Quarter-Life Capital

Speaker 3 (00:01.324)
All right. Cool. Well, welcome to the Quarter Life Capital Podcast, where we dive into strategies to build wealth and freedoms in your 20s and 30s. Today, I am thrilled to chat with Joe Burnett. He's a thought leader at Unchained Capital and also the mind behind the Mustard Seed newsletter. I've known Joe for several years and I've always been impressed with his ability to consistently see through the noise and find signal that exists in our industry.

So just really looking forward to it. Joe, thank you so much for joining us today.

Yeah, thanks Matt. Glad to be here.

Of course. So I'd love to dig into a little bit about your background, but also first, like, you know, how did you originally get into Bitcoin? What inspired you to go down the rabbit hole?

Yeah, absolutely. I first remember, well, I'll start this into one is when I was in middle school.

Speaker 2 (00:53.454)
two ways actually. was very long ago I guess maybe like 2010 through 2013 ish around that time. Whatever reason got interested in building.

time at least.

Android apps and the apps that I've built up the description with the code.

One of the things I happened to build at time for whatever reason was called commodity prices. And I used the Yahoo Finance API at the time to get gold, silver, copper, cattle, whatever else. Basically built it within the app.

and just display it. And I like to think that I was very close to it. But I imagine I had to. So didn't discover. And but you know I was. Early you. Basic software. At a young age. was kind of.

Speaker 2 (01:33.166)
discovering Bitcoin very early and unfortunately I did not discover Bitcoin when I did that. I've fairly close. I was interested in for whatever reason gold at a young age and so kind of

had this like tech...

entrepreneurial spirit, libertarian type mindset, sound money type mindset, maybe coincidence.

just by fast forward to 20.

2017 that that bull market to remember for some whatever reasons scrolling on reddit and seeing either our cryptocurrency or our Bitcoin At the time Bitcoin is maybe like a thousand dollars when I first Consciously remember hearing about it and I was just like fascinated by what it was. I was like Form of money and then 17, you know went from thousand dollars

Speaker 4 (02:13.272)
I just

Speaker 4 (02:21.016)
and

Speaker 4 (02:29.934)
What is this digital? Throughout 20. Others to 2003, as in the sixth.

thousand to eighteen thousand near the very end of the year and I just remember all throughout that year

I was like, what is this? weird technology that. To like astronomical. And I was like, this is, know, this has to be some sort of a ponzi.

weird technology for whatever reason, people are bidding at critical levels at the time.

Speaker 2 (02:57.934)
Fancy scheme or bubble because it doesn't make any sense like it's not a real company like I'd grown up thinking about either gold like I had the background a little gold but more generally I was probably more focused on like the value and betting type framework was like by Coca-Cola or by and Hold it for decades. It goes up, you know 2 % per year pays a 3 % dividend and like that's how kind of how you like and save for the future

I guess.

Speaker 4 (03:07.448)
bit on.

testing.

ID.

Speaker 4 (03:25.422)
and vast future.

And so seeing Bitcoin just go from again, $1,000 to $18,000 in like one year kind of blew my mind. with the background in technology and just kind of being open to new ideas, I a little back then I was obviously in college, 2018, after seeing the price run up so much in 2017. All right. Definitely initially very skeptical.

I happened to

Speaker 4 (03:43.148)
And then all throughout, I...

Speaker 4 (03:49.932)
I was like, I'm really a new practical of what this is, but I think.

there has to be something of value within this space. All throughout 2018, I dove into the Nakamoto Institute, is a good resource for new people in my opinion, mainly written by Pierre Richard, Michael Goldstein, and Daniel Crowitt. they had, it was,

And so I

is still like

Speaker 4 (04:14.446)
Kind of like this weird, sketchy, almost...

blog that was very minimalistic and simple, but it was very logical in laying out the case for why Bitcoin is the best form of money and why Bitcoin performed almost everything over the last 10 years at that point and why it will continue outperforming so many things going forward. The entire bear market, just

has outbro-

Speaker 4 (04:38.126)
and then the the came obsessed basically and

The price kept going down all the way back down to $3,000 near the end of 2018 and early 2019. And then after that, this makes so much sense.

after that,

There's a bear market probably because it went up so much to begin with, but it just makes so much sense. then after that, we were off to another bull market and that was kind of how I got into Bitcoin.

Mr.

Speaker 3 (05:06.53)
That's fascinating. It's kind of funny because I think you really got into it at a similar time as me, but I was also into the Ethereum side and ended up while you were sitting there, you know, buying Bitcoin, I was buying ETH on the way down. But, know, you're smarter than me.

So like when I initially it was it was Bitcoin and ARC so I was probably people at the time

I knew we heard about it. again, cryptocurrency, one of the things that thought Bitcoin was boomer coin or whatever you want to call it, couldn't do enough transactions.

It was too slow. could do a per second. So that was the one narrative that I fell for. I wasn't as interested, I guess,

like the smart contract type thing like maybe Ethereum. But I thought that whatever reason Bitcoin couldn't coins at their narrative at the time, we can do more transactions per second than Bitcoin. So we're better narrative at first. then throughout 2018, I realized wait, the innovation here is not a new visa network or a new payments network.

Speaker 4 (05:46.444)
But I was more interested in of money that for sale. And so there are other like.

was we

Speaker 4 (06:00.216)
So I fell for that.

Speaker 2 (06:09.358)
The innovation is a monetary tool that has a perfectly fixed supply that nobody can change. To do that, have to limit the block size, enable everyone to run a Bitcoin full node to where everyone can set the rules and no specific group or entity can change the rules on everybody. And so once that kind of, okay, Bitcoin's the innovation, I'm not going to focus on these other things.

change.

