Speaker 1: Hello, and welcome to another episode of the Mark Mos Show,
Speaker 1: where we're talking about the decentralized Revolution. We're talking about
Speaker 1: where politics, finance and technology come together. Of course, it's
Speaker 1: always technology that changes the world, and that technology is bitcoin,
Speaker 1: the decentralized revolution.
Speaker 2: You know.
Speaker 1: I like to bring to you some interesting guests. You
Speaker 1: don't have to listen to me talk all the time,
Speaker 1: and that's what I have today. I'm joined by VJ
Speaker 1: Boya Patti. He's the author of the Polish Case for
Speaker 1: Bitcoin and now previously with Google, now a senior engineer.
Speaker 1: Was Swan a big friend of the show for sure. Anyway, VJ,
Speaker 1: thanks for joining me.
Speaker 2: Thanks Mom, it's so good to see you again.
Speaker 1: Now, I kind of cut you off before we jumped
Speaker 1: in here because I was explaining to you how my
Speaker 1: Twitter account got hacked. So about almost three months ago,
Speaker 1: I got what happened is I guess now that I've
Speaker 1: looked into it, they got my email address, put it
Speaker 1: into like some like spambot thing or whatever, and all
Speaker 1: of a sudden, my email just started getting flooded with emails,
Speaker 1: like thousands subscribed me to like thousands of like newsletters,
Speaker 1: and so then I figured they're going to try to
Speaker 1: hide something.
Speaker 3: There was like a password to reset for Twitter.
Speaker 1: I was able to get in and reset my password,
Speaker 1: but they set up a two FA divide two second
Speaker 1: factor authentication and I've probably filled out thirty requests from
Speaker 1: on Twitter. And interesting enough, just before I stopped, my
Speaker 1: good friend George Gammon also had the same thing happened
Speaker 1: to him, and he has an attorney that filed a
Speaker 1: suit against Twitter because they're still billing us and we
Speaker 1: can't get access, and they're responding to the suit. They're
Speaker 1: going back and forth with the attorney, but they just
Speaker 1: won't reset the stupid two FA. I mean, it's like
Speaker 1: the most like just reset the two FA anyway. So
Speaker 1: you were going to tell me that something that you've
Speaker 1: done to protect your privacy.
Speaker 2: Yeah, it's actually. One thing I've noticed is that I've
Speaker 2: had friends and family who use services where they get
Speaker 2: built on this regular cadence and then for whatever reason,
Speaker 2: something happens with that service. They didn't like it any more,
Speaker 2: like in your case, you got hacked. They continue to
Speaker 2: get charged and they don't feel like there's any way
Speaker 2: they can get out of it because they the service
Speaker 2: has their credit card information and they just continue to
Speaker 2: build and there's no way to stop it. I really
Speaker 2: like and recommend this service called privacy dot com, which
Speaker 2: allows you to create sort of disposable credit cards on
Speaker 2: the fly, and you connect it to your bank account,
Speaker 2: and it's kind of this protective layer between your bank
Speaker 2: account and the merchant that you're using. And so you
Speaker 2: generate a temporary credit card, and you know, when you
Speaker 2: sign up for a service like Twitter, you put in
Speaker 2: your temporary credit card number that they give you, and
Speaker 2: you have full control over how that credit card can
Speaker 2: be used. You can say the maximum amount that can
Speaker 2: be charged is ten dollars per month, or per year,
Speaker 2: or per transaction. If you ever don't like the service,
Speaker 2: you can say I don't want you can delete the card.
Speaker 2: You can set the maximum amount that can be charged
Speaker 2: down to one dollar, for instance. And this has been
Speaker 2: for me great protection because our feat world is broken
Speaker 2: in so many ways that we need things like this
Speaker 2: to protect us, because once companies can get our bank
Speaker 2: account details or a credit card details, they can do
Speaker 2: huge damage to us. And unfortunately you're having this experience
Speaker 2: with it actually well known and well established company. It's
Speaker 2: not a scamm or it's just a well known company
Speaker 2: that just happens to not be helping you. And another
Speaker 2: example of this, my wife signed up for twenty four
Speaker 2: hour Fitness and I'm sure many people in America know
Speaker 2: about this company that do this kind of marketing scam
Speaker 2: to get you on board, and she just couldn't unsubscribe
Speaker 2: and they were charging us like fifty dollars a month.
Speaker 2: So that motivated me to find this service, privacy dot com.
Speaker 2: I'm not affiliated with them, not an investor or anything
Speaker 2: like that. It's just one of those services I've had
Speaker 2: such a great experience with. And whenever I hear friends
Speaker 2: and family tell me about this their experiences where they
Speaker 2: feel like they're getting scammed or they feel like they're
Speaker 2: getting charged and they can't stop it, I'm like, well
Speaker 2: you should try this out. Once you try it out,
Speaker 2: you want everyone to go back because it gives you
Speaker 2: that level of control where if they have your credit
Speaker 2: card information, you can really limit the damage they can
Speaker 2: do to you.
Speaker 1: All right, well, I'm definitely gonna check that out. For sure,
Speaker 1: I could at least stop my charge.
Speaker 3: Maybe they'd maybe they'd want me more.
