This is the power of DCA is obviously if you buy everything at the very bottom,
you're going to do better, but it's really hard to time markets, especially Bitcoin markets.
And so for someone who's entering in and they're not really sure what to do, and they feel like
they don't want to buy the top, they might not be able to time the bottom. A DCA is a sure way to
make sure that even if you are underwater for a little while, your cost basis will get lowered,
and then you'll get in the green very quickly as we're coming out of bear markets. And by the way,
I think that when this happens, right at this moment, when we kind of, for the first time,
coming out of a bear market, everyone who's been daily DCA, right, everyone who's just been using
Bitcoin as their savings and they save regularly, when they're all in the green, I think that that
is a signal. Like that's a signal that the bull market's starting again, because now all of a
sudden everyone's feeling like a genius. And from an outside perspective, they're still thinking like,
these fucking idiots, they're still down 70%. Why are they all cheering? Right? Why are they all
happy? Well, the reason why is because we've been averaging down and now we're all in profit. Like,
you know, even though we're 70% off the all time highs, we're all in profit in our overall DCA
investments, right? DCA savings. So then we come out of the bear market totally. And now we're like
heavy, heavy in profit. And again, like we haven't even broken the all time high,
and everyone's already like super in profit. So that's not even considering what happens next,
right? Greetings and salutations, my fellow clubs. My name is Walker, and this is the Bitcoin podcast.
The Bitcoin time chain is 86013. And the value of one Bitcoin is still one Bitcoin. Today's episode
is Bitcoin talk where I talk with my guest about Bitcoin and whatever else comes up. Today, that
guest is the king of Bitcoin visualizations and everyone's favorite mustachioed Apple,
wicked smart Bitcoin. We cover a ton of topics today. We talk about hodl waves, the power of
dollar cost averaging and why it is the best way to save in Bitcoin, the influence of large
economic nodes, Bitcoin mining and hash rate, Bitcoin versus fiat technology, the importance of
UTXO management and how to do it, plus a whole lot more wicked screen shares, a few great visualizations
he created during our chat and explains in great detail what the data actually tells us. So if you
want to watch this show, instead of just listen, head to the show notes for links to watch on
YouTube rumble and on no stir via highlighter. But if you're like me, and you do prefer to just
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or shoot me an email. It's Hello at Bitcoin podcast.net. Without further ado, let's get
into this Bitcoin talk with wicked smart Bitcoin.
Wicked, wicked smart. Welcome. Thanks for coming on another fucking Bitcoin podcast, man.
Thanks for having me. It's been a minute since I've been on a podcast. So I'm glad to be back.
Took a little break there for a couple of months. I said I was going to take a break for a longer
period of time and then sure enough, I'm back on Twitter like within a few days and back to doing
podcasts within a couple months. Well, you know, the breaks are good, I think. And I mean, you're
you say not too many podcasts, but definitely a lot of spaces like I'll always see, you know,
like wicked joined to space and I'm like, damn, I want to want to jump in there. But I'm like,
in some fiat mining meetings and it's like, ah, fuck, what are they doing up in there?
You know, but that's that's the other thing I had to take a break from actually the Twitter spaces
are very demanding in terms of time. And it's so easy to get sucked in, you know, because it's just
like, I mean, it's just like a bunch of, you know, a bunch of friends getting together and
talking about whatever. Right. And yeah, I just found myself on Twitter spaces 24 seven. So
that was the main thing I had to take a break from honestly. But yeah, now I'm back at it,
you know, on the good morning space and a few other ones here and there.
We got to a for a while, I was doing a decent amount of what like the no stir equivalent of
spaces, which are there's a couple different options for him. But like the one that I was
using was no stir nests that Derek Ross and I think the Derek and Semisoul built out.
I would honestly like works, works pretty great. But I've been a both like the new fatherhood thing
between fiat mining, new fatherhood, trying to be a decent husband as well. And then, you know,
making another fucking Bitcoin podcast on the side, it's like, fuck, you run out of hours in the day.
But, you know, it's, it's like the good, it's the good kind of busy though, you know what I mean?
It's not the bullshit busy. It's at least it's like, ah, these are all things I enjoy doing,
even, even some of the fiat mining, because it allows me to stack sats. So
exactly. And, and sats are still pretty cheap. So, you know, I'm, at least I'm still motivated to,
you know, work my ass off and keep trying to stack while they stay that way.
By the way, congratulations on the kid. I, my break was also because of a new kid. So
to our timelines for new kids are very similar. Yeah.
Yeah. And congrats to you as well. It's a fatherhood. It's, it's a trip, man. Isn't it? It's like,
like all the cliches, you know, that people told you like, oh, like, you won't know where the time
goes and like, you can't know until you know, and you're like, okay, fuck off, thanks. But then
you're in it and you're like, shit, like, I guess there's a reason they're cliches. Like, they're,
they're kind of spot on. Yeah, I feel that now.
Yeah, totally. Especially when you stay busy and then like, you know, it's the end of the day.
You know, like maybe you work from home. So you get to pop out over here and there and see your
kid. But like overall, you know, you're, you're doing other things in the end of the day. And
you're just like, you did what? You started laughing? You know,
I know. Oh man, it's, it's the bad, I've got to say, like babies are funny as hell. Like they,
like every little thing they do, it's like, you're just like, what, you're this little full human
being just doing your own thing, learning about literally everything constantly.
And like, I'm just amazed by it. Kind of like it gives you that renewed sense of your own childlike
wonder. Like your kids like looking to ceiling fan, you know, just mesmerized by it. You know what
that's like. You know what that's like. Yeah, lights in general. Like it's, it's wild. And I've got
to say like, I don't know, I'm assuming for you as well, but like the, the desire to stack sats
even more aggressively, even though it's like life gets a lot more expensive with a kid. But
you're like, okay, wow, stacking sats really has taken on a whole new like urgency and meaning for
me, because it's not just my future and my wife's future, which I care about a lot. But now it's like
somebody who will live on long after I'm dead. And like that's the in terms of like realizing what
time preference really means. I feel like it's hard to fully have a true low time preference
until you have a kid. And then it's like, okay, now my horizon just moved out so many years.
Yeah, I agree. It changes everything. So yeah, I mean, before like, you're, you're stacking to
live a comfortable life into retirement. And then, you know, like you said, you have your kid, and
then you're like, all right, well, now I need to stack enough for a dynasty. Right. And yeah,
kind of changes, changes the goalpost and it changes the reasoning. You know, that's the
why you're really stacking. So I feel that too. Yeah. And I mean, you know, I've got to say like,
in terms of like you mentioned, you know, sats being cheap, and it's like they are and they've
been they've been basically stable sats at, you know, 58, 58, the best technical analysts in the
space are the 58k gang, because they've gotten it right more often than I think any other TAs
I've seen out there, like they, I don't know how they did it. Just some sort of resonance frequency
shit. I don't know. But like, that's probably what it is. There's something there. But I don't
know, it's wild that we've this feels like such a like, you know, I haven't been in for this is
like my first full cycle, like I didn't start stacking sats until 2020, during, during COVID,
when you know, they were sending out checks and shit was getting weird. And it was like, I need to
look at this Bitcoin thing that I ignored for years and years and years, even though I heard
about it. And like, you know, you feel like an idiot after once you go down the rabbit hole,
and you realize like, Oh, how is I so fucking stupid before to ignore this? But it's like,
you know, we all we all get in at the price we deserve, right? Like once we're finally ready
to make that leap. But like, man, this feels like a calm before the storm. I don't know, like,
because we've just been just steady crabbing at 58 for so long now. I don't know. I don't know.
I don't know if you're seeing it, if the data is telling you any stories about this at all,
but it feels like some we're about to have violent moves, just because it's been so quiet,
like too quiet. Yeah, the calm before the storm. I mean, that tends to happen, right? So you get
these, these kind of periods of FOMO, where you get a lot of people rushing in, and then you get
periods of reprieve where all the speculators leave and, you know, slowly, but surely the
coins move from the weak hands to the strong hands and then just repeat it over and over. So
it's kind of, I mean, I don't have any particular data to show on that. But, you know, I mean,
it's just anecdotally like, you know, Twitter is a lot more quiet now. You don't have a lot of, like,
you know, Mumbai traders. As a matter of fact, you have a lot of like the doomers now coming out
and you're like, oh, that's a good sign. Yeah, close to the end. Yeah, so.
I think Twitter is quiet also because there's a lot more Bitcoiners who are just
spending more time on Noster, honestly. Yeah, Noster or Noster. I think
we've had this discussion with Hodl or Hodl. Yeah, well, I think it's the same thing.
I call Hodl Hodl because that, you know, in my mind, that is how it should be pronounced. And he
and I will continue to disagree on this. And I call Noster Noster because I think that's how it
should be pronounced. But, you know, that's the there's no consensus rules. Yeah, for pronunciation.
But yeah, I don't know. It's a I think that especially as we get into like this election
season, I mean, we've I feel like we're always in election season, like, you know, especially,
you know, not just in the United States, but it's like everywhere. Like, that's that's the thing of
our like one of the brilliant things of Satoshi. And I believe this was probably planned was
time Bitcoin havings roughly, you know, every four years, like the elections.
Like there, I have to imagine that wasn't a coincidence. Like, could have made him five,
could have made him three. But it's four years, and it happens to fall on those elections. And
it's like, all of the discourse right now on X is just fully political. And that just honestly
gets so tiresome, because it's like the same. And maybe people looking at the discourse around
Bitcoin generally think the same thing, like these fucking psychopaths are still just talking
about sound money and stacking sats, like how boring is that? But yeah, what's the deal?
Yeah, savings. What is the other savings maxis?
Yeah, what a bunch of losers. Yeah, I don't know. It's yes. So my point being that the
at least the vibes on the vibes on Noster are much more like, well, it's not just Bitcoin
focused anymore. There's like a lot of a lot of different types of folks out there just
posting whatever the fuck they want. That's how you know, like, and there's a lot of good Bitcoin
signal on there as well. But we'll see. I think it's gonna, you're gonna have a lot of people that
end up getting Noster must like Bitcoin, like you get smart by force, not by choice. And so you
don't know you need it or that you want it until you you really need it or you really want it.
Yeah, I'm like, sometimes people just need that push. But you know, until then the memes are solid,
the vibes are high. So anyone listening who's not yet on Noster come come hang out, talk some shit,
spread good vibes. But yeah, I digress into good vibes, but wicked. Okay. I've said this
before I will continue saying it forever. I think there is no second best when it comes to Bitcoin
visualizations. The shit you put out is truly top notch. And it always tells such a good story.
