Bitcoin is better money than anything else out there. There is a speculative attack happening of people borrowing fiat currencies in order to buy bitcoin. Based on the fundamentals, bitcoin is going to surprise to be upside then to the downside. If you invest in a bitcoin treasury company that has levers wong bitcoin and is increasing stats per share over the longer run, it could potentially.
Have perform Bitcoin.
But over the short run and with bad management.
How should we as bitcoinners be thinking about and working with government? Yes, so here, thanks for joining us.
Hey, thanks for having me Mark, Thanks for being flexible.
Maybe kind of work around this, but I really wanted to sit down face to face.
I think the first time I met you was I can bit.
Block boom, they can like twenty nineteen.
Maybe that sounds all right.
Yeah, you've been all in on bitcoin at least since twenty fourteen. I want to ask about that. I started buying bitcoin twenty fifteen and I was like, oh my gosh, I have to tele a bowl world about it. And then I found crypto and right around twenty nineteen was by I foun mc kim on the other side of it, and I was like, all right, I've done. I've done my time in crypto, this bic one on the to bitlock boom, I remember that. But you stayed bitcoin only
twenty fourteen. You co founded the One Institute. So how did you one get into bitcoin and then manage to stay firm?
Yeah, So already in high school I was really interested in open source software and sound money, and so I was like a golden silver bug type person reading Austrian economics, reading Murray Rothbard, thinking about like hundred center reserve banking, even thinking about how you could actually have something better than gold that like, could we'll just have a fixed supply. But that was just kind of a thought because obviously I didn't think that there was any way to like.
Actually have that in the real world.
But I was just kind of because Austrian economists will theorize about well, what's the right amount of money, and it's like, well, just any amount of money works well, but ideally you want to have it fixed, and you know, to the extent that gold can can try to get there, it's better than government, you know, few currencies. But in any case, when I first heard about bitcoin and really went down the rabbit hole of the fixed supply twenty one million. This is like the end of twenty twelve.
I was in grad school getting my master's in accounting, and you know, it would have been great if I had been like, you know, mister Sailor with like five hundred million dollars on the bouance sheet but in the conviction. But no, I was a broke college student, you know, cruing a student loan debt, so unintelligent leverage. But in any case, what interested in me wasn't so much the
idea of like getting rich quick. It was really about the ideological nature of this, which is that for decades Liberty Harrian's had been complaining about Siah currency ever since. Really you know, we went off the gold standard from near.
Nixon, but even before that, Roosevelt and I didn't really they bother about.
Sure, yeah, yeah, absolutely, But I didn't really see a path of how do we get from here to there other than just calamity and chaos.
Of like the Fiat systems that blows up, self destructs, everybody's like starving in the streets, and we finally are back to jo Yeah, yeah, exactly, which you know, like I'm a big believer.
In the ends.
Do not justify the means and said to me, it was like, wow, there's anything we can do to avoid that that would be really great.
Uh.
And bitcoin came along, and I think that the the key difference in my mind between bitcoin and gold was that we could upgrade to bitcoin and it's not like whereas with gold, like we based our downgrading to gold because something bad has happened.
We can upgrade to bitcoin and.
Not have if something bad happen to the dollar. Now, of course, like if something bad does happen to the dollar, you can foresee it accelerating bitcoin adoption, but I would actually argue that it would really accelerate gold and silver adoption. Maybe that's what we're seeing currently and that there's still a process of education for people to realize that bitcoin is better money than anything else out there. So yeah, that was my introduction to it, and that's what you know.
I remember early twenty thirteen, we're having these conversations about bitcoin. Somebody else in our group is like, oh, have you heard of light cooin? And then on Facebook as.
Well, I started hearing questions about light cooin and I didn't have an opinion on it, so I was like, Okay, well, I'm going to go research what's going on here, and they're saying that the advantages that has faster confirmation lives silver.
Correct, So already that argument is silver bitcoin's gold. It was like immediately debunked in my mind by the divisibility of bitcoin. And so it's like, well, SATs are the silver to beatc's gold, right that you can split it up into a very And so I didn't like that they used that that that Freeman because already in my mind I was like, well, that's not even true. So really this is just a method of almost like psychological
manipulation through metaphor. And then the faster confirmation times I found out that actually that didn't even matter either, because you get the same amount of finality over an hour that you get either with either protocol and so and then they would never come back with like a really compelling counter argument, and that's when I started.
Becoming a toxic Maximore stuff.
Like, Okay, why is it that every time I come back with an argument against their thing, they're not happy about it, and that they're they're pumping their back, they're not really like engaging in something you know, substantive. So and also just from the sound money aspect of it, where it's like, none of this works if we're basically saying, oh, we're going to keep expanding the money supply throughout coins.
