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And then I think the Fed started cranking on the tightening and it crashed. And then we thought we were going back up again. And then the FTX thing happened and we got hammered again. So you could think one to easily three cycles in 24 months. I think you just got to take the long view. I mean, if you have a less than four year time horizon, you're just a trader. You're just a speculator. And if you think you're going to hold Bitcoin for four to 10 years, you probably haven't you don't understand Bitcoin yet. You should probably go study it hard.

Because I think once you understand Bitcoin, you know, you got to have a 10 year plus time horizon. And when you really understand it, you realize you should have a hundred year time horizon. I could say, you know, Dan, first of all, on the on the cycle, I feel like there were three cycles since August 2020. Right. I mean, Bitcoin ran up to about, you know, 60,000. It ran down to the 30s. It ran up to the 60s again. It ran down to the 30s again. It ran up to 47 and we thought it was headed north. And then I think the Fed started cranking on the tightening and it crashed. Right.

And then we thought we were going back up again. And then the FTX thing happened and we got hammered again. So so you could think one to easily three cycles in 24 months. I think I mean, that's a humbling experience. I did I probably underestimated to a certain degree the volatility that we were going to have a year a year after I got into this. Right. I had a little debate at one point with Seyfadeen on it. He turned out to be more right than I was. He was saying there's going to be a 75 percent drawdown. And I was like, I don't I don't think maybe it will.

But you know, if Seyfadeen is listening, you were right. So congrats to you. I don't know if we're happy about it, but you're right. But in any event, I don't think it matters at the end of the day. Right. You've got volatility as a digital monetary asset is, you know, is coming to life and as we monetize Bitcoin. So two thoughts. One I never really took a hundred year time horizon. I never I never considered investing in anything for 100 years before I discovered Bitcoin.

If you had asked me, you know, in the year 2020 and March of 2020, is there anything that you would invest in for 100 years? Is it even relevant to ask about the the outlook for the asset in multiple decades? I would have said, you're crazy, right? You don't know what Google is going to do in 100 years. You don't know what Apple will be. I mean, you don't know. You can't own that land for 100 years. You know, you don't know anything, really. You don't know that people will use natural gas. Oil may be obsolete. Maybe we'll use nuclear fusion.

So I would say there's a pretty big inflection point that eight billion people on the planet had things they could invest in that had a useful investment life of 10, 20, 30, 40 years. It used to be a long time frame was 20 years. And it was only after discovering Bitcoin that that I started thinking different. And you know, if you roll the clock back to like the first podcast I did after I bought Bitcoin, you know, people ask me about Bitcoin. I said, well, I looked at it versus gold. And I started analyzing it.

And I was trying to figure out which one was better because it was a question of do I buy 500 million of Bitcoin or 500 million of gold? And once I, you know, read the Bitcoin standard and I started understanding stock to flow and I started thinking about hardness of a commodity, I realized, well, the half life of gold is 35 years. If you keep increasing the supply by 2%, it's a 35 year half life.

And I knew enough of nonlinear mathematics and engineering to see that the stock to flow of Bitcoin is effectively zero because in the limit as t goes to infinity, the number is 21 million and in the limit as t goes to infinity, the stock to flow is infinity. There is no inflation in the limit.

And you would understand that if you study calculus, right? I mean, it's freshman calculus, right? But the irony, of course, is most economics isn't based on calculus, right? I mean, when's the last time you saw an economist say, well, in the limit as t goes to infinity or demand goes to infinity or such and such and the limit, this is the equilibrium or this is the solution. So I just looked at that and I said, well, yeah, and the limit, it's pretty clear that gold's got a half life of 35 years and Bitcoin has got a half life at infinity.

And if I just play it out for 100 years, well, over the course of 100 years, 100 million of Bitcoin is still the 100 million, but the 100 million of gold has been cut in half three times so you've got 12 million of gold. Gold's losing 88% of its energy over 100 years, Bitcoin is not losing 88% of its energy and that makes it 10x better.

Okay, so why would you ever express an opinion about anything looking out 100 years if you couldn't imagine it lasting that long? And you know, the useful life of a company, the average life of a company or life expectancy of a company is like 20, 25 years if it's a successful one, if it's a small company, the expected life is five years. The expected life of a house or a building is not 100 years. There's no building that 100 years after it was built is still usable without substantial maintenance. So I think Bitcoin drew me into thinking hard about the theory of property.

Like what is the half life of something? Well, if you want to understand it, you have to understand the maintenance costs. So if the maintenance cost of owning a residential property in Florida is 2% taxes and another 2% a year in utilities and upkeep and insurance, then that's 4% a year. So that means in essence, the half life is four divided into 70. So call it 16, 17 years or something. Okay, so the half life of residential property in Florida is 17 years.

The half life of, you know, to calculate the half life of a commercial office building, you would have to do some kind of triple net thing where you look at the rents and then you, you know, you subtract the taxes, the insurance, the utilities cost, the depreciation of the building, and you could maybe come up with some useful half life. But what you can see, of course, is it has some expense and there's some challenge to operating it. So I think Bitcoin really drives you to think about the theory of property and drives you to think about the theory of money.

And when you finish, you realize that all the money you ever had was defective and all the property you ever had has a shorter half life, especially once you factor in all of the natural maintenance costs and the risk factors. This is where most people don't do this very well. For example, how do you calculate whether you have positive or negative yield on a loan to Celsius that pays you 6%? If I give my Bitcoin to Celsius or BlockFi and they pay me 6%, well, that's like I'm getting paid 6% rent. But then what's the real cost of the investment? And the cost of the investment is they might just take the money and never get back to you.

