{ "episodeId": "SLP654", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "vijay_boyapati": { "name": "Vijay Boyapati", "role": "guest", "tag": "VIJAY" } }, "segments": [ { "speaker": "stephan", "time": "00:12", "start": 12.15, "text": "Hi everyone, and welcome back to Stephan Livera podcast, brought to you by Bold. For American listeners who want to buy and sell Bitcoin, go to getbold.io. Now, rejoining me on the show is one of my long-time friends in the Bitcoin world, and literally, I believe you were the second guest on the show after Safteen, is Vijay Boyapati, the author of the bullish case For Bitcoin, welcome back Vijay." }, { "speaker": "vijay_boyapati", "time": "00:32", "start": 31.78, "text": "Hey Stefan, it's great to see you. Yes, I, I prized my second place slot after Safir's. He's, he's such a great person to go behind that, feel very honored and glad to be with you again." }, { "speaker": "stephan", "time": "00:44", "start": 43.85, "text": "Yeah, great to chat, and of course, listeners always love these episodes, hearing your, your insights and, I think you have a really great perspective of kind of staying balanced even in the bull run and the bear cycle, 'cause people sometimes, I, I've noticed that's a tendency, people, you know, the natural kind of human tendency is to kind of overhype in the bull and then feel overly bad during the bear, and if you could just, if you can just consistently stay, you know? You know, decently bullish on Bitcoin all the way through, that seems to work. So look, let's, you know, there's a lot of things going on. I would say, you know, here we are, it's, as we record, it's the thirtieth of April, twenty twenty-five. Bitcoin, you know, we sort of recently hit this top of, like, a hundred and nine K or so, then we sort of hit, hit a bottom around seventy-five K or so, and some of that was maybe the tariff stuff and just kind of economic uncertainty" }, { "speaker": "stephan", "time": "01:40", "start": 100.42, "text": "Sense of where things are right now, where are we in the cycle per se? I," }, { "speaker": "vijay_boyapati", "time": "01:45", "start": 105.47, "text": "I feel like we, in this particular cycle, I, I do, still do feel like we're early. We're not at the start, but we're still early. I don't think we've seen that kind of FOMO panic to buy moment. I think one thing that's so important, I always try to remind myself is, we're students of monetary theory and history, and we should be trying to understand what's happening Not so much trying to predict what's going to happen, a-and Larry Summers, you know, don't exactly subscribe to his school of economics, but he had a good quote, r-in a recent i-interview where he said you know, geologists and seismologists know more about earthquakes than anyone, but that doesn't mean they necessarily can predict when the next earthquake is gonna happen, you know, right, right down to the minute. And I think that's very true for economics. we wanna understand the causality in economics, what X causes Y. But we can't always know what the magnitude of the causality is. It's like, I'll give another example, it's like if you, you, you light a match in a, in, in a forest, you know there's gonna be a fire, but you don't how big the fire is gonna be. and predicting how big it's gonna be is based on a whole bunch of different variables like the wind and, the, the dryness and, you know, there, there are other factors that are involved, and I think that's true here with making predictions Where Bitcoin's price is gonna be. I know people love models like Stock to Flow and, and, and the recent one, from Giovanni, but I really caution people that we don't know because the future is inherently uncertain. We seem to, you know, just as students, we seem to be go- going through cycles, and the cycles look similar, but that doesn't mean they have to be the same, right? and I feel like if we look at this cycle, it already feels quite- Different to past cycles. We, we haven't kind of gone through this, you know, fairly smooth parabolic rise. It's been more like, a big, a big rally, then a long pause where the market just goes sideways for like eight months. This happened in twenty twenty-four when, you know, anticipating the, the launch of the ETFs, the markets rallied a lot. They rallied from like sixteen thousand up to thirty-five 40,000 and then didn't do anything for eight months, just kind of chopped sideways for eight months. That's pretty abnormal, you know, compared to past cycles, because in past cycles what would happen is the market would rally, then there'd be a crash, but then it'd come back very quickly And, and if you, you drew a line of best fit, it was essentially a parabola, a very neat parabola with some volatility around it. That doesn't seem to be happening right now. so we had this eight month consolidation, which actually, if you were in the consolidation, I, I tweeted about this, it actually felt brutal. Like the, the peak to trough of that consolidation period was like a thirty percent drawdown, from, I think it was seventy-two K- down to like fifty-eight K or so. And so if you were living through that, you'd be like, \"Oh man, the bull market's dead. This is, this is terrible. You know, we're not going anywhere. Doesn't feel like a previous bull market.\" Then Trump gets elected, and in the anticipation of his election, the market rallies all the way through inauguration and does a huge jump from like seventy thousand up to like, I think, about a hundred and nine thousand. And then everyone started feeling, and I, I confess, I felt this too, \"We're gonna hit 150K in like a few weeks. Like, this is, you know, when the bull market really starts.\" And then what happened? We g-went through another chop, and we're going through the chop right now, and it, it felt brutal, like people like, \"Oh my goodness, we got down to, 77K,\" but actually, that's almost exactly what the drawdown in the previous chop was. And if, if you look back at that chop, it's just kind of a sideways movement. If you just kind of zoom out, it's like it wasn't that big of, big of a deal. It was just going up and down in a kind of range, and we're doing the same thing now. I feel like we're in a really good spot in that range. I think Bitcoin has, tested the lows and, you know, when there was extremely negative sentiment, almost like COVID level distress in the market. Bitcoin didn't drop that far, I think the tr- the peak to trough drawdown was about thirty percent, which isn't that much historically compared to other bull market drawdowns, so I, I feel good, I feel like we've tested like extreme pessimism in the market, and Bit- Bitcoin weathered that, and it also seems to be decoupling or decoupling from the stock market now and, and coupling with gold, which I think is a good thing. I think gold is in a, a multi-year bull market and that I think is gonna continue, because gold is part of a much bigger macro story in terms of the world monetary order, and I think, seeing Bitcoin start to correlate to gold is very encouraging." }, { "speaker": "stephan", "time": "07:14", "start": 434.35, "text": "Yeah, interesting. And as you say, gold has obviously had a big run recently, but I will point out, on a 10-year basis, gold is something like 11% per year, you know? So it's even, even that, even with this huge run up recently, even that isn't- We could arguably, we could make the argument that it wasn't enough to keep up with the monetary debasement, right? Because if you look at, as an example, Matthew McShin's work over at Paul Krugman's Economics, where he does his quarterly, base money update, and if you look at base money, right, so physical cash and coins plus, central bank reserves, that has been expanding at something like twelve percent per year, if you average back to nineteen sixty-nine. So when you really stop and zoom out, it's like gold is only, But it's not actually beating that, whereas Bitcoin is actually beating that on a longer term basis. Of course, Bitcoin only has fifteen, sixteen years, but go on. Yeah. That's a" }, { "speaker": "vijay_boyapati", "time": "08:06", "start": 486.17, "text": "good point. I, I will push back on it a little bit. I think Bitcoin outcompeting, the growth in the monetary base is, is part-- There are two factors there. One is the growth in the monetary base, as you say, but the other is that Bitcoin is growing in adoption. I think gold has already, you know, al-already has macro scale, and what I would Gold is, it sort of, it, it exhibits the same kind of, hype cycles that Bitcoin does, it's just over a much longer period, then mu-much more elongated. And gold has this same phenomenon that much of the gains happen at the end of the cycle. So even though gold looks like it's, you know, just keeping pace or maybe slightly beating the, the growth in the monetary base, when the gold bull market really picks up, you could easily expect that it doubles or triples in a short amount of time, right? That's what- Happened in the '70s with gold, and I think it's important to think about that and factor that in in terms of the, the returns for gold rather than kind of the early part of the bull market, if that, if that makes sense." }, { "speaker": "stephan", "time": "09:10", "start": 550.11, "text": "I see. So you see it like there's a bit more to go in gold, whereas o-others people are maybe- Oh, I definitely-" }, { "speaker": "vijay_boyapati", "time": "09:15", "start": 554.96, "text": "Yeah, I definitely think there's a lot more to go in gold. I think this is a secular bull market. I think, and" }, { "speaker": "vijay_boyapati", "time": "09:25", "start": 565.16, "text": "bull markets in gold can last a decade. You, two thousands, from