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Oct. 16, 2021 - Freedomain Radio - Stefan Molyneux
59:40
BITCOIN ROUNDTABLE: ETFs!
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Hello, everybody. How's life in the world of crypto for you?
How are things hanging, as they say, technically?
I appreciate everyone who's joined me for the live stream.
This is our crypto slash investment roundtable.
A few items of housekeeping, as we used to say in the business world, a little bit of housekeeping.
None of this is investment advice.
Don't make any decisions about anything that anyone is saying here.
We're simply talking about General economic factors, personal favorite flavors, tartans, how the wind feels, blowing up our legs when we're striding over a subway grate.
Whatever's going on, none of it is investment advice.
Don't do anything based upon what anyone is saying here.
Do your own research, come to your own conclusions, all that kind of good stuff.
That, of course, having been said, we're just going to double-check, make sure that everything is working hunky-dory from the technical standy-pointy.
And... Where is my...
Lord? Okay.
DLive. Okay, let me just...
Yeah, I just wanted to double-check that everything's coming in and coming through to everyone, all right?
And... Everyone can hear.
Let me just check over here on...
DLive, we're good to go.
All right.
I'll bring up my chat here as well.
So... I was a little late in my estimation.
So just so everyone understands, before I was saying that sort of late summer, early fall, it was going to go to 100K Canadian.
That was sort of my estimation.
I really thought that the ETFs were going to be – and we'll get into these in a sec – that the ETFs were going to be approved a little sooner.
Now, it looks like they're on the verge of being approved at least one major one.
The U.S. is – So Canada's already had one.
I think Europe has one or two.
But the big one in the US looks like it's about to be approved.
For those of you who don't know why the ETF matters, we'll get into that in just a second.
But it's a very big freaking deal.
As we can see, we'll sort of focus on the Bitcoin thing here.
As we can see reflected in the Bitcoin price, which is right now hovering in the high 70s.
Let me just double-check here.
Of course, we like to track it over the course of what's going on here.
So it hit a high today of 76,517 Canadian.
It's now 75,413, but it's gone up over 3.7K, or a little over 5%, just in the last little bit.
A little bit last day, really. So that's all very good.
So it's a little later than my expectation is, but the general shape is in accordance with...
What I had talked about.
So I just wanted to mention that, say what I got right, what I didn't get right.
So, okay, let's talk about what's going on.
Okay, so there's a couple of big things for me at least, and if you have your questions and your comments and your issues, please bring them in.
I would love to hear from you.
And there's a couple of things I think that are going on.
I watch memes quite a bit.
Memes are really powerful and they really do capture the zeitgeist.
And I am very happy to be sort of following those memes and seeing what's going on.
And so there's a couple of memes that I think are interesting.
And if you guys have memes that you've seen that are powerful in this space, I think it's really important to share them.
So there are a couple of memes I think that are Very important to crypto or investing at the moment.
So one is the meme of the Nordic-looking guy with his dark-haired wife.
And it's like, my parents in my 30s.
And it was my parents in my 30s.
Wow, we've got to get a bigger house with a second garage, so we have a place to store the snowmobile or something like that.
That's my parents in my 30s.
And the second panel of that meme is a scrawled-looking guy, haunted-looking guy, like a Wojak, being drawn by some sort of epileptic.
And, you know, me in my 30s, hey, I wonder which chapter of Revelations is going to come true today.
And another one...
Is the Wojak-looking guy looking kind of sad and in the distance with his beanie and his cigarette.
Basically, the boomers don't seem to understand that my generation expects nothing good to happen ever again.
And that is pretty powerful stuff with people's despair regarding the current system and desperately looking for a new system.
The chaos of the Biden presidency and his very low popularity rating and people's generally growing sense that they've got completely bamboozled – The sense of despair that people are having over the necessity of booster shots and waning protection from the vaccines.
And now we've got the worst cold ever super colds that are going on and people's concerns about the mass migration that seems to be cranking back up again into the US where there's no money.
To fund any of this stuff is giving people a real sense of doom.
It's a real black pill, which is the crashing waves.
You know, I open up my mainstream media news apps these days with like a hazmat suit on and a crash helmet, and basically it's a line from Macbeth, which I played in many years ago.
I played Macbeth, and...
When something new comes, you open up the news app and basically it's like, what fresh hell is this?
What fresh hell is coming down the pipeline?
So there is a real end times vibe that's going on in the world today and...
People are recognizing that existing system can't last, and they're looking for alternatives.
They're looking for lifeboats. And of course, crypto is gaining some real traction and some real ground that way.
And as I've talked before, because people have their concerns about, well, what if it gets banned?
What if the elites hate it?
What if the central bankers act against it?
And of course, they will. I mean, it's no question that that's going to happen.
And, of course, the central banks are not like the horse and buggy manufacturers because the central banks have the state in its pocket.
In fact, they really are.
The modern state is central banking and almost nothing else.
So there is going to be some pushback, but...
The thing is that the elites recognize the Titanic can't stand.
They need lifeboats. The elites are starting to move towards crypto and Bitcoin in particular, and so there's going to be some minimum amount of that.
When China banned Bitcoin mining and Bitcoin transactions and so on a couple of weeks ago, I mean, I went on just kind of striking it off and laughing it off because those of us who've been around the crypto space for a while know that Bitcoin is regularly banned by China and it's usually done so that they can buy the dip.
And I also said it's actually going to be very positive for Bitcoin that it's banned by a totalitarian dictatorship because whatever they don't like must have something good involved in it, right?
And as it turned out to be the case, I was right about that, as of course a lot of other people were, and shrugged off that and just moved upwards and onwards.
And now I think the majority of the mining is being done in the US, and that's a very good thing as well.
But what seems to be going on at the moment, which is, I think, fairly responsible for moving the price upward...
It's the ETF, the Exchange Traded Fund.
Okay, so it's actually a very simple thing.
