Digital Gold: Harder, Smarter, Stronger, and Faster | The Saylor Series | Episode 6 (WiM006)

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 asset.

[Music]

Hey guys. So as you learned uh by

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you can also complement this by buying

Bitcoin price dips to further increase

that position and reduce your cost

basis. And finally, I suggest to

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not Bitcoin. It's a Bitcoin IOU. And for

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through Bitcoin. All right, thanks.

All right, guys. Welcome back to episode

six of the Sailor series here on the

What is Money Show. So today we're going

to be talking about how Bitcoin is

harder, smarter, faster, and stronger

than any form of money in existence. Uh

specifically, we'll be drawing a lot of

analogies to gold. Um which Bitcoin, as

we've discussed, is disruptive to. And

we're going to look at this through a

number of angles. Um, and a lot of this

is building on things we touched on

early on in the series, like

specifically getting into stone age

technologies and how actually the use of

tools um and the harnessing of energy is

what lets man be harder, faster,

stronger, smarter than any other animal

on the planet. So in fact these

characteristics define the utility of

both innovation and evolution. So the

tool that best exhibits them tends to

out compete in the marketplace. So that

we're sort of drawing back uh to some

lessons we laid earlier. So again, this

is episode six. If you haven't checked

out episodes one through five yet, I

suggest that you do because it all sort

of culminates um into what we're getting

into now. So we're going to look at this

through a number of angles. One is

custody. how Bitcoin custody is is very

unique. Um, we're also going to get into

the spectre of quantum computing.

There's a lot of people out there that

that like think quantum computing is

some kind of big threat to Bitcoin. Um,

so we'll dismantle that one. We're also

going to get into the hardware and

software updates of a technology like

Bitcoin versus gold and fiat. Um, we're

also going to look at the programmable

aspects of Bitcoin and how that makes it

unique. We're also going to look at the

defensibility of Bitcoin and how it's

actually one of the most defensible

assets, if not the most defensible asset

in the history of mankind.

And then we're also going to look at how

as monetary energy, as Sailor likes to

call it, Bitcoin lets us place capital

more quickly and more intelligently than

any other money before in terms of

generating yield. Um, so we'll get into

some discussion around that as well. And

then finally, we'll get into, you know,

Bitcoin is being the first truly digital

native money. It is pure information.

It's massless. It can be moved at the

speed of light. And this enables a

plethora of highfrequency and

microtransactions that were simply not

possible with any other monetary

technology historically. And then

finally, um, we'll sort of look at how

all these elements are combined to to

give Bitcoin users and holders more

optionality than any other money in

history. And at the end of the day,

that's what money is, right? It's an

instrument for freedom. So, with that,

I'm excited to dive into this one. We're

we're digging deeper into Bitcoin

theory. And, um, yeah, with that, let's

get into it.

We've talked about Bitcoin as money but

but sometimes uh

money money has a lot of elements as

store of value medium exchange unit of

measure and it could be simplifying and

clarifying if we just focus in on

bitcoin as an asset. So, Bitcoin is

digital gold. And if we use that

metaphor,

uh, some people look at it as a in a

very

constrained sense and some people look

at it more broadly. But when I say

Bitcoin is digital gold, it's harder,

smarter, stronger, and faster

than uh traditional gold, there's a lot

of depth behind it, and I I don't know

that uh it's fully appreciated. Let's

just start with um harder. We talked a

bit about

how uh Bitcoin is harder because it's 21

million cap and it's and its stock to

flow is exponentially going to infinity.

And that's the that's the easy part of

harder because you're exactly

you're exactly comparing it to gold. And

if gold is a stock of 50 and Bitcoin is

a stock to fall of infinity, then it's

harder.

But there's another element of harder

that we don't talk about much and it's

really Nicholas Taleb's anti-fragile

Um,

Bitcoin is is an anti-fragile

element. You know, I've used the

metaphor

cyber hornets,

but um, but I think people think it's a

cute metaphor, but I'm not really think

it's a cute metaphor. What I'm meaning

is it's literally um a swarm of cyber

hornets that keep getting more powerful

that you can't kill that are going to

get smarter and stronger and faster and

they're going to eat you if you try to

stop them. And that's really hard.

