[00:00:00] Speaker A: Welcome to the Independence by Design podcast where we discuss what it means to be a business owner and ways to get unstuck from the day to day so we can design a business that gives us a life of independence.
If you've been following this podcast, you've heard me talk about bitcoin every now and then throughout the conversations.
And I was recently interviewed on Alan Bolio and Kim Clark's podcast. If you haven't caught. Kim Clark's a dear friend of mine and she's got a sales, marketing, strategic planning, predictable revenue coaching business. And her and her dad, Alan, that's her dad, is one of the twins from ITR Economics. They've got their own podcast called the Growth Playbook. And they decided to have me on their podcast where Alan was interviewing me about what is bitcoin? And I was so pumped because I'm a student. I just. Full disclosure, I have been learning about this intensely for the last probably a couple years. I've spent a decade understanding the economic system, understanding money, how valuations work, and it led me to just constantly see how broken the system is and how broken our money is. And it led me to bitcoin, honestly. And there's a lot of nuances around it. I'm still again a student, but it has been, it has been proven to me to be a crazy revolutionary technology which could effectively be perfect money. Which with Larry Leopard's going to become on the podcast soon. He wrote the book called Big Print when he says, fix the money, fix the world. So anyways, that's my passion behind this because if the base layer of money is broken and the base layer of money is in the process of being healed because we have sound money as an option now, it changes all valuation forecasts, it changes all asset prices. It's probably going to happen over time, but I think understanding how the base layer of money works and how bitcoin works is going to help us all make more decisions so I can be as an individual, a sovereign individual who controls my time and my wealth and it's not being stolen, stolen from debasement or central authority. And I was very excited because Alan is a very open minded person, so is Kim. So their curiosity is helping me learn as I'm answering questions about what I've learned and hopefully helping you, the audience and the people that are listening to this podcast that want an entry point, like what the hell is bitcoin? How does it factor into the rest of the world of cryptocurrencies and, you know, all the other stuff that we have going on. I hopefully did a decent job at unpacking what I have learned so far. So I hope you enjoy this podcast. If you wanted to learn more about business valuations, go check out my
[email protected] it's up on the newsletter tab and I've got a bunch of whiteboarding videos where I actually break down how valuations work. And I. And if you actually watch the owner's utility lens, where I'm talking about the discounted cash flow and forecasting out cash flow, you can see how Bitcoin factors into the buildup methodology and how to think about the risk of cash flow and the actual rates of return. So that's a lot, I know, but hopefully this is a good entry point for you to better understand some of the things that are going on out there as it relates to Bitcoin money and valuations.
Gold is a rock.
And so are we going to speculate on gold? Are we talking about leverage derivatives at 100 times leverage of ETFs, of gold? Are we talking about physical gold? Where are we storing?
I'm a contextual guy, so I have to know why are we doing this? And if I'm going to be placing my bets of my time, where am I going to spend it? And so if we nest Bitcoin inside of that, the way it. So to answer your question, Alan, how, in my words, it is. Okay, so when someone like. So when someone says. Because if I say I'm a bitcoin maxi, because that's what I am, I save all of my time and my money into Bitcoin, well, someone goes, oh, you're a crypto guy. I'm like, no, that would be like someone saying to you, Kim. Okay, well, you like gold? Oh, you're a metals galaxy.
Well, aluminum, copper, steel. It doesn't make any actual sense. And so there's bitcoin and then there's shitcoins.
And so there's a lot of other cryptocurrencies, just like there's a lot of other metals. But there's only one store of value, which is gold. Because it's on the periodic table, you can't make it. And only one and a half percent gets created, no matter how much technology we apply to it. The inflation's only 1 1/2 percent.
So until Bitcoin came around, which is a fixed supply of 21 million coins, each coin can be divided by 100 million satoshis, so it's divisible.
So that way we don't have to break off a piece of our house to use something. So the medium of exchange is, is fixed because, or is, is solved for, because you can each, you know, bitcoin a million satoshis. It's fixed supply. So no one is, no one is inflating it. It is audited every 10 minutes through game theory with the, with the bitcoin miners and the nodes. So everyone's incentivized. It's a trustless system. I don't have to trust Alan or Kim to audit the bitcoin. Everybody is incentivized every 10 minutes to audit the bitcoin to balance the balance sheet, and it's stacked on top. So the blockchain is every 10 minutes. You're stacking on all of those transactions, I think is like 216,000.
So you're, you're building this ledger that's open, that's privately held, like, as far as, like the cryptography, make sure that it's not. Kim paid Alan 10 bucks. But effectively it's just a ledger every 10 minutes that's balanced out and you can't inflate it. And so bitcoin is a fixed supply, like my daughter's saving bitcoin, but, like, the US Dollar is what goes up, not bitcoin, because the US Dollar is getting printed out of nothing.
[00:05:35] Speaker B: I, I, that's great. Let me just throw out a couple thoughts based on what you said, because I like what you just said. I think without using the word, we're both talking about scarcity of gold, scarcity of bitcoin, because it is a fixed amount. And so it's the scarcity of something that helps give its value as well as the demand. If it was sand on the shores, you know, it's a different item.
[00:06:00] Speaker A: My question for you is, isn't it that scarcity, which is actually what's helped reconcile the, the balance?
[00:06:07] Speaker B: Yeah. Oh, yeah.
I want to get to. All right, let's deal with that. I loved what you said about bitcoin versus shitcoin. I mean, most people don't talk about that. They think they're all the same. And they, they, they really do. And they go, what's the difference? And, you know, people in politics or in business or working in a garage are trying to make money off of this. And, and if you invest in the wrong medium, you're wasting your time to your point and your effort, and you're grossly disappointed in the end. So I think what you just said is a really key statement that if you could build upon why bitcoin versus the others would be fantastic because we're all inundated with all these other coins out there and cryptocurrency in general. And I love what you said about investing in metals versus gold. I mean, that's a great way to explain your position.
[00:07:00] Speaker A: Gold doesn't have a CEO, nor does bitcoin.
If your cryptocurrency has a CEO, it's a shitcoin.
And so I just want to make sure that someone's not inflating my money and stealing my time. And so why I landed on bitcoin is because it's a fixed supply. It's a trustless system that every single person or agency in the ecosystem is incentivized to balance it out and not inflate and not have the double spend. So like XRP or anything. Like, honestly, I don't even keep my brain.
I keep my brain from even like going down the ripple. XRP. I mean, there's literally like 15, 20, 100,000 of these. Because like Alan Coin, it's like, well, you're like, if it's not. So there's the proof of work and proof of stake. And I think. And I don't want to get. Again, this gets super geeky. And again, different than the theoretical, but on the technical side. And that's why threading this needle is hard. Proof of work means that everybody's incentivized to balance out that balance sheet every 10 minutes, regardless of no one owns it. So the miners get a reward for making sure it gets balanced out. They spend money and energy to balance it out. Well, they don't want that to be corrupted because then all of their efforts would go to waste. I don't want to have to store my value. It's like bitcoin is a trustless fixed supply balance sheet that is reconciled every 10 minutes. No CEO, no one controls it. It was a code in the network effects of like, now what is, I think, started to happen, Alan, over the last three years. I mean, because I was not involved in this at all, 18, 24 months ago, at all. And then I just was like, I spent 11 years looking at the problem in the face. I'm like, oh my God, look at this thing. And I think the network effects are taking on where you. When you said at the beginning of this conversation, it's the perception of value.
So now that you. I mean, it's like, now that you or I have it, we could actually store our value. And I think bitcoin has landed as a store of value, as a protection and hedge against the debasement of the dollar and all global currencies.
And you can see, I mean, gold's price is manipulated with all the paper gold. But the bitcoin becomes a store of value. I think first to avoid the debasement. Well, all these other cryptocurrencies, Kim, could be this. I mean, there's a CEO of Ripple and XRP and they can issue more and then give it to their cronies.
So like there's this whole, like, is it a company versus is it a bear asset that has no. It's a fixed supply with no CEO.
[00:09:35] Speaker B: Okay, so. So Ryan, we got our forecast of a Great Depression coming in the2030s.
Okay. You know that we've talked about that.
[00:09:43] Speaker A: Yep, yep. And I'm a subscriber to it.
[00:09:44] Speaker B: Yep. And thank you. And there's no charge for that subscription.
[00:09:50] Speaker A: I'm just your cheerleader, Alan.
Okay.
[00:09:54] Speaker B: So when we get to the2030s, the stock market is going to fall, housing values are going to fall, you know, not, not 90% like some people claim. But, you know, we're going to see the value of things go down and the value of the dollar will be going down because of things that we have done and that sort of thing. Your forecast, because, you know, I was into forecasting. What's your forecast going to be for the value of the bitcoin in that time period? Because for somebody my age, that's the ultimate test. Right.
I want my life's work to be historic savings, not really saving worth, net worth to be protected. Tell me whether I should feel good or not.
[00:10:31] Speaker A: Let's. And I actually have a question for you too is on this is.
So when I think about like if I'm trying to anticipate the future, which I'm not, I don't have a crystal ball. But like what I do and you've helped me me a lot with this is what are the knowns people are getting older, a lot of them.
We also I have a $2 trillion deficit and most of our spending is. Can't be cut. So like what are we going to have is more and more spending because the demographics, demographics are, are leading a lot of that.
And so the only way to get out of this 120% whatever or more debt to GDP and the deficit is to cut spending, which we can't really or increase productivity while all the people are retiring that we tax.
