Kind: captions
Language: en
Michael sailor welcome back to the
show happy to be
here it is very good to have you now at
the time of recording Bitcoin is over
100k and has been for quite a while at
this point so I think the question of is
Bitcoin real is dead uh but now the
question becomes how does Bitcoin go
from where we're at at a little over
100k to the 13 million a coin that you
consider the base
case yeah I think I've always said
it's either something or it's nothing if
it's if it's embraced as an
Institutional asset if it's legitimized
as an asset then it's not going to zero
and if it's not going to zero it's going
to a million and I think the the short
answer to your question is
education and with education comes
adoption and at this point you just have
95% of the world that still doesn't
quite understand what it
is and that means I mean the way Bitcoin
marches from 100,000 to 13 million and
and by that's for your listeners you're
referring to my long-term forecast I
gave that forecast in Nashville in July
of this year and is based upon the
Bitcoin 24 model so the Bitcoin 24 model
is an open- Source macro model of
Bitcoin adoption and macroeconomic
development over the next 21 years
anybody can go to uh Google and they can
Google Bitcoin 24 they'll find it on
GitHub you can download that model you
can plug in all your own assumptions and
you can check uh what we uh what we
thought but my forecast is Bitcoin in
essence it it's growing 60% a
year uh for quite a while now and I'm
forecasting it will decelerate to 20% a
year over 21 years but that means on
average it grows about 29% a year ARR
and that 29% a year for 21 years gets
you to 13 million of coin and so what do
I expect to
happen well I expect um lots of high nut
worth individuals uh that previously
thought it's too risky or it's too
scary they see it legit IED by Black
Rock now black rock is giving guidance
that you could have 2% of your portfolio
in Bitcoin and they're seeing the ETFs
like ibit and they're noticing that this
these are the most successful ETFs in
the history of the world and black rock
has got the most successful e ETF ever
launched and now they're seeing the
world's largest money manager Black Rock
with more than 11 trillion dollars of
money managed they're seeing them
publish uh scholarly thoughtful
responsible white papers on portfolio
allocation and instead of the 6040 model
uh with 60% equity and 40% bonds now
you've got 2% that they're saying you
might want to put into a crypto asset
like Bitcoin so I think that you've got
uh that group of people that are finding
it I also think you've got institutional
investors that are moving into Bitcoin
more frequently now a lot of them are
big investors in micro strategy a lot of
them trade micro strategy options um and
uh they have Micro strategy been the
most successful stock in the S&P index
we're not in the S&P but we're more
successful than all 500 S&P companies
for the past five four years I think
this year too so we're getting the
attention of mainstream
investors and and that's bringing a set
of new investors to the asset class
because when they buy our stock we buy
Bitcoin with it I think the third uh
driver is a bunch of Bitcoin standard
companies a lot of companies are
recapitalizing their balance sheets on
bitcoin micro strategy was the
first but mea has done it m and Riot
just announced they doing it R
IO and uh the most successful company in
the Japanese stock market this year is
metap planet and they just did did it
and similar scientific just did it and
they tripled their stock in very short
order so you've got like a half dozen
companies that are recapitalizing to the
Bitcoin standard um but you've got 60
companies that have Bitcoin and there's
a lot of companies that are getting more
heavily involved I think recent oh
recently Hut 8 announced hut
hut and then um Rumble rum and so a
bunch of public companies that are kind
of uh they're innovators and they're
they've got fairly open- mind and
they're flexible and the really
important thing about that Tom is when a
public company adopts Bitcoin they start
sweeping their cash flows into it but
then after that they may start issuing
equity and then after that they can
borrow money so um uh Riot just this
week issued uh a $500 million conver
able Bond and then they bought Bitcoin
with it and Mara is this Riot games no
Riot uh Riot Bitcoin mining are r i o t
Riot um and so mea did the same thing
they did a billion doll convertible Bond
deal and they bought Bitcoin and then
they did another $850 million Bond deal
two weeks
later and micro strategy when we
announced uh we were going to pursue a
Bitcoin treasury company model we we
announced that October 30th of just this
year and we've raised uh you know
something in the range of 15 billion
dollars in the last six weeks and so
you're talking about large sums of money
that are flowing I mean much larger sums
it it took us 30 years to accumulate
$500 million in order to buy Bitcoin in
2020 it took us four years to accumulate
10 billion and we bought Bitcoin over
the next four years but then it took us
like four weeks or five weeks to
accumulate the next 15 billion so you
would check off that box which is
company adoption then after that um
you've got you've got like uh
institutional adoption you know the
endowments and the Pension funds you
know there's now there's now Pension
funds that are starting to allocate to
bitcoin and there'll be big university
endowments and and 50501 c3s and
insurance companies and so that's
another
driver and um and then you've got nation
states and of course the news of uh the
week is the United States strategic
Bitcoin reserve and the US already has
about 1% of the
Bitcoin if they don't if they don't sell
it that's a big deal and Donald Trump
said never never sell your Bitcoin and
then he was elected
president but now you have Senator
Cynthia lumus advocating for a US
strategic Bitcoin Reserve you have a
very supportive
cabinet lots of cabinet members that
have been Pro Bitcoin and then Senator
lumus just posted a tweet just a few
hours ago having met with the incoming
Secretary of the Treasury Scott bessent
saying that uh she looks forward to
working with him on this and presume
that means that he is also supportive
and uh we know that the Trump White
House and Trump is supportive he was
asked on the New York Stock Exchange
floor I think Yesterday by Jim Kramer
about it will you do something like this
and he said I think so I think we need
to lead so I think that that's also
positive so let's just say there's a lot
of different entities in the world with
capital I mean who doesn't want to keep
their money who doesn't want more money
right everybody wants to either keep
their money or they could use more money
and so Bitcoin is digital money it's the
greatest digital monetary Network in the
world but maybe it's the first example
of what I call digital Capital it's
money just so I can help people not be
confused money is a generic term but it
decomposes in the modern world into two
elements currency and capital currency
is the dollar and the peso and the
Euro that is the medium of exchange
asset it is designated legal tender that
means you can swap it without paying a
tax bill on it and it means it's liquid
INF fungible and probably it's good for
paying taxes and everybody prices things
in it that's not going to change the
world Reserve currency is the dollar the
dollar has been the world Reserve
currency since just after World War I
and uh in different forms the dollar is
getting stronger not weaker but there's
another aspect of money it's store of
value if I had a liquid fungible asset
that was a store of value that I could
give to my children's children well
nobody thinks that's the dollar and
nobody think well nobody in the US
thinks it's the dollar rich people in
the US don't have 50% of their of their
assets invested in dollar bills and uh
what they do think it is in the modern
world is they think it's the S&P index
like the Vanguard 500 or P or some Index
Fund or maybe they think it's uh real
estate and real estate's a store of
value but it's not liquid in fungible so
it's a little bit different to it's
difficult to swap it out in units of a
million dollars every day and so it's
it's not quite money but it is capital
in that
regard and um and gold for 5,000 years
was kind of capital it was go a bar of
gold bullon was that long-term store of
value asset that people
use Bitcoin is emerging as digital
capital and people they're not going to
use it as a medium exchange to buy a cup
of coffee but if you want to buy
something to give to your
granddaughter that she can't mess up
even though she's three years old and
you just want and you don't want to
worry about it every day and you don't
want to trade it and you don't want to
worry about anti trust and whether or
not there'll be rent control on the
building or or renting it out you just
buy her one Bitcoin and you put it in
coold storage and then 60 years from now
she'll be rich because the one Bitcoin
will probably be worth 50 million or
hundred million right and so that what's
going on right now is the emergence of
Bitcoin as a digital Capital Network for
the world and the thing driving it from
100,000 to 13 million over the next 21
years is the adoption of it as a capital
asset by people that have have the
wealth have the capital all right A lot
of people in my audience are not going
to understand why you can't just store
your money in dollars um I have a whole
tie rate about it but I'd love to hear
why how do you explain to people why you
can't just put your money in a bank
account or under your mattress in
dollars the simple answer is the supply
of dollars expands about 7% a year every
year for the past 100
years and what that means
is that if you want to buy something
that is a very scarce desirable asset
that the government can't make more of
and that manufacturers can't make more
of if technology and capital and
machinery and robots can't make more of
it it's scarce and desirable here's an
example um an acre of beachfront
property in Palm Beach or or a beach
front house in the Hamptons or
waterfront property in Miami Beach
that's a desirable place to live you
can't make more of
it and if you go back a 100 Years you'll
see that the value of that acre was
$110,000 and you go forward a 100 years
and that is about $10
million and for those who are very quick
at math they'll realize that works out
to 7% increase in price every year for
100 years and that's why you know that's
why people buy houses for $100 million
on the beach in Palm Beach and my house
the house that I'm in right now it was
sold in 1930 and I have the deed on my
wall and it was sold for
$100,000 in
1930 if you put that
$100,000 in a vault and you kept it safe
and sound for the 90 years and if you
took it out it would pay
about 8 to 12 weeks of my property tax
on this
house like you literally couldn't keep
the house for eight weeks go ahead you
say it in my way tell me if this
resonates with you the reason that you
can't store your money in cash is that
the government uh steals your buying
power by printing more of it I find it's
very sobering to look at it as theft um
does that resonate with you or do you
think I'm being
hyperbolic no you're correct uh in
essence the inflation of the dollar
supply means that your wealth is cut in
half every 10 years if you hold all your
wealth in
cash and and uh it just it's the rule of
72 right you divide 7% into 72 that's
the half life of the asset so the half
life of your wealth is 10 years if you
store it in cash if someone gives you an
asset you can invest in that goes up 7%
a year you're keeping up with inflation
you're not getting
wealthier but you're not getting poorer
you're just treading water you know and
if you're beating that hurdle rate then
you're getting a bit wealthier so you so
once you understand that you can see
that you can't um you can't preserve
your wealth for long periods of time in
a fiat currency and the best fiat
currency in the world Tom is the dollar
but in most other currencies they
inflate 14% a year and that means the
half life of your wealth is 5 years but
in a weak currency like in Turkey or
Syria or Iraq or Venezuela or Argentina
it used to be for 20
years the inflation rate looks more like
uh 28% a year or 30% a
year and we take example the peso the
peso went from one peso to the dollar to
a thousand pesos to the dollar over 20
years
Jesus okay so I don't you know
in America you got to keep in mind
you're an American you live in the
greatest country of the last hundred
years America won every war right we
were the winner of World War I we got
richer we were the winner of World War
II we never lost the war we were the
winners of the century our currency lost
99.9% of its economic power over the
hundred years but if you went to Nigeria
or like Germany the currency crashed
like three times two or three times
right in Japan the currency crashed you
know in Russia it crashed three last
time the Russian currency crashed in 98
the the Brazilian currency crashed
completely uh 25 years ago the Argentine
currency crashed about four times in a
100 years so if you're an
Argentinian and you're 30 years old you
already know what it's like to have
hyperinflation because you live the
entire cycle it's just Americans don't
and so when you're if you're taking
advice from an American Business person
like Warren Buffett or Charlie
Munger well I mean they didn't live
through the Yar Republic they didn't
live through the collapse of the current
by the way the currency collapsed in
Venezuela it collapsed in Argentina it
collapsed in
Brazil it collapsed in Cuba it collapsed
in Russia it collapsed in every single
country in
Africa you see and so foreigners
actually get it a bit better right it's
like the you the bank's going to take
your money the currency is going to zero
the government's going to promise you
