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- [00:00]
Podcast Host
This is an I heart podcast.
- [00:02]
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Podcast Host
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Sam Callahan
get to stand in line with pee pee pants.
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Jake Roquet
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Podcast Host
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- [02:35]
Jake Roquet
You expect the combination of Medicare, Medicaid and interest expense on the US debt to render the US government insolvent by 2031.
- [02:43]
Sam Callahan
Again, nobody wants to talk about these problems that seem far away, but we're kind of reaching the end of the track. You can feel, feel the tension rising
- [02:52]
Jake Roquet
doing the bitcoin strategy in Latin America. Have you found that it's easier to explain to people?
- [02:58]
Sam Callahan
Brazil has a fascinating history where in the late 80s and early 90s they suffered true hyperinflation. Those scars from those times are still there.
- [03:09]
Jake Roquet
There's been a lot of talk about sailors just said, sell bitcoin, pay the
- [03:12]
Sam Callahan
dividends, buy more bitcoin than we sell. And they're like, well, what are they going to do if they can't issue equity, they can't fund a dividend. Well, they could sell the bitcoin. And they were like brain breaks. A lot of people are going to have to wake up and take some responsibility and learn about some of this stuff or else it could be a challenging time for them.
- [03:30]
Jake Roquet
Welcome back to Market Disruptors. My name is Jake Roquet and today I'm joined by the great Sam Callahan. Sam is the director of strategy and research at Orange btc, which is the largest bitcoin treasury company in Latin America. He's also a prominent analyst, researcher and educator. And it's an honor to have you joining me today. Thanks for being here.
- [03:52]
Sam Callahan
Thanks for having me, Jake. Excited to chat.
- [03:55]
Jake Roquet
First question for you is I wonder if you could start with just a bit of, for those who aren't familiar with you, a bit of a more in depth summary of your background. The things that you're working on in bitcoin. Before you were working on Orange and then kind of, yeah. The path that took you to what you're doing today with Orange btc.
- [04:16]
Sam Callahan
I guess I had a little bit of an unconventional path to bitcoin because I actually was a biology major in college and I got a doctorate degree in sports physical therapy. And so I was actually developing algorithms to objectively measure the risks of professional athletes and D1 athletes of getting hurt. And then I was selling that to different sports teams to help reduce their injury risk. So that's what I was doing. It was awesome. I had a good time. But I was, I was also a business. I studied A lot of business in school, I just, I was already a gold bug kind of. And I already kind of didn't believe the economic dogma that was being taught in business schools. It was during the global financial crisis. I would ask the professors to explain, for instance, like, where the money was coming from, quantitative easing, and talking to him about currency debasement. And these were not kosher topics to talk about in those business classes. And so I switched majors to science because it just made more sense to me. It was in more truth, more factual. And I was just fascinated with the human body and realizing that I was just fascinated with complex systems and just trying to understand them. And I always was very interested in investing, but I did it as a hobby. I read financial history and the history of central bank banking just on the side. I just kind of geeked out on it. And so when I found bitcoin, I had already become very educated on the problem of currency debasement, fiat currencies, inability to save, central banking, all of that stuff.
- [06:04]
Jake Roquet
Who were you reading at that time?
- [06:06]
Sam Callahan
Jim Rickards was one that comes to mind. He wrote a book called currency wars in 2010 or 11 or something. But it came out, it was very prescient of what was about to happen. The weaponization, treasury wars, the weaponization of the dollar system. Believe it or not, Peter Schiff wrote a lot of good books back then. I learned a lot from Peter. And then just traditional Austrian economics, kind of the classics of investing. What is that one called Reminiscence of a Stock Operator is a classic book that I really recommend to people about trading, about investing. So books like that, kind of like a mix of the classics and then more a lot of financial history. Like I liked learning about manias and just almost the human behavior component of stock markets was fascinating to me. And a lot of gold focus books, I would say, in terms of like the lens looking to the lens of hard money, not necessarily I didn't like, I invested in some gold, but I just liked the ideas of Austrian economics, sound money, and the second order and third order effects of having sound money for society.
- [07:21]
Jake Roquet
So that primed you?
- [07:23]
Sam Callahan
Yeah, yeah, primed me. Right. And then when I found bitcoin, it really excited me because I felt like when I was going down that rabbit hole, I didn't feel like there was a real solution to that problem of central banking. I felt like they had become so powerful and so politically connected and the big banks were politically connected. And it. When I went down that rabbit hole, it just like I was like I don't know what's going to actually take power away from them. I don't know what's going to take the money printer away from them. Because gold has physical limitations and it would almost be going back to what we did before, which already failed. And then when I found bitcoin, obviously it being digital gold, it really, I was like, this could work. And it was really exciting. And then I just kept reading everything I could on it. This was like 2016, 2017. So there wasn't really that much. There was like a few podcasts, there was really great blog posts, but it was very distributed everywhere X was. Or Twitter was still like growing. But I just read everything I could and from there I just knew that I wanted to work full time because it wasn't enough for me to just benefit financially from bitcoin. I really wanted to help drive the adoption of it because I felt like that was a good use of my time. I felt like it could help more people than I could even just working with a patient right in front of me. I felt like I could help more people by teaching them about sound money, about how bitcoin could help them. Why this technology is important because it was so misunderstood back then and still is in a lot of ways, but back then it was very. There was a lot of ignorance around it, a lot of fear around it. And I wanted to clarify that and just do my part the best I could. Because I think bitcoin represents hope and a new alternative. And I wanted to look back in my life when I was 80 and 90 and tell my grandkids like, oh yeah, your grandpa did a small part in trying to help drive bitcoin adoption. So then I switched careers and I started working at Swan Bitcoin, which is a brokerage firm. Was the 20 something employee there, saw a lot of growth, learned a lot, was a lead analyst, kind of like head of research role. And I really wrote about everything about all the different angles of bitcoin, all the different sectors of bitcoin. I covered scaling, lightning, mining, macro basics, 101s. I really wrote hundreds of articles and newsletters and papers around that time.
- [10:09]
Jake Roquet
Does one stand out from that time? If you wrote hundreds, is there one or two that you look back on that? It's like that was a significant.
- [10:17]
Sam Callahan
Yeah, yeah. I mean there's some that I'm proud of. I mean, there's some that turned out to be pretty predictive of what was going to happen. There's one where I talk about why I'm bullish heading into 2023. That comes to mind because it was the 2022 bear. And I wrote a list of 10 things that I thought was be tailwinds for bitcoin. And that one aged very well. There was back then too. I wrote a lot about central bank digital currencies and the risks there. And one of the things that still to this day proponents talk about how it will promote financial inclusion, how it will help people in various ways these central bank digital currencies. And I wrote a pretty in depth piece about why that's not true. And that one's pretty. I think that's also aged very well. And there's one about lightning early on riding the lightning Network, about how it improves the correspondent banking system. There's a lot of them, but I poured my heart out into them. There's some that I wrote one about comparing Bitcoin and Ethereum and the Fall of Rome, which I loved writing that one.
- [11:30]
Jake Roquet
Interesting.
