What Bitcoin Did - The Path to $10 Million Bitcoin | Eric Yakes

Episode Date: September 11, 2025

Eric Yakes lays out why Bitcoin is on track for $10 million, and how cultural shifts, institutional adoption, and political realities are accelerating the path. From revolutions and mass movements to balance sheets and BlackRock ETFs, Eric explains why Bitcoin is unlike any other asset in financial history. We get into why qualitative forces - belief, culture, and narrative - drive Bitcoin’s price as much as math, how the rise of treasury companies and governments adopting Bitcoin could fundamentally change markets, and why neutral, permissionless money is the escape valve from today’s credit-driven system. Eric also explores what a $10M Bitcoin world might look like: from time preference shifts and new architecture to political legitimacy and global strategic reserves. In this episode: - Why Eric believes Bitcoin can reach $10M within a decade - How revolutions explain Bitcoin’s cultural momentum - The role of ETFs, treasury companies, and government reserves - Why narratives, not fundamentals, move markets - How neutral money could restructure capitalism and society - What a $10M Bitcoin world means for time preference, politics, and the future THANKS TO OUR SPONSORS: IREN RIVER ANCHORWATCH BLOCKWARE LEDN BITKEY Follow: Danny Knowles: https://x.com/_DannyKnowles or https://primal.net/danny Eric Yakes: https://x.com/ericyakes

No other asset has a mass movement or a revolution backing it. The largest economy in the world realized, oh, this voting class we need to appeal to. There's no politically viable solution other than to support this. Bitcoin is like this exogenous variable. There isn't a playbook, right? The big shift is that it's changed culturally. It's becoming this thing where everybody's like, oh, it should probably have a little bit of money in Bitcoin. And that's how it becomes something everybody has.

And then it will come to a point when it's going to be a lot easier for people to say, oh, well, I'll just pay you on Bitcoin. Bitcoin's going to be a $10 million in probably like seven years. I think it's going to happen relatively rapidly. Bitcoin is always and everywhere, like one major press release away from a huge change in the perception of it. Cheers, man, with the bin Tang. With a bin Tang. To Bali.

This is the kind of beer that's not nice anywhere apart from Bali. I love this beer. I think this beer is great. It's funny, too, because when we were at dinner the other night and there was like a bunch of other loggers after drinking this the whole trip i'm just like everything else is gross yeah i'm i'm like this is i'm struggling with the heat here man yeah i can feel myself sweating right now yeah first interviews i've done outside and barley's not the place for that yeah for everyone listening danie's been grinding he's been 5 a m surfing every single day surfing with some pretty heavy hitters

everybody's saying danny's the top-notch surfer i don't know about that but it's been pretty fun today was big yeah yeah oh yeah we didn't even talk about it yeah we're going to go down and have beers. Watch some waves after this. But the whole trip, you've been, I wouldn't say shilling me, but we've been talking a lot about the idea of where Bitcoin goes from here. People like to throw out numbers like Bitcoin's going to a million, Bitcoin's going to 10 million, infinity. And you've kind of been laying out the process for me of how we actually get from where we are today to Bitcoin at $10 million. So where do you want to start? Do you start with where we are today? Actually, you know what, before we do that, tell me why you think Bitcoin or it goes to $10 million.

The number one fundamental reason Bitcoin is going to go to $10 million is because no other asset has a mass movement or a revolution backing it. And we can get into the details of a lot of that kind of later on. But I think that's the primary thing that makes us distinct. Because with any asset, there's all these quantitative characteristics that people want to apply to an investment. And those are insightful and those are valuable. But certain qualitative characteristics are much harder to assess. And that's really important. Like the qualitative characteristics are the fundamental drivers behind all these quantitative measures.

Like a lot of investors will go and they'll look at the public financials of a stock. And they'll say like, okay, you know, based on these numbers, we are going to determine to be, you know, a buy, a sell, or a hold, or some sort of classification of it. The reality is that everything driving those numbers on paper comes from these qualitative characteristics. And when you look at that, the key things like assessing a management team and what are their core competencies

and what are their expertise within and is this the right market for them and, you know, do they have integrity? And like all these other different behaviors that are backing that, and you can't just like measure these things, you know? And that's the qualitative characteristics. I think of Bitcoin that makes it fundamentally distinct for many other investment is just the fact that

because there's a revolutionary movement backing it, there's this perennial bid for demand. And really the only other thing that I think exists in the world that has that right now is a Federal Reserve. What people say, don't fight the Fed, there's the Fed put, don't bet against the Fed. That is something that's changing now

because I think with Bitcoin, we have our own Fed put. we have our own, when things go down, we have a mass movement that's buying this. And that's something that you can't really stop over time. There was this book written by Eric Hoffer called The True Believer. Eric Hoffer was a social philosopher, spent his career studying mass movements, revolutions, and like what are kind of the commonalities across all of it. And, you know, I read that a few years ago. And it was actually around, it was just a friend gave me that book when I was getting into Bitcoin. And that was one of the most interesting things to me about Bitcoin

is that like the parallels that you kind of have with some of this. I could go into this. I could kind of like pull up some of the details on an AI or something. Yeah. Okay. So it's like the of these common characteristics within revolutions, like the first ones, you know, there's a desire for some sort of change. And, you know, it says like revolution stem from this deep-seated frustration

and with the present and a yearning for radically different future. and Hoffer kind of argues that this desire often arises among those who feel their lives like meaning or purpose, pushing them toward collective action or overthrow the status quo. Well, we definitely have that. And we certainly have that. And that's kind of like, you know, ending fiat. But really that stems in the public mind more from these issues today where it's impossible to live. It's too expensive to live.

The wealth inequality is at the worst point since the Great Depression and all these other characteristics that are driving, like, effectively a populist movement within society. Yeah. Do you think Bitcoin benefits from the idea of like the marginalization and then the populist movement on top of that? Because Bitcoin is a cure for all the symptoms that we're seeing. Certainly. Yeah. And it's that, you know, let's say that didn't happen.

If we weren't in this position, then money would probably be much more sound. Yeah. And that's the tragedy is that people think that today, I would say like within the psychology of the population, most people think, or at least people that are aware of these issues. most people just aren't aware of these issues. They're just like, why is life expensive? But I think most people, of the people that are aware of these issues, they don't, they think it's capitalism's fault.

And they're kind of misassociating a lot of these monetary issues with fiscal issues or policy issues. So that's like, that's one of the key conflations, I think, happening around the world. And that's what Bitcoin's changing. Like when we think about what's happened over the past, I would say seven years when I first started getting involved in this industry, nobody knew the word fiat money. I had to explain that. I didn't know what that was when I got into pay. Everybody knows that. Everybody knows what that means now. It's actually kind of like popular, I think in broader Gen Z circles to talk about like money isn't real. And like people are becoming aware of this issue, particularly those most affected by it. I think for people in my like age bracket as well, you could probably argue they didn't really know what inflation was. Like I think anyone who lived through sort of the 70s in that period of inflation, certainly. knew what inflation was. But like me growing up in the like 90s and 2000s, like it's never something that was like a common topic amongst the like amongst my friendship group anyway.

Yeah. I think it's changed certainly like the idea of what Fiat is, the idea of inflation. But then when you talk about like the other people, like the people who are blaming this on capitalism, I kind of have some sympathy for them. Like there's a growing communist, Marxist, like rhetoric going on all over the world. And like you see it everywhere like post- is up on the wall being like, come on our Marxist walk, we'll tell you about Marxism, all this kind of stuff. And I think they're diagnosing the issue, but misdiagnosing the solution.

Yeah, yeah, completely. Because the problem is, is that with all of these alternatives, the alternatives are take power from one powerful group of people and give it to another powerful group of people, as if that's gonna create any sort of change. Particularly when the powerful group of people you're giving the power to has a monopoly on violence. Can we actually do a bit of a tangent here?

Yeah. Can you explain, like, to anyone listening that might not understand the idea of we're saying that I actually think the current system we live in, I mean, Alan Farrington will say it's not capitalism, but whatever you want to call, like, crony capitalism isn't real capitalism and why it's not real capitalism and why we do actually need real free market capitalism. Yeah, it's interesting because just like with a lot of terms, they become these, they mean a lot of things to different people, right? Like the true definition of capitalism in people's minds, it's kind of hard to say at this. point what that actually means to a lot of people. Fundamentally, it's just like a prioritization of property rights within a society. And the argument for that is that it created the wealthiest economy in the world and the shortest period of time, you know, from a group of migrants that came to a new country and overthrew a world power from all of that. Protecting property rights is

the most fundamental aspect to creating wealth because it provides all the necessary incentives for people to pursue wealth in the first place at the highest level. So today it's just that when we argue so I guess there's two things there's like the fiscal side of it and there's the policy side of it and it's like okay so if we are protecting property rights then then what isn't protecting a property right and that's like the state's infringement upon them over time and when that happens whether it's at a federal level whether it's at a state level or whether it's at a localized level there's just been you know a continuous reach for more and more influence over what we can and cannot do with the things that we own so that has changed very

significantly, you know, since the inception of our country to where we are today. And, you know, the most popular arguments would be, you know, guns, you know, things like that, these fundamental rights that are constitutional and attempts at undermining that ultimately, and then creating more and more policy that's restrictive upon those behaviors. I think that's one side of it. But that, I think that that is a minority of influence compared to what's happening on the monetary side. Because with the way that our monetary system works today, we have a board of seven people who make decisions about what happens with money or interest rates. And an interest rate is simply just the value of time. It's the value of moving value throughout time.

And that affects everything. That affects every other price of every other asset that you're dealing with. So when you have this board that's elected and it's basically elected by like regional organizations, as well as you have chairman appointees by the executive branch. It's elected outside of the voting process. It's outside of our democracy. And that's why people refer to it as like a quasi-government institution because it's partially private and partially public.

So because of that, there's no democracy that goes into this. And because they can impact the value of all property, they can effectively undermine your right to that property by influencing it indirectly. So that's one of the, it's second order effects, you know, the indirect effects of all policy. That's probably one of the major distinctions, I think, between the way, you know, conservatives and liberals typically think is liberals often have very direct policy arguments, whereas conservatives try to, you know, look at the second order effects that those policies will have at a systemic level. And that's kind of the implication here is that when you have centralized monetary policy outside of a democratic system and it's impacting the asset price. of everything that exists in the U.S. as well as outside of the U.S. because we're the cog at the

center of the wheel of the economy. I was going to say that the economic power of the Fed basically is just everyone else is downstream of that. So whatever the decision they make in the U.S. affects people in Europe, the UK, Australia, the rest of the world, wherever you might be. Right. We have ripple effects across the entire world. So when we're doing this, we are, it's the most arrogant thing in the world to think that we could have people making these types of decisions. And I think that's one of the problems with academics today with a lot of people who have this like centric view that highly complex systems that one, you know, we don't fully understand. And two, even if we do understand them, it's very hard to measure them. Like actually

measuring something at the time when you need to make a policy decision in an economy is, it's practically impossible. So we're working with bad information. We likely don't even understand all the cause and effect relationships that we're playing with. And we have a bore to seven people that are making these decisions impacting the entire world. And like this, this impacts people's lives in a very, very significant way. You know, people have died and starved because of their policy decisions. And that's not obviously what's talked about. What's talked about is like quantitative models and, you know, hindsight bias and

thinking that they did decrease the volatility, or at least that's a political pandering that happens to justify their existence. But I would say that that's why we don't live in a capitalist society is because of the way that the money works. If we had protection of property rights and, you know, free markets were open, for the vast majority of markets that exist, and at least fundamentally for the most important market that exists, the cog at the center of the wheel, and that's interest rates.

