0:00

Hey, hey! Welcome to the

0:02

Bitcoin Matrix Podcast. I'm your

0:04

host, Cedric Jungelman. Today, I'm

0:06

thrilled to be joined by

0:08

Andy Edgstrom, a wealth management

0:10

expert and one of Bitcoin's

0:12

most insightful advocates. In this

0:14

second appearance on the Bitcoin

0:16

Matrix, we dive deep into

0:18

Bitcoin's market cycles, explore the

0:20

emotional and strategic challenges of

0:22

holding during bull runs, and

0:24

discuss the evolving dynamics of

0:26

property rights in a decentralized

0:28

world. Andy also shares his

0:31

thoughts on real estate, institutional adoption,

0:33

and why he remains so bullish on

0:35

Bitcoin's future. So I hope you

0:37

enjoy this conversation. The only thing I'm

0:39

going to ask of you is

0:41

if you can please go and subscribe

0:43

to the RSS feed and or

0:45

our YouTube channel. And if you do

0:47

want to get in touch with

0:49

me, it's Cedric at thebitcoinmatrix .com, where

0:51

you can also sign up for our

0:53

newsletter. And now, let's enter the

0:55

Bitcoin Matrix with Andy Edgstrom. What

1:01

is real? How

1:03

do you define real? You

1:05

can't jump into cash. Cash

1:09

is trash. What

1:12

do you do to get out? Andy

1:17

Edgstrom is the author of the

1:19

book Why Buy Bitcoin, Investing

1:22

Today in the Money of Tomorrow. Additionally,

1:25

his opinions on Bitcoin have been published

1:27

in The Wall Street Journal, and his

1:29

opinions on regulation of the internet monopolies

1:31

have been published in The Economist. Andy

1:34

has spent his entire career in wealth

1:36

management, private equity, and public markets investing. Prior

1:39

to the global financial crisis of

1:41

2008 -2009, he caught a glimpse into

1:43

the making of financial sausage while

1:45

working at Goldman Sachs. Andy holds

1:48

the Chartered Financial Analyst and Certified

1:50

Financial Planner Credentials, as well as

1:52

a Bachelor of Arts in Economics,

1:54

Magna Cum Laude, and Phi Beta

1:56

Kappa from Williams College. Andy

1:59

lives in Los Angeles, with his wife and

2:01

children. He serves on the board

2:03

of directors of the Robert M.

2:05

Adams Foundation, a child rule foundation

2:07

supporting education, health care research, and

2:09

other philanthropic activities.

2:11

And the Edstrom is one of our

2:13

earliest guests and a longtime friend of

2:15

the show. Welcome back to the Bitcoin

2:17

Matrix podcast, sir. How are you? Cedric,

2:19

I am well. It's great to see

2:21

you my friend. It was a joy doing

2:23

that early episode with you. I feel like

2:26

it was four years ago or longer. And

2:28

I just want to tell you that your

2:30

pod, Bitcoin Matrix, is one of

2:32

the very few that I still listen

2:35

to regularly. So it's great to be on

2:37

with you. Wow, wow, I really

2:39

appreciate that, flattered. You know, I

2:41

was excited to run into you

2:43

at Michael Saylor's Hundred-K party. Unfortunately,

2:46

fortunately, I guess it was in the

2:48

porta-pot. So maybe not the best environment.

2:50

We got a chit-chat outside. Yeah, you

2:52

were on episode 14. And I think

2:55

that came out on November 6th, 2020.

2:57

And the blurb on is a kind man

2:59

with too many credits to list.

3:01

Andy Edstrom is perhaps the

3:03

greatest asset in the argument

3:06

for Bitcoin's dependability down the

3:08

line. We touched on economic

3:10

tradeoffs, 9-11, the Patriot Act,

3:12

and the deceit of government backed

3:14

Fiat. You know this episode gave the definitive

3:17

answer to the age old no corner question

3:19

why by Bitcoin based on your book I

3:21

definitely recommend people go back to that it

3:23

was actually interesting before the show came out

3:26

I reached out to you I think before

3:28

maybe right when I started putting material

3:30

out and you were like how do I find your show I

3:32

got to listen to it I make sure I'm not going

3:35

on like a you know crypto podcast here

3:37

or something and I kind of appreciated the

3:39

Don't trust verify you know so many

3:41

bickwin as generous as you and

3:43

everyone else are like look yeah,

3:45

come on It's kind of courageous,

3:47

but like you don't know what you're

3:50

getting into So you know we go way

3:52

back there But you're in LA these days.

3:54

Yeah, I'll yeah, can I can I just

3:56

say so so I appreciate your style of

3:58

the time because you can't came on pretty

4:00

strong. You came on very confident when

4:02

you reached out to book me and I

4:04

was like, who's this guy? I haven't

4:06

heard of him. Yeah, I might want to

4:09

list his pod, make sure he's not

4:11

a scammer. So I did that, but I'm

4:13

very glad I came on the show.

4:15

And then regarding your comment about running to

4:17

each other at the bathrooms at the

4:19

100K party, you know, some of the best

4:21

conversations come out of running into people

4:23

at the bathroom. I met Matt

4:25

Pines in the very, very,

4:28

very long line for the restroom

4:30

at the, that party that I

4:32

think it was McCormick and

4:34

Gem and I put on together.

4:36

This was a few conferences

4:38

ago. And so yeah, you know,

4:40

run into great people at

4:42

Bitcoin party bathroom stops. That's, that's

4:44

just the way it goes.

4:46

But you're right. I am in

4:48

West LA. It's a gorgeous clear

4:50

day here. It was

4:52

not a gorgeous clear day. Most

4:54

days last week. I'm a

4:57

few miles from the Palisades

4:59

fire. So it

5:01

was a, it was a pretty

5:03

long and sobering week. And, you

5:05

know, very grateful that we didn't

5:07

suffer any personal damage. I do

5:09

have clients who got evacuated. I

5:11

have friends who got evacuated. I

5:13

have a couple clients. Sorry,

5:16

I have one client who I

5:18

believe lost his house. I haven't

5:20

been able to contact him. I

5:22

have a couple friends, you know,

5:24

who lost their houses. One who, by

5:27

his own description, he said,

5:29

by some miracle, my

5:32

house survived. And I was thinking soon after the

5:34

fact, is that a

5:36

miracle? I think it's a miracle if you

5:38

have a lot of personal affects and you

5:40

really, you really feel strongly

5:42

personally about your home. But on

5:44

the other hand, you know, the rest

5:46

of the neighborhood is gone. And

5:49

so it's hard for

5:51

me to imagine moving right

5:53

back into one's house in

5:56

the current state. That said,

5:58

I'm pretty optimistic for The

6:00

rebuild I have a contractor in

6:03

the neighborhood. He's working on the

6:05

house next to mine That's a

6:07

whole other story. He grew up

6:09

in the Palisades so, you know,

6:11

he has very personal ties to

6:13

the place and He tells me

6:15

that he's already getting Dozens

6:18

of inbound calls people saying

6:20

hey come rebuild my house

6:22

You know put me at the top

6:24

of the queue bring me to the

6:26

front of the line. Let's get this

6:28

done quickly So I don't have much

6:30

doubt at all that it gets rebuilt

6:32

very quickly having said that You

6:35

know, I I'm hopeful that it

6:37

that this event makes a

6:40

mark on the politics of California

6:42

because we had swung pretty

6:44

far in the wrong direction over

6:46

a period of years and

6:48

years and Yeah, so

6:50

I'm sort of cautiously optimistic

6:53

that that this could result in

6:55

Positive developments overall, but in

6:57

the in the near term. It's

6:59

you know, it's a it's

7:01

a tragedy I guess it was

7:03

nine days ago Tuesday

7:05

night I was Staring

7:07

out my office my home

7:09

office window and I could

7:11

see the orange billowing flames Off

7:15

in the distance. It was

7:17

probably two and a half three

7:19

miles away But there is definitely

7:21

a part of the brain, you

7:23

know, my amygdala was stimulated Let's

7:25

just say, you know, I felt

7:27

the fear response my wife was packing

7:29

go bags You know, I told her

7:31

I don't think we're at risk because if

7:33

my place burns, you know, it's a

7:35

couple it's more than two miles of Urban

7:39

sprawl, you know between the fires

7:41

and us I mean we've lost the

7:43

whole city probably if we if

7:45

we lose our house But nevertheless, it

7:47

was it was a little stressful.

7:50

It'll be a permanent imprint on Everyone

7:52

who lived through it not just

7:54

the direct victims, but also those around

7:56

them and I guess all I

7:58

can do is is Think positive

8:00

thoughts and have positive hopes for

8:02

the future. I still love LA

8:05

You know this doesn't make me

8:07

want to leave But it does

8:09

make me want to see a

8:11

change in government policy Wow, so

8:13

I mean this won't come out for

8:16

nine or ten days, but I mean

8:18

it seems like you're safe now and

8:20

fortunately you I mean I don't know how

8:22

you got I mean Two miles away

8:24

even with urban sprawl. I mean just

8:27

what the news was happening. I mean

8:29

I was in New York City on

8:31

9-11 and in the suburbs in the

8:33

following days and I'm you could see

8:35

the smoke and and the plume for

8:37

20-30 miles But you know it wasn't

8:39

so worried about embers and things like

8:41

that and wind-changing and Yeah, I mean I

8:43

can't imagine like sort of the calculations

8:46

you were having having to make and

8:48

have you gone over to the palisades

8:50

or how close have you I mean

8:52

what kind of what what have you

8:54

seen or witnessed or yeah so

8:57

I was exercising in Santa Monica

8:59

pretty not far from the border

9:01

of the palisades I don't know

9:03

a couple days ago they've still

9:05

got streets blocked off you

9:07

know the fire department has

9:09

trucks the California incline as

9:11

of that moment was closed

9:13

in the direction toward the

9:15

palisades and the California incline

9:18

in case people to know is

9:20

this big, it's this road on this

9:22

big hill from Santa Monica down

9:24

to the Pacific Coast Highway, the

9:26

PCH, and it's basically this artery

9:28

from Santa Monica down to the

9:31

PCH, which then connects up toward

9:33

Palisades and Malibu. And so, yeah,

9:35

so the, so you can't go in that

9:37

way. I'm sure if I went on foot,

9:39

I could find a way to get

9:42

in, and I know people including. One

9:44

or two Bitcoiners who have made their

9:46

way You know made their way back

9:48

in and So I think it's doable.

9:50

I haven't done it. You know my

9:52

wife is concerned about chemicals

9:54

exposure chemical in the

9:57

air chemicals in the

9:59

air I think that's probably legit.

10:01

I mean, I sort of

10:03

doubt that going up there for an

10:05

hour or something would really result

10:07

in any measurable health effect. But

10:10

I'm not in any hurry to

10:12

to get back up there. I

10:14

was actually supposed to meet

10:16

with my client who lives in

10:18

the palisades. I believe his house

10:20

made it last last I had heard.

