TFTC: A Bitcoin Podcast - #520: Speculative Attack: Ten Years Later with Pierre Rochard & Allen Farrington

Episode Date: July 4, 2024

Marty sits down with Pierre Rochard and Allen Farrington to discuss their follow up to Pierre's Speculative Attack article. Pierre on Twitter: https://twitter.com/BitcoinPierre Allen on Twitter: https://twitter.com/allenf32 0:00 - Intro 0:50 - Speculative Attack: 10 years later 7:24 - Shorting fiat 12:39 - River & Unchained 13:55 - Spec attack season 2 17:41 - Education 22:56 - Gradually, Then Suddenly & Zaprite 24:34 - Alternatives to rebalancing 32:21 - Should institutions prioritize bitcoin? 35:38 - Speculative defense 43:49 - State bitcoin 1:01:40 - Inflation lies 1:08:27 - Wrapping up Shoutout to our sponsors: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠River⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Unchained⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Zaprite⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠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

this rip of tftc was brought to you by river it's the best place to buy bitcoin go to river.com tftc and enjoy this episode you've had a dynamic where money's become freer than free If you talk about a Fed just gone nuts, all the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor. I mean, that's part of the bull case for Bitcoin.

If you're not paying attention, you probably should be. You probably should be. gentlemen we're here to discuss a timeless piece that turns 10 years old this week speculative attack pierre how does it feel to know that this piece is now officially 10 years old yeah on a personal level it makes me feel old uh but at the same time i i did write it when i was young uh and uh yeah it it feels timeless still um it reminds me of a classical song bolero that has this very very long uh build up of just the same thing over and over but louder and louder so i think that's uh that's kind of been the the pattern um and you know i i when i wrote it i

thought that speculative attacks would happen much sooner much faster uh and i think that you know what i really didn't understand was how much people would rebalance their portfolios uh so you know they there's lots of cell pressure uh on bitcoin when the price goes up uh which we don't like to hear as bitcoin maxis but that's just the reality um so yeah excited to to be here and to be recognizing the uh 10-year anniversary well it is again a timeless piece and one one of the first i share with people uh when when they ask why should i why should i not take out a mortgage and buy a house why should i buy bitcoin and i i literally sent this to somebody three months ago um when i was back in philly and he was like yeah i gotta i gotta go buy a house and i'm gonna go

to an eight percent mortgage and i was like uh maybe you should read this piece but as you mentioned the speculative attack has not happened as quickly as you may have expected when we were all younger however it has sort of uh i don't say evolved but there are new ways in which the speculative attack is materializing new ways to short the dollar and so how has the landscape of Bitcoin adoption, particularly by nation states and now large corporations affected your view on how the speculative attack may play out in the long run? Yeah, I'd emphasize, though, that speculative attacks have been happening continuously. And so it really is a question of, you know, is there some kind of final one where Bitcoin

finally causes the dollar to hyperinflate. But I think that that that's a bigger question. But when we look at how people actually use Bitcoin day to day in terms of a long term saving vehicle, speculative attacks have been happening continuously and that people have been leveraged versus the dollar and then have deleveraged themselves. You know, you'll hear stories about, oh, I paid off my parents mortgage by using Bitcoin. And so the gains from Bitcoin have certainly had the same dynamic that we see in a classic speculative attack that was initially described by Paul Krugman when he was looking at the Asian financial crisis in the 90s. But I'm sorry, what was the question again?

the the ways in which the um manifestation of speculative attack has uh has materialized like the mechanics like micro strategy come to market el salvador with their volcano bonds right and so in in the piece 10 years ago i kind of illustrated it with a an illustration that comes from the classic look at, okay, people are creating the weak currency by borrowing it through the commercial banking system. And that then they are using that weak currency to trade for the strong currency and then waiting for it to appreciate. And it's a reflexive feedback loop because by creating more weak currency, they are causing its devaluation. and then repaying that loan with the strong currency that has strengthened.

So that is kind of the classic illustration of a speculative attack. But it's just an illustrative example. There's actually lots of different mechanisms by which you can have the same economic effect. And I'll let Alan speak further to that. He did an excellent job digging into some further examples. oh sure yes so actually just just before i do that i i want to pick up on the the very first comment that both of you guys made that this makes me feel really old like i i can't even imagine what it's like for pierre i i remember reading this probably not quite 10 years ago but

i want to say like 2015 at the latest or something and they i thought of the following kind of amusing way of putting it that this article is older than my career which is now about what this article is about basically but yeah it's um i think that the proper obviously pierre's not going to say this himself so i now need to embarrass him but the the proper reaction to this is to just congratulate him on on having the unbelievable foresight and and prescience even uh to to have predicted that something like this was possible in 2014 i i would maybe at the end we can come back to um pierre's reflections on i don't know i don't want to put him too much on the spot but something like how serious were you even when you wrote this because it it now seems

obvious but i don't think it was obvious that like i don't remember reading this nine or ten years ago um i said i i remember that i did read it but i don't remember the exact experience of reading it i'm not sure i would have taken it all that seriously i think it would have been more like huh this is quite funny like maybe one day this could happen i don't know i was yeah i was completely different i read it i'm like left side the bell curve i was like this is how it's gonna happen this is this is probably happening right now no anyway sorry i don't want to um i just want to make sure that we that we mention that i'm sure pierre hears this all the time but so maybe the the the 10-year anniversary is a a good time to bring this up again like well done for

having written this at all uh but anyway yeah sorry you're asking uh the the speculative attack has now uh broadened right the the there are many more avenues to do it and this is what we we dig into in the in the newer piece which is really just celebrating the anniversary as much as anything else um i think that you can go through individual examples like marty you mentioned micro strategy already i think el salvador is a super obvious one i think there will also be this would be good to get into in a minute uh this coming bull cycle there will be even more interesting ones that actually return to what individuals can can participate in because obviously i guess you could buy microstrategy stock but then that's not really the same thing as what microstrategy

