The Iced Coffee Hour - “THE US DOLLAR IS COLLAPSING!” Michael Saylor on The Future of Bitcoin, Money, and Freedom

Episode Date: June 2, 2024

MasterClass: Visit https://MasterClass.com/ICH for 15% off ANY Annual Membership Babbel: Visit https://www.Babbel.com/ICH to get up to 60% OFF & learn a new language Yahoo Finance: Visit https://www.Yahoofinance.com for comprehensive financial news & analysis Shopify: Sign up for a $1 per month trial period at https://shopify.com/ich https://x.com/saylor https://www.hope.com/ NEW: Join us at http://www.icedcoffeehour.club for premium content - Enjoy! Add us on Instagram: https://www.instagram.com/jlsselby https://www.instagram.com/gpstephan Official Clips Channel: https://www.youtube.com/channel/UCeBQ24VfikOriqSdKtomh0w For sponsorships or business inquiries reach out to: [e-mail] For Podcast Inquiries, please DM @icedcoffeehour on Instagram! Timestamps: Intro - 0:00 Michael Saylor’s Background (Starting MicroStrategy) - 1:55 Why Michael Bought $250M in Bitcoin During COVID - 4:25 How To Spot "New Trends" Before They Happen - 19:04 Michael Saylor’s Thoughts On AI - 24:53 Why Your View on Money & Economics Is "Defective" - 36:31 Inflation, War & Collapsing Currencies - 42:20 What Is Bitcoin & Why Is It So Useful? - 55:09 The Biggest Pros & Cons of Bitcoin - 1:02:51 BTC vs ETH - 1:08:50 The Human Condition, Power & Bitcoin’s Place In It All - 1:16:57 The Problem w/ Fiat Money - 1:23:48 How the Government Will Start to Regulate Crypto - 1:37:05 Is It Too Late to Buy Bitcoin? - 1:47:29 The Longevity of Bitcoin - 1:54:57 How Bitcoin Mining Will ALWAYS Have Value - 2:24:02 How Michael Learned All This - 2:34:53 How to Not Take on Too Much at Once - 2:48:05 How It Feels to Lose $6,000,000,000 in a Day - 3:00:11 Closing Thoughts - 3:18:41 *Some of the links and other products that appear on this video are from companies which Graham Stephan will earn an affiliate commission or referral bonus. Graham Stephan is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. Learn more about your ad choices. Visit podcastchoices.com/adchoices

You have 100 billionaires in a room. One middle class dude with a $300 gun walks in. Who's the most powerful person in the room? The number that matters if you want to either get wealthy or stay wealthy is the rate of expansion of the currency supply. And so if you're not actually investing, growing your cash flow, growing your assets, you're getting poorer. Bitcoin is a system so diffuse that no one entity or person is systemically important or influential. And everybody shares this comment. economic protocol in a fair, equitable, transparent, unstoppable, immutable fashion.

It's famous that you've lost $6 billion in one day. What were your thoughts like during this day? Michael Saylor, thank you so much for coming on the iced coffee hour. This is an absolute honor. We really appreciate it. Jack, Graham, thanks for having me. Your house, by the way, is gorgeous. Thank you. So we've seen plenty of your podcasts. We've been absolutely just binging all of these different shows you've been on. The Lex Friedman one got like 10 million views. Why do you think people care so much about what you have to say? There's like 450 million people in the world that have crypto, some kind of crypto asset. Bitcoin is spreading virally. There's hundreds of millions of people that own Bitcoin. This is an idea whose time has come. And it's a fundamental idea.

It is we have developed a technology that empowers humanity and empowers the individual. It provides property rights to 8 billion people. It provides freedom, economic sovereignty, and the promise of sovereignty and dignity of the individual to 8 billion people. And we do it with cryptography, semiconductors, and the internet. So it punches all the buttons, right? It's about technology, it's about freedom, it's about empowerment, and it's about money. And those are all interesting topics for people. Why should people listen to what you have to say? I think that everybody ought to do their own research and listen to a lot of different points of view, so I'm certainly not the only voice. My particular voice is that with the background of an engineer. I went to MIT

and I studied aeronautical engineering and spaceship design. So I have an engineering background. I have a long enthusiastic history as a tech investor. There's an early investor in Amazon and Apple and Google and Facebook. I wrote a book. about the impact of technology, especially mobile technology, on civilization and on the economy. That's based upon my studies at MIT. I studied science technology and society and the history of science is another one of my degrees. And then when I saw the advent of the mobile phone, it became clear to me that mobile phones were going to dematerialize cameras and tape recording and entertainment and relationships and money and commerce and retail stores.

war fronts and newspapers and books. And when I thought about the dematerialization of all that, I thought the world's going to change. There are going to be these trillion-dollar companies like there are today, Apple and Amazon, Google, Microsoft. I thought that's going to make a difference. I wrote that book back in 2010, published it in 2012. I rode that mobile wave for about a decade.

And I did that while I was running a company I created. I created a company when I was 24 called Micro Strategy. In 1998, we came public, and Micro Strategy is MSTR. It's still in business. And I was the CEO for 30-something years. Now I'm the executive chairman. So I spent a career running a public company. Our company sells enterprise software to banks and governments and airlines and large corporations and most of the retailers in the world. So before I discovered Bitcoin, I had an engineering background, a tech investor background. I was a bit of a academic in the history of science. And I had a background in the real world running a software company that was multinational. And I had a background as a public company, CEO. And along the way, I picked up lots of bruises as a tech entrepreneur. I picked up lots of wisdom learning what it's like to do business everywhere in the world. And along comes 2020 and the pandemic crisis and there was COVID and there were lockdowns and then the interest rates went to zero and there was financial hysteria. And the world was turned upside down and split in half. You know, all of our office cultures, they all got thrown out the window and we all went to remote work and we did it like overnight.

All our prejudices and biases, well, we think we should do it this way. They got thrown out the window and maybe we have to do it a different way. All of our thoughts about money and banking, it's like, okay, here's your money in the bank and earn zero percent interest. Well, what I'm going to do? And by the way, we're inflating the currency and eventually everything's going to cost twice as much. Houses are going to go up in price and yet your money's going to earn zero. That causes people to open their mind to new ideas.

So in my case, I approached this existential risk in 2020, running a publicly traded company, and we happened to have two things. We had about 500 million in cash, earning zero percent interest, and we had a $500 million software business generating about $75 million in cash flow. And our stock was a bit more than a billion dollars in value. So the marketplace put one-x multiple on our business and one-x multiple on the cash. And I looked at it. My first concern was, will the company survive the crisis, you know, in March, April, May of 2020, We were all worried about, you know, our lives, our family, our businesses, our business model. And once I realized that wasn't going away, my second thought was, how is it possible that every Main Street business is having the worst year of their life?

Every restaurant, every bar, every gym, every yoga salon, everyone, you know, that shows up to work, not only are they not working, they're not allowed to work. And if you open up your gym, you know, people are getting a restaurant. for opening up a gym to get healthy. So on one side, you have this crisis, half the people in the world or half the businesses are having the worst year of their life. And then in the summer of 2020, all the Wall Street firms had the best year of their life. All the stocks doubled. All the the real estate assets went through the roof. When we dropped the interest rate to zero, real estate property values double, you know. All of a sudden, you know, all the big tech companies are shooting through the sky and S&P is shooting through the sky. And,

I just saw this paradox. How is it possible that one part of society thinks everything's great? And another part of society thinks this is the most awful thing. So we were worried a little bit about that. But really, we thought, you know, $500 million is going to be worth $500 million in four years, except that you're going to need a billion dollars to buy the same amount of stuff as you could buy with $500 million today. So we're destroying shareholder value to sit in our position. The market doesn't care about us. And on the other hand, we don't own anything that's benefiting from all this inflation and from these low interest rates. So we started looking around and, you know, in that year, my mind opened and I embraced a lot of new ideas.

I embraced the idea of podcasting. I'd never done any podcast until 2020. I embraced the idea of Zoom. I would have fired you in February if you wanted to do remote work, but by the end of March, it was mandatory. Yeah. It's like 10 years or 20 years of innovation or evolution, you know, all coming in a week or two weeks.

Then I thought, well, what am I going to do with this money? I either got to give it back to the shareholders, you know, and decapitalize. And if I decal capitalize, I thought that's a fast death, right? Our company was looking at a fast death, a slow death, or do something new. And I wasn't interested in the fast death. The slow death didn't have a lot of appeal, just get chipped away at by big tech companies. And so it's kind of a desperate moment, a moment of truth, where you have to make a decision and take a risk.

And so we looked around and we said, well, what is, what we need right now? Well, we need a hard asset that is scarce that people all want in the world. And we need to get on top of the next big tech trend. You know, like, is it digital relationships? Is it digital books? Is it digital photographs? Well, it's too late to jump on top of Apple, Amazon, and Google and Facebook. You had to hit them and invest in them in 2010, 2012.

I said, what's the next big thing? I thought, what about Facebook for money? What if someone actually invented a bank that a billion people, or in this case, eight billion people needed that ran on the internet, that actually had an asset which no government could debase, which every wealthy investor wants, which you could move at the speed of light, that you could program into an iPhone? What is this like digital gold, digital capital, digital property? What if the next wave is the digital transformation of money, of property, of energy, of all these ideas, they weren't transformed in the first Internet wave?

And I looked around and I thought, well, that feels like crypto gold to me. And so if I could create something that was better than gold, it had none of the defects of gold, and it offered the promise of sound money to 8 billion people. And then I could combine that with a digital network like Google, like Android or like iOS or like the internet. When it's time to scale your business, it's time for Shopify. Get everything you need to grow the way you want. Like all the way. Stack more sales with the best converting checkout on the planet.

Track your chichings from every channel, right in one spot, and turn real-time reporting into big-time operations. opportunities. Take your business to a whole new level. Switch to Shopify. Start your free trial today. That struck me as being the next big idea. And so micro strategy became the first public company to buy Bitcoin. And we bought $250 million of Bitcoin in August of 2020 and no one had ever made such a large commitment to this scary new, crazy crypto idea. Are you worried about volatility at the time that you could make that investment and have a it dropped by 80, 90% in the year? Yeah, I was worried about volatility. And the way that we dealt with that was we had 500 million in capital. I wasn't worried that it would drop and we would panic

sell it. I was worried that it would drop and our shareholders would have a big issue with it and we might suit. And so the way we dealt with it was we announced that we were going to do a $250 million stock buyback. at a premium. We call it Dutch auction. And we paired it with a $250 million Bitcoin purchase. And we allowed all of our shareholders to get out. Like if you didn't, if you didn't buy into the Bitcoin strategy, you could tender your shares back to the company at a premium. That rotated our shareholder base. And we didn't have neutral or indifferent shareholders. We had all pro-Bitcoin shareholders. And that changed the dynamic of the company. It turned out that that Dutch auction,

resulted in only about $60 million of shares being tendered. So we had $175 million left at the end of the Dutch auction period 20 days later. And we bought another $175 million of Bitcoin. And then we had $4.25. So at this point, no one in the world, I think the largest public company might have had $1 or $2 million of Bitcoin before that. And we come over the top with $425 million. And we just cleared to the world that we thought this was going to be our primary

treasury reserve asset right this is the way we're going to run our treasury and that was that was a brand new idea there's 43,000 public companies and we were the first one to say let's not put your capital in bonds or cash or just give it away let's invest the capital on this new liquid asset and this crypto asset called bitcoin. When we did that the stock doubled and we raised another 600 $150 million. And then the stock went up again and we raised a billion dollars. And we raised a billion dollars about six months after this initiative in a convertible debt offering at zero percent interest.

So we borrowed a billion dollars at zero percent interest for about six years, I think. And we went to buy Bitcoin with it. So at that point, you know, we had said, not only do we think we're going to invest our free cash in Bitcoin, we're going to go ahead and we're going to go ahead. we're going to borrow money to buy Bitcoin. And while we're doing it, other public companies, like Square and then Tesla, started buying Bitcoin. And then all these Bitcoin miners came public. And so from 2020 to 2024, that was the crazy years of uncertainty. People weren't sure, you know, will Bitcoin be banned? Will it be copied? Will it be hacked? Is it a long-term thing?

The skeptics thought, well, maybe, you know, some people, the denier says, said, it's just tulip bulbs. Other people, skeptics said, oh, yeah, it's really good. It's better than gold, but it's too good to be true. And so the government's going to take it away from you. And at one point, China banned Bitcoin mining and that created a crisis. And then they banned Bitcoin trading and that created a crisis. So a lot of uncertainty there. But our belief was Bitcoin is the solution to 8 billion people's problem. It's the solution to 300 million companies problem. It's the innovation, the biggest innovation in money or property rights in the history of the human race. It's like fire or electricity, right? It's this new monetary protocol which is going to elevate

humanity to new levels. So we became obviously very big advocates. We raised 500 million in a senior debt issue to buy more Bitcoin. Then we sold a billion dollars of equity to buy Bitcoin. then we sold another, you know, then we borrowed money against Bitcoin to buy Bitcoin. Then we issued more equity to buy Bitcoin. If you fast forward through the four years, today, as of today, since we started, well, we've invested $7.5 billion in Bitcoin, which is worth any given day $14 to $15 billion. The market cap of the company went from $1 billion to $30. The enterprise value of the company went from $600 million to more than $30.

and the stock 10xed. So during that time period, the company's stock outperformed just about every stock on the S&P index. It outperformed Invidia and Tesla and Amazon and Apple and Google and Facebook. It outperformed Bitcoin itself. And it's not very often that you 10X a stock, 20X a market cap, 40x the enterprise value in 44 months. So we took a particular position, which is Bitcoin is, is a good strategy. It's good for the world and we're not going to be shaken. And while that was happening, obviously, Bitcoin, when we bought it at 11,800, it crashed down into the 9,000.

So we took like a $40 million hit in the first week or two weeks. So it was very stressful, losing 40 million of 250 million, right? It's a big thing. But we double down. And then Bitcoin rallied up. And it eventually rallied, went through the all-time. high's around to 6,6,000, then crashed down in the 40s, then rallied to the 66 again. And then this brutal crypto winner went from 66 all the way down to 16,000. Brutal. And then it rallied up. And so it is today where it is, you know.

And, yeah, everybody's got their own Bitcoin journey, but micro strategy's Bitcoin journey is we started out of desperation. It was like, do this or maybe just shutter the company. we went from, you know, desperate defensive to opportunistic. Hey, you know, someone wants to give us $1.6 billion for nearly free for six years. If I offered you $1.6 billion for free for the next six years to invest in anything you wanted, would you take it? Absolutely. We asked Dave Ramsey the exact same question. He said, no, he wouldn't take it.

Like, like, yeah, crazy. And you must not believe in anything, right? I mean, if you're in business and someone's offering. you, in essence, free money to invest in your business for the next six years and you don't want it. Well, what it really means is you've run out of ideas. You don't know what to do with the capital. But, you know, we went from the first step to opportunistic and then it became strategic. And we realized this, we are a Bitcoin development company. Our job is to issue securities and to engage in technology projects and advocacy and education.

in order to spread, you know, the virtues of Bitcoin and the opportunities of Bitcoin to the world. How were you able to develop an eye to spot innovation like that before the general public? Were you always like this growing up as a kid to be able to spot trends? But before we get into that, guys, I have learned so much about building businesses and entrepreneurship from the business experts we've had on this show. But if you're like me and you're always hungry for more, that's where I turn to our sponsor, Masterclass. With Masterclass, you could learn from the best to become your best. In fact, Masterclass is the only streaming platform where you could learn and grow with over 200 of the world's best. For just $10 a month, an annual membership to Masterclass gets you unlimited access to every single instructor.

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How were you able to develop an eye to spot innovation like that before the general public? Were you always like this growing up as a kid to be able to spot trends? I was a science fiction fanatic by the time I was in third grade. Like, I think my parents, they hacked me when I was. was in first grade, I had this comic book addiction, and they offered me a dime for every, every real book I read in some reading competition. And comic books cost 25 cents, and I calculated if I read two and a half books, I could get a comic book.

And so I read like 60, 70 books in the summer. I'd be like reading one a day, you know, and I got into science fiction, and I discovered all the great authors, Robert Heinlein, Isaac Asimov. Arthur C. Clark, got very interested in that. It led me to a bit of fantasy. I'm the kind of guy I played board games, simulation games. Before we had computers to simulate them on, we had to use, you know, dice, you know, and then I played Dungeons and Dragons. And then I got me into fantasy, and all of that's about imagination. And, you know, one of the more famous books is Have Spacesuit Will Travel by Heinlein. And in the book, you know, the hero discovers a spacesuit, a space suit,

fixes it up, it's broken, barking at the sky, a spaceship lands, he gets picked up, he gallivance across the universe, saves humidity from the bug-eyed monsters, comes back, and as is reward, he gets a full tuition scholarship to MIT. And I guess it's stuck in my mind, you know, that if you're the, you know, the upwardly mobile alpha male, you know, tech forward thinker, maybe you want to go to MIT. So I went to MIT to study spaceship design, and I was going to be an astronaut and a spaceship designer. And that brought me in touch with, you know, some just extraordinary individuals, extraordinary professors, extraordinary students.

Like, every one of my fraternity brothers was like an Eagle Scout, right? Like, okay, welcome. Like, everybody's a valedictorian. Everybody's an Eagle Scout. And they're all brilliant. And what they do for, you know, for fun, they design space equipment or they hack the phone system or the like. And while I was there studying aerospace engineering, I stumbled on the history of science.

