How Raoul Pal 10X-ed His Money with Crypto and Retired to the Beach

But my big discovery and why I really started loading up on Ethereum. Which was a Understanding.

That Metcalf's law Was the primary driver. of all crypto markets. Almost all of the tech stocks that we've known Today.

And once you realise that these are basically networks. And once you realise that crypto On networks where you actually own the network. So Facebook is a great network stock and it works perfectly on a log chart and it's an exponential, does all the things as you imagine. You can value it in Metcalf's law's terms. But the fundamental difference is shareholders and network users are not aligned.

The shareholders make the money, the network users get the utility. Along comes crypto. You mar marry The the network. User with the owner.

Okay now you've got Network effec effects upon network effects. This is like behavioral economics. Right. Manaf. Religion meets M McCaff's law, right? It's like I have now I'm tribal about the thing. It's religion meets capitalism. It's basically what it is, right? So that is incredibly powerful. So for those who don't know, you basically you're at Goldman You started your own hedge fund.

And then Simply you you retired, correct? You retired pretty young. You retired at thirty six. But I mean, now you're you have a company now, so you're not, you know, fully retired and kicked back, but No, I've got four jobs I'm doing right now, so Right, but you did have a break in between, correct? So like I think it was two thousand four when you when you sort of retired from the hedge fund. And it was like two thousand fourteen or something when you launched. Yeah, real vision. So

What was going on in between? Were you doing nothing or you were doing other projects I just don't know about? I was writing Global Macro Investor. But that is a monthly publication. So I don't know why. All of you guys do weekly newsletters or daily newsletters. So I I wrote monthly. It's big. It's like Well it starts off at about thirty five pages a month and then

due to uh inflation it gets to Um about a hundred and thirty pages a month now. But I write it in a weekend. So

In I was living in Spain, wrote one weekend a month, sure I need to monitor markets and talk to people, but It was a part time job. Um so really what I've done is kind of opted out of the rat race. Moves to the Mediterranean coast of Spain. I was growing fruit and vegetables in my garden and almonds and olives and all of that stuff.

Living the beach life in Spain um In the middle of a on the side of a mountain in the middle of National Park. Having a great life. In the end. You m start missing intellectual capital.

P the people around you. 'Cause most of the people most of the year round in the beach town in Spain Work in a bar or restaurant. Or they um Or they're in pro real estate.

Which is fine. But you feel very isolated when your world is global macro. Totally. So so describe the moment because I think a lot of people listening to this. So just so you I don't know how much you know about the podcast, but Basically. The podcast is usually me and Sam who who can he's not here'cause he's traveling. He's actually in Portugal right now.

Um, we just sort of usually spit we're both founders, both recently sold our companies in the last two years. We started the podcast but after we sold,'cause that's when you have a bunch of time on your hands. And um and it's usually just spitballing different kind of like business opportunities, market opportunities. And so just stuff that we see that we think could work or is interesting, but we're not gonna go do it ourselves. So this became our outlet to do that. And um and so you get like

Over a million downloads a month. And those peop what what the people who listen, what they're doing is Um They typically are either like they wanna start a business, but they don't and they they have like a good paying job and they're looking thinking about making the leap. Or they ha they have their own business and this is like

They're doing this while they're, you know, doing their chores and it's like oh I get to hang out with my buddies. Who are shooting the shit about business. Cause like, you know, we talk about stuff that they want to talk about. Uh, they just don't maybe have the friends around them that want to. talk nerd out about business all the time. And so we kind of had that same uh thing where you needed that intellectual sparring To uh to feel good. But the th the thing you mentioned, which was like, you know

You sort of won one game. Uh you're doing well in one game, but you decided to exit the rat race What was that? What did you have like a kind of come to Jesus moment? Well did you have like a was that a long time coming? How did that happen? My meta narrative. Is the game is life itself.

The game is not money. The game is quality of life and how you live it. So that was always my objective. So when I was On the tube in London at five fifteen in the morning to get my Get to my desk at Goldman before six.

The reason I did it Is because I knew that the next thing I wanted to do was go and live in the Mediterranean. And wanted to have that quality of life. You know, for me

A lot of people think of money as the primary objective. I actually like houses. As you can tell. Yeah. Right, because this is where I live.

This is the quality of life. This is my bank. This is everything. Um And so I like where I live and how I live. That's why I live in the Cayman Islands, that's why I lived in Spain. They're beautiful places And I live a quality of life.

So that has always been my journey. But what I wanted to do is I always take steps towards the end game. I kinda live in the future always, in everything that I do. So I always have a vision of my future self. Or whether that's Future state of financial markets, where I think it's going. Whatever it may be, I'm always well ahead.

And so I then can look it's much easier. To live in the future and look back and say, How do I get here? Then stand here today and go I want to go. Forward. It's kind of weird. It's a psychology thing.

And so I had realised that The Mediterranean was And I was My ex girlfriend when I was at university

Um her mother lived in Mallorca in Spain. And I I was there in Majorca one point. And we were on this small beach eating Grilled sardines. This perfect Mediterranean, right? Grilled sardines, somebody's making the big oil drum on the beach. You've got a cold beer, some grilled sardines, and on this little mini peninsula is a bunch of pine trees and palm trees.

