WBD527 Audio Transcription

Bitcoin Conviction with Eric Weiss

Release date: Friday 15th July

Note: the following is a transcription of my interview with Eric Weiss. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

Eric Weiss is CEO of the Blockchain Investment Group, and the man who orange-pilled Michael Saylor. In this interview, we discuss the current malaise in the Bitcoin price, why regulation will change this and be good for Bitcoin, and why Bitcoin provides value to all Americans.

“When that changes, you’re gonna see a lot more capital come in… I don’t want to be all dramatic and be like, it’s gonna be a tidal wave of money coming in and they’re all just waiting for this. But I think we’ll see it, I think it’d be making a material difference. And as you know, when any money comes into our space, there’s such a limited supply, that it doesn’t take much.”

— Eric Weiss

Interview Transcription

Eric Weiss: I've got a broken BLOCKCLOCK at home.

Peter McCormack: What?

Eric Weiss: You know the BLOCKCLOCK?

Peter McCormack: Yeah.

Eric Weiss: I've got a broken one at home, and it broke at $61,000.

Peter McCormack: No!

Eric Weiss: So, it's sitting in my kitchen next to the one that says $19,000.

Danny Knowles: I've got one.  We sometimes bring it travelling, and the last time I brought it back, I've still not plugged it in again, so it still says $29,000, and I look at it every day.  Even that!

Eric Weiss: Yeah.  I started off with a picture, I'm like, "This sucks, dude".  I was supposed to send the broken one back, but I didn't!

Peter McCormack: Please tell me, are we recording this, Jeremy?

Jeremy: Yeah.

Peter McCormack: Brilliant, this is the start of the interview.  What is it, a broken BLOCKCLOCK is right twice a year?

Eric Weiss: Let's hope so; I'll take that if that's $61,000!

Peter McCormack: So, we had the BLOCKCLOCK out for one of our interviews once, and it was there at the front and it had the price up.  But the problem is, because we're recording six weeks of shows, there are shows coming out later on and the price is different.  So, we were doing shows, and it was saying $43,000 and the price was like, $33,000.

Eric Weiss: People are like, "Yeah!"

Peter McCormack: No, people were like, "What the fuck?" and then you yourself, you were like, "Shit, I should have sold!"  So, yeah, so you've got two BLOCKCLOCKS?

Eric Weiss: I have two working and one broken.

Peter McCormack: And the difference between them is, what's that, $32,000?  No, $42,000!  Shit!

Eric Weiss: Yeah.

Peter McCormack: How much do you care about price; how important is price?

Eric Weiss: It's not unimportant.  I don't think it's so important day-to-day.  Trends are important and ultimately the price is important.  It's important, because I'm not particularly diversified in my life, and I do have expenses and things like that.  So, I like to be in a position not to be forced to sell.

Peter McCormack: Are you irresponsibly long?

Eric Weiss: I think I am irresponsibly long.  I'm not 110% long, I don't use any leverage, but I have a disproportionate amount of my net worth in Bitcoin.

Peter McCormack: Yeah, I'm with you on that!

Eric Weiss: It's a decreasing percentage of my total net worth, but not because of any reduction, just because as the price goes down and the price doesn't go down on my apartment or something.

Peter McCormack: But the stupid thing about it is, if you look back to like, I don't know, 2020, before everything went up and Bitcoin was around $12,000, I felt pretty good.  And I have got more Bitcoin now, it's at a higher price, and I'm like, "This kind of sucks!"

Eric Weiss: Yeah, it's interesting, isn't it, the way different prices can very quickly have different emotions attached to it.  A couple of weeks ago, or not even a couple of weeks ago; a week ago, when it was $18,000, $19,000 and 48 hours ago when it was $21,000, all of a sudden $21,000 felt a lot different that time than it did three weeks prior on the way down.

Peter McCormack: How much do you think -- because I never thought we'd see sub-$20,000 again, I thought that was done; I could see mid-$20,000s, I could see under $30,000, I just never saw that coming.  Then obviously, I think there's a number of reasons why it came.  I think the contagion from some of these CeFi firms blowing up, from what happened with Three Arrows Capital, do you think that's why we dragged down?

Eric Weiss: I think it was a perfect storm.  One of the big factors, I think, is related to big, global macro hedge funds.  So, when we got this correlation between Bitcoin and Big Tech, a 3- or 4-1 beta, as they say, so Big Tech goes up 1%, Bitcoin goes up 3% or 4%; Big Tech goes down 1%, Bitcoin goes down 3% or 4%.  So, if you were a big hedge fund that had $1 billion of equity exposure in Big Tech and you wanted to hedge that position, you could short $250 million of Bitcoin and you would be completely hedged.  And borrowing Bitcoin unfortunately is very inexpensive, about 3% a year. 

So, that was a very popular trade, which does a lot of things that aren't good.  Number one, it creates a massive seller of Bitcoin; and number two, it reinforces that correlation.

Peter McCormack: Is this the whole risk-on risk-off thing?

Eric Weiss: It's a little different.  It's like, if you pick a big hedge fund, like Tiger Global or something, and you've got $10 billion of equity exposure to Big Tech, and you're like, "Well shit, I don't want to sell my Google, Facebook, Apple, Netflix stocks here, but I want to hedge it because I think recession's coming, things are going down", you short $4.5 billion worth of Bitcoin or something, or in that case, my example would have been $2.5 billion or something, just to hedge equally; but you hedge by selling Bitcoin, by shorting Bitcoin.

That way, if your tech stocks go down by 1% and your Bitcoin short goes up by 4%, the fact that you've sold one-fourth of the amount of the Bitcoin hedge as your equity, you're evenly hedged.

Peter McCormack: I see, okay.  So, this is why everything was so correlated?

