The Rise of Crypto and What Donald Trump Has to Do with It

>>> WELL, AS WE DISCUSSED EARLIER, THE IRN FLUNS OF PRESIDENT-ELECT DONALD TRUMP IS ALREADY BEING FELT IN WASHINGTON, D.C.

THE THIS TIME -- CHARLIE WARZELL TELLS US HOW HE SEES THE CURRENCY INTERTWINED WITH AN ANTIESTABLISHMENT CULTURE.

>> THANKS SO MUCH FOR JOINING US.

THIS MONTH BE THE PRICE OF BITCOIN CRACKED $100,000.

BY THE TIME WE FINISH RECORDING THIS CONVERSATION, I HAVE NO IDEA WHAT TIME IT WILL BE.

BY THE TIME IT AIRS, I HAVE NO IDEA AGAIN.

PUT THESE NUMBERS IN CONTEXT FOR US.

THIS IS A TECHNOLOGY REALLY MORE THAN IT IS A CURRENCY THAT YOU AND I CAN USE.

>> YES.

SO, YEAH,S MOST PEOPLE HAVE BEEN EXMOWSED TO CRYPTOCURRENCIES IN GENERAL OR BITCOIN THROUGH THIS RISE THAT IT HAS HAD SINCE IT REALLY CAME INTO THE WORLD.

IT IS A WILD TECHNOLOGICAL STORY.

WHETHER YOU ARE A PROPONENT OF BITCOIN OR NOT, IT HAS I THINK SURPASSED ANYONE'S EXPECTATIONS OF WHAT IT COULD DO.

ITS FIRST REAL SUSTAINED BOOM WAS AROUND 2017 WHERE IT JUMPED UP.

IT BROKE -- I REMEMBER IT BREAKING LIKE THE $20,000 PER COIN MARK AND A LOT OF PEOPLE SAID IT'S GOING TO 100,000, IT'S GOING TO A MILLION.

THOSE PEOPLE WERE SORT OF ROUNDLY MOCKED FOR THAT AND IT HAS HAD MASSIVE FLUCTUATIONS SINCE SINCE.

BASICALLY EVERY BOOM HAS A CORRESPONDING BUST IN WHICH SO MANY PEOPLE ARE WIPED OUT, SO MANY RETAIL INVESTORS.

AVERAGE PEOPLE TEND TO LOSE THEIR HAT ON THAT, BUT IT HAS CONTINUED THROUGH ALL OF THE MEMES, ALL OF THE DERISION TO RISE.

THIS LATEST BOOM CORRESPONDS DIRECTLY TO DONALD TRUMP WINNING THE ELECTION IN NOVEMBER AND PROMISING SORT OF A PROSPEROUS FUTURE FOR BITCOIN IN AMERICA.

>> NOW ONE OF THE LINES THAT STRUCK ME IN YOUR RECENT PIECE IN "THE ATLANTIC" WAS THAT FUNDAMENTALLY THIS CRYPTO WAS A TECHNOLOGY WHOSE FORMATIVE PRODUCT IS NOT A SERVICE BUT A CULTURE.

EXPAND ON THAT.

>> THE KNOCK HASN'T ALWAYS BEEN CRYPTO DOESN'T HAVE THE KILLER USE CASE, RIGHT?

THE LINE THAT I REALLY LIKE ABOUT IT IS THAT IT IS A SOLUTION IN SEARCH OF A PROBLEM, RIGHT?

MONEY ALREADY DOES ALL OF THE THINGS THAT BITCOIN WANTS TO DO, BITCOIN JUST PURPORTS TO DO IT A LITTLE BIT BETTER.

IT HASN'T REALLY TAKEN OFF, RIGHT?

BITCOIN HASN'T TAKEN OFF AS AN ACTUAL CURRENCY.

THE COUNTRIES THAT HAVE TRIED TO USE IT HAVE STRUGGLED TO SOME DEGREE WITH THAT.

THAT'S NOT QUITE THE KILLER APP AND SO I WAS TRYING TO THINK TO MYSELF, THIS THING HAS BECOME DURABLE.

IT IS WORTH A LOT OF MONEY.

IT HAS MADE A LOT OF PEOPLE RICH.

I COULDN'T REALLY COME TO ANY OTHER CONCLUSION THAN WHAT IT HAS DONE IS IT HAS CREATED A CULTURE THAT IS OBSESSED WITH SPECULATION, OBSESSED WITH GETTING RICH, THAT REALLY CARES ABOUT THE SORT OF GAMBLING ASPECT OF THIS, THE STOCK MARKETY ASPECT OF DAY TRADING AND THE NUMBERS GOING UP AND A REAL CULTURE HAS BEEN BUILT AROUND THAT.

