239. Michael Saylor's 4 years of bitcoin

Michael welcome to the Bitcoin standup

podcast happy to be here thanks for

having me the pleasure is all mine it's

always great to have you here and this

time it's a bit of a special occasion

you've just completed your first Bitcoin

cycle you've done four years in

Bitcoin so you've gone through an entire

having cycle 210,000 blocks kind of like

the um initiation right of being a

bitcoiner you didn't sell and you didn't

Rage Quit which

is an incredible achievement because the

mass majority of people don't make it

that long so

congratulations yeah I feel like I I

graduated from Bitcoin

University started August 10th 2020 just

kind of finished my senior

year I'm not quite sure does this mean

my uh my first year in the workforce or

is this my first year in grad

school well I mean depends on what you

want to do and I think it's working on

my math master's degree maybe no I think

I think you're pretty much ready up for

the real

world so uh any

regrets that's worked out fine I would

say right no it's been fun so I was uh

running some numbers before we um went

on and I looked at the market cap for

micro strategy and it is today around

$25 billion and on August 10 before you

got into Bitcoin it was at $1.2 billion

dollar so you've

done yourself a nice 20x with change on

the value of your company over the last

four years and you've outperformed every

single company in the S&P 500 right or I

guess some some days Nvidia will

overtake you on the four-year basis

sometimes they might but you're in that

league right yeah actually I I have a

little chart here I I try to keep so

yeah you want to share it well why don't

I just tell you right I've got it in

front of me uh micro strategies up

964 since August 10th 2020 Nvidia is up

94% so we're we're still uh

outperforming all of the 500 S&P Nvidia

is the number one performer in the SNP

bitcoin's up 387

per. Microsoft Tesla Google they're up

all up like a 100 perish

um and uh we uh I keep track of all the

all the V various asset classes since we

got into this and that's also very

interesting uh the S&P is up 66% so

Bitcoin is like 6X Bitcoin is

360 uh

388 versus S&P

66 and uh Gold's up

25% and silver is up 3% and bonds are

down 16 % yeah yeah so the interesting

thing of course is no one would have

thought that no one would have thought

that micro strategy could outperform all

500 members of the S&P 500 I didn't even

think that in fact we didn't even

realize that that snuck up on us it did

but our Benchmark wasn't that our

Benchmark was Bitcoin right so we were

actually just trying to keep up with

Bitcoin so I think you could have

guessed that Bitcoin would actually

outperform the

SNP and our initial goal was how do we

get to the point where our company's

market cap tracks bitcoin's market cap

but you know along the way we levered

the company and and you know the only

way to beat Bitcoin is more Bitcoin and

right and so so and that's why every

time

people people offer you they pit you all

these business ideas right they're like

well do you want to invest in this

business or that business or do you want

to invest in this real estate and I say

well you know bitcoin's up like you know

46% ARR every year for the past four

years so and and that varies but

anywhere from 45 to 55% is the AR for

Bitcoin so I think okay so 50% is my

risk-free return so are you going to

give me a proposition which is risk-free

better than

50% you know I'm like and of course no

one's got a proposition that's risk-free

better than 50% so so then the question

says well how the heck are you going to

beat better than Bitcoin and the answer

is the only good idea is borrow a bunch

of money for 5% and buy Bitcoin with it

right if you can borrow money for 0o

perc or one or five or 10% and you're

buying

Bitcoin and it's returning 40 or 50%

then that's a good idea so I think

Bitcoin is a good idea I think uh

different ways to securitize or lever

Bitcoin some are bad ideas like for

example trading 20x leverage on binance

on Saturday night that's not a good idea

trading on FTX you know on the crypto

exchanges with like Mark to Market

massive Leverage is not a good idea but

uh you know if you can take a 30-year

mortgage at 3% interest and buy Bitcoin

with it and that's a good idea and you

know and maybe you remember you liveed

through the many epics the last epic is

a about a 45 to 50% ARR the previous

ones were higher and I think it's the

law of large numbers says that as

Bitcoin approaches the market cap of the

S&P index or the market cap of all the

equities in the world it'll start to

approach an ARR and a volatility which

is lower I I I don't think it'll ever

get to the performance of S&P I think

it'll always be better than the S&P

index and I think like right now the

ratio is like 46% for Bitcoin versus 12

or 13% for the S&P so it's like three

and a half X performance and it's like

two and a half Vol so the sharp ratio is

higher right there's a higher sharp

ratio of the S&P the performance is much

higher and I just believe over time

Bitcoin will converge toward the S&P

times two and the and you know 50% more

volatility than the S&P and two times

performance or or if the S&P you know

gives you 12% a year then Bitcoin ought

to be

20% a

year and so so that being the case we

did this Bitcoin 24 model and the 24

model is a 21-year

model and uh my base case is 29% AR for

the next 21 years and a 29% AR you end

up hitting $13 million of Bitcoin in 21