itself is is doing or like similarly you know buy el salvador bonds and do really really well for you know as far as emerging market bonds go um but avenues that individuals can directly participate in other than obviously just borrowing fiat kind of even more sly around about ways um that'll be fun but i think what underpins all of these though is is the realization that fiat is such you know the fiat banking system is such that it creates involuntary dollar shorts everywhere right i tease that out a little bit more people might not completely appreciate what i mean by that um everybody is kind of speculatively attacking the dollar anyway because they have to because it's just insane to save with it so and and pierre pointed this out and is in in the first

article um that you know if you're if you basically want to acquire any kind of assets uh ignore ignoring bitcoin for you know the purposes of this analysis um it is arguably prudent to go short the dollar or go short fiat and any other even weaker fiat is it becomes even more prudent and so what we're observing here though is that almost any other supposedly hard asset that you could you know you could make your long whereas fiat is your short will have two problems relative to bitcoin the more obvious one i guess is that it's no matter what it is it's just not as scarce, right? Its equities are nowhere near scarce, real estate, whatever, even gold. And this is like classic Bitcoin lore. We don't need to explain that in too much more

detail. But the more interesting one though, is realizing also in the meantime, since Pierre wrote the first article, just how much worse fiat has gotten, just how much of a monetary premium is pushed into just about every other one of these assets, which I think it's fair to interpret as a result of people speculatively attacking the dollar, even if they don't think of what they're doing that way they think of what they're doing is saving basically because you can't save with with fiat um the that monetary premium is now also being attacked by bitcoin so it's not just that bitcoin is better it's that it's reasonable to expect a kind of reflexivity in the monetary premium shifting and so that's what's now super exciting that it you know it's not just that the

the fundamentals of bitcoin or however you want to you know pitch the case for for going long bitcoin it's not just that they're better it's that the the circumstances of the short are arguably better as well right as well as the as well as the long and bitcoin the the fragility of all the involuntary dollar shorts is now even more enticing than it was 10 years ago I was just going to respond to the point about how serious I was about it. My second mind going into it was really about what is the adoption mechanism for Bitcoin? Because there were lots of people who said that, hey, this really is about credit card fees. And so the way that we'll see adoption play out for Bitcoin is that merchants don't want to pay three percent in credit card fees to, you know, fiat payment mechanisms and that we'll see Bitcoin gradually be adopted.

And then finally, you know, nobody will use dollars because dollars are too expensive to use. And so I wanted to look at the monetary economics research or, you know, school, not a school of thought, but kind of what how do monies dominate each other and how do they take market share? And it's really not about the cost of making coffee payments. It really is about the strength of their monetary policy and the relative strength of it. And so it certainly was a very serious look at it and belief in that it is the truth. It was in response to other theories that were floating around about what would be the driver of Bitcoin adoption. This episode was presented by River. River is the best, most secure place to buy Bitcoin in the United States.

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standard. They have over 7,000 clients that are securing over 90,000 Bitcoin with 12,000 keys on their platform. Their platform leverages Bitcoin's native multi-sig properties. Their cornerstone product is their Volt product, a two or three multi-sig Volt, which allows you to hold two of three keys in a multi-sig quorum. That gives you full control over your Bitcoin. They also have an IRA product, a lending desk, and they're rolling out a bunch of other products, including inheritance protocol and sound advisory so go to unchained.com set up a call with our concierge onboarding team today tell them that tftc sent you and use the promo code tftc at checkout unchained.com i think it's pretty incredible that we're at the 10-year anniversary of this piece

and you guys mentioned um in the piece that we're in season two of the speculative attack and the timing couldn't be more perfect i mean literally last week the uh interest expense on the debt surpass the amount that we're paying on defense spending here in the U.S. At the same time, you've had the weaponization of the treasury market over the last couple of years, which has forced many countries to seriously think about diversifying away from U.S. treasuries as a reserve asset. You have Japan losing control of their yield curve and they're the largest holder of U.S. treasuries. And that is really what gives the dollar the reserve status. The reserve currency status of the world is the fact that you have so much demand for our debt. And as we turn

the chapter in the chapter two, it seems like that demand is waning pretty materially, which could accelerate things. Somebody want to hop in here? Yes, I completely agree. And so I think yeah, another interpretation that I didn't even I didn't even come to, I didn't want to, you know, list everything that possibly came to mind but as to why the the short is also deteriorating or or well from from the bitcoiners perspective or the speculative attackers perspective it's it's improving right and i think that's maybe the more interesting thing that um is what we're trying to draw attention to in the new piece is what i think is so impressive about the old piece but also i think most of all especially you know if your starting point is just like bitcoin twitter

where it's it's number go up all day long which i approve of for the for the most part but you know as as a as a meme right not less so as um kind of serious analysis i think there's space for much more serious analysis on the short side i think it's almost more intellectually interesting in a way it's kind of scary in a way too because you you start realizing just how much is likely to implode i guess you know which is another way of saying how many avenues there are for now speculatively attacking rather than just borrowing fiat again is realizing that there is so much borrowed fiat that's just you know doesn't realize yet that it's looking for bitcoin it'll find bitcoin and that's that's i think by comparison that's far more straightforward in terms of how

