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The "What is Money?" Show
The Nature of Energy with Michael Saylor (WiM314)
02:38:36
In this episode, Michael Saylor joins me to discuss the nature of energy, the history of human power projection, the source of anxiety in today's world, and the necessity for Bitcoin adoption in cyberspace.
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- [00:01]
Michael Saylor
And this is kind of a conundrum. It's the society that is best for your mental health, your physical health and your economic health is one full of checks and balances with decentralized power, lots of 50 states with control of the money, 50 states that have the ability to say no, right? The more decentralized the power, the more peaceful the society is and the more productive the society is. Unfortunately, the society that tends to win the wars, both be able to start the wars and be able to win the wars, tends to be the most centralized society. It's generally the least healthy, physically serves you bad food right. You're most likely to get drafted and be maimed or killed in a conflict. So it's physically unhealthy, it's economically unhealthy. You know, it's most mentally unhealthy because you're being forced to go kill people. So that's the human condition, right? It's a bit of a conundrum, but it all comes back to power and energy. And you can't ignore the energy. You can't ignore the machines to channel the energy, because if you ignore it, then those machines will be used against you. Right?
- [01:32]
Podcast Host (Sponsor/Ad Reader)
Hey, everybody. Welcome to the what Is Money Show. I am thrilled to have you here joining me on my mission to help shine light on the corruption of money. Now, if this is your first time listening to the what Is Money Show, I strongly recommend that you go back to episodes one through nine first, which lays a lot of the groundwork for many of the concepts that we explore on the show. These first nine episodes are my series, which Michael Saylor and thousands of people have told me that this is the best podcast series they've ever heard, hands down, and that it was instrumental to their understanding of money and bitcoin. So if you're looking to start a deep dive into the nature of money, I don't think there's any place better that you can start other than episode one of this show. Now, a little bit about this show and how it makes money. What is Money? Show is 100% sponsor based. So all of our revenues are derived from direct sponsorships. And I strive to be very selective about the sponsors that I work with, specifically only using sponsors that I use personally and also choosing sponsors that have values which are well aligned to the values expressed on this show, such as freedom, education, self sovereignty, et cetera. So what I'm going to do now is a few ad reads right at the top of the show and then I'll do a few more ad reads in the middle and I hope you'll take the time to listen to them as again these are hand selected sponsors and I think you'll like what they have to offer. Today's podcast is brought to you by In Wolf's Clothing Wolf is the first startup accelerator dedicated exclusively to the Bitcoin Lightning Network. Four times per year, Wolf brings teams from around the world to New York City to work with like minded entrepreneurs pushing the boundaries of what's possible with Bitcoin and Lightning. The program is designed to help early stage companies achieve product market fit, develop their brand, secure early stage funding and grow businesses that help fuel the global adoption of Bitcoin. So go to wolfnyc.com to learn more about the program or apply again, that's wolfnyc W-O-L f n-yc.com Michael Saylor, welcome
- [03:46]
Robert Breedlove
back to the what Is Money Show.
- [03:47]
Michael Saylor
Thanks for having me, Robert. Happy to see you here in person in Miami Beach.
- [03:52]
Robert Breedlove
I'm happy to see you as well. We are right on the eve of Big Bitcoin 2023, which is a massive event. Lots going on this week, lots of talks, lots of events, and you of course are a very special guest. You were the first guest on the show and this is the first time we've done this in person actually. So this is a very special episode. And one of the things that I think you popularized for a lot of people, or one of the connections, conceptual connections you made for me and many other people, was this connection between money and energy. When I brought you on the show and asked you originally, what is money? And you started to describe it as one of the highest, if not the highest, form of energy that humans can channel. It crystallized a lot of things for me, just connected money into physics and engineering and it was a whole other perspective on money. And it naturally kind of begs this deeper question, I guess, which is what is the actual nature of energy itself? And I'd shared this with you before, but I'd read this book called Interdependence that described energy as the quantity that remains constant across all physical transformations. So whereas I had conceived of it as something that flows and moves and transforms, it was really just saying that it's just this description of reality that we've applied, that the one thing that doesn't change across transformations is energy. So what I would like to ask you, and the theme of the show of being about deep questions is, Michael, what is energy? What is the nature of energy? And I guess a little more broadly how is it related to power and the development of human civilization?
- [05:46]
Michael Saylor
Yeah, it's a great question, Robert. I went to mit, and my primary academic influence was aeronautical engineering. And in aeronautical engineering, you study thermodynamics and you study energy systems and you study machines. And machines are mechanisms to channel energy in order to convert potential energy to kinetic energy or to heat energy or the like. So I'd never really thought about energy or power in the context of money or economics or politics or even history, probably, until I encountered Bitcoin, and especially until you kind of. You catalyzed me to think this way by asking the question, what is money? So if you. Yeah, believe it or not, there are plenty of people that make it into their middle age or their seniority, and they never ask the question, what is money? And if you don't ask the question, what is money? Then you never really start to question political energy, economic energy, or economic or political machines from an engineer's point of view. So I think I was fortunate to have an engineer's background, and then to stop, take a clean sheet of paper and consider the question, what is money? And when you start asking that question, it brings you back to just the fundamentals of what is energy? And as you know, I think Einstein pointed out very famously, energy, matter can either be created or destroyed. Energy can be neither created or destroyed. Energy is matter, matter is energy. E equals MC squared. It was a very famous equation, but very profound. Now you know it. As a layperson, if you've ever watched a bonfire, you're watching wood, which is material, get thrown into a reaction, and you're seeing forms of energy come out of that bonfire. You see light, which is one form of energy, and you feel heat, another form of energy. And of course, you see a transmutation of the material. And you started out with wood, and you end up with charcoal or something that looks different, eventually cinders. Our universe is full of examples of that, right? Sunlight striking the Earth, and somehow you end up with a green tree or algae, and that somehow morphs into bacteria, that morphs into insects and then worms. And then you've got birds. I got birds in my yard every day, and they're eating the worms and running from the hawks. And there's an entire food chain, or energy chain, from the top to the bottom. Now, if we just think of energy as the universal source of life, of substance, period, I want to say, in the universe, but the point is, it's the universal source. And energy is such a fundamental term, like the universal source of Energy is energy. You almost feel silly to say it. There's a certain amount of energy in the universe. There's a certain amount of energy in the solar system, for the most part, there's a certain amount of energy striking the Earth. And power, of course, is the rate of energy output, or energy conversion, if you will. So in the world of engineering, if we have a constant energy system where the energy is neither entering the system nor leaving the system, we call that an adiabatic system. No energy lapse. And in the field of thermodynamics, very oftentimes you're posed questions, how do I solve this problem? And what is your forecast? Or what is likely to happen given an adiabatic system? And the reason you say that is because if you actually allow for energy to enter the system or to leave the system, all of the engineering solutions are no longer valid. For example, if Miami beach, you know, is. If you. If you visit Miami beach on a clear day and the sun is shining and it's 80 degrees and there's not a cloud in the sky and everything is normal, quote, unquote, you can probably forecast a happy day on the beach. And you can probably forecast what'll happen in the restaurants, the hotels, the average traffic level, the health, the mental health, the physical health of the people. You can probably forecast the motion of the parrots. I have a flock of parrots that come to my house every day about 5 o', clock, we call it parrot o'. Clock. And they all squawk and have a big party. So you can forecast all those things and you probably won't be off by or -2%. But if I add some energy to the system, like a tidal wave 50ft high hitting the beach now, you realize that all these other models are all broken, right? You can't, you know, none of your math, none of your physics, none of your history is relevant because you have introduced excess energy into the system. A hurricane. Miami beach is a very different experience during a hurricane. If you look at photos of Miami beach during a number of hurricanes, right, different stuff happens. So that's an example of introducing a lot of energy and changing the balance of power. The opposite would be sucking the energy out of the system. What happens when the Temperature gets to 30 degrees in Miami Beach? You probably won't see people running around happy on the beach and bathing suits, playing volleyball, right? You probably won't see as many people, right? You won't see the same commercial patterns in the restaurants and the bars. You won't see the Same traffic patterns, right? So energy matters. But once you come to terms with this, engineers know it intuitively. That's why every engineering problem given to an engineering student starts with the phrase, assuming an adiabatic system, how do you design an airfoil? How do you know what will be the power output or the output of this engine? What will happen in this circumstance? So that's a pretty good discipline for an engineer. The problem with engineers is oftentimes they are channeled to only consider the consequences of their engineering training as it applies to machines or buildings or traditional engineered systems. That is, don't apply the mathematical tools or the logical tools you learned in engineering to politics or banking or war or money creation or the culture or to art, right? You stay out of those domains and you would just arm way it away and say it's not applicable. But when you ask the question, what is money? And you're an engineer and you're watching the money die, when you're watching a system fail, whether it's the Weimar Republic system or whether it's Venezuela or whether it's Nigeria or whether it's Africa or whether it's Argentina or if you're watching the slow failure of the US dollar, a slow motion train wreck, then you actually have to come up with a physical, logical, mathematical interpretation. And so here I think it's interesting to apply energy theory again and you start to ask the question, well, what is energy outside of, you know, a narrowly defined machine? Well, so we understand with machines like the outboard motor on a decent boat, you know, a powerful one, big one, would be 300 horsepower and that's a power rating. Now if you think about the man machine system, what happens when you put a human being together with a system? Right, let's not talk about the motor anymore. Let's talk about people with the machines and expand from there. Well, the typical human being in a one hour workout could probably exert a tenth of a horsepower. Makes sense, right? Like 10 people. If there's a tug of war between a horse and people, there's probably 10 people on one side, there's a horse on the other side, tenth of a horsepower. So now, you know, you start to ask the question, how much power can you exert and how fast? Well, 10 people makes a horse, a Roman trireme or quadraream might have anywhere from 200 to 300 rowers. If you get really efficient, okay, you've got 30 horsepower. Okay, so the outboard motor, a crappy one, a small one is 30 to 70 horsepower. The little one, little fishing boat, bass fisherman boat, about equal to 300 human beings. So you can see the arc of humanity and civilization is from having a tenth of a horsepower. By the way, that's a healthy person, right? An unhealthy person has a 30th of a horsepower. So now you want to understand why did the Mongols conquer the steppes? Well, a bunch of soldiers on horse have 10 times as much power as foot soldiers, right. Why did the Europeans have an advantage when they showed up in the New World versus the Indian tribes? The Europeans had mastered horses. The Indians had not. A lot more power. 10x more power. When you, when you start to apply that to other types of systems and you know, and I'll give you a few. Well, a 9 millimeter handgun can generate 500 kilowatts for a short burst. Okay, and how much is that? Well, a megawatt is 1341 horsepower. Right. So you're talking about something like 600 horsepower for a fraction of a second coming out of a handgun.
- [17:34]
Robert Breedlove
Right.
- [17:34]
Michael Saylor
You see why you would be more powerful with the handgun. 30 odd 6 Springfield Round will generate 4,000 kilowatts for a short period of time. 4,000 kilowatts, you know, so you start to think about how much power that is. It's four megawatts. It's 5,000 horsepower. Right? In one shot, one kick. I'm gonna. What if I kicked you with the force of 5,000 horses? Right? You can see why, why the, the soldier with the, the pistol beats the soldier with the spear, right? And you know, if you look at energy exerted, let's take energy. A boxing punch, if it's well thrown by a really good boxer, would be 500 joules of energy. A handgun will also generate 500 joules of energy. But the difference of course is the 500 joules of energy from the handgun is very focused behind a metallic bullet. So the same energy in maybe 1/100th of the space will punch a hole through you. Plus the average person can pull the trigger six times. But the average person can't punch you as hard as Muhammad Ali six times. It's much, much harder. So you can see why the gun beats the punch. That rifle shot generates 3,800 joules. And of course you can deliver a lot more energy in a concentrated form, but also from a much greater distance. An A10 has a, you know, it has a GAU8 Avenger Gatling gun capable of generating 13,000 kilowatts of power while it's operating. Doesn't operate long, operates about 20 or 30 seconds. But another way to say it is every single round is 200,000 joules, and it spits out 1174 of those rounds. So if you unload on some hostile population with an A10, you spit out 234 million joules in about 30 seconds.
