Original text: Bankless
Organized by: Yuliya, PANews
Searching for the next 'Bitcoin' in the cryptocurrency market is the dream of many investors. As one of the most influential investment institutions in the industry, Pantera Capital bought Bitcoin at $65 in 2013, and to date, the fund's returns have exceeded 100 times. In this episode of Bankless, founder Dan Morehead shares how he identifies assets with asymmetric return potential and his deep thoughts on the future of the cryptocurrency market, with PANews providing a written compilation of this podcast.
Bitcoin investment in 2013
Bankless: Let's talk about that famous email from July 5, 2013. In it, you suggested buying Bitcoin at $65 and planned to invest 30,000 BTC. Can you share your thoughts at that time?
Dan Morehead:
This goes back to March 2013. Two of my friends, Pete Briger (co-CEO of Fortress) and Mike Novogratz (founder of Galaxy Digital), reached out to discuss Bitcoin. (We all came from Goldman Sachs, and they later founded Fortress Investment Group.) Actually, before this, my brother had introduced Bitcoin to me, but I didn't pay much attention.
A brief meeting with Pete and Mike unexpectedly turned into a four-hour in-depth discussion. The idea of Bitcoin was eye-opening for me. Later, I accepted Pete's invitation and worked in their office for a full six years.
Bankless: You mentioned this is an asymmetric trading opportunity. Can you elaborate?
Dan Morehead：
When I was doing macro trading at Tiger Management, I learned one thing: to look for opportunities where the potential rewards far exceed the risks. While there is always risk in investing, the key is to find those that could yield massive returns.
For example, before investing in Bitcoin, we held Tesla stock. Interestingly, in 2013, the prices of Tesla and Bitcoin were roughly similar. Ultimately, we made a bold decision—selling all Tesla stock and fully betting on Bitcoin.
Bankless: You mentioned that Bitcoin is like a 'chain killer.' What does that mean?
Dan Morehead：
In the tech field, we often use the term 'category killer' to describe disruptive innovations. Bitcoin takes it a step further; it is a 'chain killer' because it disrupts multiple industries, not just one. But this process is gradual.
For example, while blockchain technology has shown advantages in certain areas, it may take another decade to truly challenge payment giants like Visa and Mastercard. Just like the internet, which is now 50 years old, Bitcoin is still in its 'teenage' stage.
Bankless: After so many years of market ups and downs, has your view on Bitcoin changed?
Dan Morehead：
While Bitcoin has already seen an impressive increase, I believe it still represents an asymmetric opportunity. We have experienced three drops exceeding 85%, but each time, it has reached new highs. In traditional investment fields, it is hard to find an asset like this.
This is also why I have focused almost all my energy on the crypto market since 2013. We are still in the early stages of this financial revolution, and there are still great opportunities ahead.
Asymmetric investment opportunities
Bankless: From 2013 to 2015, you purchased 2% of the global Bitcoin supply. Many investors hope to buy Bitcoin early and identify these asymmetric return opportunities. How did you establish that belief? Some might say it was just luck; what do you think?
Dan Morehead：
I resonate with you using the term 'pattern,' because it really is a form of pattern recognition. I have worked on Wall Street for 36 years, starting in 1987, experiencing the savings and loan crisis, the financial crisis, investing in commodities in the 80s, and emerging markets in the 90s. These experiences give me an advantage when investing in cryptocurrencies compared to younger investors, as I feel I have seen similar situations before.
Let me give a few examples:
When I was at Goldman, I was involved in the GSCI (Goldman Sachs Commodity Index), and now commodities have become a recognized asset class.
In the 90s, I invested in emerging markets, and now emerging markets are also a standard asset class.
In 2006-2007, Pantera launched the first Western fund investing in Gulf Cooperation Council countries (UAE and Saudi Arabia). At that time, many people thought it was crazy, but now the Middle East has become a completely normal investment destination.
I invested in Russia during Gorbachev's time, participating in the privatization of Gazprom.
Bankless: So you've been looking for these cutting-edge investment opportunities?
Dan Morehead：
Yes, we have been looking for those non-mainstream or unconventional opportunities. In 2000, we even set up a fund to invest in local farmlands after Argentina's second-to-last crisis.
Speaking of blockchain, it's interesting that it is still regarded as a frontier asset class. This is unusual—an asset with a market capitalization of $3 trillion is still viewed as a frontier asset, which I have never seen before.
