Original subtitles

Smart contracts can be used to transfer rent payments to an investor on a pro

rata basis as soon as the rent has been received.

Or a smart contract automatically initiates payments as soon as certain

milestones are reached in a project.

The interesting thing about token is you could say it's a smart contract that is

registered on a blockchain.

But in the end, we talk about programmable values.

I don't want to say money here because there might be a difference between

and its regulation.

and transferable values but it will be very important for example if we think

about sustainability that we not only introduce a new digital asset but that

generates impact so we need to add meaning to a certain nominal factor and

this will be i think the most relevant aspect of tokenization that we create

digital units for whatever underlying asset

but that we can optimize its use, we can incentivize certain behaviors.

Investment in tokenized real estate represents one of the most recent

advancements in the property industry.

Tokenization enables houses and apartments to be divided and sold in

smaller units.

Small programs act like a bridge between the property and an online trading

platform. Hence, tokens create a digital representation of a property

facilitating its digital transfer many

potential investors are either unwilling to enter this market on a large scale

or unable to do so due to factors such as lack of equity or difficulties in

obtaining debt financing The concept of tokenization offers a significant

advantage by enabling the smallest unit of investment to be acquired at a much

lower threshold.

For instance, a flat owner could split a property worth 100 ,000 Euro into 1

,000 tokens.

Each token would be valued at 100 Euros, representing a small portion of the

flat.

Investors would then hold the rights to a particular percentage of rental income

with each token.

After deducting costs like property tax, repairs and insurance, investors stand

to profit as the apartment increases in value over time and rental income grows.

Another benefit of tokenization is the ability to convert the individual tokens

anytime, 24x7 via apps or trading platforms.

Furthermore, the need to visit a notary and have the property or share notarized

before purchasing is eliminated.

Purchasers can efficiently manage their tokens through a mobile wallet

application. The app's features may vary depending on its design, allowing users

to track their incoming payments, monitor token value fluctuations via

displays, and sell tokens through their smartphones.

Real estate tokens follow similar regulations to securities and do not

physical ownership of the underlying property.

Essentially, a real estate token functions as a loan that the provider

for property financing.

The loan's interest is covered by the rental income, which poses a risk of

The possibility of rent defaults, and in extreme cases, the provider's

insolvency, increases this risk as compared to investing through a property

fund, which is usually diversified across many properties.

In Germany, such a scenario isn't yet to be realized due to the absence of a

regulatory framework that facilitates the scrutinization of property rights

associated with land and real estate.

The process of purchasing a property is still associated with significant

bureaucracy, lengthy procedures, and subsequent high costs.

Digital art projects were the first to bring tokenization to public attention.

With this assistance of non -fungible tokens, digital art pieces are typically

secured as a whole in the blockchain.

In March 2021, American artist Beeple sold a digital collage comprising 5 ,000

individual images for an extraordinary $69 .35 million at an auction.

A single tweet by Jack Dorsey, founder of Twitter, was purchased by a fan for

impressive sum of 2 .9 million US dollars.

My name is Everfresh, also known as Sebastian Pfeiffer, so that's my real

We are not going to see anything like we've seen in 2021, so that ship has

sailed. My hope actually is that...

The market will reach a more mature state where price levels are reasonable

and artists can actually live off their art sales in that

digital space.

It's never going to be everyone, that's clear.

You know, that's not how it works.

So it's always just going to be a few that will be able to make a living out

it. If you look at the sheer number, the people collecting crypto is growing and

growing and growing.

My name is Sergio Roberto Schmolt.

I'm the founder and CEO of Magal. Magal stands for Meta Art Gallery.

There is, of course, the 2021 January bubble where you had a crypto art NFT

market explosion with 14 ,000%.

If you have such a high increase, you fall down very, very briefly.

So what we are doing right now, we are trying to get a new base level. And from

that level, we can progress together with crypto, together with Bitcoin,

together with everything that is behind it.

allowing for international investment in the art industry.

Twitter is the main platform to promote your stuff in the NFT world.

You can also use other social media platforms, but Twitter is by far the one

with the most impact.

I reach my audience mainly through Twitter. Of course, I promote my work on

other social media platforms as well. But I've not noticed any correlation

directly to sales through other platforms than Twitter.

I would say the biggest trend right now is the thing that we are doing, coming

from the metaverse and coming into in real life. So you can only feel crypto

if you can touch it, if you can see it, like here on our screen.

And this is the step that a gallerist needs to do.

With the help of non -fungible tokens, digital works of art are usually

scrutinized as a whole in the blockchain.

Even if an artist generates multiple NFTs of the exact same image, each one

a unique identity on the blockchain.

And that means these tokens are essentially unique.

We can illustrate this concept by considering a one -euro coin.

When we hold this coin in our hand, we do not distinguish it from any other one

-euro coin as they have identical purchasing power.

Such coins are referred to as fungible.

The same principle applies to securities such as BMW shares.

We do not differentiate between individual shares as they are fungible.

The BMW share represents identical voting rights and values.

Non -fungible tokens, NFTs, can be likened to artworks such as owning a

Picasso painting or the Mona Lisa.

While forgeries may exist, the genuine Mona Lisa is one -of -a -kind and non

-fungible with no other exact copies.

Art also employs the concept of limited edition prints where a photo may have,

for instance, only 100 copies, each with a unique number.

These numbered prints belong to a specific series, although numerous

be used.

The idea is for each token to be exclusively identified, but on the other

fungible security tokens are identical and can be exchanged for each other.

It's not because you call something an NFT that it won't be under MICA. So they

really are mentioning that if something is issued in a large series, it's an

indicator of defungibility.

So then it doesn't necessarily mean it will be an NFT.

But again, what is a large series? We don't know yet. So we hope we'll have

clarification down the road. But those little things, we can play with words

don't know, especially that the technology evolves.

so quickly most nft sales are actually auctions they're not auctions in a

classical sense uh where there's you know like a guy with a hammer but it it

just um you usually put your your pr your piece on a platform uh with a with

reserve and once the reserve is met um then there's like uh you can define that

how long the auction goes but usually it's like a 24 -hour auction

And then the timer starts, and it runs for 24 hours, and then it depends if

other people put in their bids as well, if the price goes up or not.

Most platforms take between 5 % and 15%. Some also take

20%. Most take between 5 % and 15%. For artists themselves,

tokenization could also be an exciting vehicle for the sale of their works.

Theoretically, the artists can even offer themselves to investors as an

investment.

If their value increases, investors will benefit.

On the other hand, the artists generate a regular additional income.

The art market remains considerably unclear, necessitating a thorough

of the players, the influencing factors, the dynamics of the market in order to

be competitive when buying works of art.

Our collection of works from the top 100 artists is usually unavailable

at local galleries.

but it's sourced from the leading international galleries without access.

Artworks become either unobtainable or extremely expensive due to multiple

flows, each resulting in price increases.

Fractional ownership of an asset is represented in the field of art via so

-called art security tokens or AACs. These are digital assets that correspond

a part of a work of art.

Previously,

this market was exclusive to the super -rich due to the exorbitant prices of

art. Prices are often in the millions, which food can afford.

But our trade is changing that. We possess a meticulous network of art

who identify appealing works on your behalf.

The entire process involves a complex data analysis procedure.

the relevant information, as each artwork is assigned a single digital

which comes in the form of a security token.

The value of one token corresponds to one euro of the artwork's view value.

In essence, this is a fully regulated digital security as per the new

Securities Act.

This allows us to treat the token and its securities similarly to other

conventional securities, ultimately facilitating their integration into the

financial industry's infrastructure.

Thanks to their assistance Anyone can now invest in works of art that would

typically be excluded from an average investor's portfolio under normal

circumstances.

You can invest in these works of art indirectly with as little as 1 ,000

by purchasing these tokens.

This ensures that our enthusiasts with smaller budgets can engage in

art projects.

Even the old masters can now be found on the blockchain.

Just recently, Pablo Picasso's masterpiece, Fier Obere, was tokenized

blockchain.

A Ruach -based crypto bank is responsible, which dismantled the oil

into 4 ,000 of the art tokens and sold them for 1 ,000 Swiss francs each.

For this purpose, the tokens were in turn converted into blockchain -based

securities, which represent an undisputed legal claim to the unique

from 1964 in Switzerland.

As an investor, you do not acquire a piece of the artwork itself, but rather

scrutinized claim to participate in its performance.

We made a conscious choice to avoid fractional ownership and instead offer a

security as it aligns with a traditional investment product and can seamlessly

integrate into the financial system.

When works are traded on a secondary market, often after a prior purchase,

artists typically do not participate further.

However, we aim to expand this model in the long term by exploring the potential

of structuring tokens in smart contracts.

Currently, the concept remains uncertain.

This would allow the artists to maintain a permanent stake in the value

development of their artwork to a percentage of ownership.