So I just felt like a very strong bias against that that if you The last point is really un monetary economics, which is that there's always been this debate about value versus utility, and so a long time ago it was the banking school versus the currency school in Great Britain, and so when when thinking about the utility of money, like Akanesians are like, it's about spending it, right, it's about the velocity of it, and you want to have liquidity and just money slashing around the system, and
the Austrians were very much in the mindset of no, actually, there's a lot of value in saving and holding money, and that gives you optionality. It's the option value of money that if you try to inflate people out of holding money, then you're yeah, you're you're creating a short term stimulative effect, but you're actually taking away a very important tool for investors in the economy to be able to hold cash and to wait for good opportunities.
Yeah, it's interesting to hear that at the at the New York unconfience where I was a week ahead to go. You said something online. I saw Michael Sailor a chuckle from and you said. I think you said something like I've learned most of my stuff just from arguing online.
You're sort or something like that. And so to your point, like kind of arguing or or going back forward with the likelying guys back then, and so you've been really good at that and just sort of like hashing it out online that really well, I was like more of tech guy. So I built up two different tech companies and had some exits on that and so but then in two thousand and eight I wiped out and I was like, what's this whole financial system? I have to
go figure that out. And I quickly found out about the FIAT system, the debt based system, and I'd beat a bullbot also. So I also got bitcoin pretty quickly because I was really aware of what the problem was and you know, having seening Fiat and being a bullbug. But then I still fell down the tech rabbit hole. You know, it's maybe it's maybe it is blockchain, and maybe we do need all these different ledgers and so anyway, a good job on that, I think, you know, I'm
sure you would agree. A lot of times people don't understand bitcoin because they don't understand the problems. So the don't understand the solutions that I solved, and I came at it from a different problem solution a little bit maybe then use you a little bit more on the austream monetary side, where I was more a little bit on the tech side, even though we both saw FIAT
as the problem. So either way, but you had some really early predictions, one of which was in twenty fourteen calling for the speculative attack, right, and even when I heard about that years ago, it was still kind of early. And of course we can look through history and see, you know, Hugo Stine's in Wymar Republic doing things like this. Where did you, I guess, pick up that and think that was going to happen in the bitcoin space.
Yeah, So it's really from hearing about I think it was a lecture by Hans Hermann Happa where he's pointing out that there are mechanisms by which currencies compete against each other in the international market, and so as libertarians like we're often like, oh, FIAT currencies are you know, uh,
they're banked by the military. And you'll hear like charliston you know kntans to say this as well, like the value is banked by the military and some capacity, and you know, there's there's truth to that and that like if if your country gets invaded, like your currency gainst zero,
So there's truth in that. But but they can't prop up the value of currency, and certainly not when it comes to competing on four x markets, right, so like you've never seen a headline of oh Trump deployed the troops, like the dollars up five percent, Like that's not a thing.
Uh.
The way that they compete in international money markets is true interest rates and through capital controls and through currency reserves, and so those are kind of the three tools that they use to coordinate devaluation amongst FIAC currencies. Unfortunately, it's very rare that they coordinate revaluation of you know, increasing the value of currencies.
And that when you look then at.
What are currency speculator's role in this, because ultimately all of these levers that the currency issuer has, they only have an effect to the extent that market participants are on the other side of the trade. And so if you look at the history of devaluations, there's cases like Southeast Asia in the late nineties and then most famously or Soros and the Bank of England and the British pound with where they were trying to manage the exchange rate of the British pound to enter into a stability
of the Eurozone. And that the person on the ground was Scott Bessant in London who was orchestrating, you know, some of their their speculations, which is basically to say that if you have a weak currency like the British pound and a strong currency like the Deutsche Mark, that you can borrow in the weak currency borrow pounds, sell the pounds for Deutsche mark, so that you're shorting the pound, shorting one fiat currency against another, and that is the
deutsch mark appreciates and value. Then you can go back and repay that pound denominated liability the borrow and have a profit.
And so.
The that that's really how currency values come into equilibrium against each other and kind of like you get to a point where supplying demand is reflective. Now, of course the policymakers, they have their own agendas behind them, and so you know, if they don't want this to happen, what they have to do in the case of the British pound is like, for example, raised interest rates so that borrowing British pounds becomes more expensive, and so it undermines the economics of that trade.
Paul Krugman famously.
You know, obviously he's become a political hack, but a long time ago he was a legitimate economist. Keith popularized his term of speculative attack. I think it's pejorative because ultimately he doesn't like speculative.
Attacks because they impose fiscal and.
Monetary discipline on governments and saying like, hey, you can't like go full Stephanie Kelton money printer. You actually have constraints that are put on you by you know, the bond traders and the currency speculators and these giant you know, macro hedge funds.
And so fast.
For today, I think that's what's happening is that in a very interesting format, there is a speculative attack happening of people borrowing fiat currencies in order to buy bitcoin, and that today fiat currencies have to tighten their monetary policy to be more aligned with bitcoin, otherwise they're going to continue to invite this kind of trade.
