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The "What is Money?" Show
WiM008 - The Saylor Series | Episode 8 | Bitcoin and Immortal Sovereignty
02:12:26
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.
- [01:07]
Unknown Speaker
So as you learned by watching the what is Money Show, Bitcoin is the single most important asset you can own.
- [01:14]
In the world today.
- [01:15]
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.
- [01:50]
Robert Breedlove
Take custody of their Bitcoin to move.
- [01:52]
Unknown Speaker
All of their Bitcoin into self sovereign custody. Because again, Bitcoin left on an exchange is not bitcoin, it's a Bitcoin iou. And for those of you living in.
- [02:01]
Robert Breedlove
The US there's no better choice than.
- [02:03]
Unknown Speaker
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 set up automatic recurring withdrawals into cold storage, which.
- [02:19]
Robert Breedlove
Is a really big deal.
- [02:20]
Unknown Speaker
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.
- [02:48]
Robert Breedlove
Their newsletter and website.
- [02:50]
Unknown Speaker
And their team is just the absolute best dream team of Bitcoin, I would say.
- [02:54]
Robert Breedlove
Check out their roster.
- [02:55]
Unknown Speaker
It's growing every day, but it's a.
- [02:57]
Robert Breedlove
Super impressive group of individuals.
- [02:59]
Unknown Speaker
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.
- [03:21]
Robert Breedlove
Alright, thanks. Hey guys. Welcome back to episode eight of the Saylor series here on the what is Money show. Today we're going to talk about a number of interesting concepts getting even deeper into Bitcoin theory and how it has effects on the future of humanity. So if you haven't seen episodes one through seven, I highly recommend you check those out. A lot of the material we built upon there it just is compounding as we get deeper into Bitcoin theory. So today we're going to talk about a number of things. Firstly is the divinity of engineering actually and how this creative impulse is sort of what defines, defines man and fulfills man. We're also going to look at Bitcoin as a medium of exchange and talk about why Saylor thinks it's actually a low frequency medium of exchange and a high frequency store value. We'll also learn why it's pretty bad idea to compensate people in Bitcoin. Turns out tax codes are pretty hostile to that at the current time. We'll also look at another monetary function of Bitcoin and that's as a unit of account. We're going to look at Bitcoin too in a macro context, how it sits as an asset class adjacent to other asset classes. We're also going to do a deep dive into crypto versus digital networks. This is a delineation that Saylor makes to distinguish decentralized crypto networks versus say centralized digital networks. And we'll talk about the trade offs between the two. Then we're going to get into the really interesting topic of immortal sovereignty, which is something that crypto networks enable and actually allow us to project our preferences beyond our own life. So I think that's a really interesting part of the conversation. And finally we're going to get into, we're going to revisit actually money as power. We're going to talk about advanced technology as magic. And we're going to see what the two those look like when they come together. And then finally we'll discuss Bitcoin as a pure and principled ideology, which is something somewhat unique in the modern age. So this is another big episode. I hope you guys have seen one through seven, if not again. Go check those out now. And with that let's jump in.
- [05:49]
Unknown Speaker
Going to bring up one more point on the religious aspect of Bitcoin that I've thought about. And my religious tradition too was Southern Baptist I was raised Southern Baptist, so I have Judeo Christian, I guess, underpinning in my thought. But there's the ancient idea in Genesis was that God was the force that confronts chaos with courage, truth, love, and converts that chaos into good and habitable order. So when we look at that kind of like through a thermodynamic lens, we know the whole universe is everywhere and always trending towards increasing chaos and entropy, and that the only thing that works against that thermodynamic arrow of time is life. Actually, life converts entropy into order, right? So in a way we could say that life, or even maybe the God aspect of life, is the antientropic principle that propagates through all of life. And I can't help but relate that and see Bitcoin in that lens too, where we do have this system that's actually reaching deeper into chaos than anything else. Like the SHA256 mining algorithm is quite literally finding a single atom in an entire universe. That is the mining race, if you will, is identifying a single atom in the universe. And with that reach into chaos, it is forging the most profound order we've ever had. You can't argue with the bitcoin blockchain. It's just Whoever has those UTXOs has them. So it seems to me like there is something very, a profound connection between truth and this principle of converting chaos into order. And the quote that took that home for me with GK Chesterton was a dead thing can go with the stream. Only a living thing can swim against it. So there's something like Bitcoin, again in that sense is quite literally alive.
- [08:07]
Michael Saylor
Bitcoin and beavers. The beavers engineering the stream to create a dam. Human beings are engineering systems. Bitcoin is an engineered monetary energy system. It's the first well engineered monetary system that we build. And human beings, through their intellect, channel that energy. And within the system we extract order. And we have a very efficient structure. And the price we pay is some disorder outside of our system, some energy dissipation, But I'm not terribly concerned with that. The universe has got more energy than it needs. And just dipping our fingers into 0.000 with a million gazillion o's after it won percent right, right. And so it can, it can spare a little bit of energy. And when we, when we create something beautiful, be it a railroad or bitcoin network or social network or the like, right, we, we find a way to do something millions of times faster, smarter, stronger than before. And that Drives for the human race. And so this is not, it's not the only great achievement of the human race. It just happens to be the most interesting achievement of the human race.
- [09:39]
Unknown Speaker
Would you say that's the struggle then is we're sort of pushing back entropy? That's what civilization is, right? We're creating more, a larger bubble of order within the universal bubble of entropy.
- [09:52]
Michael Saylor
I would say the highest calling of man is to extract order from the chaos. And you could also say, you know, humans are divine when they engineer a better habitat for themselves and those that they love through their intellect. The human, the human that bridges, that bridges the chasm, the human that constructs, right, the city, the human that creates the machine. And that's been going on for human history. That's the most honorable and admirable thing that human beings can do. And if we didn't do it, we'd be running around naked on the plains, being chased by wolves and probably eaten by wolves, and that's that. So to engineer is divine. Look at a problem, engineer a solution. That's why we respect the engineers. You want to talk about bitcoin as a medium of exchange, let's do it. You know, a lot of people, they focus upon the white paper. And we debated Adam Finitum. And I think that everybody that we agree with notes that peer to peer cash means a settlement network for a bearer instrument. And it's important that in that regard you be able to exchange assets. It's in my opinion, utterly unimportant that you be able to engage in high frequency small transactions on the bitcoin network. And I think that it's dysfunctional to pursue that vision. I think the Roger Beer is just wrong in this regard. It was a nice idea. Rajivir thinks the magic in Bitcoin is to be able to pay for coffee with your phone. It's a tragic error of insight. That was not the magic of Bitcoin then and it isn't now. The magic of bitcoin is being able to catapult energy 100 years in the future and not lose the energy. And then the other magics are the magics that come from wrapping the bitcoin with software to make it smarter, faster and stronger. That's the magic. The ability to do a minor transaction. It's trivially inconsequential. Number one, only 1 to 2% of your wealth needs to be in these high frequency transactions. So a logical thing for anybody is just to keep 1, 2, 3% of their wealth in fiat and then Operate it on the PayPal network or the Visa network or the Apple pay network or some centralized network. I think Safedin's already made the point. Proof of work network is a billion times less efficient or a trillion times less efficient than the centralized version. You're going to get a billion times more speed and a billion times more economy by running the 1% of your life on a centralized network. And if you didn't need to move it to off chain, off chain can be. I don't think it's another crypto. I just think off chain is just a centralized network. You might as well just put it on square or Apple because nobody cares whether they go out of business in a year or two years or five years. And the fact that if you're in a country, the fact that those transactions are being monitored just means that, well, 1% of your transactions, 1% of the value of your transactions will be monitored. If you want to do something illicit, you would do it 0.01% of the time on the Bitcoin network. The one time in your life when you need to flee Iraq or Syria as a refugee, and that's when you need to do your on chain transaction. Well, then you use Bitcoin and you can wait 30 minutes. You'll probably be okay by definition, if you move a billion dollars once, it's a billion times more valuable than moving $1 once. And so the use case of moving a billion dollars back and forth is valuable and you could pay high transaction fees. And the use case of moving 1, 2, 3, 5 or $10 or 50 or $100 is not valuable because it falls exponentially or at least linearly with the amount of money being moved. Now, there's some other reasons why Bitcoin doesn't make sense as a medium of exchange right now, and maybe never. I tend to think never. I think what's going to happen is, well, we can debate semantics of what does medium of exchange mean, but I think Bitcoin is a high frequency store of value, low frequency settlement network or low frequency medium of exchange. Once a month is more than enough. Once a year may be enough. Once in a lifetime might be enough. If the rest of the ecosystem develops, there'll be a point at which there's a crypto bank. And Robert Breedlove has 200 Bitcoin in an account and he points the bank toward the Bitcoin and the Bitcoin's worth a million dollars of Bitcoin and the bank will forward you fiat on credit at good rates. To do whatever you want your entire life. The bitcoin will never move and the bank will do whatever. And if the bank fails, what do you care? The bank fail, not you. Doesn't matter. You've got 1%, you've got nothing at risk. They actually took all the risk. You don't need to do things with high frequency to create value other than protect the money. Now there are some accounting and systems and tax reasons why it doesn't make sense as a medium of exchange. The obvious thing is every time you actually take revenue in bitcoin, it would be a taxable event. You would mark the bitcoin. So if you paid me in bitcoin, while bitcoin is trading 10,500, I have to market. If you paid me $27 in bitcoin, I have a ledger entry, $27 of bitcoin at a $10,400 basis. If your friend bought another $32 book, I have another ledger entry. If I sold a million things in bitcoin, I'd have a million ledger entries with a million different basis prices. Then if I paid you a salary in bitcoin, I would then have to figure out whether the capital gain on it and then I have to pay the tax. If I have 100 million in Bitcoin and then next year I pay 100 billion in expenses with bitcoin and bitcoin went up by a factor of two, I would actually generate $100 million in capital gains and I would owe 20 or $30 million to the federal government within 12 months for the privilege of using bitcoin which runs a billion times slower than Apple pay. How many ways is this awful? Well, first of all, it takes a decade to get your accounting system to work. It's worthwhile to note. How does a global multinational work? I have 27 subsidiaries in 27 countries. I do business in about 10 different 15 different currencies. US euro, but yuan, yen, pesos, real Mexican peso, Argentine peso, you name it, we got lots of currencies. By law we do that. By law we pay all the medical bills in those currencies. All the insurance, all the vendor relationship took 10 years. Takes 10 years to set up a global multinational from start to finish. Probably takes five years to get all your accounting system to work right. It's 20, 30, $40 million to get it all working right. If I buy 500 million in Bitcoin, I put it in the treasury, I stare at it, I never do another transaction. Hopefully for the not decade until we are in an insolvency event. We're not moving it. Right. Why would we? The truth is like we want to put it in a vault and throw away the key. I would say to anybody, I don't want to be able to move it. I just want it to sit there. I'm going to wait for it to appreciate. Then we sell stuff in yuan and yen and euro and dollar and we put that onto our accounts. We sweep all the dollars into one, maybe one currency dollar, we sweep all the fiat into one thing. Dollar we balance. And if we need to shuffle some stuff around in working capital accounts, we put it back. If we don't need it for working capital, we sweep it into the treasury. If it's in the treasury, we convert it to the treasury reserve asset. Bitcoin, it goes in, never comes out. A vendor, once they send me a bill, I pay them in a local currency. No vendors gonna bill me in bitcoin. By the way, people say, I've heard this like, well, don't your employees want to get paid in bitcoin? Well, the answer is no, they don't. But let's say the answer is yes. Let's say all of them were bitcoin maximalist. Exactly how much bitcoin do they want to get paid in? They have mortgages, they have bills. So the answer is we pay them in the local currency and if they want to buy bitcoin or if they want bitcoin, they buy it.
