#716 Bitcoin Is The Best Asset w/ Michael Saylor

Michael Saylor is an entrepreneur and business executive, who co-founded and leads MicroStrategy, a company which provides business intelligence, mobile software, and cloud-based services. He has become well known in the Bitcoin community for using the company's balance sheet to purchase more than $7 billion in bitcoin. In this conversation, we discuss bitcoin, MicroStrategy’s bitcoin allocation, politics, monetary policy, and how individuals should think about bitcoin. ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp ======================= Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Compass was founded with the goal of making it easy for everyone to mine bitcoin. Visit compassmining.io to start mining bitcoin today! ======================= AG1 by Athletic Greens, the category-leading superfood product, brings comprehensive and convenient daily nutrition to everybody. Keeping up with the research, knowing what to do, and taking a bunch of pills and capsules is hard on the stomach and hard to keep up with. To help each of us be at our best, they simplify the path to better nutrition by giving you the one thing with all the best things. ONE scoop of AG1 contains 75 vitamins, minerals and whole food-sourced ingredients, including a multivitamin, multimineral, probiotic, greens superfood blend and more in one convenient daily serving. The special blend of high-quality, bioavailable ingredients in a scoop of AG1 work together to fill the nutritional gaps in your diet, support energy and focus, aid with gut health and digestion, and support a healthy immune system, - effectively replacing multiple products or pills with one healthy, delicious drink. To make it easy, Athletic Greens is going to give you an immune supporting FREE 1 year supply of Vitamin D AND 5 free travel packs with your first purchase if you visit athleticgreens.com/pomp today. Again, simply visit athleticgreens.com/pomp to take control of your health and give AG1 a try. =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Michael Saylor is an entrepreneur and business executive who co-founded and leads MicroStrategy, a company which provides business intelligence, mobile software and cloud-based services. He's become well-known in the Bitcoin community for using the company's balance sheet to purchase more than $7 billion in Bitcoin. In this conversation, we discuss Bitcoin, MicroStrategy's Bitcoin allocation, politics, monetary policy, and how individuals should think about Bitcoin. I really enjoyed this conversation with Michael, as I always do, and I hope you do as well. Before we get into this episode, though, I want to quickly

• 0:44Anthony Pompliano?

  talk about our sponsors. First up is LMAX Digital. LMAX Digital is the number one institutional crypto exchange, which offers clients the deepest pool of crypto liquidity on the planet, underscored by 100% uptime track record through volatility spikes. Leveraging LMAX Group's liquidity relationships and ultra-low latency technology, LMAX Digital is the market-leading solution for institutional crypto trading and custodial services. They feature a central limit order book, streaming, spot Bitcoin, and other cryptocurrencies, all paired with US dollars, euro, and yen. LMAX Digital, the number one institutional crypto exchange. If you're an institution, you gotta be using LMAX Digital. They're secure, they're liquid,

• 1:23Anthony Pompliano?

  and they're trusted. Learn more at LMAXdigital.com/pomp today. LMAXdigital.com/pomp today. Next up is Compass Mining. Compass Mining is the world's largest marketplace for mining hardware and hosting. With Compass, everyone can mine Bitcoin. Their team makes it easy to start mining wherever you want, at home or in one of their 23 hosting facilities around the world. Through the Compass marketplace, retail miners can access mining hardware with similar prices and purchase plans as the world's largest mining companies. Compass miners own their machines, choose whatever mining pool they want, and mine directly to their own wallet. Miners who don't want to host their machines can deliver ASICs directly to their doorstep. Simple and low-cost hosting agreements, coupled with best-in-class customer

• 2:08Anthony Pompliano?

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• 2:53Anthony Pompliano?

  with Bitcoin collateral to protect your funds. This also makes it a great fit for crypto institutions who want to diversify their treasuries and reduce risks while staying on-chain. You get your choice of terms from one to 12 months and a fixed rate that's higher than what you'll get at a bank or in many fixed income markets. Visit circle.com/pomp to book a meeting with one of their experts. Again, circle.com/pomp. Go there if you want to earn yield on your balance sheet. Circle.com/pomp. All right, let's get this episode. Michael, I hope you guys enjoy this one.

• 3:24Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:47Anthony Pompliano?

  Good morning, everyone. Welcome back to the Best Business Show. I'm super excited. Today we have a very special episode. Myself and Michael Saylor sitting down for a two-hour in-person conversation. Michael and I recorded a podcast episode about a year ago, right after he announced that he was going to put a very material portion of his company's balance sheet into Bitcoin. And so maybe, Michael, we can start with kind of a one-year update from when you actually decided to make that decision and how things have been going so far with MicroStrategy.

• 4:23Speaker 02

  Sure.

• 4:26Speaker 02

  Well, if you roll the clock back to July, we had $500 million of capital in our treasury. We were holding short-dated treasury securities and generating effectively like 20 basis points of yield on it. We'd seen a K-shaped recovery. Wall Street came back with a vengeance. Main Street was flat on its back. And it was clear there's monetary inflation. So we decided that we were going to lose a large portion of the $500 million in purchasing power if we didn't do something. My forecast then was probably like 25% inflation.

• 5:11Speaker 02

  And you could have got there just by looking at the S&P index. So I thought, you know, $500 million minus 25%, like losing $125 million in 12 months is kind of like losing money at 2 to 3x the rate that the 2,000 people in the company were making money. So we either needed to give the money back to the shareholders, or we needed to invest it in something. So, you know, the thought was, well, if we're a company, a Main Street company, struggling against all the lockdowns with all the uncertainty, and we are doing it minus $500 million, yeah, it feels like a university giving up its endowment as it goes into a crisis.

• 5:56Speaker 02

  Right? So decapitalizing the company, it was a way to give the 500 million to shareholders. They would have put it in the S&P 500, and they would have got 34% on it if we had done that. But we would have, in essence, left ourselves defenseless without any capital. So that was one strategy. The second was invest at all.

• 6:25Speaker 02

  I would have bought 500 million worth of Bitcoin if I was a private company. I just would have walked out, bought all 500 million. I would have done it at whatever $10,000 a coin. But as a public company, you've got to think about your outside shareholders. And you can't, it's not like there's 10. You can't just go to the 10 of asking what they want to do and get their buy-in. When you're a public, you've got a shifting set of outside shareholders that are changing every minute of the day when the stock market is open. So the way that you actually handle this is a bit more sophisticated. What we did is we transparently, we telegraphed that we were looking at this.

• 7:08Speaker 02

  Our first press release was an announcement that we were going to buy back $250 million worth of our stock over the course of 12 months. And we were going to invest $250 million of our capital in hard assets. And we said, we're looking at everything under the sun. And Bitcoin was one of the things. So my first love of the Bitcoin community was, the way that I knew I liked all the Bitcoiners was, was one day later, some cyber hornet, some Bitcoiner goes, MicroStrategy is considering buying Bitcoin with $250 million. Now, as Bitcoin merged in there with gold, silver commodities, equity, property, real

• 7:51Speaker 02

  estate, anything you could have imagined. But the Bitcoin community immediately picked up on that. I don't know how they do that, right? They must be scanning for this. Nobody else picked up on it. The stock was trading $120 a share. A week goes by, literally, you announce you're going to spend $250 million and buy your stock, like you think it would move? Nope, crickets.

• 8:17Speaker 02

  But the market had a week of notice and then a week later, we stepped it up into the next gear, which is, okay, we're gonna buy $250 million worth of Bitcoin. We made the decision, we're not splitting it across six assets, right? And it's a good thing we did, right? Because Bitcoin's up 332% in 12 months, gold is down 7%. If we'd split it 50/50, 125 million of gold, 125 million of Bitcoin, right? It would've cost us billions. If we'd gone all gold, it would've cost us many, many, many billions, billions. We'll come back to that in a second. So, we had to do something, but the question is what? So, we just picked Bitcoin, we made the decision, but we thought, ah, this is gonna be jarring for some people.

• 9:02Speaker 02

  Stock is around 122 at the time, right? To put this in perspective, the company's $500 million revenue generator, generating cash flow, and we have more than 500 million in cash and about 10 million shares. So, the company's trading at 1 times revenue plus cash. We give back all the cash, the company trades at 1 times revenue, the stock goes to 60 bucks a share, right? So, we're like 122, no one's really paying attention, but we said, well, maybe people think this is offensive, they're not gonna like this, or it's too risky. How do you actually orange pill every one of your outside shareholders at the same time? Well, you can't.

• 9:45Speaker 02

  So, the next best thing is, we just offered to buy them out. So, the idea is, if you don't like this, we're gonna buy, buy you out, we're gonna post $250 million to buy back shares at a premium. So, we offered to do the buyback at up to $140 a share, which is, you know, buyout premium. If you don't like it, then you sell your shares back to us for the profit. We wait 20 days. So the market trades for 20 days and, you know, in the first week, the market's trading on 135. Like people, so they're not even, they're not even quite sure about the buyout. Then after, after a while, they start thinking they're like, well, if I can put it back to the company at 140, then presumably maybe it's worth

• 10:29Speaker 02

  more. So the stock trades up a bit past the 140. And at the end of the tender period, we have about $60 million worth of shares tendered. Everyone that didn't like the strategy had 20 days to sell into the open market. And if you sold in the open market above 140, then why wouldn't you? And if you're still holding the shares at the end of the tender period and you don't like the strategy, you sell into the tender. So the result of the Dutch auction is we had $175 million of extra capital. You know, we thought about it. We put it in another press release. Okay, this is our primary treasury reserve asset.

• 11:10Speaker 02

  So the, the first notch was this is a treasury reserve asset. The second step is this is the primary treasury reserve asset. Then we bought 175 million more Bitcoin. So at that point, we're up to 425 million. The first tranche is in the 11,500 range. That was, that was a little bit difficult. It was more difficult to do the second tranche because Bitcoin traded down. We had a loss. It traded down to like, you know, into the 10s and even, you know, you remember that. So the second tranche, we bought at nine, at 10,000 something. Because we're committed, right? And, and you know, if you go pull the Twitter stream, there's all sorts of interesting commentary on our, our, you

• 11:55Speaker 02

  know, strategy.

• 11:56Anthony Pompliano?

  So you basically had done, let's call it up to that point, 425 million of a $500 million balance sheet. And you had rotated your shareholder base to people who were aligned with the strategy. And you had also planted the flag in the ground as the first publicly traded business in the United States to identify a treasury strategy that would leverage Bitcoin as the primary currency. The primary asset that you would use in your treasury. When you do all that, I know that there's been a whole bunch of conversations in the kind of behind the curtain. I don't need names, but what are other fellow publicly traded companies, other finance executives, people on Wall Street? At that point, are they saying you're crazy? Are they, oh, wait, this is really interesting.

• 12:40Anthony Pompliano?

  Tell me more about it, trying to learn like what was the reaction after the first $425 million?

• 12:44Speaker 02

  I think it was largely ignored by every other publicly traded company. I don't think there's a lot of awareness or to it. When we did our due diligence checks, we found overstock two or three years ago had a few million dollars of Bitcoin on his balance sheet. And that's it, right? We couldn't find anybody else. And, and so this is off the beaten path, but it seemed like so rational to me. It seems so obvious Bitcoin is is digital gold. It's basically engineered to be digital gold. What do you need in a inflationary environment? You need something that like gold, but better than gold. You have to make a choice.

• 13:28Speaker 02

  It was obvious that the institutions were coming, right? I mean, you had, you had companies like Fidelity getting into the space. Just, you know, six months earlier or whatever. But the fact that we're institutional custodians was a big checkbox. Grayscale was doing good business at that time. So, so it struck me as being a rational thing to do, but no other public companies had done it. And it wasn't, it wasn't totally clear to me why, although at this point now it becomes clear, right? In hindsight, so we went through that. We did the 425 million, the stock traded up, Bitcoin started trading up.

• 14:11Speaker 02

  At that point, I started speaking in public and, you know, you were the first person I spoke to.

• 14:17Anthony Pompliano?

  I remember.

• 14:18Speaker 02

  Right? And, and, you know, I had learned most of what I knew about Bitcoin by, by scouring the internet and looking at your podcast, looking at, reading all of the stuff that was posted, right? And I tripped through all these different things. And one thing I knew from your podcast was you always ask a question, right? You know, at the end, right? You're like, you can ask me a question, remember?

• 14:45Anthony Pompliano?

  Correct.

• 14:45Speaker 02

  Now you get to ask me the one question. So what I remembered about Pomp was he wants to know a book and he wants, and he wants a question or he gives me a question. So I'm like, gosh, what question am I going to ask Pomp? And, you know, how do you learn Bitcoin? You study Twitter and you study YouTube and you surf the web. So here's what I know. I know I get to ask you a question and I know Jack Dorsey has Bitcoin in his bio. So the question is, how do we, how do we get Jack Dorsey to buy Bitcoin next?

• 15:16Anthony Pompliano?

  Correct, correct.

• 15:18Speaker 02

  And, you know, at that point, we're all alone as a publicly traded company and people aren't quite sure if we're crazy, but what happens next is some bullish things, right? I mean, I thought that when Square bought Bitcoin, that was a seminal event, right? Because one data point is a question mark, but when you had the second data point, you can draw a line. And so that was a big day. When PayPal announced support for Bitcoin and they started, started moving it, that was a big day. That was a data point, right? Those were the data points that moved us from 10,000 to 12,000 a coin.

• 16:02Speaker 02

  And at some point, you know, somebody, some Citron research studied, you know, discovered my stock and Andrew left, I guess, said something positive. And the stock started trading up and then it traded into the high 100s and then it traded into the 200s and Bitcoin started trading up. And when we got into the teens. People thought, well, there's something interesting here. So the next step in our journey was like, in addition to me starting to communicate why we had done what we'd done, the next step in the journey was to go out and buy more Bitcoin. So we started buying more Bitcoin as part of the Treasury Reserve strategy, and that got people's attention.

• 16:46Speaker 02

  Then when the stock got to the 300 range, that was the highest it had been in a decade, 300. So we started thinking, well, maybe we can raise more money. And so we went back to the convert market and we had, we were trying to raise $400 million in a convertible debt offering, but it was extremely popular and we were oversubscribed. So we upsized the deal to $650 million. So that was a screaming home run. We, we had, we had proposed a 32 to 37% premium. We priced it at a 37.5% premium, the high end of the spread. We'd proposed like 1.25% to 0.75% interest.

