Today’s guest is Nik Bhatia who has 42,000+ followers on Twitter and is an adjunct professor of finance at USC Marshall, and author of ”Layered Money”, a book that I highly recommend.
He shares his knowledge on Twitter and in his newsletter ”The Bitcoin Layer”.
In this conversation, we discuss:
1. The origins of money and the evolution of monetary systems
2. Why Bitcoin will be a critical component of finance in the future
3. Central Bank Digital Currencies and their main purpose
4. Why Nik thinks we’ll see $500,000 Bitcoin within 10 years
You can learn more about Nik here:
Twitter: @timevalueofbtc
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Hey everybody welcome back to the Whiteboard finance show today’s guest is Nick badia he is an adjunct professor of Finance at usc marshall he is the author Of layered money one of the books that i Recommended in my bitcoin beginners Books that you absolutely must have to Read It’s talking about from gold in dollars To bitcoin and central bank digital Currencies uh and he’s also now the Author of the newsletter the bitcoin Layer he has 41 000 followers on twitter Welcome back to the show nick how you Doing buddy I’m doing great marco it’s great to see You thanks for having me absolutely so Uh in a nutshell just give us a little Bit of your background i know you came From i know you were a bond guy and then Also the um higher education which you Currently still do and then how did that Transition into becoming an author and Then ultimately you know the bitcoin Rabbit hole Sure so my career started in the fixed Income asset management industry i was Working for a couple Uh bond managers one was a hedge fund Another was a Mutual fund and separate account manager And my roles throughout the years in the Industry evolved from Uh
You know a trade uh settlement person so Someone in the office on the operation Side Then you know more of a paper pusher to Someone actually trading the bonds Themselves From an execution standpoint so someone Tells you to do the trade and you do the Trade then eventually Moving to strategy and trading in which I’m You know adding to the overall Investment thesis of the firm and How to best Uh You know achieve performance for for the Clients and in that type of strategy Role so i’ve I saw a lot of different sides of the Industry and I absolutely love global macroeconomics I guess that is where to start here that Is my Core interest is global macro and Geopolitics and To fast forward a little bit to bitcoin Bitcoin is at the center of global macro Geopolitics Today and i believe it’ll be there for Many years to come so that is why i Transition To bitcoin from the bond industry Because That’s where the world is going the
World is going toward bitcoin and Uh digital currencies and a layered Money system that uses bitcoin at its Core so You know that’s why i transitioned and Then i basically got an opportunity to Start guest lecturing over at usc Marshall school of business I went to undergrad at usc My dad and grandfather went to usc so it Was a huge honor for me to be invited to Start speaking over there and eventually They did invite me to be an adjunct Professor to teach Fixed income over there so i teach the Bond market uh still at usc i’ve taught The course four times It’ll be number five next spring in January When i go back and i’m i’m extremely Thankful to be involved uh as a rate Specialist At usc marshall teaching The bond industry through my eyes Through the treasury market through the Rates market not necessarily credit and Corporate client uh corporate finance Side which is where a lot of the Industry of asset management is stock Picking And bond picking as well And so When i started teaching at usc Uh i started
Diving deeper down the monetary rabbit Hole i had already gone down the bitcoin Rabbit hole before that uh switch and When i started reading a lot more about The monetary science and monetary History i got this idea to write layered Money from A paper called the inherent hierarchy of Money written by perry merlin Famous Economics and finance professor I recommend people go check out his Course on coursera money and banking It’s one of the most popular courses on The entire platform And There’s a lot of There’s a lot of information there that I I learned from him and was able to apply To the bitcoin world and came up with This idea for layered money i love it Yeah i personally i forgot to grab it It’s literally in my office upstairs but I own you know copy i’ve had a copy Since you released it so let’s start With the origins of money and the Evolution of monetary systems let’s dig Into that a little bit deeper Yes so we all think of money uh In from the historical standpoint as Something that we used as barter so People are generally familiar with the Idea that we used to use
Shells or beads you know depending or Other you know animal bones other Artifacts depending on where you were in The world as money as tokens and we used That so that we wouldn’t have to trade Uh you know cattle for cotton and you Could actually you know have a medium of Exchange something that we all view as Money That General understanding of money i think Is Out there in the public what i wanted to Do Was actually fast forward way past that And way past the Even idea that gold and silver were A great form of money for our species In the form of jewelry Nuggets Just raw gold raw silver or refined However But at a certain point And specifically in about the sixth Seventh century bc In lydia Which is modern day turkey we had our First ever coin And that was an advance in the monetary Science we had already agreed gold and Silver were valuable Across continents and across cultures And across generations so something that Had been well established for already a
Couple thousand years And then we said let’s standardize the Units And accelerate the economy so that we Don’t have to have a weighing scale Every time we transact And that’s really what it comes down to Do you want to carry around a weighing Scale To do business around the world or no do You want to use these convenient Predetermined weights and measures So that we can really accelerate trade And start Using money quick more quickly And so i identified the coin as Something that i you know wanted to Focus on but then when i read this book Called The economy of renaissance florence Really searching for some of the Original coins that Got the economy going um more quickly Than say in the past because the greek And roman empires also had coins right And now we’re talking about Uh pre-renaissance which is Let’s call it a minimum of one Millennium After the roman empire Uh for you know for example I discovered this coin uh which was it Was a new concept to me in the research Of the book of the fiorina de oro the
