← The "What is Money?" Show
The "What is Money?" Show
WiM003 - The Saylor Series | Episode 3 | Technology Themes through History – Harder, Smarter, Faster, Stronger
01:16:21
Michael Saylor joins me to discuss anthropology, energy, and technology from first principles as we build the intellectual foundation necessary to truly grasp the historic significance of Bitcoin.
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- [00:03]
Michael Saylor
Technologies that are dominating today, they're dominating because they're able to deliver force faster, harder, stronger, smarter. So if we ask the question, what is money? Money is the highest form of energy that human beings can chann. Bitcoin is channeling human ingenuity into making it better. And every commodity is channeling human energy into making it worse. The lowbrow or the historic colloquial term is hodl, right? Hold on for dear life or just hodl or save, whatever. And the highbrow term would be adopt as a Treasury reserve asset.
- [01:06]
Robert Breedlove
Hey guys. So as you learned by watching the what is Money Show, Bitcoin is the single most important asset you can own in the world today. And so this begs the question, which I'm often asked, how does one build their bitcoin position? And the strategy really is simple. I suggest first you decide on an initial portfolio percentage allocation and a target portfolio percentage allocation. Go ahead and establish the initial position with a one time buy and then start dollar cost averaging towards your target portfolio percentage. And you can also complement this by buying bitcoin price dips to further increase that position and reduce your cost basis. And finally I suggest to everyone to take custody of their Bitcoin to move all of their Bitcoin into self sovereign custody. Because again, Bitcoin left on an exchange is not bitcoin, it's Bitcoin iou. And for those of you living in the US there's no better choice than Swan Bitcoin to do all of the above. So Swan lets you set up automatic recurring buys for Bitcoin, also lets you facilitate one time buys for buying price dips. And finally they let you do set up automatic recurring withdrawals into cold storage, which is a really big deal. And all of this they provide at the lowest fees in the business, approximately 0.99% per year for weekly buys of $50 or more, which is about 60, I'm sorry, 70 to 80% less than Coinbase by comparison. And the best part, Swann is a bitcoin focused education first company. They publish great content on their Swan Signal live podcast. They publish a lot of content in their newsletter and website and their team is just the absolute best dream team of Bitcoin, I would say. Check out their roster. It's growing every day, but it's a super impressive group of individuals. And so with that I would highly recommend you check out swan bitcoin.com breedlove. You get $10 in free Bitcoin for signing up and it lets you stack sats with myself and the rest of the Swan team as we continue the fight to restore freedom, truth and virtue in the world through Bitcoin. Alright, thanks. Hey, guys, welcome back to episode three of the what Is Money? Show here in the Sailor series. So we've covered with Michael Saylor so far, the rise of man through the Stone Stone Ages, through the Iron Ages. We went into the Dark Ages. We saw how mankind can have a misstep that causes him to regress a thousand years and up into the steel and industrial Age. And today we're going to go even further into the future. And the arc of all this is we're seeing how mankind does take these evolutionary steps forward in terms of both his morality and the tools that he conducts his life with. And we see, as Michael says, that natural selection through this process, helps mankind become smarter, faster, stronger. And we're coming to see that actually the defensive attributes of technology tend to be more important than offensive attributes over time. This is just leading us deeper into and closer to Bitcoin, which, as we'll talk about later, is the ultimate monetary defensive technology. In that sense, humans, the reason we're able to progress in this way, the reason we're different than any other animal, is because we are actually capable of harnessing and channeling energy across these field lines of our intellect, so we can form these abstract concepts and ideas and then actually energize them by harnessing energy in the natural world. And that's why, in a geopolitical sense, naval power has been the force that sort of governs the world. He who dominates the sea, dominates the world. And in that context, we're looking now as we progress into the digital age, as digital space being this new high seas, if you will. And so in this episode, we're going to get into a lot of that. And then we'll also finish off by talking about an area that Mr. Saylor is an expert in, which is the history of scientific revolutions. And we're going to talk about in particular the technology diffusion S curve, which is when a new idea starts to permeate a society. It starts out relatively slowly before it hits this inflection point, and becomes rapidly adopted at an accelerating pace before finally hitting a point of full market penetration. It starts to level out. And this will be important to comprehend in terms of not only all the innovations we've seen recently, especially the Internet, but also the path that we would expect Bitcoin to continue to follow. And then finally, we'll touch on war, you know, and how it is an Accelerant innovation and how it can accelerate us down that path of the technology s curve and leaves us eventually with technologies that would be perceived as miracles to primitive man. As Michael will say later, that sufficiently advanced technology is indistinguishable from magic. So hope you're pumped. We're still building this big foundation, getting into modernity, and this is going to be one of the final episodes that gets us there. So with that, let's get into episode three.
- [06:57]
Michael Saylor
So I remember the name of the Jewish bankers. It's the Warburgs. If you want a great vignette on why it's important to have capital that's mobile, study or just read any history of the Warburgs and what their family went through and what all the Jewish families went through in the 30s in Germany and what the bankers had to do to move capital out of the country. And you get a very poignant punctuated appreciation for the need of having secure capital that you control. So there are some, I think, general themes of technology throughout history. If you look across all of these, the general theme is human beings marching toward being harder, smarter, faster, and stronger. And everyone that succeeded, every empire, every individual, every company, they all found a way to be harder, smarter, faster, stronger. George R.R. martin, he wrote a bunch of books. He's known for Game of Thrones, but he also wrote a bunch of books on superheroes, or at least he called them Wild Cards. And it's about a bunch of superhero or super people that have genetic mutations and they get it from some virus. And it's a universe full of normal people and then jokers, people that have been hideously deformed by this virus, and then aces, people that have been given superpower. And he takes a very modern view of it, and he says, he starts to analyze superpowers. Guy figures out he can shoot laser beams out of his hands, or another woman can be invisible, or some dude can be a thin man. And he goes, there are a lot of these superheroes, but after a while, we quickly realized that the most powerful ones were the ones with defensive superpowers. Defensive attributes overcome all the offensive attributes in a battle. So, for example, the guy that's indestructible with no other superpower, can pick up a machine gun and kill everybody, and you can shoot him a million times, but he's indestructible. Whereas the guy with laser beams jumping out of his hands, he's just as mortal as you and me. And you hit him with one rock, he goes down, and he's Dead. So it's the impossible to kill ones that end up winning all the battles between superheroes and the smackdown. And the ones with the sexy things are sexy, really cool superpowers. They're useless because. Because the guy that's got none of those, he just gets a bazooka and he just fire. I was like, I'm indestructible, so I'm gonna set off an atomic bomb in the city and kill everybody but myself. Because I'm indestructible. Right. It's pretty easy to win the war if you're indestructible and it causes you to come to conclusion about, you know, history and who wins in history. Unbreakable is better. Anti Fragile is best. So the superhero that's good is the one that you hit him and you can't hurt him. But the superheroes that are most frightening are the ones where you shoot them with a laser beam. And now they can shoot your laser beams back at you and you mind read them and they absorb your mind reading and they can mind read you and you fly the speed of sound. And now they can fly the speed of sound. It's like that character, what is it, an X?
