Bitcoin, Ethereum, and AI: James Altucher on Smart Humans with Slava Rubin

27:14Whoa. And then I think it's going to go much higher from there. Because here's the thing. Right now, what are we seeing right now? We're seeing two things. One is the same thing that has always played out for Bitcoin, which is that there's a thick supply of coins. There's only a supply of 21 million coins in the history of Bitcoin. By I think the year 2140, the final Bitcoin will be issued. And there is rising demand. So Ecuador, all transactions are in Bitcoin. The US is going to put Bitcoin in strategic reserves. Other countries are going to put Bitcoin in strategic reserves. And I just mentioned how these companies are...

27:53I mean, I've seen at least two or three deals in the past couple of weeks that are about$5 billion or$6 billion worth of deals for companies just to buy Bitcoin. And more are coming. There's 8 ,000 public companies. And for whatever reason, hundreds of them are raising money to buy crypto, in particular, Bitcoin and Ethereum. So this is a big trend. If you're so bullish on Bitcoin, which is totally fair, but you say it's not your most bullish token, what are some two other tokens that you're more bullish on and why? Yeah, great question. And I am very bullish on Bitcoin. But I would say this coin Tau, which is, Tau is very interesting.

28:34To really explain it almost deserves like three podcasts. Here's the problem with crypto in general before I talk about Tau. Crypto is, I will admit, hard to explain. Even Bitcoin. Got a narrative problem. Is it a digital currency? Is it digital gold? Is it a store of value? What's a blockchain? What's a wallet? What's a smart contract? Like, it's just hard. And Tau is like that. All the cryptos are like that, but Tau is also like that. But Tau is structured almost exactly like Bitcoin. There's 21 million tokens in a lifetime supply, and there's incentives paid out every day to miners. And so when someone is a quote unquote miner on Tau, what they're doing is what they're incentivized to do by, and they get rewarded Tau tokens for this, what they're incentivized to do is to create useful AI models or hardware or other software that AI developers or consumers can use.

29:31So, you know, they're either programming their own AI models or they're hosting an open source AI model, or they're providing extra compute cycles on an NVIDIA GPU. All of these things are kind of added to the Tau network in exchange for rewards. And then consumers or developers then use these models. And the more something is used, then the more rewards those miners get. So the Tau token is basically to, it's almost like the Tau token is to AI what Bitcoin is to currency. Like Tau is a decentralized AI. It's fueling all of AI. And so I think it has a lot of growth in front of it. So it's about 430 right now, 440.

30:16And I think it's easily going to 5 ,000 to 10 ,000 within the next couple of years. So what would be another one that you love? Well, so this is really interesting. We all saw a few weeks ago, Circle, a company called Circle went public. Yep. And I don't know if you remember, but Circle originally was going to go public at$25, went public at$31. It went to$250 within a few days. I think, I don't even know where it is now. Maybe it's like$150,$180. Last time I looked a couple of days ago, it was$180. So it's up huge. And what Circle is, is it's a company that makes a crypto stablecoin. And a stablecoin is just a dollar.

30:54It's always valued at a dollar, but the stablecoin industry is the oldest and biggest use case of crypto. So the funny thing is, Bitcoin was meant to be this currency that's not the dollar. A crypto dollar is the biggest use case of the crypto industry right now. It's a$200 billion industry. Tether, the first stablecoin company, started in 2014 and now has$120 billion worth of stablecoins issued. And there was$27.3 trillion worth of stablecoin transactions last year. More than Visa and more transactions or more dollars worth than Visa and MasterCard combined. Because people use it for international payments and people use it as in their own countries as a hedge on the dollar on their own currencies.

31:38So I like, I'm always a picks and shovels guy. So in the 90s, I made websites. In the OOs, I invested in things like Buddy Media. And I like the picks and shovels of the stablecoin industry. So for instance, there's a coin CRV, it's called Curve. Curve Finance is the company behind it. And what they do is they have in the crypto world, in the decentralized finance world, they power a stable coin exchange. So if people exchange their Bitcoin for stable coins, or maybe their circle stable coin for Tether stable coin, for whatever reason, and they do billions of dollars worth of transactions per year, and they give a nice yield as well.

