Ask Jack: Is It Time to Sell My Bitcoin?

[0:00] Yo, what is going on you guys? How are
[0:04] you? Welcome back to another episode of
[0:06] the Jack Mer Show. I am your host Jack
[0:10] and you are listening to Ask Jack, our
[0:13] weekly Q&A segment where you guys get to
[0:17] call in from anywhere in the world.
[0:19] Could be totally anonymous and ask
[0:20] whatever you'd like. You can call in at
[0:23] ask.jackmallers.com.
[0:26] Disclaimer, I sound raspy.
[0:30] Why? I have the flu. Bitcoin fixes
[0:34] almost everything
[0:37] except flu season. That is okay. Being
[0:40] sick is not the end of the world. I just
[0:42] hope I don't sound too gross. I
[0:46] This is Sunday night. I gave it to the
[0:49] last minute before the week was over to
[0:51] record this. Ideally, these go out on
[0:53] Fridays. It's a fun way to end the week
[0:56] and head into the weekend, but I had the
[0:59] flu and I gave it till Sunday night to
[1:03] get this out. But you guys already know
[1:05] I wasn't going to go into next week, no
[1:07] matter what, without giving you this
[1:10] episode. If I say I'm going to do it, I
[1:13] do it for the people. This is for the
[1:16] streets. This is a revolution until Fiat
[1:19] rests in peace. Whoa, that was a bar.
[1:23] But I'm not a rapper. All right, so I do
[1:26] apologize for how I sound and how I
[1:29] look, I guess. Um, but yeah, this is the
[1:33] best I got. So hopefully it's good
[1:35] enough. And um, well, consistency is the
[1:39] name of the game. I'm here for the
[1:41] people. I'm here for you guys. We're in
[1:43] it together. And so as long as I got a
[1:45] pulse, you guys are going to get
[1:47] episodes out of me. Um, and I'm bored
[1:49] anyway. It's between the afternoon games
[1:52] and and Sunday night football, so I
[1:55] figured why not? I love this. Uh even
[1:59] with a fever. All right, with that, uh
[2:02] let's get started. First question is
[2:06] from Mitch O. Uh as always, I get so
[2:10] many of these. It's such a delight to
[2:11] hear your guys' voice. So, I really
[2:13] appreciate it and I encourage all you
[2:15] guys to call in. You got nothing to
[2:17] lose. Uh, this is just so much fun. All
[2:20] right, Mitch, let's hear what you got.
[2:26] >> Yo, Jack, it's Mitch here out of
[2:28] Minnesota. Uh, screw the Blackhawks. Go
[2:31] wild. Watching your show right now,
[2:34] Sunday edition. Ask Jack. Um, sitting
[2:37] here with a pretty small Bitcoin
[2:38] position. Not big, obviously. It's grown
[2:41] a lot for me in my life. And I call this
[2:42] show All Signal, no noise. Long-term
[2:45] listener here. and I just need some
[2:47] Bitcoin motivation. You know, you got a
[2:49] little position in the midst of basement
[2:51] rens projects, different things going
[2:54] on. You have a lot of temptation that
[2:56] fiat mind starts creeping in saying,
[2:59] "Pull it out. Pull it out." And I just
[3:03] need to hear my man Jack Mau say, "No, I
[3:06] need that Bitcoin motivation, man. A lot
[3:08] of other investments I can invest in.
[3:09] Thanks a lot. Love what you do. Bye.
[3:13] >> Appreciate you, man. I'm not a I'm not a
[3:14] hockey guy, so whatever. Blackhawks
[3:17] wild. I don't know. Might as well be
[3:19] talking shitcoins. I don't know what
[3:20] what I know the Minnesota Vikings beat
[3:23] the Chicago Bears alert this year. Was
[3:25] probably a fluke. You guys barely beat
[3:26] the Miami Dolphins at home. Uh Kylie
[3:30] Murray looks terrible. Um so we'll see
[3:34] how you guys fare, but you're 4-0.
[3:36] Congratulations. Uh anyway, I digress.
[3:41] Uh, enough of the Minnesota vers
[3:42] Chicago. Let's get to motivating your
[3:44] Bitcoin position. Listen,
[3:47] uh, and you know, you're not going to
[3:49] get a the energy you're expecting out of
[3:51] me, Mitch. This is my flu game. Speaking
[3:53] of Chicago and sports, Michael Jordan.
[3:55] That was a Michael Jordan shout out. So,
[3:57] you're going to get a flu game out of
[3:58] me. But here's the deal. I think
[4:00] oftentimes people get stuck trying to
[4:03] justify Bitcoin and holding Bitcoin and
[4:07] the opportunity cost of Bitcoin.
[4:10] What I would, you know, to ease people's
[4:13] anxiety and stress and all the anxious
[4:16] energy that they somehow find themselves
[4:18] in, I firstly like to tell people, what
[4:22] else would you own? Like you start from
[4:25] a premise of you can't own fiat. Nobody
[4:28] is arguing that you should be owning
[4:30] fiat. Now, back in my day when I was
[4:32] getting into this asset,
[4:34] everyone would tell me that I should
[4:36] just own bonds and that there was real
[4:39] return in owning these things and that
[4:41] inflation was 2% and all this guckery
[4:44] that now everyone on the planet doesn't
[4:47] actually agree with. Even the, you know,
[4:49] sometimes sitting politicians don't
[4:51] agree with the way we measure inflation.
[4:53] So this is now a mainstream consensus
[4:56] opinion
[4:58] that bonds the bonds have been in the
[5:01] worst bare market arguably ever. Uh
[5:04] they've performed worse than pretty much
[5:07] anything you could have owned. And the
[5:09] currency everyone understands that
[5:12] inflation is a mathematical guarantee
[5:15] and that saving in nation state currency
[5:18] is a fool's game. So let's move those to
[5:21] the side. And then you got to ask
[5:23] yourself, well, what do you want to own?
[5:27] Instead of saying like, well, what if
[5:29] Bitcoin has quantum risk or what if
[5:31] Bitcoin h there's cryptography hack or
[5:34] what if this, what if that? Yeah, sure.
[5:36] Okay. I mean, nothing in life is
[5:38] certain. You have to understand that the
[5:39] human condition that we all share is you
[5:41] can't change the past and you don't know
[5:43] the future. And all that we're
[5:44] guaranteed is the now. That's for
[5:47] everything in life. So, could something
[5:49] happen in the future? Yes.
[5:52] in the if you could rewind time, would
[5:53] you do something different? Yes. But
[5:55] that's not unique to Bitcoin, brother.
[5:57] That's called being human. All you have
[5:59] is right now, my man. And so then you
[6:02] ask yourself, okay, I can't own fiat and
[6:05] I can't lend to the government. What
[6:07] asset do I want to own? And this is just
[6:10] it's a very simple equation. It's what
[6:12] asset is has credible scarcity. So,
[6:15] credible scarcity. Like you, you know,
[6:17] the people the the trolls on the
[6:18] internet say, "Well, my my daughter's
[6:21] kindergarten drawings are scarce. She
[6:23] only drew twice and they're both on my
[6:25] fridge." Yeah, but that's not credible
[6:26] scarcity. I can't rely on that scarcity
[6:29] credibly. Bitcoin has credible,
[6:32] mathematically secure scarcity. Okay.
[6:35] Bitcoin is easy and cheap for me to
[6:38] store. I have real estate,
[6:40] unfortunately. Honestly, it's not very
[6:43] easy for me to store. It costs a lot of
[6:45] money for me to maintain this house and
[6:48] then I got to pay property taxes and
[6:50] they just steal from me. Every year my
[6:52] property taxes go up. Yuck. Bitcoin's
[6:56] divisible. It's very easy for me to
[6:58] transport if I need to move, if I need
[7:00] to send some of it for all of these
[7:02] things. And then you kind of realize,
[7:04] man, I can't own fiat. I can't lend to
[7:07] the government. And this thing has no
[7:11] counterparty risk. It's free for me to
[7:14] receive. Free for me to store. I don't
[7:16] have property taxes. I don't have to pay
[7:19] people to secure it in a vault. I don't
[7:22] need like a armed security team to stand
[7:26] outside of its physical presence with
[7:29] weapons. I don't have to trust
[7:30] management to make the right decisions
[7:32] or not be effective altruist dooming
[7:35] weirdos. Has none of that. It just sits
[7:38] there as bytes of data free of charge
[7:41] and I can even store it as words in my
[7:43] brain. And then here's the other thing,
[7:45] Mitch. People are then gonna say, "Oh,
[7:48] yeah, yeah, yeah. Well, AI stocks have
[7:50] recently outperformed Bitcoin." But
[7:53] here's my problem with that. I've seen
[7:56] this movie a thousand times. Before AI
[7:59] stocks, it was gold. Last year was like
[8:03] all the gold bugs, like gold crushing
[8:05] Bitcoin. Yeah, but now Bitcoin's
[8:07] whipping gold's butt. Okay, so there was
[8:10] a window where gold crushed Bitcoin.