years so that being the case coming back

to every pitch I get okay well you have

a pitch can you guarantee me

29% ARR

risk-free or and another way to say it

is that's the risk-free rate so can you

give me 39% with no additional Capital

required for the next 21 years and if

so it's still not a good idea because

it's a distraction right right it's

still a distraction I'm taking risk but

it's it's may be an interesting idea but

of course as soon as you set that as the

cost of capital 29%

risk-free I mean the risk-free Fiat rate

right now is 5% right or actually after

tax really the risk-free rate has got to

be the after tax bond yield so maybe

it's 3% so it's 3% if you think

conventionally in Fiat terms

terms but if you're thinking Bitcoin

terms it's 29% for me you can have a

different

forecast but it's very it's very

clarifying right because as soon as you

actually set that you think well there's

really nothing that interesting to me

other than what's interesting is

companies that can raise Capital to buy

Bitcoin and and intelligent leverage

ideas like raise a billion dollars for

0% and buy Bitcoin with it for seven

years like those ideas are interesting

to me but there has to be Bitcoin on one

side of the idea and the other side of

the idea needs to be an Arbitrage of the

extremely cheap Fiat uh interest rates

yeah so I think um I I saw that

presentation it was very interesting and

I wanted to discuss it with you so I got

um I got the slides here uploaded Let's

uh let's share them oh yeah there it is

all this is from uh Nashville

yep the one from Nashville so this is

the forecast that you made yeah so here

you're saying the bare case is Bitcoin

at uh it's making about 21% annual

return rate base case is 29% and bull

case is

37% but in context this isn't I think

it's worth mentioning here that this is

compared to a world in which yeah so

these other assets are also making rates

of return so Bitcoin is at 29% but gold

is at 5% art is at 9 Equity is at 10 and

real estate is at seven bonds are at

five and money is at seven so I found

this really interesting and I sat and I

ran a bunch of numbers and I um thought

about it a lot I think it's a very

interesting way of thinking of Bitcoin

because you're projecting different

appreciation rates where Bitcoin

continues and now this gives you a sense

of what the scenarios are going to be

depending on what happens to the Bitcoin

price and all these other things

but I think the way that I thought might

be more useful to think of this is to

compare Bitcoin only to bonds and money

rather than these other things because

these things you would expect that in

the long term as you say as Bitcoin

becomes more useful as a medium of

exchange and as a store of value people

are going to get rid of their um of the

gold art equity and real estate that

they hold as a method of Saving right

first of all this is this Bitcoin 24

model we put in the open we open source

it it's in the public domain so if you

just Google Bitcoin 24 you'll find the

GitHub when you go to the GitHub you can

download that spreadsheet that

spreadsheet has a macro model a Bitcoin

model and a bunch of micro models for

corporations individuals institutions

and Nations states in the model

everything's annotated all of the

assumptions are there and you can change

the assumptions and and in this

particular case there are assumptions

about the inflation rate macro inflation

rate over the 21 years there are

assumptions about the Innovation rate

and then there are assumptions about the

monetization or the demonetization of

various asset classes and if you look at

that slide what you can see is we're

assuming a progressive demonetization of

gold yep you know and uh a

demonetization of bonds and to a certain

degree money but you know we're assuming

that there that there's going to be

innovation and equities will benefit

from things like technology and AI like

for example if if all the cars in the

world drive

themsel or or you can manufacture

humanoid

robots then maybe you'll see companies

that have no employees but they sell

millions of human eyed robots made by

robots so the equity will be valuable so

so there's um there's some asset classes

that look like they'll grow that we

think will grow faster than others

and art you know like there's you know

you can you can look at that variety of

different ways maybe you think art will

be demonetized faster in which case you

would you go tweak that and that and in

this particular case this is showing it

creeping at 9% but you could view art as

gold and decide it's only going to creep

at five or we just figured art would be

better marketed and it's prettier than

gold over time uh we're thinking but uh

anybody can go in a adjust these things

and make their own assumptions about

what'll happen and then they can come up

with their own macro view of the world

that's what's cool about the model and I

would definitely encourage you safe to

grab the model look at the assumptions

tweak it and come up with your own

Bitcoin View and your own macro view

because I think when you start to ask

the question how does Equity sit with

real estate sit with bonds sit with

currencies and art and gold as a

long-term store of value that's very

interesting I mean I think you you've

encouraged all of us to think that way

and you know I just see the world is

there's a bunch of assets that have

utility value and then there and then

there's assets that are primarily store

