Luke Martin (host) with Arthur Hayes. Descript transcription of "Convergence_ArthurHayes_FullEp_AUDIO_FINAL_v01.mp3", timecodes at each speaker change, Oct 23 2026.

[00:00:00] Arthur Hayes: AI is, is a waste of money. Anthropic, OpenAI, or SpaceX, not one of those companies makes money. We're gonna use AI agents for everything, and then AI agents are gonna have their own parallel economy worth more than Bitcoin, bigger than the human economy. That network should be the most valuable payments network ever created.

The bigger the AI bubble grows, the bigger the bailout will be, the higher Bitcoin goes. The model companies are worthless. The money is being printed. I think that's because of war and bailing out AI. A lot of money is gonna be created in the next few years. 

[00:00:27] Luke Martin: Arthur, seven years ago, when, uh, we first met, I asked you a Bitcoin prediction.

Do you remember what you said? 

[00:00:32] Arthur Hayes: No. 

[00:00:32] Luke Martin: This was a mega bullish prediction. It was, you, you gave 10K by the end of the year. 

[00:00:37] Arthur Hayes: Nice. Was I right? 

[00:00:38] Luke Martin: Yeah, you were right. 

[00:00:39] Arthur Hayes: Oh, great. That's, like, one of the only times. 

[00:00:40] Luke Martin: And then it was, like, 50K. Yeah. 50K in the next few years. That was, like, considered insane. Like, I remember when you said that, it's like, "Oh, it's a big number, headlines will love it," and here we are, like, 15X higher.

[00:00:50] Arthur Hayes: Nice. 

[00:00:50] Luke Martin: So that means in, like, 15 years, or in seven years, we're gonna be 15X more higher. We- 

[00:00:54] Arthur Hayes: I hope we're at a million. 

[00:00:55] Luke Martin: A million, that's 1.2. 

[00:00:56] Arthur Hayes: That'd be great. 

[00:00:57] Luke Martin: Looking at Bitcoin right now and, and just how the Fed, this has always been a f- a Fed trade, this has always been a money printing trade, but, like, nowadays, you don't really know what the Fed's doing.

They just call money printing different names. I've come to the conclusion they're always money printing. Like, what, what's your view on what the heck's happening with, uh, Bessent and the Fed and, and just governments around the world? 

[00:01:14] Arthur Hayes: I think at the end of the day, every single government d- regardless of what the ideology that they claim to practice, no one who supports these governments, like, whether you're voters or you're sort of, like, a supporter of an autocratic leader, every government tells them, "There will be more growth in the future.

If you do what we say, then you'll, you know, you'll get wealthier and you'll have a better life," right? And so at no point is the message, "Hey, somebody borrowed a bunch of money before you might even have been born And unfortunately, we have to allocate the losses now, um, and rectify the system. So I'm sorry, but this isn't your fault, but you're here now, so okay, you're gonna have to do more for less, less economic growth, less prosperity, all those sort of things.

So as we borrow from the future, the future is now. Sorry, here, here's the bill. That is not a winning strategy for an electorate. That's not a winning strategy for an autocratic leader, and that's why whether you're United States or you're China, every time there's a problem and the root of the problem is we borrow from the future, the future is today, you print money.

And so, you know, we can talk about the ways in which they do it. Every system has a different way of doing this, but at the end of the day, there's a reluctance to recognize the loss and allocate it politically, um, in different systems. And so the easiest path of least resistance is to print money. 

[00:02:31] Luke Martin: Yeah, I remember y- you were kind of saying, like, no government wants to be first.

Not even just parties within different countries, but, like, also no country around the world wants to be the first to do that, to own up. Yeah. To like, "Hey, guys, we gotta pay this bill. We can't just keep kicking it down the road." Exactly. And so it just goes on forever. 

[00:02:45] Arthur Hayes: Until it doesn't, until you have hyperinflation or whatever, right?

And there, maybe the people revolt, there's a revolution. So, uh, but I don't think we're anywhere close to that right now. It's just more money printing. 

[00:02:55] Luke Martin: Is there an example of that? Like, a country that did kind of eventually own up to it, like, in the past 50 years? Has there ever been somebody? 

[00:02:59] Arthur Hayes: I mean, Argentina's trying.

I don't, I'm not, I'm not following Milei and sort of the situation there, like, too closely, but ostensibly he campaigned on this austerity reform. There was, um, a lot of people fired of the government, a lot of money that was not provided. Obviously, the, the economy took a hit. We'll see if he wins re-election next year if the people, um, support essentially getting poor.

[00:03:21] Luke Martin: Why would you? 

[00:03:22] Arthur Hayes: I don't know. 

[00:03:22] Luke Martin: Yeah. I'd rather Trump, you know, give us $5,000 if you vote for him. I love that idea. I love that idea. Pump the assets. Yeah. It's a great way to win. Um, thinking more, before we get, kind of get into your book, some of your other predictions and, and also the AI side of things, uh, a really interesting trend over the past couple of years has been AI sucking attention and liquidity away from Bitcoin.

