WEBVTT - THIS is the Future of Central Banks | Brian Dixon 0:00:00.080 --> 0:00:03.199 Micro strategy becomes the most valuable organization from an equity 0:00:03.240 --> 0:00:05.520 perspective in the entire world, because they will become like 0:00:05.559 --> 0:00:07.440 the central bank of bitcoin in the future. 0:00:07.480 --> 0:00:08.920 There's a group of children that exist in. 0:00:08.920 --> 0:00:11.160 The world today that are around that timeframe that have 0:00:11.320 --> 0:00:14.280 only ever been alive since bitcoin has been around. If 0:00:14.280 --> 0:00:16.680 you believe in artificial intelligence is going to be successful 0:00:16.680 --> 0:00:20.000 long term, you inherently need to understand that bitcoin will 0:00:20.000 --> 0:00:21.680 be as well. These bots are going to have to 0:00:21.680 --> 0:00:24.280 get paid somehow, and they can't set up a bank 0:00:24.320 --> 0:00:25.360 account of Bank of America. 0:00:25.440 --> 0:00:26.880 Bitcoin price will decline. 0:00:26.920 --> 0:00:29.040 Some of these companies may have to start selling their 0:00:29.120 --> 0:00:31.000 bitcoin to buy their shares back to. 0:00:31.000 --> 0:00:32.800 Balance out the end nab of the company. 0:00:33.040 --> 0:00:37.760 The more bitcoin we can actually acquire, the bigger geopolitical 0:00:37.760 --> 0:00:38.360 advantage we. 0:00:38.280 --> 0:00:39.040 Have in the future. 0:00:39.280 --> 0:00:42.200 They've lowered their transaction to these by fifty percent. 0:00:42.320 --> 0:00:43.040 That's remarkable. 0:00:43.159 --> 0:00:44.159 How are you looking forward to that? 0:00:44.560 --> 0:00:45.840 I still believe that our. 0:00:47.560 --> 0:00:52.440 Hi Brian, So, what is the single biggest fundamental shift 0:00:52.520 --> 0:00:54.680 that an investor has getting their head around bitcoin? 0:00:55.320 --> 0:00:58.160 I think the biggest change that people haven't figured out yet, 0:00:58.200 --> 0:01:01.279 especially a lot of traditional investors and asked managers, is 0:01:01.400 --> 0:01:04.880 the difference between the value accretion at the protocol versus 0:01:04.880 --> 0:01:09.080 the application layer, and that's flips with blockchain technology. So 0:01:09.200 --> 0:01:10.960 to give you an example, in the early days of 0:01:11.000 --> 0:01:15.200 the Internet, nobody could invest in IP like Internet Protocol 0:01:15.280 --> 0:01:18.120 or TCP IP right like, that was the open source 0:01:18.280 --> 0:01:21.520 infrastructure layer for the Internet, but if they wanted to 0:01:21.520 --> 0:01:23.640 invest in it, they built on the application layer. So 0:01:23.680 --> 0:01:26.080 your Facebook's, your Google is your yahoos. So if you 0:01:26.080 --> 0:01:28.959 want to invest in email, you couldn't invest in SMTP 0:01:29.200 --> 0:01:32.280 Simple Mail Transfer Protocol, the email protocol itself, but you 0:01:32.280 --> 0:01:35.240 could invest in a company building an application that provided 0:01:35.280 --> 0:01:38.119 email to the markets. Right and so since the Internet 0:01:38.200 --> 0:01:41.160 up until just recently, most of the value accretion happened 0:01:41.160 --> 0:01:44.240 at that application layer, but the software protocol layer couldn't 0:01:44.240 --> 0:01:46.880 accreate any value relative to having an asset that you 0:01:46.880 --> 0:01:50.200 could hold as an individual retail. What's flipped with bitcoin 0:01:50.600 --> 0:01:53.000 is now all the value accretion is happening at the 0:01:53.040 --> 0:01:57.200 software protocol layer. So basically, buying bitcoin, buying that chunk 0:01:57.280 --> 0:02:01.360 of the bitcoin protocol is significantly out performing the businesses 0:02:01.400 --> 0:02:04.160 that operate at the application layer. And a great example 0:02:04.200 --> 0:02:06.880 is if you think about investing in Coinbase in twenty 0:02:06.960 --> 0:02:10.520 thirteen versus fuying bitcoin in twenty thirteen, and the value 0:02:10.560 --> 0:02:15.680 appreciation over that time period to now bitcoins significantly outperform Coinbase, 0:02:15.960 --> 0:02:18.080 even though Coinbase has done very very well, And I 0:02:18.080 --> 0:02:19.680 think that's the big shift people need to wrap their 0:02:19.720 --> 0:02:20.200 heads around. 