The Future of Bitcoin w/ Michael Saylor (2024) | EP #92

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Which u do you listen to? Is it get optioning those options or let's do a little research. Learn more@finra.org TradeSmart Is there a situation or an event that you view that.

Could potentially lead to the collapse of bitcoin?

I think the way to understand bitcoin is everything you learned in economics and about money and your entire life was super pseudoscience, you know, and superstitious. So I think all the smart money, all the smart people in the world that don't trust the bank, don't trust the currency, want to keep their money. They're all discovering bitcoin.

It's been quite the journey, buddy. Quite the journey.

Yeah. And I thought I was just going to retire into obscurity in 2020, and then Covid hit. The world turned upside down, everything stopped and Bitcoin presented itself.

You know what I find fascinating? A lot of people don't know this is you discovered bitcoin not in 2010 or 2014 or 2018, but as a result of COVID I remember being with you in Miami. You're telling the story. I'm going, that's incredible.

Yeah, I really, I heard about it back eight, nine years earlier. I think I tweeted very famously in 2013 that it was interesting, but I thought it would go the way of online gambling and get banned. And then I forgot that I tweeted that. And then In August of 2020, I tweeted that I bought $250 million of it. And at that time, it didn't occur to me that I was the first person to publicly announce that I'd spent that much money. And then on my Twitter or my X account, now I have this phrase. Bitcoin is a swarm of cyber hornets. And the cyber hornets were all the people on the Internet, like, the person that made that video. That was not me. I did not make that video. Of course not, but they're always doing that. And so one of the hornets scanned every single thing I tweeted in my entire life. And they dredged this up. They're like, ha, ha ha ha ha. You know, look how much money you lost. You could have bought it $100 or something. And I just kind of recycled the bitcoin trope, which, as I said, everybody gets bitcoin the price they deserve.

That's true. You know, speaking about the ups and downs and so forth, you have extraordinary tolerance for risk and resiliency, I think is the right word. I drudged this up. On the left is an article from 2000. Lost $6 billion in a day. And then on the right is actually February. That's the wrong date. 2024, not 2000, where you made $700 million in a day. How do you sleep at night with that kind of fluctuation?

You just got to have a mission, right? You got to have a mission in your life. So you can't really control the fluctuations in the market. You can control your reactions to them. So in this particular case, my view on bitcoin is the reason to do it is because it represents freedom and sovereignty, truth, integrity, and hope for the world. And that being the case, it's going to outlast all of us. So, you know, I'm kind of thinking that bitcoin goes on long after MicroStrategy's gone, and MicroStrategy, the company, probably goes on long after I'm gone. And my view is, if we're remembered for advocating and accelerating the adoption of bitcoin throughout the world, then that will have been success. And I don't really need anything else.

It's amazing.

And I'll take the. I'll take the beatings as they come or go in order to get to that end goal, because I'm sure it doesn't come without turbulence.

But the conviction that you've had, that's guided you consistently. Right? Does that go to, like, first principle thinking of physics here of, like, this this is just not going to go down, this is going to go up. There's only going to be so many and so forth. Is that first principle thinking that led you to make this commitment in the face of everybody else questioning it?

I think one of the great things about MIT is that it teaches you to think and also it teaches you to start from first principles. And the combination of that and aeronautical engineering where you have to literally, you have to build a machine that will fly through the air or through space. By combining all manner of engineering, I think that makes you confident. My first memory of MIT was the materials engineering professor. He walks out and he says, here's a tile, it just burned off the space shuttle. And NASA doesn't know why it burned off and we don't know how to fix it. What do you think? And it was 18 year old kids and we're all 500 of us, we're sitting in a room and a guy who's a consultant for NASA looks at us and he says, you know, NASA doesn't know the solution, but what is the solution? Everybody looks at each other and you can see, first we're all like, well, did I miss the reading? Like, was this in a reading? And then you're like, and then you have this dawning, horrifying observation that the answer to this question is not in any book written in the history of the world. And the guy that had NASA with the original problem, send it to a professor who knows more than you know, who's telling you he doesn't know the answer, but he's asking you. And so first you kind of, you're thinking, I didn't read the reading. And then second you're like scared. And then some kid in the front row raises his hand and says, well, have you thought about changing, you know, the lamination on the composites? And everybody else looks and they're like, the professor's going to call the kid an idiot, right? And we're all afraid. And he goes, no, that's a good idea. That's what I thought too. And we tried that, but that didn't work. And then we all go. And then the next kid, you know, raises their hand and then you think, I guess they actually expect us to think for ourself. And that was how MIT started and it just got, it just continued along that line. And so if anything, when I left school, when I left mit, my thought was, you have to work excessively hard, don't be afraid of hard work, but you can solve the problem. And that's what they do here.

We were classmates together in Unified Engineering, which is probably one of the toughest courses there. The only way to get through it was by working in teams on problem sets. I think I probably cheated off your problem sets more than the other way around.

You're too kind. Let's talk about Bitcoin. Actually, I want to talk about abundance. Pete. I have one observation which is the whole essence of Bitcoin is about creating perfect money and the discovery of what we call digital scarcity. Digital scarcity as a commodity basis for sound money. And another one of the tropes in the community is when money is abundant, everything else is scarce. And when money is scarce, everything else in the society is abundant.

What's the logic behind that?

If you go to Zimbabwe or you go to Venezuela, or you go to any country going through hyperinflation, when they print the currency, the currency collapses. As the currency collapses, everyone in the economy doesn't want to take the currency anymore and you get ripped back to stone age barter. And so like in Nigeria this week, the Niara went from 400 to the dollar to 1600 to the dollar. So in an economy where the currency, I mean that's a 75% currency debasement in a week. When that happens and I see you in Nigeria and I want to buy your house next year. Well, the issue is, well, with what and what will it be worth next year? You'll buy it today or you won't buy it at all. How do I sign a 12 month contract if the money's going to be worthless in nine months? So there are no term contracts. How do I trade with you? If you have to trade with someone else and the supply chain is 18 months long, when the currency unwinds and the assets unwind, the supply chains break. When the supply chains break, specialization of labor breaks down, the entire economy breaks down. Eventually everyone has to grow their own food, right? You want abundance, you don't actually grow your own food in your backyard. Right. Productivity drops by a factor of 100 to 1000. If you can't solve this coincidence of wants problems. So you need sound money and it needs to work across time and space. And the currencies that we use as a medium of exchange, they might be tradable over parts of space right now. By the way, it's probably illegal to actually pay someone in dollar in Nigeria. Really? Yeah.

Like so just currency controls?

Yeah, capital control. You see capital controls all over the world, especially when the currencies collapse, the capital controls go in place. So you can't trade money or you can't trade the currency across borders. And of course, you certainly can't trade the currency with your future self ten years from now. And how do you even trade a currency? In collapsing countries, you'll find nobody wants to sign a three year contract because the local currency is not going to be worth the same amount in three years. So you have a hard time trading in time with counterparties or in space. And so the key to abundance is fixing the money problem.

So you have this insight about digital currency, digital property, the. How long did it take you from studying this idea to making the decision to buy 250 million worth of Bitcoin?

I started thinking about it, I guess late March, April. It took about eight weeks before I. Four to eight weeks of constant thinking before I came to the conclusion it was a good idea. And it was probably for me to make the decision. I had made the decision personally by late May. I bought $175 million of Bitcoin in late May of 2020.

Personally.

Personally. But that was just me negotiating with myself. And I guess I started probably late March, early April. So that's six weeks to get there. And then we have a public company. So for a public company to do something, the officers have to buy in, the outside directors have to buy in, the accountants, the lawyers have to buy in.

I want to take us there. Right. One of your board members, one of your outside board members, great guy Rick is here with us today. We'll call him out. But you walk in. What was the process of getting a public board to do this?