Like you've helped me kind of frame up this problem so My question for you, and I haven't figured. I really can't. I wrestle with this a lot and I do have my specific, specific thoughts about bitcoin's price. But will the market crash or are we going to inflate ourselves into oblivion?
Because, like, if we're going to, like, we have to keep printing to keep everything going and there's like, what, a 95% correlation with the demographics and the working population and the deficit.
So are we actually going to debase the dollar so much that then actually the price of bitcoin will go up in proportion? Like get M2 money supply growth worldwide and liquidity. Because 75% of the global economy is debt refinancing at this point. And every time we do that, we debase the dollar even more.
So where that leads to, Alan, is I've been seeing. And so whether it's Black Rock now or Michael Sailor or these big, you know, these big treasury companies, we can talk about some of those if you want. Why they're doing this. I think it's really important for our business community to talk about why they're doing this. But they're.
There's a high correlation with the debasement and the price of bitcoin and the. As it grows as a, as a. From 2% of world assets to even 5. Like Fidelity and BlackRock both have this. It's. It's now like 10 million a coin by 2035. I'm sorry, by like by 2040 or something like that. So there's all these different, you know, speculations. But a lot of it has to do with correlated with the liquidity and the growth of the money supply so people can hedge against it. So I don't like. And back to your. My question too is like, is, does the market and everything crash or does it crash up because no one can afford anything.
[00:13:04] Speaker B: When you say market, tell me what defines stock market? Housing market.
[00:13:08] Speaker A: Yeah, so like when I look at like the stock market and the housing market, the whole economy, like 75% of the economy is based on asset inflation, refinancing. So we actually can't let the market go down and the pension fund. So like, you have everything that has to be stuck there because, you know, all the boomers, you got HELOCs. And like I got my neighbor across the street. I mean, like, he wants to retire. I'm like, dude, no one's going to buy your pos house for 9, $900,000 and it's at 9% or whatever. So like all of A sudden it's a. But he can't afford to sell it at that because he needs his retirement. He needs his fake 400 grand in equity.
[00:13:48] Speaker B: Yeah.
[00:13:48] Speaker A: So I feel like this, like there, there's this propping up that like if we let that crash. And maybe that's your answer or thoughts is like it actually we do let it crash.
[00:13:56] Speaker B: It's not, it's not that we. Well, for one thing, I wonder if you and your neighbor are close with that attitude. But.
[00:14:05] Speaker A: It'S like, I mean like, honestly like it's, it needs like 300 grand worth of work. It's a split level with oak. It's got blinds from the 80s that are as old as me. And like he wants 800 grand for it.
[00:14:15] Speaker B: Okay, I think the, a fundamental thought in there.
And again you, you, you cover a lot of ground and you have, you bring all sorts of thoughts to my mind. I try to sort them out as, as we go along.
I heard you say, do we let it? And the answer is we can't stop it. Government cannot stop the decline in the market and in prices and in homes.
The market cannot stop it. And we the people cannot stop it because of what will have happened to.
Because of inflation and higher interest rates, our ability to consume. And if the consumer can. Has to slow down and stop in a lot of areas consuming, then then the whole thing begins to fall apart. It's fragile and the picture you pointed is to its fragility.
But businesses and consumers have to slow in their spending. Then the thing unravels and it's not a blessed thing the government can do about it because of the debt that you talked about.
And if all of a sudden we just sell more and more debt, well, more and more of anything you put out in the marketplace, it loses its value. If you just dump the world full of sugar, sugar loses its value. Dump the world. US Treasuries loses its value.
[00:15:25] Speaker A: Add to the scarcity.
[00:15:26] Speaker B: Yes. And so the interest rates go up, the value of the dollar goes down. And that creates an inflation cycle along with the higher interest rates coming from inflation. So even more interest rate rise which stops economic activity or slows it down dramatically. Doesn't stop it.
It's a machine that is not governed. It is a machine that depends upon the different facets to work. And when a piece breaks, then that sucker has no choice but to see market decline.
[00:15:54] Speaker A: I, I track you. And so I, I got back here the U. S. The history of U.S. or the history of the U.S. money and banking in the or the history of money and banking in the U.S. by Rothbard. And like I've, I've read like so like when I like have studied the different cycles over the last 500 years seems to me that like every time the government prints and the government prints and they, they have yield curve control whether they we have a central bank or not. Like that's a whole nother conversation for like a five hour day of like should we even have a central bank? But like the, the the government prints they borrow at lower costs while inflating all of the assets to melt away their debt. This so the yield curve control and actual letting inflation go is the only way out to get to the GDP debt to GDP back to 60% or so.
So they have to melt it all away in proportion. But therefore it's just stealing all of our wealth through asset inflation.
[00:16:55] Speaker B: I think the amount of.
Again you always bring up 13 questions when I listen to you for 13 seconds because you're deep, you got lots of stuff going on.
In the past we have seen government print money. They don't actually print it but increase the money supply. M2 deflated control P just with a computer now.
And so as they have increased the money supply it helps spending and as it helps spending it can eventually lead to inflation and everything else that we just talked about.
There comes a point though where, and I believe this to be true and I'm not the only one where the bond market says to the United States, you guys are nuts. The amount of debt that you have and the fiscal irresponsibility that you're showing, maybe want to just invest in Switzerland and in Australia, Canada, you know, places that don't have the spend problem that you guys do. So again it's a demand issue on a global basis on the bond market that will determine the viability of the plan you put forth. If the bond market says I don't care what you guys say, this thing is a house of cards, then it's a game over situation because the demand.
[00:18:08] Speaker A: Has drag up track you 100%. And that's why I now look at the 10 year treasury because that is the indication of the demand of sovereign wealth nations and banks and everything. So like some of the things that I've been following is that yes the demand people are, that's why like there was the decoupling and even if Jay Powell reduces the rates we still go up because it's proof that it's the house of cards. But that's where the yield curve control comes in. The government starts borrowing at lower rates and then everyone else has to borrow at higher rates.
And the Federal Reserve is actually the one filling that bucket of that hole through the debasement so that inflation then is what's melting out the debt to gdp. So like what happened with the Denmark glider, the Dutch glider or the British pound all the way down to then like 19 with, you know, with the, with FDR and then 71 with Nixon. Like all these different things are just how to deal with what you're talking about from what I've gathered.
And then when you get to the long term part of this, it's so like if, if it collapses, I just. Okay, maybe this is where the clear answer. I don't think they're going to let it collapse. I don't think all of the old people in Congress and the Senate are going to let everyone's stock market portfolio and their housing collapse. They're going to print and save the pension funds who are $4 trillion exposed to PE because of the low interest rates for 15 years. And so I just, maybe it's a, it's kind of back to. I don't think they're going to. And how this then, like how this reflects scarce assets is when that happens. Bitcoin and gold and other scarce assets like housing and on riverfront properties and lakes and all this stuff that's scarce will become more valuable because of the demand or because of the inflation of the money supply.
[00:19:53] Speaker B: Okay, so I think I answered the question. Is there you think bitcoin and gold in the 2000 and 30s becomes more valuable?
[00:20:00] Speaker A: Scarce assets will be, I think scarce assets.
[00:20:02] Speaker B: But yeah, but we're on a bitcoin discussion.
[00:20:06] Speaker A: I think that in Bitcoin's correlation with M2 money supply globally is like. You should check out the chart. I mean it's like it's a 13 week leg. I mean you can, it's crazy. This is one chart that, I mean I've got and I've got a lot of your charts, Allen, in here. So global M2 money supply and bitcoin.
So like, like I'm literally watching the M2 money supply growth. It's one of the big indicators of, of, of price.
[00:20:39] Speaker B: And then time on.
[00:20:40] Speaker A: It, it's 12 weeks. Because the way that I've. Again, one of the people I follow a lot is Lynn Alden. She wrote a book called Broken Money. A lot of the concepts I've been talking about comes from her and she talks about there's the base money supply, which is why we didn't have runaway 2008 because they didn't get into the banks. And then there's the broad money supply which is the fractional banking reserves. And so that they want to get it into the banks and you know, expand that money supply which then increases asset price allocation or asset prices.
And then we have this debt refinance cycle that's Every like about 45 months and it just, and we're just refinancing debt because the, the economy is no longer based on cash flow, it's based on debt refinancing. And Therefore as the M2 money supply growth grows, there's a correlation with Bitcoin and with gold.
Gold price is way more manipulative because of like JP Morgan and all the other big, you know, derivatives markets. And so it's this price, it's this that I look at.
And then like the stablecoin bill, my way of our, of like understanding what just happened with the genius act. It's like they got $9 trillion refinance in the Texas next 12 months. The 10 year treasury is not, you know, giving any give because of all the things we just talked about, like the whole world's going screw you us, you're just going to debase us. And so then they can't and Jay Powell is not reducing it. So then the stablecoin, the way I've been articulating it to my business clients is like, okay, let's say your senior lender doesn't want to give you any more money because they're overexposed to you. You've got your line of credit, you got your SBA loan and maybe a conventional loan. So you say okay, well fine, I'm going to go literally crowdsource another $9 million in debt and not tell the people that crowdsource that I've got a senior position.
