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[Music]
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Bitcoin is hard capped it's not
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increasing at all so why is it going up
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to 13 million of coin well for the last
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10 years it's been appreciating 60% a
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year on average for the past four years
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60% a year okay the S&P index is
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increasing about 15% a year for the past
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four years the money supply the dollar
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is increasing somewhere between 7 and
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10% a year maybe 10% a year for the past
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four years so once you understand that
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Bitcoin is simple
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more thermodynamically sound than an
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equity portfolio Bitcoin is the world's
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first perfect monetary asset and by
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perfect I mean hard capped at some fixed
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amount every other monetary asset you
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could use as a long-term store of value
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has some leakage or inflation in it
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whether it's gold or silver or real
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estate or art or whatever it is there's
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entropy there is degradation and so the
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ideal perfect monetary asset would be
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some fixed amount of something for the
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next thousand years or 10,000 years and
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so bitcoin's the first thing like that
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even things we think that are scares
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like real estate we can make more real
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estate we make more waterfront property
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even half of Boston and half of Miami
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Beach is man-made waterfront property so
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you start with that idea of scarcity so
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why does it go up in value it goes up
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because the supply of dollars is
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increasing 7% a year for the past 100
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years and the supply of wheat currencies
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is more like 14% a year and that means
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the dollar loses 99.9% of its value over
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100 years a weak currency would lose
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99.9% of its value sometimes over 20
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years so the reason the value of scarce
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desirable stuff goes up is because it's
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difficult to manufacture with a factory
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you ever go to Hershey's Pennsylvania
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you see a fact and they spit out candy
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bars and they spit out candy bars at
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50,000 an hour in a box and you can't
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create 50,000 candy bars but they did it
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very well that's why they created a
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company so if a factory can make it the
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price is going down if a politician can
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print it or declare it the price is
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going down if technology or if a robot
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can create it if a technologist can make
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it cheaper if it's subject to Mo's law
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if the AI can spit it out you don't want
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to store your monetary wealth and
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anything that human Ingenuity or
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politics creates more of so that just
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leaves you with things like da Vinci
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paintings you like scarce sord of dead
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people you would prefer beachfront
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property in Palm Beach over Waterfront
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it's harder to create Beach than it is
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to create Waterfront and when you look
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at those things you know an acre of land
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in Miami Beach is gone up a factor of
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thousand in 100 years beachfront
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property in Palm Beach might have gone
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up 2,000 I mean these things went from
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$10,000 an acre to 20 or 30 or 40
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million an acre so the general idea is
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the currency Supply is increasing there
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are certain scarce desirable assets that
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are not increasing very fast Bitcoin is
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hard capped it's not increasing at all
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so why is it going up to 13 million of
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coin well for the last 10 years it's
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been appreciating 60% a year on average
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for the past four years 60% a year okay
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the S&P index is increasing about 15% a
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year for the past 4 years the money
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supply the dollar is increasing
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somewhere between 7 and 10% a year maybe
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10% a year for the past four years so
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once you understand that Bitcoin is
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simpler more thermodynamically
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sound than an equity portfolio the thing