Gold florin It was a coin that was struck in the Year 1252 A.d so right before the renaissance Started um Started and it was also struck uh Alongside a couple other coins in city Republics in northern italy so pisa had One genoa had one venice had one Venice’s uh the venetian coin the duke Cot was also a very popular denomination I chose not to focus on it in the book Um because it took away a little bit From the story of the florin and its Impact but the ducat itself was a very Important coin that held Its weight in purity for a long time as Well but this gold florin held its Weight in purity for over 300 years And was and ended up being used in Western europe as the chosen Denomination and what we would think of As the world reserve currency And when i read that book and understood The florence role In the economy of renaissance florence In the economy of northern italy and Also of europe And traced the florin Through time and watched the monetary System evolve in antwerp which was kind Of part of that book and opened my eyes To What happened in the 15th century in
Europe from the monetary And Um i guess money velocity side of things The credit market side of things Um i That’s when i decided to start my story In that era of the renaissance because The gold florence sets up perfectly for A story about money that leaves coinage And starts to go to credit money which Is the system that we use today our Dollar money system is a credit system It was a credit system before we left The gold standard in 1971 Because we were still using credit forms Of money To Grease the economy and to make it go so That credit system Uh i traced it to approximately the 13th 14th 15th century Okay so if you fast forward you know Eight 900 years from the 1200s How would you describe the mechanics of Our financial system now so how does it Work in a nutshell Right so We have this layered money system that’s The title of the book it’s a it’s a Hierarchy of money if we think about Money we can think about money in many Different forms Cash paper Checking account deposits uh venmo
Balance Bitcoin in a wallet bitcoin on an Exchange Um Tether There’s a lot of forms of money we can All agree on that But these monetary forms are not equal They actually have a rank And the rank has to do with who Issues the money That you’re holding For bitcoin itself nobody issues that Money So it kind of is a stand the standalone Money that’s not within the dollar Layered money system bitcoin itself and That makes it very unique but in our System say your checking account balance At wells fargo or bank of america Is issued by that bank so it’s a wells Fargo liability You think of it as your asset but it’s The bank’s liability they’ve issued it Well now what does the bank own To make that liability a sound money Uh or let’s say a money with some Backing Wells fargo owns u.s treasuries they Also own Reserve balances at held at the federal Reserve they also own other forms of Credit money money issued to them other Bank deposits money market funds
Uh repo Financing balances etc all these other Forms of assets which You know they’re all forms of credit Money right because the fed issues Reserves to wells fargo so fed reserves Are Issued by the federal reserve but still They’re a liability of the fed now what Does the fed own The fed owns u.s treasuries so in that Way and what i’ve described in the book The first layer of money is u.s Treasuries again a debt is a debt Instrument issued by the us government But held as the Primary form of collateral in the dollar System Why are we able to conclude that because The us’s central bank owns u.s Treasuries as its primary asset To Uh furnish the financial system With money Then the fed issues reserves and cash so The cash in your pocket is a second Layer your money And then the reserves that wells fargo Keeps at the fed is also a second layer Of money then the checking deposit that You have issued to you by wells fargo is Actually a third layer of money Your venmo balance which Might be tied to your checking account
Is Conceivably a fourth layer of money now I i Made a very deliberate choice to not go To a fourth layer in this book so i stop At three because after that i think the Point is well made i think readers would Agree with that with by this point we Don’t have to illustrate venmo paypal Other lower layers of money visa let’s Say but it’s it’s it’s understood when You explain that your checking account Balance is not the same thing as a us Treasury They’re very different and when we’re in Financial crisis it becomes very Apparent that not all forms of the Dollar are the same so that is the way That the us dollar system works today Gold physical gold Uh coins and bars are not issued by any Counterparty they’re Bearer assets they’re commodities of Sorts They’re not in the layered money system But a gold etf like share in gld could Be thought of as a second layer of gold For example Uh bitcoin In your own wallet Paper wallet software wallet Signing device whatever form that you Hold those keys is also a commodity and A bearer instrument it is not issued by
Anybody Bitcoin held on a on a an exchange let’s Say you have your bitcoin on cracking or Gemini That would be theoretically a second Layer of bitcoin in that it’s a Liability Issued to you by an exchange that holds Bitcoin on their balance sheet so they Have a first layer money Uh on their asset side and they’ve Issued a second layer of money which is You know a deposit on the screen it’s a Balance that says 0.4 bitcoin But We know that that’s not your big point Until you withdraw it to your own wallet And so in this way the layered money System can describe the current dollar System but it can also describe Historically the gold system it can also Describe the new bitcoin system And it is evolving in that the Word layer Is Blending itself into this construct we Have lightning network which is Why i first started writing about Bitcoin i felt like um The lightning network has unique Financial properties to it that bring Life and time value to bitcoin in a very Unique way and it actually brings A layered system to bitcoin that doesn’t
