A Crypto Update & a Gold vs. Bitcoin Showdown with Raoul Pal, Kevin Kelly & Andreas Steno Larsen

0:02Hey, everyone. If you like this podcast, go behind the paywall to get privileged access to the smartest minds in finance. Visit realvision.com slash RVpod and use the promo code podcast10. That's podcast10 to get 10 % off our essential membership for the first year. Join the Real Vision community and learn how to become a better investor. And now to the top analysis of today's markets. Hi, everyone. Welcome to the Real Vision Daily Briefing. If you've joined us for the Festival of Learning, you know that Raoul and I are busy wrapping up with a live Ask Me Anything over on the website. I can either confirm or deny whether any Spanish cava is involved.

0:40If you weren't able to make it, though, don't worry. We are going to do something special here as well. We're going to unlock a couple of conversations that were most popular among our members over the last few weeks. The first revolves around the role of hard assets in this period of stress. I want to save 10 minutes for the discussion on gold versus Bitcoin. As I said earlier, it is a bit of a hot potato, this topic. And to use your wording, Ronnie, I think the Bitcoin case is an extremely dividing case in many ways. Also, even compared to the gold case, everyone's got an opinion on Bitcoin as well.

1:21And either it's basically the cure for everything or else it's not worth anything. So, Frank, I'll start with you. digital gold, Bitcoin versus the actual physical gold. What's your opinion on this? I have very strong opinions. So I did a debate a couple of years ago with Michael Saylor, who is the biggest Bitcoin proponent out there. And I did it for a reason because he was out there talking up Bitcoin, which is fine, you know, do whatever you like. But he was suggesting that gold was going to go to zero and Bitcoin was going to take over the entire gold market and go to a million dollars per coin.

1:59And that really, I had to shake my head, and I challenged him for debate. He finally agreed. And we can find that on YouTube somewhere. There's over 2 million views on that. And I went through all the reasons why Bitcoin is not gold. Now, obviously, there are two similarities. The similarities are scarcity. Gold is scarce. Bitcoin is scarce, arguably more scarce than gold, because gold has an inflation rate from 1.5%, 2 % a year. But here's the thing. And listen, I've always said this. I may be wrong. But if you want my honest opinion as whether Bitcoin is the same as gold as a store of value, I say absolutely not.

2:43And I'll give you all my reasons because it's untested in a crisis yet. It's barely a decade and a bit old. It's never been tested during a crisis. It does not behave and has not behaved like gold. They actually behave differently at different times, which is proof that it's not gold. It's something. I don't know what it is, but it behaves contrary to gold. For a long time, it was a momentum play, played by all the big players. And I have to give credit to the Bitcoin Maxis. They did an incredible job of marketing the concept of Bitcoin, an incredible job, including buying off members of Congress with inflated Bitcoin prices.

3:26You know, you've got to give them credit. They did it, okay? But it's not gold, okay? Gold's been around for 5 ,000 years. Gold, an ounce of gold today will buy you a fine gentleman suit, like a Cuccinelli suit. Why not so? 150 years ago, it bought you a nice gentleman suit. 2 ,000 years ago, it bought you a fine Roman tunic. It keeps its value, period. So what do I fear? What is my fear about Bitcoin? Is that in a crisis, and I am one of those that believe that eventually we will have a dollar crisis, a fiat currency crisis, because you can't do what they're doing forever. Eventually, gravity will take over, and you're going to have a loss of confidence.

4:16You're going to have a crisis. If Bitcoin is any type of threat to the US dollar system or perceived to be a threat, they will keelhaul it. And it's easy to do. All you have to do is outlaw the ownership of Bitcoin or control the amount that you own. And you can shut off the on and off ramps quite easily. It's a digital asset that you can shut it off with a switch of a button if you wanted to. And so if that were to happen in a really extreme scenario, what are you going to do with all that cold sitting in your wallet? What good is it going to do? Now, listen, gold, they've tried to confiscate your gold in the past.

