The Bitcoin Standard Podcast

38. Bitcoin and fiat debt

March 04, 2021 Dr. Saifedean Ammous
The Bitcoin Standard Podcast
38. Bitcoin and fiat debt
Show Notes Transcript

Should you borrow fiat to buy bitcoin? Is it better to sell bitcoin or borrow against it? In this seminar we discuss optimal fiat strategies for bitcoiners, and the risks involved, based on Michael Saylor's comments in seminar 34, and the early chapters of The Fiat Standard.


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[00:03:40]Ahmed:  I just read the news about miners in China. So if we can touch upon this issue on  how it may affect  the network or may not, and if other countries would do the same or attempt to do the same.

[00:03:56]Saifedean Ammous:  What is the news? 

[00:03:57] Ahmed: The China region declares war on crypto mining spreading wider fear.

[00:04:03] So it seems China,  inner Mongolia has banned the cryptocurrency mining and declared it will shut all such projects by April. 

[00:04:11] Saifedean Ammous: Yeah. I mean, this is great news for all the world's minors, other than the people who are in this part of the world, they're going to stop a lot of people from mining in their own country.

[00:04:20] But of course, all the mining equipment will be smuggled out . They'll just be so sent around. I don't think they're going to confiscate it. So, you know, as soon as they announced the ban today, and this is  part of the reason that this part of a world has 10% of all of the hash rates, let's say even 20%.

[00:04:41] So 20% of all the hash rate is there and then they shut it off today, and they confiscate them burn the miners, which is, I don't think that's what they're going to do. They're just going to shut them down, if anything. They probably  won't even shut them down. They're probably using this to extort them so they can make more money from them, now that the price is  up.

[00:05:01] Basically they just need to bribe the right people. Well, it's probably not even a bribe, it's just tax and not as much of a difference between two. But anyway, so they'll do something like this, 20% of the network is off. Let's just assume hypothetically 20% of the network is off.

[00:05:20] And then what happens?  For a week or two, until the difficulty adjusts, we're going to have slower blocks. It's going to be taking longer for each new block to be mined because we have less hash rate. So the next difficulty adjustment, this difficulty period, instead of being two weeks, it might take two weeks and three days, two weeks and five days, something like that.

[00:05:41] It might take a little bit longer because there's not enough hash rate to mine at the current difficulty and produce blocks every 10 minutes. So the blocks take a little bit longer, 20% longer.  We get three more days. And so this difficulty adjustment, your transactions are slow, and in two weeks time, the difficulty adjusts downwards, because now we have 20% less mining power.

[00:06:04] Most likely the difficulty would adjust downwards around 20%, and then the network goes back to operating with 10 minute logs. This is like the most extreme example of what could happen.  If it were to shut down 50%, then yeah, the two weeks might take four weeks to finish.

[00:06:23] So we're going to have 20 minute blocks and it's going to be slowed down for awhile. But then at the end of the four weeks, difficulty adjusts downward.  I don't think the difficulty can adjust downward more than more than twenty-five percent. I may be mistaken, but I'm pretty sure there's a limit of 25% on the difficulty adjustments.

[00:06:42]After four weeks, this difficulty period will end and then I'll drop 25% and then it'll take three more weeks until we adjust another 25%, and then we're back up at 50%. So we dropped the difficulty 50%, the mining hash rate drops 50%. And so we go back to 10 minute blocks.

[00:07:02]It could be an inconvenience for a month or two, but ultimately the difficulty adjustment fixes this problem. The difficulty adjustment ensures that after a couple of weeks. At most 2, 3, 4 weeks, five weeks, six weeks at most, we're going to get back to more or less normal block processing times. And this is really the worst case example.

[00:07:23] But in reality, if they're going to announce something like this, before they can start confiscating the mining equipment, the people who own this mining equipment will have it on trucks driving out of the region or country where they can plug their miners and mine peacefully. And what this does is that it makes a lot of money for other miners.

[00:07:44]Other miners will make more money during this time because their mining equipment becomes worth a larger percentage of the network, so that hash rates are worth a larger percentage of the hash rate on the network, so they're more likely to find blocks and they're more likely to make better returns.

[00:08:02]It ends up really being bankrupting the miners in that region and subsidizing the miners everywhere else. So effectively, the government of that part of the world would be subsidizing miners everywhere else. Another aspect of it is that it leads to more decentralization, as Peter has mentioned in the commons.  If more of this stuff happens in places like China, mining starts to move away from China and mining happens elsewhere.

[00:08:25] The thing is, like Bitcoin's resiliency is such that you can hurt individual miners, you can take their money, you can take their machines, but the system itself will flow like water around whatever barriers you place in its path. It will find its way, the number will continue to go up and the miners will continue to mine.

[00:08:50]As long as people demand Bitcoin, as long as people want to hold Bitcoin, people will find a way to mine. The more governments crack down on it and make it illegal to mine in their jurisdictions, the more profitable they make it for other governments and other jurisdictions to welcome miners in.

[00:09:06]I would expect that if something like this were to indeed happen, I'd see other Chinese regions reaching out to miners and asking them to bring all of their equipment to their region and offering them better taxes. Because there's a lot of money to be made from mining. It's pretty counterproductive and stupid to be shutting it down.

[00:09:24] If the concern is that the miners are consuming so much energy, you don't need to ban it. If the issue is that they're using up so much electricity, well then you clearly have a problem with electricity pricing that is allowing them to use up so much electricity. If you raise the price of electricity, then they won't be able to use it.

[00:09:43] If your electricity is subsidized, you're providing subsidized cheap electricity, they're taking advantage of it, so just stop subsidizing electricity, and then they won't be able to take advantage of it. But banning it is kind of silly, and it's not going to achieve anything. It's just going to mean that the government that's banning it is missing out on tax revenue.

[00:10:02]They'll basically just have to have fun staying poor. That's the sad reality of it.

[00:10:10] Max: There has been a lot of talk recently about people choosing not to sell Bitcoin, but using it as a collateral to get money, to get loans. I really don't know much about it, I just began searching for information. There's one thing I saw somewhere, which is, this is not really that easy of a game.

[00:10:32] It's not as beautiful as, as it looks because many of those companies borrowing money, have a system.  Well, it's like three Bitcoins you have as collateral and they are worth this much, that's why I'm borrowing you however many US dollars, but if there is a long correction or even a bear market, that thing you put as collateral is worth less and it makes you have to pay more for the next month or so.