And I say that with some hesitation because it sounds like, well, it's so simple, why wouldn't you know it?
It's like, so if you want to buy and sell gold, but you don't want to take physical storage of gold, what do you do?
Well, you would buy and sell a fund that holds gold and pegged the major value of whatever you're buying and selling on the value of gold.
So, in a sense, like you understand how fiat currency came about was originally everyone carried around everything in gold, but carrying around things in gold, particularly as the economy gets bigger and more strong, It gets really tough to carry around a lot of gold.
It's susceptible to robbery and corruption in terms of people could dilute it and all of that kind of stuff.
They could shave it a little bit.
You can put gold coins in a bag.
You can shake them for a couple of hours and you'll end up with a bunch of shavings on the bottom.
So what happened was, of course, people stored the gold in vaults and they would simply carry back and forth pieces of paper That were redeemable for gold, right?
So rather than taking $100 worth of gold from one bank to another, you would take from one bank to another a piece of paper which said this is worth $100 of gold and can be redeemed at any time for $100 of gold.
Or you would basically take $101 pieces for $1 worth of gold or something like that.
And then this, of course, ended up The banks, of course, ended up lending out more than they had in gold.
They would print more of this currency because they knew that most people were going to keep their money or the gold in the bank and would not want to pull it out all at the same time.
But when there were economic dislocations, there would be a run on the bank that people would go and say, hey, man, give me my gold.
And the bank would run out of gold.
And they use these kinds of panics and problems to push through central banking.
And over the course of the 20th century, in the First World War in particular in Europe, and then, of course, under FDR, and in particular under Nixon in 1971, the dollar has been progressively uncoupled from gold.
And now you can't take your dollar and get gold at all.
So the idea that you want something on paper to represent the thing that actually has value is as old as mankind in a way.
And an ETF is just that thing.
So if you want to invest in gold, but you don't want to buy and store and hold and manage and protect and vault your own gold, then you will simply buy a type of security that is going to be tracking the price and value of gold.
So an ETF type of security, it tracks like an index, a sector, a commodity, or something.
It doesn't really matter what it is.
But you can't buy and sell gold directly on the stock exchange.
Like you can't say, I want to go buy a ton of gold and someone's going to give you a ton of gold at the stock exchange.
But The exchange-trained fund is tracking a particular asset, but it can be purchased or sold on a stock exchange the same way that a regular old stock can.
And they can be simple or complicated.
They can track anything from the price of some individual commodity like oil or gas or gold or whatever.
You can also have a large and diverse collection of securities, and you can even structure ETFs to track particular investment strategies.
And, of course, a well-known example, you know, the S&P 500.
So that tracks the S&P 500 index.
ETFs can have a whole bunch of different types of investment stocks, commodities, bonds, mixture of investment types, and so on.
But the point is it's a marketable security.
So it has a price that allows it to be easily bought and sold.
So earlier this year, investors here in Canada got...
Bitcoin and Ether ETFs.
Investors in Brazil and Dubai also have ETFs.
And in Europe, something similar to an ETF arrived in the stock market.
This is way back, almost a year ago now, I guess, December.
No, two years ago now, December 2019.
So one country, of course, still has no Bitcoin ETF. That is the U.S. Now, The actual first application for Bitcoin ETF was back in 2013.
I think it was the Winklevoss twins who tried to get that going on.
But the regulatory agencies have concerns about Bitcoin ETFs because it's a very young market.
And they're concerned, of course, that the whales in the Bitcoin space are going to be doing a lot of market manipulation.
And because they're concerned that Bitcoin, due to its newness and the concentration of large numbers of Bitcoins in relatively small numbers of hands, that there's going to be a lot of market manipulation.
And whatever we think of the regulatory agencies, their stated mission is to sort of try and make things more fair.
And they were concerned... Not about Bitcoin, not about its value, not even about its volatility.
Their major concern was that it was subject to a lot of market manipulation, which meant that people coming in to the market would not be facing objective supply and demand market forces, but a lot of pump and dumps and all of that.
In 2021, there's been a lot of growth in the number of applications to the SEC.
And one of the main reasons for that, of course, is that as of April 2021, Gary Gensler is now or assumed his office as the new chief of the SEC.
He took over from Jay Clayton.
Now, Gensler, I mean, yeah, he's got a lot of experience regulating the commodities industry.
But more importantly, before he joined the SEC, he was an MIT Sloan professor of economics.
And what did he teach a course on?
Well, he taught a course on the blockchain, on digital currency, on fintech, and...
Public policies and all of that, right?
So here's a guy who knows the space, I mean, I would say pretty much inside and out.
And so the fact that people can apply for these ETFs in the Bitcoin space and talk the language of somebody who knows what's going on, I think has really helped accelerate all of this, right?
So yeah, the big challenge they've had all the way from 2013 to now is Trying to show the SEC that it's diverse and diffuse enough in the Bitcoin market, it's matured enough that it's at least somewhat immune from market manipulations.
Now, one of the problems is the majority of the trading volume is reported from exchanges, obviously, outside the jurisdiction of the SEC. So that is a very big problem.
If the SEC can't oversee the institutions that are reporting on the trading activity, It's really hard to effectively monitor open price discovery of the asset.
So that's a very, very big...
Now, of course, as we know, there have been several incidents of scams and fraud cases in cryptocurrency as a whole, and that has not exactly given a lot of comfort to the SEC. As a whole.
SEC, of course, has pushed back against the ETF saying that the cryptocurrency market has a lack of liquidity and lack of transparency and so on, right?
I mean, of course, you can see what's moving on in the blockchain, but you don't know who's doing it or where it may be coming from.
At least you often couldn't, right?
So... And I actually consider that very good news.
It's very good news.
So when they say, I'm concerned about market manipulation, they're saying they're not concerned about Bitcoin or the market as a whole or whether it has value or if it's a scam.