0:02:20.720 --> 0:02:24.440 But is that is that something that changes through as 0:02:24.520 --> 0:02:27.359 this system matures in the protocol and the applications mature. 0:02:27.440 --> 0:02:29.920 So you mentioned Coinbase, but over. 0:02:29.720 --> 0:02:33.440 The last since coin coin Base went public, has it 0:02:33.480 --> 0:02:34.239 outperformed Bitcoin? 0:02:34.880 --> 0:02:36.880 No? I believe Bitcoin is still still one buick point 0:02:36.919 --> 0:02:38.079 over that time period. Yeah. 0:02:38.560 --> 0:02:42.840 Okay, Well, your fund off the Chain Capital, which thank 0:02:42.840 --> 0:02:44.119 you for dinner last night. Yes, of course. 0:02:44.919 --> 0:02:47.520 So your fund, though, is investing into companies that are 0:02:47.520 --> 0:02:50.280 building on and around the bitcoin ecosystem in hopes that 0:02:50.360 --> 0:02:51.800 they're going to outperform Bitcoin. 0:02:52.280 --> 0:02:52.480 Yeah. 0:02:52.520 --> 0:02:54.800 So we do a mixture of private companies and then 0:02:54.840 --> 0:02:57.639 also liquid assets in our portfolio. So our core goal 0:02:57.760 --> 0:03:00.600 is we try to outperform Bitcoin after fees and we 0:03:00.720 --> 0:03:04.960 take a Warren Buffett Benjamin Graham deep discount value approach 0:03:05.040 --> 0:03:07.239 and we're just applying it to this new technology sector 0:03:07.639 --> 0:03:10.720 and that strategy has fortunately allowed us to outperform bitcoin 0:03:10.840 --> 0:03:13.280 six of the last eight years after fees, and so 0:03:13.400 --> 0:03:16.600 on the private company side, we're looking for very mature 0:03:16.680 --> 0:03:20.679 businesses that are cash flow positive, minimum to no debt, 0:03:20.760 --> 0:03:22.160 and we think are on a one to three year 0:03:22.200 --> 0:03:24.440 pathway to liquidity. And what we do is we find 0:03:24.520 --> 0:03:28.679 early investors or employees that are looking for liquidity and 0:03:28.760 --> 0:03:31.239 become forced or motivated sellers, and we'll go at and 0:03:31.360 --> 0:03:33.919 offer them that liquidity at a large discount to where 0:03:33.960 --> 0:03:36.680 we believe that asset's intrinsically valued. And so we have 0:03:36.720 --> 0:03:38.920 a portion of the portfolio in private companies where we 0:03:39.040 --> 0:03:41.480 do those kinds of things. And then on the liquid side, 0:03:41.600 --> 0:03:44.240 we look for unique ways to actually buy digital assets 0:03:44.280 --> 0:03:46.680 at a discount or things that we think are intrinsically discounting. 0:03:47.160 --> 0:03:49.520 A great example of that is the Mountcox bankruptcy. So 0:03:50.160 --> 0:03:52.320 in the early days of the mountgox trade, we originated 0:03:52.360 --> 0:03:54.800 the way to buy those bitcoin bankruptcy claims with our team. 0:03:55.360 --> 0:03:57.600 And what was interesting about that particular trade is in 0:03:57.720 --> 0:04:01.120 Japanese bankruptcy law, when a bankrupt he concludes, they pay 0:04:01.200 --> 0:04:04.440 out the liquid asset, versus a US bankruptcy law, they 0:04:04.520 --> 0:04:07.040 pay out the assets cash value strike at the point 0:04:07.040 --> 0:04:09.520 of the bankruptcy filing. So not only were we getting 0:04:09.520 --> 0:04:12.240 a discount on the claim value, we were getting Bitcoin's 0:04:12.280 --> 0:04:15.040 future performance. So that's an example of something else we've 0:04:15.080 --> 0:04:16.880 deployed to help us outperform over time. 0:04:16.960 --> 0:04:19.000 Yeah, but if we go back to the example of 0:04:19.080 --> 0:04:22.000 the protocol versus the application layer, right, So to your point, 0:04:22.040 --> 0:04:25.800 you couldn't invest into the protocols of the Internet SMTP, TCIP, 0:04:26.520 --> 0:04:29.160 so the value of creed on the application layer the Facebook, 0:04:29.200 --> 0:04:32.560 the Google, etc. And now Bitcoin gives us an opportunity 0:04:32.600 --> 0:04:34.680 to invest into the base protocol layer. We can buy 0:04:34.720 --> 0:04:38.160 Bitcoin today and certainly, to your point, it's been outperforming 0:04:38.360 --> 0:04:41.080 all the applications. But I guess the point that I 0:04:41.200 --> 0:04:44.279 was trying to ask is do you think that as. 0:04:44.160 --> 0:04:46.400 Of this evolves, that starts to flip. 0:04:46.520 --> 0:04:50.440 So certainly the based protocol Bitcoin will continue to build value, 0:04:50.880 --> 0:04:54.120 but we'll start to see applications being built on top 0:04:54.200 --> 0:04:57.919 of it that eventually, maybe down the road, are growing 0:04:57.960 --> 0:04:58.680 faster than Bitcoin. 0:04:58.839 --> 0:05:00.720 Like give me like layer two type applications on top 0:05:00.760 --> 0:05:02.800 of Bitcoin, or businesses that are built I mean, I 0:05:02.839 --> 0:05:03.719 would consider like. 0:05:03.839 --> 0:05:05.960 Other businesses that are built on top of the Bitcoin 0:05:06.279 --> 0:05:09.039 system and application of that potentially, I. 0:05:09.080 --> 0:05:10.320 Think that's possible in time. 0:05:10.680 --> 0:05:13.320 An interesting way to think about it is that it 0:05:13.400 --> 0:05:16.200 took about the first fifteen to sixteen years, I would say, 0:05:16.200 --> 0:05:19.680 with the Internet to build the infrastructure protocol layer before 0:05:19.760 --> 0:05:22.720 the application layer really started evolving and getting adoption with 0:05:22.880 --> 0:05:24.480 user friendly applications on top. 0:05:24.320 --> 0:05:24.839 Of the Internet. 0:05:25.240 --> 0:05:26.920 And you know, we're kind of that same time span 0:05:27.040 --> 0:05:29.520 into bitcoin now. So I wouldn't be surprised if in 0:05:29.600 --> 0:05:32.200 the years to come we'll see interesting applications built on 0:05:32.279 --> 0:05:35.560 top of bitcoin. I still believe that our thesis around 0:05:36.000 --> 0:05:38.280 the applications that are built that are still more software 0:05:38.360 --> 0:05:40.680 enabled as opposed to a company, I think will still 0:05:40.720 --> 0:05:43.520 outperform over time. And why I think that is because 0:05:44.000 --> 0:05:48.000 the value of a digital asset has exponential growth capabilities 0:05:48.040 --> 0:05:51.040 compared to the equity of a company. Because an equity 0:05:51.080 --> 0:05:53.640 of a company, you know, bitcoin can sometimes trade up 0:05:53.760 --> 0:05:56.039 you know, twenty thirty percent or more in a couple 0:05:56.040 --> 0:05:58.200 of weeks, whereas the equity value of a company is 0:05:58.240 --> 0:06:00.680 generally never going to move this yes, so it'll catch 0:06:00.760 --> 0:06:03.400 up and it's going to create a dragon performance with that, 0:06:03.880 --> 0:06:06.600 and so if you can balance that correctly, you can 0:06:06.640 --> 0:06:08.159 I think you can make money in both areas, right, 0:06:08.200 --> 0:06:10.279 if you can get deep enough discounts on certain assets. 0:06:10.440 --> 0:06:13.559 Once that volatility smooths out from the private equity catching 0:06:13.640 --> 0:06:16.200 up with liquid parts of someone's portfolio, they can work 0:06:16.200 --> 0:06:19.080 well together in tandem. But I do think the liquid assets, 0:06:19.160 --> 0:06:20.880 just by the very nature of how quickly they can 0:06:20.920 --> 0:06:24.160 move from their performance appreciation, will probably continue to outperform 0:06:24.240 --> 0:06:24.600 over time. 0:06:24.800 --> 0:06:25.000 Yeah. 0:06:25.680 --> 0:06:27.680 And you know, I looked at like the early days 0:06:27.680 --> 0:06:30.720 of the Internet in nineteen ninety seven, ninety eight, ninety nine, 0:06:30.720 --> 0:06:33.120 and you were like trading these things called like internet stocks, 0:06:33.400 --> 0:06:35.400 and today there's just no such thing as internet stocks. 