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Peter Dunworth | Aligning Incentives | Simply Bitcoin IRL · Simply Bitcoin

0:06
Hello everybody. Welcome to another episode of
0:08
Simply Bitcoin IRL. I'm very excited for this
0:11
episode. Today's special guest is Peter
0:14
Dunworth. Looking forward to it.
0:16
But before we jump into the show into the interview, I want to
0:20
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0:53
Let's bring up Peter. Peter, how you doing today?
0:56
How? How's the it's it's it's crazy
0:59
in Bitcoin land, like every week something different is
1:02
happening. It's just, I feel like
1:05
everything's happening at 1,000,000 miles an hour.
1:08
So where's your head at? How's your experience?
1:11
Where are you in the Bitcoin roller coaster?
1:15
You know what that such an app description of what it feels
1:18
like banging in Bitcoin. So apologies for that going off
1:22
in the background, but. You know what?
1:24
I I share that sentiment. Things happen so quickly.
1:26
There's so much happening. Everything's moving so quickly.
1:29
There's, you know, constant feedback, change, updates that
1:32
you need to think about. But on on a personal level,
1:37
owning Bitcoin gives me a certain Peace of Mind and calm
1:39
that, you know, that feels like we're in the middle of a
1:41
hurricane financially and socially.
1:45
But there's a a great deal of calm and Zen that comes with
1:49
owning Bitcoin and being invested in it.
1:51
So for me, life is beautiful. Yeah.
1:54
And let's talk about that cuz I Opti refers that I think you
1:58
were just describing Bitcoin Zen, right.
2:01
So Opti calls that Bitcoin Zen. He's popping up in the in the
2:05
thing and it's this concept and it's this idea where you see the
2:09
world around you kind of disintegrating, right.
2:12
You see the late stage Fiat, I would call it right.
2:17
Some people describe it as clown world.
2:20
I I I think that, you know, if you put the conspiracy theories
2:23
aside and all the crazy stuff, I think you're just seeing a world
2:26
with misaligned incentives, right.
2:28
And it's starting to break apart and I think that you're seeing
2:31
the end result of that and it's just very interesting to see.
2:36
But at the same time you hit the nail on the head.
2:39
We're kind of protected by this Orange Force field of of hope
2:43
and peace and prosperity rules without rulers.
2:46
And it's just, you know, your energy, your time, your work is
2:49
gonna be protected no matter what.
2:51
So is that what you're describing?
2:53
Is that is that what gives you this Peace of Mind in this world
2:56
of chaos? Exactly right.
2:58
And it's funny, it takes a long time to get there and there's a
3:02
lot of learning to do, a lot of pain to go through in order to
3:05
understand that. But if you're here for the long
3:08
haul? I'm sure everyone gets to that
3:10
point in time that there is a sense of satisfaction and calm
3:14
around being heavily invested in Bitcoin.
3:17
And one of the things I I talk about is I think Bitcoin's one
3:21
of the very well. It's the only thing I think that
3:23
has the ability, to your point earlier, to align incentives for
3:28
8 billion people. And at the same time, I think
3:31
one of the very unique things about Bitcoin is if you look at
3:35
human needs and you look at the Maslow's needs hierarchy.
3:38
I think Bitcoin is the fastest way for individuals to scale up
3:42
that and ironically you know the longer you're in Bitcoin, the
3:46
the higher up that scale of Mezzo's needs hierarchy you go
3:49
and ultimately the top is self actualization, which is
3:53
basically a state of Zen in what OP is describing as Bitcoin Zen.
3:57
So ironic that all of those things sort of tie into each
4:00
other, but at the same time when you do a lot of work on Bitcoin,
4:04
you realize that that's I guess the the primary function of
4:07
what's going to. For the end result, and let me
4:10
ask you something cuz you said it does take quite a while to
4:13
learn and would it be safe to say that it's not necessarily,
4:18
it's not just a process of learning, but it's also a
4:20
process of unlearning some things.
4:23
And the analogy that I always use is this concept of the Fiat
4:27
matrix, right? If you spend a lot of time in
4:30
the Fiat Matrix, right, referencing the, you know, the
4:33
original Matrix movie, Matrix #1, and you know Neo gets woken
4:38
up and he kind of freaks out and he's like, whoa, like this isn't
4:41
real, you know? And he kind of passes out.
4:43
And then the next scene he wakes up and he realizes, holy crap,
4:46
like, you know, this thing is real and Morpheus is like
4:49
looking above him and he lives looking down.
4:51
He says Neo, I have to apologize.
4:53
After a certain age, we don't wake people up from the Matrix
4:57
because it's too much for their mind to handle.
5:00
And I think it's such a proper analogy to to what's going on
5:05
because I think a lot of people, the the comfort, the convenience
5:11
of outsourcing the personal responsibility of their wealth
5:14
to a third party, if you've lived in that world for a long
5:18
time, right? This idea of selfcustody, this
5:21
idea of a nonstate money, this idea of a money that's not
5:26
issued by a central bank, there's no customer support line
5:30
in terms of the Overton Window, it's a very radical idea.
5:33
It's it's very out there to the vast majority of the world
5:37
population. Obviously that's changing,
5:40
right? With BlackRock coming in with
5:42
amazing companies like Swan, of course, simply we're beating the
5:45
battle drum. But you know, there's people
5:48
working, there's entrepreneurs and there's bitcoiners that are
5:51
working actively to solve this problem.
5:53
Break the Bitcoin echo chamber, so to speak.
5:56
But what would you say to that? Is this not only a process of
5:59
learning, but perhaps unlearning for some people?
6:03
I know for me personally it was a process of unlearning like 25
6:07
years of traditional finance, education and training,
6:10
accounting and finance degree equivalent of a masters in
6:15
superannuation which is the equivalent to your 401K pension
6:18
system and. You know, I was the prime
6:21
example that, you know, there was so many things I had to
6:24
unlearn because it fundamentally breaks the mold of, you know,
6:27
the traditional education. And you know, education is
6:30
basically a process you go through to learn things.
6:32
And our financial system is built on the premise that you
6:35
know without getting too technical, but we've got
6:38
fundamentally a risk free right which is set by the US Federal
6:41
Reserve and that dictates basically the risk free right
6:44
for the world and then all of our financial models and
6:46
structures and. Evaluation and risk metrics are
6:49
basically built around that risk free model.
6:51
So Bitcoin is a complete paradigm shift.
6:54
It turns everything on its head And you know to your point
6:57
earlier about, you know, sort of being woken up.
6:59
I can tell you the thought of, you know, for most people of
7:01
being, you know, completely responsible for all of your net
7:04
assets that you hold in Bitcoin in one word would be terrifying
7:08
for most people. So this is where you know the
7:11
Bitcoin is who are here today, I think are a very unique breed
7:14
and that you know they're. They're they're effectively on
7:17
the forefront the, you know, their frontier Rangers basically
7:20
beating new parts of financial freedom and self autonomy.
7:24
So in a word, it's terrifying for the majority of the
7:28
population, but I guess part of our job is to highlight the
7:31
benefits of being self sovereign and and taking control and
7:34
ownership of that and then. On a broader sense, basically
7:38
building out products that scale to the rest of the population,
7:41
cuz I think we've got such a small percentage of the
7:44
population on board now. And this is where there's the
7:48
opportunity to basically on both the rest of the 99% of the
7:51
population or more that's not in Bitcoin now.
