“Doing nothing, you put [Bitcoin] under the mattress, that particular combination would have outperformed the S&P 500 over the last 10 years, not only in return but also in risk.”
PlanB is a Dutch institutional investor with a legal and quantitative finance background. He created the Bitcoin Stock-to-Flow (S2F) model where he uses scarcity to quantify Bitcoin value. PlanB is currently working as an investment manager in a team managing a multi-billion-dollar balance sheet.
Bitcoin has been the best performing asset of the last one, five and ten years. It represents a very asymmetrical bet, meaning the return is much higher than its volatility. The Bitcoin white paper written by the cryptocurrency’s anonymous creator Satoshi Nakamoto served as the “Aha” moment, laying out the revolutionary technology in simple terms. “I liked the white paper so much. It's a very simple description, nine pages, very elegant, not that mathematical… from there you start your journey.”
It’s common among anyone considering Bitcoin to feel like they are late in getting involved. In reality, Bitcoin is still in the early innings. The asymmetric nature of Bitcoin and its growth potential could see its price go above $300k by the end of 2021.
LISTEN AND SUBSCRIBE
SPEAKER
PlanB
Institutional Investor
MODERATOR
Anthony Scaramucci
Founder & Managing Partner
SkyBridge
EPISODE TRANSCRIPT
John Darsie: (00:07)
Hello everyone and welcome back to SALT Talks. My name is John Darsie. I'm the Managing Director of SALT which is a global thought leadership forum and networking platform at the intersection of finance, technology and public policy. SALT Talks are a digital interview series with leading investors, creators and thinkers that we launched during this work from home period. And what we're trying to do on the SALT Talks is replicate the experience that we provide at our global conferences, the SALT Conference, which we host twice a year in a normal environment once in the United States and once internationally, most recently in Abu Dhabi in 2019. We're looking forward to getting back to a normal event calendar hopefully in the second half of 2021.
John Darsie: (00:50)
But what we try to do at our conferences and what we're trying to do on these talks is provide our community a window into the mind of subject matter experts, as well as provide a platform for what we think are big ideas that are shaping the future. And we're breaking ground today on today's SALT Talk. It'll be a first for us here at SALT. We have an anonymous faceless speaker joining us on SALT Talks today, and that anonymous faceless speaker is PlanB.
John Darsie: (01:16)
Welcome to SALT Talks PlanB. PlanB is a Dutch institutional investor who goes by the name @100trillionUSD on Twitter. He has a legal and quantitative finance background but chooses to remain anonymous in the public sphere. He created the bitcoin stock-to-flow model for valuing the price of bitcoin where he uses scarcity to quantify what he thinks is bitcoin's real value. The stock-to-flow model is not only applicable to bitcoin but also to gold, silver, and any other type of asset. PlanB is currently working as an investment manager in a team managing a multi-billion dollar balance sheet.
John Darsie: (01:54)
So why does he call himself PlanB? PlanB refers to an alternative plan for quantitative easing, AKA printing money by central banks, negative interest rates and currency debasement in general. 100trillionUSD is a reference to the Zimbabwe 100 trillion US dollar note that came about during the 2008 period of hyperinflation.
John Darsie: (02:18)
A reminder. If you have any questions for PlanB during today's SALT Talk except questions about who his real identity is because he's not going to give that up, he's probably Satoshi and doesn't want to tell us, but if you have any other questions for PlanB during today's SALT Talk, you can enter them in the Q&A box at the bottom of your video screen on Zoom. And hosting today's talk is Anthony Scaramucci, the founder and managing partner of SkyBridge Capital, a global alternative investment firm. Anthony is also the chairman of SALT. And with that, I'll turn it over to Anthony for the interview.
Anthony Scaramucci: (02:49)
Well PlanB, thanks for joining us. Usually I ask people about their backgrounds, but because you like being anonymous, I'm going to jump right into my questions about your life and what you're doing now. John's accusing you of being Satoshi. Who do you think Satoshi is PlanB?
