Mathias Imbach, Michael Saylor, Patrick Tan, Raoul Pal, Peter Habermacher discuss Digital Assets

good afternoon everyone and and welcome to an exciting session we have the first session this afternoon on uh digital assets there will be others following and we'll try to address four questions for you first what institutional option of bitcoin really means for investors then moving on to a little bit to the fiat world and some of the problems that we're facing and maybe how central banks could evolve given where we are today then a little bit of a one-on-one maybe on how ethereum differs to bitcoin and also what the the grand new emerging world of decentralized finance brings us we will only be able to scratch the surface there but just to get you started on this a little bit and then end with really asking the questions why or should family office take crypto seriously and if so why and what could be some of the best practices as you start looking at this space as alex mentioned i will be a moderate your moderator today uh matthias one of the co-founders and group ceo of cigna we are a digital asset technology group with a banking license in switzerland and asset management license in singapore really fully focused on providing institutional investors fully trusted access to this new emerging asset class across cryptocurrencies acid tokens and stable coins and i'm superbly excited to be on this panel with with my colleagues here all of which don't really need an introduction quite frankly but still would like to kick off by giving everyone a quick uh you know a few words to just introduce yourself and maybe end with what your one sentence answer to what bitcoin is for you maybe kicking or kicking it off with raoul i'm the ceo and co-founder of real vision and i also uh write and publish the global book yeah i can hear you perfectly can you hear me yes you can hear me here yeah so i'm the ceo and co-founder of real vision and also the uh publisher of global macro investor kind of institutional research service bitcoin for me is the future shop and chris thank you uh patrick um hi everybody my name is patrick tan i'm the uh ceo and general counsel of november alpha with a digital asset quantitative trading firm we've been in the business for the last five six years um basically what bitcoin means to me it means freedom freedom that's what it does thanks patrick michael um i'm the ceo of microstrategy um bitcoin to me is monetary electricity i think it's the most powerful technology of the 21st century it's going to make the economy run faster cleaner stronger smarter longer thanks michael and finally last but not least peter hi i'm the chief executive of our capital our capital opens up the exciting and rapidly evolving deal here in the crypto as a goal sorry for sophisticated investors via a regulated myself under funds and to me bitcoin is the eureka moment which is leading to the next generation value-based internet thank you so let's kick it off with with the first question we want to address which is uh there's been over the last 12 months or so a little bit of a backstage to main stage moment for for bitcoin again and i think in a in a fashion which we've not seen before at least for in the institutional investors space which has also led to a significant rally on the price side about the 10x since last last march and michael i would like to kick it off with you you were one of the the first at least as ceo of a publicly listed company who has been very open about look i want to use bitcoin as part of my treasury portfolio i i'm going to significantly invest in it you started with i think with right now your portfolio this micro strategies bitcoin portfolio is worth around 5 billion today a bit of volatility but we're in it for the long term right so but wanted wanted you to start it off by just giving a little bit of an overview of the rationale that has led you to this decision to actually use bitcoin as a means of of adding it to your treasury portfolio i think that in march of 2020 the cost of capital tripled traditional treasury assets strategies that used to yield two or three percent went to zero and the the risk-free rate went from six percent to 20 plus percent i think our money supply expanded 24 last year i expect that the money supply expanded 20 this year the most optimistic view is it went 24 to 20 percent maybe it'll go to 15 expansion the following year and it'll be about 15 so the money supply is expanding at 15 treasuries are yielding zero cash is yielding zero the negative real yield of any any uh cash or cash equivalents or short dated treasuries is minus 24 percent this year minus 20 net well minus 24 last year minus 20 this year minus 15 next year so the reason that we discovered uh bitcoin is we all of a sudden had a massive problem it was triple or quadruple the problem that we had had in the previous 10 years instead of a six percent cost of capital and a three percent yield on treasuries and a minus three percent real yield on a conventional treasury strategy we went to a minus twenty four percent real yield on a treasury strategy so that shocked us out of our complacency that caused us to go on on a a search to find a store of value we sifted through everything and we found bitcoin and we found bitcoin is the solution to the treasury problem generally for any company i think thank you thank you michael and maybe uh in a related fashion role moving on to you you've also recently said that rarely or or actually the first time in your career you've seen an asset or this specifically bitcoin scene draw such significant interest from mainstream institutions and also recently i've heard you say that even for you the way you now look at things you want to own as much as possible of this new world