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Hi, I'm Ral Pal, and welcome to my show, The Journeyman, where we go on that journey to the nexus of understanding between the macro, crypto, and exponential age of technology. As you know, crypto is a large part of my thesis of the exponential age, and I've proven out over time that macro is crypto. This has been a business that's taken us a long time, from my early days in 2013 to where we are today. The ups and downs have been huge, but nobody's seen more ups and downs than my next guest, CZ, the founder of Binance. CZ is a legend in the space, and I got my second chance of interviewing him. I interviewed him, I think, on Real Vision back in 2020. Um, but this is the first time I've caught up with him since. And this was on stage at Token 2049 in Singapore—in, sorry, in Dubai. Singapore's coming up. It's always an amazing event. It was a great highlight of my year this year going, and this interview with CZ was the highlight, I think, for most people. Enjoy.
Join me, Ral Pal, as I go on a journey of discovery through the macro, crypto, and exponential age landscapes. In The Journeyman, I talk to the smartest people in the world so we can all become smarter together. It's great to see you back publicly talking because a lot of people listen to you. First, I want to go through what you've—what you've been working on with the Giggle Academy because that was the last thing we heard from you is like, "I'm going to focus on this." So, talk us through that journey.
Uh, sure. Yeah. I mean, it's a very fun project to work on. Um, I actually don't spend that much time—like I do have two calls with them every week, status calls, and then I kind of talk to them a bit more about like the AI side of things, like what AI technologies to use so that we can build the content faster. Um, I think the uh, Giggle—Giggle Academy has a very good product-market fit. Uh, it's very sticky. So if you give the app to a kid, they will—they beg for it. So, um, I think we—we—the original hypothesis is right. With the technologies we have today, it's not that hard to make an app that will stick—that that's educational but also like, you know, glue the kids to the device. So, um, now we just got to scale up more content. Um, and I'm—we're always exploring more different uh, ways to speed up the process. So I think right now there has about 60 lessons and about 300 uh, storybooks, and just today we launched 15 languages for the storybooks. So the storybook itself will be read to you in 15 different languages. Um, so and u—um, and now it's with AI, so much easier to add more content and more—more languages, too. So, um, yeah, it's a very—it's a very fun project, and we are educating about tw—200 tho—sorry, 20,000 kids already. Uh, this is less than six months—that you know, in the last six months.
Yeah. I mean, you've scaled businesses at lightning speeds. Now, having AI, does it even scale faster for you?
Oh, yeah. Yeah. I think AI should be much—will help us to scale much faster. Um, so now we create—we create the storybook in one language, AI translates to everything, and then even the storybooks uh, is heavily AI assisted. So before you have to create the images, etc. Now, um, now we just use AI to generate—like even like—even three months ago it was quite difficult to get AI to generate the consistent characters on multiple images through different pages of the book. Um, but that's improved like in the last month or two, and video generation is still a little bit challenging, but now the characters are much more consistent. Um, and we want to get to a point where we can use AI to generate the specific format that we need, which is a Unity gaming engine spine format. So we want to get to that format. So then—then uh, because that format serves a lot of um, storage. Um, so yeah, but AI is—Giggle is a post-AI app. Uh, so it's going to use—it's going to be an AI native—native.
And where is this all going in a few years' time? What are you trying to get to?
Um, in a few years, I think I want to teach 100 million or a billion kids for free. Uh, 18 years or more.
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Now, there's the 100 billion kids that you're teaching, but you're also doing something else, which is going around the world talking to countries about crypto. Talk—talk about this because not a lot of people realize what you're doing in the background, but you're doing a lot.
Uh, yeah, sure. So I—like I interact with about a dozen countries right now, um, top leaders in—in this countries. So I think we've seen a big shift in the last six months or so uh, with the US election uh, now the US new administration is um, extremely pro-crypto, um, and with Elon Musk wants to use u—blockchain for government efficiency—we've seen that in many other parts of the world, including Abu—including UAE, both Abu Dhabi and Dubai, um, they're—they're exploring how to use blockchain for government uh, projects that includes like decentralized IDs. Once you have an ID, you need a wallet. Once you have a wallet, then you can do anything that you need with an ID. Um, land title rights, opening bank accounts, uh, e-visas, border crossings, uh, uh, uh, diploma, education diplomas, etc. So, there's so many things we can do. Um, and this is kind of a passion project for me as well. So because now today the blockchain is kind of single dimension on the trading—right, financials, which is great, but you know, we want—we want—we—with this we can expand blockchain to multiple dimensions, and um, with the industry getting bigger, there will still be more trades, so we still—bet as a—as a shareholder of a large trading platform, I still benefit, um, and then uh, also uh, actually before this um, most countries are thinking—looking at how to regulate crypto, um, and uh, there's a—there's about a dozen countries that come to me and says, "So well, we either"—they have CZ here or they know somebody who knows me—they come and talk to me, and then because I have nothing else to do, so I'm more than happy to talk to—I'm more than happy to talk to this country leaders to advise them on how to—what are the things to watch out for uh, in terms of adopting crypto regulations, how to make them more favorable to our industry—we want to protect consumers but also advance innovation.
