MICHAEL SAYLOR X ODELL BITCOIN PARK FIRESIDE

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Transcription provided by Podhome.fm
Created: 8/5/2024 1:37:19 PM
Duration: 2691.327
Channels: 1

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What a week. Michael, thank you so much for joining us. Yeah. Thanks for inviting me. Happy to be here. This is Bitcoin Park. Welcome.

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Kinda crazy,

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It's a

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lot of birds and bees buzzing around your park.

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I apologize to Michael before we got on stage.

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The backstage was actually a little bit hotter than it is in here, but it's it's quite hot with all of it well, with all the heads in the room. So,

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our air conditioning is a work in progress. We're we're we're trying our best here. It's a a small grassroots

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iterating project.

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To those that are not aware, Bitcoin Park is supported by our members.

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So we have members that support us on an annual basis and that's who makes this possible.

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By a show of hands, who here is a member of Bitcoin Park?

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Thank you, guys. Would not be possible without you.

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Okay. Well, Michael's time is short, so let's just get into it.

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First of all, Michael, it's been absolutely crazy watching your Bitcoin journey.

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You just go 0 to 60 and just aped right into the space in a big way.

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When you think about this week, I mean, what are you looking at right now? How how how are you thinking about the space? How how we gotten so far so fast?

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And,

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how do you think about that basically, I guess?

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Well, I mean, I I think we just see great signs of, Bitcoin adoption throughout the world. Bitcoin's an issue.

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So the fact you have

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governors

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that have interests, the fact you have a lot of senators that have interests,

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the fact you have a lot of congress

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people that have interests, the fact that you have

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2 of the 3 major presidential candidates that have interests,

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the fact that you've got

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tons and tons of,

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Wall Streeters, you know, you've got representatives from Fidelity and BlackRock and the like. That's interesting. The fact you've got a bunch of operating companies,

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publicly traded

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companies like Marathon

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that are here in size. I mean, it's a big sponsor

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and, and and all the other public and and private Bitcoin miners. I think

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you you would have seen the Bitcoin miners private but you rolled the clock back 4 years,

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you didn't see any public operating companies, you didn't see any public investment trust, you didn't really see any

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politicians, I don't think they would have

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well, first of all, they they just wouldn't have any interest,

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it just would

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other than

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squash it out like a bug.

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Maybe negative interest but no positive interest and,

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you know, and, not a lot of enthusiasm

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and now I think they can't help but be interested.

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So I think,

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sometimes,

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the message

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is the message

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and sometimes

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a half a success in life is just showing up, right? The fact that you're there

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is sending the message regardless of what comes out of your mouth.

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And,

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I know in the in the in the,

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you know, in the world of say public companies or or Wall Street,

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the worst thing is not for someone to hate you,

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the worst thing is for them to be indifferent to you and view you as irrelevant.

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And so, you know, that's a a kiss of death is you're irrelevant,

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I don't even think about you.

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A lot of people don't like Tesla stock and a lot of people short it, but it's not a problem.

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Well, you know,

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there's probably $20,000,000,000

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of short interest in MicroStrategy,

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but then they go long Bitcoin. And I think it's good if they just get up every day and they, like, hate on us or like on us, it doesn't matter. What matters is they're engaged. And so I think this week is all about engagement. You just see engagement across,

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there are celebrities, there are politicians,

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there are investors, and then there are Bitcoiners, and then there are the engineers, the technologists, they all come together. And this is

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presumably it feels like this is the richest,

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like, most,

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most energetic

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gathering

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of, Bitcoin in a long time. Maybe the one that I remember is most energetic.

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Yeah. I mean, it seems absolutely unreal to me. I remember,

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my my first Bitcoin conference was in 2013

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in,

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New York, and it was just like an empty exhibitor hall.

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You know, there was a bunch of companies that had booths they paid for that no one was standing at.

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Some of them had booth babes that they overpaid for.

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And, most of those businesses have gone out of business. And it's just the last if you look at the last 10 years,

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last 11 years, it's been absolutely astounding the pace

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of growth of this space.

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And it definitely feels like it's accelerating. Even just this week feels like a decade almost,

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in in in terms of of progress, in terms of Bitcoin's recognition.

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I mean, I agree with you. You definitely cannot argue that that Bitcoin is irrelevant.

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It's definitely more relevant than it's ever been. We have more haters than we've ever had. We've had more lovers than we've ever had,

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and it's just been crazy to watch. So Michael,

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you

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have basically made a name for yourself with

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turning micro strategy, turning your baby into this

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Bitcoin accumulation

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machine. And I've, you know, I've had this thesis for a long time that every single individual, every single government, every single company

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is going to try and accumulate as much Bitcoin as possible. That that is the ultimate goal and,

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most just don't realize it yet and the people that realize it first have the most to gain.

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Since you've embarked on that strategy,

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we've seen over the last it actually kinda took a little bit longer than maybe even you expected. I definitely took longer than I expected, but we're starting to see

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smaller public companies around the world try and adopt a similar strategy. I'm kinda curious how you think

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about that like because to me, yeah I'm not gonna answer the question for you. How do you think about that these these like smaller public companies? I mean one example would be like, the meta planet that's happening in in Japan where they just

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said we're gonna do the micro strategy thing in a press release and the stock kinda just goes wild.

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You know, I've got a chart that I tweet and the chart shows that bonds are minus 5% ARR for the past 4 years

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and Bitcoin is plus 55%.

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So if you're an operating company,

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by law, you're only

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up until

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January of this year,

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by law you had to invest your excess capital in in treasuries

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and you couldn't invest it in the S and P index and you couldn't you know, an operating company can't reasonably

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hold their excess assets in real estate, timber rights, sports teams

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and Apple stock.

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The reason not well talked about but the reason,

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Berkshire Hathaway for example has so much cash

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is because

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they can't buy

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the S and P index and they can't buy more Apple stock because they would trip

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a 40%

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covenant or limit that's put in place by the SEC 40 act. And if the company gets more than 40% of its liquid assets,

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in a security,

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it's no longer an operating company and that means it can't take on debt, it can't issue option, it basically blows up the company, you become a investment trust.

