554. What One Billionaire Knows About Outlasting a Dollar Collapse | Michael Saylor

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Everyone has their own destiny.

Everyone.

on average, the currency collapses every 30 to 40 years in most political jurisdictions for all of human history.

Your storehouse of value, whatever it is, is going to be deflated terribly during your lifetime.

The best currency of the last hundred years is the dollar.

The winning currency of the 20th century, the best currency in the world, lost 99.9% of its value.

That's a winner.

Okay, now you come across Bitcoin and you talked about it as if it was abstracted gold.

If God's not going to set up divine bank and solve all your monetary problems, what's the second best idea?

We don't trust the government.

We don't trust a local bank.

We don't trust each other.

And we want the bank to last for a thousand years.

Let's go ahead and build out this Bitcoin network.

My guest today, Michael Saylor, started a number of successful companies, successful by almost every standard.

It wasn't sufficient to expand out the full scope of his ambition, and I would say that in the most positive sense.

He became deeply interested in 2020 in Bitcoin in consequence and

has

been at the forefront of a revolution in finance.

His company now owns 3% of the Bitcoin in circulation, and the successful company that he built with blood, sweat, and tears, let's say 10 years ago, has become a hyper-successful company in consequence.

He's been an evangelist for Bitcoin.

He's used religious symbolism and terminology to describe it.

He's on fire for Bitcoin.

And we talked about things you really need to know today.

You need to know who Michael Saylor is, where he got his ambition,

how his grounding in fantasy and science fiction allied

with the encouragement of his parents to produce the ambition in him that has culminated in this consequence.

You need to know that Bitcoin is increasingly becoming an accepted monetary standard like gold around the world.

There are revolutionary transformations on that that basis in the last year, not least because of the new Trump administration.

If you're young or if you're middle-aged or if you're old and you're trying to understand how you will store the work that will comprise much of your life, you need to listen to this podcast and hear what Michael Saylor has to say.

So you discovered Bitcoin, as I understand it, in March of 2020.

which was relatively recently, and it had been around for a while, and you had been doing a lot of other things but it moved your life laterally as i understand it

and i'm curious you're an engineer and a software engineer i'm curious about what it was that you discovered and realized that produced this profound change in your orientation and why you think it's justified and why you evangelized for it as well i guess i discovered bitcoin 30 years into my career so i started a company late 1989 for 30 years i had been been running an enterprise software company, MicroStrategy.

We brought it public on the NASDAQ in 1998.

Initially, we were focused upon one line of business, which is to sell software that allows banks or large retailers or insurance companies to analyze all of the data in their databases and assess risk and come up with marketing campaigns.

If you wanted to figure out what sells with what and do market basket analysis or any kind of risk assessment and you're a large enterprise, you would want to build a proprietary analytical system.

We call that business intelligence.

So that was successful.

Then I was in my expansionary era in my 30s and in my 40s, and I wanted to create lots of things.

And so I launched 10 other businesses.

I bought up all the domain names like angel.com and alarm.com and strategy.com and hope.com.

And

I launched businesses, and some of them

were singles, some were doubles.

I bought voice.com.

I sold it for $30 million.

I sold the Angel business for about $100 million.

The alarm.com business, we spun off.

It's a multi-billion dollar publicly traded company today.

And then I launched, I don't know, half a dozen, a dozen other things.

They just whiffed.

They failed.

What was your hit rate just out of curiosity?

Can you estimate it?

I would say that

the thing I started started with turned out to be the biggest success between 1990 and 2020.

And then the next idea was a small, you know, was a double, and the next one was a single, and the rest sputtered out.

I spent a lot of time.

They were my favorite idea, a great idea.

I loved them.

I invested a lot of money in them.

It turned out the world didn't think the same way I did.

I overcomplicated it.

And so it's an important part of the story because by 2010, we had overexpanded as a company and we'd launched all, I wanted to be the conglomerate, 10, you know, like the 10 different things.

And I found that the one thing worked and the other nine things didn't work.

And I couldn't, I needed to focus.

So we refocused on the core business.

And for the next decade, I had two dual experiences.

I had the experience professionally and I had an experience personally in finance.

Here's the professional experience.

I worked 2,500, 3,000 hours a year with 2,000 people doing 100,000 things right.

I tried everything under the sun.

We had a $500 million enterprise software business, and we found that we were the winner.

99 out of 100 of our competitors, or 99 other competitors had gone bankrupt or left the industry.

We were the winner, and we were competing against Microsoft.

And Microsoft is Microsoft.

And so we were the pure play,

you know, call it the David against the Goliaths.

And so for the next decade, I spent huge amounts of money on development.

It didn't work.

I spent huge amounts of money on marketing.

It didn't work.

I worked, I rebuilt every information system in the company.

It didn't work.

I obsessed over systems for HR, obsessed over systems for sales, for marketing.

I spent huge amounts of money on digital advertising, everything you can imagine.

I would fly around the world.

I flew around the world for a month and

I talked in every city, everywhere, in order to get the message out.

So I had tried every conventional thing imaginable, and 10 years later, the company was still about a $500 million company.

We were like a very low-growth, and we were banging our head against a company, Microsoft, which is more power.

You could more easily leave the United States than you could leave the domain of Microsoft.

They're just everywhere.

So, my professional experience is: I I figured I'm not a stupid guy.

I worked very hard.

I had brilliant people working with me.

We tried everything imaginable, but we could not dent, you know, the digital monopolies of the world.

And we were this, we were this, I'll call us a zombie company.

It's a publicly traded company that makes money, that won't go out of business, that's uninteresting because it's not growing 20% or 30% a year.

It's not Google.

It's not Facebook.

It's not a monster.

But, you know, there are 10,000 companies like Arts.

Right, right, right.

Most companies are like Arts.

Sure.

So we were there.

And

then here's my personal experience.

I got very fascinated with technology.

I wrote a book called The Mobile Wave.

And in the Mobile Wave, back I was in the middle of the day.

Was this 2012?

I published it 2012.

I wrote it 2010, 2011.

And the book, the theme of the book is, what happens when software dematerializes, when the software runs on a phone, when the computer goes from under your desk to in your hand, when it's no longer solid state or liquid state, but it's vapor state, and you go to sleep with the phone next to you.

What kind of software would happen in the mobile world?

And of course, we know all about it, right?

The Instagrams, the Facebooks, the Ubers, all of these things became possible during the mobile era.

They were inconceivable when the software ran on a computer.

So the theme of the book is, you know,

software is going to leap from under our desk to our clothing.

We'll wear it, we'll hold it, and it's going to become ubiquitous 24-7, 365, and it's going to change.

We're going to dematerialize 27,000 devices.

20,000 device companies died so Apple could live.

We're going to crush 20,000 retailers because everybody's going to want the Amazon.

You're going to see 20,000 newspapers crushed because Google and Facebook eats them.

And, you know, the message of the book is, you know, you probably ought to just buy the Amazon stock or buy the Apple stock.

And as an investor, I took, you know, a decent amount of money, call it $25 million that I'd made over the previous 20 years as a CEO and as a founder of a company.

I invested in these stocks and I 20X'd it.

If you, you know, how do you make money in the tech world?

You invest in something everybody needs, nobody can stop, and very few people understand.

Like most people will, in the year 2010, if you had said, hey, I really think that Amazon's going to work, people would have said, you're crazy.

Amazon's losing money.

No one's going to do this.

And they would have thought you're nuts.

And if you had said, I remember with Apple, you say, well, Apple, I think this iPhone's a cool thing.

They would say, Well, no, eventually it'll go to the price of $25 a phone, like Nokia.

It's going to be commoditized.

They can't hold their margins are too high.

They're going to actually have their margins collapse, like Dell or like Nokia.

And

of course, the conventional wisdom was Apple's not a good investment.