- [11:09]
Cynthia Lummis
I think it's Rogue and X Men.
- [11:12]
Michael Saylor
Yeah. Or Sylar and Heroes or maybe Rogue. It's the one that absorbs your power and plays it back at you. Pretty soon it's like, I'm indestructible and I have every other power and you just better get out of the way.
- [11:27]
Robert Breedlove
Yeah.
- [11:28]
Michael Saylor
And that's Antifragile, right?
- [11:30]
Cynthia Lummis
Yeah, yeah.
- [11:31]
Michael Saylor
I'm looking for the fight like I'm looking for people because I'm just going to absorb their thing. So you see that theme through history, the really successful governments, empires, organizations, they kind of. They're continually fighting, they're continually absorbing. The Romans absorbed the Carthaginians Navy in 90 days. But it's easier said than done, right? It wasn't like some Roman politician that said, these are Carthaginian ships, they're inferior to us. We will invent our own ships. It's like, not too proud to copy, not too proud to absorb it. This kind of principle can explain the success of the United States and the wars of the last century or more. It's like, why did we win World War I? World War II? Why is America, America? Well, there's two narratives or there's a millionaires. Here's one. One is because we're more patriotic and we're righteous and we're better. The other one is The Europeans were fighting in Europe and we. We're fighting in Europe, so we were fighting. They were soft. When you're dropping bombs in the middle of suburban Germany, right, You're attacking the soft underbelly of the citizens in Germany or the soft underbelly of the citizens in France, or, you know, the Battle of Britain, right? This is the citizen population being ravaged by a war. And that destroyed their economies, right? Destroyed their cultures. Same happened in Russia, same happened in Italy. Happened. And it's happened in China. The Chinese fought a war in China soil. The Japanese fought, you know, sort of a portion of a war, right, on their own soil with atomic warheads. On the other hand, the US hadn't fought a war on US soil since 1865. Okay, so who's harder, right? Back to this missile idea, right? If you can throw a missile 3,000 miles and your enemy can throw a missile back 300 miles at you, it's pretty simple. I have a rifle, you have a pistol. I stand back a thousand feet. Your pistol is good for 200ft. I take a hundred shots, eventually one hits, you're a perfect shot. Doesn't matter. Longer arms. So this idea, right, are you unbreakable or what is. Back to terrain. What is the terrain? The geography determines a lot of things. If you take a modern ship, if you. If you take. Take a. Take a modern yacht built in the year 2020 with every piece of modern equipment on it now, try to sail it to Afghanistan, you probably won't get there. Something will probably break. Try to sail it. Try to sail it to Rome without stopping in a port along the way. You probably won't make it, Robert. Nobody does. Like, they all stop and hide somewhere. It's really hard to move stuff over the ocean thousands of miles. It's really hard. Now, why don't you try to sail an armada of a thousand ships 3,000 miles in order to invade America, right? Germans couldn't sail 13 miles, you know, across the Straits of Dover, right? You know, the Japanese couldn't cross from Japan to China during the Kamikaze, you know, and that's not very far. It's really hard. It's only one guy that ever pulled it off, William the Conqueror in 1066. Nobody else managed to cross 13 miles. That's your hydraulic moat. It's really hard. It explains the culture of the uk. It explains the culture of the United States. It explains a lot of other cultures. It explains the balance of power. I think if you just say, here's someone that you couldn't Kill? Who could kill you? I had the option to fight on your turf, but you didn't ever have the option to fight on my turf. Now that in and of its way, is the reason that security is so incredibly important to the bitcoin network. What is important is that it not break, not that it doesn't. If I'm indestructible, I don't have to be the fastest, the shiniest, the whatever, anything. I just have to be indestructible. If I'm indestructible, what? The indestructible man goes and buys a machine gun and he's the most powerful superhero in the room.
- [17:05]
Cynthia Lummis
Right, right, right.
- [17:06]
Michael Saylor
The indestructible blockchain goes and buys a digital app or another crypto network, you know, off chain app or a NEXL Lightning or a Binance or Coinbase or square cash or whatever, and it's just fine. It's the most powerful network in the room because the thing that made it the winner was its indestructibility, its immortality. Not the fact that it could shoot laser beams from its fingers, or it was beautiful, or it could fly with pretty wings, or it was invisible. All of these other things, privacy, transaction, all these other things, they're features and they're interesting, but they pale compared to the characteristic of immortality.
- [18:02]
Cynthia Lummis
Right.
- [18:04]
Michael Saylor
Being indestructible in the here and now, pretty useful superhero power. Being indestructible and never aging. Double useful superpower. And as for the rest, if you're an open software protocol, someone's going to code an extension to your protocol to give you every other cool power anybody wants. I can find a way to construct every other superpower by hook or crook, and that makes me antifragile. And now I'm like the frightening, impossible to stop superhero.
