Latest / TFTC: A Bitcoin Podcast / #656: Q2 2025 Monetary Base Update with Matthew Mežinskis

Transcript

#656: Q2 2025 Monetary Base Update with Matthew Mežinskis · TFTC: A Bitcoin Podcast

• 0:00
  You've had a dynamic where money has become freer than free.
• 0:10
  You talk about a Fed just gone nuts.
• 0:13
  All the central banks going nuts.
• 0:16
  So it's all acting like safe haven.
• 0:18
  I believe that in a world where central bankers are tripping over themselves to devalue their currency,
• 0:24
  Bitcoin wins.
• 0:25
  In the world of fiat currencies, Bitcoin is the victor.
• 0:28
  I mean, that's part of the bull case for Bitcoin.
• 0:31
  If you're not paying attention, you probably should be.
• 0:36
  Summer's over. Back to work.
• 0:39
  Back in the lab.
• 0:43
  It's time to get back to basics.
• 0:45
  This is why we're starting a post-Labor Day run of podcast here at TFTC
• 0:50
  with one of our oldest and dearest friends at the show, Matthew Mazzinczos.
• 0:56
  Get back to basics.
• 0:56
  people are people are going crazy out there
• 0:59
  they are buddy september is on good to be here good to see you
• 1:05
  congrats on your expanding brood by the way thank you
• 1:08
  very exciting very exciting yeah it's uh it's pretty wild you know the uh i just saw the
• 1:16
  tweet from my friend who uh does a lot of the power curve stuff cena and he was
• 1:21
  just posting the monthly closes and august is the worst worst month for bitcoin uh not not only
• 1:29
  bitcoin it's obviously down month generally but um that is over and moving into an exciting fall
• 1:41
  i think which typically is exciting for bitcoin especially every four years and uh i've been
• 1:46
  talking about it a lot on my streams i mean if one is concerned with adoption and price and all the
• 1:52
  rest uh i've been talking about it a lot uh recently just looking at the the multiples and
• 2:00
  the percentiles and where we are and i'm sure you have a long view as i do so a lot of this
• 2:07
  chatter doesn't concern me too much and i would encourage listeners dear listeners to uh to feel
• 2:15
  the same. That was a newsletter I wrote last night referencing the chart. The chart. The old
• 2:22
  power curve. The old power curve. I messed up. I got to go edit it. We've talked about this for
• 2:30
  years. I dropped power. What did you mess up? I dropped power law trend in there.
• 2:38
  Yeah, power law triggers people. You and I have been talking about this, I don't know how many
• 2:44
  years. I first posted it in 2018. So seven years. Yeah, it's, it's funny how there's,
• 2:56
  when you talk about like a model or an idea, the word law can trigger, trigger people. But I've
• 3:02
  always, yeah, I've always used the word regression or curve because it's, there's exponential
• 3:07
  regressions, there's linear regressions, and there are power regressions. So.
• 3:12
  well let's dive into what your friends we can look at the chart you want to look at the chart
• 3:20
  let's look at the chart because you said that cena said that august was the worst month
• 3:23
  ever or just this year uh it's it's traditionally uh bitcoin's worst month as far as performance
• 3:29
  yeah but that's a different thing that's just simply get simple simple uh monthly changes right
• 3:35
  yeah okay then i'll set up this conversation i read a newsletter last night the trend is your
• 3:40
  friend i don't know if you've been observing this but i've seen a lot of people within the bitcoin
• 3:46
  twitter sphere which is consistently losing signal throughout the years but i feel like
• 3:52
  it should be addressed for those people who are freaking out they don't think bitcoin the bitcoin
• 3:58
  price is going up fast enough despite the fact that we hit a new all-time high fresh new all-time
• 4:04
  I had $124,019 days ago now at this point.
• 4:08
  And I was trying to be a good analyst, if you will,
• 4:13
  and being like, okay, let's look at the numbers.
• 4:15
  And I went to the chart.
• 4:17
  And August ended at, the price of Bitcoin ended at $108,316.45.
• 4:27
  cents the power regression model at the end of august is showing 112 262 so we're two and a half
• 4:35
  percent ended the month of august two and a half percent below trend then i just trying to compare
• 4:42
  it to something with the end of july bitcoin price ended 115 848 the trend was saying 108
• 4:49
  993 so we were 6.2 above trend in july and so i was looking at those two months those two data
• 4:57
  points and saying, hey, it doesn't seem like the price is abnormally suppressed if we're
• 5:04
  looking at this model.
• 5:06
  Yeah.
• 5:06
  There's a few different things going on there and we can go through all of them.
• 5:09
  But I think the overall power trend is something.
• 5:14
  So we should talk about that first.
• 5:16
  But then also we have this idea of paper Bitcoin that's leaking its way back into the space,
• 5:20
  I've noticed recently into the meme sphere.
• 5:25
  and we also have the idea of i mean it's tangential and related but you know institutions
• 5:33
  bitcoin treasury companies uh sort of manipulating the price with excess leverage uh sort of unbacked
• 5:41
  by real value and there may be truth to some of the some of that but um the overall picture as
• 5:47
  far as i can tell and i've been you know like i said i've streamed about this most days european
• 5:52
  morning time. Nothing has really changed underlying I haven't seen any of those signals.
• 6:00
  And I'm definitely a sort of a if it's not broke, don't fix it type of person. So so we can jump
• 6:05
  into it. Let me share here, Logan. There we go. So this is the old power trend. I can't remember
• 6:18
  I'm now putting it always on this 10, every 10 percentiles.
• 6:23
  So you can see sort of exactly where we are.
• 6:25
  Before I was doing kind of like sigmas, like one sigma, two sigma.
• 6:29
  There's less bands.
• 6:31
  But anyway, very quickly, so people understand why is it power?
• 6:36
  Why is Bitcoin power not exponential?
• 6:39
  is this is a log left scale, log linear.
• 6:48
  And you can see it has this nice sloping,
• 6:52
  nice downward, I'm going to zoom in here a little bit,
• 6:54
  this nice sort of a little bit fast at the beginning,
• 6:58
  but then a gradual descending, decelerating growth rate,
• 7:03
  which is how networks grow, cities grow.
• 7:06
  It's very sustainable.
• 7:07
  And it turns out that Bitcoin is growing like that.
• 7:09
  If Bitcoin was growing like the stock market or gold or the bond market or any other TradFi market, actually, then when you put this on log linear, log scale, you would get a straight line for the trend line.
• 7:24
  And we can show I can show you some of those as well.
• 7:28
  But it doesn't.
• 7:29
  It has this nice gradually sloping curve, which is the 96 percent R squared on the power trend.
• 7:37
  another thing i'll just show you very briefly top level if i show you log bottom here and i know that
• 7:44
  for the listeners it's a little bit better if you watch this one but so a power a power trend
• 7:51
  will turn into a straight line on log log so i do log bottom whoops i need to reset this
• 7:58
  sorry logan might need to cut that just did it once and now it's uh
• 8:07
  it's buggy on log bottom. Ignore the January's at the bottom. But anyway, you basically see it's a
• 8:15
  it becomes a straight line. Okay, we're not gonna look at this long this way. But
• 8:19
  power trends become a straight line on log, log scale. And the point is, what does that mean?
• 8:28
  It just means basically that as the thing grows, it grows proportional with itself.
• 8:34
  And that's different than, like I said, every other Tradify market, stocks, bonds, gold, because they grow constantly at an exponential rate, which more often than not, eventually will lead to some sort of a collapse or a crisis.
• 8:54
  I actually spent the Nordic circuit of Bitcoin conferences here this summer talking about this at Riga and Helsinki and Prague as well.
• 9:06
  It's not really Nordic, but.
• 9:09
  And.
• 9:11
  We talked about this last time.
• 9:14
  You remember that idea, this Jeffrey West book?
• 9:16
  Mm hmm.
• 9:17
  And so just to remind people.
• 9:22
  Well, let me hold off on the Jeffrey West, actually.
• 9:24
  because there's so many topics to introduce.
• 9:27
  Basically, Bitcoin is not growing.
• 9:29
  It's just not growing like other stuff.
• 9:32
  And before you get too disappointed,
• 9:34
  or you think that it's not exciting enough,
• 9:36
  or it's not growing fast enough,
• 9:37
  I can show you pictures of the growth rate,
• 9:40
  charts of the growth rate,
• 9:40
  and it's still pretty solid.
• 9:44
  All right, so if you look in here,
• 9:46
  we got every 10th percentile.
• 9:48
  The zeroth percentile would be 0.1x the trend.
• 9:52
  It's way down here.
• 9:53
  that's like extremely rare obviously and the hundredth percentile is 7.8x the trend
• 9:59
  that's way up here probably never going to happen again either of those never say never i know but
• 10:06
  probably never based on how uh the network has been growing that leave us that that leaves us
• 10:12
  the 10th to the 90th and if you just zoom in on the last two to three years here uh remember 2024
• 10:20
  before it was the start of the ETF approvals,
• 10:23
  we've been pretty much bouncing around the trend line,
• 10:26
  the black trend line.
• 10:28
  And the trend line itself sits at about the 65th percentile.
• 10:32
  So that means two thirds of the time,
• 10:34
  the price is below this black line.
• 10:35
  One third of the time it's above.
• 10:38
  It is true.
• 10:39
  We're recording this on the second.
• 10:41
  So it's 109K price when I pulled in the model.
• 10:46
  So my trend line,
• 10:47
  which is different than some other people's trend line,
• 10:49
  some people a little bit lower but my trend line is 112 000 so we're just below it um for a couple
• 10:56
  days but again to me as far as i'm concerned it's like nothing to worry about it's totally normal
• 11:02
  it's all totally normal behavior and um you know as a very very basic rule of thumb
• 11:09
  if you're below this black line you could kind of argue that this is an undervalued
• 11:16
  time in Bitcoin's life.
• 11:20
  And if you're above the black line,
• 11:21
  you could also argue on the flip side
• 11:24
  that it's slightly overvalued.
• 11:25
  But there's a lot of caveats there.
• 11:30
  We have the four-year cycle to contend with
• 11:32
  and a lot of other things.
• 11:34
  So, you know, a lot goes into that.
• 11:38
  I could stop there if you want to.
• 11:41
  I just want to comment on the psychology
• 11:42
  of the people who are stressed
• 11:44
  that Bitcoin isn't pumping.
• 11:46
  as hard as they expect it to.
• 11:48
  I mean, if you look at the chart,
• 11:49
  you can see early years,
• 11:51
  massive explosions in price corrections.
• 11:56
  And I think you mentioned it,
• 11:58
  like the introduction of the ETF.
• 12:00
  Since then, we've had sort of a more calculated
• 12:02
  and less volatile step up and to the right,
• 12:10
  which I prefer.
• 12:11
  But I do think many market participants,
• 12:15
  even if you came in earlier,
• 12:16
  You just heard the lore of the crazy four year cycles and you wait for, what is it, 18 months after the halving and that's when fireworks happen.
• 12:25
  And I think many people are anchoring to those expectations and becoming sorely disappointed that they're not materializing in the way that they would expect and underappreciating the fact that we have this somewhat very regimented and what's the word I'm looking for?
• 12:49
  Just stable.
• 12:51
  Structured, yeah.
• 12:52
  Yeah, structured.
• 12:53
  Up and to the right.
• 12:54
  It's boring.
• 12:55
  but it's still moving in the right direction.
• 12:59
  Yeah. And I would comment on that too, because I sort of am on record of saying,
• 13:04
  again, like I said, if it's not broke, don't fix it. I'm not discounting the four-year cycle idea.
• 13:10
  A lot of people are. A lot of people are saying now is going to be just sort of a more stable,
• 13:15
  less volatile Bitcoin. But my next question would be, at what trend? What is it going up? Because a
• 13:21
  lot of these people either don't understand the power curve or don't don't haven't read about it
• 13:26
  so from that side uh i would not be too worried like i think there's still plenty of time to
• 13:35
  overshoot um and have this euphoria which is you know again for if you do want to play the markets
• 13:42
  or you want to take some coins off the table for some lifestyle changes or whatever it might be
• 13:46
  totally fine uh on the flip side if you're a hodler if you're younger just getting started um
• 13:53
  or you're older and you have a stack and you're not thinking of like taking too much risk
• 14:01
  you know again it's caveat emptor i mean the hardest thing in the world to do speaking from
• 14:06
  someone i know you as well have been through these cycles the hardest thing to do really is to sell
• 14:10
  Bitcoin. It doesn't matter what price. No one knows the future. And if you sell it,
• 14:17
  and the price doesn't collapse as much as you think, and you can't buy as many Bitcoin as you
• 14:23
  would like from that exit that you made into fiat before, whatever, into gold, whatever,
• 14:29
  then that would be extremely disappointing. So that's why I totally respect the HODL meme. I
• 14:40
  About the four year cycle, I honestly I wouldn't count it out.