10:23

He was sort of on the outskirts

10:25

more down in the valley, sort

10:27

of below. There's an area called

10:29

I guess it's Rustic Canyon that's

10:31

right there, which is where he

10:34

is, but his house was fine,

10:36

but his daughter's house was not

10:38

fine. Anyway, I was supposed to

10:40

meet with him for lunch yesterday.

10:42

Needless to say, he canceled rescheduled

10:44

on me. But yeah, there's definitely

10:47

been some fallout, you know, in

10:49

terms of personal relationships and professional

10:51

activities going on, but... Yeah, I'm,

10:53

you know, we're, we're fine. I'm

10:55

hopeful that they rebuild it soon.

10:58

You know, there were structures

11:00

that survived. The developer, Rick

11:02

Caruso, who by the way

11:04

ran for mayor, I wish

11:06

he'd had, I wish he

11:08

had won that election recently,

11:11

he didn't, but he developed

11:13

this shopping center in the

11:16

Palisades. He has a mansion

11:18

in the Palisades. He contracted

11:20

private. fire suppression services they

11:23

worked so that shopping center

11:25

as I understand it is

11:28

still standing I believe his

11:30

mention is still standing

11:32

and you know it's just

11:35

an interesting case study in

11:37

well it's a case study in the

11:39

fact that measures can be taken

11:41

you know preparatory measures

11:44

could have been taken that weren't

11:46

taken I don't know if it's

11:48

a case study in sort of

11:50

private market solutions versus public market

11:53

solutions. It sounds like it is

11:55

right. Sounds like the, you know,

11:57

sounds like the government didn't deliver.

12:00

But private markets did

12:02

deliver, although I suppose

12:04

he could pay up

12:06

and pay any price,

12:08

considering he's a multi-billionaire.

12:10

But yeah, it's a sad and

12:12

fascinating case study in a

12:14

lot of ways, and it's going

12:17

to be studied for years to

12:19

come. I mean, this is a

12:21

major tragedy, and I'm sure even

12:23

just running errands or...

12:25

Kind of getting through your day in

12:27

LA. I'm sure this would all I'm asking,

12:30

but I mean I remember after 9-11 I

12:32

don't know if this is comparable or not

12:34

It seems like it probably is in so

12:36

many ways. That's an interesting. Yeah, I hadn't

12:38

I hadn't thought about the comparison to 9-11

12:41

I mean look there's not a lot of

12:43

maybe not in terms of casualties Yeah, but

12:45

in terms of I mean just broad

12:47

devastation and the ability to sort

12:49

of return to you know normal normalcy

12:52

You know, neighborhoods, a big neighborhood, not, I

12:54

don't know how big you can describe

12:56

how I'll say that, but this is,

12:58

it's devastated. You know, even if your

13:00

home survived, it's not like your kids

13:02

are going to go to school on Monday.

13:05

You know, even if you're home survived,

13:07

I don't know if you have

13:09

running water, electricity, I mean, what survived?

13:11

What survived? You're talking about like Rick

13:14

Russo, like the economic calculation of hiring.

13:16

I guess the private firefighters to save

13:18

his mall, maybe that was a bad

13:21

decision, maybe he would have, because like

13:23

how valuable is the ball now that

13:25

it is, and I'm not trying to

13:28

joke or, you know, kid about this,

13:30

but I do wonder what it's

13:32

going to be like for you the

13:34

next, for a period of time, just

13:37

kind of everyone trying to rebuild, get

13:39

on with their day, you know, talk

13:41

about other things, I mean, is all

13:43

anyone's talking about, that's what I would

13:46

imagine. Yeah. I've lived here my

13:48

entire life except for eight years

13:50

when I was at school and then

13:52

I was living in New York. I

13:55

lived in New York just after

13:57

9-11, so I moved to New York

13:59

in that... recessionary

14:01

aftermath period

14:03

which took years to

14:06

rebuild and recover

14:08

and I actually lived

14:10

next to the World

14:12

Trade Center site in

14:15

2006, 2005, 2006 and

14:17

that was a time when,

14:19

let's face it, you could

14:21

get great deals on

14:23

rent because the neighborhood

14:26

itself. was still a

14:28

wasteland. I mean they were

14:30

still pulling bodies out of the

14:32

Deutsche Bank building, which was,

14:35

I can't remember if it

14:37

was next to my building

14:39

or two buildings away. So

14:41

that was truly devastating. I

14:43

think, look, there's not a lot

14:46

of smiles on faces around

14:48

LA right now, that's for sure.

14:50

Certainly if you lost your home

14:52

in the palisades and I know

14:54

people who have like... It's hard

14:56

for me to imagine. I mean,

14:58

I haven't had to survive that

15:00

kind of an event. I think

15:03

that analytically, it's not

15:05

as bad. I suspect it's not

15:07

as bad as 9-11. That's my

15:09

suspicion. We'll have to see. We'll

15:11

have to live through it. I think

15:13

people still are going to want to

15:16

live in the Palisades. Those who

15:18

have lived there a long time

15:20

have built their lives there, if they

15:22

can afford it. right? If they either

15:24

can fund it out of pocket or

15:26

if they have enough insurance to rebuild,

15:28

I think they will rebuild. There

15:31

certainly will be some who cannot

15:33

afford it either because they were

15:36

uncovered completely because, you know,

15:38

they hadn't renewed policies or because

15:40

they were underinsured, you know, or

15:42

because they're at a point in life

15:44

when it's, you know, they're, they're

15:46

older and it's just kind of not

15:49

worth it to them to, to rebuild.

15:51

Maybe they, they, they, they. Maybe that it's

15:53

an opportunity for them to to move

15:55

somewhere and You know who knows move

15:58

toward where their grandkids are I don't

16:00

know. But yeah, look, it's going

16:02

to be, I'm still cautiously optimistic

16:04

that the rebuild will happen quickly.

16:07

I think it probably happens a

16:09

lot more quickly than what you

16:11

saw in lower Manhattan after the

16:13

9-11 attacks. And yeah, that's my

16:15

assessment, but I guess we'll just

16:18

have to wait and find out.

16:20

Yeah, I guess my pessimistic view

16:22

is it's more in line with

16:24

what happened in Lahaina. and maybe

16:26

it's really hard to rebuild. And

16:29

for several, like, whether people are

16:31

uninsured or not insured enough, and

16:33

then all that maybe, these were

16:35

historic homes, right? Many of them,

16:37

so they were probably built on

16:40

a very different code with much

16:42

more, you know, less easement from

16:44

the road and from the sidewalk

16:46

and from, but yeah, maybe some,

16:48

yeah, it'll be very interesting. I

16:51

wish you guys the best. Thank

16:53

you for that. And yeah, look,

16:55

maybe I'm naive and just optimistic.

16:57

I think the, I think the

16:59

scale of it allows for a

17:02

rebuild. I think the other thing

17:04

too is it, I mean, it

17:06

is a global market, although you

17:08

could say, you could have said

17:10

the same obviously for Manhattan. Like

17:13

is there demand for real estate

17:15

overlooking the ocean? you know in

17:17

West LA like obviously yes and

17:19

I think they're I'm not going

17:21

to say always will be you

17:23

know who knows what the far

17:26

future holds but I got to

17:28

believe there's a lot of people

17:30

who either were residents or are

17:32

aspirational hopeful residents you know that

17:34

would love to to move in

17:37

so we'll see how it goes

17:39

oh yeah I mean after 9-11

17:41

I as well moved into lower

17:43

Brooklyn into Kabul Hill And then

17:45

after a few years I moved

17:48

to San Francisco and did my

17:50

West Coast stint and did quite

17:52

a bit of consulting down in

17:54

LA. Had you been in Manhattan

17:56

before Brooklyn? No, I didn't live

17:59

in Manhattan before. for Brooklyn, but

18:01

I worked on the 90th floor

18:03

of the towers, Tower 2. I was

18:05

not there that day. I was

18:07

in Manhattan that day. Midtown.

18:10

My God. I didn't know you were

18:12

one of the, you know, the sort

18:14

of lucky, lucky few. I've heard

18:16

people talk about, I don't know,

18:18

what's the term, not

18:20

imposter syndrome, but you know,

18:22

feel like they got extremely lucky

18:25

and then some felt

18:27

that they... you know, didn't deserve it

18:29

or had guilt over it. I kind

18:31

of threaded the needle. I rolled off

18:33

my client about nine months before 9-11,

18:35

so I wasn't supposed to be there

18:37

for months. I wasn't going to be

18:39

there. But I had connections, I knew

18:42

people in the building, and I knew

18:44

people in the buildings nearby, and I

18:46

was in Manhattan that day. I had

18:48

the buddy, I was on the 26th

18:50

floor of my building, and buddy was

18:52

like, hey, I'm going up to the 52nd

18:54

floor to watch Tower 2 fall. you know

18:56

I don't need to spectate that and there's

18:58

other things going on here I need to

19:01

talk to people and regroup but yeah it

19:03

was a crazy day and then I moved

19:05

to California I spent a couple years there

19:07

and I definitely know the beauty of the

19:09

West Coast and and the allure I found

19:12

that you know with maybe without the mountains

19:14

I've found everything I want in Florida now

19:16

you know but I was just back in

19:18

Brooklyn and I miss New York a little

19:20

bit but I do want to talk about

19:23

property rights. Because you mentioned sort

19:25

of like Rick Russo and you

19:27

know like this notion of like hiring

19:29

private firefighters like maybe you can

19:31

sort of expand a bit about property

19:34

rights and how they're derived and you

19:36

know how people kind of can think

19:38

through those situations. Yeah so Bitcoiners love

19:41

to talk about or think about

19:43

property rights. I think that one

19:45

thing that maybe some Bitcoiners get wrong

19:47

is from a practical perspective

19:50

they think of property rights as

19:52

inherent human rights and I

19:54

think I believe that and many

19:56

believe that and that may be

19:58

sort of ethically true then

20:01

there's the practicality which

20:03

is in practice your property

20:05

rights have nothing to do

20:07

with you they are they

20:09

are either recognized or not

20:11

by those that surround you

20:13

right property rights exist around here

20:16

because of the law and

20:18

the law springs out of

20:20

government in practice I mean we can talk

20:22

about the founders and how they felt

20:24

about natural rights and how that

20:26

informed the construction of the government

20:28

but as a practical matter government

20:30

imbues the law with power and

20:32

it would and it's the law

20:34

that protects property rights but that

20:36

all has to do with whether

20:38

those around us are at any

20:40

moment in time respecting those property

20:42

rights and so Bitcoin of course

20:44

mostly fixes this it doesn't

20:46

completely fix it I mean

20:49

obviously the ability to custody

20:51

your own keys

20:53

is de facto a

20:55

de facto property right that

20:57

doesn't mean that those can't

20:59

be extracted under duress whether

21:02

five dollar wrench attack or

21:04

other means other threats but

21:06

it definitely tilts the the

21:08

balance of power in favor

21:10

of the individual property holder

21:12

but I've been thinking

21:14

more about this concept

21:16

of an investment

21:19

where the value of the

21:21

investment is your expectation of its

21:23

value in the future maybe I

21:25

should say the rate of return on

21:28

an investment is your expectation of

21:30

its value sometime in the future plus

21:32

any cash flows that have crude

21:34

in the meantime and then I multiply

21:36

that by some probability that

21:38

my property right is actually maintained

21:40

and I feel like we need

21:42

a term for this and

21:44

I haven't settled on one maybe

21:46

you've got some ideas I've

21:48

been thinking of something like ownership

21:51

durability or retention probability you know

21:53

security of tenure

21:55

that's actually a legal term

21:57

which I learned from my

21:59

wife recently who by the way,

22:01

recently finished law school, I'm

22:03

happy to tell that story,

22:06

but it just so happens

22:08

that she, midlife, we had two

22:10

kids, she decided that she wanted

22:13

a career switch, she had been

22:15

a teacher before she stopped working

22:17

to raise the kids. And by

22:20

the way, we subsequently had a

22:22

third kid. That's a story I

22:24

won't tell. But the two kids,

22:27

at the time, she says, I

22:29

want to go to law school.