THE CULTURE STARTS WITH THIS IDEA THAT BITCOIN IS IN SOME SENSE A POLITICAL PROJECT, RIGHT?

IT IS A TECHNOLOGY THAT SAYS WE ARE GOING TO CREATE A NEW VERSION OF THE FINANCIAL SYSTEM AND THAT CULTURE, YOU CAN SEE THE THROUGH LINES NOW WHEN YOU GO ONLINE THAT ARE BITCOIN MAXIMALISTS, TRUE BELIEVERS, AND THE DAY TRADERS AND GUYS POSTING MEMES AND STUFF, BITCOIN CAN FREE YOU FROM THE MAN, CAN FREE YOU FROM AUTHORITY, THAT YOU CAN MAKE ALL OF YOUR MONEY THIS WAY WITHOUT HAVING, YOU KNOW, OTHER PEOPLE TAXING IT AND WATCHING IT AND TRANSFERRING IT BACK AND FORTH.

AND I THINK THAT THAT'S REALLY IMPORTANT TO UNDERSTANDING THE APPEAL BUT ALSO WHAT BITCOIN HAS PRODUCED.

BITCOIN HAS IN A BIG WAY PRODUCED THIS CULTURE AND ENRICHED THOSE PEOPLE WHO ARE VERY ANTI-INSTITUTIONALIST AND ANTI-AUTHORITY.

>> WHY DO YOU THINK PRESIDENT TRUMP CHANGED HIS MIND ABOUT IT?

HE HAD IN YEARS PRIOR CALLED IT A SCAM AND HE REALLY BY THE SUMMER OF THIS YEAR, EVEN LAST YEAR, EMBRACED IT.

HE ROLLED OUT HIS OWN ESSENTIALLY CRYPTOCURRENCY THAT, YOU KNOW, AGAIN, VERY LITTLE DETAILS ABOUT EXACTLY WHAT THAT WOULD DO BUT HE HAS PROJECTED OUT TO SUPPORTERS WHO BELIEVE IN CRYPTOCURRENCIES THAT HE WILL MAKE THE UNITED STATES THE BITCOIN CAPITAL AND CRYPTO CAPITAL OF THE WORLD.

SO WHEN YOU DESCRIBE A CULTURE OF PEOPLE WHO AT ITS CORE TECHNOLOGICALLY WERE ANTI-ESTABLISHMENT, WHAT HAPPENS WHEN THAT KIND OF GETS ROLLED INTO THE FOLD OF THE ESTABLISHMENT?

>> SO I THINK DONALD TRUMP'S EMBRACE OF CRYPTOCURRENCY AND BITCOIN IS INCREDIBLY CYNICAL.

I THINK IT IS A POLITICALLY CALCULATED MOVE.

I DON'T THINK JUDGING FROM WHAT I HAVE HEARD IN MY OWN REPORTING, I DON'T THINK DONALD TRUMP UNDERSTANDS BITCOIN.

I DON'T THINK HE'S PAYING STRICT ATTENTION TO THAT OR THAT HE REALLY CARES THAT MUCH ABOUT IT.

I THINK THE REAL REASON IS THAT CRYPTOCURRENCIES AND THE PEOPLE WHO LIKE THEM ARE PEOPLE WHO REALLY DO RESIST THESE INSTITUTIONAL IDEAS, PEOPLE WHO REALLY FEEL THAT -- THEY'RE THE SAME TYPE OF PEOPLE WHO WOULD WANT TO DRAIN THE SWAMP, RIGHT?

THEY'RE THE SAME KIND OF PEOPLE WHO WOULD CHEER ON ELON MUSK AND THE DEPARTMENT OF GOVERNMENT EFFICIENCY.

THERE IS A BIT OF OVERLAP TO SOME DEGREE WITH THE MAGA PLATFORM, WITH THIS IDEA THAT BANKS ARE SCREWING YOU OVER OR WALL STREET IS SCREWING YOU OVER AND TO SORT OF TAKE CONTROL IN ITS OWN WAY AND WORK IN A FINANCIAL SYSTEM THAT DOESN'T INCLUDE PEOPLE.

I THINK HE SAW HUGE CONSTITUENCY THERE AND DECIDED THERE ARE SOME PEOPLE, ESPECIALLY PEOPLE WHO HAVE MADE THEIR FORTUNES IN THIS, WHO ARE SINGLE ISSUE CRYPTO VOTERS AND IN AN ELECTION THAT IS VERY CLOSE, IN AN ELECTION WHERE, YOU KNOW, WE'RE TRYING TO WIN DISAFFECTED MEN ESPECIALLY.

