Welcome to the Exponential Age

29:09What that chart shows or those charts is that the denominator, which is not the US dollar per se, but the value of currency in terms of what assets it could buy, because these are all fixed assets essentially, or low supply assets. anything that was a low supply asset was going up in price but it's going up in price in dollar terms but when you look in money printing terms they were basically holding their own after the massive collapse of 2008 and that intuitively feels right to us you know the anger and the frustration and the economic misery that's happened since is a function of that and that makes sense.

29:54Variable inputs like consumer goods and wages were destroyed by this. And that makes sense too. So with your wage, you were able to buy less assets. So if assets are a way to create savings for future consumption, you were able to buy less of them. And so in lies the pension crisis. So in lies the ability for millennials to buy housing. So in lies why the middle classes got holed out. Now, obviously, wages is also competition amongst global workers. It's also competition, importantly, against technology, which is slowly grinding away and destroying job after job after job. So this is creating this imbalance.

30:43So everyone's dead right. the central banks are creating the problem here because they're doing the age-old thing of debasing currency. Everybody's looking the wrong way because they're looking for CPI inflation, saying costs of goods are going up. Yes and no. The cost of some things are going up. Things like that are driven by the baby boomers because they've been the driver of inflation, stuff like healthcare, and also their kids, the millennials, the record number, drove up the cost of tuition. That's actually coming down now because they're all coming out of university age and the Gen Z generation smaller.

31:21But the boomers still drive that. But overall, the basket of goods falls, but the basket of fixed assets keeps going up. And what it's doing, it's just readjusting its price terms versus the fall in the denominator since 2008, which is the endless printing of money. So it's not that it's creating a bubble. The bubble is in the central bank balance sheet. The assets are not in a bubble because when you look at them relative to each other, they make pretty much total sense. So that's a big change of thinking. You need to think about what that means. But the only asset in the world that is offsetting the monetary printing.

32:04It's not gold, it's Bitcoin. Bitcoin has not only offset the monetary printing, but massively outfall it. One other asset has, which is the NASDAQ after 2008. Before 2008, no. Bitcoin didn't exist before 2008 either. So in fair terms, the NASDAQ does. I'll come onto that towards the end. But Bitcoin is the one thing that is outperforming the Fed balance sheet. And that means that it is offsetting the debasement currency. We can look at this trend globally too. It works for the MSCI world versus the G4 central banks. Everything is basically a function of any limited supply asset is exploding in price.

32:51This is where the art market's gone up, the wine market's gone up, the classic car market's gone up. It's not because rich people have exponentially more money. Well, they do because they could buy these things and they go up in price. But actually, even real estate has only basically offset that debasement of currency. Once I realized that, and that Bitcoin was going to be the super massive black hole that eats all other asset classes, I just realized there was no point doing anything else. It's the same point we launched Real Vision Crypto, because I realized it's the biggest fucking thing I've ever seen in my life.

33:28And the more time I spend here, the bigger it is. I wildly underestimated how big this all is. Now, there is a school of thoughts now that Bitcoin, as it develops, becomes the one true money. Is it possible? Of course it's possible. Is it probable? Less probable, I think. I don't really believe in the Gresham's law that all money goes to the hardest form of money. I don't think that's been proven out over time. But I understand the arguments and, you know, right now it doesn't matter. Also, but I do believe that Bitcoin is the foundation stone of what we need for a new financial system because we're certainly destroying the one we're in.

34:05And it's stealth destruction, right? There's no bond market collapse. The equity market's not allowed to collapse because the central bank prints money every time. Now that money doesn't flow into the stock market. The stock market's repricing. Again, just to get this across, here's the chart of the Venezuelan stock market. It's gone exponential. Here's the chart of the Venezuelan stock market in dollar terms. It's collapsed from the currency deval and then traded sideways since. That is exactly the same mechanism. It was exactly the same mechanism in the Weimar Republic. Now, I don't necessarily know or think we go that far, but who the fuck knows?

34:50That's why we need the right life raft, because we're going into unprecedented times. Now, what's so cunning about this strategy, it doesn't show up in the bond market. And even if it does, it gets hidden. It doesn't show up in CPI, because it's not changed the cost of computers or TVs or food. It doesn't do that. It doesn't show up in things that look bad. The equity market goes up. Hurrah! are. It's not obvious to people how they're getting screwed, but everybody knows they're getting screwed. It's the change in the denominator, the devaluation of fiat currency overall, that means you cannot buy as many assets as you could, and therefore your structural savings are worse.

35:34Now, with record low interest rates, you now have no child to making money. Well, not until Bitcoin turned up. Bitcoin was the game changer. That super massive black hole that people were going to realize was going to suck everybody in. And it is definitely going to form this basis of the financial system because it is pristine collateral. The collateral where right now collateral for the whole market is US treasuries. But bizarrely enough, you can just create more of them. So why would I hold your collateral if you keep creating more more of it and the yields fall. So I get rewarded less for lending out my collateral to you?

36:14Why should I? Bitcoin, entirely different. The structure of Bitcoin means that you can't create more of it. So as a piece of collateral, it's extremely valuable. It doesn't change because more people, because the government can print more of it, like the current collateral. So it is pristine. It's also a fantastic store of value because of the limited supply and all the other parts of it, the robustness and distributed network. It's an incredibly powerful technology that we all kind of know by now. So that takes me into about December. And in December, I started digging into Ethereum. And I wanted to understand the crypto space at large.