• 14:42
  I mean, we haven't been through it, right?
• 14:44
  It is right now.
• 14:45
  This is the for sure with 2017 for sure with 2013.
• 14:50
  This occurred both times in November, December.
• 14:54
  2021 was a little bit of a wild one.
• 14:57
  This time could also be a wild one.
• 15:00
  You know 2021 we had a double top But the first top was actually probably the real top If you look at other metrics which we can talk about like the price extending over say minor
• 15:12
  revenue or something, it was actually probably the first one. And then the second one was sort of,
• 15:18
  uh, I know people have called it the scam top or whatever, but it was, that was actually, um,
• 15:23
  kind of like a it was a huge debt cat bounce but it was not you know it was just not uh
• 15:29
  in relationship to other metrics when it usually extends and you know likewise in 2013 we had a
• 15:35
  double top although in that top it was the second top was five times higher so you never quite know
• 15:42
  um we could always be thrown for a loop with uh with bitcoin but you know there's
• 15:51
  enormous returns to be made here compared to any other traditional market. And if all you want to
• 15:58
  do is hodl, great. If you want to ape in and out with 10% of your stash, also great. So yeah, I don't
• 16:07
  think that there's any reason to discount actually the four-year cycle yet. And we can look at some
• 16:14
  charts if you want to look at that, talk about paper Bitcoin and all the rest.
• 16:18
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  the original how to position for the Bitcoin boom when Bitcoin was just $27k and it called for $120k
• 17:21
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• 17:59
  I can show you actually, let's look at the, let's, let's look at one more here. So
• 18:03
  just so everybody knows, at least my opinion on where the price could go
• 18:07
  by the end of the year. So here's what I would say. If you look at this every 10th,
• 18:12
  right, we're zooming in to basically the trajectory here or the price history.
• 18:21
  Bitcoin is traditionally during the booms very easily gotten above the 80th percentile each time.
• 18:31
  it's in the earliest booms before that is 2021 it's gotten above the 90th percentile very easily
• 18:38
  each time 2021 again was a little bit of a little bit of a ringer the first top which is what i
• 18:45
  think was the real top this time which was early it was a very easily above the 90th for you know
• 18:51
  a month two three months three to four months is actually typically all the time that we get above
• 18:57
  the 90th percentile. And then it barely got above in November 2021, right where it should be. So
• 19:02
  again, just to remind you, these dotted lines are multiples above trend, and then how percentage
• 19:07
  wise how often that has occurred. So it's been pretty easily done for the prior three tops. But
• 19:17
  if this time we're different, and if it gets invalidated, or you know, this four year cycle,
• 19:22
  So for me, I think it would be somewhere around.
• 19:27
  For sure, it would be Bitcoin not getting above the 90th percentile, which it did do in 2021 and all prior cycles, and probably even I'd say the 80th.
• 19:36
  Like that would be the only reason that I would say.
• 19:40
  OK, Bitcoin really is on this totally different trajectory that doesn't have anything to do with the halvings or excitement after, you know, 18 months after the halving.
• 19:48
  just general hype cycles that markets have, I would say if it doesn't get above the
• 19:56
  80th percentile, which by the way, is 1.3x the trend. And if we look at the end of 2025,
• 20:01
  the trend is 125k. So 1.3x is 170k. So if we don't get above 170k by year end,
• 20:10
  or into like the first couple months of next year, then I would say,
• 20:15
  okay time to rethink the idea of the four-year cycles but not doing any technical analysis not
• 20:22
  looking at these impulses or elliott waves or whatever we're just looking at the power trend
• 20:26
  and where the price typically is over or under trend every four years it's actually pretty clear
• 20:33
  it's pretty clear what's been happening and there's nothing to me that would invalidate
• 20:39
  this idea until it's invalidated and it hasn't been invalidated yet.
• 20:45
  So that's actually a, I would say that's a bullish message.
• 20:49
  If you're listening.
• 20:51
  Hasn't been invalidated yet.
• 20:53
  Could potentially be.
• 20:55
  Could potentially be.
• 20:56
  May not be.
• 20:56
  Turn on the 90th percentile there.
• 20:58
  What will we have to do to.
• 21:00
  Yep.
• 21:01
  So the 90th is 2x.
• 21:03
  Pretty rare, right?
• 21:04
  So that means 90% of the observations would always be below this dotted line.
• 21:08
  So 2x is 250.
• 21:09
  Okay.
• 21:15
  And I can throw on, by the way, we can make this even more refined and go to the top 90th and above.
• 21:25
  And we can look at the 91st, 92nd, 93rd, 94th, 5th, all the way up to the 100th as well.
• 21:33
  But very simple rule of thumb.
• 21:35
  yeah i think 2x based on the prior trends could easily happen by the end of the year but if it
• 21:43
  doesn't say in the next six months then i would consider the four-year cycle being invalidated or
• 21:49
  different or something so here's now let me show you this is the top 10 starting from the 90th now
• 22:00
  This is very exciting, very exciting rainbow. Take off the hundredth. It's extremely rare.
• 22:07
  Now let's look at what happened. So the thesis, by the way, that people should understand is as
• 22:13
  Bitcoin gets more adopted, these peaks do come down, right? So notice, I now have the 99th
• 22:19
  painted on this chart. It has for a couple of weeks in 2013 and in 2017, gotten above the 99th
• 22:29
  percentile, which is 4.6x the trend. Okay, so 4.6x the power trend, which I told you is 125k at the
• 22:37
  end of the year. Bitcoin has achieved that every prior cycle, but it did not in 2021. Okay, so this
• 22:44
  is where we talked about softer tops, and I agree with that idea. So if we take off the 99th, 98th,
• 22:51
  even 97th, then we start to see what we hit in 2021. It was a 96 percentile of 2.8x,
• 22:56
  round it here, 3x. And this is where I would say, again, totally base case, totally possible
• 23:03
  would be 2 to 3x the trend. So if you just look at this now, go to the end of 2025, 125k,
• 23:12
  2x happened every time pretty easily. That's 250k Bitcoin. 3x, roughly, that's 375k Bitcoin.
• 23:21
  although i will admit with lower highs on each one of these cycles i think this is indeed
• 23:29
  the max i would be very surprised that bitcoin went above 350 or 375k by the end of the year
• 23:35
  but i think it's possible
• 23:36
  bullish again i heard we're getting to 444 000 in november who who wrote that
• 23:46
  I don't even know if he's a microstrategy guy, but Josh, man.
• 23:54
  Well, 400,000 is the 97th.
• 23:57
  Let's go 98th.
• 24:00
  So yeah, on that 98th percentile, somewhere between the 97th and 98th percentile.
• 24:06
  It's pretty rare.
• 24:07
  It's pretty rare.
• 24:10
  You got to think about what that's saying.
• 24:12
  Three and a half times the trend line, basically.
• 24:16
  97 97 and a half percent of the time it doesn't happen uh so this is how i'm looking at it
• 24:24
  basically this doesn't tell you the time right it's kind of like a caveman analysis honestly
• 24:29
  because it's we're just assuming the four-year cycle four-year cycle doesn't happen or if
• 24:33
  extends or not i can't tell you that from this chart but what i can tell you is if the market
• 24:38
  gets heated if people get you know if grandma's getting excited this thanksgiving in the u.s and
• 24:43
  giving her grandchildren money to buy Bitcoin, then perhaps it could happen again.
• 24:51
  But yeah, absolutely possible that we have lower highs and even possible that we get out of the
• 24:57
  four-year cycle. But I'm still not seeing it based on the price action and based on where we are.
• 25:04
  I'm not seeing it. And we can look at some other charts as well to maybe further talk about that.
• 25:07
  But base case, what I'm thinking, two to three X, the trend by the end of the year or the first couple of months in the next year.
• 25:16
  That's 250K to 375K.
• 25:20
  That would be how I would look at it.
• 25:22
  I'll take that.
• 25:23
  The humble, humble 375, humble 250.
• 25:27
  Yeah.
• 25:29
  And you can imagine on the back end of this, by the way, because people, this is maybe people reset the narrative at this time.
• 25:37
  going to be like, oh, because remember this happened in 2021, by the way. People like to
• 25:41
  reset the narrative and say, oh, Bitcoin is now on this trend and is going here forever. Well,
• 25:46
  stick with this trend line, which I've come back to time and time again.
• 25:51
  This black line, Marty, has basically remained consistent since 2016. It's like the best trend
• 25:58
  line in all of finance, way better than anything else, and certainly better than the old stock to
• 26:05
  flow ratio. So, you know, take comfort in that. Doesn't mean it has to go there. But if people
• 26:14
  start to think, oh, we're now at a new plateau, you know, the old Irving Fisher sort of talk,
• 26:23
  and we're at 350k Bitcoin. And then all of a sudden, you have, you know, X number of Bitcoin
• 26:29
  treasury companies which have levered their balance sheet up, and their convertible debt
• 26:35
  facilities with less than three year duration to buy a lot of Bitcoin.
• 26:44
  And then the price starts to get soft. And then, you know, the short market participants get a
• 26:51
  little bit excited. You could see absolutely a cascading liquidations of these Bitcoin treasury
• 26:58
  companies. You could see, who knows, it might go as high as the White House. I'm not saying
• 27:01
  that it will. I'm not saying that it will. I'm just saying you can imagine plenty of scenarios
• 27:07
  where this whole thing rinses and repeats. Just on a completely different scale. Matt and I have
• 27:16
  been talking about this, Matt Adel and I, on Rabbit Hole Recap for the better part of
• 27:20
  a year and a half now. With this cycle, you have nation states and Wall Street getting into the
• 27:28
  degeneracy and we could see blow-ups unlike anything before it would make a FTX and the
• 27:35
  ICO bubble look funny in retrospect yeah precisely and I think for those blow-ups to happen you
• 27:42
  probably got to get a little bit extended on the high side first I think doesn't have to be the
• 27:47
  case but you know basic stuff at the end of the day uh you know I think a player like Saylor
• 27:54
  Obviously, you know, he's completely changed his, the makeup of their balance sheet, you know, with the new facilities and they've gotten away from the converts, you know, with pretty short duration at the beginning.
• 28:09
  Which, you know, in those days of 2022 was looking a little bit difficult for him, as you recall.
• 28:15
  but i i certainly think someone like him is uh and his uh his cohorts his colleagues around the uh
• 28:26
  around the micro strategy table are expecting stuff like this but the next
• 28:31
  500 bitcoin treasury companies i mean would you like to buy a convert from them i don't know
• 28:38
  i don't think too much about it i know there's a lot of people that strong feelings about bitcoin
• 28:42
  treasury codes but try bitcoin and be happy there is but let's let's dive into this of the paper
• 28:49
  bitcoin there's a ton of people out there who are looking at the price chart saying do something
• 28:54
  you're not high enough yet and pointing at bitcoin treasury companies etfs and saying
• 29:01
  hey they're creating paper bitcoin coin bases re-hypothecating giving
• 29:06
  allocations to the same Bitcoin to multiple players.
• 29:12
  And this is why the price is going down. Throw in CME Futures
• 29:16
  and the games that Wall Street have played
• 29:19
  with other assets like gold. And many are wholly convinced
• 29:24
  that the price is being suppressed by
• 29:27
  the combination of rehypothecation and
• 29:31
  financial engineering using derivatives.
• 29:35
  And here we can easily just look at a great chart from our friend Checkmate, great on-chain analyst.
• 29:44
  And this is the light pink.
• 29:48
  There are above one year.
• 29:51
  But as you can see, when the price is really skyrocketing, yeah, there's a lot of sub one-year hodlers that exit when we get over 100K, particularly this little spike at the start of this year.
• 30:02
  But as we gone on there have been more and more And you know that that ratio that mix above one year HODLers just one year one year and above becomes pretty large
• 30:14
  I mean, for a lot of the middle part of this year, it was 50% and above of the coins that were taking profit.
• 30:23
  Which cohort did they come from?