like nineteen ninety nine up to about two thousand eleven, that was a decade of just gold consistently going up. I, I, I would say the bull market in gold is probably three years old, so I, I could see this going for a lot longer, and I think it ties into this much bigger geopolitical story, which is the breakdown in the Bretton Woods monetary order. and the Bretton Woods agreement was, crafted in the '40s Post World War Two, to, to create a new monetary system which made the US the global monetary hegemon, like the US had the reserve currency and, and that's breaking down for a couple of reasons. One is that the, the US has become more nationalistic and is, is saying, \"Hey, we don't like what this has done. Having, having the reserve currency has kind of created this incentive for us to spend money freely and inflate our currency, but our manufacturing base is fleeing out of the country and going to places like China. And there's some, you know, strategic risks of having that happen, whether you believe in free markets or not. It is kind of- Kinda scary as the United States if all of your manufacturing power is in China and you can't build any weapons yourself, right? If, if you get into a conflict with China, what do you do if, if they're the ones building the weapons for you? The other factor is other nations are looking at, the US behavior managing this monetary standard and saying, \"Hey, wait a second, this is kinda scary. Like, the US can-- they, they can freeze our reserves that we're holding in US dollars or treasuries at any moment, as the US did with the Russian reserves. That's a really scary thing as a sovereign nation to think about, right? You have your monetary assets that you might wanna deploy in-- In an extreme situation, and then suddenly the US decides it doesn't like you and, and it freezes your assets. I think that i-is a, a part of why nations are starting to think, \"Hey, maybe we need reserves in something else.\" And I think that they're, they're turning to the traditional, historical reserve that countries always kept, which is gold. You keep your savings in gold, and I think you're seeing central banks around the world accumulate gold. They haven't kind of gotten to to the idea yet that they should be accumulating Bitcoin. Some, you know, very few nations have. That'll happen in time, but for now, I think the story is, is really gold focused." }, { "speaker": "stephan", "time": "12:04", "start": 723.62, "text": "Interesting. And you mentioned your comments around gold, as you said, it seems like you could arguably say maybe it's a central bank led run in gold, at least for now. it's maybe not as strong of a retail focus on gold, at least for now, maybe, who knows? but I'm, I guess I'm curious as well, if you were to, let's Let's zoom out. Let's say in ten years' time, you know, could you see gold, let's say, hit a double in that time? but, but do you think it's gonna beat fiat debase in that time, or do you think it's gonna sort of keep pace with?" }, { "speaker": "vijay_boyapati", "time": "12:35", "start": 755.04, "text": "I, I think what happens is in the last stage of a bull market, gold will outperform the debasement. It will, it will just kind of go parabolic. But You know, gold is already huge, so parabolic for gold might be a two X or a three X or a four X. Gold isn't gonna do what Bitcoin would do in that scenario. Like, Bitcoin can do a ten X from here, easy, that's totally possible. I think it's very, very unlikely that gold could do a ten X, because it's already a twenty trillion dollar asset, a ten, a ten X gets it to two hundred trillion, and then I guess the only scenario in which gold could do something like that is you have a global catastrophe, like global trade shuts down completely, central banks are just hoarding gold, everyone is trying to hoard gold. it would be a bad scenario if gold did a 10x, it's not something we would all be celebrating. I mean, maybe if you held gold, you'd be celebrating, but you'd kind of be a king over ashes. it wouldn't be, it wouldn't be a fun world to see gold 10x." }, { "speaker": "stephan", "time": "13:42", "start": 822.46, "text": "Yeah. Whereas a Bitcoin case is a lot more optimistic. So maybe we could make that argument that gold is kind of like a pessimistic asset to hold in a sense, in a sense, and Bitcoin is more like an optimistic asset that actually it represents better cooperation and better, you know, development and growth prospects. So therefore, we should, we should feel good about, the rise in Bitcoin." }, { "speaker": "vijay_boyapati", "time": "14:02", "start": 842.45, "text": "I think Bitcoin up until the-- to this point is really mostly an adoption story. It's more and more people adopting Bitcoin. I think Bitcoin isn't in- Inflation hedge isn't really the right story to think about. It might be a narrative, it might be something that, you know, the media and commentators talk about where they say, \"Oh, inflation spikes, so people are interested in Bitcoin.\" But I don't think that's the real story. The story is just like people saying, \"I want some of my savings in Bitcoin, I just want to.\" Then, then, it, it, regardless of other macroeconomic factors, like just that adoption story alone makes sense because the global adoption or penetration of Bitcoin is still single digit per- Percentage, right? There's still a lot of room to run. Gold, I, I, I don't know. I think gold is kind of where it's gonna get to in terms of adoption, but its movements are much more macro based. It's, it's, it's, central banks and hedge funds trying to, to anticipate central banks making the moves. It's not like there's a big adoption story. It's not like kids today coming out of school like, \"Oh, man, I wanna adopt gold. I wanna, I wanna accumulate some gold and put it in a lockbox in a bank.\" That's not really a thing, whereas I, I do think that is a thing for Bitcoin." }, { "speaker": "stephan", "time": "15:19", "start": 918.58, "text": "For s- for certain. And also there's that dynamic of even, let's say, rich boomers, when they, let's say, pass on and pass that wealth down, it's probably very likely that the millennials and the, Gen Z who they pass it down to, they might sell that gold and say, \"I'd rather hold Bitcoin instead.\"" }, { "speaker": "vijay_boyapati", "time": "15:38", "start": 937.75, "text": "Yeah, that's a funny story 'cause, my, my dad, you know, he, he thinks like a boomer and he's, you know, obviously from India, grew up in India and has that Goldbug gene in him and for my, for, for kids, for their wedding, he put aside some gold coins for them. So you'd imagine, you know You know, fifteen, twenty, twenty-five years from now, when, when they get married, it's their wedding, and I give them these gold coins, they're gonna be like, \"Dad, what the hell is this? \" and maybe gold's still valuable then, but I agree with you, the, the first instinct will be like, \"I'm gonna sell this shit coin, and I'm gonna get myself some more Bitcoin, or I'm gonna pay for the wedding. \" I mean, that was the idea that the, he was giving them gold so" }, { "speaker": "stephan", "time": "16:29", "start": 988.54, "text": "that This show brought to you by CoinKite dot com, the creators of the best Bitcoin hardware security devices, such as the Coldcard Mark IV and the new Coldcard Q. Now, we use Bitcoin hardware security devices to keep our keys offline, our private keys offline. Now, the way these work is you can do that setup, write down your twelve or twenty-four words on the, the seed word cards, and keep that secure. Now, you can use this device to interact with the Bitcoin network using software such as Sparrow Wallet. Wallet, Electrum, or Bextra Desktop or Nunchuk as a few examples. Now, you have a range of security features that you can use with these devices, such as passphrase, or you can use seed x or, or my favorite is multi-signature. Now, if you're starting in a basic way, just start with the device and the USB-C cable, plug it directly to the computer and use it that way, and then later improve your setup. But I believe these devices are great at helping secure your coins, especially as you start to migrate. Up into multi-signature security. But don't be disheartened or don't be, scared away. They are accessible, and I think you actually do learn about Bitcoin in the process. So to get yours, go to coinkite dot com, use code levera to get a discount on your cold card. This episode brought to you by Galloy. They are building banking software for the Bitcoin age. So if you are with a bank, a fintech, or a startup looking to offer some kind of Bitcoin product, whether that is a Bitcoin collateralized loan, deposit accounts, or payments, Galois can help you. Their latest product is called Lana. It is a loans management platform, and you can use this to come to market quickly and offer a loans, Bitcoin collateralized lending product for your customers. Now, Galois have a lot of experience in the space. They started with Blink Wallet in twenty twenty, and they've since grown this to become a community favorite over time, and so they have a lot of experience making things work in a secure, reliable, and scalable way. So if you need assistance coming to market quickly with a Bitcoin-based Banking products such as lending or deposits or payments, talk to the team at Galloy, you can email them, the email is biz at galloy dot io, or go to the website galloy dot io. And now, back to the show. Yeah. And I guess one other zooming out sort of macro thing, I'm curious to get your view on this, right? As we speak today, Bitcoin is a little bit under a two trillion asset, call it a two trillion asset, gold is something around twenty trillion-ish, right? And- let's say Jesse Myers, aka Crisis, has this chart that's kind of, you know, very popular, or Michael Saylor is showing that as well, showing this kind of nine hundred trillion. And in that sense, you could say, \"Look, Bitcoin is two trillion in a world of financial assets nine hundred trillion.