October 20, 2024 • 59 mins
[VIDEO EPISODE ON YOUTUBE & SPOTIFY] MicroStrategy executive chairman and self-described Bitcoin ‘maximalist’, Michael Saylor, discusses what it would take for more companies and Governments to adopt Bitcoin.
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Speaker 1 (00:00):
The information provided in this program is of a general
nature and is not intended to be personalized financial advice.
We encourage you to seek appropriate advice from a qualified
professional to suit your individual circumstances. Micro Strategy executive chairman
and self described bitcoin maximalist Michael Saylor explains what it
may take for more companies and governments to follow his
Bitcoin adoption playbook.
Speaker 2 (00:21):
If you want to see the people with all the
money and the power in the world embrace the asset,
they will do it when their vendors support the asset.
And that's a rippling thing, right because until you have
the fair accounting, people can't see how intelligent the idea is.
(00:50):
I want to talk about the Bitcoin revolution.
Speaker 1 (00:53):
Sailor is bitcoin's biggest advocate, but he wasn't always this way.
In twenty thirteen, he tweeted that Bitcoin's days were numbered.
Speaker 3 (01:03):
Now he's out there encouraging.
Speaker 1 (01:04):
Other companies to spend their cash on Bitcoin, holding a
Bitcoin for corporations event to share his strategy.
Speaker 2 (01:11):
So bitcoin there is no second back.
Speaker 3 (01:16):
And many are adopting it.
Speaker 1 (01:18):
This year, bitcoin's total market surpassed one trillion US dollars,
as institutions drove an inflection point to coming.
Speaker 2 (01:26):
Out party for bitcoin.
Speaker 1 (01:28):
I think black Rock, Vanneck and other firms launched bitcoin
exchange traded funds in January this year, giving investors and
means to get exposure to bitcoin's price through the stock market.
Speaker 2 (01:40):
You do not sell your bitcoin.
Speaker 1 (01:44):
So what does Sailor think is Bitcoin's next big moment?
You are the biggest bitcoin bill I think in the
world easily right now.
Speaker 3 (01:51):
But you are a bull among a lot of bears
out there. Still.
Speaker 1 (01:55):
It even took you, what seven to eight years to
sort of convince yourself that bitcoin was something that you know,
you should convint your own balance cheet too, and obviously
now you're doing it. But how do you convince others,
the big tech players out there, the giants NISA, Google, Microsoft?
Speaker 3 (02:11):
How do you get them to flip? Like like Larry.
Speaker 2 (02:14):
I think, you have to make it easy and you
have to give people gateway products that they can use.
You have to give them bitcoin with guardrails. You have
to give them domestic bitcoin, not wild bitcoin.
Speaker 1 (02:32):
What is that? Well, it's domestic bitcoin versus wild bitcoin.
Is that like ibit versus on market and cold stores?
You know?
Speaker 2 (02:38):
Raw bitcoin? Is you buy bitcoin? You know, and your
self custody it, you know. And the next is you
buy bitcoin with a custodian, but more domesticated. A simple
domesticated bitcoin is ibit and FBTC. I buy it through
black Rock, right, and that's a lot easier to handle.
(02:59):
There's again we're back to nine hundred trillion dollars of capital.
Real estate investors they want to buy something that looks
like real estate, right, and bond investors want to buy
something that looks like a bond. And preferred stock wants
to buy something that looks like ford stock. And some
people want half the upside as a capital gain, but
(03:22):
they don't want the downside, so they got to buy
they got to buy something like a convert And options
traders they want to trade options. So when bitcoin bitcoin
first came out, there were none of these things. And
then for a while there was an entire crypto economy
that was created offshore, you know, too much colorful drama
(03:43):
and anxiety like the ftxs of the world, et cetera. Well,
those are unregulated crypto exchanges and conventional, traditional regulated investors
can't trade in that. And it's probably good they didn't, right,
because most of them failed. So what we're watching right
(04:04):
now since twenty twenty is the creation of the institutional
vehicles in order to invest in bitcoin. And you know,
I've got this saying. I say, everybody's against bitcoin before
they're for it, right, We're all against it until we're
for it. I was, you know, why are you against it?
(04:25):
It's like, well, why are you against electricity? In eighteen
eighty you know that. I'm sure the first guy with fire,
he scared a bunch of other tribesmen, and they're like,
you know what happens we get too coast to fire,
It burns you burned. No one wants to get burned. Right.
The idiom is no one wants to get burned. And
yet without fire, we're not better than the apes. And
(04:48):
then what happens when we play with electricity? We get shocked?
Who wants to get shocked? It's another idiom in the
English language, shock is bad, and yet without electricity, like
ninety percent ofmanity is dead.
Speaker 1 (05:02):
I love that the siren just went off in the background,
is it not?
Speaker 3 (05:05):
As you were talking about the shell?
Speaker 2 (05:08):
It happens, and so new technologies are scary, right. People
thought that if you got an automobile, more than ten
miles an hour, it would suck the oxygen out of
the cabin and you would suffocate.
Speaker 3 (05:19):
Can be good to the horse, right, Yeah?
Speaker 2 (05:21):
So so if you look at the great revolutions and energy, right,
fire was extracting energy from matter. You know, water was
extracting energy from gravity. Right, that's the big idea. There's gravity,
there's energy in this field. If I put water there
in a water clock and it comes down here, I
(05:41):
can turn a wheel with it, right, big idea. And
then when extracting energy from the atmosphere, and then the
steam engine is let's let's refine the entire idea and
move the you know, create an engine that takes that
energy and spends something so that kids don't don't have
to do it. Right, you know, the steam engine eliminates slavery.
(06:05):
It's a pretty good idea, right. And then after that,
you know gasoline and internal combustion engines, and then you
know what follows NAC's nuclear reactors and electricity and each
of these energy revolutions. It was a shocking, scary paradigm shift,
and for thirty years people rejected it, and they had
good reason because they're city burned down and their house
(06:27):
burned down and they got electrocuted, and my airplane fell
out of the sky. Right, it's like the and if
you study James Watt, he spent his entire life trying
to make steam engine work. Not easy, right, it's not easy.
Bitcoin's digital energy. So Toshi figured out a way to
both transfer and store, to basically store and channel energy
(06:51):
through cyberspace without an intermediary. That's a profound breakthrough because
that means I can put a billion dollars in cyberspace,
I can move it sixty times a second, i can
hold it for a million years, and I'm not facing
counterparty risks to a bank, a country, a currency, a corporation, right,
(07:12):
a culture, you know, a commodity manufacturer. And so that's
a profound idea. We're fifteen years into the innovation. We're
only four years into the you know, to the crazy years.
And really January twenty twenty four was really the beginning
of this error. Maybe this is year zero of institutional adoption.
(07:36):
When when we have regulatory acceptance, bank acceptance, and accounting
acceptance a bitcoin, those three planks, that's year one of adoption.
And when do you have that, Well, you kind of
got seventy five percent regulatory acceptance. Since we got these ETFs,
(07:57):
not all most, when we have ibit trading on the
options market, that's a big step forward. And when you
can do incin create and redemptions of the ETFs, you've
got full regulatory acceptance of the asset. Then January twenty
twenty five, fair value accounting becomes the norm, and now
(08:20):
you've got accounting acceptance, and now you can mark up
and mark down the asset just like applestock or just
like other assets. And then when you have two big
defail banks, when you have the B and Y Melons
of the world, or the JP Morgan's of the world,
the State streets of the world, they custody the bitcoin,
or they buy and they sell and they hold a bitcoin,
(08:42):
you'll love banking acceptance. And what are banks? Banks are
just institutions that are engineered to be custodians of financial assets.
So of course the greatest custodians of assets in the
world need to custody this asset. So we are we're
right in the middle of that. And I think maybe
(09:03):
twenty twenty five you can call year one of the
institutional error of digital capital, that thing which is bitcoin.
Speaker 1 (09:14):
I want to come to the banks because I'm very
keen to talk to you about how you see banks
as being key to unlocking that next phase. But just
on this corporatization and even perhaps government adoption, what do
you think is the fear other than just volatility? I mean,
is it fear of completely disrupting economic theory and monetary
policy as we know? It? Is that the fear that
(09:35):
these corporates and that governments hold.
Speaker 2 (09:38):
So I think the issue is not really with the
asset class. I think any conservative or any traditional investor,
if you're a high net worth individual, a family office,
if you're a successful corporation, if you're an agency, a government,
(09:58):
or any political entity, and I introduced new technology, you know,
like I say, I come to I come to the government.
I say, I got this electricity thing, and you don't
have any electricity in your building. Well, what they would
do is go to their contractor. They've got some contractor
that built the building, and they would say, can you
(10:19):
backfit or rewire our building for electricity? And the contractor
said that no, man, you know, because my competitors did
it and they got shut down and bankrupted, and my
other you know, another person did it in the building
burned down, So we're not going to do it for
a while. We're afraid, right, in that case, they would
they wouldn't just embrace electricity immediately. The equivalent of the
(10:42):
building contractor for bitcoin would be the bank. So when
your rich uncle, you know, gets asked about bitcoin, he's like, well,
I called my broker, I called my bank JP Morgan,
or I called the Standard Charter or wherever, and they
won't buy it for me yet they say it's too risky. Well,
(11:03):
I'm just going to hold off a bit. So if
you want, if you want to see the people with
all the money and the power in the world embrace
the asset, they will do it when their vendors support
the asset. And that's a rippling thing, right because until
(11:24):
you have the fair accounting, people can't see how intelligent
the idea is. The difference between fair accounting and indefinite
and tangible accounting for a big company is under fair accounting,
you would know within five seconds whether you had a
good quarter, oh we made like ten dollars a share.
Under indefinite account and definite and tangible accounting you would
(11:47):
have to read two hundred and fifty pages of documents
and create your own proprietary models and spend somewhere between
one and ten hours to figure out how you feel
about the quarter.
Speaker 1 (11:57):
And so the NINA wouldn't be that succinct. It wouldn't
they there to give you like a thig of it.
Speaker 2 (12:01):
You know, the seventy year old billionaire isn't going to
take ten hours. They can't even read the document, right,
and so we you know, you could get all intellectual
about this and say, oh, they've thought about it and
they don't like this and this and this. That's not
the case. It's if I call my broker and say
buy ten million dollars of this and they say you sure, boss,
(12:22):
click and it's done. Then you start to see adoption.
And when the company that adopted it announces that they
just made twice as much in their earnings for the
quarter as they used to because of it, it's like, well,
then buy more of that stock. And when the mayor
of Miami, or the mayor of New York City or
the governor of Texas says to his treasurer, I think
(12:43):
we ought to have some bitcoin, the treasure says, okay,
no problem, I'll let City Group or Bank of America
or Morgan Stanley know, and they'll do it, click and
it's done. Then you're adopting. But when the governor says
the treasure buy ten billion, and the Treasurer says there's
not a single bank in the US that will sell
that to us, it's like, well, I guess we're too early.
And it's the same thing with you putting an elevator
(13:05):
into your house, or electricity, or how about running water?
You know, why didn't people put running water in their house?
You know in eighteen eighty it's because it was like
you had to be rich, and it was expensive, and
one in one hundred people had it. And the guy
that's building your house didn't know how to do it.
He'd never done it before, you know. And so these
(13:28):
things get embraced as everybody in the society gets comfortable
with the new technology, and generally it's like a thirty
year generational shift. You know, in year one, no one's
doing it. You see those pictures of New York City
in nineteen oh five, no cars. Nineteen fifteen, everybody's got
a car. You know, it's like, well, what did it take?
(13:50):
You know, it took this exponential set of processes and
support for this to happen, and the same as going
on with bitcoin right now.
Speaker 3 (14:00):
I mentioned yield and Michael.
Speaker 1 (14:01):
Every single time I do an episode on bitcoin, there's
always somebody in the audience who sees, Yeah, but if
I buy it, then I earn no yield on it.