[00:11:16] And that's quite dangerous because if you have fiat enough to do that, maybe fine. But if you don't, you're going to have to sell your Bitcoin and many companies doing this, borrowing money, they are shorting Bitcoin. They want your Bitcoin. They want to make those moves in the markets to buy the dip from you.

[00:11:38]It's actually not super different from many people who play these kinds of games in the stock market shorting in order to buy cheap. What are the perspectives on this? How much damage can this cause for the following four to eight years?

[00:12:01] Saifedean Ammous: Yeah, it's a very interesting idea. And you know, this is what Michael Saylor was discussing in the seminar here and what he's been pushing.

[00:12:09]He says something very interesting, which is that this is what the rich people always do, which is you own assets, and this is how rich people become rich people, which is that you own assets, and then you borrow against them. Because inflation is constantly devaluing the currency, your loan constantly gets cheaper in real terms.

[00:12:30] And you can eventually just continue to roll over the debt. And then as you roll over the debt, your debt gets bigger, but you never really basically have to pay it back, because as Michael says, you want to die in debt. This is kind of what I discuss in the Fiat's standard, which is that Fiat is a unique monetary system in which you win the game.

[00:12:54] If you want to think about it as a game, all monetary system. Your objective is to collect as many as you can. You know, whether in gold, you want to have more gold with Bitcoin. You want to have more associates with Fiat. You want to have as big, a negative balance as possible. You want to have negative balance.

[00:13:13]Winning in Fiat is being able to rack up the biggest negative score. The richest people in the world are the most indebted people in the world. They're the ones who were able to borrow very, very large quantities of money. And that's really, I think the key thing about it, the way that I approach it in the Fiat Standard is when you think that money creation is debt creation, every time you borrow you are devaluing everybody else's currency because you're generating more money. Every time you make a loan, you are the Cantillian insider, effectively placing themselves at the top of the Cantillon faucet. They're getting a bunch of freshly printed dollars. That's why it's so attractive to borrow.

[00:14:00] That's why it's cheaper to borrow for homes than it is to pay in cash. That's why nobody buys their home in cash. Everybody gets loans. And it's also why, think about it, it's why credit card companies can afford to, give people money back. Basically, credit card companies are paying off part of your spending.

[00:14:19] They want you to use their credit card to pay for things, and they'll pay you back 1% or 2%, sometimes, particularly in the US. They'll pay you back 1% in cashback for you to use their credit card. Not only are they processing your payments for free, well they're not charging you, but they're charging the merchant, but they're also giving you 1% back.

[00:14:41] Now, why would they want to do that? The more prompt payments they process, the more money they have to pay, why would you wanna do that? The answer is the more money they get you to spend on your credit card, the more likely you are to end up missing a payment at the end of the month because something happened and  you miscalculated and you forgot about it.

[00:15:05] And then, when that happens, you're going to be paying very high interest are gonna be paying 20, 30% interest on that credit card loan. The reason they want you to get into debt on the credit card, the reason they want to give you all these credit cards is, the more you use it, the more likely you are to end up having to roll over some debt, and then they'll charge you some interest.

[00:15:27] And you know, the more you do that, the more interest they make. And so the more they get people to use their credit cards, the more likely they are to get interest. So that's why they'll happily pay the 1% because when you make a mistake or when you miss a payment or when you have an emergency and you can't make the payment at the end of the month, you're going to be paying them a much higher interest rate that will make up for all the 1% that they gave everybody else. This is how I see it in the Fiat Standard, and basically Michael has really helped me solidify that idea when I think about it because his strategies of hard assets, if you own the hard asset that generates cash, you continue to borrow against it.

[00:16:10] If it's generating cash, you can use the payments to pay it off, and that just makes the debt go away. So you're effectively, constantly living off the Cantillon, of constantly borrowing. And as long as you have a hard asset, you can continue to print money effectively by continuing to borrow against it.

[00:16:33]You continue to give everybody more inflation by devaluing their currency. That's really how I think we can think about this. Now, the question is, can this work with Bitcoin? That's the interesting question here.  My honest advice is don't try this at home kids. You are not Michael Saylor. You are not able to borrow billions of dollars at 0% interest like he can.

[00:17:02] I mean, maybe some of my listeners can, if you are then by all means go ahead and do it. But corporations that size can borrow at 0% more or less, but for normal plebs, you're going to be borrowing at a  significant percentage. You're going to be needing to make payments on your loan and then you have to worry about the collateral losing value.

[00:17:30]Bitcoin is volatile and I know Michael said the days of 80% drawdowns are behind us. But you know, maybe they aren't. There's a distinct possibility that they are not. And if that were the case, you know, if 80% drawdown happens, so you take out your loan at Bitcoin at 50,000, and then we're down to 10,000,  in a few months, your collateral is going to be much smaller.

[00:18:02] You're going to need to buy in more and more Bitcoin or you're going to get liquidated and then they will take their Bitcoins. So that's not a fun part of the story. I personally wouldn't do it. I would not want to borrow against my Bitcoins with this. I mean, I guess it can be done in a situation in which you're borrowing a small amount rather than a large amount maybe. If you come close to getting liquidated, you can put in more collateral.

[00:18:29] If you have more collateral, then yeah, you can do that. But you can put in more collateral, if you're confident that you're able to put in more collateral, then maybe it can be done. The risk is still there and Bitcoin is still volatile and it might end up not working out. And then there's the issue of the cashflow.

[00:18:46]You're going to be paying from your cashflow to pay off the loan. You could be using that money to buy more Bitcoins instead. So the logic here is that, you have your Bitcoins early, instead of paying your monthly payments for buying more Bitcoin, you use those payments to pay off the loan and you get to keep your Bitcoins early.

[00:19:10]It works out better in that sense. If you expect the price to continue to go up, then yeah, it works out better because you're keeping your Bitcoins at a price of 50. And then, let's say the term or the loan is five years, over those five years, if the price goes up to 500,000, you've kept your Bitcoins.

[00:19:28] The value of your Bitcoin has gone up. The payments that you were making for the loan would not have bought you as many Bitcoins as what you had done earlier. So if you had sold your Bitcoins to buy a house, for instance, and then you start stacking SATs with the money that you would have paid for the loan, you likely won't make as many Bitcoins.

[00:19:50] That's like the, that's the price of the safety of not having to worry about being liquidated of not having to lose the loan. You sell your Bitcoins, you buy the house and then you just stack Sats with the money that you would have paid for the loan. Or alternatively, you keep your Bitcoins, you borrow against your Bitcoin, you take the loan and then instead of stacking Sats with your income, you use that money to pay off the debt.

