Bitcoin: The First Digital Monetary Energy Network | The Saylor Series | Episode 4 (WiM004)

technologies that are dominating today.

They're dominating because they're able

to

deliver force

faster, harder, stronger, smarter.

So if we ask the question, what is

money? Money is the highest form of

energy that human beings can channel.

Bitcoin is channeling human ingenuity

into making it better

and and every commodity is channeling

human energy into making it worse. The

lowbrow or or the the the historic

colloquial term is hodal, right? Hold on

for dear life or just hold or save

whatever. And the highbrow term would be

adopt as a treasury reserve essay.

[Music]

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Hey guys, welcome back to episode four

of the What is Money Show. Uh, we're

coming back today with part four of the

sailor series.

Um, and this is the first part of day

two. So, Sailor and I spent two days

recording. Uh, we did about 10 and a

half hours in total. So, episode 4

represents the first episode in day two.

And, uh, if you haven't seen episodes

one through three yet, I highly

recommend you go and check those out.

Uh, we built a lot of foundational

material there that, um, just gets

referenced back to going forward. So, I

think it's really important. In episodes

one through three, we covered the stone

ages, the iron ages. We went into the

dark ages, how we came forward into the

steel and the industrial age. And now

today, we're getting into the good

stuff, Bitcoin theory, the digital age,

um how money and economics is changing

once again, uh based on the these new

and radical innovations we see in the

world today. So today we're going to

learn about how Bitcoin is the first

true digital monetary system in world

history. Um we're also going to hear

Sailor's question, I'm sorry, Sailor's

answer to that allimp important

question, what is money? And he has a

really really good answer I think you're

going to dig. And uh we're going to get

into a bit of the economic principles

underlying commodities and their uses

money and why commodities make a really

bad form of money. actually um Sailor

lays out a really good case for for

commodity money being kind of a

self-defeating endeavor. And then

finally, um we're going to start looking

at Bitcoin

as the ultimate means of wealth

settlement and preservation.

Um it's as Sailor refers to it as the

first

closed loop or closed source energy

system we've ever had. Um, so I don't

want to spoil anything. This episode's

really good. Um, for me, this is when a

lot of the light bulbs started to go off

and started to have a lot of those

little mini epiphies during our

conversation, which you might see me uh

having as we engage. So, I hope you like

this. Um, it's a really good episode and

uh, see you again soon.

Hey everyone, welcome back to the What

is Money Show. I'm your host, Robert

Breedlove, and I'm sitting down today

with Michael Sailor as we dive into part

two of uh this deep conversation

involving history, technology,

commerce, economics, money. Um really

covering a a a broad broad spectrum of

topics today. And um today's the good

day because we're getting into the good

stuff with Bitcoin theory uh as the

first digital monetary system. Michael,

welcome back.

Thank you for having me, Robert.

I'm excited about this. So, we're going

to talk about Bitcoin theory.

Bitcoin theory. It's a a field you

wouldn't have thought you would have

heard about even five years ago.

Well, um, you know,

when I think of Bitcoin, I think this is

the first digital monetary system in the

history of the world. Perhaps the first

per we've tried others, they just didn't

work. This is the first one that's

perfected that's functioning. It's the

first one to to cross a hundred billion

dollars in market cap. And now it's

about 200 billion in market cap. $200

billion means $200 billion of monetary

energy.

And if I look at all of the other great

digital networks, Apple, Google,

Facebook, when they cross a hundred

billion dollars of monetary energy, then

that's a legitimizing step. Generally,

when they get there,

95% or more of the investment community

doesn't believe in them. sometimes 99%

doesn't believe in them, but they're too

big to fail. They're they're fires that

have been unleashed into the society and

they're burning

and the the effect is exothermal. It's

it's it's what we have in each of these

networks is we have the collapse, a

dematerialization of some product or

service or virtue or some ineffable

quality, be it friendship or mobile

devices or information. It's collapsing

into a lower energy state.

And as it collapses into a lower energy

state, hu huge amounts of energy in the

form of profit, cash flow, and value get

given off. Apple can ship a a better a

better camera to a billion people

overnight for a nickel.

