← The Bitcoin Treasuries Podcast with Tim Kotzman
The Bitcoin Treasuries Podcast with Tim Kotzman
AI, Oil, and Bitcoin with True North's Adrian Morris
00:51:00
Loading summary
Transcript39 lines
- [00:00]
A
Welcome back to the Bitcoin Treasuries podcast. I'm Tim Kotsman. I'm here with Adrian Morris, founding member of True north, advisor to ddc, resident FUD fighter, AI super user and contributor to Bitcoin for corporations. Adrian, thanks for joining us today.
- [00:16]
B
Tim, thanks for having me on. We haven't talked in a while, so I was looking forward to this.
- [00:20]
A
Yeah. It's time to check in what is an AI super user and what have you been doing in that space recently?
- [00:29]
B
A AI super user, as I would define it, is someone that not only uses all of the AI tools like the open source ones, you know, ChatGPT, Claude, Gemini, all those, but also is someone that runs local models and is interested in developing perhaps custom tools that work with AI, someone that is interested in fine tuning AI models, someone that's interested in keeping their ear to the ground and keeping their eyes open with all the developments in AI, that's at a very, very high level, what I'll call an AI super user.
- [01:03]
A
Where through your lens does AI intersect with Bitcoin? Is it one point? Are there several points? And what's your thought on Bitcoin versus Stablecoins or Crypto? Because if all of this is decentralized, could some AI agent choose to use Circle or Tether or some Stablecoin or Dogecoin or something that's not Bitcoin or whatever would be the differentiator when it comes to the narrative around AI agents using and choosing to use Bitcoin.
- [01:39]
B
So I've always found that topic kind of odd, if I'm being honest, because it is not as if the AI agents, and this is just my opinion, is going to just randomly choose to use either Bitcoin or Stablecoin or what have you. If there's an AI agent and it's acting in the market as of right now, for the time being, they're going to act autonomously in the market, but they're not going to act independently in the market. So the individuals that are building these agents, they're actually going to be the ones that I think will determine what currencies these, these agents are going to transact in. Now I think it's possible that, or rather more likely that all of the agents are going to be able to transact in a variety of currencies. It could be Bitcoin, it could be stable coins, it could be what, what have you. And if anything, the only differentiating factor I can see on a daily basis or on a longer term basis is going to be liquidity, access and the ability to easily transact between different agents using different currencies. Now where I'm probably going to upset a few people is that if there aren't the appropriate rails for Bitcoin to be used, I think that agents would likely be configured or default to using stablecoins since they'll be quicker in terms of transactions. But besides that, I think that, and again probably going to upset people with this. I think the AI agents, crypto, Bitcoin, stablecoin, kind of fusion is many, many years away before it gets to scale. I think that there needs to be a lot more infrastructure build out. There needs to be a lot more agents that are truly functional and useful in a way that is not just for engagement on Twitter or there's not just for single use cases per company or single use cases per user. Something that's a really scalable solution that's going to be able to transact, interact and communicate in between different platforms, in between different use cases. You can have agents that are for customer service talking to agents that are for tech support and so on and so on and so forth. Like until we get to that level, I think we are a ways away from transactions existing between AI agents becoming anything that's going to be too notable.
- [04:02]
A
How far away do you think we are from some of those things that you just mentioned? Agents interacting with each other? Is this something that could iterate every six weeks or six months? Or are we kind of fooling ourselves into thinking that some of this stuff is coming sooner than it is so they can iterate?
- [04:19]
B
And I mean, we've seen what's been going on with all the different AI models, right? Gemini launches one, then cloth launches one, then OpenAI launches one, right? They've been coming boom, boom, boom, boom, boom. So the iterations that can happen with these agents I think are very, very likely to be fast. But there are a lot of constraints that come into building something like this out at scale. We still have a very real compute constraints. We still have a very, very real ubiquity of high speed Internet access constraints. It is not just a matter of you having Internet and someone else having Internet. You have to be able to have high speed communication between all these agents. That doesn't eventually create bottlenecks. If we think about it, what's the world going to be like when you have billions of Internet users and then billions of agents all using bandwidth? There's obviously going to be constraints that are hit. So I think that before these we are in A world where you and I are conducting business, but we are conducting business. It's our agents that are conducting business on our behalf and doing it in a way that is secure, high speed and that doesn't require a lot of human oversight. Five years I would think, before that becomes something that is scalable, that is being used in a day to day basis. And I'm just saying that because if we take a look at the evolution of the first public instance, the public released instance of ChatGPT to now, we've got about four years, right? So in four years we've seen a lot of growth. I'm saying five and this is just me spitballing because we're going to see the growth. We have to have the compute build out, we have to have the access build out. We have to have these built out in a way that they're not going to hallucinate and eventually send someone the wrong currency or send someone money that you don't want to send. There's all kinds of things that come into building these out in a way that we are just going to say I'm going to have my agent run, it's going to pay my bills, it's going to do my business transactions, it's going to be my point of sale, it's going to do all those things without me having to constantly watch over it and hover over it.