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Shout out to the Erics. Yeah, so the first one that we were talking about was desire for change. And then, like, the second's like a presence of frustrated individuals. And like it attracts people who feel alienated, marginalized, unfulfilled. And that's very prevalent today. I mean, you know, we have a significant uprising in populism and riots that are occurring. So Bitcoin is a very specific group with those people. But I think that those are just, you know, kind of the early movers within Bitcoin.

and there's a lot more people that are unsatisfied. And they just haven't realized why yet. So that's one of the, that's another parallel. And then if we look at, you know, a unifying cause or doctrine, like, you know, fuck Fiat, fuck banks, like Fiat money or, you know, in the broader society, like money isn't real. Like there's kind of a unifying cause here around all of it where we can see that it provides this vision of like a better world.

And then the next one's like, fanaticism in absolute faith. And that's 100% true. And this is probably the most interesting thing that he calls out in this book, I think, as it relates to Bitcoin, because it provides me a lot of context. I think when we look at division within Bitcoin,

this specific point provides me context where I'm not particularly, whether or not I agree with a particular group, I know why they exist. And that's what it says like, revolutions are fueled by fanatical believers who exhibit unwavering commitment to the cause. often at the expensive reason or personal ties. This blind faith-hofer explains creates some momentum needed to sustain the movement.

He's making the point that that will sustain the movement, not sort of unravel the movement. Because you can imagine like internal conflict being, which we're definitely seeing in Bitcoin in the moment, actually being a negative. So this is how we kind of categorizes how it grows and sustains over time. Because the next one is leadership by men of words, fanatics, and then men of practical action, men of action in general. So it says, revolutions progress through stages led by articulate intellectuals who critique the old order, fanatics who push for radical action, and pragmatic organizers who consolidate power. Hoffer describes how each plays a critical role in sparking driving and institutionalizing the revolution.

So like, think about that for Bitcoin, right? Cipherpunks. These were the people that were writing and critiquing the old order. These were the intellectuals that were very precise with how they thought about things and were highly. educated and put together incredibly complex views as to effectively forecast what a new money on the internet should look like and do and what the theory supporting that would be. So the men of words is almost like what a lot of the cypherpunks were,

you know, cypherpunks write code. And then we had the fanatics and that's like, you know, the people that were just ardent, you know, like Kaiser, screaming into the void in the early years. Guys like Hoddle, like, you know, pushing people along, that group is what I think was a it's a fundamentally necessarily necessary group of people to have to spark a catalyst within organization you have to drive through emotions within people and they have their role and without them I don't think Bitcoin would have gotten to where it gotten today I think

we're moving into this like men of action phase like the people who are very good at consolidating power and movements together and and that's more like your you know CEO leadership type people or the people that tend to be much more pragmatic and actionable. I would probably say that I fall most in like that type of a category. I'm very meta with how well view things. And I definitely have my fanaticism on me. But in effect, like I think it's those three groups of people all kind of need each other for different roles, whether or not they disagree with each other.

So like when I'm looking at things in this industry, it's kind of from that framework. Like you guys exist for a reason. Bitcoin has a cult for a reason. And while I'm not like part of necessarily the cult of like every ideology that exists within Bitcoin, I'm glad that it exists because that's what's driving this mass movement. So do you think that that because when you look at what's happening today, as opposed to like the previous bull market or like 2017, we had tons of retail coming in. And like there was a serious like buzz.

You could feel it around Bitcoin. Like I don't think that's there at the moment. Like I don't feel that. Yep. Why do you think like adoption, especially like retail level adoption seems to be stalling? I don't know how to think about retail adoption as much this cycle. Does it still matter? Yeah, 100%.

All adoption matters. It's just that I think we have a lot more scale coming in from new forms of adoption. When it comes through companies, when it comes through governments, when it comes through institutional asset managers, I think the most interesting critique, basically, of what's shifting is that there's a tradeoff between different types of adoption. So more of the fanatic hot alert types of adoption, that gives us our, you know, Fed put effectively within the Bitcoin price over time. And that's important and that'll continue to expand. That, in effect, can be volatile at times, I think, within some of those groups. And then I think within the new form of adopters coming in, while in the beginning, they might be much less volatile because they're more systematic with how they buy Bitcoin.

and they do it consistently. They do it over time. They do it in the institutionalized process. They don't just sell it the first sign of some sort of breakage. And, you know, hoddlers aren't doing that. But a lot of, like, the 2B hoddlers start doing that in the beginning. And then they become hoddlers later. The institutions, they might be holding it through some of the, you know,

peaks and troughs in the beginning. But they're probably going to be selling more later. So they're kind of an inverse form of behavior. And that's an organization that isn't really, you know, providing that revolutionary mass movement type buying power. So I think that the institutions, they're good because they're creating a passive bid. And that's decreasing volatility. And that's fundamentally changing the way that people are going to perceive the asset of Bitcoin.

Like I think one of the things that we look at through our firm is just correlation of Bitcoin with other asset prices. I mean, the second we do really get gold-like characteristics in the correlation, it's starting to shift that direction over time. that's when we're really rapidly going to take the market for gold. And the world's watching that statistic right now. When you say that, who do you mean? Who's watching that? Everybody, institutional type guys. I mean, the second that, so like right now, I think you see institutions that are thinking

through like one to two percent type allocations. And you know, Black Rock had the recommendation from two years ago of like, or they're not recommendation. They had their statistical study of like an optimized backtested portfolio would have had an 82% allocation to Bitcoin. And that's what spawned the whole ETF argument. That's where they're like, we're going to lean into this. And here we are today.

And I haven't looked at these numbers most recently, but like as of a few weeks ago, it was the fifth most profitable investment product that BlackRock sells that happened within like, you know, a little over a year. And it's the most rapidly growing financial product launch that anybody's had on Wall Street ever. So it's worked well. they've leaned into it for that reason. And, you know, there's, there were like rumors that in private client sessions, they're recommending like a 30% portfolio allocation and to like private client groups that they're dealing with. So that's kind of the argument is that, you know, maybe the world is

shifting from 60, 40 portfolio to like a 33, 33, 33, 33 type portfolio. But I think where we're at today is more in the like 1, 2% range. A lot of people are kind of dipping their toes in. And I think the second, if we were to start to see a negative correlation of Bitcoin with equity markets, that's when that 1 to 2% turns to 30% pretty quickly. And I think that's when we take the gold market pretty quickly. So what you're talking about there is Bitcoin going from being this risk on asset to being a risk off asset like gold. Yeah. And it's funny because like I may have this wrong. I'm not a financial guy. But like when you look at Bitcoin and Bitcoin's properties in let's say like an environment where they're cutting rates, economies flying, like you expect

Bitcoin to do well. But the same thing, time, if things are going to shit, where else do you go? Yeah. Like, does Bitcoin in its sort of full maturity act as both risk on and risk off? I think when it's not in its full maturity, it acts as a risk on and risk off asset over time. It's just going up. It's just going up rapidly.

I think it's too hard to, like, view it through the lens of risk on, risk off right now. All that's happening right now is it's water flowing through cracks and it's just spreading and spreading and people are adopting it. There's a bunch of different ways we can look at drivers for how people are adopting it. I think it maturity is when the narratives that people understand about it start to mature. So the buyer behavior with it starts to mature at that point. And I think like, I think, you know, Bitcoin is a store of value will be the savings account. It will be the thing that moves when people

are selling their, you know, investments is when they're moving it into Bitcoin. And that's when it's more of like a negative or neutral type correlation. And what kind of scale are you talking about there? What will Bitcoin be out at that point? Yeah, that's like, Because the reason I ask is the thing that I find interesting is, like, when Bitcoin, when people are viewing Bitcoin in that way, like, the way probably you and I, like, view Bitcoin today is that what are you selling Bitcoin for? Like, what you're selling Bitcoin for becomes, like a really big question to ask yourself. Like, if I'm going to go out and buy a house to improve my life and, like, you need somewhere to live, I understand selling Bitcoin. But, like, selling Bitcoin to go and be frivolous and, like, do consumer a shit, like, I don't really understand. So, like, if the entire world views Bitcoin that way, Like what happens to society? There is a tweet I was just reading and I'm going to look it up quick because I want to give him credit. This guy, Tim Coatsman, I don't know who he is. With a K.

With a K. Yeah, I know him. But he put this really well. Bitcoin will rotate ownership over time because time is more scarce than Bitcoin. And I think that that's the reality is that the relationship, like people spending it versus time is the key consideration. And that's kind of what I'm saying. It's like if you need stuff, like if all your money is in Bitcoin and you need stuff, you sell Bitcoin to buy the stuff you need.

But I wonder what it does to sort of the consumerist world that we live in. Because when you actually value your money, then you're not going to be willing to sell it to just buy shit off T-mail or whatever. Right, right. And this is like one of the fundamental arguments within Bitcoin is the time preference type argument. But like putting all the jargon aside, it's pretty simple to understand. with the way things work today, if you try to assume as little risk as possible with your money, you're losing.

You're losing value through inflation. So that forces people, having inflation, having a central bank that's constantly printing the value of the money, that forces people to spend money on things that they otherwise wouldn't and invest in things that they otherwise wouldn't. Because they have to get a return on capital

or they want to spend it today because they're not going to be able to spend as much tomorrow. So that's fundamentally what happening is that that causes this misallocation of capital within society. And we look at these things and we say, like, why do people buy all this cheap shit that breaks out of nowhere?

And like, why aren't we thinking very long term with how we're building? Because people are thinking short term because the structure of interest rates forces us to think in that type of behavior. So if we can shift that, if we can make it so that you really don't need to spend your money unless it's something you really want.

And you really don't need to invest in anything unless it's something you really like, then that's what's going to structurally shift society in a way that we don't quite understand yet. But it should change everybody's behavior and how they think very fun. Everybody's going to think more long term. And this gets into like the Bitcoin urbanism kind of stuff

where it's like, you go, like, places like London are a perfect example of this. You walk through London, you see like the most beautiful cathedral, things from like the 15th century, and then there's just gross class buildings everywhere. Like, I think obviously, actually knowing what the world looks like in the future is impossible. Yeah.

And anyone that says they do is a liar. Totally. But there's going to be a radical shift, I think. If Bitcoin does what we all think it's going to do, there's going to be a radical, radical shift. Yeah. Yeah, people just, yeah, people don't know what it's going to be. And it's funny because we're trying to, like, a lot of people in Bitcoin that make the arguments of like,

we're going to go into a new renaissance and, you know, we'll have beautiful, beautiful buildings again. And I was trying to think of what the argument against that is. And I think it's really that like when we think about how leisure existed today versus back then, in terms of like, how do I spend my extra time on different things when they were, you know, had some degree of wealth and abundance at certain points, it was just saying. systematically different. Like, in the same way that, you know, we will start upset. Like, we're spending so much time in leisure on, like, social media and all these other things. Maybe that does change. But I think during the Renaissance, it was like, okay, so we have a lot

of wealth now. What are we going to do? Well, arts. We're going to do a lot of things in the arts. And I think that that was heavily influential on what happened with architecture. Not think, but, like, we know that. So the arts was kind of how people spent their free time. And maybe we go back to that. I think we do. Yeah. Because if you know, long I have to worry about your money being worth the same as it is today. Like, money is a proxy for time. And like, if you have more time, what do you do with that time? And maybe that is creative endeavors that make the world more interesting. Right, but it might be very fundamentally different in nature than the architecture we'd expect. Like, you know, we could just exist in like a brutalism

type architecture for a period of time, which one of my good buddies really likes and I kind of hate that architecture, except for that hotel that we were at out here. Like the blade runner-looking stuff I can kind of get on board with. It's not beautiful. But it's a... But why do you say we'd go to brutalism? Probably because it's more efficient, we've realized. And in the way that we search for aesthetic is just distinct because technology provides us alternative avenues.

