The Pomp Podcast - #636 A Bitcoin Skeptic Asks Pomp The Hard Questions - Darren Rovell

Episode Date: August 19, 2021

Darren Rovell is a sports business analyst who works for The Action Network. He previously worked for ESPN. Darren is also an avid sports memorabilia collector, along with various alternative assets.�� In this conversation, we discuss bitcoin, decentralization, value of autographs, and Darren asks Pomp various hard questions about bitcoin.  ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp ======================= Cosmos is building the Internet of Blockchains, marking a new era of interoperability, scalability, and usability. The free flow of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more. Dive into Cosmos at cosmos.network/pomp  ======================= Matrixport, Asia’s fastest growing digital asset platform with $10 billion in assets under management and custody, it offers one-stop crypto financial solutions including fixed income, DeFi in 1-click, structured products, Cactus Custody™, spot OTC as well as lending. You can earn from high single digit with fixed income to high double digit yield with their Dual Currency Product. If you hold crypto and look for yield, this is the app you don’t wanna miss out. Go download the Matrixport App and enjoy a welcome offer of 30% APY on USDC here: https://invest.matrixport.com/en

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Darren Rovell is a sports business analyst who works for the Action Network. He previously worked for ESPN. Darren is also an avid sports memorabilia collector, along with various alternative assets. In this conversation, we discuss Bitcoin, decentralization, the value of autographs. And then Darren asked me various hard questions about Bitcoin. Make sure you listen through the whole thing to see does Darren go from skeptic to Bitcoin holder. Before we get into this episode, I want to quickly talk about our sponsors. First up is LMAX Digital.

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We got Darren Rovell, the infamous and the famous Darren Rovell, coming on the Best Business Show to get wild with us. Darren, what's going on, man? What's up, guys? How are you? We're great. How are you? I am doing very well. What's up, my man, Joe? How are you? Good. How are you? Thanks for coming on, Darren. We appreciate it.

I do my work only the night before, but I also do my work. I've listened to the entire show. So I heard your reference to the passing of the torch. No, I will not retire. But I will give Joe credit. He is a hard worker. His threads have obviously resonated on Twitter. He's been among the fastest growing guys on Twitter in a medium that has not grown that much. And so I give him a lot of credit. Uh, we have been in covering the business of sports. I've been covering the business sports for 21 years. It's a huge business and I haven't had enough competition. So in a friendly way, I welcome young Joe.

Darren, should Joe put out a breaking tweet right now? Breaking Darren Rosella's not retiring. I, I, you know what, if, if Twitter had the dislike button, uh, that would, that would get slammed. Darren sent me Darren and I were DMing back and forth the other day talking about a story in sports business and he sent me an article

and the date on it, it came out Darren wrote it when I was in like third grade I loved it, it was great It's great when you say hey, these athletes are finally getting paid in college, I asked Carmelo Anthony in 2003 I mean, it's good in that way, but then

when you think of when you Google And you and you're like, oh, my God, this story from 2001, you are on 20 years now. And I will say I'm not retiring, but social media over the past 10 years has made me a very tired man in general to wake up every morning. And Joe knows the exhaustion. Wake up every morning ready to fight to do that. To do that for a decade is, you know, is really tiring. Darren, can you tell us just the quick 30-second version? How did you get into reporting on business and money kind of behind sports? Like you, when I was growing up, you were the guy, right?

You were the legend that knew everything about money. You knew all the players, everything. And you'd go on SportsCenter or other platforms, and they would just turn to you and say, Darren, tell us about the money. How did you get into that? So I always loved business. I love sports. I love business.

And I didn't want to toil in a small market. I thought it was remarkable that no one was talking about the business of sports, yet it was a hundred hundreds of millions of dollars business. So I started a sports business radio show at Northwestern and I quickly found out that athletes, everyone wants to talk to them and they frankly don't want to talk to you for the most part. Whereas business people, the CEOs and everyone behind the scenes of the business of sports. I mean, you asked Drew Rosenhaus one question. There's your show. It's a full hour. So they want to talk. And so when ESPN came to campus, I presented them with the idea of, you know, you not only have to be the worldwide leader in sports, you need to be the worldwide leader in sports business. And it was the Internet. It was 2000. They gave they gave this young kid a shot. That's awesome. Let's go through the collections first. You told me that you have a large money collection.

