The Bitcoin Effect

Every passage, on the record.

1. 00:00Claim

   The struggle is to wait around long enough to gain any of the benefit that Bitcoin is going to bring to the extended order; that's the game you're playing once you understand the stuff.

2. 00:00Reference

   The struggle to wait around long enough to be able to gain any of the benefit that Bitcoin is going to bring to the extended order.

3. 00:33Idea

   My goal isn't to orange pill the normies. My goal here is to motivate myself. I am fucking completely orange. You can't get any more orange, and I want to see, am I talking out my ass?

4. 01:08Claim · condensed

   What does the realization look like when someone has completely orange pilled themselves, going through every fact presented to see whether or not they're wrong, and then what does it look like in slow motion, how badly can you still fuck it up even if you're right.

5. 01:39Reference

   I recently finished a book, Missing Billionaires. No story I have heard shoves in your face more how dumb people are, how even if you can get it right, you have won the extended order game, you are a fiat king, you can still fuck it up super easy.

6. 01:39Claim

   Even if you think you have nailed it, even if you have won the extended order game and you are a fiat king, you can still fuck it up super easy; there are countless examples.

7. 02:12Claim · condensed

   If you've ever wondered why the world keeps getting more efficient yet the families responsible for creating that value seem to diminish over time: the person who created the value did the hard work and made it easier for their children, the children don't get the same education, and without the education they squander it as it spreads across more descendants.

8. 02:44Claim

   It doesn't just fall off a cliff, all of their assets, in fact that is the reality, because people fuck it up: being an expert at making nuts and bolts doesn't make you an expert at storing that energy and allocating it to where more energy will be transformed than if you hadn't allocated there.

9. 03:17Reference · condensed

   I want to talk about the Bogle Effect, which is a book by Eric Balchunas, that I came across a few months ago and read through.

10. 03:17Reference

    The Warren Buffett of the fiat world is Bitcoin, he just doesn't know it; he hasn't put in the work to realize that his model for guaranteeing results on energy allocated to the market is less efficient than just allocating energy to the Bitcoin network.

11. 03:57Analogy · condensed

    If you're going after a broad based indexed fund, an ETF like the VOO or VT, the global index fund by Vanguard, think about a leaky boat: where is the boat leaking?

12. 04:28Claim

    The boat is leaking in that companies have to reach a certain size to access that capital, that energy; anybody below that threshold, any energy increase those individuals find and leverage to create value for the extended order, you are not capturing those gains.

13. 05:34Claim · condensed

    If trying to find where the value and utility is inside the market doesn't tickle your fancy, you should probably do other things, because you can offer more value and utility to the extended order; if everyone tried to allocate energy this way, there would be no physical goods, which is not the ideal strategy.

14. 05:34Analogy

    Think about how one person was able to essentially put a shittier version of what Bitcoin offers individuals into the fiat system: broad based exchange traded funds, broad based index funds.

15. 06:18Quote

    Essentially, it's addition by subtraction.

16. 06:48Analogy · condensed

    It's like buying a shovel from the government: you get the shovel, every scoop gives you a scoop of dirt for every energy input, but then the government remotely puts a hole in the shovel, so every scoop gets less dirt.

17. 07:52Quote

    Who is fucking you? The person that's putting the hole in the shovel. You don't have the time, you don't have the energy, you don't realize how far you're falling behind for the exact same amount of energy output.

18. 07:52Analogy · condensed

    You can't look around and see the hole in the shovel, it's too much work, you'd have to get a microscope out and analyze the physics of the molecules; every time you scoop you think you're getting the same amount of dirt, but you're getting fucked.

19. 08:23Claim

    I probably took that analogy a little bit too far, but you get the idea: you're being sold a tool you're told you need to use to get by, and in life you have to transform energy from inaccessible to accessible, create order, generate information, that is life swimming against the stream of entropy.

20. 08:23Idea

    You have to transform energy from inaccessible to accessible. You have to create order. You have to generate information. That is life swimming against the stream of entropy.

21. 09:32Claim

    Along comes a tool that will increase your ability to transform energy, should you adopt it? Yes, because if you don't, everyone else will be better off than you and you won't get access to any energy; it's much harder to transform energy on your own than to use tools.

22. 10:02Claim

    Imagine if you could buy a shovel that nobody could ever fuck with, where every scoop gives you the exact same amount of dirt and no one can dilute your pile; that's not the world we live in pre Bitcoin.

23. 10:35Claim · condensed

    Because there's friction in information exchange, you get management fees and investment brokers, little leeches siphoning off energy, realizing they can be the middleman and take resources for doing absolutely nothing once the friction they were solving for disappears.

