Bitcoin Collateral

Every passage, on the record.

1. 00:00Prediction

   Bitcoin really is this black hole for energy and it is either going to take over the world or it's going to zero and I don't see it going to zero.

2. 00:00Reference

   Even hardcore investment supporters, people who strongly believe Bitcoin will always hold a place among their other investments, grossly underestimate the future value because they continue to measure Bitcoin from inside a broken system, and this is a Jeff Booth concept that he constantly harps on, which is true.

3. 00:00Open question

   If you start talking this way to individuals who don't see the prospects, this is when you start to sound a little bit crazy, but when you do start to think like this there are certain questions that come up: what is my best move inside of this system, being able to go between both systems at the moment freely, what am I best moves to put myself in the best position possible to take advantage of information other people don't have access to.

4. 01:30Claim

   Bitcoin works as it has for the last 14 years as a gravitational black hole for energy, or it doesn't, and although it has worked at an incredible percentage pace, it has been rather gradual in the lead-up in terms of the actual size relative to the competition, but there doesn't appear to be anything slowing it down, if anything it appears to be accelerating.

5. 01:30Analogy

   The waves of adoption increase as the properties' existence become more widely dispersed amongst the extended order, it gets out that these things are possible, that all of these advantages are real and that you can be granted access to them for an almost zero cost, this information spreads and people want to take advantage of it so they join up, and as they join up they plug their energy into the system, lo and behold more energy is attracted, the whole thing gets more valuable, this spreads.

6. 01:30Reference

   The waves of adoption increase as the properties existence become more widely dispersed amongst the extended order.

7. 01:30Reference

   This spreads, this is number go up that we have touched on many times.

8. 01:30Prediction

   It does seem like it will take a monumental effort by the legacy stakeholders to pivot fast enough to even be able to put up a valiant effort at this stage to fight back.

9. 03:00Claim

   In part it is the way that we Bitcoiners even frame the competition that gives an advantage to, or makes it seem like, the legacy system is still resilient enough to compete: we are measuring what money used to do and what Bitcoin can do now, and then we say well, it does it better, and it might not do it bigger, but it does money 1.0 better than fiat.

10. 03:00Analogy

    When personal computers first appeared they competed against the legacy machines and jobs that now we look back on as being laughably simple, that was what the use case for personal computers was thought to be.

11. 04:31Analogy

    You could type documents faster on a computer than you could on a typewriter, there was less friction, the ability to edit the document faster, it was also cheaper over time because you need ink or the consumables, all of those would have been the pros and cons, but looking back that's laughable to think that that is why computers are where computers are going to offer the most value to the extended order.

12. 06:01Claim

    Even with the legacy system's size as it stands now, even with all of its Lindy effects ingrained in the hive mind, none of that is strong enough to resist this pull created by the incentives that emerge from the adoption of the Bitcoin network to any and all of those who will seek it out.

13. 06:01Claim

    Capital reserves have a way of quickly diminishing when you are trying to rebuild a system on the run, and there's too much friction in place to be able to pivot fast enough even if the Fiat overlords were smart enough and alert to what was around the corner.

14. 06:01Prediction

    They will be hard-pressed to make the changes necessary to patch the incumbent system before it's too late, in fact it is probably already too late.

15. 06:01Analogy

    It's not hard to recognize just how impossible the task these folks are up against is, to pivot and rebrand the legacy system while it is operational, it's akin to rebuilding an airplane while it's in the air.

16. 07:31Analogy

    You are spreading yourself thin across multiple fronts, you got to get the resources and the material up to the aircraft, you have to get the workers that can implement these changes and swap out the pieces piece by piece, and you need to do it at a slow enough pace where the thing doesn't fall out of the sky, so it becomes this piecemeal effect versus something that is already baked out of the oven, ready to go and compete on a completely different level.

17. 09:01Reference

    We have explored this idea and this phenomenon in past podcasts in terms of creative destruction that emerges in any area inside an economy large enough to encourage competition and specialization.

