The Future of Bitcoin w/ Michael Saylor (2024) | EP #92

30:01All of these things disappear because it's about as stupid as saying to Bob Kraft, you can't buy a cup of coffee with a new England Patriots, by breaking off some one of your tight ends and you can't buy a cup of coffee with your building in Boston. Of course I can't. You can't buy a cup of coffee with part of a Picasso, the lower left corner either. But wealthy people have been using them as a store of value and as money for 500 years. So what real estate as a store of value, it too can sublimate. Yeah, so when you say, what is the question? What do I think of it? Real estate itself as a store of value.

30:46So what I think is, of course, if you just describe Bitcoin as digital property, a store of value, all of the popular criticisms go away and everyone that hates Bitcoin would completely flip once they understood it isn't a currency. So people just ought to say it's a property, it's not a currency, and every one of those criticisms and weaknesses is no longer relevant. What I think, the second thing I say on store of value is it's kind of silly to fight to be a digital currency because there's 900 trillion dollars of wealth in the world, 400 trillion of it wants to be store of value, only one trillion wants to be a medium of exchange.

31:26Go to a wealthy person and ask them what percentage of their wealth is in their checking account. It's like 1 % maybe? No wealthy person is holding more than 1 % in ready cash. So it's not even worth fighting for. Like you can fight the government to be a currency, but you're just fighting someone that's got guns and police force, et cetera. The store of value is the use case that matters. And another word for store of value is property. And the third word for store of value is capital. And if we just thought this is digital capital, now you get to profound idea, right? which is there's capital in the economy, where is it sitting?

32:12Well, it's sitting in buildings. We've monetized buildings. A rich person goes and I know a lot of wealthy people, they make a fortune. And what they do is they just go by real estate that they don't need. They buy apartments they don't need. I mean, everybody can pick up the paper and they can see examples. People buy trophy assets and they buy buildings and they buy land. They don't need land buying things. So real estate is a way to fight inflation or to preserve capital over the long term. Another way to do it is I invested in a company, or I attempt to pick the right stock, a magnificent seven stock.

32:51A third way to do it is with art. I mean, the last quest in the 16th century travels from Spain to Italy. He wants to buy all the great art. and he's got the King of Spain's checkbook and an infinite budget and he complains nobody will sell him the art because all the rich people in Italy are using it as store of value so they can flee with their portable scarce desirable property when they have to leave town or they're using it as an inflation hedge and I you know and I kid you not go read Will Durant's you you know, history of the Renaissance and he notes, it's an inflation hedge in a store in value 500 years ago.

33:36So that's the way people think, why is Bitcoin better? It's better because the problem with storing billions of dollars in a building is the building can't run and the building can't hide and everybody knows a rich person owns the building and therefore we're gonna tax them. I mean, I just give you a simple question. I'm going to give you a billion dollars right now. I'm going to drop you in Africa. What building in Africa are you going to buy in what country and hold for 100 years? There's not a disparage Africa. There's not a single piece of real estate in a single country in Africa that any of you would be wise to purchase if you had to hold it 100 years.

34:22On the other hand, if you held a billion dollars with a Bitcoin in Africa, you'd probably still have the money 100 years from now. If you lost it, it's because you lost it, not because it was taken from you. Everybody walks past the biggest tower in the city, and they look up and they say, there's a person with more money than me. Then they think, why don't we tax them? What are they going to do? Move the building? You're not going to move the building. And so then they walk past the parking lot and they think well, let's just go ahead and put a zoning restriction on that So you can't actually build on that parking lot.

34:58So at the end of the day your property is getting rent controlled expropriated tax etc. And so and so it's it's the best idea in the 20th century. Yeah, I think that I think that's the important point But we're not in the 20th century one of the 21st century I wanted to get I wanted to get that point across because a lot of people think about real estate as somewhat unique real estate on the beach on Central Park. But it has those issues. I'd like to take the conversation to Bitcoin as a technology. Lightning rewards. Some time ago you spoke about a Bitcoin lightning reward mechanism out of micro strategies, which I thought was brilliant.

35:52Would you go there? Well, I think Bitcoin layer one is all about creating monetary integrity and in the base layer. and it's meant to be a settlement network for high powered money. So, in essence, where you see it going is trillions and then hundreds of trillions of dollars in a network and needs to be extremely robust. But the way you get robust is you create a block every 10 minutes and you put thousands of transactions every 10 minutes. So it's destined to move blocks of money, $10 million at a time, $100 million at a time. And for that, it's pretty good. You can imagine banks, corporations, settling with each other at that speed.

36:46And if you wanna move a billion dollars from New York to Tokyo, spending $10 seems pretty cheap. And doing it in half an hour is not a big deal. But if you wanna get to transactional applications, you can't do it on the base layer. There's two approaches. One approach is you change the base layer to give it higher throughput. But the problem with that is that you're changing the underlying scarcity parameters, which undermines the stability of the system and the integrity and the security of the system. So ultimately you make the network more fragile. And so most things don't scale all at one layer.

37:24You scale in layers. So lightning is the most famous of the layer, too. and really it's an example of an open protocol layer to system that sits on top of Bitcoin and its channel based. So the idea is if I want to move $10 back and forth a million times an hour, I probably don't need to put the entire trillion dollar network at risk. I could probably just set up a channel that had $5 million on this side or $5 million on this side, and I could move back and forth. And then I'll settle on the base layer as I open and close the channels. So the brilliance of that approach is you're still using Satoshi's or Arndelang Bitcoin is gas.

38:12So you've got an ethical network and an economically sound network. But you've created an infinitely scalable network because once you go to this channel approach, There's no reason why you can't clear millions of transactions a second. And so lightning is the layer 2 to clear millions of transactions a second thing. The idea of Bitcoin rewards is if you want to give people small micro payments or very, very rapid payments for engagement, you show up to a meeting, you get rewarded with something of monetary value. you come, if I want to come to offer people a reward to come and register my website, I do it using an open network that isn't subject to the constraints of the Fiat credit system.