People don't think about it like that.

But I give an example um or another

metaphor from history. The chi the Great

Wall of China.

So, the Great Wall of China was a

defense and it was a uh it's a material

defense. It's like a bunch of stones

stacked up and it's very expensive to

create it and it was meant to keep the

Mongols out

and uh it's a um it's a fragile defense

it because it it's literally a static

stone structure and it didn't keep the

Mongols out. Eventually they found a

weak point in one of the gates, cracked

through and then they slaughtered all

the Chinese, defeated the empire, took

over. Um,

now how is that similar to what uh

Alexander the Great's father said? I

think Philip of Macedon, he's attributed

this quote. Um, uh, no citadel is

impenetrable

as long as it has a road wide enough for

me to fit a donkey up it with a pot of

gold on its back.

Interesting.

And what he meant was, it doesn't matter

how strong your defenses are if I can

bribe the gatekeeper.

Right?

And um you know the third example we

have in in modern history is the Mageno

line where the French built this

impenetrable defense against the Germans

and the Germans simply went around it

through Belgium

by cheating, right? They hacked it. They

just ducked it. And uh you know if you

if you think about the lessons of

military history, you know what one of

the lessons is the best defense is a

good offense.

And uh another another way to look at it

is that if you want a good defense, you

need an active defense, a moving

defense, right?

you're a boxer in a ring and someone

wants to hit you. Your best defense is

you move quicker than them and you hit

faster and harder than them while

they're getting ready to hit you

and so they can't,

right?

So,

it has to be adaptive, right? The

defense has to respond to the nature of

the offense continually.

Continually, continuous adaptation,

absorption of your enemies um

capabilities and reaction. You play them

back at them. And so when we think about

gold, right, I go I've affectionately

deemed gold a dumb rock. It's a rock.

It's not intelligent. It's not a life

force. A coral reef is a life form.

All forms of life, they're living,

right? Uh they're adaptive. If you kill

the weak element, the ones you didn't

kill get stronger, right? Um with regard

to Bitcoin,

it's it's composed of a number of

elements. There's software.

The software is running on hardware. the

hardware is running in in uh facilities

that are that are plugged into the

firmament of some domain.

There are people that are operating that

software that are writing that software

that are operating those facilities that

that are building that hardware and

those people are also acting in the

political domain and the economic

domain. Right? There are there are there

are people in the Bitcoin ecosystem that

are improving the Square wallet. They're

improving the Binance exchange. So,

they're improving the back-end server

exchanges. They're improving the

front-end client software. They're

improving the hardware wallets. They're

improving the Bitcoin core software.

They're improving the AS6 that the

miners are running. There are people

negotiating with governments everywhere

on Earth to get better electricity.

There are people that are negotiating

with politicians to get better

regulatory treatment. There are people

that are marketing Bitcoin and educ

There are educators, you know, yourself

on YouTube. There are people on Twitter,

right? There there are communicators.

There are analysts that are creating

analytical functions

uh that are being used uh to drive and

channel the network.

They're all moving. They're all

evolving. There are strong exchanges

getting stronger. There are weak

exchanges getting weaker. Right? We see

that all around us. There are countries

where Bitcoin mining is flourishing.

There are countries where Bitcoin mining

is under attack.

Gold is a dumb rock. It is sitting on

the floor. Gold is not going to move

itself. Right? It's Gold is not going to

feel pain.

It's not going to feel pity. It's not

going to feel inspiration.

It's just going to lie there and wait.

And uh and Bitcoin is a different thing.

