I call it a perpetual Bitcoin machine, so I literally have the
government buy my Bitcoin for me.
OK, So what does that mean? Go into that please.
The problem is if you're making 100 grand a year and spending
40,000 in taxes, you're trying to live on 60.
You're only stacking sacks. If you do this, you can stack
Bitcoin. I'm connecting the dots on the
show mark. What the wealthy do is they make
income and buy assets, don't pay taxes on that, and then they
have the assets pay for their life.
Are you saying this is a viable strategy for most?
People, everybody could do this and I can break it down for you.
Break it down. So.
Holy cow. Yeah, but as a bitcoiner, I
think that my life should be represented by a block of proof
of work. Why would I want to die with
zero? I should leave the proof of my
work, of my life here. And then why should my kids
start from zero? Why can't they add the next
block? The reason why you have to work
so hard is because your money doesn't.
Most people are willing to go get a side hustle or a second
job, but your money is only going to do one.
No, No, no, no, no. Most Bitcoin conversations stop
at price predictions, macro takes and just huddle.
Today we're going to take a different approach with this
conversation. And of course, I have the one,
the only, the legendary Mark Moss in the Simply Studio with
me today. And we're going to be talking
about all of that, how you should be building a personal
Bitcoin treasury for your life, build liquidity so volatility
never threatens your lifestyle and retire without killing
compounding by selling your Bitcoin Mark.
You've got that line that nails the whole thesis.
Bitcoin isn't the inheritance, the system is.
So let's start right there. First, Mark, welcome to the
Simply Studio. Happy to have you on today
brother. Yeah, Nico, super excited to be
here. I just found out I'm the first
person in the Simply studio, so I'm even more excited about
that. Christen it with you right here.
Always a pleasure sitting down with you, though.
Let's go. Absolutely man.
Dude, I, I Mark gross seeing your presentations and then
seeing your, your, the way that you make content throughout the
years, it's been so inspiring as a content creator.
But I, you, you sent me this, this, this document and I, and I
would, it blew my mind because again, I think bitcoiners are
approaching this completely wrong.
I think they're approaching this incorrectly and that was a major
part of what you're talking about.
And the line here that I love is Bitcoin isn't the inheritance,
the system is. What does that mean?
So the system is a lot of people think that Bitcoin is the end,
just buy Bitcoin and do nothing and it is the cheat code.
So it does allow you to do that. But I think a better way to do
it is to think about building a system around Bitcoin.
And so if that line specifically the inheritance, what I sent you
was an entire thesis from A-Z, how do we start and where do we
end? And we end with the inheritance.
We end with passing that down. A lot of people today and in the
Bitcoin community today think that passing down an inheritance
is a bad thing. I could hurt my kids, damage my
kids. I don't want them.
I want they need to go earn their own way, those types of
things. But as a Bitcoiner, I think that
my life should be represented by a block of proof of work.
Why would I want to die with zero?
I should leave the proof of my work, of my life here.
And then why should my kids start from zero?
Why can't they add the next block?
But the problem is that it's not the money that gets passed down
to the generations that make them bad, right?
Money just amplifies behavior. So rather than passing down
assets that the next generation will probably just sell, I need
to pass down the system that built the asset.
I need to pass down the system that uses the asset to pay for
their life and continues to compound without having to be
sold. I'm not going to sell my Bitcoin
ever. And I don't want my kids, my
great grandkids, or my great great grandkids to sell the
Bitcoin either. So what I want to pass down is
the system that created the Bitcoin.
The system that uses Bitcoin to fund their life, to do all the
things they want to do without selling it.
And let's talk about that for a second, Mark, because again, I
think the mentality of most Bitcoiners, at least my
audience, is accumulate and wait, You're basically saying,
no, no, no, that's not how you do it at all.
You should actually be focusing on cash flow, on generating cash
flow, building that stack, and then using that cash flow to
accumulate more Bitcoin. Why do you think so many
Bitcoiners get it wrong? Well, because everybody gets it
wrong, not just Bitcoiners. Bitcoiners bring the inherent
problems that everybody else has.
So here's a quick reframe for everybody that's going to make
sense. We can talk about Michael
Saylor. Your audience knows Michael
Sayler very well. Now, what Michael Sayler is
doing is what people have been doing for a long period of time.
It's not new, but it is new in the Bitcoin space.
So for example, let's just look at MicroStrategy.
He did, we've probably listened to dozens or hundreds of his
interviews, but he did one with Jordan Peterson that was pretty
good. I'm sure you saw that.
And he said, I, he said, I did 10 trips around the world in a
decade trying to grow MicroStrategy and I couldn't
grow it. I couldn't compete against
Microsoft. I had $500 million of cash,
capital of treasury. But what am I going to do?
Buy another company? Merge.
Nothing I could do could increase my revenue.
OK, so let's take that to a personal level real quick.
So what happens is for most of us, we're trying to earn money.
But what happens is hustle culture tells us we have to work
harder. We have to save harder.
Skip your coffee, work harder, save harder.
Get a side hustle, start a new business, get more skills, do
more sales, work extra hours, work overtime, work harder
trying to make more revenue. That's what Sailor tried to do.
He couldn't make more revenue. At some point we Max out.
We can only work so long. At some point we Max out.
So what Saylor decided, you know what, instead of trying to grow
more revenue and make micro strategy more profitable by
revenue, instead of that, how about if I change the name of
the company to strategy and instead I build the treasury and
not make more revenue? So he used tool, 2 tools to do
that, which all of us have at our disposal, credit and equity.
And within five years, he took micro strategy from a $3.6
billion company to 50 billion. So he was unable to grow it
chasing revenue. But when he worked on the
treasury, it went from 3 to 50. So us as individuals, we can
only work so hard. I can't increase my revenue, but
that's what everyone tries to do.
I need to work harder, I need to save harder.
But we have assets, we have equity and credit.
And if we want to go from 3 to 50, we can do the same thing if
we focus it that way. Absolutely.
And and again, I I think it's really interesting, Mark.
And why do you think that it was so difficult for a sailor to
break free? Because essentially you had a 20
years of him going sideways. Credit to him for
survivingthe.com crash, right, But 20 years and I remember in
so many of his interviews, he's basically look, I tried
everything and it just wouldn't work.
Microsoft just would out compete me.
It seemed like Bitcoin was really his breakthrough.
And then one of the things that I remember in the Danny Knowles
podcast that went pretty viral the other day, he kept saying
he's like, look, like if you're a struggling company or if you
just kind of want to get ahead and, and you don't have a
monopoly, this is a way for you to be competitive.
Right. I think what people miss, and I
just recorded with Danny, we went into that and I gave him a
more layman's term to try to answer the questions that he was
trying to get from Sailor but couldn't.
So I gave him layman terms that I think made more sense.
Sailor just talks it out at a higher level.
But anyway, back to the answer to that question.
The problem that we have, and you know this because you study
this, but the Fiat system is stealing from us, right, by
inflating the currency. So the problem is, is that the
cost of living is going up faster than your income.
So if you're trying to build wealth with income, you're
always going to be behind because you can't keep up with
the rate. OK, So let's just say with some
numbers, let's say the cost of living is going up at 10% a
year, but your pay is going up by 3 or 4% a year.
So you're falling by them, but your assets are going up by 30%
a year. So the switch that sailors
talking about to become more competitive is like you can't
increase your revenue and profit margins fast enough for the rate
of debasement that's happening. So you need to use an asset that
can outpace that. That's what he's saying.
And so for us individually, we can do the same.
Now again, Bitcoin is a cheat code.
Buy the Bitcoin, wait 10 years. You're going to have plenty of
money. You can sell it off.
You can die with 0, and that works.
But that's terrible. Why would you want to die with
0? Why would you want to live poor?
You know, modern portfolio theory tells you to save up for
40 years, sell 4%. Hopefully you die before you run
out of money. And I just, I think that's a
Fiat mindset. And So what Sailor saying is use
Bitcoin to outpace that inflation and then we can build
wealth and push that value forward.
What do you think is the actual inflation rate Mark 10?
Percent. 10% So even if you just buy, you know, an index fund S&P
5:00 and you're, you're underwater.
So why would I say 10%? So you know, I would look at the
the original and what I consider the real definition of inflation
is the money supply increase. So inflation is always a
monetary phenomenon, right? And so when you think about even
the term of inflation, if I if, what does that word even mean?
So if I inflate a balloon, what does what does that word inflate
mean? I'm increasing the volume of air
in the balloon. So inflation is increasing the
volume of money. That was the original
definition. Around the 1950s, they started
to change that to CPI or consumer price inflation.
And von Mises was very vocal in this period.
And he said, hey, hey, watch what they're doing.
They're trying to change the definition of the word.
And he warned us of that. And the reason why they want to
change it, as he told us, and now we see it today, is because
if we if we tie it to CPI price inflation, well, we don't know
why. Why do some prices go up and
some prices go down? It's certainly not the money.
And so then they can distract us.
And now today in the last presidential election cycle,
inflation was probably the hottest debated topic, but
nobody understands it because they've changed the definition.
We can't really tie back. So anyway, if it's the money
supply, then we just look at how fast is the money supply rating
going. Now, since I think 2008, it's
gone up by about 8%, but since about 2020, it's been going up
at 10% a year. That's the number.
We can also look at another way, and this is a little bit
different, but gold today is at 4600 an ounce, which is insane,
which means $1.00 represents 146 hundredth of an ounce of gold.
In 1913, when the Federal Reserve was created, it was
120th. So that means in 113 years it's
gone up by 5% a year. So you can say 5% a year, but
the problem is it's accelerating.
So it was 5% a year for 113 years.
It's about 1010% for the last five.
Man, that's first of all, again, it's absolutely crazy because
everybody who's been thinking that they've been getting a
return have not been getting a return whatsoever.
They've just been literally treading water at best.
But again, let. Me break that into math.
So at 5%, that means every 40, every 14 years, your money gets
cut in half. So if you're 25 years old, you
get out of college, you start your career and at the at the
time you're 25, you start saving, you save $1,000,000.
By the time you retire, it's worth 130 grand.
If you save 2 million, it's worth, you know, whatever 200
and 32140. So like, you understand, like
it's stealing so fast. And so that's why half of baby
boomers today have zero, and of the half that do have money is
an average of $240,000. That's wild.
Now, Mark, one of the things
that really stuck out to me in the document that you sent me is
the strategy is to build a personal Bitcoin treasury with
layer liquidity, cash for safety, cash equivalents for
stability. Bitcoin is the core engine and a
higher beta Bitcoin business or treasury companies.
You also said that part of your thesis was this treasury
thinking, which is the same frameworks that institutional
that institutions use. What do you mean by that?
And what can bitcoiners do today?