[8:13] There was a window where AI stocks
[8:15] crushed Bitcoin. There was a window
[8:17] where NFTTS crushed Bitcoin. There was a
[8:19] window where ICOs crushed Bitcoin. There
[8:22] was a window when there was a window
[8:23] when Tesla stock crushed Bitcoin. But
[8:26] here's the problem. Are you sitting here
[8:29] telling me that you're going to actively
[8:33] and accurately manage a portfolio to
[8:36] perfection? Because find me the person,
[8:39] everyone knows the person that got gold
[8:42] right in this little window. Okay, good
[8:45] for you. Of the 14 years that I've been
[8:47] in Bitcoin, I have 13 of them. You have
[8:50] one. Nice. Okay, to the AI bros, same
[8:54] thing. you guys your your companies like
[8:58] okay fine over the last few years you
[9:01] guys had great returns but now an and by
[9:04] the way these are all privately marked
[9:06] up returns but now anthropic is filing
[9:09] their S1 and they're projected to lose
[9:12] $40 billion a year and in the risk
[9:15] profile of the business is they think
[9:18] that they shouldn't run the company
[9:20] because they're under the impression
[9:21] that they're going to harm the world
[9:22] more than they're going to help it. That
[9:25] stock sounds abysmal. Nobody wants to
[9:28] buy that stock. None of these companies
[9:31] can find a way to go public with
[9:33] excitement. There's no way. Anyways,
[9:36] none of these companies have turned a
[9:38] profit. So, same thing goes for the
[9:40] NFTts. Same thing goes for Same thing
[9:42] goes for Listen, if you want to start a
[9:45] hedge fund and you want to every single
[9:47] day study Japanese central bank monetary
[9:50] policy, the French bond market versus
[9:54] the German bond market, what Bessant is
[9:56] saying, you want to analytically study
[9:59] which AI stocks to own, when the S&P 500
[10:02] is undervalued versus overvalued. If
[10:04] that's what you want to do, then yeah, I
[10:06] don't know how much Bitcoin you should
[10:08] have in your portfolio. But that's not
[10:10] what I do and that's not what I think
[10:13] the world should be doing. I think that
[10:16] that is a fiat game. I like here here's
[10:20] my own personal lifestyle.
[10:23] I work hard to produce more value for
[10:26] the world than I consume. I call that a
[10:28] net profit. Okay? I earn more than I
[10:31] spend. I produce more value for others
[10:33] than I consume from others. That makes
[10:36] me a productive member of society. I
[10:39] then just take that productivity that
[10:41] I'm generating and I just store it in
[10:43] the Bitcoin thing for the obvious
[10:45] reasons I just mentioned. Well, I
[10:48] can't do dollars. I can't lend it to my
[10:50] government. And when I look at
[10:52] everything else, yeah, these things
[10:53] might have like a nice little run. You
[10:56] know what I'm saying? Like, okay, like
[10:59] gold had a good nine months there, or
[11:01] okay, the AI thing has has a nice little
[11:04] thing, but none of these companies are
[11:05] profitable. Credit risks are going
[11:07] through the roof. And now there's all
[11:09] sorts of issues that are like really if
[11:12] if all these businesses like rerated
[11:14] their credit at the new 10-year rate,
[11:16] then all of the earnings from last year
[11:18] would be negative. Okay, that starting
[11:20] to look a little spooky. NFTTS were once
[11:22] really cool. Those things are now a dud.
[11:25] Didn't Justin Bieber buy one for $2
[11:27] million and now it's worth zero? Okay,
[11:29] yikes. Glad I didn't listen to those
[11:31] people. ICOs, same story. Memecoins, the
[11:34] same story. Bitcoin has rapidly
[11:37] outperformed everything. Tesla's stock,
[11:40] literally like everything. But, you
[11:42] know, there's a group of people that had
[11:44] a good 6 to 12 months at one point in
[11:47] Bitcoin's life, but it's not it's never
[11:50] sustainable. It's not. So, I don't want
[11:53] to spend my time being a hedge fund
[11:55] manager. I'm getting married. I like
[11:58] hanging out with my friends. I like
[11:59] building my business. I like lifting
[12:01] weights. I like eating steak. I don't
[12:04] want to run around and be an expert
[12:06] monetary policy manager and hope that I
[12:08] pick the right stuff. So Mitch, that's
[12:11] my answer to you, man. Is like, listen,
[12:13] what life do you want?
[12:16] You know, you can you can go all in on
[12:18] AI stocks and dump your Bitcoin. I know
[12:21] some people that went all in on AI with
[12:23] Bitcoin at 60K. Yikes.
[12:26] How do you think they feel now?
[12:27] Bitcoin's at 86 and a half and
[12:30] Anthropics S1 looks like dog
[12:33] Whoops. Oof. Yikes.
[12:38] Sames. I Hey, listen, brother. I watched
[12:41] people leave the Bitcoin industry at 20K
[12:44] after the FTX hack and get into NFTts.
[12:48] Ooh,
[12:51] you hate to see it. You hate to see it.
[12:54] And this is why you stay humble and
[12:56] stack sats. This is it.
[12:59] So, flu game. Don't got the energy I
[13:02] usually do for you, but the wisdom is
[13:05] always here. Take it from a take it from
[13:07] an old man in the game. Okay? You got to
[13:10] stay humble. Stack sats. You know, it
[13:12] says a lot about a man to watch somebody
[13:16] get gleeful in their face cuz I'm
[13:18] telling you, there's been dozens of
[13:20] people in my face. Oh, you idiot. You
[13:23] bought Bitcoin when you could have
[13:25] bought this. And I just give it time.
[13:28] Time cures all. Okay. So my message,
[13:32] time cures all. Stay humble. Don't
[13:36] follow the hot flashy thing. And go back
[13:39] to first principles. Understand you own
[13:41] Bitcoin because you can't really own
[13:43] anything else. Right? If if if you get
[13:47] anxious about Bitcoin, we'll say what
[13:49] would you rather own dollars? Would you
[13:50] rather own bonds? Would you rather take
[13:52] counterparty risk in these companies
[13:54] that are indebted and losing $40 billion
[13:57] a year? Do you want meme coins? What do
[13:59] you want? What do you want? What type of
[14:01] life do you want to live? What type of
[14:03] counterparty risk and security and time
[14:05] preference do you want to have? I'll cut
[14:08] myself off there. Great question and
[14:10] thanks for the support. The yo was the
[14:12] yo was legit. I respect the yo. All
[14:15] right, next question. We got Matt. Uh
[14:22] huh. There's two mats back to back.
[14:25] Which mat? Okay, I think it's this one.
[14:29] Let's hear it. Matt.
[14:35] Hey, Jack. My name is Matt. Um tried to
[14:39] record this once. I'm not sure if I
[14:40] successfully sent it to you or not, so
[14:42] I'm going to do another one. Uh longtime
[14:45] Strike user. I love the app. Thank you
[14:47] for that. Uh, I've loved Bitcoin for a
[14:50] long time. Uh, I love it and I've always
[14:52] understood it from a uh, monetary theory
[14:55] perspective and as somebody who
[14:57] understands Austrian economics. Um, I
[15:00] I've always been a little more baffled
[15:02] by the technological side of it. U, I'm
[15:04] not a computer programmer, software,
[15:07] tech kind of guy. Uh so as a result I
[15:10] always looked to people such as yourself
[15:13] uh you know Michael Sailor Samson
[15:15] Matthew Crder uh these these types of
[15:18] guys um they clearly understood that
[15:20] stuff better than I did. I look to them
[15:22] for guidance. Um and um my question is
[15:27] to you is is how someone like me and I
[15:29] know I'm not the only one.
[15:32] how somebody like myself should navigate
[15:35] uh like this recent schism in the
[15:37] Bitcoin community with the soft fork,
[15:40] BIP 110, OP return. Uh all of a sudden I
[15:44] find these guys that I look to for
[15:46] guidance split on this issue and I I
[15:49] don't really know how to navigate that.