5:01The U.S. tried to do it in 1933. First, they said, you know, turn in all your gold. And then momentarily after that, they repriced gold or devalued the dollars. They basically screwed over the American people. and in 1971, after all the promises, Nixon closed the gold window and said, no, we're no longer a gold bank. You can't have our gold. So gold was like smoke. You thought it was there. You went to grab it and it was gone. Okay. So they may try and confiscate your gold, but they will never try and kill it because they own it. Central banks own a lot of gold and they keep buying it, The US has a lot of gold.

5:41It's not selling it. They may try and get your gold, and good luck to them if they try, but they will never try and kill it. Now, Bitcoin, they don't own Bitcoin. Bitcoin is just a competitor, a potential competitor in a time of crisis. You know what happens in times of crisis? You have capital controls. Also, governments will go to great lengths in a crisis, including screwing over their own people, to keep the system intact. So that's it. To me, that's it. Now, listen, I may be proven wrong. And if I live 50 years longer here, and 50 years you ask me and I'm wrong, great. But if you're asking me today, where am I going to keep my store of value where I can sleep at night?

6:28It's going to be gold. Bitcoin has its purpose and people can speculate whether it will be a gold-like asset someday. And that's fine. And they may be right. But it's certainly not proven today. And I wouldn't take the risk as a store of value. End of speech. Ronnie, before I allow you to respond to that, I'd like to challenge you a little bit, Frank, with a follow-up question. Let's assume that something material happens to the view on Bitcoin within central banks. Let's assume that there is a growing probability that central banks will actually accept Bitcoin as part of their reserve or accept the possibility that Bitcoin could become part of some sort of digitally backed currency.

7:19What would be your – would that be a game changer for your view? That's basically my question. Of course. But again, you're speculating. If my aunt had a beard, she'd be my uncle. You know, it's like you're speculating if, if, if. And that's what, you know, guys like Michael Saylor are running around and say, well, you know, look, El Salvador and Central African Republic, you know, I said, so what? By the way, it's been an absolute disaster in El Salvador as, you know, the whole Bitcoin experiment. Sure, if tomorrow, you know, China, the Central Bank of China or, you know, any other large country decided to load up on Bitcoin, of course, it would change my view.

8:01But it's not happening. I don't see it happening. And so until it happens, you can't ask me questions like that because it's speculation. Hey, everyone, we're going to take a quick break right now to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

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9:21Fair point, Frank. Ronnie, I'll allow you to conclude on this topic. I suppose that you have a lot of discussions on this exact topic of Bitcoin versus gold with institutions and clients of yours. Yeah, well, Andreas, I mean, I bought my first Bitcoins in 2012. 2012. And in hindsight, I, you know, I sold too early. That's, that's at least what my, my wife keeps telling me. But I think, you know, it's what I really like about it is that, that, that people are discussing money again. And I see, you know, if, first of all, if you go to Bitcoin conferences, it's, it's crazy. You meet so many, you know, people from, from all over the globe with a very, very positive attitude.

10:12And it's, it's, it's, it's a very, very positive sentiment. And that's, that's what I kind of enjoy, especially compared to, to, to gold and mining conferences where it's, it's sometimes a bit, you know, a bit depressing. So, but the fact that young kids are now questioning themselves and, and, and asking the question, what is money? Where does money come from? What is good money? I think that's a very, very positive thing because money is not being taught in school, on universities. And I would say like 99 % of all people working in the bank have got no clue how money is actually being created.

10:52So that's a positive thing. The second thing is, you know, we run two funds that actually combine gold and Bitcoin. One of them is 75 % physical gold stored in Liechtenstein and 25 % Bitcoin in a cold wallet. And then we use the volatility of the Bitcoin market by writing options, which is from my point of view, that totally makes sense. But we faced lots of criticism from the gold community saying, you know, Bitcoin is our arch enemy. But then also from the crypto community, because they said, well, gold is, you know, that's only for old people. And it's the past, but not the future. From my point of view, it's a good combination.