- [20:10]
Robert Breedlove
Wow. A10s aircraft.
- [20:12]
Michael Saylor
Yeah, it's an attack aircraft. So you see, human beings got pretty powerful at figuring out how to project power, right? And how to channel energy. A Mark 84 bomb. Standard bomb is 1.87 gigajoules. 1.87 billion joules. When they dropped that bomb, little boy, the atomic bomb dropped on Hiroshima. 63 terajoules. 63 trillion joules. Now, remember, back to 500 joules for the punch. You see? So who's more powerful, right? The guy. The general with 10,000 soldiers or the guy with the Gatling gun, bows and spears, 100 to 200 joules of energy that you're delivering. So the history of humanity in military conflicts is determined by who can channel the most energy. And it's pretty clear that when you start to build hierarchies of energy and hierarchies of power, right? The rate at which you deliver the power or deliver the energy over time, then you can see who are the winners, who are the losers. I got very interested in just general energy comparisons and power comparisons, especially when I started studying bitcoin mining. Because a bitcoin miner, let's say, you want to generate one exahash of digital power. Bitcoin mining is digital power, right? It's not analog power. It's digital power. SHA256 power for one particular purpose. And that one purpose is cybersecurity. So I want to build a wall of digital energy to protect my data, protect my mess, protect my money. So that 1x ash with modern miners like S19s in that range is 30 megawatts of power. That's what I have to put into that. And that 30 megawatts of power will generate 1000 to 1200 BTC, 1000 Bitcoin a year. If you run that on a network that has about 350exahash in the year 2023 right now. So that. That's a. That's an interesting measure, right? I mean, the commercial value of that is something in the range of $30 million, right? 1,000 times 30,000 right now. So that gives you a sense of bitcoin mining and digital power. Now, what else has 30 megawatts? A global expression, intercontinental corporate jet global express XRS has 34 megawatts of power when it's a cruise speed. So it'll Cruise for about 13 hours. And during that 13 hours it's generating 34 megawatts of power, moving at Mach spot 8, 5. Pretty magical. That's. But it's only got like a 14 hour duration. Right? An F35 fighter jet when it gets to like Mach 2 when it's scrambled, one hundred and two megawatts full energy. But it can't do that long. Right. But it goes supersonic. That's how much power it takes, 102 megawatts. An aircraft carrier has a nuclear power plant or two, perhaps 200 megawatts. But the difference with a nuclear powered aircraft carriers, that's 200 megawatts. That's continuously being generated for the 20 years or the 30 years that the power plant is in commission, as opposed to 100 megawatts generated off of jet fuel for some number of minutes while an F35 is running supersonic. Right. But you see what power is required and what it means. And of course, how did human beings figure out how to channel or generate 200 megawatts of power continuously for years with no fuel? That's nuclear power, atomic power. Those are nuclear power plants that are doing that. And you just realize just how dense nuclear fuel is and just how efficient it is compared to jet fuel. You know, in order to generate 30 megawatts of energy with a diesel power plant, a diesel generator, you need 59,130 metric tons of diesel fuel. Right? 59,000 metric tons. That's 443,000 barrels of oil. Okay, that'll cost you $41 million. At $700 a ton, it works out to almost 16 cents a kilowatt hour. Okay, that's a lot of energy, right? Now imagine replacing. Imagine generating 7x that much with no fuel and being able to do it consistently. And what you see is the passage of human civilization is this non stop set of steps to find a way to gather more energy and to store more energy. And then the construction of machines to channel the energy. At my alma mater at mit, we study how to design global expresses. No mean feat to channel 30 megawatts of power at 48,000ft when it's 80 degrees outside, flying through the rain, when you have to carry a liquid fuel with you. Right. And hold it up. Right. But you know, a very interesting other exercise is what if you want to generate the energy with water? You know, a small hydroelectric power plant can generate between 1 and 10 megawatts. But the Three Gorges Dam in China is the world's largest hydroelectric power station. Had a capacity to generate 22,500 megawatts of power, 22 gigawatts. The entire Bitcoin network runs on 10 to 15 gigawatts of power. Okay, but imagine a large scale hydroelectric dam is generating anywhere from 1,000 to 2,000 megawatts of power by converting that water into electricity. Now, and what you realize is there are extraordinarily efficient ways to generate power. Nuclear power is just an extraordinary way to generate power and harness energy. Hydroelectric is also pretty extraordinary using fossil fuels like diesel or gasoline. They're flexible. Not nearly so impressive as 22 gigawatts off of one dam. But then the challenge is I have infinite energy coming off that dam, but how do I put it five miles up in the air into an aircraft? I have too much energy some places, but I can't get it to the other place. And then I have not enough energy. Right. My Global Express is using jet fuel because that's what you can put up 45,000ft and haul around in an airframe. And we haven't quite figured out the pocket nuclear reactor that would do that job. And there's no battery that will hold the electrical power that comes off a hydroelectric dam. So. So as I take that in context and I come back to the passage of time and the development of civilization, there seems to be this non stop trend for the most powerful. It's such a tautology, right? The most powerful are the most powerful, Right.
- [29:21]
Robert Breedlove
Physically powerful or the most politically powerful.
- [29:23]
Michael Saylor
Right. Those that actually gather energy, channel the energy in order to direct the power, move the power around, are then able to expand and those civilizations flourish and they dominate. And then the less powerful, less energetic, less energy efficient and less energy aware, they get displaced. So examples, you know, in pre Revolutionary War America you had the English colonists and they, they came to the eastern, the eastern coast and they engaged in agriculture and manufacturing. So you're growing tobacco, you're growing wheat, you're growing hops, you're growing cotton, rye. And at some point they started smelting and creating iron and manufacturing goods, machinery, and converting raw materials like sugar and molasses into rum and higher forms of products. So at one point there were 20 times as many colonists in the English colonies as there were in the French colonies. The French came up the Mississippi river from New Orleans and they came down the St. Lawrence Seaway and they engaged in fur trapping or fur trading, especially trading with the Indians and with furs, well, that's not nearly so labor intensive or manpower intensive. So the colonists had 1.5 million people on the British part of North America, and then The French had 75,000. So when the political struggle came, the British, the English colonists just had a lot more manpower. And manpower doesn't tell the entire story because when the Europeans came, they had horses and they had guns and they had steel. And so in that situation, you could have had less manpower, but you had more power because you had the technical power and machinery, your systems were more powerful. So the Indians were continually being displaced because they didn't have manufacturing and they didn't have the ability to project that power with weaponry. But even when you had like weaponry and the French and the British both had comparable military technology, you know, it's, it's almost insurmountable, you know, for you to defeat a culture that has 20x as many people as you have. And it's very interesting there because, you know, if you're hunter gatherers and you study hunter gatherer societies and a paleo diet, what you realize is it doesn't support as many people. So a given amount of land, 100 square miles, will support 1/10 of or 1/20 as many people. If you engage in sort of a hunter gatherer society, if you want large population density, you have to engage in agriculture and you plant wheat and grain products. And that's what the Egyptians did. And interestingly enough, if you study Paleo theory, you roll the clock back 100,000 years. If people lived off of a paleo diet, they had good teeth, right? But when you go forward to 5,000 years ago, after agriculture was introduced into Egypt, you find people, 2000 BC that have rotting teeth. Their teeth are destroyed. Why? Because they're eating too much starch and sugar, right? And wheat. So if you want to live a long time, if your goal is to stretch your life expectancy into your 80s or your 90s, you want to avoid sugars, starches, alcohols, you probably want to eat a paleo diet, you know, organic, etc. And. I think there's enough body of knowledge to suggest, right, like eating meat 10x to 20x more expensive than eating boxed cereal products for a given amount of 3,000 calories. I can generate the calories with grain products and breads and the like. Much biscuit. The Romans actually had biscuit factories and they manufactured biscuits so that they could feed their armies while marching. Okay, so, you know, no way can you haul all fresh meat for an army of 20,000 soldiers. So there's a certain healthy diet. It's 10x to 20x more expensive than the cheap diet. The cheap diet though, gives you 10x as many people per square mile. And so it turns out that the society that embraces agriculture and lowers its nutritional standards and basically normalizes, you eat biscuits every day. That's the society that can field an army of 20,000 or 50,000 soldiers. And whatever the weapon is, spears or guns or like, Right, that's the army that wins. Right. So can you do that your entire life? Well, I mean, we know that at some point in your 50s, 60s, 70s, you suffer from metabolic diseases, but you can do it in your teens and twenties. So what's the average age of these armies? Right. Well, I think, you know, the average age was 20, 30. The average life expectancy of a colonist in 1776, like 30 something. The average age of Elizabethans in their mid-30s. The average age of a marine. Today, 19. The average age of someone on an aircraft carrier, 20, 21. I mean, these are all college students. So even though thousands of years have passed, wars are fought by the young. And if you had a culture, a low energy culture, like hunter gatherers, like Native American Indians, low energy culture, they didn't have the wheel, they didn't have the horse, they didn't have factories. They had a little bit of agriculture probably, but it wasn't. If you look at Roman ruins, you will find that there are Roman mills that actually were used to grind grain and bake bread and they would have a series of 20 water wheels. And if you calculate they're harnessing hundreds of kilowatts of power to turn those wheels and maybe megawatts of power to turn those wheels back 2,000 years ago to manufacture bread, the Romans raised the level of agriculture to a high standard. They were very efficient. Whereas, you know, when you're engaged in that, in a hunter gatherer type society or a native society, whether it's aboriginals in Australia or the North American Indians or the various societies in South America, you realize they just weren't channeling as much energy. And because they weren't channeling as much energy, they can't generate the population density and they're also not going to be able to create the munitions necessary. So they get displaced in short order. But then you have to ask the question, and there's the other issue, right? The biological issue, right? Clearly, smallpox and germs wiped out 90% or 95% of Native Americans. They never really got even a chance to fight. But having said all that, even when things equalize, if you have the same biological resistance to germs and if you have the same exact weapons, then there are other concentrators of power that become very interesting. Agriculture is clearly a concentrator of power because it concentrates nutritional energy and eventually concentrates manpower. Manufacturing is another concentrator of power. Right. If you have all of the iron works and all the munitions factories in your part of the country during the civil war, you probably win the war. And if you don't have the manufacturing facilities to manufacture the handguns, the rifles, the cannon, the ships, right? You lose control of the sea, you lose control of the land. When we advance to air war, you lose control of the airspace. So manufacturing is a really important concentrator of power. Another interesting concentrator of power is banking. You think about it. You think, okay, so why were the British so influential? Like, how do I concentrate power? And you have done a very interesting series of podcasts on this subject. The concentration of power in the monetary systems and banking is an integral part of the fiat monetary system. In many cases, the fiat system can't function without the banks. So when I set up a bank, even if I'm a primitive goldsmith and I take whatever 100 pounds of gold and I issue 100 pounds of gold notes, well, I've concentrated power in my facility and in my organization. And when I issue 200 pounds of gold notes and 400 pounds of gold notes or 800 pounds of gold notes, right? We know that the money is effective. We know there's a cantillion effect, and it becomes less effective as it gets distributed. But the society that actually invents fractional reserve banking and is able to print the money has more power. Paper money gives you power. If you never invented it, right? All things equal, if you never invented it and your enemy did invent it, then they can use it to weaken you. It's funny how it pops up over and over again. For example, before the Revolutionary War, there were some very aggressive governors, and they had a will to power. And so, like, the Massachusetts governor wanted to conquer the French and take over the St. Lawrence Freeway. Well, they want to launch the campaign. They try two things. One thing is they want to conscript all of the colonists to go fight the war. And most of them didn't want to be conscripted, right? And when they couldn't figure that out, they have to pay them. So they actually print up paper money, and they actually issue a lot of paper money, which are Debt obligations against the future tax revenues of the colony of Massachusetts. And they use that to hire the army. They send them off to fight the war. So it turns out that the money printing is another way to concentrate the power. And