TFTC: A Bitcoin Podcast - #382: The Dematerialization of Money with Jesse Myers

Episode Date: December 14, 2022

Join Marty as he sits down with Jesse to discuss the shitcoin mindset, the core value of Bitcoin, and the financial debasement that threatens us. Follow Jesse on Twitter 9:15 - Nyms and names 10:10 - Unlearning shitcoinery 16:53 - Copying digital scarcity devalues it 21:28 - Crypto is becoming more scammy over time 28:54 - The crypto cult leaders 32:18 - Why yuppies can't grok bitcoin 38:36 - Crypto feeds off of early internet mindset 44:51 - Resisting inflation with hard money 52:50 - Digital revolution of value 55:10 - Progression of better money 1:03:58 - The degeneration of fiat world 1:12:10 - The progression of America's debasement of money 1:20:33 - Past the financial event horizon 1:30:53 - Weak men in hard times 1:33:09 - The peaceful revolution 1:36:56 - Take ownership 1:43:51 - Is the contagion still contagious? 1:49:29 - Plugs Shoutout to our sponsors: Unchained Capital Braiins Upstream Data TFTC Merch is Available: Shop Now Join the TFTC Movement: Main YT Channel Clips YT Channel Website Twitter Instagram Follow Marty Bent: Twitter Newsletter Podcast

what's up freaks it's your boy marty here thumbing through the fountain app to find the last two episodes to read the boost to intro you to rip 382 with jesse myers aka creases btc incredible conversation a lot of bull fuel getting back to fundamentals on this show we started the trend we didn't start the trend we started reading the top four boost of the previous episode for those of you participating in the value for value model and podcasting 2.0 we thank you this rip we're going to read eight boost because i got two episodes to read because of the way we started this thing but moving forward it will be the top four boost of the previous rip top four boosts from rip 380 the swiss government lied about jabs with pascal

which got us putting youtube time out hopefully if you're listening to this episode well you're only going to get this on your podcast feed uh top boost 50 000 sats from at eric 99 stay humble stack sats thank you eric not only supporting the show but rabbit hole recap as well from at the bit smith 50 000 sats love your work uncle marty another great rip pascal is an outstanding human and bitcoin are changing topics life goal for 2023 is to become fully a fully fledged ride or die freak well thank you welcome peace love and seasons greetings from christ church new zealand p.s come on freaks tftc deserves to be in the fountain top 10 podcasts these are rookie numbers get boosting in streaming sets well at the bit smith i think you'll be happy

to know we made it into the top 10 this week. I think we were number six. And I think it may be because I started this trend, actually asking you guys, if you're getting value out of the show, please send it back via the podcasting value for value, podcasting 2.0 value for value model. You can boost by listening on certain apps like Fountain, Breeze, Podverse. You can support the show. And I really thank you guys for supporting the show. It makes me feel good that you're actually getting value out of the information we're spreading and that you're sending it back. I think you're going to get a lot of value out of this rip with Jesse at Garth 20,000 sets. When do we get non ad stream for boosting slash streaming a minimum amount of

sets set by the podcaster seems wrong for me to boost slash stream when I have to skip through ads. Well, Garth, I'm sorry. It's skipped through the ads and listen to the boost and stream sets. I thank you for doing it. I really do appreciate you putting up with the ads and streaming and boosting on top of that unfortunately the way rss feeds work right now uh it's not possible i have to set up two feeds and you're bifurcating downloads then anybody can just go to the the stream without the ads and but i do think the podcasting 2.0 team is working on creating a branch that would allow me to put two audio files into the rss feed one that would be ad free and would only work as you describe it non-ad stream for boosting streaming a minimum amount

of sats set by the podcaster at some point in the future unfortunately not right now but thank you for the boost appreciate you listening at fundamentals 10 000 sats marty is doing incredible work by giving pascal the tftc platform to share his work we still don't have verification that a virus ever existed no government on earth is attempting to verify the existence of a contagious virus but they are acting like they proved it they will do worse things without proving cause that was a boost i didn't say those things was just reading it i don't know what i honestly don't know what the truth is shout out fundamentals for the boost all right rip 381 our q3 2022 monetary base update with matthew mazingtious our good friend

at eric99, 50,000 sats. Stay humble, stack sats. Thank you, Eric, again. At blockchainboog, 5,000 sats. Love the lesson of applied statistics. Matt, always one of my favorites. At vaik, 2,500 sat boost. No message.

Shout out, vaik. And at mrbadgermustard. Great show. Awesome information. I'm glad you liked the show and that you thought the information was helpful. I think you'll get a lot of value out of this rip with Jesse as well. If you are supporting podcasting 2.0, the value for value model.

I really appreciate it. Thank you, freaks. Before we get to Jesse, we have to mention our sponsors as well. Unchained Capital, the right down the hall for me here. I got a burping coming. Excuse me. If you're looking to eliminate single points of failure in your custody model, exchanges found out the hard lesson this year single points of failure you think your own

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tell them the tftc sent you and start becoming more energy efficient start increasing your sats flows it's a beautiful thing enjoy this rip with jesse You've had a dynamic where money's become freer than free. When you talk about a Fed just gone nuts, all the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor.

I mean, that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be. jesse myers or should i call you chris acers um creases creases yeah it's i know i didn't know how to pronounce it either but it turns out that is how you pronounce it um and you can call me either i don't know whichever you're more comfortable with at this point i'm i'm like equal i'm ambidextrous ambidextrous with my names because it doesn't feel like it feels like in bitcoin i am creases and not jesse so whatever i always had croatia so my mind just just yeah that's what that's what matt odell went with when i when he had me on um

on his pod and uh i think half the community heard that so well i'm notoriously terrible pronouncing anything so i'm just gonna call you jesse because it's pretty easy fair we were uh we were just discussing history rhymes it seems like these cycles these boom bust cycles and bitcoin and the overarching crypto space have a bit of rhythm to them and you're explaining that it was about this this time uh during the last cycle which was the final nail in the coffin for you to give up shit coinery and say bitcoin's the signal here yeah it was this time last cycle it was it was actually i guess after the bear market where i finally had the i was disabused of the altcoin thesis finally um and the the reason

that happened was because bitcoin rallied off the bottom in early 2019 after it had you know after the full bear market and then the bottom lasted for four months or so and then bitcoin rallied and the altcoins were left behind and so what i thought i thought that i was invested in you know the promising next generation of altcoins that would continue to chip away at the market share of bitcoin and also ethereum that's what my thesis was but then suddenly bitcoin was leaving these things in the dust um after the bear market so my hope that you know the altcoins i was in would rally more than bitcoin and we would be you know back to the same bull market dynamics from a year earlier uh suddenly were not true and then i was forced to accept that what i was positioned

in was actually just the flavor of the cycle, the last cycle. And that the only thing that had lasting value was Bitcoin. And then that sent me further down the rabbit hole to understand why that was and figure out that this wasn't actually about technology. I had the technology investing cap on you know i was approaching this with the same sort of lens as everybody does because of what happened with the internet now the winning strategy with the internet revolution was to invest in promising up-and-coming things with a sort of venture capital portfolio approach where you're going to have some big winners and most of them are going to be losers um and that was the winning formula for the internet and that doesn't you know that feels