And now we're seeing that start to happen faster and faster and faster. It's the arbitrage trade, it's the carry trade. We kind of see it play out in different different areas all over the place. I want to dive into that, but before we do, I guess, you know, kind of retracing some of this. So, like you came from the financial side of things, and you've studied the financial markets. You understand the specultive attack and the way these financial
markets work. Talking about sort of like these battle of ideas. How you've been always engaging people in open debate. Good, I wouldn't want to debate you. But it seems like today, maybe maybe it's a function of the industry growing, but it seemed like people that came to bitcoin early maybe were a little bit more principled. They came for one reason or another. I lost my money, I had to go find a solution. A sound money supply worked for me.
You were censored, a cipherpunk whatever it is. Today, it seems like we have a lot of people in that maybe don't understand how the world works. From a bunch of different angles, specifically right now about the financialization aspect of it. So a lot of bitcoiners think that bitcoin ends financialization and like Wall Street's not necessary because we can just save our money and it all goes away.
I mean, do you see that? And if so, how would you counter that?
Every day we see headlines about inflation and dead and diminishing control over.
Our own money.
That's why I always come back to bitcoin, because let's go for generations, It's go for legacy.
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Yes, so bitcoin gives you that option to uh not have to invest in stocks and bonds, or in real estate or in small businesses like that, you have the option to just save bitcoin. And I think that that itself has been very attractive for me and for lots of others out there who see stocks and bonds and real estate and all of all these asset classes that you know are tied in with Wall Street is.
Basically overvalued relative to bitcoin.
And so I think that thesis can be true, and that then when you think about the financialization of bitcoin, it's like, in that set of circumstances, could you really expect Wall Street to do anything other than try to adopt bitcoin, like you think that they're not going to act in.
Their self interests, right.
You know, this is the place where like famously Gordon Gecko is like greed is good.
Right.
If you really think that bitcoin is the best performing asset historically and going forward, then you should fully expect Wall Street.
To just go all in on bitcoin. And I think that there's part of it is.
A concern that Wall Street is going to co opt bitcoin, right, and Blackstone is going to go in there and.
They're gonna like change the rules and they're.
Gonna muck it up and and and maybe with an neferious ultimate end of just destroying bitcoin or more benign of like advancing their own interests and that undermining bitcoin, right, So like trying to get everybody to custody with you know, the ETF and like try.
To just clamp down on the ecosystem and control it.
Yeah. Yeah, I think it's the opposite.
So I think that Blackrock, Fidelity, all of the other financial institutions that are embracing bitcoin, they are joining the bitcoin network, and really I see it as like they are finding how to integrate with bitcoin, not how to integrate bitcoin into their world. And so when I look at like, so we have to start with the idea that like sixty one oh two executive order means that these are giant honey pots of bitcoin that you can get seized by the government when when the crisis arises,
right when the time is right. I think that that is a huge risk, and that the only way to
interact that risk is through lobbying. I actually don't think that it's as effective as people think to say, oh, if we all self custody, that we can avoid sixty one oh two, because ultimately, if even if you self custody, at some point, you want to do something with us bitcoin right, right, like you want to pay for your kids vacation to Disney World, and you know that basically if you take the bitcoin addicult storage, there's no exchanges to bring them to, right.
You might have like a bitcoin guy.
On the street who you know could exchange, right, yeah, but like do you really you know, want to take out like fifty grand, you know, And so then suddenly you're in a situation where sixty one or two affect
you even if you're self custodying. And so even if you are a self custody MAXI, I think that you want to be engaged in politics so that not only did you avoid that outcome, but you create a better outcome of Hey, no capital gains taxes on your bitcoin, right, you don't even need a KYCML when you take the medical storage. And so I think that we want to be engaged with the policy making process to advocate for
the best outcome. And I think that the more financialization of bitcoin there is that it's it's great to have black Rock and Fidelity and micro Strategy and anybody else hiring lobbyists and like getting bitcoiners in the room to
advocate for these policies that are good for everyone. Right, They're good for the treasury companies, they're good for the miners, they're good for the publicly traded companies, for the financial institutions, and for the self custodied PLB who just wants to you know, pay for his kids vacation.
Yeah.
I mean, the financial industry is one of the biggest lobbying groups out there, so of course it is right, Well, we can get the pharmaceutical companies to put it under.
Balance sheets that my health out too, but we won't even about that.
But so I would agree with you on that, but it seems like maybe there's a lot of people that don't understand capitalism. Then so they think that again, right, all this financial stuff goes away. So you're a grifter if you're going to help these companies raise money?
How dare you? Don't you know? People should just go hoddle their bitcoin on a hill?
Right, So I think there's that, and then almost they want to dictate how bitcoin should be used.
Yeah, so okay, so I think that part of it is just we.
Don't need to call it any names, but you know who we're talking about.
Yeah, the CAF dependency of like a lot of OG's saw what happened with mount Gox, and so when you think about it probabilistically from like an actuarial table perspective, if you were really scarred by Mount Gox, like you have a very set like list of best practices about how you can survive with your bitcoin, and you could.