[00:20:22] So you won't be buying more because as the price of Bitcoin goes down, there's the risk of liquidation. And then there's also the risk of the fact that you're missing out on cheap coins. So if you borrowed at 50 and then the price goes down to 20,  if you haven't borrowed, if you'd sold your coins of 50, you're able to buy more when it's at 20.

[00:20:43] It's a leveraged play. In a sense, like I can see the,case for it probably being neater and easier and more, probably better. I could see the case to be made that you could just buy call options or a long Bitcoin on an exchange. And this is the same thing that you're doing. If you're borrowing in order to keep your Bitcoins, if you're borrowing with your Bitcoin as collateral, you're effectively betting on the price of Bitcoin going up.

[00:21:12] And if the price of Bitcoin goes down, you get wrecked. But you can get that from your local Bitcoin gamblers exchange. The way that you can do it in the Bitcoin exchange is cleaner and neater than involving your house and the place where your family lives in it and having to worry about the liquidation and then having to leave your house.

[00:21:36]If you think that Bitcoin is going to go up and you don't want to sell your coins, you could take a long position with Bitcoin on an exchange and sell your coins or sell part of your coins and take a long position with Bitcoin on an exchange. And then if it does work out that Bitcoin's price does go up, you know, your long position on exchange will make more Bitcoins for you.

[00:22:02] So you're able to buy more Bitcoins from the bet that you made on the exchange. On the other hand, if the price does go down, you lose the money, you lose the bet on the exchange. So you lose the money that you lost there, but you get to stack cheap coins depends on how much you  risked on how much you want to borrow, what your expenses are like, what your income is like.

[00:22:24] There are a lot of factors that go into this. I don't really have advice about what you should or shouldn't do. I don't have a clear answer about it. I'll just say that it's a very intriguing possibility. And I think there is the possibility that this might become much more popular. Sometimes it occurs to me that bitcoin, just for the coming period, as long as we still have other national currencies and we still have all the Fiat systems out there, it might make more sense that Bitcoin just ends up used more and more as collateral. So people who own Bitcoin basically just put it up as collateral and live off of the number go up, allowing them to roll over the credit over and over and over again, and continue to refinance in better terms because your collateral appreciates, so you're able to get better terms on your loan.

[00:23:09] The value of the dollar that you're paying back is continuing to depreciate next to your loan. You just end up living off of your Bitcoin without even having to spend it. If the price continues to go up. If Saylor is right and we don't get large corrections, you know, if we can continue to shoot up.

[00:23:30] Not correct with anything wilder than another 30, 40%. You know, the last 80% crash and ended around January, 2019, so it's been two years. So we haven't had an 80% crash in two years. If we go another three years, without an 80% crash, it's going to tempt a lot of people to believe that Saylor is right, the 80% crashes are gone. We're not going to be getting any more 80% crashes.

[00:24:00] If we do get that another two, three years, if we have that happen, well, we're going to have this situation where people think, yep the 80% drawdowns are done and people are going to want to borrow a lot. And I think we'll see more and more of this take place.

[00:24:15] And we'll see more people borrowing against their Bitcoins. But if it does crash and the price does go down, if we do get an 80% crash, it's going to be ugly. So we'll see, Phillip is asking how is doing this not high time preference. I mean, I'm not really sure whether it is high time preference or not, because the expected value of what you're doing for the future is not really very clear to me, I guess it is high time preference in the sense of you're taking on risk when you could just have, yeah, okay, you're correct. You're taking on risk when you can just have the Satoshis in your hand. The argument for why it is not high time preference would be that if this ends up making you more money in the future, if you calculate this and you've got a thesis and you've got a risk tolerance and you've got a backup plan and you were pretty confident about where you see it, then you allow yourself a margin of error and you still see that you're able to turn a profit, then how's this different from any other investment.

[00:25:17]I guess if this was the case, if I were to make the case against this, you know, you're taking on risk, but you're calculating it, and the point of the risk is that you are going to be rewarded with more marshmallows in the future. You know, you're going to have more Satoshis in the future. That's the plan.

[00:25:35] So you could say that it is low time preference in the sense that you're plotting today and sacrificing today in order to have more Satoshis tomorrow. But yeah, you're kind of gambling as well. So I see your point in terms of being high time preference behavior. But the interesting thing about it is when you think about it, in terms of the Fiat system, you know, we're still in the Fiat system, and the more that I think of the Fiat standard and the more that I think about the issue of borrowing in the fiat standard, the more it seems like, yes,  it should be wrong to borrow, but if you're not, you're a part of this game, and if you're not the one borrowing, then you're the one paying for other people to borrow.

[00:26:18]That's the kind of sick conclusion that I'm arriving at from the Fiat standard, which is that we live in a world in which basically you either take on reckless risks, or you lose. If you're a business that doesn't want to borrow, if you're a business that doesn't want to leverage and you just want to live within your means with your own money, just like if you're an individual who is doing that, you're effectively subsidizing everybody else.

[00:26:44]I generally, before I started writing the Fiat standard, I always had an outlook against that. And like, why would you want to borrow? Because it just didn't make sense to me as a goldbug and as a hard money person that you can't have an economy built all in debt. Writing the Fiat Standard, I realized, well, you can, it'll just suck in all the ways in which our modern world sucks. But, it sucks more to be on the receiving end than to be the one benefiting from it. It's a sick conclusion, but I can see the point and looking back over the past few decades, you can see how taking on reckless debt is.

[00:27:21] You can see how essentially most the people who won in any kind of field, did so by taking on reckless debt, like it's irresponsible to not be irresponsible in the fiat standard. The way that it works is that you have to take on reckless debt in order to compete in order to.

[00:27:44] Be in the race, whether you make the finish line or not, is an entirely separate question, because you know, you take on debt and you could get wrecked and you won't make it the finish line, maybe. But maybe you make it, and you become a billionaire. But if you don't take on debt, in that situation, you are essentially guaranteed not to make it to the finish line.

[00:28:08] You're not going to make it to the finish line and you're just constantly subsidizing everybody else if you're not the one taking on debt. I haven't made my mind up about this and I'm just sort of sharing the different questions that I've been mulling over as I think about this.

[00:28:22] And I think about the Fiat standard and at some point I'm beginning to think that the conclusion of the Bitcoin standard was basically buy Bitcoin and hold it. And the conclusion of the Fiat standard is that for as long as Fiat currencies exist, you need to run up a negative balance as much as possible.

