Here's the problem with a bubble. We don't know that we're in a bubble until after it bursts. People say to me, 'Ah, you're in a bubble?' I don't know. I'll let you know when it bursts.
I was a scared 32-year-old at that time. Don't confuse brains with a bull market. So, I'm about to start my 22nd year at SkyBridge. I heard about it in 2012, didn't understand it. I think I put a tweet out there like, 'I don't understand Bitcoin and I don't care.' And that was a big mistake. It took me three times to look at it, but thankfully I struck on the third time and started buying it.
Today, there's probably almost $45 billion worth of real-world assets that are on chain right now. That's a drop in a bucket. Something like $300 trillion of real-world assets. But just imagine if we had 10% adoption.
I feel like AI is a little bit like atomic energy. We've been able to keep that genie in the bottle, thank God, for the last 80 years.
My dad got up at 4:00 in the morning, went to work in hot and cold weather, worked outside, had a union job, never complained about it. When I got my first job at Goldman, my father was actually very funny. He was like, 'Hey, man, I never want you to complain about your job.' But I said, 'Well, why is that?' He says, 'Well, you're indoors, you're out of direct sunlight, and there's no heavy lifting.'
Now, I probably took too much risk. I had a great job at Goldman. I could have stayed there for 30 years, done nothing, and I wouldn't have got my head kicked in a few times, or would have never gotten fired from the White House. I don't think it would have been as much fun, though. There's no whining.
What's your wildest prediction for the next 20 years?
I think we're going to get rich, and I think we're going to live longer. You know, I'm going to be 63, but I think my kids may live to...
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Anthony, great to have you today at Deep Tech Insights. Let's start with an unusual question. Let's start with your worst trade. You sold the Batmobile for $350,000 and it just went for 7 million.
Does Bitcoin at the moment feel a little bit like the same?
Meaning if I sell it now, I'll regret it, or meaning I should sell it because it's heading to zero? What do you mean?
Well, look, I'm a long-term Bitcoin bull. This is my seventh year of owning Bitcoin. I think I bought my first Bitcoin at 6,000. So it's trading, I think, 75 or 80,000 right now. We've just had this Binance hack which you and I both know about. Yeah, 77,000 right now.
And so, yes, it did trade to 126. I don't trade it. I'm not smart enough to trade it. I think over time, if I'm right about the direction of fiat currency, deficit spending, and the technical adoption of the blockchain and things like digital assets like Bitcoin, I think Bitcoin could trade to half the market capitalization of gold, which is a 10 to 15x from here. Won't happen overnight. But yeah, this would be like the Batmobile. If you sell it here, you'll be upset.
And just to point out to people, I bought the Batmobile for $150,000. I sold the Batmobile for $350,000. Decent enough, but it compounded over 22 years. It compounded at 19%.
Okay? And I think this is a very important thing to say to people. If you own a very high-quality asset that's scarce, okay, it tends to do well. You know, my oldest son has a hard asset company that he calls Treasure Trove where he's in the collectible space and he's buying individual or unique assets. He just bought a 16, 17 million-dollar Pokémon card.
But what we find when you analyze art and you analyze collectibles, it's typically outpacing the S&P 2:1. And so the one thing you'd also have to say to yourself, well, is Bitcoin a collectible? And I believe to many people it actually is a collectible. So it's just another fortification of the argument why there's probably asymmetrical long-term upside to Bitcoin. I'm not saying there won't be volatility, Sasha, but there will be, I think, great returns for the most patient people.
Let's start a little bit with your background. So you are out of a workers' family, right? Your dad got up at 4:00 a.m. for 42 years. What does this teach you compared to what you've learned in Harvard?
Well, I think it's everything, actually. You know, I think Harvard was a great status totem. I think I learned things at Harvard. I was able to tell people I went there, which I think was very influential in helping me get my first job. But I think when you're a kid, you probably don't listen to your parents. You know, I always tease people and say, your kids aren't listening to you, but they're watching you.