Also say Tara Luna and Celsius and and all that.
Yes, But then also like even if you held a coinbase, I've heard the stories of people struggling to get at their bitcoin out of coinbase because of kycaml right of like, Okay, now they've got additional verification all of that, and so I completely understand and you know, like this is from lots of secondhand, firsthand you know, sight seeing over the
past decade. We cannot undervalue the self custody, right, So like even for somebody who's interested in just purely financial returns, you have to multiply the financial returns by the probability of loss from not self custodying, from having to trust the third party. Okay, So now today, I think that with the election of Trump, there's a real, big, like psychological problem that's facing the bitcoin community, which is that
we've had it in for the past four years. I think we've had a really nice mindset of Joe Biden and Kamala could they can just come in and take our bitcoin any day?
And so, like self custody is non negotiable.
Now it's realizing that actually, as long as we have like some baseline amount of property rights and working institutions
here in the US, they can't undo the ETF. So to come in and say, oh, well they could see it's like the ETF that's basically kind of in the same realm as saying they could come in and seize all the four one ks and you know, all gold, ETFs, the s and P five hundred like everything, right, And so I think that there's there's a there's a reality check of like a massive amount of uh, the world's wealth is in US capital markets, and it is actually reliant on the regulatory framework and the rule of law
US institutions. And the reason why the US continues to be the wealthiest country in the world is, I would argue, due to the stability of the architecture that was set in place by the founding fathers in you know, really divinely inspired wisdom h two hundred and fifty years ago.
And that.
If if if you have the view that well, that's actually very fragile. One, we have to fight for it. So I actually agree that it is fairly fragile. But two, you basically we will we would have to go around door to door and fud all of that into saying that like, you know, your your retirement account is going to get seized by the government next year, that's why you need to buy bitcoin and self CUSSI it.
And so we could we could.
Do that, you know, like drive bitcoin marketing that way, but It goes back to like do the uns justify the means? No, I don't think sowing panic, uh, you know, by spreading food in the public, it's like a good way of selling bitcoin. I think that we have to sell bitcoin on its merits of like do you want to have the freedom to control your own money or not?
Right like that, you know, we don't have to like trust to strike here in people's hearts all the time to can I give a positive vision for bitcoin?
And I think we.
Really have to meet them where they're at, and honestly where I'm at.
I don't think the.
Rule of law is like falling apart in here in the US to such a degree that if you buy a security, whether it's an ETF.
Or the brakes a little bit.
Yeah, well, I mean we to the point like that a couple of years ago it was a different direction.
But I agree, yeah.
And I also think that if you look at, okay, when the rubber hits the road, like what what would the elites tolerate. I don't think they would tolerate like arbitrary seizure of like assets at that level you could argue like and look at like the case of gold, right like, why is it that they.
Were okay with Executive Order sixty one O two.
And I would argue that it's because gold custody had already centralized, because that is the equal equilibrium.
Outcome for gold custody.
I think for bitcoin custody, it's all about decentralization. Having a multi sig is something that you cannot do with gold. And so even if they're if they're thinking like two steps ahead of all right, well if we sixty one O two bitcoin, what's the next step. Well, it's multi jurisdiction, multi signature of custody right where Now sixty one oh two in one country doesn't mean that you see, it's the bitcoin.
It just means that you're entering into years of litigation to try to seize the bitcoin.
Maybe I often think about that.
I mean, I remember Ray Dalily making a big deal about that, and in sixty one oh two, the government had created the Federal Reserve. In nineteen thirteen printed way too many of those fake currency units, and by nineteen thirty three.
They owed gold. So they owed gold, so they needed the gold.
But they don't owe bitcoin to anybody, right, They owed dollars, right, So why would they seize.
They don't.
They don't have the same demand or need for the bitcoin like they did for the gold back then.
I think that they're going to run the playbook in reverse, right, because I think that in order to have a you know, like ship of theseus like we're going to replace each plank of this ship of seatt We're going to replace it with bitcoin and or you know, like people will talk about replacing.
The jet engines mid flight, right, Like.
That's basically what we have to do if we don't want s to hit the fan from a societal perspective, Yeah, And I think that the best path to get there is for them to print dollars to buy bitcoin until each dollar is fully backed by bitcoin. Yeah, and that's how you kind of get to the equilibrium mat com.
Do you think it's also probably levels to this game? Right, So you started the meme, I think you started about selling your chairs or whatever.
Right, the IMT started that meme?
Oh is that the IMF started that meme?
