Mailbag, incl: What’s Buffett’s take on crypto. March 22, 2026

27:05It's sort of like, you know, not that you shouldn't celebrate your successes, but, you know, there's the more, I guess, unreasonably promotional something is, the more just like, OK, just keep that in mind. The other one is, what was the promise? Like, there's a lot. They'll be very carefully worded for legal reasons. But if there's this implicit promise, not that you will just do well, but you will do well soon, no one can guarantee that. So be mindful of that. Look at the people running it. Have they got money invested in it? Like, that's probably the biggest tell of all, right? And I'll say it because you save you from having to do it.

27:43I know that you've pretty much your portfolio is largely what's in the service. So you might be wrong, but, you know, you've got skin in the game. 99 % of my portfolio, I haven't done the maths, but it's at least that by dollars, is invested in Motley Fool recommendations. We don't know if you'll be right, but we know you're trying. If Richer Sun loses money, I'm losing money too. Put it that way. They're really great signs. And the other thing I like is when things are, I like, and I know The Fool does this, I like outfits that when things are going well, they temper expectations. And when things are going badly, the message just stays the same.

28:20You know, it's not like all excuses when it's bad and look how we're geniuses when it's going well. So, and I mean, you still can't ever know, but I think there is something to be said for a group that has been around for a while, has got long term returns on the board, are honest and straightforward. It's all you can ask. And then, and I always say this about not just you guys, about anyone in the space. I mean, use it as an idea generator. to use it for what it is. It's advice. It's not explicit direction. You know, it's not like you must do this and you must do it exactly. No, it's not a thank you.

29:01It's not a mandate. It's like, hey, this is how we do it. This is what we like this month. And then I think you could go and look at 2 ,000 companies and try and figure that out yourself or you could just use the full as a shortlist generator. Like, wow. And even if maybe it's not this month's recommendation, it's last month. I just look, these are all the ones that are on the scorecard. Now I'm just looking at, you know, a few dozen companies. I'm looking at thousands of companies. And you're now operating in a target-rich environment, right? And I think that, you know, is that worth the, what is it, 90 bucks a year?

29:32I don't know. I'll say it is on your behalf, right? But that's the decision that everyone's got to work out. And I think where people go wrong in general with any kind of service is it's, and the bad operators play into this, which is what you've got to look for. But, you know, you've got to treat it for what it is. No one in the world has a formula for making money with no risk. Like, it just doesn't exist. And if you did, you wouldn't sell it. Well, you'd be a scammer if you tried it. That's how Ponzi skin's done, right? Look how good my returns are. Yep, look at that. So, yeah, just treat. You almost need that healthy scepticism that's on there.

30:15You need realistic expectations. you've got to go i can't i had a real god a mate of mine the other day he was having a little whinge about a particular asset that we've already talked about and it's just like dude did you see what did you do these are this and that and you said like when did i say in the next six months it's going to go to the moon when did i say that like when did i when did i say it wasn't going to be a bumpy ride actually i went out i remember the conversation i went out of my way to you know to do that but But your expectations were wrong. You heard what you want to hear.

30:46And we all do this. I'm not just having it go up my mate. You know, it's like before you've dipped your toe into the share market, it's like all you see is the gains. All you see is the riches. All you see is the good things that you want to see. And then someone will go, yeah, but be careful. It's rough. There'll be bear markets. There'll be drawdowns. Most people can't handle it. I can handle it. I'm not worried about it. Yeah, BS. BS with exclamation mark underlined. because when you have lost 50 % of your net wealth and every single talking head out there on the media is telling you that the world is ending, you know, and that you can just calmly just shrug that off and, you know, stiff upper lip and carry on, I don't think many people can do that kind of stuff.

31:27So just go in with realistic expectations. Remember that there's no secret that's out there and use it as one of many arrows in your quiver to try and give you a little bit of an edge on what you would otherwise have. And that is all that you can expect. Yep. No, so I'm not going to add more to that. But yeah, please stop him. Don't let him stop investing. Do whatever you need to do. If he's not the fool, that's completely fine with me. Go and find somewhere else that's going to work, Richard. I hope he sees it through. I hope he looks back and goes, oh my goodness, it's been such an amazing ride.

31:58I am very, very, very sure, but I can't promise or provide guarantees that he'll be very happy to keep doing it. Yeah. Vanguard Next chart is your friend. Print it out. Put it next to his wherever. put it on the kitchen table, put it on the wall. My nephews had it above the stairwell from the second side of their house down to the first. As I walked down the stairs, they'd see it. My wonderful sister put it there for them. So it's just get it in their head, get that comfortableness in their head. Hey, Russell sent us a question. Greetings and a humble knee in the presence of those stalwarts of the true path to financial acumen.

32:30Speaking of religions, Scott and Andrew. My name is Russell. Yes, you can use it. Thanks, Russell. I thoroughly enjoyed the recent Sound Money episodes. However, a couple of issues... I would have just shouted that into an empty room if that was the only option. Let's just say there was a chance they might have been published at all. I just let you believe it. You both, yes. However, a couple of issues, says Russell, with your examples supporting Sound Money as a concept. Now, note I'm not arguing for or against the idea, just the arguments you used. Fair enough. Cool. First, attributing Venice's use of widely accepted sound money to their success in the Middle Ages.

33:10I would consider that the sound money was a function of good government, widely admired by Renaissance historians, and the major trade status including several monopolies. And so although sound money facilitated Venice's success, trade would have occurred regardless, and evidence suggests the florin and the groat were also used by traders in Venice at this time, the precious metal content being the key. Yeah, he's right. is just absolutely right absolutely 100 right i mean and i hope i never gave the impression that it's like it's a single factor magic yeah you know so look at look at our just very quickly before you go on look look at our modern world that i every week i rant to scott anyone who'll listen about how crap the system is and how it could be so much better and yet and yet you can't help but look around and go things are better than they used to be and better than most other places Yeah, exactly.

34:02Yeah. And that just shows you the awesome power, the awesome, incredible power of human ingenuity, productivity, and at least a semblance of proper free markets and capitalism. It is a wonderful wealth creation engine. It is so powerful that you can still do all kinds of stupid stuff and just still mumble ahead, right? So it's just like, yes, it's multifactorial. And I 100 % agree with you, Russell. Excellent. He goes on to say, secondly, the reference to Nixon and his role in the end of the gold standard does have an aspect of poisoning the well. As bad old Nixon, he stopped sound money and the world has gone to hell.

34:41The nuance is always slightly more subtle, as this was not the first time the gold standard was abandoned in the previous decades. And some historians argue that Nixon's hand was forced. Yeah, he's right. So it actually, well, it's weird because the gold standard seems to imply that it was a perfect hard money system. But I said before how much I've been reading up on it. You know, they ostensibly had a hard money system, but they still had fractional reserve lending underneath that. So there was a, the banks were notionally capitalized by a hard money, but then they had this what's called fiduciary media, which was the money in circulation, the currency as opposed to the money, just to get a little bit more arcane.

