Dennis Prager Show - What's The Deal With Bitcoin?
Aired: 2021-05-13
Duration: 07:59


=== Digital Knowledge Network (07:37) ===

[00:00:00]  We dematerialize it, make it digital, we make it run on a mobile phone, and we put it on a streaming protocol.
[00:00:07]  If you want to spread your ideas to people, you put them on the radio waves because everybody can't show up in person.
[00:00:14]  The physicality of you giving a speech in person is going to be too expensive.
[00:00:20]  If I wanted to give knowledge...
[00:00:23]  To billions of people.
[00:00:25]  I can't do it with books or libraries.
[00:00:27]  That's too expensive.
[00:00:28]  So I upload them digitally to Google and I make them available for free.
[00:00:33]  And you just get an iPad.
[00:00:34]  You download 100,000 different books for the cost of electricity.
[00:00:38]  And so the challenge of Bitcoin is how do I give property rights to billions of people?
[00:00:44]  Property rights meaning, you know, somebody in Africa, Asia, South America, they work, they make $500.
[00:00:52]  How do they keep it for a decade?
[00:00:54]  If they invest it in Nigerian currency or Zimbabwe dollars or the Bolivar or the peso, that currency is going to go to zero.
[00:01:04]  So they can't do that.
[00:01:05]  And if they try to buy land with it, land's expensive to buy, and someone can take it from you.
[00:01:11]  And they can't necessarily buy the exact amount of gold.
[00:01:15]  And so how do you maintain your property rights?
[00:01:18]  And gold is like the Steinway Grand Piano solution.
[00:01:22]  It's a physical solution.
[00:01:23]  It was the best idea we had for 5,000 years.
[00:01:26]  And Bitcoin is the technical solution, dematerialized property that you can carry in the palm of your hand or put in your head.
[00:01:35]  And the advantage of dematerialized property is you can have any amount of that property and nobody can take it away from you.
[00:01:42]  If you want to give it to your grandson or granddaughter or you want to send it halfway around the world, you can do it.
[00:01:50]  You can't mail your ranch in California halfway around the world.
[00:01:54]  You can't move a building in Manhattan halfway around the world.
[00:01:58]  You can't move bars of gold around the world.
[00:02:01]  And so all the, you know, you can't move shares of stock.
[00:02:04]  And of course, there's 8 billion people on the planet.
[00:02:07]  Not many people can buy stock to save their life savings and preserve their wealth.
[00:02:12]  So Bitcoin running on a cheap smartphone is the most egalitarian idea we've come up with to allow everybody on Earth an instrument of economic empowerment.
[00:02:26]  So that's why it's important.
[00:02:29]  I mean, if you were rich and affluent, you could have a library, a piano, or a bar of gold.
[00:02:34]  But it's just not going to work for the middle class, and it's not going to work in the developing world.
[00:02:40]  Our best hope?
[00:02:41]  Is to dematerialize that virtual thing and put it on a digital network and deploy it to somebody's $50 Android phone.
[00:02:51]  So if I understand it, this is based upon people agreeing that Bitcoin matters.
[00:03:02]  Without that agreement, it's nothing.
[00:03:06]  Is that fair to say?
[00:03:08]  Yeah, you could think of it as like a monetary union or a savings alone in cyberspace.
[00:03:15]  And as people join it, right, they're joining a monetary network.
[00:03:20]  And the more people that join the network, the more powerful it gets.
[00:03:24]  But look, it's just like Facebook.
[00:03:26]  It's Facebook for money, except, you know, nobody ever joined Facebook with a billion friends.
[00:03:32]  It's like, you know, Google, YouTube wouldn't work either if nobody actually clicked on YouTube and WhatsApp wouldn't work if nobody actually used the network.
[00:03:42]  So it is a monetary network, not a social network and not a search network and not a video network.
[00:03:50]  But everybody needs a monetary network.
[00:03:52]  So I think we'll have 250 million people on this network by the end of this year.
[00:03:57]  And what you've got right now is...
[00:04:00]  Like, three million a week joining?
[00:04:03]  I mean, Coinbase is like, you know, Coinbase and Binance and PayPal and Square.
[00:04:10]  The most popular mobile apps that people are downloading right now are so they can get on the cryptocurrency network.
[00:04:17]  Is it taxable?
[00:04:21]  Bitcoin's property.
[00:04:23]  So...
[00:04:24]  The way to think of it is it's tax-like property.
[00:04:28]  If you buy it for $1,000 and it doubles in value, if you sell it, you'll owe capital gains tax.
[00:04:34]  And if you transfer it, you'll owe capital gains tax, just like if you bought a house or stock or any other asset.
[00:04:43]  So the right way to think of it is it's not currency.
[00:04:46]  It's not a cryptocurrency because currency isn't taxable when you transfer it.
[00:04:51]  It's a crypto asset.
[00:04:53]  It's like digital gold, and it is taxable when you transfer it.
[00:04:58]  So the right thing to do, of course, is don't ever transfer it and don't ever sell it.
[00:05:02]  Buy it because it's going up in value over time.
[00:05:06]  And if you ever need additional money, what you do is you finance it, like taking out a home equity loan.
[00:05:11]  You're better off to use it as collateral and borrow against it because then you don't pay capital gains tax and you don't incur income tax.
[00:05:21]  And you don't pay tax on the borrowings either.
[00:05:24]  The most tax-efficient thing to do is construct a very high-quality portfolio of assets and hold them forever.
[00:05:32]  Who came up with this idea?
[00:05:36]  So, Bitcoin was invented by Satoshi Nakamoto, and we don't actually know who Satoshi Nakamoto is.
[00:05:43]  We think it's one or more computer scientists who are experts in cryptography.
[00:05:50]  Coming out of the cyberpunk movement.
[00:05:55]  Satoshi worked on the project for about two years and then just disappeared, never to be heard from again, and gave this as a gift to humanity.
[00:06:05]  So it's thought of as the immaculate conception.
[00:06:08]  It's a big advantage for the network.
[00:06:10]  Because there is no founder and there is no founding company and all of the original coins mined by Satoshi have never moved the first million.
[00:06:21]  They were just used to start the network and the network decentralized ever since.
[00:06:26]  So it really is like money of the people.
[00:06:30]  It's like the only computer program in the world that we have that literally has no architect, founding company, or owner.
[00:06:41]  It really is just open source, owned by the world.
[00:06:46]  And somebody in China or Russia or Norway or California or Venezuela, they equally own it.
[00:06:53]  And they all have the same privileges, the same information.
[00:06:57]  Do you see this replacing currencies, including the dollar?
[00:07:01]  No, I don't think so.
[00:07:04]  It's called a cryptocurrency, so that confuses people a bit.
[00:07:08]  But if you think about money, money has a couple of aspects.
[00:07:15]  It's used as a medium of exchange.
[00:07:16]  It's used as a store of value.
[00:07:18]  It's used as a unit of account.
[00:07:20]  And if the money of the world was not inflationary, if, for example, there was a fixed number of U.S. dollars and nobody printed any more of them, then you could use the currency as a store of value as well as a medium of exchange.

=== The Academy and Dollar Component (00:37) ===

[00:07:35]  That would be perfect money.
[00:07:37]  But we've never really had that, not since the gold standard, and we got off the gold standard in 1914. So in an inflationary environment, money decomposes into a currency and into an assets component.
[00:07:50]  The currency component is the U.S. dollar.
[00:07:53]  The U.S. dollar is the world's reserve currency.
[00:07:55]  All right, all right.
[00:07:56]  I don't know if you could stay on.
[00:07:57]  I hope you can.
[00:07:58]  I want to hear about your academy.