So how do you assess that? If you think that once in 50 or once in 50 years they'll fail, then that's 2% a year is the cost of capital. But then you have to put the risk-free cost of capital on top of it. So if I had a million dollars in the current environment, I could go and get 4. 5% interest from the US government on a one-year bond. So the risk-free cost of capital is 450 basis points. Then if you think it's going to fail once in 50 years, it's 200 basis points more. So now it's 650 basis points. But now you actually got to consider the tax.

So the after-tax benefit you have from making the loan is maybe you get paid 6. 5% interest and your tax rate is 33%. So you're basically getting like 400 basis points after tax. And now you have to compare that to what have you taken, right? I guess the point is if you think that the firm might fail in 30 years, then the counterparty risk is equal to the after-tax return if it fails once every 30 years. And the real problem, of course, is you could have got 300 basis points after-tax yield risk-free if you just put it with the federal government.

So what does that mean ultimately? It means that you're basically taking on twice as much cost as you're getting yield if that firm fails every 30 years, which means that another way to get it, isn't it kind of ironic that you get to a conclusion the half-life of your money invested in the Celsius bank is 30 years if it fails once every 30 years, right? Does that make sense or something like that, right? But of course, we know that the risk is much greater, right? The risk is not they're going to fail every 30 years. How about every 10 years? Not even that. They didn't even last five years.

But if you thought they were going to fail every 10 years, then you would have had to put 10% on top of that. And what you would have realized is that you're taking on, in essence, people are taking on a 30% counterparty risk per year in order to get paid 6%. In order to get paid 4% after-tax, they took a 30% risk, which meant that they were basically buying a negative yielding minus 26% yielding thing, most likely. Although I don't know if many people even lasted three years, right? If the real risk was they would blow up within one cycle, which is 36 months, then you had a counterparty risk of 33% against an after-tax yield of 3%.

So I think the reason to study Bitcoin is because if you study Bitcoin deeply enough, you would be able to articulate all the defects of money, like the fact that there's a 34% negative real yield or 30% negative real yield owning the peso. If you understand that, if you understand there's a 30% negative real yield owning the peso, then you understand currency and money. If you understood that there was a 30% negative real yield putting money in BlockFi or an AX or a Voyager or Celsius, then you understand banking.

If you understand the risk of investing in Snapchat or Facebook or Alibaba or the like owning an equity, now you know why they're public companies and you have to read the disclosures. But of course, if you bought FTT token, you bought an unregistered security. So you bought a private equity token without a disclosure. Whatever the risk of owning a public equity like Apple or Microsoft or Amazon or the like, and Amazon's down 50% for the year, right? Whatever that risk is, the risk of owning a private equity token is 10x that. So when you put a million dollars in the FTT token, you're looking at something like a negative real yield of 40-50%.

There was a one third or one half chance it was going to zero within 24 months within the cycle. But you didn't figure that out because you didn't study Bitcoin. Who in their right mind would own FTT token? Someone that doesn't understand securities, right? And of course, a lot of people in the crypto industry don't.

Whenever we say these are unregistered securities, all the crypto people say, what does that matter? What's with these stupid securities laws? What's with the stupid security? You remember certain famous influencers, the stupid SEC law from 1933, right? It's like, well, why do those laws exist? Well, they exist so that the Sam Bankman Freeds of the world can't print their own token, do insider wash trading, manipulate the price up to $8 billion, and then tank it to zero overnight. That's why the laws exist. He could have never operated the exchange. Alameda would be out of business, FTX would be out of business, and the FTT token would be out of business if they had actually had to file a registration statement with the SEC.

Because those were all insider conflicts of interest, and there's nothing ethical or legal about any of it, right? And so they couldn't have done it. And so the reason that it makes sense to file registration statements and take equities public is in order to avoid these kind of FTX, FTT frauds that basically destroy people. Now, there's a big, there is a stigma attached to related party transactions in public companies. Rightfully so, because Alameda was a related party to FTX, and FTT was a related party. So Sam Bankman Freed is the issuer of FTT, is the owner of Alameda, a hedge fund, and is the operator and owner of FTX. Those were three related parties.

The reason that there's a stigma is if you take, if you took FTX public, and you said, by the way, FTX accepts FTT, which is a related party issued token, and it does business with Alameda. The question that a skeptical investor would have is, well, since the same person controls all three, is it possible that he actually wired the systems to give himself an advantage? And if it turns out that Alameda has a billion dollar trading loss, will Sam Bankman Freed, the CEO of FTX, liquidate Alameda in order to protect the interest of the other customers? Or will Sam not liquidate them to protect his own interests? He has a conflict of interest. And we know how the story ends.

By the way, the other question would be, since Sam has billions of dollars, $8 billion worth of FTT token, will Sam, the CEO of a bank, issue credit against the $8 billion of the token that he issued himself and give himself preferential treatment? Or will there be an arms-length transaction? So here's an interesting question, Daniel. If you were an arms-length, if this was an arms-length relationship and there was a disinterested financial executive running FTX, how much credit do you think they would have extended Alameda for $8 billion of FTT token? Every night of a new day, raising the gas in the dark sky, we are still alert for the huge collapse of life without one goddamn money. Thanks for watching!.