it'll be okay and tell you to put your
money in the bank then they're going to
inflate the currency freeze your bank
account crash the currency and then tell
you it's worthless that's what happened
in Cypress not too long ago if you want
to go and Google that and so the real
promise of Bitcoin is very simple it's a
bank in cyberspace that won't steal your
money
and it's an asset that you can store
your life savings in that nobody can
debase or corrupt and those are two
powerful promises for the first time in
the history of the human race no one
ever gave you that those two promises
ever before
now yeah the the thing that um and a lot
of this started with me getting to know
you researching
cryptocurrency um realizing the just
absolute devastation that even in
America is happening with with inflation
uh and understanding this difference
that you're now talking about in a
really clear fashion that until I
started researching you for this episode
I'd never heard you delineate it this
way that uh money is bifurcated into
those two elements you've got the money
that you spend cool but then you've got
the money that you're trying to preserve
your wealth over time uh when I tell
people the way you should think about
your house is not something that's going
to go up in value over time you should
think of your house as something that
you pay an insurance policy against the
upkeep the property tax as a way to
match inflation which is unless your
area becomes disproportionately
desirable and that does happen so like
Austin went up in value because people
just flooded into that area but for the
most part uh what you're going to see is
actually just keeping up with inflation
that as the dollar is devalued it looks
like the price and the value of your
house is going up but it's really not
now I think that's fair by the way I
think that's that's definitely a good
way to think of it yeah I think so my
thing my own company when I start
talking about this stuff uh my employees
look at me a little bit like I'm crazy
because I'm so aggressive about getting
people to understand and it'll be very
interesting to have this conversation
with you that ultimately the stock
market is gambling and once you
understand that people have been forced
to become gamblers based on inflation
that you have to find a way to outpace
inflation otherwise you lose your money
and they're really smart among us look
at the capital system look at look at
the equities market and they go oh oh
cool I have a really complex way that I
can find Arbitrage basically in these
moments where if I find an area of risk
that I think I understand better than
the next person I can come in I can buy
that asset it goes up in value compared
to what I can sell it for down the road
and I'm able to sell it for a bigger win
than inflation and and that forces
everyone to play that game or to just
have their buying power stripped away
from them which of course is what
happens to the vast majority of call it
normal to undereducated they're they're
just going to get eaten alive because
they don't have the time energy or
intellect to figure out this relatively
complicated game okay so with all of
that as the structure of why even the
average person should care about this to
a screaming degree um there's an idea
that that you say but you go by quickly
that I think if people understood it's
really going to help them so you you've
said I want to see the entire world
recapitalize in Bitcoin now when you say
recapitalize is what you mean hey that
part of your wealth that you want to
store to maintain purchasing power over
time all of that instead of being in
real estate instead of being in
treasuries instead of being in equities
that should move over to bitcoin is that
what you
mean yeah that's a good way to say it
yeah you've articulated that quite well
yes recap build yeah build your house on
a firm foundation don't build it on
sinking sand don't build it on a swamp
build it on a a granite rock on granite
on shist and I guess if I could give the
math the risk-free rate of the dollar if
you're capitalized on US Dollars and you
were to say buy uh treasury bonds the
risk-free rate is something close to
suur or the standard over night funding
rate and you know that ranges but after
you after you get paid that rate and you
get taxed on it you know you might get
paid 5% you get to keep 3% after tax
maybe if you're taxfree you get 4 and a
half% and if you're taxed you get three
so the risk-free rate of return of your
capital on that dollar standard is like
in the 3% range we'll get back to my
conversation with Michael sailor in a
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Theory and now let's get back to my
conversation with Michael sailor the
risk-free rate for Bitcoin as I just
described it to you 29% over 21 years
about
30% so the way I look at Investments is
when you're pitching me an investment
idea I say well I've got a lot of money
in Bitcoin and I'm expecting about 30%
risk-free for the next 20
years you have to actually pitch me an
idea that generates more than 30% plus
the risk premium plus the tax efficiency
if you told me here's a thing that'll
make me 50% a year but I it was going to
be taxable that might be 40% a year or
35% a year and I'm like well after the
risk it's still not as good as my
risk-free rate of
30% so if you're capitalized on bitcoin
if you understand it and if and if you
understand uh and if you have a long
time Horizon if you're going to hold it
more than four years you don't care
about the volatility all you care about
is the annualized return the annualized
return hold on because there's a lot of
assumptions in there so I know a lot of
people are clutching their pearls right
now about Bitcoin being referred to as
risk-free so can you break down for us
the difference between that volatility
and then how you can have the confidence
to look at this and say no no no the the
risk is merely a timeline question
because I think a lot of people will
will take exception to
that yeah so well the dollar is zero ARR
zero volatility that is to say the
dollar goes up 0% against itself each
year and the dollar is zero volatility
against itself each year so if you're on
the dollar you're living in flat land
and and you're you're a stationary
person in flat land a pedestrian in flat
land Bitcoin is going up 60% a year
against the dollar how long well since
micro strategy made its first investment
4 years ago it's 60% but if you stretch
back 6 8 10 years I think it's also 60%
so like a
decade but you can measure it back a
decade and you see it's going up 60% a
year and it's 60 volatility it's it's a
60 Vol against the dollar so you should
think of of Bitcoin as an asset it it's
like you're on a speeding train going 60
M an hour and you've got a
Flywheel spinning 60
RPM and The Pedestrian on flat land is
standing on the plane watching the train
go by thinking this is scary it's going
to suck the you know the oxygen out of
my lungs and uh they're thinking my
money isn't an asset because it goes up
0% a year so they have a different view
toward money than the view of someone on
the Bitcoin train the person the person
with a million dollars of cash is going
to have a million dollars of cash in a
decade a person with a million dollars
of Bitcoin is going to double their
Capital every 18
months if they just hold on to it right
and so they're going to double it once
twice three four four times at that rate
right um the volatility really does come
down to sorry and I'll let you get back
to that but this uh this does come down
to a belief that when you look into the
future that the the setup that makes it
have the 60% ARR is going to continue
because I look at this and I say the
only reason that it has that kind of
reward is that it is volatile that that
there are question marks because if
there were no question marks everyone
would flood in near instantly it would
hit homeostasis and that would be that
um and so I I do I think Bitcoin is
anything but risk-free uh but I do think
that the volatility is advantageous for
the people who are going to be right uh
about the if people are right about the
upside that's the most Fair way to say
it um why do you think the best way to
conceptualize this is as
risk-free Howard marks would say
volatility is not risk volatility is
volatility right a Margo round you know
or a carnival ride or a roller coaster
is volatile the risk part is if you fly
off the roller coaster right if if you
if the marry go around stops working Etc
um so the fundamental risk of Bitcoin is
the existential risk of an extinction
level event and Bitcoin right if space
aliens come down and say we're taking
your Bitcoin away from you right uh then
I guess there's risk if if some Evil
Genius finds a way to create a cyber
virus that infects and destroys bit the
Bitcoin Network instantly irrevocably
that is the risk so but that's kind of
like the that's the existential risk you
take when you get on the airplane if it
crashes that's the existential risk you
take when you cross the street that's
the existential risk you take when you
put a piece of food in your mouth and I
say and you say well can you imagine
that hurting man I say yeah if I put
poison in the food you're dead Okay so
do you trust me do you trust the waiter
when you put the food in your mouth
right so yes there is some risk in life
and the existential risk is that
extinction level
event you don't think there's another
layer of risk in that not not
existential because you're saying the
risk-free return of Bitcoin is 60% but I
think there is it it seems strange to me
to not allocate some percentage of H
maybe it doesn't grow that fast maybe it
doesn't remain 60% you yourself say over
the next whatever 21 years it's going to
come down it'll average out over about
29% what if that accelerates and uh the
return ends up being substantively less
than that um so I get saying that this
has a better chance of having a higher
uh annual rate of return than say the
S&P 500 which maybe we clock at 15% we
say nah ah we might not hit 60% but
we're probably not going to drop below
15% therefore if 15% is our hurt rate
it's going to be something north of that
but I think where people trip up with
your language is this idea of the
inevitability of the 60% what would you
say to that so we're dealing with three
concepts risk
volatility and
performance okay so I've I've addressed
the risk issue by pointing out that
there is existential risk in your given
Network or frame of reference and I just
want to make that point that once you
understand that risk uh of being in that
frame of reference then you have to
figure out what's the source of the
volatility and the
performance and if you don't understand
why the asset does what it does if you
don't understand the economic physics
involved then you'll think it's random
and you'll and you'll feel like it's RI
the performance is risky but I want to
give you an example of a physical
metaphor I'm a hiker and I come across a
mountain lake and the mountain lake has
500 trillion gallons of water in it and
yeah I don't know how it got there but
it's there the water's chilly it's clear
and I look down and there's a
waterfall coming off the mountain lake
and the waterfall you know it's very
beautiful and and it's very turbulent
right water is turbulent in a waterfall
water is not turbulent in a glassy lake
so the the turbulence is
volatility right and the and there's
waterfall and then I look at it and now
if you look and you say I don't know why
that water falls downhill you know I
don't know if it'll keep falling
downhill but I hate the volatility then
I guess you can take a selfie in front
of the lake go swimming get cold and
leave but if let's say you're not a
tourist but you're an engineer so you
come across the same Lake and you see
the waterfall and you see the 500
trillion gallons and you think about
gravity and you think about
sunlight and now I know how the water
got there the water got there because
the sun Shone on the ocean the O the
water evaporated from the ocean it rose
up in the clouds the wind blew it
against the mountain it condensed and it
rained into the mountain and the and the
water ran off the mountain into the
mountain lake I know how it got there
and then I think well if I create a dam
near that waterfall I build myself a dam
I put a turbine on the dam and then I
drop a billion gallons of water I
Channel a billion gallons of water
through the dam drop it 60 ft and then I
plug that into a hydroelectric power
plant I spin the Dynamo I make
electricity and then if I'm really smart
I run the Electric power line to a
village down in the valley and I light
up the village or I light up the city
now someone can come along that doesn't
understand physics and they can say
good idea Junior but what are you going
to do when the water stops flowing
downhill well I'm like uh well I
actually think the water's flowing
downhill because of gravity new Newton
solved that for me and then someone else
comes along and says good idea Junior
but what are you going to do when you
run out of water in the lake I'm like
well there's 500 trillion gallons and I
take out my calculator and a billion
gallons or whatever it's going to last a
long time like well it's eventually
going to run out I say well you know the
Sun keeps shining on the ocean and the
ocean keeps lifting the you know the
water out of the ocean and it drops it
on this mountain and that's why there's
water in the mountain but you're right
there's some kind of natural limit and I
suppose there's a limit to the amount of
energy I can pull off of this Dam but
it's a large number it's a lot more than
your donkey cart and it's a lot more
than your steam you know wood stove and
it's a lot more than your Coal Power
Plant and maybe it's a lot cleaner than
burning you know gasoline so I'm an
engineer and you're seeing you're seeing
performance thinking it's random and
