← The Wolf Of All Streets
The Wolf Of All Streets
Bitcoin Will Reach $100 Million: Peoples Reserve Reveals Plan To Redefine Global Finance
01:05:20
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- [00:00]
Scott
All right, so we'll just start talking shit and see what happens.
- [00:03]
CJ Constantinos
And this is the first time I'm actually announcing this on this, on this show right now.
- [00:07]
Scott
Question is, if the interest rate goes up and somebody can't afford their monthly payments, what happens?
- [00:11]
CJ Constantinos
Yeah, I love this question because. Wait a second, there's a trapdoor here. It goes deeper. You know, like myself, I walk into my $10 million home. The problem is it's only worth less than $500,000. Look, the risk is so much that banks don't even keep mortgages on their books. They package them together and sell them off in residential mortgage backed securities and commercial backed mort backed securities. Sorry, sometimes I have a bad habit of just going.
- [00:36]
Scott
That's literally a gift for podcast. What happens when the world accepts that Bitcoin is pristine collateral and should be the zero layer of all financial transactions? The answer is that you have a bitcoin powered life. People's Reserve is building this. Specifically CJ Constantinos, who I had on the podcast today to talk about all the incredible things that are coming not only for People's Reserve, but from a world powered by Bitcoin. This conversation will likely blow your mind, as every conversation does, that I have with cj his breadth of knowledge and the depth of thought on the products that are likely to come and how to build this Bitcoin based financial system. Absolutely astounding. You're not going to want to miss this one. Just give it a listen.
- [01:23]
CJ Constantinos
Let's do.
- [01:37]
Scott
You and I have been discussing privately the idea of Bitcoin as pristine collateral for quite a while now. I'm assuming that's effectively the basis for everything you're building. Right? So maybe we should start at the very beginning. Why you view Bitcoin as pristine collateral, why you're so passionate about the asset, why you decided to build in this space in general.
- [01:57]
CJ Constantinos
Yeah, absolutely. And I mean, it all goes back to really my personal experience. In 2019, I bought a single family home for 100 Bitcoin. You know, even though we're in a bear market, my wife was pregnant and, you know, the man may be the head of the house, but the woman is the neck and she can turn that head any way she wants. So I had to buy that house. And I don't regret it. I mean, the memories I've had, the quality of life and standard of living upgrade that we went through, from renting an apartment to moving into our own home, I mean, it was all part of the experience of life. But looking back on it you know, it revealed a big problem, and that is that bitcoiners, who are positioned on the right side of the ongoing transfer of wealth from the infinite printing world of fiat to the absolute digital scarce world of bitcoin, we don't want to give up our bitcoin. You should not sell your Bitcoin. And especially right now, because we're on the precipice of a repricing event, in my opinion, like we've seen in. In 71, they removed gold from backing the dollars. And real estate kind of went through the same process. And Michael Saylor refers to this as land banking, right? So the monetary premium that was put into real estate was really through the monetization of the asset class, its integration into our. Into our system. But what most people miss is that that monetary premium was accelerated and expanded through the financialization of the asset class. So it's not just monetization, it's financialization. And that's what's kept that premium so strong. Mortgages, second mortgages, home equity, lines of credit, all the financial tools built around the asset class build that monetary premium. And with bitcoin, we've watched it turn from magic Internet money into digital gold. And now at People's Reserve, we believe it's evolving into pristine collateral. But typical of bitcoiners who have gone to the bottom of the rabbit hole and planted some more dynamite and went ahead and go deeper, we know we're ahead of the cycle about a curve or two, or maybe even a full cycle. And it's not just about monetization. So right now, you know, with the advent of corporations and institutions through Bitcoin, treasury companies accumulating, the advent of strategic bitcoin reserves and sovereigns accumulating, it's very obvious that the asset class is being monetized as digital gold. But what comes next, just like what happened with real estate, is the financialization of the asset class is the financial tools that you need to leverage that asset on your balance sheet to create wealth for you, to compound wealth for you. So at People's Reserve, our entire ecosystem is designed to empower bitcoiners to unlock the purchasing power of their savings without giving up ownership. And especially right now, as we're about to accelerate into a massive transfer of wealth, a massive repricing. You know, like myself, I walk into my $10 million home. The problem is it's only worth less than $500,000. So I don't want anybody to get into that problem and give up generational wealth for one generation of housing. And that's one of our core products, our Bitcoin powered mortgage. But yeah, it's always built around Bitcoin as pristine collateral. And you know, a lot of people ask me, they're like, why do you call it pristine collateral? CJ well, when you look back at where we came from and, and, and you go way back, even to the free banking era, where gold was that collateral. It was literally the collateral asset backing the paper liabilities circulating in the economy. Gold was not that good of a collateral. It was, it was okay of a collateral because it's hard, it was hard to expand the supply, right? There's cost, there's proof of work required to expand the supply, but it was still expandable, but it was limited in its expansion. But, but then when it came to settlement, when it came to security bringing it across, sometimes it would cost more to settle and secure the gold than it would to borrow against it and the interest that you are borrowing. So it was a bad collateral. And these cash equivalents, these U.S. treasury build note and bonds and other types of paper debt became a much easier form of settlement because it was all about a centralized system where parties trusted each other within that system. So with gold, you have to fly it around the world, but with a cash equivalent, you can settle it in a couple of days. You could settle it real cheap. And it's in a centralized system. If a mistake was made, you could take it to court. But here comes along Bitcoin and we get the best of both worlds. We upgrade the hardness of gold to absolute digital scarcity. And then we upgrade this T +2 T +3 settlement system that we see with cash equivalents to 10 minute block times and transaction finality. So you literally get the best of both gold and US Treasuries into this hybrid collateral, which qualifies it, in my opinion, as a pristine collateral. 24, 7, 365 liquid asset that can be, that can be defaulted on within 10 minutes with 100% recovery rate and a 10 minute return time. No other collateral in the world offers that. And that's what makes Bitcoin a pristine collateral. And that's why we call our products to Bitcoin powered finance, because without Bitcoin, it's just regular finance.
- [07:04]
Scott
The first time I really heard this articulated well was my first conversation with Michael Saylor, which was right after Microstrategy first bought Bitcoin in 2020. It must have been a week after I reached out, hey man, would you really do a podcast? He was like, yeah, of course he was on the roadshow. So, you know, you, if you asked, you, you got the opportunity and he basically broke that down for me. I think that was one of the aha moments for him actually, and why he decided to go all in on Bitcoin in the first place. He said, I've got four yachts and houses everywhere. Talking about all his billions of dollars in assets. He said, good luck coming and getting my yacht that I can get a loan against. It's like it could be floating across the world. Okay, come get it.
- [07:46]
CJ Constantinos
Yeah. I love Michael Saylor. I think my split adjusted price on MicroStrategy is $27.
- [07:52]
Scott
They're doing good.