And the history of science is all about, you know, how did we discover immunology? How did we discover that the earth, you know, revolves around the sun? You know, like how do we get through the Copernican revolution? What's the significance of optics? Why do we stop bleeding people to death? What's the significance of nuclear power? What's the significance of Maxwell's equations or Newtonian physics or relative? you know, what Madam Curie do for us. And how does the society react when you introduce a new

technology, whether it's a railroad or an internal combustion engine or an airplane? And so if you look at the history of the world through a technology lens, right, then you start to see things differently. So when I came out of MIT, you know, I had the science fiction background. I had the fantasy background. I had the history of, I always loved history in general, but then the history of science, really opened up my eyes to paradigm shifts. One of the most basic principles of sciences, the paradigm shift. Dr. Harvey is the guy that discovered that the heart beats blood out through the arteries. It circulates back through the veins.

For 10,000 years, no doctor knew what the heart did, and they didn't actually accept circulation. Harvey discovers it, and everybody in the medical profession rejects it. Like, no, we don't believe you. Now, despite the fact, they could probably determine this with some experiments, but they don't believe them. And Harvey says, no physician over the age of 40 will ever, believe me, ever, right? Then I think Max Planck had a quote. He goes, you know, science advances one death at a time. And Thomas Cune says in the structure of scientific revolutions, when you come up with the new paradigm shift, whether it's, you know, the Copernican revolution, right? The universe doesn't revolve around Earth.

Your diseases aren't caused by spirits and demons, but rather by little germs. And, you know, in the blood or relativity that Einstein put forward in the paradigm shift of quantum physics, which Einstein rejected or, you know, quantum uncertainty. Kuhn says these paradigm shifts take place only after the old guard dies or in a war. With only two ways, you get people to turn the world upside down and see a new idea. They either, they either have to, you have to see the old guard die. We're seeing this in crypto right now. I mean, I go around and I'll meet people and they'll say, yeah, my son. son told me I needed to talk to you. It's like the 20-somethings, the 30-somethings, the teenagers,

they all know the 50-something, 60-something, 70-somethings that they're hearing about, they're hearing it from their kids. So this is a generational thing up. And I think, you know, so I was fortunate because my advantage was I kind of had the academic grounding. I had the passion. I was always very interested in how do we invent new things with technology. I grew up. I grew up. up in a coming of age where, you know, we started, there were three channels of broadcast television and then a rapid succession. You got to where we are today. So, obviously, some people are a little bit more, what is the word? Open-minded? They've got more of an intellectual inclination to appreciate that than others. So I always had a bias toward it. And I just had some really good,

formative experiences and opportunities in order to feed that inclination. I'm curious, who were some of your biggest influences or inspirations when you were younger that kind of like, I don't know, maybe made you think the way that you think? And as you elevate the financial ladder and you make this crazy decision, or controversial, I should say, to put hundreds of millions of dollars into Bitcoin to turn it into billions of dollars, now that you have all of that money, who do you look to now? now for inspiration and how's that's changed? You know, the great science fiction writers, you know, were inspirations.

You know, Heinlein in particular, not only is a good science fiction writer and he tells a good story, but he's also libertarian. He's also a sound money advocate. So his writings are laced with, you know, conservative economics, practical, practical observations about politics, you know. So, and, and, um, inspirational stories of improving humanity with technology. I think that's a very important formative experience. You know, Reagan, Thatcher, they were very successful politicians in their day, and they both preached limited government, right, power to the people.

Ein Rand and her books, Atlas Shrug, The Fountainhead, very inspirational. science historians, you know, and the, you know, the historians, Alvin Toffler, you know, the people who are megatrends, future shock, all those books that were, you know, how is the world going to turn upside down? I thought that was very interesting, inspirational. And I think, you know, Arthur C. Clark's got a phrase, a very famous statement. I put it on the back cover of my IPO prospectus in 1998 when the company came public. That's how important the phrase was. And his phrase was, any sufficiently advanced technology is indistinguishable for magic, right? And that was the mantra of the great science fiction writers where it blends with fantasy.

It's like, what's the magic mirror? Well, you know, I look in the mirror and I talk and then somebody talks back. Well, now you take an iPad or you take an Apple computer and you look at it and you zoom to someone in Singapore and you talk and they talk back. And that's getting pretty magical. But then at the point where they take your photo and they plug you into an AI and they bring you to life and they put you into cyberspace. And I'm talking to an AI that's talking back to me with your gestures. Am I talking to a demon, a witch, a demigod, a person? You know, where did the science stop?

Where did the fantasy begin? And that inspired me to start micro strategy. And our idea was intelligence everywhere. Let's make everybody super intelligent. Like, think about what some of these AIs can do today. You can basically ask the thing to scan the entire body of human writing. Give me a Shakespearean sonnet, you know, and the style of M&M. and in a hundred milliseconds or 500 milliseconds, it comes back.

You know what? Jack did that last night. Yeah. We plugged, we said to chat GPT, if we were to interview Michael Saylor, what should our format be? And my gosh, it gave us an outline that we would have probably spent an hour thinking of ourselves and it did it in. I would say probably more than an hour.

It was pretty, I mean, we already had an outline. We already had an outline. I'm just kind of curious what chat GPT could provide. And it was good. It was decent. Did you pray to your person? patron saint or your AI and your, your demon or your angel in cyberspace for the answer? You should have.

You kind of did, right? You actually, I asked a hundred years ago, a thousand years ago, I asked God to guide me. And fantasy novels, God's, God becomes gods. I asked the God of my podcast to guide me, and this is what they said. Right? And so where does fantasy? Where does science end? I think it is extraordinary inspirational because it starts, it opens up your mind. Right. It's like what happens if I dematerialize every book that's, that's ever been written and I can put it on iPad? Okay, well, I just gave a hundred million books to eight billion people for a nickel. Okay. Well, that's interesting. That's not linear thinking that, but that's like, second order thinking. Third order thinking is, okay, let's just dematerialize every book and then let's read every book and let's give you, you know, the equivalent of a professor that's read every book and you can ask the professor anything, you know, and the first order is, hey, do I, can you

just give me enough money to print a bunch of books and give you a big library? But, you know, printing the books is fiendishly expensive for the civilization, giving, you know, making you read them, is double fiendishly expensive. So what if the computer printed them, the computer read them? And, you know, at some point, you know, the fourth order is, hey, why don't you just read every book, look over my shoulder, think about what I ought to do, and just do it. The ride that steals the spotlight every time it hits the road,

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You're placing a lot of trust though and the AI. Do you worry about that and people not having the self-sufficiency to be able to maybe see through some of that that might not apply to them

or rely too heavily? Oh, yeah. well look we're all going to worry about a lot of stuff right when you get on an airplane you get in a tube and you fly six thousand miles oh gosh don't go enough yeah yeah this is not a window blows open you'll freeze your death or you'll suffocate you know before anybody can do anything about it but meanwhile on on on you probably don't think about it you want me to make you worry because i'm an inautical engineer on approach right if the pilot takes his eye off you know off the approach for and gets unstable for two seconds the plane may go into a tailspin tailspill

you're going to crash and burn. And there's not a single thing you can do about it. And does it ever occur to you to worry about what the pilot drank the night before he got into the plane? See, what I, what I'm concerned about is if you have a mentally unstable pilot that wants to, like, you know, do a lot of harm to a lot of people. That's what I'm concerned about.

I get so answering all we want. Graham and I are horrified of flying as it is. Like, I look over at him. I was fine for a while. Really? Yeah, I was fine up until. Let me up with you a bit more. which is, okay, are we going to worry about AI bots driving your car?

And are you worried about someone taking over the car and, you know, and crashing the AI driven car? Or next time you go into New York City or wherever you go and you call an Uber, does it occur to you that no matter how well you eat, how well you drink, how well you live your life, how careful you are, how good a shape you're in, that the random person that picks you up in the Uber in two seconds can drive you off the bridge and kill you with no chance to appeal, right? Your life is basically in the hands of a random driver every time you get in a taxi cab.

And you ought to be a lot more afraid of that than getting on the airplane because at least with the airplane, there's two pilots. And by the way, it's against professional rules and he will get fired or, or she will get fired if they drink and there's another person to look at them and assess whether they're sober when they walk on the airplane. And if they lose it or sneeze or have a seizure, there's another person to land the plane. Now I'm going to put you back in the random Uber in a foreign country that's swerving in traffic. And okay, if you think, oh, I'm too smart because I only, you know, I breathalized tests

and I personality test the Uber driver when I get in the car. Maybe you think that. Has it occurred to you that? that the guy on the other side of, you know, of the median strip can just take a drug, drink a thing, and do this. But I think about that from time to time. As I'm driving, because you hear just random stories of exactly that, of just a car that just made the wrong turn and just hit somebody who was in their lane doing exactly as they should driving the speed. And there's a point to all this, which is people used to die falling off their horse a lot. you just don't read about it because we didn't take good records.

And if you roll the clock back to 1950, without technology, the average life expectancy was 50. If you roll the clock back to 1770, the average life expectancy was 32. People actually walked past a swamp, got bit by a mosquito, and died of malaria or some fever. Or they just, they lived in a house that didn't have heat. And they died of pneumonia. And people are dying of all sorts of things before we had technology. Now, we live in the early 21st century, and there's a million things for you to worry about. But if we unleash AI and the robots drive the cars and they fly the airplanes, it's more likely than not the case that the average number of traffic deaths fall in the same way that in the modern error of antibiotics and hospitals and modern dentistry, you live in extra 30 years.

even though you're taking some kind of risk when you do it. Yeah, we can worry about it all. There'll be a debate. There's going to be politicians that will say you're safer in a car driven by a person than in a car driven by a computer. That probably won't be the case. But people will believe it's the case. And that's above our pay grade, right?

It's going to be determined, you know, regardless of what you think about it with high likelihood. But before we get into that, something you guys may not know about me is that I actually studied Spanish for six years. And last year, I actually went to Mexico and realized I could probably use a little bit of practice on my Spanish. And what better way to do that than with our sponsor, Babel. For those unaware, Babel is the language learning platform that's helping millions of people quickly and confidently have real-world conversations in a brand-new language. They're super-fast, 10-minute lessons are handcrafted by expert linguists to help you learn a whole new language in as little as three weeks. Whether it's German, Spanish, Polish, Portuguese, or

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And for time, we have a very special special deal for our listeners. You can get up to 60% off your Babel subscription, but only for our listeners at babble.com slash ICH. Again, you could get up to 60% off at babble.com slash ICH. That's spelled B-A-B-B-B-B-B-E-L.com slash ICH. Rules and restrictions may apply. Thank you so much, Babel, for sponsoring this episode and back to the podcast. You mentioned on Lex Friedman that if you look at civilization, half of the problems are due to the fact that our understanding of money and economics is defective. What do you mean by that? And what is the common and incorrect perspective versus the uncommon and correct perspective?

The common perspective is to think that money is the currency that the government gives you and that the policies of the economic policies of the, the government are for your own good, and you'll benefit by complying with them or accepting them, and that most conventional economic principles and conventional economic education is useful or that conventional economic figures are valid. Economics, as we enter the 21st century, really is a pseudoscience. And I would argue that before Bitcoin, all economic, was an art. It was somewhere between art, pseudoscience, and religion, and philosophy, and political science. And it wasn't a scientific discipline or an engineering discipline. I'm not even sure the

economists would disagree over that, by the way. So we lived in a world where human race never had perfected money. We never engineered money. And in the absence of perfected money, you can't have economics as an engineering discipline, and that means that all of the political policies and political economic wisdom generally is subject to debate, and there is no right and wrong, so people capriciously do what they want to do, and they generate facts and metrics to support whatever they want to do. It's kind of a religious, again, religious pseudoscience, and it's not rigorous engineering is not anchored in mathematics, scientific discipline, and you can't characterize it as an engineering discipline. Now, let me go back to the question of what is money.

Fundamentally, people think currency is money, but really the academic definition of what is money is medium exchange, a unit account, a store of value. What is it really? Well, money is just, you know, the most tradable good. the most durable, tradable element or unit of something that we can trade for something else of value. So in the history of the world, you know, you go back 10,000 years, people might have trade seashells, or they traded stone coins or polished glass beads, or they might have traded arrowheads. What is the universal commodity that we know people will accept? And we use it to create a market economy to solve the problem of coincidence.

of once, right? Everybody produces something different and you need to, and if you have stone axes and I have food and, you know, I want the stone axe and you want the food, we trade for some ratio, but if everybody doesn't have exactly what everybody else needs, that barter economy breaks down. It gets too complicated. So we know that there have been sophisticated economies for a million years. You can find stone axe factories to go back a million years. The issue really is how do you make those economies work? Through a process of trial and error, people eventually arrived at metals, copper coins, silver coins, then gold coins, and they worked with some kind of metallic unit of account and type of money. But even in modern era, you know, you could see people use bales of

tobacco as money and the colonies before the Revolutionary War. In prisons, people use cigarettes as money, and POWs use cigarettes as money. What's the problem? The problem is, in the modern era, we use fiat currency as money for the most part. And is it a medium exchange? Sure, it is. Is it a unit of account? Sometimes is the store of value?

It's a store of value with a half-life of, of, some amount. So what's the half-life of the money? How long does it take for the money to lose half its economic energy? Well, that's what we'll call the inflation rate. But the problem is, the actual monetary inflation rate isn't reported. Nobody tracks it. So if you actually have a million dollars of capital and you invest it in the dollar and you hold it there for 100 years, the dollar supply increases 7% a year on average over 100 years, which means that your capital loses half its value every 10 years, and over the course of 100 years, you're cut in half 10 times,

which means that you start with a million dollars, and you end up losing 99.9% of the million dollars. It gets worse if it's in a weak currency like to pay so. In that case, you'd lose 99.9% of your capital in 20 years. So what is capital, economic energy, purchasing power? Most of the time, when people think about money, they think about currency, but currency is an awful way to store your economic energy. So you can't really hold money very long. And then when they think about the inflation rate, they always focus upon the CPI, consumer price index.

That's just a manufactured synthetic metric. And what is it? you know the the establishment would have you believe that CPI is the rate at which consumer prices increase and that's what you ought to be concerned about neither of those statements are necessarily true those are those premises are wrong it's not the rate at which consumer prices go up and it's not the it's not the rate you should be concerned about it's simply the rate at which a arbitrary basket of goods defined by an economist goes up in price in a certain place. So if I define a basket of goods in Kansas and I track

the price of them, then I've got a CPI for people that live in Kansas that live solely on that basket of goods. But even that's not quite true because once I define that methodology, there's something called hedonic adjustments, which means every year or every few years or every 10 years, I can just arbitrarily take things out of the basket. You know, late one economist took coffee out of a basket. But for example, if I define a market basket of goods and that includes one concert every two months for the average person, and concerts go from $10 to $500, I could just take the concert out of the basket and I could say, well, you know, in the modern era, people can watch Taylor Swift on Netflix and that's free. So instead of giving you six concerts a year that costs

$3,000 a year that looks like inflation. I mean, how's the average person spend $3,000 a year on? It'd be more than that after you add the merch and whatever. Okay, $5,000 a year on concerts. It used to cost $100. Now it costs $5,000. That's inflation. But if I just rotate that into Netflix-Taylor Swift concert,

not only do I not notice that everything went up to $5,000 a year, I actually announced gleefully that the cost went down to, you know, to go to concerts now. So conventional wisdom is people accept the conventional definition of money. They accept a certain asset as money. That's not really money. And then they accept conventional definitions of inflation as being relevant and proper, which is neither.

And then that causes them to make a whole host of mistakes. Like, I'm going to give you 4% interest in your bank account. The CPI is only two. our target is 2%. If you're getting 4% then you're staying ahead of inflation. Well, what if the real monetary expansion rate is 12% and I'm giving you 4% or 3% after tax?

Well, you're actually losing 9% of your wealth every year that you actually have your money in the bank. And I think it's just really important for people to understand what's the true inflation rate or what does inflation even mean the number that matters if you want to either get wealthy or stay wealthy or live a decent life is the rate of expansion of the currency supply. And if the currency supply in U.S. dollars is expanding at, say, 10% a year, then that means you can expect every scarce desirable asset that anybody with money in America or anybody with money with dollars in the world is going to want to buy, it's going to go up at a rate of 10%.

10% a year or more. And so if you're not actually investing, growing your cash flow, growing your assets via that number, you're getting poorer, right? You're not getting wealthier. And once you actually do that and you do an analysis of asset classes and investing, what really pops out, which is fascinating is, is the S&P index is simply tracking the currency supply of U.S. dollars for the past 100 years. As when you invest in a diversified portfolio of stocks, you're not making money. All you're doing is preserving the capital that you had. You're not getting poor.

You're not getting richer. You're just tracking sideways. You think you're getting richer in nominal terms, but in real terms, you're not. And conventional economists would say real economic growth or real asset growth should be calculated using the CPI. But, of course, the CPI, you could reasonably conclude, is the lowest number that any, that any self-respecting government-employed economists could possibly calculate. It is the rate at which an arbitrary portfolio of things the government thinks you should

care about is going up in price. It's true inflation rate, or I'd say the currency debasement rate. The monetary inflation rate is the rate at which the supply of currency is increasing. Right, which would be about 7 to 10%. That's 7 to 10%. Might even be more. I mean, you can actually trace over 100 years about 7%, but in the past 20, 30 years, it looks more like 10% in U.S. dollar terms.