which is not just bitcoin but just the whole more decentralized infrastructure as well just talk us through your rationale why what are the key drivers for you to make such statements firstly the expected future returns of most asset classes are pretty low right now now i understand that there are some disruptive technologies that may allow some parts of the technology area to grow faster but generally the expected future returns the most assets so it's almost negative i'm sure you could pick a commodity that may may have a future expected a higher return or maybe emerging markets but everyone's faced with that everyone's faced with a problem with their portfolios you've been given a new asset that is uncorrelated it's highly skewed to the upside and truly represents an answer to all the problems of the global financial system of which everybody is acutely aware of so why would you not have that asset and that has resonated very quickly amongst the investment community the first guys i were aware of but all of the hedge fund guys that i kind of grew up with they all owned it in their pa first then they got it across the line at they they started investing in their funds and then the traditional asset manager started seeing these guys so did the family offices and everyone started following suit but essentially what i think is going on is we have this broken financial system with low expected future returns we have this entirely new world that's just being developed and what we're seeing is a gradual migration across and that migration will turn into a stampede and it has to happen because all the solutions here the only solution they have is to do more of the same which is to michael's point just devalues money and then i'll i'll pick you up on this point in in a later later stages i'll to go a bit deeper on this one but peter anything that you've heard from michael and raul anything you don't agree with or or if you if you agree with everything anything that you would like to add or stress um so i come from the very traditional economics um background particularly industrial and competition economics and i mean there is kind of a lot to be desired in the financials uh still to be designed in the financial system the payment rails is literally quicker to kind of uh put money in a briefcase and fly to france and it's kind of transparent electronically which is a bit crazy um and our view is we don't see everything shifting over to this new space but more kind of working alongside each system has the pros and cons and depending on the situation you pick essentially the lesser evil lesser evil yes how about you patrick uh particularly also anything you don't agree with that has been said um i think that when it comes to things like um and i've written about this uh relatively extensively um i think that when you go look at the data in terms of inflation some of the stores are valid that we're looking at um you know with respect especially to things like gold now if you track goals uh properties as an inflation i think that uh as an inflation hitch i think if you go all the way back to when the u.s abandoned the goal standard in 1971 under the nixon administration that's when you know you had this decoupling between um fiat currency and any particular heart asset and i think for me that was sort of like the inflection point as to how much could governments get away with you know how much of the damn stuff can they print before it starts to become worthless um oftentimes uh the argument that's leveled against why not bitcoin was simply because it's not backed by anything okay you name me something that's backed by something then um name your fiat currency that's backed by something other than the promise of a government not to print so much of the damn thing that it becomes worthless so i think that you know every generation um is able to find a new asset um i think that with um gold it took about say about 18 years before it became fully formed as a proper asset class um we often get a lot of clients who say you know what um are we a bit late to the the whole bitcoin game and i stress that you're probably not um the fact that we still have to have this debate about whether or not bitcoins of any value at all um i think that suggests that it's still immature as an asset class i think that that we have this com these levels of volatility that we see uh on a day-to-day basis that suggests that it's more an argument of narratives it's not been established as an asset class uh people always point to the fact that gold you know it's still a physical asset um but seriously speaking it has limited industrial uses outside of jewelry so i would say that you know every generation sort of like finds its way through to a new asset class um i'd say with bitcoin the same way with like data uh the same way with um data analytics and that would be the currency of the future and it takes time for people to get used to that you know you don't expect them to adopt it overnight um and i think we're kind of past that point right where um i don't i'm not the sort to like commit to a price prediction so don't ask me what bitcoin is going to be like at the end of the year i have no clue your guess is as good as mine but um you know i i actually don't want to look so much at the dollar value because if you're looking at the dollar value you kind of lost the point um because then you're still measuring and valuing the the the resources of this life in in dollar terms when when in in reality i think the things that we will value say uh two decades three decades from now are going to be vastly different from from what we see of being valued right now yeah so if there's one thing that everyone agrees here is that there there is uh there is a problem with