The Hidden Value Of Crypto

[00:00:00]Scarcity is one of the most misunderstood topics in crypto. Welcome back, baby dolls. Satoshi in 2010 wrote on on Bitcoin Talk forums about scarcity. And it's very important to understand how we get value in crypto and how anything in the world truly gets value. And scarcity pretty much just refers to how rare anything is.

[00:00:24]But scarcity alone is not enough to make anything pump. The best example I can give you are your mouth bones. Some people call them teeth.

[00:00:35]Your mouth bones, they are very scarce to your mouth.

[00:00:40]If you were to pull out one of your mouth bones, do you think I'm going to pay 5 million dollaridoonies for it? Probably not.

[00:00:48]It'd be good enough to put inside of a little bottle and rattle it around, and that's about it.

[00:00:53]So, you have an example here of something really scarce to you, but not scarce to anybody else who gives a damn.

[00:01:02]We could just use another mouth bone.

[00:01:05]So, it's very important, right? Now, of course, Satoshi, friends, he did the rounds. Was popular on the Bitcoin Talk forums because he creates Bitcoin. No one understands who Satoshi is. Now rumored to be Len Sassaman and Hal Finney, rest in peace, both of them.

[00:01:22]Also, wink wink, coincidence, they are both no longer with us with us. I'll take an out. A lot of people said that Len Sassaman, he left the Minecraft server himself. And Hal Finney got a disease. And many people stress that there was no foul play. But I mean, it just it looks really suspicious that an insider coconut intelligence agency cryptography type of technology gets released out into the wild and coincidentally the two people operating behind it rumored have now left the Minecraft server. Okay? What do you think about that?

[00:01:56]So, Scottie Pippen meets meets Satoshi in 1993 and later on Satoshi makes Bitcoin and he describes, I guess, the early parts of what made Bitcoin special. It's a digital scarcity. So, you got to understand this before you touch any altcoin or really anything in crypto because crypto, friends, remember, is not a full stock and it's not a full commodity. It is a blend of the two. And I've got to stress this to you.

[00:02:25]You have stocks over here and you have commodities over here, okay, friends? So, stocks, for example, you have your Tesla. This is an example, T S L A. You've got your Apple.

[00:02:44]You like apples, friends? I like bananas and apples. And then commodities, like, for example, you've got oil, you've got gold, okay? These are commodities.

[00:02:53]That's what we call the hard commodities. And then refer to like soft commodities as in your banana and wheat, agriculture, coos. Everybody loves the coos.

[00:03:04]Especially the fluffy highland coos, the highland bull coos. So, you understand that we have stocks and commodities and crypto is in the middle.

[00:03:14]Isn't that very interesting? Crypto's in the middle. It's not a stock because stocks there's a company, there's a CEO, they change the rules all the time, they can choose when to inflate it, they can choose to buy back shares.

[00:03:30]They make this artificial amount of ownership of how many pieces you can split the piece of the company into.

[00:03:36]But they change the rules all the time, okay?

[00:03:39]And stocks, then as well, friends, when you're looking at these different assets, there's a way that people value them, okay? There is a method of valuing, they go off cash flow, all right?

[00:03:52]Cash flow. That's That's the method of of how people valuing stocks. So, how much cash flow you producing?

[00:03:59]You understand? You do see this now.

[00:04:01]That is stocks. Crypto is not fully stonks.

[00:04:06]What about commodities? Commodities have a different method, okay? Commodities, friends, they have their own supply demand of how each is valued.

[00:04:18]And they're each different, right? So, that's what I've written here, right?

[00:04:21]Gold is valued differently as a mean to oil. Gold is a store of value when monetary units get created, people store them in gold. It's pretty good to transfer across time, right? Storing value across time. And oil, though, is not a currency unit depository, is it?

[00:04:40]No, it's not. Oil has, basically, just like also supply demand mechanics, but a supply demand of people who need to use oil to consume stuff to go do other things.

[00:04:49]You get it? That is the difference between them. Crypto is somewhere in between.

[00:04:54]It's not a full commodity, okay?

[00:04:58]Because with crypto, we turn these things into commodities. We're like making a new commodity all the time. So, that that that sim- that similarity of making a new commodity, that's like making new things. It's like stocks, okay? So, crypto is in between. So, what is crypto's method? How are people valuing crypto? It is Metcalfe's law, their network effects, okay? Network effects, Metcalfe's law, and Reed's law, okay? Actually, what's actually similar to network effects is AI as well. So, in crypto, this is very important because you have scarcity, but it doesn't necessarily mean that everything in crypto is scarce.

[00:05:36]Even though some things are different. I think that's very important for you to understand. Like Bitcoin to most people just an orange logo.

