This week we were joined by Bitcoin OGs Max Keiser and Tone Vays. Max has been publicly recommending people purchase Bitcoin since it was trading for $1, and Tone Vays has made a name for himself as a risk analyst, educator, and Bitcoin option trader. In this lively conversation, we spoke about price predictions, bitcoin ending poverty, Bitcoin hard-forks fading into oblivion, and what countries would adopt a Bitcoin standard first.
3:55 Microstrategy purchasing more Bitcoin
12:36 Forks of Bitcoin + death of Bitcoin cash
22:13 Which nation will adopt Bitcoin first?
31:07 Buying Bitcoin to pump stock prices
32:53 Sovereign debt and Cantillon effect
40:12 Bitcoin regulations
47:17 Central Bank Digital Currencies
53:27 Bitcoin’s energy usage
1:00:45 Bitcoin and eradicating poverty
1:07:21 Bitcoin price predictions
1:14:41 Cosmic perspectives on Bitcoin
1:18:33 Wrap up
All right, we are live here, episode 28 of Swan Signal Live. Welcome back everyone. We are here with two fantastic guests. I’m really excited for this one. It’s going to be a lot of fun. First, we’re going to talk a little bit about Swan and what we’re doing here at Swan. We have set up the best way to accumulate Bitcoin with automatic recurring buys. You can set your frequency weekly or monthly, daily is coming very soon. We stack that Bitcoin for you, you can automatically withdraw it or you can leave it in our very secure custody program.
We also are very committed to Bitcoin education, which is one of the reasons why we are running this show. We’re putting out content all the time and plans to keep doing that increasing the amount of educational content that we’re throwing out there. You can sign up for daily buys, it’s swanbitcoin.com/dailybuys. Get in that group, it should be coming by the end of this month. All right, let’s get into this one with Max Keiser, co-host of the Keiser Report on the station RT and, of course, on YouTube. And the hot new Orange Pill Podcast, his partner, Stacy Herbert, joins him on both of those shows. Max is an OG’s OG. He’s been involved with Bitcoin since 2009 when it cost a buck. Max, welcome to the show, man.
Hey, it’s great to be here especially with Tone Vays. My man, Tone.
And, of course, we’ve got Tone Vays, he’s a Bitcoin educator, content creator, also on YouTube. He also hosts and runs the Unconfiscatable Conferences. Also, been around for a long time. Welcome, Tone, and thanks for doing this, man.
Thanks man, and Max, thank you for speaking at these conferences with the next one it’s going to be in April. As a trader, Bitcoin did not give one dollar until 2011 so it could not have been 2009 for Max.
That was 2011, 2011 we came in at a dollar.
Okay, all right got you 2011, my bad. All right, well, let’s dive into this one. First, before we do actually remember I want to do this. Both of these guys have a Swan Force URL, this is our referral program, Swan Force. You can go to swanbitcoin.com/max to get $10 of free Bitcoin on Max’s URL. Swanbitcoin.com/tone to get $10 of free Bitcoin using Tone’s URL. Let’s see which one of these guys is more popular. They’re neck and neck on Twitter, both over a couple 100,000 followers, so let’s see who’s the most popular. By the end of Friday, we’ll play this up on Twitter for the next couple days and we’ll see who’s got the most referrals by the end of the day Friday. That should be fun.
Oh, yeah, and one more thing, at the top of the show, I wanted to make sure I congratulate you guys on the Orange Pill Podcast, Max. It’s been great. I’ve been listening to every episode. That music is incredible. It gets stuck in my head really easily. I’ve been singing it while I mow the yard and stuff.
The music is, in part, a collaboration with Sean Lennon, Sean Ono Lennon, and he’s been a fan of Keiser Report for many years, probably 10 years. He’s a friend of ours and he heard about the music from Julianne Moore, who put out the first, who put out the main composition. Then Sean came in and he added some vocals and some other stuff, and so it’s fantastic. Stacey, of course, is the producer and director of it. We’re happy with it so far, it’s really catching on.
It’s fantastic. It’s great stuff. All right. Let’s dive into the news that has Twitter a buzz from yesterday and today. Michael Saylor, he’s the CEO of MicroStrategy, who we’ve heard about plenty over the past six weeks or so. When he announced that MicroStrategy had moved its reserve asset in his treasury, corporate treasury, over to Bitcoin for the most part. They had bought over 21,000 Bitcoin in that first buy. Well, he announced yesterday that they’re doubling down and now they have accumulated over 38,000 Bitcoin. He said on Pumps Podcast that dropped this morning that this is not speculation, this is a deliberate decision to move to a Bitcoin standard for his company.
It’s important to note that Saylor has a controlling share of MicroStrategy. He controls 72% of the voting shares, I believe, which is pretty rare for a publicly traded company so there is a lot less friction for him to make this move than it would be other public companies. So we should make that note. But, Max, so what do you think of this? Is this another step toward a Bitcoin standard as Saylor put it?
Yeah, I think this ranks right up there with Paul Tudor Jones getting into Bitcoin. He got into Bitcoin a few months ago. He made some very great comments like he thinks Bitcoin is the fastest horse in the race when you compare it to gold. This is his re-emergent inflation play, and now we’ve got Michael Saylor with his announcement of MicroStrategy. They put what looks to be about a third of the market cap of this company now will be in Bitcoin. Here’s the takeaway for me, here I think is the most important thing to keep in mind is that for the last 10, 15, 20 years, stocks on the New York Stock Exchange and NASDAQ and around the world have been boosted by stock buybacks. Stock buybacks, that is the companies are borrowing money from the Fed or central banks at near 0% or 0%.
They buy back their own stock and it boosts the value of the price of the stock which boosts the executive stock options, no bigger in this than Apple. If you look at a chart of Apple shares outstanding, they just been crashing over 10, 15 years because they bought back all their stock. Now what Michaels Saylor is saying at MicroStrategy is that actually he’s taking a completely different approach and he could be marking the top in terms of stock buybacks as a strategy for corporations. This is an anti-stock buyback program, and as he said, he had a $500 million melting ice cube on his balance sheet. Referring to how the Money Printer Go Brrr is diluting the value of Fiat money. It’s everything we’ve been saying now for years.
He came to realize as the CEO of a company, that, that 500 million on the balance sheet was a liability in an environment of Money Printer Go Brrr, of just trillions and trillions being printed. He is saying that we need to protect ourselves from the Federal Reserve Bank, not go along with what they’re doing. We need to recognize the Fed as a rogue element in the economy, we need to protect ourselves, and the best way to do that is with Bitcoin. This is the anti-stock buyback, this is the first company that’s going to take this strategy. But think of all these companies now sitting on hundreds of billions and trillions of dollars worth of cash who are going to come to this realization that, that cash is a liability if they’re going to just keep printing their way.
They’ve said they want to get the 2% inflation, they say they want to get rid of this debt by printing more money. This is going to be the first of a wave of companies buying Bitcoin, so that’s a huge, huge element on the buy side. Even Barry Silbert, who’s like king of the Bitcoin, he had a remark that, “Wow, this looks serious. This is some serious business going on.” This is a huge, a huge story and it’s going to get bigger and bigger.
Tone, what do you think, man? This is pretty exciting news to me. Are you getting excited about this?