11:40And of course, I mean, gold has this tremendous 5 ,000 years track record while Bitcoin is hardly a teenager. I mean, it's around for 15 years. And we all know from our teenage times that we do crazy, crazy, crazy things during that time. But we grow up, and I think that Bitcoin has also grown up, and we are seeing, for example, when it comes to volatility, the 360-day volatility of Bitcoin was 38%, which is the lowest volatility on record. Gold's volatility, by the way, is roughly 13%. So it is definitely, it's a volatile beast, but it is also something that I think tries to, you know, copy gold.

12:31And I think Satoshi Nakamoto, whoever it was, he clearly understood gold. And for example, in the white paper, it says the steady addition of a constant amount of new coins is analogous to gold minus expanding resources to add gold to circulation. In our case, it is CPU time and electricity that is expanded. So the stock to flow ratio is really crucial when it comes to understanding gold and when it comes to understanding Bitcoin. And I think, you know, this relative scarcity of gold and Bitcoin, this, you know, this low inflation rate, This is really something that you want to have in this world that we're living in, in this monetary system.

13:18So I would say, you know, buying Bitcoin, but also buying gold, it's like a very active decision to leave the fiat money system. And I've got it for many people that have never bought gold, but also Bitcoin before. For them, it's like they feel like it's something, you know, it's like having sex for the very first time. You know, they they try to read everything and, you know, inform themselves and they're really nervous. But it is I think once you got it, once you understand how our monetary system works, I think gold, you know, for stability, but probably Bitcoin for convexity makes sense. But I know that it's a it's a very, very emotional topic.

14:04But, you know, let's face it, we're, you know, free market guys. And I think, you know, we all enjoy the virtues of competition. And why shouldn't we have like currency competition? I think that's what Hayek basically said. So I really welcome the fact that Bitcoin is here. And I would say that, you know, I once made the comparison in an interview with Daniela Camboni. I said it's like gold is like having this super stable Volvo SUV in your garage, while Bitcoin is like a motorcycle, a Ducati Panigale. And you can have both, actually. Yeah, why not? when it's probably a bit icy, when it's raining, when it's foggy, you want to sit in the Volvo SUV, but it's probably more fun to ride the Ducati.

14:59So I'm in the camp that says, well, why not have both? Ronnie, to be brutally honest, I think losing my Bitcoin virginity was a better experience than losing my actual virginity. I guess that says a lot about the latter, right? Guys, it's been a tremendous pleasure hosting you for this discussion on gold markets and also the discussion on gold versus Bitcoin. Ronnie Stoffele of Incrementum Asset Management, thank you very much for being with us. And also Frank Giustat, the president of the Fiori Group, thank you very much for being with us on our platform. It was a pleasure hosting you. Ronnie raises an interesting point about the parallels between Bitcoin and gold.

15:36Are digital currencies finally beginning to move into the role of alternative assets? In this next segment, Raul and Kevin Kelly break down the very latest happenings at the cross-section of macro and crypto. What I'm trying to express to people is we just watch just the price, and we see that, and it's like, that's what we think is going on. But when you actually spend some time, like Kevin and I were at a party, there's a whole group of people doing music. There's a whole group of people doing seeding the consumer application side and building that. There's VCs helping all of these new businesses in their journey.

16:11Then there was people like Colleen Sullivan, who's been on Real Vision, talking about gaming and culture. There was Brian Armstrong talking about regulation. There's the people working on payments rails. There's the people working on zero knowledge. There's people working on every single part of this. The guys from Franklin Templeton who have been on Real Vision were talking about tokenizing real world assets. So what you're seeing is the financial system building, the gaming industry building, the culturally relevant stuff around music and fashion and NFTs and all of that building. We're seeing the payments rails, the wallet, the application level.

16:52I mean, there is so much going on. And you don't really realize it because you just watch price and watch Twitter. But really, it is so deep and so disruptive. And everyone's kind of taken their niche and is going after that part of the ecosystem. to disrupt. And the space, I get reminded every time I go to an event is it is easily the smartest group of most eclectic thinkers of any industry I've ever been in. And when I was at Goldman, finance was taking more nuclear scientists and more scientists overall than all of academia and pretty much everywhere else. We had a lot of smart people, but they were kind of singular types that fit it in.