Like, that was the avenue. That was our technology, right? Like, that was a very significant form of technology. It was the shelters that we were building. So that was our way of, like, implementing our aesthetic at that point in time. Who knows what that'll be in the future? Maybe it'll be a space station.

Maybe we're going to have the most beautiful space stations in the world, you know, and that'll be like the new architecture. But, you know, I don't know. But I'm guessing it's going to be fundamentally different. And we're not, it's not just going to be the Renaissance and everybody's going to go to church and we're going to have, you know, like, stained glass on everything all of a sudden. No, I agree with that. But what it might change is this idea of just throwing up a building as quickly as possible, knowing you can rip it down in 20 years and just throw another one up. Right, right. Again, it's like, it all comes down to time preference. Totally. We talk a bit of a tangent there. But we're getting back to like where we are now and how we get to

Bitcoin at 10 million or whatever you want to do. Like the adoption now is coming from a very different place to pass cycles. We talked about like the lack of retail. This is a naive somewhat like I love the idea of retail adoption because I want Bitcoin in the hands of as many normal people as possible. This cycle doesn't seem to have that. It is the treasury companies, it's ETFs, it's BlackRock. Is any adoption good adoption? There's some forms of adoption are better than other forms of adoption. I think we can look at a completely like, we can take a Puritan view of, not Puritan,

but we can take a very specific view of what would be the ideal form of adoption. And we can look at everything in hindsight and say, well, this isn't that. And the reality is that none of us know how this is going to go. Nobody truly knows a specific path that we're going to follow of.

you know, when the cypherpunks, you know, when Satoshi created this, and it was all set out. And it started with this email list and people are just like, hey, let's start like trying to spend a little bit of Bitcoin. And then, you know, the first like form of product market fit that it found was in drug trade on a peer-to-peer, you know, freedom libertarian type platform. And then it was being traded on exchange for Magic, the Gathering cards that went, got hacked and went bankrupt. and then, you know, it went through a huge bear market. And then the fanatics ultimately kind of drove this store value narrative around it in a significant way. It wasn't just a drug trade thing anymore for, you know, illicit activities or whatever it is. But it was actually getting more of an investment narrative behind it.

And these fanatics were people that probably nobody would have guessed, you know, if you were to think in hindsight, who are the influential people that could drive this? You probably had people in your head. These people weren't them. And then all of a sudden we have the, you know, economy with one of the worst, if not, I think the worst crime rate in the world adopted as legal tender. And that sparked a whole international discussion of its monetary properties and, you know, whether or not it's valuable in debates and put into the mainstream academia around a lot of those questions. And then we have most recently the largest economy in the world, you know, pushing narratives that they're going to adopt it is a, strategic reserve. But really it was just the largest economy in the world realized,

oh, this voting class we need to appeal to. And this is a win-win. Because if you go against something like Bitcoin, it's just to lose, lose. There's no politically viable solution other than to support this. And that was a super powerful thing. And I don't think anybody really knew that. Everybody assumed that it was going to come more bottom up through emerging market economies, because how much could have been lost. But politicians were a little bit smarter. And I think they view it from the perspective like, no, this asset is something that has massive global support. And it's pretty challenging to quantify exactly what that is. But we know it's significant enough to have the president of the United States, you know, going to our conferences and, you know,

adopting this publicly. So I struggle with this because like you're saying adopting it publicly, but what has he done? Like all he has done since he actually came into office is announced strategic reserve, but nothing's really happened there. Yep. He's launched his shit coin. Has he even done anything for Bitcoin at this point? When I first started studying finance, for those who don't know my background, you know, I studied finance in college, I worked in private equity, I have a CFA, I got very deep into like financial theory, all of that. And when I first started studying finance, you know when I was like graduate in college, I believed in like value investing and I believe

that if you look at certain metrics and you have a contrarian thesis and you have a long-term perspective and you stick to your guns on a methodology that that's the best form of investing. I think what I've learned over time is that the best form of investing really just exists within private markets because there's the most inefficiency found there. And most forms of investing, they're not driven as much by fundamentals as much as they're driven by narrative. And that was the key thing I learned is that markets are really just driven by narratives. And there's a lot of powerful people that want to influence narrative to their benefit in some way, shape, or form. So I think from that perspective, it's what's the most powerful thing that he's done?

It's just simply the signaling of, oh, wow, the largest government institution, the most powerful organization in the world is now supporting this asset. Whether or not he tangibly buys, I don't give a shit. I actually hope he doesn't. I would prefer other people to have it. But, you know, I would prefer they honestly sell it if we're talking to. purely from like an ownership standpoint. But the signaling that that's created to the market,

the legitimacy that is put into the eyes, like it's legitimate now with the conservative party. And the Democratic Party, like when in our annual report, you know, we show the statistics of how much like CNN was giving attention to Bitcoin until Trump supported it. And now their attention to Bitcoin is completely dropped off. And all of the like mainstream media attention is coming through like more conservative channels on Bitcoin now.

So it's shifted a bit towards us. like conservative asset because of their support. And that's, that's a big deal. Like that, that's changed everybody's perception. And I see that every day when I talk to investors. Yeah, exactly, because people now just think of Bitcoin as being sort of Trump coin. Yeah. While you can say everyone gets Bitcoin in the price they deserve, is that actually going to be a good thing that Bitcoin is so closely associated with the right wing? The question to me is more just like, what else do you want? You know, it's just like, it has to go. somewhere. It has to come through some form of adoption. Here's kind of the direction it went.

We could look back. We could say, yeah, I would like it to perfectly be balanced politically with how the adoption comes. But how does it work when a president supports it? Well, he's got to have a party. So which party was? It was a conservative party. You know, like, so like these, I think a lot of people that are kind of like, we want everything to be perfectly balanced and we want everything to happen like this. It's kind of, I feel like it's a bit of a luxury to have that perspective. And usually people with perspectives like that aren't in the trenches, like building things, because when you're in the trenches building things, you're usually just like, we want wins because that's good. And so like going back to the original question on this

is adoption, you know, what forms of adoption are good or bad? I said some are, you know, better than others, of course. Like, of course I want, you know, the utopian vision of everybody gets onboarded through self-custody. I don't think with technical infrastructure that's feasible today. But even if that was, assume that hypothetically, of course I would want that. The reality is just simply that Bitcoin is this, Bitcoin is just like this virus that spread too far. Or a better analogy would just be like Bitcoin is just water and it's moving and it's finding the path of least resistance. So like one of the things that I put into our primary investment philosophy for Epoch, for those listening to our venture capital firm, is there's this, uh, um, a hundred, um, um, a, um, a, um, a, uh, a, uh, a,

I'm forgetting, Adrian B. Jan, who was a physicist from MIT, who kind of came up with this theory that he called the constructal law. And the constructal law is just basically, how does everything grow? How does growth happen in general? And his law was that if you look at, you know, trees and how they grow from a trunk branch structure,

and if you look at veins in your body, or you look at river networks, or you look at all, you see this very consistent pattern through how things grow. And that's what we're seeing with Bitcoin. We just see things following the path of least resistance. That's what happens when branches are growing off a tree. They're finding sunlight. They're finding the most accessible resource near them.

And that's just logically what's happened with adoption over time. It's moving like water through cracks. And we're just like seeing the most accepted accepted like next step for adoption that happens over time. So it looked like we have this populist movement that got Trump back into office. Trump realized this voting party is significant, I'm gonna support this asset, and I'm gonna try to monetize a bunch of shit coins for my family off of this.

I don't really care whether or not he understands it. I just care that it's just water flowing through cracks. And that puts us in a better position now, because we've spread even further to actually have the good forms of adoption in the future. Because the more people that support this, the more people that have skin in the game with Bitcoin, that's another thing that makes Bitcoin unique,

is, you know, we have millions, millions of people all over the world who all have some sort of skin in the game to use the asset you don't get that with stocks you don't get that with bonds you don't get that with any form of investment really other than bitcoin and that's the mass movement potential behind it it's like what's a mass movement where everybody has a skin in skin in the game and everybody gets rich off of that like like you know that's basically like property rights right like that's that's what spawned the u.s you know that is that is significant that incentive is unstoppable and and

that's kind of what I see within adoption. I think getting lost in like the specifics and granularities, um, while I agree that there's, you know, plenty of forms of adoption that aren't ideal, we don't want centralization within certain custodians over time. I think what's much better than saying like, you know, education is good,

but I think what's much better is building technical solutions that are just as competitive with centralized solutions so that people can use self-custodial, um, you know, self-custodial Bitcoin the asset in a way that's just as easy to do and just as cheap to do as using a centralized service provider. And we're not there yet. And that's one of the reasons that we have epoch. Like, that's what we want to do is we want to try to build all these things. We want to build adoption in general. We just want it to grow because the number one

advantage I see us getting is more people have Bitcoin. And it's just totally politically wrong for people to try to stop it at that point. And that's the incentive we want. We want it to be political suicide for any government to attempt to attack this thing. And I think that comes from adoption. So, like, that's my take. I don't know how to, like, you know, define it clearly in terms of parameters, but I think it's a luxury to look at certain forms of adoption in hindsight and say, like, this was good or bad. It's like, it's good to think about these things. But it's going to be more valuable to just build things that allow the good forms of adoption to exist, which are plenty of people are doing. One of the things that keeps me up at night is the idea

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overstate how important Bitcoin was in the last U.S. election. I think it certainly played a part, but it wasn't the only reason. But I think the Democrats showed that bashing and ignoring Bitcoin is clearly not the way to go. It'll be super interesting to see what happens next time. But if you'd have told me when I got into Bitcoin in 2016, 2017, that in how long, it was like eight, nine years time, seven, eight years time, that BlackRock, ETFs, Trump, all these things were now supporting Bitcoin. I'd have thought I was a huge fucking win. I did not think this was going to happen as quickly as it has. And I'm curious why you think that that has happened. Is it just that the facts are on our side, it's impossible to ignore now? Yeah, exactly. So,

like, when I am talking to, I tweeted about this like a couple weeks ago, but like when, when I'm talking to like Tradify guys, like finance bro types and there's a lot of Bitcoiners out there like, okay, we need to orange pill people. We need to tell them, here's what money is. And you need to like relearn all these historical things and have this context. Like, I don't touch that. Most of these people that I'm dealing with are strong pragmatists who are self-interested. And by the way, if you assume people aren't self-interested, you're going to get let down quite a bit. So, like, people are self-interested.

So what are their interests and what are they going after? It's the best way to persuade them and motivate them to support whatever it is you're doing. So when I'm talking to these investor types, the way that they're thinking about this, I don't touch anything about what is money. What I do is I start with saying, Bitcoin at this point in time is the best performing asset in measurable history. Over this 16-year period that it's been alive, like you could think about that from the perspective of the compound growth rate from its start to finish is much more rapid than when you think about like the most valuable

stocks in the world because it took them about 40 years to do. We're not quite at that size yet. We'll probably be there soon. But it took them like 40 years to accomplish that. So their growth rates don't even compare it. Like our trajectory is insane. It's on pace with the internet. So when we look at these forms of adoption,

we have an asset that's growing on pace with the technology like the internet. It's the best performing asset measurable history. Its risk-adjusted performance is outperforming all asset classes. You know, it does vary over time, but nonetheless, like, very significantly. You know, it's like the largest computing network

in the world now outside of the internet itself. We have the largest financial institution in the world, BlackRock, basically becoming our podcast, or business development arm, like CNNBC is kind of our podcast. And we have governments around the world that have adopted as legal tender. We have the largest government in the world that's like, you know, supporting it as a strategic reserve and like pumping our narrative and helping people understand it. What other investment has that?