• 17:31Speaker 02

  We priced at the low end of the, of the interest rate. So we raised $650 million at 75 basis points with a strike price of 398. The stock had not traded at 398 in a decade. So it seemed like reasonable, if you could sell $650 million of stock at $398 a share, seemed like a reasonable thing to do at the time. So then we took that, we bought Bitcoin with that. So that was, we started out with, with, we're going to raise the money for general corporate purposes. And along the way, the discussion was, what are you going to do with it? And I said, well, you know, I want to be able to buy Bitcoin with it. And they said, well, we should put that, you know, into the disclosure. I said, yeah, we should disclose that. And then they said, well, are you sure you're going to buy it? And I said, yeah.

• 18:16Speaker 02

  So eventually it flipped and it became, we're doing it to buy the Bitcoin. So that became.

• 18:22Speaker 02

  In the history of first, right, we're the first public company to buy Bitcoin on the balance sheet, we're the first public company to declared a treasury reserve asset. We became the first public company to do a Dutch auction, which is in essence like an equity issuance to buy Bitcoin, right? It's like I'm either buying my equity back or issuing the equity. So the first Dutch auction, you know, where the proceeds eventually became Bitcoin, then the first convertible bond to buy Bitcoin. And I think that all of those things rotated the shareholder base, right? I think the most important thing was to be long Bitcoin, right?

• 19:05Speaker 02

  So in essence, the first publicly traded company where the shareholder base is long Bitcoin. And it started out, my aspiration was it'd be great if half of our enterprise value is based upon enterprise software and half is based upon the assets. Because before we did this, we got substantially no credit for the assets. Like people were basically taking the 500 million and they're like, okay, well, that's going to be worth zero, right? Or negative.

• 19:34Anthony Pompliano?

  Because you were one times revenue plus just the cash on the balance sheet.

• 19:38Speaker 02

  Yeah. Yeah. So if you've got a low growth cash cow, right, that's like being a dentist where you're going to make a lot of money every year for a decade and maybe you'll make 5% more each year for a decade. If you've got a low growth cash cow, but the money supply is debasing at 25% a year.

• 19:59Anthony Pompliano?

  Kills you.

• 20:00Speaker 02

  Right? It's like the road to serfdom is working exponentially harder for a currency getting exponentially weaker. What I saw was 2,000 people doing 100,000 things right every year to make $50 million and then watching the enterprise lose $100 million a year.

• 20:25Speaker 02

  Due to a political decision. So in essence, we're running as hard as we can. We're falling backwards. And the situation was literally hopeless, right? Like, people wonder, where did the Bitcoin's hope come from? Well, it just was hopeless, right? I mean, the operating business is hopeless. And, and, you know, okay, you know, you're going to work yourself to death for a decade and do a million things right with 2,000 people, and you're going to be worse off in a decade than you are today. Okay, that's operationally hopeless, right? That's and then on the balance sheet, if somebody says, we're not even thinking about thinking about raising interest rates, it means for the next four years, you're going to get 0% on your money, and it's going to be worth half as much in 36 months as

• 21:10Speaker 02

  it is worth today. The balance sheet is hopeless.

• 21:13Anthony Pompliano?

  And this is all before we even see the persistently high inflation that we're seeing now, right? This was just from a market structure standpoint of this had been going on pre-COVID, got accelerated during COVID, you started to recognize this again, last year, if you go back and you look at the inflation numbers in Q3, Q4, I mean, it was obvious that we were in increasing or accelerating, but we weren't at 5% CPI for three, four, five months, right? Now's a much, much different situation. So at what point do you switch from this is purely a defensive, like treasury strategy of we want to take the cash on our balance sheet and put it in an asset that we can protect ourselves, protect our purchasing power, to then it feels like you've made the switch to go offensive? That first bond offering was an offensive move?

• 21:58Speaker 02

  I think you called it right there. I think that it's a defensive strategy through the Dutch auction. We had to do the Dutch auction to provide a graceful transition for our shareholders to get long Bitcoin, right? You're either long Bitcoin, or you're selling out to us at a premium, one or the other. And then from that point, Bitcoin started moving up, and our stocks started moving up. And then we realized that we, like the conservative thing to do is just stop there.

• 22:28Speaker 02

  And if we'd stopped there, I mean, we would be all equity, $475 million invested at $11,000 a coin or something. And that's not a bad result, right? We would have made 6X our money. But what we realized is, we could borrow money at 75 basis points. And we, and you know, Bitcoin's up 171% a year, every year for a decade, right? If you can borrow money at 1% and invest it at 171%, your arbitrage is 170% on how much? Well, how, how much do you want, right? Like, where are you going to stop that?

• 23:06Anthony Pompliano?

  When you borrowed at the 75 basis points, I was impressed. But then you followed it up and you borrowed even more at a 0% interest rate, if I remember correctly. What was the second offering?

• 23:19Speaker 02

  Because the first offering came out, the strike was 398, Bitcoin kept moving up, our stock kept moving up. Eventually, that bond was the best performing bond of the entire year. Right, Anthony? What I'm saying is, of every single corporate bond sold in the year 2020, every convert, every junk bond, everything sold, every municipal bond, whatever you could imagine, the single best performing bond was MicroStrategy convertible bond, which where you would have, you could have doubled your money, you know, at some point it's trading insane amounts, like triple, you know, your money on a bond. Okay? So we had good success there. And of course, Bitcoin kept moving up. And our stock kept

• 24:04Speaker 02

  moving up. And we realized by February that we could do another offering. The next offering was, we came in the market offering $600 million. The first one, we started with 400 million. This time, we started with 600 million. But again, it was oversubscribed. We upsized it, exercised the green shoe, it became a $1 billion, $50 million offering. And the range was 50 basis points to zero. So we struck it at zero. And, you know, up 50, 37, I forget the number, but we ended up having a 50% premium, or 47%? I forget exactly. It was a high premium, it was a low coupon, the strike price was $1,432 a share. So

• 24:47Speaker 02

  now, put this in perspective. This is 10 times. The price of the Dutch auction, you know, some number of months earlier. Now, um, so why would we do that? Well, because if you could borrow a billion dollars at 0% interest and invest it in something going up 170% a year.

• 25:06Anthony Pompliano?

  Pretty good trade.

• 25:08Speaker 02

  Why wouldn't you do it, right? Uh, like every single business on earth that's debt financed presumably is borrowing money to invest in something which is going to return a higher yield than the cost of the debt. Now, this, I want to pause here and make one point. The reason that I was sensitive to inflation, like, was I immediately saw the inflation in March and April in the stock market, right? Because my inflation bogey wasn't, if I were to go to all my investors and say, I got $500 million, I'm investing at a 2% interest and inflation rates 1%.

• 25:51Speaker 02

  They wouldn't have given me a pat on the back. They would have said, the S and P index is moving up 10% a year. Your hurdle rate, your cost of capital is not 1% or 2%, it's 10%. And maybe you're getting 5% yield on a, on a piece of debt and I don't know, hold my nose, but you're losing 5% a year. Half-life of the money is 12 years. Okay, fine, but like you shouldn't be holding, you should be, you should be buying your stock back or buying another company with that. Sitting on that cash is, it doesn't make any sense. Saifedine says, the dollar-weighted monetary inflation rate across, you know, all, all

• 26:33Speaker 02

  currencies for the last 30 years is 14%. Interesting number he comes up with, 14% is the inflation rate of the currencies. Now, that would be the inflation rate on scarce desirable assets or, or any portfolio of assets. And if I look at my screen right now, over the last 10 years, the S and P 500 is showing 14.15% interest, or 14.15% compounded annual growth rate.

• 27:02Speaker 02

  Nasdaq's up, you know, whatever, 19%, you know, gold is up 20 basis points. Nothing. Bitcoin's up 170 basis, 170%, right? And long bonds give you like 2.5%. So the monetary inflation rate equals the S and P index. Well, the traditional way you'd value a stock is you would put a risk premium on it. And you would say, well, your cost of capital is the return plus the risk premium. So it used to be we'd think, well, there's a 3% risk premium and the inflation rate then would be 11%.

• 27:43Speaker 02

  But I think that if you buy the S and P index, you're kind of in theory stripping out the risk because you're buying 500 companies. So the S and P index can be viewed as a proxy for monetary inflation. And the question of inflation is, what's your inflation rate? Well, what do you need to buy? If you're a consumer, then your inflation rate might be CPI. If you agree to buy what the Federal Reserve tells you you should want, right? And the market basket of things in the CPI is what the government says you should want in your life. But they never included a Picasso or a jet or a yacht or a house in Miami Beach in that market basket.

• 28:26Anthony Pompliano?

  A step even further than that is the number 14% is very interesting because my understanding is if you go back, obviously CPI used to represent a cost of goods index. So what is literally the change of price of individual goods year over year over year? And that's how inflation was measured. Now, obviously, we have a cost of living index, which is what you're talking about in terms of, well, here's the things that we think you should want. Here's the general weightings of these specific assets or consumables inside of this basket. And then that's kind of our moving target for this measurement of inflation. But if you were to go back and look at the cost of goods index based on how it used to be calculated for CPI and apply it to today's numbers, you get about 14%. And so not only is the S and P

• 29:11Anthony Pompliano?

  Not only is that monetary inflation, but also that cost of goods index based on the original calculation of inflation is around 14% as well, which is, you know, there's coincidences in life, but it seems to keep coming back to somewhere in that kind of mid teen number when we're trying to understand what is that inflation?

• 29:30Speaker 02

  Isn't interesting. You know, the hedonic adjustments kill you. But on the other hand, you know, and I say this oftentimes, inflation is a vector. And what I mean is you got to use, you got to use multi dimensional arrays and linear algebra to even start multi in dimensional linear algebra to even start to deal with the issue. Another way to say it is, you can calculate a different inflation rate for any person in any jurisdiction based upon their mix of products, services, and assets they want to acquire. And so, common sense says, a person that wants to acquire a set of manufactured goods and wants to watch

• 30:10Speaker 02

  streaming YouTube has a lower inflation rate than someone that wants to buy Picassos. Now, what if you want to be rich? If you want to be rich, your inflation rate is very high, because you have to acquire assets. If you want to be middle class, your inflation rate is different. So, back to why I did what I did. If you're the CEO of a publicly traded company, your inflation rate is the cost of capital. And the cost of capital, because your shareholders hold you to that cost of capital. If I go to a public investor, and I tell them my goal is 2%, and they're saying, well, the S and P is up 14%, then

• 30:55Speaker 02

  I'm undershooting their goal. Their index is the S and P index, right? So, the inflation rate for an investor is the index. Now, of course, different investors have different indexes. If you go back to the strategy, if you're a fixed income investor, you've got like a sovereign, you know, or corporate fixed income rate, you know, you've got the junk bond index, you've got the corporate, you know, investment grade index, you've got the sovereign debt index. You have capital structures in the world that have different indexes. Someone that wants to send their kids to an Ivy League school and wants to have a house in the Hamptons, right, they have a different index.

• 31:38Speaker 02

  Someone, and someone that wants to be obscenely wealthy, has a different index, right? So that's why you could have everybody talking past each other. Because, and of course, if you keep changing the indexes, the S and P 500 index changes, right? They rebalance it. The PCI, the PC indexes, they get rebalanced. So, so the indexes are changing, and if you allow someone else to feed you the index they want you to focus on, you can, you can see it right now, right? The official inflation rate in Canada is 4%, but the housing price is up 15%.

• 32:19Speaker 02

  The official inflation rate in the US is 5%, but the Case-Shiller index is up 27%. Something big. Okay? And, and of course, it all comes down to deciding what you want in life. Now, in the last 12 months, the S and P is up 34%. If you're sitting on $100 billion worth of cash, and you put it in the S and P index, you got $34 billion back. You have 134 billion right now. If you, if you held it in conventional treasuries, you're short 34 billion. If you convince yourself that the inflation rate was 5%, or if you convince yourself

• 32:59Speaker 02

  that you're, you could say, "Look, my treasury index is, is just the short-dated sovereign debt index, and so as long as I'm beating the 20 basis points, I'm good." And, you know, and, and, and by the way, like...

• 33:16Speaker 02

  If I have a bunch of money sitting in a bank, my bankers come to me, I've literally had bankers from the big wire houses, they came to me when I'm sitting on 100 million or 200 million in cash and they go, you know, we can get you into one of our money market funds that'll yield 22 basis points and that's much better than the nine basis points. And they're selling this to me. There are people in suits that make a lot of money and they're selling it to me and you read the prospectus and the prospectus is they're going to do something and they're going to charge you a 27 basis point fee to generate 22 basis point yield to you. You're literally-

• 33:54Anthony Pompliano?

  They're making more money than you are.

• 33:55Speaker 02

  You're giving 60% of the yield to someone in a suit that's getting, that's giving you a service to get you five basis points more. But there are, there are people that convince themselves that this is a good idea, right? And we come back to that in a second. It is, it's an important truism in the market. Why is it that everybody hasn't bought Bitcoin? People ask that, right? All the Bitcoiners wonder, why don't all these investors buy Bitcoin? And the answer is because there's trillions of dollars of capital locked up in capital structures that are chasing a different index, right? There's trillions of dollars of money sitting with people that think that inflation is CPI. There's trillions

• 34:38Speaker 02

  of dollars sitting in real estate funds and they're trying to beat CPI. If I got rents and I'm raising them at the CPI rate and I'm happy with it. There's trillions of dollars invested in fixed income funds where they have to beat the junk bond index or beat the corporate index or beat the sovereign index. And if they beat the sovereign index, if I have, if I have $20 billion and all I gotta do is beat, you know, the junk bond index or I get paid, then I'm getting paid to invest $20 billion to get 50 basis points more.

• 35:10Anthony Pompliano?

  What happens to those people? Let's say that inflation isn't 5.1% or 5.4%, wherever it comes in, you know, on a monthly basis now. And we all agree, it's something that is higher, but there's disagreement on how much higher. Is it 6% or is it 14% in terms of the actual inflation number? What happens to all the people who are using CPI as the benchmark? Do they just succumb to the inflation over time and continue to lose money until they wake up or something else?

• 35:37Speaker 02

  I think a lot of people have a hybrid situation, like- For example, let's say I run a real estate trust or I run a real estate company and I have a hundred million dollars a year worth of rental income. It's capped at CPI.

• 35:56Speaker 02

  Does the leases are signed 10 years, 20 years, 30 years duration, five years duration? And then you've got all the trade relationships like I can't go to, I can't go to the people that rent my building and tell them that the inflation rate is 14%, right? I mean, would you pay a 14% increase in your rent here?

• 36:15Anthony Pompliano?

  No.