Speaker 4 (06:22.136)
you

Speaker 4 (06:27.416)
clicked for me, I was like.

Speaker 3 (06:33.454)
that I think we all go through that journey, that altcoin journey and eventually make it back to Bitcoin. So it's awesome to hear that you went through that pretty quickly. I was curious as well and one of the reasons I was excited to chat with you is you're obviously a big, in terms of store of value, think Bitcoin is fantastic and there's more and more companies these days that are looking at Bitcoin as a store of value. One of those obviously is MSTR.

And I know that there's a lot of Bitcoiners that sit on both sides of the aisle, some that are huge MSTR bulls and other ones that are thinking that, know, this is something's going to go wrong here. You know, I was just curious for you, like, why do you think like MSTR is such a great opportunity for folks? And how should people maybe be thinking? Like, how did you go down the rabbit hole of MSTR and MicroStrategy originally?

Yeah, absolutely. This is definitely an interesting question.

I initially remember... I actually kind of remember...

like the I don't remember the exact date, but I remember the day when MicroStrategy in the summer of 2020, another press release that that they were waiting alternative assets as part of their corporate treasury strategy. And at the time, like MicroStrategy was like a half a billion dollar company, very small relative to a lot of other US companies and global companies. And I think like the Bitcoin community at the time was like

Speaker 4 (07:42.478)
put out release, basically set a value asset as it.

Speaker 4 (07:56.942)
of time.

And really excited.

about it because there were no really public companies that were buying and holding Bitcoin. So the fact that they put out a PR, they're considering buying Bitcoin among gold and maybe the S &P 500 and maybe another asset or whatnot. Huge news. Micro strategy would become and who Sailor would be, who he is today and what he is for the Bitcoin community and what he's done for micro strategy.

and such.

Speaker 4 (08:18.062)
was like, she's in little did we know what.

Speaker 4 (08:30.958)
As far as like my take on on

micro strategy in regards to Bitcoin as well.

Well, one I think, you know...

The Bitcoin Treasury Company phenomenon is like catching on and it really

on

Speaker 2 (08:51.65)
hold spot Bitcoin on a lot of these different Bitcoin treasury companies.

I think there's definitely risk with Bitcoin.

with MicroStrategy, right? Like, unique in the sense that it's an asset that you can hold without counterparty risks. Similar to holding a gold bar in your hand, you can hold the private keys in your hand, and you can also run a full note that you cannot beat as you're enforcing the monetary policy on the entire network.

It's similar.

Speaker 4 (09:16.75)
and know that you're not being diluted because...

Speaker 4 (09:23.606)
And so the Bitcoin, the asset is varied. And that's obviously what's

unique and very special, powering the potential for micro strategy.

And then when I think about what it really is, it's exactly what Sailor

even is hacker strategy. Well, I think it kind of exactly does. Like it's a rich play on Bitcoin. What he does is issues convertible notes or his new preferred

equity and effect.

Speaker 2 (09:47.836)
borrows money to buy more Bitcoin. So it's like...

If you want to amplify that's.

your returns, whether that's up or down, depending on whatever Bitcoin does over the short term, medium term or long term, MicroStrategy is going to amplify those or down. And so if Bitcoin goes down a lot, well, you're probably going to go down even more if you're holding a Bitcoin treasury company like MicroStrategy. But if Bitcoin goes up, then you might actually outperform Bitcoin.

going to

Speaker 4 (10:10.542)
goes up a lot. So that's that's like one.

goal of like how I think about micro strategy and Bitcoin.

At the end of day, definitely recommend people. You shouldn't have Bitcoin.

Treasury company is worth more than your actual Bitcoin. That's my personal opinion, not financial advice, but that's how I think about it.

And yeah, I mean, think it's interesting to continue to see the coffee flavor and continue to issue.

Speaker 2 (10:36.654)
I think we're probably going to see more companies copy that book due to issue equity by Bitcoin, issue convertible notes by Bitcoin, preferred as a form of fixed income to other players that and Bitcoin. I have my general thoughts on micro strategy in Bitcoin.

preferred equity, you know, their investor and use that money to buy. It's been fascinating to play out. yeah, that's those are kind

Speaker 1 (11:06.466)
And Joe, think we're seeing like what you're mentioning, this idea of like this fixed income market coming in now with a Bitcoin space overall and like a lot of operating companies that are looking.

You're quiet to me. I don't know if you guys are quiet as well or

Can you guys hear him?

Speaker 1 (11:26.37)
Yeah Joe, so what I was mentioning was this idea about what you're saying is that the fixed income market is kind of coming into Bitcoin now and helping leverage for like a lot of different operating companies that are thinking about let's get Bitcoin for a treasury operation. So we see MetaPlanet, which is I think the best performing stock in past year. MicroStrategy, as you mentioned, is probably the leader. You also have like Mera, which is like mining Bitcoin, but they're also taking on this convertible bond.

And so with this now we're seeing that Bitcoin bond ETFs are being issued. Like think Vivek Ramaswamy was the president candidate. He's coming out with with Strive and launching their own like Bitcoin bond ETF. Where do you see this entire space going I guess in the long term? Now that fixed income which seems like one of the biggest catalysts for growth is kind of starting to enter the conversation.

Yeah, I mean, I think sailor envisioned capital that will be fueling

it as being like the next wave.

