 When it comes to publicly traded companies that own Bitcoin, one firm totally dominates, and it's not Tesla or Square or Coinbase. It's MicroStrategy, a publicly traded company based in Virginia that provides business intelligence, mobile software, and cloud computing. It owns about two and a half times as much Bitcoin as the next closest company. The reason MicroStrategy is so long on Bitcoin is because its 57-year-old billionaire CEO, Michael Saylor, had an epiphany during the summer of 2020 when COVID-19 shut down most of the country. Bitcoin is an approximation of a perfect monetary system because it is correct. It has no inflation in it. It's not corruptible because it's decentralized. As the economy tanked due to external factors, Saylor directed MicroStrategy to keep buying Bitcoin regardless of the price, and he's remained bullish despite the recent steep price slide, while joking on Twitter that his next job just might be working out of McDonald's. Bitcoin, he believes, is the last best hope of creating an economy that is independent of the machinations of politicians, central bankers, and connected investors who rigged the system to benefit themselves at the expense of regular people. Reason sat down with Saylor at the Bitcoin conference in Miami this April to talk about why he's all in on Bitcoin, how his training as an engineer informs his worldview, and his belief that the one thing holding back the mass adoption of a non-state-backed currency is a lack of clarity in how the U.S. government will regulate it. Michael Saylor, thanks for talking to me. Happy to be here. Let's start with a kind of general statement. You have written in various places, Bitcoin is hope. What do you mean by that? I think if you don't have property rights, then your life is hopeless. So anybody in the world without the ability to store economic energy in the form of property or in the form of a proper money can't plan for the future. I liken it to being a type one diabetic, where you can't form fat. So if you can't actually store energy for the future, then by definition your life is hopeless. Can't plan anything in advance. You're living day by day, hand to mouth. And on the day that you fail to hunt or you fail to catch something, you go hungry, and after a few weeks of it, you starve to death. But there's a lot of hope before Bitcoin, right? And whatever else we might say about the dollar or fiat currency, people have been doing a pretty good job over the past 250 years here of living for the future and having hope, right? I think if you look at the history of the world, you can see a lot of desperation and desolation, right? So the plate, maybe the rich Romans did okay. If they didn't kill each other, the Gauls didn't do okay, right? The Roman Empire had like a million Roman citizens and 190 million serfs and billions and billions of people have lived without hope for quite a while. So I don't think the human condition has been great. I think that the best money that we had for 10,000 years was gold, but we know that gold is imperfect money and we can trace thousands and thousands of wars to it. And we can trace tens of thousands of stories of people that saved their money in gold to have it seized or lost. If you go back to before Bitcoin, parts of the world had assets that they could use to store economic value, maybe the United States and Europe. But there are parts of the world like South America and Africa that not in thousands of years have actually had proper property rights or proper monetary assets. So their life has been hopeless and continues. They continue to struggle, right? There are like what, like 10 currency collapses in Argentina over the course of 200 years. The Russian currency collapsed in 1998, right? So I think if we look at the history of modern currencies, right, the US dollar is the winner in every war in the 20th century and it's lost 99.7% of its value in 90 years and is on track to lose 99.9% of its value in 100 years. That's the best one, right? So every other one was worse than 99.9%. Can you explain what it means for the United States dollar to lose 99% of its value? Because there's no question that people living in 1915 or 1917, whatever the year the Fed was created versus now, people are living better. So explain what it means for the dollar to lose value and yet standards of living continue to increase. Standards of living for the eight billion of people in the world is one question which we could spend quite a while on. If you trace the cost of a house in Miami Beach in the year 1930, my home has increased in price 305 times in 92 years. The formal Bureau of Labor Statistics would suggest that in fact the dollars lost 95% of its purchasing power over that time frame, but the truth is, you know, 305X means the dollars lost 99.7% of its purchasing power over that time frame. The implied asset inflation rate then is about six and a half to 7% a year for 100 years. Safedin and the Bitcoin standard estimated that the US currency and the European currencies pegged to it have lost about 7% of their purchasing power a year or expanded it 7% a year for the last 50 years, right, since Nixon went off the gold standard. But if you look at the currencies in the developing world that are weaker, like in South America and Africa, they typically are losing power at double that rate, so 14%. So what does it mean? It means that if you want to buy an asset and you're a working class person up until the year 2020, you would have to increase your after tax cash flows by 7% a year in order to keep up with the rate of inflation. And if you lived in other countries, you might have to increase your cash flows 14% or 15% a year to keep up with inflation. The formal government measures are CPI, but CPI is the lowest possible metric that you can calculate. And it's engineered in order to not go up in price. So the real inflation rate is double or triple what the consumer inflation rate is. And the distinction of why life is hopeless is because the currency is collapsing in value. If you're a working class, you can't buy assets. You might be able to buy products and services that are highly manufactured with low energy content in them, but high energy content, unique scarce assets get progressively more expensive. What are those then? Because in terms, and I'm just to dilate on this a bit, because I agree with you, inflation is a thing, but it's compared to 1930, more poor people in America own homes as a percentage of whatever slice of income you want. So houses might be more expensive and yet they are also more available to people. It doesn't feel like a house is available to someone if it's 20% more expensive today than it was 12 months ago. Yeah, but I'm just working class right now. The house got 20% more expensive in 12 months. So what exactly is making it cheaper in the last 12 months? I don't know. But at 65% of people in America own a house, in 1930 it had to be below 50 if it probably closer to 30 and we could even factor out the depression. More people own cars now than they did in 1970, more people go