Like there is just like, first of all, they look great. Like these are high, high class visuals.
But like you really go deep into this data. And I think find some really cool ways of putting
stuff together that makes people like, you know, for somebody who's maybe not a Bitcoin or even
seeing some of these charts, like even just some of your comparisons, you know, versus like gold
and the S&P and real things like that, like, that shit when you see it visually presented to you
in like a 30 second, whatever one minute clip. And it tells the story of the last 10 years so
succinctly. Like it gets really hard to argue with that kind of stuff where it's like, look,
this is just like the data. And so I'm wondering like, how did you actually like,
how did you start doing all this? Like when when when were you like, I'm going to just become the
the the apple king of Bitcoin visuals? Well, thank you. I mean, you know, there's
there's a lot of other, I'd say kind of top tier visualization people in the Bitcoin space. And
two that I draw a lot of inspiration from our route. I don't know if you've had him on your
podcast yet, but however, I should. Yeah, yeah. He's like super smart. He's really good at, you
know, putting together visualizations and doing different analyses. And then I think his name
is chart BTC or charts BTC. That guy's kind of just like, you know, he's been around for a couple
cycles. He's just a go to, you know, chartist has some pretty good stuff. And so I'd say, you know,
personally, I draw a lot of inspiration from their stuff. You know, I try to always keep my
eyes out for other people, you know, putting charts out and just thinking how I can improve them or
or maybe change it a little bit to tell a slightly different story. Or, you know, there's some cases
where I'll just put together an entirely new idea that has never been done. And sometimes it's a hit
and sometimes it's a miss. And I'll show you a few animations that that I've kind of put out over
the past year in a minute here, some of my proudest moments. But I'd say what got me into it.
I've been doing data visualization for over a decade now, just professionally
started off studying astrophysics, as one does. And so but I was more of like a visualization guy.
So like, you know, I'll be honest, I wasn't smart enough to do like the really, you know,
like, you know, smart astrophysics stuff. But I was like the guy who would be like, hey, can you make
this website to, you know, help visualize this data set? Or can you help make this catalog and
make some visualizations out of it and blah, blah, blah, that kind of stuff. So
that's what got me into data visualization. And you know, 10 years down the road,
now I find Bitcoin, really find it, you know, like, get into it, learn about it. And I start
just making some fairly simple visualizations to start out with, mostly just for myself,
just to kind of track things, right? You know, like I, I fall deep down the rabbit hole and I
really want to like know how this stuff works. And part of that is visualizing it, right? A lot
of people are visual learners, including myself. So there's really no better way to, I think,
ingest all of this data than with, first of all, just charts, but also animated charts is like
kind of like the next level. And it was something that not very many people had done up until that
point in the Bitcoin space. There was occasionally like the price versus hash rate animated chart,
or like, you know, like a few, I don't know, it's like a few, a few kind of simple charts here and
there that were animated. But that was like kind of, I guess, one niche that I stumbled into.
And totally by accident, like I had no plans to really become the, you know, whatever you said,
the Apple King, blah, blah, blah. It was just like, you know, I was really interested in this data.
I made charts of it. I learned how to animate those charts. I posted them. People liked them.
And, you know, the rest is history. So I guess that's, that's how we got into it.
Now, I love it because I think that again, like you said, just straight charts, like, okay, yeah,
you know, people draw in lines on charts. Like most people, when you think of that, you think of
like, like, you know, TA type stuff, like where's the price going next with a YouTube video with the,
you know, a guy making like an O face, you know, oh, it's like, okay, like just like the bad kind
of cringe, you know, like, and I say this as somebody who I think does the good kind of cringe with
my lovely wife. But, but like, you know, like that's, that's what you think of when you think of like,
you know, chart guys, but like yours are like, you can always tell a wicked chart. Like it's got
that vibe to it. And I feel like again, it's always, it's never about like, here's where the price is,
is going or here like trying to, you know, say, look, this is, you know, Bitcoin's going to be,
you know, 60, you know, $9 million by, you know, whatever date it's like, no, here's,
what can we learn from the history of Bitcoin? What like kind of trends can we pull out of that?
What can that tell us? Like for me, whenever I see your charts, it's always like a reinforcement of
conviction, because it's like, I have a, I think anybody who is stacking sats on the daily and has,
you know, the majority of their, their wealth that they're saving in Bitcoin has a huge,
huge high degree of conviction. But like, you know, there's always like, it never hurts to see
something where you're like, Oh, damn, yeah, that, that makes a lot of sense. And I have now just
reaffirmed that, yes, this is, you know, yeah, this is magic internet money. But this is like the
fucking magic internet money that is a complete paradigm shift. And I feel like you're, that's
what your visuals do for me. Like whenever I see him, it's just like, Oh, damn, like this is something
special. And it's something that you can, words cannot do it justice. Like most people do learn
in a visual way. And so I think that that kind of thing is just really helpful from an adoption
standpoint. If somebody comes across this chart and it's like, maybe just that one minute video
that's easy to digest and shows them the, you know, trend of how much time Bitcoin spent at
each market cap or whatever, you know, whatever it might be, that just gets that little like bug in
their ear where they're like, huh, huh, that's kind of wild. Like that boy, that's feels like
there's something to pay attention to here. And so, you know, it's like, it's, it's a cool thing
to see. And you know, I'm kind of curious, like, you know, because I want to, I know you have some
some charts to pull up to, not, not TA boy charts, but like good charts. But you know, I'm also just
kind of curious, you know, what is like when you're looking at Bitcoin data, I guess, what's like the
most interesting part of this data to you? Like what if you had to, maybe it's a tough question,
but if you had to distill it down to like, one of the trends of the historical precedents that you
like to look at, like, what is that for you just on a personal level, like what tells you the best
story? So I'd say the most interesting data that I've gotten my hands on so far is kind of like
the I mean, I don't know, there's a lot of different data, right? But I'd say if I had to pick
maybe like the huddle wave data is very interesting. And I wish I wish I had the underlying raw
data associated with that. And of course, you know, if you're running a full node, you do,
but it's just a matter of analyzing it and actually getting out the, you know, the data set required
to make those huddle waves. But you know what I'm talking about the basically like the different
cohorts of coins which haven't moved in different periods of time, right? And you see, you see over
time kind of how each, how each period of time grows and the number of coins that haven't moved.
And you know, you go over the 15 year history and actually, no, let's just let's just share my screen.
How about, why am I talking with them? Okay, here we go. Let's see here. All right. Oh, no,
it's not letting me share. Okay, there we go. All right, can you see the infinite? Yep. We got that
nice infinity. Okay, so this, this one right here. Let's take a look at this one about. Can you see?
Yeah, yeah, we got it. All right. So this is the huddle wave visualization. Some of you may have
seen it already. A lot of the times it's represented kind of in like a full rectangular version of it.
What I've done in this version is I've actually shown the relative number of coins
at any given period. Right. So this last little sliver here is kind of where we are, where we're at now.
And then historically going back, you can see whenever there's like a notch,
that's when a having happens. So it's literally the number of coins, you know,
issuance getting cut in half, which is why the slope gets cut in half. And it kind of starts to
level out. Right. So that's kind of how you can just visually see where the havings are.
This is probably a lot cooler when it's animated. I don't have the animated version on hand, but this
is just the final frame. But anyways, what you're looking at here in terms of the colors,
is you're looking at how long each band of coins has been held and how many, right. And so
you kind of just look at this last little sliver here. You know, about 1% of the coins have moved
in the past day. Right. You know, about 2% have moved between a day and a week and so on and so
forth. And you see that like all the way at the bottom, you know, we're talking almost 17%,
right. 16.7% haven't moved in over 10 years. Now, about 5% of those are probably Satoshi's coins.
Right. So maybe about like that much. But the rest of those, you know, are super long hodl,
you know, like who knows if they're lost or if it's just some, you know, OGs who bought back in
2013, who have been hodling ever since. Right. But anyways, yeah, I mean, this tells like a really
cool story because you just see the behaviors of actual Bitcoiners, right. Bitcoiners using Bitcoin
on the base layer, buying it, hodling it, transferring it, you know, spending it. You see
all of that behavior kind of wrapped up in this visualization. And what you'll see often is when
price runs up, and I don't have the price charted here alongside because I thought that might be
distracting. I just wanted it to keep it fully kind of Bitcoin centric. But you can kind of tell
where the price pumps because that's where the hodling behavior starts to diverge a little bit.
You start to see some of these longer term hodlers move their coins and presumably spend or sell them.
Right. So this was the 2017 run up. This was the 2021 run up. Right. And then most recently,
when we breached the last all-time high, that was like this little spike down where some of those
people who had been buying over the previous year doubled, tripled their money and they said,
all right, see you later. And they exited. Right. But what you don't see, which is interesting,
is you don't see very much movement from this cohort here, which is the three to five-year
cohort. So these are the people who started stacking early 2020s, right? 2020, 2021,
that type of thing, maybe 2019. Their coins have just been stayed. They've stayed
hodled. They haven't moved. Same with all these other long-term holders. So one of the key differences
you're seeing with this cycle, and actually, you even kind of saw it with last cycle too.
Right. This last one where we got a dip in these more short to medium-torn
hodlers. Right. The long-term ones didn't fucking budge. Right. So what that's telling you,
the story that that's telling you is these people who hold most of the Bitcoin, to be honest, and
who probably understand Bitcoin the most, they're not selling. They're actually continuing to grow
their stacks. And it's really only the shorter term to maybe slightly medium-term hodlers,
and I wouldn't necessarily call them hodlers, but speculators who come in and exit. And that
supply is getting squeezed more and more and more. And eventually, it'll pop. So this is something I
kind of keep tabs on. And it's just really interesting, especially to see this long-term hodler base
grow over time, because you can see it's just been a constant growth, right, up until now. So
if this flips over, then we can start freaking out, because that would mean the long-term,
OG whales, they've had enough and they're starting to sell. And so then that would be a very interesting
change in the structure of what we're seeing here. But so far, these OG whales,
they just keep building on their positions and hodling.
Now, it's fascinating, because I'm always curious, people talk about how many coins are lost. And
like, yeah, you've got the Satoshi coins, obviously, which we can pretty safely assume.