that's why it's going to stop and you're
seeing volatility and you're thinking
it's random and maybe it'll stop and and
here with Bitcoin the reason bitcoin's
performing is is a it's volatile but B
it's more en it's a more energy
efficient State the water is Flowing
down 5,000 fet because it's more it's a
lower energy State a th000 feet below
the mountain you know it's a it's a low
energy State you've got potential energy
in the water and it wants to go to
ground and that's just physics the 500
trillion gallons of water is $500
trillion dollar and the $500 trillion
dollars of assets are sitting in real
estate and currency and B and Sovereign
bonds and corporate bonds and artwork
and equity and they're s they're
invested in the stock of a company in
Africa that's going bankrupt right
there's in they're invested in real
estate in Cuba in Venezuela in Nigeria
they're sitting in a warehouse that's
crumbling it's got a 40 useful 40-year
life and so entropy and inflation there
you know you you invested hundred
billion dollar in a war zone and then a
war broke out and your money got Deval
your asset got
devalued all of the things going on in
the world the war the chaos the
competition the inflation the entropy
the passage of time the hurricane the
covid you know vac vaccine the covid
virus all of these things impaired the
value of your assets what the reason
Bitcoin is going up it's not an
accident it's because capital is is
economic Mass it is Flowing from a high
energy State the Mountaintop to a lower
energy state to a more efficient state
it is steam condensing to W condensing
to water condensing to ice giving off
energy just like in any chemistry lab
you would learn this and at the same
time there's this volatility driver Tom
which is you have an open Capital Market
and and on Saturday night when there's a
missile crisis someone can make A1
billion short bet levered up 100 to one
and panic and they can do it in Bitcoin
and then on Sunday morning when the
missell crisis is has passed and nuclear
war did not break out they can go long
and they can reverse the
trade and bitcoin's the only asset where
you can sell a billion dollars of it in
a minute at a 100 to one leverage and
you can buy a billion back in a minute
with a 100 to one Leverage on Saturday
night and Sunday morning if you could do
that with your upper east side apartment
then property values in the Upper East
Side would also be more volatile and if
you could do it with
picassos that would be more volatile
because if people get drunk and they
panic and they short your ass at 100 to
one and change their mind six hours
later when they get up with the
hangover you're gonna have volatility so
the volatility is a feature it's not a
bug it's because it's the most useful
thing in the world from a capital Market
point of view and if and if it is that
useful then a a Bloomberg jockey in in
Singapore is going to raise 20 billion
in capital and they're going to make it
available for you to trade one Saturday
night or they're going to make $10
billion do of credit available to you on
Sunday morning because they're getting
paid an obscene fee to do it
and once you understand the assets
appreciating because it is
thermodynamically sound and it
represents a lower more efficient energy
state for capital or for money and once
you understand it's volatile because the
network is more useful and more
leverageable it it is basically the
number one it is the number one source
of credit or leverage in the world for
everybody all the time and once you
understand understand it like that you
see the volatility and the performance
are a feature of the engineering and the
technology they're not a happen stance
they're not accidental they're going to
continue in the same way that water will
flow
downhill and you're just like the Normie
that sees a fire and and it's like I'm
GNA harness the fire and I'm going to
sell it and the Nory goes well what if
the fire goes out and the engineer goes
I'm actually going to create a machine
an internal combustion engine with eight
cylinders and the fire is not going to
go out and don't you see how the
six-year-old boy scout like the fire
goes out and then Henry Ford creates a
machine such that the fire doesn't go
out and when you get on a jet airplane
and fly across the Atlantic for 12 hours
do you realize that your life depends
upon the fire not going out in the Jet
Engine and you're surely dead you will
freeze death before you before you
happen to um suffocate should that fire
go out and Engineers solve that problem
for you and so the difference between
fear and risk and anxiety and and
competence and commitment is
understanding the physics and the
engineering of the money
involved okay uh I think treating it
like um physics is brilliant I think the
more we can get out of the metaphor into
the reality the better off we're going
to be so let me set the stage and I'm
going to walk us through some of these
beats of the non-m metaphor version of
this so um you just made a presentation
to Microsoft uh to get them to
recapitalize using Bitcoin and they
voted against it so was 0.55% of people
were for it uh the rest were not so when
we when I listen to you I often get the
sense that you really have come to
understand the nature of capital Flows
In A Way certainly as it integrates
Bitcoin better than anybody else and so
I feel a bit like I'm talking to the
Future um so I really do want to map
what you just said about it being the
physics I thought the the waterfall
analogy is really really brilliant um
I'm curious to see if you think this is
a water if the waterfall is the better
metaphor or if a siphon cup is a better
metaphor um so let me walk through what
I'm understanding so when you say high
energy state of money I assume you mean
High entropy that that there's so much
chaos happening the goal would be to get
out of a high chaos environment with
inflation money printing all of the the
chaos that that reeks on one's ability
to store Capital this is where again
people need to differentiate between
currency and capital so we want to move
that into what you're calling a low
energy state but it's basically uh there
are fewer influences on it it is it is
going to be there um it has the
volatility which we'll get to in a
minute but in terms of a place to store
your Capital once you're not in a
short-term time Horizon you're in a
longer term time Horizon there are just
less influences on it so far so good
yeah yeah so far so good okay so I think
what makes that metaphor so powerful is
that if I'm understanding you um I'm
going to use a siphon metaphor instead
of perhaps the more complete waterfall
metaphor I'm not sure yet so let me use
the the siphon metaphor and see if I'm
understanding where you're going here's
what I read when I if I were going to
make a um a bull case for why this is
going to play out exactly like you're
saying I go uh everybody who's awake and
paying attention to Capital markets is
going to watch people get their 60% ARR
year after year after year after year
after year for people I know you said
the stats but for If people really
understood what you did with micro
strategies taking it from a company
where you're like well I guess this is
dead to being uh perhaps the most
valuable stock on the stock market
insane and we'll talk more in a minute
about how you did that but the siphon
effect is capital paying attention so it
will first be smart Capital who actually
understand what's going on they'll move
first this is obviously what we're
seeing play out then all the adoption
Stacks that you walk people through and
then it it and this is why I say it's a
siphon it just gets to the point where
you can't justify the money not going
into it and so now it's just by you no
longer need people to understand what's
happening just just in the same way that
there are bonds of water there sort of
bonds of narrative about where one
should be preserving their capital and
of course people are still going to
preserve their capital in buildings and
an art to some extent you've mapped this
out for people you estimate that um I
think it's I have the exact numbers here
but there's a a percentage of capital
that people store into so 450 trillion
this is rough numbers 450 trillion in
assets are held for utility so buildings
things like that it's not going to
change but there's 450 trillion that's
long-term capital pure store value and
so the siphon becomes everyone will see
over time that by moving out of this
chaotic state where there's inflation
etc etc uh down into the low energy
state of Bitcoin where there is not uh
that over time you will approximate I
don't think you would ever say 100% but
just for Simplicity you will approximate
100% of that long-term store of value
Capital going to the most efficient
highest return place and as of today
there's nothing even close to
bitcoin yeah I think I think that's
reasonable to say I mean I'm not saying
100% of long-term capital becomes
Bitcoin what I'm really saying is uh
long-term capital is like 450 trillion I
think there's 3% entropic lapse there
there's 3% loss in that Capital every
year either due to inflation or entropy
whether it's a financial asset or it's a
physical asset and that works out to
13 you know 13 to 15 trillion dollars a
year of efficiency and that's just uh
people or institutions owning things and
the building falls down the company
fails right Etc I think uh I I would
liken it to well I mean all the waters
in the lake and all I got to do is carve
a channel and the water's going to flow
downhill and why because that's just the
law of
physics if I took all your money like I
don't know how much of your money do you
have stored in a bank in Africa right
now Tom what percentage of your wealth
what if I took it what if I took it all
what if I'm what if I'm Dr Evil and I
took all your wealth and I moved it into
a random Bank in
Africa and then I said hey uh April
fools Tom I moved your money here but
here's the key you can leave it there or
you can move it back to the US would you
leave it there or might you move it back
I would be moving it back yeah but so
would I have to force you to move it
back I mean what wouldn't there be a
natural tendency on your part to move
the money to a place where you feel more
secure with the money like human nature
is such that that uh there's a lot of
people in the world um do you know that
if you went to China and you gave
everybody in China the option to move
their money to the US not all of them
would but a lot would enough so that the
Chinese government makes it illegal to
do so right the reason there are capital
controls there's a limit of $50,000 a
year is because if people could they
would so there's a natural tendency of
people to want to move their capital
from a less secure more chaotic more
uncertain place maybe where their
property rights are left less I mean you
remember the you know remember in Cuba
when the boat people when everybody
wanted to leave Cuba and come to
Florida right uh people generally want
to move from the less secure to the more
secure place they want to move their
person they want to move their money Etc
it's it's human
nature I think if we come to this uh to
this siphon
analogy well what there's just so much
energy that gets released um when you
move uh from uh from an uncertain unsafe
uh environment to a to a more certain
safer uh more sound
environment that sometimes you don't
have to convince people like for
example a lot of times if if the head of
the household could leave uh a war zone
don't you think they'd bring their
entire family with them like the kids
might not want to go my dad made me go
to places I didn't want to go you know
why when I was growing up because his
job you you know how many children go to
a place they don't want to go because
their their parents get a job that
they're chasing money Tom so people Che
you know why why did everybody come to
the New World money you know everybody
comes up with different ideas it was all
about property rights and property
rights was money that's why the dupants
came that's why everybody came so so
generally you will find why did people
go west money they went they went West
for land they went they went left West
for property so um if you come back to
micro strategy stock well micro strategy
capitalized on bitcoin and our stock
started working so people started buying
the stock and uh it was volatile well
it's so volatile that we have a hundred
billion doll options Market that's
formed on top of our stock so our our
company went from a billion doll market
cap to a hundred billion doll market cap
in four years our options Market went
went from zero to100 billion in four
years our volatility went from 20 or or
15 very low Vol to
120 okay you can look at that as a
negative or a positive but here's the
positive 120 is like hot money it's it's
it's like Fast
RPM um it's only risk if the volatility
comes from doing risky things if it
comes from gambling or doing stupid
things if I go into a casino and I play
a game where the odds are against me and
I'm
winning well my I'm also going to be
volatile but I'm volatile by taking risk
maybe stupid risk but if I build a
centrifuge or a flywheel and I spin it
really hard I might be volatile it might
look volatile to someone that doesn't
understand polar geometries or doesn't
understand physics but it's not risk
it's just it's just a machine that's
that's creating motion or kinetic energy
so when micro strategy created that 120
Vol and to be clear for your listeners
um to put that in perspective if you
stacked up all of the S&P 500 companies
120 Vol would mean you're the number one
most volatile company the S&P index okay
just just to oversimplify here or not
even oversimplify it but to State it as
plainly as possible uh it means that you
are doing wild swings up and wild swings
down very rapidly yes yeah in price
we're oscillating we're
oscillating uh maybe in an unpredictable
