← Tom Bilyeu's Impact Theory
Tom Bilyeu's Impact Theory
Crypto Secrets for Building Wealth in the Bitcoin Era | Raoul Pal (Archived Episode)
01:41:06
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- [00:00]
Tom Bilyeu
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- [00:30]
Grainger Advertiser
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- [01:04]
Tom Bilyeu
Raoul Paul, welcome to the show, man. I am super excited to talk to you.
- [01:08]
Raoul Pal
I'm really excited to be here. It's going to be a lot of fun, I think.
- [01:11]
Tom Bilyeu
All right, so for people that don't know who you are, you're a globally recognized macro investor, master investor as well, co founder of Real Vision. But if you don't mind just walking people through a quick synopsis, and for anybody that isn't used to me talking about finance and cryptocurrency, I am just on a mission to get people to understand what I think is happening now, which is I've heard you use these words and you are a far better person to listen to than me, but that there's a massive wealth transfer happening right now that gives people who have traditionally been disenfranchised a chance to get in. So everybody, even though you know, this is sort of beyond the scope of my traditional mindset conversations, I think it's one of the most important conversations to be had right now. So with that, Raoul, if you don't mind giving us the background, that'd be amazing.
- [01:59]
Raoul Pal
Yeah, I'm going to give you a background about me and why I got into crypto as well as that's kind of where we're going with this conversation. So my background was 30. I'm 31 or two years financial markets. So I grew up in that world. I grew up in the world of what is known as macro investing. Macro Investing is when you look at all the asset classes everywhere around the world. So bonds, equities, commodities, currencies, credit, all of these things. And you try and look for what is the best return you can get. Maybe that's in India, maybe it's in China, maybe It's in the US so that's the mindset. We have this 3D, ever evolving jigsaw puzzle in our heads of the world driven by the global economy, hence why it's called macro, because it's macroeconomics. So it's driven by the business cycle trends of the global economy. So I did that. I was on the sales side for many years. I ended up at Goldman Sachs, where I started and ran the hedge fund sales business in equities and equity derivatives. My whole career basically had been getting to know the world's most famous hedge fund managers from kind of 1990 to 2000. It was like being taught acting by Robert De Niro or Laurence Olivier. I mean, it was ridiculous. My daily calls would be Stan Druckenmull at Paul Tudor Jones, the guys at Soros, et cetera, et cetera, et cetera. So that was it. Plenty of crises and exciting stuff happened over that period. Very macro. Then I decided to make the switch in 2000. I saw the recession was coming and I wanted to invest and make money from it. So I moved to one of my biggest clients, which was the biggest hedge fund firm in Europe at the time, called GLG Partners, and I started and ran the Global Macro hedge fund there. So that was now me taking these bets on a global basis over that kind of very Rocky period of 2001, 2002, 2003, in 2004. Then I decided I had enough and I moved to the Mediterranean coast of Spain and started writing macroeconomic research. I'd been around the hedge fund business longer than most people at that point, and I had a huge amount of experience both in knowing all of the players and also being a player myself. So I started writing from that perspective, macroeconomic research called the Global Macro Investor, which I still write 17 years later. And that's read by most of the world's most famous hedge fund managers. Sovereign wealth funds, asset managers, that kind of stuff, really privileged position. And it's that privileged position that got to me where I am today, why I started Real Vision and why crypto? Because they're all part the same thing. So there I am, 2007, and I'm thinking the world is about to fall apart and I'm writing about it and I'M one of the people that was on the right side of that. And a lot of the people in the film, the Big Short, were clients of mine. And we all kind of knew what was going on. The world falls apart. Tons of people make tons of money out of it. Tons of people lose their entire livelihoods. This is not good. And it's not. And so I started asking the question because people come up to me in the street and say, why didn't we know? And I'm thinking, yeah, why did I know? Well, fine. I've got a lot of experience, and I managed to piece together the jigsaw puzzle. But why does nobody else get to know this knowledge? This was wrong. And this was the rise of Occupy Wall Street. This is the rise of the anger of, we're being screwed somewhere. We don't know how we're being screwed. And I believed in that, too. Then I was in Europe for 2012. We almost lost our entire banking system, plus the EU itself. I remember having to go buy a generator and dried food because I thought we were going to follow Cyprus and we were going to lose the banks over one weekend. We would have lost the banks. On Monday, the. The IMF forced Spain into taking an $18 billion bailout, which rescued it in time. Then eventually we end up with this draggy. I'll do anything that it takes to stop Europe falling apart, essentially. And that stopped the tide. But the same thing happened. I was at the epicenter of it. I knew it was coming. We all made money out of it. And everybody around me, and I was yelling to everybody, listen, you've got to be careful. Friends of mine got destroyed in that. In Spain, the property market imploded. Everybody's a real estate developer. Everybody got killed. Friends went bankrupt. And they were like, why didn't we know? And first I'm like, I have been telling you this endlessly, but because I wasn't on television at the time, they didn't take you seriously. I'm like, it's bizarre. I write stuff that the world's most famous investors read. But if I'm not on television, for an average guy, I don't have credibility. I'm like, okay. I at that point, started having two tangents, which is realizing I need to do something about it. That this disparate information level, that one group has everything, everybody else has nothing. The other thing is, I needed to make the world safer because we're kind of screwed because of this over financialization, all the debt, that we could lose the system at any point, nothing had gone away. The printing of money was just a way of wallpapering over the cracks that the earthquake had left behind. So I'm like, okay, what can I do? So the idea I had with a bunch of people was to try and set up the world's safest bank. And I tried to go and do that. It was slightly arrogant or stupid probably to try to do because it's not easy. And we got together quite an amazing group of people still. We tried in Singapore, we tried in Switzerland. We tried in the U.S. it was just hard to do. The system is not there for you to try and change. And so in that process, a friend of mine, one of my clients, tapped me on the shoulder and said, you should take a look at bitcoin. This was 2012, and I'd been aware of Bitcoin. And I took a good look at it, and he explained to me both the store of value proposition and the blockchain element, that anything could be trusted on the blockchain. I looked at this and I'm like, oh, my God, this is the future that we need. Because the problem we've got is when a firm like Lehman Brothers goes bustling, nobody knows who owns what, and somebody's going to get screwed in that equation. Just one of the very issues at the center of the system. Nobody knows who owns anything. So I started looking at that, and I started writing articles and invested in it. First time in 2013, 2014. I started real Vision because I wanted to democratize the very best financial information. Nobody gets access for an hour to the world's most famous hedge fund managers unless you invested $100 million. Real vision changed that equation entirely and said, listen, forget all this sound bites on CNBC of three minutes. It's worthless. We're going to give you an hour of the world's most successful investors, the best independent analysts and strategists, and then you have a level playing field. And that was a game changer. I mean, since Real vision starts in 2014, there's probably been 200 podcasts that's copied that model. So this is this movement. There's two things. There's the democratization of information, and then there's crypto. So crypto, as it starts building out as an ecosystem, you start to realize that, okay, this is now the fastest adoption of any technology in all recorded human history.
- [08:55]
Tom Bilyeu
Dude, you have to say that again. This is the idea that's gotten me obsessed with you with crypto, is you talk about how there's something broken. We're getting screwed and we don't understand where. And now this new thing has come along, but it's, it's entering the system at a moment where it's sort of peak distrust and peak sort of throwing your hands up. You're giving up. You tried occupying Wall street, it didn't work.
- [09:23]
Raoul Pal
You tried Donald Trump, you've tried voting in Joe Biden, you've tried everything and nothing changes.
- [09:31]
Tom Bilyeu
So hit people with that quote again, because this is something that, and I'll give my background for people that are hearing me talk about this stuff for the first time in a min.
- [09:38]
Raoul Pal
It.
- [09:39]
Tom Bilyeu
But that quote about this being the fastest adopted technology, I think is important.
- [09:43]
Raoul Pal
The Internet, from 1990 to 2000 grew at 63% a year. That was the fastest adoption of any technology in all recorded history. Prior to that, mobile phones was the other one. But what happens is the Internet technology and the mobile phone technology allows for these networks to be built. And once that network's in place, it's faster to build the next network. So in India, for example, they've just basically given out free data to every mobile phone in India. So guess what? Data usage is the highest in the world. And so their Internet scaling becomes faster. So the Internet was huge, as we all know, and it remains huge. So at 63% a year, it then flattened out over time as more and more people got adopted. So at 1997, it was growing at 63% a year and there was 140 million users of the Internet. In 2021, there are 140 million crypto users and it's growing at 113% a year, double the speed. Now, this is where humans struggle linear numbers and exponential numbers, because it's exponential. It means that growing at 113% a year, going to go from 140 million people to a billion people by 2024. I mean, so when you go back and how you introduced all of this, so if you know that something is being adopted at this speed and it's a network of money at its core, and you can buy an infinitesimal fraction of it, so Everybody can buy 10% of their net worth, then everybody who takes this opportunity will probably have the biggest opportunity in history to make money.
- [11:35]
Tom Bilyeu
The other part that I want people to understand is that it's also coming at a moment where somebody like you no longer has to convince a gatekeeper to let you on tv that you can just spin something up. Because the other part of this equation is what I'll round to YouTube so it isn't exactly YouTube, but it's that idea that you can put out this long form content, that's video that allows people access to ideas and information that they never would have had before. And getting people to see that you're now moving into a new phase where you and I, I think, share a similar sense of like, okay, entrepreneurship was very good to me. It changed my life. It made me fantastically wealthy. And now I'm looking around going, hey, there's nothing that special about me. The thing that made me successful is I'm a relentless learner. So I'm just unafraid to embarrass myself, to fall down, to look stupid. And because of that, while other people are laughing at me, I'm laughing on the inside because I'm like, motherfucker, on a long enough timeline, I'm gonna win because I'll learn and I'll figure this stuff out. So now you get a group of people like me who succeed tremendously in a system where I'm looking around watching everybody else struggle, and I'm like, I will tell you everything I know. Like, I'll just give it out as fast as I fucking can. Because I want to live in a world where other people can rise up for whatever reason. I just am emotionally incentivized to also see other people succeed. And so you're now in a position where someone like you, who essentially could have retired, you know, lives on this tropical, beautiful island and, like, does not need to be doing all this. Re engages with the world and tries to give people that information. And so you get this. Go ahead.