35:27So, yeah, yeah, 100 % right. Like, it's wrong. Like, we have never, I will, not for a long time have we ever had a really serious, strict, hard money system. Actually, even way back in the days of the gold coins and that, there were still, people still operated on credit, even between different merchants and that kind of stuff, which is a form of money creation, right? It's a promissory note, whether it's written on a stone tablet or a clay tablet. Or currently, or not, or you have to have it come in at some point to deliver it, yeah. So Nixon, absolutely, you're right, Russell, he's not solely responsible, but he did cut the last semblance of, we stopped pretending at that point.

36:11Yeah, yeah. Yeah, it was just sort of like, at that point, it was just like, we're not even going to pretend. You know, there is really, you can just - Go on the charade. Yeah. You know? And this is why it's such an endlessly fascinating topic because you start with those high level, oh, it was this, and then you go, you look into it. Actually, this is outside of money and finance and economics. Everything is like that, right? I've been talking to you a lot off air about me mucking around with coding and AI, and this is it, and you go a level deeper and a level deeper and a level deeper. It's interesting when you hear someone who's sort of a master at something, right?

36:51And they've done the 10 ,000 hours and they still say the same things that the person might've said at the beginning of their journey, but they deeply understand it. And they understand how it's contextualized around everything else and the subtlety and the nuance that goes into that. We talk about it a lot on this pod with things like the PE ratio. Woefully inadequate and just an absolutely terrible tool, unless you've got the right frame of mind and understand all of its limitations. And actually it's a really great heuristic. if used correctly, right? And I think a lot of that kind of stuff sort of applies with this.

37:26So, and if ever you're listening to some of the, again, the Bitcoiners or the hard money advocates, they do oversimplify things. Both sides do, actually. But the devil is in the detail and it's complicated and it's layered. And isn't that great? Because that's what life is, right? Like it's just, it's not that we don't live in a black and white world. most things of importance, you know, take a real amount of time to think about and internalize and conceptualize. And, you know, I keep thinking, I often talk about this rabbit hole that, you know, I'll hit the bottom someday. I just don't. Like you sort of, you find a new path, you go down a new avenue and it's just endlessly fascinating.

38:10And then, you know, someone says to you at a barbecue, it's like, why should I buy Bitcoin? kind of where do I start? You know, you start with the little heuristics, the little neat. Oh, well, it's actually we went off the gold standard. And you make these statements because you would do the same if you were talking quantum mechanics. You know, it's like, well, it's both a wave and a particle. And you move on. You're like, whoa, whoa, whoa. So what do you mean? Well, it is a wave. What is it? Oh, well, that's kind of there's sort of there's energy can be spread out or it can be comfortable. What?

38:42And you go down and you go down and you go down. And it's just like, the universe is fascinating. And anyone who simplifies it too much, I think that there is a necessary simplification in a lot of formats because what are we going to get together and just, you know, run a four-year degree on Austrian economics and sound money philosophy? And even then, scratch this, even then, just allow you just sort of equip you with a rudimentary understanding that you can then go explore further so i'm actually russell you you i i i can tell that you're someone who's thought about it and read about it and and you're absolutely right to point out all of the nuance and i 100 agree i'm not going to argue with it i if only if if to i was to make any excuses it is unfortunately you do have to you do have to simplify and summarize at a point by the way we're talking before about you know how do you work out someone who's full of it and not you do the five whys you do that yes five whys are great isn't it great like such a simple i just i see all the time in the financial talking heads like they make a statement it's like i would bet pennies to pounds yeah that in most cases you would get three whys in and they would just be tied in knots you know it's like oh that's good is it why is that oh because of aggregate demand blah blah blah but why is that you know why is that and it is and very quickly they just get tied up in knots because they don't actually understand it what they're really doing is i've got these set of words that give me the uh aura of sophistication and deep knowledge and really what it is is i'm wrapping myself in a shield of obfuscation and jargon to give you that impression now that now even the the absolute zen master who has a deep understanding will use a lot of the same words but at least they will understand or much never fully understand because it's maybe impossible but at least to a much much greater and uh sophisticated degree as to what is is is going on and so i wish we'd done before about the what was it fridays about the journos asking bullet all the questions at the bank it's like you know just like this is what frustrates me with those kinds of interviews like why about this this okay and they move on because they're too embarrassed to say i do not understand what i mean explain that to me again oh this explain that to me i think they would be doing an incredible service it's also the structure right if you only gets one question they want their question answered and so no one's asking the follow-up question to the follow-up question to someone else's original question because it's just and we stay in the shallow end of the pool we stay in the shallow end of the pool where nothing interesting happens and no understanding is revealed and we all walk around thinking that oh we're so clever and sophisticated no one's got a damn clue as to what's actually going on right And then you go, well, what is going on?

41:30It's like, oh, man, how do I? Where do you start? You know? It's a journey. Richard then goes on and happily sticks. Russell, thank you. I scrolled down. Thank you. Russell goes on and then sticks the knife in. Now, mentioning the B word to keep Ram happy. You can consider the value of Bitcoin in many, many ways. But the reality is the best time to buy Bitcoin is when Scott sells his steak. That's true. Sorry, Scott. Love your work. Yeah, thanks, Russell. Yeah, no, that's not enough. Fine, that's like, no offence. I'll get you, Russell, don't worry. Russell got a question. He said, I've got a thought.

42:06Are financial planners destined to be a thing of the past with AI being so good? I mean, I've dealt with them in the past and had conversations with others about their experiences and considered a trained parrot could cover most of it. That's Russell for any financial planners listening, not me. I like Russell already a lot. Quote, negative gearing, squawk, diversification. Squawk. Create a budget. Squawk. Reduce debt. Squawk. Sign to our bank's funds. Squawk. End quote. Your thoughts, Rance, always appreciated. Thanks and full on, Russell. So if ever I'm absent, we've got to stand in. Either that or you're using a pen name.

42:45I'm not entirely sure whether Russell and you are different people or not. I mean, just very quickly to add, like all professions, very much ours included, there are absolutely wonderful financial planners out there. You know, I'm sure there's some good real estate agents out there as well. You know, like it is a bit of fun to put the boot in, but I do want to be real for a second and acknowledge that there's – like any service professional, you can go get absolutely terrible legal advice and you can get brilliant legal advice and you just – you don't want to pan the entire legal industry as a consequence of that.

43:17So I'll quickly put that in there just to signal that I am not entirely an unreasonable zealot. Not entirely. But there's a lot of truth in what Russell says, right? And the thing is, you know that's true because I know, I've got people I know who are in that space and they're the first to tell you. It's like, yeah, it's full of crooks. I haven't told this story for ages, but I sat down with a financial planner from a major bank years ago, years and years and years ago when I was living at my old place, at least 10 years ago. And he'd be on Twitter, I think, just wanted to catch up for a coffee.