[00:28:44] So the conclusion, the actionable advice of the Bitcoin standard is collect as many Satoshi's as you can. The actionable advice of the Fiat standard is collect as many negative Fiat's as you can. Try and be as indebted in Fiat, as you possibly can, make yourself indebted. It's not something I ever imagined myself advocating for.

[00:29:08] And if you don't know me, well, this won't sound as weird as if you knew me well, but it's kind of the logical thing that people learn to do, just because they've seen around them that this is what works and everybody follows. Everybody does their calculations and figures it out, arrives at this conclusion.

[00:29:28] But I'm much more of a kind of you could say pig-headed stubborn person who thinks from first principles. So I'm inclined to think that this is stupid and only after really thinking very hard about how Fiat works, and how lending is mining in Fiat only after arriving at this conclusion, do I see the value of doing what everybody's doing and that is try and get into as much debt as you can.

[00:29:52] I can see why this is a problem, why this is a good answer in in Fiat. And to be frank, you look at a place like Lebanon, people who had savings were wiped out effectively. Their savings were destroyed in the banking system, but people who had debt, people who were irresponsibly long on negative fiat balances ended up doing really, really, really well with this currency collapse.

[00:30:17]Somebody bought an apartment for a million dollars in Lebanese Liras at that time, and now they owe the bank, something like $50,000 in Lebanese Liras. They still owe the same amount of Liras, but the Lira has collapsed. So basically, they can pay off their entire house and own the house and not have to worry about any more loans.

[00:30:37] The system is rigged in a way where, when things go bad, the bigger your negative balance, the better off you are and the bigger your positive balance, the worse off you are. And if you think about it, all the rich people in Lebanon, well, a much smaller percentage of their net worth is in Lebanese Liras than the poor people.

[00:30:59] The poor people are the ones who are trying to save up for a car or save up for a new house for the down payment for a house, or trying to, put a  couple of Liras together to afford the kids' education. These people get wiped out. And they lose everything. On the other hand, people who are able to borrow, you know, people who have enough money and assets that they can borrow with it, they have large negative Fiat balances.

[00:31:30] And when the currency gets wiped out, all the debt gets wiped out and they get to keep the assets. Who am I to disagree with that logic. Under Fiat it seems like it's just, you know, if you live in this world, there's an Arabic saying that goes... which basically means if your people go crazy, then your brain is of no use. So everybody around you is living in that kind of arrangement trying to reason with it and trying to reverse it is kind of counter productive. You might as well just join the mania. I'm not so sure what to make of this.

[00:32:04] I'm not sure what to conclude then, you know, I don't give investment advice, and if you do end up you're lowing into a loan and get wrecked, don't blame me. I'm just communicating the kind of ideas that have been springing in my mind about this. What do you guys think? Boris, you had your hand up?

[00:32:24] Boris: Yeah, it was regarding the question Max posed. I think Saylor, right now he's obviously taking the loans as a speculative attack. He's betting on the Bitcoin price going up, but even if we end up with hyper Bitcoinization where Bitcoin will appreciate at the level of productivity gains, let's say two or 3% per year, even then the loans will be very prevailing.

[00:32:47] And the reason is because of the tax system in most of the jurisdictions. So let's say Bitcoin right now is at 50,000, goes up to 1 million. If you go and sell the, sell the Bitcoin, you'll be sitting at 95% gains, and in most jurisdiction you will pay anywhere between 20 to 40% taxes. So if you manage to put that Bitcoin as a collateral and obtain a loan for 1%, then you're talking about 20, 20 year return.

[00:33:16] So you will pay in taxes, what it would take you 20 years to pay in interest. So these loans will be prevalent even after hyper Bitcoinization. The other thing I was just thinking when we were discussing this topic is, I think these loans are actually deflationary.

[00:33:34] So if you take the whole monetary supply of Fiat, plus the Bitcoin in circulation, when you actually take out this loan, yes, during the loan process fear gets created so monetary supply expands. But you always put up the Bitcoin as collateral and you put it up at higher multiples than the loan you take.

[00:33:56] So let's say you take $1 million in loan and you put up $2 million as a collateral in Bitcoin. You actually end up in net reduction of monetary supply. I don't know,

[00:34:07] Saifedean Ammous: Sorry, could you repeat that? I'm not sure I got it.

[00:34:10] Boris: So every time a loan gets created the money supply expands, right? Because of the way fractional reserve banking works.

[00:34:20] When, when you take your Bitcoins and you put them up as a collateral, the Bitcoins don't get loaned out. They sit in and address as a collateral. It's a multisig address where basically the lender, the lender of the fiat, the owner of the Bitcoin has the key.

[00:34:36] And the third signatory is a third party in case there's a dispute about the loan. If you assume that those Bitcoins are sitting without being lent out, the actual loan, which takes place in fiat becomes deflationary. Because if you put up more Bitcoin as a collateral than the loan you are taking out, the whole net effect is actually deflationary.

[00:35:00] If you assume that the whole supply monetary supply is fiat in circulation, plus the existing Bitcoin in circulation.

[00:35:09] Saifedean Ammous: Okay. I think I have two problems with that. The first thing is that when we're thinking of supply, I don't think it makes sense to add Bitcoin and fiat supplies together because for thinking about it in terms of inflationary, it's not the Bitcoin, we're not taking Bitcoin out of circulation.

[00:35:26] The Bitcoin is still there and then new fiat is getting issued.

[00:35:29]Boris: No, no, no. The Bitcoin gets taken out of circulation. If it sits as a collateral, neither the owner of the Bitcoin can use it, neither the recipient of the collateral.

[00:35:39] Saifedean Ammous: Yeah. Well, my definition of circulation is what I mean by, for me, the Bitcoins are always in circulation or never in circulation.

[00:35:49] There's no difference between Bitcoin in your wallet or Bitcoin in a collateral. So the supply of Bitcoin has not gone up or down. It's still somebodies Bitcoin. The other thing is with fractional reserve banking. The disagreement I have with what you said is you were saying, because the Bitcoin's not going to get rehypothecated, they're not going to be making more loans.

[00:36:12] But the way that it works is it's not that banks need your collateral or your deposit in order to be able to issue loans. Once a banking institution has a lending license, they can issue loans, they can make money. This is like in the textbook and the macro economics textbook that we teach.