Well, in that case, I actually pull the three most compelling videos on Bitcoin off of YouTube. You know, an Andreas Antonopoulos overview of bitcoin, A debate by Eric Voorhees and Peter Schiff over bitcoin versus fiat currency is money. Probably some other background on bitcoin. I put those three together. There's probably three hours of watching. I included some articles, some short articles, maybe by some of the Bitcoin OGs. I sent the package off to each board member. I said, I got some homework for you. It's probably going to take three to five hours for you to read through all this. Read through all of it. And then I want to meet with you. And then I set up one on ones with each one of them. And so I met with each one individually, I answered their questions. Then after that we had a group meeting. Then after that we broke into committees to study different aspects. The accounting, the Disclosures, the whatever. So it was a group process. And of course, the CFO and the general counsel at the time were also heavily involved in that.

Did they threaten to resign?

No.

Okay.

It was never a question of. Of do it or don't do it. It was an observation that the world had come to a grinding Halt. We had $500 million yielding 0% interest. Our stock had hit $90 a share. The enterprise value of the company was about $60 a share. $60 a share. You know where the stock is right now. And we had been competing with Microsoft for about a decade. And for all of those of you who compete with Microsoft, you have an idea of what that's like. They have every company on earth as their customer, and they can bundle your product into their whatever. So it's not easy competing against Microsoft. We had experience, and we are under pressure from our shareholders. You know, it's like you have half of the market cap of the company is cash. You're earning 0% interest. You're not beating the cost of capital. The cost of capital is the S and P return. So anybody who looks at it says, if you're not getting 8, 9, 10% on the capital, you should give it back to us so we can invest it. And so we'd reached a point where the company was looking at a fast death. We just sell the company and call it a day or a slow death. We keep the cash, and the stock is dead money. And that means the stock options are dead money. And that was the time when it used to be employees work for you because they liked the community and the schools and their home. And maybe they were loyal to you because they saw you every day in the office. But think about what happened in the second quarter of 2020 when nobody came to the office and they could change jobs and go work for Amazon, Facebook, Microsoft, or Google without moving. All you do is just repath your Zoom account. And so all of a sudden, you're staring at big tech. You know, the big tech companies, more powerful than most countries and getting more powerful, and you've lost the human connection. They don't have to move to San Francisco. They can simply take a job. And nobody ever got hired by big tech for less money than they're making working for you. So from our point of view, you.

Were on the precipice of a serious.

It's like sell the company or just watch all your employees dwindle. You're gonna get boiled off. And after the good employees leave, the product will gradually deteriorate and you're competing against a digital monopoly that has more power than all but four countries on earth. And so we either do that or do that or we take a risk. And so we were basically at a point where maybe we should take a risk. Now, having said all that, what really happened there is we deliberated. It took a long time to deliberate, a lot of education. And at the end of the day we ended up announcing that we were going to do a Dutch auction and buy back $250 million of the stock at a premium, coincidental with the purchase of the bitcoin. So we didn't just take that risk. We basically said we're going to take the company on a path you may not agree with, but we'll buy you out. And so we were prepared to give up half. I had to basically give up, pay $250 million for the right to buy $250 million of Bitcoin in August of 2020. Right. That's the price we paid that Dutch auction. The stock was about 121, 122. We offered to buy all our shareholders out at 140. We gave them 20 days to think about it. We bought the bitcoin. No company had ever bought that much bitcoin. And by the way, following that, only Block and Tesla did it afterwards. But it was a very rare thing to do. Of course bitcoin cooperated by immediately trading down. We bought it at 11,800 and it traded to 9,800 or something. So I was looking like a genius again buying the top. The Dutch auction ran, but the stock traded above the 140 price. After a day or two. Everyone that didn't like the idea just traded out at 1 above 140. We had $75 million tendered. We, we bought that, those shares at 140. We had $175 million left and we bought bitcoin with that. And then, and so we had basically transformed ourself into a company with bitcoin as a treasury reserve asset through that capital markets activity, you know, and it was, it was in a partnership with the outside investors. When you're a public company, you don't just do it. You have to transparently tell it.

I just find it incredible. The, I think the Greek word is the cojones. But to take. No, it's the action of a leader who's willing to take a big risk that put the company on its trajectory. Because it's so easy to ride a company to the ground. It's so easy just to do what everybody expected you to do. I'm curious, how many folks here in the room own Bitcoin? Raise your hand high. Okay, so majority of you go home tonight and buy some.

Good for you.

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No, I think the, the primary impediment to corporate adoption by publicly traded companies is that indefinite intangible accounting is toxic to the P and L and to the balance sheet. So no company with a healthy business that's fairly valued by the market, or no company run by a management team that doesn't have voting control, would ever adopt indefinite intangible accounting. Because what it does is it doesn't just obscure your balance sheet, it also obscures your P and L. And it even, it even mixes investment gains with operating gains and investment losses with operating losses. So it in essence renders 100 pages of financial irrelevant. And the current accounting is. You can't even pro forma it out. So not only does it make all of your accounting non comparable across periods, it makes all your accounting non comparable across competitors. And it also makes it. And it also ties your hands with the ability to explain that. So you're not going to see. You would do it because your choice was a fast death, a slow death. And if you're looking at a fast death or a slow death, and if you had voting control of the company and if you tried everything else, then you would do it. So we were a unique company, a unique place. And by the way, I don't think we would have done it if it hadn't been for Covid. If the world had not shut down. I don't think we needed Covid to hit. You need wars, right? People will say, I don't believe in flying an airplane. And a war hits and they start embracing air power. People will tell you they're not going to embrace, you know, whatever it is until the war hits. So we had a war. The economy shut down and then we had the central bank take interest rates to zero. But they didn't just take them to zero. They also, you know, we had the head of the central bank give a speech saying I'm not even thinking about thinking about raising interest rates until the year 2024. So they took them to zero and basically signaled they were going to peg them at zero for four years. Now that didn't quite happen. Right. You know, a lot of banks wished it had happened. I mean the people that believed it got caught on the wrong side of that trade and Silicon Valley bank and the like crashed because they believed what was said. But the point is there was a crisis, we had a need, we were a very special company in the right time at the right place.

I had dinner with a minister from a Middle Eastern nation, I wouldn't say who. And during dinner he was convincing me that the US government was going to shut down Bitcoin.

When?

This was three months ago.