I'm not really sure what that means. And then I think it's funny. I think this is funny because you deal in money not being seen, right? Like, so it's funny that I have a check collection. So that's why I think it's funny, too. So five years ago, I went to a show, a national sports collectors convention, and a guy handed me a bunch of checks and i had never collected a check before and uh and and he said uh they're all the same amount of money and i was like how does that make sense like if it's like denzel

washington paying for hertz rent-a-car how is that the same amount of money as denzel washington paying for his lakers courtside seats as a guy who loves the story if there's a better story why wouldn't it be more money if it had that greater story so i people collected checks just because they knew that the signature was more authentic because it's unlikely to forge a check uh i started collecting checks because i love the story so i'm going to show you a couple here and hopefully all right let's do it you guys can see it all right uh okay hold on let's get the first national city bank of new york yeah uh of new york yeah it's it's john f god these lights are horrible hold on we gotta we gotta move a little bit here uh so so this is john f kennedy

paying for his Washington Post subscription three months before he became president. Wow. How did you get this one? There were 13 JFK checks that are known, and this was the one that I had my eye on for a while over the last two or three years, went to auction, and I bought it. This is a great one. I think you'll like this. I don't know. God. Yep, there you go. so this is this is walt disney paying a quarter of his taxes in 1962 wow ten thousand dollars yeah he he was basically at 43 000 44 000 in 1962 and that that signature is amazing uh so i love that one uh then i wanted to get a babe ruth check and i spoke to a guy who had access to these

things. And I said, OK, I need one of three things. I need him paying a prostitute, eating too much or drinking too much. And the guy luckily did find me a check where Babe Ruth was at least buying alcohol. It's the Park Circa Liquor Shops, which is still on 38th and Madison, five hundred two dollars in 1940, which is about thirteen thousand dollars worth of alcohol. And that's a nice Babe Ruth. And then I'll quickly show you, I don't want to spend all the time on this because I want to understand Bitcoin from you.

And I want to ask you some challenging questions, or at least what I think are challenging, maybe not for you. As I mentioned, this is the, this is... L.A. Lakers. L.A. Lakers. It's Denzel Washington paying for his Lakers courtside seats

the first year of the Staples Center in 1999 when they won the title. uh you know then they it just goes on joe montana paying for his uh sophomore year apartment notre dame you get the joseph c montana uh not not likely to get that um are you guys boston guys or no no we're new york giants fans best football team in the world all right okay so so we got we got this is this is this is uh jackie robinson paying for the rent check for the apartment he was in when he broke the color barrier um so darren how many items do you have how much is it all worth and where do you keep all this stuff is it all like i don't want to under his bed no

so i i i never say how much it's worth although i i did enjoy the question that you asked does jeff bezos know how much he's worth and i would i would agree that the answer is no i would i would want to know how close he would be if if we had the number and he were to guess uh but so i i do know i keep a database of what i have what it's worth now um there are very few things in my house so don't try to go rob my house there there's a there's a gun safe bolted uh but i have this is interesting i mean when you're looking for storage of high-end items it's difficult you know there's there are, I have, I have a lot of stuff at an art storage, uh, facility. Um, you know, I just got, you just have to know where to go. And sometimes I have to pull things or,

but I, I kind of like to see things. So I go visit these places and take them out. It's not like I'm putting it in a safety deposit box in a bank and saying, I know I have it. Are we talking hundreds of items, thousands, tens of thousands? uh we're talking about i mean i i have let's say a hundred really blow blow you away quality items gotcha which one is your favorite uh in 1963 uh martin luther king uh got purposely arrested in birmingham with his right hand man out uh ralph abernethy and um uh he wrote letters from birmingham jail which was cobbled together from the letters from the jail to the outside and someone put it together this was three months before i have a dream uh the the letter was

remarkable although it doesn't get the credit it gets because it wasn't an oration like i have a dream i own the warden's log books from the birmingham jail which has 12 martin luther king signatures of him signing in and out his mail which he then used to give the letters to the outside so darren most of these things whether it's the checks the log books etc it seems like people have this fascination with signatures why is it that that signature is so valuable in your opinion on these items or like if you had the log book without a signature it would be worth less like what is it about the signature that drives so much value i mean it depends what signatures but yes, people like signatures. I think it depends on what it's on a lot more. I am in

general not interested in signatures, but if you tell me that you could get Tiger Woods signature on a 1997 Masters badge, and the signature is from 1997 to 99, and by the way, that's determined by the fact that his signature changed in 2000. So there's a lot of nuance to this. But I think people in general like signatures. I'm more tied to like I have four or five Martin Luther King signatures. They are all from 1963 because I think that's the year. And, you know, so these markets, by the way, are fairly illiquid. But I never worry about it because I think that some of the pieces I have in collect are so remarkable and I have the ability to tell the story that it doesn't matter that a hundred thousand people don't want it. So right now

