RAOUL PAL: Tyler and Cameron, great to get
you guys on Real Vision. You have been a very requested guests for us. Finally stalked you
on Twitter to get you here. CAMERON WINKLEVOSS: Thanks for having us. TYLER WINKLEVOSS:
Thanks for having us. RAOUL PAL: Not at all. Listen, obviously most people are familiar with
your backstory, but I want to just start with the backstory of why Bitcoin? When did you get bitten,
and how has your thinking evolved from then? We all have a ground zero where we all
got the epiphany. Talk us through a bit about that, starting this whole space? CAMERON
WINKLEVOSS: Sure. We were actually on vacation in the summer of 2012 in Ibiza of all places,
where you find great investments and ideas. We were recognized by a guy from Brooklyn, from the
movie, The Social Network. He started talking to us and said, hey, have you guys ever heard about
virtual currency or Bitcoin, and we had not. We started talking and connecting. Then when we got
back stateside, we started to read a lot about it and we are like, wow, this is an incredible
We were used to social networks, and we realized that this is really like a money network.
You could, for the first time ever, basically send value through the internet like an email.
That was the big aha moment from a technology perspective. Then when we were looking
at the characteristics of Bitcoin, and the fixed supply and understanding, we
started to build this gold framework early on. Once we thought about it and concluded this
is like a store of value, and an emergent one, we started buying pretty quickly. We purchased
our first coins in the high single digits. The market cap was like under 100 million
at that time, it actually quickly grew that fall over the next six months, probably in
part due to our purchasing to some extent, though, we try not to impact the market.
That is really
the origin story of our relationship with Bitcoin and cryptocurrency. It started on a beach in the
Mediterranean. The last eight years have been we have been addicted to this space. It has been
really fun, but I would say that our goal 2.0 thesis or framework really has not changed in
terms of how we think about the asset for the past decade. RAOUL PAL: Interesting. My Bitcoin
moment was 2012 in Spain. I was living there, and we have just seen our banking system always go
under. The whole of Europe, it almost collapsed. Having just gone through 2008, having gone
through that, and I was writing about it, and I was at the heart of the whole thing at
this roundtable with a whole bunch of macro guys. One of them came along and said, listen,
the answer you are looking for is Bitcoin. That started me exactly the same time in the
whole space. Did you figure out that there was a Metcalfe's law adoption pattern that could
evolve here with the system of money? How are you thinking about it? Gold 2.0, outside the store
of value, which is pretty well known, how are you thinking about this network effect? CAMERON
WINKLEVOSS: I am sorry, I did not mean to cut you off, Tyler.
I was just going to say that we
started talking to Bitcoiners pretty quickly, and the energy we got from a lot of these folks was
like, these are the smartest people in the room, especially the people who worked on protocols
who are deep in that space. When we tried to kill the idea, we really had trouble figuring how
this thing does not work long term. Everything is going digital. It is all going streaming.
It makes– RAOUL PAL: Hi, I’m Raoul Pal. Sorry to interrupt your video – I know it’s a
pain in the ass, but look, I want to tell you something important because I can tell that
you really want to learn about what’s going in financial markets and understand the global
economy in these complicated times.
That’s what we do at Real Vision. So this YouTube channel
is a small fraction of what we actually do. You should really come over to realvision.com and
see the 20 or so videos a week that we produce of this kind of quality of content, the deep
analysis and understanding of the world around us. So, if you click on the link below or go to
realvision.com, it costs you $1.
I don’t think you can afford to be without it. CAMERON WINKLEVOSS:
the idea, we really had trouble figuring how this thing does not work long term. Everything
is going digital. It is all going streaming. It makes sense that our hardware money is now
going online and that first version, of course, is Bitcoin becoming gold. We really felt like this
is going to happen, and that was pretty exciting and fun at the time. Tyler, sorry. I did not mean
to cut you off. TYLER WINKLEVOSS: Also, one big aha moment was this is the first money that was
built for the internet. It works like your email. It was not built by bankers. Credit cards, it
is like a square peg, round hole. They were invented by bankers before the internet existed.
People try to shoehorn them, given the illusion that it was works on the internet. PayPal is a
great example, but when you look under the hood, it really does not work on the internet.
It is not purpose built for the internet. Bitcoin was the first internet money in the
When you realize that, you are like, whoa, that is a pretty big idea. Then when you realize
that money is the greatest social network of all, Bitcoin is maybe the greatest social network of
all also. As you said, the way you value a social network and network effects is Metcalfe's law. You
do not look at it like a cash producing company, or an equity and try and do some discounted
cash flow model. That is why a lot of like Wall Street and finance people go astray, because
they take their frameworks, they are like, wait, it is not a company does not have cash flow, it is
worthless, there is no intrinsic value instead of looking at, like how you value Facebook, and how
each additional user provides additional utility to the other user without even knowing it.
am the only person in the world who has a phone, it is not that valuable, because who do I call?
All of a sudden, if, Raoul, you buy a phone then I can call you, and by you purchasing a
phone, you have brought utility to me. The more people in the world that
do that, the more valuable it is, and it does [?], and it is just ends where n being
the nodes, being the users on the social network, being the users of Bitcoin, and that is network
effects. We know how strong network effects are, because we see the market cap of Google, Facebook,
and Twitter, big tech, and how hard it is to unseat these companies.
Google took a run at
social. It was called Buzz. Fell flat on its face, because one of the things about network effects
is that users become the biggest champions of the network. Nobody wants to upload their pictures
10 times to 10 different social networks. Once you pick Facebook or your social network, you
try and kill consciously and subconsciously all the other ideas, because you just do not want
the overhead of doing all your connections again, building your social network online again.
You become the greatest ambassadors for that. It is really hard to unseat even Google, almighty
Google, which was much bigger than Facebook back then could not do it.
