Money Is Technology
”The problem that the institutional investors have is — they don’t understand that MONEY IS TECHNOLOGY. And that there’s a better technology that has obsolesced all their previous technologies.
So they have this model of the world. That assumes that their materials are defective. And because their materials are all defective. None of them work. Then they act sub-optimally.
If the entire world economy uses a currency that loses 10% or 20% of its value a year. It’s kind of like having blood where you’re sucking 20% of the oxygen out of the blood every month. It’s defective.
But they’ve never lived in a different world. Same with the politicians. In every single corner of our civilization there’s someone that got a problem and they’re struggling with defective money and defective technology. And they all need to be communicated to in a different way. If they don’t like bitcoin it’s because they don’t understand that it’s the solution to their problem.
Injecting PURE DIGITAL ENERGY into the civilization. It’s like brining fire to the civilization or bringing electricity to the civilization. It can’t help but make EVERYTHING better. But I got to imagine that the first time someone came into a camp with fire and flaming torches everybody else recoiled in horror. And the first time someone said they’d going to wire up everybody’s house with electricity and they burned someone’s house down or electrocuted someone. There was probably a lot of fear, uncertainty and doubt.
And now here we are, we’re carrying this new touch — DIGITAL ENERGY. A new thing. So fundamentally different that people have to discern all of their models, all their portfolio theory. Everything.
All these investors saying ”I’ve got to be diversified”. Well… You know, when you build a building and you’re standing out on a steel beam. You don’t diversify the steel beam. Steel is metallic energy. Steel is a higher form of metallic energy than iron, which is a higher form of metallic energy than bronze, which is a better form of metallic energy than wood or stone. To build our civilisation we needed steel.
And if someone came and say ”let’s just diversify the skyscraper with some steal, bolts of wood and some clay and some bronze and a little bit of brick here and there ”so we’ll be safe!” you’d scream at them ”YOU’RE GOING TO KILL US ALL, YOU’RE GONNA KILL US ALL.”
The Perfect Money Is Energy
DIGITAL GOLD is just a block of monetary energy that’s in a basement.
DIGITAL PROPERTY is a building or a structure that people are actually using that generates yield.
DIGITAL ENERGY is when I just dematerialize that entire thing and I vibrate at 60mHz or split it into a million parts send it to a million places and fetch it back every five seconds.
And you can see where DIGITAL ENERGY could be used, in social networks or trading applications or any kind of financial application. You can build it into cars and build it into anything. And all of those aspects are incredibly powerful things.
They’re options that you get when you own the property. When investors start to realize that. It’s so profound as to take us from a trillion dollars of the addressable market to 10 trillion, to 100 trillion to 500 trillion — it becomes half of everything.
What is perfect energy?
It’s money.
DIGITAL MONEY is DIGITAL ENERGY.
And the matter instantiation. The static instantiation of money — is property. And the slowest instantiation. The approximation of it once upon a time was — gold.
And we’re in a RENAISSANCE RIGHT NOW.
Digital Energy Is a Major Profound Breakthrough
Bitcoin can be thought of as ’just a speculative asset’ and it’s irrelevant to government. It’s just the tail of some random creature in a show.
And when you start thinking of it as DIGITAL GOLD it becomes interesting to macroeconomic investors. But you realize gold is not the right metaphor. Because you’d just park a billion dollars of gold in a vault.
And when you think about it as DIGITAL PROPERTY. It becomes more powerful because now you realize it generates yield and you can mortgage it. And now it becomes something that has a 100 trillion to 200 trillion of impact.
What is property?
Property is matter.
Einstein said ’you can neither destroy energy, or destroy matter, or create it’.
Matter becomes energy, and energy becomes matter.
If I take DIGITAL PROPERTY and I oscillate it at 60mHz. And I decompose it into a million pieces every second and recompose it. And there’s no power loss — it’s not properly anymore, it’s energy, it’s DIGITAL ENERGY.
An theoretical Austrian Economist might say it’s digital money. But money is too complicated of a term. So, if we come back to an engineering observation — it’s DIGITAL ENERGY.
DIGITAL ENERGY is a major profound breakthrough.
What does that mean? Well… I can power any device with digital energy. I can one day power cars, phones, a city, state, government, cooperation, trust, or a family on digital energy.
DIGITAL ENERGY is a major disruption in the world.