[15:51] I I I don't know how to feel about these
[15:53] things. Um
[15:55] I'm just curious to hear your
[15:57] perspective. Uh, I'm I'm sure there are
[16:00] a lot of people like me uh that maybe do
[16:02] understand Bitcoin as money, but don't
[16:04] understand it as a technology. I hear
[16:06] all this doom and gloom stuff being said
[16:07] that real Bitcoin is dead. We're going
[16:09] to fork it. Um, this is not what Satoshi
[16:13] intended and and I find that I find that
[16:15] debate a little uh a little frightening,
[16:17] a little intimidating. So, uh, be
[16:19] curious to hear your input on that. I
[16:21] appreciate it. Love the podcast. Thanks
[16:23] a lot.
[16:25] >> Yeah. Yeah, you got it, man. Great
[16:27] question. Um, so I first want to point
[16:30] out, you know, amidst the pessimism or
[16:35] like not from you, but you know, from
[16:38] the people you've referenced or just the
[16:40] general concept of all these people
[16:41] arguing, just some optimism. I want to
[16:44] give some optimism. Um, because embedded
[16:46] in your question, believe it or not, is
[16:48] Bitcoin working?
[16:50] Meaning, you know, Bitcoin is designed
[16:53] to have no definitive leader or
[16:55] hierarchy or authority. And so for you
[16:59] to naturally just be like, "Hey, who who
[17:01] do I listen to? Who ultimately when
[17:04] everyone's disagreeing is the authority
[17:06] figure?" I can't figure that out. And
[17:09] I'm sitting here with a grin on my face
[17:11] like, "Haha, we did it. We built it
[17:15] correctly. There is no CEO. There is no
[17:19] board. There is no president, there is
[17:21] no authoritative figure that when people
[17:24] are confused, thou must listen to
[17:28] he or she or they, which is cool. I
[17:31] think that's great. Um, and then
[17:34] obviously the next logical uh step that
[17:37] you arrive at is well, you know, you
[17:40] have to develop your own opinions. Um,
[17:42] and you know, I've talked about this
[17:44] before on the show, but you know, it's
[17:46] this with great power comes great
[17:48] responsibility. I've talked about how I
[17:52] don't believe that harmony can truly be
[17:54] restored in society without a renewal of
[17:58] self- responsibility
[18:00] and that, you know, I think that there's
[18:01] and and I'm not specifically talking
[18:03] about you, Matt. I think your question
[18:04] is pretty straightforward of like, hey,
[18:06] you know, when Bitcoin price is up,
[18:08] everyone's agreeing. When it's down,
[18:09] people start disagreeing. and how do how
[18:11] do I kind of compartmentalize all of
[18:12] that? Um, which I'll get to in a second.
[18:15] But I just take this opportunity to make
[18:17] this broader point to you guys in
[18:20] society. I think that people because
[18:23] government has gotten so big, because
[18:25] money printing has gotten so rampant, I
[18:27] think that people have delegated what
[18:31] needs to be a pride and
[18:34] self-responsibility
[18:35] and like your diet. It's like
[18:40] it's no one else's fault if you are
[18:43] having metabolic disease, if you are
[18:46] unhealthy, like that. You know, I I
[18:49] remember being gaslit as a kid of like,
[18:51] oh, that person is obese and sick
[18:55] because of their genetics. Like, what?
[18:58] No, that's not how the human body works.
[19:02] Like, so, um, the, you know, people say
[19:06] like, "Oh, I can't afford a home unless
[19:08] the government, like, please, I've made
[19:10] this joke before on the show. Please,
[19:12] Daddy, please, President, Daddy, please
[19:15] give me a house. Make it cheaper for me.
[19:17] I can't own and afford anything without
[19:20] you." And I'm half making a joke. But
[19:23] you know people I think you know are too
[19:26] quick to rely on government, rely on
[19:30] corporation, rely on institution. They
[19:33] can't have the life they live without
[19:35] the support of others. They don't get to
[19:39] dictate their health and their body
[19:41] composition and their strength. That's
[19:44] just genetics. That's and so you know
[19:48] you're just life is the way it is.
[19:50] You're born with what you born with. You
[19:52] know, it's this age-old you'll own
[19:53] nothing and you'll be happy. And so this
[19:55] kind of is embedded in my worldview that
[19:58] only harmony can only be restored when
[20:00] self- responsibility
[20:02] is, you know, respected and admired and
[20:05] taken on with pride. What you put in
[20:08] your body, how you treat your body, the
[20:10] relationships you have, the family that
[20:12] you carry, the money that you save in,
[20:14] the time preference that you hold, like
[20:16] all of that stuff is yours to own. You
[20:19] can build wealth. You can be healthy.
[20:21] You can build family. You can fall in
[20:25] love. You can own a home. That's a
[20:27] decision that you make. I I grant it to
[20:30] you that there have been easier times to
[20:32] do some of these things in the past. But
[20:34] what's the point in crying about that?
[20:36] My dad always told me, "When you're done
[20:38] crying, let me know so that we can get
[20:40] to work because we have work to do." So,
[20:43] I digress. I'm glad Bitcoin is working.
[20:46] I'm glad that there's no authoritative
[20:48] figure for people to blame, for people
[20:50] to delegate to, for people to subscribe
[20:53] to religiously. This all means that it's
[20:56] working, and that Bitcoin is a driving
[20:58] force towards a societal fix of renewing
[21:02] self-responsibility.
[21:04] Now, with that being said, I just blew
[21:07] your question way out of scope. Let's
[21:10] bring it back in. Listen, um, yeah, it's
[21:14] difficult, man. Uh listen, I think uh
[21:17] without like talking specifically about
[21:19] any other people and any other things
[21:21] that they're working on, I will make a
[21:23] few technical points. Like if you remove
[21:26] kind of the social layer of Bitcoin
[21:29] in its most pure form, Bitcoin is a set
[21:32] of consensus rules. These are the rules
[21:35] that govern the network. And a lot of
[21:37] the things that make Bitcoin valuable is
[21:40] its network effects, its proof of work
[21:44] that's been built up over time. Um, the
[21:47] value of the asset. So, Bitcoin is a 1
[21:49] to2 trillion dollar asset. And that
[21:51] asset is predicated on a history, a
[21:55] chain of transactions. There's a lot of
[21:56] human time, energy, and effort that has
[22:00] been invested and stored and saved in
[22:02] this network. And so the history of the
[22:04] network, the legacy of the network, the
[22:06] economies of scale, the network effects,
[22:07] the credibility of the network, uh the
[22:10] hash rate that's contributing to the
[22:12] network, all of these things help derive
[22:15] Bitcoin's value as a distributed
[22:18] monetary network. And that network is
[22:22] defined by its consensus rules. And so
[22:25] one of the things that I would just
[22:26] suggest because there's a lot of people
[22:27] that want to fork Bitcoin and change
[22:29] Bitcoin, which within itself isn't
[22:32] necessarily bad, but that is like a
[22:34] lastditch effort. It's totally fine to
[22:37] disagree. It's totally fine to have
[22:39] different opinions. Like I said, no one
[22:41] is the definitive ruler and controller
[22:43] of Bitcoin. Uh and so you're allowed and
[22:46] should have any opinion you want. Um but
[22:50] if anyone is ever changing the rules of
[22:53] Bitcoin, they are therefore creating a
[22:56] brand new network, a brand new asset.
[22:59] And that is like the last ditch effort.
[23:02] Um that should almost never be invoked
[23:07] unless you absolutely have to. That
[23:09] means you failed at achieving consensus
[23:13] with the existing network which implies
[23:15] that the existing network and the
[23:17] existing economies of scale and the
[23:19] existing hash rate and the existing
[23:21] monetary value and monetary premium that
[23:23] BTC ticker BTC has. You've not been able
[23:27] to convince them of your opinions and
[23:29] your vision and your ideas and you've
[23:31] not been able to garner consensus from
[23:33] them which means you're creating a new
[23:36] asset with new rules and a new network.
[23:38] And whenever someone does that, which is
[23:40] kind of what you're asking about and
[23:41] citing,
[23:43] I'm not telling you what to think, but
[23:45] it should always, no matter the context
[23:47] and no matter who it is, carry a bit of
[23:50] skepticism. Um, because it's just, you
[23:54] know, if you are saving in like you you
[23:57] told you you said yourself, I'm a
[23:59] Bitcoiner from a monetary sense. I buy
[24:01] it, I save in it. I understand that it's
[24:03] a technical piece. I don't understand.
[24:05] Well, I'm just saying like they're
[24:07] creating a brand new monetary asset and
[24:09] there's skepticism there. One thing I
[24:12] will say, you know, the most infamous
[24:14] infighting in the Bitcoin community uh
[24:17] that I've been through and I think
[24:19] definitively in its history is the block
[24:21] size wars. And that was Allah 2016 2017
[24:24] time. I mean, debatably probably started
[24:28] mildly, but nonetheless maybe 2014 and
[24:32] kind of carried through the years. But
[24:34] the point that I'll make is that, you
[24:36] know, if you think the best of people
[24:38] and you're an optimist and you think
[24:42] positively, you you can't really
[24:44] disagree with what everyone's was
[24:47] interested in at the time. Everyone
[24:49] wanted Bitcoin to be faster. Everyone
[24:51] wanted Bitcoin to be used for things
[24:53] like payments, things like remittances.
