Bitcoin, The US Election, and AI w/ Bill Barhydt | EP #113

[Music] what's been going on we've just seen the Bitcoin uh price drop from 68,000 down to a low of 498 this is another example of of not understanding the nature of exponential growth what are we going to see over the next few months as we head into the election cycle I do think the tides are changing because they're getting tired of losing it's like which which way is the win going right exactly 5 10 20 years from now where's the price per Bitcoin going to you know Trend towards as we approach this so-called fourth turning

what is the dollar it becomes easier to Define what a Bitcoin is than it does what a dollar is there's going to be a second coming for crypto when it merges with AI in the next 3 to 5 years hi everybody Peter dandis here and welcome to moonshots at this moment uh the price of Bitcoin is $56,950 and my blood gluc glucose level as measured on my levels app is 110 and I measure my blood glucose level like I measure Bitcoin because it's important for my health if you want more information about Bitcoin you can

look at Abra we're going to be talking to the CEO of Abra in a moment um or if you want information about uh about levels I'll have my team put some information down below take a moment uh and introduce you Bill baright is the Founder and CEO of Abra it's an all-in-one Mobile Wallet that allows its customers to buy trade sell and store and borrow against cryptocurrency uh he's a Serial entrepreneur who's worked at Nasa the CIA and Goldman Sachs I mean like the perfect combination to talk about cryptocurrencies we're going to do a deep

dive right now what just happened uh in Nashville with the presidential candidates uh in Japan in their recent Bitcoin drop his predictions for the Future and why it all matters and most importantly the merger of Ai and crypto what does the future look like when these two super exponentials are colliding with each other all right if you like conversations like this please subscribe so I can bring those individuals to you let's jump into the episode hey Bill good to see you my friend where are you today uh I'm at home I just got back from

my Saun and Co plunge so I'm good to go let's do it Longevity and Bitcoin abundance in Bitcoin that's what it's all about right it it it is uh I want to dive in uh you know there's a lot happening in the market there always a lot happening in the market but you were just in Nashville I want to talk about what you heard there uh what the presidents are saying what's been going on we've just seen the Bitcoin uh price drop I'm not going to call it a crash as people are it dropped from

68,000 down to a low of 498 it's recovered since then we're at 56,000 at the moment but it's always been moving back and forth in that uh in that channel uh what's your reaction to people who are like calling this a crash and are just you know flum mixed about the price coming down 10K yeah I mean this is another example of of not understanding the the nature of exponential growth and you know if if if you're looking at something in a base 10 chart and it's growing exponentially you Get a lot of noise right

so what you need to do is zoom out my favorite chart is the 15-year log chart for Bitcoin because it basically looks like a straight line up and to the right which is exactly what you would expect when you have something that shows exponential growth over time which I know your audience loves to hear about because you know we're all about exponential technology and Bitcoin is one of the best examples of that in Software that we've ever had so we get these oscillations the short-term oscillations are are a function of Market liquidity you know uh

this past week we had this this so-called carry trade in Japan which blew up which we can get into if you want which basically was a result of of long-term interest rates in Japan being out of whack with the rest of the world which Traders were taking advantage of As Traders are known to do and when that blew up guess what happened right so so so there's these shortterm fluctuations that are always going to happen I think that ultimately Bitcoin as a scarce uh asset guaranteed scarce is going to act as a liquidity suck for

non-s scarce assets uh I can give you other examples of that in history we didn't invent this idea we invented the digital version of this idea idea right ask any family that has inter intergenerational wealth why They collect art why did they not leave the money in Yark papers or or you know other currencies that don't exist anymore right because they knew that those things were not only scarce because the dead artists couldn't make anymore right uh but the paper that they that was their alternative was likely to fail eventually because all government issued currencies

eventually fail so we just have a much infinitely better version of that now well listen I just I Want to just you know start by saying thanks for joining my moonshots that discussed this uh for those of you this is not Financial advice this is a dear friend of mine bill and I uh educating each other on what's going on and hopefully you as well um you know I I I do want to say full disclosure uh I hold all my Bitcoin on abra where uh where Bill is the is the CEO um and so

that's the disclosures I wanted to make upfront here you know say that I don't I'm not Here to give Financial investing advice uh consider an entertainment value or informational value uh go to ar.com later if you want you know to talk to an adviser but this is not that so I I want to start with some fundamentals here what moves the Bitcoin price you know I have to believe I have to imagine from my perspective you know we're coming into the having uh the supply is is dropping we're starting to see presidential candidates and financial

Institutions talking about uh you know buying up Bitcoin I thought this was the perfect conditions for there to be this massive escalation you know I expected it to be you know north of 100 by now and then we see it drop down to 50 um I do want to get a little bit of understanding what's driving this and you know we'll talk about where you expect Bitcoin to be in the long term the fundamentals of you know and I've had conversations recently with Kathy Wood on this subject uh and Michael sailor and and now you

I'm hitting the triumphant uh triumphant here uh so what's what drives the price when it goes up and down is it just supply and demand why why are we not seeing up and to the right yeah so so again I would I would posit that over the right time frame with the right perspective it is up and to the right what happens though when you zoom in there's a lot of Noise Okay so let's talk about the noise where Does that noise come from why does it not look like that on a line chart base

10 as opposed to an exponential you know log chart when you zoom out okay right right the the idea is very simple you have something that has a fixed Supply and you are valuing that in something that has an infinitely growing Supply namely the US dollar okay and the rate at which that Supply is being created is actually increasing which is not supposed to be Able to happen because it was originally supposed to be based on gold but we no longer do that so we can more or less we meaning our overlords can more or

less create dollars at will as often as they want which is what they do right so I think during the the co lockdowns we printed something like 25% of where we created 25% of the new money supply versus all dollars that had ever existed since you know it's nice to be the king yeah yeah well okay I guess but they Have the same money we do and and so they're being devalued the same way we are it's just I'm guessing that they're wealthier than a lot of the people at the bottom of the US income

pyramid who uh don't have assets they can put those those dollars into okay so so back to bitcoin so so the reason that the price fluctuates is is a couple of things one right Bitcoin as a scarce asset generally will act as a liquidity suck for dollars that are floating around Most scarce assets eventually do right uh artists you know dead artists are notoriously uh good at being captured by the wealthy over time because it it was one of the best scarce long-term assets we ever had Central Park estate yeah Central Park real estate exactly

so so for the first time we have a digital version of this that's mathematically provably scarce over time so naturally it's going to act as a liquidity suck however it's a new asset 15 years in the Big picture is nothing okay you know we have to go back you know to oil as as kind of the the latest and previous new asset class I mean obviously oil's been around forever but it wasn't as important to society until we had combustion engines that would need it and all of a sudden it became you know the the

liquid gold right so now we have a digital gold if we want to focus on its it's its you know value its use as a store value and it's still new like I Said 15 years in the big picture is is is is not a long time so you have the trials and tribulations of the fact that this is a new asset class people are still learning people are still coming in right it is not a hedge against anything yet because it's too new right and so we're still at this point where it's being hoarded

by the masses there was a book written in the 70s by an Austrian Economist even before the internet existed who predicted that if We had private money that was sound it would slowly be hoarded by the masses before it became useful and it's astounding to watch Bitcoin play out his kind of Playbook uh almost to the letter 50 years before 40 years before the internet so so that's what's happening but in between the government adjusts the liquidity of money right so as inflation started Rising the Government tried to take liquidity or money out of circulation