39:03I do imagine that we're going to very quickly head to a world where everybody's got a digital wallet and is transacting and the same way we have a leather wallet in our pocket. And I love the vision that you had. like if you show up for the HR meeting on time, you get a certain number of satoshes. If you turn in your report on time, if you perform at this level, so, you know, you get what you incentivize and the idea that this is an incentivization process. I keep on waiting for X to announce wallets and and a incentive plan like that. You know, there's a profound statement made by JP Morgan a hundred years ago, he said gold is money, everything else is credit.

39:44And just like first principle model, most people don't understand what money is, money is a better instrument, most people don't understand what credit is. Credit is when you have an IOU from a counterparty and they may or may not honor the IOU. So what we have today in the internet is you have a lot of profound applications that are digital transformation of information. We have figured out how to digitally transform photos and music and books and things like that. But we haven't implemented digital money. So whenever you pay anybody on the internet, you're paying with credit, not with money.

40:27And the problem with paying with credit is, these are master card, your bank, the correspondent bank, the central banks. There's a stack of seven counter parties in between me and you, and that means that if I wanted to give you 50 cents Let's just say I want to move any amount of money around if I want to move a dollar around every time I move it There's a 30 to 60 -day settlement delay and there's a 2 % 2 and a half percent fee So when I move the money 40 times it took 48 months It takes four years to move the money from 40 people in the room. If you just started moving any amount of money, it would be four years before it finally settles.

41:16And all the money would be gone because it would be like a hundred percent commission you would pay to the banks. So the problem with the credit networks are their brittle, their slow, their expensive, And by the way, if you're an AI bot, you can't get a credit card. And so robots aren't people. AI's aren't people. And I'm going to make fun of them because Bitcoin gives AIs in cyberspace sovereignty. If you want to release a service powered by an AI into the ether outside the control of a person, a government, a company, you're going to need to finance it with money, digital money, which means Bitcoin.

42:06So, AI's aren't people yet, and Bitcoin will give them sovereignty of sorts, but people aren't people, because six billion people on the planet, they don't have credit, like I dare you to try to send money to someone in Africa on Saturday, You know or try to cross borders try to send some money to someone in China see all works out right So and by the way that's the the countries shut down At the border but even when each within each country most people a lot of people don't have credit card so Bitcoin is money everything else is Credit and you cannot build the 21st century cyber economy if you don't have money.

42:56Money needs to move at the speed of light, and lightning is an approach. There's a bunch of other approaches. So Bitcoin is the financial side of the internet that didn't exist in the 1990s. The profound big idea is Google Facebook, Apple, Amazon. They made all their money based on the digital transformation of information apps, which are non -conservative. In a thermodynamic physical sense, as they are non -conservative. I can give every one of you my music file. Whereas we're now moving into a new transition, I think it's a 30 year transition, it's digital energy. It is, it is, it's digital energy, digital money, digital capital, digital property.

43:41These are all just different words for things that are conservative and cyberspace. If I give you a billion dollars, I have to lose it. I can't give everybody a billion dollars, right? Some, you know, there has to be a conservation of energy or conservation of money here. And none of the great companies have been built on digital energy or digital monetary apps. But if you think about the next set of applications, the ones where I can take a block of a billion dollars of capital in cyberspace and I can decompose it to a million smaller blocks, send it to a million different places in one hour, recompose it three hours later, chop it into a bunch of ten dollar segments, pull that back, oscillate it, program it, transfer it, or just store it for 50 years.

44:41right? And the metaphor I give you as an aeronautical engineer, which I think Elon would like, and I think you'll like is, it's the difference between you launch something and it goes ballistic and comes back to earth. Suborbital versus orbital. And you launch it and it reaches escape velocity and it goes orbital. One is in space forever and the other is in space for a blink of an eye. And what we're trying to do is put energy in cyberspace or put money in cyberspace Reach escape velocity such that it lasts forever With zero friction. It's like hype superconducting everybody You want to take a break from our episode to tell you about an amazing company on a mission to prevent and reverse chronic disease By decoding your biology the company is called biome and they offer cutting -edge tests and personalized products that help you optimize your gut microbiome, your oral microbiome, and your cellular health.

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47:00For a limited time, you can get up to 40 % off any volume test using the code moonshots. Just go to vioom .com, backslash moonshots, and order your test today. Trust me. You won't regret it. Alright, let's go back to our episode. Let's talk about the path towards what seems to be inevitable, for which there is tremendous this social disbelief, institutional resistance manipulation. Right, so let's say the decade of 2000s to 2018 -19 was still the very entrepreneurial, highly, highly risk area. We started to have adoption by wealthier individuals, and we finally moved into institutions. the release of the ETFs.

47:57And I talk about going from deceptive to disruptive, and we're in that near the curve, right? I mean, so this is an example of the 60s, right? We've digitized money, you've dematerialized it, right? You effectively demonetized the ability to transmit, and you've democratized access to it. And it's going from deceptive to disruptive. What is the, is there a final card to flip, the next step, Domino D 'Aval, is it governments beyond El Salvador adopting this? You know, I think 2020 to 2024 was, you know, it was the, I don't know, high volatility, high uncertainty. It's like that early stage of institutional adoption, but really, we start mainstream institutional adoption.

48:48and I would date it to January 2024 with the approval of the ETFs, the spot ETFs. And I think it runs, we have about a 10 year gold rush. It runs to 2034, November. Between 2024 and 2034, we will have mined 99 % of all the bitcoins. So bitcoins becomes for all practical purposes fixed by November of 2024. the last one percent comes out over 100 years. Okay, so we have this 42 -quarter period where at the beginning of the period... What percentage are we at now? Right now we're like 94%. Wow. So you've got... You think it's not much, but I mean, 5 % is a lot... Over 10 years compared to 1 % over 100 years.