Okay, yeah. Well, I think that the biggest challenge of Bitcoin is that the industries refers to it as a cryptocurrency and oftentimes people refer to it as a digital currency. And there's a very vocal contingent that wants it to be a currency. And the rest of the world doesn't really understand money. So that being the case, let's view this from first principles. Money's economic energy. If you want to store your economic energy, you put it in asset and the assets have different half lives with which they store the energy. Any textbook economist will say money is a store of value, medium exchange, unit of account, and they stop and they don't really think much beyond that. And then they'll bark at you that you don't have money because you don't have this is not good for a medium of exchange. But nobody really thinks about what they just said. So if you thought about it, you would realize that, that about 120 currencies in the world are mediums of exchange. The Peso is a medium exchange. The Nayara is a medium of exchange. So weak currencies, the Turkish lira, the Lebanese pound, they're mediums of exchange. You can find a lot of them. The Venezuelan Bolivar, medium exchange. But if you go to South America, you'll find that it's not a unit of account. If you go to Argentina, the unit of account is the US Dollar and they think in terms of dollars. So there are only three currencies in the world that are units of account. They're the Euro, the dollar and the cny. And so why is that? Because the mediums of exchange are weak currencies inflating at 14 to 24% a year, they're losing their economic energy over three to five years. The half life of the money in the asset is about five years or less. Sometimes it's only five months, like in the Niara. They lost 75% of their energy last week. So the medium of exchange only is dictated by the government as legal tender. Every government that's functional will dictate their currency as a medium exchange and enforce that. The unit of account is generally the dollar, the euro and currencies pegged to the dollar, you know, and the store of value. Well, nobody in the United States thinks the dollar's a store of value. No rich person. If you look at wealthy people, they would say the store of value. If they're really wealthy, if they're billionaires, they own buildings, blocks, huge properties, or they own the Patriots. They own a sports team, a soccer club, or they own a collection of Picassos. That's what the wealthy use as store of value. The middle class store of value is the Vanguard 500 or S&P index. It's spy. It's basically been the S or QQQ. It's basically a diversified portfolio of stocks. And that's been the status quo since 30, 40 years ago when Bogle did that. So the world today consists of 120 mediums of exchange, about 3, 4 units of account, no currencies or stores of value. And if you say to someone, what do you think about Bitcoin as digital currency? They say, well, I think it threatens the dollar. I hate it. If you said, what do you think about Bitcoin as digital property? You know, I'm going to buy it instead of buying a building in Des Moines, they're like, oh, have at it. If you, if you simply conceptualize it as property or which is store of value, all of the objections, all of the straw man objections, like, it's used by, for money laundering, it's not legal tender. I can't buy coffee with it. It's not fast enough. It's not private enough. All of these things disappear. Because it's about as stupid as saying to Bob Kraft, you can't buy a cup of coffee with the New England Patriots by breaking off some, you know, one of your tight ends. And you can't buy a cup of coffee with your building in Boston, you know, of course I can't. You can't buy a cup of coffee with part of a Picasso, the lower left corner either. But, but, you know, wealthy people have been using them as a store of value and as money for 500 years.

And so about real estate as a store of value, it too can, can sublimate.

Yeah. So when you say, I mean, what is the question? Tax, you know, what do I think of it?

Real estate itself as a store of value.

So what I, what I think is, of course, if you just describe Bitcoin as digital property, a store of value, all of the popular criticisms go away and everyone that hates Bitcoin would completely flip once they understood it isn't a currency. So people just ought to say, it's a property, it's not a currency. And every one of those criticisms and weaknesses is no longer relevant. The second thing I say on store of value is it's kind of silly to fight to be a digital currency because there's $900 trillion of wealth in the world. 400 trillion of it wants to be store of value. Only 1 trillion wants to be a medium of exchange. Go to a wealthy person and ask them what percentage of their wealth is in their checking account. It's like 1% maybe. No wealthy person is holding more than 1% in ready cash. So it's not even worth fighting for. Like you can fight the government to be a currency, but you're just fighting someone that's got guns and police force, et cetera. The store of value is the use case that matters. And another word for store of value is property. And the third word for store of value is capital. And if we just thought this is digital capital, now you get to profound idea, right? Which is there's capital in the economy. Where is it sitting? Well, it's sitting in buildings. We've monetized buildings. A rich person goes, and I know a lot of wealthy people, they make a fortune. And what they do is they just go buy real estate that they don't need. They buy apartments they don't need. I mean, everybody can pick up the paper and they can see examples. People buy trophy assets and they buy buildings and they buy land they don't need land, banks. So real estate is a way to fight inflation or to preserve capital over the long term. Another way to do it is I invested in a company or I attempt to pick the right stock, a magnificent seven Stock, stock. A third way to do it is with art. I mean, Velasquez in the 16th century, travels from Spain to Italy. He wants to buy all the great art, and he's got the king of Spain's checkbook and an infinite budget. And he complains nobody will sell him the art because all the rich people in Italy are using it as Store of value so they can flee with their portable, scarce, desirable property when they have to leave town. Or they're using it as an inflation hedge. And I kid you not, go read Will Durant's history of the Renaissance. And he notes it's an inflation hedge and a store in value 500 years ago. So that's the way people think. Why is Bitcoin better? It's better because the problem with storing billions of dollars in a building is the building can't run and the building can't hide. And everybody knows a rich person owns the building, and therefore we're going to tax them. I mean, I just give you a simple question. I'm going to give you a billion dollars right now. I'm going to drop you in Africa. What building in Africa are you going to buy in what country and hold for 100 years? Yeah, like, there's not a. There is. Not to disparage Africa. There's not a single piece of real estate in a single country in Africa that any of you would be wise to purchase if you had to hold it 100 years. On the other hand, if you held a billion dollars worth of bitcoin in Africa, you'd probably still have the money 100 years from now. And if you lost it, it's because you lost it, not because it was taken from you. Everybody walks past the biggest tower in the city and they look up and they say, there's a person with more money than me. And then they think, why don't we tax them? What are they going to do? Move the building? Right. You're not going to move the building. And so then they walk past the parking lot and they think, well, let's just go ahead and put a zoning restriction on that, so you can't actually build on that parking lot. So at the end of the day, your property is getting rent controlled, expropriated, taxed, etc. And so. And so it's. It's the best idea in the 20th century.

Yeah, I think that. I think that's the important point.

But we're not in the 20th century. We're in the 21st century.

I wanted to get. I wanted to get that point across because a lot of people think about real estate as somewhat, you know, unique real estate on the beach, on park, you know, on Central Park. But it has those issues. I. I'd like to take the conversation to Bitcoin as a technology. Lightning rewards. Some time ago, you spoke about, you know, a. A bitcoin lightning reward mechanism out of micro Strategies, which I thought was brilliant. Would you go there?

Well, I think, I think Bitcoin layer one is all about creating monetary integrity. And in the base layer, and it's meant to be a settlement network for high powered money. So in essence, where you see it going is trillions and then hundreds of trillions of dollars. In a network, it needs to be extremely robust. But the way you get robust is you create a block every 10 minutes and you put thousands of transactions every 10 minutes. So it's destined to move blocks of money, $10 million at a time, $100 million at a time. And for that, it's pretty good. You can imagine banks, corporations settling with each other at that speed. And if you want to move a billion dollars from New York to, to Tokyo, spending $10 seems pretty cheap. And doing it in half an hour is not a big deal. But if you want to get to transactional applications, you can't do it on the base layer. There's two approaches. One approach is you change the base layer to give it higher throughput. But the problem with that is you're changing the underlying scarcity parameters, which undermines the stability of the system and the integrity and the scale security of the system. So ultimately you make the network more fragile. And so most things don't scale all at one layer, you scale in layers. So lightning is the most famous of the layer twos. And really it's an example of an open protocol layer two system that sits on top of Bitcoin and it's channel based. So the idea is if I want to move $10 back and forth a million times an hour, I probably don't need to put the entire trillion dollar network at risk. I could probably just set up a channel that had $5 million on this side or 5 million on this side. And I could move back and forth and then I'll settle on the base layer as I open and close the channels. So the brilliance of that approach is you're still using satoshis or underlying Bitcoin is gas. So you've got an ethical, ethical network and an economically sound network, but you've created an infinitely scalable network. Because once you go to this channel approach, there's no reason why you can't clear millions of transactions a second. And so Lightning is the layer two to clear millions of transactions a second. You know, the idea of Bitcoin rewards is if you want to give people small micropayments or very, very rapid payments for engagement, you show up to a meeting, you get rewarded with something of monetary value. If I want to come to offer people a reward to come and register on my website, I do it using an open network that isn't subject to the constraints of the fiat credit score.

I do imagine that we're going to very quickly head to a world where everybody's got a digital wallet and is transacting in the same way. We have a leather wallet in our pocket. And I love the vision that you had. Like if you show up for the HR meeting on time, you get a certain number of satoshis, if you turn in your report on time, if you perform at this level. So, you know, you get what you incentivize. And the idea that this is an incentivization process, I keep on waiting for X to announce wallets and a incentive plan like that.