What would what would be the advice that you would give to
bitcoiners? Because I said all of this
stuff, most of my audience is like, all right, stay humble
stack sats. What would be the advice that
you would give to, you know, the everyday bitcoiner to, to
implement this thesis so that they could actually truly build
wealth? Yeah, so stay simple, stay
humble, Stack sats. Great advice, everyone.
Again, it's a cheat code. You can just buy Bitcoin and you
can outperform Wall Street private equity venture cap.
You can just do that and then you can sell it off little
chunks at a time and you probably won't run out of money
because it's compounding faster than you're selling it.
Depend on how much you're spending.
And that works. Sure.
I'm a surfer, I'm from Southern California.
Most people haven't ever gone swimming in the ocean when
there's big waves and they probably shouldn't because they
could drown. If you wanted to surf, you
wouldn't go to like pipeline in Hawaii and jump out into 30 foot
waves because you'll probably drown.
But yet there's hundreds of people in the water there every
day surfing, having fun. So the reason why I bring that
story up is that the first thing that people hear when they hear
this, especially Bitcoiners, is Mark, isn't that risky?
Are you saying that I should use debt?
Are you saying that I should use leverage?
Because what if I get liquidated?
And what if I lose my money? And Dave Ramsey said that I
should never use debt and I should never use.
I should pay off everything. I should pay off my house.
Mark, what you're saying sounds extremely risky.
Sure, like going in the ocean is extremely risky, but I could
learn how to swim. I could put on a life jacket, I
could make sure there's a lifeguard there.
I could have a jet ski follow me.
And so we can de risk the situation.
So the first thing I would say is we have to understand that
there's never an absence of risk.
There's only a difference of risk.
An easy analogy would be if I go to the gym because I want to get
in shape, it's risky. I could get in a car accident on
the way there. I could get in a fight when I'm
there. I could drop a weight on my head
when I'm there. That's risky.
I could hurt my shoulder lifting overhead, so I'm not going to go
to the gym because that's too risky.
So I stay on the couch. But then I get obesity, I get
heart disease, I get cardiovascular disease.
So there's always risk. So the risk is you either learn
how to leverage the Fiat system and use credit and equity, the
Treasury model, or you try to save your way and that's
guaranteed loss. So what do we do?
You want to break down the Treasury model.
Keep going, man, Keep going. So the treasury model is
basically just like what Saylor did and it's what the wealthy
have been doing forever. The problem is that these tools
have only been available to the 1%.
Bitcoin is the cheat code that allows all of us to do the same
thing. So what the wealthy have always
done. So let me the traditional path
that everybody's on is go to school, get the grades, save for
40 years for retirement and when they have enough money to sell,
right? So what they do is they earn,
they pay taxes, they live on whatever's left and then
hopefully save a little bit in stack a couple sets.
What the wealthy do is they make income and buy assets, don't pay
taxes on that, and then they have the assets pay for their
life. Are you saying this is a viable
strategy for most people? Everybody could do this and I
can break it down for you. Break it down.
So you have to make, this is not how to make money.
You need to figure how to make money and and get credit.
If you can't figure out how to get a credit card just in the
podcast right now. So let's say that you're making
$100,000 a year. You know how to get a credit
card, you have a home, you have a business, whatever.
OK, So step number one, whether you're 100 thousand, 100 million
or whatever. Wait, wait Mark, hold on.
Sorry to interrupt you now I'm connecting the dots.
Now I understand by the jiu jitsu, the jujitsu analogy that
you used, and it's all coming together in my mind.
What I said was a judo because judo is about like throwing your
opponent, right? So what happens is when you
attack me, you have energy moving towards me and I would
transfer your energy and throw you.
Using the very system of credit against the system itself.
It's a speculative attack. So what happens is in the game
of building wealth, the two main penalties that we have to deal
with are taxes and inflation. So taxes steal half of our
wealth and inflation robs us 10% of our wealth.
So we have to offset those two things.
So how can we minimize that? So step number one, if I make
$100,000 a year, and let's just say 40% tax rate depending on
what state you're in, whatever for easy numbers, I'm not good
on the fly with my math. So 40% tax rate.
So I make 100 grand. I pay 40,000 in taxes.
I have 60,000 left. I live off 60,000, which is
tough. And hopefully I save a couple.
I stack a couple sets. OK, So what step #1 would be
would be to access credit and I would use that credit to buy an
asset that gives me tax depreciation.
Now I use credit so there's no money out of my pocket because I
don't have any. I'm broke, I'm barely stacking
sats. So I use some credit that gets
me an asset that gets me tax depreciation.
And let's say that I get $20,000 of tax depreciation.
So now instead of ending up with 60,000 after taxes, I end up
with 80,000 after taxes. I have an extra 20,000 without
working a single extra hour without working harder, and I
just made an extra 20 grand, which gets me more sats.
So now I buy $20,000 worth of Bitcoin.
Next year I do the same. The next year I do the same when
five years without without working an extra single hour
without making an extra single dollar of stacked $100,000 in
Bitcoin. And that's not accounting for
any appreciation. All right, so now I've got a
hunt hunt out. So you're following me.
I didn't work harder, but now I've got a treasury that's being
built up. OK.
Then I can start to leverage the Treasury to get more tax
depreciation. OK.
And I can use the treasury to now pay for my living expenses.
And the goal, let me let me Fast forward to the end goal to
connect the dots and I'll stop. But the end goal that we want to
is, as I already said, is I want my earned income to be offset.
So there's no taxable amount and 100% of my earned income goes
into Bitcoin. And then I leverage my Bitcoin
to pay for my living expenses. And that's tax free because I'm
using debt to do that. Man, this is this is first of
all is blowing my mind. And again I want to I want to
talk about the judo aspect of it, right.
How is it a speculative attack on the system?
Yeah, because I'm using cheap credit, cheap Fiat credit to buy
a harder asset. So I am using both the cheap
Fiat credit system and the tax system to lever up and stack a
giant Bitcoin treasury. So I'm speculative, attacking
using credit, buying, using cheap money to buy a harder
asset. And you said?
It's exactly what sailors doing. Sailor is borrowing stretch the
iPhone moment. He's paying 11% yield today, so
he's borrowing money at 11% to buy Bitcoin.
Most of us can get money for cheaper than 11% and we can buy
Bitcoin. I could borrow against my
Bitcoin at 10% and buy more Bitcoin.
I'm getting money cheaper than sailors.
We can all do the same thing. OK.
So but what's the downside here? What's the downside risk?
The downside is if you go to the gym, you can get in a car
accident, you could drop a weight on your head, you could
hurt your shoulder when you lift weights.
The downside is if I go in the ocean, I could drowned.
So what can we do to mitigate that?
That's the that's the right question.
The question again is not, it's risky.
I shouldn't do it. The question is, but I want to
surf. So like, how do I just learn to
swim, man, right? So OK, so we want to mitigate
the risk. Now, Sailor just built up a $2
billion cash war chest. He is now has multiple levels of
security before he'll ever have to sell his Bitcoin.
So for example, most of the the debt doesn't even encumber the
Bitcoin, right? There's actually no forced
mechanism that even get him to sell.
So how could we de risk the situation?
There's no absence of risk, but we can de risk it.
So a couple things we do #1 we want to understand that
liquidity and cash is not the same thing.
I'm sure you've talked plenty about Michael Howell and you
know, Nick Body, a shout out to the Bitcoin layer.
They have a beautiful global liquidity lay model as well,
right? But how do they come up with
global liquidity? So it's a proprietary model.
So that's why they had to build their own.
And it's not just M2, it's the total amount of available credit
that could create more money. Right.
So think about this. So we don't want to think in
terms of cash. We want to think in terms of how
much liquidity do I have? That's step #1 cash on
liquidity. Cash is liquidity, but liquidity
is not cash. Copy me.
OK. So we want to understand
liquidity from 4 layers #1 I need to have my level 1
liquidity is my operating capital.
So that's my total monthly expenses in including all my
debt service, everything I have to pay monthly.
What is that and then how much of A buffer do I need?
One month, two months, three months, six months.
Now how do I come up with that number?
It depends. If I'm a sales Rep and my income
is very lumpy, I probably and and I have high expenses, I
probably want three to six months.
If I am a government contractor, I get paid every single week
like clockwork and I and my expenses are low, then maybe one
month is fine. OK, So you have to figure where
that layer one liquidity is important for you.
One to three months. OK, Level 2 liquidity is a cash
equivalents. So this would be money market
short term treasuries making 5%, it's stretch making 11%.
So then I want to have some money in liquidity layer #2 and
that could be, and This is Money I could access in less than 7
days. So if I had a margin call, if
something happened, I can get money quickly to solve that
problem. So if I'm drowning, there's a
lifeguard that can throw me around.
OK, liquidity layer 3 is then assets that I can get liquidity
against, but it might take me weeks to months.
A home that I could refinance, I could pull a home equity line
against it stocks in my brokerage account that I could
take a a margin loan against Bitcoin that I could borrow
against. And then the layer four are
assets that are non liquid. So I bought a a lot in Mexico.
I can't really get liquidity out of that.
So I need to make sure that step number one, do I know how to
swim? That's the operating step #2 do
I have a life jacket on? That's my short term liquidity
step #3 do I have a, a lifeguard watching that could throw me a
line? That's so that's the first step.
Does that make sense? Absolutely, it makes sense.
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layer, it's a, it's a layered system that allows you to
essentially not only live off your Bitcoin, but accumulate
more Bitcoin And it's also a system that allows it.
It becomes multi generational. So this is something that you
can pass on to the next generation.
They can implement this themselves.
And rather than like the traditional, you know, the
saying, which is like within two generations, you know, they've
just the money's gone. You're building a system, you're
leveraging Bitcoin in order to just, you know, create this
flywheel. That's what I'm seeing.
I call it a perpetual Bitcoin machine, so I literally have the
government buy my Bitcoin for me.
OK, So what does that mean? Go into that please.
Well, so let's say for example, I use debt, however I get it, a
credit card or I borrow against my Bitcoin and I buy Bitcoin
miners. I know you found fond of that.
I buy Bitcoin miners under Trump's one big beautiful bill.
I'm allowed to depreciate those miners 100% in year 1.
So I use credit from some source, $0.00 out of pocket.
I buy Bitcoin miners that those Bitcoin miners offset my income
100%. I pay 0 taxes.
I use the money that I was going to send to the government so
they could pay the daycare centers in in Minnesota.
But instead I don't send it to the daycare centers.
I keep it and instead I buy instead.
Instead, I buy more Bitcoin. Wait, wait, Mark, but it's just
a matter of time. I, I was thinking about this the
other day. People are literally going out,
especially here in Miami, right? People are literally buying
properties just to sit on them. The rents from those properties
don't even pay for the expenses. The property something could,
you know, something could break the property tax.
Isn't it just a matter of time before people realize what you
just said? That there's a better mechanism,
there's a better strategy they can implement, no pun intended?
