The Bitcoin revolution & risks with Michael Saylor (Part Two)

MicroStrategy Executive Chairman and self-described Bitcoin maximalist Michael Sayler explains what it may take for more companies and governments to follow his Bitcoin adoption playbook.

If you want to see the people with all the money and the power in the world embrace the asset, they will do it when they're vendors support the asset.

And that's a rippling thing, right? Because until you have the fair accounting, people can't see how intelligent the idea is.

I want to talk about the Bitcoin revolution.

Sayler is Bitcoin's biggest advocate, but he wasn't always this way. In 2013, he tweeted that Bitcoin's days were numbered.

Now he's out there encouraging other companies to spend their cash on Bitcoin, holding a Bitcoin for corporations' event to share his strategy.

So Bitcoin, there is no second best.

And many are adopting it. This year, Bitcoin's total market surpassed $1 trillion US dollars, as institutions drove an inflection point.

To coming out party for Bitcoin, I think.

BlackRock, Vannek and other firms launched Bitcoin Exchange-Traded Funds in January this year, giving investors a means to get exposure to Bitcoin's price through the stock market.

You did not sell your Bitcoin.

So what does sayler think is Bitcoin's next big moment?

You are the biggest Bitcoin bull I think in the world, easily right now, but you are a bull among a lot of bees out there still.

It even took you, what, seven to eight years to convince yourself that Bitcoin was something that you should convert your own balanced Cheeto, and obviously now you're doing it.

But how do you convince others the big take players out there, the giants, me to Google, Microsoft, how do you get them to flip like Larry?

I think you have to make it easy, and you have to give people gateway products that they can use.

You have to give them Bitcoin with guardrails.

You have to give them domestic Bitcoin, not wild Bitcoin.

What is that? What's domestic Bitcoin versus wild Bitcoin? Is that like Ibit versus on market and cold storage?

You know, Rob Bitcoin is, you buy Bitcoin, you know, and your self-custody.

You know, and the next is you buy Bitcoin with a custodian.

But a simple domesticated Bitcoin is Ibit and FBTC.

I buy it through BlackRock, right, and that's a lot easier to handle.

Again, we're back to $900 trillion of capital.

Real estate investors, they want to buy something that looks like real estate, right?

And bond investors want to buy something that looks like a bond.

And preferred stock, once the buy something that looks like preferred stock.

And some people want half the upside as a capital gain, but they don't want the downside.

So they got to buy something like a convert and options traders, they want to trade options.

So when Bitcoin first came out, there were none of these things.

And then for a while there was an entire crypto economy that was created, offshore, you know,

to much colorful, drama and anxiety like the FTXs of the world, et cetera.

Well, those are unregulated crypto exchanges and conventional traditional regulated investors can't trade in that.

And it's probably good they didn't, right, because most of them failed.

So what we're watching right now since 2020 is the creation of the institutional vehicles in order to invest in Bitcoin.

And you know, I've got this saying, I say everybody's against Bitcoin before they're for it, right?

We're all against it until we're for it.

I was, you know, why are you against it?

It's like, well, why are you against electricity in 1880?

You know, I'm sure the first guy with fire, he's scared a bunch of other tribesmen and they're like, you know,

what happens to get too close to fire? It burns you.

No one wants to get burned, right? The, the idiom is no one wants to get burned.

And yet without fire, we're not better than the apes.

And then what happens when we play with electricity, we get shocked.

Who wants to get shocked? It's another idiom in the English language.

Shock is bad. And yet without electricity, like 90% of humanity's dead.

I love that the siren just went off in the background.

As you were talking about the, the shock.

It happens. And so new technologies are scary, right?

People thought that if you got an automobile in more than 10 miles an hour, it would suck the oxygen out of the cabin and you would suffocate.

It can't be better than a horse, right?

Yeah. So, so if you look at the great revolutions in energy, right?

Fire was extracting energy from matter.

You know, water was extracting energy from gravity.

Right? That's the big idea. There's gravity.

There's energy in this field. If I put water there in a water clock and it comes down here, I can turn a wheel with it.

Right? Big idea.

And then wind extracting energy from the atmosphere.

And then the steam engine is, let's, let's refine the entire idea and move the, you know, create an engine that takes that energy and spins something so that kids don't have to do it.

Right?

You know, the steam engine eliminates slavery. It's a pretty good idea. Right?

And then after that, you know, gasoline and internal combustion engines and then, you know, what follows?

Naxe nuclear reactors and electricity.

And each of these energy revolutions, it was a shocking scary paradigm shift and for 30 years people rejected it and they had good reason because their city burned down and their house burned down and they got electrocuted.

And my airplane fell out of the sky. Right? It's like the, and if you study James Watt, he spent his entire life trying to make the steam engine work.

Not easy, right? It's not easy. Bitcoin's digital energy.

Satoshi figured out a way to both transfer and store to basically store and channel energy through cyberspace without an intermediary.

That's a profound breakthrough because that means I can put a billion dollars in cyberspace.

I can move it 60 times a second. I can hold it for a million years.