I'm collecting tickets and there's probably 10,000 ticket collectors that just absolutely love tickets versus 20 million people that love cards. People say, oh, but it's not as liquid as cards. Doesn't concern me because if I'm getting the best pieces in the world, there'll be people to buy it yeah that makes sense all right signatures on physical items you just described how tiger woods changed his signature which is wild stat by itself or a piece no no no actually actually not i mean changed it like a little bit almost maybe un unknowingly um what is the difference uh there's there's a there's less of a curve to it in one of the like athletes in their course of their career usually change their signature in a way that uh you would know or

at least the people who collect would know four to six times wow and is that on purpose or that they're just their hand changes they get tired of signing stuff yeah i mean now these guys i mean it used to be harman killebrew you know and and willie mays and some of these guys had had tremendous autographs and now you get like mellow ball looks exactly like you know i saw the video of the bridges one yeah i mean it's like they're mb yeah gee thanks i mean like some of these things now now if the guy's collectible so i hate lynn manuel miranda's signature but i do collect dollar bills so lynn manuel putting the goatee on hamilton even though i mean look at that lynn that's signature but but you put the goatee on hamilton you know like that's next level what what is it

wait wait hold on a second hold on hold on what's your signature look like my signature is damn good because on twitter about 10 years ago i started critiquing athlete signatures and i was like you know what even when i'm an e-list celebrity but i'm like now every time i sign a risk even a receipt at a restaurant it is it is bona fide incredible signature if you give it out you got to be ready to have a good signature yourself i got here i got i got two more dollars for you ready so we got we got jay-z on a hundo how much was that how much was that that you had to pay for it you remember i paid i paid 1300 for this i i just think you know I think Jay-Z is going to get hard. I do focus on guys that are going to get harder and harder.

Hold on one second. So Darren Revelle has left the interview. So this is a if you see on this side or on this side, it's it's his customers rule, Jeff Bezos. It's one of his nicest signatures. And it's on the 1999 Time Person of the Year. I bought this the day he stepped down or was saying he was stepping down as Amazon CEO because I just thought to myself, how much harder is it going to be to get him? He's going to go from private jet to private island. It's going to be impossible. Jay-Z is one of those guys who's going to get harder and harder. I have a ton of Buffett.

Buffett has gotten – I have the largest Warren Buffett signature in the world, whatever that's worth. but but but uh but but it's guys who are gonna get harder uh and and now i will tell you elon musk is a real real one that i haven't figured out yet i have no elon musk pieces for for one reason one he is he has signed cars and pictures on the way to like when he's going somewhere he has signed he has stood and i also think he's a big enough of a freak that i start collecting like if when i collect if i collect gates i didn't account for the epstein connection but when i can when i collect gates and and buffett and those guys like i don't think they're going to change musk like one day could do like a free autograph signing for like 20 000 people like i don't know

what that dude's gonna do so i i right now i'm uncomfortable investing in him i don't think that Elon Musk is going to do that, just for the record. But he might do something more extensive than anything that those other groups type. True, true, true. All right. Before we get into the Bitcoin stuff, I want you to tell us, how did you prepare for this? We need to know what we're going into here. Did you do a practice debate? Did you read online? What did you do to prepare uh i enlisted a guy named alex holmes who is um who has bitcoin mining machines yep um and uh he is uh uh he was on the usc championship football teams um uh offensive lineman um and uh he is as crazy bitcoin as possible okay um and so i uh threatened during our hour conversation

last night i threatened to end it more than five times because i was so enraged all right what are your questions but i knew i by the way i also i i just because i so i was in crypto for 41 days total. I feel like I need to say this. I was in crypto for 41 days total. I netted probably around, I don't know, over $100,000, mostly in ETH through horse sales. I bought $93,000 worth of horses in Zed Run, and I sold it for more than double. I was out in mid-May when ETH was at the highest or near the highest. Just following that and I am a gambler at heart and the volatility made me sick. I don't care whether it's on paper or if I'm down 16 grand and it's on paper, it's just as bad as me being down 16 grand for good. That's just how my head works. So I just felt like I need to

explain that I did deep dive. And when I deep dive, I do deep dive. And I have learned as much as i can about this i have your newsletter i read your newsletter i often don't get to the bottom because i'm so angry all right what are your let's start from the top and we it's 12 33 right now by one o'clock you're going to tell me you're going to buy bitcoin let's start from the top what is your what what are the questions that you have you have a notebook full of questions okay so you say that bitcoin is innovative right but it and but at the same time it hasn't evolved and it's irreplaceable so to me that's like the kodak guys saying this is a great innovation uh this polaroid camera but then saying there's nothing beyond

the Polaroid camera because this is it. So how do you have something that is both innovative and at the same time doesn't change and is irreplaceable? So good question. I feel like I'm being cross-examined by a prosecutor right now. No, I give you a ton of credit here because I'm going to ask you some good questions here. And I'm excited. This is a very good question. There's two different ways to look at innovation. The first is what I'll call like the zero to one of the creation of Bitcoin. So the ability to actually create a decentralized digital currency. There's plenty of other attempts at digital currencies in the past.

