MICHAEL SAYLOR: Bitcoin, Crypto Crash, BUYING MORE, UST and Luna

okay let's get this started uh look this

week has been absolutely massive so it's

only appropriate that uh my guest today

is also a massive guest in the Bitcoin

community and he really doesn't need an

introduction so I won't give him one so

um

without any more delay uh welcome

Michael how are you

awesome thanks for having me oh it's a

pleasure it's absolutely my pleasure so

uh thanks for doing this on such short

notice to making yourself available

um we've got a lot to talk about uh this

week has been so eventful turbulent

volatile absolutely everything it seems

like the entire Market is under attack

um do you think this stems from an

attack

um

I had I had uh random meetings with some

investors in one of my meetings with one

of my investors the investor starts by

saying so uh you know assuming the world

doesn't end a nuclear war what's the

outlook for microstrategy

and I I I shouldn't laugh but um but I I

tell the story because I think it

illustrates the overhang here which is

you've got a war on covid right the

Chinese shut down another Province and

shut down a Tesla Factory and that's

freaking people out so they're thinking

maybe covet hadn't gone away and then

you've got a war in the Ukraine and uh

we thought it was going to be short and

now it looks like it's going to be long

and involved and and the perception is

uh the West doesn't want the war to end

and then you have the Russian sanctions

and that kind of undermined everybody's

confidence and then you have the war you

know kind of the quasi-cold war with the

Russians heating up it's kind of like

well

we almost don't want the Russians to

settle the Ukraine thing we want to we

want to double or triple down

so that creates lots of uh political

uncertainty right there's a ton of macro

uncertainty and then you've got the war

and the currency

there's a war going on in Japan right

now

um they're pegging the interest rate for

the 10 years at 25 basis points so in

essence a Geo curve control and the

Japanese Central Bank is printing

infinite money to keep interest rates at

zero and that's the third largest

currency meanwhile if the Chinese shut

down their economy and they print

infinite money that's the second lie you

know the next currency the Europeans are

embroiled in this conflict in Ukraine

with the Russians and it you know

they've got to stand off of what they

buy or don't buy Russian oil and natural

gas

so you've got geopolitical anxiety

you've got some monetary anxiety and in

the midst of that

the Federal Reserve has gone from uh

buying assets and pegging interest rates

low does not buying assets

raising interest rates so I think that's

kind of a perfect uh storm you know and

then you can layer on a few other

political agendas that are all

inflationary so there's like word and

quite war and everything right now and I

think that that uh spooked the market

so I I mean I'm just looking at the

price of Bitcoin if we use that as a

proxy for Market sentiment in you know

for Bitcoin it's sort of been trending

down

since November really but

late March early April we saw that

accelerating a little bit and last week

there was some really

um quite stupid illogical

articles printed about microstrategy

um being uh exposed to a margin call by

journalists who are obviously deficient

in math where did that come from and

what do you think is motivating those

sorts of headlines

I I think they're clickbait like I re I

read the headlines early that are kind

of like clickbait like there's some kind

of event that'll take place and then you

read it further and uh then then they

say well maybe there isn't really an

event uh you know the the fundamental

issue here is we had about five billion

dollars of Bitcoin and we decided to

borrow 200 million dollars uh against it

so the loan to value is four percent so

if you're if you were looking at this in

crypto terms like when you do 2x

leverage that means you would take five

billion dollars and you would borrow

five billion dollars that's 2x leverage

10x leverage as I as I borrow 50 billion

dollars with five billion dollars 20x

leverages I borrow 100 billion dollars

with five billion dollars we did 1.04

leverage like one it's like just the

thinnest piece of Leverage you could

imagine we borrowed four percent of our

collateral

and I think uh in our quarterly

conference call last uh it was like last

week

we discussed this and somebody asked a

question like you know how is the

collateral work and we've said well we

initially posted Forex collateral and so

when it gets to 21 000 we'll have to

have post more collateral and somewhere

around the line along the line someone

decided that was a margin call and then

they decided that was a liquidation

but you know like there are a lot of

people that don't like Bitcoin and so if

you don't like Bitcoin you don't like

microstrategy and then you want to write

something negative so the first negative

stories were like when micro when