They're just concerned that it's going to be manipulated.
And that's a long way down the road of objections.
So that's good.
So what are the ETF companies doing?
So If you want to create a Bitcoin ETF or an ETF or any crypto, the management company would have to acquire the actual coins, right?
So they would have to acquire the actual coins from the market.
So if you believe you're about to be approved, you're going to buy up a whole bunch of crypto, particularly these are Bitcoin ETFs.
So I assume that this is one of the things that's driving the demand.
So, the bitcoins that the ETF firm buys would be used as reserves.
So, like a management company would purchase stock to include in a traditional shares ETF. Like you can't have an ETF which doesn't have any of the underlying assets.
So, then the company would create a fund that represents the value.
Of the Bitcoins that it's holding in custody and it would list this fund for trading on the stock exchange where it is available to traders, investors and so on.
Now, the fact that it then can go to the stock market and be easily available to traders is really, really important.
And what that means, of course, is that if you want to invest in Bitcoin, you don't have to deal with Your keys, your security, your hardware, your wallets, your cold storage, like all of the stuff that is really challenging to understand and secure when you are trying to get into the Bitcoin space.
That's going to be outsourced, really, to the ETF companies.
You can just buy and sell without the risk of having to handle your own crypto, which is pretty rough.
Because, you know, it can be a little clunky, to put it mildly, trying to buy Bitcoin through some cryptocurrency exchange and how you're going to store your coins and all of that.
And, of course, everyone's heard the stories of the Bitcoins that have vanished or been lost.
What was this, some German guy who lost hundreds of millions of dollars of Bitcoin because he only had 10 guesses on his wallet or something like that and just guessed wrong 10 times.
So that is really powerful.
Once the ETFs allow, really, Bitcoin with a paper wrapper to be bought and sold in the same way as stocks, so any investor, institution or retail, can buy and sell holdings in the ETF. And basically it's opening up, investing in Bitcoin without the technical hurdles to virtually limitless numbers of investors as a whole, right? So ETFs are usually cheaper than mutual funds.
Because they're usually set up as passive index tracking funds.
In other words, they're kind of automated.
There's not some guy who considers himself a business genius buying and selling a bunch of stuff to make you money.
And so they're generally cheaper than mutual funds.
And the ETFs allow investors, I mean, even just Joe Blow, a private investor, to gain access to asset classes and kind of niche markets like Bitcoin, where it would be otherwise pretty difficult to invest.
So I hope that this is kind of making some good sense to you about why this is such a big deal.
So if you buy shares in a Bitcoin ETF, you're indirectly purchasing Bitcoin.
I think that's a fair way to put it.
And you get the same profits or losses – and remember, there are always losses potentially, right – As if you actually had Bitcoins, but again, without that challenge and risk and all of that kind of stuff.
And of course, the other thing too is that you can't really regulate Bitcoin itself because it's worldwide and it's largely anonymous for a lot of people and so on.
It's really tough to regulate it directly.
But once Bitcoin gets transformed with the paper wrapper into an ETF, then it's a regulated investment.
And that gives some people some particular...
And of course, there are some comfort, some security.
And there are lots of places where you can only work with this kind of stuff.
So, it looks like US regulators are going to clear the first Bitcoin futures exchange-traded fund.
And if it approves the first one, then precedent has been set and whatever hurdles they had to jump through, other people would then jump through.
And the people who helped the first ETF get through the regulatory maze will help the next ETFs.
And so, the anticipation is that there's going to be a significant demand For the purchases of Bitcoin to underlie the value of the ETFs.
Because again, you can't really sell an ETF unless you've got the underlying asset to a large degree.
So, yes.
And isn't it wild to think, just speaking in terms of Canadian, it's like, what was it, $14,000 a year ago?
And the fact that it's in the mid to high $70,000 now is pretty wild.
Pretty wild. So next week, apparently, the SEC is set to allow the first U.S. Bitcoin futures exchange-traded funds next week.
This is a huge deal, right?
I mean, starting in 2008, 2009, 2010, the first ETF request going on in 2013, and now eight years later, almost nine, it's hitting.
And that's a huge hurdle in terms of legitimacy.
And the other thing, too, the more you can spread Bitcoin around the world, The more resilient it is to regulation and banning.
Because if the ETF is approved, then the investor classes will have a safe haven from the fiat currency, and maybe even if they're not that interested in gold anymore.
And so you really desperately, as a Bitcoin guy or any crypto guy, you really want this to happen.
Because the more that bitcoins either directly or in this case through ETFs, the more that they spread into the investor class, into the money classes, into the property classes, into the elite financial classes, the more those people are going to lean upon the government to maintain the value of bitcoin or at least not do anything to the more those people are going to lean upon the government to maintain the value of bitcoin So that's really, really important.
It's spreading the risk.
You know, it's really important.
And I think it's going to do a lot to protect bitcoin going forward.
So let's see here.
This is a person familiar with the matter says that the SEC isn't likely to block the ETF's proposal by ProShares and Invesco, which are based on futures contracts and were filed under mutual funding guidelines that the SEC Chairman Gary Gensler thinks offer investors significant protection.
Now, the other thing to remember, again, whenever you think of the regulatory agencies themselves, whether it's regulatory capture, how honest they are, and so on, I think it is, I think, fairly important I think we're good to go.
So if you're lending out $30 for every dollar you have in assets, then if that asset goes down, if you lose that asset, you've lost 30 times that value, and that's where these sudden bankruptcies come from.
So given that they're going to be leveraged, they can't have as many swings, and they don't want it to be manipulated by whales.
Now, of course, what's going to happen is the price is going to be to some degree manipulated by The computers, right?
They're going to be manipulated by the programs.
Actually, the first professional coding job I ever had was coding for an investment company on buying and selling and haircuts and all kinds of stuff.
Ridiculously complicated stuff.
But I did learn a lot.
