Pomp Investments Founder Anthony Pompliano joins Yahoo Finance’s Zack Guzman at the Bitcoin 2021 Conference.

Video Transcript

ZACK GUZMAN: It's been a very interesting time for the Bitcoin community, I think. And that's what I'm hearing around the conference, is it's kind of Elon tweeting again, sending some price jitters through the market. I mean, you've been going back and forth with them about this, the sustainability question still there. What's your take right now on how important that is to where we go and the price level here?

ANTHONY POMPLIANO: I appreciate Elon Musk. Elon continues to tweet. The price of Bitcoin continues to stay lower than it probably should, which gives all of the plebes the opportunity to buy up cheap Bitcoin. So thank you, Elon. I really appreciate it. Besides the price conversation, I think that what ends up happening is people are just misinformed when it comes to the energy consumption. There's two main misconceptions. One is the energy mix. I think that's kind of getting sorted out. People were explaining it. Folks like Nick Carter doing a great job, kind of writing about that energy mix and how it's evolving over time.

But two also is, there's this belief that similar to the legacy financial system, it's not a linear energy consumption story. So you don't need more energy consumption to serve more users or more transactions. It's actually a system where whether there's full blocks or not full blocks, the energy consumption is actually pretty similar. And then you can also put millions and millions of transactions into a single block. And so I think that just as people learn more about the system, this will kind of just be a blip in the radar. People will forget about it. In five or 10 years from now, we'll laugh about it. Remember when no one understood this, and they were all talking about the energy consumption.

ZACK GUZMAN: Yeah, and the other thing, too, I mean, you know, we're at a Bitcoin conference. And it's kind of frowned upon to be talking about other projects out there. But what I've been watching is Bitcoin dominance as kind of the measure of Bitcoin's market cap relative to the rest of crypto. And that's down, I think last I checked, around, like, 43%, which is down significantly from the beginning of the year, which people might point out maybe that means more money is flowing into some of these other projects out there. What do you get in terms of the sense right now, maybe specifically to institutional investors, too, big money, where they're looking at relative to where Bitcoin was in the last big bull market?

ANTHONY POMPLIANO: Yeah, I think it's a complete mistake to look at Bitcoin dominance and to look at any comparison of Bitcoin to everything else, right? Bitcoin is going after a currency. It wants to be a global store of value and a medium of exchange. It is the winner there, right? And for a cryptocurrency, an actual decentralized currency, it has 100% market dominance.

So that's important because Bitcoin specifically is going after decentralization. That is what it holds above everything else. It holds it over transaction speeds, cost of fees, all that kind of stuff. Decentralization is most important. Everything else is competing on throughput, fees, et cetera. You're getting a lot of technical innovation, a lot of technical competition. But I think that's where there's a lot of questions as to who the winner is and all those other smart contract platforms, et cetera.

But Bitcoin is 100% dominance when it comes to a decentralized currency. And that's what makes it so special. And I think that's why you're seeing, you know, tens of thousands of people show up here at this conference, saying, like, this has won already. I think it's just inevitable at this point. And the real question is just how long does it take to get global adoption?

ZACK GUZMAN: Yeah, and I mean, we're seeing that adoption, too, when it comes to that debate. But when it comes to the next major catalyst-- because we were talking about institutions coming in-- there's that. We were talking about kind of it being used for transactions. So you can look at Tesla kind of accepting it as a form of payment before they went back on that. But I mean, what is the next big thing there that will drive Bitcoin higher? Because it seems like transactions or even the institutional adoption hasn't done much at the levels we're at right now. So what do you see as maybe the next most overlooked catalyst here?

ANTHONY POMPLIANO: We started with retail. We then moved in, and we started to get financial institutions. Then we got corporations. There's one group of people left, and they're coming. It's the countries and the central banks. And I think people think that's a 5 or 10-year type conversation. I think that's a 2021 conversation. And so I think this year, we'll see a country or a central bank come out and go ahead and say, look, we've decided to go either purchase it, put it in our reserves, et cetera.

You saw yesterday, Russia decided to drop the dollar out of that national well-being fund. They didn't buy Bitcoin, as far as we know, but they decided to increase their exposure to other currencies, also buy some gold. And so I think countries are just thinking about this, right? What should I be doing if, all of a sudden, the United States dollar has either some sort of censorship risk, or it's got some sort of macroeconomic and debasement risk? And so I think that naturally, Bitcoin will end up in one of the countries. I don't know which one yet, but I do think that it will end up happening in 2021.

ZACK GUZMAN: Yeah, as you watched out kind of the China risks we always see through kind of triggering some of the sell-offs, I mean, when you watch that play out and kind of the way that they've been taking a position maybe against similar sustainability in question when it comes to mining, it seems to be benefit, right? We talk so much about people here in the US who are stressing that as a national security concern. It seemed like it would be a reason to be bullish, to be more bullish on Bitcoin. I mean, how do you see that playing out when it comes to the US versus China on that front?

ANTHONY POMPLIANO: It's no secret. I lost 30% of my net worth in the last month I'm more bullish today than I've ever been. And the reason is because what we're seeing is the fundamentals are continuing to gain strength. More people are adopting this currency. You're seeing more wallet addresses. We're seeing more transactions. You're seeing just the belief of this as a global store of value continue to take seat.

But what you're also seeing is this kind of geopolitical conversation play out, where literally, China's pushing hash rate outside of their country, is pushing into a more green grain. It's pushing it to kind of a more decentralized aspect. And so I just generally think, like, when you look at the underlying fundamentals-- forget price-- Bitcoin has never been kind of stronger than it is today. And I don't think that people are really accounting for the fundamentals. They're all just looking at price, looking at tweets. And they're getting caught up in the emotional sentiment. But if you can ignore that stuff and you look at the fundamentals, it's really, really hard to be bearish on Bitcoin right now.

ZACK GUZMAN: Yeah, I mean, but yet they still are. There are people who are bearish on Bitcoin. And--

ANTHONY POMPLIANO: Bitcoin is an intelligence test. If you're still bearish, then, you know, you can figure out which side of the test you end up on.

ZACK GUZMAN: It is what we're hearing down here at the conference. But when it comes to maybe the risk that you do pay attention to, right-- because there are those out there. And Gary Gensler is getting set up at the SEC. There are things that maybe some people in the crypto world fear. I mean, is there one that keeps you up at night that you're watching now?

ANTHONY POMPLIANO: I think there's two main areas that I really spend a lot of time on. One is a self-imposed wound, right? So there can still be a bug that would be introduced in the development process. I think the probability is near zero, a very methodical process, kind of very, very intentional process. But still that it could be a potential issue. And so we just got to be vigilant and kind of continue to watch that.

And then the second is not any sort of banning or anything like that. It's actually more regulation and taxes, right? And so what we need to do is we need to continue to educate politicians, regulators, rulemakers, make sure they understand this asset. And it's really exciting to see there's multiple congressmen or senators or politicians that are here at the conference. We literally have them with laser eyes on Twitter. Like, it is working, but we have to remain kind of dedicated to that effort. Because the more educated they are, the better decisions they'll make. The better decisions they make, the less of a risk that becomes.

ZACK GUZMAN: Well, I know you got to run. You're off to your panel with the Winklevoss twins coming up here at Miami. But Pompliano, the man they call Pomp. Anthony Pompliano, one of my favorite people in the crypto world, appreciate you stopping by here to chat.

ANTHONY POMPLIANO: Absolutely, thanks so much.

ZACK GUZMAN: Good luck out there. Be well. Julia, we'll send it back to you here from Miami.