43:50He said, yeah, we'll do that. And he asked, he commented on my thoughts on financial plans. We've had this conversation about the fees and that kind of stuff. and he kind of said to me he said yeah i agree with you but i gotta pay the bill somehow and i was kind of like that was about that was about as clear as you can be it's like i'm not enough value here but i gotta put bread on the table it's like i mean a heroin dealer could make the same argument right i know i'm not defending i'm just saying i'm trafficking slaves because i've got to put you know like that's the best reason is that for you to exist then okay that's the entire that's the entire defense of the gambling industry isn't it yeah i'm looking at money to poker machines for 85-year-old pensioners doing their retired pension every week.

44:28Oh, I'm so sorry. Then please go ahead. I didn't realise. I didn't realise it was your livelihood to cause credibility. No, I did. I just put some on my job. Yeah. Okay, right. Anyway. Thank you. Yes, very true. Russell, I think you're right. Frankly, stock pickers are equally at risk to some more. Also, like an absolute scumbag. Fund managers. 99%, yep. And I think AI is going to hurt financial planners for sure. I mean, there's a very can I be a little bit opaque here I will have more to say about this in a couple of months time but other than to say that financial broad basic general financial advice shouldn't need a financial planner except for the fact that our system is stupidly complex and where for example planners will come into the fore at least for now is you're right Russell about the basics negative diversification you mentioned create a budget reduced debt signed by bank's funds.

45:25Maybe not the last one. That's pretty obvious, right? Where it is difficult is like, well, hang on, I have a small business and I'm going to sell it. What should I do with the proceeds? Well, if you roll this over to that and pay tax on that, you put it in super one-off but only once every three years, only a total of this much money. And so you will get, if your circumstances are complex, you will get more value from a financial planner than you'll pay. Not because they're cheap, just because the tax system is so stupidly screwed and with so many loopholes and other ridiculous garbage. Same with accounts, right?

45:52Yeah, 100%. There really shouldn't be as much of a need for an accountant. And not against accountants at all, but it's just like they exist by virtue of a hyper-complex system. So this is the challenge, Russell. And I've got to say, by the way, and here's where the gap is. Because it costs so much to provide financial advice, largely because it does cost a lot of money, also because they want to make a lot of money, and that's also fine, financial plans are pushing people away. I spoke to – I wanted some advice on structure. Oh, man. Two years ago, I think we talked about it on the pod, I'm sure.

46:23And the guy basically said to me, all right, well, here's the thing. I'm happy to see my fee start at$3 ,000. Now, what does that do? If I've got the money that I didn't co-steam, by the way, if I've got the money to make that worthwhile, I'm going to do it. If I don't, I'm not going to do it. So who misses out? Who misses out of the people who have some money but not enough to justify that, who can't get personal advice but who may or may not benefit from it? And it's just kind of shredding his cat almost at some level. Like you don't know if you need the advice or you get the advice. And so it's kind of like, am I wasting three grand going to see that guy?

46:52It depends. If I walk out and go, I was doing that anyway, I've done three grand. If I walk out going, oh man, he just saved me six grand in tax this year alone. And every year after that, I'm ahead. Then I've made my money back in spades. So it's a really tough one. So I'm not going to defend or attack them other than to say the issue is the system. And that's where they will have some degree of ongoing business. Because at some point, I may be able to evaluate every single piece of your financial life and provide that sort of advice. But you have to tell it. I've been a small business owner.

47:25I've owned this business for 13 years. I sold it for this much money. My wife does or doesn't work. I've got one, two, three or four kids and a pet. I've got an investment property. I've also got superannuation. I haven't yet maxed out my super this year. But last year I did. My income is this level. So I have a division 293 tax to pay. you know I'm just this off the top of my head I'm not a personal financial advisor I just do general advice but even just as a start literally in three seconds off the top of my head I'm already going okay well unless I can know all of those things what's what are the chances to give me the best advice I'm not leaving money on the table and I don't know so I think AI is going to be wonderful for people who are in that under three grand worth of finance advice bracket right where It's like, well, that's not that complex and it should be reasonably simple and what things always need to do and know and to keep on track of.

48:15And you're right, mate. It is all the things you mentioned. So that's easy. Where they will survive is already where they're moving. And I guess my point is they're already moving to that high end because they're just saying, I'm not going to see you unless you're going to spend so much money. So they're self-selecting into complex situations. The number of financial planners has fallen. That's no bad thing generally. What worries me or concerns me is that middle group who are probably going to be worse off than they would have been if they'd seen a planner because they're not doing things they could do to make some money or save some money, but they can't quite justify paying the fee.

48:43That's the group we're going to lose out. If you don't have enough money to invest, you're no worse off. It's not a good way or a careless way. Financial planners can't help you. If you're going to afford to pay three grand, they will help you. If you're somewhere in between those two, you can't afford it and they won't see you and you're not giving the advice. And that's the kind of bit that I hope AI actually does fill the hole for because they are the people who could absolutely deal with it. Hmm. I mean, I just, for me, it's, it's a symptom of a, I won't say broken system, but a system that's, that's not as good as it could be.

49:12I mean, the fact that you need a professional to decipher all of the legislation and the ins and outs, it's just like that. Why? And again, we bang the drum about productivity and yet we're spending all these resources and times just on, on, to pay for guides in the form of financial advisors and accountants just to help us navigate our life when really, you know, in a sane world, it's just like, maybe I just spend less than I earn and I save it. Maybe I choose to invest a little bit of that in things that I find are compelling. And that's kind of it. It's kind of it. Now, the fact that that is almost a laughable kind of suggestion just shows you how silly things are.

49:54No, it's only by decree that it is that way. It doesn't have to. There's no law of the universe that it says that it has to be that way. So it's a shame. It's a shame. I'm just going to have a fun, and I'll read it quickly because no one likes lists on audio. I just typed in a chat GPT, briefly list the complexities in the superannuation system. That was just a question. Here we go. Multiple contribution types, concessional, pre-tax, non-concessional, after-tax, spouse contributions, downsizer contributions, all with different rules. Annual limits for contributions, plus the ability to carry forward unused concessional caps with eligibility thresholds.

50:24Total superbalance thresholds. Your balance determines what you can do, e.g. non-concessional contributions and bring forward rules. Three different tax phases, contributions, earnings, withdrawals. Division 293 tax, tax components, tax-free versus taxable portions of it balanced, crucial for withdrawals and estate planning. Preservation age versus age, pension age, conditions of release, retirement, reaching a certain age, hardship, disability, each with its own criteria. Retirement phase complexity, transfer balance cap, limits how much you can move in a tax-free pension phase, minimum drawdown rules, accumulation versus pension accounts.

50:51investment and fund choice complexity fund types, industry types, retail funds, SMSFs investment options, default DIY portfolios, fees and performance variability hard for members to compare apples with apples inertia and disengagement, multiple accounts, short term thinking, default insurance cover erosion of balances, frequent rule changes, lack of long term certainty, estate planning complexity binding versus non-binding nominations, supersits outside your will, tax on death benefits interaction with age pension, means, testing, strategic structuring. I keep thinking you're going to stop. I wanted to because I thought it was a bit too much but I'm like, that's it, right?

