We explore Bitcoin's transformative role in finance, its paradoxical alignment with ESG principles, and the urgency for pensions and institutions to adopt it as a hedge against macroeconomic risks.
In this episode of TFTC we explore Bitcoin's role within ESG frameworks and its broader economic impact. While Bitcoin aligns with ESG ideals by utilizing waste energy and promoting financial democratization, it faces criticism under the same framework, exposing the political nature of ESG ratings. The discussion highlighted systemic issues in ESG’s corporate adoption, prioritizing ideological agendas over performance, as seen in poor fund returns and executive bonuses disconnected from value creation. The podcast criticized non-founder executives for accelerating ESG inefficiencies and noted the hesitance of pensions and institutional investors, like CalPERS, to embrace Bitcoin as a hedge against macroeconomic risks. Framed as both an asset and a tool for wealth preservation in volatile times, Bitcoin's transformative potential remains underutilized. Despite regulatory challenges, the hosts expressed optimism about the U.S. leading the Bitcoin revolution, leveraging its innovative edge over Europe.
The episode highlighted Bitcoin’s transformative role in finance and governance, emphasizing its alignment with ESG principles despite the framework’s controversies. Urging institutions to adopt Bitcoin before missing its growth trajectory, the discussion also explored its potential intersection with AI to revolutionize payments and productivity. Concluding on an optimistic note, the podcast celebrated America’s innovative spirit as a driver of future technological and economic progress, reinforcing Bitcoin’s maturing potential.
0:00 - Intro
0:52 - ESG/DEI disaster isn't quite over yet
14:08 - Unchained & Coinkite
16:28 - Matt's background and framing bitcoin for pensions
25:20 - Career risk of missing bitcoin
29:08 - Moving the Overton window and helping clients with bitcoin
33:28 - Zaprite & SOTE
35:01 - Making the most of bitcoin
43:23 - How using bitcoin changes your understanding
49:04 - AI machine payments, regulations and altcoins
56:50 - Trump admin stepping out of America's way
1:03:37 - America has centuries left
1:12:27 - Wrap-up
The Bitcoin is ESG argument. I'm not sure if you're aware of this, but I helped start an off-grid flare gas mitigation Bitcoin mining company, Great American Mining. And so we were on oil and gas well pads upstream in the Bakken mitigating flare gas in North Dakota. that, I mean, I went on a multi-year brigade against ESG.
because that's what I think I realized at Great American Mining is like no matter how hard you try to convince people like, we're mitigating flare gas, we're being extremely efficient with the energy, the goalposts just always moved. But you can make the argument that Bitcoin is the most ESG friendly asset in the world if you want to open source code.
Anybody who saves it is going to see their purchasing power increase over time The energy intersection really forces you to be as efficient as possible And we tried to run with those narratives for a while, but people were always like not good enough Yeah, it really exposes the ESG for what it is right which is a political movement that this asset G governance You can't find a better asset with regards to governance than Bitcoin s democratizing access to
being able to opt out from financial systems from corrupt governments. You can't find a better system than that. The ability to utilize energy that's literally just being pushed out as emissions, And that actually capturing that energy and using it to mine Bitcoin is a great example, but yet Bitcoin is anti-ESG. And then you look at Tesla as another example, the number one manufacturer of electric cars in the world and has a lower ESG score than Philip Morris.
And you just say, how are these things possible, right? And it's only possible if it's this government engineered social credit scoring type sort of issue to push an agenda. Otherwise, Bitcoin would be very high on pro ESG. Tesla would be in. And from a general perspective, then I think a lot of people would have a lot less problems with ESG because it would just be looking at does something actually do help with regards to ESG? I still think it would
personally be against a lot of capitalist principles, but at least it would have a first principled stance to evaluating investments on those metrics, which it fails on every single one of those. Yeah. Do you think ESG is officially dead? No. And I say that because I think it's dying, but it's not dead. And I say that because I worked at CalPERS, the largest pension fund in America for 16 years. They are doubling, tripling down on ESG as we speak. Now,
What's happened has really been amazing in the sense that I think the Overton window of a movement against ESG, against DEI is exploding. And you're saying, you we are going to win. We're going to win. ESG is dying, right? But it's not dead. And I think that's because of how systemic it got in corporate America with these large pools of capital like a CalPERS or a BlackRock or a State Shooter or Vanguard. mean, they voted in.
Thousands of proposals and the largest companies in America over the last several years. It's really been a 14 year movement of a house of cards It's collapsing but I think my biggest worry of why it doesn't die is if we Declare victory before it's actually dead and I think this is where things like Doge and this incoming administration and this movement can actually kill it but dying not dead
I agree, don't count your chickens before they hatch. We gotta make sure it's laying on the ground without a pulse before we officially label it dead. I mean, whether it's the fact that the, it is a political movement, not really, let's dive into that. It's a political movement that really hasn't manifested in returns that outpace benchmarks. Is that a correct assumption? How these ESG funds actually performed?
So the funds have performed horribly, but it was never about the returns. And this gets back to the origins of Strive where we literally just launched index funds, like an S &P 500 type fund, right? That says, we're own the same stocks as a BlackRock fund, but we're gonna vote differently because what you were seeing was the corruption of this push into corporate America. You saw it in this debanking issue that
The Bitcoin community is known about for a long time, but I think the general public just said, wait, what? Joe Rogan is like, I did not know about that, that people that were in crypto or, you know, name your industry or political opponents were being debanked. And you say, well, why were they debanked? Why were people on social media being censored? All these different things. was the government working behind closed door, right, to push corporations. But then on top of it, you have
the largest shareholders of basically every company in America, BlackRock, State Street, Vanguard, teaming up with the likes of CalPERS, also saying, we want you to integrate politicized ESG pressures into corporate America. That's a handful of cards that you really can't work around if you're a large company, and especially if you're a managerial CEO, which is another issue that we have in America, right?