of course, what was the banking center in that time period? London. And so you can see there are at least three ways to concentrate agriculture, manufacturing, and banking. And then you get to a fourth way, and this is very interesting, again, studying the history of the colonies. One colony, Virginia, wants to declare war on the French, and they want to take over the Ohio Valley, and they want to take over Fort Duquesne, and they want to move west. So they first try to conscript their own citizens, and the citizens fight back. You know, then they actually raise money and they have to fight with their own assembly, and there's a back and forth over how much money. Then they go to the other colonies and they want the other colonies to actually enlist and send soldiers. And the other colonies, you know, New York doesn't want to send soldiers to fight Virginia's war. Right, but what's the point? The point is that New York has an opinion and Rhode island has an opinion, and Massachusetts and Pennsylvania have opinions and they have their own assemblies. And so the power is decentralized in the pre Revolutionary War America, and the decentralized nature of all the various governmental entities meant that I couldn't, as governor of Virginia, just declare war on the French and go conscript 100,000 colonists to go fight that war. I had to negotiate. And sometimes the negotiation was send some soldiers. Other times the negotiation would send me some money. Sometimes the answer was pound sand, you're not getting anything. And so, of course, what did the, what did the authoritarians do? Well, they lobbied to actually create a confederacy and combine all of the colonies under one government so that they could channel more power, more energy to a particular centralized objective. Generally declaring war on somebody, the French, generally, sometimes the Spanish. Right. Whoever had the property that I didn't have. But what's fascinating about studying this history, and if you're interested in the history, I recommend to anybody, read Conceived in Liberty by Murray Rothbard, very notable Austrian economist. And he writes a very detailed history of the colonies before the Revolutionary War from the point of view of an Austrian economist. And he actually takes you through this step by step. And after you listen to the history, then you realize that that fourth way to channel power is political, and it's by constructing a centralized political authority. And, you know, that political authority might be the king, but it might be channeled through agencies. It might be through a confederacy. When there isn't that central political authority. You tend to have more laissez faire in the absence of a central authority. Right. You will have, you'll have a healthier economy. The society will be economically healthier and the society generally is mentally healthier and physically healthier. In times of peace, people are able to do what they want to do. The trade relationships form such that you allocate production efficiently. The overall economy grows faster and is much larger and the standard of living is higher. People's mental health is much better, their physical health is better. 20% of the able bodied men in Massachusetts colony died because of that adventure north to fight with the French in this time period. Right. And so it's like you're going to get drafted. You're either going to get cajoled into joining the military or you're going to get drafted or you're going to get in, you know, basically conscripted. There are even press gangs. You know, the British would come in with a ship in the port. A bunch of British sailors would go awol and so they would just walk on the docks, they would find a bunch of able bodied men and they would shanghai them. You're now a British sailor whether you like it or not. It's like there's, you know, it wasn't even the government, it was just the local.
- [46:55]
Robert Breedlove
What was it you said a long time ago that you may not be interested in war, but war is interested in you.
- [47:01]
Michael Saylor
Yeah, yeah. History is just a long story of war after war after war after war. And there's always someone that comes along that has a new idea for another war. And generally the war is fought to take property that someone else has that you want, take their land, take something, generally take their land. When you look at all of these factors, you start to realize that, and this is kind of a conundrum, it's the society that is best for your mental health, your physical health and your economic health is one full of checks and balances with decentralized power. Lots of 50 states with control of the money. 50 states that have the ability to say no. Right. Or even municipalities. Right. The more decentralized the power, the more peaceful the society is and the more productive the society is. Unfortunately, the society that tends to win the wars, both be able to start the wars and be able to win the wars, tends to be the most centralized society. It's generally the least healthy, physically serves you bad food. Right. You're most likely to get drafted and be maimed or killed in a conflict. So it's physically unhealthy, it's economically unhealthy because it's always imposing regulations and you know, it's most mentally unhealthy because you're being forced to go kill people or you're being killed or 30% of all the able bodied men in the society are drafted. And now what happens to all the factories and all the farms and all the families when the people are drafted? And what happens when half of them don't come back and the other half come back mentally tortured from the experience they had to go through? So that's the human condition, right? It's a bit of a conundrum, but it all comes back to power and energy. And you can't ignore the energy, you can't ignore the machines that channel the energy because if you ignore it, then those machines will be used against you.
- [49:37]
Robert Breedlove
Right?
- [49:38]
Michael Saylor
Right. So the challenge is, how do I find that right balance?
- [49:45]
Robert Breedlove
Yeah, that's quite the sweeping view of history there.
- [49:50]
Podcast Host (Sponsor/Ad Reader)
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- [52:01]
Michael Saylor
Insurance, you got to have some insurance. You got to. There's an insurance. They shouldn't even call it insurance. They should just call it in case shit. I give a company some money in case shit happen. Now if shit don't happen, shouldn't I get my money back?
- [52:23]
Podcast Host (Sponsor/Ad Reader)
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- [53:37]
Robert Breedlove
I'm struck by you mentioned the concentration of power through those different mechanisms. Agriculture, manufacturing, banking
- [53:48]
Michael Saylor
and government.
- [53:48]
Robert Breedlove
And government, yeah. There's Lord Acton's infamous dictum that power corrupts and absolute power corrupts absolutely. So I'm wondering to the extent that we can prevent the concentration of power in those ways which some of those things we don't want to prevent. We don't want to prevent manufacturing, we might want to prevent central banking, we might want to prevent centralization overall, but some of these things seem to be beneficial. But there's some kind of balancing act here where we're trying to harness More power, but in a decentralized way such that it doesn't breed so much corruption, perhaps.
- [54:25]
Michael Saylor
Yeah, it seems like the vectors of vice are concentrated around banking and government. Right? Manufacturing better things for better living and creating more food and, or just more of everything people want is probably neither a bad or a good thing. It's probably on the margin a good thing. Creating more of everything that human beings
- [54:55]
Robert Breedlove
desire, especially if everyone's doing it right. It's decentralized.
- [54:58]
Michael Saylor
I mean, the challenge is really on the banking and on the government side. I guess on the banking side, if you looked at civilization and said, well, half of our problems are all related to money. I mean, money is economic energy. So when the banking gets corrupted, then the energy and the energy balance is distorted through money. And that means that some politician, a politician that wants to fight a trillion dollar war that doesn't have a trillion dollars, can now actually create a bank, borrow the trillion dollars from the bank and fight the war without anybody paying for the war. So banking, banking and monetary networks are enabling factors for corruption. And that's half the problem, I think. But it's only half the problem. The other half of the problem is governance, and that's just having the power to, to impose regulations. And when you read, if you read enough history, it gets to be comical when you see it in historical context and then you realize that it's no different today. But for example, in the history of colonial America, there was a monopoly on baking. In New York, one family got the monopoly. You could grow grain, but you weren't allowed to bake, was against the law to bake bread because only one company and one family could bake bread. And they got the monopoly on baking bread. You had to buy it from them. And of course, they paid a kickback, a fee to the governor and they kept that monopoly. And of course, what happens next is people say, screw that, I'm going to bake my own bread. So the government then has to have customs inspectors and they kick your door in to see whether you're illegally baking something, you know, and so I'm the governor, I get paid a small amount of money, but I want to get rich. So what do I do? I grant you the monopoly on baking bread. And then the next thing I do is I notice maybe there's 100,000 acres over there that someone might live on, but they're Indians. And so I just go ahead and I find the next rich family and I give them a land grant of 100,000 of those acres, you know, and of course, they give me some patronage. And then you've got the Hudson River. Right. Why is New York New York? Because New York is at the mouth of the Hudson River. It's one of the world's great natural harbors. And the Hudson river is this highway right into the, into the center of North America. And if you've ever cruised up the Hudson river, it's like a mile wide, it's really deep, it's straight as can be. The only time it even bends is at West Point. That's why West Point was a fortress, and that's why West Point, the Academy, is there. Because that's the one defensible point up and down the Hudson River. But otherwise it's almost like a perfectly sculpted highway. If you lived in a world where you had to haul stuff in a barge and think about hauling 100,000 tons of stuff on your back, on your donkey or your horse versus a barge, right? You clearly want to move it via water. Okay, so what do you do if you're the governor of New York? Well, there's a tax on going up and down the Hudson River. Okay. Can you imagine, like even today, if you went up and down the Hudson river and someone stopped you said, I'm sorry sir, you have to pay me money. But they did. And of course, think about it, why wouldn't they? It's like we'll put a fort at one side and you have a ship and you have stuff in the ship and pay us money to go from New York to Albany. I mean, yeah, I know that God created the Hudson river, but I'm here now, I'm cashing in. So there's a tariff on that. Well then of course there has to be monopolies on everything else. Right. There was a hat act. Okay. And pre Revolutionary War America, a hat act. Okay. You might ask, what is the hat act? Well, people are making hats too cheaply. We have to constrain the supply of hats. Okay. So the rule is you're not allowed to make a hat unless you've been a hat making apprentice for seven years. Seven years. And a hat maker can only have two apprentices. And of course a negro cannot be a hat making apprentice. And then after you've gone through this arduous and you can't import hats from the French or foreigners, no Spanish hats, no French hats. And that way the hats are kind of expensive and you don't undermine our market for hats. Well, eventually it turns out that the free market is very efficient at doing things. For example, the colonists could grow hops cheaper in the New World and ship it all the way back to Scotland or Ireland. Then the British could grow hops in Britain. So, of course, the answer of the British merchants was the hops Act. We're going to make it illegal for colonists to sell hops in Britain because, you know, it's going into, you know, our alcohol, right? And we can't have them undermining the local domestic farmers. Okay? So, of course, the price of everything triples, right? Every single layer of government. There's one layer of taxes, one layer of tariffs. Stuff starts working, and it works too well. There were rules. There were laws that prevented colonists in Maryland from trading with colonists in Virginia because they wanted the. The product shipped all the way back to England in an English ship. They want to put a tariff on them and then ship them back. And so a lot of the struggles were over. The Navigation acts and the Navigation acts told you you couldn't buy anything from the French or the Dutch or the Spanish. You couldn't ship things between colonies. You had to pay a tariff nonstop. Rules creating monopolies on everything. Like, there were rules on, you know, buttons, you know, who could actually. What kind of buttons you could put on your jacket. There are rules on who could manufacture what and ship it. And every single colony had a different set of rules. And the rules were all generally constructed to enrich the ruler. And the more powerful the rulers got, but the more onerous the rules got to be. And generally, they're just entrenching one rich family, but to the detriment of everybody else. And you come away concluding, to a certain degree, pre revolutionary war America was successful despite itself, just because there was so much distance involved and so much chaos that a lot of the rules weren't enforced effectively. And why do people go west? They just kept going to get away from the rulers. You know, it's like the colonists thumbed their nose at the rules coming out of London, and the people that lived inland thumbed their nose at the rules coming out of New York or Boston. And there's continual squirmishing. But you can see the arc of history is we're arcing from very decentralized, where rules can't be enforced, to, like, a weak federal government after the Revolution to a stronger federal government. Right? When we get to Andrew Jackson and he's fighting against the bank of America, he doesn't want a central bank in the United States. He goes to war with them. And he wins the war, he eliminates the central bank but at the cost of strengthening the presidency.