- [07:54]
CJ Constantinos
Been with him for a while and no doubt he is the OG who opened up the Pandora's box of financial engineering. And here at People's Reserve we're building on top of his shoulders. I think his financial engineering has been a focus for corporations and institutions. And that's because he does have that publicly traded company where he can issue these different types of financial tools that can empower the corporations and institutions. And at People's Reserve, you know, we're not publicly traded. We are working in the background and trying to secure a reverse merger with a special purpose acquisition company. We have some pretty exciting plans for that. But in the meantime, like Saylor, we pull liquidity from the decentralized finance Internet economy rather than the US capital markets. And what he's been able to do is fantastic. And we built on top of his shoulders with financial engineering for the everyday person, financial engineering for retail. And we have that in our bitcoin powered mortgage product. We have it in our Bitcoin bond, which is a cash flow vehicle for bitcoiners who understand you need to make, you need to have some type of cash flow in your portfolio or else you're going to have to give up ownership of your Bitcoin. So every single product and service we offer is really about empowering the everyday user of Bitcoin. And I like to compare it like this because a lot of people ask, they're like, cj, we heard about your loyalty token and this is, this is pretty exciting, but we'd like to learn more. And I have to answer back. And I tell them, well, I'm glad to hear that because this is again, Michael Saylor opening up the Pandora box. Michael Saylor, he published the Digital Asset Framework. And of course within that framework, Bitcoin is a digital commodity. It's backed by digital power, and it's in a class of Its own. That's what makes it the reserve asset of the digital economy. But he also talked about tokenized securities, which would be just like stocks, but token and not closed down on a holiday 24, seven trading perfectly liquid. And also digital commodities. I think he calls it a digital abt where we're talking about gold and oil and other types of commodities. Because we envision a world where everything is tokenized, but at the same time it's priced in SATs and settled in bitcoin. And that creates a true free market world where the yield curve itself is actually not stated or anchored, but is discovered in true price discovery based on the supply of money, demand for loans, and the perception of counterparty risk. And of course, with bitcoin as pristine collateral, you. You eliminate risk. And that's one of our missions here at People's Reserve. We don't want to just help you unlock the purchasing power of your savings without giving up ownership. We want to attempt to establish a true free market yield curve. And in order to do that, we need to raise liquidity with zero cost of capital. Now, Michael Saylor has demonstrated how to do this perfectly with all of his offerings that he has in the marketplace. He's borrowing at almost $0, 0% and he's getting access to tons of liquidity. Now imagine if Michael Saylor went ahead and said, you know what? I'm going to raise this a hundred million dollars through this convertible or through this ATM or through many of the different methods he has. And instead of taking the full 100 million and buying Bitcoin, I'm going to take 20 million and put it on my balance sheet in bitcoin. But then I'm going to take 80 million and I'm going to lend it back to bitcoiners. I'm going to take that money and I'm going to provide it as liquidity. And this is where the, this is where the company name comes from. It is literally an ecosystem that allows us to source liquidity, to create a reserve of money to be deployed for we the people. So it's the people's reserve. So we pull money from defi, we pull money from US Capital markets. And yes, we put bitcoin on our balance sheet, but we also take the vast majority of that liquidity and lend it back to bitcoiners at zero cost of capital. In what world some bitcoiners think that you're going to be able to go on your knees to the cantillaners and beg them for a credit line and then they're going to give you a credit line at 6, 7, 8%. And then you have to take that and flip it to your customer. So you're arbitraging the difference between your borrow rate and your customer's borrow rate in order to create profit. Well, you're not going to create a free market yield curve in a world where you're going back and begging for a credit line from the traditional stated anchored yield curve. You need zero cost of capital in order to redefine the risk free rate and the risk free borrower. And that's one of the things I'm most excited about here at People's Reserve. People buy the token, number one, to get loyalty benefits. You're getting calculable economic benefits. If you have a Bitcoin powered mortgage, you could save thousands of dollars a month on your mortgage payment by getting a three and a half percent interest rate. And instead of borrowing at the industry standard of around 10 to 13% depending on who you're working with. So that savings of almost 10% of interest lowers your monthly payment, lowers your out of pocket costs and saves you, depending on how much money you borrow, hundreds of thousands of dollars over the life of the loan. That's a calculable economic benefit. That's why you want to hold the loyalty token. But the second reason that you buy the loyalty token is because you're providing liquidity to the People's Reserve Fund and it's the People's Reserve Fund that is sourcing that liquidity to redefine you, the responsible saver of Bitcoin, as the risk free borrower to give you, the responsible saver of bitcoin access to the risk free rate in the marketplace. There's no way to make this happen if you have to go back to the traditional yield curve to source your liquidity. So building on top of Michael Saylor's digital asset framework and his strategy of using financial engineering to source liquidity from US Capital markets and eventually I believe even from the Internet economy, the digital economy that he's laid out that framework for, we're going to see a movement into a new world, into an Internet economy world where the, where the world of finance is focused on a true free market price curve rather than the stated and anchored price curve that they're stuck in right now. It's more profitable in a true free market. And I'm not sure if you saw this news, Scott, but just the other day I believe Bybit announced that BlackRock's token tokenized treasury is actually going to be able to be used as collateral. Yep. So this is, this is accelerating faster than anybody anticipated. And it's all based on economic incentive you have. Even JP Morgan is coming out with their own stablecoin. Why?
- [14:09]
Scott
They have to.
- [14:10]
CJ Constantinos
They have to. They have to. They cannot hold the cash equivalent on their balance sheet and earn four and a half percent. When you can hold that cash equivalent on your balance sheet at four and a half percent, create a liability in the form of a stablecoin, provide liquidity to the Internet economy and rake in another four and a half percent, you will fall behind. Your business model will fail. When everybody else is doing this, BlackRock is leading the way. Other big firms are picking it up. There's no doubt in my mind we are moving into a new era of finance and we need to get out and ahead of that to help define that yield curve to make sure bitcoiners who can post pristine collateral, they are the ones who are the risk free borrowers. No longer having the power of the printer makes you risk free. Having the pristine collateral makes you risk free.
- [14:53]
Scott
So bitcoin backed loans themselves have been popular for quite a while. I wouldn't say they've reached mainstream adoption by any sort but there's tens of billions of dollars have been taken in bitcoin backed loans. You've expanded wildly on what's available using your bitcoin. So there's a number of companies focusing on that. There's never a couple of these focusing on the yield products like earning a yield. But I've never heard anybody talk about the mortgages and the bit bonds and all of these. Maybe I don't know if we should go through them one by one because it's fascinating what you're doing. I can say that you and I have talked at length about the mortgage product. We've actually looked at one of my properties. I've committed to actually using it because I find it so fascinating. But. But much better to have it described in your words than mine.
