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  • let's talk about Bitcoin because you put out some pretty interesting, you know, ideas about first when you started looking at it, I think you saw this incredible linear correlation or log arrhythmic correlation between simply the number of users and the price uh regardless of anything else.

  • And I've seen some of the presentations you put out that I think are probably available on your Pantera website where you tracked simply the adoption rate versus price and found this incredible correlation.

  • And then on the back of that also predicted some potential forward price points for Bitcoin.

  • Can you talk about that idea?

  • And then when you first realized that?

  • Yeah, so there's, you know, there's a lot of reticence about uh Bitcoin and other cryptocurrencies because they don't have cash flows.

  • And I had a fun conversation with a tiger cub friend of mine that's TMT investor and said they don't invest in Bitcoin because there's no cash flows to discount.

  • And I was like well there's no cash flows to the euro and nobody thinks twice about trading the euro.

  • There's information about interest rates and current account deficits and things like that.

  • That helped me decide where you want to be long or short euro.

  • That's the same with Bitcoin and other cryptocurrencies, all kinds of information, how many transactions are happening.

  • Many people are using it.

  • The simple concept though is just supply and demand.

  • Uh you know as I said, it's going to be a serial killers can go through all kinds of different use cases.

  • Um and every year picks up more people that find another use case, find something they want to do it with Bitcoin.

  • And we did publish a table that has a number of people using Bitcoin.

  • Uh and that's coming up in order of magnitude every two years and we're now at about 100 million people using Bitcoin um in 2013 there's about 300,000 people using it when when I got started and obviously there's only a handful in 2009 when it was released.

  • Uh and the really wild things, if you then put next to that, the price of Bitcoin in each of those two years, it has also gone up exactly one order of magnitude exactly every two years.

  • And I've never seen a relationship between two pieces of data.

  • That's that crazy in terms of going up five decimal points.

  • Uh and also maintaining the exact same ratio is the ratio is $200 per million people using Bitcoin.

  • That was true.

  • In the 10,000 people using Bitcoin is true.

  • Two million people using Bitcoin has been true.

  • 100 million people using Bitcoin and that is a framework that makes some sense.

  • The more people who want to use it for whatever they're doing with it, you know, the more it's worth.

  • I found in my time in the industry, the kind of, the stickiness rate is massive.

  • It might take people five or 10 years to get their head around it, but once they buy Bitcoin or other cryptic crisis almost never want to sell it.

  • And that's why the prices keep going up because there's very few people that ever want to part with it.

  • And you know every year you try and you know you convinced another cohort people to come in.

  • So if you extrapolate that out, There's 3.5 billion people on earth with a smartphone, only a bit more than people that currently use Facebook.

  • If all those people started using Cryptocurrency and that relationship hell which passed doesn't have to predict the future.

  • But it seems solid.

  • That's $700,000 per Bitcoin.

  • And while I'm not going to say I've met my entire life savings exactly 700,000.

  • And some specific date in the future, it really helps to point out the massive ace in the tree of this trade.

  • It's definitely risky.

  • You know, Bitcoin went down 55% of the last couple of months.

  • So there's definitely a ton of risk in the industry.

  • But um you really can only lose one time with your money and being long something.

  • And if it has the possibility of going up in order of magnitude um you know, it's a good risk adjusted trade.

  • Yeah.

  • And the order of magnitude is 10 X.

  • For anybody who hasn't probably that engineering background or science um have you ever seen an asset like this?

  • And again, I think at bankers trust you were doing some global stuff.

  • So you really have seen everything, you've been in Tokyo, you traded probably currencies, mortgages, uh probably equity is everything under the sun.

  • Have you ever seen an instrument like this or with the volatility or even with that?

  • Asymmetry.

  • Yeah, I did spend 25 years to one around the earth looking for trades like this big disruptions.

  • Also when I was a tiger management we invested in a lot of big disruptions around the world.

  • And so you know, I was in Russia when Gorbachev was doing glass notes and invested in gas promise further privatisations and Argentine farmland and Tesla Motors and every four or five years, something like that would come up.

  • This is just so much bigger than all those.

  • Um it is, you know, all those things were regional or country specific.

  • You know some kind of interesting dislocation just in that one country that one region and infected maybe just one market may be just the equity market or maybe just the bond market in spain when they had their devaluation.

  • So you know all those trades, they were great traits but they're very kind of localized or specific.

  • This is so many different use cases globally and all those are literally the biggest things on earth, well storage coal, even money MTs under trillion.

  • All those markets are the biggest markets on earth.

  • So it's I think it's a once in a lifetime type trade and that's why you know, we went all in and It hasn't slowed down.

  • You know, I really think we have another 10 or 20 years ago.

  • So, um, you know, I think it is at once a lifetime trade and every time I meet some, you know, college kid, just thinking about what to do next Blockchain, I just say, hey, do this and three years from now, if I'm wrong, you know, you did something kind of interesting, you know, it didn't work and you move on to something different, but you know, from even half right about how important Blockchain will be, it's the right place to be.

  • And so, you know, I do think Blockchain is the trade of a lifetime.

  • Yeah.

let's talk about Bitcoin because you put out some pretty interesting, you know, ideas about first when you started looking at it, I think you saw this incredible linear correlation or log arrhythmic correlation between simply the number of users and the price uh regardless of anything else.

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Dan Morehead On The Future Of Bitcoin ?

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    林宜悉 posted on 2021/09/02
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