You know, your actions speak louder than words. And so, somebody like my dad got up 4:00 in the morning, went to work in hot and cold weather, worked outside, had a union job, never complained about it. I think that was very grounding for me. You know, when I got my first job at Goldman, my father was actually very funny. He was like, 'Hey man, I never want you to complain about your job.' And I said, 'Well, why is that?' He says, 'Well, you're indoors, you're out of direct sunlight, and there's no heavy lifting.'
And so the point being, the fact that you have a much safer, secure place. And so I think that type of expectation management and having low expectations about things was also quite beneficial.
So you, as you already said, your first job was at Goldman, right?
And how did your career go from there?
Well, I did 7 years at Goldman. I was able to pay off my school debt. I was able to create a little bit of wealth for myself, which gave me the confidence to start my own business. So I started a wealth management company with another person who was working with me at the time in a business.
We launched that business 30 years ago, believe it or not. December 1st would be the 30th anniversary of the launching of that business. I was a scared 32-year-old at that time. But, you know, we worked very hard. We were also in a bull market. And so I always tell people, you know, don't confuse brains with a bull market. If we were in a bear market, maybe the business wouldn't have been successful. I don't know. But we got very lucky with that.
And then I was able to sell that business to a big wealth manager called Neuberger Berman. Neuberger Berman eventually got sold to Lehman Brothers. And then I left Lehman in 2005 to start SkyBridge, where, less than, you know, my ill-fated career in Washington, I've been at SkyBridge as its co-founder and managing partner since 2005. So I'm about to start my 22nd year at SkyBridge.
What's the investment thesis you are having at SkyBridge?
Well, that's a really good question because we've had to change SkyBridge a few times. You know, we started out as a hedge fund seeder. We morphed into private equity. We morphed into private credit fund of funds. We're now doing late-stage private equity and we're now doing digital assets. I have a pretty large digital macro fund that's done very well. I mean, it's under water this year, but only slightly.
We've had a big recovery because we own things like Zcash and we own things like Hype. But we do own Bitcoin, which had a nice recovery starting in August, but it's slipping a little here because of the Binance hack. But I mean, I changed the business a few... You know, I think the secret to staying in business as an asset manager is being able to adapt and pivot to what is going on in the society. You know, as it said differently, I don't think there was anybody 10 years ago making this sizable of a bet in AI, you know, or that wasn't happening. You got to go where the opportunity is. I think we've done a good job of that.
So, and how did you come to blockchain? Like when did you first hear about it and what was your initial idea there?
Not a good story for me. Doesn't reflect well on me. I heard about it in 2012. I actually had the opportunity to meet Hal Finney. And so for your computer programmers that listen to your show, Hal was the first recipient of a Bitcoin from the Satoshi wallet just to prove that it could work. Some people say that he was Satoshi or part of the Satoshi team. I don't know.
But he gave one hell of a presentation and I didn't understand it. And I think I put a tweet out there like, 'I don't understand Bitcoin and I don't care.' And that was a big mistake because I could have bought Bitcoin at a very low price.
And then the Winklevosses came to see me in 2014 to tell me about Bitcoin. Didn't understand it. Was more of a traditional investor. It wasn't really until 2020 when I met with Michael Saylor that I started to understand the security around Bitcoin, the cryptography around Bitcoin, and the reason why Bitcoin was probably the purest form of money or the purest form of a store of value that's ever been created.
Because, you know, we both know that diamonds have been recreated. We both saw last week that gold could eventually be recreated. But we know you can't make any more Bitcoin. You know, it's going to be very interesting as this story evolves, how successful Bitcoin will be. And I didn't see it in the beginning. It took me three times to look at it, but thankfully I struck on the third time and started buying it.
Do you then see blockchain, especially Bitcoin in that case, just as a store of value? Or do you also see the adoption of the underlying technology in the financial system?