22:31

I say, great. Sounds wonderful. I'm

22:33

sure you'll be great at it.

22:36

See if you can figure out a

22:38

way. I don't have to pay for

22:40

it. And she did. She got a

22:43

full merit scholarship to Pepperdine. And the

22:45

reason she got that scholarship

22:47

is not just her ability.

22:49

But it was the fact that

22:51

Rick Caruso was a Pepperdine grad

22:54

and he had recently given

22:56

50 million bucks to the

22:58

law school. They renamed it

23:00

Caruso School of Law. And

23:02

so, you know, Rick Caruso

23:04

basically paid for my wet law

23:06

degree. So, thanks, Rick. I did

23:08

vote for him, by the way,

23:10

not shocking after the fact. Anyway,

23:13

back to the, you know, back

23:15

to the property rights question. I

23:17

do think that... the value of

23:19

any asset that any of us possesses

23:21

or owns is, yeah, its future

23:23

value multiplied by some

23:26

probability, which hopefully is

23:28

close to 100%, but it's

23:30

lower than 100%, and it

23:32

all depends on the security

23:34

of our property rights. And

23:36

those property rights, I think

23:38

many Bitcoiners would argue, are

23:40

sometimes called into question and

23:42

called into question more and

23:45

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24:25

on River at river.com/matrix. How

24:28

would we broadly rank asset

24:30

classes via this sort of

24:32

ownership durability model? Like, let's

24:34

say that Bitcoin was the

24:37

highest ownership durability. Let's put

24:39

that at 100% or maybe put

24:41

it at 99.5% because of sort

24:43

of, you know, the human equation

24:45

element in this and, you know,

24:47

pressures, external pressures or whatever you want

24:49

to call it. your own inability to

24:52

secure your coin, or you know, maybe

24:54

other external factors to, you know, exert

24:56

force on you to get you to

24:58

give up your coin, or whatever you

25:01

want to call it. But maybe if

25:03

you looked at gold, and probably not

25:05

from a perspective of physical security,

25:07

because we all know you can't

25:09

just amount a lot of it

25:12

and secure it and probably very

25:14

low ownership ability, but stocks,

25:16

bonds, real estate, how would you

25:18

rank those? Yeah, good question. I

25:21

like the question of real estate.

25:23

If it's your primary residence,

25:25

obviously you not only have

25:27

the law on your side, generally speaking,

25:30

but you also have the

25:32

ability to defend it potentially,

25:34

if you choose to. So

25:36

that's one. If it's real

25:38

estate that's an investment property,

25:40

now you're on shake your ground

25:42

figuratively speaking, right? I think

25:45

because, let's say in the state

25:47

of California, you know

25:49

your renters have significant

25:52

rights. It's not so easy

25:54

to evict you know deadbeat

25:56

renters. There are various

25:59

laws that that govern those

26:01

properties held for investment and

26:03

then moreover you've got the

26:05

tax system the way it

26:08

works here and I think in

26:10

most jurisdictions is you got property tax

26:12

you know how does that figure

26:14

in I think you have to

26:16

factor in tax when you're talking

26:18

about your ownership value of an

26:20

asset because it impairs the value

26:22

of the asset by the amount

26:24

of the tax over time so

26:26

I guess that's some thoughts on

26:28

real estate With

26:30

stocks and bonds and

26:32

things, you know, it's all

26:34

yeah, it's all it's all the

26:37

law It's all on paper. I

26:39

think there's an interesting Factor

26:41

to think about which is you

26:44

know, does does ethics and

26:46

honesty of management? play

26:48

a role here, you know, I

26:51

imagine owning a public stock

26:53

where the management team

26:55

is scumbags and they basically

26:58

loot the company, right? There's

27:00

lots of examples of this through

27:02

history. I think of Dennis Koslowski

27:04

and Tyco as a classic example.

27:07

You know, the way that one

27:09

worked, though, was the company was so

27:11

large that even if you stole a

27:13

lot, you know, the equity value wasn't

27:15

impaired by that much, but let me

27:17

tell you he did steal a lot.

27:20

I think it's more a risk

27:22

with private companies, you know,

27:24

smaller... Smaller earlier investments, maybe

27:26

they don't have the same

27:28

public scrutiny, you know, they

27:31

don't, they're not subject to

27:33

financial accounting, reporting requirements.

27:35

There's maybe less eyes

27:37

on the management team.

27:39

You know, you can imagine yourself

27:41

getting into a position

27:43

where management doesn't treat

27:45

investors fairly, investors have

27:47

to decide whether it's worth suing

27:49

to, you know, try to recover

27:52

value. So I think there's probably

27:54

a distinction there between public and

27:56

private investments where you know hopefully

27:58

the public investments are. are more

28:00

secure. And then I think

28:02

jurisdiction matters too. I mean,

28:05

you definitely, U.S. public company

28:07

reporting and legal standards

28:09

are still the gold standard globally.

28:12

I mean, you've got, I don't

28:14

know, 100 plus jurisdictions

28:16

where there are stock markets. And

28:19

you definitely don't have the

28:21

same legal claim in the Nigerian

28:23

stock market. I don't think that

28:25

you do in the American stock

28:27

market. Those are a few factors

28:29

that come to mind in terms of

28:32

the relative merits or

28:34

relative strength of ownership

28:36

durability in the asset class that

28:38

you just mentioned. Yeah, very

28:40

interesting way to look at it. I

28:42

want to talk about a thread you

28:44

recently put out about a

28:46

week ago. It'll be about two weeks

28:49

old by the time the show comes

28:51

out. You said dear Bitcoin Newbs. Yes,

28:53

you bought the top. You're worried about

28:56

further losses. It's okay. Welcome to Bitcoin.

28:58

A quick thread. liquidity is drying up.

29:00

This may be right in the short

29:03

term. Maybe Treasury is messing with the

29:05

TGA or moving back toward long

29:07

dated issuance as a final parting

29:09

shot to the new administration. But

29:11

inauguration is now only four or

29:13

five days away from when we're

29:15

speaking now. What break that tweet

29:17

down a little bit for me?

29:19

And what message are we starting

29:21

to get out here to noobs?

29:23

Yeah, the first message is Bitcoin

29:25

always goes down except for sometimes

29:27

it goes up right as you

29:29

know Most days of the year

29:31

or days of the cycle You're

29:34

losing money compared to

29:36

when you bought or you're

29:38

losing dollar value. Okay, you're

29:40

losing purchasing power Like it

29:42

or not. We're still in a world

29:44

where the unit of account is the

29:46

dollar or is Fiat Hopefully

29:49

that won't last forever, but

29:51

it could take a while.

29:53

So that's one factor. I

29:55

think the second factor is, yeah,

29:57

it is hard to get into.

30:00

and you buy and the price

30:02

goes down and you're staring at

30:04

losses and you're questioning

30:06

your thesis, you're questioning

30:08

your understanding of

30:11

this asset, you're questioning whether

30:13

you made the right decision,

30:15

are you too late, you know, was that

30:17

the end of the bubble, all of

30:19

these things, that go through your mind

30:22

when you have fear which is triggered

30:24

by a mark down in the value

30:26

of your asset. So, you know, we've

30:28

all been through it. Except for those

30:30

of us who were on the cipherpunk mailing

30:33

list, you know, who knew from the beginning

30:35

that the Bitcoin was the thing. The rest

30:37

of us mere mortals have these

30:39

feelings and it's totally normal and

30:42

natural. And, you know, I like

30:44

American Hotels framing, which is you're

30:46

really not a Bitcoiner until you've

30:48

been through a full cycle, right?

30:50

You've lived through a bare market.

30:52

You've tested your conviction. And you

30:54

are, yeah, you are forged in that.

30:56

in that bear and you emerge a

30:58

bright orange Bitcoiner on the other side.

31:00

So, you know, I know there are

31:03

folks out there who are new to

31:05

Bitcoin, they don't have the confidence

31:07

level yet, maybe they don't have

31:09

the knowledge yet, and I'm

31:11

just trying to help them

31:14

understand what might be going on. You

31:16

know, I think we're still in a

31:18

bull market. I also think substantial

31:20

downward corrections are normal

31:23

in bull markets. There

31:25

certainly have been in...

31:27

priorable markets. There's, you

31:29

know, Bitcoin trades with

31:31

technicals to some degree, although

31:34

not perfectly, and it's faked

31:36

people out plenty of times.

31:38

I've been watching this thing's

31:40

price for whatever, seven

31:42

plus years, and occasionally

31:44

it humiliates people,

31:46

including and especially the best

31:49

traders, which is why it's

31:51

generally a bad idea to

31:53

actively trade Bitcoin. Yeah, I

31:55

was just trying to, you

31:57

know, put a frame out there. Is

32:00

there a bearish head and shoulders

32:02

pattern forming perhaps? You know, as

32:04

it turns out, by the way,

32:06

the recent price action was in the

32:08

opposite direction, you know,

32:10

suggested that that pattern didn't complete,

32:12

who knows, maybe it will in the

32:15

future, I'm not sure, but I think

32:17

it's a good example of

32:19

take the long-term view, don't worry too

32:21

much about the short term. I think

32:24

it invites a bigger discussion

32:26

of, you know, price targets in

32:28

general, and I have... You know a range

32:30

in my mind, but I think it's

32:32

worth discussing the fact that first of

32:34

all price targets that Bitcoin

32:37

are impossible to begin with right

32:39

the range of outcomes is huge

32:41

Secondly if the pattern repeats

32:44

this four-year cycle then we're

32:46

in the the big up move year, but

32:48

the magnitude of that is unknowable

32:50

So it's like you already got

32:52

a wide potential range that window

32:55

is probably even wider and then

32:57

lastly You know, it's going

32:59

to depend on actual fundamentals

33:02

and events. Like, will there be

33:04

a strategic Bitcoin reserve? That's

33:06

probably going to drive the

33:09

price. You know, do we get a

33:11

lot more liquidity, you know, big print?

