Michael Saylor of @strategysoftware: “Bitcoin is a Dominant Monetary Network” | SALT Talks #109

hello everyone and welcome back to salt

talks my name is john darcy the managing

director of salt which is a global

thought leadership forum and networking

platform at the intersection of finance

technology

and public policy what we're trying to

do during these salt talks is provide

interviews with leading investors

creators and thinkers and it's trying to

replicate the experience we provided our

global conference series

the salt conference which provides a

platform

for ideas that we think are shaping the

future and a window into the mind of

subject matter experts and we're very

excited today to welcome michael saylor

to salt talks

michael is a technologist an

entrepreneur a business executive and a

philanthropist as well as being a

best-selling author he currently serves

as the chairman

and as the of the board of directors and

as the chief executive officer for

microstrategy since co-founding the

company at the age of 24 michael has

built microstrategy into a global leader

in business intelligence mobile software

and cloud-based services in 2012 he

authored the book the mobile wave how

mobile intelligence will change

everything which earned a spot on the

new york times bestseller list

michael attended mit receiving an sb in

aeronautics and astronautics and an sb

in science technology and society

just a reminder if you have any

questions for michael during today's

salt talk you can enter them in the q a

box at the bottom of your video screen

and hosting today's talk is anthony

scaramucci the founder and managing

partner of skybridge capital which is a

global alternative investment firm

anthony's also the chairman of salt and

with that i'll turn it over to anthony

for the interview

well john thank you uh michael i got to

tell you i was so pleased when you

accepted our invitation thank you

welcome to salt and welcome to salt

talks hopefully we'll get you to one of

our live events one day when we get back

away from the pandemic but before we get

started

uh you got this beautiful ship in the

background you're crushing john darcy

who prides himself in his room rating so

i'm very happy that you're here with

this beautiful room rating but tell us

about your background tell us about your

family's background i know you come from

a military family

give us some sense for your upbringing

and what got you on the arc of your

professional journey

my father was a career non-commissioned

officer in the air force

and we spent 30 years uh he rose from

the beginning to be chief master

sergeant and after and we lived on

military bases air force bases

everywhere in the world

um then he spent 10 years as a

government servant working on the f-16

program

so i come substantially from an air

force background

i uh

i grew up in dayton ohio in uh in high

school

where they invented the airplane

i became very enamored with science

fiction

i read every science fiction author

robert heinlein arthur c clarke isaac

asimov by the time i graduated every

every every self-respecting uh

individual every every dude of my

generation either wanted to be a rock

star

astronaut

fighter pilot

maybe professor ceo

so i went to mit on an air force

scholarship

i studied aeronautical engineering and

spaceship design

i learned to fly in the air force at

lachlan air force

base um

my senior year i was i i

ran into two flukes the uh the united

states won the cold war

reagan uh drew down the military and uh

i was diagnosed mistakenly with benign

heart murmur

the result of that is i didn't go into

the air force to fly jets and become the

astronaut which was one of my career

paths i ended up going uh

going out into the business world i

thought i'd get a phd

uh i took a job

the job blew up

i got another job and when i went back

when i was about to go back to college

uh the people i was working for gave me

the chance to start micro strategy and

they financed the entire business and so

i started a company at 24 i thought when

it fails i'll go get a college i'll get

a phd it never failed i'm still stuck

here and so that's kind of how i got to

be in the software business

it wasn't of my own doing i really

wanted to be an astronaut

uh you think you'll ever take a trip

into space mike

we'll see i'm holding out hope

go spacex

i i see his base yeah we're we're we're

investors in spacex so we we love that

company and we're obviously huge

cheerleaders for what's going to happen

this weekend with their launch

and and cheerleaders for the elon's uh

company

uh talk us talk us through the mobile

wave

and how mobile intelligence has changed

the world it's a fascinating book and

what's interesting about your book even

though it was written eight years ago it

is still very current and so i would

recommend everybody on this sawtalk to

read the book

very compelling stuff but tell us a

little bit about how it's changed the

world mobile intelligence

in 2007 apple came forward with the

iphone but it was a toy there was no cut

and paste there was no app store by 2009

the iphone 3 was not a toy anymore it

was a business tool

i became enamored with the idea of

software leaping off of a computer onto

a handset and i thought when software

goes from solid state to vapor state and

now it's around us and with us and we

sleep with it 24 7 365

maybe it means something different

and so when i wrote the mobile wave the

observation was

software networks are dematerializing

everything in the world they're

dematerializing money and identity and

everything you hold in your hand the

photograph and and the camera and the

recorder and the video

and um

the conclu you know if software

dematerializes everything then i can i

can take a map

from rand mcnally and make it a magic

map and google maps is the magic map it

tells you where to drive how to drive

whether you should go there the

directions to take

and it's in the palm of your hand even

talks to you and rand mcnally was a

simple 20th century map rand mcnally's

worth 50 million bucks google maps is

worth 50 billion dollars

apple dematerialized kodak what maybe

instagram did and you went from taking

photos on a canon camera and storing

them in a shoebox or a photo album

to to facebook and instagram and the

iphone and it wasn't worth the same it

wasn't worth ten times as much it was

worth

a thousand times as much

so the conclusion of the mobile wave was

the world's going to change the networks

google's an information network

facebook's a social network apple's a

mobile network amazon's a retail network

they're going to eat the world and

they're going to destroy 15 000 other

companies that are competing with them

because apple's able to ship a better

camera to a billion people overnight for

a nickel

and nobody in the history of the world

could ever upgrade or ship a product for

no variable cost to the entire planet

for nickel and yet that's what google

does that's what facebook does that's

what apple does and that's the part of

amazon that works well

is that dematerialization of the retail

storefront to a billion people for a

nickel

well the conclusion is buy apple amazon

facebook google

i wrote the book

i'm anthony nobody read the book i mean

some people read the book i got 50 000.

