 I bought the coins around $500 and then I saw it start going up so I thought I'm a genius at investment. His name is Ricardo Salinas Pliego, the founder and chairman of Grupo Salinas. With a fortune estimated at $12.6 billion, he is the second richest man in Mexico. Not long ago, Salinas revealed that 10% of his liquid assets are in Bitcoin. That may look a little irresponsible in Latin American conservative business circles. It's a joke, it's made of air, it has nothing tangible to back it up. You know, you heard all the arguments. So, what is the rationale behind Salinas' massive Bitcoin allocation? And why is Latin America a promising market for digital gold? To find out, join us in our latest Coin Telegraph interview. What's up everyone? I'm Giovanni, welcome back to another Coin Telegraph show. Today I have the pleasure to be joined by Ricardo Salinas, founder and chairman at Grupo Salinas. How are you doing today, Ricardo? I'm doing very well. Hello from Mexico to everybody. So Ricardo, I would like to know, what was the first time you heard about Bitcoin? Well, it was, I was invited to a conference in New York City. I think it was organized by SAP, you know, the guys that do enterprise software. And there were different sessions and one of the sessions, this guy from Grayscale showed up and he gave us the whole talk about Bitcoin and how it was going to take over. And I thought, man, this is really interesting. It immediately attracted my attention. I said, well, let's try it out and see what happens. And I put in a small amount. It was trading at $200 per Bitcoin. It was 2013. But at that time it was, I didn't understand this thing about the wallet and buying it in the exchange and so forth. It was very complicated. So what I liked about Grayscale was they simplified it. Basically, you put your money in a trust. Then this trust would do the investment. They would take care of the whole thing. They would take care of the custody. They sent you, you know, a monthly statement. And that was a very good arrangement. And eventually that trust turned into GBTC, which is now an exchange-traded product. So I was very happy about it. But I'll tell you the next part, which is very interesting. This was on the 1st of November. It was $200. And then I looked at it again on the 20th of November. And it was already $550. So I thought, I'm a genius at investment. So I said, I want to add some more. So I added a lot more. And I stayed in there for all the way until 2017. So yeah, we made a very nice trading profit. Cool. So what is the property of Bitcoin that attracted your attention back then? A digital asset that can be traded freely across the world. I think that's the most powerful thing. Because we have digital assets like fiat currency, digital money. It's very difficult to make that digital money or fiat money travel across the world. So if I have some pesos right now, and I wanted to send you, I don't know, $1,000, we'd have to first sell those pesos, buy the dollars, get the dollars, buy some euros, figure out how to send their euros to Europe. And then you could collect your money over there. It's very difficult. So because we're in the payment business here in Mexico, we're really big in that. It attracted my attention as a payment vehicle. But then I figured out that no, it was not the payment issue. It's the store of value that really makes it valuable. So that's where we are today. I'm a big believer in the store of value function. Okay. So why do you think that Bitcoin is more valuable as a store of value than as a means of payment? Because I think the payment application across borders is a fantastic application. I think it still has a lot of merit. But the thing is the volume of that for small payments is not important. I mean, cross-border payments with big money is very important. But big money players are not into Bitcoin. So we have to focus on small players, small amounts, and that's not a big volume. Payments is mostly inside the country, inside the currency system. So in that respect, the application for Bitcoin in that environment is useless. It doesn't matter, because there's a very good way for me to transfer pesos from one individual to another inside my country. Right. Still, a lot of Bitcoin proponents say that Bitcoin has great potential in the field of remittances. For example, in the US, there are a lot of Mexicans working and sending money every month back to Mexico. Don't you think that that's a great use case for Bitcoin? I think so. And it's just a question of time for people to adopt it. I mean, the people who send money from the US to Mexico are not sophisticated customers. There are mostly manual workers trying to make a living in the United States. And it takes a lot of effort for them to win their dollars. And then they don't have the means, I think, to participate in a Bitcoin transfer scheme. But I mean, it's obviously doable. And to the degree that Bitcoin is easy available and accessible in the US to these people, they could do that easily. And we want to have in our banking system, we want to have a brokerage system attached to the bank where we can accept and Bitcoin trade them into pesos and also sell them. So we're working on all that. I just don't see a big volume of it right now, but I think it's definitely going to grow. So in between 2013, the year where you first bought