that plays out what's uh scary interesting uncertain i guess um yeah more worthy of analysis i think is well what happens to all these shorts i i i frankly have no idea i mean i can speculate on it but um yeah that's uh i think i think that's the that's the essence of the the speculative attack the the number go up part is fine like that'll take care of itself is what happens to everything else well i mean look at the world right now the u.s real estate market you have mortgage rates around seven eight percent all-time high prices maybe it's leveling out and then look over to equities it seems like nvidia is the one stock holding up the u.s financial system and arguably the global financial system uh people are looking with bated breath to

see if nvidia rolls over and what that does for are you suggesting that that valuation is not justified what is it it's like a 49 even ai marty what come on well i mean it's it's indicative of it feels like i guess this is the question is how much how can the speculative attack how much education how much um how much uh education around bitcoin is needed to accelerate this like how like people's understanding of bitcoin um obviously we understand it very well and that's why we're here talking about this you wrote this piece 10 years ago but just looking post-covid the explosion of flows into equities housing um treasuries even to some extent uh or hard assets like gold as

opposed to treasuries excuse me um in bitcoin we're sitting at 61 000 right now many people think it should be higher like is there a catalyst whether it be in equities in the housing market where people sort of wake up they're like holy crap this is not the store of value that i thought it was and what will it take in terms of information um around bitcoin knowledge around bitcoin to drive those flows into bitcoin and what is like the aha moment that that pushes everybody towards Bitcoin? Yeah, I'd say that first it's a momentum play. So they don't really need any education beyond just looking at the price chart. And I think that the financial press has done a great job of educating people about Bitcoin's price, which sounds weird, but they're constantly

showing charts. I think the ETFs help with that as well. So now you can very easily see how Bitcoin's performing relative to other assets. So that's where it starts. Then the real education challenge comes from when they want to rebalance, right? Of, okay, well, I looked at Bitcoin's chart. It went up. I made money. So now I'm going to sell and I'm going to convert back into dollars. And that, I think, is really where the education is critical of. You're going back onto the Titanic, right? You're actually you don't understand what you're selling. So understanding that there's intrinsic value to holding your own keys, to running your own node. I think that education, it's not so much helping people to understand why they should buy Bitcoin, but really helping them understand why they shouldn't sell Bitcoin and why there's no second best, why there is no alternative. That is the education piece that is it's not just needed today, but I think it'll be needed forever in that future generations will constantly have to relearn why Bitcoin has value beyond just its purchasing power. because if they only understand the purchasing power,

then they go out and spend it. If they understand why you want to hold it, that, I think, takes education and will take education forever. And, you know, that's why I'm excited about what Michael Goldstein, Bitstein is doing with the Nakamoto Institute and many others, including this podcast, are doing to help on that education front. yeah also not to in any way knock what we all obviously mean by education but i think that probably the best education on this front is just going to be getting wrecked right

selling out bitcoin because as pierre says you know you've seen the number go up you like the chart you want to rebalance uh you don't realize what bitcoin really is you think it's just you know yet another financial asset that's done well within your portfolio or whatever um and essentially this is an interesting way of putting it actually that in that position you maybe haven't really realized that you are speculatively attacking in the first place because if you understand that so this is going back not only to pierre's original article but you know the concept that he was borrowing just in in in fx and in general you don't stop a speculative attack you don't sell out like you don't think to yourself okay cool i've made enough money now

you do in the first place because you realize the currency is completely going to shit so if people and again i think the etfs play into this massively there's there's a good side and a bad side to that entirely in general but even even restricted to this that it makes it obviously makes a lot easier to buy but it the other side of that coin i think is that people will a lot of that buying almost by definition wouldn't have otherwise, but not just for the structural reasons, also for exactly these educational reasons, right? So there will have been insufficient education behind the initial purchase. And then the real education will be when they eventually realize that they screwed up their speculative attack, right? They could have

followed it through, but they didn't. They rebalanced instead. Hopefully then they seek some, you know, real education, then they can find, they can find the original article, they can they can find everything else from from the Nakamoto Institute. But I think getting wrecked is probably going to be the most important first step for a lot of people. Quick break here, freaks. This rip is brought to you by gradually then suddenly a framework for understanding Bitcoin is money by Parker Lewis. I wrote the forward 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.

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Bitcoin as payment using ZapRite and reduce risk for your business. I've done this for my business here at tftc we use zap right it allows you to easily create invoices payment links or connect e-commerce stores connect your wallets or custodial accounts and be set up in minutes we can also connect our bank accounts our stripe accounts or square accounts to accept fiat as well the time is now freaks the fiat system is fragile invest in the infrastructure that de-risks the future invest in yourself bitcoin payments with zap right go to zap right.com slash tftc to get 40 off their annual subscription zap right.com slash tftc 40 off what are the lowest hanging fruit alternatives to rebalancing for individuals who are thinking about it um really comes down to

managing your cost and making sure that you can you can hold bitcoin i've seen yeah so i to this earlier i'm glad that we were able to get onto it that one of the things that's exciting me the most I don't know exactly what time horizon I expect this to play out over. I think it will become more popular in the next, let's say, three to four years. You know, this cycle, it'll become a lot more normalized. And again, I think this is also yet another way of widening the avenues to speculatively attack significantly more purposefully than what I just described with somebody buying an ETF, let's say, is the model, which I think is probably fairly credited to Unchained.