darcy and i read it because we were

getting ready for you man i had i knew i

was going to be

out punched in terms of iq and brain

powers i had to read the damn thing

eight years later

when i wrote the book probably 50 or 100

000 people read the book i made 50 000

in royalties from the book

i didn't invest my company into apple

amazon facebook and google

i took 50 million of my own money

i bought it i bought it when everybody

said you're forced to own apple you

should diversify into all the other

computer companies what is this facebook

thing you're foolish to own that what is

this google thing it's overvalued it's

overpriced

well i converted the 50 million into 500

million and you know anybody could have

done it if you just if you had bought

any of those companies in the past

decade you couldn't lose money

so

what

it made me conclude a couple of things

one thing

if you want to make money in the tech

era you find the dominant digital

network the one that's worth 100 billion

that's crushed everybody you can't buy

my space you know you can't buy beef you

can you know you might hit blackberry or

myspace or yahoo

you know or something like that if you

buy too soon you might miss it but after

it's 100 billion dollars and the market

is is decided apple's the winner

google's the winner facebook's the

winner amazon's the winner and it was

pretty obvious amazon was the winner in

2013 when it was trading at 300 bucks

anthony it was a probably everybody on

wall street said what is this stupid

company they don't make any money we

don't buy into it and they would sell

you amazon for 300 bucks but you could

have bought it you could buy all those

things and you would have got a 10x 20x

gain on it and you just wait until the

99 percent of the world that disagrees

with you that's cynical and skeptical

and ignorant and they don't understand

it and they're afraid of it

as they gra as it gradually dawns on

them that

google's an information network

facebook's a social network

apple's a mobile network

amazon's a retail network

microsoft's a enterprise software

network when you finally figure it out

you're like oh these guys can serve up a

billion people for a nickel their

variable cost is zero they're they've

got overwhelming crushing

advantages

so

summary of the mobile wave i had that

experience it made me very successful as

a personal investor my company didn't

invest in it 2010 2020 came and i swore

to myself

if i ever saw this again

i wasn't going to write a book

i was going to buy as much of that thing

as i could personally as much of that

thing as i could corporately and then i

was just going to tweet about it and so

that's basically the the tie-in or what

leads us up to the virtual wave and my

interest in bitcoin

so let let's talk about that because you

started out as a bitcoin skeptic i've

listened to a lot of your uh interviews

there was a tweet in 2012 where you

likened it to a form of online gambling

and then you had the slow conversion

into becoming what i would say one of

the more exceptional bitcoin evangelists

i mean i would describe you a bit i like

that based on a lot of stuff that you've

said but now you're putting your money

alongside of your ideas and your mouth

you you've announced a 425 million

dollar

investment in bitcoin from the micro

strategy cash reserve

and so could you take us through your

personal odyssey from skeptic this is

online gambling to okay wait a minute

this is a lot like microsoft facebook

and amazon

sure i mean in the early days of bitcoin

bitcoins like an open source project

there's no company behind it it's an

emergent phenomena in cyberspace

and uh

you know and and as it emerged

the early days it was very it was very

uncertain and scary and complicated and

so

how will the irs tax it

you know will the government ban it will

it be illegal to hold it you know um

the the early exchanges were failing

mount docs failed the early use cases

were silk road you know the the early

question of is it a security or not

right you went through this that all of

these tests for bitcoin

uh it could have been destroyed because

it was uh it was banned it could have

been destroyed

because

it was uh hijacked by bad exchanges it

could have been destroyed

because it was forked like

you know everybody said well either

someone else is going to copy it or the

government will be in it

over the last eight years what happened

is it was copied

6

500 times anthony it was cut it's the

winner of the crypto wars so how do you

get comfortable with it well after it's

been attacked 6 500 times by clones and

they've all failed

and after it's when it emerged to be 95

of all of the proof-of-work networks

like 95 of all the monetary energy in

the crypto asset space is on the bitcoin

network

then you know it's facebook it's not

myspace

so we had to watch it get to a point of

maturity where it's seasoned

and we had to watch all of these these

uh these bad exchanges failed and then

you know and all the bad actors failed

and we had to watch the development of a

regulatory apparatus so now you have kyc

regulation on the exchanges in the us

you have clarity with regard to how it's

taxed

you have clarity with regard to what it

is and isn't i think people are starting

to understand

it's not a currency

it's not a payment network

it's a bank and cyber space that allows

billions of people

to store their money it gives them a it

gives them a simple straightforward

affordable secure

savings account

for people that can't set up their own

hedge fund and don't know and can't get

into a hedge fund and they just want to

put their money in a bank

you know that the the politicians and

and the country

has destroyed the savings account over

the past 30 years

when i was a kid you put your money in a

savings account get five percent

interest and everybody believed that the

money was going to be more valuable in

the future you wouldn't lose your money

and that option has been deprived and so

that is bitcoin has emerged from

casino gambling scary to

the savings account our savings and loan

at the end of the universe and that

that's the journey of the 10 years and

that's why i could get excited about it

in the year 2020.