right by by basically um you Know selling uh assets on its balance sheet during Co it was buying assets onto its balance sheet which had the wonderful effect of of you know lowering interest rates so anyway so so this has the effect that risk on assets risky assets will go up and down in value based in the short in the short term based upon these changes of liquidity neither of us would argue that the one of the most important uh uh you know public investable Technologies right now Is AI and AI stocks got hammered in

the past few days right does that mean that AI is now worthless no if you look at the same log chart that I was talking about you know I would pause it over the next not last few years in the next 10 years it's going to look like I predict a straight line up and to the right with a lot of noise in the middle the noise tends to be more microd driven what is the government doing what is the Federal Reserve doing what are Bond markets Doing the average person doesn't understand those things so

they look at the news as the next best thing to try to interpret what's really going on but you know outside of a president getting shot or going to war like really big macro shocks The Daily News is not the biggest driver of these these micro movements up and down it's things that the average Joe public investor doesn't understand right which is why always say your time Horizon should be as close to Forever as you can make it because historically this by the way I don't know if you know this people think Warren Buffett is

the best investor in history he's not in my list he's number three um number two is politicians where IL illegal insider trading for us is legal for them uh and number one is dead people uh who actually their families don't know that their investment accounts are still open find the investment accounts 20 years later and They're up and to the right because they can't screw with them that's so funny right so that's my point right is like if you have the right time Horizon the noise dissipates you're Your Own Worst Enemy yeah um and and

and so the it's really returning to the fundamentals of what Bitcoin is and believing in it and ignoring the news and ignoring what's going on um is the right is the right mindset then to basically just accumulate over time um I mean do you See people with strategies where I'm going to take you know 10% of my my paycheck every month and put it into Bitcoin and just hold on to it so so we we see I mean we see three things right there's the active Traders and let's put those people aside that is not

something that I would even if I was giving investment advice I would I would recommend that you not do that unless you really know what you're doing because your chances of losing money are Very high then there's the people who already have accumulated wealth and people are in the process of accumulating wealth and usually the pie people who have wealth are also accumulating more wealth either via cash flow or whatever and and what we see now is is more and more people who have accumulated wealth saying okay I get it what percentage of my wealth

should be in Bitcoin well let's let's answer that let's answer that question um where do You what what's the advice that people are giving I don't want to necessarily put you on the spot but is there an ethos out there so so so I look at it this way right I I have I don't perceive risk the way the average person does I'm well educated I have an engineering degree uh you know I I I I don't I'm entrepreneur for 30 years so so I I don't see risk the way the average investor sees risk

and I think most people have um risk defined incorrectly So let's put that aside for a second so I'll try to leave my personal bias out of this the older you are the more dependent upon dollar based cash flow you're going to be uh you know unless you're I guess you would say unless you're under UH 60 and maybe you'll be alive still when we reach longevity escape velocity but for other people um they have they have a cash flow concern um to live out their remaining years and so you know putting 10% of their

wealth In in in Bitcoin is is a relatively safe bet in my opinion um and if you had done that over the last 15 years it would have had a huge outsized impact on your investing portfolio and in my opinion the younger you get the more you should be considering uh putting your portfolio uh putting Bitcoin uh or potentially something like a salana but but just focus on bitcoin for now in your portfolio and I think that given that we're in this what I call late stage Debt cycle my and and that Bitcoin is actually

less risky now to me the biggest risk with Bitcoin when I was having the same exact conversation with others eight years ago was technology risk um and and so that technology risk as it relates to bitcoin is has been mitigated in my opinion you know we could talk about Quantum Computing and stuff like that but you know I I I think even that will be addressed over time you know via other encryption schemes And digital signature schemes so so so as you get younger right I actually think the percentage of your Holdings that you should

put in Bitcoin goes up and and you know obviously between 10 and 100 and and you know if you're a computer scientist a math oriented person who can really dig in do the Thousand hours of of of digging in that Michael S and you know others have talked about it's going to be very hard for you to become unconvinced that you Should be putting a uh you know a big chunk of your net worth in this the younger you are well put differently it should be the place that you are storing your net worth um

holding your net worth in Bitcoin versus anything else I think about my net worth in terms of number of Bitcoin now not dollar value I think that's an important important point I have to say I do too it's my single largest holding um other than the equities in my Venture uh companies and And and and uh my Venture compan my Venture funds Investments uh but me personally it's my single largest holding and I think about that um I think about what I could have done if I had started 15 years ago um but you know

my time machine is broken uh you were just at you were just in Nashville uh to hear RFK and Trump talk about Bitcoin let's jump there uh what how much did that surprise you um and how much how meaningful is that to to everyone Listening here everyone who's a Bitcoin holder let me talk about RFK first even though I think it's obviously well not obviously a million things can happen between now and November but it's highly unlikely that he would win but having the first presidential candidate speak was astounding and and the reason that it

was astounding is he was not pandering I mean this guy has gone deep he has a huge Bitcoin holding personally he was describing the technology I have Friends that have spent time with him on this he's done many podcasts in my kind of crypto sphere where he's gone deep on broken money and you know it's it's it's truly astounding the degree to which he has dug in on not only the history of our Fiat system and and how Bitcoin works but how Bitcoin can complement the dollar or any any Fiat system for that matter or

other commodity based uh system um and he's gone super deep and his presentation and his recommendations For the government to hoard Bitcoin were not realistic by the way but if we got a fraction done of what he was talking about it would be astounding I mean his his his his idea which is bold and I love bold ideas I know you do was you know we should basically have equal percentage of the world's Bitcoin in the US reserves as we do in the world's gold I actually don't agree with that which I I can explain

why but my opinion is less important what's important is is to your Question we had a viable presidential candidate saying that for the first time now the first person who was on a presidential ticket of any kind that I heard talk about this was also there and that's FC ramaswami a lot of your audience may not even know who VC is he is in in and among Libertarians he's a hardcore libertarian and a very persuasive speaker very I mean unbelievable I mean I I am mesmerized when he talks and I am not easily Mesmerized that

it's truly like his knowledge of American History I've never heard anything like it it's amazing um I wish I have a minor in history science I wish that my my knowledge of of of scientific history was was 12th of of of his knowledge of American History anyway he has been talking about fixing you know ending the FED fixing the money um and and the problem is is that these all seem like crazy ideas to the average American who's just not informed on this Stuff and they're really not that crazy idea we didn't have a federal

reserve for the first half of the existence of the United States and we survived just fine without trillions of dollars worth of debt so so you could actually make a case well maybe we were better off without a bunch of private Bankers by the way the Federal Reserve is run by private Bankers right so so you know they do report to Congress but it's basically private Bankers who basically Decide to increase and decrease the money supply uh largely to their own benefit right so so anyway so the third person who was on a presidential ticket

that spoke was obviously president Trump now behind the scenes myself and and a few others uh and full disclosure donors whatnot have been talking to him courting him to say look you know I I hate to make this all about politics but our space our industry has been attacked to no end the last four years I've never Seen anything like it I've been involved in Venture Capital investing since my Netscape days even when I was at Nasa you know I had friends who were doing VC so I knew about it I knew how it worked

so so I I'll give myself a little credit and go back 30 years I didn't know what a Wells notice was until I got into the crypto space even though I've done dozens of venture deals over time all of which have you know are are registered deals with the SEC you're issuing Private Stock it gets registered with the SEC companies go public register with the SEC never heard of a Well's notice almost every major company in the crypto space that I'm friend friendly with has either received a Wells notice has received a subpoena threatening a