Speaker 1: If they won't get my money, I'll have to see
Speaker 1: you said that the Fiat world is broken in so
Speaker 1: many ways. I would agree with that. There's probably no
Speaker 1: end to the amount of conversations we can have in
Speaker 1: all the ways it was broken. There was a video
Speaker 1: clip that I saw sort of going viral. Jordan Peterson
Speaker 1: just had this big conference, our conference going out in London,
Speaker 1: I think it was this last week, and the guy
Speaker 1: from trigonometry, Constantine I think his name is, had like
Speaker 1: a pretty a talk that went pretty viral, and in
Speaker 1: the end he said, he said, hey, and a message
Speaker 1: to all you conservatives. You're not gonna be able to
Speaker 1: get the youth of vote for your conservative ways trying
Speaker 1: a conservaive system that no longer works for them in
Speaker 1: a world where they can't afford to buy a house,
Speaker 1: they can't afford.
Speaker 3: To buy a car. You know, the system is no
Speaker 3: longer working. How are they going to vote for you?
Speaker 1: And I thought about that, and I was thinking about
Speaker 1: maybe doing a video on that, just that it's not
Speaker 1: a I mean, I guess it sort of is a
Speaker 1: political thing. But the reason why it's not working for
Speaker 1: these people they can't afford a house or car is
Speaker 1: the Fiat money system that's broken.
Speaker 2: You agree with that, Yeah, absolutely, And this is we've
Speaker 2: seen the culmination of a pure fiat money system that's
Speaker 2: only really existed for let's say fifty years. About fifty years,
Speaker 2: I mean, the US was on a gold standard. And
Speaker 2: some people think that US went off the gold standard
Speaker 2: in nineteen thirty three when Franklin Roosevelt confiscated people's gold
Speaker 2: from the bank vaults, but really the US went off
Speaker 2: the gold standard fully in nineteen seventy one. I believe
Speaker 2: it was when Nixon closed the gold window. So the
Speaker 2: goldstand is still acted as an anchor on the credit
Speaker 2: expansion that was happening, and once that anchor was completely detached,
Speaker 2: the credit expansion went crazy. So we've been living this
Speaker 2: experiment for about fifty years, and I think we're seeing
Speaker 2: the full effects now. And yeah, it really has pervasive
Speaker 2: impact throughout society. It really increases people's time preference and
Speaker 2: in terms of the people who are growing up today
Speaker 2: and who are moving into the workforce. This is really
Speaker 2: the first generation in I don't know, like two hundred
Speaker 2: years which can confidently say we're not doing as well
Speaker 2: as our parents, We're actually doing worse than our parents.
Speaker 2: That's the first time that's really happened. Every generation prior
Speaker 2: to us could say confidently, I'm living a better lifestyle
Speaker 2: than my parents and my grandparents. And that's a really
Speaker 2: sad statement I think about.
Speaker 1: I hadn't really know about that, But what it makes
Speaker 1: sense as you say that, So which ways do you
Speaker 1: think it's a less quality of life?
Speaker 2: I mean people used to, you know, have this expectation
Speaker 2: that when they left the house, you get a job
Speaker 2: and afford a house, right, That's that's one basic thing
Speaker 2: they could afford to have a family. There are a
Speaker 2: lot of people now who don't believe they can have
Speaker 2: a family. They're parts of parts of the country where
Speaker 2: people just don't think they's it's a possibility for them anymore.
Speaker 2: Like you look at the major cities on the West
Speaker 2: coast or on the East coast too. If you're living
Speaker 2: in one of those places, it's just if you're living
Speaker 2: a regular middle class lifestyle, or even if you have
Speaker 2: a good job. Let's say two engineers at Google, for instance,
Speaker 2: who are earning good salaries. A lot of people like that,
Speaker 2: married who have two good salaries, can't afford to buy
Speaker 2: a home in the Bay Area. That's crazy now there's
Speaker 2: some local factors involved as well. It's not just the
Speaker 2: fact that we've been dealing with fifty years of uncontrolled
Speaker 2: credit expansion and inflation. Local factors involved, such as bad
Speaker 2: policies that they don't let people build more in the
Speaker 2: Bay Area. But as a general rule, it's a really
Speaker 2: strange thing that people can no longer expect to have
Speaker 2: a lifestyle better than their parents, given how much technology
Speaker 2: has improved over time, and given how much we've advanced
Speaker 2: in so many different aspects of society, that this expectation
Speaker 2: shouldn't continue into the future. We need to sort of
Speaker 2: reflect on what is going on, what is broken in
Speaker 2: our current system that's making this new reality come about.
Speaker 1: Yeah, yeah, I think when you talk about that, there's
Speaker 1: other factors such as like building regulations and things like that.
Speaker 1: But a lot of the problems with building regulations and
Speaker 1: so forth is also because of the broken fiat money
Speaker 1: system that we have, as well as you know, overreaching
Speaker 1: government and misaligned incentives and things like that. If you're
Speaker 1: just tuning in you're listening to the Mark Mass Show,
Speaker 1: I'm sitting down with VJ. Boya Patty, the author of
Speaker 1: the Bullish Case for Bitcoin senior engineer at Swan Bitcoin.
Speaker 1: We're talking about bitcoin, we're talking about privacy, we're talking
Speaker 1: about the vac currency, and we are going to talk
Speaker 1: about the bull case and a lot more. Don't go away,
Speaker 1: We'll be right back after a short break.
Speaker 3: All right, Welcome back.