and and you tweeted a lot about that

this morning which uh

i shared with my team

i i

i guess the question i have is

and you said it but i want to hear it

again uh you you had myspace you had

yahoo they got hopped over by facebook

and google

there's not a coin out there that could

hop bitcoin

is it or no they tried

6500 times anthony over a decade

everybody and their brother thought man

could i copy this

and the problem is bitcoin's the only

one with the immaculate conception

that's truly decentralized it's the

money it's it's the it's the crypto

asset of the people

right

and and uh how do you do

there's not an example of a digital

network that hit a hundred billion

dollars in market cap that was

vanquished subsequently

like like you lots of billion dollar

things failed lots of two billion dollar

things fail but once you get to a

hundred billion dollars i think the

market is spoken

right and i think it's well said there

was a book 20 years ago

uh james dale davidson and a guy named

uh i think it was william me's

rock maybe he was his son is now in the

parliament of the uk i'd have to get the

exact title of his last name but the

book was called the sovereign individual

and i read the book 20 years ago

uh peter thiel decided that that was a

big book for him and so he's repurposed

it and helped it get published again in

a

paperback form and so you know i

wouldn't say geez i haven't read it in

20 years let me go back and read it and

i bought it

and teo writes in the forward something

that i want to ask you about he says

that ai

you think of the ccpai it's uh

it helps people score you socially it

helps people identify your facial tics

and ai

is about centralization

and command and control

but bitcoin

and the asset associated with digital

currency is a libertarian ideal it is

about personal and individual freedom

that's how we started the book the

sovereign individual i'm wondering about

your reaction to that do you agree with

them

i do agree with them

and i think that

the thing that makes people that own and

invest in bitcoin passionate about it

is because it really does enforce the

concept of freedom and truth and liberty

and uh and sovereignty for the

individual

um if we just let's just take one

interesting example

you're an investor

you have a bunch of money you want to

leave it for your granddaughter 30 years

from now

your choices are gold

or bitcoin

okay this is the real problem 10

trillion dollars in gold hundreds of

billion dollars in bitcoin well if you

actually choose gold you have to put

your gold in a bank and trust the

counter party to take to to take care of

that gold right now

shoebox that you were referring to

earlier

yeah it's pretty much you're putting it

in a bank vault and now you've

surrendered

all your monetary energy

money is monetary energy you've

surrendered your life energy to a bank a

counterparty trustee

and in the last hundred years

they all fail

every bank fails you're trusting a

company or you're trusting a country

and if the bank doesn't fail and 95 of

the cities and in the world you know the

banks failed in them over 100 years but

the countries and the regimes failed too

so you're trusting in a country or a

company

and on the uh and a counterparty on the

other hand

if you actually buy bitcoin you have the

option not the obligation but you have

the option to take custody of those keys

and that's advantageous for you and two

reasons one

you know you can you can switch

custodians quickly in half an hour you

can move your money from one bank to

another bank one country to another

country that keeps everybody honest

and that you know and and it's useful in

a capitalist world if you have options

and no one's holding you over a barrel

and the second is i can hold a gun to

your head pull the trigger kill you and

take your gold

but like but if i hold a gun to your

head and pull the trigger i can't get

your bitcoin

i could just kill you

and there's a very important subtlety

there which is at the end of the day you

control your life force it's your and

and you ha it shifts the balance of

power back to the individual versus the

bank the custodian the country

anybody that would coerce you and steal

your life force from you and in that way

uh it's it's a libertarian idea but it's

also a capitalistic idea and it's also

just uh just a a matter of decency to

the individual

and sovereignty to the individual

what you know i i'm sure you thought

about this i'm just interested to get

your iteration process and making that

large of an investment

you had to be thinking to say okay what

could go wrong what's the risk

management and tell us what you think

could have gone wrong and then tell us

how you intellectually and cognitively

overcame

what you thought the issues could be for

