WEBVTT - Kraken Co-CEO Arjun Sethi Talks Bitcoin as a "Protocol"

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<v Speaker 1>Bloomberg Audio Studios, podcasts, Radio News Now to our exclusive

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<v Speaker 1>coverage from the Wyoming Blockchain Symposium. Joining us now is

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<v Speaker 1>Crack and CEO Argren sat Cracking Insault, hosting the symposium

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<v Speaker 1>this week. Argune, good to chat with you again. I

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<v Speaker 1>know you weren't at the event last year, but I

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<v Speaker 1>imagine the vibes even this year quite a bit different,

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<v Speaker 1>given the regulatory outlook, given the excitement, and of course

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<v Speaker 1>given the price increase that we've seen in so many

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<v Speaker 1>of these digital assets. What are the vibes like?

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<v Speaker 2>Look, I think you just have a large amount of

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<v Speaker 2>tailwinds from what you saw last year, obviously with members

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<v Speaker 2>of Senate, members of House, etc. And so you have

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<v Speaker 2>a lot of excitement between folks that are here in

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<v Speaker 2>the United States and outside the United States thinking about

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<v Speaker 2>what's going to be the next evolution of building on blockchain,

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<v Speaker 2>building on crypto, building with global liquidity in mind. So

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<v Speaker 2>the vibe here is great. Like we're in Jackson HALLWAYOM

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<v Speaker 2>right before the meeting with the rest of the FED,

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<v Speaker 2>and you just got a lot of excitement in the room.

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<v Speaker 1>What do you think is the next evolution of this technology?

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<v Speaker 1>The next evolution of the blockchain. What's your view?

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<v Speaker 2>So, I mean, we're really early. We just had at

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<v Speaker 2>the symposium, we kicked it off and we started talking

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<v Speaker 2>about global finance and what's going to happen in the ecosystem.

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<v Speaker 2>We had a very us look at it, and then

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<v Speaker 2>we had a very zero sum look at it, which is,

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<v Speaker 2>you know, the value of bitcoin is going to be

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<v Speaker 2>more sons with gold and on. Our take has been

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<v Speaker 2>more that bitcoin is a protocol, it's a network, and

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<v Speaker 2>you have another set of protocols like etch et cetera,

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<v Speaker 2>and that the way in which we think about it

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<v Speaker 2>today is very linear and it's hard to think about

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<v Speaker 2>what is exponential and super linear. And so the way

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<v Speaker 2>I think about it is that we're just in the

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<v Speaker 2>really really early innings of what's going to be trillions

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<v Speaker 2>of trillions of dollars coming into the ecosystem, building against it,

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<v Speaker 2>and then the value continuing to grow.

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<v Speaker 1>Can you explain more your thesis behind bigco being a

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<v Speaker 1>protocol or being something that you build on, because I

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<v Speaker 1>don't necessarily hear that from people who buy bitcoin or

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<v Speaker 1>necessarily see that, because right now it just looks like

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<v Speaker 1>people are using this as a way to build wealth

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<v Speaker 1>they're buying and they're holding because they think the price

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<v Speaker 1>will continue.

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<v Speaker 2>To go up. Look, whenever in history you've had anything

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<v Speaker 2>starting to grow at a certain velocity, people will have

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<v Speaker 2>different interpretations of what it means. And so the first

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<v Speaker 2>version of what you've seen in crypto Bitcoin, which has

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<v Speaker 2>been the default it's an on ramp and off ramp

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<v Speaker 2>into crypto, has been that like, this will be the

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<v Speaker 2>store of value and this is where I think I

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<v Speaker 2>can make money. So you have volatility across the way,

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<v Speaker 2>and you've also seen the asset continue to grow. I

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<v Speaker 2>think there's a certain amount of people that want to

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<v Speaker 2>perpetuate that. Then there's just what is the technology of

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<v Speaker 2>what you're allowed to be able to do with bitcoin

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<v Speaker 2>and how that's going to continue to be perpetuated and preserved.

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<v Speaker 2>And so remember look at the original thesis of the

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<v Speaker 2>Bitcoin white paper. It was to be a hedge, but

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<v Speaker 2>at the same time was sending and receiving payments. So

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<v Speaker 2>you've got a lot of folks coming at it from

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<v Speaker 2>different angles. When you have a lot of folks coming

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<v Speaker 2>at it from a different angle, and it's a protocol

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<v Speaker 2>and it's a network and it's a store value, there's

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<v Speaker 2>just so many different applications that are going to be

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<v Speaker 2>built around it and within it. Then there's a next

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<v Speaker 2>set of folks that are thinking about how to build

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<v Speaker 2>around it, which is what we've seen with Eth then Solana.