• 30:25
  way more than or at least 50 50 but sometimes i think clearly 60 70 percent of the mix
• 30:33
  was above one year hodlers sometimes you know five so there's plenty of coins that are coming
• 30:42
  onto the market and as check says here uh you know nobody ever sells their bitcoin they said
• 30:48
  it was all paper bitcoins they said i think that summarizes it pretty clear uh to me but why would
• 30:54
  the OG sell? Do they know something? Do they know the top is in? Is that why they're unloading coins
• 31:02
  and converting the fee? I think not at all. I think OGs are not watching your podcast. I think OGs
• 31:08
  are not thinking about the power curve. I think OGs bought Bitcoin at sub $10 and they're enjoying
• 31:14
  $100,000 gains as they should. As they should. Agreed. The psychology of this is
• 31:22
  having been a part of it for 12 years now
• 31:25
  going on 13
• 31:26
  just observing it
• 31:29
  throughout the different cycles throughout the years
• 31:31
  it is one of the most interesting
• 31:33
  things to me is how the psychology
• 31:35
  evolves especially as you get
• 31:37
  new entrants coming in like the
• 31:39
  class of
• 31:40
  23, 24 even go back to
• 31:43
  like 2020
• 31:43
  seems like they're
• 31:46
  they're young fawns looking
• 31:49
  going to get their sea legs under them
• 31:50
  completely unaware of
• 31:54
  how this, not unaware, but
• 31:56
  I don't know, to me
• 31:58
  there's a ton of pattern recognition
• 32:00
  particularly on the sentiment side
• 32:01
  and the sentiment this summer
• 32:04
  and it's funny, like I said, August is historically
• 32:06
  the worst month, summer's historically
• 32:08
  slow, not only in Bitcoin, just
• 32:10
  traditional markets, you have the
• 32:12
  concept of the summer doldrums
• 32:14
  and it's funny when
• 32:16
  people are unable to recognize
• 32:18
  these seasonal
• 32:20
  and cyclical trends that have been pretty constant,
• 32:24
  not only through Bitcoin, but through financial markets more generally.
• 32:27
  And they succumb to the monotony of boring price movement.
• 32:35
  Yeah, and we should look at some other charts,
• 32:37
  but just to piggyback on what you said there,
• 32:40
  I think that's a crucial point.
• 32:42
  And I think, you know, five years ago,
• 32:44
  or certainly after even the activation of SegWit,
• 32:47
  even the 2017 top, every time that there are tops,
• 32:50
  the narrative actually changes to the complete opposite of what you said, right? We flip onto
• 32:57
  a new plateau, new money, this is going to be something that the world has never seen,
• 33:05
  all of which are points that I very much agree with. But the timescale is way different,
• 33:10
  I think, than people are expecting. And the idea that Bitcoin will sort of absorb the financial
• 33:24
  system next week, next month, or even next year, I got another few charts to show you on that one.
• 33:30
  It's just too ludicrous. All right. I mean, as another quick example, like Bitcoin Max,
• 33:37
  I think has done, well, actually I know Max, but the training 12 months, let's just say,
• 33:44
  has done something like $7 trillion worth of transactions on chain. All right, if you take
• 33:49
  everyday transactions, roll them at the price, about $7 trillion. Fedwire, which is the core
• 33:55
  of the financial system, one, only one of central bank, central banks around the world's real-time
• 34:04
  gross settlement systems. When I say real-time gross settlement, I mean, it works just like
• 34:07
  Bitcoin. It's literally banks transferring reserves like payments for stuff that they owe to other
• 34:14
  banks, like checks to clear and all the rest, right? That's called Fedwire. That does 1.1
• 34:22
  quadrillion dollars a year. So you're at $1,100 trillion that the Federal Reserve does versus
• 34:30
  seven that Bitcoin does. Bitcoin can absolutely get there. And the only thing that has to happen
• 34:34
  actually is the price to rise. But it's just not going to happen overnight. And so going back to
• 34:41
  the power curve, I think that the power curve actually should give a lot of people a lot of
• 34:46
  comfort and nobody still is paying attention to it. Again, I posted this stuff before the stock
• 34:50
  to flow ratio with still with a marketing budget of zero dollars. I know, but most people don't
• 34:55
  sort of understand it, think about it, whatever. But it's just the trend line
• 34:59
  that is showing how typically networks have grown. The internet actually followed a power curve.
• 35:06
  Crucially, not if you think about that S curve network adoptions,
• 35:10
  crucially, not like cell phones and other things like dishwashers or whatever.
• 35:15
  Usually, if there's a company that has a sort of a large share, technology products will not follow
• 35:24
  this. They follow more that S curve where that sort of explosion in the middle. Bitcoin, the
• 35:30
  internet, other networks, cities themselves, they don't have that. They have a decreasing rate of
• 35:36
  growth, which if you looked at it sort of as a supply, it looks exactly what we saw with the
• 35:39
  price on log scale, sort of faster at the beginning, slower over time. And so there's like huge comfort
• 35:46
  there. And I actually, you know, again, I keep saying I should reference charts and we just talk
• 35:52
  about it, but because I like to try to show people facts with what I actually say. I believe,
• 35:59
  Marty, that like 95% of what we see in the market today in Bitcoin is the power curve of network
• 36:04
  adoption itself. I don't think it has anything to do with the money supply, the Fed, interest rates,
• 36:08
  like literally 5%. That's sort of my latest thesis. And it's not really as of late. I've
• 36:15
  been saying it for a while now, but that's what I think. I think you first brought this up
• 36:20
  earlier this year and i completely agree and i think that again if you want to anchor in confidence
• 36:27
  and filter out all the noise i think anchoring to that and just taking price and exogenous factors
• 36:38
  like monetary policy and geopolitics and macroeconomics out of it and just view it as
• 36:43
  network adoption, uh, of which price is just, uh, a, an output of that adoption. I think it makes a
• 36:52
  lot of sense. More and more.
• 36:53
  Your representation of it.
• 36:54
  Yeah.
• 36:55
  Of this endogenous idea as you, to use your, uh, continue your analogy. It's, it's just within
• 37:00
  Bitcoin itself. That's what we see. We're looking at the adoption of Bitcoin, the system,
• 37:05
  when we look at the price curve.
• 37:06
  and i i do have to uh give you props too for that fed wire comparison i've actually used that
• 37:13
  a lot at 1031 talking to prospective lps when they really get in the weeds and they're trying to
• 37:20
  understand a good comp to bitcoin and many people naively will say visa mastercard
• 37:27
  venmo paypal it's like no it's the fed fed wire central bank settlement and that chart you have
• 37:33
  of the sort of multiple of Fedwire volumes and settlements compared to Bitcoin over time.
• 37:42
  This one is one of the highest signal charts out there.
• 37:46
  Agreed. Agreed. So there's your 1.1 trillion, 1,158. Sorry, there's your 1.1 quadrillion,
• 37:55
  1,158 trillion. That's what Fedwire does over trailing 12 month basis.
• 38:00
  in transfer value, or some people even call that payment volume, whatever you want to call it.
• 38:06
  Bitcoin, seven. It's maxed out at, yeah, closer to 20 back in 2022 when trailing 12 months, but
• 38:15
  seven at the moment. And then this supremacy, as you see, we used to be very, this is log scale on
• 38:23
  the right, but this black line, we used to be millions of times smaller, or more properly stated
• 38:29
  Fedwire was millions of times bigger than Bitcoin. Now, it's only 157 times bigger.
• 38:36
  Still huge. So again, keep it in perspective. Don't get worried. We're going to wake up tomorrow
• 38:42
  and there's still going to be a Fedwire. I know people hate that. I'm not defending them. I'm not
• 38:47
  saying it's great that we have to rely on these Jackson Hole speeches and all the rest, but it's
• 38:51
  going to be there. It's going to be there. So keep that in mind. Use these things as a benchmark to
• 38:57
  stay grounded spend time with your family stack sats and if you want to like i said ape in and out
• 39:03
  on the extremes uh we have very good tools to do that
• 39:09
  yeah here's another one by the way while we're not going like to zero in fiat tomorrow even
• 39:18
  though fiat is a terrible storer of value so this is the through tune only the top five
• 39:26
  broad money supplies, meaning usually M3, it should be M3.
• 39:32
  So US M3, 36 trillion, Euro M3, 19. These are all dollar numbers.
• 39:39
  The yen, 11 trillions. China only publishes an M2, which I can explain the difference,
• 39:45
  45 trillion. And then the sterling, they publish an M4, which is even more liquid,
• 39:51
  is 4.3 trillion. But the broadest money supplies, if you add that all up is 116 trillion. And I think
• 40:00
  in value, and I think that you can add another 20% for the rest of the world. I need to get a
• 40:06
  full chart ready eventually for you when I come on, but I just don't have it yet. So you're getting
• 40:11
  somewhere close to 145, 150 trillion, probably in global money at this point. And then the question
• 40:19
  is, you know, people like to talk about 100 trillion. We're definitely getting there for
• 40:24
  sure. But it's not now. It's not tomorrow. It's not next month. It's not next year. It's going to
• 40:28
  be a while from now. And by the way, all the other stuff is going to keep going on with their madness
• 40:34
  as well.
• 40:36
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• 41:31
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  That's opportunitycost.app
• 42:00
  I know we just
• 42:01
  gave the whole spiel of
• 42:03
  power trend network
• 42:05
  adoption
• 42:06
  endogenous factors versus
• 42:09
  exogenous factors and exogenous
• 42:11
  is probably not as
• 42:13
  impactful as the endogenous just
• 42:15
  pure peer-to-peer adoption of Bitcoin driving up the price.
• 42:20
  However, the exogenous factors are getting more interesting.
• 42:24
  We were talking about a few charts.
• 42:26
  If we think about podcast content,
• 42:28
  it could be 95% is indeed the exogenous factors.
• 42:33
  And I understand that very well.
• 42:34
  So we can talk about that as well.
• 42:37
  Before we get, I know you're not a fan of him at all,
• 42:42
  but did you catch the Richard Werner, Tucker Carlson interview?
• 42:46
  I did not.
• 42:48
  I mean, a few things about that.
• 42:51
  First of all, didn't that guy say that the CIA created Bitcoin?
• 42:55
  He did years ago.
• 42:56
  But I've heard from behind the scenes that he's become more open-minded toward Bitcoin.
• 43:02
  Yeah.
• 43:03
  Okay.
• 43:05
  Yeah.
• 43:06
  That's what Tucker said that too.
• 43:09
  Are you talking about Tucker or Richard?
• 43:10
  Richard.
• 43:11
  I think both of them said it, yeah.
• 43:14
  Well, Tucker doesn't know much,
• 43:16
  but if Warner himself said it,
• 43:20
  that he's backed off,
• 43:21
  then I guess that's a little bit better.
• 43:22
  But yeah, I mean, I didn't watch it in full.
• 43:26
  I saw some clips,
• 43:27
  and generally a lot of things I would probably agree with.
• 43:31
  Yeah, I think it was the most thorough
• 43:38
  and thorough and approachable understanding
• 43:44
  of money creation happens via credit creation.
• 43:47
  And then what really piqued my interest,
• 43:52
  I think his solutions, I think he's missing Bitcoin,
• 43:56
  they sort of hand-waved about gold.
• 43:58
  But I think when it comes to how money is actually created
• 44:01
  in the system via credit creation,
• 44:03
  it was really the clarifying in many regards like walking to the mechanics of of it particularly
• 44:12
  going back to japan in the yeah in the 90s so let me let me pivot off of that with another chart
• 44:22
  okay this one is what i was this is a part and parcel of presentations i was giving
• 44:27
  throughout europe this summer goes back to the idea i think we talked about it before about
• 44:32
  super exponential growth. And Werner talked about it as well. It's basically at the end of the day,
• 44:36
  most people understand that we can't go back to at least the system we're on right now.
• 44:41
  You can't peg anything. You can't fix it. You can't not grow with the amount of fiat and
• 44:49
  obligations that we have out there. You actually need to grow faster and faster. And some of that,
• 44:56
  I would actually argue, again, I'm not defending the system, but I'm just trying to look at what's
• 45:01
  actually happening, as I just showed you with the, you know,
• 45:05
  those broad money supplies keep growing and growing. And I think
• 45:08
  will continue to grow because that all that they know how to do at the base is continue to print But if you look at this Jeffrey West very interesting you know theoretical physicist who wrote this book Scale and I drew a lot upon his work in my presentations
• 45:20
  He makes the observation that it's not even only, you know, inflation. In fact, he doesn't really
• 45:26
  talk about inflation much at all. It's just the way that we grow, the way that we do things
• 45:30
  socioeconomically, we're moving faster and faster, you know, what would have taken thousands of years
• 45:35
  to evolve in the Stone Age or the Bronze Age can take 30 years now.