Use counterparties and that’s what makes Lightning network so fascinating to me It uses smart contracts these contracts Called hashed timelock contracts it uses Basically an esco escrow agreement and a Multi-signature Agreement That allows instant Transactions of bitcoin without Counterparties And uh that’s why i started writing About bitcoin that’s actually why i’m Here in front of you today is that i Wrote a paper called the time value of Bitcoin in 2018 in which i described This this phenomenon about lightning Networking about bitcoin so That’s a little bit about layered money And about how our System our monetary system today is Layered in in more ways than one Yeah i love it so i think that you Mentioned this earlier obviously when You look at money we talked about Seashells to you know precious metals to You know fungible you know bills that Had some backing to it and then post 1971 we went on a fiat currency What are the next steps or the evolution And money and banking you know it’s got To be you know digital it’s got it Already is 90 i don’t know five percent Digital 97 digital uh i think physical Money only makes up three percent of the
Actual money supply but um it’s got to Be cbdc’s it’s got to be bitcoin what Are your thoughts on the evolution of Money or banking in general Absolutely it’s going to be a co it’s Going to look like it already does today Now bitcoin is small and fed coin Doesn’t exist And when i say fed coin that’s the Nickname from you know nickname for the The u.s Forthcoming central bank digital Currency no nickname Like it’s freedom coin it’s freedom Exactly um The ministry of truth that’s right And so for I don’t know if fedcoin is Two years away or five years away I would guess closer to five than two if You if i had to put my money on it But We are heading into a world in which Money is going to be natively digital Right and so today Money is actually Um natively credit based So that’s the system that we’re in Bitcoin is a digital native money a fed Coin will also be in theory a digitally Negative credit money so again blending The the old with the new And the future of money is going to be Bitcoin
Other sorts of privately issued digital Currencies so that would include alt Coins like non-bitcoin cryptocurrencies It also includes stable coins which are Coins that are Linked to a particular fiat currency Let’s say the dollar And are backed by other dollar Instruments or other credit instruments So it’s a digitally native credit Instrument That’s backed by other traditional Credit instruments And then eventually the backing of those Stable coins will be Central bank digital currencies which Are digital currencies issued by the fed And we will transition from Fed reserves and bank deposits and Bitcoin where we are today To Uh fed coin stable coins and bitcoin Which where we’ll be tomorrow and so It’s uh it’ll still be a coexistence Marco of The uh traditional worlds liabilities And bitcoin and these new liability um Sorry new tokens new sort of bearer Assets commodities Of sorts in The uh cryptocurrency world and all of These things will coexist now what my Belief is that bitcoin Starts to head to the top of the
Hierarchy of money And how will we observe that Which financial institutions are using Bitcoin as their assets And which are not And and what are and what are people What are financial institutions Companies using on the asset side of Their balance sheets Stable coins will obviously not be The asset of the stablecoin issuer Right a company might hold stable coins As an asset on their balance sheet Because they believe the stable coin Represents dollars because the stable Coin issuer owns u.s treasuries or Other uh Dollar based instruments Okay But The stablecoin issuer has the choice Should i own treasuries Should i uh own fedcoin Should i own Short-term fixed income instruments that Have credit risk like bank liabilities Bank deposits Euro dollar Euro dollar deposits all these other Forms of dollars Or Bitcoin So we see that with tara now It’s a dollar
Sort of coin but using bitcoin as a Reserve Function because bitcoin is a first Layer money that’s really the point of This thesis It is nobody’s liability it is Completely neutral and it can be viewed In this Gold sort of way when we look at history Where if you own gold and you say you Own gold and you have an audit that Proves that you own gold Your liabilities become credit worthy There is a trust embedded in that So if people show bitcoin on their Balance sheet and even sign A transaction to show proof of reserves Which is the next level of this Something that i would definitely Advocate for but it’s not a prerequisite Here because this system is still built On trust in in many ways If the institution owns bitcoin says They own bitcoin shows an audit that They own bitcoin or even signs a Transaction that proves they own bitcoin Or let’s us see like tara does we can See the address And i can go to my node and track how Much they own Through time How powerful is that A proof of reserves Uh innovation
In this new era yeah it essentially Eliminates trust in a good way would you Agree with that You don’t have to trust you just verify That’s right it does it changes the Equation from trust to verify but i Don’t want to put the over emphasis on Verify because not everybody is going to Let you verify Their situation I hope that that’s the evolution but That’s not a prerequisite to a layered Money system evolving we did that with Just quarterly You know reports and audits Um by the banks for the last couple Centuries and that’s the you know and Not even that yeah and so enron did Those too Right exactly so so there will be bad Actors there will be bankruptcies that Will exist in the new era i mean there’s No way we won’t have a repeat in which Everybody just use does proof of Reserves we have verified balances all Over the system and there’s never a Default because there’s full Transparency it’s naive to think that We will have that Uh transparency as well as uh the enron Way Those both will happen we have to expect That that happens but what you’re saying Is that it does give us this new ability
