unbelievable energy here huh orange energy orange energy well it's an honor and a privilege to be with you all here today and get to interview uh you know my closest friend for 20 plus years Michael Saylor uh who obviously needs no introduction but whose contribution to the Bitcoin Community has been nothing short of extraordinary so thought we would start off kind of at a high level macroeconomic View and talk about what's happening on a macro level with respect to interest rates currencies things of that nature and how it seems to be pushing the whole world
into Bitcoin you know I discovered Bitcoin starting around March April of 2020 and that's because the world came through a grinding halt interest rates went to zero the lockdown shut down the economy everywhere in the world it's uh the plane stopped flying the ship stopped moving the cars stopped driving and I looked at at the interest rates at zero and I thought this is kind of the same as trying to stop the passage of time and for about 18 months the entire economy was kind of Frozen and stuck and then around about a year ago
a bit more than a year ago the Federal Reserve started raising the short-term interest rates and they went from zero to 25 to 50 to 75 to 100 and they went straight up to 500 basis points uh and they and that's the fastest rate of of increase in the interest rate in our lifetimes it you know in our business career and so I'd like to I like to think of it as it's like in Top Gun 2 the movie where the interest rates were about 250 basis points in the middle of 2018 and then the
feds flying the plane and it gets about 180 basis points in about February of 2020 and then it steep Dives down to zero and it buzzes the valley this is flying the world's economy at zero for about 18 months and then someone decided that they could go into a 9g lift and they just started pulling back on the wings of the plane and they're flying as hard as they can um up to 500 basis points and that's the point at which you either black out or you rip the Wings off the airplane right and in
the movie Top Gun the pilot started black out but we we've got the point where the plane is almost about to stall the plane being the worldwide economy a lot of people are blacking out you saw this in the UK about six months ago where the Prime Minister and the head of the the minister of the exchequer lost their jobs in a matter of weeks because they almost blew up the entire Insurance pension fund and banking business in the UK a few months after that we started ripping the Wings off of uh the banking system
in the U.S and we saw the failure of Silicon Valley Bank and silvergate bank and Signature Bank and First Republic Bank and so where we are right now is we're getting to the end of that of that um incredible adjustment where the the bankers are trying to reverse the excesses of taking interest to zero and um the result is we know we can't keep raising interest rates much faster much longer because we'll just crash the entire U.S and Western European banking complex I mean all the banks are Technically insolvent when uh when they raise interest
rates that fast because they crash the bonds so the the Western Bankers have slowed down that process now they're ambivalent can they move forward a little bit do they have to back off a bit um what's happened in the meantime the people don't notice is when we cranked the interest rates up so fast we destroyed the value of all the sovereign debt and all the all the long mid-sized debt in the world what we're also doing is we're sucking all of the energy out of second uh out of the developing world at currencies so indirectly
um or maybe directly uh the the interest rate Saga has crushed the currencies of Turkey and the currencies of Argentina and the currencies of of every developing nation that doesn't have an extremely strong economy they're all collapsing right now so where are we in the macro cycle we're at the point where the inflation hasn't really gone away it's backed off of the most extremes but we still have inflation in excess of the interest rate we can't really keep raising interest rates without destroying all of our allies currencies and we can't raise interest rates without destroying
a lot of the western Banks and Pension funds and and the rest of the bond complex so the political pressure is going to grow on the banking Community to stop raising rates but of course they're going to want the inflation to go away and they're going to want to save all of these other developing nations so I would expect the logical thing to happen now is all of the um all the economists will start to redefine inflation and so instead of hearing CPI you're gonna you're gonna see other inflation measures that we want to focus
on they're going to redefine the measure they're going to make a make adjustments to the market basket of goods and services in the inflation metric so we're going to take out expensive items and put cheap items into the index so that the CPI looks lower and you're going to start to see new novel financial instruments like swaps where you know where we're simply going to swap billions or hundreds of billions of dollars for hundreds of billions of dollars of another currency it'll be an off balance sheet adjustment and all of these things will be meant