49:42So there's actually still Bitcoin available for sale right now. The miners have to sell it. So at the beginning of this period in Q1, we're in Q1 now. If you go to January 1st, no institution could buy it even if they wanted to. It just wasn't on their radar. And so you really have 42 quarters of people learning what it is, studying it. It takes 10 hours to scratch the surface. and it takes 100 hours before you get a degree of comfort. Most people, you know, once they get past the age of 40, they don't want to spend 100 hours learning a new thing. It's very rare. So you've got Wall Street firms spinning up massive education apparatus.

50:27You've got a whole set of stages of adoption. First, can I buy it? Then is it on the approved list for solicited sale? Then it is on the approved list for unsolicited sale. Is it marginable? Can I borrow against it? Is it optionable? Can I hedge it? Is it recommended? Is it structural? Is it built into a fund? That's like seven layers of adoption. People take a year to think about each of those layers. There's a hundred powerful entities that control huge amounts of money that will go through that in the Western world. So I think we're in this this institutional education stage and In 2034 it'll simply be the new thing right now it's like it's like the scary exotic thing for most people Yeah, it's interesting my mom asked me what she should be doing with her Her mandatory distributions and I said by the Bitcoin ETF right?

51:33Talk to you in a second about it. I don't want you to give financial advice, but I do want you to speak to... How do I put this? How should a person think about what percentage of their wealth they put here? I think it depends upon where you live, who you are, what your life situation is, and also whether you're a corporation, a charity, a government, a family, an individual that matters to. So for example, if you were asking me for that advice for a business owner in Nigeria, right now, I would say most. I would say, the question you got to ask yourself is, can I trust the government? Can I trust the bank?

52:27Can I trust the currency? Can I leave with my stuff? So if you're saying to me, Mike, should I buy a building in Nigeria or should I buy a business or should I buy a diversified portfolio? Would I recommend a diversified portfolio of Venezuelan stocks or a diversified portfolio of Cuban stocks? Like it really depends on where you live. North Korea, Cuba are kind of simple. All through Africa, if you lived in Egypt, the currency is unwinding. If you follow the Turkish lira, the Turkish lira has gone from seven lira to the dollar to 32 lira to the dollar in 36 months. Let's make believe we're living in the US or your Okay, and if you're and if you're 70 years old and you're retired and you don't expect ever have to flee for your life Then you probably should buy the ETF and if you're 20 years old and you've got your entire life ahead of you And you think you might want to relocate to a different country and you know, you can't predict it Then generally you're better to buy the underlying asset that some people should buy the Bitcoin and self -custody.

53:40Some people should buy the Bitcoin and they should institutional custody. Some people should buy the ETF. And then if we flip the companies, there are companies where it's illegal for them, to say self -custody. There are companies where they're investment companies where they can't buy certain commodities, but they could buy securities. So the real issue is what's the entity and then what's your time horizon? As a general rule, the longer your time horizon, the more you would prefer to hold the money, the underlying commodity asset, because if you hold the asset, you can transfer it to any counterparty in the world, you can custody it anywhere, you can self -custody, and it doesn't come with a taxable event.

54:29Let's make, let's make believe you're speaking to 400 CEOs in the room.

54:38Who are asking the question about, you know, I've got, okay, I'm going to give you a very simple observation. Which everybody looks at Bitcoin and they think, well, how do I create the next cash app or the next mobile app or the next fidelity or the next coin base or the next whatever? and they think really hard about that or how do I topple JP Morgan. That's a very difficult thing to do. I give you a very simple idea. You have a treasury in your company. If you put your treasury into sovereign debt, you're going to yield 5 % pre -tax, 3 % after tax. And you're not going to be at the cost of capital.

55:21The cost of capital right now is 8 % to 10 % in the US. Easy. So if that's the case, your treasury is a liability, which means that any rational person would look at you and say you should decalptalize, you should give all, you should run on the minimum working capital or negative working capital and you should run on debt. But I'll give you another idea. If you actually are investing in something you expect to go up 20 to 40 % a year for the next decade, you're beating the cost to capital by a factor of two. That means the right thing to do who's go back to your venture capitalists or your bank and just raise $100 million that you don't need.

55:58And by Bitcoin with it, because if the business you are running doesn't work, you will have a business that's growing 20 to 30 % a year, scalable for the next 30 years, that will work. You'll double the 100 million two times in the next six years, so you'll be 200, 400 million And in six years, when the thing that you are doing right now doesn't work, you're going to have a business that's growing 20 % a year off of $400 million a base, which is a monopoly. So most, I think the number one, I mean, this is a simple hack. But every venture capitalist in the world is getting 2 % and 20%. They're going to get 2 % management fee and a 20 % participation.

56:40And their mandate is they have to invest in operating businesses that are private. And if they were to go and buy a billion dollars of Bitcoin with limited partner capital, their limited partners were saying, are you crazy? I could have bought the Bitcoin. So the VC can't buy Bitcoin, which is the risk -free return of 20 -30 % a year. The VC can give you the $100 million. You can buy the Bitcoin. They end up with debt and a private company. you end up with a hundred, 200, 500 million dollar business growing 20, 30 % a year that's scalable that you run with yourself and your CFO. It's good for them.

57:21They're going to make a fortune. They want to invest the money. The real problem in the world and by the way this is back to the Dow of Steve. And the Dow of Steve does a guy sitting on the bed and he's smoking marijuana and someone saying well, you know, like why aren't you out there doing something and he says, doing stuff is highly overrated. OK? So here's the big idea, which is there's a couple hundred trillion dollars of capital in the world that's debasing at 10 % a year right now. And the big idea is just stop investing in toxic money. If you simply flip your treasury to something, creating a 10 % a year.

58:07You see, it's like everybody wants to like do, they want to hire a hundred people and do a lot of stuff that's risky, but really, this is very painful, but if I told you, the water that you're giving your kids is toxic and it's full of pathogens, and that's why half of your children died and you said, well what's the big idea? I would say give your kids clean water. Is that easy? Yeah. And if I said the food, well the food's not cooked and there are worms and pathogens and that's why you're dying, what's the big idea? Eat clean food. Right? I mean that whole idea is what about clean air? Clean air, clean the food, here's the one.

