We Study Billionaires - The Investor’s Podcast Network - BTC156: Bitcoin is Not A Hedge w/ Parker Lewis (Bitcoin Podcast)

Starting point is 00:00:00 You're listening to TIP. Hey everyone, welcome to this Wednesday's release of the Bitcoin Fundamentals podcast. On today's show, I bring back by popular demand, Mr. Parker Lewis. Parker is an educator and builder in the Bitcoin space with seminal articles and thought pieces that influence the likes of people like Michael Saylor and many others. During our conversation, we talk about his most recent article, Bitcoin is not a hedge. What he thinks about the upcoming cycle, whether the halving cycle still matters, whether corporations will be taking a larger part in the coming cycle and much, much more.

Starting point is 00:00:33 Few people cover the topic better than him. So without further delay, here's my chat with the thoughtful Parker Lewis. You're listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. Hey, everyone, welcome to the show. I'm here with the one and only Parker Lewis. Parker, welcome back to the show. Welcome to be back.

Starting point is 00:01:07 Good to see you, Preston. Great to see you, too. Parker, you recently did a presentation, and if I, I might be speaking out of term, but it seemed like you had frustration as the main reasoning for the titling of this presentation, which was titled, Bitcoin is not a hedge. Explain why maybe that's the case, or it seemed like you were getting pinged by a lot of people about why didn't it perform during this downturn or why wasn't it, you know, and protecting me from inflation. But talk us through the titling of this and the impetus for Yeah, I mean, I think one of the things that I do a lot of as you do is help explain Bitcoin to people. And over the last 12 to 18 months, really wasn't a source of frustration. It was more that the most common question that I would get was I thought that Bitcoin was supposed to be a hedge to inflation. We've started to see growing rampant inflation and Bitcoin is going down. Why isn't Bitcoin serving as a hedge to inflation?

Starting point is 00:02:09 if it's what I was told it's supposed to be. And so the presentation that I crafted was based on an article I'd written earlier in the year called Bitcoin is not a hedge to help kind of articulate for people, which I think is a common and good question, why Bitcoin is not a hedge, but rather the solution to inflation. And that I basically articulate a case for why Bitcoin can't credibly be a hedge, but that once somebody starts to understand Bitcoin. at a fundamental or intuitive level, they see it as far more than just a hedge and that it being a solution to inflation is that a better form of money is the only thing that can ultimately fix a broken form of money and that if something like gold or real estate or some other hard asset or increasingly because of all the money printing people using equities as quote hedges to inflation, that Bitcoin is fundamentally different and distinct of that.

Starting point is 00:03:05 it's designed to ultimately replace money and be a better form of money. And that what I also articulated was that realistically, Bitcoin adoption happens as knowledge distributes. And imagine that somebody didn't know anything about Bitcoin, but started to experience inflation at the grocery store or wherever they were buying goods and services, they can't connect Bitcoin to that without some prior understanding of it. And so I think that oftentimes, And not really critically, but I think that sometimes erronely people can describe Bitcoin as a hedge and then it can create this confusion. Whereas if you start to dive in and understand the fundamentals of Bitcoin, you can see this rise and fall of Bitcoin is that Bitcoin isn't going down as inflation appears.

Starting point is 00:03:53 It's more so that the Bitcoin is corrected just as it has many times before because as it's being adopted, people are transitioning a state of from no understanding to limited understanding and only more people see Bitcoin. Once you see Bitcoin, you don't unsee it. So it's kind of that combination of it really isn't a hedge because you either live in a zero state where you have very limited knowledge and Bitcoin's volatility will destroy you. You'll think that you were using as a hedge,

Starting point is 00:04:17 but you were really using as speculation and you'll sell it at the wrong time. And then once something starts to click for someone, you inevitably get to the state of Bitcoin is a better form of money. It's really impossible once something's clicked around Bitcoin for you to remain in this kind of in-between state. You're really kind of either at the state,

Starting point is 00:04:34 point where something hasn't clicked and you can't see Bitcoin as money or something has clicked and you inevitably go further and further down the Bitcoin rabbit hole until it starts to become more intuitive to you as money and you start to see the volatility being able to rationally explain it. I love this and I heard this so much over this past cycle, especially when inflation was raging. It's not as high. We've had deflationary forces and we can talk about that in a little bit, but I know at the heat of like the high of that. This is what I kept hearing from people off. If it's an inflation hedge, then why is it going down? And the only thing that I could really kind of use to graphically show people is I would tell people, all right, let's look at an

Starting point is 00:05:20 equity chart, say the S&P 500 or the NASDAQ or whatever. Let's look at that chart. Let's look at the previous low of a cycle. Like, let's find a cycle here where it was very low. Let's call it COVID or before COVID when we had a pretty low point in equities. And then you can see where it went high and it came back down low again. Pick one of those full cycles. And then let's put Bitcoin next to, you name it, inflation hedge. And let's see how it performs through one of these full credit cycles where the central bankers are inserting liquidity and pulling it out.

Starting point is 00:05:53 And without fail, regardless of what kind of duration they pick, you can see the performance where it's actually forming as a better source. store of value, I think is the better way to describe it than using the word hedge. But I love this point. What are some of the other things that in this presentation that you had that you think are really salient points for people to kind of take away as they're thinking through or ways for them to graphically see why it's not this quote unquote hedge in this fractional reserve system that has these deflationary forces that play out just because of the inherent nature of it? I think separate from people, I think having this idea that Bitcoin is a hedge to inflation,

Starting point is 00:06:36 they also associate hedges to inflation as what people, you know, the flight to safety. Why isn't Bitcoin a flight to safety? And so one of the ideas that I talk about in the presentation is that when you think about how Bitcoin is adopted, but then think about where we are. at today. And very few people, it's like, if the statement is true that Bitcoin is a better form of money, which again, most people starting at a baseline of zero, that that statement is entirely incongruent. They see the volatility. And you say Bitcoin's designed to be a better form of money, but it doesn't trade or move up and down or is used on a day-to-day basis as money. That very few people

Starting point is 00:07:25 intuitively have a baseline of understanding to be able to understand how we go from where we're at today of Bitcoin being a nascent and volatile store of value to a fully functioning currency that's perfectly stable and that is used to facilitate trade in day-to-day commerce, like going to the grocery store and buying food with your Bitcoin or going to the gas station and buying gas with your Bitcoin. That where we're at today is still very few people can explain to themselves how we can go from where we're at today to that future state. If you accept that, and I would say that maximum of 1% of people in the world have some intuitive understanding of Bitcoin, I actually think it's far less than that. I think it's in my own mind, certainly not

Starting point is 00:08:10 half a percent. And really what I anchor to is all the people that I know in the world and how many of them have had some idea click about it, that it's not more than one in a hundred. It's probably not more than one in 200. But if you accept that very few people understand it for what it is or own it in any material way, because say that the number of people that own it in a material way are greater than the people that have an intuitive understanding. And in the way that I define a material percentage would be something like 5 to 10% of someone's saving. It's like somebody just has $20 in their Coinbase account because somebody gave it to them five years ago. That's not a material percentage of their wealth. They haven't consciously decided I'm going to

Starting point is 00:08:52 store material percentage of my wealth and Bitcoin, that if you accepted a very small number of people either have a material exposure to it or have an intuitive, fewer have an intuitive understanding, people cannot flee to something for safety that they do not understand. Again, the idea that Bitcoin is quote a flight to safety is incongruent with the current state of adoption. It ultimately is that same thing, but you can't use it as a tool to preserve your purchasing power if you think that it's just like a stock or bond that happens to be particular volatile because all the people that talk on CNBC do not describe it in the way that I think is actually consistent with both what it is at a fundamental level and where it's going