Well's notice or uh is in the process of being investigated potentially leading to a Wells notice or is already passed that point and is now fighting in corter settle all right so Tell us what a Wells notice is a Wells notice is basically the sec's informing you of their intent to sue you uh for some Securities violations and I'm not a lawyer so I'm giving you the bill speak on this um and and mathematically okay what are the odds that our one space has found every fraudster every evil CEO every law breaker and managed to

put them all in one space and wait for 35 years when all Of Tech in Silicon Valley where I've grown up right physically grown up because I've been here most of my life now has never heard of a Well's notice I would say the odds of that is zero so so clearly there's something else going on here how do you spell Witch Hunt right right exactly exactly and so you know strange bedfellows right so now we come back to president Trump speaking in Nashville and behind the scenes and by the way Nashville was the Was

the uh the Bitcoin conference yeah it's the largest there there are multiple Bitcoin conferences in the US around the world Bitcoin is not a company it's not own by anyone so so there are lots of them this happens to be the largest run by uh Bitcoin magazine David Bailey's been a longtime friend great great guy uh he was instrumental by the way in in what we call in our world orange pilling uh president Trump and Not only basically arranging for influential donors like the Winkle fos twins um and and others in in our space to

to spend time with him uh but to explain to him and to actually get his feedback in a very engaging way uh on why this has been a problem why we're being attacked um why this has to stop so he got on stage and he didn't really know how you I guess he was coached you know sec's been a problem like I guess he can relate to that um but but you Know he went on stage and said on day one now he talk he said a lot of things okay about crypto about Bitcoin um

some of the Bitcoin Maxis don't like the word crypto by the way they don't want to be they don't want to be mixed up in the in the crypto shitcoins right and and I I don't agree with that it's it's a word um and and so it's meaning it's intent it's context is what matters but but anyway so he got up there said a lot of interesting stuff was clearly prepared Um and and you know he Rambles a little bit like like President Trump is known to do and then he says and on day one

I will fire Gary Gensler and the crowd of 8,000 people literally goes bananas and loses their mind now he had no idea he was like I don't even know if these people know who Gary gendler is because I'm guessing right now a lot of your audience is Googling who is Gary gendler uh Gary gendler is the is the chairman of the SEC the SEC I believe is run by a Commission of five Commissioners and and and presidential appointees I believe and and one is based upon who is in power in the executive office is made

commissioner and so he's the senior uh executive for overseeing the Securities industry in the United States and and so you know he is basically let's for all intensive purposes and Elizabeth Warr app pointy uh hellbent on killing our industry and again I'm not here it's not about politics it just is I don't want This to be true I've voted Democrat before in my life I don't really care that much about the difference but they both print money at nauseum right so so so for me it's about why are you killing this technology that is the

future of money and Banking and and so you know it's clear and and so he was blown away I think I think he was so so blown away that he said it again just to get another reaction and uh yeah he was taken back like I said he probably Believe when they told him to say it are you sure these people even know who this guy is I'm Cur I'm curious in your opinion uh for both RFK for BC and for for Trump is it the size of the population holding Bitcoin that they're focused on

getting the attention of or is it the long-term benefit for America and Humanity of Bitcoin how much what's the mix there okay let's I think it's three things and and and and I'm I I'm going To be brutally honest some of it is money right I mean you know like he's got large donors in my world now Trump in particular right and VC did last year as well when he was running uh on in the primary for president um you know he was the first person willing to stand up for us and and it got

him a lot of attention which I think helped Propel him into Trump's arms and I wouldn't be surprised if he has a cabinet position or an economic position in Trump's cabinet Agree I hope he does so so but I think it's three things right I think the first is is money uh I think the the second is you know you know I think that the Democratic party un underestimated the number of crypto holders who not only hold this but truly care about this and believe it's important so what what is that what is that number

right now you think well crypto holders in the US is probably 50 to 70 million 50 to 70 million individuals individuals that's That's a l it's a significant amount it's a lot and thank Robin Hood for some of it right right coinbase obviously you know I mean we don't deal with the small dollar retail but they've done a fantastic job in in making that available even PayPal right um that is easily now now for all those people that they're not single- issue voters right but but you can only push a cat into a corner so

far before it's going to try to scratch your eyeballs Out and and so so I think that when you factor in the other issues that matter the percentage where this is single issue voters I think we represent three to five percentage points I really do that's insane for a space that didn't exist you know yeah yeah few years ago they totally underestimated that now the third part is and and and and honestly for me there's another announcement that happened afterwards that that was just as important as as the president Speaking but for me it's clearly

about the future of of money in this country and and and the world right I mean the United States basically has the the dollar the global Reserve currency and as a result you know the the military industrial complex to support it that's coming to an end whether we want to two or not there's a lot more conversation yeah sure the question is what is it going to be replaced with it is going to be replaced with something all right and How does that replacement happen if you read Ray Delio's book his last book it's not

a very uh pretty picture historically it's replaced via VIA Wars right and and I don't want that to happen I don't this isn't just about you know this is cool technology to me so so longwinded way of saying you know people are starting to get it and and of the three clearly RFK had the most impassioned kind of plea for why this technology Matters however when they were done immediately Senator Lumis the the senior senator from Wyoming got on stage and blew us all away she introduced legislation that would cause the United States for the

first first time to start adding Bitcoin effectively to the country's balance sheets or Reserve assets has she always been a strong proponent huge uh is is this recent or it's been for some time a few years so uh Wyoming has very um interesting Unique uh Bank license uh regimes that specifically for digital assets Most states and and the federal government have existing Bank Charters money transmission charters where they've kind of made crypto and digital assets a part of those existing regimes which is complicated you know a lot of these laws go back to the 1930s

and 40s what Wyoming did and she was part of this even though she's a you know you know you National Senator uh is They created leg legislations specifically contemplating digital asset Banks Banks and um you know there a few of those licenses have already been granted and so she's gone Knee Deep on this issue for years she's appeared on crypto podcasts you know Fox talking about crypto CNBC talking about crypto etc etc um and and so clearly this had been in the work for months if not years right and U you can see the the

legislation uh if you just go to her Twitter feed Senator lus you can actually uh go to the web page and read the legislation now look I don't you know if Trump wins it might have a reasonable chance of getting signed but we would need both houses because I don't think I don't think a um a democratic um you know Congress would would would vote for this right now um and I'm not even sure the timing is right in in the magnitude of of and numbers she's talking about but the fact That we're now having

this conversation that we've had three people on presidential tickets a sitting Senator multiple Congress people and from both sides of the aisle right because you know Rana the one of the most technologically astute people in Congress uh from from here in Silicon Valley also spoke um and he you know I give him credit because you know he took his lumps um right now given given you know his his peers stance on this um It's it's incredible that that this is even a conversation real quick I've been getting the most unusual compliments lately on my skin

truth is I use a lotion every morning and every night religiously called one skin it was developed by four PhD women who determined a 10 amino acid sequence that is a cytic that kills scile cells in your skin and this literally reverses the age of your skin and I think it's one of the most incredible products I Use it all the time uh if you're interested check out the show notes I've asked my team to link to it below all right let's get back to the episode you know it's interesting year years ago um I

forget exactly when uh I was on I think it was CNBC and talking about um the six the 6ds of exponentials right um digitize something in the early days it's deceptive eventually gets disruptive but it dematerializes demonetizes and democratizes products And services and I was talking about Bitcoin in that regard and of course it's exactly what it does we've digitized money it's been a deceptive growth it's now beginning disruptive and it's uh dematerialized demonetized and democratized a whole part of the of the uh financial industry and I remember you know a conversation about what would

we be looking for and it was the adoption of different segments of society um along the way right it's it's going from The entrepreneur to the high net worth individual to the family offices to and then you know financial institutions Sovereign wealth funds and then governments eventually where are we where are we in that in that progression what have we seen obviously we're seeing this incredible you know you know meaningful conversation on the presidential stage uh but we we've started to see the financial institutions begin to adopt it and Promote it to their customers yes