Yeah, so did the young kid from Canada think he'd be going around countries telling them about blockchain in technology?
Uh, no, I think even today it's a bit surreal. Um, so I view myself as a technology geek. Um, and um, just never imagined going to different countries talking with country leaders about things that could impact a huge number of people. So, but it—again, it's a—I think it's a very meaningful thing to—for me to do. Um, so—um, again, I don't charge for my time. Like, you know, it's all—it's all pro bono, but for—I think um, again, it's very important for our industry, and it's also important for each country's economy.
Now, here the UAE has been extraordinarily good at adoption, and seeing this talk through the journey here because you came here and people like, "What—why is CZ moving to Dubai?" And then it's become almost the epicenter of industry. You can see by the crowd and all the way across these countries, it's extraordinary what's happening.
Yeah, absolutely. So four years ago, um, in end of 2021—in September 2021, I came here for the first time, um, and based on my friend's recommendation, saying like, "Look, you should explore Dubai," um, "UAE is very pro-crypto, pro-business, one of the best business environments in the world," so I took—I took up his advice. I came here for three weeks. I booked a three-week trip, so came here—actually, I—when I landed, I only have one meeting lined up, which is with uh, the His Excellency—His Excellency Minister of AI, Omar Al Olama. Um, and uh, I landed on a Friday night. Um, and Friday is not a working day. Friday, Saturday is not a working day back then. Uh, Sunday is a working day. Um, he met with me, and then he—know—introduced everything, and then um, I just within like about a week or so, I knew this is the place to be. U—they are extremely pro-business, really, really pro-crypto. The ministers know exactly what's going on, very smart, very sophisticated. Um, and the speed is really fast. So, um, so we—at the time, VARA didn't exist, uh, so we were discussing about how to regulate crypto, etc. Um, and then at the time, we recommended setting up a new separate agency, and they actually took that advice. Um, so like a month later, VARA was incorporated—literally just within a month. Um, and then um, uh, by November, we signed an MOU uh, to uh, advise them on the crypto regulatory framework for Dubai. By February next year, uh, 2022, it was signed into law. Um, and then by March, uh, we got a—pro—in principle approval uh, together with three or four other crypto exchanges. So, um, it moves really, really fast here. Um, and then um, uh, so and then I explore Abu Dhabi as well. So Abu Dhabi—that's like a little bit of a friendly competition. I think our friends from locally know. Um, so uh, but both places are extremely pro-business, extremely uh, thoughtful, and uh, here, you know, Dubai—Dubai, UAE is an extremely safe country. So the—the—the fact that like, you know, a lot of Western media kind of portray uh, Middle East in a—in a sort of a negative way, but this is one of the safest countries in the world—the safest city in the world. So there's actually no crime here. So, um, so you can see that if you manage—if you regulate well, you can—you can—you can encourage business while keeping all your citizens completely safe. So, um, this is one of the best places. So back then it was like there was probably like five—10 crypto companies in 2021. Now there's like thousands.
Yeah. So it's incredible to—to see those growth. So when you go and talk to countries, are you talking more about just starting them on the Bitcoin journey, you know, the first thing that we get all of our friends to do, or do you open up and say, "Okay, this is what blockchain rails can do for a country," because we've got a world of AI where digital ID is going to matter. A lot of things are going to matter.
Yeah, I think the conversation today is a bit more advanced than that. Um, there were—there are very specific issues about like, you know, how to adopt this. Um, I'll give you a couple examples that—that are typical uh, discussion points. Uh, many regulators still want to regulate everything locally. Yeah, they want a local uh, custody wallet solution. They want a local order book. They want a local everything, local team, etc. But that's usually not the best way to go. Uh, because setting up a secure custody uh, uh, solution for like billions of dollars requires a lot of money. It requires a lot of funds and requires a lot of expertise, which is very lacking today. Um, just setting up a global one is already difficult enough. Um, if we have to do like 200 times, we just don't have the people, right? Like for each uh, for each really cold wallet, you got—you need to have like 15 signers. You can't find 15 signers that are not public that are really extremely trustworthy in different parts of the world uh, in different geographies, and they don't—and they're not incentivized by more money. They have a steady job. They—they're high income. They have nice family. Um, so you just—you just can't find like, you know, 100 times more of those 15 people, right? So, and also local order book. Uh, again, if you divide each country with their own order—local order book, liquidity is going to suck. Uh, and so when you want to buy like a million dollars, the slippage is going to be super high. So those type of issues are very—like, you know, real concrete issues. Um, many countries have the capital control, so capital flight issues. Uh, mo—almost all of those countries want foreign direct investment. But the thing is if you—if you—if you don't open up—open up your—if people can't get money out, then the money is not going to come in, right? So uh, so a lot of those like issues that are very real—u—very tangible issues to uh, to address.
