The Pomp Podcast - #764 Orange Pill Your Family

Episode Date: December 27, 2021

This is a special episode of the podcast. Last night, I held an event called "Orange Pill Your Family." People from all over the world got their parents, siblings and family together as I held a free webinar that walked through the basics of Bitcoin. In this webinar, I discuss problems in the legacy financial world, what is Bitcoin, how it works, common Bitcoin misconceptions, how monetary policy works, and why they should start to learn more today. This a great episode to share with anyone you know who's looking to get started in learning Bitcoin. ======================= Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp ======================= Circle is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.com.

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 today's podcast episode is a special one last night i held an event called orange pill your family people from all over the world they got their brothers and sisters their mom and dad their grandparents and their family friends and they gathered around while i held a free webinar that really just walk through what are the problems in the legacy financial system? What is Bitcoin? How does it work? What is the monetary policy? And why should they start to learn more?

The goal of the program was basically to just get your family and friends more educated about the legacy system while also making them interested in Bitcoin. We also covered a bunch of different things like the misconceptions of Bitcoin and many other things that people have read in the mainstream media. I hope that you find this one informative and also enjoy it as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is BlockFi. BlockFi provides financial products for crypto investors.

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Again, search StackSats in the App Store or visit choiceapp.io slash Pomp. And one more thing. If you want to hold your private keys, Choice lets you do that too. Start stacking tax-efficient Satoshis today and visit choiceapp.io slash Pomp. Last but not least are my friends over at Circle. If you manage corporate or institutional funds, you're probably looking for ways to access opportunities in crypto. You see the growth and momentum, and you want exposure.

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to book a meeting with one of their experts. Again, circle.com slash pomp and book a meeting with one of their experts. Big fan of Circle, and I think you will be as well. All right, let's get in this episode. I hope you guys enjoyed this one. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should

not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Okay. The topic today is orange pull your family. What does that mean? It is your family. Hopefully, you got your siblings, your mom, your dad, your uncle, your cousin, your grandparents, your loved ones, your family, your friends. We are going to talk today both about the legacy financial system, but also about Bitcoin. Let's start first with who the hell am I? Well, I do a couple of different things. One, I spent the last couple of years investing quite a bit of money in the Bitcoin and cryptocurrency

industry, everything from Bitcoin itself to BlockFi, Coinbase, eToro, Figure, and about 100 other companies. I've got a podcast. I write a daily letter to over 200,000 investors now, and I previously ran product and growth teams at Facebook and Snapchat. And so when we think of why this conversation is so important, I always start with what is the problem? The problem to me is the most important place to start, because if you don't understand

what the problem is, then the solution may not make sense. And so when we think of a problem, really what we're talking about is the state of today's financial markets. Now, Pop, what the hell does that mean? Well, first, let's start with the Federal Reserve and central banking in general. So for those of you that don't know, a central bank is merely the national bank, right? It is given the privilege to control the production and distribution of money and credit for a nation. You can think of this as the United States needs a bank. That bank is in charge of manipulating, controlling, and also producing money. And the reason why that is important is because it's only about 100 years old. The Federal Reserve is the central bank in the United States, but it was only established in 1913 with the passage of the Federal Reserve Act. So we're talking about an organization that is just over 100 years old that is in charge of the production and distribution of money and credit in the U.S. Now, that national bank, that central bank, has a specific goal.

They are to provide the country with a safe, flexible, and stable monetary and financial system. That's it. Safe, flexible, and stable monetary and financial system. And so since inception, they've presided over 16 economic recessions, and also their balance sheet has grown by almost 100% since March of 2020, and the purchasing power of the U.S. dollar since 1913 has fallen 96%, which we'll get to in a second. But it's important to remember that the central bank, the Federal Reserve of the United States, has seen a lot of things. It has seen both good times and bad times as that central bank of the U.S.

And so ultimately, when you hear about the central bank and decisions or meetings, etc., there's something known as the Federal Open Market Committee. This is the FOMC, and that is comprised of 12 individuals. That is right. There's only 12 people that make up this branch of the Federal Reserve System, and they are responsible for the formulation of monetary policy. These 12 people, although they have lots of people on staff, they listen to a lot of data points and economists and all sorts of forecasts, there are 12 people in the U.S. that are responsible to come up with monetary policy. Now, that monetary policy ends up affecting over 100 million people, over 200 million, over 300 million people, 330 million Americans. That doesn't even include the people who are non-Americans who also end up either holding, using, transacting, or trying to store value in dollars. So these 12 individuals have a very, very big responsibility. They make up that FOMC, which is ultimately part of this central bank system, given the control of the production and distribution of money and credit for the U.S. Now, what they have been doing is no secret. So we have here on the left side, a quote from Satoshi Nakamoto, the root problem with