Nothing. Like, nothing has that. And if you're an investor, your number one job is to find superior risk-adjusted returns for your clients, given the constraints that they're under. And if you don't understand Bitcoin, the best asset that you could be doing that with for your clients, then you're dead wrong and you're not doing your job. And that's the first thing. Like, I show up to like, you know, these trad-five organizations and there's a bunch of guys kind of like, oh, you know, how's it going? What's your portfolio? And I just like, jump in.

I'm just like, you aren't doing your job. And like, and then they're on their back heels. And then for like the first time, they're fucking listening. Yeah. Yeah. Does that actually, so like this is just number go up being the most positive narrative. And it clearly. And it clearly is.

Like, that's why I got into Bitcoin. And don't get me wrong. Like, from that, my thinking's evolved. And but number go up works. So when you say that to someone, are they not, like, pissed off? Like, are they not thinking, you can't tell me everything I've been doing my entire career is wrong? Yeah.

Statistically speaking, if they're 55 and older and they're a white male, then they're probably pissed off that I just said that. Because no guy who's like one of these trad-fi guys who were like, they've been, you know, working in the industry since, like, the 80s. and it's always worked this way. And, you know, they had the QE push. And, you know, everything's kind of benefited them from what's basically Markowitz theory.

They've all been doing the same thing their whole careers. It's worked out very well for them. And then, like, this group of kids, which, like, our industry is very young. And there's, you know, a lot of kids running around telling them, they're like, oh, all your financial theory is wrong. There's no efficient market hypothesis. And, you know, Markowitz's portfolio theory

is just a statistical model that worked under one regime. And that's all about to change, once we change money. They don't even know what any of that means. For the most part, they just kind of like learn the sound bites they always have. They've operated on the heuristics they've always had. And when some young kid comes along and tells them that, like, they're not going to listen. And they don't really have that much of an incentive to, other than if they care about their kids.

And, you know, they, it makes sense to me why they wouldn't. But a lot of people are waking up. And just like with any significant change, there's always going to be the late movers. And those people are going to feel foolish at a certain point. Because surely the people who are the top performers in the, that world. Like, bonds had the heyday, equities have the heyday, and like, Bitcoin is now, like, the thing. Like, surely there's people that have gone through that realize that one, one sort of playbook is no longer working, move on to the next one. Like, are people thinking

of it in a similar way where it's like, this is just the next evolution? They've never had to shift playbooks. It's always been like, they've looked at different asset classes in different ways, given the constraints around it. But Bitcoin is like this exogenous variable. It's like, you know, it's like you're playing a sport, and it's just like you have a playbook for offense and you have a playbook for defense. And it's just like, okay, well, now the field is ice. Like what the way, you know, like,

that's kind of what it's like. It's just like, there isn't a playbook, right? And so I think that's what's shifting them up. So they don't want to believe that the field's gonna be ice one day. You know, they wanna believe that it's gonna stay the same way and it seems absurd that the field could turn to ice. And that's when, I think to answer your question, like the perspective,

effective change that's happening is significant. Like when I talk to a lot of portfolio managers and financial advisors, there's a shift towards them being more open-minded to it now. Now it's not like, oh, Bitcoin, yeah, all right. You know, it's not that anymore. It's, I'm interested. You know, I want to hear more. Or it's, yeah, I get the digital gold narrative. You know, we're looking into one percent, two percent allocation. I think the problem right now is that a lot of them now think they understand it because they understand the very simple digital gold narrative and they're just scratching the surface. I don't exactly know where that leads, but I think it's better than not understanding it at all. And that's kind of like the primary shift. So like you got

your like older guys who, you know, are going off into retirement and they want to move down to Florida and just not think about any of this shit. And then you have like pretty much everybody else. And they're all shifting to like more of a neutral to positive stance on it because it's basically, it's just impossible to argue against at this point. They don't know all the arguments that I laid out earlier. But they do know that the president's supporting it. Black Rock is supporting it. And it's probably not a joke if that's the case.

And that's very important for if you look at like, and the statistics a bit dated, but I think it's like, you know, wealth management, like the size of the capital in that industry is around like $17 trillion. probably closer to 20 at this point, maybe more. So if you think about that, you think about a lot of these like just general,

like, you know, financial advisor types, and if they start recommending, like, a one to 10% allocation, that's a significant amount of capital, you know. That could range between the, you know, ETF, AUM to 10 times the EETFAUM right now, just within that specific group of wealth management. So that's in just within the U.S. as well. So, yeah, I think,

think that shift is critical. And now the next question is how we can get them to understand that the permissionless nature of Bitcoin is a form of insurance. So with the way that they think about risk within a portfolio, they think about risk from the perspective of the volatility of the asset. And that's obviously not a comprehensive view of risk. Being able to permissionlessly own something for a client of yours, If you want to be a fiduciary for them, or if you are a fiduciary for them, being able to permissionlessly own something is going to be one of the best forms of asset protection that they could possibly have.

And Bitcoin is the avenue with its technology to do that better than any other asset. So once they understand that, now we're talking about real risk. Now we're talking about protecting your clients against black swans and everything that you could think of related to that. And that's going to drive very significant investment in Bitcoin in the next leg out. So you said something that is, I want to dig into. You said that these people aren't ready

for the field to turn to ice. What does that mean? What is the field turning to ice? What's changing? The water that we've been swimming in, that's probably a better analogy for it, right? The water that we've been swimming in is a water of a controlled interest rate environment

that you haven't really been able to escape. And that's how we've ended up in the system that we're, we're in right now where for the first time in history, we've had a globally coordinated group of central banks all operating together to suppress interest rates and persistently increase and expand credit within the global economy beyond the amount that is natural. And all that means is debt to GDP is the highest that's ever been in history. across the globe, global debt to GDP in total.

And that's completely uncharted waters. And that's the water that's surrounding us right now, is that we've affected, when you think about credit, there's the difference between money and credit is both of them serve a similar function. They move value throughout time. But money allows us to take value from the past and carry it with us into the present.

And credit allows us to take value from the future and carry it into the present. So it's two different functions for money of where the source of the value really comes from. And that's what we've done is there's always a market around that balance between those two forms of monetary transaction, basically. Before commodity monies existed that allowed us to carry it through the past is pretty much as credit. Like primates use credit in some ways. Yep. And so... Maybe you should explain that because I think maybe. maybe people will not understand what you mean by that.

Yeah. And I assume what you're saying is like you do a favor for someone, that favor is the credit. Yeah. And then you're owed something in return. Yeah. You scratch my back. I'll scratch yours. And it was Nick Zobo and his paper shelling out where he drew on, which kind of make me like Zobbo,

but he drew on Dawkins's writing in the blind watchmaker, I believe, when Dawkins would describe who was a zoologist, atheist, primary proponent. But he did a lot of research into the behavior of animals. to be one of the primary people arguing on behalf of like evolutionary biology. And so he was the one making the argument for delayed reciprocal altruism, is the term that he used.

And Zobo kind of drawn that for, this is basically how credit worked with species prior to humanity. And then Zobo, I believe, was the first to kind of draw the conclusion that one of the primary distinctions between Neanderthals and Homo sapiens, Neanderthals were bigger and stronger than them,

but it's just like what made them genetically eclipse Homo sapiens? And Zabwe is making the point that there's very strong evidence that Homo sapiens had money. And there is very strong evidence that they organized in statistically much larger groups than their Neanderthal predecessors. And that's ultimately what allowed them to genetically eclipse the Neanderthals was that they were smarter in that regard.

They had more complex forms of organisms. which allowed them to increase their wealth and have more sophisticated means of living. And that came from, you know, very primitive forms of commodity monies being used and, you know, surpassing the use of just credit. So that form of money is very valuable. And there's a balance in the market

that none of us have an answer to between the amount of like, you know, effectively scarce commodity type money that should exist, any amount of credit that should exist. We've artificially changed that to be all credit. Like that's what our modern economy is the government can issue credit. They can't print money that's commodity money

because that requires true value and resources. So they want it all to be credit. So what they did is they took their credit. They took their debt and they forced it into the economy as money. And they did that with a strong military over time. And now we're at the most persistently expanded form of credit in the world. And it's all around us.

And it's everywhere. And it's well beyond expanded part, like across the natural rate of, market balance between the two variables. So that's the water that we're swimming in today. And Bitcoin is something that can turn all of that to ice because it for the first time provides us a bit of an escape valve. Everybody in society has just been between a rock and a hard place because there hasn't been really a good permissionless way of doing this. When I had these views on central banking before I was aware of Bitcoin, it was just like,

well, what's your alternative? Like buy gold. And you know, I own some gold. But it wasn't an alternative. It's not an alternative form of money, not to the fullest extent, but as a store of value, that's one thing. But permissionless money is what turns all that water into ice within the system. And that's what shatters the entire system. And then we build into a new system that's required to structure its incentives around, you know, a scarce form of money, or at least in a natural market economy.

Like that's the huge vision that we're looking at. And that really just, it doesn't mean a money that's swinging back to the other extreme. it means a form of money that's perfectly neutral. And like, that's the vision of Bitcoin is to have the first neutral form of money that's been global. We live in a global economy today. Any form of neutral money before,

commodity-based monies existed in, like, more primitive or early developing societies, and those weren't localized areas, and there were various commodities around the world. People were using, became more standardized with precious metals. But we've always had different constraints on money that have had a high degree of them.

But now that we have so much open access to the internet, it makes sense that we could have, you know, for the first time, a global standard. And the only reason we never would want a global standard before is because it was just, it's impossible to actually do. When we try to create, you know, post-Brenton Woods, when we try to create the IMF in these organizations and like things like SDR receipts and we try to create these, you know,

neutral forms of money. It's just like, it's not neutral. Whoever has a guns wants what they want. And unless there's just no way to stop the form of neutral money, then whoever has the biggest guns is always going to be influencing what happens with the money. And that's just been the cycle of history. So it took technology to really create the first neutral form of money. And then that allows us to stop, you know, fucking thinking about all these stupid things that governments are doing.

Like, that's the goal. It's like all this time that we waste on dealing with this. Like when I got my college education, when I learned about financial theory, I double majoring finance and economics. And when I got my, you know, economic theory, I got my financial theory. I learned, you know, all the practices and everything. And we have a little bit in my economics classes around central banking. It's like the modern financial education should be how to interpret the Fed. Like, that should be your education because that's how markets work for a lot of it today. Because you mean whatever Jerome Powell says, markets react. It's not even the action is what he says.

Exactly. And they're doing like narrative management basically. And so like that's how markets work today, all the financial, you could learn how to, you know, build a DCF as long as, you know, till the sunsats or whatever it is. And like, and it doesn't matter if the interest rate environment changes drastically overnight. So like all of these not, like the focus is really just on policy. Our markets are run by policy. And Bitcoin is what changes all of that to all the time and energy wasted of all these portfolio managers and all these investors and all these people that are paying these investors fees so that they can be like, oh, we're going to do a 60-40 cookie cutter, blah, blah, blah, blah, blah.

We're going to shift our allocation because they think basis points are going to shift this much because we think the new guy who stepped in as the Fed chair is going to have this type of behavior because the guy on Bloomberg told me this. And like, that's how people are operating today. And it's just wasted time and energy. Like these people should be, you know, building things or trying to cure cancer or, you know, doing things that are valuable. And if we have neutral money, people can actually spend their time.

time, not waste their time on this bullshit. And they're actually going to have price mechanisms that guide them towards doing things that are valuable for people. Instead of, you know, when we look at like soft bank and Masayoshi Sun getting all this financing to raise like, you know, effectively the largest private equity fund in history and just like cram money down Silicon Valley because we're in a persistently low interest rate environment. Everybody's expanding down the risk curve. And venture capital is getting blown up for that reason because it's like the riskiest form of investing you can do in private markets. And then you have these guys raising all this money and just like shoving money into like apps that allow you to like, you know, figure out your dog's astrology sign or something like that. It's just a waste. You know, like people are dying in the world. Like it's absolutely insane. And so like we can we can actually spend time like thinking about things that matter a lot more. And that's, you know, obviously me being hyperbolic around some of this stuff. But it's true. There's truth to it. And I think it gets a point across. So when we started the conversation with what is the path that Bitcoin has to take to go from where we are today to $10 million.