- [20:10]
Robert Breedlove
Right.
- [20:13]
Michael Saylor
And by the way, why would it be an awful mistake to pay them in bitcoin? Because we would accelerate the tax bill by 100 years. Right. And by as bitcoin is volatile, we will generate all sorts of tax obligations. The second thing is we would increase our accounting complexity by an order of magnitude. And the third is, the third is our employees will then have to sell the bitcoin and generate their own taxable accounting in order to get cash to pay their mortgage and pay for their kids school or whatever they're doing. Right? So you're creating lots of complexity here. If I got 2000 employees and 200 of them want to own bitcoin, then I pay all €2,000 and dollars and pesos and yen and won and they go on their local exchange and they buy the bitcoin and they hold it because like do I want to hold it?
- [21:14]
Unknown Speaker
Right?
- [21:16]
Michael Saylor
So the point is, when you're running a company with bitcoin as an operating system, the logical thing to do is you just sweep your fiat into your treasury, convert your treasury into Bitcoin. Let it sit there, then let every. If a vendor wants to get paid in bitcoin, I pay them in dollars, they buy bitcoin. If he wants to get paid in bitcoin, I pay them in dollars, they buy bitcoin. The whole ethos of bitcoin, by the way, is take responsibility for yourself. Right? Don't treat adults like children. And so it's patronizing in a way for me to say, well, Robert, you work for me, but I'm going to help you by paying you in Bitcoin. It's like, you're smart enough person, you want to buy bitcoin with it. Here's the money, buy bitcoin with it, have at it. That's what you do. The money has a constant value at the time I transferred it from me to you. The thing that really cripples a cryptocurrency and a thing like bitcoin as a medium of exchange is the tax treatment that the local regulatory domain takes. At the point that the United States IRS decided that this was going to be taxed as a capital gain on the moment of sale, it was utterly impossible. It could be a currency. It's just that simple. It's done for anybody to even maintain it. The only way you could think that you could use it as currency if you're going to run a black market, gray market operation with no accounting, no accountant, no lawyers on staff. And it's like, good luck with that, right? I mean, how many, how many discos and bars got shut down for sales tax evasion or income tax evasion, right? Like, what was it like? Most of them, yeah. Small businesses there, they're eventually going to all run afoul of the regulators and get shut down. So. So it's just not practical from a systems point of view. It would take me a decade to rewire the systems. It's not practical from a complexity point of view. You just made your accounting 100 times as complex. And it's not practical from a tax point of view. You just triple tax rate. And it's not practical from, you know, whatever employee point of view because it's making everybody else's life more complicated too. So. So that's why I think the Bitcoin really isn't a medium exchange as much as it is just a low frequency settlement network. I'll make one more point. This is like the Via Negativa. The fact that you could settle peer to peer means that you might not have to for 100 years. The fact that I say to you, Robert, you do as I say or else if you have the ability to leave the country and depart with all of your wealth. And I know you have the ability, right? It's like Robert Heinlein has a phrase. An armed society is a polite society.
- [24:33]
Unknown Speaker
I like that.
- [24:35]
Michael Saylor
It's like if, you know, I live in Miami beach, sometimes I run around and people have guns in Miami. And you can carry a concealed carry permit, right? A young debutante that looks harmless could be walking around with a gun in her purse. And you think twice when it's two in the morning and you're in a bar and everybody's drunk before you're pushy or rude, right? And then you think, maybe I shouldn't be in a bar at two in the morning when people are drunk. And maybe. And then you think, maybe I shouldn't mouth off to someone that just cut me off on the highway. Somebody pulls over and they shoot you dead. I just ought to be very polite to everybody walking down the street because every single person could have a gun concealed on their person. And maybe I'll be nice to people today. Now it's a deterrent, right? And so the ability to cash settle or the ability to settle and exchange, that's the deterrent. Because the fact that I know you could means that I'm going to treat you with respect. I knew you couldn't. If I thought that you were trapped. If you were stuck in my monopoly and I had total power over you, then I start to take you for granted and then I start to abuse that power. Because as Lord Acton said, absolute power corrupts absolutely. The power to do a thing is more important than the doing of the thing. That's what the bitcoin cash guys, they miss. They miss the fact that if I can move all the money when I need to, then I won't need to. And so, yeah, I need to be able to move it so it'll hold 100 trillion in value. But no, I don't need to move it now. And maybe I don't need to move it more than once ever. Just to make an example, it's like nuclear deterrence. I used once, maybe I used it twice, I haven't used it since. But do you think that doesn't. It's not effective. You think it doesn't matter that we have it?
- [26:56]
Unknown Speaker
I think it's a great point. And this gets back to the difference between a free market and a monopoly. In a free market, you know that your customers have options. They can go to Other providers, they could settle elsewhere, they could move their capital out. And because they have that optionality, you as the producer provider are accountable to their preferences. You have to listen to the customer, right? You have to listen to their wishes and desires and make sure you're satisfying their wants. Whereas on the other end of that spectrum is the monopolist. To your point, he just doesn't care about the preferences of his customer because his customers have no choice. They're stuck in his little fiefdom. And that is. That's what I mean. There's a difference between an economic democracy and an economic dictatorship. The fact that Bitcoin is totally movable anywhere, anytime, and you can't, I guess, put the gate around it and monopolize it is what makes it such a game changer.
- [28:00]
Michael Saylor
Just because you can do a thing doesn't mean you should do a thing. That's basic stoic philosophy. And there's the line that comes from the movie. Where is it the guy says, the loudest man in the room is the weakest man in the room?
- [28:24]
Unknown Speaker
American Gangster.
- [28:25]
Michael Saylor
I think that's it. American Gangster, the loudest man in the room is the weakest man in the room. If, you know, I can do it. If Robert Breedlove can teleport anywhere on earth, anytime with all of his energy and I can't stop it, that gives you a lot of power. I'm gonna give you a lot of respect. But that doesn't mean you want to flit around back and forth.
- [28:53]
Unknown Speaker
Right, right, right.
- [28:54]
Michael Saylor
Like a firefly. You know, you can do it. Now do something constructive with the knowledge that you can do it. Confidence. And don't get distracted by shiny objects. Fast transaction rates, low transaction cost. They're little shiny little lures at the end of a hook that the stupid fish grabs. It doesn't matter. It's the. What is the word? It's the Cracker Jack box prize or something like that. If you look at the value on Earth, there's $250 trillion of value in assets. What's the value of being able to move money back and forth to buy coffee? And by the way, what's the likelihood you're going to beat Apple in that race?
- [29:53]
Unknown Speaker
Right? This is the picking up pennies in front of a steamroller type thing, right?
- [29:58]
Michael Saylor
Basically, it's just not worth doing. And given the fact that it's a million times more expensive from a tax point of view, and given the fact it's a billion times more expensive from a computing power point of view, the only Reason to want to do it is regulatory arbitrage. That is gray market, black market operation, you know, not a very profitable pursuit of human ingenuity. You know, it's like you ask Meyer Lansky, what'd you learn in all your years as a gangster. He said, it was so hard, I realized if I didn't do it again, I just would have gone straight. You know, it's a lot easier to make money just being legitimate. So inventing some kind of technology to evade the regulators explicitly, sorry, they might let you invent something that will carry energy 100 years forward because it seems like something that legitimate law abiding citizens might want to do. They're not going to let you invent something that allows you to evade taxes. And so why try so hard? It's just not worth the trouble. I'm reminded of the stories of like Pablo Escobar and he made the billions of dollars selling all the drugs and cocaine. And they say at the end of his life he's sitting on the run and they're burning $100 bills in order to stay warm.
- [31:29]
Unknown Speaker
Good luck with all money as energy, right?
