TILP #05: FIRE with Bitcoin w/ Trey Sellers
00:01.11
ilm
Trace soers thanks for? Ah, thanks for being here. Glad to have you join me today. Thanks yeah man, well ah, just prior to recording. We caught up a little bit but it's been a couple months since we hung out in Colorado and ah.
00:04.39
Trey Sellers
Thanks for having me Jim looking forward to the conversation.
00:18.57
ilm
Appreciated and enjoyed our conversations there. So certainly happy to have you in to can continue that conversation today. Well ah.
00:26.15
Trey Sellers
Yeah, looking forward to to chatting about you know my journey. Um, what we do it unchained and how that could apply to you and your clients and anybody else out there who's listening happy to share it.
00:38.81
ilm
Yeah man well and let's I Guess let's frame the conversation. So Um I want to I want to talk just about bitcoin in general how you see things how you arrived where you're at you wrote an article about. Fire Movement Financial Independence retire early in bitcoin and how they work together. Um, so I certainly want to talk through that and then we can also go through and specifically talk about keep your bitcoin safe custodying it obviously working with Unchain. You're a place that does a great job with that. So would. Would be remiss if we didn't touch on that point as well. Yeah, before we I guess before we go into the the droillll conversation of just keeping your your bitcoin safe. Let's let's talk about bitcoin itself. So I Guess Ah, okay look I'll we'll see that well hey yeah you wrote this article. It's ah bitcoin.
01:15.46
Trey Sellers
Um, yeah.
01:26.54
Trey Sellers
Um, I'll make I'll make that interesting too.
01:33.72
ilm
Is fire friendly. Um, let's talk through that. So I guess first off for anyone who doesn't know what is what's fire. What's fire Friendly mean.
01:42.58
Trey Sellers
Yeah, so um, my financial personal financial journey um was kind of haphazard. Not really well thought out for a long time and then I got to a point in my career. I was in banking and financial services consulting you know, pretty broad and diverse experience. All good jobs. Large companies. Ah, but you know it's like 1 of those things where you go in and you're not like fully enjoying what you're doing and kind of just like looking for a way out. Like oh this whole retirement thing sounds great I really don't want to wait until I'm 65 to do that. So like how can I accelerate this um and in trying to figure all that out I found this approach to financial management for personal finances. Called the fire movement stands for fire financial independence retire early and it's ah, an approach to managing your personal finances that advocates for intentionality in the way that you spend money. Um, and really like having a good handle on that making sure that you're not wasting money on frivolous things or things that don't add value to your life. Um, and then saving and investing as much money as possible as quickly as possible and as early in your life and ah in career as possible.
03:11.33
Trey Sellers
So that you can take advantage of the compounding effects of um, the the investment landscape the stock market real estate is very popular there but the primary tool that people use in the fire. Um fire Community is a stock Market Index Um, and.
03:21.96
ilm
Um I believe um.
03:30.35
Trey Sellers
You know one of the things that ah that I found in that journey is I was going through this process of saving as much money as possible and buying and a stock Index fund at any price. It's just like whenever you have excess money.
03:38.10
ilm
Um.
03:46.92
Trey Sellers
You just put it into the market right? You're you're working backwards from retirement and trying to bring that retirement day closer and closer to the present day so that you can be in a place where you don't have to rely on having a job and be dependent on a paycheck for. Ah, you know your everyday living. Um, and ah you know I around the same time I was starting to go down the bitcoin rabbit hole and I started to see the similarities between what I'm doing in terms of.
04:24.20
Trey Sellers
Pushing money into the stock market and um the way that bitcoin came to be perceived in my mind's eye as the ultimate savings vehicle and so I started shifting my capital allocation away from stocks and into bitcoin. Um, and the more I learned the more I grew in my Conviction. Bitcoin the more it dawned on me that I actually wasn't doing any investing at all when I was buying the Stock Market Index right? I wasn't going in and looking at a specific investment opportunity a particular company and reading through their balance sheet and checking on their Pe ratio. And their debt to equity. Um, and you know any of the other things that a fundamental or value investor might be looking at to try to ah pick a specific ah point in time that an investment would make sense. Um and then track that through time. No I'm not doing that I'm just taking my money and. Putting it without any kind of regard for any of that stuff into every company that's out there. The Broad Stock Market Index That's not investing that's saving and so when when that resonated with me. Um I started to realize that like well why am I So Why am I. Saving in this subpar vehicle when I could be saving more in bitcoin and so ah, that's kind of what led me to write this. Ah this article that you mentioned bitcoin is fire friendly because I wanted to convey to the fire community.
