05 - Network State Conference 2025 - Fireside with Arthur Hayes and Balaji

Woohoo. All right, Arthur, welcome.

Morning.

So Arthur and I believe a lot of similar things. We come at it from very different angles. Arthur, you had a quote a few years ago. Get your bitcoin and get out. Why don't you elaborate on that? It's a very good, very good quote. Go ahead.

Yeah, I don't remember when I said that, but obviously if you've read my writing, I got on stage a few days ago talking about how France might leave the euro and there's gonna be some multi trillion euro bailout by the ECB. And I think I've done probably like 50 interviews over the last four days. And a big question that keeps coming up is, you know, four year cycle and is the bull market over in crypto? Because it has ended every four years in the past. And I guess my response was I just read the newspaper and when I read the newspaper I listen to what the politicians say all around the world and usually it's a similar thing of we're going to build more bombs, we're going to give you free health care, everyone's going to have a job, it's all going to be great. And you never hear anything about raising taxes or anything like that. Usually they just leave it. Oh, okay. We're just going to do all these things and it's just going to happen. So how are they going to do it? They're just going to print a fuck ton of money. And that is the point at least on the liquidity side of bitcoin and certain cryptocurrencies. And that's what I mean, get your bitcoin and get out. Because I think we're at a 80 year turning point. I think you've spoken a lot about this of massive change. Politicians don't like change. They're elected to basically squelch change. And so to do that they're going to limit volatility by printing money until it explodes in our face, obviously. And so the point of that is take this fiat that you can earn, however you earn it, convert it to bitcoin or gold or great equities and then exit stage left because it's just going to be a complete shit show.

Get to a country like Singapore or get to a country like Dubai or something like that, it's probably a good idea. But I think even if your within any fiat jurisdiction, I think just the kind of mental model for what's coming because some people, you know, they think it was like a four year cycle, others think it's an 80 year cycle. Others are like, it's like a 500 year cycle because, you know, you've had a boomerang of the world economy back to Asia and so on and so forth. And you know, we're seeing, for example, you saw the chart where gold is either flipping or has already flipped. You know, treasuries as you know, the reserve currency estates. So like it looks like gold is becoming the reserve currency of states and Bitcoin the reserve currency of the network. Do you agree with that?

Yeah, I think central banks will buy gold because they understand gold. It's been the currency of nation states or empires, whatever, since we've been in civilization, what, 10,000 years ago, whatever it is. So they understand that it's the same trade. They're trying to protect their wealth. However they define that we as a people, it's really hard to move gold around the world. And if you think about the World War I to sort of the modern age, 80s and 90s, private citizens couldn't own gold, obviously in the United States in 1933, FDR took that right away, wasn't reenacted until 1974 in the United States, in the United Kingdom, these are the two of the most Anglo Saxon capitalist property rights places in all of the world. The UK was so broke, I don't think you could own gold privately as a private citizen until the mid-1990s. Right. So if you. These supposedly capitalist property rights places restricted the price of gold from reflecting inflation that was to pay for this colossal failure of war during the 1930s and 1915 whatever period. We don't really understand inflation in a modern context. But now we have Bitcoin and it's performed so well, mostly because now we have these options.

So you mentioned something there that I think we know, but a lot of people are new to space, don't know, which is in the 1800s and before governments were limited by how much gold they could have, but only in the 20th century they could just print infinite fiat and basically just go to war forever. Right? Yeah.

I mean, fiat currency has existed ever since. Governments have been around. You can look at John Law in France, right? He destroyed the franc doing some sort of South Sea bubble and all that kind of stuff. So yes, governments go on and off the gold standard all the time. But there has been this anchor that has kept people honest, right?

And so, you know, you've done. You're actually also now into. So not just bitcoin, but also longevity into something that's common to our space. Brian Johnson's into it. Brian Armstrong's into it. Me, cz, a bunch of other people. Why don't you talk about what you're doing with longevity? Because that's been the headlines a little bit.

Yeah. So I'm an athlete. I love training, and I spend most of my time skiing and playing tennis. And obviously, as you get older, things get a bit slower. And so I've always sort of been curious about stem cells. Right. Taking other people's cells, putting them into yourself, and hopefully rejuvenating your body. And so about two years ago, I started to do some research. Okay, I want to do this. And I'm close to Thailand. I know that's one place where you can do it. And so I started looking at clinics in the region. And obviously it's a very personal decision because you're literally taking this foreign cells, injecting them into your body, and that could be life ending. Right. If you go with the wrong provider. And so after doing a lot of research, I met Julian, who's a CEO of Veritas, the clinic that I've been using. And now I'm an investor in. And about two years ago, I started taking stem cells. And after about 18 months, he came to me and said, hey, we want to do a recap of the company. Would you be interested in taking on all of our small investors? And I said, sure. So I bought into the clinic. I'm now on the board, and now it's something I'm super interested in. I. How do we, number one, further research into asking these questions that haven't been asked? And then, number two, how do we commercialize it into a clinic? And obviously it's. Right now it's more for wealthier folks, but hopefully over time, the price curve down, price comes down. And everyone can benefit from this.