It’s empowering to the individual it’s Empowering to the person that doesn’t Have Um Access to Audits Let’s say all they have to have is a Node And those sort of mechanisms are now Being built into the psyche Of money In which tara You know which is the the most uh Current use case of this sort of thing They Have We can see their their wallet Right in in your node and your block Explorer you can go see how much bitcoin They have Now Again it’s it’s a changing balance of How we’re going through this there will Be Bitcoin uh back stable coins that are Linked to bitcoin that are just credit Instruments that have a fractional Reserve Uh relationship to bitcoin but still Trade At or near part to bitcoin because of Arbitrage and trust And the simple idea that not everyone Calls their
Deposit on the same day that’s the Foundational Premise of fractional reserve banking It’s not not everyone is going to come Demand their deposit today Not everyone’s going to pull their gold Gold coin out today so you can issue More gold Deposits than you have gold coins in Your ball We should expect that type of situation To occur in bitcoin as well Now again the most empowering thing About bitcoin is that if you own the Commodity you know exactly the slice of The 21 million that you own or the Current 19 million that you own we Always will move that with 100 certainty That is the empowering thing about Bitcoin but it will still Lead to many financial innovations that Have mimicked things in the past we’ll Have fractional reserve we’ll have Default we’ll have financial prices we Already have exchanges that have gone Bust and have basically Uh robbed people of their money Many times in the past in bitcoin We don’t we actually haven’t had a knock On wood a big exchange hack us-based or You know western based In a while but again we had quadrica Just You know that wasn’t that long ago that
Was what two years ago and that was Canada so there there’s always Potential for fraud but there’s uh There’s Bitcoin still you know brings that Empowerment Innovation Yeah i love that so knowing what you Know coming from like traditional Finance or fixed income and obviously Knowing what you and i know is Essentially going to be inevitable in Some form you know currency is digital You know everything that we’re talking About in this episode how are you Setting yourself up for success so i Guess in a nutshell how are you Investing Yeah uh so i it’s a core long position In bitcoin that’s not traded i think That that’s something i’ve shared Publicly Uh before It’s That is the way that i think about Things is that i you know it’s a it’s a Core position Meaning it’s a large position it is a Safety position i look at it as a Risk-free position because it doesn’t Have counterparty risk And and i look at it over a very long Time price And
I’m uh Because i think that this Adoption cycle is still early we’re Still early in it and so i believe in Bitcoin over a very long term time for Us And that’s the way that i’m invested and That’s the way that i’m positioned and When you say Sorry interrupt nick when you say long Term are you talking a year five years 20 years what do you mean by long term Just for the audience Yes it’s a minimum of 10 years It’s a minimum of 10 years and it’s much Likely much more than that now i i Struggle to say more than 10 years Because who knows what’s going to happen How can you project more than 10 years How can you project more than one year It’s it’s impossible i also when i write For the bitcoin layer my sub stack Publication Um You know i i’m not writing with this Five to ten year time horizon Uh when i’m talking about the market and Where i think things are going i’m Looking three to six to twelve months at A time Now i have a thesis that bitcoin is Going to be around for a hundred years But i can only prove that to myself Five years at a time
Oh are we still i believed in 2016 we’re On track for this hundred year journey In bitcoin Six years later my thesis is still on Track and it’s confirmed and it’s Probably a little bit stronger than it Was six years ago But i i have to assess that again in six Years and and again because life is Uncertain and things happen right and we Just don’t know what’s going to happen But the way i think of the world is that Bitcoin is going to be around for 100 Years So i should be positioned for the next 10 years to have bitcoin as my core Position on that journey as i vet out my Own thesis whether or not i’m right About this But yes i believe that bitcoin is going To Enter The realm of gold which would make it About let’s say 15 times its current Size Okay that would be about a half million Dollars per coin a 20 trillion dollar Market cap i believe that’s a very the Very minimum benchmark of where we’re Heading over the long term So five years 20 years whatever i don’t Know but we’re heading towards gold at Least because of what bitcoin is and how It was modeled and how it’s evolved in
You know 14 years Uh incredibly Uh resilient on its path to becoming Digital gold that’s the very minimum but Then i look at stock markets bond Markets and real estate markets around The world which bitcoin is competing With not necessarily the dollar that’s Something that i’ve written about at the Bitcoin layer bitcoin versus the dollar Isn’t a great juxtaposition it’s like Bitcoin versus equities bitcoin versus Real estate bitcoin versus gold These are i think better ways to think About bitcoin because the dollar is just A denomination and it’s a liability Issued by a multitude of counterparties Across the world with very little Uh consensus as to what is a dollar Ending of course so and what right one Of my what am i starting up one of my Pet peeves are like well bitcoin is Still denominated in dollars well yeah i Mean one sat is one sat one bitcoin is One bitcoin you know at the end of the Day there’s a finite amount of one thing And an arbitrary amount of the other Right and i you know when i charge sats For books Um you know in person or online Uh You know it’s we sometimes we strike a Dollar price and so and convert it to Sats and do it like that or sometimes
