RAOUL PAL: The world of crypto is an incredibly
exciting journey that we're all going on together. We don't know where it's leading to, but we know
it's going to be absolutely massive. Join me, Raoul Pal, as I guide you on our adventure to
discover just what this new world will look like. ASH BENNINGTON: Hello, I'm not Raoul Pal.
I'm Ash Bennington here to kick off and host this conversation with Raoul Pal. Raoul,
it's always a pleasure to be with you. But especially a pleasure to be with you today as
we discuss you going down the rabbit hole on your journey in Raoul's Adventures in Crypto, welcome.
RAOUL PAL: It's great, Ash. We never get a chance to have a long form conversation. So, we're always
snatching half an hour on the Daily Briefing. So, it's just good for you and me to properly
catch up with what the hell is going on. ASH BENNINGTON: Yeah, absolutely. There's been
so much material that you've covered on the show since September 10th. So, if you've missed
any episodes or if you're totally new, we're going to set the counter back to zero,
start from the beginning and tell the whole story. RAOUL PAL: This whole show, Raoul's Adventures
in Crypto, is basically my learning journey. I am learning along with everybody
else and I'm taking everybody with me through it and there are answers here. This
is not like the macro world where you know how things work. And it's deciding which way it's
going to go, is it this path or that path? This is like it's an unknown future and we all
have to figure it out while sprinting a marathon. So, it's immensely hard work. There's incredible
amounts of input of new information coming that it's overwhelming us all. So, what I'm
trying to do is build this framework in my head that allows me to take into
account all the things that are happening without having to be an expert on all of them. And
I want to be an expert in some of them. So, that's how I'm approaching it. It's impossible to be an
expert on everything and anybody who tries will just die of overwork. So, the best thing is that.
So, what am I looking at? Let's start first with, okay, I've explained to everybody now that
this is the fastest adoption of any technology in all recorded history. So, the
chart you can see on the screen now shows that the Internet back in 1997, when it
had 150 million users, was growing at 63% a year. 150 million users in crypto is present
day and it's growing at 113% a year. So, this is why it's so hard for us all to catch
up because it's growing at a ridiculous pace. And it's only accelerating. I mean,
we've seen in the last year alone the rise of defi, NFTs, DAOs,
Central Bank Digital Currencies, stablecoins in a way that none of us could have
expected. It just happened so fast at such scale. And that's only going to continue. And that's
the core philosophy of the exponential age. How I look at this, to frame it simply, is
this is currently a $2.5 trillion asset class. If you compare the other asset classes, they're
between 150 trillion and 300 trillion until you get to derivatives which are one quadrillion. Then
when you get to FX, it's multiple quadrillions. So, the reality is if we continue this rate
of adoption, we should get to an equivalent size asset class in these digital assets.
And that would make them worth 200 trillion. We have never in all of human history been
given an opportunity that an entire asset class, not a stock, not a single token, an entire
asset class goes up 100x in value probably by the end of this decade. So, I've talked
about before, this is I think the largest distribution of wealth and fastest distribution
of wealth in all recorded history. Because unlike most other wealth distributions, things like
railroads, phones, even computers, and even the internet, they accrue to giant companies.
This is accruing to tokens which anybody can participate in, because you can own a
fraction of a token. So, Bitcoin as of today is 60,000-something, but when this interview comes
out, my guess is it's going to be a bit higher. But you can own a small fraction. You can
have $10 in it, so everybody can participate in this. This is incredible. And this is
why I'm so passionate about this space is I was driven on a mission after
2008 and 2012 European crisis to tell people about the risks and opportunities.
I didn't want somebody to come to me and said, why didn't I know? My job, the whole
job of Real Vision is to make sure everybody knows. So, I've been banging the
table as loudly as possible saying, look, there are no certainties in this world, but
this is the highest probability opportunity I've ever seen and the biggest magnitude of any
opportunity I've ever seen in my entire career, or I've ever heard about. So, that's the scale.
And that's why I am crazy interested in this. I have been following Metcalfe's Law as my guide
for this. Metcalfe's Law is about how do you value a network. And it's about basically the number
of people on the network, plus the number of connections between those people. And the more
connections and the more applications built on top of those people, the more valuable it is.
So, the biggest network is currently Bitcoin. And Bitcoin has less applications built on it
than Ethereum does. But it has more users. So, it's immensely valuable. It has the store value
proposition that most people are familiar with. What is interesting is adoption
effects seem to repeat themselves. It seems to be a human behavioral thing.
So, if you look at this next chart, Bitcoin now is basically exactly following
Bitcoin 2013 in price structure. It's weird. And this is not a chart I've just pulled up today.
I've been following this for a year and a half, once I first started discovering Metcalfe's
Law. And I'm like, bloody hell, this is weird. But it gives you a rough idea. I don't expect
it to be perfect, but it gives you a rough idea. And what I'm expecting is a gigantic
rally into yearend. And we'll talk a bit about it in an extended cycle in a sec.
ASH BENNINGTON: It's a spooky chart. It's a fractal chart. It shows the
self-similarity of growth within Bitcoin at different points in the adoption cycle.