Eric Weiss: It reinforced the correlation that was already there.  They started doing the trade because the correlation was there; but this reinforced it.  So, there was that and then the fact that we are correlated with equities at the moment, which is something that I think will ultimately break, because it's not an equity; that kind of sucked, because we're facing a little bubble burst and obviously stock markets going down for a variety of reasons, Fed raising rates, etc.  So, when stocks go down, we're going down.  That's the risk-off thing.  Sell anything that you had a profit in, so to speak, we're getting hit with that.  Yeah, it was kind of a perfect storm.

In addition to that, Bitcoin as an emerging inflation hedge, well yes, we have inflation, nobody argues that there's inflation now.  They argued with us for a long time before, but now everybody acknowledges it.  But the problem for Bitcoin is the Fed is addressing this.  So, when you're addressing the problem, some people's assumption is the problem is going away and they're like, "Well, we don't need to own the hedge anymore; if the inflation is going to go down and not be worse in the future; we don't need to own the hedge".

Peter McCormack: Right, so it sounds to me like the smart traders out there have found a way to hedge their investments but in doing so, they've kind of put us in a situation where we can't defend our narrative, because it undoes our narrative, because there aren't enough people in the market buying based on our narrative?

Eric Weiss: That's correct, and exacerbating that problem is the fact that the majority of those interested in Bitcoin are hodlers.  So, those hodlers are not influencing the day-to-day price.  If you've got your Bitcoin in storage and you're not selling, you're not in the market day-to-day making a market on that bid-ask spread, it's the speculators and the haters that are doing that.  So, what you get is this very small percentage of the players in the space dictating the price.

Peter McCormack: Well, listen, it's good to sit down with you.  Normally we start by, "Hi, how are you doing?" but you've told us about your broken BLOCKCLOCK!  There's a lot I want to talk to you about today, and I don't normally do this, but I don't know if everyone knows you.  I know some people know you, but they know you because of somebody else, and we don't want to cover that, because that's been covered.  But can you just, for context, give people your background so they understand who we're talking to?

Eric Weiss: Yeah, sure.  I came out of traditional finance.  My first job out of undergrad, I was a US Government Bond trader.  Then, after that, went to Columbia Business School.  After that, I got into venture capital and private equity, where I was investing almost exclusively in companies that leveraged the internet as part of their business model.  And it was in the course of doing that in 2013 that I discovered Bitcoin at a conference here in Miami, coincidentally.  When I saw that, something really clicked for me.

Looking at the internet, it was clear that the internet was really good for transmitting information and data, but not so securely; emails, posting pictures, etc.  But people were really afraid to put credit cards into a website, things like that.  And then, when I saw Bitcoin, this was the first time that I saw that you could transmit value safely and securely using the internet.  And then even more mind-blowing was, Party A didn't need to know Party B at all.  So, it was no intermediary, totally trustless, and this was mind-blowing to me. 

So I thought, "Okay, I've got to do something in this space.  This is where it's going".  And I thought, "What kind of business can I start?  What can I do?  How do I take advantage of this?"  It was like, "Okay, I could do a directory of companies that take Bitcoin".

Peter McCormack: This was Bitcoin Yahoo?

Eric Weiss: Yeah.  This would still not be a good business, right; so a decade later, still not a good business!  So in the end, I just bought a bunch of Bitcoin and figured, "Limited supply.  If this works out, price is going to go up", and it went down, it went up, it went down and up in really dramatic ways.  I bought in December 2013, and after a while, the volatility, feeling like I was two up or two down, I sold all of it, made a little bit of profit, not enough.  And even at today's numbers, it would have been just fine if I'd held onto it.  And I've been accumulating since 2016, and even to this day, I don't have as much as I had in 2013.

Peter McCormack: We all have that story.  Mine's more 2017/18.  I have less than half of what I had at the peak in 2018.  But it is what it is; that's the painful lesson we go through.  So that gap, how long was the gap between from when you sold out to you started accumulating again?

Eric Weiss: About two years.

Peter McCormack: About two years, and what did you do in those two years?  Were you like me when I had my gap, where I'd occasionally look up the price, it's gone down, now it's gone back up?

Eric Weiss: I was more focused on the asset class like, "Is this gaining traction?  Are people talking about this?  Does anybody care?  Is this going to be a forgotten thing?" because until the world starts to catch on to it and people are interested in it, it doesn't matter how cool the technology is, if it's not gaining traction.  And I started to have friends asking me about it and things like that, and you'd see a little more news articles on it and people would talk about it.

So, I started to get a little more involved again, and went back to some of my initial contacts in the industry, who were very helpful in sharing what was going on on the inside of things.  One of my buddies started Blockfolio back in the day, and he was kind of a sherpa for me early on.  So, yeah, just kind of networking around that.

Peter McCormack: Who's that?

Eric Weiss: His name's Ed Moncada.

Peter McCormack: He might be the guy I used to play poker with.

Eric Weiss: For sure he was.

Peter McCormack: Yeah, we used to have an online poker game.

Danny Knowles: He was in that game, yeah.

Peter McCormack: Yeah, that was during the COVID period.

Eric Weiss: He kind of taught me how to play poker a little bit back in the day.

Peter McCormack: He's a good player.

Eric Weiss: That's an understatement.

Peter McCormack: We had some fun tables.  There were some tables where it would be him, myself, Mike McDonald, who's a professional poker player, Charlie Lee --

Danny Knowles: Bobby Lee.

Peter McCormack: Bobby Lee.  It was good.

Eric Weiss: Mr Litecoin himself.

Peter McCormack: Yeah, Brad Mills was in there.

Eric Weiss: Yeah, and maybe even Ari Paul.

Peter McCormack: Ari Paul was in there.  Yeah, I made about 3 Bitcoin during that period.

Eric Weiss: Well done.

Peter McCormack: I think I gave a lot of it back to Mike McDonald!  I'm such an idiot; we had one game where I think I was like 1.5 Bitcoin up, and people were leaving because it was late, and there was just me and Mike left.  He said, "Do you want to do some heads-up?" and I was like, "Yeah".  And honestly, in about 15 minutes, I lost a Bitcoin to him.  I was like, "Get out of here!" he's the professional.