• 36:16Speaker 02

  No. So there's a certain inertia in, in parts of the economy where they're going to move up at CPI or they're going to be flat or maybe they can do double CPI. But at the same time, maybe you're the person running that real estate company or thinking, well, I'm going to take my cash flows and I'm going to invest them in, would you invest them in a stock that you thought would go up at CPI? Or would you invest them in the S and P index if you thought you would get CPI? Not really. So what you have is you have people that are sweeping their cash flows from an operating business that's low growth and they're putting in the S and P index.

• 36:55Anthony Pompliano?

  You know, They're looking for the growth to come from the investment.

• 36:58Speaker 02

  Okay, the S and P is up 34%. How many companies in the world generated 34% more cash flow or raised their prices by 34% or grew their revenues 34% in the last 12 months? Not many, right? 98%, 99% they're in a, they're in a fiat operating system where they're going to raise their prices or generate cash flows that are rates slower than the rate of monetary inflation. But those same people will turn around and they'll buy Bitcoin or they'll buy property or that you may buy property that you is going up faster, right?

• 37:40Speaker 02

  There's not a single commercial rent, there's not a single commercial lease, I think in the world where they raised the price of the rent 27% in the last 12 months, right? At least I can't imagine if you had a lease, no one's got it capped at the Case-Shiller index. So on one hand, residential property or other types of property could actually be accreting at a much higher rate while your rents don't accrete at a higher rate. So you're taking duration risk.

• 38:11Speaker 02

  I guess the more important point is, there's a lot of capital, when we think about capital structure, it's like $500 trillion to $900 trillion of capital floating around there. It's locked up in structures. Some of it is in currencies and it can move rapidly. Some of it is invested in companies that can't, right, move rapidly. Some of it is tied up in equity, some of it is tied up in debt. Some of it's tied up in a trust. I have a trust. My trust gave $10 million to a financial advisor or to a company whose strategy is

• 38:53Speaker 02

  investing in mid-duration corporate debt. And every year, I review their performance versus their index. And over the course of a decade, I might start to shift small amounts out. But I think that the capital is structured in such a way, there's enough inertia in the system, it could take 30 years for the capital to get reallocated. Like, we're waging a war on the 60-40 portfolio, right?

• 39:20Anthony Pompliano?

  Is it dead?

• 39:21Speaker 02

  How long will it take before people allocate that as 65-35, or 70-30, right? It takes a long time. There are people still invested in gold. You and I joke about that. Gold's been failing for 12 years, or something like that, right? Gold's the same price as it was when Bitcoin was invented. And yet, an aggressive move would be a macro investor allocating from 50% gold to 45% gold and 5% Bitcoin, and that's a year's work.

• 39:50Anthony Pompliano?

  Yeah. Let me ask this question. Retail investors or individuals, I think, over the last 12 years or so, took Bitcoin. And as a generalized group, it went from a contrarian idea, a contrarian trade, to a consensus trade. There's now, you know, 100-plus million people around the world that have decided, hey, this is good enough for me to go ahead and store some of my value or economic wealth here. And so you can argue that that contrarianism became more of a consensus. We now, over the last maybe 18 months, have seen In the financial or institutional finance world, more people jumping into the game. And so definitely some shift from pure contrarianism to now a little bit more of a consensus. Everyone has to have some sort of Bitcoin strategy.

• 40:34Anthony Pompliano?

  You can't simply just say, oh, it's just for drug dealers. It's just for criminals. You at least have to have had a conversation now because fidelity, Paul Tudor Jones, Stanley Druckenmiller, many others have all now started to participate. What does it take for public companies where I basically break down? There's two groups, right? There's yourself, Tesla and Square as the three major publicly traded businesses that are multi-billion dollar companies that have pursued a treasury strategy that includes Bitcoin. And then there are all of the publicly traded crypto native companies, whether they're miners, whether it's places like Coinbase, et cetera. It's still contrarian in the public markets to have Bitcoin on your balance sheet. What does it take to get the shift that we've seen in those other two cohorts to now get it to a consensus type, you know, movement or idea?

• 41:21Speaker 02

  I mean, I think there's some, you could check off catalyst that are impediments that will become accelerators.

• 41:31Speaker 02

  First of all, regulatory clarity, right?

• 41:37Speaker 02

  If you're hearing, if you're seeing support for,

• 41:42Speaker 02

  let's start with the most basic issue. Is Bitcoin an asset or a currency? Okay, the word cryptocurrency has, is a very politically charged word, because if Bitcoin was a currency, it's an opposition to the US dollar. Okay. And if it's an asset, it's an opposition to gold.

• 42:03Speaker 02

  Okay, so just resolving the fact it's a digital asset, not a digital currency. Most people, how many public speakers, how many, how many well regarded investors have made negative comments about Bitcoin over the past 12 months? Because they're mistaken, they mistakenly think it's a currency and they think they're sticking up for the dollar. Right? Many, like, I prefer the dollar. So if you understand it's a digital asset. A scarce store of value speculative digital asset. That's how politically correct people would refer to it. Right. And anybody else would say it's just, it's just a digital asset or a store of value asset.

• 42:46Speaker 02

  The first, the first impediment is just understanding that and educating the market that it's a digital asset. I think the second impediment is getting over the issue of, is it a threat to the powers that be? And will it be banned? So first, what is it? It's an asset. Second, will it be banned? Okay, well, no, we're not going to ban cryptocurrency. We're not going to ban Bitcoin. It's going to be around here. So those two checkboxes are huge. I think the third checkbox is can I actually buy it via my existing bank? Every publicly traded company has been doing business with probably the same bank for 30 years, Pom. Some have been doing business with the same bank for 50 years. Some for 100 years. Okay.

• 43:31Speaker 02

  If you trace it to, to have adopted a new banking relationship is not a one in a decade thing. But public companies don't change in a decade. Right? So if I could, if I could buy this directly through Bank of America or JP Morgan or Citigroup, et cetera. I think that makes a big difference. If I have to go to a, you know, an institutional grade Bitcoin exchange, that's a one year exercise in due diligence.

• 44:02Anthony Pompliano?

  There's friction to doing it.

• 44:04Speaker 02

  There's two issues, right? One is, is before you give a billion dollars to a counterparty, you know, you have to, you have to inspect their accountants, their legal teams, their licensing, their executive team. Would you give a billion dollars to a private company that's new? Right. It's like, that's a huge hurdle. And the second is they're not FDIC insured, right? They're not, the, the imprimatur being backed by the US government means that, you know, in a liquidity crisis, the Federal Reserve gives you $10 billion or $100 billion. How much money did you need? Right? And that's what the big, the big licensed banks have.

• 44:49Speaker 02

  And, you know, the last holdout that wasn't doing that was Goldman Sachs. In the great financial crisis, they broke down and they became a bank. Right? And it matters. So if you want to move huge sums of capital, right, at the point that some of the the major banks handle the asset, that makes a big difference because it checks a lot of boxes and people are pretty conservative about that. I think the the next hurdle is accounting.

• 45:22Anthony Pompliano?

  Explain what this problem is, because this I don't think a lot of people understand how big of a problem this is.

• 45:28Speaker 02

  Yeah.

• 45:32Speaker 02

  It's a source of massive inertia because every publicly traded company is running on GAAP accounting. And so we're publishing our GAAP balance sheet and our P and L every quarter. And investors are reading the P and L. And the whole point of GAAP accounting is, in theory, I ought to be able at a glance in 30 seconds, look at your balance sheet and know how much capital you have. And in 15 seconds, look at your P and L and know whether or not the business is well run. And when the GAAP accounting aligns with the underlying business, then you can do that. But when it gets out of alignment, then you have to

• 46:13Speaker 02

  adjust it with pro forma accounting, non GAAP accounting, or adjusted accounting. And when you get to adjusted accounting, it goes from being a 30 second inspection to a 30 minute thing. And you know how difficult it is to communicate a 30 minute concept to the world? Very, very challenging. So the the issue right now, and the issue when we got into Bitcoin is, is no publicly traded company held any material Bitcoin. So, so the accounting treatment was probably appropriately conservative. The most conservative accounting treatment you could imagine is indefinite and tangible. And what indefinite and tangible

• 46:54Speaker 02

  accounting means is, you buy something, you you test it against the market continually, you take the lowest bid, and you mark the value of the asset down to the lowest bid at any point in the history of your ownership. And you treat that not as an investment, but you treat that as a loss in the core business, the operating business. So if you have a business that makes 100 million a year and it's run perfectly, you know, with a perfect pegged 20% operating margin, right? If you buy Bitcoin and Bitcoin trades down for one hour and trades back up again,

• 47:37Speaker 02

  you might have a $100 million operating loss. And then you would be showing the business made no money this year on a GAAP basis. So now you're an outside investor and you're staring, you're saying, what happened to the software business? It looks like it, the operation got wrecked. It's, if I made a million decisions poorly, you know, I probably couldn't, I couldn't go from 100 million in cash flow to zero, right? Or if I did, it'd be challenging. But, or on a Saturday night, someone could flash crash something and you would have a $100 million loss showing on the operating statement. So indefinite and intangible means you take the volatility as an operating loss on your P and L

• 48:19Speaker 02

  and you take the theoretical worst case. The theoretical worst case would be, I buy Bitcoin and I wait for the lowest price ever and I sell it all. Okay? That you take the theoretical worst case and you represent that as the, as the status. So when you print your quarterly results or you print your annual results, you want a simple example. You buy a billion of Bitcoin. It trades down to 500 million. Then it increases to a billion, then it increases by a factor of 10 to 10 billion. If that's the fact pattern, when you close your books under indefinite and intangible, your books say you have $500 million of assets

• 49:03Speaker 02

  and it says that you lost $500 million in the, in the operating business. And the money's gone. That's what GAAP accounting says. In actuality, you might have a statement that says you have $10 billion of assets and it looks to the, to the casual observer like you generated a $9 billion investment gain.

• 49:25Speaker 02

  So you can, now, how do you fix it? Pro forma adjusted accounting, you have to create a schedule of reconciliation. But, but now, what have you done? You've just made the, first of all, you've made the, the investor's job 100 times harder. And investors got to read all the pro formas, think about it and figure, and then they've got to reverse it out and figure out what really happened in the rest of the business. Right? And then they've got to figure out what's your balance sheet really look like? And then the second problem you have is your, your statements become non-comparable over time.

• 50:05Speaker 02

  Like, for example, I can't, if I look at my balance sheet on a GAAP basis today versus a year ago, right? Bitcoin could go up by a factor of 100, the balance sheet doesn't change. So when you're comparing quarter versus quarter, there's no information there because you're suppressing it, right?

• 50:24Anthony Pompliano?

  Yeah.

• 50:25Speaker 02

  And then if two companies have Bitcoin, one company has 100,000 coin and one company has 10,000 coin and Bitcoin goes up by a factor of 10, neither company shows an investment gain, neither company shows a balance sheet adjustment. And so how do you compare one company to the other company if you're trying to make a rational investment decision? So things become non-comparable across securities and they become non-comparable across time. And you're invited as an investor to create your own set of pro forma systems to compare yourself, which is like 1,000 times harder. So that's an impediment for a public company or for a company that relies upon GAAP accounting.

• 51:10Speaker 02

  But here's where it's really an impediment. Like, why can MicroStrategy do it? Well, because we rotated our shareholder base to be long Bitcoin and because fortunately enough, we were, we were able to build a substantial Bitcoin position. So now if you know that MicroStrategy has 114,000

• 51:34Anthony Pompliano?

  114,000 Bitcoin?

• 51:35Speaker 02

  Yeah, if I have 114,000 Bitcoin and I, you know, 114,042 Bitcoin, all you have to know about MicroStrategy is take 114,000 and you multiply by the price and you know that we've got that much. But let's say that you were a Google, or you were Apple, or you were Facebook. Well, you've got all these other businesses, or Amazon, and now you're trying to decompose the businesses. And if they buy a big Bitcoin position, then what looks like a pristine P and L, everybody debates, you know, is Apple's gross margin going to be 38% or 38.5% this quarter? And that's a big deal, right?

• 52:20Speaker 02

  I mean, there are people who take victory laps on getting within 1% of the gross margin. Well, your gross margins would totally get, all your margins get blown out of the water from the volatility, the accounting volatility of the Bitcoin. So...

• 52:34Anthony Pompliano?

  How do we solve it? What is the change that needs to be made where you would say, okay, the system we have right now is an issue and it's an impediment. If we move to X, that's the solution in your opinion?

• 52:47Speaker 02

  Yeah, well, so there, I joke with people, right? Like, you'd be better off buying baseball cards, or art, or just about anything than buying Bitcoin from an accounting point of view. Because if you were to buy, if I went and bought sculpture, or, you know, some random anything, normally the test would be like, once a year, you check to see if the asset's been impaired. But checking to see if an asset's impaired occasionally is much better than checking to see if the asset's impaired every minute of the day, right? So, so there are different types of accounting treatments, but if you were to buy a billion

• 53:32Speaker 02

  dollars worth of a security, like an ETF...

• 53:38Speaker 02

  Like one immediate fix is you buy a billion dollars worth of a Bitcoin ETF. It's not property anymore. It's a security. If you're owning a security, generally accounting says you value securities based on fair market value or fair value accounting. So that means that if it doubles, you would show an investment gain. This is the Warren Buffett's accounting for Coca-Cola stock or for Apple, right? So fair value accounting is applied to securities. Fair value accounting is applied to certain other things. If the accounting goes from indefinite intangible to fair value, in that case, then you would be showing the $10 billion of Bitcoin as an asset on your balance

• 54:23Speaker 02

  sheet. And then you would show the gain or loss as an investment, what they call below the line adjustment. Like on a quarter where it's up 2 billion, you would have a $2 billion investment gain. And a quarter where it's down 500 million, you'd have a $500 million investment loss. And that's, that provides more clarity. It's kind of a benefit to investors because an investor can, they can separate the gain and the loss from investment activity, from the gain and the loss from operating activity, right? And that helps you to figure out, is the core business healthy? And you, if Warren Buffett prints like $3 a share or some large amount of EPS,

• 55:06Speaker 02

  I want to decompose it into how much of it was from the stock portfolio versus how much of it was from the operating businesses, right? And, and then I can extrapolate out rationally. So ultimately, I think fair value accounting is the solution to allow public companies to hold the, hold this in large quantity. This is why, say, even a Tesla or a Square would buy not 100% of their balance sheet or 50%, but 5%.

• 55:34Anthony Pompliano?

  Yeah.