37:03Because when somebody tells me, and many people did, don't look at anything else. You're a scammer. You're a shitconer. You're a fraud. If I look at something else, that makes me want to look at it. And I started digging into Ethereum. And I realized how incredibly robust an ecosystem it was. The amount, the sheer number of developers, programmers, applications, the ecosystem was bigger than Bitcoin. The growth in wallet addresses was about the same pace as Bitcoin. So I'm starting to thinking about that. I got sent an article by, I think it was the NYDIG guys. And they were looking at Metcalfe's law.

37:54And I understood Metcalfe's law and how it probably applied to Bitcoin. But I asked Remy and actually reached out to Santiago Velez and said, listen, can you help me develop a Metcalfe's law model? Just a simple one. We don't need the complex maths. We need to kind of prove that Bitcoin is basically priced in that. And maybe that stock to flow is representing that in a different way. And again, I'm not trying to refute the stock to flow model. I use it. I love it. Everything in plan B is done is a game changer. And he deserves all the plaudits. But once I started understanding the power of what Bitcoin was, it was clearly a behavioral economics driven model, the best of all.

38:39So behavioral economics in Facebook is why Metcalf's law exists in Facebook. It's because originally you bring on your uncle, your aunt, your friend from school, blah, blah, blah, and you create your network of people and you can keep in contact with them and you can communicate with them. And so that became network effects. And then businesses came on to it, created more network effects, et cetera. But the shareholders were the ones who got rich, not the users. the shareholders benefited from the exponential revaluation of the network because methouse law essentially is the value of the network goes up with the more nodes in operation and so the users were separate from the capital so the investors got rich and the users got to talk to their friends and then their parents joined facebook and they all left into instagram etc but Bitcoin was a groundbreaker.

39:35And sorry, all of the Silicon Valley models were basically all of the same. They were all Metcalfe's law, everything that came out of the internet, from Google to Facebook to Reddit, the whole damn lot of them. And they all came out of meetings with people like Daniel Kahneman, one of the godfathers of behavioral economics, who basically taught them how to trigger dopamine receptors in the brain by like buttons, emoticons, and how emotion drives behavior because it's all behavior. It's what you're trying to do. But with Bitcoin, you've created a network driven by behavioral economics, which is the network of money.

40:16And every participant gets rewarded by bringing participants in. So that's creating an incredibly robust network effect. In fact, it's genius. Because more of us who believe in it, the more we attract other people in, the more we all get rewarded for it. So the behavioral incentive is extraordinary. And that is a way to gain adoption for a new money, because otherwise it's very hard to do. It's very hard to get adoption unless you get rewarded. So this is stunningly good. but i wondered how you could value ethereum because i could start to see how i could value bitcoin why it is exponential why we have to use log charts it's because the network effects of more people mean that the chart is always exponential and we've only just started i mean we've got billions of people to bring on to this so this is going a lot further so i've talked about you know i have no problem when i use you know this log chart for example it would suggest potentially this rally could take us to 400 ,000, maybe even a million on an offshoot because of the wall of money that I've talked about as institutions come in.

41:29Maybe I'm not. Maybe Plan B stock to flow is right, and it gets out 288. I don't know. It doesn't really matter right now. But I think be surprised because that's what network effects get more exponential over time. but when i looked at ethereum the thing i was told not to look at i realized that not only was the technology very interesting yes it has problems and yes it's very different to bitcoin and in fact it's not even a capacitor to bitcoin it's just part of a new digital asset ecosystem i realized that ethereum was actually probably the basis of the internet of value and the internet of value is something hard to get your head around as well i'll talk a bit about it later But basically, anything that you exchange that has value is going to be digitized.

42:16And Ethereum is breaking the ground for that. Now, there's the Ethereum 2.0 coming out, which actually hardens it as a platform and lowers the supply and speeds it up and probably cheapens the cost. There are, you know, it is not perfect. Bitcoin is not perfect for certain things. There is a massive ecosystem also being built in layer two solutions. And Ethereum has layer two solutions too, but is also able to be changed, which is not Bitcoin because Bitcoin is this hard, super wonderful asset of money. Ethereum is not that. So this war between Bitcoin and Ethereum is nonsense. They're not even the same thing.

42:55So I started to get the internet of value and we started to see the rise of DeFi. And I'll come onto that again. So you could start to see real applications that were getting massive network effects immediately. And then I put Ethereum in the same terms as I looked at the network effects of Bitcoin, which was using essentially a number of active wallet addresses. And it's a simplistic way of showing network effects. And what it showed was Metcalf's Law. When I put it against Bitcoin, if you see the chart here, you can see it's basically exhibiting the same traits as Bitcoin. In Metcalf's not, but actually the adoption's earlier and faster.

43:42And then when I put the chart of Ethereum against Bitcoin, starting at 5 million wallet addresses, to rebase them to a point where network effects start taking hold, their prices were identical and the chart patterns were identical. but they're about four years different. That was like, whoa. So these are being valued exactly the same at different points because it's only the network effect that's valuing them. And that was incredibly exciting discovery. And I realized that the entire space is driven by network effects only. And then you understand that some tokens and some get network effect and then have S-curve moments.

44:28So they start to look like they get adopted. Nobody really uses it and it falls. That's called the S-curve. The S-curve could be a failure or a pivot or a change in use, and then it goes. So we've seen that. We see that in businesses and startups all the time. And we've seen it in Bitcoin where the narrative has changed. Mount Gox is going to be a scam. It's all about dirty money. Bitcoin goes off 2013 S curve back up exponential it survives and we go into the next set of FUD narratives S curve that that was the banning by China the forking and all the other stuff S curve then back up again so now we've got the Lindy effect which is basically if you can't destroy it's going to get stronger and Ethereum is going through the same and this whole space goes, you would have said, some fail, some that don't fail, get stronger.