Yeah, absolutely, and I heard Max Keiser, I’ll just add to it that, well, the reason why a lot of companies were buying back their stock, it wasn’t just because to boost compensation for their senior management, but basically they had nothing better to do with the money. They felt that, that was the best move because if they can… Even if it raises the price of the stock, it doesn’t only benefit their own senior level management. It actually benefits everyone else that’s also holding the stock, so you can participate as well. They’re taking more stock off circulation and holding onto it themselves. It’s great that he even said the first time when they were buying a Bitcoin, they even said they thought about buying back the stock and they felt that this was the better move.
I think this is even more important than with Paul Tudor Jones announcing that they’re buying it because they’re speculators, they’re traders. These guys are not speculators, they’re not traders. They’re actually buying it for a long-term strategic play, and in addition, this is one step closer to them potentially offering to pay their people salaries in Bitcoin. They probably have a lot of consultants on opposite sides of the world and dealing with the banking system is a mess. I, basically, cursed out a chase, some phone representative because they blocked my account for sending $2,000 to a friend through their Zelle system. When they finally confirmed that it was my account, and this wasn’t a fake transaction, they now started asking me a bunch of personal questions about my friend. I know Max loves to pound JP Morgan, and this is what’s happening.
Sooner or later, they’re going to run into a lot of problem in paying consultants and paying people on the other side of the world, and they will be very happy to have plenty of Bitcoin. They’ll be happy to use for transactions once the price takes one more ladder step up, and we’re breaking new all-time highs. They’ll be more than happy to use that for their currency. This is a one step closer to actual Bitcoin adoption, not just short-term speculation. I think this is huge.
Yeah, if I can add something also, some of the comments that Michael Saylor said, he was referring actually to the hard forks and it goes back to the whole SegWit. Block size wars, of course, Tone and a few others were incredibly influential and communicating everything around that. What the CEO of MicroStrategy was saying is that the blockchain, the block size wars and the hard forks it proved to him the antifragility of Bitcoin. It proved to him that Bitcoin could fend off this type of attack. It’s, again, great news for Bitcoin, it’s bad news for those hard forks. Because as we go forward and more and more people buy Bitcoin and you find that hash rate keeps going up, security keeps going up, price keeps going up. That’s less available for anything else out there, terrible news for old coins in my view, great news for Bitcoin.
The competition is looking at this, and it’s not easy buying that much Bitcoin. It must have taken them months to do it, so they are way ahead of their competition.
Yeah, well, one other point, I guess, sticking on this. There is a question now whether this is a backdoor into an ETF. Because the SEC hasn’t approved an ETF. We’ve got company now, publicly listed company, with a third of the market cap is represented by Bitcoin, and so it is a quasi ETF into Bitcoin. I made a joke on Twitter earlier that buy Bitcoin, get a software company for free. It’s an interesting play, what if they just keep redeploying their software as a huge margin business? What if they keep putting their excess cash in a Bitcoin? It’s like you’re buying Bitcoin with a dividend or a yield. But I think that the response that I saw was that it could be tiptoeing around some of the regulations about this being a quasi ETF. At the moment, no, but I think that’s something, that’s a guardrail in the market that they probably have to be aware of.
Love it, yeah, so let’s take a quick detour and talk a little bit about that fork that you mentioned. I know Tone has done some looking into this, he was talking about it on his show yesterday, and I’m sure Max has something to weigh in on here. But Bitcoin cash, which I don’t usually pay attention to, but has popped up on the radar recently because they’re looking a probable hard fork coming in a couple of months that will result in a couple of coins. Of course, Bcash, hard forks, in a planned way, like twice a year, I think. But this will be one that potentially will result in another coin.
They’re going to add an infrastructure funding plan that is an 8% tax on all block rewards that go to the developers, and there’s contention about this which could result, like I said, in another coin coming in a couple months. Tone, what does this all mean, man, as it relates to Bitcoin and just for shake coins and forks in general?
As it related to Bitcoin, it just proves how important it is to be on the same page, and while a lot of Bitcoin coin developers argue with each other over which path to go, what keeps it together is the realization that quitting and going out and starting your own version of Bitcoin or your own money is not going to succeed. If anything, I’m surprised Bitcoin cash lasted as long as it did. I completely underestimated how long that side of the fork will last. I didn’t think it would last a year, let alone, three years. Now this is another nail in its coffin as it slowly becomes more and more irrelevant. This is what happens because when you set a precedent that if the going gets tough, just split and go your own way, you’re constantly forking your community and this is what all old coins are doing.
I know people like myself are demonized with the term Bitcoin maximalist, and I have a hat that says shift coin minimalist, because that’s what happens. If you fragment something into 1000 pieces, it doesn’t get stronger. I always felt that Bitcoin’s best shot to be the globally adopted money was going into 2014. Because that’s when everyone was a Bitcoiner, and everyone was trying to convince others to use Bitcoin, buy Bitcoin. But now we’ve been set back for four or five years now because everyone is just promoting whichever coin they happen to invest in, or whichever coin they’re inventing because there were just so many people inventing their own coins. Bcash is no different than any of the others, and hopefully, when it goes away, it’ll get back to normal. But this setback with Bitcoin.com promoting a fake Bitcoin, selling your fake Bitcoin, this is what turns people off.
It’s not the attitude of people that try to explain why a single standard is good, like myself and Jimmy Song, and many others. It’s this idea that, “Hey, buy into this nonsense,” and when it goes to zero, you say, “We were just experimenting, we didn’t know which one was going to win.” That’s what turns off people, and then they don’t want to come back.
What do you have to… anything to say Max, to add to that?
Yeah, absolutely. It’s a bit of a clown car with all these clowns pouring out, they never seem to stop, right? There’s just more and more clowns coming out of the clown car, and this is just more the subdivision of a clownish fork to begin with. It’s crazy that the message seems to be too the only way we can be more decentralized is to be more centralized, right? That’s the underlying message of all these sub forks. It’s like we’ve got to burn the village to save the village. It’s just irony. It’s just absurd. It’s an absurdist exercise and it, of course, I just look at the global hash rate. It’s something like 85% of it, of all coins combined is… I haven’t checked the numbers lately, but I believe 85% last time I checked was Bitcoin, that number is rising, that number is just going to continue to rise.
You could create a 10, 20, 30,000 of these things, doesn’t matter. The Bitcoin hash rate is going to continue to dominate, and Tone’s point about 2014, is a good point. I’m part of that original, almost at the very beginning, Bitcoin 2011 and I saw that emergence of those old coins. Litecoin and other coins that came around, 2014 was the year where we saw a lot of these coins. I, myself, was involved in some of these coins. But within a year or two, I realized that was a dead end. I just went through that process as everyone eventually does who is a mature person and can understand the big picture here. They reject everything but Bitcoin on the fact that nothing is going to get us to where we need to go other than Bitcoin and the market is showing us that.
I just look at the market, I come from Wall Street, the market’s telling me the dominance and hash rate, dominance and transactions, dominance and market cap and growing dominance. I just go, I go with that, I don’t need to overthink it. That’s what the market’s saying, that’s where we are, that’s where we’re headed. Roger made us a huge, Roger Ver, I think made a huge mistake in getting off the path, and no matter how many times he sub forks it, it’s just never going to work. Same thing with Craig and Satoshi special vision, never going work.