It’s just this is the sats price that it Is and that’s the price so sometimes I’ll admit at the beginning Thinking more in dollars but then the More you use sats and lightning network And you’re using this Denomination of bitcoin bitcoin and Satoshi’s are like dollars and cents It’s the same thing you think in sats You think in bitcoin it’s a denomination Itself and there is a An online economy That is bitcoin and sats native In which the people no longer are Thinking in terms of dollars Or swapping back into dollars Now i realize that it’s hard to probably Measure that we can look at the size of The bitcoin economy and we can do a Survey and say how many people are Swapping it back how many people are Actually thinking in stats and not you Know with their calculator converting Into dollars and not but i promise you That the number is non-zero meaning that People are already switched over Right i can with confidence tell you That i’m in the process of Switching over my denomination but In no way fully now when i do book sales Online i can think in stats now Sometimes with my subscriptions and my Online bitcoin income i’m thinking in Bitcoin and i’m not thinking in dollars
Because i don’t swap that back right now But i have bills i have a mortgage i Have dollar based income i have dollar Base expenses every day so i haven’t Switched my entire mental denomination But part of it has some people are much Farther along than i am and some people Have gone 100 And Over a long time horizon the number of People that go 100 will increase the Number of people that go to 10 will Increase 50 will increase and the number Of people that go off of zero will also Increase all of those will happen Exponentially and all of those trends Are locked in so Hence my thesis of bitcoin is going to Be around for a minimum of 10 years what I think 100 years and a core investment That one should own In this Revaluation period absolutely i think We’re in a huge uh period whether you Want to call it revaluation or just the Next paradigm of money um i think it’s Inevitable yeah discovery exactly it’s Like you went from like uh the internal Combustion engine to like the model t Then now we’re kind of like in this Electrical vehicle kind of a phase i Think the same thing is happening in Money for sure And that’s why i don’t trade
And i don’t I don’t i mean i look at price i look at Price all the time i do price charts i’m Doing price analysis i love technical Analysis it’s part of my framework Itself it’s part of what led me to Bitcoin But i’m not actively trading bitcoin Because the core thesis is this binary World of bitcoin is either Not really that important to the world Or it is a core fun feature of the world Economy That’s my That’s my best guess that’s my thesis so That’s why i’m positioned over the Long-term time horizon in this asset not Trying to trade around it because i Believe in a 500 000 evaluation million Dollar valuation per coin So why get cute in the intro of course i Don’t i don’t stake it um i would stake Maybe like usdc or something along those Lines to where it’s just you know taking Fiat buying a stable coin and staking it But for me it’s not worth five six seven Eight percent to potentially lose one of The greatest assets that i’m ever going To hold in my opinion so i don’t i don’t Get cute either um i live by that matt Odell paradigm you know just stay humble And stack sets it’s really the best way To kind of Approach bitcoin um there is room for
Kind of like you know coinery and Butt floss coin and all these things That are obviously just scams um Speaking of which do you own anything do You speculate in any other crypto Currencies are you kind of just bitcoin Only No i’m 100 bitcoin only and the only Time when i wasn’t was when the be cash Fork happened And um i tried to time a trade back to Bitcoin um which i which i did Uh in the first few months of that coin Existing so no i’ve never i’ve never Actually Purchased Uh an altcoin Um ever And i don’t plan on it because again i Think that that’s also trying to It’s not it’s not factoring in the Investment thesis Which bitcoin is the network that is Attracting everything so i’m not i don’t Really play the stock market i don’t own I don’t make individual stock plays so Because i’m more of a macro oriented Person so i just like to think in terms Of asset classes And um you know that can change right These can all change i might find an Investment that i like and you know Allocate to it uh you know in the equity World or something like that but just in
Terms of bitcoin and the thesis that’s The way i keep it and i will say though That you know just in being transparent I have invested in the past Some of my bitcoin in bitcoin Denominated Uh return opportunities so that’s as Specific as i’ll get but um you know People trying to make more money In bitcoin denomination and getting a Return and i’ve had some success and I’ve had some failures in that and so i I have experimented there but i haven’t Experimented or and i never intend to With any other um Coin now i will say also that i’m Open to in the future investing Bitcoin into Uh A project that will Promise back bitcoin you know or it’s a Bitcoin denominated vehicle or something Like that i am still open to that kind Of thing um And it’s something that I would consider Let’s say and so i want to be Transparent about that but in terms of The core position it’s a long position And it doesn’t have a counterparty Uh i know that with with certainty and That is something that Um It’s something that
I believe If i Over think it Or try to again like get cute or try to Allocate too much of it to projects that Might promise back bitcoin That I can get hosed and i I’m not being true to my original thesis So um that’s how i that’s how i approach My portfolio yeah i love it i’m very Similar as to you just kind of stay Humble you know the i think long term We’re all going to make it you’re not You know cliche aside i really do Believe that um for the people that may Not understand or think you’re like a Crazy person how are you coming up with The numbers for a 500 000 bitcoin i know How you are but just give some you know Market caps of gold and stuff like that How are you coming up with that number Sure so uh Right now bitcoin is at approximately Three-quarters of a trillion dollar Market cap That means the size of all bitcoin in Circulation the market size Is about 750 billion dollars now that Topped one trillion Last year Um a couple times uh we were above a one Trillion dollar market cap so let’s say For