In the investment memos I wrote in the following months, I listed various applications of blockchain:
Competing with gold (which is already happening).
In the future, it will compete with Visa and Mastercard.
Competing with remittance companies, which charge high fees to immigrants, while Bitcoin can easily and cheaply complete cross-border transfers.
When you add up all these use cases, you will find that the ultimate value of cryptocurrencies is far greater than today's levels. This is why we are so optimistic about this field.
Experience of buying Bitcoin in 2013
Bankless: Can you describe what the experience of buying a large amount of Bitcoin in 2013 was like? I remember when I first bought cryptocurrency in 2014, it felt very unreliable; I had to open accounts on multiple exchanges, and the websites looked very rudimentary. For many investors, these are the reasons that deter them. How did you build confidence in this environment?
Dan Morehead：
The trading environment back then was indeed quite primitive. For example, platforms like localbitcoins.com required face-to-face transactions, which posed too much risk, so we never considered this method. Ironically, this was one of the most mainstream trading methods at the time.
Initially, we planned to rely on a large publicly traded company to operate this fund. We did extensive system testing, but that company eventually pulled out. At that time, Bitcoin had already dropped 50%, and we had to quickly pivot to operate independently under the Pantera brand.
Bankless: What difficulties did you encounter during the actual purchasing process?
Dan Morehead：
I remember when we began to act over the Independence Day weekend; we first tried a small platform (which later turned out to be Coinbase). We found that they could only buy $300 worth of coins per day, while we wanted to invest millions of dollars. At that time, Coinbase had only one employee, and it took four days to respond to our email. At that rate, it would take nearly 20 years to complete our plan.
Finally, we turned to Bitstamp in Slovenia. When processing a wire transfer at the bank, the branch manager asked in detail what Bitcoin is, and the entire process took an hour to explain. To be honest, I was worried about the safety of the funds at that time. Interestingly, we later became major shareholders of Bitstamp, and I served as chairman of Bitstamp for 6-8 years (PANews note: LinkedIn information shows he served as chairman of Bitstamp from 2014 to 2018).
Bankless: You mentioned that you visited many exchanges, including Mt. Gox?
Dan Morehead：
At that time, I thought it was important to personally inspect exchanges. I flew to Tokyo to visit the two heads of Mt. Gox. Although I only stayed for two days, their performance made me uneasy. Their explanations lacked logic, giving the impression of either incompetence or fraud. Ultimately, we decided not to work with them, and that decision has proven correct.
The adoption of institutional investors
Bankless: You mentioned that you held 170 investor meetings but ultimately raised only $1 million. At that time, Bitcoin was still viewed as a 'mysterious internet currency' or even a 'drug trading tool.' How did you present it to investors? How did those meetings go?
Dan Morehead：
If you want to achieve excess returns, you cannot follow the mainstream; you cannot invest in projects that 20 analysts from every Wall Street firm are tracking. That's why we emphasize in our investor letters to 'make alternative investments more alternative.'
This idea of mine stems from my hedge fund experience starting in 1991. At that time, hedge funds were truly alternative investments, but now they have become a mainstream industry with a scale of several trillion dollars, and almost all fund strategies are quite similar. This experience makes me more convinced that blockchain should be an important part of an investment portfolio because it still retains its true alternative characteristics.
Interestingly, the 170 meetings you mentioned actually took place in 2016, three years later than 2013. That was during the 'crypto winter,' when Bitcoin's price plummeted by 90%, and the market generally believed 'it's the blockchain that matters, not Bitcoin,' with almost no one optimistic about public chains and Bitcoin as an asset.
Bankless: How many times has this market downturn occurred?
Dan Morehead：
Bitcoin has gone through three cycles of an 85% drop. In the first cycle, we started investing at $65, the price rose to $1,000, and then it crashed, remaining sluggish from 2014 to 2017.
During this difficult time, even though almost no one was paying attention to this field, our team continued to work every day. The fundraising situation in 2016 is quite telling—170 meetings ultimately raised only $1 million, resulting in only $170,000 in management fee income for the entire year.
Even today, although our fundraising scale has increased, to be honest, it feels like we are still in the early stages. Institutional investors remain very cautious about cryptocurrencies; most institutions either have no allocation at all or only a very small portion.
Bankless: Has your pitch for cryptocurrencies and blockchain changed from 2013, 2016, and now?