Also, one more quick thing. As far as Bitcoin’s dominance goes, I agree with Max that Bitcoin keeps excelling. But because it’s so easy to just copy code and release something that gets added to these market capitalists on CoinGecko and the others, that it’s difficult to judge what Bitcoin’s real dominance is. The way I started talking about it lately is, look, Bitcoin dominance versus everything else in crypto may continue to drop. It can drop to below 50% again. But what’s important is Bitcoin dominance versus every individual coin. Back in the day, Bcash was like 10% of Bitcoin by dominance. Litecoin was like 5, 7% of Bitcoin by dominance, now they’re less than 3%.
Ethereum recently rose against Bitcoin’s dominance, but that’s because everyone is just doing their DeFi and yield farming and that’s going to pass. Over time, even though Bitcoin’s overall dominance versus the field may not be that impressive, but people should notice that Bitcoin will continue to separate from every individual competitor where eventually every single old coin besides Bitcoin will be less than 3% of Bitcoin’s dominance, and then lower than 2% and then lower than 1%. It doesn’t matter if you have a million coins, each one less than 1% of Bitcoin’s dominance. Together they maybe 90% of crypto, but Bitcoin will be 99% of each of them individual.
Right, and just to add on to that, I’m making a distinction between market cap dominance and hash rate dominance. In the hash rate area, the Bitcoin dominance at 150 quintillion transactions per second or extra hash per second, that I think is last I checked was 85% of the market and growing. That’s the number, that’s the key number for me and that’s growing, and that attracts players like Michael Saylor at MicroStrategy who puts nearly half a billion dollars into it. That means all the metrics are self-reinforcing. The security goes up, the hash goes up, the price goes up. We’re in the sweet spot now. This trip from the current price to 20, 30, 40,000, once it gets rolling, it’s going to be pretty rapid. Because you got a lot of people now on the side-lines who are going to commit with half a billion or a billion at a clip.
We’re no longer in 2014, people are not putting in $20,000, I’m a whale. No, we’re talking about billionaires putting billions into this thing. That’s how we get to the rapid price appreciation, and everything else just becomes noise.
It’s amazing, and another note on the market cap is that it’s important to take into account liquidity, right? Most of these shit coins are completely illiquid and so why would you want to hold them if you can’t cash them out for anything else. If you take liquidity into account, then Bitcoin’s dominance is even higher well over 90%. If you look at the hash rate dominance and the liquidity adjusted dominance, Bitcoin is just the only game in town. That’s why at Swan, we’re Bitcoin only. There’s a lot of other Bitcoin only companies that are emerging and we just want to help people buy Bitcoin in the safest way possible and ignore the rest of the casino stuff that’s going on out there.
All right, I wanted to get back just briefly to the Michael Saylor stuff, I wanted to lead into talking about sovereign nations adopting Bitcoin at least for part of their treasury as a reserve asset. We have obviously plebs like me, then we have like massive investors like PTJ and Raoul Pal are very bullish, and then we have now MicroStrategy really leading the way and plowing a ton of money into Bitcoin as a reserve asset. When is the first nation state going to adopt Bitcoin as a reserve asset and maybe some speculation on which country that might be?
Well, we already have some nibbles. We’ve got Venezuela and Iran, apparently, each have some significant or some piece of the hash rate. You’ve got Belarus, I believe, is involved there. Those countries that have been the victims of a dollar censorship, because the US dollar has been weaponized, and the Swift system, which is the international transfer payment system is used as a weapon and it’s been used by the US against Iran. It’s been used against other countries, Russia. So these countries are very eager to get out of all those systems, and so a lot of are migrating toward Bitcoin. As far as Bitcoin and the nation state, I keep coming back to Nigeria. My understanding is that 30% of the country’s now basically leapfrogged into hyperbitcoinization. They’re using it as a unit of account.
They’re doing all this international trade, they’re buying cars from Japan, they’re using Bitcoin as the medium of exchange, and they’re completely fluent in Bitcoin. This is that whole learning curve in the US that people are hand wringing about and saying, “Oh, will we ever teach anybody how to use Bitcoin. We have to be good educators.” Well, the US is the last country that’s going to get it because we’re the Empire, and we’ve got the dollar, we’ve got the world’s reserve currency, we’ve got the most to lose if Bitcoin becomes hyperbitcoinization. A country like Nigeria, however, is like, you know what, we’re just going to leapfrog all that intermediary stuff. We’re going to go right to hyperbitcoinization, and so now that’ll proliferate out. I think Nigeria in 2020 and 2021 is going to emerge as the hotspot Bitcoin country in the world.
Love it, love it. Tone, what do you think about this man? Have you thought much about a world reserve or a nation state taking over a reserve asset as Bitcoin?
I think it’s going to take a little while. It’s really interesting what Max said as well and we all know this about Belarus, Venezuela, even Iran. They’re always talking about Bitcoin. I don’t know how much their government personnel are actually using Bitcoin. We’ve heard statements by the President of Belarus. But I know Belarus has a little bit of a civil unrest now because they don’t want that President in power, and we all know about the Venezuelan situation with their government. It’s very unfortunate that if these government entities are the first ones to start adopting Bitcoin, what does that mean for their population? Because the population clearly doesn’t want these leaders, and it’s this double-edged sword.
I’m hoping that the population of these countries adopts Bitcoin and that helps them put leaders in charge that they actually want, assuming that there’s no interference in their elections or their political structures. And it’s actually as close to or some remnants of a free market there. I think Iran gets a really unfair shake. I understand why Venezuela is a problem. I really wish US and Iran had much better relations. But those are the government entities. It’s interesting what Max said about Nigeria, and every time I look at Google trends for Bitcoin, Nigeria is always near the top, if not at the top. And yet I don’t know much that’s going on in Nigeria with Bitcoin. I was supposed to be traveling through Africa, but then COVID hit, and those travels got cut short. Though, Nigeria wasn’t on my list of countries to visit. It was going to be Kenya and some of the others.
But I really feel like going there just to see what’s actually going on, on the ground. As far as central bank’s plan into Bitcoin, I don’t see it yet because maybe some Caribbean islands will do it. But I think the smaller nations will do it and they’re going to do it very, very quietly. I can see Hong Kong doing it, I can see Singapore doing it, I can see somewhere like Liechtenstein, some of these other smaller nations, or maybe a place like Panama. Just these nation states that are really small that are somewhat under threat of being taken over by much bigger nations that surround them. Maybe even Costa Rica, they don’t have an army. But, hey, if they have enough Bitcoin, they can hire one if they need one. I think these countries that have been generally smarter to navigate the political landscape and Singapore kind of stands on its own.
I think Singapore is not a… no one is a threat to take over Singapore mostly because they have some of the best financial freedoms in the world, even though some of their other freedoms are definitely a little bit lacking. But they kept a really nice thing going and they’re pretty smart and they’re going to want to keep it going. I think it will be difficult for Switzerland, for example, to do it, because they already gave up their financial sovereignty when they rolled over to the US and gave off the numbered bank accounts. Having those leaders do the right thing and give their people more of financial freedom and a more stable reserve currency and more privacy for their citizens, I’m not expecting much from them. But I think it is coming probably by end of decade. It’ll probably be a little sooner than later than people think. I’d love to hear from Max to get some comments on what I just rambled on.