And I'm not facing counterparty risks to a bank, a country, a currency, a corporation, right? A culture, you know, a commodity manufacturer.

So that's a profound idea. We're 15 years into the innovation. We're only four years into the, you know, to the crazy years.

And really January, 2024 was really the beginning of this error. Maybe this is year zero of institutional adoption.

And when we have regulatory acceptance bank acceptance and accounting acceptance of Bitcoin, those three planks, that's year one of adoption.

And when do you have that? Well, you kind of got 75% regulatory acceptance since we got these ETFs. Not all.

Most when we have Ibit trading on the options market, that's a big step forward. And when you can do in kind create and redemptions of the ETFs, you've got full regulatory acceptance of the asset.

Then January 2025, fair value accounting becomes the norm and maybe you got accounting acceptance. And now you can mark up and mark down the asset just like Apple stock or just like other assets.

And then when you have two big to fail banks, when you have the BNY melons of the world or the JP Morgan's of the world, the state streets of the world, they custody the Bitcoin or they buy and they sell and they hold the Bitcoin.

Yola banking acceptance and water banks banks are just institutions that are engineered to be custodians of financial assets.

So of course, the greatest custodians of assets in the world need to custody this asset. So we are right in the middle of that. And I think maybe 2025, you can call year one of the institutional error of digital capital, that thing which is Bitcoin.

I want to come to the banks because I'm very keen to talk to you about how you see banks as being key to unlocking that next phase. But just on this corporatization and even perhaps government adoption, what do you think is the fear other than just volatility? I mean, is it fear of completely disrupting economic theory and monetary policy? As we know, is that the fear that these corporates and that governments hold?

So I think the issue is not really with the asset class. I think any conservative or any traditional investor, if you're a high net worth individual, a family office, if you're a successful corporation, if you're an agency, a government or any political entity, and I introduce new technology.

I come to the government, I say, I get this electricity thing and you don't have any electricity in your building. Well, what they would do is go to their contractor. They've got some contractor that built the building. And they would say, can you back fit or rewire our building for electricity?

And the contractor said, no man, because my competitor just did it and they got shut down and bankrupted and my other person did it and the building burned down. So we're not going to do it for a while. We're afraid.

In that case, they wouldn't just embrace electricity immediately. The equivalent of the building contractor for Bitcoin would be the bank. So when your rich uncle gets asked about Bitcoin, he's like, well, I call my broker, I called my bank, JP Morgan, or I called the standard charter, or whatever. And they won't buy it for me yet. They say it's too risky. Well, I'm just going to hold off a bit.

So if you want, if you want to see the people with all the money and the power in the world embrace the asset, they will do it when they're vendors support the asset. And that's a rippling thing, right? Because until you have the fair accounting, people can't see how intelligent the idea is.

The difference between fair accounting and indefinite intangible accounting for a big company is under fair accounting, you would know within five seconds whether you had a good quarter. Oh, we made like $10 a share under indefinite account indefinite intangible accounting.

You would have to read 250 pages of documents and create your own proprietary models and spend somewhere between one in 10 hours to figure out how you feel about the quarter.

And even in it wouldn't be that succinct. Wouldn't this only give you like a figure? You know, the 70 year old billionaires isn't going to take 10 hours. They can't even read the document. Right? And so, you know, you could get all intellectual about this and say, oh, they've thought about it.

And they don't like this in this. And that's not the case. It's, if I call my broker and say buy $10 million of this and they say you sure boss click and it's done, then you start to see adoption.

And when the company that adopted it announces that just made twice as much in their earnings for the quarter as they used to because of it is like, well, then buy more of that stock.

And when the mayor of Miami or the mayor of New York City or the governor of Texas says to his treasurer, I think we ought to have some Bitcoin. The treasurer says, okay, no problem.

I'll let sit a group or bank of America or Morgan Stanley know and they'll do it. Click and it's done. Then you're adopting. But when the governor says the treasurer buy $10 billion and the treasurer says, there's not a single bank in the US that will sell that to us.

I guess we're too early. And it's the same thing with you putting an elevator into your house or electricity or how about running water?

Why didn't people put running water in their house in 1880? It's because it was like, you had to be rich and it was expensive and one in a hundred people had it and the guy that's building your house did not do it. He'd never done it before.

So these things get embraced as everybody in the society gets comfortable with the new technology. And generally it's like a 30 year generational shift, you know, and year one. No one's doing it.

You see those pictures of New York City in 1905. No cars, 1915. Everybody's got a car. You know, I was like, well, what did it take? You know, it took this exponential set of process and support for this to happen. And the same is going on with Bitcoin right now.

You mentioned yield. And Michael, every single time I do an episode on Bitcoin, my there's always somebody in the audience who says, yeah, but if I buy it, then I earn no yield on it. It's not a stock. I don't get paid a dividend quarterly. It's not a second property that I can rent out. It's not money in the bank that I can earn a savings yield on.

So we're if but I think from what you're saying, they're wean banks, whether it J.P. Morgan city start adopting it and allowing us to put out Bitcoin in the bank. I heard you speak about this. What happens there and how banks key to unlocking that next phase?