- [06:33]
A
What's your view on AI adoption? Do you think it could mirror bitcoin adoption where it starts with individuals in large part and then grows into SMBs, small and medium sized businesses adopting it, then megacorps, then institutions, nation states? Just because we've heard, or at least the narrative is that large corporations are even some smaller companies are prohibiting, some states and localities are prohibiting businesses or entities from using AI at all. Or do you think it could develop from an adoption curve in a different way?
- [07:19]
B
So I think if we are being honest, the AI adoption is much, much faster than bitcoin. So if we would just think about going back to the first big public unveil of ChatGPT to now in four years we went from a handful of users to hundreds of millions of users with all these different LLMs, between Google, between anthropic, between XAI, between OpenAI, then you have Gwen, you have all these other models. We've seen an extremely fast uptick in the user base that has been way, way, way, way faster than bitcoin. Now to your more nuanced point, when I do AI consulting and this is something you and I have talked about offline. The biggest bottleneck I run into is the one you just mentioned, right? SMBs and a lot of larger corporations do not want these tools implemented internally yet. They do not want them to have unfettered access to their internal systems. They're not confident enough in enterprise level solutions just yet. And they have a lot of concerns around internal audits, around compliance and around information security and internal security. Those are the three biggest bottlenecks that I run into where I spend weeks, if not months talking through with various clients about the different considerations and helping them understand them. And that is a very, very real bottleneck. I don't think it's going to stop anything though. If you are a corporation that refuses to adapt, eventually you're going to be laughed by corporations that will adapt, right? And that's at the small to medium sized scale. So let's take that to the big corporations. We already have Amazon, they have AI woven into everything. Microsoft is going all in on AI. Meta, they're going all in on AI. Tesla is going all in. We know where Nvidia stands, right? So while I think that they're very, very real bottlenecks, I think that those bottlenecks will fall rather suddenly without very much fanfare. Right now we are still in the anxiety phase of adoption because, and this is where I'm going to get somewhat technical. You've got the frontier models that are in the cloud that everyone's accessing, right? The Clauds, Geminis, so on and so forth. And then people are using APIs to access them. People are getting enterprise licenses to have secure access to them. Okay, that's great. The big adoption curve that you mentioned that I think is coming is when the local compute can handle something akin to a frontier model. So if you want to have a better understanding of what that means, that means you have Opus 4.6 right now. That's the frontier model. That is the high end anthropic model. Imagine that running locally on your laptop or on your PC with the same level of, with the same level of technical ability, with the same level of, the same level of ability to help you day to day, whether it be code, whether it be reasoning, whether it be math, whether it be media or what have you. Imagine that running locally. The reason why I say agents are five years away is because I think that's five years away. I think we'll have frontier models running locally and then when they're local, they can be segmented off, they can be air gapped away from networks and Then you can structure and segment whatever kind of access you want to the World Wide Web. That point when that happens, I think all the barriers fall. Don't sound dramatic. I think they fall overnight. And that is when we're going to see the massive adoption curve. We think that it's been big right now while it has been. I think it goes from, yeah, there's every kid in high school is using ChatGPT or Cloud or whatever to every single corporation, every single employee has an enterprise license to their own instance of an LLM that's run locally. I think that's what's coming. You're going to get hired and you know how you get onboarded. It's going to be just another process. They're going to onboard you with your own LLM. They're going to onboard you with a level of access where you'll be able to either code on it, write with it, produce, I don't know, PowerPoints with it, whatever. It's going to be your own agent that the company owns that you're going to be using. And in our personal lives, coming back to your agent's point, I think it's going to be much, much the same. We're going to have our computers, we're going to pay an extra access fee and an extra fee to have a local model that's going to run locally. And then we are going to be able to configure it. It'll eventually be able to some limited degree learn our habits. We'll be able to configure it to understand our habits. It will send emails when we want. Instead of us need to type out the email, we can just say, hey, reply to this email for me and say blah, blah, blah, blah. And it does it, it can tell you, hey, you have a bill that's overdue. It'll, it'll pay it for you. It'll have access to your bank accounts. I think all of that is coming, but I still think it's about five years away.