to massage the macroeconomic problem we'll be trying to support other currencies we'll be trying to keep our bonds uh from crashing we'll be trying to make the inflation look lower we're going to renormalize so instead of two percent inflation maybe it'll be three percent is normal and instead of three percent of inflation defined 10 years ago it'll be three percent of the of the new inflation metric that we just came up with because this is the proper one because the world is different today and technology is different and of course pretty soon you'll have add
Finance YouTube videos and the CPI because that's a little bit easier metric to manage so I I think we're at that cycle where the money printing is going to continue we're going to have uh more of a delamination between monetary inflation and asset inflation and producer price inflation and CPI inflation and the general inflation rate and uh and politicians and bankers are going to struggle to hold it all together with a lot of Novel new programs and new ideas okay I think that's a great backdrop for the next topic I want to talk about everywhere
we've gone for the last week everybody has wanted to ask about your views on what's happening on the regulatory front the SEC has come out quite strong against a number of large crypto players and so I thought it would be helpful to chat a little bit about what your views are on how this impacts Bitcoin both in the short term as well as the long term yeah well you know bitcoin's a rabbit hole and when you start going down the rabbit hole first you have to learn all about Bitcoin and then you have to learn
all about the block size Wars and then you have to learn about the history of the crypto industry and somewhere along the way I I started uh studying uh Gary ginzer I took his class at MIT I went back and I watched every minute of 20 lectures at MIT and then I started reading everything written by anybody and as you know I read all the lawsuits I read the cftc lawsuit I read the bittrex lawsuit I I read the coinbase lawsuit the binance lawsuits all of the legal judgments and I listened to all the Congressional
testimony like every minute like everything that every Congress person or every Senator has said about Bitcoin for the past three years this is true and then I talked to you about it okay and and so here's my opinion right um first of all in the beginning there was Bitcoin and it was good and there was a unit of account and it was called BTC and there was a network that could not be censored and it was called Bitcoin and then Along Came smart people that learned about Bitcoin and they arrived to fix Bitcoin I just
heard about Bitcoin I'm here to fix Bitcoin and they divided into two two factions they're the people that heard about Bitcoin and wanted to help Bitcoin the hard way and that's they worked on lightning and it took years from 2015 and they're still working at six seven eight years later and they worked on bitcoin applications and they worked on bitcoin companies and they worked very hard to to raise millions and tens of millions and hundreds of millions and billions of dollars to buy Bitcoin that's the hard way and those people are in this room and
they're in the Bitcoin ecosystem and that's Bitcoin and lightning and uh and Bitcoin maximalists and people that win Bitcoin it's it's the Samson miles and the atom box and you know and and it's the Elizabeth Starks and the Jack maulers and the Jack door season you know who they are and it's hard work it takes a lot of time a lot of money a lot of bleeding then there's another group of people that heard about Bitcoin and they wanted to fix it and they took the easy way and and the easy ways of a few
shortcuts is I want to make money by copying Bitcoin I want to compete with Bitcoin with a new token I want to bank Bitcoin I want to rehypothecate bitcoin I want you I want to loan you money on bitcoin I want to generate yield on bitcoin I want to run a Bitcoin exchange I want to offer you Bitcoin derivatives and I want to create every other flavor of Bitcoin and I got the new Bitcoin the quantum resistant Bitcoin and the energy efficient Bitcoin and the faster more beautiful Bitcoin with the crypto kitties on it okay
that's the other set okay that's crypto now what's going on right now is that uh people uh and I wanted to create the US Dollar on a crypto Rail and I'm Gonna Give You Bitcoin without volatility and I'm gonna give you a network a crypto Network that clears in one second which is cheap and free so what you see with the regulation right now is The Regulators are saying we're not comfortable with the stable coin we're not comfortable with the crypto exchange we're not comfortable with the crypto token we're not comfortable with with the shortcuts
we don't want you to do an Ico we don't want a corporate coin and um and the result of all of that is the crypto ecosystem which in the beginning was Bitcoin and then bifurcated into all these other things is going to come back together and unify on bitcoin again and um what what we're going to see is that instead of the unit account being the dollar and instead of the network being a crypto exchange offshore now the unit of account is going to be BTC and the crypto network is going to be Bitcoin and
if you want a fast Bitcoin Network a fast payment Network it's not going to be a crypto exchange it's not going to be a proof of stake token it's going to be lightning and the gas is going to be satoshi's and everything is going to Anchor into Bitcoin so this is a very painful time period for the crypto industry uh and you can read it on the news but but it's a very it's a very expensive painful difficult um educational episode where people that believed in Bitcoin but then went off to do all of their