And the vast majority of stock trades, and I assume at some point the ETF trades, are done in an automated fashion, right?
It's all bits and burps flashing ahead, in fact.
Trading companies have built massive, what used to be T1, I'm sure it's bigger now, big pipes just so they could be milliseconds ahead of their competitors in terms of buyers and sales.
So, I think that's going to be quite something.
So, it's going to be greater acceptance of the digital assets on Wall Street.
In other words, it's going to be – it's being transformed into a shape that your average investor understands, and it is being given a stamp of approval by a regulatory agency that has the ability to give significant amounts of credibility to investors.
An asset and I can't help but think that that's pretty good.
Pretty good all around.
Okay, let me just... Am I pro-ETF? Yeah, I think ETFs are fantastic.
I have no issues whatsoever with ETFs.
Whatever, like I'm a big one for wrapping things in friendly packages, like dick in a box, right?
I'm one for wrapping things in friendly packages.
That's the whole progress of the computer industry.
You know, I first used a computer...
Oh, let me tell you a story.
Believe it or not, this is a story, unlike my wife, that you haven't heard before.
When I was in university, I saw a guy who proudly held out to me the first laser-printed essay that I'd ever seen.
Before that, it was all meh, meh, like dot matrix and just horrendous stuff, right?
And it was beautiful.
Like he had footnotes and big fonts.
I mean, we know, take all this for granted.
And then he showed me how he did it.
And he had to type in TypeScript code or PostScript code or something like that.
And it was like the old reveals codes in WordPerfect 5.1.
Now, of course, you don't have to have any clue what's going on between the font and the computer and the calculations and the printer and so on.
You just WYSIWYG and print cell phones and touchscreens and mice and, like, wrapping the bits and burps and ones and zeros of computers in a user-friendly format.
I've been doing the same thing with philosophy for 40 years, trying to find a way to wrap it in actionable, bite-sized, user-friendly interactions so you don't feel like you're slogging through some...
Half getting a stroke verbal word diarrhea from Wittgenstein, but can actually do something useful with philosophy.
So I absolutely love the fact that these ETFs are translating the bits and burps of Bitcoin into something that's consumable as a very familiar financial instrument for investors.
So I think that's fantastic.
Now, I'm fully aware that we have a roundtable here.
So I just want to see if there were any big...
Questions or comments before we get into it?
Isn't an ETF more of a side bet?
Wouldn't gold miners manipulate the price just the same as ETF traders?
Well, sure. But price manipulation, once you get like, so in the Bitcoin space, when it's completely unregulated, price manipulation is, yeah, okay, you do what you can, right?
This is my, of course, I'm not a lawyer.
This is my understanding of it.
But once you start moving into regulated SEC approved ETFs, then price manipulation becomes a big no-no, right?
Unless you're Nancy Pelosi.
Just kidding. Am I? Who knows?
So that issue is that you at least have the perception of protection from the SEC for this kind of market manipulation.
So I think that does help.
Somebody says, I have most of my gold and silver in ETFs.
They haven't performed as well as my Bitcoin, but I like to be diversified.
Well, I think that's reasonable advice.
So let's see. How would people buying the ETF affect the actual Bitcoin price?
How do we know the ETF is backed by cold-stored Bitcoin?
Well, I mean, I assume that—do you not read the fine print in anything you invest in, right?
So in the fine print of anything that you invest in, there's going to be a whole, here's our ratio, and here's what we keep, and here's how we keep it, and here's our leverage and all that.
So people buying the ETF—so if you have a wrapper— I think?
To people who hold the ETFs, like if you have an ETF in gold, they have to have a certain amount of gold.
You can't just have like one gram of gold and $50 million on this stuff of that.
So I assume that more people who buy the ETFs would then require that the ETFs hold more Bitcoin, which means there would have to be some level of purchase.
It wouldn't be a one-to-one, but there would be some level of purchase.
And look, if people know more about this than I do, which is not that hard, Please correct me where I've gone astray.
Let's see. What else?
What else? What is a good ETF for Bitcoin?
No, I'm not going to.
And if anybody tries this, no, we are not going to provide specific recommendations.
This is a background, deep background, baby.
This is deeper than Jared's.
So let's see here.
Can we expect a flood of new investors?
Well, sure, because the moment you have an ETF, Because listen, people who are in the know, investment advisors, mutual fund holders or whatever, they've all been talking to friends and family and all of that about Bitcoin, but people get stalled on the technical requirements.
Or just a general understanding because it's an unfamiliar thing and it's a little hard for people to understand.
I kind of get all that, right?
So when people can just say it's an ETF just like gold and you don't have to understand how it works and you don't have to hold it, you don't have to know your keys, you don't have to worry about storage or anything like that.
Yeah, I think we're back. We're back.
Okay. So, sorry about this.
Somebody else said, and I think this is quite right, that investors of the Bitcoin ETF can sue people who try to ban it, including the government.
Yes, because if the government has approved something, then they can't really ban it without getting the living crap sued out of them because...
Banning something that has been shown to be illegal and within the bounds of the financial framework.
And that's why you want lots of people.
You want as many people crowding into the Bitcoin space as quickly as possible, not just to drive the price up, but to have it penetrate out with its financial tentacles into the ruling classes so that the government won't try to ban it.
Or if they do, they would face a lot of lawsuits and so on.
Alright, let's see here.
Yeah, Monero, very similar to BTC, has the privacy that Bitcoin is lacking.
Well, of course, Monero, of course, has its challenges in that I think the governors and the government have a bounty for cracking it and so on, and so there are all of those kinds of Matt says, those who are interested in crypto but don't have first-hand knowledge will now have an easy way to enter the market at a low risk.
I wasn't sure that it's a low-risk situation because it's still a volatile asset for sure.
But given that I believe, and many other people do believe, that we either have an economy in the future or we don't.
And if we have an economy in the future, the entire world's economy is going to need to be stuffed into 21 million bitcoins.
