moonshots ep92 michael saylor bitcoin transcript

is there a situation or an event that you view um that could potentially lead to the collapse of Bitcoin I think the way to understand Bitcoin is everything you learned in economics and about money and your entire life was pseudo science you know and superstitious so I think all the smart money all the smart people in the world that don’t trust the bank don’t trust the currency want to keep their money they’re all discovering Bitcoin it’s been quite the journey buddy been quite the journey yeah and I I thought I was just going to retire Into Obscurity in 2020 and then uh Co hit the world turned upside down everything stopped and uh and Bitcoin presented itself and you know what I find fascinating a lot of people don’t know this is you discovered Bitcoin not in 2010 or 2014 or 2018

[00:01:00] but as a result of Co remember being with you in Miami you’re telling the story I’m going that’s incredible yeah um I really I heard about it back eight nine years earlier I think I I tweeted very famously in 2013 that it was interesting but I thought it would go the way of on gambling and get banned and um then I forgot that I tweeted that and then in August of uh 2020 I tweeted that I bought $250 million of it and at that time it it didn’t occur to me that I was the first person to publicly announce that I’d spent that much money um and uh then you know on my Twitter or my ex account now I I have this phrase you know Bitcoin is a swarm of cyber hornets and the Cyber Hornets were all the people on the internet like the person that made that video that was not me I did not make that of course not

[00:02:01] like uh but they’re always doing that and so one of the Hornets scanned every single thing I tweeted in my entire life and they dredged this up they’re like haa you know look how much money you lost you could have bought it $100 or something and and uh I just kind of recycled the Bitcoin Trope which as I said everybody gets Bitcoin the price they deserve um that’s true you know speaking about the up and downs and so forth uh you have extraordinary uh tolerance for risk and resil resiliency I think is the right word um I drudged this up on the left is an article from 2000 lost $6 billion in a day and then on the right is uh actually February it’s the wrong date

[00:03:00] 2024 not 2000 uh where you made 700 million do in day how do you sleep at night with that kind of fluctuation you just got to have a mission right yeah it’s you you got to have a mission in your life so uh you can’t really control the fluctuations in the market you can control your reactions to them so I in this particular case my my view on on bitcoin is the reason to do it is because it represents freedom and sovereignty truth integrity and hope for the world and that being the case it’s going to outlast all of us so you know I’m kind of thinking the Bitcoin goes on long after micro strategy’s gone and micro strategy the company probably goes on long after I’m gone and uh you know I’m my view is

[00:04:00] if we’re remembered for advocating and accelerating the adoption of Bitcoin throughout the world then that will have been success and I don’t really need anything else it’s amazing and I’ll take the I’ll take the beatings as they come or go in order to get to that end goal because I’m sure it doesn’t come without turbulence but the conviction that you’ve had that’s guided you consistently right does that go to like first principle thinking of physics here of like this this is just not going to go down this is going to go up there’s only going to be so many and and so forth is that first principal thinking that led you to make this commitment in the face of everybody else questioning it you know I I think one of the great things about MIT uh is that it teaches you to be to think and also it teaches you to start from first principles and the combination of that and Aeronautical Engineering where you have to literally you have to build a machine that will fly through the air or through space by combining you know all

[00:05:02] manner of engineering uh I think that makes you uh confident I my first memory of MIT was was the materials engineering Professor he walks out and he says here’s a tile it just burned off the space shuttle and NASA doesn’t know why it burned off and we don’t know how to fix it what do you think and it was 18-year-old kids and we’re all s 500 of us were sitting in a room and a guy who’s consultant for NASA looks at us and he says you know NASA doesn’t know the solution but what is the solution everybody looks at each other and you can see first we’re all like well did I miss the reading like like was this in a reading and then you’re like and then then you have this dawning horrifying observation that the answer to this question is not in any book written in the history of the world and the guy that had NASA with the original problem sent it to a professor who knows more than you know who’s

[00:06:01] telling you he doesn’t know the answer but he’s asking you and and so first you kind of you’re thinking I didn’t read the reading and then second you’re like scared and then some kid in the front row raises hand says well you know you thought about changing you know the lamination on the on the composits and everybody else looks and they’re like the professor’s going to call the kid an idiot right and we’re all afraid and he goes no that’s a good idea that’s what I thought too and we tried that but that didn’t work and then we all go and then the next kid you know raises the hand and then you think I guess they actually expect us to think for ourself and that and that was how MIT started and it just got it just continued along that line and so if anything when I left school when I left MIT my thought was you have to work excessively hard don’t be afraid of hard work but you can solve the problem and that’s what they do here we were classmates together in unified engineering

[00:07:00] which is probably one of the toughest courses uh there the only way we can get through it was by working in teams on problem sets um I think I probably cheated off your problem sets uh more than the way around you’re too kind let’s talk about Bitcoin so I actually I want to talk about abundance Pete I have one observation which is which is the whole the whole essence of Bitcoin is about creating perfect money and the discovery of what we call digital scarcity as a as a ba digital scarcity as a commodity basis for sound money and and and one of the another one of the tropes in the community is when money is abundant everything else is scarce and when money is scarce everything else in the society is abundant how does that how what’s the logic behind that if you go to uh

[00:08:01] Zimbabwe or you you go to Venezuela or you go to any country going through hyperinflation when they print the currency the currency collapses as the currency collapses the everyone in the economy doesn’t want to take the currency anymore and and you get ripped back to Stone Age barter and so like in in Nigeria this week the Niara went from 400 to the dollar to ,600 to the dollar w so in an economy where the currency I mean that’s a 75% currency debasement in a week when that happens and I see you in Nigeria and I want to buy your house you know next year well the issue is well with what and what will it be worth next year you’ll buy it today or you won’t buy it at all how do I sign a 12-month contract if the money is going to be worthless and 9 months so there are no term contracts how you know how do I trade with you if you you have to trade with someone else and the supply

[00:09:01] chain is 18 months long right when the currency unwinds and the assets unwind the supply chains break when the supply chains break specialization of Labor breaks down the entire economy breaks down eventually everyone has to grow their own food right you want abundance you don’t actually grow your own food in your backyard right productivity drops by a factor of 100 to a th000 if you can’t solve this coin Ence of one’s problem so you need sound money and it needs to work across time and space and the currencies that we use as a medium exchange they might be tradable over over parts of space right now by the way it’s probably illegal to actually pay someone a dollar in Nigeria really yeah like so just just currency controls yeah Capital control you see Capital controls all over the world especially when the currencies collapsed the capital controls go in place so you can’t trade money or you

[00:10:00] can’t trade the currency across borders and of course you certainly can’t trade the currency with with your future self 10 years from now and how do you even trade a currency you know in in collapsing countries you’ll find nobody wants to sign a three-year contract because because the local currency is not going to be worth the same amount in three years so you have a hard time trading in time with counterparties or in space and so the key to abundance is fixing the money problem so you have this insight about you know digital currency digital property the how long did it take you from studying this idea to making the decision to buy 250 million worth of bitcoin I started thinking about it I guess late March April it took about eight weeks before I four to eight four to eight weeks of

[00:11:00] constant thinking before I came to the conclusion it was a good idea and it was probably you know for me to make the decision I had made the decision personally by late may I bought $175 million of Bitcoin in late May of 2020 personally personally but that was just me negotiating with myself and I guess I started probably late March early April so that’s six weeks to get there and then um we had a we have a public company so for a public company to do something the officers have to buy in the outside directors have to buy in the accountants the lawyers have to buy in I want to take us there right so one of your board members one your outside board members great guy Rick is here with us today I won’t call him out but um you walk in what was the process of getting a public board to do this well with the well in that case I actually pull the three most

[00:12:03] compelling videos on bitcoin off of YouTube you know an Andreas Antonopoulos overview of Bitcoin a a debate by Eric Vorhees and Peter Schiff over over Bitcoin versus fiat currency as money probably some other background on bitcoin I put those three together there probably three hours of watching I include some articles some some short articles Maybe by uh by some of the the Bitcoin ogs I sent the package off to each board member I said I got some homework for you it’s probably going to take three to five hours for you to read through all this read through all of it and then I want to meet with you and then I set up one-on ones with each one of them and so I met with each one individually I answered their questions then after that we had a group meeting then after that we broke broke into into committees to study different