[00:36:32] We teach fractional reserve banking in the sense of, john walks into the bank and deposits $100 and the bank tells him he can have them any time, but then they go and they issue that $100, the issue, 80%, $80 as a loan to Alice. And so now the money supply has gone up from 100 to 80. It's a good, intuitive way of teaching this, but that's not how it actually works.

[00:36:54] John is not needed. If the bank exists, the bank can make the $80 loan for Alice and Alice walks out with $80. The bank is able to just create money. So new money is created when you make a loan. So Bitcoin being there, you giving your Bitcoin to a bank just means that the bank is able to create more fiat.

[00:37:15] So there  will be more fiat. When you were saying your argument was that it is deflationary, but the way that I see it, so you're saying deflationary because it takes Bitcoin out of circulation and because no more Bitcoin is created the way that I would. Yeah, go ahead.

[00:37:29] Boris: It is inflationary on the Fiat's side, you're absolutely right.

[00:37:32] Because once the loans gets made, you have a balance sitting on the one making the deposits and also the recipient of the loan has exactly the same balance or 80% of whatever the fractional reserve is. So basically, yes, you're creating fiat money, but on the other side, if you consider Bitcoin as money, if you don't consider it as an asset, which is not money,if you consider it as a money, that Bitcoin, which is used as a collateral cannot be used.

[00:37:59] It's frozen. Neither the one who puts up the Bitcoin as collateral can use it. And the bank, which is the recipient of the collateral cannot use it either.

[00:38:09]Saifedean Ammous: It is being used. It is being used.

[00:38:12] Boris: But you cannot spend it. Neither the owner of the Bitcoin who put it up as a collateral cannot spend it, neither the bank can lend it out again. So I would think that these Bitcoins are...

[00:38:22]Saifedean Ammous:  Boris,  hodling is using, it is being used by being there. So you don't have to buy coffee with it in order for it to be used still. It's still part of the assets of the bank. It's in the assets of the bank.

[00:38:37] Boris: Let me twist it a little bit. What if I, as a depositor in the bank have fiat sitting in the bank and the bank makes up the rule that the fiat, which we'll lend out, you cannot use.

[00:38:51] So basically if you wanted to eliminate fractional reserve banking, the way to eliminate it is basically, you are giving the deposit into the bank and you cannot use it for the term of the loan. So the bank lends out the money for three years, that's the way banking used to work back in the day, you used to have term deposits, the reasons they were third term deposits, you were matching the longevity of the deposit, the deposit with the longevity of the loans. Having the term deposits, what it made is basically, you didn't end up with the multiplier effect on the fiat. The balance, which ended up on the, on the borrower side was not available for the one making the deposit.

[00:39:33] So that's how basically you were preventing the multiplier effect of the fractional reserve banking. Yeah. And this is the same. You're making a deposit of the Bitcoin as a collateral, which means it's not available for you as, as the depositor. And it's also not available to the bank to make a loan on it. It's yours.

[00:39:53] Saifedean Ammous: The bank does make a loan on it. Here's how to think about it. Let's say you give $1,000 of Bitcoin to the bank. The bank can increase the money supply by let's say $500, if that's what they issue. If they give you a $500 loan, the Fiat money supply will go up by $500 because you gave your $1,000 Bitcoin as collateral.

[00:40:17] Boris: Absolutely agree on the Fiat's site.

[00:40:20]Saifedean Ammous: Okay. So then the result is that it is inflationary on fiat, right?

[00:40:23] Boris: On Fiat is inflationary and deflationary on the Bitcoins side.

[00:40:27] Saifedean Ammous: Yeah, well, I wouldn't say deflationary because you're not destroying the money. You're just adding demand for it. I mean, you're just locking up Bitcoins from the market.

[00:40:36]You know, instead of you selling your Bitcoins in order to buy the house, you gave your Bitcoins to the bank. So you've taken coins off the market. So it's, I guess you could say deflationary in the sense of the price of Bitcoin rising, but not in the sense of the supply contracting.

[00:40:53] You've taken them from the market and now the price is going to rise. This is why ultimately I think if I was going to add the warning to this story, I think there is a twist in the tale in this that I think, and I've said this for a while, I think there will come a point at which you can't borrow if you are into Bitcoin.

[00:41:19] I think they're just going to stop lending Bitcoiners. You're going to have to make a choice. You either own Bitcoin, or you can get a mortgage. I can see this happening because the way that you describe it and the way that we discuss it, it's inflationary for Fiat, we're getting more fiat made and we're getting more demand for Bitcoin, and we're finding more and more uses for people to buy Bitcoin and use it as collateral.

[00:41:45] And we're taking Bitcoin off the market, so people don't sell their Bitcoins. They get to live off it. And that takes coins off the market, and that tells everybody, hey, you should get in on this Bitcoin.

[00:41:56]It's increasing the demand, decreasing the supply and basically providing more moon fuel. Whereas the dollar is continuing to get inflated. So I don't see how this resolves in anything other than one of two scenarios, one hyperinflation, the dollar is collapsed because everybody's borrowing and two, no more lending for Bitcoiners, you have to choose.

[00:42:27] And, you know, at this point, credit and lending is all centralized through the central bank everywhere. So the central banks can  just blacklist people who are into Bitcoin. I don't think that we're going to be witnessing governments, fighting Bitcoin by going very hostile against it.

[00:42:45] But I can see this being pulled as a card, I think we might end up having to have a system because this is like a leak between the two systems that is kind of dangerous. I think they may shut it off and prevent people from being able to do this and then that'll make it much harder to do this kind of speculative attack.

[00:43:05] And then we'll have the Bitcoin system where you have to hold and buy and sell and you can borrow against your Bitcoins. And so if you want to buy a house, you just need to sell your Satoshis and bring them on the market. And then we'll have the Fiat system in which everybody's living in debt.

[00:43:22] Boris: One way to throw a wrench into the NGU technology, if I were the government, I would basically tax the gains as if they were realized, because you could almost argue, well, this is money, you don't actually have to sell the Bitcoin to realize the gains, so if they forced you to declare your balances and then pay taxes right away at the at the year, closing, reevaluate into fiat, and force everyone to pay taxes on it, that would throw a big range into the NGO. You would get to keep only maybe your 60% after paying your 40% taxes.

[00:44:04] Saifedean Ammous: Yeah. But I mean, it's still 60% more than what you would get if you kept fiat.