- [63:26]
Robert Breedlove
Right.
- [63:27]
Michael Saylor
So you see the dilemma, which is the President is virtuous in his resistance to the banking branch, so he weakens the bankers and the financiers, strengthens the money. But the only way to weaken the bank is to strengthen the government because he used the power of the government to fight the bank. And so eventually that power of that presidency becomes its own vice, its own problem. And of course this continued up and we have the example of the Civil War, which is the federal government is asserting its power over states rights. And coming out of the Civil War, the states rights states were much weaker than before the Civil War. And then you get to the formation of the Federal Reserve and the Jekyll island, you know, incidents. And you know, if you go and you look income tax in America it was, there was no income tax, right? And then all of a sudden there's a 1% income tax on the average person and a 6% surtax. And then by World War I, you know, it's a 75% tax. And then in World War II it's a 95% income tax. And you just have, you know, you have a progression of the increase in banking, the strengthening of banking. You have conscript for a large part of the century where people are conscripted in the military. You have a weakening of the currency and you have this progression, the strengthening of the executive branch, such that the executive branch starts to routinely trample over constitutional rights. It's debatable whether the constitute you're ever had your constitutional rights. We go back and forth over them. The Constitution isn't is a piece of paper, it's an ideal and it's an aspiration, you know, but when Roosevelt seized your goal, that was not constitutional. And if you were Japanese American interned during World War II, doesn't feel very constitutional to me. And when the government censoring the press, not constitutional. And a default on silver certificates, not very constitutional. And when you're not allowed to show up at church, you know, to worship during COVID doesn't sound very constitutional. So what is the theme here if we bring it back to energy and power? The theme is 100,000 years ago, there's a limited amount of power, manpower, you know, fists, swords, spears. And the arc of human history is we keep finding ways to generate more energy, to channel more energy with technology. And then the political organizations keep getting more effective and they're made more effective with the technologies. Right. Railroads and telegraph and telephones, they all make political organizations larger they make commercial organizations larger. The creation of the modern federal government of the United States is an organization of unprecedented power in the history of the world. So is every other government. So are the banks, right? We consider the reach of a modern big four bank in the U.S. right? Incredible. Unprecedented. So are the big tech companies. So are the big pharma companies. So are the big retail companies. So are the big logistics companies. We have much more powerful entities than we ever had. But, you know, here's the issue, right? Which is one insane person with a bomb can do a lot more damage than one insane person with a knife. One insane person with 100 bombs, 1,000 bombs, a million bombs could do more damage. So if we look at the pyramid, the power pyramid, the source of instability is in our world. The source of toxicity, the source of anxiety is you have an entity that can control an aspect of the life of a billion people. And at the top of the entity is a board of directors. It might be the Federal Reserve Committee or the head of the Federal Reserve. It might be the Apple Corporation or Google Corporation or Facebook or any corporation, Twitter, any big tech company. There's a handful of officers and directors. There's five officers and oftentimes five directors that have most of the power. So you're talking about a dozen people or less, and one person in particular, the chief executive, that has extraordinary power. And if you consider the power that Genghis Khan had or Julius Caesar had 2,000 years ago, you know, it pales in comparison to the power that you have today. If you have the power to devalue the currency of billions of people by 20% in a matter of months, without any check on that, you might be draining or diverting $10 trillion worth of economic energy. And that's one source of power in a big tech company. They have the power to literally restrict you from using a word, right? When in the history of the world, when in the history of the world could you actually rip an entire word out of the English language? I can rip hundreds of words out of the English language. I can literally suppress the existence of a piece of information. There are things you can't say, There are things you can't think. There are things you can't convey. And so that's extraordinary power and unprecedented power. And, you know, I think if we follow this arc, right, what were the wars of the 20th century? There was a while where land power, right, when we went into World War I, right, they thought that would be determined, you know, by armies. And there's, you know, the Magano Line and there's, there's all of the trenches and tanks and the like. And air power didn't really play into it that heavily. Sea power a little bit, right. The Axis tried to choke off the UK and they almost succeeded. So sea power a little bit, land power a lot. And by the time we got to World War II, the Axis, the focus of the fight had shifted, first to air power and a lot of sea power, a lot of air power. It really was a fight all around the world. And then by the end of the war, it tipped to nuclear power. I mean, I guess the war was settled based upon sea power and air power in Europe, but it was settled for once and for all based on nuclear power.
- [71:26]
Robert Breedlove
And
- [71:29]
Michael Saylor
so you're fighting those wars, you're thinking about sea power, about air power. Then, you know, the next 50 years, it's a lot of skirmishing around nuclear power and how you'll deliver that. And Star wars was, you know, an anti ballistic missile defense system. And then you had nuclear subs and you had nuclear powered aircraft carriers and there was a lot of that. But now we get into the 21st century and it's becoming increasingly clear that in the 21st century, the wars will be determined by drones in the air, drones on the land, and drones in the water. So I take one of those robot dogs and I put a gun or a bomb on it. And it's cute when it's barky. It's scary when there's one gun. And you see the video where you see that the robot dog can shoot a target from 100 meters away. And then it's horrifying when you see 10,000 of those robot dogs getting manufactured in a manufacturing center and they're spitting out 1,000 a week and as many as you want, right? And then you start thinking about, well, what am I going to do when one of those robot dogs comes sashaying down the strip in my restaurant with a gun and a bomb? And then you think, what am I going to do when there's 100 of them? And what am I going to do when there's 100,000 of them? And then you start thinking about, you know, all the submarines and all the ships and the whatever. But you know, why wouldn't you just create an unmanned submarine and put a bomb in it, either conventional or nuclear? And you won't just create one. Why don't you create a hundred, a thousand, 100,000 torpedoes that, you know, have a range of thousands. You play this game, right? You can just put out 10,000 torpedoes with a range of 100 miles on a ship and just, like, dump them in international waters. We now have GPS encircling the Earth. And if you've seen the Starlink satellite system, Starlink is now encircling the Earth. You have high, high bandwidth Internet and very, very precise gps. So those drones can find their way to any spot, you know, plus or minus 12 inches in the water. The robot dogs can find any spot on land. And then, of course, the air drones. You know, it's like you think about the F35 and you think about all these, this, this air force, but that's really the armament and munitions of the 20th century. You know, the next war won't be fought with pilots, and it won't be, you know, why would you create a $50 million aircraft that's limited to nine GS with the pilot that took 25 years to train and millions of dollars to train? Why wouldn't you actually just create 100,000 Switchblade drones that cost a couple thousand dollars each, manufacture 10,000 of them. You have an army. I just spit out 500 of those, or 1,000. And they just find every truck, every Humvee, every tank, every tent, every cluster of more than 10 people. Because why would you bother to attack one person when you could get a hundred? It's a swarm. And you just send the entire swarm. You know, I've used the phrase, you remember, Bitcoin is a swarm of cyber hornets. Okay? The most terrifying thing, right, is not one creature attacking you. It's not an army, it's not a navy, it's not an air force, it's not a fighter in a jet. The most terrifying thing is a swarm of bionic Hornets. And it's pretty clear they're coming, and it's not, you know, what do you do? You just put whatever munition or weapon of your choice on the thing. And what you need, you just need to know where you are. But, you know, the silicon for figuring that out is getting better, you know, and you need some intelligence. Well, maybe you need Starlink. And right now in Ukraine, they're flying drones and fighting wars with Starlink. But it's pretty clear. It's pretty clear if you look at chat GPT and if you look at where we're headed, they're going to download those AI models into silicon and there'll be a point, point at which you'll just burn a custom asic. And instead of a custom ASIC for bitcoin mining, which is a cyber defense system. You'll just burn a bunch of custom Asics to think. And sometime over the next few years, we're crossing the chasm, if not already, where. Where the brains and the drones will be smarter than the brains in the cockpit. It's not that hard to kill something, right? Like we're, you know, you look at Boston Dynamics and they're showing all these videos of, you know, of robot workers in a factory. And like, here's a robot that does backflips, and here's a robot that's going to like, pick up packages and store them and. Okay, now we want a robot to bake bread and clean our dishes and talk to us. That's hard, okay? But creating a robot that has 10,000 rounds and saying, cross that line on the map and kill everything on the other side,
- [77:26]
Robert Breedlove
scary.
- [77:26]
Michael Saylor
That's not hard, right? I'm going to program in 100 components. What do you need to do? I just need you to get there and then turn the on switch.
- [77:37]
Robert Breedlove
Can I ask you something about this. This vision of human history that you've laid out? A lot of fighting a lot of wars, a lot of this pendulum swing to centralization of political power, but then it seems like technology comes along and somehow re. Decentralizes us. I guess the United States is a great experiment in that regard, a constitutional republic. So we had more of a decentralized governance system. People fighting over property, right? People fighting over stuff. People fighting over the power to write the rules of property or the right to tax the property or whatever it is. People fighting over wealth. I guess you might sum it up as.
- [78:25]
Michael Saylor
Yeah, I mean, this seems like a
- [78:28]
Robert Breedlove
very Darwinian picture where it's. It's animals fighting over territory effectively. Is that what you're. Is that how you see it? That we've. We've kind of created these systems of property to fight over territory? And if so, if property and territoriality are related, what does that mean for something like Bitcoin? Bitcoin being this unbreakable or difficult to break form of property. How does that change this equation and this game?
