DECODE Decentralization: The Power of a Leaderless Network

The whole idea around decentralization is essentially no one person or organization controls the system. That's it, right? If you think of centralization, it's important to kind of recognize why is centralization important or why has it been effective, right? If Amazon wants to be built or we want to accomplish a lot of the things that have been great throughout this industrial revolution, we needed central order or central kind of coordination of resources, both financial capital, human capital, and also plans and execution. And so these centralized entities end up being built into hierarchical structures. There's somebody or a group of people at the top, and they basically are able to, you know, kind of decree down to the rest of the company, here's what we're gonna work on, here's what we're not gonna work on. And that's basically what the corporate world is as we know it, right? Jeff Bezos got immense leverage with Amazon because he had human capital and financial capital in a hierarchical centralized structure. That's actually a good thing. We would not have Amazon without it, right? Amazon's actually been a huge net positive for the world, in my opinion. Name every other tech company, same thing, right? They're all centralized hierarchical structures. Now what we're getting though is a technology change that allows for the coordination of resources that doesn't require the hierarchical structure. Instead of one person making decisions, what if everyone gets to make the decision? Well, it depends. What are you trying to accomplish? Sometimes decentralization better, sometimes it's not, right? There's a very strong argument that in certain situations, centralization is the more efficient, better kind of structure. But now that we have decentralization with this technology, what you do is you can actually build much larger networks. So the difference between a hierarchical structure of, let's say, Amazon that is trying to build out all of these super kind of moonshot-type ideas, AWS and logistics and all of this, compared to maybe something where a network ends up making much more sense, right? So take Bitcoin. Well, there's miners, there's node operators, and there's holders. There are 3 different groups, um, and the miners are financially incentivized to run computers to run the network. It's pretty interesting. There's a financial incentive for people all around the world, and there's literally millions and millions of machines around the world that are all doing this. It's the strongest computing network in the world.

Why?

Because every 10 minutes or so, there is a certain amount of Bitcoin, 6.25 Bitcoin, that ends up actually being given out to folks that are running that network, to the people who are running the Bitcoin blockchain. And so that financial incentive right now ends up being somewhere $45, $50 million a day in Bitcoin ends up being given out to these people based on how much computing power and some nuance there. So when you create a network that doesn't have a hierarchical structure, there's no CEO of Bitcoin, there's no marketing department, there was no, here's the master plan, okay, Tom, you go build the site in Washington State, and Larry, you go build the site in China, and Mark, you go build the one in Texas. There was none of that. It was purely, Tom says, you know what, I want my piece of the Bitcoin block reward every day. And we know what I'm gonna do, I'm gonna go figure it out, I'm gonna go, I'm gonna get energy or power, I'm gonna buy these machines, then I'm gonna run this and I'm going to have a profitable business. And so rather than rely on that hierarchical structure, by creating a network, we created the strongest computer network in the world in 12 years.

Want to be happy? Build a life, not just a business. Hey, it's Evan Carmichael, and this channel was created to help you overcome the number one challenge that is holding you back: a lack of belief in yourself. You watch these videos because you know there's something more inside you too. You've got Michael Jordan level genius at something. So today let's live your best believe life and learn how cryptocurrency will revolutionize the future of money. Enjoy. Rule number 2, look at adoption with Raoul Pal.