other altcoin experiments and crypto experiments they're going to realize that there was a reason that you might want a censorship-resistant network that spit out a block every 10 minutes they're going to realize that there's a reason for a mining Network that spits out 400 exahash of digital power they're going to realize that there's a benefit to working really long and hard for many many years to do a lightning type Network they're going to realize that these things they took for granted they thought we can just have our cake and eat it too we can have
a decentralized Network that has the dollar as a unit of account we can move the money to speed of light for free and we don't really need to use energy and Mining A6 and Bitcoin and we don't have to pay for Bitcoin for gas we'll just issue our own yo-yo coin and we'll use that for gas and and I think that those people are going to realize that um Bitcoin is the safe haven asset Bitcoin is the risk-off asset Bitcoin is the censorship resistant Network right Bitcoin is the reserve asset of the ecosystem and that
means that as they lose confidence in their tokens they're going to trade their tokens back in to into the reserve asset of the ecosystem which is Bitcoin when they lose confidence in an offshore or an onshore crypto Exchange they're going to trade back into Bitcoin when they when they lose confidence when they think that well that's not censorship resistant anymore right those are all nation state captured networks they're going to go back to bitcoin and so I actually think that that um this is reminding everybody um why Satoshi did what Satoshi did it's going to
bring everybody back to their roots and as people lose confidence in all of these other crypto ideas which were meant to make Bitcoin better or fix Bitcoin right and I'll give people a benefit of doubt they're trying to fix Bitcoin but they're taking shortcuts or maybe it was their business right I'm going to be in the business of trading Bitcoin rehypothecating Bitcoin hedging Bitcoin creating competitors to bitcoin improving Bitcoin that was their business I think that they're going to realize that in fact the best idea always was to buy and hold Bitcoin Take the Long
View and if you see an issue if you see something that is sub-optimal like I want to pay for a cup of coffee in a split second for free if you can't do that with Bitcoin you don't reinvent the ecosystem you go back and you focus on creating either a layer two or a layer three Solution on top of Bitcoin and you solve the problem via lightning or solve the problem by a a custodial Bitcoin wallet and so ultimately the the capital and the crypto ecosystem is going to migrate from the other crypto assets to
bitcoin as people lose confidence as they get fearful about all these other crypto assets and crypto exchanges they're going to they're going to go to the thing they know the thing they Trust and the truth of the matter is as Eric as you've told me many times the crypto people don't they don't dislike Bitcoin they actually like Bitcoin they just thought that there might be another way and there might be a another possibility and now they realize that Bitcoin is the way and uh there's no second best there is no second best the exchanges will
simplify they will go from Trading hundreds of tokens or thousands of tokens or tens of thousands of ideas and they will simplify and they will consolidate the ones that are going to last are going to focus on bitcoin right they're going to realize that the investors are going to realize they should focus on bitcoin the technologists whatever their ideas fast payments defy you know some token some any kind of security thing they're going to focus on bitcoin they're gonna they're gonna focus on bitcoin lightning there'll be an explosion of interest and protocols the VC are
going to move over from crypto tokens with Solana named as a security with cardano named as a security with all these other 15 20 30 tokens name to Securities the VC in Silicon Valley are going to say wow we should what was that thing about Bitcoin and was that lightning you mean I can do this on bitcoin with satoshi's and you're going to see the VCS move over to bitcoin and lightning you're going to see a Renaissance of development on bitcoin you're going to see an acceleration of lightning you're going to see an expansion and
and all of this is in essence um a massive educational campaign to teach politicians the difference between Bitcoin and an ethical commodity and any security and you can see it it's like the senator says Bitcoin the governor says Bitcoin the Congress person says Bitcoin the head the regulator says Bitcoin Bitcoin Bitcoin Bitcoin and all of these lawsuits and I've read thousands and thousands of pages there's one word conspicuously missing from all of the thousands of pages and that one word is Bitcoin okay so bottom line right it's bumpy it's a turbulent transition it's a rationalization
of the industry the business the industry is growing up but but it's long-term good for Bitcoin and I think you can expect a lot of the the crypto Bros that got distracted maybe they took off their laser eyes maybe they love Bitcoin between 2010 and 2016 I think they're coming back to bitcoin from 2023 to 2000 30 and you're going to see there's going to be an avalanche of people returning to the fold building on top of Bitcoin and they're going to ReDiscover the roots of of the crypto uh Revolution right that the whole idea