51:21I'm sure I cut you off there as well. No, no, I just got finished. I didn't read all the detail, but that was... Wow. Right? Wow. And that's super only. Yeah. Now, who do you think benefits... Now, let me put my cynics hat on. Who benefits the most from complexity? You know? The planners. Hey, well. And the rich, really. I mean, people always shake their fists at the sky about, you know, people doing funny bugger stuff and hiding their business. It's because the system allows them to. Of course. It encourages them to. And it was, it's got a little bit worse than that, mate. Not only is it the rich who benefit, but the politicians did most of it for vote buying.

51:58Yeah. Transition to retirement pension. Who needs a retirement? You don't get a transition to retirement aged pension, but you can take a transition to retirement superannuation pension. Because why? Because I want to get the money early. Okay, well, you can get it. Oh, 55, 50 or 60. Okay, that seems generous. But you're not retired. No, no, I'm transitioning to retirement. Yeah, roll over the limbs. I can add this. If I sell my house and throw money into super, it's taxed. Why? Just because it is. I'm thinking of that Drake meme where he was like, retirement? No. Transitioning to retirement.

52:31Anyway, that was just sorry about the list, but that's the story, right? Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

52:45Let's go to something from Nessie. Nessie wrote in previously and he says, Hi, Scott. Thanks for the continued discussion on Mean Reversion. Very much appreciated. No question this time, only two points. I'm back. A full member again. So we love you both equally now. Thank you, Nessie. That's very kind of you. Hey, well done, Nessie. Although, based on what Richard said earlier, maybe not a good time to join ShareAdvisor. My apologies. Maybe you don't love me after this, I'm not sure. Also, you were too modest last time. Well, first off, everything. Your name was on the US recommendation, so you deserve much of the credit for my US portfolio performance.

53:15Take credit where it's due. Nothing more, Nessie. Thanks, Nessie. That's very kind of you, mate. Appreciate it. Well done, mate. Yep. Ben says, Hi, Scott and Ram. I love the show, fellas. Like many, I came for the knowledge and wisdom and have stayed for the rants and the banter. At the end of the day, we're all just Women's Day. I have also been converted into the Bitcoin cult. Oh, dear. Have you heard the intense conviction of Dr. Page? Dr. Page. Professor, please. Professor Page. Professor the Honourable Sir Andrew Page. I didn't spend eight years in fake university to be called doctor. Thank you very much.

53:47You can't buy professorships off the back of Wheaties packets for free, is all I'm saying. Exactly. Having heard the intense conviction of Professor Dr. Page, it struck me there must be something to it. After reading a few books, I'm now a bull. See? That's what I say. Like, anyone who looks at it, right? Anyway, I've got another topic for you to do this question. Thank you, Ben, for getting us off that one. Oh, it got me excited for a second. Why don't more people use debt recycling to invest? We all have mortgages and many of us invest also. If you use loan splits, pay down your loan by the amount you want to invest anyway, and then redraw that back into shares, that's considered borrowing to generate an income, and thus is tax deductible.

54:27To not do so would be wasted leverage, right? This is why you need the financial planner, right? That's just the thing. To be clear on not investing money you wouldn't have done otherwise, or borrowing new money against the house. Discuss henceforth, Ben. It comes up a lot, this one. It does. We've done it a bit before. it kind of what am I going to say it's all opportunity cost of you're paying down the redrawing you could just pay it down and not redraw and pay the mortgage off quicker you could not pay it down it wouldn't be tax deductible so you're right Ben if you're going to do it anyway and not pay down extra using tax deductible interest to do so is smarter than not it's the best form of leverage for share market investing for sure as long as you're far enough ahead of your mortgage and or have the capacity to meet it if that redrawn cash is actually needed at some point.

55:15I would rather people be, I don't know, pick a number. Try and get a year ahead of your mortgage maybe at least. I don't know. I have to pick that out of thin air, but, you know, that kind of makes some sense. Give yourself a buffer. Right, exactly. Yeah. But look, Ben, yes, if you're going to invest$100, you might as well pay$100 off a mortgage, borrow the$100 back out of the mortgage and invest it. That's fine. If you're going to do that anyway and you're just literally pushing it through there. But again, as Ram said, I mean, look, I never criticise anybody, almost anybody, BHP aside, from using the tax rules that are available, right?

55:42So it's not bad. You're entitled to do it. If they want to change it, change the stock. And it's not going to criticize anyone for using the system. As long as you're doing it legally and appropriately, you're entitled to it. Get angry at the police. Don't get angry at the police. You're going to give you, I'm allowed to do this? Yeah, actually. We've set it up so you can do it. Okay. Now, whether that's a good thing for the society is a different question. Yeah, but no issues. No issues other than, as you know my thoughts, you could pay down the mortgage instead, which has its own monetary, fiscal, and emotional benefits, should you choose that.

56:10If you don't want to do that anyway, at least get ahead. And then, yes, again, I'm talking to you personally, Ben, but I don't mean to you. I can't give you advice. But, yeah, I have no issues. If that's what you're choosing to do, if you're going to invest it anyway, if you're going to have the debt anyway, pushing it through the structure to save your tax, it's a no-brainer. Yeah, I do it. Yeah. I mean, it's personal choice. It's just like anything down there, just go in eyes wide open, you know, because there's two sides to every coin, and there's nothing in finance in particular where it's just all upside.

56:39Like there's compromises, there's conditions, there's downsides. Right, right. And if you understand what that is and also just structure yourself. There's no formula here, but just sort of like how much, how bad do things have to get before your hand is forced? Yeah. That's how I approach it. And it's not that I can, I don't know what's going to happen. I mean, World War III could start tomorrow and like something that I thought was a 1 % chance last year might be an 80 % chance tomorrow. I was like, oh, I've made a horrible mistake. But I think that's a really good, rather than trying to predict what's going to happen, just assume the worst and then say, can I survive that?

57:19And if you can, you're just going to sleep really well at night. As Buffer says, never rely on the kindness of strangers. Yes. Don't put you up in that position. You know, it's like everything. Joe Maga, a former colleague, used to say, and it's not his line, but I associate with him, is when things go well, everyone looks at the P &L, when things go badly, everyone looks at the balance sheet. balance sheet and it's kind of a nice way of remembering that you know your ability to withstand stuff is really all that matters because you know if I the other thing Buffett says is people I've said this before gamble what they have and need for what they don't have and they don't need so it's kind of like at some point if I could get an extra percentage point or two would I go for it yes would I jeopardize the return I know I can get just for that knowing that I might go back to square one hell no you know I want to make a lot of money I don't want to make a lot of money so bad that I'm going to take silly risks it means if I'm wrong I'm down to zero again or even meaningfully below where I started.