conventional currency is all the trust that's required to make it work. We have to trust that the central banks are doing what they're supposed to do. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Now, what exactly does that mean? Well, if I have a dollar and let's say I had that dollar 50 years ago, that dollar may be able to buy me five Coca-Colas. Today, one dollar doesn't buy me five Coca-Colas. It doesn't even buy me one Coca-Cola. It's not that the Coca-Cola itself became more valuable. It's that

the dollar itself has become less valuable. If something like the dollar becomes less and less valuable, then you need more of them to buy the same assets. It's why you've probably heard your parents or your grandparents or your friends or family say real estate always goes up. Well, it's not so much that the real estate itself is becoming more valuable, it's that the dollar is guaranteed to lose value over time. They're going to debase it, devalue the currency. And so what we see here is we've got a chart. This is not specific to the Federal Reserve. This happens with all central banks. This is their total assets measured in trillions of dollars. You can see whether it's the Federal Reserve, the ECB, the BOJ, or the PBOC, they all continue to increase

their total assets. They continue to debase their currencies. And that ultimately means that if you are sitting with dollars or a fiat currency in your bank account, you end up having less and less purchasing power. Your wealth is being devalued away as you sit there and simply hold it. And so this brings up the idea of the gold standard versus the fiat standard. Now, the gold standard is really important to understand because the gold standard is what we used to have. Before 1971, the entire monetary system was backed by gold. What does that mean? Well, if you go all the way back 5,000 years, gold has served as money. But ultimately, gold really, really sucked to be able to use in transactions. It's heavy to carry around. It's really hard if I put it down

on a table and you need to actually measure how much is there. If I want to break off a piece of it to give to Kenny or Colton, that's really difficult as well. So from a transaction standpoint, gold's horrible, but it was a great store of value. And so ultimately, in an attempt to make gold more usable, provide more utility for it, we created paper claims on gold. Now, those paper claims allowed somebody to say, I'm not going to carry around my gold bars or my gold coins anymore, too heavy, too hard to use. I'm instead going to leave them at a bank or in a vault somewhere, and I'm going to carry around these pieces of paper. And these pieces of paper would allow me to go and actually use them for transactions. So I can go to a general store where I can go buy a

horse back in the day, et cetera. And I can say, Hey, here's a piece of paper. That is a claim on my gold. That's sitting at a bank or in a vault. If you would like, you can simply hold onto the claim and use it for a transaction yourself, or you can actually show up to the bank and turn in this claim and they'll give you the gold. So now gold was able to hold value via store value, but we had paper claims to the gold. And so the entire idea was that countries agreed to convert paper money into a fixed amount of gold. On top of that, the United States used this gold standard up until 1971. And gold was valuable because it had sound money principles. All sound money principles means is that it's outside of the system and it was resistant to intentional

devaluation by others. You couldn't create more gold. The only way to get more gold was dig it up out of the ground. So in 1971, we transitioned from a gold standard to the fiat standard. Now, it was originally presented to the American people as a temporary measurement. But as we know, one of the surest ways to ensure a permanent program is for the government to create a temporary program. And so the fiat standard said, well, why don't we keep using those paper claims, but rather than have the ability to actually turn them in for gold, what if we just use the paper instead. We don't actually need to back it by gold anymore. And so fiat money, which the dollar is along with things like the euro, et cetera, is simply government issued currency, not backed by

a physical commodity. And it's just issued and controlled by the government. So the central bank is able to issue it, able to control the production and the distribution of the money. But that money is not backed by anything. It is just simply paper or an electronic format. And so this gives central banks greater control over the economy because now they can control how much money is printed. They don't need to go dig up more gold in order to create more dollars. They can simply create it by either pushing a button on a printing press or now in the electronic world, they can just edit their bank account. Just like you cannot go to your Bank of America or JP Morgan or Chase, et cetera, and say, hey, rather than have it $1,000, I want to have $10,000 in my bank. Let

me just edit the number. You can't do that, but they can do that. They can simply edit the number in their bank account. And so ultimately, what we have seen is that every fiat currency that has existed in history has eventually failed. There's over 500 examples of this, that they are helpful in the short term. They allow people, like last year, March 2020, when there are economic crises, that we can respond to them by increasing the monetary supply, injecting capital into the economy. So there are positive side effects to this. But the long-term trend is that every fiat currency in existence has eventually failed. And so if you go back and you look, this $20 bill was redeemable in gold. This is before we ended the gold standard. What you can see here in the top