You know, there's a profound statement made by JP Morgan 100 years ago. He said, gold is money, everything else is credit. And just like first principles, at least back then, most people don't understand what money is. Money is a bearer instrument. Most people don't understand what credit is. Credit is when you have an IOU from a counterparty and they may or may not honor the iou. So what we have today in the Internet is you have a lot of profound applications that are digital transformation of information. We have figured out how to digitally transform photos and music and books and things like that, but we haven't implemented digital money. So whenever you pay anybody on the Internet, you're paying with credit, not with money. And the problem with paying with credit is Visa, MasterCard, your bank, the correspondent bank, the central banks, there's a stack of seven counterparties in between me and you. And that means that if I wanted to give you 50 cents, let's just say I want to move any amount of money around. If I want to move a dollar around, every time I move it, there's a 30 to 60 day settlement delay and there's a 2.5% fee. So when I moved the money 40 times, it took 48 months. It takes four years to move the money from 40 people in the room. If you just started moving any amount of money, it would be four years before it finally settles and all the money would be gone because it would be like 100% commission you would pay to the banks. So the problem with the credit networks are they're brittle, they're slow, they're expensive. And by the way, if you're an AI bot, you can't get a credit card. So robots aren't people. AIs aren't people. And I'm going to make fun of them because Bitcoin gives AIs in cyberspace sovereignty. If you want to release a service powered by an AI into the ether outside the control of a person, a government, a company, you're going to need to finance it with money, digital money, which means Bitcoin. So AIs aren't people yet, and Bitcoin will give them sovereignty of sorts of. But people aren't people because 6 billion people on the planet, they don't have credit. Like I dare you to try to send money to someone in Africa on Saturday or try to cross borders, try to send some money to someone in China, see how it works out, right? And by the way, the countries shut down at the border, but even within each country, most people, a lot of people don't have credit card. So bitcoin is money. Everything else is credit. And you cannot build the 21st century cyber economy if you don't have money. Money needs to move at the speed of light and lightning is an approach. There's a bunch of other approaches.

So I mean, bitcoin is the financial side of the Internet that didn't exist in the, in the 1990s.

The profound big idea is Google, Facebook, Apple, Amazon, they made all their money based on the digital transformation of information apps, which are non conservative in the thermodynamic physical sense. They are non conservative. I can give every one of you my music file. Whereas we're now moving into a new transition. I think it's a 30 year transition. It's digital energy. It's digital energy, digital money, digital capital, digital property. These are all just different words for things that are conservative in cyberspace. If I give you a billion dollars, I have to lose it. I can't give everybody a billion dollars, right? There has to be a conservation of energy or conservation of money here. And none of the great companies have been built on digital energy or digital monetary apps. But if you think about the next set of applications, the ones where I can take a block of a billion dollars of capital in cyberspace and I can decompose it to a million smaller blocks, send it to a million different places in one hour, recompose it three hours later, chop it into a bunch of $10 segments, pull that back, oscillate it, program it, transfer it, or just store it for 50. How do you store money for 50 years? And the metaphor I give you as an aeronautical engineer, which I think Elon would like and I think you'll like, is it's the difference between you launch something and it goes ballistic and comes back to Earth, suborbital versus orbital versus and you launch it and it reaches escape velocity and it goes orbital. One is in space forever and the other's in space for a blink of an eye. And what we're trying to do is put energy in cyberspace or put money in cyberspace, reach escape velocity such that it lasts forever with zero friction. It's like hype. Superconducting.

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You know, I think 2020 to 2024 was, you know, it was the, I don't know, high volatility, high uncertainty. It's like that early stage of institutional adoption. But really we start mainstream institutional adoption. I would date it to January 2024 with the approval of the ETFs, the spot ETFs. And I think it runs, we have about a 10 year gold rush. It runs to 2034, November. Between 2024 and 2034, we will have mined 99% of all the bitcoins. So bitcoin becomes, for all practical purposes, fixed by November of 2024. The last 1% comes out over 100 years. We have this 42 quarter period where at the beginning of the period, what.

Percentage are we at now?

Right now we're like 94%. So you think it's not much, but I mean 5% is a lot over 10 years compared to 1% over 100 years. So there's actually still bitcoin available for sale right now. The miners have to sell it. So at the beginning of this period in Q1, we're in Q1 now. If you go to January 1st, no institution could buy it even if they wanted to. It. It just wasn't on their radar. And so you really have 42/4 of people learning what it is, studying it. It takes 10 hours to scratch the surface and it takes 100 hours before you get a degree of comfort. Most people, once they get past the age of 40, they don't want to spend 100 hours learning a new thing. It's very rare. So you've got Wall street firms spinning up, massive education apparatus. You've got a whole set of stages of adoption. First can I buy it? Then is it on the approved list for solicited sale? Then it is on the approved list for unsolicited sale. Is it marginal? Can I borrow against it? Is it optionable? Can I hedge it? Is it recommended? Is it structural? Is it built into a fund? That's like seven layers of adoption. People take a year to think about each of those layers. Layers. There's a hundred powerful entities that control huge amounts of money that'll go through that in the Western world. So I think we're in this institutional education stage, and in 2034, it'll simply be the new thing. Right now, it's like the scary, exotic thing for most people.

Yeah, it's interesting. My mom asked me what she should be doing with her. Her mandatory distributions, and I said, buy the Bitcoin atf, right? Talk to me one second about. I don't want you to give financial advice, but I do want you to speak to. How do I put this? How should a person think about what percentage of their wealth they put here?

I think it depends upon where you live, who you are, what your life situation is, and also whether you're a corporation, a charity, a government, a family, an individual. That matters too. So, for example, if you were asking me for that advice for a business owner in Nigeria right now, I would say most. I would say the question you got to ask yourself is, can I trust the government, Can I trust the bank, Can I trust the currency? And. And can I leave with my stuff? So if you're saying to me, mike, should I buy a building in a building in Nigeria or. Or should I buy a business or should I buy a diversified portfolio? Would I recommend a diversified portfolio of Venezuelan stocks or a diversified portfolio of Cuban stocks? Like, it really depends on where you live. North Korea, Cuba are kind of simple. All through Africa. If you lived in Egypt, the currency's unwinding. If you follow the Turkish lira, the Turkish lira has gone from 7 lira to the dollar to 32 lira to the dollar dollar in 36 months, let's.

Make believe we're living in the US or a European country.

Okay? And if you're 70 years old and you're retired and you don't expect to ever have to flee for your life, then you probably should buy the ETF. And if you're 20 years old and you've got your entire life ahead of you and you think you might want to relocate to a different country, and you can't predict it, then generally you're better to buy the underlying asset. Some people should buy the Bitcoin in self custody. Some people should buy the Bitcoin and they should institutional custody. Some people should buy the etf. And then if we flip the companies, there are Companies where it's illegal for them to say self custody. There are companies where, there are investment companies where they can't buy certain commodities, but they could buy securities. So, so the real issue is what's the entity and then what's your time horizon? As a general rule, the longer your time horizon, the more you would prefer to hold the money, the underlying commodity asset. Because if you hold the asset, you can transfer it to any counterparty in the world. You can custody it anywhere. You can self custody, and it doesn't come with a taxable event.

Let's make believe you're speaking to 400 CEOs in the room who are asking the question about, you know, I've got.

