Watch This Episode on Youtube
Watch/Listen To This Episode:
[00:00:06] MG: What’s going on Alex? Sorry, I started to write a tweet and unmuted myself. Oh, super good, man. Great week so far. How about yourself?
[00:00:15] AM: Pretty good man. Just waiting on this next bullish news. I don’t know if the third ETF is going to get passed or we’re going to go down or we’re going to go up, what do you think about all this? These all-time highs?
[00:00:28] MG: Oh man. We’re going to see so much volatility for sure. I think we’re definitely in that whipsaw moment, but I’m pretty confident it will be medium and long term up, definitely. So short term, you never know, but I’m pretty, pretty damn bullish, always.
[00:00:45] AM: Yeah, me too. Are we waiting on CK or do you want to dig right into your piece?
[00:00:51] MG: Whatever. Yeah, either or, happy to get going and definitely happy to wait for CK for sure. I can do a little introduction, why not, to fill some time. I’m Mark Goodwin. I live in the Bay Area. I’ve been in Bitcoin for a few years and started multidisciplinary artists. I went to school for jazz drums and then got really into production composition, and then got really into electrical engineering via production and that’s when I got really into Bitcoin and investigating Bitcoin through sort of an electrical engineering background.
And then yeah, I’ve spent the last few years basically being like full time Bitcoin educating myself, and then after March 2020, when everything went insane, that was like when I went 100% in even more so than I was. So, I’ve been Bitcoin only for a few years now. I definitely dabbled, as everyone did at the beginning, but realized pretty quick the difference between Bitcoin and everything else. I’ve just been reading a lot as much as possible. I love Bitcoin Magazine. I love all the spaces stuff. I’m not as much of an audio learner ironically. So, I don’t usually do a lot of Clubhouse space listening. I much prefer to read, but I’m really excited to chat with everyone here today. And obviously, Alex, I was super thankful we had a great talk the other day, that was super fun. Yeah, excited to see what goes on here and spaces and super open to my – I have a very open-door policy. So, super stoked for DMS, and further discussions or spin off spaces and stuff. So definitely feel free to reach out.
[00:02:22] CK: Great introduction. And sorry, I was a little bit late, I got distracted on Twitter. Can you believe it? Yeah, Mark, the focus of this is your extremely interesting article that you wrote at the end of last month was The Birth of the Bitcoin Dollar. I mean, you have a macroeconomic thesis behind this concept of the Bitcoin dollar. I do want to get into that. But before we jump into it, is there anything from the article or around the subject matter that is not necessarily in the article that I guess we should we should know? Or you want to bring up?
[00:02:56] MG: Oh, good question. No, honestly, not necessarily. And I’m sure a lot of stuff. It’s impossible to reduce Bitcoin to any one thesis or any one concept. Of course, there’s going to be a lot of stuff that’s just not covered in the focus of the article. But I think, yeah, I think the idea, obviously, we’ll get into the nitty gritty of it, but main thing that I really wanted to get across was retail and noticed inflation and it’s being talked about. But really looking at the historical precedent of this sort of pendulum of supply and demand, which is just what all markets are, you can reduce markets to that being a pretty simple buyer.
Seller, supply and demand thing. So, the purpose of the article was to just focus on what this new technology does, and having a monetary policy that is completely unaffected by demand. We’re going to get six and a quarter Bitcoins per block, no matter how many people are mining, no matter the interest for this having period. So yeah, the article was to just getting right into that about we can almost look at the Bitcoin as a replacement for the petrodollar pendulum system that we created. I say we, as an American, but we as America as imperialist America, created this scenario where we forced demand to buy dollars –
[00:04:13] CK: Let me jump in really quick. So, I guess, let’s kind of just break that down. A lot of people say that the dollar is backed by the good faith of the American people on the economy and our military, while other people will point to the deal between the Nixon administration and Saudi Arabia to effectively make the dollar, the reserve currency of all oil purchases as really what is backing the dollar. Can you just explain what is the dollar? How’s it backed today? Was the dollar ever backed in your mind? Can you jump into some of those subjects that you covered in the article?
[00:04:48] MG: Yeah, sure. First off, just to go even back before really the dollar that we know of today was around, there was a lot of different currencies and experimentation with different strands and things going on during the formation of America. When people say, “Oh, and hyperinflation can happen here.” Yeah, it has happened. It’s happened multiple times already in America with currencies, closure around to 1776 and before. We’ve seen it before, we’ve seen buy metal standards, meaning, silver and gold, set at some ratio, that you get this green denominated paper that you can go back into the bank, give them your $5 note, gets $5 worth of buy metal. Get that back. We’ve seen that in America and in a couple different expressions. But yeah, where we’re at now, what backs the dollars.
First off, it doesn’t really matter what backs anything in terms of social expression. So, money is just a social expression, and the technology to express volatility between two parties. What’s actually backing it isn’t necessarily important in regards to if it makes it money or not. If it makes it good money, it’s very important. So, we’re realizing that now. But what is the dollar back with right now? Social construct. I wouldn’t even say it’s necessarily social military. First and foremost. I’d say first and foremost, people like to spend the dollars and price things in dollars, because it’s assumed that it’s going to hold its value better than everything else. It’s really the social construct that facts, the communication of expression between volatility of two parties. So, that’s really what backs money, if you really want to get into the psychology of it.
But then, what are the mechanics? Right now, yeah. We’ve been in a petrodollar system for 50 years, 45, 50 years. You can pick and choose when you want to say it actually started when we got off the gold standard. You might argue that we got off the gold standard, actually a little bit before Nixon signed the executive order that actually literally took us off. But you can see a whole lot of weird expressions of funny business going on right before 1971 in markets. So, you can see there was a little bit of something going on there already. But yeah, right now, the US dollar, the reserve, trade currency is backed by the idea that it’s going close to what it’s worth now, tomorrow, which it has the most confidence from universe the market’s peak, and the markets tell us that the dollar has the most confidence.
So, they’re using a mechanism right now that we’ve all heard this concept of the petrodollar, which is where I stole the concept of the Bitcoin dollar. But the petrodollar is basically, it’s a military political mechanism or assertion that forces countries that are oil dependent, that are purchasing oil from the Middle East, generally. We force by denominating oil into US dollar, aka the petrodollar. We’re forcing demand for the US dollar by other nation states that need to purchase oil from the US influenced oil refineries in the Middle East.
We’re able to print and print and do fun things in America and fuck around with our monetary policy and knowing that no matter what these oil dependent countries are going to need to buy our dollars. So, we have a place to offset the inflationary effects of monetary expansion in the US. We hear about these concepts all the time. War for profit and all this stuff. Really what these the real mechanism that the US is exploiting via the petrodollar is it’s how can we hide our inflation? How can we continue to print money and benefit the people closest to the money printer without completely debasing and losing the net purchasing power of the US dollar?
So, they do that by forcing countries to buy dollars. Everyone’s going to need oil. You need it for expansion, for industrial expansion, you need it for so many things. So, by connecting the US dollar monetary supply, purchasing power to this ever-demanded commodity or asset, we’ve been able to kick this can down the road for 50 years, quietly, and then suddenly, debasing our monetary supply without really any tangible effects on the purchasing economy of the dollar. That doesn’t mean the individual dollar is not losing power. Of course, it is. We all see that. But the net purchasing power of the US economy is generally doing fine. It’s all about comparison to the rest of the markets going on and the dollar is actually doing okay, so far, despite expanding 60% in the last 18 months or whatever, monetary supply.