RAOUL PAL: Yeah, and if you remember, 2013 was a hell of an adoption cycle. It was the initial one,
and it had some violent moves. It's suggesting violent moves. Just by using that chart, it gets
me somewhere like 300,000 Bitcoin price range. Okay, that's above most people's expectations
but I don't see any reason why the chart's not going to work. And we'll come a bit more
about how the cycle plays out in a sec. But the other killer chart is once
I start discovering Metcalfe's law, I start realizing that Ethereum is exactly
following Bitcoin's last cycle. And it's like, oh, my God, this is spooky. I mean, I've got actually
on my Bloomberg in real time, and it almost works, tick for tick. I've never seen anything
like it. And that gives a cycle projection for Ethereum of 20,000. And again, I
actually think it's going to overshoot. But I thought, well, if my logic about Metcalfe's
Law is right, then these layer-ones that we'll talk about later should also fit. And bizarrely,
here's the chart of Solana against Ethereum in the last cycle, when the Ethereum
was the darling, the new breakthrough. It's exactly following. And the same is true of
Terra. It's exactly following. It's like, wow. So as these different protocols get adoption,
they're all behaving in the same way. Well, Bitcoin is repeating its early cycle of massive
adoption. So, for me this is super interesting. And again, I don't expect these to be perfect
but they're contextualizing network adoption, which is I think everything in this space for the
time being, until we start moving into some of the other things. So, how do I think this plays
out, because that's what everybody cares about? I honestly think we're going
to have a ridiculous yearend. But here's the rub, is we've got different
people, actors in the business now. So, if you are BlackRock or you are Tudor and you have Bitcoin at end of year, if you are
BlackRock and let's say I'm right and Bitcoin goes up 4x into the end of year or 3x, you
are going to rebalance and sell some Bitcoin. If you are Tudor, you come into the end of the
year, you want to lock in your gains because you get paid your annual performance fee in January,
so you will probably flatten out your P&L. So, what happens is we might see selling
towards the end of December which the market is going to go, the cycle's
finished. Because everybody's expecting a December end because it was 2013 and 2017,
where the Bitcoin cycle ended in December. However, I think the structure has changed.
I think there's a couple of things going on that will elongate the cycle. One is everybody
is onboarding. The more the price goes up, the more the institutions onboard. Institutions
are weird based they tend to operate quarterly. So, you come into January, everybody's got
approval. It's going to start onboarding and allocating January, February, March. So,
that selloff from the rebalancing will be bought by the new institutions entering the
space as they increase their allocations. Additionally, hedge funds have a brand-new P&L on
January 1st, and what they like to do is put on risk. And this will be the bet that they'll
put on. So, my guess is we see more of that and that drives prices further than we expect.
I'm thinking that is a probability, a reasonable probability, call it a 30%, 40%
chance that Ethereum gets to 40,000. And Bitcoin, whether it gets to 300 or 400, I don't know.
And there's even enough chance of more. I think we've got a spot ETF that comes in the
middle of that, and probably an Ethereum ETF that comes. Then we've got the other big game in town,
which is the fact that Ethereum has no supply. There's about 10% or 11% of all
available Ethereum on exchanges. Everything else is locked away in smart contracts,
cold storage, defi, NFTs, and then staking. Because everybody wants the ETH 2.0 to come,
so everybody's staking their ETH for the yield. That takes it off and locks it away until
after that, and then that ETH comes onto the market gradually. So, I think the
cycle probably goes on till the summer. I think almost certainly till
March but possibly to the summer, which will give us higher prices and a different
cycle structure than we've seen before. I could be wrong. I'm not betting the entire ranch
on it. But that's how I think it plays out. And if I'm right about the network adoption, then these
other layer-ones like Solana, Terra, Avalanche, Cardano, and some of the others are going to
be super explosive. But in a risk reward basis, they're riskier. They're not as deeper network as
Ethereum is. Ethereum to me remains the best bet in the world from a risk-adjusted standpoint.
It may not do the most impressive of all, but for a major asset, my guess is it gets pretty
close to Bitcoin's market cap. So, I think it probably in the end somewhere doubles in relative
valuation versus Bitcoin. I don't think the market quite expects that. But maybe that short period
of the flippening would be the end of the cycle, when everybody punches the air, all the
Bitcoin guys get pissed off because Ethereum outperformed. Then we get a larger correction.
But anyway, that's how I see it and that's a lot of work that I've been writing in Global Macro
Investor, in Real Vision Pro, for Macro Insiders, from speaking to people, understanding the
structure from people like the on-chain analysis, from Will Clemente and Willy Woo and others.
Looking at the technical analysts that we've had on Real Vision, CryptoSniper, all of these
people, getting a distillation from Plan B's stock to flow. And so, I'm forming a whole macro
view around the space the next six to nine months in the space from all of these kinds of
conversations that are happening on Real Vision. ASH BENNINGTON: One of the interesting parts
about your journey is that you're no longer just thinking about this in terms of Bitcoin and
Ethereum. You're looking at DAOs, the Metaverse, NFTs, give us a little sense of that journey.
RAOUL PAL: This is a journey I'm hurtling down. And I'm trying to figure this out because this
shit is moving fast. And it's wildly complex. It's coming from small seeds of ideas that are
exploding. And nobody knows where they're going either, but people are contextualizing them. The
first one that I've been trying to figure out is social tokens. That's something that Kevin
Kelly, I asked him, because him and I share a same fascination. We think it's going to be literally
the [?] disruptor, the big mass market consumer adoption of everything, which right now is NFTs,
but I think it's going to be social tokens. So, I've asked Kevin to go and research
into this. And I've also been talking to all sorts of people to find out where
this is going. And what is making me understand is that culture is becoming
the investments. Yat Siu on his interview, the chairman of Animoca, which
was unbelievable interview, talked about that this could create universal
basic equity. So, I've been talking in the past about the ability to have digital identity can
give us a chance of having universal basic income, because you can sell your data or identity to
platforms that currently just harvest it for free. I think that's coming. But maybe it's not as
big as universal basic equity, which means that communities that you're involved with, you
have a token in. And if the community is vibrant, then the value of that token rises over time.
So, your cultural interests align with your investment interests, align with your business
interests, align with all of your activities. We're seeing that with things like
Chiliz which is still pretty nascent and its tokenization of sports clubs.