Yeah, let's say I give you 10 acres in Manhattan. There's the land. You buy the land. You can buy the land in 1700, 1800, 1900 to your 2000. Is it worth something? You know, would you sell it to me for a penny if you owned it? No, it's worth something, right? But there's no yield. It's raw land. There's no yield. We'll give it to me for a penny. There's no. No, it's like it's central park. But there's no yield. Right. Okay. So what's what's the point?

What's the solution to the problem? Well, you take the land and you put a company, a real estate developer and the company builds a building on the land or parking lot. Right. And then they rent it out and they generate the yield. And okay. So do I like that or not? Well, there's counterparty risk. I got I'm buying a security. I'm buying a reate. There's a company. The company might build a building that falls down. They might get a deadbeat.

You know, so the point is there's risk. So you want a reliable company that you trust too big to fail to take that risk and give you the yield. A bank. Well, no, micro strategies doing it right now. Right. Like we just discussed BTC yield. So micro strategy takes the Bitcoin and then we do something.

We actually find a way to to to take out a loan reinvest it and generate a BTC yield. And and the price you pay is you take a risk with a security called MSTR. Right. So banks do it a different way. I mean bank will take your asset. You have a billion dollars of something a billion dollars of Apple stock and they may loan it out to someone else and they may get paid a fee by the one person that wants to borrow it.

They might pass it on to you and they might not. Right. So so sometimes they do they'll definitely do it with your treasuries or with your cash. Sometimes they don't. It depends on how you are. I think the banking banking is just the next logical step.

But in terms of how am I going to get a yield on Bitcoin. I'm going to get a yield when a thousand companies in the Russell 2000 by Bitcoin operate their existing business sweep their cash loads into Bitcoin and do stuff with they develops business on top of it. Right. That's a way to get a yield. And I'll get a yield if too big to fail banks that are well capitalized.

Because they they start to accept Bitcoin as collateral and probably you don't get a huge yield. By the way if you think about the metaphors like when you own Apple stock.

It's you know oftentimes you don't get a yield by loaning your Apple stock. But big corporations do the big investors actually get paid a small interest rate when they own loan their stock to people that want a short sell the stock.

And so there is a market there for that. But more likely the next stage is a big bank accepts your Bitcoin collateral alongside your Apple and your Microsoft stock and your Treasury bills as collateral.

And they give you some advance ratio against it and then you can borrow it so for plus some spread against it because it's you know no worse collateral than Apple stock as a block is. And so you'll start to see the formation of credit markets around Bitcoin.

Well it's considered that within Bitcoin's characteristics and you've already spoken about Satoshi.

Let's go back to the beginning. The Bitcoin network was started by Satoshi Nakamoto on January 3rd 2009. That Genesis block included this message a headline from the Times quote Chancellor on

Brink of second bailout for banks. It was followed by this public forum post in February on 9 announcing a new peer to peer eCache system called Bitcoin to this day no one knows who Satoshi is.

But the network he heard all they built has been operating for 15 years and 289 days when we release this video with almost 100% reliability.

The network has gone down twice in its history in 2010 due to a bug in 2013 due to a fork in the chain both were fixed within hours Satoshi's creation wasn't the first attempt at a currency native to the internet but it's clearly the most successful due to its design that has no central point of failure.

From the beginning Satoshi didn't allocate any initial supply to themselves. For the first year and a half Bitcoin wasn't worth anything except the cost of running a computer to mine it.

To create Bitcoin miners are required to solve mathematical problems to add a block to the chain. That proof of work is then verified by all nodes on the network.

So that's why it's required to mine Bitcoin can change due to what called the difficulty adjustment and the reward earned by miners halves every four years meaning Bitcoin has a predictable decreasing inflation rate as it becomes more scarce over time.

Bitcoin's total supply is capped only 21 million Bitcoin can either be mined unlike fiat currency that can be printed by authorities.

At the time I was making this video Bitcoin supply was at 94.11% that's more than 19 million Bitcoin in existence.

The currency is fully decentralized meaning there's no authority or state that oversees it unlike the US dollar which is controlled by the federal reserve and is a system based entirely on trust.

But if sailor wants banks to hold Bitcoin does that put it at risk of becoming more centralized exactly what it's supporters wouldn't want it to be.

If there is more Bitcoin Bitcoin held with these third party custodians what risk does that pose having greater supply held by fewer large institutions.

Does that increase the risk of seizure and confiscation like we've seen with gold and is that not exactly what Bitcoin is don't want to happen.

No I think it's the opposite I think that when the Bitcoin is held by a bunch of crypto anarchists who aren't regulated entities who don't acknowledge government or don't acknowledge taxes or don't acknowledge reporting requirements.

It increases the risk of seizure if a country in desperation if China knew that there were underground crypto traders with billions of dollars of Bitcoin in their midst that didn't pay taxes the Chinese would probably try to shut that down and that's what they do.

So normally the risk is greater when there are unregulated private entities that are perceived to be holding the asset.

When you have regulated public entities like BlackRock and Fidelity and JP Morgan and State Street bank holding the asset well all the lawmakers and all the law enforcement arms they're invested in those entities.