33:13

That's going to matter. Do

33:15

we experience some market shaking event

33:18

like we just had last

33:20

year with the yen carry trade unwind?

33:22

You know, do you have some sort

33:25

of black swan that that occurs? You

33:27

know, Do you get the game theory

33:29

playing out with governments competing

33:31

with each other to buy more

33:33

Bitcoin sooner and get on the

33:35

train before the next passenger? You know,

33:37

will all these happen? I have probabilities

33:40

in my head assigned to each of

33:42

them. I have no idea whether, you

33:44

know, who's right in terms of the

33:46

probability assessment. And even those

33:49

that have exactly the right rational

33:51

probabilities assigned still haven't

33:54

rolled the dice to, or... thrown the coin

33:56

to see uh... to see which side comes

33:58

up so basically we just don't know

34:00

and so the message is

34:02

hottle but also know what you

34:04

own know that big price moves

34:07

are totally normal and in

34:09

the short term it's it's

34:11

impossible to project the price

34:14

and I'll maybe add one

34:16

final thought on this topic

34:18

for the moment which is you

34:20

know when I published why

34:23

by Bitcoin I committed the

34:25

cardinal sin of every

34:28

investment which is Picking

34:30

a dollar price target and a

34:32

date, right? You're not supposed to

34:34

do both because then you can

34:36

then you can wiggle out But

34:38

this was what five and a

34:40

half years ago almost and

34:43

I had three scenarios in the

34:45

book and one scenario was

34:47

The failure scenario right it

34:49

goes to zero There we go.

34:51

Thank you for that He said

34:54

Rick's holding up his copy why

34:56

by Bitcoin. The second scenario was,

34:58

oh, it's already reached its potential,

35:01

you know, like maybe it won't

35:03

go up much or go down

35:05

much. And then the third scenario

35:07

was the success scenario. And in

35:09

the success scenario, I put

35:11

a price target of about 400K.

35:13

So price at the time of

35:15

publication was 8 or 9K, and

35:18

the target was 400K. And so

35:20

you figure, you know, what's

35:22

the multiple on that? Here

35:24

we go, Cedric, we're going

35:26

to test your math skills.

35:28

400 divided by 8. 400

35:30

divided by 8? Yeah.

35:32

We're really doing this to me?

35:34

50. 50. Yeah. 50x, okay, on

35:37

a 10-year timeline. Now, if 50x,

35:39

you know, if it's exponential or

35:41

geometric or, you know, something along

35:44

that, then you figure... Square

35:46

root of 50 is about the square root of

35:48

49, which is 7. So you might have thought,

35:50

oh, you get 7x in the first

35:52

five years and you get another 7x

35:54

in the next five years. And maybe

35:56

actually it's weighted to the front end

35:58

because when it's smaller... or you get

36:01

a higher rate of return

36:03

than when it's bigger. But

36:05

suffice to say, you know, these

36:07

are kind of the rough

36:10

numbers. So four and a half

36:12

years from now, do I

36:14

think still that will be

36:17

roughly at 400K? Yeah, that

36:19

seems pretty reasonable to

36:21

me. That's still a

36:24

cycle away. You know, we've

36:26

already made, order of magnitude

36:29

it's not too far off. So in

36:31

terms of how this thing is gone on

36:33

a long time period, I think we're

36:35

kind of in line, but it just

36:37

goes to show can one make long-term

36:40

price predictions like a 10-year? Yeah,

36:42

maybe. We'll see if it's right

36:44

or not. But can you make

36:47

short-term price predictions with any

36:49

accuracy? Yeah, my answer is no.

36:51

All right, well, there's lots on pack

36:54

here, and I'm gonna throw a few

36:56

things at you that we could kind

36:58

of riff on to one though Just

37:00

earlier you mentioned that you just kind

37:02

of You might you have a third

37:04

kid. Congratulations. I am a third I

37:06

bring it up because I'm a third

37:08

and my brothers are nine and 12

37:10

years older than me So I appreciate

37:12

both sides of that and I have

37:14

a warm spot in my heart for

37:16

the threes of the world You know

37:18

the third ones, but also I like,

37:20

you know, I think you also talked

37:22

about this on Stefan Lavera show,

37:24

but you know, like how really models

37:27

are very flawed. You know, the sort

37:29

of the historical data is how

37:31

is it going to inform future price

37:33

discovery and why would it be consistent

37:36

or how does it evolve over

37:38

time? What are the assumptions of variables

37:40

and then vetting these things out? But,

37:42

you know, if we do look

37:44

to the past a little bit. In

37:47

2016 and 2017, Bitcoin I think did

37:49

something like a 26X. I think

37:51

it went into 2017 around

37:53

a thousand. And then you

37:55

sort of did about at the

37:57

end of the year close to

37:59

18K. I should say not end of the ever peaked

38:01

around 18 case you're looking at like an 18x and

38:04

You could kind of see something along with

38:06

similar lines of like where we are now

38:09

going to something like I've seen

38:11

you know models based on that

38:13

activity of like 2 .6 million this

38:15

This cycle So I want to move

38:17

to another thread you put put

38:19

up because people are looking at this

38:21

as possibilities You know, I'm not

38:23

saying these highly probable Something I kind

38:25

of think a lot about with

38:27

Bitcoin though is where I do Wonder

38:29

because I think that you know,

38:31

not only do does the historical not

38:33

necessarily inform the future But we

38:35

have a very limited data set here.

38:37

Like we have three cycles. I

38:40

mean, we're not talking about a lot

38:42

of data points You know, we

38:44

have 16 years in But I do

38:46

think things will sort of repeat

38:48

in Bitcoin. It's sort of

38:50

this mathematical fractal like thing

38:52

and Yes, I look at the

38:54

fact and you know Bitcoin

38:56

is already 10 x 8 times

38:58

in 16 years Makes

39:00

me think maybe that will happen

39:02

again in 16 years or less

39:04

Because things kind of could get faster. It's

39:07

you know, it's it's sort of peer

39:09

-to -peer technology built already on top of

39:11

the internet It's internet of value on

39:13

top of the internet. Maybe things get

39:15

faster So I want to get to

39:17

your thread on No problem.

39:19

By the way, I'll just start, you know

39:21

riffing on some of those, you know price levels

39:24

2 .6 million I think I heard

39:26

you say, you know, if you apply

39:28

a prior a prior cycle or maybe

39:30

it was the two cycles ago multiple What

39:33

what probability do I assign to

39:36

that outcome? Pretty low Also,

39:38

by the way, I hope it doesn't happen Curious

39:41

your view on this. I do not

39:43

think the world is ready for two

39:45

million dollar Bitcoin I don't think the

39:47

world is ready for one million dollar

39:50

Bitcoin I think a move

39:52

to seven figures within the

39:54

next year or two could be

39:56

pretty disruptive So

39:59

really not hoping for that.

40:02

I think seven figures a couple

40:04

cycles from now, you know, let's

40:06

say four or five years ago,

40:08

excuse me, four or five years

40:11

from now when a lot more

40:13

infrastructure is built out, you know,

40:15

when, you know, governments have

40:18

positioned themselves appropriately,

40:20

you know, hardcore

40:22

Bitcoiners will say, keep the

40:24

governments out of it. I'm not

40:26

sure my view aligns with them.

40:29

That's okay. You know, Bitcoin accepts

40:31

all kinds. And so yeah, I

40:33

don't think it's very likely at

40:35

all that we get to seven

40:37

figures a cycle, and also I

40:39

hope it doesn't happen. And by

40:41

the way, that can be because

40:43

of the numerator or the denominator,

40:45

right? If it's because the dollar

40:47

is cratering, that's probably not

40:50

a sustainable or safe situation

40:52

for most Americans. Likewise, if

40:55

the numerator just goes ballistic

40:57

ballistic ballistic. I think that

40:59

could cause some problems if it happens

41:02

soon. So that's one. You know, two

41:04

is, you know, do I think

41:06

there's a very good chance though that

41:08

we get much deeper into the

41:11

six figures? Yes. That's entirely

41:13

possible. By the way, I'm not

41:15

going to say million dollars

41:17

is impossible in the cycle.

41:19

Anything is possible with Bitcoin.

41:21

But, and then equally you

41:23

could say, well, you know, have

41:25

we already peaked? And I think

41:28

we've peaked. You know we've already seen

41:30

the top for this cycle if

41:32

Something significant significantly

41:35

negative happens for Bitcoin,

41:38

you know going forward like you know a

41:40

deflationary recession You know

41:42

like the Fed really going nuts

41:44

and jacking up interest rates a

41:47

whole bunch more You know or some

41:49

like major I don't know geopolitical

41:51

event terrorist attack that you know,

41:54

it's proved that it was mostly

41:56

funded with Bitcoin, you know and

41:58

governments react somehow. I mean, these

42:00

are the kinds of things that I

42:02

think you'd likely have to see for

42:05

us to have, you know, to peek at

42:07

price. So I do expect upside is

42:09

my base case, but yeah,

42:11

seven figures seems pretty unlikely

42:13

to me. Yeah, I mean, I think,

42:15

well, I'm not gonna debate how likely

42:18

or unlikely it is, but what I'm

42:20

trying to get is a little bit of

42:22

the bearish side here, but I like this.

42:24

this thread you put out, because I think

42:26

it really, you know, we talked a little

42:29

bit about noobs or people earlier to

42:31

Bitcoin before, but I think maybe people have

42:33

been in Bitcoin longer, maybe four,

42:35

one, two or three cycles already, and

42:37

are thinking a lot about, you know, they've

42:39

been waiting for this year and trying to

42:41

figure out, and everyone, none of this

42:43

is financial advice, and everyone's situation is

42:46

very different. But things could play out

42:48

to, you know, and I think what

42:50

makes riding riding the bull, much more

42:52

difficult than the bear. is in the

42:54

sense the bear is one that hibernates,

42:56

it's calm, it's like static, you know

42:58

what's happening, if anything it's going sideways

43:00

or down, and you can see as

43:03

an opportunity, but like in monetary terms,

43:05

you can only lose what you put

43:07

in. So let's say you put in

43:09

$100, you could only lose $100

43:11

if you ride this thing to

43:13

zero. In Bullmark, at your $100,

43:15

if you're $100, now you're at

43:17

$1,000, if you think it's going

43:19

to $1,000 from there, and you

43:21

sell, you're going to miss out

43:23

on infinite gains, right? In a

43:25

sense, right? Or the proverbial, you're

43:27

going to miss out on infinite

43:30

gains, right? In a sense, right?