- [15:37]
CJ Constantinos
Yeah, absolutely. And there's a couple of inherent problems with bitcoin lending. And one of the biggest risk moving into the future for bitcoiners is liquidation because we there, there's a natural volatility in the marketplace. Now we know that volatility is life and it's. And it benefits us. Right. The five year compounding annual growth rate on Bitcoin is over 60%. The 10 year CAGR is over 80%. We welcome volatility. That's how we grow our wealth. That's getting the destructive part of the volatility cycle is what tradfi is missing. There's when something goes wrong, it's too big to fail and then you end up with a bunch of zombies. When something's too big to fail in bitcoin, it actually fails. And that mismanagement and over leverage gets washed out and we build from a stronger foundation. This is how bitcoin put keeps putting in higher lows and higher lows because the failures actually get washed out and punished, Whereas tradfi has all of these zombies pulling it down so that volatility is life. But with that, volatility becomes the largest risk for all Bitcoiners, which is liquidation. And don't think for one second this is why at People's Reserve we say choose your counterparty wisely. Because a lot of these entities are gonna use their ability to issue fiat denominated debt to issue circulating credit that's only backed by proof of promise to put you in a position where you're empowered for a short time. But when that volatility kicks in, liquidation risk kicks in. And that's why at People's Reserve, we're super excited not to just offer another bitcoin lending product, but to innovate and to redefine how these products should work to secure the borrower and the lender and to dive into a little bit of how this works. Like, okay, C.J. how do you, how do you mitigate liquidation risk? What do you mean? One thing we've done is that we've integrated variable interest rates. So variable interest rates, for those of you who like free market economics, interest rates are the price of money. And prices are discovered through supply and demand. So it's the supply of money and the demand for loans, but also when it comes to an interest rate, it's counterparty risk. This is why you get assigned a credit score. The higher your credit score, the lower risk, the lower the rate you can get. The lower your credit score, the higher risk, the higher the rate you have to pay. So risk is a pricing element within interest rate price discovery. And when you post collateral with People's Reserve, here's another exciting thing. It's a one to one ratio. So if you're going to buy a $500,000 home, you only have to post $500,000 of Bitcoin to initiate the purchase of the home with every other lender. Because they don't treat Bitcoin as pristine collateral. They treat it as a risk on tech stock that you're Borrowing against, on margin, you have to, you're going to be in that 50 to 70% LTV range. And if you want to sleep well at night, you want to get, get closer to the 50 level. You and I have had our fair, our fair share of sleepless nights using these products, which is again, we run into the problem, we create the solution. How do you know that, how do you know what, what that solution or how do you create that solution without knowing the problem? So our vast experience in this marketplace using these products really is what helped developed and innovate a product that secures. I, I don't want you to be able to buy a home and then not sleep at night. I want you to sleep, sleep nice in your brand new home. And when we do that, number one, we empower you by lowering, by cross collateralizing real estate with bitcoin, we lower that threshold. So you don't need to post a million or 1.5 million of bitcoin to borrow 500,000 to sleep well at night. You only need to post a 500,000. And the cross collateralization of real estate helps secure the loan as well. That's how we do that. Now what if the price goes down? Am I going to get liquidated? No, you're not. Your interest rate is going to go up. So the way that we've done this is as the interest rate goes down and the loan becomes under collateralized, for every 10% price point that Bitcoin goes down, 50 basis points or half of 1% will be added to your interest rate. And then on the way back up, while the loan is under collateralized, you'll get back those 50 basis points for every 10%. Then when the loan becomes over collateralized, you're actually going to get 20 basis points for every 10% increase up to 200% over collateralization. So let me run through like the COVID example because I think this is super powerful. If you were lending from any other person in the bitcoin industry or any other company in the bitcoin industry, during COVID price is 10,000. You know, you put up $100,000 of Bitcoin, you're, you're borrowing 50 grand, price goes down to 6,000, you're getting margin calls, you're going to have to post more bitcoin or understand that you're at risk of getting completely liquidated, losing your bitcoin savings a couple minutes later. And I, and I know you know this better than anybody, I, I, I heard one of your shows the other day. Where you set a bid at 4,000, you went to sleep, you woke back up, boom, it was right there.
- [20:10]
Scott
And I didn't even know it went six, four to six and I was asleep when it went to four and I didn't even know I bought. It was incredible.
- [20:16]
CJ Constantinos
So that movement overnight and in your case works well because you set bids.
- [20:20]
Scott
But I would have been liquidated.
- [20:22]
CJ Constantinos
Yeah, for the person who was borrowing, you were liquidated, you woke up and your bitcoin savings was gone. Well, that's unacceptable because even a month or two later, we were right back up at 10,000 and, and you just lost the most important asset on your balance sheet. At People's Reserve. We wouldn't want to offer a product that could, that could let that happen. Because things happen all the time in Bitcoin is the most volatile asset in the world. So what would happen if you were with Bitcoin? Barring posting Bitcoin as pristine collateral. What People's Reserve through the COVID crash, well, you go from 10,000 down to 5,000. That's a 50% decline in price. Now your loan is under collateralized. For each 10% you get 50 basis points. So your interest rate would go up by 2.5 percentage points. And then for a month or two you would pay a higher monthly payment based on that new interest rate. But then boom, Bitcoin's right back up to 10,000. And now you're right back to where you were when you initiated the loan, right back to where you were at your original interest rate. And then as bitcoin went on to set new all time highs. For every 10% it goes up, you're knocking 20 basis points off your interest rate. You're could have knocked 4 percentage points off at the maximum over collateralization rate. So at People's Reserve you wouldn't have been liquidated. You would have paid a couple months of, of your, your monthly payment a little bit higher of a rate than originally anticipated. But when Bitcoin returned to where it was, you're right back to where you were. And then as Bitcoin repriced and set new all time highs, your monthly mortgage payment is actually going down. So this is what we're super excited about. At People's Reserve, remove the liquidation risk, allow our customers to sleep well at night, introduce the variable interest rate model and integrate that into our contract so that we the both the lender and the borrower are put into a power position.
- [22:01]
Scott
It's so brilliant. Question is, if the interest rate goes up and somebody can't afford their monthly payments. What happens?
- [22:07]
CJ Constantinos
Yes, fantastic question. Now this is another element that we're really excited about. We understand that things happen all the time, not just bitcoin volatility, but also life volatility. So what happens if you lose your job? Well, what happens if you, what happens if that payment is just a little bit too expensive for your cash flows even though you have your job? Well, we allow you to pay 0 to 100% of your monthly payment directly from your collateral. And since your collateral is being posted at one to one, you can make those payments for a significant amount of time before you even get the 10% threshold that forces your interest rate to go up. So if you get through hard times, that payment is a little bit higher. Because of bitcoin volatility, you can always take from your collateral and, and subsidize your cash flow with that value from your collateral to make it through. Because the only way to get liquidated with the People's Reserve bitcoin powered mortgage is to not make payment. So the last thing you want to do is not make payment. You do not want to default and not make payment. So take what cash flow you have.
- [23:02]
Scott
That's the case with any loan. That's not unique to you.
- [23:06]
CJ Constantinos
Yeah, exactly.
- [23:07]
Scott
But to pay, pay your debts, as it turns out.
- [23:10]
CJ Constantinos
Yeah, yeah. Oh yeah. There's no yeah. So people are like, oh, so I actually have to pay. Yeah, there's no such thing as, as free money. The innovation here is that we're mitigating liquidation risk, we're introducing adjustable interest rates and we're allowing you to take from your collateral and pay from your collateral to get through those life volatility moments. And with all of those mechanisms coming together, we believe at People's Reserve we really truly are going to empower responsible savers of bitcoin to unlock the purchasing power of their savings without giving up ownership of the most valuable asset on your balance sheet.
- [23:42]
Scott
It's incredible. Now the bitcoin backed bond is another one I know that you're very excited about as I'm looking through things here.