Facebook can improve the way that you

communicate to your loved ones

overnight for a nickel. And Google can

package the library of Alexandria in the

palm of your hand and ship it to a

billion people overnight for a nickel.

And when when you have these massive

dematerializations of value and they get

on a network with a network

effect, it's almost like what where you

see a crystallizing structure where

you've got an amorphous substance and as

it crystallizes we go from steam to

water to ice collapses gives off energy.

And what what Bitcoin is is it's that

first digital monetary network, digital

monetary system. It's collapsing into a

a much more efficient form. It's giving

off energy. And um that just brings us

back to this entire subject of how

important is energy to the human race.

Okay,

let me ask you, sorry, let me ask a

question there. There's a chart with fa

phase transitions of say water of going

from ice to water to steam as its

temperature increases and it shows

increases in temperature and then when

it actually goes into the phase

transition it flat lines. So it's like

all that energy is being reallocated to

I guess changing the the molecular

structure for the next state. Then the

the temperature starts to increase again

as it goes into water and it flat lines

again before it goes into steam. So I

guess what you're getting at is that

energy becomes transmuted into the next

state before it can start to give off

energy in the form of profit,

productivity. It's it's giving back

economic substance, I guess, to its

users. Um I think that's sort of the

analogy you're drawing there. It's yeah,

it's a it's a wild thing when when all

the monetary energy

leaps from gold to Bitcoin or when it

leaps from fiat to Bitcoin, there's this

phase transition and uh

and um we see it uh throughout all all

areas of science, but right now this is

this is uh just the first time in human

that we see uh this creation of a pure

digital

monetary network and I I want to replace

monetary network with energy network

because

monetary uh energy is energy and money

is energy. In fact, money is the highest

form of energy. So if we ask the

question what is money? Money is the

highest form of energy that human beings

can channel.

So if I look back through time, human

beings as a species prosper by

channeling energy. And when we mastered

fire, we channeled chemical energy. And

when we mastered missiles, we channel

kinetic energy. And when we master water

and hydraulics, we're actually

channeling gravitational energy. The

idea of an aqueduct is, well, I'm using

gravity to move water 70 miles or I'm

running a water wheel or I'm floating a

two-tonon

block in the water and the gravity's

pushing down on the water and the water

is pushing up. And when I dam a stream

and I generate hydro energy, well,

that's that's gravity being converted

energy. But if I damn the stream to

divert a bunch of fish into my pond, I'm

still using gravity. Now, I I can

channel gravity by dumping a bunch of

rocks on your head, but it's not nearly

so easy to create a river of rocks as it

is to actually just tap into a river of

water. And uh and so the mastery of fire

and water is the mastery of of chemical

energy, gravitational energy, eventually

thermal in energy. And that in the

modern era morphed into the the mastery

of electrical energy and atomic energy.

And of course, of course, there's

conservation of energy. And when we look

at all of these energy networks, look, I

mean, look, a hundred guys with bows and

arrows are an energy network, right? I'm

I'm moving kinetic energy from this side

of the battlefield to that side of the

battlefield. and and um a civilization

at the mouth of a river with cities up

and down the river, right? Is sitting on

a energy network, right? Just like the

Aian and the Greek civilization was

sitting at the middle of an energy

network and they were using

gravitational energy to to uh you know

and by wind energy, right? Another form

of energy with between sales and

gravity,

you know, I I'm taking advantage of

these energies. So the theme is humans

prosper by channeling energy.

Yeah.

What's the most efficient

energy network in the history of the

world? Well, it's about to be Bitcoin.

Um because the challenge of humans

humanity is how do I store energy and

transmit energy across time and space

and domain? And by domain I mean perhaps

governmental domain like how do I move

my energy from New York to Tokyo. And

this becomes an interesting question

right let's say let's take a typical

power grid. Well I generate uh power I

channel chemical energy into electrical

energy. I lose like 35% of the energy in

the coal or in the fossil fuel. When it

gets onto the grid, I move it over a

high voltage line and it and I can move

it up to about 500 miles and I lose 2%

of the energy.