- [11:32]
Sam Callahan
So I mean it was all over the place, but that's what I wanted. I kind of. It helped me sharpen my own mind while I was doing that. And I like to think I helped just educate people about what it was and hopefully that was my goal. Hopefully people just learned a little bit from reading my pieces, but I did that. And then from there I joined the advisory boards of various companies like Mara and Cantilever, which is a bitcoin VC focus, bitcoin focused VC firm. And then Liquid Technologies Group is the first bitcoin treasury company and public lightning company based out of Canada. I'm on the advisory board there as well. And then I joined Battery Finance which was. Which is a private credit fund that's combining bitcoin with traditional assets. So like real estate infrastructure loans, it's just like sprinkling in some bitcoin into these loans and affecting the return profile by adding in that different diversification from an asset that improves the returns but in a way that doesn't introduce so much risk. And so I did that for like nine months. And that was really. I learned a lot in that role as well. But then Orange BTC was something that I had been following strategy or microstrategy at the time really because I was focused so much on the industry writing at Swan, I had been tracking MicroStrategy since the day that they released that they bought Bitcoin for the first time in August 2020. And so it's been really fun tracking that whole journey. And I know the management team and I just wanted to try to execute A version of that strategy in a different capital market, in a different jurisdiction. I thought there's a lot of opportunity there. I think when you have a bitcoin balance sheet, there's a lot of opportunities to create a really durable business model around that digital capital or the bitcoin. And it was the right team to do it. And so I joined and it's been one of the best experiences in my professional life since then. So it's been very rewarding to try to bring bitcoin adoption into a region that needs it most. The human rights component of bitcoin is what keeps me going. Everybody suffers from the mismanagement of fiat currencies around the world, especially in Latin America where they have a huge history of that. And so by having a company that's mission is to just help increase adoption in that region, it really aligned with my own values and what drives me. So that's the long answer to my journey. But it's been a ride.
- [14:28]
Jake Roquet
That's awesome. That's super interesting. I wonder, doing the bitcoin strategy in Latin America, have you found that it's easier to explain to people? I remember I had a friend from Venezuela who I explained bitcoin to her and she was like, oh, that totally makes sense. I remember like when my mom had this hyperinflation that she went through and it totally, you know, wrecked the, all of their forward looking plans for a while and all that sort of stuff. They ended up moving out of the country. Coming back. I know, like Argentina, Venezuela, you've seen a lot more recent like hyperinflationary things that, you know, there's a lot of people are like, yeah, I remember when that happened, 20 years ago, 18 years ago, whatever. Have you seen that having a big impact in what you're doing? The familiarity people have with. It's more clear perhaps.
- [15:22]
Sam Callahan
Yeah, 100%. I mean even the concept of debasement is foreign to a lot of people in places like the United States where the currencies are more relatively stable. So we're listed in Brazil, so we're on the B3 stock exchange.
- [15:40]
Jake Roquet
Only Brazil access or do you guys go beyond that?
- [15:43]
Sam Callahan
Well, there's like, you know, people, individuals from other countries can buy equities and okay, on the B3. Brazil has the most deep and sophisticated financial market in Latin America by far in terms of liquidity, in terms of sophistication, derivatives markets. And so it was the right place to do it anyway because it's just the financial center, I would say of Latin America. Now, Brazil has a fascinating history where in the late 80s and early 90s they suffered true hyperinflation, like Zimbabwe level hyperinflation. And so if you think about that, how it's that those scars from those times are still there. The parents of a lot of people that I talked to, especially the grandparents, saw their savings wiped out. And when that happens, it's not just the scars, but it's what they tell their children. They teach their kids how to protect themselves against what happened to them. And so they're very familiar with the ill effects of currency debasement and how painful that could be. And so, yes, they immediately understand the value proposition of something that can't be printed, that can't be manipulated. That being said, Brazil has one of the highest crypto adoption rates in the world. Chainalysis puts out the premier study every year looking at crypto adoption per jurisdiction. And it's across defi, Stablecoins, bitcoin, they have different categories. Brazil's the only country in the top five of every single category. So they're very innovative people, especially with their financial services. In many, many ways, Brazil is more advanced than the United States in terms of their infrastructure. And so when they adopt, they adopted stablecoins and bitcoin at a really high rate compared to other countries. Now I will say stablecoin adoption is maybe even higher than bitcoin adoption because they like the stability and the relative stability of the dollar. And bitcoin's volatility can kind of still scare some people. So it's about education, which is why Orange btc, we reverse mergered into an education company, because in many ways the adoption is very high, because they understand the history like I talked about and they're innovative and they know how to use wallets. But at the same time, the market infrastructure hasn't caught up yet. Meaning in the US you have all these companies, these great companies that have provided products and services that make it easier to use bitcoin, to access Bitcoin, to borrow against bitcoin, bitcoin backed credit cards. There's all kinds of burgeoning industry right in Brazil. There are some great builders there, but it's far behind what the US is. So the adoption's there, but the market infrastructure is still immature, which is why it presents an opportunity for a company like Orange to kind of fill that void and kind of meet that demand with proper institutional grade products, services that might exist in the United States, but just not yet in Brazil. And so, yeah, it's easier to explain to them the thesis around bitcoin. But we just have to improve the access, improve the products, improve the services, to really accelerate the adoption to where I think it should be.
- [19:11]
Jake Roquet
Where are the bottlenecks in terms of capital there? So you have, you guys are looking to reach out to underserved capital. I understand a little bit more clearly in the United States markets you have certain funds that have certain requirements that have to be met, whether credit ratings for like retirement accounts, you know, and certain, certain bottlenecks for capital there. What does that look like in Brazil? And how are you guys trying to fix that problem right now to open up those pools of capital?
- [19:39]
Sam Callahan
Yeah, I mean it's similar, right? The way that the traditional financial system developed is you have these like siloed pools of capital that have different mandates, they've allocation buckets that they can only invest in a certain percentage here or there, depending on the risks. Same thing exists in Brazil. So I talked about the, how sophisticated the financial markets. When you look at the Brazilian economy, it's basically finance and oil and gas, you know, that's pretty much a majority of the gdp. And so the banking industry is very large there. Same with the institutional investors, the pension funds, insurance companies. But they're still restricted from owning spot bitcoin. And so that presents an opportunity as well for Orange BTC to provide them ways to gain bitcoin exposure that fits with their mandates, that fits into their allocation buckets. Whether that be our equity, whether in the future we might do some kind of bitcoin backed security, you know, that's, that's where the opportunity lies to kind of unlock those pools of capital, to allow them to get exposure to an asset that historically has very low correlation to every other asset class. Then obviously the return profile historically has been attractive. And when you look at the adoption trends, personally, I believe that bitcoin's going to be a pretty good allocation over the next five to 10 years based on these adoption trends. So that's kind of one of the value propositions of Orange BTC is improving investor access to bitcoin in that market because individuals can buy spot bitcoin at various brokerages, but institutional capital still, it's not as easy to do. And they're restricted in many ways. And so that is definitely one of our goals.
- [21:34]
Jake Roquet
Are you working on a digital credit alternative or equivalent sort of thing? Like a stretch? I know medicplanet started working on their own sort of equivalent. What are you guys thoughts around that? Are you looking to do something similar, something slightly different?