Eric Weiss: Yeah, exactly.  Those guys are savage.

Peter McCormack: So, what gave you your conviction back; just the general interest?

Eric Weiss: Really what it was is, when something captures the attention of an entire planet, you have to start paying attention.  And I kept thinking to myself, Bitcoin doesn't have a marketing budget.  If you think about Uber, Uber raised about $10 billion that they went and spent marketing Uber all over the world.  Some information apparently is coming out now that their marketing tactics weren't all that scrupulous and all kinds of stuff.

Peter McCormack: Well, it's just come out in the UK as well.  Somebody was having meetings with them, it wasn't a declared meeting, I think someone in office, yeah.

Eric Weiss: Yeah, but they were trying to purchase a lot of influence, they're spending a lot of money on advertising.  I remember times when people were setting taxis on fire and protesting and things like this, and Paris was against it, London was against it.  But nothing's more powerful than an idea whose time has come.  And when the people want something, they're going to get what they want.  It might be a circuitous path to it, but they're going to get what they want.

They wanted Bitcoin, they wanted some digital asset, and there was no marketing budget to do this; yet across the entire planet, there was gaining interest in this, it was really amazing.  So, I just kept thinking, this is kind of a groundswell, this is really going to catch on and be a thing.  We need to really get back in and be a part of this.  So, that was what kind of what did it.

Peter McCormack: And this time, we've had volatility again, up again, down again, slightly different shaped chart than four years ago.  How come this time you haven't sold your Bitcoin and walked away?

Eric Weiss: I think this time, you have to come back to the fundamental advances that we've had.  When I started my Bitcoin fund and got into this space and would talk to others about it, everybody in the United States had the same concern, which is, "Oh, the government's going to take this away, regulatory issues, this is illegal", all this kind of stuff, and this was a very legitimate concern.  There was big concern, "How's China going to regulate?  How's the US?" all these massive nation states, who are potentially threatened by this digital asset, right; how are they going to react?

It wasn't until this administration and Gary Gensler, for all of his other flaws, Treasury Secretary, etc, all of this started moving in a more positive direction; Cynthia Lummis, awesome.  And so now, I think we're at a point where we don't have regulation yet, but we've got a good deal of regulatory clarity.  The US Government is going to regulate this in a pragmatic way, and frankly I think Bitcoin benefits from regulation.  So, that takes the single biggest risk off the table.

Peter McCormack: Sorry, benefits from regulation, or benefits from regulatory clarity?

Eric Weiss: Both.

Peter McCormack: Both?

Eric Weiss: Both.  I mean, regulatory clarity for sure; no markets like uncertainty.  But actual regulation, for the independent libertarian individual, they don't want any regulation or regulatory clarity, they don't even want to hear the word; you're evil for just mentioning it.  But in reality, if those people that love Bitcoin want to see it be successful on the scale that they expect, it is going to require institutional capital coming in, it's going to require truly high-net-worth individuals and family offices coming in, and those groups are reluctant to allocate serious capital until those guide rails are in place.

When they see that there are real rules and regulations, and there's a tax treatment for it, and different guidelines that they're meant to follow, then they're more comfortable allocating a significant portion of capital.

Peter McCormack: And, are we even at the point yet that we have the right regulation for that to happen, or do you think we're approaching it?

Eric Weiss: We're approaching it.  I think that all of those groups that I mentioned are now really focused on it.  Some acknowledge the fact that, "Hey, it's at a low price now, and maybe it's at a low price because all this regulatory stuff isn't ironed out yet.  So, I might dip a toe, take a little risk here, because the risk/reward benefit is greater".  But the truth is, I think at the end of the day, they're looking for a little more regulatory clarity, and that's across a broad spectrum.

If you're a publicly-traded company, it's very perilous to own Bitcoin and have it on your balance sheet.  The tax structure's very punitive; that's under review now, optimistic that that gets set to something more pragmatic.  So, all of these things need to be ironed out before the real money's going to jump in.

Peter McCormack: Right, and we have had some real money jumping in.

Eric Weiss: Yeah.

Peter McCormack: Obviously, we've had MicroStrategy, we've had Tesla, we've had Square.  Have those companies faced a lot of difficulty in actually setting up the structure so they could do this?

Eric Weiss: I don't think it's so much the difficult of setting up the structure.  MicroStrategy's kind of unique in the sense that it's pretty much their entire balance sheet, so investors will take the time to look through to, "Okay, what's the number of Bitcoin that you hold?  I'll do the multiplication by the price and I'll come up with a value for that", and I can come up with a value for MicroStrategy with that as a factor, plus the underlying business.

But if you were, say, Apple and you've got $60 billion, or whatever it is, on the balance sheet and you say, "Yeah, I'd like to buy $5 billion worth of Bitcoin here", the problem with that is if Apple goes and buys that $5 billion worth of Bitcoin and the price of Bitcoin goes from $45,000 to $20,000 and they take a massive hit on that, and they lose whatever that would be, a couple of billion dollars, the way the accounting is now, they have to mark that down.  That shows up as an operating loss, as if Apple lost money selling iPhones.

So, when they miss their earnings by X number of cents, are investors really going to take the time to parse the balance sheet and think, "Oh, wait, that loss was due to this Bitcoin thing and it's not really a loss, it's a paper loss"?  The truth is, probably not.

Peter McCormack: And that will affect the share price?

Eric Weiss: Exactly.  They're going to be like, "You missed earnings by a nickel?" and from Apple's point of view, they're like, "Yeah, we don't need this shit.  This is more headache than it's worth".  So, props to Elon for having the balls to do it.

Peter McCormack: So, the tax treatment, is that being dealt with at the moment?

Eric Weiss: It is being reviewed, yeah.

Danny Knowles: Is that the same way holding shares on your balance sheet would be treated?

Eric Weiss: No, I think it's different.  If you were to hold shares on your balance sheet, it's treated like, if you could, and not in all cases you can, but if you were to hold assets on your balance sheet in general, it's not treated as an operating loss from the operating company generally speaking.  It's like, "This money that you held, or these investments that you had, have become worth less, but your operating business delivered this".