at least at first, of the over-collateralized loan and all the nice assurances that both parties get with that. I'm increasingly seeing, I'm sure probably both of you are as well, increasingly seeing ways of basically generalizing that model to different kinds of fiat payments, such that anybody who holds Bitcoin will, I think, increasingly easily be able to find, let's say, trustworthy enough counterparties to do something similar to, well, it will be an over-collateralized loan, but may not necessarily feel that way. So two points I want to make there. So one is that I realized as I was saying it, right, in terms of like trusted counterparties and so on this is very much not you know defy that's that's

not what i'm i'm promoting here at all um it's it's impossible to do defy with fiat because it's centralized so you you need to have some trust ideally more in the mechanism and and the bitcoin side of it can be you know as transparent as as everybody is willing to allow but you will need to trust some or other counterparty for this to even be possible in the first place the second though is that the i don't mean at all to be like throwing on unchained under the bus i mean they may may well end up being involved in exactly the kind of thing i'm describing but at least the initial model that they had i think people conceive of that as being for big purchases basically and i don't know if that's a question of like how it was marketed or just the you know

the the size of the loan that was necessary to make it economical to to bootstrap this model but you know it could be for like a down payment on a on a house or something or i think pierre even mentioned that before right that um you know people realizing bitcoin gains to pay off their mortgage or something to that effect or a car or whatever you know something big um but what i'm excited about is generalizing this to enable things like uh credit cards where the custodian of the Bitcoin is basically acting as an issuing bank and are giving you, rather than one big loan, they're issuing you a revolving line of credit in exactly the same way that credit cards work with fiat banks, as people just don't really think about it that much because they kind of

imagine it as one-off payments, but which also provides this avenue of attack. Because again, this is going back to something that Pierre mentioned in the first article that we do our best to pick up on and in the more recent one that if you're ever deciding not to buy bitcoin you're effectively leveraged right whether you're whether you conceive of it that way or not this is you know this is uh itself presents a an obvious avenue for carrying out like a micro speculative attack right um i think the only this this probably no i mean this definitely was significantly harder to actually execute 10 years ago, but this is exactly what I'm now excited about. I think it's going to become easier and easier because so much infrastructure has been built in the meantime

to enable people to effectively be borrowing against Bitcoin to spend dollars or spend fiat. Not even necessarily because they won't even need to think of it as a speculative attack. They won't be doing it. They could if they wanted to, but I think what's really cool about it is they don't need to. If anything, this is what's so nice about the entire theory is that at a certain point, it just becomes rational to do this. You don't even really need to be able to articulate why the financial ins and outs or explain your own personal financial decision making in terms of longs and shorts in a portfolio and all that. It's just obviously rational to not spend bitcoin to borrow dollars and to create this position uh and you know in doing so contribute

to the to the overall speculative attack by just kind of chipping away at the edges well i think that in terms of uh helping people not rebalance one way to do it is to just make it really inconvenient to spend your Bitcoin. So put it into a multi-sig that's in several different locations and maybe even have one of the keys be with your maxi friend who will make fun of you for selling your Bitcoin. So that's one. The other is really, it's at the heart of the stack sats and stay humble part of Matt O'Dell's meme, which is the humility of not wanting to indulge in materialism and finding other ways to be happy. I think that that helps with avoiding the Lambo syndrome. And then the other piece of it is continuing to work, right?

So not retiring is a critical part of not having to sell your Bitcoin and finding ways to, you know, work in a way that you love, that it doesn't feel like drudgery. So those are important. In terms of borrowing, we have to be careful because of Bitcoin's volatility. Right. So and it's also the case that you have to be careful with drawing down on your Bitcoin because of the volatility. So you don't want to be having to spend all your Bitcoin in a bear market because you had an unexpected medical expense like that. So there's lots of reasons to be cautious with a speculative attack, especially at a personal level. And I'd argue that it's better to let the Michael Saylors of the world who have a limited liability legal entity that is doing the speculative attack at scale rather than trying to leverage up your own balance sheet to the hilt and finding yourself getting liquidated in a bear market. So there's, you know, there's a spectrum of speculative attack of how leveraged are you.

And there's ways to do it rather safely on a personal level. And then there's ways that are pretty reckless. So I think to not be forced to sell, we have to caution people there as well. Yeah, and to your point about micro-strategy and the fact that they're probably in a better position to do this since they're a corporation and have some protections that an individual does not. And to your point earlier, Alan, what you were just describing, do you think we're reaching a point where, particularly at the publicly traded corporate level and even privately held companies, it's becoming a fiduciary responsibility to acquire as much Bitcoin on your balance sheet and potentially prevent yourself from selling that Bitcoin by taking out U.S. dollar denominated debt? Are we reaching that tipping point? I want to say yes. I think we all agree at least of the the rationale there I think it's tricky I mean this this exactly

goes back to I mentioned this before in a different context that that that side of the trade seems far more intrinsically uncertain and this is one way in which it I think it's manifested quite well that it's highly highly reflexive whether or not people have the attitude that would lend that having would lend itself to to performing the attack in in that way and what i mean by that is that we we're probably all familiar with this to some extent on the personal level it's just it's kind of a different calculus you're like the cfo of a publicly traded company that you're if it goes wrong it's going to be far worse for you if nobody else did it but if many people did it or eventually if everybody else did it it gets less and less bad for you personally but

obviously you know this in advance so it's almost like um how would you how you describe i was going to say it's like a game of chicken but it's almost like the inverse of that in a way it's like nobody nobody really wants to go first but as soon as somebody does everybody else then has to which is maybe what makes it a bit disappointing that i think a lot of people expected this last cycle it it felt like once microstrategy did what they did or even telegraphed that they were going to do what they then did that others ought to follow so i think that the fact that it didn't happen there really is for public companies at least it really is just microstrategy still um or for i should say for for large u.s public companies we've seen one or two more popping up in the past

couple of months um but they tend to be quite small um the fact that it didn't happen the way that we would have wanted to or as quickly as we would have wanted to is giving me a bit of pause that it's not even that I think it will take longer necessarily. It's that I'm trying to, I'm basically trying to be humble, right?