• 55:35Speaker 02

  If it's 5% or 1% or 2%, it's not going to be material to the rest of the P and L and the rest of the balance sheet treatment. When it becomes 50%, the volatility from the accounting treatment will optically impair transparency against the P and L and the rest.

• 55:54Anthony Pompliano?

  So when I look at the public companies right now, let's put aside the kind of Bitcoin or crypto native companies, the miners and Coinbase, et cetera.

• 56:04Anthony Pompliano?

  There's basically three publicly traded CEOs that are orange pilled, right? Yourself, Jack Dorsey, Elon Musk. Those seem to be the ones who have purchased Bitcoin, who have talked about it publicly, who appear to understand the ethos of it and kind of why it's important for their businesses. Is this something where we are literally going to see one by one by one, each individual CEO is going to have to get orange pilled and eventually make this decision? Or is there some milestone or like inflection point where you say, when X occurs, we will then see, you know, on a quarter by quarter basis, tens of publicly traded companies or hundreds of publicly traded companies all going ahead and doing this?

• 56:47Speaker 02

  Okay, well, first I would say it's not just the three. There's, there's probably three dozen, but every Bitcoin miner is holding Bitcoin on his balance sheet. And one of the major things, one of the catalysts that's taken place in the last 12 months is all the Bitcoin miners coming public and all of the miners that were public on international stock exchanges shifting over to the NASDAQ and the New York Stock Exchange, right?

• 57:11Anthony Pompliano?

  Correct.

• 57:12Speaker 02

  Marathon and Riot and actually, if you look at it right now, Marathon has got a Bitcoin exposure. I wonder when Silvergate Bank will, right? Or how that'll work, but Silvergate's obviously a Bitcoin company. Coinbase has got Bitcoin on his balance sheet, right? You've got Bitfarms, Hut8, you've got Sphere, you've got Bit Digital, you've got Galaxy, you know, you've got...

• 57:37Anthony Pompliano?

  Well, there's a bunch of businesses that come out of the industry and I think we're going to see more and more go public. So let's say that that number doubles or triples of like the publicly traded companies that come out of the Bitcoin and crypto industry, because you're just going to get a bunch of startups that continue to grow and eventually go public, whether it's direct listings, IPOs or SPACs, that number will just grow.

• 57:54Speaker 02

  And I think there's a dozen other companies that are public that are holding it in their treasury at a smaller amount. So, so what are the catalysts? I mean, clearly, one thing that's already happening, right? It's the regulatory clarity that's coming. The more clarity, if the regulators move forward and they clarify the treatment of stable coins and security tokens and DeFi exchanges, you know, I feel like the connection of Bitcoin to crypto has been holding it back, right? Because, because stable coin regulation is unclear, many cryptos are security tokens, that's, that's holding us back. The exchanges

• 58:38Speaker 02

  that are trading Bitcoin while they're trading security tokens, right? The connection of Bitcoin to Shib or Dogecoin, right? This, this holds back a public entity from wanting to get into that space. I mean, in fact, it's, it's really the expressed concern that the SEC has about approving a Bitcoin spot ETF, right? Which is, they're concerned about the markets where Bitcoin is trading, right? And they're concerned probably about, what's, what's Bitcoin volatility coming from? It's coming from the cross collateralization of, of crypto markets with

• 59:19Speaker 02

  high leverage, trading it off hours, right? Against thin liquidity pools of other security tokens, right? And so, as, as that clarity comes with regard to the entire crypto ecosystem, it's, it's going to decrease volatility and it's going to increase confidence of large public investors and large public companies. That'll be part. I think as, if we get clarity from FASB or, or any kind of improvement in the accounting situation, that's a, that's a plus. And there's, I mean, there's a groundswell of interest, right? There were 515 letters

• 1:00:02Speaker 02

  sent to FASB on this subject and, and there was a lot of commentary from regulators, from, you know, we've got congressmen, we've got senators, we've got auditors, we've got big institutional investors, we've got big publicly traded companies, and they're all opining on the issue. So, and I have yet to see anybody. I haven't seen any articulation by anyone suggesting that the current accounting treatment is beneficial. Yeah. So it's broad-based consensus that it's time to take a look at this again. So I think that accounting is important. I think that, you know, we just see the barriers with the banks getting knocked down, right?

• 1:00:46Speaker 02

  Like at the point that you saw the commentary by the Chair of the FDIC where she said, "We're looking for ways to allow banks to hold Bitcoin on their balance sheets." Right? If FDIC, it used to be we dreamed, our dream was one day, big banks may actually own Bitcoin, you know, or what if all the big banks own Bitcoin? But now I think we've flipped to the, to another observation, and this is a, this is an interesting one. In that stablecoin working group paper that was released last week, not only did they

• 1:01:28Speaker 02

  say it's okay for FDIC-approved banks to hold stablecoins, they actually said it's required to be an FDIC-insured bank to hold a stablecoin. Okay? So we're, we're actually growing up as a crypto industry. We're going from unlicensed, non-institutional-grade corporations that are primarily entrepreneurial and fast-moving to licensed, institutional, regulated entities. And if you look at that, isn't the conclusion that the next step, I see as a green light, JP Morgan, Citigroup, Bank of America are going to issue a trillion dollars' worth of stablecoins?

• 1:02:12Speaker 02

  I mean, it's an invitation, like it's a green light. To every single bank in the world, right? If you're Silvergate or, you know, anybody that's in the crypto industry now, right? This is kind of a message. I don't think it's that much longer, right? If you can hold a stablecoin as a digital asset, it's not that much longer before you hold Bitcoin as a digital asset. And if the FDIC is saying, we need to find a way for banks to be able to hold this. And if the president's working group is saying, you need to be a bank in order to

• 1:02:52Speaker 02

  hold this, the stablecoin, then I think that sometime in the next 12 months, we actually start to see large banks getting in the business.

• 1:03:03Anthony Pompliano?

  Is this good or bad? The like financialization of Bitcoin, let's talk about. And then there's obviously all of these other technologies and assets. But I think that there's a group that would argue, the more that the asset becomes financialized, the more that it gets, not just accepted by the licensed organizations, but you see legislation or directives that say, you have to be FDIC insured in order to interface with this stuff. They look at that as negative. There's other people who look at it as a positive. So how do you think about the pros and cons of what I'll just call like the financialization of what were assets that, you know, many people were attracted to in the beginning

• 1:03:42Anthony Pompliano?

  because they weren't part of the existing system?

• 1:03:49Speaker 02

  Bitcoin is decentralized and it's an asset and it's already gone to 200 million places. And you might not like the people that own it, right? Don't they call it the money of enemies?

• 1:04:02Anthony Pompliano?

  Yeah.

• 1:04:04Speaker 02

  Right? The point is Bitcoin's going to people who have politics that you disagree with. Right? It's almost certain. So it's spreading at such a rate. It's like fire and it's like electricity or mathematics and you can have an opinion. Do you think it's good or bad for banks to have mathematics? It's like, we're the only ones with math. Is it good or bad for people to be able to read and write? It used to, you know, there was a concern that we shouldn't let everybody read and write. It's just basic technology. It's spreading as fast as it can spread. The reason it's superior to gold is because I can snap my fingers and I can withdraw

• 1:04:47Speaker 02

  a billion dollars of Bitcoin from the bank in five minutes.

• 1:04:51Anthony Pompliano?

  Correct.

• 1:04:51Speaker 02

  Okay. And the thing that's going to maintain its integrity is the fact that, that you can, you can shift counterparties, you can move, if you can move $10 billion of an asset out of a jurisdiction, I can move it out of Miami. I can move it out of a bank. I can move it out of a country. I can move it out of a system. It's always going to have more integrity than the alternative. So coming back to this, it's like, okay, are you comfortable? There are a lot of people that don't think you should have a software wallet on an iPhone. You should have a hardware wallet, right? There are a lot of people that think that, that it's better if, if,

• 1:05:36Speaker 02

  what if I don't want your family to have it because I don't like somebody in your family, right? What if I don't want your small company? You have a private company. Do you own some Bitcoin? Well, you know, did you sell out? Now there's a company that's got other corporate interests that has some Bitcoin. A lot of people don't want a public company to have it. Why? Well, public companies have shareholders. Yeah. Well, I don't want a country to have it, right? I mean, there are a lot of people that are concerned that El Salvador uses Bitcoin. Well, it might get hijacked by the politicians.

• 1:06:08Speaker 02

  What if Turkey actually starts buying Bitcoin? Do I like it? Do I not like it? But the point is, it doesn't matter what you think, right? It's not, it's like you sitting and saying, I'm really angry that someone else is using arithmetic other than me, right? It's spreading like wildfire. It seems to me that the world's a better place if people have monetary integrity than if they don't have monetary integrity.

• 1:06:36Anthony Pompliano?

  I agree.

• 1:06:36Speaker 02

  Right? Right? And in this particular case, is this good? Yeah, of course it's good. Why is it good? It's good because, because what we want to do is fix everything, not destroy everything, right? If you want to fix the bank, then they replace their bonds with Bitcoin and the capital structure of the bank is better. If you want, do you want to fix every publicly traded company in the world? Do you want to fix the balance sheet of Apple and Google and Facebook and Amazon? If I tell you that they have to do the deal through an FDIC insured bank, then you either

• 1:07:20Speaker 02

  can fix them, right? There are a lot of people that don't want to fix them. They don't want, they don't want Apple or Google or Facebook to fix their balance sheet. They don't want them to fix their product. But, but on the other hand, I'm an optimist. What do I think? I think eight billion people should be using, using Bitcoin as a digital asset. Now, there's two ways to do it, the easy way and the hard way. The hard way is topple every government in the universe, destroy every technology company and create my own hardware wallet and my own decentralized, let's rip back to the network, destroy every big tech platform, destroy every big company and somehow let's build something totally new.

• 1:08:04Speaker 02

  That's the hard way. Seems pretty stressful to me. What's the easy way? The easy way is all the big banks start issuing stablecoin, a token called the US dollar, right? A US dollar stablecoin. And we go from $130 billion in stablecoins to a trillion dollars of stablecoins to $10 trillion dollars of stablecoins to $100 trillion of USD.

• 1:08:31Speaker 02

  And then eight billion people have a have an iPhone or an Android phone with a with a wallet and they do 10, 20, 50 transactions a day at the speed of light on the lightning network. On the lightning network and if they and that's the best, right? A decentralized, non custodial network moving at the speed of light for free. Next best is they move these things around on the Android or the iMessage or the WhatsApp or the Facebook or a layer two or layer three application, right? That's second best and they do it without toppling every government on earth, right? Like I I can't, there's 130 currencies that are floating right now.

• 1:09:16Speaker 02

  130, how many do we need?

• 1:09:20Speaker 02

  Well, we we certainly could get by the next step with 12, right? The CNY is not going away and the USD is unless you wish to topple the government of China and the government of the US and the governments of the Western world, which I don't think you want to do, right? You've got bigger problems if you did, right? Like security and safety and food.

• 1:09:40Anthony Pompliano?

  Yeah, there'd be mass chaos and it would be a very, very painful situation for everyone.

• 1:09:44Speaker 02

  Right, like so, so if you if you look at it in at an optimistic view, let's just actually make the world a better place and a win win for everybody.

• 1:09:52Anthony Pompliano?

  So your thought process is this asset, which has that monetary integrity that you're talking about. It's fully transparent. It's a in many cases, you could look at it as an automated central bank. Nobody controls it. It just sits there programmatically executing what the code says for it to do. That will serve as a global store of value. Other people will then choose to take their fiat currencies and upgrade the technology. Doesn't necessarily change their monetary policy, but they can then go ahead and digitize or tokenize the dollar, the euro, the yen, the won, whatever currency. And then they would basically use the Bitcoin network payment rails to have those assets fly around the world, however people chose. But ultimately, people would go back to and settle in Bitcoin as that global store of value?

• 1:10:39Speaker 02

  Partially, but it's a it's a more elaborate idea, which is my idea is we incrementally upgrade everything everywhere for everybody in the most peaceful, least painful, least jarring way, right? So the incremental upgrade means means we deploy to eight billion people, to everybody on the planet, we deploy digital wallets. In the wallet, you have a set of currencies and a set of assets. And in that wallet in Argentina, you've got your peso and you've got your dollar as currencies. If you want to hold something for a day, you hold a peso. If you want to hold it for a month, you hold a dollar. If you want

• 1:11:24Speaker 02

  to hold it for a lifetime, you hold Bitcoin, right? You've got digital assets. Bitcoin is the strongest digital asset. Is it the only asset? No, because you've got a company, there are buildings, there's Apple. I still like Google. I want my YouTube. I like Netflix, right? We need Domino's Pizza. We need Bitcoin Pizza. Someone's got to manufacture the cameras that are staring us right now. Got a microphone. We can't just have one asset. We have multiple assets. We have multiple currencies. Will all currencies survive? No. The weak ones, the ones that are truly defective will go away. Sixty-six countries are dollarized.

• 1:12:04Speaker 02

  There's 180 countries in the world. How many currencies do we really need? Right? Right now, it's China and the USD, right? You might actually collapse down to two, but more likely you'll have the yen, and you'll have the euro, and you'll have the dollar. Is there any currency in Africa that you really want to hold more than the dollar if you had the freedom of choice? Not really. What will you do, though? You need you need the local currency for local payments, right? If there's a strong local government, you need the local currency to pay your tax bills because it's mandated by law. You need the global, the global currency, and let's call the US the global reserve digital currency, the global reserve currency. You need that as a medium.

• 1:12:48Speaker 02

  Of exchange, if you want to buy something in Argentina from someone in Brazil, or you want to buy something in Africa from someone in Venezuela, you're probably going to swap dollars, right? Why? Because there's 100 million companies pomp that have invested 30 years to create accounting systems and point-of-sale systems to process billions and billions of transactions in those currencies. Like, my company does it. I can actually swap my balance sheet to Bitcoin using three people, and I can do that in a matter of weeks. Swapping all of my vendor payments, all of my payroll, and all of my receivables into Bitcoin,

• 1:13:31Speaker 02

  that would be a billion times harder, okay? And it's not worth a billion times more stress and effort. It's not, it's just not worth it, right? It's, in an inflationary environment, money decomposes into a currency layer, which is losing value slowly, hopefully slowly. If your currency lost value at 1% a month, but your asset gained value at 15, 20% a year, that's stable. Now, do we need to replace it? Not this decade, right? I'm not going to speculate 30, 40, 50 years out, but I rather kind of feel like a more nuanced idea. Here's a nuanced idea.