PlanB: (03:09)
Yeah. Well, first of all, thanks for having me Anthony. I'm really thrilled to be on your show. Let me get that out of the way immediately. I'm not Satoshi, and I don't wish I were because, yeah, what he did is remarkable. The invention of bitcoin and the invention of digital scarcity. I don't know who he is or she or they. Nobody knows. And I think the people that know, that will keep him anonymous and not dox him because the anonymity is very important to bitcoin.
Anthony Scaramucci: (03:50)
And let's take that a little further. I actually think that he or she or that group has already figured out a way to encrypt the way bitcoin is secure. I think that anonymity will stay secure. Just my personal opinion.
Anthony Scaramucci: (04:07)
But let's talk about bitcoin for the neo fight. Let's talk about, wow, I'm reading about bitcoin. I haven't read the bitcoin standard. I haven't read articles related to the blockchain or I haven't been to a symposium, but something is going on in bitcoin where it went to 20,000 or 19 or so thousand in 2017. It crashed down to earth at 3,000 a few years later and now it's back in that sort of let's call it 17 to 20,000 zone, I guess currently at around 18,000. Why should I get involved? Why should I take my intellectual curiosity and be drawn to bitcoin?
PlanB: (04:50)
Yeah, that's simple. Bitcoin is the best performing asset this year, the last five year and last 10 years. And not only on a return-only basis, but also on a risk-adjusted basis. So bitcoin is a very asymmetrical bet. It has the largest sharp ratio that I have ever seen in my entire 25-year career. So it has a sharp ratio of by 2.5. So return is much higher than its volatility. And I know it has extreme volatility, right? It can go 70% or 80% down in a year. It did that three times last 10 years. So it's extremely volatile. It's not for the weak hands like we call them, but it has enormous upside as well and the upside cancels the volatility out. The sharp ratio is very high. So yeah.
PlanB: (05:54)
I think the question for investors to ask is not why should I, not why should I be in bitcoin. It's rather why should I not be in bitcoin from my perspective.
Anthony Scaramucci: (06:07)
And is there a reason why someone shouldn't be in bitcoin PlanB?
PlanB: (06:11)
No. I don't think there is actually. I've heard a lot of reasons also within my company which manages a big pension balance sheet, a bank balance sheet and a life insurance balance sheet. And that is the most difficult decision for them to make of course because it's other people's money. We have legislators, regulators, central banks looking over our shoulder. But for a normal investor or a fund investor I don't think there is any good reason not to invest because the volatility is mentioned as a big risk. It is by definition risk. But it's always mentioned as something that is a reason for not investing in bitcoin.
PlanB: (06:58)
But we as investors know of course that you can manage volatility. You can size your investment. You can as a matter of fact, if you put 1% of your total investment in bitcoin and 99 in cash doing nothing, you put it under the mattress, that particular combination would outperform, would have outperformed the S&P500 over the last 10 years, not only in return but also in risk. So that's, yeah.
Anthony Scaramucci: (07:29)
Listen. It's very compelling. But when did you have your bitcoin aha moment? So I guess it's a two-part question. When did you discover bitcoin, start to do your research and analysis on it? And then when did you have your aha moment?
PlanB: (07:46)
Yeah. I like that question because it seems like everybody goes through a sort of process that takes some time and that journey for me started in 2013, early 2013. I read the white paper because it was mentioned in, I think Zero Hatch or some website. But bitcoin was mentioned, the white paper was mentioned, so I read it. And right there right then was my aha moment because I liked the white paper so much. It's a very simple description, nine pages, very elegant, not that mathematical, just in words what Satoshi did with bitcoin and I recommend everybody to read the white paper before anything else because it's the source. It leads you to all the other people and articles that are mentioned in that white paper. And from there you start your journey.
PlanB: (08:44)
So I started reading books, listening to podcasts. And I wasn't ready to invest until 2015, 2016. But in 2013 when I first saw it, it was $100 and then a couple months later in 2013 it was $1000. So I thought, "Wow. Okay. I missed it. I'm too late." And that feeling by the way never goes away. I still feel I'm too late.
