expect. Thank you guys very much for being here.
This is a seminar on money, inflation, and Bitcoin.
It's a big enough topic that today we're just going to cover money.
Next time we'll talk about inflation. After that we'll talk about Bitcoin.
We'll get into some of each of them as we go because it's impossible to talk about one
without talking about the other.
But I want to make sure that you leave here
with a grounded understanding
of what money is.
I want you to leave with a definition.
I want you to understand what money represents,
what are the purposes of money,
and what are the characteristics of money.
So we'll get into that.
We'll see some examples.
We're going to start with just a little bit of a pop quiz, I guess.
And I hope you enjoy.
Thank you very much for your attention.
The first thing is, I do believe that this is the highest leverage understanding that you can have in life.
you're going to spend approximately 100,000 hours of your life
trying to earn money.
It would be very wise to understand where you should put that money
so that you could keep it.
You don't want to save your money in beanie babies.
We've seen that that's not a good idea.
You don't want to save it in the Deutschmark,
Argentinian peso.
Japanese yen, the U.S. dollar, gold.
All of these things have failed.
We'll talk about why and how.
And we're so lucky to be living in a time where we have access to and cannot be denied from
not only having the choice of the best money, but the ability to actually own it.
the dollars that you have in your pockets or in your bank account,
the pesos, the yen, those are not money.
Those are currency.
It's a very different thing.
A currency is an IOU.
It represents money, but it is not money.
It's also not yours.
Your money in a bank account is the bank's money.
What you have is a promise.
That promise has been broken by every institution to have ever existed.
It will continue to be broken because it is a feature of the system.
It is not a bug.
It was designed this way.
And as long as we participate in that system, then we will continue to be taken advantage of.
So my goal here is that you leave with a conviction of what money is,
what the best money is and why you should always choose the best money that exists.
So kick it off. We've got five true or false questions. We're going to go through them quick.
First one, housing, insurance, food, education, everything, cars, shoes,
they're going up in price. Raise your hand if you believe this is true.
false they're not going up in price the thing that you use to purchase it with is going down
in value therefore it takes more of them to buy it this is the u.s dollar purchasing power
starting in 1913 this is where the united states went broke this is where the united states went
broke they went broke before that and that's the best one to have ever existed in modern times
prices do not go up your purchasing power goes down
i need you to start thinking about things in terms of this when you buy something you are not
buying the thing you're selling your dollars you're selling your bitcoin you're selling your
ethereum you're selling whatever it's a two-way street but we only think about
buying in terms of when I give money for something, and we only think about selling in terms of when I
get something, when I get money for something. So you're losing purchasing power. Prices are not
going up. True or false? Inflation is an issue caused by supply chains and corporations greedily
trying to maximize profits. True? Yeah, I think I can't fool you guys anymore.
false inflation by definition is an increase in the supply of money
the blue line this is the m2 money supply this is basically an accounting as best we can
of the global amount of money that exists something kind of scary that should terrify you
is that literally no one, no government, no database, no entity,
has any idea how much money exists in the world.
At any given time, no one can pin it down.
We do not know.
There are options upon options.
If you include the M2 money supply, you're in the trillions.
If you include the options upon those, you're in the quadrillions.
When the interest rate goes down, the money supply increases.
When the interest rate goes up, the money supply decreases.
It's constantly changing.
This is going to be very important when we talk about unit of account.
And I think it will be very clear when we discuss that.
True or false?
Investing in retirement through the stock market will protect and grow your savings over time.
The S&P, which is the red line, these are the 500 most valuable companies in the world.
Compared to the M2 money supply, barely keeps up with inflation.
And in fact, out of the S&P 500, there are approximately seven, maybe eight companies that account for all of the gains.
The other 493, 492 are actually dragging it down.
The average S&P company exists for 30 years.
The average S&P company exists in the S&P for four.
So if you're going to be picking individual stocks in order to try to choose a retirement, you've got to be shockingly good.
And we've proven time and time again that you're going to find that you're just not that good.
Unfortunate, right? Unfortunate.
True or false, I can protect myself against inflation by earning more.
If you made the average wage in 1971, which was $6,000,
in order to have the same standard of living,
which is to say, in order to keep up with inflation,
by 2024, you'd have to be making $180,000 a year.
We predict that by 2030 it'll be $360,000.
Probably that's an undershoot.
I would assume that that's a very low number.
Probably closer to $500,000 would be my guess.
This red line is actually what adjusted full-time wages have done since 1971.
They've gone nowhere.
We've had some people that make all the money.
And most people make none of the money.
The average person has gotten exponentially poorer since 1971.
True or false?
There's one way to protect your savings, your livelihood against inflation, and anyone can do it.
Regardless of how rich or poor they may be.
That is true.
You can basically pick any time during Bitcoin's existence.
Compare it to the top earning assets.
This is from about a year ago.
These numbers could be adjusted.
It would actually be higher now.
But if you'd have put $100 into gold 10 years ago, more like $11.
You'd have about $110, probably closer to $120 today.
real estate 162, S&P,
put into Bitcoin you have about 15 million.
What we're seeing is a global revolution
as an innovation in technology
takes over money.
Much like we saw a global revolution
in how the telephone took over communications,
how internet took over information,
how cell phones have taken over attention, I would say.
We're coming to the point where we're going to start hitting
what's called hyper-Bitcoinization,
just like we saw hyper-Internetization in the late 90s,
where we hit the spiky part of the S-curve and we shoot up high.
so i can give you the what and the how i can tell you about bitcoin i can tell you about how these
things work but without the why we're going to have a risk the risk is that you see the potential
and the power and then you do nothing my goal is that you walk away with an understanding and
conviction that allows you to make very wise choices for your future the reason i do this
is because I want this for you.
This is something I learned when I was 16 years old.
There's a guy named Zig Ziglar who was a famous salesman.
He became a philosopher after that.
And he says, if you have the ability to share a good or service or information that will
change lives, it's your moral obligation to do so.
So I view this as a moral obligation.
I view this as a duty that I have to humanity, and I hope you find value in it.
What's my why? My why is that I want to live a good life.
I retired when I was 38, normal salary, no inheritance, grew up poor, grew up in a trailer house, no lottery.
And my goal is to spend my life focused on music, nature, fitness, and time with loved ones.
Those are things that I find far more valuable than chasing exits and being someone else's exit liquidity.
So our job here is to uncover and exploit something about the money system that will open your eyes.
It is intentionally difficult to understand.
That's why we're breaking this up into three parts.
But it's actually not hard to understand once you get a grounding of the definition, the representation, the purposes, and the characteristics.
So we're going to learn from cartoon cows.
I think this will work well.
I love cartoons.
So what are the rules?
Money is a game.
You're going to play it just like everybody else in the world.
We're going to go over these rules one by one.
at the end you should be able to look at this and not mess it up.
So when we're done here, you're going to understand money better than Warren Buffett.
You'll understand inflation better than the Federal Reserve.
And you'll have everything that you need to secure your financial future.
Oh, the important part here, I'm no guru.
I just read a lot.
And I found that by reading a lot, you can take the wisdom that other people have spent the rest of their lives dedicating to.
And you can take that and do something great with it.
My background, I've got an undergrad and a master's in economics.
I used to be a financial advisor during the global financial crisis, which was an interesting time.
I used to manage an $80 million loan portfolio, and I also have a degree in engineering, and was a National Communications Award winner when I did that as well.
None of that, by the way, gave me any sort of background for what we're going to talk about today.
So that actually doesn't matter at all.
So what was the best performing asset in the last decade?
It was Bitcoin.
This is not to scale because it would not fit.
It would go through the roof if we were to put this to scale.
You want to be able to save yourself from greed, poor security, fear, lack of follow through, and not acting fast enough.
The orange line at the top is Bitcoin as a constant.
The S&P 500 priced in Bitcoin, real estate gold, the Nigerian Naira, and the Turkish Lira.
The best one is the S&P.
It's hung on.
It's only down 94% compared to Bitcoin over the last decade.
Gold's down 95%.
We'll talk about this later, but when things go down by a percentage,
they have to go up by a lot more.
If it goes down by 50%, you have to go up by 100% to get back.
If it goes down by 75%, you have to go up 400% to get back.
What do you have?
Yep.
So there's currently around $900 trillion worth of wealth in the world.