Speaker 1: If you're just tuning in, you're listening to the Mark
Speaker 1: Moss Show, sitting down with Vja Boya Potty, the author
Speaker 1: of the Bullish Case for Bitcoin and the senior engineer
Speaker 1: at Swan Bitcoin. A great place to get bitcoin if
Speaker 1: you're trying to get something, you might want to after
Speaker 1: this conversation, now, j we were just talking about sort
Speaker 1: of like this fiat money system being broken, and like
Speaker 1: I said, we could sit here and talk about that
Speaker 1: all day. The one thing I was thinking though, as
Speaker 1: you were saying, how it's sort of changed people's time preference,
Speaker 1: and that one is a whole topic and itself, but
Speaker 1: I always think back to Vladimir Lenin was quoted saying
Speaker 1: that the best way to destroy capitalism is to debouch
Speaker 1: the currency through inflation, and through inflation you can arbitrarily steal.
Speaker 1: And then he said until all relation is lost, until
Speaker 1: the best way to get rich is through gambling and theft,
Speaker 1: and today it sort of seems like that could never
Speaker 1: be more true, right, I mean, everyone's just out for
Speaker 1: gambling and theft. It's like yolo into some whatever options
Speaker 1: trade or crypto trade or whatever it may be, or
Speaker 1: like theft. Maybe not out well in the Bay Area,
Speaker 1: outright theft and maybe there's a lot of grift and
Speaker 1: graph going on.
Speaker 2: Yeah, I think that's true. We lived through this period
Speaker 2: recently which is sort of unprecedented in history, where we
Speaker 2: had fifteen years of negative real interest rates. The Federal
Speaker 2: Reserve held interest rates at zero, and there's positive inflation
Speaker 2: during that period, so you really being punished for saving.
Speaker 2: If you kept money in cash or dollar denominated assets,
Speaker 2: you generally punished for doing that. And so this creates
Speaker 2: this massive incentive to go out there and go further
Speaker 2: out on the risk curve and find assets that are
Speaker 2: almost chasing momentum, essentially trying to find those assets that
Speaker 2: are going up just because there's this inflation and the
Speaker 2: money that exists has to go and find safety outside
Speaker 2: of a regular bank account, for instance. So they ran
Speaker 2: this experiment for fifteen years and we kind of saw
Speaker 2: the consequence as inflation started the inflation. Genie really got
Speaker 2: out of the bottle during the pandemic, and they're trying
Speaker 2: to put it back in the bottle. And so now
Speaker 2: we're actually back to what would be considered fairly normal historically,
Speaker 2: where you have real interest rates, real positive interest rates.
Speaker 2: If you are a saver and you put your money
Speaker 2: in the bank, you will get a real return, which
Speaker 2: is treasury absolutely right. Sorry, you're correct. If you put
Speaker 2: it in short term dollar denominated bond securities, then you're
Speaker 2: going to get a real rate of return, and this
Speaker 2: has not been true for most of the last fifteen years.
Speaker 2: This has a beneficial effect in that it encourages people
Speaker 2: to save and it changes the way they plan for
Speaker 2: the future as well. Unfortunately, I think this is going
Speaker 2: to be very short lived experiment. I think the FED
Speaker 2: is going to go back to what their default behavior
Speaker 2: has been for the last better part of the last
Speaker 2: two decades because the FIAT system can't survive like this.
Speaker 2: It can't survive because fundamentally, the US government has this
Speaker 2: massive amount of debt that needs to be serviced, and
Speaker 2: with interest rates as high as they are. While that's
Speaker 2: good for society as a whole, the US government can't
Speaker 2: continue to function servicing a debt that large one hundred
Speaker 2: and approaching one hundred and forty percent. So the Federal Reserve,
Speaker 2: being a part of the US government, will eventually cave
Speaker 2: in because they will see that the government can't function
Speaker 2: like this and the system as a whole can't function.
Speaker 2: So we're going to go back to negative real interest rates.
Speaker 2: The reason the FED is doing what it's doing right
Speaker 2: now is they need to establish some credibility. They said
Speaker 2: that they have an inflation of target of two percent.
Speaker 2: They could say they could change their mind to say, actually,
Speaker 2: our inflation type, we're changing our inflation target. We're going
Speaker 2: to make it three percent or five percent. But that's
Speaker 2: what banana republics do. And the FED really has only
Speaker 2: one weapon, and that weapon is their credibility that they're
Speaker 2: able to keep inflation under control because people believe that
Speaker 2: they will stick to their word and when they say
Speaker 2: they're going to bring interest rates down to two percent,
Speaker 2: they will. I don't think they can though. I don't
Speaker 2: think they can sustainably do that because they've let the
Speaker 2: inflation genie out of the bottle and they have this
Speaker 2: huge constraint of if they really try and kill inflation.
Speaker 2: They make it so that the US debt is not
Speaker 2: serviceable anymore. And if they have to choose between these
Speaker 2: two things, make it so the US government cannot service
Speaker 2: its debt anymore, which basically implodes the government, or letting
Speaker 2: the inflation genie out of the bottle. They're going to
Speaker 2: go with the former. That's what central banks have done
Speaker 2: for you know, the entire history of central banking. It's
Speaker 2: just a matter of time.
Speaker 1: Yeah, And they have no choice. I mean, to your point,
Speaker 1: they lose credibility. I would say they've already lost credibility.
Speaker 1: Maybe most people for some reason haven't lost credibility with them.
