Why Nations are Hoarding Bitcoin ft. CZ from Binance

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1:18And that's why so many investors I know are working with Bitwise today. They've been all in on crypto since 2017. They're OGs. They've got more than 30 products to help investors like you get access to whatever they need or want. They've got a team of more than 100 across the US and Europe, and they have over 10 billion in client assets. You know, a lot of people know Bitwise for their ETFs, you know, how they manage the world's largest crypto index funds and the wide range of crypto ETFs they have. But not as many people realize Bitwise manages private alpha strategies, too, and has SMAs for large investors and is one of the largest institutional Ethereum staking providers.

1:55They really do everything. These guys are true OGs in the space, and they're good friends of mine, too. So please go and check out Bitwise. They're really excellent. Go to bitwiseinvestments.com and see all that they've got to offer. That's bitwiseinvestments.com or just email them at james at bitwiseinvestments.com and let them know that Raoul sent you. Anyway, there's a million ways to access crypto. Explore how you can access it best with Bitwise. And remember, carefully consider the extreme risk associated with crypto before investing. Anyway, thanks so much. Hi, everyone. I'm Raoul Pal, the CEO and co-founder of Real Vision.

2:31Here at Real Vision, we're committed to give you the best knowledge, tools, and network to help you succeed in your financial future. If you're enjoying this podcast, please take a moment to give it a five-star rating. It truly helps us continue to bring top-tier content. Thank you so much. Hi, I'm Raoul Pal, and welcome to my show, The Journeyman, where we go on that journey to the nexus of understanding between the macro crypto and exponential age of technology. As you know, crypto is a large part of my thesis of the exponential age, and I've proven out over time macro is crypto. This has been a business that's taken us a long time from my early days in 2013 to where we are today.

3:13The ups and downs have been huge. but nobody's seen more ups and downs than my next guest CZ the founder of Binance. CZ is a legend in the space and I got my second chance of interviewing him. I interviewed him I think on Real Vision back in 2020 but this is the first time I've caught up with him since and this was on stage at token 2049 in Singapore and in sorry in Dubai. Singapore's coming up It's always an amazing event. It was a great highlight of my year this year going. And this interview with CZ was the highlight, I think, for most people. Enjoy. Join me, Raoul Powell, as I go on a journey of discovery through the macro, crypto and exponential age landscapes.

3:59In The Journeyman, I talk to the smartest people in the world so we can all become smarter together.

4:09it's great to see you back publicly talking because a lot of people listen to you first i want to go through what you've what you've been working on with the giggle academy because that was the last thing we heard from you is like i'm going to focus on this so talk us through that journey uh sure yeah i mean it's a very fun project to work on um i actually don't spend that much time like i do have two calls with them every week status calls and then i kind of talk to them a bit more about the AI side of things, like what AI technologies to use so that we can build the content faster. I think the Giggle Academy has a very good product market fit.

4:45It's very sticky. So if you give the app to a kid, they beg for it. So I think the original hypothesis is right. With the technologies we have today, it's not that hard to make an app that's educational, but also glue the kids to the device. so now we just got to scale up more content and we're always exploring more different ways to speed up the process so I think right now there's about 60 lessons and about 300 storybooks and just today we launched 15 languages for the storybooks so the storybook itself will be read to you in 15 different languages and now with AI it's so much easier to add more content and more languages too so yeah, it's a very fun project And we are educating about 20 ,000 kids already.

5:37This is less than six months. No, in the last six months, yeah. I mean, you've scaled businesses at lightning speeds. Now having AI, does it even scale faster for you? Oh, yeah, yeah. I think AI will help us to scale much faster. So now we create the storybook in one language. AI translates it to everything. And then even the storybook is heavily AI-assisted. So before you have to create the images, et cetera, now. Now we just use AI to generate. Even three months ago, it was quite difficult to get AI to generate the consistent characters on multiple images through different pages of the book.

6:15But that's improved in the last month or two. And video generation is still a little bit challenging, but now the characters are much more consistent. And we want to get to a point where we can use AI to generate the specific format that we need, which is a Unity Gaming Engine Spine format. so we want to get to that format because that format saves a lot of storage so yeah but AI Giggle is a post AI app so it's going to be an AI native and where is this all going in a few years time what are you trying to get to? in a few years I think I want to teach 100 million or billion kids for free 18 years or more applause applause applause Hi, Raoul here.