[00:13:02] aspects the accounting the disclosures the whatever and so it was a group process and of course the the CFO and the general council at the time were also heavily involved in that did they threaten to resign no okay I it it was it was never a question of of do it or don’t do it it was an observation that the world had come to a grinding halt we had $500 million yielding 0% interest we were under our stock had hit $90 a share the Enterprise value of the company was about $60 a share $60 a share you know where the stock is right now and um we had been competing with Microsoft for about a decade and and for all of those of you who compete with Microsoft you have an idea of what that’s like they have every company on Earth as their customer and they can bundle your product into their

[00:14:00] whatever so it’s not easy competing as Microsoft we had experience and we are under pressure from our shareholders you know it’s like um you have H half of the market cap of the company is cash you’re earning 0% interest you’re not beating the cost of capital the cost of capital is the S&P return so anybody looks at it says if you’re not getting 8 n 10% on the on the capital you should give it back to us so we can invest it and so we’ reached a point where the company was looking at a fast death we just sell the company and call it a day or a slow death we keep the cash and we and the stock is dead money and that means the stock options are dead money and that was the time when it used to be employees work for you because they like the community and the schools and their home and maybe they were loyal to you because they saw you every day in the office but think about what happened in the the second quarter of 2020 when nobody came to the

[00:15:02] office and they could change jobs and go work for Amazon Facebook Microsoft or Google without moving all you do is just repath your Zoom account and and so all of a sudden you’re staring at Big Tech you know the big Tech company’s more powerful than most countries and getting more powerful and you’ve lost the human connection they don’t have to move to San Francisco they can simply take a job and nobody ever got hired by big tech for less money than they’re making working for you so for from our point of you were on the precipice of a a serious it’s like sell the company or just watch all your employees dwindle you’re going to get boiled off and after the after the good employees leave you know the product will gradually deteriorate you know and and you’re competing against a Monopoly

[00:16:00] that has more power than all but four countries on Earth and so we either do we either do that or do that or we take a risk and so we were basically at a point where maybe we should take a risk now having said all that what really happened there is we deliberated it took a long time to deliberate a lot of education and at the end of the day we ended up announcing that we were going to do a a Dutch auction and buy back $250 million of the stock at a premium coincidental with the purchase of the Bitcoin so we didn’t just take that risk we basically said we’re going to take the company on a path you may not agree with but we’ll buy you out and so we were prepared to give up half I had to I had to basically give up pay $250 million for the right to buy $250 million of Bitcoin in August of 2020 right that’s the price we paid that

[00:17:00] Dutch auction was the stock was about 121 122 we offered to buy all our shareholders out at 140 we gave him 20 days think about it we bought the Bitcoin no company had ever bought that much Bitcoin and and by by the way you know following that only block and Tesla did it afterwards but but it was a very rare thing to do of course Bitcoin cooperated by immediately trading down we bought bought it we bought it 11,800 and it traded down to 9800 or something so I was looking like a genius again buying the top the Dutch auction ran but the stock traded above the 140 price after a day or two everyone that didn’t like the idea just traded out at one above 140 we had $75 million tendered we we bought that those shares at1 140 we had $175 million left and we bought Bitcoin coin with that and then

[00:18:00] and so we had basically transformed oursel into a company with Bitcoin as a treasury Reserve asset through that Capital markets activity you know and it was it was in a partnership with the outside investors when you’re a public company you don’t just do it you have to transparently tph I just find it incredible the um I think the Greek word is the kones um uh but to take no it’s a it’s a it’s the it’s the action of a leader who’s willing to take a big risk that uh put the company on its trajectory because it’s so easy to ride a company to the ground it’s so easy just to do what everybody expected you to do uh I’m curious how many folks here in the room own Bitcoin raise your hand High okay so majority of you go home tonight and buy some good for you yeah everybody I want to take a short break from our episode to talk about a company that’s very important to me and could actually save your life or the

[00:19:02] life of someone that you love company is called Fountain life and it’s a company I started years ago with Tony Robbins and a group of very talented Physicians you know most of us don’t actually know what’s going on inside our body we’re all optimists until that day when you have a pain in your side you go to the physician or the emergency room and they say listen I’m sorry to tell you this but you have this stage three or four going on and you know it didn’t start that morning it probably was a problem that’s been going on for some time but because we never look we don’t find out so what we built at Fountain life was the world’s most advanced diagnostic Centers we have four across the us today and we’re building 20 around the world these centers give you a full body MRI a brain a brain vasculature an AI nebl coronary CT looking for soft plaque a dexa scan a Grail blood cancer test a full executive blood workup it’s the

[00:20:00] most advanced workup you’ll ever receive 150 GB of data that then go to our AIS and our physicians to find any disease at the very beginning when it’s solvable you’re going to find out eventually might as well find out when you can take action Fountain life also has an entire side of Therapeutics we look around the world for the most Advanced Therapeutics that can add 10 20 healthy years to your life and we provide them to you at our centers so if this is of interest to you please go and check it out go to Fountain life.com back/ Peter when Tony and I wrote Our New York Times bestseller life force we had 30,000 people reached out to us for Fountain lifee memberships if you go to Fountain life.com Peter will’ll put you to the top of the list really it’s something that is um for me one of the most important things I offer my entire family the CEOs of my companies my friends it’s a chance to

[00:21:02] really add decades onto our healthy lifespans go to fountainlife docomo to you as one of my listeners all right let’s go back to our episode so we had Kathy Wood on the on the stage last year uh and she’ll be coming back again next year and Kathy’s prediction was you know a million to 5 million and uh it was a good week last couple of weeks um and I can understand the decision I well let me back up a second so block and then Tesla bought bit uh Bitcoin in their treasury I remember you having some conversations with Elon about trying to get him to step up even further um why aren’t other companies following suit in a major way doesn’t I mean I think you’ve made your point extremely well no I think the um the primary impediment to corporate adoption by publicly traded companies is

[00:22:02] that indefinite and tangible accounting is toxic to the p&l into the balance sheet so so no no company with a healthy business that’s fairly valued by the market or no company run by a management team that doesn’t have voting control would ever adopt indefinite and tangible accounting because what it does is is it doesn’t just obscure your balance sheet it also obscures your p&l and it even it even it even mixes investment gains with operating gains and investment losses with operating losses so it in essence renders a 100 pages of financial irrelevant and the current accounting is you can’t even profor it out so not only does it make all of your all of your accounting non-comparable across periods it makes all your accounting non-comparable across competitors and it also makes it and it also ties your

[00:23:00] hands with the ability to explain that so so you’re not going to see a a see you would do it because it your choice was a fast death a slow death M and if if you’re looking at a fast death or a slow death and if you had voting control of the company and if you tried everything else then you would do it so we were a unique company a unique place and and by the way I don’t think we would have done it if it hadn’t been for covid if the world had not shut down I don’t think we needed Co to hit you need Wars right PE people will say I don’t believe in flying an airplane and a war hits and they start embracing air power people will tell you they’re not going to embrace you know whatever it is until the war hits so we had a war the economy shut down and then we had uh the Central Bank take interest rates to zero but they didn’t just take them to zero they

[00:24:01] also you know we had the head of the Central Bank give a speech saying I’m not even thinking about thinking about raising interest rates until the year 2024 so they took them to zero and basically signaled they were going to Peg them at zero for four years now that didn’t quite happen right you know a lot of banks wished it had happened I mean the people that believ that got caught on the wrong side of that trade and Silicon Valley Bank and the like crashed because they believed what was said but the point is there was a crisis we had we had a need we were a very special company in the right time at the right place I had dinner with a minister from a Middle Eastern nation i w say who and during dinner uh he was convincing me that the US government was going to shut down Bitcoin when this was three months ago okay yeah I well I

[00:25:01] think that uh the biggest challenge of Bitcoin is that the industries refers to it as a cryptocurrency and often times people refer to as a digital currency and there’s a very vocal uh a vocal contingent that wants it to be a currency and um and the rest of the world doesn’t really understand money so so that being the case let’s let let’s let’s uh view this from first principles right money’s economic energy if you want to store your economic energy you put it an asset the and the assets have different half-lies with which they store the energy um any any textbook Economist will say money is a store value medium exchange unit of account and they stop and they don’t really think much beyond that and then they’ll like bark at you that you don’t have money because you don’t have this is not good for medium exchange but nobody really thinks about what they just said so if you thought about it you