24. 11:07Claim · condensed

    As soon as there's a direct link between you and the information itself, the middleman is no longer needed; every friction point in sharing energy with the markets is a place where somebody says, give me the resources and I'll give you access to the information.

25. 11:42Quote

    If you think you're not going to be a full time investor but you're somehow going to beat the market by gaining access to all of this information, you're not, you're going to lose, you're going to fuck it up every single time, and it's not you, it's just the game of numbers.

26. 11:42Claim

    You can draw little squiggly lines on any chart you want, but look at everybody who has ever been successful and ask yourself if you're smarter than them; chances are you're not.

27. 12:13Quote

    Chances are you're a fucking dumbass, right? Unless, well, it can't be that stupid because you found Bitcoin. Well, you can still be stupid.

28. 12:46Claim · condensed

    Every decision along the way increases the chances of me fucking it up, so why not make one good decision, allocate my resources to Bitcoin, and never have to think about it again; nobody knows in the short term what's going to happen, and trading costs and market timing eat up the difference.

29. 12:46Reference · condensed

    There's a fantastic example in the book, The Missing Billionaires, the coin flip test, where they offer a simulation: you start with twenty five dollars and bet as much or as little as you want on every coin flip.

30. 13:21Claim · condensed

    The flip is biased, 60 percent heads, 40 percent tails, told to the participants up front, and the vast majority of people still cannot make any money, let alone get significantly ahead.

31. 13:52Reference

    I think it's Taleb in one of his books who says that if you gave a person the headlines of the Wall Street Journal a day in advance, they would still fuck it up on a trading floor, they'd still lose money.

32. 14:22Claim · condensed

    The answer is it's pretty easy, the hard part is not doing much, staying the course, understanding probabilities; it doesn't fill me with confidence for the extended order as a whole, though there are people who do understand allocation and rise to the top because of it.

33. 15:33Claim · condensed

    What index funds solve for, and what Bitcoin solves for better, is the whole thing; index funds solved a big problem, they also created a few problems nobody talks about, because what you have to bet on is whether the extended order will be more efficient, whether more information will be generated in the future than today.

34. 16:05Claim

    If the answer is yes, it's best to have exposure to as many entities that can create information as possible; a cheap index fund is investing distilled to its purest form, previous to Bitcoin.

35. 16:35Claim · condensed

    As there is as little friction and as little energy bleed as possible when you expose yourself to broad based index funds, it's significantly easier to stay committed, because you can just ask what the past performance of the extended order looks like.

36. 17:14Quote

    It's gone up and to the right, so it's probably going to go there again, so I don't have to think about it as much, I'm exposed to everything, I'm not missing out, and if I'm not missing out it doesn't cause any anxiety, I don't have to lay awake at night.

37. 17:47Claim

    Relative predictability means the more decisions you have in front of you, the higher the potential error rate, and that leads to anxiety, which is energy that is wasted that could have been used to be productive; if we can eliminate that, that's all the better.

38. 18:23Claim

    The problem with ETFs is that they only access market participants, not everyone can participate in the market, which means there are gains that can't be absorbed by investors only allocating to the market.

39. 18:53Quote · condensed

    If you're holding cash, you're getting fucked by the system; the best strategy to not get completely hosed, just partially hosed, is to go with the broad based index funds.

40. 18:53Reference · condensed

    One of the quotes from the book is Michael Lewis, the author who had some wins early on and it went dogshit with the book about FTX and Sam Bankman-Fried, saying the most positive impact index funds and passive investing have had on his life is that he no longer has to think about it, which frees up resources to make him a better author.

41. 19:36Claim · condensed

    That is exactly what Bitcoin taps into, the unseen leverage Bitcoin provides to the extended order, that you never have to think about any of this stuff again, and it eliminates all the leeches, the management fees, the broker fees; the trading costs are still there for now but eventually go too, once you're not trading fiat dollars for Bitcoin anymore.

42. 20:11Quote

    If you're dumb enough to think you're going to identify the eleven days Bitcoin moves in a year, you get Bitcoin at the price you deserve, you significantly fucked up your stash.

43. 20:11Prediction

    Think about how much value you're going to have to provide to the extended order in ten years to gain access to the same amount of Bitcoin you have now; it's such a tremendous number that to think about it is scary.

44. 20:45Claim · condensed

    If you let it get out of control now, or don't realize the opportunity you have versus what's coming, you're going to be in for a rude shock, and that will haunt you for many days to come.

45. 21:22Claim · condensed

    There's no fees in Bitcoin, no ongoing cost, nothing; once you have it and hold it yourself off an exchange, there's nobody who can take it from you, which is a huge improvement over even ultra low fee passive indexing.

46. 21:55Claim · condensed

    Money saved on fees can be put elsewhere into the extended order, to transform that energy into more productive information; you gain access to that new transformation by holding Bitcoin, because the pie gets bigger but your piece stays the exact same size.