of of cryptography decentralization an asset without an issuer right and and uh that is what's going on right now it's going to educate the politicians it's going to educate the mainstream Media Watch CNBC they get it watch Bloomberg they get it read Wall Street Journal in New York Times they get in and so I I follow all you guys on Twitter and I remember when I first got in this space in 2020 people said when will the mainstream media talk about us nobody talks about us nobody talks about Bitcoin nobody talks about any of this
and then for a while they talked about a lot of stuff and it was very confusing and it was very scary and it was unclear whether there's a difference between Bitcoin and ftt token and now they're talking about us but it's very clear like Bitcoin is a commodity this other stuff is uncertain right and Andrew Ross Sorkin says tell me what you think about Bitcoin and so I think that that this has been uh it's a catalytic experience it's cathartic for the crypto community I think I think we should welcome them back with open arms
when they're ready to return to the fold but meanwhile Bitcoin is going to continue to motor forward we we have all of the people re-hypothecating and shorting Bitcoin they're all bankrupt if you thought it was a good idea to loan your Bitcoin to someone so they could short it you probably lost your Bitcoin everyone in the business of shorting Bitcoin they're all Fallen right everybody that embraced the alt coins as being equal to bitcoin they're realizing that was a bad business idea I think I think it takes a while for the market to work out
these issues but the law of thermodynamics will not be denied and Bitcoin is the technically Superior asset it is the economically Superior asset and it is the ethically superior asset you know and believe it or not the vast majority of the disinterested population around the world will will eventually given enough time and information realize that and they are realizing that and that's what's happening in front of your face it's not pretty it's not pleasant but this is the way that Bitcoin rises above the noise and establishes its dominance as the world's greatest crypto asset Network
so so we've got a macroeconomic landscape where nation states and central banks are doing their best to destroy the purchasing power of 8 billion people in the world pushing people into Bitcoin we've got a regulatory environment that you've just eloquently described as being very good for Bitcoin certainly in the long term I think the title of our chat here is uh the investment case for Bitcoin so let's get a little more granular talk about that take it any direction you like whether you want to talk about different products or the different investment groups whether it's
individuals family offices corporations what are your thoughts on the investment case for Bitcoin well I think um people are losing confidence in uh in technology Investments and in in stock and Equity Investments right now if you look at the performance of the s p and the NASDAQ and most most conventional companies they've hit a wall and so investors in the equity Market are scratching their head and they're increasingly fearful they've got high interest rates they've got inflation they've got regulation they've got trade barriers so they're looking around the um the commercial real estate market took
off in 2020 because interest rates went to zero and so the cap rates of these companies were extraordinary and the company the multiples on Commercial Real Estate were extreme and there's always like a three-year lag like you and me we sit around our pool in March of 2020 we go oh my these commercial Office Buildings going to be empty who's going to want this space well it takes three years for people to go wow commercial occupancies are low who wants the space so sometimes you don't really want to know three years in advance or at
least you got to think about it but I think uh investors getting disenchanted with real estate they're getting disenchanted with Equity they're getting concerned I mean the entire commodity thing is a concern Commodities don't work and they're realizing that that's a challenge so they're also losing confidence right in their ownership of these properties right you've seen so many people had their assets seized or Frozen and that's continuing so Bitcoin is is emerging a as digital gold be it's it's proposition is gold is stronger than ever because gold is not performed at all in two and
a half years and Bitcoin is is beating every asset class in the same time period so the gold hypothesis is our thesis is much stronger Bitcoin is digital property is much stronger the idea that I could buy a million dollars worth of bitcoin and move it anywhere in the world is becoming appealing to people as they start to struggle with property taxes and they know there's going to be an increase in tax over time so Bitcoin has emerged as a as a digital commodity better than gold as a digital property better than commercial real estate
it's it's emerging as an alternative to people that have seen their residential property monetized and and it's also emerging as a as a World's monetary index because as The Regulators differentiate between Bitcoin and everything else right as they as they Hammer over and over and over again Bitcoin is an asset without an issue or it is unique as that happens right the the significance of Bitcoin being that green ticker in the lower right corner of a CNBC you know television episode or or newscast or Bitcoin being at the top of the Masthead of the Wall