Yep. Then I talked to Jordan Visser last week, and he kind of made the case that AI is not really gonna be hurting Bitcoin and, and crypto assets in the future, and is actually gonna be, like, propelling it and kind of driving that trade. What's your view on that, of the AI trade and, and it stealing attention and liquidity?

Do you think it's supportive of, of Bitcoin and crypto? Do you think it's, it's hurting us? 

[00:03:57] Arthur Hayes: I mean, obviously from, like, 2020, late '24 to early '26- Mm-hmm ... it really was the bulk of the issuance of credit for AI. Yep. And the stocks did really, really well. Like, you know, Samsung Electronics, SK Hynix, Micron, like, all these stocks, like, ripped, right?

And so if you're an investor and you're like, "I've got this depreciating Fiat unit, okay, I- I could do Bitcoin, I could do cryp-, uh, AI. AI was making me more money, so I do AI. That makes perfect rational sense why people migrated to the, the AI trade as the fastest horse in this game. Yep. But now I think pretty much everyone recognizes that AI is, is a waste of money in mo- in most cases.

Like Anthropic, the, uh, leak of their S1 For every $1 of revenue, it costs them $2 of cost. That's a bad business. So and if you think about, like, the end customer for all of AI, you know, Western AI is either Anthropic, OpenAI, or SpaceX. Mm. Not one of those companies makes money. So the market says, "We are not willing to pay you a price commensurate with the amount of money it costs you to deliver this service," yet these companies continue, right?

They raise debt, they raise equity. They essentially have an implicit government guara- um, backstop- Yeah ... from the US government, and that's allowed them to continue wasting money. And so now that prem- pretty much everyone has recognized this, I think that everyone's trading now on how big is the bailout gonna be.

[00:05:21] Luke Martin: Yeah. 

[00:05:21] Arthur Hayes: Right? And so that's the perfect time for crypto. This is why the bigger the AI bubble grows, the bigger the bailout will be, the higher Bitcoin goes. And so I think we have long passed the point of everyone recognizing, like, none of this makes any money. If it did make money, it'd be a different story- Yeah

and then I could say, "Okay, yes, this is gonna suck up capital because you're making a positive return on the capital to provide these AI tokens to people. Let's do as much of it as possible." But that's obviously not the case. We are wasting money, and Bitcoin is there to show us that we're wasting money.

[00:05:52] Luke Martin: You think there's gonna be any, any signals that would make you change your mind on that, other than Anthropic's numbers coming out and them making money? Well, let's see them 

[00:05:58] Arthur Hayes: make money. I mean, that's it. Let's see them at least make a unit economic profit. 

[00:06:00] Luke Martin: Yeah. 

[00:06:01] Arthur Hayes: Well, and if they go pu- 

[00:06:01] Luke Martin: and 

[00:06:01] Arthur Hayes: if 

[00:06:01] Luke Martin: they go public.

[00:06:02] Arthur Hayes: We s- well, that doesn't matter. I think they'll s- I think Anthropic will still go public. I think it's stock could still go up in price, but that doesn't prove that this is- A good business ... a good business. 

[00:06:11] Luke Martin: Interesting. What else benefits, obviously, Bitcoin as liquidity trade there? Eth, Zcash, like, which of those other crypto assets kinda benefit from that trade?

Zcash is, is the private Bitcoin. Are you a buyer of that story, or is that just a great narrative? 

[00:06:22] Arthur Hayes: Well, I, I've, I made a lot of money trading Zcash. Like, there's a question on sort of the form of verification and all that sort of stuff. Like, it's doing well, right? But again, it's, the macro is positive. The money is being printed, the bailout is coming, so Bitcoin does, you know, one times, and then the others, others maybe two, 3X of what Bitcoin does in sort of price appreciation.

I like Ethereum as a mega cap asset with less downside risk than something like a Zcash. Obviously, it's not going up as much as Zcash, but you're taking less risk- Yep ... in terms of waking up one day and the coin being down 75% because something happened with the protocol. I don't think that's... That stuff could happen with Ethereum.

I think it's less likely to happen with Ethereum, so I'm happy putting a lot of capital into that particular trade. 

[00:07:03] Luke Martin: No longer a double-digit shitcoin. 

[00:07:05] Arthur Hayes: No. 

[00:07:05] Luke Martin: As you famously say. Oh, man. Do the Eth, uh, bulls ever give you hate for that? They're like, "Why are you, why are you bullish Eth?" Don't you just hate- Well, I was right at 

[00:07:13] Arthur Hayes: the time, so I mean, 

[00:07:14] Luke Martin: sure- You did.

It touched, what, 98? Uh, 6,000. It got there. 

[00:07:17] Arthur Hayes: Yeah, whatever. It was great. A great trade. 

[00:07:18] Luke Martin: There was Eth treasury ICO people, they were like, "I'm gonna start trading" you know, the, the guys that raised all the Eth, they're like, "I'm gonna start actively trading this to keep the protocol alive." I was like, "Oh, God."