Danny Knowles: I see.

Peter McCormack: Interesting.  And, once that changes, what, you think there's a wall of money that's going to come in; or, it's going to be just a bit easier, so you might -- or, is it going to be a case of someone like you getting out there and talking to people?

Eric Weiss: I think there's an education curve that people have to go up, but at least it makes it possible.  Right now, if you're the CEO of a publicly-traded company and you wanted to put Bitcoin on the balance sheet, this would be a really legitimate deterrent.  I'm sure those people exist and those companies exist, so I do feel like when this is solved, assuming it's solved in a good, pragmatic way -- and it should be solved, right, because the purpose of accounting is to let people know what the financial state of the company is.  To have to carry Bitcoin on your balance sheet at the lowest price that it's been, not even the current price, is very misleading.

So, if Bitcoin was at $40,000, went down to $20,000, and then came back up to $40,000, you would still have to reflect it at that $20,000 level, which is not accurate.  So, I think when that changes, you're going to see a lot more capital coming in.  Is it going to be -- I don't want to be all dramatic and be like, "It's going to be a tidal wave of money coming in and they're all just waiting for this", but I think we'll see it, I think it will make a material difference.  And as you know, when any money comes into our space, there's such a limited supply that it doesn't take much.

Peter McCormack: What about those companies that aren't publicly traded, or the high-net-worth individuals; are there any challenges they face that's separate from the publicly-traded --

Eric Weiss: If they're subject to GAAP accounting, which they're probably not in most cases, then no, they're not really.

Peter McCormack: You should probably explain GAAP accounting, not just for me.

Eric Weiss: GAAP accounting in general is the accounting method that all US publicly-traded companies are held to.  They must comply with this GAAP accounting, Generally Accepted Accounting Principles maybe, I think.  They have to follow those rules.  Private companies, generally speaking, unless for some reason they're obligated to follow GAAP, don't have to follow those rules, so they should be able to buy Bitcoin and not have it be an issue.

Peter McCormack: And you set up a new business this time, it wasn't a directory of companies accepting Bitcoin?

Eric Weiss: I did, yeah.

Peter McCormack: Yeah, you set up, what was it; a fund?

Eric Weiss: I set up a Bitcoin Fund called Bitcoin Investment Group, and the goal there was to try to deliver all the best attributes of Bitcoin to family offices, wealthy people, institutional capital, so that they could be as comfortable as possible buying Bitcoin.  So, this group of investors is not interested in holding their own keys, they're not particularly interested in going with a Coinbase or new exchange where they just don't have the confidence that they're going to be there forever.  They want a custodian that's a name that they can trust.

So, we did it with Fidelity, $12 trillion investment firm, who's super-pro-Bitcoin.  So, we did it with Fidelity, we have some real particular attributes of the fund that are unique.  The biggest thing for me was to find a way to do it so that, yes, you can invest in this Bitcoin fund that we started, but if you ever wanted Bitcoin out of the fund, you can actually take possession of that digital property, you can get Bitcoin.

If someone invested in my fund and they said, "You know what, Eric, I'm done, I want to redeem", they have a choice.  We can sell the Bitcoin and go back to US dollars and send them US dollars, or they can provide a wallet address that we'll verify and we'll send them the amount of Bitcoin that they're entitled to; so, that's a big deal.

Some other attributes are, we charge a super-low fee, just 1% a year.  It's not something that I really make any money on, it's more of a kind of service to Bitcoin and the industry.  But also, all the funds are comingled, but we go to great lengths to do separately-managed accounting, so that when someone else in the fund sells their Bitcoin, other individuals are not impacted from a tax point of view.  So, you come in when you come in, you leave when you leave, that's what dictates your tax triggers.

In addition to that, the accounting for this stuff is really challenging, so we did something pretty unique.  Your statements are in Bitcoin.  So, if you have the equivalent of 10 Bitcoin in the fund, when you get your account statement, there's not US dollars on it, it just says, "10 Bitcoin".

Peter McCormack: So, is the statement the same every month, unless they're buying more?

Eric Weiss: The statement is the same every month, less the pro rata 1% a year fee, which is charged in Bitcoin.

Peter McCormack: Right, 1 Bitcoin equals 1 Bitcoin, Eric!

Eric Weiss: Exactly.

Peter McCormack: In terms of doing this, you went out and set this up; how much of your work is proactive sales versus reactive, people coming to you?

Eric Weiss: It's almost all reactive.  I'm just -- some might say that I'm not a good marketer, but I just don't believe that financial investments of any kind are something that should be sold.  It just doesn't fit my personality to sell a financial investment.  I'm happy to, in generality, say that I think everyone should have exposure to Bitcoin, and I don't think it's the "only put in as much as you can lose" bullshit, that I hear people say on television; I think that's very much not the case, I think it should be a considerably higher percentage.  But I do think that once someone's ready to make that step, that we offer a vehicle that is the most prudent for a lot of reasons.

Another cool thing about it, by the way, that I didn't mention is, you're investing in a fund.  And, here in The States, when you fill out your taxes, on the front page of that form, it says, "Do you own any cryptocurrency, or did you invest in any cryptocurrency?"  I'm pretty sure this is just a way for the US Government to start to know where it is.  But by virtue of investing in Bitcoin Investment Group, you're investing in a fund, you don't own any Bitcoin.  So, the correct answer to that question is, "No". 

Then, at the end of the year, our accountants do an audit, etc, and these people are given a K-1 that they hand to their accountant, just like every other investment they have in a hedge fund or a real estate property, or whatever it is, so it's very comfortable for that class to invest in.