Dan Morehead：
My core argument has always been consistent, possibly because these ideas have stood the test of time. When I explain Bitcoin's fixed supply characteristic to people, and how it won't be diluted by fiat currency inflation, I often hear the question, 'Isn't this just like gold?' But my answer is: it's more like investing in gold in 1000 BC. Although gold has indeed served humanity for 5000 years, in the digital age, we need a whole new version—digital gold.
This is precisely why I have maintained my enthusiasm from 2013 to the present: I firmly believe that Bitcoin will gradually replace traditional gold, reform the cross-border remittance system, and revolutionize the payment systems of Visa and Mastercard. Of course, this process will take time, possibly up to 20 years, rather than happening overnight.
I am so convinced because the development of blockchain technology is an unstoppable trend. While the time to realize it may take longer than expected, and some startups may run out of money in the process, some changes are inevitable: five years from now, it's impossible for migrant workers to pay a month's salary for cross-border remittances, nor can one continue to pay a 3% fee for using credit cards.
I can't predict whether this shift will take 10 years or 1-2 years. But precisely because I am convinced that this change will inevitably happen, I will continue to hold and invest in this field.
Global adoption of cryptocurrencies.
Bankless: Many people see Bitcoin doubling this year and feel like they have 'missed out,' thinking it's too late to buy now. What do you think about the upside potential of Bitcoin and the entire crypto asset class? Are we currently at a 20% or 50% global adoption stage?
Dan Morehead：
In any ordinary asset class, if an asset doubles in a year, you really shouldn't buy it, as this might indicate overvaluation. But Bitcoin is different. The annual compound growth rate of the Pantera Bitcoin fund over 11 years is 89%, meaning it doubles on average each year. A simple investment logic is: if it doubles again, you'll make 100%.
However, there is a very important investment principle: your investment amount should be controlled within a range that even if it loses 85%, it won't affect family stability. Simply put, don't bet your marriage on this asset class. As long as you can control the scale of your investment at this level, you can hold it long-term with peace of mind.
Bankless: So how much upside do you think Bitcoin has left?
Dan Morehead：
Bitcoin has indeed reached a considerable scale, and we cannot expect to see 1000x growth again, as that would consume all the energy on Earth. However, a tenfold increase to reach a market cap of $15 trillion is completely possible compared to the total of $500 trillion in global financial assets.
I won't predict what will happen 50 years from now, but within our current investment cycle, say a 5-10 year time frame, it's completely reasonable for Bitcoin to increase tenfold from its current position; it wouldn't seem crazy or overvalued.
Bankless: What stage are we at in terms of adoption?
Dan Morehead：
I think we are still in the early stages. Statistically, about 300 million people worldwide own cryptocurrencies. Although this number is difficult to quantify accurately, many holders may not have started using it in practice.
Let me analyze from the perspective of technological adoption: using Bitcoin only requires a smartphone, and currently, there are 4 billion people with smartphones worldwide. Some innovative projects, like KaiOS that we are in contact with, are working to bring this functionality to feature phones. Assuming that in the next 10 years, smartphone users grow from 4 billion to 5 billion, most of these users will likely use digital currencies on their phones.
Think about it: half of the people share photos on Facebook. If sharing photos is so popular, digital currencies will be even more so. I think it's completely imaginable for 3 billion people to use cryptocurrencies in around 10 years. Once they start using it, more application scenarios will emerge, and people will use it more in their lives.
Overall, I estimate that we have only completed about 15% of this cryptocurrency blockchain revolution. Not only are the number of participants still relatively small, but existing users have not yet fully tapped into its potential.
Bitcoin's 'escape velocity.'
Bankless: In 2013, people were worried that the government would crack down on Bitcoin, but by 2024, the situation is completely different. Has Bitcoin reached 'escape velocity'?
Dan Morehead：
Bitcoin has indeed reached escape velocity and will not regress.
In 2013, media coverage was largely negative, focusing on incidents like Silk Road, ignoring the positive impacts. While the US had previously banned gold, now 50 million Americans hold cryptocurrencies.
Bankless: What impact does this change have on the political landscape?
Dan Morehead：
This involves an interesting phenomenon. Most Americans are under 40 years old, but over the past three years, 90% of the wealth created by the Federal Reserve and Congress' monetary policy has flowed to individuals over 70. This is actually a huge wealth transfer from the younger generation to the older generation.
