In this episode on On The Margin, Mike is joined by returning guests Jeff Booth & Greg Foss. Jeff & Greg discuss breaking news as the first ever U.S Bitcoin ETF was approved and what this could mean for institutional exposure to Bitcoin. Mike, Jeff & Greg also discuss the recent developments in El Salvador as Bitcoin was made legal tender, The Lightning Network, the deflationary forces & network effects of technology, Bitcoin mining, the difference between Altcoins vs Bitcoin, the outlook for 2021 & the future of Bitcoin.
29:20
el salvador and they
29:23
have been employed by the government for
29:24
the merchant solution for the chivo
29:26
wallet so i’m privy to some information
29:29
that uh well you know what you can’t
29:31
trade on it so i’ll tell you it’s very
29:33
positive
29:34
information coming out of el salvador
29:37
and i want to point something that jeff
29:39
said and here’s how a privileged world
29:41
we live in so you guys may or may not
29:43
know i’m a partner in eight irish pubs
29:45
in montreal and those eight irish pubs
29:48
we pay as jeff said merchant fees on
29:50
these credit cards of two and a half
29:53
percent and our margins and we’re good
29:55
restaurants we’re at about 14 ebitda
29:58
margin okay we could be at 16 and a half
30:01
percent if and assuming that not
30:03
everybody pays with credit cards but you
30:05
know a lot of people do a lot of them um
30:07
we could we could definitely increase
30:09
our margins because you know the credit
30:11
card if we don’t have to pay those
30:12
merchant fees well our eva dot margin
30:14
goes up uh accordingly do you know what
30:17
merchant fees
30:18
for credit cards are in el
30:20
salvador eight percent guys eight
30:25
this is outrageous so you think eight
30:27
percent you think that
30:29
running a business in canada is tough
30:31
with two and a half percent merchant
30:33
fees imagine running a restaurant in el
30:35
salvador where your ten percent ebitda
30:38
margin is doing exceptionally incredibly
30:41
well on an industry average and your
30:43
credit card fees are eight percent
30:46
guys lightning is not just going to
30:48
disintermediate western union
30:50
i’m pretty excited about someday being
30:53
pretty good size short on visa not now
30:56
not now i’m not gonna be michael burry
30:58
that calls it out for seven friggin
30:59
years and then he’s finally right and
31:01
he’s some sort of i’m gonna just say
31:04
watch visa
31:05
oh maybe that’s why jamie dimon’s a
31:08
little concerned because his captive
31:11
merchant fees
31:12
in third world countries might be under
31:15
pressure i’m not saying that you do your
31:18
own mathematics the other thing that i
31:20
do know
31:22
again there were only two and a half or
31:24
there’s six million people in el
31:26
salvador i think
31:27
a million and a half of them had bank
31:29
accounts
31:30
there’s currently three million people
31:32
in el salvador with a wallet
31:35
a bitcoin wallet on their phone
31:37
you tell me this stuff isn’t
31:39
life-changing for these people
31:41
changing the gdp of the country changing
31:44
the uh profitability of restaurants and
31:47
small businesses in el salvador and also
31:50
then the livelihood and the and the
31:52
productivity of the people who can store
31:55
value on their phone they didn’t even
31:57
have access to bank accounts prior to
31:59
this
32:00
like i’m telling you this is only el
32:02
salvador this is six million people now
32:04
jeff
32:05
i’m going to tell you i was very honored
32:08
to be yesterday
32:10
speaking to 45 members of parliament in
32:14
canada
32:15
on bitcoin
32:17
led by our friend pierre paul
32:20
okay 45 members of parliament
32:23
they want to know about bitcoin and i
32:25
did tell them on
32:27
the
32:28
uh on on the zoom call i and i said it
32:31
with all respect to my french canadian
32:33
wife and certainly pierre poliev who’s
32:35
franco alberton he’s not a quebecois
32:38
i said maybe we should start learning
32:40
spanish in canada because if we don’t
32:42
get our acting gear we’re going to be
32:44
reporting to the central americans
32:47
who’ve embraced this before canada
32:50
this is all about competitive a
32:53
marketplace no different than a country
32:55
or excuse me a company this is country
32:58
dynamics much like another company would
33:00
look down the road and say
33:02
boy why is jeff booth’s bar doing so
33:05
well
33:06
well because he’s encouraging people to
33:08
pay with bitcoin and can therefore cut
33:10
eight percent off the price of his beer
33:14
to get more clients to come into his
33:16
restaurant you know all of these things
33:19
are unbelievably cool opportunities that
33:22
increase the network adoption that jeff
33:24
very eloquently laid out
33:27
so greg if you just build on that piece
33:29
so the first part that incentivizes
33:33
restaurants or anybody to use it and
33:35
actually the same thing that then that
33:37
we talked about before early on a uh in
33:41
in google or amazon right you just think
33:44
about
33:44
the people that are blocked out of this
33:46
the existing financial infrastructure
33:48
today
