Robert Sykes, Keto savage.com. Today I've got special guest
Paul Tansy on the line, and this one's a little bit different
than normal. So I've often times got people
on the show talking about nutrition, fitness,
entrepreneurship, business, all that good stuff.
This one was all about currency. We talked about cryptocurrency,
we talked about Bitcoin, we talked about the Fiat system,
pros, cons, shortfalls, all that good stuff.
And this is an area of, if not my expertise, I don't know
anything about crypto or Bitcoin or any of this.
So I really wanted to just peel the curtain back and learn.
And Paul is an expert in this subject matter.
He opened up my eyes to quite a few things.
I'm very, very curious about this.
Now I'm gonna start doing a deep dive on this topic, but very
interesting. I learned a ton.
Hopefully you will as well. So that for delay, sit back,
relax, enjoy the conversation with Paul and we are live.
Paul, how are you, brother? Doing real well.
Thank you, Robert. Hey man, I'm excited to be
chatting with you. So just to give the listener
some context here, and I have never talked with you before
this moment. And we got connected because a
good friend of mine that has has helped us with the AI build out
is good friends with you. And he's like, hey, man, if you
get any interest in crypto at all, you need to get my buddy
Paul on the line, which is why we're here today because I know
nothing about crypto, but I feel like a lot of people in the keto
carnivore space, this enlightened space, so to speak,
is big into crypto. So this is this is going to be
interesting man. Yeah, well, I'm, I'm really glad
you had me on. Thank you.
And yeah, I've known, I've known our friend James since 8th
grade. Actually.
We went to his brother's wedding this weekend.
So it's been a long time friend of mine.
But yeah, to, to, yes, to your point that I almost take offense
to, to being referred to as the crypto expert.
And we'll get into that. There's a very big distinction
between Bitcoin and crypto, and I think that'll be a good one to
kind of maybe dive into first. Yeah, Yeah.
So just to kind of set the stage here, I know nothing about any
of this like crypto Bitcoin. So like like go as deep as you
want to go, but know that I have no prior context whatsoever.
Some of the listeners probably do, some of them probably not,
but crypto Bitcoin, like it's all third language to me, man.
So take it for it wherever you want to start, you just take it
from there. All right then I I won't take
the insult too heavily. But basically, yeah, a lot of
people see like Bitcoin as a subset of crypto.
And it had truth originally because crypto just stands for
cryptography, which is kind of using public keys to public and
private key pairs to basically store secrets.
And in this case, the secret is the ability to send some amount
of some token to another key pair.
But really, so Bitcoin is unique in the fact that there is no
central issuer, there is no central governance.
There's no, you know, CEO, there's no marketing team.
It's just kind of this emergent phenomena that kind of like
naturally evolves from humanity's desire for a open,
free monetary system. But crypto in kind of its
current form is just a subset of the current monetary regime,
which we call Fiat currencies, which have, you know, central
issuers. They have central governance, a
certain number of people, whether it be 1 or 100, can
access, you know, the printing mechanism and make more of them.
They can change the rules at any point to not your benefit.
And so that's why I like to make that distinction between kind of
Bitcoin as this, you know, free open economic system similar to
like gold. You know, there's no central
issuer of gold, There's nobody who changes the molecular makeup
of gold. And then crypto is kind of like
unregistered securities and the fact that they're a lot of times
the company is raising funds for founders and insiders.
And because they're unregistered, they don't really
have to follow traditional regulations in terms of access
or, you know, moral or ethical ways of acting in public
markets. Got you.
So like when it comes to the system, for instance, like the
the US dollar as an example, the, the, the negative
connotation with that is that, you know, they can simply print
more money. It can be a strong dollar, a
weak dollar, depending on global economies.
Inflation obviously is an issue of variable.
And then a lot of the other crypto currencies are similar in
that they can make more of them. There's nothing really backing
them per SE. And then Bitcoin, similar to
gold, is just like a set allotted amount.
They can't make more or less. Is that correct?
That's exactly correct. Well, yes, yes, that's correct
on the surface. So the cool thing about Bitcoin
is because it's open and anybody can access it, anybody can
likewise change the code. You know, if I want to run
Bitcoin that has instead of a maximum of 21 million, I want my
Bitcoin to have a maximum of 42,000,000.
Well, I could do that on my personal computer and I can
change, you know, my node that runs my Bitcoin and say, OK, I'm
going to have a maximum of 42,000,000 and that extra 21
million, all a lot to myself. I can do that.
But then when I go out to try to send any of, you know, Paul's
Bitcoin to other people on the Bitcoin network, it'll
immediately get rejected because, you know, there's
checks and balances in the system.
And one of those checks is, is the maximum amount of Bitcoin in
your system 21 million? Is that compatible with the rest
of what we call the Bitcoin network?
If yes, then you know, your transaction can go to the next
step of verification. If no, then it's just, you know,
it's like I, I come and speak in a foreign language.
People just look at me funny, but they don't, they don't
accept my Bitcoin certainly because it's, it's fraudulent.
So that's kind of the cool thing is like, you know, if you want
to change the rules, you can. But we have this consensus
mechanism that we all agree is the and if we want our money to
be accepted by others on the network, we have to follow those
rules. What is the total amount of
Bitcoin like? What is the upper, you know,
sealing of the total amount of Bitcoin just as like there's a a
total amount of gold. Yeah, the current, yeah.
So the current limit is 21 million Bitcoin with gold.
It's, it's theoretically infinite, but in reality it
inflates about 1.6% per year. And there's, you know, no kind
of upper cap in our lifetime or in, in any lifetime that we can
imagine in the near future. So, so gold kind of is always
increasing. So no individual can have more
than 21 million worth in Bitcoin.
Correct. And currently somewhere, you
know, the estimates vary, but somewhere between 3 and 5
million seem to be lost forever because they haven't moved, you
know, since they originally moved.
And it's it's estimated that they're lost and can't be
accessed. So the the real kind of upper
limit is somewhere around 15 to 17 million.
And there's not a limitless supply.