0:06:35.560 --> 0:06:39.159 They're just companies, right, And so you know, maybe there's 0:06:39.200 --> 0:06:41.200 this future like that. And I think of like bitcoin 0:06:41.320 --> 0:06:43.680 sort of like as a minu. It's a commodity, it's 0:06:43.680 --> 0:06:46.520 an asset, like oil is a commodity or an asset. 0:06:46.760 --> 0:06:48.760 And over the last fifty years, oil's been in a 0:06:49.360 --> 0:06:52.400 sixty seventy dollars range plus or minus. But then we 0:06:52.480 --> 0:06:55.600 have the oil industry that's the eighth artist industry in 0:06:55.640 --> 0:06:58.280 the world. Right, it's woe point eight trillion dollars. So 0:06:59.040 --> 0:07:00.839 I sort of look at, as you know, the course 0:07:00.920 --> 0:07:02.840 bitcoin will continue to appreciate. But then what about the 0:07:02.920 --> 0:07:04.360 industry that gets built around that? 0:07:06.040 --> 0:07:06.680 How would you do that? 0:07:07.000 --> 0:07:09.240 I think that it's going to grow significantly over time. 0:07:09.279 --> 0:07:11.080 So if we look at bitcoin as the base layer 0:07:11.400 --> 0:07:13.720 and the new types of applications being built on top, 0:07:14.160 --> 0:07:16.679 and some of these applications are like the difference between 0:07:16.760 --> 0:07:19.160 software and equity. So the Lightning Network is an example, right, 0:07:19.200 --> 0:07:22.040 that's a software enabled application built on top of bitcoin. 0:07:22.440 --> 0:07:25.800 Whereas a company that offers like a wallet is an 0:07:25.840 --> 0:07:27.920 example that integrates with the Lighting network would be more 0:07:27.920 --> 0:07:30.800 of the equity structure that's interfacing with that. But I 0:07:30.880 --> 0:07:33.080 think as these new layers get built on top one 0:07:33.120 --> 0:07:34.920 of the thesises that I've had for many years, it 0:07:34.920 --> 0:07:36.720 will be interesting to see how this plays out. Is 0:07:37.040 --> 0:07:39.200 many many years into the future, are we going to 0:07:39.280 --> 0:07:42.800 have all these different blockchains, so bitcoin and other digital 0:07:42.840 --> 0:07:46.800 assets that serve different use cases, or just like IP 0:07:47.120 --> 0:07:49.080 in the early days in the Internet, well that collapse 0:07:49.160 --> 0:07:51.600 on top of bitcoin. Well, the whole digital asset universe 0:07:51.600 --> 0:07:54.920 collapse on top of the bitcoin protocol. Because the applications 0:07:54.960 --> 0:07:57.400 on top get so much more efficient as technology advances 0:07:57.440 --> 0:07:59.320 over time, It's too early for us to know that, 0:07:59.600 --> 0:08:02.640 but if we use the Internet is a lesson from history. 0:08:02.720 --> 0:08:03.760 That's what happened with IP. 0:08:04.120 --> 0:08:08.360 Yeah, yeah, I mean I also understand that and my 0:08:08.600 --> 0:08:10.720 thesis as it does, all collapse, and I think we're 0:08:10.720 --> 0:08:13.480 already starting to see that. And so through the different 0:08:13.560 --> 0:08:15.960 layers that we have right now, we can do pretty 0:08:16.040 --> 0:08:18.280 much all of the if you want to call it 0:08:18.400 --> 0:08:22.080 utility from other layers or I'm sorry, other base layers 0:08:22.480 --> 0:08:25.360 coming over, even to the point of Charles Hoskin from 0:08:25.400 --> 0:08:27.320 our Cardano saying he wants to put it on top 0:08:27.320 --> 0:08:30.800 of bitcoin layer two, smart contracts on layer to privacy 0:08:30.840 --> 0:08:31.400 on layer too. 0:08:31.520 --> 0:08:31.800 All of that. 0:08:33.040 --> 0:08:34.920 I would say, it's sort of like if you think 0:08:34.920 --> 0:08:38.000 about just from like a philosophical level, like a business level, 0:08:38.080 --> 0:08:39.960 like a business's goal should be to remove as much 0:08:40.040 --> 0:08:43.559 friction as possible, and so it's like and then you 0:08:43.640 --> 0:08:45.920 have network effects, and so it's like trying to manage 0:08:45.960 --> 0:08:47.600 different blockchains and different tokens. 