way it's it's like um you know
like if I do this with a piece of
balsawood it's like a kid's propeller
toy like it's little toy you know maybe
those things that scare away the
mosquitoes at your at your uh tropical
barbecue if I do this with a five pound
weight it's a weapon or a weat eater or
a lawn mower or something right I mean
it's it's a piece of farm
machinery if I do this with $40
billion it's a
turbine it's a it might move your jet
across the Atlantic Ocean right there's
you know there's 15,000 pounds of trust
thrust in a jet engine but it's more
like why is it a turbine what what is
the um God this is where I don't know
physics but what is the energy output uh
is it that money is moving from one
person to another I mean that's all I
think about when I think about
volatility you get one guy panics he
bought high he sold low and then the
next guy comes in and buys low and sells
high and so one wins one loses it's
if I give you a stock option on the
dollar bill and I say Tom the dollar
bill is zero volatility but I'm going to
give you an option to buy 10 more dollar
bills for
$1 for the next
year well what is the option worth it's
nothing right because the dollar is
going to be worth the dollar I mean so a
stock option with no volatility is
worthless the black schs equation is the
a is the conventional way to value a
stock option suffice it to say when the
stock op when the volatility goes to 15
there's a little bit of
optionality when it goes to 60 there's a
lot of optionality when it goes to 120
you know the options exploding in value
and let me give you let me give you the
Practical value of it if if you had
um ,000 or a million let's say a million
dollars you have a million
in the bank well with zero volatility
you can probably get paid Sofer so
you're getting paid 4% to take the risk
of holding dollars in the bank
4% when you hold that money in the S&P
index with the volatility of the vix or
15 you get you might get paid uh 12 to
15% interest to take the risk of holding
one share of
spy the index
when you buy when you hold a share of
Bitcoin via ibit or a Bitcoin the
volatility is 60 you might get paid 70%
80% to hold that that million dollars in
Bitcoin and you're taking the downside
risk but you're getting paid that that
that call rate when you hold a share of
micro strategy if you were holding a
million dollars of micro strategy and
you were selling the calls at the market
with 100 20
VA you could get paid 200% annual
interest you might not even know what it
is like you don't know what Bitcoin is
you don't know what micro strategy does
all you know is that if you if it's not
going to zero in the next 12 months
someone will pay you 200% interest so
your break even point is six months
right it's like if I can hold it for six
months and it doesn't go to zero I'm
getting paid 200% getting paid my money
back my break even point is six months
on something I don't
understand uh there was an options
Trader on television
today he was saying yeah I mean none of
them really understand what micro
strategy does by the way like
understanding what we do takes an hour
understanding what Bitcoin does takes a
$100 they don't know that here's what
they say uh while the share of stocks
about $400 and we just sold a $700 call
option for 180 bucks
for one year and so someone's going to
pay us
$180 and the worst case is micr strategy
rallies and we'll double our money and
we'll get taken out of the
trade but we're thinking that it'll
whatever it'll do unless it gets cut in
half immediately and goes south from
there we're even if it does get cut in
half we still made money right so you so
this is indicative of your your point
which is when there's enough performance
and enough
volatility you don't just attract the
smart money I you're you can attract the
Bitcoin Maxis the people that have spent
a thousand hours and their view is hey
micro strategy 2x Bitcoin I'll buy it
well you might also attract the the
investors that say Hey I don't know what
it is but it's up 120% a year for the
past four years so I might as well buy
the hot thing but you may attract the
volatility
Traders and they're like well I don't
know what it is but I trade volatility
and it's got and I need volatility you
can't trade dollar bills today for
dollar bills in the future and make
money off of that so uh what I guess
it's Ain to being you're in a crowd and
everybody starts surging toward uh an an
exit you're going to go with them or
you're going to get trampled or you get
caught up in in the crowd and that's a
dynamic but that but to be clear that's
not what I endorse what I would say is
Bitcoin is the first perfect money the
first monetary instrument in the history
of the world that is an that is a
properly engineered store of
value the second best money is gold and
the and and the second best money has a
halflife of 30 years and the first best
money has a halflife of forever and so
the first best is so much better of
course intelligent physicist e
economists that understand physics or
capitalists that understand physics are
going to discover that and as they
discover that they're going to buy it
and build an industry around it and
recapitalize on it and they're going to
draw concentric circles of other
investors that that I I basically
Channel billions of dollars into the
Bitcoin ecosystem Tom from investors
that don't understand Bitcoin they just
want to do convertible Arbitrage or they
want to do option trading there are a
lot of people that hate Bitcoin and they
come into the ecosystem because they
just want to short my stock so they
short my stock and buy Bitcoin and
create demand for Bitcoin you see so so
those are all secondary and tertiary
investors they they have Capital they
have money and they want to play some
game whether it's short long trading
fixed income people that have bought my
bonds and they just wanted interest on
the bonds and they they indirectly
funded Bitcoin so so my company is an
actor to recruit other investors anybody
else in the ecosystem is recruiting
other investors but the fundamental
physics of the of this equation is this
is the world's first perfect money
that's Bitcoin the asset and Bitcoin the
network is is the greatest Global open
Capital Network in the world it is free
digital Capital
247365 1500 crypto exchanges are plugged
into it and it is the number one source
of credit you know and Capital Access
everywhere in the world right now and so
that's why it is performing that's why
it's attracting
capital okay so um what you've done with
micro strategy I think is really
fascinating let me explain it in a
simplistic way tell me if this is
accurate what you guys have done is
essentially replicate the financial
markets with Bitcoin which was at least
for a while completely out of reach of
institutional investors uh so you could
do calls puts uh bonds like all kinds of
uh financial instruments but all with uh
Bitcoin as the essential element is that
correct we issue securities backed by
Bitcoin and the $500 trillion Capital
Market I'm referring to they have to buy
Securities they need option regulated
options they they need regulated
derivatives they need regulated Equity
or they need regulated fixed income
securities that means it has to come
from a publicly traded regulated company
like micro strategy and we are unique
because we were the first company to
build a large pool of Bitcoin as
collateral so if you actually accumulate
$40 billion of
Bitcoin then you can issue these
tranches of high performance Equity or
lowrisk fixed income
instruments and then all of the other
Traders they can construct all of their
various trades and all their derivatives
based on those instruments and they can
do it on the NASDAQ or the CME or the
New York Stock Exchange from their comp
cant
institutions and they could not buy
Bitcoin and they cannot trade on crypto
exchanges they can't trade on durabed or
binance and they can't trade offshore
and they can't hold the underlying
commodity either because it's a legal or
because it's against their Charter and
and they promised their Executives their
board of directors and their limited
partners and investors that they would
only
trade public company Equity options
fixed income convertible bonds so that's
what they
do that's what they need in order to
function and what we and what we do is
we convert crypto Capital crude crypto
Capital we convert it into refined
traditional
Securities and in the process we strip
away some of the volatility we strip
away some of the risk we strip away some
of the performance
and that stuff that we strip away that
they want Stripped
Away becomes uh leverage for our common
stock and we give it to the company and
the common stock shareholders that's how
we outperform Bitcoin and that's why
we're more volatile than Bitcoin because
we took the volatility away from the
fixed income investors that didn't want
it and we gave it to equity investors
and derivative investors that need it
we're just that Gateway sitting in the
middle managing that okay so many people
speculated that when the spot ETF was
granted for Bitcoin that micro strategy
would not be uh relevant anymore but
that didn't come to pass why
not because the ETFs are SEC 40
companies that makes them investment
trusts and so a a trust company is is a
special vehicle it's constructed to own
an asset and and hold it in trust and
not do anything other than hold it so if
what you wanted to do was buy a bar of
gold you might want to buy GLD or IOU
those are gold trust and they're allowed
to take your money and they buy gold and
then the asset's dead money it's a dead
asset just well let's say a stationary
asset in custody and you have the
shares and if you were to sell your
shares or redeem them
they have to then uh sell the gold and
give you your cash back so think of them
as like overnight depository Banks I I
could have a hundred billion dollars in
that bank it's overnight deposits I
invest it in gold or soybeans or oil and
then when you want to redeem I sell the
soybeans and the oil and the gold I give
you back your money um and I charge you
20 basis points fee every
year micro strategy
is an operating company we're regulated
by the SEC 33 act an operating
company can raise permanent Capital we
we can actually sell a billion dollars
of equity to take
risk um and so if I sell a billion
dollars of equity and I buy a billion of
Bitcoin it's not an overnight deposit
it's a permanent investment so you've
got the equity forever and I've got the
Bitcoin forever you don't have a
Redemption right
you can't just show up and say here take
my micro strategy shares back and give
me cash no it's permanent equity and I
have the Bitcoin so we don't have $40
billion do of overnight deposits we're
I'm not a bank with $40 billion of
somebody else's money that I got to give
back making 10 basis points a year I'm a
guy with $40
billion it's mine okay now if I'm a
company or I'm an with $40
billion I can go and I can borrow um $3
billion from the convertible bond market
for five
years and agree to pay them 0% interest
but I have to B pay back the three
billion in five years in either Equity
or in cash okay that's a risk they take
they give me the three billion it's an
obligation I take you know uh and then I
take the three billion by the way if I
took the three billion and I bet it on
black in a casino and I lost it I took a
stupid risk I lost your money the equity
holders are hurting you know I'm GNA
have to dilute the equity or come up
with the three billion some other way
right so I can do
something irresponsible you are trusting
the management team of an operating
company to not do stupid things but
let's say I take the $3 billion and I
buy Bitcoin with it we'll get back to
the show in just a moment but first
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Theory and let's say you're an equity
investor and you just gave me your money
and you like Bitcoin well what I just
did was I just borrowed billions of
dollars for free to buy the thing that
you like and if you think Bitcoin is
going down you're not you're not owning
my stock for a minute you're not long my
stock the only people that are long my
stock are people thinking Bitcoin is
going up so if if you have any forecast
for Bitcoin whether you think it's going
up 3% 5% 50%
100% all circumstances it's smart for
the company to borrow money for free and
buy Bitcoin right it just doubles it
increases your performance
so so operating companies we can do
things
like like I can borrow money in from the
convertible bond market and I can I can
sell the you know when I do that I'm
basically posting shares that are
trading uh that are valued at four times
the underlying Bitcoin that I own so if
I were to do a billion dollar Bond deal
I would be selling a billion dollars of
Securities back by $250 million of
Bitcoin I'd then buy a billion dollars
of Bitcoin I would capture in the
Arbitrage $750 million of Bitcoin yield
or Bitcoin gain the beneficiary is the
common stock shareholder right the the
guy that bought mstr stock so I'm doing
a c i i just generated 750
million in like three days you
see so you're saying what is it that I
can
do that a trust can't do they can't make
$750 million in three days if I go sell
a billion dollars of equity and My
Equity is trading at three times the
underlying
asset I'm selling a billion dollars of
equity back by $333 million of Bitcoin
but I'm buying back a billion dollars of
Bitcoin and I'm capturing $666 million
in the
Arbitrage so as an oper if I were to go
borrow a billion dollar and just pay 6%
interest in a junk
bond well then you're just getting a
billion dollars of Bitcoin and if
Bitcoin goes up less than 6% a year that
was not a good risk I would lose money
on that but if bitcoin's going up 60% a
year I'm going to scrape a 54% yield and
I'm going to make you know $540 million
a year for my shareholders by taking
that swap so I just gave you fast I want
