Original source: Bankless
Compiled and organized by: Yuliya, PANews
Finding the next 'Bitcoin' in the cryptocurrency market is a dream for many investors. As one of the most influential investment firms in the industry, Pantera Capital bought Bitcoin in 2013 at $65, and to date, the fund's returns have exceeded 100 times. In this episode of Bankless podcast, founder Dan Morehead shares how he identifies assets with asymmetric return potential and provides deep insights into the future of the cryptocurrency market, with PANews providing a written compilation of this podcast.
Bitcoin investment in 2013
Bankless: Let's talk about the famous email from July 5, 2013. You suggested buying Bitcoin at $65 and planned to invest 30,000 BTC. Can you share your thoughts at that time?
Dan Morehead:
This dates back to March 2013. My two friends Pete Briger (co-CEO of Fortress) and Mike Novogratz (founder of Galaxy Digital) approached me to discuss Bitcoin. (We all left Goldman Sachs, and they later founded Fortress Investment Group.) Actually, my brother had introduced Bitcoin to me before, but I didn't pay much attention.
A brief meeting with Pete and Mike unexpectedly turned into a four-hour deep discussion. The concept of Bitcoin lit a spark in 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, could you elaborate on that?
Dan Morehead:
While doing macro trades at Tiger Management, I learned one thing: to look for opportunities where potential returns far exceed risks. Although investing always involves risk, the key is to find those that could yield enormous returns.
For example, before investing in Bitcoin, we held Tesla stock. Interestingly, in 2013, the prices of Tesla and Bitcoin were about the same. In the end, we made a bold decision—to sell all Tesla stock and bet everything on Bitcoin.
Bankless: You mentioned Bitcoin as a 'serial killer,' what does that mean?
Dan Morehead:
In the tech field, we often use the term 'category killer' to describe disruptive innovations. Bitcoin goes further; it is a 'serial killer' as it disrupts not just one field but reshapes multiple industries. However, this process is gradual.
For instance, while blockchain technology has already shown advantages in certain areas, it may still take ten years 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' phase.
Bankless: After experiencing so many market ups and downs, has your view of Bitcoin changed?
Dan Morehead:
Although Bitcoin has had an incredible increase, I still believe it represents an asymmetric opportunity. We have experienced three drops of more than 85%, but each time has set new highs. It's hard to find such an asset in traditional investment fields.
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 opportunity
Bankless: Between 2013 and 2015, you purchased 2% of the global Bitcoin supply. Many investors wish they could have bought Bitcoin sooner and identify asymmetric return opportunities. How did you build this conviction? Some may say it was just luck; what is your perspective?
Dan Morehead:
I agree with your use of the term 'pattern' because it is indeed a form of pattern recognition. I've worked on Wall Street for 36 years, experiencing the savings and loan crisis, the financial crisis, and investing in commodities in the 80s and emerging markets in the 90s. These experiences give me an advantage in investing in cryptocurrencies compared to younger investors, as I feel I've seen similar situations before.
Let me give a few examples:
· I participated in the GSCI (Goldman Sachs Commodity Index) while at Goldman, and now commodities have become a recognized asset class.
· In the 1990s, I invested in emerging markets, and now emerging markets are a standard asset class
· In 2006-2007, Pantera launched its first Western fund investing in Gulf Cooperation Council countries (UAE and Saudi Arabia). Many considered it crazy at the time, but now the Middle East has become a completely normal investment destination.
· I invested in Russia during Gorbachev's era, participating in the privatization of Gazprom.
Bankless: So you've been looking for these frontier investment opportunities?
Dan Morehead:
Yes, we have always been looking for those non-mainstream or unconventional opportunities. In 2000, we also established a fund to invest in local farmland after Argentina's second-to-last crisis.
Speaking of blockchain, it's interesting that it is still considered a frontier asset class. This is unusual—an asset with a market value of $30 trillion is still viewed as a frontier asset; I've never seen this before.
In the investment memos I wrote in the following months, I listed various application scenarios for blockchain:
· Competing with gold (this is happening)
· Competing with Visa and Mastercard
· Competing with remittance companies that charge immigrants high fees, while Bitcoin can facilitate cross-border transfers easily and at low cost.
When you add up all these use cases, you will find that the ultimate value of cryptocurrencies is far greater than where it stands today. That’s why we are so optimistic about this field.
