Micro strategy becomes the most valuable organization from an equity perspective in the entire world, because they will become like the central bank of bitcoin in the future.
There's a group of children that exist in.
The world today that are around that timeframe that have only ever been alive since bitcoin has been around. If you believe in artificial intelligence is going to be successful long term, you inherently need to understand that bitcoin will be as well. These bots are going to have to get paid somehow, and they can't set up a bank account of Bank of America.
Bitcoin price will decline.
Some of these companies may have to start selling their bitcoin to buy their shares back to.
Balance out the end nab of the company.
The more bitcoin we can actually acquire, the bigger geopolitical advantage we.
Have in the future.
They've lowered their transaction to these by fifty percent.
That's remarkable.
How are you looking forward to that?
I still believe that our.
Hi Brian, So, what is the single biggest fundamental shift that an investor has getting their head around bitcoin?
I think the biggest change that people haven't figured out yet, especially a lot of traditional investors and asked managers, is the difference between the value accretion at the protocol versus the application layer, and that's flips with blockchain technology. So to give you an example, in the early days of the Internet, nobody could invest in IP like Internet Protocol or TCP IP right like, that was the open source infrastructure layer for the Internet, but if they wanted to
invest in it, they built on the application layer. So your Facebook's, your Google is your yahoos. So if you want to invest in email, you couldn't invest in SMTP Simple Mail Transfer Protocol, the email protocol itself, but you could invest in a company building an application that provided
email to the markets. Right and so since the Internet up until just recently, most of the value accretion happened at that application layer, but the software protocol layer couldn't accreate any value relative to having an asset that you could hold as an individual retail. What's flipped with bitcoin is now all the value accretion is happening at the software protocol layer. So basically, buying bitcoin, buying that chunk of the bitcoin protocol is significantly out performing the businesses
that operate at the application layer. And a great example is if you think about investing in Coinbase in twenty thirteen versus fuying bitcoin in twenty thirteen, and the value appreciation over that time period to now bitcoins significantly outperform Coinbase, even though Coinbase has done very very well, And I think that's the big shift people need to wrap their heads around.
But is that is that something that changes through as this system matures in the protocol and the applications mature.
So you mentioned Coinbase, but over.
The last since coin coin Base went public, has it outperformed Bitcoin?
No? I believe Bitcoin is still still one buick point over that time period. Yeah.
Okay, Well, your fund off the Chain Capital, which thank you for dinner last night. Yes, of course.
So your fund, though, is investing into companies that are building on and around the bitcoin ecosystem in hopes that they're going to outperform Bitcoin.
Yeah.
So we do a mixture of private companies and then
also liquid assets in our portfolio. So our core goal is we try to outperform Bitcoin after fees and we take a Warren Buffett Benjamin Graham deep discount value approach and we're just applying it to this new technology sector and that strategy has fortunately allowed us to outperform bitcoin six of the last eight years after fees, and so on the private company side, we're looking for very mature businesses that are cash flow positive, minimum to no debt, and we think are on a one to three year
pathway to liquidity. And what we do is we find early investors or employees that are looking for liquidity and become forced or motivated sellers, and we'll go at and offer them that liquidity at a large discount to where we believe that asset's intrinsically valued. And so we have a portion of the portfolio in private companies where we
do those kinds of things. And then on the liquid side, we look for unique ways to actually buy digital assets at a discount or things that we think are intrinsically discounting. A great example of that is the Mountcox bankruptcy. So in the early days of the mountgox trade, we originated the way to buy those bitcoin bankruptcy claims with our team.
And what was interesting about that particular trade is in Japanese bankruptcy law, when a bankrupt he concludes, they pay out the liquid asset, versus a US bankruptcy law, they pay out the assets cash value strike at the point of the bankruptcy filing. So not only were we getting a discount on the claim value, we were getting Bitcoin's future performance. So that's an example of something else we've deployed to help us outperform over time.