- [21:51]
Sam Callahan
We're supporters of the digital credit. I mean, we were actually the first public company to put stretch on our balance sheet. And now we went public last October. And there's still, you know, we want to, as a young company, we want to build a reputation, build a track record and build a closer relationship with the regulators before we introduce a brand new type of product like that. You know, there's a lot of education that still needs to happen. You know, one of the challenges of any treasury company in any jurisdiction is you got to navigate the regulatory environment and follow the rules of the law in that jurisdiction. And so it's on our medium to long term roadmap. We would love to be an issue of digital credit in that market, but we think more education needs to happen. We think we need to build a track record as a company and because we want this to be a really successful product if we go down that route. Now, that being said, there's ways to push the adoption of digital credit in the market without necessarily being the issuer of digital credit. And so we're exploring different ways to do that. And we think it could be really attractive to somehow bring that digital credit into the market. Because Brazil is a very fixed income focused market. The investors there like fixed income. They like steady streams of income paid out, whether it be monthly, like stretch, but usually it's quarterly, biannually. It goes back to the risk tolerance of their history of the last 30 years, as well as the stock market, which has been very volatile up and down over the last two decades or so. And so they like stability, they like income. And so some kind of digital credit product in that market could be pretty attractive. And so it's one of our goals. But there's different ways to do it besides just being the issuer. But over the medium to long term, we'd love to be the issuer of digital credit in that market as well. It just, it's about education, it's about getting the regulators comfortable with it, navigating the regulatory rules and trying to figure out a structure that fits everything that could provide something like a stretch or a SATA. And so we're definitely very close to that whole revolution and we support it, which is why we put it on our balance sheet. And so we would love to be a pioneer of pretty much all bitcoin backed securities in Brazil and Latin America.
- [24:38]
Jake Roquet
You said that the stablecoin adoption, you're seeing a little bit more of that initially than bitcoin adoption so far, at least in Brazil. Is that right?
- [24:49]
Sam Callahan
Yeah, I mean I would say that's generally. It's not just Brazil. It's like stablecoin adoption is huge, especially in these regions. I'd say there was some statistic a year or two ago that 90% of crypto adoption in Brazil was stablecoins. So they're very popular. I mean not only like remittance payments and the efficiencies, but again, relative stability of access to dollars is a really compelling thing in market in jurisdictions where the currencies are more unstable. So it makes total sense.
- [25:27]
Jake Roquet
So I remember a couple ideas to connect here, I guess. But so we're seeing that increased stablecoin adoption all over the place really. I was having a conversation with Jeff Booth that we shared yesterday. And in that I was sharing that, it looks to me that one of the clearest roads to the CBDC implementation is stablecoins. There would be perhaps something that's built in the private markets that grown, has grown to a size that is, you know, meaningful and then you would see some sort of co opting of that sort of thing. That looks to me like the most likely case yet. You've talked about, you have a lot of concern about CBDCs and you don't. I heard you talking another podcast, perhaps you can connect these dots for the listeners where you don't seem to see as much of a threat from the stablecoins to CBDC route. What does that look like to like. I guess a better way to frame the question is how do you delineate between stablecoins and CBDCs? Like what are the dividing characteristics?
- [26:31]
Sam Callahan
Yeah. Cause it's a little bit nuanced. I just. Now there could be something where the state like acquires a private issue or if they grown large and then it becomes a cbdc, you know, like more closely the way that people imagined a retail cbdc. But the big difference is that it's a private issuer. Right. So a CBDC that is literally issued by the Federal Reserve, it doesn't have necessarily counterparty risk or liquidity risk because they have a money printer. Right. So they can always print money and provide liquidity. And a private issuer doesn't have that. They can build up their reserves, but they have to make sure they're managing their reserves to meet redemptions and then they could come into liquidity issues. A perfect example of this was Circle during the Silicon Valley bank when it broke its peg temporarily, when they lost access to their reserves, fully broke down. That theoretically couldn't happen with the cbdc. And why that matters is because if they introduce a CBDC and you had the private issuer stablecoins still existing, why would I choose to hold a circle or a tether when I could hold a CBDC at the Fed that doesn't have liquidity risk or as much issuer risk as these private ones? I mean, it's just that's what I would use. They're both pinned to the dollar, essentially the same thing. One is better guarantees as the holder. And so in that environment, if that existed, everyone would flood to that cdc and then once everybody's in it, then they could put down the draconian like programmable things that we always talk about, like turning on and off at certain times and cutting certain cohorts of the population off from using the money. All those things that we talked about with the risks, like the human rights risks of a CBDC would be easier to do because everyone would be siloed into it because it had the best guarantees. But as a private issuers, if you have a market of multiple stable coins from Fidelity Circle Tether, you're seeing all of these pop up, well, then you have optionality as a user. So if one of them started to do these draconian things, you'd be like, I'm not using this anymore, I'm going to go to this one. Right? And then the market would decide what's right and wrong because they would get a ton of redemptions if they did any of those draconian things. And that could turn around and use a different one. So it's a way the market can kind of referee what's right and wrong. And the users are going to decide whether they're going to put their capital where they're treated best and where their human rights aren't violated. In a CBDC world where it's directly with the Fed, they would be more easily to do that because it goes back to what I said before. They would gain a ton of capital because why would I hold tether outside of that? And so that's kind of how I think about it. It's not the exact same. It would be very different architecture. A CBDC directly with a central bank like the digital Euro and the ecb, I would be concerned about that. I've been tracking the ECB and the digital euro for years, really since they initially started to sneak in the idea in 2018, 2019. And I knew that they had more momentum than anybody because they were so desperate to launch one due to large fintech companies really taking a greater and greater percentage of the total payments volumes in Europe and then also just the way the ECB is, they have this power and the EU has this power to push down top down policies like this. Whereas in the US I've been really encouraged by the pushback on the CBDCs. And really around the world there's been a lot of pushback and that's a good thing. And even in the Clarity act, there's at least a provision. I don't think it's like actual ban of a cbc, but at least it has language around preventing one. And so I'll stop there. But I hope that all made sense. It's just, it's a little bit of a nuance between the stable coins and CBDCs.
- [31:00]
Jake Roquet
Yeah. So the liquidity, the key delineating factor being if you have a private market where a bunch of people are allowed to compete, you have a bunch of different providers, people can come on and off their different stablecoin networks, so to speak. That's when it's less of a threat. When it becomes more of a threat is when you see something very similar, but issued by a central bank that has unlimited reserves, essentially, instead of them having cash equivalent reserves, they just have. We'll print infinite money. Basically how it works now. But on a stablecoin standard, so to speak.
- [31:33]
Sam Callahan
Yeah, yeah, exactly. And it would just allow them over time, again it would attract so much of the capital because again, it's just incentives. Like why would I. It has less risk. Mm. And then once they got all of it and once they kind of killed all the competition, then they would have the power to. And the state would be the most likely to do this. Right. Is to do those draconian like things. And so that's kind of how I see it. I see it. It's possible. Like, you know, there's risks of holding stable coins like Jeff. I love Jeff's. There's nothing stable about a stable coins. It's not named correctly. And we saw like there's. It's. It's centralized. Right. They can easily seize, easily censor. Like people have to understand those risks. But I think if Tether came out and started to put a ton of programmable restrictions based on user activity and based on all these things that really added frictions to using Tether as a payments technology and also infringed on the human rights of its users, I think they would see a huge wave of redemptions. And I think they know that. So I think the market is kind of doing its thing.