18. 09:01Claim

    Blockbuster, they couldn't pivot, too much friction; bookstores couldn't pivot, too much friction; buggy manufacturers couldn't do it; Kodak couldn't do it, I mean they could do it, it's just the amount of friction that was in place that discouraged or disincentivized the ability to take those chances, it was just too great.

19. 09:01Prediction

    Doing money 1.0 better than the legacy system won't even register on Bitcoin's accomplishments in a post-fiat world, it will have appeared so obvious that it won't even be remarkable, and what will be remarkable is all of the second order effects, all of the programs and exchange opportunities made possible by a monetary system with near zero energy impedance, things like microtransactions; those will be the giant shifts in the water, not defeating some ancient accounting methodology from the before-Bitcoin era.

20. 09:01Claim

    What Bitcoin does is it makes the success of the extended order my business, because the extended order is actually the one holding the energy reserves that we'll need access to in the future, so what's in my best interest is to make sure the extended order is as healthy as possible, that is the unlock here.

21. 10:31Claim

    Apart from the obvious answer, which is simply to accumulate as much Bitcoin as possible, what actions will ensure access to future reserves by being deemed valuable or having utility by an economy who actually understands value and has the ability to allocate energy accordingly based on that recognition, these now become the pressing questions.

22. 12:01Claim

    You see so many Bitcoiners, people who have clued in as to how powerful recognizing and allocating energy to the system is at this stage, develop an overwhelming tendency to evaluate with more fervor than ever other aspects of their lives, philosophy, religion, mass organization, politics, health, because it has come to the forefront of their minds how great a mismatch there was in their previous lives in terms of energy allocation with respect to money.

23. 13:31Quote · condensed

    It's like winning the lottery in slow motion, except it isn't the lottery, because you don't just luck into hodling, you have to make that choice every day.

24. 13:31Claim

    Bitcoin winning doesn't equate one-to-one with you winning, all the wildest dreams of the most bullish supporters could come true and you could still very easily end up in a worse spot than you are now.

25. 13:31Quote

    You could easily end up in a worse spot than you are now. You could easily fuck this up.

26. 13:31Claim

    There is this constant access to change your mind 24/7, you have at your fingertips the ability to say I was wrong and pull out, so if you knew you're going to control more energy than you could ever imagine, how would you want to prepare yourself for that fact?

27. 15:01Idea

    The task becomes how do I now become the best energy allocator possible, the best steward of this Bitcoin, because it is of such vital importance that no amount of work outside of developing your energy skills will be matched simply by becoming a better energy allocator, that's how powerful this is.

28. 15:01Claim

    Finding Bitcoin means you have already touched the high point for energy allocation efficiency, you don't need to reinvent the wheel, in fact you need to fight against the belief that you need to reinvent the wheel, that is where the gains will be lost in a hyperbitcoinized world.

29. 16:32Quote

    It's going up forever, don't lose your Bitcoin, don't sell your Bitcoin.

30. 16:32Claim

    If you sell, you are giving away ownership of your claim on the entire extended order's efforts to contribute to the TASOE, the total accessible supply of energy, and you are able to farm the entire extended order who is going to come flocking to this vehicle for storing future energy reserves.

31. 16:32Claim

    The energy flowing into the system will far exceed ninety-nine point nine nine nine percent of all alternatives that any single entity might spin up to outpace those returns, it's simply a numbers game.

32. 18:02Prediction

    This is where you can imagine Bitcoiners developing a bond, because the major hurdle for Bitcoiners to overcome, that they will look to other Bitcoiners to help solve, is how do I not sell my Bitcoin, how do I hold on to my Bitcoin for as long as possible, and strategies that work for an individual hodler will be able to translate to every other hodler.

33. 18:02Claim

    The limiting factor on just how much energy you control has nothing to do with your individual ability to transform energy from inaccessible to accessible, but rather how much energy the Bitcoin economy, and post-hyperbitcoinization the entire extended order, can generate; that has never been possible before, that is a reality with Bitcoin, it's not about how much you can transform, it's about how much the entire extended order can transform.