• 1:14:15Speaker 02

  I want to build the 21st century economy on a strong foundation of integrity and trust and thermodynamic soundness and energy, pure energy. So, that means the balance sheet, the foundation of every institution should be built on Bitcoin. But every institution has its own derivative, its own security from Bitcoin. So, when you create your company, if you want to take your company public, you should be able to issue stocks and stock options backed by Bitcoin. I'm not denying that. If Turkey goes and they buys billions of dollars of Bitcoin, they can keep the currency.

• 1:14:59Speaker 02

  They would be backing the currency with, with a hard asset. How many institutions are there in the world that need some control? Like, like maybe if I said to you, you can't issue stock in a company, is that good for the economy? Not really. If I said, no country can print its own currency, is that good? Probably not really, right? Because the politicians need some power over the currency, right? I mean, unless you come up with a way to generate all the food and all the products that we need without companies and without countries.

• 1:15:40Speaker 02

  Like, when you figure that out, that's like a utopian idea, then maybe you can live with Bitcoin only and the like. But in the meantime, which is like, let's just focus on the next decade. Cause there's no point in solving this problem after the year 2030, right?

• 1:15:57Anthony Pompliano?

  Yeah.

• 1:15:57Speaker 02

  Right? Focus on the next decade. The next decade, it works like this. All the big banks issue USD stable coins. What happens? The US dollar replaces all the weak currencies and it grows in strength, right? The US dollar can become the daily currency of 6 billion people.

• 1:16:15Anthony Pompliano?

  And it has been doing that for some time. You mentioned the dollarized countries.

• 1:16:19Speaker 02

  Right now, right now, analog dollars in the 20th century banking system is the reserve currency of the world, but it's an awful inefficient system, right?

• 1:16:29Anthony Pompliano?

  Yeah.

• 1:16:29Speaker 02

  How do you send a hundred dollars to someone on Saturday afternoon if they live in Africa? If you live in South America? How, send someone to a friend of yours in Paris on a Tuesday. I dare you, right? So the point right now is the US dollar is the world's reserve currency, but it's running on, on 20th century rails. So the US dollar should evolve to run on crypto rails. It should run on, you know, we can debate, right? Lightning rails, WhatsApp rails, you know, any other crypto, right? Interesting question, but what, what we can't debate.

• 1:17:08Speaker 02

  Which is 100% certain is everybody wants to be able to move the money at the speed of light and program it on a computer chip on a Saturday afternoon. That's that sometimes we get in this in this confrontational state where people think, well, it's Bitcoin versus the Fed or Bitcoin versus the dollar. It's not right, we can all win, right? It's a win-win here. It's in the best interest of the dollar to move at the speed of light and be programmable. And there's 100 million businesses that want to do business in the dollar. And I am the controlling shareholder of MicroStrategy. I founded the company. I mean, there aren't that many CEOs that have more power than me.

• 1:17:52Speaker 02

  If I walked into a room and I ordered everybody in my finance team to convert over all the accounting systems and sell everything in satoshis and pay everybody in satoshis. You understand that if everybody didn't quit on the spot, it would be a decade and a billion dollars of work. And it wouldn't work. And by the time I finished the billion dollars of work, the company operation would go to zero, right? It's literally a death sentence for a big institution to attempt to convert over its mediums of exchange and its accounting systems for routine transactions.

• 1:18:37Anthony Pompliano?

  So right now, really, the value is to get Bitcoin onto the balance sheet as a store of value, protect shareholder value that's sitting there, continue to operate your businesses. And, you know, my understanding of what MicroStrategy is doing is you basically have articulated and highlighted two separate strategies. We have a software business that we're going to continue to try to grow, drive cash flow and serve our customers from a business intelligence standpoint. And then we have a treasury strategy, which is we're going to use Bitcoin to protect our purchasing power and our assets that are actually sitting on the balance sheet. And those two strategies combined make up the business. And, you know, obviously, the market has found it incredibly attractive, given what the stock price has done over the last year or so.

• 1:19:20Speaker 02

  If your Apple computer, right, you've got,

• 1:19:26Speaker 02

  you've got two strategies you can pursue to get in the digital economy. One strategy is you just buy $50 billion of Bitcoin. And three people can do it. And if the three people did it, then your stock becomes a Bitcoin derivative. Apple stock becomes a Bitcoin derivative. And if Bitcoin moves up at 100% a year, right, you're generating $50 billion a year of shareholder value. Three people, $50 billion shareholder value, right? It's a very simple strategy. The harder strategy is you start building Bitcoin protocol or Lightning protocol into all your other products. You can build it into the iPhone, you can build it into the iCloud, you can,

• 1:20:07Speaker 02

  you know, you can build it into all of your other services, you know, and they all have merit.

• 1:20:15Speaker 02

  And that's an operating strategy. And at that, at some point, that starts to, that starts to correlate your revenues to the growth of, of the digital asset economy and the growth of Bitcoin. So, and, and all the, both of those are rational. What's not rational, what's not rational is,

• 1:20:40Speaker 02

  is to require that all your customers pay you in Bitcoin and stop taking dollars, right?

• 1:20:46Anthony Pompliano?

  You can control what you do with your balance sheet and you can control what your strategy is, but implementing it on your customers.

• 1:20:51Speaker 02

  Or to rewire all your, all your backend accounting systems. So, and it's unnecessary, right? It's, it's not the right way. So, like coming back to, to my view of the world, I mean, I, I think my view of the world is

• 1:21:06Speaker 02

  we want to find the path of least resistance to, to fix everything. And that means, that means.

• 1:21:15Speaker 02

  Looking at every single part of the economy, every country will be better if they had some Bitcoin. Cities can be improved if they buy Bitcoin. If a city buys Bitcoin and they issue bonds, the bond becomes a Bitcoin-backed bond, right? It becomes a derivative of Bitcoin. So, I'm not against bonds, right? I'm not the guy saying we shouldn't have bonds, we should have bonds, right? If the junk bond index is 4% and you can issue a Bitcoin-backed bond at 6%, it's good for the people that have trillions of dollars locked up in bonds. It's good for Bitcoin, it's good for everybody in the middle, right? We could say, we can take the orthodox draconian view,

• 1:21:57Speaker 02

  which is, bonds should go away and Bitcoin should replace them overnight, but it's not, it's not possible, but it's not even a better view, right?

• 1:22:05Anthony Pompliano?

  Yeah.

• 1:22:05Speaker 02

  A better view is, is you take your bank and you start handling Bitcoin, and you take your mobile app and you build lightning into the mobile app, and you take your company and you buy it, and you buy Bitcoin. And the reason I don't really think it's a threat to the Bitcoin ethos is because ultimately, none of these people can control Bitcoin. It's like, people worry, like, so I have $7 billion or $8 billion of Bitcoin. I don't have any more power than anybody else, right? And, and in fact, the only sentiment that's grown in my mind as my Bitcoin position has grown is, I don't want anybody to change it.

• 1:22:50Speaker 02

  Like, don't mess it up. Right? So, I think that is, I'm not threatened if a government buys Bitcoin. It wouldn't be bad for Bitcoin, right? I'm not threatened if a company buys it, if a bank buys it. And here, I guess there is one, there's one point worth making.

• 1:23:10Speaker 02

  If your portfolio is 100% Bitcoin, you don't have any conflicts of interest. The debate of whether or not people use Square, Cash App, PayPal, Robinhood, Coinbase, Binance, or buy the ETF, or buy it through Fidelity or Nidec, doesn't really matter to you, right? Doesn't matter to you. Whether they buy MicroStrategy stock to get Bitcoin exposure, doesn't matter to you, right? You're just holding the underlying asset. If you decide that you want to get in the business of selling hardware wallets, or if you run an exchange, or if you provide advice, and now you have a conflict of interest. So now you're a Bitcoin entrepreneur,

• 1:23:54Speaker 02

  and maybe, like, if you're Tether and you're issuing stable coins, you don't want JP Morgan to issue stable coins. It's a conflict of interest, right?

• 1:24:07Anthony Pompliano?

  It's competition.

• 1:24:08Speaker 02

  Right? I mean, if the Fed say you have to get an FDIC license, now you gotta jump through a hurdle. Now you need general counsels. You need to actually pay lawyers. You have to do stuff, right? You have to have NEXUS. You have to have insurance. It's harder. So there are a lot of things that are happening in the economy. They're good for Bitcoin. They're just not good for every entrepreneur in the crypto ecosystem. And there is a conflict of interest. And that's why, like, people ask me, "Well, are you gonna get into other things? Are you gonna build software?" Well, that's a conflict of interest, you know? "Are you gonna go into Bitcoin mining?" That's a conflict of interest. "Are you gonna invest with a counterpart?" It's a conflict of interest, right?

• 1:24:51Speaker 02

  So you can do that, but those are businesses, and they have investment risk. And you have competition. And you can fail or succeed. And the truth of the matter is, is it good for Bitcoin if JP Morgan, Goldman Sachs, and Bank of America issue $10 trillion of USD stable coins and start handling Bitcoin and selling it to all their institutional investors? Yeah, it's good for Bitcoin. Bitcoins go into a million dollars a coin, then $10 million a coin. And all the people that believed in Bitcoins for the last decade are going to have the financial wherewithal to create their own companies to do whatever they want,

• 1:25:32Speaker 02

  right? And to express their sentiment. It's just not good for the entrepreneurs that compete against the mega caps.

• 1:25:43Anthony Pompliano?

  So let me ask this question. We recently have seen a bunch of politicians all start to pay attention in various ways. So we've got on one side, in the United States, most politicians started off abrasive. So without naming any of them, there's a number that we're very concerned about Bitcoin. If you go back a couple of years, we then saw, obviously, China go ahead and ban miners and take a pretty abrasive step there. But over the last, let's call it, I don't know, eight months, seven months, we've seen El Salvador go ahead and make Bitcoin legal tender. They seem to not only be supporting it as legal tender, they also are onboarding people via this app that they've built and also this ATM network that they've built. They're mining Bitcoin and kind of really trying to plug their country,

• 1:26:25Anthony Pompliano?

  if you will, into the Bitcoin network. And then just recently, over the last week or two, we've seen multiple politicians, all at the local level, start to become much more friendly or embracing of Bitcoin. So you've got, obviously, the mayor in Miami, who has been very kind of pro Bitcoin for a while. You've got Eric Adams, who's the new mayor of New York City. He now leaning in, saying he's going to take some of his paychecks in Bitcoin, and some of the stuff should be taught in schools, etc. We've also got two kind of smaller mayors, one in Tennessee and one in, I think, is Tampa Bay, in Florida, all kind of leaning into this. How do you look at the intersection of Bitcoin and politicians? And is this just a continuation of like Bitcoin is good for business? And so if it's good for corporations, then it's going to be good for the politicians as well? Or how do you read that situation?

• 1:27:12Speaker 02

  I think that one of the great advantages of Bitcoin is it's money of the people, right? It's money for the people. And the combination of the fact that it's permissionless and it's open, nobody controls it, means everyone, everyone can adopt it, everyone can engage in it. And the proof of work network means that you have a large business in Bitcoin mining. And what is Bitcoin mining? Bitcoin mining is like this, it's like your skin. It's like, it's, it's the first line of defense of your immune system, right? It's what makes you healthy.

• 1:27:55Speaker 02

  The Bitcoin mining industry is a $22 billion a year industry right now. That means that the protocol is creating a $22 billion subsidy for Bitcoin entrepreneurs to go out into the world and find supportive political jurisdictions. $22 billion and per year. So when you think about that, that means that the miners themselves, they have, they have to raise capital, but that, but you see the Bitcoin miners are ripping today in the market, right? All their stocks are up.

• 1:28:33Anthony Pompliano?

  Yes.

• 1:28:34Speaker 02

  And they've been very successful. You can take a Bitcoin miner public. You're not going to take a proof of stake validator public, right? One of the big differentiators is, is the miners. The miners have to, have to use energy and technology, but the miners are also recruiting political capital to the network. And so I think that what you're seeing here is, is lots of jurisdictions can see the benefit of Bitcoin either as sound money, right? All the holders are political constituency.

• 1:29:16Speaker 02

  And I guess we're going to get close to the point where we're going to flip 50% of the electorate, right?

• 1:29:21Anthony Pompliano?

  There's going to be a Bitcoiner in Congress. There already are. There's going to be Bitcoiners in the Senate. There already are. And eventually a Bitcoiner will be president. It's not necessarily because they're going to run on just a Bitcoin only ticket, but they're going to have grown up, they're going to have held the asset, and they're going to become the president of the United States and hold Bitcoin, right?

• 1:29:37Speaker 02

  It's the most, Bitcoin... Bitcoin's the greatest brand in the history of the world. First observation, it's the greatest brand in the history of the world. What's brand value? Brand value is monetary premium, right? The monetary premium of Bitcoin is 1.2 trillion dollars right now. Name another brand that's worth 1.2 trillion dollars, right? So it's the greatest brand in the world. It's the greatest monetary asset in the world. I mean, I'm not counting the dollar because the dollar is an inflationary asset. It's not an investment. If you pick an asset that you could reasonably expect to protect you against inflation, Bitcoin becomes the most popular one, other than just like random real estate, right? Just owning land.

• 1:30:21Speaker 02

  I guess land was maybe the most popular one and Bitcoin is that digital property. So how do I buy all these other things in Africa or Asia or anywhere? It's a very egalitarian asset and that makes it politically advantageous, right? I mean, how is it not? What politician would say, I don't want you to own your own house and I don't want you to have economic freedom, right? Right? I mean, so I think that the left and the right can both agree on that. It's pretty clear it's high velocity money, the higher velocity than anything, but it's high velocity asset. It's a bank in cyberspace, but it's a franchise bank.

• 1:31:05Speaker 02

  So anybody on earth in any jurisdiction can create their own franchise of the bank. And what that means, right? Paxful or, you know, fill in the blank, every crypto exchange in every country on earth, when they're selling you Bitcoin or exchanging Bitcoin, they're in essence creating, you know, a franchise bank of Bitcoin where they're marketing it. So Bitcoin is spreading through two incredibly powerful franchises. The Bitcoin exchangers, who are the Bitcoin banks, if you will, and it's open and permissionless, right? So there's no, you don't have to get a license from the FDIC to have a bank in Egypt that

• 1:31:49Speaker 02

  deals in Bitcoin. And then it's spreading through the Bitcoin miners. They're the security providers. So the security, the network operators and the bankers are spreading like wildfire everywhere.