I THINK HE SAW AN OPPORTUNITY THERE TO SPEAK TO THOSE PEOPLE, TO BECOME THE CANDIDATE FOR THOSE PEOPLE AND BY VIRTUE OF THAT I THINK HE SAW IT AS JUST A REALLY GOOD POLITICAL PLAY.

>> THE INDUSTRY AS A WHOLE BECAME AN INCREDIBLY POWERFUL FORCE.

$200,000 WENT TO SUPPORT PRO CRYPTO CANDIDATES.

HOW DOES THAT INFLUENCE PLAY OUT IN THIS COMING ADMINISTRATION?

>> IT WAS REALLY STAGGERING TO ME AS SOMEBODY WHO COVERS THE TECHNOLOGY INDUSTRY PRETTY CLOSELY TO TAKE A BIRD'S EYE VIEW AND SURVEY THE POLITICAL DONATION LANDSCAPE AND SEE CRYPTO'S IMPACT IN IT.

THEY -- AS A LOBBYING CONSTITUENCY THEY PUT THE MOST MONEY IN OF ANY ADVOCACY GROUP IN THE 2024 ELECTION.

THEY -- THEY BACKED A NUMBER OF RACES AND WERE INCREDIBLY SUCCESSFUL.

SO WE'RE TALKING, YOU KNOW, RAISING HUNDREDS OF MILLIONS OF DOLLARS, THROWING THAT INTO THE FINANCIAL SYSTEM IN A REALLY TARGETED WAY, RIGHT?

THEY SAY THAT THIS WAS NOT PARTISAN.

THEY BACKED DEMOCRATIC CANDIDATES.

THEY BACKED REPUBLICAN CANDIDATES.

THE ONLY ISSUE WAS YOU HAD TO BE PRO CRYPTO.

AND I THINK IN CERTAIN RACES TOO, ESPECIALLY SOME SMALLER RACES, PEOPLE WERE NOT PREPARED FOR THE INFLUX OF MONEY THEY WERE GETTING.

THE CRYPTO CONSTITUENCY WAS REALLY POWERFUL.

IT WAS A CONCERTED EFFORT BY THE INDUSTRY IN 2024 ESPECIALLY TO SHOW THEIR FORCE, EVEN MORE THAN GETTING THE CANDIDATES, YOU KNOW, ELECTED TO OFFICE.

THAT WAS A GOAL FOR SURE BUT ANOTHER WAS JUST A SHOW OF FORCE TO SAY WE ARE A CONSTITUENCY THAT MATTERS.

YES, YOU MIGHT NOT THINK WALKING AROUND THROUGH THE WORLD THAT PEOPLE WHO LOVE CRYPTOCURRENCIES AND WHO WANT TO SEE CRYPTOCURRENCIES THRIVE, THAT THEY'RE A MEANINGFUL POLITICAL CONSTITUENCY, BUT THEY PUT THE MONEY BEHIND IT TO SHOW THAT THEY ARE.

YOU HAVE A BUNCH OF PEOPLE WHO HAVE MADE A LOT OF MONEY OVER THE PAST DECADE.

IN SOME CASES BILLIONS OF DOLLARS OFF OF BITCOIN AND OFF OF THE CRYPTOCURRENCY HOLDINGS.

AGAIN, THEY'RE NOT A MEANINGFUL CONSTITUENCY WITHOUT THAT MONEY, RIGHT?

THEY'RE JUST PEOPLE WHO BELIEVE IN THIS -- YOU KNOW, THIS TYPE OF FINANCIAL SYSTEM.

BUT BECAUSE THEY HAVE SOME OF THIS MONEY, THEY THREW IT IN THE FINANCIAL SYSTEM.

THEY GOT THE GUY ELECTED WHO PROMISED TO DO SOMETHING -- YOU KNOW, PROMISED TO MAKE A PROSPEROUS FUTURE FOR BITCOIN.

AS A RESULT, THE PRICE GOES WAY UP.

A YEAR AGO BITCOIN WAS HOVERING AROUND 45, $46,000 PER COIN.

IT'S NOW WELL OVER $100,000 PER COIN.

THE INVESTMENT HAS DOUBLED SINCE THEY PUT THIS POLITICAL DONATION STRATEGY IN PLAY.

THOSE PEOPLE HAVE EVEN MORE MONEY AND BE EVEN MORE INFLUENCE AND EVEN MORE PEOPLE TRYING TO COURT THEM.