7:54
Yeah, 100%. And I kind of want to focus on
7:57
that, the the idea that not the idea, but what you were
8:01
breaking, what you were bringing up earlier, which is you came
8:04
from this traditional financial background.
8:07
What made you wake up, so to speak?
8:09
What made you realize, okay, there's something wrong here?
8:13
And what was it that initially attracted you, attracted you to
8:16
an alternative being Bitcoin? Well, 12 years ago I had my
8:23
brother tell me that I should buy some Bitcoin and it was $3
8:27
and I told him. That would never work.
8:29
That's a stupid idea. Government will shut it down.
8:32
And you know, you can literally go through the list of, I guess,
8:36
objections that most people have before Bitcoin.
8:39
And it's a very painful lesson to discuss.
8:41
But I like sharing it because it's an opportunity, hopefully
8:44
for everyone else to learn from my mistakes in not getting on
8:48
board sooner. But.
8:50
Michael was very patient with me and educating me.
8:53
He ran a Bitcoin exchange in San Francisco from 2013 onwards.
8:59
And you know, being so close to him every other day I'd be
9:03
calling him, ask him questions as to why, why it won't work and
9:06
sort of prodding. And I'm sad to say that I'm a
9:09
very slow learner and it took me 5 years to figure out that it
9:12
was it's nice to. Well, it was.
9:14
It was an investable asset and. But once I understood that it
9:18
was an investable asset, then we started talking to clients about
9:21
that too. So only in a very modest way,
9:23
but because that's all we're allowed to do.
9:26
But yeah, it was just a lot of learning and and that's the
9:29
problem that, you know, not only did I have to learn about
9:31
Bitcoin, but I had to suspend all of the all of the things
9:36
that I knew about the traditional finance system in
9:38
order to get it. And this is where I think
9:40
probably the key. Problem for most people to
9:42
understand this is that this is fundamentally a tech innovation,
9:46
not a finance innovation. It is a finance innovation, but
9:49
it's a tech innovation first. And this is where to give myself
9:53
some slack that you know the I I consider the tech guys to be a
9:57
lot smarter than the finance guys.
9:59
And so the tech guys pick up Bitcoin far faster than the
10:03
finance guys. And so this is where I was very
10:06
fortunate with my brother. To basically have a, you know,
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Michael's very tech oriented, I'm very financed, focused.
10:13
I had the great pleasure of basically being able to learn
10:16
from him and hear his insights from a technical perspective or
10:19
technological perspective. So.
10:22
So why doesn't the average? I say average, but maybe that's
10:28
a derogatory term, let's say the everyday financial advisor.
10:33
I'll give you an example. I grew up with with one of my
10:39
friends from high school. We grew up together and he works
10:42
in Tradfight. He works for one of the big
10:44
firms who works at Goldman and you know he climbed up the
10:47
ladder, very successful, very well paid.
10:50
But I swear if I bring up the idea to Bitcoin to him, like
10:54
it's like he's it's like a, yeah, I'm like putting up garlic
10:57
and he's a vampires like, no, like terrible.
11:01
And I never forget one of the things that he told me.
11:03
He says like people when I told him, you know you get down the
11:06
rabbit hole conversations. And one of the things he told
11:08
me, I thought I brought up the Federal Reserve.
11:11
It went something along those lines.
11:13
And I never forget what he told me.
11:14
He's like, the people need monetary policy, And I heard him
11:17
say them like, whoa, you're totally bought into this thing.
11:21
You dictator, you call me you, you call us a cult.
11:25
You're in a cult, bro. So it you know that that was
11:29
very striking. So my question to you is why do
11:32
you believe that most of try, I know it's changing with Black,
11:35
with Black Rock and Fidelity and all that stuff, but why do you
11:38
believe most financial advisors are just so against this thing
11:46
they're they're not comfortable recommending this to their
11:48
clients? Look to your friend.
11:54
Here's, here's the ironic thing, I think.
11:59
The fact that Bitcoin is going to dislocate so many people in
12:02
finance should be a clear indication to your friend that
12:05
he should heavily invest in it for the fact that his financial
12:09
position and standing, his job, his livelihood could be
12:13
disrupted dramatically, effectively dislodged from his
12:18
position. So just as a hitch, he should
12:20
have a lot of Bitcoin to to save him from that eventual fight.
12:25
When it comes to financial advisors, I think there are sort
12:27
of three things that are difficult for traditional
12:30
financial advisors to get their head around.
12:31
That takes an enormous amount of work.
12:34
Firstly, there is an enormous amount of work to understand
12:36
Bitcoin. You know, I I I don't think 100
12:39
hours really cuts it. It's, you know, for me it's a
12:41
lot closer to 1000, maybe more to to really comprehend what
12:44
this thing is and understand it on a deeper level.
12:48
I think there's the convergence of tech and finance.
12:50
So, you know, because it is fundamentally technology, not
12:53
finance, you know? There's a different skill set
12:56
that you know, finance guys just don't have technical nows.
13:01
The second or third thing is traditional education training
13:04
basically in some way, shape or form creates norms that we
13:09
accept. So I mentioned briefly the
13:11
riskfree rate. A lot of financial modelling,
13:14
risk management, the rest of it basically revolves around the
13:16
riskfree rate and Bitcoin doesn't have a riskfree rate,
13:19
so. How do we, you know, value with
13:22
it? How do we value this thing?
13:24
You know, if it's not throwing off any cash flows, a lot of the
13:26
financial advice will. And you know, investor
13:30
investment advisors basically take their lead from Warren
13:34
Buffett. And you know, he doesn't invest
13:36
in commodities. He has, but he doesn't really
13:38
like investing in commodities because there's no way of
13:40
valuing those those things other than supply demand.
13:44
And they don't have, they don't have cash flows which enable him
13:47
to model how valuable that business should be.
13:50
So he doesn't invest in those things that don't throw off cash
13:53
flows and and Bitcoin doesn't throw off a cash flow.
13:55
So to a lot of finance guys, they look at this as a pet rock.
13:59
You know, what does this thing do?
14:00
It doesn't really do anything. And ironically that's the
14:02
feature, not the bug. But finally, and this is
14:06
probably the. The biggest reason for a lot of
14:09
the investment advisors not advising on this is that you
14:12
know their licensees basically don't allow them to advise on
14:17
Bitcoin. Now it's not a financial product
14:20
across the across the globe. So in the US it's not a
14:22
financial product, it's classified as a commodity.
14:24
In Australia it's not a financial product.
14:26
In the UK it's not a financial product either.
14:28
So those licenses and the professional indemnity that
14:32
cover them from any malpractice. Basically cover them for
14:36
financial products. So if Bitcoin's not classified
14:38
as a financial product, it's very difficult for them to
14:41
advise, to advise on. So that's probably the three
14:46
main reasons I think that the finance world has huge
14:49
difficulty advising on it. And this to me is why the, you
14:52
know, Larry Fint, the ETF lodgement with BlackRock is such
14:56
huge news. This is where it totally
14:59
redefines from a from a career perspective.
15:01
It's not a career ending move to advise on Bitcoin now.
15:05
It also solves the ESG fad because Larry is probably the
15:08
major proponent of getting ESG across corporate America and
15:13
corporate globally. So there are so many huge things
15:17
coming out of that ETF with BlackRock that it basically
15:20
makes Bitcoin a safe asset now to advise on.
15:24
And this is where you know the next five years is going to
15:26
totally redefine that investment advice space.