So it's like it just like this house of cards. But the stable coins by inflating the dollar supply and the pressure release going to people in Nicaragua or Venezuela or Ecuador who have more volatile currencies than us. They'll gladly take something that's an 8% debasement a year compared to their 30. So we'll have this pressure release. Bitcoin is now a global reserve asset that's neutral to get away from the dollar and all the crap that we've been pulling on with people for the last hundred years. So the global M2 money supply grows is the thing that I look at because it's like, well the whole world as liquidity In China and people are printing in quotes money.
It's flowing into a store of value that's fixed. And the thing that bitcoin fixes that gold, that gold had a challenge with is gold was centralized because you can't. I mean, if you and I want to do commerce, like I'm not going to bring a cart of gold, then the cost of like actually validating it. So Bitcoin, every 10 minutes someone moved, I think it was $9 billion last week for 5Buc. Across the world, it's validated every 10 minutes. And so you have the divisibility, the scarcity, the transportation over time and the transport and the store of value over space. I'm sorry, over space and then over time with the scarcity.
So there's this gravitational pull towards bitcoin, a black hole for most financial assets where all of the other cryptocurrencies have CEOs and people are gamifying it. And it's the grift and it's all the.
It's not a bear asset.
[00:23:57] Speaker B: You're making a great case and I love it. And I think you're right about the money supply, global money supply, trying to fight off the depression and that sort of stuff. So on your chart, this is probably an aside. Do you have that going back further in time than 23.
[00:24:11] Speaker A: I can find it because I think that's important too. And there is one that's out there. And I think what I've gathered from the people that I follow closely, which Lynn Alden, Michael Saylor, Safedim and some of the people that I went to the bitcoin conference in veg in. In May. And so like these are.
There's a lot of the data that comes out there. Lynn Alden, when she presented at the bitcoin conference, she has like almost like a half a million views now. It's like an 18 minute. It's like so data driven. Like, you would probably geek out on the amount of data that she has because, like, and she is not even. I would say that she.
Why I'm bringing this up is lots of data because she has been talking about this stuff for like 15 years. And as bitcoin adoption curve happens, there becomes tighter correlations towards certain things.
[00:25:02] Speaker B: Sure, sure.
[00:25:03] Speaker A: So I think. But I think it's important to, to look at the whole picture and the trends. Like you always like rates, exchange rate.
[00:25:11] Speaker B: Yeah, yeah, exactly. All right, so let me ask you from the negative side.
You got seniors, you know, you got, you got people who are in their 60s. 70s and 80s.
There. There's a tendency to not heavily invest in that which you don't understand, but that can be explained away.
But if I was a skeptic, I would say to you, okay, what happens if.
And one of those what happens if? Would be what happens if there is a massive turn away from Bitcoin because countries decide it is too dangerous to their central banking system, that is that it represents a threat to their control over their economic system. How would you answer that for me?
[00:25:58] Speaker A: I think it's the perfect. It's one of the great questions and it's exact. The answer is exactly why I freaking love.
Doesn't matter what the other countries say. China tried to shut off all the miners. You know what happened? More popped up all over. It's like it's completely decentralized. It's a hydra. You cut off one hand head and more come up. And I think the, the question that I follow because I'm the same way. It's like, how can this be screwed up? Because I don't want to. I don't want to be wrong at all. It's like so. And I think there is the technical complications where I even like really smart friends of mine. I'll cover this real quick, Alan. Really, really smart friends, man. I don't get it. And I'm like, oh my God. You get like, you get the weighted average cost of capital and the risk free rate, you get all these things, but somehow this is just like this void in your head. And Michael Saylor says it's on a need to know basis. Like I need to know because I need to like, I needed to like make sure I could retire too. And I need to be able to like spend my time growing wealth that preserves it. So the.
If a central bank.
So if the United States said we're going to throw $9 trillion of fake money printing at this to hijack the miners, which there is a decentralized. I mean like kind of like the Internet. You can't shut it down as long as there's servers going.
It's the hydra. You can't shut it down and think about Bitcoin like that. It's decentralized. You can't shut it down as long as someone's got a phone or a server with the whole blockchain on it. It's like so the US government could print $9 trillion to coerce.
Call it 10,000 miners across the world say, hey, we're going to give you, Alan, a billion trillion dollars to allow double entry Spending on the, on the ledger. So they hijacked 10,000 out of the 20,000. They call it the fork, the 51% attack. They say, okay, we got 51% of the miners and we spent $9 trillion. We killed everybody's wealth in the process.
We had the miners who spend computation power to reconcile the balance sheet. So we convinced them to spend all their money and their time to hijack the ledger.
So now me as a bitcoiner, let's say you were the government and you did that.
I would say, I don't like that ledger anymore. I'm going to go to the original source with Kim.
So now you literally the US government just pissed away $9 trillion because people are like, now they go, well it's corrupt now.
So then you have a copy, like the copy of the code.
And everybody else just goes over to the. And there's been, I think it's been six hard forks in bitcoin. And everybody just goes, no thanks. It would be. And like the example that I've heard that I think is super useful would be like Wikipedia. If you did a copy paste to all Wikipedia's website. And Kim, that's in the cloud where like you would then have another server with Wikipedia and then all of a sudden you have the exact same copy but then none of the backlinks are there. Everyone is like, so all the updates are happening on the other one and then just all of a sudden no one decides to go to it.
So like it doesn't matter what presidents, countries or anybody says about bitcoin, which is why I love it. It's the best way to be sovereign I've ever found. Because it's like it's my money and I actually have it memorized, the 12 words. And I could walk across a border say sorry, I forgot my, forgot my code. It's mine.
[00:29:27] Speaker B: Okay, so instead of $9 trillion to coerce it and try to box it and then ruin it and that sort of stuff, what about inundation of regulation? Yeah, and putting in a straight jacket instead of trying to buy off 10,000 miners.
[00:29:44] Speaker A: I'll be honest. And that is has been a big concern of mine because the way to actually suffocate it would be to shut off the on the operands, which is like Coinbase or Robin Hood. And so if the government said you can no longer do this and we're going to tax you 90% and like you like there. If there's no way to log on to a computer to do that. And I mean Property rights. Like what happens is, is like the way I like I thought a lot about this over the last couple years. It's like if the government does that, we're no longer a free country at all. And you're like, the country would be cementing the fact that they're a dictatorship into the ground and that there is no property rights. I mean right there I've got the executive order from FDR where they took everybody's gold. Like so I'm like, remember, never forget. So like there is that risk.
But then that should be an individual question of like how do you feel about the fact that the government won't allow you to own something?
[00:30:42] Speaker B: Yeah, well, on the broader scope you're absolutely right. But I think a lot of anti bitcoin people wouldn't think that far.
And there have been proposals in the past with farmland because of some work I've done. We won't go there, but I've done some farm value work in the past. It's been a fun life where the government has thought about taxing farmers on the annual increase in the value of their land. Not waiting for a sale, not waiting for a transaction.
So who's to say something like that couldn't occur in the bitcoin world where you have to file forms and any increase in the value you are paying a tax on. I mean to me that's a danger. Whether it's likely or not, I don't know. But that is certainly. I don't want to present this today as a risk less environment.
[00:31:28] Speaker A: Oh no, no, you're, you're right there. I mean those are, those are real risks. And like I, where I go with the real risk like that, Alan, is like, what do I think about my country in that situation? And while that's happening, they're probably doing that because it's actually the safe haven while they steal my wealth from the printing.
And so then I sit there and go, okay, well what's a bigger risk holding a fiat bag of crap and the Costco at 55 PE ratio or like farmland or gold or bitcoin. And then the only way the government. So that's where like the way that the government, from what I've gathered, fixes their situation is yield curve control, which is they force their citizens into certain capital. You know, they don't want capital flight. They want them to have certain assets and they're going to tax the hell out of them while they inflate the money supply to get back to 60%.
That's GDP. Which for me is like living in that country, like that sucks.
So like what's more risky? I guess. And I, I don't know the answer to that question. Back to like how you phrase up to like what should I do? How should I be spending my time and how should I be storing my wealth? This is like when I say that I'm a bitcoin maxi. It's. I've done the thought process to land on this as the best alternative to other things.
There's like Lynn Alden like talks about portfolio allocation. I've got gold and silver and hard assets and real estate and stuff like that. But like I don't have bonds right now because anything underneath 8% is getting inflated away. So I think it's really important what you just said that this is not risk free and there are technical thoughts or challenges to this. I mean it's not mature for like I can't go to Starbucks and quickly spend the bitcoin. Right. So that's why it's stored. A store of value has become the primary mechanism right now to avoid the debasement.
[00:33:13] Speaker B: Okay, two more quick risks just to have people thinking about them and to hear your answer.
Besides the regulation or the taxing on the increase in value, what about the risk of. And this may have occurred. I seems like I've read about it but I can't quote cases of fraud theft that the vault is not as secure as everybody thinks it is.
[00:33:39] Speaker A: The fraud and the risk have to do with people like Sam Bankman Fried who had a company FTX that said they had the bitcoin and they didn't.
And that's where just like all banks I owe 20 times leverage. I mean you don't have any actual money. So like it was the derivatives and the risk and the leverage that became the issue. There is like when we say risk of fraud it is cryptography and there's a whole conversation about cryptography. But like it, it's the balance sheet balances out every 10 minutes.
[00:34:18] Speaker B: And so like I'm sorry just. But this goes to your. Stay away from any organization that has a CEO.
[00:34:25] Speaker A: Yeah, I mean like there is, yeah. You can't have fraud in Bitcoin. Like so like I actually know a family.