I see a very bright future when I look at my kids, the things they collect,

Fortnite skins or some digital weapon for a game.

This kind of collection feeling is parallel to crypto art collection.

So people will not hang a Picasso.

in oil painting on their wall my kids will not do it they will collect other

and this may be the art that they are collecting funding

for major art galleries museums collections and artwork storage

also benefit from tokenization in the near future because they invest huge

in the protection of their artworks theft vandalism preventing this cost

money that museums don't have.

The entrance fees and funding pots are often not enough to expand the

collections.

Tokenizations could help them gain this liquidity. It could make the collection

or a selected part of it available to investors who make a profit from an

increase in the value of the artworks.

A stock is a security issue by a company.

Depending on the type of share, this can be a claim to a portion of the profits,

dividends, or a say.

Companies issue shares to raise additional funds for their business's

development.

But despite digitalization, trading in shares remains inefficient in many

places.

If you want to invest in stocks, you have to buy a whole share.

However, the shares of large companies often cost over $1 ,000.

This limits the circle of those who can afford it.

And even if you secure a fraction of the large companies, this automatically

eliminates the possibility of diversifying your portfolio by investing

multiple stocks.

My name is Philip Piper. I'm the founder of Swarm.

We are a tokenization platform that does both primary issuance as well as

secondary trading.

In the past two years, there's been obviously a very high degree of focus on

crypto assets. So basically, you know, Bitcoin and derivatives of Bitcoin as

well as sort of other native assets that were on sort of the blockchain like

Ethereum.

But it's been shown, obviously, that there's a very high degree of

amongst all these assets.

So if the market goes up, everything goes up. If the market goes down and

crashes down, everything goes down.

So in that world, there is a need to actually have something called real

assets replicated onto chain, which actually derive the value of what they

from the underlying asset that is connected with that kind of digital

So a good example of that is basically a stablecoin.

Tokenization makes it possible to buy fractional shares of these large

companies. Instead of buying an entire share, you can only buy a portion of a

share and thus generate a proportionate return.

This transformation is already reshaping global investment.

BlackRock, the world's largest asset manager, has taken its first steps by

launching Bitcoin and tokenized ETFs. And today the fixed income markets are

totally imbued.

By ETFs. And so at BlackRock, when we bought BGI, we had $290 billion of ETFs.

Today we have $3 .5 trillion.

And then this week alone, just yesterday, we launched the

iShares Bitcoin ETF.

And so I would say to you, if we could ETF a Bitcoin, imagine what we could do

with all financial instruments.

Tokenization is used to create digital images of securities.

that have already been issued.

This is referred to as a token derivative.

These are scrutinized in the blockchain and thus embedded in a more flexible

infrastructure. So in principle, you get a normal stock, but with the advantage

of cryptocurrency.

The price of the tokenized share is always equal to the share price of the

issuing company.

Not everything recorded on -chain represents full ownership.

Some tokens are only wrappers.

price exposure without voting or dividend rights.

you know, equity from a company. If the value of the deposited share doubles,

the value of the tokenized share also doubles.

The price action is analyzed in a similar way to stocks, not like

cryptocurrencies.

So stablecoin is effectively a token that represents maybe a dollar. So one

token equals one dollar. You should actually have the ability to put

that has value, anything that has some kind of substance.

onto the blockchain, into the trading environments, into the ability to

fractionalize and mobilize these assets, there's a very large realm of different

asset qualities that you can gain by putting them as a digital asset onto the

chain. So if you have one Apple stock that is represented in one token, well,

you can buy a cent of an Apple stock if you want to, right?

That you cannot do in the traditional market.

Tokenization significantly reduces the barriers to entry into the new financial

market. The vast majority of all companies worldwide are currently

companies. The derivative product that probably mimics some of that, but it's

not the degree of flexibility.

The second thing is that you actually have an immediate settlement.

So if I go on to some kind of exchange, some kind of decentralized exchange,

some kind of trading venue, and you and I agree on a price,

Actually, by executing on the blockchain, immediately the transfer of

ownership to you has been executed.

Normally in the financial markets, that takes two to three days to settle. From

a regular player perspective, the United States is also in a unique position

because of the dollar.

So the dollar is...

They famously once said that the dollar is the United States currency, but

everyone else's problem.

But really, I don't fully buy that argument. I think that the dollar is

United States' problem now because you have jurisdictions in other parts of the

world that are essentially creating regulation for digital U .S. dollars in

future. And none of this is coming from the U .S. yet.

So, you know, regulating stable coins is one of the lower hanging fruit that

they could...

that they could tackle in terms of, you know, reasserting this position of

dollar hegemony. And this is not a position that Europe has to the same

I mean, you know, the U .S. dollar still makes up somewhere around like 60 % of

global reserve. The United States political system is also, by design, an

invitation to struggle.

It has been since the Declaration of Independence.

So you always have to, when you're looking at the U .S., you always have to

think of this.

The tokenized share starts to build a bridge between traditional stock

such as Extra or the Frankfurt Stock Exchange, and a crypto exchange, such as

Binance. Institutional adoption now is a recognizable name.

Global asset managers are already entering the tokenized economy.

Our customers are the largest asset managers in the world, like BlackRock

Apollo and Hamilton Lane, KKR, etc.

And that gives us a competitive advantage that now that there's further

regulatory clarity, we'll...

you know probably ensure that we continue leading the industry as we've

doing it for the last few years depending on the network and crypto

token transactions can be processed in a matter of minutes if you have

the ability to trade on a 24 7 basis without any kind of stoppage of the

it's a it's a it's a benefit it actually means real money for people if you can

attach governance processes to these technical things it is a benefit because

you have a much more real -time interaction with the way that the asset

below can actually transact.

But even more so if you actually then have the confidence, which means that

have some data that is connected with the token that points to where it

goes and what it represents and the live data reporting what it actually has in

terms of values, then suddenly you're not reliant on a quarterly report, but

have a real -time view on it.

As smart contracts perform, buy and sell orders of tokens on a blockchain,

there's no longer need to rely on a broker or banker as an intermediary.

So I would say that broadly those would be some of the aspects where

tokenization will transform the financial industry.

Whether or not you buy that there will be a complete removal of intermediaries,

it will certainly limit the role of intermediaries or diminish the frequency

intermediaries in certain financial transactions.

In the world of tokenization, in the end, it all represents something that

some kind of resemblance in real life. So there's a trust element that needs to

be created, which also means that if the token gets lost, it really depends on

how you set it up, you can actually sort of then make sure that it's either

respecting who the real owner is, or basically gets redistributed back to the

original owner.

It's just an efficiency technology.

The sale the company shares is bureaucratic, takes a long time, and

many actors.

We need to unite the technical possibilities in this traditional world.

latter insists on maintaining the status quo as it has proven stable over the

last few decades.

There are stakeholders who profit from this naturally, and conversely, the DEFI

and crypto community advocates for self -determination in every aspect.

However, the reality likely lies somewhere between these extremes and we

construct accordingly.

Investors do not have access to these companies.

Investments in these companies are mainly made by financial institutions in

form of expensive loans or equity funds.

The market, therefore, has a minimal liquidity.

Yes, I think it will affect more the B2B space because for us as end users, we

are interested in usability and, of course, in trust.

but we're not necessarily interested if a banking or fintech app is using

technology A or technology B, especially if we talk about mass adoption.

Then this should not play a role.

It should be a well -performing app.

When investing, it is almost always for the long term. If the company's

management takes a different direction, investors cannot simply get out.

They then try to influence the management of the company. The process

sluggish. Just to think of it as...

well, it's an open system and therefore everyone has access, that's also not

entirely true. It means that depending how you set up the system...

And that very much depends on what asset it represents.

You have restrictions that you artificially have to build into the

only a certain type of customer can buy into those specific asset tokens, or

that there's only a certain behavior that is allowed to be executed with the

token. So there's very much a technology -enforced restriction. But what it

gives you is actually a much higher degree of confidence from a regulatory

process as well, that because it's code,

And because it's actually enforcing what the code is being told to do, that, you

know, you cannot really bypass it.

We expect tokenization and blockchain technology to play a role to design more

efficient and streamlined processes.

So that's step number one. Then we will potentially tokenize and also use

blockchain technology to finance in different ways and to tokenize different

assets. So that's, let's say, a growth aspect.

depending on regulation but also on let's say strategic decisions some fully

automated neo blockchain banks or neo blockchain players on the market we can

expect that new use cases and a whole new set of process designs will see the

day of light so this means a totally new category targeting new use cases that

are not right there available

Discussions regarding the energy industry's future increasingly center

energy tokenization.

Renewable energies have grown increasingly popular in our current era.

Wind and solar parks continue to attract a growing number of investors.

My name is Eko. I am CEO of Realport.