Speaker 1: But now they told this inflation was transitory, this and
Speaker 1: that that obviously proved to be wrong. But I think
Speaker 1: there's a couple of big problems they have. One is
Speaker 1: that they can only try to basically limit consumer spending
Speaker 1: so they can make you and eyebroke. But unfortunately, at
Speaker 1: this point now the government, the fiscal spending is overpowering
Speaker 1: the consumer spending, so they can only crush.
Speaker 3: Us so much.
Speaker 1: They got to stop the government spending like a drunken sailor.
Speaker 1: And the US fiscal deficit was a trillion dollars last quarter,
Speaker 1: and now the numbers came out, they're projecting one point
Speaker 1: five trillion for the next two quarters.
Speaker 2: Yeah, that's the problem exactly right. And the US government
Speaker 2: and the population as a whole is in a really
Speaker 2: difficult place for fixing this problem. We need fiscal responsibility,
Speaker 2: but we have such unprecedented polarization in the country. We
Speaker 2: can't agree to anything. So it's very hard to come
Speaker 2: together and say things like, hey, can we make a
Speaker 2: compromise on your side and my side and get this
Speaker 2: sort of fiscal picture under control. It's just not going
Speaker 2: to happen. And so I think what we can expect
Speaker 2: given the political reality we live in, is that the
Speaker 2: fiscal picture is going to continue to get worse. The
Speaker 2: government is going to rack up more and more deficits.
Speaker 2: At some point, there is a breaking point when the
Speaker 2: debt is actually not serviceable, when the amount of money
Speaker 2: that the US is bringing through tax revenue is not
Speaker 2: enough to pay interest on the debt. That's when you
Speaker 2: get the moment of crisis, which is what do we do.
Speaker 2: Do we cut spending, do we raise taxes that's also
Speaker 2: politically very infeasible, or do we go for the last option,
Speaker 2: which almost all countries go for in the end, which
Speaker 2: is the easiest option because it's the politically easiest option.
Speaker 2: Let's just inflate the money supply. Let's reduce the debt
Speaker 2: by making it so that the amount of money the
Speaker 2: denominator is much much greater, and then then servicing the
Speaker 2: debts no problem, because it's always money sloshing around. Yep,
Speaker 2: that's what's going to happen. And the question is what
Speaker 2: is the breaking point for the US government. What percentage
Speaker 2: of GDP does it become unserviceable?
Speaker 3: Well, they got to get the GDP up.
Speaker 1: I just have a couple of years of double triple
Speaker 1: digitiflation and that GDP number goes up, right, So I
Speaker 1: mean they can get that number down. I mean that's
Speaker 1: the most likely scenario, this financial repression playbook. You know
Speaker 1: that they ran in the forties, the Israel ran in
Speaker 1: the eighties. The IMF put out a white paper in
Speaker 1: twenty fifteen called Liquidation of Government Debt, which is basically
Speaker 1: spelling that out.
Speaker 3: If the debt to GDP is an equation.
Speaker 1: If we can't get the debt down, let's just get
Speaker 1: the GDP up And so It's like, hey, we're selling
Speaker 1: iPhones for a thousand bucks. If we sell ten of them,
Speaker 1: that's ten thousand. But if we take the inflation pushes
Speaker 1: the price of two thousand, and we still sell ten iPhones,
Speaker 1: now it's two thousand.
Speaker 3: Right, It's a magic trick. And now too.
Speaker 1: I think maybe the last piece that I want to
Speaker 1: get into is you have this. Maybe you said contrary
Speaker 1: and take as to this bitcoin bull market, but I'll
Speaker 1: say this, I gotta take a quick break. But you know,
Speaker 1: can the Fed admit defeat and change the target. It's
Speaker 1: going to be very difficult for them to do that
Speaker 1: and maintain credibility unless we have a war. Jannet Allen says,
Speaker 1: we can afford to fight two wars at the same time,
Speaker 1: and so maybe that could be the scapegoat. If you're
Speaker 1: just tune in, you're listening to the Mark Mass Show.
Speaker 1: I'm sitting down with VJ. Boya Potty, the author of
Speaker 1: the Bullish Case for Bitcoin, and a scene engineer at
Speaker 1: Swan Bitcoin. We'll be back with more in a minute
Speaker 1: after a very short break.
Speaker 3: Don't go away, We're back.
Speaker 1: All right, Welcome back. If you just tune in, you're
Speaker 1: listening to the Mark Maas Show, sitting down with VJ.
Speaker 1: Boya Potty, the author of the bullish case for Bitcoin,
Speaker 1: and the senior engineer over at Swan Bitcoin, and we're
Speaker 1: kind of going through, I don't know what we'll call it,
Speaker 1: the unwinnable situation that the US is in, and not
Speaker 1: just the US, every every government, every central bank is
Speaker 1: sort of in this same scenario.
Speaker 3: And I kind of threw out at the end.
Speaker 1: You know, if the Fed FED doesn't want to lose credibility,
Speaker 1: they're trying to regain credibility by getting back to that
Speaker 1: two percent target unless they can come up with some
Speaker 1: good reason scapegoat as to why they can't do that,
Speaker 1: potentially like multiple wars. You kind of shook your head
Speaker 1: and discussed when I said that, So if you want
Speaker 1: to address that, you can.
Speaker 3: But then you had said that you think that.
Speaker 1: Maybe this bull market in bitcoin has already started, which
Speaker 1: might be controversial for some who think that there's this
Speaker 1: massive macro picture that's going to crash everything down.
Speaker 3: So maybe explain that to me.