47. 21:55Quote

    The pie gets bigger, but your piece stays the exact same size.

48. 22:34Claim · condensed

    One of the big ways Bitcoin improves over index funds is that you are adding information in the Bitcoin world rather than removing it, which is what's happening in the fiat market system as it's structured now.

49. 23:06Claim · condensed

    Markets exist to find efficiencies, they're a tool, the same as a shovel; we need information to do that, and information comes from the entities that make up the market, exchanging with each other to increase the utility of that market.

50. 23:43Claim · condensed

    The whole point of the market is to alert extended order participants that energy opportunities are available, matched to each person's risk appetite; you risk that energy to the market and returns may be generated.

51. 24:14Claim

    Broad based index funds and ETFs have a centralizing effect on information, which leads to less information, because there are fewer active participants putting information into the market itself; in the fiat system of markets and rewards, that's a problem.

52. 24:14Claim · condensed

    Companies on the receiving end of passive flows are rewarded on things other than value creation, which skews incentives and alters behaviors, because the aim becomes maintaining access to the spigot of energy flowing in via the index funds themselves.

53. 24:50Claim · condensed

    Fewer active market participants means fewer touch points with the real world for these companies, and the result is less information, a centralizing force on corporate governance that also enables things like ESG voting through index funds.

54. 25:22Analogy · condensed

    It's like sticking your hand inside a box to figure out what an object is: using your elbows versus using your ten fingers, more touch points give you a better picture of what that reality is; that's what we want from markets, because it's what makes us more efficient.

55. 25:59Claim · condensed

    On a Bitcoin standard this centralizing effect can't be realized the same way, because you're buying a piece of the entire extended order rather than a selection of companies representing the whole, and there's no limit to how many people can be attached to the spigot of energy flows; you can't be removed from the system the way you can be removed from the S&P 500.

56. 25:59Reference · condensed

    That's exactly what's going to happen to some company in the next few weeks: MicroStrategy is going to be in the S&P 500, and it's going to get access to those spigots of passive funds coming through.

57. 26:38Prediction · condensed

    Once MicroStrategy gets into the S&P 500, everybody will own Bitcoin whether they know it or not, which is going to give more energy to MicroStrategy, which they'll be able to leverage into buying more Bitcoin; that's going to be wild.

58. 26:38Claim · condensed

    The incentive on the Bitcoin standard is value creation, while in the fiat world the incentive is maintaining position in line with the flows of those passive streams; that difference is being overlooked for just how much more efficiently we'll be able to operate on the Bitcoin standard.

59. 27:14Claim · condensed

    One decision with Bitcoin has no ceiling; if everyone saves 999 cycles of examining an energy decision and that one decision ends up positive, that saves you 999 times over, and the next generation won't even do those calculations because it will be so obvious.

60. 27:58Claim · condensed

    All of the flows, and the whole industry built around doing those 999 calculations for people, are now misallocated energy, and that misallocated energy will flow to where it's best used, because nobody wants to see their neighbor doing fantastic on a Bitcoin standard while they get fucked.

61. 28:38Event

    Bitcoin is just on the edge of all time highs at the moment, with very little retail interest and very little communication from normies asking how to get access to this, but that's going to come as institutional adoption picks up.

62. 28:38Prediction · condensed

    Institutional adoption will make it easier to get Bitcoin on the balance sheet and A-OK'd by boards; then comes normie adoption, and normie adoption leads to the passive funds going away and the Bitcoin standard completely taking over.

63. 29:11Quote

    The play is to sit around and wait, because you're not going to be more efficient; there's nothing you can do that's going to generate more utility than buying and holding Bitcoin at the moment.

64. 29:52Open question

    There will be a day, maybe, where there are opportunities outside of Bitcoin that make more sense than allocating to Bitcoin, but by then you have to weigh that against the monumental rise in the domination of the Bitcoin system over the fiat system.

65. 29:52Claim

    If you're on the fence you haven't done enough work; if you've done enough work you should never listen to this podcast again, because this is just continually hammering home the point that Bitcoin is the best allocation until something else better comes along.

66. 30:25Claim · condensed

    Knowing that Bitcoin is simply more efficient, and looking at the studies in The Missing Billionaires, you can still see how so many people are going to get it wrong, thinking it will just fall into their lap that they'll be successful forever.

67. 30:59Quote

    Every single day when you're hodling, you are making a decision, every single second you could exchange that Bitcoin for energy in the real economy, and you are choosing not to do that.

68. 30:59Claim

    Short term prediction, who cares. Long term prediction, we're winning, it's going to the moon and you are going to be better off for it; then you get to decide when the time has come to rein in some of those energy benefits you've allowed others to exploit.