Experience of buying Bitcoin in 2013
Bankless: Can you describe what it was like to buy a large amount of Bitcoin in 2013? I remember that when I first bought cryptocurrency in 2014, it felt very unreliable; having to open accounts on multiple exchanges, and the websites looked very rudimentary. For many investors, these are the reasons that deterred them. How did you build confidence in this environment?
Dan Morehead:
The trading environment back then was indeed very primitive. For example, platforms like localbitcoins.com required face-to-face transactions, which were too risky, and we never considered that method. Ironically, it was one of the most mainstream trading methods at the time.
Initially, we planned to operate this fund through a large publicly listed company. We conducted thorough system testing, but that company eventually withdrew. 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 started taking action over Independence Day weekend, we first tried a small platform (which later we learned was Coinbase). We found out they could only buy $300 worth of coins per day, while we wanted to invest millions. At that time, Coinbase had only one employee, and it took four days to get a response to an email. At that speed, it would take nearly 20 years to accomplish our plan.
Finally, we turned to Bitstamp in Slovenia. When processing the wire transfer at the bank, the branch manager asked in detail what Bitcoin was, and the whole process took an hour to explain. To be honest, I was concerned about the safety of the funds at that time. Interestingly, we later became major shareholders of Bitstamp, and I served as chairman for 6-8 years (PANews note: LinkedIn information indicates he served as chairman of Bitstamp from 2014 to 2018).
Bankless: You mentioned visiting many exchanges, including Mt. Gox?
Dan Morehead:
During that period, I thought it was important to personally inspect exchanges. I flew to Tokyo to visit the two leaders of Mt. Gox. Although I only stayed for two days, their performance made me very uneasy. Their explanations lacked logic and gave me a feeling of either incompetence or fraud. Ultimately, we decided not to cooperate with them, a decision that later proved to be correct.
The state of institutional adoption
Bankless: You mentioned conducting 170 investor meetings and ultimately raising only $1 million. During that time, Bitcoin was still seen as a 'mysterious internet currency' or even a 'drug trafficking tool.' How did you pitch it to investors? How did those meetings go?
Dan Morehead:
If you want to achieve excess returns, you cannot follow the mainstream and invest in projects that every Wall Street company has 20 analysts tracking. That’s why we deliberately emphasize 'making alternative investments even more alternative' in our investor letters.
This idea of mine stems from my hedge fund experience that began in 1991. Back then, hedge funds were truly alternative investments, but now they have become a mainstream industry worth trillions, with almost all fund strategies being very similar. This experience has made me even more convinced that blockchain should be an important part of the portfolio, as it still retains its true alternative characteristics.
Interestingly, the 170 meetings you mentioned actually took place in 2016, three years later than 2013. At that time, it was during the 'crypto winter,' and Bitcoin's price had plummeted by 90%. The market generally believed that 'blockchain is important, not Bitcoin,' and almost no one was optimistic about public chains and Bitcoin as an asset.
Bankless: How many times has this market downturn happened?
Dan Morehead:
Bitcoin has gone through three cycles of 85% drops. In the first cycle, we started investing at $65, the price rose to $1,000 and then collapsed. It remained sluggish from 2014 to 2017.
During this difficult period, even though almost no one was paying attention to this field, our team persisted in working every day. The fundraising situation in 2016 illustrates the issue well—170 meetings ultimately raised only $1 million, resulting in just $170,000 in management fee income for the entire year.
Even today, although our fundraising scale has improved, to be honest, it feels like we are still at the starting phase. The attitude of institutional investors towards cryptocurrencies remains very cautious, with most either not allocating at all or allocating very little.
Bankless: Has your pitch for cryptocurrencies and blockchain changed from 2013, 2016, to now?
Dan Morehead:
My core viewpoint has remained consistent, perhaps because these ideas have stood the test of time. When I explain Bitcoin's fixed supply characteristic and that it will not be diluted by fiat inflation, I often hear the question, 'Isn't that just like gold?' But my answer is: it's more like investing in gold in 1000 BC. While gold has indeed served humanity for 5000 years, in the digital age, we need a brand new version—digital gold.
This is exactly why I have maintained my enthusiasm from 2013 to now: I firmly believe Bitcoin will gradually replace traditional gold, reform the cross-border remittance system, and innovate the payment systems of Visa and Mastercard. Of course, this process takes time, possibly up to 20 years, rather than happening overnight.
I am so confident because the development of blockchain technology is an unstoppable trend. Although the realization may take longer than expected, and some startups may burn through their cash in the process, some changes are inevitable: five years from now, it will be impossible for migrant workers to pay a month's wages for cross-border remittances, and you cannot continue to pay a 3% fee for credit card swipes.