- [13:15]
Raoul Pal
I did a piece that was probably the most viewed piece I've ever done on YouTube. It was like, I don't know, 2 million, 2, 3 million views called the retirement crisis. And it resonated because I kind of showed how people. People haven't seen it. Check it out on YouTube. It's well worth your time. And it's a long time ago. It predicts a lot of what's going on now. And the point being is that there's a bunch of retirees, the baby boomers, and they've kind of screwed it all up because they've got all the debt, they've got too much equity exposure. It's really hard for them to retire. This is why the Federal Reserve don't, like, equities going down, because you've got this richest group on earth who are kind of stuck. They never got enough money to retire on. But I want to look through the eyes of the millennials so they are at 32 years old. At the same age, their parents at 32, the baby boomers had all time cheap valuations of equities, all time cheap bonds, all time cheap credit, all time cheap property. So they couldn't help but make money. They kind of screwed it up because they actually ended up going into debt as well. But they couldn't help but make money. So then the millennials had the opposite. All time record valuations, equities, all time record valuation for bonds, all time record credit, all time record highs in property. So I'm like, these guys are screwed unless something else comes along. And that thing is crypto. Because the future expected return of crypto, it's been growing at 213% a year in returns. That's how much it makes. Even though it's very volatile Sometimes it's down 70% over time. You're making 213% a year. It has grown as an asset. It's gone up, I think it's 2 million percent since inception. No other asset in all recorded history has ever done this. And we haven't even started. I still think there's probably another 100x from here. Not even the baby boomers got given that the S and P didn't go up 100x since 1980. So this is the magnitude of what's there. So I'm screaming from the rooftop saying, you might be cynical, you might think you don't understand it, you might think you can't afford to play in this, but you have to listen because this is the opportunity. You can't come back to me in 10 years time and say, well, we missed all of that. All the rich people got richer. No, you, I, everybody else saying, now is your time, don't be irresponsible. Dollar cost, average, do all the right things, but here is your opportunity. This is the biggest opportunity I've ever seen and I'm going to take advantage of it and so should everybody else. This is not rich or poor. This is an every person opportunity and we've never had this before ever.
- [15:58]
Tom Bilyeu
Dude, you just gave me like sustained chills. This is not rich or poor. This is an opportunity for everybody. But you really have to move on it. So I'll tell my own story. So for anybody that is pushing back, feels late to the party, whatever, find some solace in my like willful ignorance. So I have always seen myself as good at making money and terrible at investing money. Now you have to be very careful what story you repeat about yourself to yourself. And I just kept saying that, like I'm, I didn't want to focus on learning about money. Math doesn't come easily to me. I don't like whatever that ability is to conceptualize numbers. I don't have it. So it's like I really struggle with that stuff. And one of my employees was like, tom, are you looking at crypto? And I'm like, David, I'm just not interested in investing. Like it's not, it doesn't speak to me at all. And he just kept coming back like, Tom, you really need to look at this. You need to look at this. And I'm like, David, how many times do I have to say it? Like, I don't find this interesting. I want to build a company and, and I'll make, yeah, I've already made myself wealthy. I'll continue to generate wealth and help other people by building this company. I'm not going to look at it. And then I had been introduced to the idea of digital scarcity about six years ago and I thought, ooh, that's going to change my business. And then, but the technology wasn't there. And so, or I should say the networks weren't there. And I promptly ignored it. And then when it popped back up at the beginning of 2021, I was like, I'm all in. Because I understood what it was going to be. So I start researching NFTs, the technology behind it, and that inevitably leads you to the blockchain, of course, which then leads you to crypto, which then I was like, wait a second, what? Like this is literally somebody is essentially going, hey, you know all those things that make gold, like this wonderful store of value, we're now moving that onto computers. And so I've been saying for years, technology is a one way street. I'm a total like techno optimist. There is no going backwards. Like this only moves forward. So now it's like, wait, people are digitizing money? And then poor David, who'd been telling me for God knows how long, eight months, that I needed to look at it, I was like, what the hell? So I start researching hardcore about what it is. And I'm like, wow. Not only do I have a fiduciary responsibility to myself and my family to learn about this, I now felt absolutely compelled to tell people one simple thing. Research it. You may decide that it doesn't make sense because I don't think I'm smart enough for people to listen to me. I do think that you're smart enough for people to listen to you and you're certainly educated, but even if they reject it, like there is this moment of you pull back the curtain and you see the wizard of Oz and you're like, oh my God, this is going to change everything. And it's like a dime drop on how it works. And that's when I was like, whoa, I have to move on this and I have to tell everybody. So like you, I'm screaming from the rooftops. I just don't know how to do it as intelligently.
- [18:52]
Raoul Pal
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- [18:56]
Tom Bilyeu
But when it's for a hospital system,
- [18:58]
Grainger Advertiser
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- [18:59]
Tom Bilyeu
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- [19:03]
Raoul Pal
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- [19:05]
Tom Bilyeu
That's why Grainger offers millions of products in fast, dependable delivery so you can
- [19:10]
Raoul Pal
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- [19:13]
Tom Bilyeu
Call 1-800-GRAINGER Click grainger.com or just stop by Grainger for the ones who get it done.
- [19:22]
Grainger Advertiser
If you work in university maintenance, Grainger considers you an MVP because your playbook ensures your arena is always ready for tip off. And Grainger is your trusted partner, offering the products you need all in one place, from H vac and plumbing supplies to lighting and more. And all delivered with plenty of time left on the clock. So your team always gets the win. Call 1-800-GRAINGER visit grainger.com or just stop by Grainger for the ones who get it done.
- [19:52]
Raoul Pal
And what gets worse about this is this affliction, this crypto affliction we all get right the rabbit hole as it's known. You start with understanding money, which most of us don't think about. Then you understand how we're getting screwed by central bank printing and the debt laden economy and what it means. And then you start saying, okay, but that's Bitcoin. And then what's this Ethereum business? And then you start realizing decentralized finance. And you're like, it's kind of a finance thing. But that's kind of cool because I can get yields now. Instead of getting zero on my bank account for my hard savings, I can now get 6% a year or wow, that's a difference. It's like going back 25 years in time and then suddenly NFTs come and community tokens and suddenly your mind is completely blown that this is not just money, it's the entire exchange, transfer and storage of value for the Internet. Whole business models are about to change massively because of what this technology unlocks. And then once you get your head around that. You're like, oh, God, I can't even hold this in my mind any longer. It's so big. And that it's not just buy some Bitcoin, I'm going to make some money over time. It's actually an entirely parallel financial system and business structure for the world, and it's being adopted faster than anything we can ever imagine.
- [21:23]
Tom Bilyeu
So walk people through what is it? And let's start with Bitcoin, because I want to take cares to differentiate between Bitcoin and Ethereum. And I guess full disclosure to anybody listening. I invest in essentially three things. Bitcoin, Ethereum and chainlink. I'm a use case maximalist, I guess, and I understand those three. I'm not saying they're the only three. I'm saying they're the only three I understand well enough to invest in. What is it that makes bitcoin interesting enough that so many smart people see this as ultrasound money? And what does ultrasound money mean?
- [21:59]
Raoul Pal
The world has a history of money, whether it's backed by gold or not, where government gets themselves excessively into debt and they devalue the money. So the Romans used to clip the edge off the coins so there was less gold in each coin. And eventually people would lose faith in the coins because they blend them with silver and then blend them with copper. And, you know, the coins were worthless because that was supposed to be worth the value of the denarii in Roman times. But governments can't help themselves. Humans, we're just humans, right? Humans are fundamentally flawed creatures, and we always will be. So then we have these gold standards. The US and the UK are on gold standards. World War I, World War II, we all have to leave it because we've got too much in debt again, we've overly financialized yet again because humans love leverage above all things. It's kind of sex and leverage are the two things that drive humans for some reason. Then we adopt a new system which has been around before but keeps getting abandoned, called fiat money. Fiat money is money not backed by anything. It's backed by the promise of the central bank paying it. So that's the dollar bill that we all are familiar with. And every country in the world now adopted fiat currency. But as with everything, if you're really thirsty and I gave you a bottle of water or sold it to you, you probably pay me 10 times too much for that bottle of water. If I give you a million bottles of water, they're worth precisely zero to you. So scarcity has value. That's arts, that's cars. That's almost anything. Humans value scarcity for whatever reason we do. If you're printing too much money, you're creating less scarcity. So yes, there's money everywhere, but the money has less value. So once you understand that, you say, well, what does it mean? The dollar hasn't collapsed. It's kind of where it was versus the euro in the last five years or whatever it is. And then you say, huh? But my $50,000 salary now can buy me much less shares in Apple, Amazon, Google, Microsoft. In fact, units of the S&P 500. I suddenly can't buy as much. Since 2008, it's a fraction. I can buy like a third of what I could. Same with real estate. Same with gold. And then you're like, huh? Assets have suddenly got expensive. They haven't. The value of your savings has gone down or your money. So you can't afford to buy assets. What is an asset? An asset is deferred consumption from the future. I buy a house, I sell it in the future. I get to retire. Whatever the things are. We don't buy the S and P because we want to hang it up in our wall. We buy it because we want to sell it at a future date to realize money. So that means our future selves are now poorer. That's essentially what this means. That's what currency debasement is. So bitcoin comes along in 2008 in the middle of the crisis. It's kind of like it was perfectly prepared for this. And said Satoshi goes, hey, look at this. I can create an algorithm that only creates so much of this thing, the bitcoin, and it can never vary ever. So therefore, this is scarcity that humans can't fuck around with. Now humans have this propensity to fuck around with scarcity because they're economically incentivized to do so here. They can't. So then they become economically incentivized to own this asset because it's scarce and it cannot be changed because it has this consistent supply curve and a limited number. So bitcoin becomes this great store of value, and it would look like gold, because gold's a good store of value. It's worked for thousands of years. But bitcoin has this other thing to it. It's a network, which gold isn't, and it's technology, which gold isn't. So we have use cases and the benefits of building a network. So suddenly it goes up exponentially in price, roll on to 2015. And suddenly somebody's looking at the blockchain and they start saying, imagine if these bits on the blockchain, which is where you record the ownership of something in Bitcoin itself, what happens if we could put a contract in there? Because humans live off contracts. Everything is basically a contract in our legal terms. And that was the rise of Ethereum. It became a platform where you could programmably change the blockchain. Not the attributes of the blockchain. You couldn't remove anything off that ledger, but you could change the little holding buckets and say, well, it can look like this, can look like that, it can adopt to this. And those things were verifiable as well, so they couldn't change. So this created Ethereum, which became the platform. So if you think of Bitcoin as this store of value, this very pristine, beautiful thing, then you think of Ethereum as also a very beautiful thing, but it's a much broader application because it's like programmable money.
