← The Peter McCormack Show
The Peter McCormack Show
Dan Tapiero on Why Bitcoin and Gold Are Both Important - WBD160
01:05:49
Location: Skype Date: Thursday, 17th October Project: Gold Bullion International Role: Co-Founder Bitcoin’s design allows you holders to claim monetary sovereignty, taking money and power away from banks and the legacy financial system. So, why do...
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- [00:01]
Peter McCormack
Welcome to the what Bitcoin did podcast. Hello there from a very noisy New York City. How are you all? I've just got into the city this morning. I took the red eye from San Francisco after interviewing Nick Szabo, which was pretty amazing. Can't wait to get that out. There's been some great feedback already. I think people are pretty excited about this interview. Anyway, welcome to the what Bitcoin did podcast, which is brought to you by the mighty Kraken, the very best place to buy and sell bitcoin. I'm your host, Peter McCormack, and today I've got an interview with Dan Tapiro discussing why both gold and bitcoin are important. But before that, I do have a message from my amazing show sponsors. And don't forget to give them a listen. It's because of these I get to fly to places like San Francisco and interview people like Nick Szabo. So give them a listen, give them a shout out, check them out. So, firstly, today's show is brought to you by BlockFi. And as the month comes to a close, like every month, I get pretty excited to find out what my interest is looking like with my interest account. I've had the account now for nearly six months. I've made a nice, tidy bit of Bitcoin on the side. I know it's not for everyone, but, you know, I really like it. And they've added so many cool things to the product recently. They've dropped minimum deposits, they've removed the early withdrawal penalty and you can now choose to receive your interest in the currency of your Choice. So with BlockFi, you can earn interest on your Bitcoin ETH and G USD. And if you are interested in finding out, I always say do your own research, then head over to blockfi.com which is B L O-C-K-F I dot com. Also, today's show is brought to you by the very amazing and mighty mighty Kraken. Not just sponsoring what bitcoin did, also sponsoring my other show, Defiant. So thank you, Kraken. They are the most trusted place to buy and sell bitcoin. Are you using Kraken? Yeah, if not? Come on, why not? They have the best security in the industry and for you traders out there, they've got the most comprehensive set of tools available. They've got kraken.com, the best place to buy, sell and trade digital currencies, They've got margin trading with up to 5 leverage, they've got futures, they've got indices They've got the Kraken OTC desk for large trades. They've got Cryptowatch where you can trade on multiple exchanges from a single platform. And for you advanced traders out there, they've got the best account management service in the business. There is no better place to trade. So join me in supporting Kraken and head over to Kraken.com which is K-R-A K-E-N.com okay, so onto the show today and it's with Dan Tapiro and he's come up as a request a few times recently. A few people have said, can you get Dan on? So yes, I checked him out. Absolute pleasure to get him on the show. I could have probably talked to Dan for hours and hopefully we're going to do this again at some point. I think we both agreed it was a great show. But Dan is a global macro investor and he is a co founder of the Gold Bullion International and he's a relatively new bitcoin bull. And this interview is massive. Dan is from the world of traditional finance and institutional investors. And in bitcoin, a question that is often thrown around is when are the institutions come in? With the recent launch of Bakkt futures along with LedgerX and CME, institutions now have real on ramps and they could be getting exposure to bitcoin. So why aren't they? Why aren't they coming in in the numbers that we thought or maybe hoped? Is it that the technical barrier is too high an entry? Is it that people can't get their head around physical money like bitcoin? Is there not enough educational content out there? Or as Dan suggests, will this pass? Many of the older institutional investors buy and facilitate a huge wealth redistribution. Personally, I hope it's the latter. I see bitcoin as money for the people. So a bit more on Dan. He first heard about Bitcoin in 2013 while working as a macro investor and he initially wrote it off. He thought the market was too illiquid, had too small a market cap and it was just a plaything for VCs. But after educating himself on bitcoin and hearing Raoul Pal and Vijay Boyer Patty present the bullish case of bitcoin, his opinion started to change. So I got down on the show to find out what it was about bitcoin that changed his mind. And as well as discussing gold, we also talk about Twitter, Trump influencing markets and what Dan thinks about the future of bitcoin. So I hope you enjoy the show. Just a couple of notes. I'm now here in New York, I'm here for the Human Rights Foundation Freedom Forum. I'm going to be here until Friday when I head back to the uk. It's been another great trip and included the launch of Defiance, which is pretty amazing. Next month I'm going to be back in the States. I'm also probably going to be heading to Hawaii. I've also got to go to New Zealand and maybe even Africa for my first time. So it's going to be busy, busy. Just going to keep grinding, keep hustling. If you have any questions, do reach out to me. My email address is. Hello or what Bitcoin did. Dan, how you doing?
- [04:26]
Dan Tapiro
Doing well.
- [04:27]
Peter McCormack
Thanks for coming on the show. Your name's come up a lot recently. I've. I think I've been asked about five times now. People have said you got to get down on the show. He used to be a bitcoin hater. Now, now he's a fan. You got to get him on. You've got to talk to him about why, why he's changed, why he's converted.
- [04:41]
Dan Tapiro
So I don't know if I was a hater, but. Okay.
- [04:45]
Peter McCormack
A non believer.
- [04:46]
Dan Tapiro
Okay, I'll give you that a little bit.
- [04:49]
Peter McCormack
All right, well, let's do the background first because you're what people would call a gold bug, right?
- [04:54]
Dan Tapiro
Well, I don't know if I would say a gold bug just because gold bugs are super ideological, only have one view and opinion and are not really open to other, other thoughts. I've been a global macro portfolio manager and I've been in the hedge fund business for 25 years and so have looked at all sorts of different assets at different periods. And I'm really looking for what I call almost like a step, function change type of opportunity. And so I've been involved with gold on and off since the early 90s and then in 08 started my own physical gold company with a partner called GBI Gold Bullion International, which grew from, you know, I guess this is why people might think gold bug. But it grew from basically a presentation, a thought I had in my head to a company today that has done over a million trades, has over 300,000 clients and we make it easy for people to buy and store physical gold.