- [23:47]
CJ Constantinos
Oh yeah, we've heard a lot about bit bonds lately. Yeah, it's funny, I think actually me and Peter Dunworth were the first to really actually talk about that idea and it snowballed from there. But again, the R and D was paid by yours truly because I bought my bitcoin. I bought my bitcoin cheap, did well, spent 100 bitcoin on my house. But now I'm in my house. I'M saying, well, wait a second. I got to pay taxes. I got to pay. I got to pay for maintenance. I got to pay for my family. I got. I got to sell more bitcoin. This is horrible. Like, this is. No, I. I literally. And this is a funny story, this is how I met Charlie shrimp during that 2019 bear market. I was like, I'm not selling any more bitcoin. I don't care what anybody said. I will go back to work before I sell more bitcoin. So I literally went back and waited tables at this restaurant called Green Flash, which is like a nice fish restaurant right on the. On the water. And one day, Charlie Shrem comes sailing up in his yacht called Satoshi. And I'm looking like, is that Charlie Shrem? And it ended up being Charlie. So I got to hang out with Charlie Shrem at the Green Flash restaurant. Ended up becoming pretty good friends with him. Was recently on his. On his podcast talking about People's Reserve as well. But it's just so funny because at that time, you know, I show Charlie my portfolio, and he goes, what the hell are you doing here? And I said, you know what I'm doing here? I'm not going to sell any more of these bitcoins. You and I know exactly where this is going. And it ended up going even beyond what we were anticipating at a much faster and quicker rate. And to see this rate and pace of adoption accelerate is insane. But. But the moral of the story here was I went back to work to create cash flow. I needed cash flow. I wasn't going to keep selling my bitcoin to live my life, especially knowing where the market was, where we are on the S curve of adoption at the very, very bottom, right? Once we get to the top of the S curve of adoption, then I think it makes more sense to spend your bitcoin, because I think the value of bitcoin will be relative to the. The value of the global economy. It will have sucked all monetary premium into it through that. Through that adoption. And then the purchasing power of bitcoin will be based on whether the global economy is expanding or contracting. So you can, you know, there'll be a little bit of wiggle room there in your. In your purchasing power. But right now, before global adoption, it's just absolutely insane to. To. To spend the asset. So I said to myself, okay, I. There needs to be a way to create cash flow. And for a bitcoiner, the last thing you want to do is, like, sell a large chunk of your bitcoin to buy Treasuries to get risk free cash flow because you lose exposure to bitcoin. So we created a principal protected note that we call a bitcoin bond. And we call it a bitcoin bond because it's the price performance of Bitcoin that actually creates the yield on the bond itself. So it's a five year principal protected note. And how it works is it's based on the interest rate. So we will package together either U.S. treasury debt or U.S. state municipality debt, some municipalities with even a higher credit rating than the federal government. And right now let's call that rate four and a half percent for, for the, for this example. So we would buy a five year US treasury note paying four and a half percent. And because it's at four and a half percent, it's the percentage that the note pays that actually dictates the allocation within the instrument itself. So at four and a half percent it's an 8020 split. So if you invest a million dollars into a Bitcoin bond, 80% of that million dollars or 800,000 goes into the U.S. treasury debt or municipality paying four and a half percent. And this is really important because what that means is over the five years of that principal protected note, when you, when you take the interest payments that you receive quarterly and you add those together with the principal balance that you receive back at maturation, the $800,000, that comes out to a million dollars. And that's where the principal protection comes. So you can invest a million dollars in the Bitcoin bond and understand that you have exposure to bitcoin. But at the end of those five years, your million dollars is getting paid back to you. Now what you can buy with those million dollars, nobody knows. But you're going to get paid back those million dollars secured by the full faith and credit of the US Government or a US State backed by taxes and tolls and other things like that. So the million dollars is principal protected. What's left over the performance of the $200,000 of Bitcoin? So if Bitcoin continues to do what it does and it has a 5 year CAGR of 60%, people will get surprised by this math. But a 60% CAGR over 5 years is 10x that $200,000 of Bitcoin 2 million. That means the Bitcoin bond would mature with a $3 million value. $3 million. So over the course of time you received your, your cash flows from the interest disbursements from the, paid by the government or paid by the state, and then you maintained exposure to bitcoin. So upon maturation, you're able to roll into a higher bond if you want. So if you, if you sell a million dollars of bitcoin, you buy $1 million of treasury, you get your interest, and at the end you get your million dollars back. But if you do that same methodology with a bitcoin bond, you don't just get your, you get your interest, but you don't just get $1 million back, you get $3 million back. So every five years, it's like you can increase your quality of life or your standard of living. It's like you're getting a huge raise at work. So you could take that $2 million in Bitcoin and stack if you want to maintain your quality of life and standard of living. Or you can say, you know what? I'm going to roll 2 million into the next bitcoin bond because I want to double my quality of life or standard.
- [29:23]
Scott
And you're getting 40 grand a year or whatever from the interest on the Treasuries, which is your kind of rolling income for having it.
- [29:29]
CJ Constantinos
Right? So as a, as a, as a person who's saying, well, how do I use this instrument? You know, I come to people's reserve, I'm looking to use the bitcoin bond. How do I use it? The first thing is to understand what your expenses are, because that's what, that's your cash flow need. And you're going to calculate how much cash flow you need per month. And then you're going to make sure that those quarterly payments equate to the amount of cash flow that you need. So whatever that number is, you calculate that number. You buy that exact amount of the bitcoin bond. Now you have the cash flow you need. You don't have to go to the Fiat farm of slavery, debt slavery, whatever you want to call it, the Fiat farms, right? You don't have to clock in and clock out anymore. You're now allowing the bitcoin bond to produce the cash flow for you. But at the same time, unlike any other cash flow vehicle in the world, it maintains exposure to bitcoin and you get 100% of that upside. This is not some kind of bit bond where you split the upside with People's Reserve. 50. 50. No, that's ludicrous. We're on the lowest end of the price curve. No issuer can beat our price on this bond because there's no profit share. So you get the full cash equivalent, cash flow and then you get the full exposure to Bitcoin. What it means is you have 100% downside protection that you, you invest a million dollars, you're going to have a million dollars. Upon maturation, even if bitcoin goes to zero, you'll still have your million dollars. Now what's amazing is if bitcoin underperforms, let's say the price stays the same.
- [30:53]
Scott
You still get more than a million bucks.
- [30:55]
CJ Constantinos
4%. It's a 4% APY. If Bitcoin keeps its 60% CAGR, it's 40% APY. If we get the Michael Saylor long term 30% CAGR thesis, it's 20% APY. That means you're using a cash flow vehicle that is outpacing the real rate of inflation. In other words, it is the lowest risk, highest reward cash flow vehicle in the world that pays a real positive rate of return and that's produced by bitcoin.
- [31:20]
Scott
Will you offer like 30, 70, 40, 60 or is it all structured at 80, 20?
- [31:25]
CJ Constantinos
Well, the structure of the principal protected note depends exactly on the interest rate of the issuing debt, of course. So if the US treasury lowers rates then it might go to 90, 10.
- [31:36]
Scott
Right.