• 45:41
  And the idea is we're going faster and faster.
• 45:43
  And his question, which he leaves open,
• 45:46
  is this idea of a mathematical singularity
• 45:48
  where you increase the growth rate every time,
• 45:52
  but you get to a mathematical singularity.
• 45:53
  So if I show you the S&P here,
• 45:55
  which is a derived S&P back to the 1800s
• 45:58
  because the S&P started in 1955,
• 46:00
  But you can run a trend from 1800 to the start of the Federal Reserve.
• 46:07
  And the stock market grows like 2% a year.
• 46:10
  Okay.
• 46:10
  It's very rough.
• 46:11
  It's probably even lower than that because there's like survivorship bias.
• 46:14
  There's a ton of railroad companies that went bankrupt.
• 46:17
  I'm sure they're not included in this index.
• 46:19
  But anyway, from the start of the Federal Reserve until 1971,
• 46:26
  we went through a Great Depression in the US and we grew the markets faster at 4.8% per year
• 46:34
  CAGR. Okay. So the trend line is the slope of the value of the market. 1971 until 2008,
• 46:44
  we went even faster. Trend line growth of 9.6% per year. And then 2008 caught us right in the
• 46:51
  middle of the crisis, a new monetary epoch clearly. So that's where I delineated a new trend.
• 46:55
  2008 trend actually was below like like like a truck sliding down a muddy hill right we were
• 47:02
  way below our base but we grew faster all right so if i put this trend line up now the red trend
• 47:08
  line you can see from the 9.6 percent kegger before 2008 for the markets we now grow at 11.5
• 47:15
  all of these are before dividends reinvesting reinvested it would be probably two percent more
• 47:20
  on your kegger if not so these are all targets to shoot for right for your returns
• 47:24
  the trend line for the stock market since uh since 2008 is nine point sorry 11.5 percent per year
• 47:33
  so you could see this idea of the faster and fastest faster and faster treadmills
• 47:38
  is is clearly happening and i think will continue to happen and probably at shorter time intervals
• 47:44
  uh still i mean if you just do the caveman eye test on this number one it looks like
• 47:51
  you have that sliding truck
• 47:53
  with every new trend line that you've
• 47:55
  put on this chart going back to
• 47:57
  1914 it was below
• 47:59
  the 1800 trend
• 48:00
  go to 71 it was below the
• 48:03
  1914 trend 2008
• 48:05
  and
• 48:05
  yeah this is pretty
• 48:09
  illuminating in that sense and you
• 48:11
  can feel it too not only
• 48:13
  it is weird
• 48:15
  I think we talked about this
• 48:17
  the last episode when you brought up
• 48:19
  scale and
• 48:20
  in these concepts, but you can definitely feel it socially in your life with inflation,
• 48:27
  with prices, um, certainly becoming more palpable, not palpable, but, um, very tangible.
• 48:36
  Right. He, uh, he focuses on like the growth though, as far as, um,
• 48:44
  you know, actually good things like inventions, patents, um, patents kind of weird, right?
• 48:49
  for us in the libertarian world to focus on patents, but inventions, discoveries, and,
• 48:55
  you know, increases in GDP, things like that, which again, we would say a lot of that gets
• 49:01
  papered over. But I think it's fair enough to say that there's some of both, right? There is,
• 49:08
  it is undeniable that, like, I'm very glad that we live in this time right now than in the Stone
• 49:14
  age or even 100 years ago. And I think there's a lot of hope there, actually, there's a lot of,
• 49:21
  you know, there's always the apocalyptic view, there's always the view that we're really on for,
• 49:27
  you know, in for a train wreck. But as long as we can jump to the first of all, this is back to the
• 49:32
  point of Warner, which I want to do addresses, if he's saying that they always paper over things,
• 49:37
  or they have to keep growing faster and faster. It's true. I agree with him. But there's actually
• 49:40
  a positive way to look at that. And that's we are increasingly getting better health care stuff
• 49:47
  in the US. It's always more expensive for lots of reasons. But in a lot of places, health care is
• 49:54
  improving, people are pulling themselves out of poverty. And there's actually a lot of good things
• 49:58
  to think about from these trends. Now, they are absolutely countered from the fiat madness of the
• 50:04
  money printing. We have to sort of parse through these things. But here's how it relates to Bitcoin.
• 50:10
  Okay, so this is kind of the one of the things that I was trying to show is notice, Marty, all of these trend lines, right?
• 50:19
  You see that they're straight lines, right?
• 50:20
  They're increasingly faster growing straight lines on log scale.
• 50:25
  So they are exponential.
• 50:26
  And they are, in fact, what he calls super exponential in his book.
• 50:29
  This is, I think, is a very good graphical representation of super exponential trends.
• 50:34
  But then if we look at Bitcoin, go to the price.
• 50:40
  let's go to trend. Here's our old power trend, our friend. We do not have a straight line. We just do
• 50:47
  not have a straight line on log scale. And if you actually showed the growth of that black line,
• 50:51
  it decreases. All right. So the interesting question will be, and this is again, also what
• 50:57
  I kind of left open in my presentation, my different presentations throughout the summer is
• 51:02
  what will happen when this super exponential growth of TradFi meets this decelerating growth
• 51:09
  of Bitcoin. Like, is that the singularity? Is that a new Bitcoin standard? I have no idea.
• 51:16
  You know, Jeffrey West, when he wrote his book, he was not thinking about Bitcoin at all.
• 51:20
  He wrote it in 2017, but it wasn't on his radar. You know, he left it open that hopefully it's a
• 51:25
  new invention. Hopefully we can figure it out. Maybe we're just moving to another
• 51:29
  faster singularity for, you know, the 15, 20 years. But Bitcoin was not on his radar.
• 51:36
  So the interesting thing is, if you look at, for example, the stock market's growing at 11.5%
• 51:42
  without dividends, if you reinvest it, it's probably closer to 13%, 14%. But that's constant,
• 51:48
  exponential, constant growth. Bitcoin, if you look at the returns from the beginning until today,
• 51:54
  we're right about 42% per year. All right. So on a curve, you'd actually get way more
• 52:00
  in the past, but on a curve, you'd be at thousands of... Sorry. On a curve, you're at a couple hundred
• 52:07
  percent if you hold till today. All right. If you have it today, 41%. And then as you move
• 52:14
  toward the future, we go down. And I could pull this all the way out to 2050. We still only get
• 52:20
  to 23.5%. This shows you, this is why, again, people need to back up and look at the power
• 52:25
  curve. These are monstrous returns, even with all the inflation and the craziness in the stock
• 52:31
  markets today. We're still at 41% CAGR, 42% CAGR for Bitcoin right now. I know you said you have
• 52:39
  no idea, but you have to have some thoughts on what happens when these two trends collide.
• 52:46
  And that's like... Well, I think it's a very, yeah, it's a very interesting graphical
• 52:49
  representation. Well, that's what I do. If you zoom all the way out on this, like even though
• 52:54
  the power trend still 23 and a half percent CAGR if you go back to the exponential log chart they
• 53:02
  just had a like the 2008 line is what 11 and a half percent CAGR so like even though this looks
• 53:07
  exponential the power trend is still producing a bigger CAGR and so like oh god I gotta turn these
• 53:14
  congratulations congratulations thank you but leave that on the final final cut
• 53:23
  like i guess maybe you have to extend the power trend out even further and is there like a point
• 53:30
  yeah so this hits this hits uh 10 in 2070 2070 okay and maybe like the singularity when
• 53:38
  the exponential kagger converges with the power trend
• 53:42
  bagger that's the idea i mean uh that's one of the ideas i should say no one
• 53:47
  i do not know to be honest there's so many things that could happen right uh
• 53:53
  obviously there's the world is sort of on fire the eastern authoritarian autocracies are trying
• 54:01
  to get more power away from the western democracies we got people in western democracies
• 54:06
  fighting amongst themselves we're in eastern europe here everybody should know my position now
• 54:10
  So there's a lot of stuff that could happen until then. Maybe we do peg into Bitcoin at one of these points and then things could change from there.
• 54:19
  there um i don't i wouldn't i wouldn't actually want to
• 54:28
  if you if you think about like all of the
• 54:37
  if you think about all the newsletters i've talked about this a lot right that gold bugs
• 54:44
  have written since like the year 1980, especially in the 70s when gold got depegged. This is only
• 54:51
  50 years ago, 55 years ago. You would have thought that you would have absolutely, you know, one,
• 54:56
  like civilization was moving back to gold. The fact that gold went from 35 bucks an ounce in 1971
• 55:02
  to 850 bucks for two seconds on the COMEX in January 1980, you would have thought that sound
• 55:10
  money was returning. The rest of the world was going to catch on. And then lo and behold,
• 55:16
  they went into a 20-year bear market. And in 1996, Alan Greenspan said the Federal Reserve
• 55:20
  stands ready to sell gold should the price rise. So I'm not saying that Bitcoin can be co-opted
• 55:26
  like that, although that is always some good doom porn on Twitter about any number of topics,
• 55:33
  as we know. I think it could be mixed, right? This is another idea that I've been throwing out there
• 55:42
  is it's totally possible, by the way, that Bitcoin, if we think about go to the math and back to the
• 55:49
  to the ideas of different curves, we have the power curve, which in my opinion, is a more
• 55:54
  sustainable growth rate. And we're looking at that now versus a traditional instrument like the dollar.
• 55:58
  but let's go the other way let's say that bitcoin turns into growth rates like this
• 56:06
  where now i'm not actually showing the growth rates but i'm showing the growth of the um of
• 56:12
  the supply right of the supply of the stock market value right it's still straight lines
• 56:18
  on log scale and it grows faster and faster and faster if bitcoin would move at some point right
• 56:24
  If the straight line sort of stops being the scale invariant,
• 56:29
  generally sloping curve, decreasing rate of growth, right?
• 56:33
  And somehow it just shoots up and turns into a straight line,
• 56:36
  like an Expo curve,
• 56:38
  and sort of just mirrors the rest of the financial system.
• 56:43
  That might be good for Bitcoin holders.
• 56:45
  That might be good for value,
• 56:46
  but that might not be good for the world.
• 56:48
  You know what I mean?
• 56:49
  Like that's just sort of Bitcoin,
• 56:51
  like Bitcoin kind of more matching into what it's trying to.
• 56:57
  It's kind of like gold 2.0.
• 56:58
  Like it's just, it's there, it's better, it's much better,
• 57:01
  but it's controlled for whatever reason.
• 57:02
  Like there's a lot of fiat units that are paying,
• 57:06
  you know, Bitcoin treasury companies,
• 57:08
  people lines of credit, all the rest.
• 57:10
  I mean, it's actually totally possible
• 57:12
  that Bitcoin could turn into an Expo curve, by the way.
• 57:14
  It's not now, but it could happen.
• 57:16
  On the flip side,
• 57:17
  what would happen if the rest of the world the trad fi world and again these are this is not next
• 57:26
  month next week next year this is this has to be decades from now but if everybody can start to see
• 57:32
  the beauty of bitcoin we really stay decentralized we don't have government fiat mandate mandating
• 57:38
  how everything is going if bitcoin keeps on this idea of this sort of nice beautiful sustainable
• 57:44
  growth rate in other fiat currency, how would you even charge interest if Bitcoin was rising
• 57:54
  in a power curve? That actually is one of the key questions. And I think that you can't.
• 58:02
  How do you keep... Why would you even accept a fiat loan, right? Like more and more fiat interest
• 58:11
  interest in this asset that you know is scarce you know there's only 2.1 quadrillion sats
• 58:16
  why would you even accept
• 58:19
  uh as a as a uh lender let's say to lend out your satoshis when you know that you're going to go at
• 58:29
  this very nice power growth and you know you're going to get paid back in some fiat interest
• 58:40
  on those Satoshis, you might not get your collateral back.
• 58:46
  That's what I see.
• 58:47
  Those are the warring sort of two sides.
• 58:50
  It's basically either Bitcoin goes exponential,
• 58:56
  kind of like the TradFi world, right?
• 58:59
  Or Bitcoin pulls the rest of the world
• 59:02
  into its sort of nice power growth.
• 59:05
  But if that happens,
• 59:06
  you can't really calculate interest on loans.