And these young people love cryptocurrencies, and they will vote. We have observed a remarkable change in the voting behavior of voters under 40 compared to the 2020 presidential election. The term 'young Republicans' hasn't been heard for many years.
Trump expressed strong support for cryptocurrencies this May, and all the cabinet members he nominated are very supportive of cryptocurrencies. He even wants to establish a cryptocurrency envoy. I believe that when someone writes a doctoral thesis about this election in the future, they'll find that cryptocurrency was a key factor in changing the election outcome.
Bankless: Is this change also reflected at the congressional level?
Dan Morehead：
Yes, many anti-crypto senators and congressmen have lost their seats. According to what I've read:
House: 274 in favor, 122 against.
Senate: 20 in favor, 12 against.
I predict that in four years, those congresspeople opposing cryptocurrencies may not remain in Congress because that is simply not a wise position. They will either change their views or may lose their seats in the 2026 midterms or the 2028 general election.
Seeing the Democratic Party shift to an anti-crypto stance is strange. I keep thinking that maybe I missed some strategic consideration because it clearly seems like a lose-lose strategy.
The US government's change in attitude towards cryptocurrencies.
Bankless: In 2025, we will see the first administrative departments and Congress supporting cryptocurrencies. After experiencing SEC crackdowns during Biden's administration, what impact do you think a pro-crypto White House will have? Especially regarding the establishment of strategic Bitcoin reserves?
Dan Morehead：
The executive branch can directly decide to stop selling seized Bitcoin, which is within its authority. We were involved in the first Bitcoin auction by the Marshals Service in 2013-2014.
The US government now holds 1% of the global Bitcoin supply. If it stops selling, it will have a significant impact. Because the actual circulation of Bitcoin is small, many holders never sell.
Bankless: Senator Lummis mentioned accumulating a reserve of 1 million Bitcoins. Do you think it's feasible to retain at least the current 200,000 Bitcoins and establish a custody structure?
Dan Morehead：
This is likely to happen. Stopping government transfers and sales of Bitcoin would have a positive impact on the market. When you remove a seller, it will naturally help prices rise.
As the issuer of the world's reserve currency, the US cannot hold foreign currencies like other countries. The practice of storing gold in Fort Knox has become outdated. The US should increase its holdings of digital gold and even consider selling traditional gold.
Singapore has held cryptocurrencies for 5-7 years; this is not an aggressive idea.
Bankless: This issue seems to have become very partisan.
Dan Morehead：
Yes, it's strange. As Ro Khanna said, it’s like with phones—why turn it into a partisan issue? In fact, Democrats should support Bitcoin more because it represents the dreams of progressives.
Global Bitcoin reserve competition.
Bankless: Suppose Trump retains the current 200,000 Bitcoins (about 1% of the global total) and publicly announces it. China also has about 200,000 Bitcoins that have been seized. How do you think they will respond? Will other countries start hoarding secretly?
Dan Morehead：
A strategic Bitcoin arms race could last for 10 years. Both the US and China may maintain 1% of the global Bitcoin reserves.
It's ironic: why do countries competing with the US store their wealth in US dollars and US Treasury bonds? Under the US sanctions system, their transactions could be monitored.
For countries that are opposed to Western relations, storing part of their wealth in Bitcoin is an obvious choice. Neutral countries will do the same—just like using gold—because Bitcoin offers an alternative that does not rely on the dollar system.
Bankless: The stablecoin bill has received bipartisan support; can this help maintain the dollar's status as the world's reserve currency? Will these bills pass?
Dan Morehead：
As Bismarck said: 'There are two things you’d better not watch being made: laws and sausages.' I don't pay much attention to Congress because it's a machine that's hard to understand and influence.
Institutional adoption of cryptocurrencies
Bankless: In 2024, there were significant breakthroughs in institutional adoption, such as Larry Fink acknowledging that his view on Bitcoin in 2021 was wrong. ETF products have achieved remarkable success. Compared to 2022, when Mike Novogratz predicted a 'wave of institutional investors,' it has finally come to fruition. So what is the current level of institutional adoption? How far have we progressed?
Dan Morehead：
The industry has indeed experienced some significant setbacks:
The collapses of FTX, BlockFi, Celsius, and Terra Luna.
The discount issue with GBTC.