I want to Anchor I want to Anchor this
down for people so
um when when I think about what the
stock market is and why the rich get
richer and the poor get poorer a a
substantive part of this is that this is
an extremely complicated game uh that as
many times as I've researched you and
followed this I'm just now beginning to
put all the pieces together of how this
all actually works but there is this
incredible opportunity that you know
like you said if you've got somebody
that really understands the economics
and the physics of it all There's an
opportunity that's staring everybody in
the face you guys have built in a layer
that the way the analogy that you use of
turning crude crypto money into refined
um Capital equities or equities excuse
me uh absolutely brilliant and so you
guys have set up a what I think of and
you didn't say one way or the other if
this felt right to you but it it
continues to feel right to me is you've
taken a microcosm of the entire um
equity's Financial Market all the ways
my words that people are able to bet on
equities and backed it by Bitcoin
allowing people this incredible again my
words Casino layer on top of Bitcoin so
that people can take the kind of risk
that they're comfortable taking that uh
their the governance bodies of their
organizations uh force them to interface
in that way I mean just absolutely
brilliant uh so now my question becomes
given the
freakish success that you've had with
this that one at least I look into the
future and say okay this is going to
keep going for a while uh were you
shocked when Microsoft voted against and
I know you were not uh presenting them
to do the the full Casino layer my words
on top of the Bitcoin but were you
shocked that even just getting them to
think of
recapitalizing in Bitcoin was was so
soundly rejected did you just look look
at that and say they're stupid they
don't get it like what's
happening we say in Bitcoin um the
bitcoin's on a need to know basis so the
people that get Bitcoin get Bitcoin
because they need to if you're uh
wet freezing to death and you walk past
a
fire you're going to stop throw a Log on
the Fire and you're going to draw your
clothes
because otherwise you're going to freeze
to death you have a need to know it if
on the other hand you're a rich man and
you have you know a massive ski chalet
in Aspen with 10 people working for you
and Modern Heating and Air Conditioning
and a chef you know and three cars and a
helicopter in the back you know and
you've got a dinner party
planned and you're walking past a little
flickering
fire you're probably going to think I
should put it out you know I'm G I'm
probably going to step on that that fire
because it looks like a threat to
me Microsoft is probably one of the five
most successful companies in the world
out of 50,000 publicly traded companies
and 400 million private
companies they're not exactly the
Shivering naked
starving dude running through the forest
on the mountain side right they don't
need it it's quite optional for them
right the people that discover Bitcoin
are when you live in Nigeria and the
bank or or Lebanon or and the bank
freezes your assets and you're either
going to starve to death and be bankrupt
or you're going to have learned about
Bitcoin they have a need to know if you
live in a hyperinflated economy in
Russia or in Venezuela or in Argentina
you're going to know if you remember
your family fleeing Nazi Germany in the
30s and losing everything if that
story's been told to you by your
grandfather or your great grandmother
right then that resonates and you think
I think I'd like to be able to flee with
my money you know when the government
goes bad on me
so uh I think that the message of this
is uh shareholders in a well-run public
company do whatever management tells
them because they're not looking to pick
a fight and if you're an
affluent investor in the first world
you're um ingrained in your conventional
wisdom and you don't have a need to know
it's not that you're not smart I mean
the world's full of very charismatic and
Brilliant
hardworking Rich powerful people
that is not the criteria for discovering
a new
technology the analogy I give you here
is Led Zeppelin a bunch of teenagers and
20s somethings pick up electric guitars
and they create lead Zeppelin and rock
and roll and there were probably some
very genius classical musicians in
Carnegie Hall around the same time and
if you ask the music critics what they
thought and the music professors what
they thought and the classical musicians
what they thought they would said you
know this will never amount to anything
this is you know this is bad for the
society every
generation gets a new set of
Technologies right you're a podcaster
but you know 60 years ago you know as
Walter KRON kite and it was a different
media
thing and uh 100 years before that it
was William Randolph Hurst and a
different media
thing and so
so Bitcoin is an opportunity for the new
generation it it is uh the people that
Embrace new technology they're either
the youth the 20-some the 30s somethings
at the beginning of their career that
have everything to gain nothing to lose
and no op and no chance by the way no no
chance if they stick with conventional
technology right it's it's like my
advice to you is don't create Symphonies
you know Mozart and Beethoven kind of
did it you know piano listen to chopan
between chopan and Beethoven or Mozart
they kind of did most of the stuff
people want to hear right and so if you
really want to make a name for yourself
make Fame and Fortune you pick the new
technology right and then the other
group of people that Embrace new
technology are people in a war zone
right people dismiss remember World War
I and we had horses and Cavalry and like
oh that doesn't work and then people
just missed the air for the Air Force
they they Court marshaled Billy Mitchell
I guess air power that'll never mean
anything and then people start stop
dropping bombs on your head and you
become a believer in air
power you know and so I think I think
the the real phrase from Max plun and he
said it in the history of Science and
the study of science he said uh science
advances one funeral at a time it's like
the old guard doesn't have a need to
know they're going to reject it the
younger generation they do have a need
to know and then and then people that
are under duress that are fighting for
their
life they you know maybe maybe you'll
start the War uh not believing in
airplanes and not and believing that we
should fight with horses you know and
swords but you won't end the war with
the general that believes that right
you'll replace the first general with
the next
general you'll scramble to embrace the
new technology and and the side that
Embraces the new technology is going to
is going to win the side that channels
power most effectively is the winner
that's the story of History uh but the
other story of history is the people
that got to where they are with a
different technique they become
entrenched in that technique that's part
of their
self-image I don't look you're the
world's greatest piano player and
someone invents an electric guitar and
you're 70 years old and they say what do
you think of the electric
guitar and you're like it's a brutish
instrument you know for long-haired
hippies when I talk to people that
really understand Bitcoin uh you go deep
into uh the those rabbit holes you start
getting people talking about how do we
secure the network when we um mine the
last coin so what's your take on that
how are how are we going to secure
it um well the network uh reward is a
function of the block rewards of the
miners and they will continue between
now and the year
2140 and the transaction fees and the
transaction fee
economy is um is an open free market
economy if you want your transaction to
be processed in the next 10 minutes you
have to be the high bidder and there's
only 5,000 slots and so the the most
important 5,000 transactions in the
world are going to get to the top of the
queue based upon the transaction fee of
the
broadcaster um this is why it's
important to have scarce block space
because as long as the block space is
scarce the transaction fees will Trend
up over time and as more people uh want
to SP to do more transactions they will
bid up the transaction fees and right
now they're a small fraction of the
rewards but I think 10 years from now
they'll be the majority of the rewards
for sure and I think by you know by 2035
and
onward most of the revenue that comes
from the minors will be based on
transaction fees and and transaction
fees are a durable business model
forever I mean every real estate company
you know every financial service
provider they all work on transaction
fees I mean it's it's fine like I want
to move a billion dollars from point A
to point B would I pay 10 bucks of
course I would would I pay a 100 bucks
sure if you wanted to buy a billion doll
building and take clear title of it in
Manhattan what do you think the
transaction fees are on
that right I mean you could spend a
million dollars to move a billion dollar
you could easily spend 10 basis points
how about the last time you sold your
house what's the transaction
fees to sell a house to someone else and
how long does it take by the way right
so when you think about it that way like
if I could sell my house in 30 days and
it was a million doll house would I pay
one two three 4% interest or in fees
yeah I would if I paid 1% fees i' think
that's cheap well 1% fees on a million
dollar transfer of Bitcoin right that's
going to support the network so so the
beauty is um
I don't think the transaction I think I
think bitcoin's always going to be a
hundred times to a thousand times more
efficient to transact in than other
instruments but I do think there will be
transaction fees I think the fees will
support the mining
Network and the mining will continue
forever because there's always going to
be stranded energy and there's always
going to be stranded capital and so if
you're sitting at the edge of the grid
and you have a dam in the
Himalayas well you're going to want to
run Bitcoin mining with the dam in the
Himalayas because that's the highest
bidder for your
electricity you're saying that'll get us
to the end of the blocks themselves but
uh when no I'm saying that will go
forever I mean the transaction fees will
gone for a million years I see you're
saying that uh there will always be
somebody willing to do the work for the
securing of the network based on that's
the highest bidder for the electricity
there are no block rewards uh for
Selling Houses why does why does why is
there a real estate industry they're all
based on transaction fees why the banks
give you mortgages because of
transaction fees you see but what about
gold so when I think about this as a a
static thing that I'm using to store my
Capital you just think that there's
going to be enough once it's Global
there's going to be enough reason for
enough people to be selling their long
longterm capital assets at any one time
that we're still going to have uh a
constant desire to have those 5,000
blocks
filled I'm saying that the airlines
operate on transaction fees and if
people decided they didn't want to go
from New York to Singapore I guess there
would be no Airline from New York to
Singapore and I'm saying that if I have
a billion dollars of capital and a a
bank in Singapore wants to wants to
borrow that capital
or they want uh they want to lend me a
billion dollars of capital I will be
happy to pay a transaction fee to Move
It from their Bank to my
hands I'm said why do visa and
MasterCard work they charge transaction
fees so what I'm saying is in the
finance everything in the finance
industry runs on transaction fees so I'm
just I what I'm hearing you saying is
that you don't have a concern on that
because ultimately you think there's
going to enough velocity of transactions
that transaction fees are going to
handle it and anybody that's paranoid
that there won't be enough movement
they're just
incorrect of course it seems obvious
it's like saying
well how about every other service on
Earth they all run on transaction
fees right so what's the most important
service you got to offer right this the
service of of moving money I mean
everybody pays M pays fees to move money
it's a massive business right Visa
Mastercard the entire the worldwide
banking establishment it's all based on
fees all of it so yeah I mean I think I
think when you get to the point where
you have trillions and trillions of
dollars of
capital then people are going to pay a
fee to do the
transaction we do it now when I buy bit
coin I have to pay a fee to receive the
Bitcoin then I have to pay another fee
to move it in Coal
storage if I ever want to sell it or if
I ever want to pledge it or if I ever
you know want to do anything with it I
have to pay a fee to move it on the
blockchain so transaction fees are going
to continue right people going about
Quantum Computing you you mentioned that
earlier do you think that uh as Quantum
Computing Rises up because recently the
Google made the willow announcement that
it's able to run computation so much
faster um will Bitcoin simply adopt a
new security protocol what will that
look like I think that that was a
marketing Announcement by Google I mean
there doesn't seem to be any single
practical application for The Benchmark
so they created a Quantum Benchmark they
announced that they perform well on the
quantum Benchmark but there's not any
useful application for it anywhere in
the world right
that's the that's the first observation
so you might be getting concerned
but no one's come up what they can do
with it so the second uh my second
observation
is if you create a powerful
computer the very obvious thing you
could do with it to make money is to
mine Bitcoin with it and so the first
place to use a powerful computer is to
mine Bitcoin which increases the
security the
network my third observation is if you