If I was to say, give us your top 5 or 6 worthwhile watching, obviously you're gonna say Bitcoin and Ethereum and all that. That's nice. But What's your thoughts? What gem can you give all these people watching? Yeah. So the gem of how to understand this space is easy. You don't need to be a genius. You just need to look at adoption. So this space is all priced in something called Metcalfe's Law. Metcalfe's Law really came about from computing, but mobile phones was the easy example. One mobile phone, worthless. 2, reasonably good if it's somebody you want to speak to, not very useful if you don't want to speak to them. If everybody has a mobile, you can now reach everybody on Earth. Okay. Then those same mobiles, you could put data on and have the internet on. And that changed everything. Then the computer world came along and interacted with this world. And now we've got these two networks. And it's made mobile computing turn into this, a supercomputer on your phone. What this is, is the network of money. And they all follow the same thing. Metcalfe's Law is the number of nodes on the network, i.e., the number of users, and the amount of connectivity between the users creates the value of the network. So what you do is look at these cryptocurrencies and say, right, how many people are using it? A lot of people. Is that network growing? And are people building stuff on it? If you can answer those questions with yes, then you've got a good investment. And the ones that I see that in right now are Bitcoin, Ethereum, Solana, Terra, and probably Polkadot or Avalanche. And those are the ones that larger market cap, we're seeing real use cases, lots of people adopting it, and lots of people developing applications on it. So those are the bets. But really, you only need to take one bet. Just take Ethereum. Ethereum is like the internet of money. It's like the software platform that everything is being built on. And it may not go up the most, but it's going to go up a hell of a lot because it's got massive network effects. It's easy to understand, it's easy to trade, it's easy to buy, it's liquid, and you don't have to learn too many new things.

Rule number 3, embrace Bitcoin with Michael Saylor.

I think that when you embrace Bitcoin as your property strategy, you can get away from the maintenance cost. The likelihood is going to be impaired decreases exponentially. Uh, the— it's a lot harder to seize a billion dollars of Bitcoin than it is to seize a billion dollars of land or a billion of art or a billion of gold. A billion of a building, or a billion of stock? Exponentially harder. If I have a billion dollars in a bank, it's easy to seize a billion in a bank. If I wanted to take all the money from everybody in Argentina, I could do it overnight if it was sitting in cash or credit. But if I wanted to seize all the money from everybody in Argentina, and they all used Bitcoin and held their own keys, I would have to incarcerate 70 million people for 90 days, and I'd have to sweat it out of them. So how hard is it to jail 70 million people for 3 months, and how many people do I need to do that? It's very difficult. 1,000 times harder? 1 million times harder? 10 million times? Probably 10 million to 100 million times harder to seize the asset than it is to seize cash or credit or securities. Seizing companies and seizing buildings is easy, right? The Cubans seized all the buildings, right? Everybody lost their private property in Cuba when Castro took over. That's simple. It's easy to nationalize an oil company. It's easy to seize all the gold, right? We know how to do that. It's very difficult to seize passwords in people's heads. So I look at Bitcoin, and I think, well, it's a universal property. It'll last forever. It's very hard to seize. It's very hard to tax. It's easy to move. And that makes it universally appealing, because on the day you wake up and you find that it's illegal to own Bitcoin in your country, you can either take it with you to another country, Try taking a billion dollars of gold to another country with you. Try taking a billion dollars of building to another country. So you can either take it with you, or you can send it somewhere, or you can sell it. And so the ability to send it, to take it, or to keep it, or to sell it, all those are three rights that you sacrifice when you buy a house, or a building or land or securities or credit or cash. You don't have those rights, or art or collectibles or sports teams, right? Whatever it is you think you have, you don't have property rights with those things. And ultimately, the idea of Bitcoin is nothing— is an elegant 1/21 millionth of all of the value on the network for as long as the network may last.

Also, to make sure you're actually taking action after watching this video, I've designed a special free worksheet just for this video. The worksheet will highlight all the lessons learned in this video as well as pull out our 3 favorite learnings and quotes that will inspire you to actually do something. The worksheet will also give you space to write down what your key takeaways are and your specific plan of action to make sure you're getting results. If you want the worksheet designed specifically for this video, absolutely for free, there's a link in the description below. Go click on it and start building the momentum in your life and your business.

I'll see you there.

Rule number 4: Invest with Anthony Scaramucci.

I thought there was going to be way more institutional interest at the beginning of the year, January 2021, than manifested. But now I'll make a bold prediction, Anthony. I think there's going to be institutional interest over the next 12 to 18 months because you now have gotten the regulatory box checked. And that checking of that box is going to lead to Institutions saying, hey, I gotta get in this thing. I've gotta own a piece of this. I've gotta understand it. And what would George Soros say? He would say, invest and investigate later. You've heard that aphorism, and I think you're now gonna start to see it, but I didn't see it over the last 8 or 9 months. And that's just me being straight up with you.

