Michael Saylor - The Bitcoin Crash & The Future Of Crypto

Full transcript: Michael Saylor on London Real

3:08 This is London Real. I am Brian Rose. My guest today is Michael Saylor, the American entrepreneur, technologist, author and Bitcoin evangelist. You recently became executive chairman of Microstrategy, having spent the last 33 years as CEO. With your change of position allowing you to focus even more on long-term Bitcoin strategy. You are the author of The New York Times Best-selling book The Mobile Wave How Mobile Intelligence Will Change Everything.

3:31 Which correctly predicted the sharp rise in technology giants Amazon, Apple, Facebook and Google. While highlighting the impact of mobile and social networks on global economic development. You previously described Bitcoin as the apex property of the human race. And over the past two years, you pursued a massive investment drive. That has seen microstrategy purchase over 129 000.

3:51 Bitcoin as the unofficial spokesman for the Bitcoin movement. And the most famous maximalist of them all. You believe that Bitcoin represents the digital transformation of money, property, currency, energy and matter. Michael, welcome back to London Real. Hey, thanks for having me, Brian. Hey, it’s great having you back here.

4:08 I want to quote you, and I don’t think you said this probably in the last couple months. But you said there are decades when nothing happens and there are weeks when Bitcoin happens and it’s been 14 months since we spoke. But it feels like it’s been years and years and years with everything that’s happened since we talked. And I kind of wanted to maybe get your thoughts on kind of the year in review and the things that stick out in your mind. And I don’t know where to start, you know, do we start with Celsius and Voyager going bankrupt? do we start with the failure of UST?

4:39 Do we start with Bitcoin going to 68,000 and back to 20? Do we start with the East? Merge or recent statements by Gary Gensler or the SEC, saying Bitcoin’s a commodity and everything else is a security? I don’t know what’s the highlight for you in the past year. I think that the highlight the past year is the institutional adoption of Bitcoin and the mature maturation of the asset class.

5:05 Along with the education of millions and millions of people as to why they might want digital property. What is a digital commodity and what’s its place in the macro economy? Now? To be clear, I still think we’re very early, but you know that phrase, you know, other decades, when nothing happens, and, you know, weeks when decades happen. It really refers to paradigm shifts.

5:32 And you know, if you think about the paradigm shift when automobiles arrived, you know, there’s a famous snapshot in New York City, where, you know, there’s just a bunch of horse and buggies. And ten years later, it’s all cars, and in that 10 years you adopted it. And if you, I remember, you know, standing once on the Pantheon and, you know, are on the Acropolis. And I’m. I’m like taking a photo and about to post it, and I think to myself, What’s different about this?

6:04 And I think, Well, last time I was here, maybe a decade ago, I had no smartphone, I had no iPhone, there was no Facebook, there was no Instagram, you couldn’t post it, there were no, you know, digital photography didn’t exist. So a decade goes by and you’re like, You know, you’re trying to remember, Yeah, you remember, back in college I went to college, we didn’t have laptops, you know, yeah, so when I was in college were no laptops. And I, you know, I thought, Well, what if I’d had a spreadsheet? When I was doing engineering, you know, I went with an HP 15C calculator. And we had notebooks, and we wrote down 20 pages of calculations in a notebook with the calculator, you know, and I remember seeing people saying, Well, you got a calculator.

6:50 We use slide rules, you know, and you fast forward a decade and people have laptops. You fast forward another decade, you know they have Internet, you fast forward another decade, they’ve got YouTube and simulations. And now you’re starting to question whether or not you didn’t even needed to go to college at all. Maybe you could have just sat at home. So every decade there’s some profound paradigm shift, and the thing that hits you about a paradigm shift is it’s such an out of the blue idea that no one can conceive of why you would even want it.

7:26 So, you know, it took a while before people thought, Maybe radio waves have a place, right? Or maybe electricity has a place in the world. And you know, why would I want a railroad? But I think now we’re starting this paradigm shift of digital energy. And why would I want to move a block of a billion dollars of something from Point A to Point B through cyberspace in a split second with instant final settlement.

7:58 Right initially, if you roll the clock back a decade, we didn’t have it. Every financial crisis we’ve had right and history of the world and we’ve had 10,000 of them. There have been 10 000 currency collapses. From the Lydians to the Athenians, to the Spartans, to the Romans, to the Venetians, you know to the Brits multiple times to the carthaginians, you know, you could just go on in the Persians and go on and on and on and on. And the history is full of examples of an Empire rises.

8:30 Someone meant the currency, the successors or the children of the conqueror debase the currency, the grandchildren to base it more. The great grandchildren forget how they actually got the power, they spend, everything go wacky, crazy pretty soon. The economy collapses. You can’t pay your soldiers, they all defect and the Barbarians come over the gate and they take everything, including your debased gold. They melt it down, they purify it, they meant their own coin and the cycle starts again.

9:02 That’s literally start, that’s literally taking place ten thousand times, you know? When Von Schliemann dug up Ancient Troy, he dug up like 19 ancient choice. He found 19 cities buried under each city. Everybody said, Good place to build a city. They would build it, they would rise over a couple hundred years, they would crash and burn 200 years ago by someone else.

9:27 Comes along and says, Well, good place to build a city. We do it again, we do it again, we do it again. That’s the history of money, and that’s the history of economics. Along comes Satoshi and, you know, and we’ve got the white paper. And, you know, January 3rd, 2009, We launched this little monetary virus or the or this idea virus.

9:50 And it kind of burns very, very low level for a while, and people aren’t sure of it. It’s a gimmicky thing and it gets bigger and bigger and bigger and waiting for. Why would you need it? And you know, you had to be a visionary to kind of need it or get it. If you lived in Argentina and your currency collapsed and you remember the currency collapsing.

10:13 Or if you lived in North Korea, or if you lived in Africa and your currency collapsed and you watched your family get wiped out, then maybe you get it, but you know, that wasn’t the mainstream, right? The Western world is not run by people that lost their family’s life savings in Africa or South America. So it was, it was an interesting idea, but it was a fringe idea. Until 2020 and in 2020, the monetary inflation rate tripled in the U.S, and what we saw was in the world’s best economies. You’re losing 15 to 20 percent of your economic value in the currency every year and the second tier economies you’re losing 30 or more like.

11:00 The Japanese yen is down 24 against the dollar in the last 12 months. Right? And in the tertiary economies, you’re losing 50, 60, 70 percent of the value in the currency. And that’s where you get a Sri Lanka, where literally the entire government collapses. Or where you.

11:17 What you’re seeing going on in Africa and Zimbabwe right now. Or famously in Lebanon, where people have been breaking into banks taking people hostage to get their own money back right. The bank robbers are robbing banks and their demand is Give me my own money back. Because the government stole the money and the banks froze, it devalued it. And they’re going to give it back to you over the next 17 years, devaluing it 20 a year while they trickle it out to you.

11:45 So here we are, we’re in this great reset, if you will. People are questioning currency, they’re questioning their political thoughts, they’re questioning stores of value and every conventional model, the 60 40 bond model, it’s broken. Bonds, for example, are down 20 percent in the same year, where stocks are down 20 percent. Okay, so that never happened for 20 years, so why does that happen? Because when you drive interest rates to zero, if you can’t drive interest rates negative, then there’s no way to get bonds to go up.

12:24 So what we’ve got is the 60 40 models are broken. Conventional ideas like, Oh, I’m just going to store my value by buying property that’s kind of broken in a lot of places. People are losing faith in just investing in property. When you see the gyrations of this property, the conventional idea, I’m going to buy S P Index stocks well, the S P is slightly up, Nasdaq is flat over the last two years. It blasted up and then it blasted down.

12:57 So what you’ve got is a lot of people questioning all their premises and rising through that chaos is a new idea. And the new idea is, What if I can? What if I can encrypt energy? What if I can encrypt money such that nobody on Earth? No government can debase it, no corporation can steal it?

13:22 I don’t trust anybody people, you know, people don’t trust governments, right? We’re in an all-time low in public trust of institutions. It doesn’t matter what government and they don’t trust companies and why for good reason, because companies are influenced by governments, right, right? If you’re in America, you know you’re certainly not going to trust the company in China. And if you’re in China, you’re certainly not going to trust a company in America.

13:46 And then, you know, a lot of people that don’t trust domestic companies, the Europeans and the Australians don’t trust American companies either. So there’s a lot of lack of trust. So if I can’t trust that, then what can I trust? Where am I going to put my money? You know, I’m going to do a slight detour here, Brian.

14:05 But this is very interesting that I want to share with your listeners, which is I track. I track the financial market since we embarked on our Bitcoin strategy. So here is here is what’s happened since August 10th, 2020, when we adopted Bitcoin. As a Treasury reserve asset, Bitcoin is up 65 percent. Microstrategy stock and microstrategies bought three point, not almost four billion dollars.

14:37 Not quite, but nearly four billion dollars of Bitcoin microstrategy stock is up 66, so we are, we are tracking slightly ahead of Bitcoin. The S. P. is up 14, the Nasdaq is up four percent, Whoa four percent. All of Big Tech is up four percent, gold is down eighteen percent. And, you know, bonds. The ultra safe bonds, long-term bonds down eighteen percent.

15:04 So in terms of asset classes, the crazy, volatile Bitcoin is the best performing of all those major assets. And then you can say to yourself, Well, I’m just going to invest in stocks. Okay, let’s look at Big Tech. Google’s up 37, Apple’s up 32, Microsoft’s up 16, Amazon is down 22, Facebook is down 45 and Netflix is down 52 percent. Okay, microstrategy little micro strategy no one ever heard of up 66 percent.

15:39 Would you have guessed that a mid-sized software company, Low Growth mid-size software company nobody ever heard of would outperform Google in the last two years. By a factor of two. And you know, so last point I made. We compete against companies 100 times as big as U.S. Oracle 100 times clearer than us, they’re up 25. IBM’s up three percent sales force is down 23, SAP is down 47 percent.

16:08 Okay, so what is the lesson of that? The lesson is, we’re in the middle of chaos. There is no place to hide your choices. You could buy gold, but gold is dead metal and it’s just getting ground into the dirt, right? I can seize your gold.

16:27 Gold is the half-life of money, and gold is 35 years, and you can’t put gold on 8 billion iPhones. So the problem is there’s no tech and gold, and it was a good idea in the 19th century, and it’s centralized. Governments can seize it, and the gold miners keep debasing it. They keep mining more gold right, and the best year you get two percent more in the worst year. Someone seizes a bunch of gold dumping on the market.

16:51 You get more than two percent, so people are looking for safe haven. What’s it going to be? Property in Africa, property in Venezuela? You can’t have a property in North Korea, property in Argentina, a business, a business where a business in Argentina where the currency collapses. What go to your cash flows of the currency that you generate?

