Original title: Tokened EP.5: Conversation with Arthur Hayes

Guest: Arthur Hayes, Co-founder of BitMEX

Compiled and edited by LenaXin and ChainCatcher

ChainCatcher Editor's Summary

This article is compiled from an in-depth conversation on the Tokened Podcast with cryptocurrency billionaire and BitMEX co-founder Arthur Hayes, in which Hayes shares his unique perspectives on wealth, risk, and the freedom that travel brings. From navigating market volatility to exploring the world, Hayes shares the core insights he's learned along the way. These lessons apply not only to the cryptocurrency world but also to life itself.

ChainCatcher did the collation and compilation.

1. Hayes’s opportunity to enter the industry: From traditional finance to the crypto world

Tokened: How and why did you initially get involved in Bitcoin?

Arthur Hayes: I worked in ETF market making at Deutsche Bank and Citibank in Hong Kong. After being fired by Citibank in 2013, I decided to leave the traditional financial industry.

I started researching Bitcoin after reading an article about it on Zero Hedge. It was during a period of unemployment, and Satoshi Nakamoto's white paper captivated me, especially since it resonated with my interest in gold investing.

Around the turn of spring and summer in 2013, I fully embraced the concept of Bitcoin. As a trader, I began studying the workings of the cryptocurrency market, how to go long and short, and how to trade derivatives contracts. I gained practical experience through arbitrage trading between Icybit and Mt. Gox.

This experience inspired me to start a derivatives exchange, which I started with co-founders Ben Delo and Sam Reid between late 2013 and 2014. Twelve years later, I'm still deeply involved in this field.

2. Hayes’ View on Current Trends in the Cryptocurrency Field

Tokened: What are your thoughts on current trends in the cryptocurrency space? Is there over-hype? Is cryptocurrency being used as a means of payment? Is it being built on underlying chains? Or is it being tokenized? Which sectors do you believe are at risk of a bubble?

Arthur Hayes: I believe the core trend is the continued devaluation of fiat currencies. Take Japan, for example, where debt-to-GDP ratios have reached record highs, making it a prime example of massive money printing. Inflation concerns are growing, housing and food are becoming increasingly unaffordable, and wage growth is lagging far behind the pace of excessive money printing. This constitutes the most fundamental economic trend.

Against this backdrop, Bitcoin remains valuable. Unless countries can prove they've stopped excessive money issuance, holding Bitcoin remains a rational choice. Despite price fluctuations, Bitcoin has consistently maintained the best asset performance in human history over the 15 years since its creation in 2009. The fundamental driving force behind this trend is the ongoing devaluation of currencies worldwide.

Tokened: But I think right now if you look at any communication media, it’s too focused on transactions and not on the real world.

Arthur Hayes: People will always need to make transactions. They know their dollars, yen, and euros are depreciating, but they still need to make ends meet and meet family responsibilities. This is the fundamental reason why Bitcoin will always have value.

3. Hayes’ travel philosophy: exploring the world and strengthening communication

Tokened: You mentioned that many wealthy people now live in Singapore, but can it really be called home?

Arthur Hayes: I'm a keen skier and spend a lot of time at ski resorts in Hokkaido and Japan. I also enjoy outdoor sports like surfing and kite surfing, and I always pursue a lifestyle that coexists with nature.

Tokened: Does traveling change the way you view freedom, power, and money?

Arthur Hayes: 24-hour global access has become a significant privilege for modern people. Travel restrictions during the pandemic have made us realize that some people are content to stay put, while others crave mobility, depending on geographic circumstances and personal preferences.

The global trend is clear: travel demand continues to grow, with air miles and fuel consumption climbing year by year. Humanity's enduring desire to explore the world and enhance communication is the enduring value of travel.

Tokened: What is your daily routine like now? Can you describe a typical day?

Arthur Hayes: During ski season, I usually go to bed between 7 and 8 p.m. and wake up at 4 a.m. I stretch first and prepare food for the day, as I have to hike eight hours a day on the slopes.

(IV) Industry Changes: From Talent Shortage to War for Attention

Tokened: Do you think starting a business was easier or more challenging than it is now?

Arthur Hayes: The challenges were always there, but in different forms. The core challenge we faced at BitMEX was recruiting talent. At the time, many qualified individuals were reluctant to enter the field, forcing us to hire candidates at high salaries who we might not consider today.

Today, the landscape has fundamentally shifted, with cryptocurrency becoming a standard career path. At Maelstrom, for example, we're able to attract top university graduates who are not only well-trained but also enter the crypto ecosystem with the right mindset and career plans. This evolution of the talent environment is a testament to the industry's maturity.

Tokened: Have you noticed that the financing needs of startups are changing?

Arthur Hayes: I believe the core challenge for Web 3 startups is always acquiring user attention . While the cost of developing technology has indeed decreased, the cost of breaking through the attention barrier continues to rise. Whether it's through advertising or paying influencer alliances, acquiring traffic requires significant investment.