But I think about like the plub who's just trying to get to one bitcoin, and it's like, just get to one bitcoin, don't buy anything else. Everything else is a scam nothing's worth more than one bitcoin. But like I've been to Michael Saylor's house in Miami, He's got like three outs out there, Like as you have more,
you have more money. And I think about even my own bitcoin, A good majority of it's in multi sig and then some's on single sig and some on some exchanges, and I have a little bit on my phone, and it's like kind of everywhere. So there's like levels to it, right, and so maybe maybe it's people in different levels and
they don't understand that. But even just going back to the financial system for a second, like the financialization, sure, but like there's some parts that will never go away, right, Like we're always going to have savers and not just individuals that can do multi sig or cold storage, but like corporations, So there's gonna be some need for that insurance services, capital formation, Like that's never going to go away.
So that part, I mean, sure, maybe we don't need to invest into a four oh one K. Yeah, but like the Wall Street scaffolding doesn't just disappear.
Well, there's that, And then also there's people who actually want to try to outperform bitcoin by going leverage long right, and I actually think that that's that's maybe the purest way of trying to perform Bitcoin is just going leverage long and historically the challenge there has been liquidations. So like when I worked at Kraken, like we had a margin tating product, right, and.
So it was very popular.
And then it's no secret that sometimes we had to turn it off for.
New positions because we just ran out of dollars to lend to borrowers.
And so it's also no secret to anyone that whether it's a Kraken or at bitmex or any other kind of leverage trading platform, that Bitcoin being volatile, causing cascading liquidations and causing increased volatility with this leverage, right, And so I think that's what's disturbing for bitcoiners is this idea that if you invest in a bitcoin treasury company that has leveraged long bitcoin and is increasing SaaS for share, that over the long run it could potentially perform Bitcoin.
That's really you know, just to put it bluntly, it's disgusting to bitcoiners because in the mindset of like, the virtuous thing always has to be the most financially rewarding thing, right, the virtuous thing of self cussing, right, has to be the most rewarding and if it's not, then there's an injustice occurring.
Right. But the reality is that it's a trade off.
It's saying, Okay, you're gonna have to trust the third part, and it could underperformed bitcoin. It could outperform bitcoin if you look at the fundamentals, like if it's really being executed well over the long run, it ought to be expected to outperform bitcoin, but over the short run and with bad management, it could underperform right.
The train off there.
Of saying okay, well that's that's that's a bitcoin treasury company, and then you've got bitcoin called storage where you know you're going to track the performance a bitcoin one hundred percent like uh, and you know is assuming you trust yourself to self custody. I think that's also something bitcoin is maybe tend to miss is how many people out there don't trust themselves to self custody a lot. And you know, it's like the that that is we can yell at them on social media and say like no,
you need to take responsibility for your financial life. But realistically there's also diminishing martial orts where you can say, like, all right, if I think there's a one percent probability or ten percent in probability of sixty one or two happening, and so I'm going to have some bitcoin and cult storage.
But I think that there's like a ninety percent chance of the government being controlled by bitcoiners and us going in the opposite direction of like government's voluntarily adopting bitcoin and not doing sixty one or two.
Then I want to be leveraged long bitcoin.
And so then it's just a expected value calculation based on probability weightings of different outcomes. It's not like, oh, I have a definite view what's going to happen in the future.
But now you're asking people to like get educated and take responsibility.
Yeah, so that's that's asking a lot. That's asking a lot.
So speaking of leverage long the best way to make money and the treasury companies, you had a debate with Jim Chinos, Yeah, talking about this this entire topic. Right, So he's shortened micro strategy buying bitcoin. It's kind of worked out for him so far in the short term. I think about Simon Senek's book The Infinite Game, and it's like Bitcoin's the infinite game, and if you're playing these short term games, these finite games, you could probably lose.
But he's been righting there in the short term. In the long term, why is he wrong? And why do you think these companies should outperform bitcoin?
So this is a fantastic question.
First of all, I would question whether he's right in the short term or not, because in the first five minutes of the debate he mentions that he's constantly having to go buy bitcoin to maintain his head because Sailor is increasing bitcoin per share and even.
Though the price of bitcoin, even the price of MSTR is going down.
Right, So to really short end af you have to maintain a constant offset to the bitcoin.
Per share that Sailor has.
Okay, And when I hear any kind of trader come to me and say, hey, my trade makes sense as long as I'm adding more capital to it, I'm scratching my head of like, well, that sounds like you're losing money, right, and that you're filling in the gap.
Isn't a short in the fiat price of MSTR, though?
Why would you have to add more bitcoin in his bitcoin long?
Oh, in the bitcoin long in order.
To maintain the same ratio of long bitcoin to short bitcoin, so that the only factor.
Is MNAV multiple.
