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Speaker A: Hey, guys, welcome to Debrief. After our episode, our fourth episode with Raoul Paul, I remember in the early days, we did an episode with Raoul Paul, and that was. It felt big. It felt like a big guest for us when Bankless was just a tiny, unknown crypto podcast episode. And this was before Raoul was an ETH bull. All right. Now he is very, very squarely in. |
Speaker B: ETH Bull, 80% of his portfolio. |
Speaker A: I like to feel like, David, you and I played a hand in converting him into the ETH bull that he is. He converted from bitcoin primarily to ether, he says, in 2020, and he's been pretty steadfast on that in being an ETH bull. I think we played a role in that. What do you think? |
Speaker B: Yeah, I think you can definitely watch rel portfolio expand, like, get more and more cemented over time. I think ether, as a portion of his crypto portfolio has been up only. And that trend is very, very, very strong. It's also nice to see Raul. I mean, he got it from a very early time. Like, he was one of the earliest people enforcing the crypto and macro of the same conversations. Conversation. And him then also maturing into, like, oh, and also, like, ether is the best exposure to crypto that I just. Yes, his trajectory has been fascinating to watch. And then straight into the NFTs. He's as much of an NFT DJ as, like, anyone else in crypto Twitter. It's great. Mandy, I will say, like, I do think Raul. Raul is an optimist. I think he refuses to be pessimistic. I think he, like, maybe even intentionally is like, I'm going to be an optimist. And so this is why he, like, leans into things like Metcalfe's law, because on a long term time horizon, Metcalfe's law for crypto networks. Either crypto succeeds and Metcalfe's law is, like, validated or crypto is, you know, doesn't succeed. And that's a different story. But, like, he's chosen Metcalfe's law to double down and surround his thesis and narrative on because it's. You're almost guaranteed to be right unless the whole crypto experiment fails. And so he's picked, I think, some of these long term theses that he has very good conviction on, like, debasement of fiat money. Metcalfe's law, you know, network effects technologies, deflationary. And over the long term, he must be right or else something is wrong with, like, society and investing. And so he's picked these very intentional things to ground his theses on. And they're optimistic and they're long term oriented. And they're also, like, the critique, I'll say, is they're also very difficult to disprove. That's my take. |
Speaker A: Yeah, I think that's a good. That's a good take. Um, what's interesting here, too, is, uh, just as far as logistics is David and I are sharing, like, one mic, so we just throw it back to one another. And that's been fun in the episode, I think, because I didn't know when you were gonna throw it to me. And sometimes it'd be placed in this neutral type of position. |
Speaker B: No, man. |
Speaker A: Yeah, but it also include, it means that neither of us can talk over the other one. Right. So it's a very sequential episode from that perspective. But, yeah, I guess on Raoul's optimism, don't you think that makes sense? Like, don't you think that that is actually, it's not just a kind of an irrationally optimistic take? Don't you think that that is the actual take that, like, our take is optimistic crypto, bullish crypto in the long run, bullish humanity, bullish crypto. I mean, yes, you have to make a choice. Are you going to be more optimistic or pessimistic when it comes to long term orientation? But I feel like if you're an investor, you're buying assets, you are buying bets in the future. How can you be anything but optimistic? And also the track record for optimism in investing just beats the shit out of the alternative, which is shorting. What are you going to short, like, you short humanity. What are you going to bet against. |
Speaker B: Humanity or just not have exposure? Right. |
Speaker A: Just. |
Speaker B: Just be like, dollars. Like, owning dollars is inherently pessimistic thing to do. So, yeah, I think there is some sort of, like, I mean, you can. Pessimism can also be conservative, like, risk off, and you can still have invest in, like, exposure that way. But I think people that are looking for, like, generational wealth and are looking for the upsides that crypto gives them, you ought to be optimistic, I think. But I don't know. If you took a poll of everyone in crypto, do you think it would be different than the typical distribution of society on the optimistic, pessimistic spectrum? |
Speaker A: I mean, I don't know about that, because crypto has two kind of counter forces. There's, like, the dystopians in crypto who are, like, almost like gold bug pessimistic. Like, they're bullish on the asset class. Because they're pessimistic on the rest of society and, like, fiat and institutions. And so that is kind of the crypto is a lifeboat sort of take, but you only need a lifeboat when this chip is sinking. Right. And so I wouldn't say that's globally. |
Speaker B: Optimistic, but I'm pessimistic about the current state of society. But like, the bitcoiners who will say, yeah, we're like gold bugs, the archetype, but they are still optimistic about the wealth generation effect that comes from a bitcoin enabled world, would be there. Like, they think once everyone's on bitcoin, yeah, the old ship is sinking, but this new ship is nice and shiny and big. |