- [32:52]
Jake Roquet
Yeah. It's interesting to me how stablecoins and Bitcoin are so often put in the same category. You look at the Clarity act, people are talking about them in similar ways. And when you look at these, when you break things down to the protocol level, it's clear how different they are. There's this, this tweet you posted about, about a month ago, a few weeks ago, where I think kind of lends itself to the same idea. You were saying, you were talking about how there's these Dino cryptos, basically decentralized in name only. You wrote this four years ago. Altcoins almost always attempt to create the illusion that their token is decentralized, but that is, but it is just that, an illusion. In the vast majority of cases, team members and insiders hold significant shares of the coin supply. And there's usually a founding team that can unilaterally control the protocol. So when you're looking at the dollar, you know, it's like we have one node, the issuer can issue as many. There's no limit on the currency that they can issue. If you look at like Ethereum or Solana, there was significant pre mines, there's debates about what they can do with the supply. I wonder if you could give like, fill people in on how some of these other crypto protocols that call themselves decentralized are not really like, what. In terms of the governance mechanisms.
- [34:16]
Sam Callahan
There was recently a hack, then the Security Council of this protocol basically froze and walked back the hack. And it was a, it was a Security council of, of 12 people, I think, I believe. And so it's ultimately, you know, they can say that they. Yeah, I thought I retweet, I thought I quote, tweeted that. But it was, it was a, it was a subtweet. But yeah, there was a hack that day and I thought it was funny because, I mean, you say the US Is one node, but I guess technically it's the Federal Reserve branches. So they kind of have like a dozen notes or it's like the, it's like the Governor's. But it's, it's the same level of centralization, essentially. Right. If a Security Council can make a unilateral decision to walk back some hack, then it's not decentralized. I mean, it's just. The proof is in the pudding. Right. So my point here was that my problem with a lot of these other altcoins was always the marketing. And it's disingenuous to say that they're decentralized or sufficiently decentralized. And that usually there was a large pre mine or VCs who got in at dirt cheap prices that weren't available to the broader public, who then pushed that they were decentralized and didn't control anything. But then when you really break down a lot of these tokens in terms of the actual consensus mechanism, how many validators are on the network, who owns the validators, you start to dig in deeper. You realize that they're actually very centralized, which is why they're hacked a lot. Because when you're decentralized it's a more secure right. And it's typically only when something bad happens where the emperor has no clothes anymore and they either have a choice, they can act like they are actually decentralized and they can let their project or protocol either fail or really get hurt because of some kind of bad thing that happens, some kind of hack, or they can decide, well, we could actually, because we're not actually that decentralized, we could actually unilaterally fix things to walk back any kind of hack or damage, or kind of fix any damage. And you see it time and time again that the people, because they are incentivized, because they do have a large early allocation to the founding team, and they are incentivized for the tokens to go up in value and the product to work, that they choose to fix it unilaterally, proving that they were never actually decentralized in the first place. And I've seen it I don't even know how many times at this point since I've worked. Now the problem with, I think that one of the reasons you saw the proliferation of so many cryptocurrencies is it's actually very hard to measure decentralization. Actually like the Clarity act is trying to define what decentralization is. And it's just, it's really difficult because you can't really say like, you know, number of nodes, right? But I, I could be one person running multiple nodes. That's just like one example, like that there's always different ways you can kind of try to measure it, but there's always kind of problems with it like that. And really what I kind of determined was, you know, if something's decentralized or not, just by track record and just like has it remained immutable over a long period of time? The proof is in the pudding. And that's where Bitcoin shines. And you actually know that it is sufficiently decentralized because there's still, when it breaks down at the Consensus level of the rules of the protocol. It really hasn't changed since the inception, since Satoshi launched it. I think the immutability of the protocol, the security of the protocol, the uptime of the protocol, that track record is actually the best way know if something is actually decentralized or not. The monetary policy hasn't changed in bitcoin's history, so that's kind of how I see it. And a lot of these altcoins kind of benefited because it's such a gray area of what is decentralized or not. There's not really an easy definition. And that's where all the altcoins thrived was in that gray area where they can say that they're decentralized, but it's kind of hard to disprove until something bad happens. And then it's just like you kind
- [39:06]
Jake Roquet
of know, yeah, yeah, they're able to kind of squeeze in, like ride the coattails. It seems like of just the movement, the branding. Yeah.
- [39:16]
Sam Callahan
It's a bitcoin. I picture bitcoin as a giant whale in the ocean. And then there's those like sucker fish that are kind of just like.
- [39:25]
Jake Roquet
Those are all the altcoins.
- [39:26]
Sam Callahan
Yeah. Swimming around benefiting from the whale.
- [39:31]
Jake Roquet
Right. While I got this screen. Share up. I suppose you wrote. I don't know if you wrote this article, but Orange published it. Oh, sorry, excuse me. Right at the top it says, I wrote this over you of bitcoin's quantum debate and came away optimistic. I wonder if you could fill people in on what you learned from this research here. Quantum fud, it seems to be dying down as there's been a bit more people doing a little bit of research, sharing their findings. It's a theoretical computer. We don't have one yet. It's still like computer science theory, I suppose, that we'll be able to have one at a level that will be meaningful. But. Yeah. What did you learn from this overview? In the study, writing this, it was
- [40:14]
Sam Callahan
like the FUD of the day a little bit lately and especially from the people that I talk to that are really smart people and like allocators and. And work in finance and investing. They always were like, well, what about quantum? And some of them actually weren't investing
- [40:35]
Jake Roquet
in bitcoin because, well, quantum, that's the level of resolution. Yeah.