I cannot accurately predict whether this transformation will take 10 years or 1-2 years. But it's precisely because I am convinced that this change is inevitable that I will continue to hold and invest in this field.
Global adoption of cryptocurrencies
Bankless: Many people see Bitcoin doubling this year and feel they 'missed out,' thinking it's too late to buy now. How do you view the potential for Bitcoin and the entire cryptocurrency category to rise? In terms of global adoption rates, are we currently at the 20% or 50% stage?
Dan Morehead:
In any ordinary asset class, if an asset doubles in a year, you really shouldn't buy in, as it might indicate overvaluation. But Bitcoin is different. The Pantera Bitcoin Fund has an 11-year compound annual growth rate of 89%, meaning it doubles on average every year. A simple investment logic is: if it doubles again, you can earn 100%.
However, there is a very important investment principle: your investment amount should be controlled within a range that even if you lose 85%, it will not affect family stability. In simple terms, do not bet your marriage on this asset class. As long as you can control the investment scale at this level, you can hold long-term with peace of mind.
Bankless: How much more upside do you think Bitcoin has?
Dan Morehead:
Bitcoin has indeed reached a considerable scale, and we cannot expect to see a 1000-fold increase, as that would consume all the energy on Earth. However, a tenfold increase to a market cap of $15 trillion is entirely possible compared to the $500 trillion total of global financial assets.
I'm not going to predict what will happen in 50 years, but within our current investment cycle, say a 5-10 year time frame, it's entirely reasonable for Bitcoin to rise 10 times from its current position without seeming crazy or overvalued.
Bankless: What stage are we currently at in terms of adoption rates?
Dan Morehead:
I believe we are still in the early stages. There has been more negativity, focusing on events like Silk Road, while overlooking the positive impacts. Although the U.S. once 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, yet 90% of the wealth created by the Federal Reserve and Congress's monetary policies over the past three years has flowed to those aged 70 and above. This actually represents a massive wealth transfer from the younger generation to the older.
And these young people love cryptocurrencies, and they will vote. We have observed a remarkable shift in voting behavior among voters under 40 compared to the 2020 presidential election. The term 'young Republicans' hasn't been heard in many years.
Trump expressed strong support for cryptocurrencies in May of this year. All the cabinet members he nominated strongly support cryptocurrencies, and he even wants to set up a cryptocurrency special envoy. I believe when someone writes a doctoral thesis on this election in the future, they will find that cryptocurrencies were 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 read:
· House of Representatives: 274 in favor, 122 against
· Senate: 20 in favor, 12 against
I predict that in four years, those members of Congress who oppose cryptocurrencies may not even remain in office, as that is simply not a wise position. They will either change their views or may be voted out in the midterm elections of 2026 or the presidential election of 2028.
It seems strange to see the Democrats shift to an anti-crypto stance. I've been thinking that maybe I've missed some strategic consideration, as this clearly seems like a losing strategy.
The U.S. government's shift in attitude towards cryptocurrencies
Bankless: In 2025, there will be an executive branch and Congress supporting cryptocurrencies for the first time. After experiencing the SEC's crackdown during the Biden administration, what impact do you think a pro-crypto White House will have? Especially regarding establishing a strategic Bitcoin reserve?
Dan Morehead:
The executive branch can directly decide to stop selling seized Bitcoins, which is within its authority. We participated in the first Bitcoin auction by the U.S. Marshals Service back in 2013-2014.
The U.S. government now owns 1% of global Bitcoin. If it stops selling, the impact will be significant. Because the actual circulation of Bitcoin is not large, many holders never sell.
Bankless: Senator Lummis mentioned accumulating a reserve of 1 million Bitcoins. Do you think it's possible to at least retain the existing 200,000 Bitcoins and establish a custody structure?
Dan Morehead:
It's likely to happen. Stopping government transfers and sales of Bitcoin will have a positive impact on the market. When you remove a seller, it naturally helps the price rise.
As the issuer of the world's reserve currency, the U.S. cannot hold foreign currencies like other countries. The practice of storing gold in Fort Knox has become outdated. The U.S. should increase its holdings of digital gold and even consider selling traditional gold.
Singapore has held cryptocurrencies for 5-7 years, which is not an aggressive idea.
Bankless: This issue seems to have become very partisan.