\" Do you agree with that kind of framing that, you know, Bitcoin is gonna sort of suck some of, a little bit out of each of those other things, whether it's property or stocks or bonds or gold, And do-- I guess the other question" }, { "speaker": "stephan", "time": "19:28", "start": 1167.9, "text": "Estimate? I guess I've seen different, different numbers there." }, { "speaker": "vijay_boyapati", "time": "19:31", "start": 1170.86, "text": "Yeah, I think that's a much longer term story where the Bitcoin becomes a reserve, reserve asset of the world, and if it does, it will start sucking monetary premium out of various things like art and real estate and stocks and, you know, probably most significantly government bonds. They'll lose a lot of their, monetary premium. but I am really laser focused on what I think is the most obvious bull case for Bitcoin, and I have been, you know, since almost the beginning, which is, this is better than gold. It is obviously better than gold. it has all the attributes that make gold great as a store of value, but it has ones that significantly improve on gold by orders of magnitude, so transportability, assayability Like verifiability, the bi- you know, that you actually know you have real Bitcoin instead of with gold, you know, there, there are a lot of tungsten coins floating out there and tungsten bars, there's a lot of fraud in the, the gold market. That case, that 10x, I'm satisfied in my mind of just thinking about that. I think the case from, achieving and then surpassing gold's market cap to becoming a reserve currency That is a long term story, and I do think it's still fraught with a little bit of uncertainty. We don't know what path that will be. so I, I'm happy to focus on the ten x, which I think is something that is achievable in the relatively short term. I, I see that as a five to ten year story, Bitcoin catching up to gold, and, and after that, I think E-everything else is gravy. I think the world changes dramatically with Bitcoin as the same size as gold, that everyone on Earth has the ability to keep their savings in something that can't be debased, and they can, they, they can take their savings anywhere they want without anyone's permission, that already changes the world for the better. I'm very hopeful that Bitcoin becomes the reserve currency of the world as more and more people accept it and realize it's a permanent feature of the world, but I, I just, that path is less- Let's clear in my mind how we, we get there, how we get to the, the reserve currency step, because nation states have to give up one of their most important powers for us to get there, right? They have to give up control of monetary policy, and it's almost like saying nation states giving up control of their militaries. That's, that's a tough one. Most nations aren't ever gonna do that. So, but maybe the people in these nations demand it. So, I, I just don't know how it happens, and I, and I wanna be honest about that. Whereas when someone says, you know, What do you feel confident about? I feel very confident that Bitcoin is gonna surpass gold's market cap, and, and I'm happy to say to anyone, with my full conviction, that that makes Bitcoin one of the best asymmetric bets on earth. A ten X on an asset this big which has- been massively de-risked. It's been, it's far less risky than it's ever been. That is the bullish case for Bitcoin. Everything else is gravy." }, { "speaker": "stephan", "time": "22:46", "start": 1365.64, "text": "Yeah, I see. And, I mean, even if we're throwing around these numbers, right? Let's say in- Maybe ten years time Bitcoin hits a ten X, so call it a million-ish. At that point, though, gold might have already hit a two X, so even then, it might not have actually done, completed the flipping, the, it might not have flipped gold yet. It's like Zeno's" }, { "speaker": "vijay_boyapati", "time": "23:04", "start": 1383.87, "text": "paradox, every time we catch up, it moves a little bit. We're just constantly trying to catch up." }, { "speaker": "stephan", "time": "23:09", "start": 1388.88, "text": "But maybe, let's say at that, after that ten, in the next ten years, maybe at that time, that's when the, you know, Bitcoin flips gold, and that's" }, { "speaker": "stephan", "time": "23:20", "start": 1400.08, "text": "We don't know. That's, I mean, it's hard to predict, you know, fifteen, twenty years out, we don't know. and so I'm also curious to get your thoughts as we are looking at, you know, what's going on in the market, you know, there have been different stories and different narratives that played out, so I guess if I zoom out and just kind of very high level, you know, twenty thirteen, there was kind of this narrative of, \"Oh, Cyprus bailouts,\" right? And that was kind of a big, you know Necessarily true that, okay, all the cypriots were going to Bitcoin, that was kind of a narrative, and I think maybe, you know, there's-- So that was 2013, kind of, if I had to very oversimplify. and then 2017 was kind of, you know, this kind of shitcoins and ICOs and, oh, CME futures, right? That was a big, big narrative that year. Oh, CME futures is coming. Well, the" }, { "speaker": "vijay_boyapati", "time": "24:10", "start": 1450.14, "text": "institutions are here," }, { "speaker": "stephan", "time": "24:12", "start": 1452.42, "text": "that was another one. Right? In Why NFTs and, you know, Tesla adopting, and of course, MicroStrategy adopting, and again, people were saying institutions are here, but maybe they weren't quite. And then this cycle, we had, you know, the Bitcoin, the US Bitcoin ETF in twenty twenty-four, and now the other big one that I think is, is worth discussing and understanding is this phenomenon of Bitcoin treasury companies and- Bitcoin strategy companies or, Bitcoin strategy op- treasury operations companies, or some people call them LBEs, Leverage Bitcoin Equities. So are you seeing that? Is, is that the big new thing? Is that the thing that we have to try to understand? What do you-- Do you have any reactions on that?" }, { "speaker": "vijay_boyapati", "time": "25:02", "start": 1501.53, "text": "Yeah, I do think it is, it is a big source of demand at the margin. I think the ETFs were also a big increase in demand at the margin, and I think Bitcoin's price has always been related to- Sort of the, the, the reliability and size of the liquidity channels to Bitcoin. So you go back to two thousand thirteen, you know, following these narratives that you, you've given. Two thousand thirteen, what was the liquidity channel to Bitcoin? It was Mount Gox." }, { "speaker": "stephan", "time": "25:30", "start": 1530.29, "text": "Mount Gox and like BitInstant and some peer-to-peer stuff, yeah." }, { "speaker": "vijay_boyapati", "time": "25:35", "start": 1534.51, "text": "Yeah, incredibly unreliable and difficult to use, and if you're in the US, you'd have to wire money to Japan, and it was, it was really genuinely difficult to get Bitcoin. Then two thousand seventeen And you have Coinbase and it becomes, you know, relatively easier, to get Bitcoin. Coinbase is more reliable than, Mt. Gox, but it, it would go down whenever there was like peak volume, so it wasn't perfectly reliable. By twenty twenty-one, I think you had some financialization and what, what you had was a lot of lending platforms and, options platforms, things like DeraBit, and so you did have more liquidity. And then this cycle, the ETFs, I re- I really do believe are a game changer because it opens up this massive pool of retail capital. It, that doesn't mean that all of that retail capital is gonna go into Bitcoin at once. It, but if you look at the example of gold, when the ETFs for gold were launched in, two thousand and four. Gold went on a, a very significant run for, I think four years. Every year it was up like twenty to twenty-five percent, and a lot of that was retail flows coming through the ETF. And I think the big thing that happens with the ETF is that now that we've got this channel from the pool of savings, of, of retail clients in brokerage accounts and things like that When the FOMO moment happens, the amount of liquidity that can flow into Bitcoin is just ginormous. It's much, much bigger than it's ever been, and I think that is what hasn't been fully appreciated. Bitcoin's much bigger, so people think the law of large numbers means it can't go up quite as much, but, but countervailing, the countervailing force is that the liquidity piped to Bitcoin is larger and more reliable than, than it's ever been. So that's one factor. The other factor is that you have, like you say, these companies, these treasury, Bitcoin treasury companies, accumulating steadily without, selling it all. And MicroStrategy or strategy is, is the classic example of that. What I find interesting is that it's taken this long for anyone, for the light bulb to go off and be like, \"Hey, why don't we do that? \" What, if MicroStrategy was a nothing company, no one knew what MicroStrategy was, no one knew who Michael Saylor was. Now he's like one of the most famous CEOs on earth, and his company is worth, you know, tens, may, I think it's a, maybe a hundred billion now. I mean, it, it's much, much bigger because he saw that there was an asset that was important, and he could-- what, what he really understood is that there's a premium to stocks, a monetary premium to stocks, by being listed on public exchanges. Wh-why is there a premium? It's because you have all of this passive money flowing Flowing into the stock market regardless of anything, like people putting money into retirement accounts, 401ks, they're not looking at the, the, the individual price of the stock, they're just, money's just flowing into the equity market, so it has this premium And Michael Saylor realized, hey, why don't I use that premium, this kind of irrational monetary premium where people throw money into stocks regardless, and, and take that premium and put it into Bitcoin, which is a really hard asset where the supply is limited? And that was his first insight. Actually, going before that, his first insight was, \"Hey, I've got this pile of cash that my company is generating, just put that into Bitcoin.