TFTC: A Bitcoin Podcast - #497: Bitcoin Will Power Up The Future Of Finance with Andrew Hohns

Episode Date: April 10, 2024

Marty sits down with Andrew Hohns to discuss how Bitcoin changes the world of finance. https://www.unicefusa.org/about-unicef-usa/leadership/national-board-directors/andrew-hohns 0:00 - Intro 5:05 - Andrew’s background 19:30 - Discovering bitcoin 25:44 - Alloying bitcoin with credit 34:49 - Positive impact of Bitcoin’s unique use cases 49:18 - Debt crisis 58:15 - Gradually, Then Suddenly 58:54 - High/low time preference 1:04:32 - Applying bitcoin to financing 1:12:49 - Inflation 1:29:16 - Americans should embrace their bitcoin advantage 1:45:46 - Wrapping on Bitcoin Jawn Shoutout to our sponsors: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠River⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Unchained⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Zaprite⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Bitcoin Talent Co⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Gradually, Then Suddenly⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ 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

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them to tftc send you and enjoy this rip okay you've had a dynamic where money's become freer than free if you talk about a fed just gone nuts all 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 andrew this is a long time coming yes it is i'm glad to be here uh i'm happy to have you here this is your first podcast you got to pull the mic close all right i'm gonna learn how to do it learn the ways is that good yes excellent been a long week yeah good one you started in philadelphia

yeah and uh you've been road road dog and it ended up in austin texas that's true So 18 hours driving in the last three days. I don't know how you do it. Yeah, well, it's good. I mean, when you have the opportunity to build on Bitcoin, it's inspiring, right? I mean, for me, it was not a big deal. I drove through Jefferson City. I went to Oklahoma City.

I came down here to Austin, had a bunch of appointments in the region. So it's great to be here. Yeah, it's great to have you here. Thank you. uh not only here in the studio but in bitcoin thank you more broadly i'm really excited that we're finally able to do this we've been talking about this for for years now but the reason i'm excited is because i think your story and how you came to bitcoin and what you're doing within bitcoin is very unique uh and again very exciting for the space because i think you're

um leading the charge from the traditional financial uh world and trying to prove that you can do something with bitcoin so before we jump into the future of finance let's talk about the past what you've built a new market what traditionally new market has been focused on why you decided to add a bitcoin strategy to to the new market umbrella yeah for sure no i'm happy to. Well, I mean, my background is about, I mean, as traditional as it gets from a financing point of view. I've been working in credit, banking, finance for almost 25 years. I did Wharton undergrad. I graduated in 2000. My background was a little unusual. I also studied classical studies as an undergraduate and actually came into finance through a course that I took in

my senior year, ancient Athenian banking. And I ended up, the professor of that class is a very accomplished businessman and had started a number of banks and energy and real estate companies. And I ended up joining him and his family and his son and working with them for many years. We did a lot of securitizations pre-GFC, cash securitizations. I worked on a range of different assets, bank trust preferreds, insurance trust preferreds, REITs, CRE, various kinds of mortgage debt, middle market commercial lending. I developed my sort of first product that I came up with just before the GFC, which was a portfolio of tax-exempt bonds issued by small and medium-sized institutions that were eligible to issue on a tax-exempt basis but not large enough to do their own bond offering. And so they were borrowing from local banks taxably. And I thought, well, that's kind of not ideal for hospitals, schools, public radio stations were the kinds of borrowers that we had in mind, institutions that needed anywhere between, let's say, $2 to $20 million of capital financing, not quite enough to do a big bond offering.

So we had this idea to pool together a group of them from around the country and then issue tranches of financing, which would have different priorities of payment, could take advantage of the structured finance markets, and deliver not only an efficient cost of financing to these borrowers, but do so in a tax-exempt way. So we got that deal done. But then at that point, global financial crisis really took hold. And I had a front row seat. We could talk about that. It was kind of interesting, more than kind of interesting. It was fascinating. But I've always been interested in doing new things with finance.

And it became pretty clear to me that the opportunity to do things was that window was closing for a little while. And my late grandfather, he always was telling me from the time that I was a teenager, he said, you know, he said, you should get a PhD. He said, I think you should get it. I didn't even know what a PhD was. But I always had in my mind his advice. And as I progressed through, you know, school, as I progressed through my undergrad,

I did a master's degree at night after I graduated from undergrad in liberal arts. Penn. And then when the global financial crisis came, I thought, you know, this is really the opportunity. Because I was already almost 30 years old, you know, which is a little late to be starting a PhD anyway, you know, on a conventional timetable. But I thought if it's now or never, you know, I felt this tap on my shoulder. And I applied. I applied to Wharton for the PhD program, applied economics. I was accepted. Um, and I enrolled in the fall of 2008 and, uh, you know, I was, I was really interested at that moment in, um, thinking about how ancient moral philosophy about money lending could be used to, to think about what had just happened with the global

financial crisis. And so I started doing all these classes in religious studies and looking into, you know, St. Ambrose. He has this incredible essay called De Tobiah, all from 394 or something AD, when he was in Milan, criticizing money lending. One of my favorite lines, he says, debt is like a cup of poison with honey on the rim. But, you know, looking at all of these essays, Yehiel DePisa, this incredible rabbi who wrote this handbook

about how Jews could lend money in a way that was consistent with what's called the Deuteronomic exception, which is, you know, the Torah's teaching about money lending at interest and without interest and of course the same themes are picked up in the core and so i started i was exploring that and exploring like the first bankruptcy laws and so on and so forth but my professors at wharton um they let me do it for a couple of years and then i got some really uh good advice right life is all about good advice

and following it and um uh bill alford who became my dissertation chairman great professor he said he said, listen, you know, it's great that you've been doing this work, but we're not exactly suited here at Wharton to provide you the kind of critique that you're going to need to do a dissertation on this. He said, could you maybe think about some topic that could be, you know, more in line with our expertise at the business school? So I thought about it and I was looking at that time a lot at synthetic securitization because the GFC, I had done a lot of cash securitization where assets are actually sold into an SPV. The SPV actually owns the assets and it goes and gets ratings from a rating agency for the different liabilities that are issued.

And those ratings facilitate the offering of securities to investors at a price that makes the financing really attractive overall. Synthetic securitization is all about an owner of assets, not selling them, but just buying a tranche of credit protection on the portfolio to optimize it for some reason or another. Economic capital, accounting capital, regulatory capital. And I was looking at synthetic securitization because I thought that it had, you know, when I was looking at the GFC, that front row seat, I was talking about What I observed, anyway, was that a lot of the transactions, the underlying assets, of course, some transactions had assets that ran into actual payment issues, right, like the subprime deals and so on and so forth. But there were a vast majority of the deals, the underlying assets were still performing.

They were still paying their interest. However, the cash securitizations that supported them, they had these rules that were monitored, let's say, by third parties, like, for example, over collateralization tests, which were based on the mark to market value of the underlying collateral in the portfolio or ratings driven tests about what percentage of the portfolio had become triple C rated. And those kinds of tests, they were, you know, in a moment of financial crisis, the people that are marking it, they have every incentive to just lower the marks. And so then that test was failed. And that produced a diversion of the cash flow away from the equity to turbo down the senior tranches. And so the cost of the financing went up.

The leverage went way down. The equity was shut off. But the assets supporting the securitization were actually performing the whole time in many instances. And I thought, this is a little crazy. So I've been looking at synthetic securitization, which didn't have those kinds of tests associated with it because it doesn't have the third-party rating agency aspect. And I started looking at it, and I thought it was interesting. And I began at the same time to become really interested in infrastructure finance.

and why was the world not having infrastructure, right, in the right way? Like, you know, almost a quarter of the world without electricity and safe drinking water, passable roads, right? Basic infrastructure in the developing world. And even in the developed world, infrastructure that wasn't in great shape, right? Older, creaky, not doing what it needed to be doing. And there are many, many reasons why that's the case. But the one that I really started to focus in on was the bank regulatory capital treatment of those assets and the high level of capital charges that banks were required to hold against the infrastructure loans. Not so much because they were infrastructure, but because the loans, for the most part, were unrated, not issued within corporate structures, but issued by standalone vehicles owning that particular asset.

There weren't that many of them, so they didn't lend themselves to statistical optimization. And yet, at the same time, the performance of those assets was really good. Low defaults, high recoveries. And I thought, hmm, this is a little bit of a market failure, right? Here you have assets that are performing really well. They're essential to the economies in which they're located. They're producing the power. They're creating the roads.

They're providing the runways for the planes to land on and therefore the commerce to travel by. But the banks can't really make a lot of the loans because they're highly costly from a regulatory capital point of view. And I thought, well, what if we use synthetic securitization to provide an outlet for large global lenders to manage the capital on these portfolios of loans? And so, well, that was the business version. The research version was called Justice and Infrastructure, which was focused on why is this all happening and that may be policy. At that time, I hadn't really thought about Bitcoin that much.