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So

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for a 100 years,

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80 years,

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the law forces operating companies

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to hold their excess capital

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in an asset which is losing 5% of its,

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economic energy, 5% of its purchasing power per year.

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And when 2020 came along, you know, we were pushed in the Bitcoin space, but

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there are really 3 crippling,

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defects of, you know, 3 crippling things that keep a company from swapping out

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bonds for Bitcoin or or basically putting Bitcoin in and bonds out. The first thing is

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you need, the SEC

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to endorse it as an institutional or a legitimate asset class, a digital commodity

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and not a security.

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It's it's either illegal, you know, because you can't it's illegal to own Apple stock,

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you know. It's and, you know, and so and it's definitely you don't wanna have an unregistered security. So we had to have digital commodity first step, and we kinda got 75%

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of the way there in January. It's not a perfected

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endorsement. It's like a it's a grudging endorsement,

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you know,

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with reservation,

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but we cross the event horizon, you can't turn that back. The second thing that's required is fair accounting.

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You can't invest in something that you only lose money in and you never make money in. Just simple, right? No one wants to invest and always lose money and never make money, but the accounting rules before January were you can only lose money in Bitcoin. And so nobody is gonna buy an asset that always gets written down and never get written up, and so that got that's optionally fixed in January, that's mandatory, fair accounting in next January.

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That's the second stall leg of the stall. And the 3rd leg of the stool is

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Google can wire a $1,000,000,000 to JPMorgan every month and say put it in T Bills

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and it's like 15 seconds. And if JPMorgan

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loses it, it's JPMorgan's

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problem.

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The status quo right now is Google would have to wire a $1,000,000,000 a month to Coinbase

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while the SEC is trying to put Coinbase out of business

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and they'd have to cross with Cross River Bank, like a bank you've never heard of, that's the only bank that will actually take the wire.

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So the CFO of Google is not gonna be so interested in wiring 1,000,000,000 and tens of 1,000,000,000 of dollars

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to a crypto exchange as a custodian. They want State Street, they want Citigroup.

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Citibank

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is the predi the successor to National Citibank.

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National Citibank was run by the brother of John D. Rockefeller, it was the Rockefeller Bank. So if you want a sense of how long these relationships run,

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30 years is a short period of time. So the 3rd piece we need is we need banks to be able to custody Bitcoin and then then they can buy it for you, sell it for you, loan money against it, and then in that world

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you will be able to get a margin loan at SOFR plus 50 basis points against your Bitcoin,

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you will probably get 5%

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interest, you'll probably get the same interest rate on Bitcoin as you get on a money market

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fund. And if you had those two things then a corporate

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charge, like, a $100,000,000,000

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of Bitcoin going up 20% a year yielding 5% with no risk

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and a bank too big to fail is doing the headache for me. You can imagine Apple might say put $50,000,000,000

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in Bitcoin. So we don't have that third

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thing. We're kind of in year 1.

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You could say we're year 0 because year 1 is when you get the third thing

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and you get the endorsement without prejudice,

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you

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know? But I would say that's we're 6 months in, now you got 50,000 publicly traded companies.

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They're all capitalized

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on toxic credit which is collapsing.

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You know, one of the points of my speech is if you if you build your company on a capital asset with a 10 year useful life, your company's gonna last 10 years.

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And so all these companies have a 10 to 20 year life because they're sitting on a defective capital asset.

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The driver for them to switch from bonds to Bitcoin is Bitcoin's got a useful life of 10000 years.

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If you self custody it your maintenance cost is,

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you know, one basis point or something. So the useful life of Bitcoin is 1,000 of years, the useful life of a bond is a dozen years or 20 years.

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The regulatory impediment keeps

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mainstream companies and institutions from doing it because it's too much trouble

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and 2024

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is that 1st year. So the reason that they're kinda creeping into it right now is finally you can sorta do it. It's a lot of effort

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to figure out who you're gonna custody with and how you're gonna buy it right now and you can buy it for 65,000

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because you're doing the effort.

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When JPMorgan

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and Goldman Sachs do this, it'll be easy and it will cost $500,000

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So you get 85%

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discount if you do the work and you take a little bit of risk.

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If you'd done it in 2020,

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you know, you would have got a 98%

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discount.

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If you came in in 2013,

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you got a 99 point 8% discount but that was a lot more risk and a lot more work.

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And, you know, a lot of these institutions

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they're just like, if I can make a phone call in 30 seconds and say buy $10,000,000,000

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of Bitcoin,

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they'll do it.

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But if they have to work harder, they'll study it for 3 years and then they won't do it because

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why should they take that risk? And so we're in that transition.

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But I guess that makes sense to me. I mean, risk reward. I I have a friend who always says the the best way to measure how long someone's been in Bitcoin is not how much Bitcoin they own, but how much Bitcoin they've lost,

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just because it was incredibly risky. And, also, it's very easy,

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to not stay humble and and to lose lose your coin,

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on various schemes. I guess where I'm going with it is,

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and this is something that I'm intimately focused on because of

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my work at 10:31.

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So at at 10:31, we're a venture firm,

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that specializes in the Bitcoin space. We have a portfolio of 36 Bitcoin startups.

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You know, they're all trying to accumulate as much Bitcoin as possible. That is their goal.

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And I'm trying to separate in

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my head,

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where at some point,

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it can't it I I think there's some companies out there that are just kind of riding on almost like cheap cheap trick,

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strategy. It's like we say Bitcoin. We accumulate some Bitcoin. They don't actually have a business model.

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They they they don't have a competitive advantage

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to outperform the hardest asset of all time.