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<v Speaker 2>The list kind of goes on. They're all you know,

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<v Speaker 2>combined together. And I think what people miss is that

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<v Speaker 2>we're just in the early innings of what the market

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<v Speaker 2>cap is, you know, in the trillions today, what happens

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<v Speaker 2>in five years, what happens in twenty years.

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<v Speaker 1>I want to home in on that point that you

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<v Speaker 1>made about this being something that is used to exchange

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<v Speaker 1>for goods or services, As you said, it was in

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<v Speaker 1>the white paper more than a dozen years ago. At

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<v Speaker 1>this point, are we seeing that play out at all

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<v Speaker 1>right now when it comes to bigcoin specifically, or are

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<v Speaker 1>people just buying and holding it. I'm not seeing prices

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<v Speaker 1>denoted in bitcoin by any means.

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<v Speaker 2>That's right. Well, there's some folks that are trying to

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<v Speaker 2>take you know, payments in bitcoin, but I think the

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<v Speaker 2>overall you know arching thesis today and the usage is

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<v Speaker 2>you know, buy and hold and then watch the value

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<v Speaker 2>a crew. But you are starting to see people try

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<v Speaker 2>to bridge against it and build against it, and so

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<v Speaker 2>it's really early. Most of this innovation you see is

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<v Speaker 2>happening outside of the United States, but a lot of

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<v Speaker 2>what we're trying to figure out is like how do

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<v Speaker 2>we bring it into the United States, keep it here,

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<v Speaker 2>control it here, and perpetuate it here so that innovation

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<v Speaker 2>continues to grow in the United States.

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<v Speaker 1>One more on the market and then I want to

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<v Speaker 1>get to crack in specifically and the roadmap and sort

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<v Speaker 1>of theory and strategy there. Where do you think we

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<v Speaker 1>are in the cycle? Given there's been so much pull

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<v Speaker 1>forward since the November election and on optimism over the

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<v Speaker 1>regulatory environment you mentioned just you know at the beginning

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<v Speaker 1>of our interview, the optimism around that. Where do you

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<v Speaker 1>think we are in the cryptocycle? Are we at the

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<v Speaker 1>top or is there more room to run higher?

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<v Speaker 2>Look, I wear another hat chairman at Tribe Capital, and

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<v Speaker 2>one of the first things I tell any entrepreneur that

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<v Speaker 2>I work with is the word hubris is really important

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<v Speaker 2>as you grow. And so as you grow at a

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<v Speaker 2>high velocity, a lot of people will think about your

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<v Speaker 2>company as you know, as a prime candidate. And so

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<v Speaker 2>what happens is you think about the supply and demand

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<v Speaker 2>of any type of valuation. When there's more eyes looking

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<v Speaker 2>at something, the value of that asset tends to accrup

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<v Speaker 2>and sometimes that's not healthy. So where we are in

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<v Speaker 2>the market, when I think about where we are in

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<v Speaker 2>the market with crypto, we're really really early in the slope.

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<v Speaker 2>But it doesn't mean that you won't have any ups

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<v Speaker 2>and downs and volatility along the way. And I would

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<v Speaker 2>say that if I was to just look at it

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<v Speaker 2>from a pure numbers perspective, I think we're in the

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<v Speaker 2>middle of the road. And the more we get market structure,

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<v Speaker 2>the more we get market stability, the more inflow of

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<v Speaker 2>capital that comes in. I mean, take a look at

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<v Speaker 2>like the DATS. You can make an argument that it's

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<v Speaker 2>good for the ecosystem. We can also make an argument

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<v Speaker 2>that there's a lot of folks that are sort of

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<v Speaker 2>thinking about crypto fast and loose. And it reminds me

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<v Speaker 2>and it's reminiscent of what you saw on twenty twenty one,

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<v Speaker 2>where the discipline approach around building a business starts to

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<v Speaker 2>go away and it trickles away. And so I think,

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<v Speaker 2>you know, the way in which we carry ourselves is

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<v Speaker 2>more about what's the disciplined approach to making sure that

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<v Speaker 2>we're catering towards our customers what do they need rather

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<v Speaker 2>than speculation. So I think we're in the middle of

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<v Speaker 2>the road, but it doesn't mean that we can't have

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<v Speaker 2>hubris in this category over the next year or two.