Bitcoin acquisitions, buying more Bitcoin. But recently, the sense that when Sailor equity in Bitcoin

Speaker 4 (12:30.787)
I've been thinking about this a little bit.

issues additional advice. I don't know if that like and people

about this actually where they're like you know 50,000 Bitcoin over the last why did the price of Bitcoin not do much there's a number of potential reasons for that but the reason is like it's very similar like micro strategy share holding version of Bitcoin it's a nice a little bit of leverage on it the same thing

MicroStrategyBot XMonths

Speaker 4 (12:54.53)
I think one potential, it's kind of like the same. It's very, if you hold it, you basically hold it, you it's a, but it's kind of like,

to some extent, or it's a very similar risk profile or volatility profile also as well.

And so I think with the income equity, it's actually potentially tapping into a new buyer that

the figure preferred

Speaker 2 (13:24.974)
would not even be buying Bitcoin or would not even be buying MicroStrategy stock. It's someone that may be older, maybe an institutional investor and they know exactly what their liabilities are in the future and they just need some sort of fixed income instrument to kind of like match those liabilities and maybe they take a little spread.

Exactly.

Speaker 4 (13:44.694)
in the meantime. And so I think that what's exciting about

about the fixed income and preferred equity. And it'll be interesting to see if how much Saylor really ramps up that strategy with like STRK, STRF. Like the, that would come in and acquire Bitcoin or that would, either preferred equity and fixed income instruments would be used to buy additional Bitcoin for micro strategy and potentially for other Bitcoin treasury companies. So,

an S &PF, but I think it's the next wave of capital.

the capital be used to buy.

Speaker 4 (14:16.138)
Obviously like you'll see the

charts of like Jesse Myers and Saylor show like total global wealth. Obviously fixed income is something like a 300 plus trillion dollar asset class. if you know if

And at the end of the day, like all of these.

fixed income instruments are effectively people borrowing money to maybe buy something else. Bitcoin is the best thing that you can buy. then, that are borrowing the money to buy Bitcoin, they can pay the highest interest rate and potentially and picking up a lot of capital from the fixed income market to be used to acquire more Bitcoin.

And if big.

Speaker 4 (14:40.44)
people that

Speaker 4 (14:46.734)
this could start sucking.

just, you know, and obviously.

Speaker 1 (14:56.546)
Hey, that's great insight, Joe. And also I want to talk more about, I know on your channel, you often talked about how Bitcoin has changed retirement timeline potentially for young people, right? And on this part, we currently talk about, you know, the financial advice, well, not financial advice, but you know, the things that you should know, young people should know about personal finance. And I wanted to know how your thoughts about how might Bitcoin changed the traditional retirement timelines.

you know, for people in their 20s, 30s or 40s, because our parents tell us to own real estate, own stocks. And in our lifetime, we actually see Bitcoin as an asset class coming up, which is new to so many people. So in your advice, how has Bitcoin changed the retirement timelines for people?

Yeah, I mean, I definitely think that.

Bitcoin has potentially accelerated the retirement timeline for many people.

I also think like that's this is new.

Speaker 2 (15:52.034)
very related to new technology, whether that's AI and robotics is also kind of going to accelerate the timeline to retirement and the amount of like physical work that's really required to produce the everyday goods and services that we all need and use every day. For example, we created this retirement calculator. You can find it at unchained.com slash calculator. And you can actually like type in all of your inputs on like

And

Speaker 4 (16:10.19)
So, we unchain.

Speaker 2 (16:21.474)
How much stocks, how much wealth do you have in stocks? How much wealth do you in bonds? Real estate, Bitcoin. Play with what do you expect the compound annual growth rate of these asset classes to be in the future? Then you can kind of see like, okay, do you assume all of these inputs? What's your outcome for your projected retirement? How soon could you potentially retire?

really big and then you can play with.

Speaker 4 (16:34.646)
And if you know.

Speaker 4 (16:44.374)
It's kind of a, it's a cool little calculator.

later that you can play around with but yeah I mean if you just look at something like the power law model which is potentially not aggressive not too extreme or the Taylor's 24 Bitcoin model those compound annual growth rates to where if you're saving

you know, they're pretty high

Speaker 2 (17:06.414)
The traditional financial advisor might encourage you to save as a percentage of your income every year and you're working for the next decade or so, you might be able to retire. Those models happen to be correct in the future.

sooner than you think if the

Speaker 3 (17:21.038)
What should people say to their financial advisor that recommends them not buy Biccoin?

I would say probably find a new financial.

I'm advising.

I think that's good advice. think that's good advice. So you talked a little bit about what you guys have built at Unchained and I know you guys have built a really nice vault product for anyone that doesn't know. Unchained Capital has a beautiful vault product for securing your Bitcoin. But I'm sure you guys have also thought significantly about inheritance as well. I guess like for folks that are thinking about

You know, and I've had this conversation with George and Soham as well around, know, should you just go buy, you know, native Bitcoin versus the ETF? And what makes sense for someone who's just getting into it? I guess I'm just curious for yourself, like someone who's been a Bitcoiner, but also sees the challenges with, you know, setting up self-custody. Like how, how should someone who's like just coming to Bitcoin for the first time, how should they be thinking of that? Should they be buying a little bit of ETF and then transferring over to self-custody? Or what do you think that journey should look like?

Speaker 4 (18:30.126)
Yeah, it's a really good question and I've definitely been

thinking about about this a lot obviously working on chain yes and Coinbase and other do company funnel marketing for Bitcoin

The way I currently view ETM Crypto is it's top of

Speaker 4 (18:48.886)
I think if you own zero bit, getting any is you get a little.