Yeah. I mean you can't, I mean like you can't have double spending. It's mathematically impossible. No one controls it. Everyone through game theory, through their own self interest is keeping it alive and, and audited.
No one is in control.
And there are people I know Alan back to like I mean, there's a lot of, you know, scams where, like, I had someone that I know. Last week, it got a text message. Coinbase wants you to validate your user id. The person freaking called them that person, the caller convinced them to turn their bitcoin into XRP and then put it on this wallet. I'm like, what the f. You just like, where was the red flag in your head of like, maybe I shouldn't do this? And so, like, it was the person, another human being, that convinced them to move their bitcoin. Yeah.
[00:35:26] Speaker B: So in the two minutes that. Ryan, this has been great. I've loved every moment of this because you're always fun to talk to and listen to and learn from. We got about two minutes left. So how do people who don't have bitcoin get started into buying and just buying it and deciding how much they can invest in it? What are the first steps?
[00:35:46] Speaker A: What I did, and I think that's the best way is through my own journey.
Coinbase and Robinhood, there are exchanges where. And that's what FTX was. And they went out of business. But Coinbase and Robinhood are some of the most reputable exchanges where they have bitcoin that you can go on. And that's where, like, you can go on the app and you can buy it. And I think it's back to noting the risk, Alan. That is very important to understand. So Coinbase, like right now I dollar cost average 100 bucks a day.
And it's just so I sync up with Coinbase, they validate my id, they like. I mean, it's. They sync up my US bank account and then I'm buying a hundred bucks a day. So then that bitcoin that when I log on to my app and I see, like, how much I have, let's say it's 25 grand. Okay, well, that's Coinbase on their comp. Because Coinbase is a company on their balance sheet, it's a liability that they owe me that bitcoin at that price. Sure. So it's actually more the bitcoin at that. Like the amount of satoshis or bitcoin. And then the price will fluctuate.
It's. They. There's an ism that if it's not on your hard wallet, it's not your bitcoin. And that's true because Coinbase owes it to me. Well, that's what happened with Sam Bankman fried like, he was lying to people.
So the easiest way, like, and I said this to One of my best friends last year and I screenshotted the price. It was 55 grand, not to say who's counting? I said, you should buy one.
And it was in August or September of last year. And he was like, well, I don't know how to do this in the cold water, blah, blah, blah. All these complications. That said, I said, jake, if you, the, the exposure to Coinbase is worth the risk of the price exposure at this moment.
So to just go on to Robinhood or Coinbase and just start buying it, we, we have risk that the company owes it to you. And then at a later date you can understand how to, you know, how to understand the wallets and like the store and stuff, like, but like take it one step at a time to your point.
[00:37:46] Speaker B: Okay. So at today's prices, which are extremely high in my opinion, I don't know how much higher they're going to go. Would you advise a friend of yours at today's prices to begin that investment because you have enough confidence it'll continue to go up?
[00:38:02] Speaker A: Yeah, this is not financial advice. And I, like, I, no, it's not financial.
[00:38:07] Speaker B: It's at a bar, over a glass of wine.
[00:38:09] Speaker A: Yeah.
I have people that I love, like my mom and my dad and like, like people around all my friends. Like, I believe that the price is volatile, but it's up. And the, I believe that Bitcoin is a new risk free rate at, it's about a 30, 20 to 30% compounded annual growth rate. And if you want to, like, if you need money today, the volatility is rough. Right. So like, like, don't say like. And that's why you put it in a money market account if you're going to have a down payment for a house or something like that. But for me, where I'm looking at this is, it's four years every, you know, it smooths out over four, over four years. The compound annual growth rate of Bitcoin over the last 16 years has been 60%. I'm not expecting 60% with the adoption of, you know, sovereign nations and Treasuries, I think that treasury reserve companies, I think that it'll normalize to around 20 to 30%.
So at that price, like, I mean I, I think 115 grand is cheap if it's going, based on the correlations to M2 money supply growth. What I think is going to happen with the economies and the countries. So, but like, this is a learning journey. I've got, you know, thousands of hours into this and you know, I think bitcoin is on a need to know basis where, like, if your life is fine, like, I have a dear friend who's worth seven million bucks. He could give two shits about this.
He's like, I'm fine.
And, like, maybe he handles the 50 downturn in the market and he needs 300 grand a year, and he's like, like, it's just not worth it to him.
And so I think it becomes, like, what's worth it to you? And how is it going so far?
[00:39:45] Speaker B: That makes a lot of sense. And. And I think part of the allure, maybe that's not the right word, is it's trendy. So people want to know, be part of this. This trend that seems to have so much upside potential.
And your friend has gotten to the point where he could care less about the trend. He doesn't wear the right sneakers. He doesn't care.
[00:40:04] Speaker A: You know, he wears New Balances.
[00:40:11] Speaker B: That's. That's great that this has been so amazing. Ryan.
[00:40:16] Speaker A: I've had a lot of fun. I appreciate the questions, and it helps me learn as well. Alan. Like, I'm just. I'm just trying to figure this stuff out too.
[00:40:23] Speaker B: So if you're the Fed chair, you're.
President Trump decides you're the next Fed chair, and you decide to take the job because you've whatever reason do you begin the process of changing the US to cryptocurrency, not to compete against Bitcoin. Bitcoin, but because of the efficiencies of cryptocurrency versus paper currency.
[00:40:42] Speaker A: Here's my answer to that is. I think it's.
I've thought a lot about this, and my straight answer is I don't think that the Federal Reserve should exist.
So that becomes a challenging issue. However, we're here.
So, like, I'm also a realist going, like, we can't just flip everything over to Bitcoin tomorrow as the world reserve currency. We can't. The catastrophe would be so indescribable that this has. There has to be a plan to switch over to a reserve currency that's neutral and fixed and is able to allow countries to not manipulate each other and to have fair trade. And so I don't know what the answer is. Like, it's almost like the Trojan horse where if I became the Fed chair, it's like the libertarian who becomes president, oh, I'm supposed to hate this, but now I'm it. So I don't know.
[00:41:34] Speaker B: Well, your statement about the reserve currency for the world and it's not being able to be manipulated and everything is a really powerful statement. And the thought behind that is fantastic. And what it can do.
I think that's a great place to leave it, because what Kim said about our timeline. But that's a really intriguing thought, and I really enjoyed how you didn't say we can just do this. I mean, that's a process that would take some time and a lot of education, and you probably would need the baby boomers to be dead, in my opinion.
[00:42:08] Speaker A: I hope to be around when that happens, so hopefully I will be part of some of the transition. But, like, I think it's, you know, like, the reason that you wouldn't flip the whole thing on its head right now is because who would call what fair? All of a sudden we're gonna steal all your money and give it to the people that. I mean, they like it. There has to be a transition period.
[00:42:23] Speaker B: Yep. Excellent. Hey, I've enjoyed this a lot, and I can't thank you enough, Ryan, for bracing us with your time today and your knowledge.
[00:42:32] Speaker A: Really fun.
[00:42:34] Speaker C: All right, so, dad, Ryan, question for you both. Is bitcoin more of a technological innovation or an economic revolution from your perspectives?
[00:42:46] Speaker B: Can I go first, Ryan?
[00:42:48] Speaker A: Absolutely.
[00:42:49] Speaker B: Okay. I wouldn't use the word revolution so much as evolution, because I was thinking about that, Kim, because, I mean, what we've used for currency has changed through time, and that's been as technology has changed. So I think the. This is just a.
Another evolution, not a revolution, because revolution is violent, but this is evolution.
[00:43:12] Speaker A: I'm sure there's been some. Some fats over history that have to do with money, but, you know, it's true.
I would say that I'll actually piggyback of what Alan said, and I'm pulling off of Lynn Alden, her book Broken Money, where she describes that at any point when money was used, whether it was rocks or shells or different beads or gold or silver, technology is what allowed someone else to inflate the money supply.
And that was like the arbitrage over time.
And so gold always ended up becoming the soundest money because it was like 1 1/2% supply growth no matter what kind of technology came out. And so bitcoin's technology and how it's structured keeps it sound and no inflation.
So I would also agree with Alan saying it's an evolution of different forms of money over time. And now because of servers all across the world, we now have the ability to have something like bitcoin.
[00:44:25] Speaker B: Yeah, I agree. You know, you made me think something pretty for me. Interesting. You know, you just may get edited out this purely dystopian at some point in time, you know, if what's his name, the end of the world is just the beginning, you know, is the best.
[00:44:41] Speaker A: Peter Zan. Yeah, yeah.
[00:44:43] Speaker B: Well we go back to is gold and silver precious metals again because there won't be the electricity for the, you know, the bitcoin and there won't be the printing.
[00:44:51] Speaker A: Totally dystopian.
[00:44:52] Speaker B: Like.
[00:44:53] Speaker A: Yeah, we have no computers right. Ever anywhere in the world.
[00:44:56] Speaker B: Yeah. So you would go back to copper, nickel tools and, and labor as being your, your tools, which is to your point, the lack of technology brings us back to the foundation, which is kind of cool. And it's not going to happen, I don't think. But it's interesting to think if it could happen.
The economy doesn't stop. The fundamentals of the economy are still in place. It's just a different measure of transfer of wealth.
