00:20:40 · Tillman Holloway, Anthony Pompliano
Like, when iBit options came out, go look at the filings around who has, you know, spot exposure and then who has option short exposure. You know, it's... The basis trade is real, and people have found it in volatile assets. And so I just think it's the new future of all markets is finding the volatility before it occurs and hoping that you aren't overleveraged or didn't have any... Didn't have too much concentration risk in terms of capital placement to to ride that wave. [00:21:11] S2: When you're looking at what you're doing with Arch Public, one of the things that strikes me is, like, are we get reaching a point where there's too much volatility for humans to be able to navigate? And pretty much the only way to, benefit from that volatility other than just hold great assets for a long period of time, you know, kinda a la Buffett style, is actually you need AI to capture the volatility. Like, at what point do we switch from humans are prepared to play this game to now literally humans are ill equipped to play this game, and you need AI to be able to do it?
00:21:40 · Tillman Holloway
[00:21:40] S3: Well, I'll even go further than that. The tools that are available to people today allow a novice to grossly outperform the professionals at what the professionals used to do manually. And so it's just... It's the opportunity of a lifetime for people. And I give... It's kind of a cheesy analogy, but it holds true, is everybody in... At least in my age group remembers the old whack a mole game at Chuck E. Cheese where you've got, like, nine holes and you're trying to respond to the volatility that's coming out of that hole by whacking it. You know, a professional trader in the past would stare at one symbol. Every pro trader I know, if you ask them what they trade, it's not like a basket of things. They don't look at five things every... They're looking at one thing every day, and they're waiting for the volatility. They're waiting for the setup, the conviction moment, and then they're prudently exercising into that as long as they maintain correct trajectory and they prove themselves to be right. If they... If it proves themselves to be wrong, they're the quickest exiters, and they relieve nonemotional about the trade, and they move on to the next one. And so if you look at all of the symbols that have volatility attached to them now, how do you respond to them manually? You can't. And so the automation and the rules based volatility trading that's now available to people has never been available in the past. And so instead of, like, managing only one symbol and waiting for that volatile moment, a total novice can set volatility traps against 20 symbols and set it and forget it and just wait for those volatile moments to either take place or not. It's either a nonevent or a positive event for you. So it's it's something that has, never been feasible before because technology has been the the hindering factor. It's not anymore.
00:23:31 · Anthony Pompliano
[00:23:31] S2: So when you're thinking about this, this volatility, one aspect that I think is, maybe misunderstood is the volatility in private markets has been, incredible and in a positive way. Right? If you take something that is worth nothing and you create something that solves a problem, you're going to create value, aka returns for the people who own that thing. We're seeing emerging, though, of public and private markets. Tokenization is, you know, kind of one component of this. We're starting to see some publicly traded funds that have private market exposure. How do you see that kind of playing into this? Like, if all of a sudden, investors in the public market now can get access to private assets and then you layer in AI, this feels like bonanza city in terms of, you know, really juicing returns for people who are able to navigate this kind of, you know, convergence of trends.
00:24:20 · Tillman Holloway
[00:24:20] S3: I like to chase the, problems or the headlines to what I can find is the deepest source or the deepest need. We in America live in a debt based economy. It's not a bad thing. Those aren't bad words. That means that we are a consumer based economy. We borrow money. We borrow for our cars. We borrow for our houses. We we... That is the way in which our economy runs. And if you look at, you know, how much liquidity we need to print for the AI investment and for this new set of financial rails that has the potential to include 4,000,000,000 people that are unbanked and another couple of billion people from other countries that don't have access currently to our financial markets and to our instruments. That's that's no different than us, you know, as a company investing in our growth, you as a company investing you... In your growth. America has a unique opportunity to invest in our growth. And instead of going out and raising VC capital or private equity capital, we print, and that's not a bad thing. And so I think that the excuse that we have in front of us to invest in the future of this technology and to to bank the unbanked across the globe and to bring investors into not only our private market... Markets because it's the most innovative markets in the world, but also into our public markets through a tokenized effort. Fractionalization of shares is a huge lowering threshold mechanism. Like, I... You know, if I am in another country and I can't afford a whole share of something on the New York Stock Exchange, well, I may be in the very near future able to buy a fractionalized share of of that. And it gets me the same exposure. Is that good? Does it unlock liquidity? Yes. It does. And it does it at a global scale, and it brings it back to the US dollar, especially if you look at the stablecoins that are gonna be in... Inside of those systems. And the fact that, you know, I believe that the path forward is those stablecoins being backed in treasuries. That that is the way in which you get the global economy to buy treasuries, and that's that's incredible. That's the biggest that's the biggest thing we could do with this mechanism is, I guess, the point.
00:26:38 · Anthony Pompliano
[00:26:38] S2: One thing that I have, I feel vindicated on is, for years, five years, six years, people used to always say, you know, what's Bitcoin backed by? And, I had to think hard about it because the the natural answer is nothing. Right? That that would be what people would normally look to. And I was like, well, what is it backed by? And I'd kinda think through it and, you know, the network and also whatever. And eventually, came to this conclusion. I would ask people, you know, what is the most valuable commodity in the world? And five or six years ago, people would say oil or, you know, what... Whatever thing. And I'd say, well, I disagree. I actually think that compute is the most valuable commodity in the world. And the Bitcoin network is the strongest, most decentralized network in the entire world, which means that Bitcoin is backed by compute. And therefore, it should be more valuable than you think it is because the commodity that backs it is misunderstood, mispriced, and undervalued. Now that doesn't seem as crazy. Right? And so, like, when I... I've originally started saying this, it was kinda like this, like, okay. The... Is this true? I think so. But, you know, you you almost, like, want some market validation. You want people to kinda, you know, be alongside you in the foxhole. Now I think it's pretty much like a... Like, duh. Of course, that's true. Is that kinda how you, you view it?
00:27:41 · Tillman Holloway
[00:27:41] S3: You know, it... It's taught us... I think the Bitcoin standard, as a whole is going to continue to prove us lessons over the next decade, twenty years. And and decentralization is one. Fair and economic distribution is one. Free and open access is one. Work is valuable is one. And so there's a lot of ways in which this world rewards people through mechanisms other than work. And I don't think people agree with it at some level, and I think this speaks to the soul of humanity as it relates to a workman is worth his wages. And if you contribute to a compute network that becomes valuable, then you are valuable. And that's that's a notion that is so powerful. I think, it's gotten us past the tipping point of being susceptible to brute force attacks. And I look at Bitcoin network's value as, like, if you look at how strong its fortress is, you know, it's like every block has been one wrap of duct tape around it. Well, I mean, we've gotten so many layers now that it's it's stronger than any fortress on Earth, and that is powerful. I do believe, though, that you... You know, networks that have valuable that that have value are large, have deep liquidity, and are reliable. And Bitcoin shines incredibly well on all those fronts. And so, you know, that's why I think Larry Fink's looking at it as kind of the golden child because, you know, it was the most successful ETF that they've ever launched by orders of magnitude. I think, you know, five x, maybe not an order of magnitude, but at least five x. And it it showed him how deep the demand was. And then if you trace that and you go, okay. Well, how many people actually had access to that? A very small universe. Through token... A... Tokenization, you get everyone access to it. And if you remember, like, Larry Fink was one of the first guys in TradFi that was coming out talking about tokenization of assets. He was pretty early on that front. And I think it's because in his mind, tokenizing the equities that, you know, he knows so well and the ETFs and everything else that's a US based financial instrument, the inclusion rate that it brings and the liquidity depth that it brings and the fractionalization that it brings and the reduction of management costs and scalability improvement.