58:57All my doctors, they want to give me bad drugs and bleed me whenever I sneeze. What's the big idea? Stop taking the bad drugs and stop letting them bleed you. Okay, so if you're running a business and you're running a business on cash, the cash is losing 8 % of its value a year. You're basically bleeding out energy on your balance sheet right now. And the simple idea for Max performances, turn your balance sheet into an asset. that anybody could do it. And what happens, the micro strategy story is, we had a $600 million enterprise value with 600 million of cash, which was a liability. What we do, we flipped it to be 600 million of Bitcoin and a $600 million enterprise, and then the Bitcoin kept growing.

59:47And the Bitcoin's been going up 40 % a year. Bitcoin is going, I can't tell you what it will do, but I can tell you who allowed perform the S &P 500 over time. That I'm quite sure of. So you flip your balance sheet to become an asset. And today the enterprise value, the company's $30 billion. You know, the stock's up by a factor of 10. The equity market comes up by a factor of 20. And the enterprise value's up by a factor of 40. It took 42 months. 40, not four years. I haven't graduated from my senior year in Bitcoin. I'm halfway through my senior year in Bitcoin. But the profound idea is every company in the world has toxic assets on its balance sheet.

1:00:39They're all liabilities, right? And we've taught the conventional wisdom in corporate finance is if you have capital, give it back, and dividend it out. Facebook is buying back 50 billion of their stock and divviting out billions of their stock. Apple is buying back their stock and divviting out their stock. Scratch your head and think about this a second. I'm going to apply this to Harvard and MIT. Give back the endowment and just raise the cost of the tuition 20 % a year and stack twice as many students per class. And that's how you fix the university. Right? Not no. How about this is an idea for your family?

1:01:21I want you to take all the money your family has. I want you to give it away to charity. And I just want you to tell your wife, your husband, your kid, just to work harder and ask for a 15 % raise next year. And that's how you're going to fix your family. I said, they're both pretty silly, right? You would never, in a million years, have that as your strategy. We give up all the capital and we work harder. But you know what the corporate playbook is? Give up all the capital, raise your prices, work harder, grow your cash flows by 15 % a year, and then you'll be fine. And you know, that's why 99 % of the companies fail.

1:02:02That's why the life expectancy of a corporation is 10 years. And you know what? I mean, Harvard, Oxford, Yale, they lasted more than 10 years. Did they do it by raising their prices 10 % a year and working harder? No. In fact, there's not much productivity boost in any of those places in 500 years. So, here's the profound idea, which is, you know, if we adopted a different financial model and corporations, you could have companies last for hundreds of years. You don't have to die. Right? For example, you're a dentist. You know, why do I have to raise my prices 10 or 20 % a year to be viewed as successful as the dentist, right?

1:02:47It's like, it's because, I tell you why, because we keep expanding the currency supply by 10%, which means the price of everything you want to buy goes up by 10%, which means you have to grow your cash flows by 10%, and that's why the Magnificent 7 generate all the returns in the S &P 500, and there are 493 companies that return nothing. zero. Right? They keep, and by the way, it's not their fault, right? We blame them. We blame the companies like we blame the workers for not working harder. It's not their fault. You cannot out work inflation. And we're back to this issue of, if the person that runs the currency or the money printer just keeps printing 20 % more money or 10 % more money a year, you just stop the heart.

1:03:40You basically create a heart attack for every worker in the economy. And so my advice to anybody who's a CEO is don't work harder, work smarter, but really you're in a rowboat, you're trying to row the wind is blowing, get yourself a sail, put the sail up and let the wind blow you instead of trying to row across the Atlantic, you're not going to make it. How many folks here right now in the back of their mind, they're thinking, as soon as I get home, I'm going to look at putting a chunk of my treasury or a chunk of my personal into Bitcoin. Can you raise your hand if that's a conversation that you're having with yourself right now?

1:04:20So right in 2014, I gave everybody in the room here a Bitcoin as a gift. We had a Bitcoin ATM. And you have no idea how many people came to me years later You're saying, remember the piece of paper you gave me? Can I have a copy of it? No. But you're getting the equivalent right now. You're getting the equivalent right now, which is to say if you can appreciate the logic here, the first principle thinking that Michael is putting forward, then you probably aren't thinking about going back and making that change. Now, the degree to which you want to put somewhere all of your treasure, or some of all of your cash, or some of all of your your stocks into Bitcoin is up to you.

1:05:12But I am curious and I will ask you next year, or maybe in the next meetup that we have, how many did that? And then we'll see a year from now, or five years from now, how many billions of dollars that was worth to the room. It will be interesting. The low risk way to do it, Pete, is you just go to a venture capitalist and next time you raise $50 million in capital, raise $100 million in capital, and then put $50 million into Bitcoin and the other $50 million in whatever. I mean, how many people in the room have a business they think they can grow 20 % a year every year for the next decade without taking any more capital, without a capital investment, without hiring another person, without taking competitive risk.

1:06:00Like, if you're honest with yourself, no one sure they can do that. There's like seven companies that have done it, Google, Facebook, Amazon. We know their names because for every one of them succeeded, 10 ,000 companies failed. It is statistically very difficult. But on the other hand, so when you invest in Bitcoin, is probably the least risky thing you're doing. But I'm not telling you, by the way, the big idea is not just take every last penny and buy Bitcoin. The real big idea is that they're venture -capitalists like SoftBank with $10 ,20, $50 ,000 ,000 ,000. Their problem is they need to invest the money.