SEC lawsuits against companies like Coinbase and Ripple.
These events have indeed affected the enthusiasm of institutional participation. Imagine a public pension plan manager trying to propose investing in Bitcoin to the state legislature in such an environment.
But people may not realize how quickly things can change. If by 2025 we have a Congress, president, and at least neutral regulatory bodies supporting cryptocurrencies, everything could undergo a dramatic transformation. That is why you now see prices soaring and significant inflows into ETFs.
Regarding ETFs, this is indeed a significant breakthrough. We launched the first US crypto fund 11 years ago, initially as a Cayman hedge fund, because we thought it would take years to get ETF approval. Now it seems the wait has far exceeded expectations.
Bankless：Can you elaborate on the data regarding these inflows?
Dan Morehead：
Current inflow situation:
Bitcoin ETF: $35 billion net inflows.
Products like MicroStrategy's ETFs: $18 billion.
A total of over $50 billion has flowed into ETFs or similar products.
An interesting comparison:
During the same period, the net inflow of all global gold ETFs was zero.
Funds are shifting from traditional gold to digital gold (Bitcoin).
Bankless: While it's encouraging to see people like Larry Fink change their stance, institutions like Vanguard still do not allow ETFs or crypto assets in their ecosystem. So what is the actual level of institutional adoption now?
Dan Morehead：
Here's an interesting point: many people say Bitcoin is a bubble, but the median institutional hold is zero. How can it be a bubble? Most institutional investors, including insurance companies, pension funds, endowments, etc., have essentially zero direct investment in blockchain. They may have indirectly invested in some blockchain companies through certain comprehensive venture funds, but direct investment is almost nonexistent.
This is why I am so optimistic about the future. We are really just getting started. When you see institutions like the world's largest asset manager BlackRock publicly supporting it, having great blockchain teams, and firms like Fidelity that have been setting up blockchain since 2014, it's very helpful.
Many institutions used to use compliance as an excuse to say they couldn't invest in cryptocurrencies, but now institutions like BlackRock and Fidelity are selling highly regulated quality products, so that excuse no longer holds up. Even Vanguard's stance may become difficult to sustain as the market develops.
Bankless: Does it still sound like there's an opportunity to position crypto assets before institutional investors?
Dan Morehead：
That's right, this is completely applicable. There is indeed still an opportunity to get in before institutional investors.
The cyclicality of cryptocurrencies
Bankless: You have experienced multiple cycles, and now Bitcoin is hitting a new high of $100,000; we are clearly in a bull market. Do you think the cryptocurrency market will continue to follow a four-year cycle? Traditional views hold that this is related to Bitcoin halving, while others believe it relates to global liquidity. When fiat liquidity is abundant, cryptocurrencies enter bull markets and then peak and fall back. Will this four-year cycle pattern continue?
Dan Morehead：
Yes, I believe this cyclical pattern will continue.
Bankless: Is this your basic prediction? Do you not believe in the supercycle theory or the possibility of breaking this pattern?
Dan Morehead：
Let me explain through an interesting analogy. During my college years, a professor wrote the famous 'A Random Walk Down Wall Street,' explaining the theory that markets are always efficient. Buffett once said a profound statement: 'The difference between markets being always efficient and often efficient is worth $80 billion.'
My understanding of the halving cycle has changed:
Initially, I was also skeptical like many people—if everyone knows the halving is going to happen, then this event should already be fully priced in.
But after experiencing the halvings in 2013 and 2016, I am completely convinced of the validity of this pattern.
Why is halving so important? It starts with miner behavior:
Miners will sell almost all the Bitcoin they obtain to cover operating costs.
It's like the copper market—if it were announced that half the copper mines would close one day, copper prices would undoubtedly rise.
The halving of Bitcoin has this effect—every four years, production is halved, and when demand remains unchanged and supply is halved, prices will naturally increase.
However, cyclical characteristics are gradually evolving:
The amplitude of cyclical fluctuations is gradually decreasing. During the first halving, the reduced output accounted for 15% of the circulating supply at that time.
As the circulating supply increases, the impact of the next halving will drop to one-third of the original amount.
By the time of the last halving in 2136, the impact will be minimal.
Our data analysis shows a clear pattern:
The halving effect begins to manifest 400 days before the actual date.
Reaching the cycle peak 480 days after halving.
This pattern has maintained astonishing accuracy.