So there's no way that all the senators and all the congressmen are going to seize the assets from Fidelity and BlackRock or Vanguard because that's where all their retirement money is invested.

So the asset moving from private to public hands and moving into regulated entities it does a bunch of things it decreases the volatility it decreases the risk of loss it decreases the like who do you trust more as a custodian FTX or Fidelity or Vanguard or State Street right.

And if you walk down the street and you said you know would you put all your families money in an offshore entity without a headquarters run by five dudes without an auditor or would you put it with a bank that's too big to fail in the US.

Right like at the end of the day you you have an OG crypto community is very hard core about it but if you look at where all the money is 99.9% of the money is actually in the traditional economy and in the war for the future of money the war is going to be won with money right.

Right at the end of the day Bitcoin is capital who's going to actually decide who's the winner of the loser the people with the capital and so where's the capital it's a Vanguard Fidelity State Street JP Morgan Morgan Stanley they're all regulated entities of sorts.

So when Bitcoin is held by those entities it becomes regular and normal and you know people would know more think about seizing that and they think about seizing a building in the middle of Manhattan or seizing you know the S you know the S&P spider assets is why why would you do that that's just the capital that you built the country on well if you ask why would you do that if you consider the great depression I mean people thought that they go with safe and banks until the executive.

So we're not entirely safe I mean I know that's kind of a wild thing to suggest may happen again but history does repeat itself so it was Bitcoin wouldn't be entirely safe it's absolutely safe.

People say that but mostly it's mostly it's paranoid crypto anarchist that say that okay because it's it's a it's a myth and a trope that goes on over and over again but first of all he didn't really see the goal people voluntarily turned in the goal.

They didn't go and kick in everybody's door arrest them shoot them and take their goal that never happened first of all second of all he didn't seize all the property he didn't go seize all the buildings owned by wealthy people in New York he didn't seize all the stock portfolios of wealthy people in New York right.

Gold was the monetary asset backing the dollar the dollar was literally twenty dollars you know to the ounce of gold right and so the problem was the country was on the gold standard and frank on dollar Roosevelt wanted to devalue the dollar he wanted to devalue the currency wanted to print more dollars.

And so they had to actually do something so they could devalue the dollar in the way they did it was put that executive order in place and then they re-value the dollar to thirty four dollars per ounce a devaluation and and now you have to ask yourself the question.

Is the United States on the Bitcoin standard.

Of course we will be said but the point but the point really is we're not right it's totally not a reasonable comparison frank on dollar Roosevelt didn't seize every car and every watch and you know and every piece of real estate and every piece of equity in the United States because we weren't on the equity standard of the property standard or the chicken in every pot standard or the grassy lawn standard.

We were on the gold standard and he wanted to devalue on the gold standard and so today we're not on the gold standard we're not on the Bitcoin standard the US government has no problem printing money they can print as much as they want and in fact every government on earth all of them they're either on their own standard or they're on the dollar standard.

So in this particular case I don't think we have to worry about you know Bitcoin held in custody being seized by the government any more than you have to worry about your Apple stock being seized by the government because the government doesn't need to devalue the dollar against Apple stock to print more dollars either.

So it's not really an issue it's oftentimes it's you know people have these inflammatory you know tropes or inflammatory memes that they they use and it's like I say that because I want you to give me your money okay like I want if you don't trust the bank then you'll buy my hardware wallet.

If you don't trust this government you'll move to my country and you'll buy a passport from me so if you don't trust that company you'll sell that stock and buy the other stock.

So there's a lot of a lot of this kind of of messaging and ideas that they're very inflammatory and they're meant to actually stampede people into some behavior whatever which is financially beneficial.

Like you can't make your own investment decisions investing is very hard you should give me your money I'll make the decisions for you I'm going to charge you 2% fee and 20% of the upside.

It's like well what should I do about hyper effect well you need to invest in a diversified portfolio of global alternative assets across 152 different asset classes and revalue every quarter.

Oh I can't do that okay that's okay give me your money girl I'll do it for you right that's the kind of fear mongering to get you to give me your money right and I use it to sell you a gun to sell you a hardware wall to sell you an account to sell you a financial advisor to sell you an insurance policy to sell you a you know fill in the blank right whatever it might be.

And ultimately I think that there's just a lot of fear that's unnecessary the bigger idea is Bitcoin is digital capital it's a million times smarter a million times faster a million times stronger a million times more elegant than analog capital physical capital and financial capital and it's simply a technology transformation.

It's like don't store it don't take 10,000 records and haul them around with you in 10,000 books whenever you travel take the iPad with 10,000 books on it and take the iPhone with 10 million songs on it when you travel right it's like blah blah blah but the phone will eat me and it's listening to me and it will steal my identity and kill me it's like it's just a computer with some digital files on it right and so that's that's the digital.

That's the digital transformation of capital and that's what Bitcoin represents so on digital money being tell me if this is a legitimate fear or not quantum computing it apparently is going to have the ability to solve multiple more complex mathematical mathematical equations all at once does that pose a legitimate risk to the Bitcoin network or are you confident that developers will come up with some kind of quantum resistance no it's just it's just another fear of mongering end of the world scam now.