- [27:19]
Tom Bilyeu
Yeah. There's one concept that I want to nail down here, and if you think I'm crazy, let me know. But when I think about, so I've worked in the inner cities a lot, and you begin to realize, wait a second. The generational poverty is a mindset knowledge problem far more than it's a money problem, because they manage to pass on a likelihood of being poor. And so when you think about, okay, well, right now in the. In the US for sure, and I would imagine most of the Western world, that your zip code is the number one predictor of your future success, more than your iq, which I'm just not willing to live in that world. But that's a really fascinating phenomena. And when you begin to ask the question, how is that possible? So you have extraordinarily smart people that regardless of their iq, are going to be trapped in a poverty cycle. Why is that? And some of it has to do with what a guy named Jeffrey Canada discovered in terms of the language centers of your brain. And if you're not hearing enough words when you're an infant, just the language centers don't develop well, and you're going to have a hard time interviewing for jobs and climbing the sort of traditional corporate ladder in that way. And then they just also help you with communication. But the other part is what is what I call your frame of reference? What do you believe to be true about yourself and about the world? And one of the ideas that fails to get passed on in that poverty cycle is an idea of ownership. And once you understand ownership. Now you get into that cycle that you're talking about where you can sell something in the future because you own it today and you hopefully buy low and then sell high. And that really is like just the dead simple equation. And I just a plan to flag that. We'll come back to hold all these ideas in my head. You had mentioned earlier as like a throwaway that a lot of wealth was generated in the collapse and of the economy. And so I want people to understand that this is a game. And I don't mean that in any sort of derogatory way, but it has rules. And if you understand those rules, there's always an opportunity, a especially in moments of disruption. And we're living through this incredible technological disruption right now. Okay, so back to this idea of ownership. So when I look at Bitcoin, what I see is something that I can own, right? There will only ever be 21 million of these. Now, like anything, as Noah Yuval, Noah Harari says, even money is just a story, right? It's a fiction that we all tell. And it only has value when we agree that it has value. So Bitcoin has that same sort of Achilles heel that if tomorrow everybody stopped believing that owning that has any value, then it would have no value. But we have this ultra scarce thing that the last 10 years have proven people believe has value and you can own a piece of that. And as we go, if it is true that more and more people will pour into this digitization of economic value essentially then that those 21 million units are going to become hyper scarce and hyper valuable. Now the great news is that you can fractionalize it so you don't have to own one. You can own some tiny, tiny, tiny fraction of it. But now you, you have ownership. So you're able to buy something now that you can own as it appreciates in value and then you can sell it later. And so it becomes just this buy and wait game that real estate maybe still is, but that's why real estate has worked over time. You owned it, you could also live in it, which is certainly advantageous. And then the expectation was that it would go up in value. When I think about Ethereum, at first I was like, okay, I like how much you know, we haven't even talked, we haven't named Metcalfe's Law, you've talked about it. But this how you can value something based on its network adoption curve. And so I could see there was something going there. And then when I got into NFTs, I realized I just had to buy a bunch of Ethereum to use it. And so I was like, okay, well wait a second. If I'm over here like scrambling just to buy it, to spend it, I'm like, this is me being able to buy into the dollar. When it's like new and nobody's sure if we're going to use it. I thought, whoa, I would take that opportunity. So that's how I see the difference in the two. One is just sort of straight ownership of something and then one is like, well, I know people use this and because people use it and there's controls around the supply that the odds are that it will go up in value.
- [31:32]
Raoul Pal
Ethereum's kind of like owning a part of the Internet. As you said, everybody has to use Ethereum, basically that uses this crypto Rails, unless you're just in the Bitcoin world. But everything that we've talked about and everybody will have, even if you're not very familiar with the space, will have heard the term DeFi or NFTs or tokens, basically most of that is still being built on Ethereum and as you said, the network. So what is this Metcalfe's Law that you and I have referred to? Metcalfe's Law is it really started to become understood in the 80s and then much more so as mobile phone networks started, these giant connected networks, because digital technology allowed networks to connect before it's humans, we couldn't connect with each other in the same way. So networks connect with mobile phones, suddenly they explode in value. All these phone companies, huge companies, and if you added them all up around the world, they'd be worth tens of trillions probably. We just don't even think of it in those terms because they're fragmented networks. Then the Internet comes along, this free network, and everybody builds on top of it and they create network effects. The most classic example is Facebook. Facebook connects us with friends and family and in exchange they get your data, they sell you adverts. So you've got a bunch of people using it, bunch of businesses now building on it. And this advertising monetization structure, shareholders get rich. You and I get to unfortunately meet somebody from university that we don't want to talk to, that we met 20 years ago and we're now connected with again. It's that. But the network that Ethereum and Bitcoin does is different. You're the owner of the network and the user. So as a user, like you said with the nft, you're actually owning a share of the network itself. So everybody uses it, owns a part of it. Therefore, if the network's going to get used a lot, you're all going to get rich and the value of the network is going to go up massively and the more people built interconnections. So the Metcalfe's law is not only just the number of nodes, that is the number of users, but how much they connect with each other. Well, you're seeing it because there's NFTs and there's DeFi and there's all of these applications or the store of money aspect, these things altogether. And then there's the linking of all of these, like Chainlink or some of these other protocols, Polkadot, they're linking all these ecosystems together. So I can send you a dollar instantaneously. And we have no idea whether it went on Bitcoin, Rails, xrp, Rails, Ethereum, Rails, and guess what? We don't care. I promised you a dollar. You want to get the dollar instantaneously. That's interoperability. That's all coming. So this is what Ethereum is about. It's the magnitude of this network where everybody's developing everything on top of it, and its scarce supply. So it's seeing an even faster adoption rate than Bitcoin now, for the reasons that seem pretty clear, because it has more use cases than currently the bitcoin blockchain does, doesn't mean bitcoin blockchain can't in due course, but right now there's a lot more use cases in Ethereum. It's super exciting.
- [34:44]
Tom Bilyeu
Do you think that Bitcoin would need to do something like that in order to retain its value proposition?
- [34:51]
Raoul Pal
No, I think its value proposition stands above all things. It is pristine, it's pure, it is what it is. And you know, the way it's so impossible to change any of the attributes of Bitcoin makes it a bit clunky. And that clunkiness is its beauty. It is so secure. It's the most secure of all protocols. So let it be what it wants to be. Now people are building things like the lightning layer, which allows you to do lots of fast payments over the top. Maybe that scales, maybe it doesn't, doesn't really matter. That store of value for every person to think of, like it's owning a piece of Manhattan real estate at low prices. That's never going away, not in the conceivable future, because humans have now said it has value and it's being adopted very fast. So no, Ethereum's A very different thing. It doesn't compete. That's how I like to think about it. And unfortunately when you go online, people will tell you, well, it's competing and it's not as good. You have to ignore all of that and look at the whole space overall and just be honest saying we don't know where this is going to be in 10 years time and like you say, so therefore I can own three of these things and probability is I'm going to capture a large part of this and maybe I'll adapt in due course.
- [36:13]
Tom Bilyeu
One thing. Sorry, go ahead.
- [36:14]
Raoul Pal
Yeah, so it's don't over force the narrative, just be broad, be open and always be learning, as you rightly said, because we don't know. This is all new and it's happening at lightning speed.
- [36:27]
Tom Bilyeu
Yeah, that's the thing that I am certainly most attracted to with you and the way that you are and seems to be something that people echo a lot about you is you're very open minded. Is your open mindedness the reason you have been successful or is it a response to the struggles of getting to where you've gotten in your life?
- [36:50]
Raoul Pal
I think it's part of it is my background. My father's a first generation immigrant from India, My mother's a first generation immigrant from Holland. They met on a blind date in Birmingham in the uk. I've lived in India, I've lived in Spain, I grew up in the uk, I've lived in the Cayman Islands, I've traveled the world. So it forces you to be open because you've got different religious backgrounds there, you've got massively different cultural backgrounds. All of this stuff forces you to be open minded. So I'm generally open minded by nature just because of that. And macro investing is all about being open minded to other possibilities. So once you learn the trick that it's okay to say you don't know, but I think this might be how it plays out. So you think in what's known as probabilistic terms then for that to happen, for you to say, look, I think there's an 80% chance that Bitcoin over the next five years is going to $250,000. That's a reasonable odds. What's the 20% chance that it doesn't? Okay, so you need to open, have both of those things in your mind at any one stage and be assessing them. I learned that from the book, I think it was the Alchemy of Finance by George Soros, who was probably the most famous of all of the macro investors. And he would talk about this a lot, that you have to have these kind of logic trees or probability trees. And once you understand that, you can even bet against yourself, which is really hard to do. And I can't do it. But some of the best traders can be long, the S and P. They think the S and P is rising, but then they think the odds of it falling are getting high and they start selling against themselves. It's like it's very hard to do. But that kind of investing teaches you to keep an open mind because you're looking at the whole world and you have to know that we don't know the outcome. Anybody who tells you that they know what's going to happen, it's just a fraud. It's just the open mindset. I don't know. But I think, and this is why I think that's all you need to do. That's open minded. In a nutshell, admitting that you are fallible.