- [12:27]
A
What is the competitive moat that any of these AI companies have? Does it come down to time to market? With iterating the newest, latest version, does it really go all the way back to the power, the energy, the compute and securing those contracts? Is it something else? Is it five different things or is it too soon to even know?
- [12:58]
B
I think there are a few things that are in play right now. I don't know if in the current AI landscape if time to market is a factor anymore because a lot of these companies, you know, when they're releasing these new models. You've been in business, I've been in business. They're not releasing a model they just developed on Tuesday, on Thursday. Right. They've been working with these for months, if not a year beforehand before they release it. So they already have the next models on deck and I think that they have several iterations that are already on deck that they can lean on to keep this very, very rapid production cycle. Well, not production cycle, very, very rapid release cycle going. So I don't know if the time to market right now is a deciding factor. I think the factor right now is quality of the model. So one of the things that I've noticed and that I have heard being repeated rather openly, no pun intended, is that the OpenAI models have fallen significantly behind. Right now if you have a ranking, my ranking was almost always for reasoning and logic and metacognition. OpenAI's model was always on the top, followed by Claude, followed by Gemini, followed by Grok, dead last. Right now it's getting to the point where, and again, this is just based on feedback and this is just based on my experience. You have Grok and OpenAI that are kind of fighting for last place and now you have Claude and you have Gemini that are fighting for first place with Claude having a lead consistently. You hear people talking about that Anthropic's model is the best model, so on and so on and so forth, whether it be for code, whether it be
- [14:41]
A
for
- [14:45]
B
the day to day use, what have you. Cloud is the best model. So I think that right now the differentiating factor is how good is your model, how well can people use it day to day. And also on a flip side, this is where something becomes another differentiator. We have the token use. How expensive is it for you to access the API and use tokens to use the APIs? Now I am someone as a super user, I burn through tokens rather quickly, so this is something that I pay attention to. But I'm somewhat more price agnostic for the token usage solely because accessing the API or using it in something like cursor or whatnot, even though the cost is high, the ROI I'm getting on that is extremely beneficial. So I don't really worry about the tokens too much. So that's another factor. We've got quality of model and we've got token cost. Now going forward, I think that you're going to have different differentiating factors that come into play. You're going to have model size. So can someone in the world that I gave you, are they going to need a top of the line laptop or crazy towers set up like I have with all my towers under my desk? Are they going to need all of that to run a local model? Is it going to require them to put up 10, 12, 13 grand to get a high end tower that they can run these open source local models on? Or will one of these companies be able to vectorize and be able to reduce the size of these models enough so that they can run with high fidelity, they can run with high quality on lower end machine, lower end in this future state that I'm talking about machines and allow users to have that ability to have a local model running for them day to day that they can relatively control that is relatively secure. That's going to be another differentiating factor. Then as this thing really scales out. It's going to be efficient use of compute, it's going to be efficient use of data centers, it's going to be efficient use of energy. We already seeing, and I don't know if you're aware of this, we're already seeing news about how certain data center build outs are being rolled back. The amount of data centers that were to be built, they're scaling it back somewhat. So I think that the battle for compute and for energy is going to be that next frontier that's going to become a very significant, I don't want to say a hindrance, but it's going to be a consideration for these companies. If, if there's a real concern about compute, if there's a real concern about energy, I don't think they'll still be able to say we're gonna, if we build it, they will come. Because I think that's what they're doing right now. They're building out, they're saying that we need to build out, we need to build out, we need to build outs and we're gonna, they're gonna have the user base, they're gonna be able to monetize it, don't worry about it. The money's gonna be there, the build is going to be there. This is a generational opportunity. I think we're getting to the point where the market is very, very firmly saying to these companies, no, we want to see results now in the next two years. I believe that's going to be if we see probably I don't want to see a bubble pop, but at least a reverberation in the bubble where something happens. I don't think it's a bubble, because I think that's a very misapplied term. But if one of these companies is going to fall behind in a very, very material way, I think the next 18 to 24 months, if not sooner, is going to make that readily apparent. And I'm virtually certain compute data centers and profitability are going to be the three areas that make that very, very apparent.