I have a quantum resistant token and quantum computing is going to destroy your token so give me your billion dollars and give it to me and make me rich because maybe an asteroid will hit the earth I have an asteroid bunker give me your billion dollars and I will give you my asteroid bunker you're going to die of pneumonia give me your money and I'm going to give you a vaccine right.

You're going to you know it's just fear mongering quantum computing is a if you take the general theme is like oh computer is going to get better over time and as they get better maybe they'll get really good and they'll be able to hack systems and what's your response well I guess I just shouldn't use I shouldn't invest in Apple or Google or Facebook or I shouldn't have money in a bank and I shouldn't use a computer because computers might get hacked huh I guess I okay so give up everything in your life that has a computer.

Right including the the podcast you're running right now give it all up because one day quantum computers run by doctor evil will hack the thing.

Okay well I mean the answer is it's silly of course computers will get better and as the computers get better we will adopt the better computers to defend the network the Bitcoin network used to generate hashes a thousand joules per terrahash it took a thousand joules to generate a terrahash and then it was 500 and then it was 100.

And then it was 50 and then it was 30 and it's 15 and the next will be five and it'll be one and doesn't take a rocket scientist to figure out the computers get better some like conductors get better the network gets more secure.

It's like but but but but but what if someone invent something that's better than the better thing well well we spend 10 billion a year to keep upgrading our thing and you think the doctor evil like many me in the basement with no money is going to come up with the quantum computer that's going to be better.

Then the 10 billion dollars we spend for the last every year for last decade so yeah if a teenage kid with 50 bucks in a rubber band comes up with something better than a hundred billion dollars of semiconductor investment then in theory they could hack our network but why wouldn't she just hack acts and declare nuclear war on someone and like short the market and make 10 billion dollars by hacking the president's account because we go but.

I mean the point is it's all illegal but my point is it's a billion times easier to just hack the bank or hack the communication network and make money than it is to hack Bitcoin Bitcoin is the most cyber resistant the most powerful digital network on earth it's the hardest thing to hack.

So when someone pitches quantum computing it's normally it's a degenerate 20 something crypto trader that wants you to buy his yo yo quantum coin and make him rich because he's got a yo yo quantum algorithm and I just shake my head because I think who could be so stupid to fall for this kind of alarmism it's it's ridiculous and a waste of time but having said it all the generic statesmen like answer is technology will advance.

Bitcoin is the best most profitable use of computer power in order to protect money if technology advances you got to believe that the people most incentivized they use the technology will be the one with the trillions of dollars of money to protect it will go there first all those advances will be first implemented into the Bitcoin network to defend the network they won't be used by teenage boys to attack the network.

So if you're a teenage boys would rather hack Twitter it'd be cool we're just going to go it's been done it's been done again it's very simple to do it's a billion times easier to do to hack these communication networks and so that's where your threat will come.

So I would love you to give a again a non-statement like answer to this one Michael but can you give us your Bitcoin superiority complex about the asset and can you weave in some of what you spoke about earlier about governments printing money and if you consider the economic cycle that we've been through over the past four years while you've been accumulating Bitcoin like crazy how was that and your mind increased it superiority.

So you know a short summary why is Bitcoin better first of all if I had a hundred rich families and they lived all over the world and they didn't trust the government and they didn't trust a bank and they didn't trust the corporation and they had a lot of money and they wanted to keep their money for a thousand years.

If God came down from heaven above and said hey I'll run the God Bank issue twenty one million God coin and I will make sure that no one can steal your God coins you can buy in however you want and you can trade telepathically with each other and I'll do this for free.

They'd probably accept that right the history of the human race is people looking to heaven to solve their problems in every religion.

Okay in the absence of God coin and God coming down to do this the next best thing would be an intelligent engineer that creates a crypto network to combine semiconductor technology public private key encryption and the internet TCP IP.

Okay that's a crypto coin.

So now we create a crypto coin and the question is who's going to run the software because nobody trust anybody and maybe I trust you and you trust me but I don't trust your idiot great grandson you even had him yet I mean how could we trust your great great grandchild.

Okay so we're all going to run the software and we're going to run it on thousands and hundreds of thousands of nodes and anybody who's software cheats gets kicked off the network.

Okay that's the idea Bitcoin it's basically a crypto asset network. Now the question is okay figured that out now what kind of monetary policy I want I want twenty one million hard cap forever never can make any more I want a scarcity I don't want anybody can make nobody can make any more okay that's good.

Now the question is okay I did that now which network is going to win so we launch Bitcoin as the as the 40th try and the first one with the right monetary policy the right cryptography and an equitable launch so to she launches it walks away forever disclaims beneficial ownership it's an immaculate conception.

Okay what if somebody else launched another crypto network with an immaculate conception you know there's been five million cryptos launched most of them are not immaculately conceived some of them still have the founding teams that are getting rich off of them when there's a founding team getting rich off of them with with a jet and with an office with a mansion it doesn't look immaculate there's no satoshi and swimming pool flying is jet around as a billionaire right that's why.