Maybe about this many coins. Right. And Craig Wright's not going to be moving them,
because he's a fraud. But like, okay, so take those. So plus, however many others, I would be
willing to bet there's potentially a lot more coins that are lost than people realize, and probably
a lot more than even their owners realize. Yeah, they don't even know they're lost yet.
Right, right. Which is sad, but kind of the reality. And then you factor into that,
all of what will eventually be basically UTXO dust, which because people were auto withdrawing
from their daily DCA to cold storage and have a thousand tiny little UTXOs that won't even,
you know, that they won't be able to move, like, I would be willing to bet the number of lost coins
is a lot higher than folks realize. But like, it's also fascinating to look at this and like
what you said about, you know, these longer term hodlers, and I will say hodler again,
just gonna, you're just going to preface that. They, they are just still scooping up Bitcoin
whenever they can. And it's like, you have to imagine that this, you know, and for anyone
that's just listened to the audio of this, like, some great charts and, you know, definitely follow
w underscore s underscore Bitcoin, right on on X. And I'll link your YouTube as well,
and your, and your noster, because we're going to get you back posted on there. But like, go and
check out these charts, because like, it's kind of wild to see that at a certain point, like,
something's got to give, like these long term hodlers are just increasing their stash. Meanwhile,
the folks that are like, you've basically got, it looks like about the same number of people
essentially day trading Bitcoin throughout most of Bitcoin's history with some slight fluctuations,
maybe, and about the same number of people holding it for, you know, a day to a week and,
you know, with some larger fluctuations, you know, a month to two months. Yeah. But, but like,
that is just going to keep getting squeezed. One would assume. And at a certain point,
something's got to give because there's folks that just like, you know, even just the DCA
plebs who just consistently have just kept stacking, you know, just have their daily DCA set up,
maybe do a smash buy every now and then. And all of that's just going into cold storage,
hopefully in more consolidated UTXOs, maybe we can get into that a little bit later. But like,
Yeah, excellent segue, by the way. That's the one. Oh, okay. Yes. Perfect. Yeah, man. It's like,
you read my mind. So, okay, we just for anyone listening, we've got a daily DCA cost basis
weighted average cost. Yeah. So I'll just briefly explain what this is. And then we can kind of
cycle through this animation. I'll just kind of, you know, whatever do that. But what we've got here
is assuming that you've been daily DCA, we've been buying, you know, a set amount every day.
I look at what your cost basis would be, depending on how long you've been DCAing, right? So the
longer you've been DCAing, kind of the further left you go on the chart. And, you know, in this case,
we go all the way back to like, let's see, when is the first one? It's like, June 8, 2011. So we go
all the way back to 2011. If you started DCing in 2011, you're doing pretty well. By the way,
that was so I think it was like mid 2011 is when Hal Finney, he posted on a message board, he said,
study DCA and in reference to Bitcoin, because he was basically replying to someone who said,
how should I invest in Bitcoin? And he said study DCA. So I thought that'd be a, you know,
like a nice place to start this animation. So if you had taken Hal Finney's advice back in
mid 2011, and you started your DCA, then you would have a cost basis, effectively close to zero,
right? I mean, it's for all intents and purposes, close to zero. If instead you waited until, let's
say the second halving in 2016, then your cost basis is closer to $5,000 now, right? And that's
assuming you've been daily DCing all the way throughout, you know, from that start all the way
till today, right? If you started right at the top of 2017, then your cost basis is
about close to $12,000, maybe something like that, $13,000, kind of just eyeball it, right? The orange
line. Likewise, if you started at the bottom of the 2019 bear market, then this is surprising,
your cost basis is actually higher than the person who started at the all-time high,
right? So the reason why is because this person, they got more purchases, kind of as they were
averaging down as it was consolidating, and then they obviously got all the purchases at the bottom
as well. Whereas the person who started at the bottom, they didn't have very long to stack before
they, you know, before it shot back up. So their cost basis actually is more affected by the run-up
than the person who had been, you know, averaging down throughout the entire bear market. So that's
kind of an interesting thing. And you'll see that as I cycle through the animation here in a sec.
And anyway, so, you know, just to tell you what colors mean, color is, you know, you're in the
green. So your cost basis, the orange line is below the current price, which is the dotted line.
And then red means that you're underwater. So your cost basis is above the dotted line, right?
You're above the cost of today. And so, you know, currently you're underwater, but this is an
excellent opportunity for you to average down and lower your cost basis, right? So like, it's a win-win
situation here if you're daily DCing. And then one other thing I'll say before I just hit play on
this animation is it's interesting that, so this was about when the body TFs was released, right?
If you remember, there was like a spike running up to the spotting TF and then there was a drop,
and then it just exploded, right? So what this tells us is everyone who's been daily DCing
since the spot ETF was released is underwater. So I think that's kind of hilarious, but, you know,
welcome to Bitcoin. Right. You know, keep stacking, stay humble, stack sats. Your cost basis will,
inevitably get back under the current price and you'll be in the green eventually. But
take this opportunity while the price is lower than your cost basis to lower your cost basis.
It's always a good idea to do that whenever you have a chance. So let me just play this animation
real quick. I don't know how well this is going to play on the playback here. Like if it's going to be.
Looks solid to me. Okay, cool. Yeah. And again, for folks who are just listening, you can go and
find this on Wicked's YouTube, which I'll link in the show notes, or watch the video of this,
which you can find on my YouTube or on Noster, because this is a pretty damn cool visualization.
All right. So I'm going to pause it here and let's just talk about what happened here just
real quick. So this is the 2013 run up. And if we go right here, this is the all time high, right?
It's all time high. Everyone's feeling like a genius. The people who had started their DCA
back in 2012, right, their cost basis is like in the hundreds of dollars. And they are just
killing it, right? Even the people who started like a month ago and they started DCAing,
their cost basis is in the mid hundreds and they've doubled the money, they're feeling like geniuses.
Okay. But then we hit the top, we start going, getting all crazy. And as it collapses,
right, you see that what happens, and this is very interesting, is as you bottom out in the
bear market, let's just scroll forward to the bottoming out here. You see how quickly
your cost basis gets averaged down if you had started at the all time high. Right. It gets
pulled down very quickly. So as long as you've been consistently DCAing throughout the kind of
collapse, right, the bubble pop, you effectively lower your cost basis down to pretty dang close
to where we are already, right? So like, I mean, it's not great, let's be honest, right? Your cost
basis, you're still down like maybe 50, 60%, something like that, maybe not that much, maybe
less, but still you're down the significant amount, but you're not down 80%, right? If you just bought
everything at the top and then just sat on it and then do anything and just held that one position,
you know, then you're down a lot more, you're feeling like crap. But if you average down,
your cost basis gets lowered very quickly. And then this is the other thing I wanted to show. So
this is kind of the worst of where it ever was, right, at the bottom of this bear market.
All of these people who had been DCAing, you know, all the way back from here, all the way to
present, or the present being, you know, 2015, September 22, they're all under water. So everyone
is feeling like an idiot, you know, I mean, it's not that bad for some of these people, right?
But they're still under water. Now, look what happens as we come out of the spare market.
Boom, right? Like, pretty quickly, everyone's back in the green. And we haven't even gotten
halfway up to the all time high. So this is the power of DCAing is, you know, like,
obviously, if you buy everything at the very bottom, you're going to do better. But it's really
hard to time markets, especially Bitcoin markets. And so for someone who's entering in,
and they're not really sure what to do, and they feel like they don't want to buy the top,
you know, they might not be able to time the bottom. DCA is a sure way to, you know, make sure
that like, even if you are under water for a little while, your cost basis will get lowered.
And then you'll get in the green very quickly as we're coming out of bear markets. By the way,
I think that when this happens, right, so when, like right at this moment, when we kind of,
for the first time, coming out of a bear market, everyone who's been daily DCAing, right,
everyone who's just been using Bitcoin as their savings, and they save regularly,
when they're all in the green, I think that that is a signal, like that's a signal that the bull
market's starting again, because now all of a sudden everyone's feeling like a genius. And
from an outside perspective, they're still thinking like these fucking idiots, they're still down
70%. Why are they all cheering? Right? Why are they all happy? Well, the reason why is because
we've been averaging down, and now we're all in profit. Like, you know, even though we're 70%
off the all time highs, we're all in profit in our overall DCA investments, right? DCA savings.
So then we come out of the bear market totally, and now we're like heavy, heavy in profit. And
again, like we haven't even broken the all time high, and everyone's already like super in profit.
So that's not even considering what happens next, right? You want to say something?
Yeah, I was just going to say, I think it's actually such an important thing for people to
grok, which is that like, I think there is a lot of hesitancy when it comes to people
buying Bitcoin for the first time, because you don't want to, you don't want to buy the top,
because you don't want to, you don't want to buy the top. And when it, you know, when it's going up,
you know, even though many do just FOMO in, but then it crashes down, they feel they got burned,
right? And then maybe they just they sell it for, sell it for Fiat again, for some reason,
for a loss. And they're like, I'm done with Bitcoin. And they, you know, if they manage to,
you know, decide to make a Bitcoin purchase near the like, near the bottom, they end up maybe not
making that purchase because they're like, well, I'm just going to wait for it to go lower. Like,
it looks like it looks like it's still going down. Like, you know, you get the text from friends
like, oh, saw saw the Bitcoin chart, like, you think it'll go lower? It's like, I don't fucking
know, man, I'm just, I'm just still daily DCAing because I have no idea what it's going to do next.
But like, this is super powerful to show that, okay, it really like does not like time, it's
truly like time in the market beats timing the market. And unless you are super lucky, or really
are some sort of actual incredible TA and you figure out exactly when you know, just buy low and
sell high, like first of all, you know, I'm not fucking selling. But you know, the buy low part
is really fucking hard to do. But if you just stack a little bit every day, you're going to be okay.
And basically the longer that you can do that, the more okay you are going to be.
Yeah. And the reason why, the reason why I'm taking the weighted average cost, right,
is because this is this is assuming you're doing kind of a constant daily stack. So for example,
let's say you stack, you know, just for the ease of a math here, you stack like 20 bucks a day,
right. And in this case, at the top here, you would have, you would have only stacked
1.6 million sets, right? Whereas at the bottom on your daily DCA, you would have stacked
a fucking like, what's that, like 10 million, right? So like the weight of your daily DCA is
at the bottom, heavily, heavily outweigh the weight of your DCA is at the top, right? Your
daily DCA is up here, are netting you far fewer sets than your DCA is down here. And that's why
when you DCA throughout the bear market, it lowers your cost basis so drastically, right? Because
you're actually like pulling it down a lot faster down here, then you're pulling it up as you're
coming out of it or pulling it up, you know, DCA in these upper areas here. So I don't know if that
makes sense. No, it does. I mean, you're, you're getting more Bitcoin for your fiat. And it is
having an outsized impact on your cost basis, dragging it down in a very nice way. Yep.