There is, yes. And so obviously the world is
waking up to that. I started my career in real
estate. I still own real estate, but I
started my career in real estate.
At one point I owned over 200 doors as we call them, units
that were making rent, rental income.
In 2021, I sold the last apartment that I had to go into
Bitcoin. I still own properties like I
talked about my ranch property you've been to in Austin.
I live on a beach and. But for utility reasons.
But for rental properties, they're gone.
I'm out. I don't make rental properties
anymore. I'd rather just own the Bitcoin
for all the reasons that you said.
I do think that Bitcoiners are a little bit overly optimistic in
the demonetization of real estate in a sense, because it's
not just that we need more homes.
It's not just that Bitcoin is a better investment.
There's, there's real scarcity here.
If you want to live in Miami Beach, there's only so many
homes in Miami Beach. And so the law of scarcity
applies there. To your point, there are
potentially a lot of vacant investment homes and maybe a lot
of that does go away. So that will change a little
bit. But I think at the same time,
they're always going to be someone who wants to be downtown
Manhattan, somebody wants to be lakefront in Lake Austin.
And so the scarcity is still going to be there.
You can't get around that. No, absolutely.
I mean, I completely agree on on the scarcity aspect of it.
But I do also see it like as if you are a property owner and you
own multiple properties and now there's a superior investment of
which you don't have to pay property taxes, you don't have
to pay maintenance on. And I think.
But but here's what's missing, and this is what I want to fill
in the blank for. Here's what's missing.
If I'm that real estate guy. And to your point, I have to pay
the maintenance and I have to deal with all the issues, right?
But at least it provides me some cash flow.
Sure, Bitcoin should appreciate faster if I, if I believe that I
do, obviously, but not everybody is.
I believe it will appreciate faster, but it doesn't provide
cash flow and I need money to pay my bills every month.
And this is where bitcoiners lose this they, they, when they,
when they, they don't understand what sailors doing.
They don't understand where how big digital credit is.
They can't even wrap their head around it because they don't
really understand the, the, the real world.
And the real world is you're 78 years old, you need money like
actual dollars every month to buy your freaking medication,
man. You got to pay your electricity
bill. People need income.
And so digital credit solves income.
Bitcoin doesn't. Bitcoin is an asset and Warren
Buffett would say it's a non productive asset.
So the first thing is I'm getting deeper into the
treasury. I have to understand what assets
do I own? And then there's four categories
I'd put those assets in. And Bitcoin is a non productive
asset. That's why, just like gold, it's
not a bad thing. O how do I take a nonproductive
asset when I need income? So I'll buy the rental property.
It's not going to appreciate as much, but it gives me the
income. But what I'm saying is I can
turn Bitcoin into an income asset.
I can take a non productive asset like Bitcoin and turn it
into a productive asset to replace real estate by
harvesting the appreciation through debt leverage, not by
selling the asset. Now if, if real estate investors
can catch on to that, like I used to be a real estate
investor, then they go, oh, so Bitcoin doesn't have tenants,
there is no maintenance, It appreciates faster and I can get
income from it, tax free income at that, because income from
properties is taxed. So now no, no maintenance, no
headaches, I can move it wherever I want, it appreciates
faster and I get tax free income.
I'm all in, Mark. How complicated is what you
said? Is anybody?
Borrowing at your Bitcoin? I mean, pretty Dang easy.
It's just as simple as that. It's borrowing against your
Bitcoin, being very careful with the the margin aspects of it.
It's just that simple. Yeah, and and, and Nico, there's
always risk. How do I manage the risk?
If I borrow 10% LTV against my Bitcoin, what is the probability
I get liquidated? Very low.
Like single digits? Low.
Very low because you can always just put on more put put up more
collateral. But at at 10%, what's the odds
I'm going to even give you a collateral call because,
because. Extremely.
I mean unless unless Bitcoin goes to 10K it's it's like.
Extremely low and what is the odds of that?
Minimal at this point. Single digit, yeah.
OK, So what about? So if I borrow?
But where? But where?
Are you going to get 10% LTV? I would no.
If I had $100,000 in Bitcoin, I'd borrow 10 grand.
That's OK. Gotcha, Gotcha On the borrowing
thing, I understand I. Loan to value, I understand.
So I'm saying if I only borrowed, if I set a liquidity
rule, I'm never going to borrow more than 10% LTV.
The chance that I get a margin call is like single digits, of
course. And if I'm still worried about
it, then I make sure liquidity layer two and three are built up
enough to cover it. I have a home equity line.
If I do get a margin call, I'll just pull a little equity out of
my home liquidity so we can de risk this thing now if I borrow,
if I borrow. And so here's how it works.
What do you what do you think and.
I'm connecting the dots on the show, Mark.
Okay, now okay, this is it. Now understand when you're
saying, okay, so the the judo analogy makes sense.
Now the perpetual Bitcoin machine.
I think I finished that. I think it let me just finish.
That it's I'm having explosions in my brain, Mark let me finish
the. The perpetual Bitcoin machine.
OK, OK. So what I've done is I've used
credit to buy Bitcoin miners. The Bitcoin miners offset my
income, so I pay no taxes. The money that was going to go
to fund the daycare centers now, and I get to keep and I get to
buy Bitcoin with it. So the government funded my
Bitcoin next year, next year, next year, I borrow against the
newly mined Bitcoin and the Bitcoin I bought to offset my
income again. Instead of going to the daycare
centers, I get to buy more Bitcoin again, and every single
year than the Bitcoin. I say that the Bitcoin I
acquired because I saved taxes, plus the newly mined Bitcoin I
bought for the tax depreciation is perpetually funding itself.
And and what? Do you?
And it's and it's all with $0.00 out of my pocket.
No extra hours worked, not working harder, having my money
work harder. What I say, Nico, the reason why
you have to work so hard is because your money doesn't.
Most people are willing to go get a side hustle or a second
job, but your money's only going to do one.
No, no, no, no, no, no. My money's going to do 3 or 4
jobs. I'm going to do a job.
Why do you think most bitcoiners think like savers when Bitcoin
actually rewards the treasury thinking?
It's not just Bitcoiners. It's because we've all been
taught to go to school, get good grades, save for 40 years and
then hopefully one day spend it down.
Bitcoiners bring that lens in. But because now Bitcoin is a
superior asset, I can just buy Bitcoin and do nothing and I can
outperform everybody else. So Bitcoin allows that allows us
to actually be the saver. But the problem is if you're
making 100 grand a year and spending 40,000 in taxes, you're
trying to live on 60, you're only stacking sats.
If you do this, you can stack Bitcoin.
Absolutely now. Which would you rather stack,
stats or Bitcoin? Stack Bitcoin, man, I just I'm
I'm I'm digesting. And, and if I might throw out,
we might have a moral obligation to stop funding daycare centers.
I mean, that was crazy, wasn't it?
That was crazy. That was crazy.
We might have a moral obligation to stop doing that.
Why do you think Mark they why do you think it took a 23 year
old kid with a camera with, you know, an everyday camera and an
everyday, you know, like lapel Mike for him to uncover that
amount of fraud where legacy media, literally some legacy
media even denied it. They tried to discredit they're.
Trying to cover it up. Why?
Why do you think like where are we in the movie?
Like I'm seeing like from my from my perspective, I'm seeing
like this feels like end of empire type of days.
Yeah, I mean, not to keep, I guess I kept going back to that.
I didn't want to go down the rabbit hole, but to answer the
question, I think to your point, end of empire days, I think and
I maybe I'm hopefully thinking this is sort of the straw that
breaks the camel's back. I think, I hope obviously legacy
media has a million reasons why they wouldn't want to cover it.
They need to protect that they're not interested.
They only want to talk about the the current thing.
They're really trying to use propaganda more than actual news
journalism. There's a.
Has it? Has it always been that way?
No, certainly not. Certainly not I.
Think. Or was it social media that
uncovered that the legacy media isn't actually in the business
of telling the news? No, I, I, I would think that
back in. OK.
So first of all, I think there used to be real journalists who
would really go break stories. I do.
There's a show on Netflix or it's on, it's on Apple TV.
My wife's been getting me to watch and it's with Reese, Reese
Witherspoon. And what's her name from friends
anyway? But they're like morning show
hosts or whatever. And the Reese Witherspoon
character is like, she's like real abrasive.
And I have to go for the truth. And and they're like, whoa, slow
down. The network doesn't want that.
She's like, I'm only going for the truth.
What truth? I can say nice truth.
I can say bad truth. Why does the truth have to be
antagonistic? Like when I watch her character,
I'm like, I understand that's true, but like you just don't
know that's mean. Why would you say that?
You could say truth here too, right?
Like, So what story are you choosing?
I guess is what I'm trying to say.
So I do think that people used to do a lot of undercover
journalism and used to expose things like that.
Today, they're certainly not well or maybe they're trying to
expose things that don't need to be exposed.
But but today we are the news, right?
It's been democratized. And I think that people are
willing to you and I Americans, we're willing to take a lot of
abuse and punishment. But man, when you, you, you saw
Mike Green put out that whole article about the new poverty
line is 140,000, which got a big uproar, right?
And one of the reasons why 140 is a new poverty line is because
it takes 2 incomes to get there. Two incomes then require what
second car and daycare The single biggest, the single
biggest expense 30. I believe what he said in the
report fact checked me it was 32,000 a year for daycare.
So the reason why the American people are in the poor house 140
is the new poverty line is because daycare has become the
single biggest expense they have to deal with.
And then we see that the daycare fraud is going to illegal
immigrants and funding overseas operations.
That is like the ultimate kick in the nuts.
It it totally is and I mean it, it makes you because you know,
you bust your ass, you pay at least half your income.
Again, I'm averaging here to the government.
The government has the answer to no one right.
If you don't pay your taxes, you're going to jail, right.
Like you don't want to mess with the IRS, at least if if you live
in the States and you know, but there's no accountability for
them, right? Like they can just recklessly
spend, they can recklessly debase.
Elon tried to get in in there in the beginning of the year.
They literally ran him out of town.
It's an unfixable system, which is why what you're saying
regarding the judo aspect of it resonates with me so much,
right? Because again, you're using
pre-existing tools that are already there.
You're leveraging them to not only grow your stack, right?
Not sell your Bitcoin, but you're actually speculatively
attacking the system itself at simultaneously.
Do you think that Michael Saylor was the first one that figured
this out? And what do you think Bitcoiners
misunderstand about what Sailors doing?
Could you kind of oversimplify it?
Oversimplify it? Could you walk us through what
Sailor is doing with the Treasury strategy?
Because what I got, and I love Danny Knowles, I love what
Bitcoin did, amazing content. But I heard him.
I heard Sailor get frustrated, but I heard the logic that he
was using and it made sense. It made sense what he was
talking about. So could you talk about that?
