DAN TAPIERO: Bitcoin was down 85% from the high and as an old time macro guy, you're looking to buy things that have gone down 85%, 90% after a blow-off. That's what it is. I think it's a security truth machine. Okay, well, Amazon, that's worth a trillion dollars itself stuff on the internet. But is that as valuable as a new invention for humanity?

RAOUL PAL: One of my key ideas is that within this recession scenario that I think is building, that gold and Bitcoin are going to be two of the assets that perform extremely well because they've become options on a more extreme monetary policy. So, I wanted to speak to one person who brings both of those themes together. He happens to be one of the most experienced macro people in the entire world. He's touched and worked with a lot of the greats of the industry, and he has a unique perspective. And he's been hassling me and hounding me for about six months now that I need to get back involved in Bitcoin.

And when Dan, who's not a Bitcoin guy originally, starts doing that to me, he's got a reason because he's a pure macro player. So, I really want to hear what he's thinking here and how this fits into my broader narrative.

Dan, finally, we get you back. Your previous videos were cult watching for a lot of people because you're one of the pure macro guys. And I was doing this whole thought process about recession and bits and pieces. I've been thinking the Bitcoin was part of what I'm looking at within that framework. And you and I separately, have been talking about it and you'd been hounding me from about February onwards, saying, come on, Raoul, you got to get back into this.

Before we get into your thought process and how you've applied your own macro framework into building your Bitcoin thesis, it's just people should- because many people wouldn't have seen you from the earlier interviews, just to go back over some of your background. And the reason that I like to pick your brains and stuff is you have a background almost unparalleled from anybody I know. You've worked with the greats of the industry, whether it was Julian Robertson at Tiger, Stan Druckenmiller, whether it was Steinhardt, whether it was Jacob Rothschild, whether it's Stevie Cohen, the list is endless.

And you get all their perspectives from working and seeing how they all trade. You're also a bit of an entrepreneur. You started a gold business, which was a crazy idea when you did, when you started it. But now, it's really interesting, Gold Bullion International. GBI is really interesting business. You even started, I think, the largest farming real estate business in the world with Stan Druckenmiller and managed to punted on to the Canadian pension system, I think it's now resold to Bill Gates, I think it is.

Your perspective is just extraordinary, and then that's why I trust you're a macro guy through and through, you've lived and breathe this stuff. And when you start hounding me by email every day, almost, somehow, Bitcoin, Bitcoin. Okay, what the fuck is going on?

DAN TAPIERO: Yeah, thanks for that. Thanks for that intro. Yeah, I know, we haven't- over the years- talked that much about Bitcoin. You're one of the guys who back in '13-'14, I think put it on the map, at least for the macro community. You were very bullish very early. And I was also involved. Early through GBI, we had in 2014, integrated with the uphold platform, which allowed clients to buy and sell ripple in Bitcoin to buy and sell physical gold, as well as other metals.

And so, that was a whole year long integration. And going through that process, I realized, wow, this is something, it could be big, or the company's going to make revenues. And unfortunately, what happened was that it started well, but it never really became a big revenue driver. I can't say why exactly. But the physical gold company then also moved into other areas, I guess, within crypto. And even today, I think we just launched- I think there are only two places where one can buy bitcoin in one's IRA and we partnered with Equity Trust. And now through Equity Trust, you have the ability to buy actually more than just Bitcoin but some of the other crypto as well.

So, it's been part of our DNA a little bit at GBI. And so, through that and through of course, you're writing and also, the guys- there are other macro guys of my vintage who moved into crypto. I know. Dan Morehead, and there's Novogratz and John Burbank and so the smartest guys, the best guys my age all moved into crypto, and so there's something going on. And I did my reading, I did my work, but I never really quite committed to the concept. So, I was dancing around it, but I never did the deep dive that would give me the confidence.

And then in '17, of course, you see it running but at 2000 or 3000, you decided to sell your position. So, I'm thinking there's no way I can buy here-

RAOUL PAL: Because you were at that round table when we started getting feedback from the guys who are very early adopters. From Chad- from Emil, sorry. He's like, wouldn't feel a bit cautious here. Rocketing.

DAN TAPIERO: Right. I missed it, and that's fair. But earlier in the year, January, February, March, as you had said, Bitcoin was down 85% from the high and as an old time macro guy, you're looking to buy things that have gone down 85%, 90% after a blow-off. And it's binary then, either it's a bankruptcy or a fraud, or that's the bottom. And so, I said, okay, here's the chance, I don't think it's a fraud. I'm going to buy some. And so that started a process of deep digging and research. And I probably, in that period, and that was when I was shooting you because I needed some confirmation-

RAOUL PAL: Focus on this, I'm looking at the recession. You're like, Bitcoin, Bitcoin.