of value and and if you think about the

the portion of uh you know our our

long-term capital our store of value

clearly that ought to be moving toward

Bitcoin uh much faster and then you know

everyone's going to want to have their

place to live and and things that they

like that they brag about their their

trophy assets I my my self-image is I

own the football team right and so some

people will pay a lot of money because

the idea being the owner of the New

England Patriots is worth billions of

dollars to them if they're a citizen of

Boston or something so there'll be

things like that but ultimately quckly

Bitcoin is global capital and it's the

it's the best asset so we think it'll

grow the fastest and that model my base

case there is 0.1% of the wealth in the

world growing to 7% of the wealth in the

world but but go ahead from there you

know with the caveat that you're working

with my base case and you can have your

own it's it's everybody can have their

own assumptions uh what are your

thoughts yes so I actually did exactly

what you said which is take these

numbers and look at them and try and run

them myself and

I

think so It's Tricky I think the tricky

part about thinking about these numbers

is to think about how the change in the

value of the money supply is

um reflects on the change in the growth

rate for the money so you put a 70 7%

annual rate of return on money which Su

which suggests that the value of money

increases at 7% but in reality well

value is a funny word exactly that's the

the tricky part we're just cranking in

the monetary inflation rate for the past

100 years which is your your number

right so in US dollar terms right so an

an average increase in the US dollar

money supply of about 7% is the base

case yeah but the the value of the money

isn't going up the value of the money is

flat right I mean and right we've

already established that right that

things well but that's the tricky part

because it's not exactly staying flat it

could go up or it could go down so the

supply so it's in a sense it's a little

bit like you're comparing apples and

oranges when you're looking at Bitcoin

up 29% which means up 29% in terms of

dollars okay but then what is the dollar

up in terms of so I thought the way that

I would formulate this in order to uh oh

yeah you can we've got you can actually

calculate real as opposed to nominal and

the problem with real is again the price

of every single thing in the economy is

changing in a different

rate yeah but so yeah this is obviously

it's a it's just a nominal number over

time and we're just cranking in a 7%

increase in the currency slash what you

know Fiat money supply as the base case

if it was you know Turkish ler or

Argentine peso or something and you

cranked in 14% or 21% you're G to have

massively

larger numbers but of course there's no

point in that because the world Reserve

currency is the dollar so yeah we're

coming back to the US dollar base rate

but but and we didn't build it to

forecast currencies versus currencies

right they're all just thrown into that

bucket called money yeah I thought one

way to uh get around this is to think of

the Bitcoin annual rate of return as

being opposed to a bare case a basic

case where bonds and money at set at

zero so that way we're just thinking

about the growth in the market cap of

Bitcoin in terms of bonds and money

because that's really in my opinion what

Bitcoin is up against whereas the others

I think would well we we disagree with

that like I don't agree with that at all

right in fact I think the Bitcoin is not

up against that I think the Bitcoin is

competing with all

assets it's clearly demonetizing gold

it's also an alternative to real estate

it's also an alternative to equity go

gold is a rounding error next to um

money and bonds you're talking about 400

gold is a rounding area compared to

bitcoin is 10x bigger than Bitcoin yeah

but you know I like to say gold is the

appetizer Fiat and bonds are the uh main

course real estate and AR you have an

opinion I just disagree with your

opinion I I just think you're

characterizing this very narrowly there

are a lot of people that are going to

buy a Bitcoin instead of buying a second

apartment as a rental investment

property right and you you want to

dismiss that as as relevant but it isn't

irrelevant right no it is relevant I

think fact is everybody has to make to

they have to decide how they're going to

allocate their wealth across all these

assets and there are some people that

that make a lot of money and they buy

one house a second a third I know people

that buy 27 houses okay I I know them

like l i the term land banking has been

around for 30 years as long as I can

remember people just take money that

they made in their random investment

banker job and they buy real estate just

to bank the money right

so it's this is not this is not Bitcoin

is not just a competition against

currency and you can argue for for

example in the United States it's

absolutely not a competition against

currency in the United States people

people aren't buying Bitcoin in lie of

holding dollars there's no one with

capital to invest that hasn't invested

in dollars I mean every investor in the

world has their Capital invested in the

stock market primarily in equity or real

estate right otherwise some people might

be invested shortterm for bonds but but

wealthy people in Europe and the United

States aren't choosing between moving

from US dollar to bitcoin right they're

