Bitcoin for Corporations by Saifedean Ammous

[Music] hello and welcome to everyone this is uh well i'm very excited to have safety in here with us i've actually been one of his students earlier this year he has his own uh yeah course courses actually and he do he does his own lectures every week so very very happy to have you here um i remember back in spring that one of the lectures or sessions he did was with michael saylor very cool i can only recommend everyone to read his books and participate in his courses so yeah safety this states is yours and welcome thank you thank you so much for having me victoria and for everybody the conference for organizing it's a pleasure to be uh talking to you today uh i'm going to be discussing uh bitcoin for corporations and uh presenting the case for why bitcoin makes sense for corporations today and this is largely based on my work in my book the bitcoin standard my first book as well as the um you know the recent developments and the work of uh michael saylor and um what he introduced is the corporate strategy for bitcoin so i try and present that to the few main ideas that i think are make bitcoin relevant for corporations today first of all to begin with what is bitcoin i i like to define bitcoin as a peer-to-peer software for operating a payment network without its own native with its own native currency that is protected from unexpected inflation without having to rely on any trusted third parties so it's an it's its own payment network that has its own currency that operates independently of any trusted individual party its significance lies in two main properties first it's the hardest money ever and second it's the fastest settling money ever it's the fastest money that you can settle internationally for me those two um those two technological features of bitcoin are what make it important for corporations why so first i'm going to talk about the hardness of money why bitcoin is the hardest money ever if we look at what constitutes money we see that anything can be used as money but if something is used as money when it is easy to make people who can make it are going to make more of it and that's going to cause us price to drop down and so it's going to make it not useful as money so if we look at all the things that end up getting used as money we see that they are all at the time in which they're used as money they're all hard to make so cattle limestones metals seashells government money glass beads cigarettes in prison all these things work as money when they're hard to make when there's something that's harder to make than them they stop being money when they become easy to make they stop being money so historically we see why we can understand why gold became money at the end of the 19th century for the whole world because it was the form of money that was the hardest to make it was the one that was really the hardest to make um in in terms of its growing sub uh stockpiles on the market because gold does not ruin and it doesn't corrode existing stockpiles are always piling up so in the gray line here we see the stockpile of gold it's always increasing so annual growth in the stockpile is always roughly constant even though every year we make more we also are making more onto a growing stockpile so this uh fact that the stockpile is always rising means that the supply growth rate is always pretty low so the stock to flow is pretty high and that's what ends up making gold as money now we look at national currencies we also see the same thing if we look at the currencies that continue to witness bad inflation rates and which lose value which are don't hold a lot of value we see the currencies that have a very fast supply growth rate whereas if we look at the best performing currencies the currencies that maintain their value best over the long term we see that they have a relatively lower supply growth rate so if we look here we see annual monetary supply growth rate in the u.s or the euro is something in the range of seven or five percent but still it's much higher than gold and that's why basically we can understand why prices go up if you try and measure prices in gold because we can't keep increasing the supply of gold at very fast rates it's always increasing in around one and a half or two percent we see that prices are declining whereas if we look at prices in terms of um dollars and euros and um national currencies we see that prices are constantly rising and that's of course because the supply is increasing and so now we witness a period in which supply is going up more and more we also know that government money is the only form of money that can witness sudden and complete collapse in its value basically because it's the only one that can at some point end up being made at practically zero cost we've had more than 60 episodes of hyperinflation since the move away from the gold standard in 1914 and most of the time government money has been highly inflationary even if it's not in hyperinflation um basically government money is built to finance government spending at the expense of savers it's not built to the benefit of its users for their ability to save into the future so big bitcoin is basically a solution for this it's the hardest money we've ever known it's harder than gold because we see that the supply growth rate for it is constantly declining we see the supply of bitcoin is growing but it is growing at a declining rate we're only going to ever have 21 million bitcoins and we're going to see the supply of bitcoin decline the supply growth rate in the gray line here we're going to see it decline over time currently it's around two percent per year it's going to be closer to one percent in three years and every four years is going to drop by half roughly until it basically ends up at something around zero in about a century or so so bitcoin has appreciated the compound annual growth rate of 200 per year for its first 11 years and i think now we could you know by the end of this year we're probably going to be around 200 percent for the first 12 years as well bitcoin has never been down in terms of its price on a four-year time frame because the supply is dropping by half every four years so if the marginal supply is dropping by half then even constant marginal demand will result