I want to talk about two things. I want to talk about both what it means to the world when Bitcoin's at $10 million. But before that, what is the path that it takes? How does it go from where we are today to there? Yeah, yeah. So to my point earlier, I'm going to be dead wrong about all this. But the way that I view it, right now, if we kind of look at the potential for adoption within Bitcoin, we talk about, like, Bitcoin Treasury companies.

So in the annual report that Epoch put out at the beginning of the year, and these numbers have changed, but, you know, we looked at, if you didn't look at just like the top 10 stocks in equities, the U.S. equity market, and you looked at just the cash on their balance sheet. If you put 15% of that into Bitcoin, then that's already greater than the AUM of the ETFs that we've seen. So, like, that's a big point, because with what moves price is a change. in marginal demand versus the marginal supply of the asset. And what makes Bitcoin a completely unique asset, I'm going to say this whole podcast,

there's all these things that make it completely unique. What makes Bitcoin completely unique is that it's the only asset in the world with a supply that doesn't respond to demand. It's a fixed supply, no matter what. And so we think about marginal demand, how much that shifts. Markets are dynamic.

And people say, okay, well, you know, if there's, you know, $200 billion or whatever, in cash on the balance sheets, then that'll increase the market capitalization by like $200 billion or something. It's just like, it's not really how it works. How it works is it depends on how many marginal sellers there are at Bitcoin over time. What determines that? Narrative. Narrative determines that very significantly. And that's Bitcoin's competitive advantage. And so with all that money flowing in, when we think about the inelasticity of sellers on the other side, we don't know how much that could actually move the market. But we know that it could potentially move it to the

degree that the ETFs have moved it, if not significantly more. A lot of that comes down to people's perception. And then, so that's just for like corporate balance sheets. And then we can think about like governments. And this is one of the big shifts to like zoom in on this a lot more. Government adoption around the world for Bitcoin is this, it's a highly debated topic. but I think some of the areas that are, you know, pretty clear at this point. I wrote this paper back in 2022, kind of around when these narratives are emerging. And there was this analyst that Credit Suisse named Zoltan Beaux-Arr.

And, you know, he was writing these reports talking about this, you know, shift towards reserves of governments moving towards commodities over time, away from debt of other governments. And that's kind of one of the views is that we're having this shift away from, you know, trusting other governments and their liabilities to assets within a system. Well, this is really clear. Like, I think gold is at an all-time high in terms of held on government balance sheets. Yep, yep. And like this narrative really started to, was spreading abound in 2022. Yeah. And it was because the Biden administration was choking off Russia from the SWIF system.

And everyone's like, oh, no, like, they're just proved to the world that you can't access the U.S. payment system. And now everybody's going to try to get on something that, they, they can access and people aren't going to trust, you know, the U.S. behavior that has an impact on our debt. And the reason it has an impact on our debt is that that increases the likelihood that we shift from this current unipolar system that we're in to a multipolar system. And that's kind of the prevailing view within like geopolitics and has been the prevailing view for some time that we're shifting to this form of the unipolar system being the U.S. government's control.

We're dominating the world with a global hegemon. and our policy, our decisions are what impact. And the reality is we're starting to lose control over that. I think within more conservative circles, people tend to view that it wouldn't be a shift. It would be a shift in the unipolarity of the world. It would be a shift from the U.S. or Western strength to eastern. And that, you know, might be China is the next world power and the BRICS. nations.

But the reality that we're witnessing is more that, no, it's not really a shift. It's a fracturing. And when we fracture, that changes demand for U.S. debt very significantly. that's kind of starting to show up and has been showing up in the foreign reserves and the decline of U.S. denominated liabilities in foreign reserves and, you know, federal reserve auction data as well. So when we think about this shift towards the system's kind of fracturing a bit and people are just trusting a lot less. We're not trusting government debts. We're trying to, you know, stick to our own. We're rethinking how we want to do trade. And perhaps we're going to be shifting more towards commodities and exchanging commodities. Like that's kind of the view is that commodities don't require trust in things.

And that's what Bitcoin is, like, kind of like the synthetic commodity to a lot of governments the way that they'll view it. So that's kind of, it's an interesting, it's an interesting perspective because, so like in geopolitics, and I'll recommend right now where I understood some of these things is this guy, Marco Papitch, who was a geopolitical strategist who worked for Stratfer. And he wrote this book, Geopolitical Alpha, which is a great way for investors to kind of like get just like a 101 on geopolitical views. And in this, he kind of described to the readers,

there's kind of like two prevailing. There are two like primary geopolitical thinkers. He like coined these two basically like world domination strategies. How do you actually become a global hegemon? And one is to control Eurasia. If you control all of Eurasia, then you control landmass that's abundant with commodities and has so many different points for trade access.

And it's kind of like the perfect fortress, basically, for the world. or you control the C's. And controlling the Cs allows you to control all trade routes. That allows you to, you know, force other countries to deal with your interests in their own policy. That's how the U.S. dominated so that we control the Cs. And that's kind of the world order that we're existing under now. So we still have very strong control over that.

That's not going away anytime soon, but, you know, I'm not an expert on these things. But, you know, there are people discussing how this has been weakening over time. And if that's a case and what we are seeing when it comes to like the fracturing of reserves around all of this, this new multipolar world is shifting towards commodities. So I mean, the market sizes did these things. They're so large. Like it's not even worth talking about them. You know, like because markets to my point earlier, they're dynamic. So the simplest way to understand this point is that gold, by the time we consume like gold is like $24 trillion in.

market cap. By the time Bitcoin consumes the market for like financial gold, aside from like jewelry and stuff like that, that people will probably still wear, maybe you could argue that consume some of that. I don't really care. It's going to be a big number. But let's assume it just consumes a whole market. By the time Bitcoin consumes that gold market cap at that point, when Bitcoin's that big, when that much trust has like dissolved within the world around gold as being a store of value, or at least supporting the like financial insurance against the system as a negative correlated good asset. By the time we get to that point, like, the market capitalization of gold would have theoretically probably been double or something. So it's like, we can talk about all this

stuff, but it's all going to just be dynamic and changing, right? The point is that it's really massive, and if you own Bitcoin, you're going to be happy. And so, yeah, when we think about the size of, like, this market, it's pretty much too big to quantify in a lot of ways. And, but we could just look at, like, where gold reserves are today. And if you were to take, like, 15% of global gold reserves that governments own. And you were to say, okay, so they're shifting towards commodities. So the size of that market's growing, not just within gold, but within other types of commodities, they're shifting these to be a greater proportion of their reserves. And then we have Bitcoin that's the only permissionless, most efficient means of storing

and most permissionless way of doing that type asset. That's probably going to get a material percentage of the commodity marking in government reserves. and then that market as a whole is going to be growing pretty significantly due to this multipolar shift. So if we just look at it today and we look at like 15% of just the gold reserves, you know, that is multiples of the current size of like Bitcoin ETF demand, just 15% of just the gold reserves. So like it's big. It's really, really big.

And that's something that I think is going to be very significant in the future. Because pretty much where Bitcoin loses, the reason it's not just going to happen overnight is because what makes a lot of these other government reserve assets valuable as reserves is that the depth of liquidity in the capital markets is so significant. So if you're Saudi Arabia and you want to go liquidate $250 billion of an asset tomorrow and put into something else, there's not many markets in the world. You can do that in without getting very significant slippage on the assets price, basically losing a lot on that trade.

So the more liquid, the asset you're in, the less you move the market from selling it. And Bitcoin is too small for these types of guys to own a significant amount and not move the market very significantly. So the bigger Bitcoin gets, the more likely these types of buyers are going to participate in that market. And that's the best thing is pretty much Bitcoin's disadvantages are disadvantages of scale. The similar argument with its volatility,

that's just the disadvantage of its scale. These are all things that can solve. It's like being LeBron James when he's young and saying his only disadvantage, is that he's like 13 years old. By the time he's 18, and probably earlier than that, it's like you're going to be

one of the best guys in the NBA. And that's what it's kind of like. It's like our disadvantages that we're just in the adolescence right now. So when we think about it from that perspective, the liquidity in the capital markets around Bitcoin needs to increase

and then it's more likely to be adopted. But the efficiency of storing it and the permissionless ability to send it, that's what makes it unique from like any other reserve asset. So in the kind of step-by-step playbook here, that's why we need corporate treasure first. Do you like what Saylor and everyone who's copying Saylor is doing?

I love when people buy Bitcoin. It's awesome. I think it's a badass move. Everybody needs to buy more Bitcoin. The question of, I think of, this goes back to the question of what's good adoption and bad adoption. The question really what I think how people define that is that there are forms of adoption that are more sustainable than other forms of adoption. Yes. And unsustainable forms of adoption are things that can lead to. to declines in the price later on. So people don't like that. When we think about the last cycle,

the best example of this would be like the 2017 cycle. When we had a huge structural shift and shift towards like retail buyers on Binance using 100x leverage. And you know, these unsustainable forms of buyer behavior. And then it causes a huge crash subsequent to that. Institutional buyers to the point I was making earlier where like they're beneficial up front.

They may not be as beneficial. later on, but institutional buyers aren't having that type of behavior. They're creating this passive bid on Bitcoin. And in that passive perennial bid that they're creating is a very good thing. Now, are they going to be the hoddlers of last resort if governments start going after it or some sort of, you know, terrible situation emerges within markets, no. And that's where we have, you know, the hoddler community. And that's our own Fed put. But regardless, today, they are structurally changing the types of demand within the market to kind of resolve some of these issues. I'm sorry, I'm forgetting the original question. No, but I think that's

interesting, because then sort of the knock-on consequence of like, say that as an example, buying Bitcoin every week, every two weeks or whatever it is, is that that does dampen volatility and who does that bring in next? And if you went through this sort of step by step, do you think the likely next buyer is a sort of Zuckerberg? or an Apple? Yeah. Like, is that what the next step needs to be? I don't think it needs to be anything, you know?

I think it seems like that that will be a logical next step for a lot of people. What I like about the Treasury companies is that going back to my point on narrative, the way that that's impacting narrative, what other asset? What other asset has this, you know? No other asset. There's not just a bunch of people buying zombie shell companies like IPOing and doing D-Gen shit at like a corporate level to like, but nothing else has this. But if narrative is important, is that a good narrative?

Like, what are the people on Wall Street? Like, the serious people thinking about this? Are they looking and be like, look at these idiots? They're looking at it and they're saying, look at these idiots. But at the same time, I think what it's implicitly stating is that like, this is so unique and it's so valuable. And there's a bunch of CEOs who now have to have board conversations about why they're not doing this when we look at the price performance.