[24:56] Like those were all good intentions.
[24:58] People wanted the people that I
[25:00] disagreed with and the people that ended
[25:02] up forking off, they wanted more
[25:04] adoption. They wanted Bitcoin to be more
[25:06] of a competitor to Visa. They wanted
[25:08] Bitcoin to be more of a competitor to
[25:10] Western Union. They wanted more
[25:11] commercial use. They wanted more
[25:13] individual use. All of those are really
[25:15] good things. And so maybe from a vision
[25:18] standpoint and from a conceptual
[25:20] standpoint, we were all in agreeing
[25:23] agreeance, excuse me. The problem was
[25:26] when it got technical
[25:29] it's like okay but in order to achieve
[25:32] your vision you guys weren't this is me
[25:35] speaking to them back in 201617
[25:39] you guys weren't willing to build layer
[25:40] twos like the lightning network you
[25:42] weren't willing to stick to consensus
[25:45] rules and not hard fork not explode the
[25:49] block size not compromise on the ability
[25:51] for people to run nodes like these are
[25:53] very core four technical things as I
[25:55] mentioned which effectively govern and
[25:58] define bitcoin like bitcoin is defined
[26:00] by these consensus rules this is what
[26:02] governs the network this is what governs
[26:04] whether a transaction is valid or not
[26:06] whether a bitcoin is a real bitcoin or a
[26:08] fake bitcoin this is what governs it and
[26:12] it's we agreed maybe conceptually
[26:14] because I also want bitcoin to be a
[26:16] competitive visa I also want bitcoin to
[26:18] take on western union I also want
[26:19] bitcoin to get more commercial adoption
[26:21] at the individual level in day-to-day
[26:24] commerce, but technically the proposals
[26:28] that they were making and the time
[26:29] preference they had was very dangerous
[26:31] and not sound. And I would say that
[26:35] framework in every single contentious
[26:39] fork in Bitcoin is the same. Like in
[26:42] principle, you know, you talk about
[26:44] spam, like nobody wants quote unquote
[26:48] spam. Like I guess in theory like from a
[26:51] high level you know not that you can get
[26:54] into the nuances of well what is spam
[26:56] and like Bitcoin doesn't know what spam
[26:58] is so like but anyway I digress. The
[27:02] point is like from the highest level
[27:03] like people's intentions I think are
[27:05] good and I don't disagree like in
[27:08] principle if you zoom all the way out
[27:10] but then once you get to the technical
[27:12] piece you know forking off you know
[27:15] creating your own consensus rules and
[27:19] your own network and your own coin and
[27:21] then you know changing the proofof work
[27:25] algorith like all of that is you know it
[27:28] could be something that they're
[27:30] interested in and uh they're p they have
[27:34] every right to pursue that and I really
[27:37] don't care but it's certainly you know
[27:39] not BTC it doesn't have you know it
[27:43] doesn't it doesn't have all the network
[27:45] effects and economies of scale that
[27:46] Bitcoin does. So hopefully that was a
[27:48] useful answer. I mean listen I'm not
[27:50] going to get up here and tell you who or
[27:51] who not to listen to. Um you know when
[27:54] it you know some people like some people
[27:57] like treasury companies more than others
[27:59] right? Some people like leverage more
[28:01] than others, right? And so there's all
[28:03] sorts of nuances in the influencer.
[28:06] That's one of the reasons I do this show
[28:08] is every single Bitcoin podcast sells
[28:12] their sponsor, has has similar guests
[28:14] on. And I'm I'm like, man, I don't want
[28:16] any sponsors. Try and do a bit different
[28:18] content so that I can be maybe like a
[28:23] bit more signal and uh try and give you
[28:26] guys I got a lot of years and a lot of
[28:29] time in the space, a lot of expertise
[28:31] and experience running businesses and in
[28:34] some pretty crazy conversations. And so
[28:38] anyways, I I I'm not I'm not going to
[28:40] sit here and tell you who to listen to.
[28:42] And I don't know specifically what type
[28:43] of like influencer disagreements you're
[28:46] referencing, but if you're talking
[28:48] specifically about people forking
[28:51] Bitcoin and stuff, listen, all debate is
[28:54] good debate in this asset class, in this
[28:56] industry. We're on Bitcoin's time.
[28:58] Bitcoin's not on our time. So, you know,
[29:01] time preference has to remain low. You
[29:03] must be patient. Debating is frustrating
[29:06] but healthy. Disagreeance is hard but
[29:08] good. Um, but as soon as people start
[29:11] changing the consensus rules, then you
[29:14] have to take a step back and be like,
[29:15] whoa, that is that is like arguing and
[29:19] debating and then pulling out a weapon.
[29:21] You're like, hold on a second. Like,
[29:23] you're going to get somebody hurt. Um,
[29:26] doesn't mean that they they can go off
[29:28] and work on their own coin all they
[29:30] want. I mean, I'm a free markets guy.
[29:32] I'm not going to tell anybody what to
[29:34] do, but I mean that's where you just got
[29:37] to be careful. Hopefully a helpful
[29:40] answer. And I think the history and the
[29:43] context of the block size wars like
[29:45] people had, you know, if you want to
[29:47] think glass half full, people had good
[29:49] intentions, but you know, good
[29:51] intentions doesn't mean that they were
[29:54] technically sound. You know, there's the
[29:56] right way. I've made this analogy
[29:59] before. Bitcoin engineering is like
[30:02] critical engineering. It is life or
[30:04] death. Like if we screw up, we ruin
[30:08] humanity's chance at incredibly neutral
[30:11] hard money. It's going to be insanely
[30:13] difficult to reproduce Bitcoin, which is
[30:15] like a big bang. It was very fairly
[30:18] distributed. There was no premine. No
[30:20] one had asymmetrical levels of
[30:21] information. It was incredibly fair. It
[30:24] is neutral. It is credible. And we can't
[30:27] ruin it. And it's equivalent to like
[30:30] think about flying an airplane. I've
[30:32] told this story before. Dylan's like,
[30:34] "Man, it's been decades. How has no one
[30:36] found a quicker way to get me to
[30:38] Europe?" I was like, "I'm sure there is
[30:41] maybe a quicker way, but it might
[30:43] greatly
[30:45] increase your risk of death and
[30:47] crashing." You know, once you get the
[30:50] thing to fly reliably and safely, you
[30:54] know, you got to be very, very careful.
[30:56] and enhancements that you make come
[30:58] slowly and come with time because people
[31:01] just want to get from the US to Europe.
[31:04] They don't, you know, okay, fine. The
[31:06] difference between five and six hours,
[31:08] as long as I get there alive and I can
[31:10] get there alive reliably and safely and
[31:12] credibly, then yeah, whatever. You guys
[31:15] take your time improving it over the
[31:18] decades. And it's a very similar
[31:21] engineering approach that we must have
[31:22] as Bitcoiners.
[31:25] Okay.
[31:26] Uh, next question. Renee, he's back.
[31:31] I love it. Um, with the voice, voice
[31:34] from the heavens. Let's hear what you
[31:35] got, brother.
[31:40] Hey, Jack, the voice from heaven is
[31:42] back. Thanks for that remark. You
[31:48] beautifully explained in previous
[31:50] podcasts how bad the US monetary system
[31:53] is. Now can you please take us to a more
[31:57] broader view? There is an expression.
[32:01] When the US is coughing, the rest of the
[32:04] world is getting sick. Take us to the
[32:07] global expected situation scenarios. If
[32:11] you please, if you understand hopefully
[32:13] what I mean. Love again from the
[32:16] Netherlands. The voice of heaven.
[32:19] >> The voice of heaven. Unbelievable.
[32:23] You're make me cough from laughing.
[32:26] Unbelievable.
[32:27] Um, that's so good, man. Wow. Yeah, it's
[32:31] a it's another great question. And you
[32:33] know, it's funny enough, Renee, you're
[32:34] teeing me up because I was working on
[32:36] the live stream for tomorrow. If you
[32:38] guys think cuz I'm sick I'm not live
[32:40] streaming. You just don't know me well
[32:42] enough. Get to know me a little better.