[00:44:08] Boris: Yeah. That's true. Hey, what do you think about, about this other thought, I was just thinking the other day, to move the Bitcoin price up by, let's say, there's $1 of new money coming in. The price moves up by $3 or $3,5 or something like that, and the reason for that is because there's relatively much less Bitcoin available for sale. So let's say in order to move up the Bitcoin market cap by 10%, you probably just need to add 3% of the total value. So, if you think about the monetary  supply of the Bitcoin and how it's growing and what kind of inflationary pressure it adds because of the fact that you are putting $1 in and you're expanding the total monetary supply by $3, or maybe up to $3,5 and the bigger short squeeze there's going to be on the supply of Bitcoins,

[00:45:02] I think the higher, this number will go in terms of how much money flowing in and  how much the Bitcoin appreciates. And,  that means right now, the people who are holding Bitcoin, they have $1 trillion in value, more or less the market cap. If you add another, let's say 300 billion, you will, assuming that this ratio holds, we will go from 1 trillion to 2 trillion. So the inflow of money actually generates three times bigger inflation. Then the money flowing in, I don't know what your thoughts are on this.

[00:45:38] Saifedean Ammous: You mean the appreciation.

[00:45:40] Boris: Appreciation, but at the same time, that means inflation,  because it means that people who are holding, they go from 1 trillion, to 2 trillion in the money, which they hold.

[00:45:53] Saifedean Ammous: I'm wondering, where'd you get the $3 to one ratio from?

[00:45:56]Boris:  I will look it up, but there's this there's bunch of, I think it came on the Willie Wooster, one of the papers he published.

[00:46:04] So he actually looked at it, and if you see it, the amount of money flowing in and how much the Bitcoin price goes up. It makes complete sense because if you're assuming that the supply is constrained, the price rises can be amplified and much bigger than the amount of money flowing in. It really all depends about the willingness of people to sell.

[00:46:29] Saifedean Ammous: Yeah, this is what it comes down to because I mean, at the end of the day, you're saying $1 comes in, but that's a net dollar of selling, and then as the price rises selling increases. I can imagine that this might not hold toward cause new money's coming in, but all the money wants to sell as well as number go up.

[00:46:50] Boris: I think the data should be available. I mean, right now we have 1 trillion market cap and I seriously doubt that actually people spend altogether $1 trillion.

[00:47:01] Saifedean Ammous: No, for sure. Not. No, no, but if you want to spend, if you want to see how much people have spent, you, look at the value of the mining rewards every day, that's essentially the net new money. This is how much people have spent over the last 12 years. How much was the market value of the new coins and what was the price? And what was the quantity and yeah, the ratio, I think has been much less than a third. I think if you look at the value of all the mining rewards in Bitcoin history, if somebody can look this up, I I'd be surprised if it is at $100 billion. It's probably less than a hundred.

[00:47:41] Boris: That sounds, that sounds reasonable.

[00:47:44]Saifedean Ammous:  Yeah. I remember I did this calculation a few years ago and it was  around 10 to 20%. I'm not entirely sure, I don't have the numbers in front of me now, but I think it was around 10, 20% that the total value of the market of the money spent on buying Bitcoin is about 10, 20% of the market value of Bitcoin today.

[00:48:03]Because Bitcoin appreciates and people increase the value they want to hold it, increase their valuation of it and continue to hold it. So as the price goes up and more people don't sell that makes us realize that they have a higher valuation of the price.

[00:48:21] Max: I would like to comment on something Boris said a few minutes ago. Boris, correct me if I'm wrong, but I think you said that one thing that governments might do someday is to tax my Bitcoin as if I was selling my Bitcoin by the end of the year or something like that. Is that what you said?

[00:48:44] Boris: That is correct. In fact, many jurisdictions already do that. So for example, in Mexico,  not with the Bitcoin, not with Bitcoin right now, but for example, in Mexico, if you hold the US dollars, you have to reevaluate every single month and pay taxes on your gains. 

[00:49:00] Saifedean Ammous: The gains being the Mexican shitcoin devaluing,

[00:49:05] Boris: Mexican shitcoin devaluing even faster then the US dollar shitcoin.

[00:49:08] Saifedean Ammous: Yeah. You're not making any gains, but you're still paying taxes.

[00:49:12] Boris: Absolutely. Yes.

[00:49:13] Max: That's, that's ridiculous. Okay, we should never underestimate the government willingness and capacity to steal our money in many ways, but go ahead.

[00:49:25] Boris: It's even worse in Mexico, in Mexico, they even tax you on the accounts receivables, which you have in foreign currency.

[00:49:32] So you didn't even collect it from the customers and you already have to pay tax on the, on the, on the currency exchange rates gains.

[00:49:41] Max: Yeah, that that's unbelievable. But anyway, so I didn't know about this thing in Mexico. I would not be surprised to see that this exists in many other countries, but the point is the US dollar, the Euro, the Yan are currencies, right?

[00:49:59]The government of Mexico acknowledges that dollar is a currency. When it comes to gold, when it comes to stocks, when it comes to reeds and now Bitcoin, they don't treat that as currency. They treat that as an asset, that has some appreciation or depreciation, and only when you sell it, you generate a taxable event.

[00:50:25] The moment that the government applies this same thing to Bitcoin, the government is acknowledging it is a currency. It is money because what they do now is for instance, here in Brazil, they treat that as crypto asset, which is a very, very vague definition. They don't treat that as US dollar or as stock or anything. In the legislation for taxation, it's kind of similar to stocks, not really the same, but kind of similar. But they have to treat that as something other than money in order, for the whole legal system to be coherent, you know, legal, tender and all of that, the moment they say, well, we're going to tax, regardless of whether you sell it or not, they're acknowledging it's money.

[00:51:20] Saifedean Ammous: Yeah. But I mean, when, when did incoherence ever stop them. So yeah, the law becomes slightly more incoherent than it already is. You have a lot of in incoherent bullshit in Brazilian laws and in Mexican laws and all kinds of laws all over the world. I doubt this is going to be the point at which they stop, especially if there's a lot of money at the end.

[00:51:41] By the way Max, in the US, there's also multiple lawmakers, which are already calling taxing unrealized capital gains.

[00:51:49] So basically you will tally all your assets at the end of the year and pay tax on your gains, even though they are not realized.

[00:52:00] Max: I guess I'm going to take a boat trip next weekend.

[00:52:08] Saifedean Ammous: All right. Ahmed, you had a question.

[00:52:12] Ahmed: Yes, thanks. When Michael Saylor for a plan B say in their model...