And there's a bunch of morons out there. And it's pretty hilarious. Like I like to talk shit about them on Twitter. I also like to support the good things that some of them are doing. But it's really funny. And I think that there is a legitimate like, you know, I won't use the word arbitrage because I think that terms abused within Bitcoin. But there's inefficiencies that exist that some are legitimately capturing and what

Saylor is doing. And I hope more companies buy Bitcoin. Most of them, I kind of view it as something. that's really not going to be as big of a shift is what most people think it is. I think it's going to create more companies that own Bitcoin. It's going to attract more fixed income products

that are backed in Bitcoin within capital markets because it's proving out that theory. All of that is very good for introducing, you know, people that work in like capital origination into this market. So that's a really good thing. And I enjoy all of that. And just because there's a bunch of, you know,

morons who don't have a valuable company and this is kind of like they're viewing as a lifeboat and they're maybe nine months too late to the market. And maybe they're not. And I hope they're not. You know, I hope it works. But what we put in our annual report is basically like, yeah, there's going to be a long tail of people who do this.

There's going to be a bunch of cowboy CFOs who are, you know, trying to get rich off of it. They'll probably take on too much leverage, yada, yada, yada. I think like the bigger risks that we put in our most recent report on banking when we touched on this subject is, I presume that over the years, if this were to sustain, there's going to be a consolidation of these companies into asset managers. And the same way that people are concerned about Coinbase custing all the ETF,

AUM, and having significant influence over the market, if Bitcoin treasuries become very significant in that regard, how are they going to differentiate from one another? There's kind of like two ways. They're going to do it through their capital structure. And that's kind of the big boy game. That's what Sailor is doing. Maybe a handful of other companies are going to be able to compete in that regard. Or you're going to do it based on kind of like an operating model.

And then everybody's going to need an asset management function to even like stay within a competitive position because the asset management side means you're sitting on a bunch of Bitcoin and how are you going to be earning some rate of interest on it? Because the other company's doing it and they're doing it well. And there are real like Bitcoin native ways that you can actually earn yield interest. And like this is the where does the yield come from thing. But there is places the yield comes from. You can run a Lightning node. Who knows what you really get?

And I'd be interested to know your perspective on this because I think Block came out and said they get 9% on their Lightning node. I think that's most likely because it's basically in a silo and they charge cash out of users whatever they want to send a transaction across Lightning. River came out. They have a large node said to get like 1.5%.

What do you think the market matures at in terms of, is that the only way you can get Bitcoin yield and where does the market? Like, where does the market mature? Yeah. So the ways that, you know, asset managers are going to be able to effectively earn yield on Bitcoin that, you know, arguably will or will not be sustainable over time. But, you know, I certainly believe will. There is kind of like this term structure of interest rates emerging natively in Bitcoin that Nick Batia coined in, like, 2018.

And referring to it as that in the same way that in the U.S. we view U.S. debt or like, you know, in a traditional finance view, U.S. debt is like, like, you know, the risk-free interest rate, quote-unquote. You know, we kind of have something similar emerging, and Lightning is one of the protocols in which you can basically take Bitcoin, you can use it to provide liquidity within the protocol, or you can actually provide just the technical function of routing, and you can earn some degree of yield on your Bitcoin. And, like, routing fees is, like, a very low-risk method of doing it.

Leasing liquidity is, like, the next step up. Still very low risk. It allows you to get even more than just routing fees in terms of interest. And there's going to be a variety of other ways that people can also earn interest. There's going to be like asset based lending on like taro. There's going to be, or sorry, tapass or whatever it's being called now. And like, and there's going to be like staking. And then there's just going to also be like traditional forms of lending when there is that. So like there's this whole risk curve basically that's being built out for Bitcoin capital markets.

And it requires today a lot of technical knowledge and wherewithal to be able to actually earn yield on your Bitcoin through that. So I think we're going to have a class of like asset managers emerge that are going to help people who have a treasury function actually earn a rate of return. And the reason isn't going to be because that's needed. I think a lot of Bitcoiners will listen to this and be like, well, Bitcoin's going up. You know, that's greed or whatever it is. And that may be the case.

And if it's too risky and everybody deems it that way, then it'll eventually wash out in the market. But that's not really how markets work. Markets work because of what's demanded. it'll certainly be demanded when a lot of these like treasury companies are if your sole function is to own bitcoin then you're going to have to differentiate yourself to get people to sell another company stock and buy yours and this will be one of the primary ways that I think that happens so if I were to say long term where I'd view like a concentration risk happening it's actually probably not going to

be in the treasury company itself it's probably going to be in the asset managers that they're using and they're probably be a bunch using the same ones that's interesting um so when we get to like when we talk about Bitcoin gains, $10 million? Like, how long do you see that process taking? And, like, what are the milestones along the way? So the obvious one being overtaking the gold market cap. Yeah. I mean, the big one. So, like, yeah, going back to all this, it's like we touched on treasury companies and we touched on like, you know, I went into the whole thesis around government adoption. We've talked about, like, asset managers coming in. The reality of changes in price is it's where marginal demand meets marginal supply. Markets are dynamic. If we're in, like, when

people make these arguments of like, oh, there's like nobody's selling or something like that. It's like, well, nobody's selling at this price. Yeah. If it goes up 100% selling market might change. Yeah. You don't know what it is because behind every, you know, price, there's a market of buyers and sellers. There's two big, you know, order books effectively. And you don't know what prices they're all stacked at.

Nobody knows until the orders are actually executed. That's how price is function. So you don't really know, but you can look at really like fundamental drivers and say like, on a relative basis, this is what makes Bitcoin unique. And it's certainly conceivable that because of all of the unique characteristics I've described in Bitcoin up until this point, Bitcoin is something that could get to $10 million easily within the next 10 years. If I were to put my money on it, I'd say Bitcoin's going to be a $10 million in probably like seven years. I think it's going to happen relatively rapidly.

And I think everybody's thinking about, well, market structure is changing. We're seeing diminishing returns. All of this is true. But Bitcoin is always in everywhere, like one major press release away from a huge change in the perception of it. That's how it's kind of always been.

Some large new dynamic comes out. And everybody's like, oh my God, Black Rock just stepped into the mark. Oh my God, the US government. You know, these things are only becoming increasingly more likely to happen because the narrative around Bitcoin has changed. It has changed within the culture,

It's changed within the global zeitgeist. It's being taken seriously as an asset now. It's not some sort of huge reputational risk for you to adopt it anymore. So with all of these dynamics floating around in the market, right now there's a bunch of people having conversations everywhere around the world about the how they're going to adopt Bitcoin in some way, shape, or form. Everybody's witnessing what's happening in the market where it's like literally you're creating some of the best performing stocks in the world from just buying Bitcoin and not doing anything. And it's absolutely insane. So all of that means that there's a lot of powerful, you know, companies, governments, institutional asset managers, and a lot of people all around the world that are just realizing right now,

oh, there's not that much risk for me doing this anymore. This is something that's accepted. I need to start looking into this. So I think the headlines are going to change. I think it's going to be pretty rapidly once we have some sort of next major headline of some next major, you know, country institution. if Bitcoin starts to become another geopolitical asset within the next five years,

that could significantly change how demand looks for it. Once you can kind of see the potential of like, oh, these markets are, like, that's the point. Like, these markets are massive. Everything's in our favor, and nothing's going to be able to stop this. I'm not too worried about it getting to this price. We can think about it.

I just know that everything, this is the best form of risk you could possibly be taking. because all the unique characteristics that exist with this asset and nothing else has. Impossible question to answer, but what do you think that headline might be? Because when I think about what are the things that could really change the game here, I think the obvious one is, let's say China come out and say they're buying a fuckload of Bitcoin. How do America react to that? And like, if they understand the true value of Bitcoin, which I don't think they do,

but I'm sure there's people in the team that do, then they have to stack more Bitcoin. than China. What do you think the story will be that drives Bitcoin there? I think that if we do start to see it become more of a geopolitical asset, it'll exist behind the scenes for a period of time. It probably already does. Yeah, exactly. And that's what everybody's speculating on right now. And like we do know to some degree that some of these countries are buying it. So that's kind of what's happening.

I think we're witnessing that happened. At some point there's going to be proof. And at some point, it's going to just become public. once just like when you are an activist investor, you get your position first, you make your announcement later. And then that benefits you in terms of the price. And I think that'll start happening.

Like right now everybody's getting their position. And do you think the idea of the sort of four-year cycle in Bitcoin is probably over because of all these dynamics? I think so. I don't think the four-year cycle is something that is going to, I think it's still going to be cyclical, of course. But yeah, I think with the way the behavior is changing and the perception of the asset now, it's going to fundamentally change the price dynamics of it over time.

If this happens, how does Bitcoin remain a neutral asset and doesn't get captured at some point along the way? Yeah. So that's like the trillion dollar question. And I think that there's a lot of debate about it. Right now, I just view, to the point I was making earlier, I view things as adoption, adoption, adoption. We need a lot of adoption. Centralization risks are real, right? You know, Coinbase having, you know, the majority of ETF, custodial ownership, and that being, you know, five, six percent of the total supply. That's a real thing to look at it and monitor. I don't think it has outsized influence on the network today.

It could tomorrow. And I wrote significantly about this before the Black Rock announcement happened. I put out some threat a few years ago. going into that, you know, these people are going to be able to influence the network pretty significantly. But we also are witnessing it get more, because of how it's growing, the distributed dynamics within it are also changing. I think it's not just like plebs versus institutions now. It's like institutions versus plebs. Like, there's a lot of conspiracy theories, I believe. I think when a lot of conspiracy theories fall short with me is because often the, uh,

solutions that are provided to the question, or the answers provided to the question, usually have this assumption that powerful people are very good at organizing with one another when they have competing interests. And I don't really believe that. I think that it's very hard to get powerful organizations to actually organize with one another, because there's so many people that are put in a prisoner's dilemma.

And the prisoner's dilemma, game theory tells us that when there's a conflict of interest, they're going to defect against their interests with one another and their commonality. And I think that's the fundamental thing that gives me a lot of confidence in Bitcoin. It's that incentive is that, and this is what, you know, Satoshi put into the white paper, right? Like when they were talking about a 51% attack, it's very parallel to this reasoning where people are like, okay, so if somebody were to even accumulate the amount of resources to 51% attack the network, he ought to find it more rational to just mine those bitcoins himself and, you know, take the economic value from it. Because Bitcoin is money, because it's something that it can be universally valuable, can be traded everywhere else, it's the most saleable asset in the world.

Like fundamentally, this is how the Austrians define money as it's saleability. So what I wrote about in my book is how salability has created, the most saleable asset is something that has the greatest conflict of interest with society over time. Because it's in everybody's self-interest to get the most of it that they can. And that's what has led to all these issues with banking. That's what's led to all this moral hazard that's existed from central banks. Because if you, an analogy is if you were to hire a courier to deliver some legal papers for you, an asset to you, but it's not saleable. These things are only relevant to you. You say, I'm going to pay a hundred bucks.

Go deliver these things for me. They don't really have a conflict of interest with that because there's nothing they can use that for. Money is something where everybody has a conflict of interest with you. And if you say, go deliver a million dollars for me, I'm going to. going to pay you $100 to do it, what are they going to do? And it's that conflict of interest that always exists with people that have control over money over time that has led to moral hazard within the system. So everybody wins by acting out of their self-interest with money. And I think that's the fundamental incentive that's going to make it very hard for large institutions to

start cooperating with one another over the long term, is that there's always going to be this prisoner's dilemma where they say, okay, if we all organize to do this, then we all need to be on the same page. And we all need to implement the same benefit. And maybe they do have a bit of common interest. But then one institution is going to say, well, no, actually by defecting, I can get approval from another part of the market. That's going to benefit my business significantly more. Oh, my God, like if I get the support of, you know, the majority of the node runners on the

network, that'll actually be a differentiator for me. And a lot of institutions, I think, are going to have that incentive over time. And they're also going to understand that by trying to do this in the first place is going to undermine the integrity of the network, if it were even possible. And I think those incentives are powerful. I don't know if I 100% agree. Because I think this comes back to narratives. Like, what is Bitcoin to you and I is different to the way that Larry Fink looks at Bitcoin?