And the two big ones that are still addressing this are China and India. Where are they in the process because they open—close because they got capital issues—capital control issues. Where do they stand right now?
Um, I think China's adopting the use—Hong Kong as a sandbox kind of approach. So I think uh, Hong Kong is extremely pro-crypto now. Um, I think they started changing about two years ago. Um, they started issuing licenses. Um, but two years ago, the licenses are quite restrictive. Um, so in terms of token listings, etc. So now they're exploring ways to open that up. Um, and then but Hong Kong still also have to worry about the um, capital control issue of China. So they cannot—know—blatantly help Chinese mainland users move money out. And the thing is in crypto, um, once you buy Bitcoin, where—which country does that Bitcoin belong to? This—there's no border, right? So whereas in—in traditional banks, if you have—if you have your money in your Shanghai bank account, that's in Shanghai. When you move it out to Hong Kong, that's kind of out in Hong Kong. You kind of know, um, but with—but if you buy crypto in Shanghai, when—when you move to the US, the crypto is in the U—like it doesn't have—it doesn't have that concept of a—of a border.
Yeah. Right. So, um, there's some real issues to—to address there. Um, but in the—so you mentioned—you—India—um, I think India I have less interactions with, to be very frank. Um, I think based on my knowledge is pretty much based on public knowledge. I think the tax there is quite high, um, and to—to the point where it doesn't make sense to do transactions um, anymore. So uh, we would—I personally—I don't have any much interactions with the Indian uh, uh, governments, but I would very—personally very much to see some of those being loosened.
And what about the kind of strategic reserves idea as well because that's the hot topic people are seeing happening. Talk us through that and what you're hearing.
Um, there's a few countries who are extremely advanced on that topic. Uh, I think Bhutan—uh, I believe His Majesty the King of Bhutan is actually in the city today. Um, and um, uh, he's—he's a—he's a early crypto adopter. He's a very smart guy. Um, and they—they have excess energy, clean energy, hydro energy. So, um, uh, they've been mining Bitcoin for years. So, they have billion—they have billions and billions of dollars of Bitcoin for a very small country. Um, and, um, now they've added Ethereum and BNB to that—to their national reserve. So, um, the early adopters are moving forward. Um, based on public information, the US seems to be using the—holding—at least the—no longer selling the Bitcoin. You know, some of the OGs like us actually kind of hope that governments will sell their Bitcoin so that other guys can buy them cheaply. But, you know, with this US administration, they're very uh, business savvy. Uh, so, they understand what's valuable. So, um, so now they figure that out. Uh, with the US—with the one of the world's largest economy holding Bitcoin now or holding—making a crypto reserve, other countries are forced to do it. Uh, because the later you do it, uh, the more expensive your crypto will be. So, um, uh, yeah. So I think we are talking with many countries on advising them how—how to set up a crypto strategic reserve and also like even very simple stuff—very basic fundamental stuff like u—what wallet solutions to use—do you use a uh, professional custodial solution or do you use your own cold wallets? Do you have the—do you have enough expertise to build that kind of infrastructure, etc.? So for most countries, we—when they start—when this—most countries starting amounts are not as big as the US, right? The US has like uh, 200,000 Bitcoins or—
Okay.
Uh, for most other countries, when they hold much smaller amounts, we actually just recommend them to use a c—professional custody solution that's multi-sig, right? So no—no single person can move the money, um, when they build up to a certain large amount, then they move—they should move to their own cold storage solution. So there's a lot of discussions uh, along those lines.
Yeah. Where's Europe in this whole equation?
Uh, nowhere. It's—it's unbel—it's unbelievable. Yeah. Um, yeah. So uh, we—we don't—I don't—I don't see Europe in this discussion.
Yeah. No, it's extraordinary. Yeah. And you know, because in the end, this—this technology enables average people to generate wealth, to be involved in a financial system, and Europe's actively blocking them out.
Yeah. I think so far the only—actually, let's—there's an exception. Uh, Montenegro is actually quite pro-crypto. Uh, we have an active dialogue with the u—uh, prime minister there. Um, and he's a—he's a very forward-thinking person—uh, leader. So, uh, but other than Montenegro, I don't have any other—like, yeah, it's kind of missing on the map.