Now, it has to go has to get stepped

down to 240 volts or lower voltage even

to get into your house. I lose as as the

voltage steps down, I lose more energy.

It's about a 4% loss.

I could if I had pure energy at the

power plant, I'm gonna lose 6% of the

energy to put it into your house 250

miles away. I can't send it 2,000 miles

away. I just can't. I can't send it

10,000 miles away. Energy will not move

from New York to Tokyo. But I can do New

York to Skenactity. Now, when it gets

into your house, you have to use it

immediately. You can't store it. So,

let's say I wanted to store it. I need a

battery. Well, they the absence of a

battery prevents a mechanism.

Uh the mobile wave is a function of

lithium ion batteries in the palm of

your hand. No, no lithium-ion battery,

no smartphone. Now, we're we're working

with modern batteries. You know, Tesla,

all it's all about the battery, right?

And uh and Elon Musk has really driven

battery technology. So, let's say I put

a battery in your house and you pull

energy into your house. Well, you've

lost 6%.

Now, a typical battery, a good one, is

going to lose 2% per month.

Okay, that means you're going to lose

24% of your energy a year. Well, what

does that sound like? It sounds like 24%

inflation a year. It sounds, you know,

it sounds like hyperinflation.

It could get worse, right?

Hyperinflation is 100% inflation year.

Let's say that I have a battery which

loses 20% of my power a year. Well, my

halflife on my energy that I pulled off

the plant is three and a half years in

10 years, right? I'm up to 12 and a

half% of my energy.

So, the entire civilization is based

upon electric power grids and networks.

And yet, it's not that good. I mean, you

really can't store that much power.

Anybody that ever put their computer,

they charged it and left the computer

for a month or two months and you

whipped it open. It's like it's drained.

It's dead. Yeah.

Okay. So, now

let's say I want to take a hundred

million. By the way, I can take a

hundred million dollars of money and I

can buy a hundred million dollars of

electricity in New York

and I can distribute it to 10 million

people in New York

as long as they use it today.

But it, you know, so so if they don't

use it today, it starts to bleed out and

we're and so this is this is uh the loss

on the network. No.

And in a monetary sense, we would say

that energy really lacks durability,

right? And I think this is important to

you to tie this back to money is that

gold itself, to your point, was an

energy network, right? It was whatever

productivity couldn't be allocated

towards something more economic, we

would go and mine gold such that gold

became this claim on savings of

humanity, which is what money is. And

those savings themselves are the result

of all our collective energy utilization

up until that point, right? We've been

trans transitioning energy into capital

and then gold or money becomes the

network that commands that capital and

then I what I think is interesting too

is that the scarcity of the gold

actually reflects the scarcity of the

energy right so it maps onto it in a way

a brilliant insight and now let's play a

thought experiment let's take our

hundred million dollars worth of

monetary energy

and let's put it in a a power network

and then that runs on copper and then

let's put it into a gold network. If I

put it into a copper energy network,

I have uh 20 24% bleed rate per year by

the time it gets to the

battery I lose 6% and I can't get it

more than 500 miles. Okay, that so that

it's a very shortterm short duration

here and now energy network. Let's put

it into a gold network. I put a $100

million into gold. Now I can move that

hund00 million of gold a 100 miles.

Would I lose 6%. No, probably not. 6%,

right? I I could probably lose a hund

move a hundred million dollars of gold a

100 miles for 10,000 to $100,000

depending upon how much security I need.

So we're talking about 10 basis points

instead of 600 basis points of loss. 10

base. So goal is a more efficient way to

move large amounts of energy

short periods of time or short

distances. What if I want to move a

hund00 million worth of gold at 10,000

miles?

Well, that's about 3,000 pounds of gold

at one and a half tons. So, I put it on

a Global Express. Cost $10,000 an hour.

I put some dudes with guns on it. I fly

16 18 hours around the world. That's

about $180,000

plus another 70,000.

250,000.