Yep. Okay, so coming out now, we're now we're in just for the listeners and also anyone watching
who just wants a play by play here. Now we're coming out of the 2016 or coming into the 2016
bull run into 2017. This is where we shoot up to 20,000, right? One thing you'll notice is
the cost basis of the person who started at the all time high previously is still a bit higher
than the person who started at the all time low. But that very quickly actually inverts kind of as
we get up into this next top, right? And so it's hard to kind of see because we've exploded up so
quickly. But like, I mean, you're doing good either way, right? Let's be honest. But you're
doing better the earlier you start. And this is what you were saying earlier is time in the
market beats time in the market, especially for DCA. The earlier you get into Bitcoin and start
DCA, just simple DCA, the lower your cost basis will be. And that's just a fact, right? Like,
historically, that's always been the case. And the reason why is because Bitcoin always goes up
over time, right? Like, so I guess if Bitcoin stops going up forever, Laura, then that would not be
true. But as we all know, it's going to go up forever. So that's always going to be true time
in the market beats time in the market. When you're DCA, so if you're thinking about what should I
start now or wait, start now. I mean, the earlier you start, the better off you're going to be.
Just in terms of your savings. Anyways, it takes like the guesswork out of it for people. Like,
if you're listening to this and you know, you stumbled across this Bitcoin podcast and you
don't own any Bitcoin yet, that's okay. You can start today just with a couple of, you know, just
a few dollars at a time, like literally anything is better than nothing. And earlier is better than
later. And that it's a pretty like that that is what this data is basically unequivocally showing,
which is is really cool. Yeah. And this is part of what I love about Bitcoin so much. It's
it's saving simplified, right? Like, I feel like I don't know, I mean, personally, I had always
struggled finding a place to put my money, right? And I'm naturally a saver, like I like saving money.
And previous to Bitcoin, I had saved in dollars for a very long time, just not knowing any better,
right? Like I was a pretty, you know, just a pretty simple saver. So it's like had my stack of dollars
and like thought I was, you know, building some wealth. But of course, saving in dollars or any
fiat is, you know, you're running on a hamster wheel, unless you're unless you're out stacking,
how much you're getting the based, it's very hard to get ahead. And so, you know, that's not very
sustainable. And then you get into like, okay, well, should I save in real estate or save in stocks?
And that has all sorts of other headaches, you know, liquidity being one, counterparty risk
being another, like, how do you pick a stock? You just do index funds, all those questions that
might cross your head when you're when you're considering doing that type of saving, right?
And a lot of people just end up doing that because that's what everyone does now.
But then you have Bitcoin, and it's literally just money, like it's just like dollars, right?
It's just another form of money. You can send it to anybody you want without anyone else's
permission, you can hold it yourself and control it completely in self custody. And what's best
about it is it can't get the base. So like, now you finally have money, you can save. You don't
have to worry about picking stocks, you don't have to worry about investing in stocks. You
don't have to worry about investing in the right, you know, areas for real estate or, or, or
maintaining, you know, like, properties or whatever that type of thing, you literally just,
you now have the best money there is, and you save in it. And you save in it as often as you can,
and as early as you can, and you automatically win. I mean, it's fucking crazy. And so I feel like,
I don't know, I hope more and more people are realizing this. I've put a few friends on to it
over the past few years. And like, they're not, they're not very technical, but they're also
people who understand savings. And they're people who originally just saved in dollars. And I'm like,
hey, listen, you know, here's cash out, put on your recurring buy of whatever it is, you know,
10 bucks a week, 20 bucks a week, 100 bucks a week, whatever you can afford, and just do that,
just save as often as you can, as much as you can in Bitcoin. And I guarantee you, in four to five
years, like, you're going to be way better off at that point than where you started. And you're
probably going to want to start saving a lot more in Bitcoin, you know, and like, that's kind of like,
I think the daily DCA are just a regular saving in Bitcoin is can, it's what can get you really
kickstarted in understanding the power of the savings technology. If you are already dollar
cost averaging into Bitcoin, you're ahead of the game. But as your stack gets bigger,
you need to keep those precious sat safe. And the best way to do that is to go to
bitbox.swiss slash Walker and use the promo code Walker for 5% off the fully open source
Bitcoin only, it box o two hardware wallet, then obviously get your Bitcoin off the exchange and
into your own self custody, preferably in a nice big fat UTXO, the bitbox team is honestly awesome,
and they build easy to use secure open source solutions to keep your Bitcoin safe. And not
only is Bitcoin in your bitbox safe from government confiscation, but bitbox is one of the only two
wallets to actually address the dark, skipy vulnerability, which means you're in luck.
Plus, and I cannot emphasize this enough, the bitbox o two is truly easy as hell to use.
Whether you're brand new to Bitcoin, and it's your very first hardware wallet,
or your seasoned psychopath and you've got like 69 of them. It is Bitcoin only. And again,
it is fully open source, you can head to their GitHub and verify that for yourself. There's no
need to trust me or to trust bitbox. When you go to bitbox.swiss slash Walker and use the promo
code Walker, not only do you get 5% off, but you also help support this fucking podcast. So thank you.
Amen to that. And like, again, it's something you don't need to be an expert for. You don't have to,
like, you don't need to do a ton of extra work. You can literally set it and forget it. And then,
you know, check on it. You check on that a couple years later after setting it and
forgetting about it, and you're going to be really, really happy. And it will outperform
your dollar savings account, certainly, over at least over a long enough time frame, which is
not really that long. Like just wait, wait till the next election and you'll be happy.
Yep, exactly. Yeah, just back for a whole epoch, a whole four years. And let's see where you're at
after that. Okay, well, so that just got wild there too. Yeah, yeah, we're just it just exploded
up over this past few few months or a couple years, I suppose. Okay, cool. So that's this
animation. This one I'm I'd say I'm pretty proud of. And I also just like to track this. And,
you know, like I said, it's fun finding those little like, you know, like moments where like,
ha, everyone who started DCA angles and still spotting TF is now underwater, right? Or like,
you know, coming out of the previous bear market where it's like, you know, right here.
Boom, everyone who's been DCAing, you know, even if they started at the all time highs of last
cycle, like everyone's in profit, like that was that was an awesome moment. And when that happened,
you know, I was screaming from the rooftops trying to tell everyone, Hey, listen, we're all
fucking rich now. You know, like, we made it. And we're about to fucking explode. And then sure
enough, boom, you know, we did. So again, like I think that that I think it's an indicator,
like it's one that not I don't know if there are many people track. But I think coming out of bear
markets, when the DCAers all become, you know, in the green on their on their daily DCA's or just
DCA's in general, that causes a lot of positive momentum for Bitcoin, you just kind of feel it,
right? Like everyone's, everyone's richer now than when they first started. And
whether or not they've been tracking their cost basis, like they can just look at the value of
their Bitcoin and they know it, right? They look at their Bitcoin, they're like, holy shit, that's
worth more than what I put in for sure, right? And then that gets you thinking like, damn,
like I made it, you know, we made it through a bear market. Everyone starts hodling and, you know,
boom, you get a new top. So anyways, it's going to be interesting to see because I mean, right now
we've got one of those times where, you know, like you said, folks that have started DCing,
since the ETFs, they're at a loss. So you've got that hump there. It's going to be interesting
to see, does this hold true again? And do we start, you know, rocket shipping off once those folks
are getting back and become in profit again? Yeah. So that happens. It looks like maybe around
maybe around 64, 65k is where, you know, everyone's back in profit. So yeah, that sounds about right.
Like if we get all the way back to 64, 65, then I don't know who the fuck we'd be selling at that
point. Like, you know, like, oh, we're back on the way up, you know, I'm not going to sell until
xxxxxxx price, right? It's got to have six digits at least. And so then, you know, we cap up to the
next level. It's usually what happens. Okay, that's this one. So I know you had another one.
Any last comments? You know, just that I think it's such an important point to drill home about
having an easy way to save and not having to worry about, like, if you want to invest in real
estate or stocks or whatever, and that's working well for you, do whatever the fuck you want with
your money, you know, like neither myself nor Wicked Care, what you do with your fucking money,
it's yours. But like if you are just looking for an easy way to save the value of your time and
energy over a long time and have that purchasing power grow, Bitcoin is undoubtedly the best way.
And if you think about like, okay, you may think that you're doing well in the stock market, right?
You may think that, oh, I'm up, you know, seven or eight or 9% this year. And it's like, well,
actually, you're not because the compound annual growth rate of the money supply is like high sixes
or 7%. So unless you're whatever you are over 7% is what your actual rate of return against the
monetary debasement is. So if you're only making 7.5%, you're at like a half a percent increase per
year versus the compound annual growth rate of the money supply. And I think you're killing it with
these transitions. Well, that one, I may have seen this in the folder before. So I had a slight
disadvantage. But yeah, dive into this one. All right. So speaking of the compound growth of the
money supply, and of course, we were referencing Fiat there, right? When we were talking about
7.8%, 10%. Now we want to look at Bitcoin. So what is the annualized issuance rate or the
monetary expansion in Bitcoin? So we know that new Bitcoin gets issued with every block, right?
And that amount of Bitcoin that gets issued gets cut in half with every halving. So initially,
when Bitcoin first started, obviously, the inflation is going to be super high. There's
not very much Bitcoin around at the start. And then the number of Bitcoin you're mining for
block is extremely high, 50 Bitcoin per block. So on a relative basis, your inflation rate is
going to be super high. And if we just look at kind of what that is, right? So like in this first
epoch between Genesis and the first halving, we're having issuance rates in the thousands and
hundreds of percent. So effectively, what that means is, you know, let's say we have a million
coins mined already. If the issuance rate is 200%, that means we're going to mine another 2 million
over the next year, right? So the issuance rate early on was kind of, it was extremely high. It
was erratic because people were just figuring out how to mine Bitcoin. People were figuring out how
to mine with GPUs and mine with ASICs. And so there's a lot of these kind of crazy erratic spikes.