Well, I mean, listen, you know, if you continue to debase fiat currency, could something like Bitcoin... Could there be a Bitcoin standard? I don't think there's a 0% chance of that. You know, I think you'd have to look at that. So, that's Bitcoin and I put that aside. I think layer one technology will be adapted. There's probably 40, almost 45 billion dollars worth of real-world assets that are on chain right now. That's a drop in a bucket because, you know, we've got something like 300 trillion dollars of real-world assets. But just imagine if we had 10% adoption, how things like Solana and Ethereum, or you pick it, Stellar, Avalanche, you pick whatever ones are going to be used for the adoption, how powerful those technologies could be.
And I guess the real question you have to ask people is if we tokenize real-world assets, would that be a more efficient way to trade them? And would that be a less costly way to trade them? And would we be able to trade them with greater speed and greater speed to finality? And I think the answer to that question is yes, which is why I think these technologies will be adopted even though we have regulatory pressure on us right now.
So, what do you think is the main driver for the adoption? Is it like tokenization? Is it stablecoins? Or is it really like switching the financial system towards blockchain technology?
Yeah, great question. So I think that stablecoins is the big kahuna because it's the easiest thing for people to understand and it also could eventually put pressure on credit card companies and credit card fees. So I think that's a very big piece of adoption. I think asset managers making a decision to tokenize their assets and exchanges and brokers making a decision to tokenize publicly traded companies and or bonds.
I think those are the big steps. That's where the virtual flywheel will happen in this economy. If you can get BlackRock or Carlyle or a Blackstone or a JP Morgan to start saying, 'Yeah, we're going to use the blockchain for these assets.'
I mean, the interesting part is you are coming out of the traditional finance system. And I would say like the traditional banks fought for a very long time against adopting blockchain technology, but that really switched dramatically over the past 1 and 1/2 to 2 years.
Why is that? Like why are they changing now?
I think it has to do with education. I think I can speak to myself. I was dismissive of it. I think you have to remember, if you're doing something really well and you're making a lot of money from it and someone's telling you, 'Here's a new thing,' you don't typically change. You know, there's a very famous story where Jerry Yang from Yahoo was trying to sell to Pacific Bell the laptop technology known as Yahoo, the search technology. And the Pacific Bell guy said, 'Hey, no, no. 90 years we've been chopping down 4 million trees and we've been putting these big yellow pages together and that's our business and we don't want your technology.' But guess what happened? It displaced the yellow pages. Do you see what I mean?
And so I think it just happens because, you know, I can tell the story, you know, and he, you know, back it up, you know, Larry Fink 2021, two thumbs down on Bitcoin. He saw me in the lobby of the Abu Dhabi Four Seasons and looked at me, two thumbs down on Bitcoin. Didn't like it. Two years later he got up to speed. By January of 2024, he's launching the largest ETF in the history of digital assets. He's got IBIT, which I'm a proud shareholder of.
I think it was like two days ago. I think because like tokenized stocks is a very hot topic right now and everyone tries to get into tokenized stocks. And I think a lot of like especially the big players in the US like Eli Lilly opposing at the moment that OKX is tokenizing their stocks.
What do you think is the reason for that? Is it like just they are not educated in the technology?
Yeah, I think it's a good point. They're scared of it. Well, I think you have to be very careful with CEOs that are in... I mean, the financial services and drugs in my opinion are the two most heavily regulated industries at least here in the United States from the federal government. And we have people like Elizabeth Warren inside the federal government that absolutely hate everything about the blockchain. She's like a Luddite on the technology and so a lot of times these guys don't want to get in the crosshairs of the government.
You know, Jamie Dimon is telling people that Bitcoin is a decentralized pet rock, decentralized Ponzi scheme, and yet he's spending hundreds of millions of dollars building digital services related to research. He's creating a JP Morgan coin. I mean, he's pretty steeped at JP Morgan in blockchain and blockchain-related products. But I think he can keep the regulator off his back by saying the stuff that he says. You know, so I think that's part of it, you know.
You also backed the Clarity Act. So what is the current state of regulation, especially in the US? Do you think blockchain or crypto needs Washington here?