to college even though these are things that have gotten a lot more expensive in terms of actual prices, but they're more ubiquitous. They've manufactured more stuff. Well there you would say the rate of manufacturing is outstripping the rate of population growth and therefore they're spreading. Look, present more people on a car today than they did during the height of the Roman Empire. And why is that? Because we've manufactured more cars. No, we have more computing power than all the pharaohs of ancient Egypt for sure, right? So it isn't that there aren't things in the world. Antibiotics exist today and they didn't exist a thousand years ago. So clearly people have something now that they didn't have then, but that doesn't mean that the money works. That means that antibiotics work, right? We're probably arguably, we're better at manufacturing and engineering things like bridges and cars and ships and planes and antibiotics than we are at running a monetary system. So let's talk about what is unique about Bitcoin that allows it to be better than gold? We don't even have to talk about dollars in fiat currency. What's the genius of Bitcoin that gets us to a place where we'll actually have a good money, good currency? Theoretical perfect money would be an immutable ledger that's mathematically correct. That means whatever your math system is, if it's 100 million coins, a billion coins, a thousand coins, then 10 stays equal to 10. 21 stays equal to 21. So if you had a mathematically correct ledger, it was shared by everybody in the world, no one could corrupt it and change it. If it was run by a deity telepathically in real time that was non-corruptible, you'd have perfect money. In the absence of God wanting to run the monetary system, the next best idea is you create a computer software program that will run such shared immutable ledger. You make it shared and you make it immutable by letting anybody in the world run that software and having all the nodes on the network check each other and kick off the corrupt nodes in order to maintain a degree of integrity and virtue in the system. So Bitcoin is an approximation of a perfect monetary system because it is correct, it has no inflation in it. It's not corruptible because it's decentralized. And it's governed by these rules that can't be changed. Yeah, the rules are what make it mathematically correct. What was the aha moment for you? I mean, you and your company MicroStrategy are essentially the biggest known owners of Bitcoin, right, on the planet. Where we know who the people are, what was the moment where you were like, this is what I am really going deep on? I think the second quarter of 2020, the policy response to the pandemic was to lock down most of the economy in the world, main street shutdown, and the monetary response was to lower interest rates to zero and start pumping money into the economy throughout asset purchases and to loosen bank lending restrictions, lower the reserve ratio, and that happened everywhere in the world. So we had a massive monetary stimulus while we had a massive fiscal contraction or what I'll call physical contraction. And you saw something which I kind of view as perverse, which is the stock market recovered to an all-time high, at the time when the economy was the most dysfunctional in our lifetime. And so in the year 2020, you could say if you were a Wall Street company, and if you did nothing for the entire year, you had the best year of your life, you were up 30%, you made a fortune. And you could have hung out for the entire year on a floaty at your house in the Hamptons, done absolutely nothing, and you're 30% richer. And if you're a main street company, it was, first of all, you were almost regulated out of existence, so you couldn't operate, right? Every possible impediment to operation, to doing something, providing a product, providing a service, etc. It was thrown in your face. But if you were a main street company, and if, despite all the regulations that preventing from operating, you generated 30% more cash flow, you were the same as you were at the beginning of the year. You got no benefit. So another way to say it is you have to work 30% harder to get nothing in one part of the economy, and you didn't have to work at all to get 30% richer in the other part of the economy. And I saw that as being extremely unfair. What it does is it illustrates the problem with the weakening currency is you're continually transferring energy from the working class to the property class, right? And you're making it exponentially harder for the working class to rise in society or to acquire anything of value, and you're making it exponentially easier for the property class to remain entrenched in power. And that seemed to me to be grossly unfair. I totally agree with your analysis there. I'm putting it in that frame as really powerful. Why do you think that Bitcoin is generally viewed as something that elites are dabbling in, that this is something that billionaires and international business tycoons are playing with? Given what you're describing, which I think is accurate, is this is something that will allow regular people to participate in the economy on the same terms as extremely wealthy, connected people. I don't think I agree with the characterization. There's a million different views of what Bitcoin is, but my view of Bitcoin is Bitcoin represents technology to deliver property rights to 8 billion people on the planet. No, no, I agree. But I'm saying when somebody like Elizabeth Warren talks about Bitcoin, you know, when the Chinese government kicks, you know, bans Bitcoin transactions and then bans Bitcoin mining, they're not... I don't think her views are generally shared. I don't think she is one person with one set of views. But I think that if you look at the White House, it's pretty clear from the executive order that the view of the White House is that this is profound technology that's good for the civilization. I think if you look at Congress and the Senate, I think you've got a remarkable degree of support for this as new technology. Are you worried about what kinds of regulation we might say Bitcoin ultimately is immune to regulation, but what kinds of regulations coming out of DC or capitals around the globe do you worry about that you think will either screw things up or really make it that much harder to get to where we should? I don't really worry about any of it. I think the faster that the society regulates it, the faster it'll grow. And how does that work? Because the number one thing holding Bitcoin back is the 17,000 other crypto assets that are unregulated, that are creating noise and volatility and anxiety in the system. And so that's a liability to the asset class. And then I think the other thing holding it back is that there's $100 trillion of capital that's afraid to enter into the network because they see the 17,000 other crypto assets and they're waiting to see how the regulations will evolve. And I mean, your sense then. Let me give you a different example. Electricity. Okay, so I invent