the the today's fiat system is is broken or at least there's lots of questions to be asked number one and obviously more and more people asking this question or coming to that conclusion has also very much been driving the last 12 months adoption of bitcoin by institutional investors and if we look at if we look at just recent moves by by central banks for governments uh u.s is a case in point 1.9 trillion bill was passed i think the democrats are working on a 3 trillion bill now again for infrastructure and renewable energy investments question is where does it end and and ural you've basically uh framed the the case that bitcoin is the life run raft against the the basement of traditional currencies and now but let me ask you the other way around if you put yourself given where we are ceteris paribus today the state is where we are today and we know what's happening if you put yourself in a central banker's shoes what would you recommend them to do i said just want to go back to the point about the bitcoin backed by nothing i mean i think michael makes the point a lot it's electricity right people don't get their heads around the fact that that's what you're doing here you're basically using electricity to create a future financial value transfer system and all of the things that come off it so it is backed you know we're used to a world of petrodollars that's the world we live in now essentially so there's there's a bunch of different things um in terms of what central banks can do given the nature of central banks and given the nature of the crisis i think i would have done the same what would a forward-looking central bank do they need to look at money itself um but we're not there yet you know they just don't want to go there because they lose control of their own money if they do but that's that's what has to happen they know the problem the problem is we're in a debt super cycle driven by you know the abuse of money essentially and that won't go away um because they're incentivized to continue the same game because there's nothing like disrupting yourself which they don't want to do so they'll go half-assed towards it which is central bank digital currencies but that's missing the whole point [Music] peter want to ask you the same question put yourself in the in the central bank's shoes what would you do yeah i mean pretty much what i've done uh one place where i'll probably deviate a lot from kind of most of the rest of the panel is what i see there's still a lot to be desired in the financial infrastructure fiat money itself is working largely as it should do um but there is a constant plan of being money inflation or come to the basement however there is an inherent trade-off between the store value medium exchange functions of money and if an asset appreciates by more than four percent a year he uses liquidity as people start to hoard it and the primary function of fear money is as a medium of exchange and also as a monetary policy tool to help ease the effects of money economic shocks and the business cycle on the real economy and although the fear money fulfills this function relatively well as long as governments aren't careless and fair money even though over 20 to 30 year time period halves in value um it still is able to kind of hold its value in the kind of time periods that matters to be used as a meeting with australians and you want to hold money five 10 15 years you should be invested in um kind of productive assets um as opposed to holding cash because there's this inherent up between minimums change and um kind of store all value and it's deflection deflationary value given that uh prices are nominal prices particularly people's wages are baby stickers when you try and kind of deflate prices as what happened in the european periphery in the european debt crisis or um there's a mismatch between the local economy and the currency for example in the kind of rust belt in the us the economic reality of that is very painful when the price level can't adjust and you don't have a central bank to kind of smooth over these economic defense effects though that said um this technology and together with cryptocurrencies um can massively improve the current financial infrastructure and there's a lot of inefficiency and additional costs there that can be stripped out peter and and moving on to you michael you've laid out a number of figures in your initial statement but one of the key statements you've made again and again is that cpi is the wrong measure to of for inflation and that in the current environment if you want to at least keep your purchasing power and peter indirectly referred to it as well you need to beat the 15 or so uh return annually can you just go one level deeper starting with why ins specifically is cpi uh not the right measure of inflation well you know i think if you're an engineer and you wanted to solve a problem in aerodynamics or hydrodynamics or build any machine you'd have to use vector calculus so the right way to model the economy is a multi-dimensional vector that describes inflation plugged into a system of differential equations and this is actually what i did at mit and what i did when i created sophisticated economic models after leaving school if we focus in on inflation in general i mean a reasonable way to track inflation would be keeping track of the price of every product and every place in every period and every product would mean an array of every good every service and every asset and if you track the price of of residential housing and every postal zip code and the rate at which the price change or the price change every day or every month everywhere in the world you would have a reasonable representation of inflation and everybody with any insight knows that the price