[00:26:02] would realize that that uh about 120 currencies in the world are mediums of exchange the peso is a medium of exchange the Niara is a medium of exchange uh so weak currencies the Turkish L the Lebanese pound their mediums of exchange you can find a lot of them uh the venezuel and boulevar medium exchange but if you go to South America you’ll find that the is not a unit of account if you go to Argentina the unit of account is the US dollar and they think in terms of dollars so there are only three currencies in the world that are units of account they’re the Euro the dollar and the CNY and that and so why is that because the the mediums of exchange are weak currencies inflating at 14 to 24% a year they’re losing their economic energy over 3 to 5 years the halflife of the money in the in the asset is about 5 years or less sometimes it’s only 5 months like in the

[00:27:02] Niara they lost 75% of their energy last week so so the medium exchange only is is dictated by the government as legal tender every government that’s that’s functional will dictate their currency as a medium exchange and and enforce that the unit of account is generally the dollar the the Euro and and currencies pegged to the dollar you know and the store of value well nobody in the United States thinks the dollar is a store of value no rich person um if you if you look at wealthy people they would say the store of if they’re really wealthy if they’re billionaires they own buildings blocks huge Properties or they own the the Patriots they own a sports team a soccer club or they own a collection of picassos that’s what the wealthy a store of value the middle

[00:28:00] class store of value is the Vanguard 500 or S&P index it’s spy it’s basically been the s or QQQ it’s basically a diversified portfolio of stocks and that’s been the status quo since uh 30 40 years ago when Bogle did that so the world today consists of 120 mediums of exchange about three four units of account no currencies are stores of value and if you say to someone what do you think about Bitcoin as digital currency they say well I think it threatens the dollar I hate it if you said what do you think about Bitcoin is digital property you know I’m going to buy it instead of buying a building in De Moine they’re like oh have at it if you if you simply conceptualize it it’s property which is store of value all of the objections all of the straw man objections like it’s used but for money laundering it’s it’s not it’s not legal tender I can’t buy coffee with

[00:29:00] it it’s not fast enough it’s not private enough all of these things disappear because it’s about as stupid as saying to Bob Craft you can’t buy a cup of coffee with the New England Patriots by breaking off some you know one of your tight ends and you can’t buy a cup of coffee with your building in Boston you know of course I can’t you can’t buy a cup of coffee with part of a Picasso the lower left corner either but but you know wealthy people people have been using them as a store of value and as money for 500 years and so let’s talk about let’s talk about real estate as a store of value it too can can sublimate yeah so when you say I mean what is the question tax you know what do I think of it real estate itself as a value so what I what I think is of course if you just describe Bitcoin as digital property a store of value all of the popular criticisms go away and everyone that hates Bitcoin would

[00:30:00] completely flip once they understood it isn’t a currency so people just ought to say it’s a property it’s not a currency and every one of those criticisms and weaknesses is no longer relevant what I think the second thing I say on store of value is it’s kind of silly to fight to be a digital currency because there’s $900 trillion doll of wealth in the world 400 trillion of it wants to be store of value only one trillion wants to be a medium of Exchange no go go to a wealthy person and ask them what percentage of their wealth is in their checking account it’s like 1% maybe no no wealthy person is holding more than 1% in ready cash so it’s not even worth fighting for like you can fight the government to be a currency but you’re just fighting someone that’s that’s got guns and police force Etc the store of value is is the use case that matters and and another word for store value is

[00:31:00] property and the third word for store value is capital and if we just thought this is digital Capital now you get to profound idea right which is there’s capital in the economy where is it sitting well it’s sitting in buildings we’ve monetized buildings a rich person goes and I I know a lot of wealthy people they make a a fortune and what they do is they just go buy real estate that they don’t need they buy Apartments they don’t need I mean everybody can pick up the paper and they can see examples people buy trophy assets and they buy buildings and they buy land they don’t need land B Banks so so real estate is a way to fight inflation or to preserve Capital over the long term another way to do it is I invested in a company or I I attempt to pick the right stock a magnificent seven stock a third way to do it is with art I mean Last Quest in the you know the 16th

[00:32:00] century travels from Spain to Italy he wants to buy all the great art and he’s got the king of Spain’s checkbook and an infinite budget and he complains nobody will sell him the art because all the rich people in Italy are using it as store of value so they can flee with their portable scarce desirable property when they have to leave town or they’re using it as an inflation hedge and I you know and I I kid you not go read will Durant’s you know history of the Renaissance and he notes it’s an inflation hedge in a store in value 500 years ago so that’s that’s the way people think why is Bitcoin better it’s better because the problem with storing billions of dollars in a building is the building can’t run and the building can’t hide and everybody knows a rich person owns the building and therefore we’re going to tax them I mean I just

[00:33:00] give you a simple question I’m going to give you a billion dollars right now I’m going to drop you in Africa what building in Africa are you going to buy in what country and hold for 100 years yeah like there’s not a there is not to disparage Africa there’s not a single piece of real estate in a single country in Africa that any of you would be wise to purchase if you had to hold it a 100 years on the other hand if you have the billion dollars worth of bitcoin in Africa you’d probably still have the money a hundred years from now and if you lost it it’s because you lost it not because it was taken from you everybody walks past the biggest uh Tower in the in the city and they look up and they say there’s a person with more money than me and then they think why don’t we tax them what are they going to do move the building right you’re not going to move the building and so then they walk past the parking lot and they think well let’s just go ahead and put a Zone restriction on that so you can’t actually build on that parking lot so at

[00:34:02] the end of the day your property is getting rent controlled expropriated taxed ET Etc and so and so it’s it’s the best idea in the 20th century yeah I think that I think that’s the important point but we’re not in the 20th century we’re in the 21st century I wanted to get I wanted to get that point across because a lot of people um think about real estate as somewhat you know unique real estate on the beach on Park you know on Central Park but it has those issues I’d like to take the conversation um to bitcoin is a technology lightning rewards some time ago you spoke about um you know a a Bitcoin lightning reward mechanism uh out of micro strategies which I thought was brilliant um would you go there well I think I I think um Bitcoin layer one

[00:35:02] is all about creating uh monetary integrity and and uh in the base layer and it’s meant to be a settlement Network for high powerered money so in essence where where you see it going is trillions and then hundreds of trillions of dollars in a network it needs to be extremely robust but the way you get robust is you create a block every 10 minutes and you put thousands of transactions every 10 minutes so so it’s destined to move blocks of money $10 million at a time $100 million at a time and uh and for that it’s pretty good you can imagine Banks corporations uh settling with each other at that speed and if you want to move a billion dollars from New York to Tokyo spending $10 seems pretty cheap and doing it in half an hour is not a big deal but if you want to get to transactional

[00:36:00] Applications you can’t do it on the base layer there’s two approaches one approach is you change the base layer to give it higher throughput but the problem with that is that you’re changing the underlying scarcity parameters which uh which undermines the stability of the system and the integrity and the security of the system so ultimately you make you make the network more fragile and so most things don’t scale all at one layer you scale in Lay so lightning is the most famous of the layer twos and really it’s an example of an open protocol layer to um system that sits on top of Bitcoin and and it’s channel-based so the idea is if I want to move $10 back and forth a million times an hour I probably don’t need to put the entire trillion doll Network at risk I could probably just set up a channel that had uh $5 million on on this side or 5 milon on this side and I could move back and forth and and

[00:37:02] then I’ll settle on the base layer as I open and close the channels so the Brilliance of of that approach is you’re still using uh Satoshi or or underlying Bitcoin is gas so you’ve got an ethical ethical uh Network and an economically sound network but you have uh you’ve created an infinitely scalable Network because once you go to this channel approach there’s no reason why you can’t clear millions of transactions a second and so lightning is is the layer to to clear millions of transactions a second uh you know the idea of Bitcoin rewards is if you want to give people small micro payments or or very very rapid payments for engagement you show up to a meeting you get rewarded with with something of monetary value you you come if I want to come uh to offer people a reward to come and register my website um I do it using an open network that