And there's this long table of like Thirty people, twenty five people. Uh different age groups, parents, kids, grandparents. Eating paella, the Spanish national dishes.

On this Sunday. Drinking wine, laughing, I'm like, that is quality of life. And so I kept that in my mind. And so I kind of facilitated it to happen that I would move to Spain.

Right. Um And I did it in steps as well. So I did it in the step that I was speaking to my father, I was having dinner with him. And he's like

And I I was just chatting over a few glasses of wine, I was like, you know, I'd love to buy a house in Spain at some point. And he said, Yeah, I've got a friend selling a house in Spain. A random thing. So I said, Sure, well let me know. So he send he he this isn't the day of faxes. It's like nineteen ninety

Eight or something. He sends me a fax. Of this six bedroom house on a hillside in Spain. I'm not that's great, Dad. How the hell am I supposed to afford it? He's like I was thirty years old, I was working at Goldman.

He's like, Well I don't know how much it is. So he came back and said it was one hundred and fifty thousand pounds, which at the time was like Two hundred fifty thousand US. Two hundred thousand US. And I just had a bonus and I thought well I could actually buy that in cash.

I don't think it's a good thing. And it was game changing. Had a mortgage in London and everything else. It was game changing because now I'd won the entire game. I've got a six bedroom house on a hillside in Spain overlooking Orange Groves, ten minutes to the beach. And I could lose my job.

I could still have anything good. And I could work in a bar. And I can live there. I'm done. My game of life was one. So that that was the marker stone to allow me to take more risk to do the next thing.

And so that's how I've always been. Done these things. And how do you get that vision? So I so I'm the same way, but I what I've noticed about myself is like Every I call them like these chapters so it's like every sort of like five years is like a new chapter.

And what what I've noticed if I go look back at the kind of last three chapters so I'm I'm thirty three About to be thirty four. So basically, you know, three chapters. I I I've done three chapters now. And each time it was sort of sort of this like fortuitous bounce where I get in touch with somebody, they show me a glimpse into this lifestyle. Or this kind of like mode that they're in. And then I just can't unsee it. I'm like

Why the hell am I not doing that, right? It's your version of seeing people eating paella, drinking wine at a thirty person table just enjoying life on the by the water and you're like That's the glance that that's the glimpse I needed to do it. So is that how you also got your vision for the next For the next kind of like Yeah, and so the next thing was not so I'd been in Spain and I realized the thing I was missing was intellectual capital, even though my clients were the world's most famous hedge fund managers, you know, all of these super smart guys, but they weren't around me, they're all around the world.

And It was not as easy to to get in touch. Twitter wasn't really around. You know, there was less ways to be social online. Podcasts didn't really exist. Right. And then I think I probably discovered

Tim Ferris? And another friend of mine, Mark Hart, had gone looking at Silicon Valley and entrepreneurship. And that was the thing that I thought, okay, this is the next thing for me.

How can I How can I take the entrepreneurial journey outside of you know setting up my own research business, which was a one man band essentially I wanted to take that entrepreneur's journey and push myself. I wanted to see what I was capable of. Um

So that was the next that was the next thing. And give people a sense. So you you're at Goldman, that's a good job. Uh What what are you making back then? Uh you know, w uh basically like what what was your kind of like Because I think for a lot of people they're like, Okay, some people feel trapped when they're when they're making a high salary at a nice company, they feel trapped, they don't they don't take those leaps. And other people they'll look at this and say, Well, it's easy for you, you probably were making a bunch of money at the time.

Uh, you know, so yeah, you could take these leaps of faith'cause you had kind of a a safety net. So but way wind the clock back we're talking almost twenty years ago or something like that. Um You know, how were you doing financially then versus you know, you know, at those two steps kinda like research firm and Goldman. I've been really lucky, you know.

I worked in the banking industry. Selling Derivatives, right? So these are The mega trend of finance, the mega trend of derivative and the mega trend of hedge funds.

Sorry. You know, I was doing pretty well. You know, at thirty years old I was earning earning more than a million dollars a year. Um So But you managed to walk away from that.

Which is pretty impressive. Yeah, and I I first went to a hedge fund. Don't forget. So I left gold and went to hedge, so I took a risk. But I I used to argue with my boss every time, he used to give me share options. And

uh restricted stock. I'm like, Thank you, it's worthless. I'd rather have cash. 'Cause how dare you you should be Proud to have equity in Goldman and that's why we can give you so much more compensation. I said it's worthless. He said. Why do you say that?

Because it's not money I can spend. So he got really pissed off with me. And then when I finally quit to go to My biggest customer and the biggest customer of Goldman's equity derivative.

Echo the desk. Um equ entire equity floor in Europe. uh GLG partners. He then called me into his office and goes, Ral, you were dead right. It was worthless.

So So I lost it all. Um I managed to cash in some of it, but I lost it. millions of dollars to make that move. But I wanted to make that move'cause I wanted to see whether I could If I could run money myself.

and be a macro investor,'cause it was another chapter that I wanted to pursue. For my own goals. And then Let's kind of fast forward till today. So you came on my radar Uh, I think I'd seen Real Vision a few times, but I hadn't uh I'm not from the finance world. I'm from the Silicon Valley tech world.