Okay, right, So over time that MV multiple is being monetized into BTC per share, both through common stock issuance that is a creative and through fixed income instruments, whether it's convertible notes or preferreds and so over the short term, yes, okay, I'll concede that you can have and I can see that this in the debate. You can have short term
MNAV expansion and contraction. We saw it in fact in twenty two sailors went below one x, so that without a doubt you can have based on various market conditions, right, namely that I think m NAV is a function of momentum, volatility and sentiment. Right, So if bitcoin's on our ripop, it's gonna like MNAV has an opportunity to expand Bitcoin's going sideways and it's not volatile, then I would absolutely
expect mn AF to compress. But to me, the main question of the debate was really about is the equally room MNAV greater than one x? And I think it is, and we can debate about where it should be. I think that ultimately it actually depends on what level of leverage the company achieves or is expected to achieve, right,
And that that's where equlibrim nab ought to be. And then day to day it's obviously going to oscillate around that because it's the trade off actually between like a two x lever and ETF right, where day to day it's going to have two x BTC performance on up and down. But then when you start zooming out to like monthly and yearly, there's that decay from the derivatives trading, and so I see bitcoin treasury companies.
Being the inverse of that.
Day to day, they're not tracking two x bitcoin, but over a long period of time, you're seeing fundamental value correl from SATs per share increasing, Right.
And then the m NAB, as you said, is some of it's just like a market premium, so sort of like a pe ratio. Why is it thirty seven and not forty two? Yeah, or thirty two, And so that's sort of like where the market sort of puts that
premium based off of that. So when you have higher bitcoin volatility and then they're mapping out where they think that leverage could be over a long period of time, people want to pay more for it, correct, right, and in a time of compressing volatility or price cline, then they're willing to pay less for it.
That's right, that's right.
And I think it's really amazing because like if I go back to like the days of margin trading at Kraken, like the idea that you could so you know, you have a leverage long position inside of an account, the fact that you could sell the equity in that position or buy the equity in that position and not have the liquidation risk, Well, I think that we're reaching a you know, a point where that it's it's very attractive from like thinking about the speculative attack where historically, and
this is what I wrote in twenty fourteen, is that like people would borrow against other assets to buy bitcoin, but the that's suboptimal because those other assets have a lower return on an investment capital than bitcoin does. So the ideal would always be that you're borrowing against bitcoin to buy more bitcoin, but that hasn't been impossible up until now.
I would argue that, and.
There's still like inefficiencies. So for example, like ideally the dividend payments on preferreds would be tax deductible, just like interest expensive TAC subductible set. I still think there's like and that we'd get rid of capital gains, Like there's still like constraints on the on the leveraging up against bitcoin, but it's getting better and better, and I think that it's getting better for corporates and I think that it's
actually going to get better for individuals as well. Once the like you can post bitcoin at JP Morgan Chase and just get a line of credit against it like you would a mortgage at you know, five percent interest rate for thirty years.
Right.
Yeah, if we think out five or ten years in the future, we have asset heavy businesses, so insurance companies, banks, oil companies, et cetera typically trade in a one to two times m NAV and sometimes they'll maybe get to a three and sometimes they go below, depend on sort of what's going on, which is kind of what these are, right,
asset heavy businesses. Do you think that with reclassifying reclassifying income, for example, bitcoin continues to go up, you know, hits a million dollars in five, six, seventy or something like that, do you think we start to rethink what capital and what income is and they start trading more like a pe ratio maybe much higher or do you think they stay sort of in that like one to two times m NAV asset heavy business that we see over like a five tenure window.
Yeah, so I think that you know, being levers wanting bitcoin, like first of all, they're going to buy design potentially hopefully.
Maybe we'll see be more volatile than bitcoin, right, so.
We'll they are right now.
Yeah, and so I think that you know, that's going to be it's really challenging because of this like GameStop, meme stock like uh, a time we live in where uh there's maybe less fundamental research happening in the retail community than there ought to be, but when it does happen, like, uh, it's very high quality and the high signal. Right, and so I think that the uh, there won't really be an equilibrium on the m n AFF like it's just gonna that's gonna be volatile. Nafs are gonna be volatile.
But what's really interesting is that from a bitcoin perspective, they're gonna sorb all the volatility and so strangely enough, like I think they were in a new new era of bitcoin price formation where on the way up, like bitcoin treasury companies have more resources to buy bitcoin, and then on the way down, they're not pay ex selling.
There's holding right right, they're sitting on their hands, and which we really haven't seen yet. We haven't seen anyone like really blow up.
Uh you know, knock on wood that that doesn't happen, because I want everyone to succeed in this space. But uh, you know, the even if we look at like uh uh mstr and let's just like draw the insane argument, right, Let's say they get to like eighty percent leverage on the perpetual preferres uh and that bitcoin crashes and they're like basically underwater on it.
Like, I still don't think that.
It's in their best self interest to liquidate the bitcoin. And so I think that there's like, uh, at a less than one XM and AF, the management team and the board can credibly go to the public and say, we think bitcoin is fundamentally undervalued and we're going to continue to hold it because of that. And so I think that there's like a countercyclical force to bitcoin treagery companies.
Even when their stock is doing poorly and m navs are compressing across the industry, they're actually either holding bitcoin or continuing to accumulate it.