So, what gets you excited when you're looking at the crypto markets these days? What innovations, what things are happening that you're like, "This is really interesting?"
Um, I think the crypto industry, so there's a lot of money flowing around. Um, but they're all chasing like, you know, short-term gains. So, I would like to sort of, um, help the funders to build real products. So, I'm a builder myself. Um, I like to see products built that a lot of people use. So I think that's the single most important metric. Um, it's not the token price, it's not everything else. Uh, it's just building use cases for people. So uh, this is why I'm sp—I'm actually spending the majority of—like the biggest chunk of my time today is spending on—easy labs with funders. So talking with founders, looking at different projects uh, and just trying to help them. There are very—there are still many, many strong founders; it's just that their—their—their—their voice is a bit muffled right now. So I think we got to help those funders to be more uh, vocal, more active, and also more engaging in the community and help them raise money, uh, help them design proper long-term token economics, etc. So that's where I spend actually quite a lot of my time.
And when you're looking at the applications layer that you might invest in, what are you seeing this outside of finance? Because there's a big focus on DeFi and stablecoins and all of this stuff, but there's a much broader use case here, whether it's social media at large or—or whatever it may be. What are you seeing people building? Are they—are they grasping the opportunity yet?
Um, to be honest, I think they're all very early stage. Um, I think crypto so far has not expanded beyond trading. Uh, so but this also represents an opportunity. So um, uh, right now, RWA is quite new. It's growing, uh, but it's still finance related—still like um, sort of incentivizing—tokenizing real-world assets, etc. Um, DSide or decentralized social media hasn't really taken off yet. Um, there's a number of really interesting attempts uh, that we're looking at. Um, and um, uh, but when I talked about the government solutions, I think that's another area that most likely can take off. Um, uh, and that's not finance—finance related, right? So those are just pure blockchain uh, for efficiency and for transparency. Um, for example, land—land title rights. Um, in many countries, they don't have very good systems. Even in Japan, they still use a piece of paper where—with a scratch-off code to verify you own that piece of land. And if you lose that piece of paper, it's actually quite difficult to replace uh, or to—to like, you know, to get it back. So, um, uh, and in other parts of—like, you know, in Africa, there's many land—you don't know who—who it belongs to. So, and also even in countries like the US where there is fairly mature uh, record-keeping, but the record-keeping is done manually, and the local municipal office keeps that record, and it's not—it's not digitized. Uh, so when you try to buy a piece of land, you don't know the history of that land. You don't have data. So then you cannot price it, and then you have low liquidity. Um, so there's all of this issues which can be addressed. Uh, and we are actually investing in a company that—that's solving this problem. Uh, we—we recently invested in Sygnum, which is another project that does digital—decentralized IDs. Uh, and they are building Layer 2 for governments, etc. So we're—I'm—I'm spending—I'm pushing them really, really hard. Um, so yeah, so there's a lot of interesting solutions being built.
Yeah, I think everything that can be digitized will get digitized, and—and we're seeing that trend, and there's so much efficiency, particularly like government level and stuff like that. One of the things that um, you um, were known for was the investment in X. Yeah. Now, what did you see in that because you don't make a big investment like that unless you see something in the future that could be
Related to crypto, Web3. Yeah. To be honest, um, X was a different type of philosophy. I think, uh, freedom of money is important. Um, but to have freedom of money, you have to have freedom of speech. Freedom of speech is kind of the bottom layer, layer. If you don't have that, then nothing, no other freedom kind of works. Um, so, uh, when we invested in X, the Twitter back then, uh, it was based on that philosophy, and um, uh, so, uh, and then I actually didn't expect that they were turned to become XAI. So now we're a minority shareholder in a, you know, leading AI company. So fantastic.
And talking of AI, how are you, how are you thinking about how AI is going to change even this industry?
Oh, yeah. Uh, outside of just developers using AI to write faster code, but yeah, so I think AI has a lot of use cases. Well, number one is, uh, AI, I believe will completely revamp the user experience. The inter—how you interact with blockchain—UX feels like it's all going to, it's all going to change, right? So, um, so I think AI has so many different applications, uh, that, um, uh, unfortunately, this industry happened before AI. So we need to change this industry to an AI-enabled industry. Yeah. Uh, both in terms of apps we're building, uh, product tools, um, customer support, risk management, risk monitoring, um, uh, and, uh, also AI itself can use blockchain, right? So I think, as I said, tweeted before, um, the currency for AI is crypto. Uh, AI is not going to swipe a card, you know, um, enter SMS code. That, that doesn't work for AI. Um, it's going to be crypto. So, um, and then, uh, AI needs a lot of data to train. Um, today they exhausted the public data, but there's a lot of data we don't capture today. Those, those data can be captured in a privacy-preserving way using blockchain. Um, but if you give those data to a third-party company, then you can't, you can't ensure your own data sovereignty. So, um, capture of data, it logically should be done on the blockchain. But today it's easier technology, technology-wise to do it on a centralized platform. So, uh, we will hope to see that transition happen.