And in terms of the monetary issuance rate, Bitcoin seemed wild, right? Like it didn't seem like
very sound money in the first epoch, the first, you know, three and a half years,
or roughly four years when it was released, right? But then we have the halving. Okay. So right off the
bat, first of all, we have half of the supply mined, right? So 10.5 million coins. And now the
issuance gets cut, gets cut in half. So it goes from 50 Bitcoin down to 25 Bitcoin per block.
So right off the bat, you know, it's still pretty erratic, right? Jumping between 10 to 20% issuance
rate, you can see, but much less erratic than before. So we're already starting to stabilize
and, you know, also trend down as the relative supply continues growing, right? So that's the
second epoch between the first and second halving. Now let's go to the third epoch. Boom.
The issuance per block goes from 25 Bitcoin down to 12 and a half Bitcoin per block.
And again, our supply has kind of grown, I'll just play it now, has grown substantially.
And so now we get even less kind of variance and more stability in the issuance rate. And
Bitcoin is really starting to look like sound money now, right? Like it's predictable in the
issuance rate. It's not, it doesn't have very much variation. You know, here we're at about 4%.
So again, like compared to fiat, which, you know, at any given moment is getting debased
in the high single digits, if not low double digits and depending on where you're living,
maybe even triple digits, right? Some countries have extreme debasement. And then alongside that,
you have this monetary protocol called Bitcoin. And even as early as, you know, 2020, we had a
very stable issuance rate of 4%. Okay. Jump ahead to this third halving and it gets cut in half again.
So now we're going down to 2% issuance rate. And it's getting super stable. Okay. Now,
you might have noticed right here, boom, there's a big dip below 1%. That was the China mining ban.
So that's a bunch of miners turned off their rigs. And because of that, you know, we literally
mined blocks so slowly that our issuance rate dropped below 1% before the difficulty kicked
back in and then got us back on track. Right. But that's, you know, that's where that dip was.
But, you know, like, you literally, you shut off half the miners and the difficulty kicks in and
boom, you're right back on track, you know, right back below 2%. Perfectly as predicted, steady,
not very much variation. Okay. And then the most recent halving, fourth halving, boom, down below
1%. And this is where we are now. So, you know, super, super stable. We've just been killing it
below 1% issuance, which by the way is like way below gold's issuance at this point. So from a
monetary theory, you know, sound money perspective, Bitcoin is now by far the most sound money ever
created by man, right? Ever discovered by man, some would say. And so like, here we are at 1%.
You know, and we've been here for almost, almost five months now. And this is going to stay,
you know, right below 1% all the way until the fifth halving sometime in 2028. And then it's
going to drop to half a percent, right? And it's just going to keep on getting cut in half
over and over and over again, all the way until it gets to zero in 2140. So that's,
that's the story being told by this animation. It's wild. Like, I think one of the big, like,
mind blowing moments when you're first getting into Bitcoin is the difficulty adjustment and how,
how actually ingenious that is, like the fact that you could with the China ban that or, you know,
ban. But like, what, there are still people, there's still a lot of hash rate coming out of
China, but like that was a significant, like massive drop that happened so fast. And it's like,
yeah, issuance got slowed down for, you know, no more than, no more than, you know, roughly two
weeks of our, of our human time. And then what happens, it goes right back to where it's supposed
to be, like that self correcting mechanism where it's like, Oh, you didn't need a room full of
central bankers to, to decide, you know, you didn't have to have emergency measures, because
half your hash rate went offline. No, Bitcoin just did what it was programmed to do and adjusted
in the timeframe that it was supposed to. And then business is usual again, and repeat on the,
on the upside of that too, if a bunch of hash rate comes online, okay, blocks might get mined a
little bit faster for a little while. But then they go right back to that, you know, that baseline
issuance, which is just so it's just like, it's magic to see this. And again, without any intervention,
nobody has to step in and may, you know, take emergency measures, it just, it just does it.
Like that's incredible. Like, and so much more powerful, like Fiat just seems so ridiculously
antiquated, like it seems like some stupid witchcraft compared to it. It's like, we gathered the,
the high council of wrinkly old bankers together, and they decided how much money, you know, how
much to debase your fucking, your life savings this week. It's like, no, no, it just does what
it's supposed to do. We don't need to, we don't need to meddle with it. Like that is such a,
it's just so much better than what we have now. Like it's hard to argue with that.
Yeah. And not only do we not need to meddle with it, we literally can't. So,
there's literally nothing we can do about it. So even if we wanted to mine more Bitcoin,
you can't. Even if you wanted to mine less Bitcoin, you can't. You know, the issuance is the issuance.
It was set in stone when the first version of Bitcoin was released by Satoshi and it hasn't
changed ever since and it never will. And so, I mean, that, that is just, in my mind, that's a very
powerful story and narrative that you have such a stable monetary policy that is self-correcting,
you know, and that has remained unchanged for so long, right? I mean, coming up on 16 years now,
I guess, you know, in the grand scheme of things, still a baby, right? Maybe a teenager now. But
nonetheless, I mean, having that issuance defined from the very start and upheld for so long and
the longer it's upheld, you know, the more likely it is to remain so. And I think at this point,
it's practically impossible to change it. I don't think there would ever be enough support that,
you know, a hard fork with it changed would gain majority support, right? So if you try to change
it, I mean, by the way, that's what happens when you try to change it, right? You could say, hey,
let's make Bitcoin where there's tail emission and the miners always get 1%. So we just have a
1% issuance rate, you know, for the rest of eternity. Okay, so no supply cap. And it's just
like a small issuance rate to make sure we pay our miners. You could do that, right? It's a fairly
easy change in the code. You can write that up. You can make your own fork of Bitcoin and deploy
it, try to gain adoption of that fork. But who's going to adopt that fork? Like, why would you
use inflation Bitcoin over fixed supply Bitcoin? So part of what was the genius of Satoshi when
setting this up initially is the forethought to understand how a fixed supply sound money
with the type of issuance curve it had, right, kind of like a front loaded issuance curve
and having that cut it in half every four years. I mean, that is such a profound and like crazy
thing that he was able to pull off and understand. I mean, maybe he understood implications, maybe
he didn't fully grasp it, but he understood enough that he knew incentives wise, it would be stable,
like it wouldn't necessarily change, right? Because even right from the start, he said in
forum posts, like, these are the rules that are set in stone. They won't change once they've been
started. And that was after he released Bitcoin. So he knew right from the start that I think he
kind of knew he nailed basically the optimal issuance and in making it fixed supply, he knew
that would never change. So anyway, so this animation, no, it's such a great point because
this is like the beauty of the game theory of Bitcoin, because one of the other things is you're
going down the rabbit hole or, you know, if somebody who's not quite down the rabbit hole yet, always
asks is, okay, you know, there's 21 million coins, so that's all that'll ever exist. But what if
someone changes it? And it's like, they can. And they're afraid to do that if they want. But
which one do you want? Like, which one would you rather have? And if you already have a significant
portion of your wealth in Bitcoin, the choice is even more obviously, if you're a no coin or like
you can just, you know, you can theorize and bullshit, well, maybe I'd want the tail emission
coin. But realistically, if you have half a brain, you wouldn't. But if you already have a significant
amount of your wealth in Bitcoin, there is no way you'd want a tail emission shitcoin. Like,
that just does it is not in your best interest. And so like, that's the beauty of it. Nobody is
going to want to change that it is not in anyone's best interest, who is using Bitcoin. And like,
you know, maybe just one other thing you had a tweet a little while ago, it was about,
you know, like, plebs believing that, you know, running a Bitcoin node gives them an equal vote
in consensus changes. Can you talk about that a little bit, maybe before we move on to the next
one, just like this is the idea of economic nodes, right, and having that economic power. And this
is why Bitcoin is so resistant to changes that will negatively impact those who hold a lot of coins.
Yeah. So one thing that's important to understand in this conversation is, when we're talking about
changing these types of rules, like for example, the issuance or the block size, or any of these
rules that would cause a hard fork if changed, what happens when they are changed, and you have
enough people who adopt that hard fork is anyone who had previously held Bitcoin prior to the fork,
they now get their UTXOs on both chains, meaning they have the same amount of Bitcoin on, you know,
the Bitcoin that hasn't changed the original real Bitcoin, and on the Bitcoin that has changed,
right, the inflation Bitcoin or the big block Bitcoin, right. So whenever you have a hard fork,
you get the same amount of coins on each fork. And if you favor one over the other,
you can sell the fork you don't like and buy more of the fork you do, right. So
right off the bat, you can just see how somebody with a lot of coins, they're going to have an
outsized economic influence over the outcome of, you know, which fork wins, right. If you have inflation
Bitcoin, and only 1% of the holders who control 1% of the supply are down with that fork.
The other 99% of the Bitcoiners are going to dump their inflation Bitcoin UTXOs for more real
Bitcoin. And as a result, the inflation Bitcoin is going to tank in price relative to the real
Bitcoin. Likewise, with a fork that actually happened in the past, the big block fork, right,
the Pcash fork. Even if you had a significant amount of Bitcoin users who support the Bitcoin
Bitcoin users who supported big blocks, right, what was important wasn't necessarily the number
of users, it was more so their collective economic impact. And I mean, it would be an
interesting analysis to see kind of like, you know, which UTXOs and how many of each one moved
post fork on each chain to kind of try to analyze the number of entities who kind of sold their
positions on each chain and see how they lined up. I would just venture to guess that there were
significantly more users on the real Bitcoin who decided to dump their Bcash UTXOs for more real
Bitcoin. But just looking at the price chart, you know that the majority of the Bitcoin was in
favor of the real Bitcoin, right, Bcash collapse in value, you know, 90% like right off the bat.
And it's been, it's been collapsing ever since. And so what that tells you is the economic majority,
they voted with their actual Bitcoin, right, they sold their Bcash UTXOs post fork and they bought
more real Bitcoin. And you saw that reflected in the actual market price of both tokens.
Now that's just like the, you know, the high level impact of somebody holding a lot of coins,
right, and presumably someone who's holding a lot of coins is also running a node. And so they're
going to route all their payments through their node. And as a result, they're, you know, they're
paying most of their fees through that node, and miners are incentivized to mine whatever chain
they're on, right. So if you've got someone like strike, okay, an entity like strike, and
they're processing tons of on chain payments, okay, and they're paying tons of fees to miners,
like any, any exchange for that matter, or any heavy user for that matter, right, any, any business,
or kind of whale or whatever who's moving a lot of Bitcoin around and they're paying a lot of the
miner fees. Whenever there's a contentious fork, they have an outsized weight on the outcome
of that fork because they influence which one the miners will mine, because, you know, they're the
ones providing most of the fee revenue for the miners. And this influence actually grows over
time as the subsidy gets cut in half, and the fees become a larger percentage of the block reward.