[00:52:22] Saifedean Ammous: They're not the same model. Michael said it doesn't have the same model as plan B, just to be clear. It's plan B's  model, I think is what you're saying.

[00:52:29] Ahmed: Let's stick to a plan B's  as to one evaluate Bitcoin in eight years around $10 trillion market cap. So is he taking the dollar inflation into account?

[00:52:42] Saifedean Ammous: I think the 10 trillion is not in eight years. I think the 10 trillion is in four years. According to his model, though in eight years will be a hundred trillion at around 2030. That's what at the moment he says.

[00:52:57] Ahmed: So, in eight years the hundred trillion will be different value than the other hundred trillion, right now?

[00:53:03] Saifedean Ammous: Most likely yes, but the model essentially doesn't factor in inflation, doesn't care about inflation. It just looks at nominal numbers. So yeah, it could well be, you know, the model could we could have hyperinflation and Bitcoin hits $1 million, and Bitcoin buys you less food than it buys you at $50,000 today, if the dollar hyperinflates.

[00:53:30] So this is just like a projection of the price against the us dollar. It tells us nothing about the purchasing value purchasing power of the us dollar. So what the model is saying is safe. $1 million in 2025. It makes no promises about what you can get for your $1 million for Bitcoin. You may be able to get a house.

[00:53:53] You may be able to get a cow, or you may be able to get a pack of cigarettes, but the model doesn't promise anything.

[00:54:01]Ahmed:  Or can we think about that? It's saying that it will be $1 million in four years in real terms or what would be equivalent to $1 million that it is equivalent to right now .

[00:54:14] Saifedean Ammous: I mean, obviously you can say whatever you want, but I don't see that being a meaningful interpretation of the model because the model is just built on nominal values. It hasn't been adjusting to inflation on the data points in which, you know, the model is built on the data from 2009 to 2021.

[00:54:41] It doesn't make any adjustments for price changes. During that time, it just looks at nominal values. It just looks at the exchange rate. You find the exchange data, you see that on Bitstamp at that date, it was worth this much. And then you just calculate that you can't treat it, twist it around. I think, I guess you could. You could run the model again with adjustments for purchasing power and extrapolate the results based on real purchasing power. But the difference there is that you won't be able to tell the nominal value until after the year's completed.

[00:55:20] So for instance, we know that in 2025, let's say it says that the predicted value is half a million dollars, but you won't be able to know how much half a million dollars is worth in today's terms until the end of the year, because then you can make the inflation adjustment on the purchasing power.

[00:55:37] Yeah. I mean, this is what it says. This is what the model says at this point. It just gives you normal numbers. I don't think you can push it much further.

[00:55:47] Student 3: I'm wondering if there's been any talk, I kind of doubt this, but circling back for a moment to the question of taxing unrealized gains. Was there also any discussion of getting your advantage of having unrealized losses?

[00:56:00] Did they talk about calculating that as well, or does anyone know, has there been any discussion of that at all or is it only the unrealized gains? That of course we would pay out.

[00:56:11] Saifedean Ammous: How  did they do that in Mexico? Boris, in case I know this sounds crazy, but if the Mexican Peso was to appreciate against the dollar and do you get to write off your losses on the dollar at the end of the month?

[00:56:33] Boris: Yes, you do. But only at the end of the year. So throughout the year you pay preliminary income tax based also on the gains, but the loss is you cannot write them off until the end of the year.

[00:56:46] And it gets even more funny because. One month, the dollar can go up, you pay tax, then it goes down. If you don't write it up, then it goes back up next month, you pay the tax again.  By the time, the year is finished, you actually overpaid by considerable amounts. So yes, the governments are very ingenious on ...

[00:57:09] Saifedean Ammous: And let me guess, of course, when they pay you back the difference on the taxes, the peso would have already depreciated so much from the original amount that's also going to get you another way.

[00:57:25]Boris:  Yes. And they don't actually pay it back to you. You can write it off against the future taxes on me.


[00:57:32] Saifedean Ammous: Oh so it's even more inflationary, wow. I mean, when you put it that way, the case for the Saylor strategy becomes even more and more compelling. And I remember he mentioned the tax case, which is, you sell have to pay taxes, you don't sell you don't have to pay taxes. He clearly knows what he's talking about.

[00:58:00] And in that this is a strategy that people have followed before, under fiat. This is basically how professional rich people live. They have assets and they just continue to live off of them. And you can see where it comes from, and you can see how, how basically Fiat just ends up being a system of apartheid between the haves and the have nots.

[00:58:22] Because if you have assets, you're constantly getting subsidized because you can borrow against them. If you have assets and you borrow against them, You're constantly getting subsidized and you're winning. If you don't have assets, you're constantly having the ladder getting kicked away.

[00:58:37] You know, you're trying to put together a couple of coins so that you can have a whole home start a family, feed your kids and give them a decent life. But every step of the way you're having the ladder kicked away from you and you need to go and get the ladder again and start all over again. And then somebody kicks it and it's effectively subsidy to the people that have the assets and who are borrowing.

[00:59:02] it's incredible. Sure am, glad that that Bitcoin fixes all this.

[00:59:09] Student 3: When?

[00:59:13] Saifedean Ammous: Getting sooner, getting sooner.

[00:59:17] Boris: I just wonder whether the types of Krugman and Roubini, whether they are really so clueless or they're just. Parasites, which are benefiting from the system. And clearly now that what's happening.

[00:59:32] Saifedean Ammous: Yeah. I wonder, I wonder the same quite often, but I think the best answer is to just ignore these people.

[00:59:38] They don't matter, nocoiners. They're never going to be happy about anything that happens. There's a class of people. I was tweeting about this, there's a  class of people that -essentially it's fiat brain and it's the world of fiat in which everything has to flow by decree. Everything happens because experts decide and officials decide and everybody gets together and they decide what needs to happen.

[01:00:02] And these people in their world, what's going to happen to Bitcoin is a function of what their favorite politicians are going to decide, and the politicians will decide. And then that happens. And in their entire mind, They cannot conceive of a process of something emerging without government command.

[01:00:27] They can't  imagine, not just money, they can't imagine a game of baseball taking place without government being out there to regulate baseball and to tell people how to throw the first pitch and how to  count on the runs, you know, without government who would count the homeruns. There are people who think like that.

[01:00:49] And in their mind, this is the problem that we have, in their mind when you bring up Bitcoin, for them it's a matter of, all right, how is this thing going to stop working? And it's not a question of, will it work or wont it  work? It's a question of what is going to be the thing that stops it?