General purposes bitcoins about a one Trillion dollar market cap today That equates to about fifty thousand i Know we’re a lot less but let’s say Fifty thousand Times twenty million coins right now We’re at nineteen million Odd coins so let’s round that up to Twenty million Round the price to 50 50 000 And we get to a one trillion dollar Market cap So that’s the math of where we are today Or the average let’s say last year Gold as an asset class Is at about 10 to 12 trillion dollars Depending on what estimates you use so When i said earlier in this conversation About 15 times i was multiplying 750 Billion by 15 To get to about 1.1 one to one point one tr um sorry 11 To 11. 10 to 11 trillion Okay So Let’s call it 10 to be even number and Let’s keep the number of coins at 20 Million 10 trillion dollar Bitcoin Would be catching gold in terms of its Total size To the market
To the world And that would equate to 10 trillion Divided by 20 million is 500 000. Yep so that’s how you’re coming up yep That’s how you come up with that that’s 10 that’s 10x of where we are today the 500 000 number is the number that i Wrote in the book so that i there’s some Posterity there that i said hey this is Where i think it’s going i think it’s Going to 500 000 i get that number by Multiplying 500 000 by 20 million points Is 10 trillion market cap that’s what How much gold is in the world today That’s where i think we’re going Now to get above 500 000 to get to Let’s say a million you’re going to 20 Trillion in market cap now i look at u.s Treasuries today the market for u.s Treasuries is 30 trillion by itself That’s this base money and i look at Stocks 100 trillion bonds 100 trillion Real estate several hundred trillion So we’re looking at Let’s say three four five hundred Trillion in investable Assets around the world 10 trillion of that is in gold To 30 trillion events in treasury so to Get to a million dollar bitcoin you’d Have to get to 20 trillion dollars of Market cap of bitcoin the 20 is Arbitrary the million is arbitrary It’s where i think we’re going because i
Think that bitcoin is going to go past Gold On its way to other asset classes I’m not gonna speculate much past a Million dollars It’s it’s i It’s it wouldn’t be People would say it’s irresponsible of You to speculate it’s a million dollars It’s not I don’t think it’s irresponsible to Compare it to gold and say 500 000 That’s where i think the benchmark is U.s treasuries are at 30 trillion which Would be a million and a half dollar Bitcoin i don’t think Bitcoin is going to rival u.s treasuries In the next 10 years as an asset Let’s say Five to ten years So That’s the range that i’m thinking in And That’s how i get to half a million to a Million dollar bitcoin it’s not Something that i think is gonna happen Anytime soon I don’t know when it’s gonna happen it’s It’s just not It’s not responsible of me to even get Too specific with the projections it’s Just I just Am outlining this is where i think
Something is going over the long term It’s why i’m invested in it if if we all Knew When the price was going there Life would be so much easier Than it is uh today um You know i have of course managed money In the past it’s just nothing is that Easy yeah and i wasn’t holding you to Anything i was just trying to explain to The audience like there’s obviously Reasoning behind how you got to those Numbers it wasn’t just you’re pulling 500 grand you know out of your butt um So i got a question from a viewer um or A follower on twitter they said how Would nick go about explaining to a Five-year-old the role of the euro Dollar system in the great financial Crisis so i know this isn’t the best Transition but i was actually interested About this as well do you have any input On that Sure so it so assuming that a Five-year-old Uh can grasp the difference between a Paper note Issued by the fed And the bank deposit that they have to Go to the bank To withdraw Those two forms of money Are the forms of money that a child Could recognize
Paper issued by the government or a Deposit issued by the bank To explain it to a five-year-old the Role is that you think that this dollar And this dollar are the same well guess What there’s a third Type of dollar It’s issued by banks outside of this Country And you can’t trade those dollars for The paper So it’s not actually the same type of Dollar But over 50 years those three dollars Got mixed together in the global economy And one of them was not like the other And it broke the system That’s the easiest way to explain it Um To get more complex you know i get into That in in layered money uh where i talk About the origins of the euro dollar System why dollars were issued outside Of the united states what was the use Case for that Was it some evil Uh plan no it’s actually uh just emerged From Different ways that The financial system Needed needed to operate they needed to Borrow dollars To spend dollars and they couldn’t get The dollars from new york so they had to
Get them from london and how did london Get them Well They had some paper dollars but then They made a lot of them up And then they made more up and then they Made more up and then it it it Snowballed Over the course of Basically 50 years from its inception so From the people that don’t understand What the euro dollar system is what is That in a nutshell The euro dollar system is the third type Of dollar To go back to the original example you Have paper dollars in the united states And you have checking account dollars in The united states those are both real Dollars you can trade one for the other And they both uh exist in this real Dollar world and then you have fake Dollars That were issued in europe by european Banks that hence euro dollars And they’re not real dollars they were Never real dollars But they got Co-mingled with the rest of the world World’s dollars as we Um you know as 50 years went by But In 2007 Those fake dollars those euro dollars
That system started to break and the Trust in that system that those dollars Could ever one day be exchanged for real Dollars started to break And the fed had to come and rescue the Euro dollar system in december of 2007 And it essentially made all the fake Dollars in the world Somewhat backed by the fed So now those are quasi real dollars Because of the fed’s Swap line with the ecb and just for 2007. That is the system that we currently Live under And it is why August to december 2007 Is the key Time in history that Will define The dollar system and whatever direction It goes Because we had A system like a lot of people like to Think of 1971 and pre 1971 and post 1971 Because the gold standard we’re actually Actually the euro dollar system started In the 50s It did not it did not make the us go off The gold standard but i would say that It could have had a role in that it Wasn’t the main reason but because it Was still very early in existence but Then in 2007 the euro dollar system