PlanB: (09:12)
But yeah, that took me to the investing part, investing decision was mainly driven at that time, so 2015, 16 when I didn't have a model yet or hadn't quantified it. But it was mainly driven by the notion of scarcity, that the invention that Satoshi Nakamoto did is digital scarcity which is, yeah, sort of an impossible thing. Something can be digital but then it can be copied, so how can it be scarce? How does that work?
PlanB: (09:43)
So it's really a discovery process and it leads into very exotic worlds like cryptography, peer-to-peer networks, mining, proof of work, hashing, those kinds of terms are really, yeah, basic, really essential to get, to learn about. But then, once you start investing, you start feeling the effect of volatility of course but also of the enormous uptrend that's in the asset.
PlanB: (10:17)
So the scarcity, the 21 million is what got me in there. But it was not until 2019 that I really had the desire to have something more, more like a fundamental model that I use in investing professionally as well where I could say a little bit more mathematically about the price and the path for the next couple of years.
Anthony Scaramucci: (10:50)
You're saying something interesting. You're saying that you're too late. But are you too late though or is this the beginning really? Or are we still in the first innings of bitcoin? Yes, I know 2014 bitcoin traded at $154 per coin and it's now 18,000 and so that looks late. But when you think about the potential for bitcoin, are we still in the early innings?
PlanB: (11:15)
We are, definitely. We're not late. But it's more the feeling that everybody who goes in has the feeling that he's late. I had that feeling at, well, around 400 because I missed the hundred part and before me of course there were people entering at 10 or one or even below a dollar, right?
Anthony Scaramucci: (11:35)
Of course.
PlanB: (11:36)
But yeah, now we're very early. I think in the adoption terminology we would be in the innovator stage, not even the early adopter phase. There's not even 2.5% invested in bitcoin, so we're very, very early. And that's also what my models show because this upside is immense. Yeah, no. It's always scary to enter. You always have the feeling you're late, but you're not.
Anthony Scaramucci: (12:07)
All right. Well, it's a good point. The 21 million, I have to confess you I have not read the white paper but I will now go and read the white paper. But is there a reason for that number? Is that number arbitrary? Or I know they were trying to create scarcity. But why did they pick 21 million or does nobody know that answer?
PlanB: (12:25)
Nobody really knows. And I think it is ... It could be arbitrary. I think it is by the way. So like no. There's no good reason why it shouldn't be any other number.
Anthony Scaramucci: (12:36)
Okay. Your macro view, when you think about price trajectory for bitcoin over the next five years, what do you think it is and why are you so bullish?
PlanB: (12:47)
Yeah. My macro view is also a quant view because my background is very quantitative. I have to have numbers. That's why I made this stock-to-flow model that got me my name. And what that model shows it's based on scarcity on the 21 million and it compares to scarcity. It quantifies it to gold, real estate, silver, diamonds, et cetera, et cetera. If you look at that trajectory, what we had last 10 years, where it could go to the levels of gold and real estate, then I expect bitcoin to do another 10x or 20x.
PlanB: (13:31)
So it will go to well north of 100,000, maybe north of 300,000 before Christmas next year. And that sounds really bullish. That sounds maybe ridiculous to some people, but we've done that three times before and it's this very asymmetric return. Years of nothing, some big crashes and then an enormous bull year that I think that will happen next year and it's typically after halvings.
PlanB: (14:05)
I know you talked about this before in one of the other podcasts, but the supply of bitcoin is halved every four year. And imagine that the gold mining supply would halve. Imagine what that would do to price. That's what you see.
Anthony Scaramucci: (14:21)
So let's go into it. It's being had because this stuff is being taken out of supply. It's basically like a Van Gogh. It can't be replicated and so there's a finite supply of it and it's being taken out of supply which is increasing price. Is that fair to say?
PlanB: (14:38)
Yeah, that's right. Bitcoins are made every 10 minutes in a block. Every 10 minutes all the transactions are put together in a block and the miners make that block. And the miners that found the hash that make the block valid, they get the new bitcoins. It's 6.25 bitcoins at the moment every 10 minutes. That was 12.5. Four years before that it was 25, and it started in January 2009 when Satoshi mined the first block with 50 bitcoins every 10 minutes. So we're now at 6.25. And that will halve for the next 100 years. So yeah, supply will be taken out. If you want bitcoin, you will have to convince somebody else to give it up, to sell it to you. And of course that does something with the price.