- [31:37]
CJ Constantinos
So we'll go, you know, we'll go out the curve to a municipality. But again, some of these municipalities have higher credit ratings and it's, and it's not just backed by promise and a printer, it's actually backed by taxes and tolls. And there's other types of municipal debt that are very secure and whatever that rate is, that is going to adjust. What, so if it's like if we go from four and a half to four, you might go to like 85 and 15, sort of 80, 20. If you go from four and a half to five, you can go 75, 25. So it is depending on what that interest rate on that debt is. That is the direct, that has a direct effect on the allocation of the principal protected note. And of course we want to maximize exposure to Bitcoin because bitcoin is the best performing asset in the world. So we want to give it as much power and as much pool as it can in the product to give you 100% upside. So you have downside protection risk with 100% upside. You can't beat that price. Even with some of the stuff they're talking about in the industry now. Well, like the bitbomb for instance, we'll, we'll guarantee you four and a half and then anything above four and a half, you know, we'll split that 50. 50 with you. No, actually, how about I just get my cash flow that I need from People's Reserve and then I get 100% upside. Thank you, come again. So I think that's, and that, that describes our philosophy here at People's Reserve. We like to say that we're relationship maximalists instead of profit maximalists. And some people are like, they don't just get it because they're still fiat minded. But in the long run, on a bitcoin standard, when my kids are doing business with your kids, that means that my business is still around because we cared about you. We treat our loyal customers like royalty and we believe that relationship is more important than the profit. But in the long run you actually profit more because I'm not looking at you as just a number on the screen. I'm not saying, oh, Scott came to People's Reserve. I've earned the above average lifetime return on our customer. So whatever, if he goes away, we already made money from him. Bring in the new guy so I can bring in the lifetime earnings from him. No, I think a lifetime relationship is more important. And you know, we've talked about the bitcoin powered mortgages, we talked about the bitcoin bonds, but we are a one stop shop for your most important assets, life, bitcoin and real estate. So we have a swap engine, we have a debit card, we have, we have products coming down the line. We have, we have a health share program coming down the line powered by bitcoin bonds. So you're going to get all the same benefits you would get in your typical health program, except at a fraction of the cost. Because we're taking those premiums paid and putting them into bitcoin bonds and getting the yield on bitcoin bonds to support the system rather than a cash equivalent. Spitting out four and a half percent going to get a Bitcoin bond spinning 40%. We're also working with legislators to try to establish a home share program. So not just health share, but also home share, especially here in Florida and in places where insurances are stepping away, you don't even have a chance to get insurance. Well, a home share program powered by bitcoin bonds gives you a lower price with full coverage. And the, and the insurer ourselves is more secure because we're getting a real positive rate of return. Our return is outpacing the growth in prices of the assets that we're insuring.
- [34:40]
Scott
Seems that you're very focused on downside protection as well. Because in my mind I think, well, we have these products right now, or I could just go take a million dollars worth of bitcoin or buy it. Let's say you had a million bucks and you wanted to buy the bond. So I buy a million dollars in bitcoin instead and then I just go out into the market and I take a loan against it and I basically get 45, 50% out of it and buy more bitcoin and ride the wave. Right, that's what a lot of people would do. Or they take that as their cash flow, but they get it immediately up front. But I guess the real difference is you don't have the downside protection there, you have the liquidation risk. So I guess it's about your risk profile and how you would want to approach this. Or maybe there's a blend of both where you know that depending if you have a lot more bitcoin, you know, you could add as collateral, maybe that risk doesn't really bother you.
- [35:23]
CJ Constantinos
Yeah, absolutely. And we think that, you know, as we progress, more and more bitcoiners who are using the technology as a savings technology, obviously, as bitcoin does what it was designed to do as engineered money and accrues value and properly stores value through space and time, our customer base is going to continue to grow. But the, the, the people who are few and far between and have experienced massive amount of gains are, are, are a small percentage of the marketplace. I think in the long term, you know, a dollar could be worth one sat. I mean that's, that, that might sound crazy, but it's not that far fetched. When we reprice the, the world of finance, when it's not just about real world assets of a thousand trillion, it's about all of the derivative products you see in finance too. Which brings it to the multi thousand.
- [36:09]
Scott
So $100 million bitcoin.
- [36:12]
CJ Constantinos
I think in the long, long term, at the end of the adoption phase, at the top of the S curve of adoption, which we won't even witness in our lifetime and our kids and grandkids will be reliving during that time. Yeah, absolutely. I do think that that's where we're going. I think all monetary premium will come out of all other assets that act as collateral now, but are not pristine. And that monetary premium will go into bitcoin. And what we want to make sure is that as that wealth is distributed across the world, we do it in a way where we're empowering the small guy. I mean, there's just not a focus on the small guy. Anymore. And that's why you see, in my background, we put we the People, right under serve. So it says People's Reserve, but under serve it says we the people. Because our mission is, is to serve we the People. The Cantillan Airs are not going to serve us. The Tradfi bros are not going to serve us. They've built systems that extract value from us, not deliver value to us. Only we the People can empower we the People. And again, this goes back to the People's Reserve loyalty token. How do we empower ourselves? By not going begging back to the cantillionnaires for liquidity so I can arbitrage my borrow rate with your borrow rate, but that we have a new system that allows us to raise liquidity to fund the People's Reserve to empower bitcoiners to become those risk free borrowers with the cheapest cost of capital in the world. That mission is more important to establish a true free market Internet economy that is more important than to make money. I believe that with all of my heart. Now that doesn't mean we're not going to make money. That doesn't mean I'm in this business to lose money. It just means that I think in the long run, People's Reserve makes more money caring about the people and serving the people rather than setting up a business model that extracts value.
- [37:55]
Scott
Have you gotten any pushback from bitcoiners and maxis about having a loyalty token? Because honestly, now it seems pretty much par for the course, right? I mean, no, no, I don't think it's the same kind of controversy that it once would have been. But like, you're a hardcore bitcoiner, there was probably even a time in your mind where you were, you know, dismissive of loyalty tokens or altcoins or anything else. Right. So it's a fundamental part of the ecosystem here. So maybe you should explain it and how the bitcoin maximalists will be comfortable with this.
- [38:27]
CJ Constantinos
Yeah, absolutely. I mean, everybody who's been following me for the past years, they know I am a hardcore bitcoin maxi. And what does that mean? I'm the hardest core bitcoin maxi that there is. And if you literally just said that.
- [38:38]
Scott
You held a lot of bitcoin, unknown amount. That even impressed Charlie Schramm and went to wait tables.
- [38:43]
CJ Constantinos
Yeah, exactly.
- [38:45]
Scott
So I think you've got. Your membership card has been punched here.
- [38:50]
CJ Constantinos
Yeah, okay, perfect. Yeah. So, and the thing is that's. And this is what bitcoin maxi means. Bitcoin is Money and nothing else can compete with it. Bitcoin is the wheel. You don't need to reinvent the wheel. But what does a wheel do if you don't attach it to a cart, you can't be productive. If you don't attach it to a car, you can't travel. You can't, you don't attach it to a plane, you can't fly. We need to build up tools around the wheel and bitcoin is the wheel. Nothing can compete with the wheel. There's no need to reinvent the wheel. It is what it is. And we first, we have the first form of money ever for humanity. We have it and we don't need to compete with it. We need to complement it. We need to attach the wheel to a cart so we can now become productive. And that's what people's reserve financial tools and ecosystem is all about. It's the cartoon that attaches to the bitcoin wheel. Without the bitcoin wheel, there's no need for the people's reserve at all. So you, it's, it's one and the same. And, and, and, and at Bitcoin Day Tampa this past weekend, I gave the keynote where I introduced the token and people like Charlie shm, Mike J, Chris Sullivan, big, I mean, Paul Tarantino, big hardcore bitcoin maxis and I, and afterwards I came up to them and I explained what I just explained to you. Why is, you know, the first question is, well, what? Explain the token to me more. I mean, we know you're a master.
- [40:11]
Scott
It's a trigger word. Yeah, yeah, yeah.