- [40:45]
Sam Callahan
I think I posted something like three or four years ago of just like bitcoin and quantum, just like the resources, which were very thin at the time. And you know, when these papers came out from Google that pushed the theoretical limits of it reduced the resources likely required to get a quantum relevant computer that could crack, you know, Bitcoin's signature schemes. But it was all theoretical. But then, you know, I, I respect, I respect Nick Carter, like I've learned from him over the years. He started to write in depth about it. I said, okay, I'll dig deep and actually see what I think here. And so I ended up writing this overview of why there's like factions that want different things and why some are really worried and why some are actually worried about the people that are worried. And what I came across was that the risk is less imminent than the headline and the Fudders maybe suggest. And then also the work underway is much more robust than I knew about. There's all kinds of solutions to the quantum threat that vary in terms of degree of severity, in terms of actually putting in post quantum signatures. That would be a pretty big change versus having some contingency plans that basically allow people to be prepared but not necessarily have to change the entire protocol. And so there's a lot of different solutions that vary that would overcome any kind of quantum threat in the future. And there's a lot of discussion, a lot of debate. And so it's kind of like exactly what people like Nick Carter want, which is like, hey, we just want the discussion to ramp up a little bit. It is like a theoretical tail risk. But if it's true, then we have to be prepared for it. And so what I found in my research was that's exactly what's happening. And so it's good. You know, I don't really feel worried at all about the quantum threat. And I think both sides are pretty reasonable. You know, there's the one side that says, look, we're not going to have a warning for this. We need to be prepared. We need to have different solutions in place and start to test and debate and make proposals. And we have to start doing that now because the timelines are increasing with the convergence of AI and quantum research. And this could happen sooner than maybe people think. I think that's a fair point, but I don't think enough attention is actually on the other side, which is that the real risk is pushing through a protocol that has unintended consequences. And we see this time and time again. Like anytime you upgrade a protocol, there's usually second order and third order effects that were unforeseen from that upgrade. It's really difficult to know how the incentives change when you make any kind of protocol change. Perfect example in bitcoin would be the taproot upgrade, which had all these different benefits, but nobody could have foreseen the rise of ordinals and inscriptions and how that would change the use of block space, for instance. People weren't really thinking that, but that arose from it. And there's even worse situation. If you look at the history of Ethereum, for instance, every single time they've done a protocol change, it seems to create two or three more problems that they didn't foresee. That requires an additional protocol change as well as more complexity into the protocol itself. And so that risk is actually, in my opinion, maybe even higher than the actual threat of quantum. It's like the road to hell is paved in good intentions. You could have really good intentions, hey, we're going to make Bitcoin quantum proof, like, great, okay. But then you push a protocol and then there's these second order effects that we didn't expect to happen that actually threatened the integrity of this amazing technology. And so that's why Saylor said something like, the biggest risk is a protocol change that had good intentions. Right. And part of me agrees with that. But the thing is that those are the kind of two sides of the debate. But from my research, it's kind of like both should be kind of happy because there's really careful debate going on and a lot of different solutions being proposed, like I said, and the discussions ramped up. So like the faction that says, we gotta run, we gotta do something now, they should be kind of happy with the progress, I think. And then the other side should be happy because there's also a good amount of restraint and like, and that's how we should be treating protocol and technology. That's like $1.6 trillion asset that's, you know, a safe haven for a lot of value in this world and savings. And also like a human rights technology that's like, it's a lifeline for people. So any kind of change to it should be very, very, very carefully done and tested. Which again, it kind of goes back to what the other section is saying. It's because Bitcoin's actually decentralized, which makes it more of a challenge to upgrade because it's harder to come to consensus on a truly decentralized network full of distributed participants than a more centralized protocol. So I actually said this in the piece. I said any protocol that's saying we'll quickly do quantum proof, we're pushing through it, we have a committee and we're doing this. It's again like a Tacit admission that they're not actually decentralized. They can push through a quantum proof upgrade in two months. Yeah, it's probably easier to do that because there's like a dozen people making the decisions.
- [47:02]
Jake Roquet
Right.
- [47:03]
Sam Callahan
But with Bitcoin, the decentralization is its biggest strength with the security of the network, the immutability of the network. But it also comes with trade offs. It's slower to make decisions like this and come to consensus, which is why that one faction's like, we should start doing things now because it could take years and years for us to come up with something. Because it's a real decentralized network. Yeah, I thought it was a fascinating piece. I learned more about quantum and I walked away really optimistic about it.
- [47:37]
Jake Roquet
Yeah, that's good. I think the, one of my favorite things that I believe Saylor had to say about this was like, you could vaccinate against a thousand different potential diseases that you could maybe get like in some theoretical possibility. And in doing so you can harm. You can do a lot more harm than the things you're trying to protect yourself from, essentially. And I view quantum in that realm of like, okay, when the threat does begin to materialize more and more significantly and clearly it will also be easier to get consensus on the network about what the solutions are. Like, the solutions have become more clear as the problem becomes more clear. I think too.
- [48:19]
Sam Callahan
Yeah. And I think the quantum threat is also misunderstood. People hear that and they think it would break bitcoin or something. But it's really just about certain digital signatures, like the address types that people use. Some of the older ones are more vulnerable. Like Satoshi's coins for instance. Right? Yeah. Like 30, 34% of Bitcoin supply is quantum vulnerable because they're using either address reuse or they're exposing their address to the network as they reuse it, which isn't good practice in general. Or they're older coins or there's some like a smaller faction that are like these taproot specific addresses that are vulnerable. So it's just the signature schemes themselves. And so it's not a problem with Bitcoin's consensus or the actual functioning of the network. It's just about these coins. It's like, should we protect them? Should we give them options?
- [49:16]
Jake Roquet
Yes.
- [49:18]
Sam Callahan
But the debate I think is ultimately going to go to what do we do with Satoshi's coins if it ever comes to be. That's the real debate. It's like, you know, some people say that they want to basically claim them Instead of letting some kind of nefarious actor hack them who has quantum capabilities, AKA like a large government or something. Acquiring Satoshi's coins doesn't sit right with people. Other people are like, this is a free market. And you know, what would be the harm of letting somebody like maybe they sell all the bitcoin, but then bitcoin marches on and they don't want to interfere because it is a core value proposition of bitcoin to preserve property rights. So even if you're meaning, well by quote unquote, protecting satoshi's coins, if you claim them to protect them from a hacker, you've infringed on the property rights.
- [50:14]
Jake Roquet
Well, and then you're the hacker, you know, like I'm going to claim them so that nobody else, you know, takes them. It's like, all right, well, yeah, exactly.
- [50:21]
Sam Callahan
So it's going to be a pretty contentious if it ever comes to more imminent threat. I think that's actually the real thing. But bitcoin will march on regardless and I think people will find clever solutions. That's what I've discovered with the quantum in general. But even Satoshi's coins, there's already talk of figuring out ways to claim the tokens for claim the coins from Satoshi, but then give him or her a way to reclaim them so they can prove that they have the key and get the coins back if that ever came to be. So giving them a path to recover.
- [51:01]
Jake Roquet
So maintain the capacity of the private keys to move it while up.
- [51:08]
Sam Callahan
But that leads to all the other questions like who manages all that and. But anyway, I'm just saying it's important to realize what the actual threat to Quantum, what the bitcoin, what it means for bitcoin.
- [51:23]
Jake Roquet
Right. They're not going to nuke the ledgers all around the world.
- [51:28]
Sam Callahan
Yeah. The real question is more like philosophical around what you do around satoshi's coins, if it ever came to be. That as a community we need to figure something out.
- [51:38]
Jake Roquet
Okay, so I wanted to ask a couple more bitcoin treasury company related questions before we wrap up here. So how do you guys think about managing the treasury? There's been a lot of talk about. Saylor's just said, well, you know, maybe we'll sell some bitcoin at some point in time. He, he was pointing to, you know, and everybody freaked out about it, you know, and even when he's like, we're going to be net buyers in the quarter, he's like, if we sell one bitcoin in a quarter we're going to buy back nine. You know, we just might sell some to cover some, you know, cover some tax lot, like do some tax harvesting. If we bought some Bitcoin at 120 and we can sell it at 80, capture that gain for our, you know, for our taxes and filing, that sort of stuff. So it was, it was really blown out of proportion. But I thought it did start an interesting conversation on okay, so what exactly is the right strategy? Right, like in terms of managing your balance sheet, if you are holding bitcoin on your reserves, at what M Nav is it more accretive to your shareholders to sell bitcoin and buy back shares at what m net? Which that I think is probably the most testy one for a lot of people. At what M nav do you sell shares to buy bitcoin? Yeah, you know, like how, how are you think, what do you think the ideal strategy is there? What do you think of what, how strategy is approaching it? What are you guys thinking your strategy would be there?