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that's going up a bit faster than the
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inflation rate is a diversified
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portfolio of high quality companies like
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Tesla and Apple and Google and the like
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they can maybe outperform a couple of
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percent due to human Ingenuity and
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robots and Ai and Moors law technology
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but companies have attack surfaces so
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companies have counterparty risk the
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risk factors of companies are they might
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get sued for antitrust you know China
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doesn't like Nvidia Europe might tax
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Apple a union might unionize Amazon the
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US government might Sue Microsoft right
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if it's a really good company it's going
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to get a regulatory Onslaught and if
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it's a bad company it's going to get
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crushed by a bigger company and then
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maybe it just gets unlucky because of a
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war or famine or hurricane or bad
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weather or maybe you're located in a
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city and the tax rate triples and so
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there's a parade of horribles that cause
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you to lose money on a corporate
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investment or a financial investment or
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maybe you have the best company in the
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world and it happens to be in Venezuela
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and the government changes or you know
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the people used to have really good uh
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companies in Cuba and then castra took
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over and then all of a sudden it becomes
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illegal or the currency collapses or
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they expropriate your property you have
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the best oil company in Venezuela and
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then the government takes it or maybe
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you have a great company in Russia and
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the currency collapses like it did in 98
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or maybe you have a great company in
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Brazil and the currency collapses like
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it did about 30 years ago and so things
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that are in the real world things that
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are subject to political
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fate or weather or war or famine or
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competition or maybe you have the
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world's greatest photo company like
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Kodak oops or Xerox the world's full of
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examples of really great companies and
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maybe really great product maybe a great
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land maybe you own buildings but the
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buildings were in uh Egypt and there's a
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coup or maybe the buildings were in
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downtown Afghanistan you know in Cabo
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oops okay so what is bitcoin well it's
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not in the real world it's not a company
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there's no counterparty risk to a
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company no counterparty risk to a
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culture no counterparty risk to a
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currency no counterparty risk to a
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creditor you're stripping away
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counterparty risks and so when you strip
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away all the risk you get pure digital
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property why is it going to go up it's
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going to go up because capital is
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Flowing from the more entropic state
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from the state of anxiety and risk and
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confusion toward the more ordered State
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a less risky State think of water at the
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top of a mountain why does the water
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flow downhill accidental the waterfall
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scary turbulence but what if it stops
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it's flowing downhill because of physics
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because it's a lower energy State for
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the water to be at sea level than for
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the water to be one mile up why is money
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flowing into Bitcoin well I'm going to
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take all your money put it in random
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countries and random banks in Africa
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maybe I Spirit it with a magic spell and
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then I say okay it's Monday morning your
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money is in random Banks and random
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countries in Africa would you like to
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bring it back to the US or would you
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like to leave it there right accidental
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no you're going to bring it back to a
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place you feel comfortable Capital flows
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to security it flows to where it's
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treated the best and so money is Flowing
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capital I'm using money as a phrase for
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long-term capital it's flowing into