32:18And so I think Curve is well, and there are a bunch of tokens like this, curve is well positioned among others to ride this stable coin growth. So what do I mean by stable coin growth? Well, I'll give an example. Scott Bessent, the US Treasury Secretary, has just the other day came out and said the stable coin industry, which is worth in the world $200 billion, should be worth over$2 trillion in the US alone. And why would the Secretary of Treasury say that? Like I've never heard someone make a prediction like that about industry growth. Well, he's saying that because he wants stablecoin companies like Circle make money by selling you this digital dollar and they sell it for a dollar.

33:01You get to do whatever you want with your Circle stablecoin and Circle, the company, puts your dollar into treasury bills and they keep the 3 % that they make on treasury bills while you have your digital dollar. So what happens is the stablecoin industry, if it grows to$2 trillion, they become the largest lenders to the United States of America. That's why every country in the world is going to want the stablecoin industry to grow and use their own treasury bills or loans as the collateral. So the stablecoin industry, which again is the biggest and oldest use case of crypto, is going to grow 10 to 20 to 50x over the next couple years.

33:45So I think Curve, which again, runs the stablecoin exchange, will be a beneficiary. And there's maybe like a handful of other coins. Awesome. So if you could only choose between public market circle or... I wouldn't choose public market circle. It went up too much. Right. So I was going to say Circle or Curve, you pick Curve, correct? 100%. Yeah. I mean, Circle, of course, was obviously a value proposition when it IPO'd, but I didn't get any shares in the IPO. So I think better than that, though, is the picks and shovels of the stablecoin industry, which Curve and a few others. Let's just say in the whole crypto world, I'm a skeptic too.

34:22So there's maybe 2 million crypto projects out there. And I would say, best case, maybe there's 20 or 30 that actually are real, you know, tokens that provide real utility and will be worth something. And everything else is going to go to zero.

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38:29So Peter Thiel just put in a bunch of money into Tom Lee's Ethereum treasuring company. Yeah, BMNR. Yeah, what do you think about that? I think it's very smart. So Tom Lee is making the bet. First off, everybody kind of put Ethereum down for the past year and a half because it wasn't going up for whatever reason. Bitcoin was going up and not Ethereum. Right, and Solana, yeah. Everyone said Solana is better than Ethereum. Everyone was like trashing Ethereum. But Ethereum, for what it does, is by far, it's 10 times bigger than Solana. It's by far the biggest token you would use to make crypto projects.

39:06So a lot of this, and Tom Lee specifically said, he referenced the same industry I just referenced. He specifically said Ethereum powers a lot of the stablecoin industry. So that's why he thinks Ethereum is going to basically flip Bitcoin or rise to even more than, you know, be more valuable than Bitcoin. And I might agree with that. I'm more bullish on Ethereum right now than Bitcoin. And you heard me be very bullish on Bitcoin. So, sorry, Ethereum's at like 3K right now, plus minus. You said that Bitcoin would hit 250 by the end of next year. What's Ethereum going to hit then by the end of next year?

39:41I mean, okay, it's really hard to make predictions. I can make some extreme guess, but I definitely could see that, you know, $30 ,000 or$40 ,000 up from$3 ,000. By the end of next year, you think Ethereum might be 30, 10x? It could be. I'm not predicting that. I mean, if I were to really make a prediction, I would say 10 to 15. Okay. We want the real prediction. Okay. Yeah, no, but 30 though is possible. And 10 to 15, I think, is going to happen. I think clearly 5 by the end of this year, but 10 to 15 by the end of next year. And look, Peter Thiel, let's just look at his background. He knows what he's doing.

40:22In terms of digital currencies, he started the first digital currency company, PayPal. So, you know, 30 years ago, he definitely knows. And he's been on, look, the reason I invested in Buddy Media in the first round is because Peter Thiel was investing in Buddy Media in the first round. So my one rule of investing is that in every investment I do, there has to be someone smarter than me in that investment. And so the key is, I don't consider myself so smart, so it's not a high bar, but I always look for who is really smart in this industry that is side by side with me in this investment. They have to have the exact same terms as me in this investment.