Decentralization of energy is already there, and it's only going to

I think, the past years.

considering the Ukraine war and considering the drive of governments

and our society to become more independent has shown an incredible boom

rooftop solar and decentralized energy.

So as not only the companies and supply chains grow more mature, it's going to

be even easier for tenants of houses and for owners of houses in order to,

number one, put solar into the roof.

And then it's a matter of connecting that amongst the various decentralized

hubs, meaning from one roof to another, and into the grid in a smart way. And I

do think that technology can play a fantastic.

The energy sector's intricate network is hindered by outdated infrastructure and

numerous inefficient processes.

Utilizing blockchain can enhance the efficiency of the energy supply.

And efficiency means saving costs.

Saving costs means that you can bring in smaller projects, and smaller projects

also means that you can bring in smaller investors. The biggest advantage is for

the smaller guys, making it more efficient, making access more efficient,

also enabling smaller wind farms in order to participate within the energy

economy.

Thanks to its decentralized architecture, it can document and supply

multiple energy producers simultaneously.

which is a much more complex process with a centralized system.

In such systems, every producer has to first send their data to a central

location for bundling and processing.

In a decentralized blockchain network, anyone can feed the data directly.

By means of tokenization, a digital copy of each physical energy unit can be

stored on a blockchain.

This automation of administrative processes can significantly reduce the

energy.

You know, the way we see it, they're two different forms. One form is sharing

the economic performance out of an energy project or out of a renewable

project. That means a generator wants to set up a wind farm and needs investors,

right? And will promise essentially the proceeds of this wind farm to be shared

amongst the investors.

So now we can...

tokenize essentially the future proceeds of this project with multiple

investors. So that's one part.

And the much more difficult part is how do we certify renewable energy through

national agencies and make it fungible or tradable in a sense.

Blockchain technology allows for the tracing of energy from the source to the

end consumer.

Certificates can be issued if required for proof of purchase.

This can be a crucial factor, particularly considering the stringent

for renewable energy.

Currently, it is difficult to ascertain whether the energy derives from wind,

solar or another source.

A third party is required to certify the origin and these certificates may be

traded. Greenwashing is facilitated.

legislative and also regulatory aspects around that. Number one is the EU

taxonomy, which nowadays tells us what is green, what is not green. So that

gives guidance to investors and also to the issuers of financial products.

And number two, there is also a self -disclosure regulation called SFDR.

So every publisher or every issuer of financial products will need to self

-assess themselves, whether they are highly sustainable article 9 or not

sustainable basically article 7 and that will give consumers tremendous guidance

as to what is green what is not green so it means the leeway to kind of move

around and kind of greenwash has becoming a whole lot smaller tokenized

certificates can be produced by the supplier providing an indisputable

the energy generated these certificates are securely stored in the blockchain

ensuring that the data cannot be altered governance token

is a specific type of token issued by certain companies often tech companies

so -called decentralized autonomous organizations the governance token

have a certain rights from a technical point of view they're often so -called

erc20 tokens which means that they follow the standard which is also used

many other types tokens But the rights that the owner of this governance token

has may be different from security tokens, for example.

The governance token often scrutinizes voting rights, i .e., you own the

governance tokens, and they are issued by companies.

And if the company wants to change something, if it wants to implement

changes, for example, then I have the right to vote, if I hold pieces of these

governance tokens.

This means that not only do I have a monetary incentive to hold this token

maybe hope for a future profit, but I also have a right of co -determination

I can't get involved in communities and my voice is heard based on the number of

tokens I hold.

Now, the big challenge here lies, how do consumers, be it a business consumer or

even a regular retail consumer, buy into certificated or into certified

renewable energy sources.

And that's where blockchain can provide a huge benefit.

And the vision is that eventually you'll be able to match certificates at the

time of production with consumption at the time when you really need it.

Tokenization makes wind farms or other renewable energy sources much more

accessible to investors.

Investing in a solar park via token will be an established procedure in the near

future. The same applies to the purchase of electricity from various energy

sources.

In the field of solar energy, the first energy suppliers have already tokenized

their systems.

In the case of wind turbines, too, there are platforms that bring operators of

the turbines together with companies and private individuals.

Through tokenization, the owners of the tokens become co -owners of a wind

turbine. By selling the electricity, they generate a proportionate return.

But the operators of the plants also benefit.

For them, tokenization is another way to directly collect the capital of the

investment. This gives you a reach and access to high liquidity.

So far, however, energy has mainly been managed centrally. There's still a long

way to go before new technology becomes established.

The next step is now connecting neighborhoods.

The same way as larger projects of renewable energies are now participating

entire communities in exchange for the permission of erecting a solar farm or a

wind farm into participating into that, right, into the consumption of the

energy which is being produced.

And that will also create communities which will be able to dispatch and to

trade energy amongst themselves.

and amongst multiple communities.

So yes, it is on the way. Difficult to say really, right? I think Germany is

probably the largest in Europe, a rooftop solar market in that respect,

most installations.

But you see this trend everywhere.

You see France has very, very strong regulation and the UK and Italy as well.

I think you must see it as a pan -European move.

The calls for sustainability, human rights, or animal welfare have been

louder for years.

Society is increasingly demanding products whose origins can be

verified. Supply chain tokenization represents a credible future of product

transparency. The technology will be exciting in view of the newly passed

Chain Due Diligence Act.

It is intended to prove that human rights and environmental due diligence

obligations have not been violated.

Companies will be required to document every step of the supply chain for

authorities and consumers.

Sustainability should thus become comprehensible, verifiable, and visible.

Tokenization makes it possible to track a product along the entire value chain.

Using a commercially available smartphone, all relevant information

product is collected and stored in a token.

Any kind of information can be stored via an app.

Every production step and every raw material within the supply chain can be

reliably retrieved at any time.

In this way, global supply chains can be traced seamlessly.

While a supply chain based on blockchain technology can ensure complete

documentation for this reporting, artificial intelligence can help to

corresponding risk analysis.

For example, AI can analyze contracts with suppliers for human rights and

environmental standards.

If necessary, this enables the company to quickly adapt the contractual

arrangement with the supplier.

In agriculture, tokenization allows farmers to tokenize their products.

This allows international investors to invest in regional agricultural

commodities. In the healthcare sector, the tokenization of medical institutions

help in the use of sensitive data of patients and healthcare organizations.

The logistics industry is also currently working on a concept of tokenization.

Here, the bill of lading is to be transferred to the blockchain and thus

problem of administration.

So that means that we can expect that if tokenization is becoming part of, let's

say, the underlying process setup for financial transactions, that the total

market size will be bigger than today's financial asset market volume.

But, of course, this will not happen overnight. It will happen in different

steps, depending on regulation, on innovation, and on general acceptance.

need democratic discussions about things. We need governments.

So it could take anything between 5 and 20 years and it will have an end step.

But the addressable market size will become bigger.

Despite the many benefits and its increasing prevalence, blockchain -based

tokenization also has its limitations.

A disadvantage that still exists with tokens in general today is the

of the underlying blockchain.

If you wanted to put the entire security businesses that exist worldwide on a

blockchain today in order to tokenize all securities, then the blockchains

not be able to map the transaction volume that is processed there.

This means that the system would simply be overloaded and overwhelmed, and this

is probably one of the main disadvantages of tokens.

So they're not included in the technical standard at all, but rather on the

underlying platforms, namely the blockchains on which these tokens exist.

There's a risk of hackers accessing and stealing the digital assets.

Blockchain technology itself is considered to be very secure.

Despite this, there have been cases of successful hacker attacks on crypto

exchanges and other blockchain -based systems.

As a rule, the attackers did not gain access via the blockchain itself, but

the points where the blockchain is connected.

There is therefore a need to develop a comprehensive and reliable cybercrime

protection system.

I think Mika is a great first step.

If you can think of a global regulatory waterfall that trickles down, I would

say that Europe is kind of sitting at the top, at the crest of this waterfall.

Banks

have

traditionally acted as asset managers.

They aim to broaden their range of service and provide customers with the

expensive possible choice.

As a result, they have begun to investigate the tokenization of assets.

Is this the end of mutual funds?

I think, well, a lot of people, it's just a wrapper. It's not the end of it,

I would say the dominant form of bringing products going forward will be

form of ETFs.

For Fink, tokenization is not a disruption that destroys the old world.

next natural layer of it. A system where traditional and digital finance merge

into one continuous structure.

It's possible that in the future, banks may oversee the issuance and trading of

tokenized assets.

Fintech has become one of the fastest growing industries in recent times.

So one area where there is currently a lot of innovation in tokens is the so

-called payment processing.

You can also take the security tokens as an example. A bond, for example, pays a

regular coupon, perhaps a certain interest rate once a year, to those who

that bond.