choosing to uh not buy a building or not

buy land or to sell their Invidia stock

to buy Bitcoin so so those those

comparisons really are pretty important

to people in the western world yeah and

I if you see I think you can see my

screen right so if you see here scenario

too this is the one that I was referring

to where I said bonds and money gave

them an AR of zero so that they're the

they're the metric that we're measuring

against so how much is Bitcoin going to

grow on top of the real uh growth or

shrinkage in the mon money and bond

markets and then we give gold art equity

and and real estate negative AR RS which

is in my opinion not for the assets

themselves Equity Market isn't going to

go to zero but I think people using

Equity or art or gold for the sake of

saving is what's going to Trend towards

zero in the sense that yeah all of these

people you talk about who do land

banking are going to over time realize

that Bitcoin is better and you'd expect

Bitcoin to decrease and then land

markets are going to be for buying land

if you need the land you buy the land if

you need a way to store wealth to give

to your kids you just buy Bitcoin so if

you if you run these numbers I found

that it is actually at exactly 29% the

same number you gave as the base case if

we give Bitcoin a 29% and give bonds and

money zero in your case you

gave bonds a u slightly less 5% I think

so it was less than Bitcoin and you gave

money a 7% but if we give them zero and

we give Bitcoin 29 then we give gold

minus one art minus one Equity minus one

and real estate minus 4 because that's a

lot bigger um it it has a lot higher to

fall so if you do this by the end of the

21 years we'll see this is the point at

29.2% is the point at which Bitcoin

becomes bigger than bonds and theat

money and at that point it's uh also you

know the other things gold art Equity

Real Estate they lose their monetary

premium at least most of their monetary

premium they're held for their utility

or for their return not as a form of

saving so at this point Bitcoin would be

about 260 compared to Fiat and bonds of

140 and 120 which is where they are

right now so this is not I wouldn't say

this 26 I wouldn't measure it in terms

of trillions or billions I think it's

more useful to just think about it in

terms of the change from now until then

what do you think of

that I'm not quite sure I'm following

what what's the point of this because in

21 years you know yeah I'm not quite I

don't even think your your units aren't

nominal your units are real so I guess

you're you're calculating

something I well I don't get it so I

don't have a reaction because I don't

understand what you're trying to say

what I'm trying to say is that we're not

we're not measuring them in terms of

dollars today or tomorrow we're

measuring them just in terms of U ratios

to one another so at this point Point

bonds uh bonds and money if you add them

together are worth as much as uh Bitcoin

so imagine a world in which if we' have

29% outperformance of Bitcoin

outperforming bonds and money by 29%

which so far has been doing more than

that because so far bonds are down over

the last two three four years five years

and bitcoin's massively up so it's been

at least double 29% but if it keeps

carrying this on for another 21 years

then at 2045 Bitcoin is bigger than

bonds and money at 29% of growth well

again I I would I would encourage you to

to actually take the Bitcoin 24 model

find a way to crank your assumptions in

and spit out the nominal map or the heat

map of the asset distribution in the

year 2045 and show that versus the one

that we've created because you you want

to go back to the one that we have in

our base case or yeah but I mean yeah

here it is you can debate it one way or

the other but but here in this base case

we're assuming that even if Bitcoin

grows a 29% AR and that's a nominal AR

right then bonds are actually going to

be a larger asset class than Bitcoin in

the year 20

45 and you know you so and Equity will

be a larger asset class and real estate

will be a larger asset class so we're

only forecasting in this base case that

Bitcoin would be much larger than gold

we're not for forecasting it would be

larger than the class of all equities or

the class of all

bonds I did it I made Michael Sor sound

bearish on bitcoin next to

me yeah so I don't really know if you

want to generate your own forecast it

has to be a nominal terms in the year

2045 then we can com compare it to this

one and talk about the difference but I

mean that the whole point of that model

is everybody can crank in their own

assumptions and spit out a result in

nominal terms over the next 21 years and

it gives you charts and it gives you the

heat maps and you can decide I mean it

seems to me I I think that the S&P index

and and that Equity indexes will

continue to appreciate and and I I think

if you look back you know uh the money

supply versus the S&P has been pretty

correlated so if the M2 money supply

expands at 7% I would expect that Equity

will track that and here this is a bit

bullish there's an assumption here that

Equity will outperform the money supply

but you can come up with a bearish

assumption where Equity underperforms

the money

supply I mean clearly this this chart is

is we're a bit bearish on bonds bonds is

bonds aren't growing as fast as an asset

class real estate is tracking Equity

we're kind of bullish on Art we're a

little bit bullish on maybe we shouldn't