So I was really thinking, what kind of policy could be used to change this structure? So maybe the regulatory capital charges for infrastructure could be lowered, and that would make it easier for infrastructure loans to be made. But not expecting that that policy was going to be implemented as a result of my dissertation, which would instead collect dust on the library shelf. Laufer, he said, why don't you do something about it? He said, you're uniquely situated to do something about it. You've worked in finance for 10 years. you have this Wharton education, figure it out, do something about it. So I thought that's good advice.

So I ended up getting back with an outfit called Mariner, Mariner Investment Group, and we launched a first-time strategy, which we call IIFC, International Infrastructure Finance Company. And since then, it's gone on to we've raised several billion dollars of equity from large investors, pensions, sovereign wealth funds, insurance companies. And we've invested in over $40 billion of infrastructure loans on bank balance sheets worldwide. We've completed deals with many of the world's largest banks,

a lot of renewable energy, a lot of conventional energy, transportation infrastructure, social housing, utilities, some commercial real estate assets. but a range of different assets in over 50 countries around the world. And, yeah, I mean, so that's my background. New market, you know, is structured credit asset manager, right? That's our overall kind of DNA, if you will. So we're always thinking about how can we optimize financing structures

and, you know, deliver added value through tools of finance. mm-hmm that's i never knew the the backstory from your dissertation to iifc i never connected those dots that's really fascinating that that's what led to that particularly but you mentioned at one point you didn't realize that you didn't realize that bitcoin would come to exist while you were thinking about some of these strategies when did you first catch on to to bitcoin the asset and then what was the unlock in terms of like holy crap if i incorporate bitcoin into what i'm doing uh on the structured credit side it completely changed the game because i think you've thoroughly convinced me and i think uh obviously people on your team that um adding

bitcoin to the world of credit products is is a game changer very disruptive yeah i'm so excited about the potential um for really innovative financing structures that are that are built on and around bitcoin we can we can talk about some examples but um you know i mean i first started uh look i've always been interested in financial history that's been like a major passion of mine for a long period of time i mentioned i was a classical studies student in addition to Wharton and, uh, ancient Athenian banking, right? Like, you know, I mean, I've been in tune to, you know, like, uh, right. Ancient coinage and go into that section of the archeology museum at the university of Pennsylvania. There's a great coin collection. Um, or, you know, how

have different, uh, commodities been used in different ways? You know, Lynn Alden has a wonderful intro to her book, Broken Money, where she's talking about all the different kinds of things that have been used as money over time, wampum, tobacco, et cetera, and the pluses and minuses of the different kinds of things. And I've been following that in different ways for a long time, reading about it, so on and so forth. And I've always been interested in markets. I've been reading the business section of the newspaper since I was an early teen and starting to invest and so on and so forth, you know, in stocks, little stocks here and there. And, you know, would always read Wall Street Journal and Financial Times. And I remember distinctly

the Mt. Gox news and reading about it in some of the, you know, some of the major media sources. And I've been reading about Bitcoin for a while. I didn't really focus on it, but I've been aware of it, you know, I hadn't taken the time to really think about what does it mean? What's the protocol? How is it based? But always very open to digital ideas and new ideas anyway. But I was building my business. I was at Mariner. And in 2020, we spun out from Mariner and we started New Market. And that was in the spring of 2020. And when we did do that, you know, that was actually really the exact same time that the COVID financial support, you know, what someone once referred to as a liquidity supernova burst over the world. And I started really thinking about the impact of that

and thinking, you know, this is going to mean a lot for inflation, right? This is going to be, and I started looking at my old academic books about inflation, and I went and I tried to buy some old books, but there aren't that many. There's a great one, if anyone is looking, a wonderful book called A History and Analysis of Inflation by Don Parleberg. That's a great book, but it's hard to find.

But there really aren't that many books about inflation. It's not a topic that people like to write about. Anyway, nobody talks about economic. It's a very small, if you go to a major library and you go to the economic history, the financial history section of the library is very small. Most people who are interested in finance, they follow the markets, right? They're saying like, what is this doing today? What is this commodity doing? What is this stock doing?

And how do I position my portfolio to maximally take advantage of that for maybe even the day or the week or the month or the quarter? Few people might say, how do I do it for a year or two years? A very small group of people say, what could be a five-year investment or a 10-year investment? Nobody is like, you know, hmm, if I have to invest something for 100 years or 250 years, what should I invest in? Maybe I should look at the economic history to see how these cycles repeat. And so as a result, there's a huge focus on, you know, this short-termism in financial markets, understandably. Um, and, you know, at that time, March, 2020, I really started thinking about inflation. We spun out.

Um, I started, uh, uh, myself getting more and more interested in Bitcoin, you know, proverbially going down the rabbit hole. Uh, the more that I looked, the more that I thought it was clear, elegant, transparent, fit for purpose. And, you know, that was the summer of DeFi. So I started looking at, you know, Uniswap and PancakeSwap and SushiSwap, you know, and all of these other things. You were farming yams? Yeah, well, I was like, I was reading, you know, these blogs like Decrypt.

And I just, like, I mean, maybe some people understand it. I couldn't understand it. I was like, what are these things? Like, why are these adding value? And I thought to myself, you know, if I can't really like see my way through to explaining how these, you know, of course, some things are adding value, but how these things in general are adding value to financial structure, having had like a career for 20 years, innovating around financial structures. But then I kept on coming back to Bitcoin. I was like, you know, this is really making sense, right? And, you know, at some point I became Bitcoin only, Bitcoin maxi, you know, really focused on Bitcoin.

And then in around 2021, a colleague of mine and I, we went to the Bitcoin conference in Miami and I was flying back and I was looking down at the houses from the airplane window. And I was thinking to myself, how much Bitcoin is in these houses? You know, I wonder about that one and that one. Am I looking at 100 Bitcoin? You know, I'm looking at 800 houses or 12,000, whatever, however many houses were in my site. How much Bitcoin is down there? And how are those people financing those houses? And then I started thinking, well, what if we had a loan for those houses that was secured

by both the Bitcoin and the house. And that was really the genesis of what has proven to be a rich vein of ideation around how Bitcoin can be integrated as a tool into long-term financing structures and how if you combine it with traditionally financeable assets, you can create um financing arrangements that provide uh really stable long-term financing without mark to market risk on the bitcoin and the real unlock is actually it goes back a little bit to uh some of the ancient moral philosophy islam uh islamic orientation of finance in the torah as well, about not so much focusing on interest, but sharing in the risk, sharing in the appreciation

of the underlying assets. It's hard to share an appreciation when it's built in fiat, because that's like building on quicksand. But as Michael Saylor has helpfully analogized, Bitcoin is digital granite. And when you're building financing structures, when you're building any structure on granite, you can build a great structure. It's the foundation that matters you know you ever watch a skyscraper get built it's like they announce that there's a skyscraper here they put up you know those little construction screens and but if you sort of peer through it they're like digging down down down you're like god how far are they going to go where are they digging to you know and they keep on and it takes forever and then they start filling

up that and it takes forever and then once the foundation and all of the you know the bottom of building is in place and all the systems and everything, it shoots up, right? You can build a skyscraper if you have the right foundation. And it just started, you know, we started thinking like, actually, you know, one analogy for us is that, you know, Bitcoin, because of its superior monetary characteristics, if you mix it with credit, it's almost like financial steel. It's like just like you mix iron with manganese and if you keep them separate you have iron and you have manganese and you can't build a skyscraper but if you alloy them you have a steel and if you alloy credit and bitcoin in different proportions for different objectives

you can build with financial steel and what is it about bitcoin specifically that makes this possible? Is it the fact that it's digital, really sellable, liquid, all the above, fungible? What's the most important characteristic of Bitcoin, the asset that makes this sellable? I mean, what I love about Bitcoin is that you can spend, you know, a couple of hours a day and come up with all these new analogies,

And there's so many people, thinkers in the community that are coming up with new ways to new metaphors and new ways of thinking about Bitcoin. So Bitcoin's a lot of different things. You know, it's, you know, the island of Manhattan before it's been developed every block. Right. It's digital granite. It's it's it's it's a monetary fuel cell. Right. It's all of these different incredible things. um recently i've been reading you know it's gunpowder money uh because the idea being of course that uh you know when the knights would suit up in their armor and put the arm in the

philadelphia museum of art you know if anybody loves armor you should go it's got a great armor exhibit really famous armor collection it's amazing i've got this big horse with all this armor on them and the lances and the swords helmets it looks pretty fearsome but you know you imagine you're a gunpowder salesman and you're going around the various you know castles and you're saying hey i've got and the guy says look we're we have a traditional approach right we've been fighting with armor for a long time we use swords and lances it's very honorable and we're going to stick with our honorable approach so well all right but the gunpowder does have some good character and the people who adopted the gunpowder had such an asymmetric advantage

when they went to battle that from a game theoretic point of view of course it has to be adopted very quickly and the ones that adopted first benefit and bitcoin is gunpowder money it's so asymmetrically better why us why well it's finite right everyone knows not only is Finite's mostly issued, you know, as of 840,000 blocks. We're not that far away, 2,500 blocks more or less. It's going to be 93.75% already issued. So the existing supply, the total supply is finite. New supply is scarce.