It's not a stock. I don't get paid dividends quarterly.
It's not a second property that I can rent out.
It's not money in the bank that I can earn
a savings yield on.
Speaker 3 (14:18):
So when or if?
Speaker 1 (14:20):
But I think from what you're saying there, when banks,
whether at JP Morgan City start adopting it and allowing
us to put our bitcoin in the bank, I've heard
you speak about this, what happens there and how a
bank's key to unlocking that next face.
Speaker 2 (14:34):
Yeah, let's say I give you ten acres in Manhattan.
There's a land. You buy the land. You can buy
the land in seventeen hundred, eighteen hundred, nineteen hundred, the
year two thousand. Is it worth something? You know? Would
you sell it to me for a penny if you
own it? No, it's worth something, right, But there's no yield.
(14:55):
It's rawland. There's no yield. We'll give it to me
for a penny. There's no well no, it's like Central Park,
but there's no yel right, okay, so what's what's the
solution to the problem. Well, you take the land and
you put a and you have a company, a real
estate developer, and the company builds a building on the
land or parking lot, right and and then they rent
(15:18):
it out and they generate the yield. And okay, so
do I like that or not? Well, this counterparty risk
I got. I'm buying a security. I'm buying a reate.
There's a company. The company might build a building, the
falls down, they might get a deadbeat, you know. So
the point is there's risk. So you want a reliable
company that you trust too big to fail to take
(15:41):
that risk and give you the yield. A bank, Well no,
micro strategy is doing it right now, right, Like we
just discussed BTC yield. So micro strategy takes the bitcoin
and then we do something. We actually find a way
to to uh to take out a loan, reinvest it
and generate a BTC yield. And the price you pay
(16:03):
is you take a risk with a security called mst R. Right,
So banks do it a different way. I mean, bank
will take your asset. You have a billion dollars of
something billion dollars of apple stock, and they may loan
it out to someone else, and they may get paid
a fee by the one person that wants to borrow it,
and they might pass it on to you, and they
(16:24):
might not, right, so sometimes they do. They'll definitely do
it with your treasuries or with your cash. Sometimes they don't,
depends on how you are. I think that banking is
just the next logical step. But in terms of how
am I going to get a yield on bitcoin, I'm
(16:47):
going to get a yield when a thousand companies and
the Russell two thousand buy bitcoin, operate their existing business,
sweep their cash lows into bitcoin, and do stuff whether
they develop business on top of it. Right, that's a
way to get a and I'll get a yield if
two big to fail banks that are well capitalized they
(17:07):
start to accept bitcoin as collateral, and probably you don't
get a huge yeld. By the way, if you think
about the metaphor, it's like when you own apple stock,
it's you know, oftentimes you don't get a yield by
loaning your Apple stock, but big corporations do. The big
investors actually get paid a small interest rate when they
(17:28):
own loan their stock to people that want to short
sell the stock, and so there is a market there
for that. But more likely the next stage is a
big bank accepts your bitcoin collateral alongside your Apple and
your Microsoft stock and your Treasury bills is collateral, and
they give you some advance ratio against it, and then
(17:50):
you can borrow at sofur plus some spread against it
because it's you know, no worse collateral than Apple stock,
as a block is, so you'll start to see the
formation of credit markets around bitcoin.
Speaker 1 (18:05):
Well, let's consider that within bitcoin's characteristics. And you've already
spoken about Satoshi, let's go back to the beginning. The
Bitcoin network was started by Satoshi Nakamoto on January third,
two thousand and nine. That Genesis block included this message,
(18:25):
a headline from the Times quote Chancellor on brink of
second bailout for banks. It was followed by this public
forum post in February oh nine, announcing a new peer
to peer e cash system called Bitcoin. To this day,
no one knows who Satoshi is, but the network he,
her or they built has been operating for fifteen years
(18:49):
and two hundred and eighty nine days when we release
this video with almost one hundred percent reliability. The network
has gone down twice in its history, in twenty ten
due to a bug and twenty thirteen due to a fork,
and the chain both were fixed within hours. So tooci's
creation wasn't the first attempt at a currency native to
(19:09):
the Internet, but it's clearly the most successful due to
its design that has no central point of failure. From
the beginning, sotoshi didn't allocate any initial supply to themselves.
For the first year and a half, bitcoin wasn't worth
anything except the cost of running a computer to mine it.
To create bitcoin, miners are required to solve mathematical problems
(19:32):
to add a block to the chain. That proof of
work is then verified by all nodes on the network.
The work required to mind bitcoin can change due to
what's called the difficulty adjustment and the reward earned by miners.
Hearts every four years, meaning bitcoin has a predictable decreasing
inflation rate as it becomes more scarce over time. Bitcoin's
(19:57):
total supply is cat only twenty one million bitcoin can
ever be mined, Unlike fiat currency that can be printed
by authorities. At the time I was making this video,
bitcoin supply was at ninety four point eleven percent. That's
more than nineteen million bitcoin in existence. The currency is
fully decentralized, meaning there's no authority or state that oversees it,
(20:22):
unlike the US dollar, which is controlled by the Federal
Reserve and is a system based entirely on trust. But
if sailor wants banks to hold bitcoin, does that put
it at risk of becoming more centralized exactly what its
support is?
Speaker 3 (20:37):
Wouldn't want it to be.
Speaker 1 (20:40):
If there is more bitcoin bitcoins hold with these third
party custodiums, what risk does that pose? Having greater supply
held by fewer large institutions. Does that increase the risk
of seizure and confiscation like we've seen with gold? And
(21:00):
is that not exactly what the coin is don't want
to happen now.
Speaker 2 (21:03):
I think it's the opposite. I think that when the
bitcoin is held by a bunch of crypto anarchists who
aren't regulated entities, who don't acknowledge government, or don't acknowledge taxes,
or don't acknowledge reporting requirements, that increases the risk of seizure.
(21:24):
If you know, if a country in desperation, if China
knew that there were underground crypto traders with billions of
dollars of bitcoin in their midst that didn't pay taxes,
the Chinese would probably try to shut that down, and
that's what they do. So normally, the risk is greater
(21:45):
when they are unregulated private entities that are perceived to
be holding the asset. When you have regulated public entities
like black Rock and Fidelity and JP Morgan and State
Street Bank holding the asset, well, all the lawmakers and
all the law enforcement arms, they're invested in those entities, right,
(22:08):
So there's no way that all the senators and all
the congressmen are going to seize the assets from Fidelity
in black Rock or Vanguard because that's where all their
retirement money is invested. So the asset moving from private
to public hands and moving into regulated entities, it does
(22:30):
a bunch of things. It decreases the volatility, it decreases
the risk of loss, It decreases their like who do
you trust more as a custodian FTX or Fidelity right
or Vanguard or State Street right? And if you walk
down the street and you said, you know, would you
put all your family's money in offshore entity without a
(22:54):
headquarters run by five dudes without an auditor, or would
you put it with a bank that's too big to
fail in the US? Right, Like, at the end of
the day, you have an og crypto community is very
hardcore about it. But if you look at where all
the money is, ninety nine point nine percent of the
money is actually in the traditional economy and in the
(23:17):
war for the future of money. The war's going to
be won with money, right, I mean, right at the
end of the day, bitcoin is capital. Who's going to
actually decide who's the winner or the loser the people
with the capitol, And so where's the capital. It's a Vanguard, Fidelity,
State Street, JP, Morgan, Morgan, Stanley. They're all regulated entities
(23:39):
of sorts. So when bitcoin is held by those entities,
it becomes regular and normal. And you know, people would
no more think about seizing that than they think about
seizing a building in the middle of Manhattan or seizing
you know, the you know, the S and P spider assets.
(23:59):
It's why why would you do that? That's just the
capital that you built the country on.
Speaker 1 (24:04):
Well, if you ask why would you do that if
you consider the Great Depression. I mean, people thought that
the gold was safe and banks until the Executive Order
of nineteen thirty three.
Speaker 3 (24:11):
So we're not entirely safe.
Speaker 1 (24:13):
I mean to know, that's kind of a wild thing
to suggesce may happen again, but history does repeat itself.
Speaker 3 (24:18):
So yeah, was bitcoin wouldn't be entirely safe.
Speaker 2 (24:20):
People say that, but mostly it's mostly it's paranoid crypto
anarchists that say that. Okay, because it's a myth and
a trope that goes on over and over again. But
first of all, he didn't really seize the gold. People
voluntarily turned in the goal. They didn't go and kick
in everybody's door, arrest them, shoot them, and take their goal.
(24:42):
That never happened. First of all, hey, that's for it.
Second of all, he didn't seize all the property. He
didn't go seize all the buildings owned by wealthy people
in New York. He didn't seize all the stock portfolios
of wealthy people in New York. Right, gold was the
monetary asset backing the dollar. The dollar was literally twenty dollars,
(25:06):
you know, to the ounce of gold. Right, and so
the problem was the country was on the gold standard,
and Franklin Dollan Roosevelt wanted to devalue the dollar. He
wanted to de devalue the currency. He wanted to print
more dollars, and so they had to actually do something
so they could devalue the dollar. And the way they
(25:28):
did it was put that executive order in place, and
then they revalued the dollar to thirty four dollars per ounce,
a devaluation. And and now you have to ask yourself,
the question, is the United States on the bitcoin standard?
Now we will be, but the point, but the point
really is we're not right. It's totally not a reasonable comparison.
(25:53):
Franklin Dollan and Roosevelt didn't seize every car and every watch,
and you know, and every piece of real estate and
every piece of equity in the United States because we
weren't on the equity standard or the property standard, or
the or the chicken in every pot standard, or the
grassy lawn standard or the lawn mout standard. We were
on the goal standard, and he wanted to devalue on
(26:16):
the goal standard. And so today we're not on the
goal standard, we're not on the Bitcoin standard. The US
government has no problem printing money. They can print as
much as they want. And in fact, every government on Earth,
all of them, they're either on their own standard or
they're on the dollar standard. So in this particular case,
(26:40):
I don't think we have to worry about, you know,
bitcoin held in custody being seized by the government anymore
than you have to worry about your apple stock being
seized by the government, because the government doesn't need to
devalue the dollar against apple stock to print more dollars either.
So it's not really an issue. It's oftentimes it's you know,
(27:03):
people have these inflammatory you know, tropes or inflammatory memes
that they use and it's like I say that because
I want you to give me your money, Okay, Like
I want if you don't trust the bank, then you'll
buy my hardware wallet. If you don't trust this government,
(27:25):
you'll move to my country and you'll buy a passport
from me. So if you don't trust that company, you'll
sell that stock and buy the other stock. So there's
a lot of a lot of this kind of of
messaging and ideas that they're very inflammatory and they're meant
to actually stampede people into some behavior whatever, which is
(27:49):
financially beneficial, Like, like, you can't make your own investment decisions.
Investing is very hard. You should give me your money.
I'll make the decisions for you. I'm going to charge
you two percent fee and twenty percent of the upside.
It's like, well, what should I do about hyperfection? Well,
you need to invest in a diversified portfolio of global
alternative assets across one hundred and fifty two different asset
(28:11):
classes and revalue every quarter. Oh I can't do that. Okay,
that's okay, give me your money, girly, I'll do it
for you. Right. That's the kind of fear mongering to
get you to give me your money, right, And I
use it to sell you a gun, to sell you
a hardware walllet, to sell you an account, to sell
you a financial advisor, to sell you an insurance policy,
(28:35):
to sell you a you know, fill in the blank, right,
whatever it might be. And ultimately, I think that there's
just a lot of fear that's unnecessary. The bigger idea
is Bitcoin is digital capital. It's a million times smarter,
a million times faster, a million times stronger, a million
(28:56):
times more elegant than analyog capital, physical capital. And financial capital,
and it's simply a technology transformation. It's like, don't store it.