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And at some point, that evaporates. And and we we kind of haven't hit that yet. But at the core, what I look at is

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low low low expenses. Keep your expenses as low as possible. Keep your cash flow as high as possible,

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and just try and accumulate as much Bitcoin on the balance sheet while growing in a responsible way. Do you do you would you agree with me on that on that front that there's a lot of kind of just

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say Bitcoin or say AI. Right? And as a result, your stock pumps, and I'm obviously not accusing micro strategy of that. I mean, I think you've proven that the stock is accretive, and as you hold the stock you you you gain more Bitcoin over time.

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I think that every business has got a p and l and has got a balance sheet.

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And the P and L is the operation, it's what you do

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and the balance sheet is how you save what you do. And so the people that have it very easy, the people that can make lots of money right now are just people that started with the money. Right? If you've already got the money and you just couldn't move it from a bond to Bitcoin

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then you moved it from minus 5% a year to plus 50% a year and

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that's not hard. Right?

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It's very hard to compete with Microsoft,

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like it's very hard to compete with Amazon, it's very hard to compete with Google, it's very hard to compete with Apple. All of those companies

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are examples where

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they wiped out 20,000

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competent, healthy, hardworking companies. Like, if you ever been in the retail business,

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every single retailer except Walmart got wiped out by Amazon. There's nothing wrong with those people.

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They're good people, they work hard, they work themselves to death but at the end of the day it's, you know, same with Microsoft. They have a monopoly on every, on 80,000,000 businesses and they sell them their software for 3 years and so so I think that

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if you're asking me is it easy to create a business

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in the modern world? My answer is it's not easy.

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You can do it. I mean, mister beast can you know, it happens. Right? Random stuff happen

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but it's

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it's hard and it's and if you ask me for advice in entertainment

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versus medicine versus law versus software versus whatever,

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I would say I'm not an expert in any of those things,

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I would say probably you ought to look at AI because it's probably gonna, you know, disrupt and obliterate anything that's labor intensive is getting obliterated,

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the distribution is getting disrupted,

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and, so that's hard.

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On the other side,

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the the Bitcoin,

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the balance sheet strategy it's actually quite easy. Right? The reason I talk about Bitcoin is your choice is lose 5% of your money with bonds or make, you know, if it's 50% right now, right, my my forecast is on average the ARR is gonna be 25, 30% over the next 20 years.

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So if it if it goes to the worst case for me is it's gotta go up faster and perform better than the S and P index

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And if the S and P is 10 to 12 then Bitcoin is 20 to 22. So

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I basically,

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talk about that which I know,

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I don't give advice to people on that which I don't know. And and the sad fact is

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if I were to tell you there's a 99 percent chance the startup will fail, I might be overstating your chances of success.

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99% of the S and P 500 is failing right now. Yep. I mean, there's 5 companies in the S and P 5 everybody's saying how do I compete with NVIDIA and that includes Apple and Tesla are saying I don't know if we can.

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Right? What you will see is a rise of $1,000,000,000,000

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corporations

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because someone's gonna give all the medical advice to a 1000000000 people

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with AI doctors without an employee.

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And whoever figures that out is gonna make a lot of money and it's gonna make medical care cheaper,

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It's gonna put a lot of people in the middle out of business

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and there'll be disruption. So I don't think that Bitcoin is a competes

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with Microsoft compete better. Right? It's not gonna make you, it's not gonna help you build better

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cars than Tesla.

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The dude that creates the humanoid robot that's as smart as a 1000000 PhDs,

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you know, that actually you can buy for a $100 a month, they're probably gonna sell a lot of them. And the dude that creates the 2nd best humanoid robot, nobody will wanna buy it.

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Nobody wants the 2nd best of anything, right? They just want the 1 they want the best one and they're gonna sell a 1,000,000,000.

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So,

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you know, I think the summary of that is sometimes people think that by doing something with Bitcoin

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it will generate a p and l for them.

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It's like, okay. I'm gonna launch a Bitcoin exchange and I'm gonna compete with my with Fidelity or with Morgan Stanley or with Vanguard. It's like just because you sell and buy in custody Bitcoin doesn't mean it's easy to displace fidelity.

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And so

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I think you gotta have humility there. And like in in our journey, for example,

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we got into Bitcoin,

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you know,

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we now have $15,000,000,000

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of Bitcoin but I'm not selling the Bitcoin to hire engineers to compete with Microsoft.

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See, it would it would be like throwing good money

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after bad, right? I mean,

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so

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what is a good idea? Well, I mean our ideas

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securitize the Bitcoin. There are a lot of people,

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they want

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the upside of Bitcoin but no downside.

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Right? Have you ever met people they'd like to make a lot of money but with no volatility and no risk?

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Many such cases. Okay. So how do you buy Bitcoin at the all time high

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and not lose money, and then make money if it goes up? Well, you buy a convertible bond. If I sell you a convertible bond with 70% upside

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that's 5x over collateralized on the downside

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and you and if MicroStrategy

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guarantees you to give back your principal,

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it's like I'm guaranteeing you'll get your money back in 6 years, but if Bitcoin goes up you'll also get the warrant and so you're getting half the upside,

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none of the downs or 5% of the downside, half the upside,

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and that's a security.

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And so if you think about that, we're just stripping the volatility

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or we're

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stripping

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the, risk off the bottom.

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And there are a lot of people for which

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for example, if you go up to a typical investor and you said, what would you like 20% return, no volatility,

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no, you know, and little risk, or 50% return, lots of volatility.

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Most will tell you 20% even though that's the wrong answer.

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Right? It's the wrong I mean, you're gonna take 20 instead of 55.

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Well, I just I don't want the volatility.

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So what we do is we simply strip away the volatility and the risk and give them what they want.

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But

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other companies in the Bitcoin space, if your idea is you're going to create a mobile app that lets you buy and sell Bitcoin, you're competing against Cash App

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and Cash App is, you know, holding their own but they're gonna have to compete against Apple and Google and

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and Robinhood.

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And look there are Robinhoods, I mean there are successful businesses

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but at the end of the day

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I if there's a theme to this

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business is hard, like launching a business and growing a business is hard.