Peter McCormack: So, I'd be interested how you explain it to people, because depending on who you're explaining Bitcoin to for the first time, or maybe they know a little bit, the attributes that you would put forward, or the story you tell would be different.  So, I don't know, if you've got somebody in Ukraine who's trying to flee the country and you want to explain Bitcoin to them, there's certain properties that you would be talking about: self-custody, censorship resistance, etc.  But if you were explaining it to, I don't know, somebody based out in, I don't know, maybe in Africa who was suffering under high inflation, you would explain it to them in a different way.  But when you're talking to a high-net-worth individual --

Eric Weiss: In the United States?

Peter McCormack: -- in the United States, what is it you're telling them?

Eric Weiss: I think the most constructive narrative is digital gold.  And, it's easy to differentiate, as you know ad nauseum, why Bitcoin is so much better than digital gold, for an infinite number of reasons that we don't have to rehash, but that's the conversation that I have.  It's, "There was gold, this is a digital gold.  Every digital successor of every analogue predecessor has not just equalled their predecessor, they have crushed it".  You can think of traditional phones, rotary phones, and mobile phones, right.  And it is reasonable to think that Bitcoin is a digital gold.

They invariably have children or grandchildren, and it's easy to explain to them that their child or grandchild doesn't have any interest in the bar of gold that they have in their safe, but they would have interest in Bitcoin.  And they quickly start to understand why younger generations, who grew up with an iPad or an iPhone in their hand, would gravitate towards this.  Those are the same people that had no problem spending $10 on a skin in a video game when they were just a kid, and thought it had real value; whereas, the parent was just like, "That's just pixels on a screen".

So, I think that that resonates.  And most of the phone calls that I have occur with some measure of a patriarch on the phone, this 65-, 70-year-old, very wealthy individual, and their kid on the phone with them, or their grandkid, in some cases.  It's like, "Well, you know, my kid's been telling me about this for years", and they dismissed them, but now it's on the front page of all the newspapers they read, and CNBC, which they're watching all day, and now they want to know about it and they don't want to look stupid having missed out.  So, digital gold, I think, is the most constructive narrative.

But in addition to that, you look at gold at roughly $10-plus trillion, I think it's also the most constructive narrative for the success of Bitcoin, not just for potential affluent American investors.  If we get to $10 trillion as a market cap on Bitcoin, or even half of that, I think a lot of that starts to fall into place.  Yes, Bitcoin's got battles that it wants to fight, but those battles go a lot differently at $250,000 per BTC.

Peter McCormack: Is that because, somebody was explaining to me once that there's some investors who can't invest in Bitcoin because the market isn't just big enough?

Eric Weiss: I'm not sure.  Maybe at the nation state level, some might think that, but I don't think so.  I mean, Saylor's bought, what, $4 billion worth of the stuff.  I think it's big enough.

Peter McCormack: Who was telling us that; do you remember that?

Danny Knowles: I remember the conversation.  Someone was talking about a trillion-dollar market cap being some sort of limit, but I can't remember who it was.

Peter McCormack: Yeah, it might have been Travis Kling.

Eric Weiss: No, I think it's big enough for anybody that wants to invest.  What I'm surprised hasn't happened is, because it's so thinly traded relative to other stuff on a dollar basis, I'm surprised that some nation state, sovereign wealth fund, massive hedge fund has not come in and said, "Shit, I can accumulate a few billion dollars' worth of this stuff on the DL, dollar cost, set a TWAP, time-weighted, and just buy, buy, buy every second for a month and accumulate a bunch of it.  And then, you can actually drive the price up.

If the Saudis did that, if they bought $10 billion worth of Bitcoin, $50 billion worth of Bitcoin, over the course of a couple of months, and then they announced, "We're going to price oil in Bitcoin", or something, the price of Bitcoin would go up 10X.  If a nation state, if a Turkey who is have all these issues were to print a bunch of Turkish lira and buy a couple of billion dollars' worth of Bitcoin, and then announce something positive in some way, "We're backing our currency with Bitcoin [or] we're doing something else with Bitcoin", boom, you'd get this massive self-fulfilling prophecy on an investment. 

Even a hedge fund.  A Bill Ackman could say, "I bought $5 billion worth of Bitcoin", and then announce it after the fact, and people will go, "Holy shit, Bill Ackman bought $5 billion worth of Bitcoin", and anybody who is short it would cover their short and a whole bunch of other people would go long.  It's not a security, so you can do that without it being a securities' violation or fraud.  So, there's just tremendous opportunity for some big player to do something like that.

Peter McCormack: And these people phoning you and perhaps they're sat there with their son or grandson saying, "I've heard about this", they're tracking the cultural phenomenon that is Bitcoin, they understand, what kind of pushback are you getting; what are the things they are asking?

Eric Weiss: Initially, it was mostly the regulatory stuff; that was the big deal.

Peter McCormack: Really?

Eric Weiss: We live, eat and breathe this stuff every day.  They don't know about Lummis and Gillebrand and the Bill; they don't know about the President's Executive Memorandum, ordering people to regulate this pragmatically; they're not aware of these things.  They might still have these misconceptions that this is going to get outlawed, and you just have to update them on, "Well, here's where we really are.  We have bipartisan support.  How many other things have you heard of in the United States that actually have bipartisan support?  Not a lot".

Peter McCormack: Yeah, so that's been on my mind a lot recently.  If you want to cover Bitcoin from the angle of conservative politics, there's a lot of people out there you can talk to.  And if you want to cover it from a libertarian angle, there's a lot of people who you can talk to.  On the more progressive, liberal, left side, there aren't so many people, and we're actively trying to pursue people to talk about it from that side.  I think it's really important that it is a non-partisan issue.

I think what Senator Gillebrand and Senator Lummis did was incredible, and big props to them for that.  We've got a guy coming down in the next couple of days who's working on a book called The Progressive Case for Bitcoin, and we've gone through the original structure with him, and it's fantastic.  He's approaching all the issues that progressives care about, and he's shining a Bitcoin lens on that.  And, rather than getting into the fights of criticising people for their political beliefs, actually we can get this more proactive space where we can start actually saying, "Well, if you care about this, this is what Bitcoin can do for wealth inequality, or the wealth gap; or, this is what it can do to support climate change issues".  There's all the issues that we can deal with.