I THINK WHAT WE'RE SEEING HERE IS THIS MONEY INFLUENCE FLYWHEEL THAT NORMALLY IS ACTUALLY REALLY HARD TO SEE.

I THINK WE'RE SEEING INFLUENCE THAT'S REALLY NAKED AND WE'RE SEEING THE WAYS IN WHICH THESE PEOPLE SPUN MONEY OUT OF NOTHING, USED IT TO CREATE POWER AND THE POWER IS NOW MAKING THEM MORE MONEY.

IT'S A REALLY INTERESTING PROCESS TO WATCH PLAY OUT.

>> PRESIDENT-ELECT HAS SAID THAT HE WANTS TO HAVE A NATIONAL BITCOIN RESERVE, AND WHAT ARE THE CONSEQUENCES -- WELL, FIRST OF ALL, HOW IS THAT GOING TO WORK?

SECOND, IF YOU DO UNDERSTAND THAT, DOESN'T THAT KIND OF INTEGRATE BITCOIN'S VOLATILITY INTO THE LARGER ECONOMY, RIGHT?

I MEAN, LAST TIME THERE WAS A BITCOIN UST WE SAW A COUPLE OF BANKS, SILICON VALLEY BANK COMES TO MIND, OR ONES THAT HAD SIGNIFICANT EXPOSURE TO THIS THAT ENDED UP COLLAPSING.

WHAT HAPPENS WHEN BITCOIN BECOMES SOMETHING THAT THE GOVERNMENT ACTUALLY HOLDS?

>> SO THIS TO ME IN MY REPORTING WAS THE MOST EYE OPENING AND ALARMING PIECE OF THE CRYPTO INTEGRATION.

THIS -- BITCOIN'S STRATEGIC RESERVE ESSENTIALLY AS I SEEM TO UNDERSTAND SOME OF THE POSSIBLE PLANS IS THAT THE UNITED STATES WILL PURCHASE BITCOIN FROM LARGE HOLDERS, RIGHT, OR EVERYDAY AMERICANS, BUT THE PEOPLE WHO STAND TO BENEFIT FROM THAT ARE PEOPLE WHO OWN A LOT OF BITCOIN, RIGHT?

SO IT'S PURCHASING 200,000 BITCOINS A YEAR FOR FIVE YEARS IS WHAT I BELIEVE IT IS.

BUT REGARDLESS, THE PURCHASE OF THIS BITCOIN FROM LARGE BITCOIN HOLDERS WILL DRIVE THE PRICE OF BITCOIN UP.

SO EVERY SUBSEQUENT YEAR THAT THE GOVERNMENT IS PURCHASING THIS BITCOIN IT'S GOING TO DO SO AT A HIGHER RATE.

IT'S GOING TO HAVE TO SPEND MORE AND MORE MONEY TO CREATE THE STRATEGIC RESERVE.

TO DO SO IT'S GOING TO HAVE TO SELL OFF SOME OF ITS GOLD RESERVES.

THE WAY TO THINK ABOUT THIS IS ESSENTIALLY AS A CASH TRANSFER FROM THE UNITED STATES GOVERNMENT TO THE PEOPLE WHO ALREADY HOLD THE MOST AMOUNT OF BITCOIN THAT WILL ALSO INFLATE THE PRICE OF BITCOIN BECAUSE IT HAS THIS MASSIVE SORT OF UNQUENCHABLE BUYER IN THE UNITED STATES TREASURY.

IT'S A TERRIBLE DEAL FOR THE UNITED STATES GOVERNMENT BECAUSE IT'S GETTING A WORSE PRICE EVERY YEAR.

IT SPEAKS TO ME AS A GREAT EXAMPLE OF THE WAY THAT THESE PEOPLE WHO INVESTED EARLY IN THIS TECHNOLOGY ARE GOING TO TRY TO BULLY INSTITUTIONS AND THE GLOBAL FINANCIAL INSTITUTION.

THAT'S TO SAY NOTHING OF THE FACT BITCOIN IS AN EXTREMELY VOLATILE CURRENCY, RIGHT?

YOU DON'T WANT THIS SPECULATIVE ASSET THAT CAN LOSE HALF ITS VALUE IN SIX MONTHS OR A YEAR AS BACKING YOUR MONETARY CITIZEN.

IT'S DANGEROUS.