Most CEOs in America are not the founders and some founders fail, but founders have oftentimes different energy. You got to be a little crazy to start a company, right? And see it through to be a major company. So they're more likely to stand against the grain. think you saw Brian Armstrong stand against the grain in the George Floyd protests, right? I think he's been a great example. I think he could even do more, right? But then you saw so many other CEOs that were very quick to bend the knee and then get
in their incentive comp packages, a direct tie to implementing ESG or DEI. I don't know if you're aware of this, but this year, 75 % of CEOs in the S &P 500 had part of their incentive comp tied to ESG or DEI measures. so, I mean, just thinking about general economic theory, Incentives drive behavior, drive results, and the incentives are implement ESG or DEI in this country. I was not aware of that. And so...
In terms of unlocking the compensation for hitting those metrics, it different from board to board or is there some sort of ESG index, DEI index that is across the industry that is handed to the boards and they say, all right, you get to this point and you'll get this comp? It's generally pretty vague and it's vague by design. They're not going to publish the exact metrics that they hit, but I'll give you probably what I think of as the worst example.
of ESG, incentive compensation. it's in, it was in 2022 and it was Southwest Airlines. And you've been in Texas for a few years, but I don't know if you remember when basically every plane that Southwest had got grounded in 2022. Well, what do you think happens when you ground your planes? You admit less, right? But from a stockholder perspective, Southwest had a horrible year that year.
What do you think happened to the incentive comp with regards to ESG for their CEO? Why not? He got a 1.5x on his bonus. You would think that they would say you failed, right? Because, they actually gave him the highest score possible. And I think this talks about a lot of the grift that you see in corporate America. And the question is why? And I think it comes down to just...
simply showing simple metrics of we admitted less, the guy hit his goal and not actually caring about shareholder returns, right? And that's what we should care about with this country, driving better performance, better results, better excellence as a product and a service and ESG fails on that. Well, not only better shareholder, I in this particular example, better shareholder returns, which inarguably like that grounding led to less shareholder value because it's
destroyed a bunch of potential revenue and probably a lot of refunds had to be given but then like and customer suffers too like how many people were We're traveling that day to go visit a loved one who was on their deathbed or in the hospital or had something important to do and Just because the CEO Wanted to hit his ESG comp metric Did they board or ground the planes and I don't think the CEO or Southwest intentionally grounded the points, right? Yeah
The bigger issue is your planes were grounded and you didn't punish the CEO for a massive failure of your organization. And that's a failure that we see throughout this country is that the actual accountability to driving better performance is not there. And if it's not there, what a corporation is do, they're much more likely to lean further into ESG or DEI to then change the goalpost and say, well, look at what we're doing over here. We're actually doing so much good.
And then it's hard to actually punish them or hold them accountable. Yeah, another example I've written about in the last year that is just mind boggling effect. And that's the other thing, like the push to cater towards the ESG DEI political movement is destroying brands that are over a century, Boeing being one of them. And I think it's a combination of DEI and
The overextension of the managerial class into that company particularly where they replaced all the engineers that built that company over a century with McKinsey consultants who were really just focused on the stock price. so instead of reinvesting in research and development on how to build quality aircraft and combustion systems, they simply bought back their stock to increase the
the stock price by destroying the denominator. Stock buybacks and then DEI hires, obviously over time and over time, think for me was even quicker than expected exposed really how difficult it is to run an excellent organization. I think this is one of the things that the McKinsey people get wrong is that they think that you can easily just replace person A with person B and
and increase some sort of diversity metric and still achieve the same results. That it's actually the company or the government that's driving your success, not actually hiring the best team to do a job. And in a sense, any team, sports team, you need diversity. But that diversity is just not on the metrics of race or sex. It likely is in America because we're a very diverse country.
But that's likely the end product, not the goal, right? If you have a basketball team, you need a point guard, a shooting guard, a small forward, a powerful forward, a center. That's diversity in height, it's diversity in skill set, but it doesn't have to be diversity in skin color. And a company is really no different. You need different types of people across the organization that likely have very different skill sets.
And that's the metric that you should measure on. But instead, we've focused on these other metrics at the expense of great American companies. And I think my optimism is that this stuff is dying, it's being kicked out, and it's not popular in this country. And I think this gets into the managerial class problem that you talked about. And there was a survey that was done a couple of years ago that asked managers in this country and then everyday Americans. And they said, they asked the same question.
should corporations play a role in the societal civil issues of the day? And two thirds of managers said yes, one third said no, two thirds of everyday Americans said no, only one third said yes. So this is this disconnect between the managerial class that thinks they have this role in society that they don't actually have. And I think that's starting to get weeded out in a major way.
Very optimistic right now. It seems like things are Very clearly headed in the right direction. You mentioned Doge. We've got the Trump administration with Vivek and Elon leading Doge and then it does seem like this time around Trump is motivated to put people within his administration that can actually enact systemic change that that gets a lot of this waste and this grift out of the federal government specifically, but
Taking this back to like state public sector, like CalPERS particularly, like there is, I would argue, a needed sense of urgency, whether it's recognized or not by the people within these institutions to really figure out how they should be allocating capital over the next decade to fix a lot of these problems that exist, particularly in pensions with underfunded or unfunded liabilities as they attempt to.
ensure that people can retire and actually receive a pension check in the mail or in their bank account every month and actually be able to cover the liabilities that they've accrued over the last many decades. Yeah, this actually is such a personal thing that you said to me because my wife for my career was trying to help fix the underfunded pension crisis in this country. As you know, I spent 16 years at CalPERS and started my career there because
My parents, my grandparents, my uncles all had their pensions tied to CalPERS. And I graduated literally in the middle of the great financial crisis when the funded ratios of CalPERS and every other pension in this country plummeted, right? And right now they're 70, 80 % funded. And, but yet they're paying out 100 % to the current retirees, which if you, if you do the math, if you're paying out of a system that's 70, 80 % funded 100 % to certain people, then the people on the backend are actually
less than 70 to 80 percent funded. my, you know, napkin math says that they're under 50 percent funded for our generations. And so it's it's a massive problem and gets to what do we invest in? And you look at pensions in America, pensions in Europe. And I guess at least the good thing in America is that we're much more allocated to risky assets and less debt than Europe, which is like all debt. But we have a a global
debt crisis, right? Everybody knows we have this global fiat debt crisis. And it's something that the Bitcoin community obviously cares about a ton. part of that community as well. And it's really what actually initially drew me into Bitcoin is I'm sitting at CalPERS and I was managing about $70 billion of their portfolio, all fixed income assets and generating a yield of three and a half percent, right? And you're sitting here, okay, like we have to earn 7 %
for the overall pension and I'm making three and a half, how do we actually make this math work? It just doesn't work. And then you say, okay, well, what's the data saying? And you say, what data are we looking at? Almost all the data for all pensions in America of historical returns started about 1980. What's interesting about that is 1980 was the start of a 40 year bull run and fixed income assets, right? So if you think about what...