Yeah, I guess I’m postulating, moving forward that Bitcoin is going to play a very similar role in being an energy standard that is denominated in US dollars. So again, we didn’t have a literal monopoly in the Middle East or a literal monopoly on oil sales, but we had just enough to be able to eat up that inflationary power of monetary supply expanding and putting it into this energy commodity that’s demanded. So, Bitcoin is going to be basically the same thing. That’s what I’m postulating. It just is a better from like an equation standpoint, having a fixed tokenized supply versus an oil coming out of the ground or even before that gold or silver coming out of the ground by having this fixed supply human designed, most likely.
Monetary policy of Bitcoin, we’re really going to exploit that independent supply from demand to be able to have this like perfect vacuum to just suck up all of this expansionary, ballooning, monetary, and out of control inflation that we’re now seeing. Bitcoin as a protocol is just this wonderful little vacuum that can suck that up without also causing weird inequities within its own protocol, because its demand is not affected by a supply.
So, I think we’re going to see a very similar, not monopoly, of course, I think, always there will be markets that aren’t denominated in dollar. That will always be the case. But I think we’re going to see a similar embracing of Bitcoin for those purposes by the US government, and by the US purchasing economy. In order to stay afloat, we don’t fuck around. We would never let anything happen to the US purchasing power, the US dollar purchasing power. That’s like the one thing we won’t do. If right now we’re stuck in this moment of choosing between inflating away our debts and this debt jubilee or raising interest rates and letting our compounding debt service catch up to us. We’re stuck in these two places. We can destroy the purchasing power of the US economy, or we can destroy the purchasing power of a singular dollar.
Obviously, in my mind, and this is what I’m theorizing, the US is going to the former and we are going to inflate away our debt while also inflating away the purchasing power of the individual dollar into this new system, retains our net purchasing power, anything else can debase and go to zero against Bitcoin. We create this amazing demand through payment rails that are denominated in US dollars, with these new regulations such as Basel III that are going into effect at the start of the new year. This new legislation, that means that all banks and investing firms, VCs, whatever, if they have any assets on the books, they need to also have an equal amount of denominated US dollar to that value on the books.
So, if a bank wanted to have $500 million of gold, or $500 millions of Bitcoin, it also needs to have that amount of money set aside and US dollar in their treasuries under the guise of consumer protection. But we can see how that mechanism is already very similarly being implemented. And basically, in effect, the same as the petrodollar sort of system. We’re forcing these entities that would be able to make speculative attacks on the US dollar by taking free money with low interest rates and investing it into assets and commodities, and especially Bitcoin. But we’re basically forcing demand for the US dollar in the neck while we actually get rid of the singular purchasing power.
That’s where the sort of the concept of the birth of the Bitcoin dollar comes from. And then, yeah, obviously, in regards to like, where and when it actually started to happen, I argue in the article that the sort of official start of the Bitcoin dollar was in March of 2020, when all the markets went down at the same time, and we saw oil of this thing that my entire life was a commodity that we go and invade other countries for and literally kill for and colonize for. All of a sudden, it’s trading negative.
Now, again, I know that’s future stuff and it wasn’t literally, they were giving people money to take oil away. But when that sort of a nurse’s system broke, of the last 50 years of status quo of the American economy, in my entire life, I’m 31 now. When I saw that happen, I thought that was very peculiar. I knew something really drastic had happened and I took all the dollars that I had and put it into Bitcoin. But more so, I knew, empirically, that we were about to have a havening, and that this happening was very different than the other havenings, and that it was the first havening that took us below the supply issuance rate below 2%.
So, we went down to six and a quarter coins per block. We’re at 1.79 inflation rate right now for this havening, which is the first time it’s been below the 2%, on average of the dollar or around the 2%, on average of gold coming out of the ground. I knew that this was going to be a very important havening and a very mathematically just important event in bond markets and oil markets and dollar markets. And when that happened imminently, a few weeks before this mathematically important third havening took place, the whole thing just clicked. It just seemed very obvious that this was a mathematical issue, and it was going to resolve itself in this way. It was a physical issue and inertia system that this massive expansion of credit had to go somewhere and now there was a place that it could go and it could hide and this inflation could be placed, that doesn’t necessitate war, that doesn’t necessitate the costs of –
People talk about the energy cost of Bitcoin. What’s the energy cost of the air conditioning for the US soldiers that have to stay in the Middle East? Huge energy costs. Huge human life costs. So, now we have a protocol that can handle that exact same mechanism that it does doesn’t cost the US government anything. It’s an open source, open network. So, now all of a sudden, there is a place for this stuff to go. Yeah, it seemed very obvious to me and I don’t mean that in an arrogant way, because super humble, and I’m definitely a student of this and anything can happen.
But I saw at least an outlet for this violent and vast Cares Act induced monetary supply expansion. I at least saw a place where it could go. And I think we’re seeing that play out. It was at like 3,300 bucks or something around then, around March 2020, that big flash crash. And then a year later, it was over 65,000.
So, now obviously, we’ve broken that a little bit. Yeah, it really just seems like a mathematical pendulum. And as far as I’m concerned, I don’t know why you would want to hold a dollar or a bond or dollar denominated assets, when you could buy this tokenized representation of this just incredibly vast energy market that is going to do really insane things to day to day life, but more so international global markets. I think the dollar has a really big role to play in Bitcoin. So much inflow into the value imbued into the Bitcoin system over the last 10 years or so has been in US dollars. We look at tether, we look at some of these other maybe misunderstood stable coins, but even more so just inflows coming into markets. The US made four times as much money off of Bitcoin last year, about 4.1 billion versus, China was the next at just about a billion in terms of retail citizens.
We have a lot more to lose, if Bitcoin fails, actually. We have a lot more to gain if bitcoin succeeds. I’m not really postulating that Bitcoin is necessarily coming from the United States intelligence community, much more so saying that math is math, and it’s within the best interest seemingly of the net purchasing power of the US economy to let this experiment play out. So, I think we’ll see expansions of both the US dollar supply to pay off our debt, and then also, that the vast expansion should flow into bitcoin predominantly. Then that will, obviously we’ll see some fun stuff. But yeah, that’s how I look at it. That’s where the term came from. It’s a definite homage to the petrodollar. There’s an amazing article by Susan Su, came out in February about the carbon cost of a dollar, but it specifically relates to like the extended carbon cost of the dollar in regards to how the petrodollar system works.
So, I was really influenced by that, came up with this concept of something that I just saw happening. I don’t necessarily think any of my ideas are necessarily super unique. It’s more just that I saw them occurring and pointed them out. So yeah, I know, that’s where I got to, and I’ve been seeing it play out for the last year or so.
[00:17:52] CK: So, Alex, I want to let you get a question in, but I have one question for Mark. So, we did spaces I think two weeks ago with Aaron Segal talking about the emergence of the mass investor class. And while you’re discussing about how March 2020 was like the birth of the Bitcoin dollar, or this world where the US is going to back the purchasing power of its dollars, with Bitcoin as some sort of like an energy asset, I think that’s directionally correct in the ultimate kind of long game for all nation states, but I couldn’t help it disagreeing and saying that March of 2020, was the birth of the asset Fiat. That’s like, we’re creating a class of investors now that are just passively throwing money into their assets. I think that’s like a much lower hanging fruit than Bitcoins, per se, even though I’m a Bitcoiner, I think that it’s mathematically superior asset to be this inflation sink. What’s your response to that?
