The Investment Thesis

Every passage, on the record.

1. 00:00Claim

   What is the investment thesis for Bitcoin? What is it, why have one, what is it not, what needs to happen for it to be disproven, and then what would you do in that scenario. These are the things we constantly need to think about if you're halfway smart and have allocated all your energy reserves after providing value to the extended order.

2. 00:34Claim

   We have dispersed information so greatly across the extended order that nobody can actually create anything of value on their own; we need each other to share and facilitate exchange so we can keep making products significantly more complex than our little human brains can comprehend.

3. 01:44Claim · condensed

   The most value I can add to the extended order is understanding the system, so I need to eliminate a whole bunch of noise and cancel out all the variables that don't move the needle, because I realize nobody else is going to do it.

4. 02:17Claim

   The hunt for energy is constantly happening in the legacy financial system, and the people most successful at it haven't had secrets, it's been pretty obvious, yet everybody still fails because it's hard, it takes a lot of work, and pretty much nobody's interested.

5. 02:48Quote

   Is it possible that I'm getting screwed? I'm going to do a deep dive into the fact of whether or not someone has it over on me and what risk that poses to me.

6. 04:00Claim · condensed

   My ability to retain the complete structure of an ever-flowing stream of information is constrained, and it's constrained by the physical laws of the universe, so I want to take thousands of hours of podcasts, videos, articles and books and condense it all down into one little statement.

7. 04:30Claim · condensed

   I'm not a hundred percent confident, but I'm pretty confident, more confident than the alternative, that I understand the multitude of factors that could lead to the success of Bitcoin or the failure of the protocol, even though the system is so complex you can't check every variable in real time.

8. 05:00Analogy · condensed

   The thesis acts like the gauges on the dashboard of a car I drive and trust, even though I don't fully understand its inner workings. Even the world's greatest mechanic can't foresee every issue, because there are too many variables, so we need a subset of indicators that will alert us if something important might be going wrong.

9. 06:26Claim

   If Bitcoin is going to survive, it will be because life continues, as it has since the dawn of time, to generate order and information, and uses that order to transform larger quantities of energy that it will store or wield as it sees fit. The question is: have we got access to more energy now than in the past?

10. 07:07Claim · condensed

    Look at the countries around you: the energy rich ones are doing well, the ones lacking energy reserves are doing very badly, because without reserves you have to transform energy yourself constantly just to provide for daily needs, whereas more energy lets you look further into the future and use your mind to become more efficient.

11. 07:52Claim · condensed

    Life has only ever had access to more energy since the dawn of time, not less. There is some probability of a black swan reversal, but if you had to bet everything you had and everything you would ever have on whether life gets access to more or less energy, the rational bet is more.

12. 07:52Analogy · condensed

    If you were betting on whether the sun will rise tomorrow, and had to bet everything you loved on it, what's the most rational side to take? If you said yes, the sun might rise, well, then you're on your way to agreeing with the Bitcoin thesis.

13. 08:26Claim · condensed

    The first and most important metric on the dashboard is a simple dial that tracks energy transformation by the extended order: up is better, down is a problem. It doesn't need much watching because if it begins trending down, life as we know it becomes unimaginable, so we can look for faster-reacting gauges to give us better runway.

14. 09:35Claim · condensed

    Life is concerned with the health of the extended order, not the individual, but incentives are aligned so that if each individual is better off, the whole system is better off, and money is used because it lets users maximize their chances of surviving and reproducing in a universe constantly trending toward maximum entropy.

15. 10:43Claim · condensed

    The main prior of the thesis is that accessible energy will increase, efficiency will then increase as information generates new technologies for interacting with our reserves, and life tends to move forward rather than backward in energy terms, so the energy reserves we transform will look for a home.

16. 10:43Reference · condensed

    The energy reserves we do manage to transform at the local level, thanks to our increased ability to extract usable units, will exceed our daily requirements. That's the deflation that Jeff Booth talks about, that's what technology offers.

17. 11:57Claim · condensed

    As we get more efficient, we end up with more reserves, and the demand for storage solutions increases: we're going to want to store the energy in excess of our daily needs, and that's where Bitcoin comes in. If you're not asking yourself whether there's a better home for that energy, you're probably leaving energy on the table.

18. 11:57Idea

    We know from the show that Bitcoin is a tool that tracks energy reserves in real time by encasing the total accessible supply of energy in a verifiable container. Okay, that is the TASOE.

19. 13:05Claim

    Bitcoin is open and transparent, and it runs differently based on the number of hashes thrown at the system. Hashes require computation, which requires electrical energy, so hash rate is an easy proxy for energy plus the efficiency offered by more efficient chips: if hash rate is increasing, the network is getting stronger.