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Bitcoin because it's running away from
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Russia and it's running away from China
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and it's running away from Africa and
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it's running away from Venezuela and
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Cuba and it's running away from South
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America it's even running away from
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Europe if you ask the Europeans they
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very simple test do you prefer the
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digital dollar or the digital Euro 99
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to1 they prefer the dollar to the euro
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in their own country they don't want the
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Euro everybody wants the dollar
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everybody wants to live in the US
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everybody wants their property in the
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safe Apex network of the world so
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capital is flowing into Bitcoin at
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60% the traditional method of storing
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your long-term capital is the S&P index
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is 15% what's going to happen is that
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more and more capital is going to flow
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from the 15% to the 60% more capital is
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going to flow from the 20th century to
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the 21st century you got a billion
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dollars of warehouses built in 1980
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they're rusting they're falling apart
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you're going to have to rebuild them you
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want to rebuild them for another 40-year
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run or you want to put it in Bitcoin
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money flows from the past to the Future
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money flows from physical to digital
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money flows from high risk to low risk
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money flows from insecure to secure
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money flows from the East to the West
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Bitcoin simply represents the highest
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form the least disorderly least risky
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form of property rights the 60% will
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track toward the the 15 so over time the
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S&P index and Bitcoin will head toward
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each other so what do I expect I think
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Bitcoin is it gets bigger it goes from
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60% growth rate to 58 to 55 to 52 to 50
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to 35 to 33 and the traditional world
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the $150 trillion doll of traditional
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equities it's basically a 15 percenter
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or 12 to 15 percenter they'll start to
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incorporate Bitcoin maybe they'll start
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to creep up toward Bitcoin but they'll
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also struggle with all the entropic risk
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and competition and weather and War and
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famine so they're always going to
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struggle bitcoin's going to become half
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the size of equity it'll start to head
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up toward the size of equity and then
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there's $300 trillion of fixed income
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bonds preferred stocks all sorts of ETFs
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that hold fixed income instruments
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currency equivalent sovereign debt that
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yields about 5% right now 5% before tax
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maybe three or 4% after tax so as people
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get more comfortable with Bitcoin
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they're going to move money toward
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Bitcoin and then companies like micro
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strategy well we're going to create an
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equity that pulls capital from the
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equity Capital markets from the
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Magnificent 7 from the S&P it'll flow
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into micro strategy stock and then we
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will create bonds and the bonds will pay
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you twice as much or three times as much
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as the bonds in the traditional Capital
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Market so as we issue those bonds the
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capital that's in fixed income will jump
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onto a Bitcoin back Bond and the equity
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will jump onto a Bitcoin back equity and
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over time you've got $500 trillion of
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this traditional Capital think of it as
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sitting up on that Mountaintop and it
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wants to go to ground it wants to go to
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a simpler more elegant less risky less
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disordered State a lower energy state
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water goes from Steam you go from Steam
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to water and you go from water to ice
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and every time you change that phase
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enormous amount of energy gets given up
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and if you want to go the other way you
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have to put energy into it right you
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have to cook the ice to get it to be
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water you have to boil the water to get
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it to be steamed so this is all just