[00:18:49] MG: That’s interesting. Yeah, I agree. I think you could say the birth of the retail investor or something equally, as much as you could say, the birth of the Bitcoin dollar. I’m definitely not saying that. I think people should be like, somehow investing in like the net purchasing power of the US. I do think trust is broken within the US dollar system in a lot of ways. Remember, we’re seeing that more and more every day with like the social construct of the purchasing power of the dollar breaking down. But I guess, I just suggest, humbly to check out that.
Yeah, Fiat as an asset is a really interesting concept. But I think that looking at the numbers that you just postulated, you can say there’s a mathematical thesis here for being the best bet. I would just look at that some more and I think that the, maybe the important part of the argument that it’s within the best interest of the United States’ purchasing power the economy for Bitcoin to hyperbitcoinization happen via hyperinflation into it of the US dollar. I just think it’s going to, A, I think it’s going to mathematically happen. But B, I just think that it’s yeah, it’s like a political and economic and mathematical and physical and an energy market like all at once, there’s all of these reasonings behind why I think this is going to happen. As obviously, I think you agree, generally.
So, I think it’s easy to miss the US Dollars’ role and the purchasing power of the economy in the Bitcoin story. I think that might almost be on purpose. You’re not really supposed to think about America’s like wanting this to happen. Or like, why would America take advantage of this? Or started or whatever? Don’t we have so much to lose? Because we lose the reserve currency? Or aren’t we the last ones that would want Bitcoin to win? But when we actually look at what’s really going on, it’s China, which probably has the biggest incentive as one of our biggest creditors for the US dollar, hedge money to fail. They’re the ones banning it. They’re the ones putting social pressures on it, unsuccessfully in a lot of ways, but successfully in some ways, too.
So, I think we might see some more political stuff around it. But in terms of from an investment standpoint of what I think a retail investor should do, watching this political macro kind of play out, to me, I don’t think that there’s another investment that even comes close. I do agree that an asset is better than a Fiat, and I completely agree with you on that. But I think very specifically, it’s not just about is silver or gold, or will this probably going to appreciate and value vastly? Yes, I do think so because they’re priced and denominated in US dollars, and I do think that the money supply is going to continue to expand rapidly.
What is everything going to go to zero against Bitcoin? I think that there’s the mechanics of it. All other assets are just not as good of a mathematical investment as Bitcoin can with its supply issuance, its decentralization, and it’s all the other things we love Bitcoin about. So, I agree with you 100%. It’s definitely assets and commodities over Fiat all day. Absolutely. But again, I think really specifically, Bitcoin as literally what it is, how it works, how it relates to energy markets, how its supply is not affected by its demand, how it will continue to be distributed and decentralized as a function of that being a distributed economy versus say like a centralizing proof of stake, which just gets shittier and more centralized, as every day goes, bitcoin does the opposite.
So yeah, I would completely agree on asset versus Fiat. But I think in terms of the asset world, I don’t even think that there’s like really a question, and maybe I’m being arrogant or maybe naive, but I don’t think so. I’m pretty critical of my own thesis because got a lot of money invested. I don’t want to fuck that up. I would just argue within the asset world, which I agree with, there’s just nothing that even really comes close to Bitcoin from an economic like mathematical standpoint.
[SPONSOR MESSAGE]
[00:22:40] CK: What is going on plebs? We’re going to take a break from our programming to tell you about the resurrection of our print magazine starting with the El Salvador issue. Starting this fall, Bitcoin Magazine will be available on newsstands nationwide, and at retail stores such as Barnes and Noble. Don’t want to get off your couch, though? No problem. You can also go to store.bitcoinmagazine.com. So, skip the line and get each issue shipped directly to your front door with our annual subscription. I’m talking four issues a year that contain exclusive interviews and profiles with leading Bitcoiners, actionable insights on the state of the market, breaking news and cultural trends, along with powerful photos and artwork from the best artists in the world. Subscribe today and get 21% off using code, PODCAST at checkout. That’s P-O-D-C-A-S-T, PODCAST at checkout.
[EPISODE CONTINUED]
[00:22:40] AM: I wonder, Mark, could you just find assets for yourself in the context of this piece? And then it sounds simple, but I want to know your thoughts on real estate and not understand that you think it will go down? I totally agree. I think all assets are inferior to Bitcoin being ultimately scarce and all the virtues that it has, but I always want to know what do people think is going to happen? When do you think it’s going to happen? What is the near-term future bring? Are we’re going to steal the market capitalization of the whole show? How does this play out?
[00:24:06] MG: Really good questions, a lot of questions, actually. So, what is an asset? Or what do I think an asset is? Yeah, there is definitely like some semantic and economic definitions of like acid versus commodity and there’s things in there. But to simplify it, anything that has value, or future value. So, you can have cash denominated assets, but I think specifically in this conversation of Fiat versus asset, an asset is something that is like a tangible economic monetary policy, like a Fiat or something. The value of Fiat is at the economic whim of seven people or whatever. Whereas like an asset, like a gold bar, or a house or a business or something that has cash flows coming in has more sovereign properties to it innately than a piece of Fiat or a bond or something.
[00:24:55] AM: Can I push back a little bit? I just, I’m having trouble defining, maybe it’s Fiat half, because Fiat, literally per force, by mandate, the only asset that I can think of that is probably the most valuable to the most amount of people but has the least amount of mandate attached to it is Bitcoin. So, I wonder if there’s like this overlap of assets all being subsumed and turned into Fiat that we’re trying to get away from.
[00:25:24] MG: I think that we’re just at a unit of account, sort of transformation. We’re at the sort of crux of our unit of account changing, and so assets that are denominated in dollars like stocks or precious metals or real estate, I think will go up in value, perceived economic value at when our unit of account is still dollars. Over the world, I think we’re going to see some real strange crap in asset pricing, I think we’ll see a lot of volatility. And I think we are seeing, that’s already playing out. But how that relates to like physical commodities versus like cash flow, dollar denominated stocks, or something I think will be really interesting. I think the real estate market and Bitcoin, to me, that is the game moving forward. As we move into this deflationary world, I think we’ve really deep pegged Fiat from anything. We got negative or zero interest rates, the majority of countries around the world, we’re seeing a couple people raise rates, but I don’t really think that’s really going to do much.
I think with the world reserve currency, we’re at a place where our compounding debt interest is beyond the growth of our GDP every year. We’re a dead zombie company. You wouldn’t invest in us if we were a company. So, I think we’ll see US dollar denominated valued assets go up in US dollar denominations, but they will go down in Bitcoin denominations. It’s not really so much that your house is going up, or your Tesla stock is going, it’s more that your US dollar is that much less powerful and it’s purchasing less. Be really careful when you see, yeah, cool, the housing market has gone up 30% in the last few months, or whatever, but everyone’s did. So, your house isn’t necessarily gaining in value. It’s just keeping pace with the purchasing power fluctuations of the US dollar.
So, I think real estate has a huge role to play always because humans need it. It’s a necessity. One of the few things I would even consider in the future selling some bitcoin for would be real estate really, because space is a tangible thing that humans need. So, I don’t think the real estate market is going anywhere. But I do you think we’ll see a pretty big housing crash for a moment and then see it gets swooped up. I think we’re really at the stage of like flash crash and mass buying. Because once the unit of account changes, you’re just going to want to have that land or have that Bitcoin. When we see US dollar denomination drops, that’s generally a good time to jump in.