\" Then he was like, \"Hey, I can sell equity, I can sell micro strategy shares, acquire Bitcoin, and then people like that, and my stock price goes up, and I can do it again, and I can keep doing it, and I keep, keep accumulating Bitcoin.\" Then the biggest insight he had was, \"Wait a second, there's this huge premium in the bond market, which is even more Perhaps the bond market by creating convertible debt, which allows people who are in the bond market to get exposure to Bitcoin, they can't direct-- bond funds can't directly buy Bitcoin. They can't go into the market and buy Bitcoin 'cause they have mandates, legal mandates that say they can only invest in bonds. So Mike, Michael Saylor gets around this and says, \"Hey, I'm gonna create a bond. You can buy this bond.\" But the bond is really just a wrapper around MicroStrategy, and MicroStrategy is just a wrapper around Bitcoin. So he- He's created this product which allows, the bond market, the premium in the bond market to flow into Bitcoin. So now we have all of these gigantic liquidity channels from retail from the equity market The equity market premium and now the bond market, they can all flow into Bitcoin, and what I think this means is that if and when we get to a FOMO moment, it will be crazy. It, we, we could do something similar to two thousand and seventeen, even at this scale, where we could see potentially a, a ten x in Bitcoin, because people just get insane FOMO, So yeah, I, I, the, my only surprise really on this whole thing is why it took so long, why, why so many companies, didn't look at, MicroStrategy and say we should do that, and it seems like that's starting to happen now. I've, I've heard of all sorts of companies popping up. There's the one over in Japan, there's GameStop, I've heard of one in Canada that's starting soon, which is just a, a play. There's Twenty One that's starting, the Cantor Fitzgerald Teth" }, { "speaker": "vijay_boyapati", "time": "31:12", "start": 1871.82, "text": "One, this is like the game theory part which gets really exciting. Everyone's like starting to play the same game, which is like, let's see who can get Bitcoin the fastest, a-and then eventually retail's gonna wake up and, and think, holy shit, what is going on with Bitcoin? This is what happens with retail, it's dumb money, always wakes up at the last stage of the bull market and then FOMO's in, and you'll know it, and all the old-time Bitcoiners will know it, because they'll start getting messages out of the blue from You know, five years saying, \"Oh, tell me about Bitcoin, should I get, should I get some Bitcoin?\" But we're not there, we aren't there because if you look at, interest in Bitcoin just by search volume On Google, we're at like multi-year lows. People aren't really, this isn't like a big story right now, so I think this bull market, if we use it, to use a baseball analogy, I feel like we're in the third innings, out of nine, nine innings. We're not at the beginning, but we're nowhere, we're not even near the middle, let alone the end part, the FOMO part, so I, I am, I'm super excited about this bull market because we have this, infrastructure built out and the liquidity channels to Bitcoin have never been so large and so reliable, and have not been tested fully. Like, they, they've not been maxed out in the way that, you know, how in two thousand and seventeen when we were getting through, getting to the parabolic phase, Coinbase would keep going down. Like, the liquidity channel would keep breaking," }, { "speaker": "stephan", "time": "32:46", "start": 1965.93, "text": "right? People couldn't even sign up on the exchanges, right? Because there was just that much- much demand to sign up, and all the big exchanges couldn't even handle it at that time. Exactly," }, { "speaker": "vijay_boyapati", "time": "32:54", "start": 1974.2, "text": "and there were huge spreads between the exchanges because like it was such an inefficient market. The, the current liquidity channels haven't been tested because they're so big, it's like this super highway with like ten lanes, and right now only like two of the lanes are being used. So it would be really kind of exciting to see what happens, when, when it does fill up and, and you have the full flow of capital into Bitcoin and to see what that- That will do to price." }, { "speaker": "stephan", "time": "33:21", "start": 2001.39, "text": "For sure. I wanna add a couple of reactions to what you're saying. So on other companies playing copycat, I think maybe there are some reasons for that as well. It could be that some of those other companies either- were waiting to see other people do it and for it to be successful, not just for the first one, but for others. Maybe, and I think the other line maybe some of them had is like, \"Oh, that's only gonna work for Michael Saylor, it won't work for us.\" And now it's almost like people are starting to believe, right? You know, that, The Morpheus, Matrix, he's starting to believe, you know, like people are starting to believe, \"Oh, wait a minute, actually, yeah, it-- there are ways to do this" }, { "speaker": "stephan", "time": "34:05", "start": 2045.04, "text": "Maybe that's, that's something that is changing, and that's something, that we're starting to notice now. So it's not just MicroStrategy, it's, you know, Metaplanet in Japan, it's that, blockchain group in France, it's, I think there's one in the UK, there's one in Canada starting Maple Strategy, I think they're called. Yeah, Maple Strategy. And, you know, XXI or Twenty One in the US, and, you know, I'm sure there are many others that haven't, you know, Past cycles, shitcoins or old coins were seen as the levered play on Bitcoin, right? The idea was, you know, people would buy these shitcoins thinking, \"Oh, it's gonna pump harder than Bitcoin, but be-- be careful 'cause it's gonna also dump harder than Bitcoin.\" Maybe treasury companies are sort of gonna play that role a little bit now, because they will be like a levered play on Bitcoin, and so, you know, maybe there won't be as much excitement around shitcoins." }, { "speaker": "vijay_boyapati", "time": "34:59", "start": 2099.27, "text": "Yeah, I, I won't say, I won't guarantee it won't happen, because like this idea that people are just degenerate gamblers always comes up at the, the, the, the last stage of the bull market, and that, that may still happen, but I, I do think there are some really important factors which are gonna minimize it. One is that there's this The problem of unit bias in past cycles where people would look at the price of Bitcoin and say, \"Ah, it's like five thousand dollars, like I can't buy one Bitcoin, I'm not gonna buy one Bitcoin, but I can buy a lot of Litecoin or I can buy a lot of ETH or XRP because it's cheaper.\" Like completely irrational idea that the unit price is what determines whether you should buy it or not. Now we have ETFs, and the unit price of an ETF is much, much lower, so someone can look at iBit and say, \"Fifty bucks, I can That's easy 'cause I can get like, you know, ten units of iBit. The other thing is, the other thing that absorbs the, the kind of degenerate speculation is now we have a very, Deep, liquid, and reliable options market on Bitcoin that's available to everyone. Deribit's available to people outside of the US, but people in the US now have access to options on Bitcoin through their brokerage accounts on iBit. and options give you all the degeneracy that you could ever want. You know, you remember the hundred x per trading on BitMEX back, back, back in the day? You can do that now with options. You can do a hundred x buy, buy a way out of the money call and put a ton of money into it, and then if Bitcoin does do a, you know, five x, you'll just- You'll, that, that's incredible leverage. You'll become wealthier, you'll, you'll fund your posterity for like ten generations. So, so, you know, that's available for people who have that gambling instinct. They don't need to go outside of Bitcoin anymore. And I think those two factors actually, a pretty good explanation for why, the mother of all shit coins, Ethereum, has been doing so poorly. It's just run out of narratives, all the speculative- Demand can find a place in Bitcoin now. And Ethereum is at like, I think a seven or eight year low against Bitcoin, has just consistently been going down for like three years, or, or, or about three years, and it may actually get down to the ICO level, which is, you know, the lowest in, in its history. I think that's a great sign. It's a sign of the maturing of the market, a-and, and, and I think it's, it's healthy that speculation is around Bitcoin. The speculation actually is, with shitcoins, I would say it's, harmful to the overall ecosystem because those shitcoins aren't gonna exist, they're eventually gonna die, and so that's capital just like bouncing around in this casino. I will say, however, speculation around Bitcoin is valuable, even if it's degenerate gambling, because