is that on the actual dollar bill itself, it said redeemable in gold on demand at the United States Treasury or in gold or lawful money at any Federal Reserve Bank. This was the ultimate manifestation of those paper claims on gold. Dollars were backed by gold. If you now look after the gold standard has been removed, it says this note is legal tender for all debts, public and private. There's no reference whatsoever to actually being able to redeem these dollars for gold or for any other commodity. So the top is the gold standard. The bottom is a fiat currency. And so what exactly happened since 1971? Well, if you look on the left here, what we have is a period of time called the great prosperity. And the entire idea can be summed up

with one sentence, pay rose with productivity. What exactly does that mean? Well, it means that what you can see on this chart is that as productivity of workers and corporations, et cetera, went up, so did the pay that they received for that. And so wages and overall compensation would continue to increase, and they tracked almost perfectly to the increases in production. But after 1971, once we went ahead and we unpegged the dollar from gold, we went on to the fiat standard. What we can see is that productivity, that top line continued upwards. It actually accelerated in terms of how quickly it was growing. But what we see is the average hourly compensation and the average hourly wage, the pay that actual workers received went

sideways. And so we no longer saw pay rising with productivity. What that means is in purchasing power terms, people started to get paid less and less and less. This is the feeling of I can't get ahead. I'm stuck in a rat race. And so what we have on the right side is the purchasing power of the U.S. dollar. What you can see is on the far left there, you can go all the way to 1913. The Federal Reserve Act creates a central bank with the ability to manage the country's money supply. And what we have seen is we have seen increases and decreases in purchasing power. but the long-term trend is that we continue to see a massive devaluation of the purchasing power of U.S. dollars. Along the bottom, you can see here, what does $1 buy? In 1913, $1 would buy

30 Hershey's chocolate bars, the equivalent of $26.14 today. In 1929, it was 10 rolls of toilet paper. By 1933, it was 10 bottles of beer for $1. By 1953, it was 10 bags of pretzels. By 1971, you could buy 17 oranges. By 1997, you could buy four grapefruits, 2008, two lemons, and today, up to $1 worth of a one small McDonald's coffee for $1. And so what we have seen is that the purchasing power of the dollar continues to get less and less valuable. It's not that the Hershey's chocolate bars became more valuable. It's that the dollar lost purchasing power. And so ultimately, this is why the belief

that savers end up losing in today's economy is so true. If you simply spend less than you make, take your dollars and put them in your bank account, and you just let them sit there, there is a big, big, big chance that you're going to just watch your purchasing power actually be degraded. That means that you're gonna have less and less money

from a purchasing power standpoint. If you have $100, and let's say that $100 could buy a single-family home. Today, if you wait 20 years, that $100 is not going to be able to buy that same single-family home. It's not because the house became more valuable. It's because the dollars became less valuable. And that is the erosion of purchasing power. Many of your grandparents and parents and friends have told you all you have to do to get to financial security is simply save. Well, that was true before 1971.

But in today's world, the erosion of the purchasing power of the U.S. dollar means that you can no longer do that. You have to learn what to do. You have to convert those dollars that are losing value into something else in order to protect that purchasing power. And so what we have here is the M2 money stock, and what we can see is that we continue to just get an absolute explosion in what is occurring to money. Over 40% of the U.S. dollars in circulation were printed in the last 18 months. 40% of all dollars in circulation created in the last 18 months. There is a lot of ways to describe this. I simply describe it as absolutely insane. This is undisciplined monetary and fiscal policy in a pure chart. And then obviously, if you go ahead and you look at CPI or inflation,

many of you may not know what inflation actually is, but you feel it. You see that gasoline is up a lot. You know, when you go to the grocery store, your grocery bill is much higher than it used to You understand that when you go and you try to pay your electricity bill, that's higher. You see that everything you go to the store to purchase, that's higher and higher and higher. And you feel like you can't get ahead. That is inflation at work. And so the CPI, the Consumer Price Index, simply measures the average change over time in the prices paid by consumers for a basket of goods and services.

The official numbers are now 6.8%. from 12 months ago to the end of November, there was a 6.8% increase across the entire basket of goods. The average that we have seen over the last decade or so was 2% or less. So we now are trending at three times or more where we have been recently. There's an accelerated high level of inflation. And so there's many, many people have been claiming that inflation was transitory. They were wrong. The Federal Reserve and many others now have retired that word. They're saying this is not a transitory situation inflation is here and it is likely to stick around now what many people don't know is the way that they count inflation has changed many times but the big big

change was in 1980 they actually changed the calculation for inflation they no longer simply say a loaf of bread was x price last year and now it is y price instead they mess with the weightings in the actual measurement they go ahead and they change what they measure how they measure and when they measure it, simply to try to continue to show a lower and lower number. They do not want to freak people out. Now, if you were to go ahead and look at unofficial numbers, something here like shadow stats, which is a website, this may not be accurate in terms of the most accurate representation, but it is one of many, many examples that shows much higher numbers. So what this is showing is that if you were to calculate this based on the 1980 methodology, we would be