0:08:47.640 --> 0:08:49.240 It just doesn't really make sense. 0:08:49.360 --> 0:08:51.559 Like Bitcoin makes sense to me because it's like we 0:08:51.640 --> 0:08:56.680 could have one global, recognized, borderless, you know, type of asset. 0:08:57.679 --> 0:08:59.200 So it'll be interesting to see how that shapes up. 0:09:00.880 --> 0:09:02.120 I mean, don't you think we're starting to see that 0:09:02.240 --> 0:09:02.760 or know it's true. 0:09:02.840 --> 0:09:04.520 No, I think I think we're starting to see it. 0:09:04.720 --> 0:09:06.439 I'll be interesting to see how it shakes out over time. 0:09:06.440 --> 0:09:08.199 I think it's too early to say everything's going to 0:09:08.240 --> 0:09:11.400 collapse because some of these new protocols are using Bitcoin 0:09:11.480 --> 0:09:13.920 for certain things but not for everything. So a great 0:09:13.960 --> 0:09:17.120 example is there's a new protocol called himI that is 0:09:17.240 --> 0:09:21.559 basically taking the speed of the transaction of Ethereum in 0:09:21.640 --> 0:09:24.440 some of things Ethereum does, but they're anchoring it into 0:09:24.520 --> 0:09:27.599 the security network of Bitcoin. So basically they're taking you 0:09:27.640 --> 0:09:29.520 know what Bitcoin is so brilliant on is it's the 0:09:29.559 --> 0:09:32.120 most secure protocol ever invented. But they're using some of 0:09:32.200 --> 0:09:34.800 these other protocols to create a connective tissue between the two. 0:09:35.320 --> 0:09:37.120 So what I'm trying to figure out over time is 0:09:37.120 --> 0:09:38.680 are we going to see more of that where maybe 0:09:38.720 --> 0:09:41.679 the most valuable parts of Bitcoin get connected through this 0:09:41.760 --> 0:09:44.640 tissue to these other blockchains, or as Bitcoin becomes more 0:09:44.679 --> 0:09:46.800 advanced over time, what collapse on top of it. I 0:09:46.840 --> 0:09:48.640 think today it's a little too early to give a 0:09:48.679 --> 0:09:51.439 definitive answer, but I don't think either. I think it's 0:09:51.440 --> 0:09:52.640 possible that could happen over time. 0:09:52.760 --> 0:09:54.839 Yeah, yeah, and we are starting to see a lot 0:09:54.880 --> 0:09:57.599 more side chains and things like that. There's like the 0:09:57.640 --> 0:10:00.480 whole arc ecosystem that's like developing on top of that. 0:10:00.679 --> 0:10:03.959 So yeah, it's interesting. What do you think are the 0:10:04.040 --> 0:10:06.719 most interesting things? What are you most focused on in 0:10:06.840 --> 0:10:09.120 the sort of like this bitcoin opportunity space right now. 0:10:09.840 --> 0:10:12.800 So I think right now there's a huge hype around 0:10:12.840 --> 0:10:16.680 these bitcoin treasury type opportunities, and I think it's very interesting. 0:10:16.760 --> 0:10:19.400 I think that we've participated in some of these, and 0:10:19.960 --> 0:10:21.400 I look at it in kind of two ways. I 0:10:21.440 --> 0:10:25.280 think these treasury companies will have great opportunity, especially the 0:10:25.320 --> 0:10:27.559 ones that hit the markets early in the short to 0:10:27.640 --> 0:10:30.320 near term with them. I do think if we start 0:10:30.320 --> 0:10:32.280 to see a drawdown with bitcoin, like we've seen many 0:10:32.320 --> 0:10:35.079 many times historically through these cycles, there's going to reach 0:10:35.120 --> 0:10:37.040 a point where there'll be too many of these market 0:10:37.200 --> 0:10:38.800 entrants that'll be in there, and it will create a 0:10:38.960 --> 0:10:41.200 washout phase or a shakeout phase, because as the bitcoin 0:10:41.280 --> 0:10:43.839 price will decline, some of these companies may have to 0:10:43.880 --> 0:10:46.640 start selling their bitcoin to buy their shares back to 0:10:46.760 --> 0:10:49.280 balance out the end nab of the company, and that 0:10:49.360 --> 0:10:53.120 could actually create an accelerated drawdown in the