PlanB: (15:34)
But fundamentally, from a first principle point of view, scarce assets are worth more than abundant assets. And bitcoin is the first absolute scarce asset. You cannot alter the supply, change the supply. Even when price rises, you cannot increase the supply because it's mathematically in the protocol. And that's very unique because even with gold, if there is a lot of demand, if the price rises and gold price goes let's say 2x, for sure, the mining will increase and miners will do everything to mine more gold, to print more gold if you will. Bitcoin, that cannot happen.
Anthony Scaramucci: (16:21)
You've talked about this stock-to-flow cross asset model for valuing bitcoin. You've invented it. How does that work? Describe it to a lay person.
PlanB: (16:33)
Yeah. So when I read the white paper and later also Saifedean's book, The Bitcoin Standard, I think you had him on the show yesterday.
Anthony Scaramucci: (16:42)
Yes.
PlanB: (16:44)
Beautiful book. Must read. He talks about stock-to-flow as a measure for scarcity. So there you have the two combined. Bitcoin is scarce. How do you measure scarcity? You can do it with stock-to-flow. I knew stock-to-flow from the gold community. Gold investors use stock-to-flow to measure the scarcity of gold and silver and platinum, et cetera. My insight was to relate that to the market values of gold and bitcoin and diamonds and real estate.
PlanB: (17:14)
So I plotted the stock-to-flow, the scarcity on the y-axis or the x-axis and the market value of the total market, bitcoin market, diamond market, real estate market on the y-axis, and also the historical path of bitcoin. And what you see is that there is almost perfect linear relationship between those assets and between bitcoin's path towards the scarcity of gold and real estate. So that's very interesting and mathematically very hard to deny. So yeah, it's a relation between scarcity and value, and you can exploit that.
Anthony Scaramucci: (18:02)
We have some pretty well known people, Stan Druckenmiller, Paul Tudor Jones, Bill Miller, all three are money managers that became billionaires due to their investment acumen. And now even Ray Dalio is starting to warm to crypto. We're starting to see legacy institutions like JP Morgan and Morgan Stanley write positively about bitcoin. The career risk factor seems to have faded away from supporting bitcoin at institutions. But when do you think that fade, if you will, will turn into an asset allocation recommendation for their investors? Obviously Paul Tudor Jones is already in there. So is Stan Druckenmiller and Bill Miller. But when do you think that crossover happens and it becomes more mainstream?
PlanB: (18:54)
I think it goes gradually and it has gone gradually of the last couple of years. Bitcoin is a bit exotic. It's new. So you can't ... Well, most people don't know it, but once you see it and once you get it, once you read the white paper, you get what bitcoin is, then you cannot go back. Once you've seen, you cannot unsee is what I say. And especially if you have a quantitative background. So I guess especially hedge fund guys who are used to spotting opportunities and using quantitative analysis and maybe algos to trade and invest, these investor groups are specifically open to recognizing asymmetric bets like bitcoin. So once they see it, they will go in. It's just too yummy not to.
PlanB: (19:50)
Yeah. So I think it will grow gradually. Also, the gold investors. Gold investors are of course very much into the bitcoin vision of sound money, scarcity. The only problem there is that it's a lot of older guys that don't have IT or programming or necessarily quant background. So you see the gold community divided in two groups, the old ones that want to touch the gold and feel it and want to have it physical, and the newer generation that believes in sound money, shares this view with bitcoin and actually understands what peer-to-peer is and elliptic curve encryption and all those things. So yeah, I think that's how it goes. It goes automatically and it's a momentum that cannot be stopped.
Anthony Scaramucci: (20:47)
You mentioned earlier in our conversation gold as a store of value, real estate as a store of value. The one slightly different thing about these two, and again, gold I think there are some commercial uses and use in jewelry and real estate obviously you can earn rent from real estate or you can get the pleasure of sitting in the home, et cetera. Why do you think bitcoin will rise to that level? Because it doesn't, and again, I'm just playing devil's advocate here for a second, because it doesn't have any of those two components that I just described. So why are you still comfortable with it?