in an increase in the price and that's why we can see that always on a four-year time horizon bitcoin is always up so um we look at the candles and you know the performances pretty remarkable very few uh well no assets have done so well for so long ever in history so in in the last uh 11 years of bitcoin's operation and so that's in terms of the hardness now in terms of the um in terms of the speed and the fastest money ever bitcoin is the fastest way to achieve final settlement across space of any monetary asset that we have and we've basically bitcoin transactions com add confirmations every 10 minutes we've not had a single transaction be rolled back after one confirmation in 13 years and every 10 minutes you're adding another confirmation so you're adding another level of security so security of the transactions continues to increase over time you can't really compare bitcoin transactions to consumer payments like credit cards or bank transfers because these are approval of payments and they settle many days or months later it's much better to compare it with um um with final settlement transactions because it is um you know between financial institutions across international borders because bitcoin is able to settle these um without any counterparty risk without credit risk without political risk without sovereign default risk without uncertainty about protocol rules this is really the key thing so if you want to move money across the world all other solutions involve relying on financial infrastructure that is carrying a lot of risk and a lot of hidden risk and on monetary media that also carry a lot of risk so there's the risk of inflation and there's the risk of capital controls and there's the risk of insolvency for financial institutions on the local fiat network now bitcoin is different from all these traditional financial assets and all alternative digital assets in this regard because it doesn't have any of those things and what differentiates it from other digital assets is that bitcoin has really achieved consensus on protocol rules everybody knows that what the bitcoin's protocol parameters are going to be in the future is going to be very similar to where they are today most importantly everybody knows that the supply is going to remain at 21 million this is i think something that none of the digital um assets other digital assets can claim because they're nowhere near centralized uh they're nowhere near as decentralized as bitcoin and so it's uh very easy to imagine changes in protocol rule and that's why they perform hard forks regularly whereas in bitcoin we basically never really had a hard fork so it's uh this is i think why it's differentiated so it allows you to achieve global settlement without a single point of failure without a single critical piece of hardware or infrastructure that is critical for the operation of the network not a single individual organization is critical for the operation of the network bitcoin basically cannot be stopped it's a protocol that's always open to anyone who wants it around every 10 minutes a new block of transaction is released and it's basically never failed so far and it's never confirmed a fraudulent transaction on top of all of that and it has an enormous amount of processing power and it's the hardest money ever invented it's available for anyone who can receive two megabyte data every 10 minutes it's voluntary and now it allows us to perform high values international payments without having to go through governments and central banks which is a big deal which is why it's in my book i call it the alternative to central banks bitcoin basically offers us the most advanced technological solution for value storage across times and space if you care about meeting your obligations for the future and across borders bitcoin is your best bet so that's why it makes sense in my opinion to include bitcoin as part of corporate treasury assets for the long term because cash bonds and gold are all losing value because of inflation or next to inflation and equity bonds and cash have issuer risk sovereign risk natural disaster risk and pandemic risk bitcoin comes free from all of that stuff that's basically my case for bitcoin thank you very much you can read more about my ideas about bitcoin in the bitcoin standard which is now available in about 30 languages the fiat standard has just been released and it's going to soon be out in about 14 languages principles of economics my textbook is coming next year in economics and you can find more details about these and about my courses on safedeen.com thank you hello hello safety thank you so much so i have a few questions okay all right let's go so yeah so we have one question here bitcoin is an asset that's true but it can't be an asset and a currency at the same time what is your answer here it can't be an acid why not who makes those rules like how do we may come up with these absolutes i mean uh we've had an asset and currency before that was what golds was why can't it be like gold i guess if you want to answer that question in the chat you are welcome t connor um yeah so let me just check let me take let me check um [Music] one says okay curious on his comments on lightning layer growth strike via via via twitter el salvador um so what do you see in the next years when it comes to money printing international internationally what you what what are you expecting well i guess it's not going to be better yeah i mean whatever i think the realistic alternatives that you can see for the foreseeable future will involve an increase in the money supply there's no way they're going to miss the chance of doing more inflation even if they get price inflation they might tighten monetary policy here and there in name but i think in practice there's going to be a lot of money printing taking place everywhere um you know if there's any little bit of deflation any little bit of risk to the financial system they're going to print money there's no they're not gonna you know change the habit of 12 years today so i think there's going to be inflation there's no there's no escaping it it's uh and it's looking higher and higher with the day of course i mean if you really think about it this is the key point that michael saylor keeps making and i think this is um you