what the bias that's going to put into an asset allocation model will be is that it's going to overweight owning fixed income assets, right? Where when fixed income assets are at, you know, even though now they're at four or 5%, 6 % yields, they were at zero, but the assumption that there's going to be a price appreciation in bonds and a yield is a faulty assumption, right? So it leads to an over allocation to bonds. And it really starts to be,
one of the core pieces that leads to my belief that both institutions, individuals should have a core allocation to Bitcoin as an asset because what you need to own to earn the return that you need to retire securely in the future is likely different than what it was for the last 40 years. Yeah. And we've, we were talking about this before.
We sat down to record, but we've experienced this at 1031 talking to a bunch of pensions. These are large Titanic size ships that move very slowly and you have layers of management and investment committee that decisions need to get pushed through, not only decisions, but pitches, calls, follow ups and sit downs. And it's
Historically, I mean, this is well known they move very slow and so I guess the point of bringing this up is how Queen in your mind could urgency be engendered in pension funds specifically to to act on this because that's one thing I was telling you about Andrew Hones and battery finance. That's something Andrew and I have talked about Over over the last years is one worry is that particularly this bull market if things get crazy we go into
six figures, who knows, 100,000, 200,000, and then the pensions decide, right, we need to move, and then it takes another six to nine months, and they begin allocating. If Bitcoin follows its four-year historical cycles, they could top tick the blow off top of a bull market, and then experience two years of pain, and then get sort of dismayed by the industry. And so it's like, how do we...
position Bitcoin in a way that pensions understand this is a long-term view, you need exposure and there may be some volatility on the way. It comes down to the need for them to actually understand and believe in the asset class because most people that invest in Bitcoin, whether it's an institution or an individual, they're going to go underwater at some point. I did almost every person I know that has allocated to Bitcoin as a long-term holding, it's going to get
washed at some point, right? And then if you don't actually understand and believe in the long-term fundamentals of the asset, then you're gonna either stop allocating or sell the bottom and that's when you get a dissatisfied investor, right? So I think it's hard. One thing that I've noticed about institutions and pensions as a whole is there tends to be this, they're very consensus oriented and there's not a lot of...
incentives to go outside of the consensus unless you just really care about trying to fix the problem and you don't care as much about your career and this is true whether you're a portfolio manager at a pension or you're an economist or whatever so I think you need to lean into a couple cases a couple people that allocate to a bitcoin solution and and and
You know, they're going to it's going to be one or two and maybe we can get a couple of them in early, but.
It's a challenging problem because over the investment staff, you also have a board that sets the investment policy statement for a pension. And these people are just not incentivized to be game changers. so my expectation is that you'll probably start to see a few pensions. I think you're going to start to see maybe more adoption at the government level and hopefully like...
like for striving and we just we launched a wealth management offering and a core part of that is is recommending a core allocation to Bitcoin for our clients. And I think for a for a national wealth manager, there's not very many, if any, that are actually doing that. Like the the wire houses like the JP Morgan's, the Morgan Stanley's of the world. think two of them still will not even let their clients allocate to Bitcoin. Right. Vanguard will not let you even allocate to a Bitcoin ETF, even if your client
wants to. The other ones are more in the realm of if your client approaches you, okay, you can talk about it. But it's really a CYA type sort of an industry. And my hope is that the incoming administration will relax the liabilities for these people in this industry to actually say what they're doing behind the scenes because
To me, that's the biggest problem is if you talk to many people that work at a pension, they own Bitcoin. The problem is not, in my view, that these people are like, Bitcoin's a scam. They probably own Bitcoin and they probably own all sorts of other coins out the spectrum, but yet they're worried about their professional job. And so they'll do something different behind the scenes than in front of the scenes. And that was similar to...
in the early days of Strive where behind the scenes people say DEI is crazy, ESG is crazy, and then publicly they're like, we're gonna increase diversity on this metric by 50%. And you say, well, why are you doing that? like, because I want a job, I wanna have a security for my family. Same thing's happening in Bitcoin and I think eventually that dam breaks. Yeah, that's the, and it's probably just because I've never lived within the pension world, we've been saying this.
a lot to potential investors at 1031 is like the career risk. think particularly with this administration, if a Bitcoin strategic reserve bill or executive order gets through, like we're reaching the point where the career risk has completely flipped. And that's just trying to articulate that to managers is yes, the career risk up to this point has been CYA. Like it's a little too risky. We
have the cover to stay out of it because of the volatility and all the shenanigans around the industry, whether that's FTX, Celsius, BlockFi, there's plenty of examples to point to. It's like, we made the good decision to stay out. But now we're entering the territory where if you have nation state adoption, individual state adoption, copycats to micro strategy, you see large corporations begin to incorporate a Bitcoin treasury strategy. You're going to get to the point where
the people, the people's money you're managing at some point are gonna point to like, do we miss Bitcoin? It's the best performing asset of our lifetimes. And we've been on the sidelines for well over a decade and hopefully not two decades, but you can definitely see that happening with some people. Yeah, institutions or financial advisors, definitely. And I know a lot of financial advisors personally feel this, but if I had someone managing my money and they had my money invested,
with a large asset manager that literally helped force in ESG and DEI to every corporation in America. And then they completely missed Bitcoin from zero to $100,000, maybe beyond. It is a career risk at this point if you're not actually at least doing the work. And I say this because I think this industry, know a lot of good people, but a lot of people that are very lazy and they still haven't even done the work. And so they're just like, like now I can invest Bitcoin, but I don't
I'm afraid because now it's $100,000 and I'm going to top ticket in the careers. I do think I agree with you that the ultimate career risk is if you're lazy and you miss it. And this to me is this is a multi-decade holding at a minimum. This is a long-term holding. And most people are always so concerned and myself too. when I first bought Bitcoin years ago, was like, OK, like what's my what's my sell price?
