Ask Jack: Is It Time to Sell My Bitcoin?

Yo, what is going on you guys? How are you? Welcome back to another episode of the Jack Mer Show. I am your host Jack and you are listening to Ask Jack, our weekly Q&A segment where you guys get to call in from anywhere in the world. Could be totally anonymous and ask whatever you'd like. You can call in at ask.jackmallers.com.

Disclaimer, I sound raspy. Why? I have the flu. Bitcoin fixes almost everything except flu season. That is okay. Being sick is not the end of the world. I just hope I don't sound too gross.

This is Sunday night. I gave it to the last minute before the week was over to record this. Ideally, these go out on Fridays. It's a fun way to end the week and head into the weekend, but I had the flu and I gave it till Sunday night to get this out. But you guys already know I wasn't going to go into next week, no matter what, without giving you this episode. If I say I'm going to do it, I do it for the people. This is for the streets. This is a revolution until Fiat rests in peace. Whoa, that was a bar. But I'm not a rapper.

All right, so I do apologize for how I sound and how I look, I guess. Um, but yeah, this is the best I got. So hopefully it's good enough. And um, well, consistency is the name of the game. I'm here for the people. I'm here for you guys. We're in it together. And so as long as I got a pulse, you guys are going to get episodes out of me. Um, and I'm bored anyway. It's between the afternoon games and Sunday night football, so I figured why not? I love this. Uh, even with a fever. All right, with that, uh, let's get started. First question is from Mitch O. Uh, as always, I get so many of these. It's such a delight to hear your guys' voice. So, I really appreciate it and I encourage all you guys to call in. You got nothing to lose. Uh, this is just so much fun. All right, Mitch, let's hear what you got.

Appreciate you, man. I'm not a hockey guy, so whatever. Blackhawks, wild. I don't know. Might as well be talking shitcoins. I don't know what I know the Minnesota Vikings beat the Chicago Bears earlier this year. Was probably a fluke. You guys barely beat the Miami Dolphins at home. Uh, Kyler Murray looks terrible. Um, so we'll see how you guys fare, but you're 4-0. Congratulations. Uh, anyway, I digress. Uh, enough of the Minnesota versus Chicago. Let's get to motivating your Bitcoin position. Listen, uh, and you know, you're not going to get the energy you're expecting out of me, Mitch. This is my flu game. Speaking of Chicago and sports, Michael Jordan. That was a Michael Jordan shout out. So, you're going to get a flu game out of me. But here's the deal. I think oftentimes people get stuck trying to justify Bitcoin and holding Bitcoin and the opportunity cost of Bitcoin.

What I would, you know, to ease people's anxiety and stress and all the anxious energy that they somehow find themselves in, I firstly like to tell people, what else would you own? Like you start from a premise of you can't own fiat. Nobody is arguing that you should be owning fiat. Now, back in my day when I was getting into this asset, everyone would tell me that I should just own bonds and that there was real return in owning these things and that inflation was 2% and all this gobbledygook that now everyone on the planet doesn't actually agree with. Even the, you know, sometimes sitting politicians don't agree with the way we measure inflation. So this is now a mainstream consensus opinion that bonds have been in the worst bear market arguably ever. Uh, they've performed worse than pretty much anything you could have owned. And the currency, everyone understands that inflation is a mathematical guarantee and that saving in nation-state currency is a fool's game. So let's move those to the side. And then you got to ask yourself, well, what do you want to own? Instead of saying like, well, what if Bitcoin has quantum risk or what if Bitcoin has a cryptography hack or what if this, what if that? Yeah, sure. Okay. I mean, nothing in life is certain. You have to understand that the human condition that we all share is you can't change the past and you don't know the future. And all that we're guaranteed is the now. That's for everything in life. So, could something happen in the future? Yes. If you could rewind time, would you do something different? Yes. But that's not unique to Bitcoin, brother. That's called being human. All you have is right now, my man. And so then you ask yourself, okay, I can't own fiat and I can't lend to the government. What asset do I want to own? And this is just a very simple equation. It's what asset has credible scarcity. So, credible scarcity. Like you know, the trolls on the internet say, 'Well, my daughter's kindergarten drawings are scarce. She only drew twice and they're both on my fridge.' Yeah, but that's not credible scarcity. I can't rely on that scarcity credibly. Bitcoin has credible, mathematically secure scarcity. Okay. Bitcoin is easy and cheap for me to store. I