17:11 The cash flows are collapses and value. So I think here’s the here’s the big idea, really big idea. Everybody in the world has to decide where they’re going to locate their family, they have to. Physically they have to decide where they’re going to locate their themself in cyberspace, their mind. Are you going to watch Facebook all day long? You’re going to read Twitter, are you going to be on YouTube?

17:40 You know you’re going to go to Rumble, Are you going to look at Instagram, right? Where is your mind, right? And then the third question is, Where is your business? Are you gonna run a yoga studio in Miami? How about our yoga studio in New York? How about you know, are you going to run a farm in Zimbabwe, a ranch in Argentina?

18:01 Are you going to buy a company that has business interest in China? How about owning a bunch of businesses in Ukraine or Russia, right? So where is your P L right? And the and the fourth big idea is Where is your balance sheet? Okay, you, you’re a podcaster on YouTube, okay? Well, you better make sure that you comply with YouTube platform requirements, otherwise they turn off your podcast and they crimp your business.

18:31 That’s where you generate your revenue and you generate your cost. But now where are you gonna save your money? are you gonna save it in U.S? Sovereign debt Are you going to actually store it in gold? Are you going to buy land, where in California, in Ukraine and Russia, where and Florida, right? Are you going to buy S P Index stocks? Are you going to buy Bitcoin? Are you going to buy art?

18:58 So they were conventional answers to all these questions, Brian, and they kind of worked for, you know, there was an answer to this question before 1914. There’s an answer to this question between 19 between Bretton Woods in 1971. . There’s an answer to this question from 1971 to the year, 2020. in 2020. It’s like, Oh, the answer. 60 40 bond portfolio by the S. P. Index and like a portfolio of diversified bonds. And you’re good, okay?

19:30 There was an answer. The answer kind of got confusing after 2020.. The answer got confusing for a lot of businesses, for a lot of people. And so highlight of the year. The highlight of the year is.

19:45 People were stunned from March of 2020 to March of 2021 and from March of 21 through the middle of 2022. They’re all starting to get their bearings and they’re, and they’re like, Well, I guess why does Bitcoin, a digital commodity, is that? Do I have to deal with that well now? Now Fidelity’s talking about rolling out the 34 million retail accounts. You’ve got the government embracing crypto assets saying, We better figure it out, Congress senators getting educated on it, the CFTC, the SEC getting educated on it.

20:20 You know, a big institutional investors starting to take Bitcoin positions, you know the media now, you know, now you’ve got Bloomberg covering crypto, you’ve got CNBC covering crypto, you know, you’ve got an entire world media, analyst, politicians, financiers and they’re all starting to figure this out. But I still say We’re early, right? This paradigm shift takes a decade, and maybe the first decade was the embers of a flame flickering from 2009 to 2020. And then from 2020, we started pouring gasoline on that flame, right? Get the gasoline, the U.S.

21:08 Is we triple the inflation rate triple IT monetary inflation? But forget about that. Maybe you’re a blue blood living on the Upper East Side with a trust fund, and you just don’t see why you need it. The gasoline in Sri Lanka is everybody lost everything overnight, the gasoline in Lebanon is the bank. Frozen, freezes their doors and you lose all your money.

21:30 The gasoline in Argentina is the Peso goes from 20 pesos to the dollar to 280 pesos to the dollar in four years. Right? The gasoline in Ukraine is oops, there’s a war banks are, you know, there’s a limit to how much money you can withdraw and the gasoline in Russia is okay. I get, you know, the stuff you thought you owned in Europe, you don’t own that anymore. We’re taking that from, you know, taking your gold, taking your bonds, taking your yachts, taking your villas.

21:57 So there’s a lot of people with a 2×4 at the head and they’re all stunned and they’re all trying to figure it out. And there is this colorful debate, a political debate, immediate debate, you know, a debate on YouTube, a debater on Twitter, What’s the solution? And the only thing we can all agree on is we probably need to look at some new ideas because the old ideas just don’t work anymore. And there’s no, there’s no intellectually honest person that would say, Yeah, everything I believed in 2019 or 2018, it’s all still true. I haven’t changed any of my opinions about anything.

22:40 I mean, everybody’s had a place in their life where they’ve, you know, been they’ve been jarred and stunned, and now they’re trying to make sense of it. So the question is, how do we move forward? And, you know, to summarize on Bitcoin I think Bitcoin is, it’s very volatile, it’s getting, it’s getting jerked around. All risk assets are getting jerked around. If you look at, you know, if you look at one of the more interesting things right that the two-year, you know.

23:16 The two-year. Treasury was 16 basis points a year ago, and it’s currently like 3.9 percent. We went from 16 basis points to 390 basis points on short-term money. The mortgage rate on a 30-year mortgage, you know, has gone from 2.7 percent to six percent in 12 months, right? The yield curve is inverted.

23:49 You get paid higher interest on a two-year loan to the federal government than on a 30-year loan. The 30-year loan is 350 basis points. So a summary of all this, it’s this. We had an unprecedented expansion of the money supply in March of 2020, where we just pegged interest rates to zero. And the banker said, We’re going to keep interest rates at zero for the next four years.

24:15 I mean, they literally implied, they said, Not until 2024, where we raise interest rates. Okay, well, that’s one panic, and now we’ve got the other extreme, which is the fastest tightening of the money supply. Like one of those, Oh, crap moments, oops, I think we overdid it on one side now, we ever did it on the other side. And what you see is risk assets. They’re all getting hammered down, Bitcoin included, but, but look all financial assets.

24:44 Bonds Hammer 20 Nasdaq Hammered 30 S. P. Gold hammered, silver hammered and Bitcoin hammered. But on the other hand, tangible assets, oil, natural gas, food, any type of energy. They’re all shooting up and I think people are going through this moment where they’re like, I guess I’m gonna freeze the death or starve to death. Unless I have some of that tangible commodity stuff and the financial stuff, I guess I’ll trade it.

25:18 And meanwhile, the politicians, you know, they play with the little knobs attempting to do good. And it turns out that it’s very difficult for humanity, for any human being, to actually make adjustments fast enough and intricately enough. So that they could do good without probably doing more harm than good, and that’s where we find ourselves right now. Yeah, and I grew up on the U.S yield curve because when I went from M.I.T. where we both graduated, I went straight to Wall Street and I was. I was trading fixed income derivatives, so I grew up on three percent overnight rates, six percent long rates.

26:01 I traded a swap book they traded as a premium on top of that for interbank rates, and it pretty much stayed around there for the next 10 years. Okay, it’s a couple times we had a flat curve. I think the bond yield got up to eight percent. Maybe, but you know, there wasn’t QE back then, and it all, it behaved like it traditionally behaved. What you just said.

26:20 Boggles my mind that a two-year note could go from 16 BIps to two 398. That’s just, you know, the beauty of the fish. It’s 15 weeks, that’s crazy, I mean, 15 weeks and this. It’s such a massive market for people that don’t know, it’s so big, and that’s why it usually doesn’t move much. And it’s it can.

26:39 Still, you know, move markets, and now it’s all over the place. Like you said, we used to believe that the Fed had some control over the economy. Now it’s not obvious that they have any control or that what they do helps the economy. And, yeah, it’s a good point. If you go back to M.I.T. right now and take an economics class and raise your hand and say, Is that really true?

27:01 What’s in this textbook? That’s five years ago, your professor, can you? Can he look at you with a straight face and say, Yes, I don’t know, be worth of us doing that. Maybe to go back to Sloan School and say, Do you really think that’s true? And would they have a discussion about Bitcoin?

27:15 I don’t know, maybe they would. Michael I think it’s people. It’s important for people to hear your background because you said, You know? Bitcoin was, you know, created kind of out of the financial crisis in 08. And you might not have cared about it unless you had faced a currency collapse.

27:29 If you hadn’t have watched what happened in March of 2020, would you would you? We be hit sitting here talking about Bitcoin, would you have 130,000 on your balance sheet? If that had never happened, would you have noticed it? No, right, like I. Well, here’s what I would do.

27:46 I sort of notice that some techie thing that’s interesting, and it’s in the category of, Do I want to invest in some startup, or some Instagram competitor, or Snapchat, or Uber, or Bitcoin, or Airbnb, or, you know, we work. It’s just another thing that may or may not work that I’m not paying that much attention to. I think that if you live, I. I did have a business in Argentina and I watched a currency collapse in Argentina, where we lost nearly everything like we lost all of our profits. For a decade overnight, we had all our money in a bank and the bank, and it was in dollars.

28:26 It was an American bank in Argentina, really, and the American bank sealed itself. The government sent an edict to the bank. The bank converted our dollars into pesos at one dollar per Peso, and then the next day devalued the Peso Ten for one. And we lost 90 of our money in one day and in an American bank holding in dollars. And luckily for us, it was a small part of our business.

28:51 So it’s kind of like someone just chopped one of your fingers off, but they didn’t chop your head off. Now. If you’d lived in Argentina and you had 100 of your business or your assets in Argentina on that same day, you didn’t, you know, lose one percent, you lost 90 percent of everything, so I, I kind of knew intellectually that this could be useful, you know? But it wasn’t a visceral it wasn’t a visceral near-death mortality facing event, right? You don’t really get religion until and until someone says, You know next Monday, everything you’ve got, I’m taking it all.

29:33 If you stay here, right? And so when you have that kind of come to Jesus moment, then you get you get religion. So I think that for us, our Come to Jesus moment was March of 2020. And it’s just we got to the end of the line where I’d spent a decade trying to use conventional models and conventional techniques. You know, use Treasury bonds as a Treasury asset and do stock buybacks and just work harder.

30:04 Anything you work harder and you use conventional techniques, but you’re making no progress and you’re just getting beat to death. And I, I mean, at that point I wasn’t looking at. We still didn’t have the Sri Lanka, you know, the Sri Lanka, Argentina, Zimbabwe. Type situation where your money is losing value at the rate of, I think, 90 of the value drains out of the ball out of the Venezuelan Boulevard every year, right? It wasn’t that bad, but I think that in 2020 I realized the half-life of money.

30:42 The half-life of energy or a wealth stored in the currency was 36 to 48 months. So I looked at 500 million dollars and I said 500 million dollars stored in U.S dollars at a 15 to 20 monetary inflation rate. You know, divide 20 into 70, right? The rule is 70, and you’ll, Hey, okay, got three and a half years and it’s half of it’s gone. So I think I got to that point and the significance of that for me, Brian was, I realized at that point, that holding 500 million in cash at a 15 monetary inflation rate means that you lose 75 million a year on your balance sheet.