That sounds great. Max, give us some comments then we have a question from a viewer we’ll move to for Tone after that.
Sure. No, Tone gave a really good overview of what countries around the world and their involvement in nibbling at Bitcoin. My understanding is that Barbados is very far along and coming up with a Bitcoin policy for their central bank. Also, the interesting story with Venezuela, of course, they went with the Petro, which was their national crypto and we’ve seen this in a few different countries go through this. Now, they got to the point in the education curve where they abandoned that more or less, I don’t know if they’ve said that, but it seems to be that they’ve abandoned it. They said that we’re going to move more into Bitcoin, which makes perfect sense. It’s the same learning curve everyone goes through, and so there they are.
It is the government there are very shaky and they come to Bitcoin in these countries out of desperation. But so many times, whether it’s Iran, Venezuela, or other countries, they are the primary victims, or even Africa, of colonization or the US dollar-based Empire. Iran certainly suffered a major coup from the US back in the ’50s. Venezuela has been a client more or less of the US for decades in the oil patch, So now, for the first time, not only do individuals have the ability to be sovereign and separate the state from money, but so do sovereigns have the ability to be individually sovereign away from the Empire, that is the US dollar. I think the clock is ticking and the game of which country makes the first move and says, like MicroStrategy did, and says to central bank, we have 20% of our reserves in Bitcoin as a strategic reserve.
Now, that country will immediately jump to the head of the class. You see what happened to MicroStrategy stock, it jumped significantly, and I think you’re going to see more companies just add Bitcoin as a stock way to protect themselves from the Fed, and that will move their stock higher. It will be a self-feeding virtuous cycle. When does that hit the country, the sovereign stage? I think that we’ve got enough people nibbling around the edges here that I wouldn’t be surprised to see a country like Barbados make an announcement within the next 24 months.
Max, I tried, and this is supposed to be really quick. It’s funny that you mentioned how a MicroStrategy stock rose after they announced they bought Bitcoin the first time. I haven’t looked at it since they announced that they bought more Bitcoin, but I remember analyzing it about a week or two weeks after that announcement. Because the irony that happened is like the next day, Warren Buffett announced that he finally entered the gold market by buying Barrick Gold. I took a look at what happened to their respective stocks. While they jumped about the same on the day of the announcement, they both went up like 5%. MicroStrategy went up an additional 15% over the following week and a half while Barrick Gold just like sold off. There’s the difference between Warren Buffett buying into your company versus your company just buying Bitcoin.
Yeah, well, like has said, Bitcoin should be the fastest horse in the race. Buffett looks like he’s getting out of the dollar because he bought 5% in top five Japanese conglomerates, he announced this a couple of weeks ago. That’s a way to get out of the dollar. The dollar is at a very interesting inflection point in its history. It looks like the US dollar is about to lose world reserve currency status. That means that if you’re overexposed to the dollar, you’ve got to hedge that exposure, and so Buffett’s moving into Japan, he’s moving into Gold. MicroStrategy is picking the fastest horse in the race and saying, “We’re just going to go Bitcoin, because not only do we hedge ourselves against the Fiat money, money printer gone crazy at the Fed. But we actually got something that’s going to compete with gold and could go up 30, 40X from here.”
Yeah, absolutely, and Tone, we have a question in from YouTube. I want to work in here from Alan Johnston. New Zealand has been forced into sovereign debt. What do you see there and what is Kim Dotcom thinking? Do you know anything about the story?
I don’t know what Kim Dotcom’s thinking, I did spend a little bit of time with them so maybe I could ask them. But New Zealand’s been forced into sovereign debt. Look, does this means that they didn’t have any sovereign debt before? If they have sovereign debt, I’m sure it’s tiny compared to the rest of the world. Look, I think New Zealand will be okay. The best thing about New Zealand is they’re a somewhat self-sustained country. Sure, they import like everybody else, but they grow their own food, which is really, really important and it’s pretty damn clean food. That’s probably the most important thing they have. I think New Zealand will be okay, I think it’ll be fine. Like I’ve been saying for a long-time, national debt, I don’t think it matters.
Max and I have maybe debated this. I don’t think the US national debt matters. Most country’s national debt doesn’t matter. But here’s where national debt matters, when you’re a small country that ends up in debt to the US, the US then really does bad things to your country like that book, The Economic Hitman. Basically, they bring in their industry and things like that. Basically, the US has the military to cause you harm if you owe them money. But if you are US, if you are New Zealand, if you are these major countries that have global respect, no one is coming onto your land to collect on that debt. That debt will never be repaid, and everyone understands it’ll never be repaid. What you need to be worried about is the unfunded liabilities.
The US national debt is… I always forget the number, what was it? Like 25 trillion or something like that? But that’s not the number to be concerned with, it’s the 250 trillion or whatever that number is of unfunded liabilities. That’s the money that the US owes to its own people inside the border of the US that still has a lot of guns. What happens when that check bounces? When the firemen, the policemen, even though no one wants them to get a check anyway, at the moment, anyone that’s working for the government, half the population is working for the government. When those people see what’s happening to the dollar, that’s when you have a problem. No one is going to come to the US border and collect on their international debt, that’s not happening. I don’t think that number matters much.
All right, well, to follow up on that. The debt, as Paul Krugman at the New York Times says is owed to ourselves and we have the world reserve currency and we can run massive deficits. But what we’re seeing is that there is a limit to the deficits because the interest on these deficits is still an item on the income statement. You still have interest on the debt. It is forcing the US to get more aggressive in what we would call debt monetization. They issue the debt and then they print money to buy back their own debt. Now, quantitative easing, when it was introduced 20, 25 years ago, was supposed to be temporary measure. Otherwise, if it wasn’t a temporary measure, it would be outright debt monetization.
The exact same thing that the Economic Hitman would do down in South America and Latin America. These countries would monetize their own debt and they’d get into trouble and then he’d come down there and straighten it out, and the US would end up with some assets. The US is now the victim of its own globalist intentions, and it has to buy its own debt and there is a limit to how much of this debt you can buy yourself. The Federal Reserve balance sheet is now approaching. To just give you a global perspective, in Japan, they’re well over 100%. The Bank of Japan, they bought back more than 100% of Japan’s GDP in assets as on Japan’s balance sheet and it’s still deteriorating.
The US is at roughly, last I checked 40%, 45%. So they’ve got room to go to 100%. But there are limitations to when this becomes inflationary. When you start printing all that money, they claim that there’s this enormous bucket that they can fill with liquid by printing money to buy assets. But there comes a point when that bucket is full and then every dollar you print to demonetize debt just goes right into consumer price inflation. We’re starting to see that in the edges. Now, the consumer prices are starting to go up, people are noticing food prices and these prices, they’re going up. That’s the result of printing off debt monetization, and this faulty policy for too many years.
On one hand, Tone is correct in that it’s not… because the US has the military to defend the dollar and because it’s money we owed ourselves. But, on the other hand, there is a point when this does become it spills over into the real economy and starts to hurt people with real price inflation, and I think that’s the root cause of all of the social unrest in the US. Whether it’s Black Lives Matter or any of these groups. At the core of all them is one basic problem, the value of their money in America is turning to shit, and it’s making people broke, and it’s enriching the printers. There’s no bigger shit coin than the US dollar. The Justin Sun is a peanut compared to Jay Powell. Jay Powell is the ultimate shit coiner, and it’s destroying the economy.