- [39:04]
Tom Bilyeu
Yeah, I think that that is extraordinarily smart. One thing that I've noticed about entrepreneurs is the most successful are the ones that are able to hold competing ideas in their head at the same time. And you. So when I'm teaching entrepreneurship, one thing that I talk about is, okay, you have to have this narrative. So you have a goal, you're trying to get there, you know where you are. There's a chasm between where you are and your goal. Your goal is probably, you know, skate to where the puck is going to be. So it's something where you're making a bet about how either culture is moving or technology is moving. And then you have to create a narrative that says, this is how I'm going to go from where I'm at to there. And what that narrative does is it smooths out some of those like leaps of faith that you're going to have to make in order to get where you want to go. But then, you know, bringing this back to somebody in the finance world that I've learned a lot from, Ray Dalio, where he had that just catastrophic learning event where he realized, you know, we had all this conviction about something that was happening in the market and he ended up being wrong and it just obliterated his company. And he realized, okay, you can believe you're right, but you have to hold open in your mind, how do I know I'm right? And constantly be looking for disconfirming evidence. So it's like I tell people, you have to have all this conviction, you have to Be able to lead with conviction. You have to be able to go into something believing this is going to work. My narrative is true. That's how I'm going to cross this chasm to get to my goal. But motherfucker, you better have open in your head this idea of I have to challenge this narrative. I have to constantly look for the ideas and reasons why I'm wrong. And if you can't do both, race forward with conviction and constantly battle test that idea, you are in trouble.
- [40:43]
Raoul Pal
And that's why being an entrepreneur is so damned hard. The narrative of entrepreneurship is start thing in garage, borrow money off parents, or start it on your credit card, three years later, billionaire. That's the narrative. And then you write your book on how I manage my company. That's actually not true. The best book ever written on this is Ben Horowitz's the Hard Thing About Hard Things. What you have to do is battle both your assumption, as you say, and test it endlessly. You have to be paranoid, excessively paranoid, but still confident in that you're right. And you also have to accept the risk of failure, because the moment you accept the risk of failure, which is very high in startups, you'll start hedging against it. Once you stop worrying about failure as the narrative, you tend to attract it. It's a really difficult thing. People who fear failure above all things tend to fail more. People who don't look at failure and just look at the moonshot tend to fail too. It's the people who can see failure as a wolf behind them and the testing of the ideas, but still having the conviction and maybe changing paths because the wolf is catching up. They tend to fail less, but it's hard makes you feel sick, you don't sleep at night. And that's the beginning of Ben Horowitz's book. Basically is two pages of what that feels like. It's called the Struggle, and that the struggle is probably the most profound two pages in all of entrepreneurship. And it's true. And it's hard.
- [42:23]
Tom Bilyeu
That's a great book. So going back to investing, I want to lay out for people that might be new to this. They're not seasoned investors. The idea of dollar cost averaging was extraordinarily comforting to me and I'd love to go into what it is, why it's useful, and whether you think that applies to what's happening in crypto.
- [42:46]
Raoul Pal
So there's a mythology of investing. The mythology is investing is Hedge fund manager George Soros spots the opportunity, gets in at the Right. Price makes a fortune. The reality is most people have no idea where the price is going over a short term. So what happens is you buy something, you put all your money in, you've saved up your 5,000 bucks, you put it all into Bitcoin. Bitcoin falls 50%, you panic, you sell it, you feel terrible, Bitcoin goes back up again, you feel even worse. Now you can scrape together, you've lost half of your money now and then you keep compounding these errors, right? It's called market timing. And market timing is extraordinarily difficult. I do some market timing because that's been my job. And 30 years I've done more than my 10,000 hours, a lot more than my 10,000 hours. And that doesn't make me very good at it either. I'm not bad at it in long term investing. I'm terrible at short term. So what is dollar cost averaging? Dollar cost averaging is basically what everybody does with their 401. The problem is with 401 s or retirement funds is nobody cares about them. You don't know what's in it. You have no ownership, you just put some of your salary away. And it goes in this mythical thing that you probably assume won't be worth as much money as you hope it is. That's what that's become. And you put it in every month. Why do you do that? Well, because you're averaging all of the highs and lows over time. Because markets tend to do this, so you're kind of indifferent. In fact, you love it when it falls because you're buying more units at a lower price. Because your game is to own as much as you can at the lowest possible price. But if you don't know how to market time and 99.9% of people don't in cards and shouldn't, then you just average in over time and magic will happen. You just average a beautiful price over time. And had you done that in the S and P or anything else, you'd make money. Now. What's so lovely about bitcoin is it's not a passive investment like your retirement fund, because a retirement fund you can't access until later, so you kind of write it off. And everybody's heard that it's never going to be worth as much as it should be anyway. So it's become a bit of a pain as opposed to something but this you own. You live and breathe that volatility and you live and breathe those gains when they happen. And you will be wide eyed I did it to my sister in law, forced her to do this. I said, listen, I'm going to make it easy for you. Just going to open a PayPal account and start that way. And she had some savings she could take out of another thing. She had like 5,000 bucks, 10,000 bucks and she put it in and we got the timing relatively right. So it shot up a lot. I think she got in about 13,000 in Bitcoin. Yeah. And it shot up a lot. So she's like, wow. And then it falls a lot and she's calling me up saying what do I do? Should I sell some? I'm like, no, you keep putting in part of your paycheck. And after all of these falls, these several falls, she starts to really understand. And when they start falling a lot, she starts doubling the amount that she would have normally invested. And now she's taught herself to invest. Next thing I hear, oh well, I bought some Ethereum and this is how I'm dealing with that. So she's now looking at two different things and she's now thinking about the asset allocation, what's going to outperform Ethereum. She knew nothing about this stuff. This is a year and a half. And she now understands because of that dollar cost averaging and taking ownership that you, exactly as you said, once you actually own something that 401k you don't actually really own, it's like some other guy does something with it and hopefully he makes money. This is you, you're taking responsibility for your own finances. That's so empowering.
- [46:42]
Tom Bilyeu
One thing that I think is really important that I haven't heard people talking about and just because my mind is so simplistic when I, it comes to investing is I look at the stock market and I've got a money manager and like all that and she's trying to explain to me puts and calls and all this. I'm like, ah, this is so fucking confusing. I don't want to think about this. I want to go run my business. And so I, yeah, I just never wanted to get on the phone and talk about it. It was just too complicated. Part of the glory of what's happening right now in bitcoin is if you stay or crypto, if you stay sort of at the top of the ones that have the most sort of crowd validation because you can get into the deep weeds on what's going on in altcoins, but if you just stay at the top, which has massive crowd validation and you go, okay, I'm going to Buy a bit of bitcoin, I'm going to buy a bit of Ethereum. And then you learn like your sister did, about the volatility and like how to ride that wave and to recognize. And for anybody listening, if you're new to this idea, have a thesis. You dollar cost average based on your thesis. So here is Tom's overly simplistic thesis that I believe that technology is a one way street, that very few people are in cryptocurrency right now. I believe that over time it will take over some massive percentage of the financial system. So let's say that it goes to, I don't know, become a $10 trillion asset. So I can buy that. I don't. It doesn't take an extraordinary leap of faith. It's at just below, I think 1 trillion as of the time that we're recording this. So I'm like, Whoa, 10x my money. Like that would be incredible. Okay, well, as long as I believe in that thesis, I want the price to drop. So when the price drops, I'm not panicking. I'm like, yeah buddy, because like you said, now the amount has gone down. So when I first got into this, it was the height of the euphoria, like bitcoin was just going to the moon. It was just insane. And so I was like, oh my God, I have to buy into this. And so I bought in. I started dollar cost averaging and the price is going up, up, up, up, up. And I'm still dollar cost averaging. And I'm like, oh man, should I be going faster? Like the price is going high. And I'm like, no, no, no. Dollar cost average, you never know what's going to happen. And then boom, whatever happened, you know, I guess it was like a month ago, six weeks ago, something like that. It just fucking went down like 30, 40%. And I was like, oh, thank God I still have one, my thesis is still intact. Two, the amount of money I was willing to invest I haven't hit yet. So now at this much lower price. So what I am training myself to be obsessed over is the break even point. So if my original break even point was let's say $52,000 for Bitcoin, as that came down and I kept buying in and buying in and buying in. Now my break even point goes from 52,000, I got it down to like 30 something. And so I'm like, this is incredible. So now that we're riding that wave back up and I'm telling my wife, like, we're up this much in 48 hours, we're up this much in a week, we're up this much in 10 days. She's like, what? Like, it's almost impossible to believe. And I'm very careful to check that. Like the, hey, the euphoria is dangerous. You have to be careful. You have to constantly. Like, the wolf is right behind you. You really do have to be thoughtful. But dollar cost averaging based on a thesis, that's the way to go.
- [50:07]
Raoul Pal
There's another thing I think it needs to be said is you're now faced with something that really offers people enormous opportunity. You're talking 10 for one. I think the space over the whole space over the next 10, 12 years is probably 100x. That's a whole asset class. We've never seen that in history in that space of time. But humans are humans. We go back to that fundamental flaw is we love leverage.