of housing and the magic mile of london or manhattan goes up at different rates than the price of housing in kansas and the price of housing on land in miami goes up at a different rate than the price of condos in miami and the price of assets goes up at a different rate than the price of domino's pizza and and the price of really good health care that your insurance doesn't cover goes up at a different price than the price of health care that your insurance does cover so uh so i'm so the problem with a cpi is it's a scalar and scalar means you're using arithmetic like literally you're using arithmetic to run the economy and there is no mechanism there is no engineering achievement there is no piece of technology on earth that can be created or solved using simple arithmetic and scalars everybody knows you have to use calculus calculus of variations vectors you know etc in order to do this and so that's why i say it's it's it's just a misleading number it's almost defined to be deflationary we created a basket of things that will never go up in price and we track them with a slavish devotion but you reckon michael that that could be possibly deliberate right because i mean if you are a regulator if you're a central banker that's the kind of number you want to point to so it gives you the excuse like for instance you know it gives me like if i was central banker for instance and i wanted to point to the fact that look you know what guys inflation is not something that we need to worry about let's just keep printing the damn things um and i and i think that you know i'm pretty sure that you know um jerome yellen and the rest of them up there they definitely know as you do that you have to use scalar vector quantities to actually properly track inflation and they know it but the point is that you don't look at figures which are convenient for you especially if you have got a different agenda yeah like in the last like 48 hours i've seen someone say that housing prices were going up five percent i saw another thing saying all u.s housing is up eleven percent year over year i saw the ceo of a housing company on television saying the housing price is up 16 percent year over year and i saw politicians and central bankers say that the cpi is is two percent and it includes the cost of housing i was like and how does that make sense i mean even if you would take arithmetic that wouldn't make sense and the cost of housing in miami is up 20 in palm beach 29 of the hamptons is 50 so you could pretty much and the answer is obvious some housing is more desirable than other housing yeah absolutely i mean um you might not be familiar with singapore but i mean if uh if you want that you know that beautiful mansion down in the in the spine of singapore which is like the book of team area you're gonna pay you know top dollar for it doesn't matter what time of the year it is yes and and and that's why maybe and i think you've posited that michael maybe cpi is very individual right for for for you it's different than for me and for others it's basically what future what is the composition of what you need in the future some may need a house in the hamptons others not etc etc or have the ability to buy it so cpi is actually not the same for everyone but we need to move on but for the audience if you have any questions feel free to start typing them in the chat and we will see that whether and at the end we have some time to to capture some of them uh particularly on this question i'm sure there's there's many um but i would like to move on to the third question you want to touch upon which is basically there's obviously not just bitcoin in the world of cryptocurrencies we have thousands uh the second largest is ethereum which also um over the last uh months has has uh has been very much making headlines particularly for its usage in decentralized finance infrastructures d5 has been booming right now we have around 44 billion usd locked in deep applications and ethereum is is the key protocol on which these applications are built now um we we will really only just be able to scratch the surface we could do two hour session just on this but just for the audience patrick why can you can you please start us off by just giving us a little bit of a a overview how ethereum is different to bitcoin and secondly what for you in short is decentralized finance what does it mean how do you define this phenomenon that we're seeing i mean on a technical level ethereum is different from bitcoin because it's turing complete so as a blockchain itself the programming rules that it's built on is just um it's different from bitcoin so uh touring complete if you've um you can google it but basically just means that any it's a kind of repetitive definition but basically any term complete machine can then replicate itself on the ethereum blockchain but uh what what makes uh ethereum perhaps a little bit more special is that you can write smart contracts on it not to say that you can't write smart contracts on bitcoin it's just that it's slightly uh i wouldn't say easier but it's just different on on the ethereum blockchain so when it comes to things like d5 essentially what it is is that it's taking out it's taking the argument of removing the trusted intermediary to a different level together with d5 so what you have is that you know anybody with any pool of cryptocurrencies be the stable coin or like a die or whatever you have you can become your own sort of bank and provide a loan what we've seen in the d5 space right now is that it's still relatively immature so that's why you've had to overcome over collateralize your loans so let's say if you wanted to borrow say 100 you'd have to maybe put out 120 each and that kind of thing so that you know the interest payments