58:08It's not... The greed always tells you... You're back to the point about, you know, the bloke who sells his house, goes and puts it on a casino in Vegas, puts it on black and wins double and goes home. He says, see, I told you it was a good idea to sell my house and bet it on black. You know, it looks like a genius. When it comes up red, you lose absolutely everything. I mean, I want to double my wealth, but I'm not doing it by putting the house on a roulette wheel, you know? So, yeah, just be sensible about it. I spoke to a friend just yesterday, actually. Okay. and he was talking about a friend of his.

58:37I haven't met them, but they live in Thailand, and they day trade, right? And, you know, I've got opinions on that, like I do with most things. Me too, yes. And, you know, and I was like, and I was like, how long have they been doing that for? It was like 20 years. I was like, huh. I mean, well done. Well done. Yeah, yeah, totally. But there's a little bit of a resulting in that, though, as well. It's a membership bias, right? Yeah. The other three friends that lived in Thailand day traded are now working as cleaners because they lost it all. You don't talk about them necessarily. Exactly. And it's just like, oh, he does this.

59:13And if he can just make 3 % on that because he's got a portfolio this size so he can make$30 ,000 a month and do this. And it's like, yeah, up until you can't. I mean, it's like that person you watch at the pokey machine who just like doubles it, doubles it, doubles it. And you take the goddamn money and they just keep going. They just keep winning. and it's like, okay, you can't argue with the result, but you can very much criticise the process and just separate what actually happened, which statistically was more likely to happen, is a good way of framing things. Yeah, I think that's exactly right.

59:50All right, let's move on to a question from Pete, who starts nicely and says, Hi Scott Ram, I'm writing from... Starts nicely. Okay, we're seeing where this one goes. No, I didn't mean... Well, maybe just, I don't know, we'll find out. let's see I'm writing you primarily to say a huge thank you that's very kind thanks Pete your discussions gave me the confidence to finally start my journey investing in Bitcoin seriously I'm orange peeling the country one listener at a time at least our podcast and then of course Pete I have to leave the country if this thing doesn't work out by the way I really just have to do the Motley Fool Money podcast solo and no one wants that and then of course Pete follows others and just sticks the knife straight in I got the price I deserved and a huge thank you to Scott for providing this buying opportunity.

1:00:32Thank you, Pete. I know you both, and especially Andrew, get a bit of stick for talking about Bitcoin too much. But as a beginner, I find Andrew's deep dives and first principles breakdowns incredibly helpful for grounding my understanding. Yes, the cult members always love the high priest. I suspect there are far more of us listeners enjoying the journey than maybe a vocal minority of grumblers might suggest. I don't know. We'll try and keep it balanced. Don't encourage it, Pete. My question for the mailbag, I'd like to answer this question too, actually, right? I've been looking into Bitcoin collateralized peer-to-peer lending.

1:01:04As an investor, the idea of lending fiat currency to others who use their Bitcoin as collateral seems like an interesting way to generate yield. I'd love to hear your thoughts on this new concept of investing. Is the 6 % to 12 % yield a legitimate proposition? And what are the risks one should be watching out for? Love the show. Keep the Bitcoin questions coming. And please, no more muzzling. Cheers, Pete. I cannot promise that Pete because you let Andrew off the chain and no one knows what damage could be caused so we'll keep the muzzle on the leash tight just in case but thank you for your feedback and it's much appreciated First thing I would say is and it's a wonderful meme in this space that like a lot of them there's quite a bit of wisdom in it and it goes don't trust verify and I really want to I'm like, obviously I'm passionate.

1:01:58Obviously I'm not short of an opinion and I, and I put it out there, but I really do. I do worry if someone goes, that sounds interesting. I'm going to do it. I, my hope is that if anything, it encourages, and I'm sure this has been the case for you, Pete, but I just mean more generally where, where like, if anything, it might encourage you to start thinking and exploring independently, please, for the love of God, no one do anything just because I said it. And the reason is exactly right now, you know, we're down actually up 20 % from the bottom. But anyway, you know, we had a pretty big fall there.

1:02:32We're still well below highs, right? And if you bought on the say-so of an overly enthusiastic podcaster, you know, you're not going to have the conviction to hold, you know. And you're probably going to do the wrong thing. So thank you for the feedback. but yeah, anyone listening is just like, and this goes for, this is beyond the magic internet coin as well. Like any stock that Scott is talking about, like just, it's just our opinion. We're just so fallible, so wrong. The list of mistakes we've made in our lives and continue to make, it's just too long to mention in any podcast. And it's just, I say all of this because it's just, it's easy for, it's easy to be swept up in a bull market in particular, right?

1:03:18Like it's just so easy to. And I really do want to stress that there's going to be a lot of times like right now where it's like we're looking at the past peak as like, it was better at$190 ,000 Australian dollars than it is at$105 ,000, right? So, yes, Bitcoin-backed loans. It's hard to generalize because it's like any kind of lending, right? There are sensible loans that are written every day to people with good assets, good income generation capacity at a low LVR that are going to buy a very sensible asset. Anything wrong with that? No, I don't have any problem with it. At the same time, there's someone who's taking a private debt obligation to invest in a racehorse and putting everything they have on the line as collateral.

1:04:04And if something goes wrong, they're wiped out. Now, how do you say credit is good or bad? It's like, well, it's my favorite saying. It depends, right? And the same very much goes with Bitcoin backed loans, whether you're the lender or the borrower, right? Like whenever you, the whole, one of the great things about Bitcoin is there's no counterparty risk. It's very unique, except for things like gold in that kind of respect. As soon as you start entering into these contracts, that is no longer true. You have now contractual counterparty risk. How much, how big is that risk? Depends on the person.

1:04:38If I land Scott 50 bucks at the pub one weekend, I'm pretty sure he's going to pay me back. You know, if I give it to a junkie on the corner, I'm never seeing that money again. Right. So you do have to bear in mind that. And it's very, very hard to tell from the outside, particularly in an industry that is so nascent and particularly in an industry that is absolutely full of scam and grift. Let's be real here. I'm a big advocate for the underlying base technology, but a lot of people have circled around that, attached themselves to that, doing all kinds of dumb things with it. Look at Sam Bankman Free, single-handedly set the whole movement back a decade.

1:05:20And from the outside, it's like, well, wasn't he all about this? It's like, well, maybe. It's like the internet or just the Australian dollar. There's all kinds of scumbags that use the Aussie dollar and the internet. Is it bad? Well, no, it's just that it's the technology is neither good or bad. People use it in different ways. So it's the same with this. The good thing about some of these things is that the world hasn't worked. I won't go on because there's some interesting things happening in Wall Street right now with what strategy is doing. But in terms of collateral, the banks are going to wake up to this one day, right?

1:05:58Think about this. I go to the bank. I want to borrow some money. I go, okay, what's your collateral? My house. Great. We'll take it. Here's your money. Beautiful. Now, things go bad. Think of the legal process of evicting me. Think of the procedural process of then selling the house, of waiting for settlement, of getting the money. The lender has collateral against the loan, but it's very, very illiquid. And the price of that collateral could be anything by the time you actually get around to selling it. Particularly there's a, you know, God forbid, nationwide housing slump and drops 20 % and there's a whole bunch of four sellers like all the collateral that I thought was there wasn't there now look at it from the Bitcoin perspective I know in real time 24 7 365 day exactly what it's worth to the fraction of the cent and if I ever decide that you have breached your loan obligations I can liquidate you instantly like it's it it is like the best it is it is the best form of collateral and people go but volatility is like no volatility is not a thing on on instant disposal right it It doesn't matter.