Bitcoin is below 30 000 microstrategies

average by price then we're like force

liquidated or something which is just

stupid and then the second story is well

we can't have a force liquidation at

thirty thousand when it gets to twenty

one thousand they'll be Force liquidated

and that's also stupid

so I just think uh it's flattering right

I'm getting lots of Twitter trolls that

want to talk about the company or talk

about me and uh I feel like when when

Bitcoin traded down like it's like you

notice like everybody the trolls come

out of the basement when Bitcoin trades

down and when Bitcoin is trading up

their Meek is kittens

so the summary here is is if Bitcoin

trades the 3500 we got to post some more

collateral and you know I'll divert some

cash or I'll mortgage the jet or

something or I'll do something but uh

until it gets to

four thousand a coin or or less all we

just do is keep posting some of our

existing collateral so you think that's

probably not an issue sorry um you you

think that's an organic Confluence of

sort of ignorance and clickbait

um yeah I mean I I saw some clickbait

articles from the mainstream media and

they said oh microstrategy says they

face a margin call at 21 000 and you

click a little bit further and you read

the story and it says yeah and the CFO

noted that you know if the if it got to

that they had more collateral in the

post yeah I mean because you're a public

company it's well known you know what

the conditions uh you borrowed all that

money to buy the Bitcoin on so it's not

like it's a mystery in some sort of

secret so I was really um mystified as

to where all these headlines came from

so I guess uh your inclination sheds

quite a bit of light on that I think

primarily it's just you know I'm a

Twitter personality and so there are you

know the standards of journalistic

integrity and Twitter are quite low

and the standards of most mainstream

journalists aren't High most people

don't have the attention span to read

four pages or two pages

sorry Michael go ahead go ahead

yeah it's all published but you just

have to have the attention span to read

all the things when and when you read it

you'll realize that okay we took out 1.0

for leverage all right Archie I'll make

one more point which is it's almost I

have a morbid Fascination and I'm kind

of amused by this but you know how many

people would go to a bull fight if if uh

you said well the bullfighter's gonna

kill the bull and the bull has no chance

foreign

they're hoping that the bowl will win

occasionally and and the ball fighter

will get hit and now um You Go from 10

people in the stands right because of

the pole if the bull can't win

it's just a slaughterhouse and and you

couldn't sell tickets to a

slaughterhouse

you know to a hundred thousand people if

the bull couldn't win so by ha by

actually riding these clickbait

headlines or the you know it just amps

up interest in microstrategy and and me

and Bitcoin dramatically which I kind of

find to be amusing I'm sure there's a

lot of people who Revel in uh the

suffering in others and already we see

and like you said a lot of people hate

Bitcoin and Bitcoins

um and you know sure there are there are

many people within the community who are

insufferable at times

um so you know we've seen those tweets

come out now reveling in the joy of uh

declining bitcoin price and crypto in

general where they're seeing Blood on

the streets

um oh gosh I just had a question on the

tip of my tongue and it's uh Escape me

U.S uh so this Terror thing this uh

Fiasco was Terror

um as soon as sort of that's started

unraveling there were rumors that

quickly came out and quite elaborate

ones about the Playbook that was uh used

do you see any credibility to those

sorts of rumors I I don't pay much

attention to them and I don't know I

mean it's all very opaque right I mean

the big takeaway from this

is uh Terrors of security

and usts and security

and um

if if you operate it like a security you

would normally have a bunch of

accountants a bunch of lawyers you had

published hundreds or thousands of pages

of disclosures and you would tell the

world what the board of directors is

what's the management team what are the

reserves what are the processes the

protocols you'd have accountants you'd

have risk controls you know you'd have

transparency you'd have reporting and

everybody would understand what's going

on at least in the back uh you know to

drive the security but because uh

because this is kind of treated like a

decentralized network

none of those controls were in place and

so when it blows up you know you don't

know why it blew up and who's

responsible nobody knows how much

Capital they had or reserves they had

Etc and and I would just contrast that

to say microstrategy where if you really

read this rumor you can just go to our

website we have thousands of pages of

investment disclosures you can read the

terms of the first convert the second

convert the junk bond you can read the

terms of the Silver Gate loan you can