electricity, I bring it to your town and someone like wires their house and they jury rig the wiring and then your kid comes into my house and they get shocked, electrocuted and they die and then one week later I turn something on and the house burns down. And then someone comes along and says electricity is bad for the human race, we should ban it. And then someone else comes along and says, no, I think that probably we can use electricity. We probably need to have building inspectors to make sure you get a certificate of occupancy before you let people like little kids play in the house, right? Like am I worried about regulation? I think it's impossible that the automobile or electricity or airplanes would be deployed broadly in society without speed limits, traffic lights, certificates of occupancy, elementary safety. Every single building in civilization, right? There's a fire inspection before you move into it. So will regulation help or hurt in the adoption of buildings and in the adoption of fire? So I think the answer is, you know, if you're an engineer, the definition of a mechanism is the degrees of freedom just slightly more than the degrees of constraint. But you have to have constraints because if I have 18 degrees of freedom, the thing flops around. It doesn't work. I need two, one, right? I need three degrees of freedom. And so regulations are degrees of freedom in order to create mechanisms in a civilization. And right now we probably don't have enough. And the fact that we don't have enough creates incredible fear and anxiety. And that causes public figures and public investors to pause before they fully embrace the technology. So if regulation or when regulation comes through, I mean, basically what you're saying is Bitcoin is going to be fine because Bitcoin is real in a way that a lot of other cryptocurrencies will be probably be en masse by regulation. I have a publicly traded company, right? And you can read my 10k, it's 123 pages, and we spend millions of dollars a year to remain compliant. Okay. And the fact that people trust those filings means that we can raise billions of dollars of capital. And every day hundreds of millions of dollars trades hands based upon the representation of those filings. If we eliminated all those filings, my company would be no better than any of 100 million other companies and everyone would simply claim the same exact thing. The capital market would dry up. We wouldn't be able to raise money. Some, we would be no more advantaged than a criminal that wanted to lie. In fact, we'd be disadvantaged against the criminal because a criminal would just claim that their 10x better and bigger in every way, we would lose our capital, our employees would quit, our customers would depart. The criminal, they would succeed for a while, eventually get shut down, and no one would succeed. It's kind of like asking, what would happen if I got rid of every traffic light in the country? And I told people you could drive on either the right or the left side of the street at any speed. You think you'd go faster or get there sooner? The answer is no. You wouldn't get there sooner. You wouldn't go faster. Would you sell more cars? No. Right? The economy would not work if you had a lack of some normative standards in order for people to engage with each other at high velocity with large sums of energy. So, explain for my anarcho-capitalist friends. Do you worry at all that the regulations that will come out of Washington will be motivated or effectively written by people who already run the system to their benefit? How do you get to a point where the regulations will actually clarify things and act as a referee as opposed to just letting the people who are already incumbent firms just continue at pace? Facebook has been saying since 2018 they want to be regulated, and Mark Zuckerberg even said, hey, you know what? I'll help you write the regulations because we know our industry you guys obviously don't. And the regulations will mean there will never be another Facebook but will be regulated and everything will be okay. So, there's a school of thought, public choice economics, which argues that regulations tend to be written by, insisted upon and written by incumbent firms at a time when they want to be free from market competition. But a larger way, how do we know that the regulations will be beneficial and will clarify things rather than just reward people who are politically connected and can have the government structure markets in their favor? Well, I suppose if you posit that they're bad regulations, then they'll be bad. And if they're good regulations, they'll be good. Everything that I can see about the regulatory environment implies that the regulators are actually a pretty well informed. They recognize the innovations that exist. If you parse every word by Gary Gensler for the past five years, what he said is Satoshi's innovation is real. He recognizes the existence of decentralized digital property that is not a security. He said that there is a place for a stable coin, a digital currency. He's implying that the world would like dollars to circulate on some kind of crypto system. He's implied that trading 24-7, 365 is an advance. Technology is good. And if you offer a security to the general public, you have a duty of transparency to them so they can make a rational decision. So if I do sell you $50 billion dollars worth of dog tokens and I tell you I've got $50 billion in cash to back them, but in fact I have no cash to back them, I've mislead you as an investor. So all of those things that he said seem to be quite reasonable to me. And the thing that's holding the industry back is an ambiguity about the definition of a digital security versus a digital property. And because there is so much ambiguity you have thousands and thousands and thousands of digital securities that are competing with the digital property. And if you're a rational person and if you can't distinguish and you're looking from the outside and you say, well I'm sure there's a thousand digital securities out there that are currently unregulated that are being treated like commodities, I think that that would give you pause. If you look at the sources of volatility in the crypto industry, some dude creates a dog token, issues it to his friends, levers it up 100 to one, cross-collateralizes it into another token, trades it at midnight, tweets about it, cross-crotalizes that into ETH, then trades that against Bitcoin. What could go wrong? So people look and say, well Bitcoin's highly volatile, I'm afraid to own it. Where's the volatility coming from? It's coming from the excessive leverage, the unregistered securities that are cross-collateralized into the asset class. It's coming from immature tax regulation. I'll give you an example of a tax regulation. If you sell a billion dollars of Apple stock and you buy it back 18 minutes later, right, that's a wash trade. You can't take a tax write-off on that because you didn't actually dispose of the asset, you were just trading it back and forth. If you did the same