Broke so in we are in a pre post 2007 World in which in the post 2007 world The fed has Bailed out the euro dollar system the Fake dollar system And they have had to exercise that Bailout more than once since 2007 In fact several times as the ecb has Tapped its swap line with the fed Or use the guarantee of an increased Facility to calm trust in the market Because basically the fed The fed will bail out if anything Happens the euro dollar system So it is a little Probably simplistic and cynical To Label it the fake dollar system versus The real dollar system right the more Accurate is onshore versus offshore Dollar system But if you want to explain it to a Five-year-old Real and fake Is a good way to start the conversation Then if you want to go to a 15 year old You can give them layered money because Teenagers Have been able to understand some of These concepts or so i’ve been told so Um That’s what i would say about that love It okay so we’re about 50 minutes into This podcast give or take
Depending on editing which there Probably won’t be any because this is a Great podcast and i really don’t edit my Episodes to begin with um i guess my Point is a hundred years from now you Know gun to your head what do what do You think the world would be like after You and i have already you know passed Away we’ve lived our lives what does the Finance system look like 100 years from Now if you had to guess Yeah you know I think that the state’s role In issuance it will eventually die out So that’s not something that i it’s not Something that i write about a lot Because it’s not something that’s on the 10 to 20 year horizon where the dollar Is going away But if you’re talking about 100 years And you know we’re gone Uh i do think that state money Dies Um i i just think that that’s the way That it’s going I don’t see any role For the state in money in the future as A bitcoin and digital system evolves we Can have Counter we can have issuers issuing Currencies using other currencies in a Layered money format but There’s no really Uh
Room for the state to issue currencies We might have still have state issued Debt like us treasuries Will probably be around in 100 years Right The treasuries will be denominated in Dollars but we might not have a fed And We might not have Private banks in the united states Issuing dollars They’ll be issuing they’ll be issuing Something else it’s kind of like the Banks will exist Sorry it’s kind of like the sovereign Individual route if you will It is it is and uh that book is It’s so poignant and Um You know we look we read it now and we See the projections and our minds are Blown just wait another 50 years For some of that stuff to come true and It will take You know it will take a lot longer time I think than 10 years for for the state To leave money i think a much longer Time but then if you want to talk about 100 years yeah i think it does Yeah i think to be honest man it’s this This whole like with a covet and all This stuff and i know you’re in California i’m in greater cleveland i’m In ohio um so a little bit different in
Terms of like mandates and stuff like That but i think this was a big wake-up Call as to how many people will just you Know blindly just go with anything so i Do feel feel like cbdc’s i mean if they Offer some sort of incentive because if You remember with like the vaccines and All that they’re offering like a lottery And gifts and you know krispy kreme Donuts and all this stuff i feel like People you know download the app and you Know uh embrace you know fed coin or Freedom coin you know very easily so i Feel like i agree with you but i feel Like you know state money it’s still Gonna be here through cbdc’s whether People know it or not i just feel like I’d say 80 to 90 percent of the Population just doesn’t really Want to learn or know about stuff like This i’m not saying they’re ignorant or Anything like that they just don’t know You know what i mean they don’t know What they don’t know You bring up a great point this is why i Think cbdc’s will come into existence And they will be around for a long time Because Uh And it will guarantee that state money Stays around like we’re talking about And why state money is not going Anywhere because part of what the fed And the government are going to do
Eventually with Uh cbdc is use it as their universal Basic income tool exactly so Uh you know If if you have a child you’re probably Getting that child credit um you know Into your bank account uh those sort of And then the pandemic assistance that People were getting Ubi is already kind of baked into the Mix in terms of fiscal policy bipartisan In the united states so Uh cbdc becomes a a much easier Medium of delivery For the ubi it’s like air dropping the Incentives or the stimulus I mean Isn’t it very easy marco to imagine an Air drop of your fed coin As an incentive to download your wallet Hey activate your wallet you get your First hundred bucks You know everybody you know 100 per Household you know it’s coming dude First you know it’s coming for sure uh It’s it’s just the way that states Function And um You know it is about power and control And Uh you know Although the sovereign individual thesis Is an essential one and it’s driven I think it’s driven some change in this
World for the better i think it will Continue to we still have the state uh There are still important functions of The state and uh And and so All of that does have to coexist and i i Don’t think that in my Lifetime in the next decade two decades Three decades that i’m looking at The elimination of state from money Um Or you know reversing some of these So we have the sovereign trends but we Also have the trends on the state side That we have to observe absolutely and That’s that’s growing government Ubi You know us treasuries Exceeding 30 trillion in supply that’s Going to go to 50 trillion it’ll one day Get to 100 trillion as the numbers start To Bend our minds and it just Those trends are important to observe Too and They’ll likely persist Yeah i bought andrew yang’s book i still Haven’t read it yet but i know that he’s A big proponent of ubi and you know if You look at how technology is going you Know his example that he always uses are You know truckers you know so people in The midwest or you know rural areas you Know being a trucker is a good way to