look at the management presentations

they're recorded you could see the

Auditors you could see the 10K you can

read 10ks for the last 22 years right

I've been a public company officer for

96 quarters you can find 96 10ks that

are on file read them all have your own

opinion thousands and thousands of lines

so I don't I don't think it really much

matters you know whether someone

attacked it and wrecked it or whether it

was the free market or whatever I mean

it's I'm not invested in

crypto tokens

it's it's kind of sad for people that

are invested in it but

most important takeaway Archie is

you know it's like if I pull up coin

market cap right now

let's see and I look at the upper left

it says there are 19 419 cryptos

okay well I know there's one that's a

property that's decentralized which is

called Bitcoin and there might be a

debate about like half a dozen Forks of

Bitcoin and whether they are they are

not decentralized

and then the rest of the

19400 and

seven or whatever the number is they're

all securities

right they're all Securities right which

means that they're all unregistered

Securities and they're opaque and nobody

knows they've all got management teams

they've all got foundations they've all

got icos they've all got pre-mines

they've all got protocols there's stuff

going on

it may work someone may wreck it you

trade them at your own peril

right and and I I think that it a lot of

people don't understand this but I think

that the terror implosion is just a

reminder

that uh that in fact there's a if

someone can do something

right then it's not decentralized

I can I can tell you for sure I don't

have any control over Bitcoin

right I can't do anything I can't print

more of it I can't change the protocol I

have no interest in changing the

protocol but if I wanted to I couldn't

wouldn't know how to and the only reason

I would invest in it is because I'm

reasonably certain that I can't change

it and hopefully uh this will educate an

entire generation of crypto people

into the merits of a truly decentralized

crypto asset Network and the difference

between crypto property and a crypto

security

I I guess you know looking at uh the

Twitter timeline there are a lot of

people who attribute

the decline in UST and Luna in

particular

um to the precipitous fall in bitcoin's

price over the last few days as well and

so I'm wondering now okay if uh one

supposed stable coin uh meets its fate

in this way and you know just taking

analogs from other markets where you see

contagion you know the butterfly flaps

its wings in a small market and before

you know it invest the risk-averse

investors suddenly look around and say

hey who else is uh like this little

market over here this country here which

other currency has that kind of weakness

and of course we also have Financial

players who are very independent

well-funded who uh kind of like sharks

um they smell sense the blood in the

water and they go and seek weaknesses so

I'm wondering after seeing sort of

tether

uh this morning if I could almost say

that they would

um

under a little bit of scrutiny uh

slightly coming off the peg

um I I wonder if there's any potential

for contagion from here on in because

we're still early in this a lot of

people think it's over but you know

these Financial crises when they happen

they don't play out in one or two days

they play out over weeks so I guess

that's my question too do you think

there's potential for contagion

my my opinion here is if you're a

bitcoiner you shouldn't be paying

attention to the other cryptos Archie I

think who cares like who cares about

tether or Circle or or the other

contagion I bought four billion dollars

of Bitcoin I didn't ever touch a stable

coin

so here's what I think uh

like let's not be paranoid this is not

the world is not all crypto if you want

to look at what's causing the weakness

you can look at Peloton stock crash you

can look at the crash of all the specs

they're all down 80 you can look at the

crash of the NASDAQ you can look at

Amazon stock which is crashed you can

look at you can look at every stock you

can look at all sorts of things you can

look at the at the interest rate

you know the monetary policy of the FED

I could probably point at 25

macroeconomic things that are taking

place in the world that all just add up

to anxiety and you know what's happened

is the Traders have discovered Bitcoin

right now they think it's a correlated

asset they think it's correlated to risk

assets

and I think it's correlated with a

higher volatility so they're so they're

thinking well if if NASDAQ trades down

one percent Bitcoin will trade down

three percent so I'm going to short

Bitcoin to hedge out my tech portfolio

or when they're getting all bearish

they'll think I'm just going to short

Bitcoin because it's a risk asset you've

just got people trading it and right now

everybody's shorting risk assets they're

all kind of paranoid

um with regard to the stable coins

everybody wants stable coins the world

wants them right the world wants