are built in if the other party should be fought for some reason you can claim the whole thing um we've had we've seen um trades block trades where you can do things like you can borrow make the trade on the arbitrage return the um the the borrowed all all within one transaction block um and that's what people are doing um and that's how you sort of generate because people don't quite understand how is it that you know you can generate those crazy apys um on on on some of the the ether projects in the d5 space so that's what we're looking at um i think we're still that's really really early um our company got into that um sometime last july last august and we were really just researching the thing out um and what we're looking at i think that if we as we go forward what will happen is probably you know things like and i'm not sure if this will even work but if as you know um as your ethereum while addressing develops a certain provenance um then you know and you've been shown to be a regular uh a party who a counterparty pays back regularly there might be somebody who'd take your credit risk on that so let's say if you know if you have to over collateralize your your loan under normal circumstances if we check your providence on the blockchain somebody else might decide okay you know what i'm okay to fractionalize and maybe slice and dice it almost like a collateralized debt obligation and then after that parcel that out there might be people who'd be willing to to be recompensed for the additional risk that they're taking but it's so early days we've seen a lot of scams we've seen a lot of what they call rock pools uh in the d5 space which is unfortunate but that's so common in the cryptocurrency space i've just gotten so used to it i've become numb to it already um yes it's it's part of the next frontier of innovation which we've seen and seen in 17 as well but picking up on this peter given what what patrick just said and particularly how early it is and also yeah subject to still lots of uh let's say um you know also scam scam projects that are going on in such a hype cycle is it possible in your view for institutional investors to get exposure to this trend nonetheless already today um yeah um yes so many kind of numbers of the number of scams for example the 2017-2018 kind of ico circle an estimated 70 percent were scams all naturally actually useless however a large amount of money still went into kind of very good projects and over the past few years we've seen them evolve into usable uh infrastructure in this space and also usable services which are now providing like for example traditional financial services from lending a borrowing trading infrastructure further and device has a huge amount of potential over the past year alone it has grown from around 1 billion to around 50 billion dollars in asset slots in protocols and this presents some very interesting trading strategies for crypto hedge funds um with a focus on these by this uh yield farming um that can be either market neutral or yielding hands in on the assets that already owned by an investor or hedge funds and there's yeah collateralized lending strategies liquidity mining strategies um so provides a wide range of um kind of strategies from which investors can profit from uh but here and now some are um kind of enhancing kind of market returns others are um diversifying strategies and independent from the market overall and really are a lot of unique and interesting quickly evolving ways to profit from your space for uh investors looking to enter this battle already in this space it's just a case of having to properly identify and manage this as they are very unique yeah so early but why are um you know institution a professional firms dealing with it uh there's a way to to get access obviously also um right now in i mean in my team i don't think there's many uh engineers and others who are not active in the liquidity pools et cetera it's a a huge world opening up to to everyone once you start checking it out but for institution west is still a bit early raul you've you've said before that you believe that ethereum could become bigger um than bitcoin what are your three reasons why this could be i just want to reframe some of this i think talking about d5 is missing the point it's like focusing on a micro aspect of what is the start of the digital renaissance age everything is going to change it's not just how we bank how we transfer money how we store value we're moving into a truly digital world of which everything around us will change you know people need to start getting familiar with things like the metaverse to understand where this is all going and across that once you start creating a digital world where you know everything from education to where people socialize is is digital where people store value transfer value um create opportunity is all digital that whole world is a very large world of which we now have this pristine collateral base layer which is bitcoin which is phenomenal right that gives it the stability and the anchor point from which to build but i don't believe that it's all going to end up on the bitcoin blockchain and it doesn't necessarily have to even if it's sub-optimal i think it's a much larger space and there will be a interoperability amongst protocols to create this digital renaissance age and within that ethereum probably plays a large role so um and i see it differently than i see the bitcoin ecosystem currently again that may change we don't know where this is all going it's organic you know it's driven by millions of people it's not driven by one person saying we're going there so where it goes is where it goes um but i think probabilistically speaking it is a multi-protocol interoperable world with bitcoin