be and then gold were very bearish on

and Bitcoin were you know triple bullish

on so that's what this assumption is I

don't think the bonds are going away

safe I don't I mean I think that I don't

really think I don't I think as long as

we have nation states and we have cities

and states they're going to borrow money

and they're going to keep expanding the

sovereign debt you know and I think

there'll be corporate bonds as well so

I'm not I don't think they go away and I

I don't think equities go away unless

we've Lurch into a socialist more

communist

type State I think I think the argument

in favor of equity values going away is

you have to basically argue that the

state will move to expropriate regulate

and tax out of existence the equity

values and they could so this this is

kind of a bullish on capitalism right

this forecast like like companies invent

stuff and they're able to keep their

earnings right so this is a it's a

fairly bullish on creativity

very optimistic about Technology

Innovation optimistic about capitalism

optimistic about

transformation pessimistic about the

opportunities for gold I don't you know

Art's a small thing I don't really know

one way or the other but at the end of

the day it doesn't really matter that

much given the fact that my advice if

you're a Bitcoin maximalist or a

bitcoiner is you shouldn't be investing

in anything other than Bitcoin

right

like right I mean bit Bitcoin is you've

got an answer there's one winner

everybody else is a

loser right and so the question is are

they going to lose big or lose small and

if you came to me and said oh I'm I'm

gonna find a a strategy to short the

bond market I would say I don't suggest

that either you might lose your shirt so

I I don't know how to short or I don't

know it's very wise to be shorting most

of these things well I mean buying

Bitcoin effectively is shorting them in

a way yeah the takeaway from this is

that Bitcoin can win and and the world

doesn't necessarily have to turn upside

down right but when Bitcoin is the

global monetary asset or the global

monetary index it still may not be as

big as Equity Capital it's just going to

become much much more material than gold

and much more useful than gold and you

know the dynamic between all the rest is

it's a function of you know uh are

states running deficits or not and how

do they handle their issues and and this

is a this is an optimistic forecast if

you you know if you come up with a p a

pessimistic forecast is is the only

thing that's left is Bitcoin right like

for example if I have a pessimistic view

of a of a nation state the the stock

market collapses and the equity goes to

zero and the currency collapses and the

money supply is not worth anything

thing right and and um maybe the real

estate isn't worth that much because the

rents aren't worth that much but the

challenge is it's I mean it's easy to

forecast that for Venezuela or Cuba or

North Korea or Nigeria right you can

forecast it for a small developing

country that's either poorly run

mismanaged or communist or you know or

dysfunctional with hyperinflation or a

war zone it's hard to forecast that for

the entire

world right if the entire world you know

imagine a a forecast where all the

currency of the world goes to zero and

all the companies go to zero well that's

a that's a big problem so so I I'm I'm

not thinking that and this is just a

global macro model it's not a micro

model so in the global macro model the

assumption is the world government works

you know all these governments work

through a bunch of issues and they try

to they eventually figure out how to not

make things much worse and then and then

technology advances and we get humanoid

robots and we get AIS that actually do

useful thinking and then we figure out

how to you know unleash you know the

power of a hundred million AI to make

the world a better place and there'll

probably be companies that make a

fortune the next Facebook the next

Google the next whatever and their

Equity market caps will be quite High

and uh meanwhile Capital will be created

by human productivity and a lot of that

Capital will flow into Bitcoin because

that because bitcoin's digital Capital

some of that Capital will flow into real

estate and Equity I mean companies are

going to over capitalize like when um if

Apple makes $500 billion dollar in

selling the iPhone and then they pour

the 500 billion back into buying their

own stock

right there they're kind of they're

they're they're kind of supporting uh

apple as a long-term store value Capital

asset by pouring their 500 billion into

Apple stock so I I mean I think we'll

see that now that that the the

conventional view of capital is I pour

all of my cash flows into buying my own

stock back and that's what met is doing

right now and that's what Apple's doing

right now and other companies do some of

that

the the unconventional view is I take my

cash flows and I buy

Bitcoin right and so if the world goes

completely rational

digital then we will demonetize equities

faster right like and and if the world

stays very

conventional we will um continue to

monetize equities and real estate to a

greater degree right and and and

sovereign debt and and bonds right I I

think sovereign debt real estate and

Equity are conventional Capital assets

for corporations and big institutions

and the like and Bitcoin is the is the

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now and the interesting question right