Amazon's not a good investment.

Facebook, what is this goofy thing?

And of course, for the next decade, here's what happened.

I work an hour a month as an investor and I get rich.

You know,

make half a billion dollars.

Not working.

Embarrassing.

All you got to do is just buy the Magnificent 7 in 2010.

And the conventional wisdom of Wall Street is if the stock doubles, you should diversify.

You should sell half of it.

If Apple doubles in price, go buy some IBM and some HP and some other computer company.

If it doubles again, you sell some more of the portfolio and you buy the thing.

And their thought was, you got to stay diversified.

But the problem is Apple won, everybody else lost.

At one point, Apple made all the money in the mobile phone business.

Everybody else collectively lost money to compete with him.

Amazon won.

Samsung as well.

All of them?

Yeah.

If you look at the winners

in this era, right?

I mean,

Apple was a winner.

Amazon was a winner.

Google, Facebook were a winner.

Samsung is the winner in the Far East.

Walmart kept up.

Every other retailer,

it's like there's two or three that kind of keep up, maybe a Walmart, maybe a Target, but there's 20,000 that went out of business.

I know as a clinical psychologist that any given teenager is going to fall prey to peer pressure from time to time.

If you listen hard enough, people are likely to tell you everything.

Our son, who's in seventh grade, he's starting to fall in with a bad friend group.

Teenagers are desperate to fit in and obviously desperate to have friends and not to be the isolated target of exclusion and bullying.

How do we as parents get involved and engaged?

The reason people don't have these sorts of conversations is because they don't want the emotion.

And the longer you let it go on, the more mess you're going to have to clean up.

Our daughter was bullied at her school.

How do we protect our kids when this is happening?

Don't let your kids drift away when they're teenagers.

They don't want to, but they will if you don't pay attention.

Do you think that's partly a consequence of the is there a radically centralizing tendency of the mobile world?

There is.

And so it's increasingly a winner-take-all

because when everyone's connected, the Predo distribution goes out of control.

That's what it looks like to me.

There's like one person occupies each niche or one company because everything's connected.

There's no micro-markets anymore.

These all became dominant digital monopolies.

And they became dominant because Apple could ship a new feature to the iPhone over the weekend to a billion people for the cost of the electricity.

And before Apple, you would have to, Kodak or Polaroid or fill-in-the-blank would have to create a new device.

It would take a year, and then they would have to sell it, and it would take another year, and there's a variable cost to it.

So when the functionality becomes software, there's a 99% gross margin and you can give it to 100 million, a billion.

Right.

Apple could do Apple music and give its

IP ownership matters.

Right.

And so they dominated the Rails

and they had these, you know, I used to say Apple's going to be the most valuable company in the world because it's the most valuable company in the world because it's the first time one company could deliver a feature to a billion people overnight.

You know, we never had that 30 years ago or 40 years ago.

So there are all these natural monopolies that built.

And at some point, you know, Microsoft dominated, you know, business software and Facebook.

How did you see that early?

I mean,

the companies you listed off, that was pretty good.

That was a pretty good hit list.

And like you said, you know, you worked yourself half to death, but all the money that you made, or the majority of the money you made, was actually a consequence of an hour, you said an hour a month investment strategy.

But like what, and this is germane to the Bitcoin question, because one of the things you're doing is setting up the circumstance.

You saw the direction the digital world was going.

You bet money on it, which is actually an indication of commitment to it.

And the bets that you made paid off.

And they paid off in some ways more than your hard work on the business front.

You know, you got to roll back to...

you know, first grade, my parents told me they'd give me a dime for every book I read, and I had a comic book addiction.

So one summer I read 100 books and one sum reading competition.

I started reading in first grade and that led me to a love of science fiction and fantasy, especially science fiction.

And I read the big three, Heinlein, Clark, and Asimov, and my entire generation, you know, Elon Musk, Jeff Beastos, a lot of us were influenced by that.

So

I was reading 10 a week when I was, well, in grade three and four.

My neighbor across the street had a wall of science fiction.

And he'd let me come in once a week and take, you know, as many books as I wanted.

And this I was reading exactly the same crew that you described.

I liked Ray Bradbury, too.

Well, a famous book by Heinlein is How Spacesuit Will Travel.

And in the book, a precocious youth builds a spaceship, gets picked up by

bug-eyed monsters or by space aliens, gallivants around the universe, saves the human race from bug-eyed monsters, comes back, and because he saved the human race through his

courage and his capability, he gets full tuition scholarship to MIT.

Well, I read that, I guess, by sixth grade, and I just thought I was going to MIT.

So I, you know, I liked, you know, and then my era, you know, we used to play Dungeons and Dragons and we used to do board games.

We play all these simulation games.

And,

you know, when you play these games, they give you a 64-page

set of rules and a set of dice, and you're creating a simulation of a naval battle or an army battle or,

you know, whatever whatever it might be.

That was just before computers got big.

So I got very interested in all that.

That drove me down a path where I went to MIT.

I studied spaceship engineering,

astronautics, really.

And while I was there,

you know,

studying astronautical engineering, I stumbled across another course at the School of Management there called System Dynamics, and I became fascinated with that.

It was the computer simulation of human behavior.

So people were building...

Jay Forrester founded the school and

the idea was build a computer simulation that shows what happens if you change the dynamics of a traffic system in a city.

I mean, the classic example is I build a beltway around the city and I build sp a hub and spoke system and I build super highways because I want to speed up travel time.

But invariably what happens is the city increases by a factor of 10 and the travel times go back to what they were.

Because of the feedback, right?

If you built the roads and then no one reacted to it, then you would be able to get around faster.

And the world would be a much simpler place.

Yeah.

Another classic example is, you remember the Club of Rome study?

You know, they declared that the world was going to run out of resources within 10 years.

And they declared it because all the oil reserves were for 10 more years.

But But if you thought about it, you would realize that an oil company only has an incentive to identify 10 years' worth of reserves, and everything after that's a diminishing return.

So we always have 10 years worth of reserves.

It's a time horizon issue, not a resource issue.

If you see the world as a dynamic, non-linear feedback system, and you consider the human behavior or the reaction to what you do,

then you're much more sophisticated.

And you start to realize the simplistic linear models don't work.

And you have to consider human behavior and economics and

urban planning and

business planning.

And so

I studied that.

I did my thesis in it.

I started building computer simulations.

I learned from the computer scientist

in the School of Management.

I got very fascinated in the school.

I got very interested in politics, philosophy, economics.

I ended up taking another degree in the history of science.

And,

you know, as I studied

at MIT.

It was at MIT, too.

So at the same time, when were you there?

1983 to 1987.

And when I was there, I was also an Air Force cadet.

You know, the Air Force paid for my education to go through MIT.

I was very fortunate in that regard.

So

this is all just backstory, but I had the background as

a cadet and a commissioned officer in the Air Force.

I grew up on an Air Force basis my entire life.

My father was a career career non-commissioned officer.

So I lived on military bases.

Move a lot.

Moved a lot.

So I saw the world.

I had the science fiction background.

I had the Dungeons and Dragons, the fantasy background.

I got very interested in the history of science.

That's all about paradigm shift.

You know,

how do people embrace new ideas, whether it's the Copernican revolution or whether it's, you know, whether it's relativity and Einstein's ideas or whether it's quantum physics or whether it's whether it's what happens when I introduce railroads or electricity or crude oil or radio how does it change the culture how does it change the politics how does it change the economics of the civilization So that was my academic background.

And so I always was fascinated by science and technology.

I was surrounded by technologists at MIT.

I got into the space.

But the fantasy background was very important because in fantasy,

there's this idea that if you know the name of a demon, you can summon them, you can control them.

Names are very powerful.

And when the internet hit, I was typing out

sailor at microstrategy.com in my email.