space. If 0:10:53.160 --> 0:10:55.280 you have a tenure vision for this, I think it's 0:10:55.280 --> 0:10:56.880 going to be very successful. Overta, I think some of 0:10:56.920 --> 0:10:58.720 these companies will become some of the most valuable businesses 0:10:58.760 --> 0:11:01.440 in the world. Thesis says that long term, micro strategy 0:11:01.480 --> 0:11:05.160 becomes the most valuable organization from an equity perspective in 0:11:05.200 --> 0:11:07.960 the entire world, because they will become like, in my opinion, 0:11:08.080 --> 0:11:10.439 the central Bank of Bitcoin in the future, and the 0:11:10.559 --> 0:11:13.400 other ones around the world that are smaller versions of 0:11:13.480 --> 0:11:14.800 this become like central. 0:11:14.480 --> 0:11:16.920 Bank derivative branches in a sense, but bitcoins and. 0:11:16.920 --> 0:11:21.120 Ominated and I think that over time that happens that 0:11:21.280 --> 0:11:23.160 they have this wash out phase and then a little 0:11:23.160 --> 0:11:25.240 bounce back from that, right, But short term that could 0:11:25.240 --> 0:11:27.520 create an accelerated draw down. But in the near term, 0:11:27.559 --> 0:11:29.680 as these companies are coming online and doing the strategy, 0:11:29.920 --> 0:11:31.160 there's a lot of opportunity there. 0:11:31.320 --> 0:11:33.319 Yeah. So when you talk about the draw down, you're 0:11:33.320 --> 0:11:36.400 talking about the sort of for your cycle volatility of bitcoin. 0:11:36.280 --> 0:11:37.120 If that continues. 0:11:37.400 --> 0:11:40.680 Yeah, okay, so let's let's talk about that. If it continues, 0:11:40.840 --> 0:11:41.720 is what you said. 0:11:41.800 --> 0:11:45.520 So last cycle, Michael Sailor said, all your all your 0:11:45.559 --> 0:11:48.959 models are broken, and I started thinking, you know, I mean, man, 0:11:49.000 --> 0:11:50.800 these institutions are buying it, they put in a deep 0:11:50.880 --> 0:11:53.800 cold storage. They're not really trading around it, although they were. 0:11:54.280 --> 0:11:55.920 And then we had we had the draw down again. 0:11:56.200 --> 0:11:59.040 So you said, if it happened, So how do you 0:11:59.080 --> 0:11:59.559 think about that? 0:11:59.880 --> 0:12:00.800 How are you looking forward to that? 0:12:01.559 --> 0:12:05.000 So I want to shore I'm understanding cre if what particulod. 0:12:04.800 --> 0:12:06.640 You said, if another drawdown happens? 0:12:06.679 --> 0:12:08.760 Oh? Got it? Okay? So when you said if right, 0:12:08.880 --> 0:12:10.160 it's not like there's like a certainty. 0:12:10.240 --> 0:12:11.600 It's not for sure it's going to happen, even though 0:12:11.600 --> 0:12:13.720 it's happened, you know, multiple times in the past. By sure, 0:12:14.360 --> 0:12:16.079 are you thinking that there's a there's a chance of 0:12:16.120 --> 0:12:18.559 probability that maybe it doesn't or it's it's muted. 0:12:18.679 --> 0:12:20.679 I think it's muted or damp and compared to what 0:12:20.720 --> 0:12:22.599 we've seen historically. And the big reason I think that 0:12:22.800 --> 0:12:25.440 is because there's so many new avenues that have occurred, 0:12:25.559 --> 0:12:27.439 like you noted before, to remove friction like a good 0:12:27.480 --> 0:12:30.559 business removes friction and on ramps to an ecosystem, and 0:12:30.679 --> 0:12:33.400 with the bitcoin ets, that was the first huge friction 0:12:33.520 --> 0:12:37.000 remover we've seen for most people that don't trust a 0:12:37.080 --> 0:12:39.720 crypto exchange like that demographic of people around the world 0:12:40.040 --> 0:12:42.160 to now enter the bitcoin market by being able to 0:12:42.200 --> 0:12:44.360 do it in a traditional brokerage in a fashion they're 0:12:44.440 --> 0:12:47.920 used to, right, and so that created a way for 0:12:48.000 --> 0:12:50.000 people to basically get exposure where they didn't have to 0:12:50.040 --> 0:12:50.480 think about it. 0:12:50.520 --> 0:12:51.600 They can just go in and click. 