- [18:41]
Cynthia Lummis
That's great. Analogy calls a mind that old saying that if you wait long enough by the river, you can see the bodies of your enemies float by. It's like because bitcoin is unchangeable and it's just a rock solid, absolute scarce quantity of 21 million and that is the primary property and money that matters. I love the analogy you gave too of when someone asks you about the EPS of your company, they only care about the fully diluted cap table. Who gives a shit if you've got 18 outstanding whatever, whatever, just tell me the fully diluted number. And that's what bitcoin is. It's like, you know, it doesn't matter if there's only 3 million have been lost or 18 million and a half mined so far and three and a half to go. It's all that really matters is that fully diluted figure of 21 million and that the scarcity cannot be compromised. And then it has enough anti fragility on top of that to absorb other market proven features.
- [19:41]
Robert Breedlove
That's all you want in money, right?
- [19:44]
Michael Saylor
Yeah. The mining rate, it's like a secondary particular effect that happens in the first few years of its evolution but. But exponentially becomes irrelevant. It's a second order driver. The first order drivers are the hardness infinitely hard and then adoption and utility and inflation in the fiat reference frame that it's operating in. A couple more points that are worth making on technology and human history. Humans triumph throughout history by channeling energy. All of these things come down to how did I channel energy. So navy power, right? The British Navy ruled the sea. The Phoenicians, the Venetians, the Greeks, the Romans, the Americans today control the seas via their aircraft carriers and by naval power. And naval power is just bringing overwhelming force to bear. Faster, stronger force. That's faster, that's harder than any other force anywhere on earth. I park in it aircraft carrier somewhere, you know, and death reigns from above. And so we've seen all empires are driven by a naval power. In time we invented airplanes, you know, and then air power became the thing. Right? And air power is all again about death from above. Right. The most powerful navy idea is airplanes flying off an aircraft carrier. First it was the battleship. I show up in your harbor and I blast everything. Then it became air power. And if I could get above you. And we saw this conclusion. It is impossible for a modern nation state to function if it does not control its own airspace. You saw that in the first Gulf War, the second Gulf War, the United States, especially the United States Air Force could pretty much bomb any country back to the Stone Age in a matter of a week. Once they lost their air supremacy. Once you lose control of your airspace, there's no hope for you. You can take out every port, every power reactor, every generator, every serious building. They're all gone. Death from above. There's nothing you can do. You're at the bottom of the gravity well.
- [22:42]
Robert Breedlove
Right?
- [22:42]
Michael Saylor
And with technology today, someone can sit out six miles up. You can't shoot down a plane moving high speed six miles up. You have to fight the gravity wall to get there. They're just working opposite. It's an energy thing, right. So I'm moving from a lower energy state. I'm on the ground moving armies around to a higher energy state. I have a boat, I'm moving heavy munitions around to a higher energy state. I'm above you, dropping munitions on you. Then after that became nuclear power, right? You harness nuclear power. And that ended World War II pretty definitively in a hurry. Then we go to space satellite power, and you go up in the gravity well some more. And that manifests itself primarily with gps, right? If you look at the impact of having your global positioning satellites, that's what allows me to drop a laser guided bomb or a drone anywhere on Earth and guide it day or night to anything. And that's a massive source of American supremacy, controlling those GPS satellites. And you lose them. Big problem too, right? One of my favorite books I noted is the Moon is a Harsh Mistress. And in it, Robert Heinlein, he writes about a bunch of loonies, basically libertarians, that live on the moon that believe in making their own way. And their motto is, there ain't no such thing as a free lunch, abbreviated to tahnselfel. And he introduced that idea. And they take it to the extreme, which is like, your air is not even free on the moon. You pay for everything. You pay for water, you pay for food, you pay for air. Everybody pulls their own weight. No one waits for a bailout. There's no bailout coming from anybody, you know, and they're not big fans of authority, not like being told what to do. And the plot of the book kind of winds on that. They're being oppressed by earthlings who are making them work as slaves. And they're taking 90% of their economic, economic productivity and shipping back basically their future to Earth. And they're gradually suffocating and starving them to death. And it's just onerous taxation without representation, but onerous. So the loonies decide to fight back with the help of an AI computer. The first AI computer, I can't remember the name of the computer is Mike.
- [25:20]
Cynthia Lummis
By the way, right?
- [25:23]
Michael Saylor
And their technique is they realize they got a catapult and they start tossing rocks down the gravity well. And they just take a big rock, put it in their catapult, and it doesn't take that much force to, you know, toss it off the moon because they're low G, right? They're tossing the rock out of a 1 8G or whatever and it hits the Earth, goes into a trajectory, and of course it starts picking up speed and by the time it lands, it's like an atomic warhead. They just start tossing them at random places until the Federation Empire that's oppressing them decides that maybe it's had enough.
- [26:08]
Cynthia Lummis
Wow.
- [26:10]
Michael Saylor
And of course, the lesson is, right, it's humans channeling energy, but they're channeling gravitational energy and a lot of it. And there's a lot more energy than the stuff that we have all through human history since a million years ago to today. It's really the story of intelligent people looking around for where is the energy coming from and how do I channel it in a network in order to achieve something harder, smarter, faster, stronger.
- [26:43]
Cynthia Lummis
That's such an interesting point. It's back to the terrain of the battle, right? They're holding the ultimate high ground, being on the moon. And another thing this calls to mind is, I don't know if you've read the book the Sovereign Individual.
- [26:58]
Michael Saylor
I don't know, I read it all. I've heard of it.
- [27:01]
Cynthia Lummis
So they. Yeah, written in the late 90s, and it's been relatively prescient in a number of domains. They predicted the rise of what they called narrow casting, as opposed to broadcasting, which we call social media today. They predicted the rise of anonymous digital cash being disruptive to the nation state, which we would think Bitcoin is. And they also predicted the digitization of securities, so other property rights going away from a government function to be provided via software. And one of the things that was interesting there is they compared digital space to the high seas, basically saying the high sea. The reason whoever controls the high seas controls the world is because that's the most frictionless environment. Right. You can move things with the least energy on the seas once you can conquer them. So whoever controls that domain sort of runs the world. But also because it's frictionless, it's very difficult to project dominion over the high seas.
- [28:04]
Robert Breedlove
Right.