[00:45:20] Speaker A: Well, I think what's fascinating is that bitcoin allows like I'm not going to, you know, Kim, you and I do collaborative work together. I'm not going to cart you a cart of gold and then you're going to melt it down and check it to see if it's gold. So that's where the, you know, banks came into being. And then they were like, hey, maybe we should like loan against this and fractional banks. And next thing you know, you get the centralization. And now bitcoin allows for that hardness and the lack of the inflation because it's fixed. But you and I can transport that value across the Internet as long as the Internet is still up and running.
[00:45:54] Speaker B: I'm going to make a note though. Buy gold in case the more depressed I get, the more gold I should buy in case it all does fall apart.
[00:46:00] Speaker A: I've got some gold too, Alan.
Gold, guns and bourbon.
Yeah, I was telling, I was telling Kim. It's. It's my second version of my 2030 plan. Right. This is like. It's a different type of insurance policy.
[00:46:17] Speaker B: Hey, I'm moving to Kim's house because her place is.
[00:46:21] Speaker A: I know, right?
Gardens. I mean I gotta drop pin. I know where she lives too. It's just a little bit of a.
[00:46:27] Speaker B: Hike we can bring. Nevermind. I shouldn't say the last part about horses. So let's go on.
[00:46:33] Speaker C: All right, so next question for you both is do you see bitcoin that this kind of plays into it a little bit as a permanent fixture the global economy Or a transitional phase towards something else.
[00:46:45] Speaker B: I went first last time. If you want to go first this time, Ryan.
[00:46:50] Speaker A: I don't know, is probably the best way to answer that.
The network effect, I think, has been visible. The fact that we're here talking about bitcoin means that there's been some sort of escape velocity. And as people agree on a exchange of value and the store of value, it's very difficult for someone. Like, I mean, the best example I was able to, I heard was if you were to copy Wikipedia and like literally copy the entire, the entire website and put it somewhere else, you could still have that. But like all this, but the, the current Wikipedia with all the backlinks and the evolution of it is just more valuable because of all of the connections. And so like, I think there could be something that is like bitcoin. I mean, like, the technology is available, so you would just have to have everyone adopt it. And now everybody's already using it and it's the hardest form of digital current or digital money. So I.
And then if you go as, okay, what could be next? I mean, like, I don't know. I mean, like, honestly, the only reason I think, well, not the only reason. One of the reasons I would see the adoption slow down is because the US stops spending more money than they earn and then we pay down our debt and like we have very, very pain of austerity for 15 years. I don't know, because like, then our money would be worth something.
[00:48:14] Speaker C: Dad, what are your thoughts?
[00:48:16] Speaker B: I think I'll be dead by the time something else comes around, so it'll be fine.
[00:48:22] Speaker A: Opt to know to that question.
That's fantastic. That's definitely pleading the fifth.
That's great.
[00:48:32] Speaker B: All right, to my retirement. Now I have a countdown clock to my actuarial time of death.
[00:48:38] Speaker A: So Alan, I've got up here. You ever seen that poster? My life in weeks.
[00:48:44] Speaker B: No.
[00:48:45] Speaker A: So I've given myself to 90 years old and every box is a week. And I check off the boxes and my wife thinks I'm a total insane lunatic. And I'm like, well, it makes me value every day because this is what we have. I don't know, give us context. She doesn't think so, but.
[00:49:08] Speaker C: All right, so let's see. I'm going to get a little bit more specific then just for some questions that I had that were not answered in our first two episodes. So one of which was, what are the most promising real world use cases for bitcoin today? Beyond investment.
[00:49:31] Speaker A: Do you want to go first for.
[00:49:32] Speaker B: Me, because when you think of daily transactions, I think more in terms of digital currency controlled by central banks rather than, you know, going to the store and using an app that transfers some fraction of Bitcoin to the grocer or something like that.
But again, I'm not nearly as versed in Bitcoin as Ryan is. But for me, it was like central banks would step in with a digital currency before it became an everyday transactional use.
[00:50:03] Speaker A: There's some interesting topics we can unpack about that, Alan, if we wanted to. I'll answer the question. And then if we wanted to piggyback off that. So some of the interesting stories that I've heard as far as the question was, what are some uses outside of daily transactions that what you were saying outside of investment.
[00:50:23] Speaker C: So like, a lot of my friends say, well, Kim, Bitcoin is that something that I could use at a grocery store someday.
[00:50:29] Speaker A: So medium of exchange instead of store of value. And I think that's like, you know, for. For everybody listening that that's how I mentally bucket. It's like medium of exchange is how we're transacting with stuff every day versus store of value is like, I say I'm saving money and I want to make sure that I have have that money the same purchasing power not eroded in the future.
And so what I how I answer like that is outside of the maybe speak on both. One is that, I mean, we are blessed to live in the US where they're only printing 7% of our money every 7 to 8% a year. Like, I mean, if you're in Nigeria, you're somewhere else. I mean, like the Egypt. I mean they are stealing 30% of your wealth a year. And then you have a dictator that comes in and then tells you what to do, tells you what you can kind of can't say. And there are people where like you have your 12 seed phrase in your head and you run across the border, you don't have to have a pile of gold or like you're not trying to bring your house with. I mean like the, the stat that I heard it. And like this may or may not be true, but like, so many of the Jews were not leaving Germany because they were like going to. Half their wealth was being going to be confiscated. So they were like, there's this constant balance of like, how is it worth it or not. We're in this situation. You could literally, if you're in a developed country, keep your store of value as the government prints it. But also if there if things get really bad, you can like literally take your belongings in your hands and leave.
And like the, as far as like the medium of exchange, there's something called the lightning network that's developing and there's other, these other protocols where I was explaining to my wife in bed last night, which you can poor her is like there's something called the Netscape effect, you know, with AI or with Bitcoin where like Mark Andreessen and created the Netscape where it's like now you can actually use the Internet instead of it and have it be all these like, you know, ridiculous protocols between computers. So I still think we're, we're waiting for something more like the Netscape effect. So that way we can go to Starbucks and I mean you can use. Now Jack Dorsey on Square is looking at trying to integrate this into transactions. So so the store of value versus the medium exchange, they're both kind of getting worked on. But I think there's a lot of use cases other than the crypto bros day trading in their basement and Robin Hood because they don't have a job.
[00:52:48] Speaker B: I think the medium of exchange idea is fascinating. But then I wonder about the government being concerned about an underground or unseen economy and therefore income can be hidden from their view and all the rest of that. And because right now they can monitor a lot of what we do, we just don't pay any attention to the monitoring that goes on except me unfortunately.
So that's why I think the cryptocurrency has probably would step in first because I think the governments and especially central banks would be concerned about what they can't see and what they can't see they can't control.
But that's just maybe my paranoid point of view.
[00:53:30] Speaker A: No, I think you're right Alan, because I mean I'll tell you like, and there's a lot to unpack around what are the actual risks of bitcoin from government shutting it off. And we talked about that in the one of the last episodes of like they can shut off the on and off ramps and like that could be something. But again then we're like hey, by the way, we're like not democracy here. So like you're kind of just calling like yeah, it's very obvious then of we're being so. But the, but as it relates to the control like you said. So I'm going to tell you like a like real story from me when I first decided to buy bitcoin.
So I go into, I have this, I have the screenshot of the email saved, too. I go into US bank, which is what I bank with, and there's this meme. It's like, not. You go into a bank that's not a bank that doesn't have money to go get money that's not yours.
It's like. And I had the real world experience of that. And so, like, why did. Why do you think they don't want cash?
Like, we don't. They don't want cash. Fdr Store Gold. I mean, in a roundabout way, but, like, you. You go. I went into US bank, and I was like, I would like to transfer 25 grand to Coinbase. And you would have thought I came in with an AK47 and, like, it was holding up the bank. And I was like. And they were like, excuse me. So then they had to sit me down with this teller. And I'm like, like, you know, BSing with this gal. She. Thank God. He's like, I hate the bank. I'm. I'm here, like, just to get a job, so that way I can go get a computer science degree. I'm like, good for you. And then. And then she's like, okay, so we. I've got the Coinbase routing number because it's just like any other exchange like Fidelity or Charles Schwab's. I go in there, I'm like, okay, I want to take my $25,000 and wire to my routing number with Coinbase. She's like, we can't do that unless you answer all of these questions. And I'm like, like, okay. She goes, first question. Who told you to do this?
And I was like, what?
And I was like, me? I've, like, educated myself, read lots of books. And she's like, no, we need a person. We need to implicate someone. I'm like, are you serious?
And I was like, well, I actually have my series 65 from, you know, 10 years ago. And I'm like, I actually understand investing. She's like, no, but we need someone else. Like, did a financial advisor tell you to do this? Or, like, would you do this? I'm like, well, there's all these books. So anyways, finally, I implicated my. One of my best friends. I just put his name down. I was like, if you get a call, by the way, it's your fault. So then they were like, why are you doing this? And I was like, because of the Fiat system. And you guys print too much money, and you don't actually have any cash in that vault, and you're stealing My wealth. She goes, for your sake, I think we shouldn't put that. And I was, I was like, I agree. And I just, I said I felt good to get it out. I said, diversification in quotes. Got it. Okay. So then she went through all these questions, Alan and Kim, and then she says she wires it and she's like, it's going to be stopped by the back office, even though it's my money.
I went through, answered all those questions. U.S. bank sends me an email from some random woman named Susan. Was like, ryan, we stopped this because we were concerned and we googled you in verbatim in the email. We googled you and determined that you understand the risks of what you're doing. So we're going to approve your bank wire.
And I was like, f off.
I can't get more money onto my cold wallet of Bitcoin fast enough after that experience.