we've um where are we in that what are we where are we now and what are we looking for next okay so I mentioned earlier that uh uh I've been watching Bitcoin play out this kind of Playbook on from um uh from Hayek's book in the 19 freedi Hayek who is you know considered kind of the one of the the founders of modern Austrian economics wrote this book called The D ization of money and and it was basic the premise was we need Private money to compete with government money and in the US historically that's

illegal you can't can't do that uh but we have one you can't stop because there's no off switch so it's ones and zeros which turns out or protected Free Speech which is a nice interesting way to get around the problem of making something illegal if you make it protected Free Speech the Supreme Court's already opined on this issue so that that's good right we can't stop it Right so where are we what does it mean from an adoption perspective to your question I actually think that you know having like a Bitcoin ETF um you know

government's holding Bitcoin I think these things are interesting from a marketing perspective but I don't think that they actually solve long-term real problems for anyone okay um you know obviously if if if RFK got his way and the government bought 20% of Bitcoin the value Bitcoin would go up to1 trillion Dollar and so for those people who hold Bitcoin congratulations okay that's not the point of Bitcoin all right the point of Bitcoin is that we now have a global system with no off switch that allows you to store value and move value with no Financial

intermediary okay that's the value of Bitcoin the fact that you can hold it in a vault and and trade it you know via security which is what an ETF is is interesting it makes it accessible to More investors which is fine if you're hoarding it it's just another way to hoard it then right but long term it's not why I got into Bitcoin right I I got Bitcoin because it solves the problem I'm talking about so so I think what ultimately matters and what I look at is okay family offices hoarding it awesome you know

hedge funds uh you know mutual funds buying it fantastic right we're going down that and now with the ETFs you get to kind of middle class retail IAS 401 case now what I'm looking at are what's happening in Africa What's happen happening in Southeast Asia what's happening in the poorest parts of Latin America Venezuela which used to be one of the wealthiest countries right in the South American Peninsula uh via these moronic idiotic you know communist policies has become one of the uh poorest countries right where are we with Bitcoin adoption there what melee has

done in Argentina is Interesting to me he basically saved that country if you look at what's happening economically right that's where I think Bitcoin adoption and crypto adoption you know Bitcoin as money crypto as potentially and defi as the future of banking that's where I'm looking next right government adoption I like that for two I like government adoption and and that discussion for two reasons right it's great marketing and it takes the heat off of us given Everything that you know we've been going through for the Last 5 Years sure right um so so maybe

not the answer you were expecting but but for me if it really is the kind of the people's money right and and I don't really look at it myself that way but it's it's a it's a good way to capture the idea right does everyone have access can everyone use it and right now that's not true not everyone can but we're inching closer to that uh We've made huge strides uh in in Making that happen not just with Bitcoin as as money but this new kind of defi or decentralized Finance which we can talk more

about later um as the future of banking yeah and and and for me it's the it is the abundance thesis right it is it's the means by which we create Global abundance um accessible accessible to all I want to talk about a little bit of near-term elements and then jump in some questions from my uh I have to still call it my Twitter ecosystem it's hard To call it my ex ecosystem because it doesn't sound right um I told I told Elan I need a verb Elon I need a verb give me a verb please

um so uh the fear meter so I mean we've talked about this before there's there's a meter in the uh in the in the economy and in the Bitcoin and crypto ecosystem about fear versus greed um where are we there uh in regards to just the investment cycle just to just to just Bitcoin right now people oh fear you know I mean I think I Think uh the last few days like around the time we're recording this uh we went from Euphoria uh when the time the ETF were were released to kind of sideways for

a few months uh to fear the last few weeks or last last few days and a lot of that is coming out of Japan so let's talk about I want to talk about Japan then in in in that I want to talk about Japan and and the impact on interest rates on on bitcoin yeah economies work in cycles and one of the most important Functions of those Cycles because of the fact that the government controls the printing and and the amount of money in circulation uh is what the Federal reserve of the United States chooses

to do as the largest of the world's uh government Banks and the Federal Reserve basically sets monetary policy the most important being um the the Federal Reserve uh the short-term rates the rates at which banks can lend to each other among other things and these rates Basically uh can can cause money to enter into society at a faster rate uh or or pull money out of society and they can change the rate of that and that velocity of money is a is a huge factor in how these Cycles work now there are a few other

things that matter here one is that's not the only U uh key tool in the Federal Reserve toolbox they also have the ability to uh buy assets so during if you remember during the lockdowns um interest rates got so low that you Effectively couldn't lower interest rates unless you started giving people free money uh making them negative and so what they started doing is buying assets okay so when they started buying assets when you buy bonds right you're creating demand for the bonds artificially that drives the price of the bonds up right when bond prices

go up the rate of the bond that the bond provides effectively goes down bond prices versus the rates move in opposite Directions right so by buying those bonds creating artificial demand they were actually driving interest rates down even closer to zero uh than where they were right and in some ways even negative depending upon how you you know how you look at it so so so they have that trick in their tool bag they have interest rates right and they can also coordinate with International governments or treasury right so there's other you know so they

have some some Tricks there Japan as some of your your viewers may may know basically had a multi- deade deflationary hangover from its exuberance from the 80s and 90s and their interest rates have been near zero for a very long time okay and and so this created uh an opportunity for Traders to potentially look at free money because they could go into the Japanese market and borrow dollars or yen in this case at very low rates right Even if they're going to invest in dollars the cost of pegging or hedging the interest rate or the

the currency fluctuations is relatively low and then invest in other assets that would generate cash flow or you know potentially Nvidia turns out seems like a logical thing to do very logical thing to do especially if your goal is your only goal is is to make money so this ARB trade is known as a carry trade in in in in the hedge fund world in the Trading world and this has been going on for a long time to the tune of probably trillions of dollars I've heard numbers as high as 20 trillion I don't think

it's that high I think it's probably a fraction of that but certainly trillions single- digit trillions that's a lot of money so last week the uh Bank of Japan announced that they were raising their uh Baseline interest rate by 25 basis points or a quarter of a percent and and that sent shock waves through the Investing world because not only were investors taking advantage of this they were leveraging themselves okay so when you are levered right a small loss gets magnified yes yes right and and and so the idea here that all of a sudden

if you're buying an asset leveraging that asset to borrow more money in Japan and doing it over and over again we don't know how far the leverage went but what we do know is is that the unwind started last week okay and and it went into Overdrive um on the week the first weekend of August so connect that now to bitcoin for us sure so so as the market basically becomes fearful and and and and you know Traders hedge funds whoever uh becoming fearful this will have an impact on all risk on assets because people

are basically fearful that you know this unwind is just going to push people towards cash and cause a flight to safety and everybody's going to be selling and it just kind of propagates And and it becomes its own thing right and so that weekend this past Sunday when when in in the US which is morning in in uh Japan and Asia um immediately we saw a big draw down one of the biggest we'd ever seen as a matter of fact in um the N so people are selling assets to get cash to cover their shortfall

and and and yes or they're fearful that they may basically be suffering from The Hangover of what everybody else is doing is there a Psychologic Al a point at which people are then going to flee to bitcoin eventually we're not there yet um that's the difference between being an asset for a thousand years like gold and being an asset like for 15 years I think there's the promise of what Bitcoin will become uh as this hoarding that I talk about and and the creation of this private money happens over the next decade or two and

