Nolan Bauerle: ( 01:57 )
You definitely earned it. You definitely earned it. So let’s jump right in. We’re talking about bitcoin in the world today, and the first question I have really is around whether or not you see bitcoin as a true macro asset? Is it there? Is it in the main stage? Is it in the side stage somewhere? Is it in the wings? Or is this really something that can be thought of as the macro today?
Meltem Demirors: ( 02:19 )
I think for most people in the world right now, particularly in the world of investing and finance, bitcoin and crypto assets are not yet an asset they think about. It’s a very small asset class. It’s around 200 to 250 billion right now. That’s very small, and so for most investors looking to allocate capital moving even 5 to 10 million dollars into the coin creates a lot of price movement, and there are not really efficient ways to do that today. So that’s one concern I think certainly.
Meltem Demirors: ( 02:55 )
I think the other piece to think about just on a macro level that’s really relevant is macro investors sort of define the world in the context of specific assets in markets, and so I think as an investor you look at sovereign debt, and you look at debt generally as an asset class, corporate debt funds, you look at equities, and then a lot of people like to lump crypto under the alternatives category. Alternatives is sort of a growing part of the investment world, and I think it’s challenging for a lot of investors, even in the alternative space, to really try to figure out where bitcoin fits in.
Meltem Demirors: ( 03:38 )
And so, I think the big challenge is to people in our industry, we like to talk about bitcoin as an asset class, because we live, breath, eat, sleep crypto all day every day, and certainly in our little part of the world bitcoin feels like the big asset, but I think frankly to most investors bitcoin’s not really on their consciousness, and if it is it’s far too early, and if anything the place are getting exposure if through their PA or personal account, certainly not through their firm, or their fund, and I don’t think that’s going to change in the near future, and we can talk about that more as well.
Nolan Bauerle: ( 04:20 )
So in practice what you’re saying is it’s not quite there yet. If it was in this sort of macro level the features that would define it, the aspect of it that would sort of propel it forward, I think we can even trace to some of your testimony back in Washington in July. In that testimony, I think what we saw was you had Facebook, which was almost threatening, not a nation-state, but it was taking on certain powers. It was taking on certain responsibilities that we would normally prescribe to a nation-state, and it was saying we’re going to issue this private money, that, of course, got everyone’s back up.
Nolan Bauerle: ( 04:58 )
I think one of the things that was remarkable about your testimony is you showed that bitcoin didn’t propose these same challenges, yet it is coherently creating what amounts to a digital jurisdiction at the same time, and is perhaps is at the foundation for this type of macro asset going forward, the foundation for what could amount to an important money supply, a hard money supply.
Meltem Demirors: ( 05:25 )
Let’s untangle that a bit. So I think what’s challenging when we talk about bitcoin is unlike debt or equities bitcoin represents three different things. Bitcoin is technology in the context of the bitcoin protocol, which is open-source code, and open-source software has been a part of our world for a long time, and open source is I think starting to gain acceptance as an investible category in the venture world and beyond. And so, bitcoin at its core is the bitcoin protocol.
Meltem Demirors: ( 05:56 )
Bitcoin is a network and what’s interesting here is bitcoin is kind of a supranational global communication network, and so there are tens of thousands of devices around the world, whether people are running minors, or people are just running full nodes there’s this network of computational devices that are maintaining the bitcoin ledger, and engaging the invalidating transactions, and maintaining the integrity of the ledger, and so the bitcoin network is physical in nature.
Meltem Demirors: ( 06:26 )
And then, lastly, you have bitcoin the asset. And so, what I think is interesting here is for traditional investors it’s sort of a challenging paradigm when these three things are wrapped together, so when you see people look at bitcoin they’ll talk about bitcoins in the context of software infrastructure. You’ll hear people talking about bitcoin in the context of a commodity because it’s produced in its mind digitally in the way that we sort of think about producing and mining things like gold, and oil, that are limited in supply theoretically.
Meltem Demirors: ( 06:57 )
And then, you have people talking about it in the context of currency, of hard money. What I think is interesting about Libra is...