thing with a crypto asset, you could. So there's an incentive for someone to wash trade aggressively with leverage crypto assets. Why? No good reason. If you thought about it a while, you would say, if you're going to have a tax law that says you have to wait 30 days before you buy something back in order to take a deduction against it, you should probably be consistent, right? And a fungible share of Apple stock looks like a fungible token of Bitcoin. They both kind of look the same. But the treatment of one is different than the treatment of the other. So if you have asymmetries in the society where one thing is treated differently than the other thing, either with more leverage or you're encouraged to trade it with volatility, you shouldn't be surprised that you get that volatility. How long do you think it'll be before at least the first set of regulations kind of get articulated and implemented? The first regulation that was material to me happened in 2014 when the IRS designated Bitcoin as property. They could have said, you've got to pay tax on the unrecognized capital gain. They could have said, it's not taxable ever. So they said, you pay a long or short-term capital gain when you dispose of it. That was pretty critical as a regulation. In fact, probably the single thing that distinguished it, if they had taken a different view, they could have said it's currency and you don't pay tax on it when you transfer it. It could have been in a currency bucket, but by establishing it as property, they made it not a currency, they made it a property. All the regulatory issues we're talking about, I don't really think they're about Bitcoin. If you look at the crypto economy, you could divide and segment the market into crypto property, cryptocurrency, crypto securities, crypto art, crypto platforms, crypto exchanges. Bitcoin's crypto property. It's the Apex crypto property and it's 100 times bigger than the next viable crypto property. And the regulatory question, the big one is, are you allowed to own property? And the answer in North Korea and Cuba is no. Right? The answer in China is sort of sometimes for a while, we're back and forth, right? Right? Do you own your house or you'll have it for 70 years or 100 years or whatever, but mostly, yes, you can own property. And Western Europe and the US, generally, you can own property. So the other regulatory questions are, what's a crypto exchange? Okay. If you're an exchange, can you actually trade and do you need to have a surveillance agreement with the SEC? A national securities exchange in the US can let you trade stocks with 2x leverage. In the crypto economy, they're trading at 100x leverage. Right now, they're trading with 20x leverage. Okay. So how much leverage can you trade with? Right? Who's responsible? Is a DeFi system an exchange? I think a lot of people think, yes. Is it decentralized? No, not really. They don't think it's decentralized. They've said that. So is a token, this token, is this equity or is this property? If it's equity, what kind of disclosures do you need to make on the equity and what's your civil and criminal liability on the promotion and the trading of that token? Those are all outstanding questions that'll have an impact on everything other than Bitcoin. Right? What are your obligations on the crypto art? If I sell you 10 NFTs for a million dollars each and I swear to you that I'll never mint any more and then I create another anonymous persona and I mint 10 more and I sell them and then it comes out, right? Did I defraud you? At what point does an NFT become a security? I mean, it's pretty easy to say a $50 piece of art doesn't feel like a security. What about when it's $50 million? What about when it's $500 million? Is that a security then? Do I have ethical requirements? So, and then with currencies, there's three types of, you know, a crypto currency is a dollar. So I want to move a dollar for me to you, right? The thing that creates a currency in our modern world is a nation-state law. If the nation-state designates that you can transfer the asset from me to you without a taxable event, it's currency. The euro's currency, the dollar's currency. If I transfer gold or shares of Apple stock or a building to you, it's not a currency. I'll have to calculate my basis in it, calculate the fair market value of it, the difference and pay a tax on the difference in the transfer of it. So currencies are assets that exist because there's a nation-state that's effective. When the nation-state is no longer effective and the government collapses, of course the currency collapses and then people adopt another currency and El Salvador, they dollarized. Lots of countries, they dollarize because their nation-state is no longer able to maintain a currency. Now, what cryptocurrency is compliant? The President's working group paper implied that the preferred stablecoin dollar would be issued by an FDIC-insured bank. That's what they would like. There is no FDIC-insured bank currently issuing stablecoins. So the investment grade blue chip cryptocurrency is an ideal that does not exist in the real world. There's a second tier of currencies called rated currencies. It would be like Paxos and Circle and they are backed by currency and currency cash and cash equivalents and the like, but they're not issued by FDIC-insured banks. They're issued by licensed money transfer agents or licensed entities that are recognized in the US, but they're second tier. So third tier, their unrated cryptocurrencies like Tether, they're backed by something and they give you a broad bucket of what the something is or even a stablecoin like DAI or UST, they're backed by something. What is that something? They're not audited. It's unclear. They're not transparent. They all look like dollars. The low risk one doesn't exist. JP Morgan hasn't issued the JP Morgan dollar. Meanwhile, the world has a multi trillion dollar appetite for crypto dollars. If there was a broad supply and if the technology was a bit more advanced, there would be trillions of USD circulating on crypto rails and the US dollar would be spreading into places where it's not currently using a daily basis and all the weak currencies will collapse in the world. So when you say what regulation are we waiting for? Well, we're waiting for the definition of a cryptocurrency, a crypto security, a crypto platform, a crypto exchange and then lines as to what you can do with a currency and exchange or a security. And we don't have bright line guidance, which means that entrepreneurs are left to do something and they either have to do something knowing that they're taking some kind of future risk or they have to do nothing. I've talked to people that run banks. I said, well, you're an FDIC insured bank. You see the administration just said you can issue a stable coin. Well, yeah, they're like, oh no, we could never do that. If it's not KYC, we'd be shut down by the regulators. So on one hand, you've got this deadlock. There's no clear path to create a compliant crypto dollar, but there's extreme demand for it. So that demand