None of them had been successful around creating a decentralized digital currency. When you think of when you're creating technology, you can either choose to pursue security and resilience, or you can choose to pursue speed, innovation, etc. Bitcoin's initial creation understood decentralization is the single most important aspect of what we're going to go do. There are nation state concerns. There is the ability where people will want to control the monetary policy of this, make changes, etc.

So decentralization was the pursuit. The leveraging of proof of work, which had been created before, the difficulty adjustment of the Bitcoin block reward, and then actually just the structure of Bitcoin itself created kind of a confluence of events that put Bitcoin into the world. It's gone from zero to 800 plus billion dollars in economic value in 12 years. Right. Absolutely insane. So that was kind of a zero to one moment. Now, along the path or the ethos of keeping security, resilience, decentralization, Bitcoin is intentionally very, very secure, methodical and intentional about the development process. So I'm sure you've seen a bunch of the issues in like the DeFi world where

there's been hacks of large amounts of money, et cetera. Some of that is- Yeah, Bitcoin is set up to be the, is irreplaceable in the fact that it's set up through their system to be the most complex system that you cannot replace. I understand that. It's basically the thing that has the highest likelihood

of being here 100 years from now. So because there's $800 billion or so of economic value that's at stake, we have to be very methodical about the software process. And so there actually has been a lot of updates, a lot of innovation that's occurred. So for example, there was a recent update called Taproot, which basically was a software update to the actual Bitcoin protocol that was adopted by everyone in the ecosystem. And it increased things like lower cost, more privacy, etc.

So that's a layer one type innovation. On top of that, there's been innovation in the overall system with things like layer two. So go back, you had some dollar bills there, right? If you go back to the US dollar system, gold was the original layer one technology, right? It for 5,000 years served as money, really hard to carry around, really hard to use to pay for things, hard to send to people, et cetera. So what did we do? We created a layer two on top of the gold to make it easier to transact. Paper claims of gold, right? Dollars backed by gold. So now you leave the gold in the vault, you walk around with the paper and you can exchange it pretty easily with people. And if they ever want the gold, they can go back and they can get it out of the vault

until 1971. And eventually there was layer three, layer four, layer five, right? Things like credit, electronic money, et cetera. But it was all built on that layer one of the secure goal. Can I cut you off? I think that's a good answer. I don't know if I understood it all. You're really good at talking about this, but I'm not sure if it makes sense or not. I'm not sure. But I want to hit on the decentralized part. So you said the important part about this was the decentralized nature of it all. So the new people that are in Bitcoin, at least, from anecdotally who I've talked to, do not give a flying about the decentralization part of it. In fact, with most people I talk to, it's actually not a positive. Now, I know you talk about the government

versus us and all that, and that's what propagates the we want this to be decentralized. But And I'm not saying this isn't important. There's a lot of people who either don't care about the decentralized portion of it or don't want it to be decentralized because it's fucking scary. Yeah. So I think that it's important to understand what is the value proposition of Bitcoin? The value proposition is that Bitcoin is a store of value that is based on a transparent programmatic monetary policy, right? If I asked you how many dollars are coming in circulation today, you can't tell me. If I ask you what's the next policy decision in the U.S. dollar system, you can't tell me. It's transparent because it's all on the ledger and everything has to be seen,

but it's not, and we'll talk about taxes later, but it's transparent because of that, but it doesn't seem to be transparent. I mean, the idea of it being decentralized and not connected to anything and founded by a person who we didn't know. So hold on a second. So transparent programmatic monetary policy. And the reason why that's important is because sound money principles, which gold and Bitcoin both hold, are the idea that it's outside the system and no one can create more of that asset, right? So no one controls it. Gold is the analog application. It's the physical version of sound money principles. Bitcoin takes a lot of those same principles, the sound money principles, and applies it in a digital product. What I mean by

that is 21 million total. And we know every single monetary policy decision that's already happened. We know every single transaction. I can literally show it to you since January 3rd, 2009. And then we know exactly what's happening right now. 900 Bitcoin will come into circulation today. And we also know every future monetary policy decision in the future. I can show you everything on a blockchain. Now, why is that important, right? That's the value proposition. Why is it important? Well, when you compare it to the existing system, what you see is it's 180 degree difference. Fiat currencies are inflationary and they're completely unpredictable, right? That's both true in the United States and elsewhere. Bitcoin is the opposite. It is a fixed supply

asset and it is completely predictable. If you think of the role of a central bank, there's OK, by the by the by the by the way, that's that's where I'm like about to slam the door. OK, all right. Why? This is this is what enrages me. OK, the completely predictable part. OK, so we have 21 million Bitcoin. Correct. And we have we know the supply and we know about the having and we know be less and less and less all the way to what is it? Zero. So 2140. 2140. OK, so we know that. but where, so when I talk to Alex and I listened to you, it's a foregone conclusion that this is going to go to a hundred and up and up and up. It has to, it has to, because there's no replacement