And what drives Bitcoin's value is probably different. And if Larry Fink, as an example, anyone like him, sees the sort of private use of Bitcoin as something that actually undermines its economic value, then what does he do in response? So I see this, like, I see a potential trajectory that is KYC-only exchanges, no privacy tech, and Bitcoin goes from being freedom money to being store of value asset that is at that point not that interesting to me. Like, and it gets back to the thing I've said a million times on the podcast, Thomas Packier at Poki said, we're all going to be rich and depressed because the project failed. And I think that is a reasonable chance of happening.

Yep. I think that those arguments are an argument against Bitcoin's value as money. I think you're right, but does everyone see Bitcoin as money is the question? I think they will. I think it's going to take a long time. I think by the time we're actually debating a lot of these questions, it's going to be a very different world that we live in when these are actually like real threats that are, you know, some sort of pernicious threat spreading throughout the market. I think by that time, the understanding of Bitcoin is going to be a lot more sophisticated around people. The way that I view this is that if we believe that Bitcoin's most valuable use case is as permissionless global money, is as this new neutral financial system, if that is true, then people seeking to capture value from that are going to understand that certain action

they're taking, they're going to have much more value by abiding by policy and behavior that increases that reality. We're going to be one of the first institutions that's benefiting and profitable from that reality emerging. And I think that the digital gold narrative is going to be, you know, that's going to get a lot of institutions on board, but it's going to be vastly smaller in terms of its potential. Now, not everybody's going to see that. Larry thinks probably not going to see that. I've been surprised with the way politicians have adopted. You know, I didn't expect the U.S. to be a first mover on this. I thought it'd be emerging markets. I've been consistently surprised with how people adopt it and what their

understandings are. I think in five to ten years, that could be drastically different. But the thing with, like, the U.S. is a perfect example of what I'm saying. Like, they are supposedly adopting Bitcoin. We'll see what happens. But at the same time, they are putting privacy developers in jail. And that's not Bitcoin winning to me. Yep, yep. And I don't disagree with that today. What I'm saying is more from the perspective of, will the incentive exist? So the point that you're basically making is that people who are custodians or asset managers, they're going to benefit more from having custodial ownership of Bitcoin.

And as that increases, there's going to be a strong profit model. They're going to want to be supporting that. Now, if Bitcoin is permissionless money is going to be the most valuable use case for it, then that means that some of the largest profit models that are going to exist in the long term are going to emerge from that use case over the long term. So that means that there's going to be competing institutions that emerge and say, this is a much more about, you guys are throwing the baby out with the bathwater,

we're going to support the alternative. As long as that exists, it's the same argument when people say, okay, if you're a government and you try to shut it going down, it's just going to move somewhere else. And then you're going to have to compete against it later on. And you're going to be the government that missed out on this huge expansion

and structural change in global wealth. And that incentive exists always and everywhere. If the truth is that permissionless global money is a reality, if that's the truth, then I think that incentive will exist, and the market will respond accordingly over time. Because I do believe that that's a case. One of the maybe unpopular opinions I have is that when you look at the normal path that an emerging money takes, people talk about store of value,

medium exchange, you never account. The media exchange seems like the hardest reach for me at the moment. Like, Bitcoin as a store value clearly played out. Bitcoin as a unit of account. Like, for me, it's already my unit of account. You're probably in the same boat. But, like, and again, like, I use Bitcoin as money. I buy things with Bitcoin at Bitcoin events.

And in Bitcoin places. You can't do it elsewhere. And I know Square are doing the thing. It'll be interesting to see how much actual adoption of Bitcoin in those sort of transactions occurs. But how do we get people using Bitcoin? I think it's that perspective, and I hear it so frequently, it's that perspective that how do we get people using Bitcoin? I don't think it's a right way of approaching that.

I don't think it's a right way of approaching the question. When gold emerged, people didn't say, how do we get people to use gold as money? You know, when gold emerged, people said, this is a scarce commodity. And that's what caused a convergence upon gold and silver over time. These are scarce commodities. And eventually you get to a point where everybody owns it. And then eventually you get to a point because everybody owns it, they start trading in it. What else do you spend?

What else do you spend? This is this thing that we all have. And you can look at different forms of money that they had in societies, like in agricultural societies. Like monies were just these things that were, you know, somewhat universal to their trade. And like, this is one of the arguments against Bitcoin originally from some economists was that because it has no utility value, it won't be widely accepted enough to become money. And that wasn't really true from like a precious metal standpoint historically.

But like in agricultural societies, when we look at things like cattle and salt that were used as a form of money back then. And like, you know, cattle meaning the Latin being Pekis is where the word procurinary came from, meaning of money. And then salt is where Sal in Latin is where the word salary came from. Like these very fundamental forms of money that existed during that period of time. Those were things that everybody had and everybody wanted all the time. So that was a natural way that they spread. and then precious metals naturally spread just because their scarcity was far greater

than any other commodity that existed. So like that's kind of what we're witnessing today with Bitcoin is just, we're watching it spread because it's the scariest asset in the world. And then once that happens, like eventually we're gonna get to a point where it's something just like everybody owns. And that's the big shift happening right now.

The big shift is that it's changed culturally. It's become something that people are thinking about and listening to. And it's not some sort of like, you know, illegal, whatever type thing in people's minds anymore. So once everybody has a little bit of Bitcoin, once it's like this normal thing, like I think the first shift in like from the investor's standpoint is a lot of people are thinking about investment today in like the normie world, the people who are never going to understand like a lot of these permissionless characteristics. They're just kind of kind of own some and then they're going to have it. And then by the time people are using it in money, they're going to start using it as money.

Like they're just never going to be looking into things in the depth that we're looking at it from. Like those people from their perspective, they are all just kind of like getting a little bit. And the same way that today people are like, oh, you know, you should probably own stocks if you're an investor. You should probably own bonds or you should own a home. You know, it's just, these are just cultural heuristics that people perceive to be true because their parents told them so or somebody that they trust told them so. And that's how the vast majority of the way people's behavior spreads.

So that's just happening with Bitcoin right now. It's becoming this thing where everybody's like, oh, it should probably have a little bit of money in Bitcoin. And that's how it becomes something everybody has. And then it will come to a point when it's going to be a lot easier for people to say, oh, well, I'll just pay you in Bitcoin. And I think one of the key fallacies that Bitcoiners fall under with this is a lot of people say, well, no, I'm just never going to want to spend my Bitcoin. And it's like- But there's opportunities you cost either way.

Well, I think the reality is you don't choose to spend any form of money because you want. It's demanded. I would love to give you my underwear for something. Like, you know, I would love to give you anything. Like anything that's... Yeah, yeah. There might be a few. But like, you know, it's just like, I would love to give you anything other than, you know,

the most valuable forms of money. It's because people are demanding it. And there's going to come a point where people are going to be like, no, I don't, I don't don't pay me a dollars, pay me in some Bitcoin. That makes sense. It's almost like there is a law for that, an economic law. I can't remember what it's called. But it's, so Gresham's law plays out.

People hoard Bitcoin so they don't want to spend it, spend the shit money. And then at the end of that, it gets to the point where people who are selling goods and services demand Bitcoin. And that's where the actual medium exchange part comes in. That makes sense to me. Totally. Totally. And like we're just getting to that point. That's why I care so much about adoption today, of that happening rapidly. The more people that own it, the more we start to see that acceptability happen. The more we start to see the potential for medium exchange at scale occurring, and the more we start to see it become political suicide to ever attack it. Especially if Bitcoin goes from here to 10 million, like if anyone has any Bitcoin today,

it's going to be a vast amount of their money in the future. And at that point, like, what else do you spend and what else do you demand as someone selling something? Yeah. That makes sense. So then the other like common trope in Bitcoin is if Bitcoin's at 10 million, like what does a price of bread cost you? How do you think about that? Like is a loaf of bread $10,000? I don't know. I don't think too much about it. But yeah, I think that like the other's two things happening was the price so like that'll be the nominal price of bitcoin right and that's why people like we need to denominate real goods in bitcoin to really see what our purchasing power is um because to the point i was making earlier we have this shift towards commodities by the time bitcoin consumes the market

at gold like commodities are going to be so much more highly demanded at that point so mark gold itself will just like double in terms of like demand or like that theoretical store value demand that gold holds today um and then further there's going to be that much inflation that occurs within the dollar as well that's going to be changing it. A lot of the long-term stuff, I just don't focus on it that much. I try to focus a lot more on what's the most interesting, like, companies and infrastructure that increase adoption for Bitcoin today because, and a lot of these things are more technical and boring. They're not things that really get into the mainstream.

Yeah, but I think that's like, maybe that's a specific question about a wider thing. It's like, what does society look like with Bitcoin at 10 million? Oh, okay. I see what you're saying. With Bitcoin at 10 million, I think that Bitcoin is going to be like owning a home around then. It's going to be something where it is starting to become in the same way you have like Zoomers today that are using like cash app for a lot of their bank accounts. There's kind of like this new type of buyer behavior emerging in the younger generations. And I think with Bitcoin at 10 million, it's going to be something kind of like that. It's going to be this new type of buyer behavior from these new types of companies that have emerged where everybody kind of has a little bit.

you know guys are playing fantasy football with it and paying each other out in that and it's something that's like structurally a savings account people are kind of spending it a little bit but they're still expecting it to go much higher and you know dollar inflation has significantly changed and in the world is kind of viewing this as all these conceptual ideas that are you know conceived by the minority of like the bitcoiners that are driving all this right now, they're probably going to be more persistently understood at that point. Most people are going to be like, I'm still using dollars because it's much more practical in my day-to-day life. But I kind of use Bitcoin, you know, when I can every now and then.

And they're going to be familiar with like the broader vision at that point. Okay. So in this future world with Bitcoin at $10 million, what happens to central banking? Does it still exist at that point? I think that at this point, what we're going to see, I think one of the major shifts that we're going to be witnessing over the next decade, and a lot of this relates to how stable coin demand is emerging right now. For Bitcoiners listening to this, I think, you know, everybody makes the arguments like stablecoins are a Trojan horse. The question is like, what does that mean? How does that actually work? What's going to happen that are going to make people say, I'm selling my stable coin for Bitcoin at some point in the future? And in this recent banking report that we put out a very technical deep dive into how banking works from a pretty technical perspective and making the case for Bitcoin adoption by banks in the near term,

we kind of lay out what this future vision could look like. So what's happening right now is that we're realizing, well, a little bit of background first. At a high level, the way that the current banking systems are structured, particularly in the US and other major economies is you'll hear this referred to as a two-tier system. Tier one is the central banks. Tier two is the commercial banks. Now, there's actually two other kind of bookends that are put onto that tier system. And basically how money is created today at the highest level is U.S. government issues debt

because they need debt to pay for things. So they, you know, effectively are creating money out of thin air because they issue this debt. And then they're selling it to central banks indirectly through prime bro. brokers. So debt goes into central banks, central banks converted to reserves. Now those reserves are being held by commercial banks. And those commercial banks have something called a Fed Master account that allows them to access the reserves of the Federal Reserve. And then those guys can either lend that into existence or they can have other banks plug into them called correspondent banks. And those correspondent banks can have an account with them which gives them access to the Federal Reserve