something like bitcoin you know anything

i think this this gets at the big issue

the number one problem every investor in

the world is facing right now and

there's 250 trillion dollars or more

worth of this problem

is i have monetary energy and i need to

wh where's my store of value how i'm am

i going to conserve my monetary energy

in the current macroeconomic climate as

long as the central banks are expanding

the broad money supply

m2 expanded by five and a half percent a

year for 10 years this year it expanded

by 24

if the monetary supply expands by 10 to

15 a year for the next three to four

years

the banks are sucking the oxygen out of

the room they're sucking 10 to 15

percent of the purchasing power from all

of your all of your investments

and the question is i mean if i'm

holding cash and i have 500 million in

cash and i'm looking at losing 15 of the

purchasing power every year for five

years

the risk was

i'm going to lose 75 percent if i do

nothing okay it made it easy for me to

take another decision because i expect

that the doing nothing with money with

cash is losing more half to 75 percent

of your purchasing power

and uh but it's not a problem if the

money supply is not expanding right the

expansion of the monetary supply is like

i'm sucking five percent of the auction

out of your room every year or every

month how long will it be before you

leave

now

what do i do with that well i got to

find a store of value a bond is only a

store of value if the coupon is higher

than the rate of monetary expansion

unless

i have expectation that the interest

rate will fall

so a five percent bond can work as long

as you keep cranking down the interest

rates but when interest rates get to

zero

unless you go negative bonds don't hold

value everybody in the bond market has

figured this out either interest rates

go negative or you got to exit

now how about stocks

stock can hold value if the cash flow

per share grows faster than the rate of

monetary expansion the google amazon

facebook they work in the last decade

because they're going 20 percent and the

money supply is expanding 5

but if the money supply expands by 15

how many equities are going to expand

cash flow per share by 20

by the way how do you do that if you're

not

you have to leverage up right so if i'm

growing 10 5 a year cash flows i have to

borrow money i go short the dollar i

borrow billions i buy my stock back my

cash flow per share goes above the

hurdle rate and i can hold value if you

don't actually

what happens when you're fully leveraged

up anthony everybody's at the end of the

line i've i've leveraged up as far as i

can go interest rates are as low as they

can go

how many companies are going to grow

their cash flow greater than the rate of

monetary expansion well you you crank in

your estimate for money supply

bonds bonds are a problem stocks are a

problem cash is a problem now you got to

go to precious metals am i going to buy

gold

the miners are going to create two three

percent more gold every year people you

know the gold supply is centralized

there's counterparty risks the central

bankers hypothecate it and create gold

derivatives there's no scarcity with

gold under the best case in a hundred

years you're gonna lose 85 percent of

your money when they just print two

percent more gold a year under the worst

case you're going to lose it all from a

counterparty risk and in the mid case

you're going to lose 90 95 because

people keep generating gold derivatives

this is why gold is breaking down

against the fed balance sheet you can

see it breaking down on the charts this

year it's not working if gold goes to a

hundred thousand dollars an ounce gold

miners are going to frack gold like

there's no tomorrow it's a commodity and

commodities make awful money because

human beings can create more

so you work your way through bond stocks

and gold what's left crypto

what's cr find a digital asset you can't

print more of well there's 6 500 choices

there's one that's the winner it turns

out that the winner is the one that no

company controls no country controls

it's capped at 21 million

and and because it's 21 million what do

you have here anthony you have a

software network engineered

to collect store and channel

monetary energy without power loss

it's like facebook for money or ebay for

money but here's the difference

it takes you 30 years to buy everything

you're ever going to buy on ebay

the reason ebay works is because it has

all the liquidity of stuff you might buy

but it takes you 30 years to buy it

bitcoin is a savings network it's a

monetary network if you're a billionaire

you put a billion dollars on the network

you put it on the network in a week i

bought

600 million dollars worth of this stuff

and a quarter