Absolutely. No, I think that's. So you took the risk on stem cells, but you were actually in pretty good shape even before then. Right. You just like, why'd you do that? Were you just interested in pushing the limits? How do we think about it?

Yeah, I mean, I want to feel like I'm 30 for the rest of my life if I can.

Right. No risk, no reward. I believe in that, too. I mean, no plane crashes, no planes, no train crashes. No trains. Right. So someone has to actually take that risk. So, you know, we should start giving out awards for that kind of thing, for, like, medical bravery. So stem cell clinics, anything else you're doing in longevity, anything else you're interested in looking at?

I mean, I'm just interested in just learning what everyone else is doing. Right. So that's my particular bag that I'm holding. And you know, obviously we'll be promoting it as we go along, but yeah, that's sort of my main interest.

Yeah, I think it is potentially possible. There's some amazing treatments in mice that actually really do reverse and they have these very visible effects. And I do think we could get an asempic for longevity if we pushed on enough. So simply you being a model out there, other people being a model is very good. Okay, so let's see. So that's Bitcoin that's held. What else is in your mind right now? There's a bunch of things I can talk about in terms of the macro picture.

I mean, I think the macro picture is super interesting and especially in this region of the world, I think one thing that's like, who's gonna own all this debt at the end of the day and what's gonna happen when the.

Fed is actually buying it themselves? They're calling it, it's starting to be yield curve control, but they called it, they started treasury buybacks and they said they're just adjusting maturities and something like that. Did you see that?

Yeah, I mean, I think the one.

It's only a few billion or whatever. Only a few billion right now.

But yeah, obviously the popular narrative is that the Fed has been restrictive, at least in the United States. And there's been various commentators that have pointed out that if you look at what the Fed has sold or let mature on its balance sheet from basically 2020 till the present, they haven't sold a single bond longer or than 10 years. So they've kept their holdings of 10 year paper constant. Which means that there's obviously a problem in this market. As much as US Secretary Scott Betzer wants to get on TV and pound the table, that he's done so well as treasury secretary because the 10 year yields, I don't know, 4% or something around there, the Fed, which is one of the largest holders of this thing, refuses to let that run off its balance sheet. So there is no quantitative tightening. When you talk about the long end of the yield curve, which tells you something as an investor, is like if the person who can print money has no economic accountability for their P and L doesn't want, isn't selling these things, what's actually going on behind the hood. This is all a smoke and mirror. It's like they're fucked.

And the tariff situation amplifies this because the utility of the dollar is actually less. If you can't actually use it and trade anymore, why do people want to trade with the US it's telling them to go away, stop. Stop selling them things for the printed money. They're actually reducing the utility of the printed money in the first place. Which, you know, like, do you have a view on the. On tariffs and printing like it is reducing demand, or do you disagree with that?

I mean, I understand why Trump wants to do it. There's an imbalance in the system. Fine. There's been certain people who've benefited and certain people who haven't benefited from the system. And if you are, you know, Trump, I believe he thinks he's a patriot. Whether or not you believe that's the case or not, you know, a proud American person, whatever that means. And if you think about the business model of America, which is a glorified arms dealer, it's not a good look when you can't beat Russia and Ukraine and Israel has to stop bombing Iran every 12 days because you couldn't produce enough missiles. And so I think that's a guiding light between, what does this industrial policy really mean? Well, we can't actually win a war, so why don't we go and allocate a lot of credit to do the things that we need to do, Whether that's rare earths, whether that's producing chips or whatever it is. At the end of the day, it's about this GDP number that we have is great if you're an MBA business student at an Ivy League school, but, like, if you're a soldier, if you're an industrialist, it's complete bullshit. Everyone doesn't make anything. That's what his point has been for a very long time. Whether or not you think it's a good or bad thing is not the point.

Well, in many ways, the US Is signaling strength, but the substance is scarcity. Like, it's saying, it's pounding his chest. You know, this, that, and there. But then saying to allies, pay for your own stuff, you know, you're on your own, you know, and. Or even with the tariffs, the underlying motivation in part is we can't keep going into more debt and so on and so forth. So there's an underlying signal of scarcity underneath the rest of it. Would you agree with that? Like, whether they, whether it's, like, fully conscious or not, it is taking a position of we don't want to actually spend any more on this stuff.