Um, and then, um, today many people, there's so many different AI agents with a token. Yeah. U, but the, the agents doesn't have a lot of utility, right? So it's experimentation still right now. So what we want, what, what I would really want to see is like real agents that, that have real utility, like that can really help you, that, that have tokens. So today, like, you know, you can, there's so many platforms you go to AI token launch platform, you click a button, you get your own AI with your own name. Um, takes three seconds, and then you have your own token. That token is useless. Well, most, I would say 99.99999% of those tokens are useless. Then maybe one or two for sentimental value, for culture value, for, for other things. But, um, what we want to see is real AI, um, agents that can do things like, you know, the today the big ones like, you know, ChatGPT, uh, DeepSee, etc. Those are real big AIs that can do a lot of stuff. Uh, there's smaller AI than those guys that can do a lot of stuff that know video, uh, video editing, image editing. Um, and I've just seen a demo of AI paying for, literally paying for hotel, uh, booking. Um, and but today that those AI have to go through a website. Hopefully, in the future, that you should be AI talking to AI, um, to book, to book that, right? So I think in the future, uh, we will see a very heavily automated world.
Um, I think I was talking to a fund manager yesterday. Let's say, um, of 8 billion people in the world, uh, of this, uh, of the data that we, we p, we, we generate every day, uh, it's about 300 trillion tokens, like token meaning not, not a crypto token, meaning the words, for AI tokens, uh, today open, uh, AI is generating AI is generating about 10% of that today, wow, uh, in the future, though, AI will generate 10 times more than we do, so when we have AI, AI will interacting with each other, um, there'll be so many exchanges, uh, in the tokens, in the, in the word tokens or in the interactions, and then there will be more commerce, the AI will be trading with each other, they will be paying each other, they will be like, you know, transacting, they will use crypto, so I've talked a lot about this, is people don't realize right now the agents are being essentially subsidized by VC capital in these large, uh, AI companies, over time agents need to get paid for comput and electricity, and it happens at lightning speed, and the only way of doing that payment is crypto payments, and then they will be building their own businesses, of which they'll build in profit margins as well. I, it's a strange world where we may not be the profit drivers. We may not be the economic engine, they'll come from the AI.
Uh, absolutely, I think that's, that is coming, like with AI so far in our world, um, population is related to productivity. So the, the higher the population, the more GDP, etc. But with AI plus robotics, uh, or plus robots, uh, that's going to change. Uh, so whichever country has the best economy or manufacturing and AI technologies, AI plus robots plus, uh, blockchain, um, they're going to, they don't need that many people. So, um, uh, so the productivity is, uh, equation is going to change. So it's, uh, innovation that matters. Um, so, uh, yeah, in the future world, I think we can live a much more comfortable life with much less work, um, like we, where we, how we should be. Yeah, I think there's this whole nexus of AI in crypto is very interesting. The other part of AI that people don't understand yet is if we're not careful, we're going to have two or three giants, and we need decentralization within that industry too, and I think blockchain plays a role in that.
Have you any thoughts on that?
Absolutely. So today, um, the big AI companies use our internet data to, uh, to train their models, and that happens to be with a few large internet companies, know Microsoft, Google, whoever else, um, is, um, and but going forward, uh, as I said before, we, there's a lot of data that we don't generate, we don't, we don't store, uh, and now we're going to be smarter about how we store our data, so, uh, we should, they should be stored in a permissioned way that we, we only allow access when we want to, and we should be able to monetize out of it, um, so your health data, um, um, you know, you can be anonymized and then used to train, um, uh, uh, different AIs, um, every interaction you have, every thought you have, etc., if you want to, you should be able to digitize that, uh, blockchain, tokenize it, and then be able to monetize it. So, uh, and then, so, uh, in the future, I think the, um, uh, and also we're seeing the, I think we'll give credit to the first few centralized platforms that, you know, that, that have the scale to innovate, but once the industry is proven, then the decentralization will happen. Um, now we've seen that with DeepSeek, they open-source their model, and now everyone can use that at a fraction of the cost. Um, and, uh, so I think we're going to see more, more and more of that coming. So I think the future is going to be quite decentralized. Yeah.
