the case for bitcoin is it's scarce desirable property it's not a currency derivative
it's not a security it's beyond the reach of a company a nation state an agency you can hold
it and you can give it to your children or your children's children you can take custody of it
and you don't have to trust a counterparty and i think we can see especially this month
the risk of counter parties is great if you hold gold in a vault and you're russia your goal can
be seized if you have cash in a bank account in argentina this week your cash is locked up if you
had bitcoin with a counterparty like voyager or celsius they they might very well block you from
withdrawing it so uh bitcoin is desirable because it's portable it's global it's scarce and you can
you can duck a counterparty you don't trust you can transfer it to a different counterparty or
you can take personal custody and that's why it's a it's a useful asset right now and it ought to
be part of people's portfolios and i can't think of anything better michael i want to be sold on
bitcoin give us your best pitch as to why someone with no bitcoin should buy some bitcoin today
i think we're living in a very uncertain world right now and there's a lot of political
uncertainty with regard to politics trade policy labor policy manufacturing policy so if you're if
you're considering uh investing in a company the question you have to struggle with is will the
company be impacted by tariffs or trade policy or tax policy or labor policy or manufacturing policy
or a war or a famine and so that's that's the first uncertainty the second uncertainty we have
today is monetary uncertainty we see a lot of a lot of countries with their currencies collapsing
in argentina they just implemented some capital controls limiting uh the amount of u.s dollars
that companies are allowed to hold in zimbabwe their dollar rising their currency is literally
collapsed to nothing and so if you're if you're holding a currency or you're holding a company
or a bond that generates cash flows and anything other than the dollar you have a massive amount
of uncertainty and risk if we look at the last uh 12 months the euro has weakened against the
dollar the pound is weakened against the dollar the yen has weakened against the dollar the
turkish lure is weakened against the dollar in fact just about every currency in the world is
collapsing against the dollar anywhere from 10 to 20 to 30 percent and in turkey it's about 90
in 12 months so there's a lot of monetary uncertainty to go along with that political and
a commercial uncertainty we call the two things together stagflation you've got a stagnating
economy you've got an inflating money supply which means that your currencies are buying less
so if you're any individual and you're looking out over the course of a decade
and you have any capital that you wish to preserve or you're generating cash flow from your job
the question is what do you do to insulate yourself from stagflation and if you rifle
through the list of options you can invest in companies but which company if you
invest there's no company in zimbabwe that'll save you so i guess if you x out all the international
companies and you invest in uh domestic companies in the country where you live
the question then is uh do you actually know enough to handicap their performance
98 of the companies are actually not monopolies which means that they're getting eaten
by google apple amazon facebook so if you're buying a non-monopoly company it's risky for all
sorts of reasons if the company has employees is risky because of employment taxes and labor policy
and unionization if the company manufactures things and moves them across borders it's risky
because you end up with tariff barriers it may be if you manufacture great stuff in china you can't
bring it to the u.s maybe it gets it gets banned so so if you're trying to save your capital by
investing in companies you take on all sorts of uh corporate risk if you're trying to preserve
your capital by buying bonds bonds are currency derivatives the value based on cash flows so
if the dollar supply increases by 15 a year you have to discount the bond cash flows by 15
a year that means that every five years or so they're worth half as much if you're
holding the cache itself that's obviously a currency derivative it's collapsing in value
i think uh last i checked real estate in florida has escalated and priced 500 x over 90 years 500x
in a hundred years it'll escalate a thousand x which means that your your currency will lose
99.9 percent of its value against property scarce desirable property over 100 years
that's assuming about a 7 monetary inflation rate it looks like the us is running 15 to 20 percent
monetary inflation rate you can keep track of the strength of every other currency so if the great
british pound lost 13 percent against the dollar then you're up to 33 percent uh inflation rate
and of course with turkish lear you're much much harder much higher inflation rate so
a a person's got to figure out how they're going to store their life savings
and if i'm not going to hold it in a in a currency and i even if i hold it to currency not only do i
have the inflation risk i have the counter party risk the banks will actually freeze your funds
if you live outside the us banks are freezing people's funds everywhere in the world right now
in the u.s perhaps your funds won't be frozen you'll just have the currency collapse so there's
a risk with currencies there's the obvious risk with bonds there's a risk with stocks
and that takes you to property and collectible so maybe you collect rolexes a lot of people
are doing that a lot of people you can see what people are doing in this macroeconomic
environment they're buying watches they're buying uh luxury cars they're buying real estate
if you look over the past two years the money supply expanded by 40 percent
uh single-family homes in the us increase in price by 40
so it looks in the near term over two years like single-family homes are a pretty good
inflation hedge uh bitcoins perform better than single-family homes in that time frame
but now we're we're stuck with this issue of well our single-family homes and inflation
hedge over a decade and the challenge there is that as the price of of homes go
up then there's an incentive for home builders to build more homes so commodities um they have a
they have an appeal but if you can produce more of a commodity then if i increase the price by
a factor of 10 i increase the incentive to build that thing by a factor of 10.
