Why Bitcoin is Designed to Go Up FOREVER (Deep Explanation)

This is borrowed directly from Jeff Booth. This is not my thing, but, uh, Jeff Booth says something really, really profound. So he says that the natural state of the world and the economy is deflationary. Do you understand what that means? Yeah. Stuff goes down in prices. Stuff goes down in price. Like if you were to just have a fixed supply of money, like let's say I had a hypothetical a hundred dollar bill. I don't have one to show you, but like I laid it out and I was like, this is the world's money, like it's a hundred dollars. There's never going to be more of it. So naturally the price of everything in that world would always go down forever. It wouldn't go up because as we get better at producing stuff, as we get more efficient, we invent better technologies, the price goes down, right? But for some reason, we don't find ourselves living in that world. We live in a world where prices of everything goes up forever, right? That's counterintuitive to how the universe should work. Why? Well, it's because the government has this special ability to make more than just this $100, right? So now if we duplicate that a hundred dollars, the price of everything now is essentially doubled because it costs twice as much to buy that same amount of stuff because the amount of stuff didn't double, it was the amount of paper that doubled, right? With me so far. Okay. So now that money, that excess piece of paper, all of that economic energy, it needs to go somewhere to maintain and preserve its value. So that's when we hear, oh, did you, your stocks went up to an all-time high and gold reached an all-time high, real estate reached an all-time high. It's because the amount of money keeps increasing and it's always trying to find a place to go to preserve its value, right? So it's basically like the actual value of something doesn't necessarily, the value of an asset doesn't necessarily increase over time, but the amount of dollars that it takes to purchase that does increase. Exactly. Right. So when you compare that asset to a benchmark, like the dollar, it looks like that thing went up in price, right? You're like, oh, you know, gold went up or real estate went up and now it costs more dollars, that's how we visualize it. But then if you were to take all of those things, right, and compare it against Bitcoin, then literally all of those assets are also deflationary against Bitcoin. Like take real estate, for example, a couple of years ago when Bitcoin was at what, 20,000, it took 20 Bitcoin to buy a house. Now it's like four Bitcoin, like a little over four to buy a house and it'll continue to be lower and lower and lower, right? It'll take less and less Bitcoin. So all assets are being demonetized against a money that is fixed. It is the only thing that exists in this world that is stationary, that is fixed, a true money. And so through the lens and through the perspective of Bitcoin, everything is going down against it. So I have a couple of questions about that then. What is the difference then between like Bitcoin and gold or Bitcoin and silver or raw materials that there is a fixed amount of? Right. And you can take the same exact example for gold. Right. It's like, okay, with this much gold right now, you could buy like a crazy mansion probably or a really nice house, you know, with this much gold back in the day, you could have bought more. Well, gold has certain qualities that are not quite on part of Bitcoin. And also there's not an exact finite amount of gold. There's also an inflation to gold as we discover. And as we dig up more of it, I mean, we can find one on a meteorite tomorrow for all we know. So like gold is not necessarily finite. It's funny you say that because we just had RJ Middy on the podcast and he said he bought into a penny stock where apparently they owned the rights to an asteroid that is made of gold, full of gold, that they're going to find a way to mine. Right. So imagine if you're not going to, but imagine if that were to happen, like what would happen? It would decrease the value of gold. Right. The deflation would, or the inflation of gold would increase and therefore the value would be suppressed. You know, what's funny is that they found a way to make gold. Just like you could make a diamond in a lab, like a lab grown diamond. They figured out alchemy. Yes. How found a way to make gold. The problem, however, because this was a big discovery is that it costs more to make the gold than the gold is worth. Right? Yes. But the other is that the gold was very unstable and so they were only able to make the gold appear for a short amount of time before it disappeared. Right. But the fact is there is a possible, Jack thinks I'm joking. I'm not joking. I don't think you're joking. Look it up. It's just going away. It's like poof. It's like it's just, it was unstable enough to be a solid form for longer than however many, like a fraction of a second or whatever. But point being is that they could find a way just to manufacture gold and have synthetic gold that would be identical to the real thing at some point in the future. No, I believe it. Yeah. I believe we will have the technology someday to make and reproduce gold on some affordable economic level. We can't yet, but maybe in the future we could. But Bitcoin is programmed to be fixed forever. So then what should the average person do with this information? If the natural state of the economy is supposed to be deflationary, things are supposed to get cheaper as time goes on, but because we're working off the US dollar, which we could just print more of, it's costing more dollars to buy goods and services. If someone has this information, what should they be doing with their money? I think it depends contextually, like what that person's situation is. But like for me, um, I've diversified enough to where if all of this is wrong and all of this is crazy, I should still be okay. But for me, Bitcoin is a roughly 30%, 30 to 35% of my net worth. So it's kind of high for most people, but it's still not crazy for most like Bitcoin people. That's pretty conservative if anything. Um, so that's just my approach to it. But it's funny. Cause like when I look at crypto, I feel like it's such an appealing industry for a lot of people because there's this promise of like get rich quick. It's like about, it's like a thousand fold of your money. And what I find really interesting is that people make a decision that sounds intuitive, but it's completely wrong. Like, for example, I see a lot of people that are like, Oh, I think XRP, let's just use that for example, is going to go to a thousand dollars, right? It's like, once you've convinced yourself that it's going to go to the moon like that, you've kind of already lost. And at that point, when people have convinced themselves that it has the chance to go a thousand X, they put most of their money into it. Which is actually completely counterintuitive. What instead you should be doing is allocating a very small amount to a conviction like that, right? It makes sense. Cause then you work backwards. You say, okay, if I think this thing's going to 1000 X, I'm not going to mortgage my house and then put everything into it. I'm going to instead work backwards and say like, let's say I put in $10,000 and at the thousand Xs, then I end up with what a million, right? Cool. And then I made a lot of money. If you sell your house or the equity in your house, and let's say you're like, I'm going to go all in and I'm gonna put in a hundred thousand cause I know it's going to thousand X. Okay, fine. But the difference between you being right in that scenario is the difference between making a million dollars, which is still nice and making $10 million. There is a difference there for sure. But the pain between having a million and having 10 million is way less than the pain of being completely wrong and losing your house. Does that make sense? So it's just like, so if you really believe this thing's going to 1000 X, don't put your entire life savings into it. Put in a smaller amount. Does that make sense? Yeah. I liked Alex Becker, uh, his approach. He made a video a while back when we were talking a few months ago with Ethereum. Yeah. And Ethereum at the time, I think it was like $1,500. This was recently when everything kind of fell. And he says, guys, I think there's a 50, 50 chance. You're going to lose everything that Ethereum is going to go from 1500. It's good. You're going to lose all of your money. Right. But I think there's a 50% chance it's going to go to 6,000. Okay. And so that's an asymmetric reward. Yes. Risk versus reward that, Hey, you could it's a 50, 50, you lose. But in the other 50%, you could three X your investment. Right. And I thought, you know what? That's a, it's a great phrasing. Right. And I invested in an amount where I'm prepared for that 50%. For sure. I bought in at 1500 bucks and now it's 4,200. That's exactly a great point that you brought up is it's all risk management. So if you see an asymmetric bet, that's exactly what I'm describing. Don't put your entire life savings into it. Just put enough to where if you lose it, it's not a big deal. And if you make it, it's still a lot of money. That's essentially a roundabout way of saying that. So how are you investing your money now? If you have 30 to 35% in Bitcoin, what is the other 65% looking like? It's real estate, cash, stocks. And miscellaneous things. And what's the best investment you've ever made? The best investment? Definitely by far Bitcoin. By far. Really? Yeah. And it's not even close. Not even close.