So like all 8 billion people on planet Earth can't possibly have
15,000,000 in Bitcoin, right? They can't have, you know, they
can't have 15,000,000 Bitcoin. Theoretically, they could have a
value of $15 million worth of Bitcoin.
You know, if Bitcoin came to represent all of the money on
earth, which is somewhere around 900 trillion and we keep
inflating the money supply yet, you know, up to 20% per year.
Yeah, everybody could have $15 million of Bitcoin, but the
dollar wouldn't get you much. And with regards to the other
crypto currencies that don't have this innate checks and
balances like Dogecoin, for instance, you know, Doge went up
with Elon being as prominent as he is as he is.
Is there any value in that or since it can, there's no backing
system to that? There's it's kind of just like
Monopoly money, right? Yeah, doge is.
It's also theoretically infinite.
I think there's like 10 million new doges created per day.
I I want to say though, Doge is a proof of work mechanism, which
means that it takes energy to mine DOGE and for that reason
there's a small tie to like real world economics.
Not not every other cryptocurrency is infinite.
There are some, there are kind of either limited or have set
supply schedules, but what makes Bitcoin unique is that it's
policy has never changed. So Bitcoin was the original
cryptocurrency, that word gives me the heck, but it was the
original. And so it's monetary policy was
set at the beginning. It was 21 million and every kind
of offshoot or off brand that has spurred up since then has at
its core had change since the beginning.
So like Ethereum is probably another one that you've heard a
lot about. Ethereum was created by Vitalik,
who actually used to work at Bitcoin magazine and saw that,
you know, money could be created out of nothing and decided to do
that. And the monetary policy of
Ethereum has changed countless times.
And the total amount of Ethereum is unknowable currently, which
is like kind of profound that you can't even know how many
exist. And we, we don't know how many
will exist because there's no guarantee that the monetary
policy will stay the same than it is right now.
You know, 7th. Iteration or whatever they're
on. So this like status quo of a set
monetary policy and we all agree to these rules in order to play
the game is one of those things that that makes Bitcoin unique.
One way I like to describe it is like, you know, basketball,
there's pretty standard consensus rules of what
basketball is. It's five players on a team, you
know, 20 minute halves, 10 foot hoops.
And so if I start a basketball team and I start playing on 12
foot hoops with 16 people on a team and I play, play 40 minute
halves, right? And I go and I try to play, you
know, someone down at the local youth club or gym or whatever,
and they say you want to play, you know, Paul's version of
basketball. And then they said, no, I want
to play, you know, regular basketball.
I want to play 10 foot hoops, you know, this size ball.
And so it just, it's you can't coordinate, you can't
interoperate. So yeah, I think that's a.
Yeah, that's a good analogy. So I guess give listeners and
myself like, why should we even care?
Why? Why do we need to focus on
Bitcoin? Why do we need to explore that?
Like what is the doom and gloom scenario if we don't?
Exactly. Yes.
And and this is what you know, this is how I got here.
So I graduated college. Six years ago and, you know, I
started working my first job in the corporate world and I'm, you
know, a single 22 year old and I was making more than I needed to
spend every month. And I at one point, you know,
knew that I wanted to have a family.
I wanted to, you know, have a house.
I wanted to. Do all of these things.
And I was trying to figure out, you know, how do I save my money
that I'm making now so that, you know, in five years I can do
that. And at that point I just started
putting money into, you know, S&P index funds.
And, you know, that was kind of it.
And then I'm working and I'd heard about Bitcoin, you know,
here and there in 2017. It really had like a pretty big
run and, and was all over the news cycle.
And but then, you know, at this point when I started working, it
was kind of low, maybe 5 or $6000 coin that it kind of
crashed. And I had a Co worker who would
always just kind of bring it up, Oh, Bitcoin this, oh, Bitcoin
that. And I was like, man, you got to
shut up about this stuff. It's totally over.
Can't you see the chart? It's like dead.
Then you can take it out back and shoot it.
And but he just kept, it's every couple weeks, he just kept
mentioning Bitcoin, this Bitcoin that I said, you know what, I'm
going to go home tonight and I'm going to study it and I'm going
to come in here tomorrow and I'm going to prove you wrong.
And that was like a motivating factor.
And I came home that night and spent 6 or 8 hours on the
computer just watching YouTube videos, trying to learn like
what really was the kind of fundamental principle of this
Bitcoin thing and what made it valuable and was it going to be
more valuable in the future. And it really, you dive down
this rabbit hole of what is money?
And that's a profound question because what we're told money is
it has been a lie since the beginning.
You know, these these government debt papers that we call it U.S.
dollars called IRS utility tokens.
You know, they're, they're a method of stealing wealth
because you are exchanging finite time.
Human time is the most finite resource we have.
And so you're exchanging that through your job and you're
getting paid in IRS utility tokens that lose value.
I mean, during COVID, they lost value at a rate of almost 20% in
a year. So your time that you have
stored up as savings has then been eroded by 20%.
And so like what what is the answer to that?
And after a lot of searching, the answer is money that can't
be fucked with. It's money that is absolutely
scarce, that mirrors the absolute scarcity that you have
in your human time and that you can store value, you know, for
1000 years. And because currently the US
dollar has been kind of. Model 2 or trying to say
prioritize storing or moving money across space has been the
priority. And so, you know, you want to,
OK, originally we had gold and gold is, is a good money for
storing time, for storing value across time because it has that
low inflation rate of approximately 1.6%.
But to store, but to be able to send value across space, you
know, we had a globalized world in the 19th 1900s and you want
to send values, say to France. Or to.
The Middle East for oil, it's really not feasible to send a
whole shipment of gold every time you want oil to be
delivered to the US So we have these dollars that come up.
And so instead we send, you know, pieces of paper.
Those are a lot less costly to move or to guard.
And so we can just kind of send this value across space
effortlessly. But the problem was when we
moved to dollars and off the gold standard, we lost the
ability to store value across space or across time.
So because the dollars could be printed for a lot less work or
energy than it takes to make new gold pieces, it's a lot easier
to make more money in paper form than in gold form.