17:35This is like, Christ, everybody is a weirdo, and they are all incredibly smart. That was my takeaway. Kevin, what do you think? What did you see? Yeah, I think to that point, sometimes I think we are, I should not say we, the people in our industry are often almost too smart for our own good, where as we have talked about, I think, getting back to the basics and simplicity. Simplicity will rule complexity every day of the week, right? Especially when you're talking about more consumer-facing applications. No, I had very similar sentiments. I think the focus on the application layer, as well as all the classic infrastructure conversations that happened was certainly refreshing.

18:17There was two or three really well put together events, specifically targeting real-world assets like you just talked about, which I thought was a bit surprising. And it seems like, again, that's an area where there's a lot of both time and resource and investment going into, even though that's a very, very kind of nascent, at least where we are today. So there's plenty of things that, again, for anybody who's an enthusiast or just curious about the space can kind of branch into. And that's also what I love about it, to your point. A lot more of the events I was around was kind of that consumer-facing application, cultural type of Web3 use cases.

18:57But there's really something for everybody in this space, right? Whether you're a developer and you're really focused on the infrastructure side, whether you're now, again, have experience in product development and specific consumer product development and what the important kind of metrics are, how you even acquire users for a new application. And all of those kind of trade secrets are only becoming more important, right, As those types of applications start to get built out, the whole TradFi real-world finance aspect. So there's the merging or meeting of the minds across a number of different sectors, number of different ideas, number of different industries that are all kind of coming together within Web3.

19:35It's certainly going to take time, right? It's not an overnight thing, but events like that, I totally agree. It's a nice refresher and rejuvenator of sorts, right, around what it is, you know, why we're still here and why we're excited about this. We're going to take another quick break to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing. And the other two that stood out to me is I had a chat with Tolly from Solana. You know, him as a thought leader, he's impeccable. He never attacks anybody. He's very inclusive. What they're building is mind-blowing.

20:15It's the first time I've really heard about, is it called Fire Dancer? RAOUL PAL, 400 ,000 TPS? I presume it's a Solana layer two, is it? RAOUL PAL, I'd say it's a Solana client. Yes, it's the purpose is to try and increase scalability. It's one of those things where at scale or once we reach more, quote unquote, mass adoption, those types of developments will be really important. But I still do think, not to random operator, I still do think we have a lot of excess capacity in terms of block space and just a lot of the technology that's been built to improve scalability and all that. We really need to have more of those use cases that bring more people in for us to really test the limitations.

21:01RAOUL PAL, JR.: It's also a catch-22, right? Because unless it's cheap and fast enough, you can't do ticketing. Well, you can do now on Solana because they've made it so cheap. But a lot of the use cases you can't do, you either can't do big enough files like video, or you can't do cheap enough to do tickets. It's like, it's part of the infrastructure needs to happen. But you're right. I mean, there's an excess of blockchain capacity, which is why I think all of us think that the consolidation ends up in five or so major chains, I guess. RAOUL PAL Yeah, I will say really quickly in our conversation, you and I both had at the event we attended.

21:40If you're looking for a real kind of example or examples of this kind of consumer-facing product app development that we're talking about, I would check out everything that Chess Loss and the Seed Club team is doing. They've got their demo day in a couple of days. Yeah, I couldn't make it, but that looks a great day, actually. Yeah, yeah, and they basically run out. Kevin, tell us, for people who aren't familiar, tell us a little bit about it. Yeah, so SeedClub basically started off as a, I guess, a bit of a dour collection of people who wanted to focus on creating an accelerator model for more kind of consumer, unique, novel, consumer-facing products within the Web3 space.

22:22And they eventually, certain members of their team also wound up spinning up a venture side that allows them to kind of invest in some of these projects. But the point being is they now have, I think, hundreds and hundreds of applicants for 15 to 20 slots for each of these cohorts that they do, accelerator cohorts that they do. And they basically take them through a classic accelerator program where all the way from the kind of ideation to trying to build an MVP to then demoing what that MVP looks like, how it can be used. And the range of these types of products go anywhere from, again, music applications to ticketing to whatever.