33:49
third world countries are blocked out of
33:51
the existing financial so it’s just a
33:53
country example of the same phenomenon
33:56
happening at a person level here
33:59
why we don’t see it as much is because
34:02
of our privilege
34:04
we don’t see that there’s a cost of our
34:06
privilege elsewhere in the world
34:08
and that and that cost is the same
34:10
reason that some of these countries are
34:12
moving to it to it faster than the
34:14
country is in the g7 um and
34:17
greg’s right they better we better get
34:19
our act together because otherwise we’re
34:21
going to be falling behind because all
34:22
of the innovation and all of the
34:24
dynamics are going to move to those to
34:26
those countries because it because it
34:28
provide again
34:30
the first wave
34:32
coming companies will do it because it
34:33
increases their margin
34:35
and they’ll be more profitable and
34:37
they’ll be big and they build way better
34:38
businesses than the ones that aren’t on
34:40
it and then the ones that aren’t on it
34:42
are going to compete and they’re going
34:43
to drive into it as well and what in the
34:46
second wave
34:47
is prices come down
34:50
and and and
34:52
you know from my book i talked about
34:54
technology reduces it gives us more for
34:57
less
34:58
it is
34:59
it is a central point of this whole
35:01
thing fighting against that with
35:03
monetary policy
35:05
to be able to to concentrate control in
35:08
a very small hands
35:10
is an
35:11
is an aberration against the world
35:15
so so this bitcoin force is a forcing
35:18
function essentially by stopping the fr
35:21
by by stopping the free market from
35:23
happening but stopping creative
35:24
destruction and the free marker swapping
35:26
creative destruction in the overall
35:28
market and socializing losses creative
35:31
destruction has come for money
35:33
the world will never look the same
35:36
uh the free market has come for money
35:39
and and what you’re seeing is that
35:41
crazy network effect network effect
35:44
technology
35:46
brains moving into this field
35:49
advancing advancing something that won’t
35:51
be stopped
35:52
and it it’s it’s a really good thing
35:55
because prices will fall everywhere on
35:57
everything and it’s actually the only
35:59
way if you go to a way higher level
36:02
a requirement to move into the future
36:05
where we are in uh with human a
36:07
requirement
36:09
is tech is a
36:10
digitally native currency that allows
36:12
for deflation
36:15
because without that requirement
36:17
you’re concentrating all wealth and
36:19
power in very few hands
36:21
and that is a fact
36:24
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39:02
you know the idea of a something that
39:04
looks like an internet native currency
39:06
right this is actually something that’s
39:08
existed for a lot that the the need has
39:10
been understood right uh for this for a
39:12
really long time guys like milton
39:13
friedman identified this a long time ago
39:16
um right and it just didn’t happen
39:18
henry and henry ford buckminster fuller
39:21
and then
39:22
all of these people for the for for a
39:24
long time of time what would be the
39:26
perfect currency the code wasn’t cracked
39:29
to create the perfect currency so you’re
39:31
exactly right so so thought leaders
39:34
throughout our time
39:36
have talked about what this could look
39:38
like but we didn’t have the technology
39:40
the technology didn’t exist to to allow
39:42
it to happen and so even if you think
39:44
about the innovation of when bitcoin
39:46
came out
39:48
all of the different innovations that
39:50
came together to create that
39:53
that spot
39:54
in in time it is it’s a 20-year course
39:58
through through 20 years of evolving
40:01
through through
40:03
um
40:04
through markov chains a whole bunch of
40:05
different things to be able to find to
40:07
be able to get to that point where
40:09
bitcoin
40:12
it was invented
40:14
and that’s amazing because you know 100
40:16
years ago over 100 years ago henry ford
40:18
famously said an energy currency that
40:21
would eliminate wars right um so i find
40:25
it very interesting that uh vlad putin
40:29
is entertaining uh the potential for oil
40:32
to be paid for and he called it crypto
40:35
but vlad putin is a smart engineer and
40:37
he knows that
40:38
the first law of thermodynamics which is
40:41
conservation of energy means that oil
40:43
and natural gas naturally
40:46
should be priced in bitcoin because
40:48
bitcoin is digital energy
40:50
so that i just wanted to build on that
40:52
one for from jeff’s perspective you know
40:55
lots of people have been calling for it
40:56
it hadn’t been
40:58
developed but bitcoin is what ford saw
41:03
over 100 years ago
41:05
there’s another great henry ford quote i
41:07
thought you were gonna bring up there
41:08
which is uh it’s just as well that the
41:11
american people don’t understand the
41:12
banking system for if they do i believe
41:14
there’d be a revolution tomorrow
41:16
in the morning and i’ve lived that life
41:17
too because i told the members of
41:18
parliament yesterday when i first