So, so Bitcoin kind of naturally gets more and more dominated and influenced by its holders,
as opposed to early on when they had very little influence relative to just, you know, the miners
who were getting paid by the block reward, right, like, if you're getting 50 Bitcoin per block,
you don't really care if like, you know, the power users on one chain or another are going to pay
you like, you know, a few million sats in addition in their fees, like that doesn't have as much
influence as it would now where the block subsidy has been, you know, have multiple times, and now
it's only down to three and some change Bitcoin per block. So that's kind of, you know, that kind
of summarizes like why an economic user who has more economic activity, right, you know,
like, activity, right, they're paying more fees, the miners why they have more influence over forks,
and then also just larger holders have more influence as well, because they literally
can tank the price of, you know, an unfavorable fork. Now, I appreciate the breakdown, because I
think that's something that people struggle with often to understand. So I wanted to get your take
on that, because I think you explained it very well as you just did. So yeah, appreciate the
little lesson in economic power there. Did you have, do you have another visual that you wanted
to pop up to? I do. One thing I'll say just before we move on. So with all of that said,
right, some people might start to scratch their heads and say, that sounds a little bit like
proof of stake, right, where the people who hold the most Bitcoin control the outcomes of forks,
you know, and you might draw an analog to like a proof of stake system where that's kind of the
same thing. I think one of the key differences though with Bitcoin is you still have proof of
work. And so holding more coins doesn't necessarily mean that your position is growing larger on a
relative basis to everyone else just because you're holding more coins. If you want more coins,
you literally have to do more proof of work. You either have to put in real energy using
real world resources to mine more, or you have to make a good or service or product that other
people with their Bitcoin are purchasing. So like, there's really no way to like, you know, get more
free Bitcoin and grow your position relative to everyone else, even if you have a lion's share
of the Bitcoin. So that's point number one. Point number two, incentives matter. So yes, like, if
all of the whales, let's say like the top, I don't know, 100,000 holders of Bitcoin who probably
control like over 90% of the supply or something, right? If the top 100,000 holders of Bitcoin all
decided, you know, let's do XYZ and hard fork Bitcoin and roll down for this hard fork. Yes,
the new Bitcoin would probably be the hard fork. But incentives matter. They're not going to do
inflation Bitcoin, right? No one would vote for that because you're like, you're making a shit of
your money. So like, why would you, you know, why would you adopt a shit of your money when you
already have a lion's share of the better money? So even if, you know, there is kind of this
ability for all of the larger holders to collude, right? And again, like, I mean, that's a very loose
theoretical there because 100,000 people colluding is extremely unlikely. But like, you know,
even if they somehow could or did, like they still wouldn't make the system shittier, because that
would be shooting themselves in the foot. So the only thing that they would end up doing is
presumably trying to make the system better. So if there was a hard fork that like was very
clearly going to make Bitcoin better, and it had a wide consensus majority adoption of it,
then that's probably what would end up being new Bitcoin. I guess last thing I'll say on this is
because of the issuance curve with most of the coins being distributed very early on,
and the majority of them going towards these libertarian cyberpunk type of people. I think a
big thing that those large OG holders value is freedom of choice and freedom of a choice
when considering which version of Bitcoin you're running. So in other words, they value not making
hard forks because that forces users to update the versions they're running on their nodes, and they
don't want to set a precedent of forcing people to update to a version they might not want. So one
of the core principles of Bitcoin, which has been upheld up until this point, is backwards
compatibility, meaning you can run whatever version of Bitcoin you want. Now, you probably want to run
a slightly newer one just because the client, the code actually has gotten more secure and
more efficient, and so the newer version you run the better. But if you really, really, really
wanted to run an older version, you still could, and that's the point. So it's backwards compatible
all the way back. You can gerry reg a older version of a node if you really wanted to.
If you went into a coma and you woke up 10 years from now, the version of Bitcoin you had been
running before the coma would presumably still work, assuming this value of backwards compatibility
gets upheld. And I think it will because the majority of holders of Bitcoin continue to value
that, and the issuance has already been distributed almost entirely. There's only like 6% left of the
Bitcoin to be issued, meaning the people who have it kind of have it already, right? And there's
little bits of distribution still happening now. That's why we're at 58k because this is a nice
level that all the OGs want to distribute a little bit at, and that's fine. But by and large,
I think the large holders are still holding their positions, and the large holders still value a
lot of these core principles and will uphold them if there's ever some contentious fork that would
change them in the future. I'm glad you actually put in that clarification just for folks who may
draw the comparison to Proof of Stake because again, proof of stake is basically just fiat on
steroids. It's the creation of the Cantillon effect basically. It's like the closer you are to the
creation of money and the more the money you hold, the greater the benefit that you get from the
issuance of new units of that money. That is literally proof of stake is fiat on steroids.
I think it is really important. I appreciate that distinction. What is this next one because this
looks really cool? Yeah. So this is, I'd say, one of my proudest moments, this visualization.
I mean, this one is starting to get pretty out there in terms of having a deep understanding
of how Bitcoin works, but it's pretty. So even if you don't know what it means,
you might still enjoy watching it. Looks cool. Yeah.
So I'll explain what we're looking at here, and then I'll play it forward.
What we have here in the white line is effectively what you might think of as the difficulty.
So the difficulty grows over time. It gets harder and harder to mine Bitcoin over time,
and that would be indicated by this white line kind of shifting rightwards.
Now, what I've actually done in this visualization is instead of plotting the difficulty,
I plot, you can kind of think of it as like the inverse of the difficulty, and we call that the
target hash. So instead of plotting a difficulty which goes higher and higher, I'm actually plotting
a target hash which gets lower and lower. Now, this gets into kind of like the, you know,
real like nuts and bolts of how mining works. So maybe I'll just briefly explain that so that
the listeners can have a better understanding of this. But the way that mining works is you take
a block of data, a bunch of Bitcoin transactions, you stuff them in as much as you can, and then
you do something called hashing the block. So you hash it with a hashing function called
SHA-256. And what that does is it puts out a random number between zero and two raised to the power
of 256. Or if you want to represent that in hexadecimal 16 raised to the power of 64, okay,
so that's the number I'm showing here is that hexadecimal number. And if I was showing the full
number, there'd be 64 digits, but I'm just showing like the first 30 or so. But anyways,
when you hash a block, you output that number, right? So it's a number between zero and an
ungodly large number, okay? And for the block to be valid, you need to find a hash that is lower
than the target, okay? So let me say that again. You need to find a hash that's lower than the
target. So when this target gets smaller and smaller and smaller, it gets harder and harder
and harder to find a hash that's lower than that smaller, smaller target, right? And in this
visualization, all these orange dots are literally all the hashes that miners found that were lower
than this target hash in any given moment. So you can see the orange dots are to the right,
meaning they're lower than the white line, the target hash, okay? And you can see like most
of them are kind of budding up right against the white line because that's, you know, like you're
more likely to find a hash that's kind of close to the target than one that's like wicked, wicked
low, right? Super low. But then this green dotted line is the lowest hash ever found historically.
So if you do end up finding a hash that's super, super low, maybe it will be the lowest one that
anyone's ever found. And then, you know, you'll set a new record. So you can see historically,
you know, we keep on finding hashes that are lower and lower. And now that we kind of have an idea
of what this, you know, is representing, let me just play forward the movie. I'll kind of talk
over it. So this is the start, okay? The start is, you know, this white line is constant because
the difficulty hasn't gone up yet, right? This is when Bitcoin first started. There weren't very
many miners. So difficulty was, you know, it's kind of rewind back here set to one, okay? And all of,
let me say, difficulty set to one had a target hash, you know, that was this number in hexadecimal
here. So if you ever wanted to find a block, it had to be lower than this number, meaning it had to
have, you know, this many leading zeros and then have a next digit that's lower than F.
Hexadecimal, you count 0123456789, ABCDEF, right? It's a 16 digit numeric system.
So F is the highest number in hexadecimal. So anything that's lower than F would be a valid
hash at this kind of digit, right? So you can see, like, if we kind of just cycle through these
blocks that we found up until that point, you can see, like, they're all lower than F at this
digit, right? This one's D lower than F, eight lower than F, seven lower than F, right? So we're
finding a bunch of hashes that are lower than this target corresponding to a difficulty of one.
All right. Now, a bunch of miners start joining the network. Difficulty is increasing, okay? This
was kind of a moment where I think GPU mining turned on, so difficulty exploded. And as a result,
the target hash is continuously getting lower and lower, meaning we have to find block hashes
that are smaller and smaller and smaller, which are harder and harder to find, by the way, right?
So more proof of work. This continues on, you know, and as you'd expect, you know, we develop
ASIC mining, Bitcoin's price goes up, so there's a lot more incentive to mine it. And that leads to
a higher difficulty. And as a result, a lower hash, right? A lower target hash. And so we keep on
constraining the number of valid block hashes to a smaller and smaller subset, and making it more
and more difficult to mine Bitcoin blocks. Okay, so I mean, this is how the system works. You're
basically, you know, people say it's like a lottery, right? But what a lot of people don't
fully understand usually is it's not like it's one single hat that wins. It's any hash lower than
the target hash that wins. And whoever finds one that's lower first, they broadcast it, and they
win, you know, that next block reward. And that, you know, continues over and over until the next
difficulty adjustment, every 2016 blocks. And then this target hash gets changed accordingly,
it either goes up or goes down, depending on how quickly or slowly blocks are coming in.
And then again, you know, for that round of blocks, the next 2016, you have to find a block
hash lower than that new target, right? And on and on and on the system goes. And, you know,
as more and more hash rate joins, this target hash gets lower and lower, meaning you have to
do more proof of work to find valid blocks, the chain gets more secure. Some might think of that
as being more valuable, right? Because it literally means that it's harder to steal your money.
Because it gets more valuable, more people want to mine it, the chain gets more secure.