Bitcoin represents about $2 trillion of that.
You can figure that about half of that is utility value
and about half of it's investment value.
There's about $450 trillion worth of investment value.
So $2 trillion out of $450 trillion.
We've got about $448 trillion yet to go.
You're not going to see 15,000% gains probably next year.
But if you keep your money in these, you will see 15,000% losses, especially these.
Any sort of government money.
There's been 4,000 government monies to exist.
3,840 of them are defunct.
They are gone.
They are worth literally zero.
Of the 160 so that remain,
every single one is down 99% from its original value,
which means that it has to go up 9,900% just to get back to parity.
And all the other ones are down more than that.
This is by design.
We'll talk about this later.
John Maynard Keynes, who is the father of the modern economic system,
very famous for saying that inflation is a mechanism by which governments can secretly
and slowly confiscate wealth from people without them knowing it.
This is a person who designed the system that we live in.
This is not an accident.
This is by design.
This is a money that was designed not to do that.
So yes, we can only deal with the situation that we have.
This is not for prediction, but we're going to compare
first understanding money as a technology,
and we'll take a look at some other technologies as well.
So three things that we'll try to cover today.
How to view money as a technology,
what we have over here on the board,
the four purposes of money,
and how to understand the 10 characteristics.
Be curious about this. Learn how to flip your mind. Learn how to invert, as Charlie Munger would say, and try to view things from a different direction.
And I think that this will be very valuable to you.
What is money? So we're going to start not by defining money, but by trying to define something else to understand just how difficult that is.
So, I have cowboy boots on.
You've got sandals.
You've got some slip-on shoes.
Your shoes have laces.
Can someone define for me what a shoe is?
I think that's actually what I figured I would struggle to get done in 10 minutes.
That's, I think it's perfect.
What's a shoe?
The definition of a shoe, we're going to say it's tech to protect feet.
That work?
Because my boots are fireproof, so I can weld and sparks can fall and I won't burn my foot.
But you can't do that, and you can't do that.
My boots are tall to keep rattlesnakes from biting me, but you can't do that and you can't do that, so that's not constant.
Laces don't define a shoe because hardly any of the shoes here have laces.
High heels serve another function, right? They make us taller.
so it's really hard to define
a shoe based on
a whole bunch of different things
because there's so many different iterations
and they do so many different things
but it is a piece of technology
and it protects our foot
it allows us to go places
we otherwise couldn't go
well that's another
that's another one that I'd debate you on
because nobody here is wearing Crocs, but...
Are Crocs fashion?
Yes, they are.
They're hideous.
Well, they have a problem with the book.
Some shoes are designed for fashion, right?
But then you've got insulated boots that have steel toes in them.
Are they designed for fashion or are they designed for function?
So, yeah, they can have other purposes.
They can do other things.
But really, all we can say is that they're technology that we put on our foot,
and they alter what we can do with our foot, right?
So I can put on my steel-toed boots, and now I have weapons.
I can put on my high heels, and now I'm fashionable.
I can put on my rubber-soled boots, and now I can walk across an electrified floor and not get shocked.
So what about money?
It's a technology, right?
Money is a technology.
What does money protect?
Value.
Cool.
Money protects value.
What's value?
It's like time.
Time?
So, I think the best definition for value is that it's desirable and scarce.
Coffee is desirable, but it's not scarce.
so it's not really valuable.
People give it away for free all the time.
Boogers that come out of your nose
that are the size of quarters
are scarce.
But they're not desirable.
So they don't have value.
Time is one component of value.
There's another one.
What's the other one?
Kind of, in a way.
Yeah, close.
You and I both work on the same project.
We both spend the same amount of time doing it.
I work harder than you.
Effort.
What's another word for effort?
Energy.
When you combine these two things, what do you get?
The literal mechanical definition.
Energy and time.
Work.
Physics.
Power.
Ever heard it before?
Money is power.
Money, it would be best said, is a representation of power.
Because money is what I get in exchange for my time and my energy.
And there's a skill component to that, but that skill is merely a function of time and energy.
There's an effort component to that, but that's merely a function of time and energy.
Power, by definition, is energy and time.
Yes, physics.
So we're talking like we are very much talking about physics.
Because if you don't understand physics, then you can't understand one sort of money compared to another.
Right?
There's no physical cost to creating fiat money.
It's just some people that decide something and then another guy walks in a room and he changes a number in a database.
And you exchange your time and energy for that.
he didn't exchange anything for that, right?
Gold has to be mined.
And I'm not going to mine gold
and expend my time and energy
unless I get more for that than the time and energy I spend.
So there's a time and energy component to gold.
Bitcoin, when it is mined,
is quite literally a power competition between miners.
the one that supplies the most processing power
is the one that wins the competition for the block
and they, in reward, get money.
Not always. There's a chance of probability.
Yep, yep. There's a little bit of probability involved.
But money is basically power.
That's what it represents.
But by definition, what is money?
This is money. Person A has this much of it.
Person B has this much of it.
C has this much.
D is poor.
Here's Elon.
All of the money.
And we each have a portion of it.
Right?
So what does that represent?
It represents our contribution to the world.
Right?
As valued by the world.
We can inherit it too, of course.
but represents somebody's contribution to the world.
And now I'm the person that has access to it.
So money truly is a ledger.
Money is a, you can think of it like a spreadsheet.
Everybody in the world,
and this guy owes me this much,
and I owe this guy this much,
and I have this much,
and this guy owes that guy that much.
It's just a way to keep track.
It's a scoreboard, okay?
But this is such a huge concept.
Yeah.
Ledger.
Yeah, yeah, yeah.
So a ledger, if you're keeping track of your business, I'm going to erase.
Is everybody okay if I erase this?
Okay.
So a ledger, anybody ever watch any Marvel movies?
Yeah?
The Black Widow, she's always saying, I got red in my ledger.
It means she's done evil and she has to make up for that.
A ledger is nothing more than this.
I got 500.
I sent 200.
I got 100.
I sent 300.
What do I have?
I have 100.
A ledger is just a way to keep track.
It's just a scoreboard.
And the first ledgers, the first ledgers are still around today.
And they're inherently more dangerous than they used to be.
Trust me, bro.
That's a ledger.
I giving you my word Right My word is my bond right I owe you something I pay you
Here's another one.
Handshake, right?
Handshake deals.
That's a way we keep track.
But when we had societies that grew beyond the number of people that are in this room,
we couldn't keep track of all that.
There was too much interaction going on.
And we started to have this problem.
Have you ever heard that term?
Non-coincidence of wants?
Okay.
You sell apples.
I sell bananas.
I want apples.
You want bananas.
We'll decide what's the proper exchange rate.
Three apples for two bananas.
Cool.
I come back tomorrow, and I want more apples.
But you don't want any more bananas.
Now we have a problem.
Now we have a non-coincidence of wants.
There is not a coincidence between the things that we want.
So we have to resolve that.
And what we did is we created a mutually agreed-upon belief system.
And we said, trust me, bro.
we did the handshake that didn't work very well so we had to have something that could stand in
between so we needed something to represent the trust me bro we need something to resent that
resent that represent represent that credit the first thing that we had big stones
and they were milled from a island very far away and it took a lot of work to get to them
And we brought him back and they said, Rami owns this stone, but he owes Lucas.
So now this stone is Lucas' stone.
And so on and so forth.
And different stones represented different amounts of owing.
These are what are called rye stones.
Rye stones are the, near as we can tell, probably the first representation of money.
You didn't put them in your pocket.
They were huge.
They sat at the edge of the island, and the village would come together, and they would
meet, and somebody would stand up, and they would yell out in front of everybody, this
stone is now this person's.
This stone is now this person's.
And that worked great until some white guys showed up.
Which is usually what happens.
Some white guys showed up and they said that these guys are valuing these stones.
And we've got better ships and better mining tools, etc., etc.
We'll just go get a bunch of stones and we'll bring them back and we'll be able to buy everything.
They did that and of course they ruined the entire system.
People would no longer accept their stones because they weren't representing the amount of work that it took to get them for the other people.
We're going to see this happen again and again.
We're going to see this happen with seashells.
We're going to see this happen with glass beads.
We're going to see this happen with fiat money.
Over and over and over.
A ledger, by the way, this accounting, this appears to be the creation of writing.
The oldest known writings that we can find are ledgers.