Don't take ten thousand records and haul them around with
you in ten thousand books whenever you travel, take the
(29:16):
iPad with ten thousand books on it, and take the
iPhone with ten million songs on it when you travel. Right,
it's like, blah blah blah. But the phone will eat
me and it's listening to me, and it will steal
my identity and kill me. It's like, it's just a
computer with some digital files on it, right, And so
that's the digital transformation of capital, and that's what bitcoin represents.
Speaker 1 (29:40):
So on digital money being tell me if this is
a legitimate fear or not. Quantum computing it apparently is
going to have the ability to solve multiple more complex
mathematical mathematical equations all at once. Does that pose a
legitimate risk to the bitcoin network or are you confident
that developers will come up with some kind of quantum resistance.
Speaker 2 (30:01):
No, it's it's just another fear mongering, end of the
world scam narrative that people use to sell stuff, and
in this case quantum computing, the fear is used to
sell the next alt coin. I have a quantum resistant
token and quantum computing. Who's going to destroy your token?
So give me your billion dollars and give it to
me and make me rich because maybe an asteroid will
(30:24):
hit the earth. I have an asteroid bunker. Give me
your billion dollars and I will give you my asteroid bunker.
You're going to die of pneumonia. Give me your money,
and I'm going to give you a vaccine. Right, You're
gonna you know, it's just fear mongering. Quantum computing is
a if you take the general theme, it's like, oh,
computers are going to get better over time, and as
(30:47):
they get better, maybe they'll get really good and they'll
be able to hack systems. And what's your response, Well,
I guess I just shouldn't use it. I shouldn't invest
in Apple or Google or Facebook, or I shouldn't have
money in a bank, and I shouldn't use a computer
because uters might get hacked. Huh I guess I okay,
So give up everything in your life that has the
computer in it, right, including the podcast that you're running
(31:10):
right now. Give it all up because one day quantic
computers run by doctor Evil will hack the thing. Okay, well,
I mean the answer is it's silly. Of course, computers
will get better, and as the computers get better, we
will adopt the better computers to defend the network. The
Bitcoin network used to generate hashes one thousand jewels per
Terra hash. It took a thousand jewels to generate a
(31:32):
Tarra hash, and then it was five hundred, and then
it was one hundred, and then it was fifty, and
it was thirty, and it's fifteen, and the next will
be five, and there'll be one. And doesn't take a
rocket scientist to figure out that computers get better, semiconductors
get better, the network gets more secure. It's like, but, but,
but but what if someone invents something that's better than
(31:53):
the better thing? Well, well, we spend ten billion a
year to keep upgrading our thing. And you think that
doctor evil like me in the basement with no money
is going to come up with the quantum computer that's
going to be better than the ten billion dollars we
spend for the last every year for the last decades.
So yeah, if a teenage kid with fifty bucks in
(32:14):
a rubber band comes up with something better than one
hundred billion, dollars of semiconductor or investment. Then in theory,
they could hack our network. But why wouldn't you just
hack x and the Colere nuclear war on someone and
like short the market and make ten billion dollars by
hacking the president's account. But I mean, the point is
(32:35):
it's all illegal. But my point is it's a billion
times easier to just hack the bank or hack the
communication network and make money than it is to hack bitcoin.
Bitcoin is the most cyber resistant, the most powerful digital
network on earth. It's the hardest thing to hack. So
(32:56):
when someone pitches quantum computing, it's normally it to degenerate
twenty something crypto trader that wants you to buy his
yo yo quantum coin and make him rich because he's
got a yo yo quantum algorithm. And I just shake
my head because I think, who could be so stupid
to fall for this kind of alarmism. It's ridiculous and
(33:19):
a waste of time. But having said it all, the
generic statesmanlike answer is technology will advance. Bitcoin is the
best most profitable use of computer power. In order to
protect money. If technology advances, you got to believe that
the people most incentivized to use the technology will be
(33:39):
the one with the trillions of dollars of money to
protect it will go there first. All those advances will
be first implemented into the bitcoin network to defend the network.
They won't be used by teenage boys to attack the network.
By teenage boys would rather hack Twitter. It'd be cool.
We're just going to go. But it's been done. It's
(34:00):
been done again. It's very simple to do. It's a
billion times easier to do to hack these communication networks.
And so that's where your threat will come.
Speaker 1 (34:11):
To sum this all up, and I would love you
to give again a non statesman like answer to bisman Michael,
but can you give us your bitcoin superiority complex about
the asset and can you weaven some of what you
spoke about earlier about government's printing money And if you
consider the economic cycle that we've been through over the
past four years, while you've been accumulating bitcoin like crazy,
(34:34):
how is that and your mind increased its superiority, So.
Speaker 2 (34:39):
You know, a short summary, why is bitcoin better? First
of all, if I had one hundred rich families and
they lived all over the world, and they didn't trust
a government, and they didn't trust a bank, and they
didn't trust a corporation, and they had a lot of money,
and they wanted to keep their money for one thousand years.
(35:00):
If God came down from heaven above and said, hey,
I'll run the God Bank, issue twenty one million god coin,
and I will make sure that no one can steal
your god coins. You can buy in however you want,
and you can trade telepathically with each other, and I'll
do this for free, they'd probably accept that. Right. The
history of the human race is people looking to heaven
(35:21):
to solve their problems in every religion. Okay, in the
absence of god coin and God coming down to do this,
the next best thing would be an intelligent engineer that
creates a crypto network to combine semiconductor technology, public private
key encryption and the Internet TCPIP. Okay, that's a crypto coin.
(35:47):
So now we create a crypto coin, and the question
is who's going to run the software because nobody trusts anybody.
And maybe I trust you and you trust me, but
I don't trust your idiot great grandson had them yet.
I mean, how could we trust your great great grandchild. Okay,
so we're all going to run the software and We're
(36:07):
going to run it on thousands and hundreds of thousands
of nodes, and anybody whose software cheats gets kicked off
the network. Okay, that's the idea of bitcoin. It's basically
a crypto asset network. Now the question is, okay, I
figured that out. Now what kind of monetary policy I want?
I want twenty one million hard cap forever, never can
(36:28):
make anymore. I want a scarcity. I don't want anybody
can make nobody can make anymore. Okay, that's good. Now
the question is, okay I did that, Now, which network
is going to win? So we launched Bitcoin as as
the fortieth try and the first one with the right
monetary policy, the right cryptography, and an equitable launch. So
(36:52):
so she launches it, walks away forever, disclaims beneficial ownership.
It's an immaculate conception. Okay, what if somebody else launched
another crypto network with an immaculate conception. You know, there's
been five million cryptos launched. Most of them are not
immaculately conceived. Some of them still have the founding teams
(37:14):
that are getting rich off of them. When there's a
founding team getting rich off of them with a jet
and with an office with a mansion, it doesn't look immaculate.
There's no Satoshi in a swimming pool, flying as jet
around as a billionaire.
Speaker 1 (37:28):
Right, that's the one is we don't know, We don't
know why.
Speaker 2 (37:31):
And the point is we absolutely know there isn't because
the coins have not moved in fifteen years and we
can see them. So now the question is you've got
all these smart families and they're staring at the crypto
gold network if you will, or goal's not even a
good example, just a crypto bank, and the question is
which network is the best one. Well, we sort through
(37:52):
it and we try bitcoin and it kind of works
for a while, and then we trust it. More money
gets onto it, you know, and for a while we're
not sure, and then twenty twenty, some crazy entrepreneur buys
two hundred fifty million dollars of it for a public
company and that's the first time in you know, ten years,
anybody ever bought a quarter billion dollars on the network,
(38:13):
and people are like, oh my god. Yeah, and then
that same person buys another nine point seven billion dollars
of it, and so we.
Speaker 3 (38:21):
Buy it me crazy, my gosh.
Speaker 2 (38:23):
Okay, So in that time where there's one company, micro Strategy,
buying ten billion dollars of that asset. It's not a
single person ever publicly spent two hundred and fifty million
on any other crypto asset ever. Of the five million,
nobody even put in the first two hundred and fifty million.
Nobody put in one hundred million. Right, go find it,
(38:44):
you won't find it. So now you have an interesting issue,
which is why is bitcoin the winner? It's because all
the smart money in the world decided that's the winner.
Did it have to be? Well, now it's like, why
do we speak English? Because all the rich, powerful people
decided on English. Could it have been a different language.
It could have been French. Napoleon wanted it to be French,
(39:05):
but it wasn't French. It was English. Why do we
use base ten math because all of the rich, powerful
engineering companies use it? Is it the only form of math? No,
there's base two, base eight, base sixteen, right with mement
Why yeah, you know we have the big joke about
the metric system. Right, we're still trying to work through
that protocol. So bitcoin is the protocol that the rich,
(39:28):
powerful smart people chose. Okay, so you can fork it
and create your own, and you will have to find
stupid poor people to buy yours. But why would I
actually want to put all my money in the network
with the stupid poor people when I've already got the
network with the smart rich people. Right. And the result
(39:50):
of that is Bitcoin is the most powerful crypto network
in the world. And you can measure it by a
computer power seven hundred x a hash. That's forty billion
dollars of special purpose semiconductors that generate more hashes than
all the computer power of Microsoft, all the computer power
of Amazon, all the computer power of Meta. If they
(40:11):
all ganged up on it, they still can't get to
seven hundred x hash. It's the most powerful computer network.
Then it has eighteen gigawatts eighteen gigawats of electric power.
That's the most powerful electrically powerful network. Eighteen gigawats is
more power than the US Navy users to run all
the aircraft carriers and the destroyers and the battleships. Wow,
(40:34):
we conquered the world with less than eighteen gigawatts of power.
It's eighteen full on nuclear reactors running full on right
spread everywhere in the world. Okay, how does that compare
it to the second pest. The second pest has zero
point one percent that much power one yeah, you know,
how about the hash rate one percent maybe? And then
(40:58):
eight hundred billion dollars of actual capital. Micro Strategy spent
ten billion to get one point two percent. Work it
out in your head. Look at the four year simple
moving average of bitcoin multiplied by the number of bitcoin.
Look at the trading volume. Look at real people, thousands
of institutional investors with real money at risk, the bitcoin minors,
(41:21):
the black Rocks, et cetera. Right, like seventy billion, sixty
billion dollars put into just the ETFs alone real money. Right,
eight hundred billion in capital has backed the network. So
what's the second best. The second best doesn't even have
eight like ninety nine percent of the real money went
(41:41):
into the bitcoin. Now, everything else you read about in crypto, right,
all the other crypto assets that might be a store
of value. I'm not counting the stable coins because they're
just dollar pegged, but everything else probably doesn't even have
eight billion. It might have a few billion dollars, right,
So it's like ninety nine to ninety nine point nine
(42:02):
percent dominant. And then you go to the political power. Well,
there's four hundred and twenty million crypto people that love crypto,
But what's the reserve asset of crypto bitcoin? Four and
twenty million voters and then two hundred million people that
hold an instrument back by bitcoin. So what's the source
(42:23):
of the network? Political power, electrical power, digital computer power,
economic power? Right, that's you know, that's the source of
power of the network. It's like, well, why should I
buy that? Well, once you understand that it's the dominant
crypto network, now the issue is, well why should I
(42:43):
buy bitcoin instead of gold? Well, the goal supply is
going to double every thirty years, and you can't teleport
goal sixty times a second, and the AI is not
going to want the goal, right, and you can't put
gold on your iPhone? Right, Goals not digital. If you
have one hundred million dollars and you put it into
gold and you wait one hundred years, you'll have twelve
(43:03):
million dollars worth of goal. That's why I don't want goal.
Mayf you have one hundred million dollars a bitcoin and
you hold it one hundred years, you'll still have one
hundred million dollars worth of bitcoin. Right, So gold is
gold is the best of the commodities, but it's awful
because it's got a two percent inflation rate. What's the
difference between two percent inflation rate and zero percent inflation rate.