having somewhere in the 13 to 14% official inflation numbers. They had not changed the methodology. Another one of my great examples is that the official CPI rent index, they go ahead and they measure rent in the United States. They are claiming that it is only up 2%, 2% this year over the last 12 months. But if you were to go and look at something like Zillow or apartment.com or one of these websites that has hundreds of millions of data points that they measure in real time, they are showing anywhere between 8% to 15%. So if you actually dig into the methodology of inflation, the rent index is a great example. They are only surveying. They literally ask people, what do you pay in rent? What did you pay last year? That number is literally

hundreds of households at a time, and it is self-reported. You tell them what the change is. They have no ability to actually confirm the information, and they are only looking at a couple hundred or thousand data points. But if you were to look at something like Zillow or apartment.com, which actually has the listings themselves, has hundreds of millions of data points across the nation, and has what I would consider a more real-time accurate data set, they're showing numbers that are much, much higher than what we see in the official numbers. So inflation is high, and the real inflation is probably much higher than what the official numbers are actually telling us. And then lastly, if we think global debt to GDP, this is kind of a high-level economic analysis, but we've got a quote here from Greg Foss on the right. When you have total global debt to GDP at 400%, if you count for a 3% discount rate, global GDP needs to grow at 12% just to outpace the interest expense. In this equation, currency is the error term. We are in a debt spiral, which means that the currency is guaranteed to the base.

It is only mathematics. Many of you probably remember that recently politicians started to say, if we do not raise the debt ceiling, if we do not take on more debt, we will not be able to pay our bills. The United States will default on their debt. Now, of course, the United States has never defaulted before. I don't think that we will default because we will just continue to raise the debt ceiling more and more and more. The kind of layman's example would be if you had a credit card and that credit card, the bill was due, but you didn't have the money to pay the credit card. If instead what the government does is they take out a second credit card, they take on more debt to pay off the first debt, and they continue to play this round robin game more and more and more borrowing simply to pay off the old bills. And so that is unsustainable.

Unless you run some sort of balanced budget, it is nearly impossible to do that forever. And so ultimately, this brings us to Bitcoin. If you remember, the entire idea of a central bank currency, of a fiat currency, is that we have to trust that the central bank and politicians are not going to debase it. When they debase the currency, they are stealing our purchasing power. And that is where Bitcoin comes in. As many of you know, Bitcoin is a decentralized digital currency. That's it. It's decentralized. No one owns it. No one controls it.

It's digital. There is no physical form. There are not gold coins, although everyone always likes to show the gold coin. There is actual no gold coins. It is a digital currency. And obviously, currency means that it serves both as a store of value, as a medium of exchange, and as a unit of account. And so what we have here is Saifedean Amos, who is the author of both the Bitcoin standard and the fiat standard. He said, Bitcoin represents the first truly digital solution to the problem of money. And in it, we find a potential solution to the problems of saleability, soundness, and sovereignty.

So if we go ahead and we look, what the hell is making Bitcoin so attractive to people? Well, the first is that it is globally accessible. Anyone, anywhere in the world with an internet connection does not matter who you are, what language you speak, where you were born, who your parents are, what your education level is, what your wealth status is, what you do for a living, who you know, or where you live. Anyone with an internet connection can simply go ahead and they can buy, sell, or store it, and they don't need to ask permission from anyone. This is a decentralized system, meaning that there are no gatekeepers.

There is nobody who says you may use it, you may not use it. It is decentralized in nature. And so when you have a global population of billions of people that now have access to a global store of value that no one can stop them from using, it becomes very interesting. Obviously, in many countries around the world, people would like dollars, especially in countries where their currency is failing. If you look at somewhere like Venezuela or Zimbabwe or in places like Turkey, et cetera, we know that those people would love to have dollars.