I think we will see some real estate market fluctuations. I do think that there is a bubble in real estate in a lot of ways, looking at some of the mechanisms of what Zillow was doing. Yeah, I think we’ve artificially increased demand and price a ton of people. We will see a little bit of a pullback, but immediately whenever we see pull backs, we’ll see people jumping in. I think whenever you can, it’s a great idea to purchase things, especially Bitcoin, when you see Bitcoin go down. The deflationary world is inevitable. I don’t think it’s going away. We’re probably many years into it already. Grab your piece before you can’t and that includes land. I don’t think that includes US dollar denominated bank bonds or stocks or anything like that. But when we change the unit of account, we’ll change the way that we value these things and how we express them and talk about them.
So, you could see stocks that I think the Bitcoin mining industry is about to be one of the most important things and I’m really curious to see how this works. Are Bitcoin mining companies going to become power companies or power companies going to become Bitcoin mining companies? I’m super fascinated to see how that plays out. Depending on how that does, it might make a ton of sense to invest into some Fiat denominated things that are going to be innately tied to the new standard of account and the deflationary world that’s coming. So, I don’t think it’s 100% Bitcoin is the only thing you should buy. I do think that there are like things that are going to be related to the Bitcoinization of the world. But in general, while you still can use a dollar and get multiple Satoshis, I don’t think that there’s really anything mathematic that I think, even really make sense in any sort of significant way as an investment outside of Bitcoin as a financial tool, and then buy the things that you need, buy the house you need, buy the products you need.
Bitcoin is a means to an end. I wish people looked at it more that way and find the life that you want. Find the life that you want to live day to day live in every day. And that doesn’t mean go buy a bunch of stupid crap. But find your farm, find your house, find the thing that you want to do, and live that day, every day and help onboard more people to get them as comfortable as you are and real estate plays a role in that. Whether it’s jurisdictional arbitrage, whether it’s mandate stuff, whether it’s whatever, you want to decide where you want to live, where you want to be, how you want to live, how you want to be, and real estate has a huge role in that and so does your unit of account and your energy capital where you save your life essence.
So, as far as I’m concerned, yes, real estate always makes sense. Bitcoin probably makes more sense while you still can. You’ll probably be able to use your Bitcoin that you stack now to be able to buy a house. I mean, you already can and in a lot of places but like really easily be able to do it really soon. So, until that is really the case that Morpheus meme, like when it comes time you won’t need to sell your bitcoins. So, I think we’re getting closer and closer to that every day. There’s a great Brian Harrington mini rant where he was talking about this where hyperbitcoinization, all the tools are like, basically here. We have 95% of the tools we need to take Fiat, basically out of our lives in terms of in effecting way. So, I think we have a lot of that stuff.
But yeah, Alex, I am really curious to see how dollar denominated assets. Will we start talking about Tesla stock in Bitcoin terms, in Satoshi terms? Will we start talking about houses in Satoshi terms? I think we probably will. Buy the unit of account while you still can. Then you can use the unit of account to buy all the assets and things later. And that’s at least the way I look at it. I think we have a lot of way to run an appreciation. I think people actually really do underestimate Bitcoin. I think even really bullish people. If you look at sort of some of the historical precedents of hyperinflationary events, they didn’t just stop. Bitcoin is not just going to stop at 100,000. We’re going to see some really serious inflation and denominations of US dollar. We get caught up in market cap. We get caught up in some of these presumed things from historical precedents, and we don’t actually look at like the percent change over time of the REITs mark, it didn’t stop at $100,000 or whatever.
So, I think over the next few years, we’ll see a unit of account change. And then I think we’ll be better postulated to make those decisions, Alex. But for now, if the decision is between unit of account or asset denominated in unit of account, I would buy the unit of account and then yeah, we’ll see what happens. Maybe that’s naive of me. Maybe this is a great time to be buying assets. I think in general, it probably is. I think selling your dollars is the play not necessarily buying assets, selling your dollars, and then Bitcoin.
[00:32:01] CK: I agree with you mark that even Bitcoin bulls are too bearish, and that’s – 37 stats generational wealth in 100 years. Get real bullish. I also really love this idea that you illustrated which is like Bitcoin really tethers power generation and banking together. So, whether it is miners becoming power generators, or if it’s banks getting into mining and power generation, or if it’s power generation facilities, getting into mining and then the financial services, those three industries are going to become one industry. That’s what bitcoin does.
Getting back to your article, you had an interesting kind of explanation for why leave Afghanistan now, and Afghanistan kind of being a big part of the petrodollar paradigm and now that we may be moving into a Bitcoin dollar paradigm, but it actually makes complete sense to get out of this Afghanistan. Do you want to talk about that and reorient the conversation back to this idea of the Bitcoin dollar?
[00:33:02] MG: Yeah, totally Christian. Yeah. So, I just thought it was – pointing at the sudden Afghanistan withdrawal is just like a signpost as, like Luke Roman would say, or, like this is a symptom of what we’re seeing. Basically, it’s simple. I’m going to reduce it to a pretty simple thing. I think the literal cost of holding the petrodollar was very expensive. It was obviously completely worth it, because we paid for it by inflating the US dollars. So, we did it for free. But there was a cost associated and a human cost associated and a political social cost. People don’t like wars. You can only lie so much about weapons of mass destruction to get Congress to do stupid stuff before the public gets really pissed off. I think we probably used up that card.
I don’t know if we can really do that again. We’re too interconnected. We learned too much. We call out the bullshit way too fast. The majority of us have noticed that doesn’t matter who’s in charge, it’s more of a purple thing. American imperialism will go do its thing regardless of what party’s in charge. So, I think the sudden retrieval was more just like see, like, you can see this playing out. Now, that there is an option, there’s another outlet. There’s another way to control inflation of the individual dollar while preserving that purchasing power via Bitcoin. Now that Bitcoin exists, the set costs of upholding a monetary policy that’s inflating, suddenly became instead of billions of dollars a year of defense budget, which is an open source protocol, right? So, the costs of doing war are became too much when there was an alternative that it’s really cheap and it’s that simple. It’s the same game theory stuff of like, why there is so much security in the Bitcoin network because the incentive vacation, the incentives, what is your protocol incentivizing more so than anything else? What does it incentivize?
And Bitcoin incentivizes putting as much energy into the positive play within the network. Being a bad actor, trying to do 51% attacks are very expensive. Trying to linear brute force a cryptographic hash, good fucking luck, you’re going to waste so much money and energy doing it, you would have been much better off just putting it in into the system via securing through mining or just literally purchasing coins. I think the cost benefit analysis was done and they saw that there was no longer – it’s always about money, let’s be honest. I think that they just saw really quickly that there was not money to be made there. In fact, it was losing money. And then all of a sudden, boom, we’re gone. I don’t think that’s like an unrelated event to the macro scenario.
It’s not to say that I think US like won’t engage in warfare tactics. First off, we are at war right now. If you don’t realize that, you’re naive, with all due respect, like this has been a financial war for a while now, an information war for a while now, here we are. But I think the locale has changed. It’s no longer about – obviously, oil still has a role to play in our future. Again, I think you’re naive if you don’t consider that either. But I think really, the region for where I could see warfare happening is now instead of oil, it’s really going to be about microchips and about processors and a lot of these things that are connected to everything’s a computer now. So, obviously all industrialization and stuff cars, smartphones, yada, yada. But also, ASICs and miners.