15:29
Gotcha. And what do you think it?
15:32
What do you think it will take? What do you what do you think
15:36
needs to happen for that to change?
15:37
It is it was BlackRock the catalyst is fidelity the
15:40
catalyst. Where do you see?
15:43
Because this is the way I see it.
15:44
Peter, perhaps this is naive with me, right.
15:46
I'm thinking they can just sweep this under the rug for so long.
15:51
It will get to a point where their own clients are going to
15:54
be up in arms and saying look like the fact that you didn't
15:58
advise me to put .5 or 1% of My Portfolio in this five years
16:04
ago. You cost me a lot of money with
16:07
very little downside, right? So what do you see a change in,
16:13
in in the winds? Like where do you see this
16:16
going? Is there perhaps some influence
16:19
from the government that is just like not encouraging this type
16:23
of alternative asset as as they would see it?
16:26
Of course, we just see it as the only asset, but what's your take
16:29
on that? There are just so many moving
16:32
parts to that, you know, the government's really are
16:35
incentivized not to push this operation choke point 2.0, which
16:39
you're experiencing the US we've got something similar in
16:42
Australia happening now where they're fundamentally trying to
16:45
limit the amount of cash that you can send to exchanges.
16:50
Our major bank in Australia who's just limited it to $10,000
16:53
a month. So we've got clients who are
16:55
literally just moving their their banking to alternative
16:59
institutions who don't rate limit how much they can send to
17:02
an exchange, which I I think just creates an enormous amount
17:07
of angst. And it's kind of like a Strassen
17:10
effect that you know, we're going to limit you and how much
17:13
you can move out to. You know, buy Bitcoin and we
17:17
don't want you to do that. So we'll right limit you, which
17:19
basically means the banks are going to lose their clients.
17:21
They're going to move to institutions who allow them to
17:23
do it. And this is where, you know,
17:25
basically the Straw's an effect of, you know, what they're
17:27
trying to avoid is going to come to fruition and it's probably
17:30
going to make this happen faster.
17:31
So I think there are just so many moving parts when it comes
17:36
to investment advice. There are so many.
17:41
So many things that you know, financial advisors, investment
17:44
advisors basically have to adhere to.
17:46
It's very heavily regulated. So to step outside and and
17:50
really advise on anything but what they're allowed to advise
17:54
on represents effectively a career ending risk for them And
17:58
This is why they haven't done it up until this point.
18:00
And and this is where to your point earlier, clients are going
18:03
to be really pissed at them because they see this thing
18:06
going up and they want to be on board and.
18:08
That the limitation is not with the advisor.
18:10
It's typically with the licensee who authorizes one of the
18:13
available investments. And so there are many advisors
18:17
we deal with who would love to advise on Bitcoin, but they're
18:21
prohibited from doing so because their license doesn't allow it.
18:23
And they're not prepared to potentially risk their, you
18:27
know, their income, their livelihood on giving an asset
18:30
allocation of even 1 to 2% to Bitcoin.
18:34
And I understand the risk of the trade-offs they're taking, but.
18:37
From a client perspective, excuse me, it's it's horrible
18:41
because a 1 to 2% allocation over the next 10 years I believe
18:45
can have life changing benefits to that client and it can
18:48
completely redefine their entire wealth.
18:53
So for investment advisors to do this, they need to take a career
18:57
risk in advising on it at the moment.
18:58
And this is where Larry and BlackRock is such a huge thing.
19:02
And you know, we. It totally redefines the market
19:06
because now there is not a career risk in doing it.
19:08
And also from a top down approach because BlackRock is
19:12
basically in every licensee, investment advisor across the
19:15
globe. Now that they have a product
19:17
selling Bitcoin, all of a sudden that's now on the approved
19:20
product list for every investment advisor and financial
19:23
advisor to sell globally. So now there's no career risk.
19:26
So. That can't be understated.
19:28
And I think you know across the globe investment advisors maybe
19:31
advise on somewhere between 50 and $100 trillion worth of
19:34
assets and you know and Okay, so interesting, interesting.
19:39
Okay, I have a question for you, a little bit of a change up.
19:44
So I had Caitlin Long and Larry Lapard on.
19:49
I think it was either last week or the week before and I had
19:52
boss and lavish on as well and I asked him about the BlackRock
19:56
ETF and to my surprise Caitlin and Lawrence said they're going
20:03
to rehypothecate, they're going to create paper Bitcoin lavish.
20:07
And Foss said no, that's impossible.
20:09
That's the whole point of an ETF.
20:11
You can withdraw it to spot ETF. So you know, and there's like a
20:14
a bit of a debate there, which I thought was fascinating.
20:19
What's your take is BlackRock going to rehypothecate Bitcoin
20:22
Peter or do you believe in the whole.
20:25
I come from the you know a I'm I'm a millennial.
20:29
I've I've we've gotten my generation just got screwed with
20:32
the money printing. So forgive me if I'm paranoid
20:35
when BlackRock out of all places, you know out of all any
20:38
institutions it's just you know the public perception of this
20:41
place of this financial is evil. You know ESG like what are they
20:45
doing? They, they own the world.
20:47
So like, I'm a little bit paranoid.
20:48
I'm like, yeah, they're gonna definitely do the whole paper
20:50
Bitcoin thing. So, you know, as a financial
20:52
advisor, someone who comes from that world, what's your take on
20:55
that? You know what one of my sort of
21:01
standards for determining what will happen and what won't
21:04
happen is show me the incentive. I'll show you the outcome.
21:07
Are they incentive us to rehypothecate?
21:11
Absolutely. You know, on the balance of
21:15
probabilities then we can assume that they're going to
21:17
rehypothecate. Now, one thing that I think is
21:20
going to become critically clear to them is that if they do do
21:25
that, they are going to risk catastrophic failure.
21:28
And we only need to look back, you know, over the last 12
21:30
months to see what sort of carnage happened in basically
21:34
the Bitcoin slash crypto markets for people who want to
21:37
rehypothecate. You know, we saw effectively
21:41
Terra Lunar blow up, we saw. Now Genesis blow up block 5,
21:45
blow up Celsius, blow up like, I mean the list goes on.
21:48
If the X blow up like it, it represents A catastrophic
21:51
failure. And this is where their risk
21:52
management team I think needs to really understand the level of
21:57
catastrophic failure that this digital bearer asset can
22:01
inflict. And this is where I think they
22:04
will approach this very differently if they've got any
22:07
study in this space at all. Personally, I wouldn't be
22:09
rehypothecating because it is. Although the short term gains
22:13
may be appealing and lucrative, the long term gain basically
22:19
only ends one way. It ends in tears.
22:21
And this is where, from a personal point of view, I hope
22:26
BlackRock doesn't rehypothecate because it could lead to a
22:29
catastrophic failure across the markets.
22:31
And this is where for me I. I would like to think that
22:35
they're better than that and they won't rehypothecate, but
22:37
the incentives are that they can, you know, make a few more
22:40
basis points by rehypothecating. So there's probably a backdoor
22:43
in that ETF application that will that they will justify
22:47
basically being able to do that. However, if they do do that,
22:51
they need to be prepared that that rehypothecation of the
22:55
Bitcoin ETF could blow up their entire business.
22:58
And I don't know if that's a risk they're willing to take,
23:00
so. That's a great question, to be
23:02
in the middle of those two and to sit on the fence right
23:04
between those two groups of powerhouses.