Speaker 2: Yeah, you know, one thing, this prior ballmarket was really
Speaker 2: shortened or curtailed. I think, you know, people have put
Speaker 2: out a lot of reasons, but I think the main
Speaker 2: reason was that the FED ended this unprecedented period of
Speaker 2: fifteen years of zero interest rates. And I think when
Speaker 2: there are positive real interest rates in the market, that's
Speaker 2: generally bad for competing monetary goods. And the classic example
Speaker 2: of this is gold. You go back to the nineteen
Speaker 2: seventies when gold was going through this decade long bullmarket
Speaker 2: and parabolic moving gold very similar to one of bitcoin's
Speaker 2: bull cycles. The graphs actually look very similar. These hype
Speaker 2: cycles are almost identical. Then Paul Volker, the central banker
Speaker 2: at the time, really was determined to get inflation under
Speaker 2: control and set interest rates close to twenty percent, I believe,
Speaker 2: and had very real high, positive real interest rates, so
Speaker 2: you would earn money, you would earn real value by
Speaker 2: keeping money in the bank. That's generally a period of
Speaker 2: time which is bad for competing monetary goods, and it
Speaker 2: was really bad for gold. It was bad for gold
Speaker 2: for two decades. So I think the same thing happened
Speaker 2: with bitcoin at the end of the ball market. How
Speaker 2: long can the FED go along with this, I think
Speaker 2: that's that's that's an open question, but I think about to.
Speaker 1: That point real quick though, So if you look at
Speaker 1: like Bitcoin's history, which isn't super long, so it's not like,
Speaker 1: you know, super conclusive, I guess. But if you look
Speaker 1: at like the Having market data, for example, we can
Speaker 1: see that on every Having, the peak of bitcoin is
Speaker 1: eighteen months after the Having.
Speaker 3: So so far that's been true.
Speaker 1: And I, you know, going into this this last event
Speaker 1: after the Having, knowing that as eighteen months, but we'd
Speaker 1: all thought maybe the price at bitcoin would be you know,
Speaker 1: one hundred and fifty thousand or wherever it was going
Speaker 1: to top out. Right then, you know, I have Michael
Speaker 1: Sailor in the back of my ear going all your
Speaker 1: cycles are broken, and you see the big institutional adoption
Speaker 1: coming in, and so maybe it would be higher. And
Speaker 1: so then as we get to this November date, this
Speaker 1: eighteen months after the Having cycle, I remember thinking this
Speaker 1: can't be it now, this this cycle is going to
Speaker 1: be broken at this point because the price should be
Speaker 1: so much higher. And right on cube, right at eighteen
Speaker 1: months after the Having cycle is when the price dropped.
Speaker 1: And yes, it was with the Fed's announcement that they
Speaker 1: were going to start, you know, raising rates. Now, they
Speaker 1: didn't actually raise rates until they announced it in November.
Speaker 1: They didn't actually raise my thing until January after, but
Speaker 1: just the announcement was nothing to do with the market.
Speaker 3: But anyway, is that just coincidence?
Speaker 1: Do you think that it just happened to be right
Speaker 1: at the eighteen month mark or you know, was it
Speaker 1: or is it more of the having cycle?
Speaker 2: Yeah, you know, I had the conversation about this with
Speaker 2: Stephen Levera on his podcast as well. I think there
Speaker 2: are two factors that play. There's the internal bitcoin market dynamic,
Speaker 2: and I actually believe the harving is a real driver
Speaker 2: of price movement. I think the harving will be again
Speaker 2: because the market in the band market has to find
Speaker 2: a plateau where there's an equilibrium between supply and demand,
Speaker 2: and we have We've had that equilibrium essentially for the
Speaker 2: last several months. But then the halving comes along, and
Speaker 2: it really is this huge supply shock whether the supply
Speaker 2: is halved. So the amount of fiat money that needs
Speaker 2: to come into the bitcoin market to maintain the current
Speaker 2: price is something like forty million dollars a day, and
Speaker 2: then suddenly you only need half of that. But the
Speaker 2: demand the people who are buying bitcoin, that demand doesn't halve.
Speaker 2: It's still that same level, and that supply shock makes
Speaker 2: demand above supply and it starts moving the price up,
Speaker 2: and then it starts on itself, and then you get
Speaker 2: the madness of crowds phenomena. So I think there's that
Speaker 2: internal market dynamic. But I think bitcoin now is big
Speaker 2: enough that it's a macro asset and it is affected
Speaker 2: by macro factors like interest rates, So I think both
Speaker 2: of those things are at play. I would probably say
Speaker 2: the one hundred and eighty days is a coincidence. My
Speaker 2: strong belief is that it was really interest rate lead.
Speaker 2: I think the FED hurt all risk assets, all interest
Speaker 2: rate sensitive assets, and I think bitcoin is an interest
Speaker 2: rate sensitive asset. But bitcoin also has this internal market
Speaker 2: dynamic which you're talking about, which is the four year
Speaker 2: harving cycle. And I think that's still very powerful, and
Speaker 2: I think it's going to trigger the next ballmarket. But
Speaker 2: for me, it's not just the fact that we're approaching
Speaker 2: the harving. It's just looking at the price action of bitcoin.