Bitcoin exposure to Bitcoin is better than having no exposure because once a bit of exposure then you're more inclined to Book about or listen to a podcast Read an article on the internet or whatnot exposure whether it's through the Bitcoin ETF whether it's Unchained whoever I think that's a good first starting point to get you like

read about it or read it or, you know, read

And so getting any

Speaker 4 (19:13.486)
Coinbase River.

Speaker 2 (19:19.008)
starting to become interested in what even is Bitcoin. Evaluating the different custody options. It's interesting because, you know, I've thought about this as like, don't want a large chunk of my wealth in the BlackRock Bitcoin ETF. don't want a large chunk of my wealth in signature hardware wallet that I store at my house because that's a security, potential security risk, right? Like it's a physical bear asset.

when it comes to like a value.

Speaker 4 (19:30.254)
I certainly would not have a large chunk of in-depth. I also personally would not have a of in a single

Speaker 4 (19:49.356)
And so Unchained kind of fixed it.

is this problem to where, I don't want to try BlackRock with all of my wealth, throw it in a black box, depending on however, whatever their relationship is with Coinbase, however the Coinbase custody black box works, like there's a lot of third parties there, full total responsibility, to guard outside my house, to protect the one seed phrase that I have.

us then

Speaker 4 (20:03.648)
and power.

Speaker 4 (20:07.608)
trusted. But again, I also don't want and you know, have an arm. I have the the the

sitting there. I think both of those options personally are not great. Like a little bit of Bitcoin on a single signature device and that's totally reasonable just like you'd have a little bit of cash in your house or a little bit of gold in your house potentially. Multi-Sig which is and you mentioned Unchained Vaults. Multi-Sig to where you key agents you can have multiple keys. You can protect your Bitcoin with multiple keys like our default

I think it's fine to have

Speaker 4 (20:36.183)
But I think like, which is built, you can have.

is and you

Speaker 4 (20:51.054)
model for defaults is as an individual you hold two keys and unchain and you need keys to unlock your default and so with that setup since you have the two keys you have total complete defaults as long as you don't lose or as long as you don't lose yeah as long as you don't if you do lose one of those keys well unlike single single

Vigil is and holds one key. To revolve, send your Bitcoin away.

Speaker 2 (21:09.186)
control of your Bitcoin, one of those keys. What is signal sig, where your Bitcoin would be really gone, a key as a backup in this vault product setup. Private Vault and Enterprise Vault, where you can have multiple key agents, whether that's unchained or another entity or yourself,

Unchain has

Speaker 4 (21:26.104)
We also have like well, you can.

Speaker 4 (21:36.384)
And now, no.

specific entity or institution is a single point of failure for your Bitcoin. And that's pretty good option as well. I think

I it's the way I think about like.

secure Bitcoin custodies.

really focused on a lot of

Speaker 2 (21:50.988)
limiting single points of failure from any institution or even yourself, right? think that the vaults are exciting to me because now one person disappears, including yourself, like inheritance, right? Like if you have your single SIG buried in your backyard or whatever you did and you say, how are your heirs going to inherit your Bitcoin? Like if they don't know where your seed phrase is,

think that's why Unchained is important to me because now if

like

Speaker 4 (22:11.648)
and pass away.

Speaker 4 (22:19.158)
then

they're not going be able to get to it at the same time. Give them complete this to your funds while you're alive, because what if for whatever reason they take it or they accidentally take a picture of it or want them being a single point of failure for your Bitcoin. it creates like really interesting problems like unchained vaults does a great job of solving that.

you also don't want to get late access.

Speaker 4 (22:32.728)
whatnot.

and very interesting problem.

Speaker 1 (22:44.67)
That's really interesting Joe and I think it's the idea of inheritance is one that's been like talked about like even Michael Stiller said I'm gonna throw out my keys as soon as I die as like a gift to Bitcoin and so I like the way it kind of unchanged is structuring this maybe for people that aren't as aware of how Unchained's entire structure portfolios think maybe you want to give a better background of what the goal is and everything along those lines, too

As far as custody or

of unchain products and services.

I guess it's the main mission and also maybe custody too.

Yeah, makes sense. mean, yeah, think like unchanged to is to bring collaborative collaborative custody. And tools, small business, Institute.

Speaker 2 (23:22.54)
And like our goal is to

Speaker 2 (23:28.234)
to individual businesses, public companies, governments, right? right now, a black box for so many different people and entities. Again, like Coinbase holds Bitcoin right now. No one necessarily knows how Coinbase custody works. Like, I'm sure they're using whatever is the most, they're multi-sig internally or MPC or some other

I think right now custody is...

people like so much and no.

Speaker 2 (23:58.03)
really top-of-the-line technology. Today it's just one entity that has flaws and the single point of failure when it comes to securing probably millions of Bitcoin at this point, or I'm pretty sure millions of Bitcoin at this point.

And so I think introducing collaborative custody.

to all those different groups.

groups is important. It's of perspective in my of holding.

of how Bitcoin scales from like a store of value per se, in because of the problems of

Speaker 2 (24:28.59)
billion dollars worth of Bitcoin in your house like no one's ever that's extremely dangerous and not very smart to do that. And it's the same way with you don't want an entity another entity or another person within Coinbase controlling the billion dollars on your behalf or a million dollars or dollars right like it doesn't really matter the amount. But yeah I think custody is one of the key features and like the core mission of of Unchain.

$1,000.

But collaborative.