like it's the right way to approach this technology innovation with cryptocurrencies but then you get to that level of the rabbit hole and you understand it's actually not about technology innovation it's about sounder money and bitcoin is it and that uh shelling point is what everyone will eventually converge on as the network effect grows as bitcoin becomes more lindy as it becomes more valuable you know the more valuable that bitcoin is the better it is as money as a store of value and also as a transaction currency so it's not about technology it's about money and that is really hard to get over when you're coming in with all of the baggage and all the learned wisdom from you know the prior generation of technology investing from the internet

agreed what worked there what worked there was to invest in a bunch of different applications built on top of the internet and then what works here is actually just to take a stake in the underlying protocol the internet of money the internet of value and that is bitcoin so it's a lot simpler than than everyone makes it out to be when they first come into the space because it's not about technology it's just about holding the underlying protocol and that means just holding bitcoin yeah it's almost too good to be true how simple it is and that's part of the perplexing nature of the the marketing engine that exists behind shit coins i mean i felt for when i first got in like 2013 2014 you do apply that that fintech technology investing

lens to this space you see all these tokens to do all these different things and then even when i come we can talk about ethereum and the world computer and smart contracts and automated applications using blockchain, quote unquote, blockchain technology. But then even in the realm of money, it's a bit confusing for a newcomer coming in. You see something like Litecoin. Hey, it's twice as fast. It's got four times the supply. It's using a different scripting algorithm. You can use it more transactionally. and it's bitcoin's unintuitive in a sense i mean my favorite piece i think ever about bitcoin is guern's 2012 piece uh bitcoin is worse is better and again it's unintuitive because you see bitcoin

21 million 10 minute block times x amount of transactions per second you think this can never be a good money right why is it a good money yeah and then it comes back to just such a simple thing that i think phil geiger um brought to my attention the phrase that summarizes it all for me is digital scarcity is a one-time phenomenon and once you accept that and you understand why that is then you realize bitcoin is it it we had one shot at this and luckily it has nailed it you know you could maybe find some parameters at the margins that could have been done better with bitcoin um but the big things having a hard cap supply having a every four years catalyst with the halvings that cause a

supply shock that caused the price to drift up that caused people to pay attention to it that caused the next slice of the adoption curve to get on board that's brilliant um so thank goodness that satoshi got it right in the ways that matter because you can only create a digital a system of digital scarcity once and then once that system is in place you can copy that system So, you know, I think about it as like this little island or like a bubble that in the digital landscape where everything can be copied and pasted, suddenly you have this circle where inside of that system you can't copy and paste. But you can copy and paste the system itself. So you can create new circles, new islands that are copies of digital scarcity.

And obviously, the marginal cost of creating a copy of digital scarcity is nothing. So you can create an infinite number of them. And that's what we've seen with altcoins. When I first came into this space, it was a few thousand altcoins. And now we're up to like 20-something thousand altcoins because they're just going to create more and more of them. and by definition when you can create an additional system of digital scarcity quote-unquote that's not scarce so it's only the original instance of digital scarcity that has any actual scarcity and it's just such a simple thing that's so hard to wrap your head around

that's it the nothing else has scarcity nothing else has lasting value because it everything lacks scarcity the only thing that has lasting value is the thing that has true scarcity and that's bitcoin you're describing what i like to to call the bitcoin's immaculate conception where it's it only happens once you can't repeat it in that island analogy or description that we're using yes you can you can copy paste and create these new islands but these new islands aren't going to have the network effect that exists on Bitcoin's island. They're not going to have the assurances from a security perspective that exist on Bitcoin's island.

They're easily attackable. They're not as liquid. And at the end of the day, since more and more of these can be created at a moment's notice, you're always going to be competing with the next best thing, which is, I guess,

there's something psychological with all of this, which is that people think they missed the boat with Bitcoin. And they're like, oh, no, since I missed the boat with Bitcoin, it's trading at $17,000. I've got to go find the one trading at $0.50 that will eventually be $17,000. And that is something psychologically that leads people to shit coins. And it makes sense. I can see why that happened.

But it is hard to get over the hump of understanding. Number one, we're still relatively early. if bitcoin is going to do what we think it's going to do and number two the chances of any of its competitors replicating what it has done with its immaculate conception are actually zero um so you're so you're you're fighting a losing battle from the beginning yeah i feel like as bitcoiners we still need to find the right messaging for that like the immaculate conception is right but it begs the question of like what do you mean by that right like why why can no other new project catch up with bitcoin and that actually becomes kind of hard to simplify

um but at the end of the day you we know that the only way to catch up to bitcoin is to have some sort of marketing budget some pre-mine in order to you know innovate and create partnerships and do marketing and try to catch up but once you have a pre-mine then you have ruined your decentralization and your you know credible claim to being a fair currency for the world so it's a catch-22 right there um it's impossible to catch up to bitcoin without having a marketing budget or you know a development budget and once you have that budget you can never be as good as bitcoin no we've seen it time and time again it's yeah and we will continue to sadly do you think we

will do you think this year is not i mean i matt and i always go back and forth on this rabbit hole recap i think at some point like the marginal return or the opportunity cost is better the opportunity cost of playing stupid games with altcoins compared to the security of your savings that that will exist within bitcoin as the market cap increases liquidity increases network effect increases security increases it's simply going to get to a point i don't think shit coins will ever fully disappear but i don't think that we'll be seeing and maybe it's not this cycle or the next cycle but at some point in the next decade or two i i find it hard to believe that we'll see like the magnitude of the pump and dumps in the all coin space that we've seen to date

yeah i think that's right in that longer term time frame i think that i mean i haven't i've only been in for a couple cycles so you've seen a little more than me But it does feel like in the time I've been in crypto, the grift has been pushed a little bit further towards the margins, you know, to the outskirts of the core value proposition of cryptocurrency. currency um and by that i mean that you know it felt like in 2017 2016 17 ethereum arrived and and promised greater functionality um so it was sort of attacking bitcoin based on the premise of like doing more than bitcoin um and that got a foothold in the market It's still hanging in there, but I think it's based on deceit and fraud from the get-go. And that will fade away in time, I think.

But, you know, the premise there was doing more than Bitcoin. And now the latest round of altcoins feels more like they've found more clever, more scammy value propositions like Binance's coin or FTT, which are based on this like you know utility of of a ponzi scheme exchange uh driving value for holders and you know that's inherently way more scammy and snake oily um than something like ethereum which is promising greater functionality even though that itself was over-promising, under-delivering, and also rooted in fraud because it passes the Howey test, which is to say it's a security from day one and shouldn't be allowed to continue according to the securities frameworks that we have in place as a country.