Or we don't have an economy.
That, to me, is the only two options.
All right. Let's see here.
All right. So, yeah, ETFs will do...
Yeah, the IRS has a half a million dollar bounty on cracking Monero.
Yeah, and, you know, they probably won't.
Why is there no bounty for cracking Bitcoin?
Obviously, right? So, okay, that's sort of my intro.
I appreciate everyone's patience as I just really wanted to get the ETF stuff out the way.
If you would like to unmute yourself and throw in your, you know, 50 cents worth, I would be happy to hear.
And again, it's wonderful to chat with you all this evening.
Go for it. All right, I guess I'll jump in there.
So hi guys, my name is Jared.
I've been on the previous investment roundtables and Tezos is my primary coin of choice.
But today the big talk is Bitcoin ETFs.
And in that regard, this is something that I've been around the space since like 2013.
I've seen this come and go.
I've seen all the China's banning as Bitcoin's dead, all that stuff over and over again.
And ETFs have been a big conversation, a big push for a long, long time.
I've never looked into it too much myself because I'm like, ah, ETF, that's stock.
That's the traditional market.
That's legacy finance.
You know, that's the old stuff.
That's the attitude I've had.
Like, I don't care if it's not crypto itself.
I'm not, you know, I'm not super interested.
That doesn't mean this isn't incredibly significant and important because getting the old guard Into and invested in crypto and interested in it is a, I think is a net benefit.
I think it's a net gain. It makes sense to me that having those resources come into, there's an ocean of resources out there in the traditional marketplace.
It dwarfs what crypto is at the moment.
And to have those resources come into crypto, even if it's only halfway and getting a toe in the water, That's only a net gain for crypto, for my opinion, because the more these old guards are invested in Bitcoin in some way directly or through an ETF, the more they're going to have an interest in protecting it as well.
And what Steph was saying that Oh, I lost that train of thought.
But essentially, oh, no, no, he was saying, like, this is, you know, this is a regulatory acceptance for Bitcoin.
That's a big deal. And that's not just it, because I've been in the crypto industry, I'm working in it, and I know just how influential and impactful, not to say others don't know this, but just want to emphasize it.
How influential and impactful the U.S. economy and regulatory state is.
It's a shame. It hinders a lot of things, if that's the case.
But it is the fact. If Albania authorizes ETFs, it's not like the whole financial world is like, well, hold on, man.
That's the gold standard. If Albania has done it.
But if the U.S. does it, it's, you know, it's the biggest market to crack.
And it's the most legitimate. I mean, it's the world reserve currency.
So it's the most legitimate signal of functionality that can go out to the financial world.
Absolutely. Absolutely.
So this is not just we're getting some regulatory like thumbs up.
It's the regulatory thumbs up as far as there is one in the world.
And from my understanding, someone please correct me if I'm wrong.
I've said my piece. Thank you, folks.
And so somebody here says, oh, God, I am so lost on this stuff.
And that's exactly why we're talking about it, because I understand.
Look, it's confusing, it's complicated, and so on.
I've actually been down gold mines in Africa, and trust me, mining gold is really freaking complicated.
Mining it and cleaning it and shipping it, and I mean, it's just mad.
I've been gold panning and prospecting.
Like, finding gold is monster complicated and really challenging and really technical.
But you don't have to know any of that to invest in a gold ETF. That's sort of the point, right?
Yes, understanding the whole blockchain, understanding how it's really technical, but The value of digital plus scarcity, right?
That's all you really need to know about Bitcoin, is that digital generally means that each copy is worthless, to a large degree, because it can be copied and pasted.
Like, think of some MP3, right?
Like one of my podcasts, right?
Okay, if there was only one, it might be more valuable, but given that you can just copy and paste them, each one is not worth that much.
But it's really easy to transmit and transfer them, right?
You can shoot them across in an email in five seconds.
So the convenience of digital, but the value of scarcity, that's Bitcoin.
It squirts all over the place and can transfer in insane amounts of money very conveniently, very cheaply, very easily.
So it's all the convenience of digital with all the value of scarcity.
Should we give a quick explanation of what an ETF is?
I did that for the first half hour.
Sorry, if you've spaced out, I can't.
But yeah, I did that, so you'll have to go in.
We've got to buy Bitcoin with something.
I can't buy it with a goat.
I'm not going to argue with that, that you can't buy Bitcoin with a goat.
Or at least it would be tough.
Most brokers and exchanges also offer leverage so you can buy like three times of the Bitcoin ETF. Yeah, it does give you the value of leverage.
And that is going to be both a plus and a challenging minus.
All right. Who else have we got who would like to jump in before we gather together?
Well, so... I was thinking that a lot of people just do whatever their financial advisors say, and then a lot of financial advisors up to now haven't encouraged the people they work with to buy in, and then now they're kind of embarrassed.
And then when the ETF happens, this kind of gives them an excuse where they can say, oh, well, the reason why we didn't move before is because we were waiting for this, but now that it's here...
Now we have...
This is what we were waiting for, so let's get in.
It gives the financial advisors an excuse for...
Let's not worry too much about what happened in the past.
It's like the final FDA approval for the vaccines gives people who are hesitant, okay, well, it's been approved.
Now, whatever we think of all of that, it does give that same legitimacy to people.
And, of course, the financial advisors who say this is an ETF that's now been approved by the SEC... They're not going to get the crap suit out of them because they have a legal cover or veneer if the money goes boobs up, right?
They can actually say, hey man, it's just another ETF. It was approved and that gives them some sort of defense if something goes bad.
Yeah, I was just, I was talking with a friend at work where, you know, I had him, like, totally on board.
And then he's like, okay, I'm gonna go talk to my advisor.
And then he comes back over the weekend and he goes, my advisor said no.