PlanB: (21:33)
Yeah, I like the question. Bitcoin is much more like gold of course because it has no cash flow. It's a commodity. It has no cash flow. You cannot use cash flow models to value it like real estate. With the rent you can actually evaluate it the classic way. But what you see especially right now and in the micro environment with especially since 2008 which by the way is no coincidence that the bitcoin white paper was written in 2008 and published in 2008, that was the height of the global financial crisis of course. And since 2008 we have seen quantitative easing, massive amounts of money printing, stimulus of, well, first to save banks, now with COVID to save the economy. And all that money has to go somewhere. Of course, central banks buy bonds, they buy mortgages and interest rates go down, especially here in Europe where interest rates are negative even in countries that are, well, close to default or actually already over that line, even if those have negative interest rates.
PlanB: (22:54)
So a lot of people have and also companies, hedge funds, but also normal companies we've seen that recently have a big problem what to do with your cash. There is no yield to be made. And we have that too as an institutional investor, investing pension money. Where is the yield? Where can you earn money? There is not much places. So a lot of people go to real estate. Some people go to gold. So I guess a lot of this rise in prices of all these scarce assets, gold, real estate, diamond, silver, bitcoin also has to do with the quantitative easing, the debasement, the printing. You can actually see it in the models as well.
PlanB: (23:44)
So yeah. I think there is even in real estate where there's a lot of utility value of course because you can live in a house, even in real estate there is a big monetary premium at the moment because investors use it as a store of value for it. And you can see it for example in Amsterdam right now. I won't mention names but there is huge asset investors, billion, trillion dollar balance sheets that buy everything in Amsterdam, all the houses, just because there's nothing else where you can put your money in.
Anthony Scaramucci: (24:26)
Yeah. And to your point, if you're inflating the currency or creating more currency, well, those houses will be worth more in those currencies. And there's scarcity to it. I got a couple of more questions. I'm going to turn it over to John Darsie, my colleague here, who's got ... We've got a ton of audience participation today. But before we go to those questions, just two quick questions. Are you a bitcoin maximalist or do you like other digital currencies? Do you think there are other digital currencies that will rise to the level of bitcoin or perhaps compete with it? Or is that over? Obviously Michael Saylor was on, and he sort of felt that that was over. What's your opinion PlanB?
PlanB: (25:11)
Yeah. I'm absolutely a bitcoin maximalist. I think it's winner takes all game, and I think a lot of the confusion there comes from the fact that some people see bitcoin and other coins as products or companies. And you can have multiple products and some product will win and the other product will lose or multiple companies can coexist together which is a very logical view. But bitcoin in my view is not a company. It's a protocol. It's more like TCP/IP. It's more like POP IMAP or HTTP. It's a protocol. And of course you can only have one protocol, especially a money protocol. Why? In my eyes it doesn't make sense to have ... to still have in 2020 and beyond multiple currencies like we have today where it's much, much more efficient to have one monetary protocol which is bitcoin. And yeah. I'm what they call a maximalist, but I don't like the term by the way.
Anthony Scaramucci: (26:21)
Tell me why.
PlanB: (26:23)
I don't know. It was invented by Vitalik Buterin, the inventor of Ethereum coin. It was meant in a bad way. Maximalists sounds like terrorists. It doesn't sound very good. So I'm ...
Anthony Scaramucci: (26:45)
I'll have to start switching my vernacular. I appreciate you giving me some of that etymology of the name. My last question. Then I'm going to turn it over to John. Do you think there'll be a bitcoin ETF in our future?
PlanB: (27:00)
Yeah, we already have one. It's called MicroStrategy.
Anthony Scaramucci: (27:03)
Right, yeah, amen.
PlanB: (27:05)
It's defacto ETF, right? It's listed and it has a big chunk of bitcoin in there. But no. Yeah. I don't know. We should have a bitcoin ETF. It's very strange we don't have one. And once we get it, maybe in a couple of years, but they're stalling it. I don't know for what reason. So there's all kinds of other products, exchange-headed notes, exchange-traded commodities but no exchange traded fund yet. I'm sure we'll get there, but maybe it takes some years to ... Yeah, for some reason they don't allow it yet.