And weaker currencies 14%. And the weakest currencies 20 to 30% a year. Do you think that's going to stop anytime soon? No. No, it's impossible for it to stop because governments everywhere in the world just spend more money than they take in taxes. And so the temptation is always just to print money to pay bills, either to fight wars or to implement government policy. If I'm going to forgive student debt, if I'm going to fight a war, if I'm going to implement a medical policy, if I'm going to, you know, pay a bureaucracy, I have to come up with money to do. How long is that sustainable for?

It depends on which currency you're printing. I guess let's talk about the dollar. Well, let's talk about ones that are simpler. Let's talk about El Salvador. If you have a small country and you print your currency and you get into a civil war, you print a lot of currency. Well, when you print that currency, the currency collapses. And so it's sustainable for, normally it's sustainable for about four to eight years in the event of a real war. When does that happen in the U.S.?

It happened in most colonies before the Revolutionary War. They all collapsed their currency every 40 years or so. It happened to the United States Continental Congress. Have you ever heard the phrase, it's not worth the Continental? During the Revolutionary War, the United States government printed its own money, greenbacks, and I think they just printed Continentals. And they expanded the currency supplied by a factor of 200. And so the entire currency.

collapse and everybody that took those things was bankrupt by 1785 or something. So in the event of a war, your currency collapses pretty quickly. The losing side in World War I, the currency collapsed. And between 1914 and 1917, the currencies in France and the UK were about to collapse. The only thing that saved them was the U.S. entry into the war. So generally, in the event of a war, why do wars last five years? Because if the government's printing money, as fast as they can, it takes about five years to suck all the economic energy out of the society. In the Civil War, the North printed greenbacks, they collapsed and they were worth almost worth nothing by the end of the Civil War. The South printed their currency that collapsed

by the end of the war. So in wars, the currency can collapse in five years. If you take Argentina, Argentina's collapsed their currency about every 20 or 25 years for the past 150 years. about 20 years. Sure. So the Argentine peso was one peso to the dollar about 25 years ago. It's a thousand pesos to the dollar right now. So, you know, you can see the same thing in Nigeria. So in a third-tier currency, it'll last about, well, third-tier currency,

it'll, I would say a third-tier currency is an award. The currencies collapse in five to ten years. second tier currency that collapsed at about 20, 25 years. First tier currency, the World Reserve currency is, say, the United States, compare the United States, the dollar, compare it to the German currencies. The Germans have lost two wars, so their currencies collapsed like three times. How about the Japanese currency? It's collapsed, right?

How about every other currency? The Russian currency. It's collapsed. three or four times. The last time it collapsed was 1998. Lebanon, it just collapsed a few years ago. U.S. won every war in the last hundred years. We are actually the strongest nation for the past hundred years. So we're the victor. We were the world reserve currency. So what has the U.S. dollar done? An acre of land in Miami Beach where I live cost $10,000 a hundred years ago. It cost $10 million today. Okay. Did the currency collapse?

it's worth 0.1% right? It lost 99.9% of its value. So, in fact, that's the winner, right? And how long will that go on? How long can it go on? I mean, at 7%, I mean, you can presume when we do it another 30, 40, 50 years, something like that.

But it's, the World Reserve currency goes to the end. it'll last until the mercantile empire fails. Where you see the fraying on the edges is you see the collapse of the Sri Lankan currency. You see the collapse of every currency in Africa, the collapse of the currency in Nigeria, the collapse of the currencies in Lebanon, the collapse of or the weakening of currencies in Turkey. You see that right now. Turkish lira has fallen by 75% against the dollar in the last 36 months. Generally, the biggest risk is in the second tier. third tier country. In a third tier country, your currency is broken, right? So what do you do? Normally, you actually just flip to the dollar. That's why is there so much demand for tether, right? You know,

stable coins. If you live in Argentina, you live in Nigeria, you live anywhere in Africa, it's like the dollar looks like a pretty good idea. Everybody knows what the dollar is. If your currency is falling 30% a year and the dollar is only falling in value 7% a year, it looks like the dollar is gaining, right? whatever, 25% a year. Right. Because your currency, your economic system is so relatively weak. So what you have is you have a whole world that goes to this currency collapse.

Is this new? No, it's not new. If you read the history of the world, go read, there's 15,000 pages of Durant's story of civilization. You know, I read it for fun. I reread it for fun. there's thousands of stories of an empire rising, you know, the first king conquers, the sun maintains, the third one in the line comes along and decides to overreach, overspend, debases the currency, you know, bleeds the people dry, eventually can't pay the military and it collapses.

And what happens is they always blame it on the barbarians. It's like, the bad people that live next door, you know, they, you know, they abuse. us but what really happens is every single empire in the past 10,000 years that we've got a recorded history on they go through this dynamic of their weak and virtuous they struggle they rise against another adversary the you know the big the big strong empire becomes fat dumb happy it becomes corrupted from within the roman empire the french empire the russians the whatever fill in the blank And after the empire becomes corrupted within, it collapses, the new empire rises, it stays virtuous for some amount of time. It might be 50 years.

It might be 100 years. It might be 200 years. Eventually, it becomes corrupted. It collapses. And this is just the story of civilization. Why are we here? Well, if Bitcoin had not been invented, this would be a pretty downer podcast. I'm just telling you that, you know, the world's got economic problems.

The government's going to debase the currency, spend it on things you'd disqualify. agree with and you're going to be poor. And that's how it ends. But Satoshi is as profound as Prometheus. You know, Maxwell gave us electricity. Newton gave us Newtonian physics. Einstein gave us relativity.

Satoshi gave us money. Satoshi developed a protocol that combines cryptography, networking, with semiconductor technology. with mathematics, with a bit of economics and some engineering, and managed to create something that's simultaneously a technology, a network, an asset, and an ideology. And it's this thing we call Bitcoin.

It's the world's first engineered money and the first engineered monetary network. So let's just step back and say, well, what real, what real, really is Bitcoin and what would you like to have? Well, if you had a billion people and they didn't trust the banks and they didn't trust each other and they didn't trust any company and they didn't trust any government and they realized that their life savings was being drained out of their accounts via massive hyperinflation of the currency and if they had no rights and if they if they were being driven out of countries because they were the wrong sect or the wrong color or the wrong religion or the wrong political view. And they felt like they would like to have ownership of their own economic energy, their own life force.

They like to have sovereignty. They like to have property rights that could not be taken away from them. Let's assume you're one of those people, right? And you could see why you'd be one of those people because in 1492, when you're, the Spaniards discovered the new world, I think March 31st of that year, King Ferdinand issued an edict saying all the Jews had to leave Spain, like 500,000 of them, within 120 days, and leave all their property behind. You know, or else they're getting jailed, murdered. And so the king of Spain just seized all the property of 500,000 people in four months.

And then a few years later, the King of Spain issued the same edict for all the Muslims in the south of Spain, but gave them three days. History, I could give you 10,000 stories like that. It's like you're the wrong, the wrong religion, the wrong political party, and the person in power just says, we're taking all your stuff, you need to leave now. and if you don't now use can't leave, we're just going to kill you and take your stuff. So let's assume you live through that history,

which every human being did. Now God comes down from heaven above, and God says, okay, I've decided to solve your problem. I'm going to run a bank in heaven. I'm going to issue 21 million God coins, and they're infinitely dividable. And I'm just going to go ahead and do this for you,

just about nothing and you can telepathically move the coins between each other to pay off your debts and i'm going to make sure that no bank no government no counterparty you know no country no criminal takes your money away from you and i promise never to inflate it i'm just going to you know so there's your money there's your bank it's a bank in heaven right and uh a person can hold a gun to your head, but you've got the money in your head, and the angels will, you know, protect you. They might, they might murder you, but they're not getting your money. So if I thought about that, I'm thinking, okay, God is going to run an honest bank for me. Okay, good. That's probably good, but in the absence of God offering to run the bank, you know, and protect your property rights forever from everybody,

The next best idea is we create a piece of software using cryptography, and then the software instantiates in the protocol 21 million coins subdividable by 100 million, so 2.1 quadrillion Satoshes. Effectively enough, you could subdivide it more if you needed to. We create that system, and now you can send 1,000, 100, a million, a billion, 10 billion, $100 billion worth of that from anybody to anybody without asking anybody's permission using a computer. You can hold a million dollars in your head, a billion dollars in your head. You can hold it in your hand. If you know you're going to get arrested, you can just zap it to your sister in Singapore. If you don't trust the bank in New York, you can put it with the bank in London. Right. And if you don't trust any bank, you're self-custody. That's Bitcoin. And let's say you don't, you know, so who's

going to run the software? I don't trust you to run it. You don't trust me to run it. Let's say we all liked each other. Well, do you trust your great-grandchildren? Nobody trusts anybody. So how do you create an anti-fragile, fault-tolerant, self-correcting, self-healing system that will run forever? And the answer is, everybody runs the software.

So everybody can download the node. It's all open source. You can read the code. You run the software. It's a protocol. if you decide you want to tinker with the code and you change the code, so there's 42 million Bitcoin, instead of 21 million Bitcoin, we don't recognize you, you get kicked off the network. So this is a virus.

It's a monetary virus. Everybody can opt into the monetary virus or the protocol. The more people that opt in, the more powerful the network gets. So it starts as a flicker and it spreads like a flame and then it's a fire. And then then it's like, okay, I release this thing and it's spread everywhere in the world. And everybody shares this common economic protocol for settling their differences in a fair and inequitable, transparent, unstoppable, immutable fashion. That is the idea of Bitcoin. Although, you know what, before we go into that really briefly, we got to talk about the stock market.

because I'm not sure if you're paying attention to this, but Nvidia just recently passed $1,100 a share. It's catching up to Apple in terms of market cap. And how did I know this? Well, it's all thanks to our sponsor, Yahoofinance.com. And trust me, guys, it's really important to know what you're doing when you're investing because I didn't a couple years back and I brought a portfolio from $20,000 all the way up to $70,000 and you might think, Jack, you cashed out, right?

No, I brought it down to $4,000. And that's because I was uneducated. Now, obviously since then, I've wizened up, and I feel like I'm being a much smarter investor these days. And the reasons why I invest are because, A, you make money when you do it correctly. And B, it gives you a sense of confidence for your financial future. And really, when it comes down to all of this, the best thing that you could do if you want to expand your knowledge is just get free information. Learn as much as you can. Read as much as you can.

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So you seem like somebody who's looking at the pros and cons of everything. What do you think is the best case against Bitcoin? And what would it take to convince you that perhaps you could be wrong? The idea of Bitcoin is I'm using technology to create perfect money. The first question is, you know, will it be banned, will it be copied, will it be hacked? right, does Bitcoin represent sound engineering? Does it represent sound ethics? Does it represent sound economics?

It's very, very difficult to know that in the first year or the first two years. In fact, people tried to launch something like Bitcoin a hundred times before Bitcoin came along, right? And all of those early attempts failed. Bitcoin caught, and it started to find out. flicker. And, you know, for the first year and a quarter, it traded, no one ever did a transaction with it on pizza day after a year and a quarter, Bitcoin traded for effectively a third of a penny. So it was worth a third of a penny to half a penny after a year and a

half. So it had a slow early germination period. The ethics, of Bitcoin are Satoshi created away, he gave it away, and he went away. So the ethics are what we call the immaculate conception. Someone gave this as a gift to the world. And if it wasn't given as a gift to the world, if if Satoshi was still here, rich, you know, and bragging about it and then, uttering opinions about how you ought to change or modify the network, that would be an ethical failing and that would represent unsound ethics. The engineering of Bitcoin is based upon proof of work, Shaw-256 hashing. So the network has evolved such that it uses something like 20 gigawatts of electricity, which cost $5 billion a year, running on $25 billion or more of

semiconductor hardware. And that hardware is special purpose, single purchase purpose. It's like specialized ASIC chips. And why is that important? Because if it was CPUs, the network could be attacked by Google or Facebook or Microsoft that had more CPUs. And if it was GPUs, then it might be attacked by the AI data centers. But because it's Shaw-256 ASICs, those other types of semiconductors can't be used to undermine the security of the Bitcoin network.

It is simply put, the most powerful computer monetary network, and maybe the most powerful computer network in the world, if you calculate power using the Shaw 256 hash, you know, running 600 X a hash, you can't dent it with all the other computer power in the world. So just to clarify, there's like a place where they have all of this hardware and data, no one, I'm guessing, has any idea where it is? No, it's better than that. The network is decentralized. If there was a place, it would be fragile.

You don't want it to be in one place. It's an open protocol, which means that anybody in the world can run a Bitcoin mining rig, and anybody in the world can run Bitcoin nodes. So imagine tens of thousands or hundreds of thousands of nodes, and millions and millions of different Bitcoin mining computers spread across thousands and thousands of locations in Russia, in China, in Africa. in South America, in Australia, and North America, and Iceland, and Scandinavia, everywhere. And imagine that's shifting all the time and no one can stop it, right? It's kind of like,

where is the cold virus in the human race? But back to Graham's question, what is the best argument against Bitcoin? And what would it take to convince you that it's not, that's, you don't have accurate grasp on the truth? is you've got a better monetary network. And if you had a better monetary network, then all the smart money in the world, all the smart people with money would be using it. Right. So Bitcoin has accumulated the most physical power in terms of electricity, the most computer power

in terms of hash power. It's accumulated the most economic power. $700, $800 billion of real money has been invested. in it. It's got the highest market cap worth 1.3, 1.4 trillion. And it's accumulated the most political power, hundreds of millions of people who are passionate about defending it. And so how do you know it's not working? Well, if someone came along and launched something that was more popular with intelligent people, then I guess it wouldn't be working. But of course, Bitcoin's been growing first 200% a year, then 100% a year. Then 100% of

year. Right now, it's still growing 40 to 50% a year. So it's a monetary virus that's spreading and it's, extracting the capital from all other capital assets. Right. So the proof that Bitcoin is winning is the performance of Bitcoin is 5x, the performance of the S&P index. And Bitcoin is outperforming gold, outperforming the S&P, outperforming every individual stock, outperforming bonds, outperforming cash outperforming real estate. What do you see? You see intelligent people with money voting with their money. And what they're doing is they're selling the weak assets, buying the strong asset. And why Bitcoin over Ethereum? If you're trying to launch a monetary network, you need it to be ethically sound, it needs to be sound ethics, sound engineering, sound economics. The economic policy

of Bitcoin is 21 million coins unchanged, very difficult to change, extremely conservative. In fact, no one would ever think you could change the supply, which is transparent. And even the second order economics, the bandwidth of the network is the subject of bitter, bitter fights. The block size wars was a fight over whether or not the second order scarcity should change and whether the bandwidth should change. And as the network gets bigger, it becomes much more conservative economically.

So now it's nearly impossible to change the economic policies of Bitcoin. And if you compare that to Ethereum, Ethereum changed economic policies with every hard fork. And so it's changed it half a dozen times. And so economically, the real question is how much of that asset

will there be in 100 years or 1,000 years, and can anybody change it? And what you really want is for nobody to be able to change it. And you want to know that you're buying 1,21 millionth of all the economic energy and the network a thousand years from now. So all of the hardware, all of the semiconductor technology, all of the electricity that's being used to secure the network disappears. Now the network is secured simply by the staking of a total.

with economic value. But you're going to lose Moore's law because if you have to stake $50 billion of tokens, you can't make the $50 billion of tokens worth $500 million and keep the same amount of security over time. But you see with Moore's law and with a silicon ratchet, you can actually create $50 billion of security with $500 million of hardware over time. Let me illustrate a different way you have 100 billionaires in a room and then one middle class dude with a $300 goes in who's the most powerful person in the room right the guy with the gun is a very special purpose machine for projecting and channeling energy if you actually want to get productivity if you want to spend $300 in order to hijack a billion dollars right you do it with a

but on the other hand if you want to protect a billion dollars with a dollar with a guy without spending, like, without spending 10 or 20 billion, you protect the billion dollars with the hardware. So, so the engineering of Bitcoin plugs you in to semiconductor technology to Moore's law, to electricity. And what it, what it also does is it creates this, this very interesting dynamic where if you have billions of dollars of Bitcoin in Manhattan, your Bitcoin is being defended by Bitcoin mining off of hydroelectric power in Bhutan. You might be getting defended. The network is defended by a Bitcoin mine running on stranded natural gas in Kazakhstan.

And so if your money is only defended at a bank in New York and the mayor of New York wants to seize your money, he just takes it. What you want is a very distributed network and you want incentives for every nation state and every type of actor to build mass. massively powerful centers. If you see these Bitcoin mining centers there, they're 100 megawatt, 200 megawatt data centers, and you think, well, what would incentivize someone to build such a massively powerful defense mechanism? And the answer is somebody's got a dam

with water flowing over the dam and no one wants to buy their electricity. And so they've decided to build a Bitcoin defense center in order to monetize the running water on their dam 8,000 miles away. So there's a genius to that engineering because it's continually expanding, continually growing, continually becoming more efficient, and it anchors the Bitcoin network into the electrical network and into the technology network of the world and incentivizes good semiconductor engineers to be thinking all the time about how to create more efficient defense mechanism.

to keep a hacker from hacking the network. And that just takes us to the last point, which is ethics. You know, if you want an ethical monetary network, like, do you want to trust all your money in a bank run by three people that you know? Or do you want to trust all your money in a bank that's collectively owned by humanity where nobody in the human race can possibly hack the bank?