[01:01:05] Because clearly it's going to stop. Clearly, it won't be allowed. Clearly my wise benevolent government is not going to allow it to continue. So, how are we going to stop it then? It's such brain damage where they're constantly thinking of the question, instead of trying to think about, all right, why is this thing working, they're constantly thinking about, how is this going to stop working?

[01:01:30] Because clearly it's going to stop working because we can't just have something emerge like that because that's crazy. It's like you're telling me that a child is going to emerge out of a trashcan, you know, throw your trash in the garbage bin outside, and then the next day that trash will get together and then a child will emerge from it. If you said that to me, I'm just going to think, no, you can't just make children out of garbage. Trash bins don't make children, children, there's a procedure for how children are made and you have to follow the correct procedures.

[01:02:02] And that's how our children come from. This is how these people think, in their mind, no you can't just make a Bitcoin and then you use it to buy your coffee and save your life savings. We have a procedure, you know, we need to get all of the top economists in the country to sit together, to study what is the best money, and then to decide on what dead presidents we're going to put on it and what landmarks we're going to put on it.

[01:02:28] And what colors are we going to put on it? And then we'll have our national currency and that's how it works. This is how it seems for them. And so you see like all of these idiots that are constantly coming up with problems for why Bitcoin can't work and why Bitcoin failed and why Bitcoin has failed and why Bitcoin will fail and why Bitcoin Bitcoin, blah, blah, blah.

[01:02:44] And it's just, oh well, bitcoin's too volatile, therefore currency is not supposed to be volatile. And in my definition, a currency needs to be stable in value and Bitcoin is not stable in value. Therefore Bitcoin failed. And yet a trillion dollars worth of Bitcoin continues to be held by people and people don't give a shit about the people who say that it's failed.

[01:03:07] Like the child continues to come out of the trash can. It's real. It happens. And it's amazing. It's beautiful. I love it because, what I love about it is the fact that these people are going to really be the absolute last to get Bitcoin. The shoe shine boy is going to get Bitcoin much earlier because the shoe shine boy is not so emotionally and intellectually invested in the fact that,  we have to have the correct procedure for having government decide things.

[01:03:39] They don't live in the fiat world. It's the intellectuals of the fiat world, really that live in this world where they think,  I have a PhD in economics and therefore I think Bitcoin is too volatile. And therefore, I think Bitcoin is not going to work, or I have a PhD in economics and I think deflation is bad and Bitcoin is deflationary.

[01:03:57] Therefore Bitcoin can't work. So what are you going to do?  How do we move from Mr. Professor PhD fiat brain, calling this thing unworkable, because it's deflationary to the trillion dollars that are sort of stored in this thing disappearing, like how, where's the causal link?

[01:04:18] How do we go from Mr. Professor think tanker has announced that Bitcoin can't work because it is deflationary to Bitcoin stopping working. When will the last block be mined? When will the last coin be traded? Like when do people just realize, all right, that's it, you know, this is not worth anything and they just forget their private keys and move on with their life.

[01:04:40] How exactly do you expect $1 trillion of value to dissolve? Just because you said it can't work. It's amazing. the lack of ability to think amongst those people is really astonishing. They'd just throw out these objections and the delusion that  our objections are to the world more than the world works than the decisions of individuals that are acting out of self-interest. 

[01:05:10] Yes, people might get rich if they hold Bitcoin, but it won't work as a currency, so stop getting rich, you know,  the good economists told you that this thing won't work as a currency. So stop trying to get rich from it. Eventually it's not going to work. One day, we're gonna go from 1 trillion or 10 trillion, 100 trillion to zero and the economist is obviously going to be correct, and you're not gonna want to be holding the coins then.

[01:05:35] We don't exactly know how we're going to go from 1 trillion to zero, but you know, where's your fucking PhD? People with a PhD all agree. It's going to zero. So who are you gonna believe? You know, number go up, the fact that you can just continue to trade it for a higher amount of dollars every year. Are you just going to believe that empirical fact over the people who have PhDs, who are explaining to you why it can't work, this is how these people think.

[01:06:05] And I really, really absolutely love what Bitcoin is doing, because it's just, it's giving them cognitive dissonance in a very powerful way. It's going to shatter this worldview and we really need to shatter this worldview. Like we really need to shatter this class of people who think they're in a position to tell others what to do with their lives, because we have PhDs and we have degrees and we are experts.

[01:06:30] These people need to have their egos destroyed. These people need to really have dark, what, what is called the dark night of the soul.  Because everything that you believe about the world is gone. These people really need that. I don't say it as a kind of you know, in a vindictive way, I think it's not  that they need it, it's the rest of us that need it.

[01:06:56] The rest of us are the ones who are suffering from it. And we're the ones who need them to, you know, have some humility and have their egos destroyed for a bit. Because in the last couple of years, this shit has gotten out of hand.  The cult of the craziest who believe that their special insight into epidemiology allows them to control the lives of 8 billion people, and the cult of the craziest who believe their insights into Keynesian macroeconomics allows them to control the money for 8 billion people.

[01:07:25] These people need to realize, no, the world actually works without you. You're lecturing birds to fly, the birds will still fly no matter what the fuck you say in your lectures.

[01:07:36] And they need the shock of realizing that the birds can fly without us. And they're just, waking up today, and they're seeing with Bitcoin every day, they wake up and they see birds flying without their lecturing. And then they get together and they start lecturing and tell the birds to behave as they want.

[01:07:53] I think they're writers.  They've spent the last seven, eight years  making stupid snarky jokes about Bitcoin. They hosted Craig Wright and they've done everything to portray the entire Bitcoin space in the worst light possible. And it's just a bunch of idiot journalists with high school level humor, constantly making jokes about it.

[01:08:16] And in the last couple of months,  they're beginning to really come to terms with the fact that, holy shit, maybe we were wrong. Yeah, they're seeing more and more banks and more and more corporations getting into Bitcoin. And  it's not pleasant. I would not want to be in a position where you've got a trillion dollars and you have all the world's major banks issuing reports about how this thing is working and what needs to be done.

[01:08:41] And, all of these journalists had staked their reputation on the fact that this was a stupid scam that was going to die. So, it's going to be fun watching them get taken down a notch or 20 by Bitcoin. I think that's probably about enough for today. It was great chatting with you guys and I will see you on Thursday.

[01:09:06] And again, as a reminder, don't try any of this at home. Take care!