is being filled kind of 50-50 by the layer two or the level two and the level three offerings. And the market is slugging that out. You recently interviewed Jack Dorsey, former CEO of Twitter and Square or Block now. You referred to him as my idol. What do you idolize about Jack Dorsey? Jack's done extraordinary things to spread Bitcoin and property rights to the world. The obvious things he's done are to build Bitcoin support into Cash App and of late build Lightning support into Cash App and distribute Cash App to tens of millions of people and to do it in a publicly traded entity. So a public company distributing a mobile application that supports the Bitcoin and the Lightning protocol is I think pretty avarible. They've also sold in excess of $10 billion of Bitcoin over that mobile app. I don't have the exact number, but I'm guessing they're approaching $20 billion to $30 billion by now. The third thing is that Square now Block has purchased Bitcoin on its own corporate balance sheet as a public entity. They were the second company to do it. MicroStrategy was the first. And I think that that was very courageous because one is an oddity. Two is a line. When you get to three, you start to get a trend and Tesla was the third. And so there might not have been a third if there wasn't a second. So I think that in his role leading Block, I think he's done a lot to commercialize Bitcoin and he continues to invest via entities like Spiral and the Lightning SDK and the TBD subsidiary and the like. Last year, he spoke at the Bitcoin conference and he talked about wanting to develop peer-to-peer payment systems that were without a central choke point, peer-to-peer messaging systems and things like that. Do you think, is that the future and the nation state that you talked about, which seems to simultaneously be flexing at various points, but also losing its ability to kind of control these types of things? Is peer-to-peer everything the way to go? And is the nation state or nation states, are they going to go along with that? Or what kind of conflict do you see? If you're an anarchist, you would like for there to be no companies and no countries and no governments, but I don't believe that's practical and that's not going to happen anytime in the near future. So in a world where there are companies and there are governments, then you should assume that most things will be the province of one or the other. I think that the crypto idealists are intent on decentralizing everything they possibly can, but I think that that's in a certain degree an enormous waste of energy and effort. It's idealistic, but the thing that needs to be decentralized is the money. Bitcoin is a decentralized network. Why? Because you want a monetary network that is nation state attack resistant because you want to trust it past the useful life of the nation state. I want the money to last for a thousand years, and so if I want something to last for a thousand years, it truly needs to be decentralized. Now on the other hand, do you need a decentralized smart contract platform? No. Do you need decentralized art? No. All these other things? Interesting intellectual ideas, but if the goal of a DeFi application is simply to take my Bitcoin and offer it to a hundred thousand different counterparties and then loan it to the highest bidder in order to generate 16% interest, you could do that with a website run by a company. There's no reason why Binance or Coinbase or FTX can't operate a decentralized flash loan service or a lending service on top of Bitcoin, and you would just have a program running on a single machine or two or three or four servers in a jurisdiction that executes that functionality at the speed of light a million times cheaper than a quote unquote decentralized network. So do you see Bitcoin as, you know, is it, does it become the thing or does it act as a kind of supplement that disciplines the way nation-states act or the way the companies act? So it doesn't need to become everything, but as long as it's existing, it's going to kind of help structure things in a better system. For example, I think that the ideal application, the ideal world is 8 billion people with phones built by Samsung and Apple running operating systems iOS and Android that have digital wallets on them, and those digital wallets have USD, a USD crypto dollar, and a BTC crypto property, and hundreds of trillions of dollars worth of these assets are circulating around every second, right, at the speed of light, friction free. Eight billion people trading with each other with 100 million companies and tens of billions of devices, all of them transacting. You don't need to eliminate the government, you don't need to eliminate the company. In fact, in fact, it seems pretty clear that you don't want to. What you want is you want to operate with a currency as a medium exchange, and you want to operate with the property as a store of value. And if you said to me, do I want to get rid of the dollar and replace it with Bitcoin? I say, no, I can borrow a billion dollars for 3% interest and buy Bitcoin that yields 27%. So if you got rid of the dollar, how am I supposed to fund the billion dollar loan to buy the Bitcoin that yields 27%, right? So it doesn't make sense. The other point, of course, is you want to get rid of the dollar, you've got to get rid of the nation. If you get rid of the nation, then you need to figure out how to provide for sewage and health care and social security and defense and police protection and settle squabbles over, you know, FTC, you know, spectrum rights and who gets to broadcast on 10 megahertz channels. There's a whole set of issues that have nothing to do with money. They get resolved at the municipal and the state and the federal level. How does this, in 2012, you published a book called The Mobile Wave, which predates, you know, it predates, you know, effectively the wide application of Bitcoin. But it's kind of pointing in this direction that mobile computing in particular is going to radically alter, you know, all sorts of things, you know, in terms of, you know, cash, going to the doctor, the way classroom, the way education is delivered, it's either going to make them obsolete or it's really going to restructure them. This, so Bitcoin falls squarely into that worldview, right? To be clear with Bitcoin, I think Bitcoin is, solves half of everything. Half of all the problems that human race face have to do with energy balance and economic balance and money, money property and energy. And Bitcoin represents a digital transformation of money, property and energy. And that's profound. And if you sum up the total value of all product services and assets and properties in the human race, you probably got to balance it with an equivalent amount of money. So it's $500 trillion or a quadrillion dollars worth of stuff. And on the other side is the, is the backhaul energy network to move it and, and to distribute it over time and over space and trade and transact. So Bitcoin is, is a pretty profound thing. But if we look at the, at the mobile wave