[32:43] Why don't you? So, I will be going live
[32:46] tomorrow and I'll actually be talking
[32:47] about the incredibly awful situation
[32:51] that Europe is in, specifically France,
[32:54] and why they're just totally and
[32:55] completely screwed. And in some parts,
[32:58] due to the US intentionally screwing
[33:01] them through monetary policy. So, from a
[33:05] high level, you said when the US coughs,
[33:08] everyone else gets sick. Yeah, it's
[33:10] true. I mean, listen, what's happening
[33:12] right now in the US is when you they're
[33:15] raising rates, they are effectively
[33:18] strengthening the dollar. They're
[33:20] strengthening the dollar because they're
[33:22] making it more difficult for people to
[33:24] borrow money. When it's more difficult
[33:26] for people to borrow money, that's
[33:28] reducing the level of credit expansion
[33:30] that is happening. And obviously, that's
[33:33] reducing the level of, you know, new
[33:35] credit is new fiat units. It's new
[33:37] dollars. And without credit expansion
[33:40] and new dollars that effectively
[33:43] strengthens the dollar. And sometimes
[33:45] when rates go up and people have to
[33:47] close credit, sometimes you can see the
[33:49] supply of dollars actually reduce and
[33:51] come down. And so what we're seeing
[33:54] right now is like bonds down, stocks
[33:57] have had actually a difficult time, gold
[33:59] has been selling off pretty bad, but the
[34:02] dollar's up. So we're kind of living
[34:04] through this, especially since the rate
[34:06] hike. You're seeing everything down and
[34:10] dollar up except yields. But we all know
[34:13] we've done bond math on this show. High
[34:16] bond yields means that the actual bond
[34:18] demand is down. It's inversely
[34:20] correlated. So everything down, treasury
[34:23] yield up, dollar up. Now, when the
[34:26] dollar when when this happens,
[34:29] it tightens
[34:31] monetary conditions outside the US
[34:34] because it sucks cap it's it's sucking
[34:37] theoretically sucking capital into the
[34:40] United States. Now, it's it's not
[34:42] sucking capital into the United States
[34:44] Treasury market because the yields keep
[34:46] going up. Maybe decades ago that would
[34:48] have happened, but because the US is in
[34:50] so much debt, we actually saw last
[34:52] quarter, I did this on one of my Monday
[34:54] shows, I I referenced this, we saw
[34:56] record equities purchases from Asia in I
[35:02] believe it was Q2. And so capital is
[35:06] coming into America. Uh, and as interest
[35:08] rates go up, you know, I don't think
[35:10] that the United States is going to have
[35:12] a tough time selling Ta bills, selling
[35:14] short-term debt. Um, and this is you.
[35:18] It's make it there's a very clear impact
[35:20] on Europe and specifically France.
[35:23] France is about to be in a crisis and
[35:27] effectively just collapse and with all
[35:30] the political tensions, the ECB hasn't
[35:33] stepped in yet. I'll get into all of
[35:34] this tomorrow. Why Europe is completely
[35:36] screwed. It'll be a really fun episode.
[35:39] and how the US kind the US kicked this
[35:42] off by intervening to help Japan by
[35:45] selling euros. The US did not have to do
[35:47] that but Bessant made a point basically
[35:51] saying Europe is the sacrificial lamb.
[35:54] uh we have to use them to our benefit
[35:58] and in order to support Japan, I'm going
[36:01] to sell euros and signal to the world
[36:04] that it is short euro and uh sell
[36:09] European debt. And that's what's
[36:11] happened. Europe has been in a relative
[36:13] crisis ever since. I'll get into all of
[36:16] that tomorrow. But the way you should
[36:17] think about it from a high level is when
[36:20] the dollar strengthens
[36:22] then the the dollar is the world reserve
[36:25] currency. So everyone has dollar
[36:27] denominated debt. And if your debt if
[36:30] what you owe goes up in price, but let
[36:33] me put it to you this way. Let's say you
[36:35] owed one bitcoin. You never want to be
[36:38] in debt denominated in BTC because BTC
[36:42] is always going up. So, let's say you
[36:44] owe one Bitcoin and back 15 years ago
[36:47] and Bitcoin was 50 bucks, but now
[36:50] Bitcoin's $85,000
[36:53] and you're like, "Shit, in order for me
[36:56] to pay back that one Bitcoin, I have to
[36:58] sell some of my furniture. I have to
[37:00] sell a bunch of stocks. I have to sell a
[37:02] bunch of stuff in order for me to buy
[37:04] that one Bitcoin that was $50, but now
[37:06] it's $85,000.
[37:08] In order for me to pay that debt back
[37:10] and acquire that one Bitcoin, I had to
[37:13] sell a bunch of stuff in my life because
[37:15] the value of the Bitcoin went up so
[37:17] much. Now, let's bring it to dollars.
[37:19] Because the dollar is the world reserve
[37:21] currency, everybody
[37:23] owes debt in dollars. And so, when the
[37:25] Fed hikes rates and the dollar
[37:27] strengthens, everyone's like, "Shit, we
[37:30] got to sell like everything gets tighter
[37:33] monetarily. you're selling assets and to
[37:38] right so it it becomes a bit of a
[37:40] riskoff situation and that's what you
[37:43] know this is kind of what we're seeing
[37:46] throughout the world and so for example
[37:48] Japan
[37:50] you know I can't prove this but I think
[37:52] it's fairly obvious through the charts
[37:54] and through some of the things I'll
[37:56] present tomorrow that people are selling
[37:57] European debt uh and
[38:01] you know uh monetary conditions are
[38:04] getting tighter tighter. Um, now once
[38:07] the United States is forced to monetize
[38:10] its debt and print a bunch of money,
[38:12] then that drives the dollar down.
[38:14] Ultimately, the United States needs the
[38:16] dollar to be weaker, specifically
[38:18] against its trading partners, um, its
[38:21] its uh, import partners so that it can
[38:23] re-industrialize and reshore the
[38:25] production of things. That's the stated
[38:28] goal. kind of like deglobalization,
[38:31] unwind the post 1971 dollar. So
[38:35] ultimately the US has to get to a weaker
[38:37] dollar that's been explicitly stated by
[38:39] Bessant. But in the meantime, as we go
[38:41] through this volatility and choppy
[38:43] waters, yeah, what's happening in the
[38:46] US, it's happening even more extreme in
[38:50] Europe. I mean, Scott Bessant has
[38:53] actually said this explicitly. He said,
[38:55] "Yeah, the US Treasuries market doesn't
[38:59] look great, but I'm okay with it because
[39:01] it's actually looks way better than
[39:04] every other foreign treasury market
[39:06] except for China. China's the only one
[39:08] where yields are going down. So anyway,
[39:12] hopefully that answers your question.
[39:14] Um,
[39:16] the United States has a lot of luxuries.
[39:19] The Treasury is in debt in the same
[39:23] currency that the central bank can
[39:26] print, right? The Fed can print dollars
[39:29] and the Treasury issues debt and
[39:31] dollars. That's a superpower. It's also
[39:34] a superpower that it's the World Reserve
[39:36] currency. It's also a superpower that we
[39:38] have the military presence that we have.
[39:40] All of that are luxuries. It's also a
[39:43] superpower that the United States, as of
[39:45] last year, was a net exporter of energy.
[39:48] We're like huge energy production. We
[39:51] have massive food supply of our own. You
[39:54] know, take Europe for example. Europe is
[39:56] import Europe's exports are facing
[39:59] deflationary pressure. Meaning like a
[40:02] German car may sell for 50,000 euro, but
[40:05] that deflationary pressure is from
[40:07] China. China's making the same car maybe
[40:09] a little bit worse, but half the price
[40:12] at 25,000 euro. So they're facing
[40:14] deflationary pressure in their exports
[40:16] and inflationary pressure on their
[40:18] imports. Meanwhile, Europe is importing
[40:21] things like energy. So there's their
[40:24] stated inflation right now is a little
[40:26] above 3% but energy inflation is close
[40:28] to 20%. Because they're importing that
[40:32] and so they're short energy and the
[40:34] thing that they're exporting to offset
[40:36] their imports is facing deflationary
[40:38] pressure from China. Uh and then on top
[40:42] of that they
[40:45] are they like take France for example
[40:48] they issue debt in the euro but they
[40:52] don't have their own central bank to
[40:54] print the euro for them because the ECB
[40:57] the European central bank is the central
[41:00] bank for all the European countries.
[41:02] It'd be the equivalent of if the United
[41:04] States shared the Federal Reserve. You
[41:07] know, I guess technically there are
[41:08] other countries that use the dollar, but
[41:10] the Fed is the central bank for the
[41:12] dollar and the dollar is the currency of
[41:14] the United States of America. You guys
[41:16] get what I'm It's the USD, the US
[41:18] dollar. So, you guys get what I'm
[41:20] saying? And so, the US has structural
[41:22] advantages. And so, when things get bad
[41:26] in the US, it gets a lot worse than
[41:28] everyone else. And a strong dollar
[41:31] causes monetary conditions to tighten
[41:34] and for everything to sell off. Now, the
[41:36] last thing I will say though, Renee, is
[41:38] it does cause everyone else far more
[41:40] pain. Europe is really going through it.