Yeah, but if we go back to the example of the protocol versus the application layer, right, So to your point, you couldn't invest into the protocols of the Internet SMTP, TCIP, so the value of creed on the application layer the Facebook, the Google, etc. And now Bitcoin gives us an opportunity to invest into the base protocol layer. We can buy Bitcoin today and certainly, to your point, it's been outperforming
all the applications. But I guess the point that I was trying to ask is do you think that as.
Of this evolves, that starts to flip.
So certainly the based protocol Bitcoin will continue to build value, but we'll start to see applications being built on top of it that eventually, maybe down the road, are growing faster than Bitcoin.
Like give me like layer two type applications on top of Bitcoin, or businesses that are built I mean, I would consider like.
Other businesses that are built on top of the Bitcoin system and application of that potentially, I.
Think that's possible in time.
An interesting way to think about it is that it took about the first fifteen to sixteen years, I would say, with the Internet to build the infrastructure protocol layer before the application layer really started evolving and getting adoption with user friendly applications on top.
Of the Internet.
And you know, we're kind of that same time span into bitcoin now. So I wouldn't be surprised if in the years to come we'll see interesting applications built on top of bitcoin. I still believe that our thesis around the applications that are built that are still more software enabled as opposed to a company, I think will still outperform over time. And why I think that is because the value of a digital asset has exponential growth capabilities
compared to the equity of a company. Because an equity of a company, you know, bitcoin can sometimes trade up you know, twenty thirty percent or more in a couple of weeks, whereas the equity value of a company is generally never going to move this yes, so it'll catch up and it's going to create a dragon performance with that, and so if you can balance that correctly, you can I think you can make money in both areas, right, if you can get deep enough discounts on certain assets.
Once that volatility smooths out from the private equity catching up with liquid parts of someone's portfolio, they can work well together in tandem. But I do think the liquid assets, just by the very nature of how quickly they can move from their performance appreciation, will probably continue to outperform over time.
Yeah.
And you know, I looked at like the early days of the Internet in nineteen ninety seven, ninety eight, ninety nine, and you were like trading these things called like internet stocks, and today there's just no such thing as internet stocks. They're just companies, right, And so you know, maybe there's this future like that. And I think of like bitcoin sort of like as a minu. It's a commodity, it's an asset, like oil is a commodity or an asset. And over the last fifty years, oil's been in a
sixty seventy dollars range plus or minus. But then we have the oil industry that's the eighth artist industry in the world. Right, it's woe point eight trillion dollars. So I sort of look at, as you know, the course bitcoin will continue to appreciate. But then what about the industry that gets built around that?
How would you do that?
I think that it's going to grow significantly over time.
So if we look at bitcoin as the base layer and the new types of applications being built on top, and some of these applications are like the difference between software and equity. So the Lightning Network is an example, right, that's a software enabled application built on top of bitcoin. Whereas a company that offers like a wallet is an example that integrates with the Lighting network would be more
of the equity structure that's interfacing with that. But I think as these new layers get built on top one of the thesises that I've had for many years, it will be interesting to see how this plays out. Is many many years into the future, are we going to have all these different blockchains, so bitcoin and other digital assets that serve different use cases, or just like IP in the early days in the Internet, well that collapse on top of bitcoin. Well, the whole digital asset universe
collapse on top of the bitcoin protocol. Because the applications on top get so much more efficient as technology advances over time, It's too early for us to know that, but if we use the Internet is a lesson from history.
That's what happened with IP.
Yeah, yeah, I mean I also understand that and my thesis as it does, all collapse, and I think we're already starting to see that. And so through the different layers that we have right now, we can do pretty much all of the if you want to call it utility from other layers or I'm sorry, other base layers coming over, even to the point of Charles Hoskin from our Cardano saying he wants to put it on top of bitcoin layer two, smart contracts on layer to privacy on layer too.
All of that.
I would say, it's sort of like if you think about just from like a philosophical level, like a business level, like a business's goal should be to remove as much friction as possible, and so it's like and then you have network effects, and so it's like trying to manage different blockchains and different tokens.
It just doesn't really make sense.
