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WHY 99% OF PEOPLE ARE WRONG ABOUT BITCOIN | Beyond Bitcoin · Simply Bitcoin

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  99% of people are wrong about Bitcoin.
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  What? What are you saying, guys?
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  Come on. It's not meant to be real.
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  It's just inflammatory. 99% of people are wrong about Bitcoin.
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  That's right. I said it.
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  I'm the contrarian. Many of us are quick to
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  criticize institutions for buying Bitcoin, but have you
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  ever thought about it critically?
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  I bet not. It's the summer of paper
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  Bitcoin. Are you now asking yourself what
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  paper Bitcoin is? With all this news about
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  companies buying up the Bitcoin like Strategy and BlackRock, why
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  isn't the price just skyrocketing, I wonder?
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  And for you folks that are holding stocks and Bitcoin
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  treasury companies like Strategy or BlackRock, you're going to
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  want to stick around to the end of this video.
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  Today I want to breakdown what you might be missing about
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  institutional adoption of Bitcoin and why Paper Bitcoin
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  summer might be here to stay. Count me in for Paper Bitcoin
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  Summer. I'm freshly shaved.
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  This is beyond Bitcoin. Let's go.
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  Paper Bitcoin summer. Yeah, count me in.
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  Do you ever wonder how all this demand is coming into Bitcoin
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  but the price is staying flat? I bet you wonder that all the
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  time. Are you thinking that real or
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  paper? More and more companies,
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  institutions and treasuries are placing Bitcoin on their balance
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  sheets. Oh, and by the way, if you're
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  this far along in the video and you still don't understand what
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  paper Bitcoin is, I have a deeper dive into the subject
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  somewhere up here. But the short answer is paper
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  Bitcoin is just a Bitcoin derivative, something like
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  strategies, MSTR or Blackrock's ibit ETF.
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  I spoke with my good friend Fundamentals on the subject,
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  who's an actuary. He manages investment risks for
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  publicly traded companies. He recently wrote a book titled
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  Bitcoin for Institutions where he makes a strong case for what
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  executives and company financiers need to know before
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  they even think about getting into Bitcoin.
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  Link in the description below. The number one issue that
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  companies need to understand before getting into Bitcoin is
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  that Bitcoin is for individuals first.
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  Take a look. It's the wants and needs of
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  individuals that give Bitcoin value and at least that's how it
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  really occurred to me and that's how I got it.
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  I I spend a lot of time in the first section of the book
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  explaining why individuals are way better than institutions
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  that holding Bitcoin And I'd say good luck, like good luck
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  married couple competing with an individual.
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  OK, you add one person to the mix and you've now challenged
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  the ability to huddle significantly.
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  You add a third person, you're you're really going against the
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  odds now. And part of the reason is
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  because, and this is I I really get into this.
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  It's requires being unreasonable and irrational.
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  You have to have the ability to say, I understand what everyone
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  in the world is saying, but I believe something different.
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  And I'm going to, I'm going to do what I'm going to do.
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  And it's much easier for one person to do that than a
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  partnership or a tertiary ship or four or five, you name it.
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  Right now, you add governance, you add a board, you add
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  accountability. Oh my God, it's forget Bitcoin.
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  You can forget about it. This is my view, right?
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  This was my view going into writing the book.
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  Like you can just really forget about it.
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  If you're going to think you're going to get an organization to
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  agree on holding Bitcoin for a long period of time.
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  I mean, there's just too many things that are going to happen
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  that are going to cause an organization to dump their
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  Bitcoin, right? It's going to go down.
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  It's going to go up like all of these things.
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  And if you're not like really clear in your conviction and you
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  don't have the ability to be unreasonable goal and to tell
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  everybody to go F themselves, you're probably not going to
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  hold your Bitcoin. So this is a big challenge for
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  institutions. And when I say Bitcoin for
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  institutions, this is really where I'm coming from.