And so that erodes the ability of the currency to to transmit
value across time. And so.
What we need? Oh, go ahead.
I would say what we need is a money that can do both, one that
can store value across time and across space.
And that's what Bitcoin is, because it's a purely digital
asset. So it, it kind of exists
worldwide, but it has this tie to energy because energy is
required to secure the history of transactions.
And so it has this tie to energy that brings it into the real
world. You know, it can't be duplicated
for 0 cost. It requires energy, and that's
kind of the the groundbreaking technology of Bitcoin.
And at one point, I'm not that kind of reach back in like
middle school history here, but at one point the gold that we
had in circulation or the the money that the dollars that we
had in circulation was backed by the US Treasury in gold.
And then they did away with that.
Correct me if I'm wrong here, but they did away with that with
the printing of additional money beyond that which they had in
stock of gold. So now basically the US dollar
is not physically backed by anything of true value then,
right? Correct.
Yes. So brief history of dollar, I
might have the years off here a little bit, but I think it was
around the 1930's the Executive Order 61 O2 I believe, was
issued and that outlawed personal earnings of gold.
So basically you had to turn in your gold to like the bank or
the government or whatever. And during that time gold was
valued at I think like $25.00 an ounce.
And so when the government had all the gold and they weren't
basically you couldn't turn in your dollars for gold, but they
said of our our dollars are backed by gold, then they were
able to print more dollar certificates than there were
gold to be redeemed by those dollar certificates without
anybody kind of calling their bluff because you couldn't go
and verify how many gold bars there were or how many total
dollars there were. And dollars were basically just
gold receipts, right? So that allowed them to really
begin to inflate the money supply.
And this was coming out of the Great Depression when the
government was trying to, you know, kind of spend, spend us
into prosperity. Then around 1971, France brought
2 warships to New York and said, hey, we have all these dollar
tokens and we would like to turn them in for our gold that you
are holding at Fort Knox. Because a lot of the European
gold came over to the US after the wars.
And that's when President Nixon said I am temporarily suspending
the redeemability of dollars into gold or, yeah, dollars into
gold. And he basically sent these two
French warships home. And so since then, it's been
like totally de pegged. There's not even a, you know, a
hint of gold backing. We just have some gold in a
vault and we print as many dollars as we possibly can.
That probably pissed Franks off a little bit, I would assume,
right? Yeah, but what are they going to
do? Man, so, OK, so we've got all
these dollars that are getting printed.
I mean, how frequently do they print dollars now?
Like is that like is that ongoing is never ending or how
how often are they doing that? Yes, it's really insidious.
I mean it, you know, there's not like an actual printed press
that prints dollars anymore. It's it's all it's kind of shell
game and there's really interested, really interesting
YouTube series called like the Secrets of Money.
It's like 20 minute episodes. I forget who does it, but it's,
it's really fascinating. And it kind of goes into the
gory details of how the printing money happens.
But essentially the Federal Reserve, the Treasury issues
U.S. Treasury bonds, and nobody shows
up to bid on these bonds except for a couple of large banks and
the Federal Reserve. And the large banks have to use
actual, you know, dollars to buy the bonds.
And the Federal Reserve pays from a checking account that has
a 0 balance. And that's how the government
funds their endeavours is by selling their Treasury bonds to
the Fed, who's buying them from an account with a 0 balance and
has basically a Amex black card to buy all of the unsold bonds.
So this $36 trillion that the US is supposedly in debt at
currently, like does that even mean anything like there?
Like how could we possibly pay that off?
Is there any point in paying an offer that I'll just imaginary
smoke and mirrors? There's not a really good reason
to pay it off. I wouldn't say it.
It's a lot of smoke and mirrors, but because for every dollar of
debt that's created or every dollar that's created.
So when the Federal Reserve writes that check to the
Treasury and they buy say $1000 of Treasury bills, you know,
it's usually in the pavilions. But that $1000 because it's debt
backed requires like more than $1000 is required to service
that debt because as Treasury bills pay interest, so the
terminal cost of that $1000 of debt is, you know, $1200 over
the long term. So it's like you if it you can't
really eliminate all of the debt, the debt because you can't
create enough other dollars anywhere to pay off the original
dollars. Does that make sense?
Yeah. So basically we're writing
checks we can't cash. Yeah.
It's like, yeah, every dollar that's created creates more than
a dollar of liabilities in the future.
So what what do you think? Is it going to happen?
Like is it going to be like a gradual slow decline in the
value of the dollar due to inflation and just continued
debt leverage? Or do you think there's going to
make this apocalyptic moment where the House of Cards comes
crashing down? Yeah, that's a good question.
And one, one note I want to make real quick is inflation.
So inflation is the actual original definition of inflation
is the inflating of the money supply.
So if we had a billion dollars and we printed 200 million, now
we have $1.2 billion, right? That's what inflation
definitionally means. The inflation that we hear about
on the news is actually price inflation.
So it's the the prices of all the goods reflecting this newly
inflated money supply. So if we have, you know, $1.2
billion of of dollars and they're chasing the same amount
of goods because we haven't, you know, we didn't print new
services. We didn't, you know, print an
extra couple Netflix data centers.
We didn't, we didn't print any goods for the economy.
We just printed receipts for those goods.
So now all of those goods have to adjust in price so that they
kind of command the same proportion of the economy as
they did when we had a billion dollars in the economy.
So the inflation is is actually the effect of inflation.
Does that make sense? Yeah, that makes sense.
And because there's nothing that's backing any of it now.
Definition because because everybody knows that they are
the reason for that. Like the Fed is creating,
inflating the money supply inflation.
But they say that, oh, you know, through this magical formula,
the inflation is only 2%. And you know, what everybody
should hear when they hear the inflation is 2% is that they're
being robbed 2% per year. And the Fed likes that number
because that's the number that is kind of psychologically
ignorable. So if I say, all right, I'm only
robbing you at 2% per year, get over it.