- [06:04]
Peter McCormack
Okay.
- [06:05]
Dan Tapiro
Yeah. I'm a businessman who's interested in the gold market.
- [06:10]
Peter McCormack
Right. So you have an onboarding and custody service. That's the way I would think of it in the world of bitcoin. You allow people to buy and you custody it for them.
- [06:19]
Dan Tapiro
Yeah, I think that's right. We have seven different vaults where we lease space around the world. And you might be thinking, I'm giving you a little more detail here than you need, but I'll.
- [06:30]
Peter McCormack
No, I want it. This is good.
- [06:32]
Dan Tapiro
So, you know, we have New York and Salt Lake and Zurich and London. And in 08, I was looking around for a place I wanted to own my own gold outside of the banking system. I had traditionally traded a lot with the big counterparties. And I called up J.P. morgan and UBS, they're the two really large players. And I said I wanted to do a few million dollars. And they told me at the time that the minimums were 10 and 20 million and 20 million was more than I wanted to allocate. So I started looking around and there was really nowhere online. There was no platform that I thought was trusted that wasn't based in some weird place. And they said, why are your money here? And maybe you have your gold there. I said to an ex partner that I'd started another business with, hey, what do you think about this idea? Because I'd really like to own it for myself in a secure way in a jurisdiction outside of the U.S. anyway, two years later, it took us two years to build that technology. It's a platform and what we do is we plug into other people's distribution systems. So for instance, our largest client and our first client was Merrill Lynch Wealth Management. And what we did was we built a system that plugs into theirs so that for instance, a financial advisor can, you know who's sitting there in Ohio. His client calls him up and he says, hey, I want a kilo bar stored in Singapore. And the Merrill advisor calls up his screen, pushes a button and then that's us. And the next day that guy in Ohio has got his bar in Singapore. And so it's like I wasn't really. Well, I wasn't aware of Bitcoin in 08. But some of the things that motivated my interest in having physical gold the way I wanted it outside of the system, 100% insured, secured, you know, these are similar things that, I mean, they're characteristics of Bitcoin in a way, right? Why people want to have Bitcoin?
- [08:57]
Peter McCormack
Well, yeah, and also a lot of the bitcoiners see, sometimes see it as a bitcoin versus gold argument. And always trying to say why bitcoin is better than gold. I actually see it slightly differently. I just see that there are two very complementary assets that offer a similar kind of value, but with just different properties.
- [09:15]
Dan Tapiro
I think that's right. And in a way, a super intelligent and concise description. I mean, in theory, we could stop the interview right here. That's exactly right. It's funny how resistant people are to just that very simple concept. I think that's right. I mean, each has their own properties. I think I've said somewhere that, well, you know, bitcoin is a very big thing, you know, and I think one of the things that bitcoin is is, you know, that comparison to gold. But I think just to be even handed and to follow up with that comment you just made, you know, there are things that physical gold, there are characteristics of it that bitcoin can't sort of replicate. And you know, as an example, you know, physical gold can be, if you want it to be truly off the grid with no record, no transaction record anywhere, you can also pick it up. So I could buy some physical gold, have it sent to my apartment in London, and then I can go pick it up and walk it around the street to another bank. And basically it's to another bank or vault or wherever. And, you know, with bitcoin, what we're seeing now, I mean, we just saw how it was helpful in tracking that child pornography ring. You know, this concept I keep going on about, this truth machine. You know, bitcoin really is a bulletproof ledger that tracks everything. Physical gold is mostly trackable, but there are people out there who don't want it tracked. It doesn't have to be. So that's one thing. Another thing is tax implications. Physical gold has different tax implications in all the different jurisdictions. And even within products in the United States, different products have different tax liabilities associated with it. So I don't want to say there are a lot of loopholes in that sense, but there are. And I'll just give you one example. You said you're in London often and very few people know this, but are you British citizen?
- [11:40]
Peter McCormack
I am British citizen.
- [11:41]
Dan Tapiro
So you probably didn't know this. Now, if you're a UK citizen, you can buy the UK sovereign gold coins and they are free from tax forever. No capital gains, no income. There's no wealth tax on it. It's considered the money of the realm, like dating back to, I think, 1700. In 1700, they passed some law. I'm not sure about why it's that way, but. But gbi, we actually work with the UK Mint quite closely. I thought this was incredible when I first heard about this. I mean, why wouldn't you have? I understand being a bitcoin Hodler. And I think, yes, there's multiples, more of price appreciation, but at some point you're going to pay tax if you sell any of it. Here you are with your, you know, UK sovereigns. Zero. Yeah, right. And that's incredible, don't you think?
- [12:47]
Peter McCormack
Well, I do, but I mean, my, my bet on Bitcoin is that it will appreciate in value over the next 10 years before I sell any at a much higher rate, say, than gold. So, you know, whilst I'll have to pay tax, that's my bet. But I don't have anything against gold. And like, I perfectly understand why people have it and they store it and why they, you know, people have like a basket of assets, especially if they're, they're managing money just for me. You know, I'm not a wealthy person. So, you know, I've gone all in on the bitcoin, but, but I'm interested in the gold. Dan, I've got some questions with you. Okay, so you custody it. So say I want a kilo of gold from you, Dan, and you say you custody it for me. Do you then just go onto the market and buy it and have to actually then physically have it delivered to your, say, warehouse or vault?