I think what that does is, it stops us fighting over our differences and start trying to empathise with our differences, and use Bitcoin as that kind of tool to bring people together.

Eric Weiss: I think the case for the progressives and the liberal left is by far the strongest case that Bitcoin has to make.  I think that you've got a tremendous percentage of this country, as well as the world, that is unbanked.  And to be able to have those people ostensibly be banked just by having a smartphone, which they already have, is pretty remarkable.

Take it to the next level, the fact that they might be banked and be able to hold their wealth in something like Bitcoin that's not going to get crushed by inflation, like the dollar would, now you're narrowing that wealth gap a little, because if you're in that upper class, that asset-owning class of people, inflation is bad, but it's not that bad, because you own assets, real estate, stocks, other things that are inflating with this inflation; you're getting that asset inflation benefit.  But if you're living paycheque to paycheque, you literally cannot afford the gas and the groceries, and you don't have the benefit of those assets inflating to offset that.

So, the fact that they could be holding Bitcoin on their smartphone in kind of a savings account, and then in the same simple wallet, when they want to transact, swap into a stablecoin or a USDC or whatever to do a transaction, that could really, really help them in multiple ways.  Number one, they could save, because now they have a bank; and number two, they can fight inflation.  So, I think the use case is really extraordinary.

Peter McCormack: Yeah, we had Avik Roy on the show from FREOPP.  Do you know Avik?

Eric Weiss: I don't know him personally, but yeah.

Peter McCormack: I think you'd get on well with him.  We made a show recently with him, because they wrote a piece covering the compounding affects of inflation on the poor; and even at 2%, the traditionally targeted 2% government inflation, it has a compounding impact on the poor.  And actually, didn't he get to the point of like almost anything above zero inflation…?

Danny Knowles: Yeah, and he was really getting into how the impact of inflation is way outsized for the poor in society; it impacts them the most.

Eric Weiss: Without a doubt.  That compounding effect is so insanely dramatic.

Peter McCormack: Yeah, and it's not just assets, but it's also to do with wage rises, because at the lower end of the pay scale, where pay is often driven by minimum wage, and having significant changes to legislated minimum wage is quite difficult; but also, if it's minimum wage that's set within the structure of a company, it's a lot harder to change that.

We have it in the UK at the moment.  So, there's lots of strikes at the moment, the nurses historically strike, the train drivers are striking, the pilots are starting to strike, because they all want a rise in their wages.  Now, a very small rise for one is a huge increase in the costs for the whole business at once.  So, that was another point on that.

I am with you on that.  One of the things, though, that I think makes a lot of these stories difficult, and I think it's an even harder story for the poor, is the price volatility, and I do wrestle with this, because you and I can buy Bitcoin and we hopefully have an income elsewhere of other savings.  If it's volatile, yes, it's difficult for us, but at the same time we still have income we can rely on for our day-to-day.

Eric Weiss: We can ride it out if we need to.

Peter McCormack: Yeah, we can ride it out.  But other people maybe can't ride it out.  Some people, as you say, live paycheque to paycheque; can they really adopt Bitcoin?  Can they really use it as their standard?  Can they really afford to maybe be hit with a 25% dip one week?  That is one area I've not solved, and I've not squared that circle.  And I've struggled with the idea that actually, could we potentially, because of that, actually be creating a Bitcoin wealth gap?

Eric Weiss: I think that if you're truly living paycheque to paycheque and you have to spend everything that comes in to make it day-to-day, then you can't save anything.  But if you're into the point where you can save a little, I do think it makes sense to save some in Bitcoin, because no matter what you're saving in, you're facing certain death with the dollar, or any other currency you want to pick on the planet, any other fiat currency.

History doesn't lie, and you can go back 100 years, and your $100,000 50 years ago would have gone down by -- I mean, it's almost, not worthless, but it's pretty darn close today.  I mean, I know you've interviewed Saylor a couple of times and you've been to that house --

Peter McCormack: Yeah, I've heard this story.

Eric Weiss: Yeah.  I mean, that house sold for $100,000 in the 1920s or something, I think.  And I mean, that house is worth --

Peter McCormack: A lot more now!

Eric Weiss: -- a lot more now.  But if you think about it, the way it clicks for some people is, if the woman that owned that house would have said, "I want to give this money to my great-great-grandchildren", and she sold the house and put the $90,000-something in a safe deposit box, those kids would get $90,000 today.  If she just had the house and passed on the house, that house would be worth many, many tens of millions of dollars.  And so, there's your inflation; that is inflation.  $90,000 doesn't buy you shit relative to the appreciation of that house.

Peter McCormack: How do you deal with explaining the volatility to the higher-net-worth individuals who want to invest the potential that they might put a few hundred thousand, maybe a few million, into Bitcoin and they could have a chance of a 50% haircut over the next year; how do you deal with explaining that to people?

Eric Weiss: This is emerging technology.  I think one of the best examples is Amazon.  So, from the time that Amazon became a publicly-traded company, it had to grow, had an IPO, so it wasn't truly its infancy; but from the time it was a publicly-traded company, I think six times it lost 80% of its value as a stock, and one of those six was more than 90%.  So, there is volatility in technology adoption and valuation, and we're going through that, we're going to continue going through some of that.  But in the longer term, I think that we're going to see a very clear, as we do now really, a very clear up and to the right trajectory on price.

Peter McCormack: All right, I want to go back to that thing a moment ago where you talked about the dollar.  You say, "It's almost facing certain death".  This week, we saw dollar/euro hit parity, actually dip below it.  I think it was 0.1% below, which is kind of interesting.

Eric Weiss: Yeah, I saw that.

Peter McCormack: Now, this is something you can probably explain to me that I don't understand, but somebody was talking about this on Twitter and said, "There is consequence of this.  This is going to mean the US is going to have to print more money", and I was like, "Why is that?" and there are global implications for not only the countries in Europe, but there's actual implications in the US for having such a high-value currency.