And I thought, well, it'd be a lot better if I just typed out sailor at strategy.com.

And I started thinking about domains, and it inspired me to go and buy up all the domains I could.

So I bought Hope.

You know, like, how would you like to own Hope?

Like, the nice thing about owning Hope.

That was when?

What year was that?

Between 94 and 98.

Right.

So pretty early.

Pretty early on.

And so I thought.

How many domain names do you think you bought?

I bought a bunch, but I bought about 30 of the classics.

My idea was the most valuable thing

is a constructive word in the English language that has a positive connotation that everyone understands, everybody can spell.

So I bought Emma.

I bought Michael.

Michael.com.

I bought Mike.com.

I bought Hope.

I bought Voice.

I bought Angel.

I bought Alarm.

I bought Speaker.

How did you pick the words?

I mean, you laid out

every good word that I could buy.

It was a real estate, a digital real estate gold rush.

Right, right.

If you would sell it to me, I would buy it.

I figured, you know, what did I think?

I think if a billion people learn to speak English, I'll give you an example.

A billion people learn to speak English.

How many of them know how to spell strategy?

How many of them have a positive impression of strategy?

Now,

now I name my company MicroStrategy.

Let me tell you, for 30 years, half our customers mispronounced it micro strategies.

Like when you pick a word that's not in the English language, if you teach it to third graders or sixth graders, the education system is burning the word.

What does hope mean to you?

Right?

That's different than naming a company Celebrilix.

You know, Celebrilix is not a word we can spell and it's not a word that has a meaning, but hope

angel.

It's a pretty strange opportunity to be able to buy words, which is essentially what happened.

And it happened in the internet era.

Yeah, right.

Now, if we go to mobile, my fascination was

this idea that if software goes from the back office to the desk

to my pocket,

it goes from solid state to liquid state to vapor state.

It's all around me.

What happens when I can talk to it?

What happens when it can talk back to me?

Well, you know, now

you have to have an imagination.

Science fiction, it's valuable because it says if you learn science and engineering,

you can figure out like what's the optimal way to get to Mars from the U.S.

You will start to understand gravity wells.

You understand physics.

That's very important for one part of the story.

But the other part of the story is fantasy.

You know,

I'm creating something in cyberspace.

I'm an engineer and I can imagine throwing a baseball in orbit.

And if I throw it fast enough, it stays in orbit.

And if I throw it harder, it breaks Earth's gravity field and and orbits the sun.

And if I throw it harder, it breaks the sun's gravitational field, and it spins off into the Milky Way.

Well,

that's what science fiction or engineering teaches you.

Fantasy teaches you, I can throw the baseball and will it to be a flock of seagulls that land on my head and turn into a pot of gold.

So those are little paradigm revolutions in that fantasy.

They're frame-breaking.

The significance is in the hardware world, you're subject to thermodynamics and physics, and you better know it.

But in cyberspace,

you're not subject to thermodynamics and physics.

So you could imagine,

you know, I look at mirror, mirror on the wall, who's the fairest of them all, right?

And Snow White gave you the answer, right?

Because, you know,

when that happens in a fairy tale, the mirror talks back to you, it comes to life, you know, and eventually we got to, you know, Zoom and video.

And pretty soon your iPad became a magic mirror.

And pretty soon you could talk to, you know, a relative of yours 8,000 miles away.

And that was pretty magical.

But then when you put the AI behind it and the AI generates an AI image, you're not talking to a person.

You're talking to an angel or a demon.

Right.

And so now, if you want to design that stuff, if you want to design magic songs.

Why those words

an angel or a demon yeah

yeah because you see one of the things i wanted to talk to you about today was the use of imagery the the your use of imagery in your tweets and your marketing for bitcoin because like you you have a strange mind in many ways because you're

you have your engineering background and you think that way, but you also have a foot in the world of fantasy.

And that's not a, that's...

I mean, there's a lot of, well, there's lots of engineers that are sort of possessed by the world of fantasy.

You know, they live in a Star Wars ethos, right?

And many of them had their philosophy shaped by the science fiction that they read when they were in their early adolescence.

And that really produced the religious and fantasy substrate of their thought.

But there's not a lot of examination of that.

But you thought about fantasy, by all appearances, a lot more, in a lot more detail than that.

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Yeah, well, when I was in MIT, I was surrounded by some of the most brilliant mathematicians and engineers in the world.

But what distinguished me is

I was a pretty good engineer.

Like, I probably wasn't like a Fields Medal mathematician, right?

I wasn't like that, but I was a good engineer.

But I had a liberal arts band.

And the truth is, if I could have afforded it, I would have gone to Yale and studied history as an undergraduate.

I just didn't have any money.

And they didn't have an ROTC program.

And the government wasn't paying Air Force cadets to go study history at Yale.

So my love was history.

History, science fiction, imagining the future, fantasy,

imagining an alternative future.

Would you say you think in pictures or words?

Images.

You think in images?

I'm a synthesis, so I generally

I'm the person that would tell you why the steam engine, you know, and the governor of steam engine are similar to a political process that was implemented in medieval Russia.

Like, I'm thinking about the mechanisms and how they function in the physical world, the political world, the economic world, the fantasy world, the magic world, the whatever world.

So, I would always be thinking simultaneously across that.

So, when I went to MIT, most of them were there to do engineering.

I was actually

half liberal artist, half engineer, and that was that was what was

different about me and when I and of course when I came out of MIT

I didn't work for I don't want to work for someone else doing something they told me to do I wanted to create something and I think that I think that

you know when you're

that entrepreneurial bent probably goes along at least to some degree with that proclivity to appreciate fantasy because well entrepreneurial activity is associated with trait openness, which is the creativity dimension.

And so

it makes sense that you would have that entrepreneurial bent combined because you have to imagine possibility to be an entrepreneur, right?

So that's the fantastic element.

You have to conjure up something that doesn't yet exist, and then you have to pursue it, and it has to captivate you.

So you have to have the temperament for that.

So you've got, do you like, do you still read fiction?

I do, not as much as I used to.

In my current stage in life,

I spend a lot more time reading history, like cover to cover Durant's

story of civilization, every volume, all 15,000 pages, or all the history of America, you know, you know, conceived in liberty, Rothbard's history of America before the Revolutionary War, or history of economic thought.

So a lot of history, a lot of biography, a lot of monetary theory.

And of course, today, I spend my time reading legislation and all of the developments in the political economic world world relevant to digital assets, digital technology, because there's a flood of it, and I'm expected to have an opinion on it.

But when I can sneak away, I'll go read history.

Artistic interests?

Landscape architecture,

residential architecture.

When I first came here, I went to Tallison West.

Frank Loyd Wright's architecture, all architecture everywhere in the world.

Right.

Well, that's a good blending of aesthetic and engineering as well.

Very much.

But to address two of your points that are important, one, in fantasy, there's this idea of casting a spell, right?

So if you can imagine it,

you can cast it.

That's a very interesting idea.

Can you make the world a better place?

Can you shape it in a certain way?

And

the second point you brought up about metaphor, right?

Imagery.

Yeah, that was in relationship to the angels and the the demons.

You know, if you write a book about something,

you know, write a book about Bitcoin and it's 200 pages long.

I wrote the book about something.

What I discovered is 1% of the people will read the book in five years.

Maybe 0.1%.

It's very, you know, and when they read the book, if you wanted to explain something in 200 pages or 500 pages, they might have forgotten what they read on the first 50 pages by the time they get to the end.

And so a 200-page explanation isn't nearly as powerful as to say, oh, that's a demon coming out of cyberspace.

Right.

Well, that's the power of poetry.

Because

it's like, oh, what is that?

That's an actor in cyberspace with hostile intent that I should be afraid of.

And so

there's a lot of overexplaining in the world.