Yeah. And I think, you know, if Trump was really serious about rectifying this in a way that was politically costly, would have kept going with the tariff thing. Like, you know, it is the right thing to do. If he's trying to accomplish his goal. He wanted to get there very fast. He went out with these crazy really high rates and then, you know, after seven days had to had a backpedal because he couldn't take the pain.

Well, so I would, I would somewhat disagree with that because I think if by reducing regulations domestically you could actually increase production, which is part of the stated goal, versus tariffs just is a tax actually on many of the producers have to import machine tools, they have to import raw materials and so on and so forth. So it becomes harder in many ways to make things in the US So I would argue it's somewhat self destructive. But regardless of that, overall there's many stresses on the system because tariffs also signal to other countries that the US is no longer maintaining, quote the rules based order. And so I think in the medium run we're shifting over, maybe we've already done so in some ways to the code based order where, you know, for example, bitcoin smart contracts are more internationally reliable. Have you moved any companies out of Delaware?

Moved any companies out of Delaware?

Out of Delaware? Like Elon moved out of Delaware. Async has moved out of Delaware, Elon.

I mean again, if you have bitcoin and get out, right, fine, you have a legal fiction. And every country has legal fiction wherever it is. And there's good things and bad things about every country's legal fiction. And that's one thing why I don't invest in equities. I don't like dealing with laws because it's messy and it's expensive to like, oh, someone fucked me over, oh, I got to go to court. Well, how expensive is that, right? How long does it take?

It's just pure crypto.

Pure crypto? Yeah. Okay, I have a company, maybe the company holds crypto so I can pay my taxes and all that kind of stuff. But like, cool, let the government, you know, give unto Caesar. What a Caesars.

Yeah, that's right. Give it. But then you're so agreeing with me that the code based order is actually more reliable in many ways than the local rules based order.

Yeah, absolutely.

Yeah. So what's interesting is how far we can push that. Like obviously with bitcoin, I think it's already there with Ethereum for some smart contracts. It's already there like Uniswap or things like that. How far do you think we can push that? How many things can we push it to smart contracts and code versus the physical world?

I mean, obviously I'm more in the defi space. That's kind of my, my thing. I think the banking system as Tether has proven is very ripe to be completely disrupted. You know, with a blockchain you can do compliance, you can send money between individuals, you can do proper accounting, you know, all for the price of a gas transaction.

Right.

And so like, you know, that's why 150 person company is worth half a trillion dollars. JP Morgan's worth, you know, almost double what they are. But J.P. morgan has 315,000 employees. Do what J.P. morgan does.

Have you ever seen there's a graphic called Unbundling a bank? No, it's actually a very good graphic section from 10 years ago and it shows like the homepage of Wells Fargo and it's got like loans and this and that and so on. And then each one of them has a little thing pointing out which says the fintech company that's going after them. Right. And one of the things I've wanted to do is to redo that and to show which stablecoin based companies going after them. Because really what a stablecoin is, it's a new kind of banking license since because you can do everything, you know, you can send and receive in arbitrary amounts, you can, you know, wire to this, that and the other, you can build an entire Wells Fargo or Chase UX on top of a stablecoin backend if stablecoins are legal, which they finally are. And so it seems to me, like many of the functions of a bank, the reason there's that huge gap between the, you know, the valuations of JPMC versus Tether is that we actually have reduced many payments to packets. And so many of these things, their valuations will just crumble as the new things rise. I don't know if your thesis is on that.

Yeah, I think there will be one or two large banks that get the message and have the political will to actually do it. I think a lot of times we shit on banks all the time. But if you think about it, they're essentially another arm of a national government.

Right? Exactly.

They have to do politics. And if you're employing 315,000 people or I'm sure banks in China employ millions of of people doing all sorts of nonsense, you know, you can't just fire all of them because that's just bad politically. And even if every CEO of a bank fully believes that the future is tether, you know, they lose their banking license if they don't employ people, jobs for the boys.

You know, it's funny you say that because it is absolutely true that there are arms of the government. Because something I learned in crypto was that the fiat banks, the two most important employees besides CEO were the CFO and the chief legal officer. Whereas at a tech company it's like the CTO or the lead of product, the lead designer, because you have to build up the product from scratch. Whereas they kind of inherited a license and they can just charge whatever they want for it as long as it's legal. Right. Like they can chisel people on ATM fees and all these other kinds of fees. Right. So it's a completely different psychology where their value prop comes from that government license. And now suddenly with stablecoins everybody has that license. So that's like this enormous dislocative thing that reminds me of when only a few newspaper companies own trucks and printing presses. And so then suddenly everybody got a computer and a smartphone and then there's this huge shift into social media. So that's like about to happen. I think with stablecoins. Maybe you have some thoughts on that?