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Investing is hard. When you look at every public company you try to guess if their stock is overvalued or undervalued

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versus their

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their cash flow forecast, that's hard.

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It's not hard to say it's good company, it's hard to say whether the stock price is a good entry point. Right? Investing is hard.

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Saving

305
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was hard under the Fiat standard,

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but under the Bitcoin standard if your goal is I have some money I'm gonna hold it for 4 years,

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that's easy.

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I buy Bitcoin.

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If I'm gonna hold it for 4 years, it doesn't matter what the volatility is.

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And, from there,

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you know, business is hard, man. Businesses, you know, there there's something happening in the world which is,

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like, how does anybody sell software to a corporation? If Microsoft

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look what they did with, Slack. Look what they did with Zoom.

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They will just take your Slack and make it Teams and put it into their 3 year enterprise deal and you have to buy it. And they will take Zoom and put it in Teams and put it in a 3 year deals and you have to buy it. And it would be easier for a company to leave the US

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than to leave Microsoft.

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Just like Apple, not that different. Right? I mean, how many people wanna throw away their Apple phone and switch to a new ecosystem?

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They've got

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your stuff. So business And if they do switch, they switch to Google. Right? In both your examples. Like Microsoft you leave Microsoft Teams, you go to Google Suite. And what's the 3rd choice? Yeah. Like so so business is hard

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and it's

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and it's not that you can't create new opportunities,

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but

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Bitcoin

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what Bitcoin offers is

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you can either use it to to escape the bond conundrum

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or

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if you're a private company that can raise money

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or if you're a public company that can raise money,

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you can securitize

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Bitcoin because there are large pools of capital

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that people have where they have to buy a security.

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For example, a venture capitalist,

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they have to buy

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a security, a participating a preferred stock in a private company that might go public. They have a $1,000,000,000, they can't buy Bitcoin, they can't buy the ETF, they can't buy land, they can't buy art, they can't buy

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a public operating company, they just can't. It doesn't matter whether it's gonna go up by a factor of a1000000,

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they can't buy it. Their charter says spend the $1,000,000,000

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on private equity.

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So, you you know, they can't buy Bitcoin but you can actually create a company with Bitcoin on the balance sheet

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and go sell them a participating

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preferred stock with half of the return of Bitcoin,

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none of the volatility,

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they don't have to market to market, they don't say, oh, I'm risking all your money on Bitcoin. They're like, oh, I made an interesting investment in a Bitcoin based company.

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They make 22%.

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If they get a 20% return and the S and P returns 12, they'll go back to their investors and raise 10,000,000,000 more dollars and

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the Fireman's Pension Fund will say, oh, you beat the S and P, how much money do you want?

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So they need to do that.

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The guys that buy my converts,

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when I sell a convertible bond I have a 1 hour phone call, I'm like, Okay, this is the bond, this is what we're gonna do. Okay. They buy 800,000,000 of it at the end of the day. Okay. Why? It's like they have the money, they have to buy a convertible bond, they can't they're like, why don't they buy Bitcoin? They can't. Why don't they buy your equity? They can't.

348
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They need to buy there's a phrase in Wall Street, if the ducks are quacking,

349
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feed the ducks.

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They want that. There's another group of people, they want equity in a public company,

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they can't buy

352
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the spot ETF, they can't. It's it's against their charter, they get fired, they just can't. Why don't they?

353
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Well like you're questioning the world,

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right? I mean at the end of the day the world is made up of huge pools of capital and

355
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it might have taken 20 years to raise the money, now I got to spend the money. So if you are the entrepreneur my general message is

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you can

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create a security

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that a capitalist

359
00:26:20.545 --> 00:26:23.045
can then use to get Bitcoin exposure.

360
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And if you're public, you sell public equity or debt and buy Bitcoin. And if you're private, you'll sell private equity or private debt and buy Bitcoin.

361
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If you can't raise money

362
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then you just gotta work very very hard and get lucky and it's hard and you'll see a Zuckerberg on occasion, you'll see some breakthroughs but,

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you know, it's like it's not easy and so I

364
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my recommended strategy is not work yourself to death. My recommended strategy is

365
00:26:53.404 --> 00:26:54.784
notice that there are $450,000,000,000

366
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of capital in bonds and real estate and traditional 20th century assets.

367
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There's 1,000,000,000,000,

368
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I'm sorry, it's 450,000,000,000,000

369
00:27:04.710 --> 00:27:06.425
in those things, there's 1,000,000,000,000 in

370
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Bitcoin. You should be the conduit to move the next $1,000,000,000,000

371
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from the old world to the new world

372
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and the way you do it

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is by raising money with issuing securities

374
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to buy Bitcoin and you solve.

375
00:27:22.635 --> 00:27:25.135
What's the problem you solve? Custody it for them,

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buy it for them, take away the volatility,

377
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take away the downside

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risk,

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you

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00:27:31.740 --> 00:27:34.480
know, and then solve the compliance issue.

381
00:27:35.260 --> 00:27:48.290
Chinese billionaires got to buy Bitcoin through a Shanghai ETF, otherwise he goes to jail. Right. That's the problem you solve. It's not as good as self custody. It's not as good as the raw Bitcoin, but that's academic because when you've got $10,000,000,000

382
00:27:48.830 --> 00:27:52.850
in your choices, buy a 1,000,000,000 this way or go to jail or don't buy any,

383
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the answer the world is imperfect,

384
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That's why they call it earth not heaven.

385
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Wonderful.

386
00:28:00.665 --> 00:28:01.165
Michael,

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we have 15 minutes.

388
00:28:05.230 --> 00:28:13.090
I wanna be very conscious of your time. We have a hard stop here and I have 20 different directions I'd like this conversation to go so I hope this is the first of many.

389
00:28:14.745 --> 00:28:16.924
First and foremost I just want to say,

390
00:28:19.465 --> 00:28:21.965
feel like there's a little bit of an elephant in the room.

391
00:28:23.920 --> 00:28:28.900
Michael and I have had multiple productive conversations in terms of supporting open source development.