And you know, so we all kinda have our like media sources that we learn from but based on whatever industry you care about, right? And uh so I had seen it, but I hadn't really paid too much attention. Uh, but I saw you start talking about crypto, and this was um you uh I didn't realize that you had actually started talking about crypto back in, I don't know, twenty thirteen, twenty fourteen. And I went back and I read your old kind of like memos and the yeah, stuff that you have s you know put up screenshots about.

So you know Like you said, ahead of the curve. Uh you know, you have the receipts to prove it. Um But I think it was twenty nineteen or twenty twenty where you started becoming very vocal and then you made the big splash where you were like, I've moved Some ridiculous part of your liquid net worth. I think it was

I think you might have said fifty percent at one point I thought you heard you say ninety percent into crypto. Yeah. Hundred percent into crypto. And um So that caught my attention and the attention of a bunch of other people. And so you know I know you've talked about this before, but this is a new audience, so give

You have kind of the origin story of how the mind virus of crypto kind of like What were the steps where you went from like Curious. To convinced. What was that? journey like for you where you put in ninety percent or hundred percent of your job is to live in the future. So

I had gone I I had lived through the financial crisis and predicted it. I had also lived through the European crisis and predicted it. And had been in Europe and had to buy a generator and food. And get cash out of the bank and keep it at home. Right.

Close we were in Spain to losing our entire banking system. Hm. And As a macro guy, I knew the issue was leverage. And leverage had meant that we had a unique problem which was

There's a layer of collateral. And all of this. Debt is against the collateral. And usually you've got like thirty claims on the same piece of collateral. In fact, the average US Treasury has thirty two claims on it, or it did then. May have more now. So therefore who owns what?

In an unraveling. You know, who's gonna get screwed? And the the the the leverage was uh you're talking about Uh government or corporate? Or where where did you see this p stockpile of leverage? I look at total leverage. Financial system leverage.

Government leverage. Um household leverage and private sector leverage. Right, so we're at four hundred and eighty percent of GDP now, whatever the stupid number is, right? It's ridiculous. But the problem is is that's a lot of claims on the collateral. Mm-hmm.

So'cause not everything is collateral in the system, only some things used as collateral. Anyway, so When Lehman went bust, right, everyone's scrambling to find who owns what and Yeah, th that happens all the time. So I started trying to s start the world's safest bank with a bunch of family officers. Um, I thought, you know, we could say a bank that doesn't use leverage, so then

People can put assets there. Their savings there and realise they're safe. Because it wasn't safe. People in Cyprus had all of their money taken out by the government. So I'm like, okay, I need to do something about this and I can do something about it.

So I started that journey. And a friend of mine called Emil Woods Who was a subscriber to Global Market Investor. um who was running a hedge fund at the time, an ex Goldman guy, he said you need to look at Bitcoin. And I'd read a bit about Bitcoin. This probably twenty twelve.

Um and I wrote the first Macro piece on Bitcoin, which is I think the thing you referred to. Which is twenty thirteen. I saw it and thought okay, so we've got two things here. One is this

That's it. Bitcoin. And That's a scarce asset in the digital world, so that's probably interesting. And secondly we've got blockchain, which is a recorded ownership of everything.

Okay, well that solves the entire financial system. And this could be something useful for the financial system in itself as a new version of gold. So I backed out that The fair value of Bitcoin with gold at thirteen hundred, using the kind of supply Yeah, stock to flow ratio done badly. I've you know, I'm no You know.

statistician or um econometrics expert. But I kinda backed it out and said it was probably worth a million bucks. And then How I like to look at things is okay. Wha what's the price now? Two hundred dollars.

Let's assume probably rightly that Raoul is a total idiot. So let's assume he's wrong by ninety percent. So it's worth a hundred thousand dollars. And it's at two hundred dollars. That is the best single bet I've ever seen in my entire life.

So I bought it. And I wrote about it. And I held it all the way through till And when you say you bought it, that's like a like the first time I bought Bitcoin, I bought like I don't know a thousand dollars of bitcoin, right? So I bought it means what, like You bought a tiny bit, you bought a medium amount, or you went like you put a significant stake for yourself into it.

A decent a decent enough amount. Um and I sold it after a ten X. So I've done well from it. Satan.

Got divorced in the process, so I halved that. So there was my tax that I don't pay an island. So you know, it wasn't a life changing bet, but it was a it was a good bet. Now, had I held it on to Yeah, it would have been life changing. So

Okay, so I've been in it. I got out. I was nervous about all of these forking wars and everything going on. I'm like, I don't understand this. Let's Wait and see. And then

I had talked about it. A lot, analysed it, been involved in it, but hadn't Again until two thousand and nineteen. So I'd stick my toes in again'cause the the market had been selling off. I was starting to get comfortable that yes, that we've got a recession coming, this is gonna be a useful tool.

And then twenty twenty comes along. Um and I was already positioned for a recession. But Yeah, this opportunity was like

Okay, if the central banks are gonna print like crazy, then that's the opportunity. So I bought a lot of Bitcoin owned at that point I was Long ponds. Gold. Dollars. Bitcoin.