I mean, those tokens still aren't worth a lot of money considering the fan base of-- what is
Man United's fan base? A billion people? And their token's probably worth 50 million? So, it's really
early days as people are trying to understand how these tokenized communities can work. And how
do you actually add value because it can't be a cash grab. It's got to be a participation. So,
I've been going down that journey, understanding the music industry, the media industry, sports
teams, all of these things to try and understand, okay, what the hell is coming here?
But what I understand is these people have communities that are gigantic. They have to rent
that community back of Facebook, Google and other things. They have no direct relationship with a
customer. So, if you think of a football club, the football club's direct relationship with the
customer really is the 80,000 people who can come to a game on a Saturday. Even the t-shirt sales
and stuff like that, they've lost connection. So, they have no real connection
with these gigantic fan bases. But I think that brand is becoming a tangible
asset as opposed to an intangible asset. And the tangibility is the fact that these
social tokens and NFTs will reflect that. That's a gigantic change. So, what is Man
United's brand worth, does it sit in equity, or does it sit in community? I think a lot of it's
going to sit it in community. So, that token to me should be worth a few billion. And that's where I think this is going.
So, maybe those tokens in the football clubs, if they tokenize in the right way and create the
right experiences and create the right community, you can be a fan and make money from being a
fan. And you'll be able to build businesses on these networks too. And that applies to
musicians, and even mega brands, fashion brands, particularly things that have cultural
significance. So, this is a really huge thing. ASH BENNINGTON: It's not just a huge
thing, Raoul, it's a democratizing thing. The world that you're describing is one where
the big platforms, the Facebook's of the world, become middlemen who are set up to be
disintermediated by the folks who actually own the direct relationships with their own community.
RAOUL PAL: Yeah, but the war is not over. And this is where people need to
understand where this is going. What we are creating is digital sovereign
states, multiple of different sizes. So, we are fracturing the online world, and
we'll talk about the metaverse and where this all going later. We've fractionalizing
communities into separate states. So, complex adaptive societies, like human societies,
organized religions, all of this stuff, generally have an organizing set
of principles, a mission statement, leadership, and then a method of value exchange,
money or things like in religion is like if you do these things, you'll go to heaven. If you do these
things, you'll go to hell. It's a value exchange. What tokenization has done as allow every
community to create a value exchange around these same principles. So, you organize groups
of humans, that's how old humans organized. It's as old as humans are. But the supercharging
is the fact that you own a part of the network like you don't own dollars. Yes, you can
earn more of them, but they don't have necessarily the same output. Maybe they do. I
haven't really thought that through, because the dollar can get printed. While here, you own a
scarce resource which is a part of that network. And Facebook is doing a number of things, but
it has the largest community on Earth. It's a disparate community of communities that all of
these brands are having to use. But if you unify them with Facebook Diem, which is a stablecoin,
which is no different than El Salvador's currency board or the currency board here in the Cayman
Islands. It's a stablecoin, essentially, but for use on Facebook. So, what have you created? You've
created the largest sovereign state in the world with the largest number of people.
And like all sovereign states, the US has got millions of different communities and groups
and interests and blah, blah, blah. That's what Facebook is. It's a sovereign state. There is no
surprise that Zuckerberg is seeing the metaverse. That is the kind of power that they want in this
equation. So, the battle of who owns what state in the digital world is still to be fought. And
it will be a multi-state world. But in the digital sovereign state world, you get the choice
to move from one community to the other. And your token is the vote.
I don't want to participate in Facebook's world. I'm going to sell my token, and I'm going to move
across to somebody else's world. I mean, this is democracy. It's also something really exciting
to me. The world is wildly polarized right now, left and right. But I think what this
is doing, we'll come into DAOs in a sec and NFTs because they're all part of this, is
actually creating something that only exists in some places. Which is, it is progressive because
it allows participation of everybody in a society, and it allows society to set rules. But it's
also free market capitalism at the same time. It's like putting these two things
together that are being fought over. You're a progressive. You're
a right wing. It's ridiculous. What this is, is a pragmatic elegantly engineered
solution to many of the issues the world faces. Now, that doesn't mean it's utopian because
you can have cesspool communities. You can have communities you don't agree with. Humans are
humans. We all do this shit all day endlessly. We all divide and conquer. Do all of this stuff.
But basically, right now, you're in the United States. I'm in the Cayman Islands, we have
to abide by the rules of society here. And society taxes us. And we do get taxed in the
Cayman Islands, contrary to everybody's belief, but in different ways. They tax us for the
good of society. Some people don't want that. Well, you don't have a choice to leave,
or if you do, it's a pain in the ass. In digital sovereign states, you will decide, do
you want to benefit society because this community believes in benefiting society? And others
believe in arco libertarianism? Fine, do it. But my guess is that we are going to coalesce
around the ideas of we can look after society and have free markets. And that's what
Bitcoin has done. Bitcoin is the social token if you think of it. If you ignore the narratives
around store of value and everything else because it's following Metcalfe's Law, it's not
following a store of value thing. Yes, the stock to flow does work in some respects. But
what is Bitcoin? It's a group of communities that share a vision about hard money, and some
elements of economic and monetary freedom. There's also a group that share a belief in wealth
distribution. And so, what you've got is a bunch of beliefs that are on this network that everybody
participates in. And it's a strong narrative, and so it does well. And should you decide,
as I did, that I was getting uncomfortable with that community and society, because
they were not being accepting of people with broader views, I sell some of my Bitcoin tokens
and moved across the Ethereum ecosystem where everybody uses the words GM for good morning
and good night, and everybody's lovely to you. It's like that is sovereign freedom.
This is a fascinating concept that I'm getting my head around. I don't
think most people have figured out yet. And this is where DAOs and NFTs fit in. And again,
I had no idea really how to think about this stuff. Hence, why I started interviewing people.