Like Bitcoin makes sense to me because it's like we could have one global, recognized, borderless, you know, type of asset.
So it'll be interesting to see how that shapes up. I mean, don't you think we're starting to see that or know it's true.
No, I think I think we're starting to see it. I'll be interesting to see how it shakes out over time. I think it's too early to say everything's going to collapse because some of these new protocols are using Bitcoin for certain things but not for everything. So a great example is there's a new protocol called himI that is basically taking the speed of the transaction of Ethereum in some of things Ethereum does, but they're anchoring it into
the security network of Bitcoin. So basically they're taking you know what Bitcoin is so brilliant on is it's the most secure protocol ever invented. But they're using some of these other protocols to create a connective tissue between the two. So what I'm trying to figure out over time is are we going to see more of that where maybe the most valuable parts of Bitcoin get connected through this tissue to these other blockchains, or as Bitcoin becomes more
advanced over time, what collapse on top of it. I think today it's a little too early to give a definitive answer, but I don't think either. I think it's possible that could happen over time.
Yeah, yeah, and we are starting to see a lot more side chains and things like that. There's like the whole arc ecosystem that's like developing on top of that. So yeah, it's interesting. What do you think are the most interesting things? What are you most focused on in the sort of like this bitcoin opportunity space right now.
So I think right now there's a huge hype around these bitcoin treasury type opportunities, and I think it's very interesting. I think that we've participated in some of these, and I look at it in kind of two ways. I think these treasury companies will have great opportunity, especially the ones that hit the markets early in the short to
near term with them. I do think if we start to see a drawdown with bitcoin, like we've seen many many times historically through these cycles, there's going to reach a point where there'll be too many of these market entrants that'll be in there, and it will create a washout phase or a shakeout phase, because as the bitcoin price will decline, some of these companies may have to start selling their bitcoin to buy their shares back to balance out the end nab of the company, and that
could actually create an accelerated drawdown in the space. If you have a tenure vision for this, I think it's going to be very successful. Overta, I think some of these companies will become some of the most valuable businesses
in the world. Thesis says that long term, micro strategy becomes the most valuable organization from an equity perspective in the entire world, because they will become like, in my opinion, the central Bank of Bitcoin in the future, and the other ones around the world that are smaller versions of this become like central.
Bank derivative branches in a sense, but bitcoins and.
Ominated and I think that over time that happens that they have this wash out phase and then a little bounce back from that, right, But short term that could create an accelerated draw down. But in the near term, as these companies are coming online and doing the strategy, there's a lot of opportunity there.
Yeah. So when you talk about the draw down, you're talking about the sort of for your cycle volatility of bitcoin.
If that continues.
Yeah, okay, so let's let's talk about that. If it continues, is what you said.
So last cycle, Michael Sailor said, all your all your models are broken, and I started thinking, you know, I mean, man, these institutions are buying it, they put in a deep cold storage. They're not really trading around it, although they were. And then we had we had the draw down again. So you said, if it happened, So how do you think about that?
How are you looking forward to that?
So I want to shore I'm understanding cre if what particulod.
You said, if another drawdown happens?
Oh? Got it? Okay? So when you said if right, it's not like there's like a certainty.
It's not for sure it's going to happen, even though it's happened, you know, multiple times in the past. By sure, are you thinking that there's a there's a chance of probability that maybe it doesn't or it's it's muted.
I think it's muted or damp and compared to what we've seen historically. And the big reason I think that is because there's so many new avenues that have occurred, like you noted before, to remove friction like a good business removes friction and on ramps to an ecosystem, and with the bitcoin ets, that was the first huge friction remover we've seen for most people that don't trust a crypto exchange like that demographic of people around the world to now enter the bitcoin market by being able to
do it in a traditional brokerage in a fashion they're used to, right, and so that created a way for people to basically get exposure where they didn't have to think about it.
They can just go in and click.
Because of that, because of the institutional adoption evolutioning compliance around the space as well, we're seeing tremendous capital inflows from parties that really never had exposure to it before. And so a lot of these investors, in my opinion, especially at the institutional level, they're not short term traders.