So the anti-fragility of Bitcoin comes

from the fact that everybody in the

ecosystem feels the the same pain in the

same way. If Bitcoin's price goes down,

every Bitcoin holder feels it. If

Bitcoin is hacked and goes to zero,

every Bitcoiner loses their life's

energy. We are we are a a hive creature

all integrated with one another

and uh and when there is that pain, it

spreads very quickly through the entire

ecosystem. The information flows

rapidly. So if we consider threats to

Bitcoin, like a lot of people, they they

always whine. I hear this whine. What

about the quantum computer? What about

the quantum computer? You know, and I

want to say, yeah, and what if an

asteroid hits the earth and kills us

all? Or what about the pocket

thermonuclear pencil that blows up the

entire universe? And what if your enemy

gets it before you get it? You know, I

mean, there's a lot of a lot of silly

notions of that. What if someone has the

the impossibly powerful weapon and

they're evil and they decide to use it

on you? You could look at it that way,

but um I think a more constructive way

to look at it is if someone comes up

with a computer that runs twice as fast

as the current computers, the most

profitable use of the computer is

Bitcoin mining. If someone comes up with

something which mines that generates

Shaw 256 crypto hashes faster than the

current generation of of Bitcoin mining

equipment, the most lucrative thing you

can do with it is plug it into the

network and start to and start to

contribute more hash rate. And so who do

you think's going to notice first when

that thing happens? Uh any if someone

comes up with a better piece of that,

well, what happens when it gets so

powerful they can break Shaw 256? Well,

dudes, we're just going to go to Shaw

512 or we're going to go to the next

thing, 1024. And anybody that ever

studied bit uh studied um computer

science knows we start with 16, go to

32, go to 64, go to 128, 256, 5, 12, 10,

24, and so on and so forth. And the

numbers get pretty freaking big. And

then when they get done with that, they

flip to the next protocol, the next

protocol. So, who do you think's going

to figure that out? The people that have

$500 billion dollars of risk to figure

it out or someone that's got no money at

all, but thinks that they might just

want to solve the problem just so they

can crack the world, right? And it's

like,

right.

Yeah, maybe. But I mean, it's just as

likely that some dude's going to come up

with a revolver that shoots like photon

bullets and they're going to crash the

United States government because they're

the first dude with a photon photon

bullet revolver. It's right

interesting idea.

I'm a lot more persuaded that the

Pentagon with their hundreds of billions

of dollars is going to come up with the

photon bullet gun

or the laser rifle or the whatever. So

the entire network

channeling innovation. You come up with

better hardware, it's going to go into

the miners. You come up, you come with

better client software, it's going to go

into the wallets. You come up with a

better software or way to write

software, don't you think people in the

Bitcoin core community are going to use

that way to write better software? And

if it's it's like too dangerous, the

community is going to slow it down. And

uh otherwise if if there's a political

threat, everybody that's adopted Bitcoin

as a Treasury Reserve asset has a vested

interest in dealing with a political

threat. And if they can't deal with it,

you know, if you if if you're uh a

creature with two arms and I wrap a

tourniquet around one of your arm and I

choke off the blood flow, the arm dies.

Use the other arm. When you're an

octopus, you got eight

When you're a hydra, you got a million.

So that the entire creature is just

going to move to a place where there is

oxygen where it can live. And if it can

fight, it'll fight.

And if it can't fight, it will it will

morph itself into into a different

domain. And unless you figure out a way

to kill it everywhere at the same time

utterly down to the last node,

you're probably not going to kill it.

And it seems to me that nobody's really

got a vested interest

in doing that. And if they did, it's not

it's just not clear.

You know, pick one government, one

government attacks it, it becomes more

useful to every other government.

It's this government can't agree on

anything ever, right? And they could

agree on anything ever, they still can't

do it, right?

Yeah. I think I love the quote from

Philip of Macedon about the the road

being wide enough for a donkey with a

pot of gold. That that relates to me to

the the famous quote from Charlie Mer,

right? Show me the incentive and I'll

show you the outcome. And I think that

is the key, one of the key aspects of

Bitcoin is that even if you have this

breakthrough quantum computing, whatever

it is, you're still incentivized to

contribute that innovation to the

network. That is the most lucrative,

most energy efficient strategy possible,

even in that breakthrough environment.

And it just seems to be like, and to

your point about cryptography, it's

always been a cat-and- mouse game,

right? It's always been kind of the

defense, someone trying to crack it,

then the defense adapts. like to your

point, it's a dynamic defense and that's

why it's ongoing, right? That's why it's

still relevant. Um, and when you look at

it through that lens, it's it the most

brilliant aspect of Bitcoin is that

incentive schema, frankly, that you're

always incentivized to contribute to its

longevity.