It's also interesting because crypto is the fastest-moving industry most of us had ever seen until AI came along, and now it's multiplied the whole thing. Yeah. So that's not, that's normal though. Every new industry is going to be faster than the previous one. So, uh, internet developed so much faster than traditional industries. But with blockchain now we have internet. So we can develop so much faster than, uh, internet companies. So I think Binance is probably the first, at the time, the first company to reach $1 billion in profits from startup to $1 billion in profit. U, but that's because we had the internet and we just, and we, and then we had the blockchain. Um, and then, uh, AI companies are now post-blockchain. So now if they do it well, they can easily monetize, um, they can easily use distributed token economics, um, and, uh, they should be able to grow much faster. Yeah. Yeah. I think OpenAI got to 100 million users in 3 weeks or something stupid.
Yeah. A few days.
Yeah. Unbelievable.
Unbelievable.
So, let's go back a little bit. So, 2017, I think you started Binance when you had a vision of the industry going forwards, what you were building for. How different is it today versus then? What did you get right and wrong?
Um, I think we got a lot of things wrong. Uh, so, um, and when we first started, I think we said, uh, maybe like, you know, top 10 in three years and maybe top one in five years. So, uh, that, that we got wrong, um, and you know, we didn't expect the growth that, uh, we had, and but the industry changes very quickly. Um, this another example we got wrong is like we didn't think stablecoin is going to be that big.
Really?
Yeah. So we just, look, stablecoin should be an intermediary thing between fiat and crypto. It's a, it's like a patch. It's a, it's a, it's a band-aid solution for people who selling crypto, funny holding, holding, holding stable value for a little bit. Um, but so I got that wrong. Um, and, uh, so there's a lot of things we got, like, uh, for me, I can never predict markets. Uh, I don't predict industries, but the long term is easy to predict. Uh, blockchain is going to be really, really important. AI is going to be really, really important. Um, this field is going to grow. Um, so, but then, u, on a week-to-week basis, we have to pivot. We have to adjust. Um, I didn't expect memes to be this, this big, right? So, these are just things that you cannot, you cannot expect. So, u, but when they become big, you have to adjust to it. So, um, yeah, I remember when I first interviewed you, I can't remember 2020 or something, and I said, well, how long's your strategic plan? You said about two weeks because you were just very focused on what do I need to deliver today and what does the market need?
Yeah, I think today I can look a little bit longer. Uh, but back then I was like, we're just putting out fires, right? So, um, the system, you know, is always under stress. There's always some stress point somewhere. Some, some stuff's always like, you know, uh, there's always some crisis somewhere. So back then it was just more about like, you know, getting through every week, uh, and continue to build a, and also our product development cycle is very short. Uh, especially back then, today it's a bit longer, which is a bit frustrating. Um, so, u, back then it was like, oh, every feature, when we talk about a feature in the morning, usually by afternoon that feature is live. So, uh, wow. Then that was a fantastic feeling back then. Today, it takes quite a bit longer. Today, we have a larger user base, and every change, if you screw up, it's, it's, it's going to be quite, quite, uh, quite, quite bad. Yeah.
So, when you're looking out at the industry and through your investments in startups, what should people be building? What are they missing that you're just not seeing enough people working on?
Um, so actually, look at it differently. Um, what we're short on is not ideas. um, the same ideas, the same people have, um, uh, what we lack on is, uh, strong founders that are ve, that have very strong conviction. So, uh, funders who are mission-driven, uh, funders who are money-driven, um, in this industry, in, in the crypto industry, like it's quite easy to raise 10 to 50 or 100 even more millions of dollars. Um, people who are money-driven, once, once they come into a hundred million dollars, they sometimes get like, know, they, they, they kind of think they made it, and they kind of slack, uh, they kind of, you know, just the, the, the drive is kind, they kind of lose it. Uh, whereas people who are mission-driven, they will continue to go. Um, and also people who are mission-driven, when there's a, when there's some adversity, they, they, they plow through. So, um, what we lack, the, well, from our perspective, what we lack the most is strong funders in, in the space. Uh, I think we have a lot of strong founders, but we need more. We need way more. We need 10x more. So that's where, that's where the shortage is. Uh, so strong funders with conviction, with the ability to execute. Um, and yeah, if you have, if, if you, if you have all three, like there's so much money to be made. I mean, you don't have to think about making money. The money will just come. Yeah. And it's not, we probably don't need more infrastructure layer stuff. We need the applications. I mean, you guys have got what 260 million users and growing stupid fast, but that's still all money apart from stablecoins. Yes. But it's still all the money system, but there's so many things that can scale to a billion users.
Yeah. I think, well, again, I think sooner or later there's going to be some app that will scale, right? So sooner or later there'll be another app that's might be like blockchain, AI, some combination of it that would just like, you know, that will just grow like wildfire. um, they will get like, you know, uh, 100 million users in a few days. Uh, I think those, those things will come, uh, because now we have the infrastructure, infrastructure to support it, both on the tech side, cloud, AI, uh, everything is scalable. So, uh, today the successes will be like phenomenal successes that people don't even expect. So, but again, I cannot predict where those are. I, I believe any idea that we have today can become that, it's just all or execution. If you can execute well, um, those things are very, very possible.