It's transparent. It's infinitely divisible. It is weightless. It is invisible. It is transportable 24 hours a day, seven days a week, anywhere around the world, from Tokyo to Taipei to Toronto to Tinicum Township. You know, it's just really backed by the largest computer network on Earth by far, which is producing, is an exahash a quintillion or a quadrillion? I was reading an exahash is... 660 quadrillion?

Quadrillion. Quadrillion or quintillion? because i saw on twitter somebody said quintillion in any event a lot of guesses per second quadrillion right i think it's quadrillion well we'll have to double check but uh it might be quintillion uh tarash is yeah trillion terra is trillion peta peta would be quadrillion quadrillion exa quintillion yeah okay so we're at like 660 quintillion guesses per second that are securing and that's a lot of computing power and 837 000 some odd continuous blocks that has functioned with you know basically 100 uptime for 15 years as a self-functioning system

in a transparent way and it's being adopted of course by so many people for for for really good reason right you know sometimes uh people say well i'm not sure about bitcoin you know it comes down to a belief and sometimes people say bitcoin is like a religion you know those people they're so religious you know they're like zealots right you know um but i don't i don't actually think about it that way you know because i'm not i'm not interested in bitcoin because i feel that satoshi nakamoto received the commandments on a mountaintop and inscribed them on some stone tablets and came down and there was a burning bush or something like that i'm interested in bitcoin because of characteristics of bitcoin right the fact that you have programmatic monetary supply the fact that

you can say hey look the year is 2034 and 99 of all bitcoin will have been issued the year is 2047 99.9 of all bitcoin will have been issued the fact that you can audit it the fact that it's transparent the fact that it is um you know just a remarkable money that and then you compare it to the alternatives and of course you know there are a lot of different things that store value right real estate gold silver um currency but you know bitcoin is just clearly uh superior monetary good yeah and that's i mean we've talked about this a lot too and especially when you consider the debt situation that exists right now particularly the federal debt i mean you were mentioning spinning out mariner spinning out of mariner in 2020 i was shocked to learn

i think it was last week or the week before that the treasury is issuing as much debt as we did in march and april of 2020 right now when you consider the relative stability the economy is is experiencing right now compared to the beginning of the lockdowns it seems like we're i hate to be bombastic and use the word like that we're in the middle of a debt spiral but it does feel like that when you look at the interest expense on the debt and the projections of that going completely parabolic and the fact that we're quietly issuing as much debt as we did in march and april 2020 um and nobody seems to really be paying attention to that and we consider the problems that exist in

the the treasury market the public debt markets seems like there's something like bitcoin needs to exist and people need to begin incorporating it into their lives as individuals and credit products to really save parts of the economy not going to save everything but to to soften the blow create that soft landing both for individuals and institutions that are heavily exposed to the treasury markets yeah i mean you know there's uh there are positive reasons to really be excited about bitcoin and then there are defensive reasons to really be excited about bitcoin i love to think about the positive reasons right i mean like am i getting too doomer here no i mean like it's an important perspective that you're sharing we can you know

we can go into it obviously it's a it's a key aspect but you know just because we have a lot of debt is like really far from the only reason that i think the bitcoin is a very exciting tool to develop new financing structures right i think the bitcoin is an incredibly exciting tool to use in financing structures of many different types credit insurance all kinds of different ideas that we have been developing because it does so many things. I mean, think about everything what's being built on Bitcoin. You know, you have ERCOT. There haven't been blackouts and brownouts in Texas in the last three years. It's not because the weather's been less severe. It's because there's been four gigawatts of Bitcoin mining capacity, which is a moving valve

that is able to ramp up and ramp down in order to maintain stability on the grid when people spike the thermostat or turn up the air conditioning in difficult weather situations. And, you know, the fact Bitcoin mining, it has these three characteristics, right? I mean, I'm not a Bitcoin mining expert, right? Like, not by far, but I play one on TV. And, you know, but the way that I break it down is that Bitcoin mining has three superpowers, right? Three unique properties.

Number one, it has an insatiable appetite for energy. It will eat as much energy as you feed it. Number two, it doesn't care if you stop feeding it energy. You can start and stop and start and stop 18 times in one second or 33 times in a minute or never in the next 16 weeks. And it just doesn't care. It's indifferent. It doesn't harm that particular Bitcoin miner and it doesn't harm Bitcoin as a whole. And number three, the third factor is that it's the only large scale consumer of electricity where you don't have to bring the electricity to it.

You can bring it to the source of energy and the electricity if that's, you know, if you transform the energy into that. Whereas every other large-scale consumer of electricity, a factory, a university, a hospital, commercial refrigeration facility, aluminum smelter, they're all fixed in space. And that's obviously creating a huge amount of innovation, right? methane recapture from landfills, orphan oil well, natural gas well, transformation of those wasted gas into monetized value, Bitcoin, not just any monetized value, monetized value in gunpowder money. That's really good. What Gridless is doing in Africa is deeply inspiring from a development finance point of view, because those villages are not going to be on the grid anytime soon. It's so costly to build out the grid to those remote areas, but so many areas

of human civilization are already built on a river, and that's a source of energy. Now, you could put a small-scale hydro power plant on that river anyway without Bitcoin. Bitcoin doesn't make the hydro power plant possible, but without the Bitcoin, the village can't afford the infrastructure of that power plant. And when you have the Bitcoin as the standby purchaser of whatever energy electricity is not used by that village and going back to the infrastructure piece from before you know for me infrastructure is a basic human right okay if you can't drink water where you can be uh uh sure that you're not going to get Ascariasis, right? A 30 centimeter long nematode that affects like most recent that I read, which

was some years ago, almost one out of every eight people in the world and reduces quality adjusted life years by seven years and breeds in water because the water is used, you know, the night soil is used to farm the vegetables. Night soil, of course, is feces mixed with soil in order to create a kind of low grade fertilizer. The, you know, I don't want to get too into it because people are going to get grossed out. But the point is, is that, you know, if you can't trust the water that you drink, if you can't turn on the lights at night and do homework or turn on the lights to, to balance your books for the small business that you have or for your family or to charge your phone, which is a lifeline in the modern world. You know, if you can't refrigerate

your food and your medicine then your life is much more degraded you don't really have autonomy not in not in a real sense and electricity makes that possible so i think electricity is a human right and there are many many places around the world without electricity and you can't build a grid to them it's not feasible um but that many places are on a river and you can take a small scale hydro production facility. And you can build a microgrid in that community. And you can have the Bitcoin as the standby purchaser to make the economics work. And that's a credit worthy counterparty with no counterparty risk in a global network. Now you're tying that village into the global connected digital economy and making their lives vastly better. That's a

remarkable use case for Bitcoin. And you can say the same thing about climate. If you're interested in climate, you look at methane, right? Methane is evidently much, much more dangerous than every other greenhouse gas. And it's just being spewed by all of these landfills. Why not go to the landfills and recapture that methane, turn it into electricity, monetize that electricity into Bitcoin and turn your landfills into small scale electrical power plants. And by the way, if you want, you know, you could create a electric vehicle charging station there for your municipality to take your electric vehicle, fire trucks and school buses and charge them overnight. And when they're out doing their municipal activities, just hash Bitcoin during the day. You know, you can create

these circular solutions, circular economy solutions that are really fascinating. And that's just energy. And beyond energy, you know, you have, I mean, like cyber walls, right? You know, and Michael Saylor has talked a lot about this very interestingly. You know, our organization is not going to receive an email from another one unless it has some sats associated with it. Or, Or, you know, unless we have some Bitcoin on deposit, and unless the sender has verifiable Bitcoin on deposit, these organizations, it'll just be automatically rejected from that cyber dome. And you could imagine use cases, you know, in the real world, similar use case, because Bitcoin is scarcity. And there's so many things that humans have that are based on scarcity. You know, like co-op in New York.