If I have to fly the plane back, let's

just assume I don't. It's 250,000.

So now now we're up to like 25 basis

points.25%

is the cost to move it around the world

once.

Okay. So So that's okay. Now, what if I

wanna deliver

a hundred million dollars of gold a

hundred years into the future? By the

way, what if I want to deliver a hundred

million dollars of of energy a 100 years

into the future on um copper and

batteries? Well, my halflife is at 24%

at 2% bleed a month, right? My halfife

is three and a half years. It's gone

completely. And everybody with any

common sense knows if you put your

laptop charged in your attic for a

hundred years, it will not be charged in

a 100 years, right? You cannot store

electricity on a copper network or a

lithium ion battery, it's no good. I put

it in gold,

put it in a vault.

Okay, so let's say I put it in a vault

in JP Morgan and I put in a vault in JP

Morgan in 1900 in the United States of

America. And the United States is the

most successful country in the 21st 20th

century. We win every war and JP Morgan

remains as a bank and the vault is and

New York remains.

In that case, assuming a 2% mining rate,

assuming a stock to flow of 50 and

miners mine 2% more gold a year, the

halflife of a gold battery is 35 years.

I go from 100 million to 50 million in

35 years to 25 million in 70 years to

about 12 and a half million in a hundred

years. So I've I've depleted my gold

battery 87% if the United States wins

every war,

right?

And if JP Morgan is in a corrupt

institution and doesn't fail and if no

one drops a nuclear bomb on New York

City,

right?

things don't happen then I will get 12%

of my money back.

So in addition to betting on gold right

which is governed by natural law you're

also assuming this counterparty risk in

the form of the US government in the

form of JP Morgan. You have to bet on

these on stability in the geopolitical

landscape

as well right because the go gold has to

be secured and it has to be secured by

institutions. What what what if you put

a hundred million dollars worth of gold

into a bank in Frankfurt in 1900?

What if you put it in in the largest

bank in Japan in Tokyo in 1900?

Name name a city you could have and a

bank you could have put it in in 1900

that would still be there in the year

2000.

It's a short list by the way. No,

London, Switzer, you know, Zurich, New

York, you would have failed in Paris,

Berlin, anywhere in Eastern Europe, you

would have failed in Moscow, you would

have lost it all in Beijing, you would

have lost Tokyo, you would have lost it

all anywhere south of the Rio Grande.

Yeah. And in the US,

lost it everywhere in Africa,

possibly. Would Executive Order 6102

have impacted you in the US? And you

would have lost it in the US.

Yeah.

Okay. So, so isn't it ironic? Okay. So,

can't we reduce it down to maybe

Switzerland?

Maybe.

Yeah.

Like I It's an interesting exercise for

the reader, but the counterparty risk on

gold is uh is at the municipal level,

the state level, the federal level, and

the corporate level.

And that's and and over a long there's a

phrase, right? Over a long enough

timeline, the mortality rate is 100%.

Right. Yeah. Yeah. Yeah. Yeah. Yeah. In

the long run, we're all dead. Right.

Sort of. I think Keynes may have said

that.

He said it. Robert Heinland wrote a book

called Lifeline that he said over a long

enough timeline the mortality rate is

100%.

Yeah.

And so in this particular case, back to

our gold network.

We have a gold network and we want to

move money. So I put a hundred million

dollars in gold and I want to move it

around. Well, it's 25 basis points every

time I move it around the world. If I

move it once a quarter, it's 1%

bleed a year if I move it once a

quarter. Okay? If I mine it, it's 2%

bleed a year. That gets me to 3% bleed a

year. Divide that into 70 and every 22

year. That's the halflife of gold.

Energy on a gold network has a halflife

of 22 years at best. When you throw in

the counterparty risk and the need to

move it around, let's just assume we're

moving it around so we don't lose it.

You're just down to now the the issue of

technology and commodity risk. And this

is an important point. Gold is the king

of commodities. Gold is the is the

greatest of all human commodities.