So there's a lot of new people in the space as there is every cycle. They want to hear your advice for them, how to, how to deal with this. It's hard for people. They're not used to it. So let's give CZ's advice and coming into the industry from you. What to do, what not to do.
Sure. Um, I think the fundamental thing is, um, like there's no magic bullet. There's no magic formula. Um, stick with fundamentals. Um, don't get too excited. Um, when people say, "Look, this project's really hot. uh, if you don't buy it to this minute, then it's going to, you're going to miss it." Don't, don't go for that. Uh, just know, stick with fundamentals. Um, uh, what, what happens in traditional investing in traditional market is the same thing that happens here. You should look at fundamentals. You should look at projects. You should play with a product. You should, you should believe it. You should understand it. And then, um, uh, don't follow, don't follow advices, um, just because, don't buy just because you s, you saw somebody tweet about it, something on Twitter, right? So don't, don't, don't just follow blindly. uh, uh, don't invest in a large number of tokens or coins. Um, you know, uh, play with three or five that you can understand deeply so that you know if they're good or not. Uh, if you don't understand, don't invest. Um, and then for the, uh, for the builders, u, again fundamentals, right? So, uh, don't, don't try to raise a big amount, like that's, that's not the benchmark. Uh, the benchmark is five years from now, how many users do you have? What's your valuation five years from now? So, uh, build, uh, look at product or market fit, build prototypes, test it, if it doesn't work, pivot, uh, if it works, then scale, right? So, um, and, uh, just know, uh, there's not, there's nothing magical, uh, everybody comes into crypto thinking that the crypto somehow is different, it's not, uh, it's a bit more volatile, yeah, so like you see very often, right, many people who are in, who are not traditional stock traders, they come to crypto, they become active traders, um, doesn't work, crypto, crypto is no different from, If you do day trading, it's the same everywhere. It's just a different asset type. Um, there's some guys who are like, you know, uh, entrepreneurs in traditional internet, well, not traditional, just internet tech fields. They come into crypto, somehow this, they want to do it. They want to do something very different. Um, there's nothing different. Crypto does help you raise money more, more easily. It's a very effective, uh, fundraising tool, but still the fundamentals apply. You got to have product market fit. You got to have a strong product that people use. Um, so all of those things still apply. So there's nothing too magical about this magic internet money kind of industry. Uh, there's nothing magical about it. It's a lot of hard work, a lot of basics, a lot of fundamentals.
Do you think capital formation will grow? We saw ICOs back in 2017, right? It was experimentation. It was the wild west, but it was experimentation like memes are now. Do you think we're going to come back to more of that kind of capital formation via some sort of format of ICOs?
Uh, I think so. Um, but I think there's always going to be a combination. So we've seen the evolution, right? So no, uh, say 70, 80 years ago, if you want to start a business, you can only get a loan from a bank, and it's very hard to get fundraising, right? So then, like, you know, 30 some years, 30 something years ago, VCs started to appear, and it makes sense for internet businesses because, you know, they got to, they got to burn through a lot of money before they have a, a revenue model, and that kind of work for internet, and then now we come to ICOs. ICOs are so much easier to raise money, right? That's 2017. But for ICOs, you actually still have to have a website and have a white paper at least. But that's super easy compared to like traditional VC fundraising. And then, um, and now, like, and then, and then we went through like, sort of the NFT craze, etc. But now you just need one image, say like one meme, and then you, you, and then, uh, and then you go to a pump, um, uh, platform, and then off you go. Um, and, uh, so the fundraising has become so much easier, which is kind of, u, it's a bit too easy now. Um, so I think, uh, but I think there are still, still many, there's still many strong funders who are using the, like, know, the solid approaches, white paper, product, and TGE much, much later after the product have product market fit, um, and, uh, I think we still see a lot of, uh, strong projects in, uh, in, in those categories. I think, uh, long term, those projects will win.
Um, and what do you think is going to have higher returns, VC in the space or listed to, uh, liquid tokens? Because it's actually very hard for anybody to build a business and beat Bitcoin's returns. It's phenomenally hard to do.
Yeah. How do you think about that?
Yeah. So, uh, it's very hard to outrun Bitcoin. Um, that's, I think that's only a few projects, uh, that have kind of outrun Bitcoin for, for a period of time. Um, and, uh, the, yeah, I mean, in the industry, if you're industry for any period of time, you say, look, instead of investing in crypto projects, just buy Bitcoin and hold, uh, much less work and, uh, uh, but, uh, but even as a crypto-ist like myself, uh, I invest in many, many new projects, to we have to do that to grow the industry, um, and there are projects that, that have outright, probably be richer if you hadn't, uh, actually, no, uh, I think BNB have outrun Bitcoin so far in its existence, uh, Ethereum probably has as well.