You can equip the token with so much information that it knows the amount of

interest coupon and automatically collects the interest amount from the

and then automatically distribute it to investors.

In the traditional world, in the banking world, there is the so -called paying

agent. So when a company issues a bond, there is a bank that is designated as

the paying agent and then ensures that the issuer pays its interest on time and

distributes it to the investors.

And this can be automated by program code.

also by so -called smart contracts, and this information can be given to the

token.

Talking about the ecological impact of blockchains, I think, is a big deal.

But we as an industry have to ask ourselves what's right and wrong, right?

of people from looking at it from the outside then think that all that energy

the same energy mix as the energy that goes into our daily consumption.

And as much as that was the case, it's changed dramatically.

So there's a lot of regenerative energies that have been started to be

hydro energy, wind energy, but also solar energy, that basically go into

node computations. And this is energy that never has been used in a consumer's

perspective. So it's not competing against the energy that you and I use in

daily lives.

more than 60 right now is already regenerative energy that the bitcoin

actually uses and the rest is still something to work on in particular

financing by tokens has the chance to drastically change the global economy in

the future companies will be able to map real assets online and finance them in

a decentralized manner existing financial services are being replaced by

decentralized solutions

And I think that in the future, what we're likely going to see is on the side

payments and crypto and, you know, we'll have different digital currency areas.

So you could have stable coins and commercial bank money tokens and

kinds of PDDCs. And these will all exist in cash.

So all exist in some, you know, as Germans say, in some mix together.

And I don't think that one will necessarily crowd out the other.

On the other hand, I also believe that a lot of why we see an interest in

crypto, and I think globally, about like 23 % of people globally hold crypto. In

Europe, I think the average is around 17. So we're still on the lower side

compared to the global average, but it's growing.

And I think it's confidence, right? So if people don't have confidence in the

system, they look for alternatives.

And I think that the challenge from a political perspective for the

of the nation states is how do we instill confidence in our systems in an

digital transformation?

And there's no easy answer to that question.

And I think that at the same time, it might be a little naive to assume that

crypto can solve all of the world's problems. So I would say that we need

sort of tempered optimism, right, or tailored optimism.

There is currently still a lack of standardization of the network. In

legal standards must be developed to provide companies and investors alike

clarity and thus security.

We can already see the effects on our society today. The technology has

arrived in the here and now.

At the edge of the world, in a country with more sheep than people, one of the

most powerful men in Silicon Valley built an escape hatch.

Not a vacation home, not a tax shelter, a contingency plan.

In 2011, a billionaire quietly secured citizenship in New Zealand after

just days in the country.

A legal backdoor.

a geopolitical lifeboat.

Deep in the rugged terrain of New Zealand's South Island, Peter Thiel owns

vast private estate, remote, secluded, and far from the centres of power.

While most billionaires buy yachts or private islands, Thiel secures something

more strategic, New Zealand citizenship, and a vast estate in one of the most

remote democracies on Earth.

The purchase price for this geopolitical insurance policy?

In 2011, Thiel obtained New Zealand citizenship after spending just 12 days

in the country over the previous two years, a process that normally requires

years of residency.

The investment that secured this exceptional pathway?

Approximately $7 million in local assets and business investments.

The centrepiece, a 477 -acre estate near Lake Wanaka, purchased

for 13 .5 million New Zealand dollars, about 10 million US dollars.

When New Zealand media exposed the deal in 2017, it sparked a national scandal.

Hi, Benedict. Nice to talk to you again. So when we last spoke, you told us that

Peter Thiel was granted citizenship after having only visited New Zealand

times for an unknown number of days because the documents had that

redacted, right?

Politicians called it citizenship for sale.

Opposition leaders demanded investigations.

But Thiel had already achieved his objective.

a legal escape hatch in the world's most politically stable democracy, a

geopolitical insurance policy that money can buy.

Why would a man who helped build the digital future prepare for the collapse

the physical one?

What does he see that others don't?

The slogan of the Antichrist is peace and safety, which is nothing wrong with

peace and safety, but you have to sort of imagine that it resonates very

differently in a world where the stakes are so absolute, where the stakes are so

extreme, where the alternative to peace and safety is Armageddon

and the destruction of all things.

He is one of the most polarizing figures in Silicon Valley.

To some, a visionary genius who saw the future early. To others, the shadow

financier of movements and candidates who challenge liberal democratic norms.

This is not fear. This is strategy.

For decades, Peter Thiel has made the same bet over and over again.

Bet against consensus.

Bet against the crowd.

Bet against the system itself.

To understand why he built a fortress at the end of the earth, we have to go

back to a childhood of constant displacement, to a chessboard where

meant nothing, to a company that tried to replace money, and another that

learned to see everything.

But the estate is more than a luxury retreat.

It is a fortress designed for civilizational uncertainty.

Off -grid power systems, advanced security infrastructure, multiple

routes through the mountains.

Not built for comfort, built for continuity.

While the world debates progress, Peter Thiel is preparing for a different

possibility. Not how to build the future, how to survive it.

The Architect of Dissidence

Total estimated value of field contingency infrastructure, $20 to $30

Not for lifestyle, not for prestige, but for the day the system he helped build

no longer holds.

He didn't build this because he panics easily.

He built it because he has always believed that the crowd is wrong, and

future belongs to those willing to stand apart from it.

Every fortress begins as an idea, and Peter Thiel has been building

fortresses since he was a child.

Before he was a billionaire, before he funded political outsiders, before he

built machines that could see everything, he was a boy who never

place long enough to believe the world made sense.

So he searched for a world where the rules didn't change.

He found it on a chessboard.

To understand Peter Thiel, you must understand what it means to be a

outsider.

Born in Frankfurt, West Germany, Peter Thiel spent part of his early childhood

in South West Africa, now Namibia, before growing up mainly in the United

between Ohio and California.

Before he was a teenager, he had already experienced life on multiple

continents, never staying long enough to feel fully at home.

He didn't have a hometown.

He didn't have a tribe. He only had his own mind, and in that isolation, he

found a language that didn't require a passport.

Chess.

For a child who changed consonants before he could even make friends, the

outside world was unpredictable noise.

But the board?

The board was the only place where the rules didn't change depending on the

country.

His father, an engineer trained in a culture of precision and systems

passed on a belief that reality could be understood and optimized.

While other children sought to fit in, Peter sought the edge.

He learned that the consensus of the crowd is usually a distraction.

If everyone is running toward the ball, you run toward where the ball is going

to be.

Chess is the ultimate antidote to consensus.

In a crowd, you can hide behind a popular opinion.

In chess, you are either right or you are dead.

There is no middle ground, there is no social construction of the board.

He became a serious tournament chess player, drawn to a world where rules

fixed, outcomes were earned, and consensus meant nothing.

Mid -1980s, Stanford University.

To the world, this was the peak of American meritocracy.

To Thiel, it was a factory of conformity.

While his classmates were debating how to change the world through activism,

Thiel was wondering why they all sounded exactly the same.

He saw the multiculturalism movement not as progress, but as a new form of

fundamentalism.

Stanford, in the late 1980s, was ground zero for America's culture wars, battles

over multiculturalism, speech, and the purpose of higher education.

Thiel believed the university

was drifting toward ideological conformity, that certain views were

socially, if not formally, off -limits.

Here his investment methodology was born.

Identify what the crowd considers sacred and question it.

If everyone says identity diversity is the most important thing, you argue that

intellectual diversity is the only thing that matters.

He wasn't looking for friends. He was looking to recruit others who, like him,

did not fear being hated.

He founded the Stanford Review.

The paper quickly became one of the most controversial publications on campus,

attacking what Fields saw as intellectual monoculture and political

He saw that the smartest people in the country were all competing for the same

narrow prizes, thinking the same narrow thoughts.

He did what every top student does. He followed the track.

After Sanford Law, he secured a prestigious federal appellate clerkship,

kind of credential that opens every elite door in America.

After his clerkship, he joined Sullivan & Cromwell in New York, one of the most

elite law firms in the world.

On paper, he had reached the summit.

Wall Street was his great negative epiphany.

But from his perspective, the brightest graduates in America were locked in

brutal competition for careers they didn't even seem to want.

It looked like Rene Girard's theory made flesh, a system where everyone desired

the same prize simply because everyone else did.

Wall Street looked to Theo like a laboratory of mimetic rivalry.

He realized that if he won that race, his prize would be becoming the man in

office next door, a copy of a copy.

The day he lost the opportunity to clerk for the U .S. Supreme Court wasn't a

defeat. It was his liberation.

He lasted less than a year.

But Thiel's first venture after leaving law was a humbling lesson in failure, a

lesson that would shape everything that came after.

In 1996, he launched Thiel Capital Management, a

hedge fund focused on currency trading and macroeconomic derivatives.

The strategy was to make big directional bets on interest rates.

inflation expectations, and foreign exchange movements.

