Invest Like the Best with Patrick O'Shaughnessy
00:39:10 · Micky Malka
[00:39:10] S2: It's insane. But what was it about the travel check that gave you the safety? It had the American Express logo, it was dollars. It had a serial number, you kept it. You didn't sign it both times, it was yours. Stablecoins are travel checks in today's world. It is instant dollars anywhere in the world that you can control and move anytime at a cost of zero. And they're backed by guess what? Dollars. In treasuries actually. To the point that when you think about the size of stablecoin market right now, there's almost $200,000,000,000 of stablecoin. People are willing to forfeit making 4% or 4.5% of yield in order to have it at least saved in dollars. So imagine the opportunity costs where they're willing to sacrifice their yield just to be able to have access to dollars. So the use case of the stablecoin, first, it starts with consumers always. All these cases start with consumers. Consumers, real time, anywhere in the world, not for Americans, so we can get dollars on our checking account, on our Robinhood account, on our Venmo, on our Square Cash. We have dollars everywhere. But if you're outside The US and you don't trust your currency or you wanna diversify, you will love Stablecoins just away. And that was a low hanging fruit. That was the minimum use case. Funny enough, that's not when it started. They started because there were exchanges, crypto exchanges all over the world. And it was so hard to get into the fiat rails and come back that somebody said, we're gonna put a stable coin and people can just move it around. And that was the true case. It was trading and moving dollars from one exchange to the other. Consumers took it over. What we're starting to see now is companies and treasury management of companies using it. It lowers their cost of capital. It's instant. There's less resistance. They have a lot more control. So the volume of stablecoins movement on any given month is now... You can graph it against Visa Networks payment volume, and it's not crazy off anymore. And that's only with 200,000,000,000. Imagine when there's a trillion dollars sitting there and 2,000,000,000,000. It will get there.
00:41:18 · Patrick O'Shaughnessy, Micky Malka
[00:41:18] S0: What will this mean for Visa and Mastercard and some of the big important incumbent financial institutions that have also been some of the best stocks to own with some of the best business models? [00:41:30] S2: I think for them it's a problem. And people like Visa led by Ryan understand this, and they're probably doing an amazing job on trying to be present in the crypto rails and make the network connect efficiently and tokenize dollars and be part of this and make sure not to lose that business. Time will tell. But they get it, he gets it. But when you listen to the other extreme, to Jamie Dimon saying, this is all evil. This doesn't work. I do it myself. I have our own JPM coin. I can do it on my own system. Well, they're defending [00:42:05] S0: The castle. [00:42:06] S2: The castle, which they have to do. It's their mandate. He's doing what he needs to do. There's nothing wrong with what he says. But that's the battle between the established nation states or to the new network states.
00:42:06 · Micky Malka, Patrick O'Shaughnessy
[00:42:06] S2: The castle, which they have to do. It's their mandate. He's doing what he needs to do. There's nothing wrong with what he says. But that's the battle between the established nation states or to the new network states. [00:42:18] S0: So if we have this grid that's changing on the bottom layer, above that is identity and the incredible important role of data. And then you've talked about compounders as well as a key area of focus for your investing discipline today. What else in that middle piece is most exciting to you? What does it feel like the world needs in terms of technology or companies or products or infrastructure? You and I have talked about a couple of companies attacking the identity piece specifically. What else has you most excited about? Like people that are serving the world's technical mass and giving it what it wants?
00:42:18 · Patrick O'Shaughnessy, Micky Malka
[00:42:18] S0: So if we have this grid that's changing on the bottom layer, above that is identity and the incredible important role of data. And then you've talked about compounders as well as a key area of focus for your investing discipline today. What else in that middle piece is most exciting to you? What does it feel like the world needs in terms of technology or companies or products or infrastructure? You and I have talked about a couple of companies attacking the identity piece specifically. What else has you most excited about? Like people that are serving the world's technical mass and giving it what it wants? [00:42:52] S2: Oh, there's so much. It's such an exciting time to be doing this. I think there's an intersection between AI and crypto that is really exciting to us, how those worlds collide. AI will need crypto. Crypto definitely needs an eye to really build the future because AI in many ways generates so much more content and so much more tokens that you have to be able to regulate and tokenize and use and apply into smart contracts. And there's no tech better than the crypto rails to do that. That intersection is super powerful to us. We spending a lot of time trying to understand who and how and where. And funny enough, follow the young minds. A lot of the young engineers that started with crypto when they were in college are now moving to AI because it's where the attention goes. But both of them combined have the knowledge now. You're starting to see people that understand both worlds and starting to interact in those.
00:42:52 · Micky Malka, Patrick O'Shaughnessy
[00:42:52] S2: Oh, there's so much. It's such an exciting time to be doing this. I think there's an intersection between AI and crypto that is really exciting to us, how those worlds collide. AI will need crypto. Crypto definitely needs an eye to really build the future because AI in many ways generates so much more content and so much more tokens that you have to be able to regulate and tokenize and use and apply into smart contracts. And there's no tech better than the crypto rails to do that. That intersection is super powerful to us. We spending a lot of time trying to understand who and how and where. And funny enough, follow the young minds. A lot of the young engineers that started with crypto when they were in college are now moving to AI because it's where the attention goes. But both of them combined have the knowledge now. You're starting to see people that understand both worlds and starting to interact in those. [00:43:49] S0: What sort of thing could that unlock?
00:43:49 · Patrick O'Shaughnessy, Micky Malka
[00:43:49] S0: What sort of thing could that unlock? [00:43:51] S2: So imagine, let's say Tesla's robotaxis. The car needs to interact with third parties. The car needs to get paid, collect, define hours of work, all of those things. Now their software can do it, but if they're gonna interact with the third world, there's nothing better than a blockchain smart contract to figure this out. Because at scale, you cannot do it any other way. Can the card directly talk to the Visa rails? Not yet. Is Visa trying to do this? Yes. But what are they using? They're using crypto rails to get it done. That's why they're partnering with Solana and trying to tokenize... Tokens on Solana because it's... Those networks are better than the traditional rails to do this. Those other networks are pool networks. This is push. So all of those aspects will come into this world in ways that we just don't imagine. [00:44:38] S0: And so the way to think about it is we're going to need streaming data and money everywhere to enable these automated services. And it's the people that understand the two fields and the intersection of them that can build things to solve that problem. [00:44:50] S2: You said it better than me.