Like what did Sailor discover? I would love to talk about that.
So first of all, Sailor's not the first person that's done
this. The the big story that I usually
reference is Hugo Stenez from Weimar, Republic of Germany.
And when they were going through hyperinflation, he used the
failing currency to go buy hard assets.
He bought factories, he bought all types of hard assets, and he
became the richest man in Germany.
I'm sure you've probably heard of Hugo Stenez.
That was a speculative attack. Pierre Richard wrote about
speculative attack, I think in 2014.
So Sailor didn't invent it, obviously, but what he did
invent was creating a Bitcoin treasury company.
So using Bitcoin and a treasury to build asset bases.
Now, the wealthy have been using assets for tax depreciation, to
lower taxable income and to fund their life with debt for a long
time. But it's Bitcoin that allows you
and I to do that because typically to do it with
traditional assets like real estate, we'd have to be
billionaires because because with real estate, you only
depreciate over 27 1/2 years and you and so you're only getting
little bits of depreciation. So to get enough depreciation to
write off an income of 100 or 200 grand, you need a lot.
But Bitcoin allows us to do it very quickly.
That's why it's the cheat code. Now back to sailor, I think.
What if I summarize one big statement?
Bitcoiners. Bitcoiners are very smart, and
they very quickly caught on to the Fiat monetary system, the
leverage in the system. They understand in what
inflation really is, how it affects us.
They understand that sound money can be, can fix.
A lot of this societal pressures are breaking down because they
understand that. What they don't understand is,
is the financial system. They don't understand security
analysis, They don't understand credit markets.
They don't understand that. And So what happens is they
bring a Bitcoin lens in and try to understand what he's doing in
the credit and the equity markets.
And then they can't comprehend it and they try to bring the
Stay Humble Stack SAT's into that and it just doesn't work.
It's like you're speaking in a different language.
But I can, I can break it down And, and very simply, So what
most bitcoiners don't understand, again, I made the
comment here earlier, what a 70 year old person needs is income.
They got to pay their bills. They can't huddle Bitcoin, they
can't they, they're they're not going to be alive long enough to
have Bitcoin compound. They got to pay their friggin
bills, man. So most of the world needs
income. There's a there's a massive
demand for yield. The fixed income markets are the
largest markets in the world. They dwarf commodity and equity
markets. So you you know that.
OK, so most Bitcoiners don't even understand what that means.
Why would you need income? Just stack stats, bro.
Dude, most people can't. OK, so most Bitcoiners can't
even get past that. So if we can agree on that, the
biggest markets in the world are fixed income and Bitcoin doesn't
change that. A lot of times bitcoiners think
that credit goes away. There's two types of people in
the world. There's creators and there's
consumers. Creators will always create more
than they consume. That's why Warren Buffett stayed
working active until he was 93 years old.
He just creates. All billionaires are still
working today, not because they don't have enough money, because
they're creators. So there's always going to be
people who have created more than they've consumed and want
yield. And there's always going to be
people that need to borrow money.
So there's always going to be people that want to borrow, hey,
I need to expand my factory. I need to build this new plant.
There's always going to be a demand for borrowing and there's
always going to be yield available that Bitcoin doesn't
change that. Now, we would lend from our
savings, not Fiat money that we print from thin air.
Bitcoin changes that, right? So can we agree on that?
OK, so #1 we've established the biggest market in the world is
the fixed income market. There's always going to be a
demand for yield. Now currently the bond market
has created yield instruments on a dollar standard.
What sailors doing is creating yield products on a Bitcoin
standard. Now where where I believe some
of the misunderstanding between Danny and and Sayler were, was
what what? What Danny was asking I believe
was 2 questions #1 when the if or when the M NAV drops below 1,
why would it ever come back? I think that was his main
question he was trying to get to and #2 why why?
Why does there need to be more than one micro strategy?
Like how many can there really be?
Are those the two questions? Those are those are the two
questions. I love the answer to the second
one, which is like, look like if you're in Brazil, you don't have
access to the American markets, right?
That's that's like so small that's barely scratching the
surface. So let me answer those two
questions. I had it OK anyway, but let me.
Let me ask, let me ask you a, a question before that Mark again.
I've been in this industry for 10 years.
I would like to think that I know what I'm doing, right.
I have I have a business. I employ 15 people.
Why is it so difficult for me to understand this?
Yeah, because you've never 2 reasons.
Number one, you've been living life on a pre programmed track
that everybody goes down because since you were a little kid in
school, they asked you what do you want to be when you grow up,
not what do you want to. Do I dropped out of school and I
became an entrepreneur at 22 years old?
Yeah. So, so that, and then we were
just taught to just save, save, save and then retire one day.
And then the second reason is most of us don't have people
around us that we can see doing something different.
So the story of the four minute mile is that humans thought it
was impossible to run a 4 minute mile.
But as soon as one person did it in a short period of time, then
multiple people started doing it.
So the very fact that someone else could do it, the very fact
that I can see someone else do it, then all of a sudden makes
me believe I can do it. And most people just don't know
billionaires and you just don't know how they build wealth.
And so you just haven't seen it. Your parents are not good.
I don't know your parent well. I just met you wrong.
But like my my parents, most of our parents are not good role
models for this. If you want to get in shape, you
talk to somebody who's in good shape.
And if you want to build wealth, you talk to someone who build
wealth. And most of our parents are not
that. So the model that's been set for
us, the education system that trained us and what we've seen
on TV, in the news, etcetera, has not trained us and we don't
have access to the billionaires. Really where my mind started
shifting on this was about 10 years ago, but where it really
got kicked into gear was in 2021.
I left California, went to Puerto Rico, partly because
California was locked down. I was tired of being locked in.
My own part Number 2 was the tax situation.
And I was speaking a bunch of conferences and I spoke at
several conferences with Robert Kiyosaki, you know, on the same
stage, and he would call me out from stage.
These guys like Peter Schiff and Mark Moss, they got to move to
Puerto Rico to get out of taxes. Doesn't, don't, don't they know
that we don't pay taxes? Donald Trump doesn't pay taxes.
Robert Kiyosaki doesn't. And and I've got to know Robert
Kiyosaki. Our friends are now.
And I'm like at dinner, I'm like, OK, Robert, break it down,
dude. Like break it down for me.
Right, because they take loans against their assets at very low
interest. They use depreciation to write
off against the income. OK, but now, now that this is
getting out of the bag, wait, no, let's take it back to the
let's just go back to to to the Danny and say going back to the
so the two key questions so do. You want to answer the M NAV 1st
and then we'll get to why there can be 10,000 or 10 million of
these. Companies, yeah.
So let's talk about the M NAV first.
Let's talk about the M NAV first.
So first of all, there's a gross misunderstanding of the global
financial system and different types of businesses and funds
and all of these things. And so to ask that question
shows that you don't, I want to be careful.
I love Danny. I just ripped with Danny.
We, we talked about this. Most people that ask that
question don't really understand what they're asking.
So 2 reasons why. First of all, why would it trade
for less than 1 * M NAV? So there's a truth.
If if you and I both buy one Bitcoin and Bitcoin goes up 5X,
who makes more money? The person the same.
We just, yeah, the same. Why?
Because we both bought one
Bitcoin. Yeah, right.
OK. If I borrowed 50% of my Bitcoin
value and bought more Bitcoin and you didn't, and Bitcoin went
up 5X, we made more money. The person who borrowed the
leverage. Yeah, of course.
So we can establish that if I use leverage, I will outperform
people who don't. Yes.
OK, So what's Sailor doing? Using.
Leverage right? So his goal is to get a 30%
leverage ratio, right? So he has his charts, he shows
if Bitcoin averages a 30% ARR and I do a 30% ratio of leverage
and I pay out no more than 10% coupon yield, we'll do a 2.8
times factor. It's math.
It's friggin math, bro. So if I, if I lever my assets up
30% and Bitcoin goes up 30% and I don't pay more than 10% on the
debt, I make a 3X return. So what he's doing is he's
levering the position. That's why it will outperform
Bitcoin. Now, why will the trade for more
than one times? Then we have to also understand
the actual financial system. So there are what's called close
in funds. close in funds are sort of like ETFs.
They're like wrappers, right? They buy assets.
And then what I can do is I can buy into that basket of an ETFI
can buy into that, that fund. There's about, there's about
1000 funds in the United States that are sort of like these
business Development Fund corporations or, or some sort of
funds right now. Why, why is there 1000?
Why isn't there just one? I don't understand that.
Why do we need more than one fund?
I so why do we need more than one treasury company?
We're going to come back to that.
But just that even the line of thinking, why would we need more
than one fund? Why do we need 10,000 ETFs,
Nico? Like, why isn't one ETF And
like, OK, we'll come back. Why do we need 32 flavors of ice
cream? Can't we just have vanilla?
Actually? Why do we need 30 flavors of
vanilla, old fashioned vanilla, vanilla bean?
Like how many flavors of vanilla?
Like, OK, we'll come back to that.
But so there's all these types of funds.
Now we have ETFSETFS are like a wrapper where I put a dollar in,
they buy a dollar of Bitcoin. Now that that ETF should trade
below 1 times NAV because I'm actually losing money because
they're taking fees, they're doing no operations to grow
that. OK.
Now I don't think that's a good a parallel.
A better parallel to compare a Bitcoin treasury company would
be a bank is a better parallel. It's not the best, I'll tell you
what the best is, but it's it's better.
So what a bank does is a bank receives deposits, it pays you a
yield for the deposits, it invests the money and it makes
the difference. Sort of like what sailors doing,
right? So he takes the money, he pays
you a yield and he invests the money into Bitcoin.
So sort of like a bank. Now, a bank would typically
trade between 1.5 to 2 point fives in NAV Why?
Because they have an operating business that can apply leverage
depending on who the management team is and their connections
and JP Morgan, whatever, it's going to trade at a higher
premium. If it's a bad bank, a local
community bank that can't really do much, it'll trade a lower
premium. But it's always going to trade 1
1/2 to 2 1/2 times. So why would it ever trade for
more than one times? Because that's what these types
of businesses do. But a better, a better parallel
would be like another asset heavy type of business, like a
like a gold mining company. So gold mining company has gold
in the ground, it's assets, right?
But it's an operating business that's bringing the gold out of
the ground. But it gets a better premium
because it's got gold and gold's going to be worth more in the
future. So because gold will be worth
more in the future, I'm going to give it a 3 1/2 times.
Well, they, they don't trade it at MNAB.
They trade at a book value. It's the same thing.
So when I look, when I understand the world and I go,
well, what, what's a parallel? Well, I understand an asset
heavy business that uses the assets of the business and
provides some sort of operational leverage should
trade somewhere between a 2 1/2 to a 3 1/2 times.
So I believe that Bitcoin is better than gold.