When you have the first
money ever built for the internet, you have the social network effects of money itself, and you
put Bitcoin next to gold, and you compare the traits that make gold "gold", and you realize that
Bitcoin equals or surpasses is superior than gold, and all those categories that we think make gold
valuable, then you are like, this is a really big idea. RAOUL PAL: The other thing that really
intrigued me about the whole thing is– and it has dawned on me more and more as I see the tribalism
in the space, which is a bug, and a feature is the fact that it is such powerful behavioral
It is an incentive based network that is incentivized by money and you could not
build a better incentive system for a network, the money itself with an intrinsic value that
has a store of value. It is extraordinary. CAMERON WINKLEVOSS: Yes, people on Twitter are
working for retweets, and people on Facebook are working for likes. With Bitcoin, you are working
with value. If more people buy into the system, your value does go up. Yes, the incentives are
incredibly powerful. TYLER WINKLEVOSS: That happens in all asset classes. Once you become
a homeowner, you will never look at real estate the same way. Once you buy your first car, you
will never look at a car the same way. It just disciplines your eye. That is what I tell a lot
of people, just put a little chips on the table, get into Bitcoin, get into crypto, it will
focus you to learn and then you will get it. There is a transformational shift that happens
with people. Once they start feeling the pulse, they get in it. It is very positive. For me,
that is how I learned. I have to put something at risk, a little bit of skin in the game.
case, we put our whole bodies in the game because we started a cryptocurrency exchange and custodian
called Gemini, has 330 employees and growing. We are investors in Bitcoin, Ether, and other coins.
It all started with buying Bitcoin, but learning about Bitcoin and not writing it off, and really
just asking some basic questions that most people cannot seem to do and they are like, oh, it is
just a Ponzi scheme, and then they- – RAOUL PAL: Here is the thing. You started investing in 2012,
2013 is a bull market event, it then collapses. That is the first collapse you
have had to deal with in this. Then we obviously have the second one.
you get to in questioning yourself in your thesis every time you see it during this 90% down
cycle, because it is [?] thing to do. TYLER WINKLEVOSS: Before the 2013 crash,
though there was the Cyprus bail-in. The Cyprus government said, we are going to hair
cut every bank account over $100,000. If you have a million euros, we are taking 900,000 of it,
that is what happened. Took a cut off everyone. That is when Bitcoin really hit the mainstream,
at least, of businesses like CNBC Squawk Box. You really could not turn on like Bloomberg or
some business network without hearing about it. Because people realize this is the only asset in
the world where a government could not do that, or it would be very difficult. When we saw that
happen, we knew there was going to be a catalyst. We had built our thesis in 2012. When we saw that
happen, we are like, the thesis is playing out. This is exactly how it is supposed to work.
That was very invigorating and encouraging, because we are like, yes, the world is starting to
Then of course, there has been downturns and crypto winners, but overall, that was super
encouraging. I remember where we were at the time. We were in Miami. I think it was in March of 2013,
which is a scene that was captured in this book, Bitcoin Billionaires by Ben Mezrich, which we were
portrayed in. It was quite an exciting moment, obviously really sad for the folks of Cyprus, but
hopeful because Bitcoin actually existed and this was not that far off of, which you mentioned,
the crisis of 2008, which we all lived through, and saw how devastating that was. That happened,
and when you have those moments, you are like, okay, we are on to something. This is going
to be a thing. Just like the reasoning before, there is like an inevitability about it all, just
like there is an inevitability about the internet. I just could not figure out a way how this
would not work, and really to shut down Bitcoin is to shut down the internet.
You really have to
strip the cables. You basically have to become North Korea. That is such a risky gamble for a
government, because you have cut yourself off from the internet. It is not just Bitcoin. It is
social network is big tech, which are the greatest economic drivers of at least the US economy right
now. Our calculus was that governments are going to have to learn to work with this, because they
cannot stop this because stopping it is to stop the internet.
RAOUL PAL: Come forward to the next
bull market, I went out 2016. Suddenly, there is a bunch of other cryptocurrencies that are coming
into the front, and then we are seeing the forks. I got out into that because I did not understand
the forks and how this is going to play out. How were you guys thinking about that at the time,
because that was a whole different world we will have to deal with then. CAMERON WINKLEVOSS: 2016
and 2017, what was an interesting bull market, but a lot of it was driven by Asian retail
and people who thought that you could raise capital through token issuance without going
through the traditional regulatory path. That pretty much proved to be false. It did show
the power of the Ethereum network and what could be done with smart contracts, and that ability
to program decentralized apps.
It showed what was possible in a first MVP. It is like the pets.com
of crypto. Of course, it blew up in a big way. Ethereum peaked at 1200 a coin and is now around
600, which feels a little more real, though, it is an undervalued asset. Of course, Bitcoin,
rode that wave and benefited a lot too from retail customers understanding really the properties,
and for the first time, there is a way to access cryptocurrencies in a mainstream way. When we were
getting involved in 2012, we had to go to Mt. Gox, which stands for magic, the online gathering
exchange. It started out as a magic card exchange, and then pivoted into Bitcoin, when Bitcoin was
worth pennies, and probably the greatest business pivot ever, except for they ended up famously
imploding a few years later with a lot of value because they just got ahead of their skis so to
They, all of a sudden, were on top of 95% of Bitcoin volume, trading volume and billions
of dollars of value. It was just two people in Tokyo and there is no licensing or any
real infrastructure behind it. Anyway, we bought a lot of our first Bitcoin on
Mt. Gox. That was a scary proposition. Fast forward to 2017, you could go to places
like Gemini, the exchange we have built, basically onboard like you would on to a broker
dealer, any brokerage account or open up an online bank, and buy Bitcoin so it is accessible for
a lot more people at that time. It brought in a lot of new people into the system. Fast forward,
obviously, the market cooled off, and we are now back at 20,000, or close to $20,000 Bitcoin. It is
a much different story with much different facts. One of the biggest facts has been the growing
deficit in fiat regimes across the globe, not just in the US.
The US is actually on a
relative scale, doing okay, comparatively to other countries, but our debt to GDP ratio, I believe,
is 135%. We are closing the year out at 135%, which is higher than where we are
to. Back then we had full employment, and now, we have record unemployment. It is
a different set of facts, and the deficit has been growing every year over the past decade,
even though we have technically been out of the financial crisis of 2008 and 2009.