Starting point is 00:09:39 or how it's adopted. If people start to appreciate that less than 1% of people in the world have any material exposure, that when some event happens in the world, whether it be inflation or some geopolitical event that connects with someone to be like, well, if Bitcoin was that, then it should be doing something different right now. If they accept that that can't be true just by the definition of how few people are exposed to it. And then that same thing explains the volatility of it that would come back to this idea of why Bitcoin is going down when inflation is running. And it's just to your point that if you look at it, if you zoom out over a longer time horizon, and you will start to see that, one, it's merely correcting off of some prior rise,

Starting point is 00:10:25 and two, yes, it has preserved purchasing power, albeit in a volatile way, better than any other form of, quote, inflation hedge or really any other asset. And that what explains that is that if you accept that there's still very few people who have any material exposure and fewer who have an intuitive understanding of Bitcoin is money, then when Bitcoin is adopted in waves, say Bitcoin adoption goes up by 10x or 7x or 15x, by definition, one out of 10, one out of 15, one out of seven, whatever number you want to pick are people that have previously owned it and everybody else is buying Bitcoin for the first time. They're essentially pricing an asset for the very first time in their life.

Starting point is 00:11:06 By definition, they have less knowledge than someone that's owned Bitcoin for three years, five years, 10 years. And that necessitates both a large rise, followed by what I like to describe some people irrationally buy Bitcoin and then they irrationally sell it. But more people find the signal because knowledge does distribute over time and only more people figure it out, more people stack up in terms of having had some idea click. But it has to at this stage of Bitcoin and it won't always be, which is also something else that I talked about in the presentation. But at this stage of Bitcoin adoption has to be something conscious. You know, you have to make some conscious decision to have come to some conclusion as to why Bitcoin was store value over

Starting point is 00:11:47 time, and then you can start utilizing it, you know, as a vehicle to preserve long-term purchasing power. But if you don't have that knowledge, it's functionally, it can be even a drag on your wealth because you might have bought it the wrong time and sold it at the wrong time rather than been able to hold it through the adoption waves and been able to realize the benefit, but that it all starts with knowledge distribution. Could not agree anymore with you on that. I love this statement that you had. People cannot flee to safety of something that they don't understand. Going back to the chart that I mentioned as far as trying to graphically present it to somebody, something, I was helping a person. They're talking to a corporation about potentially putting Bitcoin on

Starting point is 00:12:30 their treasury. And we were talking through kind of like the financial side of that. And I said, you know, you can pick out any four-year period. Go to the price chart, pluck any date in time you want and then go back four years prior to that and then do a compound annual growth rate of that four year period. And if you had Bitcoin on your balance sheet, just 2%, the rest all cash, you would match the performance of the S&P 500 if you were 100% exposed to the S&P 500. The thing that's really fascinating about it with that metric of only a 2% Bitcoin exposure and the rest just cash is that you had one-fourth the volatility as the S&P 500 index that you were 100% exposed to that had the same performance parameters. And the reason I was talking through the sharp ratio

Starting point is 00:13:21 with this person, but I said it's really important that you have to frame it in any four-year period of time. Let them pick the four-year period. It doesn't matter if they picked a Bitcoin top or a Bitcoin bottom. Pick a four-year period of time because that's how much time it kind it takes for it to kind of manifest these properties that prove that it's a better store of value. And I got into like the four year having cycle and all that. But again, it's a to have to hold something for four years, to hold something for duration through all that volatility relative to the thing that in their head is is a better store of value, right? Or that they they might think is better. It requires education to get through that, that holding period.

Starting point is 00:14:03 And I think that that's exactly right. And actually, in. in the article that I wrote that was back in January under the same title, I did, I did a similar exercise. I can't remember exactly what I picked out, but I think it was the S&P, the Dow, gold, maybe oil, showing kind of at a point in time versus overtime and over a longer duration. And that it ultimately, because people have a very reasonable fear that they're, they're buying Bitcoin that quote the precisely wrong time. Right. Like, how do I know that if I'm buying Bitcoin, today I'm not buying Bitcoin when it was at 69,000 at its all time high.

Starting point is 00:14:42 Again, I always come back to these fundamentals, which is you have to have some fundamental understanding as to why Bitcoin will store value over time. And I agree with you. And I think it's also consistent with most people that you're talking to as well, that their time horizons are generally longer than one, two, in three years, even four years. yet they have this struggle when it comes to Bitcoin because of the shorter term volatility. But without the anchor point in the world to say, I can rationally explain to myself why from whatever point in time I'm at, even if I'm buying Bitcoin at 69K or whenever it was there,

Starting point is 00:15:25 that if I do hold this for the long term, that it will store value. And that's where in the presentation and generally when I speak to people, I always anchored to the 21 million, if Bitcoin can credibly enforce this fixed supply, that it will emerge as the global reserve currency, that that is the fundamental reason why people will demand it, why they will have to demand it, and that it also connects because it's also in the book that I'm about to come out with, but it was also I wrote about this in the series when I was writing online of like, only through reason and logic can someone arrive at the same conclusion about the same thing consistently. And that is really the

Starting point is 00:16:02 fundamental point that people have to get to to be able to both stomach the volatility of Bitcoin, but also rationally explain to themselves why Bitcoin will store value over time, why more people will have to demand this medium or whether they will or not. That if they're not grounded in that fundamental as to why more people, if you accept very few people, because I think most of our peers in the world will accept that very few people, you know, if you say Bitcoin is money, they will say that doesn't make sense to me. That almost by definition is an establishment that they're not seeing it as you or I might see it. But then if they would say, okay, well, how many people are in the bucket?

Starting point is 00:16:44 Like you saying Bitcoin is money versus saying not in any world is that money, that an overwhelming majority of people still are not there, that if they ground themselves in the reason to explain why say, even if 1% of people are in the camp that say Bitcoin is money, do I think 2% of people will say that. Do I think 3%? Do I think 4%? Because ultimately, you have to have that basis in your own mind to say, I can see a path as to why more people would adopt this as money. But without it, you're stuck there thinking, I'm at the edge of the cliff. I might be buying Bitcoin right before its next 70% drawdown. And so it all comes back. Well, let me anchor into why this thing stores value, which is in that. inherently anchored to why would more people demand it as money in the future? Once you've evaluated that question, which some people might come away and say, I just don't see it, but Bitcoin's ability to store value over those cycles and over that

Starting point is 00:17:43 longer time horizon is also almost by definition more people forming a consensus. Yes, it is a form of money, even if knowledge might perfect over time and harden over time, that more people come to that conclusion. And that's exactly why after that rise and fall, it still has stored purchasing power far better than any other certainly form of money, but particularly any other form of asset. Let's take a quick break and hear from today's sponsors. All right.

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Starting point is 00:22:31 The people who are like, all right, yeah, this sounds like this could be something. And they just slowly kind of chip away at it. They didn't take a big position early on. They just kind of bought a little bit and they kind of put it on a DCA monthly or whatever. And then it was like a year later. and they were like, wow, this is pretty incredible. And through that process, continued to build their depth of knowledge and their education and became way more interested in it as they continued to watch it. A metric that I recently heard, Parker, that I just found, I think it was Dylan LeClair that put it out there, if you bought the top at $69,000 and you continued the dollar cost average, you didn't take a larger position at the top, but you just initiated a DCA.