[41:42] I'm worried about Europe. I think Europe
[41:45] I think Bessant in the United States are
[41:49] are purposefully
[41:52] uh yeah, per purposefully
[41:56] um tossing Europe into the fire right
[42:00] now um strategically to their benefit.
[42:03] I'll explain tomorrow. Um,
[42:08] and all of this is true, but the funny
[42:11] thing is when you're the world reserve
[42:13] currency and you run these deficits like
[42:15] the United States, all of the assets
[42:17] that people own are usually US assets.
[42:22] So, you know, Germany, Japan, they own
[42:27] French debt for sure. And French debt is
[42:30] getting sold at a rapid pace. yields are
[42:32] spiking. Uh the spread between French
[42:35] debt and German debt is at 2011 levels
[42:39] was which was the last European crisis,
[42:41] financial crisis. And so all of that is
[42:44] true, but you know the US this net
[42:47] international position that uh
[42:50] foreigners have with the US is into like
[42:52] tens of trillions of dollars. And so
[42:53] whenever the dollar gets too strong,
[42:56] this is when you see a selloff in the
[42:59] stock market, for example, or a sell-off
[43:01] in treasuries like what we're seeing
[43:03] right now where the 10-year yield in the
[43:05] United States is over 5%. So the United
[43:07] States can never really run this
[43:09] playbook for too long or go too hard
[43:12] because it all comes back home. The
[43:14] United States relies on asset prices to
[43:18] boost its economy. It was able to hide
[43:21] inflation for a very very long time
[43:24] through asset price appreciation. You
[43:27] know,
[43:29] real wages. So, think about things
[43:32] getting more expensive in your life than
[43:34] your salary is being promoted and
[43:37] increased to keep up with those prices.
[43:39] If your if things are getting expensive
[43:42] 10% more every single year and you're
[43:44] only getting a 5% raise every five
[43:46] years, then your real wage is declining.
[43:50] But one way the US can try and hide this
[43:52] is, well, the stock market is going up a
[43:54] bunch. And so, how much do you really
[43:56] care about your salary? As long as you
[43:58] take your salary and excess cash that
[44:00] you have and dump it in the S&P 500 and
[44:02] the S&P 500 keeps going up, well, you
[44:05] don't really notice because, yeah,
[44:07] you're not getting promoted as much as
[44:09] things are getting expensive, but the
[44:10] stocks that you own just keep going up
[44:13] and everything just keeps going up. And
[44:14] so, the United States actually can't
[44:16] afford these tighter monetary
[44:18] conditions, which do make everyone else
[44:19] sicker because of the US's luxuries. Um,
[44:22] but you know when people sell these
[44:25] assets
[44:27] then the US also deals with a tremendous
[44:30] amount of pain. All it's a very long-
[44:32] winded way of saying all of Western
[44:34] sovereign debt is entering crisis and
[44:38] they all need to print money. I think
[44:40] that the ECB will likely have to print
[44:43] money first and Bessant is trying to
[44:47] make sure of that and make a structural
[44:49] point about that. And uh it's one of the
[44:52] reasons you can argue that um he's okay
[44:56] with the bond market um selling off and
[45:00] yields getting this high and why he made
[45:03] a very strategic and particular decision
[45:05] to sell the euro to support Japan. I
[45:08] think that was the first time that was
[45:10] ever done. It was a very strange move.
[45:12] I'll get into it tomorrow. All right. Uh
[45:16] next question. I'm at 45 minutes, so I'm
[45:18] going to blitz through these next two
[45:20] really quick. Sorry, I never uh
[45:25] I never plan my time. Well, all right,
[45:28] John. This one's from John. Two more.
[45:30] Two more.
[45:35] Good morning, Jack. My question for you
[45:38] is, you and others have made the case
[45:40] that Bitcoin is far better collateral
[45:42] than real estate. Does that advantage
[45:44] push you towards lowering borrowing
[45:46] rates over time? Or is that largely
[45:48] demand driven? Meaning if people are
[45:50] borrowing at current rates, the superior
[45:52] collateral doesn't necessarily translate
[45:54] to cheaper borrowing.
[45:58] Okay. Uh thanks for everything you do.
[46:00] Bye.
[46:02] >> Yeah, I get this question a lot. Um so
[46:05] the question in summary is Bitcoin is
[46:08] the best collateral in the world. So why
[46:10] are rates to borrow against it more
[46:12] expensive?
[46:13] The problem is I can't print money out
[46:16] of thin air. If I could create dollars
[46:19] out of thin air, then you're right
[46:21] because I'm taking virtually no risk
[46:23] from a collateralized Bitcoin loan.
[46:25] Bitcoin's the best collateral because
[46:27] it's 247 liquid. So there's no like, oh
[46:31] shoot, I need to meet, you know, a
[46:33] margin call or something, but it's
[46:35] Sunday and markets are closed, so how do
[46:37] I effectively hedge myself? There's none
[46:39] of that. 247, incredibly liquid
[46:41] globally, and I can sell any fraction of
[46:44] it. If someone collateralizes their
[46:46] house and I needed to like meet the way
[46:49] strike works, just so you guys know, we
[46:52] never blow out your entire position. So,
[46:55] if we ever need to like liquidate
[46:58] anything, we just sell a tiny bit to get
[47:03] you back into good standing. Like let's
[47:05] say you have a Bitcoin that you're
[47:06] borrowing against like and you get
[47:09] yourself in trouble and you pass the
[47:11] thresholds like we're one of the only
[47:13] companies that I'm aware of in the world
[47:15] that doesn't just like liquidate you
[47:17] entirely. Like a lot of our competitors
[47:19] and other businesses just like take the
[47:21] Bitcoin and blow your whole position
[47:22] out. We'll sell like 0.001
[47:26] just to like get you back in good
[47:28] standing. And I bring that back to why
[47:30] it's such good collateral cuz like how
[47:32] would I do that if you collateralize
[47:34] your house? Like what do I sell like you
[47:36] know the guest bedroom of your house to
[47:39] get you back in good standing? Like I
[47:41] can't like sell half the attic. I can't
[47:43] do that. So it's incredibly divisible.
[47:46] You know it's divisible. It's liquid. It
[47:48] trades 24/7. The market is free and
[47:51] efficient. So it's the best collateral
[47:53] ever.
[47:55] The reason that that doesn't translate
[47:58] to low rates is you have to understand,
[48:01] think of me like creating a two-sided
[48:03] marketplace. On one side, I have people
[48:06] that want yield on fiat. Okay? So,
[48:10] there's people that have a lot of fiat
[48:12] and they want some fixed income on that.
[48:13] They'd want to say, "Hey, I want to give
[48:15] you the fiat and I'd want a return on my
[48:17] fiat." Sure. And then on the other side
[48:20] of the market, I have Bitcoiners that
[48:22] say, "Hey, I have all this wealth in
[48:23] Bitcoin. Over the years, it keeps going
[48:25] up and now I have a position that has
[48:28] enough size where I want to get some
[48:30] liquidity against it to do something
[48:32] special in my life. Put a down payment
[48:34] on a home, pay off debt, finance a
[48:36] medical emergency, buy more Bitcoin,
[48:38] whatever that is. And as long as the
[48:40] rate is below what I would get taxed if
[48:43] I sold it and the performance that I
[48:46] expect of it, right? So if our rates are
[48:48] 7 8 9 10% people think Bitcoin will go
[48:52] up more than that on an annual average
[48:54] basis and that's far less than the
[48:56] capital gains tax that you would incur
[48:58] in the United States then that's a
[49:01] really logical rate. It's kind of a life
[49:03] hack and these are the two-sided markets
[49:05] that I have. So really who sets the rate
[49:09] are the people that are willing to give
[49:11] me fiat. One of the reasons that the
[49:14] rate is high for Bitcoin is because
[49:16] Bitcoin itself is such a high performing
[49:18] asset. So anyone that understands
[49:20] Bitcoin well enough to say, I'll give
[49:22] you fiat because this is an easy way for
[49:24] me to get fixed income on my dollars. I
[49:27] know that there's virtually or very
[49:29] little risk to lending against
[49:32] collateralized Bitcoin is because if the
[49:34] rates are get low enough, people say,
[49:37] "Eh, I'll just I'll just buy Bitcoin
[49:40] myself." Like if people say like who
[49:42] would want to lend me dollars for like
[49:44] 50 basis points and so you can say yeah
[49:47] but it's the best collateral they'd be
[49:48] like so what I'll go buy tea bills from
[49:52] the United States they'll give me you
[49:53] know strikes about we're about to launch
[49:55] our interest on cash feature at a
[49:58] minimum of 3.6%. You're better off
[50:00] depositing your money into Strike. You
[50:03] know what I mean? Like so, you know,
[50:05] you're competing at least with the US
[50:08] government interest on cash and then on
[50:11] top of that, like if it gets too low,
[50:14] then these people will just buy Bitcoin
[50:16] or or buy the S&P 500. And so it's a
[50:19] balance. Like sometimes I can find
[50:21] really cheap capital, like capital that
[50:24] say, "Hey, Jack, I'll just give it to
[50:25] you for five 5% interest a year." But I
[50:29] don't have billions of dollars of that.