• 1:32:06Speaker 02

  Who's an example? Well, Square Cash App, right? I mean, that's an example of a Bitcoin bank. PayPal is a Bitcoin bank. Coinbase is a Bitcoin bank. Binance is a Bitcoin bank. Right? And, uh, and when you look at Marathon and Riot and all these Bitcoin miners, they're the other side of the network. So I think that it's inevitable that more and more politicians begin to support the network. Not everyone will, but, but, um, you know, the game theory of it is such that the more hostile one regime is, the more lucrative it is for another regime, right? It was a benefit to the United States when China banned Bitcoin, right?

• 1:32:49Speaker 02

  Cracking down on Bitcoin mining was a gift handed to the West. And I've, you know, I've said it before, I think it's worth a trillion dollars.

• 1:32:56Anthony Pompliano?

  Mm hmm.

• 1:32:57Speaker 02

  Right? And you can see it in the hash rate statistics. Um, but at some point, it's, it's so, Bitcoin mining is the most lucrative use of energy in the world.

• 1:33:13Anthony Pompliano?

  Oh, that's hands down.

• 1:33:15Speaker 02

  In the world, right?

• 1:33:16Anthony Pompliano?

  Very provable and very viable.

• 1:33:18Speaker 02

  In the world. And it's, it's the best use of intermittent energy and the best use of sustainable energy. And so when you look at it that way, you know, you're thinking, well, shouldn't we expect an avalanche more of political support? And the answer is yes. And, and why is it, why is it, um, stable? It's stable because the Bitcoin miners are gonna, and the Bitcoin holders are gonna go wherever the politicians support them and they're gonna bring their capital and they're gonna pay taxes. Large sums of taxes. So the right way to think about Bitcoin is Bitcoin's creating an opportunity. It's an opportunity for your family to save money for a hundred years.

• 1:34:02Speaker 02

  It's an opportunity to fix your company. MicroStrategy's stock is, you know, hitting 800, right? It's, it's an opportunity for your shareholders. It's an opportunity for your taxpayers. It's an opportunity for your constituents. It's an opportunity in the media business, right? I mean, nobody wants to talk about anything but Bitcoin. Everyone wants to talk about Bitcoin. It's an opportunity for Twitter. It's an opportunity for every mobile app.

• 1:34:28Anthony Pompliano?

  What I think people don't recognize, and you and I have talked about this before, is it's the only thing, from a strategic standpoint, that if you're an individual, you can plug in your personal balance sheet, right? You can start to run your own node. You can use this technology. If you're a corporation or a financial institution, you can plug your business into the network. And you can do that in a multitude of ways. You can build services that end up facilitating other people to use it, or you can mine to support the network. You can simply just buy the asset and hold it on your balance sheet, but you can plug in. It's also true of nation states and foundations and endowments and pension funds, et cetera. But when you plug into the network, you're in essence hiring tens of millions,

• 1:35:08Anthony Pompliano?

  if not hundreds of millions of people around the world that are all now working aligned with you to further your business, right? I talk all the time about whether you're a restaurant, right? Where we've literally seen examples of many restaurants who have done this, all the way up to large pension funds or nation states. All of a sudden, the cyber hornets online, they begin to rally around you. They begin to push you forward. They begin to say, hey, we will support you because you are like-minded like us. You are also helping us move this forward. But you also get the support of every single miner in the world. So we will protect your economic wealth for you. And you get the Lightning Network. We will help people actually route these transactions. It's just a very unique thing where you're essentially hiring so many people and so much economic value.

• 1:35:53Anthony Pompliano?

  But all you do is you just plug in, right? You don't have to go meet these people. You don't even know who they are.

• 1:35:56Speaker 02

  It's an excellent political strategy. It's an excellent marketing strategy. It's an excellent shareholder relations strategy. It's an excellent business strategy. It's, I guess there's two thoughts I have here. One, properly understood, I believe Bitcoin is digital energy. It is pure energy, right? It's not digital gold that's put a billion dollars of money in a vault and it'll sit there for a decade and you can't do anything with it. It's, it's, it's not even digital property. Digital property is a billion dollars of a digital hotel and I can teleport it from New York to Paris and back again and it's

• 1:36:38Speaker 02

  maintenance-free and indestructible. It's better than that. It's digital energy because I can decompose the hotel to room minutes and I can, I can decompose and recompose this pure energy hotel and rent it out at the speed of light and program it with a million transactions a second. You never saw a hotel get programmed with a billion parts, a million transactions a second. It's literally like a swirling energy mass. When you understand that, then you see, it hasn't eliminated capitalism. It's simply the 500 trillion dollar digital energy basis of capitalism. It makes sense that you would

• 1:37:21Speaker 02

  use it as the foundation to build your family, to build your company, to build your country, to build your city, to build your application, to build your device. You can put it into everything. And now, once you've done that, look, you can back up your, your family with the balance sheet of Bitcoin. You'll be rich. That doesn't mean you'll be happy. There's a lot of rich families that have a lot of messed up problems, right? You can watch them on television, you know? You can put it on the balance sheet of your company, you know? I have, you know, seven, if I have seven or eight billion dollars on my balance sheet, that doesn't mean I don't have to get up and go to work and make the software work

• 1:38:01Speaker 02

  and sell the software and listen to the customers. I'm still in a, in a competitive struggle with other like-kind software companies that sell business intelligence software. And the same is true with your city, right? It's half the solution. The other half of the solution is you need rational policies at the municipal level, the state level and the government level. So, when you think about it like that, right, you realize that...

• 1:38:31Speaker 02

  It just, it makes sense and it's, it's going to grow, but um.

• 1:38:43Speaker 02

  What was the second part of your question again?

• 1:38:45Anthony Pompliano?

  In terms of as more and more people plug into this system, do we expect not only one, the politicians obviously will continue to do this, but is there a spillover effect where people actually leave jurisdictions that aren't Bitcoin friendly? Like there's an element of take taxes, right? There's a carrot and a stick. You can drop your tax rates, you can incentivize people to move, but you also could increase your taxes and literally push people away. It's obvious that the incentive to get people to move to your jurisdiction, but if people continue to be abrasive, is there problems?

• 1:39:13Speaker 02

  Yeah, I remember what I was gonna say now. It's the energy system is an energy network. Everyone's plugging into it and it makes them more efficient than they would otherwise be, but they still have their struggle. What's happening is, yeah, you're benefiting from the rest of the network. You can't afford to lose laser-like focus on your family, your company, your country, right? You can't assume that just because you plugged into Bitcoin networks, you can be a crappy retailer or a bad mayor or a bad father, right? So it doesn't solve that problem. Every, I think we boil down to a simple idea, which is everybody's got a balance sheet,

• 1:39:57Speaker 02

  everybody's got a P and L. The P and L is your operating business. You better be the best in the world at that thing. The best in the world. If you get distracted, you know, you want to be a good husband, you can't have six wives. You want to be a good retailer, you better know who your customer is. You still compete against every retail. So your operating business, you gotta be really laser-like and good at it, but by plugging your, your balance sheet into Bitcoin, you have hundreds of millions of people guarding your back that are energizing the network. And it takes me back to a historic observation. History teaches us that the winning civilizations,

• 1:40:40Speaker 02

  the winners in the history of mankind are the civilizations that channel energy more effectively through time and space. Right, and that means practically speaking, right, the Romans, they were good at killing people. It's not easy to kill people, right? I mean, to raise an army, they didn't show up with bows and arrows and spears. They showed up with industrial-grade artillery that tossed 50-pound flaming balls of shrapnel at you from 500 meters or 1,000 meters away, right? And a navy. So, you see that over and over again, right?

• 1:41:21Speaker 02

  Steel trumps iron, and iron trumps bronze. And that's because, and bronze trumps stone, right? You pick up a stone, if you pick up the sharp rock, you beat the other guy. If you're smart enough to pick up a rock, and the other guy didn't pick up a rock, you won the fight. If you had the iron, then you beat the guys with the bronze. If you had the steel, you beat the guys with the iron. You ever seen steel forged? People don't even think about this. Walk into a steel mill, look around, what do you think's going on? Right? They're channeling immense energy, right? The fire, the heat, you know, or electric rolled steel.

• 1:42:04Speaker 02

  Massive energy into metallic form. Air powers, energy, potential energy. You get up 50,000 feet, you drop someone on someone's head. Okay, what's the channeling part? Remember the Gulf War? You know, Norm Schwarzkopf used to show the videos of the laser-guided bomb, and something that's in the clouds dropped the bomb that managed to hit, you know, a 3x3 space from 50,000 feet up, you know, through the wind. Right? So, the channeling of the energy through time and space, you know, and being better at channeling it, that explains why every team wins in sports. That's why Tom Brady wins, because the quarterback puts, you've seen him put the football

• 1:42:50Speaker 02

  in exactly the spot. You have to put that football in that space in a plus or minus 10-millisecond time spot with the right spin on the ball. And if you happen to be able to do that, you can win. And is it random? No. It's not random. There's one guy that's better at it than everybody else. And if he didn't have the team, they wouldn't win. So, every winner... Is better at channeling energy and time and space. Every civilization, every city, every company, right? Every investor. So the real power of Bitcoin is Bitcoin is digital energy.

• 1:43:33Speaker 02

  And until you figure it out, if I said to you, what is digital energy? Well, digital energy is I'm going to put $100 billion into this container. And then I'm going to do a magic trick and it's not here anymore. But guess what? I can move it at the speed of light a billion times a second and you can't find it. And I can put it into every car and it'll drive every car on the planet for the next two years without fuel. Sounds like a magic spell. But it is a magic spell. Any sufficiently advanced technology is indistinguishable from magic. Bitcoin's digital energy, the next best thing is electrical energy.

• 1:44:17Speaker 02

  It's not, you know, information. These are not nearly as good. It's a thousand times better than the thing it's replacing. A lot of people, they can't get their head around it. They don't want to understand it. The conclusion is, if I told you, like, which country is going to win the war? The one that masters air power, right? The first half of World War II was air power, you know? Sea power? The British, you know, control the seas, right? Or how about this? Nuclear power? What could nuclear power do for you? Right? You think you weren't channeling energy? Right? You're channeling energy.

• 1:44:58Speaker 02

  So now we're talking about digital energy and you would ignore it at your own risk. It doesn't guarantee you win, right? I put a, what's a gun? A gun is, is channeling with precision, right? Chemical energy or explosive energy, right? It's pretty obvious if you think about it, guns, germs, steel, you're channeling energy. You know, Lord help you if you're on the wrong side of that. But if I do hand you the gun, you'll probably win unless you're stupid enough to shoot your own foot off. And there are examples of people that shoot their own foot off and, you know, in the history of war and the history of civilization.

• 1:45:40Speaker 02

  But ultimately, what history is telling us is the team that is most coordinated that channels energy always wins. And Bitcoin, Bitcoin's a good bet, just because it's digital energy. And the advantage you have versus using metallic energy in the form of gold, or using political energy in the form of fiat paper, is so much greater, that the deck is just stacked against everybody else. Now, the question is just who's going to jump on it and how fast. Which politician? Which big tech company, right? If Apple gets on Bitcoin, you know, they generate a trillion dollars of additional market cap just on the balance sheet maneuver. That's the first trillion.

• 1:46:24Speaker 02

  If they build it into an iPhone, you make another trillion. If you're smart, you have a $10 trillion asset in your cloud and you become a $10 trillion bank. If they do it, or they don't do it, right? The world's full of examples of empires topple because they did not embrace a new technology. You know, the Romans, the Romans needed the Etruscans to whiff, you know? And for the Greeks to take their eye off the ball, and then, you know, one thing leads to another. And when you get enough power, you start to, you start to become more closed minded. If you have enough money and enough power, you don't need to learn anything new.

• 1:47:07Speaker 02

  What we see going on right now is, every single powerful person in the world is asked the question, what do you think of Bitcoin? Everybody. The premier of, you know, of Russia, every world leader, every major investor, every major influencer, everybody's got to have an opinion. Ask yourself the question, how many of them spent 100 hours studying Bitcoin to form an opinion? I don't think there's a single person with a negative opinion that spent 100 hours studying it. I mean, I don't think you're out on a limb there. I just think, the world's full of people that don't, they haven't spent 10 hours studying it. And yet, if I walked up to you in 1900 and I said,

• 1:47:50Speaker 02

  I got electricity. I want you to put it in your building. I want you to put it into your carriage. I want you to put it into your ship. I want you to, you know, you manufacture food, you know, I want you to use electricity instead of steam power or mechanical power. Okay, how many people would stop and study it? And how many would think they would master it and figure it out with one hour of consideration?

• 1:48:18Speaker 02

  Would you know how to wire, you know, Hershey's, Pennsylvania, you know, or a meatpacking plant, you know, or a ship with electricity in a hundred hours? Thousand hours? How many hours does it take to figure it out? And what are the consequences of not figuring it out? I think the consequences are over 30 years, you go out of business, right?

• 1:48:44Anthony Pompliano?

  Yeah. Let me ask this. This idea of moving energy between time and space, I think you and I, unsurprising to the audience, understand how valuable this asset is. We understand how much pristine collateral it provides. When you think about Bitcoin, there's a price that is attached to it. And the price goes up and down on a daily basis. It's priced in US dollar terms. There are short-term reasons why to pay attention to the price, especially if you're holding on a balance sheet of a publicly traded company like we talked about. But when you look out over the long term, I've heard you say things like, it's going up forever. Do not sell your Bitcoin. And other things that I don't want

• 1:49:26Anthony Pompliano?

  to make an assumption, but insinuate that you are going to hold Bitcoin for your lifetime. How do you think about price in that equation? Do you worry about it? Do you think about what it will be worth in US dollar terms in the future? Like, how do you think about price?

• 1:49:43Speaker 02

  I think the only thing you gotta do is figure out how much of it you can buy. And the reason to stop buying it would be you're buying it with leverage or with a mark-to-market loan that could cause you get forced liquidated. So if you had a million dollars sitting around, you just buy Bitcoin and hold it and wait. You know, can you borrow $10 billion to buy Bitcoin? I wouldn't buy it at 20x leverage, or 10x leverage, or even 5x leverage, or something. Because the significance of price is you look at the volatility. You ask, what's the likelihood that it will trade down 50%?

• 1:50:28Speaker 02

  And I'll get a margin call and forced liquidated. If you have margin debt, you can theoretically get a margin call. If you have long-dated debt, you know, if you have a seven-year loan, we have a seven-year loan, and we bought $500 million of Bitcoin at $36,000 a coin. What's the odds it'll be $36,000 a coin in seven years? You know, I'm not so concerned about it. So I think the way to think of it is, here's my model for Bitcoin. Bitcoin's price is going up because of inflation. Safedine says 14%, right?