We talk about bitcoin being the most disruptive force in the decade. Well… Many people think it’s the most disruptive force of the century.
Money Is Ultimately Monetary Energy
I think the epiphany comes when you realize that it’s the dominant DIGITAL PROPERTY NETWORK. And digital property is better than physical property in every way conceivable.
If I theoretically designed digital property:
- I want to store a billion dollars
- I want to hold in the palm of my hand
- Move it at the speed of light
- Vibrate it a million times a second
- I want it to last forever
I want immortal indestructible infinite, all powerful programable energy.
Matter is energy — energy is matter.
I can take a billion dollars and turn it into a building. I can in theory turn a building back into a billion dollars. I can buy a billion dollars worth of electricity. I can buy a billion dollars worth of guns. Whatever it is you want to do, right.
Money is ultimately monetary energy and you can convert it into any kind of product or service or property — it’s the apax.
Once you realize bitcoin is DIGITAL PROPERTY, or DIGITAL MONEY, or DIGITAL ENERGY all of these things. Then it becomes clear that everything else you can possibly own is inferior to that.
You would really never wanna own anything other than — PURE DIGITAL ENERGY.
Pure Digital Energy
Let me come back to what is bitcoin. If bitcoin is just DIGITAL GOLD. Then it’s a billion-dollar slab of gold and it must be worth more than gold. So instead of a 10 trillion dollar market, it’s a 20 trillion dollar market.
But if bitcoin is property. Then it replaces everybody’s second home and all their commercial real estate and all the land they invested in to store their life savings. And now it’s NOT a 20 trillion dollar thing — it’s a 100 trillion dollar thing.
And if it’s energy.
Energy is the same as money.
Money is half of everything.
The way the economy works is; you provide me with a product, an iPhone, or service, a good or a service or you give me property, a house, or you give me a party or you give me a car. I’m buying those with money. And the economy is using the money to backhaul the energy to convert it back into matter.
And what is service? Service is work.
Work — matter — becomes energy and they go back and forth.
And if you think about bitcoin like that you realize that. The obvious thing is it becomes DIGITAL GOLD. And the next thing is, it becomes DIGITAL PROPERTY. And finally it becomes DIGITAL ENERGY.
DIGITAL ENERGY is money — but it’s so much more powerful than the concept of money or currency!
People have in their heads. These ideas of money and currency. Full of all sorts of political beliefs and biases. So, I think if you’d thought of it as just pure digital energy — at that point, you realize ’well… that’s worth 500 trillion dollars, that’s worth half of everything in the world’.
Because in order to exchange the work, the services, the products or the properties with each other. In order to cooperate. You have to at some point convert it into money/energy and convert it back.
The Benefits Of Holding Digital Property
We need to go educate the entire world on the benefit of holding property. And what I mean by that is that; If I had a building in Vegas. And I owned the entire building outright. And I was the property owner. I could put a lean on it. I could put a mortgage on it. I could lease it out. I could develop it and upgrade it. And I could sell it.
Those are my PROPERTY RIGHTS.
But if I was an individual middle-class investor. I would have to buy a share in a reet. And I would be a security holder and maybe they’d sell a thousand shares and I owned 1/1000 of the building. And I have this limited partnership in the cashflows of the building. But I don’t have the right to lean it, mortgage it, sell it, develop it or lease it.
I don’t have property rights — I have security rights.
Up until bitcoin; only the rich that were well organized could actually own property as an investment long term.
And the real state change of bitcoin is; now you can have 387 dollars of DIGITAL PROPERTY. And you own the same property rights as a Uber driver, as a billionaire would have.
Bitcoin Is Energy In Cyber Space
Why don’t we start with energy.
Money is the energy in the system. So so how do i store energy? If i had a million dollars I could pump water uphill with the million dollars. I convert the million dollars into electricity put it in a pump and I can pump water uphill into a reservoir. And now all the water behind the dam represents potential energy. By the way. If i’m lucky, the force of nature just dropped the rain water in into the reservoir behind the dam. And I don’t have to pump it up. So now i’ve got a million dollars worth of water.
Now why why is the water energy? It wouldn’t be energy at sea level. Its energy at altitude. The higher you are the more energy you have. If you’re a thousand feet up with a million pounds of water or a million gallons of water a thousand feet up. That’s more energy than 100 feet up. The energy is the difference between where where the water is going to flow versus where it is. That’s potential energy is going to be given off and it’s and ultimately what you’re doing is you’re channeling gravitational energy. The real energy came from gravity and we and the water is the fluid.