- [31:35]
Michael Saylor
I mean, the vignette, you know, just sitting, burning stacks of $100 bills because no one will let you spend it. It's an example of just trying too hard, not worth the trouble. So let's talk about unit of measure now, Bitcoin as a unit of measure. I think Bitcoin is a universal language of economic truth. I think that it will evolve as a unit of monetary energy. It makes sense in that way. Before Bitcoin, if you go back 50 years, people talked about ounces of gold. So I think a Bitcoin will be like an ounce of gold, like an immutable, non sovereign, or I guess immutable self sovereign unit of economic energy. It makes sense to think of it like that. On the other hand, it'll generally always be converted into local fiat and the political domicile in question for buying and selling things. And that's okay. There'll be countries that will have stronger, better currencies, and there'll be countries that will have weaker currencies, and they'll crash their currencies and they'll replace their currencies. As long as you hold Bitcoin in your account, you'll be able to go into a new country. I mean, I've been to a country after they crashed their currency. We've all been to Germany. They crashed their currency, we bought the new currency, then they got rid of the market and with the euro, we bought the euro. The right way to think of it is as just a standard unit of economic energy or monetary energy and not overthink it. Anything more than that. It can be interesting to say divide stock price by gold ounces. You can divide the cost of living by ounces of gold. Or buy bitcoin. That's interesting. That's okay. It'll give you a pretty good read on inflation. If one bitcoin buys you a car in the US but one bitcoin buys you a skyscraper somewhere else, right Then you'll have relative cost of living. And people did that with the dollar. They used to say you can live in Mexico on the beach for $187 a month, live like a king. There are relative strengths and I think bitcoin will be like that. But I don't think we need to stretch any further than that. I think that's enough. I think ultimately people over, they focus too hard on medium exchange unit of measure and they underestimate the value of bitcoin as a store of value and as an asset. I think they undersell it and they don't do it justice because it's so much better than every other asset. Then I think the entire community of crypto, it's too much. Engaged in debates between the various crypto networks with each other because one, I'll post something. Bitcoin is a great way to transmit energy into the future. And then the ripple people will start fighting or the bitcoin cash people. Someone gets triggered and takes offense. The way I see it is Crypto is a $300 billion pond sitting on the beach next to a $300 trillion ocean of capital of energy. That's 99.9% of all energy of humanity is sitting in alt assets, not altcoins, not cryptocurrency. So I see all the crypto enthusiasts working on all the altcoins and they're just trying to drag down bitcoin. It reminds me of a bunch of crabs in a bucket and the bucket's kind of hot or overheating and the one crab wants to crawl out and the other crab just want to drag it back in instead of crawling on its back and all getting out. It's like all the crabs just keep pulling each other back into the bucket. It's totally self sabotaging. And it doesn't matter because what they ought to be thinking is how do we get 30 trillion of the 300 trillion to flow into our pond? They're thinking we want to go from 300 billion to 3 trillion and from 3 trillion to 30 trillion and from 30 trillion to 300 trillion. And the way you're going to get there is not by attacking each other. The way you're going to get there is by dividing the market and focusing. So if you want to be a cryptocurrency while the currency means you have to have a stable asset value because the IRS is going to tax you to death if it changes. So tether can be a currency and it cannot change. Do we need one? I don't know. Maybe we'll get by with a centralized stable coin and maybe we need a decentralized stablecoin. The market will decide that. But that's a thing in its own. And if you want to build a crypto application, there are applications of things that people might want that Bitcoin doesn't do, like total privacy, or maybe you want to issue title or provenance, or maybe you want to do a decentralized exchange or wrap something or implement insurance or lending. That's fine. Defi their applications. Have at it. You'd be better off to say Ethereum is 60% of the application market, Tether is 52% of the currency market, cryptocurrency crypto app, and then Bitcoin is 95% of the crypto asset market. If you believe in another type of asset, I don't think that it's impossible we will ever come up with one. I just think right now the only clearly successful crypto asset is Bitcoin.
- [38:03]
Robert Breedlove
Agreed.
- [38:04]
Michael Saylor
All the crypto enthusiasts would be better just to accept the success of Bitcoin because it's the gateway drug for all the alt asset holders to move into crypto. And they really ought to be encouraging the next $3 trillion to come. And the number one way to do that is not to relentlessly ruthlessly attack and sabotage and undermine Bitcoin, but rather to celebrate its success. Because as it gets bigger, the opportunities for other crypto networks to interact with it will also get bigger.
- [38:40]
Unknown Speaker
Absolutely. To people that don't understand the space, I like to articulate it that Bitcoin is digital gold. It has essentially already run and won that race. And that for the same economic and game theoretic reasons, there's only one analog gold, there's only ever likely to be one digital gold. So it's almost like you have to just accept that. And then I describe the rest of the crypto asset universe as liquid venture capital subjected to little if any due diligence. Some of them may succeed Meaningfully markets orthogonal to money. But it's very high risk. The fact that anyone can spin up one of These assets in 15 minutes on the Ethereum blockchain. There's a very low barrier to entry, very low diligence. Invest accordingly. I suggest if you're going to have a crypto asset portion of your portfolio, I think the highest risk position you could ever be in is. Is 80, 20 bitcoin, everything else. And the conservative position would be 100% bitcoin, 0% everything else.
- [39:52]
Michael Saylor
I agree with you. I think we see it the same way. I guess it's a good segue. Just a general crypto theory. The emergence of magic in cyberspace. What's a crypto network? What's a digital network? How do I view it? And you tell me if I'm right or wrong. I'm a newcomer. You've been around for a while. My view of crypto network is a crypto network is a software application running on a decentralized network with a consensus mechanism, ideally proof of work, arguably maybe proof of stake or some other consensus mechanism that theorists would agree promotes decentralization and anti fragility. And a digital network is a centralized network. It's a Facebook or Twitter or Google or Apple or whatever, a more conventional client server network. So as we look in the future of cyberspace, we're going to see crypto networks and digital networks. Why would you want a crypto network? You want a crypto network for immortal sovereignty and antifragility. We know Bitcoin is doing that right now. If you want to convey humanity across time and space, especially across time, maybe across time and domain. Domain might be even better than space. Crypto networks aren't necessarily faster than digital networks for moving shit through space, but they're better at moving across domains. And the reason for that is that sometimes you have lowest common denominator regulatory or compliance constraints that cripple the innovation in a digital network. Apple Computer will never do certain things because they're subject to the US law, even though they could do them in 98 countries. And so a crypto network may in fact may develop faster across regulatory domains if digital networks are crippled. There's obviously trade offs between digital and crypto. And I think about it's like trust, security and duration are attributes of crypto economy. Performance, functionality and compliance are attributes of digital. If I want to do it cheap, economy cheap, it's a billion times cheaper on a digital network. If I want performance, it's a million times faster on a digital network. If I want functionality, it's likely much more functional. There's nobody that would dispute that. Apple Pay or Apple or Google their beautiful functional products. Apple on Google Maps, trying to do Google Maps on a decentralized crypto network would probably be a disaster. And in compliance, digital networks are better at compliance. Sometimes we regret their compliance. They shut down stuff and they censor things, but they're better at compliance. The very things that make crypto attractive, trust, security, duration, are purchased at the price of giving up economy, performance, functionality, and compliance. Then the conclusion is some stuff makes better sense to be doing digitally and other stuff. Maybe with crypto, it's early days. And the only obvious conclusion we both agree on is, is Bitcoin is a successful crypto network as a store of value. We know that. Everything else is an experiment. And when it hits $100 billion, it's not an experiment anymore. And we can debate whether it's an experiment at 50 billion. But I would say at $100 billion, it's a thing, and it's pretty clear. And it might be a thing that we all know and recognize below that, but. But you need a lot more education to determine that.
- [44:18]
Unknown Speaker
I think just to throw in my two cents, here is it is distinguishing between a decentralized network and centralized. And this reminds me of an old quote, I forget who said it, but if you want to go fast, go alone. If you want to go far, go together. The centralized solution is kind of like going alone, because it's just according to one single plan. It can innovate very quickly and move a certain direction very quickly. Decision making is concentrated, whereas the decentralized solution has more of a dynamic equilibrium that lets it persist further across time. So the centralized solution is going to be really compliant, really fast, really innovative. But the decentralized solution is really only useful when you need censorship, resistance. You need to know that it will persist across the maximum duration of time and that no individual group, or individual for that matter, can shut it down or manipulate it. So I'd say bitcoin is at the extreme end of that centralized, decentralized end of the spectrum. Or something like Apple would be at the other end.
- [45:27]
Michael Saylor
Yeah, you could use a metaphor like an aspen forest or some massive biomass versus an animal, a vertebrate versus a, you know, invertebrates, you know, different life, plants versus animals. Right. They're different creatures and they have different lifespans. Right? You want to live for 2,000 years, you know, or do you want to live for 80 years, but one of them moves faster than the other, but one of them is more vulnerable than the other.
- [45:58]
Robert Breedlove
Right.
- [45:59]
Michael Saylor
I think from a human point of view, the real question for humans is do you want to put your trust in man, trust in an organization, trust in a company, trust in a government? Do you want to put your and, or do you want to put your trust in a crypto network? And we're going to solve our problems with the segmentation mixture of these trusts and you don't have to. We're probably not going to create, we're probably not going to put the functionality into Bitcoin in a total decentralized proof of work network that will do what Amazon does, or Uber does, or Pandora or YouTube does. Probably not. But do we really need to? Probably don't need to. So when we think about the crypto industry segmentation, I think you really, you want to divide and conquer. You want. The crypto network, by the way, is a life form and I think that's different. I mean there's a genetic encoding in a crypto network and that's, it's, it's very different than solving the problem with the human being or solving the problem even with a digital network. When you design the protocol of Bitcoin and you let it go, it becomes a life form and it multiplies and all these nodes spread and all these miners spread and you can't easily, you can't pull the genie back in a bottle and re engineer the genetics of it and release it and then wild. In fact, you would almost say that like once plankton is spread out to dominate all the ecosystem, if God had a better idea, you know, he created that and made those minnows or it created a new species, you have a better idea. Create something different. And if that's something different is in the same energy ecosystem as the plankton, it's not going to make it right. You can create a bird and the bird can coexist with a deer, but it's hard to create two apex predator birds and put them in the same space at the same time. One of them eats the other one, one apex predator creature, you know, it's like. And that's the same thing with crypto. I think you got to think of it as an evolution of a new life force in cyberspace. And the genetic code is of paramount importance. So if you really hope to be successful, and this is my opinion, when you release the privacy coin, you need to say this is for this thing and this is what it is. And we're gonna, we're going to get it just right. And we're gonna let it breathe and let it live, and we're not gonna mess with it or monkey with it. And we're not gonna decide that we wanted the monkey to have wings and also have gills and swim. And then if I'm watching TV and I see these cool antler things, I want to put the antlers on it. You can't be a technology tinkering enthusiast with the crypto. You have to be. You have to have more of the mindset of it's the crazy guy in the lab coat in the laboratory, creating a new kind of life virus creature. So you get one shot and it's out of the lab, right? And you're done, get it back. And so you should be aware just how important it is. It's a protocol life. It's a strand of DNA and that DNA is going to go and it's going to do whatever it's going to do. You're creating life. And so how devastating is it for God to say, I created human beings, I made a mistake, I'm going to recall them and then tinker and do a human being 2.0. Like it's, it's a problem, right? I don't know. I guess in the Bible, right, the biblical analogy is the flood, where everybody just gets killed, right? Or, you know, or some, some crazy stuff in the Garden of Eden. But you know, with, with things like Ethereum, right? You got Ethereum 1.0 and now you're trying to do Ethereum 2.0. You'd almost be better off just to do something different as opposed to like retrofit something, because it's like going back and trying to force fit the DNA. You could do it with a digital network. It's okay if you're running on a single server and throw a switch and everybody switches it. But the whole point of a decentralized life form is, is they're all different and they all get to make their own decisions. And if you can order them to do something, it doesn't feel that decentralized anymore.