[00:05:43]Is it really scarce, though? Well, if you understand it and you have the access to the miners, and you know that you can't produce a Bitcoin. You can dress that up, but to everybody out there in the world, the Bitcoin is just an orange logo. If you're a doomer boomer like Peter Schiff, that's all you see. You go, "What's the difference between Dogecoin and Bitcoin? They both have kind of like a decentralized network. You hold it, and they both do nothing."

[00:06:04]There is a difference, though. That's why they are valued off network, network effects, Metcalfe's law. They are digital cities. That's another way to write digital cities. You understand?

[00:06:13]This is extremely important, global digital cities, digital cities.

[00:06:18]Global, very important. The people who hold the Bitcoin is different type of purpo- purpo- uh peoples, type of person to Dogecoin.

[00:06:30]Very different. Bitcoin has is different people, okay? Now, obviously, Dogecoin might actually grow faster over time cuz Doge BTC got a nice chart for its history. But the people in Bitcoin, of course, doesn't really matter what the tech is doing.

[00:06:43]Different character, different makeup, different sets of believers. I can actually tell you what the average Bitcoin person is like.

[00:06:50]They're more heavily Christian denominated, more a lot of white dudes into it. If you listen to all the Bitcoin maxis, it's always white dudes, always blonde girls with the pearl uh earrings.

[00:07:00]Uh a lot of dudes who they have their own businesses, and they will use their own businesses' cash flow to come and store into Bitcoin. They like chopping wood. They like earthing themselves.

[00:07:12]They, you know, they know about the deep state and stuff. They do know about the money printer.

[00:07:18]They grow their own vegetables. It's that type of person, okay?

[00:07:21]Dogecoin's not like that.

[00:07:23]I don't even know what Dogecoin is.

[00:07:24]Dogecoin is like fun themed, universal, everybody's like introducing crypto to their kids. It's got a picture of a dog. Everybody loves dogs. It's just a totally different makeup. It's very interesting you can see these. So, this scarcity, I can see it separated cuz I'm here all the time, 18 hours a day.

[00:07:42]Most people can't. Most people who hold stocks, they see all of crypto the same.

[00:07:47]Most people who are in commodities like oil and gold, they also see all of all of script everything in crypto as the same as well.

[00:07:53]Let's listen to Satoshi, friends, in 2010.

[00:07:57]Bitcoin vulnerability, he's replying to this thread. Massive attack against Bitcoin system, is it really?

[00:08:03]He says, "What the OP described is called cornering the market."

[00:08:09]So, before he continues, friends, I think it's very important to see the myth the the example he's going to talk about is when the Hunt brothers, okay, they cornered the silver market. This is a chart.

[00:08:21]So, the Hunt brothers, what they did is they got all the futures and they literally swept the entire market and they bought all of it and they owned all of the supply.

[00:08:29]And what ends up happening is you get absolutely bonked because you could not keep the market up higher for that prolonged period of time and and silver had this super massive collapse on the way down.

[00:08:45]Such a huge collapse. It went to $47.

[00:08:48]You got to think about it. It used to be $6, it went to $47 and then it literally dropped a massive 90%. So, that's the chart he's talking about.

[00:08:56]And then Satoshi continues.

[00:08:59]When someone tries to buy all of the world's supply of a scarce asset, the more they buy, the higher the price goes. Now, that's obviously because you can't make more supply. That's why. If something's scarce, can't make more of them. It's the whole point of crypto, right?

[00:09:14]Cuz we decide on the rules.

[00:09:17]But with stocks, they change rules as time goes on.

[00:09:20]They just make more shares if they need to. They go and dilute, they do extra things.

[00:09:26]Satoshi, at some point it gets too expensive for them to buy any more. It's great for people who owned it beforehand because they get to sell it to the corner at crazy high prices, just like that silver chart I showed you.

[00:09:39]Wouldn't it be great if you owned silver at $4.70 back here in the 1980s and it literally rockets all the way up?

[00:09:50]As the price keeps going up and up, some people keep holding out for higher prices and they refuse to sell.

[00:09:56]Satoshi understood the mindset of people who were hardling and the crowd cheering on green candles all these years ago.

[00:10:05]He said the Hunt brothers famously bankrupted themselves trying to corner the silver market in 1979.

[00:10:12]Brothers Nelson Bunker Hunt and Herbert Hunt attempted to corner the world silver markets in the late '70s and '80s, at one stage holding the rights to more than half of the world's deliverable silver.

[00:10:24]During Hunt's accumulation of the previous metal, silver prices rose from $11 in 1979 to $50 from September to January.

[00:10:33]Silver prices ultimately collapsed again, as I just showed you, dropped 89%.

[00:10:38]Just 2 months later. Much of the fall on a single day is now known as Silver Thursday due to changes made to exchange rules regarding the purchase of commodities on margin. So, I wanted to show you this is any very important lesson, my friends. Okay, what is the important lesson?