- [50:36]
Tom Bilyeu
Tell people what leverage is for.
- [50:37]
Raoul Pal
The leverage is when you borrow money to buy something. So let's say you had borrowed to buy the original bitcoin purchases, and let's say you put down half of the money. So basically at 27,000 or 26,000, you've lost all your money. Now, bitcoin hit that, you'd have been wiped out and you'd have had to pay somebody and you'll have been liquidated. And then bitcoin goes back up in price and you'll have missed it all. That's what leverage does, because it's okay in a house because house prices aren't very volatile. So occasionally, once in a generation, you get a 2008 thing where the house prices start moving a lot and suddenly the people's equity in their house wasn't enough and everybody gets liquidated. That is, the bank says, we want our money back. That's okay to take that risk if you're cautious in housing, in crypto, this thing moves around like this. Its predictability in the short term is extremely low, unlike housing predictability. So just don't borrow money to do this. If I can get that across, then you don't care if it falls to 26,000 or 10,000, because you can buy more units at the lower price over time and you don't care. And then when it's trading at 500,000, you'll have become extremely wealthy. It's as simple as that. Don't overcomplicate it. Don't think about derivatives, futures, options, none of it. Just do stick with this simple plan. Don't use leverage. Dollar cost average. Think about as a five to ten year investment and your probability of success is going to be extremely high.
- [52:28]
Tom Bilyeu
It's funny how when it's dropping, you begin to question everything you thought you knew in the euphoria. And I've never lived through this. So for me, I was fresh out of college when the Internet was really booming and I was not focused on business. I wanted to be a filmmaker. That was it. I was just entirely focused on that. And so the sense of like when people talk about euphoria in the market, I didn't really understand what that meant. But like now, especially with social media, when bitcoin is going to the moon, like you can just go on Twitter and everybody is so happy and it's like, it just feels, there's so much energy and so much excitement and so much conviction. And then boom, it'll flip on a dime and people start panicking. And I remember. So one I don't buy on leverage.
- [53:14]
Raoul Pal
Just remember humans are ridiculous. That's all you have to remember.
- [53:17]
Tom Bilyeu
They're hilarious. Hilarious. And by the way, I'm in the middle of it. Like I don't think I'm above this by any way. And when the price turned and so I was like, I called my family, I'm like, guys, you must get into crypto. And they were all sort of paralyzed by indecision. So I said, look, my wife and I are going to help you open the account and then we will give you money. The only catch is you must spend it on crypto. And so we did all of that. And then watching everybody's like emotion flip when the price started dropping. And for a minute I was like, wait, do I have like enough conviction in this? And I was like, okay, technology is a one way street. I believe that this is gonna digitize as an asset class. I will watch and pay attention if something new comes to along. But for right now, yes, it all holds. And so I was like, okay. And so I just kept investing. And then as I like I said, I, I started focusing on that, that break even number, pulling down my cost of interest. There's a name. What's the name of that? Like your, the point at which your average buy in cost of entry. Perfect. So watching that come down became like my obsession. And then so I start getting that low and I'm really excited and I keep buying in. And then it flips again and it starts going back up. And so now I'm like, okay, I've ridden a wave. I know what it feels like when it drops. I know how you still have to like check your thesis. 100% dollar cost average, 100%. But now, because I did that, now I'm getting the gains as it swings back up and I'm still in a range. That's what's crazy. There's so much money to be made even just by taking advantage of that like, momentary volatility. Now I'm not. I am a macro guy in the making. I think only long term I'm not going to sell. As I keep telling my wife, as fun as it is to watch it go up, everything is noise sub five years. So like, just don't even think about it.
- [55:02]
Raoul Pal
It's quite funny because I've become pretty public in all of this space and I've got a very clear idea of where I think it's going and how it's going to go. So I have my thesis and when everything starts falling apart, like the market starts moving a I look like, how has it moved in the past? And it's done similar things, right? And I've been telling everybody who's ever got into the space, you need to expect a 50% correction in a bull market and you might see a 70% bear market and over five years you'll have still made more money than you could imagine. So you have to accept those things. So this thing starts tanking. Bitcoin starts first, then, then Ethereum rolls over later and it's all down 50%. And I've got this weight on my shoulders. I've got all of these people, they've been following me. I have been telling them this, but messes with your mind. And I pick out the one chart that matters to me, which is the adoption chart. Is anything that's going on with China and mining and this and that changing the adoption curve or not? No. So then, as you said, the relentless rise of technology continues. So la la la. I can't hear it. So I turned around to my wife and I'm like, you know, it's fallen 50%. Everybody's freaking out. And she just looked at me and goes, you are all so ridiculous. She said, you said, you should expect this. Now it's happening, everybody's freaking out. And she just walked off and said, she just said, don't say stupid and walked out of the room. And I'm like, yeah, just Twitter is somewhere sometimes, or Reddit or whatever forum you're on is sometimes your enemy and sometimes you just need to turn that off. Now. It's been the same with investing in Amazon. The reason Bezos is so wealthy because he was probably one of the only people in the world who had Amazon shares from the beginning and never sold them because it went down 95% in 2001, too. It's had several 60% falls, and it still made him the richest man in the world. This is what exponentiality looks like. And for people who are a little more savvy, there's a magic trick to everything to keep your sanity in this. Because this stuff goes like this. And then it does this and is. You'll see this free charting almost on every platform now, trading view, something like that. Just change the scale to a log scale, logarithmic scale. And what you'll find is, you look at Facebook, it goes like this. You look at Amazon, goes like this. And it always feels like, I can't buy this. It's gone up too much. That fear that you had at 52,000, right, that's real. You change it to a log chart and it's a beautiful trend. And you realize it's all noise. And yes, those movements can be 50%, 60%, but it's just moving in that lovely little trend. Facebook has done that since 2012, never deviated. Nor has Apple, nor has Microsoft, nor has Google. None of these have. Not even Tesla, and nor has bitcoin, and nor is Ethereum. They're all network effects, and they're priced in the same way. They're all exponential in nature, which we can't get our heads around until you put it on a log chart and it makes you calm down.
- [58:41]
Tom Bilyeu
What does the log chart do? I've heard the phrase, but I honestly don't know what that means.
- [58:45]
Raoul Pal
The scale. So normally a scale would go like a bitcoin chart. Well, because it starts really low, it might start at $10, and then it's got to go up to $65,000. So suddenly you're seeing a move, $1,000 move. It looks small, but before it was big. So what happens is it squashes the chart because most of the price action has happened from, let's say, $10,000 to 65,000. So you keep getting this looks like this all the time.
- [59:18]
Tom Bilyeu
And so this is just by stretching out the timeline.
- [59:20]
Raoul Pal
No. So what a log chart does is change the scale where it doubles every measure. So it goes $10, $100, or it goes 10x, let's say $10, $100, $1,000, a million dollars. What that little trick does is smooth out all of this issue so you'll get comfortable when you look at it just to realize that and look at the scale, look how it's changed versus the other scale. And you'll see from that it basically compresses all of this. It's the same as if you used percentages. Because a 5,000 point move now in Bitcoin is not the same as a 5000 point move. When it was at 5000 it would have been 100% and now it's not. Now it's like whatever it is today, 10%. So it's changing that and that really, really, really helps.
- [60:16]
Tom Bilyeu
It's interesting. So you're getting into the psychology of all this, which I find utterly fascinating of it doesn't matter what you look at, it matters what you see. So you're looking at this chart, you have to be very careful because if you they most of the charts, at least I use Coinbase Pro. So it defaults to like a really short time period. And so it's just like, oh my God, like this is all over the place.
- [60:36]
Raoul Pal
Why did they do that? Because it makes you trade more.
- [60:40]
Tom Bilyeu
Yes, yes, yes, no doubt.
- [60:43]
Raoul Pal
You're like, oh my God, I need to sell, I need to buy. What do I need? And then you zoom out and put the 5 year chart or 10 year chart and it's like, oh, this is noise.
- [60:53]
Tom Bilyeu
That's exactly what it feels like. And I've heard people talk about that. I think it's very sage advice when you're feeling stressed. Zoom out. Like literally zoom out the timeline so that as you broaden out and it's like, okay, okay, okay. This all gets very smooth and easy to handle. Now the best way to look at somebody's conviction around their thesis is to see what their percentage allocation of their net worth they have in said thesis. So when I started in crypto, I was like, okay, 1%, I'll get to 1%. I just don't want to be a fool. It's sort of schmuck insurance. Then as I got to 1%, I was like, well this feels pretty good. I'm going to go to 2%. And then that's where I was about when it started to fall. And so I was like, okay, well here's my opportunity to buy in. Thesis is still intact. Why don't we go to 5%? And so now I'm like, well, 5% feels pretty good. I'm thinking about 10%. So what is your allocation? Of course I know this punchline, but it'll be interesting for people that don't know.