You know, most people do, but then when they get robbed 10%
per year, 20% per year, then the Fed comes up and and waves their
wand. And so, OK, we will make it go
back to 2% and we'll just keep robbing you at 2% because you
don't really notice from mine when we run you at 2%.
It's like Jerome, or have you pronounce his name, Powell, the
head of the Federal Reserve, chair of the Federal Reserve.
Is he the one pretty much waving his hands and saying, OK, this
is what we got to reel in or be aggressive with?
Yeah, yeah. And actually, there's a really
interesting book called The Creature of Jekyll Island, and
it details the founding of the the Federal Reserve, which is
like peering into the banals of the most corrupt kind of shady
stuff that you can ever imagine. But it was created in 1914, and
that was the same year that federal income tax was levied.
And the bill was signed on I think, Christmas, either
Christmas Eve or Christmas Day. And.
There have been all kinds of. Propaganda because it was very
unpopular to have a central bank.
And so then these big bankers came together and put out
propaganda that said that the big bankers were very against
the central bank, even though they were the ones creating it.
And so then everybody was very in favor of a central bank
because they thought that if the big bankers didn't like a
central bank, that it must be good for the people.
And so then the big bankers got their way and they got a central
bank and they wrote into the founding documents of the
Federal Reserve, which is a private institution that has no
reserves. So just if you think that you're
being gaslit, you are. That wrote into the founding
document that the shareholders, who are unnamed, will receive a
6% dividend from the Fed every year.
And so we don't even know who these people are.
I mean, probably JP Morgan is one of them, but we can only
kind of speculate to to who the others are.
And so, yeah, this Federal Reserve, which is neither
federal nor has reserves, pays interest to private shareholders
and steals wealth from not only the American citizens, but I
mean, the dollar is the the global reserve currency.
So worldwide citizens, I mean, it's crazy when you start
looking into it. So what what are other countries
think about this? Like if the dollar is kind of
like the the, you know what everybody banks everything
against and you've got those other countries that can't cash
in on the gold because that's no longer backed by gold.
Like are they in cahoots with all this too?
Like do they have shareholders internationally that are a part
of this or how are they benefiting or how does that work
internationally? Yeah.
So we've kind of instituted global colonialism through
implementing central banking with the world over.
And the places that don't have central banks, I think there's
five of them now, North Korea, Iraq.
I want to say Afghanistan. But you know, it's, it's the
places that the US has been demonizing and going to wars
with trying to implement central banks.
It's it's it's pretty gnarly. But your question was, is the
rest of the world kind of in conceits with this?
Or not, and I would say not. I mean, there's a, the BRICS is
Brazil, Russia, India, China, and, you know, they're all kind
of beholden to the dollar and they don't like it.
And currently there's a lot of news about them talking about
trying to kind of implement a new currency or trade for oil in
different currencies. But the dollar is kind of backed
by two things. One is oil.
So we have an agreement. We, I mean the US has an
agreement with a lot of the oil producing nations that they will
store their oil profits in U.S. Treasuries.
And so that creates artificial demand for the dollar and
necessitates the dollar as this global trade asset for oil.
So that's kind of one part of it.
And then the other backing for the US dollar is the US
military, largest military in the world, you know, $850
billion a year spent on this. And the military kind of exists
to keep these trade routes open and ensure the dollar is the
currency that is kind of running the trade.
Interesting. So with this talk of like the
bricks system, that wouldn't really be backed any differently
than the dollar, right? Just like pretty much the the
Fiat system through a different entity, it wouldn't have any
secure backing as traditionally gold did or Bitcoin does, right?
Probably not. I wouldn't think so.
They're talking about some kind of commodity backing, but I
think it would be very hard to implement because it would have
some sort of. Central issuer, to me it's kind
of untenable at that point because you know in any case
where you have somebody or some group of people who have the
ability to make more monetary units for 0 cost, they will.
I mean it's just human nature. It's happened thousands of times
through history, you know, from like wampum shells and to beads
in Africa used to be a money all the way back to like yap stones
was like one of the first forms of money that we found in these
like, remote island villages. So yeah, it's like human nature
that this power will always be corrupted.
And so the answer is not, oh, let's give this power to some
other person or some, you know, group of people.
The answer is let's totally take away this power.
And so that's kind of what Bitcoin does is says there's
only 21 million. You can earn some Bitcoin by
mining, which is the process of using computer power to secure
the history of transactions, and you are rewarded in some Bitcoin
to do that. And some of that Bitcoin that
you're rewarded in is new Bitcoin.
Until we hit that limit of 21 million, then the new Bitcoin
issued is 0. But that's a much more fairway
because it's distributed across everybody who can contribute
computer power. You know, there's not like a
spigot the the new money comes out of and we all gather around
that spigot. Currently, that spigot is
Washington, DC because being, you know, close to the political
center, you can, you know, kind of persuade the politicians or
anyone in that sphere to give you newly created money.
I mean, if you look up the top 10 richest counties in the
nation, it's no wonder that six of them border DC.
So is there there's no risk of Bitcoin getting corrupted as is
the case with other forms of currency?
Because basically all the other players at B wouldn't honor any
form of corruption. Is that kind of right?
Yes, yes, that's exactly right. So the really cool thing about
the Bitcoin network is that it's very decentralized.
So everybody on the network basically exists at the same
level. There's no hierarchy.
And so in order to get the network to change.
You would need to convince a majority of these people to
change, you know, to, to some way that you're interested in
and it's probably not beneficial to them, right.
So, and there's no way to tell who these people even are.
So every Bitcoin node is just a computer that runs the Bitcoin
checks and balances basically. And then it it also keeps a
history of all the transactions. So in order to, and This is why
like Bitcoin is not going away, because in order to make Bitcoin
go away, the entire Internet would have to be shut off and
every individual copy of the history would have to be
destroyed. And so you can see, like, you
know, we're talking about a global network with 10s of
thousands, if not hundreds of thousands of nodes.
And there's no way to geographically track down all of
these ones. So if you have, you know, one in
South Africa that remains undestroyed and can connect to
any communications network, even ham radio, you can send Bitcoin
transactions over ham radio. Then the Bitcoin network can
continue to exist. Got you.