They believe in the full faith and credit of the U.S. government. They want dollars. The problem is that it's very hard to get dollars. The accessibility of dollars is low in those countries. They may actually have their dollars confiscated if they sit in a bank account. It's expensive and also dangerous to acquire dollars on the black market. So ultimately, if people have trouble getting dollars, then this global accessibility of a digital currency becomes very interesting to them. The second thing, the second feature that people

find interesting is this idea of programmatic monetary policy. Now, the whole idea of monetary policy in the United States is that those 12 people, FOMC, they come together, and they obviously make decisions around monetary policy. They're able to actually affect interest rates, etc. But what we know is that those people, they're human, they can make mistakes, and they make variable decisions. Variable meaning that sometimes they actually do things that make the currency more valuable or less. They strengthen it or they weaken it, and they are trying to respond to economic situations. But ultimately, if people want to trust the central bank, we need it to do two things. The best central bank is something that is predictable and independent.

independent meaning that it is not subject to any sort of influence or manipulation from outside sources politicians cannot influence the decision making and neither can anyone else well there's nothing more independent as a central bank than a decentralized system one where there is nobody no human or organization in charge there's a programmatic monetary policy meaning it is written into software and that software executes regardless of what goes on in the world. It does not care who is president. It does not care what political party is in control. It does not care what you at home think, nor your neighbors or anyone on the news. It simply continues to execute that software based on what was written over 10 years ago. The second

thing is that it is actually predictable. Obviously, if I asked you right now, what are the monetary policy decisions that are going to be made over the next year? You don't know. Many people literally watch from around the world. They watch these press conferences with the central bankers and they try to see what color is his tie. Did he use the word dovish or not? When somebody asked him a question, did he raise his eyebrows or not? How long was his speech? And does that have any correlation to future decision-making? They're all trying to speculate on what are these humans going to do in the future? The humans don't even know what they're going to do in the future. And so ultimately people are finding it very, very valuable to have a programmatic monetary

policy, something that is predictable, something that is unchanged, something that you can depend on, and something that no one controls. That programmatic monetary policy is 180 degree difference than anything in the fiat world. And so what is Bitcoin's monetary policy? There will only ever be 21 million Bitcoin. If I asked you how many dollars there will be, there's an infinite number. They can create as many of them as they want. They can create more and more and more and more. But with Bitcoin, there will only ever be 21 million Bitcoin in the entire world. That is set and cannot be changed unless more than 51% of people came together and agreed to change it. Every single day right now, there are 900 new Bitcoin that

continue to come into the circulating supply. If I asked you how many dollars were created, nobody knows. If I asked you how many dollars were created yesterday, nobody knows. If I asked you how many dollars are going to be created tomorrow? Nobody knows. If I asked you to show me transactions that happened with dollars today, nobody can do it. Bitcoin is a transparent system. It is programmatic in nature. I not only can tell you that 900 Bitcoin were created today, but I can go to a blockchain and I can show you and verify it for you. I can prove it to you that only 900 Bitcoin were created today and put into the circulating supply. We now are at 18.8 million Bitcoin in circulation. So of the 21 million total there will ever be, 18.8 are already in

circulation. We will continue to get more and more Bitcoin coming into circulation every day until we hit that 21 million total Bitcoin. Now, this is important because ultimately in a system in the legacy world where nobody knows what the future decisions are, nobody knows what's happening right now, and nobody can even prove to you what happened last week or last month or last year. They can simply tell you what happened, but they cannot prove it. What we have with the Bitcoin system is full transparency. It's audited every single day, hundreds of thousands of times by millions of people. Everyone knows what is happening, and you can watch it in real time.

You can prove it. And you know for certainty what will happen in the future because you can actually read the software and see what programmatically will occur. And so what are the implications of this new monetary policy? Well, the first is that it has created an absolutely incredible, attractive store of value and medium of exchange. We have watched Bitcoin continue to rise in global adoption. If anyone is a student of economics, if you have a fixed supply asset and demand increases, then the price has to increase in order to accommodate everyone. So that store of value compared to the dollar, which allows your purchasing power to be devalued over time, Bitcoin has actually seen an appreciation of purchasing power.

If you sat with $100 in your bank account 10 years ago to today, you can buy less things with that $100. But if you had put one Bitcoin in your account and sat there 10 years ago, that one Bitcoin would have been worth somewhere around a dollar or so. But if you now fast forward, that one Bitcoin can buy the equivalent of about $50,000 of items, goods, or services. So your purchasing power has increased with Bitcoin while your dollar purchasing power has decreased. It is the exact opposite of a legacy system. And so Bitcoin has become the best tool in the world to preserve your purchasing power. It is defending your purchasing power.

That decentralized network that cannot be changed by any one individual or any one organization will not allow for the depreciation of your purchasing power over long periods of time. And that is why millions and millions and millions of people around the world continue to find it attractive. And so ultimately, Bitcoin is the first store of value for which its supply is entirely unaffected by increased demand. No matter how much demand there is, the Bitcoin monetary policy will not change. If all the demand went away tomorrow, Bitcoin's monetary policy will not change. If there is a global pandemic, Bitcoin's monetary policy will not change. If there's World War III, Bitcoin's monetary policy will not change. If you don't like Bitcoin,

Bitcoin's monetary policy will not change. No matter what happens in the world, Bitcoin will not change. You can watch it every single day. You can audit it and you can verify. And that is why Bitcoin has become the best tool in the world to preserve your purchasing power. And so if you line up Bitcoin with gold and fiat currencies,

this is one of my favorite things to show people, is that Bitcoin is superior in every single aspect, except for one, how long it has been around. So in terms of being able to actually verify the supply and the transactions, etc., Bitcoin is superior to the other two. In terms of portability, how easy is it to actually move around the world? Bitcoin is superior to gold and fiat. Gold is super heavy. Fiat, we have electronic money, but it's not nearly as good as Bitcoin.

