Today’s episode is from a 2018 conversation with Hunter Horsley, co-founder and CEO of Bitwise Asset Management, operator of the world’s first crypto index fund. We discuss Bitcoin, the role that social media played in its rise, and why investors in today’s multi-token market need a diversified portfolio of cryptoassets. For the full conversation, check out Flippening episode 10.
Links Relevant To This Episode
- Nomics on Twitter
- Clay Collins
- Nomics API
- Nomics’ Fully Customizable Daily Crypto Newsletter
- Hunter Horsley
- Bitwise Asset Management
- Bitcoin (BTC)
- Ethereum (ETH)
Clay: Welcome to Daily Wisdom from the Flippening Podcast. These episodes feature short, to the point clips from our full-length interviews. We talk to the men and women behind the trades, crypto exchanges, and regulations with the goal of helping you become a better, more informed investor.
Michael: Hi, I’m Michael Kaplan, editor of the Flippening Podcast. Today’s episode is from a 2018 conversation with Hunter Horsley, co-founder and CEO of Bitwise Asset Management, operator of the world’s first crypto index fund. We discuss Bitcoin, the role that social media played in its rise, and why investors in today’s multi-token market need a diversified [00:00:30] portfolio of cryptoassets. For the full conversation, check out Flippening Episode 10.
Now without further ado, our conversation with Hunter Horsley, co-founder and CEO of Bitwise Asset Management. Enjoy.
Clay: This is a question I ask everyone who’s been on the podcast so far. If it weren’t for Satoshi Nakamoto, and the whitepaper, and the birth of Bitcoin and then distributed ledger technologies, do you think you’d be involved in financial services [00:01:00] and would you have started an index fund?
Hunter: Probably not, right? I think that Bitcoin is the foundation of everything that is sort of blossoming now around distributed ledgers and cryptoassets. One of the things that I think about a little bit is why is this happening now? There’s a certain path dependency of history sometimes and in contemplating that question, one of the thoughts I have is that the moment in time that Bitcoin was introduced to the world, 2009, was in many ways actually a uniquely fertile period for [00:01:30] something like cryptocurrencies to be embraced by society.
There are two things that I see in that moment in time that really facilitated people being open to something like this. The first is the proliferation of social media. Platforms like Instagram, Facebook, Twitter, I think we’re all familiar with the term the Arab Spring, but one of the byproducts of social media and the ability for anyone to become a content producer and then to distribute to anyone else is that it’s shed light on the behavior of large institutions, [00:02:00] of large organizations, and allowed some people who previously weren’t able to express what they were seeing to do so more broadly.
Having that dynamic be in place when the financial crisis happened in many ways was sort of a combination that really damaged people’s trust in the ability of the central banks, of the large private banks that we often think of as being the most trusted organizations. To perceive the missteps and the perils of those organizations’ operations with a level of clarity and specificity [00:02:30] was hard prior to social media. I think that in addition to the business models and some of the concerns that many people have about Facebook and Google and others and how their data’s being monetized sort of compounds to create an environment where people are more sympathetic and open to the idea of having decentralized systems for transferring value, or for accomplishing things. Whereas previously, maybe there was less of a feeling that there was any [00:03:00] problem with the central organization serving a lot of those things.
Clay: That’s profound, I’ve heard certainly the financial crash, the housing market and everything that was happening then, that’s often cited, sort of the compounding effect of social media and the distrust of institutions that came with that, certainly, that was a catalyst.
Hunter: Yeah, absolutely, The role of social media is substantial, right? This is why I brought up Arab Spring. That’s not trivial, the fact that giving anyone the power to broadcast what they’re seeing [00:03:30] as a result of all the platforms at our disposal today, has had really significant impacts in other parts of the world. It makes sense that it would affect people everywhere. That’s definitely something that has been one of the prevailing developments in the past 10 years and plays into the world that cryptocurrency is now stepping into.
Clay: Let’s fast forward a little bit. The Bitcoin whitepaper comes out, Bitcoin comes out in 2009?
Clay: And then various works of Bitcoin come out, [00:04:00] Ethereum comes out. For a while, we were living in a Bitcoin world, there was Bitcoin and then there was everything else. And then, Ethereum came on the scene and surprised a lot of people with the growth it’s seen. That kind of brings us to the place where we are now, which is a truly multi-token world. In a lot of ways, that set the groundwork for an index fund because you can’t just bet on two tokens and assume you’re going to benefit from most [00:04:30] of the growth in this space.
What I’d like to hear from you is really the case for index funds. I was talking to someone the other day who was going to start an index fund but they also run a hedge fund, and they couldn’t speak freely about the benefits of an index fund over traditional hedge funds because–
Hunter: They’re at odds.
Clay: Because they are at odds. What’s the case for index funds over hedge funds?
Hunter: To back up [00:05:00] a little bit to the premise you set, I do think that the clear need for holding a portfolio in crypto has been something that’s new as of 2017. As you pointed out, crypto was, by and large, a Bitcoin maximalist world for the years between 2009 and just last year. Bitcoin was always 85% or more of the market cap of all crypto assets. In May of 2017, it dropped to around 55% and it ended the year around 35%. That’s a relatively new state of the world [00:05:30] and what it means, and what really changed is many people were investing against an abstract thesis which was that cryptocurrency as a category might produce something meaningful one day, but investors don’t necessarily know which asset or what that meaningful thing will be. Previously, if you wanted exposure to cryptocurrency as a category, just investing in Bitcoin seemed feasible because it was the majority of the value in the category. As of 2017, everyone increasingly recognized [00:06:00] that holding a portfolio is important.
Clay: That’s it for today. If you like what you heard and want to support the show, please consider leaving us a review on iTunes, Stitcher, or wherever you listen to podcasts. If you decide to leave us a review after subscribing, we’ll send you a free Nomics T-shirt. Just hit us up on Twitter @NomicsFinance after you’ve left a review and we’ll hook you up. You may also be interested in nomics.com, our crypto market cap and pricing website, check us out at nomics.com. [00:06:30] Now, stick around for our legal disclaimer.
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