- [78:55]
Michael Saylor
I mean, it does seem like if you read enough history. Excuse me, if you read enough history, you just see tens of thousands or hundreds of thousands of battles and wars just fought over property. Someone wants to take something from somebody else, and after they finish taking it, then whoever the ruler is starts redistributing the property amongst their subjects, generally in a corrupt fashion. And someone's fighting to not be abused. And it's just a never Ending struggle of the more powerful dominating the less powerful with no end in sight. The tools change the significance of the 21st century warfare is this, right? It's not going to be about manpower. Right? You don't need a million people to fight a war. You don't need any of the conventional systems to fight war. The wars are going to be fought with custom silicon manufactured devices, machines. There'll be machine like. It's not that I just aren't impressed with you as a soldier, but it's just like I want you to be a soldier about as much as I want 300 beefy dudes rowing my trireme instead of having a thousand horsepower on the back of my tender. Right, right. It's just you have become singularly unimpressive to me as you know, as a human participant in this battle. We're not going to fight that way. We're going to actually manufacture drones, machines, munitions are going to matter, engines are going to matter, power sources are going to matter. And then control of the airspace, control of space, outer space and control of cyberspace is now going to matter. So all of human conflict, all of the rational human conflict, right? Intelligent humans with a will to power will shift their focus to outer space, cyberspace, space. And that there will be unintelligent, irrational examples of governments, leaders, organizations, they will cling to the 20th century. They're the ones that fielded cavalries during World War I. They're the ones that want to fight with machine guns when the bombs are falling. They're the ones that built the Magano line. They're the ones that will want to build 100 very expensive ships or build the next human powered fighter aircraft. Right? We need the fighters, protect the bombers. And we need the bombers because they fly slower because we don't want the humans to get hurt. And we need, you know, ejection apparatus, protect the human beings and we need, you know, flight training schools. Right? No, you don't need any of that. Right. It all just goes away. So when humanity shifts to this new form of warfare, call it swarm cybernetic warfare, then there's going to be a physical question and there's going to be a cyber question. The physical question is going to be, can you manufacture those devices? Like when there's 5,000 drones swarming over Washington D.C. do they have the physical apparatus to stop them, shut them down, interdict them or shoot them down? Right. Scramble them. And then the second question is going to be, can you defend, after you defend your airspace, can you defend your outer Space, because someone's going to start shooting down the satellites, right? Or jamming them, right? If I'm using satellites for bandwidth or gps, can I jam them? So to the extent that matters, then can you protect that? And then the third question, the most important question I believe, and this is where Bitcoin comes in, is can you actually secure your cyberspace? Who controls cyberspace? Can your enemy dominate it? So, for example, right now, if I ran a nation state hostile to the West, I might very well generate millions and millions, tens of millions of fake accounts on YouTube, Twitter, Facebook, the like. And I would run them with computer programs and now with AI, and I would make them very articulate, charismatic people. And I would use them to distort reality. I would, whenever something happens that causes Americans to want to fight with each other, that create a civil war, if I wanted one half the Democrats to hate the Republicans, I would actually launch the bot army to create that civil war. And I would get State to fight with State, I would get brother to fight with Brother. I would get people in the north to fight with the people in the South, I would get all the races to fight with each other. And I would just launch nonstop, never ending toxicity. So much so that people didn't know the difference between reality and not. Because the truth is there really isn't one reality. There isn't, you know, the problem with the truth. And this will take us to a subject of stories, right? When I tell you the story of the colonists that showed up in the New World, and I tell it in English, from the point of view of the English, I discount the French, but I also discount the American Indians. But the American Indians aren't one Indian. There's thousands of Indian tribes and sub tribes and they fought with each other, right? And so the Spaniards fought with who knows how many tribes in South America and the like. The Indians fought with each other, the colonists fought with each other. There's never ending set of fights and there's always a story of, well, a bunch of these people came and murdered us and so we went to war to protect our rights. But they always leave out the part where, well, someone from our village went and murdered them first or they came and they attacked us because we had actually, you know, seized and enslaved, you know, half of their village and shipped them off to the West Indies. They leave out that part, right? And so when you start reading the history like Murray Rothbard's, his book is like 250 chapters. It just goes on and on and on. And none of it was taught to you when you were in high school. None of it. When you start reading the history, what you find is there are thousands and thousands and thousands and thousands of chapters of history. It's all true. And, or whatever you call truth, let's just say for the benefit, let's give everybody a benefit of a doubt. It's all true. You want to hear the story of how whites enslaved Africans in pre Revolutionary war America? There's 10,000 stories of them. But you can also hear 10,000 stories of whites being enslaved in Africa on the Barbary Coast. You can also hear the story of 10,000 Bostonian Puritans being enslaved by British on ships and dying. Hundreds of thousands of chapters of horrific truth. I can get you to believe and I can get you to feel anything simply by filtering out 10,000 chapters of horrific truth where you're the good guy and they're the bad guys. Cherry pick. Whatever it is. Just the question of how do I weight it? So the issue with cyberspace is I can create any perception if I control cyberspace, and I can block any other perception. And I can amplify a third so I can introduce a thought into your head. I can amplify a thought that's there and make it 100x's painful. I can numb a reality that you're aware of, such that you act irrationally. I can do all of those things if I can control the information systems. And so when you think about the wars of the 21st century and beyond, you're going to have to dominate cyberspace or protect your cyberspace. And in one way, something as simple as on Twitter. What if I just eliminated all of the bots on Twitter? In my experience, 95% of the toxicity is generated by non people, has traditionally been on Twitter. And when they eliminated the bots, 95% of the uncivil toxic behavior that made everybody enraged just went away. It was never, it was never people you hated, people that disagreed with you. But 95% of that hate was actually fueled by bots, not by those people. So partly you get rid of that and you start to cure the mental health the civilization. But there's another part to this, which is if I want to pass a message, then you have to figure out, how are you going to avoid a denial of service attack? How do you avoid someone flooding or jamming the cyber frequencies in order to prevent you from controlling whatever your army of robots? What happens when someone decides to hack the controller? Right. The real risk is someone, if you have concentrated, if You've concentrated the power of 10,000 robot dogs. Well, who's controlling the 10,000 robots? Three admins, one admin. Okay, what happens if I hack the admin and I get root privileges and now I control the 10,000 robot dogs? Right. Maybe they're not attacking the enemy. Maybe they're attacking the creator. Or maybe the enemy is the one that hacked your army. This is, you know, fiction, sometimes imitates reality or vice versa. But you know, if you watch Battlestar Galactica, that's how the entire series starts, right? Human beings come up with a defense system and then the Cylons hack it and they just turn it off and then they turn it against the humans. Right? And so you have to actually ask the question, how am I going to secure my cyberspace? And I think that one answer, an important answer, is proof of work, right? And the cyber defense system, which is Bitcoin. If you think of Bitcoin as just money, you're thinking too small. Yes, it's money and it's truthful money. But the reason Bitcoin is the hardest money in the history of the world is because it has integrity, not because it's a computer system that uses energy. It's a system that was engineered to have integrity and to be thermodynamically sound, to actually manifest scarcity. And that integrity can be used for the root application of money and banking, if you will, especially money and money and monetary transfer. But there's a lot of other things you can do with it. And the other things have to do with integrity and veracity. And we call it the truth machine, not just a money machine. So, for example, on Twitter, an AI could generate 10 million fake Michael Saylor accounts, could generate a million an hour. And maybe I could try to block them all as fast as I could. But actually there are legitimate other people named Michael Saylor. There's 10,000 other people named Michael Saylor. I'm just one of the Michael Saylor. You could generate 100 million other accounts that aren't with my name, but just are interesting people. Now, should they get to participate in society, how do you stop that? Well, I mean, there's two things you want to do. One, the nostir idea is I publish my public key and I have a private key, and I use my private key to sign my message. Sort of good. But it doesn't solve the problem because the AI can still generate 100 million nostr people.
- [92:53]
Robert Breedlove
Right?
- [92:54]
Michael Saylor
Right. Because it's not. And here you see the issue is non conservation of Energy, I can generate a million accounts, a billion accounts, a trillion accounts. I'm just running the computer. And if anything, what the AI has done is the AI has shown that it can actually do what anything you can do, it can do better and it can do a million times faster. So no amount of information can serve as proof of humanity. The AIs read everything that's been written by every human that's ever written it. And that means the AI can give you 100,000 page biography of why it's more trustworthy than you, Robert. You can fill out a 20 page form. It can fill out a 20 page form every 10 milliseconds. You're not winning, right? You're not going to win this battle. So how are you going to actually defeat that or even put a check on it? The simple answer is I don't just generate the public private key combination I generated in conjunction with the bitcoin transaction on the base layer, which might cost a dollar, which might cost $15, right. This weekend, sometimes people are paying $30 some amount of money. It doesn't really matter whether it's a dollar or $100, right. What matters is I paid money and it took time. In that particular case, you could create a cyber passport. I'm going to call it an orange check. A digital identity. Your digital identity is cryptographically secured. The digital identity of Robert Breedlove might be secured by a single private key with the public key that's mated to it. The digital identity of MicroStrategy might be secured by three of five multisig. And the digital identity of a city might be secured by the city council, which is 5 of 7 or 7 of. Fill in the blank. 4 of 7. Don't hold me to all the different multisig configurations, but you can go with multi signature to sign a message from an organization or maybe a family. You have three of five. That secures your family and identifies it. So now I am, I create this identity, I burn it into the bitcoin blockchain. Now I digitally sign my accounts. Like right now, you can get a message from Michael Saylor on WhatsApp, but it's not me. And there's no method for me to verify. There is a method, by the way, for you to verify on Twitter. It cost $8 a month. For a blue check, it cost $1,000 a month. For a gold check, it costs $1,000 a month plus $50 a month for every officer of the corporation verified with the gold check. Not cheap. Not cheap, but also not open and not portable. So regardless of whether you think that's a great idea, the problem is I can't take the gold check and use it on YouTube and use it on Instagram and use it on WhatsApp and Telegram and Office 365. There are. There's a cryptographic certification in Office 365 in the Microsoft email system gives you a blue check if you have the certificate on your hardware devices, but it doesn't cross the other email platforms. And sometimes it actually is blocked by other email platforms. So what you have today is you have a bunch of proprietary certifications that are unwieldy, expensive, not egalitarian, and they're not open, they're not programmable, they're not verifiable. And you have a bunch of cyber systems that are either not secure, they're fragile, or they're toxic. Some of them are just outright toxic. You can point to them and say there's garbage on them. Others are centrally managed and they're fragile. Because maybe the big tech company does a good job of squeezing people they think are scammers off their platform, but they also squeeze people that just have a different opinion from the power structure or the executive team, and they don't distinguish between those two. So they're very fragile in that regard. And when they squeeze you off their platform, you lose your identity forever in that space. You can imagine if you use an iPhone and Apple just X's your account on the day you wake up and you find out that your account has been deleted. Right? It's a problematic thing. There's no court order, there's no due process. Right. And in that regard, the big tech networks are more powerful than nation states to society. So I think in this world, the real question is if you run a family, a corporation, if you're an individual, or if you're a governmental entity, how do you prove the veracity of your utterance? How do you sign your message? How do you sign your contracts? How do you sign your accounts? And how do you verify when there's 100 million other accounts which claim to be you that are actually look more like you than you look like you. The AI version of you, like on a. If you go on vacation for two weeks and the AI just. It just learns on all of your former videos, the AI will look at all your former videos, look at the news of today, generate the podcast, and it'll look like what Robert Breedlove would have done. But Robert Breedlove's not there to contest It. And so if it's used for good, I don't know, maybe. But if it's used for mischief, a bit more disturbing. But what if it's used for malice? And the only answer is you need somehow to cryptographically be able to secure something. But there needs to be some thermodynamic security to it, such that if I can guess your password a million times in a row and you've got one of those four digit pens, then I'll crack it. You need to actually say, well, you only get three guesses. That's friction in the real world. You can't move a billion trillion miles an hour in the real world because you will burn up. Not to mention the fact that it violates all sorts of laws of physics. But there needs to be a real world sound barrier or light barrier or else the universe doesn't work. And the same is true in cyberspace. There have to be physical cost imposed in cyberspace against malefactors. And the greatest system for doing that is bitcoin. Bitcoin can be described in this regard as the most powerful cyber network. It is a digital power network. And a bitcoin miner is a digital power center. And the unit of measure, the greatest unit of measure of digital power in the history of the world is the exahash. Right now, one exahash, it'll cost you 30 megawatts of analog power in the form of Electricity modulated through 10,000 S19 mining rigs, right, that are custom silicon. And if you can put those two things together, you can generate digital power. And if you've got digital power, you can shield something. You can hide behind it. That is a wall of encrypted energy, 350 exahash high. So the question is, what will you put behind it? Like the obvious thing to put behind it is your identity. Another thing is a tamper proof document or a hash. I create a will and it's going to convey a billion dollars in 25 years. The current way you do it is you inscribe it on 30 sheets of paper. Two people sign in ink. One notary shows up and they look at two forms of government id. They stamp a little stamp on the thing and then some clerk that works for a lawyer puts it into a vault, if you're lucky, a filing cabinet. If you're less lucky, they might scan it. If the scan ever gets released, if the PDF file is ever cracked or hacked, anybody with an iPhone can counterfeit your entire will change any word they want. It takes like a $200 ink printer, you know, and an iPhone. And you could counterfeit or tamper with that document. If you're smart enough to destroy the original, then no one will know the difference, right?