it increases the liquidity of Bitcoin. Even if people are playing these crazy options trades, that feeds into the liquidity, liquidity- Liquidity of Bitcoin and allows people to buy and sell large chunks of Bitcoin without moving the price as much. And that's basically what liquidity is. Can you do a block sale of, say, a hundred million dollars of Bitcoin and not shift the price very much? You can't do that with a shitcoin. You can't go to, you know, the number six or seven shitcoin and drop a hundred million dollars in and, and expect that the price will stay. The price is gonna tank like twenty or thirty percent. Whereas Bitcoin is deeply, deeply liquid, and that's part of what makes It attractive. You want, if you're a nation state, for instance, you wanna be able to get in and out of Bitcoin without moving the price too much. You don't want this thing called slippage. so I will, I would say that, this isn't, the degenerate gambling moving to Bitcoin isn't a bad thing. It, it is ironically a good thing. It, it is, it is creating liquidity around something that is valuable to humankind." }, { "speaker": "stephan", "time": "39:07", "start": 2347.49, "text": "Yeah. and yeah, as you said, I think, the speculation coming into more Bitcoin and Bitcoin-flavored, Bitcoin-denominated things is, is a good thing for Bitcoin growth, but of course, you know, You have to be wary and of course understand all the typical, you know, things we'll say, like not your keys, not your coins, and all of those aspects of it, but nevertheless, it-- zooming out and analyzing from an econ-- economist's perspective of, okay, this monetization process, it's part of the monetization process, it's just part of the process of Bitcoin growing up and becoming the money of the world someday that many of us believe that it will be, Now, any other, oh, I guess the other question people might have around the levered, you know, Bitcoin companies, this question of MNAV, right? MNAV is this kind of the, the multiple of the net asset value, I'm curious if you have any thoughts on that. Like, is that the kind of thing that you, you're expecting that with some of these companies it will sort of, again, e-expand in the bull cycle and then contract again in the bear markets, or is it sort of like, you know, we're just early, so right now things are, things are a bit more crazy with some of these numbers, or is it more like, no, actually it's justified in a sense because look how crazy the cape ratios are for normal stocks, right? P-E, P-E ratios" }, { "speaker": "vijay_boyapati", "time": "40:31", "start": 2430.53, "text": "I, I think mNav is, maybe this is controversial with people who are big fans of MicroStrategy, but I think mNav is basically rational. I think the idea that you have a premium to your underlying assets, I think that will compress over time with competition, like the more people who are doing exactly what MicroStrategy is doing, that's the, the, it's, they're competing on mNav. Like m-mNav is a great thing for, for MicroStrategy, the larger that is, the more Bitcoin they can accumulate, right? They just sell more equity. and when other people offer the same product with a lower mNAV, that's gonna at the margin drag demand away from MicroStrategy and people say, \"Oh, the mNAV on, this other Metaplanet is like only half of MicroStrategy, and they're doing exactly the same thing, I'm gonna put my money in, Metaplanet, \" and so over time that's gonna compress the mNAV. It reminds me a little bit of the premium, on GBTC. Do you remember? Right. So that's like" }, { "speaker": "stephan", "time": "41:30", "start": 2489.83, "text": "the new- New gBTC premium trade." }, { "speaker": "vijay_boyapati", "time": "41:32", "start": 2491.75, "text": "It, it's the new gBTC and gBTC, actually was incredibly harmful. It, it both accelerated the bull market, but was incredibly harmful, at the end of the bull market. I, I mean, it was associated with a lot of scams and like a lot of these lending platforms were, were, doing this arbitrage trade, or even three hours capital," }, { "speaker": "stephan", "time": "41:55", "start": 2514.85, "text": "wasn't that the reason they blew up? Three, three hours capital. Because it went from a premium to a, what's the, what's the re- That's the word, but it, it went, it went, it was a negative premium." }, { "speaker": "vijay_boyapati", "time": "42:03", "start": 2522.97, "text": "Yeah, yeah, yeah, exactly, yeah. and, and when that premium went negative, that was actually a really good sign to be cautious, and, and, and hey, maybe this is the end of the bull market because what people were doing with this arbitrage trade was that they were borrowing Bitcoin or buying Bitcoin. A lot of people were buying Bitcoin, and they were putting it into Grayscale, they were giving it to Grayscale And then it would get stuck at grayscale, there was no mechanism for it to get out. So they were creating spot demand, buy Bitcoin, put it into grayscale, and then because there was a premium six months later, they could sell, and that extra premium was like kinda the profit that they would get from the trade. But what this was doing was hoovering up Bitcoin all over the place on the spot market and putting it into grayscale where it was stuck. I think this MNAV thing is actually quite similar, where you have these Companies using the mNAV to hoover up Bitcoin, and at least in the case of MicroStrategy, they're not selling the Bitcoin, so it's like a one way absorption of Bitcoin, it doesn't come out and it's no longer traded, which obviously will move the price up over time. I think people should pay attention to the mNAV and like if MicroStrategy's mNAV goes negative, which it totally can go negative, it's totally possible for it to go negative, if that happens, then that's, that's a big- Big warning sign that the bull market is near the end, and, and that people should be a little bit more cautious. But I will say that when that happens, that's when you're probably gonna see the most retail FOMO, It, it's when you're gonna have, people piling into Bitcoin, which is, you know, that, that, there's two countervailing things that might also drive the MNAV of, of MicroStrategy up even more. So I, I, this mNav, the story over time is that it's gonna compress. There's gonna be more competition. It seems like the market has woken up to what Michael Saylor has done and said, \"Hey, this is like a, a good thing for us to do as well.\" And whenever you have competition, you have compression of margins, and, and here, the compression of margins is the equivalent of the compression of mNav." }, { "speaker": "stephan", "time": "44:22", "start": 2661.78, "text": "Interesting, yeah. And I guess there's different arguments here to be had because, again, coming back to that two trillion out of nine hundred trillion, you can say, \"Well, there's still this huge, huge, you know, bond market and equity market to, to tap.\" But I think I still agree with you overall that we're gonna, we're gonna see this dynamic of MNAV up and down in bull and bear cycles. and there's different arguments around this too. Like I've heard some people say that it might make sense for them to- I, I, I'm not a hundred percent sure on this, but I've heard or seen people talk about this idea that at, in a negative MNAV scenario, they might actually sell Bitcoin and, buy back company shares to be, To kind of bring it back to, to bring it back to one. Yeah, the danger there is if" }, { "speaker": "vijay_boyapati", "time": "45:07", "start": 2706.93, "text": "they start going the other direction, they try and arbitrage the other way, then they're gonna start hurting the price of Bitcoin, and, and that could create a negative feedback where MNAV, people panic and the MNAV goes down even lower and they start selling more Bitcoin, I think the right thing for Michael Saylor to do, which he seems to have been doing, is just never sell Bitcoin, continue to buy Bitcoin. If, if it ever happens that he sells Bitcoin, then- The market's confidence in his strategy being kind of accretive of Bitcoin goes away, so I think it's much better for him to accumulate Bitcoin and then if MNAV goes negative, to just kind of sit on his hands and wait it out and, and wait for the next bull cycle and do the same thing again, which is, it seems like that's exactly what he did. I, I don't believe He sold any Bitcoin between the twenty twenty-one cycle and, and this cycle? Yeah, I think there was" }, { "speaker": "stephan", "time": "45:59", "start": 2759.11, "text": "one, well, there was one moment where I think it was like a tax-loss harvesting thing, so they immediately sold and re-bought something, something like that. So like they did technically sell a small amount, but it was like a, I think it was like a one-off thing, and they-- I think they were net accumulating. 'Cause they might have done it together with something else. I, I can't remember the full detail though, so. Yeah. But, yeah, interesting to see, and, I guess we'll just kind of have to see what happens there on the MNav front, but I guess the question will be, can they sustainably achieve Bitcoin yield over the longer term, right? 