31:29 And the best I could hope for is 2 000. People working themselves to death, doing a hundred thousand things right every year, everywhere in the world. And if we didn’t screw up anything, and if everybody worked themselves to the bone, we could make 75 million right? So I, I had a this inflection point where I realized. Everything we’re going to do for the rest of our lives is going to be negated by the inflation on our balance sheet.

31:57 And there’s just, and that’s the point of hope, despair and indifference to where you’re like. It just doesn’t matter what we do for the next decade because we can’t get ahead now. That’s a slow death, right? I’ve used the phrase, Right? The road to surf them is working exponentially harder for our currency, growing exponentially weaker just a road to surf them.

32:20 That’s a slow death. But you know, if you, if you took yourself and you dropped yourself into Venezuela or Zimbabwe, and I just told you, or Argentina, it’s the same idea. But instead of a slow death, it’s just a fast death, right? You just. You might as well just open up a vein and let the blood drain out, right?

32:40 It’s not like giving a pint of blood a week, it’s like giving a pint of blood a day. Or I just open up the vein and I just bleed out, right? I mean, that’s what hyperinflation is. So I would say we were jarred out of our lithurgy or jarred out of our, our conventional thinking because of that crisis. And then we had this a couple of advantages, one, we had a huge balance sheet and so it.

33:08 If you were running on 500 million in debt instead of 500 million in equity, right when you’re running on 500 million of equity at 15 monetary inflation the cost of 75 million a year. But when you’re running on 500 million in debt, you know you’re actually getting 75 million a year. So you see, you see, if you’re an indebted company, you wouldn’t be as sensitive a sensitizer to that. So we happen to have a lot of cash. We had positive working capital and then we had a company with a fairly tight board.

33:43 Five people we knew each other and a very smart, engaged executive team and engage board. And I’m the controlling shareholder of the company. So we didn’t have to worry that we would have some hostile takeover activists. That would just immediately target us if we were to get outside of the conventional bounds. And so we had sort of not much to lose when we had something to gain and our option was a fast death.

34:17 We give the 500 million back to the shareholders and we just get beat to death by Microsoft and Oracle, you know, or a slow death. We keep the 500 million, but we just gradually get whittled down at 50 to 100 million a year or take a risk. You know, you ride out from the castle or the or the Citadel, and you make a stand on the plane. And you fight that battle. And you may win, or you may lose.

34:48 But you know that if you just cower in your citadel, you know, when you get surrounded, you’re going to get starved out and choked out. It all cut off your water supply, right? There’s no way you’re gonna win unless you make a stand. So we decided that rather than the slower the fat death, we would go and do something and take a risk. And it’s a very intricate story, which is probably beyond the scope of this.

35:11 But the short of it is about 10 different transactions. You know, a Bitcoin, you know? A share buyback, a Dutch auction equity raises junk bond, convertible bonds. Lots of communication to the street and we. We went from investing 250 million in Bitcoin to 425 million in Bitcoin to eventually a billion in Bitcoin to 2 billion in Bitcoin to just slightly less than four billion.

35:44 And Bitcoin? And the result, I just, I just said, Right? For our shareholders, our stock outperformed every big tech company, every asset class and every enterprise software company. I think we did the number and we calculated we outperformed 485 of the 500 S. P companies over that time period. And then and then, in terms of the corporation itself, we added billions and billions of dollars to the enterprise value of the company.

36:12 So it’s paid off so far, even though we get thrashed this way in that way by volatility. Right, you know, now, you know. The war in Russia, the war in the Ukraine, the utterances of the central Bank of Europe, the utterances of the Federal Reserve. All of those things impact our stock and impact our shareholders. But, you know, better to get out.

36:39 It’s another analogy. You’re in a row boat, you’re rowing three miles an hour, the wind is blowing against you 20 miles an hour. The current is 10 miles an hour. You’re never going to get to your destination, you will starve to death before you get there. Your choice, you know, reach down in the hall, put up the sale, tack into the wind.

37:00 And now you’re sailing with the wind and you know what you’re. You’re actually going somewhere and you probably will get to your destination. But you’re gonna actually get jerked around by the storm. And it’s going to be a fast ride and maybe a harrowing ride. But you have a you have life and you have an opportunity because you’ve harnessed a new energy source and the old strategy was going to kill you.

37:25 The new strategy is it’s scary, I gotta learn to sail, I gotta learn to fly, it’s invigorating, it’s different. People are going to think you’re crazy, but, you know, they wouldn’t be talking about us. And we would be just very quietly starving to death or getting squeezed out of existence. While we didn’t really bother anybody or threaten anybody, had we not done what we did right? Okay, I like the decision you made, I think I think it was the right one.

37:59 Question Is there a price of Bitcoin where things get interesting for you? As far as where I don’t know? Not that you get stopped out, but where as a leverage position gets where it’s like, Okay, now there’s an issue I might have to liquidate Bitcoin. Is there a price? There?

38:14 Is it? 12,000 or 13,000? Well, that’s an issue. Or is that not the case? Now?

38:20 We’ve been pretty artful about this. For example, the first 425 million, almost the first 500 million was equity. And then the next 500 million, or the next 1.7 billion was convertible debt, but it was converting into equity. And it’s not, it’s unsecured debt, so it’s not related to the Bitcoin, it just becomes equity at some point in the future. And in the next 500 million was a junk bond.

38:47 But that was secured against the cash flows of the software business, which is very stable, that could be refinanced in the future. And it’s just it was a seven year jump bond. So again, not really correlated to Bitcoin, and then the next billion was an ATM equity issues. We issued a billion dollars of stock. So, you see, we’ve issued a lot of equity, and then we’ve financed other parts of the business.

39:11 It was only the last 200 million, 205 million where we pledged some. Bitcoin is collateral, so that’s our famous Bitcoin backed alone or Bitcoin back. Yeah, loan facility with Silvergate. And we calculated that when we did that, we were 20x over collateralized, like we had 20 times as much Bitcoin as the loan. And right now we’re probably 10x over collateralized.

39:40 I think if Bitcoin got down to 3 500 a Bitcoin, then we’d have to come up with some other collateral. Okay, but you know, we just announced another 500 million dollar at the market equity shelf registration, so we’ve just used a balance of equity. Long-term debt, secured debt, unsecured debt, just a very thin layer borrowing against the asset itself. And we primarily did that, just to prove it could be done in order to legitimize it as an asset you could borrow against. So the answer to your questions.

40:16 I don’t really worry so much about that, you know, it’s at some point if Bitcoin gets to 2,000 that I have to adjust something. But, you know, not so likely with quite a big buffer. Okay, are you buying more or plan to buy more? Yeah, okay, yeah, we are. I remember when you were here last time I said, I said, How are you gonna buy it? and you were like, I’ll buy it up to 250 000.

40:42 Like I remember, you just said that just resolutely like this for the next thousand years, you’re like, I still, I’m happy to keep buying this. I don’t know if you remember the same, we’ve still got the same. You know, question which is, if I have an increment of 10 million dollars of cash flow, do I put it into bonds? Do I put it into gold, do I buy silver, do I buy land, do I buy art, do I buy Bitcoin? So I still think Bitcoin is the most scarce, most desirable, highest quality property.

41:13 It’s a long-term store of value. So I just I think generally for us, we’ve adopted very simple strategy we keep. We keep enough working capital to last us a year, normally in the range about 50 million dollars in U.S. dollars. And then when we have excess cash, either from operating income or any other financing opportunity. We put that into our Treasury reserve asset and we have adopted Bitcoin as our primary Treasury reserve asset, so we’re 100 Treasury reserves in Bitcoin.

41:50 You might decide that you’re going to split your Treasury reserves. One-third property, one-third arched, one-third Bitcoin or one-third S P stocks or something right? It’s a It’s a preference for an individual or an investor. But of course, our company, Microstrategy, has adopted a Bitcoin strategy and we have transparently communicated that to all of our outside shareholders. And that is in our 10K filing.

42:18 So when someone buys microstrategy stock, they know what they’re getting, they don’t want us to hedge or juggle 16 different assets. So if I showed up and said, Hey, I found it, we could buy a Picasso and I got a good deal on it. We think that’s better than Bitcoin. All my shareholders would freak out. Because they don’t want to invest in art, hedge fund or a real estate hedge fund, they want someone that’s got a Bitcoin strategy, so from a corporate point of view, it’s the right thing for us to do.

42:50 I personally think it’s the highest quality property in the world and I think it will appreciate the best over time. And as I pointed out to you, it has performed the best in the past two years versus every other option. So we, we’ve been right over a two year time frame. I think we’ll be right over A for a 10-year time frame. But even if it turned out that your Picassos were better or your rolexes were a better investment, we’re running a publicly traded company, right?

43:19 Our employees, our customers and our shareholders expect us to stand by our word right. Credibility and transparency are very important. So if you invested in a company that says they’re going to invest in Las Vegas real estate, you expect them to buy up Las Vegas real estate with their cash flows. And we are a company that you know is buying a Bitcoin with our cash flows. And so that’s what that’s what we do.

43:45 It’s worked out well for us. We’ll continue and we’ll do that with operating incoming cash flows and also any other. Any other proceeds from equity or debt offerings that come our way we buy, we don’t sell, we hold it. It seems like the rational thing to do for us. Yeah, look, last time we spoke, Michael, you called Bitcoin Digital Property, and it was.

44:07 I was probably newish in my journey to really understand crypto. I mean, again, I had Kaiser over here back in 2013, screaming about Bitcoin, and I bought some for 100 bucks or something, but I had never really gone deep. And I’m telling you, Michael, I’ll never forget you telling me that because I started thinking about it differently, I even started explaining it to people differently. My mom, she lives in San Diego, yeah. She raised three kids as a single mother, and she had the opportunity to buy property in San Diego.

44:33 I always talk about there’s a similar woman, probably in Ethiopia, who grew up with three kids as a single mother who didn’t have the option of buying property. That maybe could hold its value in that country. And when you told me about Bitcoin is digital property, it was like, Well, now. Both of these ladies can invest in something where their geography, or their culture, or their or their currency doesn’t affect their. I guess, their right to preserve that value, but lately I’m not prejudice.

45:00 Yeah, yeah. Without prejudice, you can invest in Bitcoin without prejudice, no matter who you are and where you are. Yeah, it’s fascinating because, you know, we had a whole, you know, run-in with the concept of freedom of speech and digital platforms. It’s always fascinating to me how Bitcoin transcends money. It gets really into humanity and rights and all these other things, and we can definitely get there.

45:22 But lately I’ve heard you talk not only Bitcoin as digital property, but as energy. And this is something I find fascinating. Because it’s, it seems like maybe you’re thinking of. It has evolved even more, which I guess I would hope, after a year of things bouncing around in your head. But can you explain this concept to me of it being energy?