I just don't know. It feels like it's inevitable. It will happen at some point. I think you just don't want to be too, you don't want to be too aggressive in your predictions, which is probably just wise for anything to do with Bitcoin's price, I guess.

yeah perhaps the imitators will will really jump in uh when the results are there that are undeniable um i would argue that the results are already undeniable that uh you know micro technologies market cap has tremendously grown uh the shareholders the employees everyone has benefited um but you know when bitcoin continues to rip that that'll really uh put the nail in the in it. And now the other part of it, I think that is underexplored in the piece is speculative defense. So I outline two ways that there's a possibility of defending the currency, which is one, raising interest rates. And they have raised interest rates, but not nearly enough to counteract Bitcoin's CAGR. Its average returns are still far greater than 7% or whatever the

interest rate currently is. But that has been effective for other asset classes. So in Austin, we're already seeing real estate prices starting to come down. So raising interest rates is effective as long as the expected return of the asset is lower than where interest rates go. But the other part of it is the capital controls. And this is really what SOB 121 was about is how do we limit how much debt can be created to buy Bitcoin? And that it seems like they're going to have a tough time in the United States implementing capital controls in sustainably. They've been able to do it in the short term by violating the Constitution. And, you know, we're seeing Coinbase actually just announced that they are suing the FDIC and the SEC over

these stealth capital controls that are about debanking the Bitcoin economy to prevent speculative attacks through that vector, but that'll fall apart. And what I think, though, the third prong of a speculative defense would be simply to buy Bitcoin. It really is about capitulating and backing the currency by buying Bitcoin, much in the way that MicroStrategy is backing the shares by diluting the shareholders to buy more Bitcoin. And that could very well be a highly effective way of defending a currency is dilute the currency by buying more Bitcoin or to buy more Bitcoin. And the net effect is actually to strengthen the currency. It's not to weaken it because you've improved the balance sheet of the currency issuer. So that I think will be a trend

that El Salvador can't do it because El Salvador does not have its own currency, but Argentina could do it, although it seems like Malay is too orthodox to adopt that approach. Perhaps we'll see Trump be persuaded to do it. But again, there's lots of education to be done. And I think we'll be surprised uh when it does happen that you know it's not who we expect to do it but um it's it is inevitable i believe yeah just to follow up on that it is this really odd mix of on the one hand it being very difficult to predict any or i mean basically impossible to predict the timing of any of this but also exactly as pierce has it just feeling completely inevitable in the in the longer and longer run. I think I won't just repeat everything Pierre just said, but one or two

of those points are worth emphasizing around just how inevitable it seems in terms of there basically being no way out to actually stop, at the very least, Bitcoin's price rising. I agree the ways of trying to defend against it are interesting, but none of them really harm bitcoin in any way and and again i think in the longer and longer run they obviously benefit bitcoin right so the the third one that pierre mentioned if they just put bitcoin on their own balance sheet then obviously that's buying pressure that's great that's that's probably the most straightforward one uh pierre's first point though around uh raising interest rates i think that's quite kind of exciting or always tantalizing in a way that that

is pointing to something i mentioned uh an answer to a go around the you know the dollar shorts that are just waiting to implode so you could easily imagine uh really like if this if this really gets going and there needs to be a public policy level defense against it hiking interest rates in such a way that just causes widespread bank failures and then everybody thinks oh shit like what what you know what even is a dollar i need i need bitcoin now so it's yeah it's it's fun thinking thinking all this through i mean again it's kind of scary it depends it depends on your exposure i suppose but uh for us it's fun for probably for people listening to this it's fun it's dealing pierre's dealing with something he's still there but to your point alan i think i mean

And one of the big theses right now is that we're going to have 1970s like waves of inflation. We're in the middle of the first and second wave. And the idea is that if the Fed brings rates down again, that'll bring inflation roaring back. And then will they need to have will they need to basically jack rates up even higher than they have right now? Can they even do that without creating the bank failures that you described? And if you couple that with what we discussed earlier, which is a falling demand for the treasuries, which is what really drives the federal government and the Fed's ability to bail out or facilitate the financial system, I know we've been saying you can't predict the timing. But it seems like, again, moving into season two, chapter two, whatever we want to call it, the coalition of events and macroeconomic factors as we head into the second half of 2024 are really interesting. Like if we get echo inflation, lack of demand for treasuries, it's like, what does the Fed and the U.S. government do?

Yeah, I think I've said this on TFTC before, by the way. so i i won't i won't spend too much time on this but what all of this makes me think like what kind of instinctively comes to me even even more so than i don't know intellectually is basically just like thank goodness for bitcoin like but or more more specifically though that bitcoin's mere existence gives an excellent reason to not have to think about this too hard or or rather that maybe more in keeping with exactly how this conversation has gone if you do think about it it can be fun right right it can be kind of it can be intellectually interesting rather than just terrifying and i i have thought about this before too that it must have been it must have

just been so depressing thinking about this stuff i don't know more i guess more than 15 years ago right like if you if you were let's say educated enough or or probably contrarian enough more to the point to have all of the concerns that we are discussing now, again, other than Bitcoin, purely the short side of all of this, concerns about the fiat system. You can have exactly the same conversation, but the tone would just be completely different. It would be utterly terrifying. And I guess one way of thinking about it, your avenues for speculative attack would be significantly worse and and riskier in and of themselves so yeah i'm i'm glad i basically don't need to take this too seriously i can just this entire conversation can can basically just be

sport that's great it's great for us but that's um and you well this gets into another interesting part of the speculative attack is the the uh the public and governments at large getting the causality wrong um and pointing the finger at bitcoiners and saying you destroyed all these currencies by doing what you did but i think we would all argue bitcoiners are simply making the rational decision that they notice what the governments are doing to their currencies They see Bitcoin juxtaposed to that and say, I'm going to adopt the better currency. But if a speculative attack is successful and a lot of people are left on the sidelines, that is something we have to deal with. And again, going back to education, how do we communicate this to people?