And Kevin Kelly's been doing a bunch of that for me. But also, I've been doing a bunch of NFT
stuff. Because I can see that DAOs are basically a way of getting agreements amongst
people on how things should be done in a weirdly democratic way. Will it work fully? I
have no fucking clue. But it's really interesting. As Jamie Burke mentioned to me, he's like, what
is interesting here is this like the world's biggest economic experiment in real time. There
are literally thousands or tens of thousands of economic experiments about economic ecosystems
all being run. Some collapsed, some succeed. I mean, that's amazing. Because
economics was a model-based thing. Now, we're running experiments
with real data and real money and seeing what survives and what doesn't.
And DAOs will go through the same. What is going to work in that structure? I have
no idea. But it's a way of organizing complex adaptive societies. The DAO is basically the
set of rules by which the society will operate. This is big stuff, right?
ASH BENNINGTON: What strikes me is just how comprehensive this view of the space is, talking
about reengineering, not just organizations but the nation state, society, social organization
more broadly, it's a hard thing to get your head around. Where do you think this goes?
RAOUL PAL: I don't know. But the more I reread The Fourth Turning, the more prophetic the bloody book
is. And it says that all institutions will get rebuilt from the ground up. With
rebuilding, states, corporations, communities, money, store of value,
economics, all at the same time, done by hundreds of thousands if not millions of people
of the smartest people in to engineer. Economists, finance guys, technologists, developers,
mathematicians, everybody is working on this. It's one of the most beautiful things I've seen,
is mankind saying, fuck it, we'll do it ourselves. And we will figure it out. And we don't know
the answers. Everybody in the space except the hardest core maximalist said we do not
know the answers. But we're going to try our damnedest to see how far we can get. I love
this. This is how it should be. This is one of the greatest movements I've ever seen, if not
the greatest movement, because it's political, it's economic, it's financial, it's cultural,
it's everything all rolled into one damn thing. And the market's splitting, the guys who are
interested in DAOs and what we can do with that? The social tokens, the communities, the protocols,
the defi guys will come on to some of these, the layer-ones, the transaction people and everybody's
going, alright, we're going to solve this one. And we might fail but those guys might learn
something from us, and they'll take the baton, but we're all sprinting as fast as we damn
well can to create this opportunity. And this asset class is unstoppable because
of its distributed nature of intelligence. The network effects of that power of intelligence
and the sheer number of doggedly determined people doing things is unprecedented. We saw it with
open-source software. We saw it with the internet. But this has the powerful incentives built in that
if you are a participant, you're not owning the equity in a company, you're owning a stake in the
network, which never has happened before. So, it is of a different order of magnitude. And still, I
still see people struggling to get across the line with Bitcoin or whatever it is, when actually
we're hurtling into something much bigger. The other thing that made me think about this
was NFTs. We've all seen the rise of NFTs. We all understand part of it is memes, part of it
is communities, part of it is social identifiers, part of it is social identity. And I got that,
and it's impossible to navigate. Unless you're on Discord all day. I physically don't have the
time. I'm watching the Real Vision bot guys, they're developing stuff. So, I'm learning
from them because they're too very smart guys. I'm learning from all sorts
of people on NFTs. Again, yes, you gave me some great feedback and
there's a whole bunch of people. I've been speaking to people like Bill Tai about
this as well. NFTs are a cultural phenomenon where people are organizing around these groups of
like-minded people. And the NFT is the identifier. Some of it I don't quite like yet, because I
think to be a CryptoPunk is now an elitist group. Because you can't fractionalize these things. You
can if you put them in a different structure, but basically you can't fractionalize a
CryptoPunks, you will own it outright. So, you're basically saying I've spent
three and a half million on my JPEG. And therefore, I'm one of this crowd. That's
the same as me wearing a Cartier watch saying, I can afford a fancy watch. I don't
think it's the right thing for the space, but I don't care. Who am I to judge, right?
This is what people want to do. I buy social identifiers all the time. Everything we all
do. My house is a social identifier. I mean, we're humans. This is what we do.
So, I don't really have a problem but it's interesting. But I'm seeing really
interesting stuff. When we spoke to Gary Vee, he's trying to build a media company
from the ground up, as is Ashton Kutcher, as is Micah Johnson. That was a fantastic under
watched interview with Micah Johnson about what Micah is doing with Aku which is incredible.
He's basically NFT-ing from the ground up a cartoon. So, it's built on the blockchain. And
it turns into a whole media property. And he's already got TV rights or film rights for it.
ASH BENNINGTON: I should say this is on Cryptovoxels. And it's available right now
for anyone who wants to go take a look. RAOUL PAL: Yeah, and just search for it in
Cryptovoxels. But we'll make it more available to everybody. We'll give you a tab on the page
and you can go and kick around our headquarters because it's fun. So, these NFTs, there's
many things happening with them. And what is interesting is there's some real projects like
Loot, of which it's really vague on what it is. But what they're doing is building a movement
of people around these DAOs and these things. Then that guy, and I'm not sure, it's like Punk
9526 or whatever, anonymous. I know a bit about who he is, not who he is. And he's a very serious
guy. And he started writing these incredible long threads about the social importance of what this
is, this cultural movement. How because NFTs can't be thought of as securities and they're
probably protected under freedom of speech, and they're immutable, and they're on
the blockchain, they become something extremely precious in this world. The thing
that we've all lost, our own digital self. And I'm starting to explore what this all
means too, because it's bigger than I know that I'm yet understanding and that most people
are understanding. And it's very early phase. I'm sure that we will have a NFT winter
and bunch of this stuff goes to zero, but a bunch of stuff won't. What is that going to
be? Which of these projects are going to succeed? Which are going to remain classic identifiers?
Will CryptoPunks, probably? Bored Apes, possibly? But then you'll find there'll be subgroups.