- [103:16]
Robert Breedlove
It's amazing. So anti counterfeit technology, not just for money, but also for important legal, for anything.
- [103:24]
Michael Saylor
But we think about the anythings in that particular case. You might very well burn the document as a transaction. And if you didn't want to burn the entire document, you might burn the hash. Maybe you hash the document and you burn the hash and digitally sign the hash so that 25 years from now when someone says this is the document, you hash it and you can see that it was tampered with. Doesn't match. So any kind of contract, any kind of title, any kind of deed maybe, especially if it needs to be immutable, tamper proof. But the place where it gets interesting is cybersecurity systems. Like how many people have control of the enterprise domain of a mega corporation? You know, if I wanted to actually infiltrate a bank's computer network or big tech computer network, right? I joke, I say, like, I think I know how the world will end. You'll wake up one morning and you'll get a notification from Apple or Google saying there's a routine security update download now. Or it'll already be downloaded for you and some AI will get control of that routine security update, inject a trojan horse, and 30 days later, everybody's iPhone screen simultaneously blanks. Or if you want to make it melodramatic, or you just hijack 100,000 iPhones of the 100,000 most powerful, powerful people in the world, you just start to like redirect transactions or messages, maybe they don't even know. And so the question really is, so who's securing the security update, right? And what does it take? And a lot of times corporate security is, well, this person or these three people have super user privileges. But you almost can't afford for any person to have super user privileges. You have to have all sorts of checks and balances and you have to have some combination of multi signature, multi factor. But then again, if the multi signature multifactor is based upon one proprietary corporate system, then isn't that the weak link? So what you want is a multi, multisignature, multi factor system that's open and transparent. And what is the greatest of those systems in the world? Bitcoin. The Bitcoiners figured out how to do multi sigs, right? They figured it out. And what is a hardware wallet? So signing Devices and multi sig on an open network that's transparent with world class cryptography. That's the solution to trust and integrity. And so the killer apps are control of your cyber systems and control of cyberspace to keep people from hacking the system, whether it's the banking system or the. At some point, right? If I hack the Air Force system, can't I make every drone fall out of the sky? If not now, eventually. Because we're getting to a point where the humans in the middle are the weak link. If there's 10,000 humans and they think at human speed, and I can replace them with a computer that thinks a million times faster than the human, I can't afford to put people in the cockpits, I can't afford to put people in the Humvee or in the tank or in the ship anymore. It's too expensive, too slow, too fragile. And so when I replace it, the issue is how are you going to secure the thing you replace it with and how do you decentralize that? And if there's an example of a system where everybody thought about decentralization obsessively for the past 40 years, right? Bitcoin, right? The culmination of 40 years of thinking about cryptography and decentralization and, and power and energy and Bitcoin today, in its current manifestation, it's the greatest example of a stable cyber network that's defended by digital power. It's the greatest example and the greatest success. But we're now reaching a point where, where the future of humanity, the future of how we fight our wars, the future of how we think, the future of how we bank, the future of how we communicate, the future of how we contract and how we trade. All of those things going to be determined in cyberspace for better or for worse. And most corporations, nation states, they're either defenseless or they're very fragile. And they have these fragile, untested structures that have never been attacked. Or if we want to take a slightly more pessimistic view, you could say Western civilization has been getting torn apart because all of its cyber systems are toxic and fragile and dysfunctional right now. And There are probably 100 examples over the past four years to eight years where you've seen a breakdown of many of these conventional cyber systems because they don't have economically sound, ethically sound, cryptographically sound cyber security built into them for the longest time. It was too easy. I think Twitter had 500,000 fake accounts a day created. It's 500,000 attacks a day, right? There are hundreds of thousands of attacks a day on innocent people. And they're working, right? They work in YouTube, the scammers work. There's not a week that goes by I don't get a message from someone saying, I was contacted by you with a trading opportunity or a bitcoin offer, whatever, right? If you look at every messaging system, all the email systems, all the shared bulletin board systems, all the social network systems, they are currently corrupt and toxic and they struggle with this problem. And the solution, the solution to the problem is in of itself a problem. Remember I told you the Andrew Jackson story? He defeated the bank by empowering the presidency and the result of that was the civil war, among other things. You know, millions and millions of people are going to die because of the empowered executive branch in order to defeat an empowered financial branch. Well, when a big tech company implements censorship to block the scammers, they also implement, and they implement censorship to block the nation states that are so called hostile. They end up implementing censorship to block the domestic actors and the truth as well, or anybody. And as you can see, right, the definition of the truth is hard to put your finger on. It turns out that there are 10,000 versions of the American experience that are all truthful. And if you tell it from the point of view of one Indian tribe, another Indian tribe, the Hispanics, the African Americans, the French, the ethnic Spaniards, the Brits, it's a different truth. And you know, they could all be right. And at the same time, you come to a totally different conclusion depending upon which narrative stream you choose to lock onto.
- [112:04]
Podcast Host (Sponsor/Ad Reader)
Now I'd like to tell you about our sponsor, Bitcoin Conference 2023. This three day event will be held May 18th through 20th in Miami Beach. This is going to be the biggest event of the year, as it always is. And the past two years in Miami
- [112:21]
Robert Breedlove
have simply been amazing.
- [112:23]
Podcast Host (Sponsor/Ad Reader)
Day one's industry day, Days two and three are going to be open to general admission. And I'd say this is a great place to go and network with bitcoiners or even look for a job. Just a really all around great experience. There's a fantastic speaker lineup including Michael Saylor, Zoltan Pozar, Lyn Alden, Alex Gladstein, many others. And last year we did a 10 million SATs giveaway for this event and we're going to do it again this year. So to get discounted tickets and enter for a chance to win 10 million SATs, go to B TC conference and use Code Breed Love. Now I'd like to tell you about our sponsor casa. CASA makes it simple to buy and secure your Bitcoin without wondering whether you're doing it right. Specifically, CASA provides a multi key custody solution which is by far the most secure way to custody your bitcoin. Now when I talk about bitcoin being theft proof money or inviolable private property, a multi key custody model is exactly what I am talking about. Using multiple keys lets you maintain full control of your Bitcoin while also giving you redundancy in case you lose one of the keys. It's also the best way to secure your Bitcoin for inheritance planning purposes. So go to keys casa that's C A S A today to sign up and use discount code.
- [113:46]
Robert Breedlove
Breedlove Can I ask you, do you because this is a We've taken the thesis or the value proposition of Bitcoin and expanded it out beyond money. Is this something you see nation states or militaries adopting by necessity then bitcoin to control root access to this futuristic war fighting equipment?
- [114:07]
Michael Saylor
I do actually. I think the smart ones will figure it out sooner. You know, I mean Jason Lowery is, you know, has spent a lot of time working on this and working to communicate this message in a number of different ways. And it's a challenging message to deliver. But you know, just like this nation rejected air power, like we rejected air power and we thought it wasn't of military significance.
- [114:40]
Robert Breedlove
And he quotes a general from World War I that said the airplane is an interesting toy, but it has nothing to do with war fighting. And obviously BY World War II, as you said, air power was what mattered.
- [114:51]
Michael Saylor
So you will find examples of a military complex that will reject the new thing while they cling to the last thing. But then the war comes along, like drones. Where I'm from the Air Force, I'm a commissioned officer in the Air Force, right? And I remember being in the Air Force, learning to fly in the Air Force. If someone said, oh, pilots are all obsolete, we're going to replace everybody with drones, that's anathema. You don't like that? You will fight that. If the Air Force is run by pilots, you drag your heels for a while. I think the drone mission was absorbed by the CIA and I don't know where it is today. I'm not up to speed on the modern mission responsibilities and the DoD, but you can see that when someone else starts shooting missiles out of the sky via a drone to fulfill the mission and they get 100 missions and they knock them all down and you're still waiting for the one mission that you fly with humans, like the Top Gun 2 mission, like the entire movie's about. It's a mission that humans need to fly. But you listen to the movie and if you think about it from a technologist point of view, the movie's no good. Because in the first 60 seconds you say, oh, yeah, we should have sent a drone, right? But if we just send a drone, the mission's a success and the movie only lasts about 60 seconds. And there's, there's no human beings, there's no Jennifer Connelly hooking up with Tom Cruise, you know, and there's no heroic moment and, you know, and there's no tear jerking, you know, situation. And you don't need the aircraft carrier and you don't need the, you don't need the naval base, you don't need the pilots, you don't need Top Gun, you don't need the planes, you don't need the rescue. You don't need the heroics, you don't need the. Cue the good music at the end. You don't need the motorcycle and the guy riding into, you know, into the sunset, you know, with the beautiful girl. Everything doesn't end happily ever after. They just send one inanimate robot drone, it shoots one missile, drops one bomb, end of story. So human organizations, they don't like that story, right? And that's the same that human bankers don't want to deal with the thought that maybe the bank is obsolete. And you go to a conference of financial advisors, and there's 27,000 financial advisors, okay, and an entire industry of 10,000 companies. And you stand up and you go, well, you know, it looks like 97% of all your money managers got beat by the index. And over a long enough period of time, 99%. So if we simply obliterate the entire banking industry and all the financial advisors and all the money markets and all the mutual funds and all the ETFs, and you just bought Bitcoin DCA, you beat them all, and you do it with 0.01% of the cost. No one's all that enthusiastic about that future. It takes a long time for you to deconstruct that. So I think with regard to these military systems and these defense systems, it takes a while for the military industrial complex to modernize itself. And what you'll probably find is you'll see some leaders in some parts of the world, the ones that have everything to gain, nothing to lose. Who fights the cyber war first, right? Like who's busy in cyberspace. You hear about the North Koreans busy in cyberspace. If I don't have the brute force, I use asymmetric warfare. So you'll find the smaller nation states that have the most to gain, the least to lose, they'll use asymmetric warfare. And then over time, there'll be a big war and someone will lose a lot. And then they'll realize that, you know, the machine guns don't work anymore and the barbed wire doesn't work anymore and the open cockpit doesn't work anymore. You know, and these conventional bombs, they don't work quite so well. We need laser guided bombs, right? And there's, there's this acceleration, I think, that you'll also see, you'll see adoption accelerated by commercial applications. For example, a very simple commercial application is just the orange check. Do you want to pay $15,000 a year to be authenticated just on Twitter but on no other platform for your corporation like, or would you rather pay $20 once in your life or $10? I mean, probably if you put in a bitcoin orange check transaction and you were willing to wait a week, I mean, can't you, like, bid, you know, 1 10th, 1 20th, 10 satoshis of E byte? There was a while when you could bid one satoshi of V by do it for a quarter or something, right? But, you know, you probably would do that and then you would have it on the open system and then you could take it and carry it across every other platform. But there was an idea called Pretty Good Privacy pgp. And it was like cryptography for everybody. It's like you can have your own public private key and you can encrypt anything you want. So I think that we're going to come back to that kind of idea, which is Saylor's gonna burn his orange check into the bitcoin blockchain, and I'm gonna publish that maybe to my Twitter and maybe to a few other things, but I'm also going to use it to digitally sign some documents and hash them and seal them, if you will. And as that happens, it'll spread across all the social media platforms and all the corporate platforms. And the reason it'll happen is because of this onslaught of AI bots such that just once people start to do it, it should spread virally because why would you trust anyone that's not orange check verified? What happens if I could do it? I would say if you ever get a message from me that's not orange checked, it's not Me. And as that starts to spread, because it's open, permissionless and ethical, everybody can adopt it. The problem with closed protocols, whether it's Decnet or Token Ring or something like that, is they're proprietary. And all of the verification protocols in the world today are proprietary. Apple's Blue Check doesn't carry through to Google's Blue Check. Right. If you want an example, the most extreme example, you can't even, you know, use an Android phone authenticated against an iPhone.