- [40:13]
CJ Constantinos
Explain the token. It's about loyalty and liquidity. I, you and I have worked in this industry for a while. It really bugs me that certain exchanges have made hundreds of thousands of dollars off of me over the last decade. And the guy who signed up last week pays the same fees that I pay. Like that. Just that there's no, I get no benefit from my loyalty. And, and I feel like I, the relationship doesn't matter. Well, so that's the first thing. It's about loyalty. We don't want you to have to come to People's Reserve and work with us for a decade before we start treating you right. We want you to work, if you want to demonstrate your loyalty and, and establish your loyalty level through our token, you can do that on day one by buying the token. And that's how you know you're going to be getting all of the best aprs, the best APYs, you're going to get the Lowest fees and in the entire industry. So you're going to be, you are literally going to become the royalty. You will become the new cantillion there because you're getting access to the cheapest cost of capital and the cheapest products and services in the world in order to manage your assets. We're an asset management platform where you can manage life, bitcoin and real estate. And you're going to be able to do it with the cheapest costs at People's Reserve. When you demonstrate loyalty. It's, it's just really important. But number two, again, it's liquidity. We cannot go to the traditional marketplace and beg for a credit line, warehouse and then turn around and then we can't borrow at 7% and then lend to you at 3 and a half percent. We go out of business. We need a zero cost of capital. So it's, it is literally the Michael Saylor strategy. I want zero cost of capital and I want to stack Bitcoin. Okay, that's fantastic. I love it. It's working really well. We'll do it too when we get exposure to US Capital markets. But right now we don't have exposure to US Capital markets. We have exposure to the decentralized finance Internet economy. And what we have is a loyalty token that allows us to raise liquidity. So people buy the token to establish loyalty, but they also buy the token to produce liquidity. And what do we do with that liquidity? Does CJK and the People's Reserve Team go off and buy an island? No, because I've already would have done that with my Bitcoin if that's what I want to do. I'm here for the future of finance. I believe in a world where the world is priced in SATs and settled on Bitcoin. And in order to do that, we cannot be begging for liquidity from an anchor rate or a stated rate found on the traditional yield curve. We need to establish a true free market, Internet economy yield curve with this fund. And we're willing to say, hey, you know what? Bitcoin is pristine collateral. So the other guys will come out and say, yeah, bitcoin's pristine collateral. You can go ahead and borrow from us for 13%. But the guy who comes in and says, hey, I promise I'll work the next 30 years of my life, you know, the economy is going to stay good. All the variables, all the risk. Look, the risk is so much that banks don't even keep mortgages on their books. They package them together and sell them off. In residential mortgage backed securities and commercial backed mortgage backed securities. They don't want to hold it on their book at People's Reserve. These are, these are non standardized mortgages. These are non qualified mortgages. That means we have to keep them on our book. We don't just write these mortgages and pack them, package them together and sell them off to some people who are looking for high risk cash flow. No, we consider these extremely low risk because they're secured by real estate and the most pristine form of collateral in the world. And we keep them on our book and we consider the bitcoiner, the risk free borrower. So when we lend to you at three and a half percent, but they.
- [43:34]
Scott
Are risk free because you have the collateral. So.
- [43:36]
CJ Constantinos
Right. It's exactly. The risk is like almost, it's negative risk. Like it breaks their model, which is why they can't do it. It breaks their model. So they'll lend to the guy who comes up and makes a promise for 30 years at six and a half percent or seven and a half percent, but they won't lend to the secured over collateralized bitcoiner for, for the same rate. And in fact they're going to double or triple rate. Yeah, yeah, it's, it doesn't make sense. It goes against common sense. And that's because these lenders don't understand bitcoin. They don't value it as pristine collateral. They look at it as a risk on tech stock. And they're, and they're eons away because they're also looking at it not through advancing humanity and advancing finance. Finally letting finance evolve after hundreds of years in this experiment to the next stage of finance. They want to keep it how it is because they have control.
- [44:28]
Scott
So I mean to the, to that end, like we know that I won't say exactly the same products, but similar products are going to come from legacy financial institutions. I'm not saying necessarily bitcoin backed loans or mortgages or the bonds, but certainly lending and yield and all of the classic things we'll see. Do you think that they'll be able to compete? Do you think that there will be a lot of people that go to a J.P. morgan or state street or bank of New York Mellon just because they have the name and try these same things, or do you think that they'll find ways to be equally predatory with bitcoin as collateral as they are with everything else?
- [45:04]
CJ Constantinos
Yeah, I mean, I think they're lending because they want to accumulate bitcoin. So, so lending is actually one of the best ways to acquire Bitcoin. Because when you acquire it, you liquidate people. Yeah. Because you're acquiring it at a liquidation price. So for, for them, I think it's just like, it's like that saying, you don't change Bitcoin, Bitcoin changes you. Well, business doesn't change Bitcoin, Bitcoin changes business. And government doesn't change bitcoin. Bitcoin changes government. They haven't learned that yet. They don't understand that yet. So I think in the short term I don't have any concerns about competition because any type of competition that spins up is going to be a profit maximalist mindset. It's going to be a V2 of what happened last time with Blockfi and Celsius and all of that stuff. There's going to be rehypothecation schemes going on in the background. That's something I didn't get to talk about. At People's Reserve, we contractually obligate ourselves to not rehypothecate your collateral. If there is any form of rehypothecation that takes place, we are in breach of contract. And as a US regulated company, you can take us to court and hold us liable for that. So we don't just say, oh, no rehypothecation. No, we actually contractually obligate ourselves to ensure and protect you that there is no rehypothecation.
- [46:22]
Scott
Yeah. You spent 100 Bitcoin on a house. I lost 50 Bitcoin on Voyager Plus.
- [46:27]
CJ Constantinos
Yeah, yeah, there you go. And that's unacceptable. But that's the games that they're going to play. Oh, you hand us the collateral, we'll take this collateral and post it as collateral with a trusted third party. And then you know what happens when it all breaks down? You're not going to get your Bitcoin back. You're going to get the dollar denominated value of your bitcoin at the liquidation price. So they're still going to play these games and, and when something goes wrong, just like at ftx, some people thought, oh man, you know, I'm going to get back a good portion of my Bitcoin, so I might, I might end up okay. Right. Bitcoin was at 16,000, went back up to 30 and then 40 and they're like, I might be okay. Yeah, cash value at the liquidation price of 16,000. So you got absolutely decimated, you got absolutely crushed. So when something goes wrong, they're going to print it and they're going to settle with you in dollars, People's Reserve. There's nothing going to go wrong because we don't want to use your Bitcoin. You're already using it to secure the loan and that's good enough for us. And we're, we don't need to rehypothecate to increase our yields from 3 and a half percent to 4 and a half percent because we look at it as a loss leader. What do I mean by that? Yeah, we write you the loan at three and a half percent when we could lend it to the government at four and a half percent. But the first thing we get is negative risk because you're over collateralized. The second thing we get is you're going to also use our other products and services. If People's Reserve, if we're empowering you and we're a one stop shop for everything you need for life, Bitcoin and real estate, why are you going to use the other people? You're not. And when you're using our products and services, the fees and revenues that are generated there equate to being they make up for far more than the hundred basis points that we can make on that loan. So it's about empowering the user and creating an ecosystem with a positive feedback wheel just like Michael Saller's done. And that rewards both the company and the customer. And you have to pick and choose your spots. I think our potential competitors don't think like that. They come from the fiat mindset of profit maximalism. They want to extract as much value as they possibly can and they want to keep the rates as high as they can because that's where the profit comes from. You, you would if you could be a fly on the wall in some of these high net worth individuals and family offices I've been into, the first thing I do, I sit down and they're like, son, I've been in the markets longer than you've been alive. Let's make this meeting quick. Right, so that's how, that's how they start off. And then I'm like, okay, well he already knows we're here to talk about Bitcoin. But I'm not here to talk about your investment portfolio. I'm here to talk about your lending portfolio. Who are you lending your money to? The government? Yeah, because it's risk free. Municipalities. Yeah, because I get tax free cash flow. So okay, you have a, you have a little bit of choice in there, but why not lend to some bitcoiners? You have diversification in your investment Portfolio. It's time to introduce some diversification into your lending portfolio. And then they're like, okay, I'll listen to a little. What else you got for me? I got something for you right here. When you lend your money to the US government or to a municipality, you get a piece of paper. That piece of paper is constantly diluted because we live in a fiscal dominant era. That means the government has to run a deficit. We have $38 trillion in debt. We have another $220 trillion of unfunded liabilities. They have to create more of those cash equivalents that they're handing to you as the form of collateral. That means you're holding your principal in a form of collateral that is being diluted over the life of the loan. There's an ongoing soft default on the collateral that you're holding to secure your loan. That doesn't sound too healthy, does it? Okay, now what happens when you provide liquidity into our private real estate, equity fund or credit fund or debt fund, that people's reserve? I'll tell you what happens when you write a loan to a bitcoiner. Your principal is actually secured and held in number one, real estate and bitcoin. So if something does go wrong, and again, we've taken all the steps to make sure nothing goes wrong, but if something does go wrong, you default into the assets that you want. Because if the government defaults, whether it be a soft default or hard default, as soon as you get that back, you're going and buying a real world asset. The problem is, is you're buying a smaller house, you're buying less goods and services with that maturation value. Over here, if something goes wrong, the principal is secured by assets that are inflation proof. The principal is secured by assets that you want to accumulate. So you know what, introduce some diversification into your lending portfolio. Yes, lend to the government. Yes, lend to the municipalities, but also lend to over collateralized bitcoiners who you will soon learn truly are the risk free borrowers in the marketplace.