Eric Weiss: Yeah, it can potentially hurt US business pretty dramatically.

Peter McCormack: Is that with exports?

Eric Weiss: With exports, yeah.  US company exports become that much more expensive and unaffordable to folks buying in euros.  They buy less, the companies sell less, they suffer, it hits through that way.  So, I think that's the big downside.  But I think the dollar is having a good run right now, an epic run, but Charlie Munger, who's about as well-respected a financial guy as there is, not a big fan of us, by the way --

Peter McCormack: Rat poison.

Eric Weiss: Rat poison, right, double rat, rat poison squared, or whatever.  But there was a video clip of him from not even a month ago, where he said that your basic assumption, talking about the US dollar, has to be that the currency is going to zero.  That's really strong language from someone who measures their words pretty carefully.  So, yes, the dollar's having a good run here.  In the long run, the US dollar faces serious challenges from the money printing, in my opinion; I agree with Charlie on that.

Peter McCormack: Does it worry you?

Eric Weiss: I've got more immediate worries!  I'm not sure I'll live long enough to see it be a thing, and I don't have any children.  So, not being completely selfish, but no, there's shorter-term stuff that I focus on, and I feel like it's best to spend your time worrying about things you have some kind of influence or control over.

Peter McCormack: Like Bitcoin?

Eric Weiss: Like Bitcoin, like just other stuff in general, educating people on this stuff.  I don't know that the outcome is avoidable; it may be inevitable; but awareness is important.  The worst thing would be to be a victim of something like that and have not seen it coming, or not know.  So to the extent that you can inform people, educate people, "This is a likely possible scenario, behave accordingly", people can take it upon themselves to work with solutions that they think might help.

Peter McCormack: But even with that, I mean me and Danny were talking about this before, I was like, "Well, how do you prepare for this?"  If you know it's coming, a year ago, I could have transferred my pounds to dollars, and I would have hedged UK inflation with that.  But I didn't know this was going to happen.  I could have put more money into Bitcoin and Bitcoin's dropped; I could have put money into equities, equities have dropped; I could have put money into housing, which seems to be the one that hasn't dropped yet, but there's a lot of things pointing at the housing market.

Eric Weiss: That's dropping, yeah, that's dropping.

Peter McCormack: So, it feels like everything is dropping; what do you do?  I don't know what to do.  I mean, I have some Bitcoin and I have a property, but I don't actually know what to do here, and I do worry.  I do have children and I do worry for them, and what does the collapse of a currency, or many currencies around the world mean?

Eric Weiss: I can tell you, the solution with how to deal with a recession or depression is not what Warren Buffet said.

Peter McCormack: What did he say?

Eric Weiss: He said, "You've got to be really great at what you do", which is a total copout and just a ridiculous thing for someone like that to say.  If you're in Venezuela, I don't care how good a cardiologist you are, it's not going to make a fuck of difference when the currency goes to zero.

Peter McCormack: And I know that for a fact.  I went there and I met a guy who was a university professor, and he just explained to me about how his entire savings just evaporated.

Eric Weiss: Right.  So, being great at something is not the solution.  There are no easy answers, which is why Buffet gave such a crappy answer.  It's not because he's not intelligent, it's because a better answer didn't come to his mind.  I think it's got to be on the investment side.  First, you've got to be aware of the fact that it's happening.  Like you just said, "If I'd known, I could have done XYZ", but you have to know.  So, paying attention, being informed, and maybe it's just a mass psychosis of all of these things saying, "Shit, we need a solution to this".  

There is no solution, and it's collectively, maybe even to some degree, self-fulfilling prophecy, or positive reinforcement loop, where people say, "Something like Bitcoin is the solution", and then therefore it becomes the solution, because the world believes it is.

Peter McCormack: So, one of your lifeboats is Bitcoin!

Eric Weiss: It is my largest lifeboat!  But it's like the analogy Saylor gave, "Would you rather be in a little lifeboat on a stormy sea", which is what we are, "or do you want to be on that really big ship with a massive hole in it that is definitively going to sink?"; so certain death, or a little bit of risk, maybe a lot of risk.

Peter McCormack: I'll take the little bit of risk.

Eric Weiss: I'll take a lot of risk!

Peter McCormack: You seem to have pretty good conviction, which is awesome.

Eric Weiss: With a high degree of humility.

Peter McCormack: With a high degree of humility!  Is there anything within Bitcoin that you question yourself?  I mean, I know you've been in since about 2013, you said at the conference, you've seen some narratives come and go, people come and go, ideas come and go, prices go up and down.  Is there anything at the moment you're questioning?

Eric Weiss: Yeah, so I chatted with Charlie Shrem about this a little bit, and one of the things that we agree on, which is certainly not popular among Bitcoin maximalists, is that the Event Horizon has not passed.  We are still in the hopeful and experimental stage, and one could call it conviction to think that it's an absolute certainty of success; and another could call it maybe being a little bit irrational, or wishful thinking.

I think I'm hopeful, I'm constructively hopeful, and I don't think there's a better solution, and I think it's important in life to stand for something.  And if you're going to stand for something, for me you want to stand for something that's morally and ethically sound.  That's the most important thing to me about Bitcoin, is that it's morally and ethically sound.  No rulers, no one's disproportionately advantaged, or disadvantaged, for that matter.

So, I think if you've got to cheer for something and stand for something, for me it's Bitcoin, and I'm hopeful that it works out.  But I'm not going to say that hyperbitcoinisation is inevitable.

Peter McCormack: Right.  Well, listen, the last thing I want to talk to you about is, last summer I was in El Salvador and I played chess with Jack Mallers.

Eric Weiss: Don't even tell me that you beat him, I'll be super-impressed!

Peter McCormack: Come on, man, I didn't beat him!  He's so good that we had a game, he said, "I'll tell you what, I'll turn my back around from the board and we'll play and I'll just tell you where to push my pieces.  I was like, "I'm not going that far".  So, there is chess where you can sit down and play with somebody.  Me and Danny can have a game, and as we go along, we'll try things and figure things out; there's no real strategy.  And then there's Jack Mallers' chess where offensively, he knows his next 20 moves; and defensively, he knows every move I make, what he's going to do for that.

