WEBVTT - Why Bitcoin's Scarcity Drives It's Value

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<v Speaker 2>The thing about bitcoin, when it was created by Satoshi Nakamoto,

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<v Speaker 2>whoever that entity is, it has a limited supply. If

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<v Speaker 2>you go back and you read that way paper, you

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<v Speaker 2>read it on your own time. The way that Satoshi

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<v Speaker 2>whoever Satoshi was, set it up was that there will

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<v Speaker 2>only ever be twenty one million bitcoins to be mined.

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<v Speaker 2>And when I say mind, you might be thinking of

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<v Speaker 2>like gold mining, like literally going underground and picks and

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<v Speaker 2>shovels and digging into the earth to extract gold. It's

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<v Speaker 2>like that, but it's actually done with software. And it's

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<v Speaker 2>done with computing power, and it takes a lot of energy.

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<v Speaker 2>You may have heard stories about how much it costs

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<v Speaker 2>to have produced just one bitcoin. In terms of energy,

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<v Speaker 2>you could power a small city, right. A lot of

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<v Speaker 2>that's true, but it's getting a little bit easier to

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<v Speaker 2>that the energy use is not as intense as it

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<v Speaker 2>used to be. But because there's only twenty one million

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<v Speaker 2>bitcoin that will ever be mined, that's a limited supply,

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<v Speaker 2>and that's one of the attractive features of bitcoin, especially

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<v Speaker 2>as we see it at these very high prices. We're

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<v Speaker 2>at about nineteen point eight million that have already been mined.

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<v Speaker 2>There are not that many more bitcoin to be mine.

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<v Speaker 2>The thing about bitcoin though, because you have to mine

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<v Speaker 2>it solving a software equation or a math equation with software,

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<v Speaker 2>it gets harder and harder for programmers to solve it.

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<v Speaker 2>It takes a lot of computing power, it takes a

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<v Speaker 2>lot of smarts, and it takes a lot of time.

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<v Speaker 2>So as we get closer to twenty one million and

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<v Speaker 2>worre about nineteen point eight million, it gets harder and

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<v Speaker 2>harder to mind these things, which kind of raises the value.

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<v Speaker 2>Tighter supply, more difficult to produce that's helping boost the price,

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<v Speaker 2>along with a bunch of other factors. Right again, it's

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<v Speaker 2>a supply demand issue. We're here right now, and well

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<v Speaker 2>we're here a little bit further in twenty twenty four.

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<v Speaker 2>Not that many more bitcoin to be mined. A lot

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<v Speaker 2>of it's already out there. It's just more difficult to mind.

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<v Speaker 2>And it has a scarcity issue. When you have a

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<v Speaker 2>scarce resource that a lot of people are interested in,

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<v Speaker 2>prices go up. I don't care if we're talking about

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<v Speaker 2>air Force ones. I don't care if we're talking about,

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<v Speaker 2>you know, a brand new special iPhone. You know, Scarcity

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<v Speaker 2>of a product that people want and are interested in

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<v Speaker 2>always drives price. It's supply demand and its manias and

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<v Speaker 2>its hype, and bitcoin has all of these aspects associated

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<v Speaker 2>with it. Right. So, in terms of an asset something

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<v Speaker 2>you can buy and trade and invest in, well, bitcoin

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<v Speaker 2>has ruled the roost in the capital markets for the

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<v Speaker 2>past ten years really, but in the past five years alone.

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<v Speaker 2>Just look at the price appreciation of bitcoin. It just

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<v Speaker 2>blows out all these other things. I'm gonna read it.

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<v Speaker 2>If you can't get if you can't see it close enough,

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<v Speaker 2>Bitcoin's up about one thousand, two hundred and ninety percent

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<v Speaker 2>in the past five years. Right, the S and P

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<v Speaker 2>five hundred our stock market, the five hundred biggest companies

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<v Speaker 2>in America, is up ninety one percent in the past

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<v Speaker 2>five years. Guys, that's outstanding, right, Those are great returns

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<v Speaker 2>for stocks. But when you look at bitcoin, it doesn't

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<v Speaker 2>even compare the Dow Jones industrials. They are not all industrials.