DAN TAPIERO: Right. And I understood that, and I was with you on that. But that started a process, I probably spent 400 to 500 hours reading, listening to podcasts. There's some really excellent work out there now available. That wasn't five years ago. In terms of explaining what is Bitcoin? What is this phenomena? What is it? And what I've come to see is that almost every person has a slightly different definition for what Bitcoin is. And I think that that's contributed to making it very difficult to adopt easily.

And so, what do I mean by that? So, I thought, okay, let's get down to the very essence of this. Yes, I understand digital payments, store of value, reading all this stuff. But what Bitcoin really is, is that white paper, and you go back, and you read this thing, and I don't understand even half of it. But what you realize is that this is a great invention. It's not a coin. It's a system.

It's not a blockchain and maybe it's an invention akin to the motor engine, or invention of electricity. It's something potentially a new organizing principle for humanity. And part of the problem was that people, when they start really digging into Bitcoin, they end up saying these kinds of things, which really puts everyone off, because you're thinking, well, this is a madman changing the world, all of this stuff.

So, as a macro guy, I come at it, macro investor, I'm thinking, well, what's the value of it? What's it worth? The difficulty I always had was trying to put a value on it. I need to know what I think it's worth today, and what I think it'll be worth in three, four or five years and have a proper fit framework. And I found that very difficult in '14, even listening to some of our contemporaries talk about it. I didn't quite get it.

It's because Bitcoin is a lot of things. So, what it is, is it's an invention. And I think it should be referred to as an invention, rather than all the other things. What it really is, is it's a truth machine. It's a way, in a way, to eradicate all fraud, or lined by human beings. The whole bigger concept of certainty, of confirmation, of validity, of security. That's what you're buying- a system that now is 10 years old, has a tremendous track record.

And I'm thinking, well, what's that worth? What is a security platform like that with that track record? What is that? What's the value of that? And I think back in the early days, it was very hard to get a sense. You have something that has a $3 billion market cap. Who cares for my perspective? It would have been great to have bought it at $10, or $50. But I think that really was the realm of the VC. I never would have had that vision, the Tim Draper early vision.

It was just -I remember going down to Barry's office, Silbert, in 2013-'14, and he says, Dan, have this product, and we're trading like $2 million a day. And I thought $2 million a day, that's not anything. It's not a store of value. It's not anything. So, that's just from my perspective. And again, just given where I was coming from, would have been hard to really grasp to be all in, a white paper, it just all was completely different, a new language.

And also, you had the fraud component, and Mt. Gox, and all of this, really the first five years. So, that kept away, I would say, traditional macro people, but also just people in general. I think that that kept people away from it. And said, oh, I don't have to bother with. But for me, it was, I don't really understand how to value it.

So, here I am, I'm going back in the beginning part this year, I'm thinking, okay, it's gone down 85%, 90%. I know it's real. How do I value it? What are the- so, what's this security truth machine worth?

RAOUL PAL: Security truth machine.

DAN TAPIERO: That's what it is. I think it's a security truth machine. And the Bitcoin really is just the reward that the miners get for guaranteeing the security of the framework, of the network. That's what it is. Now, if you think about what would it cost for a company to build that? If that belong to one person, it's hundreds of billions of dollars. Think about all the man hours, think about all the people who volunteered their time? What is that worth? All that time?

RAOUL PAL: That's really interesting thing. Because you and I know the amount- the sheer amount of intellectual capital- programming capital, the amount of people working on this space is unbelievable. I've never seen anything like it.

DAN TAPIERO: Yeah, and I'm really just sticking to Bitcoin for the moment.

RAOUL PAL: Even within Bitcoin, the amount of development and intellectual capital that's involved is huge.

DAN TAPIERO: Over these years, like, what would it cost to build that? It's truly a massive endeavor, something that can touch every single human being on the planet, all they need is a phone. It's incredible- could a company even develop that? And maybe Satoshi realized it could only be developed slowly over time, in a decentralized way. Because the current, the structure of the way a corporation works could never work fast enough. This thing is going 24/7, not just the trading of it, but the maintaining of the system. And all the mining that's going on, it's constant.

Part of the problem, I think, in the early days, is that it's hard to really believe as an investor that someone invented something unique and gave it to the world for free. And so, it was valued at zero in the beginning. If it had been within a normal company structure, it would have grown to some degree and you would have had an IPO and maybe it would have been worth more than we work, which is 50 billion or I don't even know how you compare it. But I'm just saying that I think it took a while to adopt because it didn't make sense that if you had done this early digging and you could realize the nature of the invention early, to think that this could be worth trillions of dollars, it was too far, I think too far a stretch.