Starting point is 00:23:11 You are already in the green right now, despite the price being significantly less. lower than that local top that we saw back on this past cycle. Is that the solution when we talk to people or like, what do you tell them? I mean, I definitely think that that is a rational approach, right? But I think also something that fundamentally happens is that oftentimes it's like, and I'll just speak for myself, but I think that many people have similarly experienced this. First time that you buy Bitcoin, it feels like you're like feels almost viscerally like you're lighting money on fire. You're kind of taking the jump off the deep end and you don't know exactly what you've just done.

Starting point is 00:23:51 Right. And so doing that in a more automatic, lower amount, gradual over time, it kind of takes some of the teeth out of, you know, stepping off the ledge. But once you've done that and once you have that, you know, some skin in the game, you've made that kind of forward or conscious decision to be involved. then it creates a stake that makes you want to learn more. You might see it go up and you might see some benefit, or at least your perceived benefit to yourself of like what that is worth now, but ultimately you're paying more attention. And as you're paying more attention,

Starting point is 00:24:27 you see Bitcoin in a different lighter. You start reading different things and diving in more. And oftentimes without the stake, it's harder to do that. But I think, I mean, I was somebody as an example like, skeptic for a long time. And I had to like, and also very conservative from a, with my money perspective. And I had to like, you know, work through the reason and logic how, how there could be a possibility that this is what people claim that it was before I could put any immaterial

Starting point is 00:24:56 dollars in. And I think a lot of people are in that same position. The other side of it, though, that I help connect for people. So I think it is, yes, it's like having a stake and doing it with a, you know, dollar cost averaging approach, I think it's proved to be highly effective. It allows people to, you know, because you can certainly buy too much Bitcoin. If you've bought too much Bitcoin and the price goes down and half, you're very logically with limited information in a position to, quote, cut your losses, but actually realize your losses and then not actually benefit from Bitcoin storing value over time. But the other side of it, which I try to connect for people and I did in this presentation, which I think has helped resonate and it's resonated historically when I've talked in smaller settings, is that people need to connect Bitcoin to a problem.

Starting point is 00:25:38 that they have. And I think in our current environment, people are connecting that there's something broken. I don't think that most people know what. They know that inflation is a problem. They know that inflation is in the case of most people suffocating them, creating significant financial strain because their bank accounts might be dwindling because food at the grocery store is more expensive and they're trying to figure out how to make ends meet. But connecting that to Bitcoin is an important part to connecting the side of Bitcoin is a better form of money. And if Bitcoin credibly enforces its fixed supply of 21 million, it will emerge as a global reserve currency and everyone will adopt it. And that's the basis of why it will store value

Starting point is 00:26:21 over time. Because if you are looking at Bitcoin as a vacuum, and imagine I just said that statement. And I hadn't connected the idea to the dollar and creating a framework for someone to understand how all the money that they printed in 2020 and 2009 to 14 before that is directly connected to this thing, Bitcoin. Then you're sitting there saying in a vacuum, I'm evaluating if 21 million Bitcoin, it's going to emerge as a global reserve currency. And it's far more than a hedge to inflation. It's actually the permanent solution inflation.

Starting point is 00:26:58 We're all going to be at the grocery store buying groceries. It's like, you've just lost 99.9% of people think, in a vacuum. If you start with, let's talk about the Fiat system because Bitcoin being the solution to inflation, if you're just sitting there saying, hey, there's this great thing that can do great things for your purchasing power, or as most people think about it, making money when they first buy Bitcoin, without connecting it to the problem, it very reasonably is a solution in search of a problem. But Bitcoin is not that. It is not a solution in search for a problem. it was created in a very intentional way to solve a very finite problem.

Starting point is 00:27:37 And that is one of all the money that's being printed. And so kind of helping connect that fiat economists will try to explain inflation away, you know, every which way that doesn't include the fact that they're printing massive amounts of money and that, hey, what's causing this inflation at the grocery store is all the money that they printed in the past. And oh, by the way, they're going to have to print ever more money and they're always going to do that until the money

Starting point is 00:28:05 doesn't work. You know that you have a problem. Your problem is actually directly tied to fact that they're printing all this money. Because most people, I don't think, connect this in a direct way that the Fed printing money is actually this thing causing inflation for the reason that economists explain it every way but that, that first connecting inflation to the money printing to the fact that they are going to have to print more and why. And, oh, this thing, Bitcoin is a solution to that.

Starting point is 00:28:30 and that's why people are demanding it, that it's the connection of all those ideas that then allow somebody to, to what I would say, see Bitcoin for the first time, or at least open up the possibility in their mind. You know, it's kind of a convergence. Either you can go down the rabbit hole of understanding that first and then buy more Bitcoin, or you can start buying Bitcoin in little amounts. You have a stake and you're going to be paying more attention. And it's actually Bitcoin that's going to drive you to this place of, oh, this is actually

Starting point is 00:28:57 far more significant than I understood. the beginning. I'm not only a lot more comfortable with my DCA today, maybe I'll increase my DCA by 10% or 15% or double it or on liquidity events by more. In this presentation, when you took the Q&A, you were talking about how over in the UAE, they have 400 megawatts to maybe 500 megawatts that they're mining with. And you were talking about why you found this to be just really important beyond just the mining implications. Do you remember kind of your response on this? And if so, explain to the listeners what what were you're talking about here. Yeah. And part of the background to the question was, what are you seeing

Starting point is 00:29:42 that tells you on a fundamental day-to-day basis that this transition to Bitcoin is happening in a real and fundamental way beyond. And I think it was intended to be like beyond just people. speculating financially. And I used mining as an example, and I used it kind of fundamentally for two reasons, which I'll explain related to the UAE, was that I had a chart where I showed the mining hash rate increasing like 9x over a period of five or six years, and through which a period when China banned Bitcoin mining. And there's this significant rise, followed by a steep decline and then an even more rapid rise that far exceeded where it was at before. And I connected that the people with more knowledge, if you're going to mine Bitcoin, regardless of whether you

Starting point is 00:30:34 are the UAE or somebody out in West Texas, that if you're going to endeavor to build a 500 megawatt mine, which I don't know 500 megawatts is online, but I believe that that's the number that they're building out toward. And I believe it's a project with Marijuana. which is a U.S. public company for people that are interested in reading about it more. If you are going to endeavor to do that, that is a multi-billion dollar project at the end of the day. And that say you endeavored to do that, you would have to put capital investment up front to the tune of multiple billion dollars and that it would take likely 12 to 24, maybe 36 months to get fully operational. And then on the other side of that, all you are going

Starting point is 00:31:22 who get paid in is Bitcoin. Ultimately, you are pursuing that activity and performing a very important function to enforce Bitcoin's fixed supply and clear for final settlement, all Bitcoin transactions, but that if you think about, and I made this point that,

Starting point is 00:31:35 honestly, it is fairly easy to buy Bitcoin. With very limited understanding, you can get signed up with an account and go financially speculate with very little information and click a button and buy Bitcoin. If you are going to go out and build a 500-magawat mine and spend multiple billion of dollars worth of capital over a period of 24 to 36 months into the future, but that's the period lead time to then start to return your investment.

Starting point is 00:32:03 You necessarily or definitionally have to have more information than the market. And so I use it to explain on the one hand that the fundamental of mining going up is more significant because the nature of the people who are doing that and the nature of the operation requires a lot more skin in the game. And that the fact that all you get for doing that is Bitcoin sends a signal that you are willing to make a longer term decision, not worrying about even what happens necessarily in the next 12 to 24, 36 months, that you can only do that if you have made a long term conscious decision to be involved and exposed to Bitcoin over a longer time.