23:00And the demo days I've found really, really valuable, not just to see what people are building out there, but also to kind of expand the imagination of what is possible with this tech. And what's really interesting, you have a lot of people and founders who are building something from an industry that they come from, and they're trying to find better ways to leverage Web3 and crypto and this technology to create an actual better product than what the incumbents can offer, right? either a new product or something that is a significant improvement upon what exists today. And so, again, all of us have our own kind of expertise in different worlds that we come from.

23:36And so what I love about that is people talking from a point of being a domain expert about, you know, my, let's call it music industry expertise and experience. And now I'm going to go build an application that's, you know, targeting this industry. And here's the problems we're trying to solve. And here's how we're doing it with Web3. is just a really, really interesting and quite frankly, a fun team to follow because I think a lot of what they're doing is at the center of some of the trends that we've been talking about here. RAOUL PAL, And you've interviewed Jess in the past, but I think it would be a great idea to bring him back to - RAOUL PAL, Yeah, because they've done a ton since I first run him on.

24:13RAOUL PAL, He's one of the nicest people in the business. And also, he sees a lot of interesting things. So you should definitely get him back. The other thing that was interesting around the consumer stuff is Tarek. So Kevin and I were co-founders of a business called Science Magic Studios. And Tarek's the president. He ran web through it and added us. Many of you have seen him on the platform. We had a great Twitter spaces with Lacoste, some karate combat group, and also the guy who built, Adam Brotman, who built Starbucks, his loyalty program. just really interesting to see how the big brands are thinking about this.

24:52And they were thinking about it in the same way that you were just saying. They're using Web3 not as we want to do a Web3 thing. They're saying, how do we get closer to our community? What are the business problems we're trying to solve? And how do we use this technology? Does this apply to this? And it's been really, really good for them. So they're all still crazy excited about that kind of stuff. And I think we'll see more of that over time. The other people I bumped into was the team at Coinbase, the head of institution, Brett Tejpol, who's been on Real Vision, great guy, and also the head of Coinbase Asset Management, because that's a new thing that they've done as well.

25:34They bought OneRiver, they're integrating that. And every time I meet people from Coinbase, I'm more impressed. What they're doing is building, they're going to build a monopoly in the end. The US government's going to enable it, and maybe the Europeans are too. Coinbase is just fascinating, the quality of what they're building, who they're building. Kevin, you know more about it. I don't really understand base. RAOUL PAL, Yeah. Yeah, so BASE is basically a, you can think about it as an L2, Ethereum L2 that Coinbase built basically using a fork of the optimism tech steps, usually like optimistic roll-ups, right?

26:19What I find really interesting about BASE is that, and I think you and I have talked about this a little bit, and we had an actually really good discussion internally this past week on this broader kind of meta concept. I think when it comes to these L1s, L2s, these base layers, these protocols, right, where this activity is taking place, I think we're going to start to see, yes, there are still things that need to be built out and improved upon on the technology side. But when it comes to things like roll-ups, some of that technology might wind up becoming more and more commoditized, right? So what you can do with it doesn't really change a whole lot.

26:57But what becomes even more important now is distribution, right? And so distribution over tech may wind up being the kind of winning solution or what matters more, right, long term or in the end game. And what excites me about Base is, one, it's backed by Coinbase. I think Coinbase is an extremely impressive team. They've almost kind of gone full circle and they've become cool again in a sense, right? They've played into a lot of the relevant crypto narratives and the ethos of this space more recently. and some of the applications that are being built on there are actually starting to gain quite a bit of traction.

27:33FriendTech is one that has exploded onto the scene in the last several weeks. And when you look at some of the on-chain data and metrics, I mean, base has already surpassed what Optimism and Arbitrum, some of these other kind of what you would consider L2 competitors or peer chains. It's already surpassed them in terms of total transaction count, activity levels. And so the fact that it's going to be integrated into this bigger ecosystem that Coinbase is building, I really think Coinbase is going to wind up being the gateway for a lot of people within Web3. And I think that they're going to be able to sustain some of the revenue or business lines that they currently have, especially around retail trading, because as we've talked about, convenience in this space is also going to be, I think, a big factor going forward, right?