Initial capital raised $1 million, mostly from Stanford Connections, who

believed in the chess prodigy turned lawyer turned financier.

The result was spectacular failure.

Within the first year, the fund had lost significant capital.

Industry estimates... suggests losses between 30 and 40 % of the initial

investment pool.

Investors fled.

Some demanded their remaining money back immediately.

Thiel's reputation among finance professionals, the people he had walked

from at Sullivan and Cromwell, took a serious hit.

He was no longer the Stanford genius.

He was just another failed trader.

But... This failure taught him the most important lesson of his career.

Competition is for losers.

Do not compete in crowded markets where everyone is making the same trades with

the same information and the same tools.

Wall Street was full of extremely smart people doing the same macro trades,

reading the same economic reports, betting on the same currency movements.

It was a zero -sum game played by thousands of nearly identical players.

He needed to find a space where the rules were still being written, where

first mattered more than being best, where a monopoly position was still

available. He needed technology.

And from the ashes of Thiel Capital Management, a new philosophy was born.

If you want to create lasting value, you have to build a monopoly.

This became his investing mantra, and it would make him billions.

Thiel walked away from the firm and went back to California, not to start a tech

empire, but to try trading, then to launch a hedge fund.

It failed.

The system he had rejected did not welcome him back as a prodigy.

It treated him like a nobody.

That failure would become the last lesson before his real beginning.

But he'd learned something.

If you play the system game as everyone else, you've already lost.

The chess master was done with the board. He was ready to build his own.

So this is an ATM, and what we're going to do is transform the traditional

banking industry.

I do not fit the picture of a banker.

Raising $50 million is a matter of making a series of phone calls, and the

is there.

I've sunk the great majority of my net worth into X .com, which is the new

banking and mutual funds company on the internet that I've started.

December 1998.

Peter Thiel co -founds a company called Confinity with Max Levchin, a brilliant

Ukrainian -born programmer, and Luke Nosek, a fellow Stanford reviewer

Initial funding, $300 ,000 scraped together from friends, family, and

libertarian true believers from the Stanford days.

The original product idea, digital wallet on Palm Pilot handheld devices.

The vision was that people would beam money to each other using infrared ports

on the Palm pilots.

In coffee shops, at restaurants, person to person, by parking banks entirely.

Total users after six months of operation, 12 people.

Literally 12.

Most of them were employees and their friends testing the system.

It was a complete and utter flop.

The technology worked, but nobody cared.

Nobody wanted it.

March 2000.

Confinity pivots hard and launches a new feature.

Email -based money transfers.

You send money to any email address.

The recipient gets a notification, creates an account, and the money is

Simple, instant, revolutionary.

The name of this new service?

PayPal.

Within weeks, user growth exploded at a rate nobody had ever seen in financial

services.

Month 1, 10 ,000 users.

Month 3, 100 ,000 users.

Month 6,

1 million users.

Month 12, 5 million users.

This was the fastest user adoption rate in the entire history of financial

services. Faster than credit cards, faster than checking accounts, faster

anything.

But here is what most people do not know about PayPal's growth.

Here is the secret that the mythology leaves out.

PayPal's explosive user acquisition was not organic.

It was not word of mouth.

It was not viral in the natural sense.

They literally bought their users with cash.

The strategy was elegantly simple and brutally expensive.

Sign up for a PayPal account, get $10 deposited instantly.

Refer a friend who signs up, gets another $10.

Your friend also gets $10.

Cost per acquisition, $20 to $40 per user, depending on how many referrals

user generated.

Monthly cash burn rate at peak growth, $10 to $12 million.

Just vanishing into user acquisition.

By late 2000, PayPal was spending $60 to $70 million annually just to buy

users with cash incentives.

They were hemorrhaging money at a terrifying rate.

Investors were panicking. Board members were demanding answers.

How long can you sustain spending $10 million a month buying users?

But Thiel had done the mathematics.

He had run the numbers obsessively.

Each acquired user was worth $100 to $200 in lifetime transaction fee

revenue. through the PayPal network.

They were buying $100 bills for $20 bills.

It was either genius or insanity, depending on whether the math actually

Thiel believed it would work.

He bet everything on it.

But there was a problem, a major problem.

Another company was doing the exact same thing.

X .com, a finance company founded by Elon Musk, with money from his Zip2

and a vision for online banking that was nearly identical to PayPal's.

Two companies, same idea, same market, both burning massive amounts of cash at

completely unsustainable rates.

Total funding raised between both companies, over $100 million.

Combined monthly cash burn rate, over $20 million.

Time until both companies simultaneously ran out of money, less than six months.

The merger was inevitable.

X .com and Confinity merged into a single entity.

The combined company kept the PayPal name because users had already adopted

The brand had momentum.

Elon Musk became chief executive officer of the merged company for five months.

October 2000.

While Elon Musk was on his honeymoon, the board of directors, led by Peter

and other Confinity founders, held an emergency meeting and voted Musk out as

CEO.

The official reason cited strategic disagreements over technology platform.

Musk wanted to use Microsoft software.

The Confinity engineers believed in Unix -based systems.

The actual reason?

Thiel wanted control, full control.

This was his company now.

Peter Thiel became chief executive officer of PayPal.

Elon Musk remained a major shareholder, but his operational control was

finished.

The two men, both future billionaires, both future power brokers, had their

first battle.

Thiel won.

At its core, PayPal ran on a simple idea that turned into a powerful engine.

Every time money moved, PayPal took a small cut, 2 .9 % plus 30 cents per

transaction. If that money crossed borders, the fee climbed to between 2 .5

and 4%. Then there was the float, the cash sitting in PayPal's accounts

payments, quietly earning interest for the company.

Tiny slices, repeated millions of times.

By 2001, the numbers told the story of a system coming to life.

Every single day, $5 -8 million flowed through PayPal's network.

Each month, that translated into $10 -15 million in revenue.

But growth at this speed came at a cost.

Running a system, fighting fraud, scaling infrastructure, acquiring users

burning 20 to 30 million dollars every month the machine worked it just

wasn't profitable yet late 2000 paypal data scientists

discovered something crucial 70 of all paypal transactions were happening on

ebay auctions people buying and selling random items on the internet's largest

marketplace were using PayPal to move money.

The strategic insight became immediately clear.

Make PayPal the only payment method that eBay users trust completely.

Own that market, become indispensable.

The execution, buyer protection guarantees that eBay's own payment

not offer.

Instant payment transfers with no 7 -day check clearing period.

Fraud detection algorithms that were better than credit card companies.

Email notifications for every transaction.

Simple, clean user interface.

By mid -2001, the strategy was working beyond all projections.

50 % of all e -mail auctions accepted PayPal as a payment method.

PayPal was processing $50 million daily in eBay -related transactions alone.

And then eBay noticed.

And eBay was not happy.

eBay launched their own competing service called Billpoint and attempted

PayPal through the marketplace.

They promoted Billpoint in search rankings.

They penalized sellers who only accepted PayPal.

They made it harder to display the PayPal logo.

It was war.

PayPal's response was total war.

Temporarily lower transaction fees that undercut bill points.

Guarantee faster money transfers than eBay could offer.

Invest heavily in superior $30 million deployed in 2001 fraud protection.

Massive marketing spending alone.

By early 2002, the war was over.

PayPal controls 65 % of eBay's payment market.

Billpoint at barely 10%. eBay executives looked at the numbers

and reached a conclusion.

If you cannot beat them, buy them.

July 2002.

eBay acquires PayPal for $1 .5 billion in eBay stock.

Peter Thiel owned approximately 3 .7 % of PayPal at the time of the

His equity stake was worth $55 million in eBay stock.

After taxes, he walked away with approximately $40 million in liquid

At age 34, he had won his first billion -dollar game.

But the money was not the most valuable thing he extracted from PayPal.

The real value was the network, the PayPal Mafia, the name they gave

and it was not ironic.

It was descriptive.

The core team that Thiel assembled at PayPal would go on to create some of the

most valuable companies in human history.

Elon Musk, Tesla market cap $650 billion.

SpaceX, estimated value... $150 billion.

Reid Hoffman, LinkedIn, sold to Microsoft for $26 billion.

Steve Chen, Chad Hurley, Jawed Karim, YouTube, sold to Google for $1

.65 billion, now worth over $100 billion.

Jeremy Stoppelman and Russell Simmons, Yelp, peaked at $3 billion market cap.

David Sachs, Yammer, sold to Microsoft for $1 .2 billion.

Later founded Craft Ventures.

Max Levchin, a firm $12 billion company.

Also co -founded Yelp.

Keith Rabois, COO of Square, partner at Founders Fund, investor in

dozens of unicorns.

Roloff Boffer.

Partner at Sequoia Capital led investments in Instagram, YouTube,

MongoDB, Eventbrite.