20. 14:33Claim · condensed

    The second dashboard indicator is simply whether physical energy allocated to the Bitcoin system is increasing or decreasing, and by how much, and because the first indicator (life becoming more efficient at energy transformation) has been so constant for the last ten thousand years, this hash-rate metric is really the only one that needs watching.

21. 14:33Quote

    The thesis then for why invest in Bitcoin is fairly simple. Life will continue on its trend of becoming better at generating information, life will look for a home for that energy, Bitcoin is by far the most efficient tool for facilitating energy storage and exchange, which leads to even more energy reserves.

22. 15:22Claim · condensed

    If we see less energy flowing into the system, that's the first alarm and immediate action should be required. If it's not happening, we can devote resources to studying what might bring about that scenario so we're better placed to react, which is low time preference utility emerging.

23. 15:22Analogy · condensed

    Imagine spending as much time as you've spent learning about Bitcoin on a single company instead, one that generates value through increasing efficiency. That's what evaluating companies in the stock market actually requires: due diligence you have to redo, over and over, for every new allocation.

24. 16:21Claim · condensed

    With a company there are limits to how much you can allocate and keep the same benefit, which means you have to constantly redo the study if you want to maximize energy reserves, and that cost exists whether or not you choose to do the work; those who skip it get an even worse outcome.

25. 17:03Claim · condensed

    With Bitcoin you never have to relearn the thesis: once you realize it's the tool that generates the most order and offers the most utility to the extended order, you never have to devote energy to that study again, which is a huge upside compared to constantly redoing company research.

26. 17:03Claim · condensed

    The security outlook of the network improves as energy allocated to the system compounds, increasing the cost of attack, which undermines trust in the network less; if trust in the network builds, units on that network can store value in the future, so more trust means more energy stays in or gets allocated to Bitcoin.

27. 18:33Claim · condensed

    Users of the Bitcoin system benefit from the increased efficiencies offered by its rails over the fiat competition, and the longer people experience that benefit, the more their conviction grows, which increases individual allocation, at least while dual monetary systems exist in parallel.

28. 20:03Claim · condensed

    As trust builds and people allocate more energy to the system, they need access to a protocol with only 2.1 quadrillion sats, and the energy requirement for individual units increases, providing incentive to hold and keep the market small, creating demand by decreasing supply. There is no second best.

29. 20:42Prediction

    The fiat system will continue to walk itself off a cliff toward its own demise. There is no out for the fiat monetary system, and this will be no exception: inflation will continue at larger and larger levels, resulting in faster, more immediately observable degradation to the vast majority of currency holders.

30. 20:42Claim · condensed

    What would have taken a decade will take half a decade, what would have taken a year will take a month, and the law of diminishing marginal utility, like the pull from a black hole, becomes inescapable as more and more debt is added into the system, adding less and less productivity.

31. 22:13Claim

    Governments, by definition the least efficient allocators of energy, will continue to eat the market share of energy allocation as conditions deteriorate from a lack of real-world energy transformation, hamstrung by over-regulation, improper spending and outright corruption; every time government enters the mix, things get worse because we get less efficient.

32. 23:43Claim · condensed

    Inside the Bitcoin system, users aren't stuck on the same trend line as fiat for generating excess reserves; incentives let them devote themselves to solving real problems rather than engineering ways to get closer to the money dispensary, and if you run that equation across eight billion people, you get a very large number of smart people trying to make the world more efficient.

33. 25:08Claim · condensed

    That's really the whole thesis: is the extended order going to continue generating energy reserves? Yes. More energy reserves need a better home. I can tell whether Bitcoin is that home by tracking how much energy is actually flowing into the system, and that's my only red alert.

34. 27:41Claim · condensed

    If you don't know what you're doing you've got no idea, and you're just getting screwed all the time by people who do, which is the whole appeal of a fund like this: the energy people allocate to you just continues to grow forever, and there's no rush to get in because it's already winning.

35. 28:23Reference

    It's going to take time for people to understand what this thing is, and that's when you see enormous waves of Omega candles that we can never come back from, and you thought you were going to play it smart and sit on the sidelines, and you get hosed because one day, as Michael Saylor says, ten billionaires wake up.

36. 28:23Prediction · condensed

    Ten billionaires will wake up, realize they're underweight exposure to something like Bitcoin, and all pile in at once, destroying everyone's models of how to wait for a better entry.

37. 28:58Open question · condensed

    Maybe my investment thesis is completely wrong, maybe more energy flowing into the system isn't good. I'm waiting for someone to show me. I'm constantly, every day, spending time figuring out if I'm wrong, how long it would take to feel the pain of being wrong, and what I'd do to mitigate it.

38. 28:58Quote

    The answer, up until this point, to make myself as well off as possible, is to get more and more exposure to Bitcoin.