41:03So Peter Thiel is someone I would always follow into investments. One time, I had an opportunity to invest privately when it was still private in Palantir, and it was a$5 billion valuation at that time. And I was like, oh my gosh, 5 billion, and how much really more valuable is it going to be? Now it's like a$100 billion company on its way to being a trillion dollar company. So I didn't invest in that. So one time I did not invest side by side with Peter Thiel. You broke your own rule. I did. What I always look like, like if Warren Buffett buys IBM, I'm just making this up. If Warren Buffett were to buy IBM at 100 and now the stock's at 95, what am I going to, if I run into Warren Buffett at a party, what am I going to say?

41:40Like, Warren, how could you be so stupid? Like you bought it at 100, now it's like, no, I would just buy, It would be like Warren Buffett was my intern. I'd buy IBM at a discount to where my free intern, Warren Buffett, was telling me to buy it. Yep, yep. Let's change the chapter here for a second, which is the economy. Obviously, inflation is heating up just a little bit. We're not exactly sure where that's headed. Jobs are seeming pretty tight. There's talk about rate cuts, but who knows based on inflation and what the tariff impact is going to be. Overall, stock market is doing well. Crypto is really catching a bit.

42:14You know, risk on assets are starting to feel a little bit better. It's kind of unknown what's happening in the real estate market. Open-ended question. What's happening in the economy and the stock market for the coming year? The economy is doing great. And the reason the economy is doing great, other than just the fact that in general, the U.S. economy is always doing great, is AI is, and I don't want to say this as a cliche because I feel like everyone's saying this, but AI in every single Fortune 500 company, in every single division of every Fortune 500 company, they're being told by their bosses, you must use AI to improve productivity and profitability.

42:55And they're doing it because there is so much money you can save and so much more money you can make using AI. A typical example would be, I talked to the CEO of freelancer.com or freelance.com. And they're the biggest marketplace. There's like 60 million freelancers who every day are bidding for jobs that are posted on freelance.com. He said the number of freelancers has tripled in the past year or so because of AI. And it used to be the case, if let's say a record label needs a design for a record album cover, okay, you would hire a designer and he or she would take a week or two to design the cover, maybe more, and charge a lot of money.

43:36Now you can use AI and anybody could do 10 really good looking record covers in an hour. So the time to do things, now maybe you need a designer for the final touch-up, but the ability to do high quality output, whether it's code, write something, legal work, we're starting to see this in the medical field in various ways, everything from patient diagnosis to surgery is being done better and better by AI and particularly with the addition of robotics. So this is a theme of the economy that kind of began, let's say, two or three years ago, but it's going to continue for the next 50 years. And it's going to be incredible.

44:22So let me... Productivity has to improve for U.S. debt to go up. And that's what's happening. Sorry, productivity has to improve for U.S. debt to go down. No, for U.S. debt to go up. For us to justify borrowing more money, the U.S. economy has to be more productive. We have to produce ourselves out of kind of a debt hole. Understood. And that's what we're going to do. Because interest rates are not going to do it. Like cutting interest rates is not going to do it. So let's do a lightning round here. So quick answers. So in the next 12 months, are we going to have a recession? As a matter of fact, before the next election cycle in November of next year, will we have a recession, yes or no?

45:06No. And will we see rate cuts by then? Yes, 100%. Literally 100%, meaning like 100 basis points? No, 100%. Yes. What is the basis points that you think we'll have? Well, you know, Trump's calling for 300 basis points, which I think if you were to do that, it actually would cause a problem for the economy. So, but I can easily see, you know, 100 basis points before the midterm elections. Right, so 1 % cut. Yeah, not all at once, I hope. Understood. And then how about unemployment? What is it going, is it getting better or worse within, by then? No, I think it's going to get better. People are worried AI is going to take jobs, but it's going to be the reverse.

45:49AI is going to create, you know, millions of jobs. So I think it's going to stick around. But isn't unemployment quite tight already? Yeah, and that could cause inflation. But the issue with inflation is if productivity increases, you need the money to fuel, to keep the engine going. So it's okay to have more money in the system if productivity is going up, and that's what AI is going to do. So that was my next question, which is inflation. Does it stay steady at where it's at, or is it up or down until the next cycle, the next election? Probably a little bit up. People say tariffs cause inflation.