Anthony Scaramucci: (27:47)
John, I'm going to let you take over. I love the name. I got to get one of these hats PlanB. So when this is over, I got to send you my home address, okay? I got to be walking around my town with this hat on so people will have to ask me what that means.
PlanB: (28:03)
I'll get you one.
Anthony Scaramucci: (28:04)
All right. That's a deal. All right, go ahead John. I know you got tons of questions.
John Darsie: (28:08)
Yep. All right PlanB. So Anthony referred earlier to the fact that a lot of big names in the investment management industry are now espousing the virtues of bitcoin and in many cases buying it either in their hedge fund portfolios or in their personal portfolios. How do you think the evolution of the base of asset owners for bitcoin that now includes so many strong hands like a Paul Tudor Jones or a Bill Miller or a Stan Druckenmiller, how do you think that affects the way bitcoin will trade and ultimately could potentially suppress volatility as it experiences its next bull run?
PlanB: (28:42)
Yeah, great question. Two questions actually. I'll start with how it will progress. I think it will progress and it has progressed in a way that the easier it is for an investor to decide, the earlier he goes in. So if you're a high net worth individual that can decide over your own money and don't need some shareholders or employees or accountants to convince, you just do it with a little bit. You start small and you grow into it. And if you have a fund for participants, you can do it and you can start selling that and there's people that want to go into the fund. If it would be an exchange traded fund, you would have a huge crowd. But look at Grayscale which is a trust entity, right? It's interest structure. Huge demand, over 10 billion in cryptocurrencies under management.
PlanB: (29:44)
And lately you see for example Michael Saylor's company, MicroStrategy. I know you had him on your show. But he is a listed company, has of course a lot of accountants, legal questions and shareholders to deal with and his board. So it's very natural that he comes later into the game because he has to convince all those people.
PlanB: (30:11)
The last group of investors that will enter in my opinion will be, well, like my employer, the institutional investors that manage bank balance sheets, life insurance balance sheets, and pension balance sheets because they have the regulators, the central banks that have to okay the new type of investment. And that will be a long and very, yeah, tedious process. So yeah.
PlanB: (30:42)
And then the second part of your question, what will do that with price? Of course if adoption grows, if adoption increases and demand increases while at the same time supply decreases because of the halving and the scarcity, stock-to-flow goes up, price will go up. It has to go. So yeah, very interesting times.
John Darsie: (31:11)
You did a recent poll on Twitter about basically crowdsourcing answers on what people think are the biggest risks to bitcoin. Could you tell us the results of that poll and also what you think personally are the biggest risks to bitcoin?
PlanB: (31:26)
Yes. I like Twitter very much because especially when you have a large following, you can very easily gouge the market for questions and sentiments. So I did the poll two days ago. It was answered by more than 13,000 people. The biggest risk that people see is government ban or regulation. That's 34% of the people think that's the biggest risk to bitcoin. And I tend to agree because governments have been against bitcoin and openly, but also trying to ... especially trying to kill the predecessors of bitcoin. Bitcoin was not the first digital currency. It was the fourth or fifth of even the sixth. All the others were shut down by government because it was not peer-to-peer or the inventor was not anonymous so they just shut them down. Well, look what they did to Libra from Facebook, Facebook's coin.
PlanB: (32:37)
So in a way bitcoin was especially designed for this risk to ... It's quite impossible to ban or to kill bitcoin by a government because if a government does it, it will just go on in another country. Of course, governments can make it very, very difficult with tax laws, with know your customer and anti-money laundering laws. And that's what they're doing at the moment. It's a bit. But they do that with every invention, every technological improvement. When the cars were invented, there was this rule that if you had a car, you also had to employ a person that walked in front of the car with a red flag because otherwise there would be danger for the pedestrians and the cyclists.