- [51:05]
Unknown Speaker
Not decentralized, exactly.
- [51:12]
Michael Saylor
With regard to this, I look at the crypto industry, I think the logical segmentation is assets versus applications versus currencies. It is the purpose of the crypto network to be an asset. And bitcoin clearly is. And then Bitcoin cash and Bitcoin satoshi vision, the rest are trying to be. It seems pretty clear that Bitcoin is 93, 94% of all the assets. And the other ones are probably Going to zero. And the only way you don't go to zero is you have to be differentiated in a way that the marketplace appreciates you. It's a species, right? I can't be almost like a bunny rabbit. I need to be a wolf. I need to be different than a bunny rabbit. And it's an important caveat. Differentiate in the way the market appreciates. In other words, differentiate it in a way such that nature gives you an advantage in natural selection. So taking bitcoin, forking it and making it do transactions 10 times faster isn't good enough because you're a million times slower than the other way to do transactions. So that's just not a genetic mutation that works. It's an example of a faulty genetic mutation that kills the carrier and takes it's an extinction level mutation. Genetic mutations happen all the time in nature. Most of them our mistakes, right? But some of them might work, right? If I can stand up on two feet and if I can find and if my eyes start to work 10 times better than your eyes and I can fashion missiles, then maybe that's going to work for me and maybe I will procreate. So it's not impossible to have a genetic mutation on Bitcoin that would be naturally advantageous. It's not impossible. It's just the ones you look at right now, like what do you have? I mean, transaction speed, that's really no good privacy. It's a regulatory threat, and so therefore it's kind of a nice thing. But it's a bullseye in its forehead, which means that when the regulators go to shut down crypto exchanges, the first thing they'll do is pass a law against that. And so tell me, give me an example of a mutation on Bitcoin that would make it a distinct asset that would deserve to have its own life as a store of value.
- [53:51]
Unknown Speaker
I've thought about this a lot and written about it, and I have yet to identify one. Bitcoin sort of perfects the main properties of money that you need. And then the added caveat to that is that even if a mutation or innovation occurred such that the market identified it as useful, and you saw this reflected in its market cap. Bitcoin also has this capacity to absorb feature set from competitors. So if something becomes market proven, Bitcoin can assimilate that to its existing UTXO.
- [54:22]
Michael Saylor
Set, just as living organisms do, just as companies do. Like you get attacked by competitor, that which does not kill me makes me stronger, right?
- [54:34]
Unknown Speaker
Instagram absorbing Snapchat story feature, right Totally destroyed Snapchat.
- [54:39]
Michael Saylor
So we don't see another one right now. It's not impossible to conceptualize that maybe there would be one. But right now it looks like Bitcoin is 94% of the crypto asset market. You can't include Ethereum because although it's proof of work, now it's going to proof of stake and that, you know, they don't even have, you know, a commitment, intellectual commitment to be proof of stake is. It's not clear to me. The proof of the proof of stake is intellectually defensible over the long term. It's not proven. It seems like it may be defective. Right? It's like an example. We're back to this issue. It's like I want to hobble the antelopes. It's like somebody complained we're using too much energy. It's almost like the environmentalist took over and they've decided that they're just mad that someone's using too much energy. So they want to pass a law to stop it. But it's a law against mother Nature and it's to hobble the antelope. And so the 4% or 5% crypto assets left are satoshi vision, bitcoin, cash. None of them are differentiated enough that they would seem to have any future in a Darwinian world. So their destiny seems to be to go to zero. So then we go to cryptocurrencies. That's a simple one. Stablecoins people go ballistic. If you said they're cryptocurrency because everybody wants bitcoin to be a cryptocurrency. But if the definition of currency is money that you can legally spend in a country without incurring taxes, Bitcoin is not a currency. But tether is because it's kind of simple. Read the IRS tax code. You'll find most places on earth they're going to tax it as an asset. And there's nothing wrong with that. In fact, that's better. It's actually a mistake. Why would you want to create a short term currency that's a billion times more expensive to implement computationally than the other way? The only reason you want to do something a billion times more expensive is for immortality, immortal sovereignty. That's a good reason. But you got that. If you have that on 99% of your assets, 99.9% of the time, then you're good. Then you can afford to have a little bit of risk in order to get a billion times faster performance on a digital network. So that's currencies. The only risk for cryptocurrency is for regulatory arbitrage or maybe innovation due to decentralization. If you can make the argument that we're going to innovate faster because we're governed by the laws of Singapore and people in Malta can use Singaporean cryptocurrency and it's not technically illegal, it's just 100 times better because we're able to tap into that regulatory arbitrage opportunity called market. Then I think, okay, fine, there's a place for cryptocurrency.
- [58:02]
Unknown Speaker
I guess you could add the speed factor too. Like the tether can be moved 24 by 7, whereas US dollars would face certain restrictions in terms of time or jurisdiction, capital controls as well.
- [58:16]
Michael Saylor
On the other hand, you can move Apple Pay 24. 7, you can move square 24.
- [58:21]
Unknown Speaker
7.
- [58:22]
Michael Saylor
There's no reason why you couldn't run a digital network 24. 7. By the way, Binance is a digital network and you can trade 24. 7 on Binance. So Binance could simply. They could just move it around. If I'm moving money on an exchange or between exchanges, I could do that on a digital network. I don't need a crypto network to do it. So whether or not people will use a digitally based stablecoin or crypto stablecoin, it's a function of regulatory arbitrage. I mean, there are privacy issues that people have and. And then there are trust issues.
- [59:00]
Unknown Speaker
But I guess you would say actually Tether. Tether is a digital network actually in this framework. Right. It's not decentralized.
- [59:09]
Michael Saylor
You trust the counterparty because there's a central authority that can actually be. Right, right. And so you can almost argue that if Tether is the king of stablecoins, it's running on a digital network, not a network.
- [59:24]
Robert Breedlove
Agreed.
- [59:25]
Michael Saylor
Dai, maybe dai, if it's truly. The irony is DAI is a truly digital decentralized one. But people don't like it because it's inefficient and it doesn't quite peg the value. But you could create a cryptocurrency as a stable coin using an oracle. I mean, using some information feed and using Bitcoin as the underlying collateral and. And create a synthetic dollar and a synthetic euro. You could and will. We need depends. I mean, that takes us to crypto applications and digital applications. Well, I mean, Binance and Coinbase and Hobie and the like, they're digital exchanges. They're digital networks for exchange. And then you've got the decentralized exchanges. Right. Uniswap. Sushi swap. And there's a very romantic notion like decentralized exchanges will beat digital exchanges. Not so sure. I mean, we'll see. The point that I made in one of my tweets is, So I buy $400 million worth of Bitcoin, I do it in seven days, for seven days, I have some exposure on a digital exchange. I move it to cold storage for the next 10 years. So for the next 3,000 or 20 years, for the next 7,500 days, it's off the digital exchange. So 99.9% or more. Right. What is seven divided by 7,000? Right. Yes. It's 99.9%. 99.9% of the time I'm not exposed to the risk of a digital exchange. And so everyone that says, well, digital exchange are risky. Well, it's risky in the same way that walking across the street is risky, Robert. But you do it in theory. Cross a crosswalk. If the red light failed, couldn't you get slammed into with a truck and killed? Okay, so are you going to take the position that we're going to have to build flyovers on every crosswalk in the world? Yeah, it's pretty expensive.
- [62:01]
Unknown Speaker
Yeah.