And what I've discovered is

in the modern world, we live in an age of abundance and there is so much infinite information.

You know, I watched your podcast on YouTube.

I came to know you before COVID and I was fascinated by them.

But then I stumbled across chess videos and then I found you could spend your entire waking day watching chess videos.

And then I realized you could spend your entire life watching Magnus Carlson chess videos.

And then I realized you could probably spend an entire day watching different chess commentators covering one Magnus Carlson game from 30 different points of view.

And if you want to go down that rabbit hole, whether it's

diets, the carnivore diet or chess or pocket knives or someone sailing around the world,

there is literally infinite depth content.

And then comes along Netscape and YouTube, and all these other streaming.

And then Lord help you, you fall into a TikTok hole, and you're like, you start swiping and then YouTube decided to steal it.

And they have these shorts.

And when you pull up the YouTube short, the algorithm is thinking, what is the statistically most likely thing to capture your attention and punch your buttons and hit your dopamine?

And you find yourself going, yeah, is that an angel or a demon, that algorithm?

Yeah.

And you are, you know, you are stuck and it's an addiction if you're not careful.

And

of course, well, it's optimized to grip short-term attention, you know, and that's, there's something really, there's something really distressing about that because the more immature a mind is, the more it's gripped by short-term attention.

And these bloody algorithms maximize for short-term attention.

And the attention fragments are getting shorter as the content gets shorter.

And so we're literally training super intelligent AI systems to hook us in keeping with our hedonistic drive.

So that's a demon, I would say.

And that tech, you know, that.

It's not a fair fight.

It's not a fair fight.

It's a 16-year-old boy against the smartest, you know, AI in the world trying to addict the boy to the imagery they feed, right?

right and and so yeah the smartest the smartest engineers and the smartest AI systems that are actually operating in ways that we don't even understand because they're reinforced they learn by reinforcement but so they understand things about us that we don't understand they understand coming back to my communication style then what I realize is people just don't have the time like you can for example and in life you can equivocate and you could say well you know you might do this and you might do that and do your own research and if you think blah blah blah things might happen and read these 82 pages yeah yeah or you can say this is digital gold but it's going to crush real gold by a factor or so okay so let's let's leap ahead into the bitcoin issue because i i still want to know because you set up the background now you've described how your mind works you described the fact that you recognize patterns and that you see possibility i want to hear how that translated into your discovery of bitcoin and where that went okay okay it's march of 2020

and in March of 2020,

Michael Saylor, the CEO, is slaved for a decade, working infinitely hard, working his 2,000 employees infinitely hard

to compete against Microsoft and Magnificent 7 and to put growth back into this public company called MSTR.

The company is a perfectly fine company, but we're, you know, a company growing one, two, three, four percent a year is uninteresting to every professional investor in the capital markets.

And we've tried everything under the sun and we cannot break free.

And

our employees are paid in stock options and the stock's not going anywhere.

Right.

And so I am at a dead end there,

very frustrated, my wit's in.

And then Michael Saylor, the individual, occasionally buys some Apple and Amazon stock and he's made a fortune.

And I'm thinking, this is not good.

Why is it not good, though?

Like, because I mean,

because I want to dig into that a little bit.

You had a company that was growing moderately, let's say.

It wasn't spectacularly interesting.

There were stock problems, but the company is quite functional and it's doing quite well and it does its thing well.

And then as an individual, you've made these like home run investments.

So what is it that's dissatisfying you exactly?

What's dissatisfying is to think that you peaked 10 years earlier.

You've hit a plateau and you cannot

go any further.

I see.

So it's a plateaued adventure.

Right.

We plateaued.

We can't break free.

And work isn't fixing that.

What's dissatisfying is to see the Elon Musks or the Mark Zuckerbergs of the world have extraordinary success.

And you grow up in that generation and you feel like you hit the wall.

They launched the Instagram.

They launched the Facebook.

They launched the electric car.

And

you somehow have created this.

It's a successful business but it's now a low-growth business which is you know

comparable why do you think why do you think that that

why do you think that

ground at you like i mean because in by many by many

indices

you're multidimension you were multi-dimensionally successful already now you talked about the fact that the the big league leap so to speak didn't occur but why in the world do you think that particularly disturbed you and drove you to seek other avenues of expansion?

I just thought, is this all there is?

There's got to be more.

I wanted to change the world.

You know, when you, you know, you start and you think you can change the world, and you get to some point where you realize you fulfill one, two percent of the demand of a given niche of the world, which has now become a mature cash cow business, and the world's done with you.

Do you have any idea where that ambition came from?

Oh, it must have come from my mother.

When I was, my first job was as a paperboy.

And, you know, so I'm delivering papers in Dayton, Ohio

through the bitter cold, the Blizzard is 78.

And at some point, there's going to be a competition for the best paperboy of the Dayton Daily News.

And my mother enters me in the competition.

And, you know, she creates this book of entries.

So, you know, I'm the musician.

I've got the book collection.

I'm the gamer.

I'm a this.

I'm a that.

And I swear she must have thought I was God's gift, you know, and it never occurs to me that being, you know, the number one honor paper boy in Dayton, Ohio isn't necessarily the pinnacle of achievement.

But in her eyes, it was.

And she entered me in the competition.

I ended up number two.

She had no faith in you.

But I thought, you know, she thought I was the greatest person on earth.

She's like, you're going to change the world.

Freud's mother thought that about him.

And he said that it had given him a tremendous advantage.

You know, it's really something to have a parent who has like unblinking faith in you, especially if they've actually identified those elements of you that are

useful.

I was a smart guy.

Like I was like number one in my class normally, but being number one in your class in a public elementary school in middle Ohio is no statistical justification for thinking someone's going to grow up and change the world.

But my mother believed it.

She believed in me.

She imbued it in me.

And for whatever, if your parents think that about you, they program you and it works.

So somehow in my head, I was programmed at an early age

by an inspirational figure.

To believe I could do it.

Do you think that was ambition exactly?

Or do you think that was faith in your ability to solve problems?

Because those aren't the same thing, right?

I mean,

you could imagine a...

situation like that that would produce someone who is narcissistic.

That's a very different outcome than someone who believes that if they hit a problem hard enough, they can crack it and move forward.

You know, if you combine the influence of my parents and my mother, especially, with my father is a very inspirational figure as well.

He's like the, he's the Air Force sergeant, you know, at 6.30 in the morning saying, hit the ground, run him, son.

Okay, okay.

So that's the work ethic.

He was the work ethic.

Okay, okay, you know, straight arrow, work hard, you know, and do your job and do your duty.

And my mother was,

I have the smartest son in the world.

He's going to change the earth.

Right.

And so that was the two.

But, you know, once I got into

reading, you know, if you read Heinlein, Heinlein's, you know, stories, his juvenile stories, and his stories are.

Here's a teenage kid that's going to go off, go to Mars and make peace with the Martians and change the course of human history.

Right.

Right.

Or, you know, and you name them.

Every one of them.

So you found that hero mythology in

all of his figures are inspirational figures, you know?

Yep.

Right.

If you think about the Heinlein

ethic, right?

It's like self-reliance, resourcefulness.

Yeah.

You know,

he was a libertarian, too.

Very much so.

I know the lefties used to think of Heinlein as a fascist.

I remember that.

It shocked me.

I never realized when I was like 13 that the science fiction I was reading had political implications.

I didn't think that, and that's not my takeaway.

My takeaway is he says, when wherever you're living gets too crowded, and there's too many bureaucratic busy bodies telling you how to live and how to breathe and what to do, it's time for you to find a new frontier.

Go somewhere else.

Yeah, right.

Go west, go to cyberspace, go to out, in his case, go to outer space.

You have to, you know.

Well, there are frontiers everywhere, and you found them in the digital world.

And

something, you know, it's always a struggle, but something good always comes of it, right?