Speaker 1 (24:57.55)
That's awesome. And Joe, think personally, I know, Matt, no, I'm really bad at and always scared about storing Bitcoin in my house. So whatever you said really resonated with me there. I think a lot of our audiences, including ourselves, like we're all in our 20s and maybe we're just new, we're just starting to purchase Bitcoin and storing it in either a hardware wallet or an ETF at this time. With your experience on Unchain, like

When do you think people should start thinking about using a joint custody solution, such as what you just described with Anshin?

Yeah, I would say it's whenever you reach a point.

to where you begin to be concerned of Bitcoin in a decade from now. You've already upgraded to a single signature device, like you said. Did you write down the seed phrase correctly? Like have you practiced restoring that seed phrase on a new device if you happen to lose your device or if your device happened to be destroyed?

You know, will I have this

Speaker 4 (25:43.822)
That could be.

Speaker 4 (25:49.027)
No.

Speaker 4 (26:00.322)
things like that.

Like, are you sure that no one has ever seen your seed phrase? Are you sure that no one took a picture of it? I'm good. That becomes higher potential that.

you know and as time goes on like that that could exist and

On top of that, it's like, okay, you have your phrase on one single hardware wallet, one single manufacturer. know, are you sure this manufacturer has not compromised your seed phrase in any way? Like, are you sure that their firmware was perfectly sound every time you plugged it into a computer? you sure that your computer, at the end of is kind of a never ending rabbit hole to where you could be perpetually paranoid forever?

one

Speaker 4 (26:22.798)
sure that the.

Speaker 4 (26:32.91)
was fine. there's, yeah, security.

Speaker 4 (26:39.372)
You theoretically

Speaker 4 (26:44.076)
And I think that.

You know, it's not great to perpetually live in paranoia, but.

It is good to take some steps just to make enough

Make sure that you've done it that's reasonably possible to ensure that your Bitcoin is overly secure and very secure. That it's just simply eliminating a single point of failure, whether it's a hardware wallet manufacturer, whether that's a single custodian like the ETF, or whether that's yourself on a single signature device.

I think the best way to do this

Speaker 4 (27:11.618)
weather.

I'd say it's whenever you're like, wow, like the number a lot.

has gone up my Bitcoin is worth more than I or or it's it's what I okay I don't feel comfortable signing this transaction or you know I really hope BlackRock or whoever never loses my Bitcoin and get that point you're like okay I need to upgrade my my security it's time to consider something like

expected it to be worth and expected it to be worth but now it's like

Speaker 4 (27:32.494)
I think.

Speaker 4 (27:40.334)
it's a

Yeah, I think you you touch on a really important point like on the collaborative custody model, because I think one thing that people really don't understand about it is, OK, you can go and set up multi-sig yourself, right? You can go set up a two of three. But at the end of the day, if you die and it's your parents or your spouse that has to go and try to get that Bitcoin, how are they going to know how to do that? Well, know, Unchained can actually go and guide you through that process. And so I think that's really important.

But actually, it's kind of interesting. Speaking of, I guess, centralized points of failure for Bitcoin, you've got MicroStrategy with 600,000 coins with custodians. You've got... Wait, what does Coinbase have now? A million Bitcoin in custody. It's kind of crazy. Are you concerned about how, I guess, centralized the custody of Bitcoin is becoming and how that might affect future upgrades to Bitcoin itself?

Yeah, it's an interesting question. guess my personal perspective is it's not ideal. You know, it's ideally Coinbase's split

Coinbase custody would be put into 50 different key agents.

Speaker 4 (28:59.054)
all with no, not one of those.

agents being a single point of failure, some sort of operative custody network. like, it would be cool if MicroStrategy had Coinbase as a key agent, had Unchained as a key agent, Fidelity as a key agent, and whoever else institutions were a single point of failure for their Bitcoin.

had abilities and then now none of those.

I, as, as the moment, like I don't think.

It's a threat to Bitcoin itself. Hold their Bitcoin with Coinbase, right? If North Korea hacked Coinbase and was able to drain their cold storage for whatever reason, which I'm sure North Korea and other attackers and hackers are probably targeting Coinbase, right? Like it's the essentially honeypot.

Speaker 4 (29:27.918)
I think it's a threat to people that...

Speaker 4 (29:46.21)
probably the most valuable in the history of honeypots. Obviously, it's hopefully, but something that's worth tens of billions

It's not easy to steal.

Speaker 2 (29:58.008)
billions of dollars, maybe hundreds of billions of dollars, going to be pretty key target for tens of elaborate theft, whether that external of Coinbase or even internal of Coinbase, right? Like tens of billions of dollars is to say, you know, certain employees couldn't get together and try to key you have this key, like a of money.

If you have

Speaker 4 (30:18.374)
just hey I have this like this is a lot of money. Obviously you know I don't think that that will happen. hope that does not happen but it's certainly possible to say the least. So yeah that's kind of how I think you know.

I think I surely hope that

Speaker 2 (30:32.588)
say.

Speaker 2 (30:36.27)
Think about the honey pot that exists within Coinbase and within other large custodians. I think time people understand that they need to eliminate a single point of failure.

Hopefully over time, we'll...

Speaker 2 (30:51.032)
via experience, whether it's Mt. Gox.

BlockFi, Celsius, FTX, like the trusted instance.

institutions within the space have failed, whether that was negligence or hack or fraud. It doesn't really matter. The of IOU at those platforms, you either got none of your Bitcoin back or you got a fraction of your Bitcoin back.

or anything. You you were a Bitcoin.

Speaker 4 (31:21.518)
So I think it's just, you I don't hope that we have.

another one of those events, whether it's with any custodian, although it probably is almost possible that another custodian will have one of those events. But I think every time we have one, we're in the space begin to understand the importance of eliminating single points of failure when it comes to securing a significant amount of Bitcoin.

and have a good one.