anthony i put 20 years of earnings

into the network up front

because as soon as you you figure it out

you realize that it's going to be the

highest real return

you know versus all the alternatives and

do i want to have my money sitting in a

fiat instrument which is a bond or a

stock that's going to be debased by

expansion of the money supply

or do i want to put it into an

absolutely scarce digital asset which is

going to float with the expansion of the

monetary supply worried about the

volatility because it has experienced

some volatility over the years

you know lebron james started playing

basketball like age eight or nine the

first 10 years he was brilliant

everybody knew he was brilliant but he

was a little bit volatile he was a

little bit erratic and from age 18 to 28

he crushed everything and everybody in

his past

great superstar athletes have a volatile

first decade

it was volatile there were crooked

exchanges there were hacks there was

three decades i mean there are some

superstars that have a volatile threat i

just want to give that as a disclaimer

there are some

but my point really is looking backwards

at the first decade of a superstar's

life

and then extrapolating forward to the

next decade isn't necessarily the most

rational thing for example you know

apple computer was a totally different

stock for me from 1998 to 2007

and then from 2010 to 2020 it was a bit

different

now it's like so i i don't if you look

at what's happening now institutions are

discovering bitcoin and there are adults

in the room and when they're buying

they're not buying a hundred thousand at

a time and they're not being manipulated

on these you know early exchanges you're

talking about people putting in 100

million dollars yeah and like for

example for me to buy 600 million it

took me 14 days trading every three

seconds anthony yeah i i was damping the

volatility i was sitting there ready to

buy everything you would sell me for 14

days straight every second for two weeks

me one guy

one one actor now what happens when

there's a hundred actors like me in the

bitcoin market

yeah i think you're making a very

compelling case and i and i uh and i

appreciate you taking all my questions

because uh

you know there's a lot of people on this

salt conversation

that are coming up the learning curve

and they appreciate all the work that

you've done and in fact frankly they're

able to leverage all of the genius that

you've put into this i'm going to turn

it over to john darcy

who has a series of questions from our

audience we've got a tremendous amount

of audience participation michael and so

i'm going to let him ask a few questions

here and then all right

bring it on all right so you have a very

interesting concept michael about

bitcoin being a store of energy in a

thermodynamic type of sense could you

walk us through

sort of that metaphor what you mean by

that

okay look

it's it's totally strange to have a

financial instrument which is scarce and

and capped because you can print more

tech stocks you can print more bonds you

can you can mine more gold

you can issue more fiat currency

on the other hand in the engineering

world when you're designing pneumatic

systems or hydraulic systems

nobody ever built a pneumatic system

with a leak a hydraulic system with a

leak your swimming pool doesn't even

work with a leak

right um everybody knows if there's a

leak in the fuselage or the airplane

it's not going to fly it's going to

explode so you know you don't have a

leak in a nuclear reactor you don't have

a leak you ever try to go across the

ocean in a ship with a leak

okay the idea of a closed system is

basically every freshman in engineering

and i'm an mit engineer

we talk about something called adiabatic

lapse you know an adiabatic system is no

leak a closed system is when you have

mass in the system that can either leave

or can be added and all you can do is is

inject energy

and so bitcoin is the classic textbook

closed system there's 21 million coins

virtual bars of gold in the system

you can't remove any you can't add any

there's no inflation there's you know

and on the other end what you can do is

you can heat it up

if you're buying bitcoin above the four

year or the 200

week moving average you're heating up

the system if you're buying it below the

200 week moving average you're cooling

down the system

the entire thing's like a massive

monetary battery a capacitor it's

storing energy

and and what we've done is created a

system where i can take a hundred

million dollars of monetary energy i can

put it into the bitcoin network

and it'll sit there for as long as you

can imagine and there's no power loss

that's the genius of it if if i told you

i was gonna

inject another million bitcoin or two or

three million bitcoin i'm drink i'm