In all of his books.

Right, right.

Right.

And so you have the inspiration of

him as, you know, as kind of a

figure.

And then you have the inspiration of, you know, your parents in a different way.

And then, of course, once you start reading books, right?

If you read enough, you're inspired by the lives of human beings that came before you.

So I think all of that

made me think I was put here to do something.

Okay, okay.

Right.

Okay.

And I get to 2020 and I'm frustrated and it's it's a very pivotal point in my career.

I'm just deciding, am I going to sell this company?

Am I going to retire and drift quietly out of history?

How old are you at this point?

55.

Right, right.

Okay.

Lots of people stop at 55, right?

They decide they're retired, whatever that means.

And then they're, well, looking

They're looking for purpose for the next 20 years, which is not a good fate.

It's not a good fate.

I've watched this many people at right around that age, you know, they decide in a way that they're old and they stop looking for further adventure.

And generally, that's a catastrophe.

But you, when you hit it, you thought you hadn't hit an apex.

You hadn't had the apex that you wanted.

And then you found Bitcoin in 2020.

Yeah, well, you know, I felt like I'm not done yet.

Yeah, I'm not.

I had invented 10 things and that didn't work to invent something.

And then I had tried 10 different business strategies and not small, like I bought 300 million dollars of my stock bag.

I was like, I'm going to spend hundreds of millions of dollars.

And this is against a company that made 75 million a year.

Right.

So I spent huge amounts of money to try to fix it.

I literally rewired every single IT system, rebuilt everything, rethought every business process as the, you know, thinking if I just work.

If I work harder and focus more.

That's your Air Force dad.

Yeah.

Yeah.

Well, the thing is, the funny thing is, so that's the contradiction between conscientiousness and openness, right?

Because the conscientious types are managers and administrators, incrementalists.

Their solution to a problem would be make what we're doing better.

But the fantasy people, the open people think, no, no, like no matter how efficiently we go down this road, it's not the right road.

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Now we get to some very transformational things.

So, Thomas Kuhn in the structure of scientific revolution, he introduces this idea of the paradigm shift.

And what he notes is that when a new paradigm comes along, it's embraced by the youth Yeah.

All the people who have the old paradigm in the world.

The only reason the adults ever embrace it is a war.

So, you know, you know, and there's the famous phrase, science advances, one funeral is exactly.

So we're waiting for the old guard to die.

But the one time when it's possible for an old dog to learn new tricks, if you will, is when there's a war.

So when I first saw Bitcoin, I was 2013, I was fascinated by Apple, fascinated by Amazon, making a lot of money in my private investments.

That was my tech ride.

And I was working hard my business.

And I had 20 things that I thought I was going to do to fix that business.

And I looked at Bitcoin.

I was like, well, this is an interesting thing.

Some decentralized monetary system.

But, you know, right around then, the government shut down.

There was an online betting site called Trade Sports.

And you could go and you could bet on the outcome of anything.

You You could bet on the outcome of elections.

You could bet on sports.

You could bet on whether it's going to rain.

And it was kind of a cool idea.

The government shut it down because a lot of times when they're, you know, remember they shut down online gambling.

I was watching this in 2013.

I looked at Bitcoin and I tweeted very famously.

This is back when I tweeted, but no one cared.

So I aired my opinion and my opinion was.

You know, Bitcoin's interesting, but I think it's going to go the way of online gambling.

You think it'd be shut down?

I thought it it was going to be shut down.

I disagree with that.

Well, that was a likely, that was a likely outcome.

And in my defense, a lot of good arguments why.

And it wasn't until 2014 that the IRS designated Bitcoin as property.

2013, it was unclear what it was going to be designated as.

But in any event, I did it.

I forgot about it for the next seven years.

I went off, and we roll into March of 2020.

And in March of 2020, you know, this entire COVID thing developed, right?

So first, the world shut down, and I'm not happy about it, and I don't agree with it.

And the second thing that happens is we all go remote.

And the third thing that happens is, is all of the big tech companies, the Amazons, the Microsofts,

their number one disadvantage in recruiting away our employees is all of our employees would have to get up, move across the country, take their kids out of their school, sell their house, and their wife would probably have to get a new job or their husband have to get a new job.

And our advantage was we had a tight group and we all had lunch together and we met in the office and we had a face-to-face community.

So imagine how you feel when your best engineer is basically sitting at a house in Arlington or Vienna and they can simply point their computer to a Microsoft server, change jobs, get a pay raise.

All these mega companies are going to steal all my employees.

And if they hire away all my engineers, then maybe my product's good now.

I have a better product, but I'm fighting against monster corporations with a better product, but I'm not going to be better once they've hired my best engineers away and they're going to slurp them,

you know, off.

So the company had one more ACE.

The thing that we had in our back pocket that kept us, that we had relied on was we had $500 million in cash.

I have 2,000 hardworking employees.

I have an operating business.

It's a cash cow and I have 500 million in cash.

And that cash, you know, in the best period back in 2010, just before the great financial crisis or

in that range, interest rates got to 5%, 5.5%.

And maybe you can make 25 million a year on that.

And then interest rates got hammered down.

The central bankers kept printing money and they actually forced the interest rates down.

I didn't understand that they were manipulating the interest rates to make them lower during that decade.

I was a techie.

I would say I was very technically sophisticated and I was very good at running a business.

I was in the category of work very, very hard

and know my business.

But what I didn't understand was money.

And I didn't understand banking.

And I didn't realize that as hard as I was working, they were taking it out the back door through inflation.

So the interest rates are maybe 2.5%

as we roll into the year.

And here's what happened.

COVID lockdown takes place.

There's a massive panic.

All of these stocks crash because we're shutting down the world for the next two years.

Of course they should crash.

And, you know, the administration looks at it and, you know, The hue and cry comes from the mainstream media and from the leaders in business and from the politicians.

Lower the interest rates.

So Jerome Powell turns around and lowers the interest rates and lowers the interest rates.

And pretty soon we've got interest rates going from 250 basis points, like overnight rates, to zero.

Well, what happens to the stock market?

And this is the most perverse thing imaginable.

By the summer of 2020, all of the stocks have recovered.

It's like, oh, we had a crisis, but we solved it by taking the interest rate to zero.

We printed money.

And the stocks recover.

Amazon's recovered.

Apple's recovered.

Disney is trading higher.

People are basically taking Disney up to double and they're trading it based upon forward expectations of Disney streaming video revenue year 2024.

And I'm watching this.

And this was a what happened in 2020, I would characterize as a bifurcation of Main Street and Wall Street.

What you saw was Main Street was destroyed by these policies, right?

Main Street got shut down.

The private manufacturer, the person that works with their hands, the guy that shows up, the small business, the mid-sized business.

This is the Trump constituency, by the way.

These people get destroyed, right?

And they're wiped out.

Like, okay, it's illegal for you to open your gym.

You're going to jail.

If you go to work.

Okay.

And then Wall Street was, you got guys running $5 billion

equity investment funds living in New York and the Hamptons.

They had the best year of their life, Jordan.

2020 was the best year in 30 years for these investors.

They're making all you had to do was be holding the stocks or playing the market.

When interest rates go to zero, the P2E of any company that generates cash goes, it doubles, it triples.

The cap rates on real estate doubled.

So the perverse irony is you own a building, no one's in it, the value of the building doubles in four weeks.

You're owning a company, all the customers are being bankrupted, the value of the company doubles.

So what happened was the government printed money.

We had hyperinflation,

not in consumer products, not in producer products.

We had hyperinflation in financial assets.

That hyperinflation meant that the stock market rallied, real estate rallied.

If you owned a portfolio of real estate or portfolio of stock, you got rich.

And the thought that I had, which is, this investment manager sitting on his floaty at his house in the Hamptons is having the best year of his life, and I'm having the worst year of my life.