• 59:09
  you just uh all this stuff bitcoin treasury companies people taking converts and everything
• 59:15
  it won't actually work because loans literally literally interest will only work
• 59:21
  in exponential fashion compound growth is exponential so you can't do it you can't do it
• 59:29
  with this power growth so it's a very sort of uh deep philosophical way out in the future idea but
• 59:36
  Those are the two extremes as I see it.
• 59:38
  And I honestly don't know.
• 59:39
  I see so many different things that could happen on the spectrum where we go one way or the other.
• 59:44
  I would say probably the less optimistic side is if Bitcoin just kind of turns into gold 2.0.
• 59:49
  It's a great hedge, but the system is what it is.
• 59:54
  Bitcoin is exponential, just like gold and stocks and bonds and everything else.
• 59:57
  Well, on the latter of the two extremes, I know SAFE and many others have talked about a potential transition from debt financing to equity financing, where instead of giving a loan to somebody with an attached interest rate, a lot of financing will be equity driven, where...
• 1:00:17
  you give somebody money, you get a portion of the business and you read the benefits of
• 1:00:24
  the commensurate cash flows to come your way from that equity injection.
• 1:00:28
  Yeah. Equity, uh, equity does solve, uh, like just simply to say that you have equity
• 1:00:36
  would solve that idea. Uh, you don't have to worry about it like interest rates or anything.
• 1:00:42
  and maybe that could happen.
• 1:00:47
  But things would have to turn into very short-term.
• 1:00:53
  Like even if you're thinking about working capital or something,
• 1:00:55
  it would have to be very, very short-term fixed rates of interest
• 1:00:59
  and you just can't work very long.
• 1:01:02
  That's my thought about that idea.
• 1:01:05
  Is the world going to be ready for...
• 1:01:09
  That upends everything.
• 1:01:10
  And hey, we're ready, obviously, for Bitcoin to upend everything. But the credit markets are huge. The biggest markets in the world, I mean, bondholders all over the world, they get paid back first before stockholders.
• 1:01:25
  It just upends everything about the financial system.
• 1:01:30
  And so if we go to this sort of everybody's a stockholder, everybody has equity, there's no interest rates or interest rates are very, very short term.
• 1:01:38
  Yeah, it could happen.
• 1:01:40
  And I would say that's probably the better outcome.
• 1:01:43
  That's where Bitcoin stays on the power curve.
• 1:01:45
  It stays on a sustainable lower and lower rate of growth.
• 1:01:51
  But if you're on that curve, you literally, by definition, cannot calculate interest over the long term.
• 1:01:56
  You would explode the system with fiat interest.
• 1:01:59
  There just wouldn't be enough sats to go around.
• 1:02:02
  Yeah, it's fascinating.
• 1:02:05
  It is fascinating to think through these philosophical discussions of what we transition to.
• 1:02:11
  And I've always been partial.
• 1:02:12
  I think we've talked about this, but it's always good to touch on.
• 1:02:14
  Like, I think when you talk about transitioning and what it looks like, I think we're beginning to see that manifest in the form of Bitcoin becoming part of collateral packages.
• 1:02:30
  A lot of people look at micro strategy and the converts and all that.
• 1:02:33
  But I think in private markets, particularly what we're seeing with the emergence of products like Debitify, battery finance, the tools, the infrastructure is getting built out to begin seriously injecting Bitcoin into the credit stack as collateral.
• 1:02:51
  I think you can squint and look at that and see that as a first step towards equity financing, particularly if the lender and the borrower are sharing in the upside of the Bitcoin appreciation over the duration of the loan.
• 1:03:09
  Yeah, it depends on the nature of the contract. As a borrower, I think it's an absolutely great deal. Obviously, Saylor himself, you know, doing a lot with that idea, sort of borrowing with Bitcoin as collateral or borrowing to buy more Bitcoin and then have that as collateral.
• 1:03:34
  it still is though you know the the trad fi model right uh i mean have you seen
• 1:03:44
  these collateral deals where you know i've seen some i think in the u.s they've done it where
• 1:03:49
  a lender will have the developer of say real estate uh take a loan but also a portion of that
• 1:03:57
  loan should buy bitcoin i think that's very interesting uh so you have sort of a dual
• 1:04:03
  hedge, dual collateral hedge against the loan.
• 1:04:08
  All of that stuff, at least as far as I can see, is still modeled on the TradFi world.
• 1:04:13
  It's modeled with rates of interest.
• 1:04:16
  And since Bitcoin has such explosive growth, like as you see here, and your holding time,
• 1:04:23
  we're roughly on a curve.
• 1:04:24
  We're increasing the power trend at $100 a day.
• 1:04:27
  So as a CAGR, that translates into 42% per year.
• 1:04:33
  we're looking pretty solid, right? We're looking pretty, pretty, we have a lot of buffer,
• 1:04:39
  even enough to take care of the drawdowns or the bear markets, if they come again,
• 1:04:44
  which we talked about already at the top of the show, I think they probably will.
• 1:04:48
  There's still a lot of buffer before we get down to your, you know, your senior collateralized debt
• 1:04:55
  of like major companies, or major real estate companies where your people are trying to get,
• 1:04:59
  5% or 7% now, maybe with a lot of crazy treasury markets. But obviously, treasuries themselves,
• 1:05:08
  I mean, you want to be even below 5% depending on your duration of the curve. But
• 1:05:13
  there's a lot of delta there. There's a lot of room to play around. When Bitcoin is doing 41%,
• 1:05:20
  TradFi roughly, let's just say it's 5%, maybe leaking a little bit higher.
• 1:05:24
  and as we talked about with the S&P 500,
• 1:05:27
  it's probably looking a lot higher
• 1:05:29
  as far as stock returns go.
• 1:05:32
  I think they're going to careen.
• 1:05:33
  I do think that they're going to hit each other.
• 1:05:35
  And before they hit each other,
• 1:05:40
  we're probably enough people
• 1:05:41
  will see the writing on the wall
• 1:05:42
  or understand Bitcoin
• 1:05:43
  that it's just, it's the place to be.
• 1:05:47
  But what I'm very curious,
• 1:05:49
  and I think what you'll start to,
• 1:05:50
  what will start to take shape,
• 1:05:51
  let me try to put some more substance
• 1:05:52
  on what I'm saying for the listener,
• 1:05:53
  is in the next 20 years, if we're pretty locked down in developed markets,
• 1:06:00
  if you can't withdraw Bitcoin, if there's just KYC up the wazoo,
• 1:06:05
  like you can't do anything in the real world,
• 1:06:10
  if nobody cares about key management or even node management,
• 1:06:17
  then that looks to me like a pretty traditional TradFi world.
• 1:06:23
  going back to exponential and that and in that world, interest rates work totally fine.
• 1:06:28
  They work totally fine. They're just you're going to get the boom bust cycle, you're going to get a
• 1:06:31
  lot of government intervention. And that's what it is. I think that's not that exciting. But in
• 1:06:36
  the other world, that's really hard for bondholders. I mean, it's just it doesn't,
• 1:06:43
  the math doesn't really check out. So yeah, again, a long winded answer to your question. But I,
• 1:06:49
  I think there's even those examples like you, I don't know, have you ever seen debt contracts or Bitcoin denominated contracts that are like fully equity?
• 1:06:58
  And that's kind of like a, is there a marketplace for that where it's like fully equity only Bitcoin?
• 1:07:03
  Probably not, I think.
• 1:07:05
  No.
• 1:07:06
  Pretty young, immature.
• 1:07:07
  I think the converts are like the closest thing because they convert to equity, right?
• 1:07:12
  Right.
• 1:07:12
  So we've seen.
• 1:07:13
  That's going to have a duration.
• 1:07:15
  Yeah.
• 1:07:15
  That's probably pretty short.
• 1:07:17
  Sailor rotated out of that market, right?
• 1:07:18
  and he got more into preferreds, which have no duration.
• 1:07:23
  So he's kicked the can down the road on that idea.
• 1:07:30
  Yeah, I'm looking at Cormant, the miner in West Texas.
• 1:07:35
  Shout out to Jamie McCavity.
• 1:07:37
  They did an interesting Series B equity funding, $29 million.
• 1:07:42
  I believe they did use both equity and debt financing,
• 1:07:46
  including unique Bitcoin-denominated loans.
• 1:07:48
  that was debt to fund its expansion, low-cost Bitcoin miner.
• 1:07:51
  From what I understand, those instruments perform very well.
• 1:07:58
  I think, yeah, I think all this is to say that we're still in the very early innings
• 1:08:03
  of people getting creative and really beginning to explore
• 1:08:09
  and innovate with Bitcoin-based financial contracts.
• 1:08:16
  Agreed, yeah.
• 1:08:17
  it totally i would say i would prefer the equity based but i think about it a lot i think about
• 1:08:23
  the different things that would have to happen for that to occur and a lot of that is self-sovereign
• 1:08:28
  stuff you know people standing up to you know some of the draconian uh financial regulation
• 1:08:38
  that we've seen grow and grow and grow since the 1970s so yeah i think it could go either way
• 1:08:44
  Honestly, I think it could go either way.
• 1:08:46
  And I think Bitcoin would do well in either scenario, but different people will be hurt in either scenario.
• 1:08:55
  Yeah.
• 1:08:56
  Well, let's let's paint the picture for people.
• 1:08:59
  What does an ideal landscape and capital stack and tech stack on a Bitcoin standard look like in your mind?
• 1:09:09
  I mean, you experienced it earlier this summer in Riga, particularly.
• 1:09:16
  What I think is very underappreciated and not really talked about enough
• 1:09:21
  is the maturation of the Lightning Network,
• 1:09:25
  particularly as this connective tissue between disparate second-layer technologies,
• 1:09:30
  whether that's liquid e-cash mints.
• 1:09:35
  in the case of Riga, they were using ARK in the background for all the merchants. And
• 1:09:43
  this is something that I'm very passionate about. And I can actually see it materializing
• 1:09:49
  in front of our eyes is this sort of emergence of a new tech stack for a banking system with all
• 1:09:58
  these different second layer technologies.
• 1:10:01
  And so I think if we want it to be true and if we want it to manifest and materialize,
• 1:10:08
  then the tools are there to make it happen, make this cypherpunk Bitcoin standard banking
• 1:10:14
  stack possible.
• 1:10:18
  I agree.
• 1:10:19
  And I think that we're going to go in that direction.
• 1:10:22
  I think that is very good.
• 1:10:23
  And I absolutely support everybody that's doing that.
• 1:10:30
  I think obviously the Noster ecosystem is helping a lot there.
• 1:10:36
  It's amazing.
• 1:10:37
  It really is amazing.
• 1:10:38
  I'm all for it.
• 1:10:41
  I'm all for it.
• 1:10:43
  Are you Larry White, Hal Finney?
• 1:10:51
  We're going to have a free banking system built on top of Bitcoin.
• 1:10:53
  I've been partial towards that.
• 1:10:56
  Yeah.
• 1:10:56
  Well, the risk of the free banking system is that it can be unfree, right?
• 1:11:02
  And that's the interesting thing that I think Bitcoin's trying to break.
• 1:11:08
  And so...
• 1:11:08
  What do you mean by unfree?
• 1:11:09
  Just over-regulated?
• 1:11:10
  Yeah, it becomes monopolized and captured and over-regulated.
• 1:11:14
  And then we don't have a free banking system anymore.
• 1:11:15
  We have a centrally planned central bank system, which central banks have no idea.
• 1:11:20
  Like in Washington, D.C., they have no idea what the bank reserve ratio should actually be in Wyoming or something.
• 1:11:26
  It's just it's completely gone.
• 1:11:28
  We had that in the 18th and 19th centuries in a few different markets, actually in a lot of markets, but big in northern Europe and in Canada as well.
• 1:11:39
  And then we lost it.
• 1:11:40
  So I think people got to look at all sides.
• 1:11:43
  I think anyway, the good thing I know we're going to be too heavy on this, like people are going to do Bitcoin.
• 1:11:50
  you're going to hold Bitcoin, you're going to do what you need to do on Noster or, you know,
• 1:11:54
  all the different relays and L2, L3 options that are coming, which are awesome. Absolutely amazing.
• 1:12:03
  I'm just wondering about, you brought up, you know, the free banking system. The problem is
• 1:12:08
  when you get to that sort of centralized, too big of a centralized hub, right? And we can already
• 1:12:14
  see I mean look it already happened Like let I know people don like this company but let say Binance This was totally you know shitcoin company They were an ICO company but it absolutely one of the most successful ICOs ever right
• 1:12:29
  And what happened?
• 1:12:30
  They didn't stay free.