Total value created by the PayPal Mafia across all their companies,

conservatively estimated at over $200 billion in combined market

capitalization. Fields ownership stakes across this extended network through

direct investments and fund positions estimated at 2 to 4 billion dollars.

This was not just a company that got acquired.

This was the creation of the most powerful business cartel in Silicon

history.

But what made PayPal different was not the technology.

Not really.

The technology was impressive, but not miraculous.

What made PayPal different was the culture.

The religion of extreme meritocracy.

Thiel's hiring criteria were brutally specific.

1. Raw intelligence.

High test scores.

Ability to solve complex puzzles.

Proof you could think better than everyone else.

2. Intensity. Are you willing to work 100 hour weeks? Are you willing to

sacrifice everything else in your life for the mission?

3.

Missionary zeal.

Do you actually believe we are changing the world?

Or are you here for a paycheck?

Loyalty to the tribe.

Will you protect the other members?

Will you put the group above yourself?

Average employee age at PayPal, 25 years old.

Average work week, 80 to 100 hours.

Office culture, libertarian, anti -regulation.

contrarian, anti -establishment. They called themselves the Mafia specifically

because loyalty mattered more than credentials.

More than degrees, more than previous experience, Thiel's operating principle

stated explicitly and repeatedly, talented people do not want to work with

people who are less talented than they are.

So every new hire must be more talented than the average current employee.

Otherwise, we are diluting the talent pool.

This created a self -reinforcing escalation, an arms race of hiring.

Every new person raised the bar. The standards became higher and higher.

Only the absolute best could get in. And once you were in, you were family.

But here is what most people forget about PayPal.

Here is the original vision that got erased from the mythology.

PayPal was supposed to destroy the Federal Reserve.

It was supposed to undermine state control of currency.

That was the actual mission. That was why Peter Thiel, the libertarian

ideologue, cared so much.

The original vision laid out in Thiel's founding documents creates a new digital

currency outside government control.

Enable true peer to peer transactions globally without state intermediaries.

Undermine the state monopoly on money creation and management.

Build the financial infrastructure for a stateless society.

What actually happened?

To become mainstream, to actually scale, PayPal had to compromise every single

founding principle. They had to integrate with the traditional banking

The enemy.

They had to comply with Know Your Customer and anti -money laundering

regulations.

Government control.

They had to partner with credit card companies.

The old system they wanted to destroy.

They had to get licensed in every single state.

Regulatory capture.

They had to report suspicious transactions to federal authorities.

Surveillance. By 2002, PayPal was regulated.

exactly like a bank.

Partnered with banks, dependent on banks for all core functionalities, the

libertarian revolution had become just another fintech company, playing by the

government's rules.

Thiel learned the most important lesson of his career from PayPal's failure to

achieve its revolutionary mission.

You cannot disrupt the system from inside the system.

If you want to change the rules, You cannot ask permission from the people

wrote them.

This lesson would shape everything he did next.

Palantir. Facebook.

His political investments.

Everything.

The PayPal acquisition was not an ending. It was a beginning.

The start of something much larger.

The pattern that emerged over the next 20 years.

PayPal veterans leave.

and start new companies in different sectors.

Feel invest early as angel investor or through founder's fund.

PayPal mafia members join each other's boards of directors.

Cross -investment between all their venture funds creates alignment.

Preferential access to deals flow because of network relationships.

Shared intelligence about markets, technology and opportunities.

Real examples of how the network compounds.

Reid Hoffman introduces Thiel to Mark Zuckerberg in 2004.

Thiel invests $500 ,000 in Facebook, eventually makes over $1 billion.

Roloff Botha joins Sequoia Capital and invests in multiple Thiel -backed

companies, creating reciprocal deal flows.

David Sachs hosts high -dollar fundraisers for Thiel's political

mixing business and politics seamlessly.

Max Levchin provides seed capital for Palantir and serves as advisor, lending

credibility.

This network effect multiplier is precisely how Thiel turned $55 million

PayPal into over $5 billion in net worth today.

The PayPal Mafia is not a cute nickname. It is not a metaphor.

it is the most successful organized business cartel in silicon valley

self -reinforcing network of wealth power and influence that has shaped the

entire technology industry for two decades and peter thiel sits at the

it all the godfather

after

paypal Peter Thiel was a man with a billion dollars and a dangerous secret.

While other investors were looking at spreadsheets and profit margins, Thiel

looking at the human soul through the eyes of his mentor, Rene Girard.

Girard taught him a terrifying truth.

Human beings don't know what they want.

We are mimetic creatures.

We don't desire things for themselves.

We desire them because other people desire them. We are copy machines

as individuals.

August 2004.

Facebook has been online for exactly six months.

It started as a Harvard dorm project and has now expanded to several college

campuses.

The metrics that Zuckerberg shows seal.

Total registered users, 200 ,000.

Almost entirely college students.

Daily active user rate, 70 -80 % engagement.

Unprecedented in web services.

Revenue, $0.

No business model yet.

Valuation Zuckerberg is asking for, $5 million.

Every single professional venture capitalist in Silicon Valley has passed

Facebook. Every major firm has looked into it and said no.

The reasons they gave? It is just a college directory.

Limited market.

Friendster has already 5 million users and is the leader in social networking.

Myspace is dominant with 8 million users and growing fast.

There is no obvious business model or revenue stream.

Mark Zuckerberg is too young, too inexperienced, too risky as a founder.

Peter Thiel saw something completely different, something that had nothing to

with technology.

Thiel had spent years studying Rene Girard's mimetic theory, the

framework that would shape his entire investment approach.

The core idea, humans do not have original desires.

We desire what other people desire.

We learn what to want by watching other people want.

Desire is imitative.

Desire is social.

Desire is mimetic.

When Thiel looked at Facebook, he did not see a technology platform for

connecting friends.

He saw something far more powerful.

He saw the perfect mimetic desire machine.

The insight that made Thiel invest.

Social networks do not create value by connecting people.

That is not where the money is.

The money is in comparison.

The money is in making people compare themselves to each other constantly.

You see your friend's vacation photos, you want a better vacation.

You see someone's job promotion announcement, you want higher status.

You see someone's relationship photos, you want romance.

You see someone getting likes and comments, you want validation.

You see someone's perfect life. You feel your own life is inadequate.

Facebook was not selling connections.

Facebook was selling envy.

And envy, feel understood from Gerard, is the most powerful economic force in

human history.

The desire for what others have.

They need to keep up. The fear of being left behind.

Infinite envy creates infinite demand.

Infinite demand creates infinite value.

September 2004.

Peter Thiel wires $500 ,000 to Facebook Inc.

The deal terms 10 .2 % equity ownership in the company.

A board seat giving him governance rights and inside information.

Right of first refusal on all future funding rounds.

Post -money valuation of exactly $5 million.

Mark Zuckerberg's reaction after the deal closed?

This guy actually gets it. He understands what we are building.

Silicon Valley's reaction?

Peter Thiel just threw away half a million dollars on a college kid's

This will be his biggest failure.

What happened next rewrote the history of venture capital.

2004

End of year.

200 ,000 users grew to 1 million users.

5 times growth in 4 months.

2005.

1 million users becomes 5 .5 million users.

2006. 5 .5 million users becomes 12 million users.

2007. 12 million users exploded to 50 million users.

2008.

50 million users doubled to 100 million users.

2009, 100 million users becomes 350 million users.

Growth rate, the user base was doubling every six to nine months for five

consecutive years.

This growth curve has never been seen before in business history, not even

close. As Facebook grew, its valuation grew.

and Peter Thiel's stake grew with it.

May 2005.

Axel Partners invests $12 .7 million at $100 million valuation.

Thiel's 10 .2 % stake is now worth $10 .2 million.

He has achieved 20 times return in nine months.

April 2006.

Raylock Partners and Meritech Capital invest $27 .5 million at $500 million

valuation.

Sealsake is now worth $51 million, 100 times return on his original investment.

October 2007,

Microsoft invests $240 million, valuing Facebook at $15

billion.

Sealsake is now worth $1 .5 billion.

A 300 ,000 times return in three years.

2009 through 2011.

Multiple private sales and secondary transactions value Facebook at $50

Seal's stake, if he had held everything, would be worth $5 billion.

May 18th, 2012.

Facebook goes public at a market capitalization.

of $104 billion.

But Thiel does not hold everything.

He is strategic.

He is tactical.

He takes profits.

At the initial public offering, Thiel sells $640 million worth of shares

immediately.

Over the following six months, he sells the remainder of his stake in carefully

timed transactions.

Total cash realized from the Facebook investment Approximately $1 billion.

Initial investment in August 2004, $500 ,000.

Total cash realized by end of 2012, $1 billion.

Total return, 2 ,000 times in 8 years.