Starting point is 00:32:46 horizon. So that was one part of it. The other part of it was this idea of kind of recognizing that the old world is broken, the new and a big part of what has caused that old world to become so broken is that everything about the currency system is trusted, that it is a debt-backed trust-based system chock full of counterparty risk. And one of the other things that happened in the last 12 months, I believe, maybe 12 to 24 months, was that the UAE began. and I can't remember which one, but was decided to trade oil for rupees with India. And that in 2022, when Russia got caught off of Swift, a lot of people, that was like a kind of earth-shattering moment.

Starting point is 00:33:35 I think a lot of people will say, we'll point back to the kind of end of the dollar reserve currency will be tied to that point. But that what it inherently demonstrated for the world to see was the dollar is all it's a trust, trust back system. Swift is a trust back system. You can get your, you can be cut off from it by the stroke of a pen. And that if we're looking at a world where someone like the UAE is mining Bitcoin and making a very conscious decision to invest in this long-term infrastructure, at the same time that

Starting point is 00:34:04 it's keyed in on that like, I need diversity and what my reserve currency is, but they also mentioned at the same time saying, yeah, we're, we're accepting rupees for oil, but we don't actually want the rupees, that there's, there's a lot of. of options in the trust the world. You can take the counterparty risk of India and their rupees, Russia and the rubles, China and their yuan, the U.S. and your dollars, and functionally, you are exposing yourself in a very uncomfortable position to another country's currency and ultimately another country's counterparty risk, whereas the only alternative that you have in the trustless world of money, where you don't have to trust anyone as to how the supply

Starting point is 00:34:43 the currency is both issued and maintained and enforced that it be a fixed supply, that that's not dependent on the trust of anyone, that if the UAE is at the point of both mining Bitcoin, as well as shifting at least partially away from the dollar and willing to accept Indian rupees, which they don't want for oil, that it also becomes inevitable in that world, that at some point in time, someone like a UAE looks at India and says, hey, how about you just pay us in Bitcoin? because we're already producing it, and there will be this connection between, you know, they're already converting their power for Bitcoin. Why not oil? You know, and it's not just a why not in like the, well, there's a random chance in the universe, but if you connect these two things,

Starting point is 00:35:28 that you have to be very intentional to set off on a multi-billion dollar Bitcoin mining project, and that's a very long-term focused initiative. And what it ultimately is doing is converting energy to Bitcoin. Well, here you are. looking at the exact same thing, trading oil for what? Either a form of money that the Indian government and Central Bank creates out of thin air or the same form of money that you're helping to secure and ensure that there will only ever be 21 million of. Just to give the audience a little bit of context on 500 megawatts. A stadium, a large sports stadium might use one megawatts during a night game when all the lights and the facilities are operational. So 500 megawatts is the equivalent of

Starting point is 00:36:14 500 large sports stadiums worth of power. So when a person hears that and they're thinking about the context of what you just described, the UAE, just the UAE, has invested in infrastructure to service the security and the transactions of this network, of this Bitcoin network, to the tune of enough power to power 500 large sports stadiums. That's how mind-blowing the infrastructure is. Now, and again, we're just talking about a small country in the world. We're not even talking about the U.S. or anywhere else that also has infrastructure tune of, I don't even know, how much, how many megawatts are we talking, Parker, for the whole planet right now.

Starting point is 00:37:02 Yeah, and it's inherently, you know, there's no central, you know, source of truth. People estimate the amount of power based on the amount of what's referred to as hash rate, and then they tie it back to individual machines and how much power does individual machines consume. So it's an inherently imprecise science. I would estimate it's somewhere in between 10 and 20 gigawatts, maybe 15 to 20 gigawatts. my understanding here in Texas that there's three to four gigawatts online just in Texas alone, you know, kind of measuring by bookends. But I do think it's a good context that you just provide there. The week before last, I was in Missouri at an event, a single day event hosted

Starting point is 00:37:47 by a group called Build Asset Management on trying to educate people in Missouri on Bitcoin, specifically Bitcoin. And one of the guys there that spoke, worked for a power company. and he's been working with a number of Bitcoin miners and trying to get kind of internal support within the power company to make more investments on, you know, kind of creating the environment to be able to host more miners as an example and kind of recognizing how, you know, kind of separate discussion, but how Bitcoin can help solve an energy problem with all the variability and kind of peak to trough demand. But the thing that he did to help connect for people was, you know, this was in Jefferson City,

Starting point is 00:38:24 Missouri, and he's pointing across the Missouri River and saying, hey, we service that large company. It was a large industrial company. I can't remember exactly which company it was, but I don't think that this was it, but it was like to the tune of like a John Deere, you know, like making large heavy machinery. And it's like that plant, which is one of our largest customers is five megawatts, right? And they're not using five megawatts 24-7 either. But to give you the context of like when a single miner wants to come and take 100 megawatts,

Starting point is 00:38:54 20 times larger than our largest customer, that these are, you know, one, extremely large loads, highly capital intensive. The mining equipment alone to go in requires significant investment. And every single watt of energy or, you know, kind of computer hashing power is going to secure the Bitcoin network. And that when you put it at the 500 megawatt scale, it's like, this is material and significant, and you don't do that with the same amount of information as somebody clicking a button to buy a thousand dollars worth of Bitcoin. You're not doing that as, quote, a hedge if you are going to devote that amount of your own country's power resources in a primary way, and even if it's in a JV.

Starting point is 00:39:46 Recently, you were on record saying the having, this upcoming halving is not priced in. So lay it on us. Why is this, why is it not priced in? Yeah. So, and I use this to explain in the context of the presentation that every fundamental of Bitcoin is strong. I pointed to the mining hash rate. I pointed to the growth of the Lightning Network, which is used to facilitate more day-to-day

Starting point is 00:40:10 payments on Bitcoin. I talked about kind of, I think, you know, using your example of saying, hey, where Bitcoin is today. And at the time, it was like 27, 28K. it's three and a half to four times higher than what it was pre the drop in March of 2020. So from like 8,000 to 28,000. And if you compare that to any other asset over the same time period, it's stored purchasing power far better. I think it's just under 70% of all Bitcoin has been held for over a year.

Starting point is 00:40:40 And for context for people that after the rise and fall in 2017 and 2018, only 40% of all Bitcoin had been held over a year. So from that period to today, 30% of all over the currency on a 19 million nominal currency, the nominal units of currency that have moved from short-term holding to long-term holding, where not only kind of 30% higher than where we were, where Bitcoin is being held by more long-term holders than it ever has before. And then I said, and on top of that, the Bitcoin happening is six months away. way. So every fundamental is strong, including price. And what I believe is the most significant

Starting point is 00:41:24 market event in Bitcoin is six months around the corner. And that now is the time, you know, it's not, now's not the time for people to blindly go buy Bitcoin, but now is the time for people to be doing work. I say that it's the most important market event for Bitcoin. And for those people who are aware of the running debate, everyone knows that the Bitcoin happening is in six months. And if it, if everyone knows that it's happening, surely the market is pricing it to happen, of course. And the reality is the having is not priced in. It's never priced in. It functionally can't be because ultimately it creates a supply shock. So even though everybody who is paying attention knows that this quote supply shock is happening, it really doesn't know the consequence of it until