for it and there will be more demand for it. And that drives me nuts because I've taken economic classes and I want to know where in Adam Smith and any economist that has ever said anything Has anyone said that you can guarantee a system whereby it will definitely over time only go up? So this is a great question, right? And you're the perfect person to talk to this about because you understand supply and demand better than almost anybody else, right? The difference is, remember what you said about Elon Musk. You said, I don't want to buy Elon Musk's signatures because I'm scared that he may go do a signing of 20,000 pieces. and so all of a sudden the supply would move on me, right? I can't predict the supply. What Bitcoin has that is different than any other asset in the world

is that Bitcoin's supply is known with certainty. So forget price, price is not certain, but the supply is certain. 21 million total, we know the halving schedule, we know exactly how many will come in. And so from a circulating supply and total supply, we know with certainty. When you have one side of a supply demand equation,

that is known and proven. That's nice. Yeah, that's nice. But you guys talk about as if you know that demand is a foregoing. Okay, so this is the key part is when you know supply and you can prove it. It's not just knowing what's going to happen. It's being able to verify it, prove it, right? When you know that with certainty and can prove it, then the only thing you need to be able to kind of look at or extrapolate is demand. Now, demand is not known, right? We do not know if demand for Bitcoin is going to go up or down. But you talk about it as if you know. Okay, hold on a second. Hold on. So think about it probabilistically, right? If you think of it as, is it more likely that Bitcoin demand goes up or down in the future? Well, there's a couple of

different ways you can analyze. I don't know. Okay. Well, so let me walk you through a couple of things I think, and you can disagree with them. One is if you look at it as a pure technology, as a network, right? What you end up finding is that money is one of the most viral technology products in the world. Because what happens is in order for the money to be valuable to me, I need to be able to send it to other people and they need to be able to send it to me. And so things like PayPal or Cash App, et cetera, and also things like Bitcoin are very viral because they involve money. So if you look at just as a structure, it is more likely that it will be viral product than not. If you then look at it in terms of economics, Bitcoin today, having that

finite supply and a transparent programmatic monetary policy, being the exact opposite of kind of the chaotic monetary policy in the fiat system, it is likely, not guaranteed, but likely that people will seek something to store value in if the currency that they denominate their life in is being devalued at a historic rate. Okay. Okay. Okay. Okay. I got that. Now, can I get to, I need to get to this because my eye is on the time and believe me, we have 17 minutes here. Okay. The next issue is that we talk about the inhuman nature of Bitcoin. Okay. we talk about the fact that it's not affected by humans, right? Like it's not controlled like the Fed. That's your main concern. Look what the Fed's doing, pumping out more and more money.

It's inflationary. This is a disaster. Bitcoin is not affected by humans. I've heard that. And that's also one of the most outrageous, egregious things I could ever imagine. Because at least right now, maybe it wasn't so much affected by humans in the first eight years of its life cycle. But in 2021, baby, I could tie what Elon Musk said, what China did when they shut down their machines. I could tie every single news data point to where Bitcoin went. And so to me, it's like you guys say that this is the benefit is it's non-human. And then all of a sudden I'm thinking, well, it's a hell of a lot more human manipulated than the dollar. So think about this for a second. There's two different ways to look at this conversation.

Let's start with the monetary policy, the structure of it. Nobody controls it. Nobody can change it. No one's ever changed it. No one will ever change it because everyone would have to agree or majority of people have to agree. So the structure, the monetary policy is immune to human emotions of greed, fear, politics, et cetera. What you're talking about is the U.S. dollar exchange price, right? Which basically means Bitcoin was worth 60,000. Now it's worth 40,000. In a world that is denominated in dollars, there is volatility. There's also volatility in dollars, right? If you were to invert it and say, okay, the dollar denominated in Bitcoin has been crashing aggressively for a decade. Now in the last 12 months-

Whoa, whoa, whoa, whoa, wait, can I stop? Yeah. crashing aggressively so you talk a lot i'm gonna let you go uh you talk a lot about america which to me i understand your sponsors are in america this is an american audience but like i totally get bitcoin in nicaragua and argentina i mean god i mean they got they got nothing the bank means nothing that you know but in america like it's it's it to me it doesn't even if there's inflation, it doesn't seem like it's a foregone conclusion that inflation and Bitcoin are related or in any way, nor does it seem to me that like we are headed

to a point where Bitcoin is going to become the next currency and replace fiat. So all right, let me let me get through a couple of these things. Right. So first is in the United States, the financial position of Americans is way worse than anyone understands. 78% of Americans live paycheck to paycheck. 45% of Americans have no investable assets. So they're the people who get hurt the most by the inflation, right? Stanley Druckenmiller has gone on CNBC multiple times and said, listen, the Fed is the greatest contributor to wealth inequality because when they print money, people who hold assets get richer, right? Everyone that