really come up with a computer powerful
enough to crack crack
cryptography the first thing you're
going to crack is Google itself right do
you think that Google would sell a
computer that destroys its own network
which is kind of ironic to me right like
that's also the acid test right if if
you're going to crack crack the
cryptography you would actually crack
the networks that Google Apple Amazon
Microsoft run and then you would crack
every single government Network and
every banking Network and if you could
crack all those
networks you wouldn't need to steal the
Bitcoin 99.9% of the stuff in the world
isn't in the Bitcoin
Network so if you hyp it and but I don't
think Google is selling such a device
right I I don't know what'll happen but
the entire thing is a is a little bit of
a parody to me um if we just because you
never think it's going to happen or
because Bitcoin is Nimble enough that
when something like that happens they'd
be able to adopt a new security protocol
what I'm saying is all the existing news
is just climatology alarmism where
someone is saying I invented a hyper
powerful computer and then it's being
used by an entrepreneur to Market their
new Quantum token like the number one
use of it well that's why we're talking
about it right the number one use of
this is to actually Market uh a a yo-yo
token that some someone has that has a
Quantum resistant algorithm and they're
hoping you think that the quantum threat
is a
threat I'm just going to
indulge the fantasy for a second let's
say sometime in the next 30 or 40 years
or whenever it happens someone comes up
with a powerful computer which we will
call a quantum computer which actually
does something useful and the useful
thing is it craps cracks
cryptography then I would acknowledge
it's a problem for the human race it's a
it's a problem for every government
every company every
individual because if I really can crack
cryptography that means everything
that's digital in your life is now at
risk that means I can launch you know
nuclear weapons that means I can take
over the government that means I can
have the interpole kick your door in and
shoot you with a faked arest arrest
warrant right so the point really is all
of civilization breaks down into chaos
if Dr Evil gets the hypothetical quantum
computer that works with that really
does work let's imagine that threat
what's my response the response is
obvious which is every computer
scientist on the planet has a vested
interest in upgrading the cryptography
that we use to secure our networks and
our
systems we will do that the that the if
if the quantum computer the quantum chip
that Google offered actually threatened
cryptography Google's own Engineers
would be releasing a set of of uh
upgrades to their own encryption and
they'd be huddled with Microsoft
Engineers right now because Google and
Microsoft would be the two biggest
losers and if they didn't Zuckerberg
would be doing it at
meta so ultimately it's not uh it's not
a Bitcoin specific thing it's a human
race specific thing and let's just
reframe it as what happens if we come up
with a computer that can break our
current Shaw 256 you know techniques or
current cryptography and the answer is
we're going to upgrade it we'll upgrade
the software Bitcoin is a Bitcoin is at
its core it's a
protocol like English like
math if I come up with a way to hack
your phone and send a message from you
to the government saying you're going to
topple the government I have corrupted
your communication technique but you're
not going to abandon English are you
right and if I come up with a protocol
to basically put false numbers into your
database that might doesn't mean you're
going to abandon base 10 math I mean
Bitcoin is a bunch of honest people
smart money they all decided that they
were going to store their money in a
bank in cyberspace that they
trust the bank is getting upgraded all
the time the software is upgraded every
year the hardware is upgraded every year
and so the implementation of the
protocol will change over time and if
there is a Quantum threat we will react
to the quantum threat just like
if you were to go to the Microsoft
shareholder meeting and said hey I heard
Google just released the quantum chip
and it looks like it's going to crack
your cryptography and therefore should I
sell my Microsoft stock and buy Quantum
yo-yo stock I bet you satch and Nella
would say no don't buy Quantum yo-yo
stock because it's an overdone fear and
Quantum yo-yo doesn't actually have the
support of every company on Earth and
doesn't have a trillion multi-trillion
dollar market cap and it doesn't have
have all of our engineers and everybody
on Earth hasn't decided to standardize
their Office Products on Quantum yo-yo
whatever stock they're using Microsoft
don't worry we're adults if it does
become a threat in the future we'll
upgrade our software to deal with the
threat when it happens for now the
reason people buy Bitcoin is it's better
monetary protocol and the reason that
they Ed Google is it's a better search
engine and the reason they use Microsoft
is it's a better enterprise software
suite all three of them have to deal
with this uncertain thing we call the
future and I think that they'll probably
figure it out if they don't figure it
out right then they'll be replaced with
something better but but I put my money
on bitcoin first because the
protocols whether it's the metric system
or the English language or base 10 math
or Bitcoin those
protocols they're the most durable thing
in the human race and they will Outlast
the companies and the
countries all right makes sense um I
want to talk more about the US strategic
Reserve doing that in Bitcoin uh if you
had time to sit down with President
Trump what exactly would you advise him
to
do I would
say that
um m
decomposed into currency and capital the
US dollar is the world's Reserve
currency Bitcoin is emerging as the
world's resered
Capital gold used to be the world's
Reserve Capital Network gold became
ineffective in the 20th
century Bitcoin is becoming the digital
gold of the 21st
century you understand
gold
and you understand digital gold if you
want the US to remain the
world's greatest power the economic
leader then your agenda ought to be
economic and Technical
leadership that means create a regulated
stable coin um make it possible for a US
Bank or a US company to issue a dollar
back stable
coin like tether uh like Circle create a
regulatory environment a digital assets
framework if you will where tether can
relocate to the US and then expand the
stable coin Market from 150 billion doar
to10
trillion and you will create1 trillion
of demand for us treasuries custody in a
US
Bank the demand how do you you create
the demand they create the demand
because there's 10 trillion of stable
coins issued the reason there's 10
trillion do of stable coins issued is
because American companies can do it the
if you are you asking why will people
want to buy the stable coin no no no I'm
saying how how are we creating the
stable coins is it are we locking up um
are we backing it with Securities
treasuries excuse me uh are we talking
about money what I'm saying is what I'm
saying is the US should create a law
that allows a US Bank or a US
Corporation to issue a US dollar stable
coin like usdc or
usdt and back it with us dollar
equivalents the definition of the stable
coin would be you have to hold US dollar
equivalents that would create the demand
for1 trillion do of us treasury
bills right the big idea here is let
sorry let me say it slightly differently
make sure I understand you're saying if
you back the stable coin with treasuries
to the tune of1 trillion saying you
define the law so that you have to do
it's not an if it's the definition of
digital currency is a token Pegg to the
dollar backed by us treasuries that's
the definition of the currency that's
what the government stable coins are by
definition tied to
treasuries what I'm saying what I'm for
not now like what I'm saying is you're
asking me what the government should do
and what I'm saying is the government
should create a law that allows us
companies and US Banks to issue stable
coins and the definition of the stable
coin the def a stable coin is a digital
currency yep the definition of the St of
the the digital currency is a token
pegged to the dollar backed by US dollar
equivalent sitting in a US
Bank that's missing right now that
doesn't exist the reason that tether is
not in the US is because it is
impossible for tether to come to the US
and do that thing if the US did that
then the stablecoin float would go from
150 billion to a trillion to 10
trillion and the US dollar would become
the world Reserve digital currency on
every iPhone and every Android phone and
everywhere in the world and so I know if
I'm going crazy are you are you picking
numbers just sort of randomly or is
there math that backs up it would go to
trillion that's what I think it would do
that's the demand for that asset 10
trillion because there's $900 trillion
dollar of wealth in the world we could
go back to the Cris
chart about $450 trillion of it is uh is
you know for assets held for use for
their use case and the other 450
trillion is store of value but you can
see it's pretty easy to get to 10
trillion are you are you suggesting
that's too much or too little no I'm
trying to track whether that number is
tied to something that I should already
be aware of or uh if you're just giving
an example it's 1% of the global
economy right 1% of the global economy
wants to be a medium of exchange and the
dollar yeah but so it we can stipulate
it's my opinion if you like
you asked me what I would what advice
I'd give the administration though so
I'm giving you my advice which is you
want the US dollar to be the world's
Reserve currency and you want the US to
own the world's Reserve Capital
Network for the US dollar to be the
world's Reserve digital currency if you
want to be the world's Reserve currency
and you want to cement your control for
the next hundred years then you want the
US dollar to move at the speed of light
on billions and billions of devices okay
how do you do it you need to stable coin
backed by US dollar equivalence who
should issue it a company in the
US either a bank or or a public company
like Circle right and uh and how do you
ensure it's good for the dollar well you
just make sure that it's pegged one for
one the US dollar equivalence now let's
go to bitcoin Bitcoin isn't medium
exchange it isn't the currency it's
Capital it's digital gold what uh what
the government ought to do is is sell
their gold they have $600 billion doll
of gold they ought to just sell it and
buy Bitcoin with it and you could buy 20
or 25% of the Bitcoin network with the
with the proceeds from selling the gold
the goal ought to be for the us just to
buy four or five million Bitcoin after
you do
that you've demonetized the gold Network
so the gold network is the 19th century
World Reserve Capital Network you might
as well just sell it all the people that
will own it will be the enemies of the
United States and the gold network will
go from being worth $20 trillion to
being worth four trillion or three
trillion you'll just drive it into the
ground go will go to $2 $300 an
ounce and anybody holding gold as a
reserve asset is bankrupted or has has a
worthless Rock just a shiny heavy Rock
um and you're buying Bitcoin in the Swap
and then Bitcoin goes to hundreds of
trillions of dollars of coin and you end
up with 50 trillion to1 trillion dollars
of
capital and then what happens to the US
the the US becomes the economic leader
of the world for the next hundred years
we're the richest country in the world
we negate the entire debt if you
generate a $50 trillion capital gain
with Bitcoin you offset the existing
national debt uh and you become a net
creditor nation and the dollar permeates
everywhere
okay what's going to pay for this Tom
well first of all everybody with CNY or
rubles or any African currency any South
American currency even the Euro they're
probably just going to trade all their
currency for US dollars for the digital
currency of the US second anybody with
capital assets outside the US that can't
get access to the dollar to capitalize
their their company they're going to use
the stable coins to capitalize their
entity so you're going to have Capital
flows from
currency and you're going to have a lot
of other Capital flows there's a there's
a lot of people in the world in in Cuba
in Venezuela in Argentina they would
sell their real estate they would sell
their um their Equity they would sell
their currency they would sell their
bonds just to buy the US dollar I mean
that's been proven in Argentina that's
been proven in turkey that's proven in
Lebanon so you have a lot of currency a
lot of money just flow into the US
dollar via the
stablecoin um
and by the way an anecdote is you know
in Europe if Europeans are given a
choice between the digital Euro and the
digital dollar they 99% of the time
choose the
dollar that mean people in France and
Germany and Italy and Greece want the
dollar now if I go to China and I give
them a choice between the digital CNY
and the digital dollar
the vast majority of the money chooses
the dollar that's why it's illegal
that's why the Chinese have a law making
it illegal for you to trade
crypto because everybody wants it so bad
they would all buy it so so one we're
talking about economic physics now right
capital capital flow money water flows
downhill and money flows to its most
secure uh best
home so on the capital side with regard
to bitcoin what would happen
is everybody in Africa South America
Asia they would all dump their physical
assets and their low they're low quality
bonds
currencies real estate equity and they
would buy Bitcoin because everybody
would rather have a piece of cyber
Manhattan they would all rather be in
the US they'd all rather have the high