'Cause that's the whole, the whole premise of this stuff is, can they achieve, can they get more Bitcoin per share over time? I guess that's, that's the premise," }, { "speaker": "vijay_boyapati", "time": "46:44", "start": 2804.0, "text": "As the competition from other people doing it, I, I am shocked that he has a- been able to accumulate such a large percentage of the total Bitcoin supply, Without the price moving much more, because what I thought was that as he accumulated more, the price would start getting ahead of him, and so he would never-- in percentage terms, he would never be able to get to two percent of the supply. I, I think he's above two percent of the supply now. a-at some point that will kick in and it will become progressively more difficult. And I think people who have been in Bitcoin long enough understand this idea where, you know, they, they, they're stacking Sats. And over many years, they realized that the vast majority of their Bitcoin came from their first few purchases, because the price gets ahead of them. Yeah, yeah, yeah, exactly. a-and that will happen for MicroStrategy too. It's just, it's a question of when that, that really kicks in." }, { "speaker": "stephan", "time": "47:44", "start": 2864.26, "text": "Right. Yeah, yeah, I think that's fair to say. And I guess there'll also be this dynamic of, because they're already so big, it'll just be harder to grow as a percent. So there, there may be some of these smaller ones, like a Metaplanet, as an example, has been able to achieve very, very high Bitcoin yield because they're starting so small, because they're coming off a smaller base. So that will also kind of be a competitive dynamic between the different- Bitcoin, treasury and Bitcoin strategy companies, I guess." }, { "speaker": "vijay_boyapati", "time": "48:11", "start": 2890.67, "text": "This will-- This idea, we're talking about it in terms of companies, but I, I want to point out that this idea will come to individuals as well, I, I have a friend working on a startup. I don't, I don't wanna, I don't wanna, do the big reveal here, but, suffice to say that he's working on a startup that brings Michael Stray, Michael Saylor's strategy to individuals and allows them to deploy the same strategy in, in accumulating Bitcoin. and I, I expect that that startup will launch in the next two to three months, and, and then people will be able to do the same thing Saylor's doing in their kind of indi-individual A lot of people are gonna start, trying to replicate what he has done." }, { "speaker": "stephan", "time": "48:56", "start": 2936.27, "text": "Interesting, yeah. Alright, well, yeah, I'll look forward to seeing, the announcements of exactly the mechanics of that, because I guess up until now, individuals simply can't access those markets, or at least not for that price, right? It's that, that these large public companies can tap these debt and equity markets at a far cheaper price than you and I as individuals can do, and I guess, historically, a lot of people have found cheap credit from, you know Redraw equity, this kind of, this kind of thing. You're" }, { "speaker": "vijay_boyapati", "time": "49:24", "start": 2964.25, "text": "anticipating the idea, you're anticipating the idea. So, Oh, well," }, { "speaker": "stephan", "time": "49:28", "start": 2967.83, "text": "okay, well, let's see what happens. But, yeah, I guess we're gonna see what happens there. and, I guess one other topic I know you were keen to chat about, we don't have a lot left of time, a lot of time left, but, AI, I know this is something you've been thinking about a lot. It's been a big phenomenon recently, AI or" }, { "speaker": "stephan", "time": "49:51", "start": 2990.81, "text": "L" }, { "speaker": "vijay_boyapati", "time": "49:52", "start": 2992.11, "text": "My background is in machine learning, actually. I, I did my, thesis, when, when I left college, it was, in using machine learning to classify text documents into like categories. Actually, very simplistic stuff compared to what, what, LLMs can do today. I was always very skeptical of this idea that we would part- see a computer pass the Turing test in my lifetime. very, very skeptical. I was skeptical that the developments in artificial intelligence really represented any kind of major breakthrough. They really felt like optimization problems, like image recognition or text classification or playing chess. They all felt like optimization problems. They didn't feel like they had any kind of intelligence, and I, I do think that we have seen some kind of, Qualitative shift in what has happened, and we have actually passed the Turing test, the, the, the test being that if there was a, you know, a veil between you and a person or a computer, and you couldn't tell whether you're speaking to a person or a computer, that's the Turing test, that's the test of intelligence, I think we can safely say that LLMs now would be able to pass that test with most people. I, I think, so I, I've gone from being a skeptic to being honestly astonished a-and thinking that AI might be the most tran- I, I know it's, it's so easy to get hyperbolic about this stuff and to sound kind of crazy, but I really do believe this could be the most transformative thing we've ever seen economically, and, and I, I kind of think of it as like an industrial revolution on steroids, like 10x more profound than the industrial re- Revolution. Already, you can see that knowledge work is getting disrupted, in a big way. I'll give you, give you an example. I got a tax opinion, from a, a legal accounting firm on, on this kind of very esoteric subject that most, tax attorneys don't know anything about, and it cost a lot of money. It cost ten, you know, Many, many thousands of dollars, and, and they gave me, a response, and it was pretty good and, and had a lot of citations and, explained the, the, the tax theory in a way that I understood. Then I was like, hey, why don't I ask Google Gemini? And I asked the same question, and it gave me exactly the same answer with more detail, more nuance, and more ability to kind of poke and prod and ask questions around it, and it was ten thousand times cheaper, ten thousand times cheaper. Like the potential to see hyper deflation, over the next few years is enormous, and it's gonna start with these kind of knowledge professions, like the, the legal profession, where people are gonna be like, \"Why am I gonna pay for a legal opinion when I can go to an LLM and get a, a legal opinion?\" that's just as good and cost twenty bucks. and I, I, I think that's gonna put a huge downward pressure on the legal profession. It's gonna happen with medicine, it's gonna happen with any kind of, information generation, any, any profession where they're like doing PR or anything like that. You don't need to hire some fancy PR firm, you can get a, you can get at least to generate like the content, you can get an LLM to do that. But eventually I think what we're gonna see is this is gonna move into the physical world as well. So even if you have like a blue collar job type job, like you're a carpenter or you're a plumber, even those professions are gonna get disrupted because I think robotics is only a few years behind, w-with the LLM and the, the sort of artificial intelligence of the digital realm is, the physical realm is gonna catch up very quickly, and part of it is because, There's gonna be a huge acceleration in, in development. We're talking now about firms which don't need software engineers to build stuff, the, the LLMs are writing the software. And I encourage anyone who has got any kind of interest in building a website or building an app, like, go and try one of these LLMs and try and build it. You don't need to be a software engi-engineer at all to get stuff built. That, what that will do to productivity is, it, it's hard to underestimate, i-it's, it's hard to overstate how, big a boost in productivity that's gonna be. So that's gonna accelerate the development of robotics as well. I think it's not inconceivable that within five years from now, I think, you know, mark it on your calendars, five years from now, we have Quite intelligent robots in our houses doing things, like, you know, go get me a coffee, or clean up, clean up, sweep the floor. so even these professions which involve like physical interactions, I think could be disrupted in the, in the, in the time horizon of approximately five years. That, that This is science fiction type stuff, but I don't think it's crazy. I, I think we're on the precipice of a, a, a huge, revolution in production. And, and what does it do when, when you have this? The biggest, factor or most expensive factor of production is human labor. It's always the most, expensive. What happens in a world where you need- You know, far less human labor because you have robots doing everything. Everything becomes, e-everything faces hyper deflation. What you see with technology now, with iPhones and computers, and things that constantly dropping in price, you should expect that to be across the spectrum, There might be some examples where, counterexamples where you have a lot of government regulation where it's hard to disrupt because for regulatory reasons. But everything else, I think you should think that we might start seeing hyper deflation in these, these other areas. So I think AI i-i-i-is a huge, a huge economic, shift that we're about to see in the world, and, and I, I- Like to think of like, what does that do to money? How does that affect money? When you live in a world of hyperabundance, do you need money? I, i-if you lived in the sort of theoretical world of Adam and Eve, where you have everything you want, do you need something that, You can is, is kind of an intermediary to trade, like the medium of exchange. Do you need it anymore? I believe the answer to this question is yes. You do still need money because one, another factor to production beyond human labor is time. Things always take time to produce. You can't remove time as a factor of production. It takes time to move material from one part of the earth to another, so even if the cost of the labor is much, much lower, it still takes time to accumulate the, the various, Factors of production together to build something new, and