So I, I, I was listening to some Joe Rogan podcast or something
and he was talking about the cash app and you can buy and
sell Bitcoin. So I got the cash app and I've
I've got that open now and it's showing that Bitcoin is valued
at $94,835 and 13 based off of USD currency.
So for every Bitcoin, of which there is 21 million total, that
is worth an equivalent of $94,000 I guess.
Yes, each Bitcoin is currently $94,000, but you know, it's easy
to get pulled into unit bias, which is like 01 Bitcoin is
94,000, but a Dogecoin is $0.30 and maybe that'll go to, you
know, $10,000 or something. But you have to look at like the
market cap or like, you know, what is the total network value?
So right now for Bitcoin, that's about like one eight, $1.8
trillion. For Dogecoin, it's like 60
billion or something. So like the amount of units can
kind of throw you off when you're like, you know, trying to
compare side to side. And yeah, as as Michael Saylor,
who runs MicroStrategy, which is the largest corporate owner of
Bitcoin currently, he says every every Bitcoin you don't buy
today is going to cost you 13 million because his price
estimate for the year 2045 is 13 million per coin.
And I, I, I got into it man. I, I invested into Bitcoin and I
have a total of $16.29 equivalent USD.
So I probably shouldn't retire anytime soon, right?
You're on your way, man. Yeah, but it's it's yeah, I
treat it like a four O 1K, you know, and dollar cost average.
You just, you know, turn it on, set it and forget it and just
buy every week as soon as my paycheck hits, you know, convert
it to some Bitcoin so that I can actually store that value.
And it doesn't get sent to Jerome Pals personal bank
account. But yeah, it's like it's, it's
it's just like a savings account for, you know, the wealth you
actually want to save. And it performs better than any
investment account because over the last five years, Bitcoin's
compound annual growth rate is 67% per year.
Over the last 10 years, Bitcoin's compound annual growth
rate is 74% per year. I mean, it's unheard of wealth
accumulation, You know, if the S&P like this, this current
year, it's up something like 30%.
So Bitcoin is up double that over A5 year period every single
year. And the S and PS compound annual
growth rate for comparison over five years is 14%.
So Bitcoin beats it by 53% per year compounded.
And over 10 years, the S and PS return is 11%, and so Bitcoin
beats that by 63% per year, compounded at.
What point do you think the use of Bitcoin as a, you know,
monetary value of exchange becomes mainstream?
Like when will I be able to go and buy a stake with Bitcoin or
go get a haircut with Bitcoin? Yeah, hey, if you want to buy a
stake with Bitcoin, I'll send you a stake all day long.
But, and actually I think I think KNC.
Cattle out of Texas right now. Takes Bitcoin for stakes.
Nice SO. Yeah, you can start there, but
the money evolves in three stages.
And so the first is kind of this collectible stage where, you
know, it's cool, I want to have some and I think it'll be worth
more in the future. And so that's kind of where
we're at right now with Bitcoin. It's not, you know, everybody
doesn't have it. So it's a collectible of sorts
and it's future value we see as much higher than it's current
value. So it's not super rational for
me to give away the Bitcoin for, you know, something like a
consumer good a coffee or whatever, because the the value
of the coffee and the future value of the coffee is much less
than the future value of the Bitcoin.
But after you get through that kind of collectible stage and
the money has permeated society such that a lot of people have
it, it's value is, you know, an order or two of magnitude higher
than when it's just a collectible.
And so then we use it as a means of exchange.
And so I say, hey, I'll give you some Bitcoin for the steak.
I'll give you some Bitcoin for that coffee.
And once that happens, then people start pricing things in
Bitcoin. So you know the the coffee,
we'll say 200 SAT's per cup of coffee and a Satoshi called a
SAT is the smallest unit of Bitcoin.
So it's 8 decimal places to the right.
It's one 100 millionth of a Bitcoin.
Gotcha. Any idea what your estimated
timeline on that would be? It probably takes, I would say
like at least a generation for that to like fully matriculate,
but Bitcoin's 15 years old right now.
Yeah. I think probably, yeah.
Maybe by the time it's 30, it'll be pretty like universal and
it's and it's we call that unit of account.
So you know what? What things are priced in?
Is there? But it could be, it could be a
couple generations because you think like for the generation
that's say 35 or younger, Bitcoin is kind of a natural
evolution of our always connected digital life.
But for the couple of generations above that it's it's
still like, is this a Ponzi scheme?
Is it like, what is this thing? I don't see it.
I can't hold it. You know, it's not, they're not
digitally native. So it just doesn't, it doesn't
click as immediately as it does for for kind of our generation.
Is there any risk of they're being just a totally different
decentralized form of currency created?
Like for instance, say, you know, the powers that be are
like, you know what, we're going to make our own alternative to
Bitcoin. It's going to also be
decentralized and you can invest in this if you prefer.
Yeah, at this point now because the network affects the Bitcoin
enjoys are so large, I mean there's forget the exact
estimates, but you know, hundreds of millions of people
who have interacted with Bitcoin at this point.
There's billions of dollars worth of special compute power
known as ASIC miners that have been designed, manufactured and
bought and then turned on to secure the network.
And currently there's 8 gigawatts of energy back in the
network to power those miners. Estimates range from 8 to 40
gigawatts to an enormous amount of power.
So then you have like the monetary network effects over
$850 billion has been put into the Bitcoin network.
So those people, you know, would be kind of not willing to move
that monetary energy to somewhere else.
And the other thing is like, you know, we.
Have a central. Party creating a new currency or
token or. Whatever they're not going to.
Want to give up the power? The whole reason to create a new
one is that you control it. You know, they, they wouldn't
kind of make that benevolent move of, oh, let's all get
together and spend a bunch of money to create this new one
that we don't have any control or say over.
And then that's kind of what they're trying to do with
central bank digital currencies. And those are like an even more
extreme version of fee out money where they can say, you know,
this dollar expires on January 1st, 2025 if you don't spend it.