- [13:33]
Dan Tapiro
You know, so you're talking about the specific logistics and I guess it depends. So we lease space from Brinks, and so we're a large vaulter, so we get very cheap rates compared to what an individual will get for a smaller amount. So in a sense we're an aggregating business. But it depends if you're buying your kilo in New York, maybe the same day we have someone selling it, so we just move it from them to you. The ownership. If it's a small vault, we're not really in any small vault. But if you were at a small vault somewhere and they didn't have the bar there, then, yeah, we would have it directly sent from one of the vaults where we do have the gold. This is a very flexible product. I mean, you can have it delivered to your house. We deliver to over 100 countries. Think about that. And then you could say three days later, oh, I want to put it back into a vault in London. And you know, I had it in New York, I took delivery, I looked at it, I put it back. I prefer to have it in London. So there's lots of flexibility. And we have 50 different products as, you know, different coins, bars, kilo bars, smaller little bits. Some people buy one coin. So the logistics just depend on the specifics of what you're doing.
- [14:55]
Peter McCormack
No, it's really interesting. And say, what are, what are the risks with this? So, you know, one of the things bitcoiners will say is, well, my bitcoin can never be confiscated. My private keys do. Would people ever worry about that? Is that something anyone should ever be worried about?
- [15:11]
Dan Tapiro
It's 100% insured.
- [15:12]
Peter McCormack
Great.
- [15:13]
Dan Tapiro
So if your gold ever was stolen or confiscated, it's 100% insured by lords of London. So you have no, especially if you're a smaller holder, you have no risk. I would think maybe if a government came in and took your gold because you had 4 or 500 million, maybe that might be more difficult. You know, that would have to come under a separate insurance agreement, but for, you know, millions, tens of millions. And believe it or not, a Brink's vault has. There's never been any loss. It's like they say, bitcoin has never been hacked. It's the same thing. No one has ever lost a single penny having their gold vaulted in a Brinks vault.
- [16:03]
Peter McCormack
All right, so then why are you going to be offering bitcoin alongside gold now? Are you going to offer a buying custody service for that? Because that would be, what a cool business, right, if you were offering both gold and bitcoin.
- [16:15]
Dan Tapiro
Right. So actually we sort of do. And this is a funny story and maybe why I am one of the few gold guys who was exposed to bitcoin. We had a young guy who worked with us very early on who ended up being president of the company for a while. Gbi, no longer with us. Who, of course a younger guy at the time, he was probably 26, 27. And in 2013, 14, we actually had a digital gold product. We then spent. There was no demand, so the business went nowhere. So that was. We lost money on that, on that business line. We then integrated with a company called Bit reserve. This is 2014, which turned into Uphold.
- [17:06]
Peter McCormack
Ah, yeah, I know, Uphold, right.
- [17:08]
Dan Tapiro
And so if you go to Uphold, you can still. Today we were the first place that you could buy or sell Ripple or Bitcoin to buy or sell physical gold, silver, platinum, palladium. And it took us a year to integrate with them, but we did. So if you go to Uphold today, you could sell Ripple and buy palladium. And that's the functionality that we've. We gave them, we built for them almost five, six years ago. But unfortunately, that business never really took off. And I don't know that I can explain it. It still is there today. It's not a Big revenue driver for us. What we had in the very beginning, you'd find this interesting is there were very small bits of money coming out of China and they were buying, my guess is they were buying Ripple and then they were selling their Ripple to buy physical gold and then we would have it stored outside of China somewhere. Right. So it was a way for them at the time. But again, I say this freely, just because it's never turned into a big business. So, you know, the Chinese have nothing to, you know, I would have hoped it would have been a conduit for Chinese money to leave the country, to be honest, but it never turned into that. So, you know, we have it. Maybe we as a firm looking forward over the next three, four years, really need to think about building out that business. I'll say one last thing. We did six months ago start a business with Equity Trust, which is an IRA firm. You know, like in the US it's retirement accounts. You can set up an independent retirement account on this with this company. And they through, we built this for them, we partnered with them building this. You can buy I think any one of eight cryptocurrencies for your ira, which means that they're tax free. And that business actually has taken off in the last six months. So I mean it's mostly bitcoin, but then we also offer six, seven, eight other ones and that's in partnership with digital currency group, Barry Silbert's group. But we built the tech for all of that and that's been. There aren't too many places in the US where you can buy bitcoin in your Iraq at a reasonable price. There are a few other people out there who are really, really gouging people and I feel bad for them. I wish they knew about our product because they would be saving multiple percentage points. So we are sort of involved, but not as much as maybe we will be in the future.
- [20:01]
Peter McCormack
Okay, so one thing that would be interesting for me to understand is like as I mentioned before, I was told that you were originally like a non believer in bitcoin and you've kind of changed your view on. Can you talk to me about that? Can you tell me when you first heard about bitcoin, what were your doubts about and what changed? Because I think that's going to be a really interesting thing for a lot of people to hear.
- [20:23]
Dan Tapiro
Yeah. So the thing is this is that being in the global macro money management world, I was aware of bitcoin earlier. I remember it was on the front page of the FT at one point when it hit, I think it was 30, and then collapsed back down. I forgot what year that was. But my familiarity with it increased when GBI got involved. As I said, we integrated with bit Reserve in 2014, and we were actually making little bits of money from, you know, the trading in bitcoin and Ripple. So I was aware of it. I thought, yeah, that's great, that's cool, you know. But the problem for me early and really until recently is just the market cap was just too small. As a macro guy, I traded in markets that trade trillions of dollars a day. The currency markets are multi trillion dollars. The bond markets are billions, sometimes trillions. Even the gold market, I remember one day in 2011, I traded over a trillion dollars of gold and traded in maybe a day or two. I've always positioned in these large assets playing for big moves and big trend moves in large asset classes. So bitcoin was more like a small dc, I would almost say plaything. It was like a tech stock trading at $0.30. And so I was never involved in stocks. I don't trade stocks. And so I saw it, but it wasn't real to me. 5 billion. Even when it hit 10, $15 billion market cap, it was just still too small. So I'm like, yeah, that's cool, but it's not macro. And I've got all these other acid classes I'm looking at. But what happened was when it went up to 18, 19,000. Well, let me just say before that, being very involved with gmi, which is Raoul Pal's group, I think I was one of the original subscribers to his monthly newsletter back in the early 2000s, and he even covered me when he was at Goldman Sachs. So I've known him for over 20 years. He had a session down in the Caymans. I think maybe there were 10 or 15 guys there. There was one year, I think it was 2013, he presented the bullish case for bitcoin, and so did a bunch of other guys. And so, you know, and those guys are probably pretty well known today in the bitcoin space.