46:24They don't. Tariffs actually cause deflation. Yes, the products being tariffed will go up, but that's not what inflation means. Inflation means when it's across the board. So I constantly am reminding people of that. But I do think because the money supply has been going up lately and because of these increases in productivity, I do think, and because of the tightness of the job market, I think inflation will go up a little bit, which is why it's going to be hard to justify cutting rates, but they need to cut rates because the U.S. needs to borrow trillions of dollars to roll over older debt. So they're going to have to cut rates at some point just so we don't have hundreds of billions of dollars a year of extra interest rate payments.

47:05Interesting. So you sound quite optimistic in general. What are your... And not for foolish reasons. Look at your own life. Like AI is... And I hate to keep banging the table about AI. AI is changing your life. Like everything, probably everything you do has some component of AI that has improved your life. But also crypto as well. Look, last year, there was$27.3 trillion of stablecoin payments. Most of that was cross-border payments. So someone from Mexico working here, sending money back to their family, they send it through a stablecoin rather than going through a bank or through Visa or whatever because the fees are one-tenth, one-one-hundredth what they would be through traditional ways.

47:46So a lot of things are deflationary. AI makes things deflationary. I don't have to pay$1 ,000 for a logo. I could pay$10 for a logo. I don't have to pay$3 to send$100 to my family across the world. I could spend three cents. So technology is deflationary. So that's going to fight the inflation. What are the watchouts though? What are some of the concerns that although a lot of the positives that you're saying could happen for productivity, et cetera, what are the things that could railroad this or maybe could go sideways? is. Yeah, I'd be worried about if there's another COVID-like situation where they suddenly, you know, inflation is very related to the supply of money in the world.

48:29If suddenly, if you had a dollar in your pocket and suddenly everyone in the world went from having$1 to$2, then all prices would double just automatically. And so that's what happens when they print trillions of dollars. It becomes a significant percentage of the overall wealth in the world. I mean, 40 % of all the money printed in history was printed in the year, you know, between 2020 and 2021. So, you know. Is that true? Is that right? 40 % of all the money is between 2020 and history. Wow. Yeah. So we have to be careful now printing money. And this is not who's president, who's not president.

49:04This is not who's Federal Reserve, who's not in Federal Reserve. A lot of this was a reaction to a disaster like COVID. Similarly, a disaster like the Great Recession in 2008 or a disaster like 9-11 and a lot of money was printed to avoid people being scared. That has some good sides, but every government action, and I'm not going to be all anti-government here, but every government action has good intentions and sometimes good consequences, but also always some bad consequences. And you have to be watchful of that, particularly if you're playing around with the supply of money in the world. I know that you already mentioned some interesting crossover between crypto and AI.

49:41Are there any other topics or things that you'd want to mention in that area? I mean, I'm so, when you really do the deep dive on Tau, I am so excited about that, which is why I started an entire public company just to invest in Tau. So, you know, I'm really, I think Tau could potentially become even bigger than Bitcoin, which sounds ridiculous when I say it. But again, it's structured very similarly and has more wider use cases. So, and can be used as a currency as well. So I'm very bullish on that. So you're referring to TaoX, is that right? TaoX is the stock, Tao is the crypto. Right, right, right, right.

50:19So TaoX is something that people can just buy on Robinhood or their brokerage? Yeah, yeah, they can buy anywhere. It's a trades on the NASDAQ. And is that basically like a Tao ETF, like a Bitcoin ETF would be for like grayscale, et cetera? No, only because the grayscale ETFs don't allow staking. I see. None of the ETFs by now allow staking. So with Tau, we can actually make revenues and earnings by staking it into the Tau ecosystem. So people can use it as incentives to create AI companies. Oh, so is that the equivalent of like getting yield? Yeah. Perfect. Perfect. So you obviously are super knowledgeable.

50:56What is it that you watch, listen to, or read that makes James James? You know, of course, reading and watching all these things are very important. but the most important, and I can't survive without doing those two things, but the most important thing is doing. And I've been following the crypto worlds for a long time and I've written quite a bit about crypto and read a lot about crypto and talked to all sorts of crypto experts, but now actually doing major things in the crypto ecosystem forces me to kind of go to a level that I've never gone before. I love it. So not about what you watch, listen, or read, but rather doing.