at the center of it thank you ralph michael will microstrategy also invest in an ethereum you know our view is that um you know bitcoin is a is a a treasury reserve asset and it's a trillion dollars and that makes it the most stable monetary body in the economic universe so so we just went and borrowed a billion dollars we invested in bitcoin we'll wait for bitcoin to flip gold we expect to make 10 billion dollars off of it um when i look at things outside and i think that that's a that's bitcoin is um if you look over the last six months the price is going up at 700 percent a year if you look at liquidity on binance it was trading 605 million a day six months ago it's trading 4 billion 937 million a day that's up that's growing at a rate of 1376 a year by a factor of 10. so the liquidity is exploding in bitcoin the price is moving up it's stabilizing um if i look at innovation opportunities i feel like there's three pockets of innovation in the world there's uh there's crypto innovation at the base chain level and that's what ethereum is and there's other there's other crypto assets that are that are working on innovating in that level there's crypto innovation at the layer two level which is what lightning is or open source things on top of bitcoin and then there's a lot of centralized innovation going on at square and paypal when fidelity issues an etf when morgan stanley tries to sell a fund all of these are innovations big tech and finance and bitcoin banking and crypto banking and centralized things i think um look there's a you can just go borrow a billion dollars buy bitcoin and wait three years and you might make 10 billion that's financial you know that's just a financial play that's a play i feel like uh tyrell's point we've got an explosion of opportunities and you can decide that you want to focus in on the base layer crypto innovation area or you can focus on layer two solutions or you can just do more pedestrian things like ask yourself if your fidelity how do you plug into digital assets and everybody's got their you know their opportunity it's so big so you know there's and you can build an insurance plan that's based on bitcoin and it would be a hundred times better than every insurance plan in the world right now is anybody doing it no could you make hundreds of billions of dollars doing it yes it's just a different thing so i would say hundreds of thousands of opportunities no human mind can grasp every opportunity it's going to be a competitive market and who knows who's going to uh prosper and who is it i don't know but the rao would say the market will sort it out right and and just let the markets be the markets and capital will flow to wherever it's going to work and that's part of the wonder of what's going on right now hundreds of opportunities competitive landscape we have the audience is about 150 family office from from across the globe we've done a little bit of a tour doris across bitcoin ethereum d5 what it means on the macro scheme what what the problems are with the fiat current fiat ecosystem now let's spend the last five minutes and i see i don't see yet uh major questions in the chat so i would i would love to do a one final round in the last six minutes to just ask you okay put yourself in shoes of a cio of a family of a single family office or a multi-family office or principal why does does the crypto space matter why should you get into the space what are the the what are maybe some some guidelines some best practices that you would would wanna wanna pass on to them and maybe your view on in a in an overall portfolio of what percentage allocation do you feel is reasonable for for someone for family offices to get exposure to this asset class maybe kicking it off with patrick i would ask all of you to just keep it to to a minute or so that we that everyone has has one last round i think ultimately if you're a family office or if you're an individual allocator you have to look at um the data the data doesn't lie um if you take back the data from and let's take out the periods where bitcoin really did um crazy rallies so you you know like an olympic diving competition you've got to take out the twos you've got to take out the tens so if you look at at the last decade or so um and if you looked at a just a simple median allocation of two and a half percent uh into any 60 40 standard portfolio of stocks and bonds um that would have improved your your your return by about 15 increase your sharp ratio by about i think uh 0.48 so you would have had um better returns with a very small allocation about two and a half percent in a very standard 60 40 split with no additional uh things like commodities and stuff like that you might have experienced slightly more volatility but overall you would have come on the other side a lot better so um i think anywhere between one percent to five percent of uh any uh family office's allocations um and of course there are other ways to um participate of course uh in the underlying asset we're not necessarily just buying and holding i think buying and holding is great um i agree with michael in the sense that you know you can look to it as a long-term store of value but then you know if there is that portion that is slightly skeptical about where is this thing going to end up then there are also other ways for you to participate in the underlying asset whilst hedging those positions so you could take um a non-market market agnostic sort of approach where you sort of trade the volatility one of the things that we can be definitely if you can keep it short if you keep it short for the others yeah all right yeah so anyway that's the same anywhere between one and a half uh one to five percent two and a half percent is probably a nice median perfect thank you