That basically ended in 2009 technically. The recovery was we were out of that cycle
and on the way up.
Despite a tremendous bull market, where we have had incredible gains in
the stock market, not saying the underlying economy and businesses or wages, but the actual
stock market, and yet we are spending more than we make, and we are printing money to basically
finance some portion of government operations. Add a pandemic on top of that, and people or
Wall Street veterans and people who understand how the value is eroding and the specter of
inflation are saying, wait a second, this math is starting not to work.
This is not manageable. How
am I going to protect my value? This time around, people are turning towards Bitcoin. You've got
Paul Tudor Jones. You've got Stan Druckenmiller. You have Michael Saylor of MicroStrategy putting
hundreds of millions of his publicly traded company's Treasury into Bitcoin. They are not
going into gold. If this were the 1970s, 1980s, or 1990s, or even 2000s, gold would be the classic
hedge and the classic bet. This time around, people are saying, wait a second, there is this
new thing. It is engineered like gold, but it is actually better. It is built for the modern
day. That is, we think, going to be the trade of the decade. Even today at $20,000 Bitcoin,
we believe that buying in at 20,000 will be the best trade you can make over the next 10 years.
RAOUL PAL: I came out of that macro community, so all of those guys are friends of mine, we all
grew up in that whole space.
One by one, I think Dan Morehead was first, then it was probably–
I do not know if you know John Burbank, and then probably Novo, and then one by one, all the macro
guys got it. For the same reason. This is before COVID. The sheer amount of alpha you can generate
in this space and the sheer magnitude of the opportunity is enormous. Now in my conversations
with people, it is moving from everybody having their own PA accounts to everybody starts getting
their funds, and Paul was the first to go, and then Stan as well. We are seeing it literally
everywhere. You guys, having the exchange and you built out as an institutional platform to start
with, then you have been more involved in retail, but I am guessing you are starting to see
some of this institutional flow as well. Are you starting to see these conversations
being had? CAMERON WINKLEVOSS: Yes, and we can say anecdotally, that we are having some really
interesting conversations from high net worth Wall Street veterans to sovereign wealth funds
that are dramatically different today than even eight months ago, or a year ago.
getting closer and starting to see the light. I think a lot of these sophisticated investors
have been quietly buying Bitcoin. That is what we are hearing. That is what we are seeing. Then
of course, some people are being vocal about it. It is a much different crowd than last
time. Gemini caters to the entire spectrum, though at times, we have focused on institutional
type products and that kind of trust and audits and things like SOC 1, SOC 2, and all
those things, because that is really important to the institutional crowd. That is what they come to
expect from a platform. One of the things that was damaged a lot early on in crypto was trust. You
have these stories that are headline grabbing, and scare people away, which is really
unfortunate, because there would be more people in crypto if the earlier entrepreneurs
had done a better job of protecting their customers. That was a big part of our story the
first couple years is building the most safe, reliable platform out there that is compliant.
RAOUL PAL: Here is a question.
Do you think the narrative of not your keys, not your crypto is
behind the times? Do you think that is still a Mt. Gox and earlier they narrative? Do you think
the space is now actually secure enough to hold your significant balances on exchanges? CAMERON
WINKLEVOSS: Not your safe, not your gold, not your server, not your emails. TYLER
WINKLEVOSS: Not your servers, not your tweets, Twitter got hacked. RAOUL PAL: That's right.
CAMERON WINKLEVOSS: Right, or you can get deplatformed. We think it is a spectrum. I think,
Tyler, you wanted to say something. Go ahead, jump in. TYLER WINKLEVOSS: I was going to say like,
look, there is going to be the tinfoil hat crowd, and the gold bugs who will never be comfortable
using or trusting Gemini, but the major exchanges in the space have not had any incidents for
years. Ourselves, Gemini, Coinbase, Kraken, we have been incident free, for years. We actually
are all holding billions of dollars of value. The space is not only ready, it has also
been doing it, and it will continue to do it. The average person is willing to trust Google
with their email for the ease of use and the reliability and the simplicity of GMail.
few people have the energy and the brain damage and the skill set or want to go through the
brain damage to run their own email server. You are going to see the same thing there that
with email, and crypto, like pirate radio, there is all these very private secure ends of
the spectrum that never get mainstream adoption. That does not mean that the other end is less
secure, it is just it requires a little bit of trust in us. CAMERON WINKLEVOSS: Nobody uses PGP.
It is just too annoying. We use it but obviously, the average person, it just really never had–
TYLER WINKLEVOSS: We use it depending on how sensitive the information is. CAMERON WINKLEVOSS:
Exactly. It is not a one size fits all. It is what are you doing, and what are you trying to– if you
are trying to transport passwords or secret keys, obviously, you are going to encrypt it.
challenge has always been the experience and the ease of use. That is why we think that 95% of
people or the vast majority of people are going to use simple, easy, reliable platforms like Gemini
to get into crypto. Maybe they will get in. Look, I got into AOL, I got into the onto the
internet with the AOL CDROM. They onboarded millions of people around the world. I still do
not have an AOL email address. Some people do, they never left the AOL garden or experience, and
that is okay.
TYLER WINKLEVOSS: The two issues with trusting Gemini let us say are, are
we going to run away with your Bitcoin? I think that answers pretty much– it is
no, but other people think it is no, too. We are regulated by the New York State Department
of Financial Services, you know who we are. We are just not going to run away with your Bitcoin. It
just does not make any sense for us to do that. The second question is, okay, are we securing your
Bitcoin as well as you could secure it yourself? The answers are probably yes. Very much yes for
almost 99.9% and I do not think anyone can secure your Bitcoin better than the way we do it. You
are either matching Gemini or you are below it, because we have the best security experts in
the world, and our cold storage system has been engineered with hardware security modules.
It is distributed.