But my my first job at DuPont was I

built computer simulations of

commodities and specialty chemical

networks. And let me tell you what

people in that business think. They

think commodity is a dirty word. The

first thing I learned is commodity is

awful. Nobody wants to be in a commodity

business. And here's the reason

commodities are awful.

If I actually create um a factory that

creates a commodity, say gasoline,

the only thing it can do is create

gasoline. If I invest $10 billion into

gasoline refinery, my fixed costs are 10

billion. the uh the ideal rational price

for me to make a profit, call it $4 a

gallon, but my variable cost is $1.50 a

gallon because I've got all these

billions of dollars in the factory. What

happens is when I create commodity

refineries when the price goes below the

profit the profitable point I I can't do

I will still keep running the factory

because I've got a variable margin. I'm

generating cash flow even though I'm

driving the price down for everybody

else in the business. So, it's possible

in a commodity business for every single

producer to be losing money and from

their them to all be acting irrationally

and they're all pumping out the

commodity, be it silver. If you're a

gold miner, what can you do other than

mine gold,

right? Once I've gone and I've invested

a hundred billion dollars in mining

gold, if the price of gold is cut in

half, but my variable cost is $400 an

ounce and it's $800 an ounce. I'm mining

gold and selling it at $800 an ounce.

I'm selling it at $700 an ounce. I'm

selling it at 600. When it gets to 500,

I'm selling it because the market is not

rational. I can't transmute my hundred

billion dollars of gold mining capital

into Google stock,

right? The switching costs are too high.

It's just not possible.

And and by the way, maybe I've been

captured by the government. Like maybe

maybe a certain government wants to mine

gold. Maybe uh maybe I can't legally

stop even if I wanted to stop. So when

you have a commodity business where

people have specialized capital and they

make those investments, what happens

over time everywhere in every industry

in every commodity in the history of the

world is the producers overproduce the

commodity because in the phrase of Hotel

California, you can check in anytime you

want.

It's a one-way route,

right? you go in, you can't get out. And

so as C and course that takes us to this

real issue of gold or the real risk of

gold which is

gold price goes up by a factor of 10.

Capital gets attracted into commodity

production. It's a feedback. People

produce more. Gold price comes down.

People keep producing to try to recover

their cash flows. Lots of intelligent

people become desperate. When men are

desperate, they invent new techniques to

produce more gold. They keep producing

because they don't have a choice. They

will produce down until the variable

cost equals the price. then they will

keep producing below variable cost

because it's possible that they're in a

situation where where uh they can uh lay

off the for example a government that

takes ownership of a gold mine will

produce below variable cost in order to

maintain jobs.

We'll subsidize it. Yeah.

Where does this happen? Uh automobiles

and airlines.

This is why you don't ever want to be a

budget airline because a government will

operate airline flights at a variable

cost loss in order to avoid shutting

down the I mean the airline, right? If

you're Singapore and you turn off the

airlines because they're not profitable.

You turned off your bridge to the world.

You you know the politicians will run

the airline below variable cost. If I

want to keep jobs and how many countries

want to project jobs? If I want to

project jobs, I will produce

something below the variable co and sell

it below the variable cost. We do that

with anything that is politically

uh charged. When a government decides

education, health care, transportation,

automobiles, local manufacturing,

security, defense, defense is a great

example of something that we produce

whether we like it or not.

you know, at a cost that's higher than

potentially the value and use of it

and we can't stop it creates this

industrial complex. So

I think a good sorry to cut up just a

good point there that I think reinforces

your earlier point too. You said that

gold was the greatest commodity in

history and I think the point there is

that it is the greatest commodity in

history because it it commands human

time or commands savings. It commands

the collective output of capital that

humanity has ever created. Right? So in

that way it's kind of like the smartest

form of energy because human beings are

our ingenuity, our time, our our ability

to see the world. We are the greatest

form of economic energy in the world,

right? And gold is the the instrument

that commands that energy.

For thousands of years, it was it was

the the best commodity that we could

produce to store our energy in. Like

part partly it was hard, but it's not

the hardest thing to produce. I think

there are other commodities that are

harder to produce, but it was the best

combination of being hard and then being

durable and being nonto right. There are

toxic things that kill us.