If i’m flying an airplane at 50 000 feet. I have more energy than at 5000 feet. How do you know? I just point the nose down and the plane starts to accelerate. And I pick up velocity. So i’m converting potential energy into kinetic energy.
If i wanted to move energy via another medium. I can move it through air pressure. Sound is acoustic energy. AAH! That’s more energy, right. If I yell, i’m putting more energy into the system, right. Less energy, more energy, right? Singing right? What what do, we do we’re listening to someone perform music. We’re watching them doing an extraordinary performance art on energy. Look at a guitar right? And think about, Tesla said “you want to understand the universe think in terms of of vibration right and frequency and energy”. So a guitar has got a fretboard and when you’re when you’re playing the guitar. You’re actually changing the frequency with which the strings vibrate. One hand is actually putting a bit of energy into the system. But the but the real trick is, change the length of the string, so that the strings vibrate at different resonating frequencies and then you get the chord, you get the music.
You can use many many mediums to move energy.
When sound is moving through the air. Right? The air is the current currency. Is it a good currency or bad currency? Well, the sound moves through the water faster than through the air. Water is a better currency than air. But the sound moves through a piece of wood, or solid faster than the water. And the stiffer the solid, the faster the sound moves and the more efficiently it moves. So you can pick any kind of medium to move energy. Electricity is is a way to move it. Sound is a way to move it. Water is a way to move energy. You have a certain amount of energy in your body. And your blood is the currency that’s moving the energy through your body. And it works to a certain level. Fiat currencies are a method of moving energy. All of these all of these mediums have dissipation. They dissipate energy.
If I shine a light uh through a vacuum. It will travel further than if i shine a light through a wet blanket. Why? Same energy dissipated faster. Right? Through a solid. Then through the air. But you know you can figure out that; we can see stars that are light years away. But you can’t see candles that are 10 miles away. Because the air, it dissipates energy faster. So all of these things dissipate energy at a certain rate.
The US dollar right now, dissipating energy, maybe at the rate of 15 percent a year. But in in Argentina or in Turkey they’re dissipating energy at the rate of 70 percent a year. And the best managed, US currency, the best managed, in a given year maybe anticipating energy at seven percent a year. And right now in Japan the Japanese currency has lost 19 percent, let’s say the US dollar strengthened 19 against the yen, in the last six months.
So, if the us dollar is weakened eight and a half percent against consumer goods. And if it’s weakened 20 against property like single family homes. And if it’s weakened 33 percent against oil. But it’s strengthened 19 percent against the yen. You can see that the yen is losing 50 to 60 percent of its energy, in six months. Against a commodity like oil. Now there are all sorts of individual effects. Oil is probably going up in price because the scarcity of oil has been increased because of the war. But if we took US single-family homes and said it looks like the inflation rate of the US dollar against scarce desirable assets is about 20 percent. Then you can see that the effective inflation rate of the Japanese yen, against scarce desirable assets is 35 percent. Maybe 40 percent. Becomes tricky to measure, but that’s what happens.
So the reason that i don’t want to hold the currency forever; is because it’s bleeding off energy over time. But the reason that I want to hold it for a day is because they’re a massive network effects. When I walk into a pizzeria they don’t price the pizza in apple stock. And they don’t price it in bitcoin, they don’t price it in ounces of gold, they price it in dollars.
When I go to Europe when the EU formed, one of the interesting things that happened is; in the 10 years after the eu formed. Most menus in the European union started listing products in the local language and English. English became the second language on all menus of most nice restaurants all throughout Europe. And then of course they started listing prices in Euros. Before that, they listed the menu in French and Francs. So, you know, you had a standardization on a common currency and a standard nation on a common language. And that facilitates the medium of the process of exchange in the near term. But the price you pay is, the loss of your local culture, the loss of your local language, and the loss of control over your local currency, and the increase in the power of the centralized bureaucracy.
Bitcoin is a battery
”The US currency is going to lose energy. Anywhere from 7 percent to 25 percent a year. Fiat or the US dollar, is a battery, that’s draining at 20 percent a year right now. Gold is a battery draining at 2 or 3 percent a year right now. Bitcoin is a battery that doesn’t drain. In fact, it’s charging. It’s been amping up at 100 plus percent a year. When I give you the money, you have the option to convert the hundred dollars into bitcoin immediately. You could also go the other way and convert the hundred dollars into pesos.