Okay, I'm going to give you a very simple observation. Everybody looks at Bitcoin and they think, well, how do I create the next Cash app or the next mobile app or the next Fidelity or the next Question Coinbase or the next whatever? And they think really hard about that, or how do I topple J.P. morgan? It's like, that's a very difficult thing to do. I give you a very simple idea. You have a Treasury in your company. If you put your treasury into sovereign debt, you're going to yield 5% pre tax, 3% after tax, and you're not going to beat the cost of capital. The cost of capital capital right now is 8 to 10% in the US easy. So if that's the case, your treasury is a liability, which means that any rational person would look at you and say, you should decapitalize. You should run on the minimum working capital or negative working capital, and you should run on debt. But I'll give you another idea. If you actually are investing in something, you expect to go up 20 to 40% a year for the next decade, you're beating the cost of capital by a factor of two. That means the right thing to do is go back to your venture capitalist or your bank and just raise $100 million that you don't need and buy Bitcoin with it. Because if the business you're running doesn't work, you will have a business that's growing 20 to 30% a year scalably for the next 30 years. That will work, right? You'll double the 100 million two times in the next six years. So you'll be 200, 400 million in six years. When the thing that you're doing right now doesn't work, you're going to have a business that's growing 20% a year off a $400 million base, which is a monopoly. So most, I think the number one, I mean this is a simple hack, but every venture capitalist in the world is getting 2 and 20. They're getting a 2% management fee and a 20% participation. And their mandate is they have to invest in operating businesses that are private. And if they were to go and buy a billion dollars of bitcoin with limited partner capital, their limited partners would say, are you crazy? I could have bought the bitcoin. So the VC can't buy bitcoin, which is the risk free return of 20, 30% a year. The VC can give you the $100 million, you can buy the bitcoin. They end up with debt. In a private company, you end up with 100, 200, $500 million business growing 20, 30% a year. That's scalable, that you run with yourself and your cfo. It's good for them. They're going to make a fortune. They want to invest the money. The real problem in the world. And by the way, this is back to the Dow of Steve. In the dao of Steve, there's a guy sitting on the bed and he's smoking marijuana and someone's saying, well, why aren't you out there doing something? And he says, doing stuff is highly overrated. Okay, so here's the big idea, which is there's a couple hundred trillion dollars of capital in the world that's debasing at 10% a year right now. And the big idea is just stop investing in toxic money. Right? If you simply flip your treasury to stop accreting at 10% a year. You see, it's like everybody wants to like, do they want to hire 100 people and do a lot of stuff that's risky, but really this is very painful. But if I told you the water that you're giving your kids is toxic and it's full of pathogens and that's why half of your children died. And you said, well, what's the big idea? I would say give your kids clean water. Is that easy? Yeah. And if I said the food, well, the food's not cooked and there are worms in it and pathogens and that's why you're dying. What's the big idea? Eat clean food, right? I mean, that whole idea is what about clean air, clean the air, clean the food, clean the. Here's the one. All my doctors, they want to give me bad drugs and bleed me whenever I sneeze. What's the big idea? Stop taking the bad drugs and stop letting Them bleed you. Okay, so if you're running a business and you're running a business on cash, the cash is losing 8% of its value a year. You're basically bleeding out energy on your balance sheet right now. And the simple idea for max performance is turn your balance sheet into an asset. Anybody could do it. And what happens? Well, the microstrategy story is we had a $600 million enterprise value with 600 million of cash, which was a liability. What did we do? We flipped it to be 600 million of Bitcoin and a 600 million dollar enterprise. And then the bitcoin kept growing. And the bitcoin's been going up 40% a year. Bitcoin is going. I can't tell you what it will do, but I can tell you it will outperform the s and P500 over time. That I'm quite sure of. So you flip your balance sheet to become an asset. And today the enterprise value of the company is $30 billion. The stock's up by a factor of 10, the equity market cap's up by a factor of 20, and the enterprise value is up by a factor of 40. It took 42 months, not four years. I haven't graduated from my senior year in bitcoin. I'm halfway through my senior year in Bitcoin. But the profound idea is every company in the world has toxic assets on its balance sheet. They're all liabilities. And we've taught the conventional wisdom in corporate finance is if you have capital, give it back and dividend it out. Facebook is buying back 50 billion of their stock and dividending out billions of their stock. Apple is buying back their stock and dividending out their stock. Scratch your head and think about this a second. I'm going to apply this to Harvard and mit. Give back the endowment and just raise the cost of the tuition 20% a year and stack twice as many students per class. And that's how you fix the university, right? Not no, right. How about this is an idea for your family. I want you to take all the money your family has, I want you to give it away to charity. And I just want you to tell your wife, your husband, your kids just to work harder and ask for a 15% raise next year. And that's how you're going to fix your family. They're both pretty silly, right? You would never in a million years have that as your strategy. We give up all the capital and we work harder. But you know what the corporate playbook is? Give up all the Capital, raise your prices, work harder, grow your cash flows by 15% a year, and then you'll be fine. And, you know, that's why 99% of the companies fail. That's why the life expectancy of a corporation is 10 years. And you know what I mean. Harvard, Oxford, Yale, they lasted more than 10 years. Did they do it by raising their prices 10% a year and working harder? No. In fact, there's not much productivity boost in any of those places in 500 years. So here's the profound idea, which is, you know, if we adopted a different financial model in corporations, you could have companies last for hundreds of years. You don't have to die, Right? For example, you're a dentist. You know, why do I have to raise my prices 10 or 20% a year to be viewed as successful as a dentist, Right? It's like. It's because. I'll tell you why. Because we keep expanding the currency supply by 10%, which means the price of everything you want to buy goes up by 10%, which means you have to grow your cash flows by 10%. And that's why the Magnificent Seven generate all the returns in the S&P 500. And there are 493 companies that return nothing. Zero. Right? And by the way, it's not their fault, right? We blame them. We blame the companies like we blame the workers for not working harder. It's not their fault. You cannot outwork inflation. And we're back to this issue of if the person that runs the currency or the money printer just keeps printing 20% more money or 10% more money a year, you just stop the heart. You basically create a heart attack for every worker in the economy. And so my advice to anybody who's a CEO is don't work harder, work smarter. But really, you're in a rowboat, you're trying to row. The wind is blowing. Get yourself a sail. Put the sail up and let the wind blow you. Instead of trying to row across the Atlantic, you're not going to make it.

How many folks here right now, in the back of their mind, they're thinking, as soon as I get home, I'm going to look at putting a chunk of my treasury or a chunk of my personal into Bitcoin. Can you raise your hand if that's a conversation that you're having with yourself right now? So, right in 2014, I gave everybody in the room here Bitcoin as a gift. We had a Bitcoin atm. And you have no idea how many people came to me years later saying, remember that piece of paper you gave me? Can I have a copy of it? No, but you're getting the equivalent right now, right? You're getting the equivalent right now. Which is to say, if you can appreciate the logic here, the first principle thinking that Michael is putting forward, then you probably are thinking about going back and making that change. Now, the degree to which you want to put some or all of your treasury or some of all of your cash or some of all of your stocks into bitcoin is up to you. But I am curious and I will ask you next year or maybe in the next meetup that we have, how many did that? And then we'll see a year from now or five years from now, how many billions of dollars that was worth to the room. That'll be interesting experiment.

The low risk way to do it, Pete, is you just go to a venture capitalist and next time you raise $50 million in capital, raise 100 million in capital and then put 50 million into Bitcoin and the other 50 million or whatever. I mean, how many people in the room have a business? They think they can grow 20% a year every year for the next decade without taking any more capital, without a capital investment, without hiring another person, without taking competitive risk. If you're honest with yourself, no one's sure they can do that. There's like seven companies that have done it. Google, Facebook, Amazon. We know their names because for every one of them succeeded, 10,000 companies failed. It is statistically very difficult. But on the other hand. So when you invest in bitcoin, it's probably the least risky thing you're doing. But I'm not telling you, by the way, the big idea is not just take every last penny and buy bitcoin. The real big idea is that they're venture capitalists like SoftBank with 10 billion, 20 billion, 50 billion. Their problem is they need to invest the money, right? They need to invest the money. They need a use of proceeds. And bitcoin is the world's greatest use of proceeds because it's accretive. It beats the cost of capital, right? And name, you know, sovereign debt does not beat the cost of capital. Cash does not beat the cost of capital. You can't, by the way, you can't do this with art. You can't do it with real estate. I mean, the closest thing would be, I'm going to raise billions of dollars, I'm going to buy high quality real estate. And so that's a real estate development thing, but that's a 20th century idea, and we're in the 21st century and you need to think about cyber real estate.