Right. And then as you start to understand the asset more, it's more of I just want exposure to this asset class. And I sleep well when I have exposure, the proper amount of exposure for myself to this asset class. And I think until you get that, and it's why I still think we're early, which is crazy to say with Bitcoin at a hundred thousand dollars. But in this industry, I still think we're early because people are still so focused on
What's the top this cycle is the top 150 K or 200 K or 500 K is going to go to a million like good layout scenarios, probably where any of those those tops are possible. but regardless, it's about the long term dynamics in the world, in America and owning an asset that is both a return enhancer and a risk diversifier versus all these different risks. Right. like I think the Trump administration
is massively bullish for Bitcoin. But I think I would have still been bullish on Bitcoin, would have been less bullish in America, but I'd still been bullish on Bitcoin if Kamala would have won. Like Bitcoin was gonna win. But just the path that it's going would be different under different circumstances. Yeah, that's why I'm incredibly impressed, number one, too, with the leadership that Strive has shown over the years. Whether it was a couple years ago when we had Vivek on the show to talk about
the anti ESG perspective that the tribe was taking and saying, no, this is not the way that companies need to operate. There is another way that is pro-America, pro-meritocracy, pro-capitalism at the end of the day, and now leading on Bitcoin as well with the wealth management offering that you offered and being just public on it. got preparation for this interview. I was watching a bunch of your appearances on Fox Business and Fox News talking.
about what you guys are doing at Strive and why Bitcoin is important and whether the long time Bitcoiner likes it or not, it's very important for companies like Strive with that particular stature and your experience at CalPERS to be able to interface with these people who believe that the career risk is having exposure to Bitcoin and I think slowly but surely Strive being on the tip of the spear, just giving that
institutional capital, more comfortability with like, maybe these Bitcoiners aren't crazy being able to interface. I mean, you particularly with your experience at CalPERS, I think has to be a massive benefit for the industry, Bitcoin industry overall. My hope is that we help open the Overton window here, right? We're just like we did with ESG or DEI, where 2022 when I joined Stripe as part of the day one team with the bank before I was CEO.
And the thought at the time was, we're gonna be called racist. Name your negative thing that people are gonna say about you. We're climate deniers, whatever. And then you look at this group of people and it's like, okay, well, a bunch of us drive Teslas and a lot of us were into Bitcoin. It's just like, okay, and a very diverse.
group of people, male, female, skin color, diversity, name it. I mean, obviously our founders is Vivek Rameswamy, right? This is like, okay, like I feel comfortable. I'm cool going down with this ship. that's what, if I'm going to get canceled and called a racist, I believe in meritocracy. I believe in capitalism. And the same is true with Bitcoin. This is, this has been something that I've been passionate about now since early 2017. I wish it was.
early 2013 or whatever, right? But we all have our own journeys. But once you understand Bitcoin as an asset class, you realize, like we said, there's career risk to not being bold about about what you believe. my feeling is that at least with Strive, if we're ever doing something different behind closed doors and what we're doing publicly, there's a problem. And so if we would have launched a wealth management offering and we weren't open that
we believe that Bitcoin should be a core holding in the portfolios. Then behind the scenes, we're doing something very different than what we're doing for our clients. And I think how you win is through authenticity, right? And as we do that and as Strive has success, and I'm sure there's gonna be other wealth managers that are gonna be doing this as well, I think that's where then the pressure starts to get on these late adopters, some of these behemoth financial institutions that are gonna be very slow, right? Okay, like we'll offer if you call us,
Well, now there's competition and with ESG and DEI, what that did is it's helped lead to the collapse of that industry. And I think it'll ultimately lead to something similar in Bitcoin. we can debate a bunch of things with regards to Bitcoin. I like I'm a true Bitcoin believer, not your keys, not your coins. But then, I know a lot of older people that, man, it's like, if I give you your keys, like,
You're gonna lose your keys. Maybe for you that's not the best, right? That you might need some actual professional help in managing Bitcoin as part of a core holding. Is that the optimal way from like a core Bitcoin believers? Probably not, but is it the optimal way for that individual person with where they are? Maybe, and that's where we come in. Yeah, and so I mean, we've broadly described what we think Bitcoin.
Is an important part of the future a multi-decade asset that should be held? by everybody individuals institutions countries, but let's dive into like using CalPERS as an example, like how Would you envision them incorporating Bitcoin into what they're doing? Like we're there's many different flavors 1031 were Venture like there's ways to get exposure via us. We were describing battery finance other credit funds like build asset management, which are basically providing
dollars to unchanged lending desk to get a credit return on that. And obviously you have spot Bitcoin, which you can acquire. Like how would you incorporate Bitcoin into a portfolio at the pension level to get exposure to it? I think it should be all of the above. And there was there was a saying at CalPERS that actually agreed with, which was if you only have one percent of your portfolio allocated to something, then it's a hobby.
not an investment, right? Because even if it goes well, if you're rebalancing, like let's say you put 1 % of your portfolio in Bitcoin, you did nothing on the venture side, nothing on the debt side, and Bitcoin doubles and then you rebalance, okay, like you just added 100 basis points of alpha to your fund. That might be good to help a CIO make his bonus target for the year, but is actually fixing a underfunded pension crisis where pensions are, you
20 to 30 % plus sometimes more underfunded, you actually need a core allocation. I think that core allocation falls in the realm of, I think 5 % is a recent, it's a decent place to start. know 3 % is a pretty commonly thrown out number. I think five is a number for an asset class when you actually look at all the different macro risks that we have from the debt crisis to sticky inflation to geopolitical.
crises to government overreach, all these different risks and you keep going down the list that exists that are long-term risk factors, the AI revolution. I think all these things in different ways are bullish for Bitcoin. And so if you're thinking about a 5 % allocation, I think some of it should be owning Bitcoin directly. Some of it should be investing in the ecosystem through venture funds. I think
some of it should be in debt instruments. And I think this kind of gets into the Bitcoin versus other crypto. for me, Bitcoin is the true asset class. And then think in other blockchain, I think there's probably still a space in the venture place for pensions to get involved, maybe less in the owning coins, but in actually in the ecosystem.