A lot of them have long term oriented use with this, especially when we start thinking about what country governments could do in time, like they're thinking about multi generational strategic
asset holds. And so, even if there is a drawdown, because all markets go through cycles, every market in history has always gone through some kind of cycle, I think the drawdowns in the future aren't going to be seventy to ninety percent like we've seen before, but maybe the drawdowns fall somewhere between, you know, twenty five to forty percent or something like that.
Yeah, So basically you're talking about the volatility is decreasing, So does that mean the upside potential also gets muted?
So over time it will, but I think we still have quite a few years before we're going to see that get muted so much. And as a very nature of bitcoin being a scariest finite asset, right like, the more money that flows in, I think it'll just exponentially
grow over time. So I think we have a ways to go, probably like another at least five to seven years before we see like that tremendous adoption that's going to be happening over this time period from a growth perspective, and then I think we could probably see a little more dampened growth on it. But I think that for the physample suituture, it's going to be really, really valuable.
So if understanding correctly, you're saying that the upside volatility isn't dampened very much until maybe five to seven years later, but the downside volatility is dampened. So does that make it a better risk adjusted entry today than we saw in the past.
It's possible.
I mean we've got now what sixteen years of data on bitcoin and what we've seen is when you add bitcoin as part of a diversified portfolio from the traditional sixty percent stocks, forty percent bond split even two percent into bitcoin two percent out of stocks, and you transition that into the Bitcoin actually enhances your sharp ratio, your risk adjustine returns while lowering the overall ballotility of the portfolios. So that's the data we have over the last sixteen years.
So like you noted, I think it's possible that can continue to enhance the portfolio as this non correlated asset which fiduciaries when you understand what bitcoin is. This is actually one of the things that I think is very interesting today. There's so many int situtional asset managers and have a fiduciary duty to their clients to find non correlated assets that can enhance risk adjustion returns, and so many people still.
Have in bought baycoin.
Yeah, and it's like we have enough data now to figure this out where you're almost violating, you know, or infringing on your fiduciary duty to your clients by not getting them exposure to this.
Yeah, because the data is clear.
Yeah. Just I think it was just this week we saw Charles Schwab make a big announcement that they're getting into bitcoin. They actually I heard about this a couple of weeks ago because my sister in law is the vice president over at Charles Schwab, and we have a lot of fun at family get together for sure, because I don't believe in that advisor model, we don't actually
talk about it too much. But you know, she's told me for years that even if a client that she's advising and comes to her and asks her about bitcoin, she's not even allowed to discuss it.
Yeah, it's common across off with several different asset managers like that.
Yeah, so back to the futary of duty. It's like even if I'm asking you, you know, you're advising me on my portfolio, and hey, do you think I should include this? Like I can't talk about that, and what a big gap. Now they just had a big meeting I think it was two weeks ago, two three weeks ago, and they announced, Okay, we're going to start allowing our clients to do this. And now I've I posted about this on Twitter and I got a lot of people
commenting the I'm with Schwab. Now they're talking with me about it. Okay, Vanguard seems to be maybe the last hold out there.
We'll see what happens there.
But so I guess so, but if we still have a lot of the upside left, the downside's been damp, and then it's a little bit of a better asymmetric opportunity, I would think.
So.
Yeah, I think over time, it's just pretty clear economics, right, like if you have something that you can't create more and then we know the predictable issuance schedule over time and the adoption growth gurbling thing that can change his price.
Yeah.
I look at it from like the cycles and the different phases that we go through. And so phase one was like this retail eruption, and so we had the retail money coming in, which was big and it got the market up there, but at the same time, the risk was so high because like when I started buying bitcoin it was twenty fifteen, but like what is it and what was it going to do? And then you had all the competition, like which layer one is going to win out? And now most of that's been sort
of settled a little bit. And then you have now the institutions and they're bringing in hundreds of billions of dollars, and so we have sort of the risk removed, as in, the government's not going to make it illegal, and the US adopted it. That's a big one. It's not going to be illegal. It's pretty much won the store value race, and now we have hundreds of billions of dollars coming in at the same time. So I look at it as a much better risk adjested entry right now.