23:07
I would like to. I was just observing and I.
23:12
Tap dance through the middle of those two, I had the privilege
23:15
of being able to. I was able to host a debate on
23:19
the Swan channel and I and I put them together and I said Foss
23:22
and Lawrence, like, what do you think?
23:23
And they're like, you know, they had their different perspectives
23:26
and and whatnot. It was just it was a fascinating
23:28
conversation but I completely agree with you, right.
23:32
It it's, you know show me the incentives and that's the out
23:35
and I completely agree. I just you know, they're
23:38
incentivized to do it. But perhaps you know for people
23:41
in the audience that are are not well versed in this, why would
23:45
it lead to like because we know for example in the gold market a
23:49
lot of rehypothecation takes place but that's because of the
23:51
physical properties of gold and how difficult it is to take self
23:55
custody of it. Could you explain a little bit
23:58
why it's so different in Bitcoin, Why it would lead to a
24:02
potential blow up? What is it about Bitcoin that
24:06
makes rehypothecation a lot more riskier than doing it with
24:11
something like gold? That's a great question.
24:15
There's a lot to that. So the problem for BlackRock to
24:19
do rehypothecation is firstly they don't control the market.
24:23
So the majority of Bitcoin sits off exchanges, so there's no
24:27
centralized point of failure. There's no centralized housing
24:30
of Bitcoin. It's completely decent.
24:32
Well, it's not completely decentralized, but the majority
24:35
of the bitcoins available right now are basically distributed
24:38
across. Multiple, multiple people or
24:41
institutions that basically self custody that Bitcoin.
24:44
So I think and this is just plucking numbers out of the
24:47
year, but let's just say it's roughly 14 or 15 million out of
24:50
a total of 21 million. So you you're looking at roughly
24:52
75% of 75% of all Bitcoin available sitting in self
24:59
custody. Now, if that's the case, that's
25:02
not the case in gold. Basically all gold.
25:04
Well, the majority of gold is basically sitting in central
25:06
repositories. And you can basically do
25:09
whatever you want to that because there's no one, there's
25:12
no way to assess the Ledger that that gold in those central
25:17
positives has. And and this is the difference
25:20
between Bitcoin and gold is that everyone on earth who has an
25:24
Internet connection can verify the basically the total number
25:28
of Bitcoin and they can verify that they're holding their own
25:31
Bitcoin and so. That is totally verifiable.
25:34
Whereas with gold, there is absolutely no way of firstly
25:37
verifying how much there is, who's got what and whether or
25:41
not the gold you're holding is actually real gold or it's just
25:43
a tungsten bar covering gold. Now Chinese banks basically
25:47
discovered the hard way by someone basically wrapping
25:49
tungsten in gold and getting a four billion loan against it.
25:52
I think back in 2019 that you know this, it's very difficult
25:56
to verify if you're actually holding gold or if you've just
25:58
got tungsten. So for that reason.
26:02
And understanding the dynamics of the gold market, gold is very
26:05
easily rehypothecated because it's so opaque and there's no
26:08
real accounting or verifiability to it on many levels.
26:15
Compare that. The juxtaposition to Bitcoin is
26:17
that you can verify absolutely everything happening on the
26:20
network at any point in time. And this is where I call
26:23
Bitcoin. Basically, it's triple entry
26:25
accounting. It's an upgrade on our double
26:27
entry system because it's triple entry Ledger because anyone with
26:31
a node. Can basically assess everything
26:33
that's happening on the network and that has ever happened on
26:36
the network up until that point in time.
26:38
So it's a very unique technology that is something that we
26:42
haven't seen before and this is what makes Bitcoin far more
26:47
resilient to rehypothecation and.
26:51
The want of a better term fuckery in price discovery
26:54
markets. So this is where BlackRock is
26:56
gonna have a huge problem when they understand the backfill to
27:00
Bitcoin and the benefits that it has in able to manipulate and
27:04
rehypothecate the markets. Because it's not like the gold
27:07
markets. It's a completely different
27:09
based gotcha. Yeah, no.
27:11
And I completely agree with you. And the question is though,
27:15
right, is are they aware of that?
27:17
Are there executives? Aware that that that to me is a
27:21
is an interesting question. Are they aware that there's no
27:24
bailouts here? Right.
27:25
That's that's the $1,000,000 question.
27:27
I really hope they have smart people working with them because
27:31
it is going to cause carnage if they don't.
27:34
So let's let's just play this out there sort of two examples.
27:37
They take the moral High Road. They do everything that we don't
27:41
expect them to do. They don't rehop applicate.
27:43
They just have a great business running an ETF on Bitcoin.
27:46
You know that can that's probably the best outcome that
27:48
we can. You know, see, over the next 5
27:51
or 10 years, I expect they'll basically take probably
27:54
somewhere between 6:00 and 700,000 bitcoins into their ETF
27:57
and they'll become the largest ETF.
27:59
They'll outsize grayscale, you know, basically that'll take,
28:03
you know, bitcoins on exchange from 2,000,000 to 1.3, give or
28:07
take. That's the best case scenario.
28:09
In a worst case scenario, they've got stupid people
28:11
working for them who think they can basically pick up pennies in
28:14
front of a steamroller and make a few more basis points by
28:17
rehypothecating that Bitcoin. And I'm just wondering if Larry
28:22
is smart enough to figure out, to figure out whether or not
28:25
these few basis points that they're going to make is going
28:28
to be worthwhile, a total catastrophic failure of the
28:31
business. And this is where I really hope
28:34
that, you know, Larry seeks out the advice and guidance of
28:37
Michael Saylor because I think he's, you know, one of our best
28:40
risk managers and understands this better than just about
28:42
anyone in the space from a financial perspective.
28:44
And the convergence of the stock market and the risks that
28:47
happened from a corporate level. In holding Bitcoin, so fingers
28:51
crossed, Larry basically listens to some smart people and says,
28:54
look, the pennies aren't worth it.
28:55
So yeah, yeah. And then it kind of reminds me,
28:59
like on a smaller scale, right, People, unfortunately, you know,
29:03
everyone wants more Bitcoin, but the people who are chasing the
29:06
two or 3% yield on those products.
29:09
And then it's like what Bitcoin was returning historically 250%
29:13
next 10 years. You know on the conservative end
29:16
it's like 50% every year. You know, if you kind of zoom
29:21
out so you know you're chasing 3 to 4% and then giving up custody
29:26
of your coins in the process. I kind of see it the same way,
29:29
right. It's like you're just those
29:31
percentage points but this thing is is crazy anyhow.
29:34
So I kind of wanted to ask you this before I move on to I think
29:39
the big question, what I'm looking forward to cuz I heard
29:42
Dell talk to me about this for the longest time and I just I
29:45
want to hear from you directly. But before I get there I wanted
29:49
to ask you about so the bull market of 2021-2022, a lot of
29:54
people were expecting 100K Bitcoin.
29:56
I was I myself was in that camp. I have my own theories more so
30:01
rather than FTX selling paper Bitcoin and all that I really
30:04
believe that the the China mining ban played a huge role in
30:09
kind of really taking the momentum out of the market.
30:14
I've I've brought this up many times On the show you look at
30:17
the hash rate and the price is directly correlated.
30:20
The hash rate falls, price falls.
30:22
Obviously those miners have to sell Bitcoin in order to
30:25
physically relocate to other friendlier jurisdictions.