And they're showing farmers who owed for seed or fertilizer or something like that.
They're written on clay tablets in Sumerian times.
and every once in a while things would get so bad that they would clear the ledgers they would break
the tablets and they would start completely over but we're going to go with a ledger as a definition
of money it's just an account that's all it is fiat is a word that means it exists because we say it
exists yeah which is kind of terrifying but that's truly what it means fiat fiat literally means it
exists because we say so. In practice, that's not true. In practice, fiat exists because
if you don't use fiat, we'll kill you. And how does that make it more real?
No, it doesn't.
Okay. Yeah, you could actually hang on to it. Yeah, yeah. This is, by the way, yeah,
this is the huge danger of central bank digital currencies, right? If your government creates a
money that you can hold, they have to go through the trouble of putting a gun to your head to get
it. Or they have to seize your bank account, which means they have to have power over the
banking system. If they have a central bank digital currency, then you just walk across
the wrong street, you jaywalk, and they freeze your accounts. You get a message on your phone
that says, we are trying to stimulate the car economy. If you don't spend $20,000 on a car in
the next two months, we're just going to take it and give it to the car economy. This is happening
already?
Yes.
Yeah.
Well, yeah.
And the reason is because you can't track bills, right?
This is well known.
Like, it was really funny when they came out and started talking about how Bitcoin was the
money preferred by criminals.
Because cash is the money preferred by criminals.
Always.
Because you can't trace it.
Bitcoin, you can eventually figure out where it came from.
And you can say that wallet address is doing some nasty stuff.
We're not going to work with them anymore.
But dollars, unless you track every single one, and you still can't track every single one.
I can hand it to you.
You can hand it to him.
It goes through a billion people, right?
It's completely anonymous.
Yeah.
I think it's Latin.
I believe it's Latin.
Let there be.
Yeah.
The explanation, by the way, of violence, your president, Javier Malay, does a beautiful job of explaining this.
When he talks about how taxation is theft by governments.
And he says, understand this.
It's very easy.
I come to your door and I say, give me 20% of your money.
And you say, you can go to hell.
And I come back the next day and I say, give me 20% of your money.
Here's a piece of paper.
I signed it.
And you say, yeah, you can go to hell.
The third day I come back and I say, give me 20% of your money.
Here's a piece of paper.
I signed it.
Here's a guy with a gun.
And if you don't give it to me, we're going to put you in jail.
or worse. This is taxation. And here, by the way, is a thought that I think should send your head
spinning. If governments can create money out of nothing, and they can, do we all agree that?
We all agree they can create money out of nothing. Why do they need to tax you? Couldn't they just
create that money? What's inflation? Inflation is just printing money. They're the ones printing
money. Exactly. Exactly. Right. So the amount of tax receipts is a minuscule portion of the entire
monetary supply. What's the point? Control. Yeah. It's just control. They don't need to.
right? Income tax in the United States is less than 120 years old.
Ever played the game Monopoly? Anybody? Monopoly was actually created in conjunction
with the government. You know, there's a spot you land on that says income tax.
it was created as a way to get people used to the idea that you have to pay income tax
because before they never did yeah that's a great question how do i think governments should pay for
roads health care etc first is i don't accept the premise of your question the reason being is that
governments pay for nothing governments don't pay for anything right where do governments get money
huh
Yeah. There's no such thing as government money.
They print it. Yeah. But when they print it, what happens? Borrows from Fed. And where does the Fed
get the money? Not anymore. Yeah. Here's the way to think about it. This is all the money in the
world. Okay. Here's my portion of it. If we make more money, let's say my portion is 17%.
What this means is I want you to stop thinking about money in terms of quantity and start
thinking about it in terms of buying power. If I have 17% of the money in the world,
I can buy 17% of the stuff in the world. If you increase the amount of money, my share goes down.
Every new dollar, every new yen, every new naira that's created
makes every single other one in existence worth proportionately less.
This never changes.
All the money always equals all the stuff.
Any amount of money, as long as it meets the characteristics of money,
any amount of money is sufficient to run an entire world economy,
a global economy, a galaxy economy.
If you had one dollar, but you could split that dollar and put it back into pieces and reconstitute it, one dollar would be enough.
If you had a trillion dollars, it'd be enough.
Let's say that again.
What happens to the buying?
This is called deflation.
Deflation is a natural occurrence of technology, right?
Technology allows us to do more with less.
And so the natural order of things, as we have more technology, better technology, should be that prices go down.
And you saw this in Roman times when you had the Roman, it was called the denarius.
It was the consistent money for a thousand years.
And during that time, prices continuously went down until the government started screwing with things.
And they started screwing with things first by what you call coin clipping.
Do you have a gold coin?
I'm just going to clip a little off of it, just a tiny bit.
If I do that to 100 coins, I probably have enough clips to make five more, right?
So now I can increase the money supply without anybody knowing it.
By the way, this is why your coins have ridges on the outside of them.
that was a protection mechanism to try and keep people from clipping coins.
Then they got sneakier.
They would take the coins and they would melt them down
and they would add a less valuable material to them
and then they would recast them.
Take 100 gold coins, add some tin.
Now I've got 200 gold coins.
Now I'm going to put them back into the market.
They're going to buy the same amount until people start to figure that out.
This is where we got the term sound money.
Has anybody ever heard that term?
Sound money.
Do you know where it comes from?
The term sound money comes from people taking a coin that they know is pure
and flicking it with a piece of metal to hear the tone
and then taking one that they're suspect of and flicking it.
And if the tones don't match, then they know that this one has been messed with.
They know that this one's been altered.
You still see this by the way.
It's a cool little tool, actually.
It holds the coin, and it's got this little metal fling, and you just swing, and this is how jewelers verify coins.
The only true way to verify a coin, by the way, is to melt it down.
It's the only true way, which makes it really costly.
But this is a concept that I want you to understand.
All the money always equals all the stuff.
And if the amount of money grows and the amount of stuff doesn't grow, then the stuff just costs more.
Because all the money always equals all the stuff.
This is the unit of account purpose of money we'll get into shortly.
Good with this?
All right.
I'll throw this off.
All right.
I think we can start to move into this a little bit.
Money's an innovation.
Innovation means an entirely different new way of doing things.
There's two types of technology.
There's iteration and there's innovation.
Iteration is we take something that exists and we make it better.
We've got a car.
We're going to put a radio in it.
We're going to put cup holders in it.
We're going to put headrests in it.
We're going to put airbags in it.
Innovation is we're going to do this entirely different.
What if that car flew, right?
What if that car drove itself?
Innovation is solving a problem the better way.
Technology is the tool that you use to solve it. I love this one. The upside-down
ketchup bottle. You know we had ketchup for like 150-200 years before somebody
finally decided that we should put it upside down?
We had shampoo like that for decades.
I remember growing up and everybody had that trick. It's like oh if it's Heinz
57, then you have to turn it and hold it at this angle, and you have to tap with a spoon
on the logo. That's how you get it out. And we're just waiting for somebody to flip it
upside down. This is the thing that I want you to understand, because so many of us get
caught up, and we play the mid-twit game. You've seen that, right? You've got the mid-twit,
and you've got the idiot
and then you've got the genius.
By definition, most of us are in here.
We're always going to be in the middle of the curve.
And we're always going to think that we know something better.
We're always going to think that what if?
What if aliens show up?
What if there's a solar flare?
What if there's war, etc., etc.?
And we're going to talk ourselves out of understanding
something that is clearly blatantly better.
When talking movies first came into existence,
the world's largest movie studio,
the co-founder of it,
said, who the hell wants to hear actors talk?
Why would we ever have movies with sound?
That's such a stupid idea.
In 1993, Bill Gates,
he said, the internet,
we're not interested in it.
We don't think that there's a purpose to that.
Internal memo from Western Union,
the world's largest communications company in the 1800s.
The telephone has too many shortcomings
to be seriously considered as a means of communication.
The device is inherently of no value.
These are the experts.
It keeps going.
Thomas Edison.
Everything that you see here, all this power,
this is all alternating current.
Thomas Edison said,
alternating current is a waste of time.
No one will use it ever.
There was an implicit bias
which is all needs of measuring electricity.
These are all implicit biases, right?
Because every one of these are stakeholders
that have a reason for the existing technology
to remain as is
and for them not to make a change.