One thing that's important too, I think that you just noted about the government not making it illegal or take it over. There's a very important court case that happened back in the day. But in twenty thirteen when bitcoin went from a couple hundred bucks up to I think around twelve to fourteen hundred bucks and crash back down, the US government actually had congressional hearings and they were
considering banning bitcoin. But what they discovered was there was a just I think it's an ap pellet case that went up and I forget exactly what jurisdiction it was in, but there was a university professor named Bernstein who created open source cryptography software for some mathematical algorithms, wanted to publish to the public that the government said, no, you can't publish because this open source cryptography needs to be approved for military arms dealing with the US government. And
this university professor said, that's not fair. This has nothing to do with arms dealing or rocket launch systems and things of that nature. I should be able to publish this in an open source community to show the world this work and this algorithm and things I figured out. So he sued the US government. So the name of
the case is Bernstein versus the Department of Justice. The Court's ultimately determined that open source cryptography software is considered language and protected under the First Amendment with freedom of speech. And so when they looked at that, they said, well, one, we have court precedent on this. We can't actually ban bickcoin. So we all know they slowed it down. It is some things to try to slow down this option, but they do. They couldn't ban it. I think the other
thought too, is how can we really ban it? How can you ban open source cryptography software that you're going to shut off the telecommunications grid or the energy grid, Like, it's just not reasonable, right. But that's a very interesting court case that kind of set some precedent many years ago for open source cryptography software, which is exactly what bitcoin is.
Yeah.
Good, it's a good point to bring up. And to your point, they've done things to slow it down. I remember in twenty seventeen, Bitcoin ran from like a thousand to twenty thousand that year, and then in a coordinated fashion in December of twenty seventeen, you had Facebook and Google shut down all advertising around it. You know, most of the banks blocked you from sending money over to crypto exchanges, credit cards blocked you from making purchasing your credit card.
And so if you think about like markets stopped going up when there's no more buyers. Yeah, and so as it was going.
Higher and hire and it sucking in more and more buyers, there was less less buyers available, but then they shut the door, right, And so to your point, now when you look at the market cycle, the structure of the market, I would say, to your point, the ETFs and now these companies being included in the indexes and now financial advisors bringing on board, so like instead of blocking the exits like they did in twenty seventeen, it's like or I guess they blocked the entrance.
Now they've just opened up the doors.
And from a friction standpoint too, I think between now twenty thirty we're going to go through a remarkable span of adoption because of the amount of friction that's going to be relieved. And I noted before that it took about sixteen years to build this infrastructure later for bitcoin, and now we're reaching this mass adoption phase. I think from ease of applications for these unique user experiences, it
will be developed. An interesting data point is that most children around the age of sixteen is when they become interested in computer science.
Now there's a group of children that exist in the world.
Today that are around that timeframe that have only ever been alive since bitcoin has been around, right, and they're reaching age sixteen. And if these people follow statistics and they start to become interested in computer science, this could be the generation of children that build the very very interesting killer apps for bitcoin that removes this friction to allow the world to just adopt this asset and technology in mass.
Yeah, it's certainly a generational thing. It's like my grandparents wouldn't buy bitcoin, but my grandkids or my kids wouldn't buy gold kind of thing. And I know even with my kids that are older now, but I remember my daughter. She just thought everything was a touch screen to go to every screen, and it's like, that's not that screen, but they just they just think that, right, that's native for them.
Now.
I know you've been doing a lot of trips over to the Middle East, and when you think about the Middle East, I had recently. I was over there in Abu Dhabi in December and it broke a lot of preconceived notions that I had. Right, I hadn't been there before. And when you think about the Middle East, you might think of old money, oil, right, things like that, But they're pretty interested in this. Tell us what's going on over in the Middle East. I think Saudi Arabia, UAE, things like that.