Uh, which seems to make it, you know,

antifragile. To your point,

you can the one thing in the Bitcoin

ethos is they hate gatekeepers.

So gatekeeper is a very powerful

metaphor, right? The reason that the

Great Wall of China fell was because

there were gates and there were

gatekeepers and the prosperity of a 100

million people can be destroyed by

corrupting the one

on the gate, right? As soon as the one

gatekeeper opens the gate, the 100,000

person army comes through. And and

herein you see the problem with hiding

behind a wall or hiding behind a wall

with a gate in it. Much better idea

would be I have my own 100,000 person

army and when that army comes I stand

against them. Right? And that's what the

Romans knew. The Romans never sat and

cowed behind a gate. They they knew and

anybody in a war knows you have to go

and leave the citadel and you have to

direct actively fight the army that

would kill you because if they manage to

surround you and isolate you, no amount

of defense is going to hold them back,

they will find a way through. And that

and that's the story of history. Um

gatekeepers are your weakness. There's

no gatekeepers in Bitcoin, right? and

there but and there's no gatekeepers in

a in a decentralized proofof work

network that's energy intensive. That's

one of the problems I think of like

proof ofstake

networks or the every time someone tries

to come up with a quote unquote more

efficient way to do it. Well, if you're

going to secure a trillion dollar

network with a billion dollars of stuff

staked,

the problem with that is that all I need

is another billion dollars, right, to

bribe that person or half a billion.

Half a billion bribes half that network

and then I topple the entire trillion

and I get it all.

Right? And so the when you have anything

where I'm playing games where I'm trying

to use a small amount of energy or a

small and money is energy, right? A

small amount of money, a small amount of

energy. If you're trying to use a small

amount of energy to secure a large

amount of energy, you created a

gatekeeper.

And so you need to flip the pyramid. And

and that's why there's no shortcuts

here. There's no such thing as a free

lunch. And it's it doesn't terribly

bother me that that Bitcoin channels a

lot of energy

through encryption facilities.

A minor is an encryption facility. It's

it's it's generating Shaw 256 hashes.

And you have to get and you're going to

have to get through that, you know, hash

wall. And the only way you're gonna get

through it is you're gonna have to buy

yourself 51%

of all that equipment on Earth. And then

you're going to have to harness 51% of

all the energy. And then you're going to

have to attack. And it still may not

work.

And you're still incentivized to honesty

even if you're executing 51% attack. And

the joke, of course, is if you really

could buy 51%

of the of the encryption equipment and

harness 51% of the energy, you could

have 51% of the block rewards and 51% of

the transaction fees. And the value of

owning half of the transaction fees is

higher.

I like when the thing's worth 10

trillion dollars and the transaction

fees are 1% there's going to be a

hundred billion dollars a year worth of

transaction fees. So it's $51 billion

a year if you cap that at times 20. It's

a trillion dollars just to go along with

the program. So someone's gonna have to

have

a hundred trillion dollars and be really

mad in order to want to spend a trillion

to destroy other people. It just doesn't

make any sense. Plus,

you're not going to get to attack the

thing without a counterattack, right?

Because at the point that you have a

hundred million people that all have all

of their life's energy, all of their

hopes, their aspirations, and all of

their economic security and physical

security invested in the network,

they're probably not going to roll over

and let you do it,

right? You know, like it's it's pretty

hard for one evil genius by themsself to

plot a trillion dollar war on a cyber

network. H how are you going to gather

the software, the hardware, the monetary

energy, and the political support by

yourself? And if you're not by yourself,

I'm reminded of the phrase three can

keep a secret if two of them are dead.

So when when I think about Bitcoin, I

think it's harder, but it's harder

because it's it's a evolving

herd creature, an evolving swarm

creature, and it's evolving as fast as

it can and and it feels pain and as

Nicholas Taleb says, an anti-fragile.

Pain's a good thing, right? pain.