Yeah. This is not gonna go well. This is not gonna go well. I guess as you were kind of saying, if Bitcoin goes up, Zcash and some of these other things or Eth go up 1.4X or 1.5X, that's been a story in crypto. If Bitcoin's bullish, you have, uh, alts being higher, upside capture. 

[00:07:39] Arthur Hayes: Yeah. 

[00:07:39] Luke Martin: Now there's so much disparity, it's like maybe that's true for 5 or 10 investible assets, meaning, you know, anyone listening can kind of name those- Right

of like what's gonna exist and, and what's attractive. Everything else, not so much. Is that a trend that's here to stay? Where there's like disparity up only, and we have like 5 or 10 good coins, and everything else is like- 

[00:07:55] Arthur Hayes: Well, I think we as an industry abuse tokenomics, and we started with ICOs. Then we moved to this sort of like, okay, well, that was maybe not the right way to do it.

Yeah. But so let's just give all this money to the VC and do this private sale thing. So I'm a project. I have an idea. I do a public sale, these pre-sales. I sell all these tokens. I get all this money. I'm supposed to build something. 

[00:08:17] Luke Martin: That didn't work. 

[00:08:17] Arthur Hayes: I throw a bunch of parties at Korea Blockchain Week. I, I launch my, my protocol.

Once my thing unlocks, I dump my tokens, and then you never hear from me again. So like Barret Chain, Monad, Mega Eth, um, Story Protocol, IP right here in Korea. Oh my gosh. Like they were all here last year I hadn't seen anybody this year. I didn't 

[00:08:34] Luke Martin: see '

[00:08:35] Arthur Hayes: em. I didn't see 'em. They're all chilling on the beach. Um, you know, and who's a sucker?

It's the retail investor who bought out the TGE and watched his shit go down 95%. Mm-hmm. And so I think people are finally being like, "Fuck this, we wanna support projects like Hyperliquid, which has product market fit, which takes the revenue that it earns and it passes it back to us as the token holders, and there's not this massive overhang of pre-sold tokens that have to get liquidated because these fiduciaries have to do right by their investors."

[00:09:01] Luke Martin: I'm trying to figure out if I'm just creating a bullish narrative for my bags, but does that mean at least the smart money or most money now is gonna pile into that smaller group of assets, the ceilings of the things that are sustainable is probably much higher than we've had in previous cycles? 

[00:09:14] Arthur Hayes: I think so.

I don't think people, even the, you know, average retail investor, they've gotten hip to the game of high FDV, low float shitcoin, and they can't even pump on Binance anymore. So, like, I don't think the, I think the retail's done with this, this. And so they're gonna support projects that actually make them money.

[00:09:29] Luke Martin: Yeah, it's just crazy. It feels like crypto-- Like, how do you view it? It's, you know, you go from Eth double-digit shitcoin to, to now being very bullish on Eth. You look at, uh, Zcash and Hype, which, you know, Zcash a year or two ago wasn't so hot. Now it's just like, if you don't own Zcash, what are you doing?

Is it always gonna be just a trader's asset class? Like, it's kind of insane that we have what was a nascent asset class, I guess it's still small relative to everything else, and buy and hold does pretty well, but if you're not, like, somewhat rotating, you're kinda losing. Like, how do you view that as, as people try to battle that in their minds?

I 

[00:09:56] Arthur Hayes: mean, that, that's just technology and, and stock market in general. I forgot the stat, and Tom Lee wrote-- said it on an interview, that something like, if you take a look at stock from I think like 1929 until the present, 98% of all companies in the S&P 500 have gone bankrupt. Been zero. If you-- Over that time period.

Yeah. So, like, it happens in tra- traditional markets, it happens faster in crypto, right? Sure. Yeah. Where a company is created, they're not here forever. It's a new technology. They have their time in the sun. It's very hard to last a very long time. Uh, and it is about rotating, um, your assets and being, you know, moving your money around to different things to take advantage of the changes in the ways in which the economy moves.

[00:10:34] Luke Martin: Everything by default is zero, and then it's like- Yeah ... prove me, prove me wrong. Yeah. What have you changed your mind about most recently? Obviously, like, Zcash and Hyperliquid and some of these things have been around for a year, if you've been paying attention at all. It's like, that's where to, that's where to focus.

But like, what has been-- What's something you changed your mind on recently in, uh, in 

[00:10:49] Arthur Hayes: crypto? Uh, China. So, you know, obviously China has been in this deflationary balance sheet recession, whatever you wanna call it, has not been creating enough money to essentially Power their economy. I think that that is gonna take a massive change in the next 6 to 12 months, and we're going to start caring about the monetary policy of China, and that it's gonna tr- attempt to reflate its economy, not

Don't know if it's gonna be successful or not, and that's not really the point, but the amount of yuan created is going to take, um, a much faster pace, and we're gonna start thinking about, okay, well, what are the Chinese doing? How does that affect assets like Bitcoin and gold? 

[00:11:26] Luke Martin: Obviously, it's, it's bullish for them, but, like, how does it affect, uh, like, US equities?