Yeah, of course, So if we look at the UAE, they were probably the earliest in the world to develop solid, understandable crypto regulations. I think it was around twenty eighteen timeframe. They just laid out the rules and said everything's a digital commodity. So they were complete clarity on what regulatory infrastructure was in for digital asset entrepreneurs that wanted to build. So there's a ton of people that moved to the
UAE for that reason, so they're very advanced there. I believe the sovereign wealth funds, like one of their top holdings is the bitcoin ETFs. They also have big exposure to coinbase and some of the asset managers that are publicly traded in the crypto space, and I think they're very forward thinking in regard to that. And they're making huge investments in technology. And actually President Trump was just
over there recently on a tour. They were talking about a lot of the investments they're making in digital assets
and artificial intelligence to grow the economy over time. And then when you look at places like Saudi Arabia, whenever the Crown prints NBS came and took over power, he really, in my opinion, started this cultural renaissance in Saudi Arabia because they were very traditional for many many years, and I think he stepped in and he probably looked at other things that were going on around the world, and even UAE that was attracting tremendous amount of tourists and
opportunities from technology standpoint, and they started to lay out this vision twenty thirty for Saudi Arabia, and that has huge investments in technology and clean energy and infrastructure and artificial intelligence and a variety of different things in these
new projects that they're building in the region. I think long term to grow the region, attract more types of opportunities and tourism to the reason for very unique things that they're building, But technology is at the forefront of it, and I think long term part of the goal is they want to become less dependent on the remaining oil reserves that they have, which has been such a tremendous
income generator for the region over time. And I think one of those ways to go about it is thinking how do they integrate in the future of technology, which is bitcoin, in digital assets, these kinds of things.
Yeah, Yeah, I saw Trump's announcement of that. Is there some joint i think cooperation with the United States to build out is it some AI tech data centers or something something like that.
In the UA specifically, there's a tremendous amount of large scale bitcoin mining operations that are going on over there and they're making the government's making a tremendous investment in that space.
Yeah.
What are you seen in regards to sort of maybe the convergence of bitcoin and AI and how those things are working together so long term.
I always tell people that are hesitant or concerning of crypto in bitcoin that you need to understand that if you believe in artificial intelligence is going to be successful long term, you inherently need to understand that bitcoin will be as well. And the reason I say that is because all these agents and these people doing these technology
technology algorithms doing virtual labor and work. There's an energy expense to that from the computing power that's necessary whenever we're querying groc or chat beat, GPT.
And things like that.
So there's going to be a whole economy of these virtual agents creating virtual labor to service us and service themselves as well. I think there'll be a whole economy of even these bots that are doing things for themselves in virtual economy, because there is an energy expenditure for that,
and it creates a computing cost. These bots are going to have to get paid somehow, and they can't set up at a bank account of Bank of America right, or a traditional financial institution, so they will get paid in like bitcoin or an astheletic piccoin, right, because it's the most Internet native way to exchange value, and so I think long term, if you believe AI is going to be exponentially revolutionary to our world, which I think most people that see it do believe that and understand
that's going to grow very quickly, you inherently need to believe in bitcoin as well.
Yeah. Do you think that the AI revolution is going to take everybody's jobs, is going to depress the economy and then kind of hurt the long term trajectory of these financial assets, or you think it's going to be add to it.
I think it'll be a combination of both. I think there'll be some jobs that'll get replaced completely by AI. I think there'll be other jobs that will allow an individual or a company to do things significantly more efficient and then be able to reallocate their labor in other areas.
And I'll give you a great example. So I have a family member of mine who runs a law firm, and in the law firm, he was able to structure chat GPT queries so that they could provide information into it to help them develop reports and things that they needed significantly faster than the manual way they were doing
it before. And what that allowed him to do was actually expand the caseload that each of the pair of legals could take on in the firm, So it didn't replace the pair of legals, right, but it made them ten x more efficient than what they were before. So I'm hopeful that that'll be a likely outcome where you still had this integration into the traditional economy, but it's making people much more productive.
Yeah.