Anyway, I think that that trend of altcoins trying to create hype and a value proposition for themselves at the margin will continue to be more and more at the margin. And I think that that's kind of the analog that I think of is snake oil salesmen on the Western frontier, you know, in the 1800s in America. um the scammers and grifters that found ways to extract money from pioneers and and the early settlers of areas by through their traveling um shtick and as the american west frontier continued to develop there's less and less place in in those societies for the grifters to like extract value. And so I think that that's just kind of what we have to go through as a culture who's still trying to understand and incorporate digital value and what that means and who should be trusted in that world. And so as we continue to make progress with that

culturally there will be less and less room for grifters to con newbies and part them from their money yeah i mean the exchange token meme is going down pretty quickly with ftt obviously blowing up it seems that bmb may be in some trouble too i believe they stopped allowing binance users to use bnb as collateral yesterday on their platform which isn't a promising sign that's something that doesn't doesn't exude confidence in the token they probably didn't stop themselves from using bnb as collateral for borrowing if ftx is any indication because ftx used ftt as collateral for their borrowing uh pretty incredible new development in the ponzi nomics of crypto yeah and it's hilarious because these people particularly spf was going

on podcasts just earlier this year explaining how ponzi schemes are actually good business models they're very overt with their scamming that clip of him talking about you put money in the box and now everybody thinks there's value in the box and you can take money out of the box ridiculous that will go down as one of the most remarkable podcasts of all time i remember he blocked me over a year ago for calling him out on his bullshit but i remember that coming out just like oh this guy's still around and he's literally going on a bloomberg podcast telling people that ponzi's are good businesses there were signs freaks there were signs that something was wrong he was telling you that he was building his business on ponzi's i i feel like one of

the things that trick keeps tricking people um in crypto is is they were unprepared for the level of um grift um and and what it looks like what true what these cons look like um i think that ethereum was rooted in in a con um founded on that and ethere and vitalik has total confidence and enough enough intelligence cleverness and also guile to not only convince his audience that he's that he has real value but i think the key here is that he he believes it himself and i think that's like a common thread with a lot of the grifters or scams that that go belly up with crypto you know i they truly believe they're bullshit yeah they believe they're bullshit i think that's the case with um you know not only with ethereum but also with

cardano or um you know the these enigmatic leader characters who tell you with fervent confidence that that their product is great and you know i think we saw that with celsius um mashinsky was was uh adamantly bashing bitcoin maximalists and doing it with enough convincing rhetoric that you i think the casual person who's accustomed to a world where people are professional and um don't lie uh hear these adamant proclamations of integrity and they believe it And I think that's the common thread that keeps screwing over people in crypto is believing these polished con men that are different from how we think of con men because we think of con men as people who know they're conning. um and i think the problem with crypto is so often these these people delude them these enigmatic leaders delude themselves into thinking they've created real value

and so they're conning people but they've conned themselves too and they believe it and that's an extra dangerous combination agreed and you you always find like the wunderkind like vitalik paired with a business-minded con man who probably does know it's bullshit but is willing to push the grift because they see the the gains that can be made on the back end you have joe lubin vitalik jen mccaleb's another one i mean damn they remember teamed up a bunch uh hawkinson i think he's got a bit of both i think he may believe some of his bullshit but deep down he knows cardano and all the shit coins he started are are not going to change the world in any material capacity and then you have like richard hart who's just an overt snake oil salesman loser right and that

one's easier to wrap your head around because it's it's so clear that he is extracting value he's literally flaunting it yeah right he's quite proud of how much money he's taken from the people he can convince to believe him and follow him like some sort of cult leader um yeah there are these little rules of thumbs like like we talked about how if you have a marketing budget then you can't ever best bitcoin um similarly if you have a leader anyone particularly an enigmatic confident leader you have a problem there too because you are centralized you have a leadership and you can't compete then with a decentralized protocol of value like bitcoin agreed and this gets to another point i mean not only are these grifters pulling in the layman

with ftx and ethereum even we found that they've successfully conned individuals who would otherwise be deemed to be competent capital allocators and this Sort of ties into what burst you onto the scene when you were simply gone by creases was the fact that the yuppie professional, the managerial class yuppie in your traditional finance consulting professional world can't rock Bitcoin. But it seems like this time around, especially a part of that class has been completely enamored with the grift and pulled in to crypto thinking it's the next big thing. Yeah, it is a little sad how evergreen that article is going to end up being. I just wrote that in summer 2020, Why the Yuppie Elite Dismissed Bitcoin, because where my background is coming from, I got an MBA from Stanford. I worked at Bain & Company as a management consultant. these are kind of your your elite creme de la creme sort of background and when I fell down

the bitcoin rabbit hole and was trying to convince all of my friends that they should pay attention to this too that there was like holy cow it it might take a little bit of learning to figure out why there's value here but it's the most important asset of the 21st century once you dig just a little under the surface um i was shouting that from the rooftops and nobody was not only was nobody paying attention to me they were uh dismissing it with a borderline hostile reaction and so i wrote that article to try to for for my own you know from my own experience tried to put a um an explanation to it like why is this the case why why does it seem like the people who should know the most about money and finance um seem to be the quickest to write off

Bitcoin as some kind of scam. And as you know, the conclusion of it was that it's not just about intelligence that matters, but the real driver, the differentiator between the Bitcoiners and your typical MBAs or Wall Street finance types is the degree to which they have trust in the system. And that means trust in the dollar, trust in the Fed, trust in the corporate America system that we have in place in general. And the Bitcoiners are smart and distrusting. And the typical MBA is smart and trusting. So they're viewing Bitcoin from very different worldviews. And that gap seems to be, to me, the reason why my MBA friends just cannot see Bitcoin and don't see the value of it and write it off as a scam, because they think

the dollar is fine. And they've never really thought about it, really. But they've spent a lot of time learning about business and working in finance. And so they think they know a lot about money and when they're presented with bitcoin it immediately strikes them as scammy or or this can't possibly work because where's the authority that kind of rationalization um and so they can't see it and obviously the bitcoiners to in order to see the value of bitcoin need to value um decentralization and the fact that there is no authority issuing um bitcoin and and putting that you know backing it in any kind of way in the way that the u.s government backs the dollar through the u.s military um so yeah that

i think that's the driver that we're we all deal with when we're talking to our personal networks about bitcoin and you know i think that by and large the more plugged into business and finance um and and the longer that somebody has been a part of the system the more resistant they are to bitcoin um and unfortunately that seems to be a fairly evergreen phenomenon and it'll it'll take us a long time to onboard the whole adoption curve and until we get to the you know the heart of the mainstream this theme will continue to play out yeah i mean bitcoin is worldview shattering especially if you've gone through the ranks of going to a good prep school getting into a good college getting into a good mba program climbing the corporate

ladder and whether it be in finance consulting other tech other areas to reach a director level and everything that you've learned your whole life just completely gets shattered by the concept of bitcoin and what bitcoin what bitcoin represents as a as a replacement of a lot of the structures in which your education your world view were built on so how did it happen for you i mean you went through this process where you always you always have a distrusting perspective did diving into bitcoin and actually taking the time to learn about it sort of peel back the onion for you and have you come to an aha moment or oh this has been wrong um uh i may have yeah it it took a while it was a meandering path that led through altcoins it started in altcoins and

led through altcoins and it it required a great deal of trauma in altcoins before i was receptive to the bitcoin thesis um sort of like a in biology you can convince um cells to take up up this or that segment of DNA by exposing them to trauma, heat shock usually, and only then are they receptive to taking up what's in their environment. Anyway, that was a random tidbit from my bio days. But yeah, so at Stanford, that's where I first came across Ethereum, it was in early 2016 some of my classmates were buzzing about it. And the third time I heard about it, I was like, all right, I should pay attention to this. And then I got pulled into the Ethereum

investment thesis, only to buy the local top in 2016 and then be down 50% for the next nine months. And then of course, it took off in 2017. But I believed in Ethereum enough to invest in it because it rang true with the knowledge i was getting from um you know the guest speakers at stanford stanford business school like it's just a a long line of accomplished venture capitalists who come and speak to your class or or tech entrepreneurs who had several exits and they're coming to tell you about, you know, how they managed a particularly difficult time for their company, um, so that you can learn these, these lessons and try to glean from them what you can about, you know, how to run a business.