We're going to play with NFTs at Real Vision. Not to extract value from the community
but by giving people a sense of identity. Because we've got a very, very, very strong
community at Real Vision. And they want to be identified as Real Vision people. So,
that's part of what NFTs are. And maybe they are your identifier to log in to stuff. Maybe
it's your identity for affiliates. I have no idea. But Real Vision is going to go the social
token as well. And again, I don't know where it's all going. I'm certainly not going to stand up
and say, we're going to make you rich. No, no, no. What we're going to do is create a utility token
that allows people to participate in the network. And it's up to everybody who's on the
network to drive value to the network. It's not about us trying to make people rich,
it's about driving utility and use case to the network by all participants. And we'll see. It's
a brand experiment but I think it's going to work. And I think it's going to tie people together and
have a great understanding of where this is going. So, we've talked about cryptocurrency,
blockchain itself. We've talked about social tokens, communities, digital sovereign
states, NFTs, DAOs. These are all the conversations I'm having on Raoul's Adventures in
Crypto and getting other people to have for me. Conversations that you're having for me and
Santiago Velez, it's all part of this big fucking learning journey. Because I know this is the
biggest thing, and I'm trying to understand it. I had a fantastic conversation with Jamie Burke.
And Jamie and I came around to the idea that we're both using the metaverse as
our framing of an End State. And again, none of us know what the metaverse is, where
it's going. It's this digitally fluid world between the physical and the digital world where
you can move around, live, exist, work, earn, etc. But if you conceptualize the metaverse as
an End State or the start of an End State, it allows you to hold all of
these thoughts in your head. A digital financial system. Defi, a digital
system of organisms and corporations. DAOs, social tokens, system of money for the communities
that you're in. NFTs, digital identifies and stores of value within the digital world and
interoperability and transferability of that value across various digital properties. All of that
becomes the metaverse. This is all this Web 3.0, the metaverse, that gigantic change. So, the
metaverse is not to me, who's going to win? Tim Sweeney, Mark Zuckerberg?
That's just not going to happen. Apple is in the game. Google's in the game. Apple
are going to give you an ability because they own this, which is a supercomputer in your
hand. They're going to have the ability that those glasses you're wearing today,
Ash, will give you augmented reality. So, what does augmented reality means? Does it
mean Google tells you what road to take when you're walking through Manhattan? Sure. But it
also means that I can have a piece of NFT art in my living room that doesn't exist in the physical
world but does to anybody I want to show it to. It's Pokémon GO as a world where these
digital and physical things coexist. And we can have different experiences. I can leave you
a digital map of my house because you're coming over too little Cayman. And I say, it's only
available for you. And you stick on your glasses, you've been permissioned because you've got the
token and you look at it. So, all of these things plus what everybody's doing. I think I'm
speaking to the guys who are building Wiles. They're doing it on Zero.
What Tim Sweeney, who's building on Unreal Engine. What people like Alexandria Fernandez is
doing? He's creating metaverses for companies and organizations. We've got giant corporations.
We've got small people. We've got Cryptovoxels, Decentraland. They're not going to be one
or the other. It's the same way as these communities. We will be interoperable. We'll
be able to move fluidly between places that better suit our needs, desires, communities, etc.
There'll be some giant winners from this. Gigantic trillion-dollar winners. I don't know who they
are. It's hard to invest on it. You can bet on some of this social tokens. There's like three
or four companies that are platforms for that. And I talked about those people like Rally,
Flow. I think Lukso is coming through, Chiliz. NFTs, you can get involved in but it's really hard
because there's so many. It's the opposite social token platforms where there's few. NFTs, it's
millions. So, you just have to suck it and see. DAOs, they're still early. There's a few DAOs.
People are investing in things like Friends With Benefits. It's super interesting. And the
metaverse, how the hell do we invest in this? I don't know yet. There are some opportunities.
You can buy Decentraland, Sandbox. Sandbox is a very interesting. There are lots of people
buying. Actually, Snoop Dogg land in Sandbox. There's all sorts of stuff going on. So, I
think of this, the metaverse as the End State and it allows you to hold all of these things
in your head without having to be the expert. But it's the macro way, is
here's the probabilistic path. Because then if not, you end up trying to argue
and everything, how do DAOs-- well, I don't know how they're going to evolve, and that's okay.
But I just do know that they're going to evolve. So, that's how I'm thinking this. This is why I'm
fascinated with the metaverse. Not some dystopian, utopian, how's it going to play out? Is this
ready to play? I don't give a shit about that. There's too many people working
on too many different ways. We will get our choice in how we want to live.
And my guess is once we have digital identifiers that have things like zero-knowledge proofs
in them, something we haven't really explored in Real Vision yet, because it's still pretty
early. But zero-knowledge proofs basically give you a cryptographic block between your data and
the authentication. So, it can be authenticated without question, trusted authentication,
without actually seeing my data. So, that allows us to operate
anonymously in a digital world. Now, our government is going to adopt
that for their wallets for CBDCs. Our government's going to have their set
of documents that are publicly available, and other things that we want privately,
but who the hell knows. But I do know is the other end state is everything's going on this,
everything. Your communities you're a member of will be in your wallet, and they will go up and
down in value if your community is thriving. You will have the cryptocurrency bet, but I
think of those communities too, as well now. So, I've given up the whole idea that these are
different things. They're all the same thing. And those will go up and down in value. You
will have your digital identifier that I can share with you. And what's really powerful is
what defi is going to do for everybody too. And people are like, I'm struggling to get my
head around defi because it's moving and it's failing and it's succeeding, it's all of these
things. They're all of these economic experiments. But basically, stuff like Terra Network, you can
just put money to stake in the network and get 20%. Then basically risk free if you want to
own that network. Same with Ethereum. This is mind-blowing. So, you can just quickly
park your assets by flicking up screen and get different yields. Then there's going to be
yield farming, all the different ways of getting multiple yield products. And eventually,
we'll get to a system of risk weighting. This is a high risk 20% yield. This is a low risk
3% yield. You just do it accordingly. There's no middlemen. It's just applications layers
being built on defi. And defi is borrowing, it's lending. You'll be able to borrow
against your token holdings and say, look, my portfolio token holding's worth 200 grand. Can
I use that as a deposit for a house? Yes, you can. Because of the beauty of these digital assets, and
how they're recorded, and who's got the ownership. This is where this is all going. And it's going
to happen at lightning fucking speed because the central bank digital currencies enable all of
this, which is what people don't think. They think, well, we don't want more- - no more
fiat. Forget it. Fiat is a sovereign state. That's how they want to run their currency
regime. That's fine. You don't need to keep all of your money in that currency regime. This
is the new world. In fact, you don't need to anyway. You can switch between yen and Francs and
whatever you want anyway. And you can buy gold. This is just an extension of that.