And I think that's how I would approach it if I was an institution. Yeah. Yeah, like. And that's the beauty of the nation, see, of the Bitcoin industry, too, because that's part of our thesis at 1031 is if you believe in Bitcoin as this asset that's going to increase in adoption, that would preclude that there's going to need to be infrastructure that facilitates that adoption. So you need exchanges, you need custody, you need.
financial services, need literal physical infrastructure for the mining layer, and it all feeds into each other. So if you get a little spot, you get a little venture exposure, like the venture exposure, we would argue is going to help your spot exposure because it's gonna invest in companies that make it easier for people to adopt and incorporate Bitcoin into what they're doing. And then on the credit, like the credit side too, I'm very happy you mentioned the...
I guess we could call complacency that exists on the fixed income side of allocations due to the fact that people grew up in this 40 year bond bull market and the returns that are being provided in private credit like if you're going to get high returns you need to go pretty far out on on the risk curve where Bitcoin if you look at unchanged lending deaths like it's providing pretty good returns from a credit perspective because
I would argue it's an extremely mispriced credit product. However, if you look at the actual product, how the Bitcoin's custodied in a multi-sig escrow account, the fact that Bitcoin is the collateral for the loan and it can be liquidated 24-7-365 if a borrower comes under some stress and it needs to be liquidated compared to other credit products, I would deem much less risky, but it's providing a higher return as well.
And so like all those factors like spot, it is helped by the venture exposure, which makes it easier. And then credit, like you just have this nascent industry that people won't really understand. So there's this mispricing, this arbitrage that exists that people can be taking advantage of over the next decade, two decades, whatever it may be. Yeah, totally agree. And I think the incoming administration likely changing many of the, a lot of the regulatory environment around Bitcoin.
and crypto I think will also ultimately help some of those yields come in. But it is mispriced. then you see how the SEC has treated anyone in this industry through regulation by enforcement. And to me, that actually creates some legitimacy in why the yields behave the way they do. And I think that
that ultimately will change. And I do think it's it's mispriced at this point. And people that are at the forefront of allocating assets like that are at least understanding. Right. And I think that's probably the bigger problem is I don't think most people take the time to actually understand the risk, how they work, how the liquidation process would would behave in a liquidation event. Right. But you're talking about an industry in traditional finance that
is nine to five, right? And they don't fully understand or comprehend the beauty of a 24-7 market. They view 24-7 market as like a risk, right? And I view it as a risk that the market, the general market just closes up for the evenings and the weekends when stuff happens, right? And I think that's what the crypto community, and this gets into like really any technological innovation that increases
time and learning. I don't know if you play poker, but I grew up a poker player. I helped put myself through college playing poker, online poker back in the day, right? And made more money playing poker than internships, right? But the interesting thing about online poker was that online poker, you were playing multiple tables. So you'd be playing, I was playing like six, some crazy people playing like 20 tables at a time. I wasn't that crazy, right? But then also each table you're getting four to five
X the hands per hour that a live table would have. Right. So you're really like about 100 X in your experience versus versus the traditional poker players. And so the online players ate the lunch of the of the live poker players. I think in crypto, you see the same thing. Twenty four seven markets, bull markets, recessions, like recessions and quotes. Right. But like bull markets, bear markets like crazy. And you compare that to traditional markets where the average finance professional might.
see if there's seven year business cycle, they might see five, six recessions in their life cycle where in crypto markets, know, a 30 % drop, that's just, you know, that's just another month, right? And so you start to develop this skill set and you eat the lunch of the traditional people. so, and then you realize 24 seven is not something to be scared about. actually, it's a beauty in an efficient market.
Right. And so I still think that traditional finance people have a ways to go to to learn that lesson. And that creates this mispricing of credit spreads and Bitcoin instruments. Do you think there's a misunderstanding of how long it takes to actually grasp this? Like in your in your mind, like if somebody decided at one of these institutions like, all right, there's maybe they're there. I need to take the time to sit down and understand.
What is there? How long do you think it should take the average individual to go from zero to having somewhat of a firm understanding of what we have in front of us? It depends on how humble they are. And I say that because I've met so many people in this industry that think they understand Bitcoin, they've never even made a wallet. They've never even done a transaction. And this is broader than just Bitcoin. This is...
investing 101 or running your own company, like you actually understand how the product or the asset works, right? Are you in the weeds or are you theorizing how you think it works? Right. And the more you're moving towards theorizing, the more you get to what I, what I view as this managerial class structure that thinks they know, but they don't know. And
I really do have a lot of worry that that's that's where most people lie. But if they actually said, OK, like I'm to go make a wallet, I'm going to go use it, I'm going to go transact and do do all the crazy things that a lot of the Bitcoiners have done, right? Transact on, you know, on a whatever back in the day on BitMEX or a decentralized exchange or, you know, moving, sending money to someone, trying to go buy a coffee with Bitcoin, right? Like seeing how these things work, that gets you comfortable.
in the system and if you don't actually do those things, don't think people ever get comfortable. I think one of my big aha moments was the first time I recovered a wallet from a seed phrase. I it was back in 2015. I was in St. John. I was probably like 23 or 24 at the time and I didn't realize how expensive St. John was and I went down there and spent, blew through.
My checking account was like, crap. need some money and Luckily probably not smartly but luckily it was traveling with a seed phrase that I'd back up to an Electrum wallet and I Went to my dad's laptop downloaded Electrum recovered from seed sent the Bitcoin from his laptop to my coinbase account and Liquidated the Bitcoin within an hour. It was like holy crap. Like I have money I can continue spending money down there and that for me like taking that
Small piece of paper with 12 words, recovering the wallet, sending it to Coinbase, and having cash within an hour was insane to me.
How many people in the finance industry that think they know Bitcoin have actually been used to seed phrase or maybe they've written it down but have never even updated their treasurer or ledger or whatever. Even for me, the first time I updated a ledger and then I had to use my seed phrase to restore it. And talk about a heart attack or sending a transaction and being like, did I...
copy paste the wrong wallet or did I miss a word and waiting for, these are all just things that you have to understand the technology. And we have those moments of stress, but then when it works, it's like, holy crap, this is magic. Yeah, exactly. Right. And it is magic. And so that's where, again, it all comes back to, it's not hard. It just takes a humility and it takes admitting you were wrong, right?