we know that holds assets has gotten rich beyond their wildest dreams in the last 12, 15 months. Stock market hitting all time highs, you know, all that type of stuff. Bitcoin as well. Every asset goes up. The people who get hurt are the people who live paycheck to paycheck and have all of their wealth in cash. So what you get is this massive divergence in the two kind of populations, if you will. And so ultimately what happens is don't think of Bitcoin as replacing the dollar from a the government is going to ask me to pay in Bitcoin for tax purposes for right now. Right. Just simply think of it. Isn't that isn't that the main point to when the hodlers holders uh decide to really isn't it out of all the things that here's the three the thing in the

flow and it's on the third time i'm gonna hit it at the high and i'm like it's so obvious why would anyway if everyone knows that you're hitting at the high of the next half what's the deal it's jerry seinfeld okay but but what i don't i just don't understand that like how that how it works All right, hold on, hold on. So think about this, is your grandparents, my grandparents, my great grandparents would tell you and I, save. That was the advice financially, right? Was spend less than you make, stay out of debt and save. And before 1971, you literally could save your way to financial security, right? That was possible because there wasn't a massive devaluation of the currency. Today, it is impossible to save, right? If you look at somewhere like a Chipotle where they gave a three to 4% wage increase to their workers, CPI is at five plus percent, right?

So it doesn't even account for the actual inflation. And so you can't save your way. So what has happened is we've seen all these investors push further and further out on the risk curve. They're YOLOing into stocks, collectibles, Bitcoin, cryptocurrency, everything that is like the madness of the markets is because people can't simply just buy bonds

or hold cash, right? And so when you get to that world, it's almost this crazy thing where we ask a teacher to go to school and be a great teacher and then go home and be a professional investor, right? That's the only way to keep your purchasing power, which is insane.

You think it's insane. Everyone thinks that's insane. What Bitcoin provides is basically a savings account. It's an asset where you simply just save. And as you save, what happens is because of that structure and that finite component to it, the US dollar exchange price has to go up as long as, as long as there is more and more people that want it. Now, what is the most interesting part about the

Bitcoin market? I don't know if you know this or not, but you can see on chain, which is basically that open ledger, how many Bitcoin are being held by people who historically have never sold. And that number is usually over 50%. So right now there's 18 to 19 million, there's about 19 million Bitcoin or so in circulation. It's like 18.8 million, I think. And that 18.8 million in the last 12 months is held by 70% of that is held by people who don't sell.

They're called strong hands. So you literally have 18.8 million in the market, but 70% of them or so are being held by people who are those long-term hodlers. And so when institutions or public companies show up and say, hey, I want to buy Bitcoin, they go to these exchanges and they say, hey, I'll pay you $10,000 for your Bitcoin. And the Bitcoiners say, I'm not selling it. Then they say $15,000. I'm not selling.

$20,000, $30,000, $40,000. So this also drives me nuts, right? So you have it will only go up. The demand will only go up. So it's going to only go up. And then it's the hodlers holders. Again, I'm not beholden to these economic textbooks. But no one's ever said that you should always hold over time. Why did I sell my baseball cards in February and it just turned out that it was three days away from what was the high in the market? Because it just seemed too obvious for me. I was uncomfortable.

The idea of holding is a cult-like activity that in previous worlds just does not make any economic sense. And it's unique to this Bitcoin crypto market, which to, I think, a rational person like myself makes absolutely no sense. Okay. So it's a fair critique. Let me put it in a different perspective, and I think it'll make more sense. If I said to you, name a meme stock, the first one that you would tell me is GameStop

amc one of the ones that we've recently talked about i would argue that berkshire hathaway is a meme stock right there is a leader warren buffett people go on mecca to omaha every year to talk to them they are disciples of it has cultish type properties i agree with so berkshire hathaway amc same story different generations it's not it's not the same story because amc everyone knows that the popcorn is still ingrained in their red carpet from 1983 and they know that. And they know that while Warren Buffett has said, buy what you know, he has done some great deals with insurance companies and transportation. There is actually fundamentals behind it. I'm talking about the psychological component. I get it. The properties

of it. I get it. Okay. So those are very similar, just different generations. Historically, people would buy real estate and would say, never sell the real estate. The real estate will always go up in value because it's actually the dollar being devalued against it. Right. Now, what these people are doing is it's a hedge. Yeah. As hodlers, is there basically buying digital real estate as a way to look at it? So there's 21 million lots in this digital ledger. How many do you own? Right. And so just like you wouldn't sell the real estate or day trade the real estate or say, hey, you know what? I think it's high in February. Let me buy it back in March. Right. Because it just doesn't make sense to do that with real estate.