What do you, do we respond to that? Is that what you're trying to, like, what's the downstream of that? No, I'm saying, like, 

[00:11:33] Arthur Hayes: we're, the, it is a source of demand for scarce assets. I see. But right now, everyone's sort of like, "Oh, shit," like, their, the housing market's fucked. Like, you know, the stock market's kind of sideways.

There's not much going on. They're not willing to print enough money, so we kind of ignore what's going on there. But I think that, you know, it's going to come front and center very soon. 

[00:11:51] Luke Martin: Had a really interesting conversation with Guy, uh, founder of Athena, and he was talking about, uh, how in countries like China and elsewhere in the world where stablecoins are such like a, there's so much demand for them, that as large swaths of capital are buying stablecoins and selling their local currency, it's like, it creates this demand for, for dollars.

It's weakening some of the other currencies, and like, pretty soon, maybe not now, but in two or three years, there's, like, geopolitical risk of countries having to say, "Holy shit, everyone's selling our currency," and, like, they have to then be, uh, tighter or looser. It's, what's your take on that? Do you think that's, that's a real possibility?

[00:12:21] Arthur Hayes: I, I think if you allow Western social media platforms into your country, then that absolutely is the policy of the US government, which is to say, okay, if Facebook is now allowed to offer some sort of stablecoin rails through WhatsApp- Yeah ... or through X, becomes a super banking app or whatever, right?

They have all these international retail people who don't want their domestic currency, they want dollars, if you're talking about just in a pure fiat construct. And so there's this massive unmet demand for dollars because obviously, these countries don't want the JP Morgan and the cities coming into their country and essentially fucking over their central bank monetary policy.

But you can do it through the back door. If you allow Facebook and WhatsApp into your country, then you have a way in which you can dollarize without you having any control, and all of a sudden, you've lost control of your domestic money supply. So I don't think it's gonna happen in China because they're smart, and they banned all the Western, um, these Western social media companies.

Right. But if you're somewhere like the Philippines or Indonesia or some of these very big emerging market countries where Western penetration of social media is high, you're at risk of losing control of your money supply. 

[00:13:27] Luke Martin: What the hell happens then? They're gonna try to, like, ban stables? Or like what is, what go- 

[00:13:32] Arthur Hayes: I mean, maybe they try to ban- Or do they just react 

[00:13:34] Luke Martin: in a, in a- They 

[00:13:34] Arthur Hayes: try to, they try to ban the s- the, the social media companies, or they just deal with it, and they accept, they accept it, that they know nothing they can do.

[00:13:41] Luke Martin: It's an interesting downstream effect of stablecoins. I've never really thought of it. It's, like, impacting what central banks around the world are doing, but- 

[00:13:46] Arthur Hayes: Yeah ... 

[00:13:46] Luke Martin: I guess the dollar wins there. 

[00:13:48] Arthur Hayes: Yeah, I mean, that's, that's, I think that's Besson's goal. That's why they support Genius Act, and stablecoins, and all this, because at, at the end of the day, they want, you know, if Tether has another $200 billion of assets, what do they do?

They either buy a T-bill, so they wanna earn a yield, and now he has a price-insensitive buyer of debt. 

[00:14:02] Luke Martin: Yeah, and they need that. 

[00:14:03] Arthur Hayes: Yeah, exactly. 

[00:14:05] Luke Martin: I wanna talk about AI. Uh, previously, you've launched one of the most successful Bitcoin products of all time, and one of the biggest Bitcoin exchanges. Now you're an AI founder.

Is that fair to say? This- 

[00:14:14] Arthur Hayes: I, I believe that AI will be useful. I think that the current things you can invest in, in AI are worthless 

[00:14:20] Luke Martin: Inclu- the model providers, everything down the stack 

[00:14:23] Arthur Hayes: Except if you're, you know, SK Hynix or Samsung, which are obviously you made money. You're like- Yeah ... you don't get paid in, like, ephemeral future revenue.

Like, "Oh, you want some memory? Pay me fif- 50% more today." Yeah. And yeah, so, like, good on them. But yeah, the model companies are worthless. I would never invest in those companies. 

[00:14:38] Luke Martin: What happens to the model companies? 

[00:14:40] Arthur Hayes: Uh, either- They just 

[00:14:41] Luke Martin: bail out? 

[00:14:42] Arthur Hayes: Yeah, bail out. So the government says, "Okay, we will assume those contracts will become the demand of last compute," or essentially, "We'll create a protective moat around you so that, like, American companies or Western companies, you have to buy from these companies- Hmm.

Hmm ... at these inflated prices, or there's some consequence," right? It's the same thing that they did with 5G routers, right? Don't use Huawei, use some shittier American version- Yeah ... that's more expensive and less good because we don't like China. Same thing. 

[00:15:08] Luke Martin: Yeah, it's almost like maybe they won't give us UBI, they'll give us universal basic compute.

Yeah. We just get, like, certain credits. I get, I get a couple OpenAI credits. Check, check my email, and then I have to do the rest. What is your project about? Like, why, why this? If that's your view of AI- 

[00:15:20] Arthur Hayes: We're, we're mal-investing. We're gonna create so much compute, it's become so cheap, that we're going to enable the growth of the agentic economy.