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  What do you really need to know? And so you really want to
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  understand how like, well, what are the advantages that
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  individuals have over you? Well, for one, they have way
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  longer time horizons. Time horizon for companies is
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  literally a quarter long. You have to be willing to do
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  something for a long period of time to be able to learn how to
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  do it. And individuals have that
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  horizon. Institutions do not.
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  Institutions should. But because this is like what
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  Fiat did to institutions. Institutions that are corrupted
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  by Fiat, I should say, have very short time horizons.
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  They should have the ability to look beyond problems of an
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  individual, but they don't. Individuals can think much
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  longer out in the future. They can say, you know what?
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  I know I don't need this now, but I'm going to thank myself
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  one day for doing this. There's nobody in an institution
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  that's governed that ever can say that.
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  You know, it's what did you do last quarter Period, end of
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  story. The issue for many Bitcoiners
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  and people in the space is that paper Bitcoin is completely
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  against the ethos of what Bitcoin stands for.
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  By issuing paper Bitcoin, companies can give multiple
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  claims on the same Bitcoin in their balance sheet, like
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  fractional reserve banking. This becomes a huge problem when
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  you consider Bitcoin supply cap at 21 million coins.
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  And though this is true and paper Bitcoin has the potential
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  of being an enormous problem in the Bitcoin space, I think many
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  of us are overlooking the problems that paper Bitcoin
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  solves, and that's institutional exposure and institutional
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  custody. 2 biggies. What do you mean by
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  institutional exposure and institutional custody?
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  prepared I. Think that one of the problems
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  that exist right now is that companies think that the only
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  way to get into Bitcoin is to hold it on their treasury, which
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  is really asking a company to take a lot more risks than
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  they've thought about. OK, It's a big, big, big leap.
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  I mean, think about it, Michael Saylor does it with his company
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  and literally 0 S&P 500 companies have followed him.
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  There's zero today. Now I get after a year or two
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  years at the end of 22, nobody wanted to follow him.
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  But I mean, this is obviously one of the most successful
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  gambits anyone's ever done. And yet still no company is
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  ready to do this. It is a giant leap for the way
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  they think about the way they think about risk.
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  Paper Bitcoin has counterparty credit risk.
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  Real Bitcoin does not when if you're entering as a rookie and
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  don't know what you're doing, you're probably going to have to
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  accept the counterparty risk of a custodian and trust an ETF,
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  which is what we would all affectionately call a paper
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  Bitcoin. However, I think that
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  competition and the market will end up driving companies to hold
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  real Bitcoin. The way I can really look a lot
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  better than my competitor who looks the same as me is by
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  taking it into self custody and removing the counterparty credit
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  risk and probably reduce cap at that time.
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  You know, we'll have maybe have some regulation that understands
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  these dynamics and capital charges should be less for
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  holding real Bitcoin rather than a version of Bitcoin that adds
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  counterparty risk. Like look, Fidelity is a first,
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  has a first mover advantage in holding their own keys.
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  Now, just because they hold their own keys doesn't mean
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  they're better than BlackRock. We don't know because no one
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  has. Nobody that I'm aware of has
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  looked at their custody and said and done an audit.
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  Logic would just say that they've been doing this a very
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  long time and they're probably better.
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  And they don't have the counterparty risk.
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  They have the event risk of losing their keys.
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  BlackRock has the event risk of Coinbase losing the keys and the
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  counterparty risk. Look, you have to crawl before
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  you can walk and you have to walk before you can run.
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  So a company that knows nothing about Bitcoin is going to have
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  to. They can't.
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  They can't just hold a bunch of Bitcoin recklessly and not know
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  what they're doing. So they're going to have to,
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  you're going to have to take a graduated approach.
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  So Bitcoin has no counterparty risk.
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  Bitcoin has no monetary policy risk.
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  They're far less risky than bonds, but there's the event
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  risk of losing keys that is very real.
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  Like almost the first thing I did after I bought my first
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  Bitcoin was I wrote an essay called Taming the Bitcoin Bowl.