trillions of dollars of stable coins and

that's why tether exists and circle

exists and that's why die exists and

that's why UST exists now the challenge

is they can't get the trillion dollars

from JP Morgan

the president's working group kind of

said they want FDIC approved Banks to

issue stable coins but this has been a

long Jam in Congress in the Senate and

they can't get a decision uh Senator

Toomey has has some legislation Senator

Lomas has some legislation two weeks ago

if you'd asked me I would have said

it'll take it'll take till the middle of

2023 before they come up with anything

and no one's going to make any decision

this year because nobody can agree uh

but I think that what happened with the

Meltdown of Luna and UST

and all this in the crypto crash if you

will is it's put this right front and

center of Janet Yellen and Gary Gensler

and the Senate and the House of

Representatives and I think political

consensus has built very rapidly in the

past like 72 hours that this needs to be

accelerated so let me say it a different

way instead of you know like people can

be negative my opinion if all the stable

coins go to zero to tomorrow it's going

to accelerate the migration to bitcoin

it's going to accelerate the regulation

that's going to that's going to

legitimize the asset class it'll be good

for us

so your worst case is going to be good

for Bitcoin if it doesn't go to zero

tomorrow that's okay too one way or the

other I think you can expect that

legislation uh to provide clear

guidelines for issuing stable coins is

going to be fast tracked when Senator

Toomey asked Janet Yellen about this two

days ago yesterday or two days ago it

literally is like just right now

uh he said you think we can get this

done this year and she said I would

think it would be appropriate to get it

done this year and um I think that I

think that the Congress was slowing down

this because they couldn't agree amongst

themselves

like there's there was a view that you

know the administration shouldn't do

that much because they might hurt the

retail investor

you know gensor said someone's going to

get hurt

and we should lay down queer lines the

crypto exchanges should be regulated and

most of these tokens are securities and

then you had Congress saying well Mr

Gensler chairman Gensler don't go too

fast you might hurt the retail investor

and then you had a little fight over you

know is it FDIC Banks or federally

chartered Banks or State Banks or should

it be money transfer agents it can issue

stable coins or should we do nothing

right and then you have the crypto Lobby

that have been basically lobbying

against

uh clear guidelines to come out of the

SEC or out of the administration they

want a more permissive environment

and I think that um

that uh it's pretty clear now

that what would be really best for

Bitcoin is if we if we Define digital

currency versus digital security versus

digital property with bright lines if

there was a law

and if there was clear regulatory

guidelines because then you'll have an

avalanche of institutional Capital flow

into stable coins and you'll have an

into Bitcoin and it'll probably be a big

ShakeOut you know well how many of the

19

000 crypto security tokens will exist

like maybe there's a massive ShakeOut

there really should be a ShakeOut

and uh and ultimately that creates that

eliminates confusion because I think

that right now Bitcoin is undermined by

guilt by association with all the other

securities

and uh and there wasn't political

consensus to move forward I think that

the Congress was fighting the

administration on this a bit

and I think that this this meltdown of

Luna will will create consensus that

yeah we need to move forward faster so

rather than focus on the negative which

is there more contagion coming I would

say focus on the positive which is the

contagion you've seen has created a

consensus to move forward with clear

regulation which is going to be good

it's going to move the asset class from

being a one trillion dollar asset class

to a 10 trillion dollar asset class and

we can't move forward without without

clarifying the definition of a security

versus a currency versus a property in

the eyes of the banks and the

institutional investors and and the

politicians and The Regulators

so I I agree with uh everything you've

said actually so you know I thank you

for those very elaborate answers as well

but I want to take you up on something

you mentioned with respect to individual

tech stocks sure they are subjected to

you know macro headwinds like every

other asset class as well but they're

not really a pathway into Bitcoin and

the broader crypto Community uh crypto

asset class as well so when we have

the prospect of contagion from one

stable coin to another clearly the fact

that you identified with respect to

um guilt by association it plays you

know it loons large on on on the um on

the horizon sure but there's also a fact

that funds flows through those and

there's a the the issue of confidence as