- [62:02]
Michael Saylor
You know, so what will happen there? I don't know. But it seems to me that Binance is doing just fine as a centralized exchange. And it seems that Square works fine as a digital client application. And it looks if Apple Computer announced that you could send bitcoin or cash by Apple pay tomorrow or by imessage, I think a lot of people would be pretty happy to do that. No one be complaining about it. And it really comes down to this issue of economy. It's a million times cheaper performance. It's a million times faster functionality. It's a million times more functional. And compliance, they're probably more compliant in the country you're in. So if you can do it on a digital network, you probably will. When you think about crypto, you really have to ask this question, you know, like, what is so important that I want immortal sovereignty? What is so important? And certainly my life force. If you said to me, michael, I'm going to take all of your energy and I'm going to protect it, and I'm going to fulfill your wishes from now to a thousand years from now, I think that's worth it. That's a religion. That's a crypto. I have a park. I'd like for the park to be trimmed and the trees to be kept nice. And I'd like for the park to be beautiful for the next thousand years. And it'll cost a million dollars a year. And so If I put $50 million into endowment and it generates 2% yield, then I could reasonably say to Robert, Robert, why don't you take my $50 million endowment and put it into Bitcoin? And then becomes the question of, you know, how am I going to see my wishes through for a thousand years? Well, the current way you would do it is you would create an institution like the Rockefeller Institution or the Hughes Institute, and you trust human beings. What we're really talking about is we're talking about, we're talking about the crypto asset network of Bitcoin, taking the base layer and holding all the monetary energy for 1,000 years. And then we're talking or 100 years, if you think 1,000 years is crazy, we'll go 100 years. Then we're talking about a digital network. Maybe it's gardeners.com and it's special. Or Amazon will probably do it because they'll probably do everything. By the time we get through the decade, there won't be nothing that they're not doing. Let me make it easier. Let's just say I want to send flowers to everyone in my family on their birthday for the next hundred years with a little note from me telling them how much I love them. That's a simpler thing. I endow an account with bitcoin, I create an Amazon account, I wire it up with flowers. I create some kind of mechanism so that when children are born, they get added to the family unit and the thing drips out a little bit of money. Monetary energy in bitcoin converts to fiat, buys the flowers for $187,000, a dozen roses in the year 2047, and it ships them to the person and I die happy. And for the next hundred years or thousand years, flowers get delivered to people in the Saylor family line. Because that was my last will and testament. And how would I do it if I was John D. Rockefeller 100 years ago, I would have a crapload of assets, probably a lot of gold and stock. And he owned every oil company and they're still around. And then you would put some of that into a foundation, a nonprofit foundation, because you need to be tax free, tax advantaged, and that's why you got to go nonprofit. And then, by the way, all your capital gains become tax free, tax advantaged, and all your income becomes tax advantage. Right? So that's a good idea. And then you have a Board of governance. And you have like five advisors and they appoint a money manager and they appoint a business manager. And when one of them retires, they have a selection committee process to put someone else. And we're probably on the seventh generation of advisors to the Rockefeller Institute. By the way, John D. Rockefeller created the University of Chicago. It's still running. You know, Rockefeller created a lot of stuff still running Rockefeller University. So I can do it the old fashioned way, but you're probably talking about, to do it well, you need $100 million of assets and a $5 million a year operating budget. You get down to 1, $2 million. It's not right. So $5 million a year is the minimum. Your best bet is you'd have to become a university, a religion, a church, or a nonprofit Hughes Institute. So that's the way that you get immortal sovereignty or like some long range sovereignty. Another standard way people do it is like Rockefeller bought up all the land on the Hudson river and he gives it to the state, state of New York, turn it into a state park and get it, and get the national park, like Grand Teton national park, and you get the federal government, the state government to agree to fund it in perpetuity, part of the Smithsonian Institution. The problem with all those things is that somebody can't even trust the governments. Right. But your best bet is you lay it off on a state or federal government. And that's okay until the government fails or it reneges on something or other. But the bottom line is it's, it's not really within the grasp of small mid sized business or the individual. Just what is YouTube? YouTube allows you to become your own TV station. So what are we talking about here? Well, you know the, the cliche be your own bank. It's kind of a cliche. And I think if we look at it a different way, it's like I'm a normal person. I endow my own monetary energy into bitcoin. I plug it into some digital network. I give the keys to someone I trust, family member, heir, maybe I do multi sig. Right. And multi. Instead of having five people on a board, if you have five people on a board of an endowment with 100 million or a billion dollars in the endowment, they're kept honest by filing annual tax forms with the irs. And in theory they could be personally liable if they defraud the foundation or abuse their fiduciary trust. But you know, it's kind of like a 20th century idea. A better idea would be I put the money into Bitcoin. And I have like three or five digital keys, and it takes three out of the five to vote on everything. And then when anybody, every three months, they have to register that they're online and of healthy mind and spirit. And if someone stops registering, then the remaining four automatically appoint a fifth. And whenever anybody retires, they automatically transfer their key. And then what I've done is I've dematerialized endowment, board of directors, corporation, institution, and it's just become maybe a simple application in cyberspace plugged into a base layer of monetary energy. And it's doing something, whatever the something is. And so that's of people and digital networks and crypto networks in order to allow people to achieve their hopes and desires over long periods of time.
- [70:18]
Unknown Speaker
That's really interesting that you can lock up the base layer money and then appoint this multisig schema as almost a decentralized organization in a way, among these five members. And then that gives the ability for your will and testament to be carried out in a more dynamic way across time. Because as governments fail, organizational landscape changes or other macroeconomic conditions change, these five people can adapt, right? So they're sitting on this money that you've put behind the wall of encrypted energy, but it also gives it some dynamism in a way that they can adapt to your will and testament.
- [70:59]
Michael Saylor
And until computers get so smart that they do it all for us, the most likely outcome is I appoint three people or five people, and then they plug in the digital networks that do all the stuff that we want done. Maybe you want to host all of your writings and all of your videos for the next thousand years in cyberspace. Okay, so you appoint three trustees of the Breedlove Institute, you endow it, or with some amount of Bitcoin, you live a fine life, you depart. And their rules are every 10 years, they have to find someone to replace them. You put your own term limits in there. The Romans did it every year, by the way. You could put all sorts of rules that you could say that everyone that actually reads my stuff and passes the test can vote on who this five trustees are going to be, or you can't even be a trustee unless you've watched and read everything and understood everything and passed, you know, my quiz that I left for you. You know, what if Ludwig von Mises left all of his stuff in cyberspace and we need to read all this stuff, absorb it, and pass an oral exam by him in order to become a fellow and we became a fellow, we were invited to the Academy of Austrian Economists. And that goes on to all eternity. And then the academy, the academy adds to the body of knowledge and they can upgrade the protocols and they can upgrade the test and then they pass the flame down from generation to generation. The entire thing becomes antifragile and it's a religion of Austrian economics. I'm thinking the guild system. If you want something to be an immortal sovereign crypto network, then you think like the guilds. It's got to be something that people are so passionate about. They'll pass it down from parent to child, father to son, mother to daughter, you know, master to student. There are things like that. I mean, schools of martial arts, Brazilian Jiu jitsu, other jiu jitsu, religions, etc. And the medieval guilds were like that. Maybe there would be a like. For example, I like environmental causes. What if I had a park and I said, well, people have to go and have to work in the park and support the park, but the park is this private public entity where you can be a member and you can use it, but only if you contribute to it and protect it. And then I endow it and becomes a self sovereign entity for a thousand years with like a. It's like a park owners association, right?
- [73:49]
Unknown Speaker
Yeah. It's really interesting. You've called previously, I think, domain names akin to digital real estate. And so what's coming to mind is that you could also do this with a domain, right? You could fund a domain in perpetuity and then populate it with these institutional Factors you've described bitcoin.org?
- [74:10]
Michael Saylor
Yeah, any domain. I mean, it could be wisdom.com and people put wisdom in. And there are curators and it's. And there's a governance mechanism and as a support mechanism. And you just want it to go on forever. Like a monument in cyberspace.
- [74:30]
Unknown Speaker
Interesting.
- [74:31]
Michael Saylor
Think of it as a monument in cyberspace. Yeah, right. It's something that has some functionality. But you know, the real question here is just what do you love and what is it you want to achieve in your lifetime? And people, you know, are you a family man? Are you a political man, Are you religious? You know, do you love art? Maybe you want to create a website that allows people to upload their art. You can upload digital art and then other people can like, can check it out or use it subject to some licensing. And you just want that to become like, I guess like a Wikipedia type thing. Right. It's a common service, but you want it to just go on forever. This is so interesting subject or fragile to human failure.
- [75:27]
Unknown Speaker
Right. It's so interesting that another way to think about money is the medium for expressing preferences. When you buy a car or sell a house, the economy responds dynamically by making more cars and less houses. So now with Bitcoin, you can actually express these preferences transcendentally of space and time. Right. You can express them in theory for all eternity.
- [75:55]
Michael Saylor
Sorry to cut you off. Can I give you two examples to pop them on, please?
- [75:58]
Robert Breedlove
Yeah.
- [76:00]
Michael Saylor
All the time you have examples of rich donors that they endow a professoral charity university and then the money gets hijacked to build a new football stadium. Or I want to endow a professorship of Austrian economics, but then someone takes over the university and so they divert the money to buy a new hot dog truck. So I'm dead. How do I make sure that someone doesn't, that they really fulfill my last dying wish? How do I make sure? Well, I can do it if I have a Rockefeller Institute and they hold the purse strings and they go it out annually and they watch. But then I have to actually have a bunch of people that I trust that 100 years from now will remember what my wishes were. And maybe nobody cares about that, but it's a challenge for people. Now, I went into Naples this year, and if you go to Naples, you go into the port, you have all these super yachts in the port and very, very wealthy people on the super yachts. But if you walk out of the port, there's puddles on the floor, and there's this park in the middle of Naples right next to the port, and it runs about 10 blocks. And 50 years ago, it was beautiful in the jewel of Naples, and it was like Central park and everyone could come there and enjoy the day. Now, if you walk through it, all the buildings are spray painted, they're all closed. There's pooling, stinking water. No grass grows, it's just mud. It looks like something 40 years after the apocalypse. It's in the middle of like the third largest city in Italy. There's money everywhere. And yet somehow, neither the municipal government, nor the state, nor the federal government of Italy, nor any wealthy person can manage to come up with €100,000 a year to water the grass and mow the lawn in the middle of a city of a million people. The public jewel of the city, the single most important piece of real estate in the entire city, is suffering from a tragedy of the commons. Now, I asked myself if I was that wealthy person and if I wanted to bring that part to life. If you wanted to do a top notch, and you need a million dollars a year, A million euros a year, you want to do spectacular something. 10 million euros a year. If you want to just mow the lawn and water it and keep it from being a stinking, mud infesting war zone, €100,000 a year. How do I actually endow that part without having the money hijacked by whoever hijacked the money? Because obviously none of the economic energy is making it to that part in the middle of Naples. It might be a more worthy cause than just giving a third of my money to the government as tax on my death, or two thirds when I die for them to whatever they're doing. What can you say about a civilization that can't keep its central park in its most important city in the province from being a stinking post apocalyptic zone?
- [79:25]
Unknown Speaker
Right. Terrible.