Starting point is 00:42:12 after the fact because it doesn't really know how much of a deficit on a percentage basis is now absent from the market that needs to be made up in bidding the price up. And that as people start bidding the price up, psychologically, people get more confident and they're less willing to sell. And so the example that I use simplistically, and it's not exactly this, but I just use the example to help articulate for somebody of functioning what happens at the point of the happening is that if 6.25 Bitcoin are being issued every 10 minutes on average and, and technically speaking, because hash rate is going up, block times come in about 10 seconds on

Starting point is 00:42:52 average faster than every 10 minutes, but just simplistically to help people understand the point I was making was let's assume that it's every 10 minutes that currently at the time, 6.25 Bitcoin at a price of 27,000 translated to basically revenue to miners in a dollar equivalent of $24 million a day, 900 Bitcoin a day on average. And that in order to maintain equilibrium in price, that the market would have to absorb that $24 million in supply. And some miners hold a lot of miners naturally do sell a good amount of their revenue to pay for power costs to buy more miners, but to achieve equilibrium on top of

Starting point is 00:43:31 everything else that the market might need to sell, the market of existing holders, 24 million of new supply. Well, overnight when Bitcoin in April of 2024, when the new supply goes from 6.25 Bitcoin every 10 minutes on average to 3.125, that translates to 450 Bitcoin a day, which translates to 12 million of new supply that the miners have, but that if demand, even if it fluctuates some day-to-day in an equilibrium, say, to achieve an equilibrium, needs to be a 24 million, well, now you have a supply and demand and balance. And no one knows how great that gap is relative to the market, but that what has to happen necessarily

Starting point is 00:44:10 for all those people that are accumulating to get their Bitcoin is that it has to come from somewhere else that's not the miners if they're trying to accumulate nominal Bitcoin and the market has to bid up the price of Bitcoin in order to get it from existing holders. One of the things that Paul Tudor Jones pointed out when he was rationalizing his case for buying Bitcoin

Starting point is 00:44:28 on the other side said, you know, when I noticed that when the price of Bitcoin went down by 80%, you know, nine out of 10 people didn't say, or something around that order of magnitude. Well, on the other side, it's like what we've seen in past cycles is when the price goes up 10x, it unlocks about 20% of Bitcoin. But what that means is that a 10x move in price was insufficient for 80% of the market.

Starting point is 00:44:51 You know, and so ultimately, my view is the halving creates a supply and demand and balance. Like the drop in new issue Bitcoin does nothing to the people that are out there in the market saying, I need to buy Bitcoin. But what it does create is this certifiable imbalance where the supply that was there yesterday, newly issued Bitcoin, is no longer there tomorrow. And the market has to figure out just what that imbalances. And that's naturally what inevitably forces the price higher because the market has to bid up the price in order to unlock supply from the existing holder base, which increasingly

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Starting point is 00:49:05 their conviction and their buying was amplified and why we're seeing such. So I do think that that was something that's that was something that's that was something that was something that's prior all time high. I think that there might have been some well to explain that so like one of the ways I think about it is that I think that a lot of these failures uh I mean it's like one Bitcoin can do anything and everyone has I always psychologically prepare myself and I think it's done me a lot of good over time and I think it will serve everybody that that's getting into Bitcoin and and starting to see it as money and why I will preserve purchasing power over time to psychologically prepare for the unexpected. I have always psychologically prepared for a drawn down of 50% in a single

Starting point is 00:49:51 day. And then, you know, I always talked about that. Then when you actually live it, you're like, okay, like, yeah, you're right. That was worse than I thought it would be. But that it can't happen. So it's like all bets are off, but fundamentals went out in the long run. And you better be positioned in a way to survive all weathers. Can't be caught off sides because you'll, ultimately bear the brunt of it and not get out unscathed. But that what I think happened in this cycle that is different from past cycles was all of the waves of failures. And I think it might be more similar to say, or like at least the prior cycle, I was not yet involved in Bitcoin when Mount Cox failed.

Starting point is 00:50:30 But I would say that those market events probably have distinct effects that maybe were absent in a cycle without a big failure like what happened in 2017. And so, you know, part of the way I describe it is if, I don't know, do you know how many Bitcoin blockfai had? Wasn't the number like 50,000 or something like that? I think I think it was 50,000. Like, so FtX was around 70,000, Celsius was 150,000. I think BlockFi was 50,000. That was the number I used in the presentation.

Starting point is 00:51:00 It was the one I was like least confident in stating, which is why I ask here. But if you total that up 240,000 Bitcoin. And I'm not saying that BlockFi, FTCS and Celsius 4 sold 100% of all their Bitcoin. But we're talking about hundreds of thousands or 100 to 2,000 Bitcoin that was forced sold because of institutional failures of a few entities, that that depressed the price a lot more than probably was otherwise natural for the cycle. And there were a lot of people that lost Bitcoin that wake up tomorrow and don't have it.

Starting point is 00:51:32 But that was the market absorbing it. And in order to absorb that unnatural supply that became unlocked because institutions that were insolved and were forced selling it. to try to cover up liabilities. That is what forced its price below its prior all-time high. But always anchoring back to the fundamentals is that the market absorbed the liquidity, right? And that now it's back at levels prior to all-time highs. And so it's unclear how kind of that impacts, I say, this go forward.

Starting point is 00:52:00 I just anchor to the fact that fewer than 1% of people have any material exposure to Bitcoin and more people are figuring it out because of a perfect storm of the Fiat system with maybe, you know, a tightness of this past cycle or kind of a more depressed setup than would have existed without the massive failures. And that ultimately where we're at from a market position is right back where the market was at in 2016 or 2020. And that we have four of these cycles and humans responding to scarcity the same way. And still a significant imbalance between people that own Bitcoin in a material way versus

Starting point is 00:52:41 not to expect that the quote Bitcoin is priced in when very few people still own Bitcoin. I think it's like the fundamentals say that people are going to have to bid up the price of Bitcoin to get it. So, you know, I hate forecasting on like, what does price do? I just try to explain why more people will demand Bitcoin over time, but I'm certainly conscious and try to explain for people what drives the big swings. And for me, the halving is a critical one because it's like in reality, the fixed supplies of force every 10 minutes.

Starting point is 00:53:16 That you start to understand when you're deep down the Bitcoin rabbit hole. But if you've heard this fixed supply of 21 million and then the way that that happens is that the rate of issuance gets halved every four years and then you observe it and you say, oh, a group of people in D.C. or New York did not get together and do that. It happened by pure economic force. and there's no way to deviate from it. And I just saw it happen, that it reinforces for all existing market participants that new supply just got tighter.