41:20
started working at the royal bank of
41:21
canada canada’s largest financial
41:23
institution
41:24
it was insolvent and i know it didn’t
41:27
sink into their head until i said
41:30
bankruptcy
41:31
yeah what
41:33
and then they realize
41:34
the banking system is only what it is
41:37
because of the implied backstop of being
41:39
able to print this thing called fiat
41:42
money
41:43
have you guys noticed that uh and maybe
41:45
this is uh where we can transition to
41:47
probably part of the conversation that
41:48
we’re not going to agree on as much
41:50
because jeff i do want to talk to your
41:51
get your thesis on kind of all coins and
41:53
the stuff encrypted outside of bitcoin
41:54
uh but if you notice that uh people that
41:56
are getting into the space
41:58
there’s a remarkably similar thought
42:00
pattern that occurs across a whole bunch
42:02
of different types of people like when i
42:04
was first getting involved in um
42:06
i remember listening to pomp in one of
42:08
the early days of his shows described
42:09
this and it really
42:11
it resonated with me uh but back then
42:12
enterprise blockchain in like 2017 2018
42:14
remember that was still a thing and um a
42:17
lot of people went on this journey i was
42:18
a consultant before this so what i
42:19
understood was operations and supply
42:21
chain and uh you know you first get
42:23
exposed to something like crypto and
42:24
bitcoin you’re like well i’m not really
42:25
sure this makes a whole lot of sense but
42:27
like some sort of light bulb goes on you
42:29
try to jam it into your own world view
42:30
or how you understand things uh and i’m
42:32
like oh well like oh okay this is cool
42:34
like all assets get tracked to the
42:35
system there’d be supply chain
42:36
applications for this yada yada then you
42:38
go down that road and you’re like wait a
42:39
second none of this makes any sense
42:41
actually it was all bitcoin you know the
42:43
whole time and then you but there’s this
42:44
kind of remarkable journey that everyone
42:46
goes through and like greg what you were
42:47
saying is like everyone thinks they’re a
42:48
day trader i can’t tell you how many of
42:50
my friends i’ve talked to about bitcoin
42:53
they’re like i’m gonna wait for a dip
42:55
like
42:56
why do that why do you do that that’s
42:58
just not a smart interest either this is
43:00
an asset worth owning or it’s not
43:02
okay if it is then it is and then what’s
43:05
the entry strategy you dollar cost
43:06
average waiting for a dip is just a poor
43:09
entry strategy for how to get ownership
43:11
of this asset but like everyone thinks
43:13
like that so
43:15
you know your guy that writes brian uh
43:17
that writes for your block works i wrote
43:19
a pretty neat article either
43:22
was it today or yesterday where he said
43:24
look i don’t try and short the market as
43:26
a as a profession because over time the
43:28
market goes higher uh but you know and
43:32
it was neat because it’s a very wise uh
43:34
equity trader type of uh thought process
43:36
the reality is uh there’s another
43:39
expression never short a bull market
43:41
right uh trend is your friend all these
43:43
other things so yeah everyone uh says
43:45
gosh they have price uh
43:47
uh
43:49
remorse uh i missed it at a thousand i
43:51
missed it at five thousand i missed it
43:53
at ten thousand let me be very clear
43:55
about this uh and i think this is
43:57
something i can talk about because i’ve
43:59
done this for 32 years uh and thirty
44:02
years i did it professionally managing
44:04
other people’s money managing other
44:06
people’s money is a horrible horrible
44:08
job
44:09
okay because they will only give you
44:12
credit
44:14
their credit to you oh the guy did great
44:16
he’s a bitcoin allocator he did great
44:19
but i’m so smart i put my money with him
44:21
and uh look at me i’m a superstar
44:24
allocator and this guy
44:26
convinced me to get into bitcoin the
44:29
flip side of that is i’m a money manager
44:31
i own bitcoin and bitcoin goes offside
44:34
and these guys are upset god he’s stupid
44:36
why did i ever listen to him like as if
44:39
i i had pulled them in in some sort of
44:41
uh you know false narrative
44:43
managing money is horrible in order
44:45
priorities it’s easiest to lose your own
44:47
money second easiest to lose a bank’s
44:49
money and absolutely horrible to lose
44:51
friends family and client money okay
44:54
anyone who thinks they want to do that
44:55
on a professional basis trust me sit in
44:58
the chair for a year and a half in a
44:59
bear market you don’t want to do this
45:02
and so i’ve seen the world melt down
45:04
four successive times in my career
45:06
i think i know how to manage risk i
45:09
survived all four of those financial
45:10
crises i came out
45:13
with war wounds and you know
45:15
stomach ulcers and i talk about you know
45:18
my
45:19
perhaps a little
45:20
grosser types of things that i came out
45:22
with but at the end of the day
45:23
bitcoin today right now
45:26
is cheaper on a risk-adjusted basis than
45:29
it was when i got in involved with
45:31
bitcoin in 2016.