It is multi-sig, it is geographically distributed, multiple custodians. I
do not think there is any company or individual in the world who has engineered a better cold storage
security system than us. It is one of those things that like, you want to leave that to the experts,
and most people are not experts, and they are more likely to lose their password, get it stolen
by the person who is coming in to fix the sink. All those stories you hear, the person, the
laptop in the garbage dump, and they are digging it out, and stuff.
It is a very hard
problem. We spent years and much money and many experts solving it. The chances are that
someone else is going to solve it better than us are very low. Then your only question is,
can you trust us not to run away with it, and the answer is, yes. That is why the
Geminis, and the Coinbases, that is why 99% of the world will rather use those than
try to do it themselves, because it is more likely that you will screw it up. Look, these
are the same people who say, oh, not your keys, not your Bitcoin. Most people get into
a cab, and do not even put a belt on. It is just like, what? Physics does not work in
a cab? I have heard this argument like, oh, only in the front seat, I wear a belt.
Wait, okay, so
physics stops working in the backseat. RAOUL PAL: People misprice risk all the time,
humans are [?]. TYLER WINKLEVOSS: This is the best one. During COVID, you see people
on city bikes with a COVID mask and no helmet. It is like, nothing to protect my brain up here
but I just want to protect my lungs from COVID when– and they are young people, and they are
like low risk people.
They are totally screwing it up. That is a long-winded way of saying that
overall, people will choose to use companies like Gemini to custody. RAOUL PAL: Where are you
going with Gemini? What is your grand vision here? Where do you want to go with it? TYLER
WINKLEVOSS: We are global. We are in many, many countries. There is a list on our website,
but US, Canada, UK, Europe, Singapore, Hong Kong, Australia, so most of the world, and I am
leaving out some countries, but it is there. Right now, it is buy, sell, store crypto, but
we want to increase those money verbs to earn to spend, earn, all these other behaviors that
We started off and we very much were a fiat on ramp into the crypto universe. If you
have cash in your bank, and your value is there, you want to put your value in cryptocurrency get
onto the blockchain, you open up a Gemini account, because you can link your fiat bank and we are a
fiat on-ramp into that world. Right now, the world still maturing. The crypto universe where people
still do most of their banking, most of their finance activity outside of crypto, but we want to
keep people, we want to get people over the bridge and stay there so they can actually never leave
the crypto universe. The mainland is legacy finance, crypto is an island but we want to see
that inversion where crypto becomes the mainland and legacy finance is just this dinosaur that
is like slowly fading away. RAOUL PAL: It is layering on financial services layer to the
existing store of money layer is the next phase.
You said transfer of money in and out,
that is the first thing. Storing is the next, and then there is all the other things we do with
money such as– TYLER WINKLEVOSS: Yes. Like okay, you can buy, sell Bitcoin, you can store your
Bitcoin, your ether, but generally speaking, your equities activities happen outside of crypto.
Also, could you trade a share of Apple? Basically, Gemini is a one-stop shop in all assets. Bitcoin
is gold on the blockchain, ether is like digital oil, but every asset in the future is going to be
on a blockchain. Equities we are already seeing this with non-fungible tokens, digital art,
We have a platform for that called Nifty Gateway. All these things that are
assets like the comic books you grew up reading, the baseball cards you collected, those are
now being put on a blockchain because everybody realizes, or people are starting to realize the
physical nature of it is actually not a feature, it is a bug. It is not about the physical nature
of it. It is the scarcity. It is the uniqueness. All of these assets are going to move on to
blockchains, and Gemini is your one-stop platform to do whatever it is you want to do, whether it is
you want to issue, sell, turn. RAOUL PAL: How far away are we from the tokenization of everything
from IP rights to social media styles through to physical property? How far are we from it? We know
it is coming, but it feels like it is a heavy slog to make much progress.
CAMERON WINKLEVOSS: That
is a good question. Yes, it does feel like a bit of a slog, and that there is going to be other
things like DeFi which is decentralized finance, which is all these financial services being
rebuilt permissionless on the Ethereum blockchain, so you can go post-collateral and borrow or
lend or trade in these decentralized exchanges. That has been exploding over the past six or
so months. RAOUL PAL: And imploding as well. It is doing the classic early phase– CAMERON
WINKLEVOSS: Exactly. It fits and starts a little bit, and some projects are taking off and others
not doing so well. It is this Cambrian explosion of new ideas and financial services reimagined in
a permissionless fashion. That is really exciting to see, that unbundling and attacking a lot of
these centralized things that exists in the legacy financial world. In terms of artists' rights, for
example, I am not really sure. There is probably good headway made in the next decade, I am not
sure exactly where it comes from. If you have seen that movie, Searching for Sugarman, the
way they found him is they followed the money. They are like, where are all these royalty
checks going? They tracked it to some PO Box in Detroit somewhere, and they were able to locate
him that way.
When you look at people, if you have ever done like a commercial or something, and
you get a royalty, and sometimes the royalty is like less than the postage of the stamp, they
send you and you are like, pull out a check, and you are like, it is 20 cents. It
costs more to put this together. That is so bad. CAMERON WINKLEVOSS: We actually got a
couple of those from our cameo on Silicon Valley, we get something like $1, $1.23.
RAOUL PAL: And
you will find all the middlemen have taken all the middle. You could have had $3, but we
are staking all of that. TYLER WINKLEVOSS: Totally. No, maybe it was a million? I do not
know. RAOUL PAL: Exactly. CAMERON WINKLEVOSS: Yes, we have no way to verify that. That is really
how money and checks and all that stuff has been working for a long, long time.
all goes on to a blockchain of some sort and gets digitized. I am not sure there is a ton
of motivation from within the current system. That is the irony. Who solved, music was broken,
who solved it? Silicon Valley. Movies were broken, who solved it? Silicon Valley, Netflix. It usually
comes from the outside, because the insiders are just not incentivized to change anything.