- [23:20]
Peter McCormack
Yeah, that's Vijay Boyapati did the bullish case for bitcoin. He's been on my show and Raoul's been on actually as well.
- [23:27]
Dan Tapiro
Yeah, yeah. And they were early and very smart about it. And as I said, there were probably five or six other guys as well there still. I had this problem that it wasn't really big enough. And in fact, Raul, he had bought it, as I said, around 300. He sold it around 2,000, 3,000 in the run up, went up to 20. And again, it's been on my radar. I looked at it every day. And then earlier this year, really in January, I saw this thing that it was down 85% from the high. If you're a macro guy and you've looked at markets, different types of markets, your own career, you know that when a market goes down 85, 90%, either it's a total bankruptcy or a fraud or a zero and will be a zero, or it's really the buying opportunity. And like, you saw this with like thai banks in 1998 after they evaluate the peg break in 97. You know, there are plenty of examples of it. And so I thought, well, bitcoin's not a fraud. So I'm going to start buying. And I started buying it. 4,000, 5,000, 6,000, I bought all the way up. And the more you buy and the more of your personal net worth you put into something, the more interested you become in it. What happened was I just started spending all my time reading, digging into bitcoin, and I was just blown away because I didn't realize that it was all the things that it is. You know, I mean, I had looked at the white paper years before, but I don't have any background in computer science or cryptography. I don't know how to code. I wasn't even good at math in high school. Okay? So it was very far. It was a very far road. I mean, it was a long stretch for me to understand it. So I just thought, oh, you know, I don't get this. This is for the VC tech geniuses out in Silicon Valley. So I gave up. And I think a lot of people give up. And I bought some of those early books that came out in 14 and 15, and they made no sense to me at all. So, you know, but I didn't give up this time, earlier this year, because again, as I said, I had this position, which I still have. But the things that were available to read were helpful. And I read Safedin Ammous book that was helpful. Antonopoulos Volume two was very helpful. And, you know, after the interview I did with real vision, I was introduced to the world of Twitter, which I had never been on Twitter. I never tweeted, you know, until August or September, basically of this year. And so there are, I mean, and that is an incredible community of, I mean, there are some geniuses on that, you know, in that world. I mean, there are also some goofballs. But to be able to Read comments from Adam back, or even some of these younger guys who are unbelievably knowledgeable, that helped the process of learning. I think one of Bitcoin's problems, people always say, well, what's a barrier to adoption? And I said this before, is I think when you're outside of Bitcoin, it's extremely opaque to get into it. Well, the language is hard to learn. It's like you're learning a new language. The concepts are hard, and there aren't that many people who are explaining it within a framework or context. That makes it easy for, you know, what are called no coiners.
- [27:47]
Peter McCormack
Dan, Dan, listen, this is. This is why I do my show the way I do it. I often get called on like a people like, oh, Pete, you're an idiot. Because I, you know, ask simple questions and try and get people to explain things. But I think people on the inside, they don't actually realize how, like, deep the rabbit hole is, how much knowledge there is. Also, people can be really hard on you if you get something wrong. So, for example, you might get sucked into looking at altcoins for valid reasons. I totally understand why people do. You might want to ask questions and then people will just go crazy at you. And it's just like, well, come on, take a step back. Let's help people here.
- [28:22]
Dan Tapiro
Yeah. And I don't particularly mind that because I've always been one who believed in strong debate, and I was a history major and did a master's in history in school. And that whole. And then, of course, being an investor, part of the fun for me is having an idea and then going back and forth in a real way with people who are, you know, who are the best at what they do and can provide insight and let me know where I'm wrong or I'm right. I don't know. If you look at some of the places where I've worked and things I've done, you know, it's just. One needs a thick skin to survive, number one. But it's more that I like. I'm interested in the heated debate. So just as an example, I mean, maybe about a month or two ago before the Hedera Hashgraph release, I asked somebody almost very simply on a weekend on Twitter. So can someone tell me what they think the pros and cons are of Hedera Hashgraph versus Bitcoin? What?
- [29:37]
Peter McCormack
What did you do, Dad?
- [29:39]
Dan Tapiro
I know, but let me tell you something. It was one of the interesting back and forth because all of a sudden this guy Eric on Twitter, this guy is some sort of genius as well. And he's probably like 28 or 29 and says he lives in Sweden or something.
- [29:59]
Peter McCormack
Eric Wall? Yeah, yeah, he's a great guy.
- [30:01]
Dan Tapiro
Some missive that actually, you know, was incredible. And then you had the pro Hedera people come out against him and they were debating in the thread of my question. And so it's like where this is also, you know, the power of Twitter is something that's also blown me away. I'm a 51 year old guy, not naturally taken to all this stuff. But you know, part of like the decentralized power of Twitter in a way is also, you know, similar to the decentralized power of bitcoin in some way. I mean, the decentralized aspect. And so to have this debate and then Eric released something on medium and then the Hedera people released their, you know, response to that. So you can't get that anywhere in the world. And I guess my point is that, you know, five, six years ago, I don't, maybe that did exist. But I feel like the bitcoin Twitter is filled with enough people at all the different levels and I feel like it is a, it is a nice community. I feel like, I know people talk about this toxic this and that and again, there is this ethereum bitcoin thing. But for the most part, I mean, I think it's an, it's, it's a really nice community because people, you know, like, you want to help people learn and understand and not just ask like, okay, well, how is bitcoin going to be scalable? Like, that's the dumbest question. Some people, you know, people ask that over and over and over. But when you get to that place in the rabbit hole, you don't ask that question anymore because you understand what bitcoin is, which is, it's much bigger than all that.