is at what rate does Google decide that

they're gonna start to buy Bitcoin with

cash flow instead of buying treasury

bills with cash flow you know and and

and or you know if I generate a billion

dollars a month and I'm a big tech

company I can buy treasury bills

probably US Treasury

short-dated or I can buy my stock

back or I can buy

Bitcoin and as a practical matter I

don't really think there's that much

else you could do oh you could dividend

out your cash flow right and so I mean

those are really your choices uh for the

most part and that's what that's what

the big tech companies do so the

interesting question is at what rate do

I go from uh buying my stock back where

I'm basically capitalizing My

Equity or do I buy the treasury bill

which is capitalizing sovereign debt or

do I go to buy Bitcoin which is digital

Capital capitalizing in

Bitcoin and that's a a regulatory issue

and that to a certain degree and that's

also an issue of corporate finance

Doctrine like when will Business Schools

start to teach

CFOs that they should take all of their

cash flows and buy Bitcoin with them or

half their cash flows and buy Bitcoin

with

them and uh if that

changes then Bitcoin monetizes much

faster and if we're you know if we're

traditionalists right like uh right now

um the big bulge bracket Banks they

can't custody Bitcoin buy Bitcoin or

sell Bitcoin so that's a huge impediment

to Microsoft Google Apple Amazon

adopting Bitcoin as their Capital asset

right they're probably you're not going

to see Mega conservative Corps do that

until they can wire a billion dollars a

month to city or Bank of America or JP

Morgan and uh and just have it converted

and held in a capital account so when

that happens when Sab 121 gets repealed

or when there's a

when there's support for banking Bitcoin

in the traditional banking system I

think that

accelerates the um uh the

monetization of uh Bitcoin and it

accelerates the

demonetization of equity and debt but

you know so you can fixate on saying oh

well that's this is all just about you

know using Bitcoin instead of instead of

sovereign debt as Capital asset but you

could but but I could argue that right

now Microsoft Apple Google and meta have

already decided they're not using

sovereign debt as a capital asset right

they decided 20 30 years ago that debt

is a bad Capital asset so they're really

monetizing their own

Equity but either by buying their Equity

back or they're overpaying for other

equities when they when they do these

mergers and

Acquisitions if you're a a CEO and

you've got a lot of cash you either got

to go buy other companies and they and

they overpay 90% of Acquisitions are

they overpay and they're deluded right

so so we're in a way we're monetizing

private Equity or monetizing all sorts

of other Equity or we're monetizing

public

equity and if I didn't have

to if I didn't I think meta is going to

do a 55 billion share buyback

well what if I bought 55 billion of

Bitcoin instead of 55 billion of my own

stock right you yeah by the way and

here's an interesting one the stock

becomes a derivative of the Bitcoin if I

capitalize on the Bitcoin so if you're

doing this macro model you're you could

say well that means that you know the 55

billion goes to bitcoin and it goes away

from meta but it's not quite because if

meta buys Bitcoin then the market cap of

meta probably increases by $200 billion

and so the

equity gets larger and then if you

really sophisticated you would be saying

what percentage of the equity is backed

by the Bitcoin in that model which we

haven't worked through that second order

issue right but you could imagine like a

rational world is Amazon Microsoft meta

Apple they all buy Bitcoin with their

cash flows

I mean Apple would be worth an extra

trillion dollars right if if Apple

basically started buying 20 30 billion

dollars a year of Bitcoin you know they

spent 500 billion on their stock where

would Apple be if they bought 500

billion worth of bitcoin right now I

mean granted it was over a 10y year time

period but but if you look at that right

H how do you increase the market cap of

Apple or meta by a trillion and the

answer is you start to take your cash

flows in your Treasury and then you buy

a capital asset that's plus 40% a year

instead of one that's minus 4% a year

and when that

happens you can see in our macro model

the equity Market's going to look good

right that's going to put a boost in the

S&P and the NASDAQ and the Magnificent

Seven so it's not you know I I guess my

point is I don't want to be a Doomer

like Bitcoin good everything else bad

because the truth is you could say