It's the difference between living thirty years and living forever.
(43:27):
Like one is mortal. Okay, here's your choice. Take the
orange pill, you live forever. Take the gold pill, you live.
You're half dead. In thirty years, you're half dead. You're
gonna live seventy five eighty and you're dead. Right. This
is a mortal life. This is immortal life. That's differently
in zero and two percent. Gold is the greatest of
the commodities. Every other commodity inflates a ten percent a year,
(43:49):
twenty percent a year, fifty percent a year. They're awful.
Commodities are awful stores of value. Well, what are they
good at. Here's what they're good at. Commodities are ethically sound. Okay.
That means they're an asset without an issuer. You can
promote gold or a chicken in every pot, or a
land or silver, or you can promote soybeans. You can
(44:11):
tell people to keep kerosene behind their house. Those are
commodities you cannot promote a security. A security is an
asset with an issuer. If a senator says, god bless apple,
she's promoting a security. If a senator says, god bless bitcoin,
they're promoting a commodity. It's like promoting bluegrass music, is
(44:33):
like promoting fasting. It's simply a cultural or a technical idea.
So what do you want as your long term store value?
You want something economically sound. That means absolutely zero inflation
rate forever and nobody can screw with that. You want
(44:54):
something ethically sound now, that means an asset without an
issuer or where the inv enter Prometheus disappeared. You own fire,
you know electricity. You can use it. The English language
you can use it. Math you can use it. Bitcoin
you can use it. There's no company with the copyright,
the charges you are royalty. Right. It needs to be
(45:16):
ethically sound, needs to be a commodity, right, and finally
it needs to be technically sound, you know, good engineering,
and so yeah, a building is sort of it's sort
of economically sound, not as good as bitcoin, because you've
got property taxes and an entropy you know, and happen
(45:41):
and a share of magnificent seven. It's kind of economically sound,
but it's a security And if the Chinese decided to
seize Apple's assets or the US sees as a Chinese
company's assets, you know you've got all sorts of political risk.
But bitcoin is both the econ economically sound asset anestheethically
(46:03):
sound asset. But it's a big tech digital network. It
means that I can move one hundred billion dollars a
million times a second. Okay, So the big idea is
I can give a capital asset to eight billion people
on their mobile phone, and ten million computers can trade
(46:25):
it a million times an hour across every jurisdiction. Right.
And so if you want to give music to eight
billion people, you need digital music. You can't do it
with records and eight tract tapes. And if you want
to give digital communications, right, you want to give education
to eight billion people, you need digital education. You need
(46:47):
to give them lectures for free for the cost of electrons.
And if you want to give wealth to eight billion people,
you need digital capital. You need to put your wealth
on your iPhone and you need to know that it
will last forever. And I just ask anybody, I ask you,
what do you own in your life that you think
your family will still have intact that will be valuable
(47:11):
three hundred years from now. What would that be, right,
Because there's no conventional thing. There's no company that's going
to last three hundred years. Right. They might not live
in New Zealand three hundre years from now. I could
give you ten thousand acres in Auckland. And the issue is,
so can you take it with you when the government
(47:32):
changes and they decide to seize the assets of people
with blue eyes? Right? Because happens if you look at
the history of the twentieth century and you're like, what
country didn't seize the assets of somebody over one hundred years? Right,
It's like you had one country, the United States, that
(47:54):
won every war, and yet that country's currency lost ninety
nine point nine percent of its value against scarce assets.
That's the winner. The winner gives you one tenth of
a percent of your wealth all you know, the rest
is all just anxiety inducing counterparty risk.
Speaker 1 (48:14):
Well, I'll tell you what does lebone is a legacy
and you mentioned mortality, but sadly, neither you nor I
am going to live forever. It's a bit of a
personal question and a cynic may say that you do
this because you have something to financially gain. But I
feel like, after this conversation, the effort that you put in,
the generosity with your time, why do you bother educating
(48:36):
everyone on this and talking about.
Speaker 2 (48:38):
The you know, I mean even if you take a
guy like Jack Dorsey and he asked about Beitquin, he said,
I didn't do it for the money. I did it
to fix the money. The legacy is the English language, electricity, fire, fission, fusion, engineering, right, telecommunications, right, mathematics,
(49:02):
all of these things. And what's the legacy here. It's
a monetary protocol, which is true. Right. The history of
the human race, if you look at it, it's fraught
with people dying from dirty water, dirty air, dirty clothes,
dirty environments, you know, dirty everything. Right, It's like dirty
(49:29):
dirty blood, and you know overcoming that with electricity and
clean water. Right. Just the joke is like a poor
person sits down at a table and they put a
glass of tap water in front of them, and that's
what you drink if you have no money. If you
have money, you buy a coke zero, or if you
have a lot of money, you buy a thousand dollars
(49:50):
bottle of wine, but the poor person drinks the glass
of water. And you know, I just finished reading again
The Story of Civilization by Will Durant. It's like whatever,
you know, the books are all over there. It's eleven volumes,
it's fifteen thousand pages. You read it all eleven volumes
beginning to the end. And there's thousand stories of famous
(50:12):
people that died of gout because they didn't drink water.
They drank wine because the water had bacteria in it
and cholera, and you died of infection if you drank
full water. If you were the king of England, you
couldn't get clean water. Then the rest of them died
because they walked past the swamp, got bit by a
(50:33):
mosquito and they you know, they didn't have any cure
for a malaria, they had no modern medicine. Or they
died of tuberculosis because there's no penicillin or there's no
antibiotics you know, to treat it. And so today, right,
it's like, what's your legacy. It's like clean the air,
(50:55):
clean the water. What kills the patient? It's dirty food,
dirty winter, dirty air. Right, how do we kill George Washington?
We bled him to death. We bled him to death, right,
that's why he died. And so what's killing every corporation
on earth? It's dirty money, dirty capital. To be precise,
(51:17):
the asset that every publicly traded company fifty thousand companies
use is sovereign debt. Sovereign debt yields three percent after
tax at best two percent, the cost of capitals thirteen percent.
It's a negative real yield of minus ten percent. It
means that you hold a billion dollars, you lose one
hundred million a year holding the money. It's like forcible
(51:39):
chemo therapy for your healthy fourteen year old teenager. Or
it's like strapping the twelve year old kid down and
taking two points of their blood every day and sending
them off the track. Practice the very mobid metiful.
Speaker 3 (51:51):
But I'm picking out what you're putting down.
Speaker 2 (51:54):
The point is it's medieval. But at the end of
the day, that's the scourge, the burden of humanity that
they've been hauling for thousands of years. And so when
you ask what is human progress, what elevated the civilization?
You know it's technology and it you know a lot
(52:15):
of painters they went blind because a middle class family
can afford one candle. Look around you, right, Each one
of those is one middle class family of light, clean light,
clean water, heat, air conditioning, electricity, energy, clean blood, antibiotics, right,
(52:38):
a language you can speak. Right. All of these things
are defined modernity. So what is my agenda? My agendas
fixed the money because the fifty thousand companies have a
life expectancy of ten years. You know why you die
in ten years when you could live forever. It's because
you have toxic chemicals in your vein. I can kill
(53:01):
a healthy person if I inject poison into their vein.
I can kill a healthy person by sucking the blood
out of their body. If the money's broken. All eight
billion people right have toxic capital. All three hundred million
companies have toxic capital. Every institution, every nonprofit, every government,
(53:24):
every city, every state, every idea. Everything you wish to
accomplish you need in part economic energy. You need energy
to accomplish it. What is electricity. It's clean silent energy,
clean silent energy. Take away the electricity. Look at everything
(53:45):
around you. We're in the dark. This podcast is not happening.
Clean silent energy. Catapult A created cities, It created Manhattan,
it created the modern world. What is bitcoin? It's clean, silent, programmable,
immortal money. Right. What's it worth? It's worth half of everything.
(54:09):
It's not worth the other half. It won't fly you,
and it won't carry your cancer, and it won't make
you happy, and it won't solve your mental issue. And
it won't make your children love you. It's not all that,
and it won't stop a bullet. Right. The world's full
of stuff, right, materials and vehicles and technologies and medicines
(54:30):
that do things. What is it? It's economic energy. It's
the other half. Right, it'll solve half the world's problem.
I give you energy that I give you a battery
that doesn't lose its power.
Speaker 1 (54:45):
You know that'd be nice because one of our camera
batteries stop tough.
Speaker 2 (54:49):
Wa Hey, I wear this watch. I don't have to
take it off. If you get an Apple watch, you
gotta recharge it every night. I get. What about a
battery that lasts forever? Right, I mean that's the problem
of nuclear fusion. Give me a power source I could
put in my pocket that will last forever. Now, imagine
how much better of the world is Bitcoin? Is digital energy?
(55:09):
If you want your company, your family, your endowment to
last forever. You have to capitalize it with an asset
which doesn't degrade at the rate of the rate of
the dollar is seven percent a year for one hundred years.
When you lose seven percent of your energy for one
hundred years, you lose ninety nine point nine percent of
(55:31):
whatever you are over one hundred years. And the only
alternative is you've got to be an investor. So now
you juggle razor blades. It's like, oh, I got to go,
like build something a warehouse and it will last for
thirty two years, and fight a tenant who's not going
to pay the rent, and then I get tax on it,
and then I got to go and talk to the
politician who created the tax, and I got to run
for office, And like, your world becomes just one of
misery because you're attempting to not lose your economic energy.
(55:56):
So yeah, I see bitcoin as a profound step forward
for the human race because for the first time economics,
you know, crosses from being an art to being a science.
For the first time, you have perfect money or a
perfect capital asset, non defective. Once you understand see the
(56:17):
steel behind you, I have steel vaults run into it.
Still there. Okay, they weigh two tons.
Speaker 3 (56:24):
I feel like I'm going a goal vault, a vault
in event.
Speaker 2 (56:27):
I happen to like metal? What is it? It's material energy.
You ever seen a steel refiner. You put a lot
of energy in the front, a lot of energy, an
outcome steel, And what's the significance? It will stop a bullet?
What else will it do? You can create a skyscraper
with it. If you build one hundred story building with steel,
(56:48):
it will withstand for a storm, it will withstand gravity.
You can stand on the ninety ninth floor. The floor
will not crash, you will not die. We can build
a civilization based on it. What did we do? We
built a civilization on steel. You know, the highest form
of material energy the human race could channel. Take the
(57:09):
steel away. I'm going to give you wood. Go to Nice,
Go to Europe. Look at the kind of buildings they
built before steel. They're all five stories max. You take
away the steel in electricity, right, those are two big ones.
Take away the electricity. You have no elevator. Take away steel.
The building falls over steel. Clean clean power, clean energy,
(57:35):
like almost clean adnerable energy. Can't even see it, clean
invisible energy. And then almost indestructible material energy. Put the
two together, and you build the modern world. And so
the problem, as I see it in the economic world
is we never had economic steel. We've had We've had
(57:58):
the equivalent of economic balsa wood, you know, economic clay.
We build clay houses and drink houses and straw houses,
and we build houses on swamps, you know. And the
Bible says, build your house on a rock, not sinking sand,
you know, build on a solid granite foundation. So what
(58:20):
is Manhattan? It is one hundred story steel buildings powered
by electricity on shist closest to granite you can find.
That's the recipe for civilization. Okay, that's what bitcoin is.
I'm a single guy. I have no children. When I'm gone,
(58:40):
I'm gone. I've got, you know, just like Satoshi left
a million bitcoin to the universe. So I'm leaving whatever
I've got to the civilization. But it occurs to me
that eight billion people with crypto steel or economic steel
can build something much grander in the twenty first cente
(59:01):
then all the twentieth century economists struggling with clay and
cotton candy.