Yeah, that's the way I see it too, And that's exactly what I was thinking as well. Everyone's like, oh, they're going to fire everybody. It's like, why would they fire everybody? Like why would'? They just want to be more productive, more efficient and make more money, right, yeah, which seems to make sense. What about with the bitcoin mining and sort of like the AI data centers, is that an area that you guys invest in or follow.
We've looked at it before.
So a big allocation that we had historically was in a group called core Scientific, which was the largest bitcoin miner in North America. And one of the things that we found interesting about them is we were doing our due diligence. Is core Scientific, I think, was coming out of bankruptcy from the twenty twenty two events that occurred, and when we were doing.
Our diligence on it.
What we discovered is about seventy five percent of their mining infrastructure could be redirected towards AI computing, and the profitability on the AI computing contracts was probably five to seven x what the bitcoin mining profitability was and didn't mean they were going to shut down the bitcoin mining. It just means this was an expansion of their revenue models. And when we discovered that that something, we're like, Okay, this is very interesting haus a lot of opportunity here,
So we end up investing in that business. And then they started launching these AI contracts and that created a tremendous opportunity and for performance for that company, and I think that's something that's going to be akin to a
lot of these bitcoin miners. The thing is is that the bitcoin mining companies, as they get into that space, most bitcoin miners, from my understanding, have built out their infrastructure specific to bitcoin mining, and a lot of the AI computing requires different kinds of hardware than what you need for bitcoin mining, and so they will have to have large capital capax expenses to build that out. But over time, I think it's totally makes sense for their
business model because they're already doing it. They're already hosting these data centers for bitcoin mining. You might as well expand in that area as well.
Okay, Now for bitcoiners that are I mean, hopefully most bitcoiners are here for the freedom aspects of bitcoin, but a lot of us also like the number go up part of bitcoin as well. So for people that are thinking about allocating towards bitcoin to get their number to go up, to protect their savings from inflation, things like that, you think about allocating to bitcoin versus maybe some of these bitcoin treasury plays, public plays, bitcoin minors or funds like off the Jam Capital.
Yeah.
So if you're an individual investor that is probably not going to have direct access to a lot of these bitcoin treasury opportunities in the early stages when they're getting the investments to go public and then do that, I think it's probably better just to buy bitcoin.
However, that being said, some of them will do very very well.
Right Like we saw micro Strategy have tremendous performance since twenty twenty they adopted the standard and they've outperformed bitcoin
over that timeframe. So I think that I'm a big believer is I don't like market timing if I invest in something like Warren Buffett says, I wouldn't hold something for ten minutes that I wouldn't hold for ten years, right, Like, I'm a very long term oriented thinker, and so from that perspective, I actually think you could be looking at allocating to both, right, because the bitcoin treasury companies had
the potential during certain market cycles to outperform bitcoin. And then if you have bitcoin directly too, if there's time periods where they underperform, that as part of your portfolio as well, because they're both getting exposed to the same space. But long term, if you think about it from a five year, ten year perspective and you have the mindset that's possible these bitcoin treasury companies can become these bitcoins
and nominated central banks in the future. You're talking about some of the most valuable organizations in the world in my opinion, And so I would look.
At both, okay, and then where does a fund fit in on top of that.
So from a fun perspective, if as an institution, if you're finding the opportunities for these bitcoin treasury plays in the early components where people are doing these pipe investment transactions, usually you can get exposure at very favorable entry points, and then once those companies ultimately do their reverse merger or whatever their public offering is, as long as the markets are interested in that and they allocate to it, there's a lot of opportunity there as well.
But from an individual investor standpoint, is it something like get your bitcoin first. Absolutely, And depending on how big your portfolio is, then you might want to take a small percentage of that move into some treasury companies. And if your portfolio is even big enough, then maybe even a small percentage goes into some funds. And so those are sort of like different risk levels, different duration levels that hopefully have different return profiles.