45:21That was mind-blowing to me. I now realized I had a framework of understanding that I could apply to anything within the space. So that was the big growth for me. And when you look at the speed of which this happens, because don't forget, exponential means it gets faster all the time. In lower chance, it looks normal. It's kind of linear, but actually it's non-linear as moon. And we've seen this. I I mean, I don't know. I had an interview with CZ who built Binance. In three years, he went to the largest crypto exchange and 1 ,500 employees. I think it's the fastest startup in history. Speaking to Sam at FTX, I mean, I don't know how he did it, but he got this whole from idea to launching in four or five months.

46:13And then a year later, the third largest exchange in the world. Look at Coinbase. 56 million accounts. That's more than Robin Hood. And Fidelity, and it's together. It's astonishing, the network effect. And we're bringing in the institutions, and they're spreading into Ethereum. And everybody else is building products on Ethereum. It's coming at a lightning speed. And I don't think the space can catch up with the narrative change that is happening so fast. You know, first was the rise of alternative protocols, interoperability, polka dots, chain links, etc. You know, the alternatives to Ethereum, things like Kadana, different type non-blockchain like Hedera.

47:09and the list is endless and i know you're gonna say you didn't mention my favorite coin our care at this point there's too many of them i can't figure them out but there are some really exciting things because i sit back as a macro guy and look at the mega trends what is the mega trend here first defy holy shit here is a whole lending borrowing system probably insurance system or all distributed on blockchain. This is what the world needed. Now, it's really nascent. Some of these are going to blow up. Some are going to work. Which ones do? I don't know. I'm investing in a whole bunch of these and I just hold them as a basket.

47:47But oh my God, this is changing everything. There's Bitcoin lending markets. Remember when I was talking a year ago, it's like, well, we need a Bitcoin yield curve. Christ, it's happening everywhere. There's yield curves popping up on everything. So this is all going on. DeFi space is exploding. I've now got friends of mine who are like selling some of their Bitcoin and then gone through the realization that they don't even need to put it back in a bank because they put it into a stable coin, USDC at 8%. Why even go to a bank? Because then they can send it somewhere else instantaneously. You only need to go to a bank when you want to buy a physical asset in the real world.

48:24but savings assets don't really need to be in the real world. So, I mean, this is game-changing. So anybody who's complaining about, I can't get enough interest in my savings, well, here's a world for you that's come out of DeFi that allows you to do it. What risks are you running? Well, it's not clear what all the risks are, but it's not clear what risks you're running in your pension fund when your fund manager invests in corporate credit. You don't know what it is, but I do know they're invested in more junk bonds than they've ever done in history. So as long as you spread your risk out, then you're probably going to be okay.

49:00Because there's unlikely to be catastrophic risk. There's going to be regulatory risk without question. But regulators only want to put this into their control so they know that there's no money laundering and you're paying your taxes. Bulk standard stuff. And we see it everywhere. The narrative of, oh my God, the regulation, they're going to kill. It's bullshit. Everybody, it's very clear when you see and speak to the regulators, that is not the case. It's very clear that this green narrative, you know, it's dirty money. It's terrible. It's just a narrative there spread, I think, by the ECB to slow adoption.

49:38And that's all okay. You know, everyone's got their game to play in this. They want to get their digital currencies out. They want to be able to interact with this new system. but what they do i mean ecb talks about defy being a core part of this and i think the us will too and it's already happening across asia and china i'll come on to that in a bit so defy all the lending that it wants to integrate with the new financial system why because the european banks are fucked so are the japanese banks so you can change all of that by using DeFi and central bank digital currencies, and then they're interoperable or connecting on routes and offerings to Bitcoin and all the cryptocurrency world.

50:19It's all there. It's all coming. So this whole financial system that I've talked about is being built in front of our goddamn eyes. And people are still fighting it saying, well, you know, Bitcoin, I know it's a bit risky, right? I mean, really, it's all happening. Everything you've ever wanted. All of you hate the Fed. all of you want gold, all of you who don't trust the equity market, it's all here. This world is coming at you fast. But there's more than that. The next big thing to come out was NFTs. And here we go again, a lot of teeth saying, well, they're a bull. I don't think you even know what NFTs are if you think it's a bull.

51:05What they are is a way of authenticating assets digitally. That is something the world needs, because all of this internet of value that's being built across Bitcoin, Ethereum, and all the other protocols and elsewhere is all about trust. So when you put something on an NFT, you're creating trust. And trust creates scarcity. And scarcity creates value. Now, this is where everybody gets NFTs from. They're like, well what we can just put anything on an nft attach it to an nft and now it's valuable no some of that stuff is trading because of proof of concept going on most of this meme stuff is worth zero most of this stuff is worth zero but what people did was real you see people's piece of art was groundbreaking a it was the digital journey of his artwork over 5 000 pieces of art over 14 years, which in itself is extraordinary.

52:11That sold for$69 million, as we all know. That's about 15 grand a piece of art. It's actually not that valuable. But what it was was a real artist that was acknowledged by the art world, i.e. people who want to put money into the asset, as valuable. And that's great. It was actually outbid by not the art world, but by somebody from the crypto space who also appreciates it. And there's a good story behind that too. So Beeple's art was groundbreaking because this was as abhorrent to most people as, let's say, Damien Hirst and his shark in Formelda, or Tracy Emin and that messy room, or any of the modern wave of British artists, as abhorrent as Jackson Pollock was with his spray paints, his stuff, or Andy Warhol was.

53:00Everything that comes out of art that has real value is generally not considered to have value by the majority. They think it's ridiculous. How can a piece of digital stuff that can be replicated be worth anything? Well, interestingly enough, it's all about authentication. So photographs have value. Original photographs that are signed by the photographer have real value. If you own the negative, it has even more value. A book that is printed has value, whatever value that is, minimal. A book, a first edition of that book has rarity, it has more value. A first edition of that book signed by the author has more value.