- [31:59]
Peter McCormack
Yeah, absolutely. And you know, Eric's a great guy. I mean, I was out in Oslo with Eric early in the year. We went to the Human Rights Freedom Forum. We went dancing together. He's, he's a hell of a dancer as well. A lot of people don't know that. And he's going to be coming on the show very soon. But it is great. I love how you can go online and you can have, you can get into a debate and Eric can be there and then you can have safedinamouth jump in and then you, you could jump in and then maybe Raoul jump in. You've got this kind of global group of People all debating issues to do with bitcoin. I think it's an amazing time to be alive, to be able to do that. But I do find it interesting. I'll tell you what else I find interesting, Dan, was where you said you initially dismissed it not because of any of the fundamentals, you just dismissed it because of the market cap size. And you're a trader, essentially. So that was very interesting because I made the assumption you dismissed it as magic. Internet money had no meaning. So what is it about the properties that, when you were learning about bitcoin, did you really come to appreciate? What was it that kind of grabbed you?
- [33:01]
Dan Tapiro
Yeah, I would also say one of the other things, why I knew there was something there, was that some of the very best people in my global macro space who are around my age, maybe a little older, but around my age, moved into the space permanently. Dan Moorhead, he was at Tiger Management after me, and I've known Dan for 20 years. Mike Novogratz Fortress was a global macro fund. He now has Galaxy. John Burbank is also now very involved. So they were very smart younger guys who I respected who had moved into the space. So it also made it easy for me not to say, oh, it's magic Internet money, because these guys, you know, they're real, you know, smart, good investors. So, anyway, I'm sorry, I just wanted to, you know, it was maybe made a little easier for me because I saw my peers who actually had done all the hard work fall into it. And you said, so what were the properties?
- [34:08]
Peter McCormack
Yeah, also. Yeah, we're going to come back to that. I've got a very short question. You might be able to clear something up for me relating to Dan Moorhead. Do you know if he was into the 90s heavy metal band Pantera and that's why he called the fun Pantera? Or is it a coincidence?
- [34:23]
Dan Tapiro
I don't know. I really. I really don't know, actually. But I'm going to see him in a few days. I can ask him.
- [34:31]
Peter McCormack
Can you ask him to come on my show? I can't get hold of him. I don't think he knows who I am, but I think he should. Come on, I want to talk about.
- [34:36]
Dan Tapiro
He's hard for me to get a hold of these days, so I can't.
- [34:40]
Peter McCormack
Promise anything we'll find out the Pantera thing. But. But, yeah, so what I wanted to know, what is it about the properties of bitcoin that initially kind of made you go, oh, this is. This is something.
- [34:50]
Dan Tapiro
Yeah, Well, I thought When I got to a certain point where I had not realized initially that Bitcoin was really the culmination of 30 years of scientific and cryptographic research. And I have that timeline and I saw this, you know, as a, as a person interested in history and the evolution of things. When I saw that timeline, you know, starting with, you know, early with Serf and Khan and Ralph Merkel and then David Chaum and you know, all of these things, I thought, oh my gosh, this is like, you know, it's an invention, it's a breakthrough. It's like, you know, the, and then the fact that the paper solved the Byzantine General's problem, I, you know, I was just not in that world. I was not aware of these things. So I thought, wow, that it's super legitimate. In fact, it's in. And I had been an academic at school, so it was like in the realm of an academic paper that actually had a real world application that even that it had 1 or 2 billion or 5, 10 billion of market cap, I should have realized back then, but again, I had no idea. I just didn't do the super deep dive. So that for me was the light bulb that like, wow, this is like the invention of electricity. And that immediately sort of sucked me in because I thought everyone who knows less about bitcoin than me, which is basically a lot of people, even though I'm not, you know, by any means even close to some of the experts, but I thought everyone else has no idea about this. And so I'm still way ahead of people generally. And so that got me very excited when I think I have, when I'm really early. I had a farmland business in 0607 that I started. I was very involved in agriculture. It's sort of. I had the same type of epiphany. I thought grain prices were going to double for certain number for whatever reason. And the same thing with Gold in 0506 when I got very focused on gold. So what I'm saying is that that feeling as a macro investor was the same. Wow, this is real. And I'm early and I better figure out what to do right away.
- [37:45]
Peter McCormack
Next up, I talked to Dan more about bitcoin and gold. But before that I do have a message from my amazing sponsors. Okay, so we're starting out today with drop bit and I've been sending stats out. I've done around 4 million. Now I've got another 6 million to go. I'm going to be sending out 10 million SATs in total, unlocking Lightning for people who've got their wallet. And also they've got another cool, interesting update coming soon. I can't believe the rate they're doing these. I can't tell you about it yet, but I'm going to save some of the stats for that. But over the next week I'm going to be doing another 6 million SATs. But have you got it? Have you got. Drop it. Have you checked out their Lightning implementation? And also they are now supporting fetch 32 addresses. I love everything they do. I think their implementation is really, really cool. The UX form moving between Bitcoin and Lightning is one of the best I've seen. And add to that their ability to text and tweet bitcoin to people. It's pretty fucking cool what they're doing. There is a waiting list for Lightning, so do hit me up if on Twitter if you want to get access. I've got some stats for you. Just DM me and if you want to check it out, it's available for the iPhone and Android. Just head over to drop bit app, which is D R O P B I T app. Also. Have you checked out why yet? Have you checked out my buddy Michael Dunworth's business sponsoring the show for nearly a month now? I really, really want to help those guys, help them succeed. So please do go and check out semwire.com whether you're a solo developer or a large team, if you are looking to simplify user onboarding and offer users an easy, fast way to purchase bitcoin, then you've got to talk to Wyre. Since 2013, they have focused on taking care of all the heavy lifting in terms of compliance, payments and liquidity so you can focus on building your core offering. Have you got an idea for the next killer app? You want to crush it or do not let the regulators kill it? To find out more, reach out to wire or create a developer account@sendwire.com which is s e n d w y r e dot com. When you talk to other investors, you know you've got a lot of friends, macro investors and analysts and various people you talk to amongst them. I'm assuming there are some naysayers, some who still, you know, they don't know Bitcoin. They don't believe in it, maybe they don't understand it. What is the kind of like rejections you're getting from people?