And so in that way, they can kind of influence the money
supply at a moment's notice. And they can also, you know,
spur spending to quote UN quote, boost the economy, which they
they think are related. That's what they So no, I think
during. COVID right?
Like that's what the the talk on the town was there.
Like if they move to some form of controlled digital currency
in which you know they had all the power, they could basically
turn off your credit card, so to speak, and just control you
through and through. Exactly.
Yeah. Like if you buy too many steaks
this week, we're going to turn off your credit card so that you
can only buy, you know, Impossible burgers because we
want to save the environment by eating plant slush that comes
out of a factory floor. Yeah, we don't want that.
Yeah, it's, it's like total Orwellian control.
But I do want to, you know, we got down to Bitcoin rabbit hole
real quick. But I do want to tie it back to
to keto. I mean, the the parallels are
definitely there. So Bitcoin, because it has this
tie to the real world through energy use, through, you know,
computers that are hashing, we call it a proof of work system.
And so in order to, you know, move Bitcoin, it has to go
through this process that is proof of work.
And then it takes the the hashing algorithm is basically
like find a random number and combined it with the data from
these transactions and put it through this one way hash
function and make make a number that starts with a lot of zeros.
And so that sounds confusing, but a hash function is yeah,
just this like meat grinder. You can think of it, you know,
the the data and this random number go through this meat
grinder and it comes out and you basically need to start with a
bunch of zeros. And if it starts with a bunch of
zeros, then it's good. But if it doesn't, then you have
to try it again. And there's no way to go from,
you know, the right side of the equation to the left and figure
out what that random number is. You just have to try different
random numbers until it comes out with a bunch of zeros in the
front. But it's very easy to verify,
right? So if if somebody says here's a
valid transaction, a valid hash, basically my computer can look
at it and in an instant, just with one calculation, see yes,
that that is correct. But because the odds of finding
something that start with a bunch of zeros is very small,
you can only guess and check. And so right now, the entire
Bitcoin network guesses 750 * 10 to the 18th times per second,
which is a incredibly large number.
I mean, you can't even conceptualize it.
So every second the Bitcoin miners on the Bitcoin network
are guessing 750 * 10 to the 18th times.
And so we call this proof of work because it takes energy to
make all those guesses, but then we can verify it by looking at
it. And you know, like in
bodybuilding, right, this takes an enormous amount of effort to
get to the gym everyday, to work out, to eat, right?
But then, you know, when you see a bodybuilder, you can recognize
in an instant that they put the work in.
Like that is proof of work. And it's really interesting if
we think about like the societal implications of a money that
demands this proof of work and this like transparent honesty
versus a money that requires deceit and lying and has that as
it's kind of base layer and theft.
So, you know, in a, in a economic system where the money
has the deceit and theft and lying, the most expedient way to
make money is to cheat, steal, lie your way there, right?
It's to cut corners. It's to basically make things
with that are bad quality that don't last.
And like if we look around, that's kind of what we see in
our consumer products. It's things that.
Break things that don't last, things that are meant to be
thrown away. But in the in the other
perspective where you have truth and honesty and transparency
underlying your monetary system, you know you have the golden
age. There's a reason it's called the
golden age. You have like social norms that
revolve around, you know, society prospering and, and this
kind of communal advancement of science and technology.
It's just it's really interesting to to see the
effects that the money has because you know, money is half
of every transaction. And often times we are bartering
with our self, our future self. And so if if we're using, you
know, like this tainted communications channel to do
that, we come out with some really bad decisions, right?
So you can just think about food.
If I, if I highly value the future and I can project my kind
of economic situation into the future and be able to do
economic calculations on what the future holds, then I can
plan for it. Then I can set myself up for
future success. It's empowering, it's
motivating. But if I live in a world of, you
know, 10%, 15% inflation and I can't even make economic
calculations into the future because the money that I'm using
to do that is so tainted and the signal within the communication
channel is just so blurry, then it leads to nihilism.
It leads to, well, you know, what's the point of saving for
the future? What's the point of planning for
the future? You know, I don't even know if
I'm going to make rent this week because my rent just went up
10%. I can't, I'm not going to put in
an hour to make a nice meal. I'll stop at McDonald's on the
way home because that's quick and easy.
And so like every decision gets kind of skewed to the expedient,
to the easy. To the short term success.
And so bringing it back to keto is like the keto community, it's
kind of predisposed to the delayed gratification, right?
Like eating keto consistently and being disciplined in that is
not something that you trip and fall into.
You know, it takes a conscious effort of planning things out of
spending the time. And so this like predisposition
to thinking long term is exactly the type of mindset that's
needed to understand why Bitcoin is kind of the answer.
Yeah, no, that resonates for sure.
So I mean, I'm assuming there will be like everything in life,
this, you know, first mover, early adopter, phenomenal, which
is what you're seeing now with the the collectible analogy you
mentioned earlier. And then at some point when it
becomes mainstream, when there's enough options to pay via
Bitcoin for goods and services and people, I probably just fed
up with the loss of value in the Fiat system, They'll just be
like this dumping effect of everybody transitioning to the
Bitcoin, you know, transactional approach.
But the longer people delay, basically the more their their
dollar loses value. So they're just kind of delaying
the the inevitable and losing, losing value with every day that
passes. Basically yes.
And yeah, like the the transactional use case is kind
of like the the least interesting to me.
The most interesting is this like global reserve asset
because. You know the.
We already have a transaction network.
It's called Visa, it's called ACH.
You know we can, we can move money pretty easily.
And for limited. Cost the, the, the problem that
we have is that that base layer, the money itself is decaying.
And yes, as Michael Saylor says, it's a melting ice cube.
And so you don't want to store, you know, your entire life's
work in a melting ice cube. You want to store it in this
digital vault that cannot be broken into cannot be written
written and is the most secure computer network on earth.
So that's the high value use case.
That's what's going to command $500 trillion in capital.
The the transactions, you know, they'll come.
We can, we can keep using Visa for now.
But being able to store your human time in a completely
finite, scarce, globally available resource is, yeah,
that's, that's the golden nugget there.