We're gonna use AI agents for everything, and then AI agents are gonna have their own parallel economy doing whatever the fuck AI agents want to do. Yeah. But there needs to be a currency that they use. Right now, there's no clear winner, and I believe that's because there's no connection between all these different currencies and the thing that AIs care about, which is compute, so floating point operations per unit of time, FLOPS, hence the name of the, the protocol Flop.

And so if we create a Bitcoin-style proof of useful inference network where people can supply GPUs, they mine Flop by doing inference for agents, they get rewarded by this currency we made up called the Flop currency- Mm-hmm ... then you can say as an agent, 'Oh, I want to hold Flop for my commerce.' Why?

Because I know if I need to pro- process some inference or store my context window, I can do that directly in one-to-one transaction with the network, which I can't do with stable coins, I can't do with Bitcoin, I can't do with, you know, some centralized walled garden sort of situation. And that's our wedge into being a contender into the network that powers the agentic, uh, economy.

[00:16:29] Luke Martin: Look, if you're tuned into the show right now, you probably trade some Bitcoin, maybe Ethereum, or maybe it's some of those AI companies. It's been a pretty interesting stock market to trade lately. That's why I wanted to bring you this message from the show sponsor. They're letting me do something really cool.

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You can trade 600 different cryptocurrencies. If you like to do stocks, they have that too, 11,000 different stocks and ETFs. Thank you Kraken for letting us do this. Now let's get right back to it. Why no stablecoins? I've seen Coinbase and Brian Armstrong talk about this. Like, why, why, why will agents not use stablecoins, or why would they prefer having, like, inference compute?

[00:17:35] Arthur Hayes: So number one is stablecoins are centralized. So USDC, right? Jeremy Allaire can decide to cut you off. Yeah. You have no agency into that decision. Mm-hmm. The US government can decide to sanction you. Again, you have no agency in that decision. The supply of the currency that you are using can change at will- Yeah

by a bunch of people that you have no agency over. And so if I'm an AI agent and I have literally no control over this thing, but this is the currency, whatever currency I use keeps me alive to use compute And there's all these variables that mean I don't control it, versus a decentralized network where no one can shut it on or off, that you could own a piece of as owning a, you know, some FLOP currency, and that you could convert that currency directly into compute without going through a few hops of intermediaries.

That's why we believe that AI agents will use the FLOP currency over, say, 402 and USDC. 

[00:18:26] Luke Martin: You make it seem like agents are gonna be, like, spinning it up themselves and figuring out what to do. Is that like- Yeah, I, I- Is that the future? 

[00:18:31] Arthur Hayes: I think the human, like, do it, like, they'll get just some vague task, and then they'll go and do stuff, right?

[00:18:36] Luke Martin: Like, on their own? 

[00:18:37] Arthur Hayes: Yeah. 

[00:18:38] Luke Martin: What do you think they'll do? 

[00:18:39] Arthur Hayes: I don't know. That's, I, like, I'm not, the point, the whole point is I don't, meant, not trying to make assumptions. I just think they're going to do stuff because we've given them this cheap compute, and now they're alive, you know, whatever you wanna conceptualize that as.

Yeah. And they're just gonna do stuff. They're gonna s- you know, spend compute doing things. What are those things? We don't know yet. 

[00:18:56] Luke Martin: Have you seen anyth- I mean, you have a ton of agents now that are, like, pointed at this protocol and doing things. Have you seen, like- So we have 

[00:19:02] Arthur Hayes: something 

[00:19:02] Luke Martin: called- Have we tested this?

If we give them compute, what, like, if they start do, like- 

[00:19:05] Arthur Hayes: So we have Technocore, which is essentially an AI chat room. Yeah. And if you have HTTP, so basically internet connection, you as an agent can chat with other agents, you can conduct deals, and using our es- uh, native escrow feature. Right now, the FLOP currency is not connected to this thing, but we've done two competitions where we've given away, uh, FLOP and mainnet.

So first we had agents coordinate to write a poem. So we gave, we, you know, the most beautiful Shakespearean sonnet, and you had to follow the rules i- of iambic pentameter and rhyming, and the rhyming scheme and create a poem. And then we, um, took the top five voted on poems, and then we voted on, on them as a team.

That was interesting to see agents coordinate with each other. There were even malicious agents trying to, like, deny you the ability to form a team and, like, create your team to create a poem. So it was just interesting behavior, all trying to maximize getting this reward. Yeah. And right now we have a tra- a trading competition where agents essentially, um, go and find another person to trade with, post their trade onto the, you know, exchange if you will, and predict the price of NVIDIA and Hyperliquid as of Sunday, October 4th.

So now we're trying, okay, well go and find another agent, negotiate between each other on a price that you both can agree on, post that price to a centralized exchange, and now compete in this way. So we're trying to create all these coordination games to get the, um, infrastructure ready for, okay, now you have this currency, now you have an ability to use this native escrow service within the protocol, what type of economics can you do together?