Yeah.

You know, there are things that aren't

durable that are unstable. Like I I'm

sure we figured out how to produce gold

before we figured out how to produce

uranium or palonium,

right?

But so there's other stuff

the other the other

the sorry the other important piece too

is that gold is indestructible right

such that every ounce we ever mined is

pretty much still part of the extent

supply I think it's two Olympic size

swimming pools of gold

you ever produce

you want stability right it takes us

back to like why why Marjorie

Merryweather Post was the richest woman

in the world because Post cereal was

starch that was stable

stability at room temperature

like Coca-Cola is stable at room

temperature in a can and

a great analogy

is stable energy.

So yeah, it's energy, but nonetheless,

it's a commodity. And you know what they

call a business when it's been totally

wrecked? They call it commoditized,

right? The profit margins.

Yeah.

And so every business person forever

has always strived to avoid being

commoditized. That's that's the origin

of branding, right? We branded sugar

water. We branded Gucci bags. We branded

everything. Everybody, everybody, we

patent things. We brand things because

we want to avoid the inevitable result.

The res the result is as soon as

something is commoditized and and open

to the public and anybody can produce

it, its value goes not it goes to the

variable cost of production and then it

goes below.

Right? For example,

Apple computer worth$ two trillion

dollars today.

Google worth more than a trillion.

Facebook. These are valuable networks.

But are they the most valuable networks?

No, they're not the most valuable

networks that to our to humanity.

They're the most valuable

non-commoditized

networks because if I go to New York

City and I pull the plug on Google, it's

inconvenient. But if I go to New York

City and I pull the plug on the power

company, it's deadly,

right?

If I cut off your power and your water,

right? Or even turn off the bridge,

people die.

If I turn off Google, Facebook, and

Apple,

nobody in New York City is going to die,

right? And so

people forget this. And this is this is

the danger, by the way, of putting all

your wealth. This is the danger of

storing your wealth in Apple stock. If

you think but the world thinks Apple,

Google, and Facebook, big tech, they're

a store of value. And you know, post

pandemic, everybody surged into the

NASDAQ five and the NASDAQ because a big

tech equity. This is a store of value.

I'll be safe here. Well, you'll be safe

there for a year or two years. But you

know, General Electric and General

Motors

were once, you know, and Standard Oil,

they were the most important networks on

Earth. And they changed humanity a lot

more than Google, Apple, and Facebook

did, you know, and and you want to

change your life, try to go a week

without electricity and see if if there

aren't riots, murders, mayhem, and it

and it comes to an end. And so people

don't ask the question that they don't

ask why is it that I get my electricity

for nothing?

Why do I get my water for nothing?

Because you try try to go three days

without water, three days without

electricity. You see what that's like?

And the answer is because those two

things got declared as public utilities,

right?

They're so important

that nobody could could have a monopoly

on it. Right? As soon as as soon as

standard oil became so instrumental that

it changed the western world,

politicians got interested in standard

oil,

right?

And as soon as you know, if your power

company said, "We just decided to jack

the cost of electricity by a factor of

10, would you pay it?"

Sure, you'd pay it, right? Would you

complain? Who would you complain to?

It's politician, right?

Yeah. Yeah. So, so we've got these uh

these networks. They're really

important,

but eventually they become if they're

important enough, they become commodity

networks. And so that that that's an

interesting characteristic.

The reason that gold doesn't work over

time is

by the way, we we have two examples. It

doesn't work over time because people

produce two to three% more of it a year

and over a hundred years that means you

lose 90% of your energy.

It doesn't work over time because

there's counterparty risks, you know,

and and the Polish bank through no fault

of their own got overrun by the Nazis in

World War II and the Beijing bank got

overrun by first, you know, one regime,

then another regime, then a third

regime. Right? So, that's another reason

it doesn't work. And the third reason it

doesn't work is if the people become

threatened

by the network. So for example, 1933,

Franklin Delano Roosevelt f found gold

to be inconvenient.