have real estate, unfortunately. Honestly, it's not very easy for me to store. It costs a lot of money for me to maintain this house and then I got to pay property taxes and they just steal from me. Every year my property taxes go up. Yuck. Bitcoin's divisible. It's very easy for me to transport if I need to move, if I need to send some of it for all of these things. And then you kind of realize, man, I can't own fiat. I can't lend to the government. And this thing has no counterparty risk. It's free for me to receive. Free for me to store. I don't have property taxes. I don't have to pay people to secure it in a vault. I don't need an armed security team to stand outside of its physical presence with weapons. I don't have to trust management to make the right decisions or not be effective altruist dooming weirdos. Has none of that. It just sits there as bytes of data free of charge and I can even store it as words in my brain. And then here's the other thing, Mitch. People are then going to say, 'Oh, yeah, yeah, yeah. Well, AI stocks have recently outperformed Bitcoin.' But here's my problem with that. I've seen this movie a thousand times. Before AI stocks, it was gold. Last year was like all the gold bugs, like gold crushing Bitcoin. Yeah, but now Bitcoin's whipping gold's butt. Okay, so there was a window where gold crushed Bitcoin. There was a window where AI stocks crushed Bitcoin. There was a window where NFTs crushed Bitcoin. There was a window where ICOs crushed Bitcoin. There was a window when Tesla stock crushed Bitcoin. But here's the problem. Are you sitting here telling me that you're going to actively and accurately manage a portfolio to perfection? Because find me the person, everyone knows the person that got gold right in this little window. Okay, good for you. Of the 14 years that I've been in Bitcoin, I have 13 of them. You have one. Nice. Okay, to the AI bros, same thing. You guys, your companies, like, okay fine, over the last few years you guys had great returns, but now, and by the way these are all privately marked up returns, but now Anthropic is filing their S-1 and they're projected to lose $40 billion a year and the risk profile of the business is they think that they shouldn't run the company because they're under the impression that they're going to harm the world more than they're going to help it. That stock sounds abysmal. Nobody wants to buy that stock. None of these companies can find a way to go public with excitement. There's no way. Anyways, none of these companies have turned a profit. So, same thing goes for the NFTs. Same thing goes for... Listen, if you want to start a hedge fund and you want to every single day study Japanese central bank monetary policy, the French bond market versus the German bond market, what Bessent is saying, you want to analytically study which AI stocks to own, when the S&P 500 is undervalued versus overvalued. If that's what you want to do, then yeah, I don't know how much Bitcoin you should have in your portfolio. But that's not what I do and that's not what I think the world should be doing. I think that that is a fiat game. Here's my own personal lifestyle. I work hard to produce more value for the world than I consume. I call that a net profit. Okay? I earn more than I spend. I produce more value for others than I consume from others. That makes me a productive member of society. I then just take that productivity that I'm generating and I just store it in the Bitcoin thing for the obvious reasons I just mentioned. Well, I can't do dollars. I can't lend it to my government. And when I look at everything else, yeah, these things might have like a nice little run. You know what I'm saying? Like, okay, like gold had a good nine months there, or okay, the AI thing has a nice little thing, but none of these companies are profitable. Credit risks are going through the roof. And now there's all sorts of issues that are like really if all these businesses like re-rated their credit at the new 10-year rate, then all of the earnings from last year would be negative. Okay, that's starting to look a little spooky. NFTs were once really cool. Those things are now a dud. Didn't Justin Bieber buy one for $2 million and now it's worth zero? Okay, yikes. Glad I didn't listen to those people. ICOs, same story. Memecoins, the same story. Bitcoin has rapidly outperformed everything. Tesla's stock, literally like everything. But, you know, there's a group of people that had a good 6 to 12 months at one point in Bitcoin's life, but it's never sustainable. It's not. So, I don't want to spend my time being a hedge fund manager. I'm getting married. I like hanging out with my friends. I like building my business. I like lifting weights. I like eating steak. I don't want to run around and be an expert monetary policy manager and hope that I pick the right stuff. So Mitch, that's my answer to you, man. Is like, listen, what life do you want? You know, you can go all in on AI stocks and dump your Bitcoin. I know some people that went all in on AI with Bitcoin at 60K. Yikes. How do you think they feel now? Bitcoin's at 86 and a half and Anthropic's S-1 looks like dog shit. Whoops. Oof. Yikes. Same. Hey, listen, brother. I watched people leave the Bitcoin industry at 20K after the FTX hack and get into NFTs. Ooh, you hate to see it. You hate to see it. And this is why you stay humble and stack sats. This is it. So, flu game. Don't got the energy I usually do for you, but the wisdom is always here. Take it from an old man in the game. Okay? You got to stay humble. Stack sats. You know, it says a lot about a man to watch somebody get gleeful in their face because I'm telling you, there's been dozens of people in my face. 