Dan Morehead:
Yes, it is strange. As Ro Khanna said, it's like the smartphone; why turn it into a partisan issue? In fact, the Democrats should support Bitcoin more, as it represents the dream of progressives.
Global Bitcoin reserve race
Bankless: Suppose Trump retains the existing 200,000 Bitcoin (about 1% of the global supply) and publicly announces it. China also has about 200,000 seized Bitcoins, how do you think they will respond? Will other countries start secretly hoarding?
Dan Morehead:
A strategic Bitcoin arms race could last 10 years. The U.S. and China may both maintain 1% of global Bitcoin reserves.
It's ironic: why would countries competing with the U.S. store their wealth in dollars and U.S. Treasuries? Under the U.S. sanctions regime, their transactions may be monitored.
For countries in opposition to the West, holding part of their wealth in Bitcoin is an obvious choice. Neutral countries will do the same—just like using gold—because Bitcoin provides an option that does not rely on the dollar system.
Bankless: The stablecoin bill has bipartisan support, which can 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 should never watch being made—laws and sausages.' I don't pay much attention to Congress because it is a machine that is difficult to understand and influence.
Institutional adoption of cryptocurrencies
Bankless: In 2024, institutional adoption saw significant breakthroughs, such as Larry Fink admitting that his views on Bitcoin in 2021 were incorrect. ETF products have achieved astonishing success. Compared to 2022, when Mike Novogratz predicted the 'wave of institutional investors,' it has finally materialized. 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 collapse of FTX, BlockFi, Celsius, and Terra Luna
· The discount issue of GBTC
· SEC lawsuits against companies like Coinbase and Ripple.
These events have indeed impacted the enthusiasm for institutional participation. Imagine a public pension fund 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, a president, and at least neutral regulators supporting cryptocurrencies, everything could undergo a seismic shift. That’s why you see prices soaring now, with a flood of funds into ETFs.
Speaking of ETFs, this is indeed a significant breakthrough. We launched the first cryptocurrency fund in the U.S. 11 years ago, in the form of a Cayman hedge fund, because we thought it might take years to get ETF approval. Now it seems that the waiting time has far exceeded expectations.
Bankless: Can you provide specific data on these fund inflows?
Dan Morehead:
Current fund inflow situation:
· Bitcoin ETF: $35 billion net inflow
· MicroStrategy and similar ETF products: $18 billion
· A total of over $50 billion flowed into ETF or ETF-like 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 notable that someone like Larry Fink has changed his stance, institutions like Vanguard still do not allow ETFs or crypto assets in their ecosystem. So what is the actual level of institutional adoption right now?
Dan Morehead:
Here’s an interesting point: many people say Bitcoin is a bubble, but the median held by institutions is zero; how can it be a bubble? Most institutional investors, including insurance companies, pension funds, and endowment funds, have virtually zero direct investment in blockchain. They may have indirectly invested in some blockchain companies through comprehensive venture capital funds, but direct investments are almost nonexistent.
This is why I am so optimistic about the future. We are actually just getting started. When you see institutions like BlackRock, the world's largest asset management company, publicly supporting and having excellent blockchain teams, and organizations like Fidelity that have been laying out blockchain since 2014, these are very encouraging signs.
Previously, many institutions used compliance as an excuse not to invest in cryptocurrencies, but now firms like BlackRock and Fidelity are selling highly regulated quality products, making that excuse untenable. Even the stance of Vanguard may become difficult to maintain as the market evolves.
Bankless: It sounds like there is still an opportunity to position crypto assets before institutional investors do?
Dan Morehead:
Indeed, this is entirely applicable. There are still opportunities to enter before institutional investors.
The cyclicality of cryptocurrencies
Bankless: You've experienced multiple cycles, and now Bitcoin has reached new highs of $100,000. We are clearly in a bull market. Do you think the cryptocurrency market will continue to follow the four-year cycle pattern? The traditional view is that this is related to Bitcoin halving, while others believe it relates to global liquidity. When fiat liquidity is abundant, cryptocurrencies enter a bull market and then peak and decline. Will this four-year cycle pattern persist?
Dan Morehead:
Yes, I believe this cyclical pattern will continue.
Bankless: Is this your basic prediction? Do you not believe in the possibility of a super cycle theory or breaking this pattern?
Dan Morehead:
Let me explain with an interesting analogy. During my college years, a professor wrote the famous book (A Random Walk Down Wall Street), explaining the theory of market efficiency. And Buffett once said a thought-provoking statement: 'The difference between the market always being efficient and often being efficient is worth $80 billion.'