30:28
Most of them relocated to Texas. So I want to get your take.
30:31
Were you on the camp were you expecting 100K Bitcoin in
30:34
2021-2022 And if you were you know what Why do you think we
30:39
didn't hit that that that that price target?
30:42
I I, I truly believe it was meant to hit 100K.
30:45
I I think that we got a, we got a a neutered bull market in in
30:51
in my beliefs. I couldn't agree more with you
30:54
on that. I think we were ripped off and I
30:57
think there were a lot of, there was a lot of foul play at at
31:00
hand. I think the, you know, the first
31:04
sort of, I guess stumble in that bull market was, you know, China
31:08
banning Bitcoin mining. And, you know, I couldn't just
31:11
help but, you know, think back to the 2017.
31:15
South Park, China ban Bitcoin main That is one of my all time
31:19
favorites. I'm like, oh shit, this again,
31:21
right. OK oh, they're banning China's
31:23
banning Bitcoin mining. Oh, OK, right.
31:25
Like this is just what they've said it so many times.
31:28
It's. It's a yawn fest, but it was
31:30
actually a big deal, You know, basically the network hash rate
31:33
went from 183 down to 84 hexa hashes in the space of two or
31:37
three weeks, which you know, in any other network would have
31:40
been a catastrophic failure. But what happened with Bitcoin?
31:42
Basically blocks went from taking two weeks to three weeks,
31:45
and within three months we'd basically solved through that
31:47
problem and. What was, you know, a huge bonus
31:50
I think on the side of things is that that basically reduced the
31:54
the concern around a 51% attack to make.
31:56
We basically had a 51% attack where 51% of the network or more
32:00
basically shut down and had to be relocated.
32:03
And the Bitcoin network basically kept functioning.
32:05
It was slow and expensive, but it basically kept functioning.
32:09
So that was a huge win. Now when it comes to the price
32:12
discovery that I expected to see towards the back end of 21.
32:17
I think we were completely ripped off by fraudulent actors
32:19
in that space and I put that down to FTXI think is probably
32:26
the biggest reason in the marketplace that we didn't
32:29
achieve $100,000 Bitcoin. And what what shocks me in light
32:32
of what I learned about what happened with FTX is that, you
32:35
know we got to 70,000 roughly which is 70% of you know a a
32:40
minimum target that I would have expected for that bull run and I
32:44
think in light of. What they were doing, So if TX
32:47
was one of the biggest exchanges in the world at the time,
32:50
someone who does on chain analysis can basically tell me
32:53
these numbers. But roughly speaking, they were
32:55
responsible for somewhere between 10 and 20% of total
32:58
global trade in Bitcoin. And what they were doing was
33:01
they were basically selling their clients Bitcoin, storing
33:05
it on exchange, lending it out to Alameda immediately, where
33:09
Alameda would put that Bitcoin back on the exchange and sell
33:12
it, and then go and buy all coins with it now.
33:15
That merry go round of the transaction basically has two
33:19
effects. Firstly, it is a huge price
33:22
suppression for the price of Bitcoin and it's also a huge
33:26
outperformance for the altcoins. So at the same time the the
33:30
Bitcoin price was being suppressed, the altcoins were
33:33
outperforming massively. And this is where when you
33:36
understand that price is determined at the margin, if
33:39
you've got 10 to 15% of global trade.
33:42
Not really trading and effectively being rehypothecated
33:44
which is exactly what they did then there's no chance we can
33:48
get a parabolic blow off top like we did in 2017.
33:51
It just doesn't happen. Like prices determined at the
33:53
margin where a 3%, you know, variance can have that parabolic
33:58
spike effect. And so when you've got 10 to 20%
34:01
of the market being rehypothecated and and not
34:03
really being put into cold storage and there's cell
34:06
pressure, of that much cell pressure, I I think absolutely
34:10
we would have you know. That's my opinion that we would
34:12
have hit 100K easily and you know I had a much higher price
34:16
target on that that I thought it could have gone parabolic still.
34:19
So I'm hoping that you know, what we went through in 21 has
34:23
basically cleaned out a lot of bad actors.
34:26
I think there's, you know, still a number of question marks
34:28
across the industry, but this is where it's so vital that if you
34:32
want to see true. Price discovery in Bitcoin, It's
34:37
critical that you self custody Bitcoin so that the exchanges
34:42
and bad faith actors in the space don't have the opportunity
34:45
to to rehypothecate. Do you believe that's possible?
34:48
Do you believe that you know it, the everyday individual, the you
34:55
know the like just I see it. I see it with my mom like you
35:00
know, she my mom's a hardcore Bitcoin.
35:01
She's been stacking since 2016. She she has multi sig,
35:05
geographically separated as is. Is is cold storage.
35:09
Like literally it's cold storage.
35:11
However, if I told her, hey, could you send me a Bitcoin
35:15
transaction, Mom, she'd be like, I have no idea how to do that
35:18
and I'm going to have to be the Uncle Jim in that situation and
35:21
then kind of do it for her, right?
35:23
So I guess my question is, do you do you see a world where
35:27
where people because look if you could take it, if you take care
35:31
of a child, if you can open a bank account, right?
35:33
If you can send a wire transfer, like you could write down 12
35:36
words. But at the same time, we live in
35:38
this world of like hyper convenience.
35:41
You could just pull up an app on your phone and you can have food
35:43
delivered to your door, you can have it someone pick you up,
35:47
right? You can order anything and it
35:49
will come to your doorstep. So it's this world of hyper
35:52
convenience. Do you believe that?
35:55
Do you believe that people are gonna be willing to take a
35:58
little bit of personal responsibility for the benefits
36:02
of financial sovereignty? And that question, Peter, is
36:05
something that I've been divided on for a very, very long time.
36:11
So what are your thoughts? Many on this topic and this is
36:16
where I think for. You know for all of us who are
36:19
here now, we I think make up the disagreeable minority of the
36:23
point, 1% of the population who's prepared to self custody
36:26
their Bitcoin and believes in this from a long term
36:28
perspective. So it's a very small niche of
36:31
the broader population and this is where I think the solutions
36:37
that we're pushing. From the point 1% that's already
36:41
here, that not your keys, not your coins, you've got a self
36:43
custody is terrifying and unappealing to the 99.9% of the
36:48
population who's not here. So I look at the solutions that
36:51
are coming down the road and one of the things that we've got
36:54
which helps clients get probably 95% of the way there from a
36:59
Bitcoin Maxi Puritan perspective is collaborative Custody.
37:03
I think collaborative custody has the ability to help.
37:07
Say on board the next 10 to 20% of the population.
37:10
So we're not going to get all the population, but I think a
37:13
collaborative custody with a collaborative custody
37:17
arrangement where you've got trusted third parties and I know
37:21
that verify, don't don't trust, verify is a critical component
37:25
of Bitcoin, full stop. But a lot of people in the world
37:29
will feel far more confident in having multiple parties who are
37:33
experts in this in this domain. Who they outsource some level of
37:37
responsibility to And this is where on a personal perspective,
37:42
this is what we deliver to clients.
37:44
And so I'm talking my own book and I understand that everyone
37:48
on this call, it's really critical that you know I don't
37:51
pretend to give investment advice or advice to any Bitcoin
37:54
on how they should self custody their Bitcoin.
37:57
But I can tell you from a personal level and six or seven
38:00
years in this space giving advice to clients that.