- [79:27]
Michael Saylor
Like one of my values. So people have wishes. They have a hard time realizing their wishes. There's a lot of ways to do it. And the theoretical magic way to do it is I create a program on a crypto network in cyberspace. It runs on the blockchain network. Nobody can stop it, ever. It's unstoppable code. It's literally a magic spell. A less intense way is I power it with crypto network and I use a combination of people and digital networks to do it. I think ultimately people can achieve what they want in a variety of ways. If I want to be fed, I can feed myself by hunting a deer, I can feed myself by raising chickens, I can feed myself by growing some corn. These are all different ways to achieve what you want. The real key is I need to have mastered the technology of hunting, the technology of farming or cultivating animals, wildlife, and then the technology of farming. And if I have all three of those technologies on my fingertips that I can mix and match, then I can actually do something interesting. I think that's the potential here we talked about. Money is power. Any sufficiently advanced technology is indistinguishable from magic. So if you apply advanced technology to money, then you can give someone magic power. So the source of magic power is providing an instruction into the digital and crypto network space and powering it with crypto network space such that you've cast a spell in the future or cast a curse into the future when you're long gone. That's real magic, right? Like casting a curse 30 years after I died. That's impressive magic. But less interesting and more practical is I just want to cast A spell while I'm alive. And the magic spell I would cast were I a magician is I'd go to that park in Naples and I would wave my hand and it would become a beautiful paradise with gorgeous trees and nice grass and water flowing and cleanliness and safety and free ice cream cones for the kids and flowers and happy music and concerts on the green. And it would be like that forever, because that's my magic. And by the way, in fantasy, the great magicians, the demigods, right, the powerful wizards, they have magic power. They can do that. And the more powerful they are, the longer the spell last. So if I have a million dollars, I can do it for a year. If I have $100 million, I can do it forever. If I have a billion dollars, I can allocate 10% of my power to do it there forever. Magic power, right? Money is power, right? You got enough money, you can snap your fingers, materialize a jet, it'll fly you to Tokyo on 10 hours notice. It'll cost you about $250,000. If that's how you want to expend your energy. If you have enough energy, it doesn't matter if you don't have 250,000, right? The other part in those magic stories is the mere mortal that wants that same, that same trip, their life force is sucked out of them and they are aged 82 years and they die, right? If I take a middle class person making $72,000 a year and they need to fly from New York to Tokyo for 250,000, right? That's all the savings they're ever going to have. I just sucked their life force out of them to cast that spell. And so, so how much power do you have and how much magic can you bring to bear? What John D. Rockefeller had magic, he just did it the old fashioned way. He went everywhere and his son did. John D. Rockefeller Jr. They went to all the beautiful places on there on earth. They bought them all up and then they ended up turning them into national parks. You know, the U.S. virgin Islands is a Rockefeller Park. St. John, they bought Acadia, they bought a lot of Mount Desert island, made it a national park, Grand Tetons, they bought all that land, made it a national park. Most of the land up and down the Hudson river, between they and JP Morgan, they bought it, made it state park, they're casting spells.
- [84:29]
Unknown Speaker
And he turned it over, turned it over to the governmental organization, which was the best method he had at the time based on technology, right?
- [84:39]
Michael Saylor
They gave it to the longest Lived sovereign power. They did the best they could do.
- [84:47]
Unknown Speaker
Right?
- [84:48]
Michael Saylor
And you know, they played the cards that were dealt them. Those were the cards. They had gold. They had state governments, by the way, most of the trust, state and federal trust. That law was written by lawyers, paid for by Rockefeller. So they created the political system. I mean, you think 501c3 law just came out of nowhere. I mean, all of these laws, they're created. John D. Rockefeller's son married Abby Aldrich. And Abby Aldrich, who became Abby Rockefeller, the richest woman in the world at the time, was the daughter of, I think, Nelson Aldrich. And Nelson Aldrich was the head of the Senate Banking Committee, happened to be key in the creation of the Federal Reserve. But he was one of the most powerful men in the country for quite a long time. And so there was an example where they were working to influence the political system. And critics say they influence it to the detriment of people. But you can also see many ways they influence it to the benefit of people. If you've ever enjoyed a national park, half of them were endowed by guys like Rockefeller.
- [86:11]
Unknown Speaker
Right. Interesting angle. Yeah. So Aldrich, of the Aldrich plan that failed right before the Federal Reserve act, right?
- [86:19]
Michael Saylor
Yeah. He was from all the way through 1920 or something. For 30 years he was dominant from the senator from Rhode Island.
- [86:30]
Unknown Speaker
Right.
- [86:31]
Michael Saylor
We could pull the exact stats. So I think that in a nutshell is my views on crypto. I think ultimately we're moving into an exciting world where people are going to be able to achieve great things with a variety of digital networks and crypto networks. What we can see right now for sure is there is at least one successful crypto network, Bitcoin. There are many successful dominant digital networks. YouTube. Right. Google, Facebook, Amazon, Apple, etc. Plenty of them. And the future is going to be defined by these networks. And you just got to decide what's the best tool for the problem. You can solve problems with people. I can pick up the phone, I can call you and say, Robert, buy me $100 million worth of Bitcoin and I solve the problem with a person, or I can solve the problem with a digital network. I can go online on Binance and I can, like start typing and trading and I can buy 100 million worth of Bitcoin, or I can solve the problem with Uniswap with a decentralized total crypto network. What will happen? The market will determine. What we know is that over time, what was done by people will start to be done by digital networks. And what was done by digital networks may in fact float into crypto networks to the extent that sovereign immortality is worth the trouble. And if you're going to make a crypto network, if people are, if they're just doing it for regulatory arbitrage, it's probably got a 10 year lifespan and it's shaky. Because who's going to lay down in front of a tank for something like the difference between binance and uniswap? Would you sacrifice your life to trade on uniswap instead of binance? Because I wouldn't. Let me tell you what they'll lay down on a tank for. They'll lay down in front of a tank for freedom, for their religious values, for the future of their family, for the future of their ideology. If they have a passionate belief, they will lay down in front of a tank in order to defend the principles of science and justice and humanity and truth. Not everybody. You don't need everybody. You need the keepers of the flame, you need the maximalist, the 1% who are willing to fight and die for the principles we hold. These truths to be self evident. We didn't come up with it here today in this call. It was a basic truth that founded a lot of things, including the United States of America. And if you go back to the Roman Republic, you'll find there were a lot of Romans when the Roman Republic was healthy and they were willing to fight and to die for Roman principles to a certain extent. A lot of good Romans assassinated Julius Caesar because they thought they were fighting for Roman principles. And a lot of wars were fought over it. So if you really want a crypto to be successful over 100 years, the technology is only part of it, right? It's the ideology paired with the technology. And you're going to have to have an ideology that is so pure and so straightforward that people will fight to the death to defend the ideology. And that's why I'm probably not going to sacrifice my Life for the 13th iteration on smart contracts. It's not that important. On the other hand, if you tell me that we're about to suck all of the economic energy out of the civilization and plunge ourselves into the dark ages, then I think I'll fight for that's worth fighting for.
- [90:59]
Robert Breedlove
Alright guys, that was episode eight and man, just another big deep dive into bitcoin and its implications globally. Really. So we started the episode out talking about the divinity of engineering and as Saylor mentions, which is the mascot for mit, the beaver. Right. The reason the beaver is the mascot of this engineering focused school, MIT is because the beaver is really special, right? He actually goes into nature and harvests materials and re sculpts the flow of rivers, frankly, by damming it and using his wits and ability to build habitable structure for himself and his family when he goes to reproduce. So the beaver ends up being this symbol for this divine quality that really life has, which is engineering. This divine quality of engineering has found its highest expression in man, right? We have, at least so far as we know. We're the animal most capable of harnessing this quality that the ancients would call the logos, which is its ability to confront the chaos of nature, dissect it with the categorical capabilities of our mind and our words, communicate about its properties and qualities to learn about nature and basically convert this unexplored territory into explored territory and convert chaos into, into good inhabitable order. And this is a really deep and ancient idea, but it's something fundamental to life and to humans. And you know, civilization itself we can think of is just a bubble of this habitable order amid the unlivable entropy of the universe, right? And you can see this even in like where I'm from, the South, Southeast United States, there were areas in say Mississippi that were just not habitable whatsoever before, prior to the invention of the air conditioner. So that's maybe one extreme example. But there were literally places, geographic locations on Earth that we simply could not live until we became sufficiently advanced technologically. And Saylor has a great quote on this. Humans are divine when they engineer a better habitat for themselves and those they love through their intellect. So again, this to me points back to work, right? Which Bitcoin, as we've discussed, it's money rooted in proof of work, as gold was. And work itself is a noble pursuit, right? It is the, the means by which we convert chaos into good and useful order. And I would argue that it elevates our timelessness, right? It's actually giving us, allowing us to accomplish greater results with less efforts in terms of making productivity gains. It's also lowering our time preference, so making us more long term oriented. And in this process we define, develop more morality, more selflessness even. And we also become, we develop greater survivability, right, as a species. So when things, you know, the entropy of nature inevitably creeps in, we have the ability to respond to it, right? If there's a natural disaster or something of that sort, we can harness resources from other pockets of civilization and channel them into the affected area such that they can recuperate. So I Thought that was just a really interesting topic and it points towards the instrumentality of Bitcoin in helping us better focus on this divine quality. Right. Bitcoin really is money purpose built for entrepreneurial experimentation which involves, you know, engineering and problem solving. Whereas you could look at something like fiat currency, much more based on bureaucratic theft. Right. We're talking about individuals and organizations that add no value to the productive economy and just siphon value off of those that do go out in the world and engineer. So in that sense, by re enabling and re energizing work itself, we could view Bitcoin as a form of divine money in a way. And then we got into bitcoin as a medium of exchange. And there's a bit of a, you know, in 2017, during the Bitcoin cash fork wars, there's a bit of delusion related to this word cash. In the white paper where Satoshi called bitcoin originally peer to peer digital cash. And, and the thought was at least by say the Roger Vers of the world who represented bitcoin cash, that bitcoin needed to be used in day to day transactions. What this is ignorant of actually is the original meaning of the word cash, which comes from the French word casse, that's C, A, I, s, S, e, which