43:32

You're the principal. You know, based

43:34

on your principal. or a lot

43:36

of Bitcoiners in the Bitcoin bubble

43:38

think that, you know, 2025 is going

43:40

to play out as expected. And whether

43:42

it's, you know, 100% that expected or

43:44

50% or 0% or 10% like might

43:46

be good to have a game plan

43:48

and to think about emotionally how to

43:50

configure that game plan. So, you know,

43:52

so maybe some reasons we don't get

43:55

a very big bull market in 2025,

43:57

you know, maybe the Fed, you know,

43:59

policy store. maybe there's a policy reversal,

44:01

maybe just you know in the new

44:03

year we rotate out of you know

44:06

certain asset classes into new asset classes

44:08

at a macro level, you know, maybe

44:10

policy comes into focus and you know

44:13

maybe there's not a Bitcoin reserve and

44:15

or maybe there's a move to the

44:17

gold standard or maybe you know this

44:19

to sell the news with the inauguration

44:22

or we just don't have momentum right

44:24

and You could see lots of reasons for all

44:26

that. So, you know, what you went on

44:28

to say, are you embarrassed? You said, no,

44:30

you're definitely not. But do I expect on

44:32

an ongoing bull market well into 2025? Yes,

44:34

you do. But also thinking about when I

44:36

start pulling a few lifestyle chips off the

44:38

table. Hopefully I don't have to until, you

44:40

know, well into the cycle. But that's an

44:42

interesting way to put it, because I think

44:44

a lot of people... think about is I'll

44:47

never sell Bitcoin and maybe that's Fiat in

44:49

itself like you know it's money it's a

44:51

tool you know you can use it now

44:53

you can use it later for things you've

44:55

always wanted you know I think there's also

44:57

you know people say I'm never gonna sell

44:59

them to trade you know but when do you trade

45:01

You know and maybe when do you just

45:03

maybe upgrade your lifestyle? You know I think

45:06

a lot of people have said sell your

45:08

chairs Maybe you've turned to your wife or

45:10

your husband and said honey we're gonna sell

45:12

the chair and one day You know we

45:14

can buy 10 chairs. Well Do you ever

45:16

get to the day where you can buy

45:18

the one chair back or the two chairs?

45:20

And you know are we gonna go? Are

45:22

you gonna be saying like yeah we could

45:24

buy 10 today, but we're gonna buy a

45:27

hundred? Next cycle, you know, honey, like when

45:29

does that, you know, so how do you

45:31

think about this? Yeah, every one of

45:33

your listeners who's married is

45:35

nodding their head right now.

45:38

They've all had this

45:40

conversation. I've had it. I'm

45:42

sure you've had it. Yeah, look,

45:44

I'll speak for my own

45:46

perspective. So I had never sold

45:49

taxable Bitcoin. Fact

45:51

one. Fact two or

45:53

expectation. Do I expect... to sell

45:55

taxable Bitcoin this year for

45:58

the first time? Yes I do. You know,

46:00

why? Well, I have my

46:02

reasons. There are some lifestyle

46:04

chips, as you said, that I

46:06

would probably want to take

46:08

off the table. You know,

46:10

there's things that I've been

46:13

hodling for a while. I've

46:15

never had what I would consider

46:17

an extravagant lifestyle. I mean,

46:20

I've always been a

46:22

savor. I think Bitcoin made me

46:24

even tighter-fisted than I already was.

46:26

You can interview my wife to

46:28

find out if that's true or

46:30

not. Sad to say I think

46:32

it probably is. So yeah, I

46:35

mean if you're a Bitcoiner and

46:37

you've been in for a cycle

46:39

or two or even longer, you

46:41

may be asking yourself, you know, I've

46:43

been renting, do I want to own

46:45

a home? Maybe you're fortunate enough

46:47

to already own your home, you know,

46:49

do you want to own a second home? Or

46:51

do you want to buy that nice car

46:54

that you've been, you've been thinking

46:56

about, you've been thinking about? Do

46:58

you want to take some nice

47:00

trips? Another comment, yeah, take care

47:02

of your spouse, take care of

47:04

your significant other buyer, something nice

47:06

on occasion. Buy her a nice

47:08

experience, you can be involved, you'll

47:10

make a great memory. So I

47:12

think a lot of Bitcoiners should

47:14

be thinking in these terms. And

47:16

then of course the alternative

47:18

as well, how about just borrowing

47:21

against the coins? The market is

47:23

developing. It's still early days, it's

47:25

still pretty nascent. My base

47:27

case assumption. is that as the

47:29

current bull market plays

47:32

out and when it

47:34

reaches its end, and

47:36

you know we won't know

47:39

in advance, we never know

47:41

in advance when the

47:43

end is, but my expectation

47:46

is that the borrowing

47:49

market will not develop

47:51

enough in that time

47:54

period for me to

47:56

look at that as a

47:58

realistic alternative. to

48:00

selling some coins and it pains

48:02

me to say that because I'm

48:04

a California taxpayer and We

48:07

have the highest rates in

48:09

the nation Even higher than

48:11

New York I think it

48:13

at Max bracket, but you

48:15

know Anyway, it's painful. It's

48:18

painful to think about but

48:20

yeah, my base case assumption

48:22

is selling some coins and

48:24

I think that everyone

48:26

every Bitcoin or Bitcoin holder

48:29

who hasn't yet parted with

48:31

any coins, needs to prepare

48:33

themselves for the possibility that

48:35

they'll miss the top, they'll

48:37

miss the opportunity to sell

48:39

at their target price, whatever that

48:41

target price is, and that they'll

48:44

have to sit tight for another

48:46

four-year cycle. Oh, footnote to

48:48

that. We never know if the four-year

48:50

cycles will maintain forever. You know,

48:53

it could be that the price pattern

48:55

in the future is just different.

48:57

And so as with anything, yeah,

48:59

you got to prepare yourself for

49:02

the possibility that you get it wrong

49:04

and that your highly liquid,

49:06

most liquid asset in the

49:08

world, that's Bitcoin, proves to

49:10

be less liquid in practice

49:12

because you have to wait a lot

49:15

longer for your target price, you

49:17

know, whether that's measured in dollars

49:19

or in purchasing power terms. Well,

49:21

kind of along those lines. One,

49:23

do you think the Bitcoin market

49:25

is sort of the price in

49:27

dollar terms that's manipulated at all?

49:29

Or sort of, uh, when I say manipulate, I

49:31

don't mean this really nefarious doctor evil

49:33

way, but I mean large pools of

49:35

money trying to push it one way

49:37

or the other, or maybe large pools

49:39

of money trying to suppress it at

49:41

times or not, or any of that,

49:44

do you? Yeah. So 100 percent, I

49:46

think that the smaller the asset, any

49:48

asset, the more manipulated it

49:50

is. I also think that all assets

49:52

are manipulated to some degree.

49:54

It's just kind of a matter

49:56

of degree. I think it's harder

49:59

to manipulate. Assets as they

50:01

get bigger, I think it's easier

50:03

to manipulate assets where

50:06

the ownership concentration is

50:08

high. So where is Bitcoin today?

50:10

Well, you know, it's now a two

50:12

trillion dollar asset, roughly. That

50:15

sounds pretty big. On the

50:17

other hand, it's pretty closely

50:19

held still, right? If you believe

50:21

the chain analysis and

50:23

if you look at the UTXO set

50:26

and you look at how many coins

50:28

have never moved, Even

50:30

if you assume that a lot of

50:32

those coins are lost or gone forever,

50:34

Satoshi's coins, you know, other people's,

50:37

you know, the guy who is

50:39

still trying to dig up that

50:41

landfill in the UK, right? I

50:43

think he lost that case again.

50:45

Somebody asked me recently, like, hey,

50:48

is it over for this guy?

50:50

I'm like, no, it's never over.

50:52

Like, if the price keeps going

50:54

up by orders of magnitude, like,

50:56

they'll find a way to dig

50:59

up those coins. But if you're

51:01

wrong, what if they're not there?

51:03

I don't mean, yeah, well, they

51:05

could be wrong. Of course they

51:07

could be wrong. They might, you

51:09

know, there might be too much

51:12

decay. Bit rot, bit rot

51:14

is a thing, right? It's

51:16

not, it's not in that

51:18

landfill, maybe. Could be wrong,

51:20

yeah, exactly. Could be barking

51:23

up the wrong tree. Are

51:25

the coins there? Is the

51:27

gold in Fort Knox. And

51:29

there aren't that many assets that

51:31

are, you know, $2 trillion. I

51:33

mean, you're talking about a handful

51:36

of stocks, you're talking about gold,

51:38

you're talking about, you know, sovereign

51:40

bond issuers, a handful of those

51:42

also. But I would suspect that

51:44

for, you know, for a multi-trillion

51:47

dollar asset, it's probably still

51:49

the most manipulable just because

51:52

of the concentration of the

51:54

holder base. And, you know, that's just

51:56

kind of the normal course. You know,

51:58

it used to be a microcaps. stock

52:00

equivalent. We all know about

52:02

pump and dump schemes and micro

52:05

cap stock land and it's

52:07

graduated past that and if

52:09

it reaches its potential it'll get

52:11

bigger and bigger which will make

52:13

it less and less manipulable.

52:16

All right yeah I agree and so let's

52:18

say you know it's a market that can

52:20

be bullied around a bit and you

52:22

know I want to compare it

52:24

to micro strategy and maybe

52:26

where do you think there's... Better

52:28

or greater or more transparent price discovery and

52:30

the reason I asked that is frame it

52:32

up like this So Bitcoin we you know

52:35

we know how many coins exist We could

52:37

track them on the ledger, but we don't

52:39

know how many coins are for sale You

52:41

know they could be on an exchange and

52:43

that doesn't mean they're actually for sale There

52:45

could be fake trade spoof trades. There could

52:47

be coins that are not an exchange, but

52:49

they will come on at a certain price

52:51

People's lives change. I'll never sell these coins.

52:53

That person dies their heirs sell the coins,

52:55

their heirs sell the coins, right so you

52:57

know, right We have very little transparency, how

52:59

many coins are lost, if they're not

53:02

moving because they're lost or they're just

53:04

being held. So little. Whereas with stocks,

53:06

we have like in a weird way

53:08

a lot of transparency. We know exactly

53:10

how many are issued, we know where

53:12

they are, we know what was custody

53:14

of them, we know the short positions

53:16

very clearly. You know, and so where

53:18

is true maybe which one's scarcer? And I'm

53:20

being a little tongue-in-cheek here, I'm

53:22

not recommending anyone ever buy microstrategies

53:24

to get the qualities of Bitcoin.