This is the single greatest venture capital return in recorded history.

else comes close.

But here is the twist.

The haunting decision that Thiel himself admits keeps him awake at night.

Selling was a mistake.

If Peter Thiel had held his original 10 .2 % stake and had never sold a single

share, that stake at Facebook's peak market capitalization in 2021 would have

been worth $102 billion.

$102 billion.

He left $100 billion on the table by selling early.

Thiel himself admitted this publicly, saying, The mistake was not investing in

Facebook. The mistake was selling Facebook.

I should have held longer.

I should have believed more. It is the single most expensive decision of his

life.

Years later, in a Stanford lecture, Thiel explained his actual investment

thesis.

The real reason he invested.

I did not invest in Facebook because I thought social networks were going to be

big. I invested because I understood that humans will always want to be more

like their peers.

That desire is infinite. It never stops.

It only intensifies.

An infinite desire creates infinite value.

The mimetic theory made him a billionaire.

The memetic theory also made him terrified of what he had helped create.

A machine that weaponizes human envy. A system that profits from making people

feel inadequate.

An algorithm that amplifies the worst aspects of human nature.

Peter Thiel helped build the most powerful behavior modification system in

history. And then he cashed out for a billion dollars.

2003. Peter Thiel has a problem.

It is the CIA's problem that they think Thiel can solve it.

His PayPal anti -fraud algorithms have become so sophisticated at detecting

patterns in financial transactions, at finding terrorists trying to move money

through banking systems, that the CIA venture capital arm In -Q -Tel requested

meeting.

The pitch from the CIA.

Can you build what you built for PayPal, but for national security?

Can you find terrorists the way you found fraudsters?

May 2003.

Peter Thiel co -found Palantir Technologies with an unusual group of co

-founders. The founding team, Alex Karp, Chief Executive Officer.

Stanford Law degree, philosophy, PhD from Frankfurt University in Germany.

Former human rights lawyer who once worked on refugee cases.

An extremely odd choice to run a company that will become the most powerful

surveillance technology provider on earth.

Nathan Gettings, chief technology officer.

PayPal's lead security engineer.

Brilliant programmer, Joe Lonsdale.

A Stanford undergraduate student, barely 20 years old, one of the first Thiel

fellows. Stephen Cohen, PayPal's chief security architect.

The person who actually built the fraud detection algorithms.

Initial funding, $2 million.

Entirely from Peter Thiel's personal capital.

No outside investors yet. This is his project.

The mission statement...

Build software that can find patterns in massive datasets from disparate

incompatible sources.

The kind of data that, if intelligence agencies have been able to analyze it

properly, could have prevented September 11th, 2001.

The company name, Palantir, named after the seeing stones in Lord of the Rings.

The magical orbs that allow their possessors to see anything happening

in Middle Earth.

Even the name revealed the ambition.

Total information awareness.

The ability to see everything.

2005. The CIA's venture capital arm, In -Q -Tel, invests $2 million

in Palantir's Series A funding round.

This was not just money.

This was validation from the intelligence community.

A stamp of approval from the most secretive, most paranoid organization in

US government.

Initial contract value undisclosed.

Government intelligence contracts are classified by law.

But industry analysts estimate the first CIA contracts were worth five to ten

million dollars annually.

The product was called Palantir Gotham.

The name itself was significant.

Gotham, the dark city that needs Batman.

The city that needs surveillance to fight crime.

Core technical capabilities.

Integrate data from dozens of incompatible government databases that

designed to communicate with each other. From hidden connections between people,

places, financial transactions, communications metadata.

Visualize networks of relationships in ways human analysts could understand

intuitively. Predict future behavior and likely attack patterns based on

historical data.

Specific use cases for intelligence agencies.

Track terrorist cells across multiple countries.

Map drug trafficking routes from production to distribution.

Identify money laundering networks moving funds for organized crime.

Predict insurgent attacks in Iraq and Afghanistan based on pattern

It worked.

The software actually worked.

By 2006, Palantir software was being actively used in Iraq for

operations and in IED attack prediction.

Afghanistan for predicting Taliban leadership networks.

Langley, Virginia, at SCIA headquarters for threat analysis.

FBI field officers nationwide for domestic terrorism investigations.

Early revenue growth told the story of Palantir's expanding reach.

2005, $3 million in revenue.

Government contracts only. 2006, $10 million.

2007, $25 million.

2008, $50 million.

First commercial clients added.

2010, $150 million.

2012, $400 million.

By 2012, Palantir had achieved something extremely rare for a high -growth

technology company, profitability.

They were actually making money, not just burning venture capital.

Customer revenue breakdown in 2012.

Government contracts, 60 % of revenue, $240 million.

Commercial clients, 40 % of revenue, $160 million.

May 1, 2011.

Palantir Software plays a role in the operation that kills Osama bin Laden, a

role that remains partially classified.

but has been confirmed by multiple sources.

How Palantir contributed?

Palantir Gotham integrated dozens of different intelligence sources.

CIA human intelligence on courier networks.

NSA signal intelligence including phone metadata and email communications

patterns.

National Geospatial Intelligence Agency satellite imagery of potential compound

locations.

historical pattern analysis of previous high -value target operations in

Pakistan.

The system identified patterns and connections that human analysts, working

separate databases, that did not communicate, had missed.

It narrowed the search area and helped confirm the identity of the Abbottabad

compound.

When asked about Palantir's role in the Bin Laden operation, Field gave

carefully worded response.

I cannot comment on specific operations or specific clients due to

classification requirements, but I will say this.

Tools that help protect American lives and help intelligence professionals do

their jobs better. That is our mission.

This single operation, this single success, legitimized Palantir's entire

proposition to the national security establishment.

After Bin Laden, the contract poured in.

After the Bin Laden success, Palantir's government business exploded.

Revenue growth from 2012 to 2015.

2012,

$400 million in revenue.

2013, $600 million.

2014, $900 million.

2015, $1 .5 billion in revenue.

Major new contracts announced publicly.

US Department of Defense, $222 million for a three -year data

integration platform contract.

US Army.

$800 million for comprehensive data platform modernization across all Army

systems.

U .S. Special Operations Command.

$444 million for targeting and intelligence fusion.

Department of Homeland Security.

$240 million for border security and immigration enforcement systems.

Palantir had become the single most important software company in the entire

.S. defense and intelligence establishment, more important than

defense contractors, more embedded in classified operations.

Simultaneously, Palantir launched a commercial product called Palantir

for private sector clients.

The sales pitch to corporate America.

Your company has exactly the same problem as the CIA.

Too much data. Too many incompatible systems. Not enough insight.

We can help you find the patterns you are missing.

Major commercial clients and estimated contract values.

JP Morgan Chase.

Over $100 million.

Fraud detection and financial crime prevention.

Morgan Stanley, over $50 million, risk management and regulatory compliance.

Airbus, over $75 million, supply chain optimization and manufacturing

analytics.

Merck Pharmaceuticals, over $60 million, drug discovery analytics and clinical

trial data integration.

BP, over $80 million.

Oil field production, optimization, and predictive maintenance.

Commercial revenue growth from 2015 to 2020.

In 2015, they got $600 million commercial revenue.

By 2016, the number was around $800 billion.

In 2017, they reached $1 .1 billion in commercial revenue, and it became their

peak year.

2018 made them hit the $750 million mark, a temporary decline due to

churn.

In 2019, revenue was around $745 million.

And by 2020, they reached $1 .1 billion again.

This recovery was driven by COVID analytics contracts.

Palantir had created a business model with two enormous locked -in customer

bases, the US government and the largest corporations in the world.

But Palantir's work, especially for government agencies, attracted intense

controversy and moral criticism.

In 2019, they secured a contract with ICE for $49 million.

The purpose of the contract was enforcement and removal operations

meaning a software used to identify, track and process undocumented

for deportation.

This project came with a controversy attached.

The software was used during the family separation policy at the southern

border. Children separated from their parents, families torn apart.

Palantir software helped make it operationally possible.

Hundreds of Palantir employees signed an internal letter demanding the company

cancel the ICE contract.

They argued the company was enabling human rights abuses.

Thiel and Karp's response?

Absolute refusal.

The contract would continue.

Alex Karp gave a public statement saying that they had chosen sides.

and that the company supported American institutions.

But this was not the only controversy Palantir has faced.

Palantir worked alongside the NYPD with a contract estimated between $50 and

$100 billion.

The mission?

Predictive policy.

They were asked to use historical crime data to predict where future crimes will

occur and who is likely to commit them. The controversy?

Civil rights groups argued that systems perpetuated racial bias.

Minority neighborhoods were flagged as high risk.

Innocent people were put under surveillance based on algorithmic

Joe Lonsdale, Palantir co -founder, had made a personal investment in Cambridge

Analytica. Multiple Palantir employees, on their own time, helped Cambridge

Analytica build data integration models.