peter your tech yep so as for the impact of building crypto assets to add it to a traditional portfolio um how and i suggest that a number of key observations of us is the outperforms of crypto funds relative to the crypto market overall and the second is that there is ample evidence uh that get the most of that allocation in space one should allocate up to five percent of before quality and crypto assets a five percent allocation to crypto funds will according to this evidence again approximately through the annual return shot ratios or tina ratio or a traditional investment portfolio and through the maximum drawdown and does all of this with a rather limited impact on portfolio volatility and this is because a diversified range of crypto funds has a much higher return and a much lower volatility than any mainstream crypto index over the full crypto market cycle thank you uh raul well i'm not the right person to ask because i've got 100 of my liquid net worth in in bitcoin and a bit in ethereum and a few other assets the point being is to frame it in terms of portfolio effects particularly for family offices is not that relevant what you're deciding in a family office is what does the world look like in the future and what do i what am i trying to transfer across to the next generation this is the future that's how i started this whole conversation today it is the future of the entire financial system it's the future of the digital world it is the future of how we're going to transact in that world how we're going to create opportunity in that world and it's best represented currently by bitcoin so to not have a significant proportion your portfolio and the significant of your proportion of your mind share is really missing the big picture and i talked about this recently we've basically just discovered america there's a whole new world and you can be the european saying well everything's going to remain the same but it didn't and it won't and so that is what you have to do you have to embrace this new world so you need to be braver than you think you do you need to ignore things like volatility because volatility is just a function of return and so you have to embrace the volatility and understand what it means thank you and maybe michael just that we i've seen there's a question addressed you and maybe uh if you also in your uh answer in the last week and also touch upon it they they say someone adam says there's a interesting point on innovation and the binance liquidity point michael how would one sell insurance at this time using a volatile currency like bitcoin i thought that was quite interesting yeah so my first response to generally any family office is everybody's under allocated to bitcoin if the cost the risk-free cost of capital is 15 to 20 that means the hurdle rate's 15 to 20 percent every cash instrument stock piece of commercial real estate or bond has a negative real yield you're destroying value with that entire portfolio right now it's like clinging to a portfolio of bonds real estate and stocks in a country where the currency is go is collapsing so the answer is you ought to be looking for scarce assets the world's most desirable highest quality institutional grade scarce asset is bitcoin microstrategy is 400 allocated to bitcoin we have 4x our capital i would say you ought to convert all your stuff to dollars and buy bitcoin then you ought to forward finance your cash flows finance your fixed assets and borrow as much money as you can and buy bitcoin and the reason why is because everything else is deriving its value based upon currencies dollars euros yen and they're all debasing at fifteen to twenty percent a year if they were debasing a two percent a year it would be a very complicated portfolio allocation if i but if i told you i was going to collapse the currency at 30 a year we wouldn't be having this conversation ever you know the only answer is get your money out of the country and so bitcoin or any or digital asset a non-solver a non-sovereign scarce asset is the same as moving your property into cyberspace where it won't be debased so that that's my view on that if you don't like if you don't like the macroeconomic argument the reason to do it is because it's a you have a billion dollar block of encrypted sunlight you can program it a million times a second you can move it at the speed of light and to route point we're going to build the 21st century economy based upon encrypted sunlight that you can program we're not going to build it based upon lumps of yellow metal and we're not going to build it based upon paper that's losing one percent of its value every month that's currency but that's not assets so you know as for the other question i don't have an answer to the other question i think if you want to build you can build insurance and you can build all sorts of complicated interesting things it's for specialists to do it have at it uh i have a simple idea you know take take money that's invested in assets that are deriving their value from cash flows that are that are debasing and convert that monetary energy into assets trophy assets scarce assets things that are not deriving their value from currency cash flows that are debasing thank you michael that's a great end statement or time is over we could have uh you know gone on for two hours i'm sure it gentlemen it was a pleasure and with that and hopefully not too much to lay alex back to you uh thank you all for listening and uh hope to be in touch with all of you soon thank you

Channel: Sygnum

Views: 11,757

Rating: 4.9789472 out of 5

Keywords: fintech, digital assets, bitcoin, ethereum, #WorldFamilyOfficeForum2021, DeFi, blockchain, blockchainFinance

Id: y6ReOuLZfcw

Length: 42min 44sec (2564 seconds)

Published: Fri Mar 26 2021