- [39:58]
Dan Tapiro
Almost all of them. And I'm talking about very, very successful guys in their endeavors, almost all of them, you know, and that goes from Money managers to people who are very senior in Wall street to, you know, billionaire business people, they all kind of smirk a little bit, you know, and then, and then I say, well, you know what, you're probably not really going to do the work that's required to really understand it. And then they're a little interested because I've goaded them on a little bit. You know, a guy who's very successful doesn't want to be told that there isn't something he can't understand that's related to money or business or making money or, you know, or what the new banking system might look like 10, 15 years from now. Right. But very few, even guys who might, I would say part of that, it's not just their fault, but you need to have the time to put into it. And if you're running a business or several businesses and it's 10, 12 hours a day. I've been independent and investor for many, many years, and I've started two companies from scratch that were based on a macro thought. And I've been involved in probably 30 to 50 different, I would say, significant macro trades in my career over the last 28 years. So, like this whole process, it wasn't that difficult for me to fall into it. Right. Oh my goodness. Light bulb goes off, lock myself away in a room, read 10 books, listen to 100 podcasts, read a thousand articles, and that's basically what happened. And it took months and it wasn't the only thing I did, but it pretty much was. So unfortunately, I think that's still needed. So amongst my peers, last thing I'll say on this is that guys over 60 get zero. And I don't think that any of them will be able to adjust. Even ones that have invested in venture capital firms that are involved in the space, they don't, you know, they very, very few. When I mean zero, it's. I just mean a near zero number. And over 40, I think the number is still very small. Very. And then under 35, and I don't know that many people under 35, but under 35, I think the adoption rate is much easier, much quicker. So what we're talking about is a massive wealth transfer that's going to happen from the old people who don't understand it to the young people who it's second nature for.
- [43:04]
Peter McCormack
So I think that's, that's really interesting, the actual as a wealth redistribution, I think that's a very interesting concept. You know, one of the things I've been trying to get over recently is where people have been talking about, oh, when are the institutions come in, and then getting excited when Bakkt arrives and then getting disappointed when there's little to no volume. I really think bitcoin is very much a movement of people. And I think by the time the institutions will arrive will almost be, you know, we could be years away from that. And so I think we as like a community people should stop focusing and worrying about the institutions. I think it's much more about individuals and how we educate them and get them up to speed quickly. Because, you know, I don't know about you, but I'm like two and a half years in and I'm still learning.
- [43:46]
Dan Tapiro
Yeah, I think that's right to some degree. But, you know, the institutions, as you know, as they're referred to, really are a massive different group, is comprised of many different groups. So as an example, I think that there are probably a lot of successful fund managers that have invested in the venture capital firms in the space who are funding the companies who are in the space. So Coinbase goes out and does a raise in December, and they raise from Tiger, which is a big hedge fund complex. They raise money from. I can't remember who else, but I think maybe Union Square or Andreessen or whoever it was. So the institutions are playing it in that space is my guess. I mean, to some degree, because they don't want to deal with owning the bitcoin. They don't want to figure out how to deal with it. And again, it's still an extremely small number of people and I think it's starting a little bit. And I know this firsthand, but I can't really get into it why. But it's definitely just say it's early in the first inning. So that tells you. But it's in the first inning. It's not. You know, there is a game, people are aware of the game and it's in the first inning. But it's remarkable. Again, I'm not so sure that it's the fault of the older people. You know, after you've had some success in this world and you figure out your way of being successful in the business world, most people are not really looking for a new paradigm. They're not looking for a new way. You have the people who run the Wall street banks and accountant firms, but you have some of the accounting firms are really advanced at least in trying to figure out how to apply blockchain. And I don't like this whole thing because you can't like blockchain and not bitcoin. That whole concept is ridiculous. It's all bitcoin.
- [46:14]
Peter McCormack
Yeah. Are you a maximalist?
- [46:17]
Dan Tapiro
Well, I don't know. No, I don't know if I'm a maximalist. But the invention, the value is the bitcoin solution, the network, the framework and the store of value and everything else. And look, I have nothing against Ethereum and there are interesting projects that go on. I listened to Laura Shin the other day. She had some woman on who was doing something very funky and integrated with the Ethereum platform that had real world application. And she's saving this woman's business. Saves people in rural areas, you know, $100, you know, off their cable bill because they're sharing, why they're sharing excess WI FI capacity or something like that. I, I'm not very good with that details, but like, I, I know enough to know that there's, that, you know, that's a project that's creating value for somebody. It's not bitcoin. But you know, look, I mean, there's Coke and then there's Pepsi, you know, and there's. And I don't want to say it's like that because I think bitcoin, you know, is the thing.
- [47:31]
Peter McCormack
Yeah, people prefer there's bitcoin and then there's shitcoins.
- [47:34]
Dan Tapiro
You know what, I think that's very bad for the space. Like, I think people should stop that actually, you know, using that terminology. And again, I'm not really big on cursing, especially in public.
- [47:51]
Peter McCormack
Oh man, don't follow me on Twitter then. I curse a lot.
- [47:54]
Dan Tapiro
I'm just not big on it because I just think it's unnecessary. But I think that being demeaning to something kind of like that, it's just, you know, there's a lot of, There are a lot of very smart people, people who are 10 times smarter than me and you, who spend their life working on non bitcoin crypto projects. And so I don't feel comfortable dismissing that type of talent with an epithet.
- [48:27]
Peter McCormack
I think that's.
- [48:28]
Dan Tapiro
And I think that it, you know, there's some goofy parts about this community that also keep people away from it, that make, you know, keep adoption, make adoption more difficult.