Street Journal every day right that's sending a message to the world this is the world's Global monetary index in fact this is the greatest of the world's Global monetary indexes and I think Bitcoin is has successfully morphed from being speculative scary you know digital asset to legitimate monetary index legitimate monetary asset everywhere in the world and you know I've we've talked about this before I think that if you get people to acknowledge that Bitcoin is an asset with a period then Bitcoin 10x is from here like we don't really have to conclude anything else I
have my hierarchy of investors it's like a five-part hierarchy okay here are Bitcoin investors there's the Bitcoin denier like the Peter ship Bitcoin is tulips it doesn't exist it's a scam right over the Bitcoin deniers have actually been discredited right they've not got no credibility left when the head of the cftc the SEC the White House congress senate the treasury the head of the central banks of the European United States when uh when the Wall Street Journal the New York Times when CNBC when they all acknowledge Bitcoin is an asset the deniers just look silly
so the deniers have kind of been silence now you've got the Skeptics Skeptics are those that say oh Bitcoin it's uh it's an asset [Music] it may be digital gold it's too good to be true so the government will ban it like let me follow me that again it's it's really good it's so good that the government's going to ban it that's the skeptic right they're not denying they're just saying well someone's going to take it away from you okay well that was a very loud refrain three years ago and you and you heard that
from Bankers and from Big investors you've even heard it two years ago and one year ago but if you're reading the 10 000 pages of lawsuits right now and if you're looking what's going on in congrat Congress and the Senate it's pretty obvious they're not taking it away from you guys right big at the end of the day the one thing that The Regulators everywhere in the world are trying to tell you is if you operate a crypto exchange you can sell and buy Bitcoin that's what they're trying to tell you Bitcoin is good it's
ethical it's an asset without an issuer it's real it's an innovation we don't know what we think of it but it is but it is tangible so the Skeptics are actually proven wrong as well and now we move to the last three categories the investor the technocrat and the maximalist investors are people that say ah bitcoin's a digital asset I think maybe I'll buy some maybe maybe I'll short it it's correlated to the NASDAQ no it's it's it's uncorrelated to the NASDAQ no it's negatively correlated to the NASDAQ they're like Traders they change their mind
but if they acknowledge that it's something then they need one percent of it okay we're actually seeing a migration and a lot of people are coming on board as investors and Traders and that's not a bad thing that's a good thing I think I think The Regulators in the mainstream media are doing a great job of of orange pilling Bitcoin investors you know and this is maybe the first and greatest asset class you know since the creation of the S P 500 right and since the creation of the s p index or the Vanguard index
right this is the biggest thing for them so yeah we like investors the technocrats technocrat is what I was with regard to Apple in 2009 if you'd asked me I said Apple's going to be a digital Monopoly a mobile Monopoly they're going to crush everybody they're going to get a billion users they're going to make huge amounts of money the Stock's gonna go up by a factor of 10. okay um if you believe that Microsoft is going to own the business software market and Google is going to own those search market and Apple's going to
own the mobile market then you're a technocrat a techno investor and pretty much every every obscenely rich person that you know in this world was a technocrat you know the mark zuckerbergs the Larry Pages the Sergey brins the you know the Steve Jobs the you know all of them the zuckerbergs the Jeff Bezos of the world they're technocrats right if a lot of people made a lot of money being a technocrat and so if you believe in bit if you understand Bitcoin and you're a technocrat what you say is Bitcoin is the world's dominant digital
monetary Network that's what Kathy Wood just said on CNBC just today to Andrew Ross Sorkin she said hey it's the world's greatest Global monetary Network and the first and it's going to go to 600 000 to a million dollars a coin that's our base case Pratt and then she went on to say yeah we like Tesla we like technology right that's okay most people are great Warren Buffett eventually bought Apple computer Carl icahont eventually bought Apple computer right those people once they buy they'll hold I started out as a technocrat and I think anybody that
understands technology says well it's 95 percent of the proof of work in the world maybe more it's absolutely dominant the the next closest thing is one percent so it doesn't take a stretch to say Bitcoin is the digital monetary Network destined to provide a digital monetary Network to billions and billions and billions of people in the next one to two decades and on that basis it should go up by a factor of a hundred and we're winning those people we're going to get them but the LA the last type of investor is the maximalist okay