You see this with the most recent election. People are worried about, oh machines, fraud, all
Who is changing it? Nobody is actually incentivized to change it. Once you are in power,
you just accept the status quo, because it is generally better for you than the challenger. We
could have changed our voting systems for decades. Of course, we have not, and there probably
will not be much movement on that front for a long time. Regardless of whether or not there is
fraud, the system, the fact that it is a mail-in a ballot system seems a little bit broken. TYLER
WINKLEVOSS: Mail-in 2020. CAMERON WINKLEVOSS: Yes, and we have not really solved the
identity problem, a mail-in ballot. You draw your signature.
Some human is looking
at your signature versus what is on file, how does that work. RAOUL PAL: That is
extraordinary. Because India solved this with its Aadhaar system, which is fingerprint or
retina scans. Look, that is not distributed, but digital KYC and digital identities, and
that has to come as well. Because even in this world of social media, it is desperately
needed now that people have some verifiable entity, who they are. Because trust is important
for them. We talked about trust before, but trust is breaking out all over the place
because of these new systems.
CAMERON WINKLEVOSS: Yes, and I think that there will naturally be
probably some resistance in the US to things like retina and all that stuff. India did it in one
fell swoop overnight, like literally you have no choice, gun to your head, you better sign up
or you are not going to get paid. In the US, there is a lot of people who would be against
that. Looking at things with the vaccine rollout or the discussion around that, many people like
do not trust it and will not do it. That is one of the challenges to distribution is actually getting
people to take it. Not trying to go down into that area but it is an example of how one of the
challenges– we will keep it out of there for now. TYLER WINKLEVOSS: Going back to the conversion
conversation, we deal with this in Nifty Gateway, too.
We are not trying to convert the
boomer art collectors, like the 75-year-olds who collect paintings and who buy paintings from
Chelsea galleries. This is our collection for the next generation. CAMERON WINKLEVOSS: Tyler,
sorry. Can you explain what Nifty Gateway is? For people who do not understand. TYLER
WINKLEVOSS: Sure. It is a platform to buy, sell and store non-fungible tokens. The acronym is
NFT, or you can say Nifties for slang. Basically, they are one of a kind assets that represent
art, digital art, or collectibles to get picture. Then artists can go on Nifty Gateway, and create
one piece of work, maybe for 10 additions, or like two of two.
It is all enforced by–
the scarcity is enforced by the blockchain. If you think about like Instagram, you go
on Instagram, you click liking a picture. What if each picture on an artist's profile
was an asset, and there could be five of them, or 10 of them? Instead of clicking and liking, you
could actually purchase, and it was a supply and demand market. You own one of five of these in
the world. There will never be more than five. You could authenticate in the blockchain it was
created by this artist. It is like putting money, economic supply, and demand on top of Instagram.
RAOUL PAL: We have seen it in the gaming world, with skins. TYLER WINKLEVOSS: Totally. RAOUL PAL:
Digital assets have valued. I did not grow up in an era where it did. Most of us did not, but
the Gen Z only know that world. We think buying a shirt from a fancy place or expensive watch
is our value statements and our status symbol. They do not mind whether it is digital or
real. TYLER WINKLEVOSS: No, they buy a dance in Fortnite, they go to raves inside Fortnite.
The only problem with buying and collecting those digital assets is you are trusting the
If Epic Games goes out of business, or prints more of the battle axes, and
all of a sudden, yours is not that scarce. Whereas with Nifty Gateway, we put that all onto
the blockchain. The scarcity, the additions of what the artist is doing is enforced by
the math cryptography of the blockchain, the same stuff that enforces that there is only
going to be 21 million Bitcoin. You could actually buy a Nifty and people have bought them, NFTs are
worth $65,000, or even more, because the scarcity being enforced, the authenticity, all the forgery
problems in the traditional art world are gone. Our audience, it is a range, but it is like a
different type of art media.
It is a different type of collector, and we are not relying on
converting the existing art world, we are building a new one. RAOUL PAL: Do you think
that is going to just remain as art or do you think you are going to end up with all
sorts of NFTs on this? TYLER WINKLEVOSS: Well, you can do different things. We have DJs
creating art that is 3D moving picture with a soundtrack. CAMERON WINKLEVOSS: Like
an album cover. Instead of– TYLER WINKLEVOSS: And you are only one of the few people in the
world that own this music video. You can box digital assets. Digital art has been around
forever, but how do you package it? How do you buy it? How does an artist create like a digital
art and sell it or make it scarce? RAOUL PAL: What does somebody like Getty not put all the
Getty Images on a blockchain? Because they have a problem with IP rights, and it solves huge
amounts of their problems.
They bought all of the digital rights to everything and then distribute
it. I can say it beyond just an artist but just anything with digital rights is a huge problem
in the current internet world, and blockchain solves a lot of them. TYLER WINKLEVOSS: They
totally should. What I found is that that is very much like a generational thing. I never
meet someone who is under 25 who is a skeptic of Bitcoin or cryptocurrencies. They grew up
digitally native. They grew up more online than they did offline. More of their life, the things
that are important to them, their social tribe is on social media. It is about getting likes,
it is online. They rarely go offline. You meet someone over like 55 and chances are,
they are a skeptic of Bitcoin, because the mind loses some plasticity, you build these
skills, you become a banker, a partner at a bank, and all of a sudden, this thing is going to
disrupt it, and this mountain that you climbed, you've got to come down and climb the wall.
PAL: Also, you have an inherent need for the status quo to continue the more you are invested
in it. You have an investment that is 20 years old. TYLER WINKLEVOSS: You should up your game.
You still had to make money, you are on top of the hill, like, this is a great game, let us keep
it going. You are Gen Z, you have nothing to lose. You did not spend 25 years building an asset,
building a skill set, building a core competency, that now you have to disrupt to stay relevant.
It is a blank slate. When someone says Bitcoin, you say, cool, what is that? That is new. If
you are entrenched, it is innovator's dilemma. It is why these companies end up stop innovating.
They just protect the franchise, and they die a slower or very fast death. It is the same thing
with cryptocurrencies. We do not have to convert the boomers, although, I say a lot of the boomers
get it, especially the really sophisticated ones who understand what is happening at the
Fed, who pay attention to the money printing, to the deficit spending.