Divisibility, Bitcoin is super divisible. Gold and fiat are less divisible. Scarcity, Bitcoin is way more scarce than gold and fiat. Now, established history is interesting because Bitcoin has been around for about 11, 12 years. Gold has been around for 5,000 years. It is by far the longest established history. Fiat currency has only been around since 1971. So while Bitcoin has only been around for 11 or 12 years,

fiat currency has only been around for about 50 years. So it's only been around for longer than Bitcoin. But compared to gold, Bitcoin and fiat have been around for almost the same amount of time compared to thousands and thousands of years of history. Censorship resistance, Bitcoin is much more compelling from that standpoint, programmable and decentralized, the same thing. Bitcoin is superior to gold and fiat in every single aspect other than established history, where gold has survived for 5,000 plus years.

And so there's tons and tons of misconceptions about Bitcoin. Everything from it's not a viable currency. Well, there is trillions of dollars of transactions in Bitcoin this year that have occurred. and there are 100 plus million people that hold it. They use it as a store of value, as a medium of exchange or a unit of account. It is a currency by every single measurement. People say that Bitcoin is slow,

but what I always tell folks is I can walk into a coffee shop. You can stick your credit card into the machine and in the seven to 10 seconds, it takes for your credit card to be read, to be processed, for it to tell you to remove your card and then to tell you that the transaction is finished. I can send Bitcoin faster

than you can actually do your credit card transaction by sticking your credit card. But of course, when you stick that credit card and you're not actually paying using dollars, you're paying using an IOU. You still have to pay off the credit card later. With Bitcoin, when I make the transaction, there's cash finality.

The merchant gets the money right then and there. I can't go home and cancel. I can't go and actually say, you know what? Someone stole my credit card and I didn't actually pay for that item. There is no kind of chargeback or anything else. It is done when it is done. People say that Bitcoin is volatile.

Well, like I said, 40% of US dollars have been created in the last 18 months. Nobody thinks of the dollar as volatile, but the dollar has been debased at a historic pace over the last 18 months. The reason is because goods and services are priced in dollars around you. You don't think of the dollar having an exchange price

because you say, I have $100, and when I go to the store, the bread is priced as $5. So what I ultimately have to do is I have to guess my purchasing power increasing or decreasing. I don't think of the dollars having a price. $1 equals $1. Well, Bitcoin is the exact same thing. If I go and I buy something from Kenny or Colton, and I have five Bitcoin, and they say, well, if you want me to do that service, then you have to pay me one Bitcoin. Then ultimately,

there is no volatility. One Bitcoin equals one Bitcoin. And that is where the world is going, is that people are beginning on the internet, specifically, this idea of an internet currency. They're beginning to price things in Bitcoin so that you can actually pay in Bitcoin and not worry about the volatility. People say it's a bubble. Well, if it was a bubble, then it would burst. But ultimately, Bitcoin has been the best performing asset

over the last decade. And so this would be the craziest, longest bubble that's ever existed. Obviously, I don't think that that is where most people think that we are headed. People will say that Bitcoin's easy to hack. If you think of the US dollar system, no one has ever hacked into the Federal Reserve

or the Treasury. But there's been lots of hacks at banks. People have robbed banks. They've hacked into ATMs. They've even went and robbed armored trucks, or they've hit people over the head and stolen $20 out of their pocket or out of their wallet. The further you get away from the creation of the money, the less secure it becomes. No one's ever hacked into the Federal Reserve. No one's ever hacked into the Treasury, but they have absolutely gone. They've stolen it from individuals. They've broken into banks. They've broken into ATMs or armored trucks.