• 1:12:32
  They didn't stay, you know, the mission,
• 1:12:35
  obviously no Bitcoin is really going to sort of like agree generally what
• 1:12:40
  they're doing, but they're, they were a untethered,
• 1:12:44
  unregulated zero fiat company.
• 1:12:47
  same with BitMEX, same with BitMEX. These guys were free banking, untethered, using Bitcoin
• 1:12:52
  primarily, but also in Chitcoins, I guess more in Binance case. They were a decentralized free
• 1:13:00
  system and they both got captured. So that to me is the interesting question really about what will
• 1:13:11
  or could happen with a Bitcoin, like a true Bitcoin free system, because those those examples,
• 1:13:19
  I agree, they're more sort of free banking like they're more, you know, but any system,
• 1:13:26
  if you're going to get big enough, you're going to have enough money.
• 1:13:28
  People are your footprint is starting to get around.
• 1:13:31
  They're going to want to get you and they're going to want to tax you.
• 1:13:35
  Yeah, well, and I think this is where implementation details really come into play.
• 1:13:40
  and obviously BitMEX, Binance.
• 1:13:44
  BitMEX, I think, most beautifully,
• 1:13:47
  and I don't think they get enough credit
• 1:13:49
  for really building a primitive Bitcoin bank
• 1:13:55
  with the way they implemented multisig
• 1:13:57
  and did all their payouts
• 1:13:59
  and geographically distributed.
• 1:14:03
  But in the case of BitMEX and Binance,
• 1:14:06
  like you needed...
• 1:14:08
  I'm just trying to figure out how I want to describe it.
• 1:14:10
  You need those core teams who really understood the space
• 1:14:13
  and were able to spin up a business,
• 1:14:16
  like a legal business entity with processes and all this.
• 1:14:21
  And they had their siloed sort of way of operating
• 1:14:25
  and building their businesses,
• 1:14:27
  where I think I've been really on this tip
• 1:14:32
  that I think the reemergence of eCacheMint,
• 1:14:34
  really the two protocols, Fetty Mint and Cashew,
• 1:14:38
  the fact that you have these protocols
• 1:14:40
  that are open source, permissionless,
• 1:14:43
  and you sort of had these out-of-the-box,
• 1:14:45
  this out-of-the-box banking infrastructure
• 1:14:48
  that doesn't necessarily,
• 1:14:50
  you have a team of open source developers
• 1:14:52
  building out these protocols,
• 1:14:53
  and anybody can leverage the product of the work
• 1:14:56
  of that open source team,
• 1:14:58
  whereas in the case of BitMEX and Binance,
• 1:14:59
  you're really dependent on those closed source teams
• 1:15:02
  to build out that infrastructure.
• 1:15:03
  And I think you can squint and see an implementation of a rapidly growing competitive and hydro-like free banking system with these cash humans.
• 1:15:16
  And if you go back to CHOM in the 80s and what the holdup was there is that it failed in the 80s because you need permission from the banks to actually do anything.
• 1:15:25
  Whereas with these e-cash protocols, you don't need any permission.
• 1:15:29
  You just get a GitHub and figure out how to peg in and peg out Bitcoin and issue e-cash tokens.
• 1:15:38
  And boom, you have a bank.
• 1:15:40
  That is my dream.
• 1:15:40
  Maybe it's naive.
• 1:15:41
  Maybe it's too optimistic.
• 1:15:43
  But I think implementation...
• 1:15:44
  No, 100% me as well.
• 1:15:46
  To use the old parallel word, right?
• 1:15:49
  It's fiduciary media.
• 1:15:50
  it's a it's a you're setting up something that's related but different to the underlying base which
• 1:15:57
  in the old days was of course gold or silver at times uh there are so many better things about the
• 1:16:04
  both the systems that you just mentioned fetty and cashew than any other prior system but even there
• 1:16:10
  right the um the different coordinators or i can't even forget the language of fetty uh but you know
• 1:16:18
  say you're a farmer, like say you have a big farming operation in Africa.
• 1:16:22
  Yeah, the guardians, right?
• 1:16:23
  My understanding is there still is a possibility that guardians could
• 1:16:27
  in some way, shape or form.
• 1:16:32
  Rug you.
• 1:16:33
  You're right.
• 1:16:34
  I mean, for lack of a better word.
• 1:16:36
  And that's totally fine, but I'm not totally fine,
• 1:16:39
  but that's natural the way that the system needs to scale.
• 1:16:41
  I'm absolutely not poo-pooing any of this.
• 1:16:45
  This is like, this is like, like you said, this is basically my, you know, one of my dreams as well.
• 1:16:50
  That's why I like reading about free banking history because it's something that existed.
• 1:16:53
  It worked.
• 1:16:54
  It was there.
• 1:16:55
  Then it failed.
• 1:16:56
  So we have to do better than that.
• 1:16:58
  And I think we're on the way.
• 1:16:59
  I think it's amazing what those guys are doing.
• 1:17:04
  And I think it's totally possible.
• 1:17:06
  I do.
• 1:17:08
  The rub will be, though, probably two main things, right?
• 1:17:14
  it to be, of course, the co-opting it at some point, like you said, if, you know, however that
• 1:17:19
  form might occur, it could be different in different places and different geographical
• 1:17:23
  factors and socioeconomic factors. It might be, you know, some, some guardians turn out to be
• 1:17:29
  mafia-like. Some guardians might turn out to be co-opted by the state. I have no idea. I'm just
• 1:17:33
  saying, I know these guys think about that stuff too, all the time. We got plenty of time. So
• 1:17:38
  that's, that's probably the main risk that people think about. But then the other risk, which goes
• 1:17:42
  back to the power law stuff and the, um, you know, the exponential stuff is you can start to make
• 1:17:51
  money off of these systems. If you can be like, well, you know, let's just, let's keep the Bitcoin
• 1:17:57
  here. You're just going to start using our, uh, fiduciary media, our sort of certificates. Yeah.
• 1:18:03
  This, this, uh, this, uh, this Chami and Mint is backed one-to-one, but this one isn't because
• 1:18:11
  the state is involved and then this other state is involved here here here and you can just imagine
• 1:18:15
  that there is if the economic growth is big enough anywhere it doesn't really matter what we're
• 1:18:22
  talking about if the economic big growth is big enough there will there will be that
• 1:18:27
  sort of perennial tendency of the of wherever you are operating to come after you and you know fill
• 1:18:35
  their coffers with tax revenue. So it's just going to be interesting. It's going to be interesting
• 1:18:45
  to see how that works. I mean, on the one hand, we could maybe set up the true dream of the old,
• 1:18:51
  the anarcho-capitalist paradise where everything starts to have a fee and a price and a service
• 1:18:57
  can be delivered from infrastructure, water, Bitcoin mining, right, can give heating. There's
• 1:19:05
  all sorts of amazing things that can happen. I'm sure you've done some shows with some of those
• 1:19:09
  miners, um, talking about that, like grid list was doing that and stuff, but the, uh,
• 1:19:16
  the question will be, is if we can overcome the state, the state, uh, monopoly there when they
• 1:19:26
  want to come in and start doing it their way, very mafia, like as Rothbard said, there's only the
• 1:19:33
  the mafia and the state are the two groups that can just sort of come and
• 1:19:37
  demand demand revenue from you without necessarily providing a service.
• 1:19:42
  It's fun to dive into these like deep philosophical where we'll go.
• 1:19:47
  And I think it's not only fun, but it's important, I think,
• 1:19:50
  to anchor, to put something down,
• 1:19:52
  like here's a vision to strive for to at least test out.
• 1:19:57
  And I think it's also important to recognize where we are still in the very
• 1:20:02
  nation stages of Bitcoin overall, and even more so these second layer technologies and
• 1:20:10
  these financial contracts and his way of doing things. But I think it's also important to
• 1:20:16
  recognize that the stuff is getting built out, like really tying this back to the overall tenor
• 1:20:23
  of the beginning of the episode, which was people are somewhat disappointed with where Bitcoin is
• 1:20:28
  from a price perspective.
• 1:20:31
  There's another contingent of people who are disappointed
• 1:20:34
  because Bitcoin doesn't seem to be maturing at all
• 1:20:36
  at different levels, different parts of the stack.
• 1:20:40
  But I think that's inarguably untrue.
• 1:20:43
  We are actually paying attention.
• 1:20:45
  All this stuff is getting built and getting more mature
• 1:20:48
  and getting used more every day.
• 1:20:51
  Yesterday, we have somebody helping us out
• 1:20:54
  with the YouTube thumbnails, the clickbait
• 1:20:56
  to make sure that we're getting as many views as possible.
• 1:20:59
  And he sent me an invoice via BlinkWallet,
• 1:21:03
  which I was not expecting at all.
• 1:21:04
  This is some dude I think we found on YouTube.
• 1:21:07
  And he asked to get paid in Bitcoin using BlinkWallet,
• 1:21:11
  using the Lightning Network.
• 1:21:12
  And that was a shocking signal to me,
• 1:21:19
  like, oh, people are waking up.
• 1:21:20
  This network adoption is happening.
• 1:21:23
  Yep.
• 1:21:24
  There you go, man.
• 1:21:25
  It's a great thing.
• 1:21:27
  I'm super bullish.
• 1:21:28
  I mean, we talk about all these.
• 1:21:30
  Don't get me wrong if listeners are doubting.
• 1:21:33
  I'm absolutely very, very confident that at least one of these paths to sort of stay free in Bitcoin will work.
• 1:21:45
  And obviously, it's not limited to just one.
• 1:21:47
  I mean, there are just so many different ways to do it.
• 1:21:49
  I think it's
• 1:21:54
  for sure green pastures
• 1:21:56
  but yeah it is the
• 1:21:58
  sort of the
• 1:21:59
  current
• 1:22:02
  fiat world that we're in
• 1:22:03
  can be quite unforgiving
• 1:22:06
  unforgiving
• 1:22:07
  very depressed
• 1:22:09
  yeah
• 1:22:11
  I think people are waking up though
• 1:22:13
  I think
• 1:22:14
  people are getting fed up
• 1:22:18
  You got to have that optimism.
• 1:22:20
  We're going to break free.
• 1:22:22
  Absolutely.
• 1:22:23
  It's inevitable that they will get fed up and look for other options.
• 1:22:27
  And you know, Bitcoin is going to be there.
• 1:22:29
  Gold failed there, right?
• 1:22:31
  Like I said, you were the gold bug.
• 1:22:33
  If you were the gold bug in our, we were at some gold conference in 1981.
• 1:22:37
  You're like, this is it.
• 1:22:39
  This is on game on.
• 1:22:40
  And then 20 year bear and Alan Greenspan in the nineties is telling you that he's
• 1:22:45
  got the gold market captured.
• 1:22:48
  Bitcoin is not doing that.
• 1:22:50
  I mean, it could happen, but actually capturing it,
• 1:22:58
  actually stopping every single person from running a node
• 1:23:01
  and being able to censor every transaction
• 1:23:04
  and being able to control the market price,
• 1:23:07
  we're a long, long way from that.
• 1:23:09
  So I have no doubt that we're going to give it a good run here with Bitcoin.
• 1:23:17
  It's the best chance we have.
• 1:23:19
  It really is.
• 1:23:20
  But speaking of gold bugs and gold,
• 1:23:22
  gold's having a moment right now.
• 1:23:24
  It's having a moment.
• 1:23:25
  It is.
• 1:23:26
  It is.
• 1:23:27
  I saw your tweet.
• 1:23:28
  I saw your tweet about the gold,
• 1:23:31
  you know, getting to the highest reserves ever
• 1:23:33
  and more than treasuries.
• 1:23:38
  I'm pulling it up right now.
• 1:23:40
  We are still up at 35 or at 35.
• 1:23:43
  6-3.
• 1:23:45
  Corn's even pumping a little bit, up 100.
• 1:23:47
  11k. The model that I just pulled in
• 1:23:50
  earlier at the start of this episode, I think was 109.
• 1:23:54
  So
• 1:23:54
  we just pumped like
• 1:23:58
  2k during the course of this episode.
• 1:24:00
  Of course, this chat 2.5k
• 1:24:02
  hasn't even been posted yet and the universe
• 1:24:06
  can feel
• 1:24:07
  a signal coming from it. Smash buying
• 1:24:10
  Bitcoin. What a letdown if
• 1:24:12
  it's 105 when this thing is released.
• 1:24:14
  But
• 1:24:14
  no, I love it, dude.
• 1:24:19
  I mean, yeah, gold is pumping.