Yeah.
Even though I know a lot of people have a lot of opinions about Ethereum.
Doge has.
Yeah. Even Doge has, which is crazy, right? So, um, so there are a few projects that outrun that outperform Bitcoin. Uh, but those are a small number. But I do think that they all continue to be new projects that will outperform, uh, Bitcoin. Uh, and, um, but they're very small in number, and also they start at a much smaller market cap, right? So, it's easy to, if you look at the multiples, yeah, they can go, they can go higher. But once they, if they reach to the size of the Bitcoin today, they will slow down too. It's much harder to grow a large market cap than a small one. So it depends on your risk, pro, risk appetite, risk profile, uh, on what you want to invest in. But I do think there, there are still many good opportunities. Uh, but it's true that, u, if you want the least amount of work, uh, with very good returns, just buy the top few tokens. You, you're, you're in good shape, and you'll be fine.
So in our last few minutes, where are we in the current market cycle? How are you thinking about this? What should people, how should people be thinking about it?
Uh, I'm always bullish.
Me too.
So, um, if you ask me though, at the deepest winter in, uh, 20, what, 2019, I'm bullish. Uh, 2022, 2023, I was bullish. Um, and if you ask me at the peak, I'm bullish, and then the market goes down, have a correction, you know. So, um, so I'm, it's very hard to time the market. Um, so far the markets go on four-year cycles. Uh, but it's very hard to tell, like, know, if this one is going to be shorter or longer, etc. So, um, but I think if we take a long view, we're still early. Uh, and also what we know about state-level adoption.
Yeah. Asset management adoption. You know, there is a lot of big players coming in, and that feels like that's a this cycle thing where people start.
Yeah. So actually, on this one, um, I think what we've seen is that this cycle so far has been ETFs. Yeah. So, US institutional money going to ETFs, and those money go to Bitcoin because the Bitcoin ETF is the biggest. So, in that regard, yeah, the Ethereum didn't go up that much, right? Because the money hasn't, u, the money is kind of stuck with Bitcoin. Um, um, but what's good for Bitcoin is good for other crypto. Uh, eventually the money will disperse. Uh, when, when they're in ETF, they usually take longer because the institutions for them to, uh, move, go from Bitcoin to ET, uh, Ethereum to other altcoins will take a bit longer. But, uh, what we've seen, and I, I still believe that 100% is, um, what, uh, Bitcoin is the usually the first, uh, crypto that people interact with when they come to crypto, that's the first one that learn, that's the most stable, that's the most, uh, decentralized, etc., and that's the biggest market cap, but once the money is in crypto, u, they will eventually explore other things, right? So it, you will come, so, um, I, so yeah, I think we're, I think we're still quite early, um, well, I think we're still in, uh, if we go by four-year cycles, should be end of this year. Uh, but, um, we don't know for sure.
And do you think the, because of where we are in the network adoption that growth has slowed down yet in Bitcoin, or do you think we're actually early because there's an argument or discussion going on where we are in the adoption curve and i.e., our returns coming down. I don't think they are, but what do you think?
I don't think they are. Um, I think we're just getting started. So, um, uh, yeah, I think right now there's a handful of countries that, that's talking to me about blockchain adoption. Um, and most other countries, I don't see anything going on. Um, so, uh, out of 200 countries, there, even there's 12 countries that just starting, right? US is just starting. Um, so, uh, ETFs is only like the last, what, a few months, right? So, um, everything's just starting. Uh, I think people, people when they invest, they, they're very impatient, right? So, of course, when I invest, I want to see my money 10x tomorrow, uh, why not, right? But the market doesn't work like that, uh, so I think if you want to chase, if you're chasing things that are against how this world works, you're going to be always disappointed, right? So basically, you're chasing something that doesn't make sense, and if you keep, if you chase too hard, then you're going to, it's going to backfire, you're going to lose, lose money, but, uh, I think in this world, we got to understand how, how, how
The world works, uh. Money takes time to build, and uh, what's good for crypto is what's good for Bitcoin is good for crypto, and you will filter to other things.
So, uh, and it will take time. As long as we understand the right time horizons, then, then you can set your expectations correctly, and then everything will make sense.
So your overall summary is just hold on, be patient, pretty much don't mess it up, and if you can build something important and do it with a mission, pretty much, yeah, and use AI while you're doing it.
Yes. Perfect. There we go, CZ. Thank you. Thank you so much. Yeah, thank you guys. Thank you.
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