53:50A first edition of a book signed by William Shakespeare has almost limitless value. so it's the layers of rarity that come into it and nfts do that so i'm really interested in the nft space because it spreads it's not just about art art is an easy way of looking at it and also by the way just think about what a painting is yeah but you know a michelangelo painting that's worth millions but this piece of art is rubbish it's only digital well that's a piece of cotton canvas with some paint on it. Total cost, current price, probably about 50 bucks. But you can trade at$500 million. And the premium is the price of the alt and the authenticity and the rarity.

54:40So alt is a very subjective market. And what's nice for you or me is not nice for somebody else. That picture behind me is actually an NFT made by the two quants guys who developed the real vision bots that you know we see on real vision a lot um that was a that's an nft and i printed it out put it on my wall now is it going to be worth anything not not unless they become rich and famous um or some other reason or the artist does um but it's currently and it just shows that we can use nfts in different ways but nfts are not just about that nfts that don't forget is attaching scarcity and value and trust to an asset digitally.

55:22So it can apply to real assets like wine. It can attach to real estate. So we're all waiting for the growth of tokenized real estate. And as securities laws change and come up to speed, we're going to see an explosion in that. My guess is the next cycle, we will see a massive change. Now, why should real estate be tokenized. Real estate should be tokenized because it stops just the rich people getting rich in the high-end real estate. Because again, if you remember, because of the monetary debasement and the fact that they get more money, they get to invest in the more expensive property, which goes up more because there's more money in that space and everybody else gets left behind.

56:00But if you tokenize it, everybody can own a share. So you can have the same percentage share of your net worth in it as a multi-billionaire. That's groundbreaking. That's all of this digital space does that. It completely levels the playing field. So the Beeple art, interesting enough, there was another bunch of Beeple art that was bought and then tokenized and then sold. And I'll come to that story a bit in the metaverse. But that truly was groundbreaking because everybody can own it. So one rich guy can own the$69 million piece and a bunch of ordinary people can arrest. Phenomenal, massive game change.

56:41And it's not like a REIT. A REIT has all sorts of rinky-dink shit in it. It's not a pure play. It's different. You actually physically have legal titles apart with NFT. But NFT is also game changing for the music industry. So if you see my conversations with people like RAC, Andre, Andre is pioneering that. We've seen the Kings of on we've seen a bunch of bands starting to realize that this is going to disrupt the middlemen in music 80 of all money in music goes to middlemen not the artist which is kind of insane we think bankers are egregious in what they take well in this it's really all of the economics but when you can put your own things on the blockchain and sell them directly to your communities nfts well then you'll you've got a direct relationship with your community our community is a bit more and set but that's fascinating but what's more fascinating is the fact that you can then price scarcity for different people so if the bulk of your people will buy your album or stream it for free so you get paid virtually nothing from spotify then there's the next tier and currently that's the people who go to concerts so your concert tickets 50 bucks 100 bucks okay so you've got extracted more value from people because it's rarer because you get to see the artist physically and then you might have the meet and greet which you pay a bit more money for okay that's basically all there is for artists and then the rest have to do by you know whoring themselves out to brands oh here i love nike shoes i mean it's like really when what they've got is this massive community of millions of people they can also provide rarer assets to them so in the case for example you could provide a single recording that nobody else has and give it to your super fan and it could be worth millions so you can monetize all across your fan base much like most subscription-based businesses do so that creates revenue streams for musicians they also could put their ip rights on so as they move around they automatically accrue ip and you can sell baskets of ip rights we're already seeing artists sell their bad catalogs, but if you tokenize them and sell them, you could have still part of the stream, maybe maintain 20%, much like Beeple has with this art and some of these NFTs are with art.

59:11It changes the economics and gets rid of middlemen. It just ekes out more for the actual people. That I think is really interesting. We're also seeing the rise of community tokens and people haven't quite seen this yet but this is coming and it's going to be gigantic so there is a platform called socios that has a coin called chilies which i don't own but they have built community tokens for big football clubs soccer clubs in europe ac milan fc barcelona a bunch of others and what as a fan you get is a token of which you can get benefits. So they're like fan club benefits, including voting for what kind of kit they wear or some of the choices.

1:00:03So you're actually involved. Your community token has meaning. So it also has value. So if the team does better, your token's worth better. And you're kind of part of that ecosystem and it will give you benefits like tickets and stuff like that. So that is the start of where this is going. Everybody who monetizes online in any way, shape or form is going to have a token. Right now, we're used to subscription models. Right now, artists, for example, or influencers have to leverage Google and Facebook to basically monetize. And that's where brands and themselves meet and they use advertising and other methods.

1:00:41But once you've got community that has a token and you have direct access to them, then you can monetize in a number of ways and create value for the community. or you can destroy value for the community but that's for the community to be involved in and you can share in successes and we're going to see this from everybody from sports stars to youtube channels to actors and actresses through to charities through to i mean you name it anything with a community is going to tokenize and it's going to unlock vast amounts of value it's going to unlock ability for people to participate and feel part of something of a society which has its own form of money and the money can go up and down in value or it may be stable it may be utility and function and that's okay but you can't be part of the society without it but once you've got it it means the artist can speak to you directly or the charity or whatever So community is going to be explosive.

1:01:43People like Rally and stuff like that, people have no comprehension how large this is going to be. I think it's one of the largest underpriced parts of the market because people haven't got their heads around it. We haven't even got our heads around insurance and all of the other kind of contingent stuff, betting, that all comes onto start contracts. That hasn't really got off the ground because we've still got the problem with regulation. regulation is so fucking far behind where it needs to get to. They're still trying to figure out what's the security or not when the fact is you need to rewrite security stores because this has nothing to do with securities.