'Oh, you idiot. You bought Bitcoin when you could have bought this.' And I just give it time. Time cures all. Okay. So my message, time cures all. Stay humble. Don't follow the hot flashy thing. And go back to first principles. Understand you own Bitcoin because you can't really own anything else. Right? If you get anxious about Bitcoin, we'll say what would you rather own dollars? Would you rather own bonds? Would you rather take counterparty risk in these companies that are indebted and losing $40 billion a year? Do you want meme coins? What do you want? What do you want? What type of life do you want to live? What type of counterparty risk and security and time preference do you want to have? I'll cut myself off there. Great question and thanks for the support. The yo was legit. I respect the yo. All right, next question. We got Matt. Uh, huh. There's two Mats back to back. Which Matt? Okay, I think it's this one. Let's hear it. Matt.

Yeah. Yeah, you got it, man. Great question. Um, so I first want to point out, you know, amidst the pessimism, or like not from you, but you know, from the people you've referenced or just the general concept of all these people arguing, just some optimism. I want to give some optimism. Um, because embedded in your question, believe it or not, is Bitcoin working? Meaning, you know, Bitcoin is designed to have no definitive leader or hierarchy or authority. And so for you to naturally just be like, 'Hey, who do I listen to? Who ultimately when everyone's disagreeing is the authority figure?' I can't figure that out. And I'm sitting here with a grin on my face like, 'Haha, we did it. We built it correctly. There is no CEO. There is no board. There is no president, there is no authoritative figure that when people are confused, thou must listen to he or she or they,' which is cool. I think that's great. Um, and then obviously the next logical step that you arrive at is well, you know, you have to develop your own opinions. Um, and you know, I've talked about this before on the show, but you know, it's this with great power comes great responsibility. I've talked about how I don't believe that harmony can truly be restored in society without a renewal of self-responsibility and that, you know, I think that there's, and I'm not specifically talking about you, Matt. I think your question is pretty straightforward of like, hey, you know, when Bitcoin price is up, everyone's agreeing. When it's down, people start disagreeing. And how do I kind of compartmentalize all of that? Um, which I'll get to in a second. But I just take this opportunity to make this broader point to you guys in society. I think that people because government has gotten so big, because money printing has gotten so rampant, I think that people have delegated what needs to be a pride and self-responsibility and like your diet. It's like it's no one else's fault if you are having metabolic disease, if you are unhealthy. Like that. You know, I remember being gaslit as a kid of like, oh, that person is obese and sick because of their genetics. Like, what? No, that's not how the human body works. Like, so, um, the, you know, people say like, 'Oh, I can't afford a home unless the government, like, please, I've made this joke before on the show. Please, Daddy, please, President Daddy, please give me a house. Make it cheaper for me. I can't own and afford anything without you.' And I'm half making a joke. But you know people I think you know are too quick to rely on government, rely on corporation, rely on institution. They can't have the life they live without the support of others. They don't get to dictate their health and their body composition and their strength. That's just genetics. That's, and so you know you're just life is the way it is. You're born with what you're born with. You know, it's this age-old you'll own nothing and you'll be happy. And so this kind of is embedded in my worldview that harmony can only be restored when self-responsibility is, you know, respected and admired and taken on with pride. What you put in your body, how you treat your body, the relationships you have, the family that you carry, the money that you save in, the time preference that you hold, like all of that stuff is yours to own. You can build wealth. You