392
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We are not going to go there today. I I don't think that's the best path for for this conversation to take.

393
00:28:36.295 --> 00:28:37.995
I want to talk to you about

394
00:28:38.519 --> 00:28:41.340
your thoughts on Bitcoin as a transactional currency,

395
00:28:42.679 --> 00:28:44.700
because I I think it's super interesting

396
00:28:47.095 --> 00:28:52.075
being in the space with you because we agree on so much and we have such different perspectives

397
00:28:52.455 --> 00:28:53.435
on bitcoin

398
00:28:54.830 --> 00:28:57.970
but we we we end up in the same space like 99%

399
00:28:59.150 --> 00:29:00.690
we're on the exact same page.

400
00:29:01.550 --> 00:29:03.570
The transactional currency piece

401
00:29:05.695 --> 00:29:08.035
might be where we differ the most. Let's

402
00:29:08.335 --> 00:29:18.290
just chat about that. Like, how are you thinking about that right now? Okay. Well, you know, if I think about energy frequency and vibration, every time you trade an asset, it's a vibration.

403
00:29:19.024 --> 00:29:25.605
And if you're vibrating in a high friction environment or a high impedance environment, you're bleeding off energy.

404
00:29:26.080 --> 00:29:30.419
And so things that you can things you can do in outer space forever,

405
00:29:31.360 --> 00:29:35.620
you can do in the atmosphere for less and in the water not so much.

406
00:29:35.975 --> 00:29:37.674
So the real issue is

407
00:29:38.135 --> 00:29:39.755
when you're doing a transaction,

408
00:29:40.215 --> 00:29:48.000
what is the impedance? And there's there's a source of physical impedance, like, for example, what do I think of gold as a transactional

409
00:29:48.300 --> 00:29:48.800
currency?

410
00:29:49.420 --> 00:30:01.265
Well, like, I don't think it's good because it's hard to subdivide it and it's hard to send it over the mail, and so you can see how there's a high energy cost to trade gold high frequency, that's why it died.

411
00:30:02.780 --> 00:30:03.680
On the other

412
00:30:04.380 --> 00:30:06.560
hand, like, what do I think of Apple stock

413
00:30:07.580 --> 00:30:09.280
as a transactional currency?

414
00:30:09.875 --> 00:30:11.895
And here you're just getting into politics.

415
00:30:13.235 --> 00:30:16.375
In a country where Apple stock was legal tender,

416
00:30:17.230 --> 00:30:23.570
if it's legal tender and I can send it to you and you could send it back to me and I can do it in one second

417
00:30:24.750 --> 00:30:25.810
with no tax,

418
00:30:26.904 --> 00:30:29.804
Then, you know, wow Apple stock is better than gold.

419
00:30:30.184 --> 00:30:33.325
Now what do I think of the dollar as, as legal,

420
00:30:33.705 --> 00:30:34.524
as a transactional

421
00:30:34.825 --> 00:30:35.325
currency?

422
00:30:36.200 --> 00:30:44.540
Well, what I think is I can send it back and forth a 1000000 times a day and I don't have a 1000000 taxable events and so I don't have to account for it.

423
00:30:44.875 --> 00:30:45.695
If I send

424
00:30:46.235 --> 00:30:50.495
a a capital asset whether it's a corporate bond and equity,

425
00:30:51.515 --> 00:31:05.865
Bitcoin in the US if you're in the US now, if I move it, I'm moving at high frequency and I'm incurring an accounting event and a taxable event, and if you if you do the calculation it just turns out that everything just cost 10 or 20% more.

426
00:31:06.405 --> 00:31:07.465
And and so

427
00:31:07.925 --> 00:31:13.240
I don't if we were talking about a country, El Salvador, where it's legal tender

428
00:31:13.700 --> 00:31:20.040
and I can move it back and forth a 100 times a month and there is no accounting event and there's no taxable event,

429
00:31:20.605 --> 00:31:22.065
then my opinion is

430
00:31:22.605 --> 00:31:23.585
if it's satoshi's

431
00:31:24.125 --> 00:31:26.305
on lightning I kinda like it.

432
00:31:27.165 --> 00:31:27.905
If it's

433
00:31:28.279 --> 00:31:34.460
satoshis over the base layer, I I think at some point the friction is, you know, when it's $3 a transaction

434
00:31:34.919 --> 00:31:40.115
Yep. There's too much friction. So I don't like it on the base layer. I do like it on the second layer.

435
00:31:40.895 --> 00:31:45.955
But I would counsel anybody that if you had a if you had a certain amount of money,

436
00:31:46.520 --> 00:31:47.020
95%

437
00:31:47.400 --> 00:31:50.700
of it should be held in the capital account as Bitcoin,

438
00:31:51.640 --> 00:31:53.660
5% should be in the local

439
00:31:54.315 --> 00:31:55.215
checking account.

440
00:31:55.995 --> 00:31:56.495
And

441
00:31:56.955 --> 00:32:02.654
as a practical matter, you've got real 2 2 things. You've in Argentina, if everything's priced in the peso

442
00:32:03.400 --> 00:32:05.340
and then you have to have pesos,

443
00:32:05.880 --> 00:32:10.220
I would probably buy them the hour before I had to spend them, but I would buy them.

444
00:32:10.845 --> 00:32:12.705
And on the other hand

445
00:32:13.565 --> 00:32:14.065
if

446
00:32:15.164 --> 00:32:23.820
if something is legal tender I'm much more likely to wanna vibrate it or transact at high frequency. And if it's and if it's going to be taxed

447
00:32:24.280 --> 00:32:24.780
heavily,

448
00:32:25.480 --> 00:32:26.140
you know,

449
00:32:26.845 --> 00:32:30.225
short term capital gains tax, right, is like 35, 40%.

450
00:32:30.525 --> 00:32:41.950
Right? So if I if I gave you a Bitcoin and it was up, you know, a bit and I gave here's the thing I think we both agree on, Matt, which is neither one of us think we should send all our money to the government.