You live in a co-op in New York City. you know they do all this analysis of you know the financial wherewithal of the person so well what if instead of all of that they said look in order to live in this co-op in new york city you need to verifiably have one bitcoin or five bitcoin in an address at all times and you're going to get you know this you know your your key to enter is going to have an rfid in it and the rfid is only going to function if you know the bitcoin is verifiably there and when bitcoin is 70 000 it's 350 000 that's a lot of money but when bitcoin is a million that's five million dot when it's 10 million that's 50 million dot and so you can create really interesting physical

you know gates you can create digital gates all of these cyber walls are remarkably interesting sat streaming is uh it's happening right now as people listen to this it's happening right now and it's so early days i mean when you think about uh you know when you have when you have sound that's moving at different frequencies you create a symphony right when when you have money the money right now you do you do a structured credit transaction you buy all these assets they collect their interest the interest is collected by some trustee every 90 days it's run through this waterfall everybody gets it you know if you could do that continuously right it opens up it opens up a symphony for financial transactions

You know, I was reading today in Milken Institute quarterly letter about the future of payments in the U.S. And someone was saying, well, you know, small scale continuous payments is going to be when you get in your car and you start to drive, you can just stream a payment to the insurance company. So you're paying just based on how much you actually drive, how much you actually drive and only when you're driving. And, you know, sometimes people like to do things that are, you know, a little risky, where sometimes people, you know, get hurt, like, you know, like skiing, right? Skiing is a sport where people sometimes have bad injuries, unfortunately. And, you know, maybe if you get on the ski slope, you start streaming your SATs while you're skiing in order to have a contingent life insurance product just at that time. you know, or a contingent injury risk product. And you can just start to imagine all of these different use cases for sat streaming, cyber walls, e-gaming, payments

and remittances. I mean, what Jack is doing is incredible. Jack Mahler's Strike is an amazing company. And, you know, long Bitcoin, short Western Union is so obvious to me. And it's like So there are all of these positive developments that actually don't particularly pertain to Bitcoin as a store of value. As Jack has so eloquently said, the best use case for Bitcoin, number one use case for Bitcoin is by far the best savings technology on the planet that pertains to 8 billion people. It pertains to however many millions of companies, however many nonprofits, charities, governments, everyone can use it. for all of these different savings, conservation. Bitcoin is capital conservation, right? Because it's a fixed number. It has all of these characteristics. It's a very conservative approach to, you know, as Michael Saylor has said, right, you're etching your labor and your capital

into a granite ledger that can never change. If one of the things he said, I love, if you were a creature that had a lifespan of 10,000 years, what would you save in? You know, and that's a very interesting rhetorical question. It's not so rhetorical, really. He's provided a clear path. So you have the savings technology, but then you have all of these other use cases that are not savings use cases. They're based on the different capabilities that exist within the protocol and have been developed on the protocol. And those all reinforce the value proposition of the savings tool because they're all demanding. They're either strengthening the protocol, such as in these mining activities, or they're utilizing some Bitcoin. So they're

a separate source of demand for the Bitcoin, even ordinals, a separate source of demand for the Bitcoin, but they're not directly savings tools. And that is like, you know, a million percent what's fascinating about creating financing structures and structured credit, structured finance vehicles around this asset. Now, over here, back to your dooming question, right, is, you know, that's a little bit of a different story, right? Because it's like 1981, we had one trillion dollars of debt and i remember i remember when i graduated from college david walker came to give a little presentation at the university of pennsylvania he was the former comptroller of the united states okay and he was at the pete peterson institute

and he was saying you know you know to all you youngsters here right all you all you people in your early 20s, you know, the federal funded debt right now, I can't remember what it was, $4 trillion. But we see this on a non-sustainable path. And we think that by the year 2035, there's going to be a real crisis. Why do we choose 2035? Social security, right? It's hiding in plain sight. And fast forward. And now, you know, here we are, we're at $34.5 trillion dollars worth of debt. By the way, we were at 33 in September of last year, right? We've added more debt in less than six months than it took us in the first however many years, you know, 200 and some odd years of, you know, the country's history. And it's not just the federal funded debt,

obviously, you know, you have the states, right? You have all of the pensions, which are in general underfunded from an asset to liability perspective you have the social security which has only one asset as you know which are u.s treasuries which are not exactly inflation resistant and where the income from them is you know the interest on them is paid from you know it's rather somewhat circular um medicare and then you have gen x you know gen x i read a study the other day i didn't like fact check it i just read it it was on zero hedge it was several months ago said 40% of Gen X has zero save for retirement. And the average is 40,000 save for retirement. And you look for, and you know, and so I, I think it's pretty clear the direction of

travel and it's not just the U S obviously the same circumstances applicable and, you know, in, in different, you know, different variations on the theme. Right. But in general, a lot of the developed world has really a lot of debt. And, you know, most of the currencies around the world are liability money. And so in order to promote economic growth, the governments in one way or another create new money through new liabilities. And, you know, it pertains to Japan, it pertains to Europe, it pertains to Canada, you know, all of these different places. And, you know, And that's definitely, it's definitely, you know, on my mind, because if you think about credit, you know, credit, you know, people need income, right, for legitimate reasons. You know, if you're a pension, you need income to pay your beneficiaries, right?

You can't just like not have income. You have firefighters, you have teachers, whoever the beneficiaries are, and you need to be able to meet the current obligations that you have. If you're an insurance company, you have to be able to pay out on claims. If you're a university, you have to be able to pay a certain amount in order to fund your scholarships and your research and whatever your current initiatives are, any charity. If you're a family, you need income for those reasons. If you're an individual, you may need income. so people need income. They can't just not invest in income. And it's very helpful because you're exchanging, you know, your capital for a current stream of income with somebody who has a long-term

plan. And that's like kind of exchange of capital and how the world works for capital formation and, and, and building things, which is good. Um, but if you have this inflation that is happening, I mean, the federal funded debt I read on Twitter, I also read the Wall Street Journal, but I read on Twitter the other day that the five-year compound annual growth rate of the federal funded debt is 9.24%. That's big, right? and you know if you you know if you have a seven percent you know real real inflation i'm not talking about cpi or pce or you know i'm talking about like you know if you want to you know look at look at price buying two cappuccinos and a chocolate croissant it's 23 right right we experienced that this morning 23 for two cappuccinos and one chocolate croissant and that

is um you know 23 i mean that's like that's a lot of money that's over 30 000 sets right it's like 35 000 sets that's a lot of money and it's just going up and um you know everyone sees it and lynn lynn alden posted this great graph today which is you know how inflation is reported and it's obviously the current rate of inflation oh it went down so and so forth how people experience inflation and it's just a cumulative index like over 320 yeah exactly right and that and that's that that is how it feels right and so if you just get back a hundred dollars on the you know you get back par on your on your income oriented investment in five years or ten years that's potentially really value destructive from a real point of view and so you know essentially

if you combine actually a small amount of Bitcoin with a large amount of, it could be even high quality credit, the transformation of those two things protects significantly, provides a significant hedge against the inflation risk, provides an upgrade overall to the stability of the income stream,

participates in all of this positive possibilities around everything that's being built on Bitcoin. And it really just allows for a whole new path of thinking about structured finance that I think is just incredibly fascinating. Going back to the, in these credit products you have a line of fixed income from revenue cash flowing entity you're investing

with any of these liabilities and dollars which are deflating over time you have to get more dollars to sustain the purchasing power that you have historically like you said like flipping that adding bitcoin into this where as a business as a company if you have bitcoin within a credit product your equity position within the structure is getting better throughout time as bitcoin yeah monetizes yeah well i mean there are a million of examples okay literally it introduces patient capital into this capital structure capital that actually works for you yeah i mean look 1031 uh is an amazing amazing uh you know full disclosure so we you know so new market founded a company battery battery finances

uh focused on built on bitcoin institutionally oriented asset management strategies that are value-added right so and and and 1031 um is a partner in battery finance but an amazing partner but 1031 has called their funds the low time preference funds and there's in bitcoin there's this idea low time preference lower your time preference and michael saylor says if you were a creature that had a lifespan of 10 000 years what would you invest in that's a very low time preference but the thing is i'm not familiar with creatures that do have lifespans of 10 000 years right like 10 000 years ago was what 8 000 bc i mean which which are the creatures today that There may be a shark that people have found that they say has been around for like a thousand

years. Quick break here, freaks. This rip is brought to you by Gradually Then Suddenly, a framework for understanding Bitcoin as money by Parker Lewis. I wrote the foreword to the book. I'm honored to have done so because it's the best zero to one primer if you're looking for a logical explanation of why Bitcoin obsoletes all other money. Buy one for yourself and maybe a few for your friends.

Go to the safehouse.com slash gradually. that's the safe house.com safe spelled s-a-i-f the safe house.com slash gradually use the promo code tftc for five dollars off at checkout buy it now freaks the price of bitcoin is going up you need to understand it this is the best zero to one primer back to the show are we recording again yeah yeah sorry i had to take a little break there freaks but uh yeah the question is like how does injecting an asset that allows you to be more patient within a credit product or just more patient broadly into a credit product change the future of finance?