And then over time I started charting Bitcoin versus other assets. And I realised its dominance in performance was so extreme. Then it made no sense to own other assets, even with the fact that Bitcoin can be very volatile and have periods like now where it's down fifty percent. It's like it makes no sense to own anything else. Now, I probably will

Take other bets here and there. Um But I think my core strategic ho so I was Bitcoin first. Then I started doing the work. I was on Twitter a lot. Um And

People, if I were to ask anything about Ethereum, people would pile onto me That makes me want to know more. So I start digging in. Has the opposite reaction. But I started properly digging in.

And I thought, you know, this is really bloody interesting. The chart looks incredible, the chart versus Bitcoin looks incredible. Um This makes sense to me. So um I started Switching

Um into Ethereum. And when you say the chart looks incredible, so tell me what that means. So I've uh Like I said, come from the tech world. We look at charts all the time, but they're always like Users revenue um Things that sort of like

Are not uh based on spec you know any kind of like uh speculation or or human emotion. Yeah human emotion, exactly. Um So you know, charts don't lie or you know, they they they they do if you if i but unless unless you know what you're looking at. So When you talk about charts, I've seen pe you know, I see people like do this all the time on Twitter where they're like, you know, it's voodoo magic. They see a chart, then they draw this like crazy shape.

Oh, clearly this is doing a reverse cyclone pattern and it's going to go all the way up. And so are you one of those guys where you actually do the technical analysis and you say no the price chart is what I'm looking at? Or are you looking at other charts? Um both. So um and I'll come on to that. So price chart I think is the best guide. Of What the asset is doing, what its trend is, how it

How people are perceiving it. And where it is versus what you might perceive as fair value. So okay. You know, you you notice certain characteristics like Crypto tends to be exponential in price, so you put it on a logarithmic chart, it starts to make sense.

You know, you look at things like Copper and lumber they tend to be mean reverting assets. Because you Excess supply with high high prices lead to excess supply. So right now with oil at a hundred bucks, everybody wants to make as much oil as possible. So the price comes down over time. Doesn't happen with crypto because you can't.

Right. So y you need to understand the structure of markets, where the sentiment is. Is it overly bearish? Like a day like today, it got overly bearish. And so suddenly you start to see a reversal. So these kind of things are interesting. But my big discovery and why I really started loading up on Ethereum. Was another child.

Which was a Understanding That Metcalf's law Was the primary driver. of all crypto markets.

Almost all of the tech stocks that we've known Today. And once you realise that these are basically networks And once you realise that crypto On networks where you actually own the network. So Facebook is a great network stock and it works perfectly on a log chart and it's an exponential, does all the things as you imagine.

You can value it in Metcalf's law's terms. But the fundamental difference is shareholders and network users are not aligned. The shareholders make the money. The network users get the utility. Along comes crypto.

You marry The the network User with the owner. Okay, now you've got Network effec effects upon network effects. This is like behavioral economics.

Right. Manaf. Religion meets M McCaff's law, right? It's like now I'm tribal about the thing. It's religion meets capitalism. It's basically what it is, right? So that is incredibly powerful. So I start looking at the fact that Bitcoin and Ethereum charts just At different points when they at the same point in the adoption cycle were remarkably similar And then it dawned on me is they're all the bloody same thing. They're all about adoption.

So then So So if you look at it and if you're honest with yourself Ethereum, if you think about Metcalfe's law, it's about the number of Users.

And then the kind of connections between the users and the applications built to create those connections. Well bitcoin's kind of a w one sided one, which is bunch of people own it as a store of value. Like gold. Nothing wrong with that. But there's not many applications built in it. When you look at Ethereum it's like holy shit.

I mean this is like the internet. Right. That moment is like okay. This is far superior of that. Um And so

That's why I took that bet and then I eventually shifted. Majority into Ethereum and then took other bets in the space to express macro views. Yeah. Uh it's funny. I I I have uh one tenth of the intelligence of you, but I did the exact same pattern. So you know, I heard about it in twelve twenty thirteen, bought a little bit, dabbled, sold during when I you know, I when I went to a wedding and my aunt was telling me about how great Bitcoin Ethereum was, I was like, Oh, it's probably a bubble twenty seventeen, twenty eighteen. sold for a nice profit, was patting myself on the back. Uh, you know, in retrospect, worst trade I ever made. It should have just held everything. Um, you know, bought started buying back in. Uh in twenty

twenty n uh twenty nineteen or twenty twenty, I kind of announced that I've Uh, I had moved twenty five percent of all my liquid net worth into the thing, but that was right before, you know, another another run up. And so that became quickly fifty, sixty percent. And um and you know, pi peers and some people were telling you you're crazy. I'm sure you had the same. And same thing, you know, why are you betting on this? Are you just kinda speculating? And I said, No, like Basically, I spent my whole career st studying the power of network effects, right? I'm trying to build marketplaces and social networks in Silicon Valley.