The US has only run a
budget surplus four times in the last 50 years. Ross Perot, the independent candidate in 1992, he
ran on balancing the budget. He was slamming the panic button and be like, this is crazy, that was
1992. Before all the printing that happened after, it was before the printing in the crisis,
the TARP, and it was before the printing in the last decade, and it was before this. That
was like 30 years ago, he was getting traction, because he was worried about what was happening to
the US dollar. It is getting to a point now where, how do you get off this track? Both parties,
there is no hard money party anymore. It is not like the Republicans, the Democrats
are not the same thing when it comes to printing, running debts, and financing government
operations. The question is, how does this end? At some point, the math becomes so impossible.
I do not know who said compound interest is the eighth wonder of the world.
RAOUL PAL: I think
it was Albert Einstein. TYLER WINKLEVOSS: Albert Einstein or Warren Buffett, maybe it
was Gandhi, I do not know. Basically, you want things compounding for you, your wealth
growing overnight, and compounding, but you do not want your debt obligations compounding against
you. That is obviously what is happening and the ability for us to actually service our debt
is just going to be impossible, not believable. The math just will not work out, and these fiat
currency regimes will collapse.
I hope they do not, but who is going to get us off this path
that we have been on? RAOUL PAL: That leads me to the next bit, Central Bank Digital Currencies.
They are clearly coming. They are all, the ECB, the BOJ, the IMF, the BIS, the Bank of
England. Everybody is saying it is coming. That is going to be another gamechanger. It
is also a gamechanger, because even today, you just saw the G7 are like, wow, you can
tell that they really do not like stablecoins. What is your whole thing about how this is
going to emerge? Because the stablecoins, cryptocurrencies, and central banks all
in the same space, can they all coexist? CAMERON WINKLEVOSS: Well, the Central Bank
is showing their own currency digitally. That is just like a different factor of
fiat, so I do not think that solves the underlying– RAOUL PAL: It is all fiats' problem,
but it will change.
If we talk about the actual change, here is another thing that can change
the system for a while longer, and so fiat does not– CAMERON WINKLEVOSS: It is interesting that
we would be moving off like physical printing presses to a blockchain or node like system.
I think that does benefit the entire space, but it still takes me back to the fiat problem.
I think the reason why central banks do not like stablecoins in the current iteration is
because they are issued by private companies. One of the companies that wants to issue one
is one of the largest companies in the world, Facebook. RAOUL PAL: It is the largest network
in the world. CAMERON WINKLEVOSS: Exactly. It is a massive project with massive scale, or potential
scale. Money has been the domain of governments for a long, long time. They do not want to cede
that control. That is where a lot of that Fudd around stablecoins is coming from. Tyler,
you have done a little more thinking on this area.
TLYER WINKLEVOSS: Well, it is bankers
have been the protectors of the currency. They are the distribution pipes when the
government wants to get it out. All of a sudden, Facebook or private tech companies will become
the issuers of these stablecoins, and they will really be the protectors of the currency. I
think it is more coming from bankers who do not want to lose their post position on when the
Fed prints money, or whatever, it comes to us, and you got to come to us. Bankers are like the
miners of fiat currency. They perform a service, they get paid. RAOUL PAL: The Central Bank Digital
Currencies might clear out the banks anyway. TYLER WINKLEVOSS: Totally.
I am not sure, I have
not paid too close attention whether the banks like that, but yes, why would not every US citizen
have a bank account with the Fed? RAOUL PAL: Why not? Yes. As long as you've got a FinTech layer on
top, then we can get all the services like Gemini, I can use all my stuff, I can mingle
it around on-ramp and off-ramp. Why do we need a bank? CAMERON WINKLEVOSS:
That is a great question. TYLER WINKLEVOSS: Was not there a huge issue of even getting people
in the US like their check, their stimulus checks? Email. CAMERON WINKLEVOSS: It is actually
hard to do helicopter money. TYLER WINKLEVOSS: I cannot believe we are talking about snail
mail to get people money, or to cast votes in 2020. It is really embarrassing. We have even [?]
invented, we have cryptography, we have all the building blocks to get people their money, help
them to cast their votes by sending an email, and we just cannot get our act together to do it.
RAOUL PAL: We cannot even do helicopter money. My thought process is this entire thing is going
to change and integrate fiscal and monetary policy together.
Now, that still accelerates
the endgame, which is you are giving an unlimited check, but what you've got is actually
pretty powerful. Because you can create stimulus, you can create behavioral incentives with Central
Bank money now, because I can give you a negative interest rate because you are a saver, while I
can give somebody else a positive interest rate, because they are students. I can also give
you a stimulus because you own a restaurant, but you have to spend it in these places.
could all be programmed now. I was listening to Benoît Cœuré from the ECB and now the BIS,
they are clearly going to go down this path where you've got programmable money. It is
fascinating because macro policy changes forever, fiscal and monetary all merges. TYLER WINKLEVOSS:
That sounds great. I read this article a long time ago, Self-driving Money, and it said a lot of this
We could actually know the supply of M1, M2 down to a penny. We know everything. The Fed can
pull the levers, like you say dual interest rates help certain sectors, certain people. It would
be just so much more scientific, and advanced and data-driven. RAOUL PAL: Yes, you can use
big data, you can use behavioral sciences, and you can create all sorts of incentive based
systems because then you've got a purely incentive basis the way you can [?]. This is governments
we are talking about, and they are going to fuck it up for everybody by becoming China because
they cannot help it, because they want power. TYLER WINKLEVOSS: It probably would bring some
transparency to– What is that? RAOUL PAL: Like TARP where there is wall of money just goes to all
of these people, you cannot do that with a Central Bank Digital Currency because it is all trackable.
TYLER WINKLEVOSS: How do these conversations go behind the curtain? It is like the Wizard of Oz.
The Fed, it is a mystery, and there is no clarity on how the decision is made.