1:02:17This is a whole new asset class. So in thought turning terms, we need a new infrastructure and new institutions. I think it's coming. You can't launch central bank digital currencies and then not reinvent it. And we're seeing Asia much faster adopting how this plays out. And that's massively important to rewrite all regulation from scratch, not shoehorn it into stupid old regulation that requires endless court cases. Figure it out properly. And I think the institutions are keen to do that. It just takes time. And it's frustrating for businesses trying to build at lightning speeds when they don't really know, are they going to get prosecuted for this or not?

1:03:00And that's not right when you're building something so incredible. But that's not all.

1:03:08So all of that fits into even something larger, which is we are creating digital worlds, which we can call the metaverse. And I urge you to watch the interview that I did with Pierce Kicks of Delphi Digital about this. And this is the world where everything is digitized. Barry Silbert launched all of this to us really early on but he started to talk about Decentraland. Within the digital world, there are 3 million gamers. various gamers live in an alternative world where they socialize with each other. So when I went to see a friend of mine, my oldest friend, Daryl, went to see him at his house, his son, Harry, was playing, I think it was Fortnite.

1:03:56And I wasn't really aware of this. I knew Fortnite was the biggest game in the world, but I wasn't really sure why Harry on a Saturday would be in a gaming chair with the headphones on on Fortnite on a sunny day. And Daryl's like, well, he's been out, he's played football but now he's socializing with his mats and i'm like what do you mean so we used to get to the shopping mall um and he's like yeah well they don't do that now because his friends are spread around he said they they do it online and for some of you you're like duh obviously and to the rest of you watching this you're gonna be what so they hang out and talk to each other and play games together and interact and swap things and trade things with each other.

1:04:37Within these games, there is systems of money, tokens, earning a living, everything. And that's one game. And there's many of these games. And these games are becoming interoperable, where they connect with each other and all digital universes. And those digital universes have now money that can start spreading from one to the other. So it can be a base layer. Now, Bitcoin can do that too. But what we're seeing is monetary systems in this digital world where these digital goods have value. I mean, swords in some of these games now have yield curves, because I want to lend my sword to you and you're gonna have to pay me for it.

1:05:10So you can get the experience of my level in the game. Same with skins, or renting the ability to play at different levels in games. There's so many variations. But it's not just about gaming. Because we're starting to see the rise of education, living in these digital verses. We're starting to see income, businesses real estate all happening there are digital architects that are building digital projects that have digital value real value that people are paying big money for so let's go back to that people story so the guy who bought the people had also bought a bunch of the other people artwork and he created a token and he created virtual art galleries physical digital galleries, which you could visit to see the art in various metaverses.

1:06:00And then you throw a party on the launch of it, where people could go, listen to famous DJs in different worlds at parties, play Easter egg hunt. So you're exploring this world where you had to cross from one world to another. And then you go to another party and another art gallery and so on and so forth. That's kind of telling you where this is going. So digital art is trading in a digital gallery with live music, where in some cases, millions of people, 20 million people attended in some of these kind of musical events in the digital world, where people are meeting, exchanging value, conversing with each other, communicating, creating communities, earning money.

1:06:48And that is growing at an exponential rate. and most of us don't see it because we're not Gen Z, but Gen Z are in it. Millennials seen this edge of it, but most haven't seen it and it is coming and universities and schools, they can all operate in this world. You could now go into a game and play another game from a different multiverse within the game. It's beyond mind-blowing. When you put a VR headset on and an Oculus Rift and the first thing you come into is that room, You're like, oh my God, I could live in a garage and think I'm living in a beautiful house. And that's just the start of where this is going.

1:07:28These technologies are exponentially growing. More and more people are being absorbed into the digital world. This whole thing is like the discovery of the Americas. There is an entire new world that has enormous potential. It is going to increase global GDP. massively. It might even double it because of what is happening. We're not constrained in a digital world by the same constraints of the physical world. In the world of universal basic income, people can earn money within these digital verses, not creating something, but creating something for a digital company in the digital world, earning digital money.

1:08:11You can live in a digital house, but live in your parents' bedroom. I know that makes it sound sad, and it's not supposed to be. And that's just a dystopian version of this. But there's utopian sides of this too. This whole extra world, when I talk about the Bitcoin life raft, it's not just a life raft of Bitcoin. It's everything that we understand from value is moving and being built at a speed that none of us can comprehend. Nobody, literally nobody can keep up with what is going on. There is, it is sucking in all of the world's talent, whether it's financial talent, developer talent, philosophical talent, economic talent, everybody is going into this.

1:08:55So we're creating opportunity and opportunity to make money and invest at a rate of which has never been seen, I don't think, in human history. I think this is the largest wealth distribution underway that has ever happened. and it's going to happen in such a short space of time, you can't get your head around it. And the reason it's a short space of time is because we really fucking need it, right? Because this other system is destroying itself. But many of us, me included, thought that this moment that we saw in March was going to be the big bang. Boom, all over. How does it finish? The end game.

1:09:37there is no end game. The end game is the ongoing destruction and the ongoing migration. We are all migrating across. And I know there's many of you who go, Raoul, I wish you'd just talk about dollar-yen and I wish you'd go back to bonds or traditional macro. This is traditional macro, where it's going. Everything is going here. It's almost irrelevant to talk about the bond market when it's between 2 % and zero, when you've got different yields and different assets all going on over here that are fairly priced without the influence of central banks. Why would you get a lot? Why care if the dollar goes up 10 % when you can be involved in assets that do this, when they're all on exponential adoption curves and there's new exciting technology?