Um, but the consistent message in all of that is there were, there are a few things that you, you take away. And one of them is, is that, um, you want to be in a place where everyone is saying there's no value here. Um, you want to be young and, and find something that you think is valuable. And, uh, the old people in the room are saying is not valuable. that's like a consistent theme across like what who were the successful people over the last 40 years of technology and what did they do they bet on things that they believed in they could see because they were young they had their finger more on the pulse of where things were going with technology and the rest of the world didn't understand it um that's that's one major takeaway

for me. And another was that you want to invest in shrinking markets. So, you know, the dream for a venture capitalist is to see a startup that does the same, that does something better than the incumbent and does it for cheaper. And that's usually because they're leveraging technology to, You know, do you faster, better, cheaper, you know, ideally something 10 X better, um, and, and for cheaper. And so if you find that, that product, that product is going to chip away at the incumbent position because it's better and it's cheaper. Um, and in doing so that shrinks the market because the amount of money that is being spent on the same functionality is now less. So you're shrinking the market, but that's what wins with technology.

And so you want to be there. And then, you know, I was in that frame of mind and then exposed to Ethereum. And that was kind of my backdoor into Bitcoin. But the promise of any cryptocurrency is to disintermediate. So get rid of some of the fee takers in the middle of transactions. um you know why is your your credit card is charging the merchant two percent why when you can do that for next to nothing with a cryptocurrency so obviously there's some value there and then of course the the boomers out there don't like the idea of cryptocurrencies because

they can't touch it. And so they, they immediately distrust it because they can't hold it in their hands. They can't see it. And, you know, at the same time, like our generation where we grew up on the internet, like, you know, in middle school, we're on AOL instant messenger chatting with people. Um, and, and so our entire formative years were spent on the internet. It makes more sense to us that you can have digital value um you can trust it too uh so that's where you want to be and and i guess that's a long backstory for why i was why cryptocurrencies piqued my interest of course then it was ethereum and i was still applying the like internet revolution um idea of of looking for innovation that that magical buzzword that you're you're uh trained to look for

and it would it would take me some time to figure out that it's not about innovation it's about sound money here but i think that those were the um that's kind of the the backdrop for why i was interested in this thing and why I just had a sense that this was the area for our generation to do well. And I think part of that is we all have this sense that real estate has been bid up to egregious levels. In 1981, interest rates were 15%, mortgage rates were 18%, and boomers love to tell you about how ridiculously high their mortgage payments were when they got their first house in 1981.

But the reality is that a house cost 2x the median, the average house cost 2x the average income in 1981. Yeah, 2x. And now the average house costs 10x the average income in 2022. to. And yeah, the mortgage rates are a little lower, but that gap in affordability is very real. So that's a 5x relative growth in the valuations of real estate. And we all have the sense that that market has been bid up to a point where there's probably not much room for growth. and in fact, I think is destined to lose ground relative to commodities over the coming years.

On that point in, I think it was 1980, Peter Thiel had a great slide earlier this year about in 1980, the total value of all the gold in the world was $2.5 trillion. And the total value of all the equities in the world, all the stocks, all the stock markets in the world was 2.5 trillion dollars so they were at parity i mean 40 years ago and since then gold has gone to 10 to 12 trillion dollars and equities have gone to 100 trillion dollars so now equities are 10x

gold so it's been 10x relative growth versus gold and i think that you know when i think about that dynamic and where we've come from. And that was in the context of 1980 was at the end of the 70s stagflation. Gold had outperformed because that's the asset that you want to hold during high inflationary periods. Since that 15% interest rate peak in 1981, we've trended down to zero with interest rates and have effectively had 0% interest rates the last decade or so. And that jacks the valuation of every financial asset in the landscape to crazy levels because you're screwing with that denominator in your discounted cash flow equation. When your discount rate is 0%, it jacks up the prices of everything. so looking forward we're now entering we're now a year into this new inflationary era

and i think we have a decade plus i think it i think it's worse than the 70s because we now have debt to gdp of 130 percent which 51 out of 52 times that has happened since 1800 led to a default for that nation, the one exception being Japan. And they're, frankly, circling the drain right now because of what they're having to do to defend their balance sheet. So these levels of national debt

always lead to a default of some kind, soft default most commonly, meaning printing a bunch of money to get your to get out of it so that's what we're going to do we're going to print a bunch of money and soft default on our debt and the asset that you want to the asset class that you want to hold in that period is the asset class that did well in the 70s which was hard money back then it was gold and right now it's gold but also bitcoin and then there's all these other reasons why Bitcoin stands to gain more because of its increasing scarcity, the fact that it's misunderstood

still, and the fact that it's starting from a very small valuation of what currently under $400 billion and gold is $10 trillion. So just to get to that level is 25x. um and and then if gold plus bitcoin as a combined um valuation returns to parity with equities which is sounds crazy but is maybe possible um that might look like gold and bitcoin combined approaching 100 trillion and and equity is stagnating as they did in the 70s you know the value of stocks went sideways over the course of the 70s so maybe 10 years from now we have gold plus bitcoin at 100 trillion and equity is at 100 trillion and we've

returned to that parity level that happened in in 1980. That was a big tangent for me but that's part of why I'm you know I think that the opportunity is for our generation is not in real estate, it's not in equities. These things have been bid up over the last 40 years because of declining interest rates. If you want to be on the fastest horse, as Paul Tudor Jones perfectly phrased it, you should be on the thing that does well during inflationary times. And what did well in the 70s was gold because it was hard money, because you couldn't print more of it. And now there's Bitcoin, which is a better hard money. And it's misunderstood. And it's early stage startup level you know adoption um so that's i think going to be the fastest horse

i agree but no then when you add the fact i mean the bitcoin is just supercharged i mean the fact that satoshi launched it in the beginning of 2009 like timing couldn't be more perfect for generation it's a perfectly scarce asset but then you add the network side of things like peer-to-peer what you can do in layers with lightning and other second layer solutions and eventually third layer solutions that some people are talking about already like that just supercharged it not only do you have the scarce asset but enables this economic activity globally that was not possible before 2009 which is just mind-blowing so you have to add like a multiplier effect to that inherent utility that the the p2p network side of things adds to this whole equation yeah i think

that we we so commonly forget about like the the pure simplicity of what's going on here um we're we are living through the internet that we are living through the digital revolution and that has been going on since you know the computers were were first brought onto the scene and then that accelerated with the internet so really we've had the digitization of information with the internet and the internet revolution and that has largely played out right we've we're approaching the plateau of that adoption s curve because we've digitized information if if you want to go access information you go to the internet right now so that has played out but until bitcoin we couldn't digitize value and that's because

that problem of you can't store value in a place where copy and pasting is possible you can do that with information, but you can't do it with value because then it loses its value because you can't be able to duplicate value. And as a side note, I think that there's a funny commonality with a lot of Bitcoiners, especially with the think boys, which I guess I have to count myself a part of, where a lot of us played Diablo as kids. And I don't know if you're familiar with Diablo 2, where there was like a trading economy and uh duplications duping items through like you know hacking the code was a big problem um and i feel like we learned a lot our generation the people who played these online games about like barter economies and what actually drives value and holds