[50:31] So, if I'm slinging out billions of
[50:32] dollars of loans, it's like, at what
[50:35] price can I get all this fiat currency
[50:38] to lend out to Bitcoiners? And so, it's
[50:40] kind of this two-sided marketplace. So,
[50:42] my rates are determined by the rates
[50:44] that I'm getting. And the rates that I'm
[50:45] getting are determined by, you know,
[50:47] people are saying, you know, if you're
[50:50] not going to accept my capital, you
[50:52] know, that's not giving me something
[50:55] that I feel is worthwhile, I might as
[50:57] well buy Bitcoin or I might as well buy
[50:58] the S&P 500. I might as well buy tea
[51:00] bills. So I see this online all the time
[51:03] is people will say like oh it's the best
[51:05] collateral ever like it should be 0.1%.
[51:08] And I'm thinking to myself I mean I know
[51:10] that people are saying this in good
[51:12] faith but I'm like brother if you can
[51:14] find anyone in the world that's willing
[51:16] to give you billions of dollars for.1%
[51:19] interest. Like what do you think this is
[51:22] like Michael Sailor financial
[51:24] engineering the capital markets? Like
[51:26] what are you doing? There's that's not a
[51:28] thing. That's just not a thing. Now over
[51:31] time like Strike we our rates used to
[51:34] start at like 12 and a half 13%. Now I'm
[51:37] able to do through our private client
[51:39] desk. I'm giving out loans right now in
[51:41] size that start with a six 6 and a
[51:44] half%. So I told you guys I will drive
[51:47] this market down. I promise you I will.
[51:49] Now the last thing I'll say on my answer
[51:52] uh I got to keep this video under an
[51:54] hour is my what I'm working towards at
[51:56] Strike. We're launching this interest on
[51:58] cash feature which will start at 3.6
[52:00] maybe 3.7%. But my dream is that Strike
[52:03] acquires the necessary licenses where if
[52:06] you guys want interest on your cash
[52:09] and people have Bitcoin they want to
[52:11] borrow against, I can create the
[52:12] two-sided market myself where I can then
[52:15] say, "Oh, maybe the interest on cash I'm
[52:18] paying 4%, 5%, 6%." And then I turn
[52:21] around to the Bitcoiners, add a little
[52:24] margin on there for strike to pay our
[52:26] bills and pay my employees. And then I
[52:28] create the market myself where I don't
[52:30] have to go out to these institutions and
[52:33] these other people and source the fixed
[52:35] income dollars from them. I can do it
[52:37] from my own customer base. And then
[52:39] obviously like you guys can then pull
[52:41] pull your dollars out and we would
[52:43] manage all of that liquidity and that
[52:45] two-sided market and that risk as a
[52:47] business. That would be the service
[52:48] we're providing. But that's ultimately
[52:50] how I can drive I can drive the rates
[52:52] down the more I get access to fiat. But
[52:56] I I'm not a central bank or a
[52:59] government. So I can't print money out
[53:01] of thin air. I have to get it from
[53:02] someone else. And so right now
[53:05] the cost of me to get money from someone
[53:08] else, I've been able to drive it lower.
[53:10] The more loans we've been able to give
[53:11] out, the more I've been able to orange
[53:13] pill like with time I will drive this
[53:16] market down, you know. And you have to
[53:18] have realistic expectations like a
[53:19] heliloc like right now you know in
[53:22] strike's lowest pricing this six and a
[53:24] half seven seven and a half eight%
[53:27] that's like a heliloc I mean you can't
[53:29] expect much lower than that like I said
[53:32] if you want really really low like less
[53:34] than a percent or a percent I mean
[53:36] people are just going to buy tea bills
[53:38] or just deposit their cash on strike and
[53:40] get almost 4%. So, you know, you have to
[53:43] be realistic. So, we're actually getting
[53:45] pretty close, but there is an
[53:46] opportunity where Strike has the right
[53:49] licenses where I can pay you guys the
[53:52] highest yield on cash because I'm doing
[53:55] this two-sided market myself. So, like
[53:58] really high yield on cash for people
[53:59] with idle cash and then the lowest
[54:01] Bitcoin lending rates. Like, that would
[54:03] be a really cool thing. Unfortunately, I
[54:04] need some special licenses that we're in
[54:06] the process of acquiring. But anyway,
[54:08] hopefully that was educational and
[54:11] provided you some information behind the
[54:13] scenes what it's like to run this
[54:15] business. And that's pretty much why.
[54:16] Unfortunately, it doesn't have much to
[54:18] do with how awesome the collateral is.
[54:21] Although it should and one day it will,
[54:23] you know, 10, 20 years out into the
[54:25] future, I think this market looks
[54:26] incredibly different. But right now,
[54:28] we're in the middle of kind of
[54:29] pioneering these kind of consumer credit
[54:32] products on top of Bitcoin. Okay, last
[54:34] question. Let's hear from Paul. Here
[54:39] we go.
[54:44] >> Hey Jack, curious to learn more about
[54:46] your AI setup. What tools you use, how
[54:50] you use them, when you use them, how you
[54:52] balance personal versus business stuff,
[54:56] things like that. Thanks.
[54:59] >> Yeah, no problem. I got five minutes
[55:01] tops because I got to keep this under an
[55:03] hour. I don't want to turn these into
[55:05] monologues, but um great question. So, I
[55:10] have a cheat code. Strikes engineering
[55:12] team is one of the best in the world,
[55:14] and I I would like to think we're a bit
[55:17] ahead of the curve when it comes to AI.
[55:20] So, you know, Strike setup is insane. We
[55:23] have a team of, you know, the red team
[55:25] in Bitcoin that's uh battle testing all
[55:28] of our, you know, the Bitcoin
[55:30] community's open source repositories and
[55:32] trying to enhance the cyber security in
[55:34] this new AI era. Um, Strike's been doing
[55:37] that for a while internally. We have a
[55:39] team of agents that Red Hat are software
[55:44] and we are like pretty we do some crazy
[55:47] cool things at Strike with AI internally
[55:52] and I'm able to kind of cheat and use
[55:55] what we build at my company for myself.
[55:58] And so there's some stuff that you know
[56:01] I would say is more proprietary to
[56:03] Strike and that you know maybe isn't
[56:06] anything that you guys will have access
[56:07] to. Maybe there's opportunity to do a
[56:09] bit deeper dive. I can bring my CTO on
[56:12] and we can talk about, you know, how to
[56:14] get the most out of AI because we've
[56:17] we've done a lot over the years and uh
[56:20] it's really cool. Like Strike has like a
[56:22] brain that we are able to talk to and
[56:25] it's very cool. But for myself
[56:28] personally, I'll do this. I mean AI has
[56:31] changed my ability to produce content.