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  It was about how I was so bullish about Bitcoin, but I had
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  this one problem as an actuary and a risk manager was this
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  probability of total loss. And I think that's the thing
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  that makes Bitcoin or strong is living with that fear, right?
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  That's the power that holding your keys gets you is, you know,
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  it's like a hormetic stress, but companies don't necessarily
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  benefit from that stress. You know what I mean?
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  Like you become better. Like what doesn't kill you makes
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  you stronger. That's not necessarily true for
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  companies. Like what doesn't kill you today
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  will probably kill you tomorrow. It's again, it's, it's a series
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  of trade-offs and companies need a different set of trade-offs
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  than individuals. It's the individuals screaming
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  about paper Bitcoin, but it's they're fine.
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  They're not affected by paper Bitcoin.
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  Companies just don't have they They need a different set of
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  trade-offs to do what they want to do.
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  And the fact is, individuals work at companies and they have
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  FOMO and they want Bitcoin exposure.
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  The flock to paper Bitcoin is more about risk evaluation.
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  As we all know, there's a number of risks involved with self
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  custody of Bitcoin, and these risks are much easier to
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  mitigate if you're an individual and not an institution.
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  In the eyes of Bitcoin, an institution or an individual,
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  it's all the same thing. But we all know that
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  institutions are not individuals.
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  They don't have the same incentives.
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  They don't have the same mobility, flexibility, speed, or
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  need of Bitcoin. For many institutions, the
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  choice to put Bitcoin on their balance sheets is simply just
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  for the gains alone. An individual values Bitcoin
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  much more than an institution. An individual sees returns, but
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  also freedom, potentially privacy, potentially the type of
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  optionality to run away or to escape a tyrannical, you know,
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  there's all kinds of reasons an individual has to want Bitcoin.
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  Whereas for institutions, it's mostly just return.
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  And so to me, I'd say an institution is never going to
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  value Bitcoin as highly as an individual is.
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  And if they have to, but they have to understand that Bitcoin
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  is much more valuable than they think it is.
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  And what gives it value are things that they don't care
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  necessarily care about. And as long as they understand
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  that, see, like I think when Michael Saylor was, say was
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  creating his Bitcoin treasury, I think he understood that even
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  though to him now Bitcoin is not even something you want to
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  spend. So he has a very, very limited
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  view of what Bitcoin's value is. My personal, you know, I
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  personally probably value it 20 times more than he does.
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  And so at the end of the day, and as much as he will be a
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  buyer forever, individuals will always outbid him because
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  they've they've just value it more.
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  Individuals are the golden goose that give Bitcoin its value, and
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  failure to understand this could be fatal.
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  An individual has the ability to act irrationally and
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  independently, and an individual does not have a portfolio full
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  of unfunded liabilities for the pensions.
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  On the flip side of that, an institution is disincentivized
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  to hold their keys as it comes with a significant event risk of
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  losing those keys. By holding their own keys, they
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  put themselves at all kinds of risks that they may not be ready
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  for, be it loss due to negligence, user error,
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  miscommunication or mismanagement, or simply just a
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  bad actor within the institution.
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  And I hate to break to you, but for institutions, these kinds of
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  risks are inexcusable. So custodians for institutions
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  absolutely makes sense. And custodians mean paper
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  Bitcoin. I am not even in the world of
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  talking to current Bitcoiners and when we talk about people
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  who have no exposure to Bitcoin, OK paper Bitcoin for them is a a
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  stepping stone to solving problems.
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  It's solving problems for BlackRock, it's solving problems
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  for Michael Saylor, and it can solve problems for companies
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  today without waiting really 1015 years for the corporate
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  landscape to really understand what Bitcoin is.
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  Paper Bitcoin is not like paper gold.