I believe it's going to go up more than gold.
So if a gold company like Barrick or Newmont, for example,
if they're trading at 3 1/2 times, then certainly a Bitcoin
company should trade at 3 1/2 times, if not more.
When I did an interview with Saylor, we we went down this
path. He said that he thinks the
minimum should be a 3X, but then why does it go down to 1X or
below? Because it's a frigging market,
man. Like like an ETF or a closed end
fund should always trade a little bit below NAV because of
the fees. But sometimes they trade way
over because it's a market. And then people can arbitrage
the spread and they can do things like that.
So. So first number one, I would
just understand 1. So to recap #1 because there's
leverage that will outperform Bitcoin, that's just math #2
because of the operating company, the better the company,
the better the team, the more I believe in the safety and the
teams ability to use intelligent leverage without blowing up, I
get a premium. And if I compare it to a bank 2
X 2 1/2 X or a gold company three 3 1/2 X, that's where it
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Leaden. Dot IO today so and as a
Bitcoiner advocate for self custody, Mark, you've known me a
long time now, right? I'm, you know, cookie cutter
Bitcoin right? Stay humble stack stats put into
self custody. I completely agree on the
leverage aspect. Why we saw this before sailors
been in this position. This is what people forget about
this cycle 2021-2022. What happened to micro strategy?
It got absolutely hammered right?
It reached an all time high I think.
It was down to .8, right? Yeah, it it it got hammered, the
stock got absolutely hammered. And then what happened?
What happened in this previous cycle?
It 30 XD. So I 100% agree with the
leverage aspect. I do think that once the price
starts picking up again, a micro strategy will outperform Bitcoin
because of the reasons that you laid out.
So that's topic one, that's question one, which is the M NAV
aspect. The topic too, which is what
Danny was asking, which is why are there so many Treasury
companies? Thousands or 10s of.
Thousands. Why is that?
Why is that necessary? So I do want to just say real
quickly, 2 two things. I had dinner with Sailor when I
was in Prague a few months ago. Awesome con conference, by the
way, Bitcoin Prague, go there if you can.
And two things that he said there.
So 1 he said that. People to well.
Let me answer the bitcoiner for it, he said.
I've never targeted bitcoiners. I I've never wanted Bitcoiners
to buy this. I've never received money from
bitcoiners as far as I know. And so let me ask you a question
first. BlackRock has now started saying
they may recommend Bitcoin for portfolios we see like big, big
names like Paul Tudor Jones talking about taking small
allocations. What percent of people do you
think have at least minimum of a 5% allocation to Bitcoin?
Extremely small minute. Like 1% or less than one, Yeah,
OK. And and that's to take a 5%
allocation which we would consider pretty bullish.
But Even so, even those people that would reach that point less
than 1%, those people are pretty bullish.
They did a 5%, they still have 95% not allocated to Bitcoin.
And the reason why I bring that up is because you and I, we say,
will this beat Bitcoin? And if not, then I'm not doing
it because Bitcoin is my hurdle rate.
And that is the right question. And I believe that we should all
be on that. Bitcoin is the hurdle rate.
If it can't make more than Bitcoin, then don't buy it.
OK? But less than 1% of people even
have 5%, which means 95% is not allocated to Bitcoin, which
means they're not asking will it be Bitcoin.
What they're asking is will it beat inflation or will it beat
the S&P 500? That's all they're asking.
And so for them MSTR or whatever Bitcoin treasury that you want
to fill in the blank with, they're not saying will this
beat Bitcoin yes or no that they're not asking that
question. So for again, we, we take this
Bitcoin or lens into it. These are not products for
Bitcoin. Yes, just buy Bitcoin and put in
cold storage. You don't need Bitcoin treasury
companies, but that's not who they're going after.
And then we'll get to the weather's 10,000 of them.
So oh, but I was going to say one more thing.
So Sailor said so he said that and then he also said what what
people want is MSTR to be a more volatile version of Bitcoin.
You hear him talk about volatility is vitality, right?
So they want it to be more volatile.
So Bitcoin or micro strategy is one of the most heavily traded
stocks. People love it because of the
the volatility, right? So professional investors love
volatility. Most people think volatility is
bad. They love it.
OK, So what they want is they want micro strategy to be two
times volatile to Bitcoin. So if Bitcoin, we talked about
it going up by two or three X in that right.
So if Bitcoin goes up 2X, then micro strategy should go up 4X,
right? But what it also means is if
micro, if Bitcoin goes down to X, then MicroStrategy goes down
to X. So he said, he gave us the
story. He said, imagine, imagine
tonight in my sleep, God comes to me and God says, hey, the
market's going to crash tomorrow.
And so I wake up and I hedge the positions of MicroStrategy and
sure enough, the markets crashed.
But MicroStrategy didn't because I hedge the positions, he said.
He said, that'd be great, right? Right.
No, it'd be terrible because the market needs me to be
dependable. The market wants me to trade 2
times. If somebody doesn't want 2 times
exposure, they'll hedge their position.
They don't want me to be irrational.
So I'll ask a rhetorical question.
How much did Bitcoin drop by about 30%?
How much did micro strategy up by 60% two times volatile to
Bitcoin? Isn't that exactly what we buy
it for a more volatile? So it's like like what did you
buy it for? What were you expecting?
It did exactly what you're expecting.
Anyway, that's a sidetrack. No, not a sidetrack.
I mean, it is a sidetrack, but it it hits the nail on the head.
And then also to me, it highlights that Bitcoin Twitter
is not reality, it's not the markets.
And I think us Bitcoiners, we, we operate in a little bit of an
echo chamber, right? I think the, the example that
that you laid out, which is like, look like this was a
product that was never designed for Bitcoiners.
This was a product that was designed to tap into different
pools of capital that otherwise would have no ability to get
exposure to Bitcoin whatsoever. And I love the comment that you
that you pointed out, which is like a lot of these people are
really not, they're not interested in outperforming
Bitcoin. What they're really interested
in is outperforming the S&P 500, which is why they would buy
something like MicroStrategy itself.
Now I do want to focus on the second question, which is why
are there so many, so many Treasury?
Yeah. And and what and is that
necessary and will it get to a point where we'll see a
consolidation? Yeah.
OK. So this is the this is the good
part. So we've already made the case
and we agree that the fixed income market, the demand for
yield is the largest market in the world.
There's about $300 trillion of fixed income, about 145 trillion
of that is tradable securitized fixed income, 145 trillion.
That's the demand for yield. And as I said, currently it's
the bonds are on a dollar standard.
So what sailors doing is he's taken Bitcoin and built up a
Bitcoin war chest and he's now that's what he calls digital
digital capital and he's created digital credit on top of that.
OK, So what he's done is launched preferred, right,
Preferred strike, strike stride and stretch by stretch is a
stretch is a they're all perpetual.
So they're not termed they're perpetual and they're different
and far as their seniority, the yield and then potential upside.
OK, I don't want to get in the details of that.
We can if you want, but they're preferred meaning their
equities, meaning their stocks. But most of the world that once
yield buys bonds. So funds that buy yield, buy
bonds by mandate, they can't buy equities.
So most of the market can't even buy what he offers.
So, so just by that alone, sailors, like he told me on the
interview with him, he said you could make $100 billion just
doing a 30 year bond. I'm not going to do it.
You should do it. You could make 100 million on a
10 year bond. I'm not going to do it.
You should do it. So let's just think about bond.
So Apple or Google sells a bond and then they use that money to
go build a new data center, right?
Apple has a bond, right? All these corporations say sell
bonds. That's debt.
There's 10,000 bonds available in the USI can buy an LA County
municipal bond. I can buy an Orange County
municipal bond. Why?
Why does LA have one in Orange County have one?
Why would I buy? Why would I buy an LA County
municipal bond or an LA County water municipal bond?
Why? Why do I need a LA county water
one and an LA county one and an Orange County?
Why? Why can't there just be an LA 1?
I don't understand. Each one has a different risk
return profile. They have different risk return
profile. I don't know, Orange County went
bankrupt once before. So I don't know if they're as
good, but they do pay a little bit better yield, but I'm going
to put a little bit towards that.
But I'm going to also get some LA County because I think
they're safer. So I'm going to do a little
elegant, but I also like the water.
So OK, I'm going to get a little of those, those couple bonds,
but oh, shoot. But the water ones only a five
year. I kind of want a 10 year.
So I'm going to get a little bit of the 10 year like pro like and
and and and so there's like there's 10. 1000 bonds man.
It's different flavors for what you're looking for.
For different use cases. So you want to fix your car?
I got a professional tool chest right here.
You're like, Mark, hand me a tool.
OK, Did you want a hammer or a screwdriver?
Like what do you want? So professional investors,
allocators. Think about, I'm trying to solve
a problem. What tools do I need to help me
solve the problem? And so then we build different
financial products to serve different use cases.
And again, most Bitcoiners just understand this and that's fine.
But like what? What they'd also to understand.
Most Bitcoiners probably caught this a little bit, but they
hadn't really thought deeply about this.
You remember when three banks collapsed in 2023 and what
caused their collapse was a duration mismatch, right?
So they were locked up in 30 year debt, but they needed short
term liquidity. So they had a, remember I talked
about 3 layers of liquidity. They had a they had a liquidity
mismatch. They needed more short term, but
they had it all long term. OK, so the way that the
financial world works is we time duration.
So most of the world has six month, five year, How long is
your auto loan? 5 or 6 years?
How long is your home loan? So we have term debt, OK.
And I match my liabilities in my assets and I try to match the
duration. So Sailor has perpetual
products. What do I do with that?
My debts, 10 years. I just need a 10 year bond.
I don't, I don't even know how to price or use a perpetual.
But it's not even a bond. It's a it's an equity.
I can't even use an equity. So like there's a market for
10,000 bonds. And that's just in the US alone.
We haven't even gotten to Brazil and the UK and every other
currency. We're just talking about the US.
There's 10,000. Let me give you another example
why there could be 20,000 or 50,000.
Nico, do you have insurance? Of course.
How many types of insurance? For the car, for the house, for.
Metal for disability. Why do you need all those types
of insurance? Why not just one?
Because the house insurance ain't going to insure.
So how many, how many companies in the world offer insurance?
So many. How many?
10s of thousands, Thousands and thousands?
Like AIG was like the too big to fail in 2008.
Like the biggest insurance. Warren Buffett has insurance
companies. Why not just Warren Buffett's
insurance company? Why do we need all those
insurance companies? We need competition.
But we need thousands of insurance companies.
Like why not just one insurance company I mean.
Because. Because they're going to.
Offer different prices, but Nico man, Warren Buffett's insurance
company is the biggest and it's the most well backed.
So why wouldn't everybody just use Warren Buffett?
Maybe not everybody could afford Warren Buffett's insurance.
I'm. Making my case, yeah,
absolutely. So there's 10,000 bonds.