51:34That's a good one. We haven't heard that one before. And then you've already given us some predictions, but I'm going to put you on the spot for the official three years out segment, which is what is one public markets asset that you would invest in today that you think will do really well three years out? And what is one private asset? Private could be a public crypto token, but not on the public markets. So something that is not considered a New York Stock Exchange type pick. So what would be your picks and why? Yeah, so of course, TauX is going to be my public market. pick because that's going to do very well.

52:08And I'm going to try to pick a crypto. Because you have TauX, you don't need to own the Tau crypto token because we'll do the owning of that for you. Right. So a crypto token, look, if you want to be safe and conservative, I would say Ethereum. Actually, I agree with Tom Lee and Peter Thiel. But if you want slightly more risk, but I think maybe higher reward is this curve that I mentioned, or I'll throw another one out there, which is Aave, A-A-V-E, does lending against stablecoin collateral in the crypto world. So that's going to also be linked to stablecoin growth. So a TauX in the public market is priced at what today?

52:47It's at like nine, something like that. And if you had to predict what it would be three years from now, what do you think it would be? 200. That's quite the bold prediction. I think it's going to go along with the growth of Tau. Sure. And Ethereum, you already gave us your prediction. So Curve and Aave are both kind of originated during like DeFi summer and they kind of went down. You feel like they're going to have still a huge run ahead of them? Oh, yeah, because I think with this whole kind of, oh, DeFi summer and crypto winter, like all these seasons of crypto, they don't really exist. It's again, it's a story people have told themselves, but cryptos that are used are going to grow.

53:31and the stablecoin industry, again, it's going to grow like 10 to 20X in the next couple of years. So that means Curve, which has the biggest stablecoin exchange, that's going to grow. And Aave, which is the biggest lender of stablecoins, that's going to grow. So yeah, it has nothing to do with like, yes, everything's been correlated to Bitcoin to some extent, but that's going to start to change also. Right. Amazing. Just looking at my notes here, we covered a lot going back from when you started with computer science and being one of the only people that knew how to code. Nevertheless, knew how to actually code a website in New York City, getting to do that for HBO.

54:07And before you knew it, American Express sold your company for$15 million and proceeded to lose all your money, which I like how you said it. There's making it, there's keeping it, and there's growing it. And you still have to learn how to keep it and grow it, but you sure were good at making. You need to have a lot of optimism to be a good investor. You have the idea of getting 10 ideas a day and exercise your brain. Just like your legs, you need to be able to make sure or you're using your creative muscles so that you don't atrophy. You know, you're well-known for Choose Yourself, the book, which you went through your own experience of the ups and downs of your investing and making your money and losing your money.

54:39You gave us some perspective on how you like to invest your net worth. About 20 % cash, 60 % of pre-IPO, 20 % crypto. But your pre-IPO and your crypto are really having a crossover. You definitely stay away from all that other stuff, which seems boring to you, which is the real estate, the private credit, the bonds, the already collectibles. It's really all about the storytelling that you're looking for. You gave us some bold predictions with Bitcoin potentially at$250K by the end of next year and even a million by 2027. I'm going to call you out on that one. So I'd like to have you back on there if we actually hit a million.

55:11Ed, look, whether it does or doesn't, I'm sure there'll be a lot of talk about it either way. It's all good. So I'd be happy to go back on. So you're a big fan of Tau and obviously you're looking for the token for AI. So decentralized AI. You're a fan of Curve. And then you were pro-Ethereum as well, whether it's through BMNR and following Peter Thiel, even though you broke your own rule once. And you're a fan of the productivity as to how that will improve our economy. There is no recession in your future. Rates will probably go down by 100 basis points. And you do think unemployment is going to stay tight, but inflation is going to go up a little bit.

55:49You did say, though, technology is totally deflationary. Awesome factory, which is 40 % of all money printed It was actually printed during COVID between 20 and 2021. So that is awesome. You didn't tell us any things that we need to watch, listen, or read, but you did say just do, which I am a huge fan of that. And of course, you finished with your three years out predictions. You double, tripled, and quadrupled down on TauX and Tau, saying that it would go from 9 to 200. You're a fan of Ethereum, and you gave us some extra bonus picks with Curve and Ovid, Stablecoin Exchange, and a Stablecoin lender.

56:23James, you covered a lot. Thank you. Thank you so much for having me on the show. I really appreciate it.

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