Yeah. Well, we were talking about, you know, low time preference, right. And, you know,

we go right into an example, but I was going to tell a little funny story about my friend who proposed to his girlfriend, his longtime girlfriend, uh and they were like real history buffs and you know nuts and they went to saint helena right and there's apparently there's this hotel in saint helena where there's this old tortoise named jonathan who's like 200 years old and he surprised her by putting the engagement ring on a box and tying a ribbon around the tortoise and the tortoise like slowly walked

over and i don't know i wasn't there so but it must have been like kind of funny but apparently then unveiled this wedding ring on the back of the tortoise that's like a 200 year old creature you know and michael saylor is talking about this 10 000 year this creature with a 10 000 year lifespan and that's a fascinating fascinating idea and i think it's clear you would choose bitcoin because as he helpfully points out you know gramercy park 600 years ago was uh you know was a forest or a swamp and you know even the city of london right 2500 years ago you know would it be gold are you going to hold on to the gold for that long even if you did by the way the amount of gold that if i gave you okay one ounce of gold in 1989 and pressed that ounce of gold into your

hands and say, keep this for your, you know, your child is going to be born this year, you know, and give it to them when they're 35 years old and you put it in the drawer and you keep it. And then your child turns 35 here in the year 2024. And you, you still remember it. You pull it out. You look at it. It's beautiful. It's got all the same design. It's gleaming. It hasn't rusted it's uh it weighs the same amount it's still an ounce of gold but in terms of purchasing power of the gold gold protocol it's about half as much because there were around 90 000 metric tons of gold at that time and now there's about 180 000 and that's because every year gold grows by about two percent and that's not changing it may grow by a lot more if you know asteroid mining

or deep sea mine or whatever, or maybe even synthetic gold, right? Just like laboratory diamonds. And so although the substance itself hasn't changed, it's, you know, the denominator of it has been growing all around it. It's the same effect for fiat currency. It's just the denominator is obviously growing much, much more quickly than the inflation, natural inflation rate of gold or silver. But Bitcoin has no natural inflation rate. And so that makes it a really sensible tool for a creature with a lifespan of 10,000 years or for someone who can project 30 years or 50 years into the future. And there are interesting financing structures for that. We can talk about an example. But low time preference, there are things that you actually, you can't

lower your time preference. You know, if you're going to make an important investment that pertains to, uh, the adolescence of, of, of, of, of one of your children, the adolescence is a limited period of time, right? If you want to make that investment pertaining, like, for example, if you want to send them to a certain school or provide them with extra education of a certain type, um, or, you know have a swing set in the backyard if you have all of your money in bitcoin and it's 70 000 you're like oh no i'm huddling until it's you know seven million you know no i'm not selling my bitcoin well then you're not getting the swing set yeah tough luck kids right tough luck kid and if you're waiting until it's seven million which might happen in i don't know 2035 who knows

whatever well the kids they're not going to be wanting to swing anymore you know because they're you know, their time preference doesn't match up necessarily. And so the transformation and the same thing pertains to a business investment. You know, at some point in your life, if you want to open up a pizzeria, you maybe want to start that in your 20s or your 30s or your 40s. You want to start it in your 80s. Maybe some people do, but not everybody. And so the time preference, you know, Bitcoin is immortal, but humans are not. Right. And so the transformation of time preference is something that can be facilitated through capital markets because you can exchange some of the future growth of the Bitcoin, which you're not going to

see because you're not going to live forever. You can exchange some of that future for entities that will live forever, i.e. financial companies who can provide you with funding to achieve a goal today or a goal over the next year or the next five years. And if that goal is starting a new business or investing in your current business, that might be your best path to stacking more Bitcoin in the first place. And so, you know, there are really interesting ideas. Now, to bring it, you know, to pilot the plane, you know, down from 30,000 feet to 5,000, I'll give you just, you know, just one example. And there are many examples, right?

This pertains to commercial real estate, project financing, equipment financing, corporate lending. There are many consumer applications. I'll share a consumer application because I think it really illustrates the potential. You know, of course, you have to figure out how do we navigate all of the regulatory, consider all of that stuff, right? But just as a thought experiment for financing structure, right? so let's say you want to buy a house um maybe look i'm i'm from philly you know i i know that area you know the best i guess and you know so median home i think in philadelphia is something like three hundred thousand dollars and you want to buy a median home city of philadelphia three hundred

thousand dollars by the way the average age of the house in stock is 90 years and so that's pretty expensive to maintain, you know, because older homes, they have more maintenance and upkeep costs and maybe have to replace the roof or it has older systems. And, you know, all of those issues are embedded into it. And not only does that particular home have those issues, but every home around it and the whole neighborhood and to a certain extent, the whole city. But in any event, you want to buy a $300,000 house and you finance it. How do you finance it? Let's say you finance it with an 80% loan to value, 30-year fixed rate mortgage. I was looking at CNBC this morning and flashed on the screen national average 6.99%. So I did a little calculation and

the monthly payment on that is a little bit more than $1,600 for principal and interest only, not pertaining to insurance or property taxes, just principal and interest. So you pay, I can't remember exactly, $1,625 or something. You pay $1,600 a month for 30 years and you own this house. What do you have at the end of it? Well, you have 100% equity position in an idiosyncratic asset, highly concentrated risk. It is emotional, right? It's where you live. The only way to access that equity is to either borrow against it again or to sell it, neither one of which may be exactly ideal based on the time of life or the circumstances. The value of the home depends heavily on whether you've been able to invest in it over time

for planned and unplanned maintenance or renovations or changing needs or what have you. not only is your ability to manage those factors uh heavily influential on the value of the property but also the properties on either side of you uh and their ability to manage all of these complex factors and whether they held on to their job or didn't or moved or how frequently they moved and is or were their roofs repaired and is it painted and are you in a duplex or row home or what have you and then the whole block and then not only the whole block but the neighborhood and that's kind of uh path dependent as well because some neighborhoods have you know gentrified and so they have a yoga studio or some fancy restaurants or some popular restaurants or maybe

there was a municipal project to build a park in the area and that's led to a renewal but there are more neighborhoods that haven't had that kind of renewal than there are that have and not only that but also the health of the broader community right in terms of like if you're if you're a public school teacher and you buy a median home and you're a public school teacher in in in in nashville tennessee then the median home that you purchased has done better than if you were a public school teacher in knoxville tennessee but if you were a public school teacher in nashville tennessee or Knoxville, Tennessee, you've done better than if you purchased the median home as a public school teacher in Worcester, Massachusetts or Springfield, Massachusetts. And yet both places

need public school teachers, both places need bookkeepers and, you know, all kinds of different, right. You know, Richard Scarry, what do people do all day, right. There's a lot of different jobs in the world and everywhere needs them, you know, butchers, bakers, and, you know, bean counters and everything. And just because, you know, I don't think it should be, you know, so arbitrary that your, you know, most significant financial asset is this place where you live and it's heavily dependent on all of these factors. And so, okay, so what does Bitcoin do, right? You know, what can Bitcoin do for this, the American dream? And, you know, sort of thinking about it, thinking about looking down at the window of the plane and saying, well, what if it's actually, look,

the genesis of this idea, I was driving with my son and, you know, we, we talk about finance, which, you know, uh, is probably like a little self dorky, but whatever. And, you know, then we started talking about Bitcoin a few years ago. And one day we were driving along and he said to me. He said, you know, I've been thinking about it. Before we were starting talking about how to integrate Bitcoin into finance, I look back on it. It was like we were watching television in black and white. He says, now that we're talking about Bitcoin, it's like everything is in color. So we're driving one day through West Philadelphia and we're talking about, you know, these ideas, mixing Bitcoin with credit and traditionally financeable assets. And he says, what about a

house? What if we did it for a house? I said, what do you mean? He says, what if we put some bitcoin on top of the house i said what do you mean put the bitcoin on top of the house he says well you know like mario he eats the mushroom and he gets bigger he gets all of these powers he says the bitcoin can power up the house and we just started riffing on that and we said well let's you know let's talk about and so we say all right same house three hundred thousand dollars but now ad, add Super Mario, $30,000 worth of Bitcoin. Okay. 10%, you know, Bitcoin, $30,000, $300,000 house, combine them into a financing package, a collateral package, $330,000. Make the same 80% loan. Okay, now it's a $264,000 loan instead of a $240,000 loan on a $300,000 house. Same 80%

loan to value. The borrower has to put up $66,000 instead of $60,000. But here's where it gets interesting. Because the lender can also receive some return from sharing in the appreciation of the Bitcoin, and not just in the interest and in the amortization. It provides quite a lot of flexibility for the interest and the amortization. And so instead of a 30-year mortgage with a 7% interest rate, we were just penciling out, how about a 25-year mortgage with a 5.25% interest rate. And as it would turn out, the monthly payment on a 25-year mortgage with a 5.25% interest rate and an original balance of $264,000 is a little bit less per month than the monthly payment for a $240,000 mortgage on a $300,000 house with no Bitcoin, 30-year amortization,

7% interest rate. And so before we get onto the Bitcoin, we could say to the borrower, hey, yo, if you make the monthly payment, you will own the home five years earlier for a lower amount per month. That's the value proposition if Bitcoin goes to zero. Of course, I don't think Bitcoin is going to zero. It's gunpowder money. In fact, it's been the most well-performing asset of the last 15 years by far, especially if you look at it over medium to long-term periods of time. And we can say to the borrower, okay, now enter the Bitcoin. Say every year that the borrower stays in the home and continues to pay the interest and continues to amortize the debt on this 25-year schedule, they also vest into 2% of the appreciation of the Bitcoin.