Because I know that a network effect is the most powerful force Imagine. And uh and then I see this chart, this adoption chart of this m new money network. I'm like, Well if the s if the If the social network was worth X and the information network was worth Y, and then the you know f the merchant network, which is like you know, basically Amazon, um it was worth, you know, Z, then then this thing is gonna be the money network's gonna be worth a lot. I can tell you that. And so I was like didn't know much more than that, but I just knew

If you can bet early in a in a network effect that's still going through its kind of like exp you know adoption curve. Um you know, you'll do pretty well. And so that was kind of my my my bet. Um Coming from a compl you know, sort of a different

Different take, but ended up at sort of the same conclusion. And I remember being impressed that you were talking about network effects because I didn't really see a lot of people in kind of traditional finance talking about that at all. And I was like they're missing the point, you know? Really one of the first people to really start saying. Unless you understand network effects, you don't understand what this is at all.

Because everyone's identifying weird things. Because people people listening maybe don't know network effects. So so to to find it, network effects just describes this phenomenon where Uh, let's just take, you know, a language. If I'm the only s person who speaks English, English is not very useful. Same thing with a telephone system. If I'm the only person with a telephone, it's not that useful. But now another person gets a telephone or learns English. Well, English just got more valuable. And then the more people that learn English, the more valuable English is as a language. And so

It's describes this phenomenon that Every participant that joins the network makes the whole network more valuable. So it's like the opposite of like a Popul nightclub where Everybody who joins makes the thing sort of you know, diminishes the popularity over time.

Network effects typically describe that they It gets more valuable at it. Square basically as an exponential, not linear. And then if you think about it in other terms is let's say let's say let's look at web three as a network. And a network of

Engineers, engineering talent, right? This is where where it gets really interesting. Why is it exponential? It's because there are parts When Everybody's trying to hire. Web three.

Talent, right? We are every single person I know is, right? And the actual pool of people who are capable of doing it is probably like A thousand. Right. And they're all multi millionaires who don't want jobs. That's the point. Is there

Salaries. is exponential. The demand for the network of those guys becomes exponential. Over time There'll be millions of trained people and it becomes the network effects The overall space is very valuable.

But the opportunity that ramp That's the single most important Interesting part of network effects. Right. A share of the network.

So even when the network flattens out and is now worth I think two hundred trillion dollars for the Digital asset space is currently two trillion dollars. That's a hundred X in market cap. That's huge. We've never had anything like this before.

Right. Like when the when the first when the information network was getting built out, which is just the internet. And it was pretty clear, like slowly but surely people were adopting, they were getting online, and then stuff was getting built, stuff to do, and then everybody who was online made made being online better because you could communicate with them or they might write a blog or whatever. The whole internet was getting better. the more people that joined, right? That was a network effect. But you couldn't invest in the internet. Like you couldn't just invest in generically The internet. And so you had to pick, you know, certain platforms. And even then, how how do you become an inv let's say you believed in Amazon or eBay or whatever.

Y you're only getting a slice of the total internet and even then They don't want, you know, the average person could not invest. And that to me it feels like NFTs right now. We wanna all get involved in NFTs. You have no idea what's gonna win.

I mean I mean you don't have the ability to go on every Discord so it's bandwidth constrained. We all are in this space. We know it's huge. We all know it's huge. We also know it's a Bubble. We also know tons of this is going to zero. Um that fit

What's interesting. Only ETH gives you the gives you the uh action of of NFTs. The kind of you know, that that kinda makes sense. Like only Oracle did a pretty good job of capturing the internet. Right. And so you've been now kind of following this and so What what is what is a viewpoint you had about crypto that you have

Changed your mind on or you Y what you believe before now you realize is sort of wrong and you you think about it a different way. Is there any has there been anything as this kind of Yeah, it's kind of like this rapidly evolving thing. You're sort of like defogging This like brand new world. Yeah, so you know, maybe some mental piv picture you're some mental framework you had before

hasn't really held up and maybe something different has happened. Can you think of an example of that? Well my views on Bitcoin changed. Um Significantly. I don't think yeah, n no less of it as an asset, but I thought about it in network terms and the community and I thought the community is not attracting

New people. And the job of a network is to attract new participants. And if the network was actively rejecting people. I thought it was gonna underperform. Um which was surprising to me'cause I was very bullish on Bitcoin. first because I thought look it's gonna have a larger place and what's happened is almost immediately

And it made me change my mind. is the institutions start going, Well, I I actually don't like this space. And they started buying Eve. And that was so so that's that's new. I haven't really heard that. So tell me about the'cause you're connected to all these folks, right? Like you know They just hedge fund guys, CIOs, whatever you know, a bunch of different people in that world. They don't own an asset where everyone's shouting have fun, stay poor at each other and putting laser eyes.

Makes them look fucking stupid. And irresponsible with their money. Well, ETH feels like it's a technology play. Yes, it's amusing because everyone's saying GM to each other and all of this stuff, but it's not at war. While Bitcoin was at war with every other network. Because you know, that's what networks do, you know, religions go to war with each other for the same reason, right? They're exactly the same principles.