38:02
Every one of my clients is far happier with a collaborative
38:05
custody arrangement because it builds in multiple redundancies
38:09
that enables them to completely fuck things up and still not
38:13
lose their Bitcoin. And this is where they're not
38:16
your keys, not your coins. Fabulous for those who want the
38:18
self responsibility and the accountability to have full
38:21
control over it, but understanding that most of the
38:25
population is not there yet and may never be there, it's
38:28
important we have solutions that span the spectrum of.
38:31
Custody, So, So I'd like collaborative custody for the
38:38
reasons that you said, right, that there's some people that
38:40
are just not going to be accustomed to that.
38:43
Also in the US, I think there's some laws that if you're I don't
38:48
know the specifics of it, but let's say you're managing
38:50
someone else's money has to be held in a trust, like it has to
38:55
be held in some type of environment.
38:58
It can't be held by the financial advisor, by the
39:05
person. So it's legally in certain
39:08
situations it pushes you to that collaborative custody model.
39:11
Now I'm assuming when you mentioned collaborative custody,
39:14
you're talking about multi sig between different institutions
39:18
but there's only a handful of companies that so there's
39:21
Nunchuck, there's Unchained, there's Casa, you know Swan is
39:24
about to to roll out their own version really looking forward
39:28
to that as well. So so you know like there's
39:33
they're amazing products all of them, right.
39:36
But there's there's really not that many options at the same
39:38
time. But I but I do agree it solves
39:41
the major issue because it's it removes the moral hazard like it
39:44
that because that's the fundamental issues is the the
39:46
moral hazard of of let's say you're Celsius or your FTX,
39:50
right. And you're looking at this this
39:52
mountain of Bitcoin and you're looking at that and you're like
39:55
saying like look I'm just gonna take some of that speculate with
39:58
it. I'm gonna make a return for
40:00
myself but I'm also gonna make a return for my client.
40:03
Everyone wins, but they never incorporate the the bear market
40:07
into that, into that equation. Not like that.
40:10
So, so I guess that's what you're referring to, correct.
40:14
Correct. And this is how like to sort of
40:16
explain how the collaborative custody works with us.
40:18
We use Unchained, we use Casa, we use Nunchuck and we do that
40:22
in collaborative custody where say the software provider being
40:27
say Unchained or Casa Nunchuck, they hold a key.
40:33
We set up a hardware device for the client for them to hold a
40:35
key and it's their account, so they've got full control over it
40:38
and then we hold a default key in the event that basically they
40:42
lose their key or alternatively something happens, there's
40:46
always a way to recover their Bitcoin and move that to an
40:49
alternate multi sync provider. So you know we're comfortable
40:52
with the trade-offs we've made and I think it's critical to
40:54
understand that there's no solutions, only trade-offs and
40:58
the level of trade-offs that you need to make to get comfortable
41:01
with. I think you know for our clients
41:03
they're they're comfortable with that trade off so.
41:06
Yeah. And and and I love how you, how
41:08
you phrase that, right. Is this idea where, yes, there
41:11
is no salute, there's no perfect solution to this, right.
41:14
You know, and then this is a very, very deep rabbit hole.
41:16
Like I think everyone kind of starts with like a Ledger or
41:18
treasure. The 24 words and you had a 25th
41:21
word and you're like, wait a second, how do I trust the
41:23
random number generator on this Ledger?
41:25
Let me just roll some dice. Let me cut up all the 2000
41:30
words. Put it in the hat, mix it, fix
41:32
it up. And pick the words myself and
41:35
create my own entropy, right. So we all kind of go down that
41:37
rabbit hole. And I agree, like there is no
41:39
perfect solution to this, there's just trade off.
41:42
But I do agree, I think that Collaborative Custody and Multi
41:45
Sig really does solve a lot of these issues.
41:48
Anyways, so I'm going to use the last 20 minutes to really talk
41:51
about, really talk about Dell and really talk about this,
41:57
this, this Bitcoin price prediction which is just
42:01
absolutely crazy, this idea of $7 billion per coin.
42:08
And let me start off with this, right?
42:09
So you had Adam backs famous prediction.
42:12
I know, I know, I know. You know what I'm talking about,
42:14
which is the $10 million Bitcoin.
42:16
Oh yeah, how Finny. How Finny?
42:18
Oh, I'm so sorry. How finny I'm bumping the
42:20
Bitcoin goes. This could be $10 million.
42:23
I'm confusing. I'm confusing the Satoshi's.
42:25
I apologize. Yeah.
42:27
And then I didn't say that. And then, yeah, so you had Hal
42:32
Finny's original prediction of $10 million Bitcoin, and then
42:37
you had Adam back prediction of $8,000,000 Bitcoin and then?
42:44
I think it was Jesse Mess, Jesse Myers BTC crosus on Twitter.
42:49
He had like a $10 million Bitcoin, of which that Medium
42:53
article was reposted by Michael Saylor.
42:55
So you like, you know, it's like the general consensus in the
42:59
Intelligentsia, so to speak, Is this $10 million Bitcoin price
43:03
target. You're completely just
43:05
destroying that. You're like, no, this $7
43:07
billion. So how did you get to that
43:09
number? Does hyperinflation need to
43:11
happen in order for a $7 billion Bitcoin?
43:14
No, it doesn't. And this is where I think, look,
43:18
you know, probably the most enlightened of all Bitcoin, as I
43:20
feel is Jeff Booth with his, with with his commentary around
43:27
it's impossible to value a, you know, a system, a new system
43:31
from within the existing paradigm.
43:32
And this is where I think he is 100% correct.
43:36
Then we have Knut with is everything divided by 21
43:38
million, which I think is directionally correct.
43:40
And then I'm a very distant third in trying to bridge a gap
43:44
and a financial framework slash modeling thought experiment to
43:49
get us to bridge the gap to what I think Knut and Jeff Berth talk
43:53
about. And this is where the reason for
43:58
coming up with that business model, all that framework for
44:00
valuing Bitcoin was twofold. Firstly, most people don't
44:03
really understand the upside that's left in front of us.
44:06
Everyone thinks the returns and the best of Bitcoin is behind
44:08
us, but I actually think the best Bitcoin is in front of us.
44:12
And if I gave you the option today to buy Bitcoin, if I could
44:15
take you back to the year 2009 and buy as much Bitcoin as you
44:18
wanted, everyone would fill their boots.
44:20
But my point with, you know, building a framework on thinking
44:24
about Bitcoin as a billion dollar Bitcoin is twofold.
44:27
Firstly, to tell people that today is the day that you can
44:30
buy Bitcoin in 2009 and there's more upside in front of us than
44:33
behind us. And secondly, as a way to help
44:36
people avoid the carnage that comes with investing in
44:39
altcoins. Yeah, bitcoins are roller
44:42
coaster ride to riches and altcoins are a roller coaster
44:46
ride to financial poverty. And this is where if people
44:49
understood how much is in front of us with Bitcoin and relative
44:53
to everything else and on a risk adjusted basis, they just buy
44:56
Bitcoin and we wouldn't have to worry about our coins and the
44:58
rest of it, we'd just get on with improving society.
45:00
So that's I guess the fundamental premise of why I
45:03
talk about a billion dollar Bitcoin is to help shift the
45:06
over the window for people to think about Bitcoin could be
45:08
billions of dollars and all we need to do is really buy and
45:11
save dollar cost average in it to to get to that valuation.