well

um in the broader so-called crypto

community so I just wonder whether or

not you know we've seen Bitcoin I would

attribute bitcoin's precipitous decline

in the last couple of days to the

uncertainty around UST and I wonder if

that if that did spread out to other

stable coins while I agree with you that

in the longer term that's going to be

the Bushfire that sort of clears the

ecosystem of a lot of garbage and then

allows green shoots to emerge perhaps a

stronger consensus on um on legislation

as well I just wonder what that path

dependency is and how people can

mitigate those risks for themselves do

you have anything to add on that

I think that a lot of people on crypto

Focus too much on crypto and not enough

on macro

look today's silver is crashing gold is

down uh the 30-year Bond and the 10-year

bond are up it's a massive risk-off day

NASDAQ is down the s p is down right and

people are worried about China shutting

down a war in Europe and and uh you know

the Federal Reserve cranking interest

rate sure the roof and all of those

things I think dwarf the impact of of

Luna and Tara and and they dwarf the

impact of tether

I think that it's it's it's fun to talk

about it but it's it really is you know

kind of inconsequential I mean at the

end of the day you know

do people this would Shock Me you think

anybody in the U.S is actually using

tether to buy Bitcoin because no

institution is no legitimate

institutional buyer anywhere in the

world is using uh tether to buy Bitcoin

tether uh tether's primary significance

is for offshore crypto exchange

clearance and settlement so you know

it's really uh critical to the crypto

economy of of all the other crypto

staking coins and the crypto exchanges

since since every intelligent Bitcoin

holder is buying Bitcoin and holding it

we don't need tether I mean it's it's

interesting but again it's if it were to

crash it would have a disproportionate

impact on the other cryptos and the and

the crypto exchanges and the security

tokens I and if it has an impact on

bitcoin it'll be short term

yeah

Bitcoin Bitcoin is a global market so

well I appreciate that in the United

States is a significant and and perhaps

the largest player at the moment

um Bitcoin is a global market that's

affected by

Global issues and um you know when

you've got something like tether that

has as you pointed out I'm not aware of

what their market share is in in terms

of activity around the world but shall

we say it's a non-us uh predominantly

non-usual Financial

I thought would I thought you're doing

Bitcoin stuff no I am but I'm concerned

how I'm concerned about it goes to zero

yeah then Bitcoin will trade down for

some short period of time and then it

will trade back up again

it's just a stable coin used by offshore

exchanges like there isn't any public

institution or public company that is

even allowed to use tether

it's non-compliant right you can't even

use it it's all it's offshore exchanges

that are settling with each other in

dollars but anyway but I don't care I'm

not concerned if it goes to zero it'll

be good for us if it doesn't go to zero

it'll be fine for us the significance of

what's happened in the past week is that

you can expect stable coin regulation to

get accelerated in the U.S and that's

good for us

okay so a lot of people listening to

this are saying okay you know we don't

quite have uh the diamond hands that

Michael has thanks to his financing

arrangements and so that's sort of the

thing I was getting to sure

um there might be short-term risk

um and I I wanted to sort of touch upon

how you might suggest others from a

personal point of view could mitigate

those risks for themselves so for

example myself I've taken a lot of

inspiration from uh the financial model

that you've used at microstrategy to

purchase Bitcoin so my I do have some

debt which is sort of long dated and not

dependent on the price of Bitcoin for

any repayments or anything like that any

sort of viability so it's completely

independent of the Bitcoin price it's a

long dated and so any short-term

fluctuation is it doesn't really affect

my ability to uh finance that loan so

that was kind of what I was getting at I

can write out that short-term effect but

um you're not denying that it will have

a significant short-term effect are you

I I get I'm not here to find tether

right yeah nor am I nor am I like the

point you want to worry about something

worry about covid worry about nuclear

war worry about other Wars worry about

political policy worry about medical

policy worry about manufacturing policy

there's a million other things you can

worry about worry about getting hit by a

car by walking across the street

I could I I just think that you know we

need to stop like fixating upon one

thing called a stable coin that you may

or may not like I think it's just

misleading if uh if we switch to

something more constructive if people

are concerned about how you you know how

you move forward well the answer is