They want their taxes because you live in a society where somebody believes that the right
answer is societal benefits. So, society together stronger if they share some of the wealth amongst
others, so other people get a support. I believe in that, too. I know it's wildly unfashionable
with some people in the Bitcoin space. I have no problem. I'm European. I believe in society.
How we make that society is up to society itself. So, this is how big this all is, Ash. I mean,
it's ridiculous. And you can see my thinking just moves on and on and on. I mean, I'm now so excited
about all of this. I just can't unsee any of it. ASH BENNINGTON: One of the fascinating things
to me as someone who's doing this journey alongside of you, talking to people, is just how
infrequently people from different silos of these worlds talk to each other. And the $100 trillion
question is something you alluded to, is how all the puzzle pieces ultimately fit together.
RAOUL PAL: But it's like AI doing it. It's the hive mind, right? I passionately talk about
the hive mind. This is the hive mind. As I said, engineers, developers, mathematicians, economists,
finance people, all coming together and working on the same project independently, running
experiments. I mean, get your head around that. We've seen the power of the hive mind
in Real Vision. Something we're going to do more as we start moving towards Web 3.0 world
for Real Vision, which we're hurtling towards. The hive mind allocates capital better than
individuals do. That's mind-blowing. The Real Vision bot portfolio which is voted on by the Real
Vision community has outperformed Bitcoin. It's outperformed the algorithms that the bot produces.
And it's the same with the macro portfolio. And those portfolios aren't run in a way that
a portfolio person would tell you to run them. One day, Terra's right and then the next day, it's
out on Cardano. It's like, this is no way to run a portfolio. Guess what? The crowd is smarter.
And when you put millions of people onto solving issues, then we get outcomes. So, like regulation
is a big issue, we need to get it right. So, what do the guys on the Terra network do?
We're going to go to court. What the Ripple do? We're going to go to court. What a Coinbase do?
We're going to stand up and fight. What you're doing is creating and then individuals, went to
senators and congressmen and everybody is saying, no, it's the power of all of these people in this
network is unbelievable. Nobody's going to go against them, because the vote's in their money.
It's like, I can't get my head around how magical this is. And again, we're humans. We will
fuck it up relentlessly. We will create awful things. We will abuse power. We will create
monopolies. All of that but this is a new way. And a new way, maybe it can give us another 200
years of renaissance. A new renaissance. That's what I think's coming. Well, the other journey
I'm doing on Real Vision is the exponential age in its broadest context, which is then the rise
of computational power, AI, genetic sciences, 5G, network, all of these things, EV, green
energy, all of these massive exponential trends of which crypto is part of this.
And it's all coming together into an entirely new world. We're living in probably
the greatest time in all human history. And exactly like the Fourth Turning, it also
feels like the worst time in human history, where the worst of humanity has come out. And
we're seeing nations and people ripped apart. But from that, we're building a new world.
ASH BENNINGTON: So, talking about this renaissance, one question that I know Real
Vision community members are going to have is how does this influence your view of
Real Vision, and what our role is going to be as we move forward into this space?
RAOUL PAL: It was about two years ago that I started to realize that it was pointless to be
just a media company creating video. And actually, we created something better which is we created a
community. And it's an incredible community. Now, I just got an email today, typical Real
Vision. Somebody who designs nuclear submarines is right so saying, you've changed my life. And
we've had that from incredible people, our hive mind is almost unparalleled. I think, probably
within any community I've ever seen. And I don't say that because I'm a co-founder of Real Vision.
I say it because it's true. It's ridiculous. And people have been telling us, we want to be
more part of Real Vision. We want to be part of this community. We want to be part of this
network. We want to help the business. We want to just drive this mission and believe in what
that is. And that's lending itself to Web 3.0, is how do you get the community to be really part of
Real Vision? How do they share in it? And that's, as I said, probably a social token, that's NFTs.
I want to reinvent how brokerage is done. I want to reinvent how asset management is done, by the
community, for the community, for the benefit. I want to use AI in a way that's not being done
by others, which is to use AI to give back to the community as opposed to extract from the
community to serve ads. I want to do stuff that nobody's done before. And we're working on so many
secret projects. And there's some game changing. The other thing that's not secret is
we're working hard and fast on education, because we need to educate people. Get them up
to speed. I don't want people to say why didn't we know? I'm trying to give everybody the tools,
everybody the understanding, and then everybody the place, the community they could hang out where
they feel safe to ask questions or give ideas and build the community, the knowledge of the
community together. That's what I want to do here. Because then, we've got the world's most powerful
community, and the community of the people who have the power, not some corporation. So,
that's what I'm thinking of. Other exciting things we're up to as well is we've just started our show
with The Defiant. The Defiant, a fantastic group. They're the cutting edge of crypto media.