So many people in this industry like financial leaders, right? Bitcoin is a scam. It's only used by terrorists or money launderers, right? Like all these different, different, you know, claims that are made. And then what I see is like a problem for, you know, concern for me for the Bitcoin industry is the Wall Streetization of Bitcoin of like, OK, like we're never going to teach people about Bitcoin. We're going to claim it's a scam. It's used by terrorists, money launderers.
And then we're going to control your Bitcoin for you and we're going to move it into the safe asset and you're never going to understand it. You'll have exposure to it. But to me, that's a worry that I have about Bitcoin. actually think that the education of the Bitcoin community, still getting people out there and understanding the asset classes is very important. Venture investing in the solutions of an ecosystem of Bitcoin is extremely important, right? Because otherwise, I think you get, you know,
Bitcoin trademark signal, is like Bitcoin in terms of like the price returns of Bitcoin, right? But actually nothing that the technology could offer. And I think that to me is where it's not surprising coming from someone at Strive, but like we do not trust BlackRock. Like we saw what they did through ETFs to corporate America. I think with regards to the digitization of Bitcoin in ETF form, I think
I don't think that these are true fans and believers of the actual Satoshi white paper foundational beliefs of why Bitcoin exists, but I think it comes back to what you guys and others are doing in this industry and really building out a vibrant ecosystem. And I think if we do that, we win. And like you said, we will win, but there's a lot of work to be done.
No, actually, this is actually brings up a good topic like the intersection of Bitcoin and AI, I think, could be a catalyst for or a forcing function to force people to interact with Bitcoin the right way, because particularly AI agents actually get to a point of maturity where they're being incorporated into many different aspects of people's lives. And these agents need to interact with each other and you send them out to complete a task that
that includes spending money. You're not going to give an AI agent your credit card information. You're going to give them, via the Lightning Network, you can literally, at the HTTP level, incorporate Bitcoin payments and wallets with these agents. I'm getting in the weeds here, but you can literally give them a Bitcoin wallet with spending conditions and allowance or budget and say, all right, I need you to go.
book this flight for me. You have to be go from this place to this place on these dates and here's what I'm willing to spend. Here's your balance in Bitcoin. Like go, go get it done. And I think that's one thing that like Drew Bonsall, the founder, co-founder of Unchained has really been on the tip of. And I think that's one of the most interesting things as we transition into this intersection of AI leaving its nation stage and Bitcoin.
similarly maturing, they're gonna intersect. And I think we'll find that like the AI agents are actually like probably outnumber human users of Bitcoin at some point in the next two decades. Totally. To me, what would really unlock that would be removing the capital gains tax from Bitcoin. If we can actually achieve that as a country, I think that unlocks Bitcoin as payment. think, please.
is extremely important. I'm hopeful it happens. have no inside information of it happening. I think if it does, then you move from, I'd just say savers, because maybe for myself, I'm still in this mindset that I don't want to spend my Bitcoin. But at a certain point, I do agree with you that AI will be using cryptocurrencies, hopefully Bitcoin, to transact.
my worries would be that if regulation becomes too lax to that we go through a cycle or two where there's confusion of which cryptocurrencies actually have value and kind of this like bubbling condition because it's ultimately like I'm a hardcore Bitcoiner like you, but I have to question like how would I be wrong? I think how we're wrong in the short term would be this relaxation of regulations. mean, right now you have
ripple going through the moon, And you say, like how, why? Like normie friends that are not crypto native, do they then buy ripple at $2, $3 thinking it's gonna go to $97,000? Like they don't even understand market cap and they just see price, right? Like this happens, right? And then ultimately that creates a bubble condition which I think represents a
a risk to this industry, but ultimately I agree with you. I think it goes to Bitcoin and Bitcoin used in AI. I hope the path to get there is less painful than more painful. I mean if history is any indication of where things will be, it's gonna be the path of most pain, unfortunately. hopefully, that's what I think. I joke, I say that somewhat in jest, because I do.
have that belief in my mind, but I also think the market has learned over the first 16 years. I got in 2013, you had the first initial altcoin, they were called altcoins back then, like the new entrance into the space don't even understand what altcoin is. It's out of nomenclature. Now it's cryptocurrency. Shickcoin's more predominant than altcoins at this point, but I think...
There's been enough of this fervor of every asset around Bitcoin over 15 years that a lot of people, certainly not all, as is evident by the number of XRP army techs I've gotten in the last week. Like, you buying Ripple? I do think, particularly like with bigger money, we see this with conversations with potential LPs at 1031, is there is beginning to be this clear demarcation between Bitcoin.
and everything else and people that care about the preservation of their wealth over the long term are gravitating towards Bitcoin specifically. And I think if you just look at the numbers, Bitcoin's market cap versus the next 10 biggest altcoins, it's more than double. And those next 10 altcoins have cycled throughout time. if I think what's most important here, whether we like to admit it or not is
the big capital understanding this and I do think the larger pools of capital are beginning to recognize this delineation between Bitcoin and broader crypto. Yeah, I agree with that and to me that in a weird way is one of the good things to me about this cycle being somewhat like the cycle of like Bitcoin and meme coins is that no real money is going to look at.
meme coins and think that there's actually underlying value, right? Where in the past you have all these coins alt coins that have, you know, big visions of what they're going to do. And I think that's that's probably more confusing to to larger pools of capital. This one is obvious. And and ultimately, ultimately, mean, we are in a cycle right now where how many meme coins are there with multibillion dollar market caps? It's it's it's crazy and it's going to end in tears. And
And it's most people I know that are into Bitcoin. You know, obviously we all have friends that are invested in the ripple army texting you and and the only friends that I know absent one that have made money in crypto are the ones that bought Bitcoin and held. And then you have all these other people that will buy the tops of name your random cycle, right? Moodang or whatever they're buying these days, right?