1:06:43They need to invest the money. And they need a use of proceeds. And Bitcoin is the world's greatest use of proceeds because it's a creative, it beats the cost of capital, right? And name, you know, sovereign debt does not beat the cost of capital. Cash does not beat the cost of capital. You can't, by the way, you can't do this with art, you can't do it with real estate. I mean, the closest thing would be, I'm going to raise billions of dollars, I'm going to buy high quality real estate. And so that's a real estate development thing, but that's a 20th century idea. and we're in the 21st century and you need to think about cyber real estate.

1:07:26We're going to go to about 20 minutes of questions here. If I have a question, please go to this microphone here. Michael, while people are lining up here, what about AI and Bitcoin? Okay, I think the way that AI is empowered by Bitcoin is literally Bitcoin is digital money and AI is digital intelligence. You know, you think about the idea like I create a digital accountant that gives advice or a digital lawyer that gives advice Well, how's it get paid? What if I wanted to actually release that digital thing and have it learn to do this in every country But how do I cross borders, you know, and how does the AI get you know get credit cards?

1:08:09It can't wait we talked about having a appropriate jurisdiction where AI's can self -incorporate start their company and and run it. Charlie, let's keep it off with you, pal. Wow. Thank you. So I have a question about governments getting into digital currency. To what's your opinion about governments getting a digital currency as a way of directing how people will spend money. So the example being government issues a digital currency, says if you make less than $250 ,000 and you do X, Y, and Z will give you A, B, and C, but if you make over a certain amount, yep, the point of it. So, yeah, so just to be clear, so I am, I don't think Bitcoin's digital currency, I think is digital property, but an example of digital currency is Tether or USD or Euros or CNY moving on a digital device.

1:09:12Governments, as long as there's an effective government and they have power, they're going to designate legal tender and currency is a system of control as well as a medium of exchange. And so it's going to be a very political issue, very controversial. There'll be lots of politics. And in authoritarian government, they will use a digital currency as a system of control. In the US, there's a massive fight on Capitol Hill over whether or not there should be a digital currency and people that believe in freedom and and the like they're gonna fight it and and do their best to stop it. I think that you'll see that debate in every country in the world.

1:09:52It'll continue and it'll be layered in with another debate which is for example, if If the people that love the digital dollar in the form of tether are actually the Argentines, the one a medium of exchange. So the positive of a digital currency for the United States is if the US actually mandated a digital currency, the dollar would collapse and replace every other currency in the world, including it would metastasize through Russia, through China, through all of our enemies and our friends and you would have allies of America complaining that their local currency collapsed and you would have enemies of America not liking that.

1:10:37So it can be used as a tool to spread, to make a certain currency of reserve currency. And if you want the US dollar to remain the world's reserve currency, you would actually argue in favor of a digital currency because why wouldn't you want China to run on the dollar if you could get it to work that way. But, you know, equally, there's the issue of who controls it. Are you going to have a private corporation issue it, running on a crypto rail, or are you going to have a government issue at running on a state controlled banking rail? Look, I don't have the answer. It's very controversial. I do think that the future of digital currencies in the US will probably be influenced heavily by the November elections and by the next administration.

1:11:23Thank you. Adam. Michael, I'm curious how you think about the identity of Satoshi? Like, does it matter a lot to you? Have you spent a lot of resources trying to investigate? No, I don't think it matters at all, and I think it's better that we never know. And I think that what makes Bitcoin special is it had an immaculate conception. Look, there's a fundamental, a very asset test. Is it a commodity or is it a security? If a crypto asset is a commodity, that means it's an asset without an issuer. If it's going to be a commodity, it means no person, no company, no government, no group of people can exercise undue influence over the future of the protocol.

1:12:06If there was a Satoshi alive speaking, tweeting today, and Satoshi said, I think we should change this part of the protocol, that would be an awful, awful fact. It would be, it would undermine the integrity of the network. There's the guy that invented gold is not tweeting that he wants to change the atomic characteristics of gold and the density of gold. That's why it's actually a commodity. And so it's, I think Bitcoin is unique and that it had an immaculate conception. Satoshi's gone, walked away, and the thing didn't even monetize until Pete's today, 18 months later. And I think that it can't be ethical.

1:12:53It can't be ethical money and global money unless it's a commodity. It's easy to create a security. You can create a million securities. You could spend them up in three hours. It's hard to create a commodity because the miracle of Bitcoin was we released something to the hobbyist that's worthless. And then And on pizza day, a year and a half later, someone wants to pay a fraction of a penny for it, and it spontaneously monetizes. That's never happened in the history of the world. It may never happen again. And Satoshi is not necessary, is not relevant, and it's an open source protocol, read the code, right, and decide for yourself whether you trust it.

1:13:42Yeah, I totally like the idea to swap your treasury into Bitcoin and I want to discuss another idea with you because all the people who hold Bitcoin today and we are hodling as a thing that we are doing for many years and we have locked so far more than a trillion of dollars in assets into Bitcoin which is in a way capital which is idling, you know. So that's why I want to hear your opinion about DeFi on Bitcoin, which would be a Enable that you can borrow against your Bitcoin and then reinvest it and as it's like decentralized infrastructure I think we've got an open market and there are Thousands of experiments and thousands of projects going on right now Well for example, MicroStrategy has more than 200 ,000 Bitcoin I just borrowed 1 .4 billion last week.

1:14:38That's DeFi. Right? And so how do we do that? We did that working with options market, convertible debt market, the NASDAQ spot market. Ibit, you know, is a black rock application. Sometime in the next year to two years, I'm sure that major wirehouses like JP Morgan or Goldman Sachs will give you loans against that. That's a different way to do it. But there's a bunch of crypto approaches. At the end of the day, the issue of, do you want to be able to get yield on your bio? You can get yield. The people that bought my convertible debt, they're getting yield. So there's a lot of ways to get yield.

1:15:21There's a lot of ways to generate credit. They all come with counterparty risk. And the question is which counterparty do you want to trust? And sometimes we trust something like FTX or Genesis and they let you down. Other, you know, some people don't trust the CME or NASDAQ. Some people don't trust whatever. I would never endorse anything. What I would say is that there's 100 ,000 experiments that will run. The answer is going to be different in Singapore than it is in China, than it is in the US, than it is in France. and it's going to be different five years from now than it is right now. So all these are morphing.