value over time um a funny side note but i know that gg and breed love were were diablo players and i was as well yeah duping i mean that's why vitalik started ethereum people were yeah he got his he got his world of warcraft gold bricked overnight it's the opposite of duping they just said no this is where they changed the supply of origin yeah no it's but again it almost sounds too good to be true yeah right and and to round around that prior point out where i derailed myself but you know we we've lived through the digitization of information and now with bitcoin we are at the in the very early days of the digitization of value and obviously digitization of value has its inherent benefits that the dematerialization of value specifically because

that was the Achilles heel of gold. Gold is physical and that means you have to protect it and that means you end up putting it in vaults and it ends up being centralized and then you issue promissory notes against that gold and then over time you coin clip the value of those promissory notes and then eventually you de-peg temporarily of course in 1971 as Nixon did And suddenly you're in an era where paper money is no longer backed by gold, but 30% of the country still believes it is to this day, 50 years later, which is pretty incredible. um anyway so when you when you dematerialize value you can now store it safely not in fort knox but by using cryptography and you can fundamentally connect it to the internet so instead of it sitting instead of

your value sitting in a vault being protected by armed guards um you can make it available to somebody on the other side of the world you you know in theory i think what we'll see is a development of more sophisticated lending markets where you know you can offer your bitcoin to somebody who's willing to pay 15 apr you know overnight um and you can stream together those sorts of deals on like a lending club kind of digital marketplace for borrowing value and that's not possible with gold and that's just one example of the kind of incredible enabling properties that a dematerialized value brings to the table that gold cannot and you know that's that's why it's inherently better than any physical value and so we're

living through this this period of human history where if you zoom all the way out you know we've been uh there's 70 000 years of documented use of money and and that means that we have cave sites 70 000 years ago um showing that there were shells being used as money the shells with little holes through them so you could string them on a on a necklace and and use that as money and that's because those shells had some novelty and you know they're they're ornate little things that came from the nearby ocean um and they were a good commodity you could have more you could have a dozen of them or you could decide to you know the price was 14 instead of 12 and so that was a decent money but obviously you can go find more shells at the sea seashore

uh and so you know over the last 70 000 years we've had what's amounted to a darwinian conflict of different forms of money different commodities being used as money and from that i don't know that sort of um playoff bracket of of shells going up head to head with glass beads and oh it turns out glass beads are harder to make more of than shells so you can rely on glass beads to store value better than shells so we should use shells now and if you and if you resist using shells that's fine that's your choice but you're going to see your value evaporate and it will basically be confiscated by the people who adopt the harder money and then use go find shells and buy your assets from you. Beads wins out over shells, silver wins out over beads,

gold wins out over silver, all because gold is the hardest thing to make more of in the physical landscape. And so we've, you know, this is fundamental to human history because if you look at those cave sites 70,000 years ago, and you look in the same region, Nick Szabo included this in Shelling Out, and I think he didn't explore it more, but I think it's a fantastic point. Contemporaneous Neanderthal cave sites don't show any use of money. And we can see that there wasn't really any material difference between the Neanderthals and Homo sapiens sapiens in terms of physical ability or use of tools, really.

They're kind of at parity. But the Neanderthals didn't use money. And simultaneously, we see that the population density of the Homo sapiens sapiens cave sites was 10x population density of the homo sapiens neanderthalensis subgroup and so implied in that is maybe it's it's having currency having the the capacity to appreciate currency and inherent in that is having the capacity to value scarcity to value things that are scarce and put value on them and then be able to use those things as money

to transact with, that is possibly the Darwinian advantage that early humans had over Neanderthals and possibly the reason that humanity won out over all of the other early human groups. So to appreciate scarcity and to be able to understand scarcity and put value on it might be the defining human characteristic. And now, 70,000 years later, we are living through the singular moment in time where value goes from the analog world and goes through this process of digitization and will henceforth be digital. So we are living at the most auspicious of all times when you're talking about humanity's relationship with value.

Yeah, it's crazy. And this goes back to the yuppie elite. And it's weird because the way you just described it, I mean, you mentioned the Neanderthals and the Sapiens. rep parity when it came to tools in terms of manipulating the natural world to produce things that would make them more productive but i think that's one thing maybe the yuppie elite and most people on the planet take for granted today is that money itself is a tool to coordinate economic activity and in the fiat era of the last 50 years particularly

most poignantly today where people can look at the fed print trillions of dollars at a moment's notice and say oh that's normal there's been a bit of a detachment from humanity's connection to this tool which i would argue is the most important tool we use because coordinating economic activity is what gives us the ability to to live stream to do what we do today in this modern world. Yeah. I think this was one of the hardest final pieces of the Bitcoin thesis for me to accept. It involved having to tear down my existing worldview in order to entertain that this sort of more cynical take on the state of the world is true but obviously for everyone who's read the bitcoin standard you know that he spends a fair bit of time bashing

modern culture as sort of the erosion of what was great on the gold standard um the proof of work and you know the quality of craftsmanship that inherently comes from holding a um a holding a currency that is inflating at a rate less than the growth of the economy which is to say net deflating so you get more for you get more for less um over time and that that helps create a flywheel of increasing quality with all goods and craftsmanship. And that thesis was hard for me to accept because that inherently means that since 1971,

at least, the world has been getting worse in terms of the quality of goods. And that's a sort of sad conclusion to come to. And is also at odds with the massive growth and the quality of technology goods. But at the end of the day, like it is true about that's why shrinkflation exists. Companies that are honestly trying to keep their prices stable are facing increasing inputs, input prices. And so they're forced to, you know, put a little divot on the bottom of the peanut butter jar in order to decrease the volume without it looking like it in order to keep those prices stable. And there are examples like that abound everywhere.

And when you look at a house that was made in 1920 and you think about the craftsmanship there and the quality in all the little details, and then you look at a house that's been built any time since 1971, it just pales in comparison in terms of craftsmanship and quality. and uh that that is very depressing but it also gives you hope when you realize that if we return to if bitcoin is setting in motion the inevitable return to a sound money standard because of the individual choices that everyone will be faced with in terms of how they store their value and propagate it through time and you conclude that humans are smart enough to figure out that trusting the best money is, you know, trusting a money that can't be fucked with is the best course of action for them, then everybody will find Bitcoin in time. And that will put us back into a state of a deflationary currency,

getting more for less with over time and that could put us back into a condition of having that positive flywheel once again in terms of craftsmanship getting better over time quality of products getting better over time across the board not just with technology products and so it's it doesn't bode well for the transition because it'll be bumpy um but it gives you a lot of hope for the place that humanity can arrive at um by adopting this better money yeah agreed it's it's it's bamboozling because like you said throughout our whole lives We've seen the proliferation of the Internet, the increase in quality of the mics that we're using, the cameras that we're using, the streaming services that we're using, the amount of goods and services we have at our fingertips on the Internet. And so, yeah, this is getting better.