we get the benefit of that for being Early right because that will be the stable measure of of of value 50 years from now right in the meantime we get the benefit of the fact that it's on its way there you know it's it's fascinating how um public uh reactions and fear I mean it's in the financial industry it's you know Traders are are watching the financial tickers and use like minute to minute and um not not the world I want to live in and I you know the the advantage of of buying my Bitcoin

you know putting it into Abra and just forgetting about holding it uh is a psychological Peace of Mind in that regard but um what what are we going to imagine what are we going to see over the next few months as we head into the election cycle and and where where do you imagine uh Democrats are going to come out on this in particular on uh the the Democratic ticket uh is there has there been Any any softening in in their point of view on on bitcoin let me kind of Connect the Dots here so

so as I said these are these this kind of Moves In Cycles right and and and Federal Reserve interest rates Market liquidity that those are the biggest contributor to those cycles and what happens is is that in in um sometime early in 2022 uh because of the inflation that was going on postco the government was really trying to force interest rates up And take dollars out of circulation to basically get prices down because you know bread was super expensive going out to dinner was getting expensive toilet paper was expensive yeah right and and so we're

still suffering from the overhang of that it's just that the prices aren't increasing as fast as they were so when people say inflation has come down what they mean is they don't mean the prices have come down they mean the rate of increase has either slowed Or stopped right and it hasn't stopped but it's backed down to probably like 1 and a half% for most Staples right now there are other things like housing that skew it higher okay so so that that's fine mission accomplished but that's a cycle okay so now in in late 200

uh 22 the FED said okay we're probably at the bottom of that cycle right we we we we think that inflation is moving in the right direction and it'll take 18 months to get there and they were mostly right On that okay so then what you want to do is you want to slowly start loosening the pur string on the on the money because if you don't what's going to happen is people are going to start stop borrowing businesses will stop growing small bus and mediumsized businesses which are you know the heart blood of of

of you know new job creation historically are going to stop being created right right and so they have no choice but to predict to some degree When these Cycles are going to happen so slowly liquidity was coming back in U which is one of the reasons why Bitcoin and and tech stocks had a booming 2023 if you remember yeah it was it was an amazing year right and and it was the velocity of money even though conditions were still tght dramatically flipped um and and from from ridiculously tight to a little tight and and again

at the edge it's that velocity of money that that moves Markets okay and so that slowed late last year right and so it looked like you know Bitcoin was going to be flat for a while the reason if you remember early this year a lot of assets except for you know few few stocks were very flat except for Bitcoin which was up and to the right why well that was the ETF okay so the ETF at that moment that liquidity was drying up a little created incremental demand for the Bitcoin itself because now 401ks and

IRAs for The first time could could could allocate okay so for the last few months liquidity has been very dry because the FED has been very concerned about making sure that they really got this inflation under control right now it's clear that not only do they have it under control at least in the short term right because you can't have it under control forever but the economy is slowing dramatically and again it doesn't matter in absolute Numbers it matters about the rate of change and it's clear that they've turned the Titanic slowly and if they

don't basically start thinking about the direction of the Titanic now it's going to be a problem so a lot of people are predicting that you're going to see interest rates come down quickly over the next few months um and then the discussion is turning to okay we're seeing employment numbers employment numbers start to trickle up are they Going to be able to to steer this Titanic quickly enough to save off a recession or is it going to be a small recession or is it going to be a big recession so saving off a recession is

almost impossible if the interest rates do come down what will that mean to the Bitcoin price so historically like I said um you know risk on assets act as a liquidity suck for dollars sloshing around the system which is why the price of Bitcoin was was skyrocketing during Co because it was the fastest we had ever printed money uh and and put money proverbially in circulation in in United States history actually world history and and so it won't be you know that much money but but we have two problems one we have to save off

this recession which means a lot of money is going to come into the system and risky assets are going to act as a liquidity suck for that stocks um crypto I think crypto will be you know number one in terms of Percentage gain technology stocks number two small cap stocks number three etc etc down the pipes so the so is the is the you know the word on the street so to speak that it's going to be a strong fourth quarter for yes for crypto and Bitcoin yes it is let's let's get back to what

do we what are you hearing from uh the Democratic conversation I mean are they going to come out in favor of of Bitcoin as well or are they going to stay flat on this conversation I think They have no choice over time but to soften their stance they're losing court cases right now like important court cases um and and that's why got the ETFs they tried to fight the ETFs they they they denied the applications for six or seven years and finally um which is what we predicted somebody I went on CNBC and said this

uh you know Black Rock filed and um took you know Grace scale took them to court and said hey you know this you have to allow this I mean this is Perfectly legal I mean there's nothing there's no there's no legal reason for you to deny this and the court agreed with him that's how we got the ETF right so so I think what happens here is when you start losing these court cases it does send a message because you know the lawyers making these decisions are also people I mean they don't want to get

their asses kicked regardless of what their subordinates are telling them to do Time After Time right so I I I think that is trickling down now to Congress people who are also hearing it from their constituents right so there's these um Draconian rules in the US right now that that make it extremely difficult for banks themselves to hold crypto on their on their kind of let's call it the bank's balance sheet m okay which is crazy it's just an asset right and and so there was legislation introduced um a few months ago to undo this

SEC rule That made it difficult for banks if SEC should have nothing to do with what banks can can't hold in their balance sheet by the way nothing as far as I can tell but they have this they managed to create this rule that prevented Banks from doing it even though banks are overseen in theory by different Regulators the legislation was passed but it was vetoed by President Biden I think if this happened again under a different Administration democrat or Republican it would have a very good chance of getting signed I think they regret not

signing it actually um and and so that's a long wited way of saying I do think the tides are changing both because we we're now just not you know just taking it on the chin and we're fighting but also because they're getting tired of losing and they're also seeing they're also seeing in in in you know the which way is the wind going right Exactly right you know and so um it's just common sense that at some point I don't know if you remember this whole Clipper chip nonsense from the 90s with the encryption um

back when ncape days the the Clinton Administration was trying to backdoor the ability to read encryption in all new hardware oh yes I do remember that yes yeah and we lost our Collective Minds in Silicon Valley I was working on SSL you know hgps back in my Netscape days and we just couldn't Believe it we're like well this defeats the purpose of everything we've been trying to do to create e-commerce online and they eventually figured it out and they got it and they acquiesced and and and everything was fine uh this isn't that unfortunately um

it's going to be a harder fight but eventually one it's not going to matter long term anyway it's just not yeah Bitcoin Bitcoin will Outlast a multitude of of administrations me you presidents Whoever doesn't matter um and by the way we're 300 million 400 million people out of what8 billion so by the way what what countries what countries are the biggest Bitcoin holders by percentage of population you know I don't know the answer to that exactly but I I think I have anecdotal evidence um it's it's interesting it's places like Nigeria um Philippines Argentina uh

the US um historically I think India um let's see what else comes to mind that I know um UK so you know it's it's an interesting mix Argentina always been look if you're in Argentina this is a very interesting very easy discussion to have because if you're over the age of 40 you have lived through so many currency failures so much corruption that this is just obvious yeah right that's why Mele is a hero now right Because he you know he took the the V Playbook which is look the only way to stop this corrup