can be healthy. You can build family. You can fall in love. You can own a home. That's a decision that you make. I grant it to you that there have been easier times to do some of these things in the past. But what's the point in crying about that? My dad always told me, 'When you're done crying, let me know so that we can get to work because we have work to do.' So, I digress. I'm glad Bitcoin is working. I'm glad that there's no authoritative figure for people to blame, for people to delegate to, for people to subscribe to religiously. This all means that it's working, and that Bitcoin is a driving force towards a societal fix of renewing self-responsibility. Now, with that being said, I just blew your question way out of scope. Let's bring it back in. Listen, um, yeah, it's difficult, man. Uh, listen, I think without like talking specifically about any other people and any other things that they're working on, I will make a few technical points. Like if you remove kind of the social layer of Bitcoin in its most pure form, Bitcoin is a set of consensus rules. These are the rules that govern the network. And a lot of the things that make Bitcoin valuable is its network effects, its proof of work that's been built up over time. Um, the value of the asset. So, Bitcoin is a 1 to 2 trillion dollar asset. And that asset is predicated on a history, a chain of transactions. There's a lot of human time, energy, and effort that has been invested and stored and saved in this network. And so the history of the network, the legacy of the network, the economies of scale, the network effects, the credibility of the network, uh, the hash rate that's contributing to the network, all of these things help derive Bitcoin's value as a distributed monetary network. And that network is defined by its consensus rules. And so one of the things that I would just suggest because there's a lot of people that want to fork Bitcoin and change Bitcoin, which within itself isn't necessarily bad, but that is like a last-ditch effort. It's totally fine to disagree. It's totally fine to have different opinions. Like I said, no one is the definitive ruler and controller of Bitcoin. Uh, and so you're allowed and should have any opinion you want. Um, but if anyone is ever changing the rules of Bitcoin, they are therefore creating a brand new network, a brand new asset. And that is like the last-ditch effort. Um, that should almost never be invoked unless you absolutely have to. That means you failed at achieving consensus with the existing network which implies that the existing network and the existing economies of scale and the existing hash rate and the existing monetary value and monetary premium that BTC ticker BTC has. You've not been able to convince them of your opinions and your vision and your ideas and you've not been able to garner consensus from them which means you're creating a new asset with new rules and a new network. And whenever someone does that, which is kind of what you're asking about and citing, I'm not telling you what to think, but it should always, no matter the context and no matter who it is, carry a bit of skepticism. Um, because it's just, you know, if you are saving in like you said yourself, I'm a Bitcoiner from a monetary sense. I buy it, I save in it. I understand that it's a technical piece. I don't understand. Well, I'm just saying like they're creating a brand new monetary asset and there's skepticism there. One thing I will say, you know, the most infamous infighting in the Bitcoin community that I've been through and I think definitively in its history is the block size wars. And that was around 2016, 2017 time. I mean, debatably probably started mildly, but nonetheless maybe 2014 and kind of carried through the years. But the point that I'll make is that, you know, if you think the best of people and you're an optimist and you think positively, you can't really disagree with what everyone was interested in at the time. Everyone wanted Bitcoin to be faster. Everyone wanted Bitcoin to be used for things like payments, things like remittances. Like those were all good intentions. People wanted, the people that I disagreed with and the people that ended up forking off, they wanted more adoption. They wanted Bitcoin to be more of a competitor to Visa. They wanted Bitcoin to be more of a competitor to Western Union. They wanted more commercial use. They wanted more individual use. All of those are really good things. And so maybe from a vision standpoint and from a conceptual standpoint, we were all in agreement, excuse me. The problem was when it got technical, it's like okay but in order to achieve your vision you guys weren't, this is me speaking to them back in 2016-17, you guys weren't willing to build layer twos like the lightning network, you weren't willing to stick to consensus rules and not hard fork, not explode the block size, not compromise on the ability for people to run nodes. Like these are very core four technical things as I mentioned