What happens to the the groups of people, I guess when you
extrapolate out this whole haves and have nots scenario and
you've got people living in their world countries that don't
have any way of accumulating Bitcoin.
Like what happens to them? Are they living in a a better
scenario now? Because they probably don't have
that much Fiat currency anyways, but like what happens to that
demographic? It's interesting you you bring
that up because I think that those people have an advantage
over the people in the United States in terms of understanding
why a fair money is good. Because in most of the third
world countries, you know, their average inflation is actually,
you know, 10 to 20% reported, which means that the real
inflation is even more, up to hundreds of percent.
And all you need to interact with Bitcoin is a smartphone or
not even a smartphone. You can send it over text.
There's, you know, in Africa, they sent it, they send Bitcoin
by text message, But it, it has kind of permeated those areas
because they're kind of predisposed to know that their
government is fucking them. Whereas in the US we have the
privilege of, you know, only just coming to that realization
really for most people in the last three or four years.
But these people in 3rd world countries have been, you know,
getting robbed at 20% per year for decades, if not longer.
Like, intimately understand the value proposition that Bitcoin
brings. And I mean, like El Salvador,
they made Bitcoin legal tender in 2021.
So yeah, they, they almost have an advantage in kind of being
the first mover here. And yeah, like El Salvador,
their president posted on his Instagram Story the other day.
His name's Naive Buchele that their Bitcoin holdings for the
country hit like $573 million, so that's just really cool to
see. Yeah, but it makes me sad to me,
people like, I feel like there's this implosion on the horizon
with our current structure with with everything man, like, like
the education system, political system, the healthcare system,
like we're we're literally dealing on the House of cards
right now. And, you know, I think back to
humanity before all of this regulation and overreach was
ever a reality. And it's like people would
barter for goods and services, like they would trade, you know,
things that they had that were tangible for other things that
they wanted that were tangible. And I feel like if we can return
to some semblance of that, we're going to be way better off for
it. Yeah, yeah.
But barter had one key inefficiency, which is the
basically mistiming of wants is like if I want a cow and you
want apples and I have an apple tree.
But you know, it's spring and my apples aren't going to be ready
till the fall. And your cow, like, I'm hungry
right now and I need a cow. We can't basically barter in
that sense because of this misalignment.
So like money, money is an emergent phenomena, meaning like
if the conditions are right, something will be used as money
in the economic system. And because money is really good
at doing what it does, which is facilitating trade.
So, you know, I could give you the $100 for your cow, and then
in the fall you could give me you.
Know one? Dollar for my apple.
Because you don't want every single apple that falls off the
tree. You just really want, you know,
an apple or a bushel to make a couple pies.
You don't want a cow's worth of apples, right?
So like. Money is is.
Very good. It's just that the money that we
have now is very bad because it doesn't store the value across
time like it should, and that value gets usurped.
Yeah, so Bitcoin solves that problem.
In a fluid manner that allows for that trade to take place in
a true form without all this this rigmarole behind the scenes
that people aren't even Privy to.
Yes, it takes the. Noise out of the.
Economic Communication Channel because there is no, you know,
the terminal inflation rate is zero.
Yeah, I just bought. Three more dollars Bitcoin as
we're talking here. So I'm I'm I'm getting there
man. All right, you're on your way, I
think. I'm not sure if you can do it
with Cash App, but yeah, there's some of them that you can turn
on daily buys there. There was something that was
going on. One of my buddies gave me a book
on Bitcoin and he was like all hyped about it because like I
think two years ago now, there was some some phenomena that was
supposed to happen with Bitcoin or maybe did happen.
I just wasn't really in the know at the time.
But what what was that, that thing that was supposed to
happen? I think it was about two years
ago now, but wasn't there some like pivotal moment within the
Bitcoin history so. There's 2.
Things that that I think you could be referring to, one is
called the halving. Is that it Possibly, Yeah, OK.
So the other. Thing is the block size World
War, but that was closer to like seven years ago.
Now that was 2017. Must be the halving that
different, yeah. The block.
Size war was like a debate over how large the blocks should be
in Bitcoin, but that's a little bit more technical.
The halving. Is something that happens every.
Four years and that's when the issuance rate of new bitcoins
being created gets cut in half, so.
In the beginning. Every block reward awarded 50
Bitcoin to the winning miner and then four years later it got cut
in half to 12 and or 25 and then 12 1/2 and then six and a
quarter and it just got cut again to 3.125 in April of this
year. And it's it's interesting
because approximately 6 months after.
The halving. The Bitcoin price historically
has gone on on pretty big bull runs, so we're kind of in the.
Middle of one, right? Now that'll probably go through
sometime next year, but like I'm looking up the having date.
So when having occurred this year, Bitcoin price was around
$63,000 and it's currently, yeah, at $95,000, it's up about
50%. But yeah, if you look at the
stock splits, then basically. Sorry, it's kind of like.
The same concept as like. Splitting stocks?
Then no. It's like.
Because like a stock in a stock split.
You know you get 2 stocks. And you used to have one stock
and that inflates the. Supply of stocks, but all of the
Bitcoin, the 21 million Bitcoin, they're not all accessible right
now so in the 1st. Epic.
The first ten and a half million Bitcoin were issued, so like
over that 4. Year period 10 1/2.
Million were issued then over the next four year period 5 and
a quarter Million were issued and then over the next four year
period a. Little over two and a half
million were. Issued.
So that's it. It's like this exponential decay
in newly created Bitcoin. Gotcha.
And once they've issued the. 21 total million Bitcoin.
That's all she wrote. Exactly, Yes.
But functionally right now 95% of that 21 million has been
issued so and the final one gets issued in the year like 2140.
So, you know, we have 5% over the next century and so like
realistically basically they're they're all there.
Gotcha. OK, that.
Makes sense. That makes sense.
And once they're all issued like that, that is.
Truly all short so. Pretty much people have either a
share of Bitcoin or none, and you've got to pretty much once,
once everything's in circulation, that's pretty much
when the rubber meets the road and people actually start
accumulating that and using that as the primary form of currency
well. That's like.