Tokened: When investing, do you also provide strategic advice to the invested companies?

Arthur Hayes: Yes, our big business advisor.

Tokened: If you were to give advice to yourself when you were just starting out, what do you think needs to be adjusted the most?

Arthur Hayes: Hire better people.

5. The Digital Nomad’s Choice: Disconnecting from the Internet, Einstein, and the Antarctic Dream

Tokened: You could choose between a year without internet access or a year without travel.

Arthur Hayes: A year completely off the internet.

Tokened: If you could choose a historical figure as a travel companion, who would it be?

Arthur Hayes: Albert Einstein.

Tokened: Not Satoshi Nakamoto?

Arthur Hayes: Satoshi Nakamoto should remain a mystery. Not meeting him in person and not revealing his identity is the best way to preserve this legend.

Tokened: You travel frequently. Is there a destination you haven’t visited yet but always want to visit?

Arthur Hayes: Antarctica.

Tokened: Do you take books or movies with you when you travel? Are there any works that particularly inspire you?

Arthur Hayes: My favorite science fiction series is The Three-Body Problem.

(6) Hayes’ advice to entrepreneurs

Tokened: If you were to give one piece of advice to any entrepreneur, what would be the main piece of advice you would give?

Arthur Hayes: Building a product truly worth paying for is the key. Many entrepreneurs today focus on building products that venture capitalists value, rather than products that the market needs. While they may secure funding, even if their company is acquired or goes public, the founding team may lose ownership, essentially just piling on free services with features no one truly needs.

It often takes a long time for a Web 2 company to reach a valuation of $50 million, while a Web 3 company may achieve the same valuation in just a few hours after issuing tokens. This difference reflects the fundamental difference in the valuation logic of the two business models.

Tokened: Are you investing primarily in Web 3 or a combination of Web 2 and Web 3?

Arthur Hayes: Maelstrom focuses on token investments rather than equity. We are familiar with the highly liquid nature of the crypto market and typically achieve a payback period of two years.

In contrast, the equity investment cycle is as long as 7-10 years, which does not match our liquidity needs. This does not deny the value of equity, but is a strategic choice based on capital efficiency.

I like this flexibility. Cryptocurrency is an area I'm familiar with, and we're familiar with the successful models of token economics, so we stay focused on our niche. We stick to our areas of expertise and avoid blindly branching out.

(7) Could decentralized media become a key breakthrough?

Tokened: What kind of key projects do you think are currently missing in the BlackFree project?

Arthur Hayes: I'm looking forward to the realization of decentralized social media . Currently, mainstream platforms like X, Instagram, and TikTok have a monopoly on the value of social interaction, and breaking down these centralized barriers is the key to success.

Tokened: Do you mean data and content?

Arthur Hayes: Your data and content can be blocked at any time by powerful authorities, whether it's Elon Musk or a nation-state. This centralized control runs counter to the core ideals of the cryptocurrency movement, which champions data ownership and economic autonomy , and aims to disintermediate governments and large financial institutions through disruptive technology. The current architecture is fundamentally inconsistent with this vision.

Tokenized: Why put your data on-chain?

Arthur Hayes: Founders should focus on underserved market segments. Instead of chasing celebrity users, they should build dedicated social credit systems for specific groups. By starting with grassroots communities, they can gradually build low-cost network effects and ultimately achieve ecosystem expansion. This is the effective path to breaking the monopoly of social media.

Tokened: Are you still active in the NFT field?

Arthur Hayes: I don't like cypherpunks.

Tokened: Are we missing a key project? Perhaps a platform that you can directly drive and develop yourself, specifically for your own followers?

Arthur Hayes: While I don't have the business or technical skills to lead the transformation of social media, I do believe it will take a dedicated group of entrepreneurs to tackle this challenge, a challenge no one has yet truly overcome. The key is to promote the decentralization of social media and gain the support of the entire crypto community.

As for Musk? Clearly, that's not his goal. His goal is to strengthen the centralization of the X platform, using data to train AI and integrate it into robotics systems. This has its own logic, but it completely contradicts the concept of decentralization.

8. What is the future of encryption and what are its prospects?

Tokened: What are your thoughts on the future of cryptocurrency over the next 5-10 years? What are your expectations for its evolution?

Arthur Hayes: I expect prices to rise significantly, but the key is user scale. We want to achieve a true application ecosystem with 2 billion active wallets. This means the current user base needs to grow a hundredfold.

Tokened: How to clearly explain the value of joining Web 3 to potential users?

Arthur Hayes: I recommend beginners start with a small investment in Bitcoin, read the Satoshi Nakamoto white paper, and share it with friends. This process will naturally lead to a polarized understanding of the technology: either accepting its revolutionary value or deeming it a scam . From there, you can delve deeper into the crypto world based on your personal needs.