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  I think when people hear paper X they think, OK, it was once a
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  hard money and now it is no longer because of the ability to
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  paper and it is really what did. It's really the death knell for
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  gold. Bitcoin is different, but I just
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  don't Paper Bitcoin doesn't necessarily imply fractional
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  reserving. It doesn't necessarily imply
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  that it doesn't mean it won't happen.
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  So let me let me say something a little further about that and
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  why I think the Black Rock story is important.
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  Black Rocks spent their entire existence talking about saying
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  it was for criminals. And then one day, all of a
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  sudden they're here. Do you think that they endured
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  this embarrassment and shame for some higher fees or some higher
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  returns? If that were true, you would
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  have somebody in the S&P following Michael Saylor's
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  strategy. The truth is, it's not enough.
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  Ordinary fees and returns are not enough to get a company
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  involved. The BlackRock is involved
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  because of existential reasons. I strongly believe they will
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  behave themselves until this mission is complete.
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  I think we we already know who the before Bitcoin version of
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  Larry Fink was that he's going to revert to.
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  But while he's here solving the problem, I do believe they're
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  going to do what they have to do to be to play in the sandbox.
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  They're not going to put it at risk.
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  I don't think they're going to risk what they need to get done
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  in their company just to make a few bucks manipulating the
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  Bitcoin market. I think that's a really low
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  signal. Like it's, it's understandable
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  that people would worry about that and they should, you should
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  worry about that. But I do think BlackRock is
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  smart enough to have their eye. I think their eye is on the
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  prize. They're I believe they're
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  keeping Coinbase in line. I believe they're preventing
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  manipulation. I just think I understand
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  BlackRock because of my experience in my career.
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  I just understand what they're trying to do, and my conviction
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  is very high as a bitcoiner as a result of it.
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  And it's OK that we have some nice things now because of
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  BlackRock. Doesn't mean you should ever
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  trust them, but you should trust their incentives.
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  And right now their incentive is to fix a bond portfolio that
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  needs to be converted into Bitcoin.
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  It's probably going to take 5 to 10 years at least to get to get
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  done before they can start before mischief starts.
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  By this logic, BlackRock actually isn't incentivized to
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  manipulate this asset class. At this stage, BlackRock
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  actually has a critical problem with their business, a
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  structural problem really, and that is that the risk free asset
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  that they use, the bonds, is actually a lot more risky than
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  they thought. In fact, their risk free asset
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  can end up unwinding their entire company.
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  And so enter Coinbase. Coinbase custodies Bitcoin for
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  all kinds of institutions as well as retail investors.
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  What the financial products like the ibit ETF or MSTR accomplish
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  are the solutions to this issue of wanting to invest in this
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  asset class, but not wanting the risks involved withholding their
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  own keys. In a way, BlackRock actually
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  keeps Coinbase in check. The financial weight of the
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  world is literally on Coinbase's shoulders, so it makes sense
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  that they'll shore up all their walls and be able to satisfy
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  claims for their biggest clients.
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  Now, with all this talk about paper Bitcoin, many Bitcoiners
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  will be shouting at the screen and leaving their toxic
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  comments. So toxic.
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  But the sweet truth of the matter is that if you hold your
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  own keys, then you don't really need to be concerned about paper
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  Bitcoin at all, now do you? Let's be real, if you're an
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  individual Bitcoiner and you're in it solely for the gains,
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  well, you kind of need the institutions for the NGU.
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  But the institutions need paper Bitcoin for all the reasons I
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  mentioned earlier. And if you're a die hard maxi
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  that cares about freedom and sound money, then by holding
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  your own keys you are unaffected by paper Bitcoin.
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  That's like a joke to you. So if you're out there in the
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  jungles of social media and you're scared that paper Bitcoin
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  summer is going to turn into winter, all you got to do, my
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  friend, is custody your own Bitcoin and stay humble.
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  Anyway, that's our show for today.
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• 18:03
  Thank you so much for watching. If you like the content you want
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  the channel. Anyway, imotions.
• 18:23
  This is beyond Bitcoin. Until next time.