[00:38:02] isn’t um isn’t subject to the constraints of the Fiat credit system I do imagine that we’re going to very quickly head to a world where everybody’s got a digital wallet and is transacting in the same way we have a leather wallet in our pocket and I love the vision that you had like if you show up for the HR meeting on time you get a certain number of Satoshi if you turn in your report on time if you perform at this level so you know you get what you incentivize and the idea that this is an incentivization process I keep on waiting for for X to announce wallets and and a incentive plan like that you know there there’s a profound statement made by JP Morgan a 100 years ago he said uh gold is money everything else is credit and just like first principles back then most people don’t understand what money is money is a bearer instrument most people don’t understand what credit is credit is when you have an IOU from from a counterparty and they may or may not honor the IOU so what we

[00:39:02] have today in the internet is you have a lot of profound applications that are digital in digital transformation of information we have figured out how to how to digitally transform photos and music and books and things like that but we haven’t implemented digital money so whenever you pay anybody on the internet you’re paying with credit not with money and the problem with paying with credit is Visa Mastercard your bank the correspondent bank the central banks there’s a stack of seven counterparties in between me and you and that means that if I wanted to give you 50 cents if let’s just say I want to move any amount of money around if I want to move a dollar around every time I move it there’s a 30 to 60 day settlement delay and there’s a 2% 2 and half% fee so when

[00:40:02] I moved the money 40 times it took 48 months it takes four years to move the money from 40 people in the room if you just started moving any amount of money it would be four years before it finally settles and all the money would be gone because it would be like a 100% commission you would pay to the banks so so the problem with the credit networks are they’re brittle they’re slow they’re expensive and and by the way if you’re an AI bot you can’t get a credit card and if you’re and and by so robots aren’t people AIS aren’t people but you know and I’m going to make fun of them because Bitcoin gives AIS in cyberspace sovereignty if you want to release a a service powered by AI Into The Ether outside the control of a

[00:41:01] person a government a company you’re going to need to finance it with money digital money which means Bitcoin so so AI aren’t people yet and Bitcoin will give them sovereignty of sorts but people aren’t people because six billion people on the planet they don’t have credit like I dare you to try to send money to someone in you know in Africa on Saturday you you know or try to cross borders try to send some money to someone in China see how it works out right so and by the way that’s the the countryes shut down uh at the border but even with each within each country most people uh a lot of people don’t have credit card so Bitcoin is money everything else is credit and you cannot build the 21st century cyber economy if you don’t have money money needs to move

[00:42:00] at the speed of light and lightning is an approach there’s a there’s a bunch of other approaches so I mean Bitcoin is the financial side of the internet that didn’t exist in the 1990s right it’s the profound big idea is Google Facebook Apple Amazon they made all their money based on the digital transformation of information apps which are non-conservative in the thermodynamic physical sense they are non-conservative I can give every one of you my music file whereas we’re now moving into a new transition I think it’s a 30-year transition it’s digital energy it is it is it’s digital energy digital money digital Capital digital property these are all just different words for things that are conservative in cyberspace if I give you a billion dollars I have to lose it I can’t give everybody a billion dollars right some you know has to be there has to be a conservation of energy

[00:43:01] or conservation of money here and none of the great companies have been built on digital energy or digital monetary apps but if you think about the next set of applications the ones where where I can take a block of a billion dollars of of capital in cyberspace and I can decompose it to a million smaller blocks send it to a million different places in one hour recompose it 3 hours later chop it into a bunch of $10 segments pull that back oscillate it program it transfer it or just store it for how do you store money for 50 years right and and the metaphor I give you as an aeronautical engineer which I think Elon would like and I think you’ll like is it’s the difference between you launch something and it goes ballistic and comes back to Earth suborbital versus orbital and you launch it and it reaches escape velocity and it goes orbital one

[00:44:03] one is in space forever and the other’s in space for a blink of an eye and what we’re trying to do is put energy in cyberspace or put money in cyberspace reach escape velocity so such that it lasts forever with zero friction it’s like hyp super conducting everybody I want to take a break from our episode to tell you about an amazing company on a mission to prevent and reverse chronic disease by decoding your biology the company is called viome and they offer Cutting Edge tests and personalized products that help you optimize your gut microbiome your oral microbiome and your cellular Health as you probably know your microbiome is a collection of trillions of microbes that live in your gut and mouth these microbiomes influence everything your digestion immunity mood weight and many other aspects of your health Heth but not all microbes are good for you some can cause

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[00:46:02] has a special offer for you for a limited time you can get up to 40% off any viome test using the code moonshots just go to vi.com moonshots and order your test today trust me you won’t regret it all right let’s go back to our episode so let’s talk about the path towards what seems to be inevitable um for which there is tremendous social disbelief institutional resistance manipulation right so let’s say the decade of of 2000 to 201 189 was still the very entrepreneurial highly highly risk area uh we start to have adoption by wealthier individuals and we finally moved in into institutions uh the release of the ETFs um and I I talk about going from

[00:47:01] deceptive to disruptive and we’re in that KN of the curve right I mean this is an example of the 6ds right we’ve digitized money you’ve dematerialized it right you effectively demonetized the ability to transmit and you’ve democratized access to it and it’s going from deceptive to disruptive what is the thei is there a final uh card to flip Domino to fall is it governments Beyond El Salvador adopting this you know I I think 2020 to 2024 was you know the it was the uh I don’t know High volatility High uncertainty it’s like that early stage of institutional adoption but really we start mainstream institutional adoption I would date it to January 2024 with the approval of the ETFs the spot ETFs and I think it runs we we have about a 10-year gold rush it

[00:48:00] runs to 2034 November between 2024 and 2034 we will uh have mined 99% of all the Bitcoin so so Bitcoin becomes for all practical purposes fixed by November 2024 the last 1% comes out over 100 years okay so we we uh we have this 42 quarter period where at the beginning of the period what percentage are we at now right now we’re like uh 94% wow so we you got you’ve got you think it’s not much but I mean 5% is a lot over 10 years compared to 1% over 100 years so there’s actually still Bitcoin available for sale right now the miners have to sell it so at the beginning of this period in q1 we’re in q1 now if you go to January 1st no institution could buy it even if they wanted to it just wasn’t on their radar

[00:49:02] and um so you really have 42 quarters of people learning what it is studying it it takes 10 hours to scratch the surface and it takes a 100 hours before you get a degree of comfort most people you know once they get past the age of 40 they don’t want to spend a 100 hours learning a new thing it’s it’s very rare so you’ve got Wall Street firms spinning up massive education apparatus you’ve you’ve got a whole set of stages of adoption first can I buy it then is it on the the approved list for solicited sale then is on the approved list for unsolicited sale is it marginable can I borrow against it is it optionable can I hedge it is it recommended is it structural is it built into a fund that’s like seven layers of adoption people take a year to think about each of those lay ERS there’s aund powerful

[00:50:00] entities that control huge amounts of money that’ll go through that in the Western World so I think we’re in this this institutional education stage and um in 2034 it’ll simply be the new thing right now it’s like it’s like the scary exotic thing for most people yeah it’s interesting my mom asked me what she should be doing with her uh uh her mandatory distributions and I said buy the Bitcoin ATF right um talk to me one second about I don’t want you to give Financial advice but I do want you to to speak to how do I put this how should a person think about what percentage of their wealth they put here I think it depends upon where you live who you are what your what Your Life situation

[00:51:01] is and also whether you’re a corporation a charity a government a family an individual that matters too so for example if you were asking me for that advice uh for a a business owner in Nigeria right now I would say most I would say can the question you got to ask yourself is can I trust the government can I trust the bank can I trust the currency and and can I leave with my stuff so if you’re saying to me Mike should I buy a building in a building in Nigeria or or should I buy a business or should I buy a diversified portfolio would I would I recommend a diversified portfolio of Venezuelan stocks or a diversified portfolio of Cuban stocks like it really depends on where you live North Korea Cuba are kind of are kind of simple uh all through Africa if you