- [50:59]
Scott
Yeah, I don't think the banks are going to be able to compete well.
- [51:02]
CJ Constantinos
Their mindset, you know, and after I say that, some of them, you can see they just, they just had their first orange bill. It goes off and they're like, that's it. Send me the pm. Send me everything I need to know, I'm in. And other people are like, let me ask you this. Nice to meet you. Please leave my office.
- [51:19]
Scott
Yeah, well I said, yeah, if 10% get it, that'd be a tremendous success.
- [51:22]
CJ Constantinos
Rate.
- [51:23]
Scott
Right. But how much would the loyalty token volatility impact the company or the consumer? Because we know that once you go a step beyond Bitcoin, there's going to be more volatility in any other token that's created anywhere in crypto. Right. Regardless of whether it's a loyalty token, a utility token, whatever it is. So how does that impact the user that's using this loyalty token to participate in the ecosystem or to provide liquidity?
- [51:46]
CJ Constantinos
Yeah, I love this question because as a bitcoin maxi, I had to really understand the tokenomics so strong because I wouldn't be able to sleep at night if I sold a token to somebody that could go to zero. Like, I've been rug pulled. I've had my fair share of scams, especially in the defi industry, and I don't, I don't need money, thankfully. I'm blessed. Bitcoin has been my savings technology for 12 years. I, I'm not in this to make money. I'm in this to create a new system. So when you ask that question, it really pulls out the passion in me because, and this is the first time I've, I'm actually announcing this on this, on this show right now. We have what's called a rental vault. And we believe we created a tokenomic structure that for the first time in the entire industry, when the price goes down, there's actually going to be buying demand and not just speculative buying demand. Because the price went down, you think it's going to go back up?
- [52:42]
Scott
Not by not buy the dip. Yeah.
- [52:44]
CJ Constantinos
So what is the rental vault? Okay, let's, let me explain a scenario. Let's say that you have a mortgage and you, you establish your loyalty at the diamond level, which requires a 10% threshold. So what do I mean by that? The USD value of your PRN tokens must be 10% of your loan value. So if you have a $500,000 loan, you need $50,000 of PRN. But what that does is it gets you a much lower interest rate. So if you max over collateralize, you, you're getting three and a half percent interest rate. That's the lowest interest rate that you can attain.
- [53:18]
Scott
I'm, I'm doing this. By the way, people, I've talked to cj. He sold me in one of those meetings before. I'm pretending I don't know things for the sake of this, but when it launches, we're doing this. I'm doing this.
- [53:28]
CJ Constantinos
So the difference between diamond and BASIC is at basic, your interest rate starts at 10 and a half percent. And if you max over collateralize, you can get down to six and a half percent. So those three percentage points of interest save you massive amount on your monthly payment and then save you hundreds of thousands of dollars of interest. So what happens if the, the PRN price goes down and now your $50,000 is only worth $45,000? Well, you need to buy more PRN in order to maintain your level. But what if you don't have money to buy more? What if, what if you can't afford to buy 5 or 6,000 at that time? No problem. We have what we call the rental vault. You can rent PRN tokens over a daily period. So as a renter, you can rent for one day or, or seven days. You can choose your time period. So if you believe the price is going to bounce quickly, you just rent for one day in order to maintain your. But what backs this, what supports this, this ecosystem? The monetary benefit, your calculable economic benefit, the invisible hand that drives the marketplace is profit. So if you drop from diamond to gold and your monthly interest rate payment goes from, just for an example here, just goes from like 2,000 to 3,000 per month, that's an extra thousand dollars that you're going to have to pay on your interest rate. That's a lot of money. Well, doesn't it make sense that you go to the rental vault and Maybe you pay $250 to rent $5,000 of tokens and then you rent that period so that you maintain your lower rate and then when the price rebounds, you no longer have to rent. So what happens is renters of PRN tokens who want to maintain their calculable economic benefit are going to pay to rent those tokens during the downturns. So during the downturns in the rental vault, the apy of people who provide PRN tokens to the rental vault is going to skyrocket because people who are using our products and services are going to come and rent.
- [55:20]
Scott
So they're going to buy a hell of a lot more tokens to take advantage, to take advantage of the high.
- [55:24]
CJ Constantinos
So let's say bitcoin drops down 10% and PRN drops down 15 or 20%. Right. Because it's always at a multiple of that.
- [55:32]
Scott
Yeah, high beta.
- [55:33]
CJ Constantinos
So the bitcoin drops down 10 pure and drops down 20. You're going to have a bunch of renters coming into the vault. Well, the more renters who come into the vault to get through this temporary downswing, the higher the APY on the vault. The higher the APY on the vault, the more incentivized the market is to buy PRN tokens and provide them to the vault in order to earn the higher APY from all the renters. So for the first time in this industry, I believe there is a digital utility token that when the price goes down, there is actually going to be a massive source of demand on the token in order to buy up those tokens to provide to renters. And we've not seen this dynamic anywhere else. So that is just one element of our tokenomics that make the. But we also have absolute digital scarcity. As a Bitcoin maxi, how could you, you know, a shit coin is a coin that has unlimited supply, that can be expanded by an issuer at any time for any reason. It's digital fiat. That's not this loyalty token. There's 1 billion tokens and they'll never be any more than that. We do not have the ability to just issue more of them. It has absolute digital scarcity. So as the demand for these tokens goes up, the price has to go up. As the utility for these tokens increases, as people use our products and services, the price has to go up on the token. Now, is the price going to come down? Of course it is, because it's free market price discovery. But during those moments we have the rental vault element which creates a natural buying pressure, a natural floor to the token itself, because the free market can buy those tokens, provide it as liquidity to the renters, earn the interest, and then when bitcoin rebounds, there's no locking period, there's no staking or locking period at all. You can provide liquidity and remove liquidity at will and you can liquidate that, liquidate that whenever you want. So I believe PRN is actually going to become a safe haven during downturns because you'll get the initial, you will get the initial price drop, but upon that initial price drop, you'll have an influx of renters. And with the influx of renters, you'll have the yield opportunity, a paid yield opportunity. So you'll buy more PRN creating a floor to provide those renters those tokens they need to keep their calculable economic benefits. They're going to be paying $250 to rent $5,000 of PRN tokens so that their interest payment doesn't go from 2,000 to 3,000. And that's a really exciting thing that we have at People's Reserve that I've not seen anywhere else in this industry.