It is just like
wave the magic wand, Powell says this, or that. It is insanity. You would never invent money, and
have it look the way it works in the US. Let us put 12 people behind a curtain and have them pull
everything and I got it. We will distribute it to this elite class of bankers, and that will go
well. No wonder the bankers always end up on their feet when there is an issue or whatever. More
transparency, more scientific data analysis behind this, that is all great, but I love the fact that
Bitcoin is not coming from a government. I love the competition aspect of it. Then people can just
get a Chinese menu of choices and be like, I trust Gemini stable coin, because I know the twins or I
saw them on this podcast, or I am going to go buy DAI or use DAI because it is algorithmic. Bitcoin
is non-government, it is just digital gold, and the US are pretty privileged that we have a pretty
good fiat currency, but Zimbabwe, Venezuela, Argentina, it is so sad.
The wealth that gets just
destroyed with inflation and defaulted currencies. They take ferries over to Uruguay to get
dollars, you buy motorbikes, you buy bricks, you do all these crazy things, because you
cannot trust the currency, it is all these capital controls. These people need options. The
governments need to stop having monopolies because as the famous folk goes, power corrupts, absolute
power corrupts absolutely. CAMERON WINKLEVOSS: That is a good– just reminds me on the point
you are asking about what is next for Gemini. One of the areas, one of the things is we are in
most of the developed world but at some point, I would really love to get down into the developing
world, where crypto is really needed in a big way, whether it is hyperinflation, or there is just
not an infrastructure or a system there. There is a billion plus people unbanked in the world
and many unbanked people, and this technology can solve for that problem better than any that
we have seen to date.
That is the longer game, is trying to get into those areas that
really need it. Because I do not think Bitcoin, people are not clamoring– now,
people see the light in the US, but it is not the necessarily the most pressing priority
for some individuals, as it is, in say, Venezuela or other hyperinflation environments. RAOUL
PAL: I was introduced to a family office in– where are they now? They are probably Mexico
City, they are a Latin-American family. These guys were mining Bitcoin in Venezuela for zero
cost up until the government shut them down. These guys were very involved in the space,
and basically setting up a multifamily office for these big Latin-American families, which
is about 10 trillion of wealth down there. All of these guys have to have dollars and they
cannot get them half the time, because they are getting cut off from here, or you either got
currency restrictions, or you've got an imploding currency, it is very hard to get your money out.
These guys are building a multifamily office, because everybody is understanding Bitcoin very
quickly, and how useful it is.
These guys used to be dollars and gold. They are thinking, wow, okay,
Bitcoin really solves a lot problems, because they do not have this dollar shortage issue of
trying to buy dollars. You just buy bitcoin, and you do not have the same issue. I think all
of these guys, whether it is in– if you look at the exchange volumes, it is Venezuela, it is
Colombia, even South Africans are huge users of this because they've got the inherent problems
of currency controls and weakening currencies. TYLER WINKLEVOSS: Yes, even look at the central
banks are stocking up on gold. They say everything is fine. QE infinity, no big deal. This is
normal. Do not really listen to what they say, look at what they do and how they act. They are
stocking up on gold because they understand what they are doing.
They understand the problem they
are creating with the money printing. One day, not too far from now, that is going to
be central banks stocking up on Bitcoin, just like Michael Saylor and MicroStrategy.
Just like Jack Dorsey and Square, every company, multinational or whatever, public-traded, every
large company is going to need their Treasury invested in Bitcoin. It will be irresponsible not
to. Central banks are going to do the same thing. Sovereign wealth funds. When you look at the fact
that only two companies that we know are publicly traded and we would know because they
have to disclose this if there was more, out of all the companies out there, it is so
early if every Fortune 500 or 1000 company does what these two just did. A tremendous amount of
wealth comes into this space because Bitcoin and crypto has primarily been a retail phenomenon
thus far. It has really been driven by people's personal accounts, not really their hedge fund
money, their LP money, but really their personal money.
That started to change as we
mentioned before with legendary investors like Paul Tudor Jones, Stan Druckenmiller, and
now, we have companies that are doing this. The dominoes are starting to fall, and
eventually, it is going to be a central bank, and some very smart companies may take– a
country is going to take a huge position in Bitcoin and talk about it. RAOUL PAL: Game theory
suggests that if it is the hardest form of money, one of these countries is going to have a change
of government, is going to say we are going to solve the problems, and we are going to buy
bitcoin as part of our reserves. TYLER WINKLEVOSS: I tweeted about this. I said, the trade of the
century is still out there for a couple of people, a couple of hedge fund managers.
It will be as
great as the Soros breaking the pound trade. A couple people take $100 million position in
Bitcoin hedge fund managers and go talk about it, whether it is a Bill Ackman, Ray Dalio, or anyone
who's got a fund. Our thesis is that Bitcoin 30X-es from here because it is digital gold, it
disrupts gold. Bitcoins market cap is 300 billion. 300 billion, gold is 9 trillion, the above
ground gold is 9 trillion. If Bitcoin's market cap is 9 trillion, then each Bitcoin will be worth
$500,000. $100 million trade in Bitcoin right now for a hedge fund will turn into $3 billion. RAOUL
PAL: I have not ever seen a risk reward like it in my entire career, and I have been doing this 30
TYLER WINKLEVOSS: That is why it is so crazy that it has not happened yet. Maybe it is
happening, and we just have not heard of it. That is why Michael Saylor just bought 50 more million
Bitcoin. People say, oh, is 19 too high? Well, it is not too late. Look at what Michael Saylor
just did. He took $50 million in Bitcoin position, because he obviously thinks that is going up.
CAMERON WINKLEVOSS: There is a psychological barrier around 19,000, 20,000, and people are a
little scared of it for some reason.
They think it looks expensive. Our viewpoint, of course,
is that look, if you bought into Amazon in 2014, it might look expensive compared to where it was
in 2000. Still an amazing trade, it is probably up what? Five, six times from there? That is a
tremendous trade. It is probably doubling every, every year. We think there is a 25x, 30x from
here on the conservative bull case if Bitcoin were to dethrone gold, but we think it actually has
greater promise than that because a lot of people cannot really get access to gold, if you think
about it, whereas really anybody with an internet connection gets access to Bitcoin, and there is
more smart devices on the planet than people. Yes, the access will be there for digital gold.