He's not working at all.

He's literally not working at all.

He's watching television getting rich, taking high fives, and I'm watching all these people I care about wiped out, destroyed, jailed, abused, bankrupted, fired, stripped of all hope.

And then I have this $500 million asset and the interest rates go to zero.

And Jerome Powell goes on television and he gives a speech.

And these are his words.

We've taken interest rates to zero.

I'm not even thinking about thinking about raising interest rates to the year 2024.

But my observation was:

I had an asset, it's now non-performing.

You know, my finance is non-performing.

My equity is dead in the water.

My chances of turning this around are zero because after doing 100 things for a decade, they're zero.

My human capital is about to be stripped away.

And so I have a choice between a fast death or a slow death.

And so it was time to make a decision to choose a side.

And I felt like

if I give the money back to the shareholders, conventional wisdom is, you know,

give the capital back to the shareholders because you idiot, you're getting 0% interest.

And us brilliant investors are getting, you know, S ⁇ P is up 25% this year.

Okay, so I could just give the money away.

Well, I took 30 years to accumulate the money.

Why should I give up 30 years of my life?

2,000 people did a million things right, and I'm just going to give it up and slink into my hole and disappear from history.

I thought that's not very appealing.

Well, I can keep the money at 0%

interest, but I'm boiling, right?

The environment is boiling my employees off, and it's just a slow death, not a fast death, but it's a slow, certain death

or I can fight

right and so paradigm shift war it wasn't the war on COVID it was the war on currency combined with the war on COVID and in that circumstance you know I'm standing there and I'm thinking I wasn't put on the earth to lose like this like this is not how I'm going to go out

And so I started looking for a solution.

And I said, well, it's pretty obvious.

Operating companies are discriminated against.

People that do things are being discriminated against.

I want to be one of those guys that owns things, but I don't want to own sovereign debt.

If I'm owning the T-bill, the government's just told me T-bills are worthless.

I better go find something else to own.

So I started thinking, well, what can I buy?

Am I going to buy art?

Am I going to buy a building?

How much time were you spend thinking about this at this point?

Like, is this like 16 hours long?

Oh, you know, so I was there and I thought, well, what can you buy?

It's like, can I buy real estate?

And the answer is, well, real estate just doubled in value over a few weeks because Jerome jacked the price of the interest to zero.

So that's not good.

Can I buy a portfolio of stocks?

They just went to an all-time high because we jacked the interest rate to zero.

That's no good.

Can I buy a portfolio of collectible art?

Oh, yeah, good luck with, like, how do I find $500 million of Picasso's and Monets attractively priced?

That's not.

And by the way, we're now meet, we're struggling with, you're looking at a guy after 30 years in business and an engineering education,

reasonably educated, but not a classically trained economist, not an Austrian economist.

I am

struggling with the time-honored question, what is money?

I need a liquid, fungible asset which will store my economic energy for an indefinite period of time.

And so what is money?

I'm looking for money.

And, you know, eventually I get to gold.

And I'm thinking, should I buy $500 million of gold?

And, you know, my attorney, he looks at me and goes, you know, Mike, I remember when gold was $800 an ounce back in the 70s or the 80s.

And then it went nowhere for 20 years.

And you should be careful about that.

And it might not, it's kind of dead money.

And then I, so I'm sitting at this table and I'm watching the world burn while all the Wall Street guys get rich and the talking heads on CNBC say what they're saying.

And I'm looking out at Miami Beach, and I'm looking at Collins Avenue, and every car is not, there's no cars on the road except for an Amazon truck, which just makes me angry.

One Amazon truck going by.

And I've got 82 birds in my backyard, and they're hunting for worms because all the restaurants in Miami Beach shut down.

So

whoever was feeding them is not feeding them.

So I'm watching us strip the world back to the stone age, right?

A devolution.

And I'm staring over my pole.

I look at Eric and I say, Eric,

tell me about that Bitcoin thing again.

And Eric was a crypto entrepreneur and he had been investing in digital assets and crypto.

And I had dismissed him two years earlier in 2018.

I was like, oh, that's probably just a scam coin that's going to collapse.

But, you know, everybody finds this when you, you know,

if I tell you you got six months to live, you would go looking for a cure.

And if I told you every asset that you hold in Canada is going to be seized from you within six months, that could happen.

You would think about how you're going to get your money out of Canada.

Yeah, we already thought about that.

You know, and like, and the point is, you didn't think about it for the 20 years of your career when it just wasn't the priority.

Yeah.

And then

when you're faced with a crisis, a challenge, you start thinking.

So I said, Eric, tell me about that Bitcoin thing again.

And he started describing it.

And I started thinking, how can I get more information on that?

And he said, well, you can go and watch this podcast.

And you can learn anything on YouTube.

You can learn it if you want to learn.

I learned a lot from you on YouTube.

I learned a lot about diets and ketogenic diets and the carnivore diet.

I learned a lot about food politics and I learned a lot about psychology.

And

so I started studying up on crypto, and I and I started speed watching and intensely watching.

I went and I saw the work of Andreas Antonopoulos, and I saw the podcast of the early crypto developers.

And I started looking for the books, and I read the Bitcoin standard, and

I got, quote-unquote, dragged down the rabbit hole.

And

I came to the opinion that

the solution

was a non-sovereign store

bearer instrument, of which gold had been the best of those.

But then I applied my engineering mind and

I thought the way Heinlein

would have thought about it.

And I said, okay, over a long enough timeline,

what's the mortality rate?

Okay.

Short, you know, people that think short time think about weeks or months or years.

I thought, well, let's try 100 years.

I looked over 100 years and I realized that at a 2% inflation rate, and that's the rate at which we mine more gold, at a 2% inflation rate, that means the half-life of gold is about 36 years, which means that the value of the gold you hold is cut in half three times over 100 years, which means that if you started with 100, you ended up with 12.5% of the money you started with over 100 years.

Explain that in a little more detail.

How does that happen with gold?

Say you owned 100% of the supply of gold this year.

The gold miners produce 2% more gold every year.

It compounds, which means it takes 36 years before they've doubled the supply of gold.

You've got it.

Got it.

You own

the supply of gold in 30 years.

You own a quarter of the supply of gold.

And 76% of

12% increases as you hold it.

It's inflating.

Okay.

Okay.

Okay.

And

so gold, although it's quote-unquote sound money, in the Austrian economy school of thought, it was the best money.

It's not perfect money.

The reason that you had stable prices throughout the gold era, you know, the gold standard age, is gold was inflating about 2% a year

and the economy is growing 2% a year.

And so if the output of goods and services grow at the rate of the money supply, the price is constant.

Okay.

If the money supply is fixed and the economy grew 2% a year, prices will fall 2% every year.

And by the way, in technology, when you look at technical products where the company grows productivity faster than 2%,

in a gold world, the price would fall very fast.

Okay, so what's going on is there is a race between productivity and money supply.

And if I can drive the price of the product down 20% a year, I can inflate the amount of money 10% a year, and the price of that thing will fall 10%.

But if I didn't inflate the price of money, it would fall 20%.

You see?

So

I looked at gold.

I said, I need something like gold.

But

the problem with gold is it's a conventional asset.

It had kind of recovered a bit.

And I thought it's not perfect.

It's the best idea in the 19th century.

And

it's not quite working in the 20th century.

And so I started thinking, what if someone designed digital gold?

What if I, you know, now we go back to the engineer saying, can you perfect gold?

And the engineering idea, how do you fix gold and make it perfect?

Well, you make it impossible to mine anymore.

What if,

and then we get into the fantasy thing.

What if,

you know, what if

God came down, and there's a bit of theology here, if you allow me, if God came down and wanted to fix gold, it's impossible to make any more gold,

right?

How can you make it better?