bleeding off i'm diluting the energy

and so

you know when i describe it as a closed

system what i'm saying is for the first

time in the history of man

we created a monetary energy network

that will store the energy over time

with no power loss we've never had a

money we've never had a a thing that

could do that gold didn't do that copper

silver doesn't do that fiat doesn't do

that stocks and bonds don't do that it's

so it's really an engineering

breakthrough

so you have this degree in aeronautics

that we mentioned earlier but you also

have a degree sort of in the history of

science and you've talked about how you

study different technological leaps uh

throughout history do you think bitcoin

is a technological leap and the

blockchain technology that underlies

bitcoin is a technological leap akin to

the start of the internet

akin to the the start of the automobile

what does that mean for the banking

system as a whole you've talked about

how you know this isn't a store of value

or a currency it's a bank that lives in

cyber space do you think bitcoin

blockchain technology is ultimately

going to swallow the entire uh banking

system

what i think is that bitcoin is an

elemental force similar to steel or

electricity or oil

john d rockefeller found a way to

channel chemical energy via oil created

standard oil changed the world drove

down the cost of energy by three by

three orders of magnitude and everything

changed

take away steel

right andrew carnegie came up with steel

there's no new york city without steel

build a building more than four floors

there is nothing without steel it

created the entire modern civil

engineering era

andrew mellon brought forth aluminum

that's why he became rich

aluminum try to build an airplane

without aluminum there is no aviation

industry without aluminum

electricity

no think about the world without

electricity the roman romans had

aqueducts

you know you the city of 500 000 people

shrinks to 25 000 people if you turn the

aqueduct off it's channeling hydraulic

energy

bitcoin is pure

monetary energy for the first time in

the history of the world we figured out

how to create a software network that

will store and channel

monetary energy with no power loss

that that's a million times better than

a gold network

but it's better than electrical network

i

if i want to hold 500 million dollars of

electricity and i put in the battery i

lose 2 a month there's a 24

inflation rate on an electric battery

you can only move electricity 500 miles

and you lose 6 percent in the first

transaction try to move 500 million

dollars of electricity from new york to

tokyo

here's how you do it you take the 500

million converted to bitcoin send a

bitcoin to tokyo for three bucks convert

it back into electricity and by the way

the magic is not just that i did a

transfer for three dollars instead of

three hundred thousand dollars with gold

it would take you a month and three

hundred grand to do it with gold

the magic is i can put the i can put the

500 million dollars 30 years into the

future

and not lose a nickel of the energy

right that's the beauty of this entire

network it's

it's a network to channel monetary

energy which is the apex energy monetary

energy is the sum of kinetic energy

potential energy chemical energy

electrical energy nuclear energy all

energies flow to monetary energy

we have

we have a software network or a

technology network

for monetary energy

one last point google's an information

network

it's worth a trillion dollars because it

channels information and video

facebook's a social network it's worth

nearly a trillion dollars because it

channels social energy people couldn't

conceive of it

bitcoin

is a monetary network

it collects and channels monetary energy

it's a little bit more valuable than

collecting all your photographs from a

shoe box

posting photos to your fam friends and

family on the holidays we're talking

about

tens of thousands of billion dollar

entities they've all got a problem

their monetary energy is being debased

by ten to twenty percent a year by the

expansion of the of the monetary supply

they're all

they're all stampeding toward a solution

is that going to be derivatives or

equities or bonds or what is the

solution

bitcoin is the first perfected crypto

asset that's that serves as a long-term

store of monetary energy that's what's

going on here it's an invention

and it's and and you know like

it's

john d rockefeller became the richest

man in the world

because he stored he collected stored

and channeled chemical energy

it's a simple idea

99

of the world doesn't understand it

they're new to it

it's it's inconceivable because

facebook was an inconceivable idea a

decade ago

so that's where we are with this

something exciting

new

powerful