Maybe we don't know we don't know how he she and the point is we absolutely know there isn't because the coins have not moved in fifteen years and we can see them so now the question is you've got all these smart families and they're staring at the crypto gold network if you will or goals not even a good example just to crypto bank and the questions which network is the best one well we sort through it and we try Bitcoin and it kind of works for a while and then we trust it more money gets on to it.

to it. And for a while we're not sure. And then 2020 some crazy entrepreneur buys $250

million of it for a public company. And that's the first time in 10 years anybody ever bought

a quarter billion dollars on the network and people are like, oh my god. And then that

same person buys another $9.7 billion of it. We must be crazy. Okay. So in that time where

there's one company, micro strategy, buying $10 billion of that assets. It's not a single

person ever publicly spent $250 million on any other crypto asset ever of the $5 million.

Nobody even put in the first $250 million. Nobody put in a hundred million. Go find it.

You won't find it. So now you have an interesting issue which is why is Bitcoin the winner? It's

because all the smart money in the world decided that's the winner. Did it have to be?

Well, no, it's like why do we speak English? Because all the rich powerful people decided

on English. Could it have been a different language? It could have been French. Napoleon wanted

it to be French. But it wasn't French. It was English. Why do we use base 10 math? Because

all of the rich powerful engineering companies use it. Is it the only form of math? No. There's

base two, base eight, base 16. Right? Same with measurements. Yeah. Yeah. We have the

big joke about the metric system. We're still trying to work through that protocol. So

Bitcoin is the protocol that the rich powerful smart people chose. So you can fork it and

create your own and you will have to find stupid poor people to buy yours. But why would

I actually want to put all my money in the network with the stupid poor people when I've

already got the network with the smart rich people. Right? And the result of that is Bitcoin

is the most powerful crypto network in the world. And you can measure it by a computer

power, 700X a hash. That's 40 billion dollars of special purpose semiconductors that generate

more hash than all the computer power of Microsoft, all the computer power of Amazon, all

the computer power of men. If they all ganged up on it, they still can't get to 700X

hash. It's the most powerful computer network. Then it has 18 gigawatts, 18 gigawatts of electric

power. That's the most powerful, electrically powerful network. 18 gigawatts is more power

than the US Navy uses to run all the aircraft carriers and the destroyers and the battleships.

Wow. We conquered the world with less than 18 gigawatts of power. It's 18th full on nuclear

reactors running full on. Spread everywhere in the world. How does that compare to the second

pest? The second pest has like 0.1% that much power. How about the hash rate? 1% maybe.

And then 800 billion dollars of actual capital, Microsoft has spent 10 billion to get 1.2%.

Look it out in your head. Look at the four-year simple moving average of Bitcoin and multiply

it by the number of Bitcoin. Look at the trading volume. Look at real people, thousands of

institutional investors with real money at risk, the Bitcoin miners, the Black rocks, etc.

Like 70 billion, 60 billion dollars put into just the ETFs alone. Real money. 800 billion

capital had back the network. So what's the second pest? The second pest doesn't even have eight.

Like 99% of the real money went into the Bitcoin network. Everything else you read about in crypto,

right? All the other crypto assets that might be a store of value. I'm not counting the stable coins

because they're just dollar pegged. But everything else probably doesn't even have eight billion.

It might have a few billion dollars, right? So it's like 99% to 99.9% dominant.

And then you go to the political power. Well, there's 420 million crypto people that love crypto,

but what's the reserve asset of crypto at Bitcoin? 420 million voters and then 200 million people that

hold an instrument back by Bitcoin. So what's the source of the network? Political power,

electrical power, digital computer power, economic power, right? That's the source of power of

the network. It's like, well, why should I buy that? Well, once you understand that it's the dominant

crypto network, now the issue is, well, why should I buy Bitcoin and set a goal? Well, the goal

supply is going to double every 30 years. And you can't teleport at goal 60 times a second.

And the AI is not going to want the goal, right? And you can't put gold on your iPhone, right?

Gold is not digital. If you have a hundred million dollars and you put it in a gold and you wait

a hundred years, you'll have 12 million dollars worth of gold. That's why you don't want gold.

If you have a hundred million dollars of Bitcoin and you hold it in a hundred years, you'll

sell them to a hundred million dollars worth of Bitcoin, right? So gold is the best of the commodities,

but it's awful because it's got a 2% inflation rate. What's the difference between 2% inflation rate

and 0% inflation rate? It's the difference between living 30 years and living forever.

Like one is mortal, okay? Here's your choice. Take the orange pill you live forever.

Take the gold pill. You live half your half dead in 30 years, you're going to live 75, 80 in your

dead, right? This is a mortal life. This is immortal life. That's definitely 0 and 2%. Gold is the

greatest of the commodities. Every other commodity inflates at 10% a year, 20% a year, 50% a year.

They're awful. Commodities are awful stores of value. But what are they good at?