Um So you know it's the same reason Russia and NATO. They're all network fighting each other for the robustness of their own network. I get it. So that That that whole process of seeing institutions getting turned on off by it was a was a big deal to me. I just thought, yeah, I don't like this either. So that was

One thing. Um I'm trying to think. Well. You've seen a lot of news about institutions buying Bitcoin, whether it's

Tesla or MicroStrategy or Square or You know, some like you know, random insurance company buys a hundred million dollars worth of Bitcoin. So we've kind of heard those We hear less of that with ETH. Is it just going on under the radar? Is it coming? What what's your sense of that? Because I haven't I'm in this and I haven't heard a ton. It's happening.

Um blow the radar. Because people keep coming to me saying, When's this wall of money? I'm like, It doesn't come as a tidal wave. It comes as a flow. Right. You don't see it until you look back and go, Wow. So I mean I literally every other day I'm speaking to the world's largest financial institutions who put me in front of their investment committees and talk them through crypto and how to invest. And the the narrative changed. It really surprised me.

It was always bitcoin. You know, can we put Bitcoin on our balance sheet? How should we invest in Bitcoin? What's the diversification? Move very quick to Look, Ethereum feels like it's a technology play that makes sense with the applications. We can't we're interested in DeFi, et cetera. Then it very quickly became a little bit more.

Oh shit, how do we get involved in web three? Um so it moved very fast. Which is why in the end VC got most of the money. Um because they saw the broader opportunity. They all came through the The twenty twenty lens of

Bitcoin is the asset and you know the the Michael Saylor route and even me, you know, in the earlier part of twenty twenty, a lot of people came in that. And then Like all of us. They kinda go, Oh wow, okay, this is much bigger. So you know, I've started a fund of hedge funds.

Um Which is Invest in in crypto hedge funds. Mm. To allow institutions another way into the market because they don't really want to buy just Ether Bitcoin. They want exposure to this

Two trillion dollar asset class is gonna go to two hundred trillion over the next ten, twelve, fifteen years, whatever the number is. So hedge funds are pretty good for that because their their job is to manage the exposure and And to capture the So You know, that's another way that it's coming in that people don't see.

Um You know, people it's not all about the bitcoin ETF. I don't think that's gonna move the needle as much. It'll be positive. Only in a positive market. Yeah. Yeah. The the w the way you described it's like it's not one giant wall of money and like most things it's not, you know, a single moment in time where it just goes from

From not here to here, it's like a d it's more like a cascade of dominoes. And every day you hear something, it's a that's another domino that's tipping the next domino. Oh yeah, each one f influences the next one and then you sort of Once you tip it off, which has already happened. It just takes a matter of time until the whole domino set runs through and and it's all it's all it's all Yeah, and I I'm seeing institutions using this weakness And not being frightened by it.

So like look, this is a fantastic opportunity, I need to use this, I get it, it's a volatile space. They they understand. The people who are trying to put capital work understand. But once the price starts going up again, then you'll see the stampede. Um You know, if Bitcoin's a Sixty five thousand or seventy thousand.

Um Then people say okay. We've had a year long correction. It's now going up. Next phase is gonna go to one hundred fifty thousand. Right. And they'll be in.

And they'll be in and there'll be a mad panic. 'Cause they've all been doing the work over the last year and a half. So they'll be like we've gotta get in now, gotta get in now'cause if they don't They miss the outperformance of their peers who've got it.

And what do you do with your do you uh like let put it into DeFi or you're earning interest or you yield for you you put it in a and it you lock it away, you don't touch it. Do you remember that story of the house in Spain? Once you win something. You don't let somebody else take it away from you.

It's as simple as that. Because if I was staking I get What? Five percent yield or if I'm really clever and I'm mess around in deep defy, I'm getting like a fifteen percent yield.

And then I get rugged. Or something goes wrong, or it's on an exchange that gets hacked. I just That's not the risk I want to take. It's not worth it if my expected future return is

Yeah. Ten eggs. Why take Why get a five percent yield? It's nonsensical.

So I just don't do it. Uh, you know, that's that's not really the the bet to make. What I do is I take a very small percentage and I say, this is my learning budget. Like because I, you know, basically if I had done that With Bitcoin, I would have just sort of sat on my Bitcoin, never touched anything else, and I said, Well, no Actually it was quite useful to start playing in Ethereum fairly early on. And similarly now playing in DeFi or NFTs, you take a learning budget and you say

Look, this isn't the principle, this isn't the one that's gonna make all the money. Um but this is also where I get you know, continue to play the game and understand w how this whole thing unfolds. Yeah, and I've

I've never been interested in yield. Even in financial markets, all the yield stuff is boring to me. I'm I'm a Mm-hmm. I'm a guy who likes the capital game route. Um and different people, right? There's a whole bunch of people who love yield, ca it's called carry in financial markets. They want to get carry And others want to go for performance.

And they're two different equations and the carry guys do really, really well until they blow up. And the The guys like me tend to do mediocre, mediocre and then make huge Things. They're just different ways of skinning the cat. Right. So I spent my time because we don't have enough

mental ability to focus on all the things in the space. So I started going down a different rabbit hole. I saw NFTs, I understood it. Mainly. Not all of it.

Understood that. Yeah with the But the m the macro view of what these things are and how big this is I wasn't really that interested in these communities.