Speaker A: Yeah, that's true. And so I guess, from that perspective, are crypto people more pessimistic or, sorry, optimistic than regular people? I'd probably say so. I think anybody in investing skews more optimistic, and then anyone in technology skews more optimistic generally. I think technology is an optimistic force for the world, at least generally. But maybe there's a countervailing force against that, too, which is sort of, I feel like now there's a mainstream narrative of technology's bad, like technical kind of overlords. There's an anti tech bro ism and anti Silicon Valley ism that's going on. I think that's more a reaction to power consolidation and corruption and erosion of credible neutrality and increase in wealth inequality than any inherent issue with the technology. But that is another countervailing effect. |
Speaker B: Yeah, I cant remember when this was, but I think there was something in the weekly roll up, there was some news that if you were a reporter or a writer for the New York Times or something like this, some reporting agency like Bloomberg, you were only allowed to own bonds. Like, you basically only could have exposure to fiat and yield from fiat. Do you remember, do you remember when we were talking about this? It was like a year ago, and so we threw up a flag. But it's like, well, how can anyone speak to the merits of crypto when anyone in the mainstream media whose job is to report on news has a fiat filter that fiat investing filters, like, how do they get upside. Oh. From bonds. And so that is the, that's the backdrop. That is the context of their reporting life. And so, like crypto investors like you, me and Raul, we have that same bias. Like, we have the backdrop of crypto exposure. But I do think that just like crypto exposure, if you are going to write from the crypto lens, like, you have to be bullish growth, you have to be bullish on the future, because if there's. And if you have a fiat backdrop, it's like, well, the more. The more innovation there is, the more, like Tesla goes up, the more equities are bullish, the less bullish bonds are. Right. Because there's a tug of war between equities and bonds, and there's going to be a tug of war, especially between bitcoin, a brand new currency that's meant to dethrone the dollar and fiat. And so I guess this conversation has turned into just like, what is the context of the people and how does their asset portfolio impact their disposition? But it's like, it's also like a chicken and egg problem, right? Like, maybe Raul is inherently an optimist to begin with, and so he elected to choose tech and crypto, and therefore, that's like a self reinforcing prophecy. |
Speaker A: I guess one way to describe my own take on this is I am definitely optimistic humanity, but I am pessimistic on legacy institutions, and I am optimistic on new institutions and new organizational structures, of which I think crypto is one of the most important that we will have birthed in this century, in the 21st century. I want to turn to another aspect of this conversation because I think we were probably aligned with Raul on a lot of things. Right. The idea of a cycle playing out again, that's what we've talked about. And the idea of that being around. Things start to heat up in 2024, and then 2025, things get really hot, and then all the way. Asset prices. He said he was predicting to 2026. This is basically our base case at bankless. At least my base case. I think yours is, too, David, is we're predicting another bull cycle. It's going to happen in crypto. All right. And you're feeling like it's not going to happen at this point in the market, because that's how everyone feels at the end of winter and the beginning of early spring. They always feel like this and been through a few cycles. So I kind of know the feeling. Anyway, that's the base case prediction here. But one of the interesting areas that I haven't quite decided who's right on is this area of inflation. Okay, so Raoul Paul predicts deflation, which. |
Speaker B: Is the optimistic thing to think. |
Speaker A: Yes, this is the optimistic thing to think. Maybe it's partially optimistic, partially pessimistic. I don't know where to put the technology's impact on inflation. And making that technology being a deflationary force is definitely optimistic, bullish technology, yet demographics, I guess demographics is neither optimistic nor pessimistic. It just is what it is. But it's different, I think, than crypto canon. I would say that most crypto people, even most crypto macro people, think of the Lynn Alden's of the world. I don't know what Jim Bianca would say about this, but think about that class or even Arthur Hayes, that whole macro group think that inflation is going to be an ever present part of the, not just asset price inflation like CPI inflation. And Raul says, no, in fact, we might have some deflationary years. Doesn't mean we're not going to get debasement. They're all on the same page with respect to like the money printer is going to continue to hum and there's going to be rampant debasement of fiat currencies. But Raul does not think that translates into core CPI inflation. And I'm not sure what I think about that. I don't know that it matters so much for a crypto investor, but I'm interested in your take on this, David. |
Speaker B: What was interesting to me is that Raoul Paul and Arthur Hayes diverge. And Arthur Hayes is like we're going to get inflation and it's going to be bullish. And Raoul Paul is like we're going to get deflation and it's going to be bullish. I'm like, wait, what? I don't know what to do with this. You can see the merits of both cases, but also just like this is what they have exposure to, this is what they are long on. And I guess it could, in theory, there's enough of an overlap between those two Venn diagrams where both could be true. Raoul Paul is specifically bullish because of technological innovation. Arthur Hayes is bullish because eventually we're going to have debasement, of which Raoul Paul also agrees with. So I guess there's like nuances to unpack there. One thing you said that I want to touch on is that, like, there's enough crypto sentiment, negative crypto sentiment out there by crypto people that, like, the case of we, we are going to have another cycle in the way that we've always had before is like actually fantastic news from like, where most a lot of like, crypto's negative sentiment in the gutter's perspective is if you just told the average crypto investors like, oh, yeah, we're just going to do it all over again. It's not going to be any bigger or smaller than it usually is. So many crypto investors are going to be like, oh, thank God. Which is how, you know, we're below the line on where the mean sentiment ought to be, probably. I know you can pick up on either of those two things. |