- [52:55]
Sam Callahan
Well, I'm a big, I'm a big supporter of, of what they just did. I think I've actually said it many, many times to people when they're kind of doubting the business model or strategy and they're like, well, what are they going to do if they can't issue equity, they can't fund a dividend. I was like, well, they could sell the bitcoin. And they were like brain breaks. I'm like, they're sitting on 65 plus billion dollars worth of Bitcoin, you know, the best form of money ever existed. And they're an operating company that can use it however they want that they think would be valuable for their shareholders. And that's the benefit of being an operating company as opposed to like an ETF, like a, like BlackRock couldn't do this, but strategy can because they're an operating company. They can use that balance sheet however they see fit to increase bitcoin per share for their shareholders. And so selling a little bit of bitcoin it really, like I think Michael said, they want to inoculate the market. Just want to get them used to this idea. Because when you really break down the math, sometimes it is the right choice to sell bitcoin to increase bitcoin per share for shareholders as well as put the company in a better long term position to ultimately accumulate more bitcoin. I thought the outrage was comical because you have a company that's bought hundreds and hundreds of thousands of bitcoin over the last year. And then they're like, hey, we might sell a sliver for strategic reasons, just to maybe buy more Bitcoin in the future. And then everyone freaks out. Like Michael said, if he wanted to be more accurate, he would say, never be a net seller of bitcoin, always be a net buyer. And so that's what we take as well. And then when you're thinking through the different trades available for a bitcoin treasury company, when it's more accretive to do this versus that, it really just comes down to one input is the M Nav. And so Orange BTC has bought back chairs because we traded at a discount to our M Nav. It was actually more accretive for us to buy back our own shares than to buy Bitcoin with our cash. And so we've already actually done these things and there's some times, if you were trading at a really steep discount, that it would make sense mathematically to sell Bitcoin and buy back the shares. If we think our shares are undervalued in relation to our Bitcoin holdings and our enterprise value more broadly, then that's the right move mathematically for our shareholders. And so that's what Saylor. I think optionality, maintaining optionality with the balance sheet is really the message that they were trying to get across. It just adds more tools that they can use to provide value for their shareholders. And even selling Bitcoin, even as an individual, if you took a million dollar personal loan and you bought Bitcoin with it and it matured, let's just say, like, I don't know, say it matured in three years and bitcoin appreciates a bunch over those three years, you sell a portion of the Bitcoin and repay the debt and you're walking away with more Bitcoin than you started. That's an accretive transaction for yourself. So this isn't really that complicated. The same thing exists at a larger scale with treasury companies. If they do a typical debt transaction, you're betting that Bitcoin's going to outperform the cost of that financing and you're going to walk away with more Bitcoin by the end of when that debt matures or you retire the debt. And so this is pretty basic stuff and I didn't really understand even when, if you're a public company and you can retire your debt, that could be a good long term option to strengthen up your capital structure and that improves your credit ratings. Because if you read S and P'S B minus credit rating for Strategy. They specifically point out their reluctance to sell Bitcoin. And they basically treat that Bitcoin as completely inert and not valuable. And they don't consider assets. They wrote it down to zero because they're saying, well, they won't sell it. I'm like, it's not worth zero, it's worth 65 plus billion dollars. And it's the most liquid capital you can possibly have that you can sell at any time for any need. And so that's not right. That's not correct. And so if you look at that checklist of what S and P said that they would consider a better rating or a higher rating, it was minimize their convertible debt or the use of convertible debt. It was demonstrating that they have access to capital markets in challenging market conditions. AKA the last couple quarters where strategy has bought a ton of Bitcoin, proving that they do have that. And then there was one other that I'm spacing on. Was it that, oh, increasing their USD liquidity?
- [58:11]
Jake Roquet
Yes.
- [58:11]
Sam Callahan
So they already did that when they created the USD reserve. So they're just checking the boxes of this stuff.
- [58:17]
Jake Roquet
Right.
- [58:17]
Sam Callahan
And so if they decide to sell some Bitcoin and they didn't say this, but if they decided to sell Bitcoin to retire some debt, that could unlock a ton of capital. If they get a higher credit rating, that would allow them to accumulate more Bitcoin in the future. So really what they're doing is low time preference decisions. How do we build a bitcoin accumulation machine that doesn't run for the next quarter or the next year, the next decade, the next hundred years? How do we build a machine like that? And there's some transactions that people will be like, oh, they're selling Bitcoin, but it unlocks all these second order effects. And the other thing, if you say, well, I might sell Bitcoin instead of issuing equity when I feel like it's more accretive for our shareholders, that could potentially lead to people feeling more comfortable allocating to mstr. Right. You could have MNAV expansion then. And then that could unlock even more bitcoin accumulation. So you can't really model that stuff out in terms of the reflexivity of what the common stock does from these decisions. But that's how they're thinking about this. It's not as simple as every single transaction. It's more thinking about how do we build for the long term, how do we unlock larger pools of capital, how do we strengthen our demand for strc, which we think that's the premier way to accumulate bitcoin in a non dilutive way for our shareholders. How do we even make it more attractive so that more demand comes into it and we can buy even more bitcoin? How do we satisfy index committees to make ourselves more eligible to be included into things like the S&P 500 which again create that passive flow, more demand. So these are really strategic thoughts. And then there's the tax component as well. They're sitting on a bunch of unrealized losses. They can get those tax credits. I think it was like 2.2 billion. And so there's all these.
- [60:22]
Jake Roquet
You can't leave that on the table. Yeah, if they did leave that on the table, it would be concerning.
- [60:28]
Sam Callahan
Yeah. And they've done this in the past. So yeah, I thought it was a big overreaction. I was actually very happy to see that because they are the market leader. You know, we, we have learned a ton from Michael and Bong Andrew Shareeesh whole team there has really been transparent and spend learning as they go as they build out this brand new business model. And by having them say like we'll sell bitcoin occasionally for strategic reasons or because it's more accretive, it gives the rest of the industry more cover to do something same. We had already broken from that at Orange BTC before because we were already buying back our shares. We also do different yield strategies. Every treasury company is going to do something differently but now it seems like all the options are on the table for us and the market. Like he said, he's inoculating the market for it, but it's actually a way to actually show that the business model is more durable than people who are saying it's a Ponzi scheme or whatever that other people who doubt it think so. Yeah, I think it's great.
- [61:45]
Jake Roquet
Yeah. I thought there was something Fong tweeted. I forget exactly what it said, but it was something, something overall ideology was strategy over ideology or some, some word over ideology. And I really like that where he was saying like, you know, I think it would have been foolish for them to say, well, Michael had this really great line on stage at the bitcoin conference with Cathie Wood at one point in time when he said never sell your bitcoin and everybody went crazy. And then because of that we're going to make bad business decisions that are like, you know, not the optimal options available to us. So he was basically saying like we're not, we're not hung up on ideology, I think it would be more concerning if they were like, we have a key guy who said something once and now we're going to leave really viable business strategies on the table because of that.
- [62:31]
Sam Callahan
Yeah, I think he said like math.
- [62:33]
Jake Roquet
I think he believes in math over math, over ideology.
- [62:36]
Sam Callahan
Really just comes down to math. Which corporate action would increase Bitcoin per share the most for the short term, but also for the long term. That's the thing that people, I think, miss.