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our healthy lifespans go to fountainlife decomp it's one of the most important things I can offer to you as one of my Listeners all right let's go back to our episode let's let's look forward you know I'm I have to ask this question it's the most popular question asked you know 5 10 20 years from now where's the price per Bitcoin going to you know Trend towards you know it's it's hard to answer in dollar terms because I do think that a Bitcoin will one Bitcoin right obviously yeah that's that's the easiest and most important

answer I I hope yeah but but as we approach this So-called fourth turning right what is what is the dollar it becomes easier to Define what a Bitcoin is than it does what a dollar is so now let's assume nothing changed and the chances of that is zero but I don't know how else to answer your question right so if we keep create increasing the money supply by 6% a year on average which is more or less what we've done since the 50s what is gold incre gold increases by some percentage points from more or

less Match matches price inflation plus a couple of percentage points over time is my understanding y but if you look at stocks over time right and I know Michael sailor talked about this on other outlets as well if you look at the rate of average increase of stock prices over decades it matches the rate of increase of the money supply is that a coincidence I don't think so and and so what does that tell you it's kind of A scary thought right so so anyway whether it's scary or not if nothing changes at a minimum

it should stabilize in terms of exponential adoption at some point and then the question is what are we measuring in well if we're measuring it in dollars it should at least go up 6 to 10% a year because we're adding six to 10% more dollars every year right so if you do that math and basically assume that you know for the next 10 years it goes up by 20 to 25% because we're still Getting the exponential adoption and then after that it basically starts to become slightly better liquidity suck than than equities because you can

always create more equities right people create companies they can more shares right can't isue more Bitcoin so so Bitcoin should do better right so let's say it's 10% right so you do that out for you know 20 years the numbers are astronomical you know no company has Ever grown that fast for that on that sustained basis in in corporate history I mean the way you know others look at it is um it should be equal to half the value of you Holdings in gold or 10% of real estate or whatever the case might be um

I mean the question becomes ultimately how much has the global economy inflated at the same time but but remember we we we we increase the the supply of gold or we find we don't increase the supply of gold we find more Gold that's usable at the rate of about 2% a year right right in Commodities we call that the stock to flow ratio of of of of gold so every 50 years we double the supply of gold in 50 years the supply of Bitcoin will not have doubled okay we can build up for new property

right so so those are assets that you know while historically they have been good liquidity stocks for in intergenerational wealth they're not they're still not optimal Bitcoin is Optimal for storing intergenerational wealth because you you are mathematically certain how scarce it's going to be let me ask this question that comes over from uh from X from uh pic do 581 says do you think bitcoin's price could go higher than what experts predict using the power law and stock to flow models specifically do you think Bitcoin might see bigger price jumps than usual parenthesis power law

or that its value might increase more than Expected because of the limited Supply yeah so so there's two ways to look at this you know one is be the last question which talk implies dollars and there I would say well what happens if we start printing dollars like crazy again because we're trying to you know deflate our way out of this debt crisis right and of course at that point the price of Bitcoin is going to outpace the power LW it has to right there just not enough to go around the more important Question becomes

purchasing parody meaning what am I buying with the Bitcoin and if I was to buy you know a commodity that we we we we know more or less what it should be worth Starbucks coffee a McDonald's burger whatever it might be all right so if I if there's the same number of Starbucks same number of employees like like how much Bitcoin am I using to buy that cup of coffee in 10 years 20 years 50 years like I've seen people do this with the Ferraris And the houses where you see basically how many Bitcoin it

took to buy a a Ferrari in you know 2013 well took all of them and and then you know and you can see that like how much Bitcoin it takes to buy a Ferrari now and the number is just going down like because it's a it's a deflationary asset it's the opposite of the way we're taught to think which is the value of money should go down because you're inflating it we made that up we literally made it up and And and so what we did is we made up something which is more sound right

so so it's it's it's the answer to that question should be I think Bitcoin follows the power law relatively closely over time so it's a good question and what that implies to me is that its purchasing power should increase versus you know other things that you would want to buy with it dollar is a different story because we can't trust the government to responsibly do Anything with the dollar and they'll just inflate it to infinity and so as a result the price of Bitcoin on a dollar basis could go to Infinity what does that mean

yeah right here's a couple of questions I find fascinating this one is from magga 10424 Bitcoin doesn't create a source of income for retirement so and I want to talk about that I mean if you're holding Bitcoin how do you create how do you make it a source of income right um so Let me just finish a question here so so what would what would be the strategy to use use BTC for retirement is it work borrow die or sell a little bit each month so so um that sounds more bid work borrow die um

but but um hopefully it's work borrow longevity yes um yes yeah and and so let's assume it's work borrow longevity for a second and I think the answer to this question becomes even more interesting it's the same answer either way by the way I'm not trying to Be uh cute um I am but just just just for a fact so so I think that the future of Bitcoin as it relates to the dollar and this is part of why you know I you know I love Michael sailor he is highly incentivized for the dollar not

to fail okay uh and and and and it's part partially related to the answer to this question which is that you know the right way to think about how to generate a yield versus Bitcoin is not you know my cash flow on bitcoin it's if my Purchasing power uh on a dollar basis via Bitcoin is going up really past really fast what I should be doing is borrowing against that Bitcoin and if I borrow at a low enough LTV in theory I may never have to pay back the loan okay now let me unwind that

one step at a time and it's I want to go deep into this personally and for a number of the questions from the community here yeah okay let me let me paint a picture that that that uh is Relative to historical finance using your your home which everybody understands okay if you have a house that's worth a million dollars and it's completely paid off okay and you know housing prices in your area have been relatively stable there's a bunch of banks that will probably lend you 40% of the value of that house okay yep doesn't

matter if they will or won't let's just assume for the sake of this discussion they will okay so you have now a loan For 40% of the value historically with housing the value of the house only goes up a few percentage points a year but let's say you keep the loan and you're making interest only payments on it for a few years but you wait like 10 years and for whatever reason the value of the house is now $2 million well 40% is now double what it was before but you have a loan to pay

back from before what if you could basically um you know reset that loan with the same bank so that you're Now borrowing $800,000 because it's still 40% of the loan to value okay so you would still have to make the interest payments in this case because the price of the house isn't going up very fast or at least not compared to other assets but you now you've now drawn more money out of the house okay now let's think about it in terms of Bitcoin for a second Bitcoin his is historically going up between on average

you know 20 to 40% per year if I factor In the standard deviation I predict that I could make well I shouldn't say predict I make a good case I think that we could see 20 to 25% increases in value for the next 15 years let's say 25% I think is realistic I think there'll be years where it's higher but then I think it you know kind of goes into that 10% in dollar terms for the reasons we talked about before because of the government money Printing and the fact that things like gold and and

real Estate are in a fixed float right we increase the value we increase the amount of that float whereas with Bitcoin we don't so it should get a higher rate of of increase over time so what does that mean in terms of lending let's break it down if I let's say I have a million dollars worth of bitcoin and I conservatively borrow 20% of that value in dollars I borrow $200,000 okay let's say that my Bitcoin increases in value the next year 25% So I now have $1.25 million okay the loan to value ratio that

I have has gone down right so that means that if I want to stay at 20% right I can now borrow 20% of 1.25 million mhm you follow so as the price of Bitcoin keeps increasing the amount that I can borrow against this also continues to in increase now with the traditional banking system the banks need you to make that interest payment that's how they make their money That's how they make their money but that's not the way defi works okay so with these defi loans right you set a um a loan to value ratio

so think of this as an online marketplace right where you're practically borrowing from the internet itself all right we can come back to the mechanics but basically you're borrowing from the bank of the internet however it works all right you the same loan that I just described okay Bitcoin goes up another 25% so you can actually borrow at least 25% more and keep your loan to value ratio the same right with these defi systems if you're borrowing dollars against something like Bitcoin you can actually increase your loan to value ratio to something like 60 to