45:42 Because I don’t think we were talking about that 14 months ago? Sure, well, first of all, I think that money traditionally has been the province of economists and politicians. And if you look at the at money in the past 10,000 years, it’s always been imperfect. Money, you know, debased by politicians with economists doing their bidding. Even at M.I.T. when we were there, we didn’t really think of economists as engineers, right?

46:11 I mean, there’s political science, there’s economics. But those were considered to be kind of light disciplines, the engineering, disciplines, you know, the computer science, the civil engineers, the chemical engineers, aeronautical insurance. That’s serious stuff like you build a plane wrong, it crashes and burns. And in the chemistry lab, you can blow yourself up and you can electrocute yourself in electrical engineering. And the building can collapse in civil engineering, and the ship can sink in ocean engineering.

46:38 And that’s kind of separates the serious from the light,-hearted right. We got the poets and the, you know, the drama Queen. Things and the politicians and the economists, and they talk about stuff, but there aren’t really serious consequences. So I think that Satoshi really represents the first monetary engineer, and the discipline of monetary engineering really begins with Bitcoin. This idea that I’m going to create a shared, immutable ledger incorruptible, immortal right Transcendental ledger.

47:16 We never had it before in the history of the world. And if you can create a shared immutable ledger, then you can introduce the disciplines of math and physics into the world, right? I mean, the whole idea of Bitcoin is I use Shaw 256 hardware, and I use energy to do proof of work. And so I’m plugging thermodynamics and the laws of physics into the security, the integrity of a network. Nobody, nobody ever thought of it like that.

47:49 And when you combine it with the protocol and the difficulty adjustment, then you actually have this like first order Servo mechanism or negative feedback loop a thermostat, right? You know, a servo mechanism to exact our control system, right? A dynamic control system to exactly get 21 million Bitcoin no more, no less trickling out at a certain rate every 10 minutes roughly. So that creation of thermodynamically sound shared system was a breakthrough for money. And because people never thought of money as an engineering thing, they never thought to apply Newton’s laws or thermodynamics or math.

48:34 Or, you know, Maxwell’s equations or anything to it, it just it just wasn’t relevant. So, so we know, right? Economists will say Satoshi’s innovation was the ability to transfer value from one person to another person without a trusted intermediary. That’s the, you know, and the low brow. The lowbrow description of that is we solved, you know, the double spend problem, or we solve the Byzantine General’s problem, right?

49:05 But if you, if you had an engineering education and you thought about it, you would say, What do we solve? Well, we solved the issue of how you actually implement conservation of energy in the digital realm. If I can transfer a million dollars of value from me to you without an intermediary, I don’t need a bank. That means I have transcended the political realm. If you need a bank, then you need a politician to license the bank and you need a corporation to run the bank.

49:44 And you’re all. When I send you the million dollars via Visa, then I’m, I’m gonna wait, 40, you’re gonna wait 45 days for the final settlement. And if the Central Bank of the USDKS, the deal or the British bank decays the deal. Or if I have a change of heart in three days and I call up and say, I don’t know, I didn’t do that. It doesn’t go through, yeah, so you see you’re living in a socio-political realm.

50:12 When you deal with Fiat currency through banks, if you need a bank, then the money is political, it is not engineering. Now, conservation of energy matters. If I can transfer a billion dollars from me to you. Without a trusted intermediary and cyberspace, I can manifest a billion dollars of energy without a trusted intermediary and cyber space. If I can manifest a billion dollars of energy, okay, then I can manifest energy at all.

50:50 Now, Einstein says, You know, matter is energy, energy is matter, energy can neither be created nor destroyed, it can only change forms, Tesla says. If you understand it, understand the universe, think in terms of energy, frequency and vibration, I’m changing kinetic energy to potential energy, right vibration plucking the strings of a guitar, right? I mean, I mean, I’m converting the kinetic. The potential energy of the string to kinetic energy of the string, to acoustic energy through the air to a wave form to create music. Okay, this idea of energy, conservation, of energy is very important now.

51:38 How do I vibrate energy through the digital realm? Without Bitcoin, I have to use a credit card. Okay, so what does it mean to move a billion dollars from my, my bank to your bank with a credit card network? Well, it takes 45 days, maybe I can move it. I can move the money with a frequency of six per year, six per year.

52:02 I’m using a Fiat currency and a banking network with a conventional payment network, so my frequency is six. I’m gonna lose 15 percent of the energy, right? The dissipation of energy is 15, two and a half percent per hop times six. And then in a 15 inflationary environment where the dollar is being expanded by 15. I lose another 15 percent so I can vibrate frequency six, losing thirty percent of the energy per year.

52:37 Okay, how do you play Beethoven’s Fifth Symphony? If you’ve got one thing that vibrates six times a year, there’s no music, right? There’s no nothing like think about reality, Building the Universe The universe is eight billion people subject to the laws of gravity universal, gravitational, constant. And I can say for certain that if all eight billion people drop a baseball at the same time, it’s going to fall down. I don’t gotta order things right.

53:12 If you fall off a wall, there are consequences. There’s friction, right, the universe, you know, I punch somebody in the face. I don’t have to go to court and sue in order to get a judge in the Fifth Circuit Court after six appeals to say that, yes, I did punch them in the face, right? I run into a wall. There are immediate consequences.

53:33 I can build a machine because of vibration and frequency and motion and gravitational constant. And Reynolds numbers. The universe works right, the sun, the stars, the moon stuff works right, the moon rotates around the Earth, the Earth goes around the sun. We have weather, we have tidal waves, tidal patterns. Because of the relationship, the moon to the Earth, no central banker ordains, it plans it, monkeys with it, okay, the laws of physics govern the universe.

54:08 They work quite well. Now let’s go to cyberspace before Bitcoin. There is no matter in cyberspace and there is no energy in cyberspace. What you have is virtual representations of matter and virtual representations of energy. The million dollars moving on a credit card network is a virtual representation.

54:33 But you require a bank, or, in fact, sometimes six different banks and people in order to convert that virtual representation into reality. So here’s the problem A computer can’t do 10 000 transactions a second when you’re relying upon socio-political representations. 8 billion computers can’t do 10 000 transactions a second each. But, you know, when eight billion people open their mouth and start talking to each other, think about the kilohertz. What did I just do, right?

55:18 I just vibrated the air right? Because I’m using energy, so the real significance of Bitcoin is it’s digital money. I can move a billion dollars from Point A to Point B in one second with final settlement. That’s the first idea, but the bigger idea is I can vibrate it, like with a frequency, right? I can, I can vibrate.

55:46 I can change forms of energy from matter to money to energy back again, I can do it at multiple frequencies. 10 Kilohertz 100 kilohertz. I can do it a million times a second, I can do it a million times a second between a million computers. What does that mean? Well, that means one computer could actually engage with a hundred thousand counterparties every second.

56:11 Moving your money back and forth to the highest bidder. And, you know, 87 seconds from now is somebody wants to pay a higher interest rate. I can fetch the money back and I can pledge it to them. As you can see, it’s 45 days before I even know you’ve got a final transaction in a conventional Fiat credit card based world. So I don’t have, I don’t have conservation of energy in cyberspace.

56:43 Without a digital commodity and the digital commodity, it needs to have energy content. I need to be able to transfer it with final settlement here, you know, unstoppable irrevocable transaction because I need to create consequences. For example, you stand up on a wall in the real world and you’re 100 feet up and you fall off the wall, right? There are consequences, irreversible, the laws of physics, the universal gravitational content, constant. They drag you to the earth, they’ll probably smash you, you’ll probably die, you’ll be dead in four seconds.

57:22 You can create a wall in the real world. How do you create a wall in cyberspace? Can’t do it with a represent a virtual representation of energy? Because there’s no way for you to lose a billion dollars or a million dollars in four seconds in a virtual representation, why would I want to do it well? For example, maybe I actually want to clean up Twitter, and so the way I clean up Twitter, I is, I charge you twenty dollars.

57:53 Every time you create an account and if your account turns out to be a hostile bot, I just delete the account. And I keep the twenty dollars. Okay when I post on Twitter, Brian, the first 87 responses to my post in the first one second are bots so 87 bots in the first second, probably 800 bots. In the first 10 minutes or something like that. There are no consequences, no cost, it is.

58:23 It is free to spam and fish and maliciously attack. If you created a 20 wall, then it’s 80 or 800 times 20, right, so you’re at sixteen thousand dollars. If you want to do the same thing, you can do it and it would cost you sixteen thousand dollars in about 10 minutes. There is literally no way to spend sixteen thousand dollars in ten minutes using Fiat credit card system. Now, do I does it matter?

58:59 Well, it matters because there are fake Michael Saylor Bitcoin giveaway videos on YouTube right now with fifty thousand fake listeners. And so if the if you charge people, yes, if you charge them twenty dollars worth of energy to listen to YouTube the rest of their life. You understand that thermodynamically, that’s the equivalent of you have to walk up a hundred steps like, I’m gonna put you on a plateau. You’re gonna have to walk up 10 steps or 20 steps. When you’re moving up 30 feet, you’re achieving a new potential energy.

59:38 You’re paying the price of getting up those 20 steps by putting one foot in front of the other. And in return for that, I can guarantee that everybody did walk up the steps and they’re all human beings capable of doing that. If you didn’t need to walk up to 20 steps, if there’s no friction right, then what if there’s 18 billion people on the plateau, what if there’s 187 billion people on the plateau? And they’re all screaming at the top of their lungs, right? You have been drowned out by cyber demons because there’s no friction, there’s no cost.

1:00:12 So the way we construct things in the real world is we require that. You expend energy in order to change your state. And it’s irreversible, and there’s no appeal in the cyber world. There’s no way to do it right now. The friction is so high.

1:00:33 And the delays are so long that people haven’t tried to build energy into Instagram or Facebook, or Twitter or YouTube. But it’s a fairly simple solution. And if you get to the point where I can pay, you like, Let’s say I’ve got a website and I’m posting something that’s sensitive and my. My only requirement is you just got to be a human being willing to make a 50 deposit to come to my website. Well, what I want to do is allow a hundred thousand people every minute to enter the website, to browse around the website for 37 seconds and to leave.

1:01:14 And I need them to drop the 50 deposit at the front door and then fetch the 50 deposit going out the back door. And it’s going to be 200 000 transactions a minute and that 200 000 transactions and a 10 million dollars a minute of velocity. That is the equivalent of friction. Or at least it’s skin in the game and you know what keeps you from running into walls, you’re going to break your nose right? What keeps you from doing irrational things.

1:01:48 Why don’t you jump out the window of a hundred story building because it’s going to kill you? It’s irrational, right? So the entire civilization is based upon physical consequences, right? The universe is based on physical physics, physics is physical consequences, that’s why we study it, that’s because that’s why you can study it. If there were no physical consequences, F equals M A if there was none, no, there’s nothing to study.