7:02Listen, I think we've got until 2030 before the economic singularity arrives. Now, it might not be the exact date, but it's around then. So we have about six years to figure out how to unfuck our future. I've put together a report to help you called Prepare for 2030. It's going to help you take the first steps in that journey to make sure you're secure past 2030. So just click on the link below and start your journey now. Now, there's the 100 billion kids you're teaching, but you're also doing something else, which is going around the world talking to countries about crypto. Talk about this, because not a lot of people realize what you're doing in the background, but you're doing a lot.

7:42Yeah, sure. So I interact with about a dozen countries right now, top leaders in these countries. So I think we've seen a big shift in the last six months or so. With the U.S. election, now the U.S. new administration is extremely pro-crypto. and with Elon Musk wants to use blockchain for government efficiency. We've seen that in many other parts of the world, including UAE, both Abu Dhabi and Dubai, they're exploring how to use blockchain for government projects. That includes decentralized IDs. Once you have an ID, you need a wallet. Once you have a wallet, then you can do anything that you need with an ID.

8:22Land title rights, opening bank accounts, e-visas, border crossings,

8:29education diplomas, etc. So there's so many things we can do. And this is kind of a passion project for me as well. Because now, today the blockchain is kind of single dimension on the trading, right, financials. Which is great, but with this we can expand blockchain to multiple dimensions. And with the industry getting bigger, there will still be more trades. So as a shareholder of a large trading platform, I still benefit. it um and then also uh actually before this um most countries are thinking looking at how to regulate crypto um and uh there's a there's about a dozen countries that come to me and says well we either we have cc here or they know somebody who knows me um they come and talk to me and then because i have nothing else to do so i'm more than happy to talk to them i'm more than happy to talk to this country leaders to advise them on how to what are the things to watch out for uh in terms of adopting crypto regulations, how to make them more favorable to our industry.

9:27We want to protect consumers, but also advance innovation. So did the young kid from Canada think he'd be going around countries telling them about blockchain technology? No, I think even today it's a bit surreal. So I view myself as a technology geek and just never imagined going to different countries, talking with country leaders about things that could impact a huge number of people. So, but again, I think it's a very meaningful thing for me to do. so again I don't charge for my time it's all pro bono but I think again it's very important for our industry and it's also important for each country's economy Have you ever wanted to trade Bitcoin but haven't dared try?

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11:05Now, here the UAE has been extraordinary good adoption and seeing this. Talk through the journey here because you came here and people are like, why is CZ moving to Dubai? And then it's become almost the epicenter of the industry. You can see by the crowd and all the way across these countries. It's extraordinary what's happening. Yeah, absolutely. So four years ago, end of 2021, in September 2021, I came here for the first time. And based on my friend's recommendation saying like, look, you should explore Dubai. UAE is very pro-crypto, pro-business, one of the best business environments in the world.

11:41So I took up his device. I came here for three weeks. I booked a three-week trip. So I came here, actually when I landed, I only had one meeting lined up, which is with His Excellency Minister of AI, Al Olamo. And I landed on a Friday night, and Friday is not a working day. Friday, Saturday is not a working day back then. Sunday is a working day. He met with me, and then he introduced everything. And then I just, within like about a week or so, I knew this is the place to be. They are extremely pro-business, really pro-crypto. The ministers know exactly what's going on, very smart, very sophisticated.

12:19And the speed is really fast. So at the time, Vera didn't exist. So we were discussing about how to regulate crypto, et cetera. And then at the time, we recommended setting up a new separate agency, and they actually took that advice. So a month later, Vera was incorporated, literally just within a month. and then by November we signed an MOU to advise them on the crypto regulatory framework for Dubai by February next year 2022 it was signed into law so and then by March we got a in principle approval together with three or four other crypto exchanges so it moves really really fast here um and then um uh so and then i explore abu dhabi as well so abu dhabi this is like a little bit of a friendly competition i think our friends from locally knows um so uh but both places are extremely pro-business extremely thoughtful and uh here you know dubai's dubai ua is an extremely safe country so the the fact that said like you know a lot of western media kind of portray uh middle east in a sort of a negative way but this is one of the safest countries in in the world, the safest city in the world.

13:35So there's actually no crime here. So you can see that if you manage, if you regulate well, you can encourage business while keeping all your citizens completely safe. So this is one of the best places. So back then, it was like there was probably like 5, 10 crypto companies in 2021. Now there's like thousands. So it's incredible to see those growth. So when you go and talk to countries, are you talking more about just starting them on the Bitcoin journey? the first thing that we get all of our friends to do? Or do you open up and say, okay, this is what blockchain rails can do for a country? Because we've got a world of AI where digital ID is going to matter.