- [28:05]
Cynthia Lummis
So we have. We don't have law, really. We have international waters kind of everywhere in the world. And they compared that and analogized it to digital space, where it's this frictionless space that whoever is dominant there will be dominant in the 21st century. But it will also be very difficult to project dominion. So you won't have. It'll be unregulated, largely. So they're using that to kind of make the case for digital cash and the fact that people would be able to escape oppressive regimes. Once you get your capital in the digital space, you're sort of no longer under the thumb of the government or the local oppressive monopoly. So I just think it's interesting how it always has come down to the terrain. Right.
- [28:49]
Michael Saylor
Yeah. And I agree with you on that. And I agree that the digital domain has weakened all the geographic terrain constraints. It's pretty clear that information is flowing across borders. And even when people try to stop it, they're defeated by VPNs and anonymous browsing and, you know, other techniques. And we see. We see places where information is illegal, it's leaking where capital is. Was illegal to move capital, it's leaking where it's illegal to move information is leaking where one person's. One person's sedition is another person's news or truth, depending upon who controls the government. And that's something I wrote about in my book the Mobile Wave, you might be interested to note, And I think 1998, we created a product called Narrow Caster.
- [30:01]
Cynthia Lummis
Oh, really? I didn't know that.
- [30:03]
Michael Saylor
We made a lot of money off it. And it did just that. It actually sent out personalized information. So I was always a big fan of that. So I think it's interesting the way that's evolving. Probably the key theme there is technology is empowering the individual and giving them more sovereignty.
- [30:25]
Cynthia Lummis
That's right.
- [30:25]
Michael Saylor
And it's harder and harder in those ways for the government to control what information you get and then how you manage your assets. It's a very. It's a very twisty, complicated subject because the government's getting more power over you in some areas as they get less power over you in other areas, and it's spinning fast.
- [30:51]
Cynthia Lummis
And you could argue that that trajectory is taking us closer to a reflection of natural law.
- [30:58]
Robert Breedlove
Right.
- [30:59]
Cynthia Lummis
Because natural law would say that sovereignty in here is within the individual. Our rights are not given to us from government. They actually inherit naturally within us. So it seems to me that. And it's complicated because we've never seen a world like that. Right. Again, we've always needed government to sort of keep the peace and enforce contract law and satisfy property rights. But now in the digital age, at least, there's the possibility of some of those functions kind of falling to software.
- [31:32]
Michael Saylor
As more and more things dematerialize the software and they move into cyberspace, it seems like it gets harder for any one government to assert control over the things that take place virtually. So there's a lot of virtual empowerment going on, but there's a lot of other things going on too.
- [31:58]
Cynthia Lummis
Yeah.
- [31:59]
Robert Breedlove
Yeah.
- [32:00]
Michael Saylor
You know, I guess I would end. I'd end this section with just a couple of dynamics that I think I've seen over and over again. The technology. You know, when I was at mit, I studied the history of science and I read about the structure of scientific revolutions. And I just, I studied all different types of technology, diffusions, and there are certain things that pop out. A lot of times you'll see an S curve where it'll start slow and it'll accelerate until it reaches diminishing returns. And then all of a sudden, it's not an interesting technology where you see that a lot. But one of the lessons of history is it's very difficult to figure out when the curve starts. And it's hard to stop it once it starts, but it's a lot easier to invest in it and to forecast it once it starts. But before it starts, people will say, well, next year this will commercialize. Or in two years, or in five years, 10 years, you could be off by two years. You could be off by 100 years. You remember Google Glass, how big that was going to be and how that was a lead balloon? And how many years is it after Google Glass? And it's still not going to happen next year either. Technology fails until it succeeds. That's another trend, another theme. So you see over and over again, people pick a technology and say, it'll never work. It'll never work, it'll never work. In the year 1902, before the Wright brothers flew that next year, if you'd asked the most learned people on Earth, they would have given you 100 reasons why airplanes will never fly, and they would give you 100 examples of how they didn't fly, and they would talk you to death. And the thing about these paradigm shifts is oftentimes it's not the learned individuals that make the breakthrough. Aircraft weren't designed by professors of aeronautics and astronautics and engineering and fluid dynamics and mathematicians. They all failed miserably, right? The Wright brothers were bicycle mechanics. They had a bicycle shop. Tinkerers. They're the ones that ushered in the age. And they did it against all conventional wisdom. And on the other hand, Leonardo da Vinci tried to develop his own flying contraption. Every brilliant person for hundreds of years tried it failed. All failed. And then some dudes in Dayton, Ohio, that have a bicycle shop succeeded. It happens like that. You know the story of John Harrison inventing, discovering a method to determine longitude on the ocean, which is. It's articulated in the book Longitude. It's an amazing story. Everybody knew how to find latitude. It was easy. You just sight against the North Star. But longitude's very hard because all the earth's spinning all the time and required massively complicated calculations. They gave it to the Newtonian professors at Cambridge and Oxford, the smartest mathematicians in the world, the smartest astronomers in the world. No one could figure it out. Finally, they posted a 10,000 pound prize and John Harrison, who was not a mathematician, his clock maker figured it out. And the way he figured it out is he made a clock that was accurate and they put one clock on this ship and they set it to the Greenwich Observatory, the Royal Observatory, which is in Greenwich, England, hence the term Greenwich Mean Time. Greenwich Mean Time comes because you sail down the Thames past the Royal Observatory in Greenwich, you set your clock on that and then you have another clock. And then every day at noon, if you're in the Caribbean, you look up and then you set that clock and then you just subtract the time on the one from the time from the other multiplied by 15 degrees and you've got your lawn launch tube. It was tinkerer's solution to a problem. Everybody else wanted to solve it with star charts and tables and complex math. But of course, ships captains in the middle of the Caribbean or in a storm, they can't do complex math. They're just stay alive. So you see lots of examples in history where people try to do something and they either accidentally discover it, like penicillin, or a tinkerer discovers it and not the educated. And then all the professors crap all over it and they all swear it'll never work. And the tendency is either to reject it, people don't like change, or it doesn't get embraced until everybody dies or until there's a war. And war has a way of opening your mind because when someone drops a bomb on your head and you're burning or screaming, then the pain causes you to take a more open minded attitude. So a lot of stuff happened after World War II and happens in various wars and you can trace it throughout human history that drives innovation faster, generational change will drive it faster. People keep trying it and then just because it's failed a thousand times doesn't mean it won't succeed. But when it does succeed, then it's probably unstoppable for a while. And hence, you know, you just get to this phrase which is, which is kind of punctuation for modern technology. Arthur C. Clarke writes, any sufficiently advanced technology is indistinguishable from magic. And it was a great quote. It's a quote that I put on the back of my prospectus when my company came public in 98. I believed it then. We have thousands and thousands of examples of magic things in our lives today. Literally magic things that are just technical things. It's always been that way. And to a primitive man, a rifle looks magical or an airplane. And now we're starting to deal with some software technologies and digital technologies that don't just look magical to a primitive man, they're gonna look magical to a modern man.