THIS IS -- SPEAKS TO THE MOST IMPORTANT POINT I HEARD WHEN I TALKED TO A BUNCH OF CRYPTO SKEPTICS AND PEOPLE INSIDE THE FINANCIAL INDUSTRY, WHICH IS THAT THEIR BIGGEST FEAR ISN'T THAT A LOT OF PEOPLE WILL ADOPT BITCOIN OR CHOOSE A TECHNOLOGICALLY BASED FINANCIAL SYSTEM, THE BIGGEST FEAR IS THAT CRYPTO WILL ENTER 2009 AND MESH WITH THE GLOBAL FINANCIAL SYSTEM IN A WAY WITHOUT ADOPTING ANY OF THE GUARDRAILS THAT IT WILL NEED TO DO AND THEN THERE WILL BE THIS CONTAGION BETWEEN THE CRYPTO ECOSYSTEM AND THE TRADITIONAL FINANCIAL SYSTEM.

WHEN FTX COLLAPSED A LOT OF PEOPLE LOST, YOU KNOW, THEIR LIFE SAVINGS.

IT WAS A -- IT WAS A HUGE, YOU KNOW, FINANCIAL CATASTROPHE.

IT WAS VERY WELL COVERED.

A LOT OF PEOPLE SAW IT, BUT THE GLOBAL FINANCIAL SYSTEM WAS NOT AFFECTED BY THIS.

IF WE PLUG CRYPTO INTO THAT, THESE PEOPLE HAVE TOLD ME WHAT THEY'RE MOST WORRIED ABOUT IS THAT, YOU KNOW, MALFEASANCE OR FRAUD OR WHATEVER THAT'S HAPPENING IN THIS MUCH LESS REGULATED SECTOR COULD COME IN AND HURT PEOPLE WHO ARE NOT DOING THAT KIND OF SPECULATING, WHO ARE TRYING TO INVEST IN SOUND ASSETS AND STABLE ASSETS.

>> AND I WONDER WITH THE INTENTIONAL CHOICES THAT THE PRESIDENT-ELECT HAS MADE SO FAR, HE SAID HE WANTS PAUL ATKINS TO RUN THE SEC AND HE HAS POINTED OR HE IS INTERESTED IN APPOINTING DAVID SACKS, SILICON VENTURE CAPITALIST, WHAT DOES THAT SIGNAL OR GIVE THE FINANCIAL INDUSTRY SOME GREATER CONCERN?

>> I THINK WHAT WE'RE SEEING FROM DONALD TRUMP'S, YOU KNOW, EARLY APPOINTMENTS AND FROM, YOU KNOW, HIS -- HIS POSTURING ON THIS IS THAT HE'S GOING TO CONTINUE TO PANDER TO THIS CONSTITUENCY, SO I CAN ONLY IMAGINE THAT UNLESS THE INDUSTRY DOES SOMETHING TO, YOU KNOW, TURN HIM OFF OR, YOU KNOW, ATTRACT HIS IRE, I THINK HE'S ONLY GOING TO TRY TO, YOU KNOW, ENMESH CRYPTO WITH THE GLOBAL FINANCIAL SYSTEM.

THERE IS A FEAR INSIDE OF A LOT OF BANKS THAT I'VE HEARD FROM NUMEROUS SOURCES, THEY DON'T WANT TO BE LEFT BEHIND.

THEY DON'T WANT THIS ONE ASSET CLASS TO BE THE HISTORIC 21st CENTURY GROWTH ASSET THAT THEY DO NOT GET BEHIND.

THEY ALSO DO NOT WANT TO BE SEEN AS DINOSAURS, YOU KNOW, IN TERMS OF THEIR INSTITUTION.

YOU HAVE A LOT OF YOUNGER PEOPLE WHO SEE CRYPTO AS NEW, EXCITING, PART OF THE FUTURE.

THOSE PEOPLE ARE ONLY GOING TO, YOU KNOW, MAKE MORE MONEY, INVEST MORE HEAVILY IN BANKS AND THINGS LIKE THAT, AND WANT TO SEE AN ASSET CLASS THAT THEY BELIEVE IS IMPORTANT.

AND SO THERE'S THIS IDEA OF LIKE FEAR OF MISSING OUT, RIGHT?

THAT THESE BANKS MIGHT WANT TO DO THIS.

AND IF THE TRUMP ADMINISTRATION COMES IN AND, YOU KNOW, PROPS UP CRYPTO AND, YOU KNOW, OFFERS NO REAL IMPORTANT REGULATIONS AND ALLOWS PEOPLE TO TRADE IT AS A SECURITY, I THINK WHAT WE'RE GOING TO SEE IS THAT COMINGLING BECAUSE I DON'T THINK BANKS WANT TO BE LEFT OUT OF, YOU KNOW, THE MONEY.

>> CHARLIE WARZALL OF "THE ATLANTIC" THANKS FOR JOINING US.

>> THANKS FOR HAVING ME.