- [48:39]
Peter McCormack
Yeah, I think that's fair. I think I agree with you at some extent. I, I'm probably more on the ridiculous side myself sometimes because it's all a bit of fun to me sometimes. But I appreciate your point there.
- [48:49]
Dan Tapiro
Well, there's nothing wrong with a little fun. I'm all for a little fun. Don't get me wrong, but look, I see this whole world from an outsider perspective and I look at the level of talent of the people engaged and it's higher than certainly anything that I've ever seen in finance or in the investment world. Maybe 25 years ago, maybe there was a smaller group and the talent was higher. But I don't think that the people in that business are as high quality as the people in this business, especially under 35. I think the under 35 people who are innovative, creative, who are entrepreneurial, who want to make something new, who want to make money, who want to be engaged in the future, they're not going into a macro hedge fund, they're not going into the investment business to be long bonds or stocks. It's a very uninteresting world with nothing great economic or financial prospects compared to this one. And so I think, and if some of those younger people are involved with projects that aren't bitcoin, they're going to find ways to make things happen. And I think we should be encouraging them, even though, to me, yes, bitcoin is the gold standard.
- [50:30]
Peter McCormack
All right, well, listen, look, before we finish, there is another area I want to touch with you, you macro thinker. It seems to me that at the moment there's a lot of crazy stuff going on. I'm not a financial guy, but I'm reading about negative interest rates, which seem crazy. It seems like China and the US Whilst having a trade war, they're also both trying to stimulate their economies. It feels like everything's going a bit weird, kind of. From your perspective and as an experienced macro guy, what's going on, man?
- [50:56]
Dan Tapiro
Yeah, I hear you on that. I, I think there are different time frames that I think about that I used to think about a macro framework. And so I think about like, okay, let's start with today. I think today, in the last six to 18 months, the world economy has been slowing and I think the data has shown that the problems with the US and China, to just think very simply, the US China Nexus was the growth engine really for the world for 15 years. And now it's fracturing. De facto things can't be as good as they were. There's a change and there's an adjustment and people are trying to figure out what to do. If I have a business and I'm thinking about expanding in Asia, I'm probably not going to expand in China today, whereas five, ten years ago I might have. But look, I don't think this lasts forever either. I just think Today there's uncertainty with that. And Federal Reserve also, I think has made a mistake and raised rates too much. And I think that contributed to some of the problems that we had last year. In December, the markets basically completely collapsed. And it was only in early January when the Federal Reserve basically didn't about face on policy, that the markets also reverse coursed. Since then, you've seen many central banks from across the world ease interest rates. And again, a lot of people, oh, well, this is the traditional financial world. Interest rates, they don't do anything. 17 trillion negative bonds. The economy in Europe is still soft. Yes and no. I think, look, on balance, when the central banks all together get together and say we're going to make liquidity plentiful and we're going to lower rates, that liquidity then goes to place and it goes to markets, it goes to stocks, it goes to gold, it used to go to bonds, in some case, certainly goes to credit. And then that leads another demand cycle. And people say, well, we've exhausted that. We've been doing that for 30 years more. I'm aware of all that. But it's still on balance as an effect, I think that the Fed recently, in the last few months has reversed from what was neutral. They were tightening to neutral and now to actually easing. And hopefully they'll continue to drop rates and make liquidity more plentiful because the data warrants it. The issue is that, and this is the first time I've seen this in my career, is that Trump, if you had to say to me, what's the one thing today that's different than anything you've ever seen? It's just that the political interference in the process of the economic management that's done by the Federal Reserve and probably to some degree the treasury. It's never been, as I would say, impinged upon by a president as we have today. It's really having impact. He watches the stock market and when the market's at a high, he becomes more aggressive with China. And then the market goes back down and down 5, 10%. And then he says, okay, well we're coming close to a deal. And then he'll start attacking the Fed as well. And the Fed's been too tight. They should be easing more. He even said a month or two ago we should have zero or negative rates because the other countries are doing it. The dollar is too strong. We've never had a president, I mean, since I can remember following things, Reagan, Bush, Clinton, Bush, no one ever was on top of the markets like this in almost like a daily fashion. So my guess is that he is going to want the stock market up into the election of November 20th. So I am centering my views on that expectation that he will get the macro policies that he needs. And that means if the Fed doesn't accommodate and continue to ease rates, if the data stays soft, and again, I think it stays soft to neutral, that there's a potential that he really starts to talk down the dollar. And this is some things that non macro, non financial people don't understand, which is that the treasury is responsible for the dollar, not the Fed. And it is perfectly legitimate and legal for the treasury to take any stance that it wants on the dollar. I think the strength of the dollar in the last few years has been a reflection of overly tight Fed policy. So Trump does actually have a real case to make here that the dollar is too strong and that it needs. I mean, you have even official bodies like the IMF and World bank, others that need a structural downshift and step back for a second and just to understand why, I mean, look, 15, 20 years ago, the US was a much larger percentage of world GDP than it is today. The US dollar is still the world's reserve currency, but there are other. But it's not the same percentage of world gdp. So there's an upward bias to the dollar because people hold it in reserves. And the Fed policy being too tight also complicates things and makes the dollar stronger. I'm coming up with my macro thought in a backwards way. I'm saying what do I think will happen to ensure that the market is near its high on November 20, which is not something I usually do, I don't usually think this way, but when you have an election like this and you have a president who will go in and manipulate the markets, and I don't say that in some sort of evil way, but he will to ensure that he gets his results. I can go with that. What does that mean? I think things are slowing. I think liquidity will be plentiful. There's a possibility that China has just recently eased and that the ECB has maybe shifted towards a little more of an easing bias. Just in the last few days, I've been starting to think maybe there's been acknowledgment globally, and I'm not sure exactly. So I would say you caught me right now at a moment where I'm contemplating whether there's been a macro shift or not.