Two years ago, when Bitcoin was priced at $17,700, we predicted it would reach $28,000 at the time of the halving, and then reach $117,000 480 days after halving (next August), with the prediction of the lowest point being almost precise to the exact date.
During the last halving, we predicted the price for each month in 2020 on Twitter. We predicted it would reach $62,964 on August 15, 2020, and it indeed hit that exact number on that day.
Thus, I still believe that this cyclical pattern will continue, and I think we will experience a major bull market followed by a bear market. But the only difference is that after experiencing three 85% drops in the past 12 years, the next correction may only be 50% or 60%, at least for Bitcoin. Smaller coins may still experience greater volatility.
2025 Bull Market Outlook
Bankless: If we follow a four-year cycle pattern, does this mean that 2025 will be a bull market, followed by a downturn in 2026?
Dan Morehead：
Yes, that is my expectation. April 19 of this year is the halving time, and August 2025 should be the peak of this cycle.
Bankless: It feels like everything is heading in this direction, which seems too simple?
Dan Morehead：
I know it sounds a bit ridiculous, but we have been discussing this topic for 12 years. We have always predicted that the amplitude of fluctuations would gradually decrease; previous halving cycles had larger fluctuations, while this one would be relatively mild. Not just due to the halving factor, but also because the political and macroeconomic environment is creating favorable conditions for cryptocurrencies. Therefore, I am quite optimistic about 2025.
Bankless: What do you think about the macroeconomic situation? Will it have a positive or negative impact on cryptocurrencies? Does Bitcoin influence the macroeconomy or vice versa?
Dan Morehead：
Generally, we discuss the impact of macroeconomics on Bitcoin. From a macroeconomic perspective, I am skeptical about the possibility of the Federal Reserve cutting rates. In December 2021, the federal funds rate was zero, and the 10-year Treasury yield was 1.3%. At that time, I predicted both metrics would rise to 5% and remain there for years. To this day, I still hold that judgment.
Why? Look at the current economic situation:
The economy is thriving, and the crowded airports are the best proof of that.
The unemployment rate is at a historic low.
Wage inflation continues to rise.
The stock market continues to hit historical highs.
In such an economic environment, I think the views expecting the Federal Reserve to cut rates are unreasonable.
The actual federal funds rate is only 80 basis points higher than core inflation, which does not constitute a tightening. The historical average is 140 basis points higher, so it is currently only slightly tight.
More concerning is the fiscal situation:
During the most prosperous times, the US still had a $2 trillion deficit.
Even with full employment and various indicators hitting new highs, it still fails to achieve fiscal balance.
This suggests that once the economy turns, it may face even more severe problems.
Macroeconomic environment and cryptocurrency.
Bankless: What do the ongoing US deficits, money printing, and interest rate cut expectations mean? Do they signal that the prices of commodities and digital assets will rise?
Dan Morehead：
The US has developed a dependency on money printing. This trend existed before the pandemic, and after the pandemic, fiscal constraints have completely disappeared. For example, multiple direct cash subsidies to the public have directly led to inflation and rising prices.
The current fiscal situation is concerning:
The US is running record deficits even in the best economic times.
Interest expenses have exceeded military spending.
The government uses adjustable-rate financing, which increases future fiscal risks.
Interest rates are expected to remain at 5% or higher.
This means we will have to refinance all debts at increasingly higher interest rates, which will be very costly.
While I don't focus much on fiscal and macroeconomic research, one thing I'm sure of is that I would rather hold Bitcoin than US dollars.
Bankless: You mentioned commodities, which reminds me that gold, Bitcoin, the stock market, and real estate are all hitting new highs; how should we interpret this phenomenon?
Dan Morehead：
The key is to shift perspectives:
These assets are not really 'rising'; rather, fiat currency is depreciating.
Attention should be paid to Bitcoin's relative price against gold, stocks, real estate, etc.
The depreciation trend of the dollar can be clearly seen from the price ratios of various assets against the dollar.
Under the current fiscal situation, holding fiat currency lacks meaning. Even former cryptocurrency skeptic Ray Dalio has started to suggest holding gold and Bitcoin in response to potential debt crises.
This shift in perspective is important because money is essentially a consensus technology. The change in attitude among top investors indicates that the market's recognition of digital assets is increasing, and the consensus brought about by deep liquidity is crucial for the development of an emerging currency.