And so each company can create a security.
They can. So right off the bat you have
equities and bonds right off the bat, then you have 100 different
terms of bonds. And then each of those bonds is
different risk return profiles. And I'm going to use them all
differently for different types of debt that I have and
different income needs. And then I lat so then we can
get into more complex financial engineering, but then we do
laddering of bonds. So then you start laddering
them. So they all come due at
different times. Like there's all types of
strategies and I need all these different tools and, and then
there's different products and there's insurance products and
there's, and then there's there's like insurance companies
sell income products. They're called annuities, but
that's different than a bond yield like like proud.
I mean, I think you answered it perfectly and the the first
part, you hit the nail on the head.
It's just, look, MicroStrategy is a form of leverage.
It's a leverage on Bitcoin, and leverage on Bitcoin means that
when price of Bitcoin goes up, everyone's celebrating, but when
the price of Bitcoin goes down, it's going to be twice as
painful. Leverage cuts both ways.
And the explanation on why there has to be so much, so many
Bitcoin treasury company, because everyone has a different
risk profile, everyone wants a different flavor, and there's
different opportunities in every single Bitcoin treasury company.
And not only that, there's the jurisdictional aspect of it,
right? If you live in the UK, if you
live in Brazil, you might not have access to American capital
markets, right? And not only that, the free
markets are going to do what free markets do best.
And the Bitcoin treasury companies that aren't run
properly are just going to go out of business.
But those are the ones that probably have bigger risks if
you want to buy them, right? So I think you answered that
question perfectly. And I think again, the clash
here, and This is why the that podcast was, I think it was like
a pivotal moment in Bitcoin's history because it was a reality
check. It was kind of like a reality
check of like what's going on and how Bitcoin has matured and
how Bitcoin has changed and how Bitcoin is becoming part of the
traditional financial markets. And again, for Bitcoiners that
have been used to living outside of that for most of the careers,
my, myself included, a lot of the stuff we just, we didn't
even, we didn't even realize it, it existed, nor did we realize
should we use this right? I've gotten to a point where
again, I have a business, I have to make payroll.
So barring against your Bitcoin that, that that's obvious,
right? It's, it's, it's an obvious
thing Bitcoin appreciates as time goes by, the amount of
collateral that you that you need in order to fund that loan.
Over time, you're going to be able to pull that collateral
out, right. So for me, it's, it's, it's
become obvious in that sense, but I think you're much deeper
down the rabbit hole in terms of the, the system that you've
built and for, for basically for you to accumulate more Bitcoin,
for you not to have to sell your Bitcoin.
And that to me is fascinating. And when I asked you the
question, like, what do people need to do to get started, you
basically said like, look, you just borrow against your
Bitcoin. But it's not as simple as that.
I said. I said use credit to offset your
taxes first. So could you if, if one O 1
they're tuning into this podcast like Mark Moss is literally
talking about a perpetual Bitcoin machine, what the F is
he talking about? Could you break it down?
Like what is step number one? Then what is step #2?
Then what is step #3, etcetera, etcetera.
So I'm going to give you step by step from the beginner level,
but what I want to do is tell you where the end goal is first.
So I'll give you the goal and then I'm going to build the map.
So the end goal is get to a point where 100% of my income
buys Bitcoin, 100% of my income buys Bitcoin tax free, so I'm
not leaking 40% to taxes, 100% goes into Bitcoin, which means I
can buy more Bitcoin. And then what I'm doing is I'm
using debt off of my income to live off of and that way I don't
pay tax on that money either all right so that's the end goal IA
100% of my money goes into assets and my assets pay for my
life. All right so that's the end
goal. How do we get there?
Step #1 Because I'm staying humble, I'm only able to stack
sets because, right, that's kind of funny.
Because I'm staying humble, I can only stack sets.
If we get a little more aggressive, we can stack
Bitcoin. So what?
Step number one is I have some credit available to me from
somewhere, whether I borrow against my existing Bitcoin or I
go get a credit line or credit card or whatever.
I borrow from a friend or family, I get a home equity
line, whatever, I get credit. First thing I do is I buy
something for tax depreciation. It could be a piece of real
estate, it could be a solar credit deal, it could be an oil
and gas deal, or it could be a Bitcoin miner.
OK, so first thing I'm going to do is I'm going to borrow a
little bit of money off a credit card or credit line.
I'm going to buy some Bitcoin miners or some sort of
depreciation and I'm going to offset some of my income,
whatever I can afford. If I can get 20,000 of credit,
I'm going to offset $20,000 and then let's say so $100,000
paying 40,000 to tax. I have 60,000 leftover.
Now instead of paying 40,000 tax, I only pay 20,000 tax.
So I, I made an extra 20 grand that was normally going to go to
the government. Now I got to keep.
So step number one credit to get depreciation.
I end up with more money. I take that more money and I buy
more Bitcoin. I buy more assets.
Now I rinse and repeat on that until the asset base gets a
little bit bigger, that now I can continue to borrow against
my credit lines and my asset base to offset my income and
also to start augmenting my lifestyle spending.
So now it's offsetting my my taxable income and it's also
paying part of my bills. And I continue in that hamster
wheel in that rinse and repeat flywheel until the asset base
gets big enough to now buy depreciation to offset 100% of
my income and offset 100% of my living expenses.
And at that point, I've broken free of the system.
I'm out of the rat race because remember, my income cannot keep
up with the pace of inflation, but Bitcoin is beating the pace
of inflation. So once I start with the
depreciation to get more money right now, and I continue doing
that until I've broken free reach escape velocity and at
that point my wealth will compound faster than the rate of
appreciation, faster than my rate of spending and I will
never run out of Bitcoin. And then back to the first
question you asked me. So now that I've created this
system where every year gets me depreciation and then
depreciation allows me to put more cash into the assets and
the assets pay for my life. Once I've built that system out
and it's working, it's functioning, it's mapped out,
it's written on paper, the accounts are up, that's the
system I passed to my kids. If I died today, if you died
today, heaven forbid, I hate to say that if I died today, my
wife, or if my wife and I died, my kids would get my assets,
what would they do Now? We have like a trust and we have
a will. So like they can call the
attorney and whatever. So the attorneys like, cool, you
got all this money, but what do they do with all that money,
which is why they go broke. And sure, I could.
Well, I want to teach my kids about business and I went, I can
do that. But why not just pass the system
down that just automatically runs for them?
Absolutely. So all of this system requires a
form of leverage, right? You're leveraging because and
you've said that the real enemy isn't leverage, it's for
selling. What actually causes for selling
in practice? Yeah, Warren Buffett said that
number one rule of investing is don't lose money.
He said #2 rules don't forget number one.
I think it's different. I think number one rule
investing is never be a force seller.
So a force seller means right. So because assets are volatile,
what happens is let's say like in in the year 2008, I had sold
a couple businesses I had, I bought, I put everything into
real estate in Southern California.
Real estate dropped 60%. I couldn't afford to cover the
payment on those and I had to give some of those properties
back. Short sale, I'm giving back to
the bank or whatever, right? So I was a force seller at the
bottom of the market. If I could have waited a couple
years, the property values came back up.
If I could have just waited a couple more years, I would have
kept was $20 million in real estate.
I would still had that now have been worth even more, but I
couldn't. I was a forced seller at the
bottom because I didn't have the liquidity available to ride the
volatility. So we understand that Bitcoin is
a volatile asset, which is what we want.
I want Bitcoin to go volatile to the upside, but I understand
that it ebbs and flows. So I need to have enough
liquidity to ride the volatility without being a for seller.
Back to Sailor as an example. You see all the pundits on
Twitter that don't want to talk about, oh, if Bitcoin drops to
this price, he's going to be a for seller.
He's like, no, I'm not. There's nothing that's going to
force me to sell. So that's what I mean by being a
for seller. So what mental framework do
listeners need to adopt if they want Bitcoin to fund their life
without killing the compounding? That's a good question.
Unfortunately, identity politics and just the education system
today has got us thinking in just like victim mentality
mindset. So I think a lot of people will
go, that sounds too risky, that sounds too dangerous, I could
get it wrong. I don't need to do that.
I couldn't do that. It sounds too complex.
And so it's sort of like victim mentality.
So what I would probably urge people to do is think of the
four minute mile. The very fact that other people
are doing it means that you can do the very fact of that.
And so all we have to do is find other people that we can see a
model of, and then we just model those things.
And so that would be the mindset.
The other mindset, I would say, is that whether you take action
and do this or not, either way you've taken action.
You've taken action to not do it or do it.
And there is no absence of risk. If I do it, it's risky.
And if I don't do it, it's also risky.
And so really it's about which risk do I choose and how do I
mitigate either of those. And so I would just say you
don't have to be risky. You can use little bits of
leverage. I don't have to go surf 30 foot
pipeline. I can just go out to 1 foot
waves here on Miami Beach and that's way less risky and I'm
getting a little bit of leverage, a little bit.
The chance of me drowning in knee deep water in Miami Beach
is very low. If I go into 30 foot waves in
pipeline, it's higher. And so then you can choose the
level of risk that you want. It's not like an all or nothing
thing. It's like sailors goal is a 30%
leverage. Maybe you target A5?
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mark. Let's talk about 2025, right?
This was what I call the year of victory for Peter Schiff.
You know, this was like one of the only Thanksgivings I can
remember where you know that you know that great uncle that you
have that grandfather, you know, is coming to you and said, ha,
you know, the SNP gold silver took Bitcoin to school.
Everybody was expecting this, this this amazing year.
The Trump administration coming in the first pro Bitcoin
president, a more positive regulatory environment.
What the hell happened? Yeah, good question.
So what I would say, and actually this is the opening
that Danny started with with Michael Saylor and I think
that's what put set the tone for the whole interview.
And he answered, he opened with almost the same question, but he
framed it different. He said, so 2025 was a pretty
disappointing year for Bitcoin. And Michael say it was like
disappointing what? So Warren Buffett would say that
price is what you pay, value is what you get.
Warren Buffett would say that I've never bought a stock.
I buy companies, the companies happened to trade public, but I
didn't buy the stock. He says don't ever buy one thing
for a day that you wouldn't hold for 10 years.
So what does all that mean? And, and to answer your
question, he doesn't buy this, he doesn't buy the the stock, he
buys the company. So I don't look at the the the
price of the stock. I'm not looking at the daily
mark to market price. I'm looking at what the company
is doing. I want to understand the value
of the company because I believe that the company is creating
value over the long term, the stock price will adjust.
So when we look at Bitcoin price, maybe you're a little
disappointed partly because you brought your own preconceived
notions into that of where you think that price target would
be. Now, as Sailor pointed out on
Danny, so I'm not, you know, I'm repeating for what he said, but
it's true. Obviously we made a new all time
high in quarter 4. That's pretty much the end of
the year. Yes, we ended December down, but
in quarter four we made a new all time high.