45:14
So there are a number of ways to to get to that billion dollar
45:19
valuation. The 1st and the most simple
45:20
model I think of getting to a billion dollar Bitcoin is
45:23
thinking about. Firstly, Bitcoin is the best
45:26
form of money that's ever been invented and I'll go into that
45:29
in the sort of second framework for thinking about Bitcoin.
45:32
But the first framework is really simple in that we've got
45:36
$6.3 trillion of global trade on a daily basis that includes the
45:39
Forex markets, the rest of it, which is probably a highly
45:42
inflated figure, but let's just work with the numbers that you
45:44
can Google today. My expectation is, is that once
45:49
people realize that Bitcoin is the first money that can't be
45:51
inflated or isn't arbitrary, they will want to be paid in
45:55
Bitcoin because it's the best form of money ever invented.
45:58
And so when you have, excuse me, a functioning credit market with
46:03
a stable coin on Bitcoin, people will never have to sell their
46:07
Bitcoin. They'll there'll be credit
46:09
products that enable them to hold on to it forever.
46:11
And this is where I believe daily global trade divided by
46:15
the number of bitcoins minted on the day will work out to be
46:18
roughly what the price of Bitcoin is on a daily basis.
46:21
So if we look at those numbers, we have roughly 6.3 trillion /
46:25
900 Bitcoin, and that gets us out to a $7 billion Bitcoin.
46:30
But what would that put? So like the total global wealth,
46:34
right is like, you know, what is it?
46:37
It's like It's like 900 trillion if you include derivatives.
46:41
It's like 2 to 300 trillion if you don't.
46:46
How? Yeah, I feel like that would.
46:48
What is what is above 900 trillion, What a trillion?
46:52
It's a quadrillion. Yeah.
46:55
And I think 9 quin trillion. So.
46:56
So this is where I think there's a big misconception in people
47:01
have a myopic view and think, oh, well, there's, let's just
47:03
say there's 2.1 quadrillion dollars worth of value in the
47:06
world that needs to be accounted for.
47:10
That includes derivatives. That includes stocks, bonds,
47:13
properties, shares, the whole lot.
47:15
So that gives you a very round Number to basically divide 2.1
47:20
quadrillion by 21 million and we get to $100 million a coin.
47:24
Everyone understands that simply.
47:26
And probably where you can add nuance to that is thinking about
47:29
the prices determined at the margin.
47:31
There's 4,000,000 Bitcoin that are lost.
47:33
There's 17 or call it 1514 million in cold storage.
47:37
So there's really only two million Bitcoin available for
47:40
trade and there's 2.1 quadrillion of value.
47:43
So that basically changes the dynamics and moves Bitcoin from
47:46
100 million to a billion dollars.
47:48
I I think that's an overly simplistic way of thinking about
47:51
it. And this is where what's really
47:52
important to understand from an economic principle perspective
47:55
is that price is determined at the margin and market cap of the
47:59
2.1 quadrillion is downstream of how price is determined at the
48:03
margin. And So what I see happening is
48:06
Bitcoin has the ability to expand the the total value of
48:12
assets globally. So we've got 2.1 quadrillion
48:14
dollars worth of value in the world right now.
48:17
A lot of that's made-up of derivatives and basically
48:20
arbitrary ship that you know, we can't really touch, get
48:23
products, instruments, credit, collateral, the rest of it.
48:26
And this is where Bitcoin I think has the ability to consume
48:31
10s if not thousands of quadrillions of dollars worth of
48:34
value and store it there. And that's not going to change
48:38
how much is available in stocks, bonds, property and the rest of
48:41
it, But it's just going to expand the part dramatically
48:43
because the market cap of total assets globally are going to be
48:48
downstream of the price determined at the margin.
48:52
Interesting Okay. Wow.
48:55
Okay. That is, that is very, very
48:57
interesting. Okay.
48:59
So this would all we need to think about conceptually is at
49:03
the moment we have half a trillion dollars in the Bitcoin
49:06
market right now. And let's just say in round
49:09
numbers, the total addressable market is 1000 trillion dollars
49:13
or one quadrillion dollars. So we have the ability to
49:17
basically expand Bitcoin 2000 times market cap just to reach
49:22
what is available now. Gotcha.
49:26
Interesting. So it can go up in value 2000
49:28
times, but there's nothing stopping Bitcoin going up a
49:31
million times from here. And all it does is the π goes
49:36
from being, you know, .002 of a percent of the total value of
49:40
assets globally to 99.9% of global assets will be stored in
49:45
Bitcoin, and then there'll be a little percentage for stocks,
49:49
bonds, property. And that little percentage stays
49:53
roughly the same numerically. But yeah, okay, but the value of
49:59
Bitcoin. We can have millions of
50:01
quadrillions of dollars in Bitcoin because everyone will
50:04
want to store that their their value in Bitcoin because it's
50:07
the best store of value. Not only is it the best store of
50:10
value, it's the best made of exchange.
50:11
It's the best unit of account. It provides the greatest
50:14
optionality for all of us. So why would you buy a house
50:18
when you can buy Bitcoin? And this is where Bitcoin can
50:21
take on huge amounts of the world's wealth.
50:23
It can store 99% of the world's wealth or more, because people
50:27
will want the optionality of being able to buy a house, or
50:31
buy a boat, or buy a car, or buy education or buy whatever, and
50:35
because that's the best asset that's going to appreciate the
50:38
fastest. Gotcha.
50:40
Interesting, Very interesting. It's the first time I've heard
50:43
that a lot to impact there. How long do you believe this
50:48
process is gonna take to play out?
50:51
Right, so you have ARC Investments predicting?
50:54
And other someone commented Nikko's minds it is expanding.
50:59
Yes my mind is expanding literally like Bitcoin in the
51:03
future it's it's expanding in real time.
51:06
So how long is this process going to take to play out?
51:09
You have ARC investments, Kathy Wood, bullish prediction
51:12
thinking 1.5 million by 20-30. You have, you have you know the
51:19
the more conservative prediction, I think it's a 258K.
51:22
In the base case is around 700,000 by 20-30.
51:26
Then a lot of other intelligent people are also predicting
51:31
around a 1,000,000 dollar, 500,000 to $1,000,000 Bitcoin by
51:34
by 2030. So but $1,000,000 to $7 billion
51:39
very big jump. So is this a multigenerational
51:42
thing that's going to play out? Is this going to happen very,
51:45
very quickly? And I'll add my own little
51:48
opinion on there, I think. With the current U.S. debt and
51:54
their expenditures and the interests of which you know they
51:58
they owe for that debt, that is not a sustainable model 10/15/20
52:04
years from now. So I I really believe
52:07
something's going to break to. With all that said, what what's
52:13
your take? How, how long is this thing
52:15
going to take that? How long is this going to take
52:16
to play out? I I I think the US can go on for
52:20
a lot longer than we think. So I'm I I never ruled the US
52:23
out and I'm rooting for the success of the US Yeah I want
52:28
you guys to win. I think you're beacon of hope
52:29
for the rest of the world. The rest of the world looks up
52:31
to you. Not only is there it's the
52:35
number one place that people want to migrate to.
52:37
It's the number one place for capital and property rights.
52:39
So you know I'm I'm invested in making sure the US wins this but
52:44
that that show can go on for a whole lot longer than we could
52:47
ever dream of. But what fundamentally happens
52:49
when the debt rises there then becomes a collateral problem.