You can tell the difference between

people that get it and people that don't

get it. There's a there's a group of

people in life that run from pain

and they're attempting to an

anestheticize themsel and always isolate

themselves from pain. And there's a

group of people that run toward pain or

at least they embrace pain. Pain's a

good thing. The the more pain you feel,

the faster your reflex is. Put your hand

on a hot stove, it moves quickly. you

have reflexes,

right? So that that uh that system is

learning and it's and pain is one of our

number one information signals, maybe

the most important information signal in

order to provide a living organism with

vitality.

That's right. Yeah. TB says that

stressors and pain are indistinguishable

from information at the organic level.

That is the only way that an organic

system learns is by exposure to

something that is resistive or

conflictive to it. And even at a a

genetic level, uh the when a virus

invades a host uh organism and destroys

its cells, there's always a few cells

that survive. And those cells that

survive actually take some of the DNA

from the virus that wiped out 99% of

their cellular comrades and incorporates

that DNA into its own such that it is

resistant now to that virus. So it's

it's it's

happening at anformational level even

deep in biology. This isn't just

something that happens kind of at the

the the physical layer here. this

happens really. It's quintessential to

life, I guess, is the point I'm getting

at.

And I agree. I And I think that

if it's not a living thing,

it can't be hard. Like, it can't be

hardest, right? People think gold is the

hardest thing because it's a rock, but

it really isn't the hardest thing. The

hardest thing is like the Mongolian

horde if you're in its way. when the

horde of a hundred thousand comes at you

and they're terrorizing, blood curdling

with their missiles and and if you read

the history of Genghaskhan, they would

ride across the plane. They find a city,

the city is surrounded by a moat. They

would go up river and divert the river.

They would divert the river, choke the

city, starve them of water for three

days, and they'd ride underneath the

gates in the riverbed. It's just

horrifying,

blood curdling

living horde creature. And and you want

to attack it,

it's moving, right? You could go to it,

retreat, they stop, they turn around,

they throw you off balance, they murder

you.

Right.

Right. That that's what happens when

you're dealing with living creatures. Go

into a hornets's nest, attack the

hornets with your revolver, see what

happens.

Yeah.

It's the the most horrifying thing,

right? You have

thousand hornets. You seen these videos

of 20 hornets taking apart 20,000 bees?

Yeah, I saw that on Twitter recently.

Frightening.

And that's and there are all examples of

that. There's there's bacterial

examples, there cancer examples, and you

know there's single cellled organism

examples, there's invertebrate examples,

right? It's when something is a

decentralized organic creature that is

rapidly evolving and adapting,

it becomes excessively anti-fragile

because every time you kill it or kill

an element of it, the elements you don't

kill get that much stronger,

right?

I was going to say one other thing. I'm

reminded of a quote to uh when you're

talking about the possibility of of

Bitcoin being disrupted or attacked from

the outside that you are attacking the

life energy of the holders, right?

Because money is energy. And there's a

there's a Sunzu Sunzu quote from the art

of war um and it it said that I'll

paraphrase, but basically you never want

to attack an enemy whose back is against

the wall, right? They have nothing to

lose. Therefore, they will come at you

with everything they've got. It's it's

almost just an unstoppable force. And it

seems to me that's what you're facing

when you face Bitcoin. You're facing

this uh you know swarm intelligence of

individual self-interested but

collectively organized uh life force

that's defending their own life energy.

So, it seems just really hard to attack

that. Almost as if you're attacking the

honey and the and the the wasp nest,

right? They're going to come at you with

everything they've got.

Yeah. That the gatekeepers are like

centralized

they're like centralized banks or

centralized regulators. Those are

gatekeepers and and political financial

systems and gatekeepers on the wall of

China on a wall are literally

gatekeepers. And and the result is one

person uh has the power to destroy the

lives of a million by opening the gate

because Bitcoin doesn't have a gate.

there's no there's no gatekeeper.

Therefore, there's no asymmetric payoff.