Speaker 3 (31:48.588)
Yeah, that's a great point. And most recently, Bybit as well. North Korean hackers did actually get that Ethereum. And you should point out that Bitcoin is much more secure than Ethereum in terms of the multi-sig setup. obviously for... I think you're right. think Coinbase does have a very good and secure setup that's offline and they've put a lot of effort into that. So that's probably not a super big concern for,

Micro strategy, for example, I'm just curious for you, you've dug into the details of MSCR of micro strategy. What do you think is actually the riskiest case for MSCR for micro strategy? Is it that, hey, we have a bear market that just occurs for the next 10 years? Like what is it that would actually break that model?

Yeah, it's a really good question. A few ideas, I guess, come to mind would be like their custody set up, right? Like they, I believe.

One, right. You have a single point of failure, I believe, with Coinbase or whoever their custodian is.

That's not ideal, but also likely. I think, you know, I have. So I think that.

Speaker 2 (32:58.574)
essentially online.

Speaker 2 (33:03.142)
micro strategy position. these risks exist, but they're minimal or low. Another risk

is simply the microstrategy does.

leverage right like borrow money via convertible notes or now they're prefer coin with it so like I mentioned earlier it amplifies returns so if Bitcoin goes through a year bear market and we're in the year 2033 and bitcoins at dollars

bird equity and they buy back.

Speaker 4 (33:28.526)
this video.

No, and

Speaker 4 (33:36.558)
$20,000? Well, yeah, would probably suspect that.

that micro strategies failed at that point, it might have actually probably gone to zero. That's kind of, I think Bitcoin is at $20,000 and 2033. It's possible that Bitcoin has failed for whatever reason or adoption, drastically. The concern where it's like, okay, if you have to start paying the debt, Bitcoin is in a pretty significant bear market and you're not able to borrow more money to keep rolling the debt.

I don't think that's gonna happen.

Speaker 4 (33:53.336)
slow. So that's like a

Speaker 4 (34:01.282)
back and.

Speaker 2 (34:08.141)
then that's going to be a pretty major problem. But he uses it in a very conservative manner. Like he's targeting a 20 % debt to equity ratio from the Bitcoin to the convertible notes plus preferred equity, which are another form of fixed income instrument. conservative manner. You know, you have real estate where people tax long real estate, put 20 % down and borrow the other 80%.

But know, sailor, obviously he uses leverage.

Speaker 4 (34:16.078)
I think like a.

Speaker 4 (34:27.234)
He does it in like a very contrasting that it's like regularly go five.

Speaker 2 (34:38.092)
or even more aggressively, they put 10 % down or 5 % down. That's a lot of leverage that people are using. Micro-structural leverage is a lot more conservative than that.

is obviously Bitcoin is a lot more volatile you know

And that's part of the reason why it's important to keep the leverage significantly lower.

But it's interesting.

seem to compare the two leverage ratios between a lot of traditional finance assets and Bitcoin, despite Bitcoin having higher outperformance. But obviously that outperformance is

Speaker 4 (35:03.808)
extremely superior.

has been, has come. So those are probably two.

from extreme volatility.

main risks I see with micro strategy, custody and leverage in general. Third might just

be, you know, I hope this doesn't happen.

Speaker 2 (35:26.018)
I don't think it happens, but government confiscation, right? Like throughout the history of the United States, the U.S. has confiscated gold before in the past, a form of sound money.

think Bitcoin's.

pretty different in the sense that then the dollar was paid old and they needed to confiscate gold to stimulate debt based monetary system that was dollars based top of gold. Right now the dollar is not pegged to Bitcoin. So it's like they want to stimulate the economy. They can just print dollars easily. They don't need to remove the peg from gold to the dollar or Bitcoin to the dollar pretty low. It's a possible risk, right? I mean,

back to gold.

Speaker 4 (35:45.431)
the

Speaker 4 (35:49.122)
on

Speaker 4 (36:02.424)
So I think it's a risk, but it's a.

you know, if the US government ever reads.

for whatever reason wanted to do such a thing and it was popular among, you know, there may not be much that can be done about it, it might just happen.

people.

Speaker 4 (36:16.814)
So I don't, I, but again, I don't expect that.

generally an optimist and I think like with AI and robotics, we're probably going to create a lot of prosperity and wealth and productivity for the world. And a lot of that purchasing power is just going to go into Bitcoin and many people will get exposure to Bitcoin, whether they buy it themselves, it'll end up in their index funds. Just owning a normal 401k and not even paying attention to any of this whatsoever when things like MicroStrategy eventually probably will get added to the S &P 500 or if

antibiotics like

Speaker 4 (36:33.42)
many people.

via.

Speaker 4 (36:49.56)
just

like a Vanguard total market index fund. You already kind of own some micro strategy, you own probably some meta planet, you all the Bitcoin treasury companies. You get more exposure automatically because all weighted by market cap.

then

Speaker 4 (36:59.022)
And then as those companies grow,

Speaker 4 (37:04.524)
And so I'm pretty optimistic and I...

don't think that those things are going to happen, but those are probably the main risks that I see to micro strategy.

Speaker 1 (37:16.525)
And Joe, maybe keeping on this idea of micro strategy and I guess like the version Matt was using prior was like the idea of being centralized. Does it scare you how much, like I guess like how strong the tailwinds are for micro strategy and how well they can end up growing into? I guess the idea is like this week they have earnings, right? And they'll finally be able to put market to market for their bitcoin, which like you mentioned, the S &P 500 is a realistic idea for them to kind of join into.

and so much additional tailwinds that they have just being the first market movers in this space. What do you see in the next, I guess, five to ten years of micro strategy if they are able to continue with this sort of throw?