- [39:09]
Cynthia Lummis
Right.
- [39:10]
Michael Saylor
Because they just really are getting pretty magical.
- [39:19]
Robert Breedlove
Alright, guys, so that was episode three of the Sailor series. Hope you enjoyed that. We continue our progress towards modernity and laying this really solid intellectual foundation through the lens of technology, anthropology, civilizational development, military, all of these aspects that lead us to the importance of Bitcoin as money. And as I said in the intro, I like to think of this whole arc as an evolutionary process. Right. I actually consider that evolution is the inorganic form of innovation, or you could say that innovation is the organic form of evolution. So it's all. They're both about colliding ideas together and with reality to test which ideas, strategies and approaches work best. Right. Which offer the highest utility to the organism or human being that set an intention and an aim. And it's through this iterative process, as Saigler says, it makes us harder, faster and stronger. And I think what's starting to shape up here, as I think you'll see, is that the defensive attributes tend to be even more important than offensive attributes. So if you have an ability to defend yourself, say behind a wall of water, like here in the United States, we're defended on both sides by large walls of water. In the Atlantic and the Pacific Ocean we have this natural defensive advantage. So it's really difficult to invade us without having long ranging weapons when we dominate the naval territory already. Right. Like we are the dominant naval force because of our access to the oceans and our protection from hostile powers. And I liked the analogy that Saylor gave when he talked about the superheroes, the George R.R. martin superheroes that I think they were called the Aces, where the. It wasn't the superhero with the most. The best offensive capability. Right. The laser beams out of the eyes, whatever that became dominant, it was actually the one that was indestructible because you could. He could essentially subject himself to any situation and survive. So, which reminded me of that saying that which I think is from Sun Tzu might be Lao Tzu. If you wait long enough by the river, you live to see the bodies of your enemies float by. So it's this point that if you are optimized for survivability, that tends to make you the dominant competitor over time. Right. Time is on your side, whereas time would be arrayed against all of your competitors. And as time being the ultimate judge of all things, it really, it's probably the defining feature or the defining competitive competency you could have is just really high resiliency or robustness or ideally even anti fragility where you're actually improving from the hostility you face in the world and advancing through adversity. So I thought that was interesting and clearly plays really well into the bitcoin narrative. And you know, we were looking at again how the terrain had shaped battles throughout history and why America fighting in Europe in say World War II was much different than war taking place on American soil. As in we were fighting and attacking the soft underbelly as sailor called it. But we weren't exposed to that same level of attack ourselves, you know, with a small exception of Pearl Harbor. And that's why the nation that controls the sea controls the world. Because that is the terrain that it's the hardest to project power and dominion across. So whoever is dominant there just runs things. You can move energy around the world much more quickly and bring force to bear much more quickly anywhere in the world world. And so when you look at bitcoin through that lens, it's like it's already the longest and most rigid chain. So it has already become dominant. If you look at digital space and compare it to the ocean, Bitcoin has dominated digital space for monetary networks, right? It's impossible to compete with it as money because it's already perfected all the properties that make money money. And it's done so in this terrain, this digital terrain that everyone, all other competitors would be competing for. Which is it's very low friction, right? Very low friction domain. So you can move things at the speed of light in the digital space and you can defend things with cryptography at very low cost, right? You can basically erect these impenetrable walls of encrypted energy at relatively low cost. So bitcoin is just has optimized for that. It gives us a way to store the vital life energy that is money behind a wall that basically cannot be breached. And I like that military analogy pointing to it as a very fundamental breakthrough. And the other thing there, we didn't talk about this in the episode, but that I think about is it sort of balances this super, this anti fragility or robustness with also a degree of adaptivity. So even though bitcoin is the longest chain, the most rigid, has these unbendable rules that favor its holders, it also still maintains this ability to adopt new features that are beneficial to it. And one of my favorite authors and good friend Brandon Quiddom, he's written about this, this is called in the mycelial space, it's called horizontal gene transfer. So in a mycelium, which is the underground informational network of a fungus like a mushroom, when it encounters a threat in the environment, it can actually code new enzymes and proteins and defense microbes against that threat at one particular spot, right. These myceliumats can be tens of hundreds of square miles size. But if it encounters a threat and creates a formula to neutralize it, and even any one spot of that mycelial mat, it can incorporate those lessons into the entire organism. So it's actually learning from interaction with its competitors at the edges, but then incorporating all of its lessons into the entire organism, which is something that Bitcoin's capable doing. So that's kind of a tangent, but pretty interesting stuff in regards to Bitcoin. And then as we said earlier, what distinguishes us as human is that we have this unique ability. I think, as Celia described it earlier, we're the only animal that plays with fire, right? So we have the special ability to mold our behavior in a way that allows us to harness energy and then we can channel it. You know, we can create these abstractions of thought and speech in the ideological space, and then we can use that energy to energize these formulas that we've created. And that's what makes us human, Right? That's what we do. When you look at anything, you look at a table or a house or a computer, all of these things began as ideas that we then funneled energy into. We've harnessed energy in the natural world, whether it's hydrocarbons or fire, which is kind of the stone age energy network, solar radiation, whatever it may be. And we channel that energy into the manifestation of these ideas, and that's what helps us become more productive and, and enjoy higher quality of life over time. So such a radical new way to look at humanity and really makes you appreciate being human. And I think too, again, we're talking about the naval power and how that's shaped us throughout history. The naval power was the, the predominant aspect of what determined which nation is in geopolitical control. But what I think, and I got this from a book I read called the next 100 years, that predicted in the 21st century it would actually no longer be control of the seas that mattered so much, but it would come to be control of space. And you see that somewhat in US military dominance today in that we control the seas, actually, with our aircraft carriers, which essentially means we can control the airspace of nations. So, again, back to fighting the battle on the terrain that favors you most. By going into the sky, right, we're able to get a very frictionless space of air, but we're also able to take advantage of the gravity