Uh give the give the uh here's my understanding of N FTs'cause I think like, you know, the The third most Google. question is like, what is an N F D? So so you know, even people who Like hear about it, maybe even own a couple, but they don't have a great frame. Um and I think you're very good at framing things. And so give uh give us your current frame of NFTs.

So Ethereum. Introduced a piece of magic. In a smart contract. A smart contract.

Attached to a blockchain. Means that Any contract in existence can now be a Attached to a blockchain.

Algorithm or a calculation to be made automatically and verified on the chain. So that could be your insurance contract for your house. It could be any of the contracts. I mean, if you look around you, almost everything that we have in life is a contract. Mm-hmm. Whether it's a spoken contract or written.

Me appearing on this together with you. is a form of contract, right? So all of these things are contractual relationships that are everywhere. What this was saying is we can record all of them and verify all of them. Okay, so that's a really big concept beyond which most people understand. And you can understand that okay, if that's the case, then A house can government.

Blockchain, yes. 'Cause the deeds and then you don't need a notary and then you don't need lawyers, and there's all of this stuff. Most legal stuff can actually go on this. And then the Breakthrough is that

Okay, we've got another thing that's going on in digital world. Which needs solving. So this contract thing is a big deal. We don't even know what this means yet, right? When we talk in ten years' time, we'll go, Oh my God, we don't even see that coming. Right. So that's all happening. And defies that, the contractual obligations.

Between borrowers and lenders. It's all happening on chain. But what the c what the But The average person is seeing is a different breakthrough that came out of this whole concept. Is

In digital world Everything that gets digitised. goes to zero in value. Or cost. Everything.

Right, the price of data, the price of Everything is zero. Over time. So that's a big problem. If you're including in an increasingly digital world.

So how do you cement digital value is you have to introduce a system of scarcity. And an NFT allows a digital asset to have scarcity. Okay. Breakthrough.

Now it could have come from the music industry, it could have come from a number of different places. It ended up being the art market. Mm okay. And where you can say This stuff that

Basically worthless online. I mean Getty had bought a bunch of image rights, but to police it is really bloody hard as well. So okay, now We can uh create a one of one of value or a

Number. And do that. That becomes the value of an NFT. The next part of an NFT That you say, Okay, well if we give a bunch of people these

We can now identify a community. And then these people can be sh like minded communities'cause they coalesce around an idea, which is this piece of art and this community. Which is board ape yacht club. Or crypto punks. So that becomes in incredibly valuable membership to a club.

And it's your identification. It's showing your Rolex. And you know, it's all of that sh stupid identifying tribal stuff that humans do endlessly and always have and always will. So that's going on and it allows us Don't forget the internet. Towns, villages, families, which is our social structure.

And thrown us into a big shouting room from people all around the world with different views, right? It's quite exhausting. And we all wanted A place. And what this is giving us.

Yeah. These little digital communities. Sovereign states, villages, towns, cities. Where we can now operate with

civically minded people. Within that and these tokens are the identifiers. Social tokens are the big thing. They're they're not comp They've only just started. That's much bigger, I think, than even NFTs are. But let's start with this,'cause this is a way of coalescing humans. 'Cause humans l like these kind of identification, system of shared values, that kind of stuff.

So NFTs are a lot of things. That's why they're so big. And Again, that's just scratching the surface of what this is. It's your it can also and will also be your digital identity online. Right.

You said something about music and I saw you tweeting about music and kind of the future of music royalties or like how anybody can become an A and R, you know, uh person now. Describe what you kind of what what you're thinking there. Cause I think that'll be fascinating to a lot of people because music is one of the music like art is a great entry point for a lot of people, whereas, you know Macro investing is Deeper in.

Correct. So what is the world's most vibrant communities? It's sports. And it's Culture. That's fashion.

Brands. Fashion brands more than any others. Um It's music. It's art.

These things, right? Culture. The big unlock here Is if you can tokenize communities Which is now the network owner is the same as the network user. Remember that Facebook example? Right.

So now we've got Pop star. And token holder. They're all now joined in the same network. So now every incentivised to grow the value of that network.

You've now made Culture and investment. This was not possible. You could take a cultural marker like an Adidas sneaker. But you weren't making money from address. You had to buy the shares.

And there was no connection between the consumers. There was no network of Adidas users. Now You're about to create networks amongst these people. So what is the value of L VMH, the fashion Company.

All of it's kinda mega brands that people are passionate about that are status symbols that humans like We've just talked about love these things. So the same with music, right? We're all tribal in music. We love different music, we like different bands. So to be part of that network I could now be a

sixteen year old kid and never have to have a job because I happen to Get involved in the right and good at Finding the next pop star. But if I buy their social tokens. Mm-hmm.

Or I invest in their song IP on NFTs. Right? I'm in business. So what this is creating is a system I think is Universal basic equity.

Where culture is the investment. They're not living in your and I world where they're building businesses. And having to sell them and go through the entrepreneur's miserable journey. Um they don't have to do that. They do a different way.

Which is By using their human instincts about the communities they want to be part of and which networks they're going to thrive. And music. is so powerful because it's human emotion.

Um and people and it's It's a place in time. I I remember um Um Huge music fan. I identify music by the same thing.