45:34
okay
45:35
what happened since 2016 when i got
45:38
involved in bitcoin
45:40
not only the price has gone up 50 times
45:42
okay that’s fair but colvid cove
45:45
and governments have proved that we will
45:47
never escape this debt spiral ever
45:50
cynthia loomis said it so beautifully on
45:52
a c-span thing
45:55
the governments have been irresponsible
45:56
and mathematically it’s impossible to
45:58
escape this debt spiral very cool
46:02
head yourself accordingly don’t
46:04
overthink it bitcoin is the best
46:07
asymmetric trade i’ve ever seen and it’s
46:10
actually gotten better since i got
46:12
involved in it five years ago i know it
46:14
doesn’t resonate with people and they
46:16
want to buy a dip and they want to do
46:17
this
46:18
put five percent in your portfolio and
46:21
then concentrate on the other
46:23
95 of your portfolio that really is
46:27
risky
46:28
bitcoin’s your insurance it’s just i
46:31
just need people to take that experience
46:34
i’ve seen people literally carted off a
46:36
trading floor because they had a heart
46:38
attack right in front of me
46:42
jesus
46:43
yeah i’ve managed to risk for 32 years
46:46
please
46:47
it has nothing to do with where it’s
46:50
been it’s
46:51
has everything to do with where it is
46:54
going yeah
46:56
and
46:57
and if you’re talking price
46:59
again and a lot of people are talking
47:00
price you just asked about price and
47:02
everything else and that’s that’s the
47:04
natural thing that a lot of people are
47:05
doing and they’re measuring that price
47:07
in u.s dollars they’re measuring that
47:09
price
47:10
in a system that is that has to
47:14
print money forever that has to keep on
47:16
you so so
47:18
so
47:19
um
47:20
but
47:22
i so number one it we i i totally agree
47:25
there is no asymmetric bat
47:27
unless the majority of people
47:29
misunderstand it
47:32
so so the majority of people still
47:34
misunderstand it and and how and how how
47:37
early we are that’s how greg is a
47:39
traitor
47:41
who creates that arb that is how but but
47:44
it’s this exact same thing as any
47:46
entrepreneur wanting to change the world
47:48
with their idea
47:50
everything around us is just an idea the
47:53
system we live in as an idea first
47:55
started with an idea the iphone is an
47:58
idea that replaced another idea
48:00
and you have to have conviction you have
48:02
to have two things you have to be able
48:05
to see the future of your idea pass out
48:08
and you have so you have to any of deaf
48:10
conviction on that idea otherwise you’d
48:12
never start a business
48:14
and you have to be right
48:17
on both of those you create asymmetric
48:20
bets
48:21
right and because most people don’t see
48:23
that that’s why entrepreneurs are seem
48:25
so crazy to the rest of the world
48:27
because most people live in
48:29
a world where everything stays the same
48:31
forever and it’s constantly changing and
48:34
it’s and and entrepreneurs are creating
48:36
the future that we we are part of
48:39
if you look at bitcoin through that same
48:40
lens that’s all it is
48:42
it’s a whole bunch of people that
48:44
believe in a new system that and they’re
48:46
creating that system and the more belief
48:48
that there is in that system
48:51
we’re going to transition to that system
48:53
and that system is going to be a far and
48:55
produce far better results for society
48:58
now yes a whole bunch of people that are
49:00
going in early are going to create
49:02
untold wealth in that new system
49:05
and but this is actually critically
49:07
important to understand too because
49:08
there is
49:10
a
49:10
belief from a lot of people who don’t
49:12
understand what we’re talking about
49:14
right now
49:15
that you’ve just transferred power to a
49:17
new set of people
49:19
and the world looks the same
49:21
and that couldn’t be anything there
49:23
couldn’t be anything further from the
49:24
truth
49:25
because the world looks the same because
49:28
because the people at the top of the
49:29
economic pyramid
49:31
write the rules of the system
49:34
and they keep on changing the rules so
49:36
that they stay on the top of the
49:37
economic pyramid
49:39
that doesn’t happen in bitcoin you make
49:41
a mistake you make a bad bet you lose
49:43
your bitcoin if you want to if you want
49:46
wealth doesn’t equal power in the
49:47
bitcoin world if you have a whole bunch
49:49
of wealth in in in in bitcoin and you
49:52
want control of other people so you
49:54
bring a whole bunch of people so you pay
49:56
them more to control them
49:58
then you’re distributing your bitcoin by
50:00
trying to retain control
50:03
so
50:04
the the system incentives
50:07
make ensure
50:08
that the path to abundance for the
50:11
greater part of humanity
50:13
are aligned um and so it’s a way bigger
50:16
deal than the money you might the
50:18
generational wealth that you might gain
50:20
from
50:21
bitcoin by by getting in early it’s a
50:23
way bigger deal
50:25
because there is no fix from the
50:26
existing system short of concentrating
50:29
all power in the state
50:32
i want to get to a part of the
50:33
discussion uh because i’m pretty sure
50:34
we’re in violent agreement about almost
50:36
everything discussed so far but i want
50:38
to talk about an area where maybe we’re
50:39
not in such agreement um
50:41
so uh you know i like bitcoin for me was
50:44
uh
50:46
it’s still a large focus right uh block
50:48
workshop obviously covers a lot of stuff
50:50
outside of just the bitcoin ecosystem
50:52
i’d love to give both of your thoughts
50:53
in general on
50:55
uh assets outside other crypto assets
50:58