- [122:27]
Podcast Host (Sponsor/Ad Reader)
Right?
- [122:28]
Michael Saylor
So there's a problem. It's a problem for everybody commercially. And this is a solution. It's going to be a problem for every corporation. Right? Corporations have to deal with this issue of cyber hacking and denial of service attacks. And how do they secure their relationships with their customers, their partners, their employees? Ultimately you got the same multi factor, multi signature situation. And then next we'll go to municipal entities and political entities. Like how does the police chief. Okay, sure, the police chief's got a gray check or a black check account on Twitter. Well, what about every other communication channel? And you remember what happened, the uproar when Elon took away a lot of those checks. It's just chaos. There ought to be an open standard for authentication and digital seals for any kind of official communication. I think military will come in time and they will come to this realization when they realize this thing, which is, Remember how I said it takes 30 megawatts of electricity to generate an exahash, and it takes 10 to 15 gigawatts of electricity to generate 350 exahash. Well, you know, that dam might give you 10 gigawatts of power, but the problem is the damage on itself doesn't work. You also have to put it together with millions and millions of mining rigs. And that will take you years and years and years of manufacturing. So you want to attack this system. If you want to stop the message from being processed that I'm passing from me to you in any encrypted message, I want to send you a message, I put it on the blockchain. Well, you're going to have to come up with not 350 x a hash. You're going to have to come up with 3500exahash. And if you have 3500exahash now you've got 90%. The 51% attack doesn't mean anything. 51% attack just means that the message takes 20 minutes instead of 10 minutes. Maybe when you actually put 3500x a hash out there, you've got to come up with 150 gigawatts of power. And now you need 100 million of those mining rigs and the world can't manufacture. They're all bought. Okay. That's kind of like saying I need to buy the next 20 years of production of all the aircraft in the world. Well, good luck with that. How are you going to do that without anybody knowing that you did that? Right. And you kind of have to do it immediately without people knowing. So Bitcoin represents the most secure system. Systems that are based upon human intellect, right. Can be cracked by the AIs. The AIs will crack all of the things that are based upon proof of humanity because they're more human than you are. Right. In order to actually secure the system, it's got to be defended by raw power, by energy.
- [125:57]
Robert Breedlove
They can't take energy.
- [125:59]
Michael Saylor
And you could think of a bitcoin miner. If you use the offensive term, you could say it's a machine gun in cyberspace. But I know that triggers all of the maxis and all the libertarians who don't like the idea it's an offensive weapon. So a better articulation of it is it's a defense system. It's the cybernetic fence. It's the wall in cyberspace that you can hide behind or you can stand behind. Right. It's a cyber dome. Right. It's not a system to inflict destruction. And death and mayhem on your enemy. It's a system to defend your own cyberspace perfectly.
- [126:49]
Robert Breedlove
Preserve information in a force field or something like that that can't be rewritten.
- [126:56]
Michael Saylor
If I have 100 million identities and I want to protect the identities. If I have 100 million documents and I want to protect the documents. If I have 100 million systems and I want to protect access to the systems, it's a cyber defense system. Once upon a time, there's an iron dome. The idea is it's a missile defense system. It's shoots things down that are coming at you. It's anti aircraft system. So if you think of Bitcoin as a cyber defense system, that's really critical. Because you recall in our previous series we talked about what made America great and superhero theory, and I said superhero theory is you want to be indestructible, invincible, right? If you're invincible, you can figure out the rest of the stuff. You don't have to be the fastest, the most beautiful. You don't need the, the electric lightning bolt shooting out of your fingertips. You don't need all the cool magic. You just need to be invincible because you're invincible. You can just, you know, strap an atomic bomb on your waist, walk into the building, you know, leisurely, have a couple coffee and set off the bomb and then walk out of the city, right? You're going to win. And every other idea everybody has is not going to work. So invincibility is the ultimate superpower, you know, if you combine it with immortality, right? The big eyes, invincible, indestructible, immortal, right? That's the thing everything else you can learn or you can strap on, right? And bitcoin represents invincible, immortal. And in America, America's big advantage was hiding behind 3,000 miles of the Atlantic Ocean and hiding behind 6,000 miles, the Pacific Ocean, with a tundra to the north and with a desert to the south. And that meant that you could have an army of 250,000 men, fully armed in France. You're not going to be able to deliver more than 5% of that force to the US it's going to take you three months. And then they're probably going to starve to death as they try to live off the land, and a third of them are going to die of disease. And so the ability for you to punch is, you know, you're ameliorated. Your force is attenuated by a factor of 50 when you're trying to work from that distance. Right. The deciding battles on the American frontier were fought by 2,500 people or 800 thousands, tens of thousands, right? And so America always had the luxury in World War I, World War II, etc. Of being able to manufacture infinite munitions, shuffle everything around and ship it somewhere else, and then drop the bombs on somebody else. And in Poland, they never had that luxury. You know, in Russia, they didn't have that luxury. And it's a pretty big deal, that distance. And the same hold holds through in cyberspace. If you are going to fight a cyber war, the first thing that has to happen is all your iPhones can't go blank on the first day of the war and all your systems can't stop working. But there's something worse than all your systems stop working. It's all your systems start working against you. That's autoimmune disease. It's like when your body attacks you. And we've seen that. You know, you see it physically and you see it politically. You know, if someone manages to plant a mole in the middle of your system and they just simply turn all the weapons on their own population and so that cyber defense mechanism has to be based on some cryptographically secure digital energy system. And if I look at all the systems, right. The only one that's, that's truly, you know, acknowledged to be successful and secure is Bitcoin. Yeah.
- [131:29]
Robert Breedlove
Nobody prefers the second best in security.
- [131:32]
Michael Saylor
I can't.
- [131:33]
Robert Breedlove
So that's why there's no second best.
- [131:34]
Michael Saylor
I would like to name the second best, but I cannot. I can name no second best. Right. Like 350. If you're going to compare cybersecurity systems, you have to ask the question, how much energy will it take to break it? Okay, Well, I mean, if you take all the big tech companies and all the big banks, I actually think simply compromising anywhere from one to ten people breaks it. If I flip half of the board of directors or two or three of the officers, I broke it. Right. And at some point, you can always trace these things down to, all I got to do is compromise or spoof or fish some number of dozen, two dozen people. And if you have those two dozen people, you want to keep their identities quite private. There's a lot of ways to get to them, right? You can blackmail them, you can issue a court order, you can put them in jail. It's like you could say, well, I'm, you know, I'm not going to be coerced. Well, if you're in jail and the government orders you, you will be coerced. Because the argument is, well, the person that you're supposed to. The thing you're supposed to do is in the interest of the state. But the problem is every single country has their own state, and they think the other states and their interests. Everybody's being coerced by everybody all the time. Right? And that's just. If they do it, you know, legally, they can also do it politically, but they can also do it in a criminal fashion, right? So that. And you can just do it in a corrupted fashion, or you can just be incompetent. A lot of ways to compromise those systems. So you don't really want a cyber system that's based upon human virtue. Right? You have to assume. You have to assume that at some point the human and the loop will fail. And if you dismiss all those ideas, just imagine what, you know, how will the people in your family react when they get a call, a video call from you and your voice that looks like you, that just, you know, urgently needs something because your iPhone was stolen or maybe it's from your iPhone. What are they going to do if it's you calling from your iPhone on a video call to make a request. Request. You don't think that they're going to actually believe you, right? You know, I think it ought to be disturbing. So now we come to the issue of a true digital power network. Bitcoin, secured by digital power. It's energy over time. Exahash is that measure of power? It is a hash rate, right? A hash rate. And the only way to generate the hash is analog energy converted to electricity combined with computing capability. Computing power in the form of how fast can you generate a SHA256 hash? Those two things that creates digital power. If you take the Asics away, it's not digital power. It's power. It's analog power. But analog power, as we pointed out, isn't that impressive, right? I mean, would you rather have the power of a rifle or the power of the dam? Well, you know, if the rifle's pointed at your chest, the dam doesn't do you any good, Right? It all comes down to a specific ability to generate a specific type of power. You could have control of every hydroelectric facility in the world. If you can't digitize the energy, it's not going to defend your cyber system. So, so bitcoin is digital power. It's 350x a hash that equates approximately to $20 billion worth of computer equipment that has been purchased that's running on a network, something like 10 to 20, probably 20 billion of capital investment on the compute side. And then you can value the energy at various levels, right? If it's 5 cents a kilowatt hour, you're getting to 5, 6 billion dollars a year. At 10 cents a kilowatt hour, YOU'RE getting to 10 billion dollars a year of electricity. That's what it takes to run the network now. But that's not what it takes to attack the network. If I'm a nation state and I wanted to block every message or intercept every message on the network for the next six hours, I need to win the next 60 blocks. And if I'm going to win the next 60 blocks, statistically, that means I need 98% of the hash rate. And that means I need to bring online 50x to 100x, right? If I want 99%, I need to bring on 3x,500 exahash of computer power.
- [136:40]
Robert Breedlove
Completely impossible.
- [136:42]
Michael Saylor
The problem with that is if I hijacked all of the Google, Amazon and Microsoft computer power, I could maybe bring on 5exahash because of the silicon ratchet because that ASIC is 2000 times more efficient than commodity compute. So commodity computer power is at the bottom of an energy well. It's like I built a wall that's 2000ft high and your node you rented from Amazon is one foot, a one foot step. You need to now get 2000x higher than that. You see? And so, and so, just like the logic of creating a literal wall, I'm creating a wall of encrypted energy. And you're not going to be able to use three things that every nation state has. Nation states have commodity money. They can print $100 billion of money. Some of them, not all of them. Some of them, they have commodity electricity. One third of the electricity is wasted or energy is wasted. Right. Then they could divert that entire dam, which is two 20 gigawatts or divert gigawatts. They've got commodity electricity and commodity energy, and they've got commodity compute, all the iPhones in the world, all of the AWS nodes and the more commodity compute. But a truly secure system isn't based on commodity money. That's why proof of stake doesn't work, Robert, because I can buy $20 billion of your token by printing commodity money. And so if you're secured by $10 billion of your token and it trades, I can come up with another 10 billion 100 billion of commodity money. Especially I can print it for a few hours or a day.
- [138:40]
Robert Breedlove
Yeah, right. This is the space and time security layer you talked about in our prior episodes.
- [138:45]
Podcast Host (Sponsor/Ad Reader)
Right?
- [138:46]
Michael Saylor
So commodity money can't be used to attack a proof of work network like Bitcoin, but it can be used to attack a proof of stake network. It can also be used to attack a centralized network, any kind of proprietary network. You just coerce, bribe, you know, incentivize the result you want. Commodity energy can't be used to attack the network either because it has to be modulated through the the ASIC miners. So you would need 2,000 times as much energy. That's all. The energy on Earth doesn't work. You need three earths. If you had enough compute power, and you don't, but if you did, if you had infinite money to rent infinite AWS CPU nodes, then you need three and a half earths, but you're not getting that. And of course, finally, commodity compute power, there's not enough of it. Just don't have enough of it on Earth. You take it all, it's not enough. So the only way to attack the network is to actually play the same game over long Periods of time, you have to actually create Bitcoin ASICs that are progressively more efficient, which is to cooperate. That's an arms race. And it's an arms race that takes you a decade. It's like we're in it. If you want to spend a decade and billions and billions of dollars in order to try to enter, you can. You won't sneak in. It won't be cheap. It won't be stealthy. Right. And there's no cheat code. You can't repurpose anything else. It's just like when I. When I have a nuclear weapon. You can't repurpose a yacht or a bow and arrow or a machine gun to pretend it's a nuclear weapon. There's only one way to play the game. You have to commit to that and delivering that. And you either do or you don't. And we'll probably know because it's hard to keep that secret.