65% that high until such that if the price of Bitcoin starts to fall which would make your loan value ratio go up right they might they might automatically sell some of your Bitcoin And that's what you're trying to avoid you don't want to sell your Bitcoin so if you kept your loan to value ratio low for the initial loan let's say 30% to 20 to 30% to keep it conservative Bitcoin is still increasing right you can now not only continue to borrow if you want to and maybe make interest payments or you can roll the

interest payments over in into the principle of the loan which would increase the loan to value ratio that Makes sense but you're still far away from 65% in most cases because the interest payments today the rate you know might be between 6 and 10% just depending upon the market gations right so so but you you start to see a model which says you can hold a deflationary asset Bitcoin borrow an in in an inflationary asset the dollar right and if you have enough of this asset that's that's deflationary in theory you can borrow forever M

depending upon the math Between the inflation and the deflation right so we now have clients who have figured this out you know and the only reason that they haven't figured it out from Abra yet is is because not everybody's heard of Abra and and so part of my goal is for everybody who's you know trying to figure out how to manage their money long term relative to the answer um from from mag's question that um that they see that this is a viable model for leveraging your Bitcoin To live and still not have to sell

your Bitcoin yeah I mean I think that's one of the important another another uh friend Claire is asking basically the same thing I don't want to sell my Bitcoin but I want to be able to borrow against it earn yield on it to you know to fund my life um so let let's talk about what is what are you doing at Abra to enable that we call these lifestyle loans and if you're holding like I it's the same example I gave you if you're Holding millions or hundreds of thousands of dollars to millions of Bitcoin

millions of dollars worth of bitcoin um we will set up borrow facilities for you using our registered investment advisor um it's a basically these are separately managed accounts which are similar to separately managed accounts you would get in the equities world and and that's important because you're not giving your Bitcoin to ABRA you're actually retaining title to the Bitcoin but if you want to borrow against the Bitcoin you'll place the Bitcoin into a collateralized contract using Defi and then receive stable coins which you can use as stable coins or convert to Dollars doesn't matter they're

the same and again depending upon how low that loan to value ratio is right you can even roll the interest payments over into the principal you can make the interest payments if you want and if the price of Bitcoin is growing Faster than the rate of interest right your LTV is still going down even though you have paying the interest which is super interesting right so if you have conviction for these markets the way I do and I think the way you do this model makes perfect sense right Michael sailor talked about it I've heard

others talk about I think we're the first ones to come close to perfecting it um we've worked on this for a long time and um you know it's still early still new but But it's working and in terms of getting yield on bitcoin um what kind of numbers are you seeing in the maret Marketplace yeah it fluctuates uh it's it's supply and demand so you know we've seen every anything from you know there's months when it's zero to months when it's 15% um and and so you know it I I think steady state over time

for the next kind of cycle um the demand will probably put it in the 4 to 6% range which is pretty good but again these are D5 based Systems so so the important message here because everybody wants to know about risk right is okay well we're what risk am I taking sure you're not lending Bitcoin to ABRA or another company you're not taking corporate counterparty risk when you deposit money in a bank your asset becomes a liability on the bank's balance sheet right that's why the FDIC exists to address exactly that problem right so this

isn't a bank you are holding your assets if you choose to Put them into the def5 marketplace the risk you're actually taking is technology risk it's not mostly technology risk it's not cter party risk to ABRA and that's a big breakthrough because all things considered no offense to to my peers in the banking world I would rather trust the open internet if I could then the banks and just to just to be clear abro was Last Man Standing um in in the category that you are today and and you You basically redefined yourself can you

speak one second about the process you went through CU I think it's important people to understand it yeah sure so we were part of the first generation ation of of crypto lending companies um you know we were doing the opposite of what I just said we were basically you know people were lending money to us uh and then we would generate yield uh for that and in kind and you know so if you deposited Bitcoin you would get more Bitcoin back and and the counterparty to those transactions was abber and my opinion as to the

legality of that doesn't matter the government didn't agree with all that so um you know we the last standing because we weren't doing a lot of the Shady stuff that others were doing in my opinion um but regardless uh just from a regulatory perspective you know we had a long Tod do with the SEC uh which we've settled um several states which we've settled And then we migrated to this registered investment advisor which is an SEC registered entity which then gives you these individual separately managed accounts so that you're not actually lending your assets to

ABRA anymore so if Abra goes away you've still retained title your assets okay that's that's the Breakthrough it's as close to the Mantra of not your own keys not your coins as you can get yeah and still have somebody helping you yes I I I completely get That I mean the the other option and personally you know the way I way people listening should think about this you can go by ETFs as one point uh you can do something like what Abra does you can uh get yourself a hardware wallet and hold on to it

yourself and it's a matter of uh how technically literate you are and uh how much attention you want to pay to this yeah look I have a degree in computer science uh Stanford PhD Dropout I'm I'm telling you I I still like get Cold hands when I sweaty Palms when I have to deal with a lot of that stuff your Hardware wallet I remember remember these Keys um uh talk one second about the wash rules one one moment so people need to know this um uh if if Bitcoin drops substantially um you're able to take

the loss and Reby uh the Bitcoin um and take the loss on your stocks unlike with a normal you know stock where you can't Reby it and And take the loss right away on your stock on your on your taxes so um uh do you think that that situation will last for a while longer I have seen no indication that it's going to change um you just to my knowledge you described it perfectly meaning you can take the tax um you can get the the gain the tax write off immediately even if you Reby the

asset um within minutes that is my understanding and I'm not a tax expert but I know many people have take Including myself have taken advantage of it over time I suspect at some point they would be incentivized to close that loophole by the way one of the things that Kennedy proposed was that there should not be any capital gains taxes on uh selling um you know crypto assets that are commodity assets um and I I agree with him on this I think I think it's ridiculous um this is a store of value so you're effectively

getting taxed twice in the same thing so Basically we're paying a tax on the fact that you're decreasing the purchasing par of the dollar at my expense so I've chosen to put my stuff in another digital currency that doesn't have that problem and now I have to pay you extra for the rights to not have my purchasing parody fall when I've already paid tax on the the wealth that I in order to get the Bitcoin in the first place so it doesn't make any sense right I mean obviously there's a million things about Our tax

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for those who don't know what defi is um uh can you give us a 101 and what and you know what you think about defi on on bitcoin Sure this is one of my favorite topics so defi is short for decentralized finance the basic idea of decentralized Finance or defi is to take all of the components of Banking and Financial Services lending savings certificates of deposit yield more sophisticated instruments like derivatives and make all of those capabilities available using this latest uh smart contract technology which is software but what's unique about this Software is is

that it runs on the open internet just like Bitcoin in a way that it can't be shut off there's no off switch M right so there's no company that owns a a a defy system so there are defi systems now for borrowing and lending right so that's the marketplace where on the one hand I might deposit Bitcoin into the defi Marketplace to earn yield and the other side I might be borrowing it but it's over collateralized in dollars so I'm not Losing money and if the LTV gets too high they're automatically converting those dollars back

to bitcoin for me so I'm not taking a risk of losing my Bitcoin so so these marketplaces now manage tens of billions of dollars just for borrowing and lending yield and and and you know borrowing against your Bitcoin Holdings that was the kind of first generation we were already on like Generation 4 of defi where you know these kids are now developing You know sophisticated derivative systems um sophisticated you know yield generation uh systems to the likes of which the world has has never seen before we basically wholesale rebuilding the entire banking stack the entire

stack of capabilities of the banking system one layer at a time over the last five or six years ethereum was the first system that we could use to do this now we have salana which is is gaining in popularity cuz it's more performant than Than Bitcoin and scales better so you can actually in theory with the upgrades coming to salana get almost Visa like numbers in in transaction processing and remember banks are open 35 hours a week maybe some are open in extra 5 hours on Saturday so 40 hours a week right these systems are