outside of just bitcoin so ethan even
51:00
beyond right some of these other layer
51:01
ones or gaming things like acting
51:03
infinity whatever kind of cropping out
51:05
um i know uh maybe i’ll pick on you jeff
51:07
go first because i know you have some
51:08
thoughts on this so maybe you can kick
51:10
off your your thoughts i am not in any
51:12
of those
51:14
and i’m not in and and not to say that
51:16
if it was just about wealth or
51:18
short-term trade
51:20
that that i might not be you can imagine
51:23
with with the type of influence or
51:26
dynamic and everything else i could go
51:28
create a coin right away a whole bunch
51:29
of people and create crea create a coin
51:31
and create a whole bunch of wealth that
51:32
way and essentially
51:35
game my advantage
51:37
to the loss of other people
51:39
right i could pre-mine a coin i could
51:41
bring a whole bunch of people and they
51:42
say and by the way i have been asked to
51:44
do that
51:45
by countless people
51:47
to get involved in their thing because
51:49
because that’ll bring more people on to
51:51
their
51:52
altcoin platform right right and and to
51:56
to one i will say unnamed person in this
51:59
space in the financial world that said
52:02
but we should write the rules
52:05
of what that looks like and i’m
52:07
categorically against that
52:11
and so so i i’m not categorically
52:13
against a free market deciding what coin
52:16
is better
52:17
i’m not uh
52:18
but i’m categorically against
52:21
kind of
52:22
integrity to i’m going to sell my soul
52:24
for money
52:25
so
52:26
uh so
52:28
so most of those i see as as say all of
52:33
those i see over time and this we can
52:35
disagree here and i might be wrong
52:39
but i actually can’t see if the base
52:41
layer is money okay
52:44
and now the technology starts to exist
52:47
because the base layer can’t be
52:48
corrupted and it’s secured
52:51
through proof of work
52:52
why the technology doesn’t evolve
52:56
to handle every other use case
52:59
that current alt coins
53:01
handle
53:02
so in it i understand totally why
53:05
ethereum would
53:07
it would live for a time
53:09
well that technology didn’t exist
53:12
because you could create a whole bunch
53:14
of you could sell art on on that and you
53:17
couldn’t on bitcoin right you could you
53:19
could do a whole bunch of uh different
53:21
things you could create a a a
53:24
and so you could actually drive a
53:25
network effect on ethereum because it
53:27
did a different job ordered a bunch of
53:28
the other coins
53:30
um because it did a different job and
53:32
now it’s a race to the bottom on fees
53:35
um and why why why
53:37
why they keep changing the rules of
53:39
these altcoins
53:41
is because
53:42
it’s the race to the bottom on fees and
53:44
somebody is attacking them
53:46
right or
53:48
you you manage for security through
53:50
proof of work so so you look at this
53:52
entire ecosystem
53:55
that is is almost i would say
53:59
trying to find
54:00
what it’s going to be long term
54:04
at the same time
54:06
bitcoin is advancing the technology
54:08
stack to remove it all
54:12
and and and so if i’m looking at a long
54:14
term if i’m looking at a long term
54:17
for forget the for forget now
54:20
making money because i think you make
54:22
way more money over the long term in
54:23
bitcoin but forget that
54:25
if i’m looking for the long term thing
54:27
that is going to to
54:31
be a network transfer from one system
54:33
that can’t work to another system
54:35
it’s only bitcoin
54:38
and so so that’s that’s my reason
54:42
so what a great uh
54:44
again
54:46
it’s great to be on a podcast with you
54:47
jeff um you bring everything you you
54:50
distill things into first principles and
54:52
simplest terms uh i i want to take a
54:54
step back and make sure everyone
54:56
understands why i got involved in
54:57
bitcoin because i had been searching for
55:01
a replacement to the fiat ponzi for 30
55:03
years okay i just never found it i
55:06
understood gold i just didn’t embrace it
55:09
like some of the other gold portfolio
55:11
managers uh because of some of the
55:12
shortcomings that being said
55:16
the thing that i loved
55:17
after having met jeff is i read his book
55:21
after i wrote my research paper on
55:24
bitcoin being valued using credit
55:26
default swaps
55:28
and it was really comfortable comforting
55:30
to read jeff’s book because he used a
55:33
lot of the same data as to the
55:34
inevitability of the debt spiral from
55:37
sources like institute of international
55:39
finance that aren’t widely published by
55:42
the investment banks in new york i guess
55:45
why because it would be exposing the
55:47
fiat excuse me the fiat ponzi so i was
55:50
really comforted by the fact that jeff’s
55:52
book used the same data by and large as
55:55
i did or vice versa i was comforted that
55:57
i used the same data that he did and we
56:00
came to the same conclusion
56:01
independently and then became pretty
56:03
good friends who i was out skiing at
56:04
whistler one time in the in the winter
56:06
just less than a year ago and i called
56:08
them up and we instantly
56:10
bonded over the ability to
56:13
distill the the information that’s
56:15
available but not widely disseminated
56:17
because you know the investment banks
56:19
don’t disseminate that
56:20
so i met jeff
56:22
and we had never talked about this we
56:25
don’t talk about altcoins we talk about
56:27
our desire to improve the world’s most
56:30
pressing problem
56:32
which is fiat currency and none of these
56:34
other altcoins can do that in my opinion
56:37
now will there be more than one winner