My understanding of the halving cycle has evolved:
· Initially, I was skeptical like many others—if everyone knows a halving is coming, then this event should have already been fully priced in.
· But after experiencing the halvings in 2013 and 2016, I fully believe in the authenticity of this pattern.
Why is halving so important? It begins with miners' behavior:
· Miners will sell almost all the Bitcoin they acquire to pay for operating costs
· It’s like the copper mining market—if it's announced that half the copper mines will close one day, copper prices will inevitably rise.
· The Bitcoin halving has this effect—every four years, the output is halved, and when demand remains unchanged while supply is halved, prices will naturally rise.
However, the cyclical characteristics are gradually evolving:
· The amplitude of cyclical fluctuations is gradually decreasing. The reduced output during the first halving accounted for 15% of the circulating supply at that time.
· As circulation increases, the impact of the next halving will be reduced to one-third of the original.
· By the time of the last halving in 2136, the impact will be minimal
Our data analysis shows a clear pattern:
· The halving effect starts to manifest 400 days before the actual date
· Reaching cycle highs 480 days after the halving
· This model has maintained astonishing accuracy
Two years ago, when Bitcoin was priced at $17,700, we predicted it would reach $28,000 at the halving, and then hit $117,000 480 days after the halving (next August), with the prediction of the lowest point being almost accurate down to the specific date.
During the last halving, we predicted the price for every month in 2020 on Twitter. We predicted it would reach $62,964 on August 15, 2020, and it indeed hit that number precisely on that day.
Therefore, I still believe this cyclical pattern will continue. I think we will experience a major bull market followed by a bear market. But the only difference is that after experiencing three drops of 85% in the past 12 years, the next pullback may only be 50% or 60%, at least for Bitcoin; smaller coins may still experience larger fluctuations.
2025 Bull Market Outlook
Bankless: If we follow the four-year cycle pattern, does this mean 2025 will be a bull market, followed by a decline starting 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 moving in this direction; it seems too simple?
Dan Morehead:
I know it sounds a bit absurd, but we've been discussing this topic for 12 years. We've consistently predicted that volatility would gradually decrease; previous halving cycles had greater volatility, and this one will be relatively mild. Not only that, political and macroeconomic environments are also creating favorable conditions for cryptocurrencies. So I am quite optimistic about 2025.
Bankless: How do you view the macroeconomic situation? Will it have a positive or negative impact on cryptocurrencies? Does Bitcoin influence the macroeconomy or vice versa?
Dan Morehead:
Typically, we discuss the macroeconomic impact on Bitcoin. From a macroeconomic perspective, I am skeptical about the possibility of the Federal Reserve cutting interest 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 indicators would rise to 5% and remain there for several years. To this day, I still hold that view.
Why? Look at the current economic situation:
· The economy is booming, and crowded airports are the best proof of this.
· The unemployment rate is at a historical low
· Wage inflation continues to rise
· The stock market continues to hit all-time highs
In such an economic environment, I believe that expectations for the Federal Reserve to cut interest rates are unreasonable.
The actual federal funds rate is only 80 basis points above core inflation, which does not count as tightening. The historical average is 140 basis points higher, so now it is just slightly tight.
Even more concerning is the fiscal situation:
· Even during the most prosperous times, the U.S. still faced a $2 trillion deficit
· Despite full employment and record-high indicators, fiscal balance remains unachievable.
· This suggests that when the economy turns in the future, it may face even more severe problems.
Macroeconomic environment and cryptocurrencies
Bankless: With the U.S. experiencing ongoing deficits, printing money, and expectations of interest rate cuts, what do these macroeconomic signals mean? Do they indicate that the prices of commodities and digital assets will rise?
Dan Morehead:
The U.S. has developed a dependence on printing money. This trend existed before the COVID-19 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 U.S. continues to run record deficits even in the best of economic times.
· Interest expenses have exceeded military spending
· The government uses adjustable rate financing, increasing future fiscal risks
· Interest rates are expected to remain at or above 5%
This means we will have to refinance all debts at increasingly high-interest rates, and the costs will be very high.
While I don't focus much on studying finance and macroeconomics, one thing I am certain of: I would rather hold Bitcoin than dollars.
Bankless: You mentioned commodities, which makes me think about the current highs in gold, Bitcoin, the stock market, and real estate. How should we interpret this phenomenon?