- [61:53]
Raoul Pal
So I am, this is going to sound weird when I tell you, but I'm actually risk averse. So I own a few properties myself and I live in them. So I don't rent anything out. This is my bank is lifestyle and I like to live in nice places so that I don't consider money that I'm investing or doing anything with that's just buried in lifestyle. My shares in Real Vision as an entrepreneur, that could be worth nothing. They could be worth gazillion. That's not part of it. So what really matters is your liquid net worth, the money that you've got available to invest. And I'm 100% in crypto and I feel like I'm underexposed. So maybe I didn't start with enough cash that I should have had more in cash as opposed to in real estate or whatever. But it's 100% and I feel massively underexposed now. Why can I do 100%? Because I have income, I have numerous sources of income. So I've always got money coming in. If I lost, well you're never going to lose 100% because I've got no leverage. So it could go down 80% and it'd be back to roughly where I bought it. So I'm kind of safe in this crypto space now. I can't really lose money, but I've got cash flow coming in. So even if I did lose it, it's not going to change my life. And in fact, cash flow coming in gives me an ability to buy at lower prices. So I'm structurally set up to take advantage of the biggest opportunity I've ever seen. And I'm comfortable with that. Now I don't know what percentage of my total net worth it is because I don't think of total net worth as total net worth because those are things that are never going to change. My beach house and it'll Cayman door, I sell it and buy something else. I'm not going to invest in something else with it. That is the answer. Lifestyle is the answer to everything. We don't do anything else for any other reason. I don't think or you shouldn't. To be rich is not a future state. To have the lifestyle that you want is the future state. And that can be anything. You can live on a shack and a beach in Nicaragua and be the happiest man in the world, go for that. So that's what I care about. But liquid net worth? Yeah, everything. And I feel underinvested. I'm desperate to, you know, waiting for the next quarter when more income comes in to put more in, because I feel underinvested at all times. That's how. That's how much conviction I have. And I've never done that before. Ever, in my entire lifetime have I ever taken a bet like this.
- [64:33]
Tom Bilyeu
I want people, I want to make sure that they hear, though, that you've got the income coming in, that this is not a leveraged trade. I think that that's very, very smart.
- [64:42]
Raoul Pal
I don't have debt. This is my pool of investable savings. It's my entire life savings because I don't count the house, and all of the houses and stuff is there. So I can't be forced out of it. I can't lose everything. And I've got an income that tops it up. So I can buy more. Or if I get the bet wrong and it doesn't go anywhere for five years, I can buy other stuff. I can cover my cost of living. Everything is fine. So, yes, it sounds, and I call it irresponsibly long, but it's actually not very irresponsible. It's actually quite responsible. It's just a very high conviction bet.
- [65:22]
Tom Bilyeu
Yeah. This is such a fascinating time. And I'm very aware, and it sounds like you are as well. I'm very aware of. Okay, I'm a. By Internet standards, I'm a somewhat public figure. There are people that listen, and I feel this obligation to tell people. You just have to be aware of what's going on. I don't trust my understanding of investment strategies enough to tell people, hey, go do exactly this. But when I really think about the things that would mess with my head. It would mess with my head if cryptocurrency ends up being what I think it's going to be. And I didn't tell people to at least research it because what. So my wife and I end up getting just fantastically wealthy. And you have this moment where I know you've dealt with this, where it's like, do I buy an island and retire and just, you know, check out and sit my ties on the beach all day? Or do I recognize that what really matters is meaning and purpose? And so I want to do. I want lifestyle. I'm with you on that. But at the same time, I want to matter and I want to help other people. And so then you come into the game and you go, okay, who am I going to help? And because of our background, we had about a thousand employees that grew up in the inner cities, and you just See what a devastating force it is. You come to the realization I talked about earlier, which, this is a mindset problem. And so we start thinking about, okay, how are we going to address this? You get in, you realize people's money towards, people's attitudes towards money, and that becomes one of, like, the key areas where I want to help people. So originally, it was all about giving people an entrepreneurial mindset so they could control their life. And I really believe in that. And I think that when you think, which to me is just taking ownership of your life and recognizing when you have a company, the buck stops with me. I have to figure this out. There's no way to hide because I'm either going to be able to pay my employees or, or I'm not. Like, there's. There's just no bullshit in that. And so you realize, okay, the market's always going to win. I have to figure out how to run this company well so that I can pay everybody. So super powerful mindset now. Crypto comes along and I'm like, oh, my God, this really is this. It is a moment where all the people who are angry, frustrated, disenfranchised, this is your fucking shot. And I heard you say this. This is so powerful. Thinking about the words you said are giving me the chills, where you said, this is the first time where the retail investor, so the average everyday person, gets to front run, meaning go before the big institutions. It's always been the other way around. The big institutions take the cream off the top for themselves and then all of us get the leftovers. And this is the first time where it's flipped.
- [68:05]
Raoul Pal
So if you think about Robinhood or any of these big IPOs that have just happened, what they're basically doing is there's a bunch of VCs who've made 1000x, 100x, whatever the number is, and have got obscenely rich investing in something that you're not allowed to invest in because of the law because you're not an accredited investor. And in fact, the system's so set up that you're never, ever going to be shown this opportunity. And then at the very end, when the asset's gone up so much, they then list it on the New York Stock Exchange or the NASDAQ and dump it on retail when the best gains have been had. Now, within that, there's always going to be an Amazon and a Microsoft and an Apple, but your chances are getting it at the higher price. So you're the 52,000 guy and not the averaging at 30,000, your probability of success is always lower than those guys. So the system is against you in this. The institutions are being held back by regulation and can't do it. But we're not. And we know that they have a lot of money because it's actually our pensions. And so they're going to put our pensions in this in the end. Well, we might as well make money from them coming into the market later and driving up prices ridiculously, because that is what's going to happen once this ETF is listed. Every RAA in America is going to be advising their clients to buy the Bitcoin ETF and the Ethereum etf and it'll drive another half a trillion dollars of price appreciation. This is all coming and it is the opportunity. And I tried to set everybody up like you. I've had that sense of responsibility. Real Vision was about that. But it's also a subscription model. So I purposely give ridiculous amounts of information out on Twitter. That's free. Subscription model is because I need to pay my staff and create a proper business that has value. But I give a match out on free. We give tons of stuff out on YouTube and tons of stuff out on the podcast. And then with crypto, I just thought, fuck it, we're going to give the whole thing away free. So kind of Real Vision. Crypto is a free channel. We just said we're going to get sponsors from these big players because they're making tons of money. The exchanges and others, they can pay for everybody else to get access. So I can pay the staff for the crypto stuff because it's that important to me. It's like, guys, I'm giving you everything you need. We do five interviews a week with everybody in the space.
- [70:41]
Tom Bilyeu
And they're so good.
- [70:43]
Raoul Pal
So there's no excuse not to educate yourself. It's all there. First you go in there and go, whoa, I don't know what this is all about. That's okay. You'll find the thing that interests you and you'll find your way in and then you'll go down the rabbit hole. But, yeah, I passionately believe, you know, that the future of everything is based around community. You have a community in what you do, I have a community around what I do. And part of community is the inherent or the inherent agreement that you're all in this together. I'm not going to be extractive of you and you're not going to be extractive of me, but together we can all benefit from being part of this. Community. Crypto is a community in its own right. And we're all benefiting from being part of that. We're all part of that community. But I think that that's why both you and I are very passionate believers in bringing everybody along for the ride. Because everybody around us has enabled us too to build this amazing network and do all of these things. So everybody should share. And this is something that you'll pick up from my interviews. I've been talking about a lot. All of this is going to get tokenized too. Culture is going to become an investment. The probability of there being a tom coin within five years is something like 100%.
- [71:58]
Tom Bilyeu
Yeah. So I definitely want to talk about that because I think you've got some really fascinating ideas there before we move on. I haven't talked about this publicly, but. But this idea of a credited investor. So I don't understand why people aren't rioting in the streets. It is the most obscene and it's masquerading. And so I'll explain what it is to people. You tell me because you understand this a lot better than I do. Tell me if I go astray anywhere. So the government is basically saying, hey, you're not savvy enough to invest your money wisely. You're going to get taken advantage of. So we're going to protect you just by making it impossible for you to do these early stage investments unless your net worth is a million dollars or more. It's something sort of that basic. And I remember when I crossed that and suddenly my net worth was over that. And I was like, but wait, I'm not any savvier when it comes to investing. I know how to build businesses.
- [72:53]
Raoul Pal
And most of it might have been your house. So it's not like you've got more money. It just so happens that your house has gone up because you bought it in a nice neighborhood. It's ridiculous.
- [73:02]
Tom Bilyeu
Ridiculous. And so I'm like, how are people not complaining about this? That's the one thing that I sort of look around and go, wait, this is madness.
- [73:13]
Raoul Pal
And you're allowed to bet. So you can go to Vegas, lose all of your money, and there's no regulation. But if you want to invest in a group of startups or a single startup, it's deemed too risky by somebody. And a lot of that is a power grab by Wall street, because what does that mean? It means you can't do it. You have to give it to somebody else and they can pool the money. So then you're not Taking specific risks. What that means is somebody on Wall street gets rich on your behalf because you're now paying them fees that you didn't have to pay. That's the beauty of bitcoin. You're basically a VC investor in the future of money. Not Bitcoin, Ethereum, even. Even better, you're a VC investor in the future platform of the Internet of value and you're paying nobody any fees.
- [74:07]
Tom Bilyeu
Dude, let that sink in. It's really, really crazy. And man, I just really hope. Go ahead.
- [74:16]
Raoul Pal
There's no bank saying, well, you have to do it through us. If you want to do this, you can buy it and store it on a hard wallet and there's nobody involved. That is the power of what is happening here. This is true distributed power within wealth creation that people only dream of. This is the system not being against you, but working for you for once.
- [74:43]
Tom Bilyeu
Yep, this is the chance. It's really exciting. And the more you learn about it, the more you just start freaking out like, whoa, this was really custom designed. Of course it was. I haven't read the Satoshi white paper, which probably would benefit me. I think it'd be make it easier to communicate to people. But it is. It's kind of like that ultra secure bank you were talking about starting. It's like somebody who really sat down and thought, how do we put the power back in people's hands and make sure that it's uncorruptible. It's. It's really pretty phenomenal. All right. Getting into like this idea of tokenization. First, if you don't mind, explain to people what tokenization, tokenization is. And then we'll get into like where this is all headed.
- [75:23]
Raoul Pal
Their heads are going to be melting by now.