Let me go to about 20 minutes of questions here. If I have a question, please go to one of the microphones here. Michael, while people are lining up here, what about AI and Bitcoin?

Okay. I think the way that AI is empowered by Bitcoin is literally Bitcoin is digital money and AI is digital intelligence. You think about the idea like I create a digital accountant that gives advice or a digital lawyer that gives advice. Well, how does it get paid? What if I wanted to actually release that digital thing and have it learn to do this in every country? But how do I cross borders? And how does the AI get credit cards? It can't wait.

We talked about having a appropriate jurisdiction where AIs can self incorporate, start their company and run it. Charlie, kick it off with you, pal.

Wow, thank you. So I have a question about governments getting into digital currency to what's your opinion about governments getting into digital currency as a way of directing how people will spend money? So the example being government issues a digital currency, says if you make less than $250,000 and you do X, Y and Z, we'll give you A, B and C. But if you make over a certain amount, you get the point of what I'm talking about. Yeah. So just to be clear, so I am. I don't think Bitcoin's digital currency. I think it's digital property. But an example of digital currency is tether or USD or euros or CNY moving on a digital device. Governments, as long as there's an effective government and they have power, they're going to designate legal tender. And currency is a system of control as well as a medium of exchange. And so it's going to be a very political issue, very controversial. There'll be lots of politics and an authoritarian government. They will use a digital currency as a system of control. In the US there's a massive fight on Capitol Hill over whether or not there should be a digital currency. And people that believe in freedom and the like, they're going to fight it and do their best to stop it. I think that you'll see that debate in every country in the world. It'll continue and it'll be layered in with another debate, which is, for example, if the people that love the digital dollar in the form of tether are actually the Argentines that want a medium of exchange. So the positive of a digital currency for the United States is if the US actually mandated A digital currency, the dollar would collapse and replace every other currency in the world, including, it would metastasize through Russia, through China, China, through all of our enemies and our friends. And you would have allies of America complaining that their local currency collapsed. And you would have enemies of America not liking that. So it can be used as a tool to spread, to make a certain currency a reserve currency. And if you want the US Dollar to remain the world's reserve currency, you would actually argue in favor of a digital currency. Because why wouldn't you want China to run on the dollar if you could get it to work that way? But, you know, equally there's the issue of who controls it. Are you going to have a private corporation issue it running on a crypto rail or are you going to have a government issue it running on a state controlled banking rail? Look, I don't have the answer. It's very controversial. I do think that the future of digital currencies in the US will probably be influenced heavily by the November elections and by the next administration.

Thank you, Adam.

Michael, I'm curious how you think about the identity of satoshi. Does it matter a lot to you? Have you spent a lot of resources trying to investigate? No, I don't think it matters at all. And I think it's better that we never know. And I think that what makes bitcoin special is it had an immaculate conception. Look, there's a fundamental, a very acid test. Is it a commodity or is it a security? If a crypto asset is a commodity, that means it's an asset without an issuer. If it's going to be a commodity, it means no person, no company, no government, no group of people can exercise undue influence over the future of the protocol. If there was a satoshi alive, speaking, tweeting today, and satoshi said, I think we should change this part of the protocol, that would be an awful, awful fact. It would undermine the integrity of the network. The guy that invented gold is not tweeting that he wants to change the atomic characteristics of gold and the density of gold. That's why it's actually a commodity. And so I think bitcoin is unique and that it had an immaculate conception. Satoshi's gone, walked away, and the thing didn't even monetize until pizza day, 18 months later. And I think that it can't be ethical. It can't be ethical money and global money, unless it's a commodity, it's easy to create a security. You can create a million securities, you could spin them up in three hours. It's hard to create a commodity because the miracle of bitcoin was we release something to the hobbyist that's worthless, and then on pizza day, a year and a half later, someone wants to pay a fraction of a penny for it and it spontaneously monetizes. That's never happened in the history of the world. It may never happen again. And satoshi is not necessary, it's not relevant. And it's an open source protocol. Read the code, right, and decide for yourself whether you trust it.

Thomas? Yeah.

I totally like the idea to swap your treasury into bitcoin. And I want to discuss another idea with you because all the people who hold bitcoin today, and we are hodling as a thing that we are doing for many years, we have locked so far more than a trillion of dollars.

In assets into bitcoin, which is in.

A way capital which is idling, you know. So that's why I want to hear your opinion about defi on bitcoin, which would be enable that you can borrow against your bitcoin and then reinvest it.

In assets like decentralized infrastructure.

I think we've got an open market and there are thousands of experiments and thousands of of projects going on right now. Well, for example, MicroStrategy has more than 200,000 Bitcoin. I just borrowed 1.4 billion last week. That's defi. Right. And so how do we do that? We did that working with options market, convertible debt market, the NASDAQ spot market. I bet, you know, is a BlackRock application sometime in the next year to two years. I'm sure that major wirehouses like J.P. morgan or Goldman Sachs will give you loans against that. That's a different way to do it. There's a bunch of crypto approaches, right? At the end of the day, the issue of do you want to be able to get yield on your buyer? You can get yield. The people that bought my convertible debt, they're getting yield, right? And so there's a lot of ways to get yield. There's a lot of ways to generate credit. They all come with counterparty risk. And the question is, which counterparty do you want to trust? And sometimes we trust somebody like FTX or Genesis and they let you down. Some people don't trust the CME or nasdaq. Some people don't trust whatever. I would never endorse anything. What I would say is that there's 100,000 experiments that will run. The answer is going to be different in Singapore than it is in China than it is in the US than it is in France. And it's going to be different five years from now than it is right now. So all these are morphing. But I do think that bitcoin at the end of the day is the highest quality capital. It is going to. It is, you know, is the most credit worthy thing because you've got transparency to a 24 7, 365. We have a situation where the credit markets and the payment markets are immature. There's a huge amount of work to be done over the next decade to build out all of these various parts of the financial universe. And like some people will do it very enthusiastically, like Sam Bankman. Fried was very enthusiastic, didn't know what he didn't know and blew up. Other people will go slower but they'll do like they'll go slower but they'll do a better job. And the answer will be different for every type of entity. So I am enthusiastic, but I don't think there's any one answer. I think it's a market economy.

Warren, hi. I love what you're doing in your stock.

In fact, I've made five times more.

On your stock and derivatives around it than buying Bitcoin. So one of my questions would be why should we buy bitcoin? Why don't we just buy your stock.

And what do you think the halving event is really going to do to the price? Bitcoin's a commodity. It's an asset without an issuer. Whenever you invest in a company, you're taking counterparty risk. In order to invest in my stock, you should reasonably read 1,000 pages of disclosures. And I'll make the obvious point. People in Nigeria can't self custody MicroStrategy stock. So what we're trying to solve the problem of creating integrity, sovereignty, truth and hope for the world. That's going to be done via protocol. Right? MicroStrategy is simply a high performance business. There's a lot of other businesses and every business does their thing in the world as best they can. So we offer a very particular thing to us. We offer convertible debt to convertible arbitragers. And they have billions of dollars of capital and they can only convertible arbitrage. So if we didn't give it to them, their capital wouldn't come in the ecosystem. And so that 1.4 billion that I got came from them that went into bitcoin. I need to do something for them. It's a complicated something. There's a lot of volatility to it, Right. There's a limit to how much we can do. Can you just buy your stock then? You know, the truth is I would recommend anybody that's interested in bitcoin, they should study bitcoin before they buy anything. And then after they study Bitcoin for $100 they ought to, I would say you ought to buy the bitcoin. The real debate ought to be do you buy the bitcoin in self custody? Buy the bitcoin, institutional custody. Buy the bitcoin through, through an etf.