53:26

And I'm not getting into the,

53:28

you know, sort of the trade

53:30

here of it, or trading, but

53:32

just what do you think? Like,

53:34

where do you think there's greater

53:36

price discovery? Considering that microstraddy is sort

53:38

of developing this like, what I think

53:40

is the greatest security ever put on

53:43

the markets, and it's a Bitcoin hovering

53:45

hovering machine. on bit coin like

53:47

a biclin bank or biclin insurance

53:49

that they're not even doing now so

53:51

uh... did you say by the way did you

53:53

say a hovering or yeah it's just like a

53:55

back ring yeah well a whobering machine it's like

53:58

michael second i got that one wrong but It's

54:00

not, you know, this is not

54:02

a grammar test or, you know,

54:04

a vocab test, basically. But fair

54:06

enough, you know, it's hoovering up

54:08

Bitcoin. I think he's doing it

54:10

in a way that he's engineering,

54:12

you know, the capital markets and

54:15

securities in a brilliant way. He's

54:17

eating up the bond market. A

54:19

lot of macro, huge institutions cannot

54:21

buy Spot Bitcoin. He's offering that.

54:23

He's leveraging to buy Bitcoin. There's

54:25

no, it's lots of interesting things.

54:27

But I'm really looking at maybe

54:29

price discovery. Just in terms of

54:32

liquidity and transparency into the assets

54:34

held and who's holding them and

54:36

who's long, who's short. So I

54:38

like, I think there's cross currents

54:40

here. It's a really interesting question.

54:42

I like this question. As you pointed

54:44

out on the one hand, we don't know how

54:47

many coins there are. At least we don't

54:49

know how many coins are lost

54:51

in the case of Bitcoin. We

54:53

think we know how many coins

54:55

micro strategy has. Of

54:58

course that's conditional on

55:00

honest reporting and accounting,

55:02

which I think is highly highly

55:04

likely, you know, whatever 99% chance

55:06

or something. Like I think

55:09

it's quite unlikely that there's

55:11

fraud. I suppose that there's

55:13

more risk of fraud with respect

55:15

to... the custody of the

55:17

coins, you know, this is

55:19

the old, this is the

55:21

Fort Knox question, is

55:24

the golden Fort Knox, are

55:26

the coins in coin base

55:28

custody? I think they

55:30

probably are. Do I have

55:32

99% certainty of that? I'm going

55:35

to say no. Do I

55:37

have 90% certainty? Perhaps, you

55:39

know, 80% probably. So I

55:41

think that's another risk with

55:44

respect to... quote-unquote

55:47

how many coins there are.

55:49

I think that your point

55:52

on transparency and holdings is

55:54

a good one. I mean

55:57

I think you know the

55:59

transparency... Share is outstanding. Yeah,

56:01

yeah, share is outstanding. I

56:04

mean, that's like, you know, the

56:06

number, the number is the number.

56:08

I'm not too worried about the

56:11

share count in the case of

56:13

micro strategy. And I'm

56:15

also, yeah, I think the surveillance

56:17

in terms of, like, is

56:19

trading in a US listed

56:22

stock, NASDAQ listed stock

56:24

now, better surveilled

56:26

than the Bitcoin

56:28

blockchain? Probably yes. So

56:30

yeah, I think you probably

56:33

have more view into price

56:35

manipulation on Microsoft. I wonder how

56:37

many shares are actually trading on

56:39

the exchange for micro strategy compared

56:42

to how many coins are trading

56:44

on exchanges or and over the

56:46

count. Oh, good question. And over

56:48

the count on both sides, and

56:50

you have exchanges on both sides.

56:53

I wonder how many like which

56:55

one has a thinner marketplace. That's

56:57

a good question. I don't know the

56:59

answer to that. I want to see

57:02

the data. It's going to be interesting,

57:04

yeah. Someone listening now, enlighten us.

57:06

Yeah, which one's going to sort

57:09

of, you know, which one's going to

57:11

be the horse? Which one's going

57:13

to be the horse? Which one's going to

57:15

be the horse? The qualities and

57:17

traits of Bitcoin is the value

57:20

proposition as the horse, but like

57:22

where does price discovery actually occur

57:24

will be interesting. Here's another, you

57:26

know, framing for that price discovery.

57:29

Another way to think about that

57:31

is... Hey, Bitcoiners, get your Sats

57:33

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58:00

the right analytical framework for

58:02

what the asset is worth?

58:05

I think that at minimum

58:07

you have to say that

58:09

right or wrong, you know,

58:11

I've got a valuation model

58:13

or framework for Bitcoin,

58:15

you have to say that right or

58:17

wrong, you know, I've got

58:19

a valuation model or

58:22

framework for Bitcoin, you have

58:24

to say that the value of

58:26

micro strategy stock is derivative of

58:29

that and is more complex than

58:31

that because you have you know the added

58:33

layer of one is a complex

58:35

capital structure getting more complex by

58:37

the day and two is yeah

58:39

what is the right valuation framework

58:42

for that business model so

58:44

I think price discovery has got

58:46

to be harder potentially a lot

58:48

harder for micro strategy stock

58:51

because you have all the

58:53

complexity of Bitcoin itself Plus

58:55

several other parameters. Yeah. And then kind

58:57

of I'm really curious, I mean, I think

58:59

you went to like a CFA holiday party. Yes,

59:01

I did. I'm kind of curious what the

59:03

temperature checks are. Not recommended, by

59:05

the way, not recommended. I wonder

59:07

if you know how Tradfai is

59:09

sort of looking at Bitcoin right

59:12

now. You know, we kind of

59:14

looked at, you know, what we

59:16

were thinking going forward, but I

59:18

wonder what they're thinking now at

59:20

100-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a- And I want to lace

59:22

in there, like, how is maybe

59:24

the changes in FAS be going

59:26

to, like, maybe change things, period,

59:28

and change their views? Yeah. So

59:30

CFA society, in case people don't

59:32

know, you know, it's a professional

59:34

certification, and you got to

59:37

take a bunch of tests,

59:39

and it's pretty hard, and,

59:41

you know, it's just a

59:43

professional certification for professional

59:45

investors. That's what it's designed to

59:48

be. And so every... City in

59:50

the world major city has its own chapter and

59:52

there's a you know There's an organization basically they

59:54

do social events. Okay. So they have

59:56

their annual Christmas party and it was

59:58

pretty well attended Los Angeles is one

1:00:00

of the bigger markets obviously because

1:00:02

it's high population and there were

1:00:04

a couple hundred people at this

1:00:06

event and I went to this thing years

1:00:08

back I think it was right after I'd

1:00:11

published the book you know and I was sort

1:00:13

of laughed out of the room right I'm

1:00:15

like testing the waters here you know I

1:00:17

got my copy of the book I'm walking

1:00:19

around oh hey you know just really having

1:00:22

random conversations hey you know where are you

1:00:24

on Bitcoin what do you think about it

1:00:26

you know And it was definitely early days

1:00:29

and it was not taken seriously. So I

1:00:31

figured out, I'll run this test again. It'd

1:00:33

been a number of years. So I went

1:00:35

and I did it and I had about

1:00:37

a dozen conversations. And what

1:00:40

was a little surprising to me was

1:00:42

how early we still are. So I

1:00:44

would say, you know, obviously everyone had

1:00:46

heard of Bitcoin. But of those dozen

1:00:48

or so conversations, I would say

1:00:50

three quarters, let's say nine people

1:00:52

had had no real... understanding of

1:00:55

it. You know, you ask a

1:00:57

few basic questions and, you

1:00:59

know, they really don't throw the

1:01:01

ball back. There's just, you know,

1:01:03

there's not a lot going on

1:01:06

intellectually or in terms of knowledge.

1:01:08

Three of the conversations, so let's

1:01:10

say a quarter of them, were

1:01:12

with people that actually had some

1:01:15

demonstrable knowledge, but I would say even

1:01:17

within those or within that

1:01:19

subset, you know, there's one guy

1:01:21

who knew a lot about the

1:01:23

price action and the correlations to

1:01:25

other assets and he really knew it

1:01:27

well as a trading sardine as we

1:01:30

like to say, right? But he didn't

1:01:32

have any sort of underlying understanding

1:01:34

of the property rights and

1:01:36

what it means to hold

1:01:38

your own keys and self-custity

1:01:41

and sovereignty and all that

1:01:43

good stuff. There was another one

1:01:45

who was a deep skeptic

1:01:47

who actually had pretty decent

1:01:49

knowledge. And he was long quote unquote,

1:01:52

I think he owned the ATF,

1:01:54

right? He wasn't owning actual Bitcoin

1:01:56

self-custiting. And he had, he liked

1:01:58

it as a trade. but he

1:02:00

had all the usual concerns about, you

1:02:02

know, is it really a supply cap,

1:02:05

a hard supply cap, like, you know,

1:02:07

will we have to have tail missions

1:02:09

in the future because transaction fees are

1:02:11

high enough, you know, quantum computing, all

1:02:14

that stuff. So, you know, sort of, I

1:02:16

guess, real, quote unquote real fud, or

1:02:18

real risks, I guess, but he was

1:02:20

still viewing it as a trade, you

1:02:22

know, and he didn't own actual coins.

1:02:24

And then the last guy owned some

1:02:26

Bitcoin, but also he had spent the

1:02:29

last. several years working at startups

1:02:31

for real-world asset

1:02:33

tokenization companies, right? It's

1:02:36

putting stocks on the

1:02:38

blockchain. You know, does

1:02:40

he understand Bitcoin? I don't

1:02:42

know. He doesn't, I'm not sure

1:02:45

he's, in my opinion, if

1:02:47

you really understand an

1:02:49

internalized Bitcoin, you either

1:02:51

work in Bitcoin or you work

1:02:54

not in blockchain, but you work

1:02:56

in a fiat job while

1:02:58

you stack Bitcoin. These are

1:03:00

the optimal strategies. Anyway, so

1:03:02

yeah, I think it's such

1:03:04

early days. I mean, if

1:03:06

the ETFs, let's say, opened

1:03:08

up the spigot for

1:03:10

wealth management, and these people,

1:03:12

you know, several of them

1:03:15

are wealth managers, they're

1:03:17

portfolio managers and analysts

1:03:19

and back office people

1:03:22

and accountants. Anyway, but

1:03:24

they're all professionals in

1:03:26

the finance space. And three

1:03:29

quarters of them basically have

1:03:31

no idea. And more than 90%

1:03:33

of them have little idea or

1:03:35

don't really understand it. Then

1:03:38

yeah, I think we're still early in

1:03:40

the learning. This means there'll be

1:03:42

lots more demand in future

1:03:45

than there is today. Some of it

1:03:47

will be via the ETF. Some of

1:03:49

it will be. for actual coins. Some

1:03:51

of it will first be for paper

1:03:54

Bitcoin and then as they learn, they'll

1:03:56

learn what it means to really hold

1:03:58

Bitcoin. And it makes me... still very

1:04:00

bullish for the future of Bitcoin

1:04:03

price that's a different you know

1:04:05

thing than network security

1:04:07

you know or self-sovereignty or how

1:04:09

many people actually hold their

1:04:11

own keys but in terms

1:04:13

of price it left me pretty darn

1:04:16

bullish for the future of Bitcoin

1:04:18

they still ain't figured it out

1:04:20

yeah even going back to what

1:04:22

we were talking about earlier with

1:04:25

sort of the 2016- 2017 trajectory

1:04:27

and why you know sometimes I

1:04:29

got so bullish I think the

1:04:31

next phase of Bitcoin adoption from

1:04:34

an economic, you know, purchasing price

1:04:36

perspective, purchasing power perspective, is

1:04:38

going to be price agnostic.