well if if people have uh lots of bitcoin exposure even indirectly by holding s&p 500 that has you know micro strategy in it then um you know it bitcoin would actually be pretty widely distributed uh and so it wouldn't really be um hugely disruptive uh hopefully i think that the best way to get it the most widely distributed, again, is to have governments buying Bitcoin by printing more money. And that is how you get Bitcoin into the most hands, even though it goes completely counter to the purest kind of, you know, Satoshi white paper, anarcho cypherpunk ethos. Pragmatically, it's how you diffuse the bomb. It's how you make this not be an issue

for the wider public, where to them it's more of like an upgrade rather than some kind of catastrophe. So hopefully that's the approach the policymakers take. But I think that it also depends on the government approach, which is, is it democratic government

or is it authoritarian government? In a democratic government, you know, Bitcoin is popular. And so people will vote for politicians that want to adopt Bitcoin. And that helps things be orderly in transitioning to a post fiat economy. But in authoritarian or regimes where they're only nominally democratic, but in reality, you know, they are authoritarian, then that will cause a delay in adopting Bitcoin that could cause a lot of no coiners to be very disgruntled. And so I think that is a very real risk. And I think that it also shows why Bitcoiners should be involved in politics, because ultimately we want governments to make this a soft landing rather than creating all sorts of, you know, poverty or unnecessary harm for people.

German and U.S. governments this week, though, dumping all their Bitcoin. You hate to say it. It's awful. It's really, to me, it's the worst policy move of the Biden administration. It eclipses even, you know, the SEC or the Department of Energy coming after Bitcoin miners. All of those things are they're almost cosmetic, right? Theatrics. But selling Bitcoin that were seized, it's wrong on two levels. One, it's wrong on the financial level of, OK, they should be holding the Bitcoin because they can print dollars.

So there's no reason to be buying dollars on the market. it. But two, on the moral level of, well, what if the asset forfeiture gets reversed? What if a court says, actually, you have to give the Bitcoin to so-and-so? And so then the government would have to go out and buy the Bitcoin, or they would have to pay the person in some kind of dollar amount that is not reflective of the Bitcoin's value. So even for people who say oh the government should not seize bitcoin and therefore the government should sell seized bitcoin that's illogical because if you think the government should not seize bitcoin then you should also believe that the government should return the seized bitcoin not sell it uh

and so at the very least they should hold it until they're in a position to return it um the it's a it's a policy decision that in many ways will be irreversible uh so as bitcoin's value increases um and that really is unforgivable um but uh we'll see if the next administration has a a wiser approach to it and i'm not sure exactly which portion of the c's bitcoin they're selling this week i forget from which asset seizure it is but i think in the case of bitfinex where the us government sees bitcoin from the person that stole bitcoin from the exchange like bitfinex should get their bitcoin back if we live in a just society i i think they did uh but um i don't know about the specific details i thought the coins they

were selling was related to um uh silk road still but yeah yeah i want to be clear i don't know if they're selling bitfenix's coins but they're still holding them they should give them back to bitfenix they should yeah it's uh and how much is what what would you guys put the like obviously we have el salvador Or we're seeing these movements of the BRICS countries diversifying away from treasuries. We've seen China buy a lot of gold. What, I mean, El Salvador, again, obviously a big moment in Bitcoin country, making it legal tender, staying humble and stacking sats month in and month out. But what do you think it would do to accelerate the speculative attack if one of the bigger nations got it?

And what would the two of you put the likelihood of a larger nation outside the U.S. getting into Bitcoin going into the next two, three years? Yeah, I think that it may be driven through the Bitcoin mining industry, that nations that are abundant in energy, you know, at first it's the private sector that's mining Bitcoin. And then you have a politician say, oh, we should mine all of the Bitcoin here. And then they realized that would be very expensive relative to buying Bitcoin. And so that's how you would end up kind of walking through the maze to end up buying Bitcoin is from the energy angle. Obviously, the Middle East stands out in its energy abundance, but there's lots of other places around the world. I think that's the highest probability, but I still think that's low probability compared to El Salvador continuing to be the standout, just like MicroStrategy is the standout, and that El Salvador could attract a tremendous amount of economic activity. You had Cathie Wood saying they're going to 10x their GDP.

And so really, it might end up being that MicroStrategy and El Salvador continue to grow rather than other competitors trying to imitate them in the short run, at least. Yeah, I completely agree. I think mining is the most obvious first step for nation state. i'm not even sure i call it adoption necessary involvement nation-state involvement the one thing i'd add to to pierre's comments though is that i think this isn't really addressing your question marty sorry i don't i'm not sure how likely i think this is it's more just whenever this does happen i think it will be kept secret for a long time for basically as long as whoever's doing it can get away with it so it could be that it's happening now maybe that kind of answers the

question a little bit it could be happening right now and we won't know for for several years and I was going to say, we have had recent confirmation of the strategy you're describing with the Kingdom of Bhutan, which was quietly accumulating Bitcoin since early 2020, but due to the fact that they got swept up in some bankruptcy proceedings, it was... I don't know the details there all that much, but that's... Oh, you didn't know that? The Kingdom of Bhutan had to come out and admit, like, yes, we've been mining Bitcoin and accumulating Bitcoin since 2020. I knew they admitted it. I didn't know why. because they got caught up in the celsius and block fi um bankruptcy proceedings and so it got made public that they were doing this yeah that's unfortunate for them i guess well but then that's even back to like they need education right like they i told you they're gonna get