451
00:32:43.794 --> 00:32:44.294
Right?

452
00:32:44.914 --> 00:32:45.815
Very true.

453
00:32:47.794 --> 00:32:50.695
And and I think that's why, for example, Tether

454
00:32:51.160 --> 00:32:52.460
has been so successful,

455
00:32:53.160 --> 00:32:56.060
you know, I mean in theory a digital currency

456
00:32:56.440 --> 00:33:01.115
that's just a dollar that's pegged to the dollar for high frequency checking,

457
00:33:01.895 --> 00:33:03.675
you know, and a digital

458
00:33:04.135 --> 00:33:04.635
property,

459
00:33:05.255 --> 00:33:10.720
Bitcoin, which you can hold for the rest of your life as the property or the capital asset.

460
00:33:11.020 --> 00:33:15.679
Those 2 paired would allow you to go anywhere in the world and stay rich or stay wealthy

461
00:33:16.115 --> 00:33:17.095
and stay compliant

462
00:33:17.875 --> 00:33:24.135
and minimize you know, what do you want? You wanna hold the the Bitcoin forever and never pay capital gains. You don't wanna, like,

463
00:33:24.679 --> 00:33:30.700
you know, and you never you know, you just wanna hold it forever, and then you want everything else to be quick and easy.

464
00:33:31.080 --> 00:33:33.179
So that's what I think on that subject.

465
00:33:33.755 --> 00:33:46.460
I mean, so you think you think the tax treatment is is the major hurdle. So it's more of a politics regulatory kind of landscape issue. I think the government can basically destroy any asset by the tax treatment. I politics matter.

466
00:33:47.320 --> 00:33:50.700
Like, if they wanna destroy it, right, then for example,

467
00:33:51.205 --> 00:33:56.025
you know, here's the best tax treatment, legal tender. No tax on it. You can hold it forever

468
00:33:56.565 --> 00:33:59.625
and you can transfer it and there and there's

469
00:34:00.245 --> 00:34:05.370
no tax. What's the second best, which is capital gains or property? What's the last best?

470
00:34:05.750 --> 00:34:08.170
Property tax, which is a tax on time.

471
00:34:08.595 --> 00:34:11.815
Like, you're holding it and I want 1% of it,

472
00:34:12.355 --> 00:34:18.135
you know, I want 1% of the market value every year regardless of whether you trade it. Right?

473
00:34:18.550 --> 00:34:25.290
And that's the land tax in the US and that takes your money away from you in 35, 40 years. So I would say

474
00:34:26.405 --> 00:34:30.984
if the government passes a property tax on Bitcoin you should leave the country.

475
00:34:31.685 --> 00:34:39.400
I would say if they're gonna capital gains tax that you should manage yourself so you don't have to transfer it very often, almost never.

476
00:34:39.859 --> 00:34:45.755
And I would say if they made it legal tender then you probably ought to move to that country, you ought to go the other direction.

477
00:34:46.215 --> 00:34:49.195
We haven't talked about inheritance taxes yet, right? That's it

478
00:34:49.815 --> 00:34:52.395
but that's the last part. But I do think taxes

479
00:34:53.160 --> 00:34:57.339
taxes are 40% of the equation, they matter a lot and generally

480
00:34:58.119 --> 00:34:59.099
the best strategies

481
00:34:59.400 --> 00:35:04.134
are strategies that allow you to defer tax or avoid tax,

482
00:35:04.835 --> 00:35:07.815
and the worst strategies are strategies that accelerate

483
00:35:08.115 --> 00:35:16.410
the tax. You're either gonna pay it or you're not gonna pay it and then you've got a legal liability and then you gotta worry about that. And then either way

484
00:35:16.870 --> 00:35:18.410
those strategies become

485
00:35:19.494 --> 00:35:23.675
a friction. You know, they become a problem. Yeah. I mean I think one of the earliest things,

486
00:35:24.375 --> 00:35:30.650
you said when you became public in the space was that that politics matter and people aren't taking them seriously enough. I mean, and I think

487
00:35:31.270 --> 00:35:38.184
just the last few weeks alone have have proven you right. I mean, just the panel before us was was with our governor and one of our senators.

488
00:35:39.045 --> 00:35:45.224
We have the former president of the United States gonna be speaking at at the largest Bitcoin conference in the world tomorrow.

489
00:35:47.200 --> 00:35:48.740
Politics clearly matter.

490
00:35:49.120 --> 00:35:51.220
I think one of the cool parts about,

491
00:35:52.935 --> 00:35:56.715
Freedom Tech and Bitcoin as freedom money is is it gives individuals

492
00:35:57.175 --> 00:35:59.115
more power when it comes to

493
00:36:00.190 --> 00:36:04.849
combating governments or not combating governments. Maybe that's too critical of a word, but,

494
00:36:05.309 --> 00:36:08.369
defending themselves and and and

495
00:36:08.925 --> 00:36:11.105
and supporting their individual liberties.

496
00:36:11.885 --> 00:36:17.105
And as a result, it levels the playing field a bit, and that to me has always given me hope. And I think,

497
00:36:17.470 --> 00:36:30.515
you've always been really good. You have hope dot com. Bitcoin is hope. I mean, we got Larry Fink out there saying Bitcoin's like the hedge against hope. It's like the exact opposite to a degree. But I the opposite thing. Yeah. I think we can merge I think we can merge that. But, anyway,

498
00:36:31.855 --> 00:36:32.355
Michael,

499
00:36:32.815 --> 00:36:36.170
I'm curious. Are we do you think we're entering

500
00:36:36.550 --> 00:36:37.290
the era

501
00:36:38.710 --> 00:36:42.310
of nation state government FOMO? Like, is is is

502
00:36:43.125 --> 00:36:48.744
are we about to start seeing, you know, the micro strategy playbook happen on a government scale?