[00:56:59] Speaker B: That's fun.
[00:57:01] Speaker A: Yeah, it's like, it's not your money. And so like, answer your point. Like, I think that all like, like they already, even the CBDs and the stable coins, I mean, they already know everything at this point.
So then the question is, are they going to shut off Coinbase and Robinhood and the on and off ramps? Because, like, and there's an argument like the swell now with the new crypto framework that Saylor and say David Sachs have put out. Like, that was one of my biggest concerns about the two different administrations of like, are they going to shut this off or not?
And I feel like the, the, the, the cat's out or the, you know, everything's out of the box now where it's like, I don't know if you could back out of this in three years or not. Any, any thoughts on that?
[00:57:41] Speaker B: No, I haven't thought about it yet. But I, I can see where they can freeze the, you know, make it difficult to get it back out. And what was on my mind though, Ryan, or is on my mind, is that 25,000. I bet you if you had said $9,900, it wouldn't have happened happen.
Because you know as well as I do from your series 65, anything 10,000 or more is laundering money.
[00:58:03] Speaker A: Yeah.
[00:58:03] Speaker B: And that triggers all kinds of alarms, bells and whistles and.
[00:58:06] Speaker A: Totally agree. And like in. And I actually. Well, because I, I remodeled my house and I paid in cash because I was able to get a discount for my remodeler because whatever he wants his cash back to, the whole reason, they don't even want us to have cash. They want like the cbdc. I think we already have a cbdc. They already track everything. So, like, this whole argument of, like, CBDC versus not is kind of a moot point, in my opinion. And I went in there and I asked for 999. $9,900. And she's like, you need to tell us ahead of time, because. And this is a different time at U.S. bank, in order to actually have that money ready. I'm like, you have an HP printer right behind you. Can you just use that? The people next to me started laughing.
[00:58:54] Speaker B: Oh, well, it's. Yeah, you're right.
Quick. Really quick. Promise. Kim, 30 seconds. A friend of mine, good friend of mine, used to work for the irs, and he had somebody come over his house to do some work. And the guy said, it's this price, but I can reduce it to this if you pay cash. And my friend Ted said, could I just ask you your Social Security number, because I work for the irs. And this could prove. Interesting.
[00:59:20] Speaker A: Yeah, interesting.
Yeah. I mean, it's. It's.
[00:59:25] Speaker B: It.
[00:59:26] Speaker A: And like, that.
It needs to be tracked. Like, all. All the money needs to be tracked and accounted for, because at the end of the day, Kim, Allen, and Ryan all have a balance sheet, and we need to have our balance sheets tie out.
Right. The only person that doesn't is the U.S. government.
They can just keep printing more of the denominator. And so I think it's interesting whether it's the CBDC or if it's bitcoin. Like, what. Whatever. We're medium exchange. We're just exchanging value. And we're tracking like. And even with. With Bitcoin, Alan, like, there's. I can't. And this is way technical, beyond my understanding, but there's a. There's a. Like, when you're on Coinbase or Robin Hood, there is some protocol where, like, you're accepting. Like, they know that Ryan Tansom has bitcoin. They don't know exactly how much. I mean, I. I don't know exactly to what extent of it, but, like, I do know my 12 words that I could, like, escape and actually go log in and get my money if I wanted to. But, like. Like, while I'm in the U.S. they know that, you know, there's. There's money that I've moved to wallets because of. Like, I mean, in Coinbase, you're taking a picture of your driver's license, and you're putting your social in there, and you're hooking up your bank routing numbers. So, like, people think that, like, they totally don't know I've got it on my hard drive. And it's like they know at this point, and, like, if they act. But, like, the question would be is, like, kind of back in 1933, like, what extent will the government go to? I mean, there's this whole capital gains tax on the table.
So that way, if I worried it back and forth, you just, like, with cash, we should be recording that.
What level of surveillance do they want over that? And audit do they want over that? And then if that passes, then. Okay, if they really wanted to take everybody's bitcoin, what are they willing to do?
[01:01:07] Speaker B: Hey, Ryan, that makes me wonder, can your bitcoin assets be frozen by the government?
[01:01:12] Speaker A: It.
The on and off ramps can be. So like the. The Silk Road guy, Ross, I saw him speak at the bitcoin conference. And, like, they couldn't take his bitcoin, so they. They got. They shut down the website and everything, but they couldn't get his bitcoin.
[01:01:29] Speaker B: So they can limit his access to it because of the on and off ramps, right?
[01:01:34] Speaker A: Yeah. And they threw him in jail where he couldn't get a computer. Yeah.
[01:01:38] Speaker B: But, but. But the point being, it. That's what frozen is. It's still yours, but you can't access it. You can't use it. Frozen, taken. Frozen is just removed from your accessibility.
[01:01:48] Speaker A: Right. And going back to, like, the developed countries, I mean, there's so many awesome, like, just beautiful stories about, like, they're in. It was either Larry. Larry Leopard's book, the Big Print, or Lynn Alton's book, the Broken Money, where like, there's like, these people that are fleeing dictators that are like. I mean, where. It's really horrible places to live. And they got stopped.
And she had her 12 words memorized, so she could. They. She. They couldn't confiscate anything. And then she had like, four bitcoin or something like that.
And, like, you can log into a phone or computer and access your bitcoin as long as you like. I have got my 12 words memorized. And then Michael Saylor's got this joke, and in the bitcoin community, it's like, so, like, you come to put a gun to my head. Sorry, Alan. I lost it in a boating accident. Kind of like to play on gold, you know, Like, I don't know.
So, like, at the end of the day, they can extract it from your memory, you know, from your mind, unless AI and torture. But, like, I mean, like, at that point, it's like, where am I living? And that's what I keep talking to people about. It's like, okay, if that. If they go to that extent to. To take our property, where are we living now?
[01:03:03] Speaker B: Well, and that's not a probability, but it's not like it's an impossibility.
[01:03:08] Speaker A: Right, Right.
[01:03:09] Speaker B: But what you're making me think with the 12 words is because of where I am and how things are working, I would go, wait a minute, I got it in my wallet.
[01:03:18] Speaker A: Yeah, but I've got it in she, you know, or sheet metal. You put it, you're safe. You mean you stamp, they make. I mean, there's that guy. I mean, the infamous story. I mean, like, he literally is buying the landfill because he's got, like, I think it's now $750 million worth of Bitcoin on a hard drive. And it's the equivalent of, like, the boat sank at the ocean, right? And, like, the poor guy, it's like, for 11 years, it's like, dude, give it up. You're like, move on.
[01:03:48] Speaker B: Oh, well, sorry, Kim. We wandered.
[01:03:52] Speaker C: No, this is great conversation. It's really helpful, I guess, from. Again, just a very in the weeds question, because I was talking to a couple of my friends after our first two episodes, and they had asked that question, well, what about, like, how far into the future do we need to be before that's something that. It can be used for transactions. And then if I was interested. So your 25k example, Ryan, like, what does it, like, what do we tell people? They say, all right, I'm interested enough. I'm going to take $10,000, $15,000, whatever the case may be, and move it. What does that process look like? Like, how do they even get started, actually get started.
[01:04:29] Speaker A: My group call was talking about that, too. And let me go back, let me, like, very pointed answer to your, like, medium of exchange, like a store of value. Like, I don't break off a piece of my shingles to go buy a cup of coffee yet I've got hundreds of thousands of dollars of equity in my house. Same thing with people that are real estate investors. Like, we will need fiat for a medium exchange for probably a long time. And with stable coins, we're going to have more of the dollar as a medium of exchange. But, and Alan, you might remember this, I always get all the different, like, rules of thumb, but is it.
Oh, my God, I'm totally blanking on it. It's where good money drives out or bad money drives out. Good money where, like, the Reason that everyone's using the dollar because they're getting rid of the dollar while they're hoarding actual assets. So I can't remember what that phrases. But like, I think that we're going to be using dollars for a long time. Like, I'm going to keep my Bitcoin, I'm going to keep my house, I'm going to keep everything. And like, whether you do have margin loans against it and use it, use dollars to do your coffee exchange. Like, so I think like, and until there's a, like a good app for it. But that's. Does that directly answer your question? Yes.
[01:05:35] Speaker C: Yep.
[01:05:37] Speaker B: About the on ramp. How does one get started? Right.
[01:05:39] Speaker A: Yep.
So Coinbase, Robin Hood, I mean there's all those basic app, you know, the, the, the apps out there. So like, I'll tell you exactly what I did and then I'll tell you the risks. And Alan, I want you to question, like, kind of understand the risks if I can get this out appropriately. So like Coinbase, because this ties into the FTX collapse and people's kind of misconceptions of that. So you go into Coinbase and you literally plug in your driver's license, your bank, so US bank, whether they like it or not, my checking account, my debit cards are hooked up to Coinbase. And so like, sorry, guys. And now again with the, the crypto framework, all these banks are getting hooked up into that. But like, so Coinbase is one of the most reputable ones out there at the moment, you know, or Robin Hood. And you could say, okay, well, Coinbase, I would like to like create an account. And it's obvious the, you could, you could go in there and say, okay, I would like to hook up to. So that way I can trade. I mean, it's an exchange just like Fidelity, just like Charles Schwab or whatever. And like I would go in and you know, collect or click BTC for Bitcoin. And then I would say, well, how would you like to buy it? My debit card, my credit card or my checking account?