Rule number 5, adapt with Robert Breedlove.

You can think of Bitcoin as this new technology that so radically increases the cost to benefit ratio of violence and that if someone's properly custody of it, again, in a multi-signature format or whatever, there's not any carrot at the end of robbing them. You're not going to get anything, right? You can go and— in Bitcoin circles, they call this the $5 wrench attack because you buy the wrench for $5 and you beat the guy over the head with a wrench until he gives up his Bitcoin. But if he's custodyed it properly, there's no incentive even to conduct the $5 wrench attack. So In this gigantic geopolitical upheaval that I anticipate occurring due to the monetization of Bitcoin, I think it could be very uncertain at first. Governments are going to use their power in certain ways that could be unfavorable, let's say. But over time, as Bitcoin continues to monetize and more and more people are holding their wealth in this viable property, that would— I would tend to believe that the incentives towards peaceful cooperation would begin to outweigh the incentives to coercion. So although it could be a bit rocky in the beginning, I think the long-term outcome is way more fruitful for humans. You know, we're— and something you said earlier too, that maybe people don't want sovereignty, full sovereignty, full sovereignty. I think people— I think incentives are the fertile soil from which our humanity springs, actually. All right, so we think— is maybe a bit egotistical— that we think that however we are, this is the way humans are, it's the way they've always been. But again, that's totally not true, right? Pre-printing press, most of us were illiterate. We didn't have— our cognitive software was completely unrecognizable to what we are today. No one could sit here and have a conversation like this, much less with all these amazing tools we've created in the marketplace since then. So I think that by changing the fundamental soil, which are the incentives, again, like the logic of violence, all these other things, that we actually change our character traits and behaviors. I've said that, and to try and draw a commonality here, I said organizations and institutions are all property strategies. You know, I think that even DNA itself is kind of a survival strategy or property strategy over time, right? We're all organisms geared towards reproduction. Reproduction necessitates territory. We need to take territory. Humans express territory in property, right? That's how we share and build, declare property and create more wealth actually by trading through property rights. So I think that we our strategies ultimately conform to the invariance on the game board, if you will. And Saylor talks about one of these is gravity, right? Like, gravity is the one invariant that all of these strategies, whether you're a human being, whether you're a building, whether you're a government, like, you're, you're adapting your strategy to gravity. It's an invariant. If you changed gravity, it would destroy all the humans and buildings and all the things. You can kind of consider Bitcoin, maybe I'm out on a limb here, but I think 21 million, this fixed supply asset, as the emergence of a new seemingly perfected invariant in the market for money. So it forces all of us to change our strategies to adopt this invariant in the supply space. So this is at the individual level, the institutional level, and at the nation-state level. Um, sounds a bit radical, but I think that if you come to see, you know, DNA as a survival strategy propagating through blood, flesh, and bone, and that all the other creations we make are just, um, you know, in biology they call this the extended phenotype. We have the genotype, which is the genetic code, the strategy itself, We implement it in the phenotype, the body, the teeth, the eyes. We have the extended phenotype, which are our tools and technologies, or even our institutions, that it's all a strategy, and that those strategies will adapt themselves to the invariants that we create for ourselves. I think Bitcoin is just the perfect invariant money.

Rule number 6, evolve with Gary Vaynerchuk.

Gary, you tweeted in 2013 that you just bought using Bitcoin Google Smart Pants and had it delivered by a drone in 21 minutes. First of all, must be a very expensive pair of pants in today's dollar terms. And second, you know, you know, what was your experience with paying something with Bitcoin? Should it be used as a currency? What are your thoughts on that?

Should be— I apologize. Should— my experience was in 2013.

Yeah, should be— should Bitcoin be used as a currency?

It is. It's not even a should. This is not about predictions. People accept Bitcoin all the time. It's already happened. The question becomes what happens next. I think this, you know, Bitcoin is so much further along than the majority of things that have come before it as an accepted currency. To me, I don't get to say, nor do most humans get to say what should or shouldn't be accepted. If enough people believe in it, then it becomes. I always remind people, somebody used to live in the world before gold meant anything. We didn't have great documentation, but gold was a created ecosystem. Be accepted.