Because what about the.

Bitcoin is the innovation, right? Bitcoin is the innovation. If you're, if you are a professional investor and you have billions of dollars of capital. By the way, I, the investors of my company aren't allowed to buy bitcoin nor are they allowed to buy the ETF. Their charter is here's $10 billion. You have to invest in publicly traded operating companies. So my company is meeting a need for certain types of investors that are sophisticated. I'm not here to promote my company. Right. I expect bitcoin will be here 1,000 years from now. My company won't be, I won't be. Right. There's not much to be said there.

What about the halving? What do you expect to see?

Bitcoins Right now there are 900 bitcoin naturally produced every day available for sale and miners generally have to sell them. They have high electricity bills and high debt bills and build outs. Around April 20th that'll be cut in half. That's 23 million a day or 20 something million a day. That's like taking $8 billion a year of supply out of the market. It will be the most consequential having in the history of bitcoin in my opinion. It will create a squeeze. It means at that point if, if the natural organic demand is in excess of 25 million a day, then there is no natural seller. So obviously it's very bullish for the asset class and for bitcoin holders. I think that by 2028 you'll be down to 225 bitcoin a day. It'll start to become second order. And by 2032, it's a rounding error in the northeast.

Who are the sellers of bitcoin over the last six months and a year?

I think that there's a number of class of sellers, the bankruptcy estates like ftx, bankruptcy, Genesis bankruptcy. A lot of these people have billion dollar positions of bitcoin and other crypto assets and they're not Long term investors, they're just looking to unwind and get their creditors whole or unwind the trust. So they're the big natural sellers right now.

They were flushed out of the system.

And they're getting flushed out of the system. And then I think the miners are the persistent natural sellers. Otherwise the volatility in the system, it comes, there's a. The primary volatility is that bitcoin is cross collateralized and cross traded with the other crypto assets with it's, it's an unregulated market traded offshore 24, 7, 365. There are many, many billions of dollars of bitcoin held offshore. There's $400 billion of ETH in a market cap. There's 80 billion and 80 billion of Solana and BNB. Right now. If you had a billion dollars of crypto tokens offshore, you could post it as collateral and you could do a $10 billion trade in an hour on Saturday night. Unregulated. Unreported. So the Wild west, the number one source of volatility in my opinion is unregulated offshore after hours crypto trading. The second, the lesser source of volatility is the options and the futures and derivatives market onshore during normal trading hours in the world, western world. But I think that although they are capable of face ripping trades, the degenerates in the crypto ecosystem put them all to shame in terms of what people.

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Good Greg. Hey everyone.

Hey Michael. I appreciate everything you're saying.

I just want to Know, what's your thoughts on Ethereum or Litecoin or any.

Of the other cryptocurrencies out there?

I, I stay in my lane, generally, and I say, you should buy bitcoin. Don't sell your bitcoin. Bitcoin's good. I like bitcoin. It's an ethical commodity. Everything else in the. What I'll say about everything else is the rest of the digital asset ecosystem is a bunch of good ideas with a lot of regulatory uncertainty and competitive uncertainty and technical uncertainty. So they're all interesting ideas. Digital currency is interesting. It's very controversial. Digital tokens are interesting. They're very controversial. Digital securities are interesting. Very controversial. Digital exchanges are interesting. They're very controversial. I have, I have no recommendations one way or the other. I just think they're complicated.

Jason? Hi, Michael.

So I'm bullish on Bitcoin, so big supporter, but is there a situation or.

An event that you view that could potentially lead to the collapse of bitcoin? Have you guys thought about, so, putting it differently? I was going to ask that question. If it's 10 years from now and Bitcoin has failed.

Yeah.

What caused it to fail?

You know, when, when I started searching around and I discovered Bitcoin, I thought, okay, well, this is crypto gold. But it's got none of the defects of gold. It's got, it's got all the attributes of a big tech monopoly. It's, it's. It's better money than any economist has ever conceptualized in the history of the world. So I thought, this is kind of perfect money. I can't see it being more perfect. So the question is, is it going to be banned? Is it going to be copied, or is it going to be hacked? You know, you start as the denier. It's not a good thing. And then you go to skeptic. Skeptic is it's too good to be true. So when I got to my skeptical phrase, I, I just asked, will it be banned? Will it be copied? Will it be hacked? And I stared at it, and the conclusion was, it's only if it's understood to be property, not currency, then no, it's not going to be banned in a country that gives you property rights, which means it's banned in Cuba, it's banned in North Korea. If the world becomes communist and they deprive you of the ability to own things, that's an existential risk. But that's not a problem in Russia or China or the U.S. right. Right now. So not Banned. Will it be copied? It was copied 10,000 times. They all failed. This is the winner of that 10,000 experiments. So not so, yeah, it worked. And now will it be hacked? And Satoshi's got 50, 60 billion dollars in a wallet out there. Then that's the reward for hacking it. And no one's figured out how to get the money yet, so it hasn't been hacked. And I know it's able to store 60 billion without anybody hitting it. So what I think is, I think the way to understand Bitcoin is everything you learned in economics and about money in your entire life was pseudo science and superstitious. And you can't blame the economist for being mired in pseudoscience and superstition because we never discovered perfect money. And so bitcoin is the first time that we actually discovered a thermodynamically sound, mathematically sound economic protocol in the history of the world. So I think we will date things before Satoshi and after Satoshi. And I think that you can't think of it as a network or as a product. You have to look at it as a protocol. The human race discovered, like base 10 math, mass of protocol, like the metric systems of protocol, like English as a protocol. And so this is the first sound protocol, economic protocol, in the history of the world. Now we finally realize why seashells and bales of tobacco and fiat currency and gold coins and silver coins and copper tokens and glass beads and the giant stone coin and the yap people. We understand why that stuff never worked. Now, you know, if you really understand bitcoin, it's because I've got an asset where the energy has a half life of forever. And the half life of energy in gold is 30 years, and the half life of your money or your energy in the dollar is ten years, and the half life of your energy in the Bolivar is one year. And now once you understand that basic breakthrough, now the light bulb goes off. So I think all the smart money, all the smart people in the world that don't trust the bank, don't trust the currency, want to keep their money. They're all discovering bitcoin. It's like all the smart people decided to use math and use this language. And now what happens in the future? Well, stuff will advance, but you're going to have a trillion, then a 10 trillion, then $100 trillion network. And if someone comes up with a new crypto algorithm and it's better, we're just going to fold it into this network. And if someone comes up with another twist or tweak. We're going to fold it in the network. You're not going to. It's like saying everybody uses English in the world of science and trade today, but anguish doesn't have a word for my widget. So I think we should all switch to Swahili because they've got the word. And my answer is, I think we're just going to put the word into English and we're going to stick with English. So Bitcoin is a protocol. It's going to go on a long, long, long time. And I think that as long as the world doesn't plunge into some Orwellian no property rights situation, I think we're good.

I'm going to take three last questions. From Paul, from Mark and from Marina on Zoom. Paul.

Hi, Michael, Paul, Paulo from Chicago, Illinois. Very insightful talk. You've convinced me to get crypto, but not just.

He's not, he's not pitching crypto.