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economic physics or
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thermodynamics and what do I think you
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know I think over 21 years Bitcoin goes
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from 60% AR down to 20% AR and if you
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blend it it's like an average of 29% AR
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and if you cranked 29% ARR into a
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21-year model that takes you from where
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Bitcoin was which was about 55,000 a
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coin in the middle of
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2024 when I was at Bitcoin Nashville and
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I gave that speech and I gave that
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forecast Bitcoin is about 55,000 or
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60,000 and it just climbs up with some
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volatility you know it surges up it
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crashes down it surges up it crashes
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down the serpentine and it climbs to 13
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million coin in the year 2045 and and as
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it climbs it becomes a greater amount of
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the world's Capital instead of being $2
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trillion it becomes $280 trillion but
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you know the amount of wealth in the
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world goes from 900 trillion to 4,000
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trillion and there's a lot of bonds and
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there's a lot of real estate there's a
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lot of equity and it's not like Bitcoin
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eats everything it's just like Bitcoin
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goes from being a tenth of 1% of the
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world's wealth you know to being 7% of
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the world's wealth or something like
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that I'm not saying 100% of long-term
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capital becomes Bitcoin what I'm really
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saying is long-term capital is like 450
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trillion I think there's 3% entropic
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lapse there's 3% loss in that Capital
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every year either due to inflation or
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entropy whether it's a financial asset
00:12:50
or it's a physical asset and that works
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out to you know 13 to 15 trillion dollar
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a year of inefficiency and that's just
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people or institutions owning things and
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the building falls down the company
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fails right Etc if you went to China and
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you gave everybody in China the option
00:13:10
to move their money to the US not all of
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them would but a lot would enough so
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that the Chinese government makes it
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illegal to do so the reason there are
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capital controls there's a limit of
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$50,000 a year is because if people
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could they would so there's a natural
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tendency of people to want to move their
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capital
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from a less secure more chaotic more
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uncertain place maybe where their
00:13:35
property rights are less I mean remember
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in Cuba the boat people when everybody
00:13:39
wanted to leave Cuba and come to Florida
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people generally want to move from the
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less secure to the more secure place
00:13:45
they want to move their person they want
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to move their money Etc it's human
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nature I think if we come to this siphon
00:13:53
analogy well what there's just so much
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energy that gets released when you move
00:13:59
from an uncertain unsafe environment to
00:14:02
a more certain safer more sound
00:14:05
environment if I give you a stock option
00:14:07
on the dollar bill and I say Tom the
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dollar bill is zero volatility but I'm
00:14:13
going to give you an option to buy 10
00:14:15
more dollar bills for $1 for the next
00:14:18
year well what is the option worth it's
00:14:20
nothing right because the dollar is
00:14:22
going to be worth a dollar I mean a
00:14:24
stock option with no volatility is
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worthless if you had say a million
00:14:29
dollars you have a million dollar in the
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bank well with zero volatility you can
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probably get paid Sofer so you're
00:14:37
getting paid 4% to take the risk of
00:14:39
holding dollars in the bank 4% when you
00:14:42
hold that money in the S&P index with
00:14:44
the volatility of the vix or 15 you
00:14:47
might get paid 12 to 15% interest to
00:14:50
take the risk of holding one share of
00:14:53
spy the index when you hold a share of
00:14:57
Bitcoin via ibit or a Bitcoin the
00:15:00
volatility is 60 you might get paid 70%
00:15:04
80% to hold that million dollars in
00:15:07
Bitcoin and you're taking the downside
00:15:09
risk but you're getting paid that call
00:15:12
rate if it's not going to zero in the
00:15:15
next 12 months someone will pay you 200%
00:15:17
interest so your break even point is 6
00:15:20
months right it's like if I can hold it
00:15:23
for 6 months and it doesn't go to zero
00:15:25
I'm getting paid 200% I'm getting paid
00:15:27
my money back my break even point is 6
00:15:29
months so something I don't understand
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what I would say is Bitcoin is the first
00:15:35
perfect money the first monetary
00:15:37
instrument in the history of the world
00:15:39
that is a properly engineered store of
00:15:42
value the second best money is gold and
00:15:45
the second best money has a half life of
00:15:47
30 years and the first best money has a
00:15:49
half life of forever and so the first
00:15:51
best is so much better of course
00:15:54
intelligent physicists economists that
00:15:57
understand physics or capitalists that
00:16:00
understand physics are going to discover
00:16:02
that and as they discover that they're
00:16:04
going to buy it and build an industry
00:16:06
around it and recapitalize on it and
00:16:08