- [140:51]
Robert Breedlove
Yeah. And even getting into the game, you're incentivized to play by the rules of the game. Right. It's actually in your best interest to mine the bitcoin rather than try to attack the network. I'm struck here by this.
- [141:02]
Michael Saylor
No private actor can afford to subsidize it. So any private or corporate actor has to mine bitcoin and support the network. If you're a hostile nation state and you wanted to attack bitcoin, I guess in theory you could print tens of billions of dollars in order to develop miners, in order to create mining centers to attack bitcoin. Bitcoin. But we would be basically debating that on Twitter for four to eight years, and then at some point, someone might decide to adopt the SHA512 protocol, brick all of the ASICs, and migrate. Right. But you have many, many years to figure that out. It's like the enemy will be at the gates for a decade, and sometime between year two and year eight, we will have decided what to do. But of course, what government do you know that would want to spend a decade failing to attack something? It's much more likely that you'll just flip everybody in that government to support bitcoin by the time they finish that. And they'll just come on board. Right. Because the truth is, if you're take the United States, the United states had what, $4 billion of Bitcoin? Like how much Bitcoin they had? 50,000. No, people say they've got more bitcoin than microstrategy. So let's. So let's say that the United States has $10 billion of Bitcoin, they could sell it for $10 billion. Any intelligent bureaucrat, if they just wanted to make another $20 billion risk free for the United States of America, all they have to do is draft a one paragraph press release saying we have it and we've decided we're going to keep it, we're going to hodl. That's all you would have to do. And you would go from having $10 billion of Bitcoin to having $30 billion of Bitcoin. Right? Just one paragraph press release and you make $20 billion risk free. And any bureaucrat that thought, well, I just like to have $100 billion for the taxpayers, they would simply buy another few billion dollars. Then they put out that two paragraph press release, we're keeping what we have and from time to time we're going to buy more. Like last week. And then you would have 100 billion, okay, so just make a list of every country on earth and then you ask yourself the question, how many of them would rather have $100 billion risk free than spend 20, spend 100 billion over the next 10 years attacking Bitcoin to destroy it.
- [143:57]
Robert Breedlove
Right? That's the asymmetry.
- [144:00]
Michael Saylor
You're down to a very short list. Right? And so, yeah, bitcoin is just the most well thought through cybersecurity network. And I think it's worthwhile dwelling on this issue of power and energy and security because of course, all physical security has to come from military power, you know, has to come from power. If you don't have power, right, you're the 998th Indian tribe that got, you know, pushed off their land. And people don't even write books about you lamenting how you were mistreated. Right? They only write the books about the top 300 Indian tribes that were mistreated. When you get far enough down in the totem pole, right, there's 10,000 tribes that got squeezed out of Europe by Romans and the Gauls and fill in the blank over the past 20,000 years. And we don't even lament them, we only lament the famous ones. So if you don't have a lot of power, right, there's no hope for you. And as we go forward, you can see our war shift from land power to sea, power to air power to space power to cyber power. If you hope to have economic health, mental health, physical health, political health, you're going to have to control your cyberspace. And it doesn't matter whether you're Robert Breedlove simply controlling the cyberspace, your identity. Online. I launched 10,000 fake Robert Breedlove's. I can destroy you if you can't stop it. Right? They're scammers. You have to control your space. A family has to control their space. Twitter has to control its cyberspace, lest a billion toxic bots corrupt everything. And so does every company, so does every bank, so does every government, so does every politician. So I think we're early. We're early. And in the first place, 14 years, people started to recognize Bitcoin as a great monetary network and the greatest, hardest money humanity ever created. But the only reason we could create the hard money is because of the integrity of the network. They solved the problem of digital integrity. How do you create a truth machine? First they had to solve the double spend problem. They had to solve the problem of how do I know it's truthful? And then they had to solve the integrity problem. How do I keep the money on the network for 100 years? And since they solved the problem of truth and integrity, the killer app they put on it is money. And now we're entering a new era. And money will always be half. It'll be half, right? But the other half, you know, is. Is how do you defend your reputation? How do you defend your commercial interests? How do you defend your political interest? How do you offend your. How do you defend your corporation, your nation, your family, whatever it might be? And. And that is a problem that Bitcoin is extremely well suited to serve. And as we saw last week with this entire big brouhaha over inscriptions and ordinals and all these things, BRC20 tokens. It's just one of hundreds and hundreds of applications. It's a set of applications that come before hundreds of applications that maybe will come before thousands of applications, and many will fail. I mean, there'll be a lot of, you know, like, do I endorse, you know, Bitcoin for speculating and unregistered securities? No. Can someone do it? Yes. You know, like, do I endorse, you know, digital art? I'm not going to give you a recommendation on digital art. I wouldn't give you a recommendation to buy a Picasso right now. I like Picasso. If you said, should I buy Picasso? You know, as a store of value, it depends on the price. Like, you know, that's a totally different thing. So there are a lot of things that people do I wouldn't endorse. But do I like the idea of art? Yeah. Do I like the idea of digital signatures? Yeah. Do I Am I. Am I optimistic about the potential for sealing and authenticating and verifying systems and documents and transactions other than Bitcoin on the Bitcoin blockchain? Yes, I am. Because the status quo in the current systems is just so awful. And I'm reminded. I'm reminded for thousands of years, people have struggled with the issue of how do I authenticate and brand something. And the example I used is, go to the J.P. morgan Library in Manhattan and go visit it, and you'll see he's got a 2,500-year-old ivory seal collection. And they're works of arts. They're small roller seals. They're carved out of ivory, and there's an image and relief on them. Might be antelope. It might be a hunting scene, it might be some other scene. And they were on a roller, and their use was. People had ledgers, and they had ledgers of money and official communication. And to make it immutable, they baked the clay and then to seal it, to authenticate it, to show it's official, they rolled the roller over the clay and then they baked it. And so you could look at the scene at the bottom. And that's the public key, which you can decrypt with your eyes. That's your key. I've seen that brand before. It's a brand. It's a key. It's hard to create because you need this cylindrical roller, and it's hard to create the private key. The roller is the private key, and it's very, very difficult. And there's only one of them, the public key, is easy to authenticate. This is like public key, private key cryptography. It was used by the Assyrians, it was used by the Greeks, it was used by the Romans. They date to 500 B.C. and beyond. The Egyptians had them. So we're not the first people to figure out public, private key cryptography. We're not the first person to realize that it's important to authenticate an official document. You know, we're not the first immutable ledger. We're the best. Right. You know, at some point, though, you want an immutable ledger. It's like either it's parchment and wax seals or it's clay tablets and a clay seal. And that was the basis of commerce and trust and politics in the ancient world. Today, in some ways, we've gone backwards, right?
- [151:46]
Robert Breedlove
Just a digital way.
- [151:48]
Michael Saylor
Like when I sign that contract, I just do this scribble and it's an awful signature. It's not good. I don't even do this, right? I don't even do an Impress imprint or a stamp. So in some ways, you've gone backwards. And I think that the world needs to fix that, especially if you want to live in a high velocity world. I still, you know, I shudder to say this on the podcast, but I will in the interest of public good. I still have certain bankers that call me to authenticate wire transfers of large sums of money. And they say I got to start with a security question. What's your date of birth? And you know, you can Google Michael Saylor and you don't even have to click to get my date of birth. It serves up my data that would only be on like a billion documents. That's the security seal question right now. In their defense, there's a lot of other layers, right? Like my phone, my voice, and a lot of other questions they might ask me that I won't mention on this call for other reasons. But if there's a message here, the message is the world needs digital signatures. The world needs modern cryptography. The world needs multi signature authentication. The world needs multi factor authentication, where the factors are physical tokens and physical instruments. The world needs an open protocol. And the world needs something verifiable, maybe verifiably indestructible and immutable for the next hundred or thousands of years. And there's only one thing in the world that looks like that, and that's Bitcoin. And there is no second best thing.
- [153:53]
Robert Breedlove
Beautifully said. Just one last thought here. I want to be respectful of your time, but we're expanding the scope of the Bitcoin thesis from just a monetary property protocol to something more like an authentication certification protocol. And as you said earlier, the problem was getting the human out of the loop on that, right? That was kind of the single point of failure. So in many ways, what I hear you describing is something like an alternative to what government has provided us historically, because they've been the property protocol provider, the monetary protocol provider. They certify legal documents, they authenticate identity. And now you're saying there's this alternative system that can serve up a lot of those services that we traditionally needed,
- [154:36]
Michael Saylor
from the dematerialization of notary networks, the dematerialization of licensing networks, of titling networks, of passport networks, of all commercial verification networks, all of those things. Bitcoin becomes the foundation of cyberspace. It becomes the ultimate digital network. If you need a network that will defend the integrity of commerce on the Internet and serve as a worldwide truth machine that is powered by digital power, the most powerful cyber network in the world. The most powerful will be the most reliable, the most truthful, the most resilient, the most indestructible, the most immortal. And it's just getting more powerful. And if you want to build something, you know, with integrity in cyberspace, you're going to want to build on that foundation. Everything else is fragile and corruptible. And so I think the early bitcoiners, they grasp that as the foundation for sound money. But, you know, if you fix the money in the world, you didn't fix the world. As long as there's one person that can conscript 10 million people or launch an army of 10 million robots on someone else they disagree with, you still have problems in the world. So half of the problems in the world may be fixed with a sound financial foundation, but the other half of the problems in the world have to be fixed with, with a mechanism to deliver truth and integrity into the political sphere and the commercial sphere.
- [156:41]
Robert Breedlove
And bitcoin's addressing both?
- [156:43]
Michael Saylor
Yeah, Bitcoin is the solution to both.
- [156:45]
Robert Breedlove
That's incredible, Michael. I've kept you way too long.
- [156:51]
Michael Saylor
It's been a good talk.
- [156:52]
Robert Breedlove
It's been a great talk.
- [156:53]
Michael Saylor
Interesting.
- [156:54]
Robert Breedlove
Thank you so much for doing this. Do you want to let people know where they can find you on the Internet in case they need to look up your birthday for anything?
- [157:03]
Michael Saylor
Sure. Well, Google knows my birthday. Feel. Feel free to send me something in orange on my birthday if you like. Orange is the color. And if you want to follow me on Twitter Aylor S A Y L O R and if you're Interested in Bitcoin, hope.com H O P E Bitcoin is hope. Just remember that I post a lot of stuff on hope.com and if you're interested in free education, the Saylor Academy offers free education. We've offered it to millions of students and it's at saylor.orgs a y l o r dot o r g. It's all free worldwide. Lots of good bitcoin courses, lots of good computing courses. You can learn computer science or physics or whatever you like. Lots of. We've got some courses on monetary history. We've got courses by seifudine on Austrian economics. We even got courses on how to develop on Bitcoin or just how to develop with other computer languages. So those are the three most useful resources. And I guess I should thank everybody for sitting with the two of us this afternoon through a romp through energy and power and the future.
- [158:23]
Robert Breedlove
Always a fascinating journey with you. Thank you for everything that you do. Thanks, Mike.