[00:52:02] lived in Egypt the currency is unwinding if you follow the Turkish L the Turkish L has gone from 7 L to the dollar to 32 L to the dollar in 36 months let’s make believe we’re living in the US or a European okay and and if you’re and if you’re 70 years old and you’re retired and you don’t expect to ever have to flee for your life then you probably should buy the ETF and if you’re 20 years old and you’ve got your entire life ahead of you and you think you might want to relocate to a different country and you don’t you can’t predict it then generally you’re better to buy the underlying asset some some people should buy the buy the Bitcoin and self custody some people should buy the Bitcoin and they should institutional custody some people should buy the ETF and then if we flip the companies there are companies where it’s illegal for them you know to to say self- custody there are companies where there there are investment companies

[00:53:01] where they can’t buy certain Commodities but they could buy security so so the real issue is what’s the entity and then what’s your time Horizon as a general rule the longer your time Horizon the more you would prefer to hold the the money that the underlying commodity asset because if you hold the asset you can transfer it to any counterparty in in the world you can custody it anywhere you can self custody and it and it doesn’t come with a taxable event let’s make let’s make believe you’re speaking to 400 CEOs in the [Music] room who are asking the question about you know I’ve got okay I’m going to give you a very simple observation which everybody looks at Bitcoin and they think well how do I create the next cash app or the next mobile mob app or the next Fidelity or the next coinbase or the next whatever and they they think

[00:54:01] really hard about that or or how do I how do I topple JP Morgan it’s like that’s a very difficult thing to do I give you a very simple idea you have a treasury in your company uh if you put your treasury into sovereign debt you’re going to yield 5% pre-tax 3% after tax and you’re not going to be the cost of capital the cost of capital right now is 8 to 10 % in the US easy so if that’s the case your treasury is a liability which means that any rational person would look at you and say you should decapitalize you should give all you should run on the minimum working capital or negative working capital and you should run on debt but I’ll give you another idea if you actually are investing in something you expect to go up 20 to 40% a year for the next decade you’re beating the cost of capital by a factor of two that means the right thing to do is go back to your venture capitalist or your bank and just raise $100 million that you don’t need and buy

[00:55:01] Bitcoin with it because if if the business you’re running doesn’t work you will have a business that’s growing 20 to 30% a year scalably for the next 30 Years that will work right you’ll double the 100 million two times in the next six years so you’ll be 200 400 million in 6 years when the thing that you’re are doing right now doesn’t work you’re going to have a business that’s growing 20% a year off of $400 million base which is a monopoly so most I think the number one I mean this is a simple hack but every venture capitalist in the world is getting two and 20 they’re getting a 2% management fee and a 20% participation and their mandate is they have to invest in operating businesses that are private and if they were to go and buy a billion dollars of Bitcoin with limited partner Capital their limited partners were say are you crazy I could have bought the Bitcoin so the VC can’t buy Bitcoin which is the

[00:56:01] risk-free return of 20 30% a year the VC can give you the $100 million you can buy the Bitcoin they end up with debt in a private company you end up with uh a 1002 200$ 500 million business growing 20 30% a year that’s scalable that you run with yourself and your CFO it’s good for them they’re going to make a fortune they want to invest the money the real problem in the world and by the way this is I’m back to the Dow of Steve in the Dow of Steve there’s a guy sitting on the bed and he’s smoking marijuana and and someone’s saying well you know like why aren’t you out there doing something and he says doing stuff is highly overrated okay so here’s the big idea which is there’s a couple hundred trillion dollar of capital in the world that’s debasing at 10% a year right now and the big idea is just stop investing in toxic money right if you simply flip

[00:57:01] your treasury to something a creating at 10% a year and you see it’s like everybody wants to like do they want to hire a 100 people and do a lot of stuff that’s risky but really the here’s this is very painful but it’s if I told you the water that you’re giving your kids is toxic and it’s full of pathogens and that’s why half of your children died and you said well what’s the big idea I would say give your kids clean water is that easy yeah and if I said the food while the food’s not cooked and there are worms in it and pathogens and that’s why you’re dying what’s the big idea eat clean food right I mean that whole idea is what about clean air clean the air clean the food clean the here’s the one all my doctors they want to give

[00:58:01] me bad drugs and bleed me whenever I sneeze what’s the big idea stop taking the bad drugs and stop letting them bleed you okay so if you’re running a business and you’re running a business on cash the cash is losing 8% of its value a year you’re basically Bleeding Out energy on your balance sheet right now and the simple idea for Max performance is turn your balance sheet into an asset anybody could do it and and you know what what happens well the micro strategy story is we had a $600 million Enterprise Value with 600 million of cash which was a liability what we do we flipped it to be 600 million of Bitcoin and a $600 million Enterprise and then the Bitcoin kept grow and the bitcoin’s been going up 40% a year Bitcoin is going I can’t tell you what it will but I can tell you will outperform the S&P 500 over time that

[00:59:01] that I’m quite sure of so you flip your balance sheet to become an asset and today the Enterprise value of the company’s $30 billion you know the the Stock’s up by a factor of 10 the equity market caps up by a factor of 20 and the Enterprise Value is up by a factor of 40 it took 42 months 40 not four years I you know I have haven’t graduated from my senior year in Bitcoin I’m halfway through my senior year in Bitcoin but the profound idea is every company in the world has toxic assets on its balance sheet they’re all liabilities right and we’ve taught the conventional wisdom in corporate finance is if you have Capital give it back and dividend it out Facebook is buying back 50 billion of their stock and dividing out billions of their stock Apple is buying back their stock and dividing out

[01:00:01] their stock scratch your head and think about this a second I’m going to apply this to Harvard and MIT give back the endowment and just raise the cost of the tuition 20% a year and stack twice as many students per class and that’s how you fix the university right not no right how about this is an idea for your family I want you to take all the money your family has I want you to give it away to charity and I just want you to tell your your wife your husband your kids just to work harder and ask for a 15% raise next year and that’s how you’re going to fix your family and see that they’re both pretty silly right like you would never in a million years have that as your strategy we give up all the capital we work harder but you know what the corporate Playbook is give up all the capital raise your prices work harder grow your cash flows by 15% a year and then you’ll be fine and you know you

[01:01:03] that’s why 99% of the companies fail that’s why the life expectancy of a corporation is 10 years and you know what I mean Harvard Oxford Yale they lasted more than 10 years did they do it by raising their prices 10% a year and working harder No in fact there’s not much productivity boost in any of those places in 500 years so here’s the profound idea which is you know if we adopted a different financial model in corporations you could have companies last for hundreds of years you don’t have to die right for example you’re a dentist you know why do I have to raise my prices 10 or 20% a year to be viewed as successful as a dentist right it’s like it’s because I tell you why because we keep expanding the currency Supply by 10% which means the price of everything you want to buy goes up by 10% which means

[01:02:01] you have to grow your cash flows by 10% and that’s why the Magnificent 7 generate all the returns in the S&P 500 and there are 493 companies that return nothing zero right there is they can’t and by the way it’s not their fault right we blame them we blame the companies like we blame the workers for not working harder it’s not their fault you cannot outwork inflation if and we’re back to this issue of if the person that runs the currency or the money printer just keeps printing 20% more money or 10% more money a year you just stop the heart uh you you basically create a heart attack for every worker in the economy and so my advice to anybody who’s a CEO is don’t work harder work smarter but really you’re in a Rob boat you’re trying to row the wind is blowing get yourself a sail put the sail

[01:03:02] up and let the wind blow you instead of trying to row across the Atlantic you’re not going to make it how many folks here right now in the back of their mind they’re thinking as soon as I get home I’m going to look at putting a chunk of my treasury or a chunk of my personal into Bitcoin can you raise your hand if that’s a conversation that you’re having with yourself right now so right in 2014 I gave everybody in the room here a bit coin as a gift uh we had a Bitcoin ATM and um you have no idea how many people came to me years later saying remember the piece of paper you gave me uh can I have a copy of it no but you’re getting the equivalent right now right you’re getting the equivalent right now which is to say if you can appreciate the the logic here the uh the first principal thinking that Michael putting forward then you probably are thinking