The same thing's happening here. And so ultimately, one of the things that Bitcoiners say, which this is going to be crazy for you to hear at first, but just think through it for a second. Oh, I've heard a lot of crazy things. Bitcoin actually embodies the timeless investing principles. It's basically dollar cost average in, don't look at price and sell and hold for really, really long periods of time. and if you buy a great asset and hold it for a long period of time, you will do well when it

comes to wealth generation. But see, the problem is Bitcoin is so young that that's why it comes off as a tactic. Real estate is not young. Bitcoin is. And so it's like, oh, it's look, let me show you the chart of the last 10 years. How can you argue with this? It's the last 10 years and it's the first 10 years. And I can show you a chart and I know it's the first 10. So it means a little bit more, the first 12, whatever that chart is. But I can show you a beautiful chart of blockbuster from 1985 to 1995. So here is a great way to look at it. In 1971 is the creation of fiat currency. And that fiat currency is only 50 years old, right? We just had the 50 year anniversary of the Nixon speech. Bitcoin is 12. So it's younger than the fiat currency.

if you look in 1971 at what happened to gold it was at like 35 bucks or whatever and now it's trading at you know 16 1700 so there's the world repriced gold once it was unpacked my belief is that the world at that time was trying to price what is a global store of value right and so gold was a global store of value it ended up pricing it where it is today i think bitcoin's going through the same thing which is in the first 12 years it explodes you're not going to get the same returns in the next 12 years that you got in the first 12 years obviously right there's more uh distributed ownership all that type of stuff but what i do think is that bitcoin which historically has grown at let's say 200 compound annual growth for a decade maybe that comes down and it's 150 or 100

or whatever the number is it's so it could be negative it could be zero i mean like well the only way that it would be zero is that you would have to basically have no more increasing demand It is possible, even though Bitcoin itself is not replaceable to the exact T. I buy that. You cannot replace Bitcoin to the computer systems, how everything's back ended. Fine. But maybe there is something that is like that, that people simply want. You always talk about, you know, the digital currency, the quick transaction on the ledger, if that did become a currency and we did more of that. Like, I don't know. Like, I know I'm a 43-year-old guy, but, like, I kind of like the 100 days where I can get my money back on Apple Pay. And I know you can say, well, then we'll pay you if there's a problem, we'll pay you back. And it's the young, fast transactions.

But like, again, like it seems to me and I know we're we're almost done here. It seems to me that people say if they're in Bitcoin or crypto, they say it's not comparable to anything except when they when it is convenient to compare. So there's definitely tons of what I'll call intellectual manipulation that goes on because people are trying to explain it. They're trying to compare it. There's also a spectrum of people who are very sophisticated and can explain it well. than those who are trying their best, etc. It's like that's true in any market. What I would say is the comparison between Bitcoin, let's say Apple Pay, is a comparison of technologies from a payments perspective. What the true Bitcoiners, I think, wrap their head around and kind of hold on to is Bitcoin is different from a monetary policy standpoint. So forget for a second which

transaction is faster or, you know, does a store accept Apple Pay or not, whatever. The difference is the 180 degree kind of opposite end of the spectrum of Bitcoin being a transparent, programmatic monetary policy versus an unpredictable one. And so ultimately what you have to do is you have to get to, from a sequence of events, you can't be a true good medium of exchange unless first you're a good store of value.

You can't be a true good medium or a store of value unless you are a super secure decentralized system in today's digital world. And so what I think is gonna happen here There's these central bank digital currencies. This is the digital dollar, et cetera. Those are technology innovations. But the monetary policy is the exact same, right?

What Bitcoin did was it innovated on monetary policy. Will it be possible to have a centralized, obviously it won't run exactly as Bitcoin, but is it possible that a replacement is a centralized coin? So what I think ends up happening is every single country in the world that has a fiat currency

is going to create a digital version. So there will be a digital dollar, digital euro, digital yuan, et cetera. China is doing that, right? They're all doing it. The problems with that, I think there's three problems. One is you drastically increase financial surveillance. Right now, if I want to know what's in your bank account, I got to go to a FISA court or whatever and get an order to subpoena your bank records, right? If they control the system, they can see in your account in which everything you spend on. Really scary stuff, especially in authoritarian countries, but even here in the US.

The second thing is that they can personalize the monetary policy. So everything in your life is personalized. Your news feed, your search results, your music playlist, your Google Maps, everything. If all of a sudden I can say Darren gets a high rate of inflation and Pomp doesn't, or Darren has to experience something from monetary policy standpoint and Pomp doesn't, scary. The third thing is, and China just ran a test here, and we have it in the US with EBT cards, is what if they make the money expire? So say we're going to move to a UBI system, and every month Darren's going to get $1,200. But he must spend it in the first 30 days or it disappears. Now, all of a sudden, you lose sovereignty, right? You lose control. It becomes a more authoritarian system.