- [18:39]
A
There's a window right now where getting up to speed on AI still puts you ahead. That window won't stay open forever. If you've been putting it off, here's the easiest way to start. AI Help Desk is offering a free consultation for listeners of this podcast. You can get clear on what matters without wasting time going down the wrong path. Go to the AI help desk.com that's the aihelpdesk.com and book your free consultation today. Hey, everyone, quick heads up. If you're serious about Bitcoin and wanting to actually live it, not just talk about it, you've got to check out Camp Nakamoto. This is a bitcoin experience happening June 18th to the 21st in New Hampshire on a private island. Think Bitcoin. Real food, health, great people, and zero noise. It's family friendly. And tickets are almost gone. There's only about 50 tickets left. If you want to be around high signal bitcoiners and build real relationships, this is the place. Use my code KOTZ for 15% off and I'll see you there. Visit camp nakamoto.com today you posted on X and I quote, keep fading everything and do not chase oil right now. I do not trust this move, end quote. Can you unpack that for us?
- [20:09]
B
Sure. So, and this is not me getting political, but we have an environment right now where there's a president that one post can send the market tumbling or send it or send it running, right? So the environment is volatile and unpredictable, to say the least. What we have going on in the Middle east right now, this is just my read on it. I don't think it has anything to do with anything but the petrodollar and oil. And I think that the world is aware of that. And the world is kind of on knife's edge trying to figure out what's going to happen with oil prices. What people don't realize, and I think you probably are more aware of this than most, is that oil isn't just about what we get at the pump. Petrochemicals are in everything. So quite literally everything that we have from the cameras that we're talking on right now to the machines that we're on right now, to our food, our clothing, everything. Oil is involved in the transport of it or in the creation and production of it through petrochemicals and the derivatives. So it is not just that high oil prices make gas more expensive, it's that high oil prices essentially makes civilization and life and existence more expensive. Because oil and petrochemicals are the base layer of, of our entire civilization. Everything runs on it. And because of that, the market is overreacting to everything. Yesterday, oil drops, right then, this morning, they thought they saw the market thought a tweet announcement. I don't even know if it was an announcement, I don't know if it was a press release, I don't know what it was. But something about Iran and Oman coming to some kind of potential agreement. Price started running again. Then we're just as likely after Easter weekend on Monday or Sunday night to get a tweet that comes out that sends the market tanking again. So the reason why I'm telling people I don't trust this move is that we have a lot of tension in the market. We have a lot of volatility in the market. And I think that anyone that's saying that, oh, we're going to rip if the situation in the Middle east gets resolved, they're being somewhat presumptuous. And if you're chasing oil right now, yes, it's up a crazy amount. And yes, I was involved, invested in oil in earlier weeks and months, but I got out because I have no idea what's going to happen. The price is just doing like this and on any given day you can get a 10% swing. So chasing oil right now, either through futures or what have you, I don't think it's the best move for someone unless you have the stomach for the volatility. I mean, we are strategy investors, so we have more stomach for volatility than most. But I'm seeing a lot of people on X talking about I should invest in oil, I should invest In Exxon, Chevron, USO, BNO, the ETFs that give you futures exposure. I just think that right now things are a little bit too hairy for that. So I'm trying to advise caution that if you're in cash right now, that's great. If you have your positions and you can stomach the volatility, that's great. But I wouldn't go allocating capital anything new right now. Which is why I say fade everything, even oil, because the volatility is too Crazy.
- [23:32]
A
And I guess just to be clear, when you talk about markets ripping or markets going down, are you talking about equities? Are you talking about bitcoin? Because it seems like when oil goes up, equities go down. Bitcoin largely chopping sideways. Although of course, you can make a headline out of anything, including it going up and down by $1,000 maybe.