And it's one of them is a protocol. beyond the reach of any individual, any corporation, any government. Bitcoin is a system so diffuse that no one entity or person is systemically important or influential. Right. Whereas Ethereum or any of these other proof of stake protocols, if there's a company, if there's a founder, if there's an engineering team, if you're going to identify them, then they can change it. and the ability to change the network undermines the integrity and the security and the immutability of the network. The one thing you want with a monetary network is you want to know that 100 years from now, 500 years from now, a thousand years from now, the network's going to maintain its integrity.

and if it relies upon any individual action, you've already failed. That's why, for example, you speak English and you don't speak the language made up by your best friend that's a little bit more efficient that's got special words in. You're buying into a shared protocol of all of the smart money in the human race.

And the smart idea, if you study history, is don't trust anybody. Don't trust yourself, right? Like, you could say, Michael, would you rather invest in a network where you control them? I'm like, no, right? I'm the weak link, right? We're all the weak link at the end of the day. So you want to put your energy and your support behind a network which transcends any institution.

That's what secures you. That's what makes it, you know, safe. and economically sound. Although you know what, really quick, while we're on that topic, if you run a business, there's no better sound than hearing, and if you want to hear a bunch more, then it's time to get started with their sponsor, Shopify. For those unaware, Shopify is the global e-commerce platform

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Why do you think it is that we can't trust anybody? You said you could come up with thousands. Maybe you, I think you might have actually said 10,000 examples of empires that have risen and then consequently fallen because somebody got too ambitious, somebody got greedy, someone had power and control. Why do you think that that continually perpetuates its? when we have all of this evidence that that's, you know, not the correct way to go. Do you admire Alexander the Great? Do you admire Julius Caesar? Do you admire Napoleon? There are three

very famous examples. Alexander the Great went off and waged 200 wars, murdered millions of people and managed to fight and drink himself to death by the age of 33. And within a few hours of his death, his empire broke up. And he just left, you know, everyone that followed him ended up dead. Everyone in front of him ended up dead. It was like a massive shambles, and yet he's the great. Julius Caesar got stabbed in the back by all of his best friends. And the human condition is, you know, most commonly, it's an alpha male in their 20s or 30s, and they feel like they were put on earth to make a difference and to fix things. But generally, it's just someone feels like they have to actually improve something or fix something or correct right or wrong or revenge their their

family or their friends or something like that and so they go off and and they wage some political initiative they can't afford or they fight a war and then they fight another war take napoleon like i'm born in corsica i live through the french civil war and it's actually success would be not getting murdered, right? Double success is actually being affluent and into the war. Triple success is they put you in charge of the entire country. Does he stop? It's like, no, I need to be in charge of Spain. I need to be in charge of Italy. I need to be in charge of Germany. And then after I'm done with all that, why not just invade Russia? What is it Corsican that lived through the French Revolution doing, deciding to like bring civilization to all of Russia? That doesn't work out well, right? And somewhere along the line, oh, yeah, I think I'll invade Egypt. That doesn't work out well either. So I think the human condition is people are always working to expand their influence

and they reach very aggressively. And, you know, and on the other hand, you have examples Frederick the Great. He was supposed to be the philosopher king. And Voltaire loved him because Frederick was. the genius, cultured, sophisticated, well-educated king that understood the perils of warfare. But in his reign, he eventually started a war with, and he started the war with the excuse that, I need to fight this war because otherwise they'll get powerful and start a war with me later. I don't know. It's the human condition is, it's, no one will, no one will ever just leave it

well enough alone. They always have to expand, you know. You know that Louis XIV created Versailles. I don't know if you know that he starved a good portion of the French people, you know, fighting his wars and creating Versailles. And so he impoverished his entire nation, collapsed his economy. So you think Bitcoin is the first thing that actually combats the human condition effectively? There are hundreds of challenges that the human race has, pride and ego. I did it for my son. I did it for my family. I did it for my God.

I did it because I was sent to do it. I did it because I was interested. I did it because it was cool. There are all these things. People all have these good ideas and these intents that end up going horribly awry. And there's a million examples of them. I don't think that's going away. So I don't think Bitcoin fixes that.

It won't stop wars. It won't stop governments from collapsing. It won't stop bad medicine. It won't stop bad ideology. It won't stop criminal behavior. so it's not the solution to that it's just the solution to bad money so money is yeah maybe uh what we ought to do is just focus upon what what is the role of of money it's like you have you you did a lot of work and now you want to save up your money so that sometime in the next 10 20 30 40 years you'll be

able to afford to live so you're storing economic energy um you could think of money as economic energy, just like you could think of fat as organic energy. You eat a lot, you store fat, and now if you have to go without food for two,

three, four weeks, you're not going to starve a death. If you can't form fat cells, you're type one diabetic. A type one diabetic can't store organic energy and they dwindle and they will starve to death.

It's just horrific disease. Being able to store fat isn't a bad thing. We think it's a bad thing, but actually for most of human history, right? The number one reason you died is you starve to death. So it seems pretty intelligent than when you get excess energy, you can store it and hold it for a while. Now, let's imagine a person as an economic diabetic. Where do you see that? In a society where the

currency is collapsing and hyperinflation, the Weimar Republic, famous example. So you work, I pay, you know, in Zimbabwe, they had it. In Venezuela, they had it. In Nigeria, they had it. Jerry, they're getting it right now. You work. I give you $100 and the $100 buys you four meals, but then in three months it buys you one meal and then in 12 months it buys you one soda. And in 24 months, it buys you nothing. Okay. So now you've got a problem. You can't store economic energy. So what happens when the currency dies or the money dies? Well, the society gets ripped back to Stone Age barter. What it means is you can't save any. anything. And also it means that the unit of account breaks down so you can't trade. It's like,

okay, you have bullets and I have soap, how many bars of soap for bullets? And how do you figure that out? Give me a chicken and I'll give you, you know, a bottle of water. Things get very complicated. The civilization just gets ripped back to Stone Age bar. And when that happens, all the factories break down. Like, imagine trying to trade with your friend for dentistry. tree work. You just be your own dentist. Try that one. Be your own doctor.

Take out your appendix. So the money breaks down. The civilization breaks down. That's the danger. But normally in most modern societies, the money doesn't break down as a medium of exchange. It breaks down as a store of value. So that means that, yeah, you can store money for 12 to 36 months or maybe up to 10 years

and the dollar, you can't store it for a lifetime. So if you have some money, you can't just store the money. If you want to keep your economic energy, you have to gamble it or invest it. You have to speculate it with it or, you know, you worked your entire life. You have a certain amount of retirement. And now if you store it in the bank, it'll be worth nothing. So you have to go and invest it in the stock market. But if you pick wrong, you lose it. So we basically force. We force people to be gamblers, speculators, or hedge fund managers if the money's broken. And the money is broken. So what is the significance of Bitcoin?

Well, let me say a different way. You just take your money, take everything you earn, you buy Bitcoin and you wait and it goes up 20 to 40% a year forever. Or you take your money and you invest it in a bank account and you get 3% after. tax and everything goes up 10 to 15% a year in price and you just get poor and poorer. Or what are you going to do? Buy GameStop at the right time. You know, buy a building, run an Airbnb. I force you to go and forcing you to be a hedge fund manager is horrifically inefficient

for the society. It's just as inefficient as saying, okay, be your own dentist and doctor, right? If the medical system was broken, you have to be your own doctor. It's not good for society. What happens? People die 20 years early as what happens. So when you have to be your own banker or be your own hedge fund manager, what happens is you just get poor or you lose faith in the future.

If I told you your money was going to be worthless in 36 months, what would you do with it? You would spend it. What if I told you your money is going to be worthless next Monday? you would go out this weekend, make a decadence weekend, and you would just blow it all, you would buy anything. Things you don't need? It's like, if it's for sale, I'm just buying it. So, Bitcoin actually solves the problem by saying, well, what if you just had a money that the government couldn't debase, the bank couldn't steal that would last forever? Okay, it profoundly changes incentives because now a corporation, instead of buying back its stock

or instead of divining out its cash flows, we'd just keep the money. And the money would go up in value 20, 30 percent a year. So that's what micro strategy did. Like, what's our secret? Right? We're just holding the money and it's an appreciating asset. Let me try to make one more analogy that might help. It's like, you're an athlete, your blood is carrying.

oxygen. Oxygen is energy. If you're an athlete, you need the oxygen to circulate and you need the blood. So before your race, I show up and I say, well, conventional wisdom is I need to bleed you now. So I take a bunch of your blood and now you run the race. And then next week before the game, I show up and I bleed you again. And what if I just bleed you every week? What if I bleed you every day? Are you as good an athlete? If you're not sure about this, try this experiment. But I think any athlete will tell you, no, you know, the goal is to have as many red blood cells and as much oxygen in your blood stream when you compete, not to bleed the blood out of your system. So when the government is telling you, you should use a currency, the currency is the blood of your corporation

or your family or your civilization. When I'm inflating the currency, I'm bleeding the civilization. And in the extreme, if you do this thought experiment, if I just double the currency supply in a banana republic and your company had whatever a million dollars worth of currency, but I double it and now it only buys half as much. And I double it again and it buys half as much again. You see, you see it's... Amazon presents Jeff versus Taco Truck Salsa, whether it's Verdei, Roja, or the orange one. For Jeff, trying any salsa is like playing Russian roulette with a flame thrower. Luckily, Jeff saved with Amazon and stocked up on antacids, ginger tea, and milk. Habaniero, more like habanier, yes.

Save the everyday with Amazon. Yeah. Now take it back to micro strategy. In 2020, we had 2,000 people working as hard as they could work. to generate $75 million a year in cash flow. And then we had $500 million of actual assets. And then the government was increasing the currency supply by 20% a year. At 15% a year, if they increase the currency supply at 15% a year,

then you're losing $75 million of capital value of wealth every year for the 75 million you're winning. So at the 15% inflation rate of the money supply, 2,000 people are working as hard as they can, doing 100,000 things right for an entire year to stand still. And if I crank the inflation rate up to 30%, I tilt the playing field such that you're running as hard as you can and you're falling backwards. So another way to say it is everything you do is worthless. Your time is worthless. Your life is worthless.

You're failing. Right? And then one more analogy, I put you in a rowboat and you row seven miles an hour and the wind starts blowing the opposite direction or the current is blowing the opposite direction and you're actually rowing as hard as you can and you're not moving at all. And then the current picks up and you're rowing as hard as you can and you're going backwards. But there's this point where you're rowing seven miles an hour and the current seven miles an hour and then you and you're in the middle of the Atlantic and you horrifically realize you're going to die because you're not getting across, right? You're not going to make it. And so what do you do? You reach down, you pull up the sail.

You can't row. You can't roll against current. You put up the sail. You catch the wind and let the wind blow you. You're going to have to change the way you do work. And in an inflationary currency, right, you probably can't outwork inflation no matter how hard you work. Unless you can grow your revenues, if you ask your boss for a raise 20% a year and you get it every single year, then, yeah, maybe you can outrun inflation, but most people won't be able to do that.

Why does it seem like older people are so resistant to the idea, why they're so resistant to change? And what do you say to Warren Buffett, who doesn't like it? Because he says it doesn't produce anything. I mean, Warren Buffett never invested in Microsoft, you know? He did Apple. Yeah, a guy that worked for him did Apple. And you know what happened? He made more money off of that proxy investment in Apple than everything else he did his entire life. everything it is entire life and so the truth

is the only the reason Berkshire Hathway isn't a failure right now is because he allowed someone that worked

for him to invest in a big tech idea, right? Why do senior people don't accept things? Well,

it's because generally once you get past your 40s you stop you stop embracing new technologies. Why?

Remember what Harvey said? Yeah. Well, how many people over the age of 40 will spend 100 hours to master a totally new idea? First of all, you have less interest in it. Second, you have less incentive. You don't need to. If you're already wealthy, like Warren Buffett is wealthy. He's not going to be unrich.

At that stage in your life, you're successful, you're wealthy. You've already married or not. You've already made a name for yourself. You've got nothing to prove. You know, meanwhile, your eyesight is failing. Your motor skills are failing. Your attention span is flagging. And your interest have shifted to your children, your grandchildren, or something else.

When you're 22, you have everything to prove. You've got no money, no fame. You're in search of fame and fortune, right? You're at your athletic peak, you know, your hormonal peak, you know, you're able to go harder, run, you're an athlete, right? You're an intellectual athlete. You're a physical athlete. And you have less to lose and a lot to gain, right? So, I mean, it's just human nature that the youth are going to embrace new ideas, A, because they can,

be because they need to. You're not getting ahead by doing what someone did 30 years ago. Why were you done it? Why were you different? Because it seems like you were also at the same place where you were wealthy. I don't think you had anything to prove. You had a great company. No, actually, the first time I heard about Bitcoin is 2013 and I was invested in Apple, making a lot of money on big tech investments and I was busy running my company and it was just the third thing, an oddity, a distraction, and I thought, it's interesting, it'll probably get banned. You know, famously, one of my tweets is I think it'll go the way of online gambling.

But I didn't need it. And I was busy with something else. So if you have other priorities and you don't think you need it, you'll generally be dismissive. And then you'll just, you know, did I spend 100 hours? But by the way, it was much, it was embryonic then, too. It was probably 100 X as risky. But in 2020,

As I said, the choice was a fast death or a slow death for my company. So coming back to Thomas Cune, why do people embrace new ideas? They die or a war. 2020, there was a war. I mean, there's a war on COVID. There was a war on capital. When you set the interest rates to zero, that's like trying to make time flow backwards. Right?

That's literally a, if someone said, oh, you have real estate, you're a real estate investor. I'm just going to set the rents on your real estate to zero and throw you in jail if you attempt to charge rent because the people need to not pay rent. Did that happen? Yeah. That actually happened to 2020. People said, you know, people aren't paying rent. So if you're owning a building and the political system said, you're building, you know, you can't pay rent, then all of a sudden, you know, your model gets broken, you better come up with a new idea. If you own a bunch of capital

and the government says we're paying you zero, let's say you have a million dollars in the bank and the government says, we're actually going to charge one percent interest. We're going to take one percent of your money in the bank. What are you going to do? Take your money out of the bank, maybe? Right. So what inspired you, you know, a war, a disruptive disturbance in the force of the universe. But now, what set you apart versus the other people who would simply say, I'm going to retire? This is a great point where I could step back and just take it easy. Well, that was my choice. Some people did as retire. Yeah. Again, our company was very unique. And as I said, like, I made a choice. Fast death, slow death, or take a risk. The fast death would have been retirement. Just sell the company and disappear.

right i guess i guess um everybody reacted to covid in lockdowns differently and i looked and i said well there's a hundred things in the world i don't agree with but i'm not going to be able to change those but this thing i can change like i mean i can do this thing i guess part of it is when when you're actually faced with you know this crisis situation or this this world turned upside down is there something you can do? And so if there is, then you do it. So we had a company, I'm the controlling shareholder of the company. So one advantage we had is I have the majority of the voting shares.

The second advantage we had is we had no debt. The third advantage we had is we had $500 million in cash, right? And the fourth advantage we had is I had enough background in technology and in finance to recognize the opportunity that was Bitcoin. and even having said all that, we still, I still basically offered, I paid $250 million for the ability to take the bet. It's like I offered to buy out all of my other shareholders

at a loss to myself, at a profit to them, so that I could bet on Bitcoin. And I did it because, because I thought it was the right thing to do. And the alternative was just to roll up shop and go away. and give up on life, and I guess I wasn't ready to give up on life.

How do you see the regulatory environment evolving for cryptocurrency, and do you anticipate any changes? Well, a week ago, I would have said it's grudgingly pro-Bitcoin and the rest of crypto is highly uncertain until after the election. But there was a massive political shift just this weekend, and this week, I would say, what we have is a political environment, which is pro-crypto, very pro-Bitcoin.

The Republican Party has gone from from crypto-friendly to crypto-passionate, and the Democratic Party has been to crypto, has gone from crypto-unfriendly to crypto-moderate, you know, you know, so one party's moderately, moderately supportive and the other party is passionately supportive. So the entire Overton window has just shifted. And I think that that's very auspicious for the asset class. What that means is that crypto is an asset class. It's a political movement that's too powerful for anybody to stop.

You know, there's no politician is going to win any votes by being anti-crypto. And probably they'll lose elections by being anti-crypto. And I'll lose elections by being anti-crypto. I think that's becoming pretty clear. There's a lot of things that would be helpful to Bitcoin, like banking custody of Bitcoin, like the ability to trade options on top of Bitcoin spot ETFs, like the ability to do cash or in-kind creates a Bitcoin ETFs and like institutional adoption of Bitcoin.

I think all of that will go forward now. And I think that there's a lot of interesting ideas in the crypto space, like stable coins, like crypto exchanges, 24-7 trading, crypto tokens, crypto securities, crypto art and NFTs. I think that there'll be a lot of enthusiasm

to put together a regulatory framework and there'll be a lot of back and forth. But I think at this point, we will arrive at a digital assets framework that allows people to much more enthusiastically, much more aggressively, build crypto-related projects. Who do you think,

think should regulate crypto? Do you think that should be its own division? Do you think it should be the government? Or do you think that should be the SEC? It seems like they're getting somewhat involved. I think ultimately Congress will make that decision. But if you break down the asset classes and crypto, you have digital commodities, an asset without an issuer reasonably decentralized. No entity can control it. That'll probably float to the commodities in futures exchange. Then you have digital currency, like tether, like circle, a stable coin. It's a crypto token that represents a dollar or a euro or a yen. It's hard to imagine that the banking regulators will give up control over that.