1:04:40

So I think a lot

1:04:42

of no coiners and

1:04:44

pre-cointers now, and I don't

1:04:46

say this in a derogatory way, but

1:04:49

retail, as I think this is my

1:04:51

friends, my family, myself, right? You know,

1:04:53

I'm retail, and I wish, you know,

1:04:56

retail was the whole movement, right? But...

1:04:58

I think when retail comes to Bitcoin,

1:05:00

myself included, you think about it as

1:05:03

what new money am I willing to put

1:05:05

into this, to speculate on this thing,

1:05:07

especially when you think of it before

1:05:09

you start thinking about a savings, right?

1:05:11

And if you come to it from that perspective, you're like,

1:05:13

oh, I'm going to speculate on this thing, and I'm going to

1:05:15

put some new money in it, because I'm not going to, you

1:05:17

like, you probably like the things or are committed in some way

1:05:19

that things you already have, especially if you come from the, my

1:05:21

guy told me to buy this stuff, I'm in the indexes, I'm

1:05:24

in the, my guy told me to buy this stuff, I'm in

1:05:26

the indexes, I'm in the indexes, I'm not going to get rid

1:05:28

of, I'm in the, my guy told me to buy this stuff,

1:05:30

I'm in the, I'm in the, I'm in the, I'm in the,

1:05:32

I'm in the, I'm in the, I'm in the, my guy told

1:05:34

me to buy, my guy told me to buy this, I'm in

1:05:36

the, I'm in the, I'm in the, I'm in the, I, my

1:05:38

guy told me to buy, I, I, I, I told me to

1:05:40

What are you going to put into that? $500, $1,000, $1,000, $10,000,

1:05:42

right? I mean, that's a lot of money

1:05:44

to go speculating on something.

1:05:46

But I think when, in this next

1:05:49

phase, when high net worth individuals

1:05:51

and corporations and nation states,

1:05:53

like you look at the

1:05:56

way micro strategy buys Bitcoin,

1:05:58

it's price agnostic. around maybe

1:06:00

their second cycle you move to like

1:06:02

what else can I sell or trade

1:06:05

for this better thing right you move

1:06:07

from like speculating to like these

1:06:09

are my reserves and I could

1:06:11

I fathom that a lot of

1:06:13

high-network individuals or you know entities

1:06:15

when they think about this it's

1:06:17

kind of like we have 10%

1:06:20

of our reserves in gold let's call

1:06:22

up our guy or girl at Morgan

1:06:24

Stanley and put half of that in

1:06:26

this other thing I don't care what

1:06:28

the prices Like you know is it

1:06:30

is it a hundred K is a

1:06:32

hundred fifty K like how I don't

1:06:34

care how many getting like we're making

1:06:36

the move I don't want this other

1:06:38

thing anymore I'm just you know and

1:06:41

that's why I think you get very

1:06:43

bullish When because I think that's a

1:06:45

stampede when that happens to it's

1:06:47

a race I Used to think it was a race

1:06:50

I think it definitely could

1:06:52

be a race if very deep

1:06:54

pockets, you know start really reallocating

1:06:56

quickly. I mean you mentioned governments

1:06:59

For sure, that's true. Corporates?

1:07:01

Also true. And sometimes I

1:07:03

check myself, I ask myself, like,

1:07:06

why haven't we seen more corporates

1:07:08

move in sooner? Obviously, Michael

1:07:11

gave us the playbook, Michael Saylor,

1:07:13

but of course it's hard to

1:07:15

implement because you got

1:07:17

to jump through all these hoops

1:07:19

in terms of legal and accounting

1:07:22

and, you know, informing your shareholders

1:07:24

about what you're doing

1:07:26

and, you know, potentially what he

1:07:28

did. did a tender offer, he

1:07:31

offered to take his shareholders out

1:07:33

at a premium so that those

1:07:35

didn't like the strategy, wouldn't have

1:07:38

to hang around. So, and then

1:07:40

you mention the accounting obviously, and

1:07:42

I'm no accounting expert, but I

1:07:44

will say that yes, the accounting

1:07:47

rules were especially unfavorable, and that's

1:07:49

fixed now. So, you know, part

1:07:51

of me is surprised that we

1:07:54

haven't seen corporates move sooner.

1:07:56

We definitely could see it.

1:07:58

unfold very quickly I think

1:08:01

about certain asset classes like where

1:08:03

what's the biggest asset class that

1:08:05

could get demonetized and where

1:08:07

capital could flow from and I think

1:08:10

it's real estate I mean obviously

1:08:12

the bond market is huge but

1:08:14

the real estate market globally is

1:08:16

multiples of the bond market and

1:08:19

multiples of the stock market

1:08:21

and so that's clearly the

1:08:23

biggest pool of existing capital

1:08:25

but it's also arguably the

1:08:27

least liquid liquid pool of

1:08:29

capital. And so look I definitely

1:08:32

know people I have friends who

1:08:34

are and clients as well who are

1:08:36

big real estate investors and

1:08:38

they're you know the smarter among

1:08:40

them have already allocated

1:08:42

a bunch toward Bitcoin and they

1:08:45

want to allocate more toward

1:08:47

Bitcoin and they're continuing

1:08:49

to do so over time. You know some

1:08:52

are still nervous about the cycle and

1:08:54

price. It's like... you know, let's say

1:08:56

you're sitting on a giant real

1:08:59

estate portfolio and a bond portfolio, is

1:09:01

now the time, you know, after a big

1:09:03

move, a big bull move from a low

1:09:05

of whatever, 16 to 100, you know, is

1:09:07

that when you want to be, is that when

1:09:09

you want to be allocating? Some

1:09:12

people, yes, because they recognize

1:09:14

that it's likely going a lot higher,

1:09:16

but on the other hand, there, you know, there's

1:09:18

two voices in their head. Am I too late

1:09:20

in this cycle, you know, you know, you know,

1:09:22

is now the time, you know, is now the

1:09:25

time, So, and then if it moves even faster,

1:09:27

I have to think about scenario

1:09:29

analysis and stability, like,

1:09:31

you know, will governments, including

1:09:34

the US government, let it go parabolic

1:09:37

to a million in short order? Maybe.

1:09:39

Will it be allowed to go to parabolic,

1:09:41

you know, to two million before they

1:09:43

start shutting off the on-ramps? And then

1:09:45

you get into the question of, oh,

1:09:47

okay, but, you know, if it goes

1:09:50

that far, do the on-ramps matter, because

1:09:52

people will figure out. you know that they

1:09:54

got to hold the thing that's

1:09:56

that's being constricted you know not

1:09:58

outright prohibited but You know, read the

1:10:00

writing on the wall. You know, do as

1:10:03

I do as I say, not as I

1:10:05

do in terms of the government singling.

1:10:07

So I don't know. I think there's

1:10:09

a lot of factors at play.

1:10:11

I'm very bullish. I think

1:10:14

Bitcoin continues to demonetize some

1:10:16

of these big asset classes. Could

1:10:18

it happen very rapidly? Yes. But

1:10:20

it's kind of not my base case

1:10:23

in terms of these capital flows. I

1:10:25

mean, I am sort of amazed. Let

1:10:27

me put it this way. It was

1:10:29

2017. first bought Bitcoin and I

1:10:31

thought it was happening like I thought

1:10:33

hyper Bitcoinization was happening now right

1:10:36

just like Pierre Rochard thought it

1:10:38

was happening I don't know when

1:10:40

the 2013 or whenever he got

1:10:42

involved so we always think that

1:10:44

it's happening now and so far

1:10:46

it hasn't you know could this

1:10:48

be the cycle yes it's possible

1:10:51

but I'm assuming that that's I'm

1:10:53

not assuming that's gonna play

1:10:55

out that way well that's why I

1:10:57

appreciate speaking to you and you know

1:10:59

people kind of maybe more like-minded with

1:11:01

you because it's a little bit balanced

1:11:04

I can get very you know up

1:11:06

or down about it you know like

1:11:08

I really do think where you know

1:11:10

one I want to touch on so

1:11:12

bonds versus real estate in terms

1:11:14

of where Bitcoin pulls from and

1:11:16

you know I think they're both

1:11:19

incredibly flawed now on a fiat

1:11:21

system yep But maybe they don't get

1:11:23

truly dematerialized or deflated. Maybe Bitcoin inflates

1:11:25

both. Maybe Bitcoin backs bonds and Bitcoin

1:11:28

backs real estate. What I mean by

1:11:30

that with real estate is real estate

1:11:32

developers need to put Bitcoin in their

1:11:34

maintenance reserves. They need to have Bitcoin

1:11:36

on their balance sheet. Maybe they'll be

1:11:38

able to repair and maintain their buildings.

1:11:41

Maybe they won't have to gouge their

1:11:43

renters because of the depreciation of Bitcoin.

1:11:45

Maybe they could just perform those functions

1:11:47

at a utility plus some sort of

1:11:49

like... you know margin for their services

1:11:52

and you know and I think that'd be

1:11:54

great maybe moving to like you know because like

1:11:56

being you know I'm in that situation I rent

1:11:58

and then you know we are looking to

1:12:00

buy, but you know becoming a homeowner

1:12:02

aside from you know the positives of

1:12:04

home ownership which is stability and security

1:12:06

and you could augment your house any

1:12:08

way you want and You know, different

1:12:10

things like that. You have to kind

1:12:12

of like become an expert on a

1:12:14

lot of different trades that I want

1:12:16

no interest in, you know, being an

1:12:18

electricity, a carpenter, or you have to

1:12:20

hire someone for all this and become

1:12:22

a project manager. Another thing I don't

1:12:25

want to say I want to do

1:12:27

with my time from that front. So,

1:12:29

you know, maybe there's a lot of

1:12:31

room for experts who can run housing.