What should be the currency of the world is my question to you.

Whatever enough of the people in the world accept, right? Humans create their ecosystems. I don't think they're— I don't think this is a game of should. This is a game of how has it always happened. People used to trade berries for sheep. People used to trade furs for, for people. Uh, people used to trade high-end wine for workers to build things. I mean, I, I laugh at people's naivete to think what is going on today, or what we grew up with, is the end-all be-all. Uh, that, that's just laughable. The human race will continue to evolve. And if anything, I think it makes more sense that things that are digital become the currency as we go that route as a race.

And rule number 7, the last one before some very special bonus clips, is store value in Bitcoin with Mark Cuban.

How do you see this Bitcoin narrative now versus the Ethereum narrative?

How do you see them going into the next few years?

A couple of things. Where people got mad at me, where I was at odds with the Bitcoin community is I never saw it as a currency. I saw it as a store of value, digital gold, and just a supply and demand issue. Obviously, the algorithmic scarcity is built just to define supply, and the more demand you can build for it, the higher the price is going to go. And that's not a bad thing, but it was never really designed to be a currency. And you saw that in 2017 with all the forks and all the arguments about block size and everything. And so I was fine with it as a store of value. And, um, really just to me, it was just a question of when it started becoming more commonplace for people to buy it, because that's what was going to lead to a significant increase in price.

And that's what happened.

And then with Ethereum, I really, you know, with the ICO blowup and the ICO balloon, it was interesting. And I actually lost some money at that time, just experimenting with some things, but nothing horrible. But I learned some there, but it really wasn't until this summer when smart contracts really started to evolve and become more available that things really took off. And that's, you know, like I said before, that's where I dug in. And to me, in terms of how it all plays out, Bitcoin's great as a platform, and it's accepted now. It's an alternative asset. It's going to replace gold in the portfolios of a lot of people, and that hopefully will push the price up as long as the whales continue to hodl. But that's a different type of platform, and its utility really only happens when you wrap it, at least as of now.

What would it need to take or what would have to happen for you to go from the 7% target today to 20% performance?

Performance. I mean, that's basically, you know, I'm not a cowboy here. I'm actually allocating capital towards achieving a distributable return of between 6% and 8% a year. And so, you know, we have a lot of volatility in Bitcoin. And right now, we're kind of 61% back from the lows, and that's great. But not every crypto asset has to be that volatile. So when you start to build out your portfolio, let's go to USDC. You know, you actually can take that as a relatively stable asset and write contracts on it for 60 days, 30 days, 90 days, and generate 3.5%, 4% yield, which which is what I'm doing right now. And so I look at it as a portfolio approach. Some of these things have volatility, some don't. But, you know, the biggest problem which is holding all of us back in the crypto industry right now is compliance at the institutional level. You know, you go in and you say, look, everybody's talking about this. All right. I'm running— let's say I'm running a billion-dollar mandate. That's not uncommon. And I want to put 10% into crypto. You have to be able to find a platform that can link to your internal reporting and your external regulatory. You know, it's not like I got a— if I'm putting a 10% allocation on a billion, that's $100 million. I'm not going to download an app on my phone and put $100 million into it. I'm going to have to have an institutional compliant platform. And the industry is not there yet, Pomp. It's got a lot of work to do on that front. And the more we the more we move towards that, the more capital is going to be coming in.

Because you made it this far in the video, I want to celebrate you. Most people start and don't finish. Most people never actually follow through. Most people say they want something, but they don't ever do the work to actually get it. But you are different. You are special. Believe Nation, you made it here all the way to the end, and I love you. So as a special celebration, if you put a hashtag #believe down in the comments below on this video, I will showcase you and celebrate you somewhere on the screen in a future video because you are awesome. If you want a deeper dive into Bitcoin, check the video right there next to me. I think you'll love it. Continue to believe and I'll see you there.

Much, much more valuable than it is today. Do we get institutions to adopt, then kind of developing nations, and then there's a default and there's an inflection point? How do you think we sequentially get there? What does that order of operations almost look like?