• 1:24:21
  I think it makes sense geopolitically that states are doing that It funny though You know the trend I do like trends on this stuff as well also to look at you know comparisons with Bitcoin
• 1:24:35
  The trend is still generally flat to even slightly down since the 60s
• 1:24:42
  of central banks holding gold.
• 1:24:44
  But since 2008, they've been consistently buying.
• 1:24:46
  And like you said, we're getting now to the point where,
• 1:24:49
  in dollar terms, gold is, you know, your gold reserves are more than your treasury reserves.
• 1:24:56
  That's, uh, that's, that's big news. Yeah. And I'm just going to pull this up here. I'll
• 1:25:02
  share a screen for the first time ever during one of these episodes, but just to
• 1:25:07
  put a visual on this for, um,
• 1:25:12
  everybody watching on YouTube or wherever, here's the chart we're talking about. Foreign central
• 1:25:19
  banks hold more gold in treasuries for the first time since the early 90s yeah that's a good chart
• 1:25:28
  i gotta get that i gotta get that data online yeah i mean and even though exogenous factors
• 1:25:36
  only factor for five percent of of bitcoin price movement right in your opinion it is
• 1:25:42
  fascinating to observe
• 1:25:45
  what is going on.
• 1:25:48
  If only because
• 1:25:48
  just take Bitcoin out of the question,
• 1:25:51
  it is very obvious that we are
• 1:25:53
  in some sort of phase change
• 1:25:56
  in terms of
• 1:25:57
  the global monetary system
• 1:25:59
  as is evidenced by
• 1:26:01
  people falling back to gold
• 1:26:03
  in favor
• 1:26:05
  or in disfavor of treasuries.
• 1:26:09
  Yep.
• 1:26:09
  you see there it's 75 that's an 850 gold price for like i said two seconds on the comex in 1980
• 1:26:18
  uh that's a huge valuation there of gold and um you know can we go back to that
• 1:26:27
  i don't know but i absolutely think the bitcoin will be a part of that now moving forward um
• 1:26:34
  but also i'm not you know i think there's a lot of conflicting messages
• 1:26:39
  between bitcoiners as well you know you have a lot of bitcoiners that
• 1:26:42
  are even uh i don't know
• 1:26:46
  you have a lot of bitcoiners who are saying that it's a good thing that big you know governments
• 1:26:54
  are starting to reserve bitcoin you have a lot of bitcoiners that think that that's a bad thing
• 1:26:59
  right the government's reserve bitcoin what's your what's your take on that if bitcoin starts
• 1:27:05
  to become starts to become a mix in that basket i have a very uh mvk view on this which is bitcoin
• 1:27:16
  is money for enemies and there's nothing you can do um you just have to if you're worried about the
• 1:27:23
  government potentially co-opting or wall street co-opting blackrock co-opting whoever the only
• 1:27:29
  way to prevent that is to
• 1:27:30
  hold your own private keys, run your own node
• 1:27:33
  and make sure that
• 1:27:34
  hash rate's sufficiently distributed.
• 1:27:39
  What if
• 1:27:39
  they say no withdrawals from Americans?
• 1:27:42
  Like no Americans can
• 1:27:43
  hold gold.
• 1:27:44
  That's when you take to the streets
• 1:27:47
  and you say no.
• 1:27:49
  That's why
• 1:27:49
  don't wait for it.
• 1:27:52
  It is certainly a possibility as you just mentioned
• 1:27:55
  it has happened before in US history
• 1:27:57
  with Executive Order 6102
• 1:27:59
  and to best prepare for that is to make sure that you get your Bitcoin off the exchanges
• 1:28:05
  and into your own wallets that you secure.
• 1:28:11
  And I think luckily we're still in this period where a majority of Bitcoin is held in individual wallets
• 1:28:18
  with private keys secured by individuals.
• 1:28:21
  The trend is going in the wrong direction, but that is a product of the institutions coming in and buying via the ETF.
• 1:28:29
  and paper Bitcoin summer with the treasury companies.
• 1:28:34
  I do think everybody should be proactive.
• 1:28:39
  And if you want to protect yourself
• 1:28:43
  from the withdrawal button being turned off
• 1:28:48
  by the US government at exchanges,
• 1:28:50
  just don't wait for that to happen.
• 1:28:52
  Be active, get it into your own wallet,
• 1:28:57
  secure your own private keys.
• 1:28:59
  Yeah.
• 1:28:59
  And if the government does do that, like I think, I think it would be hard for me to believe that people, Bitcoiners specifically, particularly the early adopters would just roll over and allow that to happen without some pushback.
• 1:29:21
  Right.
• 1:29:22
  I was on a panel with Pitch Todd in Helsinki and he said similar things.
• 1:29:28
  I mean, on some level, it is going to get political.
• 1:29:31
  You know, you will have to push back.
• 1:29:37
  He gave the example of the, you know, if code is for speech, right?
• 1:29:43
  The cypherpunks had to do the government in the 90s and actually won.
• 1:29:51
  Although that analogy is still very hinged on a U.S. centric world, which we're moving away from now.
• 1:29:58
  frankly. So in any event, I think it's still better. Bitcoin is, I still think,
• 1:30:03
  going to do well in this world, right? In a more multipolar world, even though these,
• 1:30:09
  you know, Russia, of course, has no gold because they're stupid and they lost it all. But China does
• 1:30:13
  have a lot and they continue to buy. And so gold will be a part of it. And if you think Bitcoin
• 1:30:21
  will be a part of it.
• 1:30:23
  But, you know, yeah, I hope it like the other side of whatever comes here.
• 1:30:29
  I hope it's not, you know, too bloody, too violent.
• 1:30:34
  But like you said, I think people are going to have to push back.
• 1:30:38
  If your basic rights and private property rights,
• 1:30:44
  free speech rights start to get taken away, you will have to push back.
• 1:30:47
  Yeah.
• 1:30:47
  and I can think of a number of founders that run exchanges in my mind that if
• 1:30:53
  the government were to signal like, Hey,
• 1:30:55
  we're going to turn off the withdrawal button.
• 1:30:58
  Like I like to think the romantic in me likes to think that there are
• 1:31:02
  principal Bitcoiners and positions and many exchanges that would sort of force
• 1:31:10
  their users to withdraw saying like, Hey,
• 1:31:12
  you need to figure out how to download blue wallet.
• 1:31:15
  we're going to send her your Bitcoin because we don't want to
• 1:31:17
  we don't want to be holding this.
• 1:31:23
  Do you think that there are principled
• 1:31:25
  owners of Bitcoin treasury companies?
• 1:31:30
  God.
• 1:31:32
  I think a lot of...
• 1:31:34
  Sorry, I just had to lob that one out there for you.
• 1:31:38
  Well, you want to hear my theory.
• 1:31:41
  What are your thoughts on the U.S. government
• 1:31:43
  taking a 10% stake in Intel?
• 1:31:45
  hold on i want to hear your theory first well this is the setup for the theory what are your
• 1:31:50
  thoughts on the u.s government taking 10 staking intel i'm not gonna i'm not gonna throw too much
• 1:31:57
  judgment out there first of all uh you don't get too much back into the geopolitics of this episode
• 1:32:03
  but um yeah if you want to envision yourself as a citizen fully sovereign
• 1:32:14
  way in the future, or your grandchildren or your heirs way in the future. I think that's sort of
• 1:32:22
  easier to envision. But if we talk about even just 100 years ago, the consolidation of power
• 1:32:29
  between monarchies and a few governments around Europe, we're completely consolidated and completely
• 1:32:36
  hopeless as far as the proletariat. I think we're somewhere in the middle of that today.
• 1:32:41
  OK, so what I'm saying to answer your question is I don't think I think it's a gray issue.
• 1:32:46
  I don't think it's black and white.
• 1:32:47
  If someone wants to, you know, if we talk about pure capitalism in a free market, I think that's one thing.
• 1:32:56
  But if you're talking about an entity like the government buying 10 percent of Intel.
• 1:33:02
  OK, but what about if the Chinese government came in and tried to buy 10 percent of Intel or the Indian government tried to come in and buy 10 percent of Intel?
• 1:33:09
  You don't think the U.S. government would stop that?
• 1:33:11
  So there are pros and cons there. I understand the idea of the US government trying to do this for a defensive as a defensive play. And those those though that position is not without merit.
• 1:33:30
  on the other side as a free market person obviously yes i'm not a fan of seeing the
• 1:33:36
  government come in and you know take bigger and bigger stakes and companies so it's mixed
• 1:33:43
  i can see they're being married to it but also like intel why are you buying intel
• 1:33:48
  it has been good since andy grove died and you're basically buying a loser in hopes that
• 1:33:57
  injection of
• 1:33:58
  or it's not even
• 1:34:00
  they didn't even check there
• 1:34:01
  it's the CHIPS Act
• 1:34:02
  they're basically converting
• 1:34:03
  subsidies from that act
• 1:34:06
  into equity
• 1:34:07
  it's like they're getting
• 1:34:10
  the money anyway
• 1:34:10
  the US is getting
• 1:34:13
  the US government
• 1:34:15
  is getting
• 1:34:15
  and taxpayers by extension
• 1:34:16
  theoretically are getting
• 1:34:18
  a return
• 1:34:19
  based off of that equity injection
• 1:34:21
  but
• 1:34:21
  no no the point I bring up
• 1:34:23
  is
• 1:34:23
  if you didn't want a 6102
• 1:34:26
  So if you were the U.S. government, if you understood the game theory of Bitcoin adoption and particularly tipping your cards to your adversaries in terms of what you're doing on the Bitcoin adoption side.
• 1:34:44
  And one great way to build a Bitcoin stack is to have somebody in the private sector acquire 3% of all Bitcoin and then come in one day and just print money, acquire that company and their balance sheet and make their shareholders whole via printed money.
• 1:35:07
  That's a great way to build a Bitcoin reserve.
• 1:35:12
  Sure.
• 1:35:13
  Sure.
• 1:35:14
  and uh are you referring to anybody in particular by chance yeah microstrategy you know large
• 1:35:20
  bitcoin holder yeah perhaps yeah 600 000 plus coins yeah no man i mean the theories are out
• 1:35:28
  there for sure i mean the headquarters is a tyson corner i believe it's right next to every defense
• 1:35:33
  contractor in the united states no i mean um look you and i are pretty skeptical on a lot of that
• 1:35:41
  stuff so i'm with you there uh no no actually like honestly like it's just a theory it's fun to
• 1:35:47
  to talk about and to surmise but honestly if you're thinking like the most
• 1:35:53
  um sort of painless way to do a 6d 102 like event just like you have like a strategy acquire
• 1:36:03
  all the bitcoin once it gets to a certain level the government's like okay this is a good
• 1:36:08
  strategic reserve for us.
• 1:36:11
  You print the money,
• 1:36:12
  you make shareholders hold,
• 1:36:14
  maybe even at a premium.
• 1:36:15
  Everybody gets paid back.
• 1:36:16
  The government gets their Bitcoin.
• 1:36:18
  And I'm not saying this is happening,
• 1:36:20
  but it is funny.
• 1:36:22
  Yeah, so I share your skepticism.
• 1:36:25
  Most of our listeners
• 1:36:26
  who listened to me and you chat for all these years hopefully know that I share your skepticism But i also have this other layer of skepticism towards other governments and the united states actually i don think it the worst i still think it the best looking horse in the glue factor as i usually
• 1:36:41
  say the dollar and even the government in some cases not in not in others but um you know a very
• 1:36:48
  simple example all the uh nice hard right uh anti-woke podcasters or some of them let's say
• 1:36:56
  were contracted by Russia earlier this year via a company called Tenant Media,
• 1:37:04
  and were paid hundreds of thousands of dollars an episode to create content.
• 1:37:09
  You know, the likes of Tim Pool, Dave Rubin, these guys.
• 1:37:15
  It's not only walled to like, the U.S. government is not playing just with itself.
• 1:37:23
  There are a lot of other players happening.
• 1:37:25
  So that's what I meant with my intel answer of trying to say it a little bit of both ways.
• 1:37:29
  It's a defensive move.
• 1:37:30
  It might be a dumb move.
• 1:37:32
  Like you said, it could be a totally dumb move.
• 1:37:34
  But I don't actually know.