I was at the Bitcoin Blockchain Summit, and one of the representatives there, a US representative was like microchips are the new oil. And that’s just true. Obviously, I’m biased, because that goes towards my thesis a bit, quite literally. But I just think it’s true when monetary supply and monetary policy can be secured via the energy from mining, why would you spend money to house 100,000 troops in the Middle East? So, why would you spend all that money to air conditioning them, to keep their jets fueled up, to all the costs of just running that type of operation? To basically to have a place to place inflating money supply? When you have an open network, that is the best human created fulcrum for accepting inflation without affecting a supply as increased demand without affecting supply issuance, why would you keep your forces and in the Middle East? Why would you continue to wage war?
I agree with the Max Kaiser concept of Bitcoin is a peaceful revolution and I think we may see stuff, we may see some more, we may already be experiencing it and in a lot of ways. But I think in terms of incentivizing war, I think those concepts are just wars not really incentivized anymore. Knowing that you could positively put that energy into the Bitcoin network, incur a debt to mine Bitcoin, and then watch it extrapolate into credit over time, as the Bitcoin network gets more robust, more users are using it. SAS per bit goes up ledger space, and we see the little micro markets within Bitcoin play out.
I just don’t think that there’s much incentive anymore to politically take the hits of colonizing a country for oil and forcing those demands. At the same time, as we’re seeing this pull out, we’re seeing China move in, we’re seeing other denominations of currencies that you can buy oil in. So, it’s not just the military withdrawal. It’s also in hand with what we’re actually seeing in oil markets up there.
I think that just yeah, very simply, the incentives of the new world economy, with this deflationary energy protocol, remittance market, that is Bitcoin, there’s no need to spend all this money in human costs and bad press by doing military activity in the Middle East. It’s no longer cost effective and it’s really that simple. There’s a good Frank Zappa quote about that, that’s just like, at the end of the day, when the show’s over, it’s going to be because it’s no longer profitable, and the lights will come up, and you’ll just see that there’s a curtain and there’s nothing on the stage and the show’s just over. That’s what we saw happen. It was just boom, we’re out, peace. Everyone’s, “Wait, what?” My entire life I’ve been gaslit to assume we needed to have military presence there. What are we doing? And you look at the macro and there’s like a reason and an incentive for them not to be, so they’re not, it’s money. It really is money. It’s always about it.
[00:39:05] AM: Right. There’s a parallel there that I see in the education system, and that as we’ve learned in this past two years, there’s really no reason even for most corporations to have brick and mortar buildings anymore. We can operate the world pretty well from at home. So, I guess my question would be what other changes do you foresee as we take energy, our ability to move it, and store it, and transact, and we take all these systems and move them to Bitcoin, and we digitize them. What’s going to happen? I don’t see a reason for it be an army, but I’m not really a geopolitical strategist. but I just don’t see the purpose for something like that anymore.
[00:39:50] MG: I think there’s a purpose for a sitting one. I don’t know if there’s so much of a purpose for marching or invading one. But protecting, again, Bitcoins for keeps. Let’s protect our keys from a national security standpoint. I think that there will always be a case for defense from a culture or looking at border stuff as a country. I think that will always be the case and I think that there’s a biological evolutionary reasoning behind a lot of that. There is an incentive to protect your people. So, I don’t think military activity is going to die as a concept. But I do think it’s going to be much more about – think about your own self, and how bitcoins changed your life and how in your own actions. Then incentivization is no longer to like, go out, and it’s less about, I need to keep up with inflation, or keep up with making a bunch of money and spending a ton of money. It becomes much more about conservation, you spend a lot less.
When you start to see everything in Satoshi, you start to price, everything in this deflationary asset, things become less, you’re less incentivized to go buy some piece of crap. Whereas in the Fiat system that we’ve grown up with our entire lives, we’re just constantly bombarded with advertisements and with concepts of you got to do this, you got to spend all this money and go to college. You got to buy this cool phone. So, there’s so much incentivization within the system of we need to spend money, I just think it’s going to be that same concept on a nation state level.
Obviously, there are resources involved and there will always be political conflicts over resources, but becomes much less we need to control monetary policy. We need to diminish the effects of inflation. That’s what these endless wars are about. They’re not about really any, you could argue. And so, the incentivization is just gone. So, we won’t see that as much. I don’t think we’re going to see none of it. I do think that we could actually see something soon. But I think in general, the status quo of let’s do a military operation as a way to just, we can just burn money, and no one will notice that we’re inflating our money supply back at home, because we have this billion, billion, billion dollars of sinkhole to just shove it into and just shovel dollars into.
The incentivization is going to be don’t spend any money, don’t keep your lights on, it’s going to be the same concepts that are going to destroy a lot of the legacy financial institutions, it’s like you no longer need a brick and mortar in every city and in every country. You no longer need the lights to be turned on or janitorial services or paper. There are so many just sunken costs to our legacy system that we’re just not going to need. I think that’s going to play out from an incentive standpoint in a geopolitical way, just the same. I think, yeah, people like to remove the individual from the group and I just think in this case, you can’t really do that. What’s going to happen to you is going to happen to the people making the decisions behind the monetary policy of the United States. I think that it’s not a surprise that we’re seeing the things that we’re seeing now, because that’s what Bitcoin incentivizes, right?
So, I think the future geopolitical conflict is, it’s definitely going to be microprocessors. I think we’re seeing that now. We’re seeing lots of activity going on around Taiwan, where they make 90% of the sub 10 nanometer chips that go in like everything. They make over 90% of them. We’re going to continue to see stuff like that. Scenario, again, I can’t exactly say 100% why Vietnam happened. But this sort of concept of a place where we can just keep shoveling money into, as to not, once we debase from gold, and we went into the gold standard or closed the gold window, I just don’t think there’s really an incentive for that kind of similar military play. So, I just don’t think that we’ll see it. I think Bitcoin is more of a destruction than it isn’t invention and it’s going to dematerialize all these concepts that rely on sunken costs and rely on what does it cost to run a brick and mortar legacy financial system? Who cares? Throw it out the door. We don’t need it anymore. We don’t need you to do that.
Look at what’s going on with El Salvador. How many people are going to copy that concept where they see, “Hey, what’s better than spending millions and millions of dollars of running your own economic policy and trying to do all that stuff within your country? What’s way better and more efficient, and what’s incentivized?” Let’s go use this open monetary network that has millions and millions of dollars of like user activity on top of it, of open source developers that are going to make it better and make these products that are going to serve your country better and serve your citizens better.
So, we’re going to see that dematerialization, that we’re going to see in legacy finance, that’s so easy to see, that we’re going to see in bond markets that’s so easy to see, that we’ll see in global remittance and energy markets, which is so easy to see. We’re going to see it in geopolitical. We’re going to see it in military conflicts. We’re going to see those effects, which is to say, I don’t think we’ll see military conflict. I think the cost of, “Wow, we can still buy Satoshis, why would we spend all this money on a soldier to stay here and preserve the purchasing power?” We don’t really need to do it anymore. We have a mechanism that will do it for us. It’s a lot more social, maybe not understood yet, but I think war is pretty poor, we looked upon certainly when it’s the reasons why we went into it relies.