- [75:25]
Tom Bilyeu
Yeah, but this is how it starts. And in fact, one sort of a quick primer. If they made it this far, they probably don't need it. But here's how learning works. You start not even knowing the terms. And so you take the first step down the rabble. You're like, this is madness. I don't even understand the words people are saying. You start to get the vocabulary. Certain words will jump out at you go, look those up. Now you begin to cobble like, ah, I kind of know what's going on. Then you can, like you said, you pick that path that you understand. You go through. So that sense of like overwhelming confusion. A, it's perfectly natural. And B, in the beginning, just find the words. Once you understand the words, that'll be the key to unlocking Things. Okay, so with that, one of the words that we need to define is tokenization. What does that mean?
- [76:05]
Raoul Pal
So, remember we talked about smart contracts? Smart contracts are this thing that you can attach to the blockchain. And that contract can be any kind of contract. So that brings up the word tokenization, because you can therefore attach anything onto the blockchain because of this contract.
- [76:26]
Tom Bilyeu
Piece of art, fractionalized real estate, whatever, whatever.
- [76:31]
Raoul Pal
So bitcoin, okay, that's attached on the blockchain, but now it can be other things because the contract will say, well, legally it has the right to this. So it starts off with people conceptualizing about real estate, artwork, other things. Why real estate? This is a really powerful thing, real estate. None of us can afford the $50 million apartment in Manhattan, but that goes up 100% in two years, unlike something in Queens that goes up 20% in five years. So the rich dude's getting richer while the poor are getting less well off. The rich poor divide once you fractionalize it like you can with bitcoin, that anybody can own 10% of their net worth in a $50 million apartment. We're all making the same amount of returns. The rich don't get richer, we all get the same. If it goes down in price, we all go down in price. That is what it should be. That is what tokenizing real estate is going to do. And you can do it with tokenizing artwork. So you're allowing fractionalized ownership of all sorts of things that is recorded. Nobody can take it away from you. It's written and recorded on the blockchain and on that ledger, it's confirmed by lots of people to say, tom owns this piece of this real estate and nobody else can take it, okay, that's genius. But then what happened was this massive explosion this year in digital art, or just happened last year. Digital art was where you start tokenizing the recorded ownership of something digital. So people say, digital art, well, it's just a jpeg. Well, a JPEG has no scarcity. Now, it's the same with photographic art. So photographic art has no real scarcity until it's signed or you have the negative. Then it's priceless. That creates scarcity. And I collect signed rock and roll photographs of music artists signed by famous photographers. Now, because it has scarcity, and I like that. So that applies with digital art too, because if you say there's only going to be one of this, and it's recorded on a blockchain and it's called a non fungible token It's a token. Then I can sell it to you, and you now have the rights to it. We have scarcity. There's one. And this guy called Beeple creates
- [78:58]
Tom Bilyeu
I
- [78:58]
Raoul Pal
can't remember how many pieces of art. It's like 14,000 pieces of art. No, it's more. So he did 15,000 pieces of art, which was all into one JPEG, which was 13 years worth of daily art and all incredible. And then he sells it at Christie's or Sotheby's for $69 million. And everyone goes, oh, my God. It's the same when Banksy started selling graffiti art, and everyone's like, this is ridiculous. And now suddenly everybody wants a Banksy. And it's the same when Jackson Pollock started spraying paint, and now everybody wants a Jackson Pollock. Nobody believes in art until they do. And it's that same human system you talked about. Once we perceive it's got value, it's got value. That's how it's going to be. And we will trade it for whatever it is. So we can put digital art, we can tokenize it and own it. But that also means we can tokenize things like IP rights. So this video we could tokenize, and only token holders can watch it, or there's advertising that comes attached to it or whatever it is. And anybody who owns part of the token or one of those tokens can get some of those rights. So that means that music artists who are getting screwed by Everybody, they lose 80% of their economics by the ticket sellers, the middlemen, the music publishers, the record labels, the talent management business. I mean, everybody, including Google, Facebook, everybody's taking money. They're bringing massive communities, handing them over for free and getting back 20% of the economics. It's terrible. But imagine now you can tokenize the IP to a song, so every time it's ever used, it directly attributes to you. So let's go back to that Beeple example. He cleverly put into that contract that every time it change hands, he gets paid a commission 20%. That never happened to artists. So Damien Hirst, every time he sells stuff, he gets the money at the beginning, the gallery takes 50%, and then every time it trades, he never makes a penny again. But this people will make money forever, and so will his family every time that ever trades. So it's like Van Gogh, his family always having a share of that super interesting IP rights to songs, IP rights to all sorts of things. Video. In a digital age, it could be anything. And then you think about, okay, well, where's this all going well, it's going to community. Because community is the new powerful business model where a group of like minded people coalesce around an idea, a person set of ideas. So if you go back, you talked about Harari's book. The other great book is Jared Diamond's Guns, Germs and Steel. Very similar kind of book. In that book he says, he talks about complex adaptive societies, human groups, large human groups. How do you hold those people together? How you do that is basically you have a leader, you have a mission, you have a set of rules, and then you usually have a value or money. And that's true of all religions. It's true of almost all groups. But what was missing in most religions had the value part, because it's like if you didn't follow the rules and follow the leader, you went to heaven or hell or you didn't get reincarnated. Whatever religion you're part of. In modern society, like us, you have a leader, you have kind of a mission, you have a set of rules, and then you have money. And money is what binds them together. That is your national accounting for your society. But tokenization means we can all have a system of money. Bitcoin is the system of money for the people on the bitcoin network. But I can have a system of money based around real vision, because we have hundreds of thousands of users who all want to gain value from the ecosystem and want to create value within the ecosystem. But more obviously it's with musicians and sports stars. If you're Rihanna, you're the third largest social media influence in the world after Barack Obama. And I can't remember who the next one was. So it's her and biba. She has 150 million followers. Whoa, that's just on Twitter. So her reach is something like 400 million people on a daily basis. They all want to be part of the community of Rihanna. We saw that with Lady Gaga and her little monsters. If you give them a leader, a mission, a set of rules, and then a system of money, you've created an economy, a country, a digital country, and that has value. If you make your society successful, it goes up in value and you create more gdp. So this is now us getting rich from culture. We coalesce around this idea. We create the system of money and this rules, and then we look after our society. And if we look after it, our network grows. We bring more people into the Rihanna network. The value of our tokens go up. Rhianna gets wealthier and the fans get wealthier that is a whole change. In the old world it would have been Rihanna gets super rich, all of these other people around her get even richer, and the fans don't get anything except some experience. That's the old Facebook idea. The shareholders got rich, but the people who use Facebook got nothing except abused. Really, this tokenization changes everything. We can all participate.
- [85:08]
Tom Bilyeu
I don't think people understand how much has already been disrupted. Did you pay attention to what happened with the nouns dao and the noun nft?
- [85:16]
Raoul Pal
No.
- [85:17]
Tom Bilyeu
Oh my God, Raoul. This is insanity. So it's an NFT project. They release one 8 bit looks like it was created by Nintendo back in the 80s. Eight bit graphic. They release one a day, every day, forever. So it'll take them 27 years to get to the 10,000 number, which has sort of become the magic number. So up until that point, it'll be the most scarce of these kind of NFTs. And the way that the DAO was structured. So DAO for anybody that doesn't know, is decentralized atomic autonomous organization. So you every day one of the noun sells, the buyers of the nouns go into the nouns Dao. 100% of the proceeds from the sale of these little 8 bit graphics go into the Dao. And then the members of the DAO control what's done without money. The first one sold for. I might. I might be off a little, but it was like $1.8 million as of that time in terms of the number of eth that it sold for. And so I was like, this is a company overnight. Like you literally sold essentially a flag. And in selling the flag on day one raised almost $2 million. And on day two will raise, you know, however many, because obviously the number will go down. People are going to pay the most for the first one. But when you think about having to go the old model of having to go to Sandhill Road in San Francisco to hawk your wares and convince somebody that you were worth investing in and to raise $2 million of seed capital, like was you had to put this massive prospectus together and like do all this crazy stuff and really have this vision and know how to pitch and know people. And I mean, just that would have taken a lot. And now it's an eight bit graphic and the structure of the dao and that's it. And I was like a company just came into existence like that?
- [87:13]
Raoul Pal
Yeah, I mean, we did similar real vision, but not as that's much more advanced. We never raised money, I don't know, over the History of Real Vision. We've probably raised 50 million in capital over time. And we raised it only from our members. Whoa. Never. Not a single vc, nothing. No strategics, nobody. Our members. So they're the owners of Real Vision along with us, which is fabulous. So that's this community idea. I believe in it passionately because I live it with real Vision because people are passionate about what we're doing. But then when you say this. Yeah, I mean people are setting up daos, which is basically a rules based organization or economy or country. Exactly what I talked about. It's, it's controlling a group of people in a way that they agree the rules, they set the rules, they do it, they all economically benefit. And it can happen like that. And you sell a piece of digital nothing that has scarcity but the community buys into. I mean, where is this going to go? There'll be a bunch of copycats and they'll fail because people don't believe in the scarcity, whatever it is. But this is a change of everything because in exchange for, let's say starting up a company, let's say that Dao is actually going to become a publishing company. But you can't raise money for a publishing company. So you say we will sell these tokens that are super valuable because we're going to restrain the supply and they're kind of cool and we'll sell those and that's what you're buying into. And that company will, will now be in existence to do whatever it wants. That's groundbreaking. That's the end of VCs. And that's what people don't understand. All of this is going away. The bankers, the VCs, the private equity, everybody in the middle of this equation, the people like Google and Facebook who monetize your community and my community and make more money out of it than we will, that goes away because we have direct relationships with our community, because they're token holders and the community benefits because they make money out of that. Because you're stripping out middlemen and the money goes back into the value of the network. I'm talking quite a lot about this right now. And I get a lot of people going. I don't quite get my head around it because people are still trying to get their head around the digital asset space. But this is even bigger because you won't even know it's crypto in the end. Just like your membership points to communities that you're part of and you'll realize that you're part of these nations and it might be the nation of Rihanna and you might be there for 20 years.