I like this one.
Movie producer at 20th Century Fox.
Television won't be able to hold on to any market share it captures after the first six months.
People will get tired of staring at a plywood box every night.
That didn't work out well.
Warren Buffett talking about Bitcoin.
Stay away from it. It's a mirage.
Charlie Munger talking about Bitcoin.
Rat poison. It will go to zero.
He later changed and he said it's rat poison squared.
Their company is down 96% against Bitcoin since that quote.
Here you're making the point that these people misunderstood the technology.
Yeah.
They did those things, so other people did it unestablished.
If that was the case, then they would have adopted it personally.
If you understand it, you'd adopt it personally,
and you're trying to just be nefarious and get other people not to adopt it.
No, they own no Bitcoin.
They have more cash than anyone.
They have $500 billion in cash that's wasting away at 13% a year, destroying shareholder value.
And they're down 96% against it.
It would take over 9,000.
Berkshire Hathaway would have to gain over 9,000% just to get parity with Bitcoin.
There's something that's really consistent with all these people.
Bill Gates might be an exception because he actually changed his mind.
All these people are old.
Right?
Have you ever heard the term
science advances one death at a time?
Special effects.
Yep.
And medicine.
Right?
Technology is always misunderstood.
That's the Berkshire Hathaway.
Oh, yeah, sorry.
It's actually down 99.1%
compared to Bitcoin.
It's more than that now.
That's Berkshire Hathaway
priced in Bitcoin.
The world's most famous
investing company.
Those who study it say, technology does not negotiate.
This is my favorite quote ever.
Technology does not negotiate.
What does this mean?
This means that if I had a stable of horses,
when horses were the taxis and the transportation for everybody,
and the car came out, and I said, not going to do it, I believe in my horses.
Five years later, I'm broke.
I've got a bunch of horses nobody wants to ride because everybody's in a car.
It means if I'm the world's best piano tuner,
and the radio comes out,
and I decide I'm going to stick with what I'm doing,
I'm going to tune these pianos, I'm so good at it,
five years later, I have no job.
I'm basically a circus oddity at that point.
If I'm a milk delivery man and the refrigerator is invented,
and I don't understand that people no longer need to have milk delivered,
I'm going to be walking around carrying sour milk.
Technology does not negotiate.
You adopt it or it destroys you.
The reason I have this picture here is this is a throwback.
So it's a Roman citizen.
I forget his name.
He invented this thing called the explosive projectile machine.
It's a cannon.
And he took it to the Roman emperor, who was an old guy.
And he said, this thing, fucking rules.
You can put stuff in it, light it, and it blows up everything in front of you.
And the Roman emperor said, our shields are strong and our swords are sharp.
We have no use for your toy.
this guy took it down the road
to the next emperor
a young guy in Constantinople
and he showed it to him
and the guy goes
this thing is awesome
you pointed at stuff
and then that stuff no longer exists
and you can go where you want
and a year later they used the cannon
to destroy Rome and burn it to the ground
technology does not negotiate
in all forms
you adopt it or you die
That quote is by Jason Lowry.
Jason Lowry is a Department of Defense fellow with the United States military.
His job is to determine with which weapons we will fight the next war.
They sent him to MIT to do a Ph.D. thesis.
He came back after three years, and here's his thesis.
It's called Soft War, a Novel Theory on Power Projection and the National Strategic Significance.
Of Bitcoin.
Jason believes that war is easily defined.
It is a power projection competition over resources.
And the goal is to gain access to resources and deny access from resources.
And he says if you look at warfare, it always moves to a level of higher domain.
We started on land.
I was just fighting people.
Then he got a club.
Then you got a bow and arrow.
Then he got a spear.
Then he got a rifle.
Then he got a cannon.
Then we took all that stuff and we put it on a boat.
And we conquered the world.
Then somebody put a boat underwater called a submarine.
And they conquered the world.
And then somebody got an airplane.
And they dropped stuff on the submarines.
And they conquered the world.
And then we started shooting missiles into space and coming back down.
And they conquered the world.
So the domain of warfare has constantly escalated from land to sea to air to space.
to cyberspace.
And you can actually plot out
if war is a power projection competition,
how much power can your weapon project?
I can project.
I know how much force I can punch with.
I know how much force a bullet hits with.
I know how much force a nuclear bomb expels.
It's all energy over area.
Bitcoin is energy over no area. It's infinitely powerful. It cannot be hacked.
Only way that you can take control is to have more power than everyone. It makes it very fair.
This, by the way, was the cost of this thesis. He put it on Amazon. It's published as a free press. It's open source.
About two months after he published it, the United States military classified it and they made him pull from Amazon.
Now you can find a copy online from somebody selling it.
It'll probably cost you around $5,000.
Jason Lowry is now in charge of leading the strategy for the United States military to use Bitcoin to defeat China and Russia.
Whenever you hear someone testify in front of the U.S. Senate that's from the military and they're talking about Bitcoin, he's the guy writing it.
Mark Yusko is a good guy.
Investor, he says, the greatest wealth is created by being an early investor in innovation.
Remember, innovation, not iteration.
You have to make that investment.
You have to believe in something before other people do.
You have to have conviction.
People are going to make fun of you.
They're going to laugh at you.
It is 100% worth it.
BRICS nations, UAE, Argentina, Ethiopia,
they're mining Bitcoin with government resources.
Russia's sovereign wealth fund is investing in Bitcoin mining.
By the way, this was a year and a half ago, a year ago, a little over.
And this is just accelerating, right?
Four years ago, we had one public company in the world
that had Bitcoin on their treasury sheet.
Now it's like 300.
I would assume by the end of the year, it'll probably be closer to a thousand.
United States has a Bitcoin sovereign, a Bitcoin treasury.
It's exploding.
People are starting to understand the true value.
Michael Saylor, the guy.
Once you understand Bitcoin, you will realize it's the most powerful force for good in the world today.
I love this quote.
I'm going to describe it.
throughout all of history, if I wanted what you had,
and I had a way to get it from you, I had a gun.
I could put that gun to your head,
and I could force you to give it to me,
or I could kill you and I could take it.
But now you have Bitcoin, and I put a gun to your head,
and if you do not give it to me, and I kill you,
I don't get your Bitcoin,
and I proportionally enrich everyone else in the world
who owns Bitcoin the same amount right Have you guys heard of the wrench attack You know what this is So the wrench attack just means that the fault of Bitcoin is that you can have a billion dollars in Bitcoin and I can go to the store and I can buy a wrench for and I can beat it out of you
What's wrong with the $5 wrench attack?
I can beat you up and I can beat you up and I can beat you up, but I can't beat you all up.
It doesn't scale.
You can't individually kill everyone.
You can't individually imprison everyone and take everything.
The $5 wrench attack does not scale.
This is why it's so, like, you look at the world today and see what the trends are.
Go ahead.
It doesn't scale, but it doesn't need to scale if I just...
Yeah.
It doesn't need to scale.
Yeah, you can do it.
You can do it once.
But when you do it to him, I'm going to do it to you.
And he's going to do it to me.
Yeah, yeah.
Because you know where the wallet is.
Yep.
Yeah.
One of the things that's really fascinating is, so if you read the Network State book, Balji talks about decentralization, recentralization.
We're in a period of decentralization.
We reached the maximum centralization back in probably like 1950.
And now we're starting to see countries, nation states lose power.
Why do they lose power?
They lost power because the internet came around and it democratized information.
They could no longer hide stuff, right?
You can't just go into a town and storm it because somebody is going to take a video and put it on the internet.
It's going to live forever.
Also, you can't just take people's money because now I have Bitcoin, right?
You can put somebody in prison, but unless they give you their Bitcoin access, you can't have their Bitcoin.
So they're losing power.
So we're reaching this period of decentralization.
Decentralization has a trend throughout history.
During times of decentralization, individual crime rises.
Person-on-person crime rises.
Because there is the benefit of taking out the whale.
There is the benefit of taking one person out.
But nation-state violence is actually decreasing because there's less return to violence.
Do you think Russia will be proven right?
Yeah.
Nobody really wants to play with Russia, though, right?
The Chinese do.
Yeah.
Chinese believe in violence.
Yeah.
If you come to my class often, you'll find that one of the things I talk about very often is that
there are two ways to lead.
You can lead through fear, and you can lead through love.