- [62:51]
Jake Roquet
And people are so stuck in this quarter to quarter to quarter business approach. You know, where it's like, okay, we need that we have three months to put out our next earnings report. And you know, for even someone to be thinking in two year, three year, five year terms is almost abnormal now when it comes to like reporting at least where they're like, yeah, we're taking low time preference behavior, which it's not even that low time preference behavior. It's like we got these three things to fix. We're going to get another credit rating in, I don't know, six months whenever those come around. And then like, you know, it's not, not even that low time preference. But for people that are like, you know, who don't understand it, it's, I guess it may appear very alarming or something like that.
- [63:33]
Sam Callahan
Yeah. And I think, I think Saylor said it. He's like, you know, I, if I was being perfectly accurate, I probably would have said never be a net seller of Bitcoin. But that doesn't, that's not as viral. Right? That doesn't sound as good.
- [63:48]
Jake Roquet
Last, last key topic for you that I wanted to touch on you. You wrote a handful of reports with Lynn Alden. And in one of these, I believe you were talking about how you expect the combination of Medicare, Medicaid and interest expense on the US debt to render the US government insolvent by 2031. So you were writing too, before the Doge attempt even took place in the government. You were saying, I know this is going to fail and I know it's going to fail because they can't touch these things are unfunded liabilities that are the key reason why we're becoming insolvent. So, yeah, could you tell me about how you came to that conclusion? The year 2031. Yeah. How'd you come to that?
- [64:33]
Sam Callahan
Well, it's actually not even me. It's actually the CBO and the cfrb. That's their projections of when. This is math. It's when the Medicare Trust and Social Security Trust is going to be insolvent, where it's going to bring in less money in the tax revenues than what they're going to pay out for the first time. They're going to be insolvent. They'll come 20. The projections keep moving forward. I think it is like 20, 31 now. But if that happened and nothing was done before that, almost immediately any of the Social Security beneficiaries would see their benefits get cut by like, I think off top of my head, I think it was like 30 or 40%, which is really, really challenging for retirees on Social Security who depend on that income. And already they talk about how it doesn't keep up with the rate of inflation, because it doesn't, because it's tied to some kind of silly CPI metric that understates the actual inflation going on. So they feel like their fixed income is melting away anyway. And to cut that by another third, let's say, would be really difficult for these people. And the other side of the solution is to raise taxes. And you already, like, if you do the math, the younger people already know that Social Security is basically a Ponzi scheme because every single paycheck, the working force has to basically fund those entitlement programs. And that's young people. And every single time they get their paycheck, they look at it and they're like, where is all this money going? And the other solution is to raise taxes on the young people who already feel disenfranchised, who can't afford homes, who. You can feel the tension rising.
- [66:26]
Jake Roquet
You can only push people so far. Yeah, a lot of the young people are starting to go, hey, hey, hey, hey, watch it.
- [66:31]
Sam Callahan
You know, that's the concern, right? It's kind of like we all know, like Lynn and I were like, nothing stops this train. And we actually, the end of that piece said that we think that things are going to be less chaotic than people think over the next, the rest of the decade. Things are just going to run hotter. Higher inflation, large deficits, more spending, maybe faster nominal GDP growth because of that. But in general, it's not going to be like this, barring some kind of like, macro event like black swan thing, we likely will just see it run hot. But there is this end of the track that you look at with these insolvency of these large trusts that could be the time where things can get really chaotic because it can lead to a lot of money printing to basically try to fill the hole if we're not being run by smart people or if they try to push policies that either cut the benefits of the older people that are struggling because of inflation, or they tax the younger people who are struggling because everything's unaffordable. So you can see how it could kind of cause this social division and lead to them doing the easy choice, which is trying to fill the gap through money printing. And so I see that, and I. I'd like to raise awareness from it because it's not that far away, you know, and you don't really see people talking about that five years. Why I knew Doge was going to fail is because those are mandatory spending programs, right? They're codified into law. You know, you can't cut them without some kind of piece of legislation to change the entitlement programs either the eligibility requirements. They can change the ages, they can change the benefits, but you look at Congress, they don't. They can't get anything done really, you know, like something that big. And so maybe they'll do something before that. But I don't really see enough chatter around this because it's actually the most important problem right now. And then you look out of the next four years, we're entering what they call Peak 65, which all these baby boomers are hitting the eligibility age to get their Social Security benefits and Medicare eligibility. And so you're going to see this huge wave of beneficiaries come in over the next two years, and you'll likely see the Medicare, Medicaid sectors of the spending continue to balloon. Right. So it's not like this is getting better, it's getting actually worse. And then you couple in the interest expense, which I think for the first time it was higher than defense over the last year. Was that a year or two years ago? I don't know, but it's above that now. And so that is also out of the control. That's really based on interest rate policy and the size of the debt, as well as the. The maturity of the debt. Like how much of the short end is the debt versus the long end in terms of how sensitive they are to interest rates. So that's really out of the control as well. And that's a majority of the fiscal budget. If you don't touch the entitlement programs, you're not really fixing anything. Even if you cut defense to zero, that would be a good hit. But the majority of the spending is. And the majority of the spending in the Future projection, like 90% of the spending over the next 10 years is projected to be from Medicare, Social Security and interest expense. And then you look at the defense picture, and Trump's saying that they want to double it to double the defense budget. That's actually the largest discretionary spending component that they could turn down or up.
- [70:15]
Jake Roquet
Why not double it? Why not triple it?
- [70:17]
Sam Callahan
Yeah, but see, it's going the other way. That's my point. You know, the fiscal situation isn't getting better. It's getting more unsustainable.
- [70:26]
Jake Roquet
Right. And everyone talks about that $39 trillion number without, for. In terms of federal debt, without ever noticing the unfunded liabilities category, which includes all these things. You're talking about Medicare, Medicaid, Social Security. That's like in the. I mean, last time I checked, it was like, 220 trillion. I bet you it's closer to like, 240 now or something like that.
- [70:47]
Sam Callahan
So, yeah, and this is like, I mean, again, nobody wants to talk about these problems that seem far away and they've kind of always been there, but, you know, we're kind of reaching the end of the track with it because, like I said, the math is the math, and they're projecting that it's gonna. It's gonna go insolvent if nothing changes.
- [71:12]
Jake Roquet
It's just people waking up to the fact that it is insolvent. The only reason that it hasn't fallen apart is that people still believe the illusion. It seems like to me. And as more and more people wake up and go, wait, I got to move my, you know, nation states go, wait, I got to move my capital out of Treasuries. Individuals go, I can't let my cash sit in the bank because it just becomes worth less over and over like that. It seems like that shift is in the process of taking place, but it'll be slow. And the bottleneck is understanding, which could be a decade or two. There could be things that accelerate the understanding where people are like, I got to figure this out now. But at current rates, it seems I can be optimistic.