well that is the planet, so we can drop bombs that, you know, at a very low cost for a plane to release a bomb is essentially no cost once it's up there. But it brings this gigantic force to bear on its terrestrial targets. And that's why, you know, it's. In that sense, we can consider air power today being this extension of naval power, as it has the highest optionality, right? It has the greatest, most degrees of freedom, both offensively and defensively. It's really hard to shoot down one of these aircrafts moving at supersonic speed, which gives it a lot of defensive capability. But it also can bring a lot of force to bear on you really quickly by dropping bombs or shooting missiles. And all of this is facilitated by control of that frictional space in the sea, which is the aircraft carrier, which itself is really hard to attack because it's thousands of miles out to sea, right? It's just flying these planes in. So that's why the aircraft carrier today is the dominant military technology. But I think as we get further into the 21st century that it's going. There's. If you go even another layer higher, say into low Earth orbit, you can get into a territory that's even more offense, has even more offensive and defensive optionality, and is even, you know, it's just way harder to attack. It's literally in orbit. So. And the book I referred to, the next 100 years, I think they were called ion cannons. So the thought was whichever country came to get these ion cannons into orbit first would have a power that's even superordinate to what we consider aircraft carriers to be today. So the space, if you want to call it space, it's kind of this Earth orbit is the next frontier for military dominance. I think that'll be really interesting to see shake out as we look at the development of history through this lens and going forward. And Saylor, you know, he brought up that book the Moon is a Harsh Mistress. That really brought this point home for me because there were these rebels on the Moon, right? And they were tired of being tyrannized by Earthlings. So they basically took advantage of their ultimate high ground and just started throwing rocks at Earth, right? And because it was at the bottom of that gravity well, the earthlings were forced to capitulate eventually and give in to their demand. So it just keeps going back to this principle of holding high ground or holding the best terrain in any confrontation. And like the moon, you know, digital space, it is the ultimate high ground. It enables us even as an individual today with Bitcoin, you can safeguard billions of dollars of capital, which is again life force. By either memorizing a 12 word seed phrase, you can move it around the world, speed of light permissionlessly at virtually zero cost. You know, talking about moving a billion dollars in Bitcoin, you can probably do from anywhere from 5 to $20. You try to move that same billion dollars across space in a fiat currency system, you're going to spend a lot of time navigating regulatory, the regulations of both the departing the regime you're sending from and the regime you're sending to. You're going to pay a lot of bank fees, you're going to be answering a lot of questions, you're going to be probably paying a lot of taxes as well. Again, the number one export of empires being security. They sort of, they gate check all these movements of value across their domain. And so these rights and abilities that were reserved for the nation state in eras past where they could move, say, goods and capital, if they're dominant militarily, they can do so pretty much without permission. They do what they want. That same capability is now being delivered to the individual via software. So it's this radical new worldview that's shaking out where because we don't need an empire to honor at least the private property rights and money with Bitcoin, like as far as we can see today, maybe other property rights will fall as well in time, but that is a big slice out of the pie, right? All of a sudden we don't need the nation state to honor property rights and money. We can just. That entire function of trust and security has fallen to distributed software. And it's hard to even fathom how big of a game changer that really is. And when I think about that a little more, it's just that these digital high Cs, they're weakening the geographic constraints to being all of a sudden you're not as beholden to the local monopolies and systems because you can now participate in this global network that has, you know, many more degrees of freedom and a much lower need for permission. You don't need to check as many boxes and satisfy as many bureaucrats interact in the digital domain. It really is this much more of a pure free market environment where kind of the best ideas when if you're able to serve your customer by whatever means necessary, you can earn a living. My mind goes back to a story of girls in the Middle east that are actually prohibited from holding bank accounts. It's illegal for women to have bank accounts in certain countries. So this contributes to their disenfranchisement because they can't even earn a living in the home, right? So the women not only are perceived as second class citizens, but in many ways are second class citizens because they can't hold a bank account, they can't control contribute to the livelihood of the home. So they're just forced to stay home and work and do as they're told while the men go out and make a living. But with Bitcoin, some of the women at least were able to find jobs online. Whether it's copy editing or anything you can do informational, any job you can conduct online, which is more and more jobs as we become more advanced. And they were able to be paid and remunerated in bitcoin. So all of a sudden they just, they leapfrogged this entire restrictive system that would really prevent them from even increasing their own condition in life. They cannot improve their own conditions because they're trapped in this cage. But all of a sudden Bitcoin gave them this exit option to just go into the world and earn a living based on their own skills. So that's just one example of how the geographic constraints are weakened. And I think we'll see many more of those come out. Another thing that comes to mind here is I've analogized Amazon in the past. Amazon came to be a dominant monopoly in the world because they essentially out competed for digital distribution networks, which are a naturally scarce service for the world. You only need. It has a huge network effect, right? So there's a big advantage to big economies of scale and a big advantage to being bigger in that space. And Amazon was able to bootstrap itself in a way by leveraging two things by two benefits of being digital and not being a brick and mortar per se. Firstly, they were able to offer low prices to their customer because they could, they had lower cost of fulfillment. Right? They didn't have brick and mortar stores for a while. They were skirting sales tax so they would, you know, distribute from a state that had low to no sales tax. And they were selling into other states without being deemed for sales tax. So they're taking advantage of this digital space and Then two, because in a bookstore you can only fit so many titles, right? Maybe you can fit, I don't know, a quarter million books in a store. But the advantage to being online in an online store is that you have literally limitless selection. Anything that's available on earth you can sell on your store. So I think that's one of the reasons Bezos zeroed in on books Amazon started out as an online bookstore is because that is product where that advantage is super favorable, right. There are millions of books written, right. The selection is just endless. They're not. They're a totally non fungible thing. Every book is different. And I think Bezos started there and used that as his pressure