• 1:51:11Speaker 02

  We know that in the absence of everything else, if you had complete adoption, if 8 billion people had Bitcoin, and we had world currencies, and the US dollar was the world currency, and we inflated it 14% a year, then you would think Bitcoin would go up 14% every year as the currency kept getting inflated. So the price of the dominant monetary network, or dominant monetary asset, goes up by inflation. And the second dynamic is adoption. There's a rip, right? If there's $100 billion of demand for Bitcoin, then it's going to go faster than the 14% because there's a short squeeze

• 1:51:54Speaker 02

  as people are trying to buy the stuff faster than the market wants to sell. And if you went from 1% adoption to 2% adoption, you could imagine that the price could double just because the adoption doubled, even in no inflation, right? Correct. And then the third driver is utility. If, um, this is common sense, right? You ever send Bitcoin to anybody else on the main chain? And you want to send 37 bucks and it takes you an hour and you got a fee. And then when Cash App came out and said, you could just send it via Cash Tag, or, you know, or you get a Lightning, that's the proprietary way called Layer 3. And the Layer 2 Lightning way is I got a Lightning Wallet and I zap it

• 1:52:38Speaker 02

  for one Satoshi in a split second. Remember the big smile that brings to your face? It's pretty fun. Okay. Did it not make you think that Bitcoin is more valuable? Like Bitcoin's utility explodes. If I can move the money at the speed of light on the Layer 2 or the Layer 3, and if I can do a billion transactions a day, or let's take El Salvador, right? 3 million people download a wallet and they start doing remittances. Is there demand for Bitcoin? Sure there is, right? So, so as the technical utility increases, as we go from, and by the way, the technical utility drives and feeds back into the adoption, right? Because there's 3 million people in El Salvador that now have maybe a bit of Bitcoin

• 1:53:23Speaker 02

  or the ability to buy Bitcoin in a split second that couldn't buy it six months ago. So, if you look at a world going from 100 million people with, what's low utility? I buy it and I hold it for 100 years. That's low velocity, 100 million adoption, 200 million, and I move it every year, 400 million, 800 million, 1.6 billion. As the user count increases, that's going to drive things. But the adoption is not just user count, right? If you're building the model, you would say, "Well, how much money?" People talk about Bitcoin and network effects and Metcalfe's law.

• 1:54:04Speaker 02

  Again, if you're just looking at it in a cursory way, you're saying, "Oh, Metcalfe's law is applied." But if you're thinking a bit deeper about it, you're thinking, "Newton's law is applied, right? Astrophysics applies." If you bring $100 billion to the network and you're one person, that's more important than if you brought a dollar to the network and you're one person. And so, you have to do a dollar-weighted assessment of adoption, right? And you would almost say the value of it is a function of the total amount of capital, plus the velocity, right? What's the amount of money that shows up? What's the velocity of the money that shows up? What's the utility of the money that shows up?

• 1:54:50Speaker 02

  And when you think about it that way, it becomes pretty clear that as we march from one use case to 1,000 use cases, like, you know, holding it is one thing, lending it out for yield is another thing. What if I put a lien on it? What if I can lock it up for five years? What if I can create a trust? What if I gave you a trust that's good for the rest of your life and the life of your firstborn child for the next 1,000 years? And it's an app, and I just fund it with two Bitcoin? And you can't ever sell the Bitcoin, but you can live off of the yield of the Bitcoin for the next 1,000 years? It's an application, right? I can create insurance policies, I can create trust funds. What if I gave you a car, a Tesla car,

• 1:55:35Speaker 02

  and I put a Bitcoin in the car and the car refueled itself forever and maintained itself? It's a self-maintaining car, more valuable than a non-maintaining car, right? It's like I hand you something with an endowment, right? So, as that happens, as you get more money flowing on the network and more people flowing on the network and more utility flowing on the network, the price goes up. And does it go up forever? But why? Yeah, because as I said, it's the language of money. What's that mean? It's like English. How long's been around? Long time.

• 1:56:17Speaker 02

  It's like, it's like base 10 math. Right? Like there, here's the thing about it, right? People don't get this part. Bitcoin is, is, is math, but it's a type of math. It's like base 10 math. The Bitcoin protocol is a protocol for money. Now, I hand it to you. You can either say, great, this is the dominant protocol for money. This is the winner and I'm going to buy as much of it as I can. Or you can keep trying to commercialize base 16 math and base 32 math and base 2 math and base 4 math. And, you know, the base 16 math.

• 1:56:57Speaker 02

  Base 10 math is not the only mathematical protocol, any more than the metric system is the only system of measures. It happens to be one that we adopted. There's no reason to think it doesn't last 1,000 years. It could last 10,000 years. Right? And that's the part that, that people don't get. So when I say it's going up forever, I'm saying, well, if the, will the technology get better? Obviously. Will, will adoption increase? Well, I guess you could say it gets pegged out. When adoption is 8 billion people, when everybody's adopted it, technology keeps advancing.

• 1:57:37Speaker 02

  Inflation continues in whatever other currencies exist. And, and at some point theoretically, if all the other weak currencies failed, right? You think we go from 130 currencies to 100, to 30, to 12, to 10, to, maybe one day there's the dollar in the CNY and you're down to 2. And then maybe we decide to throw away the dollar in the CNY. We get enlightened and we just use satoshis. Yeah. And you get the perfect Austrian economics, hard money, perfect thing. Maybe, doesn't matter to me if we do or we don't, but let's say we did. Well, then it goes up with the productivity of the civilization, right?

• 1:58:19Speaker 02

  If the civilization is got 5% productivity growth and everybody's adopted the same money, then you've got 5% growth. And until that, you're going to have faster than the productivity growth because you're going to get these, these rips, these, these accelerations from technology and adoption and fiat inflation in, in the, in the frame of reference, right? It's useful to see the frame of reference, right? Is your frame of reference the peso? Is it the Bolivar? Is it the US dollar? And in that frame of reference, then the, the price is going to adjust.

• 1:59:01Anthony Pompliano?

  My brothers are going to join us here in a second to ask a couple of questions.

• 1:59:04Speaker 02

  Sure.

• 1:59:04Anthony Pompliano?

  But my last question for you on this topic is, when you think about micro strategy, we always talk about micro strategy, right? Because it's the company that you run. But a lot of people will forget, you actually made a very large personal Bitcoin purchases as well. Do you think about a difference in the decision making between a person optimizing for this as like a balance sheet strategy versus a corporation? Or do you see those as the exact same thing?

• 1:59:30Speaker 02

  I think for a person, you just, you just say, how much money do I want to store for the next decade? Or maybe hold for life? How much, how much long duration property? If I said, I said, you're going to invest something for the next 30 years and give it to your grandchildren, hold it in the family, the family endowment, I would put that amount of money in Bitcoin, right? The rest of your money is an investment. You're betting on Apple versus Facebook, or it's a speculation. I want to speculate on Doge versus Shib because it's fun, or I want to gamble on the outcome of the Super Bowl because I think I know and it's fun. Okay. And I think that, that all, personal money falls into those three categories. It's either an investment, it's a speculation, or it's

• 2:00:15Speaker 02

  a, it's an endowment of a savings account.

• 2:00:20Speaker 02

  For a business, that's different because some businesses are traders. If you're a trader, if you think you can out-trade someone else, you're a business. You better be thinking about it 60 hours a week. You better have proprietary computers and proprietary models and know the markets and the arbitrages. Then you could trade, maybe. I mean, Citadel trades, Renaissance trades, I mean, other people trade, Goldman Sachs trades. So I think they can be traders. And then also, when you get into business, right? Businesses have other options, like maybe they can raise capital, they can issue equity, they can issue debt, they're publicly traded. I have an army of lawyers and accountants so that I can do that. You don't, as a family. So businesses don't have the same financing capabilities, sorry, people don't have the

• 2:01:05Speaker 02

  same financing capabilities that businesses do. And then your business has strategic assets. If you're Fidelity and you have trillions of dollars of fixed income, you can build it into your bonds. If you're a bank, you can build it into the bank. If you have a mobile app, you can build it in a mobile app. If you build phones or devices, you can build it into the device. One thing I think with a business is clear is, you just should be laser-like focused and you should think that, when the dust settles, I need to be the best in the world at what I do. Right? Like, for example, it wouldn't be a good idea for me to go into business competing with Fidelity. Right? They have 11 trillion in assets. I'm not, you know, like, I'm not gonna launch a Bitcoin investment fund, right? I'm not. I mean, it's not for me.

• 2:01:48Speaker 02

  I'm not gonna go in business against, you know, Square or PayPal either, just because I think it's a good idea. So businesses need to be laser-like focused on competing and growing and in an accretive fashion for their shareholders. And also, businesses have shareholders to manage and shareholder relations, and so, so there's that phrase, you know, if we wanna go far, we need to go together. And so, for a business, it's very important to have shareholder alignment. Would you rather have $10 billion of capital and get a 10% return, or no capital and get a 30% return? Right? So, a business has to keep their capital aligned, and so, a lot of times, they'll do things that are either optimized for their shareholders, or they're optimized for their other constituencies.

• 2:02:33Speaker 02

  And businesses have regulatory nexus, right? Like, there's certain things that I can't do if I'm a bank in China, right? Or if I'm a bank in the US, I can't. So businesses have compliance issues, and individuals don't.

• 2:02:48Speaker 02

  So that's how I think about that.

• 2:02:51Anthony Pompliano?

  You don't know this, but my two brothers run the best business research team, which is a very clever thing that they came up with. They also run a union that I've busted like 20 times. What questions do you guys have?

• 2:03:04Speaker 04

  Hopefully by the end of this, we're going to get Michael to join the union. This will be our recruiting pitch.

• 2:03:10Speaker 02

  Bitcoin's a monetary union.

• 2:03:13Speaker 04

  See, he's in.

• 2:03:13Speaker 02

  It's a monetary union you should join. Eventually, everybody else will.

• 2:03:19Anthony Pompliano?

  What questions do you guys have?

• 2:03:20Speaker 04

  So I listened to the entire interview. Fantastic, awesome stuff, but I have to ask one question around volatility. So you mentioned earlier, you own, MicroStrategy owns or holds over 100,000 Bitcoin. I think you've mentioned in the past how much you personally hold. But there's days where Bitcoin is obviously appreciated drastically over the last year, 10 years, etc. But Bitcoin also went from 65,000 call to 30,000 or 32,000 this year. What's going on on days where you're looking on paper and it's going, you know, hundreds of millions of dollars at some points down?

• 2:03:56Speaker 02

  Look, I'm running the business just like any CEOs running the business. Like if you were to ask Jeff Bezos, you know, what are you thinking about on days when Amazon stock is down? He would say, I'm not thinking about it. I'm thinking about fix the business, run the business, and the stock will take care of itself. And that's what I think. I'm looking out seven years, right? I'm saying, how do we educate more people on Bitcoin? What's my next deal that I'm going to do? I mean, if, if, if my stock is down, I'm going to issue debt. If my stock is up, maybe I can do a convert, right? What about the software business? How are we going to deliver the best quarterly results we can deliver? You focus on the things you can control.

• 2:04:41Speaker 02

  So if I can control it, I'm going to do it. And the short-term volatility, you know, you can't control. And so you just wait. You gotta figure that in seven years, the market will sort itself out. In seven months, it likely will sort itself out in seven. And if you want to drive yourself insane, then you zoom in. And if, if I zoom in close enough, if I just look at 0.0001% of your face for 18 milliseconds, I bet I can find some protozoa bacteria crawling around somewhere and it'll freak me out.

• 2:05:24Speaker 02

  Right? If I, if I want to, right? Like it's you're driving yourself to apoplectic fits by, by inducing this anxiety. So the way I look at volatility is, actually, the truth is, I just say this, it's a benefit. Volatility is the price you pay to get 10x the performance of the S and P. If it wasn't volatile, then would I have been able to borrow $2.2 billion at 1% interest? And buy $7.5 billion worth of it, starting with 250 million in capital? Like, I like the fact it's hard. I like the fact it's scary. I like the fact it's volatile.

• 2:06:08Speaker 02

  What you really want, this is what you should hope for in life. You should hope that you can see the future and you have a very strong opinion about the future. But that everybody else disagrees with you and they're getting bounced around. It's a bumpy ride. It's like, I'm taking you on a bumpy ride down the road. I'm going to bounce you this way and that way. And in five years, then there's a pot of gold at the end. And there's only two seats and there's 10 people and only two of you can get on. So the two of you guys, you're like, oh, this pot of gold at the end? Sorry, pot of Bitcoin at the end? Pot of Bitcoin at the end? Yeah. You're like, okay, well, we'll sign up for the bumpy ride. What else do we got to do?

• 2:06:51Speaker 02

  And everybody else is like fat, dumb and happy. And they've all got plenty of everything and they're comfortable in their life. And they're like, well, that doesn't look like a very comfortable ride. It's like, you know, a Jeep and it's a desert and it's a bumpy ride. We'll sit this one out. Can you just bring it to us?

• 2:07:09Speaker 02

  And it's, you know, what I said tongue in cheek about the FDIC statement is like, when every bank can hold Bitcoin on their balance sheet, well, then every company is going to borrow hundreds of billions and trillions of dollars against their Bitcoin. Every bank's going to buy trillions of dollars of Bitcoin. The prices go into the moon, you're not going to be able to afford the Bitcoin. When I make it, you know, a smooth passage, you're going to wait until there's a train or a plane that flies across the country? Are you going to get in a wagon and you're going to go west, young man? Right? So I'm like, the joke, of course, is it's volatility, but it keeps going up.

• 2:07:51Speaker 02

  People are like, well, how else do you want it to go up? Right? I mean, like, it's going up with volatility. So I think it's a benefit because it's volatility that pays off everybody that does the research and has any conviction. And it disproportionately benefits people that want to make the investment in the new world and it transfers wealth away from people that are afraid of volatility. It's not really afraid of volatility. It's, I mean, Amazon was volatile, right? I mean, a lot of people made a lot of money on Amazon. A lot of people

• 2:08:31Speaker 02

  made a lot of money, even venture capitalists, you know, accept extreme amounts of volatility. I think here you have an example of a liquid publicly traded asset, which is volatile, but in fact, it's still misunderstood by 98% of the public investors. So it's an asymmetric opportunity to buy something which is no less risky than investing in a big tech company, but much less understood. And I think probably the Sharpe ratios would actually bear that out if we looked at volatility adjusted yield.