They're not going to want a shadow bank to be able to move hundreds of billions or trillions of dollars of dollars around without some banking oversight. So I would suspect the FDIC or Treasury or some banking regulatory organization and Finsen will be involved looking at digital currencies. There's an aspect of digital currencies that also makes them sort of security-like because whoever sold $100 billion of digital currency invested it and maybe they have the money

and maybe they don't have the money, right? So if I sell you a billion dollars of digital currency and I take your money and I steal it, okay? Well, that's a problem, right? So you kind of look like a bank, right? And so I expect probably banking regulators will probably get involved there. Then there's a third aspect, digital securities. It's a token that's being launched by an entrepreneur or by a company and there's, you know,

or maybe Tom Brady coin or something. And if Tom Brady launches Tom Brady coin, obviously Tom Brady has a lot of influence over the value of Tom Brady coin. And if Tom Brady says he's going to issue 10 million and he issues 100 million, then, you You know, that's kind of a securities violation, right? So I think that probably at that point, there'll be somebody like a securities regulator. It'll either be there, or maybe it'll go to Consumer Protection Agency. Like, if Tom Brady sold you a million concert, or maybe Katie Perry sold you a million concert tickets, but then she canceled the concert and she didn't actually give you the money back, like, who would you complain to?

Right? So I feel like probably there'll be some consumer protection agency that may get involved in a, and did. digital tokens that are issued by companies and celebrities. And then if there's digital securities, the Securities and Exchange Commission will get involved. I mean, the big question really isn't, it isn't, can I issue a token without disclosures and trade on a crypto exchange?

The bigger question is, why can't you trade Apple stock on a crypto exchange? Like, here's a company, Apple, everybody trust, you've got all the disclosures. Why can't I self-custody Apple stock on my mobile phone? Why can't I send a share of Apple stock from me to you on Saturday? Why can't I sell the Apple stock on Saturday night? Right. That's an interesting question, right? But it's totally ethical. It's totally progressive. Why wouldn't you want to be able to do that? And right now you can't? Do you think you can in the future? Because that's an interesting. in concept, if I want to transfer you my stock, you're right. I mean, it's, I don't think you can. So, see, the good ideas, the progressive ideas in the crypto universe and digital asset space, or the idea of self-custody, you know, ability to transfer peer to peer, ability to trade 24-7,

365, ability to write a program that will programmatically trade Apple stock on Saturday afternoon while I'm, or Sunday night while I'm sleeping, right? These are all very progressive ideas, right? They, they, they, all that innovation has been shut down in the traditional finance market for 40 years. There is no API to trade stocks on the NASDAQ, you know, like that, that an entrepreneur in South Africa can write against on an Android phone, right? So coming back to your question, I think ultimately the question of what are the digital, what's the digital assets framework is a legislative one. And that'll be worked out between the House and

Senate and the administration. I think that the question of which agency should regulate it, well, it's really a question of what's the nature of the asset? Is it a Katie Perry token? Is it a security? Is it a commodity? Is it a currency? And then there'll be a question of, well, you know, who regulates the exchanges, you know, will it be the commodities futures exchange or will it be the SEC or will it be somebody else, you know, and will the exchanges be able to trade all these different asset classes? The status quo or the conventional view of the administration last week was the only thing that a digital exchange can trade is Bitcoin and they wanted them to stop trading everything else. Well, that's going to change, right? That's changing this week.

And so when you have the digital assets framework come out, they're going to define all these things and they're going to define the safe harbor and then they're probably going to define who regulates what and there's going to be a political back and forth. I think that what's good for the world and what's good for America and what's good for the industry

is a clear digital asset. framework that allows people to pretty aggressively develop digital art, digital tokens, digital securities, digital commodities, digital exchanges, and then all of the mobile software, notal software, internet networking software, and bot software that actually creates value from these things. That would be good for the world. It would expand, it would grow the industry from $2 trillion to $100 trillion pretty quickly. it would create a lot of efficiency in the civilization and empowerment.

But, you know, I was of the opinion that all the prediction markets and all the, you know, like remember trade sports or 10 years ago, people can bet on the outcome of anything. I thought that was a really good idea. And the politicians shut it down. It was like online poker or online gambling. They did shut down a lot of online gambling. And even today, they regulated. So what's the best idea? necessarily what the political system will support. What you could say, optimistically, though,

is there seems to be a lot more consensus to do something. And I think that the likelihood as of two, three weeks ago, was nothing was going to happen until after the next election. Now I think the likelihood is something will happen before the next election or before the next administration and then whether we like maybe we're like two on the dial of one to ten of crypto adoption. We're like a two like grudging Bitcoin and everything else under question mark. And I think we'll get to a four or five by the next election. And then probably if you have a very progressive administration, they'll dial it up from five till seven or five to eight. And if we have a more regressive, skeptical administration, maybe it'll get to four or five and maybe it'll creep to six over four years.

So what do you say to the people who feel like they're too late or they see the price at 70,000 and they feel like they've missed the boat? It depends on what it is. I mean, the truth is the only thing I advocate is if you have a portion of your portfolio, that you don't, if you have money you don't need for four years, and you want to hold it for more than four years, for between four years and the rest of your life, that's your long-term investment portfolio, then you take a portion of that

and you buy Bitcoin, which is digital property. You know, if you, if you want a diversified portfolio, I would say you buy some rental real estate or some real estate you're going to hold as a store of value, maybe you buy a market basket of high-quality stocks that you think will last for decade or decades, or you buy the S&P index. And then you buy collectible items, trophy assets.

You want to hold your entire life, right? That's normally what goes in that basket of long-term assets. I think the apex property of the human race is Bitcoin. Bitcoin is Manhattan and cyber. space. If you think about investing in Manhattan as a good metaphor, the question is, is it too late to invest in Manhattan? Well, was it too late in 1680? No. Was it too late in 1776? No. Was it too late in 1865? No. Was it too late in 1914, no, 1945, no, 1976, no, 2000, no. What is the story of, and why is that, by the way, it's because Manhattan's built on an island, there's a limited amount of land, it's the nexus,

the commercial, the commercial center of the North American Trade Network or the Western Trade Network. Everybody with money and power wants to go through or needs to go through Manhattan at some point in time. That's been the case for hundreds of years. Everyone that ever bought real estate in Manhattan bought it from someone that paid less for it than they're currently buying it for, right? And why does it keep going up? It keeps going up because we keep printing more currency, right? And so scarce desirable assets go up forever. And in this case, is Bitcoin's safer investment than Manhattan? I think so because Manhattan competes with Tokyo and London and Paris, and Manhattan is just a physical city. Bitcoin is the center of the digital commerce or of the digital

economy. It's like the capital city. It's the nexus point of the entire digital economy. And it has appealed to everybody on earth speaking every language. You could think of it. is a city that's 276 blocks high, 276 blocks wide, 276 blocks deep. That is the integer cube root of 21 million. And when you're buying one Bitcoin, you're buying just one of those blocks. That's how many there's going to be for 100 years, a thousand years. No one expects there to be any more. And why is it a useful thing to buy?

Because it passes the Bernard Arnote. The Bernard Arnaud test says, I have a lot of money. What should I invest it in? I should probably buy something that someone richer than me, more cultured than me, smarter than me, will want to buy from me in 10 years. So when you look at the things you own in your portfolio and you think, will the smart money or the global, will all of the global, intelligent, wealthy class, will they want to buy that from me?

And if it's Picasso, probably yes. If it's 25 blocks in the middle of Miami Beach or 25 box in the middle of Manhattan, probably yeah, right? If it's the Magna Carta, probably. Maybe it's a trophy asset in the civilization. But Bitcoin is the most popular, most well-known financial asset in the world

that is an investment. I mean, it's second to the dollar, I suppose, as a pure financial thing. Everybody knows the dollar, but the dollar is not going up in value measured in dollars. So the dollar is only an investment asset for people in economies with hyperinflation. If you went to 10,000 rich families and you said, how'd you get rich, not by buying dollars? How'd you get rich? Not by buying gold. Now that you are rich, what are you going to buy?

Dollars? No. Gold? No. What are you going to buy? A sports team? Maybe. Leonardo da Vinci paintings?

Maybe. The magnificent seven stocks? Maybe. A Bitcoin, digital property, maybe. The one thing that's for sure they'll say is property. I own buildings and property in London, Paris, Tokyo, New York, San Francisco. Francisco, L.A., Miami. They're the ones that own the three acres on the beach in Palm Beach that's worth $250 million right now. That's what they're buying. And why? Because they know that everybody else with

money in the world is going to be competing to buy that from them if they want to sell it. And because it's scarce desirable. Now, the perfect capital asset is something scarce, desirable, and portable, durable, maintainable, right? And what is that? That's Bitcoin. What was that over the last 500 years? Maybe trophy art. If you're a wealthy person and you're in the middle of a hyperinflating economy in Argentina or Russia or Nigeria, what are you going to get out of the country with you? You can't take the gold. You can't take the building. You can't take the company. You can't take the land. What can you take? You're going to roll up your Picasso and you're going to fly out of the country. I hope you can smuggle it. How would you compare that with something like a board ape? A board ape is art. Okay. And so I'm not an art investor. Like, the issue is the millennials probably want the board ape more than they want

the Picasso, right? Right. When you're buying into art, right, there's the question of the community and the cultural reference. And there's very scarce, desirable Japanese art that has no value maybe to a Russian. And there's scarce desirable Chinese art. and scarce desirable Western European art and, you know, and modern art. And of course, the people that love classic art

hate modern art, but people that love modern art don't want to own classical art. So art is a segmented market of assets and their collectibles and they're all interesting. But the point is there's a thousand of those markets. So help me understand what happens if we go like 50 to 100 years in the future with Bitcoin. if the havings keep happening, when they keep happening, and less people are mining, if fewer

people adopt it because the mining is worth less, since you're mining less, and if fewer people adopt it, because it is such a complicated thing that you kind of do have to make that access to information of why it's valuable, very simplified to be adopted by many people. And it also seems like it's the world around it needs to keep failing for it to continue getting value. So provided those are all true, then it will continue to grow and people I'm guessing will continue to mine

it. Sure, even if it is, yields lower quantities. But let me break them down one at a time. The reason it's Bitcoin is valuable is because if I gave you a billion dollars and dropped you in Nigeria and said

buy anything you want anywhere in Africa, but you have to hold it a hundred years, there's not a single thing you would buy anywhere in Africa that you would prefer to have rather than a billion dollars of Bitcoin. Nothing. There's nothing in the entire continent. So the value from Bitcoin comes from the fact that there is nothing to buy in Cuba, in Venezuela, in Argentina, in Africa that you can put away for 100 years and you can put in your pocket or move anywhere on earth. So the appeal is global digital property rights or global digital capital. The reason

that Apple works is because a billion people want an iPhone, whether the world stinks, whether the world is chaotic at war or not at war, people still want a billion iPhones because the iPhone's a good idea and it's a better idea than a pad and paper a hundred years ago. And the reason Bitcoin works is because I can put all my money on my phone and zap it at the speed of light and no one can steal it from me and and I get rich. So the point is the getting rich and having freedom and having power, you know, in power. Why will AI work? Because I can ask any question to my phone and it will answer. It's going to work whether the world is screwed up or not. It's just that in a world that's screwed up and it's a life or death decision and you need to ask a question and get an answer in five

minutes. Maybe it'll save your life. Yeah. But it doesn't have to save your life. It's just a good technical idea. Now, go ahead. You have a follow question. How are you so convinced it's going to be going up in price 20 to 40% a year over the next, let's say, 10 to 20 years? You have to buy something with price supply inelasticity. So what is the one thing on the earth that you can buy where they can't make more of? I would say beachfront real estate would be one of them, but also Bitcoin. Beachfront real estate is the closest conventional idea to a scarce desirable asset that the politicians can't make more of. What is it the government can't print more of? They can print more bonds.

They will issue trillions of dollars of bonds. They can print more currency, so don't buy that. Corporations can manufacture more Hershey's bars and more Kellogg cereal and more Netflix can stream more videos. Right? So anything a company can create more of, a factory you don't want to buy. Anything an AI can create. Yeah, you know, you want to buy, you know, art rights. Well, if the AI can generate infinite free art personalized, then those rights might not be worth anything. So you don't want anything a robot can do. You don't

want anything an AI can create. You don't want anything a manufacturer can create. You don't anything a politician can create. You ask the question, what's the thing that's least likely to be taxed or expropriated seized from you? Okay, and so Bitcoin's interesting and beachfront property is interesting, but beachfront property is, it's illegal to buy it in certain countries. In the UAE, you couldn't buy it if you wanted to. You have to be a member of the royal family to buy it. That's actually a law. In Florida, the beachfront property comes with a 2% property tax. So that means that you can buy it, but you're going to have to come up with an equivalent amount of cash to pay the tax to keep it for 30 years. But another way to say it is over 30 years. years or 20 years, the state's just going to take it away from you. So maybe you want to buy some floating property that doesn't have a 2% tax on it. And the advantage of Bitcoin is maybe Bitcoin isn't property in Florida. Bitcoin, but you can buy beachfront property in Wyoming. I guess you can't, no, right? So how do you move your beachfront property to Wyoming? Tricy. With Bitcoin,

you can actually move your Bitcoin from Florida to Wyoming, and in the worst case, you could put it with a custodian in Singapore or Monaco or London, right? Carry it with you. So it's less likely to get a property tax. If you own the best building in a country where there's a coup d'etat, they're taking your building. Look at what happened to everybody that owned property in Cuba.

Castro took it all, right? And so you're asking the fight. fundamental question. Why do I think Bitcoin will keep going up? Because every other investment is being diluted. It's either being, it's being mismanaged. You know, like, you want to buy Kodak stock or Xerox stock? How'd that work out for you, right? Either your competitor destroys you, the management team destroys you, or it gets unionized. What happened to, you know, if you buy a car company gets unionized and then it gets bankrupted by the union, maybe that wasn't a good investment. So companies have tariff risk, union risk, competitive risk, tax risk, execution risk, nexus risk.

Alibaba was a good company, but maybe they can't do business in the U.S., right? So did you want to put all your money into a company that will get banned in the country you live in? That's the challenge there. All that stack of risks, you can easily say that adds up to about 7% per year. If the return on the S&B index is 7%, if I could get the risk to go away, the return. would be 14%. And so that's what we call equity risks. And there's a bunch of them. But if I go to property, real estate, maybe the real estate gets rent controlled. Maybe the real estate gets taxed. Maybe

the tax increases. Maybe the real estate is struck by a tsunami. Maybe the real estate rust. Maybe the real estate has the neighborhood goes bad. Maybe people stop coming to the city, right? You're the best real estate in a city that died because the industry died. Right. Maybe the country fails. Maybe the state fails, right? Real estate, in theory, is scarce desirable. But, you know, we can make more land. Half of Miami Beach is all just manmade. Half of Boston is manmade.

Look at Emirates. A lot of man-made stuff. Go to Monaco right now. If the value of your land goes up too high, they just build out and they'll reclaim the ocean. The entire airport, Hong Kong, is made on reclaimed land. So even land itself isn't truly scared. And, of course, ultimately, there's plenty of real estate in the world.

I mean, if you fly over the United States and you look down, you'll notice that 98% of the country is not occupied. Land doesn't make a good treasury asset. The ideal asset for a corporation or a wealthy person is an asset which is liquid and fungible. So I've got a certain amount of money. and on Saturday afternoon, if I need to raise cash, is there's somebody somewhere in the world that will create a market for the thing that I have to sell? And there is a market for Bitcoin on Saturday afternoon worldwide.

In fact, it's the greatest global market. There's not a market for your ranch in Texas on Saturday afternoon. How does it differ from the ETF? Because you're talking a lot about self-custody and having complete control over your assets. with an ETF, is that a reason against buying it? Or do you worry that an ETF might be at risk of someone else's management? You should think of Bitcoin is like it's the granite underneath Manhattan.

And you can build a 10-story building, a 100-story building, an apartment building, a townhouse. You can build a park. There's a lot of ways to use the granite. So you're like, well, do you want to live in your own townhouse where you can walk out on the street? or do you want to live in an apartment 35 floors up where you have to take the elevator? The ETF is the 100-story building where you've got to take the elevator. You know, what's the problem? Well, you trust the building.

What's the benefit? Oh, it's 10 times cheaper and easier to live there. And maybe you can't afford, you know, to buy the townhouse. Right now, today, I think there's 28 different active ETFs. Okay? So there's ETFs in Hong Kong. The Chinese government, the Hong Kong government may not let you invest your funds in Bitcoin. In fact, they'll make crypto trading illegal, but they'll let you buy the ETF.

How about the ETF that will come to China? You'll be able to buy that and get Bitcoin and get the benefits economically of Bitcoin, but you won't be able to buy the underlying Bitcoin. And so what do ETFs do? Or they meet the need for people that have stranded capital that's locked up in a a 401k? You might have money in a 401k and you can either buy the S&P index or you can buy Bitcoin, but Bitcoin will double the S&P index, but you can't get your money out of the 401k. Maybe it's impossible to get out. Maybe you get taxed on it. The ETFs are securitized versions of Bitcoin.