• 1:37:36
  Again, in the world where our grandchildren and their grandchildren are living in a purely anarchic capitalist paradise,
• 1:37:42
  running a node and maybe mining a little bit of Bitcoin on nuclear fusion or something versus the world of 100 years ago,
• 1:37:50
  we are, unfortunately, I think, and I would use this word, unfortunately,
• 1:37:54
  we're still in a world where there are big big powers that play with a lot of money and a lot of
• 1:37:59
  guns and there are wars going on right now so it's very difficult you got to watch out for that
• 1:38:02
  and i also think and this is where i kind of land more on the side of like i think the way that
• 1:38:10
  peter todd looks at some of this geopolitical stuff he's a big ukraine supporter by the way
• 1:38:14
  um is there they're just our adversaries they're their government government adversaries there are
• 1:38:21
  government intelligence agency adversaries. There are good companies and bad companies in
• 1:38:27
  different jurisdictions. It's just not the US government alone by itself.
• 1:38:33
  Anybody can argue about the strategy the US government takes on a lot of things,
• 1:38:37
  I would certainly argue in many ways. But that little example of the right wing podcasters being
• 1:38:44
  paid by the Kremlin, which I have been, again, yelling for years as RT was ascending in the 2010s
• 1:38:51
  on youtube that's just that's one example to think about you know we just thought there's a summit in
• 1:38:57
  china right right now where all the all the dictators are meeting including modi even though
• 1:39:04
  people like to say that modi's a like india's still a democracy because trump had put all the
• 1:39:09
  tariffs on them right and now he's meeting with xi and putin and kim jong-un is even coming in
• 1:39:13
  is he by train yeah he's coming in by train and they cancel all the trains uh in china like
• 1:39:20
  lovely communist move right there.
• 1:39:23
  Like, I don't know how many hundreds of millions of Chinese
• 1:39:26
  just got shut off of a train when he's coming in.
• 1:39:28
  But I mean, he's coming in by train.
• 1:39:31
  And this is a very rare event, by the way.
• 1:39:33
  You know, Kim Jong-un would come,
• 1:39:35
  like he might meet with Trump in Singapore,
• 1:39:36
  or he might meet one-on-one with Xi.
• 1:39:39
  But this is a major dictator event that's occurring right now.
• 1:39:43
  You know, Erdogan's there from Turkey and then Modi.
• 1:39:47
  I mean, we'd say India's democracy,
• 1:39:49
  but they're a fledgling democracy at the moment.
• 1:39:51
  Modi himself has got plenty of autocratic history, let's say.
• 1:39:57
  I feel like he's been in for quite a while.
• 1:40:00
  He has indeed.
• 1:40:01
  That's really all you need to do is look at the track record,
• 1:40:03
  like Putin for 25 years.
• 1:40:05
  Lukashenko was there, of course, from Belarus,
• 1:40:08
  very close to the Baltics here.
• 1:40:09
  He's been in for 31 years.
• 1:40:13
  I mean, it's a wild world, man.
• 1:40:16
  It's a wild world.
• 1:40:17
  So anyway, there's that stuff as well going on.
• 1:40:19
  That's my long winded answer to your point there about the government getting involved in U.S. businesses.
• 1:40:26
  Yeah.
• 1:40:27
  Why can't we all just get along, man?
• 1:40:31
  Vipers everywhere, man.
• 1:40:33
  Vipers everywhere.
• 1:40:34
  I'm just trying to run around the block with my son and not have to worry about that.
• 1:40:38
  And do that.
• 1:40:38
  Hey, let's go back to the top of the show message.
• 1:40:40
  We're getting close to the end, right?
• 1:40:44
  Enjoy the power curve.
• 1:40:45
  it's 95% of what Bitcoin is doing
• 1:40:48
  the adoption you can see it
• 1:40:50
  you can visualize it
• 1:40:51
  let me finish off with one more
• 1:40:54
  chart here just so people
• 1:40:55
  those brave souls that have stuck through our
• 1:40:58
  you have one of the highest
• 1:41:00
  retention particularly
• 1:41:02
  my rants because I know a lot of people
• 1:41:04
  don't like my Ukraine stance but
• 1:41:06
  let me show you
• 1:41:07
  let me show you
• 1:41:09
  the
• 1:41:11
  Bitcoin
• 1:41:14
  as we close it out here.
• 1:41:18
  I think this is my new headline chart
• 1:41:19
  as far as showing the whole thing.
• 1:41:21
  It got the power curve.
• 1:41:23
  We got the power curve.
• 1:41:23
  We got exponential curve.
• 1:41:24
  We got money.
• 1:41:25
  We got Bitcoin.
• 1:41:25
  So this is now what I'm calling
• 1:41:27
  TradFi based money.
• 1:41:29
  It is available gold and silver.
• 1:41:31
  So it doesn't include industrial.
• 1:41:33
  And then since gold and silver
• 1:41:36
  is actually a little bit
• 1:41:37
  a part of the monetary base,
• 1:41:38
  there's like $4 trillion now
• 1:41:39
  because it's a huge value
• 1:41:40
  in backing the fiat based money,
• 1:41:43
  which is liability.
• 1:41:43
  You take that off.
• 1:41:45
  So you just look at unbacked fiat money.
• 1:41:49
  That's what this is.
• 1:41:50
  Okay.
• 1:41:50
  At the moment, that total right now is $38 trillion.
• 1:41:56
  All right.
• 1:41:57
  $38 trillion.
• 1:41:59
  And the Bitcoin network, all right, is right there.
• 1:42:10
  Okay.
• 1:42:13
  Bitcoin dominance, 5.6%. All right. 2.1 trillion. This moves from actual values right into the
• 1:42:23
  trend lines, right? So you can see them. But this is actually graphically what I mean when I say
• 1:42:28
  95% of Bitcoin's action right now is just the power curve itself. Like we literally,
• 1:42:33
  this is kind of the real Bitcoin dominance. If fiat-based money altogether is 40 trillion,
• 1:42:39
  gold, silver, fiat-based money, central bank money, Bitcoin's $2 trillion. We're at 5%.
• 1:42:44
  All right. Question would be, when do we cross? That would be here. Go out to 2041 or so.
• 1:42:55
  Actually, it's changed a little bit here, but
• 1:42:57
  2041, roughly 120 trillion.
• 1:43:07
  And there's an idea for you.
• 1:43:10
  15 years from now,
• 1:43:12
  something to shoot for.
• 1:43:18
  It's around this mythical 100 trillion.
• 1:43:20
  All right.
• 1:43:21
  And I think that we're going to get close there,
• 1:43:23
  probably sooner.
• 1:43:25
  and again when we do meet it's still 50 50 so that's money that's valued in something like a
• 1:43:31
  dollar that has nothing to do with bitcoin okay because it's unbacked fiat based money would be
• 1:43:36
  something like 100 trillion 120 trillion uh bitcoin itself if it got to 120 trillion there
• 1:43:45
  would still be 50 50 so that's what i keep saying these money supplies keep growing skate to where
• 1:43:50
  the puck is going uh yeah i think 15 17 years is probably where we will match and this is this is
• 1:43:57
  how you can see basically um you know trad fi which runs in a exponential straight line on log scale
• 1:44:06
  right versus bitcoin which runs in a power trend on log scale which is a this sort of nice gently
• 1:44:15
  sustainable curve.
• 1:44:19
  So that's what I think.
• 1:44:21
  I'll keep tracking this.
• 1:44:23
  Keep tweaking it.
• 1:44:25
  But that's what I think is going to happen.
• 1:44:27
  You know what I think is going to happen?
• 1:44:28
  Tell me.
• 1:44:29
  Bring it to year 2041.
• 1:44:32
  And people are going to be digging through the archives of the episodes that we've been
• 1:44:35
  producing for seven years.
• 1:44:36
  This guy was a genius.
• 1:44:38
  He told us how exactly how it was going to happen.
• 1:44:42
  Yes.
• 1:44:42
  Looking forward to that.
• 1:44:43
  no uh it's tweaked around a lot like these numbers are super sensitive and um the trend
• 1:44:49
  line is sensitive like you know i could tweak a couple things and this could go up to like 140
• 1:44:54
  trillion so i just want to make that caveat this can be i'm tweaking this all the time based on
• 1:44:59
  the changes in the numbers and the uh the updates of the trend line itself when i do these quarterly
• 1:45:05
  reports. So it's, you know, big, big, big ticket numbers, a long time period out might be like May,
• 1:45:16
  something like that. That was it was showing that before when I before I did this quarterly update,
• 1:45:19
  it was already up to like 140 145 trillion. Now it's down to 120. We'll see. We'll see based on
• 1:45:25
  all the price action and everything that happens. But who knows, it might be that mythical 100
• 1:45:30
  trillion is exactly where Bitcoin passes the fiat world.
• 1:45:34
  But this is how I see it, sort of a headline idea.
• 1:45:38
  Yeah.
• 1:45:41
  I like it.
• 1:45:41
  Very exciting.
• 1:45:42
  Very exciting.
• 1:45:43
  So all reasons to be bullish, all reasons to hodl.
• 1:45:47
  Never financial advice, but if you want to play around with the extremes of those percentiles
• 1:45:52
  and ape in and out, check my streams mostly every day.
• 1:45:55
  Check the streams, check out porkopolis.io.
• 1:46:00
  There's a porkopolis economics, let me see.
• 1:46:02
  Yep, yep, yep.
• 1:46:03
  Porkopolis.io.
• 1:46:04
  We'll link to all this.
• 1:46:05
  BaseMoney.World.
• 1:46:06
  You can get a lot of different places.
• 1:46:09
  It was funny because I was setting up to write the newsletter last night.
• 1:46:13
  I wrote the newsletter that I wrote last night because I was beginning to question myself.
• 1:46:16
  I guess Bitcoin, is it not doing what it should be doing?
• 1:46:19
  Are we having a depressed cycle?
• 1:46:22
  And then I just went back to basics.
• 1:46:24
  I went to look at the chart.
• 1:46:25
  I said, no.
• 1:46:25
  It's right on trend.
• 1:46:27
  We're,
• 1:46:28
  we're fine.
• 1:46:29
  People are the noise for anybody listening.
• 1:46:31
  I think the lesson to take from this conversation,
• 1:46:35
  really every conversation that Matthew and I have every quarter is this is the
• 1:46:42
  best way to filter out the noise.
• 1:46:44
  This is the signal.
• 1:46:45
  If you're ever feel your emotions being manipulated by people on Twitter or
• 1:46:51
  gold bugs or whoever it may be,
• 1:46:53
  just fall back to basics.
• 1:46:54
  Look at,
• 1:46:55
  look at the data. This is where the signal is.
• 1:46:57
  There's a lot of noise out there. It's only going to get louder
• 1:46:59
  and there's going to be
• 1:47:01
  more of it.
• 1:47:03
  Twitter is not real life.
• 1:47:05
  It really isn't.
• 1:47:07
  Running around the block with your kids
• 1:47:09
  is real life. I love it, man.
• 1:47:11
  I'm very happy for you. Good luck with the
• 1:47:13
  newest
• 1:47:15
  getting some sleep and
• 1:47:17
  all the rest, but
• 1:47:19
  I'm very happy for you, buddy.
• 1:47:21
  Thank you, sir. Go run around the block.
• 1:47:23
  Actually, you said tonight, so you got a while.
• 1:47:26
  Yeah, we got a while.
• 1:47:26
  I could run around the block with my little one.
• 1:47:28
  Maybe we'll do that.
• 1:47:28
  Yeah.
• 1:47:32
  We're going to be doing this until 2041, so.
• 1:47:35
  I think we will, dude.
• 1:47:36
  I think we will.
• 1:47:39
  I just hope Central and Eastern Europe are preserved and safe until then.
• 1:47:46
  That's what we're working for.
• 1:47:48
  Yeah.
• 1:47:49
  I think we're going to be good.
• 1:47:50
  I think we're going to be good.
• 1:47:51
  Let's see.
• 1:47:52
  Let's see.
• 1:47:52
  And when in doubt, run your own note.
• 1:47:56
  Yeah.
• 1:47:56
  Enjoy yourself.
• 1:47:58
  Marty.
• 1:47:59
  Always a pleasure, my friend.
• 1:48:01
  Matty.
• 1:48:01
  The pleasure is always mine.
• 1:48:03
  Peace.
• 1:48:03
  Love freaks.
• 1:48:04
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• 1:48:09
  Can you subscribe on the platform that you're listening to?
• 1:48:12
  Maybe give us a rating and a review that helps the show quite a bit.
• 1:48:15
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• 1:48:18
  speaking of fountain that is my favorite podcasting app if you go over to fountain you can subscribe
• 1:48:24
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• 1:48:29
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