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<v Speaker 2>That's up fifty six percent. Gold and I use the

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<v Speaker 2>ETF as the proxy is up about seventy eight percent

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<v Speaker 2>in the past five years, and the dollar is up

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<v Speaker 2>about ten percent. So Bitcoin in terms of an investment,

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<v Speaker 2>has returned a lot more or generated a lot more

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<v Speaker 2>what we call alpha in our business because of this scarcity,

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<v Speaker 2>because of the interest in it, and a lot of

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<v Speaker 2>that has come in different waves. Rare Shad mentioned he

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<v Speaker 2>first got introduced to it in twenty sixteen. Twenty seventeen,

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<v Speaker 2>bitcoin had already been around. I remember back in twenty

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<v Speaker 2>fourteen when it was two bucks, and no, I didn't

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<v Speaker 2>buy it because I didn't understand it. But the more

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<v Speaker 2>scarce it gets, the more interest there is and the

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<v Speaker 2>more adoption there is by both investors like us individual

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<v Speaker 2>investors or institutional investors like the Fidelities of the world,

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<v Speaker 2>the Black Rocks of the world, the Goldman Sachses of

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<v Speaker 2>the world, and yes they're interested, and yes they're mining

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<v Speaker 2>their own bitcoin. Well, that's just going to drive price

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<v Speaker 2>even higher. So in the past five years it has

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<v Speaker 2>blown out stocks by a long shot. But let me

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<v Speaker 2>take you back five more years beyond that. Ten thousand

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<v Speaker 2>dollars invested in bitcoin ten years ago, that's where two

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<v Speaker 2>point nine million dollars today. Now we want to talk

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<v Speaker 2>about fear missing out or you know, I wish, you know,

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<v Speaker 2>somebody would have told me about this and I just

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<v Speaker 2>would have put a thousand. Well, we can think about

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<v Speaker 2>that with everything. Bitcoin is super unique, with returns like

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<v Speaker 2>this ten thousand, ten years ago worth two point nine

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<v Speaker 2>million dollars today. We have never seen anything like it

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<v Speaker 2>in the capital markets. And I've been doing this for

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<v Speaker 2>a very long time, so we could talk about why

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<v Speaker 2>that's happened. But still, even with that massive price appreciation,

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<v Speaker 2>bitcoin is still much bigger than that. It's about a

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<v Speaker 2>trillion and a half now, but it's very small compared

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<v Speaker 2>to the market capitalizations of big assets that are already

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<v Speaker 2>traded in our capital markets, real estate being the biggest

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<v Speaker 2>worldwide to three hundred and thirty trillion dollar market. Global debt,

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<v Speaker 2>we're talking about the bond market. We're talking about US debt,

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<v Speaker 2>Chinese debt, Japanese debt, European country debt. That's a three

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<v Speaker 2>hundred and fifteen trillion dollar market. FIAC currency we're talking

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<v Speaker 2>about dollars, euros, YenS, right, that's one hundred and twenty

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<v Speaker 2>trillion dollar market. Bitcoin is a trillion and a half

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<v Speaker 2>dollar market. It's come a long way in fourteen years,

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<v Speaker 2>but it is still a very small asset class comparatively speaking,

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<v Speaker 2>and given the hype that it gets, barely anybody owns it,

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<v Speaker 2>but the people that own it own a lot of it,

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<v Speaker 2>especially some of the bigger companies. So we'll get into

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<v Speaker 2>that in a second. Just keep that in mind though,

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<v Speaker 2>when Rashad mentioned that eighty five percent of people's surveyed

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<v Speaker 2>say they don't own it, Well, you know, it's still

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<v Speaker 2>pretty young, and it's still pretty small, and it wasn't

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<v Speaker 2>until like the last year or two where it really

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<v Speaker 2>became available for us to put into our retirement accounts,

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<v Speaker 2>to buy like an exchange traded fund, like we would

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<v Speaker 2>buy in exchange traded fund that tracks the Nasdaq. Right,

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<v Speaker 2>it is still kind of a I wouldn't call it

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<v Speaker 2>a baby, but I may call it like an eight

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<v Speaker 2>year old or like a fourteen year old, because that's

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<v Speaker 2>actually what it is.

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<v Speaker 3>An illegal alien from Guatemala charged with raping a child

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