[00:10:56]No one person is bigger than the market.

[00:11:01]You have billionaires on average buying 50% of the world's supply. 50.

[00:11:15]Literally 50 deliverable. 50 freaking percent.

[00:11:19]And they could not keep the price up.

[00:11:22]You know, they they tried to be worth trillions back then. Yeah, that's what they did before they bought it. So, I I think after they started buying it, they started shilling it to the the They said silver is the greatest uh commodity to man. It's It's a real money.

[00:11:35]So, you get to see these friends, okay?

[00:11:38]We're going to write these down. Nobody is bigger than the market. Okay?

[00:11:44]Even if you buy 50% of the supply of anything, it does not mean the market will accept it higher. Okay? Number three, scarcity must be understood. Not everything is respected as scarce by the market at all times.

[00:12:06]Okay? So, you get to see these friends.

[00:12:08]Just make sure you beam these into your head. This is very relevant. Okay? I want you to think about names such as Michael Saylor.

[00:12:15]I want you to think about this wonderful example, dude. Wonderful. Where you literally had a a a world commodity.

[00:12:24]Silver. They call it the devil's metal for a reason. It literally, friends, it's silver, man.

[00:12:29]And it still could not be forced up.

[00:12:34]The basics of supply and demand mechanics, they started overruling. You see? The more This is the thing what happens, right? Uh basic economics. If your commodity gets too expensive, what ends up happening is people find substitutes.

[00:12:48]They just stop using your thing.

[00:12:50]Okay?

[00:12:51]That's very important. Also, remember silver was being mined out of the ground.

[00:12:57]So, there were mines where as soon as silver rises up this much, all the supply starts coming out.

[00:13:05]Cuz they keep making it. You get it?

[00:13:07]That's very important.

[00:13:09]That's why like maybe you had a mine, but it would have cost you maybe your break-even point was $16 for silver.

[00:13:15]$16. And maybe it was not profitable to get the mine out when it was $7. But then when it reaches freaking 44, you can now get it out. Now, obviously, it didn't pump up for long enough time.

[00:13:24]That's why what actually end up happening is as the prices got up here, everybody came to sell futures.

[00:13:32]Because that's what a future is.

[00:13:33]Somebody wants to buy silver from you in a future point in time for $40. So, if you're selling the future, you're selling them the $40 silver. They go, "Hey, hey, hey, I've got a lot of silver in my backyard underneath. Please, you want to buy for $40? Here, I'll sell you the future. Let's lock in the contract.

[00:13:52]So, in 3 months, I'll give you the silver. Just make sure you want to buy it for $40." Well, that's exactly what happened. All the supply came online, and you got dumped down.

[00:14:01]Isn't that wild? You can't force the market up.

[00:14:03]You can't, you know?

[00:14:05]That's why, friends, I want you to think about Michael Saylor buying $65 billion of Bitcoin.

[00:14:09]Still goes offside. I want you to think about Tom Lee, crowd favorite, buying $19 billion of Ethereum. Still goes offside.

[00:14:17]I want you to think about the Hunt brothers buying 50% of the world's silver supply in futures, deliverable 50%.

[00:14:26]50%. You know, friends, they start swapping on the way up, and then there was not enough liquidity to let them out. I think they I think they Yeah, they literally got bankrupted from it.

[00:14:35]Now you understand scarcity, right?

[00:14:37]There are a couple of elements from this. I hope, friends, you've learned as well from my lessons, too, that ultimately crypto is not stocks, and it is not a commodity. It is something in between. It is new. It's a new It's new, you know? There's a bit of the commodity aspect, where there's limited supply.

[00:14:58]There's a bit of the stocks aspect, where there's a product somewhere in there, and it can change, and you can kind of change rules sometimes, you know? We're not that.

[00:15:08]There's cash flow.

[00:15:10]It's different. They're digital products. You can think of it like that, cuz it's it's software, digital tech, you know?

[00:15:16]We are somewhere in between. Okay?

[00:15:18]Network effects.

[00:15:20]See, you might also wonder, "Hey, Sammy is is Bitcoin even really scarce? Well, stop thinking about Bitcoin the coin.

[00:15:28]Start thinking about Bitcoin as the first crypto.

[00:15:32]Oh yeah, you are scarce.

[00:15:34]You'll always be the first.

[00:15:37]Always.

[00:15:38]There will never be another first crypto. You are the first coin. You see the first move advantage? You get the scarcity of being first.

[00:15:47]That's why it's an uphill battle for the rest of us. But, we will be talking all about that my friends when the Bitcoin dominance is at 36.9% maybe in 2 years, maybe in 3 years. One day. Like, subscribe, catch you soon.