in the book I was writing, I was discussing the digital transformation of stuff. And especially the chapter of that digital transformation related to the dissemination of mobile devices. So what happens when software moves to its vapor state? When the software leaps onto a mobile phone and billions and billions of people have the software in their pockets. How is that different than the software running on the internet or the software running on a PC computer? And if you think about software running on a mainframe or a PC, it's kind of like solid state. And when the software gets to a laptop, it looks like liquid state. And when the software gets to a mobile phone, it feels like vapor state. And the significance of the mobile wave was now I could have software that I sleep with, right? And I drive with. So if the, if the software is in the car, now I can conceptualize a digitally transformed map. And a digital map, first, first I take a Ram McNally Atlas and I dematerialize it. So it's weightless. Then I carry it with me all the time. Then I put 10 million pages of satellite images on it. So it becomes a million times richer. Then I start to feed telemetry back in the system. So I know the traffic on all the arteries in real time. I think it's smarter. Then I start to plug in all the places you might go. Then I plug in whether people are there now. And then I start to tell you that these are the restaurants that people are at. And I tell you that they're closed. And then I tell you can't get there because there's a traffic jam. And if you keep following that thread, eventually I put some AI on it. And I tell you how to get there, which turn left turn right, then I tell you don't bother to go. Then of course, ultimately I build it into a car and you get in the car and you say just take me to a nice place. And the car drives you there. All of those things are logical continuations of the idea of a digital map in the mobile era. Each of those digital transformations of information, digital maps, digital music, digital books, digital education, all of those things created a profound increase in productivity for the human race. I could give a billion people a million dollars worth of books for the variable cost of electricity. So what we had was a technology that allows us to give billions and billions of people education, erudition, insight, or joy, right? Take the idea of a Beethoven Fifth Symphony played by the Berlin Philharmonic and calculate the cost of that, record it, put it in MP3 file, then send it to a billion people, then play it back a hundred times a year. And now what you realize is that the physical cost, of course, to do that is effectively zero, right? Well, and if you do it physically with the Berlin Philharmonic, it would cost you all the energy of the human race. In fact, if the entire human race wanted to do nothing but play Beethoven's Fifth Symphony for everybody, they couldn't do it, right? So the cost to do it in the physical world is prohibitive. And in the digital world, I can give everybody in the human race every minute of the day and the palm of their hand every great symphony composed by everybody. Right. And you can even give them the ability to transform it in whatever ways they feel like at that moment. To even go beyond that, right? Now what's that worth? Well, that creates trillion dollar networks of Google, Facebook, Amazon, Apple, Microsoft. So we create an entire 50 trillion dollar economy through the digital transformation of information when we mobilize it. But that entire wave, digital music, digital maps, digital messages that created the Apple, Amazon and Facebook, it didn't include the transformation of digital energy. And the fundamental difference between digital energy and digital information is encapsulated colloquially in the phrase, Satoshi solved the double spin problem. Like that's the lowbrow thing to say. But an engineer would say Satoshi figured out how to implement conservation of energy and cyberspace. The difference between me sending you the MP3 file and me sending you the Bitcoin file is the Bitcoin had a billion dollars on it. And when I sent it, I lost it. But when I sent you the MP3 file and it had Beethoven's Fifth Symphony on it, I kept it and I could send it a million more times an hour. So information is non-conservative. Energy is conservative. Bitcoin represents conservation of energy. So what is the universe? The human universe is made of energy. What does matter? Matter is energy. You're a low frequency ball of energy. You'll last on this earth 100 years, ashes to ashes, dust to dust. The human race is vibrating. On the other hand, going to a disco in New York City and, okay, you're walking into establishment in a universe that's just 14 billion years old. And you know, the universe is oscillating at one every 14 billion years. The sun's four and a half billion years old. The earth, about that, the continent's 400 million years old. The schist rock underneath Manhattan somewhere between 200 and 400 million years old. The Hudson River 20,000 years old. The building you're walking into 100 years old. The company that runs the party 10 years old. The party been lasting for three or four years. The customer experience is an hour. You're listening to music that's oscillating on audible frequencies while you see light. Okay, so they're all different energy at different frequency. Everything is different frequency. Once you see it that way, what you realize is that Bitcoin is digital energy. What is digital property? It's low frequency energy. What is property? What is a house? It's low frequency money. I give you a million dollars. You want to save it for 20 years. If you keep it in fiat currency, you won't have any money in 20 years. You put it into a house. You'll have it. But on the other hand, how fast can you vibrate a house? It takes you a decade, it takes you two decades to change a house back and forth. So the significance here is that if the digital information revolution was worth 10 to 30 trillion dollars to the human race or some number like that, the digital energy revolution is in order of magnitude more. Right? If I said to you, you have a choice. You can give up all the money in the world. Everything you have and everything you're ever going to have or you can let me delete your photos off your iPhone. Which of them is more important to you? Let me ask you. You grew up all over the place, but you lived outside of Dayton and kind of connected to Wright-Patterson Air Force Base, which is one of the great places where UFOs and aliens are hidden by popular legend and things like that. What's the line between you growing up in that world and the things that you're talking about now that seem somehow related to science and technology in the 20th century, but then go so far beyond it? Well, Dayton's the birthplace of aviation and I grew up right behind the Wright Memorial, where the Wright brothers had their first flight. And I think the significance here is across a variety of dimensions. First of all, in 1903 they flew and by 1969 we were standing