quality property but they can't buy it
they can't phys basically it's illegal
for do you know it's illegal in Nigeria
for you to hold
dollars I did not you know I mean
there's a lot of countries you know it's
illegal in China for you to trade in US
Stocks or or buy dollars so there are a
lot of places you can figure it's
probably illegal in Russia
too I think um most places in the
world they have Capital controls and the
capital controls can range from you
can't take your money out of the country
to
you can't even hold those foreign assets
and do you think that tether or
something like that lets them get around
those regulations that's how they're
that's why tether is successful today
the reason that tether is a hundred
billion dollar Plus network is because
people want dollars so bad they're
willing to buy it from a company that
isn't public that isn't a
bank because they want the
dollar right if tether were allowed to
uh incorporate in the US and operate in
the US it would probably go from a
hundred billion to a trillion dollar
Network in a
hurry right but there'll be competition
let them compete with Goldman Sachs and
JP Morgan and circle and
whoever and may may the better company
win but the point I'm getting at here is
the capital from the 20th century is
going to flow into the 21st century
people are going to sell gold and
they're going to buy digital gold
they're going to sell Antiquated real
estates and aged apartment buildings and
natural gas fields and they're going to
sell soybeans or whatever in Siberia and
they're going to buy 21st century
assets um and that means Bitcoin among
other things and then capital in foreign
Nations is going to flow toward the west
and it's going to Capital will flow from
the East to the west and it'll flow from
Europe to the
US and the only reason it doesn't is
because we don't make it easy for the
money to move and the way to make it
easy Embrace Bitcoin and anybody can buy
Bitcoin anywhere in the world there's
15,000 crypto on ramps and you can do it
peer-to-peer so Embrace Bitcoin and that
that is a capital Network that the
United States would own and benefit from
and all of the capital from your enemies
and all foreign capital and all
Antiquated capital and all inefficient
thermodynamically unsound Capital it
would all flow into the Bitcoin
Network and if we issued that digital
currency that stablecoin then all of the
world currencies would immediately swap
to the dollar for you know for all
except for their next four weeks of cash
flows because everybody wants the dollar
everywhere out the US and so this is an
example of leading through a digital
assets
framework right and the two most
important digital Assets in the world
are digital currency in the form of the
dollar and digital capital in the form
of
Bitcoin and the Trump trade is I just
swap you know I swap the gold for the
Bitcoin and I make 80 trillion in the
trade and I catapult the United States
to worldwide economic dominance for the
next hundred years that's the advice I'd
give you very good advice uh but given
how many people in the US hold gold what
do you think the odds are that he'll
actually do
that I don't
know but it doesn't you know the gold is
the last twist that the reason to sell
the gold is because uh foreign central
banks and the competitor to bitcoin over
the long term is gold so the entire
trade becomes free and it becomes
geopolitically
wise because not only do you enrich
yourself with an extra 100 trillion but
you also bankrupt your enemies Banks so
that's why you should do it but will
they do it maybe not but the fallback
would be you keep the gold by the way
Gold's getting demonetized whether you
like it or not like I will just say you
know gold is failing as a capital asset
it'll either fail because a nation state
puts a heart puts a a stake in the heart
of it or it'll fail because the free
Market's going to short sell it I mean
every rational investor that holds gold
is going to dump the gold to buy Bitcoin
every year so it's going to it's going
to be demonetized no matter what so the
reason to sell it is because it's a bad
investment and it's happening anyway but
let's say that they don't well you just
use $600 billion dollar of US dollars or
borrow 600 billion to to do it it still
becomes a effectively a free
transaction you're going to borrow 600
billion and you're going to pay off 40
trillion or you're going to make 60 80
60 to 80 trillion so so it's a it's a
pretty obvious swap even with just
currency and would you be perfectly
happy to see them inflate the money
supply to do
it yeah as I said I mean uh if you're if
you're buying the Bitcoin before it goes
up by a factor of a 100 is not inflation
it's a
cre right you could you could spend a
trillion dollars to buy the Bitcoin and
make a 100 trillion and it's 100 to one
gain so if you look at um if you look at
the history of the us we actually bought
Louisiana from
Napoleon I think it was like whatever 15
12 or15 million we bought Alaska from
the Russians for $6 million we bought
California for the Mexicans for $12
million there was inflation to do that
or they just paid with a check or
currency they were all good Investments
you know New York was bought but what 60
gilders or something
nothing yeah so so I think that
the look the point I really make is you
as an individual ought to borrow money
against your house and buy Bitcoin if
you're borrowing the money at 6% or 3%
and investing it at 30 to 60% it's it's
a good idea for you if you could sell
10% of the equity in Impact Theory the
corporation at a fair value I would say
inflate your Equity sell 10% of your
stock buy Bitcoin with it because
bitcoin's going up 30 to 60% a year in
the worst case you'll have Diversified
in the best case you'll actually grow
faster and the First Nation to print
money the First Nation to print their
own currency to buy Bitcoin
wins right
Tom look what micro strategy did we
basically issue our own currency our
stock and we buy Bitcoin what happened
we went from a billion to hundred
billion doll market cap is what happened
is it inflation it's only inflation if
you print the currency to invest to make
a bad
investment right if if you if you print
the currency to buy something that's
appr appreciating faster than your
inflation rate it's actually a cre right
so the C the hurdle rate is the
7% and the problem generally is uh is
most governments print the currency to
make a poor investment instead of
printing the currency to make a good
investment and that's why they can't get
out of their hole when you look at the
hole that we've dug for ourselves and
the adding a trillion dollars every 100
days to the debt do you see this as like
a no-brainer way to get out of
that yeah I do because because you want
to grow your way out you don't want to
tax your way out and austerity isn't a
good idea tax isn't a good idea what's a
what what what is this the way you get
out
well if we create a billion robots and a
billion AIS and they all do the work
smarter faster stronger Cheaper by a
factor of a million
then that's probably good for the
economy right I mean you're going to
harness digital technology
and that's going to help us grow our way
out if you remember what I said at the
beginning of the podcast and I said it's
a 10 to 15 trillion do entropic lapse
every year due to physical and financial
Capital so I'm point you know you're
saying how are we going to pay off a 30
or $40 trillion debt what I'm saying is
I have a network that's worth trillions
of dollars a year maybe 10 trillion a
year and so if you actually uh install
the network it's worth1 trillion dollar
a year to the human race how long does
it take running a a thing worth1
trillion doll a year to pay off a $40
trillion bill it's like what I'm coming
back to is is you have a problem problem
and I and I invent um a modern Fusion
reactor a pocket Thermo you know a
pocket Fusion reactor that will run for
a million years and give you infinite
power you know from a bottle of water
and I offer it to you and and you're
like no I'd rather just tax everybody to
death like I I think that if you're
smart you figure out we'll just take a
few of these and this is how we're going
to grow our way out of our problem and
I'm offering you the same thing a crypto
reactor and I'm
saying the
solution to our economic problem is
harness
technology to generate trillions of
dollars of economic value a
year the conventional thing that
everybody
understands is creating a trillion
dollars worth of new products and
services that didn't exist before right
that's the I got to produce more candy
bars more cars more planes more trains
More Travel More concerts more buildings
more houses more more more more more
more more that's conventional that's the
p&l side robots and AI will help with
that but the
unconventional the monetary the economic
side the very deep Paradigm shifting
idea is here's my idea um eliminate the
toxic capital from the civilization that
it's destroying $1 trillion dollar a
year worth of products and
services the
part the average life expectancy of a
human was like 30 when we drank dirty
water and we had dirty food and we had
dirty air and we had dirty blood and we
had doctors with dirty instruments and
everybody's just dying and you can't
grow your way out of that with a better
Factory but if I come along and say this
is clean water give this to your kids
they won't
die okay it's it's the taking away of
the germs from the food and the water
that makes you live twice as
long Bitcoin is about taking away the
germs right the toxins from the capital
of the
civilization right when you see
crumbling devastatingly okay is that I
was gonna ask what the most
devastatingly bad capital is
it's just it's just all imperfect right
like every every hyper inflating economy
go to Africa and ask why are they poor
they're poor because all the capital is
toxic what about the Yar Republic what
happens when the capital collapses okay
the government collapses what happens
next Nazi Germany what happens next
World War II okay a 100 million people
eventually
die right so the crumble Ling Capital
creates a crumbling
civilization every single civilization
for 10,000 years everyone in recorded
history has as one of its root causes
the capital crumbles the monetary system
collapses you know and then what happens
is they can't they can't uh feed
everybody so then what happens is the
people complain so the soldiers kill
them then what happens well eventually
you can't pay the soldiers and and the
soldiers
Mutiny because they're not being paid
and then what
happens the people that pay their
soldiers come over your border and
defeat you and then the historians write
oh yeah The Barbarians came and they and
they toppled our civilization due to no
fault of our own but the fault was the
capital
crumbles agreed but you're you're
dealing with countries that want control
you've talked about uh China won't allow
you to transact in dollars a lot of
these places want to make sure that
you're using their Capital so even if
Bitcoin is this perfect system why won't
it hit an immune response from these
nations that want
control they will bitcoin's not going to
solve The World's problems what I'm
saying
is if I give you Cen water it solves a
bunch of problems if I give you
electricity it solves a bunch of other
problems if I give you clean uh clean
food food right healthy food and ster
sterile jars it solves a bunch of
problems even in the civilizations you
don't agree with I think you would agree
that if we turn off the
electricity they have a
problem right if I kill the water and
the power in New York City everybody's
going to die it's just that simple right
I mean so what I'm proposing is we
inject digital energy into the
civilization
Bitcoin is digital energy it's digital
Capital right and I'm telling you I
think it's worth1 trillion
dollar and I'm saying if you have an
economic problem if if you were running
a factory and you were in debt and I
came to you in 1900 and you said well
Mike should what should I
do I'm thinking about cutting the wages
of all my employees making them work
twice as hard and whipping them
occasionally and then barking at the
customers and den nurturing the product
because that's what I need to do to stay
in business what do you think I would
say well Tom I'm an engineer what I
think is I'm really interested by what
this Edison guy is doing with
electricity and I think you can rip out
this the coal you know the coal powered
steam engine in your factory and maybe
Electrify it and then I think you ought
to look at what Henry Ford did with the
assembly line and the internal
combustion engine and maybe instead of
whipping the people in your Horseless
Carriage buggy whip Factory and then you
know and then and then begging a
politician to buy your buggy whips and
your Horseless carriages maybe you ought
to invent a you know a car and maybe you
ought to do it with
electricity and maybe you ought to use
this this physics and then maybe it'll
be such a delightful product that you
know demand for the product will go
through the roof and that's what I think
about this I think that Bitcoin is a
digital technology that solves an
economic problem that's worth trillions
of dollars I don't think it cures
cancer I don't think it'll stop Wars
people had Wars after electricity and
clean water I'm just pointing out that
Henry VII dies of gout because he didn't
have clean water and of all the things
that Henry VII would have liked to have
bought with all of his power and he was
the most powerful man in the
UK he would have liked that right this
thing we take for granted this thing
that makes us go from living 32 years to
living 80
years clean Capital clean money digital
money high frequency programmable
money it's the it is a protocol for
prosperity and I think that if you're
you're looking
for if you're looking for a politically
sound strategy the most politically
sound strategy is not to tell people