Here's what they're good at. Commodities are ethically sound. Okay? That means they're an asset

without an issuer. You can promote gold or chicken in every pot or land or silver or you can

promote soybeans or you can tell people to keep caracene behind their house. Those are commodities.

You cannot promote a security. A security is an asset with an issuer. If a senator says God bless

Apple, she's promoting a security. If a senator says God bless Bitcoin, they're promoting a commodity.

It's like promoting bluegrass music. It's like promoting fasting. It's simply a cultural or a technical

idea. So what do you want as your long-term store of value? You want something economically sound.

That means absolutely zero inflation rate forever and nobody can screw with that. You want something

ethically sound. That means an asset without an issuer or where the inventor, Prometheus,

disappeared. You own fire. You know, electricity. You can use it. The English language. You can

use it. Matthew, you can use it. Bitcoin, you can use it. There's no company with copyright that

charges you a royalty. It needs to be ethically sound. It needs to be commodity. And finally,

it needs to be technically sound. Good engineering. A building is sort of economically sound,

not as good as Bitcoin because you've got property taxes and entropy. And a share of

a magnificent seven, it's kind of economically sound, but it's a security. And if the Chinese

decide to seize Apple's assets or the US seizes the Chinese company's assets, you know, you've got

also it's a political risk. But Bitcoin is both the economically sound asset and it's the ethically

sound asset. But it's a big tech digital network. It means that I can move a hundred billion

dollars a million times a second. Okay. So the big idea is I can give a capital asset to eight

billion people on their mobile phone and 10 million computers can trade it a million times an hour

across every jurisdiction. Right. And so if you want to give music to eight billion people,

you need digital music. You can't do it with records and attract tapes. And if you want to give

digital communications, right, you want to give education to eight billion people, you need digital

education. You need to give them lectures for free for the cost of electrons. And if you want to

give wealth to eight billion people, you need digital capital. You need to put your wealth on your

iPhone and you need to know that it will last forever. And I just ask anybody, I ask you,

what do you own in your life that you think your family will still have intact that will be valuable

300 years from now? Right. What would that be? Right. Because there's no conventional thing. There's

no company that's going to last 300 years. Right. They might not live in New Zealand 300 years from now.

I could give you 10,000 acres in Auckland. And the issue is, so can you take it with you when

the government changes and they decide to seize the assets of people with blue eyes?

Right. Because it happens. If you look at the history, have the 20th century. And you're like,

what country didn't seize the assets of somebody over 100 years? Right. It's like you had one country,

the United States, that won every war. And yet that country's currency lost 99.9% of its value

against scarce assets. That's the winner. Right. The winner gives you one tenth of a percent of your wealth.

All, you know, the rest is all just anxiety inducing counterparty risk.

Well, I tell you what does Lebonne is a legacy. And you mentioned mortality, but sadly, neither you,

nor I, are going to live forever. It's a bit of a personal question. And a cynic may say that you

do this because you have something to financially gain. But I feel like after this conversation,

the effort that you put in the generosity with your time, why do you bother educating everyone

on this and talking about this? You know, I mean, even if you take a guy like Jack Dorsey,

and he asked me about Bitcoin and said, I didn't do it for the money. I did it to fix the money.

The legacy is the English language, electricity, fire,

vision, fusion, engineering, right, telecommunications, right, mathematics, all of these things.

And what's the legacy here? It's a monetary protocol, which is true, right?

The history of the human race, if you look at it, it's fraught with people dying from

dirty water, dirty air, dirty clothes, dirty environments, you know, dirty everything,

right? It's like dirty, dirty blood. And, you know, overcoming that with electricity and clean water,

right? Just that the joke is like a poor person sits down at a table and they put a glass of tap water

in front of them. And that's what you drink if you have no money. If you have money, you buy a

Coke Zero, or if you have a lot of money, you buy a thousand dollar bottle of wine. But the poor

person drinks the glass of water. And, you know, I just finished reading again the story of civilization

by Will Durant. It's like whatever, you know, the books are all over there. So 11 volumes, it's

15,000 pages. You read all the live and volumes? Beginning to the end. And there's thousand stories

of famous people that died of gout because they didn't drink water. They drank wine because the

water had bacteria in it and cholera and you died of infection if you drank the water. If you were

the king of England, you couldn't get clean water. Then the rest of them died because they

walked past the swamp, got bit by a mosquito. And they didn't have any cure for malaria. They had no

modern medicine or they died at tuberculosis because there's no penicillin or there's no antibiotics

or you know, or to treat it. And so today, right? It's like what's your legacy? It's like

clean the air, clean the water. What kills the patient? It's dirty food, dirty water, dirty air.

How do we kill George Washington? We bled him to death. We bled him to death. That's why he died.

And so what's killing every corporation on earth? It's dirty money, dirty capital to be precise.

The asset that every public traded company, 50,000 companies use is sovereign debt, sovereign debt

yields 3% after tax at best, 2% the cost of capital is 13%. It's a negative real yield of minus 10%.

It means that you hold a billion dollars, you lose 100 million a year holding the money.