I just think the social costs are too great. Sure, but more so just the cost. It’s always about the costs. The bottom line is too high, the basis points – instead support, maybe more surveillance state information warfare, kind of stuff. I think we’ll see more of that. But it’s a totally different cost system, it has much less to do with developing weapons and human power and much more to do with like subversive techniques and Central Intelligence Agency.
So, I think we’ll see more of that stuff and less of the boots on the ground. And again, maybe I’m being naive, but what is the Bitcoin protocol incentivize? Not stupidly spending your money when every purchase that you make is going to become more and more expensive, right? That’s how Bitcoin works. So, every war becomes more and more expensive, rather than, less than less than less expensive. When you look at the total cost, for the US anyway, there’s some countries that like just paid off their World War Two bonds. But for us, we can print that stuff at a whim no problem.
For us, these wars that we’ve done had been not only cheap, we’ve made tons of money off of them via monetary supply stuff. It’s no longer incentivized. It will no longer really play out because yeah, again, it is really that simple. You can reduce it to money. These things have always been about money. We have a new money now. It doesn’t incentivize war. It doesn’t incentivize frivolous spending. So, we’re going to see a lot more saving. We’re going to see a lot less land war, and probably a lot more weird, subversive internet stuff, which I think we’re just full-blown in. So, buckle up
[SPONSOR MESSAGE]
[00:46:33] CK: My fellow plebs, the Bitcoin Conference is back. Bitcoin 2022, April 6th through the 9th is the ultimate pilgrimage for the Bitcoin ecosystem. The Bitcoin Conference is the biggest event in all of Bitcoin and cryptocurrencies. We’re leveling up and making this bigger and better than ever. I’m talking straight to the moon with the four-day long festival in the heart of Miami at the Miami Beach Convention Center. This has something for everyone, whether you’re a high-powered Bitcoin entrepreneur, a core developer, or a Bitcoin newbie, Bitcoin 2022 is the ultimate place for you to be with your people and celebrate and learn about the Bitcoin culture.
So, make sure to go to b.tc/conference to lock in your official tickets and use promo code Satoshi for 10% off. Want more off? Pay in Bitcoin and you’ll receive $100 off general admission and $1,000 off well pass. Those are stackable. So, go to b.tc/conference and attend the best conference in Bitcoin history.
My fellow Bitcoin lovers, have I got something specifically curated for you. The Deep Dive is Bitcoin magazine’s premium markets intelligence newsletter. This isn’t some paid group showing buy and sell signals. No, this is a premium Bitcoin analysis led by Dylan LeClair and his team of analysts. They break down in an easily digestible way what is happening on chain in the derivatives markets and in the greater macro backdrop context for Bitcoin. This newsletter turns volatility into a joke. So, hit up members.bitcoin.magazine.com and use promo code PODCAST for 30% off The Deep Dive. That’s members.bitcoin.magazine.com promo code PODCAST for 30% off. Divorce your pay group and learn why Bitcoin is the strongest asset by Dylan LeClair and his team.
[EPISODE CONTINUED]
[00:48:29] CK: I know that Alex needs to bounce and we actually have a hard stop in about 28 minutes here. I think we have time for probably one more topic. I think that you pointed out that very interesting and important that one, Bitcoin became legal tender in a dollarized country, El Salvador, and El Salvador is one of 66 dollarized countries globally today. Do you want to just talk about why is dollarization in a third world country, so important for Bitcoin to start making some end routes and just dive into the El Salvador kind of situation more specific?
[00:49:05] MG: Yeah, totally. Yeah, I think what I said in the article was like, perhaps we shouldn’t be as surprised as we are that the first country that tenderized, if that works is a word, that tenderized Bitcoin is a dollarized country. I think it makes perfect sense. I think that yeah, I think the first country that isn’t dollarized to tender as Bitcoin, I shouldn’t use that word. It doesn’t make any sense. To make Bitcoin legalized tender, legal tender, that will be a really important moment, because it’ll be the first time where the monetary supply is a country that has its own currency could just completely debase their currency and try to buy up as much Bitcoin as possible.
We’ll see that will be more of an interesting crux to see in terms of a shot heard round the world. Yes, El Salvador, exceptionally important in terms of what it means from international like banking things, the fact that this is a legal tender, means that the World Banks might have to deal with it. So, there’s a lot of that stuff. But the first country that has its own Central Bank, El Salvador uses the US dollar monetary policy. So, it’s not like they can just print $100 trillion and buy as much Bitcoin as possible, they can’t. They’re reliant on a central bank that is ours. And yes, you could argue that we debased it and probably bought a ton of Bitcoin with it, but bought a bunch of crap with it. But we haven’t done that.
So, there hasn’t been that – if you look at money as an electrical system, or like some sort of inertia, physical system, water, whatever, that Valve hasn’t really opened yet. So, there’s a really big difference between a dollarized country legalizing Bitcoin versus a country that runs its own central bank. So, when we see that, we’ll see some really interesting stuff. I think we’ll see more countries be forced to make a decision from the first country that has its own central bank, legalizing Bitcoin, than El Salvador, which is reliant on the economic policy of the United States.
I said 66 countries are dollarized. There are not 66 countries that use the US Dollar as their like singular currency. But there are 66 countries that like predominantly use the US dollar for their official transactions. So, I’m not 100% sure on the exact number of what we use it as their like sole legal tender, it’s not 66, it’s a little less. I think it’s in the 30s. But in terms of countries that like the majority of their economic activity is denominated in US dollar, yeah, it’s around 66. But just a significant portion of the world. I mean, even though they’re countries that don’t make that list, they’re still using the US dollar a lot. It is like the trade reserve asset.
So, I think El Salvador doing it makes a lot of sense, so much of their GDP over the quarter is reliant on remittances from the United States, or from remittances that are denominated in US dollars. So, by using a system, an open monetary network system that reduces again, that cost basis, those basis points, and we take it from being like 500 basis points to sub 100, using the Lightning Network. So, we’re there now. It’s a small country, seven million people. It’s not a huge deal, in a lot of ways, in a macro sense. But also, it’s like the biggest deal ever in a lot of ways. I am really interested to see the first non-dollarized country. I think that someone will see some really serious – we’ll see dominoes fall really quick when that happens, because that is a very different thing from an inertia system standpoint is –
[00:52:15] CK: Can you go into why that’s different? Just because I think a lot of people are familiar with this kind of attack, but maybe not everyone and that’s a very specific type of a situation.
[00:52:23] MG: Yeah, sure. I think everyone here should be familiar with a speculative attack because our good friend Michael Sailor is doing it, and by basically all metrics, and that means that when interest rates are zero or subzero, and you can take the Fiat currency du jour, and you can use it to buy scarce assets, Soros did with the pound with silver, or you see a speculative attack going on where you’re taking the purchasing power and removing it from the system and putting it into an external asset, that is no longer in political control of the central bank that you’re like removing the value from.
So, when a non-dollarized country does that, they can start to debase their currency and use it to purchase dollars probably, and then use those dollars to purchase Bitcoin, or they could just go straight into Bitcoin. So, the non-dollarized country opening up that spigot for them to basically debase the monetary policy of their citizens in order to purchase as much Bitcoin as possible, there’s nothing really to stop a country that runs its own central bank from doing that, as long as they can still purchase Bitcoin with it, they’re probably at an advantage to do a “speculative attack” on themselves, which once we start to see that kind of stuff, again, like that’s like kooky shit we’re going to see, when hyperbitcoinization happens on a geopolitical front. We’re going to see people do speculative attacks against themselves. It’s going to be weird.