It's

it's not economically feasible to break

through. Now, another big advantage and

anti-fragility of Bitcoin is this idea

that that I can take my um I can run my

own node. I can take my own uh keys off

the network. I can I can choose to to

trust them with a custodian or I can

choose to take ownership of them myself

and I can I can choose for example to uh

to put a million dollars with a

custodian that's going to run a bank or

maybe lend it out or give me yield on it

or protect it. But then at the point

that I lose confidence in them, I can

shift all those assets to another

trustee or I can take physical

possession of them myself. And be

because you have lots of different

entities, individuals and corporations

choosing to do different things at all

times.

Even though someone might entrust their

keys to a bank, the the security of the

entire system is being protected by the

someone that doesn't. And so so the

diversity with which people choose uh to

engage and support the network actually

makes it more anti-fragile.

and the potential for example if if if I

know that you are going to take

possession of your keys and then if you

set up an organization that's custodians

that will hold my keys and charge me 10

basis points then if another

organization charges me 50 basis points

I would just say to them I'm going to

shift it to 10 basis points the

competition drives their rate down or I

move to 10 basis points if I hear that

your exchange or your custodian is not

secure or it might not be secure or if I

heard that there's a new multi-IG

protocol that's more secure and I ask

you and you don't support it I move my

keys or I move my assets to the next

exchange the next wallet the next

technique that means that you cannot

afford to ignore me because you don't

have a monopoly right you don't have a

regul there's no regulator saying you I

have to leave my keys with the breed lab

trust in order to get a tax deduction or

in order to qualify for a 501c3,

413, 509, you know, etc. IR, IRA, this

or that. As as you start to have pure

competition, you get this ferocious um

evolution in in all aspects of the

ecosystem. And we we saw it for with

miners for example they started with

CPUs and they flipped to GPUs

and then they went to AS6 and like every

three years there's another generation

and um you know the thing that really

destroys the quantum computing argument

is if anything Bitcoin has proven

that uh that people that believe in the

Bitcoin network are going to pursue the

highest performance special purpose

client and server hardware before

everybody else in the world. If if you

look at the state-of-the-art with

Bitcoin wallets, they're more secure

than any other mobile client device. And

if you look at the state-of-the-art of

Bitcoin ASIC miners, they're higher

performance than AWS or any device

you'll find on a public cloud. And

that's because Bitcoiners have skin in

the game, right? Again, back to one of

Nicholas Taleb's books.

It's like everybody that writes the

software, runs the software, uses this

the software, everybody has skin in the

game. If you got a business, it's going

to be obliterated if you fall behind. As

a minor, you can't make any money. As a

wallet, you can't sell anything. As a

crypto bank exchange, you know, look how

fast the money moves out of, you know,

one exchange to another this week,

right?

Everybody has skin in the game. Nobody

can ignore the pain. There is no agency

or agency bias is very hard to come by,

And and you can expect every year

forever

it's going to get harder. Now back back

to this issue of Apple and Amazon.

Apple's the most valuable company on

earth because they can ship a software

update to a billion people for a nickel.

That's pretty powerful. Well,

with Bitcoin,

you can rewrite the software that runs

the nodes to make it smarter, right? You

can rewrite the software or the firmware

uh that that works on the mining

devices. And so the hardware cycle,

what's the upgrade cycle on hardware?

Two years maybe like one, two, three

years in that range. What's the upgrade

cycle on software? Well, it depends on

whether it's the node or it depends on

whether it's the client software.

One year, two years, three years.

Doesn't, you know, in the greater scheme

of things, it doesn't have to be super

fast. You just have to compare it to the

number of hardware and software upgrade

cycles on gold.

Zero

in 5,000 years.

Yeah.

In five billion years, right? Right?

Goal is pretty much five billion years.

God made it and left it that way.

And and there there's a lesson to be

learned from that. But the point is it's

not upgrading. It's not going to move.

And if it doesn't move in invariably

when human beings, you know, come in

conflict with mountains, we move the

mountains,

right? Like we move the rivers. We, you

know, we chop up the granite. You ever,

you know, go look at a citadel. It's

literally moved a mountain. You have to,

you might have to move it two tons at a

time. Look at the pyramids.