If they're sorry, it was last part. If they were able to.

If they're able to continue this kind of growth and then like come in comparison to like other competitors that might also want to have Bitcoin treasury

Yeah, I, it's a, this one's an interesting cause I don't know exactly how to play. So I was listening to sailor on.

Speaker 2 (38:18.252)
the block podcast, whatever podcast that's called.

And he had the idea that someone out there.

was like a public question that interviewer asked, Saylor. Whenever MicroStrategy gets to, or MicroStrategy gets to 5 % of the total supply of which would be a little over million Bitcoin, and for reference today, they have a little over half a million Bitcoin. So we're talking about doubling the amount of Bitcoin that they have on their balance sheet.

And sale basically said, you

if

Speaker 4 (38:50.51)
he suspected that Bitcoin would be a. And then he brought up if if Microsoft.

million dollars by that point.

Speaker 2 (38:57.39)
Okay, Reggie somehow is able to acquire 7.5 % of all Bitcoin, which would be like 1.5 million Bitcoin. The Bitcoin would be 10. He gave out another number, which was 10 % of all Bitcoin. So, you 2.1 million Bitcoin, expected Bitcoin would be $50 million.

then he suspects $9 million and then he.

Speaker 4 (39:15.65)
He's a

And so based on that answer, I was kind of to him that at a certain point the supply just

getting the sense that it gets so tight and potentially micro strategy gets so large that significant incremental buys or significant generation and BTC yield would just lead to like some sort of like massive supply squeeze that would push the price drastically higher. And it kind of makes sense because like, if sailor is going to acquire billion more bit

Y-

Speaker 4 (39:46.102)
is quiet a million

more Bitcoin, granted he only has half a million at this point. like, okay, for that to happen, he's got to issue fixed income, a lot of preferred equity. It's going to be new cash that's coming in billions and billions of dollars. It's going to be buying this fixed asset. The price is probably going to squeeze significantly higher if that happens.

A lot of...

Speaker 4 (39:59.128)
You can.

Speaker 4 (40:04.942)
Obviously.

Speaker 4 (40:09.144)
So I feel like at some point.

He probably like runs into a He himself, a parabolic bull market.

of he almost himself drives a he you know he can't accumulate too if if if he accumulate so much the price runs away with

too much because

from him and the next time he tries to raise $21 billion via whatever instrument that he's issuing, significantly less Bitcoin than maybe the last $21 billion. So, it'll be interesting to see if the minutes play out or his quick top of the head estimates of like billion Bitcoin, what's the price of Bitcoin worth.

Speaker 4 (40:33.932)
That buys the signal.

Speaker 4 (40:38.014)
does. It's an interesting question.

Speaker 4 (40:48.055)
I don't know.

actually plays out but at the moment I'm personally not the size and map holds and again earlier strategy is not it's of the it's some it's almost similar like Bitcoin but it's not like

concerned with the size, magnitude of that micro strategy. Like I think it kind of relates to what it's like. Micro-sha- Michael Saylor, it owners the equity. Coinbase, it's like Coinbase has a lot of- Brian Armstrong holds millions of Bitcoin. It's individual that hold up, use that

It's entities at least with Coinbase, could withdraw.

With MicroStrategy at the moment, they can't withdraw and buy real Bitcoin.

Speaker 4 (41:26.382)
But they could sell it's it's like it's it's almost like

another exchange to some extent, a leverage Bitcoin exchange at this point. so more people are getting exposure without kind of consciously thinking about it as MicroStrategy and other entities get added into index funds. I think now, billions of people in the future will have Bitcoin exposure, whether they're paying attention to finance and markets or not.

I think it's good that

Speaker 4 (41:45.816)
You know

Speaker 1 (41:56.076)
Yeah, and I like that point that you're making about like more and more people getting exposure. And I feel like most likely where the exposure will come from increasingly will be through these index funds and operating companies that are now being entered into it. I guess then my next question is one of the most I guess like the best bear cases I've heard on Bitcoin in this idea is this idea that as Bitcoin becomes more and more cemented as a store of value.

it becomes less incentivized to be able to like actually move your Bitcoin. Like as Michael Siller said, I'll never sell my Bitcoin. I'll just hold on to it, right? So maybe then my question becomes, at what point does it become hard to incentivize miners and other people to secure the Bitcoin network if like transaction fees aren't going to be able to make up for whatever the block size rewards once those kind of start being eliminated will fall short on.

Yeah, this is a really good question. I feel like the is not decided how exactly this will. In 20, I think it was 2022. So three years ago, I.

Bitcoin community.

play out over the long run.

Speaker 2 (43:02.208)
a report with Pierre Richard on topic. It's like an interesting, very unique perspective on it because I think a lot of

on this and he has a lot of Bitcoiners now try to say that,

transaction fees will be very high because the block space is fixed. You'll eventually want to settle your Bitcoin on chain, whether that's between individuals or banks or institutions and like there will be fees will be deep and that'll be good enough.

fixed.

Speaker 4 (43:23.158)
or instance and bang.

be enough transactions to recently high. And I think that it's like, think that

That's probably exactly what's honestly probably what will like at some point there will be more demand for block space There is block space I happen right like

Play out.

Speaker 4 (43:42.772)
then and that's kind you know i think it took like the the mempool

clear somewhat within the last like six months or so it took like a very long like years and pull to finally clear once again and I think like you know it fees are very low right now I don't know if the mempool is cleared recently but there's transactions sitting in the mempool that are waiting to get mined it's been the case for for quite some time seeing analogy though where

years for the

It had still. Like I think.

most partly.