Speaker 2: That price action tells a story, and as telling a
Speaker 2: story that bad news is not hurting bitcoin in a
Speaker 2: bear market, good news does not help. In a bull market,
Speaker 2: bad news does not hurt and so when you see
Speaker 2: that price action, you know we're entering a bullmarket. And
Speaker 2: there's been you know, plenty of news that would normally
Speaker 2: knock bitcoin down, but the price keeps going up higher
Speaker 2: and higher and higher. Then there's other factors as well
Speaker 2: well that could be propelling it, including the potential approval
Speaker 2: of an ETF, which I think will be a good
Speaker 2: market catalyst, but it's undeniable. You look at the price
Speaker 2: action a bitcoin right now, it looks like it's ready
Speaker 2: for a big bull run.
Speaker 1: Yeah. One chart that I've been amazed by. You you
Speaker 1: mentioned real rates earlier, and you can look at charts
Speaker 1: with inverted real rates and it's like lockstep with gold.
Speaker 1: I mean, since the last couple decades, gold and real
Speaker 1: rates have just moved almost in lockstep. And now there's
Speaker 1: this massive divergent So there's something going on there that
Speaker 1: tells us something right, And then you look at other
Speaker 1: factors like this narrative shift, if you will. Larry Fink,
Speaker 1: the you know, largest asset manager in the world from
Speaker 1: black Rock, came out and said people are running to
Speaker 1: bitcoin for safety. Like to hear him come out and
Speaker 1: say that, And and so I think that's why gold is diverging, right.
Speaker 1: I think people are starting to realize and maybe not
Speaker 1: the United States, but the rest of the world is like,
Speaker 1: we don't want us treasury, so we can see central
Speaker 1: banks are net sellers of treasuries and net buyers of gold,
Speaker 1: and so it's causing this divergence. But I think it's
Speaker 1: also bitcoin and gold sort of moving in that way.
Speaker 1: Just to kind of go back, so back to the
Speaker 1: hiding cycle. If the if the Fed would have announced
Speaker 1: they were going to raise rates a month later, then
Speaker 1: this whole eighteen month after the having would have been
Speaker 1: broken that that that'd be your that'd have been your
Speaker 1: base case.
Speaker 2: Yeah. I honestly believe if the Fed had maintained zero
Speaker 2: interest rates, say yea longa, we would have probably hit
Speaker 2: one hundred thousand. That's that's my belief.
Speaker 1: Yeah, yeah, all right, So do you think it did
Speaker 1: maintain it's it's a having cycle kind of structure. Do
Speaker 1: you think we're back into this having cycle structure again?
Speaker 3: Now? Like so now we're about a year and a
Speaker 3: half before or.
Speaker 2: I think so. And it's really remarkable you look at
Speaker 2: these price charts for each cycle and you overlay them
Speaker 2: and they're they're eerily similar in terms of timing from halving,
Speaker 2: just as you use the harving as the anchor point.
Speaker 2: And Satoshi did something incredible like choosing this system where
Speaker 2: we had a four year halving. You could almost imagine
Speaker 2: that this four year halving, if it had been some
Speaker 2: other number, it might not have had the same impact.
Speaker 2: It's almost like four years is enough for the pain
Speaker 2: to be forgotten of the previous cycle and the enthusiasm
Speaker 2: to rebuild units. He almost tapped into some human psychology
Speaker 2: here to know what the ideal time was for creating
Speaker 2: these supply shocks. If they had been every six months
Speaker 2: or so, I think it wouldn't have had the same
Speaker 2: impact as it does.
Speaker 3: Yeah, that's a good point. I didn't really think about
Speaker 3: it like that.
Speaker 1: But you know, typically I started my career in real
Speaker 1: estate investing, and typically the old ad edge was, you know,
Speaker 1: don't buy a home unless you plan to hold it
Speaker 1: for at least five years.
Speaker 3: So you have sort of like these.
Speaker 1: Five year you know, these longer maybe eight year business cycles,
Speaker 1: and so to your point, there's sort of long enough.
Speaker 1: I hadn't really thought about it that way, but from
Speaker 1: a psychological standpoint, pretty interesting. I want to come back,
Speaker 1: and we've got to take a very quick break. If
Speaker 1: you're just tuning in, you're listening to the Markmos Show
Speaker 1: talking with VJ.
Speaker 3: Boya Potty.
Speaker 1: I want to talk about when we come back, maybe
Speaker 1: this bullish case for bitcoin. So we talked about sort
Speaker 1: of this US demand, but I want to talk about
Speaker 1: do you really think this ETF is a big but
Speaker 1: enough catalyst or do we need something bigger from the
Speaker 1: rest of the world. So I want to ask you
Speaker 1: those questions when we come back. We'll talk about that
Speaker 1: after a very short break.
Speaker 3: Don't go away, We'll be right back.
Speaker 1: All right, Welcome back. If you're just tune in and
Speaker 1: you're listening to the Markmas Show. Sitting down with VJ.
Speaker 1: Boya Potty, the author of the Bolish Case for Bitcoin and.
Speaker 3: A senior engineer over at Swan Bitcoin, and you know, VJ.
Speaker 1: We were talking about sort of this this Bolish case
Speaker 1: for bitcoin, sort of looking at price action and having
Speaker 1: cycles and things like that. I know a lot of
Speaker 1: people are putting a lot of weight onto this ETF
Speaker 1: getting approved. There's some controversy there from like real bitcoiners.
Speaker 1: I'm a little fearful of potentially this sort of shakedown
Speaker 1: or this event that seems to be happening where you
Speaker 1: have like Elizabeth Warren going on this rampage, specifically going
Speaker 1: on what she's calling non custodial wallets, brand new technological innovations.