I mean bitcoin. So that's. To be more specific, how do you think about these other, other stable coins like Cardano and Ethereum? And is crypto in general a zero sum game or not a zero sum game? Cardano and Ethereum aren't stable coins. They're crypto tokens which are probably unregistered securities. And so Cardano has been designated as an unregistered security by the SEC explicitly in lawsuits. Ethereum is this massive gray zone. So at the end of the day, Bitcoin is the only, the only thing in the world universally acknowledged by every rational, intelligent person is Bitcoin is a commodity. Everything else you're going to see people disagree on and fight over and litigate politically and there's a war that will go on. And so what I think is there's 10,000 things that people are going to fight over. There's one thing that is institutional adoption. It's clear. So it's like asking me which of the 10,000 mobile apps would I suggest I should invest in? My answer is none of them because there's a 99% failure rate in startups. So I'm not going to recommend you invest in a company. Which of 10,000 buildings should you buy? I don't know. Which of 10,000 pieces of art should you buy? I don't know. I mean, that's your business, right? If you want to do that, you do that. The only thing that I'm here to say is Bitcoin is a digital commodity. If you want global money, then it has to be a commodity, it cannot be a security. Right. I'm not going to tell you to buy Apple stock. Apple stock will not be a store of value in China in a hundred years. Right. I mean, even Tim Cook would tell you that. So, so the world is very complicated when you get into securities and, and other types of investments. The idea of Bitcoin is what if we had a global money that was based on a crypto network that's decentralized and ethical? No, I think Apple will be a successful company. Right. You know, you can. Is crypto economy zero sum or if the government allow, if the administration flips and they allow companies to issue stablecoins, then a company that issues a stablecoin in a compliant regime will make a lot of money issuing it. And if the next head of the SEC says that Tom Brady can issue Tom Brady coin and 10 million tokens and file a quarterly statement saying how many tokens are out there? Then there's a business there. So there's a million. As I said, there's a lot of good ideas. If you've got a regulatory regime that will allow you to do it in a legal fashion, then it might be a good business right now. Okay. But again, bitcoin is. If you're trying to replace global money. If the question is which is the global money? Bitcoin's the global money. It's going to eat everything, right? If you want to talk about what's going to eat, forget about cryptos. There's no money in crypto. Probably the total amount of money invested in all the cryptos since the beginning of time, other than bitcoin probably isn't even $50 billion. My company's invested 7 billion. There's not a single person that's publicly and publicly disclosed who invested 100 million in, in any other crypto project in the last decade I can think of. So I don't think there is any capital there. The capital is in gold, real estate, art, corporations, the S and P index and corporate bonds. And so what's really going to happen next is Bitcoin is demonetizing gold, silver. It's going to demonetize a lot of real estate. It's going to demonetize a whole lot of. Why would you put your money in the S and P index when 493 of the companies are 5 failing? Right. So you talked about demonetization, right? The money, 500 trillion of it is in the 20th century economy. It's not in the crypto economy. That's what's going to be attacked next. Thank you, Michael. After doing the amount of research that you've Talked about, in 2017, I made a very large bet, Put all of my investable net worth into Tesla. And then in 2020, when Covid hit, I started doing what you said not to do, giving it away. And I put a half million dollars to fund the Denver basic income project. And so, as we're making this transition into this new economy, that we're not all sure what it's going to turn out to be. I'm curious about what you think the role is of universal basic income and bitcoin as maybe a tool to finance that and in the idea of trying to create an economy that works for all and seeing human capital as a type of capital that we might want to invest in more heavily as we think about putting our resources into capital. Well, I mean, the issue of UBI is above my pay grade, so that's an issue which I'm not going to opine on because I'm not an expert and it's not my area of. Of expertise. With regard to bitcoin, though, I do think that one of the killer apps of bitcoin is to endow a charity. So using bitcoin to power the endowment. I'm using bitcoin to power my nonprofit, which gives away free education. And the promise of bitcoin is it could do it forever. And so you could power a church, a park, any kind of charitable activity using bitcoin, because the number one problem they have is they need their endowment to go up over time. And so anybody that's got any amount of capital, if you're investing it, you're getting a 20% return instead of a 5% return. You're actually going to be able to perpetuate your mission forever.

Bill ackman had a proposal of, like, putting $10,000 into the S&P 500 when a child was born. And it would be worth, you know, so many millions of dollars when they're ready for retirement. But I think it's a much sounder, you know, put $10,000 with the government to put it into bitcoin, and then you don't have any dependencies thereafter.

Right.

And the money. And the money is made available after retirement age. You can't touch it.

I gave a pretty famous speech in Madeira where I said, bitcoin is for everybody. Everyone. And the point really is a lot.

Of crowds cheering for you.

Yeah, well, anybody that flies all the way to madeira to talk about bitcoin, Likes Bitcoin. But my point really was you can power a city, a state, a country, a church, a charity, a non profit, a family, a company. You can power any of those things. And if you've seen my other talks, we didn't go into it, but you know, the S and P index is pretty much going up 7% a year for 100 years. And the U.S. dollar currency supply is going up 7% a year for one hundred years. And it doesn't take a rocket scientist to see that what you have is a basket of assets that are holding their value in real terms while they trend up in nominal terms. And that's not awful. I mean, at least you don't get poor. But, but what you really want is you want something to go up 14% in value a year. Why the currency supply goes up 7%. And the way you do that is you strip away all the counterparty risk of a company. I mean, you're all in companies, right? If you watch the news, you can see Amazon might get unionized, Apple might get fined, Facebook might get sued. Right? I mean Microsoft has their. So corporations are tax surfaces for regulation, taxation, tariff. And that's why over 100 years it's likely that you're not going to be able to do any better than simply keep up with inflation under the best of circumstances. And if you want to power a family or a charity, you need to beat it. You need to grow faster. And now we're back to my phrase, like doing stuff is highly overrated. You know, Apple's on the iPhone 15 if you have to, you know, if you have to ship the iPhone 99 in the year 2100 in order to not have your stock crash, there's a lot of risk in that, right? There's a lot of work.

Marina, we're going to you for the final question on Zoom.

Thanks. My question is really practical and logistical. So for those of us who have our bitcoin in self custody, what are your thoughts around the best way of keeping it safe? When we compare something like a cold wallet versus a multi sig solution like casa, I wouldn't feel comfortable giving a particular recommendation on that. I really think that it's a function of who you are, like what stage in your life you are, how technically capable you are, your family situation, your political situation. So I will say this, which is if, like if you're a retiree and your hands shake and your eyesight's not good and you simply would like to not run out of money or live comfortably, you probably ought to buy ibit or buy FBTC or buy some Bitcoin ETF through your broker that you've been dealing with for 40 years. Because the truth is you're probably not qualified. You probably can't literally type in the keystrokes necessary to recover or manage that. And it would be foolish for you to even go there. If you're at a different stage in life, then you might find that the best of all worlds is you buy bitcoin, but you leave with an institutional custodian with the understanding that on one week notice you can self custody if and when you need to, or when you lose faith in the counterparty the custodian. Right. And there are a lot of people for which that's the appropriate thing. And then there's another set of people that they would self custody because they're capable and it's appropriate. And there are a lot of organizations that should. Again, if you're running a company in a certain country where there is no reliable custodian or institutional custodian, it's inappropriate to suggest that the risk of holding bitcoin at Fidelity is the same same as the risk of holding bitcoin at a bank in the middle of a war zone. They're not the same. Right. And so you've got extreme differences depending on who you are and where you are. And I think that. But I will say the obvious thing, which is when you decide to go to self custody, you're taking on a much greater responsibility and you need to be technically much more proficient and capable. So you have to put more time in and be prepared to do that if you're going to do it.

Michael, thank you buddy. Thank you for joining us tonight.