So, his first almost 20 moves on the board are all automatic.  He knows every scenario mapped out.  I think I held on for about 20 moves where I was like, "I'm in this game, I'm in it, I'm responding to him, I'm seeing every scenario".  I miss one thing, I'm done, I'm dead.

Eric Weiss: Yeah.  The even more amazing thing about doing it with his back like that is, he has to remember A through H, 1 through 8 grid, where every piece on the board is.  So, he has to know that his knight is on H3 in order to tell you to move it to another square.  That's a level of visualisation I don't have!

Peter McCormack: No, it blew me away.  Also what blew me away was for him to relax, he watches people play chess online.

Eric Weiss: Interesting.

Peter McCormack: He just sits there and watches these games, and then he plays speed chess.  For me, it was -- I was watching something and realising, I will never be able to do that.

Eric Weiss: I don't think that's true.

Peter McCormack: No, I will never have the dedication to do that.

Eric Weiss: Maybe the dedication, but if you wanted to, if you had the bandwidth and the time and the desire, I think chess is something that's learned.  By the way, Saylor and I do the same thing.  We'll watch chess stuff online, we'll watch Magnus Carlsen play Blitz, some people on the phone, while it will be a three-minute game against another Grand Master, and he's talking to his buddy and drinking a beer and still crushing the dude.  And he'll know, three moves before, that he's already got it won, or that he's in trouble, and we just sit there and we're like…

Peter McCormack: Do you know this Magnus Carlsen?

Danny Knowles: I mean, I know the name, yeah.

Peter McCormack: So, there's a documentary about him that's worth watching, and there's this one time, I'm pretty sure it's him, where he's got his back turned, like Jack, but playing like ten people at once.  So, there's ten boards laid out, and he plays all of them essentially blindfolded, move by move on each board, and I think he wins every game.

Danny Knowles: That's madness.

Peter McCormack: I think there's some debate about it, but I think he's probably the best ever.

Eric Weiss: Yeah, that seems to be the consensus.

Peter McCormack: Yeah, and actually he's kind of cool.  It's definitely worth watching it.

Eric Weiss: He is.  The great thing about chess though is, the world of Bitcoin is so all-consuming and we don't have the benefit of any holidays or weekends, so it can be very challenging to turn your brain off from it completely.  Chess has been one thing that requires complete attention.  Like you said, one mistake and you're dust.  So, it's great in that sense.  That's why Saylor and I play a lot, because there's a period of hours there, depending on how long we play; sometimes it's pretty long.

Peter McCormack: Phone away.

Eric Weiss: Yeah, you're just phone away, you don't care and you just disappear for a second.

Peter McCormack: Well, Danny came up with an idea.  Danny wants to film you and Saylor playing a game of chess, talking about Bitcoin!

Eric Weiss: You can film us talking about Bitcoin.  I think that's just something for us!  Neither one of us are Jack Mallers' level, let's put it that way.  We're decent enough players, but not to the point that we're going to be putting it on display.  That said, I don't think you're going to get Saylor to do much other than Bitcoin-related!

Peter McCormack: Maybe a Bitcoin chess game?

Eric Weiss: A Bitcoin chess game!  But it's all-focusing.  We can't talk about Bitcoin when we're playing chess.

Peter McCormack: Who wins the most?

Eric Weiss: He wins the most, but I win probably 30%, 40% of the time.  And when we first started, I'm not sure if I told this before, but I don't know if you saw the outdoor board when you were there, it's kind of a big outdoor board.  And the first time we played, I really didn't -- I played when I was a kid, didn't really know or remember the rules, and I moved my pawn and he kicked, literally kicked my pawn off the board.  And I go, "What the fuck?" and our friend, Ray, looks at me and just shakes his head like, "Yeah, it's a thing".  He goes, "En passant", and I was like, "What the fuck is that?"

Saylor doesn't give a shit that I didn't know the rule.  He was like, "Sorry, dude, you lose, I'm doing my thing".  I was like, "All right", after that I was like, "Fuck this, I'm going to learn chess".  I found a teacher, an international master in Siberia, and I took 30 hours of chess lessons on Skype and learned how to play opening strategies, things like that, how to try to calculate stuff, and just had some basis.  Now, we're at the point where it's good, it's fun, it's competitive; the outcome's uncertain between us and I don't think either one of us wants to get to a point where it's not fun to play the other.

Peter McCormack: So, you're closing the gap?

Eric Weiss: I'm closing the gap.  It's fine where it is now.  I wouldn't mind improving a little bit, but it's fine where it is now.  At least the outcome's uncertain when we play.

Peter McCormack: Oh, man, well I would love to play more if I had time.  Do you know what, I tried to get my son into playing it, and it's quite interesting when you sit down with somebody who's never played chess before, to get them to that starting point of just remembering what each piece can do and the threats.  It takes some time.

Eric Weiss: It does.

Peter McCormack: It was really interesting to do with him, but I should encourage him to get back into it.  Anyway, Eric, great to talk to you, man.  Thank you for coming on, appreciate having you on here.  Tell people where to find out more about your fund and what you're up to.

Eric Weiss: Yeah, you can find out more about my fund and me, the best is probably Twitter.  It's, no wait, what is it?

Peter McCormack: You should know!

Eric Weiss: I don't even know!  It's @Eric_BIGfund, I think.

Peter McCormack: We'll stick it in the show notes.  Danny will find it.

Eric Weiss: Yeah, Eric_BIGfund.  Thanks so much for having me.

Peter McCormack: No, man, any time.  Next time we're here in Miami, I'll bring a chessboard, we'll have a game.

Eric Weiss: Let's do it.

Peter McCormack: All right, man, ciao.

Eric Weiss: Cheers, bye.  Appreciate it.