Speaker 3 (59:07):
Thank you so much for your time.
Speaker 2 (59:08):
I really enjoyed this Michael, thank you, my pleasure,
The information provided in this program is of a general
nature and is not intended to be personalized financial advice.
We encourage you to seek appropriate advice from a qualified
professional to suit your individual circumstances. Micro Strategy executive chairman
and self described bitcoin maximalist Michael Saylor explains what it
may take for more companies and governments to follow his
Bitcoin adoption playbook.
Speaker 2 (00:21):
If you want to see the people with all the
money and the power in the world embrace the asset,
they will do it when their vendors support the asset.
And that's a rippling thing, right because until you have
the fair accounting, people can't see how intelligent the idea is.
(00:50):
I want to talk about the Bitcoin revolution.
Speaker 1 (00:53):
Sailor is bitcoin's biggest advocate, but he wasn't always this way.
In twenty thirteen, he tweeted that Bitcoin's days were numbered.
Speaker 3 (01:03):
Now he's out there encouraging.
Speaker 1 (01:04):
Other companies to spend their cash on Bitcoin, holding a
Bitcoin for corporations event to share his strategy.
Speaker 2 (01:11):
So bitcoin there is no second back.
Speaker 3 (01:16):
And many are adopting it.
Speaker 1 (01:18):
This year, bitcoin's total market surpassed one trillion US dollars,
as institutions drove an inflection point to coming.
Speaker 2 (01:26):
Out party for bitcoin.
Speaker 1 (01:28):
I think black Rock, Vanneck and other firms launched bitcoin
exchange traded funds in January this year, giving investors and
means to get exposure to bitcoin's price through the stock market.
Speaker 2 (01:40):
You do not sell your bitcoin.
Speaker 1 (01:44):
So what does Sailor think is Bitcoin's next big moment?
You are the biggest bitcoin bill I think in the
world easily right now.
Speaker 3 (01:51):
But you are a bull among a lot of bears
out there. Still.
Speaker 1 (01:55):
It even took you, what seven to eight years to
sort of convince yourself that bitcoin was something that you know,
you should convint your own balance cheet too, and obviously
now you're doing it. But how do you convince others,
the big tech players out there, the giants NISA, Google, Microsoft?
Speaker 3 (02:11):
How do you get them to flip? Like like Larry.
Speaker 2 (02:14):
I think, you have to make it easy and you
have to give people gateway products that they can use.
You have to give them bitcoin with guardrails. You have
to give them domestic bitcoin, not wild bitcoin.
Speaker 1 (02:32):
What is that? Well, it's domestic bitcoin versus wild bitcoin.
Is that like ibit versus on market and cold stores?
You know?
Speaker 2 (02:38):
Raw bitcoin? Is you buy bitcoin? You know, and your
self custody it, you know. And the next is you
buy bitcoin with a custodian, but more domesticated. A simple
domesticated bitcoin is ibit and FBTC. I buy it through
black Rock, right, and that's a lot easier to handle.
(02:59):
There's again we're back to nine hundred trillion dollars of capital.
Real estate investors they want to buy something that looks
like real estate, right, and bond investors want to buy
something that looks like a bond. And preferred stock wants
to buy something that looks like ford stock. And some
people want half the upside as a capital gain, but
(03:22):
they don't want the downside, so they got to buy
they got to buy something like a convert And options
traders they want to trade options. So when bitcoin bitcoin
first came out, there were none of these things. And
then for a while there was an entire crypto economy
that was created offshore, you know, too much colorful drama
(03:43):
and anxiety like the ftxs of the world, et cetera. Well,
those are unregulated crypto exchanges and conventional, traditional regulated investors
can't trade in that. And it's probably good they didn't, right,
because most of them failed. So what we're watching right
(04:04):
now since twenty twenty is the creation of the institutional
vehicles in order to invest in bitcoin. And you know,
I've got this saying. I say, everybody's against bitcoin before
they're for it, right, We're all against it until we're
for it. I was, you know, why are you against it?
(04:25):
It's like, well, why are you against electricity? In eighteen
eighty you know that. I'm sure the first guy with fire,
he scared a bunch of other tribesmen, and they're like,
you know what happens we get too coast to fire,
It burns you burned. No one wants to get burned. Right.
The idiom is no one wants to get burned. And
yet without fire, we're not better than the apes. And
(04:48):
then what happens when we play with electricity? We get shocked?
Who wants to get shocked? It's another idiom in the
English language, shock is bad, and yet without electricity, like
ninety percent ofmanity is dead.
Speaker 1 (05:02):
I love that the siren just went off in the background,
is it not?
Speaker 3 (05:05):
As you were talking about the shell?
Speaker 2 (05:08):
It happens, and so new technologies are scary, right. People
thought that if you got an automobile, more than ten
miles an hour, it would suck the oxygen out of
the cabin and you would suffocate.
Speaker 3 (05:19):
Can be good to the horse, right, Yeah?
Speaker 2 (05:21):
So so if you look at the great revolutions and energy, right,
fire was extracting energy from matter. You know, water was
extracting energy from gravity. Right, that's the big idea. There's gravity,
there's energy in this field. If I put water there
in a water clock and it comes down here, I
(05:41):
can turn a wheel with it, right, big idea. And
then when extracting energy from the atmosphere, and then the
steam engine is let's let's refine the entire idea and
move the you know, create an engine that takes that
energy and spends something so that kids don't don't have
to do it. Right, you know, the steam engine eliminates slavery.
(06:05):
It's a pretty good idea, right. And then after that,
you know gasoline and internal combustion engines, and then you
know what follows NAC's nuclear reactors and electricity and each
of these energy revolutions. It was a shocking, scary paradigm shift,
and for thirty years people rejected it, and they had
good reason because they're city burned down and their house
(06:27):
burned down and they got electrocuted, and my airplane fell
out of the sky. Right, it's like the and if
you study James Watt, he spent his entire life trying
to make steam engine work. Not easy, right, it's not easy.
Bitcoin's digital energy. So Toshi figured out a way to
both transfer and store, to basically store and channel energy
(06:51):
through cyberspace without an intermediary. That's a profound breakthrough because
that means I can put a billion dollars in cyberspace,
I can move it sixty times a second, i can
hold it for a million years, and I'm not facing
counterparty risks to a bank, a country, a currency, a corporation, right,
(07:12):
a culture, you know, a commodity manufacturer. And so that's
a profound idea. We're fifteen years into the innovation. We're
only four years into the you know, to the crazy years.
And really January twenty twenty four was really the beginning
of this error. Maybe this is year zero of institutional adoption.
(07:36):
When when we have regulatory acceptance, bank acceptance, and accounting
acceptance a bitcoin, those three planks, that's year one of adoption.
And when do you have that, Well, you kind of
got seventy five percent regulatory acceptance. Since we got these ETFs,
(07:57):
not all most, when we have ibit trading on the
options market, that's a big step forward. And when you
can do incin create and redemptions of the ETFs, you've
got full regulatory acceptance of the asset. Then January twenty
twenty five, fair value accounting becomes the norm, and now
(08:20):
you've got accounting acceptance, and now you can mark up
and mark down the asset just like applestock or just
like other assets. And then when you have two big
defail banks, when you have the B and Y Melons
of the world, or the JP Morgan's of the world,
the State streets of the world, they custody the bitcoin,
or they buy and they sell and they hold a bitcoin,
(08:42):
you'll love banking acceptance. And what are banks? Banks are
just institutions that are engineered to be custodians of financial assets.
So of course the greatest custodians of assets in the
world need to custody this asset. So we are we're
right in the middle of that. And I think maybe
(09:03):
twenty twenty five you can call year one of the
institutional error of digital capital, that thing which is bitcoin.
Speaker 1 (09:14):
I want to come to the banks because I'm very
keen to talk to you about how you see banks
as being key to unlocking that next phase. But just
on this corporatization and even perhaps government adoption, what do
you think is the fear other than just volatility? I mean,
is it fear of completely disrupting economic theory and monetary
policy as we know? It? Is that the fear that
(09:35):
these corporates and that governments hold.
Speaker 2 (09:38):
So I think the issue is not really with the
asset class. I think any conservative or any traditional investor,
if you're a high net worth individual, a family office,
if you're a successful corporation, if you're an agency, a government,
(09:58):
or any political entity, and I introduced new technology, you know,
like I say, I come to I come to the government.
I say, I got this electricity thing, and you don't
have any electricity in your building. Well, what they would
do is go to their contractor. They've got some contractor
that built the building, and they would say, can you
(10:19):
backfit or rewire our building for electricity? And the contractor
said that no, man, you know, because my competitors did
it and they got shut down and bankrupted, and my
other you know, another person did it in the building
burned down, So we're not going to do it for
a while. We're afraid, right, in that case, they would
they wouldn't just embrace electricity immediately. The equivalent of the
(10:42):
building contractor for bitcoin would be the bank. So when
your rich uncle, you know, gets asked about bitcoin, he's like, well,
I called my broker, I called my bank JP Morgan,
or I called the Standard Charter or wherever, and they
won't buy it for me yet they say it's too risky. Well,
(11:03):
I'm just going to hold off a bit. So if
you want, if you want to see the people with
all the money and the power in the world embrace
the asset, they will do it when their vendors support
the asset. And that's a rippling thing, right because until
(11:24):
you have the fair accounting, people can't see how intelligent
the idea is. The difference between fair accounting and indefinite
and tangible accounting for a big company is under fair accounting,
you would know within five seconds whether you had a
good quarter, oh we made like ten dollars a share.
Under indefinite account and definite and tangible accounting you would
(11:47):
have to read two hundred and fifty pages of documents
and create your own proprietary models and spend somewhere between
one and ten hours to figure out how you feel
about the quarter.
Speaker 1 (11:57):
And so the NINA wouldn't be that succinct. It wouldn't
they there to give you like a thig of it.
Speaker 2 (12:01):
You know, the seventy year old billionaire isn't going to
take ten hours. They can't even read the document, right,
and so we you know, you could get all intellectual
about this and say, oh, they've thought about it and
they don't like this and this and this. That's not
the case. It's if I call my broker and say
buy ten million dollars of this and they say you sure, boss,
(12:22):
click and it's done. Then you start to see adoption.
And when the company that adopted it announces that they
just made twice as much in their earnings for the
quarter as they used to because of it, it's like, well,
then buy more of that stock. And when the mayor
of Miami, or the mayor of New York City or
the governor of Texas says to his treasurer, I think
(12:43):
we ought to have some bitcoin, the treasure says, okay,
no problem, I'll let City Group or Bank of America
or Morgan Stanley know, and they'll do it, click and
it's done. Then you're adopting. But when the governor says
the treasure buy ten billion, and the Treasurer says there's
not a single bank in the US that will sell
that to us, it's like, well, I guess we're too early.
And it's the same thing with you putting an elevator
(13:05):
into your house, or electricity, or how about running water?
You know, why didn't people put running water in their house?
You know in eighteen eighty it's because it was like
you had to be rich, and it was expensive, and
one in one hundred people had it. And the guy
that's building your house didn't know how to do it.
He'd never done it before, you know. And so these
(13:28):
things get embraced as everybody in the society gets comfortable
with the new technology, and generally it's like a thirty
year generational shift. You know, in year one, no one's
doing it. You see those pictures of New York City
in nineteen oh five, no cars. Nineteen fifteen, everybody's got
a car. You know, it's like, well, what did it take?
(13:50):
You know, it took this exponential set of processes and
support for this to happen, and the same as going
on with bitcoin right now.
Speaker 3 (14:00):
I mentioned yield and Michael.
Speaker 1 (14:01):
Every single time I do an episode on bitcoin, there's
always somebody in the audience who sees, Yeah, but if
I buy it, then I earn no yield on it.
It's not a stock. I don't get paid dividends quarterly.