Yeah, I guess obviously in the US context, because everyone's really focused on stablecoins in the US because you have circle and tether and all those sorts of things. I think there's an underlying political battle, right? Trump got debanked by all these large banks, right? And he's been a New Yorker for his whole life. He is the epitome of the establishment, right? Just look at the photos of him and the Clintons and the Obamas, they're all friends, right? So for him, for them to go after him and his family or whatever and take after anybody, now he's like, oh fuck you guys. Yeah, I'm just gonna let this stable, I'm gonna push behind this stablecoin thing. Obviously there's some geo strategic reason why they do it, but otherwise it's like, well, fuck all you guys in New York, you debanked me. So I'm just going to make your business worth zero by allowing this remediation to happen.

And that's exactly. See the thing is, many people can't articulate the difference between USDC and a bank wire. But the fundamental difference is a bank wire is within a locked network of other banks and usdc, anybody can set up an address to receive to it to first order, right? And that's like. And then USDT is even more unlocked. And that locked versus unlocked is like a lock versus Unlocked cell phone. And this unlock is like the whole thing, the license. Right. So, you know, related to that, by the way, something I'm thinking a lot about nowadays is not just debanking but denaturalization. So like stripping of citizenship, stripping of identity. I think that is actually in some ways the new debanking. And they're related because you need an identity to get a bank account. And you know, these things go hand in hand. And one is kind of, you know, a left tactic, one is a right tactic, you can argue, but basically both of them, you can have a crypto defense against it because you can keep your bank account with bitcoin, you can keep your identity with ENS and crypto identities. Have you, have you put any thought into something like that?

I mean, I guess I'm not really deep on the identity space, but I think obviously people still have a lot of emotional attachment to, you know, this lottery ticket that they got, which is where they were born. Like nobody. I was born in America and I got a piece of paper that says I'm American, but like I didn't do anything to become American. I guess I was born.

Right.

It wasn't my choice, you know, and wherever you were born, right, so. But then you say you have this self worth based on this thing that you're not responsible for. And I think once we move past that, then the crypto identity makes a lot of sense. Whether you're an Eth person or a Solana person or a bitcoin person, whatever. You talk a lot about tribalism, but those are positive things you've done since you were born, since you have a consciousness that you made a choice to join this tribe versus I am an American because I was born in this place that I had no agency over.

That's exactly right. Basically you are choosing to sign that social smart contract and join that group. And it is not something that you were born with, but something that you chose, which actually is a much stronger bond potentially. Right. So in the last couple more minutes, anything you want to ask me, what.

Are you most excited about?

What am I most excited about? Well, network C8, so obviously. But actually, so here's, you know, I'll say something which is, you know, Elon wants to go to Mars. Right. Brian Johnson wants to live forever. Sam Altman wants to build a machine super intelligence. And I just want to start a new country.

So where's it gonna be?

Sounds like the boring enterprise sass of crazy tech founders or whatever. Right? And it's been done hundreds of times. Where's it gonna be? Well, where's bitcoin? It's decentralized, right? Decentralized country.

So can I go skiing in your country?

Yes, okay. Absolutely. Absolutely. Well, actually, when we put it, Indonesia is nearby, right? Indonesia is a country which is a bunch of islands separated by ocean, right? So couldn't you have a country which is a bunch of islands separated by Internet? I think you could, because telepresence, remote work drones, you know, all of these kinds of things are making it easier and easier to coordinate things, you know, like. Like across large distances. And you might need, you know, them to be like, peninsulas or islands or.

Are we going to have a large army?

Well, no army. I mean, bitcoin has no army. Right. I mean, you know, the whole Stalin thing of, like, how many divisions has a pope. Right. How many long divisions has, you know, like, like fiat. Bitcoin has all the long divisions, right? So we could get very far, I think, non. Violently. India got independence nonviolently. Singapore actually became independent nonviolently. And I think being nonviolent, being peaceful is. Is good, especially when, like, China has this giant drone army that's coming. And so you can't fight that. So, you know, like, we have to be flexible, digital, you know, agile, and so on and so forth. Right, so, okay, so that was good.

No, so no Balaji army.

Okay, well, no Balaji army, no Balogy. Peace. Peace. Yeah, exactly. Right. Biology peace. That's right. All right, great. This is awesome.

Thank you very much.

Boom.