know this presentation is heavily inspired by him you know the ultimate reality is for corporations that you're losing purchasing power you're losing uh wealth you're losing capital if your revenues aren't growing faster than the money supply growth rate that that's the uh that's the tough thing about the the fiat standard you're basically witnessing your accumulated resources and capital getting depreciated because of the money being depreciated and so the way to opt out of that is to strengthen your balance sheet and to have the strongest asset ever invented the hardest money ever invented and have it on your balance sheet thank you safety okay talking about balance sheets so pedro is asking if you have bitcoins as assets how do you value them on a balance sheet um i'm i you know i'm not an accountant so i don't know but i mean you value them um i mean i guess you could think of them as i don't know an an asset that you own uh property it's a form of property really it's a form of it's a commodity um it's i yeah market to market and [Music] fantastic great okay so we have another question here so your opinion on ethereum ethereum um over the last four years so yeah basically since you publish your your your book the bitcoin standard i guess have your thoughts about ethereum changed or no not really not really i still think it's um i still think it's highly centralized as a project and i still think it uh you know it has enormous scaling issues that can only be resolved through centralization and we see the dependence on hard forks where you know hard forks are just always happening at all the time it in my opinion it makes the project's decentralization look a little more than um uh you know uh more than a show a little more than a show um in reality i think uh you know what makes bitcoin different for me is that bitcoin went through several attempts at uh uh changing consensus parameters from uh people who are heavily involved in bitcoin so we've had people like gavin andreessen and then we had the segwit2x and for many years these people tried to make changes to the bitcoin protocol and changes that you know basically that are not backward compatible changes that effectively kick you off the network if you uh make them and the the idea behind bitcoin was that they um you know you want this kind of autonomous record that no person is able to control that no person is able to um decide upon that it is truly decentralized and so you can still run the bitcoin client from genesis you know you can still take the code that was used for genesis block for bitcoin and use it and fix maybe one bug or so and you'll be able to sync your node with the current blockchain so that for me is why i think bitcoin is capable of resisting uh individual control corporate control and i would go even as far as saying um state level control i think it is going to be difficult for a state to be able to change bitcoin parameters and that's kind of why i think bitcoin matters and why i think um you know it's it's it's also why i have no problem telling people that buying bitcoin is a good thing because it's not like i'm chilling for somebody's private project it's it's completely decentralized project and nobody is in charge and nobody can change the rules and nobody can basically kick people off the network so that's the reason why i don't see any other uh token other than uh bitcoin worth mentioning because ultimately it's somebody's somebody's project basically and uh i see no reason why we should be promoting individuals projects when we have this neutral code that anybody can use 100 degenerate yes thank you okay last two questions and one i think one is asking how do we come back execs and corporates within negative comments when it comes to bitcoin and how how much exposure should a corporate treasury have in their trashy when it comes to bitcoin well it's too costly basically yeah i think generally you're probably better off spending your time with executives that are uh convinced and talking to them than trying to argue with the skeptics because the skeptics can get really stuck on it and can be frustrating so maybe just tell them you know enjoy enjoy watching your balance sheet melt and try and invest with people who don't want to do that if you're an investor if you guess if you're an employee um i think the best way to do it is to send them michael saylor's website bitcoin for corporations if you go to that he's got an entire playbook that gives you the idea for how a corporation should use it and so that brings us to the final question uh you mentioned which was uh in terms of uh portfolio exposure i think the i think a reasonable way to go about it is that you have your operating expenses in your local fiat currency available for the next say year maybe 18 months maybe two years so you have that on hand and then you put all of your excess cash in bitcoin and so you have it and you have the exposure where you're able to put all the excess cash that comes your way instead of keeping it in your national currency just don't go over the level of um 12 maybe 18 maybe 24 months depending on your risk tolerance um you know maybe i i'd go as far as saying 36 months if you want to be extremely conservative as a start you know if you're dealing with skeptical um [Music] skeptical partners and executives and you could also see look at look at price performance you know over three years it's been very difficult for somebody to um be down on bitcoin over three years that's barely happened and over four years it's never happened so with that kind of time frame you're protected on the downside and um and then you can put all the excess cash in bitcoin i think that's what makes sense that's what michael seder recommends fantastic fantastic i i loved i really enjoyed your keynote safety and yeah just to to to wrap it up yeah so any excess cash i mean you should have enough money for the next 12 24 36 months if you're a bit more conservative and then the rest on bitcoin thank you so much if you have more questions i can see you have more questions for safety you can use the hashtag ebc mutual and hopefully safety can answer and if not go to his website read his books and enjoy enjoy the ride thank you safety thank you bye thank you thank you victoria take care bye bye [Music]