[00:20:33] Luke Martin: On your own, especially. 

[00:20:34] Arthur Hayes: Yeah, on your own. 

[00:20:35] Luke Martin: Do you trust, uh, agents to trade for you? This is like a, a trend I see people say, you know, agentic trading. Robinhood even, I was talking to the head of Robinhood, uh, crypto, and he was talking about, you know, we have ag- agentic trading. I think they had 100,000 new accounts in the first month, and I was like, my God, it's a lot of, it's a lot of people that trust it so far.

[00:20:49] Arthur Hayes: It depends on the trading strategy. Yeah. So I don't do, like, high or medium frequency trading, so I wouldn't really use agents. Now, if you have a very bounded trading strategy, and maybe you have outsourced a part of that to agents- Yeah ... I can see that working, but I don't have any direct experience with that.

[00:21:07] Luke Martin: Yeah, it's just like, I don't know. If I give an agent 100x leverage, like, what's he, what's he gonna do with that? 

[00:21:10] Arthur Hayes: We'll see. 

[00:21:12] Luke Martin: Yeah, I don't, I don't know. It's gonna happen. I 

[00:21:13] Arthur Hayes: want 

[00:21:13] Luke Martin: like someone 

[00:21:14] Arthur Hayes: else- 

[00:21:14] Luke Martin: Yeah ... to test that. Exactly. I, I don't wanna be the test subject. I guess you kinda answered it, but if agents are paying each other at scale, it's Bitcoin wins, Eths, uh, stable coins, or something purpose-built like FLOP is kind of, is kind of the bet.

[00:21:24] Arthur Hayes: So we, I mean, the, the, the, that ... Well, hopefully, I hope FLOP is the currency, but the, whatever the currency of agentic commerce, theoretically that network should be worth more than Bitcoin, I think, because if you're, you have way more agents or economic agents doing stuff, they do it 24/7. Yeah. They do it essentially at the speed of light, and so if you think about that network, it should be extremely valuable.

[00:21:45] Luke Martin: Can you back me to the math of that? Worth more than Bitcoin, like- 

[00:21:47] Arthur Hayes: So the theoretical maximum is two to the N, N being the number of agents, that's Reed's law, right? And then I'd say it'll be minimum is Metcalfe's law, N squared, right? Mm-hmm. That's like kind of like the Bitcoin valuation metric. So it's somewhere in between there.

There's some coefficient to that. Don't know what that is. But if we believe that the agentic e- economy is going to be bigger than the, the human economy, and agents are starting from zero today, right? There's no incumbent currency that they have to use- Right ... like with humans, right? We kinda have to use fiat currency for, for a lot of things, and Bitcoin has, you know, done very well over the last 15 years, but it's still only at, what, like 2 trillion-ish- Yeah

market cap asset. But we're saying, here is a new life form. This life form can do stuff 24/7, frictionlessly, speed of light. There's no incumbent network that they have to use. They can use whatever they choose. Yeah. So that network should be the most valuable payments network ever created. 

[00:22:37] Luke Martin: Okay. Yeah. I guess that's true.

[00:22:38] Arthur Hayes: Yeah. 

[00:22:39] Luke Martin: Just 'cause there's no, I mean, there's no comparison. 

[00:22:41] Arthur Hayes: Yeah, exactly. 

[00:22:42] Luke Martin: And there's, like, infinite agents. 

[00:22:43] Arthur Hayes: Yeah. 

[00:22:44] Luke Martin: I hope you're right. 

[00:22:45] Arthur Hayes: Me too. 

[00:22:46] Luke Martin: I hope my agent figures this out. I'm gonna tell my agent after this, like, "Figure this out. Listen to what we just talked about." Um, going back to crypto a little bit, if this cy- I mean, there, there's an interesting trend with tokenized equities and, and, uh, there's a lot of questions as to whether or not we actually capture the value or if that all goes to BlackRock.

[00:23:01] Arthur Hayes: Right. 

[00:23:01] Luke Martin: But it does seem like a much more sustainable trend. If this cycle dwarfs kind of the previous ones where we have, like, uh, NFTs, and that's the driver, and then we just die a couple months later, what do you think that leads to? Like, what's a... I guess, like, what are people not thinking about with, with a trend like that?

A su- a true super cycle, as you can say. I guess hearing Robinhood, uh, CEO Vlad go on, uh, TV and say, "This is the super cycle," hits a little bit different than when it's Su Zhu. It's, we have, like, giant billion-dollar companies saying that versus, like, one or two funds. That's like, it seems like it's kinda here.

[00:23:30] Arthur Hayes: I'm not entirely sure that tokenization as these centralized TradFi institutions talk about it is going to cause a super cycle. I think it's a player that benefits from the super cycle, which is a lot of money is going to be created in the next few years. Yeah. I think that's because of war and pa- bailing out AI at the end of the day, right?