that austerity is the solution or
bludgeon them to death it's just to
introduce a new technology that Delights
and enriches everyone and spreads like
wildfire and I think Bitcoin is
spreading like wildfire just like if
it's a good thing whether it's the
internet or an iPhone or clean water or
air conditioning or an automobile you
don't got to bludgeon people you don't
got to bark at them the average person
looks and and they know why they want to
drive in a car or fly in a plane or have
air conditioning I mean I live in
Florida all of Florida is due to air
conditioning right the entire State
wouldn't be here without
electricity and
HVAC and that is my contention with
regard to digital capital I think that
the world's full of problems but half of
them are economic problems and if you
want to solve your economic problems
solve it with
technology which is egalitarian
utilitarian right that is
nonpartisan because no one can agree on
religion and political issues but they
can all agree that they would like to be
more powerful more prosperous more
comfortable more
capable and generally the only countries
on Earth that are anti- technology don't
last long you know remember the Japanese
they denied gun powder powder that
didn't work well the Chinese tried to
keep guns out of China that didn't work
well either I mean eventually you know
technology is coming to your Shores and
if you resist it you know your
government's going to collapse and your
ideology is going to
collapse so I I think this is a very St
forward practical approach to making the
world a better
place yeah agreed I don't think it will
be adopted as uh such so it'll be
interesting to see the the war of the
powers with different countries taking
different approaches I'm certainly
encouraged by Japan seems like they're
contemplating having a strategic reserve
of Bitcoin that's amazing especially
given the economic troubles that they're
having but here in us what do you think
about David saaks is he going to be
somebody that's in the president's ear
uh that's pushing this agenda have you
heard him talk about this
issue I don't think there's anybody
better qualified uh to do that job than
David saaks I think he has extraordinary
good judgment with regard to economics
human
behavior
technology right and and good intentions
uh for the US and the world so I think
he'll be he'll be great and I think that
in general the leadership that's in the
incoming Administration is is very Pro
technology pro- Freedom pro pro property
rights pro-
entrepreneurial in and pro-innovation
so I think that uh it's a good team and
I'm very
optimistic have you spoken to saaks
directly uh I talked to all a lot of
people uh but I don't share uh what I
say so it's inconfidence
yeah very fair uh I certainly think we
have a sense of um how you would be
approaching this uh what do you think
about um Japan and what they're doing do
you think that they'll move forward with
that do you think that they have any
other way out of the situation that
they're in and could Bitcoin be the
solution to their whatever 40-year
stagnation you know I I think that
adoption of Bitcoin it starts with
retail then investors then small
corporations then large corporations I I
don't think large governments will adopt
it first I think small governments will
adopt it but but primarily it'll be
adopted at the institutional level next
so and I don't really think it's even
necessary I mean I'm not holding my
breath for that I I think that uh there
are examples like metap planet in Japan
that are metap Planet I think it's the
number one stock on the Japanese stock
market they're going to get noticed and
I think people in Japan will start to
learn about
Bitcoin but um but it'll be a solution
for the individuals and the families and
the
investors and then it'll be a solution
for the companies long before it's a
solution for the country uh governments
are normally the most conservative
actors in The Last to move you know ju
just like any technology right think
about how all technology propagates your
iPhone your web browser your electricity
or whatever it starts with the you know
the early adopters the innovators and
then the small companies and the startup
and the big companies they dismiss it
then eventually the big companies get
threatened by it and then they embrace
it and then after that it ripples into
government but it's government normally
when they try to do something they're a
little bit slower than
normal yeah it'll be interesting do you
think that the Red Wave here is going to
Buck any of that Trend in the US are we
going to see a pretty gross acceleration
in
uh adoption of um anything Innovative or
do you think that we'll get bogged down
in the normal Quagmire and uh the
traditional system will still make it a
slow slow I think that the US is now
actually the worldwide leader in digital
assets I mean we're going to catapult
from being you know 25 30% of the way
back from the pack in the middle of the
pack we're going to catapult to number
one because most of the rest the world
is fearful of innovation if they're
fearful of getting ahead of the
US so even if it's a good idea like all
the ideas I just laid out I mean and the
dig a digital assets framework is a
great idea I think that other countries
would be afraid to adopt a good one if
they thought the US was more
regressive so now I think very
Progressive digital assets ideas will
get adopted by the US and I think the us
has the economic
capability the financial power the
political power and the technical power
to commercialize all those so at this
point the US has gone from being right
in the middle and and not very
Progressive to actually being number one
the greatest opportunity I I do think
it's quite likely in the next four years
we'll have an incredible crypto
Renaissance in the
US and I I just pointed out I really
think the US is positioned to dominate
digital currency and digital capital and
it's a 10 trillion dollar opportunity on
the currency side and it's a hundred
trillion dollar opportunity on the
capital side I don't think any other
country has a has an opportunity that
big I think the US is really in the pole
position at this point
and before November
5th if you thought it was going to be a
Blue Wave you would have been you would
have thought there won't be a digital
assets framework and the US is is going
to grudgingly accept Bitcoin but they're
not going to embrace the other
ideas but after November
5th I think now it's more likely than
not that we will get a digital assets
framework you will get digital tokens
digital Securities digital currencies
digital Capital digital exchanges and
the US will be the big winner and all
those things that's what I think now not
without some you know some Poli iCal
maneuvering back and forth and you know
and
some some negotiation and
compromise but it seems the writing is
on the wall and the path of Le lease
resistance right now is the creation of
a multi hundred trillion doll digital
assets ecosystem and a multi hundred
trillion dollar digital Capital
ecosystem as part of it that's what I
expect now
when you talk about the people that are
really going to get this are people that
understand economics and physics
somebody like Elon who certainly maybe
he understands economics maybe he
doesn't but certainly understands
physics uh still continuing to uh at a
minimum sort of troll with the idea of
Doge uh are you surprised at all that he
for a minute seemed to be really into
Bitcoin had it on the balance sheet
seems to have moved away from that Peter
teal has also moved away from it um
what's your take on on Elon specifically
and
Bitcoin well there's a lot of things
going on in the world right now right
there's a there's a 100 different
Industries and there's a lot of dynamic
um questions right so solving the
problem of space travel and solving the
problem of electric guitar electric cars
and solving the problem of satellites
and solving the problem of government
efficiency and solving the problem of
free speech and solving the problem of
digital capital and solving the problem
of digital currency and solving the
problem of War
and solving the problem of medicine and
solving the problem of health and
solving the problem of overregulation
and solving the problem of overbearing
Capital markets and solving the problem
of climate and solving the problem of
filling the blank I could go on for
another hundred problems that's a lot of
problems um I think uh this
Administration has the greatest number
of problem solvers we've ever
seen um I think that Elon is the number
one sponsor of Bitcoin and the
Magnificent
7 I mean if you look at it right take
the top seven companies in the world
okay which one has Bitcoin on the
balance sheet
Tesla right so truthfully Elon is the
leader in understanding digital Capital
you know on the Bas Tesla has C has
Bitcoin SpaceX has
Bitcoin so I think elon's been a great
Advocate but so is um VC
you know um ramas Swami and and uh you
know so is I think David saaks
understands this and I think the
Secretary of the Treasury Scott bessent
and Atkins the head of the SEC and Trump
you know both Donald Trump and Eric
Trump you know and Howard
lutnick the head of Commerce so I think
that you've got a lot of people that
understand
it I think if you're parsing people
words and saying did they say the
perfect exact thing like I don't talk
about the other 99 things I don't utter
my opinions on health and vaccines and
foreign policy and the like because you
might not exactly parse your words
correctly or there might be someone that
spent 100x as much time as you that's a
bit more nuanced so uh I think it's in
very inevitable that when you are asked
to opine on a 100 subjects
you'll occasionally say you'll
communicate uh with uh a Precision that
leaves you open to criticism from
someone but I don't really get worked up
over it I think that uh we've got a good
team right now and I and I think that
they understand the need for digital
transformation for in
Innovation and uh they will pursue it as
uh as effectively and as as as rapidly
as they can you know subject to the
constraints of God and
man so at the risk of getting you to
comment on something that you don't have
enough uh time looking at as you look at
the first call it 18 months of the Trump
presidency what what to you would just
be an unbelievable win if they actually
got across the finish line and whether
that's dumping gold and and buying uh or
getting in place a strategic reserve of
Bitcoin or simply making a statement
about we're never going to sell um what
what would a real Victory look like in
the first 18
months I think a digital assets
framework could be a huge win it'll
bring the entire digital assets industry
to life and it'll that from an SEC
perspective like hey here's exactly what
you can and can't do I think if they
have a digital assets framework that's a
big a big milestone if they put in place
um a much lighter regulatory environment
if they if they remove a bunch of
crippling overbearing regulations that
that um prevent entrepreneurial
activity that uh that make it very
difficult uh for companies to do
anything I think that would be a big win
and you know it's and then beyond that
um avoid in avoid placing a crushing
burden on on the capital markets or or
on free free market so that people can
move about and fix the problems in the
world I think that I think that all of
those things are quite possible they all
be good in the first 18 months they'd be
great for the world and what do you
think is going to be the intersection of
AI and uh Bitcoin specifically AI
represents digital intelligence it's
going to go into every product every
service every company you know
everything it's going to
permeate everything in the economy
uh the result is they're going to be
very valuable
companies and I think those companies as
they get more valuable are going to buy
Bitcoin I it's gonna I think AI is going
to fuel the Capital Market so it's going
to create lots of capital lots of
productivity and I think that that will
flow into Bitcoin and I think
um I think long term uh the AI will want
to move money at a faster speed they'll
want programmable high frequency money
and that'll be Bitcoin and so I think
that I think
that the uh the growth of AI systems
will result in demand for digital
capital from directly from the AIS and
indirectly from the companies that
create the capital I think it'll it'll
drive both of
those and that that would be my first
order and second order uh impact there
are some other possible things that
could happen with AI but they're more
they're more speculative and I think
those first two things are the things
that drive multi-trillion dollar impact
on the capital
markets I love it Michael every time I
get a chance to either research you or
spend time with you it is uh absolutely
mind-blowing how many more pieces of the
economic system I begin to put together
um where can people follow along with
you learn more about what you're up
to I post everything uh every day on X
sailor s y l r and so if you want to
follow me follow me on Sailor and
otherwise uh we collect a bunch of
Bitcoin materials on hope.com
hop and my personal website is
michael.com and I post a lot of my
personal speeches on that just
michael.com so those are the three
logical resources any wants to anybody
wants to follow me or or look at
anything that I've uh
posted excellent all right everybody if
you have not already be sure to
subscribe and until next time my friends
be legendary take care peace if you like
this conversation check out this episode
to learn more you are being slaughtered
and you don't realize this there could
be a dollar crisis they debasing the
currency by 15% a year I mean it is
inevitable that it's going to happen but
does that just mean that we're crazy and
it's going to be fine I'm not saying
everybody is wrong I'm saying that
people that believe in Bitcoin are wrong