1:07:02So anyway. I mean, it matters between this two times, between the Bitcoin, a Bitcoin's always worth a Bitcoin. Oh, yeah, if you take a loan and the collateral halves. Yeah, for sure. Yes, yes, yes. Yeah, definitely, definitely. But my point is, is if that happens, you're out. So there is almost no risk to the lender because it's sort of like, okay, I've got, and it depends, I don't want to get too technically, but it depends on how that's, like if you have, you're going to have shared custody with multi-signature and some of these sort of more technical things, which just basically mean that, you know, smart contracts is all this kind of stuff as well, such that if anything defaults, it's like, it's actually an algorithmic decision that, you know, no one else is involved.

1:07:41It's like, oh, you're broken, boom, you're out. And it's just, whoa, that just happened. So unlike the situation where maybe you've got a margin loan, US markets crash, share markets close in Australia, by the time it reopens, it gaps 30 % down and the margin lender now doesn't have the collateral that they thought. These things are not possible in a Bitcoin credit system. So it actually has a huge amount of advantages, but it depends on the provider. It depends on the platform and it is absolutely full of weird offshore dodgy operators. So do your due diligence and please be aware that you still have that counterparty risk, right?

1:08:24Not your keys, not your coins. You're giving away your keys when you collateralise, depending on which side of the transaction you're on. I was going to say, can I unpack? I'm sorry, you fish off. No, no, that's it. That's it. That's it. If you're using Bitcoin for collateral, why? I'm trying to work out the motivations of different parties in this one. Because what are you giving your Bitcoin for collateral for that you wouldn't otherwise be using the Bitcoin for other than just a play on the Bitcoin price relative to Fed. But if you're collateralizing with it, so I don't say collateral, right?

1:08:58Or to whatever degree it's not fully collateralized, that's the risk you're taking. Yeah, yeah. Well, it's why would you borrow money full stop using your house or your car or your income? It's always pledged against something. It's just something else. It's the same thing. But if I'm – that's what I'm trying to work through. I apologize. I'm literally – as a naive question, I'm not making a point. I'm not literally asking the question because I'm trying to understand. And if I... Banks will lend me the money because they figure they can make a margin on the loan, right? That's their business.

1:09:28Right. They create money and they charge interest on it. Okay. But you don't get to do that in the Bitcoin world. So in theory, you're collateralizing it 100 % of the value of the loan, aren't you? Or is it a partial collateralization? Oh, it's a billion different flavors and setups and structures and whatever. So I know Strike is a US company that's doing a lot of stuff here. But if I had one Bitcoin, what would I give that up? What would I collateralize against that that I wouldn't use the Bitcoin itself for? If it's 100 % collateralization, then I might as well use the money. And if it's not, someone else is taking a risk.

1:10:03Because you don't want to sell your Bitcoin. You don't want to trigger a capital gains event. So there's plenty of people out there at the moment that might have bought when it was$100. They're sitting on an absolute fortune. I don't want a capital gains tax, but I do want to enjoy some of the spoils. So I'll take a loan against it. That's actually tax deductible. You know, enter financial planner who will tell you all the reasons why that makes sense. So there is spending the money without spending the money. And, you know, the math is actually, whether or not it happens, but the math is straightforward.

1:10:31Well, maybe I'm just doing it because I see an opportunity to invest in an ASX company I think has got a great amount of potential. I don't want to liquidate my Bitcoin. I don't want to get charged tax on that. but I do want to access some capital to allow me to prosecute this opportunity people borrow money for all kinds of reasons

1:10:54it's weird because we haven't done it before but in a way it's very like exactly the same I'm trying to understand the well some people do it because they want more Bitcoin I had a chat to a friend just the other day and they've said that what a gift from heaven this correction has been. I've used my Bitcoin to borrow some more money and I'm using that money to buy more Bitcoin. And, you know, that sounds really reckless, but I think it's very low. Yeah, but, you know, it's like it would have to fall another 80 % from here. I don't want to cast judge on each to their own. This is the whole thing.

1:11:27I'm not either. I'm trying to do the mechanics of both sides of the transaction work out. Who would accept Bitcoin as collateral and who would post as collateral? I'm just trying to think it through. I would accept Bitcoin as – if I was going to lend something money to someone, I would accept Bitcoin over any other asset personally. Okay. For all of the reasons that I said, I mean, it's weird, right? I get, I know how that's like, Oh, someone's offering you a house and you're going to take their, their, some intangible made up kind of things like, yeah, because I can just, I can get my money back in an instant.

1:11:57If I want, if I, I mean, it doesn't even matter what my view of is of Bitcoin. I can just liquidate. I need to call the loan at the current value though, because you couldn't liquidate unless they defaulted on the loan in theory. So if they break their contract. If they break the computer, if they don't. If the price of Bitcoin was to fall by 90%, you could still have one Bitcoin, it's still worth one Bitcoin, as long as a house is worth a house, but you are taking the purchasing power risk, right? Yeah, so one house is one house, right? My house is a house regardless of what the market value is, and I've still got that as collateral.

1:12:24Correct, correct. I get it. Conceptually, it's hard, but it's the same thing. It's just all you're doing is you're taking away you're taking away illiquidity and transparency. You know, instantly, you know, they'll send a value around here. He'll suck their thumb and stick it in the air and go, your house is worth that much. I don't need to do it. I know exactly what it's worth. And then it's like, okay, you breached your contract. I'm selling your house. Good luck. I'll see you in a year when that finally settles. I'm selling it in the next three milliseconds. Right. It's got every advantage under the sun.

1:12:59Yeah, I get that. With the exception of, because the price is volatile and uncertain, it would be the same as using shares for collateral in a given company. Yeah, it's like a margin line in that respect. Yes, exactly. I don't mean it in a bad way. I'm literally trying to think the first one. No, I don't take it in a bad way. I mean, this is the thing, right? And I even said to my mate the other day, right? It could be a decision that you regret. Leverage is always risk. Yes. Always. It's a question of how there might be very, very moderate risk. Like I've got a house that's worth$10 million and I'm borrowing 50 grand against it.

1:13:31Is that risk? Well, yeah, technically it's risk. It's just very, very, very low risk, you know, but there is risk. And so all it is is a question of degrees. And what we need to do with this discussion, I think more generally is just remove a, I'm not saying this of you, just in general. It's like, forget about what you think about the asset. All you want is I've entered into an arrangement with another monkey out there, right? We're all just hairless apes pretending we know stuff. You know, we've effectively just signed a bit of parchment digitally that we've made an agreement on. And just in case you're not going to honor that or be good on that promise, I've got a little bit of security in case you go off the reservation, right?