[01:04:01] about going back and making that change now the degree to which you want to put some or all of your treasury or some of all of your cash or some of all of your your uh stocks into Bitcoin is up to you but I am curious and I will ask you next year or maybe in the next Meetup that we have how many did that and then we’ll see a year from now or five years from now how many billions of dollars that was worth to the room that’ll be interesting experiment the lowrisk way to do it Pete is you just go to a venture capitalist and next time you raise $50 million in capital raise 100 million in capital and then put 50 million into Bitcoin and like and the other 50 million to whatever I mean how many people in the room have a business they think they can grow 20% a year every year for the next decade without taking any more capital without a capital investment without hiring another person without taking

[01:05:01] competitive risk like if you’re honest with yourself no one’s sure they can do that there’s like seven companies that have done it Google Facebook Amazon we know their names because for every one of them succeeded 10,000 companies failed it is uh statistically very difficult but on the other hand so so when you invest in Bitcoin is probably the least risky thing you’re doing but I’m not telling you by the way the big idea is not just take every last penny and buy Bitcoin the real big idea is that their venture capitalist like SoftBank with 10 billion 20 billion 50 billion their problem is they need to invest the money right they need to invest the money they need and they need a use of proceeds and Bitcoin is the world’s greatest use of proceeds because it’s a creative it beats the cost of capital right and and name you know sovereign debt does

[01:06:02] not beat the cost of capital cash does not beat the cost of capital you can’t by the way you can’t do this with art you can’t do it with real estate I mean the closest thing would be I’m going to raise billions of dollars I’m going to buy high quality real estate and so that’s a real estate development thing but that’s a 20th century idea and we’re in the 21st century and you need need to think about cyber real estate we going to go to about 20 minutes of questions here if I have a question please go to this micro one microphones here Michael while people are lining up here what about Ai and Bitcoin okay I think the I think the way that AI is empowered by Bitcoin is is literally bit Bitcoin is digital money and AI is digital intelligence you know you think about the idea like I create a digital accountant that gives a advice or a digital lawyer that gives advice well how does it get paid what if I

[01:07:00] wanted to actually release that digital thing and have it learn to do this in every country but how do I cross borders you know and how does the AI get uh you know get credit cards it can’t can’t wait we talked about having a uh appropriate jurisdiction where AI can self- incorporate start their company um and run it Charlie Ki it off with you pal wow thank you so I have a question about governments getting into digital currency to uh what’s your opinion about governments getting a digital currency is a way of uh directing how people will spend money so the example being government issues a digital currency says if you make less than $250,000 and you do X Y and Z will give you a b and c but if you make over certain amount you get the point yeah so just to be clear so I am I don’t think

[01:08:02] bitcoin’s digital currency I think it’s digital property but an example of digital currency is tether or USD or Euros or CNY moving on a on a digital device um governments as long as there’s an Effective Government and they have power they’re going to designate legal tender and currency is a system of control as well as a medium of exchange and so govern it’s going to be a very political issue very controversial there’ll be lots of politics and and an authoritarian government they will use a digital currency as a system of control in the US there’s a massive fight on Capitol Hill over whether or not there should be a digital currency and people that believe in Freedom and and and the like they’re going to fight it and and do their best to stop it um I think that you’ll see that debate in every country in the world it’ll continue and it’ll be layered in with another debate which is

[01:09:00] for example um if the people that love the digital Dollar in the form of tether are actually the argentines that want a medium of exchange so so the doll the positive of a digital currency for the United States is if the US actually mandated a digital currency the dollar would collapse and replace every other currency in the world including it’ll would metastasize through Russia through China through through all of our enemies and our friends and you would have allies of America complaining that their local currency collapsed and you would have have enemies of America not liking that so so it can be used as a tool to spread to to make a certain currency um a reserve currency and if you want if you want the US dollar to remain the world’s Reserve currency you would actually argue in favor of a digital currency because why wouldn’t you want China to run on the dollar if you could get it to

[01:10:00] work that way but you know equally there’s the issue of who controls it are you going to have a private Corporation issue it running on a crypto rail or you going to have a government issue it running on a state controlled banking rail look I I don’t have the answer it’s very controversial I do think that the future of digital currencies in the US will probably be influenced heavily by the November elections and by the next administ ation thank you Adam Michael I’m curious how you think about the identity of Satoshi like does it matter a lot to you have you spent a lot of resources trying to investigate no I don’t think it matters at all and I think it’s I think it’s better that we never know and I think that what makes Bitcoin special is it it had an Immaculate Conception look there there’s a fundamental a very asset test is it a commodity or is it a security if a crypto asset is a commodity that means it’s an asset without an issuer if it’s going to be a commodity it means no

[01:11:00] person no company no government no group of people can exercise undo influence over the future of the protocol if there was a Satoshi alive speaking tweeting today and Satoshi said I think we should change this part of the protocol that would be an awful awful fact it would be it would undermine the Integrity of the network there’s the guy that invented gold is not tweeting that he wants to change the atomic characteristics of gold and the density of gold that’s why it’s actually a commodity and so it’s I think Bitcoin is unique and that it had an Immaculate Conception satoshi’s gone walked away and the thing didn’t even monetize until Pizza day 18 months later and uh I think that it can’t be ethical it can’t it can’t be ethical money and Global money unless it’s a commodity

[01:12:01] it’s easy to create a security you can create a million Securities you can spend them up in three hours it’s hard to create a commodity because the the the miracle of Bitcoin was we release something to the hobbyist that’s worthless and then on Pizza day a year and a half later someone wants to pay a fraction of a penny for it and it’s spy mously monetizes that’s never happened in the history of the world it may never happen again and uh Satoshi is it’s not necessary it’s not relevant and it’s an open-source protocol read the code right and and decide for yourself whether you trust it Thomas yeah um I totally like the idea to swap your treasury into Bitcoin and I want to discuss another idea with you because all the people who hold Bitcoin today um and we are hling is a the thing that we are doing for for many years uh

[01:13:01] we have locked so far more than a trillion uh of dollars in assets into Bitcoin which is in a way U Capital which is idling you know so that’s why I want to uh hear your opinion about defi on bitcoin which would be uh enable that you can borrow against your Bitcoin and then reinvest it in assets like decentralized infrastructure I I think we’ve got an open market and there are thousands of experiments and thousands of projects going on right now well for example micro strategy has uh more than 200,000 Bitcoin I just borrowed 1.4 billion last week that’s defi right um and so how’ we do that we did that working with options Market convertible debt Market the NASDAQ spot Market um ibit you know is a black rock applic sometime in the next year to two years I’m sure that major wirehouses like JP

[01:14:01] Morgan or Goldman Sachs will give you loans against that that’s a different way to do it there’s a bunch of crypto approaches right at the end of the day the issue of uh you know do you want to be able to get get yield on your by you can get yield the the people that bought my convertible debt they’re getting yield right um and so there’s a lot of ways to get yield there’s a lot lot of ways uh to generate credit they all come with counterparty risk and and the question is which counterparty do you want to trust and uh you know sometimes we trust somebody like FTX or Genesis and they let you down other you know some people don’t trust the CME or NASDAQ some people don’t trust whatever I’m I would never endorse anything what I would say is that there’s a 100,000 experiments that will run they’re going to be the answer is going to be different in Singapore than it is in China than it is in the US than it is in France and it’s going to be different 5

[01:15:00] years from now than it is right now so all these are morphing but I I do think that Bitcoin at the end of the day is the highest quality Capital it is going to it is you know is the most creditworthy thing because you’ve got transparency to it 247 365 we have a situation where the credit markets and the payment markets are immature the ‘s a huge amount of work to be done over the next decade to build out all of these various parts of the financial universe and like some people will do it very enthusiastically like Sam bankman freed was very enthusiastic didn’t know what he didn’t know and blew up other people will go slower but they’ll do a like they’ll do they’ll go slower but they’ll do a better job and uh and the answer will be different for every type of entity so I am enthusiastic but uh I don’t think there’s any one answer I think it’s a market economy Warren hi I love uh what