Bitcoin and today, Bitcoin experienced a lot of ups and downs. So did you ever lose faith in the asset? Well, let me tell you that's a very good and interesting story. Because obviously when I bought the coins around $500, and then I saw it start going up. I mean, I was going crazy because I thought that I had to sell them. I mean, it was obviously ridiculous, right? But it so happened that this trust that grayscale had, it was impossible to get out of it until a certain date. So through no merit, through no merit of mine, I had to sit around until that date came, which was in February of 2017. And then I could take possession of the of the asset and sell it. So it's not because I'm a genius. It just happened that I was not able to sell it. I was not able to short it. I was not able to hedge it. So I just sat around and I think it's a bit of a great investment lesson. Okay, so you said that you gained back control of your Bitcoin investment in February 2017. That year later, we had the Bitcoin price skyrocketing and then it crashed. And then we had the bear market in 2018. So how did your attitude towards Bitcoin change during that bear market? It was fantastic timing again and also through no merit of mine. But I think the peak was in December around 20,000. And then in January, when I got hold of the asset, it was 17,000. I sold it at 17,000 and got out of it completely. I had a big party. I'm very happy it was one of my best investments ever. But we always return to the scene of the crime. So when it went down to 10,000, I thought, well, now it's more reasonable. And I bought some of it at that time. And then it went down more to 6,000. I bought some more. And that's where our average right now is around $9,000. I'm not selling it. I think I'm going to sit around for another five or 10 years. So you recently revealed that 10% of your liquid portfolio is in Bitcoin. That's a pretty massive position for an asset that is still considered by man investor to be highly risky and volatile. Can you explain the rationale behind your portfolio construction? Well, I always view my holdings as core holdings comprised of stocks in my company, equity in my company. This is my main position. And that's not for sale. It's not for trade. It's forever. So other than that, the stock portfolio in my own equity, I have a good size trading portfolio that I call my liquid assets. And I've always had those liquid assets mostly invested in hard assets, like gold, silver, and precious metal miners. That's been my destination. I don't trade in the high tech stocks, the NASDAQ stocks, all the high flyers, the fangs, never touch them. I'm much more of a value investor. So that's why I have my liquid assets in the, let's call it hard money portfolio. So for me to take 10% of that and put it into Bitcoin is not a big deal. It's just a position and hopefully it will turn out OK. So do you plan to increase your Bitcoin position in the near future? When it drops, I will certainly increase my position if it drops. So as reported by Bloomberg, your bigger listed assets, which is conglomerate, Grupo Electra, SAB, and TV Azteca, slumped by 10% and 60% respectively this year. Did your Bitcoin investments help to make up for some of those losses? No, no, no, not even close. But you know, again, those are my main equity investments. They happen to be quoted, listed, but they're not for sale. And at any price. So I'm not worried about the valuation of my, my companies. I'm not in the stock selling business. I am in the money making business. And as long as the companies continue to make money, we're very happy. OK, so my next question would be, why do you think that Bitcoin is so popular in Latin America? I'm not so sure if it's so popular in Latin America, but I mean, obviously what's happened in, in Venezuela, in Argentina, where fiat money is collapsing and it's become a scandal. The way you see those wheelbarrows of, of Venezuelan cash being thrown in the dumpsters. I mean, it really opens your eyes to the problem of fiat cash, you know. And most of our countries, I would say every country in Latin America, has gone through some horrific inflation periods. And it's hard to forget that. I mean, there's a lot of young people out there. I'm 65 and I remember what happened in the 80s. I remember very well. And the destruction of wealth and the transfer of, of value from the people to the governments was, was horrible. And I think that creates a fertile ground for, for someone who, who's worried about preserving their, their capital. Obviously this is, this is a problem also in other countries in Africa, for example, you know. And in Lebanon, you know, we have Zimbabwe, which is a basket case. And now Lebanese is a terrible thing. But this is what happens to fiat money, you know. You have been talking about Latin American currencies and also currencies from developing countries. But what about the dollar? So a lot of our guests say that the dollar might face the same kind of the basement soon. What do you think about these predictions? Well, the thing with the dollar is that because it's a reserve currency, a worldwide reserve currency, it has different kinds of rule. I mean, but the way they manage their central bank is like a third world banana republic, you know, when internal credit of the Federal Reserve more than doubles year over year. I mean, this