point because he could leverage the, you know, not only the sales taxon like Brick and Mortar mentioned earlier, but he also limitless. He leveraged the limitless selection capability of an Internet based bookstore to just really dethrone a lot of the competition. So he could offer it at lower prices and he could offer it at a wider selection. So super interesting there. And then he was smart enough to leverage the advantages of a digital business model in a really pressure point focused way. And when I look at tech and Bitcoin through that lens, I see. And Saylor alluded to this as well. The overall trend is that distributed software and encryption is very empowering to the individual. So these things that we used to need large entities to satisfy because there are a lot of fixed costs that you had to incur to deliver these functions, right? Whether it was a bookstore or whether it was a bank custody in your gold, all of a sudden we can do these things via software, right? At very low fixed cost. It can be replicated at near zero variable cost. So once it's up and running, you can basically do it anywhere. Net of the actual distribution fee, the physical distribution fees, assuming there are some, right. If it's software, there's basically no distribution fee either. That's what the Apple App Store is. And so it's interesting to see how that I would just want. I'm thinking about this a lot. It's like, okay, we needed empires and large entities in the past to provide security, to create this intersubjective fabric of trust in the world so we can interoperate. But now a lot of these human based politicize or politicizable institutions, institutions are now going into trust minimized software where it's like, here are the rules, you can't bend them or break them. And Bitcoin is just the greatest expression of that, right. Amazon and things like that still have a political dimension because they're traditional organizations. They're essentially owned and controlled. But something like Bitcoin is just a pure instance of that. It's just pure, unbendable, unbreakable rules that help you channel energy across time and space and satisfy wants more efficiently. So I think too that and this gets a bit into the sovereign individual thesis and we didn't touch on it a lot in the interview, but as people wake up to this truth, right, that we have this ultimate savings technology in cyberspace or this non state central bank, whatever you want to call it, it's a medium for permissionlessly storing your wealth in a way that no one can compromise and you don't need any government to even acknowledge it or honor it. The property rights you have in bitcoin, it's just we've converted property rights to information, right? Owning is now knowing. And when you couple that with, with the increasing incentives to exit inflationary currency, and again the book, the sovereign individual goes really deep into this. But the numbers are roughly for every $10,000 you can reduce your annual tax liability. Assuming you can compound that capital at an average return rate of 10%, you're talking about tens of millions of dollars over the average earners lifetime, right? This becomes a 10, becomes at least a multimillion dollar in many cases tens of millions of dollars. Decision of holding your money in an inflationary fiat versus holding your money in a non inflationary bitcoin. So I think as the market wakes up to this and starts to do the calculus, I think you're just going to see this overwhelming demand for security from distributed tech, especially for your money, as in Bitcoin. And it's just going to pull demand out of these anachronistic security models like the nation state and banks and all these other politicized institutions. And you know, wow, that's just a lot to think about. It's hard to even fathom where that goes. Sovereign individual, the next, you know, they predicted social media, they predicted Bitcoin. Another thing they predicted was the actual digitization of security, so other property rights being eaten by software. And my general thought there is that the government's not going to let go of any of this willingly, right? It's not like the government would have ever acknowledged and accepted Bitcoin. Bitcoin just grew up in the wild somewhat flying under the radar long enough to establish itself as something that's really difficult to take down. Now today I think we're at $350 billion market cap for Bitcoin. So it's a really entrenched monetary network at this point and it's exhibited a lot of antifragility. I think as my theory would be that as bitcoin continues to ascend and demonetize inflationary government business models, that some of these functions that governments have bureaucratized will just start to fall to free market competitors. Right. There's just going to come a point where government's no longer solvent enough to keep. The one example I like that I heard from Safety and is there's a train international, not international, a national train agency in Lebanon. I think it was right. And he made the point that there hasn't been a rail of there hasn't been a track of railroad in Lebanon for 50 years. I might have the country wrong or the years wrong, but it's that old saying that there's nothing more permanent than a temporary government solution. Right? So we have all these layers of unnecessary bureaucratic buildup across the world and all the countries because they're not accountable to their P and L. Right. There's no free market competition keeping them honest. So they get away with these asinine models where they have a training committee, but no trains, for instance. So I think as those useless or worthless or unaccountable institutions start to shrivel up and die because there's no funding for them, that you'll see whatever functions that they provided or were intended to provide start to fall into the free market. And I think software is just going to eat that up. So that is a lot to think about and that's something to keep your eye on. But I also liked how Saylor dove into this diffusion of technology, which is really just another way of saying the diffusion of ideas. And it follows the S curve. Right. This is the name of the book escapes me, but I think it's the history of scientific Revolutions. It's possible to name and it talks about this S curve where there's a beginning or there's kind of innovators that adopt it first and then it hits an inflection point, let's say around 13.5% market penetration. And the innovation becomes super being adopted at a super accelerated rate. So the curves goes vertical for a while until it hits, you know, it's suffused and saturated the market sufficiently to where it starts to level off and you have the laggard sort of adopting it late. And when we look at Bitcoin through that lens, it's. We're very early on the flat part of the curve, we're very far below 13.5% total adoption. We're probably more in the range of 1 to 3%, as we say here in late 2020. And Saylor just makes this great point that those curves are impossible to predict. You never know when it's going to work. The idea can exist for hundreds of years before it ever gets commercialized. If we think back to the Native Americans that had the pottery wheel but never figured out to turn on its side and use it as a wagon wheel, the idea was there, but no one had harnessed it, commercialized it. But his point is that once it does become commercialized and it hits a certain critical mass, that it's very clear to see that you can invest in it now almost right before it hits that vertical point and reap just huge gains as the rest of the world wakes up to the importance of the innovation, utility of the innovation. And I thought that was great. And the other thing in his book, the Virtual Wave, which I read the preparing for this, he laid out in 2010, saying, Facebook, Apple, Amazon, Netflix, Google, buy these, hold they're going