Starting point is 00:53:46 And everyone that was on periphery can see Bitcoin is doing exactly what people told me to do. Not that it was hedging inflation, but that it was enforcing its fixed supply. And that that enforcement of the fixed supply is what drives everything. Just to wrap your head around some of the numbers that he was talking about with the FTX and BlockFi and Celsius, just all those. customers that had Bitcoin on deposit, let's just say roughly the number was a quarter of a million Bitcoin, 250,000 Bitcoin-ish, somewhere in that range. The inflation rate that minors, all this electrical power that's being poured into the protocol in order to secure it and to verify the

Starting point is 00:54:25 transactions. Based on 6.25 every 10 minutes, it's about 320,500 Bitcoin on an annual basis. $328,000. So you're almost matching that amount that FTX BlockFi and Celsius sold into the market that when they went bankrupt, the Bitcoin weren't there. They sold their customers deposits. And that sell pressure took place in this past cycle just to kind of wrap your head around how significant that is. I think it's a very significant number. I think it's a lot bigger amount of cell pressure than people realized that they actually went through and endured if you are in this space and have been in this space through the past cycle. Yeah. And which you also, like, what I try to, because it's like, think about like the micro

Starting point is 00:55:14 example of what happened in that instance. FTX sells a Bitcoin. It has to deliver a Bitcoin to some other counterparty. Somebody had to come up with dollars. And those, imagine, imagine you had one Bitcoin, you were fortunate enough to have one Bitcoin on FTX, you no longer have it. You thought you had a Bitcoin. You don't have it. Somebody in the market when Bitcoin was crashing had to step in and buy that. And the Bitcoin is no longer at FTX, Bitcoin's no longer at BlockFi, the Bitcoin's no longer at Celsius. Again, saving that there's some residual small percentage of Bitcoin that maybe they didn't sell and they had to file for bankruptcy before that point. But that the market absorbed that. And also, the market,

Starting point is 00:55:56 market absorbed it at a time when everybody was fleeing, not to safety, but running for the hills because they were scared, that the people with more information, it's actually, it's a lot easier to buy Bitcoin when the price is going up. It's a lot harder and you have to have, by definition, more knowledge to be able to step in with a position of confidence when Bitcoin's falling like, or dropping like a falling knife. And the nature of what happened was like the Bitcoin that you thought you had if FDX no longer there, somebody bought it somewhere else in the market and FDX delivered it. Now the person that thought they had a Bitcoin and FTCS no longer does, they're now not short of Bitcoin in terms of having borrowed it and sold it, but like they thought

Starting point is 00:56:39 they had a Bitcoin and they don't. So if they want to get another Bitcoin, they're going to have to go back into the market and buy more. But that's the other side of it, that there's 200,000-ish worth of Bitcoin. Those are people that had made the decision or thought they had Bitcoin that now don't, they're now in a deficit and they need to accumulate. But at the same time, the market of people that had more information rather than less were stepping in to accumulate forced de-leveraging from the institutions. And that that I think did inevitably have an impact on the last cycle, probably shortening kind of the rise, but then also exacerbating the volatility on the downside. So it is important to be conscious of the big things that cause swings, to then be a

Starting point is 00:57:21 able to find the signal through the noise, right? Because it's like, if you are not in a position to understand over the long term why the world is shifting to Bitcoin as a new form of money, trying to fit all the different moving pieces of the world around it, rather than having a strong anchor point, it's 21 fixed supply, the thing that's going to drive all demand or all or he does, but it will increasingly. You're like, I've never figured out the perfect analogy, but it's like a boat at sea that's lost its anchor in a violent storm that's just whipping around. You don't know what directions north or south that you don't have an anchor point to be able to evaluate anything. Once you have that anchor point of the long-term fundamental, then you can start looking at the happening event or large institutions failing and being able to fit it around what might be causing larger or directional market shifts.

Starting point is 00:58:15 You know, I have to throw this up here because you were saying that to step in, to that market and buy that Bitcoin, you had to have increased knowledge or more knowledge. And so you were over here on the right side of this bell curve that I'm displaying. But I would also argue, Parker, we had the less than 80 IQ folks stepping in and buying the hell out of that market when it was scratching. I'm just joking. One of the other things I do say is that Bitcoin's a common sense test. Yeah.

Starting point is 00:58:42 Right? Yes. Because it like people who try to over-analymp. analyze, overthink it, try to zero in on trying to find the one thing that's broken about Bitcoin or why everything falls apart, that that can be their own worst enemy, right? And that's, I think that's that part of the meme, but it's like Bitcoin's IQ test, you can tell certain people say, hey, look, they're printing a lot of money, you know it. Food of the grocery store is getting more expensive because they're printing a lot of money. And there's only ever going to be 21 million

Starting point is 00:59:13 Bitcoin. And they're like, okay. That's that makes sense. Yeah. And then they're also, on that other end of the knowledge distribution curve, they've made it there. It doesn't have to be like the rocket scientist being like, ah, you know, this is money. I would say it's a, Bitcoin's an equal opportunity mindbender.

Starting point is 00:59:31 Someone like Jack Doris, he can get it, but he didn't get it because he's a billionaire. Someone like Elon Musk cannot, but he doesn't not get it because he's a billionaire. It's that we're staring at a problem that virtually every living human being has never consciously considered. And it's not that it's,

Starting point is 00:59:48 super complicated. It's just that it's hard to see. And that, you know, once people key in on the fundamental, once they tie it to that, yeah, I do have a problem. And I can see how this big thing, Bitcoin is related to it, then they can start to make sense of what's otherwise a chaotic world and otherwise unexplainable. But the other one thing that I made me think of, and, you know, we can talk about it as I was interested, is that I, you know, kind of the thought that I put out of why they're always going to have to print more money, you know, because part of it is when Bitcoin's going up in value or, you know, or going up in price, increasing and purchasing power going down, vice versa. If someone, again, is just looking at Bitcoin in a vacuum of like 21 million

Starting point is 01:00:32 fixed supply and trying to make sense of it, but they don't tie it to the problem of printing money. And they're still at this point, because I've gotten this comment a lot, is like, well, how do you know they're going to print more? Like, I get kind of that they've printed a lot. a lot, but how do you know that they're going to print more? And the part of that presentation that I keyed in on that like, when I'm sitting there in these volatile times, not knowing truthfully what's going to happen in Bitcoin on a day-to-day basis or month-a-month basis, other than knowing that over time people are going to have to adopt it, it is the 21 million fixed supply on one side. But on the other side, it's this relationship between the U.S. credit

Starting point is 01:01:09 system, which can be a kind of analog to the global credit system, I use the U.S. because it's the largest. It's on the order of magnitude of 25 to 30 percent of the entire world's credit system added together, but that where we exist in the world in the U.S. is 96 trillion of debt, and that's very vanilla debt, where it's like auto loans, mortgages, student loans, credit card debt, corporate debt, both financial and non-financial, state, local, federal debt. But just like this amount of money is due at this point in time and there's an interest rate on it, it doesn't include derivatives and it doesn't include unfunded pension liabilities. And it's a number that the Federal Reserve puts out.

Starting point is 01:01:52 And they put it out quarterly. That number today, or kind of stepping back at the financial crisis was $52 trillion. At that time, there was just under a trillion dollars in the system, $900 billion. the banks had about 350 billion of it. So the financial system was leveraged over 150 to 1. They put the money in to be able to save the credit system to prevent collapse. Then they try to take the money out later, but the money that they put in caused the credit system to expand massively.

Starting point is 01:02:19 And so prior to 2020, when they put the $3.6 trillion in after the financial crisis in 2008, that had caused the credit system to grow from $53 trillion to $76 trillion or $75 trillion. where we're at today after they inserted $5 trillion between 2020 and 2022, or really the fall of 2019, now that credit system has grown from mid-70 trillions to $96 trillion. And so now there's $96 trillion of debt in the system and, quote, only $8 trillion. So even though they've printed a massive amount of money that is causing wreckage and inflation, they're still in a position where they're ever going to have to print more money because as we see,

Starting point is 01:03:00 see right now is they've tried to raise interest rates. One, it's not reducing inflation of food and energy for fundamental reasons. But then two, all that it necessitates is in the future that they're going to have to put all that money back in and more. Otherwise, the credit system would collapse because at a world where we sit today, a credit system in the U.S. of 96 trillion in debt and only $8 trillion, each dollar is leveraged 12 to 1. So for every dollar that exists, that's owed 12 times over. And as the Fed, quote, tries to tighten, everyone figures out the dollars, or the world is far more than a dollar short.