Yeah, as long as they can hold it. I remember Sailor saying, we've been Prague a few months ago, and someone said, what's the worst that can happen? He said, the worst that can happen is we never raise any more money ever again. And we're one hundred billion dollar company growing at sixty percent a year. And to your point, right, there could be these bear markets. But to your point right, if we're not forced to sell the bitcoin, the stock
can take a hit. Let it take a hit, give me a year or two, and we can kind of get it back. I think that's what you're saying, if you're able to withstand and kind of and hold through that period.
It also gets back to like the argument of like and Chaino's pointing this out. I was like, Okay, so strategy has been going to do great as long as Bitcoin's price keeps going up.
You have to believe in that, right, And I.
Look at Bitcoin's fundamentals and they've never been stronger. And so I'm like, the only argument against like getting back to like one hundred percent cager that it was at, you know, five ten years ago is basically just that it's gotten so big that now it's a two trillion dollar asset class, and so it's going to require massive
inflows to you know, get to that. But I still think that even if we fall short of a hundercent cager and we land a fifty percent or forty percent or thirty percent, that's still greater than the cost of capital in uh FIAT markets. And so I think that the yeah, the arb there is intact, but I think that it's more likely based on the fundamentals, that Bitcoin is going to surprise to the upside than to the downside going forward.
So the give in the law of large numbers. The bigger bigcoin gets, the harder it is to kind of continue to have that explosive keg. But when you overlay like a technology like s curve intol, you can see we're.
Accelerating to that adoption.
And you would also say two tillion is actually still pretty small when you're tapping into one hundred and forty five trillion dollar fixed income market. So certainly, yes, as it gets bigger, technically that's correct, but as we tap these big pools of capital, things could speed up. Two more things to ask because then we got to go to dinner.
So One, what.
Are these extremely attractive fundamentals that you see and why do you think potentially we could see the end of that four year cycle in the bitcoin cycle you're talking about.
Yeah.
So one is on the supply side, ninety five percent of the bitcoin have been mined at this point, and so with each having like the new issuance of bitcoin entering into the market is just a smaller and smaller percentage of the trading float out there, and so I
think that that is less and less impactful. Two, on the demand side is the ETFs have only begun to be rolled out, and so if you think about all those financial advisors out there who are talking with their clients about what percentage delllecate to bitcoin, like, all of those conversations getting to like one to five percent are in the future in the next ten years, not in
the past, So massive amount of demand from that. And three on still on the demand side, from a demographic perspective, the massive wealth transfer that's going to happen through inheritance from boomers essentially to younger generations over the next ten to twenty years. It's just it's astronomical trillions of dollars and so incrementally a lot of those dollars that are
going to flow into bitcoin. And so I think that those are the three big trends that even if you look outside of like corporate adoption and software adoption, like if I just look at flows from ETFs plus plus from demographics, they were looking at a multi decade pull market in front of us.
Yeah, I would definitely agree with all those. I would also add that I think that the four yer having cycle just so happened to coincide with the four year global liquidity cycle and the four year ism business cycle, and I think those are really.
The dog that wags the tael.
So when you look at the global liquidity cycle, I think one we can see from the banking collapse in twenty twenty three, there's like no appetite for a drawdown right now. Yeah, you have yelling and now you mentioned Ascent earlier.
They've continued just to load the front end of the bills.
And so when you take away that debt maturity at three to five year debt maturity and you load it all in the one year, you start to really limit the impact of that liquidity and then on top of that, you have rates just started being cut now, as opposed twenty twenty one, they were behind the curb and they are hiking.
Now they're just starting to cut. Right. Trump is patting the table.
He wants rates three points lower than that he gets usually what he once. He's going to replace the FED chair in a couple months from now. We'll probably be cutting all the way through next year. And if the US is cutting, that gives cover to China and every other central bank to start cutting on top of that. So certainly the cycle is intact.
Intel has proven otherwise.
But when you look at the macroeconomic picture, it looks like we can accelerate all the way through next year.
What worries me about like and.
The US dollar monetary policy situation is said, it feels like any gains we get in bitcoin from that are going to be offset by the price of my stake.
At the supermarket increasing.
And I feel like that way about like COVID. You know that COVID inflation period where it was like but no, but no.
Right, So from twenty twenty to now they increased in US and two forty percent.
Yeah, and homes are up forty percent, gases.
Of forty percent, oils of forty percent.
Foods up thirty to forty percent.
Yeah, well bitcoins up what.
I don't know if that percent so big point is much more sensitive to that liquidity.
But I still feel like that the the the marginal demand from people trying to avoid inflation. Yeah, that that can that can be material. I just I hope that that's uh maybe maybe it's just uh rose colored or orange colored glasses of just hoping that like they don't blow up the system, because ultimately, if we think about it from a societal perspective, like we can't take what
we have for granted. And uh, as much as we want to be like anarcho capitalists, the reality is that if if the system blows up, it's going to hurt a lot of people that had you know, they're not the ones who decided to go off the gold standard or anything like that. And so, uh, but I agree with you that we're entering into an easing things and if we think about bitcoin versus the dollar, they arguably should be increasing interest rates, not lowering them.