Well, no question. They need Washington. It would have been better for us to have gotten the Clarity Act done, but we couldn't get it done because of the partisan rancor around it and the ethics bill that I don't think the president was willing to accept. And so we didn't get it done. But you have a pro-crypto-friendly SEC who's going to begin the process of putting rules out and guidelines.
And so what you have to hope, and I'm praying for this, is that these big companies start adopting and they start tokenizing. Because if you get another Gary Gensler in there, who's probably the worst chairman in the SEC's history, but if you get another Gary Gensler in there, hopefully we will have reached escape velocity in the industry through Paul Atkins' good work that they won't be able to go back and try to undo it. And I think that's the goal that we're all hoping for. That's the goal we're shooting for.
You also had a political career. How did that happen?
Well, you know, I came from, as I said, a middle-class, working-class background. I didn't know a lot of people in the areas of wealth in the country. And one of the ways you can meet those people was through political fundraisers. And so I started doing that, and then I got pretty good at it, and then I started raising money for different people.
And of course, when Jeb Bush came out of the race, he was the person I was supporting in 2016. Donald Trump called to recruit me and I got bitten and intoxicated by that and I went to go work for him and it didn't work out well for me and I frankly don't think it's worked out well for the country, but I know this isn't a political podcast so I'm sticking to the economy and the digital asset story, but that's how it came about. You know, I was looking to do more networking and one way to do that was through politics.
What do you think it's like, because you said it's not a political podcast, that's obviously right. What do you think is the current state of the economy in the US and in the broader market?
Oh, you know, I think we're already seeing pockets... I already see the stock market's correcting, NASDAQ is correcting, digital is correcting because of the hack. I think we're seeing pockets of recession now in the economy. I think we broke the economy. The economy was doing well, but you know, we put the tariffs on the economy and then we started to run a forever war and we took the 10-year from 396 to 496 from April. We were expecting rate cuts this year. We're getting rate increases.
And if you look at our energy costs as a result of the war, I think it's hurt the economy. And so yeah, I think there's pockets of recession. We're not in a full-on recession, but may not fully get there, but there are pockets of economic weakness everywhere.
Yeah, that's not really... we are not really seeing an end of the war. I mean, it could easily be that we are seeing an attack again. Also China kind of... the Chinese stock market crashed during that week. Do you think people had more hope in all of the AI outbuild and infrastructure outbuild, or do you think it's just like a normal cycle and we will go up to all-time highs?
Yeah, we're talking about euphoria, you know.
What's this euphoria? You know, I mean, you listen... I mean, here's the problem with a bubble. We don't know that we're in a bubble until after it bursts. You know, people say to me, 'Oh, are you in a bubble?' I don't know. I'll let you know when it bursts. You know?
Everyone says this time is different.
Could be. Especially with all of the AI use cases, it's kind of crazy, but...
It's never different. We both know that. It's never different.
So, what's your guess? What's your opinion? What do you think, how will the next few months, years look like?
Well, I mean, I think the next few months are going to be sloppy. Unless you're telling me we're going to resolve the Iran war, you have to also tell me how the government's going to be configured. You know, we typically do better under a mixed government. So, if the Republicans lose the House, it might be good for the economy because typically the GDP and typically the stock market does better under a mixed government. We'll have to see what happens.
But I would say we're going to be sloppy here because you have a much longer than expected energy supply imbalance. We can call it a short-term energy shock because maybe the war gets resolved and then prices go back into the 60s for oil, but it doesn't feel like it's going to get resolved anytime soon. That's what has me the most worried.
So, what's your take on AI in general? Are you more on the positive side or are you more on the 'AI will destroy everything'?
These are such good questions. That's why I'm hesitating because I don't want to just give it a flippant answer. I feel like AI is a little bit like atomic energy in the following respect. We know that an atom bomb, if we proliferate and we use them all over the world, we're going to end our civilization and perhaps even end life or most of the higher intelligent life on Earth. I think we know that as a group of people. So, as a result of which, we've been able to keep that genie in the bottle, thank God, for the last 80 years.