If you lead through fear, you will always be subject to an uprising of the people.
You're always only as in power as the amount of power that you can exert.
And you're always going to be waiting for the hammer to fall, for the shoe to drop, for someone else to rise up and take over.
I don't think it's going to work out well.
the thing is that if I can no longer take your stuff
and if we both have Bitcoin
and that Bitcoin increases in value
with the more value that's put into it,
the more power that's put into it,
the more time and energy,
the more work that's put into it,
if it increases proportionately because of that,
I'm actually encouraged to collaborate with you,
not compete against you
because by collaborating, we all go up,
and by competing, we all suffer.
You'll create a half that doesn't like you, right?
You'll probably be a short life, right?
I mean, you'll be looking, like, that's the thing about,
I called this, we had this in one of my presentations before.
It's called the bully problem.
What's the problem with being a bully?
There's always a bigger bully, right?
But being someone who rules by force, by fear, by power,
That's never a good idea.
It works in the short term.
It does not work long term.
So what is money?
We have our definition.
It's a ledger of who owns what.
It's a non-material good.
That's really interesting.
It's a good that does not have matter.
Like you can say gold is money, but gold actually isn't money.
Gold is just what we use as money.
Gold has a utility value as a conductor,
has utility value for jewelry.
But the actual value of it as money
is just that we're passing it between us.
So everything in the world is a spectrum, right?
So how do you account for the infrastructure
that's needed to keep the fiat system running, right?
So what is the infrastructure
that keeps the fiat system running?
It is ever-escalating power and violence and militaries.
Yeah, but that's not exclusive to fiat money.
We had roads when we used seashells, right?
We had roads when we used tobacco, right?
That's not exclusive.
The exclusive part of fiat money,
the thing that exists in a fiat monetary system
that does not need to exist in the other type of money system,
which is called a commodity money system.
The thing that exists is violence
because you have to have violence to enforce the fiat.
Yeah.
Right.
Yeah.
So those who see value in mining Bitcoin will turn their miners on.
By the way, this is why we're seeing a revolution in energy prices.
So Bitcoin is a commodity.
I grew up on a farm.
Farming products are commodities.
wheat, cattle, grain, milk. They're effectively homogenous, right? Like I'm going to raise a cow,
you're going to raise a cow. Cows are cows. Commodity markets are what are called price
taker markets. I don't go to the market and say, this cow costs $5,000. I go to the market and you
all decide by bidding against each other what that cow is worth. Just like we all decide by
bidding against each other what Bitcoin is worth, right? It's a commodity. Commodity markets
always favor the low cost producer. If you're raising cows and I'm raising cows and it costs
me $500 to raise a cow and it costs you $1,000 to raise a cow and we sell the cows for $1,200,
very soon you'll be working for me, right? Because you'll go out of business, right? I'll get all
the profit. It forces all of the inefficient producers out of the market. So what does this
mean in terms of Bitcoin? This is fantastic, by the way. This is incredible. When China outlawed
Bitcoin mining, where did everybody go? Texas. They went to Texas because there was access to
power that was currently being wasted. That power is flare gas. So Texas has a lot of oil wells.
Oil wells have natural gas that comes out of them.
And it's not in sufficient enough amounts to capture and be profitable, but there's a lot of it.
And so when you drive through Texas at night, it's kind of interesting.
You see just flames because what they do is they light it and it just burns off into nothing.
They're wasting that energy.
And the Bitcoin miners came there and they said, here's what we'll do.
We'll take that natural gas and we'll use it to mine Bitcoin with.
And by the way, when the power grid needs it, when the cost of energy goes up enough,
it'll be advantageous for us to shut off our Bitcoin miners and use that power and sell it back onto the market.
In 2022, in 2021, Texas went through a series of rolling brownouts.
Their energy grid was failing.
People died.
They had a bad winter.
A bad winter in Texas is not a bad winter anywhere else, but for Texas, it was really bad.
And the next year, all of these Bitcoin miners had moved in and they sustained the energy grid.
It's called load leveling.
So now you can capture that energy.
When it's profitable, you can mine Bitcoin with it.
When it's profitable, you can sell it to the grid.
The Human Rights Foundation is led by a guy named Alex Gladstein,
who took his charity that existed to free people from oppressive regimes
and he learned about Bitcoin and he said,
this is the greatest freedom technology to have ever existed.
This is how we free people from oppressive regimes.
We give them access to their own power.
Not power in terms of electricity,
but power in terms of time and energy,
in terms of their own value.
They can now hold it.
They can keep it.
So what they do is they go into Africa
and they set up Bitcoin miners on stranded energy,
wasted energy and stranded energy.
Stranded energy is like a waterfall.
It's out in the middle of nowhere, lots of energy.
Let's just put a generator on it.
Let's hook it up to a Bitcoin miner.
And we'll mine Bitcoin.
And we'll also supply energy and electricity to a place that's never had it before.
We get a Starlink and now all of a sudden we are creating capital
in a place that previously has been under the threat of a very oppressive regime
that takes all of their money, etc., etc.
It's driving the cost of energy down because you cannot compete as a Bitcoin producer because it's a commodity market.
You can't compete unless you're the low-cost producer.
So you have to go to the cheapest source of energy.
You have to go to the stranded energy.
El Salvador is going to do it with volcanoes.
There's places that are doing it with waves, with waterfalls, with rivers, with wind.
this is going to be the thing that revolutionizes the world we're going to drive the cost of energy
to nothing and when energy costs nothing we all have infinite power we can all do everything we
want because energy is everything energy is the food we have energy is the cars we drive energy
is how we get to places it has a cost it's not that it's worth nothing it's worth everything
cost. Yeah. So you're driving the cost of it down because you are accessing parts of,
you're accessing energy that's never been accessed before. So like when you go to a
stranded energy spot, like a waterfall and you take that energy, you're. So think about this.
This is all the, all the factories that produce. I don't know. That's a,
probably looks like a weird penis.
Sorry about that.
But let's just say this is an energy factory, right?
That's even worse.
We're burning coal, right?
And we're burning natural gas and oil.
And just like what we had before, remember all the money, right?
This is all the energy.
But then out here we've got waterfalls.
Yeah, yeah, yeah.
And natural gas that's currently being burned off and rivers and solar and wind, nuclear, etc., etc.
This is additive.
It adds to the entire energy of the world.
And you can take the standard of living for people and you can plot it and it's basically a one-to-one match between how much energy people consume.
This is why the 1970s are referred to as a decade of lost generation because it's the only time in modern history when energy consumption per capita, energy consumption per person, went down.
Things started getting really bad.
There's a website that I hope you check out.
I'll write it here.
WTF happened in 1971.
Check that website out.
There was a report that if you dig around really hard, you can find it.
In the 50s, I believe, or the 60s.
There was a think tank that was given a task by the government.
The government said, hey, we've got a problem.
We've exited World War II.
we've entered a period of peace and we're finding we're having a really hard time controlling the
people because if you don't give them a common enemy then all of a sudden they start to think
for themselves and they said what what are some things that we could do in order to control these
people they came back and they said well there's a couple things you could do one of them would be
like a global global pandemic that would probably do it everybody would be scared of maybe like a
virus that could probably do it one of them would be like aliens like everybody might be scared of
aliens. They actually tried that out. So tons of shows in the 60s about aliens, and they found that
it was just so far out of the realm of people's imagination that even if they were real, they
wouldn't believe it. And there's a couple other things, and they finally said, well, what about
climate? I said, what if we told everybody that because they're consuming more energy, they're
killing the planet? Well, maybe then we could control them. Maybe then we could stop this
progression. And maybe then we could change things. And I mean, is the world less polluted
or more polluted? Right? Has it really changed anything? Interesting to think about. Money,
non-material good. It's time and energy. It's power. It's an idea that we agree upon. It's
a collectively agreed upon technology. It's a solution. So yeah, I mean, Jason Lowry
talks about this in the software thesis a lot. So there's two types of hierarchies in the world.
There's two ways by which we can say, I'm in charge of you or you're in charge of me.
One is a power hierarchy. A power hierarchy is very simply, I can beat you up. So I'm in charge
of you. And that doesn't work very well for a society. Like we don't want people fighting to
the death over every ham sandwich, right? That doesn't work. So we have what are called
abstract power hierarchies. And abstract power hierarchies are why military officials wear
ribbons and medals and badges and stuff. And it says, well, you've got this thing that says you're
a colonel. I've got this thing that says I'm a private. Therefore, I have to listen to you.