It's like forcible chemotherapy for your healthy 14 year old teenager. Or it's like strapping the

12 year old kid down and taking two points of their blood every day and sending them off to track

practice. It's a very morbid metaphor, but I'm picking up what you're putting down. The point is

it's medieval, but at the end of the day, that's the scourge, the burden of humanity that they've

been hauling for thousands of years. And so when you ask what is human progress, what elevated the

civilization? You know, it's technology. And it, you know, a lot of painters, they went blind

because a middle class family could afford one candle. Look around you, right? Each one of those

is one middle class family of light. Clean light, clean water, heat, air conditioning, electricity,

energy, clean blood, antibiotics, right? A language you can speak, right? All of these things

are defined modernity. So what is my agenda? My agenda's fixed the money because the 50,000

companies have a life expectancy of 10 years. You know why you die in 10 years when you could live

forever? It's because you have toxic chemicals in your vein, right? I can kill a healthy person,

if I inject poison into their vein, I can kill a healthy person by sucking the blood out of their

body. If the money is broken, all 8 billion people, right, have toxic capital, all 300 million

companies have toxic capital. Every institution, every nonprofit, every government, every city,

every state, every idea, everything you wish to accomplish, you need in part economic energy,

you need energy to accomplish it. What is electricity? It's clean, silent energy.

It's clean, silent energy. Take away the electricity, look at everything around you. We're in the dark,

this podcast is not happening. Clean, silent energy, catapult, it created cities, it created

Manhattan, it created the modern world. What is Bitcoin? It's clean, silent, programmable, immortal,

money, right? What's it worth? It's worth half of everything. It's not worth the other half.

It won't fly you and it won't cure your cancer and it won't make you happy and it won't

solve your mental issue and it won't make your children love you. It's not all that and it won't

stop a bullet, right? The world's full of stuff, right? Materials and vehicles and technologies

and medicines that do things. What is it? It's economic energy. It's the other half, right? It'll

solve half the world's problem. I give you energy that does, I give you a battery that doesn't lose

its power. You know, that'd be nice because one of our camera batteries stopped off. I wear this watch.

I don't have to take it off. You get an Apple watch, you got to recharge it every night. I get

what about a battery that lasts forever? Right? I mean, that's the promise of nuclear fusion. Give

me a power source. I could put in my pocket that will last forever. Now imagine how much better

the world is. Bitcoin is digital energy. If you want your company, your family, your endowment

to last forever, you have to capitalize it with an asset which doesn't degrade at the rate of,

the rate of the dollar is 7% a year for 100 years. When you lose 7% of your energy for 100 years,

you lose 99.9% of whatever you are over 100 years. The only alternative is you've got to be an

investor. Now you juggle razor blades. It's like, oh, I've got to go build something a warehouse

and it will last for 32 years and fight a tenant who's not going to pay the rent. Then I get taxed

on it and then I've got to go and talk to the politician who created the tax and I've got to run

for office and like your world becomes just one of misery because you're attempting to not lose

your economic energy. So, I see Bitcoin as a profound step forward for the human race because for the

first time, economics crosses from being an art to being a science. For the first time, you have

perfect money or a perfect capital asset, non-defective. Once you understand, see the steel behind you,

I have steel vaults. Run into it. I saw that. Okay, they weigh two tons. I feel like I'm going to

go vault. We'll start with the vault in the back. I happen to like metal. What is it? It's material

energy. You've ever seen a steel refiner? You put a lot of energy in the front, a lot of energy,

an outcome steel and what's the significance? It will stop a bullet. What else will it do? You

can create a skyscraper with it. If you build a hundred story building with steel, it will

withstand a storm. It will withstand gravity. You can stand on the 99th floor. The floor will not

crash. You will not die. We can build a civilization based on it. What did we do? We built a civilization

on steel. The highest form of material energy, the human race, could channel, take the steel away.

I'm going to give you wood. Go to Nice, go to Europe. Look at the kind of buildings they built

before steel. They're all five stories. Max, you take away the steel and electricity. Those are

two big ones. Take away the electricity. You have no elevator. Take away steel. The building falls

over. Steel, clean power, clean energy, like almost clean at the real energy. Can't even see it.

Clean and visible energy. Then almost indestructible material energy. Put the two together

and you build a modern world. The problem is I see it in the economic world is we never had

economic steel. We've had the equivalent of economic balsa wood. Economic clay. We built clay

houses and drink houses and straw houses. We built houses on swamps. The Bible says, build your house

on a rock, not sinking sand. Build on a solid granite foundation. What does Manhattan?

It is 100 story steel buildings powered by electricity on shist closest to granite. You can find

that's the recipe for civilization. That's what Bitcoin is. I'm a single guy. I have no children.

When I'm gone, I'm gone. I've got, you know, just like Satoshi left a million Bitcoin to the

universe. I'm leaving whatever I've got to the civilization. But it occurs to me that 8 billion

people with crypto steel or economic steel can build something much grander in the 21st century.

Then all the 20th century economists struggling with clay and cotton candy.

Thank you so much for your time. I really enjoyed this, Michael. Thank you.

My pleasure.

Thanks for watching Markets with Madison. If you enjoyed this interview, please hit the like

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