So like, come on guys. Like really number one.
But #2 back to the Warren Buffett lens.
If we look at the value, the underlying value, we saw a
massive change in hands of Bitcoin ownership, which I don't
like, but it's unfortunate. It's an important necessary, we,
we shifted massive from weak retail hands to cold storage
institutional hands. And I want Bitcoin for the
people. So I'm not happy about it, but
it's also part of the process of this.
And So what we saw was this consolidation and a transfer
from weak hands to strong hands. So that's positive number one.
Number two, you mentioned we saw a 180° shift in the political
winds 100 we went from the Biden administration Operation Choke
.2 point O or three-point O or wherever on at this point right
now. Elizabeth Warren.
I mean, if Kamala would have won, who knows what would have
happened. And now we have a pro Bitcoin
administration, the Trump, I mean Trump who has controlling
interests of DJDJT media has been buying billions of dollars
of Bitcoin. His sons are not following in
his footsteps and building a real estate empire.
His sons are building Bitcoin empires.
Like we couldn't have a different shift.
So that is massively bullish. If you look at the number of or
let's talk about mining, if you look at the hash power of the
network, it's never been higher. It's never been more secure.
I mean, so from so many benchmarks, we can see that the
that Bitcoin itself, the value has never been better.
It was a massive year. Maybe the rice should have got
150, maybe it maybe at 1:26 it was a little low.
I mean, maybe it should be at 176.
I don't know what number you had in your mind.
So maybe the price should have been a little bit higher.
But I think when I look at the underlying fundamentals, they've
never been better. Not to bounce back, but just for
a second with the Bitcoin treasury companies, Metaplanet
is way down, but it's a way better company today than it was
at its peak. Micro strategies price is way
down, but it's a way better company today.
And so that's the way I'd look at Bitcoin as well.
Yeah. And and I agree with that.
And I think it was, it was, it was a it was a humbling year and
you buried the lead there, which is the aspect of expectations
and expectations in Bitcoin. Bitcoin has a way of taking your
expectations and literally grinding it into atoms.
Humbling you? Yeah, absolutely.
And I think a lot of people heading into the year, because
Trump was elected, had very high expectations of what Bitcoin
would do and then also previous cycle performances as well.
And then if you take that combination together, right,
you, you end up where, where we are today, right?
You end up with interviews like with Danny and Sailor.
And, but I think it was healthy. I think this is good for the
community because once Bitcoin truly bounces back, all these
treasury companies are going to bounce back or not all of them,
but most, a lot of them are going to bounce back 2 * 3 times
as hard. And I think that this cycle.
And I want to get your thoughts on this, Mark.
I think that last cycle, Michael Saylor and the country of El
Salvador paid their dues. So for the first time, a nation
state bought bitcoins somewhat at the top.
It went down. Michael Saylor, a big, you know,
publicly traded company bought Bitcoin, went down.
Both wrecked. You know, they survived the 2222
bear market, and then they got rewarded.
This is a story that all of us Bitcoiners go through.
We call it paying the price of tuition.
I think this cycle is where Wall Street is paying their price of
tuition. I think once we get over the
hump and Bitcoin starts to pick up again, I think it's just a
matter of time before the mag 7, you know, start to say, hey,
listen, this could be detrimental to our to our
shareholders if, if we don't have Bitcoin.
Yeah, I would agree with that. I think to your point, the the
cycles are brutal and I I started buying Bitcoin in 2015.
So I've been through a few of them.
It gets a little easier, but it's not easy where I've made
the mistakes paying my dues. When I look back to the 2018
bear marker, 2022 was I never sold.
I never sold the bottom. I never sold it all, but I
didn't buy with conviction in the dips because even me, I'm
like, Oh my God, I remember in 2018, right, a Bitcoin dropped
from 20,000 down to whatever was like $3000 and it's like, Oh my
God, is it ever going to come back?
I had all this money and now it's this much.
What did I do? Right?
I'm not going to sell it. But like, I don't know, I kind
of have enough. I don't need if I need to buy
anymore, right? And and and each cycle and now
it's only down 30%, but the sentiment is so low.
It's like, man, I don't know if it's going to come back and may
keep dropping. So it's like the same thing, but
I would I would agree with you, right?
Like I said that the network has never been stronger.
The hash power is continuing going up.
The institutional adoption is stronger.
The institutional rotation has been stronger.
I think gold took some of the shine.
I think that the Bitcoin four year cycle became like a self
fulfilling prophecy. So many people expected it when
the price dropped a little bit. And you know, it's a confluence
of factors. Trump tweeted on October 10th
that that he was going to put 100% tariffs on China that
caused the market to stumble. Then you had a cascading
effective of of leverage get wiped out across the crypto
exchanges. You also had JP Morgan start the
attack on micro strategy all on the same time frame.
And then you had the four year cycle people going, oh, this is
it, this is it, this is it. We should sell right now.
And I think it became a self fulfilling prophecy.
But shoot, if all we have is a 30% drawdown, that's not so bad.
If you look from the bear market, 2022, as you said, this
is the third drawdown of 30% we've had and it held and it
held. So, you know, I think next year
shows that that four year cycle is over. 2026 kind of shows that
and yeah, yeah, all these people have vindicated the treasury
companies will be the one that will come out on their side of
having paid their dues. I.
Have 100% agree now, Mark, you made this amazing presentation
Bitcoin Mina, last time you came on the show, you were talking
about it, but you were basically laying out, you know, the
future, you know, decade or two and Bitcoin and what the
potential is. And the reason I want to bring
that up is I think this cycle because Bitcoin didn't perform
to the expectation that people performed it to again, keyword
expectation. I think perhaps people still
believe that, you know, listen, they missed the boat.
There's no opportunity here. The diminishing returns are are
just too big, you know, So they start to gamble a little bit,
they start to buy whatever mean coin is the current thing.
They get absolutely wrecked. NYC coin or whatever.
Yeah, they, they, they, they buy the, the latest and greatest
whatever mean coin, right? The, the, the, the, you know,
'cause they feel like they, they, they missed the boat, like
it Bitcoins not going to give them the financial freedom that
they have hoped for. I think they're wrong.
I think the only difference is the time scales have changed,
but I think the opportunity is still there.
This is a subject that you've talked about at length.
Could you break it down? Could you give the people a
little bit of hope so? First of all, I think, I think
just that overall sentiment is very strange of I am too late, I
missed the boat. I, I, I don't understand how
people come with that mindset. And the reason why is back to
the financial system. The entire financial system is
about discounted future cash flows.
You're buying stocks on APE ratio.
I'm buying the MAG 7 at a 30 to 50 times PE ratio, meaning I'm
paying a price today. It's going to take 30 to 50
years for them to make enough cash flow to be worth that.
So I'm buying Tesla, Apple, Google, whatever because I think
it's going to be worth more in the future.
Nobody goes. Oh, well, Google used to be
cheaper, so it's too late. Like, dude, you buy Google, she
has to be worth more in the future.
I buy gold because it has to be worth more in the future.
So like, I look at all financial assets as how much it will be
trying to guess, trying to speculate, trying to put some
model into what I think it'll be worth in the future.
If Apple, Tesla, Google makes this cash flow, it will be worth
this in the future. But when they come to Bitcoin,
they go, oh, but in the past, like, no, I don't understand why
they would bring that number one.
OK, So what we want to do is think about where does Bitcoin
go in the future? So we need to come up with some
sort of valuation models of where we think it can be now to
the presentation. I gave a Bitcoin mean and I sort
of gave where I think it'll be 203020402050.
And the way that I did it was using economic models, but also
I use like a venture capital lens.
So the way a venture capitalist thinks, I have a shout out to my
Bitcoin partners, a Bitcoin opportunity fund James lavish
layer of the par David Foley and we deploy venture capital into
the into the Bitcoin space and help Bitcoin companies grow.
And the way we do it is we go, OK, this company's starting up,
but this is the market they're going into.
These are the markets that it's disrupting.
How much do we think it can get from those markets?
So for example, if we were investing into Uber in the early
days, do you want to invest in this app where you can get a
ride? You mean like a taxi?
Well, it's sort of like a taxi, but you can get like a black
car, but it's easy because your credit card is in there.
It's like, but can't we do that now?
Well, it's different. And how much is worth 100
million, a 100 million? What are you talking about?
Well, the taxi is this big, the limos is this big, the van.
So if I get 5% of that, right, so then I come up with some sort
of future valuation. So with Bitcoin, we could do the
same thing. What are the markets Bitcoin is
disrupting? How big are those markets and
what percentage of those markets do we think we can capture?
So there's two things that I used for this.
Number one, how big will the overall market or the pie get?
And then two, we speculate as to what percentage we think Bitcoin
can acquire. So that's how we do it from a
venture capital lens. So what do we do is we
understand that when we look at assets, there's different types
of assets. I mentioned that earlier, I like
to break assets into four different categories.
But these assets are what we call store value assets.
So unlike a car, RVA, boat, that's an asset on your balance
sheet, but it's not a store of value asset.
A store value asset is where money goes and sits.
So that's typically real estate is the biggest, but it's
equities, it's stocks, it's bonds, it's gold, it's
collectibles, it's fine art. Those are things people put
their money into. And then Bitcoin fits into that.
And so that bucket, that pie is growing at the rate of monetary
debasement or liquidity increase.
So as more dollar units are created, they buy less and then
the valuation of that store value bucket goes up.
So number one, we realize that that's not a static pie.
That pie is getting bigger or more valuable or, or in nominal
terms anyway. So if I remember correctly, in
2010, that store value bucket was like about 300 trillion.
Today it's about a quadrillion and at the rate of monetary
increase. So the the CBO, Congressional
Budget Office of the United States, they project out the
spending, the deficit, the budget, the debt through 2054
for 30 years. So they tell us how much money
will be printed in the next 30 years.
And they're going to undershoot. That is going to be way more
than they're saying. But let's just if, if we just
use the numbers they give us and we're not going to talk about
what AI could do to that and all that, but just using the numbers
that they give us. So we apply that the rate of
monetary and debt increase to that store value buckets.
And so we're 300 trillion, we're at a quadrillion today.
That's about it should be about 1.6 quadrillion by 20-30.
I believe it's like 3 1/2 quadrillion by 2040 and it was
like 88. It's been a while since I looked
at numbers. It was like 88 quadrillion by
2050. OK.
So then now that we know that how big that pie is getting,
what percentage of that pie do we think Bitcoin can acquire?
Now from a venture capital lens they potential, you know
investment says we think we can get 5% of the market in five
years. OK, sounds reasonable.
Someone else says I think I can get 80% of the market in one
year. OK, that's probably not
reasonable. So we try to come up with what
we think is reasonable to make this a little bit easier to
understand. Uber and Airbnb were both able
to acquire 10% of their markets in less than 10 years.