they're going to draw concentric circles
00:16:11
of other investors I basically Channel
00:16:14
billions of dollars into the Bitcoin
00:16:16
ecosystem Tom from investors that don't
00:16:19
understand Bitcoin they just want to do
00:16:21
convertible Arbitrage or they want to do
00:16:24
option trading there are a lot of people
00:16:26
that hate Bitcoin and they come in the
00:16:28
ecosystem system because they just want
00:16:29
to short my stock so they short my stock
00:16:32
and buy Bitcoin and create demand for
00:16:33
Bitcoin you see so those are all
00:16:36
secondary and tertiary investors they
00:16:38
have Capital they have money and they
00:16:40
want to play some game whether it's
00:16:43
short long trading fixed income people
00:16:47
that have bought my bonds and they just
00:16:49
wanted interest on the bonds and they
00:16:51
indirectly funded Bitcoin the
00:16:53
fundamental physics of this equation is
00:16:56
this is the world's first perfect money
00:17:00
that's Bitcoin the asset and Bitcoin the
00:17:03
network is the greatest Global open
00:17:07
Capital Network in the world it is free
00:17:10
digital Capital
00:17:12
247365 1,500 crypto exchanges are
00:17:16
plugged into it and it is the number one
00:17:18
source of credit you know and Capital
00:17:22
Access everywhere in the world right now
00:17:25
and so that's why it is performing
00:17:27
that's why it's attracting Capital
00:17:29
because the ETFs are SEC 40 companies
00:17:32
that makes them investment trusts and so
00:17:35
a trust company is a special vehicle
00:17:38
it's constructed to own an asset and
00:17:41
hold it in trust and not do anything
00:17:44
other than hold it so if what you wanted
00:17:46
to do was buy a bar of gold you might
00:17:48
want to buy GLD or IOU those are gold
00:17:52
trusts and they're allowed to take your
00:17:54
money and they buy gold and then the
00:17:57
assets dead money it's a dead asset just
00:18:00
well let's say a stationary asset in
00:18:02
custody and you have the shares and if
00:18:05
you were to sell your shares or redeem
00:18:07
them they have to then sell the gold and
00:18:10
give you your cash back so think of them
00:18:12
as like overnight depository Banks I
00:18:15
could have a hundred billion dollar in
00:18:17
that bank it's overnight deposits I
00:18:19
invest it in gold or soybeans or oil and
00:18:22
then when you want to redeem I sell the
00:18:24
soybeans and the oil and the gold I give
00:18:26
you back your money and I charge you
00:18:28
basis points fee every year the network
00:18:31
reward is a function of the block
00:18:33
rewards of the minors and they will
00:18:35
continue between now and the year 2140
00:18:37
and the transaction fees and the
00:18:40
transaction fee economy is an open free
00:18:43
market economy if you want your
00:18:44
transaction to be processed in the next
00:18:46
10 minutes you have to be the high
00:18:47
bidder and there's only 5,000 slots and
00:18:51
so the most important 5,000 transactions
00:18:54
in the world are going to get to the top
00:18:56
of the queue based upon the transaction
00:18:58
fee of the broadcaster this is why it's
00:19:02
important to have scarce block space
00:19:04
because as long as the block space is
00:19:06
scarce the transaction fees will Trend
00:19:09
up over time and as more people want to
00:19:13
do more transactions they will bid up
00:19:15
the transaction fees and right now
00:19:18
they're a small fraction of the rewards
00:19:20
but I think 10 years from now they'll be
00:19:22
the majority of the rewards for sure and
00:19:24
I think by 2035 and onward most of the
00:19:28
the revenue that comes from the minors
00:19:30
will be based on transaction fees and
00:19:32
transaction fees are a durable business
00:19:34
model forever I mean every real estate
00:19:37
company every financial service provider
00:19:39
they all work on transaction fees I mean
00:19:42
it's fine like I want to move a billion
00:19:44
dollars in point A to point B would I
00:19:45
pay 10 bucks of course I would would I
00:19:48
pay a 100 bucks sure if you wanted to
00:19:51
buy a billion doll building and take
00:19:54
clear title of it in Manhattan what do
00:19:57
you think the transaction fees are on
00:19:59
that right I mean you could spend a
00:20:01
million dollars to move a billion dollar
00:20:04
you could easily spend 10 basis points
00:20:06
how about the last time you sold your
00:20:08
house what's the transaction fees to
00:20:11
sell a house to someone else and how
00:20:13
long does it take by the way so when you
00:20:15
think about it that way like if I could
00:20:17
sell my house in 30 days and it was a
00:20:19
million doll house would I pay 1 2 3 4%
00:20:22
interest in fees yeah I would if I paid
00:20:25
1% fees I think that's cheap well 1%
00:20:28
fees on a million doll transfer of
00:20:31
Bitcoin that's going to support the
00:20:33
network I think bitcoin's always going
00:20:34
to be 100 times to a th times more
00:20:37
efficient to transact in than other
00:20:40
instruments but I do think there will be
00:20:42
transaction fees I think the fees will
00:20:44
support the mining Network and the
00:20:47
mining will continue forever because
00:20:48
there's always going to be stranded
00:20:51
energy and there's always going to be
00:20:53
stranded capital and so if you're
00:20:56
sitting at the edge of the grid and you
00:20:57
have a dam dam in the
00:20:59
Himalayas well you're going to want to
00:21:02
run Bitcoin mining with the dam in the
00:21:04
Himalayas because that's the highest
00:21:06
bidder for your electricity I think that
00:21:08
Bitcoin is a digital technology that
00:21:11
solves an economic problem that's worth
00:21:13
trillions of dollars I don't think it
00:21:15
cures cancer I don't think it'll stop
00:21:17
Wars people had Wars after electricity
00:21:20
and clean water I'm just pointing out
00:21:22
that Henry VII dies of gout because he
00:21:24
didn't have clean water and of all the
00:21:27
things that Henry would have liked to
00:21:29
have bought with all of his power and he
00:21:31
was the most powerful man in the UK he
00:21:35
would have liked that right this thing
00:21:37
we take for granted this thing that
00:21:39
makes us go from living 32 years to
00:21:41
living 80 years clean Capital clean
00:21:45
money digital money high frequency
00:21:48
programmable money it is a protocol for
00:21:52
prosperity and I think that if you're
00:21:54
looking for a politically sound strategy
00:21:57
the most political sound strategy is not
00:22:00
to tell people that austerity is the
00:22:02
solution or bludgeon them to death it's
00:22:05
just to introduce a new technology that
00:22:08
Delights and enriches everyone and
00:22:11
spreads like wildfire I think that the
00:22:14
US is now actually the worldwide leader
00:22:17
in digital assets I mean we're going to
00:22:19
catapult from being 25 30% of the way
00:22:23
back from the pack in the middle of the
00:22:25
pack we're going to catapult to number
00:22:27
one because most of the rest of the
00:22:29
world is fearful of innovation they're
00:22:33
fearful of getting ahead of the US so
00:22:35
even if it's good idea like all the
00:22:37
ideas I just laid out I mean a digital
00:22:40
assets framework is a great idea I think
00:22:42
that other countries would be afraid to
00:22:44
adopt a good one if they thought the US
00:22:46
was more regressive so now I think very
00:22:49
Progressive digital assets ideas will
00:22:52
get adopted by the US and I think the US
00:22:55
has the economic capability the
00:22:58
financial power the political power and
00:23:01
the technical power to commercialize all
00:23:04
those so at this point the US has gone
00:23:07
from being right in the middle and not
00:23:10
very Progressive to actually being
00:23:13
number one the greatest opportunity I do
00:23:15
think it's quite likely in the next four
00:23:17
years we'll have an incredible crypto
00:23:19
Renaissance in the US