1:12:33

And you know, Bitcoin can support that.

1:12:35

And bonds, I think there's a lot

1:12:37

of opportunity, I just showed CJ on

1:12:39

bonds and Leon Wankham on real estate,

1:12:41

but I think there's a lot of

1:12:43

opportunities for maybe Bitcoin to inflate the

1:12:46

bond market or support it or recapitalize

1:12:48

it. Because I think one of the

1:12:50

things that just structurally terrible bonds is

1:12:52

like you got these guaranteed fee

1:12:54

out-denominated payouts in this debasing currency. So

1:12:56

it's just not inherently like it's just

1:12:59

flawed to me. But I don't think

1:13:01

bonds and real estate and equities go

1:13:03

away and credit goes away on a

1:13:05

Bitcoin standard. But I do think all

1:13:08

of this when I get bullish on price,

1:13:10

I think I get very bearish on

1:13:12

freedom and sort of... freedom money on ungovernability.

1:13:14

I think sort of what you were getting

1:13:16

to there is maybe, you know, government lets

1:13:18

it run up to two million, everyone's so

1:13:21

pro-state, pro-government, and the government rolls up the

1:13:23

on-ramps and you can only have your Bitcoin

1:13:25

and an ETF and you can't take it

1:13:27

out and all these different things and it's

1:13:29

neutered and they gave you your number go

1:13:31

up and they took everything else away from

1:13:33

it or as much as they could. So

1:13:35

my final question to you though. is, you know, why

1:13:38

is it that you can get an

1:13:40

on secured loan at a pretty good

1:13:42

rate in the single digits and, you know,

1:13:44

you collateralize and over collateralize your Bitcoin

1:13:46

and you get a not so great,

1:13:48

you know, ish loan, you know, rate in

1:13:50

the double digits and, you know, when do

1:13:52

you think that will change? I mean, you

1:13:55

kind of talked about a little before, but

1:13:57

like, why is that? Well, that's just doesn't

1:13:59

make... any sense to me. Yeah.

1:14:01

So just a quick anecdote, I

1:14:03

was looking at buying a property

1:14:06

literally a year ago, not even a

1:14:08

year ago. I think it was 11

1:14:10

months ago. And, you know, I didn't

1:14:12

want to sell Bitcoin. And

1:14:15

so I was looking at borrowing

1:14:17

against my Bitcoin. Now at

1:14:19

that point in the market, yes, the

1:14:21

ETF. I guess it just got approved

1:14:23

and so you'd had somewhat of a

1:14:25

pump but then you had to sell

1:14:27

off afterwards so it was like you

1:14:30

know yeah price was higher than it

1:14:32

had been recently but it was it

1:14:34

didn't feel like that big a bull market.

1:14:36

And so this is before you know the

1:14:38

massive inflows to the to the ETFs really

1:14:41

pumped the pump price up to into the

1:14:43

70s I think it was. And so I

1:14:45

went to the lender there were very

1:14:47

few actual active lenders

1:14:49

in the market at that time just.

1:14:51

not even a year ago. I went to

1:14:53

I think one of the better ones and

1:14:55

I got I think according to

1:14:58

them was their institutional you know grade

1:15:00

deal offer and it wasn't too exciting

1:15:02

it was like it was I think

1:15:04

it was 10% interest rate but the

1:15:06

terms were yeah you got to post the

1:15:09

coins you know they can rug

1:15:11

you they can liquidate you down

1:15:13

I can't remember down 50% or

1:15:15

something I can't remember the magnitude

1:15:17

the price move but there was

1:15:19

like two levels of liquidation right

1:15:22

it was like you got a

1:15:24

short period where you can post

1:15:26

collateral, you know, to cure the

1:15:28

under collateralization and then be on

1:15:30

a certain point, then you're just

1:15:32

toast. Oh, and by the way, the,

1:15:35

you know, they can basically cancel

1:15:37

the loan for any reason. I

1:15:39

can't remember if it was 24

1:15:41

hours notice or 48 hours. So,

1:15:43

and then, oh, if you wanted

1:15:45

to pay an extra percentage point,

1:15:48

you know, you want to pay 11% at

1:15:50

a 10. Okay now you get a

1:15:52

one-year term, you know, you get

1:15:54

a one-year guarantee on the rate.

1:15:56

Okay, well, BFD, not too exciting.

1:15:58

Anyway, Ultimal Ed... did not get

1:16:01

comfortable with the terms of

1:16:03

that loan. Fast forward to today.

1:16:05

Is there more happening? Yes. I

1:16:07

know several other providers in the

1:16:10

market. I do think that number

1:16:12

one, banks have been excluded

1:16:14

from this market, right? This

1:16:16

is the sub-121 stuff. Well,

1:16:18

that's a huge portion of the

1:16:21

global balance sheet. Like most

1:16:23

of the global balance sheet is

1:16:25

banks, and if banks effectively

1:16:28

cannot... touch the asset, you know, they

1:16:30

have to hold a dollar of collateral

1:16:32

against the asset, you know,

1:16:34

so it's functionally not even an

1:16:36

asset from a balance sheet perspective,

1:16:38

like that whole pool of capital

1:16:41

is unavailable. And so then you reduce

1:16:43

it to what's the pool of capital

1:16:45

that understands the asset and

1:16:47

do they want to, you know, underwrite

1:16:49

loans where they're making, you know, let's

1:16:52

say a reasonable, I don't know, high

1:16:54

single digit rate of return on

1:16:56

collateralized loans. when instead they

1:16:59

could just allocate more capital of

1:17:01

Bitcoin. I'm like, I asked myself

1:17:03

the question, you know, I'm

1:17:06

an investor, broadly speaking, would I

1:17:08

like to be underwriting, you

1:17:10

know, collateralized loans to Bitcoiners

1:17:12

or would I rather just own

1:17:15

Bitcoin? Probably rather just own

1:17:17

Bitcoin. So, will this get fixed

1:17:19

over time? Yes. Do I expect it

1:17:21

to happen this cycle? No. I

1:17:23

wish it would, because I'd like

1:17:25

to use the product myself. I'm

1:17:28

definitely not holding my breath, but

1:17:30

I think it does come down

1:17:32

to. It's still that small percentage

1:17:34

of the global capital that is

1:17:36

available. And then secondly, it's a

1:17:38

much smaller circle of people that

1:17:40

understand the investment opportunity, and they

1:17:42

just want to hold the actual

1:17:44

asset itself rather than lend to

1:17:47

Bitcoiners. Well, I appreciate you setting

1:17:49

some light there. Hopefully things will

1:17:51

come to fruition this year I

1:17:53

know CJ Constantine knows to do

1:17:55

a soft launch on people's reserve

1:17:57

this spring Q1 and then hopefully

1:17:59

a hard launch in Q2, I'm

1:18:01

hopeful that they come out with

1:18:03

some great products there for Bitcoiners.

1:18:06

Dude, it's been four years since

1:18:08

we did the show and I'm

1:18:10

looking at the book here, the

1:18:13

picture on the book, you look

1:18:15

the same, maybe better. Very kind.

1:18:17

Thank you. Very kind. What are

1:18:20

you look better? You look better

1:18:22

too. I mean, I went, yeah,

1:18:24

I don't know. I think when

1:18:27

I took that photo, I guess it

1:18:29

was... Was it, I guess it

1:18:31

was just pre-covid? Yeah, because the

1:18:33

book would have been, the book

1:18:36

came out literally months before

1:18:38

COVID. Yeah, I don't know. I

1:18:40

probably, I'm probably no

1:18:42

different, or not too different from

1:18:44

where I was then. I'm probably

1:18:46

eating more keto, I'm probably eating

1:18:48

more meat, who knows? Maybe that's

1:18:51

working in my favor. Who could

1:18:53

say, you look great too? You

1:18:55

know, Bitcoiners sometimes take care of

1:18:57

themselves. What can you say? It

1:18:59

does change your time preference. I

1:19:01

think it does help you take

1:19:04

a long-term view. Most of the

1:19:06

Bitcoiners I know that have kids,

1:19:08

have lots of kids. They're thinking

1:19:10

about the long term. They're excited

1:19:12

for a bright orange future and

1:19:15

they're optimistic and they're investing

1:19:17

in themselves and their families

1:19:19

and their communities and the

1:19:21

network itself. So I think

1:19:23

it's all positive. Well, good

1:19:25

luck in LA out there

1:19:27

to carry yourself. Thanks, Cedric,

1:19:30

and you know, I hope

1:19:32

to see you again soon.

1:19:34

Hope to visit you in

1:19:36

Florida sometime. That'd be cool.

1:19:38

And yeah, you know, unfortunately

1:19:40

no place in the country is

1:19:42

truly safe from all natural disasters.

1:19:44

You know, we just had one

1:19:47

someday we'll have a big earthquake.

1:19:49

It's happened before. You know, hurricanes

1:19:51

are a thing, but we... you

1:19:54

know we plan for the future

1:19:56

and uh... and we do our

1:19:58

best and we to try to

1:20:00

help out our communities when we can

1:20:02

and I guess life goes on. Clay

1:20:04

Space, friend of the show, did a

1:20:07

lot of research on this topic and

1:20:09

he moved to Boise, Idaho to be

1:20:11

in the safest place in America from

1:20:13

a lot of different threat perspectives. The

1:20:16

book is fantastic. I recommend people go

1:20:18

out and get it. Why buy Bitcoin

1:20:20

Investing Today in the Money of Tomorrow.

1:20:22

This has been dope as always. Andy.

1:20:24

I'll leave it as always. Andy. I'll

1:20:27

leave it to you and... your audience

1:20:29

and all the Bitcoiners out

1:20:31

there and Edstrom Andrew on

1:20:33

Twitter. That's the main place you

1:20:36

can find me and yeah looking forward

1:20:38

to seeing how the rest of

1:20:40

this bull market plays out and all

1:20:42

the while learning with others and

1:20:44

helping others learn about the long-term view

1:20:47

on Bitcoin and what it's really about

1:20:49

with respect to self-custy and sovereignty and

1:20:51

everything that comes in addition to... Hopefully

1:20:54

number go up. Thanks for tuning

1:20:56

in to this episode of the Bitcoin

1:20:58

Matrix. If you enjoyed the conversation, don't

1:21:00

forget to like, subscribe, and drop a

1:21:03

comment below with any questions or thoughts

1:21:05

you may have. We'd love to

1:21:07

hear from you. You can support the

1:21:09

show by checking out our sponsors and

1:21:12

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1:21:14

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1:21:16

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1:21:18

in. Share this episodes with your friends,

1:21:21

family, or anyone curious about Bitcoin. and

1:21:23

let's keep growing this community together. Stay

1:21:25

curious, keep stacking, and I'll catch you

1:21:28

in the next one.