56:39
in the short term on a number go up
56:42
because there’s defy on erc20 and
56:45
there’s different blockchains that have
56:48
various levels of decentralization but
56:50
at the end of the day they
56:52
sort of smell like a lot of centralized
56:54
control
56:55
over time there’s a lot of people that
56:58
believe
56:59
that
57:00
other blockchains and apps on those
57:02
blockchains are essentially a test net
57:06
for layer 3 bitcoin
57:08
and as a trader all my life i am not
57:11
short any of those
57:14
okay
57:14
there will be a time when it’s very
57:16
clear that the dodgy coins of the world
57:19
that are true zero-sum scams promoted by
57:22
a pretty famous guy
57:24
uh but look
57:26
you got to call it out as it is there
57:28
are times when it will pay to be short
57:31
those but right now
57:32
bitcoin is
57:35
the leader by market cap but it also is
57:38
what most big money is gonna understand
57:41
they need it as a hedge
57:43
to the absolute certainty of fiat
57:46
debasing and this brings me back to my
57:48
career as a bond trader
57:50
if you
57:51
advance
57:52
a 10-year loan to the u.s treasury
57:55
highly highly likely but not 100 certain
57:57
you’ll get your money back in 10 years
57:59
the biggest problem is you get a d based
58:01
currency 100 cents on the dollar back in
58:04
10 years you might have 65 purchasing
58:06
power if you’re lucky what kind of
58:08
contract is that like what i’m a bond
58:10
manager this is i need to start thinking
58:13
outside the box and that bond market is
58:16
400 trillion dollars that’s all fixed
58:19
income by the way it’s not just
58:20
government bond market point being
58:23
why are we battling with the gold bugs
58:25
that’s 10 trillion that’s okay gone see
58:27
ya we don’t care like we want gold to go
58:30
up because gold will go up because
58:32
bitcoin goes up because fiat 100 certain
58:35
d bases
58:36
and a lot of these other coins that are
58:38
out there
58:39
yes they will go up why they solve a
58:42
short term problem but in the long term
58:45
is there a better decentralized
58:47
blockchain for those apps to exist on
58:51
how about this
58:52
right now i’m not going to worry about
58:55
that my biggest problem
58:57
is i don’t want this fiat system to
59:00
collapse before we have this other
59:02
network in place where there can be an
59:04
orderly transfer
59:06
and i want to sum it up with
59:08
a a saying that i love saying i want
59:11
bitcoin to be north america’s store of
59:13
value that the chinese graciously have
59:16
given us like have you seen these mining
59:18
stats now usa biggest center of mining
59:21
for bitcoin mining
59:23
china almost down to zero
59:25
my goodness i think is a capitalist with
59:28
a heart okay i have a heart i want to
59:30
help the people at the lower end of the
59:32
privilege spectrum but i’m a capitalist
59:34
not a communist
59:35
these the communists have given this as
59:38
a as a present to the west
59:40
embrace it bitcoin is your store value
59:42
savings account
59:44
fiat currency in this in the short to
59:46
medium term will be your checking
59:48
account
59:49
don’t save your money in your checking
59:51
account
59:52
use that for
59:54
not having to do barter
59:55
what are where do altcoins then fit in
59:58
between here okay think of your savings
60:01
account checking account
60:02
i think a neat way of seeing whether an
60:05
altcoin has any value how close is it to
60:07
a checking account
60:09
versus a true savings account
60:11
and play your cards accordingly
60:13
michael i i maybe i ask you and the
60:16
reason i
60:17
so so when i’m investing or building a
60:20
company or
60:21
or spending time on it i wonder i want
60:23
to understand the thesis right from the
60:26
bottom up and i want to understand
60:29
what could possibly go wrong i want to
60:31
understand
60:32
one of the first things i look at is
60:34
what are all the things that could go
60:36
wrong
60:36
with i have this view what are all the
60:38
things that could go wrong
60:40
with with this view and and if i do that
60:43
on
60:45
bitcoin and the altcoins
60:48
i can’t see a path for any of the
60:49
altcoins
60:51
i may be wrong right i may be but but i
60:54
don’t see what they and and the problem
60:57
is
60:58
measuring in a point in time and that’s
61:00
actually maybe maybe the opposite side
61:02
of the argument opposite side of the
61:04
argument is i totally understand how
61:05
some people can make a lot of money in
61:07
the short term uh short term on some of
61:09
the altcoins i totally understand it
61:11
whether they’re whether they’re gamed
61:12
whether if you get in you’re trading on
61:14
a a
61:16
on on hype and everything else and
61:17
you’re trying to trade a momentum play i
61:19
get it i’m talking the thesis for them
61:23
against the thesis for
61:25
uh
61:26
for
61:26
what is going to happen
61:29
with
61:30
projecting what’s going to happen with
61:31
bitcoin forward
61:33
and then specifically i’m talking later
61:36
because it’s i don’t think i don’t think
61:38
we would disagree that bitcoin is
61:40
already
61:41
one layer one store of value
61:44
sure
61:45
absolutely
61:46
and so so so what what in time
61:50
is the technology develops on that on
61:52
layer two and three
61:54
do those alt coins provide that it gives
61:56
it gives a defensible moat to the
61:59
altcoin
62:00
and that would be my question i think if
62:03
you approach everything happening in
62:04
crypto from the standpoint of this is
62:07
solving a monetary problem
62:09
then bitcoin is the clear winner
62:11
solution bar none i don’t even think any
62:13