[01:16:01] you’re doing in your stock in fact I’ve made five times more on your stock and derivatives around it than buying Bitcoin so one of my questions would be why should we buy Bitcoin why don’t we just buy your stock and what do you think the having event is really going to do to the price Bitcoin is a commodity it’s an asset without an issuer uh whenever you invest in in a company you’re taking counterparty risk in order to invest in my stock you should reasonably read 1,000 pages of disclosures and and I’ll make the obvious Point people in Nigeria can’t self- custody micro strategy stock so so what we’re trying to solve the problem of creating Integrity sovereignty you know truth and hope for the world that’s going to be done via protocol right micro strategy is is simply a high performance business right there’s a lot of other there’s a lot of

[01:17:01] other businesses and we every business does their thing in in the world as best they can so we offer a very particular thing to us we offer convertible debt to arbitragers and they have billions of dollars of capital and they can only convertible Arbitrage so if we didn’t give it to them their Capital wouldn’t come in the ecosystem and so that 1.4 billion that I got came from them that went into Bitcoin I need to do something for them it’s a complicated something there’s a lot of volatility to it right uh there’s a limit to how much we can do we just buy your stock then I I I you know the truth is I would recommend anybody that’s interested in Bitcoin they should study Bitcoin before they buy anything and then after they study Bitcoin for 100 hours they ought to I I would say you ought to buy the Bitcoin the real debate ought to be do you buy the Bitcoin in self- custody buy the

[01:18:00] Bitcoin institutional custody buy the Bitcoin through an ETF because what about Bitcoin is the Innovation right Bitcoin is the Innovation if you’re if you are a professional investor and you have billions of dollars of capital by the way I the investors in my company aren’t allowed to buy Bitcoin nor are they allowed to buy the ETF their Charter is here’s 101 billion you have to invest in publicly traded operating companies so my company is meeting a need for certain types of investors that are sophisticated but I’m not here to promote my company right uh I expect Bitcoin will be here a thousand years from now my company won’t be I won’t be right there’s not much to be said there what about the having how what what do you expect to see Bitcoins right now they’re 900 Bitcoin naturally produced every day available for sale and the miners generally have to sell them they have high electricity bills

[01:19:00] and high debt bills and build outs around April 20th that’ll be cut in half that’s 23 million a day or 20 something million a day that’s like taking 8 billion dollar a year of Supply out of the market it will be the most consequential having in the history of Bitcoin in my opinion um it will create a squeeze it means at that point if the if the natural organic demand is in excess of you know 25 million a day then there is no natural seller um so it’s it’s obviously it’s very bullish for the asset class and for Bitcoin holders I think that by 2028 you’ll be down to 225 Bitcoin a day it’ll start to become second order and by 2032 it’s a rounding error in the noise who are the sellers of coin over the last 6 months and a year I think the there’s a number of

[01:20:00] class of sellers the bankruptcy Estates like FTX bankruptcy Genesis bankruptcy a lot of these people have billion doll positions of of Bitcoin and other crypto assets and they’re not long-term investors they’re just looking to unwind and get their creditors whole or unwind the trust so they’re the big natural sellers right now so they were flushed out of the system and they’re getting flushed out system and then I think the the miners are are the persistent natural sellers um otherwise the volatility in the system it comes um there there’s a the primary volatility is that Bitcoin is cross collateralized and cross traded with the other crypto assets with it it’s it’s an unregulated Market traded offshore 247 365 there are many many billions of dollars of Bitcoin held offshore there’s $400 billion doar of eth in the market cap there’s 80 billion and 80 billion of

[01:21:02] salana and BNB right now if you had a billion dollars of crypto tokens offshore you could post it as collateral and you could do A10 billion trade in an hour on Saturday night unregulated unreported so the the wild west the number one source of volatility in my opinion is unregulated offshore after hours crypto trading uh the second the the Lesser source of volatility is the options and the Futures and derivatives market onshore during normal trading hours in the western world but I think that that although they are are capable of face ripping trades you know the degenerates and the crypto ecosystem put them all to shame in terms of what people will do face ripping trades over the years I’ve experimented with many intermittent fasting programs uh the truth is I’ve given up on intermittent fasting as I’ve seen no real benefit when it comes to

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[01:23:00] know what’s your thoughts on ethereum or Litecoin or any of the other cryptocurrencies out there I I stay in my Lane generally and I say you should buy Bitcoin don’t sell your Bitcoin bitcoin’s good I like Bitcoin it’s an ethical commodity um everything else in the what I’ll say about everything else is is the rest of digital asset ecosystem is a bunch of good ideas with a lot of regulatory uncertainty and competitive uncertainty and Technical uncertainty so they’re all interesting ideas digital currency is interesting it’s very controversial uh digital tokens are interesting they’re very controversial digital Securities are interesting very controversial digital exchanges are interesting they’re very controversial I have I have no recommendations one way or the other um I just think they’re complicated Jason

[01:24:00] hi Michael um so I’m bullish on bitcoin so big supporter but is there a situation or an event that you view um that could potentially lead to the collapse of Bitcoin have you guys thought about what putting it differently I was going to ask that question if it’s 10 years from now and Bitcoin has failed yeah what caused it to fail you know when I when I started searching around and I discovered Bitcoin I thought okay well this is crypto gold but it’s got none of the defects of gold it’s got It’s got all the attributes of a big Tech Monopoly it’s it’s it’s better money than any Economist has ever conceptualized in the history of the world so I thought this is kind of perfect money it I can’t see it being more perfect so the question is is it going to be banned is it going to be copied or is it going to be hacked it you know you start as the denier it’s a it’s not a good thing and then you go

[01:25:00] to skeptic skeptic is it’s too good to be true so when I got to my skeptical phrase I phase I just asked will it be banned will it be copied will it be hacked and I stared at it and the conclusion was it’s only B if it’s understood to be property not currency then no it’s not going to be banned in a country that gives you property rights which means it’s banned in Cuba it’s banned in North Korea Korea if the world becomes communist and they deprive you of the ability to own things that’s an existential risk but that’s not a problem in Russia or China or the us right now so not banned will it be copied it was copied 10,000 times they all failed this is this is the winner of the 10,000 experiments so not so yeah it it worked and now will it be hacked and satoshi’s got 5060 billion doll in a wallet out there then that’s the reward for hacking it and no one’s figured out how to get the money yet so it hasn’t been hacked and I

[01:26:01] know I know it’s it’s able to store 60 billion without anybody hitting it so what I think is I think the way to understand Bitcoin is is everything you learned in economics and about money in your entire life was pseudo science you know and superstitious and and you can’t blame the economist for being mired in pseudo science and Superstition because we never had we never discovered perfect money and so Bitcoin is the first time that we actually discovered a thermodynamically sound mathematically sound economic protocol in the history of the world so I think we will date things before Satoshi and after Satoshi and I think that you can’t can’t think of it as a network you or as a product you have to look at it as a protocol the human race discovered like

[01:27:01] base 10 math math a protocol like the metric systems a protocol like English is a protocol and and so this is the first sound protocol economic protocol in the history of the world now we finally realize why seashells and bales of tobacco and fiat currency and gold coins and silver coins copper tokens and glass beads and the giant Stone coin and the Yap people we feel we understand why that stuff never worked now you know if you really understand Bitcoin is because I’ve got an asset where the energy is a half life of forever and the half life of energy in gold is 30 years and the half life of your money or your energy in the dollar is 10 years and the half life of your energy and the bolar is one year and now once you understand that basic breakthrough now the light bulb goes off so I think all the smart

[01:28:01] money all the all the smart people in the world that don’t trust the bank don’t trust the currency want to keep their money they’re all discovering Bitcoin it’s like all the smart people decided to use math and use this language and now what happens in the future well stuff will advance but You’ you’re going to have a trillion then a 10 trillion then A1 trillion dollar Network and if someone comes up with a new crypto algorithm and it’s better we’re just going to fold it into this network and if someone comes up with uh with another twist or tweak we’re going to fold it in the network you’re not going to it’s like saying everybody uses English in the world of science and trade today but but English doesn’t have a word for my widget so I think we should all switch to Swahili because they’ve got the word and my answer answer is I think we’re just going to put the word into English and we’re going to stick with English so Bitcoin