should you borrow against your Bitcoin

you should you should ask yourself the

question can you survive an 80 drawdown

right I mean Bill Miller held Amazon

stock through 80 drawdowns so did Jeff

Bezos right Elon Musk has held a lot of

Tesla stock through a massive drawdown

so if you can hold your uh your Bitcoin

position through an 80 drawdown like you

take a loan to value four percent right

we can we microstrategy can last through

an 80 drawdown we can last through a 90

drawdown

right so I think that if you're if

you're leveraging yourself and you're

you're taking out huge loans where a 10

or 20 drawdown wipes you out right then

you got anxiety I wouldn't suggest that

and I think that I'm

I I think the things that create anxiety

is is a mark to Market loan Mark to

Market every day that's a that's a risk

factor I think if you post your Bitcoin

on an exchange where they where they

could force liquidate you that's a risk

factor like I wouldn't do that like I

wouldn't put a billion dollars of

Bitcoin on somebody else's exchange and

then and then want to wake up one day

where I found out Bitcoin traded down 80

percent they sold all my Bitcoin at 80

loss and I have nothing and then it

trades back up 60 percent

yeah so that's why you don't want to

post your Bitcoin on an exchange

like yeah we did our deal we posted some

Bitcoin as collateral but we we have it

in Cold Storage

you know silvergate doesn't have it So

I'm Never Gonna wake up one morning and

have silvergate say Bitcoin traded down

for five minutes and it traded back up

so we sold all your Bitcoin at a loss to

you sorry you wrecked right that's not

the way we do it right that's

irresponsible so my advice to anybody

would be you know uh is your balance

sheet strong enough to take an 80

drawdown first second do you have your

Bitcoin and coal storage you know uh and

uh third if you have other debt what you

want is long-term debt right you want

10-year 15-year 30-year mortgages

like a two and a half percent 30-year

mortgage is a pretty good idea

especially and the best debt is

I don't know why people beat up on me

right on Twitter I noticed all these

people like trolling me saying oh you

ask people to borrow money to buy

Bitcoin well a year ago you could have

borrowed money for half the interest

rate now you could have got two and a

half percent mortgages or two percent

mortgages if you locked in a mortgage a

year ago smartest thing in the world to

do so I would say you know borrowing

money against Real Estate it doesn't get

marked the market that has a long

duration that is a low interest rate

it's like a no-brainer that's the

smartest thing to do so you could

long-term View and you can do a lot of

that right like for example if you had a

million dollar house you could

reasonably go up to loan to value 80

percent

on a 30-year loan at two and a half

percent interest

and you're not going to get wrecked

because the house is not going to get

assessed down by the bank oftentimes the

mortgage doesn't even have a provision

like the market to market right

so you can borrow 80 percent loan to

value against against Real Estate and be

very comfortable with that debt on the

other hand I would never borrow 80

percent loan to value against Bitcoin

right because a 20 drawdown right wipes

you out right your your margin called

and I wouldn't post the Bitcoin if I

could avoid it and of course what you

know what real Leverage is is when I go

ahead and I go five to one levered and

that means that I borrowed five million

dollars against one million and when you

know and when Bitcoin trades down

nineteen twenty percent I lose the

entire million

right so I wouldn't do that but but that

keep in mind what what uh that is right

when you're actually borrowing at 5x

leverage you would be borrowing 25

billion dollars against the five billion

dollar position instead of 200 million

dollars so 5x Leverage is 100 times as

much leverage as microstrategy put on

right so so thin layers of Leverage

against a volatile asset but heavier

Leverage

against the non-volatile property

especially if the government is

subsidizing a loan and if it's a

long-term loan and it's not Mark the

market

so your um your debt at microstrategy I

think from memory it's what five or six

year terms do you sort of take your risk

assessment or or your direct your

attention towards risk along similar

time frames as well so some things are

one year risk you just don't consider

that an issue

yeah I mean you know I've said before

and I don't really think you ought to

buy Bitcoin if you can't hold the

investment for four years

right the 10 years is the right time

frame 100 years is the perfect time

frame four years is kind of a minimum

time frame like if if I was giving

advice to someone about how to think

about money I would say figure out what

you got to spend in the next month and

hold the next month of expenditures in

the local currency uh that is the you

know is the unit of the bill right if I

live in Argentina and I got rent to pay