It’s all those Cantillionaires, Max.
It’s the cantillionaires, exactly.
Yeah. For anyone who’s new here, I know that we got some new Swan members that like to come on and watch the show and learn about Bitcoin. The Cantillon Effect is the idea that Bitcoin or that money is printed by the Federal Reserve, and if you’re closer to the Federal Reserve, the more you benefit by getting lower interest rates on that money. The same effect holds true on the international level as well because the US dollar is the world’s reserve currency. US companies and the US government benefit from it before anyone else. They get access to lowest interest rates, and this leads to a whole bunch of inequality both domestically in terms of wage inequality, wealth inequality, but also inequality on terms of like national wealth levels.
This effect is what Max is alluding to here and is just a terrible cause of inequality in the world. Jay Powell is the world’s largest shit coiner, and we must not have any mercy about calling him out.
Not at all.
All right, well, let’s move on to the next topic at hand. Today there was a leaked set of rules that the EU will be instituting later this month or next month. The takeaway from the rules was that Europe intends to treat crypto the same as any other regulated financial instrument, going the same way the United States has been going with the announcements from the Office of the Comptroller of currency recently. That banks can legally custody Bitcoin in the United States. Just today as well Kraken announced that they are the first financial institution who will be a full bank charter and a crypto asset company. They’ll be chartered out of Wyoming. That’s pretty exciting. We’re seeing this new wave of regulatory attention to Bitcoin. Tone, we’ll start with you. What’s your take on what this means for Bitcoin and the emerging Bitcoin industry?
I haven’t dug deep into the new regulations statement. I haven’t done on my Bitcoin show in a while. But, look, Bitcoin itself doesn’t care about regulation and it’s good, thank God that it doesn’t. As long as you have an internet connection and I know our internet connection isn’t as free as it should be. But there are ways you can run it, you can do on the air routing, you can use floor. There are ways to make Bitcoin transactions no matter what. There’s ways to mine Bitcoin and there’s ways to run a node and people will continue to contribute to Bitcoin’s code. As far as Bitcoin is concerned, regulation is irrelevant. It’s like electricity care what the regulation on electricity is. We have it, it’s a new innovation and people will use electricity because it’s just better than candles.
Having said that, anytime the regulations around Bitcoin and making Bitcoin businesses are more streamlined and easier to comply with and doesn’t cost millions of dollars, that the barrier to entry is lowered. That is of course, a good thing. You want your barrier to entry to be as low as possible when it comes to working with a Bitcoin business. This is where I always end up in these weird debates where people call me a status. Look, I don’t like regulation as much as the next guy. But here’s where I differ, in that if you are soliciting money from other people, if you are creating security, if you are printing your own money and that’s the one that’s most debatable because people think that if the government can print money, why can’t I? If you are actually creating value out of thin air, then the regulation is not strong enough.
Now we can also debate whether the regulation is good or not. Look, no one likes the SEC. I think the SEC does a terrible job. However, the SEC is supposed to do a job, they just don’t do it very well. That’s more of the problem and I don’t know how to fix it. People smarter than me hopefully will fix the problem. I think this is good. I think lower regulation when it comes to entering the spaces is great. But I think the regulation on people that are taking other people’s money is not strict enough at the same time and that’s how everyone’s getting scammed.
Max, is this wave of regulations good for Bitcoin?
Yeah, it’s an interesting topic because to put this in a context, Bitcoin is really the first ever example at scale of separating money from the state. Therefore, in an environment like Bitcoin, where the state is completely divorced from the money, it just opens up this whole question about what exactly do we need government for at all? What exactly are these regulators doing at all? I think if Bitcoin succeeds and I know it will, we’ll get to that point where bureaucrats and civil servants will be pitching us their services and we will pay them accordingly. You’ll have, civil servants will say, that the SEC will say, “Hey, we got an idea where we can come up with this framework that will develop some consumer protections.” We’ll say, “Okay, we’ll give you a few bucks for that, civil servant bureaucrat.”
It’ll pay you like we would pay somebody who does this type of paperwork. The ability for these government agencies to cream off the top, to continue their effect, the industrial complex, the large S, the corruption, the Pentagon. The multi-trillion dollar Pentagon budget, the multi-trillion dollar government budget, it does jack shit. That’s all got to go away, that’s got to go away because we don’t need any of that anymore. Let’s all let it collapse and we’ll just rebuild it. There is a place for limited government to some degree there’s good place for some regulations are okay. But we got to rebuild it from scratch with this new paradigm that separates state from money because now that means that we can build the infrastructure out the governance structure for the infrastructure of our day to day lives.
In a way more prudently which is not just based on corruption, lobbying, voter fraud, election fraud, it’s just become a total mess. I think that’s beyond repair. You just got to let it collapse. I think we’re going to see it collapse. The economy is on the verge of a lot of headwinds. There’s a lot of problems here and so I think we got to welcome that and just say, it’ll be a chance to rebuild society and to rebuild our regulatory framework from the point of view of the people who now are in possession of stateless flagless hard money.
Wonderful, I agree completely. I think it’s a beautiful way to put it. It makes good sense. As somebody just said in the comments, Bitcoin equals true love. We fall in love with it because a beautiful, it explains just what’s going on here like that. In contrast to the countries that have decided to regulate crypto and are going down that route, we have countries like India which recently announced that they plan to introduce a lot of, ban it again, as they did in 2018. Both times they cite fraud as the reason for banning crypto. Alongside which is, they also announced it’s probably the actual reason they are planning to introduce their own digital currency. Last week on the show, we had Erik Townsend on, who is the host of the Macro Voices Podcast. He has for a long time been saying that Central Bank digital currencies or now Silicon Valley digital currencies, as he calls them will be the end of Bitcoin and will win over Bitcoin.
He wrote a book about this and published it in 2018. Still as well versed, but this is his stand still to this day. Tone let’s start with you on this one. What do you think about central bank digital currencies? Are they the last gasp of a failing system or are they a real threat to Bitcoin?
Can I just get a mic check real quick. I think I was using the wrong mic, hopefully it’s much better now. Sorry about that, guys. No, this is actually completely laughable. We’ve been talking about this as far back as the world crypto network back in 2014. I don’t understand what’s revolutionary about central bank digital currencies. Central Banks already have digital currencies. They’re called the dollar, the Euro, and Japanese Yen and all the rest because 99% of the US dollar is digital, not in physical form. Nothing will change. Well the US dollar is the only one that has a problem if they eliminate paper money because the paper US dollars are used all around the world. No other currency around the world matters in its paper form, none of them.
Not the Pound, not the Euro, none of them. They can go digital tomorrow and they probably should, but nothing will change. They don’t even need to waste time developing a new currency unless they want to somehow revalue their current currency. It’s just a waste of government resources and our tax dollars. All they have to do is stop printing paper money and say, “Hey, over the next 10 years, make sure you spend that paper money because after that, it’ll be good to, I don’t know, make a wallet out of it and that’s about it.” That’s all they have to do. That’s what a central bank digital cryptocurrency or digital currency is. It’s not going to have censorship resistance. It’s not going to have the unconfiscatibility property, and it’s not going to be finite in supply like gold or Bitcoin.