Starting point is 01:03:40 And the credit system starts to contract initially and then ultimately starts to accelerate to a collapse. And the only way to avoid the collapse of the credit system, which is how the Fed's entire system works is on credit, is by printing money and going out and buying financial instruments to prop up, asset prices to sustain existence. and debt levels. And so it's like my world, when I'm looking at the price of Bitcoin and the impact of the happening, all of that or the failures of financial institutions, I bring it up now because it's like it's all anchored by those are things in the middle creating kind of short term

Starting point is 01:04:15 volatility and chaos. And the thing on the bookends that are driving everything are six supply $21 million world in debt and they're going to have to print more money than they ever have before. And those two things on the bookend are related. And this thing Bitcoin fixes not just the problem of debt, but the money printing that the debt problem induces. Parker, you're working on a book that I think has one of the coolest titles I've ever heard, which is gradually then suddenly. What are you trying to accomplish with this real simply for people? And when is it coming out? It's officially at the printers. So I got to figure out how many weeks. it will take to actually have the prints in my hands.

Starting point is 01:04:59 But I would hope in three weeks, maybe four, but before Christmas. I'll hope for sooner, but, you know, just the cover's done, the book's done, the printing specs are done. It just has to be printed. There's a cue at the printer. So give us the premise. So you're just laying it out from an educational standpoint to kind of cover a lot of the things that we just talked about so that it makes it more accessible for folks? Or what was kind of your main intention with it? Yeah, I mean, my main attention is to help more people come to an intuitive understanding of Bitcoin as money.

Starting point is 01:05:32 So the title is gradual and suddenly the subtitle is a framework for understanding Bitcoin is money. I will always recommend that people first read the Bitcoin standard. It was formative for me. But I also designed this to be a zero to one guide. It's not designed for somebody that is super casual that thinks if they read the dummies guide to Bitcoin that they're going to figure it out. Like I lay out that Bitcoin's hard to see, but impossible to unsee once the picture starts to become into focus.

Starting point is 01:06:04 But if someone's self-motivated and been staring at this equation for a long time and it just has never added up, but that they're curious and they want to understand and want to understand Bitcoin at an intuitive level, that is what this is designed to be. That I don't know if it's going to necessarily be a book for the masses, but it's kind of more a rifle-shot approach to get somebody very deep beyond a cursory understanding to kind of start to be able to explain rationally to themselves how we could go from today of Bitcoin being a nascent, but volatile store of value to a stable form of money that's everything's priced in Bitcoin and Bitcoin's facilitating virtually all the world's trade in day-to-day commerce and Bitcoin's a

Starting point is 01:06:48 global reserve currency. That anybody that wants to understand that has to be intentional and that it really, yeah, to be that zero to one guide, what I kind of framed it after was my series called Gradually Than Suddenly that I wrote online over the course of 2019 to 2021. There were 16 essays as part of that series. Each one of those basically has a chapter and I've refined them to be more polished, more timeless, but to maintain the substance, to not veer, you know, to basically maintaining the historical record of those. But then I've, organize them to be more linear and to be more kind of knit together, but also to preserve the historical context, because a lot of them were written in the periods before and then just after

Starting point is 01:07:36 this latest episode of unlimited QE that happened from 2019, 2020, 2021. And so the time period in which I wrote a lot of the original bulk of my work, the historical context was very relevant to it. And that kind of passage of time helps reinforce the argument. So it's kind of capturing the same spirit of the series as I wrote it back in the day, which is that each chapter is both meant to be part of a comprehensive framework, but then each chapter can also be read as a standalone. So there's a section on the fundamentals, there's a section on common misconceptions, and then there's a section on Bitcoin versus a dollar. So I kind of, you know, zero to one Bitcoin, then things like, well, if you are particularly

Starting point is 01:08:21 struggling with why Bitcoin's too volatile to be money, why Bitcoin's not too volatile, why it's not too slow, why it's not for criminals, why it can't be banned, all the, I think the most common questions, there's that common misconceptions section. And then Bitcoin versus the dollar is one where I kind of explain more of my thesis or not really thesis, but just the fundamental economic reality as to why they are always going to have to print more money, but also why it's a problem and why it's a bigger problem than most people understand on the surface for that reason that oftentimes people can't come to understand Bitcoin in a vacuum. They've got to understand it in a relation to a problem that it's solving for them and that it's a problem that they have. So it's

Starting point is 01:09:01 really kind of architected off of the same series that I've written, but refined quite a bit and better needed together, better structured to be able to ship off to somebody and, you know, that's self-motivated that wants to be able to see what they haven't been able to see before. So it's a, I got another thing. I have another thing here to highlight that you're working on because you're just working. We were in a bear market. We're coming out of the bare market.

Starting point is 01:09:25 You were building Zapparite. Talk to us about Zappright. What is this? You're doing this with Will Cole, right? Yeah. And John McGill, he's actually the founder. Okay. So we joined John.

Starting point is 01:09:36 Zaparite is still at a very early stage, but we've got great product and market. It's focused on Bitcoin payments. Okay. And oftentimes when people here are, you a little bit of the backstory, but before I do that, when people hear Bitcoin payments, they think, oh, this is a lightning company. Realistically, what we are focused on is enabling businesses to accept Bitcoin as payment, and we're focused on two early use cases of Bitcoin payments. One is invoicing, such as like Preston, you if you were invoicing advertisers for

Starting point is 01:10:05 advertising, to be able to issue a business invoice with all the business context, to bill somebody and then to be able to receive Bitcoin as payment, either on-chain, lightning, importantly, both non-custodial or custodial. Zappright is not a payment processor. We're enabling businesses and facilitating Bitcoin, or businesses, not Bitcoin businesses, some Bitcoin businesses, but any business that wants to receive Bitcoin as payment with that application of business invoicing as well as e-commerce. So it could be someone like yourself issuing invoices and wanting to be paid in Bitcoin. Another key feature of Zapri, is that we allow for fiat payments side by side with Bitcoin payments.

Starting point is 01:10:45 Again, Zapprite isn't a payment processor. We enable people to connect methods of payment like on-chain Bitcoin wallets, like a coal card ledger, treasur via an ex-bub or an unchain vault, or they could connect something like a strike account. But then also they could connect like a stripe with a P account so they could receive credit card payments. One of the ways part of our vision of businesses accepting Bitcoin as payment is not that somebody goes from zero to one.

Starting point is 01:11:11 One day I was 100% receiving Fiat payments, and then tomorrow I'm receiving 100% Bitcoin payments. It's that it will be a shift in that you start by giving your customers an option side by side. Do you want to pay Bitcoin, on chain or lightning? Do you want to pay in Fiat? Our whole kind of premise is you bring your wallet. You don't need to accept our counterparty risk as a company.

Starting point is 01:11:35 What we are specializing and facilitating is the actual payment itself and again focusing on the contract services on the invoicing side. So podcasting, you know, lawyers, contractors, software developers that are doing contract work or on the e-commerce side, small businesses that are selling business services online and that we importantly focus on non-custodial because we think most of people that are at the point where they want to receive Bitcoin payments are minded to hold their own keys. But we're also not opinion to be about. We accept that people are going to receive Bitcoin in the way that best fits their needs. And that will be both custodial and non-custodial, but a core of Zapright

Starting point is 01:12:19 is being able to enable direct to non-custodial payments for Bitcoin. And really what got me focused on this or more focused on it to the point of wanting to dive in and all the time that I spend outside of giving a presentation here or there on the fundamentals of Bitcoin or working on my book is all going to ZapRite. And for the last four years, Will and I worked on Bitcoin custody, which I think is critical. We worked at Unchained, helped grow Unchained from very early stage to more developed stage, and still client of Unchained, worked down the hall from Unchained extremely close. I'm generally speaking to somebody from Unchained every day.