14:12A lot of things are going to matter. Yeah, I think the conversation today is a bit more advanced than that. There are very specific issues about how to adopt this. I'll give you a couple of examples that are typical discussion points. Many regulators still want to regulate everything locally. They want a local custody wallet solution They want a local order book They want a local everything, local team, etc But that's usually not the best way to go Because setting up a secure Custody solution For billions of dollars Requires a lot of money, it requires a lot of funds And it requires a lot of expertise Which is very lacking today Just setting up a global one is already difficult enough If we have to do it like 200 times We just don't have the people For each really cold wallet you need to have like 15 signers.

15:00You can't find 15 signers that are not public, that are really extremely trustworthy in different parts of the world, in different geographies, and they're not incentivized by more money. They have a steady job, they're high income, they have a nice family. So you just can't find like, you know, a hundred times more of those 15 people, right? And also local order book. Again, if you divide each country with their own local order book, liquidity is going to suck. And so when you want to buy like a million dollars, the slippage is going to be super high. So those type of issues are very like, you know, real concrete issues.

15:36Many countries have the capital control. So capital flight issues. Almost all of those countries want foreign direct investment. But the thing is, if you don't open up your, if people can't get money out, then the money is not going to come in, right? So a lot of those like issues that are very real, very tangible issues to address. And the two big ones that are still addressing this are China and India. Where are they in the process? Because they open closer, because they've got capital issues, capital control issues. Where do they stand right now? I think China's adopting the use Hong Kong as a sandbox kind of approach.

16:14So I think Hong Kong is extremely pro-crypto now. I think they started changing about two years ago. They started issuing licenses. But two years ago, the licenses are quite restrictive. so in terms of token listings, et cetera. So now they're exploring ways to open that up. And then Hong Kong still also have to worry about the capital control issue of China. So they cannot blatantly help Chinese mainland users move money out. And the thing is in crypto, once you buy Bitcoin, which country does that Bitcoin belong to? There's no border, right? So whereas in traditional banks, if you have your money in your Shanghai bank account, that's in Shanghai, when you move it out of to hong kong that's kind of out in hong kong you kind of know um but with but if you buy crypto in shanghai when you when you move to the us the crypto is in the u.s like it doesn't have it doesn't have that concept of a border yeah right so um there's some real issues to to address there um but in the uh so you mentioned you uh in india um i think india i have less interactions with to be very frank um i think based on my knowledge is pretty much based on public knowledge.

17:22I think the tax there is quite high and to the point where it doesn't make sense to do transactions anymore. So I personally, I don't have any much interactions with the Indian governments, but I would very personally very much to see some of those being loosened. And what about the kind of strategic reserves idea as well? Because that's the hot topic people are seeing happening. Talk us through that and what you're hearing. There's a few countries who are extremely advanced on that topic. I think Bhutan, I believe His Majesty King of Bhutan is actually in the city today. And he's an early crypto adopter.

17:59He's a very smart guy. And they have excess energy, clean energy, hydro energy. So they've been mining Bitcoin for years. So they have billions and billions of dollars of Bitcoin for a very small country. And now they've added Ethereum and BNB to their national reserve. So the early adopters are moving forward. Based on public information, U.S. seems to be holding at least no longer selling their Bitcoin. Some of the OGs like us actually kind of hope that governments will sell their Bitcoin so that other guys can buy them cheaply. But with this U.S. administration, they're very business savvy.

18:38So they understand what's valuable. So now they figure that out. With the U.S., with one of the world's largest economies holding Bitcoin now or making a crypto reserve, other countries are forced to do it because the later you do it, the more expensive your crypto will be. So I think we are talking with many countries on advising them how to set up a crypto strategic reserve and also very simple stuff, very basic fundamental stuff like what wallet solutions to use. Do you use a professional custody solution or do you use your own hood wallets? Do you have enough expertise to build that kind of infrastructure, et cetera.

19:17So for most countries, most countries' starting amount are not as big as the U.S. U.S. have like 200 ,000 Bitcoins or something. For most other countries, when they hold a much smaller amount, we actually just recommend them to use a professional custodial solution that's multi-sig. So no single person can move the money. When they build up to a certain large amount, then they should move to their own code storage solution. So there's a lot of discussions along those lines. Where's Europe in this whole equation? Nowhere. It's unbelievable. Yeah, so I don't see Europe in this discussion. No, it's extraordinary.

