T.A.S.O.E. & Value Investing in the Bitcoin Age

Every passage, on the record.

1. 01:01Quote

   I'm trying to, I find if I speak out loud, it's significantly easier to spot the bullshit in my stories or in my reasonings or in the reason that I believe something.

2. 01:37Analogy

   The negotiation is over, right? The Trojan horse has been let in the city walls.

3. 02:09Analogy

   Everyone's had their fiat party and they're asleep at the wheel and the warriors are now out.

4. 02:09Claim

   Every individual can opt out for themselves and they can immediately join the winning side.

5. 02:43Quote

   You are basically telling someone that they have been a pacifist on the losing side of a war that they didn't know existed.

6. 02:43Claim

   The good part is they have an ability to opt out and they can immediately join the side that is doing good and is out there providing the best possible picture of what the future might hold.

7. 03:49Idea

   Bitcoin itself is representative of a phrase that I use called TASOE.

8. 04:21Idea

   And then that is the total accessible supply of energy. That is what the 21 million units of Bitcoin represents. That's what the currency represents is the total accessible supply of energy in the network at any given time.

9. 04:21Prediction

   Once hyper Bitcoinization kicks in, it really is the total accessible supply of energy in the world.

10. 04:52Claim

    It paints a little bit clearer picture for individuals who are just coming into space about how to think about why the huddle mindset works and just what is going on during a Bitcoin transaction and how the ability to be sure that the truth is represented in those transactions, how that can change everything.

11. 04:52Reference

    That's the Bitcoin fixes this meme really stems from this idea.

12. 05:24Analogy

    He's basically an old man in a park with a bag of bread and he's feeding pigeons. He's an energy allocator, just like the man in the park feeding the pigeons. He's got monetary energy and he's very interested in pigeons and he's very good at identifying pigeons that have good genes and that can fatten up and that will survive if they are fed.

13. 05:24Claim

    99.9% of the people in the world could not or do not want to do his job.

14. 06:05Claim

    That is what is happening in the current legacy, is that you have to be interested in pigeons or else you're going to fall behind. You don't have a choice. You have to learn about investing. You have to study investments. It doesn't matter if you like it or not because that's the only way that you can keep the value that you have produced in the past.

15. 06:40Reference

    Well, what you should do is broad-based index funds, right? Put 90% of your wealth in there, 10% in the short-term treasuries. He often gives the example of, in 1942, if you would have invested $10,000 in the S&P 500, in 2018, you would have had $51 million.

16. 07:15Claim

    Progress is development towards an improved or more advanced condition. And we know from the past episodes of this podcast, all that means is that human beings will have access to more energy.

17. 07:52Claim

    Because there's only one way to get energy, that's to transform it from an inaccessible state to a readily accessible state.

18. 07:52Claim

    Warren is saying, do you think that human beings, the top 500 companies, on average, we're going to have some of that win and continue to innovate and continue to unlock energy more so than what we have right now? If the answer is yes, then it makes perfect sense to invest in the S&P 500.

19. 08:31Reference

    Said another way, if we think back to the Lindy Effect, right, which Nissim Taleb made famous recently, is what is the Lindy Effect that you are investing in, or that you have to take stock of when you make that decision?

20. 08:31Claim

    Now let's take that exact same logic, that exact same path, to get to the answer of whether you should invest in something, whether you should put your wealth or your stored energy that you have unlocked in the physical world, should you put that into Bitcoin.

21. 09:12Claim

    Bitcoin is, by the very definition of what the system produces, the currency that is inside of the network, it is an index fund. But rather than an index fund for the top 500 companies in the world, because of its decentralization, its permissionless nature, and the fact that it cannot be censored, it is a index fund for every single person on earth, every entity that is capable of unlocking energy is represented by Bitcoin.

22. 09:12Quote

    It is a index fund for every single person on earth, every entity that is capable of unlocking energy is represented by Bitcoin.