is outrageous. It's only because they're Americans and they can get away with it. Any other country would have a massive depreciation. However, having said that, what is the competition? I mean, Europe is doing the same thing. And I'm not sure about Japan, but I'm not sure about the numbers, but Japan has also increased the central bank balance sheet in a horrific amount. So what we're seeing is that all the fiat, the major fiat currencies are being debased as we speak. So having the dollar collapse against the other currencies doesn't make any sense. What's going to happen is happening is that asset prices go up in terms of dollars. And that's why we see the booming stock market in the United States. Okay, I'm pretty curious to know what is the most common perception of Bitcoin among Latin American entrepreneurs? I think there's not really a perception. Very, very few people know about this. And you know, it's the usual if you get into a discussion about it, people say, oh, well, it's a joke. It there's nothing behind it. It's made of air. It has nothing tangible to back it up. You know, you heard all the arguments. People are the same across the world. So they all say the same thing. Right, so in this kind of conversation with your peers, you are always the outsider, right? Oh, yes, I'm very much used to being an outsider. Okay, so now I'm curious to know what is your counter argument that you usually use in these conversations with your peers to defend Bitcoin? I think the main confusion is people come up with this idea that, oh, it's not money. So we have to go to definitions of what is money? Money as a unit of account, as a means of exchange, as a store of value. But anybody who studies monetary history knows that money has been evolving across time. I mean, that's why I mentioned the book of the Bitcoin standard by this Lebanese gentleman, Sefidina Mous, and he has a really excellent chapter on monetary history. And he takes us through how people used to have big rocks as proof of wealth, and then these rocks were traded, and then how you go to copper and iron. People need to exchange stuff, right? And what they used to exchange is the most tradable commodity that's within their reach. And that's why gold and silver became very good instruments for trade. They're commodities, they have some use, and they're highly desirable, and they're easy to exchange. So I mean, if you just consider that logic, and the way that most of the world has now gone to an all digital money, bits and bytes in the ether, I mean, what's so bad about Bitcoin? It's bits and bytes in the ether, but the big thing is it cannot be debased, and it cannot be confiscated that easily. It can be confiscated, but not so easily, right? So there's got a lot of things going for it as a means of exchange. It's actually a pretty good commodity to be used as a means of exchange. If you want to call it money or not, it's totally personal, it doesn't matter. All right, now switching topic. According to a report published by IntelligenceFirm Insights, the majority of the world's illicit crypto funds ends up on Latin American crypto exchanges. And that is because apparently Latin American exchanges have very lax KYC and AML procedures. So don't you think that this trend could prevent crypto from establishing itself as a legit asset in Latin America? It has nothing to do with know your customer in anti-money laundering, much less with terrorism financing. This is just, you know, the established governments don't like Bitcoin because it's a competition to their fiat currency, and they don't like it and they want to get them down. So that's what's happening. And I think in terms of Latin America, I don't think that there's a lot of Bitcoin volume, as far as I know, in Mexico or in Venezuela or Argentina. I mean, there's got to be much less than what is traded in the U.S. in Europe if you talk about volumes. So no, I'm not worried about that. I just think that there's a lot of hypocrisy by the establishment about this new currency being used for nefarious purposes. That's just propaganda to try and derail the product. Okay. So you don't think that this illicit crypto activity could prevent Bitcoin to become a legit asset, so to become accepted by large investors and institutions in Latin America? I think there's a big difference between being legal and being legitimate. I mean, the asset is legitimate period, end of story. There's no question about it. It's an asset that you can buy, you can sell with the willing third party. There's no question about being legitimate. Now, any government waiving their magic wand of legislation can turn it into an illegal asset. And America, again, is a good example. I mean, gold was a very legal asset until 1931 when it became illegal and criminal to hold gold, which had the stroke of a pen, you know. Roosevelt did that. So will it be legal? I don't know. Will some governments try to make it illegal? Probably. Are we concerned about that? No. It's just the way things are. Awesome. Thanks a lot, Ricardo. That was a great conversation. Well, thank you, Giovanni, and hopefully we'll have a very nice Bitcoin year now that it goes over 20,000 any day now. That was Ricardo Salinas, founder and chairman at Grupo Salinas. I'm Giovanni, your host. If you enjoyed the interview, don't forget to like the video and subscribe to our channel.