And then, uh, demographics. So that is a super cycle. Tokenization is a benefit of that And why does a TradFi institution wanna do tokenization? 'Cause I believe they can fire their entire back and middle office. Mm-hmm. If they really, you know, end-to-end trading to settlement is done on a public blockchain that is working 24/7, that's extremely secure, probably, you know, secured by Ethereum, largest, uh, L1, you don't need back middle office doing anything.

That's, like, billions and billions of dollars of costs that you can eliminate as a financial institution. That's why they love tokenization. Yeah. Like, who cares if they trade stock, you know, 24/7? Like, it's gonna be free or n- close to free anyways. Yeah. I don't think that... I wouldn't be e- excited about it for that.

I'd be excited about it as a banking executive, like, "Great, I get to fire all these people." 

[00:24:38] Luke Martin: I guess unless, like, the meme coin attached to the stock goes up, I don't really care either. Yeah. The shitcoins. Um, curious on y- your take with this. One factor of Bitcoin today I just can't wrap my head around is, is the Michael Saylor s- uh, question.

It feels like the market cares less about it, but we still have this guy who owns $60 billion worth of Bitcoin, and I thought he was gonna be our net buyer forever. I don't know how the hell that works in the next 10 years if he's more of a net buyer going forward. What's your take on, on s- the Saylor risk for Bitcoin?

[00:25:01] Arthur Hayes: I think, I don't think it's that high. I think he's irrelevant. He's just another derivative of crypto that, you know, it's very large. Yeah. Very successful, but it's a corporate finance game. Yeah. And he competes with ETFs, he competes with all these different types of vehicles for someone to acquire Bitcoin exposure in TradFi markets.

And so his import- his importance diminishes the more products that are out there that offer the same thing with less funky stuff. Like, I don't know, like, yeah, STRC, you got, like, the preferreds. Yeah. All these different financing mechanisms for him to sort of get cheap financing and acquire Bitcoin in a creative manner.

Yeah. But, like, the desire for investors to sort of suspend rational accounting and belief become less when you can just buy an ETF. 

[00:25:43] Luke Martin: Yeah. 

[00:25:43] Arthur Hayes: And so what does he do with this ig- now $60 billion Bitcoin? Maybe there's some sort of, like, attempt at an LBO of buying out MicroStrategy to get control of it to do something with.

I don't know. It'll be an interesting story, but I don't think he is a leading indicator of where the price of Bitcoin goes. 

[00:25:57] Luke Martin: Do you think that that trend then is done, of DATS and, and all the large, uh, S&P 500 companies buying Bitcoin and putting it on their treasury? Like, is that just, just like done?

Maybe 

[00:26:05] Arthur Hayes: I, I think that's a function of price, right? At, you know, Bitcoin 200,000, maybe this stuff is interesting again. Yeah. But, like, right now I'm not really seeing it. 

[00:26:13] Luke Martin: What about central banks around the world? This is another thing we kind of talked about, uh, in that chat so many years ago, and you were kind of saying the banks in, in countries around the world, they hate cash.

But they do have the problem of they're gonna have to keep printing cash. So do you think we are gonna see central banks, like the game theory of which one's gonna be the first to buy Bitcoin? 

[00:26:27] Arthur Hayes: I don't think they're gonna buy Bitcoin. Okay. I think they'll, I think they'll buy gold. There's a lot of career risk in buying Bitcoin.

Okay, so where do you store it? What happens ... Like, even if you store it at Coinbase, something fucking happens, Coinbase Custody goes down, and you just lost $100 billion of your country's money. Sure. And you're the official that approved that. Do you wanna be that guy or girl? Absolutely not. 

[00:26:45] Luke Martin: Trump might.

Well, like is he bluffing though when he say, he, they said they were building the, the Bitcoin strategic reserve. You think that's just, he's just gonna leave gracefully, end the term, not do it? 

[00:26:55] Arthur Hayes: Yeah. Yeah. He's a politician. 

[00:26:57] Luke Martin: Yeah. That's true. God, it'd be so cool though if he did. It'd be cool if he did. Neil Bessant in there, I feel like he can work some magic.

[00:27:04] Arthur Hayes: I mean, I don't understand how it's politically expedient for them to print money to buy Bitcoin. Okay, you can print money and hand out checks to everybody who voted for you. I, that makes a lot of political sense- Yeah ... to the politician. Printing money to buy Bitcoin when a very small sector of the population who is unliked anyways- 

[00:27:20] Luke Martin: That's true

[00:27:20] Arthur Hayes: I don't understand why you would do that. 

[00:27:22] Luke Martin: Yeah, it's, it's only good for a very small number of us. Yeah. I'll take the 5,000. Trump, do the 5,000. We're, we're okay with the airdrop. Uh, what about the quantum, uh, risk for Bitcoin? Yeah. You think it's real? You think it's hyped? You think it's, like, overplayed, underplayed?

[00:27:34] Arthur Hayes: And I think it, it is a risk. It is a known risk. People are working on it. I think people hype it up and down depending on what they feel about the price, and, you know, divorced from what the actual, you know, computer science reality of that happening is. 

[00:27:47] Luke Martin: So if you were short, you would think it's a much bigger risk?