Speaker 4 (44:13.39)
Peter had an interesting... He thinks, and I agree with this, where he thinks it's... The miners don't necessarily like... Like today, it's more so the future...

secure bitcoin.

Speaker 2 (44:28.398)
transaction fees can secure Bitcoin.

What I mean by that is like theoretically Bitcoin could work with

or just one miner operating on laptop somewhere. In fact, like that's how Bitcoin started, right? Like there was one miner operating a laptop.

And if no one is sens...

spins, then that's fine.

Speaker 2 (44:50.902)
That actually works perfectly. Then the problem, one starts censoring transactions or what if someone starts double spending? Well, in the censoring transaction scenario, you're trying to broadcast your transaction. The one guy on his laptop is censoring you. He's the one minor and could, know, 51 % attack, whatever you want to call it.

is okay well what if some

Speaker 4 (45:02.19)
What would happen is, okay, you're.

Speaker 4 (45:13.678)
All of sudden now you can't hear. Okay, well, what do you do? You create.

transaction mind.

market incentive you increase your transaction fee other miners or other computers on

for

the network to actually

Speaker 2 (45:27.21)
start mining, overwhelm the attacker, include your transaction in a block.

and then.

And so that's kind of his moment. agree with that as you don't necessarily like have this like wall.

perspective and I perspective.

I probably need to like

Speaker 2 (45:42.862)
of protection beforehand, you can pay for the wall protection whenever you need it by transaction fee. There's no point of overspending today to build this wall protection if you don't even necessarily need it. Right now it's like...

the

Speaker 4 (45:50.862)
Speaker 4 (45:54.711)
If you'd,

And so that's kind of my perspective. Fees could be really low and I

think that Bitcoin would still be working fine. get censored, you have to increase your transaction fee and try to encourage a bunch of honest miners to work in

It's if you

Speaker 4 (46:12.504)
come on the network or convince the malicious to say, right, you know what? I don't, I I was censoring you, but you know.

You've offered me a pretty good fee to include your transaction. I'll just include this so can honestly and get more Bitcoin. kind how I'm thinking about it at the moment.

So that's kind of.

That makes a lot of sense. Well, I feel like these questions are always the classic, if we don't have enough transaction fees, then Bitcoin's dead because no one's using it. And then when the transaction fees are super high, well, Bitcoin is dead because it's unusable because it's too expensive to use. we never seem to have an equilibrium ever. It always seems to be a cycle. guess just to wrap up here, Joe, I was curious for you, like what

What advice would you give to your younger self or what information would you tell your younger self that would have helped you go down the rabbit hole of Bitcoin more easily that would have maybe helped you from going astray as we all do in the early days? I was just curious.

Speaker 4 (47:21.122)
Yeah, good question. mean, general advice, I'd give my younger more Bitcoin. Yeah, I mean, I guess like going a strip.

is to buy.

or thinking about Bitcoin and the crypto space in general.

like one thing that I've noticed over my time and as well as

Bitcoin space as I'm sure you guys have as well. It's like when I got into 2017 there weren't really many good resources to learn about Bitcoin, right? Like Standard didn't exist until I think like 2018-2019. Like Saifedean emailed me a PDF copy of his book I believe so I could read it. I a cornerstone book of Bitcoin from like a monetary history perspective I would say at this point.

Speaker 4 (47:46.548)
That

Speaker 4 (47:50.69)
The Bitcoin.

Speaker 4 (47:59.532)
And so like that, you know, that's kind of the first of.

Speaker 4 (48:07.542)
And you know, that didn't even.

even exist in 2017 despite Bitcoin going almost $20,000 at the time.

And so, I got.

I learned from people like Trace Mare, Pierre Richard, Michael Goldstein, I people to...

And so I would encourage you to on point maximalists that I

Speaker 2 (48:25.73)
Bitcoin have like the signal that that understand that the entire purpose of money is to solve the problem of barter that To do you have to converge on one form of money Otherwise if you're barring with every good you're trying to use everything as money. And so the purpose of money is to find one common good The one common good historically has had the best monetary properties. So scarce portable durable divisible Well, once you guys all right Bitcoin

And then.

Speaker 4 (48:50.826)
and when you see that you recognize

has the best properties, world's actively converging on it. on your craft on like how can you stack more Bitcoin. Maybe that's working in Bitcoin, maybe that's working in traditional finance, maybe that's working in engineering, maybe that's doing some sort of other thing that you're passionate about that has nothing to do with Bitcoin. And I think that's fine and perhaps you can actually make more money, something outside of Bitcoin, because not everyone can work in Bitcoin.

on that and then honestly like just go focus.

Speaker 4 (49:12.622)
That's totally fine.

doing.

Speaker 4 (49:21.03)
And we don't need everyone to work.

We need people building things also in the

real world. So yeah, that would be my advice. Go focus on and then

I guess like just on your craft build things save as much Bitcoin as you can

I think that's really great advice. Where can people find you, Joe? Where can they follow you?

Speaker 4 (49:41.986)
Yeah, absolutely. They can find me on YouTube. Just search.

on twitter, jobernetbitcoin and you'll probably find me. Watch out for the busters on twitter for sure.

impossible impossible

That's always a problem. Well, thank you so much for joining us, Joe. And for those listening, remember to subscribe and go give Joe a follow. I've known him for several years. He keeps putting out amazing content. So keep it up, Joe, and see you all next time.

Thanks guys.