23. 09:43Idea

    The 21 million units of Bitcoin, the currency represents unlocked energy that people have plugged into the system. If you own a Bitcoin, you own one 21 millionth of the total accessible energy in the world at that time.

24. 10:18Claim

    You have to go and exchange your unlocked energy in the real world for ownership over a fixed portion of the TASOE.

25. 10:48Quote

    I unlock this energy, I don't want to consume it right now. I don't have an efficient way to make more energy with it or to unlock more energy with it. So is there anybody in the world that needs energy right now? I will trade you my unlocked energy for a fixed portion of the TASOE.

26. 11:19Claim

    If anyone anywhere in the world innovates or increases their efficiency in any way and they plug that newfound energy into Bitcoin, the TASOE increases, the total accessible supply of energy is now larger. But the portion is fixed. The percentage is fixed.

27. 11:50Quote

    As the TASOE increases and your portion that you own remains the same, you are rewarded with a call option on more energy when you decide that it's time to consume energy.

28. 12:30Claim

    Someone always had the power, even in the gold era, there was the opportunity, whereas the gold, the price of gold rose, it became more and more lucrative to go out and expend money, expend energy, trying to find more of it in the ground, which eventually led to the price equaling the amount of energy that was going into getting that out of the ground.

29. 13:03Claim

    With Bitcoin, that's just not possible. The fixed supply of 21 million ensures that.

30. 13:03Claim

    So now, think about the relationship that changes between a Bitcoin puddler, someone that owns a portion of the TASOE, with the rest of the world. You are incentivized to have everyone win.

31. 13:34Claim

    That person, the only rational reason why that person would give up ownership of the total supply is because they think they are under the assumption that they can use that energy now to unlock more energy.

32. 14:05Claim

    You need access to energy to use less energy in the future to become more efficient. We need access to energy, right? We're less and less and less and the output is going to be greater and greater and greater.

33. 14:35Reference

    This is often what people misunderstand about measuring the amount of energy that is going into the system, in which Parker Lewis illustrates so beautifully, gradually then suddenly.

34. 14:35Claim

    If money is the economic good that coordinates all other economic activity, that is the thing that must be taken care of first, and as we find efficiencies in the exchange of that money, that directly impacts every layer above it and it only makes us more efficient.

35. 15:10Idea

    The TASOE will continue to get larger and larger and larger and the beautiful thing about Bitcoin is that it is self-regulating.

36. 15:41Claim

    They're going to have to store it somewhere and in a hyper-Bitcoinized world, what are they going to do? They're going to store it in Bitcoin, which means the total supply of energy gets larger. The percentage that you own stays the same, which means you have access to more energy in the future.

37. 16:11Analogy

    Say they are a responsible actor. They are a Warren Buffett of energy in the sense that they are able to use it and allocate it very efficiently.

38. 16:50Claim

    If they win, the winnings or the excess energy is shared by all the owners of the system. Everybody that owns Bitcoin, no matter how big, no matter how small, based on the percentage that you own, you will feel the benefits of someone winning anywhere in the world.

39. 17:20Quote

    Could be a farmer in Rwanda, could be a Silicon Valley, Tech Bro, it could be anybody finding any amount of efficiency.

40. 17:57Analogy

    They go out and they buy a yacht, which they're never going to use. It doesn't actually create, it doesn't unlock any more energy for them, although they may get some enjoyment of it. Still on balance, they are net negative energy because they've distributed it. Well, the people that are building the yacht, they wouldn't be building it unless there was some sort of energy advantage in it for them.

41. 18:27Claim

    The only punishment, the only energy punishment goes to the individual that didn't come back with more energy than they started with, because they don't have the ability to control the same amount of tassel that they did beforehand, because they were irresponsible with their energy.

42. 19:04Quote

    We want energy allocators who are extremely responsible, who use energy in the best possible way to unlock the most energy in the future. We want those people to be rewarded with more decision making power over how energy should be allocated. And we want people that are irresponsible with the energy to be punished.