They're applications of Bitcoin that meet a certain need. Now, why do the Chinese, maybe they might want you to buy the ETF and not buy the underlying Bitcoin? Because the Chinese don't, want capital to flow out of their country. They have capital controls. It's illegal for a Chinese citizen to move more than $50,000 a year out of China. So you have $100 million in China. Your choice is lose it all, inflated away on stupid, bad investments, or buy a Bitcoin ETF in China and then double it every three years. Is that good for you? Yeah. Is it good for the Chinese nation? Yeah. It's actually good for the nation and good for the investor. Okay, well, what What'd you do? You trusted the custodian of the ETF. That's the negative. Is it as good as owning the

Bitcoin outright? Theoretically, no, because you've lost the ability to switch custodians and you have to trust a single counter party. But this falls in the category of you don't have a choice. Your choice is lose all your money or have a wrapped version of Bitcoin. The wrong way to think of it is, hey, I self-custody Bitcoin, is this better? The right way to think of it is 99.9% of the money in the world is not invested in Bitcoin. Bitcoin's a trillion out of a thousand trillion, right? So 99.9% of the money is invested in something else. How is that money going to flow into the ecosystem? And ETFs will be, one of the solutions to actually pull that money into the ecosystems.

And it's not about diminishing the value of Bitcoin. It's about improving the value of your ETF. It's fixing the ETF. If there's hundreds of billions of dollars invested in defective ETFs, the ones on Bitcoin are not defective anymore. So, in fact, you're fixing that part of the economy and the money is full. this way. In order for Bitcoin to continue increasing in value, what things need to happen, if I were to rephrase my question from earlier, which would, I'm assuming, would be more people

need to know about it. The information surrounding Bitcoin, all that context needs to be simplified, and surrounding economies need to continue failing. I would say it like this. Bitcoin is succeeding. it's succeeding faster than any monetary economic idea in the history of the world. It's gone from zero to $1.4 trillion in 15 years without any support from a company, without marketing, without anything. So it's growing. It's going to continue to grow because of the following drivers. One driver is just education.

Information spreads. Like you said, you know, 10 million people can watch. a YouTube video. 20, 30 years ago, if I retired and I taught college and I taught a thousand students a semester and I did it for 20 years, you know, I might get to 40,000 people. Now you get that many a week, you know, while you're sleeping. So information is going to spread. And as people realize this is a safer, better way to protect their wealth, to store their

life savings and to create wealth. and as companies realize it, you're going to see adoption by individuals, by families, by corporations, by nation states, by governments, by institutional investors. That just happened, that is happening right in front of our face. We're watching it every day there's $100 million or more flowing into the ecosystem. So the second thing that's going to drive adoption is regulation and regulatory clarity. as regulators, like when the House of Representatives in the Senate vote pro-crypto, pro-Bitcoin, and if the White House says we are in favor, that's sending a signal to the establishment

that traditionally is very conservative, you know, and people thought, well, it's tulip bulbs, the deniers, they go away, the skeptics go, the government's going to ban it. Well, they go away because if the government's embracing it, then the deniers are out of consensus, the skeptics are dismissed. And now you're into the traders. Well, should I buy it? Should I sell it? Well, that's a big deal to move from skeptic to trader. And then you get to investors. And eventually, of course, you get to the maximus to think it's an instrument of economic empowerment. Regulatory signals matter. And we've got 28 spot Bitcoin ETFs active today. They're active in Australia, in Hong Kong. They're active in Europe. They're active in South America.

in America. Those things are marketing, legitimizing, and spreading, and they're creating a channel. An ETF is like a website. Like if you have a restaurant or a museum and you didn't have a website, people have to call you on the phone to get information. It's very inefficient. And then when the web came along, you create your website, you know, museum.com, food.com. I hit the website. I see the menu. I see the location. I get directions. I see the photos. You know, maybe I order.

Right now you can't really be a business without a website. You know, you need a website. With ETFs, what ETFs did is they said, well, it used to be you had to go to a mutual fund, and it took you like six weeks to get KYC with the mutual fund, and then you had to study it. And then you had to wire them your money, and then they invested it. And if you wanted your money out, you had to make a request, and you had to wait 30 days and maybe they don't give you your money back.

And, you know, it's very complex. located and scary and takes a commitment. And when the ETF came along, it was like, oh, you want this, you just punch in those four letters and hit buy. Or you change your mind? Hit sell. And who wired? Every brokerage in the world, every monitor in the world, is that you type I-B-I-T, you type F-B-T-C. There it is. So having that ticker is like having the URL, hope.com. And it's like all you got to do is say it. and everybody immediately is empowered. So those ETFs, they're spreading everywhere in the world, and you're seeing financial infrastructure get created.

And what's the impact of the honor at? Well, billions of dollars, and then tens of billions of dollars, then hundreds of billions of dollars flow. Companies like micro strategies, when we adopt Bitcoin as a treasury asset, we had none, and then we had $250 million, and then we raised $7 billion.

billion and then we bought and then we had 15 billion but then people will go and they will short our stock and they will buy 5 billion more so there might be 20 billion dollars probably there's 20 billion dollars or something like that of bitcoin that's that's actually locked down because one company what happens when the second company the third company the fourth company the fifth company so so corporate adoption as a treasury asset drives the price up adoption by individuals drives the price up, you know, there's company millennium. They just announced they own $2 billion worth of spot Bitcoin ETFs. That means that some, the ETFs had to buy $2 billion worth of Bitcoin, right? Just one hedge fund. They've got $64 billion, right? As these hedge funds come in,

then they drive adoption. So beyond that, you've got to keep advice of technology. And so take out Cash App and look at it. It's all about Bitcoin. Cash App is used by more than 50 million people, and they sell two and a half billion dollars worth of Bitcoin a quarter, 10 billion worth of Bitcoin a year or more via that phone. When companies like Apple and Google and Microsoft, when they build support for Bitcoin into their payment apps, into their mobile phones, into their operating systems, that makes Bitcoin more compelling. That'll drive demand. That'll drive up the price. And by all of those are just natural things. that the human race is going to do, you mention a driver which is chaos, chaos and inflation

in the world. Yes, that's a driver too. The more chaotic the society, the less, if I don't trust the currency, I look for an alternative one. If I don't trust the bank, I look for an alternative of one. If you lived in Lebanon right now and you just watched 98% of your wealth frozen by the bank debased and then the bank wouldn't give you your money back for 20 years. And I said, well, what do you think about the idea of buying property that's not in Lebanon that's not in the bank that keeps go up in value that you control and then no one could take away from you? You would think, well, I wish I'd known that five years ago. But like you would swear by it. In that, those societies, crypto adoption accelerates, go to Brazil, they had hyperinflation. They

remember, they're very pro-crypto, pro-Biccoy. And you look at people in Venezuela or Cuba, what else are they supposed to do? But I think it's important to make two points. One point is you don't need the world to burn for people to decide that having all their money on their iPhone is a good idea. Right? The world doesn't have to burn for you to take photos with your iPhone. Apple would be successful regardless. It just happens, right, that the more chaotic certain parts of the world are, the more there's a stampede of capital toward the thing that's safe. Everybody would come. Everybody would move to the United States with all their money if they could. I'm just curious. How much leverage do you feel like is in the Bitcoin market? And do you ever worry that maybe with the

ETF's buying up Bitcoin, driving up the price, that there is a chance if people over leverage that could cause a flash crash of sorts. Most of the leverage is in the crypto market. It's in all the other altcoins. Like those altcoins are 10x to 100 to one levered. And so all the leverages in the altcoins and most of the volatility in Bitcoin comes from the alt coin leverage. The Bitcoin market isn't nearly that leverage. People that are buying Bitcoin are buying Bitcoin as a long-term store of value. And so they, they're, they're generally buying it to hold it forever.

But there's a lot of speculation in the rest. And, you know, you can't stop them. It's a free unregulated market. They do what they're going to do. I'm not discouraged by the volatility in Bitcoin because the volatility makes it the most interesting asset in the world. And that's what draws all the capital. And that's what draws all the traders.

And that's what drives up the demand for it. And that's what drives up the price. So, in fact, the volatility is, virtue. On Saturday night, if you think there's a war, you're going to dump what you can sell, which is Bitcoin. But when you realize there isn't a war, you're going to buy back in, and there's going to be massive trading. And people that understand are going to say, hey, that's part of the asset class just growing and getting more powerful. And people that are afraid of volatility will run from it. But, you know, Bitcoin's got a higher sharp ratio. It's got a, you know, and it's got a higher

return. It's like, do you want to five X your money? and be on a volatile way, or do you want to lose all your money in a non-volatile fashion, or do you want to just one-ex your money in a normal volatile fashion? And that's an issue of adoption or education. But coming back to long-term, long-term, what happens is this is an idea whose time has come. It's good technology. So every technology investor and every technology executive it was going to recognize that. It makes their company better. It makes their offering their device or their service more compelling. It's good economics, which means that you inject it into your mutual fund or into your fixed income fund or you injected into your ETF, right? You know,

Larry Fink runs $10 trillion of assets on television the other day. He said, our Bitcoin ETF is the most successful ETF in the history of the marketplace. Okay. So, you know, people that might might not have a different opinion, say, this is good business. Why wouldn't it be good business? Because it's the highest quality asset, right? And it's good ethics. You're giving property rights and freedom to 8 billion people. What else does it?

So it's got a strong ideological drive. And back to the point that I was making is if you live in Cuba or Africa in a coup or you live in a hyperinflating economy in Russia or in South. to America. If you could, you would take all your property, all your money, all your family. You'd pick up, you'd move to America. But you can't. You can't move your property from hyperinflation collapse to America. And you can't move your family. There's, there, there are limits to immigration and there are, there are practical limits. The next best thing is you teleport your money into cyberspace, which is almost,

better than moving it to America. I'm moving it into cyberspace outside of the reach and outside of the risk zone of the physical world and the political world and the economic world. That's the appeal of Bitcoin right now. Now, you ask one more question about miners, and I didn't address it, but I probably should. Bitcoin's secure because it has this massive, diversified, decentralized network of Bitcoin security data centers, which we call miners, but they're really driving up massive hash rate to secure the network. They are subsidized by a Bitcoin block reward, and they're also subsidized

by transaction fees. The block rewards, for the most part, run out after the first 30 years of the network, you know, between 2009 and, you know, in 2000. We will have mined 99% of the Bitcoin by 2035. So that's running down, but the transaction fees will grow and are growing over that period because there's a scarce amount of block space. You can maybe process 30,000 transactions an hour. And if you want to move your money or you want to do that transaction, that's a limit. you have to put a bid to get your transaction in the next block.

People are going to bid high. If I want to move a billion dollars, I'll bid a lot of money. If I need the transaction to take place, I'll bid it up. The more people in the network, the more demand for that transaction bandwidth. What would you pay to sell $10 million worth of real estate in New York City today? You might pay a million dollars. You might pay a million dollars in transaction fees. Transaction fee economy works just fine for real estate, right?

There's no block reward for real estate. People don't just get a bunch of free real estate every 10 minutes for being in the real estate business. They all work on the basis of a commission. The same is true in the financial markets. So there'll be commissions and fees to trade. There's a very limited amount of transaction space. The fee will go from a few dollars of transaction to $30 a transaction to $300 to $300,000 to $30,000. to 300,000.

And that being the case, there's no reason to think the mining ever stops. It will be more efficient. In a world right now, I guess you have a trillion dollar asset class and the Bitcoin miners get paid $10 billion a year. So the cost for the security, right, 10 billion a year is like 1%. right? The fees will trend to be less than that. And so that that one percent security cost will probably become half a percent, a third of a percent, a quarter of a percent, a quarter of a percent, a tenth of a percent. But there's no reason why the revenues can't go up while the value

that's protected goes up. And the incentive is always going to be to run the equipment. Even if the transaction fees aren't high, once you've invested $100 million, in Bitcoin mining equipment, it's a sunk cost. You can't repurpose it to anything else. If your electricity is free, and if you have $100 million of equipment, then it doesn't matter whether you make a million a year, 10 million a year, a hundred million a year.

You would run it for a million a year. You would run it at 99% lower price because a million a year is still better than nothing a year. The electricity is worth nothing to you. A third of all the electricity in the world is valuable. It's wasted, stranded. We've got too much. You have a dam.

Nobody wants to buy electricity from the dam. The water just flows over the dam. Right? Or you can mine Bitcoin. So the genius of the network is everybody that gets into Bitcoin mining does a one-way trade. You take a billion dollars.

You invest in in Bitcoin mining. You can't get your money out. You can go bankrupt. The equity holder can go bankrupt. then the creditor gets the Bitcoin mining. The debt holder can go bankrupt. Then the electricity company, the power company, gets the mine. The power company can go bankrupt.

The nation state, the sovereign that owns the power company will own it. If you notice, electricity companies never go bankrupt. Maybe they're owned by the state or they're owned by the country. But people decide they want electricity and they'll keep running them. There's no way to turn them off. And that's why even in a crypto winner or bear a market, the hash rate just keeps going up. It's a one-way silicon ratchet.

And it's like at an eight to 10-year natural frequency. It's like eight years after the business became awful, my equipment starts burning out. But you see, even if the equipment burns out, like people bought, they would buy Bitcoin mining rigs for $10,000 at the height of the bull market, and then the market price crash. and then they're buying the same rig for $1,500.

So the price of the equipment will compress by 90%. The price of electricity will go to zero. How does it go to zero? Everybody that's just mining on expensive electricity goes out of business. So when they go out of business, where does their equipment go? It migrates to the next buyer. Who's the buyer of last resort, someone that has free power? There are actually places where the power is negative cost.

where people will pay you to take the electricity. You know, that happens on solar and wind grids, where the sun is shining, the wind is blowing, and we're going to burn out the grid unless you take the power. Wow. Right, you see? Yeah. You know, and it happens if I'm flaring methane gas

or if I'm flaring natural gas, the regulator says to you, if you don't actually use this, if you don't cap the flare and use this, then you have to write off and close in the well, and then you take a $100 million write-off. There's always going to be people that are going to want to mine Bitcoin, and there will always be a market for Bitcoin equipment that's used.

And you want to be a doomsday? Well, okay, 10 years later, all the Bitcoin mining rigs all burn out. What happens? Well, what happens is the big semiconductor manufacturers, like Bitmain, already have the engineering specs. They will sell this equipment at a very, very, very. margin of 3% right you know what does it cost for a 386 chip you know or what does it cost for for 30 year old computer right at some point you manufacture it for 5% of the original cost it gets

insanely cheap like they put they put computer chips and greeting cards now right and so you're working your way down this manufacturing curve and this moors law it's just like the truth is guns are cheap. They're too cheap, right? You could buy a gun for $100, right, that works. What you have here is a network defended by technology, and the technology is a one-way function, and the hardware is one-way investment. You can't unknow how to, you know, how to set off an explosive. You can't unknow how to build an ASIC. But now that you know how to manufacture it, and now that you own it, what can you do with it? There's only one thing you can do with it. The only thing you can do with it is to provide security for Bitcoin.

So it's a quite elegant engineering design that I entice so many engineers to invest so much money to simply defend my economic rights against those who would steal from me. Do you think that the government would just forego control of the economy? I feel like I wouldn't think that the United States would do that if Bitcoin got to the point of being used as a currency and being traded and kind of, you know, it's not traceable. It can't be controlled. Yeah, it's a good question. It's a good question.

Has only ever increased their control over time. So I think the important point there is it's not a currency. Like a currency properly defined would be a medium of exchange that is deemed legal tender by the nation state. So if I give you 15 bucks, you know, for three cups of coffee. it's tax-free. It's a tax-free exchange. If I give you $15 of Bitcoin for that coffee, and if I bought the Bitcoin a year ago for $5, I just generated a $10 capital gain, and I owe $3 to the government in tax. So in fact, for me to pay you in Bitcoin cost me $18, not $15. And I generate $87 million accounting transactions, which will break your brain. So, as a practical matter, currencies are established by nation states. And when a nation state deems the asset to be legal tender, they give a corporation or an individual the right to trade it tax-free. And that's a pretty big advantage.

That's a big enough advantage that no company in the United States will ever. Like no company will ever trade Bitcoin high speed to pay things or to pay bills because with normal volatility, you can show mathematically that everything costs 20% more if you trade it and it's not legal tender, you see? So nobody's stupid, right? Why would you pay 20% more for everything you buy and accept 20% less for everything you sell? So it's not a currency. And if you think of it as a currency, you invite all sorts of concerns and risk, like it doesn't fit with the accounting systems. You know, the only way to trade as a currency is not pay your taxes and not admit it, but then now you're a tax evader, right? So that takes you to a difficult place.

If you just say it's capital, right, money, medium exchange, store of value, while the store of value element of money is capital. Capital preservation. I'm keeping my, it's my savings account. I'm going to hold for 30 years. Currency checking account I'm going to spend in this month, right? So if you think about it as capital, then, or as property, I bought a building. Did you intend to use it to buy coffee tomorrow with? No.

You bought a building. Why'd you buy it? Because you wanted to store your capital. You thought it would double in value in 10 years. That's why you bought the bill. It's an investment. So when you think of it as profit. or think of as capital, then all of those concerns disappear. Now, if you look out at the future,

companies, as long as they exist, will issue equity. If Apple and Facebook and Google exist, they're going to issue equity. Equity will not go away. Is it an investment at a certain price, you know, if you can buy the stock and it has a 22% dividend yield, it's a good investment. If it's too high, it's a bad investment. So there's a, there's a natural market. acquiring price where equity is an investment asset. How about property? People buy real estate, Airbnb's buildings as an investment. Is it a good investment? If it has a 15% or 10% rent yield and it's going up 10% a year in value and it's a good desirable place, then it's a good investment. If the rent pays 2% after tax and it's in a crappy place and it's not going to buy it's a bad investment.