At this point, stock markets, all time highs, low, unemployment, right, I would say, I mean one hundred percent. I remember in two thousand and eight. I referenced that earlier and how I got hammered in that. And I remember them coming out with a billion dollar tart.
Build and I'm like, no, you can't do that.
No, and now seven hundred billions like nothing right part of me, and maybe it is insensitive is just like okay, just bring it now, right. But we did see in two thousand and eight was we had massive asset price and it's not inflation, it's appreciation. When consumer prices stayed actually relatively low. So we could see actually, maybe it's
hopeful thinking. But where bitcoin is that liquidy sponge and absorbs more of that asset price inflation, So maybe you don't see houses going up as much as you did in two thousand and eight, So maybe houses stay down a little bit, maybe assets stay down little bit. Bitcoin absorbs more of that. Consumer prices could still say relatively low. Yeah, maybe that's that's hopeful thinking, and we'll see how that
plays out. Let's jump into the last question because we're here in Washington, d C. My first time being here on the helm by the way in Washington, d C. Talking about policy. So you referenced it sort of earlier with the A M L K y C. But you know, I was I was mentioned to you before we started recording.
I think that we should sort of be trying to keep the government and check one of the finding fathers that intended the Constitution to be as opposed to working with them the past laws that allow us what to do.
I'm just curious.
You spent a lot of time with regulators in Texas and now here. What do you think is the sort of approach and how should we as bitcoorners be thinking about and working with with with government.
Yeah, it's a great question.
So I think that first we have to kind of have some like North Star principles, right, Okay, we would never or support anything that undermines self custody.
Running your own note mining, you know, whether it's at home or a large facility.
And by the way, self custody whether you're a plub, you know individual, your family, or your.
Church, or a giant mega corporation.
That you know wants or you know, a bank that wants to be able to custody a bitcoin like, they should be free to do that for their clients and for themselves. And so I think that that focus on freedom like has to guide everything within that. And then there's questions of like, well do we what do we prioritize on a tactical level given the game of politics, right, And I think that we always want to be moving
the ball down the field away from banning bitcoin. And so I feel like that's the strongest argument, for example, for the strategic Bitcoin reser, is that's one more thing where we get it, you know, ten yards down further field, where AOC or Gavin Newso or whatever Democrat gets elected as president in the year twenty thirty two after JD Vance's second term and they cheat again or something anyway, but that's get too political that yeah, they've got to undo,
they've got to undo wins rather than score goals, right, And so I think that we also want to make sure that the debate is debating what is the value of bitcoin, like are we bullsh on bitcoin or not? Versus the debate of should we ban bitcoin or not? And so it's almost like a denial of service attack of like we want to advocate for policies proactively so that we keep them tied up and not keep them
on their heels. Right, Right, there's there's a saying here in d C of if you're not at the table, you're.
On the menu. And so you want to be in those rooms. Yeah, and you want to be.
Zealously advocating for bitcoin and for the bitcoin community and for the whole ecosystem, because if you're not telling the story, your enemies are telling the story about you know, and they have right, They've they spent many years talking about the environmental devastation of bitcoin mining, all the criminal activity happening on bitcoin, all all of this fud that we
have to push back on. Otherwise, if we take everything for granted, it's kind of like a metaphor of like another sports metaphor soccer name.
Okay, so got to.
Like him national team, like FIFA champions versus five year old like you know, kids soccer.
And you could say, well, obviously the FIFA team's gonna win.
They don't even need to play, and then you know, the kids score goals and then the kids win. Right, the FIFA team still has to go out on the field and kick the ball into the goal. It's not enough for them to sit on the bench and say, well, we're obviously better than them on paper, so we don't actually even need to play right. And so that's where I think like, even though we know bitcoin's going to succeed,
that only happens by us doing things. It doesn't happen from us, like you know, just you know, taking cheap shots on Twitter.
Yeah, we're responsible to go build the world that we want. And I've challenged a lot of bigcoiners with that. You think you're just going to go hoddle and the whole world's going to get built for you and then you're going to emerge one day. It's like not going to happen that way.
So or or they're free writing on the efforts of others, which I'm like, that's fine, Like, you know, I don't know that you want to tell your grandkids about it, but that's fine.
Yeah, yeah, all right, Pierre, we're going to wrap it up host a Bitcoin for Corporations. You talk about this all the time. New independent director at Strive Asset Management. Again, congratulations of that bitcoin bond co company. You don't have anything to announce on that yet, but we're going to keep an eye on that. Anything else people should be paying attention to.
Uh, the Satoshi knacametoans too, of course.
Yeah, I encourage everyone to go check that out and to just go down the rabbit hole.
Okay, that's it. Thanks thanks for having me on Mark Cool