And you could argue maybe we already are seeing that. Micro strategy is like over a quarter owned by like Vanguard and BlackRock, and we’re seeing them take out an absurd amount of money and creating these debt scenarios to use it to just purchase Bitcoin to not ever sell. That is a speculative attack on the US dollar system. It just is. It doesn’t necessarily mean, I think he’s great. I don’t think it’s not like a bad thing. It just is something that is happening. So, El Salvador is very limited in what they can do. They had their set amount of money that they had that they could put into Bitcoin, that they can invest in Bitcoin infrastructure, make their own Chivo Wallet, buy the 700 bitcoins or whatever they bought, they had that set amount of US dollars to play with, but there’s no El Salvadorian Jay Powell that they can call to, Ctrl P and print 60% of the El Salvadorian dollar and then they can use it to buy bitcoin, they can’t.
So, the US has to be sneakier about the ways that they do it. So, I postulate that the US has been sneaky and has been doing this for a while, has been making speculative attacks with zero interest rates. But so far, we haven’t seen a country do that yet. There are negative interest rates, there are zero interest rates across the country. We have seen central banks like Japan buy up 300%, 400% of their GDP and hold that. We have seen strange things but we haven’t seen a central bank just let money printer Gober and just buy as much Bitcoin as possible, like actively. Maybe that’s happened secretly, but we haven’t seen it yet. But I think we’ll see that soon. And when we do, it’s going to be imperative that other countries make a very similar choice immediately and imminently. Otherwise, they’re going to be completely left behind.
I think the game theory is already in place, the chessboard is set or whatever. I mean, the first country that does that, Ukraine, whatever, there’s a couple that could do it. We’re going to see some really interesting stuff. So yeah, that sort of makes sense that the difference between El Salvador doesn’t have a central bank in the same way that the US does, because they use ours. They’re a dollarized country. They use – they are at the whim of the monetary supply of the Federal Reserve presidents, and they have to work within that world. Whereas if the US wanted to just say, “Hey, we’re going to create a new bond system, instead of printing this trillion-dollar coin, or whatever, we’re going to create these new kinds of bonds. We’re actually going to attach the purchasing power of the US dollar to Bitcoin denominated holdings, whether it’s in some spot, future or whatever, so we’re going to see some fuckery.” And when that happens, we’re going to just see it happen everywhere. It’s going to have to happen, otherwise, you’re going to have fun staying for whatever, on a country standpoint.
So, it will be a matter of national security for countries that have their own central bank to have Bitcoin exposure. Otherwise, they could potentially be irreparably harmed. And you can say, yeah, sure, China has, “banned Bitcoin”, and there’s a lot of political movement behind it, that’s pushing it away, but they still own – they got 100,000 bitcoins from that coin plus scam or whatever that thing was. But it’s held by the government. They at least got some exposure. What other countries can really say that? Probably very few. It’s going to be really interesting to see that play out. And while it does, what retail can do is use their dollars and buy pieces of this deflationary world before things get really crazy.
But yeah, CK was saying earlier, people aren’t bullish enough, and when you really look at what does the 21 million, or no more than 21 million represent and what it could represent, they’re not in a market cap sense, but on like a human utility, human energy, capital, a scarce tokenization, of all of the energy of the universe, it’s not infinite. It is measurable the energy of the universe, but it’s practically infinite, right? So, when you demonetize infinite energy, then the infinite like spirit of humanity, and tokenize it in a first time ever, digital scarcity. If you don’t debase your shitty Fiat, to get a piece of it, you’re going to be in a bad place pretty soon.
[00:57:38] CK: Mark, just to close out this space, it’s been a really enlightening one, just like the article. For everyone who has not read the article already, I implore you to go click on Mark’s Twitter account, go follow him and go click on the pinned Bitcoin Magazine article on there. It’s also pinned to the top of this chat. But I feel like this would be a really solid time for you and I know that you explained your thesis already for an hour now, but if you could summarize the overarching thesis and trend in the next 10, 15 minutes, I feel like that would be really helpful for the audience, especially folks who have jumped in the middle.
[00:58:13] MG: Yeah, totally. And yeah, thanks again. I know we got a hard cut in about 15 minutes. So, thank you, CK. Thank you, Alex. Thank you, Bitcoin Magazine. But yeah, basically, let’s be reductive. There’s a concept that a lot of us have heard about, maybe we don’t understand the nitty gritty. But this idea of the petrodollar that yes, the US dollar is not backed by gold, but is still on an energy standard. So gold is an energy standard at the end of the day, meaning it takes energy to get it out of the ground, human energy or the literal energy for processing.
So, there’s a demand, the energy component of your standardization of money, makes it so that it is scarce to source. So, it’s not just leaves growing on a tree, if you need 10 bucks, you can go out and grab them. If you want 10 buck’s worth of gold, you got to pay someone money to go down the mine and get it and process it yet. There’s like a set energy cost associated with the standardization of your monetary supply. So, the petrodollar is the same concept. But just a little more technologically advanced than just using gold or silver. It’s a little more complicated. It took advantage of this like mass industrialization of the world that was happening at this time, the oil denominated industrialization, and it allowed the US dollar to inflate without losing that purchasing power from 1971 up until now. And over those 50 years, it has worked relatively well.
We’ve had a pretty strong dollar in a lot of senses a really good purchasing economy, and anytime we’ve had an issue, we’ve been able to basically sweep it under the rug. It really caught up to us though, in 2008. And when we had the Euro dollar liquidity squeeze happen and we had the subprime mortgage infamously represented in The Big Short, that sort of whole concept all those things happen, was our first kind of really like scary moment where the US purchasing economy was at a crux and at sort of a junction where we had to make a decision. And instead of re-standardization or doing any sort of tangible monetary policy, we decided to print more money, bail the banks out that put out predatorial shitty loans. We hired the people profiteering running the banks that profiteered off of the housing crisis, like we let them become treasury secretaries. We made a decision to kick the can down the road for an X determined amount of time. It is no surprise that the Bitcoin Genesis block immortalizes, there are things that we were going through, and yes, it’s 2009. But it’s the same concept. It’s the Chancellor’s on the brink of second bailout for the banks, that was all coming from the same crisis.
So, the petrodollar was no longer working as a way to hide the inflationary effects of this debt selling like Ponzi Fiat scheme that the world economy was for the last 50 years. So, the theory that I put forward in the article is that in March of 2020, when everything, like sort of Coronavirus, when the markets all pooped and threw up a little, we saw a new system be birthed. That was the cleansing, the like flood, and everything went down at once. We saw oil go negative in futures, which is just absurd. And this thing that we used to invade and spend a lot of human capital on sourcing and demanding people pay US dollars to buy this oil, where now it’s trading at a negative.
The sort of concept is that this same fulcrum that can suck the inflationary monetary supply effects of a debasement of the US dollar with via money printing, where normally we could just push that into the petrodollar system without losing that purchasing power. Now, we have Bitcoin, as a similar energy denominated standard that is hard to source digitally scarce. The concept of something scarce in the universe is so unbelievably, we so do not understand what that really means. It’s a really big deal. It’s a huge deal. The universe is unbelievably big. It is filled of unbelievable amount of things. To have a 21 million token denominated scarce communally upheld system is an unbelievably rare and new thing. It’s going to have vast effects on individual day to day life and geopolitical scenarios.