PlanB: (33:25)
So every new technology brings its own suite of stupid regulation, but in the end that regulation will improve, be more reasonable, be more just better for the general population and also countries will of course be different than that. There will be countries that want to be the next Silicon Valley, crypto valley if you will. Singapore is there. Switzerland is there, et cetera, et cetera. And there's companies that are less ... Yeah, that don't have much with protecting property rights. It's more the socialists, the countries, yeah, that will have more problems with this.
John Darsie: (34:12)
As a quick follow-up to that, one of our viewers is asking and they're saying that in the past gold has been made illegal to hold by the public. In that type of scenario where a country comes out and says it's illegal for our citizens to own bitcoin, obviously there's going to be plenty of citizens that do own it, have you studied what a similar outcome would be if people declared it illegal to hold bitcoin if we went through a period of legal prohibition?
PlanB: (34:37)
Yes. Yeah. So the United States made it illegal for US citizens to have gold. That was I think in 1933, just before they did the Bretton Woods and gold was of course increased in price a lot. So yeah. Normally what you see if something is forbidden, is made illegal, there'll be black markets and the price of it will go up. So it's much better to legalize it. You see it with other things as well. It's much better to legalize it, to control it, to take a little bit of tax and profits from it than to make it illegal because it will transform into something you don't want as a government. It will be stronger because of the ban.
PlanB: (35:34)
And of course, if you ban it as a company, then the businesses will go away. In a way you see that in the Netherlands at the moment. They're making it very ... So there is a legal guy head of finance at the moment in the Netherlands, and he has no technical background. So he doesn't really get bitcoin and he's completely into anti-money laundering and know your customer. That's his thing. So he has made that so strict. And I think it's the strictest in the world where you have to even make a copy of your wallet so your own wallet where you want to receive the bitcoin. What that means is all the companies that are in a country go away. For example Daily Bid, the biggest option in exchange, and that's a Dutch company, moved to Panama with all the profit, with all the employment.
PlanB: (36:31)
So there will be a very interesting game, theoretical game there of countries that ban it and others that welcome it. That's how the new world will be shaped.
John Darsie: (36:43)
So you talked about how MicroStrategy is effectively now a bitcoin ETF and they're sort of a pioneer in terms of taking corporate treasury money and investing it into bitcoin as an alternative to cash or other corporate treasury type of investments. Do you expect to see other corporates follow suit?
John Darsie: (37:00)
I think about all these countries in the United States for example that have millions upon hundreds of millions of dollars in cash on their balance sheets that are domiciled in foreign countries that aren't really accomplishing much for the firm. Do you expect to see those types of companies especially in the tech arena where I think bitcoin has a little bit higher adoption rate? Do you expect to see more of those companies start to follow suit?
PlanB: (37:25)
Yes, absolutely. I think we're seeing it already. And it's even easier for non-listed companies. So if you're a private company, you can put your excess cash in bitcoin or whatever asset you like without dealing too much with all the things the listed company has to deal with. But even listed companies now that Michael Saylor shows the way that it can be done.
John Darsie: (37:53)
And you talk about career risk. People were scared to be the first mover, but now somebody's done it effectively and it's reduced some of the stigma around it I think.
PlanB: (38:02)
Yeah, yeah. I mean MicroStrategy is a small company, right? It was. Before they invested in bitcoin, it was 1.5 billion dollar market cap. I don't know what it is today. It will be much higher. But that's small compared to the real cash rich companies that you mentioned as well, Google, Apple, Facebook, et cetera. So yeah, they all ... We all have to put the same problem, what to do with your money in an environment that money is debased basically by quantitative easing. So yeah.
John Darsie: (38:36)
We have two questions that came in within a minute of each other and I'll combine them from JJ and from Josephine. And they're asking are you fully convinced that bitcoin supply is indeed capped at 21 million, and what stops bitcoin's core developers, the miners, the node validators from all agreeing to increase the circulated supply of bitcoin? They're questioning whether in Satoshi's white paper explicitly says that the bitcoin supply is immutable.