So, if you're telling me, and I accept these people because I'm not a computer scientist, but if a computer scientist is saying to me that this could be species-ending technology, I think we have to take that seriously and we have to hope that we develop, like we did with atomic energy, the right global protocols to protect ourselves from it. Can we do that? I mean, I'm hopeful. I mean, generally human beings have been very smart about doing things like that.
But I think the broader question is, can it be a research tool? Can it be a drug discovery tool? Can it help us in our day-to-day business in terms of improving efficiencies and productivity? I think the resounding answer to that is yes.
And I guess the real question is, does it get so good and so agentic that we start firing people and that it actually becomes a cultural wasteland of people that are unemployed while the AI engines are working and the people that own them are getting very rich? So there's a lot to do here from a policy perspective to make sure that we're safe from AI, but also that we're running the AI in a way and we're using the right tax strategy and we're using the right incentive strategies to make sure that the people benefit broadly from AI.
And that's going to be hard. There's no easy answer to that. Someone comes on your show and says something Pollyannaish and says everything's going to be great and this is going to be great, that's going to be great. Maybe, but I don't believe that without a lot of hard work. And then if someone comes on the show and says, 'Oh, we're going to go into the Earth and it's going to turn the US into the Will Smith movie when he was walking around with his dog.' I don't know. I don't think that's going to happen either, you know?
And there are a lot of people saying we need to do something and implement policies and look more after these AI companies.
But I think the current legislation in the US just said, 'No, they need to regulate themselves.' Do you think that is even possible that a money-driven company can regulate themselves?
I think an industry can. I'll give you an example, okay? A money-driven company like Goldman Sachs, money-driven company. Morgan Stanley, money-driven company. But after the 1929 stock market crash, we created a self-regulatory body. It's now called FINRA. There were other names for it when I was a kid, but it's now called FINRA.
And so we are regulated by the SEC, which is a federal regulatory thing. But then we also have a self-regulatory body that we conform to, try to keep everybody in line. So if you told me that the companies were going to go in that direction and they were going to submit themselves and adhere to a formal self-governing, but a, you know, self-regulatory organization like FINRA, I think it's possible. But I don't think any one company on a standalone basis could do that. You'd have to get them all to join forces to do it, if that makes sense.
And we had a lot of discussions over the past few weeks, especially when it comes to cybersecurity, because AI is getting crazy good at, let's call it hacking, because this is what it is. And more and more companies are really facing exploits every single day.
I'm not yet sure, but we are coming back to crypto. I'm not yet sure how AI was involved in the Binance hack. But what do you think of the whole situation we are seeing right now at Binance?
Well, I think it's a bad situation. I feel bad for my friends at Binance and my friend CZ, who I'm close to. But I think he's handled it in an exemplary way. I don't know exactly what happened, but they made an announcement that this happened. They told you the magnitude of it so there was no... you know, the worst thing that can happen in a crisis is that it leaks out the information and the company itself doesn't present it the way it did. You know, I'm a little older than you. I remember the...
Tylenol crisis. You know, in 1982, someone was poisoning people using Tylenol. And so the company said, 'Okay, this is a safe brand.' And they addressed all the concerns for everybody and they put additional wrappers and safety compliance around their product and the product soared because people trusted the product. And I think it's a good example because I think what's going to happen here, frankly, is that CZ and his team over there is handling this very well and they're telling people the truth and they promised to backfill the losses. And you can already see the activity on crypto Twitter where they've already said, 'Hey, we've identified the tokens that were lost. We've frozen some of them, the ones that we think we've lost permanently. We're in the marketplace right now trying to replace.' So I'm hopeful that in a weird way this will make the company and crypto generally stronger. That's my goal and that's my hope.
Do you think because everyone is talking about institutional adoption right now? Does something like that scare the institutional companies away again?