Like, obviously, it's getting better. But as you mentioned, it is all in spite of the degradation that's happened alongside of it, particularly in the physical world. and that it's actually it's funny you went on that mini rant there because i had these i was thinking through this last night too and it sent out a tweet thread it basically started with the fiat monetary system incentivizes a high velocity trash economy that degrades the quality of life for everybody and leads to a degenerate culture it's pretty simple like you print more money it's harder for people to save so it starts in the 70s you have both parents going into the workforce then has these little negative externality ripple effects you

get both parents in the workforce maybe they're not able to tend to their children with as much attention as they would on a hard money standard and so then you have undisciplined children not everybody but it leads to an increase in a lack of discipline of the younger generations and like you mentioned with food food good quality food gets more expensive so you replace the good nutrient-dense food with soy slop and people's health degrades from there their health care cost goes up and then you have an incredibly subsidized health care system that then is heavily dependent on the government and they're printing money and giving it to to this industry and if you're in the health care industry you know we're gonna have we're gonna have a bunch

of flows coming in from the money printer so we're gonna get that money no matter what maybe we don't have to increase the quality of our services maybe we can wait people make people wait longer similar with education tell everybody they have to go to college get a degree but you'll give them a loan very low interest rate print money give them a loan universities like oh that gravy trains coming. We can increase our prices. And since they're being told they have to go get this degree, we can just make sure they're checking the boxes. Let's not really focus on making sure they're well-rounded individuals when they leave the halls of this university. Everywhere you look, you make it harder to lead a life of integrity and go to work and

accumulate capital, save capital for the future. And particularly for the lower middle class, they're working these hard monotonous jobs and don't really have anything to show for it on the back end and then crime then crime starts to pay you can easily make the decision you know what i don't want to work this excel monkey job i don't want to work this gas station job i don't want to work this railroad job i'm going to sell drugs instead i'm going to scam people instead like you just create these perverse that's what i said the fiat monetary system creates perfectly perverse incentive systems that don't lead to a better quality of life or it'll lead to people actually wanting to do good things because the good things, doing good things,

doing hard work, doing virtuous work doesn't provide you with enough value on the back end. So the virtuous things, the good things, the things that will last, the things that will make you healthier things will make you a better parent um are much harder to do it's much easier to do the the easy um scammy things yeah yeah and it and it traces back to you know 1971 is that at that real inflection point where all of these trends accelerated you know that there's and what the fuck happened in 1971 they have got that i think their first graph is just an incredible you know productivity and workers rate workers wages rising together until 1971 and then boom flatlining for workers rate workers wages and um continuation of the upward trend for

asset owners um and so that that that uh that happened at 1971 but it also began earlier right like i think there's sort of there's sort of three um stages to that curve like you know There's a slope of a certain level of cultural degradation because of money printing, starting with the Federal Reserve's inception, going until Bretton Woods at the end of World War II. And that was like that was a low level of interference with money because the dollar was still firmly connected to a set exchange rate of gold. but they were able to you know influence things the federal reserve wasn't doing nothing um and and sort of the easy money that came about in the 20s created the bubble that caused the you know exacerbated the depression in the early 30s but by and large that was a period of minimal intervention or influence by central banking in the integrity of the money.

And then Bretton Woods through till 1971 was effectively our era of coin clipping, meaning that because Bretton Woods set the exchange rate of international currencies pegged to the dollar. And then the dollar got to be pegged to gold. That allowed U.S. policymakers to periodically reduce that peg to gold. And the effect of that was a flowing of wealth from international currencies to the dollar. So we were effectively confiscating wealth from our allies as our reward for establishing the new world order and saving everyone from hitler um which you know realistically that russians probably did more of but we got to set the world order um don't talk about that that period played out um until 1971 and and um

I forget if it's Saifedean who talks about that or in another book, but the French wanted their gold back. They were sick of it. They sent an aircraft carrier to New York demanding their gold, and we had to give it to them. And then the Germans who we had saved from tyranny were going to do the same. And that was one of the proximate causes for Nixon actually breaking the peg to gold was because we couldn't we couldn't fulfill that reasonably. and so that that's why we that and to pay for mounting costs in vietnam by printing money

you know what a convenient thing to do to get out of all the political pressure that we were in at that point in 1971 uh yeah just print money oh lo and behold here comes a whole decade of stagflation uh because of that money printing and and the excess of that duh in hindsight and yet and yet nobody nobody can agree to that nobody can look back at that objectively and say oh yeah maybe the stagflation of the 70s is because we went off the gold standard how is that not like a consensus just simple fact in academia um and yet you you're not taught that what do they lean on they're like vietnam it was the war war times yeah they come back to i mean i what i recall from business school is uh supply and demand which is the same

you know um what's the panacea that they're trotting out now for to explain inflation in the wake of 10 trillion dollars of u.s money printing and 20 trillion dollars globally in quote-unquote response to the COVID pandemic, but really that crisis started before COVID arrived when in late 2019 the reverse repo market was showing signs of strain. There was a crisis coming, and then they happened to have COVID arrive

and be a perfect cover for printing a ton of money, and now they're surprised and claiming that it's supply and demand issues that are driving almost double-digit inflation in the U.S. that they admit to. I think double-digit inflation, if you look at the 1980 basket of goods that used to be included to calculate cpi um that inflation rate is at like 15 or 16 percent right now not the eight percent that is the uh the official new basket of goods um so they've managed to uh obfuscate obfuscate that um despite everyone watching this you know there's no reason why

people can't um use their brains to bring attention to the fact that that uh inflation if you use the 1980 basket is much higher than the inflation that you're being told is happening today um and yet nobody's doing it and i don't know if that's some function of you know there's this skeptical interpretation the cynical interpretation of, well, they're deliberately suppressing that message. But I think I take a little bit more generous or forgiving stance. And I think it's just that we have so marginalized Austrian economics that the only economists out there are Keynesian. And so it's an echo chamber of Keynesianism that was sort of established 100 years ago

and has perpetuated until today. So there isn't a competing school of thought, and it's not the fault of people today. It's the fault of people 100 years ago, and that was malicious, I think. But I think it's genuine ignorance now. They just picked up the baton. They're running with it.

without reflecting on keynes's comment that doesn't matter what happens because i'll be dead um saying that not really thinking about the generations to come after him which is us and we have to deal with the implications of the policies that he put forth and one of the oh go ahead yeah one of the um most shocking numbers that that i've come across this year uh let's see if i can remember all the pieces here but a year ago the um u.s unfunded liabilities was 157 trillion oh yeah i saw you tweeting about this yeah and now it's 170 trillion um but they just approved a 8.7 cost of living adjustment 8.7 cost of living adjustment for 2023 meaning that those unfunded liabilities effectively will be bumped by 8.7%.