1:02:21 And in our world, the economy, the economy works when there are economic consequences. I go into a hotel room, I trash the hotel room. They bill me ten thousand dollars if I can go into every hotel room on Earth every minute and trash them all and get billed nothing. How do you make anything work right? The economy doesn’t work so the summary here is Bitcoins, not just digital money.

1:02:53 Digital money means I can move it from a billion computers to a billion computers every second programmatically for free. And you do that by just transferring private keys, or, you know, do it through the Lightning Protocol. There’s all sorts of proprietary protocols to do it. We can talk about it. Once you get the base layer that manifests 400 billion dollars of actual monetary energy, then the layer twos and layer threes and layer fours.

1:03:19 Could. They can vibrate this stuff at any frequency and they can do it with any degree of scalability. So once you create a digital money, then when you when you think beyond the uses of money and you realize that. Maybe I go to 20,000 websites in a day as a Web crawler and I post I, I post a deposit and then I get it back. That’s not really digital money that looks like digital energy now and then.

1:03:47 When you think about, you know, sunlight hits the earth and I get a tree right, energy becomes matter, I take the tree, I chop it down, I burn it, and it becomes light and matter becomes energy again. And there’s some inefficiency in there, right? But the point really is energy in low frequency is matter and matter. When you convert, it becomes energy, whether it’s sound energy or light energy, or heat energy or kinetic energy or potential energy. Once we’ve done that, once we’ve figured it out.

1:04:25 You can create beautiful structures in cyberspace with digital matter you can create beautiful symphonies in cyberspace with digital energy. When you walk out of your house and you stand in the sunlight, the sun shines on your face. May the sun shine on you. That is the sun radiating energy on you. Light is life, we know light is life.

1:04:52 What if I create? What if I create a place in cyberspace where you can come and talk to me? And you get 100 Satoshi’s every minute, how about 100 Satoshi’s every second, how about 100 Satoshi’s every millisecond? What am I doing? Yeah, you can.

1:05:10 We can call it micro transactions. I’m micro streaming money, but that’s kind of a pedestrian way to think of it. Another way to think of it is I’m radiating energy, right? If you can get through my barrier. Do you have a P.H.D. in physics?

1:05:27 Okay, I’ll pay you ten thousand dollars an hour to listen to me. So you go through the barrier, you post ten thousand dollars as your bond to show you’ve got a P.H.D. in physics. I stream money for you to listen to me, you get to listen to the music. If I find out you’re lying to me, I seize your deposit, right? You pay the price, there are consequences, you’ve got credibility, you want to reverse it.

1:05:50 You pay me to listen to me, right? What is that, Brian? If I took you and I dropped you on the North Pole in your suit right now, and it’s like 50 degrees below zero. The universe is sucking energy out of your body and we call that freezing to death. If I drop you on the surface of the sun, the universe is pumping energy into your body.

1:06:16 We call that burning to death, right? The thermostat in your house adjusts you to a pleasant temperature between this and that. What I’m describing with Bitcoin is the ability to radiate energy, to stuck energy, to draw energy, to build walls of energy, right to construct structures of energy, to tear down the walls, to build up the walls to leap over the wall. There’s a price to pay to climb a mountain, there’s an energy price. That’s why we actually we, we respect mountain climbers.

1:06:54 It’s not easy to climb a mountain, right? And on the other hand, skiing is fun. Because we’re going down the mountain. We’re converting potential energy into kinetic energy and it’s fun, so we have fun. When energy flows one direction, we struggle with energy flows, the other direction.

1:07:12 The human spirit is lifted through the channeling and the management of that energy cyberspace is missing, that it’s missing the challenge of climbing a mountain. It’s missing the joy of sliding down it, and that’s because you can’t transfer something that’s conservative. A conservative asset from Point A to Point B without a trusted intermediary as soon as we fix that problem. When Satoshi solved double spin problem, Satoshi manifested energy in the digital realm, and then Satoshi manifested matter. In the digital realm.

1:07:52 We opened a portal between the physical universe and the cyber universe. And energy is flowing through it to the tune of now caught 400 billion dollars plus of energy, you can build things. You can build a billion dollar structure in cyberspace run by a computer sitting on a satellite in low Earth orbit. And you can. And that computer can manifest that structure and evolve it over the next thousand years without a corporation or a government touching it right.

1:08:31 This is a profound singularity in the human condition. And so the reason I’m excited about it is we’re going from frequency. Six with dissipation of 30 per year, the frequency 6 billion a second with no dissipation. You know, we’ve gone from, you know, schlepping around, you know, walking across the continent. Like the Hana gatherers.

1:09:03 We were 500 000 years ago to orbit where we’re in orbit, circulating the circling the Earth. 25 000 miles an hour. And maybe we can get out of orbit. We have reached escape velocity. People don’t quite realize it yet, but the civilization is based on its materials.

1:09:26 And so the most beautiful thing you could build with wood structures and clay a hundred thousand years ago. It’s not New York City. Well, when I give you steel and glass and concrete, or I give you aluminum, and I give you, you know, and I give you fiber optics. I can create beautiful structures, right? The human condition is all about mastering new materials.

1:09:54 Steel is metallic energy and concentrated form, right, and glass is another form of energy in a concentrated form, and Bitcoin is digital energy. And if I have it, I can create extraordinary cyber structures, just like you can create beer, you know, like the Web telescope, right? Think about everything we discover with telescopes while trapped in the atmosphere for ten thousand years. And then think about what we did with the Hubble and then think about what we did with the Web telescope. And the secret is, get in orbit, escape, you know, slip the surly bonds, find a new material, and then we can see further than we’ve ever seen before.

1:10:43 And I, I think that’s what Bitcoin represents. It represents the ability to construct structures in cyberspace that don’t last 30 years. They don’t last 100 years, they might lost 10,000 years, they might last a hundred thousand years, right? It’s like I could, I can, I can, I can move. You fly across the continent and you look down and you’re going 700 miles an hour with a tailwind.

1:11:10 And then you think about the Donner Party and you think about people with covered wagons and how they took six months schlepping across the thing. And you and you blink, you’re like in the next five minutes, I’m gonna travel further than they could go in a month, and what am I going to do with all that time? I got back and the answer is hopefully something beautiful, so that’s what I think about Bitcoin and digital energy. Well, as usual, Michael, you give me something that I’m gonna have to probably sleep on for a couple weeks. But I love where you’re going with this, and I, I’m gonna meditate on this more.

1:11:44 But it’s fascinating because we can create things we never even imagined with this new physics of money in cyberspace. So I’m going to think more about this, Michael. Last time we spoke about digital currencies. You said Bitcoin is digital property, but there’s still a need for digital currencies because you can’t use property to do your debt, your transactions. And like you mentioned, Microstrategy has 50 million dollars that use for working capital.

1:12:11 Where are we with the state of digital currencies now? And I’m probably talking about stable coins. What do they need to go? And we’ve had some recent events in various stable coins. Is it worth talking about UST, maybe USDT, USDC and what that future might be as far as digital currencies?

1:12:32 Sure, well, let’s fast forward to how it all ends, like, What does the world want? The world wants 8 billion wallets on Android and iPhones, and it. Each wallet has a checking account and a stable and a savings account. And in the checking account, the wallet has the U.S. dollar the world’s strongest currency. And then if you live in Argentina, it’s got the Peso, and if you live in Zimbabwe, it’s got the Zimbabwe dollar you live in Argentina, it’s got, or Mexico’s got the Mexican peso.

1:13:05 So the Laurel wants a local currency. Because whatever government you’re, you know you’re subject to. It’s going to mandate. You have the local currency to pay your taxes, and maybe it’s a medium exchange. Then the world wants the U.S. dollar because that’s the strongest currency, and everybody on the planet would like to exchange their local currency for dollars.

1:13:26 If I need money for a month, I hold a local currency if I need money for a year. I hold a dollar as the it’s the International Medium Exchange. If I’m going to trade between Argentina and Russia or between China and Italy, I’m going to use dollars. And then the world wants a long-term store of value more than a year. If you’re conservative, I mean, for people that are very risk-averse, like everything you want to store for four years or longer, you put in property and if you’re a.

1:13:54 And if you’re a bit more aggressive, everything that you need for your store for one year or longer, you’ll put in property. So Bitcoin is property, I’m gonna, I’m gonna hold money for the next 30 years, or maybe for my grandchildren and Bitcoin. I’m gonna save up money that I need for the next one, two, three years of dollars that I absolutely can’t do it now. And then, you know, if I’m traveling and fill in the blank Italy or traveling in Korea? I’m gonna have Korean won, I’m gonna have Japanese yen, I’m gonna have whatever, because that’s the custom at the time, so that’s what the world wants.

1:14:31 They’re now starting to realize it. Two years ago, you know, stable coins were fairly small and Bitcoin wasn’t that big, and then stable coins kind of exploded in about one year. But people were afraid of them. They thought, We’re just using them as a settlement device between crypto exchanges, and they were used by dissidents. I think if you go back to Jerome Powell’s comments two years ago, he said, Well, you know, it’s well, we’re not going to be first, we’ll wait, we’ll see what happens.

1:15:02 No interest, you know. And if you look at Christina Lagarde at two years ago, she said, Well, we’re gonna like, Look at it and study it. And we saw the Chinese are going to do something. And really, the most successful stable coin was tether. And then circles started to come up after them, and then other crypto people experimented with them.

1:15:22 I think that about a year ago, people realized that you know you need, you need the digital dollar, but by the way you may or may not know this. But we’ve created digital euros, digital yen, digital, other stuff, nobody wants them, nobody wants a digital euro. Yeah, like the demand for a digital dollar is 100x more right Digital pounds A nice idea. Nobody wants it like. What they want is they want the dollar, they don’t want the yen, the pound, the euro, and those are good currencies.

1:15:53 Yeah, they certainly don’t want the digital peso, the digital nayara, the digital whatever. So why is that 100x for the dollar? why is that because the dollar is the world reserve currency? It’s the most universally desirable medium of exchange. Doesn’t matter if you’re in Africa or China or Asia, if you, if you actually pull that a chart of like currency strengths and you look over the past year, right? The yen’s down 23 percent.

1:16:26 The Polish is that the Zilates down 18, the pound’s down 17, the South African Rams down 17 percent. The Korean won’s down 15 percent, the euro’s down 15 percent, the Aussie’s down eight percent CNY the Chinese currency is down eight percent. Okay, what is that the world telling you? It’s telling you nobody wants the third? You know, the tertiary currencies, most people don’t want the secondary currencies, everybody wants the primary currency.