This is the geopolitical scenario that I foresee happening, where the US dollar inflates away its debts. It’s almost $30 trillion of debts and rather than losing purchasing power, it’s forced into the Bitcoin system they ever demanded but not affected disinflationary system of Bitcoin by getting a place to put that monetary expansion into coinciding with these like Basel III regulations, which forced banks and VCs and investment firms to hold equal value dollar denominated dollar positions for the assets that they hold, were set up for this scenario, where a new financial mechanism that I’m calling the Bitcoin dollar to thrive, and incentivizing a scenario where the US can still have its fun with its monetary supply, but will always have a place to go and a place to put it into.
So, by creating these US dollar rails around the Bitcoin system, by making the ins and outs in the exchanges and the big market share of volume and markets, by making them US dollar denominated markets, we’re creating a place for the US dollar to continue to expand but the purchasing power of the US economy to stay strong. And via that, I would suggest selling your dollars and buying Bitcoin and really understanding the difference of what Bitcoin is, in regards to regulation, in regards to, if it would be considered a security or not, versus these other shit coins, the difference of how it works and uses the remittance market, the energy market. Really do your homework and realize that Bitcoin is different than everything else. It’s different than gold. It’s different than real estate, and it has a huge role to play. It’s a non-accidental role. It was literally designed for this purpose by humans or human, or maybe I don’t know, designed for this purpose and homage to the effects of the petrodollar system having some issues in the 2007, 2008 crisis.
And yeah, we’re going to see mass expansion of US dollar denominated value in the Bitcoin system because of these policies and these incentives, both from the Bitcoin policy protocol and from US monetary policy. So, I don’t think money printing will stop. I don’t think number go up will stop. If you’re still thinking in terms of the limitations of market cap of how high Bitcoin can go, I think you are bearish even if you think you’re bullish. We’re going to see a weird fun stuff. I think it’s going to play out. It is playing out, but I think we should see some pretty radical geopolitical monetary expressions in the next few months, certainly over the next year. I think by the end of the decade, the purchasing power of a singular bitcoin is going to be absolutely outrageous.
[01:05:12] CK: Absolutely, 37 cents, generational –
[01:05:14] MG: Let’s talk about that for a second Christian, because that’s the 37 SATs is like the block reward like 30 havenings in or something like that,
[01:05:21] CK: The block reward –
[01:05:22] MG: 2021. Yeah. So, I agree with you, man. I think that it might be a minute till we see 37 SATs being generational wealth, or even like an annual salary or something. But if things continue to play out the way that they are, and again, I think the way that Nakamoto consensus is designed, I don’t think it’s going to be taken over by anything. I just think it’s basically mathematically – I don’t want to say impossible, because nothing’s impossible, but it’s about as mathematically unlikely, as of something else taking over or taking this role of playing this role that Bitcoin plays. It’s such a specific new – the apex predator of sound money doesn’t just stop evolving, and just take a nap and let something eat it or take over it, it’s going to always continue to evolve to become the soundest, most badass, best version of money. And that includes what’s its role in the energy market? Money has always been an energy tool and an expression for energy markets, whether it’s human energy or or literal energy markets.
Yeah, we’re going to continue to see mass appreciation and energy as scarce tokens, then of that there are one, or there are 21 million of them, but they are Bitcoin. Yeah, I think a lot of predictions of that are using the market cap as a way to say, “Okay, maybe we could take over gold and now put us at this.” I think a lot of that stuff is, I don’t want to say naive, because that’s not really nice. But because this is such a new thing that it’s really hard to, I think process, for a lot of macro people. They understand the difference, what makes this is fundamentally different. It is not power or purchasing power being generated by a keystroke. It is purchasing power being generated by an energy debt being incurred by a minor extrapolating over time, it’s a very different thing. There is a fundamental cost of energy being imbued into the system. And that cost was majority denominated in US dollars. I think now that we’re approaching about 90% of supply issuance, and the majority of it has been purchased with US Dollars or denominated in US dollars, we have 100% forever, pun intended, the US dollar to Bitcoin and I think we’ll continue to see it play out like that. I don’t think it’s a mistake and stay humble and stack stats, man, I think that’s really it, yeah.
[01:07:34] AM: For sure. Mark, I’ve got a good step for you too. If there’s 18.8 million Bitcoin right now, 7.7 billion people, that means if all of us were to be allotted some of that Bitcoin, it would be 0.002 Bitcoin. If you’re in the audience, and you don’t have any bitcoin, that might be a nice goal to start. Go get your allotted piece of the most unforgivable asset ever, like the greatest asset ever, 0.002 Bitcoin.
[01:08:08] MG: Yeah. People need very little. I think for a lot of us that have bigger stacks, and have been in it for a few years and are so lucky to have what we have, don’t necessarily stop stacking, make sure you’re taking care of your neighborhood and your loved ones and your family and buy as many tickets to this arc as possible for your loved ones. But also remember, really, truly, I hope people get this more and more. It is a means to an end and that doesn’t mean sell it and buy a Lamborghini. That means buy the art supplies you need, buy the studio you need, buy the farm you want, buy your friend a ticket to get out there to come with you so you can build a company together. Invest in yourself, invest in your community, invest in the world, invest in America, take care of each other, make art, have kids and perpetuate goodness in the world, use Bitcoin as a means to an end. Don’t just die angry in the loan with 12 Bitcoin in a hardware wallet somewhere that just gets burned, don’t do that. Thanks for your donation.
Really, use this to make the world a better place. We’re entering a deflationary world. Any of us that are around my age, I’m like 31. I’ve just been basically gaslighted my entire life. Use this, fight back, take control of your life, push back against these controls against Central Banking, against shit coins, really push back, take a step back, take care of yourself. When the plane pressure drops, put your mask on your face first and help those around you. Stack your stuff and take care of those around you. It’s a means to an end, and this world is too important to let a bunch of shitty people get your Bitcoin and invested in your communities and yourselves and our read Bitcoin magazine.
[01:09:44] CK: Yeah, that’s a great spot to end it, Mark. Thank you so much for the article. Thank you so much for the time and explaining this. If you all joined halfway through and want to hear this conversation, it will be on Bitcoin SPACES Live, everywhere where you can find your podcasts. So, that should be live in the next three days or so. You can go, again, go click on Mark’s profile, go follow him, go click on the article that is on Bitcoin Magazine, The Birth of the Bitcoin Dollar. And yeah, Hey, Mark, are you going to be going to the Bay Area Bitcoin meetup today?
[01:10:16] MG: Actually, tonight, I am going out of town with my girlfriend. We’re going to go camping for a few days, so I will not be there tonight. But I will probably be there next week or the week after. So, I’d love to connect with everyone there. Shout out to all the Bay Area Bitcoiners, Aces, Tommy, Billy, all those sweet folks.
[01:10:32] CK: Yep, great folks. I’m a Bay Area Bitcoiner for now. But yeah, you all, I got to bounce. Make sure to come meet me in person at Bitcoin 2022. Use promo code Satoshi. Save yourselves 10% off. Use Bitcoin to save yourself even more cash on your purchase and ticket prices. I believe we’re going up next week. So, stack that Bitcoin Conference ticket layer. Cheap. Piece.
[01:10:52] MG: Bye everybody. Yeah, reach out. DM is always open. I love educating. Come say hi.
[01:10:57] AM: Go read Mark’s piece. See you.
[01:10:59] MG: Thanks, Alex. Thanks, Christian. Bye guys. Thanks, Austin. Peace.