meant money box. And this was used as a term in the 19th century to indicate final settlement. So it was a bearer asset money. Right. Physical gold or physical silver was said to be cash. And only in the modern age have we sort of repurposed this word to mean the government debt certificates that we trade with today and call money. So knowing what a genius Satoshi was, I am confident he was clear on this meaning of cash and did not mean bitcoin needed to be used as a day to day medium of exchange to be to proliferate. And by the way, even if he did, it doesn't matter because the market selects the purpose and utility of a tool. So Bitcoin is being selected, has been selected by the market as a store value and that's the direction we think it'll keep going. So the magic of bitcoin, if you will, is as we discussed in earlier episodes, its ability to transfer energy or monetary energy in a lost, minimized way. So you can send energy across time and space with minimal loss, essentially. And that's what's important. Not the ability or speed or low transaction fee to move it at a high frequency. Just doesn't make any sense. And to Saylor's point on that, the bitcoin Network is optimized for survivability. That's what decentralization is, is that it's a very slow and inefficient database. But with that slowness and inefficiency comes maximal resources redundancy. And with that redundancy comes resistance to large attacks, you know, specifically nation state level attacks, which would be the most powerful organization in the world today. And so if you're going to, if you needed a medium for high frequency transactions, you're always going to get a million times more economy and efficiency moving to a centralized system like PayPal, Venmo, Apple Pay, Visa, whatever. Because the database only needs to be updated once versus Bitcoin. It has to be replicated everywhere and nowhere, across all nodes and miners. So that's the trade off. And we'll get into more of that shortly. But in a nutshell, I like the description Sailor uses that Bitcoin is a low frequency medium of exchange, meaning you only need to move it occasionally, maybe never if you custody it correctly. But it's a high frequency store value, right? So every time you're hodling, you're using it, right? So the people that argue that Bitcoin doesn't have any utility, they don't understand this economic principle whatsoever. And further to that, even if you wanted, if you absolutely wanted to use Bitcoin as a medium of exchange, most tax codes in the world today are hostile to that, right? They'll actually trick capital gains realization at each transaction, so really suppresses its use as a medium of exchange. And another way to think about this, it gets a little more complicated. But actually when you're holding something as a store of value, trades are not just with other people, trades are also with ourselves, like infinite slices of our future self. So every time you choose to hold, hold cash or hold Bitcoin or gold, cash in its original sense and not trade it, you are basically trading with your future self. So you are giving away the opportunity that the cash could have otherwise been traded for whatever its cash value on the market is. It could go out and buy you X assets. You're foregoing those assets and choosing to hold the optionality have cash, right? Whereas those assets may have real yield, right? They may have, they may be productive assets, you know, rent generating real estate or whatever may be, whereas hard money doesn't actually create a yield. So you're actually the most trades you do in life are not actually with present others, but they are with your future self, right? All these infinite slices of your future self and every action or inaction even, is a set of trades with those future slices of yourself. So we could look at the actual store value function truly being much more important as a medium of exchange than a present medium of exchange with present others. So I think that's just an interesting way to get conceive of money and that it's something that you're holding onto to have maximum optionality into the future. And that holding is a trade with you, even though it's not a trade with others. And this also dovetailed into why Saylor chooses not to compensate people in Bitcoin and why he thinks it's a bad idea to do so. Because again, again, if you're using it primarily as a store value, you may not sell it ever, or for say, at least 100 years. By choosing to compensate people in Bitcoin, you're accelerating that tax bill 100 years into the future. So that's a really bad idea. You're also increasing the accounting complexity of the business, which would be the payor and the payee. They both need to mark Bitcoin to market at each point of transaction. You'd also be forcing, if, say, you're kind of compensating your employees with Bitcoin, you're forcing them to sell it later, right? To actually cover the tax bill that's generated as a result. So that doesn't make a lot of sense. And yet, in a nutshell, as Saylor said, the ethos of Bitcoin is self responsibility. So you should pay and settle in whatever the generally accepted medium of exchange is, the one that the tax code is not hostile against, which tends to be currency. And then if you have savings, you have excess currency or excess assets, you would, as Saylor does, sweep them into your savings or your treasury for long term storage. That's the optimal and intelligent and low complexity strategy. And we got into a bit about how optionality itself is freedom, right? The more options you have, the more free you are, we'd say. And this has direct impact on the stability of society. And Saylor quoted Robert Hyland who said, quote, an armed society is a polite society. So to tie that back to Bitcoin and capital, it's like when people have this option of capital flight, they have this perpetual option to move their money across domain, across time, across custodian, and settle with finality nearly instantly that governments and institutions and service providers, they're going to tend to be more respectful because the customer holding the capital has such a high degree of optionality. You can think about this too. When you go to the amusement park, just to name one example, the food and drink cost in an amusement park tend to be really high, right? A soda that you may pay, I don't know, $3 for at your local convenience store might be 8 or $10 in that amusement park. And it's because the amusement park has what's called a captive audience premium. You have no other choice. You have no other options to buy food or drink once you are inside the bounds of that amusement park and they can effectively charge you monopoly style prices. And if you look at Bitcoin capital through that lens, it's kind of removing this captive audience premium that legacy financial institutions tended to have or nation states tended to have over users. And we could say that if users have the ability to move the money whenever they want, they don't actually need to. It's just the fact that that option exists keeps everyone honest, keeps everyone listening to one another's preferences, because no one wants the capital to move. So I think the point of this is that a symmetry of options, a symmetry of optionality between, say, buyer and seller, and stability of the rules and protocols through which they interact, this is the bedrock of peace. This is what preserves peace. But when you get asymmetries, when one group has a lot of optionality over another, that's when you get predatory treatment. I would say central banking falls much more into that model where they get this perpetual call option on society basically that they can allocate cash into businesses, the shareholder values being increased, dividends are being paid, and if there's ever a shock to the economy and the institutions that have deployed that capital into risky positions get wiped out, well, the central bank just stopped, siphons more value from the productive economy through printing money and allocates again. So it's a heads I win, tells you lose situation for central banks over productive economies. So Bitcoin is just eliminating this, this captive audience premium, or asymmetry of optionality, if you will. And another way to think about this too is to get back into Bitcoin as money. We can actually consider the monetary premium itself on an asset as its optionality value, if you will. So the more tradable an asset is, the more a component of its market value is its expected future exchange. So for instance, if ammo has a very specific use, it can be put into a gun and fired, and the gun can be used to kill people or animals or whatever. But in an environment of ammunition scarcity, people may also be willing to trade other goods and services for that ammunition. So that ammunition will start to trade at a premium not just for its utility value. Not that its utility value has increased a lot necessarily, but that its exchange value or its optionality value has increased, increased. And the extreme example of this would be gold, right? Gold has a. I think we're at almost 12 trillion dollar market cap for gold. The industrial demand for that is, I think it's around less than 2 trillion. I want to say it's closer to $1 trillion. The rest of that demand or the rest of that market gap for gold is reservation demand for gold as money. Right? Because it best fulfilled the properties of money which made it maximally exchangeable across space and time. So in that lens too, we could say that Bitcoin is like the world's first pure money. It's pure monetary premium. There's not really an industrial use beneath it. Some have argued that actually the transaction network was kind of the original utility that bootstrapped its monetary premium into existence. Maybe you could make that argument, but the point is that it's a tool of pure optionality because it's pure monetary premium. Or you could look at things that are less tradable, would be a much larger component of their market value, would be their use, their industrial use value versus their trading value. So money exists on this gradient is the point. Right. Like something that's very not tradable, very highly non fungible, very specific purple telescopes or something weird like that would have, it'd be valued just on its use, mostly just on its use. Right? Not on its expected future exchange value, but something like Bitcoin at the other end of the spectrum. And money itself is valued based on its expected future, future exchange value. Essentially I think it was naval said that money is the bubble that never pops. Because this delta between market and industrial use value has been called a bubble by some people. But what it actually is underlying that is the value of the monetary properties giving rise to that exchangeability. So that got us into Bitcoin as a unit of account. And Saylor had a great quote on this. He said quote, he expects that Bitcoin will be a universal language of economic truth. And I fully agree. It is the predictability of the supply of money that gives rise rise to its utility and pricing other goods and services. That's what gold was. It had the most predictable supply of any monetary metal. And that's why all of the liquidity and market capitalization coalesced to gold. And that's too like we used for that reason. We Used to think actually in ounces of gold. Even dollars themselves represented ounces of gold originally because it was another way to think about it is the time and energy of market actors that produce every good and service in the world. This tool, money or gold, most closely mapped onto the absolute scarcity of time and energy. So gold was the supply curve that was closest to the absolute immutable, perfectly scarce supply curve, if you will, of time and energy. And this gave it the ability to basically generate prices that were generally the most stable. Not saying they were enforced stability, but they were just tended to be most stable because gold had the lowest and most predictable inflation, which also meant prices were most useful in calculation.
- [111:04]
Michael Saylor
Right.
- [111:04]
Robert Breedlove
They weren't fluctuating wildly all the time, and they were communicable. So we could. We'd actually start to just think in ounces of gold for goods and services instead of needing to think in all these countless exchange ratios, you know, like how many chairs a car is worth or whatever it may have been. So I agree that bitcoin is going to go that way, but as far as where it is today, I love this point. Say they're saying there's a lot of infighting in the crypto community about, you know, is bitcoin going to be the thing, or Ethereum or this or that? But it's all essentially pointless because as he described, the crypto asset ecosystem at the time we recorded was around a $300 billion pond sitting next to a $300 trillion ocean of assets, which a lot of them are just intended to hold value over time. Right. Store of value assets. So say gold, bonds, real estate, all fall into this ocean, and that's where our energy should be focused.
- [112:08]
Michael Saylor
Right.