1:16:01But I do think the Bitcoin at the end of the day is the highest quality capital. It is going to, you know, is the most credit -worthy thing because you've got transparency to a 24 -7365. We have a situation where the credit markets and the payment markets are immature. There's a huge amount of work to be done over the next decade to build out all of these various parts of the financial universe. And like some people will do it very enthusiastically. Like Sam Bankman Freed was very enthusiastic, didn't know what he didn't know, and blew up. Other people will go slower, but they'll do a better job.

1:16:45And the answer will be different for every type of entity. So I am enthusiastic, but I don't think there's any one answer. I think it's a market economy. Warren. Hi. I love what you're doing and you're stock. In fact, I made five times more on your stock. And derivatives around it and buying Bitcoin. So one of my questions would be, why should we buy Bitcoin? Why don't we just buy your stock? And what do you think the having event is really going to do to the price? Bitcoin is a commodity. It's an asset without an issuer. Whenever you invest in a company, you're taking counterparty risk in order to invest in my stock.

1:17:26You should reasonably read 1 ,000 pages of disclosures. And I'll make the obvious point. People in Nigeria can't self -custody micro -strategy stock. So what we're trying to solve the problem of creating integrity, sovereignty, truth and hope for the world, that's going to be done by a protocol. Micro strategy is simply a high performance business. There's a lot of other businesses and every business does their thing in the world as best they can. We offer a very particular thing to us. We offer convertible debt to convertible arbitragers, and they have billions of dollars of capital, and they can only convertible arbitrage.

1:18:17So if we didn't give it to them, their capital wouldn't come in the ecosystem. And so that 1 .4 billion that I got came from them that went into Bitcoin. I need to do something for them. It's a complicated something. There's a lot of volatility to it, right? There's a limit to how much we can do. You just buy your stock there? You know the truth is I would recommend anybody that's interested in Bitcoin They should study Bitcoin before they buy anything and then after they study Bitcoin for a hundred hours They ought to I would say you ought to buy the Bitcoin the real debate ought to be do you buy the Bitcoin in self -custody by the Bitcoin Institutional custody by the Bitcoin through an ETF because what about the Bitcoin is the innovation Bitcoin is the innovation.

1:19:07If you are a professional investor and you have billions of dollars at capital, by the way, the investors in my company aren't allowed to buy Bitcoin. No more are they allowed to buy the ETF. They're charteries. Here's $10 billion. You have to invest in publicly traded operating companies. So my company is meeting a need for certain types of investors that are sophisticated. I'm not here to promote my company, right? I expect Bitcoin will be here a thousand years from now. My company won't be, I won't be. There's not much to be said there. What about the having? What do you expect to see? Bitcoin's right now, they're 900 Bitcoin naturally produced every day available for sale and the miners generally have to sell them.

1:19:56of high electricity bills and high debt bills and buildouts. Around April 20th, that'll be cut in half. That's 23 million a day or 20 something million a day. That's like taking eight billion dollars a year of supply out of the market. It will be the most consequential having in the history of Bitcoin, in my opinion. It will create a squeeze. that means at that point if the natural organic to band is an excess of, you know, 25 million a day, then there is no natural seller. So it's obviously, it's very bullish for the asset class and for Bitcoin holders. I think that by 2028, you'll be down to 225 Bitcoin a day.

1:20:44It'll start to become second order and by 2032 it's a rounding error in the noise. Who are the sellers of Bitcoin over the last six months in a year? I think there's a number of classes sellers. The bankruptcy estates like FTX bankruptcy, Genesis bankruptcy. A lot of these people have billion dollar positions of Bitcoin and other crypto assets and they're not long -term investors. They're just looking to unwind and get their creditors whole or unwind the trust. So they're the big natural sellers right now. So they were flushed out of the system? And they're getting flushed out of the system. And then I think the miners are the persistent natural sellers.

1:21:29Otherwise the volatility in the system, it comes. There's a, the primary volatility is the Bitcoin is cross collateralized and cross traded with the other crypto assets. It's an unregulated market traded offshore 24, 7, 365. There are many, many billions of dollars of Bitcoin held offshore. There's 400 billion dollars of ETH in the market cap. there's 80 billion and 80 billion of salana and B &B right now. If you had a billion dollars of crypto tokens offshore, you could post it as collateral and you could do a $10 billion trade in an hour on Saturday night, unregulated, unreported. So the wild west, the number one source of volatility, in my opinion, is unregulated offshore after hours crypto trading.

1:22:23The second, the lesser source of volatility is the options and the futures and derivatives market onshore during normal trading hours in the Western world. But I think that although they are capable of face ripping trades, the degenerates and the crypto ecosystem put them all to shame in terms of what people will do. Face ripping trades. Over the years, I've experimented with many intermittent fasting programs. The truth is, I've given up on intermittent fasting as I've seen no real benefit when it comes to longevity. But this changed when I discovered something called Prolon's 5 -Day Fasting Nutrition Program.

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1:23:50Great, great. Hey everyone, hey Michael, I appreciate everything you're saying. I just want to know what's your thoughts on Ethereum or Litecoin or any of the other cryptocurrencies out there? I stay in my lane, generally, and I say you should buy Bitcoin. Don't sell your Bitcoin. Bitcoin is good. I like Bitcoin. It's an ethical commodity. Everything else in the... What I'll say about everything else is, is the rest of the digital asset ecosystem is a bunch of good ideas with a lot of regulatory uncertainty and competitive uncertainty and technical uncertainty. So they're all interesting ideas.