34. 19:33Analogy

    Think of it like the ocean and all the fishing that is done in the ocean, all of the fish that are out there swimming around, they are the potential energy that the system has access to, and the fish that are extracted from the ocean on a daily basis, they are the accessible energy; when you own Bitcoin you get a fixed percentage of all of the fish that are pulled out of the ocean, no matter where, no matter by who, every single day, forever.

35. 21:03Analogy

    Just imagine there's an infinite number of fish in the ocean, it's just about our ability to access those fish and to pull them out; we are always getting more fishermen, regardless of whether or not they're bots, because they get more fish themselves when they decide to join up and fish in our waters, when you own Bitcoin you own the water.

36. 21:03Quote

    When you own Bitcoin, you own the water.

37. 21:03Analogy

    When you sell Bitcoin, what you can do for a limited time if you're smart is take the proceeds and invest in a sole fishing operation, you can get yourself a little boat, but you are making an extremely concentrated bet; think about how good you would have to be at fishing to overcome the alternative, you need to be an expert fisherman with tools no one else could possibly have access to, the odds are not in your favor.

38. 22:33Claim

    Removing yourself from the system, removing yourself from Bitcoin, that would be the worst thing that you could do, so what are the alternatives? It's the same as any Fiat overlord now, it's the same as the extremely wealthy people now: the easiest, most efficient way to pay yourself today is to find someone who is willing to loan you dollars against your ever-increasing collateral, whether real estate or stock, that is the way with the least amount of friction; you keep the allocation small enough versus your overall net worth so the increase in value of the underlying asset outpaces the repayments necessary on the loan, so you retain ownership of the underlying and get the upside of not having to part with the collateral, plus you get the energy to sustain yourself.

39. 24:03Claim

    If you've got cash or real estate in any size in the fiat world you know how this works, right, there you'll be familiar with refinancing your mortgage, you take out a loan against your house, it has appreciated in value, and you can use that money tax-free to fund a vacation or a boat or another home, you access the increase in value without selling the underlying, and all is good as long as you can service the repayments.

40. 24:03Claim

    We all know, because we have access to this information, we're early, we all know that the collateral in both of these things is complete dogshit when compared to Bitcoin, by miles, almost immeasurably poor compared to Bitcoin, and in a collaborative custody model, running say a federated model, Bitcoin held in this way is superior to stocks and real estate in every way, in every capacity.

41. 24:03Quote

    The collateral in both of these things is complete dogshit when compared to Bitcoin.

42. 25:34Prediction

    The upsell on the rates lenders will be able to charge will be even smaller than what they are now with things like a collateral loan based on your stocks, it's going to be smaller than 1% once this is realized, and in the near term you can imagine a scenario where you get better rates on Bitcoin lending than you do on margin lending through a traditional brokerage while Bitcoin is still growing at a double-digit pace on an annualized basis.

43. 25:34Claim

    Imagine you can get 10% of your Bitcoin holdings at 3% while Bitcoin is growing at 10%, you pay the 3% from the loan itself, you take that, and you live off the rest, at the end of the loan period you just roll over the debt.

44. 27:04Claim

    You go from a 10% of your stack loan allocation to an 8% because of price appreciation, and so you have to commit less Bitcoin to every single loan opportunity because it's going up forever, because it will only get larger and faster as more people enter the system, which means the market continues to grow at a faster rate; you pay off 3% with the loan, you live off the rest.

45. 27:04Claim

    Do people get wrecked this way? Yes, absolutely, this is certainly a way to lose an incredible amount of Bitcoin, the danger is in the over-allocation of the initial loan to value, on something that has an 80% drawdown on the regular.

46. 27:04Quote

    This is not a way to increase your Bitcoin stack. This is a way to not deplete your Bitcoin stack.

47. 28:34Claim

    Based on the programmable nature of, or the knowing of, the halvening numbers, things like retirement will become scheduled, that's the power that a fixed monetary supply issuance has on the extended order.