So real estate is a good or bad investment. So property will will say, here. The city of New York, a city of London or whatever, they will issue bonds. As long as your municipalities and states and they can issue bonds and they can borrow money or countries, they will issue bonds. Will you see sovereign debt, municipal debt, state debt? Sure you will. Is it a good investment? Not normally, but credit's not normally a good investment. If it paid 10, 15% interest and if the currency wasn't collapsing, then it might be. But if it pays 10% interest and the currency is collapsing at 20% a year. It's not a good investment. But will they do it? Yeah. And who will buy it? You know, the governments will buy it from themselves. You know, central banks will

buy their own bonds, institutional investors, regulated banks, regulated banks, regulated corporations, the state power company, they will buy municipal bonds because they're required to by their charter. And so that will circulate. Countries, the United States will issue the dollar. China will issue the C and Y. The Euro will issue the Euro. How long will that go on until the nation states collapse? Where does it collapse? Well, you know, half the countries in Africa don't have a currency. They use the CFA, the colonial franc, right? They literally don't have a functioning currency their own, you know, and El Salvador doesn't have a currency. So those countries will, they will either dollarize, or they will use the CNY, or they'll use the EU, the euro, or they'll use the CFA. Or

they'll use the CFA. And so where does Bitcoin sit in all of this? It's an asset in a portfolio. It's global property. Everybody else doesn't have to fail for Bitcoin to succeed. Right? When we're preaching Bitcoin going to $100 trillion or $200 trillion, that doesn't mean you might not own a building.

Is my building a, is my, you know, beachfront property in Palm Beach a bad investment? well, not necessarily, but there are certain assets that are quote unquote monetized. That is, people buy the asset just as a store of value over and above the utility value. Gold is an example. People that are buying gold as a store of value probably are, you know, 70, 80 percent of the value of gold is monetary value. And the last part is utility value. One could think that over time, Bitcoin will demonetize. gold. There's a scandal in Canada where people, the Chinese were coming, well, the narrative was,

the Chinese are coming into Canada, buying up all of our apartments and all of our houses and driving the price of housing up. Well, I mean, maybe also the Canadian government was printing a lot of money, driving up the price of housing too. And maybe corporations were buying up property because that was the best way for them to invest their shareholder capital because they had a lot of money. The problem with that is that the houses, you know, tripled in value, but the wages of the people that want to live in the houses don't triple. And so if you triple the price of the house and if you double the interest rate, then the middle class, working class person can't buy a house. That's an example of monetizing a useful asset to the detriment of the society. What should happen is the people that were buying the houses as a store of value should sell that real estate.

buy Bitcoin with it, the price of the houses will become more affordable, and then, you know, 20-something starting their career can buy a house instead of living with their parents. The world is rationalizing when people don't irrationally buy assets in order to avoid losing their money, right? In the extreme, if I tell you all your money is worthless next Monday, you stampede to buy anything you can buy and you monetize soap and you monetize toilet paper and you monetize you see where I'm going with this it's like like when I panic you you monetize anything because you don't want to be holding worthless paper better to own food you know where do you get all of your knowledge from

are there websites that you look at are you drawing for personal experience is it mentors there's a lot of information that circulates on the internet I mean so some comes from ex-twitter Some comes from YouTube. There's a lot of depth in YouTube. A lot comes from reading. You know, read the story of civilization by Durant. Read History of Economic Thought by Murray Rothbard. Read, you know, there's infinite books.

You can download. There's audio books. And, you know, you can listen to them while you're running, walking, exercising, and the like. I would say it's that combination of podcast, books, you know, informative, informative stuff on the internet, on YouTube, and then the real-time stream coming off of X that I get most of my information from. Like what podcasts? Well, you know, like Lex Friedman, you know, he just does these really in-depth interviews. That's a good source. you know, all the Bitcoin podcast, they will touch on economic history, protocol history, current events.

You know, when you hear people talking about Bitcoin is useful as a lens because if you hear someone from Argentina describing what it means to them, then you get the conditions on the ground in Argentina from an economic, a practical economic perspective. It focuses you, right? And when you hear someone talking about what it means in Iran or you look at, you know, what's going on in China, what's going on in Russia, what's going on in Europe, or what's going on in Iceland or what's going on in Canada or Australia, right? What you've got is crowdsourcing of macroeconomic information. You're not hearing it from the talking heads on cable television. I mean, another source really is, you know, financial news, CNN, Bloomberg, CNBC, all these things. But those conventional news sources, and, you know, the New York Times, the Wall Street Journal, etc., those conventional sources, they tend to filter the information in a conventional fashion.

So there'll be a big debate about the unemployment number coming in 0.1% high, and is it 3.2 or 3.1% this month? But really, 40% of the people don't have a job. And maybe 70% of the people of the world don't have a job that they can sustain them. but the debate will be over the 0.1% on the faux metric, and it doesn't really even matter, right? So the conventional channels are useful because they tell you what conventional thinking is. It's good to know what the conventional traditional institutions are thinking,

but you have to go think for yourself. And if you want to understand, for example, what's going on in the crypto economy, like, you know, Fit 21 is a bill that passed by an out. Avalanche, a landslide a day ago in the house. It's 494 pages long. You can go click on it and download the PDF and start reading. So I think listening to congressional testimony, which is now available, you know, and, you know, Gary Gensler's the chair of the SEC.

He taught a class at MIT. The class is online. So I went and I took the class. I was a few years late, but luckily, nothing ever dies on the internet. So if you listen to 24 hours of lectures that date back to 2018 and by the person that runs the SEC today, and you listen to every word, and then you read every word and every utterance, and then you listen to all the congressional testimony, and then you read all the bills, and then you talk to 100 people in the industry, and then you listen to a thousand podcasts, you know, and if you have a laser-like focus, then you can synthesize. Where do you have the time for that? Is this all you do? And how do you have a laser-like focus?

Do you think that you've learned that? Or do you think you were just kind of born with that? This is just an exercise in humility. There's a hundred things in the world that we could talk about that I might have an opinion on. And there's someone in the world that's passionate about that thing, you know? All hundred things. There's someone that's very passionate about diet or medicine or dentistry or politics in the UK or soccer or the future of women. basketball or, you know, fill in the blank. I mean, there's people that are passionate. But

what I've come to conclude is in life, you're lucky if you can gather enough information to form a meaningful opinion on one thing and to be useful in one area, right? If you want to be the domain expert, right? So I feel like laser-like focus, laser is the right metaphor. I have a flash light, it'll go so far. A laser might go 10 miles. Well, how? You're focusing, you're giving up the ability to project light every other way. Yeah. You know, you have to make sacrifices. And so in my case, yeah, I mean, I was the CEO of micro strategy and now I'm the executive chairman, but one reason I stepped down two years ago, and I put another guy as a CEO, and I just took the executive chairman role is that allow me to spend 100% of my time thinking about digesting what's going on in the

Bitcoin crypto economy and figure out what's good for Bitcoin, right? What's good and how best to advocate, adopt, commercialize, evangelize, and even raise money to buy more. And I thought that was a pretty good use of my time. The CEO of a 2000-person software company has to be concerned with the careers of 2,000 people and 10,000 customers. and there's a lot of other stuff to do, and that's a full-time job. There's a value to focus. You've got to focus your energy. You've got to focus your effort, partly because you start to make breakthroughs if you can

try, if you can pull all of the source information. if you are pulling the raw information and not getting it synthesized and regurgitated by someone that knows less than you. You know, sometimes news is like the sound in a fury, you know, signifying nothing, you know, tale told by an idiot. Right. It's like people will write a story, but they'll write the exact opposite conclusion of what's really going on because they don't understand the subtleties. like there's there's the what the headline says and then there's the what the person what the what the government official says and then what the executive says and then there's what they meant but what they meant is never said but it's implied and the only way to understand what's implied is that is to have enough information about the entire industry

and the physics and the dynamics right that you that you can imagine or you can fill in the blanks like i know they said that but that's what they said because they They couldn't say anything else, but this is why they did what they did, and this is what they mean. So I think you can say you're a surfer, you know, like, and you're writing stories about surfing. And, you know, the average person goes and they watch the surfer, and they see the guy ride the surfboard. But the guy that's the championship surfer that surf for 30 years, that obsessed over it, goes and watches the same competition and writes the story, they probably write something different. They're like, why did he do that? Well, he did that because of these following 14 things, the wind and the current and there's something else and where the sun was.

And, you know, there's just a lot of dynamics. And if you're not a domain expert, then you can't parse the news feed intelligently. Being a generalist, you know, you sacrifice that. So I think, is it worthwhile the focus? Well, sure it is. I mean, we're talking about solving half the problems in the world, right? I mean, I think Bitcoin is a solution to half the problems in the world. Every corporation, every government, every individual will benefit.

So, yeah, can I afford to focus on Bitcoin? And what do I study? I study Bitcoin as relationship to the crypto market, the macro economy, every other asset. And then I think about the regulatory environment for corporations and individuals everywhere in the world and how that's evolving. And I try to stay abreast of all that. and that changes by the week. And that's worthwhile and useful to do. And I, you know, I would say that somebody else wants to be an expert on something. They should just focus on that. But in obtaining a

laser-like focus, do you think that's something that you were born with or do you think that that's something that you can learn to have? I think, uh, you can learn it. And I think some people are better than others. But I actually think I, I came to it more through experience and failure. Like, For example, if I go back earlier in my life, I would be very focused for a phase. We'd have a lot of success. And then I would say, okay, I've been successful. Now I'm going to launch 10 other businesses. You see this oftentimes, you know, as a dynamic.

Someone starts, they have nothing. They're focused. They launch a business. The business gets to a certain size and they declare victory. And then they're like, okay, now I'm going to do this and this and this because I'm too good and I'm too smart to be tied down to this one business. And so they stop focusing upon the one thing. They under-invest in it.

And the thing that they launch begins to decay. And then they launch 10 new things and, like, most of them fail or they whiff. And then they realize that it's juggling too many balls, right? And then they realize, oh, well, I probably should go back and focus upon the basic thing. and I lived through that at micro strategy. I mean, I eventually realized, you know, that I launched probably a dozen businesses after our initial business intelligence business. And there were some singles and some doubles and I made some money here and there. But none of them were as successful as the original business.

And I realized that I had shifted my focus off of the core business. I came back and I had to focus on that with a vengeance. And it gave me an appreciation. that people overestimate what they can accomplish. I guess I would say there's this conundrum, which is you have this with a boat, right? You see a boat, you like the boat, you're at a boat show. You're like, can I buy the boat?

Yeah, okay, I'm going to stretch, I'm going to buy the boat. And then they underestimate how much it costs to maintain the boat. Oh, my, I have to spend 10% of the purchase price of the boat every year to keep the boat from sinking. Oh, that's so expensive. So they underestimate the maintenance on the boat and they just think, can I afford the boat? Well, can you afford the boat and pay 10% of the boat's value a year forever? And so that's the second hurdle.

And then the third hurdle is, oh, can I enjoy it? Oops, I bought the boat. I'm maintaining the boat, but I'm too busy with everything else to ever use the boat, right? So the hurdle of, can I acquire it, can I maintain it, will I enjoy it, right? That's a high hurdle. In business, it's can I create the product? That's not so hard. Can I actually make money selling the product?

That's 10x, 100x harder. And then the last hurdle is, can I actually compete successfully against everybody who's going to sell a similar product to me so that I grow faster than they do forever? Can you get into a business, make money, and then can you grow and dominate the market, right? that that's a thousand times harder than can you you know here with podcast everybody's like oh i'm launch podcast it's not very hard to launch podcast the issue is okay now can i make money in the podcast and make it a good podcast right that's a lot harder okay now there's other people all the time can i actually grow and compete and stay relevant by continually upping my game continually well you can imagine if I tell you, you got to grow your podcast, you got to make money growing your podcast,

you got to keep the quality really high, you know, and then you say to me, well, we've been doing it for three years, and now I think we want to, you know, launch a restaurant and a clothing brand, and we have three other things we want to do. We want to get into politics because, and I would say, you know, I really think you ought to go back to focus. Why do we respect, like Jimmy Fallon, Why do you respect the Tonight Show or Dave Letterman? They showed up every single night year after year, day after day, you know? And they didn't like run off to launch their own whiskey brand. But how do you know when to pivot?

Because it seems like you ended up pivoting somewhat of your business model to a certain degree at the right time. I mean, you could obviously say you should have done it sooner, but how do you know when the right time is to take on more or to make a big change rather than focus? In this particular case, we have a P&L. The thing we do that we work at is a software business. It's a steady company making money, but it's not going to grow 20, 30, 40% a year. And then we have a treasury, and the treasury was a liability. And so at some point, you know, the world changed. I saw the world in a new fashion, and I realized that I should just turn my treasury into an asset.

and so we launched that new business. What about for the average entrepreneur? And by everybody can do what I, what I just described, it's the equivalent of you guys, you run the podcast, but now you adopt the Bitcoin standard and whenever you make money,

you invest in in Bitcoin. And then when you go to an investor and they want to invest in the podcast and they want to give you a million dollars or $10 million, you say, why don't you give me $50 million, I'm going to invest it in Bitcoin and the podcast.

Okay. At some point, you're still doing the podcast, but Bitcoin's going up 20% a year and you're making $20,30 million a year on the treasury, but you have an endowment and you're going to do your podcast. Like, should you do that? Yeah, it's kind of like saying, you know, when should a company buy, get into the internet or start using mobile phones or start you thinking about website or, you know, when should we start posting our stuff on YouTube?

Well, when you conclude that YouTube is a good distribution channel or a good technology, you should. You know, technically, the business didn't pivot. You know, five people, six people work on the treasury part of the business. Two thousand people work on the other part of the business. You know, what we did is just we fixed a defective investment strategy or a defective treasury strategy by flipping the polarity of that. And if you're asking, you know, for my advice for any entrepreneur, I think. My advice to an entrepreneur is you've got a business, think of, think of your business with a P&L and then your balance sheet. If your balance sheet has money, if you have money on the balance sheet and you're investing it in treasury bills, you're generating 3% after

tax, but the cost of capital is 12%. So you're losing 9 to 10% of your treasury every year in shareholder value. So you've just jacked into a parasitic system. which is sucking the life out of you, you're being bled to death, and the simple fix there is flip the treasury asset from one that's dilutive 10% a year, the one that's accretive 10% a year.

If Bitcoin goes up 24% a year and the cost of capital is 12, right, then you're doubling your treasury every three years instead of cutting your treasury in half, right? That's a very simple thing, but that doesn't change how you run the P&L. What you did is you plugged into a technology platform to make you more powerful to basically preserve or increase your capital.

On the P&L, the answer is you plug into a technology platform that makes your product or your service more powerful. So it depends on what your product and service is. But, you know, it's simple. If you're a podcaster, right, you think about where are the eyeballs and what is the format. You know, you could create an audio-only format or you can create video and audio. and if you create video and audio, then you make the best quality video and audio you can,

which means that you get on a plane, you travel to the person you want to interview and you set up the cameras, and if the light's bad, fix the light, create the product, right? So you create the right product, then you put it on the right channel, and then, and there you focus upon building that,

that viewership. So if you spread yourself too thin and you kind of create a product, which is inferior for 10 different channels, then maybe that's not as good as creating an awesome product for one or two or whatever channels. Obviously, if you want to go on TikTok,

you create TikTok content. You take this, you splice it into 15, 30 second TikTok videos, and you run it. If you want to run on Instagram, you create real content. On YouTube, it's smart to make sure you, you know, make it YouTube friendly. Put in the timestamps, put in the description.

You know, some people are stupid. They'll post a podcast video, and they'll like not enable comments and then they'll put the wrong header in it and they have a famous name and a famous topic. You wouldn't say, you wouldn't say we interviewed a dude about the problems in the economy. You would say we interviewed Michael Siler about Bitcoin because my name trends and the economy trends. A really smart. A really smart when it comes. Most people have no idea about YouTube.

Just the fact that you said that you're beyond almost everyone else that we've interviewed. You're just focusing on creating a great product, you know, and you're asking the question, like you're saying, like, how do we use AI? Right. How do I use AI to create a better show? You know, when this thing comes out, it'll be in English. You know, you can actually translate it to Spanish and Portuguese, and maybe you capture the Spanish and the Portuguese market if you actually have content or Korean or Japan. So if I was a podcaster, I'd be thinking hard about the channel and the platform. I'd be thinking hard about creating content that's global. I'd be thinking hard about how I format it in the right form factor that drives the maximum engagement, the maximum likes, right?

All of those things. And, of course, every year, the technology shift, right? Like is Alibaba or TikTok coming and going? Is Alibaba coming and going? And then not even just AI, but if you do an AI and it translates garbage, and there's another AI that will actually create a good Spanish language translation, and obviously find the right one. And I would say probably in this era, you've got to allocate 10, 20% of your time

to just considering the changes in the technology landscape. Can an AI drive your car? Do you sell cars? Can you put AI on your robot? Can you build a robot? Will a robot build what you're... Will someone create what you're creating? Yeah.

Right? And so there's a defensive. There's an offensive. And then you're reinventing yourself. But the model I've always had, and I had one of these fossils on my wall, in my office for a while. It's a chambered nautilus. And a chambered nautilus represents a really good model for entrepreneurial growth in business because it's a creature, a mollusk that lives deep down and under high pressure, and it creates a shell. And then it's growing. And as it's growing, it's creating a geometrically larger shell, but it's creating it by turning in on itself. So it's always using its previous work as the foundation for its next its next work, which is twice as much.