on the moon. And so that's one of the truly all-time great technology S curves. In 1900 every learned professional would have told you a million reasons why you can't fly. And they've been trying it for thousands of years, failing. And they couldn't really fly until they made some critical breakthroughs. And the first was like the internal combustion engine and eventually aluminum. And you put an internal combustion engine with aluminum and of course they need liquid propellants. So John D. Rockefeller, then the diesel engine, then the aluminum and you've got the ability to fly. And then there's a rapid advance in the human race's aviation capability. So that's the first observation. The second observation is they hit a wall in 1969. If you look at the space shuttle, the Boeing 747, the Global Express, the Gulfstream, they're all designed in the late 60s and the early 70s. And once we got to the 1975 we kind of were on a plateau where aviation technology was slowed to a crawl and sort of improving one percent a year. If that, maybe not even that, right, the fuel efficiency of engines in the year 2022 might be 25, 30 percent better than 1975. But we lost that entire exponential advance. And at the point that the technology party was ending an aviation, and when I came of age and I studied aeronautical engineering at MIT, I made, I elected to enter an engineering discipline at its peak, right, when everyone idolized, right, what the aviation industry had accomplished for the past two generations. And yet when I was at MIT, the space shuttle blew up and it was almost apocryphal in a way or symbolic that maybe that was the end of an error and it was going to be slow growing. And I never worked, I never worked professionally in the industry that I was trained in the rest of my life. Because by then it became clear that the next great internal combustion engine was the CPU, the transistor giving way to the semiconductor and Moore's law kicked in. And the cost of storage decreased by factors of a million, millions. And the cost of compute power decreased by orders of magnitude. And advances in batteries and radios and communication networks increased by orders of magnitude. So the computer industry became a very fertile environment and jumped onto an S-curve and just started to advance rapidly from the point that the aviation industry, you could almost say 1969 is the end of that error. It's the beginning of the modern computing. Microsoft comes public in 1976. And the world changed. In 1980, there was a perception in the U.S. that we were all going to be working for the Japanese. And the Asians would take over the world because they dominated manufacturing of analog technologies. And it was only the explosion of digital technologies that shifted the balance of power from the East back to the West. And from, it's almost like 1980 was the inflection point. And from that point, the West got stronger on based on digital technology. The East got weaker. And that's continued. I think that if you try to take some, you know, some insights away from aviation and the history of science in general and the history of technology, it's that you have to have a dose of humility with regard to these fundamental paradigm shifts because the people that solved the problem of flying through the air with the greatest of ease were bicycle mechanics. They were not aerospace engineers. They were not physicists. They were not mathematicians. They were not politicians. They were not billionaires. They were literally middle class bicycle mechanics at a date and all how. Not the place you would expect they would solve the problem, not the type of people. If you roll the clock back to another great innovation, the discovery of longitude on the ocean, how do we actually navigate across the ocean? The solution was attempted by the Newtonian professors of mathematics at Cambridge and Oxford and they were PhDs and none of them could solve the problem, not Newton, not Newton's disciples, nobody. The problem was solved by John Harrison, who was an uneducated clock maker. And he solved it by making a clock that kept proper time. He didn't solve it with star charts or calculus of variations or computational theory or any amount of high brow thinking. He was a blue color laborer. And so now you go forward to Satoshi. The fundamental problem of economics, how do you solve the coincidence of wants between everybody in the human race over time and space forever? How do you solve the economic problem of getting people to cooperate in an efficient fashion? It wasn't solved by any economist, it wasn't solved by any organization or governmental agency that should have solved it, solved by the cypher punks. Solved by, I think, a generalist engineer that knew a decent amount about computer programming. But if you look at all the crypto world that's dominated by the computer programmers, they screw up everything. All of the other crypto tokens that are dominated by software engineers are screwed up because they understand a lot of software engineering, but they don't understand thermodynamics or physical engineering or systems engineering or all the other disciplines you need. So Satoshi represented one part economics and one part systems engineering and one part computer engineering and one part game theory and one part practical political science and all of the mechanisms you see in thermostats, the difficulty adjustment. It's a first order negative feedback loop. Invented by Satoshi? No. And maybe invented by Archimedes, right? It's in water clocks. It's in stuff since the beginning of time. Every mechanical engineer understands this stuff. So what you had was a generalist engineer, right? Not a specialist, throwing out a very practical solution, not the elegant, beautiful thing people would expect it, but a practical solution that turned out to be as profound as longitude, as profound as human flight, you know, as profound as electricity or fire. Micro strategy is inevitably described as a data mining company, which kind of has a lot of negative connotations these days. People worry about big data that governments or corporations are able to sift through massive amounts of data that were inconceivable even a few generations ago. Find patterns, develop patterns, predict things. What is the positive case for data mining? And then, do you worry about it as a tool of surveillance in places like the United States or in China or in a corporate environment? Well, actually, we don't call ourselves a data mining company. And there might be some people that might view it that way. But generally, the industry has been referred to as business intelligence or enterprise analytics. And what we sell is enterprise software to any organization that wants to analyze anything that they have. We don't do it for them. So we're not really mining any data. We're not engaged in it. We're selling enterprise software to your supermarket and your hospital and your healthcare provider and to airlines and to any organization. And the analytics they're doing is to try to figure out how to