It's not a second property that I can rent out.
It's not money in the bank that I can earn
a savings yield on.
Speaker 3 (14:18):
So when or if?
Speaker 1 (14:20):
But I think from what you're saying there, when banks,
whether at JP Morgan City start adopting it and allowing
us to put our bitcoin in the bank, I've heard
you speak about this, what happens there and how a
bank's key to unlocking that next face.
Speaker 2 (14:34):
Yeah, let's say I give you ten acres in Manhattan.
There's a land. You buy the land. You can buy
the land in seventeen hundred, eighteen hundred, nineteen hundred, the
year two thousand. Is it worth something? You know? Would
you sell it to me for a penny if you
own it? No, it's worth something, right, But there's no yield.
(14:55):
It's rawland. There's no yield. We'll give it to me
for a penny. There's no well no, it's like Central Park,
but there's no yel right, okay, so what's what's the
solution to the problem. Well, you take the land and
you put a and you have a company, a real
estate developer, and the company builds a building on the
land or parking lot, right and and then they rent
(15:18):
it out and they generate the yield. And okay, so
do I like that or not? Well, this counterparty risk
I got. I'm buying a security. I'm buying a reate.
There's a company. The company might build a building, the
falls down, they might get a deadbeat, you know. So
the point is there's risk. So you want a reliable
company that you trust too big to fail to take
(15:41):
that risk and give you the yield. A bank, Well no,
micro strategy is doing it right now, right, Like we
just discussed BTC yield. So micro strategy takes the bitcoin
and then we do something. We actually find a way
to to uh to take out a loan, reinvest it
and generate a BTC yield. And the price you pay
(16:03):
is you take a risk with a security called mst R. Right,
So banks do it a different way. I mean, bank
will take your asset. You have a billion dollars of
something billion dollars of apple stock, and they may loan
it out to someone else, and they may get paid
a fee by the one person that wants to borrow it,
and they might pass it on to you, and they
(16:24):
might not, right, so sometimes they do. They'll definitely do
it with your treasuries or with your cash. Sometimes they don't,
depends on how you are. I think that banking is
just the next logical step. But in terms of how
am I going to get a yield on bitcoin, I'm
(16:47):
going to get a yield when a thousand companies and
the Russell two thousand buy bitcoin, operate their existing business,
sweep their cash lows into bitcoin, and do stuff whether
they develop business on top of it. Right, that's a
way to get a and I'll get a yield if
two big to fail banks that are well capitalized they
(17:07):
start to accept bitcoin as collateral, and probably you don't
get a huge yeld. By the way, if you think
about the metaphor, it's like when you own apple stock,
it's you know, oftentimes you don't get a yield by
loaning your Apple stock, but big corporations do. The big
investors actually get paid a small interest rate when they
(17:28):
own loan their stock to people that want to short
sell the stock, and so there is a market there
for that. But more likely the next stage is a
big bank accepts your bitcoin collateral alongside your Apple and
your Microsoft stock and your Treasury bills is collateral, and
they give you some advance ratio against it, and then
(17:50):
you can borrow at sofur plus some spread against it
because it's you know, no worse collateral than Apple stock,
as a block is, so you'll start to see the
formation of credit markets around bitcoin.
Speaker 1 (18:05):
Well, let's consider that within bitcoin's characteristics. And you've already
spoken about Satoshi, let's go back to the beginning. The
Bitcoin network was started by Satoshi Nakamoto on January third,
two thousand and nine. That Genesis block included this message,
(18:25):
a headline from the Times quote Chancellor on brink of
second bailout for banks. It was followed by this public
forum post in February oh nine, announcing a new peer
to peer e cash system called Bitcoin. To this day,
no one knows who Satoshi is, but the network he,
her or they built has been operating for fifteen years
(18:49):
and two hundred and eighty nine days when we release
this video with almost one hundred percent reliability. The network
has gone down twice in its history, in twenty ten
due to a bug and twenty thirteen due to a fork,
and the chain both were fixed within hours. So tooci's
creation wasn't the first attempt at a currency native to
(19:09):
the Internet, but it's clearly the most successful due to
its design that has no central point of failure. From
the beginning, sotoshi didn't allocate any initial supply to themselves.
For the first year and a half, bitcoin wasn't worth
anything except the cost of running a computer to mine it.
To create bitcoin, miners are required to solve mathematical problems
(19:32):
to add a block to the chain. That proof of
work is then verified by all nodes on the network.
The work required to mind bitcoin can change due to
what's called the difficulty adjustment and the reward earned by miners.
Hearts every four years, meaning bitcoin has a predictable decreasing
inflation rate as it becomes more scarce over time. Bitcoin's
(19:57):
total supply is cat only twenty one million bitcoin can
ever be mined, Unlike fiat currency that can be printed
by authorities. At the time I was making this video,
bitcoin supply was at ninety four point eleven percent. That's
more than nineteen million bitcoin in existence. The currency is
fully decentralized, meaning there's no authority or state that oversees it,
(20:22):
unlike the US dollar, which is controlled by the Federal
Reserve and is a system based entirely on trust. But
if sailor wants banks to hold bitcoin, does that put
it at risk of becoming more centralized exactly what its
support is?
Speaker 3 (20:37):
Wouldn't want it to be.
Speaker 1 (20:40):
If there is more bitcoin bitcoins hold with these third
party custodiums, what risk does that pose? Having greater supply
held by fewer large institutions. Does that increase the risk
of seizure and confiscation like we've seen with gold? And
(21:00):
is that not exactly what the coin is don't want
to happen now.
Speaker 2 (21:03):
I think it's the opposite. I think that when the
bitcoin is held by a bunch of crypto anarchists who
aren't regulated entities, who don't acknowledge government, or don't acknowledge taxes,
or don't acknowledge reporting requirements, that increases the risk of seizure.
(21:24):
If you know, if a country in desperation, if China
knew that there were underground crypto traders with billions of
dollars of bitcoin in their midst that didn't pay taxes,
the Chinese would probably try to shut that down, and
that's what they do. So normally, the risk is greater
(21:45):
when they are unregulated private entities that are perceived to
be holding the asset. When you have regulated public entities
like black Rock and Fidelity and JP Morgan and State
Street Bank holding the asset, well, all the lawmakers and
all the law enforcement arms, they're invested in those entities, right,
(22:08):
So there's no way that all the senators and all
the congressmen are going to seize the assets from Fidelity
in black Rock or Vanguard because that's where all their
retirement money is invested. So the asset moving from private
to public hands and moving into regulated entities, it does
(22:30):
a bunch of things. It decreases the volatility, it decreases
the risk of loss, It decreases their like who do
you trust more as a custodian FTX or Fidelity right
or Vanguard or State Street right? And if you walk
down the street and you said, you know, would you
put all your family's money in offshore entity without a
(22:54):
headquarters run by five dudes without an auditor, or would
you put it with a bank that's too big to
fail in the US? Right, Like, at the end of
the day, you have an og crypto community is very
hardcore about it. But if you look at where all
the money is, ninety nine point nine percent of the
money is actually in the traditional economy and in the
(23:17):
war for the future of money. The war's going to
be won with money, right, I mean, right at the
end of the day, bitcoin is capital. Who's going to
actually decide who's the winner or the loser the people
with the capitol, And so where's the capital. It's a Vanguard, Fidelity,
State Street, JP, Morgan, Morgan, Stanley. They're all regulated entities
(23:39):
of sorts. So when bitcoin is held by those entities,
it becomes regular and normal. And you know, people would
no more think about seizing that than they think about
seizing a building in the middle of Manhattan or seizing
you know, the you know, the S and P spider assets.
(23:59):
It's why why would you do that? That's just the
capital that you built the country on.
Speaker 1 (24:04):
Well, if you ask why would you do that if
you consider the Great Depression. I mean, people thought that
the gold was safe and banks until the Executive Order
of nineteen thirty three.
Speaker 3 (24:11):
So we're not entirely safe.
Speaker 1 (24:13):
I mean to know, that's kind of a wild thing
to suggesce may happen again, but history does repeat itself.
Speaker 3 (24:18):
So yeah, was bitcoin wouldn't be entirely safe.
Speaker 2 (24:20):
People say that, but mostly it's mostly it's paranoid crypto
anarchists that say that. Okay, because it's a myth and
a trope that goes on over and over again. But
first of all, he didn't really seize the gold. People
voluntarily turned in the goal. They didn't go and kick
in everybody's door, arrest them, shoot them, and take their goal.
(24:42):
That never happened. First of all, hey, that's for it.
Second of all, he didn't seize all the property. He
didn't go seize all the buildings owned by wealthy people
in New York. He didn't seize all the stock portfolios
of wealthy people in New York. Right, gold was the
monetary asset backing the dollar. The dollar was literally twenty dollars,
(25:06):
you know, to the ounce of gold. Right, and so
the problem was the country was on the gold standard,
and Franklin Dollan Roosevelt wanted to devalue the dollar. He
wanted to de devalue the currency. He wanted to print
more dollars, and so they had to actually do something
so they could devalue the dollar. And the way they
(25:28):
did it was put that executive order in place, and
then they revalued the dollar to thirty four dollars per ounce,
a devaluation. And and now you have to ask yourself,
the question, is the United States on the bitcoin standard?
Now we will be, but the point, but the point
really is we're not right. It's totally not a reasonable comparison.
(25:53):
Franklin Dollan and Roosevelt didn't seize every car and every watch,
and you know, and every piece of real estate and
every piece of equity in the United States because we
weren't on the equity standard or the property standard, or
the or the chicken in every pot standard, or the
grassy lawn standard or the lawn mout standard. We were
on the goal standard, and he wanted to devalue on
(26:16):
the goal standard. And so today we're not on the
goal standard, we're not on the Bitcoin standard. The US
government has no problem printing money. They can print as
much as they want. And in fact, every government on Earth,
all of them, they're either on their own standard or
they're on the dollar standard. So in this particular case,
(26:40):
I don't think we have to worry about, you know,
bitcoin held in custody being seized by the government anymore
than you have to worry about your apple stock being
seized by the government, because the government doesn't need to
devalue the dollar against apple stock to print more dollars either.
So it's not really an issue. It's oftentimes it's you know,
(27:03):
people have these inflammatory you know, tropes or inflammatory memes
that they use and it's like I say that because
I want you to give me your money, Okay, Like
I want if you don't trust the bank, then you'll
buy my hardware wallet. If you don't trust this government,
(27:25):
you'll move to my country and you'll buy a passport
from me. So if you don't trust that company, you'll
sell that stock and buy the other stock. So there's
a lot of a lot of this kind of of
messaging and ideas that they're very inflammatory and they're meant
to actually stampede people into some behavior whatever, which is
(27:49):
financially beneficial, Like, like, you can't make your own investment decisions.
Investing is very hard. You should give me your money.
I'll make the decisions for you. I'm going to charge
you two percent fee and twenty percent of the upside.
It's like, well, what should I do about hyperfection? Well,
you need to invest in a diversified portfolio of global
alternative assets across one hundred and fifty two different asset
(28:11):
classes and revalue every quarter. Oh I can't do that. Okay,
that's okay, give me your money, girly, I'll do it
for you. Right. That's the kind of fear mongering to
get you to give me your money, right, And I
use it to sell you a gun, to sell you
a hardware walllet, to sell you an account, to sell
you a financial advisor, to sell you an insurance policy,
(28:35):
to sell you a you know, fill in the blank, right,
whatever it might be. And ultimately, I think that there's
just a lot of fear that's unnecessary. The bigger idea
is Bitcoin is digital capital. It's a million times smarter,
a million times faster, a million times stronger, a million
(28:56):
times more elegant than analyog capital, physical capital. And financial capital,
and it's simply a technology transformation. It's like, don't store it.