because there's time, there, there is a cost to it, there is a real cost, and so you still need money to represent that cost and the trade-offs of using, you know, one material versus another material. There are also things that, hyperabundance can't really solve immediately. For instance, beach, beach, beachfront property. Like, people will always want beachfront property, and so there's still scarcity in the world. I do think over a long enough time horizon, if we have like millions and millions of robots doing all the work, you, you could even, remove that kind of scarcity. You could just create new beachfront property property. And, you know, you live in a place where they've done that. Well, in the UAE, yeah, the Palm, there's" }, { "speaker": "stephan", "time": "58:14", "start": 3493.86, "text": "Palm Jumeirah and Palm Jebel Ali, right? And they make islands, man-made. exactly. Exactly." }, { "speaker": "vijay_boyapati", "time": "58:18", "start": 3498.5, "text": "You can have as much beachfront property as you want. Everyone can have beachfront property. and if human labor is no longer a factor of production, it's all done with robotics, that's possible. You know, you could potentially have cities which are much, much bigger because it's, it's much cheaper to" }, { "speaker": "vijay_boyapati", "time": "58:38", "start": 3518.48, "text": "Like Manhattan, except where the skyscrapers were ten times as big." }, { "speaker": "vijay_boyapati", "time": "58:45", "start": 3524.8, "text": "w-we are on the precipice of something really big, and, how it's gonna affect the world, I think it would be really good for all of us as students of, economic history to go look at the Industrial Revolution. It was incredibly disruptive. It increased the standards of living dramatically, but in terms of like if you had a business, it's scary, right? Going through a pe-period of hyperdeflation, you've got competition coming from all sides, margins are constantly being compressed, you have to like- Fight really, really hard to keep your business alive, because of all, all the competition and prices going down. I think we're gonna see that on a grand, grand scale over the next five years." }, { "speaker": "stephan", "time": "59:28", "start": 3567.78, "text": "The lead sponsor of this show is Bold, the best place to buy, sell, and save Bitcoin. For listeners in the US, Bold lets you secure your financial future with complete peace of mind by integrating a low fee Bitcoin only brokerage with next gen multisig vaults. With Bold, you can smash buy Bitcoin or set a DCA plan for only 0.99% fees and seamlessly deposit the Bitcoin direct to your Bold Vault. The Bold Vault is a two or three collaborative multisig where you hold two keys and Bold holds one as a redundant key. Back up, protecting against loss or theft. You can use Trezor, Ledger or cold card hardware wallets to spin up a Bold Vault in just a few minutes, and the Bold Vault is the only collaborative custody vault available with zero monthly fees. They're also offering zero fees on your first ten thousand dollars of Bitcoin buys and twenty five dollars of free Bitcoin when you buy a hundred dollars of Bitcoin or more. Try Bold today and upgrade your stacking experience over at getbold dot io. And now back to the show. Yeah, interesting. Yeah, I think I, I agree with a lot of it. I think what we're at least starting to see now, and I'm hearing this when I talk to developer friends, they, they're saying, \"Look, I can amplify, I can multiply my impact, right? They might have a team of five who are doing the work of fifty, you know, because now they're just using these, you know, these, coding AI tools to help them kind of, maybe it can't do everything, but it can kind of really speed up and make things more efficient. Maybe we're gonna start to see like small to medium Play with the big boys, right? They can compete with large companies now because they're using AI to sort of amplify their impact, compared to, let's say, some large bureaucratic company that's kind of bogged down in either regulation or just kind of internal company policies and things like this. so it's really interesting. I think the other big thing, and you were sort of touching on some of this, is- There will be social consequences to a lot of this, right? There's gonna be job losses, it's gonna change the way people are educated, it's gonna change the way government interacts with businesses as well. I, I just think there's just gonna be so many social changes, and that is gonna be a very weird thing to navigate over the next, call it, ten, twenty years." }, { "speaker": "vijay_boyapati", "time": "01:01:40", "start": 3700.23, "text": "Totally. Nick Carter had a, a, a good tweet about this where he said people ask him for advice on what to do for their career going- Going forward, and he, he ba- his advice is basically learn as much as you can about artificial intelligence and how to use it. N-nothing else will really matter. I mean, you touched on education, we live in the greatest period of history for an autodidact, anyone who wants to learn anything, you sit down with an LLM and start asking it questions, it's, it's such a magical experience. Like I, I gave that example of that, that tax opinion within, within half an- Now, I became a, a deep expert on that very arcane area of t-tax policy. I was just kind of asking questions, and what about this? And what about that? And, and, and how does it apply to this other scenario? And you can become, a, an expert in a subject very, very quickly if you have the curiosity to just sit down and start asking questions. so education is gonna be upended, the many, many professions are gonna be upended, and, and- The thing is, we can't fully anticipate what the social consequences of that are, but it, it will be very, very disruptive." }, { "speaker": "stephan", "time": "01:02:57", "start": 3777.21, "text": "One other question that people might be thinking is, \"Look, what about this hallucination thing? Right? Sometimes these AI LLMs, they just make things up.\" Are you seeing that, or do you see that like people, you know, the people who develop these models are gonna find ways to fix them, and in the same way that, you know, search engines, maybe, you know, Google had a big innovation at kind of showing you what you actually wanted to see, maybe there'll be AIs that kind of find a way to reduce this hallucination issue?" }, { "speaker": "vijay_boyapati", "time": "01:03:21", "start": 3801.37, "text": "I think these problems are, are being fixed so rapidly, the rate of advance of the LLMs from even like a year ago is just Unbelievable. Like the problem of hallucination is much less significant today than it was a year ago, and I think that'll continue to, advance. I will say that these LLMs excel more at knowledge-based tasks than they do at reasoning-based tasks, where you really have to think about something, like, you have to understand the underlying causality or, like, mathematics, for instance. I, I asked, I, you should try this on Google. I asked, Google, is three x the same as? Three hundred percent, you know, through something growing by three x is the same as three hundred percent, and it started out, saying no, and then it ended up by saying yes, and it, it literally contradicted itself. And it's an example of where it's not so much a knowledge-based task, it's a reasoning-based task. You have to think about like the underlying mathematics, and it's, it wasn't able to do that. I, I think that that will improve very quickly, though. I think reasoning with, AI will- Will, be human level in two to three years. but right now the knowledge stuff is already surpassing humans, like the, the LLMs are equivalent to effectively the smartest person on Earth on every subject if it's a knowledge question. Reasoning, I think we, we're still gonna have to wait a few years, but, you know, you're talking about programming as well and how you can have teams, which is smaller because, it, it, more of the coding can happen From the LLM, eventually you don't, you won't need any like engineer, you'll just say, \"I need this piece of software, go and build it.\" The, the rate of improvement on generating code is so rapid that I- I, I think that you'll have whole teams disappear in some of these big companies because you'll be doing it with LLMs rather than using those teams. Or it might be one manager managing like two or three AIs instead of having a team of fifty engineers. So I, what my, I guess my advice would be, computer science as a profession, is much less attractive today than it was twenty years ago when I finished college. the, the risk that there isn't a real job there in ten years from now is very, very high." }, { "speaker": "stephan", "time": "01:05:46", "start": 3946.77, "text": "Interesting, yeah. And I think one area that some people might push back is, \"Well, what about, okay, it's one thing to kind of hastily code something together, vibe coding or whatever, but then actually, what about bug fixing? What about maintaining? What about kind of...\" Making sure it works with the other pieces of your software stack. Do you think, again, similar to the hallucination thing, like this is just early issues, or another one people might say is, \"Oh, the context window. Okay, it's only so much context window that can fit inside this LLM, therefore you still need certain humans to kind of manage it.