PlanB: (39:03)
Yes. I'm actually glad that question is asked because it's still out there. Let me first say you can only ask that question if you don't get bitcoin yet. If you have not read the white paper or did not fully understand the white paper because it's an essential thing of bitcoin that it cannot be increased, unless everybody agrees with it. But changing the monetary parameters of bitcoin protocol, the 21 million, is technically very easy. You can just copy the code. Right? It's on GitHub, it's open source like Linux and all the other open source software. So it's very easy to copy the software and change the parameter of 21 million to 42 or whatever number. But you cannot copy the network around it. So the miners, the users, the node operators, the developers, the investors, all the exchanges.
PlanB: (40:08)
So in other words, if you copy the code, change that number or make a totally ... an entirely new bitcoin. If you do that, that would be like changing the rules of chess. You can do it but you would be playing alone.
John Darsie: (40:29)
Right. Talk about quantum computing, if you will, for a second. We asked Raoul Pal who you may know and we had on a SALT Talk a few months ago about. In his view one of the real legitimate threats to bitcoin and he mentioned quantum computing. Is that a risk in your mind, and what are bitcoin developers and the bitcoin network doing to create quantum computing basically firewalls that could potentially disrupt the network?
PlanB: (40:56)
Yeah. Quantum computing was mentioned as the second risk in that poll we talked about earlier. 21% of the people think that is a big risk after government banning. So yeah, I'm not an expert on quantum computing. I know what it is. I read a lot of papers about it, so I have some view. My view is that first of all we're not there yet. So most papers quote a time range of 2025 to 2035 for the first quantum computer to do something that is useful, some small thing, let alone cracking the private keys that are used in bitcoin and a lot of other security applications of course.
PlanB: (41:49)
So yeah. I think it's ... But the risk is there of course. A lot of teams trying to build a quantum computer. We saw a lot of news lately about Chinese scientists that have made a breakthrough in quantum computing. Actually I talked to some guys that own companies that make quantum computers to get a better understanding of this, and I talked to the cryptographers that are very close to bitcoin core development about what the risks are and what I see is two worlds. It's the world of the investors in those companies that make quantum computing and the researchers that are very bullish, that are very optimistic. They'll be able to do it one day.
PlanB: (42:36)
And there's the cryptographic guys, especially the bitcoin guys that say, "Okay, it's far away." And even if they can do it, then there are all sorts of other things that they'll crack first because all the banking systems will crack before bitcoin because their security is much lower than bitcoin.
John Darsie: (42:57)
Yeah. There are a lot of issues that will arise if we reach full quantum computing capability from a national security or a global anti-proliferation standpoint as well.
PlanB: (43:08)
Yeah, exactly, exactly. So yeah. And even that, right, if it's there, you can change the algorithm. You could go to stronger encryption. It's already there.
John Darsie: (43:20)
Right.
PlanB: (43:21)
Military grade strong. But you can make it even stronger.
John Darsie: (43:26)
Well, Elon Musk will have us living on Mars by then so I'm not quite as concerned. How would you react to accusations-
Anthony Scaramucci: (43:34)
We'd be living on Mars with the Martians, you know that right, because we ... The Israeli scientists said that there are aliens living there already.
John Darsie: (43:40)
Yeah, I'll tell you a story PlanB. Anthony, he goes to work in the government. He only was there for 11 days, but on the first day what do you think Anthony Scaramucci did when he got in government? He wanted to find out about the aliens.
PlanB: (43:52)
Of course.
John Darsie: (43:53)
And there's nothing there. So does that tell you that there's no aliens?
Anthony Scaramucci: (43:57)
PlanB, that's confidential, okay? Don't listen to this nonsense.
PlanB: (44:00)
Yeah, yeah, yeah. Okay.
Anthony Scaramucci: (44:00)
Don't listen to this nonsense.
Anthony Scaramucci: (44:03)
All right. So thank you so much for joining us. You're terrific. I appreciate the opportunity to spend time with you. I'm going to take you up. I'm going to come with a PlanA hat. I'm going to meet you at an Amsterdam restaurant with your PlanB hat. This way I know who you are. You wear the PlanB hat. I'll be able to identify it, and we'll have dinner one night.
PlanB: (44:21)
Great. Thanks for having me guys.
John Darsie: (44:23)
Thanks so much for joining us PlanB.
Anthony Scaramucci: (44:25)
Terrific.