Same thing is true in Bitcoin. No one has ever hacked the Bitcoin blockchain where the Bitcoin is actually created. There's been plenty of hacks of exchanges. People have had their wallets stolen. There's been all sorts of other types of nefarious activity. But Bitcoin itself has never been hacked, just like there's never been a hack of the Federal Reserve or the Treasury. It is in other venues where people choose to store their Bitcoin that can be hacked. That is no different than the US dollar system. There's an argument that Bitcoin is bad for the environment. But what many people don't know is that majority of the energy consumption of Bitcoin is actually done with renewable energy. What we know is that

the United States has been the absolute biggest beneficiary of the mining industry over the last 12 months or so. And what we see is in places like Texas, where Bitcoin mining now is about 10% of the total network, there are things like gas flare capture. What does that mean? One of the worst things for the environment is that when they actually go and they drill for oil, there's a gas that comes out of the earth and rather than know what to do with it, in many cases, they simply burn it into the actual environment. And so what Bitcoiners have figured out is they go right to the wellhead. They actually capture the gas flare and they take that and they turn it into power on site and they mine Bitcoin right there. So not only is Bitcoin mining driving R&D of renewables

and clean energy, but it's also helping to re-divert bad things that occur to the environment. So Bitcoin is not bad for the environment. I would make a strong argument that Bitcoin is actually very good for the environment. And from a quantifiable standpoint, you can see that the impact it's having is very positive. Bitcoin is not backed by anything. It's another misconception. If you think of the dollar, the dollar is not backed by anything either. The best argument people have is it's backed by the US government, the US military, which is true to some degree. But Bitcoin is actually backed by a commodity. The most valuable commodity in the world today is not oil. It is not gold, but it is computing power. If you think about computing

power as a commodity, Bitcoin is backed by that computing power. The Bitcoin network is the strongest computer network in the world. It is the most defensible computer network in the world. So Bitcoin is backed by something. It's backed by computing power, which is the most valuable commodity in the entire world. That is why it's called a digital currency. Bitcoin is mostly used criminals, another misconception. Less than 0.5% of all transactions on the Bitcoin network are used for nefarious purposes. The former director of the CIA came out with a report, 0.4% or less is nefarious or criminal activity. There are reports out from places like the UK Drug Administration that say, well, the US dollar and fiat currencies, over $2 trillion are laundered

every single year, just with money laundering. There's bank after bank after bank, whether it's Mexican drug cartels, whether it's some sort of terrorist financing, et cetera, all that money laundering continues to happen in U.S. dollars. The choice currency of money launderers, drug dealers, and criminals around the world is U.S. dollars. It is not Bitcoin. You can easily put dollars in a duffel bag and bring them somewhere, and it is completely untraceable. But with Bitcoin, every transaction happens on a public ledger. Everyone in the world can see that one Bitcoin address, sent a Bitcoin to another Bitcoin address, and it stays there forever. It can never be changed. It can never be hidden. And so no matter how long Bitcoin lasts, people always go back and

see that transaction. So if you're a criminal, the idea of conducting your crimes on a public ledger where anyone can audit it and law enforcement is watching is pretty damn stupid. And that is why criminal use of Bitcoin has significantly decreased to now less than 0.5% of all transactions. And lastly, the government will shut down Bitcoin. Well, we've actually seen the exact opposite. In countries where government has banned Bitcoin, what we've seen is adoption has exploded in places like Nigeria and Pakistan. We've also seen governments adopt Bitcoin. We know that there's countries like El Salvador that not only are buying Bitcoin, that are giving Bitcoin to their citizens, that are setting up ATM networks, but they're also mining Bitcoin as well. The U.S. government has already come forward, and there's multiple politicians, senators, and congressmen that hold Bitcoin. The major banks are participating and actually either conducting transactions, holding Bitcoin, or starting to actually service clients with Bitcoin. We have public companies like MicroStrategy, Square, and Tesla that have Bitcoin on their balance sheets. And what we know is that there is a very, very healthy appetite to continue to usher Bitcoin forward.

Governments do not want to stop Bitcoin because ultimately governments are going to need Bitcoin just as much as you or I. The governments themselves, they cannot continue the masquerading of their debt. They cannot continue to devalue their own currencies. Ultimately, the governments need Bitcoin and so do organizations and so do individuals.

They are not going to shut this stuff down. But over time, we are going to watch as we've already started to see governments capitulate and start to adopt Bitcoin just as much as the individuals. And so where ultimately is Bitcoin today? It has grown from this crazy experiment to a globally accepted digital currency with over a trillion dollars in total value and over 100 million users. You can see here that while that is incredible, incredible progress, what we see is that it is still smaller than a single company like Amazon. The entire crypto industry is only two, two and a half trillion dollars. Gold's 11 trillion. The US dollar M1 is 18.7 trillion. Treasury bonds are 19 trillion. And the US stock market's 49

trillion dollars. So ultimately, Bitcoin, while it has gone from zero to a trillion in about 12 years, it is minuscule in the entire global financial system. And when you go ahead and you look, the 10-year compound annual growth rate of Bitcoin has been absolutely insane. The 10-year compound annual growth rate of Bitcoin is 173%. That is nuts. Amazon coming in second with 34%. So Bitcoin has been by far the single best investment that you could have made over the last 10 years.