19:57And, you know, because in the end, this technology enables average people to generate wealth, to be involved in a financial system, and Europe's actively blocking them out. Yeah, I think so far, actually, there's an exception. Montenegro is actually quite pro-crypto. We have an active dialogue with the prime minister there. And he's a very forward-thinking person, leader. But other than Montenegro, I don't have any other... Yeah, it's kind of missing on the map. So what gets you excited when you're looking at the crypto markets these days? What innovations, what things are happening that you're like, this is really interesting?

20:36I think the crypto industry... So there's a lot of money flowing around. But they're all chasing short-term gains. So I would like to sort of help the funders to build real products. So I'm a builder myself. I like to see products built that a lot of people use. So I think that's the single most important metric. It's not the token price. It's not everything else. It's just building use cases for people. So this is why I'm actually spending majority of, like the biggest chunk of my time today is spending on easy labs with funders. So talking with funders, looking at different projects, and just trying to help them.

21:13There are still many, many strong funders. It's just that their voice is a bit muffled right now. So I think we've got to help those funders to be more vocal, more active, and also more engaging in the community and help them raise money, help them design proper long-term token economics, etc. So that's where I spend actually quite a lot of my time. And when you're looking at the applications layer that you might invest in, what are you seeing that's outside of finance? because there's a big focus on DeFi and stablecoins and all of this stuff. But there's a much broader use case here, whether it's social media at large or whatever it may be.

21:47What are you seeing people building? Are they grasping the opportunity yet? To be honest, I think they're all very early stage. I think crypto so far has not expanded beyond trading. But this also represents an opportunity. So right now, no, RWA is quite new. It's growing, but it's still finance related. It's still like sort of tokenizing real-world assets, et cetera. De-sci or decentralized social media hasn't really taken off yet. There's a number of really interesting attempts that we're looking at. But when I talked about the government solutions, I think that's another area that most likely can take off.

22:28And that's not finance-related, right? So those are just pure blockchain for efficiency and for transparency. for example land title rights in many countries they don't have very good systems even in Japan they still use a piece of paper with a scratch off code to verify you own that piece of land and if you lose that piece of paper it's actually quite difficult to replace or to get it back so in other parts of like in Africa there's many land you don't know who it belongs to and also even in countries like US where there is fairly mature record keeping, but the record keeping is done manually and the local municipal office keeps that record and it's not digitized.

23:10So when you try to buy a piece of land, you don't know the history of that land. You don't have data, so then you cannot price it. And then you have low liquidity. So there's all of these issues which can be addressed and we are actually investing in a company that's solving this problem. We recently invested in Sign, which is another project that does digital decentralized IDs and they are building layer twos for governments, et cetera. So I'm pushing them really, really hard. So yeah, so there's a lot of interesting solutions being built. Yeah. I think everything that can be digitized will get digitized.

23:45And we're seeing that trend and there's so much efficiency, particularly like government level and stuff like that. One of the things that you were known for was the investment in X. Now, what did you see in that? Because you don't make a big investment like that unless you see something in the future that could be related to Crypto Web 3. Yeah, to be honest, X was a different type of philosophy. I think freedom of money is important. But to have freedom of money, you have to have freedom of speech. Freedom of speech is kind of the bottom layer. If you don't have that, then no other freedom kind of works.

24:24So when we invested in X, Twitter back then, it was based on that philosophy. And then I actually didn't expect that they would turn to become XAI. So now we're a minority shareholder in a leading AI company. So fantastic. And talking of AI, how are you thinking about how AI is going to change even this industry? Oh, yeah. Outside of just developers using AI to write faster code. Yeah, yeah. So I think AI has a lot of use cases. Well, number one is AI, I believe, will completely revamp their user experience, how you interact with blockchain. UX feels like it's all going to... It's all going to change, right?

25:04So I think AI has so many different applications that unfortunately, this industry happened before AI. So we need to change this industry to an AI-enabled industry, both in terms of apps we're building, product tools, customer support, risk management, risk monitoring, and also AI itself can use blockchain, right? So I think, as I said, tweeted before, the currency for AI is crypto. AI is not going to swipe a card, you know, enter SMS code. That doesn't work for AI. It's going to be crypto. And then AI needs a lot of data to train. Today they exhausted the public data, but there's a lot of data we don't capture today.

25:50Those data can be captured in a privacy-preserving way using blockchain. But if you give those data to a third-party company, then you can't ensure your own data sovereignty. So capturing of data, it logically should be done on the blockchain. But today, it's easier technology-wise to do it on a centralized platform. So we will hope to see that transition happen. And then today, there's so many different AI agents with a token. But the agents don't have a lot of utility. It's experimentation still right now. So what I would really want to see is real agents that have real utility, that can really help you, that have tokens.