Bitcoin good equity bad and bonds bad

but if I actually back the bonds with

Bitcoin and if I back the currency with

Bitcoin and if I back the equity of

Bitcoin then they're all going up right

so so it's it's like just Bitcoin better

and everything else is actually going to

grow and and that's the argument for

Bitcoin just makes the world a better

place right it's the constructive

cheerful Progressive grow out of your

own problems with a good technology

you know um Vision as opposed to you

know this nation is going to melt down

its currency and its banks are going to

melt down and and we're all just going

to jump on a Lifeboat so I I don't think

that is the case and in the Fiat stand

discussed this in detail and I think

it's I don't see it as necessarily

having to be something that is uh

disastrous because I just think as you

described um people are just going to

start holding more and more Bitcoin now

I mean you're the one who said it's

going up forever going up forever means

eventually it's going to reach a point

at which it's going to be uh larger than

pretty much everything it's just going

to keep going up yeah so so this is if

you see here in the yellow these are

your projections but then I think the

comparison is in terms of percentages in

your in your projection Bitcoin is

remains at around 7% of global assets

and money and bonds are uh 12 and 21% in

real terms so here are three different

scenarios that I put up which I thought

would be uh interesting so in the first

scenario Bitcoin goes up 25 and um art

gold real estate go down and Equity go

down minus one and minus four oh and and

to add I I changed a little bit the

starting points so in your case the

starting point uh for go for for

instance for Equity you had it at 115

because you counted all Equity markets I

counted only 20 because I think that's

roughly what's the monetary premium in

equity that's what you would expect to

go away you wouldn't expect Equity

markets to disappear you wouldn't expect

Art to disappear but you could say that

it could go down from uh that you could

say that from the $18 trillion do in art

today about five of them I think that's

conservative estimate but about five of

them are just monetary premium

everything else is people buying at 13

are people buying art because they like

it not because it's an

investment and then real estate we'll

drop it to 100 and then bonds at 130 40

and money at uh 120

now if you're thinking of it this way

then we get to a point with you know 25%

Bitcoin and the other assets shrink or

stay roughly constant then Bitcoin gets

to 30% of all assets in 2025 where Bond

while bonds are 34 and 17 but if we do

29% for Bitcoin then Bitcoin overtakes

bonds and money and if we did 35 then

it's triple as big as bonds and money in

uh

2045 so that's not entirely out of the

realm of possibility Bitcoin can do 35%

over the next 21 years and if it does

that it's a lot bigger than money and

bonds and that's not necessarily A Bad

Thing my question is if this happens

Bitcoin witnessing a a phase shift

Bitcoin is 62% of global money markets

or of store of value uh in the in the

world at that point you know a child

isn't just an adult isn't just a bigger

child there are fundamental functional

things that change and so when you go

from an asset that's $1 trillion doll or

less than 1% or less than a half percent

of global Capital markets to something

like 60% or 50% of the store of value

market in the world well that's going to

make you the most liquid asset so at

this point wouldn't you think that

that's going to undermine demand for

bonds and government money no I I I like

why would you lend money to bonds you

were just saying how Apple wouldn't lend

you wouldn't lend them well if everybody

figures this out and I think in 21 years

you know eventually I think they will in

21 years why would anybody want to lend

to a government and of course I am

biased here about bonds I don't think

it's going to be a doomsday scenario I

think it's going to be Utopia when we um

when we just start saving in something

other than government uh coupons I don't

think I don't buy into the notion that

everyone else must lose for us to win I

I just think I think that's that these

ideas that I gotta find the loser are

just not they're non-constructive and

pessimistic and cynical and I don't

think they're necessary so for

example like I think people like art I

think if the if if I think that uh the

currency Supply will keep expanding it's

been expanding at 7% I think it'll keep

expanding I think the value of art or

the price of art will go up right I I I

think that uh the price of real estate