503
00:36:49.684 --> 00:36:50.345
I think

504
00:36:51.605 --> 00:36:52.105
it's

505
00:36:53.150 --> 00:36:59.890
it's positive that they're all talking about it. The Overton window has shifted. A year ago, no one would discuss it. Now you've got,

506
00:37:00.825 --> 00:37:06.605
you know, you've got Robert F. Kennedy talking about it, you've got a bunch of senators talking about it.

507
00:37:07.065 --> 00:37:13.690
So I just think we start with a conversation. I keep my expectations low. I think we should all keep our expectations

508
00:37:13.990 --> 00:37:14.490
low

509
00:37:14.950 --> 00:37:16.890
but with the observation that

510
00:37:17.654 --> 00:37:25.835
when a government starts talking about owning it, they legitimize it and that means what they're not talking about is taking it away from you.

511
00:37:26.750 --> 00:37:31.089
So when they're not talking about owning it, like, if you look at the German government,

512
00:37:31.550 --> 00:37:32.369
they emergency

513
00:37:32.670 --> 00:37:35.010
sold it because it could go to 0.

514
00:37:35.745 --> 00:37:38.645
And so the narrative of it's not an asset

515
00:37:39.265 --> 00:37:42.645
and it's, you know, it's a criminal thing and it's going to 0,

516
00:37:43.430 --> 00:37:44.810
that thing is pernicious

517
00:37:45.190 --> 00:37:48.890
and if you want to move forward you have to put a firm foundation.

518
00:37:49.750 --> 00:37:54.155
So I think when the government starts talking about it that means that individuals

519
00:37:54.615 --> 00:37:59.915
and small companies will feel comfortable enough to move in. They'll move first. They'll front run.

520
00:38:00.289 --> 00:38:05.190
Right? The government's always gonna be slow, it's always gonna be ham fisted, there'll be a lot of fighting.

521
00:38:06.210 --> 00:38:22.720
But I think the individuals and families will move. I think if the government's considering it it becomes a lot less risky for you to discuss it in the board meeting. So when I go into a boardroom and they ask me I'm I can say, you know, MicroStrategy is doing, but guess what? Here are all the politicians that have this

522
00:38:23.020 --> 00:38:25.600
bill and the question is will I get fired

523
00:38:26.035 --> 00:38:30.214
if I propose it? So I think the Overton window is shifting.

524
00:38:30.755 --> 00:38:32.214
I I'm not expecting,

525
00:38:32.674 --> 00:38:40.430
you know, that our government's gonna buy a ton of Bitcoin tomorrow and put it on the wire. I think I think you have to discount that.

526
00:38:41.050 --> 00:38:46.285
I do think we will over the next 4 years see some government start to take a position.

527
00:38:46.905 --> 00:38:50.684
It'll probably come out of the blue, it'll probably be someone you didn't expect,

528
00:38:51.464 --> 00:38:53.244
and it'll be a good thing but

529
00:38:54.010 --> 00:38:58.510
my I generally think this this plays out over EPIC's 4 years.

530
00:38:59.130 --> 00:39:03.150
This is the early institutional phase, then another 4, then another 4.

531
00:39:03.535 --> 00:39:05.635
Yeah. I mean, we've already seen the smaller nations

532
00:39:06.255 --> 00:39:08.995
to a degree start Bitcoin accumulation strategies.

533
00:39:10.015 --> 00:39:20.635
Obviously, El Salvador is is the one that's on most people's minds. I think it's pretty cool that you could go to their, like, mempool instance and see they buy 1 Bitcoin a day, which is like a nice little meme step chart up.

534
00:39:21.355 --> 00:39:25.055
But, like, even countries like Bhutan that we found out through bankruptcy

535
00:39:25.355 --> 00:39:29.375
reports that they were just quietly accumulating as much Bitcoin as possible.

536
00:39:31.390 --> 00:39:32.270
But what is your

537
00:39:32.830 --> 00:39:35.650
given what may or may not happen tomorrow,

538
00:39:36.670 --> 00:39:39.090
do you believe the US Treasury should

539
00:39:40.415 --> 00:39:41.155
stack Bitcoin?

540
00:39:42.815 --> 00:39:48.755
Yeah. I mean, I I just came from a a presentation on a stage and what I said was,

541
00:39:49.440 --> 00:39:50.339
you know, the

542
00:39:51.119 --> 00:39:54.900
the the 10 percenter strategy for the US would be to buy 500,000

543
00:39:55.200 --> 00:39:55.700
Bitcoin,

544
00:39:56.135 --> 00:40:02.315
The BTC the Maxi strategy is they should buy a million. The double Maxi strategy is they should buy 2,000,000

545
00:40:02.775 --> 00:40:08.490
and the triple max strategy for the US is they ought to buy 4,000,000 Bitcoin over the next 4 years.

546
00:40:08.950 --> 00:40:10.250
They would have, like, 18%

547
00:40:11.515 --> 00:40:16.815
of the of the supply and if they did that, they retire the debt and they flip to a massive

548
00:40:17.275 --> 00:40:18.414
surplus. And

549
00:40:18.850 --> 00:40:20.870
and I, you know, my precedent is

550
00:40:26.664 --> 00:40:32.285
Like the secret to success as a nation state is you have defensible productive property

551
00:40:32.744 --> 00:40:39.980
and so the reason that the British Empire rose is they had an island and it was hard to invade it. Nobody got to it after 10/66,

552
00:40:40.360 --> 00:40:42.060
and that on that island they industrialized.

553
00:40:43.160 --> 00:40:43.820
And then

554
00:40:44.295 --> 00:40:48.635
they got the the colonies and that was defensible productive land.

555
00:40:49.255 --> 00:40:59.180
And then the reason the US rose to power is the United States is defended by the Pacific on one side, the Atlantic on the other side, frozen tundra to the north, the desert to the south,

556
00:40:59.480 --> 00:40:59.980
defensible,

557
00:41:00.520 --> 00:41:01.020
productive.

558
00:41:01.400 --> 00:41:02.619
And what do we do?