You're my president. I'm your citizen. Therefore, I have to listen to you, right? Abstract power
Power hierarchies are built upon a collective belief, and we do have to have them to organize a civilization,
because we can't just have anarchy, we can't just have chaos, we can't just have people going completely,
and everybody doing things for themselves. We have to have some type of organization.
But there's a problem with abstract power hierarchies.
The problem with abstract power hierarchies is that they're a popularity contest, right?
Like democracy is a popularity contest.
And the reward for winning the popularity contest is that you get power over people that you didn't earn.
That you're not, you didn't earn by merit.
You earned by cleverness and by marketing and by saying the right things, right?
So what type of person does that attract?
Jordan Peterson talks about this a lot.
Sociopaths.
Dark traits.
The dark triad.
right? This is bad, right? Why would somebody want to do that? The reason that you're asking
that question, or not, by asking that question, you're probably telling me that you're not a
sociopath, right? Because somebody that was would be like, oh, obviously, I can get power that I
didn't earn, right? You maybe don't have those traits, and that's probably a good thing, right?
But, yeah, it's a problem because you always attract the worst of the worst, right?
When we vote for president of the United States, we don't vote for the best candidate, right?
We take the best worst option.
That's what we always do.
All right, let's get into the real cool stuff.
Four purposes of money.
Medium exchange, unit of account, store of value, and means of payment.
Medium of exchange.
This is what we did to replace barter.
Barter was, I'm going to give you the chicken, you're going to give me the bananas, right?
Barter only works for very small societies.
In fact, this aspect of money is why we have eye doctors.
This is why we have nuclear physicists.
This is why we have people that read your crystal and tell you what your chakras are.
because by doing this, by having a medium of exchange that we could exchange between each
other that represented value, so I didn't have to give you half of a chicken every time I wanted a
shoe, or I didn't have to, what if I'm a cobbler? What if I made shoes and I wanted bread?
I can't just go to the store every day and give you shoes, right? So it allowed us to specialize,
because by having this, then I had something that I could take to the store and I could buy my bread
and then I could go home and I can make my shoes. Then I can go home and I can study and I can become
an eye doctor. I can't go to Burger King and trade one twentieth of an eye surgery
for burger and fries, right? We had to have this in order for society to develop and this is what
allowed society to flourish. We needed this thing to pass between us. A medium of exchange.
The dollar's a medium of exchange. Gold's a medium of exchange. It's whatever we use.
We've used seashells. We've used tobacco. It's the tool that we use to transfer value. It's
easily the most widely understood function of money because it's the one we do all the time.
We understand this.
It makes it easier.
In prison, money is ramen noodles.
That's what you trade around.
Trade it for cigarettes.
Trade it for, actually, cigarettes are more money.
Money and ramen.
But you price them.
You watch prison documentaries, and they're like, you know,
a pack of ramen is 17 cigarettes or something like that.
They have like a standard for it.
A unit of account.
This is my favorite because this is the least understood.
So, again, all the money, all the stuff, stuff, goods and services, anything that you can purchase with money, goods, services, entertainment, cars, houses, haircuts, right?
All the money equals all the stuff.
If I make the money bigger, it costs more.
Money is a standard.
It is a unit of a count.
The kilogram is a unit of a count.
The meter is a unit of a count.
These things never change, right?
In fact, it's in World War II, so I think it's in France, is where they store the kilogram, like the kilogram that we base all of the other kilograms off of.
and supposedly Hitler strategically did not bomb that
because he knew how disastrous it would be for the world to lose their unit of account.
Because if I change the unit of account,
then we no longer have a way to measure things.
If I weigh you and you weigh 75 kilograms,
and then I change the kilogram,
and next week I tell you you weigh 90 kilograms,
and the week after you weigh 120 kilograms,
you didn't gain weight.
the thing I used to measure your weight with changed.
You come stand next to me and I measure you,
and I say, you're 172 centimeters tall.
And then I take that meter stick.
So you can think of money as this.
Think of it as a meter stick that you use to measure all the stuff.
If I take that meter stick and then I add more marks to it,
and then I add more marks to it,
this is me printing more money, by the way.
I'm increasing the money supply.
I'm increasing the amount of tick marks.
I measure you this week and you're 172 centimeters.
I measure you next week and you're 300 centimeters.
And the week after, you're 1,000 centimeters.
You did not get taller.
The thing that I measured you with got smaller.
This is disastrous to the world economy.
Why is it disastrous?
If the supply of money is unknown, remember we said that no one in the world,
knows how much money there is. If the supply of money is unknown, it's no longer an accurate
measure and you end up with shortages of things you need and surpluses of things that you don't.
Why? Because a unit of account is pricing. When I go to the store and I buy a steak,
they price it in dollars. They don't price it in every other good in the world.
Like if we didn't have a unit of account, if we didn't have a standard by which to measure these things,
we would have to price every single thing in terms of every other single thing.
A house would cost eight cars or 300 cows or 1,200 laptops, right?
You'd have to compare every single thing.
But instead, we have this unit of account, and it's a signal.
And that signal is to producers.
When the price goes up, the producers get a signal and they say, we're going to produce more.
When the price of housing goes up, people who make houses make more houses.
But if the price of housing is going up because you're measuring it with something that is going down,
then that's an inaccurate signal to the price market.
This is why we had the global financial crisis.
We overproduced. We ended up with too much supply.
All of a sudden, we had all these empty houses that no one could afford.
Unstable money supplies cannot measure prices.
And what happens?
You end up with scarcity.
That's why central planning committees never work, right?
You can't guess.
You can't say, oh, this year we're going to need 5,000 tons of grain and 200,000 cattle.
Good luck.
That's why markets do this.
Markets are a clear signal to producers to produce.
and they're a clear signal of what consumers want.
Store of value.
So the first one, medium of exchange.
The second one, store of value.
Store of value is really simple.
I'm going to work one day.
I'm going to get X amount of money.
20 years from now, what do I want that money to be able to buy me?
One day's worth of work.
Right?
Money is like a battery.
The store of value part of it is like a battery.
You charge it with your time and energy.
and you want it to stay charged.
Inflation is that charge leaking.
You charge it to 100%,
they print 10% more money,
and now you've got 90% charge.
And you didn't do anything.
You just hung out.
But now you're losing charge.
And it happens so fast.
Who knows the rule of 72?
Yeah, doubles or halves.
So you have a percentage,
up or down,
So let's do it this way.
Since 1971, on average, the United States dollar has increased in supply by 1% per month,
compounds to about 13% per year, but let's just call it 12%.
That's 1% a month.
So if you have 12% inflation, you use the rule of 72,
and you say 72 divided by the percentage
is the time that it takes for that value to be cut in half,
the buying power.
So 72 divided by 12 equals 6.
So if you have a million dollars six years later that buy you worth of stuff Six years later that buy you worth of stuff Six years later that buy you worth of stuff
Six years later, $125,000.
Six years later, $62,500.
Right?
What is that?
Six, 12, 18, 24.
So before you're done with your working career,
you went from a million dollars in buying power to $62,500.
you have 6.25% of your buying power in 24 years
by holding your money in the strongest currency that exists today.
What's that?
Where does it come from?
It's just a mathematical rule.
Yeah.
And it works the other way too.
If your money goes up in value,
Let's say Bitcoin goes up around 50% a year.
So it's 50%.
So, well, let's call it 36 because that will make it easier math.
72 divided by 36, you get 2.
So you got a million.
In two years, you got 2.
In two years, you got 4.
In two years, you got 8.
In two years, you got 16.
In two years, you got 32.
That's 2, 4, 6, 8, 10, 12.
So in half the time, you increase your money 32x,
as opposed to the other one where it went down 94%.
Would it have been speculation in the mid-1990s if you could have bought the Internet?
Yes, it would have been.
Yeah, it would have.
But speculation, just by definition, is that you believe you know something other people don't know.
Right?
So you can say it's speculation.
I mean, yes, but the thing is, it's not...
No, but it is for sure that your money in dollars is going to be worth zero.
Zero.
Right?
So this is not a static thing.
This is a trajectory.