So if they stay in the home for 10 years, they vest into 20% of the appreciation. If they stay in the home for 25 years, they vest into 50% of the appreciation. The lender gets the other appreciation share and when you start to run the math okay since may 2020 right a lot's happened since may 2020 you know like what are some of the things that have happened been up we've been down yeah uh that's one way to put it another way to put it is uh ftx alameda celsius voyager block five, three arrows, you know, a lot of different turmoil in the digital asset world as a whole, right? 69,000 down to 16, you know, a lot of volatility, but when in doubt, zoom out the compound annual growth rate since the May, 2020 have, and do you know what it is as of today?

About 72%. Not too bad. 72% per year. So if you put this financing formula, this financing structure and you just pencil it out okay then in about year 10 the borrower will have enough money if they choose enough embedded appreciation in the bitcoin if they choose to fully retire the loan and have a couple hundred thousand dollars of additional equity besides and now i think i hope actually honestly you know you look at a neighborhood like germantown in philadelphia you know where there's a lot of older housing stock there's a lot of needs for repair and it's not just germantown many areas that you know fit this description but germantown you know was founded one year after the city of philadelphia right 1683

So it's an old neighborhood of the city. It was incorporated into the city in the consolidation of 1854. But, you know, a lot of older housing stock needs a lot of repair and upkeep. And if you, you know, if you were to put 50 of these kinds of mortgages with, you know, I mean, that would be like putting 25 Bitcoin into Germantown. And then you fast forward 30 years, you have 25 Bitcoin in Germantown in 30 years. That's a major shift. Of the capital resources of that neighborhood.

And if you power up the houses with this, then my hope is that people won't be like in year 10, hey, yo, I can retire my mortgage, take my $300,000 extra and run to somewhere else. My hope is that they're going to be like, oh, actually, hold on. I should really stay in this house for the rest of the term of this financing facility because every year I do, I vest into two more percent. the most best appreciating asset of the last 15 years, gunpowder money, Bitcoin, with all of this incredible attributes. And then, of course, as the equity of the Bitcoin grows, that provides a really powerful, non-correlated, and not the house that you live in, and one that doesn't require the roof to be replaced or have any storage costs, store of financing potential around which that family, that individual can invest in many other things, right?

And that could be the maintenance and repair of the house, or it could be the initial capital to start a business, or it could be to pay for an important operation or for tuition or to better facilitate a retirement savings. And you think about the wealth creation that is possible, and it's a much better program for the borrower and for the lender. You look at the lender's return, it's much higher. It is protected against inflation. It is non-correlated asset pair. It doesn't have just this idiosyncratic risk on this specific building in a specific neighborhood in

a specific region with all the issues that we discussed. It has that, which is good because that provides shelter and it has traditionally been a good store of value. It has a real utility, but it also has exposure to the best collateral, the most pristine collateral. And by unifying them, you're transforming time preferences in a way that is allowing the accomplishment of real-world goals. And, yeah.

It's, every time we talk about it, I get even more excited. Because you think about, like you mentioned FTX and BlockFi and all that too. and when you compare what you just described to what they were doing, like they were taking Bitcoin and lending it out to degenerate traders

that were betting on shit coins and losing their money on leveraged bets. Compare that to this. It's like as a Bitcoiner, it's like this actually, if we're looking to build a liquidity base and get to a phase of monetization and stability where Bitcoin is more pervasive,

something like this makes a ton of sense where you put it in these structured products and literally lock it up. Potentially 25 years if people want to tap out early because the appreciation of Bitcoin is such where they can do that. Our mission is to deliver superior financing alternatives for people who choose to invest and save in Bitcoin.

For people, companies, institutions, that choose to have as their treasury asset, gunpowder money. We want to provide them with, you know, the best financing tools, the best long-term financing tools without mark to market risk that enable them to express in the physical world, the physical manifestation of the dreams and objectives that they have in their mind. Because if you just keep it in Bitcoin and you keep it all in the digital world forever, there are going to be a lot of dreams and ambitions that are ultimately not realized because of the time preference reshaping. And what, you know, the financing products that exist today are very high time preference financing products. You can

borrow on a continuous liquidation basis, full mark to market risk, or continuous mark to market risk, anytime liquidation for high current fiat interest rates. And, you know, so if you, even if you have a, you know, if you have a little bit, I mean, you borrow on a ratio, right? So, you know, it scales up and down, but I mean, you know, like let's say, you know, somebody has 10 Bitcoin, that's a lot of Bitcoin. Somebody has 10 Bitcoin and $700,000, you know, how much financing can you draw against that, you know, safely, you know, 70,000, right. $100,000, 150,000. How about, how about 300? Well, you can't get 300 because you're talking about like 50% LTV max, 40% LTV max, but probably anyway, that's like, depending on where you are in the cycle. And then you have

all this cycle awareness and you're like, well, what if there's a flash crash and all this other stuff? And anyway, it's 16% per year. And how are you going to, you know, you know, if, you know, if you've built up a stack and you're like, you know, I have a dream for my hometown and I want to, I want to buy the movie theater and I want to reposition it in this way as a maker space. And we're going to show old films and we're going to have an incubation facility and whatever it is you're going to do, you know, and you're like, look, that's a $10 million project. I'd like to do this, it's going to take me eight to 10 years to realize that vision. You can't finance that on a continuous mark to market instantaneous liquidation basis. That's not, you know,

it's a mismatch. It's a basic mismatch of the term of the financing and the term of the uh, purpose of the financing. And so what we're seeking to do is to, um, match, you know, create much more of a match by aligning interests with a constructive long-term view on the value of Bitcoin for all of the reasons that I think are resplendently, you know, clear, right? hugely clear um and and and i think it's i think it's good for i think it's very good for for credit investors also because it provides a very clear plan in terms of how to address uh the um the biggest risk which is hiding in plain sight which is also the most difficult risk to deal with in the modern world it's a slow moving urgent crisis right that's like impossible to deal with

feels like it's getting a little faster maybe so but like you know you know the the the two cappuccinos and the croissant was 23 today it's not going to be 26 tomorrow although in germany interestingly um at the uh end of not in germany but in hungary hungary had by far 1945 to 1946 the worst inflation uh right after the second world war and uh two stats that um are pretty fascinating. I learned them from, uh, the wizard of wall street, the great Jeremy Siegel, uh, the wizard of Wharton, uh, you know, one and only Jeremy Siegel, uh, who is just a genius and stocks for the long run is a book that everyone should read. Uh, but you know, he said he was lecturing one day and he said, Hey, um, two facts, I'm going to give you two facts and I'm going to

ask you to guess uh the total value of one unit in in number terms at the end of the 18 month uh great inflation in hungary two facts are um at the uh in the final month of the great inflation 1945 to 1946 prices doubled approximately four times daily and the second fact is that um you can read newspaper articles about how factory workers would ask their uh their spouse to go to the factory at midday in order to get the wages for the first half of the day so that they could run to the market to liquidate the the the paper money into food and other things that they needed because if they held on to it it would be doubling four times a day and immediately worthless so if you started with one okay

and you ended with what in terms of what equaled one at the end of 18 months what do you think 18 months so one day would be one two four trillions trillions well so um so you have thousands right millions trillions no thousands millions but billions trillions quadrillions quintillions um what's next i'm not sure but it's three if i'm my memory serves something around the vicinity of 3.83 times 10 to the 26th power was the worst i mean we laugh but it's actually really profoundly sad yeah right It's a profound issue, and all of this happened before digital, right? And so, you know, you think about, I mean, if you look at the inflations,