Starting point is 01:12:54 I like to think about the custody problem. If money is a store of value, then you need a good form of custody. And I talk about this too, and the Bitcoin is not a hedge presentation, is that if Bitcoin went from $1,000 to $27,000, And in between there, it went from 69,000 to 16, and now it's at 35,000. But if you put your Bitcoin in FTX and lost it, but Bitcoin went from 1,000 to $35,000 to store purchasing power for you. No, it didn't.

Starting point is 01:13:22 You lost your purchasing power by making a bad decision, not because Bitcoin doesn't store value, but because you did the wrong thing with it. So I think of custody, it's like, in order for something to be a long-term store of value, you need to be able to reasonably have to hold that with knowing. that you're not going to lose it. And that was really the problem that we focused on at Unchain and continue to support and focus on. When we had the slew of bank failures earlier this year, like one, it was twofold. When I was working on my book, I wanted to accept Bitcoin payments, actually for the blog post, Bitcoin is not a hedge. And what I thought should exist for Bitcoin

Starting point is 01:13:58 payments to be able to easily set up a website, drop in an ex-pub, connect a lightning wallet without having to have an onerous onboarding process and then have that experience be custodial or on the other side of the spectrum not wanting to run my own server but have someone just be like hey provide me the front end to accept the bitcoin payment and make the bitcoin payment go where i want where i wanted to that didn't exist as easily as i thought should and then so i was already minded to thinking about this problem like why doesn't why is it not easier to receive bitcoin payments in a non-custodial way but without me running a server And also that's not a dig at BTC pay because I do use BTC pay.

Starting point is 01:14:35 It just wasn't what I needed for this particular application and also what I think a lot of people want. But then the other side of it that really sharpen my kind of interest in ZapRite and working on Bitcoin payments was when Silicon Valley Bank failed and there were the slew of other bank failures and there's going to be more bank failures to come that when Silicon Valley bank failed and there was a $160 billion deposit taking institution and virtually failed. overnight. A lot of what the commercial companies that were working with Silicon Valley Bank were thinking about was, how am I going to make payroll on Monday? And that you think very first about your savings that's in the bank, and that becomes a balance sheet problem. Now, ultimately, Silicon Valley Bank was bailed out predictably. It was pretty comical, seeing the likes of Bill Lachman and Jason Calcanus and any very wealthy individual that was claiming for bailouts for wealthy people that had all their money at Silicon Valley Bank. And I also, someone who's

Starting point is 01:15:37 like, it was very predictable. They were going to get bailed out, certainly. But that's almost beside the point. But when that bank failed, everyone was most focused on what, how am I going to make payroll and is my money at the bank? Well, certainly the money is not a bank. But the other side of it is that the banks are a choke point, not in like a censorship way, but they're also the way. that every business receives payments. So it's not just a balance sheet problem. The decision to own Bitcoin is principally one of a balance sheet. It's personal savings or savings of a corporation to hold working capital.

Starting point is 01:16:10 But you also need a mechanism to be able to charge customers and receive revenue. And the bank is also a single point of failure in that world. And that anybody that's run a small business, I mean, I've dealt with this in getting my entity set up for my book. you dealt with it was that right to get bank accounts set up to actually get the rail set up on the fee outside. It's not only onerous and costly because they take three to four percent of payments, but their counterparty risk exposes you on the revenue side or the way that you receive payment. And so when those banks failed, it just sharpened my lens through which I looked at the world and said,

Starting point is 01:16:48 the train's coming off the tracks in a bigger way than before and in a seemingly accelerated, away. And I did a podcast with Marty where we talked about before I formally started working on ZAPRite, but it's like people need to start thinking about building infrastructure that they would build if the U.S. banking system was not there as a backup. If they didn't have access to that, what infrastructure would you build in that world? And that's ultimately what made me say, hey, working on Bitcoin payments and helping Bitcoin businesses or any business or any individual contractor that wants to get set up in a way, in a seamless way to accept Bitcoin payments that they need to start doing that and building in the redundancy because Bitcoin

Starting point is 01:17:35 helps protect their balance sheet, especially if they hold their own keys and hold it without counterparty risk, not that they necessarily have to do that, but if banks become unreliable and the banks are the central point by which companies receive their revenue, setting aside the costs associated, that if those banking rails become less reliable, which they already are, but will become increasingly, that now is the time in a more real way for business after business to make the constant decision. And it really starts with a business owner to say, I'm going to build, I'm going to invest in this redundancy before I absolutely have to, because if I wait until it's absolutely necessary, I've waited too long. Same reality for buying Bitcoin.

Starting point is 01:18:17 And that's what we're trying to do is ZapRite, is make it really easy, lower the bar, hopefully help grow the market of businesses receiving Bitcoin, you know, not to be competitive with everybody else that's already in the space, but to help grow the space to grow the pie and expand the reach of Bitcoin payments, 10x, 100x,000 X, 10,000 X. The world's going that way. We just want to help accelerate it and help usher in and provide greater security to businesses to both have rails to receive payments in addition just to having the currency as a means to store wealth.

Starting point is 01:18:48 I love it. We'll have links in the show notes for folks listening. Zap Wright was the company and then obviously the book. Christmas coming up gradually, then suddenly. Parker, is there a landing page for the book yet? Or do people just search on Amazon if they're listening to this in a couple weeks from now? What I would say is follow me on Twitter. Parker A. Lewis, I'm trying to get off Twitter, but with a book release, it's proven to be harder.

Starting point is 01:19:15 They can also monitor my blog or like sign up for my blog gradually. then suddenly. Dot XYZ. I'm going to be putting information out there. I'll be making an announcement there and on Twitter on where the book will be for sale in the next couple weeks. Okay. And then, yeah, I'm going to be selling you personally on using Zapparite, Preston,

Starting point is 01:19:34 just as besides. We'll follow up about that. But yeah, Twitter, Parker A. Lewis, the blog, gradually than suddenly dot x, y, Z. And then also, if you would, drop the presentation, Bitcoin is not a hedge into the show notes. Oh, okay, yeah. People are interested in that.

Starting point is 01:19:50 I'd love for them to be able to, they could probably just YouTube it. But if you can include that, that'd be awesome. Awesome. Okay, we'll have all that into the show notes. Parker, thank you so much for making time. It's always a pleasure to chat with you. I learned a ton and love having you here. All right, looking forward to seeing soon.

Starting point is 01:20:07 All right, see you. If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for We Study Billionaires, the Bitcoin-specific. shows come out every Wednesday and I'd love to have you as a regular listener. If you enjoyed the show or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that. And it's something that helps others find the interview in the search algorithm. So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening and I'll catch you again next week.

Starting point is 01:20:42 Thank you for listening to TIP. To access our show notes, courses or forums, go to the investors podcast.com. This show is for entertainment purposes only. Before making any decisions, consult a professional. This show is copyrighted by the Investors Podcast Network. Written permissions must be granted before syndication or rebroadcasting.

We Study Billionaires - The Investor’s Podcast Network - BTC156: Bitcoin is Not A Hedge w/ Parker Lewis (Bitcoin Podcast)

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