If you look at the last year, if you converted the hundred dollars in the S&P, you’d be up 27 percent. If you bought a typical house, you’d be up 25 percent. If you bought bitcoin you’d be up like 400 percent. If you held it in dollars, you’d have a hundred dollars. But the hundred dollars wouldn’t buy as much as they would have bought last year.
So, bitcoin is a battery.
All assets are repositories to store energy or to store money, if you want to call it money, you want to call it energy, you want to call it work. They’re all just different ways to store that energy over long periods of time. What’s the worst one? The Venezuelan bolivar. It’s the worst one. That’s awful. If you took the money and you bought electricity. Pure electricity. If I give you a million dollars of electricity and you put in the best battery you lose two percent a month. So pure electrical energy loses 24 percent a year. And if you wanted to move the electricity 100 miles on a line, well, you need the line. And you lose six percent of it, right?
So you can store your money in different things, and they all decay.
Look, you can buy sheep with it. You can buy hamburgers with it, right? You can buy packaged food with it. So some things last a long time, other things don’t.
But here’s the really big problem for us.
All these other things you can buy, let’s say; you’re coming back to John Locke. John Locke said, ’You spend an entire year and you build a house for me and I pay you a certain amount of money.’ Well, so you take the money and you buy your own house. Well, you don’t really own your own house. In the physical world. If you own a house, or you own a herd of cattle, or you earn a bunch of gold. Those are all spoils of war. I can take them from you with violence. I can take your house. I can tax your house, right? The problem with gold is; I can just murder everybody and the gold is still there.
So if you look at the history of humanity. Bitcoiners are pretty passionate. There’s a lot of religious conviction. You see our laser eyes on Twitter. Well, here’s, here’s the big idea; for the first time in 10,000 years; we have invented a form of digital property, a form of property that you can truly own, that is not spoils of war. You cannot seize bitcoin with violence.
Gold is war. If you study, all through history, it always ends with, you know, the Romans or the whatever sacked the city. Kill everybody and take the gold, right? Nobody ever burns the gold, they always take the gold. It doesn’t matter whether the people live. So I can take your gold. I can take your land. I can take your house. You have a company; you know, the government like in Cuba and Venezuela, they’re gonna expropriate your company. In Zimbabwe, you have a ranch, they take the ranch.
So if you have anything in the physical domain. I can take it. And if you disagree. I can still take it. Occasionally I might negotiate with you. But there’s not really an incentive for anybody to negotiate. I can either just take 10 percent of it by a tax or just take it all. On the other hand; if you own bitcoin, and I come to you and I say, “give me all your bitcoin” and you have the private keys, you can say, ‘no’. If 100 people in your city have bitcoin and I go and I grab one of them and I put them in jail and I say “give me your private keys”. Well, maybe after 60 or 90 days of like roughing you up. You might give me the keys. But the other 99 people in the city, they’re going to send their bitcoin somewhere else. Or send it or transfer it or get it out of the country. And so, violence is not going to get you more than 0.5 of the asset.
And if we invaded a country. I could take the oil out of the ground. I could seize everything. You don’t want to be too violent, right? Because if you burn all the buildings, you burn the oil wells, you do some damage. But ultimately, there’s a lot of stuff that still might be left, depending upon how difficult the war was. But if I invade a country, I’m not getting any of the bitcoin. There’s no point in going to war.
Isn’t it interesting, it used to be the Egyptian pharaohs; they wanted to be buried with their gold. But you bury them with their gold and then the tomb raiders they steal their gold. There’s this phrase ‘you can’t take it with you’. That’s true of everything on earth except bitcoin. If you die with your keys then you’ve made a contribution to all the other bitcoiners. You’ve made a humanitarian contribution to everybody in your tribe. And so, that’s sort of good.
I think that, here’s the big idea.
Bitcoin is property rights. It’s technology, to deliver property rights to eight billion people for the first time in the history of the human race. And that’s, I mean, life liberty and property. That’s what John Locke was all about, property rights. And people diminish property rights saying, ’Well, they don’t matter.’ Well, they sort of do, because, if I can steal your life’s work from you, like that, what was your life worth? I mean, it’s completely and utterly demoralizing, right? You’ve stolen someone’s sovereignty and their freedom and their liberty. So, property rights does matter. And then half the world doesn’t have any hope of accumulating property and the other half has property at risk. And bitcoin is technology that gives you back a right to your own personal sovereignty and your own property.”