It'd be really great if it was weightless.

How do you make it better?

I'm going to cast a spell and allow you to teleport the gold anywhere on earth.

If God said, you know, I'm going to implement a system of 21 million gold coins, but we're going to call them God coins, and I'm going to keep them in a bank in heaven.

And I'm going to let you transfer, you know, any amount.

I'm going to let you subdivide it by 100 million, and we'll call them Satoshis.

And I will let you transfer peer-to-peer and pay anybody, anytime, instantly at the speed of light.

And I will keep track of the ledger of who, you know, who owns correctable way.

I will never cheat you.

And I will do it forever for free.

You know, if

God offered you that kind of divine bank

and you were sitting in Argentina when the currency was collapsing to zero, the Argentine peso went from a dollar to the peso to a thousand pesos to the dollar over 20 years.

And it did it five times over the century.

Right, right, right.

Or if you saw it happen in Russia where their currency collapsed, the currency collapsed in Brazil not 25 years ago.

Currency collapsed in Germany a few times.

If you read the history of civilization, read Durant, Durant's talking about currencies collapsing in Russia in the 16th century.

Yeah, yeah.

You know, the Roman Emperor's.

It's a substantial lifetime risk.

Pretty much on average, the currency collapses every 30 to 40 years in most political jurisdictions for all of human history.

And if you get a currency to last for, by the way, The best currency of the last hundred years is the dollar.

The U.S.

won every war of the 20th century.

My house in Miami Beach traded for $100,000 in 1930.

It would trade for $100 million

100 years later.

99.9%

collapse in the value of the dollar.

The winning currency of the 20th century, the best currency in the world, lost 99.9% of its value.

That's a winner.

If you do the math fast, just for the viewers, it works out to 7% a year

inflation over in the best currency.

And how do you calculate the inflate?

Like the inflation calculations have always

been.

The first thing to do is take the number divided into 72, and that means that you're halving or you're doubling every 10 years.

7 into 70 is a 10-year half-life.

So the issue is, what's the half-life of your money?

Against what basket of goods.

Okay, and that is the trick.

That's for sure.

That's the problem.

because what's the yardstick the yard the the government wants to calculate inflation by constructing a a market basket of consumer goods

and then uh the trick is they just keep changing what's in the basket so they call it a hedonic adjustment yeah so i exactly well i create a basket of by the way I create a basket of goods that are not likely to go up in price as I print money and I put that into the basket.

You know, it's like if I said

inflation of the inflation standards.

Grass-fed beef.

This pops up in organic diet or, you know, carnivore diet or diet in general where people note that if everybody ate meat and if it was all organic, then we probably couldn't support the 8 billion people on the planet.

We could support 800 million people.

So it behooves us to convince everybody that they should eat biscuit.

And that's what the Egyptians figured out 5,000 years ago, that, you know, if you grow grain and you feed the population biscuit, you can raise an army and it's very cheap.

How does the army travel?

They travel on biscuit.

So, you know, is this good for 40, 50 years?

No, your teeth are going to fall out.

It's awful for your health.

You're going to die 20 years early.

But it doesn't matter when the people fighting the war are between the ages 15 and 30.

Like, you won't kill yourself with an awful diet fast before the age 25.

Like, you're going to, by the way, in a war, you're going to die from influenza, right?

You're going to die from the pathogens first.

If the bullet doesn't get you second,

you're not going to die from malnutrition, except that I can't give you a cow.

So I can only give you the biscuit.

So

at the end of the day, the government's view toward inflation is it's in their best interest to

construct a single number.

There's the old phrase, you can tell people, you can't tell people what to think, but you can tell them what to think about.

Right?

Go ahead.

And so I want you to think that inflation is CPI.

It's not.

Yeah, yeah.

I want you to think that 2% is acceptable.

And you estimated it's 7.

Now, this is where you got to come back to being an engineer.

When you look out at a bay and the wind is blowing on the bay and you see all the white caps and the water is moving, and I ask you in one sentence to describe describe the motion of the bay

you there a semantic representation is imperfect way to describe fluid flow

you know watch you know water and it's spinning like this going down a drain How do you describe fluid flow?

Well, the answer is every component of the water has a different velocity.

It's a different vector, right?

They're all moving like, and it's dynamic.

And now blow some bubbles in it.

Describe that with words give me the number there's no number that's a field it's a vector right you you know so my background at MIT I study thermodynamics I I study very hard math I mean the math you use to design a jet engine the math you use to design you know anything that goes supersonic through the air the math is complicated you know you need vector calculus.

You need non-linear dynamic systems of equations.

You need field theory.

What's the gravitational field of the Earth?

Tell me that in like a number.

Well, you know, like it's, it's different everywhere.

It's changing.

But that's too complicated, right?

For the rank and file.

So what is inflation?

Inflation is a vector.

There's a different inflation rate for every single thing in this room.

And it would be a different rate for this room if I put this room in Toronto, right?

And it's changing every week.

It's changing every minute.

So the inflation rate of, there's 100,000 things you might might want, and the rate of inflation on all of those 100,000 things is changing minute by minute, and it's different in Hong Kong than it is in China.

It's like, okay, there's a war going on.

Guess what?

We shut down the economy.

There's a war.

World War I, World War II, there's no inflation.

Why?

Because it's illegal to buy anything.

Okay, there was no inflation in 2020 when we printed money, except what are you allowed to buy when you're under home arrest?

You can buy stocks.

The inflation was in the stocks.

The inflation was in Amazon stock in March of 2020.

It wasn't in restaurant bills because it was illegal to go to the restaurant.

It wasn't in the cruise lines.

It wasn't in the airlines.

And so I want you to think, oh, this 2% inflation is less than 100%.

So let me abstract back a bit here.

So just, okay.

So we laid the groundwork for why

this Bitcoin

revelation hit you hard.

And then you laid out an an economic argument, which was that your assessment of the situation was that the

standard story with regards to the reliability of currency and the inflation rate is radically

off-kilter.

The most successful currency hasn't been particularly successful at all, and the inflation rate that's reasonably estimated is much higher than the official inflation rate, which means that your storehouse of value, whatever it is, is going to be deflated terribly during your lifetime.

Okay, now you come across Bitcoin and you talked about it as if it was, you know, this abstracted gold with the properties that you already described.

So it has the rarity of gold.

Let me ask you a couple of questions about that because some people have actually asked me about this.

Is quantum computation going to break the Bitcoin passwords?

Like, I can imagine, are there two things that would take it out?

What about a solar flare that wipes out the electronics?

Does that wipe out Bitcoin?

What about quantum computation and cracking the passwords?

Yeah, so I mean, the short answer is no.

And this is the most anti-fragile, indestructible thing

in the world.

The longer answer is distribution.

The longer answer is

Bitcoin is an ideology

that is manifested as a protocol.

Okay.

It's materialized as a network across which an asset runs.

So

is the most real aspect of it the ideology?

Let me say it's like, is quantum computing, if it hacks your email account, going to destroy the English language?

See, is quantum computing going to actually break base 10 math?

Base 10 math is a protocol.

If you have a computer program and it becomes insecure, you have to upgrade the program.

But the reason that we we use numbers one through nine or zero through nine is because over the course of about 900 years, Western civilization realized that we could actually calculate things more efficiently with that protocol.

But it's not the only protocol, Jordan.

There's base two.

There's base, you know, 16, right?

Why do we have 12 months in the year?

Why do we have 360 degrees?

Because the Babylonians had other systems of math.

We have a system of math.

There's other languages.

Why do we use English?

Well, we all decided the scientists, the economists, Western civilization, there's a lot of reasons why we could trace it to the geography of England and the English Channel and a bunch of stuff.

We don't have time for that.

It's a protocol.

Bitcoin, it's a protocol.

What kind of protocol?