Both companies used similar approaches to data harvesting and psychological

profiling. When the connection was exposed by journalists, Palantir claimed

there was no institutional relationship, just coincidental personal connections.

But the damage to Palantir's reputation was done.

Thiel had built the Panopticon, the all -seeing eye of corporate and government

surveillance.

September 30, 2020.

After 17 years with a private company, one of the longest periods of private

operation for any major tech company, Palantir finally goes public through a

direct listing.

They went public at $10 per share, and their market capitalization at market

open was $16 billion.

By the first day, shares were down 5%. The stock was initially a

Investors were skeptical of the business model, worried about customer

concentration, concerned about the controversy.

But then COVID -19 created massive new demand for Palantir's capabilities.

2020 to 2021, Palantir wins enormous pandemic -related government contracts

with governments across the world.

The pandemic proved that governments needed Palantir, and the market

By late 2021, Palantir stock had exploded, $29 per share.

At 190 % gain from the direct listing price, market capitalization $60

billion.

Peter Thiel's stake.

Approximately 7 % ownership, worth $4 .2 billion at the peak.

2022. The tech crash hits Palantir brutally hard.

Stock prices crashed to $6 per share, down 8 % from the peak.

Market cap collapses to $13 billion.

Seals paper wealth from Palantir evaporates.

Billions gone.

2023 to 2024, the AI boom creates new opportunities.

Palantir markets itself as the AI platform for governments and

And they get major new contract wins.

The U .S. Army invested $463 million for AI -powered battlefield analytics and

decision support systems.

Palantir stock recovered, 25 to 30 per share by 2024.

As of 2024, Peter Thiel's current Palantir holdings are approximately 7 %

shares, with the current value ranging from 3 .8 % to $4 .5 billion, depending

on daily stock price.

This makes Palantir Field's single largest source of personal wealth.

In 2024, Palantir's financial performance was divided between

commercial revenues.

The company's net income was $2 .5 billion annually.

And, as big as the number is, this might represent a future problem for the

company. If government budget cuts happen, Palantir is extremely

Their entire business model depends on continued government spending.

Here is Peter Thiel's fundamental contradiction.

The paradox at the heart of everything he has built, he claims to be a

libertarian who values individual freedom above all else.

A man who believes government power should be minimal. A man who wrote that

freedom and democracy are incompatible.

Yet, he built the most powerful private surveillance technology company in human

history. A company that gives governments and corporations

to monitor, track, predict and control human behavior.

Palantir's technical capabilities include real -time tracking, of

across multiple data sources and databases.

Predictive behavioral modeling that forecasts what people will do before

it. Network analysis that maps every person you have ever contacted through

medium. Complete integration of financial records, communication

location history.

and social relationship data into a single unified profile.

Thiel's defense of this contradiction was explaining that the alternative to

Palantir is not no surveillance.

The alternative is worse surveillance performed by incompetent government

bureaucrats using decades -old technology that does not work properly.

The critics' response was obvious.

They told Thiel he had built the Panopticon, the architecture of total

surveillance, a system allowing governments around the world to use

citizens' information to control them, not a system to protect them, said the

critics.

Palantir now operates in dozens of countries worldwide, the United States,

United Kingdom, Germany, France.

australia and even japan the company has some controversial international

clients some confirmed some alleged but the total estimated value of all

global contracts lifetime over 10 billion dollars in contract value

palantir is peter thiel's most important company not because of

its valuation though that is substantial not because of its revenue So that is

significant. Palantir is important because it reveals the truth about

worldview. It is the bridge between his libertarian philosophy and his

authoritarian reality.

He claims to want freedom from government control.

But Palantir gives governments unprecedented control over their

The resolution of this apparent contradiction

Peter Thiel believes in freedom for the elite and surveillance for everyone

else.

In his vision of the world, there are rulers and there are the ruled.

There are the people who make the decisions and the people who are

Palantir is the enforcement mechanism for that hierarchy, the technology that

ensures the rulers can see everything.

the system that makes resistance impossible because privacy no longer

And Peter Thiel sits at the center of that eye, watching the world, seeing

everything, the architect of the surveillance state.

In 2016, Peter Thiel made an investment that every other major technology

investor avoided.

While his peers in Silicon Valley were contributing millions to the opposing

campaign, Thiel wrote a check for $1 .25 million to Donald Trump's presidential

campaign. This was not ideology.

This was portfolio diversification.

Thiel has always invested in contrarian positions.

When everyone zigs, he zags.

When consensus forms in one direction, He looked for asymmetric opportunities

the other.

The 2006 donation gave him something money usually cannot buy in Silicon

direct access to executive power.

The return on that $1 .25 million investment?

A seat on the presidential transition team.

Input on federal technology policy.

direct communication channels to the White House, credibility as a Washington

power broker.

And, most measurably, Palantir's government contracts increased

during this period.

But Thiel's most significant political investments came in the 2022 midterm

elections. Two candidates, both former employees, both running.

for United States Senate.

The financial commitment was unprecedented in scale.

Vance had worked at Thiel's venture capital firm before writing his best

-selling memoir, Thiel's Total Financial Commitment. Direct campaign

contribution, $15 million.

Super PAC expenditures,

$5 million.

Combined investment, $20 million.

This set a record as the largest single donor contribution to an individual

Senate campaign in American history.

The outcome?

Vance won by six percentage points.

Masters had worked directly for Thiel as chief operating officer at Thiel

Capital.

Thiel's financial commitment to his campaign was a combined investment of

million. But unlike Vance, Masters... lost by 5 percentage points.

Thiel's total 2022 midterm investment was over $40 million in two Senate

Two different candidates that would have allowed him to be in direct touch with

power at different chambers and stages.

For context, the average competitive Senate race cost approximately $10

total. Peter Thiel invested four times that amount on two races.

It's July 2024.

J .D. Vance is selected as the Republican vice presidential candidate.

From a pure investment analysis perspective, this transforms the return

and seals $20 million commitment.

He has considered the potential financial implications if this ticket

he gets access to executive branch decision -making for eight years.

Influence over federal contract allocation across multiple agencies.

Input on technology regulation affecting sales portfolio companies.

If we consider what's the estimated return on investment for Palantir's

government business, what we see is current annual government revenue of $1

billion.

Potential additional contract value over eight years.

conservatively $5 -10 billion.

Anduril and other defense companies in SEAL's network, potential $3 -5 billion

in contracts.

Regulatory treatment of cryptocurrency holdings, value potentially in tens of

billions.

The theoretical return of those $20 million invested is potentially 15 to 20

billion captured across the portfolio.

That represents a potential of 750 to 1000 times return.

By comparison, Thiel's Facebook investment returned 2000 times.

To sum it up, the complete political spending of Thiel from 2016 to 2022

is 70 to 80 million dollars.

For context, Amazon spends $20 million annually on lobbying.

Meta spends $20 million annual on lobbying.

Google spends $12 million annually on lobbying.

Thiel's approach is different.

Rather than ongoing lobbying expenditures, he makes concentrated

individual candidates who potentially provide access for years or decades.

It is the venture capital model applied to politics.

Make early -stage investments in promising candidates.

Provide sufficient capital to help them win.

Capture value through long -term relationships and access.

The candidates Steele has supported now serve on key committees.

Technology regulation, defense appropriations, intelligence oversight.

banking and financial services.

Precisely the committees that oversee industries where Thiel has billions

invested and where he can use some privileged information.

Is political investment a good use of capital?

The mathematics suggest yes.

70 to 80 million represents less than 1 % of Thiel's net worth.

The potential return?

if access translates to favourable treatment for portfolio companies, could

worth billions.

Even with a 50 % success rate, the expected value is positive by orders of

magnitude.

Investment, 70 to 80 million over 8 years.

Potential value captured, 15 to 30 billion across portfolio.

Expected return, 200 to 400 times invested capital.

That rivals the best venture capital returns in history.

Peter Thiel is not playing politics.

He is optimizing his portfolio.

Chapter 7 The Final Exit Peter Thiel has spent his life betting on the

future, building it, funding it, accelerating it.

But there is one frontier he refuses to accept as fixed.

Death.

To him, mortality is not destiny.

It is an engineering problem waiting for a breakthrough.

And like every other system he has challenged, he believes this one too can

redesigned. While others plan for retirement, Thiel funds longevity labs.

While governments plan for decades, he thinks in centuries.

If time is the ultimate constraint on power, then extending life... is the

ultimate leverage.

At the edge of the world, he built a refuge.

Far from political centers, far from social unrest, close only to time.

In Silicon Valley, there is a dark joke shared quietly among founders and

investors.

How many billionaires does it take to buy a country?

Just one, if he is smart enough to get there first.

He invested in digital currencies that governments cannot print, in

systems that see what others cannot, in political candidates who might