- [58:17]
Peter McCormack
Interesting.
- [58:18]
Dan Tapiro
But then just to finish up, I would say that if The Fed does not accommodate the weakness. And the stock market does have a problem. If it does in the next few months, Trump and Mnuchin will come out to engineer a softer dollar. And that could mean 10, 15%. And if that happens again, it's bullish for gold, it'll be bullish for stocks. But I think that that kicks off and also highlights the debate around Bitcoin, because 10, 15, 20 years ago, there wasn't really the sense that fiat was being debased by authorities and that there was intervention. Pre 08, which was a massive government intervention, we really didn't have that so much. And every time they come in and intervene that way, it just makes the case for bitcoin stronger. So I don't think it's an epiphany moment. If the dollar went down 30, 40%, which I don't see right now, that would further put bitcoin into the spotlight, in my opinion.
- [59:43]
Peter McCormack
Yeah, interesting, because that's the discussions I've had with a few people recently. Will bitcoin become a safe haven asset? And right now it doesn't appear enough of people are considering it 1.
- [59:56]
Dan Tapiro
I'm not saying it has to be necessarily a safe haven asset. I think bitcoin goes up regardless. And I think bitcoin goes up for a lot of different reasons. 80% of the reasons we haven't even discussed today. But the concept of an alternative currency, a hard money, does not necessarily mean it's a safe haven. I think gold is probably more of a traditional safe haven. And gold is infinitely more liquid than bitcoin. So the people who have assets, they want a safe haven. Like they're not choosing between bitcoin and gold because gold is much more liquid. You might have some flow into gold. But the concept that an alternative financial system, alternative banking system, a whole new world is growing up. I mean, this would be my thought. A whole new world is growing up alongside the legacy framework. And so I just think that what will happen is the whole ecosystem, plus the market cap of bitcoin and all the coins, is around $350 billion. That's the value of the equity plus bitcoin and the altcoins. One day people in the legacy system will wake up and it'll be 2 trillion. And then the next day they'll wake up and it'll be 4 trillion. And so at some point there'll be a flourishing system that will be, in some way, I think will be somewhat integrated with the legacy system. But not at this point or no, but it's going to continue to grow alongside, if you see what I'm saying, as opposed to a replacement. And so I don't see that necessarily as a safe haven, more like an alternative. And there is a difference.
- [62:00]
Peter McCormack
Interesting. Interesting. Well, listen, I find it very interesting at the moment. I've been kind of. I can't decide whether with bitcoin it's going to become like this thing that could potentially take over or it's just going to be like an asset that sits on the side, you know, I just don't know. But I find the whole thing exciting. I do feel a lot more confident when I speak to somebody like you, though, and hear your supporter of bitcoin. I don't know, it just makes me feel like. Feels like I've got. I've made the right bet.
- [62:27]
Dan Tapiro
I think there's a chance it takes over eventually.
- [62:31]
Peter McCormack
Wow.
- [62:31]
Dan Tapiro
Just. I'm not the only guy. You know, I may be early in my world, but, you know, there are lots of guys a lot smarter than me who are gonna, in my world who haven't figured it out, who will. So it's just, it's just the moat is very high and that's good for all of us because the longer it takes them, the longer more meaningful the opportunity is for us.
- [62:58]
Peter McCormack
So we need to keep stacking sats while we. While we wait.
- [63:01]
Dan Tapiro
Exactly. Everyone out there should keep stacking sets. I love that.
- [63:06]
Peter McCormack
All right, well, listen, I think that's a, that's a good point to end it. We've, we've done a good hour. I do think one of my next visits to New York though, we should do one of these in person because I think we could, we could go through a whole bunch of different things. That other 80% of reasons why you think bitcoin will be a success I think would be an interesting show on its own. But before we close out Dan, one thing that would be good, you can just let people know how they can follow you, follow your work, your companies.
- [63:29]
Dan Tapiro
Yeah. As I mentioned, I recently just on Twitter, DTAP Cap, that's my investment firm, DTAP Capital I Gold Bullion International. You can go to our website if you're interested. We do sell physical gold directly and I'm actually going to be launching a new venture in the next few months that is in the bitcoin space.
- [63:57]
Peter McCormack
Okay.
- [63:57]
Dan Tapiro
But I'm not going to get into that. Maybe next time we could chat about that.
- [64:01]
Peter McCormack
You can announce that on my show if you want. Get out to a massive audience. You'll be welcome to do that. But certainly when I'm next in New York, we should definitely meet up and do that.
- [64:10]
Dan Tapiro
I really enjoyed this. I really enjoyed chat.
- [64:13]
Peter McCormack
All right, Dan, we'll listen. Best to best luck with everything you do. Keep telling people to stack stats. Educating the people in your world about bitcoin, I think that's super useful. And yeah, thank you so much for coming on the show. Okay, so what do you think of that? Did you enjoy listening to Dan? I did. I think his perspective was pretty cool. It's pretty interesting having on the show and hear him speak so positively about bitcoin, especially coming from gold with a background like Dan's. It was just really interesting to hear about him talk about how he thinks bitcoin could take over the legacy financial systems and enable this huge wealth redistribution. So it's very cool. So lots to be bullish on with this show. And if you did like it and you haven't already listened to my interview with Raoul Pal, I recommend you go back and check that one out. Also, my show with Stefan Levera is another pretty good one which kind of feels like it fits alongside this in some ways. Anyway, thank you, Dan. Thanks for coming on. Hopefully we'll do this in person sometime. And if you're going to feedback about the show, do reach out to me. It's hello@whatbitcoindid.com if you do want to support the show, if you are a regular listener, you haven't done any of these things and you want to help me, please do head over to my website, what bitcoindid.com click on the support section. Anything from leaving a review to become a Patreon. It all helps with the show. As I said, I'm in New York now. I'm going to be here till Friday and then it's back to Bedford. If you've got any questions, do hit me up. My email address is hello or what bitcoindid dot.