Master account. So it's like this really muddy system, but it's basically like debt gets created by central bank, central banks buy it indirectly, and commercial banks are lending it into the economy. Debt gets created by the treasury. Sorry, what did it? Yeah, by the treasury. And then that is indirectly, you know, central banks are creating demand by effectively buying that from prime dealers. And then commercial banks are ultimately the ones accessing those reserves and lending into

the economy. So they're just taking those reserves, putting them on the balance sheet, and then lending out against those reserves. Yeah, yeah. And there's, we don't need to get into all the technical details about how, like, actual, like, M2 expansion and things actually are happening because there's a much of, like, you know, not like dynamic variables and impact how that happens. But like it just structurally to kind of understand the system, this is the, you know, levers that exist. And, and then at the bottom of that, you have like fintech, basically, which are kind of just like a makeup layer that's plugging into this bank banking system and making things function better and work better for everyday people with software. So, like, that's kind of the structure of the current system today. We have all these intermediates. areas that exist within it. What happened with stable coins? Stablecoins are buying U.S. debt and people are trading it as money. And what does that mean? The first part is going all the way to the end and we're cutting out the complete middle. So in the U.S., what shifted this year is that we had the, like,

the SAB 121 ruling that was put in under the Biden administration through Gensler. And I was basically saying that, you know, banks aren't allowed to, or they have to, if they're, you know, holding digital assets on deposit, then they have to hold those as a liability on their balance sheet, which is a big problem for them. Because any other deposit they have is something off balance sheet. So to understand that better, if they own like a billion dollars of Bitcoin just as an example,

they have to also have a billion dollars in cash. Yeah, well, they don't have to, but all it means is that they now have a liability on their balance sheet, which impacts their risk metrics and the way that those are being assessed. So like when regulators come in and they say like, you know, are you meeting the right, levels of certain thresholds. So they have to allocate a billion dollars of cash

in that scenario. Yeah, yeah. And like the, and it can impact what all these metrics are that they're having, then they may not pass like certain stress tests by regulators. And it basically made it so it was like a non-starter

for them to even adopt digital assets in the first place and like Caitlin Long was fighting this whole battle, et cetera. And then that Trump administration enters, that gets repealed. And at that point was when, you know, our firm was like, this is really interesting. This is really going to impact a lot of things.

because banks adopting Bitcoin is going to be the next major, I think shift in the US for how things operate in the market. And so we started like diving a lot more into this question. And basically going back to the point of like, we have this tiered structure of system where debt gets converted to money and then money gets created through banks and then fintechs make it easy for people to access that. And now it's just debt goes straight to a stable coin.

And a stable coin makes it easy for people to access that. So it's like, what are we really trading when we're trading money? we're trading debt. And the question's like, well, why don't we just like trade debt directly? Why don't we trade treasuries with each other? The answer is that treasuries are heterogeneous. They're not homogenous. So because they're not like, you know, specific, every debt has different maturities,

different interest rates, you know, yada yada. These are kind of blended together to create a form of money. And that's kind of what stable coins are basically doing. They're creating this blend of reserve assets that's giving us, you know, a stable coin. And the reality is that with the way the tether exists right now, all the interest that they earn on that debt, they're just pocketing all of it. And because the markets is not that competitive against them for anything else.

Well, they've been told they can't issue, like all for interest. And that's one of the big shifts that happened with the Genius Act last month, where we had this bill passed through Congress, passed through the House. And this bill, like the two primary things to consider is that short, Duration Government debt is the primary form of reserve, or the only form of reserve that Stablecoins are allowed to have in the U.S. And also Stablecoins aren't allowed to pay interest. So it's huge regulatory ring fencing carve out to protect the banks. Because what did I just describe? We're basically disintermediating the entire banking system of stable coins.

Well, I don't know if you listened to the All In podcast ever, but I was listening to that not long after the Genius Act passed. And David Sacks outright said that, they put that rule in because the banks weren't happy? Exactly. No, I mean, there's like public letters from the Community Bank Association where they were, you know, publicly letters or public letters sent to say, you cannot have, you cannot let stable coins get a Fedmaster account. Because the second thing, if a stable coin, if Tether gets a banking license

and they get a Fed Master account, that'll, banks can't compete with that. And today, because they don't have those things, they can't pay interest. But the second they have those things, they actually could pay interest like a bank. But why are they protect? the banks in that scenario. Because surely if this is like an innovative thing that could be really positive, why not just let them have it? I feel like the question is obvious, right? Like there's a huge pervasive conflict of interest between banks and society and like, you know, Bitcoiners talk a lot about that. But like, I think the reality is just that, you know, putting aside that

banks have influence over politicians, putting that aside, it's a, we have a strong path dependency in the system because our money creation exists around the banking system like this today, to undermine that could create significant upheaval in the functioning of our financial system. I mean, even with the GFC, that caused a very significant crash. But do you think this could be a temporary measure until J.P. Morgan and all these people

have their own stable coin, then they'll be like, okay, fine, you have a go. They're basically just holding it off until they can compete. There's going to be a convergence. I don't know. I'm definitely not an expert on how specifically that dynamic would play out.

But like J.P. Morgan already listed their own, and they call them tokenized deposits, by the way. So the tokenized deposit that they issued on Coinbase's base blockchain, which is just a server that Brian Armstrong has in his basement, they issued that, and that's an interest-paying Stablecoin effectively through that. It's kind of like a beta or something. But that's kind of the world that we're going to, are stable coins that are paying interest through banks with the proper, you know,

certificates to be able to do that. And then stable coin providers are going to be powerful and they're going to effectively become banks doing that. I think you're going to see a lot of like crypto institutions doing something similar. And then even if you don't, what I think we will see is there's going to be like an onshore market and an offshore market. I think we'll start to see like more like offshore type stable coins emerge. Totally. If I was tether and I saw what happened in the Genius Act, I'd be like, okay, we'll have tether U.S., Tether International. Exactly.

We'll offer interest. And they have a huge decision right now. I think there's going to be a ton of like, it's going to be very illuminating to see what they do. Because they've got to try carefully because like they are now in with the government. Exactly. Yeah. So like onshore tether that's like either not paying interest or they get a banking license

and do it onshore. And then there's going to be like offshore tether. And I think the reason that that's created is like one, it's like, okay, even though we can pay interest, we can still only buy U.S. short duration government debt. It's our collateral. So what's going to make them when I issue offshore? at that point. I'll be like, well, how does it exist today? Five percent of the reserves are in Bitcoin.

So wait, wait, I don't know if that's true. A five percent of their reserves in Bitcoin, are you sure? Yep. Because I thought they were putting excess capital into Bitcoin and they had fully reserved by treasuries. Yeah, just like their reserve composition holds Bitcoin in it as 5 percent. Damn. It could have been excess capital. Like how they accumulated it over time, I'm not sure. But yeah.

So if there's just for easy mass, 100 Tether it issued, they have 95 US dollars. Yeah, like five cents are in Bitcoin. Interesting. I didn't know that's how it works. I thought they had excess capital in Bitcoin and they were 100% reserved by the treasuries. I think they probably have both. But if you look up like their reserve reports, they're reporting 5% in Bitcoin. Damn.

Yeah. So that's what's really interesting. like that's how tether exists today so what's going to make them want to do something in the offshore um is that and i think the best way to conceptualize this well i'll start here the they're going to want to maintain that because that's going to be a very valuable form of reserve over time um and why because the ability to pay interest i think is going to be superior from that what allows you to pay better interest having superior risk-adjusted collateral or sorry uh risk-adjusted reserve assets that are backing it um so if we do envision a world where there's a lot more stable coins that are competing in different

jurisdictions, I think within that world where they're competing over interest, now we have a competitive dynamic where everybody's trying to say, how do we pay the most interest and not get too risky and blow up? And that's going to be more like a free banking type world. I think under that type of an incentive is where we see Bitcoin start to pervasively move into the reserves of assets. And I think like the end run on a lot of that game is, going to become basically what Saylor has done with his new stretch product. So a short duration it's paying like I think 9%. Yeah. The stretch product is like a Bitcoin fully collateralized short duration asset that is, you know, perceived. Perceivably. It's a stable coin with really

high interest, much higher interest in government debt. Now the question becomes, is that going to work? We're going to find out in the market. But that's the end game is that if you believe Bitcoin, is going to be superior collateral is going to be, you know, the most valuable form of money and asset, then it's going to expand throughout the reserves of stable coins over time, one way or another, whether it's onshore, whether it's offshore. And like that paired with what stable coins are doing right now, putting the world on a standard of cryptographic signatures for payments, getting everybody on those payment rails, it's going to be really important because that means it's not just like, oh, I have my credit card system and that needs to integrate Bitcoin.

it's going to be, okay, we already have these systems set up for stable coins now. And it's a flip of the switch to start using Bitcoin as a form of money. So those two things, changing the payment rails to be on cryptographic type rails and Bitcoin penetrating the reserves of this market. I think that long term builds a market where Bitcoin starts to continue to move throughout the reserves and grow and grow. And then eventually it gets to the point where everybody's like, okay, so we're basically just like trading these stable coins that have reserve back.

in Bitcoin and they're paying us interest, why am I just not using Bitcoin directly? Because it's been going up 30% a year and I've been getting 9%. Why do I let this company take that from me? And that's the mechanism that this Trojan horsing through stablecoins happens. And I think that's going to be a very significant form of adoption for Bitcoin over the next decade. So do you really see stable coins as like an intermittent step before we get to full Bitcoin usage? So fast forward sort of 20, 30 years, you think it's going to be all Bitcoin, no stable I think it's a vehicle that allows us to use interest rates within them as a mechanism to gradually increase the exposure to Bitcoin.

I think for people that are like, we want this to happen gradually, as opposed to just like, you have to sell all of dollars to get stable coins. It's kind of a way to like gradually increase the exposure of the asset through it at a systemic level from dollars to Bitcoin. So yeah, I view it as potentially a very large one. Again, to fast forward, look out 20. years, what does the world look like? Do we have a central bank? Is Bitcoin the only money? Do we get hyper-bitconization? I think that hyper-bitcoinsization is not a certainty yet. When I wrote my book, that was like the

primary thing that I concluded from it is we need a whole financial system built around Bitcoin. So over the next decade, that's, I think, one of the biggest problems to be solved is we need a lot more companies. We need a lot more infrastructure. We need more software. We need more protocols enabling people to move Bitcoin faster and do more things with it in the most permissionless way possible, as well as in more efficient ways that bring in adoption more rapidly. It's an entire competitive market that's emerging around this. And it's just like a tree that's growing. There's going to be a lot of branches that are growing today that are going to be dead tomorrow while other branches are growing off of it. All of these branches, the more they expand, it grows

the trunk. And the trunk is Bitcoin adoption. So we need more branches. They need more access to sunlight. They need more water. That's why I built my firm is to be a capital provider to these types of companies that are focused on Bitcoin adoption. I think that's the biggest problem to be solved right now. And I think for people that are working in the industry or people interested in doing so, I think some of the most competitive business models in the world are going to be emerging around this new vision.

And we're very early to a lot of it. I think people are still shifting out of the mindset of there's going to be a bunch of different cryptocurrencies to, well, there's really just going to be Bitcoin, and that's going to be the money. And a lot of what these cryptocurrencies attempted might be infrastructure that exists and is used by Bitcoin, but Bitcoin's going to be the form of money. And for a while, it's going to be like Bitcoin stablecoins are used. And I think that, like, this shift is just starting to happen with a lot of these financial institutions. And the key competitive advantage that they're going to have is being Bitcoin native over the long term. That doesn't seem

obvious until you really start to understand their business models and you realize that like if a bank moves from how they currently work to oh we're going to get into bitcoin the margins are better the interest rates are better there's a lot of things that are make them get a significantly greater return on capital that's kind of what we're looking at in our banking report we put out this year and we're just going to keep seeing this incentive move because bitcoin's just going to keep going up and more and more people are realizing that so that's what we're working on on today. That's what we're trying to solve. I think it's the most important problem in Bitcoin. This is a very historic time. We're going to look back on these years fondly, Danny.