It's year, what I was doing, what it smelt like, what I heard, who I was hanging out with. I mean everything, right? is one of those anchoring things. So Just the ability for musicians to now sell directly and have a direct relationship with their fans via social tokens. And N F T.

is literally a game changer. I mean there is no way on earth Snoop Dogg would have been able to sell Something. In small numbers. And make fifty million dollars.

It's just not that big a star. Because record labels. Um Because eighty percent of all the economics of selling music gets taken by middlemen.

So yeah, he'd have to Sell a huge sum to do that. Or he'd have to go on tour. And to make fifty million dollars? That's a big exhausting tour, you know, he's no spring chicken anymore. These things are you know it it the music industry economics got destroyed by middlemen.

And it made the artist have to work harder. take more risk with capital, which is like I have to go on a massive tour, I have to rent arenas and take these trucks. This changes. All of that dynamic. And the metaverse changed it one stage further. Yeah, like the artist had to create uh scarcity.

uh which was basically come to my concert. There's only X tickets and that's how you can see me And then they also created status, which was take photos of yourself at this concert and post that online, and that's a big part of the value that you're gonna get. out of uh out of coming to this thing. And then now we have a digital version of that, which is and and so when all these people spoke to each other, the fans They'd have to go on a Facebook group and Facebook monetizes them.

Right. Right, and if they want to go on tour, they need to go on Facebook and Google and pay everybody. But when you've got Millions of token holders. You've sold out fifty percent of your tall, you've de risked everything.

In minutes. It's just it's It it stops you having to use middlemen all the time. And uh You talked about two different things. There's like the sort of like almost like the

Thousand True Fans, uh, you know, concept where basically an artist can drop something that's rare and exclusive or access to them or their commu their c fan club. And the it gives the whales. You know, something to go buy that they would you know, that they're they're actually willing to buy for more than just a t shirt. Uh now you give them something worth buying. And so that's that's one thing that you could do with it. But the other one is what you're talking about, buying A stream a ro uh

a a part of the royalty, right? A part of the royalty stream. And so that's where You know. I remember I don't know I I remember finding Macklemore the the artist when he had like, you know Whatever, t two thousand fans.

And I was like, this guy's great. And like if I had actually Being able to bet? That this guy's great and therefore be a part of his community. He views me as a backer and true believer. And I did. I remember I kinda did a Kickstarter with him or whatever. He he pre sold his album and I just Gave him, you know, thirty bucks because yeah, go use this to help make your album. Pay for some studio time.

But he didn't know me, I didn't have a relationship and I had nothing to show for being right. And um and so now in this in a world like this where The six year old kid can say, I think these guys are gonna be great. their price is cheap right now and I could buy, you know, some of their future Um

But But there's even more magic. Because that sixteen year old kid 'Cause he's now financially incentivised to grow the network and make that song a success. It's gonna make sense. Yeah, exactly. Right. And if you multiply that by all of the

Token holders of th those IP rights. They're all marketing free for you. Because they get paid in the upside. It's genius. I mean, think about it like uh

You know, if you doubt what you just said, just think about you know who who's Bitcoin's CMO. Who's the chief marketing officer there? H what's their ad budget and then how much Publicity do they get? Who's their PR person? How much publicity do they get? How much chatter, how much you know, the ticker that's sitting on CNBC all day showing the Bitcoin price, right? Like all of this happened because you had a network of people incentivized to go shout to the world how great this thing is. Um, you know, and and people hate that about crypto. Oh, there's just people shilling their thing. Yes.

And that does get annoying and you know, you have to filter, you know, signal from noise. But at the same time you have to appreciate what that does. It turns every every believer into a Every society Is the same. So if we think of everything as the same.

So let's assume Bitcoin is a social token, Ethereum's a social token. Let's assume the US dollar's a social token and let's assume That um Religion. Is a

Social status. Token essentially. So Everybody goes the same way to increase the value of that thing. So the US is like we've got military might and we're the greatest nation, this is the free place and everybody can become a president, right? That's their narrative. Right, every country has a different narrative to drive its value system for its network because they all require incoming capital to support the network, including the church.

Which couldn't have survived without incoming capital. So they get all these people out to go and tell the word of God. They then spread The the dish around, take money in, it builds the church, it grows the network, they're all the same. That's humans. The the book Sapiens kinda goes through this a lot about How

Humans need to self organise. Yes. I uh well said. I think that's a that's a perfect zoom out. Uh we can kind of even even pause or stop there. So uh Rao, where should where should people f so follow you on Twitter, you're Raoul GMI. Uh you also have real vision and people should go sign up for that. I've set up an entire free crypto

Um Channel. Which is realvision crypto dot com. It's all the great and the good of the entire industry. Everybody every week I interview like who I think are the people I really want to pick the brains of, and I go down all these journeys of social tokens and music and macro and all of this stuff. So there's so much there and it's free. Realvisioncrypto.com. Awesome. All right. Thank you for coming on. I appreciate it.

I really enjoyed it, thank you.

What you see above is a preview of the first minutes. One unlock costs 3 credits and covers this episode forever: full segment and word-level timestamps on this page, plus .txt, .srt, .vtt and word-level JSON downloads, as many times as you like.