to eat everything. Don't diversify. Here's why. Going to network effects. And all of this history of scientific revolutions and paradigm shifts, he saw that, right? And he's now proclaiming bitcoin to be a similar pattern proliferation. It has reached this critical mass. We're north of 100 billion in market cap. The race has been won almost for digital money. And now it's just a question of how big does digital money become relative to everything else, relative to analog money? And, you know, if you're keen to believe the advantages that digital tech has over analog tech, I mean, clearly I'm bitcoin bull. I would say it eats all of it, right? It's just, it offers so much more utility to the users and it's so much more energy efficient. It's as if you don't adopt it, you just get left behind. So there's this Darwinian propulsion to adopt the hardest money. And, you know, you can't get any harder than bitcoin, right? It's 21 million fixed in forever. So. And then he brought up too, that these things seem crazy at first. Like when the Wright brothers finally flew, had their first maiden voyage and figured out how to fly, he made the point that anyone you interviewed up until that time, you could interview the smartest people in the world and they would tell you flat out, it's not possible. Mankind will never fly. It just can't be done. Until it's done, right? Until a tinkerer figures it out in their garage, which points to that, that it's the tinkerers, not the theoreticians, that bring about breakthrough, right? It's not like, I feel like some people think that there are geniuses sitting inside of Harvard writing bunch of complex formulas that figure out this practical mechanical innovation in the world. And that's just largely not the case. It's people, it's entrepreneurs putting their skin in the game, failing, right? Failing forward, learning from their mistakes, facing the unknown, adapting to the unknown, trying new things. And then all of a sudden, there's a breakthrough. All of a sudden the plane flies. The Wright brothers are skybound. So that's what drives humanity forward. It's this relentless impulse to tinker and play with things. Not the intellectuals sitting in their ivory towers theorizing. And he brought up too, that John Harrison, the clockmaker, no one could figure out longitude. It was easy to calculate latitude, but no one could figure out longitude. And how did they solve it? They put a reward in the paper. I think it was a 10,000 pound reward. Anyone that can solve this, how to calculate longitude will give you a financial reward. So what did they do? They went to the free market, right? They incentivized the collective intelligence of humanity as best they could to the newspaper at the time. And this guy, John Harrison, a clockmaker, comes out of the woodwork and figures out, hey, I can solve this spatial problem, which is the calculation of longitude at C with a temporal answer. He's a clock maker, right? So he makes a super precise clock, which is just kind of out of the blue. Like who, if you had been a theoretician, you would have just sat there and like, tried to figure out how to calculate space and observational things. But this guy just took a 180, right? And he solved a spatial problem with a temporal solution. And that's the kind of, kind of problem solving you get out of the free market that you just won't get out of legislated innovation or think tanks or things like this. And so the point there, I think, is you can't, I like to say, you can't push water, right? Like, innovation is something that it emerges naturally through us, our creative impulse. You can't force it, you can't yell at your garden to grow faster. It needs to go through its own natural process of discovery to get the best ideas to the surface. And the only thing we can hope to do in our socioeconomic systems is to incentivize that they put a reward in the paper for this. That's what the free market is. It's. It's like just go into the world, you have liberty to do pretty much anything you want, as long as you don't hurt anyone, kill anyone, or steal from anyone. These are the actual pillars of free market capitalism. And make bets, right? Invest your time, energy and capital onto things you think, onto solving problems you think the market wants solved, and you think you have a unique way to do it. And by betting against one another, we develop better, faster and cheaper ways of doing things. Right? We incentivize this ideation process that rewards humanity forever in the form of innovation. And I like to say there that it's the tinkering entrepreneurs. There's nothing more problematic to problems than tinkering entrepreneurs. If we want to solve problems, we need to harness our collective ingenuity. And we do that through free market capitalism and tinkering, not through legislation. Finally, we got into war and talked about it as an accelerant to innovation. My thought there is pretty simple. It's just that war pushes you into a domain of high uncertainty where everything, the relevance of everything becomes accentuated because you don't know what's going to happen next. You don't know maybe how much food you need to save or money or what kind of money or weapons or where you need to be. Everything becomes much more relevant when you're in unexplored territory, so to speak, and that, you know, they say necessity is the mother of invention. It's like all of a sudden you're pushed by your survival instinct to necessarily figure out all your now very relevant surroundings very quickly. So it accelerates that S curve adoption or accelerates these ideas that may have been idle for some time. All of a sudden there's a big impetus to figure it out. And that's what's going on right now in 2020, right? We have a war on cash, war. We have a war on Covid. Everyone's strapped into seclusion. A lot of people are out of work. Inflation is right around the corner. So everyone's been pushed to figure things out. And I love that Saylor paints that picture of the war on Covid being an accelerant to Bitcoin and digital technologies more generally. And finally, I love this quote that he references from Arthur C. Clarke, that any sufficiently advanced technology is indistinguishable from magic. All these modern miracles that we take for granted, they're all generated by free markets. And if you pulled a primitive man out of the Stone Age and brought him here into 2020, he would just be flabbergasted, right? Like, all this stuff looks like magic. This camera, this laptop. So I thought that was super interesting, and that's why bitcoin is so misunderstood. And consider even the joke, right? Magic Internet money, it's disparaged like that. But what I think it actually is that it is this radically more innovative and advanced technology that people are just trying to get their head around. And ultimately, in the long run, the great promise of it is to help us make even more magic in the free market, right? To create even more advanced technologies by eliminating the barriers to trade. Again, tinkerers operating freely in the open marketplace is where we discover all the new and useful things that make life easier and better. And we've honored that paradigm to some extent, especially in Western civilization. But we've erected these artificial barriers to it with fiat currency, central banking, and overly complex tax codes, convoluted laws. All these things are frictions to free trade. So bitcoin, by defunding these inefficient institutions, it's eroding these barriers to free trade and therefore bolstering the innovation generated by free markets. So in that sense, I think bitcoin, not only is it magic Internet money, but it's going to make the world much more magical in the long run. So I hope you guys enjoyed that. That was episode three of Michael Saylor. We've probably got 10 episodes total, so we'll be back soon with the next one. Until then, take.