Yep.

5,000 years ago, someone figured out how

to move a mountain of rock. And that's

5,000 4,000 years ago. you know, are you

going to bet against a 100,000 humans,

you know, with their channeling gravity,

channeling water, channeling whatever,

or you going to bet on the mountain? And

the answer is you're going to bet on the

human beings,

right?

And when you roll forward and you look

at human beings versus animals, it's the

same thing, right? Us versus elements,

elephants, us versus lions, us versus

nature, right? anything living generally

we figure out how to beat it because we

channel energy better. So now

we're talking about how yeah what what

are we competing with here? Well, if

we're competing with gold, it just seems

like no contest whatsoever. Let's talk

about smarter, stronger, and faster

because harder is relevant to money, but

smarter, stronger, and faster is the

source of all tech value in the past 20

years, maybe in the past 2,000 years, by

the way, but let's talk about

smarter. Well, if if Bitcoin is

programmable money, right? It's a it's a

pure energy token and I can move it

around, that means I can write software

on the client and I can write software

on the server that will actually move

the money, right? And and that means

that means uh you can hold keys to 100

bitcoin and then you can write software

that will prove that you're creditw

worthy that you own the keys to 100

bitcoin. Then you can actually use it to

register and certify transaction or

information or title channeled into

that. Um I can write a piece of software

that will

what what do I want? What if a million

people wanted to borrow money pledging

Bitcoin? And what if another million

people wanted to loan out money and

generate interest? And what if I write a

program where everybody on one side pl

says I'll pay 3% interest or four or

five or eight or two or one and

everybody on the other side says I'll

make a loan assuming you have collateral

coverage of four to one in Bitcoin and I

can market to market every hour. Okay.

You are offering me terms. I'm off

you're offering to loan. I'm offering to

borrow. We create a piece of software.

It runs

every day. every minute, every second.

Robert, what if you had 10 Bitcoin and I

scanned everybody, a 100red million

people? What if I scanned them today and

I found someone want to pay you 8%

interest with a a loan to value of 10%

and you could market the market every

minute? Good deal. Maybe, maybe good

deal. Maybe you don't want to loan it,

but if you did,

what if I went through all 100 million

of them and I found someone that needed

the money real badly and would pay you

27% interest? Smart.

Smart. What if I actually ran the

algorithm every hour?

What if I ran the algorithm every

second?

What if I, you know, what if I just, by

the way, what if someone wants to borrow

the money for a year and they'll pay you

um they'll pay you 10%. And what if they

want to borrow for 30 years and they'll

pay you 15%. And what if they want to

borrow it for one year and they'll pay

you 5%. What if they want to borrow it

overnight and they'll pay you x%. You

could generate the yield curve with a

piece of software and then that software

will connect all of the all of the

lenders with all of the borrowers

on a server. It could be a centralized

server,

right?

You don't the logic doesn't have to be

decentralized. In fact, a centralized

server runs a billion times faster,

right, than a proofof work network. So,

it's likely that the logic will be

smart. And that's an idea. I mean,

another idea is put the intelligence on

your iPhone

and be able to talk to your iPhone and

and when I talk to my iPhone, I can tell

it to chop my money into 37 pieces and

send it off, you know, send my money to

my daughter and and let her spend it on

ice cream, but not on

Uber rides because I don't want her

running off with her boyfriend somewhere

or something, right? So, I can I can

condition the money using all manner of

software, and I can I can turn on

servers that will move my money around

while I'm sleeping. And I can turn on

clients that will handle my money. And

of course,

if I walked into a gold I walked into

your bedroom and I picked up a gold bar

and I walked out with it, the bar's not

going to complain. It's a dumb rock.