Their focus has been on defi which is very applicable to our audience who are interested in
finance and defi is hard to get your head around. And I wanted to bring the macro, the defi,
the crypto world altogether. And that's that. And that's what we're doing there is
bringing new people into our community. And there's going to be other announcements about
communities that we're bringing into the Real Vision community as well. Which are going to be
very exciting. So, there's a shit ton going on, which is I think the official measure of how much
is going on. There's a lot of change to come. But the idea is to create the best place to learn,
accumulate knowledge, disseminate knowledge, and understand what's going on, and how to best
benefit from it. That's what I want to get to, the vision of the future.
ASH BENNINGTON: Raoul, talking of community, one of the things that we're
passionate about here at Real Vision is opening up the conversation to the community. We've got
a lot of questions here from an AMA. What do you say? Want to do a quick speed round?
RAOUL PAL: Yeah, let's do it. I always love the questions from everybody.
Because again, it personalizes it. It's not me behind the camera being the voice of
God. It's like, we're all in this together. We're all trying to figure it out. So, yeah, let's go.
ASH BENNINGTON: Alright, here we go. First question comes to us from Fabrizio T. What is
the single most important factor that will drive financial institutions to adopt crypto?
RAOUL PAL: Price. It's simple. The number go up, more get involved.
Then after that is regulatory clarity, which is happening. We've just seen that I think it was the
SEC, not the SEC, I can't remember who the hell has just said that they can hold crypto on their
balance sheets, which allows them market making functions and prime broking. Well, they're not
going to hold on their balance sheet because the risk weighting. It's not about having as an asset
on the balance sheet, it's about having a bloody prime brokerage and offering it to hedge funds.
ASH BENNINGTON: Alan asked, Raoul, what do you think are the three biggest day-to-day
impacts of blockchain technology on people's lives in the next 5 to 10 years?
RAOUL PAL: Honestly, within 5 to 10 years, I think it will be our digital identity, our store
of value, our way of digital method of ownership, our ownership of rights, IP rights.
I think it'll spread to insurance contracts. It'll be the way you earn money,
yield. The way you borrow, and how you identify yourself within the communities within
which you live these digital sovereign states. So, apart from that, it's very little impact.
ASH BENNINGTON: A great and very nuanced question comes to us from Janis about The Fourth
Turning. I'm just going to simplify it here. For people who may not be familiar with
the book, give us a sense of what The Fourth Turning is about and how you see it as
being relevant to the exponential age thesis? RAOUL PAL: So, The Fourth Turning is a book
about demographics, and how demographic cycles repeat themselves. And Neil Howe and William
Strauss went through in great detail back in the 1990s these demographic transitions through
time. And you get these turning points, where basically a full group of full three or
four generations of people have gone through. And you get a moment of change.
And the transition from baby boomers to millennials is a moment of gigantic
change, because the millennials know nothing of the lives that the boomers live, which was
the relationship to World War II and then the 1950s and all of that. So, it's all it breaks.
And what happens is, the world is not fit for the new entrants, so the zoomers and the
millennials want the world made a different way. And so, usually you get societal change
writ large. Sometimes it can be catastrophic change. It can be warfare. Other times it can
be social change. And their argument has proved prophetic on where this is going, how you ends
with financial crashes. And out of the financial crashes, comes people realizing we need to do
things differently. And generally speaking, even the previous two elections are pretty much in the
book, even though it was written 20-odd years ago. And the idea is from all of this, innovation
accelerates, if it's the right answers to the fourth turning and not war. Innovation accelerates
as everybody reinvents a new set of institutions. So, if you remember, most of the institutions
that we have in our world came out both World War I and World War II. The rules based global
order system. All of that is going to get thrown out and changed. That doesn't mean we reject the
rule based global order system, but we have to adopt it for a modern world. And that's why I've
spent a lot of this interview talking about today is the magnitude of these changes.
ASH BENNINGTON: Yeah. J. Michael, we're hearing so much about the impending bull market,
and it should last roughly three to six months. After that time, is the market expected to
largely recede, or are we entering a time where technology will continue to push it ever upward?
RAOUL PAL: It's a good question. And I don't know. I really don't know. Obviously, it's a very
volatile asset class. It's a logarithmic, so you can have these 50% pullbacks within the same trend
much like Amazon, Apple, and stuff like that. There is also periods of Amazon and Apple that
have gone sideways for two or three years after a 50% correction, something like that. I don't
think the corrections will be as deep in the main protocols. In other stuff, it will be. It's
a risk curve, it's what normally happens. My guess is either the corrections are shorter and sharper. Actually, I don't know.
Shorter and sharper, or just shallower and longer, or none of the above. I don't know. It
makes it really hard to navigate. But I'm actually on the side turning up a fund
of funds to exactly deal with this issue, because it's impossible to know what to do.
ASH BENNINGTON: Well, as we start all of that out, here's a question from Mike H.
about the data. Raoul, where do you get your crypto adoption statistics from?
RAOUL PAL: Remi Tetot. Remi is my co-founder of Real Vision and also, my macro analyst who
runs the massive database that we have. And Remi builds out all these models.
So, he's the front of all knowledge. ASH BENNINGTON: Jorge A., how do you see the
transition from a bank credit system with all its moving parts, credit bureaus, scores, stores,
etc., to a collateralized or not cryptosystem like the one we are experiencing in defi right now?
RAOUL PAL: It's a migration. Don't expect the lights to go on, lights go off. It's a
migration. It just happens over time. So, it's happening already. It's just not consumer
friendly yet. I mean, still way from the space right now. But I think defi explodes in the next
bear market or sideways market for crypto. Let's say crypto trade sideways for two years. We're
all going to be staking, looking for yield, looking for opportunities to make money
out of our coins over that period of time. And there are risks with that too, as there
are with all yields and all returns. So, we just have to navigate that world too. What's the
risk? Half of us don't know. Stuff gets hacked. Some of these protocols don't work in defi world
because it's all experimentational. Nobody is saying I've got the perfect solution here.