So what I always recommend, and this is both for institutional investors that don't have crypto exposure and individual investors, I always say you should look at three parts of your investment strategy. One is bitcoin direct that should be
the biggest portion of your exposure to the space. And then you should also have a smaller percentage of your exposure for venture type opportunities, like what are the new things happening on top of bitcoin, Like one of these new application layers and things are being built, and that should be you know, like any venture portfolio, maybe that's five to ten percent of the exposure you have to the space. And then the third one I tell people to consider is what we do with off the chain
because it's very different. It's its Warren Buffett value strategy. But with that, the biggest part of the portfolio for anybody, in my opinion, should be a big point.
Yeah, yeah, yeah, depending yeah, start start there first, and then and then and.
On the treasury companies too.
The reason it's interesting, I think to find an asset manager who's very experienced to do that component is most people are going to have a very challenging time trying to figure out which one do I invest in, right like, which one has a lot of potential, and most people won't even understand the differences behind the scenes of what these some of these bitcoin treasury companies are doing that
makes one different from another. And if you can't figure that out, in my opinion, it's better for you to find an asset manager that's allocating to those types of strategies because they're the ones with the boots on the ground doing the diligence figuring that out, and then you just put your other exposure in bitcoins.
Yeah, is that because there's all new terminology and all new metrics to measure them that people aren't used to.
There's new terminology, there's new metrics, and a lot of these companies too, they're not all doing the same thing, right, Like some of them are issuing equity or debt to acquire more bitcoin for share. Some of them are taking other components where they're going into a certain industry segment and they're buying discounted cash off a publicly traded balance sheet, which then allows them to get more bitcoin for share when they issue their equity. And so there's a lot
of nuances to it. And so if you don't fully understand the differences between each one, you could maybe invest in one that doesn't perform as good as another one.
Cause yeah, yeah, especially when it's very frothy right now.
Yes, And then to your point, if a market cycle turns down, then like who gets left hold.
In the bag?
All right, let's wrap this up.
What would you say is maybe the thing that you're most looking forward to over the next five years developing?
I think I think I'm most excited about is we're finally reaching a point after many many years in the space where governments are opening their eyes after being so resistant for so many years. And I truly believe the first government that prints to buy bitcoin wins in mass right, like the first government that understands that the more bitcoin we can actually acquire, the bigger geopolitical advantage we have in the future. And I think the United States government
is waking up to that relatively quickly. And so I think that's a very interesting thing because that, in my opinion, is a major step towards potentially backing our currency by bitcoin long term, having bitcoin being the global currency, which I think long term is the real value because Satoshi's original vision was a peer to peer cash electronic system, right, And we've gotten so ingrained with how bitcoin has transitioned over time and evolved as an asset that we don't
want to forget that one of the most valuable things about bitcoin is transacting value between.
Two parties peer to peer with no central party intermediary.
I mean, it's a brilliant, brilliant thing that never existed before, right, And I think long term we'll get back to that. And I think that is that's a major step for governments to have that trust and belief in it where we can start backing some of the dollar by bitcoin and then maybe eventually it's only bitcoin.
Yeah, so the government adoption, the sovereign adoption, it's sort of like the nuclear or arms race, or like the space race, and like which nation is going to acquire it first? Yeah, I agree with you on the medium exchange front. And it's interesting to know. I think about this monetary evolution and it's like we haven't quite got to the medium of exchange phase.
Yet, but in some instances it makes sense.
And this morning I opened up the show here at the Bickcoin conference was the I think it was the president or CEO of a Steak and Shake, which is like another franchise that just started accepting bitcoin, and he was talking about how just since they've started accepting bitcoin at the trans at the locations, they've lowered their transaction fees by fifty percent.
That's remarkable, that's I mean, that's no brainer for companies.
I mean to the bottom line, like, Okay, sign me up. But who's not going to do that?
Right sure, because they're paying whatever three four percent on you know whatever two three percent on transactions and now they get it for like a point or whatever.
Right, So okay, cool, Well.
I think anything else that we should be paying attention to that you want to shout out, and.
I think, yeah, I think that's the main core copis we covered? Yeah? I appreciate you having me on. All right, thanks, all right, thanks man,