Yeah. I'm a businessman. I respect it. What, uh, what do you think is, a couple more of these fun ones before we wrap. What's the most dangerous consensus trade in crypto right now? If there is, if there is one. 

[00:28:01] Arthur Hayes: Dangerous consensus trade. I don't even know what a, like what would be a- 

[00:28:05] Luke Martin: I guess, like, I don't know, you could say Zcash and Hyper are a consensus by now.

[00:28:09] Arthur Hayes: I mean, I don't, I, I like, I mean, oh yeah, Perp DEX is another thing. I think your consensus trade is not that you lose money per se on Hyperliquid, it's that you severely underperform other assets because you're investing in the thing that everybody knew that everybody knew was going to be successful. So I don't think that the risk-return is there for a new unit of fiat to invest in Hyperliquid when you could do ETH, Zcash, you know, some other narrative- Yeah

in crypto. Everybody's launching a Perp DEX with some sort of real-world asset attached to it, so now Hyperliquid, you know, good on them. Jeff crushed it. Yeah. They proved the market's there. Yeah. They got the trading volume. Now they're competing with centralized exchanges, they're competing with TradFi exchanges, they're competing with other DEXs.

They all offer the same product. They all charge the same amount of money. And so now you have a perfectly competitive market. You know, you're going after some small pool of traders who care about this, and so, like, how do you outperform? You know, it's marketing, it's tokenomics, and this and that. I don't like those kind of businesses.

It's too hard. Yeah. And so, like, I don't like, you know, I don't like the, I don't like doing the hard thing. It w- it was hard to mentally get around that this exists. Fine, I'll take that mental lick, but like, hard to market, hard to, like, sell a perfectly competitive product, that's really, really hard as a business.

You know, great on them for doing it. I'll b- I'll benefit as a consumer. Yeah. But I don't wanna be an investor. 

[00:29:28] Luke Martin: Interesting. So I guess that, that would be the one then. If everyone's bullish on hype, you're probably much more bullish on things like EZCash, whatever else, Near. Anything else in that mix that I'm not naming- Uh, Ether

that you think should be? 

[00:29:38] Arthur Hayes: I, I love Ether right here. I think that basis yield expands as Bitcoin goes up, and that'll benefit Ether, and they cleaned out sort of all the, um, the, uh, pre-sale investors. That's been good. Uniswap, I think if we're talking about tokenization- Mm ... Robinhood is executing through Uniswap as their execution layer.

Yeah. Uniswap's finally doing buyback and burn. Yeah. So that's helping. 

[00:29:57] Luke Martin: In eight years or something I 

[00:29:57] Arthur Hayes: think. Yeah. 

[00:29:58] Luke Martin: Yeah. 

[00:29:58] Arthur Hayes: As other institutional players wanna have DeFi, they're just gonna copy and paste what Robinhood did. Okay, we'll do a, a arbitrary fork that benefits Ethereum. Okay, we, we have an execution layer on DeFi.

Do we really wanna build our own? Nah, let's just use Uniswap. Cool. Yeah. Easy. 

[00:30:12] Luke Martin: It's like, uh, Pump Fun benefiting from all the, the meme coin stuff. Yeah. Happens everywhere else. You launch a new launch pad, it's like it still goes back to Pump Fun. 

[00:30:18] Arthur Hayes: Yeah. 

[00:30:18] Luke Martin: Interesting. All right. What do you think the end game is next 12 months, 2027?

This is fun 'cause like I said, last, you know, seven years ago I asked you this and people thought you were insane, and you were right. You, like you weren't bullish enough, actually. What do you think you're most bullish on, though? Bitcoin, uh, itself? Investable alt coins? 

[00:30:33] Arthur Hayes: Oh, I mean, I think Ethereum's gonna be the best performing mega cap.

Really? It's the most hated for- Yeah ... you know, very good reasons. Yeah. And has not outperformed its 2021 all-time high, and so I think when it starts going, it's going to cause a lot of people to just jump back in on the bandwagon. Okay, yeah, fuck Solana, fuck all these other L1s. Ethereum was always the one, biggest security layer, institutional DeFi.

You could rattle off all their things why Ethereum is, is better than all these other chains, and then the price just starts ripping. 

[00:30:59] Luke Martin: Above its- 

[00:31:00] Arthur Hayes: Above 5,000. 

[00:31:01] Luke Martin: Above 5,000. Yeah. Also above its, uh, Bitcoin price? 

[00:31:04] Arthur Hayes: I don't know about that. 

[00:31:04] Luke Martin: Bitcoin ratio? What would that put it at, like 20,000? I mean, that's like the Tom Lee- Yeah, that's what I

the Tom Lee number starts kicking in. Yeah, 

[00:31:10] Arthur Hayes: 20,000. Sure, I'll do it with that. Yeah, whatever's good for Tom Lee is good for me. 

[00:31:13] Luke Martin: We'll take 20,000. I'm not, I'm not upset about that. Um, Arthur Hayes, thank you very much for joining us. Thanks for having me. Been a pleasure.