05:56.51
Trey Sellers
That really helped me a lot in thinking through my my personal finance journey. Um, that bitcoin actually is a superior vehicle for you to achieve the goals that you are trying to achieve and so you probably should take a second look at it and and give it You know a fair shake in terms of analyzing how that can. Fit into the way that you approach your personal finances.
06:20.11
ilm
I ah yeah I fell into the whole fire thing probably i't know 7 eight years ago and the there's the there's a lot about that I like now I think there is there's some unhealthy mindsets as well like I like I mean the.
06:30.50
Trey Sellers
Are.
06:35.31
ilm
Basically the advocate for really healthy, basic principles of money and it coincides a lot with like Dave Ramsey principles as well. You know it's like lot thoughts like Dave Ramsey do you like what he has to say like you know is it is it trash is it great. Frankly, if if that if all of America just stuck to Dave's general principles. The us would be at a better place financially. Um, and I think that'd be this we could apply that same metric to the fire community. It's basically like live well below your means save aggressively invest or save the difference and let time work for you and ah just be patient versus.
07:14.57
ilm
You know it's so many people like what the average person should say about 15% of their incomes towards retirement the average person reality saves like 3% so versus the fire community they're saving usually it's like 20 to 45% of income getting socked ah socked away. But ah.
07:31.12
Trey Sellers
Yeah, um, um more of a like fat fire. Ah adherent right? So like a lot of people in the fire community will just strip everything down right? They're like I can't have this cup of coffee I'm going to live in this like tiny house.
07:32.84
ilm
Yeah I think a lot of it.
07:48.39
Trey Sellers
And ah, you know, completely give up all the luxuries of life for the whole next ten years so that I can be in a position where I can retire and like look man those 10 years are very precious. You're giving up so much when you do that and so you know my my perspective has been look. I want to replicate the lifestyle that I have now and improve on that and if that means that I need to um, save more or invest more in order to reach a higher goal that will allow me to do that. That's what I should be going for because like you can retire great but like how are you going to spend that time. Um, you need to be thinking about like what is the vision that you have for your future and and the way that you want to be spending your time in the future in the future and then work toward that make your decisions based off of that adults and and don't sacrifice so much in the here and now so that such that you are.
08:46.92
Trey Sellers
Really like not getting the most out of the time that you've got like you might not make it to those 10 years. Let's be honest that that does happen for some people and so you know if if you're living out of a ah you know Cardboard box essentially trying to save for this like mythical retirement. That's that's somewhere in the Future. You're really doing yourself a disservice and and and in my opinion like kind of wasting valuable valuable time.
09:10.71
ilm
Yeah I think that's what concerns me about a lot of people in fire is again. The principles are fantastic. The end result can be fantastic. But I think a lot of time. It can be misguided and you want to make sure you're not running from something but rather pursuing something.
09:29.47
Trey Sellers
Yeah, that's really good way to put it.
09:30.26
ilm
You'd enjoy more and that running from something like so many people in fire like I hate my job therefore I'm going to double down and just burn myself I'm already burned out might as well double down and burn a salt file even more but be done sooner but then they stiff arm any sense of community or enjoyment. So they can one day experience these things and what I'm what I'm concerned with is we're going to have this group of people who caught onto the fire movement together and like in 15 years they're going to be like what mid 30 s like 38 and they're going to retire and go travel southeast asia and realize like dang I'm still empty I guess I have a good amount of money but like. I spent the last fifteen years neglecting community and finding any means of passions and pursuing those and now I have a lot of money but like I still don't have those things and ah obviously it's a jimal blanket statement. But I think that's that's a big concern that I have with ah getting to my opic on what you're trying to pursue. There's a difference like this is really important to distinguish is goals and then the thing informing those underlying goals and the problem I think with a lot of people in fire is you come you become so focused on the goal itself while neglecting the thing that is informing the goals like for instance like my wife and I I'm 33 we want. We want financial independence and I would say ah like fat fire both now and later on by the time I'm 45 so but when I when I think to that it's like all right we want financial freedom at 45 but why do I want that? Well I want more time really the things that are most important to us on time with family.
11:02.40
ilm
And ah, the ability to give generously are really the the reasons we want to build to do that now. Let's stick with the the family thing if I say hey I want to retire at 45 so I can spend a lot of time with my wife and kids. But in the meantime spend so much time working. That I'm neglecting my kids like dad you're never here to read to us. It's like shut up son I'm working so I can spend time with later on you know it's like what at when I'm 45 atticus my oldest yeah atticus that point will be 18 I'm like all right son I can finally go play catch with it. He's like dude get out of here where were you when I was a kid you know.