Dan Morehead:
The key is to change perspectives:
· These assets are not truly 'up,' but rather fiat currencies are depreciating.
· We should focus on the relative price of Bitcoin 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.
Given the current fiscal situation, holding fiat currency lacks significance. Even former cryptocurrency skeptic Ray Dalio is now suggesting holding gold and Bitcoin to cope with potential debt crises.
This shift in perspective is important because currency is essentially a consensus technology. A change in attitude among top investors indicates that market 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 to be mainly aimed at institutions. Will all assets eventually go on-chain? Are we experiencing an S-curve of development from stablecoins to government bonds, and then to stocks and bonds?
Dan Morehead:
This is indeed the 'killer application' long awaited in the blockchain space. Although some early investments were premature, they are finally beginning to show results. For example, stablecoins allow ordinary financial instruments to realize new value on the blockchain. Projects like Ondo are opening the doors to the U.S. financial market for more people.
The significance of moving government bonds onto the blockchain is far greater than it appears on the surface. Most of the 8 billion people globally live outside the U.S. and are eager for dollar assets and U.S. government bonds, but traditional channels make this difficult.
Even for U.S. citizens, the existing system has obvious problems. For example, transferring from Treasury Direct accounts to brokers takes a year, and this inefficiency precisely illustrates why we need blockchain technology.
Bankless: Wait, really? I had no idea this was the case.
Dan Morehead:
Yes, at some government office, a stack of withdrawal applications piled high, requiring a year to transfer your 90-day Treasury from the government to Merrill Lynch. If there is anything that perfectly illustrates why we need blockchain and RWA tokenization, this is it. You thought it wiser to buy directly from the government, but the funds are locked for a year.
Another good example is Figure Markets, which has 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 incurring costs. Blockchain technology can significantly enhance the efficiency of this process.
However, not all assets are suitable for tokenization. Products like hedge funds and private equity funds aimed at accredited investors already have a well-established operating model and do not urgently need to go on-chain.
But for assets like government bonds, blockchain does indeed provide an ideal solution. This not only allows more people to participate in investment but also presents an opportunity for the U.S. government to expand its financing channels. Through blockchain, they can more easily promote government bonds to global smartphone users, benefiting all parties involved.
Prospects for the integration of AI and cryptocurrencies
Bankless: AI and cryptocurrencies are intersecting in unique ways. What are your thoughts on the crossover between cryptocurrencies and AI? Are you paying attention to AI-related projects?
Dan Morehead:
The integration of blockchain and AI is inevitable. Fundamentally, AI has a huge impact on society; 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 notable phenomenon is that existing AI models have digested almost all free internet content. The next generation of AI models will need to access paid data, and blockchain is adept at providing incentive mechanisms that can effectively solve this problem.
Regarding the use of currency by AI agents, they obviously cannot open accounts in the traditional banking system. When interacting between machine agents, they must use some form of digital currency, and programmable currency (like Ethereum) seems to be the most natural choice. While some may be exploring options outside of blockchain, the solutions provided by blockchain are the most complete.
In the long run, it seems difficult for AI to operate independently of blockchain. Important intersections have already emerged between these two fields, and we are likely to see further deep integration in the next 5 to 10 years.
Looking for the next Bitcoin
Bankless: Pantera's initial Bitcoin fund achieved a 130,000% return. Is this a unique 'once-in-a-lifetime' return rate? Do you think investors will have similar opportunities in the coming decades?
Dan Morehead:
Blockchain technology is at a critical development stage and presents a highly potential career development direction for young people. Even if they ultimately choose to shift to traditional industries, the experience gained in the blockchain field will be a valuable career asset. This career choice has asymmetric return characteristics: significant upside potential with controllable downside risks.
The current monetary policy and regulatory environment have created numerous adverse effects for the younger generation. High barriers in the real estate market, inflationary pressures, and other factors have made traditional wealth accumulation channels increasingly difficult. In contrast, the blockchain field offers a relatively fair competitive environment for the younger generation.
For young investors, the following investment strategies are recommended:
· Diversify the portfolio and avoid over-concentration of funds in a single crypto asset
· Emphasize risk management and adjust investment ratios based on personal financial conditions
· Seizing investment opportunities arising from generational cognitive differences
· Adopt stable investment methods such as dollar-cost averaging
It is important to note that investment strategies should be adjusted based on changes in personal life cycles. In cases of marriage, home loans, etc., the allocation of high-risk assets should be appropriately reduced to ensure the investment portfolio matches personal risk tolerance.
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