of these other coins like even ether or
62:16
any of these other layer ones are even
62:17
trying to be a money or a store i mean i
62:19
guess there is the ethos sound money
62:21
whatever i think they it wins the store
62:23
value i think why they just changed to
62:26
that
62:27
is because they realize exactly what we
62:29
just talked about
62:30
they realize that unless it’s
62:32
unless it becomes a store of value which
62:34
is highly unlikely that everything else
62:37
is lost over time i believe that that’s
62:39
why
62:40
but it becomes a centralized store of
62:42
value in that case
62:44
so i would go
62:46
like
62:46
starting way back right the advantage
62:48
that humans have well for everything
62:50
else on this planet is coordination
62:51
right that’s how we hunted back on the
62:53
plains of the savannah that’s how we
62:54
were able to build cities from an
62:55
evolutionary standpoint our one big
62:57
advantage is that we’re intelligent
62:58
enough to coordinate in novel ways right
63:01
we had like nomads roaming around that
63:02
we had cities um
63:05
consummate to that
63:06
uh trend right which is like a millennia
63:09
old trend in humanity uh you have
63:11
everything moving more digital in
63:13
general right life uh is is moving to a
63:16
more digital plane um and in my my
63:18
personal thesis behind everyone who
63:20
doesn’t understand bitcoin the chief
63:22
objection if you scratch hard enough is
63:23
that you can’t pick it up with your hand
63:25
that’s my personal thought process on it
63:27
and i really believe that uh like if you
63:29
really dig hard enough what you come
63:31
down to is the problem that i can’t hold
63:33
it in my hand um so i i personally kind
63:36
of see economies transitioning to
63:38
something that looks a lot more digital
63:40
so if you go back to the original
63:41
innovation of what did satoshi create i
63:44
think what he
63:45
created was
63:47
the creation of scarcity in the digital
63:49
realm and the first most important use
63:51
case of that is the monetary use case
63:54
and i think bitcoin handily solved that
63:57
monetary use case
63:59
now i see what’s happening in
64:01
ethereum and you know dows and nfts is
64:04
like okay now we’ve got the money layer
64:07
of this new digital world solved what
64:09
are the other things that we’re going to
64:11
build in this new digital realm
64:14
and when i look at the existing world
64:16
and everything’s completely out of whack
64:18
today so let’s like use another period
64:20
of time in history but i look at what is
64:22
the
64:24
sound value pristine collateral type
64:26
thing that everyone wants to own in
64:28
relation to riskier assets and more
64:31
productive assets companies things that
64:33
are building on top of that
64:35
pristine collateral and it’s like you
64:37
know so i guess the way i look at it is
64:39
the the eventual value of things that
64:41
are going to be built in this new
64:42
digital ecosystem looks roughly like the
64:44
ratio of gold to equities today that’s
64:47
my like you guys can totally disagree
64:48
and tell me why i’m an idiot but that’s
64:50
the way that i think about it ics
64:53
transitioning to a primarily digital
64:54
native economy i think gold by the way
64:56
like i’m younger i see the value in gold
64:58
honestly if i’d been bored 70 years ago
65:00
i would own a lot of gold today i only
65:02
own bitcoin because i believe that
65:04
economic value is transitioning to a
65:06
largely digital plane i think the
65:08
preferred store value is going to be
65:10
bitcoin and i i actually think when the
65:13
rest of the world starts to consider
65:14
bitcoin as a store value instead of a
65:16
risk asset is when the majority of the
65:18
economy happens on this digital plane
65:20
but that’s my overall framework jeff so
65:22
so yeah so let’s play that for forward
65:25
and and because i agree with a lot so
65:27
you said solve the coordination problem
65:28
i totally totally agree right the the
65:31
byzantines general problem and
65:32
everything else and bitcoin solves that
65:34
coordination program a
65:36
coordination problem at a different
65:38
level
65:39
where you don’t need to have slack in
65:42
the system
65:43
somebody else choosing how much money in
65:46
an intermediary choosing how much money
65:48
is going to be held as slack in the
65:50
system because it can’t it can’t uh it
65:53
it can’t
65:54
uh
65:55
settle every 10 minutes
65:57
right so so so
65:59
that coordination problem becomes solved
66:01
with bitcoin
66:03
and
66:04
now the next step of that is the
66:06
question is is two
66:08
does it require a whole bunch of other
66:10
altcoins to be built building
66:13
layer two on top of the internet
66:16
right because if if you just say what
66:18
you just said
66:19
is then you have to see bitcoin as a
66:22
primary protocol like tcpip it is the
66:25
internet
66:26
it’s the internet of money if that’s
66:27
true sure
66:29
right now
66:30
what i believe happens on top of that
66:32
internet of money
66:34
through layer two and three layer three
66:36
solutions is all of the innovation takes
66:38
place on top of it rather than
66:40
in a different different silos
66:44
because because it solves that
66:46
coordination problem and it’s already
66:47
solved that that anyways that that is
66:51
if you’re looking out kind of looking
66:54
out and projecting if if you said today
66:56
or if you said let’s not use today
66:58
because we we can see the evidence of
67:00
lightning network
67:02
reinforcing what i’m saying
67:04
and i think you’ll see the evidence of
67:07
of the same thing with taproot and and a