will go up I think that uh I think the

people companies will keep getting

bigger so I think that uh governments

will continue to borrow money right and

I think that some governments will

succeed better than other governments

but as long as there are companies

they'll keep selling Equity okay they'll

sell Equity but I mean why bonds I think

Equity yeah it makes sense but why bonds

because I mean okay the the the value

proposition of bonds is that it you

don't you're not getting Equity risk

well Bitcoin doesn't have Equity risk

and it's a lot better yeah so the point

is that if Bitcoin goes up 29% a year

it's still only 7% of the world

Capital so it's like

uh that the fact that I own an expensive

apartment building in New York City

doesn't mean that the United States

government isn't going to borrow money

and it doesn't mean that no one's going

to loan the money to the US government

so it so I I I just don't follow I don't

follow you right you don't isn't a 21

year old going to borrow money to buy a

house I mean like what's B like if I'm a

21 year old and I want to buy a car and

all the money I'm gonna borrow money to

buy the car so so there you go there's a

piece of debt it's not going away if I'm

the city of New York and I want to build

a new tunnel I'm going to borrow money

to build the tunnel

right well but I mean the tunnel can be

built by private companies they can

borrow businesses can borrow Banks can

lend I

think private lending might continue and

a government lending I see as being the

real

potential thing that's going to be

disrupted here because the reason people

look for bonds as you said remember

earlier you said the risk-free rate as

people think of it in Fiat markets is

that it's buying the bonds and then the

return you get with bonds after tax

but if they figure out that that's not

risk-free and you know over the last

three years or so you lost something

like 30 40% um going into this risk-free

asset so if this keeps up and you know

you look at the fiscal situation it's

not looking very promising whether it's

in the US or in other places so you

would expect continuous underperformance

for government debt and now you have an

alternative I think this is really the

incredible thing which is why it's

different from Real Estate in New York

because not everybody can buy real

estate in New York you have to have an

enormous amount of capital in connection

and understand how to run real estate in

New York and there's an enormous cost to

holding it and running it that's not the

case with Bitcoin with Bitcoin you just

need to understand how to hold your

private keys and then you can hold it so

why would you buy real estate in New

York unless you had a very good reason

to do it as an investment but not as a

store of value

okay again so you're free to disagree of

course people want to live in New York

so my my point is you're making this a a

a black and white people want to live in

New York so they're going to buy an

apartment in New York because they want

to go to New York and they don't want to

not live in New York they're going to

buy a house they're going to buy a yacht

they're going to buy a plane they're

going to buy a car they're going to buy

a share in stock of stock in a company

because they want to own the company

they're gonna buy a sports team because

they want to own the sports team they're

gonna buy a Picasso because they want to

own the Picasso so so the issue is those

assets aren't going away the only

they're going to buy a a you know a

ranch in Texas because they want to say

I own a ranch in Texas what's happening

is there's competition entering the

market and Bitcoin is a competitor for

that Capital so I think we could

probably just agree that Bitcoin

competes with uh it competes for Capital

and it's a good competitor and if I had

a

choice I would probably prefer to own

the Bitcoin if my primary goal is store

of value or long-term capital

preservation and that's just going to

drive down the price of the it's going

to make the building cheaper maybe it'll

make the sports team cheaper it'll make

the Picasso cheaper maybe uh in a bond

it'll make the bond cheaper which means

the interest rate will be driven up

right in in a competitive in a

competitive market where you have a free

market and no Capital

controls right then in that case take

example right when you have a weak

currency you have a high interest rate

you have to pay higher interest rates to

get Capital right if there's no Capital

controls so I think we could say that

Bitcoin is a competitor for Capital

against all these other assets so so if