There’s nothing there. It already exists. It’s just a silly statement thinking that it will make some difference. The other thing I’m recently hearing is the Central Bank would actually hold people’s deposits instead of commercial banks. Again, I don’t understand how that is innovation. One of the things that as much as Max Keiser hates the private banking sector, one of the things that separated the United States, from its communist counterparts throughout the 20th century was capitalism and a big part of capitalism is private banks. If the central bank is now going to be holding people’s deposits, there’s no need for a commercial bank. There’s no need for capitalism in the banking sector and now we’re back to the Soviet model where the Bank of Moscow is holding everybody’s deposits. I don’t understand where the innovation is by holding your money with the central bank instead of private banking. As much as we hate private banks, it’s a better solution.
Right. Yeah, so I agree with everything Tone is saying there, to add some color to the discussion about private banks. A bank’s functionality is as a utility is fine and it is the backbone of capitalism and private property. The problem in the US however, is we’ve got, private banks have become unregulated kleptocrats. They are committing massive fraud, admittedly that they admit to and their business model is to keep 90 cents of every dollar they steal. That’s their admitted business model and that’s the big problem. But I want to throw something else onto the table. It’s a bigger picture thing that I’ve just been thinking about recently and that is that, when it comes to Bitcoin and you relate it to these other possible sovereign coins, country coins, etc. What they don’t understand and what I believe to be true is that Bitcoin to a large degree is predatory.
It’s the apex predator out there. What it’s feeding on is energy. Right now Bitcoin has got roughly, in a very rough estimate, let’s say it’s got 1% of World Energy is dedicated to Bitcoin. In my view, Bitcoin is a predator seeking to do essentially a 51% attack on the global energy supply. None of these projects are going to work without energy. None of these projects are going to survive in the era of the Godzilla of money, Bitcoin, gobbling up all the energy. I think, if you look at the hash rate, you look at that network, you look at the energy usage, you look at the way that it favors renewables over fossil fuels. That’s another huge trend that’s completely transformative to the global economy.
Those forces are like the forces of gravity, the forces of atomic energy. They are incredibly powerful forces. These sovereigns are stumbling in the dark and they think they’re going to come up with a centralized competing coin that looks awful a lot like, as Tone says, the exact model they have now and they’re going to get eviscerated. They’re going to get decapitated or decapitalized to be more precise. It’s not going to be pretty but no one’s going to stop them from making those stupid mistakes. I say step aside, watch them beat themselves up and hodel.
Yeah. Let’s dive a little bit more into the energy topic, Max. I know that this is something that you’re interested in and talk about quite a bit. I know that Sun Exchange is a sponsor of the Orange Pill Podcast, for instance and they’re doing very interesting work with Bitcoin and solar power. The question that will come in from people new to Bitcoin when they find out about proof of work and how much energy Bitcoin uses is simply that, that’s absolutely wasteful. What’s your response to people who bring that up to you, that kind of old fudd about energy?
Well, there’s the huge waste in energy. A flaring of gas projects, busted pipelines, fossil fuels is hugely wasteful. It’s hugely capital intensive. Bitcoin is moving the industry towards renewables. The cheapest energy in the world right now is solar and wind. This is what Bitcoin’s tapping into. It’s forcing all these fossil fuels… Look at Exxon and BP, their stocks are crashing because their model is crashing. The fossil fuel industry is crashing. Renewables are really on the upsurge and the Sun exchange, yeah, they sponsor the orange pill podcast, they’ve got a brilliant model, they install solar cells and they convert sunlight into Bitcoin and it goes right into your wallet, while you’re helping to supply energy to projects like schools, and factories and stuff like that.
It’s a brilliant project and it’s a great company. But that idea that Bitcoin is boiling the oceans or that it’s a waste of energies is diametrically wrong. It’s 180 degrees wrong. It’s wrong. Bitcoin is actually green, it’s a green industry, if you understand really the dynamics of the global energy grid and how this is moving away from fossil toward renewable, renewables the cheapest. Something like 90% of the profitability or higher of miners comes from energy costs. They are extremely sensitive as Marshall Long in Texas says, he’s in the energy arbitrage business. He’s not in the Bitcoin mining business. He’s in the energy arbitrage business. He’s got to get energy under three cents a kilowatt, two cents, under a penny a kilowatt. How does he do that? By bringing efficiencies and putting out the companies that are inefficiently destroying the environment because they’re fat, stupid, old, politically corrupt.
They’re all going to be disintermediated. We want agile, Bitcoin mining energy users to make the industry efficient, move over to renewable and actually in the case of the sun exchange, you’re monetizing sunlight. I mean, they’re paying like 10, 11% a year on their projects. These defy projects that offer five or 6% and you’re taking 100% risk, go to the sun exchange you’re getting nine, 10, 11 and 12% in some cases and you’re not taking that risk, he’s taking minimal risk. Why not just turn the sunlight into Bitcoin. Bitcoin is love. Bitcoin is freedom.
I love it. Tone do you have anything to say on the energy front?
Sure. Look, Bitcoin does use a lot of energy and that’s only going to get bigger. Is it a great thing? Well, it depends how you look at it, am I, for example, I know Max talked about the renewable energy versus either the current way we use it with fossil fuels. But there’s one in between, you have nuclear energy as well, which is ranked under green energy. Do I want to see countries popping up nuclear power plants all over the world to compete in mining Bitcoin? I honestly don’t. I don’t want to see another Fukushima. I don’t want to see another, Chernobyl. No, it’s not great. But we do have a free market. When people complain about Bitcoin uses too much energy, the best example I have as a counter argument, how much global energy is used to play video games? No one is complaining about that.
Then you compare how much good to society playing a video game brings versus how much good to society Bitcoin can bring. If the government’s really don’t like the fact that people are using energy to mine Bitcoin, great, give us money that you’re not going to steal from us. Allow us to make all kinds of transactions we like without these laws like FBAR and FATCA and scrutinizing every transaction. Like in my case, sending $2,000 to a friend and don’t print so much money. Run a stable currency because I don’t expect any of these things to happen. This is the life that the world has chosen, in that Bitcoin will continue to eat up more and more energy. Now, hopefully the Bitcoin ecosystem will evolve energy. I’m hoping that, because now some entrepreneur, if they find a cheaper way to get energy and use energy, they can directly profit from their invention by simply mining Bitcoin.
That’s a huge incentive to go and find the best ways for renewable energy uses. No, it’s not great but it’s the best system we have because proof of stake just doesn’t work. It’s not going to give us politically neutral, decentralized money. As long as the world benefits from politically neutral, decentralized money, it is what it is and we’re going to have to keep burning a ridiculous amount of energy until those that have controlled other people with money for millennium, learn a lesson. Then maybe the energy won’t have to be used as much.
Another great question for you up next. Go for it and then I’ve got a question for you.
Yeah, great points on that and people say what backs the dollar and according to Paul Krugman, again of the New York times, he says, the Pentagon or men with guns. The Pentagon, I read that just to keep the Pentagon fueled with gas for their tanks, jets, etc, is $250 million a day is what they spend at the gas station. It’s incredible. That’s to fuel the Pentagon to defend the dollar because the US foreign policy is, we want you to start using the dollar and if you don’t, we’re going to bomb and murder your people. That’s our foreign policy. That’s the way it’s been for decades. That’s all very inefficient. The idea of entrepreneurs coming up with ever more evolved, tech energy, technologies is so exciting and that’s the way it should be. We should be searching for these things and that’s really, really exciting.