so silver gold lumber oil homes real estate in general they're all they're all subject to
supply demand elasticity and when the demand increases the supply is going to increase that's
why a lot of people probably they actually prefer branded items controlled by monopolies i i think
they probably almost believe that ferrari and rolex are more reliable they'll keep the supply
capped like it's not likely that a random uh suburban ranch house and so you know in middle
america will have a cap supply because there's no there's no single monopoly or brand organized
brand controller to keep that supply from getting out of control so the the general strategy
when you're staring at inflation is i want to acquire scarce desirable property that i can
hold for a long period of time if i'm going to hold it for a long period of time that means i
got to be able to afford to maintain it if you buy if you buy a really nice beach house in palm beach
you find that you have a two percent of your property tax so in a decade you have
to come up with 20 of the purchase price to maintain it then you probably got to come up
with another one or two percent per year uh to pay for wear and tear hurricane insurance
electricity repainting whatever there might be so if you take four percent a year of the purchase
price that means that you have to come up with 40 of the purchase price over a decade to maintain it
bitcoin's not going to cost you 40 of its purchase price to hold it for a decade so the maintenance
cost on digital property is lower than the maintenance cost on physical property the scarcity
on a digital commodity well that's a function of the protocol and the integrity of the protocol
so if i create a product like dogecoin and i know i'm going to print more dogecoin every year right
it's not quite five percent inflation a year but it's it's an inflating supply
well then you don't have an a hard cap you've got an increasing supply it'll continue to increase
in supply forever that's an uncertainty if a small group of people can change the protocol
that's another uncertainty the reason that we don't trust stocks as money over 100 years is
because the board of directors and the ceo can change the supply of the stock
so apple might be a good company but if the ceo of apple changes the new ceo might double the supply
of the stock and so it doesn't necessarily make a good currency or a good money over the long term
so i think in short commodities are increasing in price right now oil wheat soybeans
natural gas all of those have surged in the past 12 months
you'd like to hold a commodity that you can hold forever that's that it has a supply
that is inelastic to the demand it's kind of hard to dollar cost average into a skyscraper
right you can i mean the average person can't buy 387 a month worth of a skyscraper so it doesn't
quite work you can't buy 200 a month worth worth of um the new england patriots either
so certain things that look like long-term trophy assets don't work for the for the average person
you can't stockpile oil for a decade either i i know i thought about it you know when
oil got to zero dollars a barrel there was a point when it was free so why wouldn't you just go and
get a billion dollars worth of free oil right a billion barrels of it because you would have made
a fortune if you could have but the average person can't stockpile oil you couldn't take delivery up
so at the end of the day the the the issue is most things you can buy are currency derivatives
and currency derivatives are correlated to the strength of the currency all currencies are
collapsing international currencies much faster than the united states dollar but the united
states dollar is also collapsing so i have to find property which is not correlated to currency
i need it to be scarce i need to be desirable i need to be able to afford to hold it for a decade
maybe hold it for 20 30 40 years and i want something that's globally desirable ideal and the
ideal property is something that a person more affluent than me more more intelligent than me
will want from me in a decade so the case for bitcoin is it's scarce desirable property it's
not a currency derivative it's not a security it's beyond the reach of a company a nation
state an agency you can hold it and you can give it to your children or your children's children
you can take custody of it and you don't have to trust a counterparty
and i think we can see especially this month
the risk of counterparties is great if you hold gold in a vault and you're russia your goal can
be seized if you have cash in a bank account in argentina this week your cash is locked up
if you had bitcoin with a counterparty like voyager or celsius they they might very well
block you from withdrawing it so uh bitcoin is desirable because it's portable it's global it's
scarce and you can you can duck a counterparty you don't trust you can transfer to a different
counterparty or you can take personal custody and that's why it's a it's a useful asset right now
and it ought to be part of people's portfolios and i can't think of anything better right i mean
there are other things you can own other assets you can own apple stock you can own google you can
own a building in los angeles and you can own the new england patriots well you can't right i can't
right but the things that you could own they're challenging to own they're expensive to maintain
they're not necessarily portable and universally desirable around the world
and in many cases you may not be able to take personal custody of it you know we got a phrase
not your keys not your coin and the bitcoin world but you know if you own a building in moscow
maybe you don't own the building you know if the if the mayor of moscow turns against you
and if you have a yacht in the south of france and you're russian maybe you don't own the yacht
and uh you know if you have granaries in the ukraine and a war breaks out maybe you don't own
a farm and so most things they live in a political domain or any physical domain where your ownership
rights are questionable and you have to at least discount them with some risk depending upon
your citizenship and your own location and then the type of entity you are i think bitcoin
uh it appeals because it is it is the purest form of property or ownership that the human
race has yet to divine and that's why i think it's valuable in a portfolio