wrecked they're they're gonna learn by getting wrecked and they should have just gone on nakamoto institute from from day one um but yeah i think we'll see a lot more of that and it to to try to bring it back to your question again without because i have no idea on probability sorry that's kind of my answer to all this is like that's it's also what makes it exciting i just absolutely have no idea uh except that it gets more likely in the longer and longer run but um the the rationale for keeping it secret i think that's the most interesting part because it's basically you want to you want to front run people as much as possible right it's it's it's in and again we we have experience of this from the individual level that the incentives are

not exactly the same but they're similar enough to recognize that the longer the price stays down or you know relative to not at any absolute level but just less than like shooting up when you're still trying to buy the better that is for you if you know that i guess on the one hand at the individual level what's more relatable is you know you have a fiat salary so you know what your buying schedule is going to be uh with mining it's it's maybe even more straightforward is that like you know you obviously can't it's physics you can't accelerate that you've got you could actually do the work over time so if you just do it secretly for as long as possible then then that's great maybe borrow in dollars to fund it as well just to round out the link here well i've had that

idea for quite a while as bitcoin mining permanent funds where whether at the state level or the municipality level you issue muni bonds to raise cash to acquire energy assets or asics and then roll the revenue into a bitcoin permanent fund pay off the bond holders and then just keep rolling the revenue rents repeat speculative attack fee so that's that's super interesting i think i i want pierre's comment on this as well but my interpretation of that is it's in the spirit of what pierre's described earlier of actually the best way to fend this off is just for states to buy bitcoin themselves but it's not quite as clean as what pierre was putting forward and in fact is more in keeping with what we're describing in terms of the avenues

for attack widening because it's it's channeling it through the excesses in capital markets right the involuntary shorts that are looking for a long well the long is i mean it's really it's mining i guess but you know that's obviously just a proxy for eventual bitcoin yeah the the limiting factor there is access to energy at what price. And so when we look at El Salvador, for example, electricity is relatively expensive in El Salvador, you know, despite the geothermal that is developed there. And so for them, it really does make sense to just go out and buy the Bitcoin. Perhaps, you know, the suggestion I'd have for President Bukele would be to issue more bonds and to further indebt the country to buy more Bitcoin. But, you know, that's

ultimately he rules by democratic legitimacy. And so perhaps his people would not, you know, want that. They don't want the country to be over leveraged. But I think that that would be a wise move, even though, you know, I'm sure he's got he's got other priorities going on as well well that there's a natural and and almost cute in a way counter to the question of the uh you know the the democratic accountability that that you obviously have to keep in the back of your mind that i think that actually that strategy lends itself to in how would i what's the best way of putting this normalizing the argument that it it is in fact responsible that if anything you you potentially have a fiduciary responsibility

to do this kind of thing because as we know i mean there's like half a sentence or something in the newer piece but since they've done this their bonds have been like unbelievable performers again within the scheme of how well an emerging market bond can perform um but it's it's it's just really interesting again this this avenue of of tapping all these excesses in in capital markets uh becoming self-fulfilling and probably in the longer and longer run uh lending itself to not only making your own individual trade or country's trade i guess not like bukele's personal trade but that trade looking more responsible but normalizing the idea of that trade being responsible that's uh that's also really fun to see playing out

Yeah. Go ahead, Barrett. Well, so I was thinking about, you know, with one of the advantages that Saylor has is that he can issue a convertible bond that converts into equity that a sovereign does not have. Now, maybe, though, there'd be a way for Bukele to develop some equity in the government of El Salvador, which, you know, really becomes very, very colonial very quick. But the the other option is really looking at it from the perspective of what other ways are there of securing the bond. And so it might just be a question of him having a credible way of custodying the Bitcoin where it's still transparent, but it would give the creditor some level of confidence that there's some recourse if things go south, if somebody else gets elected in El Salvador, that they would still get repaid using the Bitcoin as collateral. And so, yeah, hopefully that's something on his radar. I might be misremembering this. Maybe one of you two can fill in this gap,

but I swear I have actually heard a proposal like this. Maybe it just wasn't entirely serious, I guess, from the government of El Salvador, but they would have a bond which was in part, and it's basically approximating a convertible into equity as best you can with a country where what it converts into is some proportion of the Bitcoin's appreciation.

Does this sound familiar? I'm pretty sure I'm not making this up. I have heard something like this before. Yeah, I think that it was structured in a way that was like too creative in a sense. And so, you know, because if you're trying to tap into the excesses of the bond market, you have to have something that's pretty vanilla that, you know, a bond portfolio manager could just buy without getting a lot of scrutiny. um and so i uh i i also am not familiar with the details of their imf uh negotiations so uh perhaps they've got other limitations that you know are more opaque it would i mean would be a smart move though and we're seeing um

we're seeing strategies like that at the individual layer like we've Got companies in our portfolio at 1031 that want to restructure traditional credit products or the commercial real estate energy and dual collateralize with the asset, whether it's the commercial real estate property or the energy asset and Bitcoin and have the lender and the borrower participate in the appreciation of the Bitcoin. In my way, this is an incredible vehicle to manifest the soft landing that Jerome Powell, Janet Yellen, everybody in the government would like to see happen, but you're really not going to do it without restructuring a lot of the credit, the debt that exists out there,

dual collateralizing with Bitcoin and the other underlying assets. Yeah. Yeah. That's a great example of, again, something I mentioned earlier. I was thinking that the example that came to mind for me was the kind of pseudo credit card one. But yeah, I'm familiar with exactly what you're talking about, Marty, that again, interestingly, this is relatively new right you need quite a lot of infrastructure built out to facilitate these kinds of financial products um but i guess underlying all of it is is number go up creating a pretty obvious incentive to try to do that yeah and um i know we're coming up on time here um but i wanted to i was on my phone because i was sending logan this tweet and bringing it back