Speaker 1: She's calling it of non custodial wallets. And in the
Speaker 1: UK they just passed a bill that they could seize
Speaker 1: or freeze your crypto accounts without due process. And so
Speaker 1: the only way they could do that is again if
Speaker 1: you had your bitcoin on a custodial exchange, right, So
Speaker 1: it seems like there's this attack vector coming from both
Speaker 1: Elizabeth Warren and from the UK on custing your own bitcoin,
Speaker 1: and at the same time you have this ETF narrative,
Speaker 1: and so it's like, hey, we could buy it on
Speaker 1: an ETF or maybe keep it in coinbase, but you
Speaker 1: can't hold it yourself.
Speaker 3: So there's that. And then I want to kind of frame.
Speaker 1: This up even more where you know, we just had
Speaker 1: the fifteenth anniversary of the Bitcoin White Paper, and Satoshi
Speaker 1: in the white paper talked about that we no longer
Speaker 1: require trust. To use the word trust fourteen times in
Speaker 1: the white paper. I think it's like the third most
Speaker 1: cited word, and we don't need to use these trusted
Speaker 1: third parties, these trusted intermediaries, right, And so it seems
Speaker 1: like bitcoin is made for enemies, or we might say
Speaker 1: for adversary right. So like if I'm being sanctioned by
Speaker 1: the Tally ban or by North Korea, we can go
Speaker 1: peer to peer, and so it almost needs this adversarial.
Speaker 3: Opponent to really have value. Right.
Speaker 1: So like in America, like the dollar works pretty good,
Speaker 1: most people don't understand why we need new money. But
Speaker 1: if you go to Lebanon or whatever, Peru or Argentina,
Speaker 1: they already know why they need new money, right, So
Speaker 1: it almost seems like we need this adversarial lens more
Speaker 1: for the bowl case. So I don't know, curious your
Speaker 1: take on that.
Speaker 2: That's a really interesting question.
Speaker 3: You know.
Speaker 2: The one time I felt worried about bitcoin was during
Speaker 2: the block size walls, when bitcoin did go through this
Speaker 2: very adversarial struggle where the most powerful companies and powerful
Speaker 2: mind and some of the biggest holders tried to change
Speaker 2: Bitcoin into something that would be I think, much less
Speaker 2: beneficial to the world that we're trying to change it
Speaker 2: into essentially a piece of software rather than this immutable
Speaker 2: unchangeable institution that allows people to transfer value with complete
Speaker 2: confidence that they can't be censored. They were trying to
Speaker 2: change it, essentially into what a theoreum is today. It's
Speaker 2: just kind of this plaything for engineers who can just
Speaker 2: tinkle with the interest rate or sorry, tinkle with the
Speaker 2: money supply and change it at will and roll back
Speaker 2: transactions if they want to. When Bitcoin got through that,
Speaker 2: my confidence grew to the point where I don't worry
Speaker 2: about Bitcoin anymore. I don't worry that you could have
Speaker 2: a fairly large concentration of ownership in an ETF, for instance,
Speaker 2: because what I think would happen is if they tried
Speaker 2: to use that to control the network in any way,
Speaker 2: the people who really believe in bitcoin's principles and it's
Speaker 2: true value to the world would just say, we don't
Speaker 2: want to be part of this system anymore. We will
Speaker 2: continue running the original Bitcoin that's unchangeable, and you can
Speaker 2: go off and do your own thing. If you want
Speaker 2: to change the money supply and you want to add
Speaker 2: inflation to bitcoin, you go and do that. And I
Speaker 2: think what I believe I discovered during the block size
Speaker 2: wars is that value will accrue to that immutable, unchangeable institution,
Speaker 2: because that's something that's truly unique in the world. And
Speaker 2: value follows that. Value looks for savings, looks for a
Speaker 2: vehicle that cannot be manipulated or changed. It naturally flows
Speaker 2: into vehicles like that, so.
Speaker 3: And scarce assets.
Speaker 2: Into scarce assets exactly. So I think it might be
Speaker 2: used as an attack vector in the future, but I'm
Speaker 2: much less worried about it than i I would have
Speaker 2: been if the block size war hadn't happened, because really
Speaker 2: that was I think the peak threat for Bitcoin, because
Speaker 2: the most powerful companies in the space really banded together
Speaker 2: to try and change Bitcoin, and they were not able
Speaker 2: to And I think that was a testament to Bitcoin's
Speaker 2: resilience and this underlying belief and philosophy in the ecosystem
Speaker 2: that it's something that should not be changed. And of
Speaker 2: course the market incentives and the economics of it people
Speaker 2: want that. And it was really it was a real
Speaker 2: revelation to see that the people who were trying to
Speaker 2: change Bitcoin, despite all the reasons that they gave, ultimately
Speaker 2: the economics were too powerful for them. They decided that
Speaker 2: they wanted to stay with the system that was unchangeable,
Speaker 2: and that's where they put their capital, despite saying that
Speaker 2: their system was better. So it bitcoin sort of reveals
Speaker 2: the truth of what real money is just on its own.
Speaker 3: Yeah.