- [23:53]
B
Yeah, I have a few thoughts on that. So when the conflict started and gold started selling off and bitcoin was going up, people were saying that now bitcoin is a safe haven asset, right? That was a narrative that was building steam. But as you've seen, that narrative has kind of dissipated because bitcoin has been kind of, just as you said, chopping. It's not like we went back to 80 or 90k. We went from 60 to 71, 72, and now we're back down. I think we're at, what, 66 today or something like that. So I think that bitcoin, whether we want to accept it or not, is still highly correlated with the markets. But because what we're seeing is a rotation from one sector to the other, I think the market is trying to figure out where to put the money. Gold, Gold and metals were running. And then the oil run started right at the end of that run, though. And then oil ran up, and now you're seeing people looking to exit oil. So they're rotating back into equities, and then the S and P is. Is ripping, right? But then a tweet comes out and then it rotates right back into oil. So that's why I'm saying there's no way to. There's nowhere to hide right now. There's no set narrative outside of this one. Until the situation in the Middle east is decisively resolved and until the strait opens up and until we get some semblance of economic certainty, I think that people should be cautious in the markets. We've gone from tariff Armageddon, Liberation Day to the first bombing of Iran and the first exchange between Iran and Israel, to more potential tariffs, to not tariffs, to more potential tariffs to not tariffs, to now we're in the Middle east to the war is over to the war is not over. Do you see what I'm saying? Like, just taking a very objective view of the market. There's been no consistency in the market whatsoever. Besides rip dip, rip dip, rip dip has been going like that. And typically, just my view, what. Just based on what I've seen in markets, when we have that kind of dynamic, it is Far more likely that something goes sideways, then it goes the right way. And we saw on October 10th, a liquidity event happened that took Bitcoin from 126. And now we see that where we are right now, a liquidity event can happen in the same fashion in the markets. Furthermore, without some kind of economic geopolitical certainty going forward, I don't think the market knows what to do. And I believe that the market runs on sentiment. And I think that's very, very apparent. So given that and given the fact that we've just seen capital literally rotating from one thing to the next very, very rapidly, I mean, the S and P lost a trillion, gold and silver gained 1.2 trillion. Then they lost it just as quick. Then over the course of a week, it lost 2 trillion, then it gained back to. Do you see what I'm saying? That's insane. How are you supposed to make heads or tails of that? So that's why I'm just like, I don't know. I think that when I say rip or dip, I'm talking about. Will you find a safe haven for your capital in this market that will rip? I don't think so.
- [27:20]
A
Maybe. Let's walk through the opposite side of the coin. Let's say that the straight does not reopen in this example. Let's just say it's permanently closed. And, you know, no one knows what would, what energy prices would do in that scenario. But following that, in that scenario, let's say the new Fed chair says, you know, we can't have the economy grinding to a halt just because of energy prices, so we need to do the responsible thing and print more money. And then that sends equities and Bitcoin and commodities higher. Do you think there's a non zero chance of that happening? And how do you view that sort of a scenario? Or is there another scenario that's more likely that we haven't kind of walked through?
- [28:11]
B
Well, let's take that scenario at face value. Let's say that we have Powell's gone, we have the new chair coming in, and the straight, for whatever reason, is still at least, at the very, very least not fully open, if not just closed. And energy prices are, you know, we can't expect less. They're much higher than they are right now. At that point, printing money will make inflation run even hotter because higher energy prices, higher oil prices are, have a very strong correlation to high inflation. So we have to assume that inflation will go even higher in that scenario. So that's the first thing the Second thing is what is the economy going to look like at that point when the printing starts? So it's not just a matter of printers turns on. We have to know what the unemployment rate is, if it's, if it's elevated. We have to know what the inflation rate is and how elevated it is. We would have to know essentially what the broader macroeconomic geopolitical situation is. Is it a matter of companies that are laying people off? Because losses in the market typically trickle into losses in the job, in the working force. There are all kinds of things to take into account. But let's put that to the side for a second and let's say that the money printer turns on and we're just talking about equities, we're just talking about bitcoin and so on and so forth. In all likelihood, I don't think that happens right now. Like if we're talking about like a true stimulus package. So whether it be like a GFC style stimulus package or whether it be like a Covid style stimulus package, right. We're not talking about just a few billion here. We're talking about trillions being injected. I don't think that happens without a massive correction first. I mean like massive, like a really huge correction and just going off of precedent. All the stimulative factors that have come into the market in terms of government stimulus and that's separate from liquidity. So in terms of government intervention since 2000, it's been about $35 trillion roughly since 2000. And that's always come on the heels of a need to spur economic activity. But the reason why you spur economic activity in the first place is that it's died off. So we would need to see a correction first, then the printer could turn on and then will equities and bitcoin and so on and so forth run. Yes, but the other question is, can that happen? I'm not sure if it happens Now. I was of a mind that if things kept going as they were going, eventually political expediency would force a Fed chair to keep pushing the interest rate down until we get as close to, as close to ZIRP as you possibly can, whether that be having zero interest rates again or whether it be having a 1% interest rate again. I thought we were eventually going to be forced into that direction. However, now if you have an environment where inflation is going up, whether people want to accept it or not, it's just going up less than it was, but it's still going up. And whether or not however, the situation in the Middle east resolves, that's still going to take months to resolve. Because even if the strait opened up tomorrow, there's still a backlog of over a month of oil that should have been in the market. So there are a lot of things that come into play that make me think, is it possible for intervention in terms of stimulus to happen? Yes. Is it possible that we are then in an environment where equities and bitcoin could run? Yes. However, what happens before that point is the real consideration that leads to the stimulus, that leads to the money printing. If bitcoin gets completely kneecapped and it drops to 50k and if mag7 loses 3 trillion off the top of what it has right now, and broader equities also sell off and you still have high energy prices, I don't know. That's a very nasty situation.