Super, super exciting, but interesting to see the emotions and the irrational aspects of the
My feeling is if we preach the 20,000, when we breached the $20,000 barrier, it
is all bets are off, and things start running in a pretty exciting way. TYLER WINKLEVOSS: Like the
four-minute mile, as soon as Roger Bannister broke it the next week, and then kept– like it became,
oh, yes, four minutes is not that big of a deal. Look, the game theory is that you do not want to
be the last one into Bitcoin. Two publicly-traded companies have done it. A couple of hedge fund
managers have talked about it. It is really early, but you do not want to be the last manager in.
RAOUL PAL: Somebody gave me a great tip. Now, we are humans. Humans are pretty stupid. We anchor
ourselves in certain things. You've got a chart on the screen, which we all look at, it is a Bitcoin
The all-time high is 20,000. We look at that, and that is what we anchor ourselves on.
The little trick is change the scale on your chart and squish it down to the bottom. What
happens is you immediately think, oh, it has only just started its move. It is the same
chart. It is behavioral anchoring. That is what I urge everybody to do, who is like thinking, oh,
it is expensive, behaviorally anchoring the chart. The other thing I do is use regression lines and
you can use it on the log chart. Suddenly it gives you just a pretty simple understanding where price
moves and how it moves, and it just moves on to meet carcinomas itself.
CAMERON WINKLEVOSS: It is
so thematically, if you just do something simple like regression analysis and plot that line, you
are like, oh, okay I see where it is going. Yes, there is peaks and valleys, but we always
say, if you are taking a Bitcoin position, prepare to hold it for five or 10 years. Do
not get in if that is not your time horizon, just forget it. The same is true with gold. Who
wants to trade around gold? That is not the trade here, but if you can hold this thing– and I think
the same is true for ether for five to 10 years, then $19,000, $20,000 entry point is going to be
very high an entry point. It is so interesting how as humans, we have these anchoring and biases
and things like that. TYLER WINKLEVOSS: The other big one is a lot of people are like wait, I want
to own one whole Bitcoin and they do not realize, A, that they can own a fraction of a Bitcoin but
there is like a mental block or a psychological– RAOUL PAL: Because again, the anchoring bias
is gold coin, banknote, physical things.
The anchoring bias we have is that is all you can
own. TYLER WINKLEVOSS: That is all you can own, or my ego says I need to own a whole
one. I have heard that from young people as well. There was a movement early on in Bitcoin
to move at a decimal point, the micro Bitcoin. That never really took off. I guess if Gemini and
Coinbase, and all of us said, hey, let us make Bitcoin 2000– RAOUL PAL: Bitcoin share splits.
that what you are talking about? TYLER WINKLEVOSS: Or just change our UI, but no. It is like you
have 200 of this, or it costs $200 or something. CAMERON WINKLEVOSS: Yes, it is. They split
companies for that purpose. Here is an interesting fact. There is something like 40 million plus
millionaires on the planet. There is of course only 21 million Bitcoin. There is not enough
whole Bitcoin, not that you have to buy a whole for millionaires on the planet. To Tyler's earlier
point, you do not want to be the last one in and there is going to be millions of millionaires
that will never own a full Bitcoin.
RAOUL PAL: I love that. It is empowering. I have always said
to people, just to finish off, I have always said to people, this is the biggest legal frontrunning
opportunity I have seen in my entire life. Because we know the institutions have to come in, the more
the market cap goes up, the more the institutions have to come in.
It is a ridiculous reflexive
loop. When you've got the best performing asset class on Earth, that is market cap is now
becoming investable by institutions, it drags in institutions, which brings the market cap up which
drags in institutions, that cycle is to play out, has even started. CAMERON WINKLEVOSS: A lot of
people do not understand that aspect that for some institutions to invest in an asset class like
Bitcoin, it has to have a certain size. Because they are only writing a check of $50 million or
$100 million per investment. Like if Bridgewater, I think one of the largest macro hedge funds in
the world says, hey, we want to put a Bitcoin trade on, they are not going to be buying millions
of dollars, they are going to be buying a billion plus dollars. If they look at the market, and
the economic bandwidth, or liquidity is only $100 million, they might say, well, if we buy 1%,
we are just going to own too much of this thing. Let us just wait for it to get more expensive
counter-intuitively, and then we can go in.
We are getting to that threshold where institutions can
actually get in based on their rule set or bylaws or whatever it is. There is those institutions
who really want to get in and wanted to get in at 100 billion, and they cannot convince their
management. RAOUL PAL: The whole space is short upside call options. It is a really complicated
thing. Now, the price rises, everybody has to buy back those call options, because as the price
rises, they have to get in, it is going to be a true experience. TYLER WINKLEVOSS: We
were having conversations a couple years ago with institutions, and they are like, it
is just not expensive enough for us right now. As your point and at some point, they will
see like 100,000 Bitcoin, they are like, okay, we are going to [?] within that, and it goes
It has not even started. We are just seeing institutional, sophisticated people
start to trickle in, but the biggest money is still on the sidelines, but it is coming. It is
so inevitable. It has been from my point of view, since I started looking at this eight years
ago, like, Bitcoin was always going to happen. It just we did not have the computer
science breakthroughs to make it possible. It was always going to happen, and it is going
It is happening. RAOUL PAL: Guys, thank you so much for your time. Really
enjoyable conversation. Hopefully, we can give people something to think about as well. TYLER
WINKLEVOSS: Yes. CAMERON WINKLEVOSS: Thank you so much. RAOUL PAL: Take care. CAMERON WINKLEVOSS:
Awesome. See you. NICK CORREA: Thank you for watching this interview. This is just a taste of
what we do at Real Vision. To learn more about the complex world of finance, business, and the global
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