1:14:20And it's the same exact thing. It's nothing new. Nothing new in that regard. No, yeah, that's right. And that's why, but it's also worth thinking about where it's different and why you would, as opposed to using other collateral as a borrower or a lender again in the same context. Just, you know, why not go, why not houses, why not cash, why not sheep, why not trees? You're right, it's no different, but it's also worth thinking through the motivations of those who would choose to use that mechanism. Because it's not a peer-to-peer. You can peer-to-peer lend now using cash cash. Yes, yes, you can.

1:14:47And I'm not saying good or bad. There's no value judgment on the Bitcoin other than just, It's an interesting idea. I'm just trying to think through where and why. Oh, it's an idea. It's an idea whose time will come. And I mean, it just, you can say it with such confidence because I know how bankers think. Bankers like lending money. That's what they do. Like that is their whole raison d 'etre. How does a bank do it if they can't, because they can't create it, right? So they're going to have to charge a fee differently to. No, I'm talking about fiat money, right? Oh, sorry. We said time to come.

1:15:16I thought you meant banks. Yeah, yeah. Oh, no, they're doing it now in the US. this whole clarity and genius act stuff is to clear the decks to allow banks to accept this as collateral right in fact there are institutions that are already doing it today and they love it because it's risk-free it's like i can magic most fiat money out of thin air i can lend it to you if everything goes well you pay me back and you pay me some interest it was easy money oh turns out you're an absolute scumbag it's okay boom i'm liquidating your collateral and i'm still okay there's no downside yeah there's no that well let me very care i gotta walk that back Like the risk would be that the market gaps so massively and so quickly.

1:15:57But that's what's interesting. At a trillion dollar asset with tens of billions of dollars traded every day, this is why Bitcoin is different from crypto, right? That depth and market maturity of it allows you to do things that just aren't possible with other sort of digital assets. Unless I'm misunderstanding you, though, I think when you say there's no risk, I think either we're disagreeing or you're glossing over the possibility, unlike in your world because you're a Bitcoin bull, that Bitcoin is worth just permanently less. If I accept Bitcoin as collateral for a life. Yeah, but it's not going to die in an instant.

1:16:32It doesn't need to if the contract's not broken. If I lend it for five years and you don't break the terms of the contract, I get the Bitcoin back in five years at whatever the price is at that point. Yeah, yeah, you do. Yeah, yeah. But I'm fine as well, though. But that's the risk because the value of the collateral depends on the value of Bitcoin, at least. Wait a second, you're talking from the borrower's perspective? Yes, I know. If you break the contract, I get to take your Bitcoin. I only get the value of the Bitcoin when you break the contract, which might be double or half the price you put it up as collateral for.

1:17:01Well, this is how margin lending works. Yeah, but that's the risk. But I'm not saying it's any better or worse than margin lending. You're saying there's no risk. Because you're saying I can always sell the minutes in minutes. There's very minimal risk from the lender's point of view. So let's say I do it. His guy has$100. He's like, okay, I'm going to lend you$100, but I want$200 worth of current price of Bitcoin to do that. It's just going to sit there and I'm not allowed to legally touch it. But if you stop making payments or something, and I'll have a trick. So margin lenders might have, they have different lending ratios for different stocks, big liquid, like a woolies, they will lend.

1:17:31A margin lender will lend you a lot more money on woolies than they will on some dodgy little specky. In fact, they won't lend against that at all, right? And so all of a sudden, everything's fine. You service a loan, it reaches the end. you pay me back I hand you back your Bitcoin we have both now maybe you've taken some exposure duration risk with your you know and the asset has moved and whatever but let's say that you you stop paying your interest and you break our contract and let's say that Bitcoin goes from 100 down to sorry 200 down to 100 it's like alright I'll sell now and I'm whole but if it goes to 90 you behind I'm just making the point you are relying on that's why I walked it back in terms of so it has to be very quick no it doesn't have to because you haven't broken the contract If Bitcoin falls from$200 to$90 over the first four years of a five-year contract, and then you break it, you get the Bitcoin at$90, because that's what it's worth at the time you take the collateral.

1:18:21Well, if I've been really dumb in where I set my LVR trigger, then yes. But I'm not going to do that. What I'm going to do is I'm going to say, I'm going to lend you$100, only$200 worth of Bitcoin collateral. If it gets to$150, you need – I used to work in margin lending yonks ago. So it was a fun phone call. Hi. Hi, it's Andrew from Blah Blah Margin Lending. you know that money that you borrowed from us? Well, that collateral that you gave isn't worth as much anymore. So here's the deal, right? So you either give us more collateral or I'm selling you shares. Is that the case with P2P Bitcoin?

1:18:58Does it have an LVR trigger? Yes, it does. But again, there's like 400 different flavors and a thousand different ways that people are doing it. But any sensible operation, I've not yet ever come across anyone that will say, I'll lend you$100, I want$100 worth of collateral. It's like, no, that does not happen. That doesn't even happen in housing. Right? You have to have mortgage insurance if you're above 80 % over here for housing, which is sacrosanct. The government will pay that if you're first-hand buyer. Right? We don't have the hook for that. Yeah. Sorry. But that answers your question. I am just not going to.

1:19:38In fact, I should have mentioned that because Will's really, I think if I understood him correctly, he's coming from the point of view as just like, I want to lend the fiat and I will, on these P2P platforms. That's what I was, yeah, I think so. Yep. So again, if look at the, it's hard to answer because I don't know the platform, I don't know the nature of the contract, but I assume - And that's probably the broader point, right? And that's the broader point. And that's why I said there's a lot, it's a great idea, but like a lot of early ideas, there's a lot of scam around it. But if the platform that you're looking at means that there is some kind of custodian arrangement where the person can't just walk off with their clutter, which I find that very surprising if that wasn't the case.

1:20:20And if the LVR is anywhere under 100%, and most of the ones, like the best I've seen, I think, is about 50 % or 60%. And you can, I think, on a lot of platforms, you can sort of specify yourself. Again, it doesn't make it risk-free, but it goes back to that initial point of something that, you know, hyper risky and very minimally risky. Yes, there is risk, but I, yeah, if I've got extra fear around that, I will lend and I will get Bitcoin as collateral and I get three times as much collateral as I do. It's like, I'm feeling pretty good about that, particularly if the other person has no option to just like disappear with their collateral and it's held in trust by some third party or by a smart contract in an algorithmic kind of setting.

1:20:56It actually, it potentially, it's actually a thing of beauty, I think. As this as a thing matures, it is a wonderful way to take, not take, to facilitate the lending from people who have excess capital to those that need it. In a free and open market with interest rates set by the individual participants, it's just nirvana. The only way Pete's talking about it is actually as a futures contract. It feels like a futures contract the way he's talking about it. This is hard to know. Because he's saying he's a bull, right? And he's saying he's – yeah, we shouldn't assume, but let me draw a conclusion, an assumption.