it's the elemental structure of a of a

totally new set of financial systems yes

so building upon that just before we

came live the federal reserve chairman

jay powell

responded to a question about a central

bank digital currency which has gotten a

lot of buzz lately we asked ralph powell

about this last friday he had an

interesting answer we talked to marty

chavez the former chief information

officer at goldman sachs

who's thought a lot about what you could

do if you did create a central bank

digital currency you know you could

relate it to something like modern

monetary theory or stimulus packages if

you gave everyone a central bank digital

wallet you could instantly transfer

government money into their bank account

and target

individual people based on who you need

to send money to and how you want that

money to circulate through the economy

do you think central bank digital

currencies have a future and what is the

future of bitcoin living alongside

potential central bank digital

currencies you know i i wrote about

software as money as software in the

mobile wave in 2012. you could see it

coming today you see apple pay paypal

square cash you know alipay

big tech companies are moving money

around uh it's clear that governments

are going to at some point grapple with

it

i listen to the same interview what i

heard christina lagarde say was

you know we'll make a decision in

january february and if we do something

it's two to four years and so we're

talking four years out for the eu

and i heard jay powell say we got to

study it and make sure we get it right

and that felt to me like more than four

years so my view is everybody knows that

digital technology matters and they know

they can't ignore it the governments you

know aren't going to move as fast

as the big tech companies china's going

to move fastest big tech we'll move

second fast the governments will be five

to ten years out

and i i wouldn't be holding my breath in

the next 36 months

now how it relates to bitcoin

bitcoin's not a currency it's not a

payment network right currency is the

province of the government always has

been always will be the irs sets the tax

code for currency

you can't use bitcoin as a currency

because the tax code is hostile to it it

would generate a hundred thousand

accounting entries and tax obligations

for no reason whatsoever

and so there's no point in bitcoin being

thought of that bitcoin is not a payment

network apple pay and square cash and

paypal and alipay are payment networks

they work well they work a billion times

better

than bitcoin or any crypto will ever

work so crypto's inappropriate as a

currency even though people call it

cryptocurrency it's it's a it's a wrong

choice of words

we should move it out of the lexicon we

should refer to as crypto asset

crypto is an awesome technology for

creating a scarce asset as a store of

value

the 250 trillion dollar problem is

store my value i just want to put my

money in a in a piggy bank in cyberspace

and have nobody take it

it's a very simple idea then if i want

to spend money i'm going to convert five

percent of it to apple pay or square

cash or paypal

or alipay i'm going to move it around in

fiat currency on those rails in a

responsible legal efficient

fun fashion

and let the governments be the

governments

let the big tech companies do what they

do best and bitcoin is going to solve

this last very simple issue which is i

just need

pharmaceutical grade

synthetic

safe haven asset

synthetic gold with none of the hangover

of gold none of the bad problems none of

the problems with mining and

hypothecation and centralization and

corruption

but all of the good parts of it like i

put my money in there in a decade from

now i've still got it and it hasn't been

inflated away

you didn't even touch on

flying to asteroids and mining gold on

asteroids which they think potentially

is going to be possible in the next

decade and there's an asteroid out there

they think is worth 10 quintillion

trillion bajillion dollars worth of gold

yeah you just bring us back to the

fundamental issue in the finance world

it's very rare to be able to buy

anything you can't print more of but in

the engineering world

it's very rare to find a machine that

works

unless you plugged all the leaks unless

it respects conservation of energy the

first law of thermodynamics

and it's a closed system

what we're do by the way bitcoin is the

singularity where engineering science

and technology smashes into finance

and for the first time we can finally

apply

isaac newton's laws and the laws of

thermodynamics to protecting our money

and who wouldn't like to have a monetary

system that works

so a less charitable character's

characterization of your recent bitcoin

evangelism would be that you've now put