The lack of conservation of energy in the civilization
The root problem that bitcoin has put their fingers on is; there’s a lack of conservation of energy in the civilization.
There’s an energy imbalance.
And everything that we think of as money, that we use use as money. And right now we use gold. And we use 90 trillion dollars of currency derivatives. And 100 trillion dollars of bonds. And we use trillions of dollars of equity. And we use collectibles. We use all sorts of other derivatives — there’s a lot of things we use as money.
All of those things we use as money; are low velocity, inefficient transmitters of energy, that drain energy. And the cost of that; you could measure in the tens of trillions; 10 trillion, 20 trillion a year. Some huge amount, right? 20 trillion is the GDP of the United States nominally measured. So the cost of the broken money, or the lack of a proper monetary system is; many, many trillions a year, compounding for the last hundred years for the next hundred years.
Fixing that is; it’s no different than; if you’re an athlete, and you were bleeding a pint of blood an hour. And I didn’t stop the bleeding, right? I mean, the number one rule of triage is stop the bleeding first. Well first make sure you can breathe, right, three minutes without air and you’re dead, and then make sure your bleeding stops because you’ll bleed out in a few minutes. And then after that figure out what the rest of the problem is.
So I think that we should think of ourselves as trying to stop the bleeding. The source of the bleeding is a lack of effective money. And the human race has never had an effective money. A mathematically sound, thermodynamically sound money, right?
Gold was the closest thing, but it was it’s way too inefficient. It bleeds energy too fast in time and in space, right? You can’t really use it.
We now have a situation where 10 basis points of the civilization has an effective store of value (bitcoin), and of course nobody has an effective medium of exchange, right? So you could probably say; it’s like 2, or 3, or 4 basis points of the entire economy is efficient.
99.95% of all the economic activity in time and in space is woefully inefficient. And how inefficient? We probably got to assume we’re losing 10 to 15 percent of energy. If you were writing a calculus equation, right. The time variable was losing 15 percent of your energy with time and then there’s another dissipation coefficient which is how much energy per transaction.
Property In Cyberspace
Once you understand that bitcoin is not just digital gold — it’s DIGITAL PROPERTY. And what’s the difference? Gold you can’t lease, and gold you can’t mortgage, and gold can’t really be developed to be upgraded. And you would never put a lean on gold.
The metaphor of DIGITAL PROPERTY is much more powerful.
Digital gold takes you to a 10 trillion or 20 trillion market cap.
DIGITAL PROPERTY takes you to 100 trillion or 200 trillion dollars or more addressable market — because you can lease, and mortgage, and develop and lean.
And if you understand that bitcoin is the dematerialization of property. Then you realize when you put your bitcoin into an application. When you give it to someone else you’re kind of putting a lean on it. When you loan it you’re leasing it. When you borrow against it you mortgage it.
This is the first property you can buy in quantities of 1000 dollars, 100 dollars, 10 dollars, 1 dollar, a million dollars, ten million dollars, a hundred million a billion dollar or 10 billion.
Everybody pretty much has exactly the same property rights that the renaissance organization or a 20 billion dollar property development company has.
In addition to having property. You’ve got PROPERTY IN CYBERSPACE. Which means that anybody with a mobile phone application or a website might want to borrow your property, or use your property to fuel their application.
Cyber Development Company
We’re (MicroStrategy) in essence running a cyber development company or a cyber reet if you want.
If I told you there’re 21 million blocks in cyberspace. And each one is a bitcoin. And the world’s going to consist of 21 million blocks. And you showed up there two hundred years before everyone else showed up. You would think ’I’m just going start buying city blocks of cyberspace as fast as I can’.
We got a high growth business — DIGITAL ENERGY or DIGITAL PROPERTY. And we got a low growth business — enterprise software. And they’re both linked. And they both benefit from each other in different ways.
Why’d we do it?
First we did it defensively and then we were opportunistic.
Stage one was defensive; ’I don’t want to lose my money’.
Stage two was opportunistic; ’I did it cause I could’.
Stage three is strategic; ’This is a pretty good idea; to buy up all of cyber-manhattan before everyone else moves here’.