- [32:32]
A
Yeah. All of this reminds me of. I remember exactly where I was when I was getting notifications on my phone in 2020 about the circuit breakers. The circuit breakers. The circuit breakers. I guess to just say it out loud that you have the market go lower. But that's a moment in time, not necessarily a certain duration of time. It doesn't need to be a slow, drawn out process. It's going to take months or years. If we remember Covid and the drop and then the intervention and then the V shaped recovery. I mean, that was less than a few months, probably much shorter than that. But I just don't want to overstate it. So do you think that's also potentially in the cards of what you say the market goes lower? There's something that, that happens that they need to react to with the money
- [33:28]
B
printer, if I'm being honest, I don't know. Coin toss. We can have a situation like the GFC where we had rips and dips, but if you take a, if you look at what happened, it would rip, then it would dip further, that would rip and it would dip further. And we just kind of went like that for a long period of time. Or it could be Covid where everyone. Because I just like you, I remember when I was looking at my phone and looking at X and looking at financial news, it seemed like every time you refresh the page or you looked at a new stream, the price was lower. It was crazy what was going on for that few days period where the price just literally just tanked. But to your point, is it going to be a momentary slam or is it going to be a prolonged dip? I can't say. I Honestly can't. That's why I say flip a coin.
- [34:19]
A
Yeah. Can we agree though that the political powers that be will do whatever they need to do to not have the economy come to a screeching halt, stay there and get voted out of office?
- [34:34]
B
Yeah, and that's why I was saying that I thought long term the political expediency would force interest rates to keep getting slashed. The only nuance now is I don't know what needs to happen first before they do that. Before I thought it was going to happen if things just kept kind of trotting along, but now with all this uncertainty, I'm not sure if we need to have a band aid rip off moment like a Covid crash. Well, not even a band aid ripoff moment, a kneecap moment for the economy like that. Or if it's going to be something prolonged because of sustained higher energy prices. But yes, I do agree that one way or another politics will win over economy and the politicians will do what they do and they'll print money.
- [35:14]
A
Is it possible they just keep rates the same and just start printing money?
- [35:18]
B
Well then you have to talk about rates being high and servicing the debt. So higher rates means higher functional serviceable debt while you're printing more money. That's a very nasty situation to get into from an economic standpoint. But to your point, could things get desperate enough for that? I can't say. That's a zero chance. What I will say is that higher energy prices will lead to people driving less, which will in theory lead to lower consumption, which can be downward pressure on the prices of energy. It would lead to costs of goods going up, which will probably lead to less consumption and it will lead to more layoffs, which will lead to higher unemployment. All of those in tandem can work that while energy prices are going up, everything else is going down. And it can give them room to operate and print money sooner. So that's one outside scenario I can think of. But the interest rates itself, however, They don't have a lot of wiggle room with that. If the interest rates are relatively high in comparison to what they will be. If they were printing money in a lower interest rate environment, they would still have to service the debt while issuing more debt. So I don't, I don't, I don't know how that gets managed, to be honest with you.
- [36:49]
A
About an hour ago, Polymarket reported that Amazon is reportedly adding a 3 and a half percent quote fuel and logistics surcharge, end quote, for sellers due to the Iran oil crisis. How much more of that are we going to see? And how much more of that can the economy take before you see somebody respond politically? I guess we could frame it that way.