Right. You're not measuring it at a point in time. You're saying, here's the line.
And over time, every fiat in the world looks like this. And over time, Bitcoin looks like this.
At any point in time, I can take a look at it. But what I'm really concerned with is my trajectory.
What I'm really concerned with with your health and your trajectory is not what you weigh now.
What did you weigh five years ago, 10 years ago, 15 years ago? What's the trajectory that you're on?
If you gain two pounds a year and you live 50 years, you're going to gain 100 pounds.
If you lose two pounds a year, it's trajectory that we're concerned about.
We're not trying to say anything's definite.
But what we are trying to say is this is a guarantee that your fiat will be worth zero.
And this is replacing it.
And it's moving in a trajectory.
I'm going to try and convince you of this other than to say this is the model by which every technology is invented.
If you take the price chart of Bitcoin and you set it over Amazon and you put it on a logarithmic scale, it looks the same.
If you set it over Internet adoption, it looks the same.
If you set it over the rise in the number of cars in the world, it looks the same.
It goes and it stops and it goes and it stops and it goes and it stops.
But where does it go? Up, right?
Because it takes over everything because it is better.
It's faster, it's cheaper, it's stronger, right?
It's all, in all aspects, it's better.
One more.
By the way, so yeah, store of value.
This is the hardest part that no one has ever been able to achieve.
So by the way, inflation.
In the United States, it's commonly believed that inflation should be 2% per year.
That's just the number that everybody knows.
Like we're born with it.
We don't know how.
Where does that come from?
It comes from gold was mined,
and approximately 2% of the world's supply of gold was mined every year.
So you increase the amount of money by 2% every single year.
And by the way, remember, rule of 72, 36.
So if you save in gold, you lose half your buying power every 36 years.
That means by the time that you die, let's say you live to be 100,
you will have approximately 25% of your buying power.
This is just how inflation works.
The final thing is a means of payment.
Means of payment is just how do we exchange this.
You can have a check, a credit card, cash, handshake.
It can be your word.
That's the fourth purpose of money.
I'm going to burn through the next 10, and then we'll get you out of here.
So just quick review, four purposes of money, medium of exchange, unit of account, store of value, and means of payment.
Now let's talk about what is good money.
So I'm a fan of football, American football.
And the way that you determine whether somebody's going to be a good football player is when they come out of college,
They go through this thing kind of like what you guys did when you got here, the NS Combine, remember?
So football goes through a combine, and they don't measure football skill.
They measure how big is your hand, how high can you jump, how far can you jump, how fast can you run,
how quickly can you go back and forth and back and forth and back and forth and around.
It's all these things that, like, they're not really football,
but it turns out that there's a high correlation to being good at those things and being a good
football player. These are the characteristics that make a good football player. So we're going
to talk about the characteristics of good money. Money is good that is acceptable.
We want our money to be accepted. If you take Nigeria and Naira to the U.S., no one wants it.
If you take the U.S. dollar to China, they don't want it, right? We want our money to be acceptable.
Here's an idea of things that aren't acceptable.
You can't buy a hamburger with airline points, but it is money, right?
It exists.
It represents money.
You can't buy fried chicken in Arkansas with the Chinese yuan.
Cows.
Cows are not really widely accepted as money.
They used to be.
They used to be like chattel.
The term for property, chattel, comes from that, cattle.
The term for salary comes from salt.
we used to pay people in salt.
It's no longer an acceptable form.
Your money has to be divisible.
It has to be able to break it apart and put it back together.
Take a dollar, make it into 100 cents, put it back into a dollar.
Cows are not good for this.
You can't take a cow apart and put it back together.
Gold is not good for this.
You can take gold apart, but it's really difficult and it's very costly.
right? Uniform. Your money needs to be uniform. This one needs to be the same as that one.
Cows are not good money. Seashells are not good money. The dollar is pretty good money in that
aspect because it's uniform. This dollar is the same as that dollar, right? It needs to be uniform.
It needs to be the same. This is why you can't, you like, I come tell you that I want to buy
from you and I want to use cows and I show up and I've got 20 cows that are old and they don't have
teeth and you can see their ribs. That's not like somebody showing up with two-year-old
heifers that are strong and virile, right? That's not uniform. Portable. This is why
gold failed. Gold is not portable. Gold's a bearer asset, which means if I hold it, it's
mine because you can't identify that gold. But that makes it a risk. So I had to store it somewhere.
And it's really costly to store it. So we all agreed that we would trust
a government to store it. This is why the United States built Fort Knox.
After World War II, there was an agreement between all the allied countries and they said,
we're going to have one form of payment for the world. It'll be the dollar.
The U.S. will supply the world with dollars.
We'll give our gold to the U.S.
That's why they built Fort Knox.
In 1968 or 69, Charles de Gaulle, president, prime minister of France,
he figured it out and he said, this is a bad deal.
We give you guys goods and services that we gave our time and energy for
and you give us dollars that you created out of nothing.
It's not a good deal for us.
We want our gold back.
He sent his warships to the United States to get his gold back.
He did.
And then Germany wanted their gold back.
And then President Nixon said, we're closing the gold window.
You can no longer exchange dollars for gold.
It's a temporary thing.
That temporary thing has now lasted 54 years.
Remember, WTF happened in 1971.
That happened in 1971 when the United States declared bankruptcy and went off the gold standard.
If your money's not portable, then it's a threat to be taken.
Think about being a Jew in Germany in the 30s and trying to leave.
And at first it would cost you about $100 to leave, and then it was like $1,000, and then it was just literally everything you had.
Because you couldn't get past the gate.
You can't carry a billion dollars of gold through an airport, through a border.
But you can carry a billion dollars of Bitcoin anywhere.
your money needs to be durable right it needs to be able to last this is why
china has a period of history called i think it's called the century of shame we used to be on a
bimetallic standard which meant that we had a fixed rate between gold and silver and what happened
was that people started hoarding gold and only using silver because it was worth less because
gold never is destroyed. You can blow it up, you can put it in the ocean, you can bury it,
you can expose it to the elements, nothing's going to happen. Silver tarnishes. Silver
chemically becomes something different. Average year, you discover 2% more of the world's gold
supply and it just grows, right? Average year, you discover 50% of the world's silver supply
and it's consumed. So the world decided, ah, this is not a good idea. It was actually,
It was Florence.
Florence created the world's first standardized currency.
They said, we're going to have a florin.
That's what we're going to call it.
It's going to have X amount grams of gold in it, 0.69 or something like that.
And the world soon adopted that, except for China.
China decided to stay with silver.
They lost about 30% of their buying power against the world in a period of a couple decades.
And then they entered what is called the century of shame
because they lost so much buying power compared to the world.
You need your money to be durable.
Cows aren't durable, right?
They die.
Houses aren't durable.
They fall apart.
Cash isn't durable.
It decays.
You can set it on fire, right?
It needs to be verifiable.
The only way to verify gold is to melt it down.
Very costly.
Very easy to counterfeit dollars, right?
Seashells.
when they
had
so
there was a
form of money
in Africa
and it was
glass beads
very hard to produce
with the technology
that they had
and the Europeans
came there
and they saw
that they were
trading with glass beads
and they went back
to Europe
and they
used their
much more
modern technology
to literally
load ships
with glass beads
and they brought
them back
and they bought
everything
they flooded
and destroyed
the economy
those were
counterfeit
but they were
hard to verify
right
you can verify
every single sat on the Bitcoin network.
Really hard to verify dollars.
Really hard to verify gold.
Corruptible.
This is just like common sense, I think.
So if you're a government
and you can make your own money,
how much money are you going to make?
As much as you can.
What's stopping you?
So there's an inherent moral hazard
that exists has to be incorruptible.
Gold's pretty incorruptible, by the way.
That's like one of the good things about it, right?
Private.
Your money should be private, right?
Have you ever bought something
that you don't want people to know you're buying?
Right?
You go into a treatment center for addiction.
You buy a magazine that maybe is a little illicit.
You don't want your transactions to be public to the world.
So your money should be private and immutable.
This is cool.
So if I ask someone to tell me,
where have all the dollars been spent in the last three minutes in the world?
No one can tell me.
Or the last 30 years, or the last second, or the last whatever, right?
The Bitcoin ledger, you can trace where every single transaction has ever occurred from the beginning of Bitcoin to now.
Every single one.