1:24:37Digital currency is interesting. It's very controversial. Digital tokens are interesting. They're very controversial. digital securities are interesting, very controversial, digital exchanges are interesting, they're very controversial. I have no recommendations one way or the other. I just let their come. Jason. Hi, Michael. So I'm bullish on Bitcoin, so I have big support. But is there a situation or an event that you view that could potentially lead to the collapse of Bitcoin? Have you guys thought about what? So putting it differently, I was going to ask that question. If it's 10 years from now, and Bitcoin is failed, what caused it to fail?

1:25:21You know, when I started searching around, and I discovered Bitcoin, I thought, OK, well, this is crypto gold, but it's got none of the defects of gold. It's got all the attributes of a big tech monopoly. It's better money than any economist has ever conceptualized in the history of the world. So I thought this is kind of perfect money. I can't see it being more perfect. So the question is, is it going to be banned? Is it going to be copied or is it going to be hacked? You start as the denier. It's not a good thing. And then you go to skeptic. Skeptic is too good to be true. So when I got to my skeptical phrase, I just asked, will it be banned?

1:26:05Will it be copied? Will it be hacked? And I stared at it. And the conclusion was, it's only If it's understood to be property, not currency, then no, it's not going to be banned in a country that gives you property rights, which means it's banned in Cuba, it's banned in North Korea. If the world becomes communist and they deprive you of the bill to own things, that's an existential risk. But that's not a problem in Russia or China or the US right now. So not banned will it be copied? It was copied 10 ,000 times. They all failed. This is the winner of the 10 ,000 experiments. So yeah, it worked.

1:26:44And now will it be hacked? And Satoshi's got $50, $60 billion in a wallet out there and that's the reward for hacking it. No one's figured out how to get the money yet. So it hasn't been hacked. And I know it's able to store $60 billion without anybody hitting it. So what I think is I think the way to understand Bitcoin is everything you learned in economics and about money in your entire life with pseudo science and superstitious. You can't blame the economists for being mired in pseudo science and superstition because we never discovered perfect money. And so Bitcoin is the first time that we actually discovered a thermodynamically sound, mathematically sound economic protocol in the history of the world.

1:27:43So I think we will date things before Satoshi and after Satoshi. And I think that you can't think of it as a network or as a product. You have to look at it as a protocol the human race discovered like base 10 math, mass of protocol. like the metric systems, the protocol, like English as a protocol. And so this is the first sound protocol, economic protocol in the history of the world. Now we finally realize why C shells and bales of tobacco and fiat currency, and gold coins, and silver coins and copper tokens and glass beads, and the giant stone coin and the YAP people. We understand why that stuff never worked.

1:28:28Now you know, if you really understand Bitcoin, it's because I've got an asset where the energy is a half life of forever, and the half life of energy in gold is 30 years, and the half life of your money or your energy in the dollar is 10 years, and the half life of your energy in the bowl of R is one year. And now once you understand that basic breakthrough, now that light bulb goes off. So I think all the smart money, all the smart people in the world that don't trust the bank, don't trust the currency, want to keep their money, they're all discovering Bitcoin. It's like all the smart people decided to use math and use this language.

1:29:15And now what happens in the future? Well, stuff will advance, but you're going to have a trillion, then a 10 trillion, then a 100 trillion dollar network. And if someone comes up with a new crypto algorithm and it's better, we're just going to fold it into this network. And if someone comes up with another twist or tweak, we're going to fold it into the network. You're not going to, it's like saying everybody uses English in the world of science and trade today, but English doesn't have a word for my widget. So I think we should all switch to Swahili because they've got the word. And my answer is I think we're just going to put the word into English and we're going to stick with English.

1:29:56So Bitcoin is a protocol. It's going to go on a long long long time And I think that as long as the world doesn't plunge into some or well -earned No -property right situation. I think we're good. I'm gonna take three last questions from Paul from Mark and from Marina on Zoom Paul. Hi, Michael Paul, from Chicago Illinois. Very insightful talk. You've convinced me to get crypto, but... Not just, he's not pitching crypto. I mean, but Bitcoin, I don't think I'm clear. So that's, to be more specific, how do you think about these other stable coins, like Cardano and Ethereum, And is crypto in general a zero -sum game or not a zero -sum game?

1:30:49Cardano and Ethereum aren't stable coins. They're crypto tokens, you know, which are probably on registered securities. And so Cardano has been designated as an unregistered security by the SEC, explicitly in lawsuits. Ethereum is this massive gray zone. So at the end of the day, Bitcoin is the only thing in the world or university acknowledged by every rational, intelligent person is Bitcoin as a commodity. Everything else you're going to see people disagree on and fight over and litigate politically and there's a war that will go on. And so what I think is there's 10 ,000 things that people are going to fight over.

1:31:34There's one thing that is institutional adoption, it's clear. So it's like asking me which of the 10 ,000 mobile apps would I suggest I should invest in my answer is None of them because there's a 99 % failure rate and startup so I'm not gonna I'm not gonna recommend you invest in a company which of 10 ,000 buildings should you buy? I don't know which of 10 ,000 pieces of art should you buy? I don't know I mean That's your business right if you want to do that you do that the only thing that I'm here to say is Bitcoin is a digital commodity. If you want global money, then it has to be a commodity.

1:32:15It cannot be a security. I'm not going to tell you to buy Apple stock. Apple stock will not be a store of value in China in 100 years. I mean, even Tim Cook would tell you that. So the world is very complicated when you get into securities and other types of investments. The idea of Bitcoin is what if we had a global money that was based on a crypto network that's decentralized and ethical. It is zero sum. No, I think Apple will be a successful company. You know, you can... Is crypto itself crypto economy zero sum? If the government allow, if the administration flips and they allow companies to issue stable coins, then a company that issues a stable coin in a compliant regime will make a lot of money issuing it.

1:33:07And if the next head of the SEC says that Tom Brady can issue Tom Brady coin and 10 million tokens and file a quarterly statement saying how many tokens are out there, then there's a business there. So there's a million, as I said, there's a lot of good ideas. If you've got a regulatory regime that will allow you to do it in a legal fashion, then it might be a good business right now. That would be a dual song. But again, Bitcoin is, if you're trying to replace global money, if the question is, which is the global money, Bitcoin's the global money, it's going to eat everything. If you want to talk about what's going to eat, forget about cryptos, there's no money in crypto.