- [37:17]
B
Well, let's think about what that means. Amazon's one of the largest companies in the world. It has a multi trillion market cap and they are implementing a surcharge due to advanced rising energy costs. What that says to me is that they forecasted this and they said this is not going to resolve anytime soon. So Amazon being one of the largest retailers, wait, if not the largest, I think they could be, in terms of their footprints with online retail and whatnot. They are in many ways a barometer for the market. If they are doing it, it is very, very likely that other retailers, other businesses will follow suit and decide to do the same. I'm sure you've noticed already even before this situation in the Middle east with the Strait of Hormuz and increasing energy costs. If you have subscriptions to anything, if you go to the grocery store, if you, if you are paying for energy in general. Prices have been going up steadily for years now. And there's been no, there's been no drop. It's literally been year over year, quarter over quarter. Prices have been going up, subscription fees have been going up, energy costs have been going up, food costs have been going up. And now in that environment, one of the largest companies in the world, one of the largest retailers in the world, they're saying we're going to make prices even more, even higher because of the additional costs that we're incurring in terms of transportation and whatnot. So it's very, very likely that more will follow suit. What I will say is these kinds of things, and that's what's so dangerous about these situations. We saw during COVID that prices increased for things, but they never came back down. They stayed. What happens is when prices increase, the market absorbs it and becomes a new reality and becomes the new relative floor for prices. And then that floor, they increase prices from that point. Right. So once Amazon does something like this, are they then going to roll it back? Are they going to roll back that almost 4% they're getting? I don't think so. I think they're going to maintain it in perpetuity and other, other companies are going to do the same. So then we are now, as a result eating 3.6% more anytime we do something with Amazon. And I know for a fact that you order from Amazon, I order from Amazon. Hundreds of millions of people in the world, if not billions of people in the world order from Amazon.
- [39:48]
A
So, yeah, so everything just got 3.5% more expensive on top of the base, whatever the base energy cost is, essentially.
- [40:01]
B
Let's think about it for a few seconds. Do you really think that they're just going to roll it back? I don't think so. Once they roll it out and the market accepts it, it is highly unlikely that they're going to say, okay, now we're going to. We're going to take it off again.
- [40:13]
A
Is all of this potentially enough to break fiat currencies and have bitcoin really come front and center, or will there always kind of be the US Dollar? It might just mean that bitcoin's at a million dollars or $10 million a coin at some point.
- [40:33]
B
So. And here's where I'm probably going to upset some people. Bitcoin could be at a million dollars a coin, and fiat currency could be stronger than ever. What I think bitcoiners fail to realize is that if you take the economy as a whole, the economy now in a very real sense, is the stock market, the stock market globally. And when I say the stock market, I'm not just talking about the US Stock market. I'm also talking about London. I'm talking about all of the stock market. The entirety of all stock markets in the world. The entirety of all capital markets. Is the. Is the word I should use, actually. It's a phrase I should use. The economy is the capital markets. The capital markets have something like. When you take derivatives into account, $1.4 quadrillion of everything, of when you take the derivatives, when you take equities, when you take all assets, collectibles, commodities, so on and so forth. Yeah, about 1.4 quadrillion. That is where things are now. And Bitcoin hit $126,000 right now, even if bitcoin were to hit a million dollars, does that mean it is at an escape velocity in terms of market cap to absorb enough capital and have the velocity necessary for that capital to offset or perhaps usurp fiat currencies? I don't think so. I think bitcoin could be a million dollars. And the global economy, the capital market can swell from here and still be chugging along strong. It's just that everything will be more expensive and bitcoin will be worth more in a world where bitcoin becomes the center of everything. I think we need to understand what that means before that happens. So the phrasing that you used about breaking fiat bitcoin, I don't think will ever break Fiat. I think Fiat, if it's going to fail, will collapse under its own weight. The problem with that is the collapse needs to happen first, before the replacement takes its shape. We will need to see a world where Fiat has collapsed. And in that world, it's not as if capital is going to rotate into bitcoin. It's going to be utter chaos and people are going to be selling everything. And in that world, we would need to see a truly civilization shifting fall in currencies for Bitcoin to become the nexus of what needs to happen and what needs to replace it. And when I say a collapse of currencies, that's not just the USD, that's the yuan, that's the Russian dollar, that's all currencies, the euro, all of them, will need to collapse for Bitcoin to replace it. Because if we think about it very, very logically, if you look at it historically, every fiat currency has collapsed, has been replaced by another that was already in place. It's just that that other currency grew in size, it grew in footprint, and it took over the use case and the store value and the medium of exchange for the failed currency. What we're seeing right now is if the USD were to fail, hypothetically, it's not as if the world will collapse. I think that what would happen is that it'll be a gradual failure that'll be sucked up by the yuan, by the euros, by pound sterling. Other existing currencies will siphon off the capital that is being lost with the failure of the USD. For bitcoin to be the replacement for everything, everything will have to fail all at once. And I don't think that's a world that we want to see. So that's why I'm more pensive with those kinds of narratives. I think bitcoin will be a million dollars, I think bitcoin could be $10 million. And fiat can still be going strong. But that doesn't mean that bitcoin won't take a larger and larger piece of the piece. But 1.4 quadrillion, that's rather significant. And that is something that's going to take, I think, generations, if ever, to happen.