Speaker 1: I did this whole segment earlier talking about the green
Speaker 1: curtain crumbling, this green movement from evs and renewables and
Speaker 1: all this, And so after the Great Financial Crash, there
Speaker 1: was no ESG funds that were open. Then Blackrock and
Speaker 1: State Streets started opening these ESG funds. They were projecting
Speaker 1: they had twenty trillion and under under management, they were
Speaker 1: projecting fifty trillion by twenty twenty five. And now all
Speaker 1: the funds are crumbling. Blackrocks shut most of them down,
Speaker 1: and it's because they're all losing money, so they're not
Speaker 1: making sense. And so as you were talking about that,
Speaker 1: I was thinking about it, where if the value accruised
Speaker 1: to the scarce asset, if the value accruised to what
Speaker 1: can't be changed, the Wall Street the institutions can try
Speaker 1: to co opt it, but they just end up with
Speaker 1: an ethereum. But if the value accruised to the non
Speaker 1: changeable chain, then all that money is going to want
Speaker 1: to come back. If they change it, then they didn't
Speaker 1: care about the attributes. What they cared about was the
Speaker 1: alpha they could make. But I guess the question I
Speaker 1: was asking more was about, do you think like this
Speaker 1: chasing money narrative, this ETF narrative, is.
Speaker 3: Enough to be the bowl case?
Speaker 1: Meaning like, so what black Rock is going to send
Speaker 1: the signal and every financial advisor in the United States
Speaker 1: is going to sit down with their client and go, hey,
Speaker 1: now you can invest into the ZTF through your stock account, right,
Speaker 1: but they're going to look at two years of data
Speaker 1: and go, dang, I would have lost money if I
Speaker 1: held this for a couple of years. So maybe it's
Speaker 1: not the strongest compelling case if I'm only buying it
Speaker 1: for the money. Well, the last two years of data
Speaker 1: doesn't really look that good.
Speaker 3: Right.
Speaker 1: We saw like SpaceX had to liquidate a huge position
Speaker 1: at a loss, right for example. And maybe what I
Speaker 1: was saying is the bowl case might be as we
Speaker 1: have more need for it as we see the EU
Speaker 1: crack down on pushing. They just announced they're moving to
Speaker 1: the next stage of their CBDC, for example. So as
Speaker 1: we get these CBDCs, as we get these digital IDs
Speaker 1: put into place, and we have to adopt it.
Speaker 3: I guess that's what I was asking something like that.
Speaker 2: Yeah. Yeah, I think what the ETF does is it
Speaker 2: really expands the liquidity channel into bitcoin, and ultimately Bitcoin's
Speaker 2: price level is determined by how much liquidity goes into bitcoin.
Speaker 2: I think what you're saying is correct. There will be
Speaker 2: these other events that will trigger people's desire for bitcoin,
Speaker 2: but the fact that the liquidity channel will increase substantially,
Speaker 2: I think will also mean that those flow of funds
Speaker 2: can be much larger than they are now, So it
Speaker 2: will be much much easier for people to invest, say
Speaker 2: their IRA or their four oh one K money into
Speaker 2: bitcoin when they haven't when they have access to an ETF,
Speaker 2: it's still not particularly easy to do that. So I
Speaker 2: think the flow of funds will actually be fairly substantial
Speaker 2: with an ETF approval, and I think it will have
Speaker 2: a meaningful impact on the price. But I don't think
Speaker 2: that's alan the driver. I think it's going to be
Speaker 2: a combination of multiple factors. That it will be the
Speaker 2: ETF approval and the increasing liquidity channel. It's going to
Speaker 2: be the harving, and I think it's going to also
Speaker 2: be the FED pivoting at some point in the next
Speaker 2: couple of years, or maybe even in the next year,
Speaker 2: when they realize that the FIAT system as a whole
Speaker 2: cannot survive with positive real interest rates. And when that happens,
Speaker 2: I think we've started to see the cracks emerge in
Speaker 2: the economy, certainly in some parts of the economy which
Speaker 2: are in a deep depression right now. The real estate
Speaker 2: market is in probably the worst depression it's been in
Speaker 2: the last century. Like the housing market is completely frozen.
Speaker 2: The number of transactions that are happening is the lowest
Speaker 2: level in a very, very long time. So we have
Speaker 2: depression in some parts of the economy, but some parts
Speaker 2: of the economy are still kind of booming because of
Speaker 2: all the inflation that came out in twenty twenty, so
Speaker 2: the service sector. But I think as the cracks continue
Speaker 2: to spread to other parts of the economy, the FED
Speaker 2: is going to be forced to pivot. So we have
Speaker 2: a confluence. I think for what will be a huge ballmarket,
Speaker 2: we have the harving, we'll have an ETF approval. I'm
Speaker 2: fairly confident that that's going to happen sometime by January,
Speaker 2: and we're going to have the FED pivoting. I think
Speaker 2: that's going to really be three key drivers for bitcoin's
Speaker 2: ballmarket this cycle.
Speaker 3: Man, I love it.
Speaker 1: You're just tune in here listening to the Mark mass Show.
Speaker 1: I've been sitting down with VJ. Boya Potty. He's the
Speaker 1: author of the book The Bullish Case for Bitcoin and
Speaker 1: a senior engineer over at Swan Bitcoin.
Speaker 3: But that's what we got. Hopefully enjoyed this conversation.
Speaker 1: Let me know. Hitmib on social media at one Mark
Speaker 1: Moss and let me know what you think. Leave a
Speaker 1: comment if you're listening on the podcast, a review. I'd
Speaker 1: really appreciate it.
Speaker 3: And that's what I got. Thanks so much for listening.