- [89:58]
Tom Bilyeu
It is a sea change that is, it's almost impossible to recognize how big it is and how foundational of a change this is going to be. Like, I don't know how much you know about my story and why I'm doing all of this, but I'm going to use this very principle to completely disrupt entertainment. And so looking at. So when we founded, we founded about four and a half years ago, and my message to the team was, hey, guys, we're looking for two things. We're looking for a platform moment so that we can capture a lot of the economics. And then we're looking for a moment of tremendous disruption so that we can take advantage of that. Because I'm trying to build the next Disney. So when you look at Disney 90 Year Head Start, they've got however many billions of dollars in revenue plus just the catalog of IP they have is daunting. So if you're trying to build the next one and you're being intellectually honest, you look at that and go, okay, I'm at a such a severe disadvantage. For me to really make ground, I'm going to need to move faster on a new idea that than they do and leverage that to get some sort of early momentum. And so I said, our job, because this is a creative endeavor, we're going to fail 19 out of 20 times. That's just sort of the rough math when you look at music, film, all that stuff. So our job is to stay in business long enough to find those two things. And so we were hiring slowly and we had good revenue growth, but I was really throttling the growth of the company. And then when we found our platform, which I'll be disclosing in the probably about six months, and then we are capitalizing on the blockchain. And so now all of a sudden we're in a frenzy and I'm hiring people as fast as I can find the right people. So in whatever four and a half years, we brought on 27 people. In the next two months will bring on 10 more. And so, you know, when you take that out over a year, it's like we'll double the size of the company in, you know, 12 to 18 months. And it's because of that thesis that you just walked us through of how tokenization is going to change everything, how the economies of community are going to change everything, because one of the main things that I look at is anime. And so I started traveling to Japan and talking to the biggest names over there. And they're like, oh, there are some years where we don't make money. And I'm like, I'm sorry, what? And they're like, it's becoming a global phenomenon at the same time as it's becoming impossible to make money on. So it's this really weird thing where you're like, okay, there's all this pent up demand and enthusiasm and yet nobody understands how to deal with the economics. And I think what we're going through right now with the blockchain tokenization, bringing the community into the value structure of that. Like imagine that you can bet on whether it's the next Rihanna, whether it's the next anime phenomenon. Like there's. For people that aren't familiar with that world, there's one. So normally anime starts as manga. So there's this one manga called Demon Slayer which that one title outsells the entire western comic market. And so Spider Man, Superman, Wonder Woman, Batman, all of it outsold by Demon Slayer. So you look at that and go, okay, what if I could have bet on that when like the first episode of the manga came out, Let alone the fact that during the pandemic that was like the highest grossing movie, it may have been the highest grossing movie globally. It certainly was the highest grossing movie in Japan. It was one of the highest in the U.S. and if I could have made that bet when I read the first chapter of the manga and owned some of that ip, oh my God. Like now all of a sudden you have like these, what started as micro communities who are passionate about a creator, songwriter, a singer, whatever, a photographer. You love the photography of these rock stars, right? Just you see a photographer before somebody else, right? This just happened with Justin Eversano. I believe in twin flames. And when you own a piece of that, like it's, it is insane. Now they're very high risk and so you have to be super smart about it. But whoa, it's going to be life changing. A manga or photographer is going to change somebody's life.
- [94:23]
Raoul Pal
And also, you know, I've been taking, I'm also doing something on the side, building a whole studio business based around communities, working with the world's largest communities. And this is all very blow the red dot require screen still. So I can't talk about too much, but building token economics and token communities for the world's largest communities. And then you start realizing stuff like, okay, an up and coming music artist to go into the recording studio costs money. They have to pay it back to the record label, blah, blah, blah. Well, what happens if they've got 50,000 fans and the fans can hear 10 piece of music and can back the IP to own a token of the IP for the first year? So now they're betting on which song is going to be successful. So let's say they're superfans. They then go on to TikTok and they start creating videos with the soundtrack and they make it viral. Right? This is the network effects. The recording artist now doesn't have to borrow money to pay because their fans want to invest in it. And the recording artist will probably be still better off because of how the economics work. So, yeah, all of this is coming. It's interesting to see Gary Vaynerchuk is going down the same route. I had a long chat with him the other day. We're seeing the Aston Kushner thing coming up as well. The Stoner Cats. And again, people have got similar ideas of creating large entertainment brands, starting from the scarcity of the NFT and building out from that. Who knows what the business model is going to be that will prevail. But I think you're dead right. But also, Disney's going to tokenize too, without question, because the value of that community is worth more than the value of Disney itself.
- [96:15]
Tom Bilyeu
No doubt. No doubt.
- [96:18]
Raoul Pal
Yeah.
- [96:19]
Tom Bilyeu
It is a mad scramble to, you know, be first and to do it better. The only good news in the area that I'm in, and this is now. So anybody watching this in the NFT community, I will just tell you, you have to switch the mentality from what's new, which, like, there was so much, there is so much enthusiasm in NFTs right now that it was just all too easy to just buy things. They were new, they renew, they were new. And most of them, you know, stagnate or drop. And over the long run, though, it's not going to be enough to launch another new project. Like, you've really got to say, as a buyer, as a collector, even as an investor, you have to say, okay, there's only a few projects that I can really understand well enough to be an intelligent investor, especially if I'm trying to time the market. And so now it's going to switch to, well, wait a second, I'm invested in this, these seven projects, let's say I need to go and be a part of that community that breathes life into this and gets this moving, if for no other reason than to protect my investment. So now you start thinking, okay, wait, like I want to be deep on certain niches so that a I can be a meaningful community member, I can be a voice in the community and that I can make sure that these projects have real legs. Because ultimately, especially when you're dealing with art, if there's no emotional resonance with the community, you don't have anything. So it was just a quick flip and then people moved on to the next thing. And so I am really going to be interested in, one, watching the energy change in that space and two, trying to be a part of the vanguard of people that change the energy in that space and then see what comes out of it in the next five to 10 years would be utterly fascinating.
- [97:57]
Raoul Pal
I can't be more excited about where NFTs, communities and all of this is going. What I do know is I don't know where it's going. You and I might think we have an idea, but it's probably going to be bigger and the use cases more extraordinary that we can get our heads around. Now we're all struggling to get our heads around daos, but this is just the start. So it's an amazing opportunity, both from a business perspective. You and I as entrepreneurs are seeing this going, oh, my God. As investors, we're getting really excited about the opportunity to create returns from investments. And then I think we both share this mission that we can also bring everybody else along with us and help change people's lives, get them into this. A mindset that they can own assets and they can make money and not everything's against them. The system's not stacked against them. Here's the opportunity everybody's waiting for. So, I mean, what an amazing point in time.
- [98:54]
Tom Bilyeu
No doubt. So one thing that I really want to get your take on is when I look at some of these projects, they do look a bit like they would fail the Howey test. So when we think about securities and the SEC, how do you think about NFTs and DAOs and that stuff through that framework?
- [99:14]
Raoul Pal
I've been thinking a lot about this. I think the Howey test pisses me off. To start with this whole securities. What is a security? Why? Because therefore, you will put it, if it's a security, it then has to go back through Wall Street. You're putting it back into those people with power. If it's not security, it's not. It's distributed. And there's something wrong with that. There's something wrong with using a 1930s law. There's something wrong with saying what people can and can't do. In terms of investment. So allowing those with more money to do more. Something fundamentally wrong. And I think that the power of 86 million millennials coming in the voting population and further into power will force that change, because if not, they're voting against themselves. So it is coming. I believe change will come. You know, there's a great book called the Fourth Turning by Neil Howe and William Strauss. Cannot recommend it enough. It's about this demographic change and what it does and the changes that are coming. This is all part of that. So, yes, there will be prosecutions. Yes, people will get it wrong. It'll hold back the space. But over time, the regulators and the authorities will have to agree that the world has changed, that what we thought of as security is not security. Now, should we try and protect people against scams? Yes. How to do that? That's probably a different set of regulations, and I don't really know that's what you want to do is stop fraud and people getting money extracted from them. Then focus on that. Don't focus on what you can invest in and what you can't, and hope that somebody who's got a million dollars is more able to choose what's a good project than a student straight out of MIT with three master's degrees and a PhD who happens to be age 22 and doesn't have a million dollars. It's ridiculous. It's just simply ridiculous. So it will change and it's going to be frustrating and we have to be careful. So many of these projects will start on smaller scale than we'd want them to be, just because we need to get through this regulatory issue. Regulators are so far behind, they're still trying to figure out how to deal with Bitcoin ETFs. They haven't even got to defi. And they haven't looked at NFTs. And then when we get to the social stuff, I mean, they haven't even started. So they're going to struggle, really, to figure this out. Yes.
- [101:44]
Tom Bilyeu
Raoul, thank you so much for being such a voice in this space and for coming on the show today. I mean, really, really incredible. Where can people spend more time with you?
- [101:52]
Raoul Pal
Yeah. So I'm on Twitter a reasonable amount. So, Raoul. R A O U L G M I I just urge everybody to go to the real vision crypto, realvision, crypto.com or realvision.com crypto wherever you want to find it. It's free. You just give an email and there's tons of information. Everything you want to learn. Go off the deep end and you will come out the other side with a part of this space that resonates with you. And that little seed will change your life. And I did it on purpose that it's free. So make use of it. There's no excuse not to.
- [102:29]
Tom Bilyeu
I love it, dude. Thank you again so much guys. Trust me. This is somebody that if you're going to invest in your future, this is exactly where you want to start. I've spent an obscene amount of time taking in his content. It is wildly informative. And speaking of things that are wildly informative, if you haven't already, be sure to subscribe. And until next time, my friends, be legendary. Take care.
- [102:51]
Raoul Pal
Peace.
- [103:08]
Tom Bilyeu
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