[56:34] So I created a design agent um with
[56:38] through Claude where I was able to I
[56:41] have a few different design agents which
[56:43] understands the typography and the
[56:45] personality and the color scheme and
[56:50] just everything that I aesthetically
[56:53] want to express when I design things for
[56:56] strike or when I design things for the
[56:58] live streams on Monday or when I design
[56:59] things for a Bitcoin 101 education
[57:01] episode. And uh that is huge for me. So
[57:06] I you know I'm able to create
[57:08] animations, decks, presentations,
[57:11] everything. Um that's one. I use Mac
[57:14] Whisper. Mac Whisper is my ability to
[57:18] transcribe my voice into AI prompts. Um
[57:23] I'm sure there's a lot of those, but AI
[57:26] needs context. It needs to understand. I
[57:29] I think of AI empowering the artist. So,
[57:32] the artist needs to you'll get the most
[57:35] out of AI the better you're able to
[57:37] express your artistry. And I just think
[57:39] typing there's just no way. Typing is
[57:42] the worst way to express. You end up
[57:45] being short on words. You over
[57:47] summarize. You spell things wrong. So,
[57:49] being able to just open your mouth and
[57:51] rant and get everything out and let your
[57:54] thoughts lead to thoughts which lead to
[57:56] thoughts which lead to thoughts make for
[57:57] better AI results. And so I highly
[58:01] encourage always use your voice if you
[58:03] can. So, you know, I talk to my computer
[58:05] more than I type on it. I use Mac
[58:08] Whisper personally, but you know, you
[58:10] guys can I think there's a lot of these
[58:12] tools. Um,
[58:14] let's see what else. I mean, I've gotten
[58:17] I I have built a developer environment
[58:20] with my AIS, which I can potentially
[58:22] walk through at some point. um so that I
[58:25] can build you know I think we're going
[58:27] to enter an era where you know people
[58:30] will end up having to make the trade-off
[58:31] of building a service for themselves
[58:33] versus using someone else's. Strike I
[58:36] think is in a very unique position. You
[58:37] can think of Strike as a business as we
[58:40] are a Bitcoin services distributor. You
[58:44] can't just build your own Bitcoin
[58:47] brokerage or Bitcoin lending desk or
[58:50] Bitcoin custodian because there's
[58:52] regulations and there's expertise and
[58:54] complexity and finance risk. Um, so we
[58:58] serve a unique business that is actually
[59:00] resilient to this AI wave. But other
[59:03] businesses, let's say like I'm planning
[59:05] my wedding and our wedding planners
[59:07] like, "Do you want to meet the website
[59:09] vendors?" I'm like, "Webite vendors? I'm
[59:11] going to build our website cooler than
[59:13] they ever could and it's going to take
[59:14] me two minutes. And it did. And so
[59:17] instead of having contractors build out
[59:21] our website, I built it myself. Um I
[59:24] just learned how to use my United points
[59:27] and my United status. Um I built my own
[59:31] website and tools for me and my fiance
[59:34] to understand how to book our flights
[59:36] the most efficient way, get the most
[59:38] bang for our buck, maximize our points.
[59:40] That took me I did that yesterday. It
[59:42] took me 30 minutes. So I have a
[59:43] developer environment where I'm talking
[59:46] to my AIS and they're building me. I
[59:49] have like these are a few examples, but
[59:50] I have tools all throughout my life that
[59:55] you know this is how I think about AI
[59:56] changing the world. It empowers I I use
[59:59] the word artist maybe too ubiquitously.
[60:04] It empowers the creator, the individual,
[60:07] the aspirer, the entrepreneur, the
[60:10] believer. It empowers the one that wants
[60:13] to achieve, you know, because I spend
[60:16] less of my time making like editing
[60:19] decks in Google Slides or in PowerPoint,
[60:22] right? I spend less of my time working
[60:24] with contractors on trying to get them
[60:26] to understand my vision. I spend less of
[60:28] my time sifting through United logs and
[60:32] like uh manually refreshing screens and
[60:36] and counting points. I spend less of my
[60:39] time in the mundane in the slog. Um I
[60:42] spend less of my time doing my taxes. I
[60:45] spend less of my time managing my
[60:46] finances of like property taxes and tax
[60:50] returns and all of that I spend
[60:53] less of my time doing that humans
[60:56] don't want to do. we're not meant to do
[60:58] because we're naturally artists, we're
[61:00] culture carriers, we're expressionists,
[61:02] we're um we're creators of family. Um
[61:08] so I spend more of my time doing,
[61:11] pursuing, thinking, ideiating.
[61:15] And that's how I think about that's what
[61:16] I think AI will do to the world. I think
[61:18] we'll have less accountants and less
[61:20] lawyers and less compliance associates
[61:22] and less web wedding contractors and
[61:26] people will be left to pursue art um and
[61:29] expression and culture. Um and that's
[61:32] where you you know that's where you see
[61:34] people say like oh in this world of AI
[61:36] it's all about taste and it's true you
[61:38] know it's all about a uniqueness to you.
[61:41] That's another thing I pride myself on.
[61:42] You know you you're not going to get
[61:44] another Jack Mer show. you know,
[61:46] everyone's interviewing, you know, the
[61:48] same macro analysts and the same, you
[61:51] know, the same and I love him too, like
[61:53] Jordy Visser. He's great, but like the
[61:57] show's different. There's culture,
[61:58] there's taste, there's character,
[62:00] there's artistry, and I think the world
[62:02] you'll you'll be forced to deep more
[62:04] deeply explore that. The age-old of
[62:06] like, you know, Trump just announced
[62:08] recently that he's going to try and ban
[62:12] certain majors at university. Like if
[62:14] you want a liberal arts degree or a
[62:15] history history degree, they're not
[62:17] going to let you go into debt to get
[62:19] that. If you want to get that, you have
[62:21] to pay cash because you're never going
[62:22] to be able to get a return on that
[62:24] investment. And I think the days of
[62:26] like, I'm going to go into debt and just
[62:28] do a slog job, a slog white collar job,
[62:31] and kind of hate my life, but I'm just
[62:33] going to click clack at the office and
[62:36] just kind of get by. Like those days are
[62:38] gone. Um, AI is going to forcefully fire
[62:42] you from the mundane slog and um, and
[62:47] encourage you to channel your inner
[62:49] artistry. Um, so that's how I think
[62:53] about it. That's how I use it. That's
[62:54] how it empowers me. But that's just a
[62:56] very high level short version. You know,
[62:58] if there's demand for it and interest
[63:00] for it, you know, I can bring on some of
[63:02] the engineering team at Strike or do a
[63:04] deeper dive into some of the things I
[63:06] just talked about. But definitely get
[63:08] you a Mac whisperer or some uh way to
[63:12] talk to the AI so that you can like
[63:14] really truly get your ideas out, give it
[63:16] as much context as possible and express
[63:19] um the design agent that I built is huge
[63:23] for me because you know it understands
[63:28] the typography and the font weights and
[63:30] the color schemes and the aesthetics and
[63:34] the ratio like you know details like the
[63:36] ratio between visual to text, you know,
[63:39] I I like visuals. I I like being
[63:42] responsible for the text. I like voicing
[63:44] over and explaining like all of that so
[63:46] that I can say, "Hey, I I literally, you
[63:49] know, while I was watching football,
[63:50] hey, I want to do an episode tomorrow on
[63:53] just how Europe is and here's how
[63:56] I want to explain it and here's the
[63:57] ideas and it, you know, it it brings us
[63:59] to life." So, that's huge. And then
[64:02] yeah, some developer environment so that
[64:04] you can build internal tooling for
[64:06] yourself as opposed to what you would
[64:08] traditionally do is yeah, give me the
[64:09] contractor to build the website or gosh,
[64:12] I really wish I could maximize my
[64:15] ability to travel with my fiance all
[64:17] over the world, but I don't have time to
[64:18] refresh the United thing. It's so a way
[64:21] to build, you know, empowering software
[64:23] for yourself requires a sufficient
[64:26] developer environment. And I would
[64:28] encourage you guys to look into that.
[64:30] All right, I'm over time. Uh, and my
[64:34] voice is is gone. I appreciate you guys
[64:37] if you made it this far. You're a legend
[64:39] and a hero. I sorry again, you know,
[64:42] can't really control when or how I get
[64:44] sick. Uh, but I'll show up no matter
[64:46] what. As always, this upcoming week
[64:48] should be fun and and I'm on the up and
[64:50] up. I'm getting better. So, hopefully
[64:52] I'm better tomorrow. If not, I will be
[64:53] in a few days. I got the live stream
[64:55] tomorrow. I'm aiming to, given my voice
[64:58] allows for it, uh, we've got a new
[65:01] animation video on Tuesday. Uh, we
[65:04] should have a Bitcoin 101 education
[65:06] video, the difference between altcoins
[65:08] and Bitcoin from a fundamental level,
[65:11] and then some Bitcoin history. Uh, what
[65:14] was Bitcoin before 2008? What was the
[65:16] state of things like cryptography, proof
[65:18] of work, where did these technologies
[65:20] come from? Satoshi patched together a
[65:22] bunch of pre-existing things. What are
[65:24] those things? I do a little bit of
[65:26] history there. Uh and then Friday we'll
[65:29] do another JMS uh or excuse me, Ask
[65:32] Jack. Uh so if you guys want to be on
[65:35] the next episode and call in, it's at
[65:37] ask.jackmowers.com
[65:39] and uh between now and then, I'll see
[65:41] you guys in the comments section trying
[65:42] to do a piece of content per day this
[65:45] upcoming week. Cool. Love you guys. Uh
[65:49] stay humble, Stack Sats. Huddle on. Take
[65:52] care.