And it always ends in tears and it ends in tears because it's more about greed versus understanding the underlying fundamentals of an investment. But I do agree with you that getting long-term pools of capital, whether it's nation states, whether it's pensions, whether it's wealth managers, right? Like if a wealth manager actually understands Bitcoin and allocates, it's significantly different than just a
just someone that doesn't understand it buying it because they're more likely to sell. Like when we put it in our clients portfolios, it also comes with, hey, you need to understand the volatility of this asset, right? This asset is extremely volatile. That said, look what it does in your overall portfolio. It can enhance the return, lower the risk, and it might drop 50%. It might drop 80%. We don't know, or it might be a super cycle. Like your guess is as good as mine.
But if you believe these underlying issues in this economy and this asset's gonna go up and this is a long-term holding and you can't say that with almost any other crypto asset. Yeah, woo dang, it's the currency of the future. Even Doge, Doge. It's funny that Elon is hooked on the Doge. It makes sense considering the jokester side of Elon. He definitely likes to lean into the meme.
people understood the inflation rate of Doge. They probably wouldn't be as excited as they think they should be because Elon is quote unquote supporting it. we'll see. I mean, taking a step back and just really leaning into this new administration and what seems to be again, a tectonic shift towards optimism, growth and deregulation to allow the American economy to flourish.
What is your hope for this administration, hopefully other administrations that come after that in terms of what the American economy can do within the next one, two decades? Because as you mentioned, $36 trillion in debt, a lot of underfunded pensions out there, inflation obviously has ravaged the economy over the last few years. It's been pretty tough going in recent years particularly.
Do you view this incoming administration and the posturing of we're going to unleash the American economy as something that's definitely going to happen? And if so, like, what do you think we can do over the next decade? I'm extremely optimistic right now. And I say that from myself. I've been fairly pessimistic about the future of America for about a decade now, at least. And because of the debt crisis, because of
in COVID what the government tried to do to American citizens and this constant gaslighting of something that's, know, conspiracy theory. And then it shows to be true like time and time again, most recent one being Biden's not going to pardon his son. Like, like, like, like, like I look at, I think it's like, I don't really care that Biden pardoned his What I care about was that the American people just got gaslit.
And he said he wasn't. And if you, if you said that he was going to pardon his son, then you were a conspiracy theorist and then he does. And it's, it's, it's, it's that, that movement time and time again. But we went from a nation that was that, that is hooked on basically subsidization, right? Subsidies for corporations, subsidies for American people. And my hope is that we can move that to a nation around deregulation to your point. And.
If we can do that, think our brightest days are ahead of us. I look at this as ultimately this is a competition. It's a global competition. Right. And we're in America. We want America to win. And right now we're at the precipice of an A.I. that is going to unlock the need for crypto to help fund, you know, to be used as a mechanism within A.I. And if we can properly deregulate
then I think America can easily be the winner of the AI revolution. And like other technological advancements, this is going to happen at an exponential rate, right? And so, and this is why think Elon got so involved in this specific election, because if you believe that the next five years or 10 years or 15 years are gonna set the stage for the next 100 plus, because of the technological advancement that's happening right now,
and because of the debt crisis that our nation and the globe faces, then this election was probably the most important election in several hundred years, right? And so it going right was extremely important. And then if you come in and if Feveik and Elon can go fire a bunch of people, well, that sounds horrible for those people, but it's actually not because when I was at CalPERS, I can tell you,
You could fire 80 % of the people at CalPERS and you wouldn't even miss a beat. And it's not even because they're like bad people. Like some of these people are my friends, right? And there's people and they come into their career and they wanna help make a difference. And then when you work for the government, you basically can't get fired. You have tenure without it being called tenure, right? And so certain people don't work out for whatever reason, wrong skillset or don't get along with the manager.
And in the private sector, those people are fired or they're laid off. And then they go find what their actual purpose is in life to make a living. And the government, they get put in the corner. And those people in the corner, they get given a job that probably takes two, three hours a week. So basically zero productivity from these people. And you say, well, why don't they leave? And they don't leave because they have families. They have a secure job and they're afraid.
They're like, well, if I leave my secure job, my pension, even though it's underfunded, right? What am I gonna do? They need that decision made for them, right? They've been handed this subsidy that they can't walk away from. If it gets ripped away, that's gonna be painful, but that's ultimately substantially better for our government in a clear way. These people are gonna have a tough short period of time, but they're ultimately gonna have to figure out how to be a productive member of our society.
And when they integrate back in as a productive member of this society, that's going to unleash more productivity. Deregulating in the AI revolution will also unleash productivity. It's gonna, firing a bunch of people is gonna lower the spend. So if we can lower the spend, increase productivity in a major way, which I think we can. And I would already say, at least versus Europe, America was already positioned better than Europe. As much as I would
rail on ESG or DEI, America's still even with those things better off than what's going on in Europe. We can compound these these these progressions, right? Because because just like stock returns compound, so does productivity and moving forward and innovation. And so I'm actually extremely bullish on on what we can do in America and being a leader in AI and Bitcoin.
And ultimately in making our government run more efficiently, it's gonna be a lot of work, but I think we have a chance to really set ourselves up for a great next couple hundred years to come. I do as well. And not only is that compound internally within the US economy, but we've seen, I think this election, and I don't think this, I just know anecdotally from talking to people in the UK and...
Europe more broadly is that it has been inspirational to a lot of people over there who were looking at America and the direction we were going in and thinking it was somewhat of a lost cause, but seeing the turnout of this particular election and essentially the American people giving the Trump administration a mandate, a clear mandate saying we don't like the direction this is going in. We want to go in this direction. And now it seems like everything is primed to actually go execute that dream.
Like that's inspirational to other countries. We've seen other examples of this in recent years, whether it's Argentina, El Salvador, this sort of shift towards free market economics and liberation of individuals and the economies they operate within. It's beginning to have compounding effects that hopefully, I mean, I completely agree, Europe is in a terrible position right now, but we have a lot of European listeners out there. I care for them. I want them to.
experience a world in which they're able to increase the quality of life and do things in the world and be productive. And I think what we're doing, what other smaller nations are doing, if we can all execute on the mandate, if we can execute on the mandate that's been given here and then Argentina continues to succeed, El Salvador continues to succeed in this age of social media and information being distilled almost instantaneously, that I think just for overall human productivity globally, it's going to be massive.
as well. Yeah, I totally agree. And although I'm a kind of America first person, I love visiting Europe. And I do think that they will learn from America because even in Argentina, you look at Malay comes in and it's like it's going to be Great Depression. He's going to come in and close all these things down. And then actually the economy thrives. Right. And
Same thing is going to happen in the US. I have no doubt that maybe worst case scenario, there's a little bit of short term pain in a transition, but I don't think it's going to be that painful at all. And ultimately then as America starts thriving, hopefully Europe can see that as a guide to unlock themselves and ultimately unlock productivity across the globe.