when money was governed by physical constraints of some kind, natural constraints, you know, the Romans were only able to adjust the silver content of the coin. I say adjust, to lower, to debase the silver content of the coins by the industrial capacity limitation of mining additional base metals to mix them with. There was a physical limitation and it took 150 years to manifest. When you have some physical limitation, you know, and then you have a technology step forward. And Lynn writes, Lynn Alden writes about this brilliantly in broken money i mean everyone should read it it's an amazing book you know the wampum was easily able to be replicated by industrial tools from from europeans so that

dramatically undermined the scarcity value of the wampum through the technology then you come into eventually paper money to make a long story short and printing that is um you know it's much easier isn't it than mining base metal and melting and restriking coinage and getting that coinage out there because it's heavy and you have to get it into people's hands and takes a while to get out there but even still the paper money is physical and it um there are some practical real world constraints to getting it out there you have to put it on vehicles and take it out to the places and get it into people's and then it starts to circulate and there's a storage issue and it's like, actually, there are real world constraints. And but if you if you look at Don Parleberg's

book, and he has a great table of the 15 great inflations that he profiles. And by the way, he says he profiles 50, but he could have just as easily profiles 15. But he could have just as easily profiled 50, or for that matter, 500. The story is the same. He just chose 15 that he thought were representative. These 15 great inflations starting with ancient Rome and continuing through. At that point, the book was written, I think it was in the early 1990s that he published this book. But if you look at the rate of inflation, it's actually, it doesn't become exponential until the 20th century inflations. Until you start, prior to that, it's not exponential because there are these physical limitations. And then in the 20th

century, it's exponential because now you're talking about money printing, which is still physically constrained but substantially easier and then you fast forward and you're like okay now we have digital money right cbdc's and so on and so forth and the constraints are lowered considerably and you say well what could be the outcome of that not that it's going to be necessarily you know we don't have to like wear our doom cap but what could be it could be very very significant. And if you take that at all seriously, if you take this risk at all seriously, this is a, in my opinion, this is the most significant objective that investors should be focused on right now, because I think it's a risk that's hiding in plain sight.

The question is not, like, you know, is the 1% allocation to Bitcoin going to have, you know, volatility and maybe be worth 25 basis points if it has a 75% loss? The question is, is my 35% or 40% allocation to credit baked in the cake a 50% loss in real value? And that's just at a 7% depreciation over 10 years. What if it's higher? I just mentioned that all of these are, are exponential in the 20th century. We haven't gotten yet to that phase. I hope we don't, but what if we do, what if we do, what's the plan? Like actually what's the plan. And, um, you know, I think it's really, uh, I mean, I've been, uh, fanboying a lot on Lynn Alden, but, uh, it's easy to do that,

But she writes, you know, very compellingly, why pivot later from a position of weakness when you can pivot early from a position of strength? And here in, you know, the United States, where we have so much capital, so much innovation, so many capabilities, so many natural resources, we have every reason to embrace the Bitcoin renaissance and every ability. did. Everyone around the world, Bitcoin is for everybody, right? Saylor helpfully created that in Atlantis, this idea. It's a great idea. It's true. But in the United States, you know, Bitcoin is for everybody. It is around the world too. And also we have the ability to really take advantage of that. You know, the fact that MicroStrategy owns 1% of the Bitcoin in this American company, that's very powerful, right? That's like, you know, the new Carnegie, right? That's a very incredible, you know, a very incredible position. And if other companies start to embrace this and begin to think about how can they improve their value chain, how can they integrate this incredible technology? You know, I mean, if you're, I mean, if you're Procter & Gamble, you know, how do you integrate Bitcoin? Right? If you're Pepsi, how do you integrate Bitcoin?

you know i mean certainly obviously you know treasury right corporate treasury that makes a lot of sense but into pension but not only into that also you think about you know these industrial applications if you have wasted energy if you're chevron and you have flare gas why not monetize it why like why not monetize it or if you have the need for heat in some component of your industrial processes. You know, should you just burn fuel to make heat? Well, I mean, I guess that's one alternative. But another clearly better alternative would be to burn fuel to make electricity, to make Bitcoin, to produce heat as a byproduct, to create the heat that you need. And now you're talking about these circular approach. And then, you know, you have

a really, a dynamism. And Bitcoin delights people, right? When you adopt Bitcoin, it is delightful, right? You start to hang out with people that have creative solutions, that are driven, that are constructive, that are cheerful, that are working to upgrade the world. And it is delightful. And imagine if we take the companies, the institutions, families, small businesses, not just publicly traded companies, but also divisions of government and we think about how can we integrate bitcoin in a constructive way into these institutions and we think about it over not like you know five minutes or five days which is hard because it's a very volatile asset and so it's hard to get away from the short term

but especially in today's society yeah i mean you know i was thinking about um this this morning because i was watching cnbc right before i came over here and they had this panel of you know very intelligent people and they were all talking about look the jobs number came in it was 332 000 you know what does that mean for interest rates for right now for this for that for so on and so forth and you know this person says this for durable goods and this person says that for this and it's like and they're all talking and it's like i'm thinking it's like you're standing on the beach okay and you're watching the water wash over your feet and you're saying what are the you know what are the things that i can see in this little water in this little

frame right in front of me right now and you just you're looking down and yet if you avert your gaze to the horizon and you look out and you're like oh hold on when in doubt zoom out you know and it doesn't make for good tv to talk about long-term trends on squawk box that's the issue right because they're long term box we're going to squawk about what's going right right it's not changing that often like people don't read the financial history section right they're reading you know they're if you know if they're reading they're reading the newspaper you know or they're reading headlines or they're watching the ticker right it's like all very you know what is happening now what is the rate of change what and but if you zoom out if you think about it in if you allow

yourself to imagine what could i accomplish if i took careful steps over three years five years seven years ten years let alone 30 years or the creature with a 10 000 year lifespan and you integrate bitcoin into that which is a non-debasable digital granite what you can build on that foundation is absolutely remarkable what you can not only build but particularly in this country like your germantown example rebuild right revitalize right reestablish which is very much needed right now and in terms of thinking long term about these problems too like you mentioned sailor micro strategy has one percent most in like in terms of populations that own bitcoin americans are leading the way from an individual perspective

like individuals in america own the most bitcoin on a per capita basis out of anybody in the world i believe i think that's still true um that's wonderful and when it comes exactly when it comes to the government's perspective and they're posturing towards bitcoin and you're taking the debt situation the um the unfunded liabilities situation consideration like i said this on another show a couple weeks ago but it's like if you want the path to least resistance to solve these problems you have to embrace bitcoin yeah and you have to let people like yourself and others begin to incorporate it into these things that need to be revitalized and rebuilt because they've got a poison in them which is toxicity yes yeah and bitcoin produces an asymmetric advantage an

antidote yeah an antidote that's exactly right yeah so it's really exciting you know it's um it's great to be able to wake up every day and be able to build on bitcoin i mean that is just great right and it's like the tools make sense they are fit for purpose you know it just involves uh being open-minded right a little bit you know because when i mean it's like that with everything though i mean you know what you know the you know the teamsters logo is right the teamsters logo it's those two horse heads and the spoked wheel but you know why no because they're team drivers of horse carriages you know and that's how you get the items to the place where they're going and when jimmy hoffa was coming up and the strawberry uh boys rebellion the kroger foods

you know the big thing that was under debate right was should we uh you know jimmy hoffa really wanted to embrace the mechanical horse right the car yeah the truck right that's the mechanical horse there was a group of people that said hey whoa hold on right we are interested in horses we have horses on our logo we've been with horses forever you know and i'm sure that Somebody probably said, hey, hold on. One of the, you know, muckety mucks, one of the bigwigs on the board of directors, do you know they have a stable? And do you know that his daughter combs the mane of the horse every night? Like, what is she going to do, like pet the leather on the mechanical horse?