Speaker A: Yeah, I agree with that. Take especially the case that the thing that matters is not so much where the debasement manifests, I guess, for the sake of kind of our bags or the crypto industry, right. It's just like whether that manifests as CPI inflation or just asset price inflation, right. This doesn't really matter. Debasement is just bullish. Crypto in general. And both the macro analysts of which I've named several and Raoul Paul, think there's going to be massive debasement. In fact, there has been debasement since 2008, and that's the regime that we're in. We're going to continue down that regime. I don't know. I guess for the sake of the crypto investor, whether it matters, whether we get CPI inflation or just asset price inflation. I want to actually ask you about Raoul's thoughts on AI, because it almost seemed like you partially disagreed with him, but I'm not sure that if you did. I think what you were saying, david, is you feel like the current AI narrative meta, or you're at least posing this question, is kind of overhyped right now. And Raul was saying, okay, zoom out, David. It hasn't even begun. All right, we are like crypto in 2012 when people were saying, oh, bitcoin's overhyped, you know, like in the pre mount Gox or the Mount Gox timeframe. This is so early innings, and you're going to have cycles of boom and bust in AI. But if you zoom out, this thing is just getting started. And his case for that was basically like a new renaissance, a thing that only humans have been able to produce, which is, he called it knowledge, but I'll call it intelligence, is now we're able to create intelligence by way of computers and by way of chip manufacturing. Essentially, that's what artificial general intelligence is. And we haven't even begun to feel the impact in our economy of what's coming. And I guess part of this depends on what you believe about the pace and the rate of AI innovation, because over the last ten years, up until, like this year, when things exploded on the scene, it's been somewhat slow. But now chat GPT is here and everyone is kind of like, well, new paradigm, things are going to move fast from here. What do you think about that? Do you think, what about his takes on AI. Do you think he's right? |
Speaker B: Yeah. It's all timeframes, right? So it's all what? It's a matter of perspective and nuance. So there are some things about AI which are unignorable. Chat GPT is a real technology. No one's doubting that. And then there's that one company that raised like, $150 million, and they had just started hiring employees the week prior. And so there's bubbly elements of it which can't be denied, and then there's also very real elements that can't be denied. It's probably naive to just do the thing that I did in the interview and take crypto cycle timeframes and then impart them upon the AI business cycle, whatever, like, investing cycle. It's probably the right perspective to take of, like, there are the AI blue chips, and then there's AI shitcoins, and the startups that just pivoted to AI, that's raising as much money as possible from an API to chat GPT are probably is an AI shitcoin. And then there's the AI blue chips, which are things like mid journey, actually, chat GPT, stable diffusion, all of the very real primitives, like, we'll call them AI primitives, that are like the what? What you would map onto is like the bitcoin, the ethers, the Solanas of AI. And like, you know, you can't invest in these things. These aren't assets to buy. But what I'm saying is, like, there are things that the AI industry are actually, is actually standing upon and is actually resulting in deflation, and it's actually resulting in job loss due to extra productivity out as a result of these technologies. And then there's the AI shitcoins, which are just like the scammers, grifters that are coming in very, very quickly into the space and raising a bunch of money. And so rauls, when he says, we're just getting started, he's talking about the very real fundamentals of the AI industry, which are totally bullish, and they are totally disrupting businesses and are making startups easier and all of this stuff. And then what I'm focused on is like, man, the Twitter love of AI, the VC love of AI, the AI vc raising cycle is, like, really frothy and not fit for investment, and not to be extrapolated by, as usual with. |
Speaker A: This thing, it's these types of things. It's less of a debate and more a matter of differences of timeframes, right? Where you guys would probably be in agreement. One other kind of timeframe question, though, as we were talking about AI that I asked Raul, and I'm not sure what I think about this, is just whether we are ready as a species to grapple with this level of change, this pace of change so quickly. And one of the things, so last week I was on vacation. I was out at the beach. I was just hanging out, but I was actually following the story of the Titan subdivide to almost like an unhealthy degree. I don't know why. All right. |
Speaker B: That makes me like a normal person. Yes. |