And so all of that will be possible. I'm not saying that they're going to do it. Okay, I agree. That makes sense. but also some people are more comforted in an authoritative system than a system that has nothing and no one running it. Agreed. We got a minute. I got two more things. I am not going to invest in Bitcoin yet. I mean, this would take another couple hours, but my two last things, and I'll leave the floor to you for the last bit. You talk about inflation. And the one thing about

inflation that people think about is erratic volatility. And isn't Bitcoin, at least in the last six to 10 months more erratic than the american dollar and that's one and then two why do you feel the need why do all people who invest in bitcoin feel the need that they need to talk about it and pump it up why is it part of like a multi-level marketing scheme why is that part of the deal when i buy bitcoin why do i have to pump it up why does pump on on june 26 2019 say there's a 75% chance that it's going to reach 100,000 by 2021. Why is there that need? That's my final thing. All right. Inflation. We might have to do another one. Inflation, dollars guaranteed to go down in value. Guaranteed. There's not very many things

guaranteed in life. Guaranteed dollar will lose value every single year. Second thing on inflation is that if you look over the last six, seven months, Bitcoin has appreciated, it was $30,000 on January 1st, and now it's sitting at $45,000, $46,000. The dollar has been devaluing. So over 12 months, six months, 10 years, five years, everything, the dollar has gone down, Bitcoin has gone up in value. So Bitcoin protects and increases your purchasing power, while the dollar does the exact opposite. Two completely different kind of structured systems. Well, if you're a rational person, you want to throw up every day from the roller coaster. Agreed, if you look at the US dollar price. Now, what we didn't get to, and maybe we'll do a different conversation around

is if all of a sudden everything is priced in the currency, so dollars, you don't realize that the dollar is volatile. You just see that, oh, prices went up a little bit, right? That's the only way you see any level of inflation. You don't realize that the dollar lost 10, 15, 20%, whatever. There's not a metric every day on how devalued the dollar is. Exactly. So if everything was denominated in Bitcoin, you wouldn't see US dollar exchange price volatility. You would just see whether the price of things are going up or down. Over the last 10 years, everything's been getting cheaper. If you denominate your life in Bitcoin, everything getting more expensive in dollars. So let's put that in a box and we'll put that

to the side. The second thing is I think most people who hold Bitcoin, what ends up happening, I say it all the time, is Bitcoin taught me economics and it taught me personal finance. I got an economics degree. I didn't learn anything in college, right? But I got the degree. I got a piece of paper. I'm supposed to know all this stuff. It's not until I bought Bitcoin that I really started to understand money. And there's this belief that like people come for the profits. They think they're going to get rich. That's what pulls people into Bitcoin or cryptocurrency. They think they're going to get rich. Not everyone, but a lot of people. But ultimately, they start to hold the asset and they start to learn economics, start to learn about personal finance.

They start to learn about the dollar, Bretton Woods, inflation, all these things. And they start to understand, wow, why was I not taught this in high school or college or after I graduated? And what they're doing is they're not so much talking about Bitcoin, I think. I think what they're doing is actually talking about calling out kind of the charade that goes on in the legacy system. Now, what they say is, hey, Bitcoin is the solution. Bitcoin fixes this, you know, whatever your favorite example is. But I don't think it's about talking so much about Bitcoin as it is highlighting the issues in the legacy system. OK, are you going to buy Bitcoin? I will buy. You know what? To honor you for having the balls to have me on,

uh i will i will buy some bitcoin i'll receive it in 10 days because i'm going to go through coinbase i will buy a nominal amount of bitcoin um and i will it will be in your name i will i will honor you by by by doing that today because i appreciate you uh having me on and allowing you to ask some of the tough questions listen we're gonna do this again because i actually enjoyed doing this but the next request that i have by the way i think it's good for you too like you can't have i mean to have some critics every once in a while do you see the laser eye do you see the laser eye bull right here let's go you you want to go if you hold the bull by the horn you'll be grabbing your nipples

all right where can we send people to find you on the internet or find more uh on twitter darren or bell on instagram uh just whatever if i'm sure i'm sure i'll have a lot of people screaming and yelling at me listen for the record for those scoring at home i didn't kill pomp pomp didn't kill me i know that when i go look at my twitter be like oh pomp wrecked him it was like you know the judges are always against me darren i actually i actually think people are going to appreciate you doing this i think that you came with good questions you did your homework you were open-minded and you're even buying bitcoin so that'll that'll make some people happy i i think they'll enjoy it awesome joe all right darren wait two two last things real quick

one do you want to give a shout out to athletic brewing yeah hells yeah i wish i was drinking one right now uh we are we are rocking and rolling i'm glad that they sponsor uh the huddle and joe's uh endeavor uh non-alcoholic beer man is you know i've been a believer from uh the get-go people on twitter say that it's my brand um i don't care you can look at my bank account later all right that's first second of all can you do the uh the virtual passing of the torch just for fun sure i'll take it love you man thank you so much you got it take care guys