1:16:57 It’s the most liquid one. So what’s happened in the past week, even literally in the past week? The news is the White House in the United States. They’re realizing that we need to look at CDB D.C.S, there needs to be a digital currency, we need to support that. So now most governments that dismissed this, now they’re saying, Okay, I get it, digital currency is the future.

1:17:24 Now there’s a big political debate Will it be a government, a central bank, that issues a currency? Will it be a FDIC insured bank like a legit, a regulated bank that issues the currency? Will it be a company like Circle, Will it be a public traded company issue the currency? Can a private company with a money transfer license issue the currency, or can anybody issued the currency? Okay?

1:17:53 And there’s a massive market debate there. The danger of anybody is you get a U.S.T where you issue 2018 billion dollars of currency backed by a billion. And it just collapses under its own weight, right? Or you Tether’s very successful, but it’s not. It’s not a U.S. FDIC insured bank, but it’s been successful.

1:18:15 But it’s kind of in this in this offshore area. So the question is, will it get licensed, and how will I get license circles a bit more licensed, right? But it’s not a bank, and then you’ve got real banks JP Morgan, Goldman Sachs. They’re afraid to issue it right, they’re afraid, because they think the regulators will like, smack them down. So everybody wants to medium of exchange.

1:18:42 You know, if you’re an American, maybe you don’t care, but you know, you’re oblivious to the fact that three billion people don’t have bank accounts. And if you ever try to send money between EOS and Africa, good luck with that. You can’t do that one, you know. Half one third of the transactions from an iPhone to another iPhone in the U.S get knocked down, you know, by. I mean, the other day I actually paid for lunch with my credit card and I hadn’t used it in three months.

1:19:11 And all sorts of fraud. Warnings went off and my credit card got shut down just by using the credit card to pay for a lunch. You know, infrequently, so what you have is a very imperfect system. People want to be able to move money at the speed of light, friction free. Everybody wants that governments are afraid of it.

1:19:34 We’re going to evolve in that way. But I think that we crossed the Rubicon here, they’re really. It’s pretty clear if you believe in the dollar, then for the dollar to remain the world reserve currency, it needs to become the world Reserve, digital currency. And even with everybody with every bank resisting it and every government resisting it, it is still emerged as a hundred and forty hundred and fifty billion dollar asset poll, right. Even trying to stop it right, people want it.

1:20:05 If governments in Western Europe and the U.S. lay out a clear framework, we’ll see. The digital dollar grow from 150 billion to a trillion to two trillion to four trillion to 10 trillion. It will. It will explode because it. If I went to 100 people in Africa and I said, You know, would you like to convert your local currency to dollars?

1:20:30 And would you like me to pay you in dollars? And would you like to be able to buy things in the rest of the world from other people? That are cheaper than what you can get in your own country, like you think that’s a hard sell, like everybody wants that. It’s not hard now. If I went to them and I said, Would you like to be able to save money and give it to your grandchildren?

1:20:49 And buy the same bitcoin that someone in New York or San Francisco or London can buy, 20 of them would get it 25. You know, I not the majority, but like 20, like what I can buy the same property that you buy in Atlanta, Georgia, you know, because owning an Airbnb in the middle of Africa is not the same as owning an Airbnb in Atlanta, Georgia, right? There are different risk profiles there. What if I told you can buy something which everybody in the world wants and you can take it with you? No matter where you have to go?

1:21:20 If you have to leave the country, okay, that’s a good idea. But that’s an out there idea. Like we’ve got a lot of education to teach people that Bitcoin is this great long-term store of value. But it’s there’s not that much education to convince people that the U.S. dollar allows them to sell stuff for more money. Yeah, you speak English, I travel all through Eastern Europe, you ever travel through Eastern Europe.

1:21:44 If you speak English and you’re a tour guide, you get paid triple. If you drive a taxi cab and you spoke English, you know you get paid triple right? English was a universal language of commerce. And you want and you want the dollar. So everybody they want, they want to be paid in dollars, they want to speak English.

1:22:03 Okay, what happens if you actually have a menu priced in local currency in the local language? Oh, everything costs one-third as much. You want to travel cheap, learn the local language. Pretend I had friends, I like. When they traveled in eastern Europe, they didn’t tell, or in Egypt they didn’t say they’re from the U.S.

1:22:22 They said they were from like Czech Republic or something right, or Romania, because the Egyptians cut the price by a factor of three. So bottom line the world wants. They all want English, they all want to be on Western Tech, they all want to be paid in dollars, they all. They all would like to be able to buy things somewhere else and you can’t buy things anywhere else and pay in your local currency. The problem is they don’t have a bank account, their transactions won’t clear so.

1:22:57 So what’s the what’s the killer app? The killer app is like a lightning wallet. That’ll do a transaction in BTC or USD in one second and no transaction cost between any of 10 billion devices. And do we have that yet? Not quite, but are, but, but do we have surrogates for it?

1:23:17 Yeah, you’ve also it’s a crypto surrogates, right? A lot of the crypto networks are, you know, our surrogates to that, and that’s the appeal of them. And you take risk you, you trust custodians here and there you trust an app company, you trust the Cryptocustodian. But. But the view is, I would rather trust a custodian or company than live in a hopeless situation.

1:23:41 You know, what am I going to do, like pick up a bushel of wheat and ship it? 6,000 miles via FedEx to trade it for something I want to buy in China and get that back. Good luck with that, all right, so I think it’s an exciting time. The good news is people are beginning to realize there’s a consensus that, yeah, this is. This is necessary and good, but you know, the friction is going to be government’s going to want to control it.

1:24:10 There’s a lot of competitive positioning, there’s a There’s a lot of novelty and confusion. And their security issues and a lot of governments. You know, a lot of governments don’t want you to use dollars, right? So if like, it’s against the law in a lot of African countries to sell something for dollars like it’s against the law to sell something for foreign currency. So on one hand, in the U.S, we’re afraid to let you know a company issue digital dollars outside the U.S.

1:24:46 They’re afraid to let their citizens accept them, and everybody’s got an agenda. In an environment where the currencies are collapsing and you have unprecedented policy intervention, you have this. This entire array of capital controls, wage controls, price controls, currency controls, technology controls. You know, sometimes they’re well-meaning. It’s like, I want to protect you from some scammer, but you know, but sometimes they’re just.

1:25:16 I just don’t want you to convert your local currency to somebody else’s currency because they’ll cause my currency to collapse right under my, my bank. And so that’s kind of be the chaos of the world. I think in the 20s, you know, the terrifying 20s, right? The next eight years is going to be, you know, a lot of sound and fury and jocking. And the people coming to accommodation with this and trying to figure out where they stand.

1:25:46 Yeah, I think it is going to be rocky. Can I finish on a regulation question? Because last time you were here, you said Brian, I like Bitcoin because it has low aspirations. I always quote you to people, Michael, and you know, we’ve seen that the S.E.C. has come out and said, Look, it’s a commodity. And then they started calling out other cryptocurrencies.

1:26:05 If you will and calling them securities, what’s your take on this? And I’ve heard you talk about this before. There’s only a couple proof of work mechanisms that you think could even potentially be qualified as commodities. But the other 20,000 coins on coin market cap are securities. And if that’s the case, then they’re going to have a problem existing in their current form.

1:26:29 Can you just speak on your thoughts on this? Yeah, well, look, the professor here is Gensler. He taught the course at M.I.T. at 2018. on YouTube. I watched the whole thing you and me both, yeah, he’s and you and me both, He’s very, he’s, he’s smarter than people realize. He understands the tech.

1:26:49 In my opinion, he understands it better than most of the crypto entrepreneurs understand it. Yes now, and what he said is the vast majority of the crypto tokens are securities. And he and the real fundamental. The fundamental first principles issue here is if you want to create a commodity, it needs to be a substance with energy content without an issuer. Okay, like a bushel of corn, a stack of lumber, a gold bar, right wheat, natural gas, gasoline, you know, pork bellies, these are commodities.

1:27:34 There’s no issuer, you can create some, but there is no central group of programmers that can get up in the morning and say, We just made pork bellies non-edible, we just doubled the density of gold, we just made natural gas stop working or we just doubled. You know, the heat content of it. You can’t change the nature of the thing and it needs to have energy if I take any commodity and I extract all the energy content from it, I take an orange and I remove 99.95 of the energy from the orange. What do you have? You have an imaginary orange, you have a security.

1:28:12 If I take away 99.95 of the oil in a barrel of oil, what do you have? You have an imaginary barrel of oil, right? What if you want to convert a commodity to a security, take the energy out of it? Now there’s one other aspect which is it controllable right? Like you need to not have an issuer?

1:28:35 So the challenge with most of the cryptos is there’s an issue or there’s a promoter. There’s a small team and they’re managing, they’ve got a road map and they’re doing hard forks and they keep upgrading the road map. And if you have a software engineering group that keeps changing the protocol, that allows them to make material changes to the protocol. Like if I change from proof of work to proof of stake, I obliterate, I murder all the miners, right? All the Ethereum miners got wiped out billions and billions of dollars of economic damage.

1:29:06 Did they get a say in it? No? Well, if they didn’t vote on it, why is it happening? Because the programmers control the protocol, not the miners, control the protocol? Yeah, if a bunch of people could get together and vote to make all of the wheat in Asia non-edible.

1:29:25 It wouldn’t be a commodity right if I could, actually, if I had a switch where I could change a program and make all your electricity not work any in the UK, it wouldn’t be a commodity, it would be a security. And I think Gensler’s point is from an ethical point of view. If one group of people get to turn off or turn on the functionality of the entire system for the rest of the world, then the investors are relying on the efforts of others. They’re relying upon a group that controls the protocol. And if you’re going to actually be able to turn off.

1:30:03 Or, you know, crank up the staking yield to 10 percent. Or crank it to zero, or lock somebody up for a decade, or give half the people. What if I just give myself all the tokens and I give you none of the tokens, right? I make yours not spendable and mine’s spendable. If you have that kind of power, you’re running a company, it’s a security.

1:30:24 If you’re going to sell it to the public, you have to make a full disclosure about who has the power, and you have to make continuing disclosures. That’s what a public company does Google does it, Apple does it microstrategy, does it, Microsoft does it, you’re running a company. And if I had intention to give myself all the shares of stock for the next hundred years, right? I kind of have to tell you, I just did it right, I mean, and if I did do it and didn’t tell you, right, there’s the issue. So the obligations of disclosure for security are orders of magnitude higher than for commodity.

1:31:02 So coming back to this issue of crypto, well, the idea of crypto, the idea of Bitcoin was, How do I create a protocol? That’s fair and equitable that I give as a gift to the world that no one can control? If you’re going to do it and you understand thermodynamics. And if you have any sense of genetics or biology or physics, you realize you need to be very humble in your aspirations. Like Satoshi’s monetary protocol, it was set in stone, it was January 3rd, 2009, they released it.