So it's like, it's the Fiminacci sequence. It's a one and a two and a four. Sorry, I'm going to get this wrong. It's not that, but you understand what I'm saying. I do. Which is, it's going to spiral out like this. And when you look at the creature, what you say is that is nature's solution to growth under pressure or disciplined growth. Because it's always building on its past asset, its past foundation.

It's not just, I've got this and I reach over here, this gets snapped off under pressure, right? Whereas this spiral or chambered nautilus, that actually has integrity under pressure. That doesn't get crushed by the weight. And in your business, you know, if you're taking an asset, like for example, maybe you've got a body of Congress. content, good podcast, but you've never been in the Brazilian market, and you figure out how to translate everything to Portuguese. But, you know, you try that in the Brazilian market, you know, do you want to go learn Portuguese and then just restart, you know, or work twice as hard, interviewing Portuguese people for the Portuguese market and Portuguese and interviewing English

speakers for the English market? And you're like, well, you know, you can see how that becomes too many balls and you drop the balls, and pretty soon you're not using technology to do something a thousand times cheaper or a thousand times better. You're just trying to do twice as much. And growth that relies upon you working twice as hard isn't sustainable. You need to find a way to use your assets, but be the first person to a new platform with these assets. If you hypothetically, for example, if you could create an AI that would look at your podcast and automatically generate 27 short reels that run on TikTok and Instagram that then drag the most exciting things said and then dragged people in 37 languages to 37 full

podcasts. And that was all done in the 30 minutes after you finished each podcast by the AI. That's pretty good. You know, sometimes I think I'll get on Twitter and I'll say something. I'll do stuff and it'll run 500,000 video views. And I can accomplish more than if I had a marketing team of 40 people and a $20 million year budget. And in fact, I would say sometimes if I gave you a $40 million year budget and 40 or 50 people and 10 lawyers, they would all come together to tell you you can't do anything. You get less done by trying to do things. conventional way, and then the new way.

So I think with entrepreneurs on the P&L, you're just always looking for how you harness platforms. And the two most powerful ideas right now this year, digital money, digital intelligence, right? Those are breaking, right? Digital intelligence is AI. It really wasn't commercial two years ago. We're like in year one, year two of a 10-year run.

And magical things will happen. that were written about in science fiction books 50 years ago. But, you know, the way science works and S-curves work is people will talk about doing things for 100 years, and they'll never do it. And then the year before it becomes feasible, people will think it isn't, but then it will be. And all of a sudden, you're on an S-curve, and the entire world changes over the next 10, 20 years. The automobile, the airplane, et cetera. And so right now, we're at the beginning of a massive S-curve in digital intelligence. and the same is true with money.

So if you were trying to do things a conventional way on your balance sheet or a conventional way with your P&L, this is a good time for you to rethink that because either it will make you 10 times or 100 times more successful or it will keep you from being torn apart by the challenger that uses that technology while you're still trying to create studio movies the old-fashioned way with a thousand unionized workers and there's a dude with one other person in a computer that spits out the entire series like godzilla is a good example of that

scary right yeah it's famous that you've lost six billion dollars in one day which i can't even fathom what were your thoughts like during this day it's really uh stressful and unpleasant because you think about all the other people that you let down right i mean it's the share if you if you have that change that's in a public company right the public stock crashes and you think about the shareholders and the employees that are affected by it and their families right and so i mean the truth of the matter is if you have a billion and you lose six billion or if you have a hundred million and you lose six billion if you have 10 million you lose you know your your lifestyle isn't changing uh one way or the other at some point you know these are just

numbers that move back and forth. But the people, like, you know, the people that, the small investors or your employees, their life is changing. So the hardest thing about it is, is knowing that they're not going to have money they thought they had or if you have to lay off people or someone that, it's pretty brutal if someone invest in you and they trusted you and you feel like you let them down. Or you did let them down, right? So I think that that's, that's the emotional toll. on that. And I, you know, I mean, to this day, like, people ask me, you know, what about, should I buy micro strategy stock? And I don't want them to. Like, like, I would never recommend anybody to buy it because you might buy it and might trade down 10%. You might feel like I let you down. Or I don't want you to rely upon me. I'm like, do your own research, make your own decision. It's very risky, right? Like, it's volatile. And that's why I think, even with Bitcoin, I would say if you're not ready to hold it for 10 years, don't hold it for 10 minutes.

Like I would prefer, if you look at me and said, I really need the money in the next four years, I would say definitely don't buy it. I mean, it's reasonable. No one's ever lost money holding it more than four years, but really your attitude ought to be. It's a 10-year investment. I'm going to buy it and hold it.

And if you don't have that attitude, what you ought to do is not buy it. What you ought to do is spend more time until you get the conviction that you're ready to hold it for 10 years. Just invest money, and thinking and otherwise don't because I don't want to be the guy that said Bitcoin's good and it trades down 17% and you tell me that, you know, your family's bankrupt because of it.

Having so much money invested in pretty variable assets like Bitcoin and your company, what is it to have swings, like $100 million swing, $200 million swing in your net worth, with that happening nearly daily for you? Yeah. Do you feel anything outside of it? that? Like, how can any other life experiences compare to that sort of financial swing? I'm going to tell you a true story. I'm with a friend of mine in Vegas, and he's a big gambler. Okay? And so he'll go sit at the table and he'll say, give me $50,000 in chips, you know, we sit down at the table. He's got $50,000 in chips. I have $500 in my pocket. I'm like, you know, I don't have any money. It's like, oh, spot, you here,

take $10,000. We're going to. And we start playing and we're playing multi-thousand-dollar hands. Okay. And the truth is I would have a hard time just gambling $50,000 going up and down $10,000. He has no problem at all. But I have no problem at all having a billion dollar bet and having a trade down $300 million. Or a $15 billion bet and having a trade down $3 billion doesn't bother me in the least. But I would not gamble $30,000 in chips on a black chip.

table that would just drive me bananas. So the truth is, you could imagine that it would bother me. It doesn't. And here's why. Because the gambling table, I feel like the odds are stacked against me and the house is going to win and it bothers me that I'm playing

a game that stacked against me. But with Bitcoin, I feel like the odds are way in my favor. And, you know, at some point, you know, 18 months ago, we had two and a half billion dollars of Bitcoin and we had, you know, two and a half billion dollar market cap or something like that. And everybody else is freaking out. I'm not freaking out.

Bitcoin traded from $66,000 to $16,000. People said, what are you going to do? I'm like, well, I'm going to wait for it to go back up again. Right. It's been oversold. It's going up. You know, my view is it's going up forever. If you owned Central Park in Manhattan, you, you you know, for hundreds of years. And someone said, well, there's a war. I hear that the price of real estate Manhattan just dropped 30, 40 percent. What are you going to do? I'm here forever, right?

I mean, I'm not selling. I don't need to sell. I'm just waiting for the world to rationalize. So it's not really stressful. In fact, in fact, there's a very subtle point to be made here. Microstrategies attribute is that it's volatile. Like the reason that we're able to raise billions of dollars of capital is because we're more volatile than Bitcoin and Bitcoin is more volatile in the S&P index. So that's actually an attribute.

It makes the options valuable. That's why there's $30 billion or more of options trading in the options market because if there was no volatility, the options are worthless. And if the options are worthless, we can't raise money. So we can go to the market and raise a billion dollars. and pay 60 basis points or 70 basis points, I can borrow money for half a percent. You probably can't borrow a billion dollars for half a percent interest.

I can borrow for half a percent interest for six years. Okay? And so you're going to say to me, are you bothered by the swings? No, I'm aware that because of the volatility, I'm able to sell a convertible bond that's got a seven-year duration or a seven year duration and pay 80 basis points interest

that's no recourse unsecured, right? And if I didn't have the volatility, if it went away, I would pay 10% interest. And by way, I'd have to pay 10% interest and I would only be able to borrow about one-fourth as much money. You have to embrace the volatility in the same way that you get out in the ocean and you put up the sale and the ocean kind of does this to you

and this is your cab. And you're like, are you bothered by the motion? And I'm like, well, I mean, the alternative is get out and swim. Yeah. But it's still not good. I mean, the truth is, I'm not going anywhere if I don't accept the volatility. And there's a difference between volatility. Like, Microstrategy had $500 million of cash it didn't need and no volatility four years ago.

Today, micro strategy is $14 or $15 billion of Bitcoin, $3 billion or $3 and a billion in debt. So it's like plus $12, $13 billion of assets it doesn't need. What difference does it make, whether the amount trades up a billion a day or down a day? It's a billion. When Bernard Arnaud goes from being worth, you know, $180 billion to $160 billion to $120 billion to $200 billion, Do you think it bothers him? Does it change his behavior? I mean, the reason he's successful is laser-like focus on the luxury business, right?

It's like that's just, you know, an artifact of it. And we can make that volatility go away. You know how we do that? We just give away all the money. Like Bernard Arnoy could just give away all the stock, and he wouldn't have any volatility. And micro-strategy, if we gave away the $15 billion, we wouldn't have any volatility. but volatility is vitality. It's life, right?

So you're better off. You do bring up an important point, which is conventional wisdom in corporations is volatility is bad and capital is toxic. So most corporations in the world, what they do is they say we have to give the capital back to the shareholders because holding it is debt is obviously destroying shareholder value. You notice the big buyback at Apple, the big buyback at Apple, the big. buyback at Facebook, the buyback at Google, the buybacks, you know, the capital is toxic. It's like, I want to get rid of it. Why is money a bad thing? Think about it for a second, because you've got

to invest in the wrong asset. You've got the wrong kind of money. You're holding $100 billion of pesos that's going to zero. If you're holding $100 billion of Bitcoin is doubling in three years, right? So the capital is toxic, so they decapitalize, which is pernicious. And the other thing is, volatility is toxic. And so they want to get rid of volatility. Microsoft sells contracts three years in advance. Like a three-year enterprise agreement. Like, you know, I just want long-term rental contracts. Like, I want you to agree to buy the same thing for me for the next three years with the CPI escalator. And that way, there's no uncertainty. I mean, the issue is if there's no volatility on the P&L, there's no volatility on the balance sheet, and then if I want to evaluate the stock,

I can look at it once a year, put a price on it, buy, and snooze on you for the next 364 days, right? I mean, what's going to happen? Nothing. Well, if nothing happens, the options are worthless. You're not going to trade the options. That means you're not going to trade the underlying equity. That means the stock options for the employees become worthless. So how can you succeed, you know, if you have no capital and you have no volatility, right?

And the answer is you're just going to have to work yourself. to death, if you can't grow your revenues 15% a year, then you're going to fail. And so in that case, that explains why most corporations have a life expectancy of 10 years. They're all dying in 10 to 15 years because they have toxic capital and they have dysfunctional financial strategies. And so these things that other people want to run away from, I think you should be running toward those things. What's your biggest insecurity? That's an interesting. question. I suppose my biggest insecure is I don't want to let people down. Like at some point, if more and more people trust you or put their faith in you or you feel more responsible for them,

whether I've got employees, 2,000 of them. I hate the idea of letting them down. I've got shareholders, now lots. I've got bondholders, you know, and I've got stakeholders. So now we become important to them, and then you've got the entire Bitcoin community. And Bitcoin is a team. It's a global team. I travel everywhere in the world. I get off on a flight line, and the guy that's actually refueling the aircraft is going like, like, hey, I own Bitcoin. I bought some from my kid. You know, you go through a bar, and the guy behind the bar knows you or the, or the waiter, or the waitress, or the, you know, all these people. And what this means to them is there a chance at economic sovereignty and security, and it's given them hope.

So if you're actually, if you're lucky enough, right, if you're lucky enough to have employees, have investors, and have people that listen to you, then the thing you should fear is, is letting them down, right? And so I think it's becomes a greater responsibility as more people take you seriously in life. The last question that I have is what's something that nobody knows about you that you feel like they should know? Another very interesting question. You know, a lot of people know a lot about me. I've done a few podcasts. Yeah. Yeah. So I'm trying to think about something that I haven't really spoken about much. I think one thing is, is I have a profound appreciation for,

for nature and natural law and natural beauty. And I think a lot of the most beautiful things in life and the most important wisdom is derived from a close study of nature. And a lot of people think that, you know, because they see me in technology and in commercial environments, that I'm a technologist.

But I actually think a lot of the inspiration and the best inspiration comes from nature. And I think that we would all do well to be grounded in it to the extent that we can be. Cool. Anything else? Tell me the other thing is we looked up photos of you and it looked like you used to be bigger.

Did you shed some weight? Yeah. Like that looked pretty impressive. At one point, I was probably 30 pounds heavier. And what happened is I started appreciating I mean, the things that you can learn today if you study, paleo diets, lean proteins, steak, salad, vegetables, stay away from too much starch, too much sugar, too much alcohol, right? If you want to be 30 pounds heavier, drink sugar water, drink alcohol, drink starch, eat a lot of pizza, potatoes, pancakes, rice, etc., eat processed food, eat fast food. You know, all of those things take their toll, but, but, you know, what's the secret to life?

I think someone said it the other day. They said, get plenty of sleep, put good nutrients in your body, eat good food, nutritional food. Eat food that would rot. It's not, you can't leave it out for three days and still eat it, right? So eat organic food. The closer to organic, the better. And don't poison yourself, right, with toxins. There's a lot of different types of toxins, but just don't put them in your body.

Right? And then get exercise, get routine exercise. So I think that, you know, that helped a bit. I would recommend that to anybody. And I would say coming back to natural principles, one thing I think about a lot is, is this something that my great, great, great grandfather would have done 100,000 years ago? Because the human genome, right, and humanity has evolved over millions and millions of years. And if you think about all those generations, how did you evolve and what did you adapt to?

There are certain things that we do today that they wouldn't have done 100,000 years ago. And a lot of times those things are pernicious. Drinking a carton of orange juice. Yeah. Impossible to do 100,000 years ago. Sugar in that, yeah. But, you know, you give yourself diabetes or the life. if you just pound that stuff too much.

So I think, you know, just looking at diet exercise, nutrition is useful. I think 30 years ago there were some pernicious ideas. Like, you know, it used to be every alpha male business leader wants to brag about how little sleep they get. Oh, I get on three hours sleep. You know, it's like when the competition is to brag about how little sleep you can get, It's just here's an unhealthy habit and I do it. And of course, a lot of people I think lied about it. Like a lot of times people say stuff in public and an interview.

What's your secret? Well, I don't need that much sleep. I, you know, I sleep three hours. And, you know, what an awful disservice you do to the humanity because, you know, you find a lot of people die because they didn't sleep enough. And then, you know, when I grew up, you know, I looked at all the athletes and the bodybuilders. and I was like, well, I don't look like that guy. And I thought I wasn't trying hard enough.

And then I, you know, at one point I realized they're all taking steroids or performance enhancing drugs. And, you know, it was only in the modern error, you know, when information comes out on YouTube, guys like more plates, more dates. Yeah. We got him on the show. Yeah. Yeah.

He came on the podcast. And I'm like, I started listening to him and my mind is blown. And I'm realized, like, everything I'm bad. believe was not, you know, it's like, oh, how'd you bulk up for this movie roll? Oh, yeah, I ate a lot of chicken. No, you didn't eat a lot of-old. I ate a lot of chicken and I had a trainer. Yeah. And that's just pernicious, like, untruth. So when you start to actually understand how people achieve what they achieve, and you're like, well, that might work, but that might also give me cancer at age 27. And maybe I don't want that. I think it helps you make rational.

decisions about what to eat, how to live, right? How much to sleep. And then there's like even even with exercises like, yeah, you can do the Hollywood, you know, specialty exercises, but, you know, to a great degree, you know, simply low impact aerobic activity that's not going to destroy your joints is a pretty good thing. And engaging in full contact. combat sports, you know, might not be the best path, you know, over the long run. So, so I don't know, I think I get a lot of wisdom or gleaned a lot of wisdom about health just from all sorts of unfiltered, unbiased internet sources. That's awesome.

Cool. Well, thank you so much for coming on the show. And thank you for being so generous with your time. I mean. Yeah, I appreciate it. Thanks for having me. Is there anything else that you feel like we didn't touch on that you want to talk about? Well, and I guess I would end just by saying, you know, my personal opinions are all my own, you know, form your own opinions.

My primary professional opinion is Bitcoin's good. And if you don't know that Bitcoin is good, don't go buy Bitcoin because I said it's good. What you want to do is go learn about Bitcoin. I think that you will spend 40,000 hours of your life, maybe 60,000 hours of your life trying to make money. It is worthwhile to spend 100 hours of your life figuring out how to keep it and figure out what it is and thinking about that. So most people won't. Most people will, they'll just go do something because their friend told them to do it. But if you do it for a shallow reason, you'll probably panic and sell it or do the wrong.

thing or get confused by another shallow reason. So I think that the best investment anybody can make is go spend 100 hours, you know, studying Bitcoin, then study economics, then study the, you know, history of money, and then think for yourself and think really, really hard about risk and the like. And some resources to do that, or if you go to hope.com, H-O-P-E, just remember Bitcoin is Hope. It's a website we run. It's got a ton of Bitcoin resources, courses, books, materials, interviews, you know, research, etc. that you can get to. And other people that are experts, you can go trace down that rabbit hole and look at them. So that's one place to go. I think if people are interested in my Bitcoin musings, follow me on X Twitter. I'm Sailor,

S-A-Y-L-R. And otherwise, I wish everybody the best. Cool. Yeah, we'll link to all, we'll link to everything down below in the description. be super easy, including hope.com. Okay. Thank you, gentlemen. Thank you so much.