Like, that was all it took, you know, so I bet you the advisors are going to be more open to it after the ETF. Well, and let's not also forget that the West and America as a whole is going through some, not quite Weimar, but seriously catastrophic inflation at the moment.
I mean, even up here in Canada, I filled up my car the other day.
It was $80. I mean, I remember filling my car up for $30, honestly.
I mean, it's really mad what's going on.
And even if you accept the official numbers that it's like 5% or 6%, I think that's complete nonsense.
It's way more, way more.
All they do is exclude everything that's really high in inflation.
And it's not even counting shrinkflation, right?
Which is where you pay the same amount, but you get less goods and all of that.
So when the inflation is starting to go up, people are just looking at...
You know, having inflation go up, it's like having a cake out in the rain.
I mean, you can kind of eat it later, but who'd want to?
And so people are just trying to figure out how they can protect their assets from inflation.
And the traditional, of course, store for inflation is gold or bonds or something on a sort of fixed income payout.
And gold is spectacularly unexciting these days because a lot of the money that would normally go into gold has now gone in To crypto or Bitcoin.
And so people are looking for some place to go, some place to hide their money.
And ETFs are a pretty good way to do it.
Because the other thing, you don't have to pull this money.
You may have a bunch of cash in your trading account.
You can just buy an ETF of Bitcoin rather than pulling it out and figuring out how to buy stuff.
And, you know, that's kind of intimidating.
I also wanted to mention as well.
So this was two days ago.
There was more than $21 billion of transaction volume settled on the Bitcoin network in the previous 24 hours.
Okay, $21 billion of transaction volume settled on the Bitcoin network in just 24 hours.
Now, just to give you a sense of that, if you annualize that $21 billion, that's over $7 trillion of annualized volume, or just over 50% of Visa transactions.
So 50% of Visa's total transaction volume.
Now that is...
I mean, good lord, people.
It hit 50% of Visa's total transaction volume a couple of days ago.
And, you know, that's just totally mind-blowing.
And, of course, the speed issues are to a large degree being solved by the Lightning Network, and I may sort of do something on the Lightning Network.
I won't sort of do it now, but I may do something on the Lightning Network some other time to sort of explain that.
But, I mean, basically the Lightning Network is like having a bar tab, right?
So when you go into a bar and you want to drink five beers or ten beers over the course of the night, you don't pay for each beer.
You just say, here's my visa.
We'll settle it at the end of the night.
You run a bar tab, right? That's kind of the way.
That it goes. And that's what the Lightning Network does.
It says, okay, we're going to trade with this person and you just stuff a bunch of trades, have them waiting around and then execute them all at once.
And it's always sniffing for the fastest trade positions.
Like a friend of yours who wants a couple of beers could just say, let me put it on your tab and then I'll pay you.
And then he doesn't set up his own tab and it's the same way the Lightning Networks.
It's really brilliant stuff and it's fantastic at solving some of the congestion issues and speed issues.
Of that. So yeah, just problems are being solved left, right and center.
So I think that's really, really important to understand.
And of course, the last time the Bitcoin was at 60 grand US, there were actually about 20% more active addresses, which means that, of course, that there's fewer people trading, which just means that it's a more narrow aperture, which is going to speed the price up if it's going to go up or down, I guess, if it's going to go down as well.
So yeah. And also, I said, it's just wild.
Like, look at the growth of this, right?
So, as of the 13th of October, which again, two days ago, $21 billion of transactions settled in one 24-hour period.
And then today, it was $23.55 billion of transaction volume.
I mean, isn't that wild? Bloomberg has just added a ticker symbol for Bitcoin futures ETF, right?
So that's how certain they are it's going to go through.
Bloomberg has actually added this ticker symbol, which is pretty cool.
And here's the funny thing, too.
Let's sort of look back at the history of this, and then I'll sort of turn it back to you guys.
So the first gold ETF on the New York Stock Exchange was listed in November of 2004.
November 2004, and the price when it was initialized, the price when it was first released, it never went back down to that price again, ever.
In other words, The price of the gold, the first gold ETF on the New York Stock Exchange never again returned to the levels, back down to the levels of when it first started.
And that's kind of, seems quite important.
And it's gone significantly higher since.
So that's pretty wild.
So the gold market cap.
So before the first ETF in 2004, the gold market cap was a trillion dollars.
After this first ETF, the gold market cap, the market cap for all of gold, went from $1 trillion to $11 trillion.
Obviously, the math is not that complicated.
We've got an 11-fold increase.
Bitcoin's a trillion right now.
I'm sorry? I say that Bitcoin's a trillion right now.
You're absolutely right about the ratio.
When the first ETF for gold went in in 2004, gold had a market cap of a trillion dollars.
Now it's 11 trillion.
That's with the slow-moving gold stuff.
This is right before the first ETF for Bitcoin.
Which is a trillion dollars.
Of course, if it follows the pattern of gold, it's going to 11 trillion dollars, which is an 11-fold increase in the price, right?
So I'm not even going to try and do this in my head.
So 76,000 times 11, we're talking $836,000 per Bitcoin Canadian.
That is quite a bit of money.
Frankly, that is quite a bit of money for Bitcoin.
Nobody guarantees anything like that.
But that's the closest analogy that I could find in the past was ETFs took gold from $1 trillion to $11 trillion of market cap.
And that's just gold, which has been fairly stagnant for quite a long time.
I think that Bitcoin is going to go, has the potential, of course, to go even faster.
So, sorry about that.
I'm back to whoever wants to chat.
Tim, if you had more that you wanted to say, or Jared, unmute yourself, or if anybody else wants to raise their hand, I'm happy to have them come in too.
I just want to say, I guarantee you there's someone somewhere that will trade a goat for Bitcoin.
That's a thing. Jared's already typing up the business plan.
Bitcoin is the goat. Wait, Bitcoin is the goat.
Wait, you mean greatest of all time?
No, no. Bitcoin is a goat.