- [57:58]
Scott
I know we're up against the clock here, but what's the. And I can't believe that we just cooked through an hour on that by the way. But all of this said, I like to take the 30,000 foot view and zoom out. So what is this all. And I know this might be a long answer, but what does this entire ecosystem, people's reserves specifically, but I think more generally around Bitcoin look like in 10 years if you're able to build everything you want and it's all successful and all adopted and Bitcoin continues on the trajectory that we believe it will.
- [58:31]
CJ Constantinos
Yeah, People's Reserve will be a central bank of the Internet economy. That is what I'm building towards. So when we look at the yield curve, the very front end of the yield curve is called the federal funds rate. This is an overnight banking rate. But when you come into the Internet economy and you try to say, you know what, what's going to be that rate? What is going to be the equivalent of the federal funds rate in the true free market yield curve? Yeah, we have the middle of the curve with bitcoin powered mortgages and Bitcoin bonds. We have the long end of the curve with the longer end bonds. So what formulates the front end of the curve? The interbank lending rate between companies like People's Reserve and MicroStrategy who have become the central banks of the Internet economy. So the rate that we lend to each other will actually be the equivalent rate of today's federal funds rate in the Internet economy. So when we do our reverse merger and we get access to US capital markets and we're becoming a Bitcoin treasury company that stacks Bitcoin but then sources liquidity from U.S. capital markets and defi. And then empowers the People's Reserve ecosystem or the people's Reserve Fund which is then the funds that are lent out to the risk free borrowers establishing the risk free rate in the marketplace. That is the long term of what's happening here. A true free market Internet economy where no one country can control or out compete because it's an aggregate where no one country can state or anchor a rate because rates are discovered through true free market price, discovery of supply of, of the money, demand for loans and perception of counterparty risk. And for People's Reserve, our long term goal is to be a Bitcoin treasury company that pays dividends. Because I hold my. I'm, I'm very happy with MicroStrategy. I am not Going to sell my micro strategy. It's already in trust for the great, great, great grandkids. Because I believe Michael Saylor will make MicroStrategy into a central bank of the Internet economy. Well, People's Reserve will become a central bank of the Internet economy. But when we have publicly traded equity, it's important to me that that equity pays a dividend. So all of the fees and revenues that are generated within our ecosystem, all of that funnels back up to our main umbrella corporation, People's Reserve Inc. Because People's Reserve Inc. Is our umbrella corp. We have many subsidiaries to offer our products and services. But all the fees and revenues generated by those subsidiaries filter back up the People's Reserve Inc. And then get distributed as a dividend. So when you hold People's Reserve equity in the long run, when you hold People's Reserve equity, it's not just about a long term bet on a future central bank of the Internet economy. It's also about dividend cash flow. And we were. My mission is to create a Bitcoin treasury company that pays absolutely ridiculous dividend cash flows. Because I hold my Bitcoin for the long term. I hold my Bitcoin for the extremely, extremely long term. In the, in the short term, I want exposure to the long term central bank of the Internet economy, but I want cash flow dividends. And I think my mission is to create the first Bitcoin treasury company that actually has a positive ecosystem built in its infrastructure, creating those revenues and fees, that is financial engineering for the everyday person, and then pulling those fees back into the Bitcoin treasury company structure and distribute them as dividends. I don't believe in companies that sit on hundreds of billions of dollars of cash. Why do you own a company? You own a company to make money with it. So if the company's making money, they should be maximizing their dividend distributions so that you can make money with them. And with this mindset, I want to completely rewrite and rewire the thought process of a publicly traded company and how it distributes dividends. And I think with the People's Reserve ecosystem tied into decentralized finance and People's Reserve Inc. Tied into US Capital markets, which we can pull both of those markets together and create a product that the world's never seen before.
- [62:21]
Scott
Every time I talk to you, it just strikes me how you've thought of everything. I'm sure you haven't, but like you have so many layers of products that are coming and ideas based on the core ideas that it's just absolutely incredible, man.
- [62:36]
CJ Constantinos
Thank you so. Well, that's, that's bitcoin for you, right? You get to the bottom of the rabbit hole and you realize, wait a second, there's a trap door here. It goes deeper. And, and that's how it's been for people's reserve. We are bitcoin maxis building for bitcoin maxis. And when you leverage bitcoin in your ecosystem that the potential is infinite. So one of the hardest thing for us to do is just concentrate and launch our products and get it done. But when you, when people start to see our roadmap that their jaw is going to drop to the floor. Because we're not just talking about bitcoin powered finance, we're talking about bitcoin powered life. We're talking about bitcoin powered everything. Because bitcoin is the layer zero money and money is 50% of every transaction. So bitcoin powered transactions is Bitcoin powering 50% of everything. And that's the future we're building for.
- [63:19]
Scott
Absolutely brilliant. So talk to me about where people can check this out, how they can participate when all these products will be launching and then more importantly where they can follow you for more updates as we move forward.
- [63:31]
CJ Constantinos
Absolutely. So the best thing to do right now is go to peoplesreserve.com and sign up for our newsletter because that's where you're going to stay up to date with us on all the fresh announcements. And the big exciting news is that the PRN loyalty token sale will be taking place on July 4th. So make sure you get into that newsletter book reserve.
- [63:49]
Scott
Come on, man. It is be the People day, Independence Day, baby.
- [63:53]
CJ Constantinos
It is time to take back financial independence and freedom. And we couldn't be more excited to be at the tip of the spear of that fight. And we're excited to fight it with you and to get back our financial freedom and independence. So July 4, tokens tail and then shortly after that. This is another exciting thing. Most of the time when you have a token sale, you end up waiting a very long time to find out how you can use those tokens. No, no, no, no. We, we, we're not raising, we're not selling these tokens so that we can build something. We've already built it. We're, we're selling you the tokens so that you can use them and be empowered. That's, that's what we're excited for. But that's. And then of course, you can follow me on X at CJ Constantinos and People's Reserve at People's Reserve.
- [64:33]
Scott
Absolutely amazing. Thank you so much for your time. Obviously, we'll be tracking it. I've already talked about you guys in my newsletter and stuff. You know that I'm very excited to be participating. Now I want to have a private conversation about the reverse merger. So that's coming. I find that very, very interesting. And that's something we had not discussed before this podcast. So thank you, man, for your time. I can't wait. We'll be screaming from the mountaintops, obviously, on July 4th, and I can't wait to actually use this and get it going.
- [65:01]
CJ Constantinos
Oh, thank you so much, Scott. And I look forward to talking again soon.
- [65:04]
Scott
Thank you.