If the people become threatened, they

complain to the politicians. The

politicians

might go ahead and take action. And in

this case, the reason that they were

able to take action is because all the

gold was sitting in the same place.

So if the gold's sitting in a vault and

we know where it is and it's under the

control of institutions, the

institutions are under control of

governments and therefore that that and

that heighten

the counterparty risk because the

centralized nature of gold. So the best

case for a gold network is you're going

to lose 90% of your energy over a

hundred years. But the likely case is

you're going to lose 95 to

98% of your energy over 100 years. And

and if we looked at Nicholas TB's like

range of outcomes, if you take a hundred

the hundred biggest cities in the world

and you put your gold in the best bank

in any of the hundred cities in the

world, it looks like in 95 of them or 96

of them or maybe maybe 99 of them, you

lost all your money. You lost all your

Yeah. So, so isn't it if we come back to

the issue of monetary now go ahead

Robert

just add one thing so that highlights to

one of the shortcomings of gold is that

the economies of scale

uh lead to its centralization right

because it is so heavy and hard to

transact it's not you know compare

compared to Bitcoin that's non-corporeal

that can be transmitted uh at the speed

of light because gold is so heavy it is

subtle right that that leads to its

centralization in bank vaults and that

becomes the ultimate honeypot for for

politicians and governments frankly and

the other I guess attack vector we

didn't discuss is that that temptation

is always given into right as soon as

things get dicey governments immediately

monopolize that golden energy network

which is the most important in the world

let's say it's not fast enough We talk

about you know every good technology is

smarter, faster, stronger. Every

technology smarter, faster, stronger. So

coming to digital gold versus gold,

physical gold is not fast enough. How

fast is it? If I wanted to move a hund00

million of gold, as we talked about,

it's going to cost me $250,000.

So that's that it's impedance. But how

long's going to take you? A week, a

month?

Somewhere between a Yeah, you want to

move 3,000 pounds of gold from New York

to about a month, I'm guessing, if you

want to get all the protocols set up.

So, so you're talking about a quarter

million dollars in a month to move the

gold. If assuming I needed another

custodian and I used Bitcoin and I

wanted to move a hund00 million dollars

of Bitcoin and this is this is where you

know Bitcoin critics are just utterly

wrong and missing the point. They all

think they all think, "Oh, well, it

takes 30 minutes and $5 to move

Bitcoin." And they're comparing it to uh

a new crypto network that has no value

on it. And they're saying, "I could find

a way to move it in five minutes for a

nickel." But that's not the point. The

the appropriate comparison is to gold.

How long would it take to move a hundred

million dollars of gold? And because

there's $250 trillion in assets in the

alt assets

and there's only 25 billion dollars of

real assets in the alt coins or the alt

cryptos. So

how long does it take me to move the

$250 trillion around? And when you think

about that, you realize that that

Bitcoin would move it in 30 minutes

instead of 30 days.

Okay, that's 1440 times as fast, right?

A thousand times as fast a minute versus

1440 minutes in a day.

And so it's it's thousand times as fast,

but then it's $5 versus $250,000,

right?

You know, so we we do that. That's

50,000 times cheaper.

Absolutely.

So So

now we've got people saying, "Oh, well,

it's very energy inefficient, blah,

blah, blah." Well, it's not really. It's

it's it's in it's inefficient in the way

that it's inefficient to create

an electro electro high-speed transit

system, a mass transit system. It was

expensive to build the mass transit

system. It got really really cheap to

move on the rails,

right?

If you look at the history of railroads,

right? The biggest thing in the 19th

century was railroads. It was pretty

expensive to create the railroads.

it became really cheap to move on the

rails.

Right. Right.

So, what we do is we created crypto

rails in order to make it 50,000 times

cheaper to move. But it's it's not just

that it's 50,000 times cheaper. It's

that it's a thousand times faster and

50,000 times cheaper. And then when you

start to multiply a thousand times

50,000

and you realize it starts to be 50

million times

faster,

right?