And if that's a permanent adjustment, then that $170 trillion should be increased by 8.7%. And if you do that, and you subtract the $157 from a year ago, that's a year-over-year $28 trillion difference in U.S. unfunded liabilities. and for context um our gdp is 24 trillion so you would have to tax over 100 of us gdp in order to keep unfunded liabilities from snowballing that's not going to happen so we're already past some event horizon here yeah and that's i actually read about it last night at the bent too. Another part, I don't know if they're technically labeled as unfunded liabilities, but the interest payment on the debt in this high interest rate environment

is tamed, I believe, as of the end of November, $766 billion, which is catching up to the military budget. And then next you have social security and the Medicare, Medicaid. So the interest on the debt alone that we have to pay is reaching points where it's getting on parity with our military budget annually and then when you think about that it's it's quite scary if you look at the interest rate payment chart it's like approaching hockey stick territory and it's quite impossible it's literally impossible it's mathematically impossible but and that's where soft default comes from there's no other way and we i mean i think one can make the strong argument that the soft default has to start at some point in 2023 considering the market conditions that

existed throughout this year we have stock markets crashing bitcoin crashing real estate crashing so you have a lot of people who didn't make money in the speculative markets this year they're going to write those down as losses so you don't have the capital gains tax revenue you don't have nearly as much revenue as you had in 2021, the year after markets screamed and people were making a shit ton of money. And so when you, when you talk about the revenue, the government's going to bring in a come tax season next year, it's going to fall well short of where it was this year and last year. And then you have a really obvious gaping hole in the revenues you have coming in the liabilities you have to look forward to yeah the um if i recall the uh tax receipts for

2021 uh record tax receipts because of the bull market in equities and everywhere um driving capital gains was four trillion dollars and yet we still ran a trillion dollar deficit it so we spent five trillion um and that's with the you know best ever tax revenue for the government and now and that was with zero percent interest rates so the interest you were spending on 30 trillion dollars of national debt was zero um and of course now that is ticking upwards um if it was to get to to the current uh inflation rate of eight percent well that wouldn't be enough so you know the the way that volcker um handled inflation in the end of the 70s was to set um interest rates meaningfully above inflation

uh and if we were to do that today that would mean having to set like a 10 interest rate and it would take a while for the national debt to to roll over into 10 interest rate um conditions but the result of that would be on 30 trillion dollars of national debt you're spending three trillion dollars a year in interest expense when recently we were spending zero so you're adding you know even if if if interest rates just get to 10 which is lower than what volcker did um you're talking about adding three trillion dollar line item to u.s expenditures every year uh at a time when we are already running a multi above more than a trillion dollar deficit. So now you're talking about a four trillion dollar deficit on the back of

three or four trillion dollars of tax receipts. And the only way you're going to create that money is by printing it. And because you've eroded the position of U.S. Treasuries as a reliable store of value, nobody else is going to buy it. So you're putting that on the Fed's balance sheet so the only way to pay this interest expense is going to be to print a bunch of money and further erode the value the store of value properties of the dollar the desirability of the dollar so then you have to print more exactly there's your debt spiral and there's no way out of it the only way out is to soft default i was wrong however um i told all my investors that And I was looking at this math a year ago, and I was like, I just don't see how the Fed can raise interest rates. It just mathematically doesn't make sense. And of course, that's what they've done.

Um, and I, and I, I still don't know if it's because they genuinely have deluded themselves into thinking they can do what Volcker did when Volcker had 25% debt to GDP and we have 130% debt to GDP, meaning that Volcker could afford higher interest expense because there wasn't much debt to pay. uh so i don't know if they've deluded themselves into genuinely thinking they can do that or if this is a short-term gambit that they're playing of like okay let's do a strategic tactical interest shock to try to bring down inflation uh in in which case they've sort of succeeded but uh they've probably already set in motion um kind of business cycle contraction that

will lead to a serious recession if not depression and that's if they stop right now which they're not going to do because they're going to tail off um you know so they're going to keep adding but less and less and then they're going to hold it there too long because they're inherently backwards looking so we're already on course for a serious recession um even if they don't do anything. They changed nothing. Serious recession already inbound, I think. Anyway, I was wrong a year ago because I believed that they would be rational about the realities of their debt position. And they're either taking a very risky gambit to do a tactical recession, which is scary because they don't have the precision to accomplish anything like that.

A growth recession. That's one of the terms that they were throwing around earlier this year. Yeah. I have just no faith that they'll be able to do that because they should have been raising interest rates all through 2021, and they didn't because they were still looking in the rearview mirror, still terrified of COVID, like COVID's impact on the economy. So they were a year late.

they're going to be a year late to stop so they're going to cause a serious recession in the process um anyway the the longer term picture is crystal clear it's math there's no way out of that math but they have some reckless gambits they can do and are doing in the short term which are hard to predict because they're not really um they're not reasonable gambits to be making um you wouldn't do this with your personal finances uh but they're doing it because their options are hyperinflation now or hyperinflation soon and so they're going to choose that this is the world run on centralization run on fiat currency just you simply cannot have a select few individuals attempt to micromanage not only the u.s economy but the global economy

it just does not work just from again i use this term a lot but just from an information systems perspective and from emergent order if you truly believe that is the natural way of things this is again perfectly perverse to that natural order perfectly opposite of what nature intends for these complex systems and yeah we're living through it yeah and the what sucks is that our generation the millennials the zillennials uh are going to bear the brunt of it um and and our kids will bear the brunt of it you know it's the classic arc of we're creating hard times right now And the millennials and Gen Z are inherently not prepared for hard times because we were raised by boomers who came of age, their formative years were spent in the easiest times in human history, the post-war economic expansion and dominance of the U.S. where everything was possible and all you had to do was show up.

And we were raised by them with that same assumption only to find a lack of opportunity. And not only that, we're saddled with a national debt burden from, turns out, the boomers running up their credit card. And not only incurring debt, but also writing $170 trillion of IOUs. we'll get you we'll get you don't worry we're good for it it's like lloyd christmas oh that's good for a lambo you're gonna want to keep that one

yep and so you know when you it's it's all very depressing when you think about it in these terms um about the economic prospects for for our generation but then there's there's one growth area there's only one thing out there that is that i see that is genuinely undervalued massively and not only is it undervalued but it brings about a better world a better future a brighter future and returns um culture to the positive flywheel of quality uh and empowers it's you know it's it's wild how it is beyond just an economic story it becomes a story of individual rights and liberties and it's wild to be living through that where this is the next stage of what was began i think in the protestant reformation

where in the Protestant Reformation, it was technology, the printing press enabled thinkers to propagate their ideas and that caught on with people of, you know what, why do we allow the autocracy of the Catholic Church when Jesus' message was not designed to be theocratic like this? um we should take some of that power back separation of church and people um and then you know that set in motion the separation separation of church and scripture i like that beautiful yes um and that's an emotion the enlightenment which culminated in you know the

The best representation of those ideals was the American Revolution, the Declaration of Independence, and the separation of decision-making from monarchy, by the people, for the people. So that's the next step in asserting individual rights of I have the right to religious choice. I have the right to self-govern now. And now Bitcoin comes along as this separation of money and state, peaceful revolution. And it is quite literally a continuation of the same ethos of individuals asserting and protecting greater individual rights, civil liberties for themselves, and saying that I have the right as a person to my own value and controlling my own value and not allowing any authority to confiscate it or tell me what I can and can't do with my value. It's pretty incredible to be living in a time

when not only is this the greatest economic opportunity of our generation, but it's also the most important thematic and civil rights push of our generation. And, you know, I think so many people get caught up in following the latest crusade of this or that disenfranchised group and, you know, trying to bring them into a level of greater inclusion in the national conversation or whatever. but this is this supersedes that this is for all people it's not just a marginalized group that we're trying to you know bring greater rights to this is about empowering every individual on the planet to save money in a money that cannot be diluted and confiscated through money printing

it's pretty powerful time it's a beautiful thing it's beautiful yeah that's why we that's why we meet here that's why we do this that's why you come for number go up and you stay for the peaceful revolution the peaceful revolution and one thing that comes with this peaceful revolution this is incredible opportunity but also demands extreme ownership and personal responsibility which is the topic i would like to end on for this conversation because as we've seen And over the course of this year, the Bitcoiner mantra, not your keys, not your coins, has been proven to be incredibly prescient. Not only prescient, it's just true. Not your keys, not your coins.