the individual level, the level of the individual and driving urgency for them to understand that they should be speculative attacking the dollar. The government lies about inflation statistics and data. And so they'll tell you that inflation has been tamed and they'll tell you not to believe your lying eyes and try to quell you into a sedative state where you don't act to protect your wealth by accumulating bitcoin and we had a great example of that on twitter yesterday this gentleman um went uh to reorder something on walmart that he ordered two years ago and uh he came to find that the the price of his basket of goods that he bought from from walmart tripled in just two years let me play this

i feel like i'll go be sick i just like looked through my walmart history and i found this like um walmart order from two years ago for the whole month worth of groceries 45 items cost 126 dollars a whole month of groceries just for me basically but i did notice this reorder all button and i wanted to see how much it would cost now now this order of 45 items for one month would have cost 414 dollars that is four times more how the fuck how like what so the government would lead you believe that inflation is not 329 percent over the last two years but this walmart basket of goods that's a pretty diverse basket of goods 53 items um i'm kind of straining this interpretation but i think the comic effect is worth it

that's him getting wrecked right that's what you're watching there he's long dollar and you're watching him realize how wrecked he is so get him on nakamoto institute as well that would be by far the most helpful comment that could be left on that tiktok well if you were to price that that basket of goods and bitcoin it would be worth less sats today yeah there was an interview with janet yellen where the interviewer asked her if she had sticker shock going to the supermarket and her response was no uh so they're they're very dishonest i mean or she's senile it's like which which one is it um and i i think that the level of denial will continue uh they clearly to them it's enough to say oh well we got inflation back

to two percent but people are going to continue to have the reaction that that guy had of wait hold on even if even if inflation today is actually two percent nevertheless over the past five years you know it's it's 400 so uh it's an arbitrary time frame to say oh only annualized CPI is relevant. People have longer memories than that, right? People have memories going back decades. So you're essentially attacking people's memories and trying to gaslight them into thinking that this is okay. But really, they've stolen a tremendous amount of wealth and redistributed it in a way that there will never be accountability for. no it's your duty as an individual to protect yourself your family your business from this

overt theft via inflation and again they're they're literally telling us not to believe our lying eyes and don't it's not it's only three percent inflation it's not 329 percent it's becoming so blatant that i feel like we're quite we might be there already but we're certainly pretty close to the narrative switching to okay there is inflation and it's a good thing and like here's all the reasons why so you should be really happy about this well i recorded which is kind of always the fiat or you know mainstream economics argument anyway but i think it's it'll be quite entertaining watching them try to popularize that beyond the academy let's say beyond the kind of thing that we we make fun of on bitcoin twitter and actually become something normal people talk

a bite well i think despite of um despite how they try to frame it like all right there's no inflation to inflation good what really matters is how people act like this gentleman like freaking out that the basket of goods went up significantly and i had a discussion with peter st andre earlier this week and he said something um that i never heard and it's interesting it makes sense to me he said there are accounting bodies that define hyperinflation as 20 percent um many economists We'll say it has to be over 50 or some astronomically high number in the thousands of percent per year. But this accounting board has essentially identified 20% as the level at which people will act differently once dollars hit their bank account when they get paid.

They'll go and they'll buy goods right away. They'll do something that they otherwise would not have if they weren't aware of the high rates of inflation. So, again, going back to the government's telling you not to believe your lying eyes and is misreporting the amount of inflation. That is something that people listening to this episode, particularly under the context of speculative attack and how you should approach your Bitcoin accumulation strategy and basically benchmarking it to what's happening in the fiat world.

Annualized over the last four years, real inflation is likely over 15%, 20%. and is that like are we living to the beginning of a hyperinflationary event here in the United States potentially especially if we have 1970s like echo inflation on the back end of this decade and so seriously consider the the ideas put forth in the original speculative attack and the the follow-up decade later version that that Allen and Pierre have written there's anything we didn't touch on you think the freak should be aware of no i think we covered a lot of ground today gentlemen it's always a pleasure pierre uh you are humble you are modest uh don't want to blow

smoke up your ass but i'm about to one of my favorite pieces one of the most formative pieces i read in the early days um and still go back and reread year in and year out and send to people like you said earlier alan short but gets right to the point and i was and still am left side of the bell curve i was like oh this is how it's going to happen and despite the fact it may not be happening as quickly as we all imagined a decade ago i think it certainly is happening to some degree and i do think it will accelerate and is in the process of accelerating right now Like I said, the timing of the 10-year anniversary and the follow-up piece that you two wrote, I think, could be more prescient with everything that's going on in the world of fiat. Let's do this again in 10 years.

Yeah. Season three. Season three. Gosh. Just one final thing. A lot of teenagers at that point, which is weird. Marty, you were actually mentioning you go back and reread it and you go and send it to people. I'm not sure if I even told Pierre this.

So maybe I did write it at the start when I first pitched it to him. But for me, literally the idea that we should write this and that we should update it was me rereading the original and realizing, holy crap, that was nearly 10 years ago. Like the actual 10-year anniversary is coming up. And then it kind of snowballed from there. Like it'd be cool if we did an update, blah, blah, blah. But that, yeah, that in itself I think is the best testament of all

that I only realized that in the first place because every now and then I go back and read it. Probably done that going on 10 times, I would say. And I'm very grateful, Alan, that you reached out because I always felt like there needed to be an update to it, especially after we saw Michael Saylor with his spin on a speculative attack. And so now that is accomplished and in a very timely manner.

Go forth and speculative attack the dollar. stay humble stack sats peace and love freaks