Make a living you know what happens when That gets automated for example you know All those jobs are going to go away so He’s a big proponent of ubi and things Like that obviously that’s just one Example but i do feel like technology in General is going to displace a lot of Jobs but on the other side you know it Could create other jobs as well i’m just Not smart enough and i haven’t studied It long enough to really understand what That discrepancy is going to be Between jobs eliminated and jobs created What are your thoughts just in general Like on technology and stuff like that With ubi planning I think uh i think um you know Unemployment insurance is something that Has Decades of precedent here in this Country so unemployment insurance Insurance it will serve the function That you’re talking about so maybe Extended unemployment insurance i don’t Think that’s the ubi use case it’s not Necessarily the automation the job Market job market evolves people lose Jobs they get new jobs they they train Hopefully they have some assistance to Bridge the gap that’s not necessarily Ubi ubi In my opinion It Will come in a more palatable form if
You’re taking away Or you’re eliminating programs That Cost the government money and putting That money into people’s pockets through Ubi because you have fed coin and an Easy delivery mechanism you also have More let’s say Hopefully in the future more transparent Accounting in terms of when money is Coming in and where it’s going out to um And so i look for ubi to hopefully be a Replacement of social programs as a way To Give people more power over the money That they pay in their tax system And and all that so that’s that’s the Huge optimist in me um in terms of you Know i think ubi is coming i’m not I don’t think that um Listen i think the government spends way Too much and the the debt that the United states government is is in is a Function of poor fiscal policy Bipartisan over many many decades i Agree but You know that’s the situation we’re Already in so Unless we’re going to reverse that trend Which doesn’t seem to be likely Look at the trend that’s going which is Spending more so if you’re going to Spend Give the money to the people
Don’t have the government make the Decisions To Allocate the money Because the government is not great at Allocating money we have proven that Because of the deficit and the debt Numbers they’re just not very good at it But there’s a role for again there’s a Role of government And so what is that role Um you know i those are some of my Thoughts about the role of government And the role of ubi uh going forward as We get fedcoin love it okay so we are Coming up to an hour here nick thank you So much for coming on um i always ask my Guests you know if you can leave the Audience with one nugget of information Whether it’s a book an article you know A movie whatever you know quote doesn’t Matter what would you leave the audience With today Okay good one um Sorry No It’s it’s it’s um so actually here’s Here’s the one one book that i’d Recommend to people uh right now it’s uh I’m not sure if you covered this in your Bitcoin books for beginners but uh Bitcoin is venice Um this is by allen allen farrington and Sasha myers that came out very recently
The book is filled with dreams about Bitcoin And i find it so fascinating to Dream about a bitcoin future And All these ways that bitcoin is changing Us as people So i would i would recommend people to Go to go read that and dream about the Next 10 to 30 to 50 Years Of this world with bitcoin in it and um And how bitcoin can make the world a Better place and that’s that’s where i’m Spending a lot of my time I love it especially the geopolitical Climate now um you know when people say Bitcoin will end wars um that’s not Necessarily like a tongue-in-cheek Comment you know some people take that Literally and there’s reasons for that Which i’m not gonna expand that rabbit Hole because we’re at the end of the Podcast but i actually sat next to allen Farrington um on the bus on the way to The bitcoin conference not this year but Last year he was staying at my hotel and We were both running late for this bus And we’re like oh you know and then i’m Like oh who are you and he’s like oh who Are you it’s like oh no you know It’s kind of funny um but yeah i Remember his original article when it Came out um i wasn’t aware that it was
Made into a book is that just an Expanded version or is that just the Article itself rewritten into a book No no there are there are dozens and Dozens of essays in there about Um just different ways to describe Bitcoin imagine it Um And i i i’m really fascinated by it i Love it okay nickname I’m i’m also uh i’m also uh the time Value of bitcoin my original work about Lightning and layers of bitcoin is Included in in one of his essays so There’s a there’s a there’s a plug for Me within the book which uh i’m not i’m Not too uh sad about no no no that’s Perfectly fine man you provide so much Value on these podcasts uh thank you so Much for coming on where can people Follow you or learn more about you Absolutely so People can find all of my links at Layeredmoney.com So you can find links to the book on Amazon the audiobook as well Uh there’s a link to my substack Publication which we’ve talked about in This interview called the bitcoin layer Or you can find that directly at the Bitcoinlayer.substance And uh everyone can find me on twitter At time value of btc perfect uh thank You so much for coming on nick i
Appreciate it buddy nice talking to you Thanks you too marco [Music] Thank you for listening to the Whiteboard finance show to read more About today’s episode visit Whiteboardfinance.com And don’t forget to subscribe to Whiteboard finance on youtube this show Is for entertainment purposes only Investing of any kind involves risk While it is possible to minimize your Risk your investments are solely your Responsibility This show is copyrighted by zlatic media Llc Written permissions must be granted Before syndication or broadcasting