keep the supermarket shelf stocked. It sounds pretty sinister, really, when you put it that way. Yeah, not really. Just don't run out of cereal. Or if you're a bank, you're scanning 18 million accounts to figure out, is there a credit problem? Is there an overdraft? Merch, big shipping company. They're just using it to balance the shipping containers, to figure out how to work logistics. So typically, it's heavy-duty number crunching. But for the most part, as far as I know, it's logistics number crunching. It's merchandising, marketing efficiency, shipping efficiency, risk management of different types. And there's no real other issues there. It's actually, it's probably more a boring business than anything else. It's like a spreadsheet on steroids. Yeah. What about governments doing, using, not your software, but using that kind of analysis? Are there ways, should we be worried about that? And are there ways to kind of build in firewalls or ways to minimize harmful policies enacted by governments based on that kind of analysis? Well, I mean, I think governments have policies and some of them are better than others. Some of them are not so good. They have tons and tons of information. They look at one way or the other. If you're asking me, how do you eliminate iatrogenic government policies? That's a wonderful phrase, which I'm going to use going forward. I would say less government is better than more government. Right? The government that governs least governs best. So I'm in favor of less government. And I think that in general, governments have policies that are oftentimes not achieving their... Where does that come from? The belief that less government is better? If you have any segment of the economy and you leave it to the free market, then you have lots of actors, individual consumers and corporations that are constantly reorganizing themselves in a market economy in order to solve for the best solution for the lowest cost. And whenever the government interferes with that market and regulates it or advocates a particular outcome, they're interfering with the free market. So as the government encroaches on free markets, invariably, the market would have chosen a different thing. If the market was going to choose the same thing the government was going to choose, the government wouldn't need to involve itself. Having said that, you were talking about how one of the things holding Bitcoin back is the lack of regulation. Can you just kind of square that with what you just said? The struggle and the human condition is to create a mechanism. So for example, language, law, money, right? Three great ideas. We're speaking the same language. I learned the language when I was going to school. If there wasn't a standard language that we both spoke, then we couldn't communicate, right? If there's no standard currency, then we can't trade. There is a law that generally says that if you punch me in the face, there are consequences for you that gives me some degree of comfort. I would generally expect that you won't do it, right? Because against the law. So I drove here on the right side of the road. So for us to have a functioning civilization, you need standard protocols. 120 volts, 60 hertz. Some of these might emerge spontaneously, but it's not a problem really. When the government just says, here's a minimal amount of regulation instruction. Well, you know, what if a mayor in a city wanted to make the red lights mean green and the green lights mean red and they just got elected and they decided to do that, and then you drove through the city and you ran the red light and you were killed? How would you feel about that type of libertarianism? Well, I think that's everybody did it. What if the mayor decided to change it every hour on the hour because that was... I think this is part of Woody Allen's Bananas, where we... And what if the mayor basically said, it's okay to murder people on Saturday night in my town and you happen to walk into that or your daughter was in that town with her boyfriend, and how would you feel about it? So the point is not all regulations are bad and some mores and some protocols come out of the free market and then they're entrained, and other time other protocols are substantially free market, but it's not a bad idea for the government to say that if you're going to rent something to a random college student that you shouldn't electrocute them in their bed by design, right? So when you get that certificate of the occupancy and someone walks through and says, yeah, I don't think the thing is going to burn down. You didn't put the electricity underneath the bathtub, and when you run the hot water, it's going to electrocute you. And I think that's not bad. So you can't really have a civilization without some normative standards any more than you can have a machine. I mean, look at the light right here. There's three points. The reason there's three points is because if there's two points, it would fall over. You can't fix something in three-dimensional space with two constraints. You need three constraints, right? So I'm not going to rail against the three constraint in the tripod. It's just a way to get something done. How about a wheel? If the wheel didn't have a degree of freedom, it wouldn't spin. So when someone comes along and says, I'm going to regulate the last degree of freedom of the wheel, it becomes a brick, not a wheel. So that's too much. But what happens when I make it wobble in this direction and it spins, and I roll down the street at 60 miles an hour and the wheel flies off and I crash into the river and I drown? That's too few degrees of freedom. So I think if you're an engineer, you don't look at this like all freedom or no freedom. You just asked the question, what's the right amount, right? And so the least amount consistent with making the machine work, right? And I think we can agree that generally there's a bit more than we need in most places in the world right now. But there's a benefit to have a bit. That's actually a pretty good working definition, I think, of libertarianism as opposed to anarchism. But final question, I read that you were a Heinlein fan growing up. I am. Yeah. Robert Heinlein is fascinating for a million different reasons, partly because he was both kind of a hippie and a technophiliac. How would he look at Bitcoin and the world we're living in? Would it please him? Would he be aghast? Robert Heinlein would love Bitcoin. And if you read his work, read a book like Friday, he refers to chaos and anarchy in the crazy years and crossing the United States has broken down. But when he changes from the Republic of California or whatever to the next thing, they make him change his money and they want to give him paper currency. He says, no, I want gold. And so in 1980, 1970, 1960, all during the time he was writing, he was a gold standard, hard money, sound money, inherent. And if he knew that Bitcoin existed, he would view Bitcoin as digital gold for the 21st century. Be a big advocate. Michael Sandler, thanks for talking to me. Yeah, thanks for having me.