Don't take ten thousand records and haul them around with
you in ten thousand books whenever you travel, take the
(29:16):
iPad with ten thousand books on it, and take the
iPhone with ten million songs on it when you travel. Right,
it's like, blah blah blah. But the phone will eat
me and it's listening to me, and it will steal
my identity and kill me. It's like, it's just a
computer with some digital files on it, right, And so
that's the digital transformation of capital, and that's what bitcoin represents.
Speaker 1 (29:40):
So on digital money being tell me if this is
a legitimate fear or not. Quantum computing it apparently is
going to have the ability to solve multiple more complex
mathematical mathematical equations all at once. Does that pose a
legitimate risk to the bitcoin network or are you confident
that developers will come up with some kind of quantum resistance.
Speaker 2 (30:01):
No, it's it's just another fear mongering, end of the
world scam narrative that people use to sell stuff, and
in this case quantum computing, the fear is used to
sell the next alt coin. I have a quantum resistant
token and quantum computing. Who's going to destroy your token?
So give me your billion dollars and give it to
me and make me rich because maybe an asteroid will
(30:24):
hit the earth. I have an asteroid bunker. Give me
your billion dollars and I will give you my asteroid bunker.
You're going to die of pneumonia. Give me your money,
and I'm going to give you a vaccine. Right, You're
gonna you know, it's just fear mongering. Quantum computing is
a if you take the general theme, it's like, oh,
computers are going to get better over time, and as
(30:47):
they get better, maybe they'll get really good and they'll
be able to hack systems. And what's your response, Well,
I guess I just shouldn't use it. I shouldn't invest
in Apple or Google or Facebook, or I shouldn't have
money in a bank, and I shouldn't use a computer
because uters might get hacked. Huh I guess I okay,
So give up everything in your life that has the
computer in it, right, including the podcast that you're running
(31:10):
right now. Give it all up because one day quantic
computers run by doctor Evil will hack the thing. Okay, well,
I mean the answer is it's silly. Of course, computers
will get better, and as the computers get better, we
will adopt the better computers to defend the network. The
Bitcoin network used to generate hashes one thousand jewels per
Terra hash. It took a thousand jewels to generate a
(31:32):
Tarra hash, and then it was five hundred, and then
it was one hundred, and then it was fifty, and
it was thirty, and it's fifteen, and the next will
be five, and there'll be one. And doesn't take a
rocket scientist to figure out that computers get better, semiconductors
get better, the network gets more secure. It's like, but, but,
but but what if someone invents something that's better than
(31:53):
the better thing? Well, well, we spend ten billion a
year to keep upgrading our thing. And you think that
doctor evil like me in the basement with no money
is going to come up with the quantum computer that's
going to be better than the ten billion dollars we
spend for the last every year for the last decades.
So yeah, if a teenage kid with fifty bucks in
(32:14):
a rubber band comes up with something better than one
hundred billion, dollars of semiconductor or investment. Then in theory,
they could hack our network. But why wouldn't you just
hack x and the Colere nuclear war on someone and
like short the market and make ten billion dollars by
hacking the president's account. But I mean, the point is
(32:35):
it's all illegal. But my point is it's a billion
times easier to just hack the bank or hack the
communication network and make money than it is to hack bitcoin.
Bitcoin is the most cyber resistant, the most powerful digital
network on earth. It's the hardest thing to hack. So
(32:56):
when someone pitches quantum computing, it's normally it to degenerate
twenty something crypto trader that wants you to buy his
yo yo quantum coin and make him rich because he's
got a yo yo quantum algorithm. And I just shake
my head because I think, who could be so stupid
to fall for this kind of alarmism. It's ridiculous and
(33:19):
a waste of time. But having said it all, the
generic statesmanlike answer is technology will advance. Bitcoin is the
best most profitable use of computer power. In order to
protect money. If technology advances, you got to believe that
the people most incentivized to use the technology will be
(33:39):
the one with the trillions of dollars of money to
protect it will go there first. All those advances will
be first implemented into the bitcoin network to defend the network.
They won't be used by teenage boys to attack the network.
By teenage boys would rather hack Twitter. It'd be cool.
We're just going to go. But it's been done. It's
(34:00):
been done again. It's very simple to do. It's a
billion times easier to do to hack these communication networks.
And so that's where your threat will come.
Speaker 1 (34:11):
To sum this all up, and I would love you
to give again a non statesman like answer to bisman Michael,
but can you give us your bitcoin superiority complex about
the asset and can you weaven some of what you
spoke about earlier about government's printing money And if you
consider the economic cycle that we've been through over the
past four years, while you've been accumulating bitcoin like crazy,
(34:34):
how is that and your mind increased its superiority, So.
Speaker 2 (34:39):
You know, a short summary, why is bitcoin better? First
of all, if I had one hundred rich families and
they lived all over the world, and they didn't trust
a government, and they didn't trust a bank, and they
didn't trust a corporation, and they had a lot of money,
and they wanted to keep their money for one thousand years.
(35:00):
If God came down from heaven above and said, hey,
I'll run the God Bank, issue twenty one million god coin,
and I will make sure that no one can steal
your god coins. You can buy in however you want,
and you can trade telepathically with each other, and I'll
do this for free, they'd probably accept that. Right. The
history of the human race is people looking to heaven
(35:21):
to solve their problems in every religion. Okay, in the
absence of god coin and God coming down to do this,
the next best thing would be an intelligent engineer that
creates a crypto network to combine semiconductor technology, public private
key encryption and the Internet TCPIP. Okay, that's a crypto coin.
(35:47):
So now we create a crypto coin, and the question
is who's going to run the software because nobody trusts anybody.
And maybe I trust you and you trust me, but
I don't trust your idiot great grandson had them yet.
I mean, how could we trust your great great grandchild. Okay,
so we're all going to run the software and We're
(36:07):
going to run it on thousands and hundreds of thousands
of nodes, and anybody whose software cheats gets kicked off
the network. Okay, that's the idea of bitcoin. It's basically
a crypto asset network. Now the question is, okay, I
figured that out. Now what kind of monetary policy I want?
I want twenty one million hard cap forever, never can
(36:28):
make anymore. I want a scarcity. I don't want anybody
can make nobody can make anymore. Okay, that's good. Now
the question is, okay I did that, Now, which network
is going to win? So we launched Bitcoin as as
the fortieth try and the first one with the right
monetary policy, the right cryptography, and an equitable launch. So
(36:52):
so she launches it, walks away forever, disclaims beneficial ownership.
It's an immaculate conception. Okay, what if somebody else launched
another crypto network with an immaculate conception. You know, there's
been five million cryptos launched. Most of them are not
immaculately conceived. Some of them still have the founding teams
(37:14):
that are getting rich off of them. When there's a
founding team getting rich off of them with a jet
and with an office with a mansion, it doesn't look immaculate.
There's no Satoshi in a swimming pool, flying as jet
around as a billionaire.
Speaker 1 (37:28):
Right, that's the one is we don't know, We don't
know why.
Speaker 2 (37:31):
And the point is we absolutely know there isn't because
the coins have not moved in fifteen years and we
can see them. So now the question is you've got
all these smart families and they're staring at the crypto
gold network if you will, or goal's not even a
good example, just a crypto bank, and the question is
which network is the best one. Well, we sort through
(37:52):
it and we try bitcoin and it kind of works
for a while, and then we trust it. More money
gets onto it, you know, and for a while we're
not sure, and then twenty twenty, some crazy entrepreneur buys
two hundred fifty million dollars of it for a public
company and that's the first time in you know, ten years,
anybody ever bought a quarter billion dollars on the network,
(38:13):
and people are like, oh my god. Yeah, and then
that same person buys another nine point seven billion dollars
of it, and so we.
Speaker 3 (38:21):
Buy it me crazy, my gosh.
Speaker 2 (38:23):
Okay, So in that time where there's one company, micro Strategy,
buying ten billion dollars of that asset. It's not a
single person ever publicly spent two hundred and fifty million
on any other crypto asset ever. Of the five million,
nobody even put in the first two hundred and fifty million.
Nobody put in one hundred million. Right, go find it,
(38:44):
you won't find it. So now you have an interesting issue,
which is why is bitcoin the winner? It's because all
the smart money in the world decided that's the winner.
Did it have to be? Well, now it's like, why
do we speak English? Because all the rich, powerful people
decided on English. Could it have been a different language.
It could have been French. Napoleon wanted it to be French,
(39:05):
but it wasn't French. It was English. Why do we
use base ten math because all of the rich, powerful
engineering companies use it? Is it the only form of math? No,
there's base two, base eight, base sixteen, right with mement
Why yeah, you know we have the big joke about
the metric system. Right, we're still trying to work through
that protocol. So bitcoin is the protocol that the rich,
(39:28):
powerful smart people chose. Okay, so you can fork it
and create your own, and you will have to find
stupid poor people to buy yours. But why would I
actually want to put all my money in the network
with the stupid poor people when I've already got the
network with the smart rich people. Right. And the result
(39:50):
of that is Bitcoin is the most powerful crypto network
in the world. And you can measure it by a
computer power seven hundred x a hash. That's forty billion
dollars of special purpose semiconductors that generate more hashes than
all the computer power of Microsoft, all the computer power
of Amazon, all the computer power of Meta. If they
(40:11):
all ganged up on it, they still can't get to
seven hundred x hash. It's the most powerful computer network.
Then it has eighteen gigawatts eighteen gigawats of electric power.
That's the most powerful electrically powerful network. Eighteen gigawats is
more power than the US Navy users to run all
the aircraft carriers and the destroyers and the battleships. Wow,
(40:34):
we conquered the world with less than eighteen gigawatts of power.
It's eighteen full on nuclear reactors running full on right
spread everywhere in the world. Okay, how does that compare
it to the second pest. The second pest has zero
point one percent that much power one yeah, you know,
how about the hash rate one percent maybe? And then
(40:58):
eight hundred billion dollars of actual capital. Micro Strategy spent
ten billion to get one point two percent. Work it
out in your head. Look at the four year simple
moving average of bitcoin multiplied by the number of bitcoin.
Look at the trading volume. Look at real people, thousands
of institutional investors with real money at risk, the bitcoin minors,
(41:21):
the black Rocks, et cetera. Right, like seventy billion, sixty
billion dollars put into just the ETFs alone real money. Right,
eight hundred billion in capital has backed the network. So
what's the second best. The second best doesn't even have
eight like ninety nine percent of the real money went
(41:41):
into the bitcoin. Now, everything else you read about in crypto, right,
all the other crypto assets that might be a store
of value. I'm not counting the stable coins because they're
just dollar pegged, but everything else probably doesn't even have
eight billion. It might have a few billion dollars, right,
So it's like ninety nine to ninety nine point nine
(42:02):
percent dominant. And then you go to the political power. Well,
there's four hundred and twenty million crypto people that love crypto,
But what's the reserve asset of crypto bitcoin? Four and
twenty million voters and then two hundred million people that
hold an instrument back by bitcoin. So what's the source
(42:23):
of the network? Political power, electrical power, digital computer power,
economic power? Right, that's you know, that's the source of
power of the network. It's like, well, why should I
buy that? Well, once you understand that it's the dominant
crypto network, now the issue is, well why should I
(42:43):
buy bitcoin instead of gold? Well, the goal supply is
going to double every thirty years, and you can't teleport
goal sixty times a second, and the AI is not
going to want the goal, right, and you can't put
gold on your iPhone? Right, Goals not digital. If you
have one hundred million dollars and you put it into
gold and you wait one hundred years, you'll have twelve
(43:03):
million dollars worth of goal. That's why I don't want goal.
Mayf you have one hundred million dollars a bitcoin and
you hold it one hundred years, you'll still have one
hundred million dollars worth of bitcoin. Right, So gold is
gold is the best of the commodities, but it's awful
because it's got a two percent inflation rate. What's the
difference between two percent inflation rate and zero percent inflation rate.