RWA tokenization trend
Bankless: RWA tokenization seems mainly aimed at institutions. Will all assets eventually go on-chain? Are we experiencing an S-curve development from stablecoins to government bonds, and then to stocks and bonds?
Dan Morehead：
This is indeed the 'killer application' that the blockchain field has been waiting for. While some early investments were premature, they are finally beginning to show results. Take stablecoins as an example; they provide new value to ordinary financial instruments on the blockchain. Projects like Ondo are opening the door to the US financial market for more people.
The significance of moving government bonds onto the blockchain is much greater than it appears on the surface. Most of the 8 billion people worldwide live outside the US; they all crave access to dollar assets and US Treasuries, but traditional channels make this difficult.
Even for American citizens, the existing system has significant issues. For example, it takes a year to transfer from Treasury Direct accounts to brokers, and this inefficiency precisely illustrates why we need blockchain technology.
Bankless: Wait, really? I had no idea this was happening.
Dan Morehead：
Yes, a stack of withdrawal applications is piled up at some government worker's desk, so high that it takes a year to transfer your 90-day Treasury bond from the government to Merrill Lynch. If anything perfectly demonstrates our need for blockchain and RWA tokenization, this is it. You think buying directly from the government is wiser, and yet your funds are locked for a year.
Another great example is Figure Markets, which has already processed $10 billion in mortgages on the blockchain. The traditional mortgage market takes 55 days from borrowing to final settlement, with many steps in between, each generating costs. Blockchain technology can significantly improve the efficiency of this process.
However, not all assets are suitable for tokenization. Products like hedge funds and private equity funds, which are aimed at qualified investors, already have a well-established operational model and do not urgently need to go on-chain.
But for assets like government bonds, blockchain truly offers an ideal solution. This not only allows more people to participate in investing, but it's also an opportunity for the US government to expand its financing channels. Through blockchain, they can more easily promote government bonds to global smartphone users, which benefits all parties.
The prospects of AI and cryptocurrency integration
Bankless: AI and cryptocurrencies are intersecting in unique ways. What are your thoughts on the intersection of cryptocurrency and AI? Are you following AI-related projects?
Dan Morehead：
The integration of blockchain and AI is inevitable. Fundamentally, AI has a huge impact on society, and decentralized, open AI is more beneficial for everyone than private control. We have already invested in some projects in this direction, such as decentralized AI projects like Sahara.
A noteworthy phenomenon is that existing AI models have digested almost all free internet content. Next-generation AI models will need to access that paid data, and blockchain happens to excel at providing incentive mechanisms to solve this problem.
Regarding the use of currencies by AI agents, they obviously cannot open accounts in traditional banking systems. When interacting between machine agents, they must use some form of digital currency, and programmable currencies (like Ethereum) seem to be the most natural choice. While some may explore solutions outside of blockchain, the solutions provided by blockchain are the most complete.
In the long run, AI seems unlikely to operate independently from blockchain. An important intersection has already emerged between these two fields, and in the next 5 to 10 years, we are likely to see further deep integration.
Searching for the next Bitcoin.
Bankless: Pantera's initial Bitcoin fund achieved a 130,000% return; is this a unique 'once-in-a-generation' return rate? Do you think investors will have similar opportunities in the coming decades?
Dan Morehead：
Blockchain technology is at a critical stage of development, and for young people, it represents a highly promising career development direction. Even if they ultimately choose to turn to traditional industries, the experience gained in the blockchain field will be a valuable career asset. This career choice has asymmetric return characteristics: great upside potential with controlled downside risks.
The current monetary policy and regulatory environment have created many disadvantages for the younger generation. High barriers to entry in the real estate market, inflationary pressures, and other factors have made traditional wealth accumulation channels increasingly difficult. In contrast, the blockchain field offers the younger generation a relatively fair competitive environment.
For young investors, I recommend the following investment strategies:
Diversification of the portfolio to avoid over-concentration of funds in a single crypto asset.
Emphasizing risk management and adjusting investment ratios according to personal financial status.
Seizing investment opportunities brought about by generational cognitive differences.
Adopting robust investment methods such as dollar-cost averaging.
It's important to note that investment strategies should be adjusted according to changes in personal life cycles. In situations such as being married with a mortgage, the allocation of high-risk assets should be appropriately reduced to ensure that the investment portfolio matches the individual's risk tolerance.