173% compound annual growth rate is very, very, very impressive. And so ultimately, if we go ahead and we look at adoption itself, what the hell is going on with Bitcoin adoption? This chart comes from the global macro investor, Raul Paz, fantastically put together. In the orange, we have the total crypto users measured in millions. In white, we have the total global internet users measured in millions between 1992 and 2006. We have been growing about an 80% average annual growth since 2016 until today. We are somewhere in the 1997-1998 equivalent of Bitcoin adoption compared to that total

global internet users. But the more important thing is not only that we are growing and have already gotten to 1997 or 1998, but that we are going at a faster pace than what the internet did. Now, it makes sense. The Bitcoin adoption is benefiting from so many people having the internet, so many people having mobile phones, etc. You would expect it to grow faster because it's growing on the back of the internet. And ultimately, what we will get is at some point, we will get a tapering off.

You can't grow up into the right forever. So that 80% annual average yearly growth is likely to go somewhere much lower, somewhere in the 30, 35%, 33% annual average growth. That's okay, because at that point, we will have over a billion users already on board. So this adoption curve is really important to understand. It's growing incredibly quick. And what we know is if you looked at the internet users in 1997, 1998, extrapolated it out today, there were still tons and tons of growth to go.

That's what Bitcoin has in front of it. So most people will ask, am I too late to Bitcoin? Did I miss it? No, of course not. This is on the top left. Eight years ago, a post on Reddit, it said, too little, too late. Honestly, I feel like I missed the boat when I first heard about Bitcoin in 2009, 2010. and it's stressing me out to see all these overnight fortunes being made.

I realize there's still money to be made, but coming from someone who feels like a check for $130, there's reason for celebration. $250 US dollars for one Bitcoin is a bit of a barrier of entry for me. I don't know why I'm posting here. Frustration mixed with regret and jealousy, I guess. I can't help but hate myself for not knowing better. This was in 2015.

Literally, somebody thinking that they were actually before 2015. Somebody thinking they're too late to buy Bitcoin at a price of $250 per coin. And so ultimately, what we continue to see was that Bitcoin's price is approximately 250x from what it was at that point of $250. So if you believe Bitcoin's on a path to continue to be the world's dominant store of value, there is still significant upside. If a fixed supply asset demand continues to increase, then ultimately, the US dollar price, the exchange price has to go up in order to accommodate everyone. And so if you go ahead

and you compare it to all of these other assets, what you can see is that Bitcoin has only captured a small percentage of these other types of store of value. Bitcoin is very, very early in terms of comparison to these other assets that people hold to store value. And the most important thing is that today Bitcoin is trading somewhere around $50,000. It'd take $50,000 to convert it to buy one full Bitcoin. But you don't have to just buy one full Bitcoin. You can buy a fraction of a Bitcoin. Each Bitcoin is divisible into 100 million Satoshis. That's similar to 100 cents make up $1. 100 pennies make up $1. 100 million Satoshis make up one Bitcoin. So you don't need to spend $50,000 or $60,000 in order to start buying Bitcoin, you can start off with as little

as 50 cents. If you bought $10 worth of Bitcoin at a price of 60K per Bitcoin, you'd be able to buy 16,000 Satoshis. And that is ultimately what people are doing is they are simply continuing to just dollar cost average into Bitcoin or converting their fiat currency into digital sound money. For about $600 or so today, you can become a Satoshi millionaire. And as the value of the asset continues to increase because of a fixed supply and increasing demand, then obviously those million satoshis become more and more valuable in US dollar terms. So do not forget that you can simply buy a fraction of a Bitcoin. You don't have to buy the full thing. How do you do it? There are so many companies that you can go and actually buy

Bitcoin on. There are regulated exchanges similar to if you went to the stock market to a regulated exchange. You can go on places like Coinbase, Gemini, BlockFi, Strike, etc. There's things like public market funds. So you can go and you can buy, whether it's GBTC or BITW, et cetera. There's also futures-based ETFs now, et cetera, in the US. There's interest-bearing accounts. So that's something like BlockFi. You can buy Bitcoin. You can put the Bitcoin in an interest-bearing account. You can earn some interest on that Bitcoin. And then you can also buy Bitcoin in your retirement account via something like Kingdom Trust, which will allow you to go in, set up a self-directed IRA, contribute dollars to it, and then turn around and convert that

into Bitcoin. This is why it is so valuable to continue to get more and more ways for people to get access to the asset. Regulated exchanges, public market funds, interest-bearing accounts, or retirement accounts. It all is available to the individual today.