And Coinbase also, like, I don't know if this is where, like there's algorithms involved because, like, I think they only when I first started it was like. And the reason I wanted it for 25 grand is because, like, it like only allowed me like a thousand dollars every three days because you have to go through Amex or all the different intermediaries, you're all skimming off the top and it's like, well, and it would be like four days to to settle, to get your grand or like 1500 bucks. And then over time, they allow you to buy more and more. Like, I can buy 15 grand a day or something like that now, but I wanted to go in there and have a bank wire. So that's why I went into US bank versus just actually because I wanted to get the price that it was at. So I was like, more concerned about, like, I want to get more than, you know, two grand right now at this price. Which is why I went and risked the money laundering thought process. But so it's really. That's like, it is as simple as, like with Charles Schwab or Fidelity is like, you can go in there and just hook up your bank accounts and then go in and buy Bitcoin and then you're like. And like that transaction with Coinbase is locking in with your transaction receipt. You bought $100.
So like my. Both my daughters have bought bitcoin, so they took 100 bucks and it was 0.0004177. That's how much Bitcoin they have.
So right now, that's what Coinbase says is you have that much Bitcoin, the dollar changes and fluctuates, but you have that much Bitcoin, it's a fixed number.
Then it stays on Coinbase. Like, you have money on Coinbase and you have a certain amount of money on Coinbase. You could log in on mine and see that I've got about 0.3 that I keep on. I swipe everything else off of the exchange, but, like, I keep it on there and there's money in my Coinbase account.
There's a certain number of Bitcoin and you know, the dollar that changes every day about how much that's worth.
But then you could literally, Alan, you could go in there and say, convert back to cash instantaneously. I could send it to Kim.
I want to stop and pause.
Do it. I want to pause because I want to explain the risks of having it on Coinbase versus taking it off of Coinbase. But, like, does that process make sense?
[01:09:14] Speaker C: Yes, it does. Yeah. I'm still curious where the 12 words come into play, though.
[01:09:19] Speaker A: Okay, you want me to keep going to double click and just go. Go into that and just stop me if I, If I'm. If. If I'm losing air for. I'm not being coherent. So the. When I think about. Because I will never forget and God bless my friend from college, because I screenshotted it, I told him what, like, hey, dude, like you. Because he's like, all these hard wallets, cold wallets, seed phrases, blah. Like, in my brain, I'm running a company. Ryan, shut up. And I'm like, dude, it's 55 grand right now. Now I'm screenshotting my phone. So you remember forever.
And unfortunately, my relationship with him is I. I constantly. People don't forget. So he didn't want to understand all the stuff that we're, like, walking through right now because it was too complicated. And I'm hoping that we can make this successful for, like, the average person. Like the. At the end of the day, you could go into Coinbase and you could buy it with your bank account or your credit card. Like tomorrow. I mean, like, it's that or today. Like, you could get it all set up by the end of this call and you could have. You would. You would have money or Bitcoin on Coinbase.
And again, the risks of that is that Coinbase is a company with a CEO, right? They have a software platform that is based on having money move around and they collect fees on the transaction fees, right? So that's what FTX was. So like, think about ftx, Coinbase, Charles Schwab, Fidelity, you know, Ameritrade, they're all exchanges. It's a software that buys and sells assets.
The problem or the risk of having leaving, like, there's this ism in. In the bitcoin world of like, if it's not on your. Not your wallet, not your money, same thing. It's not your bank. It's like, it's it. That money on Coinbase on my Coinbase accounts is an IOU to Ryan Tansom. So it's a liability on their balance sheet.
Sam Bankman, Fried was just lying.
He's like, I have all this bitcoin. It's like, no, you don't. And people went in and asked for it just like a fractional bank reserve. It's like everybody went in for a bank run and, like, you don't have any of the money.
So then it's the proof of reserves. So Coinbase has to. They owe me that money. So I have Coinbase risk by keeping my money there.
Does that make sense? Because they owe me the money when I ask for it, and if they don't have it, then I'm screwed.
[01:11:35] Speaker B: Road.
[01:11:37] Speaker A: So then we move, move over to, like, I like to call it the three different layers of wallets, which is just like, where do you put your bitcoin? Right? You could leave it in there as an iou. There's risk to that. But at least like my. My friend, I'm like, you would have gotten the price exposure. Now it's 115.
That's a bummer. I took the risk of keeping on Coinbase going. Like, I think it's going to be worth that risk.
Then there's three layers of wallets. The one, like, the way I kind of like to break it down is there's something called a hot wallet, a hard wallet and a cold wallet. And like the way to think about this, the hot wall is it's on the Internet, right? It's like it's hot. Like you have electricity, like you're using electricity. And it's a. It's a bank or it's a. It's another company that does all the security of the backup of the phrase Alan. So, like, think about it. Like, like the way I like to think about it is when you actually go get a bitcoin wallet. So can we say, okay, you now transfer. You want to take it from Coinbase and you want to have one bitcoin off of Coinbase.
You could get it. You could go to another software company to host to. To host your bitcoin wallet, address that 12 characters.
You could put it on a hard drive.
That's the hard wallet. Or you could put it on the cold drive, like, which is just a sheet metal. Or my head, where there's no. There's nothing tied to it. So there is a way. And the way I like to think about the wallet is like, you know, on like US Bank, I have a routing number for the bank and then I have a specific checking account number.
Or that's exactly like you think about. You have a public address, which is like your routing number, and then you have your private one, which is your private keys, which is your 12 words. And then it's like, who is going to keep that? Do you want to keep it on a software company where they. There's some risk there or do you want to put it on a hard drive and then there's some, you know, there's some risk, there's some different ways to think about that. Or you can put it on like literally on a sheet metal.
But at the end of the day, you're just trying to keep those two of the public and the private words, words safe. So that way no one knows it. So you could go back and then grab a computer and say, okay, well, I lost everything. Now I can plug in my 12 words and I can still access my portion of the ledger that is owed to me.
[01:13:50] Speaker C: Okay, that makes sense.
[01:13:51] Speaker A: Does it? Does it make sense?
[01:13:54] Speaker B: Very well.
[01:13:55] Speaker A: Okay. There's a lot of complications in that, but like, I think it's just like, so you know, Hot Wallet is someone else, some other software company. You're. You have a risk that Alan has a software company that hosting my key and then he goes out of business. Like, that's 12 words that I wish I would have known. And then you could put it on a hard drive. Well, if you'd lose the hard drive, like the guy that cut the landfill, like, bummer, dude, you should have memorized your 12 words. And so like, like you're just kind of going through like, what's the best way to keep my public routing a number and then my private checking number safe so that no one else can use it?
[01:14:26] Speaker B: Yeah.
[01:14:27] Speaker C: Oh, that makes sense. So a follow up question to our first. I think it's our first episode, it might have been our second where it landed.
The shitcoins. You said if a CEO is involved, then it's a shitcoin. So it sounds like we're still working through a CEO because we have to go through some sort of application software program to access the trading. Is that. How does that all work?
[01:14:49] Speaker A: Yeah, the.
It's a, it's the right question.
And this is where like I will, I'll be honest to everybody, like, I have spent most of my life trying to understand money so that way I could figure out how to save my time that I. The value that I created. And so like, as I get outside of where do I store my wealth and what's the risks of that and all the complications with business and valuations and stuff like that, the next layer, that's what I would call the next layer out of the core first principle. So then everything else that's out there.
If you have a CEO, you literally have an income statement, a balance sheet and a cash flow statement and someone makes decisions of like, how many shares do we have? Do we want to dilute the shareholders? Do we want to like, you know what I mean?
So you just have a centralized body of person that's making decisions, decisions.
A lot of these shitcoins that I've that I'm maybe unfairly bucketing into one big pile of, no pun intended, is the.
There's starting to become companies that are popping out of this with very specific utilities. Coinbase has a very specific functional utility and they generate free cash flow based on the value that they're providing of a medium of it as an exchange.
Right. So it's like great. And then like you say okay, well what are other companies that have a utility? Well there's a lot of companies that are like launching on the Lightning network to solve the transaction issue.
Right. There's a lot of companies that are also trying to solve settlement, you know, processing and like we haven't gotten into this but plant a seed where like I think it's each block is like 216,000 transactions. And you say okay, well like Amex processes like a tr. I don't know if it's a trillion payments a month. Where Bitcoin you can't actually process that many transactions every month. So there's now companies that are getting built out around to say okay well we are going to settle off outside the network and have one think about like an EDI transfer at the end of a day with a company. They say okay, we did all of these things today, here's the final settlement. So there will be companies that then like say okay Kim, like you know, call it like QuickBooks will probably end up being one of them. Or Stripe where you have all these transactions that happen outside of it and then they submit their ledger to the miner at the like the end of the day and then it's reconciled. So like I, there's all these crypto currencies where it's like they're all, a lot of them are companies or like you know, you know, some athlete created their own stable with their own crypto coin. I'm like what the hell? It's not money. It's like is just proving that like they're just taking advantage of people that don't know what's going on unfortunately. And it's completely wrong in my opinion. You're like, you're, you're, it's, it's the whole rug pull like we're going to do this and then we take all the money before it collapses. I mean it's just, it sucks. But there are companies that are bucketed into those shit coins that are actually have like very specific utility to help with transactions to help with like management. Like, like, like there's like legit stuff out there. I just don't have the wherewithal with what I'm doing with my life to say. I mean it's the same thing of analyzing the free cash flow potential of every single company. I mean like that's so much work. That's why ETFs came out. Right? So it's like I don't want to deal with this because Then you're analyzing per investment thesis based on a cash flowing company instead of money, which I think bitcoin and gold and immediately exchange in the storehole of wealth is what I've concerned myself with.