We got a question from, I think it’s YouTube from Duarte about poverty in Bitcoin. Max, I’ll throw this one to you. How can Bitcoin end poverty?
By destroying the idea of poverty. Poverty is an idea. If you even have one Satoshi, or let’s say dollars with a Bitcoin, you’re not poverty. You don’t have poverty anymore because you now are going down the path of self sovereignty. Poverty is a state of mind. Bitcoin raises your consciousness to and it’s so accessible. Even the poorest people, look at in India for example, there’s 20,000 tons of gold are held by women in India. That’s their wealth and they are considered by the world index to be living on let’s say, certain number of dollars per day that would qualify them as “Poverty stricken” but they are in fact, they have gold, they have individual sovereignty to some degree and it’s a functioning society. The barrier to entry to escape poverty with Bitcoin is even less than it is for gold.
You can get immediately, get out of poverty by simply by saving and changing your mindset from spending and from everything that comes with that to saving. Again, look at Nigeria. Nigeria is considered right now to be a poor country yet they could very well in the next few years become one of the richest countries because they’re going to hyper Bitcoinization. How did that happen? How did all these “Poor people” become now the richest people in the world? Look at the people in Qatar, Qatar has the highest GDP per capita, the highest income per capita because of oil. Now oils in retreat. They could become the poorest people in the world. It’s just a matter of the money. Do you have hard money or do you have… Warren Buffett is poverty stricken, in my view because his entire mindset is based on Fiat money, less so now because he bought into gold.
But here’s a guy who is one of the richest men in the world, never leaves his house. He took one trip to China once with Bill Gates and he brought along a discount coupon from McDonald’s to get a cheap deal on a McDonald’s hamburger in China. That’s where his mind is at. He’s a poverty stricken guy. He thinks like a poor person. He’s just engulfed with paper. He’s never produced anything. He’s never done anything. He just gets money from the Fed and he buys strategic assets, and he sits there in the same house for 40 years. He says the same platitudes over and over again. Warren Buffett to me is a poor, is a very poor man because he has no life force within him.
He’s spiritually dead. Many people who say are poor, but they might have a little bit of Bitcoin and they’re vibrant. They’re spiritually connected. They’re in tune with the global consciousness. They’re rich, those people are rich. Let’s get out of this definition of who is rich and who is poor. If you have Bitcoin you are rich as fuck, if you are all Fiat money, you’re a poor bastard. That’s number one. Number two, the on ramp to Bitcoin is accessible to anybody with a fucking phone. You can get on the Bitcoin sovereignty ladder today, right now. Use swap Bitcoin, use coin floor in the UK, use all these on ramps. Get on the bus baby because it’s going to the heart of the spiritual matter. That’s where we’re going Tone, am I right?
Yeah, no, I completely agree. Bitcoin makes it easier than ever to hire someone from Nigeria. A lot like five years ago, I would have never thought that I would be getting consultants, someone from Australia, someone from South Africa all over the world. Bitcoin makes it so easy. That’s where it’s going. Now, there’s no excuse. It doesn’t, like even India that’s constantly trying to ban Bitcoin or any other country. There’s no excuse. If you have access to the internet, you can learn anything for free. You have YouTube, you have other resources, you can be a coder, probably the best remote job you can have. You can be a graphic designer, you can do a lot of useful stuff on web developer. All of those skills are at your fingertips, and you can now work from anywhere.
COVID is actually raising that trend because after COVID there’ll be more people working from home. You don’t need to live anywhere specifically and now you have a global currency that will appreciate in value over time, as long as you can get your hands on it so there’s no excuses. One of the stories that I say is, when I was still working on Wall Street. I remember commuting to and from work in, like early 2010’s. Bitcoin already existed, but I haven’t heard about it or I wasn’t really paying much attention to it. But I remember, what did I spend doing on my commute to work? It used to take me an hour to get to work. Taking can buses, taking ferries.
I would do one of two things. Either I would be sleeping on my commute, which means I’m resting my body or I would be reading blogs or reading something interesting. All around me, all I see is people playing what was like Candy Crush or another popular game that was coming out back then. That’s the problem. That’s what’s keeping you in poverty. That’s what’s keeping you at the horrible job that you hate, is that you’re spending your commute playing Candy Crush and not improving yourself to do something better if, unless you love your job but then again, most people don’t. This is what Bitcoin allows you to do. It gives anyone the freedom to work from anywhere and it’s amazing.
Sorry about that, guys. My dog was barking in the background. I went on mute.
For a second, I thought it was me.
Yeah, no it was me. Let’s talk a bit about price guys. Tone I’m going to kick it off with you, man. You are a trader. I know Max spent some time on Wall Street as well so let’s hear your predictions for price action in the next couple of years?
I’m bullish. I went bullish earlier this year. I had a rough 2019, most of the Bitcoin went up from the early 2019 from around 3000 all the way to 14,000. I was skeptical all the way up and then spent the rest of 2019 falling back about 50%. Just the market looked strange to me. I kept waiting for another low, felt like the bear market didn’t last long enough. People didn’t feel the pain they felt in the last bear market, but all that changed in March. Now granted COVID had a lot to do with it as all markets crashed. But that day, the day when Bitcoin crashed, the 3800 day. The next day, I became a long term bear. My two years and two months of being a bear turned into being a bull. Now I am expecting Bitcoin to challenge new highs, break new highs, I believe the next high, the next peak will be about 45,000.
I know everyone is waiting for Plan B’s stock, the flow model hitting 100,000 next year. I think that’s a little optimistic. I’m going to be a little bit more realistic on this one. I think 45K is a realistic target for Bitcoin. But I still think it’ll take a little bit longer than people think. It may even take until the next halving. The first week of this year, I wrote an article saying that I expected Bitcoin to spend the majority of the year below 10,000 and closing the year approximately at 10,000. We did spend the first six to seven months of the year below 10,000. For me the majority meant a little more than 50% closer to 70 but it looks like we were about 55% below 10K. I think we can still have a pullback to about 9K. But I think if you get a chance to buy Bitcoin below 10,000, you will only have one more chance to do it.
This is the last year to do it. If we fall back down and I’m not saying that we have to, I still think there is a greater than 50% chance ever slightly that we fall below 10K one more time. That would be the last time. Sometime next year I’m expecting the break of 20K and it looks bright. I think we’re good into the next halving and then I’m sure there’ll be another bear market because there always is one.
Yeah, so I look at Bitcoin and Bitcoin price, in a lot of ways I look at it like I look at gold. The thing about gold is that it’s not so much a reflection on what’s happening in the gold market, it’s more a reflection of what’s happening in the US dollar in the Fiat currency market. Because an ounce of gold is no matter what the dollar is doing, is still an ounce of gold. The dollar has been weak recently and gold made a new all time highs in the dollar and in all Fiat currencies around the world. Does that mean Gold’s going up or Fiat money is going down? Well it means that Fiat money is going down. An ounce of gold is still an ounce of gold. In Bitcoin it’s that 10 minute admission schedule, no matter what the price is, the coins come every 10 minutes no matter what.