11:24.86
Trey Sellers
Um, yeah I can't hang out with you now because I want to hang out with you in 15 years
11:36.31
Trey Sellers
Um, right exactly.
11:38.67
ilm
So that's that's a big risk is ah sacrificing ah my my kids in our relationship on the altar of future financial success and how foolish would that be to ah to pursue something in the end goal by neglecting the thing that's over that is the overarching theme that you're trying to pursue. And that does present this It's a it's a false dichotomy but yet it does present a balancing act of pursuing future financial freedom or whatever goal is that that seems like it's counterintuitive to making sure you're doing well in what you're pursuing today and that's just that's why you have to be intentional. Like all right? How am I spending my time. It's not just about money like my time my money my talents these things to make sure it's aligned now and in the future like what I want is and what I hope to equip clients for is let's let's understand what's important to you. Let's articulate that. Let's make sure you're doing that today and also able to do that well in the future and hopefully in the future we can do that in an even more grand way because we've allowed for the resources we're setting aside now to compound and grow for the future.
12:42.12
Trey Sellers
Yeah, it's it's um, what you're describing where people are and and again like you're right? This is um, a broad brush and the the fire community is is very diverse in you know their backgrounds and the way they approach this. Um. There are some people who like take this stuff to the extreme.. There are some people like me who who think about this in more of a fatfire type of of standpoint where it's like you know you're You're okay, working a little longer because you want to enjoy things now and and actually live well in later in life. Um, but I think like this overcorrection that you're talking about.
13:18.97
Trey Sellers
Ah, and and this like um relentless pursuit of the later. It's almost like too low time preference. This is a ah ah bitcoin related type of concept where you're you're so focused on the future that you're you're missing out on the president. Um I think it's it's kind of like an overcorrection from the fact that people recognize intuitively that they have to constantly do more work harder. Um, and. And be on their toes so to speak to keep up with the ever-rising cost of living with the fact that that you know their kid's college education is going up at like 35% annually or something you know like by the time my kids are going to go to college. And might cost them a half a million dollars or something for a 4 year degree it's like you're you're never going to get that that value back you know, um, and and in order to do that because that's the expectation you have to continually be focused on that and be very intentional about it. Um. And so the reason that that's happened and and part of what I lay out in this article is ah you know that that these fire proponents they intuitively understand a few things right? They understand that the money is broken that life continually gets more expensive.
14:50.75
Trey Sellers
And that you have to continually save and invest in order to keep up with that. Um, and they don't really get why that's happening. They don't understand the same things that I think the bitcoin Community has really focused in on in terms of the money being being broken and being the cause of all of those things. Um, but they are acting like they understand that right? And so um, that was part of of what I wanted to communicate in in writing this is just that. Um you you get it right? like you get it fire Community. You're you're there, You're like so close. Um, you're just not quite addressing the root cause of the Problem. You're just reacting to it and in doing so it can lead to this kind of overcorrection where you're just you know focused so far on the future that you that you forget to live now.
15:41.56
ilm
In in the article you break it up through I mean it's it's really easy to read marches through ah generally what is fire houses generally accomplish through like 4 % safe withdraw rate the trendity study those sorts of things. Let's talk through a couple of those items in there. So. I guess ah, let's start off with most people in fire tend to just use index funds and I understand the reasoning here like if we if we looked at ah, most active funds net of fees and net of taxes underperform. Ah, they're the index and they're they. They're placed against so with that I mean it's just let's go ahead and just place the index and allow it to allow it to grow. But if we're just as you mentioned earlier if we're blindly throwing money at an index. It's odd because suddenly. Is that still considered investing or is that simply savings if we get this place of well if it's in reality it really is just more you're using an investment tool as a means of general savings without any thought it's just all right. This worked. Over a polling period of time so we'll continue to do so without any thought about where we are currently in the macroeconomic landscape with our current fiscal monetary policies microeconomics whatever these specific companies inside of this index. We're going to throw that out and just say that it's worked in the past and it'll continue to work and it probably will work for a lot of.
17:11.90
ilm
For over a very long period of time if we don't have some sort of strange event that happens. But then we have to bring in this other thing this the system is different now I know everyone always says that things are different this time. That's a really dangerous thing to say as things are different this time but we look at like. The outrageous prices that things cost and I'm not talking about like avocados but like Pe ratios and everything of the average stock out there like I think that is indicative of the fact that these indexes are being propped up and that's a term that we were talking about earlier. It's just what financialization of assets. And um, that sounds sort of weird to say like Index funds are being financialized but what what I mean by that it's not.. It's not ah, it's no longer being used as a means of investment but rather a means of general savings. Ah, you want talk through that like I just talked a bit about it. But.