1:31:35 It circulated till Pizza Day for 500 days. Without any value, right? They fixed a couple of bugs, but they never changed the 21 million they never changed the block rewards and never change the monetary protocol materially. It’s the same protocol unchanged and never a hard fork. All the changes were soft forks.

1:31:58 The whole idea is, is I have a protocol, it’s a genetic code, I’m releasing it. How long do you expect that protocol to exist? Well, how about, like, a hundred thousand years, how about a million years, right? The idea of the protocol was to go forever, right? Between now and 2140, you release Block rewards, and after 2140, the network runs on transaction fees.

1:32:23 And the intention was, this is going to exist to create a shared, immutable ledger of 21 million coins subdividable to 2.1 Quadrillion Satoshi’s That was the idea. No other idea. It’ll be protected by the generation of Shaw 256 hashing, you know, encrypted energy, right? And that’s what makes it a digital commodity, the fact that it uses physics, hardware and energy. And if you had a software development team and they were, had the power to change it to something different and keep changing it.

1:33:04 We’re going to change the block rewards every year we’re gonna, we’re gonna turn off the mining we’re gonna convert to, you know, this protocol, that protocol, we’re going to lock up those coins, you know, well, the problem is, you now have an issuer, and if you have an issuer, you have a software engineering team. It’s a software company, and it’s not unethical to create a software company. It’s unethical to sell the equity of a software company to the general public without full, unfair disclosure. So the failing is you’ve created a company and you intend to keep changing the software continually. And it’s a small group of people they get together to do it, and they do it to the detriment of somebody else.

1:33:47 There’s a winner and there’s a loser. The losers in the Ethereum merge. Or the miners who lost everything and the winners or the stakers and the people that can control it. And then you’ve got the general public that have money locked up and the staking contract, but they can’t get it out. So when are you going to get out your steak to eat 10 of the eat, the steak that’s locked?

1:34:09 When are you going to get it out? Nobody knows who controls that the software engineers control it. Well, you know, is, what is that right? That’s like a small group of people, right? Are controlling the entire network.

1:34:25 That’s the definition of an investment contract when you have the general public and making an investment of money depending upon the efforts of others. And so I think the elephant in the room with the crypto world is most of the cryptos are attempting to do very intricate things. They want to move fast and break things, and they want they want sizzling functionality and performance. I want to do D5 contracts and the like, and yeah, those are all sexy and fun and fine. But if you’re doing them in a decentralized fashion, you have to release a singular protocol and give it to a hundred thousand different groups.

1:35:03 And then they all have to run the software and you can’t change it anymore. You can’t keep changing and hard. You can’t keep with non-backward, compatible, hard forks that people have to keep adopting. Because that’s what actually establishes it as an investment contract. And most of that functionality, you don’t really need to build that.

1:35:22 On the layer, one the base layer, you could build that either in a lightning layer like a layer. Two, you can implement all sorts of sophisticated functionality via lightning, which is a non-custodial, open, permissionless protocol. You could do that and give that to the world, and that would be. That would be much more defensible because you haven’t created a proprietary token that has an unfair distribution. Lightning is running with its gas as Bitcoin, so that would be a safer way to do it.

1:35:54 Or you can create a centralized application like a. You can create a Coinbase or Binance, or Block or Cash app, or Apple Pay or Google Pay. And you can put functionality in a layer three where a corporation is responsible for compliance. And they’re the custodian. And that, you know, you can do flash loans to a hundred thousand counterparties using a centralized corporation and organization.

1:36:22 You still get the benefit of moving the money fast you, you don’t need a token to do it, so I think a lot of the crypto world is attempting to achieve. Layer two layer three layer, four functionality using Layer One tokens. And the problem they’ve got is they’re inadvertently creating unregistered securities, and that puts them crosswise with the regulators. If you, you have an example of how to create a digital commodity, Satoshi said. It that is, make it simple, be modest, no pre-mine, no Ico, right, give it to the world, get out of the way.

1:37:06 If you wanted to create a comp competitive Bitcoin, then whoever launches it needs to not benefit from it. You need to participate PaRa pursue on the same base as everybody else, and what you have with Bitcoin is you have two additional facts, which are extraordinary facts. There’s no pre-mind, there’s no ICO, but. But third, it traded without any economic value until Pizza Day for 500 days. So that’s a very special fact.

1:37:33 They’re immaculate conception. Because, you know, there was there was no immediate profit motive because there was no value. It was literally a hobby. And then the other fact is that Satoshi never touched his coins. The million Satoshi coins were left as a gift to the world.

1:37:51 So the founder said, I’m going to launch this, I’m giving it to you, and I’m not going to benefit from it. So that was launched as an egalitarian, decentralized, open protocol. You know, there are other open protocols, Linux, right, you know, like there’s plenty of open protocols in the computer science world. Like Linus, Torvalds is not a 10 billionaire, right. I mean, he didn’t get 10 royalty on everything.

1:38:20 And if you charged a royalty or kept control of your open protocol, it probably wouldn’t be a successful protocol. So I think that the real key here is there’s a lot of people in the crypto world that they really lost. Focus on what makes something open and permissionless and egalitarian, and they’re pursuing this as though they were sulfur entrepreneurs. And if you’re and you kind of want to have your cake and eat it, too. I want to launch a software company and skip the I.P.O. and go and sell stuff to the public.

1:38:56 But I don’t want to have to comply with securities laws. And there’s good reasons for, you know, complying with them. Like even when you think you’ve told the world, you know everything they need to know, you probably haven’t right that I, I employ a hundred accountants and lawyers in a very simple business to make sure that we explain to people the consequences of what we’ve done, it’s a lot of effort to explain to people the risk factors. There are thousands and thousands of pages of risk factors and financial disclosures for someone to figure out whether they want to take a risk on a security. And the crypto world wants, they want something different.

1:39:39 But I think fundamentally, you’re only going to be able to achieve a very humble, a very conservative set of engineering goals with a truly decentralized asset. If you come up with, you know, you know, slashing and sharding and staking, and, you know, and smart contracts. And, you know, and you keep going with thing after thing, after thing, after thing, after thing, you end up with millions and millions of lines of code. And that means there’s no way that a hundred different organizations can all keep track of that and maintain that, and you can’t. You can’t update that much code in a decentralized, you know, universal consensus process.

1:40:29 So you end up with a centralized organization. And the centralized organization creates an investment contract and the investment contract create. It’s not just a legal quandary or a regulatory conjuring like, Oh, yeah, I’m stalling an unregistered security on an unregulated exchange. That’s a quandary, yeah, but forget about that. There’s an ethical quandary, which is you created, something you’re selling to the general public.

1:40:55 But you haven’t disclosed to them. The risk factors right and everything they need to know. And so it’s unfair and it’s not equitable. And ultimately it’s not neutral, because if you’ve got a company or a small group of people to control the protocol, they’re subject to coercion. Right?

1:41:19 It’s you don’t really want to trust your life. Savings for the next 100 years to a company that’s headquartered in Zimbabwe, do you or in China or in North Korea, right? I mean, the reason you trust pork bellies and a barrel of gasoline is the opinions of a politician. Halfway around the world won’t rob you of your food and your heat, so we’re trying to create a digital commodity here digital, energy, encrypted energy take away. The energy is not a commodity.

1:41:55 And if you centralize it by having a small group of people that are programming it and reprogramming it constantly, it’s also not a commodity, it’s company and companies you know, you’re, you know, I mean, if Twitter doesn’t like what you say, something happens if YouTube doesn’t like what you say, something happens. If Alibaba WeChat doesn’t like what you say, something happens like. Companies are not commodities. And so that’s what I think about, that I think the world is, is starting to understand this better. A lot of the people in the crypto community just need to be better educated.

1:42:33 I think I think the meltdown of Tara and Luna was a painful education. Brian like, what’s the difference between just putting 20 billion dollars into U.S.T. versus 20 billion dollars into circle versus 20 billion into Bitcoin? Well, well, now you know, right, right? I mean, if you put 20 billion into something that’s backed by nothing, it can go to zero overnight. So now you have people saying, Wow, they didn’t tell us this.

1:43:04 Maybe I should have been, I should have had more disclosures. That’s the whole point, right? So, so it’s the difficult time. Because, on one hand, the crypto ethos is libertarian and freedom oriented. And in some context, the regulators are on the wrong side of history.

1:43:29 But on the other hand, you know, when someone actually meants a billion dollars worth of a penny, stock in a boiler room and dumps it on the general public? And it goes to zero the next month. On that side, the regulator is on the on the good side, right? You know, like, like there, there are transgressions that we need to manage. And in a lawless society, you know, maybe you’ve got freedom.

1:43:56 But if your neighbor can come across the street and club you in ahead and take all your stuff, that’s not better either. So I think that the industry needs to grow up and hopefully we’ll find some Yin and Yang like you find some balance. I think you can, you can do good work open, permissionless, non-custodial, you can do it. People in the lightning ecosystem are doing it. The people in the open source community and the Cyberpunk community are doing it too.

1:44:27 You can cut corners, you can create great companies. It’s a struggle to comply with all the laws in a given country. And that’s why a lot of times, companies don’t offer their services outside of a few jurisdictions. It’s a struggle you can do it, and I think the most important thing is everybody’s got to be aware. Like, if you’re in the crypto industry, you have to understand securities law and you have to understand the ethical basis.

1:44:58 I mean, too often we dismiss this, the Crypto Bros. are like, Oh, that’s like antiquated law. Well, the part about Don’t lie, cheat and steal. That’s not antiquated. That’s, that’s, you know, human nature. And so you have to understand the ethical underpinnings of the ecosystem.

1:45:20 You have to be thinking very hard about that. And, you know, Satoshi understood it. There’s a reason that Satoshi disappeared and never moved the coins. There’s and there was no ICO, right? There’s a reason maybe Satoshi got lucky.

1:45:35 You could say, Well, I just got lucky. They couldn’t have done an ICO anyway, because there’s no demand for the thing, and there is no pre-mine or whatever. But I’d rather think that Satoshi was a very good monetary engineer. And the and the basic underpinnings of Bitcoin are this. We want to create something which is a neutral, fair, equitable digital commodity.

1:45:59 That can serve as an open monetary system and an open, permissionless monetary asset to eight billion people on the planet that don’t trust the company, don’t trust a bank, don’t trust their mayor, don’t trust their governor, don’t trust the state, don’t trust the regulatory agency and they. And if you’re going to have something and hold it for 200 years, who can you trust, can’t trust me, can’t trust anybody alive. Today, there is. There is nobody on Earth that knows what institution is trustworthy in 200 years, nobody. So if you’re trying to create something to last and give it as a gift to the world, it needs to be this neutral protocol that is, that transcends corporations and governments and investment contracts.