Not for the VC people maybe, not for the private equity people, not for the technologists, I think, who got in earlier and then maybe not for the smart macro guys who we've mentioned who are actually also in. You can get to numbers very reasonably that are- the Winklevoss number is a million on Bitcoin and Draper's 250,000 within five to eight years, you can start to see it because you say, okay, well, Amazon, that's worth a trillion dollars itself stuff on the internet. But is that as valuable as a new invention for humanity? And that is applicable to almost everything we do

RAOUL PAL: But most people don't see that. Can you talk a bit about that? Because they just think- most people are still stuck with, well, somebody's created something that they claim has value and there's a lot of the naysayers who would say that, but you're saying something so huge. explain a bit about the hugeness.

DAN TAPIERO: Yeah. And this is part of the problem and the hurdle for Bitcoin is that it takes so much work and so much digging. Of every piece I've read, I probably only understand, at the beginning, 30% and 50%. And then maybe 70%, I still can't understand the details of the white paper. However, I've spoken with people, in one case, a founder of paid pound, another case, a genius cryptographer, and they all say that it is genius. And so what's behind the genius? He solved the Byzantine General's problem. And so, that problem had not been solved ever. People had been trying to solve that problem.

RAOUL PAL: Explain that problem.

DAN TAPIERO: So, that's the problem of trust, not having a central authority verify a communication between you and I. So, having a third party that we both trust verify our interaction. So, it was very difficult to figure out a mechanism to build a solution to that problem with a real world application. And so, what's something worth? Again, the macro guy, what's something worth that solves a problem that they haven't been able to solve for hundreds of years? And the reason is, is that it's so multi-disciplinary, it's financial, involves cryptography and computer science, and sociology and psychology, and economics.

And to be honest, I don't think Bitcoin would have been invented without '08. Because in '08, the trust was lost. The banks basically failed, and they were saved. And there were people who were saved that shouldn't have been saved. Now, my response to that crisis was okay, unfortunately, backward looking, being a historian myself, I'm going to create a gold company, physical gold company, where that stores gold outside the banking system that is fully allocated, where you have your name on it. And in a way, that was my like-

RAOUL PAL: That was your macro bet. So, holding it.

DAN TAPIERO: That was my solution to I need-

RAOUL PAL: A broken system.

DAN TAPIERO: Right. I need a way, I want to have some allocation to that, because I'm concerned about that. Not in the realm of the technical genius to solve a math problem that hasn't been solved for hundreds of years to turn that into a functioning system with incentives. That's part of this.

RAOUL PAL: It's like behavioral economics is all rolled into this.

DAN TAPIERO: That's right. So, how do you get someone to maintain the integrity of the system? How do you get millions of people and millions of bits of energy? Using all of this energy, how do you convince someone or a decentralized group to say, hey, we're all going to work towards the security of this new platform? How do you come up with that?

Well, there's real math behind that. And so, this is a mathematical solution to the trust problem created by '08. So, again, GBI, my company, we figured an- '08, I had the idea. And we launched in March '09, the white paper came out in March '09. And then unfortunately, it was way over my head. But of course, that was the right macro response to the crisis, which also makes me think that Satoshi had a very advanced sense of the macro, because it was only our crowd that talked a lot about fiat.

Fiat currency and gold and debasing the currency through quantitative easing and negative interest rates, well, of course, so we all thought, oh, yeah, gold. But for someone to have understood that deep macro problem, as well as all of the computer science and cryptographic aspects, that does not exist in any person who I knew. So now, all of a sudden, you hear every Tom Dick and Harry on Bitcoin, on Twitter Bitcoin talking about fiat this, I don't want my fiat that. And it's 10 years later, but it used to really just belong in the realm of the macro.

So, it's really a phenomenal person or group of people who brought all of these pieces together. And so, Bitcoin, people are like, well, okay, Dan, that's obvious. We knew that 10 years ago, you're not saying anything new to us. I'm like, yes, I know. But for the macro community, and for investors at large, institutional investors as well, and they're way behind- they need a language to understand what Bitcoin is. It's so confusing when you listen to these different people. Often, there's a lot of hype.

Even like Antonopoulos, who's written his two books, I read the last one recently, it's a brilliant book, but you have to really go through it. You have to pull things out of it. You have to constantly be upgrading your knowledge, because it's also evolving, and they're in this constant innovation. But, as I said, every person describes it differently.

RAOUL PAL: It's because it's an entire system. It's an entire architecture, infrastructure and system all combined. So, it has attributes of many things.

DAN TAPIERO: Right. That's exactly right.

RAOUL PAL: What is society is asking philosophical questions. It's actually a philosophical question. What is Bitcoin?

DAN TAPIERO: That is right. That is right. And that's hard for people who are looking for cash flow, or EBITDA, or whatever it is to value. Macro guys value things all the time that have no cash flow. Gold is one. Bunds now certainly have negative cash flow. I don't know who could buy bunds. But anyway, the point is, is that this isn't just