It's the difference between living thirty years and living forever.
(43:27):
Like one is mortal. Okay, here's your choice. Take the
orange pill, you live forever. Take the gold pill, you live.
You're half dead. In thirty years, you're half dead. You're
gonna live seventy five eighty and you're dead. Right. This
is a mortal life. This is immortal life. That's differently
in zero and two percent. Gold is the greatest of
the commodities. Every other commodity inflates a ten percent a year,
(43:49):
twenty percent a year, fifty percent a year. They're awful.
Commodities are awful stores of value. Well, what are they
good at. Here's what they're good at. Commodities are ethically sound. Okay.
That means they're an asset without an issuer. You can
promote gold or a chicken in every pot, or a
land or silver, or you can promote soybeans. You can
(44:11):
tell people to keep kerosene behind their house. Those are
commodities you cannot promote a security. A security is an
asset with an issuer. If a senator says, god bless apple,
she's promoting a security. If a senator says, god bless bitcoin,
they're promoting a commodity. It's like promoting bluegrass music, is
(44:33):
like promoting fasting. It's simply a cultural or a technical idea.
So what do you want as your long term store value?
You want something economically sound. That means absolutely zero inflation
rate forever and nobody can screw with that. You want
(44:54):
something ethically sound now, that means an asset without an
issuer or where the inv enter Prometheus disappeared. You own fire,
you know electricity. You can use it. The English language
you can use it. Math you can use it. Bitcoin
you can use it. There's no company with the copyright,
the charges you are royalty. Right. It needs to be
(45:16):
ethically sound, needs to be a commodity, right, and finally
it needs to be technically sound, you know, good engineering,
and so yeah, a building is sort of it's sort
of economically sound, not as good as bitcoin, because you've
got property taxes and an entropy you know, and happen
(45:41):
and a share of magnificent seven. It's kind of economically sound,
but it's a security And if the Chinese decided to
seize Apple's assets or the US sees as a Chinese
company's assets, you know you've got all sorts of political risk.
But bitcoin is both the econ economically sound asset anestheethically
(46:03):
sound asset. But it's a big tech digital network. It
means that I can move one hundred billion dollars a
million times a second. Okay, So the big idea is
I can give a capital asset to eight billion people
on their mobile phone, and ten million computers can trade
(46:25):
it a million times an hour across every jurisdiction. Right.
And so if you want to give music to eight
billion people, you need digital music. You can't do it
with records and eight tract tapes. And if you want
to give digital communications, right, you want to give education
to eight billion people, you need digital education. You need
(46:47):
to give them lectures for free for the cost of electrons.
And if you want to give wealth to eight billion people,
you need digital capital. You need to put your wealth
on your iPhone and you need to know that it
will last forever. And I just ask anybody, I ask you,
what do you own in your life that you think
your family will still have intact that will be valuable
(47:11):
three hundred years from now. What would that be, right,
Because there's no conventional thing. There's no company that's going
to last three hundred years. Right. They might not live
in New Zealand three hundre years from now. I could
give you ten thousand acres in Auckland. And the issue is,
so can you take it with you when the government
(47:32):
changes and they decide to seize the assets of people
with blue eyes? Right? Because happens if you look at
the history of the twentieth century and you're like, what
country didn't seize the assets of somebody over one hundred years? Right,
It's like you had one country, the United States, that
(47:54):
won every war, and yet that country's currency lost ninety
nine point nine percent of its value against scarce assets.
That's the winner. The winner gives you one tenth of
a percent of your wealth all you know, the rest
is all just anxiety inducing counterparty risk.
Speaker 1 (48:14):
Well, I'll tell you what does lebone is a legacy
and you mentioned mortality, but sadly, neither you nor I
am going to live forever. It's a bit of a
personal question and a cynic may say that you do
this because you have something to financially gain. But I
feel like, after this conversation, the effort that you put in,
the generosity with your time, why do you bother educating
(48:36):
everyone on this and talking about.
Speaker 2 (48:38):
The you know, I mean even if you take a
guy like Jack Dorsey and he asked about Beitquin, he said,
I didn't do it for the money. I did it
to fix the money. The legacy is the English language, electricity, fire, fission, fusion, engineering, right, telecommunications, right, mathematics,
(49:02):
all of these things. And what's the legacy here. It's
a monetary protocol, which is true. Right. The history of
the human race, if you look at it, it's fraught
with people dying from dirty water, dirty air, dirty clothes,
dirty environments, you know, dirty everything. Right, It's like dirty
(49:29):
dirty blood, and you know overcoming that with electricity and
clean water. Right. Just the joke is like a poor
person sits down at a table and they put a
glass of tap water in front of them, and that's
what you drink if you have no money. If you
have money, you buy a coke zero, or if you
have a lot of money, you buy a thousand dollars
(49:50):
bottle of wine, but the poor person drinks the glass
of water. And you know, I just finished reading again
The Story of Civilization by Will Durant. It's like whatever,
you know, the books are all over there. It's eleven volumes,
it's fifteen thousand pages. You read it all eleven volumes
beginning to the end. And there's thousand stories of famous
(50:12):
people that died of gout because they didn't drink water.
They drank wine because the water had bacteria in it
and cholera, and you died of infection if you drank
full water. If you were the king of England, you
couldn't get clean water. Then the rest of them died
because they walked past the swamp, got bit by a
(50:33):
mosquito and they you know, they didn't have any cure
for a malaria, they had no modern medicine. Or they
died of tuberculosis because there's no penicillin or there's no
antibiotics you know, to treat it. And so today, right,
it's like, what's your legacy. It's like clean the air,
(50:55):
clean the water. What kills the patient? It's dirty food,
dirty winter, dirty air. Right, how do we kill George Washington?
We bled him to death. We bled him to death, right,
that's why he died. And so what's killing every corporation
on earth? It's dirty money, dirty capital. To be precise,
(51:17):
the asset that every publicly traded company fifty thousand companies
use is sovereign debt. Sovereign debt yields three percent after
tax at best two percent, the cost of capitals thirteen percent.
It's a negative real yield of minus ten percent. It
means that you hold a billion dollars, you lose one
hundred million a year holding the money. It's like forcible
(51:39):
chemo therapy for your healthy fourteen year old teenager. Or
it's like strapping the twelve year old kid down and
taking two points of their blood every day and sending
them off the track. Practice the very mobid metiful.
Speaker 3 (51:51):
But I'm picking out what you're putting down.
Speaker 2 (51:54):
The point is it's medieval. But at the end of
the day, that's the scourge, the burden of humanity that
they've been hauling for thousands of years. And so when
you ask what is human progress, what elevated the civilization?
You know it's technology and it you know a lot
(52:15):
of painters they went blind because a middle class family
can afford one candle. Look around you, right, Each one
of those is one middle class family of light, clean light,
clean water, heat, air conditioning, electricity, energy, clean blood, antibiotics, right,
(52:38):
a language you can speak. Right. All of these things
are defined modernity. So what is my agenda? My agendas
fixed the money because the fifty thousand companies have a
life expectancy of ten years. You know why you die
in ten years when you could live forever. It's because
you have toxic chemicals in your vein. I can kill
(53:01):
a healthy person if I inject poison into their vein.
I can kill a healthy person by sucking the blood
out of their body. If the money's broken. All eight
billion people right have toxic capital. All three hundred million
companies have toxic capital. Every institution, every nonprofit, every government,
(53:24):
every city, every state, every idea. Everything you wish to
accomplish you need in part economic energy. You need energy
to accomplish it. What is electricity. It's clean silent energy,
clean silent energy. Take away the electricity. Look at everything
(53:45):
around you. We're in the dark. This podcast is not happening.
Clean silent energy. Catapult A created cities, It created Manhattan,
it created the modern world. What is bitcoin? It's clean, silent, programmable,
immortal money. Right. What's it worth? It's worth half of everything.
(54:09):
It's not worth the other half. It won't fly you,
and it won't carry your cancer, and it won't make
you happy, and it won't solve your mental issue. And
it won't make your children love you. It's not all that,
and it won't stop a bullet. Right. The world's full
of stuff, right, materials and vehicles and technologies and medicines
(54:30):
that do things. What is it? It's economic energy. It's
the other half. Right, it'll solve half the world's problem.
I give you energy that I give you a battery
that doesn't lose its power.
Speaker 1 (54:45):
You know that'd be nice because one of our camera
batteries stop tough.
Speaker 2 (54:49):
Wa Hey, I wear this watch. I don't have to
take it off. If you get an Apple watch, you
gotta recharge it every night. I get. What about a
battery that lasts forever? Right, I mean that's the problem
of nuclear fusion. Give me a power source I could
put in my pocket that will last forever. Now, imagine
how much better of the world is Bitcoin? Is digital energy?
(55:09):
If you want your company, your family, your endowment to
last forever. You have to capitalize it with an asset
which doesn't degrade at the rate of the rate of
the dollar is seven percent a year for one hundred years.
When you lose seven percent of your energy for one
hundred years, you lose ninety nine point nine percent of
(55:31):
whatever you are over one hundred years. And the only
alternative is you've got to be an investor. So now
you juggle razor blades. It's like, oh, I got to go,
like build something a warehouse and it will last for
thirty two years, and fight a tenant who's not going
to pay the rent, and then I get tax on it,
and then I got to go and talk to the
politician who created the tax, and I got to run
for office, And like, your world becomes just one of
misery because you're attempting to not lose your economic energy.
(55:56):
So yeah, I see bitcoin as a profound step forward
for the human race because for the first time economics,
you know, crosses from being an art to being a science.
For the first time, you have perfect money or a
perfect capital asset, non defective. Once you understand see the
(56:17):
steel behind you, I have steel vaults run into it.
Still there. Okay, they weigh two tons.
Speaker 3 (56:24):
I feel like I'm going a goal vault, a vault
in event.
Speaker 2 (56:27):
I happen to like metal? What is it? It's material energy.
You ever seen a steel refiner. You put a lot
of energy in the front, a lot of energy, an
outcome steel, And what's the significance? It will stop a bullet?
What else will it do? You can create a skyscraper
with it. If you build one hundred story building with steel,
(56:48):
it will withstand for a storm, it will withstand gravity.
You can stand on the ninety ninth floor. The floor
will not crash, you will not die. We can build
a civilization based on it. What did we do? We
built a civilization on steel. You know, the highest form
of material energy the human race could channel. Take the
(57:09):
steel away. I'm going to give you wood. Go to Nice,
Go to Europe. Look at the kind of buildings they
built before steel. They're all five stories max. You take
away the steel in electricity, right, those are two big ones.
Take away the electricity. You have no elevator. Take away steel.
The building falls over steel. Clean clean power, clean energy,
(57:35):
like almost clean adnerable energy. Can't even see it, clean
invisible energy. And then almost indestructible material energy. Put the
two together, and you build the modern world. And so
the problem, as I see it in the economic world
is we never had economic steel. We've had We've had
(57:58):
the equivalent of economic balsa wood, you know, economic clay.
We build clay houses and drink houses and straw houses,
and we build houses on swamps, you know. And the
Bible says, build your house on a rock, not sinking sand,
you know, build on a solid granite foundation. So what
(58:20):
is Manhattan? It is one hundred story steel buildings powered
by electricity on shist closest to granite you can find.
That's the recipe for civilization. Okay, that's what bitcoin is.
I'm a single guy. I have no children. When I'm gone,
(58:40):
I'm gone. I've got, you know, just like Satoshi left
a million bitcoin to the universe. So I'm leaving whatever
I've got to the civilization. But it occurs to me
that eight billion people with crypto steel or economic steel
can build something much grander in the twenty first cente
(59:01):
then all the twentieth century economists struggling with clay and
cotton candy.
Speaker 3 (59:07):
Thank you so much for your time.
Speaker 2 (59:08):
I really enjoyed this Michael, thank you, my pleasure,
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