- [71:50]
Sam Callahan
Maybe they will come up with some solution that doesn't. That fills the hole, and I hope so. But I don't really feel like there's any really good options, to be honest with you. I at least like to always point back to the fiscal situation because it's by far the most important for driving economic activity today, as well as inflation expectations. It's less about interest rate policy. It's more about the fiscal dominance. That's kind of what that piece was about. And you look at the trends, and they're not going the way that you would hope. These Trusts are interesting because there's a trust called the Highway Trust, which is meant to bring in tax revenues from gasoline and it helps fund highways and infrastructure. But that actually went insolvent. I forget which year it was, 2021 or something. It went insolvent. And it's a smaller trust, much smaller trust than Social Security. But the tax revenues no longer covered the expenses. And what they did was what I worry about, which is they just filled the hole by adding to the debt by printing money, essentially. They didn't change the tax policy to bring in more revenues. They didn't cut the spending out of the trust. They just filled the hole. And then all that does is kick the candidate on the road another five years. And I believe the same Highway Trust is going to go insolvent in like 2027. Again, they didn't really fix any of the problems. They just papered it over, print some
- [73:31]
Jake Roquet
money and say, we'll figure it out later.
- [73:33]
Sam Callahan
Yeah, add it to the federal debt, we'll figure it out later. But they didn't figure it out later because now it's going to be insolvent again. And now the problem's even bigger. And so if you do that, come 2031 with Social Security, you're talking about adding hundreds and hundreds, maybe even a trillion dollars to the fiscal deficit to fill that hole. And I just hope that they don't do that.
- [74:01]
Jake Roquet
Yeah, well, it's kind of funny because, well, we hope that they don't do that. Right. Because obviously we see all the problems that come with that. But then you look at the alternative as well, and it's like, well, the alternative is to default on debt, is to have an abrasive global debt market collapse to some degree. And so when it's like, okay, we could have this fast catastrophe or slow catastrophe, it looks to me like they'll just continue to take this low catastrophe. Print the money. You know, obviously the government could shape up and get really responsible and not. Yeah, that's out a lot of fraud and yeah, that, that, you know, that would be nice.
- [74:38]
Sam Callahan
Yeah, there could be like less fraud. There could be some responsible, like austerity. You can try to cut wasteful spending. It doesn't really matter what anybody says about the fiscal deficit. If we're not talking about reforming the entitlement program, it's just the same problem. We're not even talk about it because it is the fiscal deficit. If you break it all down, it's just like it's the entire problem.
- [75:06]
Jake Roquet
Yeah. So we have a lot of clarity on a lot of the problems on the horizon. A lot of these things bitcoin were created to fix. Bitcoin was white paper was dropped coming out of the 2008 financial collapse. And so we'll probably have more financial collapses on the horizon from these sorts of things that we're talking about. Or people always think about collapses in a downward way, but we could have upward collapses, so to speak, upward spirals, inflationary type collapses. I guess to end things off here we're talking about the next five to 10 years, some of the problems on the horizon. On the flip side, like what are you most excited about looking forward to the next five to 10 years related to Bitcoin or not exactly looking forward. What's giving you hope and excitement for the future right now?
- [76:00]
Sam Callahan
I mean, I'm broadly optimistic. I think there is more awareness about all this stuff in terms of fiat currencies and that. And there seems to be more better understanding of how the system works. Especially after Covid, people kind of woke up to a lot. That's why you saw a lot of new bitcoiners come into the space. They took the time to learn about it and they basically said the same thing, that this doesn't feel sustainable given the debt levels and everything. And so I'm optimistic about bitcoin. I think the trends of bitcoin adoption have never been stronger. I think bitcoin represents a sanctuary for people to be able to save. And I think when people are allowed to save in an asset that maintains its purchasing power over time, that unlocks a lot of investment and long term thinking, which leads to innovations and leads to productivity gains, which leads to higher quality of life generally. And so I'm just bullish on that because I think that's the biggest problem is that people just can't save. And I think more and more people are finding that bitcoin sanctuary to be able to save. So I'm, I'm bullish on that. I think the adoption trends are just happening at about the pace I'd expect. I mean even probably faster given like the strategic bitcoin reserve. And I thought that would take longer than it did. I'm also just bullish on the convergence of all these different technologies like AI is exciting, what it unlocks across sectors like medicine and healthcare broadly and pharmaceuticals. And I think that we're going to enter in a really special time where people will have basically digital money and digital intelligence at their fingertips and it'll be the time of the individual. And so that's really powerful when you're entering the age of the sovereign individual. That's a book that I read early on in college and that's also been pretty spot on with a lot of the predictions in that book. And I think it's a really exciting time for people to have agency and just work hard and the power is shifting from institutions who have lost the trust of the people to the individual. And ultimately the individual is the one that makes decisions based on their own specific needs and that leads to a really healthy free market and more sustainable growth than say top down economic policies or debt driven policies. Like policies or economic activity driven by the individual with sound money I believe has the potential to lead to more sustainable long term growth and all the benefits that come with that. So I'm super optimistic about the future. I think there's challenges ahead and I think it'll be rocky and I think a lot of people are going to have to wake up and take some responsibility and learn about some of this stuff or else it could be a challenging time for them. So that's why education is so important and that's why I do what I do.
- [79:32]
Jake Roquet
Last, last parting question for you off the back of that is what advice would you give to let's say yourself or someone who is 20, 21 years old, entering the job market right now, entering the world that we live in. What advice would you give to that person considering these changing times we're headed into?
- [79:50]
Sam Callahan
I think it's never been easier to become an expert on any subject as long as you have some agency and drive, motivation. And so that's what I'd recommend people, you know, you don't need credential or to learn a ton about a certain subject. I've always said like if you read two, three books on a subject, you'll know more about it than 99% of people. So when you have tools at your disposal like we do today, the possibilities are endless. Like I would just say build. Like I would, I would proof of work like share your thoughts. You know, don't be afraid, put yourself out there. Don't be afraid to learn new things. Be open minded. In this environment of more chaos and really changing world environment and global economy and you got these disruptive technologies. It's actually a benefit to have a beginner's mindset and look at the world through fresh eyes as opposed to an older folks who think very over the years they've started to think really close mindedly or they have their system in place and it's harder for them to kind of step outside and look at the whole and so if you're a young person you actually have that benefit. That inexperience can actually be a strength if you use it right. If you're looking at the world freshly and you're open to new ideas and then you have the agency to learn about them and use them effectively. So that's the best advice I could be is just open mindedness. Practice humility, don't be afraid, have the courage to put your thoughts out there, your work out there and just always be learning constantly.
- [81:40]
Jake Roquet
That's awesome. Where can people find find you?
- [81:42]
Sam Callahan
Sam XX so I share all my thoughts on there. It's amcayla S A M C A L L A H. We have Orange BTC which is just spelled O R A N J E B T C. That's our handle where we have company ACT and updates on X. And then we have our website spelled the same way where we have our treasury analytics dashboard. We have blog posts, educational materials and more information about what we're building at OrangePTC. But yeah, that's where you can find me. My DMs are open.
- [82:15]
Jake Roquet
Awesome. Thanks so much sir. Appreciate you coming on and learned a lot from you. Thank you.
- [82:20]
Sam Callahan
Appreciate it. This January Bare Knuckle Fighting Championship takes over the ocean.
- [82:30]
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- [82:35]
Sam Callahan
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The lineup reveals coming soon.
- [82:46]
Sam Callahan
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Sam Callahan
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Amazon Pharmacy Advertiser
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Sam Callahan
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Amazon Pharmacy Advertiser
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