559
00:41:02.935 --> 00:41:03.435
Well,

560
00:41:03.815 --> 00:41:05.595
we bought Louisiana Territory,

561
00:41:05.895 --> 00:41:07.275
Jefferson did it for $15,000,000

562
00:41:08.215 --> 00:41:12.130
and then he bought 27% of the land mass. Seward bought Alaska,

563
00:41:12.750 --> 00:41:13.250
$7,000,000

564
00:41:14.670 --> 00:41:17.970
The United States Federal Government owns 28% of the land.

565
00:41:18.595 --> 00:41:22.295
In the US we own, whatever, 18% of the gold or something,

566
00:41:22.835 --> 00:41:23.335
so

567
00:41:24.035 --> 00:41:25.175
scarce desirable

568
00:41:25.530 --> 00:41:28.589
property but by productive property you can defend and so

569
00:41:29.530 --> 00:41:32.910
if 100 of 1,000,000,000,000 of dollars are migrating to cyberspace,

570
00:41:33.845 --> 00:41:36.025
right, my view is Bitcoin's gonna demonetize

571
00:41:36.325 --> 00:41:43.385
Siberian real estate and Chinese real estate and everything in Africa, and why would you want to own bonds of a South American

572
00:41:43.910 --> 00:41:45.530
company? Why would you wanna own

573
00:41:46.710 --> 00:41:50.170
anything other than Bitcoin? So as the capital flows

574
00:41:50.775 --> 00:41:54.955
you're gonna see 100 of 1,000,000,000,000 of dollars there. So if you're the United States

575
00:41:55.255 --> 00:41:56.475
what are you worried about?

576
00:41:56.935 --> 00:42:08.010
Losing your world reserve currency status. Where's the money gonna go? To Bitcoin. How do you hedge that? Just go to go to where everybody's going and buy 20% of it, and then when they get there,

577
00:42:08.310 --> 00:42:09.690
you know, you'll be fine.

578
00:42:10.494 --> 00:42:22.340
Now where else are you gonna go? Right? For example, if you're if you're gonna sell the dollar, right, you're not selling the dollar for the peso, the lira, the euro. Nobody wants any of that. So So when you sell the dollar, you're gonna buy Siberian real estate?

579
00:42:22.640 --> 00:42:28.580
No. You're gonna buy buy bitcoin? What's the second best? You're gonna buy a sec nothing second best. There is no second best.

580
00:42:30.545 --> 00:42:31.045
So

581
00:42:31.744 --> 00:42:35.525
so the point is you want a country you want a country to be capitalized

582
00:42:35.825 --> 00:42:38.645
on a firm foundation. The foundation is productive

583
00:42:39.090 --> 00:42:41.510
property that no one can take away from you.

584
00:42:41.890 --> 00:42:43.190
And Bitcoin's beautiful.

585
00:42:43.810 --> 00:42:45.270
It is productive because

586
00:42:45.730 --> 00:42:47.590
the AIs are gonna wanna move $10,000,000,000

587
00:42:48.210 --> 00:42:51.914
from, you know, here to there every hour. They're not gonna move $10,000,000,000

588
00:42:52.214 --> 00:42:55.994
of buildings or silver, right, or dollars.

589
00:42:56.810 --> 00:42:58.910
Lord knows they can't get a bank account,

590
00:42:59.370 --> 00:43:00.350
right? So

591
00:43:00.970 --> 00:43:02.590
everybody's gonna want the capital,

592
00:43:03.050 --> 00:43:05.790
if you want a company, a family, a country

593
00:43:06.275 --> 00:43:08.055
to last and prosper,

594
00:43:09.075 --> 00:43:13.895
like how well would your how good would your family be if you owned a 100 acres in the middle of Manhattan?

595
00:43:14.460 --> 00:43:21.279
Like how would you like to own a 1000 square miles in Texas or something. Right? Own something productive

596
00:43:21.819 --> 00:43:23.359
for a long time.

597
00:43:24.185 --> 00:43:31.805
The catch is you don't want me to take it away from you. They you don't want them to tax it and you don't want them to steal it from you. And the beauty of Bitcoin is

598
00:43:32.265 --> 00:43:33.085
any country

599
00:43:33.600 --> 00:43:40.100
puts their money in cyberspace, nobody can steal it, nobody else can tax it. So even though it's brilliant for the US,

600
00:43:40.575 --> 00:43:42.915
it's even a better idea for Switzerland

601
00:43:43.535 --> 00:43:44.035
or

602
00:43:44.415 --> 00:43:44.995
for Norway

603
00:43:45.455 --> 00:43:46.195
or for

604
00:43:46.735 --> 00:43:52.660
Turkey because there's no point in invading your country to take your stuff if all your stuff is in cyberspace.

605
00:43:53.840 --> 00:43:58.260
So I I'm a big believer, I think it's good for the network, I think it decentralizes

606
00:43:58.725 --> 00:44:03.865
us further. I mean it it'll be source of a lot of interesting debates and dialogue but,

607
00:44:04.645 --> 00:44:09.470
you know, if you if you believe you want if you wanna help the US then give them productive

608
00:44:09.770 --> 00:44:15.310
digital capital and anybody else you wanna help, give them the same advice. And if you hate somebody,

609
00:44:15.944 --> 00:44:19.405
if you hate someone, tell them to sell their Bitcoin and don't buy it,

610
00:44:20.585 --> 00:44:26.670
right, that's the worst you can do to anybody, encourage them to not Bitcoin because that's like encouraging

611
00:44:26.970 --> 00:44:28.830
the Russians to sell Alaska.

612
00:44:29.370 --> 00:44:32.910
It's like Napoleon sold a third of America for $15,000,000,

613
00:44:34.305 --> 00:44:42.005
blew it on bullets and blankets in the Napoleonic war. We still have a third of the United States so who got the better trade?

614
00:44:43.420 --> 00:44:46.559
Bitcoin is beautiful and we should all stack as much as possible.

615
00:44:47.180 --> 00:44:49.680
Stay humble, stack sat. Let's go.