0:12:52.440 --> 0:12:56.400 Because of that, because of the institutional adoption evolutioning compliance 0:12:56.440 --> 0:12:59.840 around the space as well, we're seeing tremendous capital inflows 0:12:59.840 --> 0:13:02.160 from parties that really never had exposure to it before. 0:13:02.640 --> 0:13:05.200 And so a lot of these investors, in my opinion, 0:13:05.280 --> 0:13:08.199 especially at the institutional level, they're not short term traders. 0:13:08.320 --> 0:13:10.839 A lot of them have long term oriented use with this, 0:13:11.360 --> 0:13:13.719 especially when we start thinking about what country governments could 0:13:13.760 --> 0:13:16.320 do in time, like they're thinking about multi generational strategic 0:13:16.400 --> 0:13:19.240 asset holds. And so, even if there is a drawdown, 0:13:19.280 --> 0:13:21.640 because all markets go through cycles, every market in history 0:13:21.640 --> 0:13:23.480 has always gone through some kind of cycle, I think 0:13:23.520 --> 0:13:25.480 the drawdowns in the future aren't going to be seventy 0:13:25.520 --> 0:13:27.920 to ninety percent like we've seen before, but maybe the 0:13:27.960 --> 0:13:30.760 drawdowns fall somewhere between, you know, twenty five to forty 0:13:30.800 --> 0:13:31.800 percent or something like that. 0:13:32.160 --> 0:13:36.160 Yeah, So basically you're talking about the volatility is decreasing, 0:13:36.280 --> 0:13:38.720 So does that mean the upside potential also gets muted? 0:13:39.360 --> 0:13:42.160 So over time it will, but I think we still 0:13:42.200 --> 0:13:44.640 have quite a few years before we're going to see 0:13:44.880 --> 0:13:46.840 that get muted so much. And as a very nature 0:13:46.840 --> 0:13:49.679 of bitcoin being a scariest finite asset, right like, the 0:13:49.760 --> 0:13:52.000 more money that flows in, I think it'll just exponentially 0:13:52.040 --> 0:13:54.400 grow over time. So I think we have a ways 0:13:54.440 --> 0:13:56.280 to go, probably like another at least five to seven 0:13:56.360 --> 0:13:59.000 years before we see like that tremendous adoption that's going 0:13:59.040 --> 0:14:01.880 to be happening over this time period from a growth perspective, 0:14:02.240 --> 0:14:03.760 and then I think we could probably see a little 0:14:03.760 --> 0:14:06.800 more dampened growth on it. But I think that for 0:14:06.840 --> 0:14:08.960 the physample suituture, it's going to be really, really valuable. 0:14:09.360 --> 0:14:13.439 So if understanding correctly, you're saying that the upside volatility 0:14:13.600 --> 0:14:16.760 isn't dampened very much until maybe five to seven years later, 0:14:17.160 --> 0:14:19.760 but the downside volatility is dampened. So does that make 0:14:19.800 --> 0:14:22.280 it a better risk adjusted entry today than we saw 0:14:22.320 --> 0:14:22.760 in the past. 0:14:23.160 --> 0:14:23.760 It's possible. 0:14:23.800 --> 0:14:25.520 I mean we've got now what sixteen years of data 0:14:25.640 --> 0:14:27.960 on bitcoin and what we've seen is when you add 0:14:28.080 --> 0:14:30.800 bitcoin as part of a diversified portfolio from the traditional 0:14:31.160 --> 0:14:36.280 sixty percent stocks, forty percent bond split even two percent 0:14:36.640 --> 0:14:39.000 into bitcoin two percent out of stocks, and you transition 0:14:39.080 --> 0:14:42.200 that into the Bitcoin actually enhances your sharp ratio, your 0:14:42.280 --> 0:14:45.600 risk adjustine returns while lowering the overall ballotility of the portfolios. 0:14:45.600 --> 0:14:47.320 So that's the data we have over the last sixteen years. 0:14:47.720 --> 0:14:49.640 So like you noted, I think it's possible that can 0:14:49.680 --> 0:14:52.520 continue to enhance the portfolio as this non correlated asset 0:14:52.840 --> 0:14:56.920 which fiduciaries when you understand what bitcoin is. This is 0:14:56.920 --> 0:14:58.200 actually one of the things that I think is very 0:14:58.240 --> 0:15:01.360 interesting today. There's so many int situtional asset managers and 0:15:01.440 --> 0:15:04.120 have a fiduciary duty to their clients to find non 0:15:04.200 --> 0:15:07.880 correlated assets that can enhance risk adjustion returns, and so 0:15:08.000 --> 0:15:08.840 many people still. 