1:10:23Why bother? Why does it matter? Why does it matter what the price of oil does over the next nine months? It doesn't. And so that's the realization. That's where so many macro people have moved across. Macro is going to be useful as ever for hedging because all of this is still beholden to the world of business cycles, even though most business cycles have now been trodden out in terms of asset price effects because of the debatement of currency changing the denominator. But it will still have VAR shocks where everything implodes and goes down because there's too much leverage in the system and the usual bullshit the humans do.

1:11:03What we've just seen with Archegos, It's very common. And macro is great for hedging some of that stuff. But literally, I can't express to you how big this is and the opportunity. So if we look at the traditional macro world, of which I've now highlighted that I think there's a death of macro, I don't think currencies really move. I don't think bond yields really move. And not in terms of secular bet moves where we can make big money by following a career in this shit. that's done so what does it leave it leaves equities okay and it leaves crypto and so we're just going to see more money yes we've got commodities as well credit that's pinned to the rate so that's all gone credit's gone bonds are gone short-term rates are gone fx trading's gone i mean yes emerging markets are focused with equities and further that risk curve but really is going to force more money and more people to migrate into the source of returns.

1:12:04Now, what's extraordinary is the alpha that this space generates. The alpha is like I've never seen before. Alpha in digital assets, because there's so many of them, they're complicated. Everything's going under network effects. People who are buying tokens who really understand it are generating massive returns at this point in the cycle. It is cyclical. They will have points where they'll lose shit tons of money. But over time, because it's network effect, it doesn't revert to the mean like silver did after 1980. It doesn't work like that. Exponential assets revert to the exponential moving average.

1:12:42So it's always rising, which is what Bitcoin's done all the way through. Facebook's done. Google's done. All of these have done. And so, yes, these tokens, selling them will go to zero, but the whole token space and these guys, they're going to have boom bus cycles, and they will keep going up exponentially. There's also the trading firms that trade crypto, algorithm traders, short-term traders, macro guys, everybody. The amount of alpha those guys are generating is unheard of. And it will happen in the down cycle too, because they will capture some of the down cycle. There's money to be made all over this.

1:13:15And every day, there are more tokens. And these tokens are complex. So it's hard to trade. So that's even more alpha for the people who figure it out. So this space is going to be ongoing source of alpha for decades. When all real estate's tokenized, and we can trade real estate, when people are tokenized in terms of future careers or job paths or all sorts of parts from community tokens, when you can trade FC Barcelona against AC Milan, community tokens, and you can arbitrage it with something else. I mean, oh my God, you can't get your head around this. So if we look at the traditional asset space, which is DAI, equities, bonds, they're all kind of credit.

1:13:59They're all kind of 100, 200, 300 trillion dollar markets. The crypto market is 2 trillion. It's 100x from here. But I think it eats all of those assets over time. So maybe it's 200x. No, it won't be a straight line. But this is the biggest change in financial markets, the system of money and economics, and how economies are run in all of history, in the fastest, shortest time it's ever happened. And people are going to be tribal about it. People are going to catch hold of their own narratives to make sense of this world. But this world is unstoppable. It is coming. It will have massive boom-bust cycles.

1:14:45there will be periods of time when you'll lose money and periods of times you'll feel like a god but that is opportunity because in an exponential world risk doesn't equal reward reward massively outsizes risk as long as you're not stupid about how you invest so i just thought it was important because it's simply the most important thing I've ever seen in my life. And I keep talking about it, but I wanted to bring everything together to get it across how big this is and why I spend a lot of my time in this space, because everything else seems dull. But in my journey of understanding and my migration to this other world, it gave me a new lens to understand the world we're in now and the opportunities that are coming.

1:15:42I'm a big believer in Neil Howe and William Strauss's book, The Fourth Turning. I really do think we are in the fourth turning as we speak, where new institutions, new forms of government, and new ways of doing things develop. And they develop over 10, 15 year period. And I think we're in the middle of that. I think this digital revolution is clearly the most fourth turning thing on the planet. But I also think something else is happening. And this is interesting to me because it's giving me optimism because the world is pretty fucked, right? We've got the pension system that's broken. They can't afford to pay the baby boomers and the millennials hadn't been financialized.

1:16:18They've now been financialized. They've started to understand markets, but maybe not in the best way yet. We've got the debt burden. We've got too many people. We've got aging populations as well that are dragging on growth and the debt bubbles and all of this stuff, right? The stuff we know, the broker banking system, the rich-poor divide, and all the misery and shittery of the world around us. But Bitcoin gave me hope that there was an answer. And my very first video about the pension crisis said, well, this is the asset you actually need to buy. And that proved out pretty damn good. But I'm starting to see that this is about to coincide with a bunch of other mega secular trends.

1:17:01I think we are entering what I'm referring to as the exponential age. And it's going to be ignited by the stimulus that's coming, because the stimulus is being pushed into areas to develop a new economy. Because people need to understand that the old economy can't generate GDP growth. Just simply can't. It's proven. GDP growth keeps rashing lower after every recession and lower. So if we just did the same thing repeatedly, this time around GDP growth should average about 1%. How do you change that? You change it by investing in technology. And we so happen to be at a point in time where more things have come together at the same point than ever before.

1:17:49And I realized this a while ago when I realized that Europe was hurtling towards a green future and what it was doing. And I'm not going to talk about all this way too much to absorb. And it's that whole conversation for another day. But it's something I wrote to Global Macro Investor. But right at the same time, we've got the revolution of digital value and money, the entire monetary system, the exchange of value, the soar of value, everything. And the digital world within which we live. we've also got the EV and green energy revolution, the digitization of emerging markets, the internet of things, virtual reality, wearable technology, biotech, 3D printing, autonomous vehicles, robots, AI, distributed computing, 5 and 6G and space Wi-Fi, all rolling out in the next five years.