OK, so how much of that pie do we think Bitcoin can get now?
It's certainly better, right? It's, it's more portable than
gold, right? It's more secure, it's more
stable. We, we, we compared it to real
estate, which is the biggest bucket.
There's no maintenance, no tenants.
So, so it's, it's like a, there's, there's 30 to 40
trillion in offshore bank accounts.
It's certainly better than offshore bank accounts, right?
So how much can we get from offshore bank accounts, for
example? So if Bitcoin can get to just
1.25% by 2030, 1.25% and that would be what would that be?
20 years of Bitcoin? 22 years of Bitcoin, not 1022
years. It gets to 1 and a 1 1/4%.
Now Airbnb and Uber got 10% in 10 years.
I'm talking 1 1/4%. That would be $21 trillion or $1
million per Bitcoin by 20-30. Base case.
I mean, yeah, obviously we have no crystal ball, but I'm using
the venture capital lens and I think that's more than
realistic. I absolutely agree with you.
Yeah. Then we project that out.
So by 2040, so now we're at over 30 years, if it can get to 8% of
the bucket, that would bring it to $14 million per Bitcoin.
And I believe by 2050 I had to get into like 15 or 20% of the
bucket, and that puts it at like $40 million per Bitcoin.
Holy cow. Yeah, but again, it's not the
the reason it doesn't sound unreasonable, Mark, is your
logic behind it, right? The logic behind it, if you
break it down like that, because I see a lot of people do this,
it's like, oh, these, this price prediction, the this and this
and that. But it's, if you apply that VC
logic towards this type of thinking and it's like, what
percentage of, you know, I, I love the way that you broke it
down. It's like, what percentage of
the market could you get right? Like 1% is not, it's not crazy,
it's not unreasonable, but look at where the price would be if
it gets to 1%. And then you compare Bitcoin
with all these other assets. Like the question is, is Bitcoin
better than gold? Absolutely, 100%.
I can break it down. It's like, look, the physical
characteristics you can, you can transport anywhere around the
world. It's censorship resistant.
There's absolute scarcity. Gold doesn't have any of those
things. Just for Bitcoin to reach the
market cap, just for Bitcoin to reach the market cap of gold
would put Bitcoin at $1.5 million per coin, right?
That base case is not unreasonable.
But I think because we got so chewed up because of the
expectations that we had heading into 2025, I think that it it's
it, it seems like an impossible mountain to climb, I would say.
There's a, there's a few other metrics that I would have put
over the top of it to really try to drive this home.
So when you look at technology, I've started, I started two tech
companies that had big exits. I've been investing in tech for
a long time. And so some other models we
would look at is you would use something called the diffusion
of innovation, which is like a bell curve.
And then we'd use like an S curve.
And an S curve helps us understand how much market
penetration we can get over a period of time.
And so the way an S curve works is it it's like a sideways S,
the time it takes to go from zero to 10% is the same time it
takes to go from 10 to 90%. Typically about 80% penetration
is considered full market penetration.
There's still people today who don't have like Internet and and
you know, cable TV. Did you want to say that?
Where do you think we are in the S?
Group Yeah. So there was a there was an
article that just came out about a week ago.
I was going to make a video on it, but I haven't got a chance
to write it out yet. But it showed a whole bunch of
data and they believe we've now just hit 10%.
Of Bitcoin adoption. Of it was crypto adoption, so I
haven't really got through the weeds to understand the exact
details, but about 10% of Bitcoin adoption, yes.
And so we've just hit that now in the USI think we've gone past
that quite a while ago, but this is like globally.
And So what that means is that now we are I guess what, 17
years into it. So now it could take another, I
don't know, 15 years to get to 90%.
But what that really means is the S curve, it turns parabolic
and then it so it's, it goes up slow, it turns parabolic and
then it evens out again. So we're entering the parabolic
phase. And so, and the reason why is in
the beginning you had, you had small retail money people
bringing 10s of dollars or hundreds of dollars and then
thousands of dollars and then 10s of thousands.
But today you have hundreds of billions coming in.
So we enter this parabolic phase.
And so while most people Sailor talks about the law of law of
large numbers, the larger the asset gets, the lower the
volatility drops because it's harder to move the basket.
While that sure is the law of large numbers.
And of course that is the law. It's the bigger it gets, the
harder to move, of course. But when you think about when
you have a technological revolution cycle and you overlay
financial capital onto that and you look at the way investors
come into these cycles, phase two, which we're going into the
parabolic phase is what's known as the frenzy phase.
That's where the institutions come in.
That's where the sovereigns come in.
So we, we went from retail bringing small checks to
sovereigns bringing in massive checks in the S curve, parabolic
part of the adoption cycle of the technology.
We, while I do believe obviously it's the law of large numbers,
of course that makes sense, but we could potentially see Kagar
turn back up for a while. I would agree with that.
And I was actually talking to someone who worked in like the
corporate world. And the way that he, he told me
and the way that he described it to me is like, look, Nico,
there's one catalyst that if this catalyst happens, like
we're going to $1,000,000 tomorrow.
And I said, what is that? He's like, look, the moment the
United States government announces that they are actively
buying Bitcoin, you're going to see a frenzy the likes of which
you've never seen before. And again, that would be the
ultimate because right now it's like, look, they've established
the, they've established the, you know, the, the, the Bitcoin
strategic reserve, but it's via executive order.
It's not via, you know, it's, it's so it's, it's, it's
fragile, so to speak. But the moment the United States
government announces, hey, we're actually accumulating Bitcoin,
it's going to start a frenzy worldwide.
I think Max Kaiser calls it the global hash war or something
like that. So I want to get your take on
that because I, I do agree with your theory.
And, and, and, and, and, and it is ultimately a technology.
So the S curve adoption applies, but you need that catalyst, I
would say. And I think that Catalyst would
be, you know, the most powerful country on the on the face of
the planet with the most powerful money printer basically
saying, OK, we're going to use the money printer to buy
something that has absolute scarcity.
Yeah, I think, I think there's other catalysts as well, but
we'll talk about that for a second, I think.
Yes, obviously, right. So when you have a country like
El Salvador start buying Bitcoin, they're not really an
influential nation. They're like one of the poorest
countries in the world. And so because they bought it
doesn't make other countries want to go buy it.
Although he did start meeting with other heads of smaller
countries, right? I think he met with 40 other
country leaders, like shortly after them.
But the United States, which is kind of funny because in my
opinion, it would always be the last move because it's got the
most to lose, right? It's got the reserve currency of
the world. So you'd think everybody would
move before the US. But if the US moves, which is
the top of the heap with the reserve currency, then of
course, yes, it's the most fun to a nation.
Everybody would be forced to buy.
So that would certainly be a catalyst to your point, right?
We got an executive order. I mean, what we just found out
they're selling going on by I mean, so like who knows where
that's at. We probably are quite a way from
from buying happening. But I think the, the, the other
catalyst that's there is you mentioned gold.
I mean, holy crap, 4600 bucks an ounce silver hit $99.00.
I mean, that is absolutely insane.
And it's been smashing Bitcoin in the last year.
But what's happening on the gold front is what's going on in
China, in Hong Kong. And yesterday Trump announced
25% tariffs against Iran. All of that is the story.
So what what's happening is the US dollar is the reserve
currency of the world. It's the reserve asset of the
world. So what does that mean?
That means that that's what central banks hold, an FX
currency holds. They hold in their reserves.
That's what they hold in their, in their bank grant.
But what we've seen is that's dropped from about 60% down to
about 40% in the last 10 years. But that's what they hold in
reserves. But it, but the dollar isn't
just the reserve currency. The dollar is also the payment
network of the world. So it's the Visa like you can go
anywhere and use Visa. That's what they, they have the
benefit of that. So you have the dollar payment
network. And so the US is able to slap
sanctions on people like, hey, no, no network for you.
Well, what China's been doing is they've been actively working on
setting up a parallel financial system, a whole new set of rails
that are on gold. And they've been doing it
through Hong Kong with the Shanghai Gold Exchange.
And what they're using is their own currency, the RMB, which
nobody would ever use or trust that money.
No one would ever reserve that money, But they're not relying
on that. They're using the RMB for the
liquidity piece, but they're settling in gold.
People trust gold. And not only have they done
that, it's pretty much up and operational in Hong out of Hong
Kong. They've already opened up swap
lines with I think 32 countries, pretty much every country but
the US and So what that means is that now all these countries can
do business with each other, settle in gold and completely
bypass It's like instead of using the the Fiat rails like
swift, I'm going to send you Bitcoin.
That's basically what we're talking about here, right?
So when the US continues to sanction, sanction, sanction now
another 25% sanctions on Iran is state, which by the way, what's
happening in Iran is terrible. And I'm, I wish we could do
something. I'm just not sure the tariffs
are, are the sanctions are a way to do that.
Because what happens is every time we kick more people out of
the party, they just go have a party somewhere else.
And they're not coming back. You saw this with with Russia,
right? The moment the United States
build Russia, the whole theory was like, OK, this country's
going to collapse, the government's going to go.
That's not what happened. They just built around that,
right? Like, I saw crazy videos of like
shopping malls where like, they literally just changed the
logos. But the products inside are
exactly the same, same, right? So it it didn't work.
And and again, do you think that Russia, even if the US drops the
sanctions, do you think the United States is just going to
go back and say, I mean, Russia is going to go back and say, oh,
you know what, let's just use the suicide.
They're never going to do that again.
Not if there's an alternative, of course, which there is.
So if there's no other party to go to, I'm just kind of mingling
outside, but oh, there's another party right here, I'll go over
there and I'm not going to go back to that party because these
people let me do what I want to do.
So where that where that ties back to Bitcoin, the other
catalysts I'm talking about is that's obviously causing gold to
catch a big bid. And gold's going to continue to
pump really hard because central banks are now adding gold.
So, so the US Treasuries in the reserve have dropped from 60 to
40 and gold's gone up to 30. Like this is a big shift, right?
But while gold is going to continue to catch a bid because
that's happening from a sovereign level, we the people,
the individuals, institutions are going to be running the
Bitcoin. We're going to be ahead of the
curve. We understand Bitcoin is a
higher beta than gold is. And I think, I think, you know,
JP Morgan called the debasement trade was gold and Bitcoin
together. And I think we'll see the more
institutional adoption of gold for now, but I think Bitcoin is
also going to be catching a bit with that.
Fantastic, ladies and gentlemen, Mark Moss in the Simply Studio.
First interview in the Simply Studio.
Guys, go check out the Mark Moss YouTube channel.
One of my favorite creators. A man is so talented.
The personal inspiration for me. Mark, thank you so much for
joining me. Really appreciate it.
I'll see you guys in the next Simply Bitcoin IRL.
Take care, everybody.