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<v Speaker 1>Hey, before we go, I want to try to get

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<v Speaker 1>some updates on how you're thinking about the road to

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<v Speaker 1>a publicly traded company at CRACK and can you give

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<v Speaker 1>us an update on your IPO when it will take place,

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<v Speaker 1>any banker's size, anything color around that.

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<v Speaker 2>Sure. Look, I think people use the word public markets

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<v Speaker 2>as if it's like a race to an exit, and

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<v Speaker 2>like we're private. We've stayed private. We've raised less than

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<v Speaker 2>twenty five million in capital since twenty eleven, and we've

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<v Speaker 2>been able to stay disciplined. The way we think about

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<v Speaker 2>our journey along the way private or public is that

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<v Speaker 2>isn't in the best service to our clients and our customers.

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<v Speaker 2>If the answer is no, we won't go public. And

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<v Speaker 2>so there's no real update there. It's just that you

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<v Speaker 2>know we're profitable, We give our quarterly updates, and we

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<v Speaker 2>want to make sure from a counterparty risk perspective, trust

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<v Speaker 2>is the currency that we.

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<v Speaker 1>Care about what are your takeaways from recent IPOs of

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<v Speaker 1>firms in the space circle. For example, we saw Bullish

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<v Speaker 1>last week. The investor appetite was certainly there for that one.

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<v Speaker 1>What are your thoughts.

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<v Speaker 2>If I use the framework of intrinsic value versus options value.

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<v Speaker 2>My personal belief is that a lot of these companies

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<v Speaker 2>in the crypto ecosystems are option valued, So they're overvalued

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<v Speaker 2>in my perspective. And in some cases that is a

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<v Speaker 2>good thing and and a bad thing, which is you're

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<v Speaker 2>getting more attention and so you know more about what's

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<v Speaker 2>happening in the industry. But I think it's really important

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<v Speaker 2>to just take a look at, you know, how are

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<v Speaker 2>these companies growing efficiently? Where do they make their money,

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<v Speaker 2>where do they not and where do the losses recruit?

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<v Speaker 2>And so again, taking a step back, how do these

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<v Speaker 2>companies actually grow the industry, How do they grow themselves?

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<v Speaker 2>And are they actually fighting intrinsic value to themselves and

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<v Speaker 2>their shareholders is what matters most.

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<v Speaker 1>So which companies do you look at and say those

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<v Speaker 1>are overvalued?

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<v Speaker 2>Well, I mean, you know, I think any company that

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<v Speaker 2>gets into a category of a meme tend to get overvalued.

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<v Speaker 2>I don't think that's necessarily good or bad. You just

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<v Speaker 2>take a look at the numbers and say, like, does

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<v Speaker 2>it actually make sense for where they're going to be

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<v Speaker 2>in two years, five years, and ten years. So I

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<v Speaker 2>don't have any specific perspective on which one is overvalued.

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<v Speaker 2>I just think the world of crypto has become a

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<v Speaker 2>more overvalue with the dats and the companies that have

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<v Speaker 2>been going public.

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<v Speaker 1>Yeah, it's been pretty wild to follow this just over

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<v Speaker 1>the last few months, and what a difference we've seen

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<v Speaker 1>in a little, you know, over a year at this point. Hey,

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<v Speaker 1>one more for you on the public markets and what's

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<v Speaker 1>happening there. Are you concerned at all about all the

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<v Speaker 1>companies that are going public sort of taking away interest

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<v Speaker 1>from a potential IPO for you, or sort of taking

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<v Speaker 1>the air out of the room when it comes to

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<v Speaker 1>investors who want to invest in a company that is

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<v Speaker 1>in the crypto space, By the time you get there,

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<v Speaker 1>maybe the interest won't be there because there are so

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<v Speaker 1>many others.

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<v Speaker 2>Well, I've been around around a lot long time in

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<v Speaker 2>Silicon Valley, and I think what you've seen is that

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<v Speaker 2>there's a race. You know, it's kind of let me

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<v Speaker 2>put my idea on a napkin and raise, you know,

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<v Speaker 2>tens of millions, one hundred millions of dollars. Put a

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<v Speaker 2>dot com at the end of my company and take

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<v Speaker 2>it public. I think good companies get valued because they're

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<v Speaker 2>good and because they're able to continue to execute.

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<v Speaker 1>Argent Safety Kraken's CEO. Always good to see you, Argent,

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<v Speaker 1>thanks so much for joining us on Bloomberg Crypto