More people want to use it to store their money, you know, and then the cycle kind of
continues over and over until, in my opinion, it eats all the value in the world. So anyways,
this is where we're at now. We have a target hash with 19 leading zeros, which is crazy,
by the way. I mean, that's, you know, like this is, let's see, this would be the equivalent of, I
don't know if I'm going to be able to do this math, to the four. It's the equivalent of like
flipping a coin, you know, 30 something times getting heads in a row, something like that,
right? So it's just incredibly unlikely to ever find a valid hash if you're just, you know,
kind of doing it with pen and paper or, you know, doing the equivalent of like flipping a coin,
right? But because the miners that are trying to mine Bitcoin are, they're literally trying to hash
blocks, you know, quintillion times a second. They're making so many guesses
that they're actually able to find blocks, you know, on average, once every 10 minutes. So
this really just represents kind of like the overall proof of work that Bitcoin has done over time.
And as well as kind of like the smallest hash, right, the kind of maximal amount of proof of
work that any single miner has ever done over time as well. And that's what this green star is here.
This is the lowest hash ever found up until the point. It's like a huge outlier. Yeah, like massively
so. Yeah, yeah. So this one is actually, so I did an analysis and I wanted to see like which blocks
were the furthest distance away from the target hash, right? So the distance between the white line
and then the minimum at the time. And this one is the largest, the largest distance. So this one is
like a huge outlier. We've never had this extreme of a, you know, of a minimum lowest hash relative
to the target. I think the second place one was this one here. So this, you know, this distance
from here to here, right? And that one was pretty large as well. But yeah, but this one, you know,
this one was even bigger. And I actually have a bet with somebody that this will remain the lowest
block hash until block one million, block height one million. So we'll see, there's 100,000 sats
on the line for that, you know, for that bet. And block height one million, I think happens
sometime in 2027 or something like that. So we've got a while to go, but so far, so good.
So just to make sure I understand, so like, is each discrete point on the white line an individual
block? And then like, or like, just so for people looking at this, like, I know, because it's measuring
across time. So it's like, is was each one of those discrete points plotted along that line,
like one, one block basically, or, or how does, how should people look at that?
Yeah, so each. So the white line is the, you can think of it as just the target hash or the
difficulty, right? So you see how it kind of jumps every so often. That's every 2016 blocks,
it gets adjusted. Right. So that's literally the adjustment that you're seeing. And in this case,
it looks like it stayed pretty stable for that adjustment. But then again, it started adjusting.
The orange dots are the blocks that are mined. Oh, okay, the hashes of the blocks. And then the
green line is the lowest hash found historically up until, you know, that point in time.
And then just relative to whatever that target hash was, that's why you see so many trailing
blocks, because at that specific target hash, you had, you know, a spectrum like some that were,
as you said, budding right up against it. And then others that like they, they were, were lower
than like much lower than they needed to be. And then you've got that one massive outlier that's like,
yeah, way, way, way lower. Like, yeah, insanely so. Yep. Yep. And then no hashes to the left,
right? So, I mean, one important detail is like, you know, obviously, the majority of hashes
that the miners are doing are dots over here. Right. So like, we're not showing those dots
because we don't log all of those failed hashes, right? If we did,
well, it would be so big, right? Like relative to substantially more hashes over here than
they're over here, right? There's probably for every, let's see, if the hash rate is
600 X a hash, that means that we're pulling in 600 quadrillion hashes per second. And how many
seconds are there in 10 minutes? 10 times 10 600 times 600. So we're talking about 360 quintillion
guesses per 10 minutes. And of all of those guesses, typically one of them has a valid hash.
That's just like, it's such an unfathomably big number. Like we like, we like our brains aren't
even set up to process how large that number is. And then it's like, I mean, like, like,
and that's happening every 10 minutes. Yeah. Like a needle in a haystack the size of, you know,
the universe, like it's, it's nuts. Yeah, it's ridiculous. And the other thing, you know, just
to kind of, I mean, one, one, one, when people start learning about this, right, one of the things
that typically question that comes up is, you know, are we ever going to run out of, of, of space for
the target, right? Like, obviously, this target is getting lower and lower, right? Are we ever
going to get to the point where we run out of digits and it gets all the way to, you know, being
64 leading zeros? Okay, because this, this number here, again, we're not showing the full number,
we're just showing the beginning of it. Okay. But it's 64 digits. And so, you know, if we ever did
get to the kind of the maximal difficulty, that would be effectively having a target hash, where
you have, you know, 63 or 64 leading zeros, I mean, I guess, I guess, theoretically, you could have a
target hash of zero, where like the only valid hash is one that is zero. And that would be the
theoretical limit. But in order to get there, every, every digit that we go up, right, so right now,
we're at 19 leading zeros, when we get to 20 leading zeros, that is an, that is, it's not an
order of magnitude change, it's a change of 16 times. So because this is hexadecimal, we're not
counting by 10, we're counting by 16. So every leading zero, every additional leading zero is
actually an increase of 16 times in difficulty. Okay, so right now we're at like a 84 trillion
difficulty. In order for us to get another digit up and have 20 leading zeros, you know, we're
talking about, you know, well into the hundreds of trillions in difficulty, meaning hash rate would
have to, you know, double, triple quintuple just to get another leading zero. And so you can see,
like, very quickly, we start using up, you know, I'd say probably, I haven't done the math on this,
and I probably should, but I bet, you know, even within like 30 leading zeros, we would already
be using all the energy of like the entire solar system or something like that. So, you know,
the answer to that question is no, we will not run out of, you know, digits in our target hash,
we would literally have to be like a type three civilization using all the energy of our entire
galaxy, just to get up until like the, you know, like 40s of leading zeros, and then we'd still
have like 20 left, you know. Yeah, we've got a ways to go up that Kardashev scale before we need
to start worrying about that. But Satoshi made it, he made it future proof, you know, like,
that was another one of these kind of crazy things. It's like, you know, how could he had,
he had the fourth thought to say, you know what, I'm going to make this a 64 digit integer as opposed
to a 32, just in case, you know, like just in case this, it becomes the money of like the universe.
And it could function as such, you know, because of that.
It's wild, like to think about like he understood at that time, or at least hoped, maybe, I mean,
you know, he couldn't have been certain, but he at least hoped the way he planned for it was to be
money, like forever, like for as long as you know, like this is money that is is going to last many,
many, many, many, like unfathomably large number of generations. And, and that's incredible.
Again, without the need for us to go tinkering in there, without the need for us to change something
and to add tail emissions, or to have our, our cabal of central, you know, central planners
meeting to decide how much, you know, issuance there should be, it just works. And it'll just
keep working. And that's like kind of crazy. I feel like for people that are still, you know,
maybe have some doubts about Bitcoin. And they're saying, Oh, yeah, like this also, you know,
magic internet money sounds nice. But like, you know, like, how do you know it's, it's going to,
you know, it's going to last and it's going to be around. And it's not just some fad. It's like,
well, because it is literally built to last, it is built on the most solid foundation of
cryptography and proof of work that one can possibly imagine. And if you compare it to what
we have now in the fiat system, it's, it's not even comparable. It's like comparing a, you know,
a nuclear bomb to a bow and arrow, like it's just, it's so unbelievably more effective at doing what
it does. In this case, it's a lot more peaceful than a nuclear bomb, or a bow and arrow. But
like that's the level of difference that we're talking about. And once you see that, it's like,
God, it's insane that we've had to put up with this bullshit fiat money for so damn long that has
destroyed so many people. Like, like that, that's just nuts. Like it's nuts that, you know, but I
guess it was the best that we had for a while. I mean, I'd argue gold was better, but like,
you know, central planners don't like gold because much like Bitcoin, they, they cannot
control it like they can pieces of paper or digits in their central bank spreadsheet, which is, you
know, all most of our money is right now is just entries on a centralized ledger that they have
complete control over. And this is Bitcoin is just so far superior to that the mind it boggles, one
might say. It's not. Yeah. Yeah. Totally. I'm going to go ahead and I don't know how do I stop sharing?
That's a great question. There we go. I got it. I've got to say, so those were,
those were awesome. And again, like this, for anybody who is just listening to this and wants
to check out the visuals, go to go to the show notes and grab Wicked's YouTube. You can also see
him walk through these on my YouTube or on Noster or on rumble or where the fuck ever you want to
watch it. But you can watch it on Noster and not be, and not be tracked by, by big daddy, big brother.
But I really appreciate you walking through these because I think again,
seeing these and then hearing the explanation of it and hearing the history of it and looking at
this, this gives people such a great insight into like, not just what is Bitcoin's history,
you know, from a like a price or a holder perspective, but how does Bitcoin actually
work? Like this last one, especially that's like, that's really showing you how it works.
And I talk about conviction. It's like, when you think about just these unimaginably large
number of guesses that need to go into finding one or, you know, one potential right answer,
one answer that's lower, you know, it's staggering. And when all of that has to be backed by
computational proof of work, using energy from the real world, you really start to get the picture of,
Oh, wow. Now I understand why this is so damn secure. Now I understand why this is such an
unfuckable money, because you can't just, you know, twiddle your fingers and make a change.
You can't just rewrite the rules to suit yourself. It is completely unfuckable. And it's
also great because it happens to be unconfiscatable. And if you're have self custody of, you know,
your UTXOs, you are now so much further along that spectrum of sovereignty. You know, you can,
I don't think you can ever reach like full, complete absolute sovereignty. I think it's like,
it's like a spectrum. It's something we, we all get closer, much like Bitcoin's
issuance gets closer to 21 million, asymptotically, but we'll never fully hit it.
We can just get a little bit closer to sovereignty. And when seeing these visualizations, I think
really drills that home, like this is the best money. And here's why. So yeah, like Bravo on
these, because they're fucking cool. Thanks man. Yeah, thanks for letting me share them.
I love it man. And I'll get through them. Yeah, I mean, I think the, just in terms of conviction,
you know, like I said earlier, I started making these charts and animations mostly for my own
enjoyment. And part of that was to bolster my own conviction, right? Because I kind of jumped in,
you know, headfirst, once I got orange peeled, and you always have that, you know, devil on your
shoulders saying like, what did I just get myself into? And was that the right choice? And is this
really, you know, un-fuckable money? And I think, you know, like you, the more you learn about it,
just how it works, how to actually use it. And part of that, and my experience was,
you know, looking at the data and starting to visualize it. And the more conviction you get
and the stronger of a puddle or you become, just to kind of tie it back to the holidays. But yeah,
I mean, I think, you know, that's, that's, that's it man. And like, I hope, like I hope that these
animations can help people understand Bitcoin, people who haven't maybe taken that plunge
and adopted it yet. But like, you know, especially people who are new, who are just getting into it,
and people who have been around for a while, but maybe they didn't learn specifically how it
actually works. Like I just, I think it is such an interesting technology and money to understand
how it works. And yeah, I just want to, I just want to teach as many people about it as I can.