- [112:09]
Robert Breedlove
Is actually carving a little spillway from the ocean into the pond here. Not competing amongst ourselves because frankly, as we've covered in previous episodes, Bitcoin is just highly resistant to disruption as money. You know, it's not to say that other crypto assets won't succeed in something orthogonal to money, something that's not the market for money. This technology may have other use cases. There's a lot of theory out there, but today it's just not proven. So I agree completely that our focus as educators or ambassadors for Bitcoin needs to be geared towards those still holding and interacting with these other alternative stores of value so that they can understand why Bitcoin is, as we described earlier, essentially possibly the sole store of value asset for the 21st century. The only way you could successfully transfer value 100 years into the Future with least loss. So I agree with that completely. We then jumped into crypto versus digital networks. And again, crypto network we can think of as a decentralized consensus model. And this is using Saylor's nomenclature. The digital network would be a centralized consensus, right? So just sort of one entity or decision, decision making, body deciding. And there are different use cases for the two and there are trade offs between them, clearly. So crypto network will be useful for establishing what Saylor calls immortal sovereignty or anti fragility, which means they are able to persist over time. Right? Decentralized crypto networks have a high degree of survivability and they impart properties like trust, minimization, security and duration. So you don't need to trust the centralized decision making body, instead you trust the aggregate self interest of all market actors in a decentralized network. And this is, you know, clearly this is gold or this is bitcoin, right? These are again gold. Not. It's not built on cryptography per se, but the inability of producers to create gold in a lab, right. Basically meant that the whole world was decentralized around gold as money. There was no political actor that could control it until central banks accumulated a large stake in the supply and started manipulating it in the gold derivatives market, which we've talked about before. So on the other end of the spectrum from crypto network is a digital network which is useful for as opposed to survivability, it's useful for squeezing efficiency out of a system, right? Eliminating redundancy where a decentralized network is going to be fully redundant. Right? You think about all these nodes and miners all over the world all running a copy of Bitcoin and updating all the time. So it's a huge expenditure of energy to establish redundancy. A digital network is going to just have one sort of record base that can be updated very quickly. Very low latency, very low redundancy. So the properties that it imparts are economy, performance, functionality and compliance. And to draw back to the, you know, we say gold is kind of decentralized money. We could say fiat is more like a centralized money. So because gold was expensive to move across space, we could introduce this centralized database on top of it called fiat currency that let us do ledger entries really quickly in gold. So we picked up all of this transactability across space, but we introduced this attack, attack vector for intermediaries that actually compromised gold's store value function over time. So I thought that was an interesting way to look at it. And you know, the only as we discussed, the only market proven crypto network in the world today is non state digital store value Bitcoin. Everything else is theoretical. This is not to say that actually digital network can evolve into a crypto network. So it's kind of like. It reminded me of our earlier discussion of the steel age where newly charted industrial spaces tend to have monopolists when out in the beginning and then those monopolists set standards and then over time that market becomes commodified and tends back toward a more freely competitive domain based on those standards. So it's as if a decentral or a digital network could establish certain protocol standards for a decentralized network and then, you know, turn over the keys, so to speak, to the free market. And then if there was sufficient demand for whatever utility it's providing, it could become decentralized over time if handled correctly. We haven't really seen that yet. We've seen some attempts at it, but I don't think we've seen it done really cleanly yet. But this evolution, a successful evolution from a digital to a crypto network would require sufficient differentiation, one that would end up being useful as a competitive advantage essentially in this, this market driven natural selection process. So it wouldn't be again, I think Bitcoin's already run and won the race for money. So it would have to be a different market and it would also have to. It's difficult, it's really difficult to accomplish this differentiation given Bitcoin's capacity to absorb other competitor feature set. And in a biological sense we call this horizontal gene transfer where Brandon Quidum has written and talked about this mycelium has this ability when it encounters a threat in the environment. If it neutralizes the threat and consumes it like a competing mycelium or an insect or whatever, it can actually digest its genetic code and incorporate that information into its own genetic code. So we typically think of animals having vertical gene transfer right from parent to offspring. But there's something more competitive in nature, this horizontal gene transfer where you can just slurp up genetic material from competitors. And Bitcoin exhibits that in the digital domain. So the point is that the differentiation necessary for a digital network to evolve into a crypto network would have to overcome this horizontal gene trend or Bitcoin as well, which would otherwise just absorb it and render the attempted evolution unnecessary. So finally we got into this concept of immortal sovereignty, which I thought was just incredibly interesting. And we can think about this as channeling one's preferences beyond one's own life and this is not a new idea actually. You know, Saylor gave this sort of general example. If he wanted to buy flowers for everyone in his family for the next 100 years on their birthday, how would he accomplish that? And he drew on examples from John D. Rockefeller and he said, you know, Rockefeller would have established, using the tech of his time, this quote unquote, immortal sovereignty by either establishing a non profit foundation, an endowment, a university, or possibly in a national state park. But this necessitated really big numbers and was limited to just a few ultra rich people that could do it. And again, these are, Rockefeller was alive, I guess almost 100 years ago. Now you're talking about 100 million in assets and 5 million a year operating budget in $1920. So big, big numbers were necessary to achieve this moral sovereignty that Bitcoin delivers to us in a much more cost effective way today. And then additionally, no matter what you set up, foundation, endowment, university, you would still suffer this counterparty risk because you'd have to trust the institution, you have to trust the government protecting the institution. But Bitcoin gives us an interesting thing which is a monetary layer that enables us to dematerialize these, these institutions but still achieve something similar, this immoral sovereignty, if you will. And it does this because it gives, you can actually assign the trustees, let's say a multi sig setup keys to the funds to accomplish the aims of the, I guess you'd call it the digital foundation. But they would have, because their property rights wouldn't be expose the counterparty risk in the form of the institution or the government, they actually gain a great deal of dynamism to roll with or get through geopolitical changes such that they could preserve the original mission of that institution. So you can think of it as immortal sovereignty at just a much lower cost. Which I think seems speaks to the grander vision of Bitcoin. Right? It's like why do we have these stories like the nation state and universities organizing us? And what is possible when we instead maximize the sovereignty of the individual? How relevant do those institutions remain? And the other example he gave is like if you wanted to host your website reading material for a thousand years into the future, you could code all kinds of interesting rules around that, like maybe requiring people to pass a test and become a certified, certified student of your knowledge. And then maybe they gain a voting right to choose the next trustee of the institution and it becomes this kind of dynamic, digital, autonomous, democratic organization that just rolls forward in time. So it gets really, you know, really wild when you imagine the possibilities. And it points towards all the new institutional possibilities enabled by Bitcoin, which in my opinion calls into question the structure and the purpose of the firm today. So Bitcoin gives us this monetary layer capable of dematerializing these institutions we've needed in the past for sovereignty to establish. Let's say they're called immortal sovereignty. And it does it in a way that empowers the trustees of these organizations to be self sovereign so that they can actually resist geopolitical sea changes and adapt to changing political climates over time. Whereas historically you would have needed to trust that institution itself. And should it be invaded, you know, say in wartime or broken down due to a civil dispute within the country, then you would have lost the sovereignty that you would have vested trust in the state park or whatever the will you were trying to project beyond your life. Its fate would have been vested with the survivability and sovereignty of that institution. So Bitcoin, by being a monetary base layer that maximizes the sovereignty of individuals and being optimized for survivability, actually gives us a whole new way of establishing this immortal sovereignty across time. Another way to think about that is Bitcoin is collapsing the cost of money. It's collapsing transaction costs, it's collapsing the cost of satisfying the functions of a central bank. And it also just collapses this cost of immoral sovereignty, which again, The Rockefellers needed $100 million in assets and a 5 million dollar annual operating budget to achieve to establish the Rockefeller Foundation. Now you can do that in theory at least, just a much smaller Bitcoin stash and some software and some really long term strategic thinking. So I like the analogy too that Saylor used. If you wanted to say, host your website, reading materials for a course of a thousand years, you could actually chop up the keys to that institution, the endowment, the Bitcoin endowment for that institution, give it to five trustees, encode a set of rules such that people have to read your materials and pass a test to maybe gain a voting right, so that they get to decide who replaces each, the succession to each trustee. And in that way the thing kind of becomes this decentralized autonomous organization over time that just preserves your will and testament, which was to have this body of knowledge go into the future for the benefit of humanity. So I thought that was really cool and points towards just the new possibilities that Bitcoin brings into the world and that it not only causes us to question the purpose of the firm itself and other organizational models we use, but it's also kind of like creating something that's truly timeless. This is why I thought Saylor, he called these creating monuments in cyberspace. I thought that was a really cool way to look at it, is that by gaining immortal sovereignty through Bitcoin enabled institutions, we can actually create things that, well, outlive us, yet still are shaped and influenced by our living will and testament in our own life. So I thought that was really cool. And finally we got into a topic we touched on earlier, which was that money is power. And we combined it with another topic that we touched on previously is that sufficiently advanced technology is magic. So by combining these two concepts, we say that a sufficiently advanced monetary technology is magical power, effectively, and it lets its users cast spells or cast curses. And one of, you know, on the spell side, we went into this park in Naples that as Saylor described, was surrounded by wealth, but for whatever reason was not receiving an adequate allocation of that wealth to preserve the park and keep it pristine. So again, to establish an immortal sovereignty historically, like the Rockefellers, they had to go out and buy up this land and basically turn it into national parks because they were then vesting their will and testament with the longest lived sovereign power of the time, which was the nation state, to see that it would to maximize the chances of preserving their intention across time. Whereas. And the point there was even more interesting is that the 501c3 nonprofit foundation laws, they're actually written by Rockefeller's attorney. So again, this shows the relationship between money and government. The common misconception is that government is the originator of money. But what is in fact true is that money is the originator of government, that wealth itself tends to shape the laws around it that determine its management, preservation and distribution over time. So I thought that was a great point to touch on. And then on the other side, where we talk about casting a curse, we didn't talk a lot about this. But just thinking out loud, if you had an organization like Anonymous, which is this anonymous set of computer hackers distributed all over the world, you could in theory fund them in perpetuity, right, With a Bitcoin based smart contract enabled endowment that would effectively fund their hacking attempts or attempts to say, dissolve the power structures of government, or to remedy any government mistreatment of civilians, things like that. So it could be used in both a defensive way to defend the park in Naples, but could also be used offensively to influence attack hostile organizations like national government. That just all. It's just an incredible way to think about how many ways Bitcoin not only shapes and influences our wills and our willpower and intention by lowering our time preference and elevating our morality, but also gives us this medium through which to project it over much longer time and space horizons. So it really is one of those tools that's just radically reshaping who we are. And in that sense, you'd kind of consider it. You know, we touched on the religious aspects of Bitcoin, but even if you just stripped that out and said it's just an ideology, it is perhaps one of the most pure and principled ideologies there's ever been. Right? It's just if you respect fairness, equality, natural law, thermodynamics, mathematics, freedom, that's what Bitcoin positively embodies, essentially. And this is such a pure and pristine ideology, is something people find worth fighting and even dying to. So it does have these qualities again, of a religion or of its own independent nation state, if you will. Again, it's just challenging all of our language even to describe what it is. So although we focus on its monetary properties and exploring it as money, by asking this question, what is money? I think we come to see bitcoin is even much more than that, or perhaps even seeing money as much more than that. Money is foundational. It's like the base operating system to all these higher order operating systems we have, like the nation state and religious institutions and etc. Etc. So, as I said once before, Bitcoin people come to bitcoin for the profits. I think almost everyone's drawn in by number go up. But I think the people that really come and stay and find roots in bitcoin and purpose and meaning in devoting their lives to this space, they stay for the principles, you know, so it's bitcoin, come for the profits, stay for the principles. So that was it. That was episode eight, guys. I hope you enjoyed that one. This has just been a dynamite series so far. We've got at least one episode left, so look forward to that. I'll see you back to the next one.