Sorry, go ahead. So if you're living somewhere like in the third world, you can exchange goods, physical goods for Bitcoin.
There's literally nothing stopping that.
So I think that's kind of a silly example.
I mean, one of the early examples in Bitcoin was someone trading, I think it was 10,000 Bitcoin for a pizza.
That's right. That's right.
Someone walked off a little happier than the other in that deal.
So I don't think that's a good counterexample of anything.
Somebody's asked, don't you have the fear that governments approve it only to spy money through the blockchain?
Well, look, if you're concerned about the government following your financial transactions, didn't they just put something in the recent bill for infrastructure that anything over $600 is going to be tracked?
Because, you know, they want to make sure that the super rich don't cheap.
So, you know, apparently the super rich these days means $600.
So... You can follow stuff through the blockchain, absolutely.
And that has great value in terms of trust and openness and so on.
And as you know, only 1% or 2% of bitcoins are ever used for anything illicit.
A far higher percentage of fiat currency is used for illicit purposes, but...
Hopefully, I mean, listen, I've always suggested this.
If you've got crypto, declare it, pay your taxes, pay your capital gains, do what you need to do so that you stay out and can promote Bitcoin, stay out of jail and promote Bitcoin.
So I hate to sort of say nothing to hide, but yeah, I mean, you can follow us through the blockchain for sure.
Sorry, somebody was saying? The situation can't possibly get any worse than where we're already at.
I'm not worried about my financial privacy getting worse.
It's already as bad as it could be.
Right. Financial privacy with fiat is non-existent.
At least with Bitcoin, there's potential for anonymity, and there's lots of things that you can do.
Nothing that I would suggest in terms of illegality, but there's things that you can do to cloak transactions and all of that if you don't want people to know stuff for legitimate reasons, maybe for financial privacy or whatever.
There's things that you can do, all of that kind of stuff.
The inflation going on is blatant theft.
Well, that's the problem.
I mean, I agree with you, but it's not blatant theft.
That's the problem. So when you have a middleman, this is why communism generally fails and fascism generally fails, but this system is kind of going on and on because when the government inflates the currency and the prices go up at the grocery store, People get mad at the grocer.
You have a human shield for the government to, you know, we're going to investigate why the prices of oil is going up so high.
It must be price gouging.
It's like, no, it's Saudis and the Chinese funding all of the environmentalists to cripple the economy of the West and all that.
Right. Also, it's kind of different now because before you didn't have an option.
The fact that you were stuck in the dollar means that when they inflated it, I think that means that they were stealing from you.
But now that you have an option to get out, it's like you're almost choosing to let them steal from you by continuing to hold dollars.
Right. I mean, it's not even so much that Bitcoin is going up, it's that the dollar is going down.
I mean, the Bitcoin is, in a sense, it's shorting the dollar, right?
It's assuming that the value of the dollar is going to go down over time, right?
Yeah, let the other people pay the inflation.
That's not something we need to worry about anymore by holding Bitcoin.
Right, right. Somebody says, government can already look at your debit card transactions anyway.
Oh, yeah. I mean, I don't assume anything's private anymore these days, I mean, as far as all of that goes, so...
If privacy is your concern, just use Monero or PirateChain or any of the other privacy coins.
When you just say, oh, there's this big problem, it's like you're going rubber bones in the conversation.
Yes, there's a problem there, but there's solutions.
I've got to push back against that, like using privacy coins as some way of like, well, they're not going to track you and somehow you're going to get around having to surrender to taxes and things like that.
Obfuscating your transactions is a whole other job in and of itself.
And the amount of time and accounting headache you would have to have to even somewhat safely try to do that, it's like you might as well earn the other wealth and surrender it anyway without the risk.
Not to say, like, I think it's a good idea to try to do these things.
It's not nearly as easy as I'm going to use this privacy coin and then somehow I'm going to, you know, they're not going to come after me for taxes and things like that.
Whenever you go out and you try to use your resources somewhere to buy anything of substance, anything that matters, then it's like someone's going to show up and say, where'd this money come from?
What's going on there?
It's not this cut and dry game.
And like, I mean, yeah, it's just...
It's much better to steer people towards like, do not do these incredibly risky things that people often get thrown away in deep dark holes for.
Well, the other thing, too, is, I mean, look, I mean, pay your taxes, declare your income, because, I mean, it's illegal not to.
And look, they've just come to your house and tell you to open your wallet anyway.
I mean, it's like, if you've got access to it, then so does the government, because they'll just tell you to open it.
And then if you don't, they'll throw your ass in jail.
And I'm around the Free State Project, a lot of, like, libertarians and liberty-minded people.
And there's also, like, some...
There's also the folks that are a little more on the edge case.
Individuals are like, no, nothing but cash and privacy coins.
That's all doing like the folks that like live so paranoid about these things all their time that.
I don't envy their lives at all.
They're not the kind of people I would not want their lives.
That's the Ian Freeman thing, which is the whole other circle of hell.
They're so worried about this stuff.
It's like, just make more money.
Create more wealth. They're going to get it one way or another.
Alright, let me just see if we've got any other questions.
I actually can't do a super long show tonight because I have a debate coming up tonight with some communists.
So I will of course need to snort massive amounts of powdered altcoins in order to do all of this.
Alright, so hit us up with your last questions if you have anything that you wanted to...
I'm just going to report on some people saying about what's been happening to things that they've tried, still that they've tried to buy.
Somebody says, I bought two hamburgers for shakes and fries.
It cost $22. Somebody else said, I purchased a drink for $3.41 two weeks ago, now $4.67 yesterday.
Yes. Where can I watch the debates?
I'm not sure. I'll post it if I can get a link ahead of time.
So I never want to use the same arguments twice.
I'm like Freddie Mercury doing impromptu.
I never want to do it.
Will the debate be streamed? I'll check.
I'll check. But I've got some great new arguments about communism and all that.