1:18:47That is unbelievable. I don't think ever in history that all of these things are working now, but we're going to hit Metcalfe's Law on every one of these in the next five years. And yes, there will be ups and downs and there will be bubbles and booms and busts, but we're going to see the largest group of things in an exponential trend than we've ever seen before. It's a new era. It's the exponential age, and it is going to be a golden age of opportunity. As we leave this old way of doing things, where we transition from the fourth turning into this new way, the new way is going to offer unprecedented opportunities to redistribute wealth.

1:19:34So we're going to be there. I'm going to be there on this journey. I'm trying to get my head around all of this now. But hopefully, I've given you the big dump, so you're all on the same page as me with this whole digital world, the world of digital assets. And let's keep discovering more. It's all a journey of learning. None of us know what's going on. None of us know where it goes. All we know, it's going there fast. All right. I hope that was helpful, everybody. Good luck. And just keep adding into the dips, because this thing is going up. so welcome to the footnotes um as i said at the beginning i wanted to add some extra bits onto the end and i don't want to shoot one into the middle of the video so you see these weird cuts again this is really a free thought piece from me where i'm just dumping everything on my mind and i realized when i've gone through it there's a few things i really need to clarify or go into more detail on the first thing i think is probably the single most important point i'm to get across at the beginning of this video is this central bank debasement.

1:20:37You know, we talk about changing the denominator because the denominator is falling, but I realize I'm really going to cross clearly or super clear what that is. Now you'll hear Michael Saylor talk about this too. And I think he does a good job, but it's still not quite clear. The actual thing is the central bank balance sheets since 2008, whether we're using the Fed or the G4 central bank balance sheets, since the 2008 crisis started, they've been devaluing or increasing the balance sheet at about 15 % a year and 13 % after 2008 started, because that was obviously going from a very small base, the percentages move accordingly.

1:21:22But with that debasement, What we're trying to do is make sure our investments outperform that 15 % fall in the denominator, i.e. the rise of the central bank balance sheets. So we're now looking for a hurdle of 15%. Now, that's pretty tough even for the equity markets to do. 15 % is pretty unheard of, but that's what we're looking for. So we're looking for assets that rise more than 15 % or at least hold water versus that 15%. If not, we're actually getting poorer. And this is this rich-poor divide that I talk about, because if you can't buy these assets that increase more than 15%, you're not generating wealth.

1:22:08You're just keeping in line with the devaluation of fear currency. And this is creating that 99 % and the 1 % divide is that inability to own the assets that outperformed evasement means you're not generating net wealth. So really important point. So also some other key points and observations about stuff happening within the space. I don't think I spent enough time talking about the interoperability layer. now how i describe this is you know we kind of started this whole crypto journey back in 2013 for me at least with bitcoin and then ethereum came and then we've seen these other tokens some have survived some have failed this big ecosystem and people say well this has got a great case for that this has got a great case for this and then there's a group of people saying well it's all going to go into one protocol.

1:23:03But the big development is people saying, you know what, it doesn't need to go on one protocol, and we'll build a layer that allows all of these things to work together. So what this means is I'm talking to you. I'm using a microphone of which you don't know what it is that condenses the sound and records it on a system that you don't know what it is. On a computer, you don't know what's a Mac or a PC. I'm using an internet of which you don't know what the type of modem it is. You don't know any of these things. And I can have a live call with you on the phone, or I can have a Zoom call, and you don't know or care.

1:23:38I can send you an email. You don't know what system I'm on. You just get the email. That's interoperability. It's one of the key features of the internet and what made the internet so successful. That is coming in crypto, and it's coming fast. We've seen on Real Vision Crypto things like QuantNetwork, Polkadot, chain link these things are huge because they allow different things to move around across this ecosystem we're seeing in the gaming metaverse where where a token go or a skin can go from one game to the other to the other and those are different languages different protocols somewhere on blockchain so long it's extraordinarily exciting so the wave of the future is you're not going to know that some of these things are built on Bitcoin or Ethereum or anything else.

1:24:31What you care about is the end application. And we're coming closer to that. In fact, NFTs are one of those because really a lot of the people, for example, buying the NBA slam dunk shots are actually not interested in the fact that it's on Ethereum. All they care about is whatever protocol it happens to end up on, all they care about is the photo and the authenticator. So that's a first time I've seen a real example of that. That leads me on to another story that I didn't cover in the video. I kind of alluded to is these layer two solutions. So we are seeing, for example, some really interesting things on the lightning layer in Bitcoin, which is using the Bitcoin protocol but kind of speeding it up.

1:25:24And we've seen two big breakthroughs there. One was strike, and the other is bottle pay. They're both slightly different. But what they're doing is having lightning fast payment rails, which is not about Bitcoin. It's actually me sending a dollar to you or sending you a euro, and I start in dollars, and it happens instantaneously. It's payment rails. So obviously, there are many other protocols that are looking at the payment rails side, but it shows that Bitcoin can do that too. And these things will be interoperable because don't forget, we've got a big monster coming, which is Facebook DM or the DM project.

1:26:04And that means that on Facebook, there's going to be a universe which needs to be interoperable with everything else. And the central bank digital currency is going to be interoperable. So these layers, this interoperability, this is a really exciting development that I think people don't really yet know how this is all going to work, but it's coming and it's coming fast. I also didn't talk about remittances. I mean, this is another huge use case that's building rapidly. People like Abra are building out some really interesting stuff. The third world has been unbanned. And as I talked about in the video, we've hurtly in a massive quantum leap into the digital world.