It's a monetary protocol.

Why?

What's it informed by?

An ideology.

What is the ideology?

Sovereignty, truth,

sound thermodynamic soundness

why thermodynamic soundness because one plus one has to equal two

and if one plus one equals three some days or one and a half other days yeah you can't solve any problem in engineering and in aeronautical engineering

there's a phrase called adiabatic

an adiabatic system an adiabatic system means a closed system.

And so

whenever you're building anything,

the problem always starts with assume an adiabatic system.

If I introduce this heat source,

if I fly through, what they're saying is, assuming it's a closed energy system, there's no external factor,

right?

Assuming an adiabatic system, how long will our podcast go?

About two and a half hours.

If Godzilla steps on your studio in the next 30 seconds, the podcast will go shorter because of new energy.

So when Godzilla shows up to the playground, all bets are off.

Right, right.

Okay.

So, right.

So if I have

a bathtub or I have a swimming pool with a leak in it, you can't jump into the swimming pool without risking breaking your neck.

If I have a leak in a fuselage of an airplane, we can't fly.

Explosive decompression.

If you're you're an engineer and you're engineering airplanes or internal combustion engines or spaceships,

you have to do the engineering properly.

And that includes make it a closed system or a thermodynamically sound system.

When it's not, there's leakage, right?

There's either a friction cost or there's a leakage cost, and you have to account for the leakage in a replenishment if you want the machine to work.

The machine will not work if you don't actually solve the problem.

So

when we come

to this idea of the ideology of Bitcoin, Bitcoin is based upon

engineering principles,

mathematical soundness, consistency, integrity, truth, right?

And those are all the principles.

Those are the principles of libertarians and Austrian economists, right?

and those those are also that is someone that believes that we should be governed by natural law right so we go back to john locke and we go back to natural rights and natural law right

uh

nature governs right whether nature nature gives you gravity if you tip the glass there it's falling to the floor you don't get to break the rule that is just the rule you have to comport yourself accordingly knowing that there's a gravitational field in this room right now you can't wish it away right a lawyer would like to wish you would like to if if the politicians could pass a law they'd pass a law suspending gravity rights you know for the time being in certain places but the you can't as elon musk says you don't get to break the laws of physics right

so

so bitcoin starts with this ideology of the engineers, the scientists, the mathematicians, right?

And

we create a protocol.

The protocol is,

what if a bunch of smart people in the world,

what if they wanted to keep their money?

What if, or in this case, I gave you the example of the divine bank that God gave you, except if God's not going to set up divine bank and solve all your monetary problem,

what's the second best idea?

The second best idea would be a smart engineer takes advantage of semiconductors, the internet, and cryptography, and you create a system where 21 million Bitcoins circulate, subdividable by 100 million Satoshis each.

That system

is protected by public and private key cryptography.

And should you actually have possession of the private key, you have control over your coins.

That means that you've created a bank in cyberspace.

Now, imagine 100 rich families.

They live all over the world.

They all get together one day and they say, well, you know, God won't solve our problems for us, so we've got to solve our problems ourselves.

Let's go ahead and build out this Bitcoin network.

And this is a bank, and we're all going to be able to deposit our money in this bank.

Why?

We don't trust the government.

We don't trust a local bank.

We don't trust each other.

We don't, you know, and we want the bank to last for a thousand years.

Okay.

Who's going to run the software?

Well, the answer is everybody's going to run the software because nobody's, I trust you, you trust me, but your idiot great grandson, I might not trust.

Or maybe my idiot great grandson might not get along with your idiot great grandson.

So

You know, and this is where history of science comes in.

You know how we studied longitude?

Longitude was the breakthrough that gave the British control of the seas.

And

the longitude prize was instantiated by the parliament.

They offered 10,000 pounds to whoever could figure out how to calculate longitude on the ocean.

Every physics professor at

Cambridge and Oxford tried it.

They all failed.

Every mathematician failed.

They could not figure it out.

A clockmaker by the name of John Harrison makes clocks.

He solved the problem.

Just like the Wright brothers figure how to fly without the aeronautical engineering degree,

the bicycle makers figure out how to fly.

The clock maker figured out how to solve the problem.

He created a perfect clock.

It gave you two clocks.

And when you get in the British ship, you sail past Greenwich, which is where the Royal Observatory is.

You set your first clock to Royal Observatory time, Greenwich Mean Time.

That's where we got Universal Time.

The second clock is set to local time.

The ship sails to the West Indies.

You look up, you figure out what high noon is, you compare the second clock to the first clock, you subtract two hours, you multiply by 15 degrees, you've got your longitude on the ocean.

Now, what's the breakthrough?

No one could make a perfect clock.

How do I create a perfect clock?

Because the metal in the clock expands and contracts.

John Harrison created a perfect machine from imperfect materials.

What he realized is, yes, the metal does expand and contract.

We can't stop it from expanding and contracting with humidity and with temperature.

What we can do is take two identical pieces of metal and put them in tension with each other.

So this one is contracting the same amount that one is contracting.

They actually

compensate, neutralize each other, and you end up with a perfect machine.

That is brilliant engineering.

Not through math,

not not through science but through uh practical engineering harrison creates a perfect clock the clock inadvertently gives us longitude longitude gives the british navy command of the seas and we're speaking english right now right satoshi

satoshi has to create a perfect monetary network And you got to create it with imperfect components.

The imperfect components are the people, the governments, the actors, the computers.

they're going to fail.

What happens if the power goes out?

What happens if that gets hacked?

The answer is: I create a machine that's running the protocol.

This one's running the protocol.

This one's running the protocol.

They're all running at the same time.

They're all hashing

in order to guess the answer that's required to build the next block.

One out of a million of these things will win.

The entire thing is is a fault-tolerant, shared-nothing, you know, mission-critical nuclear-hardened system because what is it?

It's a virus, right?

It's an internet virus, a monetary virus, an ideological virus.

And everyone that chooses to run the node is feeding the network, you know, participating in the network.

All of the miners are defending the network.

But once you understand it like that,

then you realize that what's going on with this, with Bitcoin is a bunch of people with the same ideology, we just all like to keep our money,

running a protocol, have instantiated that protocol in software that runs on mobile phones, that runs on computers.

We should also say, you know, it's not exactly that you want to keep your money.

It's you want to keep the fruits of your labor and you want to keep your reputation.

And you want to do that over the longest amount of time possible with the least amount of parasitism and corruption manageable.

And so, you know, because when you say you want to keep your money, it's got that kind of evil capitalist ring to it.

But, you know, if you spent your entire lifetime building up a storehouse of value and you did that in a way that also brought prosperity to other people, it's only natural justice of the sort that keeps hardworking people working in everything abundant in order to not allow people like that to be parasitized and taken out.

If you would indulge me, this is where we should probably veer off into libertarian politics and philosophy.

Let's wait.

Let's do that on the Daily Wire side because we should bring this part to a close.

Well, you had a good landing there with regards to

your summary of how Bitcoin worked and all the things that we talked to culminated into that.

And on the Daily Wire side, we'll talk about the relevance of this for young people.

We'll talk about what you think is going to transpire in the next five to ten years on the Bitcoin side, and we'll flesh out the libertarian discussion.

But that's an excellent place to stop.

Thank you for your time.

Thank you very much for the thorough investigation and explanation.

And so we're going to continue on this road on the Daily Wire side for all of you watching and listening.

And so

you might feel inclined to attend to that so that we can delve into this.

I want to hear Michael's thoughts on,

well, what's going to happen in the next five years and what you should do if you're young, concretely speaking.

And so join us there.

Thank you, everyone, here today in Scottsdale, Film Crew, and thank you very much for showing up and talking.

It's been a real pleasure and very informative, that's for sure.

So thanks, everybody.

We'll see you on the Daily Wire side.