in pesos I have to have one month worth

of pesos then take the next the next you

know two to 12 months

and then flip that to a strong currency

like a dollar if I lived in Argentina

I'd have a month of pesos I'd have maybe

a quarter to a few quarters up to one

year of dollars and then everything

beyond that you know I would if you know

from one year to four years if you want

to be really conservative you have a

hedged property

like something which is hedged that

can't go to zero but it's not going to

go to infinity and that Beyond four

years I think you kind of want to have

the best property in the world and then

you know beyond four years you've got

three types of property I think that are

reasonable and defensible you've got

digital property in the form of Bitcoin

so one portion digital property then

you've got uh companies uh a company

that you operate or uh you want to own a

corporation you want to own a digital

Monopoly like Apple or Google some

company that has a monopoly that where

even if the government fails the company

won't fail like you can more easily

imagine like a hundred governments in

the world failing before you can imagine

Google or Apple

failing that like they're I mean it's

part the United States government would

probably could even fail easier than

Apple and Google it's like it's a

bizarre thing right you could imagine

that you was breaking into three pieces

but you can't imagine all the people in

the three parts of the country giving up

their iPhones and if I if I gave you 500

billion dollars and said recreate Apple

you couldn't do it

so apple and apple will probably go on

beyond Canada or Australia or Japan

right they could fail before Apple would

fail so um so that's the second form of

really hot strong property you own some

kind of digital Monopoly that can raise

prices that everybody needs that no one

can get rid of that's kind of close to

oxygen

and then the third form of property is

like trophy real estate like the house

you live in if you have you know if you

have a house you're going to live in the

rest of your life then you're going to

always have value for that and otherwise

super trophy real estate that scares

desirable than an affluent intelligent

person want to buy from you in a decade

so if you're you know if you're uh

totally Bitcoin maximalist then I'm like

100 percent Bitcoin you know but even

you know I'm 100 Bitcoin but I'm still

going to have a house to live in I just

might put debt against it right you know

you might you know you might own some

but you might own some big tech stocks

it depends everybody can figure out what

their mix is but those are the three

logical

logical assets to hold for the long term

and and the question of the near term is

okay well do you need one month one uh

one year's uh supply of cash or one

month supply of cash it's obvious you

want to be real extreme if you lived in

uh Venezuela you'd have a day a bowl of

one day worth of bowl of bars

you might have one month with the pesos

or real you'd have like a few months to

a year worth of dollars and then

everything else has got to be invested

and of course this gets really simple

because

you know they can't buy the big tech

stocks in Venezuela so if you can't buy

Apple and Google and Microsoft

which I would acknowledge are monopolies

right Microsoft will be around long

after 82 countries are gone right at

least whatever the successor is if you

can't buy those then well what can you

buy you can buy Bitcoin Bitcoin is your

digital Monopoly monetary Network that

anybody can buy and then you know like

if you're committed to living in uh

Argentina or Venezuela for the next

hundred years then I guess you've got to

own your ranch or on your beach house or

own your whatever right

if you trust the government and if

you're not if you don't think you don't

have to flee or move

and if you're not worried about taxes

but the problem with all these other

things right or it's hard to get your

hand on Securities 70 75 80 of the world

can't buy Securities trading on the

NASDAQ and it's hard to carry your

property with you when you've got to

leave and it's easy for someone to seize

it by eminent domain or tax it or in

parrots right they could put rent

control on your house in California

if it's a second house so so Bitcoin

clearly is uh my favorite form of

property for the long term

and that's how I would think about you

know managing your portfolio

earlier on uh you sort of touched upon

how Bitcoin can get stronger from all

this Market turbulence and you mentioned

uh regulation and I wonder do you think

Regulators have a preference to move

first on uh stable coins or Bitcoin to

fully regulate it and sort of uh

entrench it within the institutional

landscape

okay I think that some people in the

Bitcoin Community think regulation is

bad but the bottom line is Bitcoin is

property it's already regulated

and the IRA the regulation you needed

was to determine whether it's property

or currency it was designated as

property by the IRS in 2014.