There's nobody that can go in there and rewrite the ledger.
There's nobody that can change it.
There's nobody that can wipe it away.
You want that to exist because you want that constant record to be there.
The bail-in, by the way.
So in Cyprus, in the United States, we're a big fan of bailouts.
That's when the government prints money and they give it to an industry that failed because they were immoral.
In Cyprus, they had a bail-in.
The government went broke and they said, hey, I can't remember what it was, like 30% or something.
30% of the money in your banking accounts, it's ours now.
So we're just going to take that.
And they did.
They just took it from everybody.
Why does it matter?
I love this one.
Why does it matter that you need to be able to track where money went?
This is a quote by Donald Rumsfeld.
He was the Secretary of Defense.
Note the date.
September 10th, 2001.
He was testifying before the Senate and he said,
our financial systems are decades old.
Oh, they're old.
We can't track.
According to some estimates, we cannot track $2.3 trillion in transactions.
At the time, the debt of the United States was about $4.5 trillion.
This was like half.
And they said, we have no idea where it's at.
We cannot share information from floor to floor in this building
because it's stored on dozens of technological systems
that are inaccessible or incompatible.
The building that he's talking about is called Building 7,
which is a building that was destroyed on September 11th
that you probably don't know about.
because it was never publicized.
There's video of it.
The official story is that it's a fire.
If you watch the video,
it looks exactly like a controlled demolition.
It comes straight down.
That's where they stored those records
that they said they couldn't access.
And finally, it needs to be scarce.
If it's not scarce, it has no value.
Mosquitoes are not scarce.
Coffee's not scarce.
Toilet paper's not scarce.
Doesn't have much value.
It needs to be scarce for all these reasons that we talked about previously.
So, quick review.
Ten traits of good money.
Acceptable, divisible, uniform, portable, durable.
If those things exist, then it will be adopted, right?
Like, if you have in your mind the traits of what a good mate are,
and you meet someone like that, you will want to be with them, right?
If you have in your mind what traits of good money are and you're presented with what good money is, then you can recognize it.
Yeah.
Nobody's going to use it because nobody, like, I mean, there's literally like 20,000 forks of Bitcoin.
Which one?
So, like, it's not acceptable, right?
Your fork is not acceptable.
Nobody wants it, right?
I mean, they can.
Right.
And there is one that they have.
This goes into network effect.
So the network effect of adoption is that in digital markets, it's a winner-take-all market because there's no obstacles.
I have the same access to Bitcoin as somebody in Sri Lanka, but they don't have the same access to the dollar that I have.
By the way, I have the same access to an iPhone that Elon Musk has.
right and that is a that that means that a network effect occurs is that we all adopt the same thing
this is why this is why digital markets are inherently monopolist monopolistic is because
if you can get the best thing and there's no obstacle to it then you'll get the best thing
if you're in kansas and you want the best apples in the world you're not going to get them you got
to go to washington they're all like equally powerful i mean if if nobody accepts your money
then what's the use of it? It has no value. Right? Like if, if I don't accept your money,
then what's the point of having that money? Right? I mean, it's, it's pretty valuable to,
to be acceptable, to be accepted at globally. Right? Which question, Sam? Spit it out. What
do you got? You have VPNs. If you have a VPN, then you can get past all that stuff.
Quite a bit. Yeah. But then you can take that and you can put it on your strike account. You
you can put it on your Binance account,
then you can put it on a cold card
and then it's gone from the world, right?
You don't have to have that.
Like most of the,
like when you watch all these huge transactions happening,
a lot of these are over-the-counter transactions,
meaning that it's just me meeting you individually
and agreeing on a price and just exchanging it.
Like it's not going through an exchange, right?
There's like, that's how Bitcoin started.
There were no exchanges, right?
So it actually from infancy grew without exchanges.
It's much more convenient, sure.
It's by no means impossible.
Like, not at all.
Yeah, this is how...
You just need to find someone who pays you.
Yeah.
Well, you're at the beginning...
So, again, you're at the beginning of the adoption of a new technology, right?
If you had a car in 1916, you couldn't go very far because there weren't any roads, right?
You couldn't get gas because there weren't any gas stations.
You couldn't get it fixed because there weren't any mechanics.
But because it was a better technology, the infrastructure builds around it.
Like, yes, you're in the infancy of adoption.
Of course there are places that don't accept it, right?
But what is the trend?
Again, don't look at the static.
Don't look at where we are now.
Look at where we're going, right?
But on top of that, do you think seeing, for example, transactions, if you do more than 20 years ago, do you want to go?
Of course.
Right?
It is, because money controlled by a government is controlling the people, right?
You can do, Balaji covers this in one of the chapters of his book,
Voice, Exit, and Loyalty, right?
You can vote and try to change it.
You can be loyal and say, yes, you're the good government, I'll do what you say.
Or you can literally just leave the country with all of your money on your cell phone and come here.
Or go to someplace, go to El Salvador, where there's a government that recognizes the power of Bitcoin, right?
You're going to have people making different decisions.
I would say that, again, look at the trend.
Look at the trend of El Salvador versus the trend of, I don't know, Iran.
Countries that forbid this type of technology.
Who's on the rise and who's on the fall?
Again, don't look static.
Look at the trend.
Look at the trajectory.
Yeah, just real quick.
These are all things that at one point or another were effectively the global money.
Gold, silver, cash, cows and salt, beads, seashells, and tobacco, cigarettes, digital dollars, and Bitcoin.
Seashells and beads, they're not very acceptable.
Divisible, can't chop them off.
They're not uniform.
They're heavy, not very durable.
They're kind of private.
They have like one thing going for them.
Cows and salt, kind of private, kind of acceptable.
Everything else, not at all.
silver sort of acceptable sort of uniform pretty private all the other things doesn't even come
close gold it's very durable everything else it kind of fails on cash the good thing about cash
is that it's uniform it's accessible you can divide it kind of but the problem with division
on fiat is it goes the other way.
Is that when you continue to devalue the money,
like this is why in the United States,
it costs like seven cents to make a penny.
Right?
That's a bad idea.
So we're going to stop making pennies.
And now we're talking about making $500 bills.
If you go to Zimbabwe,
they printed trillion dollar bills.
One bill that was worth $1 trillion
or whatever it was in Zimbabwe.
You have to go up.
You have to keep changing it.
Cash, not good.
Digital money, digital fiat, not at all private, absolutely incorruptible, definitely not immutable.
You can just take it and change it, and definitely not scarce.
Fiat money, again, by decree, it means that there's no asset backing it.
And every fiat money to exist in history is defunct or has lost at least 97, more like 99% of its value.
This is the purchasing power of the dollar from 1900 to 2008.
And Bitcoin.
The only thing that it lacks is the acceptability.
It's growing.
But everything else, it has.
What about privacy?
Privacy?
It's private.
It's not entirely private because you often have to do KYC, right?
But you can build layers on top of that that make it private.
Tornado cash, you can have mixers.
Okay, okay.
Yeah, pseudonymous.
So the way that I think about this is that the most important thing for a money is that it never fail.
Kind of like for a boat, the most important thing is that that boat never sink, right?
So we're going to build a Bitcoin boat.
It's never going to sink.
It's not going to have a chandelier.
It's not going to have a swimming pool.
It's not going to have stairs.
Layer twos and threes and fours, they're going to build that on.
But if you have a fiat money or if you have Ethereum or if you have anything that is ultimately corruptible, it's like a boat with a hole in it.
and the more features you add to it and the more wealth that it gains,
it's like driving that boat faster.
And the faster you drive a boat with a hole in it, the faster it sinks.
Because when you create wealth in something that is corruptible,
it makes it a target and it makes it more and more valuable
for someone to take shots at it, right?
More shots on goal, eventually somebody's going to get it.
It's kind of like being the bully again, right?
All right. We're going to end there.
And next time we'll jump into inflation, which is, I would say, mind-blowing.
And then we'll cover Bitcoin as well in a couple weeks.
So thank you guys very much.
Any questions before I leave?
All right.
I really do appreciate your time.
I do think that this is the highest leverage knowledge that you can have in your world.
you will spend $100,000 hours of your life working.
It is worth it to spend some time
learning where you should keep that money
so that you can still have it
and access it for future generations
because the technology that we create
is making our lives more powerful
so they should become easier.
Thank you very much.