I do think that that will happen, right? Because right now there's this pointing of, like Trump's gonna come in, look at this, our RFK is gonna be in charge of food safety, what's that gonna mean? And then he's gonna come in and he's gonna make some changes and we'll be better off for it. then we'll get gas lit again. Of course that was gonna be good, but.
And then hopefully many more countries around the globe introduce more friendly policies for growth, for innovation, for Bitcoin. But I do think that the US needs to lead this and will lead this. I think we are going to lead it. I forget who I was talking about this with, but the idea of the American spirit. I was listening to the
Rogan Mark Andreessen episode yesterday Took the time that I was at the gym listening to it and I think that is One of the interesting parts of the conversation where Joe asked the question like how long? Will the quote-unquote American Empire last if you look throughout history empires have a certain lifespan and us is brushing up on 250 years since we
clear their independence and people can squint and be like, maybe it's this empire dying. there is something unique and inherent in the American spirit that I think prevents an overall collapse from happening. again, going back to the election, I think that was a clear indication that the American spirit is still there. Something innate in the fabric of being an American that has this strife, for lack of a better term, towards.
Freedom and just being able to get shit done and and it makes actually sense right this nation of people from all over the globe that left wherever they want because they care about freedom and liberty would actually care about freedom and liberty right like and and that to me is is is why I do agree with you that I do think that America has another At least another cycle of dominance left behind it. But but I think it's
The risk in it becomes this cycle of weak men create bad times, bad times create strong men, strong men create weak men, weak men create bad times. Like where are we at right now, right? In that cycle. And I think you started to see this cycle of weak men or weak people, right? And this election to me showed that we still actually have strong men, strong people in this society that care.
about it in a major way and are willing to sacrifice themselves or their future for the greater good. you look at Trump, like billionaire, Vivek, billionaire, Elon, billionaire, these guys could all be doing whatever the heck that they want to do, right? Go having fun, be on a yacht, but yet they're actually doing stuff that I can tell you just economically, this is not good for any of them.
to get involved in politics. It's not, I know it gets pitched as, like, well, look at how Elon's gonna benefit from this or that. You're way better off to not, to not get involved in politics. But when you actually care about this country, the future, the world, then getting involved in trying to make a difference really matters, right? And it matters, you know, even like for the Bitcoin community, right? If you care about Bitcoin, you could buy it, put it in a wallet and then,
You just go about your day and you hope it succeeds or you could go help build the future. Like and y'all are investing in companies and founders that actually care about building the future. And ultimately, that's how America wins. That's how Bitcoin wins. Right. We need more people that are willing to take a stand for what they're convicted in. And, you know, it's it's
I think that that's becoming cool again in this nation. And I hope that if there's a bunch of people that work for the federal government that happen to be fans of your pod and they're about to be fired, I don't know. But my message to them would be find your passion and just go live it out. we could actually, you could go from sitting in a corner, it's going to be scary, but to actually being a productive member of the society. And if we do that, that's how we create a flourishing.
Bitcoin economy, that's how we keep America, dominance up in this nation, in this world, be leaders of the globe. We do that by being crazy. Like founders are crazy. You have to be crazy to say, I'm going to do that. But that's the American energy. And I think we can harness it. And I think by harnessing that, we can really make a difference in the next several years. And to me, the biggest learning than that for me, just being at Strive.
when we started Strive, I was like, okay, like, I think ESG and DEI are gonna be the death of capitalism. Did I actually think that it would be dying two years later? No, I didn't. I had something I used to say that the rise of ESG and DEI took 14 years. If we succeed, it's gonna take 14 years to unwind. I think it's actually happening substantially faster than that.
And it's happening because because of a movement of people that care about this stuff and and and so, you know It's it's it's really fueled a lot of optimism and so many people big trees fall hard in the The as it pertains like Bitcoin In its position in America's future. I think that is actually another Sort of undertone that highlights what you're just describing that there is still strong men and whether was
people were cognizant about this or not, like America from the perspective of individual Americans is better positioned than any country in the world to take advantage of Bitcoin. Over the first 15 years of Bitcoin's life, 16 years now, like Americans per capita accumulated the most Bitcoin, started the most businesses, like despite everything that was going on politically and regulatorily, like that American spirit, like really, I think showing
shines through in the Bitcoin industry because despite all that, people are like, we know this is good. We're going to go after it. We're going to accumulate it, build businesses around it. And I can only imagine what's going to happen in the next 16 years when people are able to work without the overbearing weight of regulations, government, and people calling us criminals and drug dealers, whatever it may be. We've gotten this far despite all that. And if all of that
It's laid to waste and we're able to run in clear seas. It's going to be gangbusters for not only the Bitcoin industry in America, but America overall, like the amount of wealth that is going to accumulate within the pockets of American citizens is going to be incredibly beneficial for the overall benefit or the overall quality of the economy and productivity overall, overall, overall word of the day. Yeah, no, I completely agree with you.
Yeah, Matt, this has been fascinating. I'm happy you do that. You email me two days ago. You're like, I'm up in Dallas. I'll drive down to Austin. We were going to do this remotely. It's so much better in person. So much better as I just moved to Dallas about a month ago. And I can't remember when we scheduled this, but it was before I think I even knew I was going to be moving to Dallas. And so as it's getting closer, it's like, let's do this in person. It's way better. And I made the trip. Well, thank you for making the trip. Where can we find out more about Strife?
Twitter at Strive Funds, Strive.com. All right. Matt Cole, everybody. It was a great conversation. Peace and love. Okay. All right, Thank you. Thank you. That was fun.