67:09
whole bunch of other things reinforcing
67:11
an entire
67:13
ecosystem build on top of it
67:15
but let’s look back in time two years
67:18
instead and and bitcoin only was the
67:21
store of value
67:22
it was greg’s savings account
67:24
right it was only the store value or it
67:26
was it was just it was competing against
67:29
gold
67:30
and you didn’t have lightning network
67:33
and there was an opportunity and there
67:34
was a whole digital economy thriving
67:37
and there was an opportunity to create a
67:39
digitally native token that could help
67:42
that along
67:43
that was that bitcoin couldn’t do
67:46
that’s why i totally understand ethereum
67:49
where it was
67:51
i understand the value creation that
67:53
came on the ethereum of trying to do
67:55
something else and a whole bunch of
67:56
value delivered from that
67:59
my question is
68:01
i don’t see the use case going forward
68:03
with all of the innovation and
68:05
everything else that’s happening that’s
68:06
reinforcing the primary network i don’t
68:09
and and i may be wrong
68:11
but i don’t see it hey guys i don’t
68:14
think i’m going to get back in the show
68:15
but i have to run anyway
68:17
yeah i’m sorry about that
68:19
it’s all good jeff i’m so glad i had the
68:21
last uh the opportunity to listen to it
68:23
i don’t think i’m i’m being recorded but
68:25
i wanted to say thank you to you both
68:27
and please relay that to the uh to the
68:29
crowd i love being on a show with jeff
68:33
because i learn
68:35
way way way more in 45 minutes or an
68:38
hour and a half than i’ve learned in you
68:40
know the week and a half prior so right
68:43
right back at you greg great back at you
68:45
well let’s keep this going because the
68:47
kids need it michael there’ll be more
68:49
than one winner
68:51
and there needs to be more than one
68:52
winner in the short term
68:54
but in the long term and that’s the
68:56
difference between a trader and an
68:58
investor
68:59
in the long term
69:01
uh you know you play your thesis
69:03
i really really really hope that
69:08
what you guys keep doing is educating
69:11
that’s all that’s important jeff says
69:13
frequently he may be wrong and i know
69:15
for sure i’m
69:17
often wrong
69:18
but there’s a trading expression
69:20
frequently wrong but never in doubt okay
69:23
i’m frequently wrong but i’m never in
69:25
doubt okay so keep up the good work and
69:28
uh and i i really appreciate you guys
69:30
inviting me have fun on your trip jeff
69:31
we’ll talk soon okay bud thanks thank
69:34
you guys thank you good day good day
69:38
all right i’ll give a bit of a
69:39
disclaimer for for greg uh since we i
69:41
think lost him uh for whatever reason it
69:43
might have been uh networking space or
69:45
whatever what we got to wrap this up i
69:47
guess but jeff this has been awesome i
69:49
guess look end of day um i just really
69:51
appreciate you coming on the show
69:52
sharing your opinion here i have no idea
69:54
which one is going to be right i think
69:56
at the end of the day you need to do the
69:58
thing that uh i’ve started to give
69:59
people this advice when they’re like how
70:00
much bitcoin should i buy or say just
70:02
buy the amount
70:03
buy the amount that if it dipped 50 you
70:06
wouldn’t sell it and at the end of the
70:08
day i think people should only really do
70:09
things that they have conviction in i
70:11
have a lot of conviction in bitcoin i
70:13
also have a lot of conviction in eth i
70:14
don’t have a colossal amount of
70:17
conviction in other things outside of
70:19
those two assets at this point so i own
70:21
some of them but i don’t own a whole lot
70:23
and that might change um try to keep
70:25
everyone on the show updated
70:27
but you know at the end of the day what
70:29
i do have deep conviction around is this
70:31
space in general because i can see guys
70:33
like you uh jeff and greg you guys
70:35
moving in that just the pure
70:36
intellectual capital uh and the amount
70:38
of stuff going on just blows my mind all
70:40
the time and i just feel super lucky to
70:42
be a part of it to be completely honest
70:43
yeah and and by the way michael me too
70:45
that conversation we just had on that
70:48
those are the types of conversations
70:49
open curious on and everything else and
70:52
different viewpoints that actually bring
70:54
a whole bunch more and again i might be
70:56
wrong i could be too it’s it’s exactly
70:59
but but that type of conversation brings
71:02
a whole bunch more people to to
71:03
understand and it’s important it’s a
71:06
really important asset class to
71:07
understand yeah i do i want to put you
71:10
on the spot here to plug your book
71:11
because it’s great uh tell people about
71:13
the price of tomorrow where they can
71:15
find it also if they want to find out
71:16
more about you just like what’s the best
71:17
way to do that uh myself just on twitter
71:20
at jeff booth is probably the best place
71:22
to find me
71:23
amazon’s probably the best place to find
71:25
the book the price of tomorrow why
71:26
deflation is key to an abundant future
71:28
jeff’s book was foundational for me for
71:31
understanding a lot of the deflationary
71:32
argument and the impact of money
71:34
definitely i’ll i’ll say it for you jeff
71:36
you should definitely go read this book
71:38
and uh and that’s about all the time
71:40
that we have uh jeff this has been a ton
71:42
of fun uh we’re pouring one out uh for
71:44
greg we lost just at the tail end of the
71:46
show uh but it was a ton of fun thanks
71:48
so much for coming on
71:50
thank you it’s awesome
71:51
thank you
71:53
[Music]