Did that answer your question?
[01:18:36] Speaker C: It makes sense. Dad, do you have any follow up questions for him?
[01:18:40] Speaker B: No, no question. I just. Agreement. And to your point about valuing every company based upon cash flow and all the rest of that, the big unknown is always what's the CEO or board going to do to change that, that, that projection. Right.
[01:18:56] Speaker A: Yeah. And have they thought through their strategic plan, how they're going to get repeatable revenue, what's their cost of goods structure? I mean it's like, it's like a lot of work.
[01:19:03] Speaker B: Yeah. Thus the risk. And with those companies that do all these transactions off to the side, there's obviously a benefit to that. But if there's been valuations in the, in the value of the bitcoin, for instance, during the day and if it dropped 10% or that's a lot. But if it dropped any during the day or went up any during the day, if you're only dealing with the end of the day stuff, stuff, you know, you could have missed out on a transactional moment if you, if you had transacted earlier in the day, then it went up 10%, you may have been better off than all of a sudden having an end of day transaction.
[01:19:35] Speaker A: It's just agreed. And I think that that's a good liftoff. Alan, if you want to touch on this for a couple minutes of where do stable coins fit into this whole situation? Which you know, the US government bipartisan nonetheless is like, how do we get more people to buy US debt so we can fund our, our, our circus party.
Like the, to the way that I would articulate how to avoid what you just said of like the volatility.
Like yeah, bitcoin since, since we spoke last, it went from 118 to 124 down to 115. It's like, well that's exhausting. It's like, well it's a, it's a small market that actually has supply and demand. Like there's a fixed supply. So pricing is volatile because it's not a deep pool. It's only $2 trillion. Now once, once it gets, you know, one note on the liquidity and I never knew what that word meant other than the fact that like now I get it with what I've learned is someone last week sold 80,000 Bitcoin in one day. And the price went from 118 to 115.
So the market absorbed that demand without crashing the price, which is a freaking miracle. And I think it is a milestone that we are going to remember for a long time. It's the same reason a CEO of a like Jeff Bezos or Mark Zuckerberg has to announce I'm going to sell shares over the next 90 days so I don't crash my own stock even though I just want to sell it for whatever reason. So the market absorbed that 80,000 Bitcoin which was a milestone. But the, the price is still going to go up and down because of all like it's a smaller market. You know, people are buying and selling. And therefore I go back to if you need a specific dollar amount at a specific point in time for a medium of exchange, don't use Bitcoin.
Like you, you store your wealth in bitcoin right now until the medium of exchange becomes more mature with the software, with the, the more the liquidity pool of how big it gets. So the, the store of wealth because if you look at over a 12 or 24 to 48 month it's a, a 50% compound annual growth rate. But between last week and this week, I mean it's volatile. So like don't do that for payroll. But I think where stablecoins comes into play along is the stable coins is a very fascinating topic in itself because they're just bypassing the entire banking rails and the fractional banking reserves so we can get people in Nigeria to buy US debt to fund our party.
And so now with the stable coins you can get outside of the BS that I was talking about and now people literally on Coinbase.
So now you have like billions of people across the world who literally it's still just a dollar but it's now on Coinbase and to go I want btc.
It's very fascinating because it's like it's no longer stuck in US bank like the crap that I was going through. So I still think that US dollar is how we are going to be exchanging daily transactions for I don't know, a long time is my guess. And that will take a lot longer because it's more consistent with how we're dealing with payroll every two weeks and inventory and all the expenses that we have where the store of value is really one of the primary use cases I'm seeing of Bitcoin at the moment.
[01:23:02] Speaker B: Yeah, I think what one of the things you, you've touched upon that struck a chord with me is that The Bitcoin, the value dropped. But if that had been a stock, it would have plummeted because there's no emotional content to what you're talking about versus day traders and professional investors have algorithms that move so much. We're going to sell or we're going to, we're going to short this. And individuals that are just going to all of a sudden go, I better sell. You know, panic and all the rest of that. The emotional aspect being gone provides for a much more stable base.
It certainly has its ups and downs and its risks. But I was just thinking of stocks.
[01:23:42] Speaker A: That have it's, it's a hard currency, it's a bear asset. Like, I mean they're, they're there. It's not like, well, you know, Sam Altman did his GPT5 release and he sucked and it was boring. And now it's like not a $400 billion company, it's 300 because Sam didn't perform. You know what I mean?
[01:23:58] Speaker B: I feel bad for him.
[01:23:59] Speaker A: Yeah, it was like, well, I know I w. Which was better too. Like I love GPT, but I think there is still emotion because people don't under. Like what took the emotion out of it for me, Alan and Kim, is that like I understand this. So like I had like zero concern that it went up and down and up and down because I'm just like, it is what it is. Like, what do I know? Government's going to keep printing money.
People are getting old, we can't pay our bills, we have to print to keep going. Which means where else can I put my money?
And so it kind of goes, I go back to this deductive reasoning to going, well, if all of a sudden like every boomer disappeared and now we balance our budget and we don't have all these liabilities, I'd be like, oh well, maybe the US dollar might survive. But you know, it kind of goes back into your whole thesis, Alan. It's like, okay, well what is the alternative that gives me a lot less concern on the day to day volatility? And I'm like, I'm still using US dollars to, to live my life.
[01:24:59] Speaker B: I'm doing something very similar in, in theory, not in Bitcoin, but with our equity optimizer. A large part of it's now AI driven. So while there are daily fluctuations, I don't look daily. You know, that's just a good way to go insane. But when I look over by the quarter or by the half year or whatever, and I see the better returns than the market delivers. It's like, all right, here's a methodology that I don't have to worry about. It's proven, and I can just enjoy the benefits of it. Of it's not as protected from regulation, government intervention, and emotionalism as Bitcoin. But I get the theory and the process, you know, it's. It's. Yeah, yeah, don't look every day. You're just gonna go nuts.
[01:25:40] Speaker A: Well, and your, Your. My guess is with that portfolio that you're not using to buy your Starbucks because you would have capital gains issues. It would. Because of the. It's the same exact theory like you're talking about where, like, you have a store of wealth, philosophy and strategy.
[01:25:54] Speaker B: Right.
[01:25:54] Speaker A: And my guess, because I've read all of your books and I've talked to, like, you guys so much, is that, that it's probably trying to generate more than the 10%, so that way you're not getting diluted by the government printing money. And I know that there's different bonds that you guys are interested in over the world because of, you know, different reasons. And then there's the energy sectors and the infrastructure. I mean, I have a lot of my equities in, like, literally just pulled out your prosperity agent decline. And that's where my equities are. Just, like, went to ETFs that you guys suggest. It's like, sounds good. And like, I was like, here you go. And. But like, then there's the. How are we spending our money? Every day is just different, so I don't have to tap into that.
[01:26:30] Speaker B: Right, exactly so. Exactly so.
And I made my children a promise many, many years ago that when I die and my wife dies, we're going to leave them absolutely nothing.
[01:26:41] Speaker A: So you read that book die with nothing then, right? Yay, Kim. Right.
[01:26:46] Speaker B: Do well, because we're going to do well and we're gonna have fun.
[01:26:52] Speaker C: The great plan. I support it wholeheartedly. All right, gentlemen, we gotta wrap up our talk here for today. Are there any last 60 second thoughts you want to share with the audience before we head out for the day?
[01:27:05] Speaker B: I do. I just want to thank you for bringing Ryan, bringing this all to us. And I hope the people who listen to this can take advantage of the wisdom and the path that you put forward, because I think it's a valued path, and I think it's something that they should consider. And like early investing, you don't have to do a lot of it in big dollars. You just start the drip going and just let it grow through Time if you can. If not, at least you have some measure of wealth that's being created and protected and you'll be glad you did that in the future.
[01:27:41] Speaker A: I appreciate that. On. And like, I mean the numbers out there. If you dollar cost average 10 bucks a day for the last 15 years, you'd have one point point like 7 million bucks.
And I. I'll just say, Kim, like, I got a D in accounting. I don't. Like, I've learned all of this because I'm trying to figure out how this all works myself. So, like, this is all just a work in progress. And like, I will be honest, like I was.
I haven't been this vocal about my opinions about this stuff up until now because you provide a safe space. And Alan, you've been a great, you know, counterpart to talk because I'm thinking through this stuff myself too. Like, I mean, it's a lot of work to think about and understand all this stuff. And I've seen an asymmetric opportunity for myself and other people where like, what do we do to protect ourselves over the next 40 years when the government has got a lot of problems going on? It's still a great place to live. But like, so came. I appreciate it. It's the work in progress and it's a, it's a journey. And so like, I, I hold the right to be wrong, but like, I'm trying my best.
[01:28:43] Speaker C: Well, we appreciate it. And I've had a lot of fun talking about the subject and I've learned a lot. So you taught me a lot about bitcoin and it didn't take me nearly as long as it took me to learn about the cloud. So I appreciate all the insight.
[01:28:56] Speaker A: Water vapor.
[01:29:00] Speaker C: All right, guys, I gotta run for my next call, but it was nice to see you, but still. Talk soon.
[01:29:06] Speaker B: See you.