18:02.40
Trey Sellers
These you know stocks are a great um example and and that is probably the primary tool for a savings vehicle that the fire community is using real estate is also very popular and suffers from um, a lot of different types of tradeoffs. Ah, then does the stock market. Um, but you know what you're describing here is that the money is broken. You can't just hold onto it because it's going to continually lose purchasing power right? Everybody knows that whether you whether you intuitively know that and or whether you explicitly know like no there is a direct mandate. To at least have the purchasing power of your dollars fall by 2% per year right? like yeah yeah.
18:42.96
ilm
Let's camp on that right quick because that's that is something that we're so used to it's like bringing up water to a fish. It's like well yeah I guess like what do you? What do you? only know what you're talking about yes I guess I'm aware of this concept. But it's it's normal. Why is that normal like why do we have 2%
18:48.80
Trey Sellers
Yeah, exactly right? yeah.
18:59.62
ilm
Inflation like you have this book behind you ah price of tomorrow. Um, that talks about how it sort of makes more sense to be a deflationary economy. So why? why? Why is two percent inflation normal.
19:09.14
Trey Sellers
Um, yeah.
19:15.00
Trey Sellers
Ah, well I don't know if normal is the right word for it. But it is the accepted standard um for sure and the reason is because um, our money is actually not really money. It's just credit. Like every day when you go to a store and you swipe your credit Card. You're spending what you kind of think of as money. But in reality it's just credit right? It's a ledger entry that is owed to somebody else and. That expands the monetary base essentially because you are spending money. That's not really in existence yet. Um, and that that has a cost to it. Um, we typically think of this as an interest rate Well that interest rate. On the total debt load needs to be paid back with other money like other dollars but those other dollars are not yet in the system and so what needs to happen is that either somebody needs to lose money and go bankrupt. In order to pay off the total debt that is in the system that our money is built off of or the other option is you need to create New Monetary units in order to satisfy the debt load that is out there. This is really accelerated in the past you know few years.
20:35.16
Trey Sellers
Especially since Covid as as debt levels have just like been screaming higher and then interest rates rise and you start getting this like exponential. You know people call it the debt spiral where it's just like it feeds on itself and it's more and more um on a personal level. You can just think about this as. You're putting your living expenses on a credit card that has like a 20% interest rate and you're not able to keep up with the interest payments. Um, you know because it just keeps compounding at such a high rate that is essentially what is happening here just at a like. Ah, much larger magnitude and a little bit slower pace than if you're using an actual credit card. Um, but because everything is built on credit and you're going.
21:11.50
ilm
We we talked about we we talked about the debt spiral with James Lavish episode two a few weeks back when that for about 45 minutes
21:22.67
Trey Sellers
Yeah, so you're so perfect you your listeners are well aware of of exactly with that. No better person than than James to be able to articulate exactly how that works and so that 2% inflation rate. Ah that. You were talking about. It's essentially required to expand the money supply in order to meet these debt obligations that are out there that our money is just built off of um if that doesn't happen the the bill comes due. And if the bill comes due somebody has to lose money in order to make everything whole and make the math work and people don't like to lose money. Especially really powerful interests and those people who are very powerful interests. Um, who are loaning money into existence like banks governments are creating money like all that. Like they don't like to lose money but they also control the monetary system so they don't have to lose money they can just literally conjure it up out of thin air pay their debts. Um, the rest of us who don't have that luxury of being able to print our own money and then spend it into the economy. We pay the price for that. Um. Our purchasing power is decreased by that 2% per year if you believe that number. Um, so that these other powerful interests who do control the monetary system are able to um you know fly around in their private jets and lecture us about carbon emissions. Sorry now now I'm really getting after it.
22:52.58
ilm
Um, so yeah, what it comes down to is money monetary expansion ah leads to devaluation of the money itself. So it's not a factor of like suddenly.
22:54.43
Trey Sellers
That.
23:07.73
ilm
Ah, everything costs more but rather the means of purchaing those things is worth less so you have to have more of those units in order to acquire these things and that's where you see this? Ah so if you look at Cpi or most metrics for inflation you're going to have a basket of goods and services. And if you look at those basket. What's in that those baskets it shows going to be things that are be like really scarce or frankly more important for life are going to experience a higher average inflation rate versus the things that are easier to produce less scarce and not as important generally are going to be lower inflation rate or even Deflationary. So. Things that are generally higher inflation. It be Healthcare housing education food energy like pretty important things versus things that ah.