\" But again, are you saying, would you view that similar to the hallucination thing where this is just an early thing, eventually it is gonna surpass those things?" }, { "speaker": "vijay_boyapati", "time": "01:06:29", "start": 3989.78, "text": "Yeah, when something improves, say five x Or ten x a year, every year, these problems just disappear. Like, the, the problems of hallucinations w-were significant like a year or two years ago that I, at least in my usage, are effectively gone. Th-there are still problems in reasoning, I gave the, the math example, but I think those will be gone in a few years as well. The rate of progress is just astonishing, and I, I, like I said, I started off as a skeptic, a-and, the switch flipped for me I, I'd say like six months ago, and I realized, hey, this is a really, really big deal. so, th-they still do have some problems, but I think those problems are gonna get ironed out very, very quickly. A-it's also because like the, the, the tools that they are building to improve these models, they can build them faster because they're using the models to write the code. and Mark Zuckerberg talked about this, like they're building this whole tech stack just to accelerate their progress in improving the model. So it's like a feedback loop almost in, in it's getting faster and faster." }, { "speaker": "stephan", "time": "01:07:36", "start": 4056.36, "text": "Do you have a question? Do you have a take on whether AIs will use Bitcoin or, I've heard another interpretation is more like, no, actually it's more like whoever the owner of that AI will choose, right? What currency. You know, if you have a smart fridge, it's not that, you know, it has to select the currency, maybe you select, I wanna use US dollars or I wanna use Bitcoin or whatever. Do you have a take on the AI and Bitcoin question?" }, { "speaker": "vijay_boyapati", "time": "01:07:58", "start": 4078.26, "text": "I think a Related to AIs in the future, and I think that you're gonna have different AIs that need to communicate value to each other, and there is no better, a mechanism for transmitting value on the internet than Bitcoin. Bit-Bitcoin is the native currency of the internet, and I think that AI will actually provide a lot of demand for Bitcoin in the future, even though we will live in a world of, I think hyperabundance, as long as we don't destroy ourselves, that's the other part of the story that we may not have time to We talk about, there's a big risk that the development of AI is the great filter, i-is, is, and the great filter is the answer to the Fermi paradox of why we don't see intelligent life in the universe. We get to a, a level of advanced civilization where it becomes so easy to destroy ourselves because we've become too powerful. that's a real risk. I, I really, really worry about that. But if, if we figure out a way to not destroy ourselves, we, we'll probably live in a A world of hyperabundance where these AIs are communicating value to coordinate with each other, and that value is, transmitted using Bitcoin." }, { "speaker": "stephan", "time": "01:09:10", "start": 4150.13, "text": "Awesome. any, I, I guess, kind of the impact of AI on the state as well, right? Think about welfare, retirement, Ponzi systems that, you know, nation states of the world are using today. Do you see an impact there? Like, do you think, like, okay, so here's, here's the typical argument. It would be, \"Look, these welfare states are a Ponzi. They're un- sustainable, there isn't enough new young people being born, i.e. TFR, total fertility rate is low, it's below replacement in many of the well-developed economies around the world, and therefore that's gonna be a problem for these welfare states. But I guess in an AI abundant future, does that actually change?" }, { "speaker": "vijay_boyapati", "time": "01:09:49", "start": 4189.03, "text": "Yeah, it does, and it's kind of, it's sad and it's ironic that these states which have been so irresponsible and gotten themselves into debt, that in a traditional world, or developing a- economy that they would eventually go bankrupt and face a lot of hardship, but in a world of hyperabundance, the problem of debt effectively goes away when you can produce things for nearly free, 'cause you can pay for that debt, I mean The thing that solves the large debt burden, if you're a country which has a lot of debt, is production of stuff. If you can produce a lot of things, then that solves-- you can, you can pay, you can service your debt, and when you have AI, you have almost effectively infinite production. so it, it could be, you know, looking-- people might look back on this and think, \"All of these countries were the rational ones, because they went into debt to buy themselves a little more comfort until they got to AI.\" And then the problem of debt just went away. It would be ver- it, it would be, it would be crazy, you know, it'd drive us Austrians crazy to think that something like that is possible. but I, I think you have to be honest, it, it is possible, i- in a world in which you have robots doing everything, debt, debt isn't a problem anymore" }, { "speaker": "stephan", "time": "01:11:05", "start": 4265.93, "text": "Yeah, interesting. So I guess the question then is more like, how quickly will this AI abundant stuff come? Like, will it come in five years time or will it come in twenty five years time? Because if it comes in twenty five years time, there'll still be some, you know, problems on the way there. But if it comes in five years time, well then, yeah, probably not a big issue, right? Like, the, it'll just be so productive and so abundant that it, it won't matter that much." }, { "speaker": "vijay_boyapati", "time": "01:11:29", "start": 4289.64, "text": "Five years from now, we'll see meaningful changes in the way Twenty five years from now, we may not recognize the world. It, it will just be completely different. Like if you were to transport you and I twenty five years into future, we'd be like, \"Holy shit, like, this is so crazy, I, I can't imagine.\" Like, maybe we do have cities which are ten times bigger, or, or maybe, like, it, it, it's just such an accelerant to everything. If you, if you get to an AI system that it has reasoning and can advance, not, not just production in an Engineering sense, but advanced science, it, it accelerates everything, and the, and the world could be just transformed from that. Like for instance, I think self-driving cars is something that is, is, is right on the horizon. Like they, they are, I, I went in my first, self-driving ride, in the Bay Area. Oh yeah. Like a" }, { "speaker": "stephan", "time": "01:12:24", "start": 4344.3, "text": "Waymo or a- A Waymo, yeah, yeah. Went," }, { "speaker": "vijay_boyapati", "time": "01:12:26", "start": 4346.7, "text": "went in a Waymo, and that was another moment where I was like, \"Holy shit, this is much closer than we think It's like that saying, like the future is here, it's just unevenly distributed. you can, you can go to the Bay Area and see some of those things, self-driving cars and robots, and, flying machines and all of these things which I, I was very skeptical of, I, I think we could see all of that stuff on a ten, ten year time horizon. And, and I think sort of the way," }, { "speaker": "vijay_boyapati", "time": "01:12:57", "start": 4377.76, "text": "things work in the household could change very quickly within five years with robotic-" }, { "speaker": "stephan", "time": "01:13:05", "start": 4385.14, "text": "Yeah, it's fascinating to think about. And, yeah, I think one other thing that came, comes to my mind is when you read, let's say sci-fi or whatever, and I'm sure you've done, you know, when we were kids or whatever, when we read sci-fi, and it would be so advanced, and then by the time we actually got to that year, we weren't there yet, you know? Like Marty McFly has a flying skateboard, and, you know, we-- and, you know, we don't have that now, but, you know, Early sci-fi writers thought we would have." }, { "speaker": "vijay_boyapati", "time": "01:13:35", "start": 4415.32, "text": "Yep, yep. And actually some of them were kind of behind in a sense that they, they wouldn't predict some of the, the abundance that we would have, but, yeah, it's gonna be very interesting to see whether our future looks like a sci-fi future five years from now." }, { "speaker": "stephan", "time": "01:13:51", "start": 4431.52, "text": "Yeah, fantastic. Alright, well, I guess, that's pretty much all we have time for. not sure if you have anything you need to promote, but of course, check out the book, The Bullish Case for Bitcoin, and, anywhere that you want p- people to follow you, Vijay." }, { "speaker": "vijay_boyapati", "time": "01:14:04", "start": 4444.1, "text": "Thanks, Stefan. The, the other last thing I wanna say, and we didn't get a chance to talk about it maybe next time, is quantum computing, I think is something that folks should pay attention to. the risk profile of Bitcoin is far different today, it's de-risked in many, many ways, but there is one important risk that I think especially the Bitcoin core developer community should pay attention to, and that's quantum computing. I think people need to focus on finding a solution to this as quickly as possible, even if it's five or ten years out, the market will- We'll begin pricing it in much, much earlier than the actual threat of, certain addresses being breakable, by quan-quantum computers." }, { "speaker": "stephan", "time": "01:14:44", "start": 4484.89, "text": "Yeah, and I think there's more to come there. I know there are people like, Hunter Beast and others out there who are sort of really pushing on that front. so definitely I'll need to, I'll need to get him on at some point and talk to some of the people who are, really domain experts in that field as well. Alright, well, thanks very much, a great chat, and, looking forward to seeing you soon." }, { "speaker": "vijay_boyapati", "time": "01:15:05", "start": 4505.2, "text": "Thanks, Stefan." } ] }