and here's what that here's my definition of maximalist Jack Dorsey said Bitcoin is an instrument of economic empowerment I heard those words they stuck with me my entire life when I first bought Bitcoin I said it's the world's greatest digital gold Network it's going to be better than Apple computer but when I heard Jack Dorsey speak I said Bitcoin is an instrument of empowerment for eight billion people it's an ethical good it's a utilitarian entitlement to all eight billion people in the world it gives property rights it gives Freedom it gets a hope of sovereignty
that's a little bit better than the value proposition of Apple Google Facebook Amazon and Microsoft which I like but at the end of the day if you believe that Bitcoin is an instrument of empowerment then you're a maximalist right people don't when I owned Apple stock I didn't think it was going to cure half of the ills in the world and provide property rights to everybody in China or Africa I just thought it was a really good investment with the technology uh a technology lever so much leverage it was Unstoppable he said it's Unstoppable like
Amazon's Unstoppable like Google's Unstoppable like Bitcoin is Unstoppable however the difference with Bitcoin is that that's just Unstoppable right it's inevitable and and it's ethical and and so for that reason I think it's the most important thing I've ever done and you you don't have to you don't have to be disinvested from everything else in your life you can own a building own Apple stock you can believe in supporting your local mayor you can actually own Farmland in canvas Kansas and you can actually mine for silver or you can run a natural gas well and
you can still be a Bitcoin maximalist right what differentiates Bitcoin Maximus is say this is not just an Unstoppable digital Network this is an ethical imperative and if you believe it's an ethically good thing then you become as passionate as Jack Dorsey is as everybody in this room is right as I am and and I think that ultimately is what differentiates the decision to support Bitcoin from the decision to support gold or natural gas or oil or or any given corporate stock or invest in a building those are just mercenary Investments but but this is
uh this is a mission I love that definition because it's [Music] I love that definition of Bitcoin maximalist because it's so inclusive and I think there's often a perception that Bitcoin maximalism is anything but inclusive so I think that's that's great um in addition to that there's this kind of feeling that there is this strong ideology around Bitcoin which this uh you know role of financial empowerment uh kind of permeates our industry and that ideology can be viewed some people think it's zealotry and has religious connotations to it others just think it's an ideology what
are your thoughts on the ideological components of Bitcoin I I think Bitcoin is definitely an ideology it's a superior ideology if you believe in the Apple application of mathematics and physics and the laws of thermodynamics to the world of economics and politics and human behavior then you believe in Bitcoin I don't think you have to apologize for that right there was a time when Galileo said you know I think that the Earth moves around the Sun and I observed that because of Science and and experimentation and and uh people thought that was a religious belief
but it was just an ideology grounded in science and I think that everything that's beautiful in this world right of the planes that fly the trains that move the ships that float that don't sink right the electricity the fire these are all based on physics and they're based on thermodynamics and if you believe in the cult of Fire And The Cult of electricity and and and the cult of of sailing power and ships that float and don't sink then yeah you know you believe in ideology but it's it's an ideology rooted in in mathematics and
rationale and physics and I think that uh the Bitcoin the Bitcoin Community is passionate but it's because we want physics and we want mathematics to be applied to money and to be applied to property rights and be applied to politics and be applied to economics and for the first time in human history we have the technology to bring physics and Mathematics and thermodynamics to economics and for everyone that doesn't understand that that they may view that as a as an ideology and a bit scary but the answer to that is we just have to educate
the world because one once they understand that there are physics that that we use to fly our airplanes and build our skyscrapers and make our mobile phones work and heat our homes and those physics can also be used to make our economies work better and make everyone's life better I think that people will Embrace that technology and then they'll realize that you know Bitcoin maximalists are no more religious zealots than Galileo or Isaac Newton where when they proposed certain scientific and mathematical ideas to make the world a better place okay well I I think you
hit the nail on the head there with we've got to educate the world and uh the contribution that you've made through your podcast and your colorful metaphors and explanations of how to educate the world on bitcoin has been nothing short of extraordinary so on behalf of everyone thank you for that I think we're out of time but but