[01:29:00] is a protocol it’s going to go on a long long long time and I think that as long as the world doesn’t plunge into some orwellian no property rights situation I think we’re good I’m going to take three last questions from Paul from Mark and from Marina on Zoom Paul hi Michael Paul Paulo from Chico Illinois very insightful talk you’ve convinced me to uh get crypto but um not just he’s he’s not pitching crypto I mean Bitcoin Bitcoin so that that’s that’s um to spe to be more specific how do you think about these other other stable coins like cardano and ethereum and is crypto in general a zero sum game or not a zero zero sum game cardono and ethereum aren’t stable coins they’re they’re crypto tokens you know which are probably unregistered Securities and so

[01:30:02] cardano has been designated as an unregistered security by the SEC explicitly in lawsuits ethereum is this massive Gray Zone so uh at the end of the day Bitcoin is the only the only thing in the world universally acknowledged by every rational intelligent person is Bitcoin is a commodity every else you’re going to see people disagree on and fight over and litigate politically and there’s a war that will go on and so what I think is there’s 10,000 things that people are going to fight over there’s one thing that that is institutional adoption it’s clear so like it’s it’s like asking me which of the 10,000 mobile apps would I suggest I should invest in my answer is none of them because there’s a 99% failure rate in startups so I’m not going to I’m not going to recommend you invest in a company which of 10,000 buildings should you buy I don’t know which of 10,000

[01:31:03] pieces of art should you buy I don’t know I mean that’s your business right if you want to do that you do that the only thing that I’m here to say is Bitcoin is a digital commodity if you want Global money then it has to be a commodity it cannot be a security right I’m not going to tell you to buy Apple stock Apple stock will not be a store of value in China in 100 years right I mean even Tim Cook would tell you that so so the world is very complicated when you get into Securities and and other types of Investments the idea of Bitcoin is what if we had a global money that was based on a crypto Network that’s decentralized and ethical it is it is zero ultimately zero no I think Apple will be a successful company crypto is crypto zero you know you can is crypto itself cryp crypto economy zero sum or if the government allow if the

[01:32:01] administration flips and they allow companies to issue stable coins then a company that issues a stable coin in a compliant regime will make a lot of money issuing it and if the if the next head of the SEC says that Tom Brady can issue Tom Brady coin and 10 10 10 million tokens and and file a quarterly statement saying how many tokens are out there then there’s a business there so there’s a million I as I said there’s a lot of good ideas if you’ve got um a regulatory regime that will allow you to do it in a legal fashion then it might be a good business right now have to be Zero Sum okay but bit again Bitcoin is if you’re trying to replace Global money if the question is which is the global money bitcoin’s the global money it’s going to it’s going to eat everything right if you want to talk about what’s going to eat forget about crypto there’s no money in crypto probably the total amount of money invested in all the cryptos since the beginning of time other than Bitcoin

[01:33:02] probably isn’t even $50 billion I I my company’s invested 7 billion there’s not a single person that’s publicly and publicly uh dis uh disclosed who have invested 100 million in any other crypto project in the last decade I can think of so I don’t think there is any Capital there the capital is in gold real estate art corporations the S&P index and corporate bonds and so what’s really going to happen next is Bitcoin is demonetizing gold silver it’s going to demonetize a lot of real estate it’s going to demonetize a whole lot of s why would you put your money in the S&P index when 493 of the companies are failing right so you talked about demonetization right the money 500 trillion of it is in the 20th century economy it’s not in the crypto economy that’s what’s going to be attacked next

[01:34:00] hey Peter thank you uh Michael um after doing the amount of research that you’ve talked about in 2017 I made a a very large I put all of my investable net worth into Tesla and then in 2020 when Co hit um I started doing what you said not to do giving it away um and I put a half million dollars to found the Denver basic income project and so as we’re making this transition into this new economy that we’re not all sure what it’s going to turn out to be um I’m curious about what you think the role is of universal basic income and Bitcoin as a maybe a tool to finance that in in the idea of trying to create an economy that works for all and seeing human capital as a type of capital that we might want to invest in more heavily uh as we think about putting our resources into Capital well I mean the issue of Ubi is above my pay grade so that’s that’s a that’s an issue which I’m not going to Pine on because I’m not

[01:35:00] an expert and it’s it’s not my area of of expertise with regard to bitcoin though I do think that that one of the killer Ops of Bitcoin is to endow a charity so using Bitcoin to power the end I’m using Bitcoin to power my nonprofit which gives away free education and the promise of Bitcoin is a do it forever and and so you could power a church a park uh any kind of charitable activity using Bitcoin because the number one problem they have is they need their endowment to go up over time and so anybody that’s got any amount of capital if you’re investing it you’re getting a 20% return instead of a 5% return you’re actually going to be able to perpetuate your mission forever Bill lman had a proposal of like putting $110,000 into the S&P 500 when a child was born and it would be worth you know so many millions of dollars when they’re ready for retirement but I think it’s a

[01:36:01] much Sounder you know put $10,000 with a B you the government to put it into Bitcoin and then you don’t have any dependencies thereafter right and and the Mone the money is made available after retirement age you can’t touch it Bitcoin I I I I’ve gave a a pretty famous speech in madira where I said Bitcoin is for everybody uh everyone and the point really is a lot of crowds cheering for you there yeah well anybody that flies all the way to madira to talk about Bitcoin likes Bitcoin uh but my my point really was you can power a City a state a country a church a charity a nonprofit a family a company you can you can power any of those things and if you’ve seen my other talks we didn’t go into it but the you know the S&P index is pretty much going up 7% a year for 100 years and the US dollar currency Supply is going up 7% a year for 100

[01:37:00] years and it doesn’t take a rocket scientist to see that what you have is a basket of assets that are holding their value in real terms while they Trend up in nominal terms and that’s not awful I mean at least you don’t get poor but what but what you really want is you want something to go up 14% in value a year why the currency Supply goes up 7% and the way you do that is you strip away all the counterparty risk of a company I mean any you’re all in companies right if you watch the news you can see Amazon might get unionized apple might get fined Facebook might get sued right I mean Microsoft has their thing so corporations are tax surfaces for regulation taxation tariff and that’s why over a hundred years it’s it’s likely that you’re not going to be able to do any better than simply keep up with inflation under the best of

[01:38:00] circumstances and if you want to power a family or a charity you need to beat it you need to grow faster and now we’re back to my phrase like doing stuff is highly overrated you know Apple’s on the iPhone 15 if you have to you know if you have to ship the iPhone 99 in the year 2100 in order to not have your stock crash there’s a lot of risk in that right there’s a lot of work Marina we’re going to you for the final question on Zoom thanks my question is really uh practical and and logistical um so for those of us who have our Bitcoin in self- custody what are your thoughts around the best ways of keeping it safe when we compare something like a cold wallet versus a multi- solution like Kasa I I I wouldn’t feel comfortable giving a particular recommendation on that I really think that um it’s a function of

[01:39:02] who you are like what stage in your life you are how technically uh capable you are your family situation your political situation so I I will say this which is if like if you’re a retiree and your hand shake and you’re eyesight’s not good and you simply uh would like to not run out of money or or live comfortably you probably ought to buy ibit or buy fbtc or buy some Bitcoin ETF through your broker that you’ve been dealing with for 40 years because the truth is you’re probably not qualified Tech you probably can’t literally type in the key strokes necessary to recover or manage that and it would be foolish for you to even go there there if you’re in a different stage in life then you might find that the best of all worlds is you

[01:40:00] buy Bitcoin but you leave with an Institutional custodian with the understanding that on one week notice you can self custody if and when you need to or when you lose faith in the counterparty the custodian right and there are a lot of people for which that’s the appropriate thing and then there’s another set of people that they would self- custody because because they’re capable and it’s appropriate and there are a lot of organizations that should again if you’re running a company in a certain country where there is no reliable custodian or institutional custodian that it’s it’s it’s inappropriate to suggest that the risk of holding Bitcoin and Fidelity is the same as the risk of holding Bitcoin at a bank in the middle of a war zone they’re not the same right and so you’ve got extreme differences depending on who you are and where you are and I

[01:41:01] think that but but well I I will say the obvious thing which is when you decide to go to self- custody you’re taking on uh a much greater responsibility and you need to be technically much more proficient and and capable so you have to put more time in and be prepared to do that if you’re going to do it Michael thank you buddy thank you for joining us [Music] tonight