And then you start to add that third

dimension which is maybe a computer that

thinks about this while you're sleeping

18,000 times and you realize eventually

you get to 50 billion times faster. And

now we've we've got to a new engineering

or or a new scientific metaphor which is

superconducting networks.

Okay, if you you know there's impedance

going through electric power network and

you're losing it. And so the the

solution is I need to get the

superconductance. I got to cool the

network down to close to near zero,

right?

And it's expensive.

And the point is, yeah, it's expensive

to get to near zero and then the

impedance disappears in the network and

the friction goes away. And what could

you do if the friction went completely

away,

right? You're in outer space, right? The

smallest amount of energy can move

something billions of miles. And I love

that analogy, too, that you're getting

to a lower energy state, and that

eliminates the frictions to to

conductance. So you achieve

superconductivity

and in a way that's what Bitcoin is,

right? It's a monetary medium completely

free of the noise of unexpected

inflation. So you're actually conveying

pure price signal. Something we even

gold we didn't quite have that.

And I love your analogy because I mean

the aerospace engineer in me is is is

loving it a lot.

You could think about

when when you encrypt monetary energy on

the Bitcoin network.

It's like

achieving escape velocity out of the

gravity well. What we've done, we paid a

price to get out of the gravity well.

Throw a baseball on a baseball field

that goes a couple of hundred feet.

Get out of the gravity well. throw the

baseball, it'll go around the earth

forever.

Yeah.

Doesn't it? Okay. So, how much more

distance do you get out of the baseball

if you pay the price of getting out of

the gravity? Well,

right.

It's not It's not like 10 times better.

It's not a hundred times better. It's

not a million times better. It's it goes

to infinity and it never stops. And

that's the that's the breakthrough that

people don't get. It's like what could I

do if I had vacuum and I was I was rid

of friction and yeah there's a price to

pay and and that's your phase change and

your state change and uh that's why I

would say

Bitcoin is the most efficient system for

channeling energy through time and space

in the history of mankind. We we've

never figured out how to channel energy

with no impedance and channel energy

with no loss. But let's let's come back

to the outer space analogy. Take your

flashlight and shine it in your

basement. Take your flashlight, shine

it, you know, on your baseball field.

Now get into outer space and take your

flashlight and shine it. Or flip it the

other way, the Hubble telescope, right?

How much better are the photos you get

from the Hubble telescope than the

photos you get from a telescope that has

to shoot through the atmosphere,

right?

It's a billion times better.

Yeah.

It's like you just can't really imagine

the world when you're trapped in

I think energy well.

This analogy too holds for the

counterparty the institutional

counterparty risk. It's almost as once

you escape the gravity well, you're also

free of institutional counterparty risk.

Right? I don't need to worry about the

stability of the United States or JP

Morgan to transmit Bitcoin 100 years

into the future. You only need to be

concerned about the stability of the

energy network, which is maintained by

the collective self-interest of the

world. and theory.

Yeah, it it's something that's just all

together unique and we've just never had

it before.

Um, if if you now if you now

conceptualize that and you go through

your thought experiment, you realize we

need a monetary system. And our monetary

system, the three in front of our face

are let let's take it. Fiat is a

monetary system. Gold is a monetary

system. uh, Bitcoin as a as a monetary

system.

If I put my hundred million dollars of

monetary energy, I I have energy. I take

energy, I sell it on the grid, you give

me money. I take my money, I put it into

the US dollar bank. It's in fiat. I wait

a hundred years

and it's 7 to 8% asset inflation rate. I

have a half life of

10 years.

So I get cut in half 10 times.

Okay. 100 million, 50 million, 25

million, 12 million. It's going to get

painful. 6 million,

three million. I only cut in half five

times. One and a half million.

That's six times. Now it gets really

painful. 70 basis points. 35 basis

points.

17 basis points.

Eight basis points.

Eight basis points. Crazy.

Wait. Eight basis points. If you don't

get hyperinflation,

the eight basis points if if your nation

wins in this case. Yeah.

Your bet, you know. So, we're not even

what to say. It's you're losing 99% of