which effectively govern and define bitcoin. Like bitcoin is defined by these consensus rules, this is what governs the network, this is what governs whether a transaction is valid or not, whether a bitcoin is a real bitcoin or a fake bitcoin, this is what governs it. And we agreed maybe conceptually because I also want bitcoin to be a competitive visa, I also want bitcoin to take on western union, I also want bitcoin to get more commercial adoption at the individual level in day-to-day commerce, but technically the proposals that they were making and the time preference they had was very dangerous and not sound. And I would say that framework in every single contentious fork in Bitcoin is the same. Like in principle, you know, you talk about spam, like nobody wants quote unquote spam. Like I guess in theory like from a high level you know not that you can get into the nuances of well what is spam and like Bitcoin doesn't know what spam is so like but anyway I digress. The point is like from the highest level like people's intentions I think are good and I don't disagree like in principle if you zoom all the way out but then once you get to the technical piece you know forking off you know creating your own consensus rules and your own network and your own coin and then you know changing the proof of work algorithm like all of that is you know it could be something that they're interested in and uh they have every right to pursue that and I really don't care but it's certainly you know not BTC it doesn't have you know it doesn't have all the network effects and economies of scale that Bitcoin does. So hopefully that was a useful answer. I mean listen I'm not going to get up here and tell you who or who not to listen to. Um you know when it you know some people like treasury companies more than others right? Some people like leverage more than others, right? And so there's all sorts of nuances in the influencer. That's one of the reasons I do this show is every single Bitcoin podcast sells their sponsor, has similar guests on. And I'm like, man, I don't want any sponsors. Try and do a bit different content so that I can be maybe like a bit more signal and uh try and give you guys I got a lot of years and a lot of time in the space, a lot of expertise and experience running businesses and in some pretty crazy conversations. And so anyways, I'm not going to sit here and tell you who to listen to. And I don't know specifically what type of like influencer disagreements you're referencing, but if you're talking specifically about people forking Bitcoin and stuff, listen, all debate is good debate in this asset class, in this industry. We're on Bitcoin's time. Bitcoin's not on our time. So, you know, time preference has to remain low. You must be patient. Debating is frustrating but healthy. Disagreement is hard but good. Um, but as soon as people start changing the consensus rules, then you have to take a step back and be like, whoa, that is like arguing and debating and then pulling out a weapon. You're like, hold on a second. Like, you're going to get somebody hurt. Um, doesn't mean that they can go off and work on their own coin all they want. I mean, I'm a free markets guy. I'm not going to tell anybody what to do, but I mean that's where you just got to be careful. Hopefully a helpful answer. And I think the history and the context of the block size wars like people had, you know, if you want to think glass half full, people had good intentions, but you know, good intentions doesn't mean that they were technically sound. You know, there's the right way. I've made this analogy before. Bitcoin engineering is like critical engineering. It is life or death. Like if we screw up, we ruin humanity's chance at incredibly neutral hard money. It's going to be insanely difficult to reproduce Bitcoin, which is like a big bang. It was very fairly distributed. There was no premine. No one had asymmetrical levels of information. It was incredibly fair. It is neutral. It is credible. And we can't ruin it. And it's equivalent to like think about flying an airplane. I've told this story before. Dylan's like, 'Man, it's been decades. How has no one found a quicker way to get me to Europe?' I was like, 'I'm sure there is maybe a quicker way, but it might greatly increase your risk of death and crashing.' You know, once you get the thing to fly reliably and safely, you know, you got to be very, very careful. And enhancements that you make come slowly and come with time because people just want to get from the US to Europe. They don't, you know, okay, fine. The difference between five and six hours, as long as I get there alive and I can get there alive reliably and safely and credibly, then yeah, whatever. You guys take your time improving it over the decades. And it's a very similar engineering approach that we must have as Bitcoiners. Okay. Uh, next question. Renee, he's back. I love it. Um, with the voice, voice from the heavens. Let's hear what you got, brother.