so we're done right that's it that's

that's the regulation there's the lack

of regulation in the crypto industry is

not is is hurting Bitcoin more than it's

helping it the lack of Regulation has

been helping stable coins and crypto

Securities and and in fact all the com

all the competitors to Bitcoin in the

space so regulation is is going to be

good for Bitcoin by far and the first

thing they'll regulate is stable coins

because there's a massive demand for

stable coins right everybody on Earth

wants the dollar the Chinese want the

dollar the Japanese want the dollar the

South Americans want the dollar

everyone's at the dollar they want the

Dollar on digital rails that's why they

buy tether that's why they buy Circle

they want the doll right it's not

spreading I think

we went from 5 billion to 200 billion in

stable coin the real demand is trillions

and it's and it's been crippled because

in order to hold the stable coin you

have to trust the counterparty and you

have a lot of imperfect issuers right

you have tether which is which is

somewhat opaque you have uh you know dye

and UST the algorithmic with ineffable

like opaque risk that you couldn't

really ascertain

you have Circle which is which is uh the

most transparent but it's not a bank

right it's and so and and it's still

like this uncertainty

so I think that they will move first on

stable coins and they should move first

on stable coins because there's a

multi-trillion dollar demand for stable

coins that is and the stable coins are

kind of like the back hole energy

Network for the rest of the cryptos

and of course stable coins are kind of

the Killer

the killer asset for Global remittance

for Consumer remittance and also

corporate remittance and also settlement

and so there's there's an obvious big uh

demand there's also an obvious benefit

to the United States dollar

the US dollar is the global Reserve

currency of the world on the 20th

century rails of credit cards and Banks

and ACH and fed wire

but it would be much better if the US

dollar was the digital Reserve currency

of the world running on lightning

right running on any crypto Network

running on running on any internet right

if you could transfer 87 on what's up

from here to another what's up address

in a split second for free

then that would be beneficial to the

dollar the dollar is the winner

the dollar is going to Ripple everywhere

in the world all the other currencies

are weak there people are people in a

heartbeat will swap their pesos for the

dollar if they're allowed to

they'll swap every currency in Africa

every currency in Asia every currency in

South America will all be swapped for

dollars if people could easily do it in

a trustworthy way

so that's the big opportunity you know

the question is do we need digital

Securities that's a much bigger question

right it's unclear right there's a big

debate over the use case and the value

proposition

most of the value proposition that you

see in the other cryptos like the crypto

platforms and the utility tokens like

defy nfts you can you know Citadel can

offer D5 and and so could you know so

could

um

a regulated institution I mean anybody

coinbase could offer D5 in the US on

their website in theory

any Financial actor could offer it Apple

computer and Google could the reason

they don't is because it's it's outside

of regs it's non-compliant

a public company can't do it because you

know in essence it's against the law

that's why that's the reason those

applications aren't spreading because

they're outside of the ranks and so if

you want to provide applications that

are that are not compliant

then maybe you can exist in an offshore

crypto you know Gray Zone

but um that's one percent to five

percent of the market opportunity

so I think that um

if you if you boil down this industry uh

and listen to what The Regulators have

said I think I think what they've said

this is Gary Gensler this is Janet

Yellen this is the White House this is

this is anyone that studied it they're

going to say this satoshi's Innovation

is real

the creation of a decentralized network

to transfer value without a trusted

intermediary that is an innovation that

is Bitcoin that is property we're not

going to regulate that as a security

it's not a Securities property so that's

the first thing they'll agree on the

second thing they'll agree on is that um

the world wants digital currency in the

form of stable coins you know uh they

want a USD type token and there's a

massive demand they'll agree on that

then they'll say well it's kind of risky

they let like uh entrepreneurs offshore

you know issue these things right the

Luna example being an illustration of

why it's risky 34 billion dollars goes

to zero in a couple days

then the third thing they'll say is they

agree that moving stuff 24 7 365 at the

speed of light for free is good

right that's useful

everybody agrees on that and the fourth

thing they'll agree on is that some of

these things are securities and there

ought to be disclosures

right and so that's what the Regulators

think right now they haven't given

people a very clear fast track to become

a to be a compliant digital currency

and they haven't given them a fast track

or a clear track to being a digital

security other than the traditional

method the traditional method is very

expensive Archie the traditional method

is you spend you know I think I spent a

year and a half getting ready to come to

go public

it's like you you do a year and a half

two years you have to have three years

of audits you you know there's a lot of

work you have to do to go public so the

traditional method is expensive is there

going to be a fast track method well

it's unclear like what you know what

Corners are you going to cut or what are

you going to cut in order to make it