If you don't possess the UTXOs within addresses that you control with a private key that you possess, then you have a Bitcoin IOU. And I think considering everything we just discussed in terms of the gravity of the situation in the incumbent fiat world and how drastic that's going to change things and the relative low value that Bitcoin has in juxtaposition to this environment we're facing. as more and more people get onboarded, how imperative is it that they take extreme ownership and develop the personal responsibility of actually possessing their Bitcoin? Because we've learned if things do get as volatile due to the debt situation countries have put themselves in

in the future, I believe we could be looking at Celsius, BlockFi, FTX, and others as child's play compared to what could potentially happen in the future if people don't learn their lessons right now. Yeah, yeah. And everyone has to burn their hand on the stove. And that is, I guess, one of the great parts about the anti-fragile nature of Bitcoin is

Bitcoin itself as a network is anti-fragile. Specifically because people step in to take advantage of opportunities when the incentives aren't, you know, like if when the Chinese mining ban happens and hash rate drops off, suddenly everyone else on Earth has a huge incentive to step in with hash rate. because the the economic incentives of bitcoin are still there and in fact in its um sort of crisis there uh the incentives are heightened and and that's how bitcoin achieves this anti-fragile um stance is because when it's in jeopardy or in a position of weakness Its incentives are such that they, on a relative basis, are heightened, so it induces people to come in and save the hash rate from going down further because there's more incentive to mine. And I think that's true of business models on Bitcoin, based in cryptocurrency as well. when weaknesses occur when things go belly up there's an incentive for the next generation

of businesses to be built better and be built in a way that solves for the weaknesses of the last generation and because there's an economic incentive to step in and take market share and build a good solid business by doing that and so i think that is an iterative process that will continue for decades here. Businesses built on Bitcoin will keep getting better. And that'll be a wave, a series of waves of the next generation coming up and doing something better or setting up shop for a use case that hasn't yet been solved for or whatever it is and so i think we luckily have that to look forward to and will be part of how bitcoin gets better and strengthens itself and further embeds itself into the fabric of finance

um but you're right that there's there's a part of this in an implicit trade-off of in order to not have any centralized authority dictating who owns what, individuals have to take ownership of their own security. And that's what Satoshi created here is all you have to do is take control of 12 words and store them safely in order to have to in order to allow math to protect you so it's a skill that everybody is going to have to learn a simple thing of how do you protect 12 words in order to

reap the massive benefits of taking control of your money out of the hands of anyone else on earth and all you know and and now have a money where nobody can debase it nobody can take it from you nobody can stop you from using it um any time of day or for any reason so that's you know in the grand scheme it's the smallest trade-off imaginable you just have to learn like you did with email you have to learn a new technology workflow. And part of that is to secure 12 words. And that's a learning curve everyone's going to have to go through if they want to get off of the hyperinflation roller coaster. Your option is to just remain with the status quo. You can always do that and watch your wealth be you know melt away out from under you or you have you can do

the the slightly hard thing and learn this new skill set and learn how to protect 12 words it's not that hard freaks it's not that hard i can do it any of you listening can do it marty you set a low bar so that is a good example Yeah. This has been an incredible conversation. Where do you think we go from here? Is the contagion over yet? Oh, that's a good question. The Binance stuff is a little scary that's popped up today. Um, we'll see there. I, uh, I, you know, I thought we were going to 150. We all did this time last year. We all did. And I thought we were going to get a blow off top the same way we've gotten a blow off top every post halving bull market we didn't i was surprised

i thought it was going to be a blow off top to 150 and a bear market low of 50 something like that and of course that's not what we got and here we are with a currently 77 percent drawdown from peak which mind you was not a blow off top so it could have or maybe you know to have a direct comparison with prior examples it should have been a blow off top and it would have been a higher peak and therefore a larger drawdown to get to this point but whatever 77 last um last bear market from the 2017 peak to the 2018 bottom was an 83 drawdown and the one before that was 90 and the one before that was 93% so each bear market has been slightly less volatile and here we are with a slightly less volatile drawdown than the prior one and it has

been 12 months just over it's been about 13 months since the peak in the from the 2017 peak to the 2018 bottom it was 12 months so the timing seems to be about right uh the sentiment couldn't be worse which is exactly how it felt at the bottom in 2018 back then that was my first cycle so i allowed myself to be influenced by the prevailing bearishness and i got caught on the sidelines with some i was sitting in cash partly in early 2019 when bitcoin rallied off the bottom. So I won't be making that mistake this time. I think a lot of newbies will be making that mistake and learn that hard lesson this time. It feels like we are in the refractory period following the latest bubble. And the bubbles happen after each halving. And here

comes the 2024 halving 18 months away. We're in the refractory period, which is to say probably below where we should be or will end up being going into the 2024 halving. So right now might actually be the single best time in the last four years of this four year period from the peak last year and going into the next bull market. this might be the time, the best time to invest. And it feels like the worst time because it feels like everything is scary. And that's part of why it is probably the best time. So I'm always too bullish. I was too bullish this time last year. But I think that there are all these signs right now, that right now is an unusually good time to be bullish

large part because it feels so bearish yeah i mean you had a tweet a couple days ago somewhat predicted today's pump like many five percent pump that we got here yeah i'm scarred from i was making the comparison to right now feels like how it did at the bottom last bear market we spent four months at the bottom last cycle and uh everyone was complacent and confident that it was going lower, including me. And that's how I ended up partly on the sidelines. Um, and then the price just kind of ticked upwards slowly until it popped. Uh, and that set off a three X run over the following few months. And, um, we're in the same sort of pattern right now, though we haven't spent months at the bottom yet um so i don't know i wouldn't be surprised if in 2023 we have a two

or three x rally um the same way we did in 2019 granted that was driven by the plus token scam in china um hoovering up coins um but maybe it's that maybe it's just that the price right now is overly depressed and there's and any kind of catalyst will send us on a little bit of an echo bubble popping back up before we settle in on some price equilibrium going into the next halving and the supply shock sets in motion there's not enough supply being created every day to go meet demand in the market and price has to drift upwards because supply is inelastic and it sets in motion the next bubble in this ongoing series of bubbles

which will continue until 2140. So it's a good time to be holding your Bitcoin if not adding to it, I think. You heard it here first for 3X next year. Here's hoping. Jesse, thank you so much for this. This is a bit last minute. Talked to you yesterday.

this was awesome yeah first time on here we'll do it again anytime you want to have me rant about stuff oh I won't be shy so you put the offer out there now you can expect me to take you up on it many times in the future where can we find you creases yeah I'm on twitter as Cresus, C-R-O-E-S-U-S underscore B-T-C. That was my pseudonym before I came out publicly a couple of months ago. But as far as Bitcoin goes,

I still think of myself as the Cresus Nym contributing from the shadows. So yeah, that's where you can find me. uh my pin tweet has a collection of all my um writings and uh tweet threads analyzing this and that about bitcoin so if you're interested check that out very high signal freaks very high signal go follow creases jesse whatever we're calling him these days i was gonna say enjoy the rest of your afternoon thank you

and uh i'm sure i'll be talking to you at some point in the future i i know we will peace and love freaks