52:53
And you know, take a, you know, sort of that discussion that
52:56
we've probably all heard about that, you know, nation states
52:59
have a problem when they reach 130% debt to GDP levels because
53:03
the US is a global reserve currency.
53:04
That's meaningless. It's a meaningless metric to
53:07
look at. But it's important to think
53:09
about how they adjust, you know, and how they can create growth
53:11
on the back of it and what happens when we reach those debt
53:16
levels across nation States and indebtedness across corporate
53:19
and personal as well as governments.
53:23
There needs to be a rewriting of the collateral.
53:25
Now one thing can happen, you can pay that debt down and take
53:29
it from 130 to 20% or you can just inflate the assets.
53:34
So you've got effectively a 20% LVR under value ratio or
53:38
indebtedness. Now it's far easy to just
53:41
inflate the assets than it is to pay the debt back.
53:44
So my expectation is, is that Bitcoin's going to be in
53:46
beneficiary of the underlying collateral of these debts
53:49
basically inflating. That's my bet.
53:53
Gotcha. Interesting, Okay.
53:56
I do agree. But here's the thing.
53:58
Yes, they can get away with it as long as the world's reserve
54:01
currency, everyone's holding the US dollar.
54:04
How long is that gonna be the case?
54:06
Right. You have the whole thing about
54:07
bricks and then. You have, you know, and of
54:10
course this is just like sidelined stuff.
54:12
But clearly China, Russia, you know, a lot of other countries
54:15
are, you know, they feel the injustice of the money printing.
54:18
They're like this is just crazy what they're doing.
54:20
Why are we using these dollars? You know, let me coin a term
54:25
that I think everyone should incorporate, particularly in
54:27
Bitcoin land. It's only abroad if you're not
54:30
in on it. That's why Russia and China are
54:32
shitty. It's because they don't get the
54:34
privilege. So you know what they're not a
54:36
great custodian of global reserve currency and as
54:39
egregious as some of the things are that the US has done and the
54:42
money printing particularly that we've seen over the last three
54:44
years is as distasteful as it is.
54:47
It's you know the US has been the best custodian over the last
54:50
100 years of a global currency. They've they've they've done a
54:53
better job than any other nation state.
54:56
So you know to coin Foss, you know it's the cleanest dirty
54:59
shirt in the pile and it it literally is that.
55:02
So you know this whole bricks, this whole bricks thing.
55:06
I find just, you know, I live in Australia, our major export is
55:12
to China and our largest exporter is BHP day basically
55:16
for the first time in history accepted a contract in China as
55:19
you want. And I'm thinking no one wants
55:22
yuan. Like, if you think the US is
55:24
bad, you know, the Chinese yuan's even worse because
55:27
they're running two sets of books.
55:28
They've got an internal set of books which runs the internal
55:30
money in the country. But if you want to export
55:32
anything, well, you use the, the external books.
55:35
And I'm like, you know, people who are running two sets of book
55:38
are running abroad and China's doing it on a nation state
55:41
level. So I'm like no one's trusting
55:43
that currency. And then Russia, you know,
55:48
they're kind of in a pickle at the moment.
55:49
They're not. Politically, they're persona non
55:52
grata on a global scale at the moment.
55:55
And, you know, no one's taking the Indian rupee.
55:57
And you look at Russia, they're already trying to sell the
55:59
Indian rupee back out of what they've got.
56:00
So, you know, for the foreseeable future, it's the US
56:03
And when you look at actually the bond markets, you know, the
56:06
US is paying five and a half off the bat.
56:09
You know, Europe's paying three, 3 1/2.
56:11
And they've got inflation at 7:00 or 8:00.
56:13
They've got real rates of -, 4%. And the US has got real rates of
56:16
positive, too. You know your currency is golden
56:19
for the foreseeable future. Gotcha.
56:22
Interesting. I love the.
56:25
I love the different thing cuz you hear it from all the macro,
56:28
the macro heavyweights of Bitcoin, Twitter and like the
56:31
dollar, it's over, it's done, it's this, but you know, but
56:36
from your perspective it's like no, no, it's still a long way to
56:39
go anyways. So I kinda wanna go back to this
56:42
and we are getting to the top of the hour and I do wanna be
56:44
respectful of your time. This idea of $1,000,000 Bitcoin
56:49
by 20 Thirty $500,000 Bitcoin by 2030.
56:52
Now, I know that you cannot give financial advice, so this is not
56:55
financial advice. This is just.
56:57
Just, you know, two acquaintances, hopefully one day
57:01
friends talking about the potential price of Bitcoin in
57:05
the future. So do you think, and then my
57:08
followup question to that was the idea of of the $7 billion
57:14
question at the $7 billion Bitcoin, So from $1,000,000
57:18
Bitcoin to $7 billion, that's a that's a huge gap, right?
57:21
So is this a multigenerational thing?
57:24
Is this going to take decades? This is going to play out very,
57:27
very quickly. What's going to happen in your
57:29
opinion? I think it'll play out a lot
57:31
quicker than we we think. You know, we're only one nation
57:34
stayed away from setting a floor of Bitcoin at $1,000,000.
57:38
And this is where, you know, listen to Frost Foss, who I
57:42
consider a friend, even though we haven't spoken so much, but
57:45
I've listened to so much of him. Don't You can make price
57:48
predictions with no time limits or time limits with no price
57:51
predictions to to give you both and you know, just ignore that
57:55
advice because it's fun to speculate.
57:57
I think Bitcoin will be 10 million USA coin by 2030 and I
58:01
think we'll have a billion dollar Bitcoin by 2040 in
58:04
today's terms. So you know, for me personally,
58:08
I think you know they represents huge, huge upside and the risks
58:12
are, you know, completely overstated.
58:14
People confuse risk with volatility.
58:17
Risk is completely different to volatility.
58:19
And yes a little Bitcoin's volatile.
58:21
I I think it's the risk free asset of the of the world right
58:24
now. So I think the asymmetrical
58:28
upside to Bitcoin for the next sort of seven or eight, even 10
58:31
years is a bit that you can't, can't ignore and basically just
58:36
get some. Yeah, just get some.
58:38
Just get some just in case it catches on.
58:41
And I'm glad to hear that. You and Foss.
58:44
Next time we'll put you and Foss together and we'll do a simply
58:49
Bitcoin IRL between the three of us.
58:51
Anyways, Peter, I love that. Thank.
58:53
You, Peter. It's been an absolute honor.
58:54
Thank you so much for joining us today on Simply Bitcoin IRL.
58:58
I put up Peter's handle and his website on the screen guys for
59:02
you guys to check it out. But Peter, in case just for
59:05
audio listeners, why don't you tell everybody where they could
59:07
find you on the interwebs? In the interwebs, well there's a
59:11
website thebitcoinadvisor.com that's advisor with an er My
59:17
handle on Twitter is probably the best place to catch me at
59:20
Peterbtc Advisor and any questions please reach out.
59:24
Love to help you and appreciate your time, Nico and big fan of
59:27
the channel. So thanks for all the hard work
59:29
you do and educating us all. Appreciate you and the Honors
59:33
mine. Thank you Peter.
59:34
Hanging out backstage for a second while I wrap it up guys,
59:37
Thank you so much for tuning in to another episode of Simply
59:39
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week with a very special guest. I'm sure you guys are going to
59:57
enjoy that, but until then, enjoy your evening.
1:00:00
Peace out guys, We'll see you tomorrow.