• 2:09:13Anthony Pompliano?

  John, what questions you got?

• 2:09:14Speaker 05

  Yeah, nice to see you again, Michael. So you have mentioned, and I tend to agree, that Bitcoin is digital gold and it's a store of value. I'm curious what your thinking is behind people, companies and other countries using it as a medium of exchange. We've seen El Salvador adopt it. What are your thoughts around that?

• 2:09:32Speaker 02

  I really think that for the next decade, the screaming home run architecture is digital currency as the US dollar on top of digital asset as BTC. And I think that every country really wants to move dollars around as the medium of exchange, because 100 million companies have their accounting systems wired for dollars. And I think they want to use to store a value. And I think if you had $100 and $99 are invested in Bitcoin and $1 is invested in the USD, you have 99% of the benefit. In fact, it's not even that. It's like, you don't have to give up anything.

• 2:10:16Speaker 02

  If you have a million dollars, you put a million dollars into Bitcoin and you borrow $100,000 in USD, a stablecoin, and then you pay your bill in the USD while the Bitcoin appreciates. So, the net balance sheet ratio is 100% Bitcoin, but it doesn't make the currency go away. Right? Like MicroStrategy's got more than 100% of its balance sheet in Bitcoin, but we still use the currency. So, what I think will happen, if you really want Bitcoin adoption to take off, you don't want to squeeze out the stablecoins. I think that the USD stablecoin is actually going to drive the explosion in Bitcoin.

• 2:11:01Speaker 02

  The use case of stablecoins up until now has been crypto exchanges settling offshore, right? They're settling crypto exchanges. We didn't use stablecoins at MicroStrategy for anything. We don't use stablecoins to buy Bitcoin. Right? So, what you want is you want 8 billion people to use a stablecoin to buy coffee, and you also want Amazon and General Electric and Apple to remit cross-border treasuries in stablecoin. Thank you. And why would you do that? Because you can move money at the speed of light on Saturday afternoon for free. And right now, MicroStrategy can't move money cross borders at the speed of light for free. Would we move USD by a stablecoin? Yeah.

• 2:11:45Speaker 02

  Would we move Bitcoin? Well, we might flash it into Bitcoin for a second, move it in another second, flash it back into USD, right? Allah, you know.

• 2:11:54Anthony Pompliano?

  Strike.

• 2:11:54Speaker 02

  You know, strike and Jack Mahler's. We might do that. But I actually think that what the world wants, not just the world, every consumer, kind of, every consumer in South America, Africa would love to have dollars in their wallet. They would also love, they know that now. Everybody knows that now. That's 100%, right? Everybody knows they want dollars in their wallet now. So the US dollar could spread to 6 billion people. It would spread to 8 billion people if the Chinese didn't block it, right? It'll spread to all 8 billion people now. They don't all know they want to hold their life savings in Bitcoin. But that's growing at a massive rate. That's spreading like a virus.

• 2:12:37Speaker 02

  Every government knows they want to control their currency. The strong governments will. The US will. The Chinese will. The EU will. The weak governments won't, right? Afghanistan, you know, and Venezuela and places with hyperinflation, Zimbabwe, they will lose their currency privileges because they're weak. And who will they lose them to? To the dollar, right? So what I think is happening is you're just going to see an explosion in the dollar, an explosion in Bitcoin, an explosion in demand for money moving over lightning rails.

• 2:13:21Speaker 02

  If you can move stablecoin over lightning rails, that would accelerate the growth of lightning, right? The killer, the killer application I want on my phone is a lightning wallet with USD stablecoin and then Bitcoin and to be able to move either of them at the speed of light in a programmatic fashion. And I think they both win. Who loses? And this is the key, like we, there's too much. The dollar must lose so Bitcoin can win? No. Who loses is weak assets and weak currencies. Can you think of a weaker asset than Bitcoin? Every other investment asset, right? Especially gold, silver, commodities, land,

• 2:14:06Speaker 02

  stock, weak value stocks, and then, and big tech stocks. They're all weaker assets. So you see money flow from, there's 500 trillion of them, by the way. We have 500 trillion in weak assets. If you got the 10 trillion from gold, we'd be up by a factor of 10. So I think that weak assets flow to the strong asset. And then weak currencies. How many, how many currencies in the world are weaker than dollar? Name one currency, fiat currency in the world, stronger than the dollar? None. They're all weaker. CNY is weaker, every African currency, every Asian currency, everything. So 180 nominal currencies, one, a lot of them are pegged to the dollar. 130 floating currencies.

• 2:14:50Speaker 02

  They all, they all can be replaced with the dollar. So who wins? Uh, Western banks, Western technology companies, Western hardware devices, the Western world, the United States, Western Europe. Who wins? Everything embraces Bitcoin, right? Who loses? You know, the nation of gold, right? I mean, you want to declare a war on something? Declare a war on gold. They don't have an army. They don't have an air force. There's no politicians running for office of president of gold. There's, there's, there's no city, state, country. No one is crying, thinking that their way of life will come to an end if gold got demonetized.

• 2:15:35Speaker 02

  So I, you know, if I had one. One request from the Bitcoin community, my request would be focus your guns on gold. Ultimately, gold is being demonetized. This is not speculation on the part of Michael Saylor. You have all the stats. It's been demonetized for the past decade, right? It doesn't have a country. It doesn't have an army. It doesn't collect taxes. There's not a single person on earth that is going to lie down in front of a tank to defend the nation of gold. And yet, gold is the enemy because gold is a dumb rock sitting. You can't mortgage your gold. You can't lean up your gold. It's hard to rent your gold

• 2:16:19Speaker 02

  or license it or develop it further. You know, gold is not big tech. You can't put gold on an iPhone. So ultimately, what you have is, there are two things that should succeed and grow. The US dollar, if you live in the United States and you believe in Western values and freedom and justice, right, and Western law and the progressive movement, you want the US dollar to grow. And instead of saying, well, the dollar is like a problem to save, and forget about that, just point out that if you live in Africa and Asia, you would give your left arm to trade in dollars, right? So the dollar should expand on lightning

• 2:16:58Speaker 02

  rails, and Bitcoin should expand, and they go together, and we all win. There's not, I mean, we all win, right? The world's a better place. Every company, everybody wins. If you're going to compete, by the way, if you're going to compete with Square Cash App, then you might lose. If you're going to compete with Twitter, you might lose. If you're going to compete with the United States of America, you might lose. My advice is, you don't got to destroy the banks. You don't have to topple a government. You don't have to crush a currency. You don't have to stop a regulator. You don't have to, you know, eliminate PayPal, right?

• 2:17:41Speaker 02

  You don't have to compete with all of them. You can buy Bitcoin. You want to compete with something, declare a war on a dead rock, right? Declare a war on the rock, right?

• 2:17:53Anthony Pompliano?

  The rock has been losing for a while now.

• 2:17:55Speaker 02

  And after you've finished declaring war on the rock, declare war on dead property, right? Dead money, right? What a low-velocity, not-

• 2:18:06Speaker 02

  I don't want to hold 500 acres in the middle of nowhere as a store of value. I don't want to hold five tons of rock as a store of value. I don't want to monetize these things. So if you start thinking that way and you think, I just want to take my monetary energy, put it into digital energy, and then I want to partner and ally with everything I find admirable. Every great company, every great politician, every great country, right? Every great technology. Just be positive, be constructive, and we all go and we win together. The world will rebuild itself, right? It's going to rebuild itself. I would like, I would prefer that it rebuild itself in a peaceful, constructive, cheerful

• 2:18:51Speaker 02

  fashion as opposed to, you know, someone's got to lose so I could win. I don't think everybody can win, right? If we invent electricity and we invent math and we invent fire, isn't it highly likely the entire human race is better off because of math, fire, and electricity? Right? I think, right? We can, we can all win together. And so that's, that's the way I see that.

• 2:19:16Anthony Pompliano?

  Before we finish up, we've been going for two hours, but I know you and I could talk about this all day. If I just give you the floor to finish, when somebody says to you, why Bitcoin? What's your, you know, two, three, four sentence answer as to why has Michael Saylor, who had every option in the world to buy an asset and put it on your balance sheet or personally invest in, why Bitcoin?

• 2:19:45Speaker 02

  Because the most...

• 2:19:52Speaker 02

  I'd start by saying the human condition is elevated via the channeling of energy and every great advance was a new form of energy via metallic energy in the form of steel or electrical energy or chemical energy. And Bitcoin is the next evolution of that, right? So the first reason is it's compelling.

• 2:20:18Speaker 02

  And critical to the events of the human race. The second observation is every successful investment idea in the 21st century was a digital transformation. Digital transformation of music, digital transformation of entertainment, digital transformation of books, digital communications. Bitcoin's the digital transformation of everything else. Everything that didn't get transferred, transformed in the first, you know, chapter of the mobile wave comes next. So now we have digital transformation of gold, digital transformation of property,

• 2:21:00Speaker 02

  and digital transformation of energy. And for the first time in the history of the human race, you can literally take energy, transform it into something in cyberspace, store it forever, move it at the speed of light, program it, and eliminate the friction that is applied to that energy when it takes another form. Economically, energy is capital, right? We use the phrase capital. If you have digital capital, it's the digital transformation of capital. And capital is half of everything. If you sum up every piece of property, every corporation, the value of everything, it's all capital.

• 2:21:44Speaker 02

  You capitalized it. So if I capitalized everything and I stored it in 20th century instruments, I would store them in equity securities and bonds and titles to property. In the 21st century, I have the chance to capitalize the entire world economy and put it in a digital token we call Bitcoin. So why buy it? Because it's half of everything.

• 2:22:14Speaker 02

  It's literally half of everything and it is the platform. It's the foundation upon which we build the 21st century economy. You could say 21st century cyber economy, but if you want to fix everything in the world, if I could eliminate the friction, move everything at the speed of light, make it immortal, oscillate it at 60 megahertz or faster, execute a million transactions a second and make it infinitely intelligent, wouldn't you think that that would be a good idea? Right? The future capitalism.

• 2:22:55Anthony Pompliano?

  There's not very many people who believe in this more than I do, but you may be one of them because I think you and I see eye to eye on all of this. So I appreciate you taking the time to come in here. I appreciate you two sitting around and watching this entire thing, coming and asking some questions. They'll be taking virtual laps for weeks now because you even hinted at the fact that you may be open to joining their union. I appreciate everyone watching at home. Please make sure you like the video, subscribe to the channel. Thank you to SoFi for sponsoring the best business show and we have lots and lots to go over after this conversation, but we'll be back tomorrow and I think that's it. Go follow Michael on Twitter. I don't know if we've got anything else.

• 2:23:37Speaker 02

  Thanks for having me.

• 2:23:39Anthony Pompliano?

  I don't know if you need any more Twitter followers, but.

• 2:23:41Speaker 04

  I got one more question.

• 2:23:42Speaker 02

  What? Go ahead.

• 2:23:44Speaker 04

  We talk about.

• 2:23:46Speaker 02

  Don't ask me what the price is gonna be.

• 2:23:47Speaker 04

  No, I won't ask you.

• 2:23:49Speaker 02

  I'm tired of that question.

• 2:23:50Speaker 04

  No, we talk about Bitcoin being good for business all the time and I think part of that is obviously the price has appreciated. So anyone who has been involved has benefited from that. But part of it is also just the community aspect of it, right? And how powerful that is. Is there a specific point in time where you were like, holy crap, like this is wild, these people are really strong, they're really passionate?

• 2:24:14Speaker 02

  You know, I think that every single month that's gone by, I've just been more impressed with the community ethos. If you look at our press release, when we first bought Bitcoin and we said why we bought it, one of the lines we put in the press release is, "We're persuaded by the community ethos, by the community itself, that this is digital gold, and it's harder, and it's smarter, and it's stronger, and it's faster than gold." And I think that came out of all my research before we actually made that announcement. And the way you figure out the community's passionate is you do your research, and you study all the influencers,

• 2:24:56Speaker 02

  and you look at all the podcasts, and you read all the books. And you couldn't come to any conclusion other than the asset is differentiated based on the community ethos. I even tweeted this, I made this point, and I guess I elaborate right now. I said, "You know, the character of the asset determines the destiny of the asset." Right? The character of the people that own something. If you own, like, Joe Random Yo-Yo coin, and you're

• 2:25:35Speaker 02

  owning it to flip it on Saturday night, depending upon which way a football game goes, okay, that's the destiny of the asset, right? It's going to be short-term, because the people are short-term. Whenever you buy anything, you've got to ask yourself the question, "What's the character, and what's the intent, and what's the strategy, or the belief system of the people that are buying the thing that I'm buying?" If I buy real estate in New York, right, you'll eventually sell it to someone else, who swears that New York is the apex city. People that love New York, their opinion is, "There is no other city on earth where you could go." Everything is a step down. They have a view of New York as Mount Everest, and they're living at the top of it. And everything, if you were to say, "Have you

• 2:26:20Speaker 02

  ever considered moving to another city?" They recall in horror, you know, kind of like, New York is like the Rome of 100 AD, and there's Rome, and then there's barbarians.

• 2:26:32Speaker 02

  Okay, so that's the character of the asset owner. What's the character of people that own Bitcoin? If you have, if everybody bought it because, because they intend to hold it forever, isn't that the kind of asset you want? Or if I told you people bought it because they liked the monogram, the, you know, they own that dog, well, how many dog coins are there? Forty-eight or something? Well, if you bought the forty-seventh dog coin, then the forty-ninth dog coin is eventually going to demonetize you. So I, I think that's been very clear from the beginning. Bitcoin had the immaculate conception, right? I mean, you can't recreate this again.

• 2:27:16Speaker 02

  How do you have a, an open sourced, you know, asset that was never pre-mined, that was never ICOed, that, you know, no one thought would be that until it became that, right? So I, I think that, um, I think that my conviction grows with time, but it's pretty evident in August.

• 2:27:42Anthony Pompliano?

  All right, so what's your, no, I'm just kidding. Do you have a price prediction?

• 2:27:48Speaker 02

  It's going up forever.

• 2:27:51Anthony Pompliano?

  All right, listen, I appreciate everyone coming. I thank you very much, Michael. You, you've got a whole bunch of stuff you could spend your time on, so I appreciate you coming here, hanging out with us. And anyone who's got any questions, go tweet at Michael. He probably will not respond, but he'll at least read it. So, see you guys tomorrow.