On the other hand, if I took your

Bitcoin and I wrapped your multifactor

authentication around it and your retina

scan and your voice scan, I could

geoence it, you know, and I could say,

well, you know, nobody can can uh move a

mobile device with this Bitcoin key

outside of, you know, 100 meters of

where Robert lives, right? You could you

could do all sorts of magical crazy

things

uh with software. that you can't do in

mechanics, machines and so so gold is in

essence mechanical and Bitcoin is

virtual and of course it's tokenized and

and that means it can get as smart as

the computer can get smart and

eventually the computers can talk to

other computers and that opens up all

sorts of applications like credit

ratings, authenticity, insurance, you

know you could you could you can maybe I

want to buy insurance for you, but I

want you to pledge the full value of my

house, and I want to know that you have

the proof of the reserves to pay off the

insurance. Right? So, you could create

very interesting pieces of software with

less risk or more transparency and more

speed.

We know it doesn't work with gold. It

doesn't work with tokenized gold because

you've got the counterparty risk and you

don't know whether the tokens actually

are backed by real gold. It doesn't

really work with with other tokenized

assets because stocks, bonds, they move

too slow and there's no API

between the bonds and the tokens. And if

there was an API, you end up with

regulatory compliance issues and you're

not delivering the physical instrument

ever. And um so that's just not likely

to happen. So when we think about

Sorry, just one thing. If

it seems to me the general theme is

we're we're betting on dynamism over the

static state, right? Like the reason

human beings can overcome the mountain

is because we have time and dynamism on

our side and the mountain static. It's

not responding

nitroglycer

literally we can blow through the

mountain by by unchaining chemical

energy. And the mountain is not um

mounting a defense of any kind. It's not

adapting. It's not changing. And um I

wonder if it so today to kind of change

domains a little bit, the US Treasury is

considered the risk-free rate in the

world, right? Um being that it bears low

to no interest, but it assumably has no

risk of default or the lowest risk of

default.

As you see us moving into more of a

Bitcoin denominated world, there have

been talks of uh a risk-free rate for

Bitcoin developing on the lightning

network such that you would you would f

fund these lightning channels in time

locked contracts that the market would

determine anywhere from a minute to 30

years and that some it would bear some

interest rate. Do you think that's the

direction the risk-free rate goes? Is

that how we develop a Bitcoin yield

curve or how do you see that evolving?

Yeah, I think I think on a on a chain

like lightning above the base chain,

it'll either be but you could do it with

a centralized or a decentralized

solution, right? So, lightning is one

solution, but but uh you could uh you

could do it on any exchange too if they

chose to do it, right? Um it there's a

lot of ways to solve the problem. The

key uh the key idea is to create a free

market yield curve.

Rational people right of their own

volition

would never willingly loan you for 30

years for 1.4% interest. There is there

is no person that would think that's a

good idea to do it. And if in a in a

free market, you would expect that you

would see,

you know, 30-year rates would definitely

be north of 10-year rates and north of

one year rates, but you would see things

like 3 4% short-term, five, 6% 10year,

8% long-term rates if by risk-free

rates. And that's what they used to be.

I mean, uh, when Vulkar finished

his work and he kind of like reset

everything for a while, the the

conventional wisdom back in the 80s was

um the long-term uh risk-free rate was

about seven or eight% and then the and

then the risk premium was 4%. And so the

cost of capital was about 12% on making

um an investment and that's how they

came at it. And and the interest rates

typically

mirror that and you could get a savings

account for 5%. Four four percent 5% and

so it's like anywhere from four to

eight% on the on the yield curve. It was

it's it's only you know state

intervention that will deflect it below

that. Right.

Um, we we could talk about that when we

get to interest, but uh that's my

thinking on that. Uh, with regard to um

to Bitcoin as an asset, right? We talked

about why it's harder and why it's

smarter because you could program it,

but it's also stronger. And the stronger

is is an important thing, right? Strong

is about channeling energy with force

and acceleration. I walk into the ring,

we're gonna fight. If I if I'm if I

punch slowly, I could be strong, but if

I'm slow, I don't win. The fighters that

win have explosive force,

right?

Like if I you could be stronger than me,

but if I can strike you before you

strike me, I can knock you out,

And so it's all about how explosively

you can channel that energy. And that's

what an arrow is, or a sling, or a

bullet. It's,

you know, it's not the guy that's the

biggest, strongest, fastest that wins.

It's the guy that that puts a bullet in

your head first that wins.

And so we know that in military combat,