open 247 168 hours they don't close there's no holiday all right and and so so you know this weekend when you know markets went haywire people were able to access Their Bitcoin right so so I think this is the future of banking do do you see Bitcoin getting integrated into the traditional Financial systems um it's hard because you know the way Bitcoin settles is very different than the way traditional asset movement works and and so you get into all these hypothecation and it's complicated I apologize but these rehy ification issues with related to leverage and

other things we talked About earlier that don't reconcile well with banks the problem is not Bitcoin the problem is the Arcane Banks yeah Bitcoin works just fine so yes you can do it um it's my concerns are not related to the things that the government would have you be concerned about my concerns are more related to the issues with the banks themselves um but I actually think the banks are going to be rebuilt faster than people think over the next 10 years leveraging this Technology the problem that Regulators have now mhm is that these systems

have no off switch no borders they don't know anything about Draconian banking laws they've never heard of the bank secrecy act or kyc rules they just run right I'm I'm all for following the laws I have no problem with following the laws as a company I do I have a comp team of lawyers that make sure that we do all these things Legally but when you implement something in software and put it on the internet they're not asking for permission anymore it just runs right nobody ask for permission to put Bitcoin out there it just

runs right so these defi systems that you know lend and and borrow money and and generate yield for people they just run and and so this is the future so I can't really see a model where you know the laws and and and regulations exist the same way they do today in 25 Years it's just it's it's actually not possible doesn't really make any sense I think the borders as we know them related to finance are going to disappear just like they have for messaging on the internet or video streaming or Zoom calls it's just

another protocol right so we we created a protocol for accessing text hypertext HTTP well we've now created protocols for money first with Bitcoin as the money itself and then protocols for Banking and I think Bitcoin is now being integrated into those protocols the first generation of defi or these decentralized Finance systems didn't really use Bitcoin the Next Generation actually do and the merger of the two is incredible right that's when you start to cons when you can start to see a world where you don't ask yourself anymore what is this worth in dollars but what

is it worth in SATs or Bitcoin you know switching topics slightly we've Been in the midst of a uh an AI explosion right um anyone who's not been hiding under a couch at the same time that that Bitcoin has been making headlines AI has been just um moving at not exponential but hyp exponential speeds we've seen uh compute you know what was more is law 2x every um every couple of years now 10x every year you know Elon was at stage at the Abundant Summit this year saying he's seeing 100x um in a year and

expects that for the Next couple of years and then we have you know AGI sometime in the next 1 to 5 years and then you know digital super intelligence there's a lot happening there and you've got to be thinking about how Ai and crypto slit coin you know intersect and transform each other um speak to what's on your mind there what are you finding exciting I mean are we going to see AI agents transacting uh you know uh basically buying and selling and you know I assume that crypto is the Unspoken additional layer on top

of the internet um for financial transactions yeah let me let me it is let me try to make it real and tangible for people I'll give you some some real world examples so so I believe um we had this idea during the kind of you know the last crypto summer we had when when things everybody was going crazy during Co this new concept of a DA was created um this it's called da is a decentralized autonomous Organization and you can literally build an organization in software and lot of these defi systems are basically Dows and

it this the system has software-based governance built in there's no PE there's no necessary people involved there's no it runs on a set of rules independ software enforceable rules based upon who owns potentially the tokens in the system and maybe you earn more of those tokens as yield you know there's different aspects To how the governance can work but but what's important is is it's not people-based meaning there's no once it's a dow you can have a dow that's a company but it doesn't really make sense in my opinion people are trying the beauty of

a dow is no off switch and and you know it's not run by politics it's no no op no opinions no opinions but now merge that with AI and i' I've spent a lot of time on this lately so so I think that we're about to enter into a Universe where we have billions of dows and what we defined as a dow in the first generation and what you're talking about as as autonomous agents which is also the phrase we use at Abra basically become the same thing and and and there's Dows everywhere so so

take take Elon the robo taxi model that you know that that Tesla's close to finally announcing right so I think what you're going to see is you're going to see the corporate version of the taxis that Tesla owns and you're going to see the ability for people to own taxis because that's what people can get their arms around right now that's not the scaleable model in my opinion the scalable model is is the tax that the car itself isn't owned by a person or a company it's actually part of a dow and it drives itself

around right and you automatically pay using crypto probably stable coins or or Bitcoin via lightning whatever and there's rules in the Dow Via software contracts that decide what the car has to do in terms of you know where do I go to automate getting charged if it needs servicing it goes exactly what do I do for for maintenance um how do I distribute the profits to the Token people who own tokens right so all of this is happening right without governance now this is a lot easier when all cars are are um you know automated

the biggest challenge with all this right now is people we get in the way we Screw things up um and and so but eventually you can see where I'm going with this I just gave you one quick example which was a car that owns itself and then eventually it'll end the life itself and you've made all your money back as people who invested in the car via this token issuance right and that's how Dows are created you have a token issuance where you deposit money as stable coins or Bitcoin into the Dow and then the

software rules determine how it Gets used well it automated buying the car it automated setting the sub up and it automated the token distribution back to the people there's there's a million other examples what if I have autonomous agents that do you know video content distribution and basically determine you know out in the in the cloud you know I I created a smart contract out in the cloud to sell my movie and it's automatically going to give the money to this group of investors that uh invested In the movie based upon how the distribution rights

work and then at some point the price is going to come down for watching the movie and then end of life itself and it's just open source content you know something like that I can give you thousands of examples of these crypto and smart contracts become the transactional layer for all of these autonomous agents Dows I think you know I was listening to to elon's Lex Freeman interview where he was they were in Memphis you know these massive compute centers you need them now but you know if you look at the amount of compute you

know my laptop here that we're talking from that sits idle this is all going to become compute in globally decentralized AI systems remember years ago when SEI was basically letting you install software in your last do yeah I remember from my NASA days right and so so we're we're wasting so much compute that is eventually going to become part Of these decentralized systems and it's all going to basically use a Smart contract based layer on top using Technologies like salana ethereum etc etc so that these systems can can communicate contract to contract having a person

who speaks what did he say at8 bits yes8 bits per second yeah yeah processed transactions makes no sense right visa when every single person on the planet is or I'm sorry there a lot of religions when every person is buying At Christmas time there's a couple of billion people that shop over a onee period That's visas Peak transaction processing that is a roundoff error compared to what's coming yeah okay so so people can't manage that Oracle an Oracle database can't manage that you need a globally decentralized Network that can process transactions to manage that that's

what defi enables right gets us out of the way it's going to be an exciting um exciting few years ahead you Know as they say yeah it's awesome there's going to be a second coming for crypto when it merges with AI in the next 3 to 5 years you know we made some token investments in abber in this area and I'm really excited about it and that is the time frame right it's it's not 10 years or 20 years it's it's the next 5 years and maybe even before that with the speed of which uh

which things are are moving um Bill where do people go to find you on social uh where do they go To learn more about Abra yeah sure I'm I'm Bill barx on on Twitter X sorry uh we do need a verb um abra.com uh you can you know sign up you can get get more information um I'm on the interwebs all the time relatively easy to find uh we have our money talks podcast every Friday I think we're taking this week off for August but but most Fridays we have money talks online uh via all

the normal channels where I give you the kind of macro latest on what's going on Related to crypto and other things uh related to exponential Tech and all this stuff so so you can check that out but we're we're pretty easy to find fantastic and Bill love you having being part of the abundance community and and thank you for for joining me each year and uh and sharing your wisdom and your technology and um yeah super pumped uh for our conversation and for where things are going I'll see you soon pal take care [Music]