And so I think it will be enjoyable and, of course, very, very important.
Yeah, so empty shelves Biden.
You've got the Freedom Flu, the hashtag that's going off on Twitter.
You've got a lot of people who are pushing back against these mandates.
And what was it?
3% of the U.S. workforce quit in August.
Like, that's staggering.
I had a look at the breakdown.
Yeah, it's a lot of people in restaurants and hospitality, but the third biggest group were professionals.
Like, here's the thing, man.
These mandates...
I mean, they're gutting the economy.
In America in particular, because in Canada, people are a little bit more compliant.
You know the old joke, how do you get 500 Canadians out of a swimming pool?
You say, hey, would you mind getting out of the swimming pool?
Out they go, right? But in Americans, it's like, you'll never take me alive.
And so what's happening, of course, is...
People who are older, who are closer to retirement, particularly high-skilled professionals like lawyers and accountants and doctors and surgeons and all that, all of the high-worth, high-value, massive amounts of social and intellectual capital investment by society in society, they're bugging out, right?
I mean, a surgeon was ordered to take the vax, and he's like, nope.
And they're like, no, you have to.
He's like, okay, cancel all my surgeries.
I'm taking early retirement. And they're like, okay, whoa, whoa, let's not get crazy here, right?
And they sort of backed away from that.
So this mandate is pushing a large number of people.
And I would argue in a sort of Atlas Shrugged Galtz Galtz situation, the most valuable people Out of the economy.
They're like, to hell with this.
You know, I don't need this.
I'm not, you know, maybe if you're a doctor, you'll say, hey, I might take them after the experiment ends in 2023, but not before or whatever.
So there are a lot of people and they tend to be the more experienced people because younger people new to their career Don't usually have the financial wherewithal to resist these kinds of mandates.
But if you're older and closer to retirement, in other words, you are at your maximum economic value for intellectual labor in particular, you're out.
And that is going to have an absolutely catastrophic effect on the economy.
It's going to be a slow roll.
But when the older people decide to retire, the amount of value that you lose is unbelievable.
Now, I was watching an interview with a nurse who was quitting, who was just saying, you know, I've been a nurse here for 30 years.
You think you're going to get the same level of service with somebody who's two years into this?
Do you think I've learned nothing in the 15 times longer that I've been here?
The amount of capital and knowledge and expertise and value that is walking out of the door When people are bugging out of these situations, it's literally incalculable, but it will be priced in at some point, and the great slowdown will generally accelerate.
People don't call you back.
They don't understand what you've got.
They send you the wrong thing.
Just everything slows down and kludges up.
Of course, in the healthcare industry, that means lives will undoubtedly be lost and way more than I think would be saved by these mandates, but maybe a topic for another time.
I think looking at that, that's another reason why You wouldn't have had these mandates under Trump.
Whatever you think of Trump, you wouldn't have these mandates under Trump.
A Biden is...
Committed to the evisceration of the existing economy.
There's no other explanation for everything that is going on at the moment.
And when you have chief executives who are gunning for the end of the current system, it may be a good time.
It's one thing if you accidentally hit an iceberg.
It's another thing if the chief engineer is down there drilling holes in the hull.
That's probably not going to go. Somebody says, I'm seeing it here in Canada, early retirements.
Yes, that is a very big deal.
Now the other thing that's interesting about this is people who retire a little earlier than they want will often have a greater tolerance for risk.
And maybe that will put them more into Bitcoin ETFs.
I'm not sure. I'm not sure.
Quebec extended the deadline for 30 days.
Yeah. Well, in Canada, too, the rule of law is completely breaking down.
You have all these provinces enacting these completely anti-constitutional mandates and nothing's happening.
The entire legal system seems to have completely shut down.
I mean, the Nuremberg Code isn't being enforced at all.
So, yeah, it's pretty wild.
I think this raises an interesting question.
Would you rather have the economy shut down like it is, or would you rather that we become like Australia?
I think trying to avoid whatever's happening in Australia is pretty much job one for every sane human being.
That 237-year boomerang from prison colony to prison colony seems like a dystopian movie with giant spiders.
And that is not a good combo for any sane human being.
All right.
Any last closing comments or questions?
Let's see.
I did say that it's interesting how many, like, famous people are not going along with the vaccine.
Like Kyrie Irving, he's giving up a $30 million salary in order to not have to take the VACs in the NBA. And there's other NBA players too that are not going to do it.
And wasn't there, I can't remember who it was, there was some famous basketball player Yeah, people look up to those people.
They're kind of like heroes.
It's the first time they're watching the heroes get kind of in trouble with the state.
Magic Johnson, he was the guy with AIDS, right?
Magic Johnson actually had AIDS and was totally fine.
And a player recently lost his career.
His career ended because he got blood clots from the vax.
Is that right? So, yeah, the school shooter was let out of jail.
Oh, yeah, rule of law in the US is pretty wild.
I mean, I experienced this up here in Canada.
So, yeah, it's pretty, pretty wild.
All right. Well, listen, let's not...
Sorry, go ahead. I'm just excited to log into my 401k account next week and see if I can move some stuff around.
Oh, it's good to hear.
Good to hear. All right. Well, listen, thanks, everyone, for dropping by.
Thank you to the Brain Trust of Super Geniuses for dropping by.
I think it's a really exciting time.
And sorry it was so long since the last one, but Bitcoin was boring.
And, you know, or you'd poke it.
And it's like, do something. It's like, no, but not tumble down the stairs.
Do something the other direction.
Now it's doing something the other direction.
But I thought this was really important to talk about.
So... Thanks, everyone, for dropping by, freedomain.com forward slash donate.
If you would like to help out the show, you've gained value over the years, as I know a lot of you have.
So have yourself a great evening and look on my social media to see if I can post a link to the debate that's coming up.
And thanks, everyone, for dropping by.
Have a great night.
Thanks, folks. We will talk to you soon.
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