You're doing a good job so far. Wicked, is there anything else we didn't cover
that you wanted to touch on? Or any, if not any just final, final thoughts before we close out here?
Final thoughts. You know, so I guess, I don't have a visualization for it, but you know,
I always will talk about UTXL management. Yeah, that'd be great.
That'd be great. I mean, I don't know if we really want to get into it, but if you haven't
learned about UTXL management yet, please, please take the time to do it now, sooner rather than
later. Currently, the, you know, the fees to move around your Bitcoin are extremely low. And
for various reasons that we don't have to get into, I don't think they're going to stay that low
forever. And they actually might get pretty high in the future. And so if you don't take your UTXL
management seriously, right, if you don't keep track of like the different chunks of Bitcoin
that you have and make sure you don't have a bunch of small ones, then those small ones could become
permanently unspendable in the future. And you could effectively, you know, lose a bunch of Bitcoin
as a result. So this is something that's like, it's very important. It's actually imperative
to understand if you want to be a true Bitcoiner, if you are taking your Bitcoin into self custody,
you need to learn about UTXL management. And really, there's no better time to do that than now.
Well, the network is super cheap to use and super cheap to consolidate your smaller chunks of
Bitcoin into larger ones. I'm glad you brought that up because I do think it's such an important
point. And I mentioned earlier, like there's been a number of different exchanges that have
allowed you like as a nice feature, they claimed, Oh, automatically withdraw your daily, you know,
DCA into your cold storage. I don't like, I'm not going to tell you what to do with your money,
but I'd say that's a fucking stupid idea. Because that is literally the best way to, yeah,
the best idea in the world is a very fucking stupid idea. And I'm sure it was done with the
best intentions, but it is done not from a perspective of understanding UTXOs.
And then their defense, so in their defense, I think a lot of these exchanges were set up
during the time when a daily DCA produced a UTXO that was fairly sizable. And when fees were much
lower. And so, you know, you can imagine like back in the day when Bitcoin was like 1000 bucks,
right? If you did a $10 DCA, that's a million set UTXO right there, baby. So like you're already,
you know, it's like, and that's a $10 DCA. So, so in that case, like you're still kind of above
that threshold, which we like to talk about nowadays. But now a million set UTXO is like 600
bucks. So, you know, we're dealing with order of magnitude differences and prices. And it's
something that, you know, UTXO management as it relates to, you know, unspendable dust amounts,
right? It's something that kind of wasn't really thought about or really worried about until now,
because, you know, it's only been recently that Bitcoin has become so valuable. And that fees have
kind of spiked in the ways they have. And even during the laws, I mean, we still don't clear,
like we're not, we haven't seen one SAP review by for like over a year, it's fucking been crazy,
right? That's the longest we've ever gone. And we may never see one SAP review by ever again. So,
I mean, that right there means that the floor to spend your Bitcoin has more than gone up by,
you know, by more than 100%. Right. If we went up from a one SAP review by clearance, you know,
if you have to wait maybe a month or whatever for it to clear, that's fine. Now we've now we've kind
of floored at like bottomed out at like two SAP review by or maybe even three, you know,
it doesn't sound like a lot, but just on a relative basis, that's a 100% 200% increase.
And that's just with like a bunch of retards making order ordinals, you know,
imagine once we get some real adoption, excuse my French, but yeah, imagine once you get some
real adoption and, you know, and there's people who want to use Bitcoin for much more important,
you know, much higher value transactions and they're willing to pay as a result much higher fees.
So, you know, I think those days are are are common sooner than people would suspect.
I agree. And for anyone like just because we're we're bumping up on time here and I want to be
conscious of your scarce time because that's, you know, like Bitcoin, our time is very scarce. But
for anyone who is not super familiar with this, like basically on Bitcoin's base chain,
your transaction fees are not a function of the amount of satoshis you are sending. On Lightning,
that is the case on the Lightning network, it's like the larger the amount that you want to send,
the more you're probably going to pay in fees. But on Bitcoin's base chain, your fees are a function
of the complexity of your transaction complexity, meaning how many unspent transaction outputs
are going into your new transaction. So if you have 10 UTXOs that are all worth, you know,
point one Bitcoin, and you want to send one Bitcoin, you're not just sending one Bitcoin from this,
like slush fund, you're combining individual UTXOs to make however much you want to send.
So you can have a minimum of one that you can send, or as many others, but as many as you add
on to there, that's increasing complexity, fees are going to increase. So that's why if you have,
you know, you want to send one Bitcoin, but you've got a bunch of, you know, all you have are,
you know, 10,000 Satoshi UTXOs, that's going to be really, really, really expensive.
So did I do a good job of summarizing that in short form? Yeah, that was well said. And
then in that final example, where you have a bunch of 10,000 Satoshi UTXOs, it wasn't that long ago
when those would have become permanently unspent, or not permanently sorry,
because obviously they're spendable now again, but would have become temporarily unspendable.
So when the fee rate kind of jumped up last year in the hundreds of Sat's per V-Bite,
in that moment of time, you know, UTXOs that were in the tens of thousands of Sat's
literally couldn't be spent at that time, right? If you wanted to spend them, you would have paid
more in fees than they're worth. And so you actually end up losing Bitcoin by including
them in your transaction. So, you know, you effectively just toss them in the bin until,
you know, hopefully fees go back down. And luckily they did, right? And again, we're in this lull
where fees are low and now's a great time to learn about UTXO management and merge your UTXOs
together. So you have larger chunks and don't have to spend as many of them in the future.
But the next fee spike, I mean, you know, like, who knows, who knows where it will kind of go up
to and then where it will kind of level out again in the future. And I suspect it will kind of stir
its way up until it gets to a certain threshold. And anyone with smaller UTXOs, you know, during
that period of kind of the suddenly part of the adoption curve, they're going to get left behind
with unspendable dust. And they're going to see their balance on their wallet. It's going to say,
you have one whole Bitcoin, but it's in, you know, like a thousand different 10,000 set UTXOs
and they're going to try to spend it. And it's going to say, oh, that's going to cost you 1.1
Bitcoin in fees to spend all your one Bitcoin. So you literally can't even spend it at that point.
Yeah. So, yeah, and I think it's important to emphasize here, like,
UTXO management does not need like it's not a complicated thing. Like it sounds like, can you
give the TLDR like, okay, I have 10 UTXOs I want to consolidate. What does that mean to consolidate
them for somebody who's like, this sounds like, like more intense than I'm ready for?
Yeah. So I think the easiest way to think of it is with Bitcoin, you're your own bank. And so you
can think of your UTXOs as being like individual bills, right? So you might open your wallet and
see that you have like a $1 bill, $5 bill, you know, a few tens and 20s, right? And if you wanted to
get 100, if you wanted to get all $100 bills, you'd have to go to the bank, exchange your smaller
bills to get out $100 bill, right? Now with Bitcoin, you can do that yourself because you are your
own bank. So if you've got a bunch of small UTXOs, right, in this analogy, a bunch of small bills,
you can send them to yourself and receive back a big bill. So the easiest way to consolidate
your UTXOs and it's not, you know, I mean, it's not always advisable because there are trade-offs
with privacy. But if you're really worried about tiny UTXOs and like you don't really care about
privacy, the easiest way to consolidate them is to just send your entire balance to yourself. So
you get your own receive address, you send all of your balance to your own receive address, and
when you receive it, it will come in one big chunk, right? Now you'll just have like the equivalent
of like a whatever, a million dollar bill. Yeah, because you know, we're fucking balling out now.
We're fucking balling out now. But um, no, that's a great way to explain it though, because again,
I think people like, I mean, myself included before I like actually looked into UTXO management,
it was like, okay, well, this sounds like complicated. It's like, oh no, it's just like if you, if you
do have some potentially future dusty UTXOs, just literally send yourself, you know, generate a new
receive address and send yourself a transaction. Like it does not need to be complicated. And yes,
fair to bring up tradeoffs on privacy, which we could probably do a whole nother chat about that.
But like, it's generally a good idea if you have a lot of really tiny UTXOs to clean some of them
up. And you know, you can also use some, some mixing services, if you feel like doing that,
you know, before or after. So, you know, there are options for increasing your privacy. But you
know, if they're, if they're KYC coins anyway, mixing, what are you, what are you, what your grandpa,
you know, we do now, right? We set it up, we send it all to a FETI Mint and then we
would throw off in the FETI Mint. That's what you got in now. That's the ultimate privacy.
It really is like that. I mean, and honestly, like before that, just like swap it with some
liquid BTC swap it right back and that just went into a black box. And if you're a spook listening
to this, please disregard that last part. I lost all my Bitcoin anyway. I had a terrible boating
accident recently, but I tried to swap it on a fake liquid on swapper. So yeah,
shucks. I guess we'll start stacking from zero again. But, but hey, Wicked, I really appreciate
your time, man. This was super informative and interesting. I hope it was useful for folks listening
to give them a deeper dive into like, what the fuck is Bitcoin and how does it work? And
you made it look so beautiful. So I'll link all your stuff in the show notes, but anywhere else
you want to send people. Yeah, I mean, just touch me on Twitter. I go by Wicked. My handle is
W underscore S underscore Bitcoin. That's short for Wicked Smart Bitcoin, by the way, which is my
YouTube. But I, you know, I spend, I'd say an unhealthy amount of time on Twitter. So, you know,
if you want to participate in any of my posts, just shoot me a message or quote, retweet it,
and I'll follow you and then you can, you know, participate in the conversation.
Or if you have any cool ideas for animation, so I'm always all ears. So, you know, I like,
like input. So yeah, anyways, follow me there. And, and yeah, we gotta get you back.
I'm gonna get you back post, post and more on, on Noster again.
I know man, it's hard. I know. I am every time I go over there, I'm like, God damn it. This is,
it's taking too long to load. I can't post long videos. And then I just get frustrated and I go
back to Twitter. Okay, I got you covered on this. I'm gonna, I'll send you some stuff that is going
to make your workflow super fast because I upload all these as, you know, two hour long conversations
on Noster. There's some great tools that popped up, but I'll send you some stuff. And yeah,
I'm writing a little guide on this right now actually. So yeah, I'll give you an advanced draft.
But man, appreciate your time. Thanks so much. I'm looking forward to chatting again soon.
Yeah, man. Thanks for having me on.
And that's a wrap on this Bitcoin Talk episode of the Bitcoin podcast. If you are a Bitcoin only
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