1:33:52Probably the total amount of money invested in all the cryptos since the beginning of time other than Bitcoin probably isn't even $50 billion. $1 million. My company's invested $7 billion. There's not a single person that's publicly and publicly disclosed who invested $100 million in any other crypto project in the last decade I can think of. So I don't think there is any capital there. The capital is in gold, real estate, art, corporations, the S &P index, and corporate bonds. And so what's really going to happen next is Bitcoin is demonetizing gold silver. It's going to demonetize a lot of real estate.

1:34:35It's going to demonetize a whole lot of... Why would you put your money in the S &P index when 493 of the companies are failing? So you talked about demonetization. The money, 500 trillion of it, is in the 20th century economy. It's not in the crypto economy. I mean, that's what's going to be a tack next. Thank you, thank you. Michael, after doing the amount of research that you've talked about in 2017, I made a very large, I put all of my investment that worth into Tesla. And then in 2020, when COVID hit, I started doing what you said not to do, giving it away. And I put a half million dollars to fund the Denver Basic Income Project.

1:35:21And so as we're making this transition into this new economy and we're not all sure what it's going to turn out to be. I'm curious about what you think the role is of universal basic income and Bitcoin as maybe a tool to finance that in the idea of trying to create an economy that works for all and seeing human capital as a type of capital that we might want to invest in more heavily as we think about putting our resources into capital. Well, I mean, the issue of UBI is above my pay grade. So that's an issue which I'm not going to pine on because I'm not an expert and it's not my area of expertise.

1:36:03With regard to Bitcoin, though, I do think that one of the killer apps of Bitcoin is to endow a charity. So using Bitcoin to power the end... I'm using Bitcoin to power my nonprofit, which gives away free education. and the promise of Bitcoin is you can do it forever. And so you could power a church, a park, any kind of charitable activity using Bitcoin because the number one problem they have is they need their endowment to go up over time. And so anybody that's got any amount of capital, if you're investing in it, you're getting a 20 % return instead of a 5 % return, you're actually gonna be able to perpetuate your mission.

1:36:46Bill Ackman had a proposal of like putting $10 ,000 into the S &P 500 when a child was born and then it would be worth you know, so many millions of dollars when they're ready for retirement. But I think it's a much sounder, you know, put $10 ,000 with the government to put it into the Bitcoin and then you don't have any dependencies there after, right? And the money is made available after retirement age. You can't touch it. I gave a pretty famous speech in Medirer where I said Bitcoin is for everybody, everyone. And the point really is... A lot of crowds cheering for you there. Yeah, well anybody that flies all the way to Medirer to talk about Bitcoin likes Bitcoin.

1:37:28But my point really was you can power a city, a state, a country, a church, a charity, a nonprofit, a family, a company. you can power any of those things. And if you've seen my other talks, we didn't go into it, but the S &P index is pretty much going up 7 % a year for 100 years, and the US dollar currency supply is going up 7 % a year for 100 years. And it doesn't take a rocket scientist to see that what you have is a basket of assets that are holding their value in real terms while they trend up in nominal terms. And that's not awful. I mean, at least you don't get poor, but what you really want is you want something to go up 14 % in value a year, why that's currency, why it goes up 7%.

1:38:22And the way you do that is you strip away all the counter -party risk of a company. I mean, you're all in companies, right? If you watch the news, you can see Amazon, Micah unionized, Apple, Micah find, Facebook, Micah sued, right? I mean Microsoft has their thing. So corporations are attack surfaces for regulation, taxation, tariff. And that's why over 100 years, it's likely that you're not going to be able to do any better than simply keep up with inflation under the best of circumstances. And if you want to power a family or a charity, you need to beat it. You need to grow faster. and now we're back to my phrase, like doing stuff as highly overrated.

1:39:10You know, Apple's on the iPhone 15. If you have to, you know, if you have to ship the iPhone 99 in the year 2100 in order to not have your stock crash, there's a lot of risk in that. Right? There's a lot of work. Marina, we're going to you for the final question on Zoom. Thanks. My question is really practical and logistical. So for those of us who have our Bitcoin and self -custody, what are your thoughts around the best way of keeping it safe when we compare something like a cold wallamp versus multi -six solution like Koso? I wouldn't feel comfortable giving a particular recommendation on that.

1:39:56I really think that But it's a function of who you are, like what stage in your life you are, how technically capable you are, your family situation, your political situation. So I will say this, which is if your retiree and your handshake and your eyesight's not not good and you simply would like to not run out of money or live comfortably. You probably ought to buy IBIT or by FBTC or buy some Bitcoin ETF through your broker that you've been dealing with for 40 years because the truth is you're probably not qualified. You probably can't literally type in the keystrokes necessary to recover or manage that and it would be foolish for you to even go there.

1:40:51If you're at a different stage in life, then you might find that the best of all worlds is you buy Bitcoin, but you leave with an institutional custodian with the understanding that on one week notice you can self -custody if and when you need to or when you lose faith in the counterpart of the custodian, right? And There are a lot of people for which that's the appropriate thing. And then there's another set of people that they would self -custody because they're capable and it's appropriate. And there are a lot of organizations that should, again, if you're running a company in a certain country where there is no reliable custodian or institutional custodian, it's It's inappropriate to suggest that the risk of holding Bitcoin at fidelity is the same as the risk of holding Bitcoin at a bank in the middle of a war zone.

1:41:48They're not the same, right? And so you've got extreme differences depending on who you are and where you are. And I think that, but I will say the obvious thing, which is when you decide to go to self custody, you're taking on a much greater responsibility and you need to be technically much more proficient and capable. So you have to put more time in and be prepared to do that if you're going to do it. Michael, thank you buddy. Thank you for joining us tonight.