1:47:00 It needs to be the MO. The monetary protocol in the same way that Arabic math is a mathematical protocol in the same way that English is a language protocol? You know, we need to that kind of protocol and we need to be humble and not reach beyond our fingertips. Because the world is full of well-intentioned people that are trying to make, they’re trying to fix something, and that’s the problem in the world. Right?

1:47:32 Try, there’s a joke I just heard about Bitcoin. I’m here to fix it. It doesn’t need to be fixed, it’s actually, you know, if you think it needs to be fixed, then you’re probably the one with the defective model, right? Fix the medical system, fix the economic system, fix the currency, fix the government, fix the geopolitical world, order, fix the energy, fix the climate, fix the commerce. You know, think about all the things we’re trying to fix right now.

1:47:59 Everybody thinks they know everybody is willing to impose their will on everyone else without getting the consensus of the group. There are a lot of unpopular things and I think that the beauty of Bitcoin is it was created. You can decide to buy into it if you want. But there’s no one with the power to corrupt it general generally, corruption starts with an aspiration. You know, it’s a good intent, right?

1:48:34 Someone’s got an intention. And that intention is a justification to coercion, which I mentioned comes to corruption. So, you know, that’s what I think about Bitcoin, I think it is commodity. I think that more and more people are starting to realize it’s a commodity. What they don’t realize the critics, the energy critics is if you were to actually take the energy out of it, you would make it a security.

1:49:03 If I had the power to convert proof of work to proof of stake, I would have seized control of the network and I would have converted into an investment contract and you would be relying on my efforts, the efforts of other, and it would become a security, not a commodity. So the changing of it is the destruction of it, and when you understand that the changing of it is the destruction of it. You’ve reached the maturity, you know, and the degree of humility where you can embrace it and support it right. All right, that really cleared up a lot. Thank you, Michael, for that.

1:49:40 Just want to close and say your executive chair now, so the next 10 years, what are you going to do? What are your plans? If we fast forward to 2032 and everything’s gone, well, what are you doing? I think that there’s a world of people to be to be educated on Bitcoin on the on the strength of digital property, digital energy, digital money, digital matter. I think that I think that there’s eight billion people on the planet that would benefit from Bitcoin.

1:50:13 I think there’s eight billion people. They’ll benefit from just digital assets, right? And we talked about that digital wallet. So helping the media, politicians, investors, influencers and analysts technologist, helping them to understand the potential of digital energy, I think that’s valuable. I mean, everybody at Google and Apple and Facebook needs to understand digital energy.

1:50:40 If you want to clean up cyberspace, we need to understand digital energy, digital energy is, you know, is the ability to create the New York City of Cyberspace creating, you know, people talk about, you know, creating beautiful, magnificent starships to cross, to cross the vast expanse of space. Well, how about creating beautiful cyber ships to cross the Vance vast expanse of cyberspace? I think there’s a, so there’s a lot of education, there’s a lot of evangelism there are is a lot of regulation. You know, what does this mean to the world, what does it mean to any government? How do you harness the power of digital energy to make your country better to make your company better, to make your product better, to make your service better?

1:51:33 You know, if you think about electricity when it rolled out, I mean, electricity changed. The way you build ships and airplanes and hotels and cities and hospitals and schools and lights and everything products, everything changed everything. It’s at 30, 40 years where people get their hands around it if you think about every single thing that came of electricity. So I think we’ve got a digital renaissance. Digital energy is going to.

1:52:02 It’s going to permeate every product, every company, every country, every agency and helping people understand it. I think that’s a full-time job at microstrategy. We’re going to spend our time working to raise more capital, generate more capital and buy more Bitcoin. And we’ll continue to build our Bitcoin holdings, and then we’ll use our position as a public company to educate the regulators. You know, we talk to the auditors like Fastbee, we’ll talk to the S.E.C. we’ll talk to the C.F.T.C. we’ll talk to, you know, government agencies we’ll talk to, we’ll talk to the legal firms et cetera.

1:52:45 We talk to other publicly traded companies to private companies. I think it’s important we educate them. I think it’s important to show some leadership, you know? Carnegie built a steel bridge. People thought the bridge would collapse.

1:52:58 He walked out on the bridge, right? You built an Howard Hughes built airplanes, he flew his airplane right. If you’re going to build something right, show that you believe in it, right? People think that Bitcoin isn’t, you know, isn’t reliable. So we bought a billion dollars of Bitcoin, we bought another billion, we bought another billion, we bought another billion, right.

1:53:20 I mean, people talk about there’s this classic diversification trope. I got to be diversified. While you’re not sitting on 10 different chairs right now, you know, we don’t have 10 different metals in the skyscraper, we build planes with aluminum. You look through windows of glass, so you have beams of steel, you know, we have a wire of copper, right? An engineer doesn’t diversify, right?

1:53:45 Make a decision like your life depended upon it and find the right material, find the right engineering approach right. When you cross a bridge, if it collapses, you’re going to die. Okay, so should I try to send my family across 10 different bridges, built with 10 different sets of materials? At the same time, that doesn’t work. Civilization doesn’t work until people actually master an engineering principle.

1:54:10 So we, as a company, we’re gonna, we’re gonna evangelize and set a example for that engineering principle, which stands for a different Treasury strategy. Bitcoin is a Treasury reserve asset. Who needs that? Every government, every institution, every company on Earth, every family, every individual needs that. So I think we got a lot of work there.

1:54:35 To provide leadership. To set an example, tell people work through the issues we’ve opened sourced our methodology, so we’ll continue to publish legal methodology, accounting methodology, you know, custody, methodology and we’ll continue to buy Bitcoin, you know, whenever the opportunity presents itself, we’re also working on applications. You know, we’ve got. We’ve got lightning developers building applications to deploy Bitcoin as a lightning wall and a lightning wallet. So if I’m a corporation and I wanted to put all of my hundreds of websites behind.

1:55:19 A wall of lightning or a digital energy wall instead of a firewall instead of a paywall or a firewall. Think a lightning wall of energy. Then we want to give people a one-click way to do that. And if I wanted to give a lightning wallet to a hundred thousand employees in an afternoon, or to 10 million customers in a week? I need to do that with Enterprise Authentication and Enterprise applications.

1:55:47 So we’re working on enterprise wallets and enterprise walls that are powered by Bitcoin as the as the fuel and to use lightning and open protocols to manifest themselves. And that’s the kind of technology that would allow us to plug Bitcoin into marketing applications. Like, like, I’m going to give a hundred million customers Bitcoin rewards instantly when they come to my website, and it’s how you would. Power sales applications, like anybody in the world can buy anything from me using Bitcoin in a split second or and digital dollars. And then it’s also something you would use to power enterprise cyber security applications.

1:56:33 Like, you know, all one hundred thousand people using my website have to post a hundred dollar deposit. And if they unleash the denial, service attack or a phishing attack on me, they’d forfeit the deposit. And I’m going to create a wall of encrypted energy around my services. Right? That Bitcoin can be used for national security and cyber security.

1:56:56 It is literally a wall of digital energy, and the next wars will be sought fought in cyberspace. How do you protect yourself from cyber attacks, denial, service attacks, phishing attacks? How do you clean up cyberspace? So digital energy for cyber security? So those are the things that I’ll be working on over the next decade, and I don’t know how it all turns out, right? I mean, it’s A.

1:57:22 It’s a crazy world, and there’s a lot of unexpected, unintentional consequences, and lots of people have things they’re working on. But I feel like this is a pretty worthwhile area to focus on, all right, and I’m quite sure of. One thing, which is which is the last 30 years, were about the digital transformation of energy, digital music maps, right? All of these things messages, relationships, that’s digital information. It is non-conservative.

1:57:58 I can create Beethoven’s Fifth Symphony. I’d give it to eight billion people and I’ve still got it. The next 30 years is about the digital transformation of energy matter properly. My name, those are conservative. If I give you a billion dollars of money, I don’t have it anymore, right?

1:58:19 I mean, if you think about all of the products, all the services and the consequences and implications for technology companies. I think that the digital transformation of energy is profound in the next generation. And I think the leaders will be the companies that master digital energy, whether they’re countries or companies or products. And so I have no doubt that’s enough to keep me busy and make the world a better place, right? Ultimately, this is all grounded in an egalitarian idea.

1:58:50 How do we give the gift the property rights, freedom and sovereignty and empowerment to everybody on the planet? And the best idea 30 years ago was YouTube or Google Maps or Google, you know, Twitter or Facebook or email. I think the next the best idea for the next 30 years is digital energy. Everybody can own their stuff and nobody can take it away from them. It’s a beautiful concept and now it makes sense that you step down from CEO because this is super important work.

1:59:31 Michael, We very much appreciate everything you’ve done for the ecosystem. And you are still by far the only public company with any significant holdings of Bitcoin at this point, which, again, just shows. Not only were you the leader, but you still remain by far the leader of what you’re doing. And the fact that you’re educating everybody on this and educating regulators, yeah, it’s a great use of your time and something I think you’re going to be long. Long remembered for with statues in the whole nine.

2:00:01 MichaEL So very much appreciate you doing that. And if people want to follow you, is Twitter the best thing you’ve got 2.4 million followers, you’re getting pretty popular on Twitter? Yeah, Twitter’s the best place to find me. S-a-y-l-o-r. Just come to Saylor at Saylor.

2:00:17 On Twitter, I post all my thoughts daily and it’s got links to my personal website at Hope. .Com is where we post Bitcoinstuff. Michael.com is my personal website, but you can find it all on Twitter Saylor Saylor and you like to mix it up on Twitter. And you got the laser eyes as well, you got to keep the laser eyes, you know. It takes four years to get an undergraduate education, it takes eight years to get a PHD.

2:00:42 A lot of people, you know, they want to be successful in four months or four weeks or something like that. It doesn’t happen like a decade, you know, we’ll just focus on this for a decade. And a decade is a short period of time when you’re dealing with a digital transformation. And so I look forward to. Continuing with the laser or ice lasers is such an apropos metaphor for focusing energy in order to achieve your objective.

2:01:11 Okay, all right, fantastic, thank you, Michael. I am slowly starting to get the energy metaphor now. It’s actually been soaking into me during this conversation and I’m gonna spend the next couple weeks thinking about it. MORE Appreciate this, Let’s do our next one in person. Somehow maybe you can sail that boat over to London or I’ll come see you and, yeah, again, thank you, Michael.

2:01:30 We really appreciate it. I look forward to it. Thank you, Brian. Thank you, Michael. Take care. We’ll see you all next time on London Real.