1:26:43We're seeing it particularly in countries like India, but it's happening all across the world. You know, Filipino remittances, it's a big market for the Philippines, all down in Latin America. A lot of this is going on crypto rails. So we've seen Ripple and XRP with some of their use cases. We've seen that Lightning is working on this. We've seen that people like Abra are building wallets for this space. We see a lot of focus on this. That's another game changer that's kind of different to a lot of this other stuff, but it's going to change the world. And that is ongoing and is happening very fast.

1:27:19And I think as people get connected to the internet by the 5G, 6G and Starlink and all of the other, you know, satellite Wi-Fi, we're going to see some major changes in what it means to be banked globally. Also, I think that leads me on to another thing I didn't really talk about is we kind of tend in the crypto world to be focused on the West. We're sort of very kind of US-centric with a bit of Europe, even only marginal Europe. Everything's talked about like the West. But when you talk to people in Asia, you realize how incredibly advanced the Asian crypto ecosystem is. I mean, all the volumes are really coming out of Asia.

1:28:06Yes, there's a bit of wash trading between exchanges. But really what is happening is extraordinary things like a corporation in Malaysia that has currency restrictions is trading with a company in China that has currency restrictions. And then getting around it to the getting around the bureaucracy, the slowness of that whole system and crossing the ringgit RMB cross rate by actually doing it on Tether. Now, it doesn't have to be Tether, but Tether is the standout winner in this area. So trade payment rails are happening on stablecoins. This is enormous. We don't really understand this in the West, but it is also happening at any other country level where we're seeing this.

1:28:52So that's where you get these kind of weird countries that are using a lot of stablecoins. The narrative from the West is, oh, it's clearly, it's just capital flights and money laundering. And it's not. It's business doing business on a crypto solution. And that is incredibly powerful. Also in Asia, retail and institutional investing is much more advanced. So the use of leverage, the sophistication of the Asian trader is by far an advance of where we are in the West because they're allowed to, the regulations allow them to do it. So that's why the big uses of Binance and BitMEX and FCT are all in Asia, because people can't understand how these products work.

1:29:36You know, Koreans and others deeply understand selling puts to generate yield and the risks that involve because they've been doing it for decades as part of structured products. There's a structured products market that's developing there. So, you know, we've had some videos on Real Vision about this, but I think it bears understanding how advanced this is all going on in Asia, how big these exchanges, why the volumes are so enormous. There are some real use cases and real understanding. So don't keep your eye off that ball either. And finally, the other thing I want to bring to people to understand is we're seeing a massive spike in, let's say, option trading in the stock market.

1:30:22Speculative activity. Activity in cryptocurrencies. currencies. These things are really dramatic in their shift. But I've been thinking about this, and one of the things I realized is, if he was the same group of people, and they had suddenly become more speculative, then that's different. That's a change in activity. But actually what we've done is the gigantic rise of the financialization of the millennial population. So if you look at the massive growth in Robinhood, the massive growth in Coinbase, those 56 million accounts that Coinbase is coming to market with, and you see that globally, that is a younger population that is just financialized.

1:31:12Why? Because the millennials, like their parents, just did that 30-year-old mile, 32-year-old mile when they need to get their shit sorted out and start saving. this recession we've had was the one, and who knows why, but it was the one that brought them all into the financial markets. So that step change in volumes and speculation and opening a brokerage account is not about an excessive speculative bubble building within an existing group of investors. It's new investors. Remember, when we go back to the story of inflation, the reason why we got the inflation in the 70s and 80s was this massive rise of the baby boomers going straight into this workforce and buying everything as they first got their first wages that led to a massive rise in prices.

1:32:04Now, that doesn't happen, as I talked about before, in the inflation scenario with the millennials and the boomers offsetting each other. But in the investment world, this is creating a huge new source of demand. And it's very exciting for people like us at Real Vision. It's very exciting for the crypto industry. It's very exciting for the financial industry as everybody kind of tries to catch up now and create the right product for the right world, which looks to me like it's a much more optimistic world. The reasons why Cathie Wood's ARK Invest have done so well is because the young people are investing for the future.

1:32:42And we're seeing it and we should encourage it. Anyway, thanks. I hope the footnotes helped. I just wanted to get across some of these points. And remember, we're all trying to offset that 15 % number. And that is why we're focused here. As the crypto market gets into the phase where, let's say, central bank printing slows down, the Fed start tapering, the global central banks taper, the economy grows, we'll probably see that traditional crypto cycle where crypto comes off. And again, that point will be the start of searching for other assets that can offset that average 15 % devaluation of the currency.

1:33:24Anyway, thanks for your time. Hope you found it useful. So as you can see, there is an enormous amount here for us to get our heads around. The component parts are all exponential at the same time. It's this Reid's law idea of Metcalfe's law on top of Metcalfe's law. And look, it's going to be really hard for all of us. I'm thinking through how the hell are we going to cope with the US election with this amount of AI coming? I'm thinking through what does it mean for the future of jobs? what does it mean for future productivity can we get out of the debt trap because of productivity increases there's so much here so i'd urge you all on the real vision platform is to take notes on this clip some of the stuff out and use that as a framework to build your understanding from all of these component parts and it'll help you understand this so it's not coming at you like a fire hose it kind of is structured and you'll understand how it all fits together and you can feel like you're in control of something because it's going to feel hard for us to feel in control.

1:34:28Anyway, I'll see you next time and hopefully take you further down one of these rabbit holes at the nexus of macro crypto and technology. What's up, revolutionaries? Thanks for tuning in. For more content like this, head over to realvision.com and get unfiltered access to the very best, brightest, and biggest names in finance.