It's, as I said, one of the millions of economic experiments being run in real time.
ASH BENNINGTON: Carl C., hi, Raoul. Besides the ETH 2.0 transition, can you go into more
depth about why you believe the crypto peak in this cycle will be Q1 or Q2 of 2022? Will hedge
funds institutions, sovereign wealth funds, etc., be the main catalyst for that?
RAOUL PAL: Yeah, I think I covered this at the beginning of this interview. I think
yes, the change in the nature of the participants will change this. But we're going to get through
a selling cycle first, a bunch people need to pay a lot of tax bills. There's a bunch of people who
need to reallocate their assets because crypto has gone up a lot. And there's a bunch of hedge funds
that want to close their P&L at yearend. So, it's going to get volatile towards the end of the year.
That was going to call the end of the cycle. Then I think we're going to see a face ripping rally.
ASH BENNINGTON: Talking of which, here's a nice cheery one from Daniel. What is the biggest
risk in crypto now that nobody is talking about? And what is the worst-case
scenario for crypto being regulated? RAOUL PAL: I don't think
there's a worst-case scenario. I think there's too much money, too many voters,
too many people. And I've talked about this, there was a grand compromise will happen. And
it'll be a new set of digital asset laws. And that'll be another fourth turning. That's
moving away from Securities Laws of 1934. That's the previous turning where we had the
world wars and we're now going to a different one. So, what is the risk? The risk is going
to be a boom bust cycle. The risk is we get a ridiculous extended bubble in this cycle,
and then a collapse. Like entrants get hurt. It's that. I don't think there's any real risks
of this whole thing. I just don't see it. I just don't see any of the FUD. Tether, solvable,
just go to a different stablecoin. Regulation, just to go to a different country. There's
no stopping this. There is no stopping this. ASH BENNINGTON: It's one from Tim L., what effect
will the Fed tapering have on crypto prices going forward, especially Bitcoin and Ether?
RAOUL PAL: Over time, once the economy gets through a tightening, partial tightening,
and REITs which trend rate of growth which I suspect is 1% or so, my guess is there will be
other assets that will start to perform that will get investments. And I think the exponential age
stocks, for example, will do very well over time, and they will have a competition for crypto.
And crypto will be just not the only game in town. So, that's how I think about it.
A credit cycle, most people in the crypto market aren't involved in the credit cycle
so much. So, it's not a credit market thing. But at the margin, it will take hedge
funds out, institutions out. So, credit cycle, the business cycle still rules most
things, but in these exponential adoption curves, it has a much lesser pronounced effect.
ASH BENNINGTON: Final question, Raoul, and this is my favorite one. It comes to us from
Gurekam, I'm going to paraphrase a little bit, but he wants to know what our advice would be to a
25-year-old right now? Here's my answer. I've got two. Number one, learning is a lifelong process. I
know that may sound a little onerous to you at 25 but it's actually just the opposite. It takes the
pressure off of you. This is something that you are going to be learning, experiencing for decades
and decades to come. It's one of the reasons why Real Vision is betting so big on education
and something we're so passionate about. And second, Raoul, this is a lesson I
learned actually directly from you. So, it's probably a fitting note to end on, which is
you can't be paralyzed by perfection, by the need for certainty, the need to always be right. You
have to get comfortable being uncomfortable. Get comfortable taking risk. Get comfortable managing
risk and understanding the limitations of risk. I think for me, that's probably the most
valuable lesson I've learned in the last year. Raoul, what are you thinking about?
What's your advice for a 25-year- old? RAOUL PAL: On that point, I've
said it before. There's two zones. One is the comfort zone. And the other is
where the magic happens. They don't overlap. Once you've learned that lesson in life, the
magic happens outside your comfort zone always. So, for the 25-year-old, you have
a massive advantage over all of us. Culture as an investment is something you grew
up with. You will spot the cultural trends that you can get involved in, and you will
make money from it. This is a different world. You don't have to be the guy and
needs to understand stock markets or currencies or yield curves. You don't have
to be that person anymore. You're liberated to say, I've seen this trend on TikTok and I
think this is big. And you can be part of it because of the tokenization of the world or
the NFTs. So, you have an advantage over me, over Ash, over anybody. It's an incredible
opportunity to rewrite the rules based around how you see the world. At 25 years old, you grew
up in games. You grew up in a digital world. You understand digital value. Use your advantage.
ASH BENNINGTON: Raoul, as we wrap here, final thoughts?
RAOUL PAL: I think people now can understand what it is we're trying to do here. We're
trying to understand this new world, the digital asset world, along with the macro
world, because they are the same world. They're just different areas of it. It's important
as important to understand the gold market, the industrial commodities market, the
currency markets, or the crypto market. I just think that the crypto markets offer the biggest
catalyst of change and the biggest opportunity. I have no idea where this is actually going. So,
what you're doing when you're watching me do this, or you do this, Ash, and all of the people
we are inviting, we're just learning. We're trying to figure it out. We're trying
to figure out the world's biggest opportunity so nobody can say I didn't know. We want to give
everybody the tools, democratize that information, and allow people to participate in
literally the biggest economic cultural revolution the world's ever seen.
ASH BENNINGTON: Well, there you have it, the macro view, the biggest big picture.
Raoul, thank you so much for joining me. RAOUL PAL: That's lots of fun. It's the first time
I've really managed to get the whole thing across. So, hopefully people found it useful.
ASH BENNINGTON: Absolutely. Thanks for watching everyone.
RAOUL PAL: The world of crypto is an incredibly exciting journey that we're
all going on together. We don't know where it's leading to, but we know it's going to
be absolutely massive. Join me, Raoul Pal, as I guide you on our adventure to discover
just what this new world will look like.