Speaker A: So I was a normal person not paying attention to crypto Twitter for the week. And I was following this AI sub thing, and one thing I noticed, because it has some parallels with crypto Twitter is like, and I was thinking about this during our conversation with Raul, is everything that Raoul is predicting, everything that's the base case for crypto, everything all the macro analysts are saying is basically like, and you looked. We didn't even get to ask this question, but we looked at. We hardly pay attention to stocks, David. But you and I looked at the charts of Nasdaq, QQQ indices, which is the Nasdaq growth stock, tech stock. It's almost back to all time high. Ok? It's almost back to what it was during COVID Must be nice. I'm just. Wealth inequality. Nothing that any of the politicians are talking about that the society is grappling with deals with the massive problem of wealth inequality, which I feel like is only going to get further exacerbated by debasement and asset prices go up. So the capital holders, those with the assets, make all of the money. And I saw this anger about the sub. And of course, there were tons of stupid decisions, like, why would any of the world ignore all of the safety, the provisions in crypto, or, sorry, not in crypto, in kind of like deep sub discovery. James Cameron said he would never step foot in this thing, all of these types of things. But there was almost like an irrational glee among the Internet population about a bunch of billionaires finally getting their comeuppance. It's just like you have been screwing everyone else for so long by taking risks and just screwing the underclass for so long that finally now you get what's coming to you. And there's like this anger, and it was almost like a dehumanizing type thing that I just. I couldn't vibe with. Right. I mean, these are real people, and it's like everyone is flawed anyway. But what was interesting in kind of that situation is this underlying anger towards wealth. Like, that is coming as a symptom of wealth inequality towards the wealthy and towards the rich. And if that gets exacerbated by further currency debasement, if that gets exacerbated by AI and societies can't respond in time to actually solve these issues, are we even going to make it? I'm not as worried coming back from vacation, I guess, about existential risk of artificial intelligence. I'm more worried about the near term threat of, can our societies grapple with this technological change? Do we have the governance structures in place to actually deal with everything that's going to happen over the next ten years? I'm worried about rampant populism. I'm worried about increase in fascism. I'm worried about this being the 1930s or the 19, like maybe the end of the 1920s into the 1930s, something like that, and we're headed towards something more catastrophic. What do you think? |
Speaker B: I think maybe what you're saying is the most bullish case is like, hey, what if crypto did exactly what it was designed to do and it went up and it was succeeded? And also, what if AI did exactly what it's designed to do and it made and it completely changed the landscape and it was completely successful? If both bullish scenarios play out, you're saying you get bearish because society won't be able to deal with that paradigm. We will break apart at the seams because we're not prepared for the wealth generation that that gives to only certain sectors of society and all the disruption that that gives society. That's what you're saying. |
Speaker A: That's exactly what I'm saying. So what if we're all right? It's like the question of like, all right, so, I mean, maybe some people who are holding the assets that go up in price get really wealthy. Does that solve some of the big problems for society? What do you think about this? |
Speaker B: Well, this is a conversation that we had with Dmitry Kofinas and was the whole Wall street bets GME like paradigm for a while is like, every investor who got their $2,000 stimmy check was like, I need to hundred x leverage this, even though there's only a 2% chance that I get it. Because if I win, then I am set for life and then I'm good and I'm. And I'm out. I'm on the other side. I'm part of the, I'm part of the elite, and then this is my only shot. And so that you know, that there's that basal demand to take your $2,000 check and shoot your one shot to try and turn it into $2 million. And so we know that this is a, like, society is ready to take that perspective again, probably, yeah. |
Speaker A: These are things I worry about and are still unaddressed, I think, in general, anyway, I don't think Raoul knows anything more about that than anybody else trying to figure this out. But it certainly feels like on this voyage, it feels like there are some icebergs ahead, and one of them could be exactly that. Yeah, I don't have anything else. It's always good to talk to Raoul. He always has a good perspective. He's always able to kind of zoom out and craft the narrative. It was funny. The last thing I'll say is, it's funny playing that clip from 2022. My God, his face when you told him that USDT was trading at $0.92. His face in that moment, he said he was feeling the full weight of the impact. Gears were turning. He was worried about his co founder, who had invested so much in the Luna ecosystem. He was worried about the impact. And crypto investors. My, that was a moment capturing time, wasn't it? |
Speaker B: Yeah. Yeah. It took him a full, like 5 seconds for him to like, wait, how big is this and what does this mean? And what are the consequences? Do I need to probably. Do I need to exit from this podcast and go answer some coworkers messages? Right now? I have no more in this debrief. |
Speaker A: Neither do I. It's good to record this with you in person, David. Thank you for tuning into the debrief. Thank you, bankless citizens. |
Speaker B: We appreciate. |