That’s the equivalent of gold being priced in ounces. Bitcoin’s priced in the admission schedule, in the monetary policy, in the protocol itself everything that comes with it. The price of Bitcoin is also contingent to a large degree to the dollar. The correlation between gold and Bitcoin, I’m sorry, yeah, between gold and Bitcoin has never been higher than it is recently. These two things are now trading pari passu to use a Wall Street term, together and it’s reacting to the dollar, when the dollar is weak, gold and Bitcoin move higher. To understand that to have a price prediction or a forecast for Bitcoin and gold, you’re asking, “What’s your forecast for the US dollar?” The US dollar I think is, the DXY is the dollar index.
It’s hovering around some support and it’ll break that support and you’re going to see some new lows in that DXY, and then you’re going to see highs in Bitcoin and gold. Now that’s important because if you’re investing in Bitcoin, you’re going to have a portfolio. You’re going to have cash, stocks, bonds, property. The question is, how much do you allocate to Bitcoin? If you want to be like Warren Buffett and get out of the dollar, he went into Japan market and he went into gold mining stocks. As Bitcoiners we’d be like, “I want to get out of the dollar, I want more Bitcoin. That’s my way of getting out of the dollar.” What percentage of your portfolio should be in Bitcoin? That’s the question and everyone has a different answer to that. If you’ve been in it for a long time, Bitcoin is a big part of the portfolio simply because it went up by 1,000,000%.
There’s not much we can do about that. It’s not prudent to have as much Bitcoin, perhaps, as some of us in relation to the overall portfolio but that’s just a function of the fact that it went up by as much as it did. If I were being a Wall Street professional, I would advise myself to be more prudent and have not as much of a percentage in Bitcoin but I’ve learned to resist that temptation. Because ultimately, I believe there’s no top to the price of Bitcoin because when it comes to the US dollar there is no bottom.
Dollar like all paper money can go to zero, they all go to zero or lose 90 to 98% of their value. None of them last for 300 years, they all go to zero and Bitcoin and gold of course. During the Weimar Republic in Germany in the ’20s, gold went to a trillion Reichsmark to a trillion to one from a parity of one to one. It went from one to one, to a trillion to one during hyperinflation in the 1920’s in Germany. I think it was a trillion to one but it was very, very high. This could happen right now with the US dollar. It’s a shit currency. It’s going to zero. Where is Bitcoin going? It’s going a lot higher. How much did you buy? As much as you fucking can.
I hear you, man. I hear that. All right, well, Max seems to be in his typical cosmic mood right now. I want to finish things up with a question that he can hit out of the park and get real cosmic for us. We’re 50 years into this pure Fiat regime and we are witnessing the inevitable conclusion of that “Experiments” which is we’ve had many times throughout human history. We know what’s going to happen, this is the inevitable end and probably it started in 2008. We’re still seeing it play out right now. We have this non sovereign alternative now that we call Bitcoin. That’s been growing exponentially against that Fiat money. Max, can you paint us a picture, like a beautiful Renaissance painting of the future that you see for Bitcoin, our Bitcoin future?
Well, in the Renaissance, let’s talk about the Sistine Chapel, the masterpiece by Michelangelo. There are Satoshi’s on the ceiling and he’s handing a Bitcoin to humans. If you remember the scene as depicted by Michelangelo, and this was the moment that Satoshi entered our human consciousness. It took about 500 years for that to finally make it to the white paper and to make it into our wallets. But the message is clear. That Satoshi is God. Hello, is this on? Hello?
Well, I’m okay. I can build on this theme if you’d like.
Let’s do it.
There is a spiritual component to Bitcoin. I think it is a predator. I think that it’s voracious, it’s insatiable in its quest for more hashing power energy. It’s totally out of our control. It’s something that was assembled through bits and pieces like a Frankenstein monster. Frankenstein is put together by spare human parts from the graveyard and then the monster came out and it destroyed everything. Bitcoin is like, it was assembled from bits and pieces and then you put it together, add electricity like in Frankenstein when the lightning bolt came down and it’s like it’s alive. It’s alive like that scene in the movie where Dr. Frankenstein is saying, “It’s alive.”
This is Bitcoin, it’s alive and it’s stalking us. It’s saying, “Either understand what I am and start to live by my principles or you’re going to get rolled over by me.” The choice is yours, either live by Bitcoin or get destroyed by Bitcoin. It’s your choice. You have the choice. Choose wisely.
I love it. Tone, what’s a Bitcoin future look like to you? I’m sure you’ve thought about it over the years.
Man, look, it looks bright. It looks awesome to me. I think it’s great. I think the fact that what Max just described about Satoshi, no one’s ever going to know who he was. I think that’s the best storybook ending you can have. Yeah, we’ll look back on these times. It’s great. I can’t wait to see it 10 years from now. I think it’s going to be awesome. I’m really looking forward to the future, I think one more halving and Bitcoin will truly separate from everything that came before it or since. Yep.
Yep, I love it. It’s only 11 years old. It’s just absolutely crazy to think that it’s only 11 years old and just approaching that asymptote of adoption and price. I think you’re right Tone. It is a privilege to be here and be able to talk together like this and make shows like this and run companies and build companies. I think we will look back 10, 20 years from now and just be really proud and just happy or proud to share our work with our children and grandchildren and friends. I think we’ll drop it right there guys. I really appreciate your time. This was a ton of fun. It did not disappoint. I knew it would be a great time. Everyone, thanks for listening. Thanks for being here. You can grab the podcast version if you joined late. Like the audio at swansignalpodcast.com.
Of course, the YouTube channel subscribe and hit those notifications. We do this every Wednesday. We go live every once in a while just me and Brekkie and Reid and some of the guys from the Swan team and talk Bitcoin and Swan answer your questions. Turn on those notifications you’ll be able to watch and join in. Awesome job in the chat everyone today. It was super lively. I loved the questions coming in, the comments coming in. I love that we have this new broadcast set up now that we can put your questions and comments up on the screen. That was a ton of fun. All right, that’s it for today. Take care out there, swanbitcoin.com to stack. Take care.
Episode 8 –Andy Edstrom and Ansel Linder
Episode 9 –Rockstar Developer and Jeremy Rubin
Episode 10 – Bitcoin TINA and CK Snarks
Episode 11– Gigi and Knut Svanholm
Episode 12 –Adam Back and Preston Pysh
Episode 13 –Alex Gladstein and Matt Odell
Episode 14 –Robert Breedlove and Tuur Demeester
Episode 15 –Isaiah Jackson and Max Keiser
Episode 16 –Gigi and Udi Wertheimer
Episode 17 –Aleks Svetski and Jimmy Song
Episode 18 –Stephan Livera and Marty Bent
Episode 19 –Mark Moss and Ben Prentice
Episode 20 –Samson Mow and Parker Lewis
Episode 21–Lyn Alden and Jeff Booth
Episode 22– Robert Breedlove and Cory Klippsten
Episode 23 — Saifedean Ammous and George Gammon
Episode 24 –Jameson Lopp and Eric Martindale
Episode 25 –Preston Pysh and Andy Edstrom
Episode 26 –Lyn Alden and Nic Carter
Episode 27 — Erik Townsend and Yan Pritzker
This blog offers thoughts and opinions on Bitcoin from the Swan Bitcoin team and friends. Swan Bitcoin is the easiest way to buy Bitcoin using your bank account automatically every week or month, starting with as little as $10. Sign up or learn more here.