Mining is 1. Way that Bitcoin kind of
permeates through society because, you know, new miners
come online and then they earn mining rewards.
But you know, the other way to earn Bitcoin is right now to
exchange IRS utility tokens or to provide some goods and
services to a Bitcoin or who's willing to separate with their
Bitcoin. So I wouldn't say that that it
certainly doesn't have to wait until the year 2140 for for the
rubber to meet the road. I think that we're kind of in
that spot right now. And once they're all issued, the
miners still earn rewards from basically finding, you know,
that one in a million number that makes the block valid.
So it's not like the. Miners will stop getting paid at
that point. You know their their fees, which
is, you know, a portion of your transaction that you send to the
minor for them to include it in the block, they'll still be
getting fees and the value of the Bitcoin will be many orders
of magnitude higher. So even if the fees are small in
Bitcoin terms, so like one Bitcoin worth of fees, that'll
be, you know, an enormous amount of dollars.
And you know my estimate is that the amount of dollars will be.
You know, half of the world's total.
Energy production for 10 minutes.
So that's how you can think about like, what kind of value
the Bitcoin miners will be taking in.
Is 10 minutes worth of probably half of the world's electricity?
Man, this is some trippy stuff. This is crazy though.
This is this is interesting. I must be like a deep dive.
You get me a that you piqued my curiosity for sure.
Where where do people go if they want to dive deep?
Like are there any particular resources that you would point
out and recommend? Yeah, I.
My favorite book is called the. Bitcoin standard and I usually
keep like a dozen copies on me to give them out to everybody
who's who's interested. I piqued.
And that's by saving a moose. It's a really interesting
historical. Kind of look at.
You know economics, money, and it describes.
You know, primitive economic systems and and money for like
the first 7 chapters. And that really establishes the
baseline for how to understand Bitcoin because Bitcoin is a
very like new technology. That we don't really have a
good. Reference point for, you know,
saying it's like gold is is like severely insulting to Bitcoin.
Yeah, well, the this appeals. To me, for a lot of different
reasons, but like the notion that there was a, that there
would be a form of currency which was just standardized
across all societies, all humanity.
And it it, it just, it just genuinely creates legitimate
value as opposed to this inflated value.
And then, you know, that kind of equalizes everything.
Yeah. And even.
You know, like. Henry Ford understood that we.
Needed an energy backed currency and you know he didn't really
know how to. Go about that, but.
He he saw that we had this need. For a, a.
Currency that was related to energy.
And then Hayek, who's a economist, economist, he said in
1984, I don't believe we shall ever have a good money again
before we take the thing out of the hands of government.
That is, we can't take it violently out of the hands of
government. All we can do is buy some sly,
roundabout way, introduce something that they can't stop,
and that is this. That is, he described.
Bitcoin, yeah, that was. 40 years ago and.
You know, like I was telling you.
About. Kind of the decentralized nodes
earlier. Bitcoin at this point is too big
to kill. You would need global
cooperation between every single government on earth to invade
every single private citizen's home and destroy all the
computer and communications networking technology around.
And I don't think that's a possibility.
You know, we have a president who was just elected who vowed
to implement a Bitcoin strategic reserve at the government level.
So the odds of him doing that are are pretty slim.
And the new class of congressmen like 300 or more were rated as
being. Pro Bitcoin or pro crypto?
So yeah, it's pretty hard to imagine a case where where
Bitcoin dies at this point. Yeah, well, I feel like it.
It's it's own. Innate form of checks and
balances like you have to have that and you can't have this
monopoly but this creates that from a monetary standpoint.
I mean kind of like the whole thing with like, you know guns
like it wouldn't make any sense for them to restrict all guns
and remove all privatized guns in America because just so many
guns out there I mean I've got who knows how many guns
personally. So like same thing kind of goes
into effect with the notion that you could control the entire
monetary system and white Bitcoin free from planet Earth
are just not realistic. Yeah, and.
Yeah, it's, it's the gang. Theory, which is like pops up
all over with Bitcoin. But you know the game theory.
Is it's much. More profitable to join it than
to attack it, yeah. This is interesting man.
You have a definitely piqued my interest.
I'm going to have to do a deep dive on this.
Have to read that book. I think that may be the same
book that my buddy gifted me. So I will actually have to crack
the cover and read it now. It's been sitting on my shelf
for who knows how long, but I will definitely read that.
And we're going to have to well, I have to get you back on the
podcast after I read it and I can actually ask legitimate
informed questions as opposed to totally ignorant questions.
But this this is this is interesting.
Man. I appreciate you enlightening me
here. All right, awesome.
I. Look forward to it.
Yeah, we can talk about. Talk about war.
Remote energy production. Because it'd be good ones.
Yeah. Yeah.
What? So where?
Where do people go to? Find out more about you man are
you on? Socials I you know.
I I really got off. Socials lately, wise man.
Kind of getting. Cleansed.
You can find. Me on LinkedIn.
At Paul Tansy but. That's.
About the our place on that right now.
Awesome. Awesome, but for for people.
That are on Twitter. There is a really good Bitcoin
community on Twitter and there's just some fabulous minds.
That's that's where I got started for sure.
But yeah, Guy Swan followed. Michael Saylor.
There's a lot of good information there.
Lynn Holden Yeah. And then podcasts, I mean,
there's, yeah, you got to be a little.
Careful because. Some people are pushing their
own stuff, but in terms of. Crypto, but there's some really
good kind of high signal Bitcoin podcasts that exist.
Awesome. Well, I will.
Start doing a deep dive myself. And immerse myself in this
world. For sure, man.
So Paul truly can't thank enough for the time and I appreciate
your expertise. I will definitely keep the
conversation going. I'll start diving into the
books, the podcast, the interwebs, and do some do some
learning. Awesome, Robert.
Thank you for having me on and. Yeah, I look forward to our next
conversation. Sounds good.
I appreciate you, Paul. Till next time, man.
Take care. All right, take it easy.