0:15:08.720 --> 0:15:09.400 Have in bought baycoin. 0:15:09.560 --> 0:15:11.240 Yeah, and it's like we have enough data now to 0:15:11.280 --> 0:15:14.880 figure this out where you're almost violating, you know, or 0:15:15.400 --> 0:15:17.880 infringing on your fiduciary duty to your clients by not 0:15:18.000 --> 0:15:19.160 getting them exposure to this. 0:15:19.360 --> 0:15:20.400 Yeah, because the data is clear. 0:15:20.680 --> 0:15:23.000 Yeah. Just I think it was just this week we 0:15:23.040 --> 0:15:25.120 saw Charles Schwab make a big announcement that they're getting 0:15:25.120 --> 0:15:28.760 into bitcoin. They actually I heard about this a couple 0:15:28.760 --> 0:15:30.520 of weeks ago because my sister in law is the 0:15:30.600 --> 0:15:32.960 vice president over at Charles Schwab, and we have a 0:15:33.000 --> 0:15:35.000 lot of fun at family get together for sure, because 0:15:35.040 --> 0:15:38.880 I don't believe in that advisor model, we don't actually 0:15:38.880 --> 0:15:40.560 talk about it too much. But you know, she's told 0:15:40.600 --> 0:15:43.440 me for years that even if a client that she's 0:15:43.480 --> 0:15:45.320 advising and comes to her and asks her about bitcoin, 0:15:45.400 --> 0:15:46.560 she's not even allowed to discuss it. 0:15:46.720 --> 0:15:49.400 Yeah, it's common across off with several different asset managers 0:15:49.440 --> 0:15:49.600 like that. 0:15:49.960 --> 0:15:51.680 Yeah, so back to the futary of duty. It's like 0:15:51.960 --> 0:15:54.480 even if I'm asking you, you know, you're advising me 0:15:54.560 --> 0:15:56.240 on my portfolio, and hey, do you think I should 0:15:56.240 --> 0:15:58.800 include this? Like I can't talk about that, and what 0:15:58.880 --> 0:16:01.320 a big gap. Now they just had a big meeting 0:16:02.200 --> 0:16:04.040 I think it was two weeks ago, two three weeks ago, 0:16:04.240 --> 0:16:06.040 and they announced, Okay, we're going to start allowing our 0:16:06.280 --> 0:16:08.760 clients to do this. And now I've I posted about 0:16:08.760 --> 0:16:09.840 this on Twitter and I got a lot of people 0:16:09.880 --> 0:16:12.240 commenting the I'm with Schwab. Now they're talking with me 0:16:12.280 --> 0:16:15.840 about it. Okay, Vanguard seems to be maybe the last 0:16:15.840 --> 0:16:16.480 hold out there. 0:16:17.560 --> 0:16:18.480 We'll see what happens there. 0:16:18.840 --> 0:16:21.120 But so I guess so, but if we still have 0:16:21.560 --> 0:16:23.560 a lot of the upside left, the downside's been damp, 0:16:23.600 --> 0:16:26.440 and then it's a little bit of a better asymmetric opportunity, 0:16:26.840 --> 0:16:27.320 I would think. 0:16:27.360 --> 0:16:27.400 So. 0:16:27.560 --> 0:16:30.600 Yeah, I think over time, it's just pretty clear economics, right, 0:16:30.640 --> 0:16:32.280 like if you have something that you can't create more 0:16:32.320 --> 0:16:34.640 and then we know the predictable issuance schedule over time 0:16:34.680 --> 0:16:36.920 and the adoption growth gurbling thing that can change his price. 0:16:37.040 --> 0:16:37.240 Yeah. 0:16:37.800 --> 0:16:39.920 I look at it from like the cycles and the 0:16:40.000 --> 0:16:42.160 different phases that we go through. And so phase one 0:16:42.320 --> 0:16:45.080 was like this retail eruption, and so we had the 0:16:45.160 --> 0:16:48.720 retail money coming in, which was big and it got 0:16:48.760 --> 0:16:50.000 the market up there, but at the same time, the 0:16:50.080 --> 0:16:52.760 risk was so high because like when I started buying 0:16:52.760 --> 0:16:54.920 bitcoin it was twenty fifteen, but like what is it 0:16:55.040 --> 0:16:56.520 and what was it going to do? And then you 0:16:56.640 --> 0:16:59.360