- [45:00]
A
We've seen both strategy Coinbase and others very publicly make quantum priority. What does that signal to you? We have maybe five minutes left, so we don't need or we don't have the time, unfortunately, to get into quantum. But where are we right now on that topic? And what does it say to you that you have the most prominent public companies in the space really making it a priority.
- [45:28]
B
I think they're making it a priority because investors are making it a priority. I think investors are getting scared and investors are making them make it a priority. But to anyone watching this right now, there are three things that are taking place. One, a lot of the people that are pushing quantum computing have a vested interest in their success and they have money invested in it. So it's a cash grab. That's the first thing, and this is just my opinion. Second thing, quantum computing as it stands right now, only has one viable use case, and that's breaking encryption. So that's Bitcoin, that's banks. That's everything. That's the second thing that's going on. It is not as if a quantum computer is going to be on your desktop, making your life easier. Quantum computers have no benefits over classical computers as it stands, and they won't for a very, very, very long time. Even if one comes online tomorrow, they just won't. There's no code to run on them at scale. There's no programs, there's no applications, there's no networking, there's no nothing. So even if a quantum computer were to come online tomorrow, it's relatively irrelevant. Third thing, breaking encryption. We already have solutions for that today. So if a quantum computer, if quantum computers are being built out and there was no viable solution to them, there was no even hypothetical solution to them, I would be more concerned. However, we have viable solutions that just need to be implemented, that just need to be tested today for a problem that by some estimates, even the most optimistic ones is 10 years away and by the most realistic ones is decades away, if ever. And a lot of people are making a lot of hype about what the Google research paper said the other day. But that wasn't talking about breaking encryption. That was a hypothetical if, if, if, if, if and if and if paper. It wasn't anything structural, it wasn't anything actually hard in the sense of new, truly frontier quantum developments. So I would urge people that when they see a lot of this talk about quantum computers, realize that if it breaks encryption, it breaks everything. Realize that you have people that have a vested interest in this becoming a powerful narrative to attract money into it, to make money off of it. But the technology, the theory, is still a very, very, very long way from being implemented at any sort of scale, in any sort of way that puts encryption at risk.
- [48:00]
A
What are you seeing in the market right now with Bitcoin, treasury companies? You see a lot of a lot of a lot going around from companies kind of sitting there stuck, companies selling bitcoin. Are you seeing, are you having conversations around companies that are actually being constructive and positive and building in the bear market? Is it all, is it over? Except for strategy and a few other leaders? Will we see a renaissance and a version, whatever you want to call it, 2.0, 3.0, 4.0, either shortly or when the bitcoin price reaches new all time highs. What's your kind of quick take on that?
- [48:52]
B
I think that, and this is something I've talked about often, I think that the market, capital markets as a whole move on sentiment and it's amplified. In the Bitcoin treasury space, companies were very, very reliant on issuing shares at a premium to buy bitcoin and having that reflexive benefit when bitcoin sentiment is high. The sentiment around these treasury companies was high and everyone was riding high. Now that we've seen the sentiment has shifted for a variety of reasons that we don't have time to get into. We now see the benefit of first mover advantage and strategy. We see the benefit of mindful planning, perhaps with strive doing the acquisitions and having SEDA and so on and so forth, following the strategy model but also taking their own road. And we are going to see what companies are able to either stand pat or innovate and survive. If I were a betting man, I think that we're going to see a lot more treasury companies go under in terms of. I don't mean go under, I mean go under in terms of selling off their bitcoin. I think we've seen a few recently. Not going to say any names, but we've seen a few. We're going to see the importance of the preferred offerings for strategy become more apparent as if we are in a bear market and it's prolonged. We're going to see them become even more important. But if we are in a bull market that somehow manifests, they'll be equally important because it'll give them multimodal abilities to go out into the market and buy bitcoin and grow their net asset value. So that's just my high level view of it. Sentiment has shifted. We're now seeing who's going to survive and we're also seeing the benefit of first mover advantage and proper planning with strategy.
- [50:30]
A
Great summary of where we are right now. Adrian Morris, thanks for joining us today on the Bitcoin Treasuries podcast. Appreciate your time, Tim.
- [50:37]
B
Thanks for having me. Anytime.
- [50:39]
A
Join Bitcoin Treasury's Media and the Smarter Web Company as we present the inaugural Bitcoin Treasury's Unconference UK on Friday, May 29th. Visit BitcoinTreasuries Media for tickets to the Bitcoin Treasury's unconference Ukraine.