1:21:39He says as an investor, so he's a Bitcoin bull, to keep that in mind, the idea of lending fair to others who use their Bitcoin as collateral seems like an interesting way to generate yield. That feels like a futures contract. Yeah, yeah, yeah. You get paid the premium, and if the price falls or they break the contract, you get to take the Bitcoin on top of that. And if you think Bitcoin's worth more than it currently trades for, you're happy to get it at a lower price or at the current price for free. Not for free, but on top of the yield. If worse comes to worse, you get the Bitcoin, you've got a long-term...

1:22:07If Berkshire falls to$40 ,000, I'm happy to take the Berkshire shares. And if I get paid a yield to do that, then I'm kind of up on both. It sounds like that's how you might be thinking about the investment. It's hard to know, right? It could be right. Well, here's the risk then, Pete. Let's say that you've, I'm just going to make numbers up here, right? Let's say you've got 10 ,000 in Bitcoin and you've got 10 ,000 in cash and that you're thinking, actually, I can lend this 10 ,000 in cash and I can get 12 % because interest rates are higher for all the reasons. You're going to regret that decision if Bitcoin compounds it, it's traditional.

1:22:40Which is always the problem with futures contracts, right? You get the premium if the shares go up. Oh, I made 12 %? Yeah, that's right. If I just bought more Bitcoin with that 10 grand and I got a 20 % CAGR over 10, that's the risk. That's exactly the risk. Yeah. So this is the world of what we live in. It is always compromise and trade-offs. And that is that. I would, no judgment, no anything. Me personally, no. If I had any spare cash, I'd just be buying more Bitcoin. Well, it's kind of like that, right? Because if you're a Bitcoin bull, you want to buy the Bitcoin. And if you're not a Bitcoin bull, I wouldn't take it as collateral.

1:23:15I think the Bitcoin value is going to fall because then you run the risk of calling the loan and actually getting less Australian dollars of value worth of Bitcoin for the purpose. It's almost kind of like trying to play the really narrow field between those two points is a tough one. Yeah, you're right. I guess my point of difference would be, yeah, I mean, if you hate the whole idea of it, then you're probably not doing it anyway. But I just made the point that if you do happen to not be a fan of it, it's the same as my argument with energy, grid stability and Bitcoin mining and people love to jump up and down about it.

1:23:49It doesn't matter what you think of Bitcoin. All that matters is that if you've got liquidity and depth there, that you can exit at any point very quickly with very little slippage, which is the world that we currently in. Now, I can't guarantee that that will always be this, but I can't guarantee that about US bonds either, right? So it's not trying to be slippery here. I'm just saying that in that in that world, I hate Bitcoin, you should still want to accept it as collateral because when you think about it objectively, it's actually superior than most other forms of collateral. It's more, better collateral than your car, better collateral than I promise to keep working and pay you back.

1:24:27Because I know you've got it. It's verifiable. Not about housing though, I wouldn't have thought. Hell yeah. Not if you're not sure it's going to go up. If you're not aware of Bitcoin, Bitcoin could be worth a third or a quarter of what it's currently trading for now. Yeah. The chance that your house is worth a third or a quarter or a property is worth a third or a quarter is much, much, much lower. Let's do it as a hypothetical. Let's say you lend someone some money. Yep. And again, I give you$100. They give me$200. Today's$200 worth of Bitcoin. Yep. And it's on its way down to zero. Yep. It's completely dead, like really dead, right?

1:24:59Now, there is the situation where it dies instantly. And I don't want to put odds on that, but I would suspect it's credible. And if that's on your agenda as a possibility, don't do it. Yeah, exactly. Don't do it. But excluding that possibility, it goes from$200 to$190 to$180 to$150. At a point miles away, let's call it at$120. The collateral that you've given me now is$120. You only owe me$100. I've still got it. I'm out. I'm done. So it's like, yeah, but I don't like Bitcoin. Great. Sell it. But how's that better than housing, though? Because how, have you ever sold a house? Yeah. Dude, how long did it take?

1:25:39From when you and your missus decided we're going to sell, I would reckon from that committed decision to the actual money arriving in your bank, I would be surprised if it was less than six months. Oh, actually, the last question we moved here was, but I take you brought it apart. You know what? It wasn't one second. It was about a month and a half. I bet it wasn't a second. I bet it wasn't an hour. I bet it wasn't a minute. And what I'm talking about is a second. Yeah. Right? So what's not to like? Is that rain on your roof? It's right on the roof. Can you hear it? It's lovely. Yeah. Sorry about the...

1:26:15Now, again, this is what's so... I'm going to go on a little rant here. This is what's so beautiful about how credit should be priced. Without this nonsense of central planning bureaucracy crap that you can... You know, the way that we do it at the moment, the way that you determine credit is by the free exchange between those who have excess money and those who want it? Do I think you're a good risk? How much collateral do I want? What interest am I going to charge you? You know what the right answer is? Whatever is appropriate to me and you. That's what's the right answer. And in aggregate, when you layer that up, you will actually have a very honest, transparent, free and open market and you will actually price for the first time in a long time credit exactly how it should be priced, which is the same way that we price coal and iron ore and bananas because it's an incredibly powerful and potent way of doing it.

1:27:03And I just think that like, and that's why I don't do this. I don't do this stuff, right? Yeah. But I'm so in support of it as a concept. I'm not against it at all. Yeah. No, no, I'm just, I'm not saying it shouldn't be done or people shouldn't do it. I'm just, I'm just thinking through when I would choose to do it and not do it. That's how I would consider it. Oh, yeah, you're right to do that. As a writer of collateral or the borrower of, you know, borrowing against someone else's collateral, I'd be thinking about the potential risks and downsides. And you do that? and you do you, I do me, Jane does Jane, Gary does Gary.

1:27:33And in aggregate, we have a very accurate cost of capital and we have a very efficient allocation between savers and those that need capital. And society and civilisation flourishes into a golden age, the likes of which we haven't seen since the era of Venice. And that takes us to the end of our podcast. Thank you for everybody listening. I'm really not even joking that much. It makes a hell of a lot of sense. See, and this is where you leave the dark, horrible realms of pessimism and despair. And find your sunlight optimism, mate. I'm happy for you. Bitcoin is hope. Hope or hopium? A bit of both.

1:28:19Mate, that was a great summary. Thanks for the great chat. Thanks for listening. If the two of you are still here, thank you very much. If no one's listening by now, just feel free to cut the episode here because we're pretty much done. Until next Friday, you'll come back, won't you? Hell, I mean, more of these questions. Try and stop me. No, we'll be calling on Friday. I can't promise I'll be on Sunday. Take your own risks. Do your own thing. Do your own research. It's a free market out there. Until then, full on. Cheers. The Motley Fool and people appearing in this program may have positions in the companies mentioned.

1:28:47General advice only. Please speak to your financial professional to understand how it may pertain to your situation. Subscribe to the free newsletter at fool.com.au forward slash listener. The Motley Fool operates under Financial Services Licence 400691.