43. 19:35Quote

    So Bitcoin, with the winners, they are shared. They are distributed within the system by everyone. When they lose, the failures are punished on the singular, on the singular person or entity that decided to pull energy out of the system.

44. 20:06Claim

    The incentives are for you to unlock as much energy as you possibly can and then share it with the world, with whoever thinks that they can be more efficient with it than you. And the way that you benefit the most is by delaying the consumption of the energy unlocked in the first place.

45. 20:40Quote

    I did this. I don't want to consume it. I want to share it so that we can all benefit from it.

46. 20:40Claim

    Bitcoin is the broadest index fund that you could possibly have. It's access to every single entity in the world that can unlock energy. And that is what will happen in a hyper-Bitcoinized world, is it will represent the total supply of energy in the world.

47. 21:17Idea

    At the moment, the TASOE is the total accessible supply of energy within the system, because there's a lot of energy outside the system that is being mismanaged. And the more that finds its way into Bitcoin, the more benefits you get from delaying consumption of the energy that you've already plugged in.

48. 21:51Reference

    This goes back to Gigi's fantastic thread on the map is the territory for the first time in Bitcoin. We can tell what happened in the real world simply by looking at the ledger, because you cannot lie.

49. 21:51Claim

    Energy has to go in. Energy has to come out. That's the only way that you can interact with the system. And if that is true, then we have perfect data. We know exactly where energy needs to go and needs to flow.

50. 22:22Claim

    If we look at that data, if we organize it and start to structure it, that becomes information, which is the price, the price of anything. And as soon as Bitcoin becomes the unit of account for things, we're going to be able to see incredible efficiency gains, like monumental.

51. 22:22Claim

    This is why no one is bullish enough, because up until this point we don't know how much efficiency we have been leaving on the table, because the money has been manipulated. The price, we can't rely on that price. So we're dealing with faulty information, which leads to, if you study and start to recognize patterns, that becomes the knowledge. And then the application of that knowledge is the intelligence.

52. 22:59Claim

    It enables for the first time, the hive mind of mankind to come together, and we don't even have to talk to each other, because we know that the system cannot be lied to. We know there is only truth in the Bitcoin transactions, which leads to perfect information, which means our knowledge is now perfect.

53. 23:30Reference

    This is how you move up the Kardashev scale of energy, right? This is how you go from one to two, or how you even get to one.

54. 24:01Idea

    This fixed supply that is credibly enforced by the consensus protocols, this is really, really important, because now we have a constant in economic calculations.

55. 24:37Quote

    Warren Buffett is, you know, unbeknownst to him, he has been advocating to do this exact thing.

56. 24:37Prediction

    For the last 10,000 years, the answer has been we will always have access to more, we will always innovate, we will always improve efficiency, we will always progress, we will find ways to do that.

57. 25:15Reference

    This is what Jeff Booth is always talking about. And Jeff has a great talk where he's talking about how, essentially, mankind is at the 34th fold.

58. 25:15Analogy

    The fold is referring to the folds of paper, the demonstration of exponentials, when you talk about how many times you have to fold a piece of paper to get to the sun, and the answer is 50. And we're at the 34th fold. So that means the majority of the growth is in front of us.

59. 25:47Claim

    The doubling and the momentous growth happens on the very back end. And this is only going to get faster because as we get more efficient, that allows us to unlock more energy, which allows us to project out even farther, our time preference lowers further and further and further.

60. 26:19Prediction

    This is not going to be a slow process. This is going to be gradually, then suddenly, and when it happens, it's going to happen big.

61. 26:19Claim

    The companies and the people that recognize this stand to benefit greatly. But really, in the end, it benefits the entire world, is just a matter of how long it takes to get there.

62. 26:52Claim

    This is basically, you know, Warren Buffett idea, he just doesn't realize it because he doesn't understand what Bitcoin is, he doesn't understand how the hard cap of 21 million is made possible, where the security comes from, and how TASOE essentially changes the way that we will interact and make us more efficient. And those efficiencies will lead to greater prosperity for everybody.