This is not going to work. You know, you can't do this. You can't do this. This is not traditional. This is unproven, you know, untested. but the thing is is that all new ideas are unproven and untested and old ideas that aren't working are proven to not work right like it has been proven that it isn't working and so you have to try something that is unproven but around which we now have 15 years of data and which

we're not interested in because uh we have some like you know faith in uh you know in in in you know dogecoin or our pirate coin or you know whatever like it has nothing to do with that it has everything to do with finite supply scarce new issuance invisible weightless transportable 24 hours a day seven days a week anywhere around the world extraordinary innovations on layer two that make it instantly transportable at virtually no cost protected by the largest computer network on earth 837 000 whatever blocks 568 quintillion calculations per second right all of these factors fully auditable that, and not only that, but conservative in the sense of conservancy and therefore tied directly to the electrical infrastructure of the earth, creating all of

these industrial applications that are doing incredible things like methane emission reduction and orphan oil, well, and natural gas, well, you know, pollution abatement and monetization into bitcoin and electrifying villages remote villages you listen to fred teal talking about mining as a service i mean he hasn't used that expression but the way that i interpret what marathon is talking about is like software as a service it's mining as a service and when he's saying look we're saying can we do some test projects with you know scandinavian cities who heat their cities with with with with with uh with with with steam you know under the cities and hot water and what if we heat that hot water with bitcoin and marathon enters into some kind of co-venture to distribute

the heat over there or the same thing with an agricultural plant that instead of combusting the plant material after processing and just polluting the environment and also by the way just wasting the fuel to combust it that doesn't make any sense why not bio you know why not anaerobically digest it create a biogas turn the biogas into electricity turn the electricity into bitcoin use the heat byproduct to facilitate the decomposition in the anaerobic digester and if you need heat or cooling in the power plant or in the industrial plant that you have for some other reason you can do that too through heat exchange and you know you have that spa in new york city that is heating the largest jacuzzi in new york city through bitcoin like these are just sensible

conservative in the sense that they are conserving energy in a much more rational way and capital and capital and it and it just creates these um amazing possibilities and you know you got like you know the boxes right upstream you know like let's put that box right there right you have wasted energy you have some extra electricity boom and you know then you have a heat that comes and i mean it's a much better idea in the future isn't it for everyone's hot water heater to also be a bitcoin miner right we need some technological but wouldn't it be great if you could go to sears does that even exist anymore but wouldn't it be great if you could go to you know the five and dime. It's not the five and dime anymore. You know, the 50 and 100 sat, uh, wouldn't it be great

if, uh, if, if, if, if, if you could go and the hot water heater for your house, you know, maybe you still have to pay for some electricity because maybe it's not super, but maybe there's a way to make it efficient where you're also, you know, and then you're distributing hash, right. Which is good for different reasons and the last five minutes have been all about you know mining and all about that you know sort of uh area value proposition but we haven't even we've hardly even scratched the surface in this conversation on remittances and payments and set streaming and cyber walls and interesting escrow yeah insurance applications like you know digital gates physical gates scare the value of scarcity and you know and and of course bitcoin's infinitely

divisible that's useful but people that have a lot of bitcoin are also going to be able to lease it for these use you know mike microstrategy bitcoin development company i've been thinking a lot about what they mean when they say that. And I think that there is a lot to do with that idea. A lot, a lot to do. So it's great, man. I'm just, yeah, I love it. It's, um, it's wonderful when, you know, it's wonderful when you can work, uh, in, in a space that is making sense that, you know, inspires creativity that that you can develop novel solutions that are fit for purpose i mean every day you wake and you feel like and not only that but everybody is working toward the same object in each in their own way right you know i'm not out there trying to figure out you know

immersion or different kind of you know underclocking you know or whatever the case may be, but, you know, what, what AJ and Drew are doing is helpful to what, you know, to what I'm doing indirectly. Right. And it's like, everybody is building on this common foundation and building, building, building. And then if you integrate that into, you say, look, if you're a pizzeria owner and you want to expand your pizzeria and you have a little bit of Bitcoin, you know, should you put your pizza oven on the credit card? Should you borrow at a low teen's interest rate from Stripe? Should you sell your Bitcoin? That's obviously not ideal. Well, what if we could offer a low interest rate loan supported in part by the Bitcoin that enabled the capital expenditure

to buy the new pizza oven or the new equipment? And instead of a high interest rate that puts a strong burden on the business right now, it's a low or a very low interest rate. but we also share in the appreciation of the Bitcoin. And that enables that pizza owner, because that's the life dream of that person, let's say, you know, whatever the life dream is, you know, I worked at a pizzeria when I was a teenager. I love that idea. But, you know, whatever that life dream is, like, that's probably that person's best path to acquire as much Bitcoin as they can is to pursue their passion and their life dream. And if they can build that up, by obtaining stable long-term financing structures

without mark-to-market risk, transforming time preference by combining Bitcoin with traditionally financeable assets, then that becomes a very robust financing paradigm. And that's really what we're looking at here is a new financing paradigm. Yeah, it's really exciting. And as you freaks may be able to tell,

andrew's very uh eloquent in describing all this and every time i talk to you i feel like i get more energized and thank you i get energized when i'm talking to you too it's a great way to uh to begin the friday yeah man we got a great weekend in store yeah it's uh it's exciting and i hope that's that's one thing because i think uh you know this as well i know you're gonna jump here soon but i put on the black pill hat every once in a while doomers and that's why i love talking to you is because you put such an optimistic view and perspective on what this can be i think particularly when we're trying to pitch this either to to people who are thinking about allocating to bitcoin or to governments who are trying to decide what do we do from a regulatory

perspective um with this thing is it a competitor that's going to take us down or is it something that we should embrace i think the way in which you pitch the optimistic vision of the future that is riding on bitcoin particularly in america is extremely effective and persuasive and something that that more people in government particularly need to hear we can win yeah bitcoin is a big innovation embrace it and just let the american citizens do their thing and get to work to to integrate it to what we're doing yeah as 100 100 i'm gonna wrap with a shameless plug plug it uh so we got the bitcoin john in philadelphia what is a john a john what is a john isn't that the question yes i mean what do you think a john is john is whatever you need it

to be at any point in time it's a very useful word yes right so we got the bitcoin john which which is our Philly Bitcoin meetup. And it's a great group, really terrific. Matt does a great job. We meet on the first Monday of the month. Lately, we've been meeting at the Grand Palace restaurant. Sixth in Washington. Sixth in Washington.

So, you know, there's an account on Twitter, Bitcoin John. You know, there's definitely, you know, take a look. We've had some wonderful guests. you were very helpful in launching it as the first uh speaker at the bitcoin john and we had some freaks that formed that core group who came out of uh some of the you know some of the awareness that you raised around that but we've had just incredible people i mean i'm you know gonna not remember all of them but you know dennis porter came uh and he's doing amazing work at the state level and he came by the way like a year and a half ago we started the john in november of 2022

basically the bottom of the bear market and i remember the first question i got i was like what do you think's gonna happen to fdx right and then before it blew up that's right and then like the following day was when uh the shoe dropped actually and for the first several johns it was like the day after each john some crazy thing happened and so we started talking about the John effect, but I mean, obviously it's a little silly, but you know, Dennis Porter, he came really early on. And since then he's done incredible work with Satoshi Action Fund and you see all the success that's happening in Oklahoma. You know, we haven't, again, another topic we haven't even discussed is how exciting the interest is building at the states

and states as a laboratory for innovation within our federal system. Isn't that incredible? Tennessee, Texas, Wyoming, Oklahoma Hopefully Pennsylvania Hopefully Pennsylvania, let's go And you know And Pennsylvania makes sense because it's an energy state too You know, and it makes sense Because it has a lot of landfills too

And it makes sense because there are a lot of communities That would benefit from this kind of reinvestment too And it makes sense because it is The birthplace of this country That's right, Keystone State, you know So Philadelphia, you know There's a lot to be said for that And a lot that can be done

And what Dennis is doing with his advocacy and his model legislation is terrific. He was a speaker at the John. We had Jason Mayer come with his progressives case for Bitcoin. We had regulatory Jason come and talk about his perspective. Grant McCarty from the Bitcoin Policy Institute. We've had so many terrific, terrific speakers that have come. And also we review the news. You know, just this month we had Lynn Alden came and gave just a tremendous presentation on broken money.

We had maybe 100 people who came out and a fireside chat where we got a chance to really hear from Lynn about, you know, how she views the future of, you know, Bitcoin looking 20, 40, 60 years in the future. And, of course, she had fascinating perspective. And, yeah, it's open to all comers. So if you're in Philly on the first Friday of a month, come on down, check it out on Twitter. You know, if you, if you want to come present, you know, let us know we're open, right? It's an open community and we love to, you know, and I mean, just more generally, I mean, I've been to meetups probably, I'm sure, obviously nowhere near as many as you've been to, but I've had the chance over the last few years to go to meetups in Austin, in New York, in Chicago,

at Strike's office. It's going back two years. How I met Dennis Porter actually was at, We both happened to be at a meetup in Chicago for Chicago BitDevs that was happening at the strike office more than two years ago or three years ago, whatever it was, you know, and other places as well. And it's like you have these communities and everyone, again, is working together and all supporting, you know, this common initiative. And it's a very powerful force. It's a really powerful force for renewal. And it's only getting stronger. Only getting stronger. There's more of these, like John's two years old.

There's more popping up all over. It's really exciting. I'm happy to be on this journey with you. Thank you, Marty. I'm very excited for what you guys are building a battery and what's going to happen over the next decade as we begin to infuse Bitcoin into the traditional world. Thank you.

Safe flight home. Thank you, sir. I'm sure I'll see you soon. With pleasure. Thank you. Thank you. Peace and love, freaks.