23:51.18
Trey Sellers
And and all the things that that everybody knows like you you all like everybody sees this every day in their life that college is way more expensive. It's ridiculously hard to pay for for college. Um, you basically have to take on student loans in order to pay for it which is just adding to the problem by the way um, housing costs constantly going up and and ah is leverd to the hilt as well, right? like we're talking about like these massive mortgages people coming out of out of college now they can't make enough money. In order to save for a down payment to pay for a house because that down payment is now like $200000 or whatever for just? Ah, um, the median home I'm exaggerating a little bit but um, but that is a massive problem that that continually compounds. Um, and the reason it does that is because of all this debt that is built up and and the fact that our money is just it's credit based um, it's not It's not based off of the the productive capacity of the economy. It's pulling pulling forward um productive capacity from the future for the here and now. Which just is gumming up the works in the way that you're describing.
25:05.62
ilm
Um, there's strangely enough there's a lot of camps who don't recognize that the cause of debt is monetary debasement or monetary printing rather but as other factors if it's corporate greed or. Just suddenly things are getting more scarce and hard to produce which doesn't make any sense which again goes back to Jeff's Jeff Booth his book press tomorrow talking about how in a lot of things. We should actually be experiencing a deflationary economy like if we have technology and our efficiencies picking up then why shouldn't we be at a place where average person instead of working. 40 to 60 hours a week is only working 20 to 30 hours a week and things still cost the same if not less that just that makes sense. But again that that takes a total paradigm shift of how we view things and I don't think most people even have allowed themselves to go there because we're so used to being fish inside of this water of. Inflation and let's let's talk to them. So um.
25:57.76
Trey Sellers
Yeah, well everything is everything is financialized and everything is funded with debt right? All of the big things. All of the big important things and because it's financialized and funded with Debt. You have to continually chase after more and more monetary units in order to pay that ever growing debt compounding right. And so that's where this like Rat Race wheel thing. Ah you know analogy comes into play and that's where this overcorrection comes from from the fire community where they're just saying like I'm I'm going to get out ahead of this thing and I'm going to do everything I can in order to get out of the Rat Race so to speak right. That's where all of this leads from and and and that's that's that's the like key point that I wanted to make in in writing this is is the connection there between um, the problem that the fire community is trying to solve for or um. Ah, address in their daily lives and the root cause of that problem that is monetary and that bitcoin bridges the Gap there. It is the solution for those things.
27:06.50
ilm
That's what I mean so just a bit ago I saw that apparently the bank of Japan is about to ah release a round of ah basically like universal basic income payments to help with the impact of inflation.
27:23.81
Trey Sellers
Um, disturbable.
27:23.85
ilm
Which is hilarious if we're so if we're sitting here saying that monetary debasement through ah monetary printing is the cause of inflation going through and saying hey I know everyone everyone's struggling because things cost more here's some free money like we're just kicking the can further down the road and not just kicking the existing can down the road. But we're making that thing larger whenever we have to face the the repercussions of it like you cannot let's say that that's kicked a few months down the road or a couple of years again this happened in March of 20 you know stimulus checks all that fun stuff. And that point people are blinded to saying to seeing the inflationary impact of this and it took a while for it to catch up in normal people's lives. Ah but it eventually came and we're experiencing that the impacts that right now. So but I would I would venture to says despiteke the fact that we're experiencing that now I think the us will do something very similar in the next. eight months and ah to curtail the issues that were caused by this thing we'll come in and we'll we'll reprint and we'll keep putting bandaids on it and that's a.
28:26.35
Trey Sellers
It's it's such an insidious form of taxation really and wealth transfer from the masses to the people who are closer to the monetary spigot right? We can call this the kention effect. Um, the people who get the money first when all this happens. Benefit because they're able to go out and purchase goods and services with that newly created money before it has time to work its way through the system. Um and and and increase those prices now if you just splash the entire economy with you know thousands of dollars into their bank account. So much of the way that happened with covid you're going to get inflation like in a much quicker way and it's going to be much stickier. That's that's essentially what happened and then you know pre prior to covid and and all of that those happenings I think there was a little bit of um, you know complacency from um, you know. Economists out there and the fed and the government that look we're doing all of this stuff that we've been doing since the great financial crisis to try to get inflation and we're not getting it right? like we're we're we're really, um, we're really pulling out all the stops we've got qeone 2 3 4 ah we we're just like um spending more than ever and we still yeah, but yeah, oh I remember getting a $600 check from george bush back in the in the middle of the the um ah great financial crisis back in like 8 or 9 or something like that.
29:43.69
ilm
Um, helicopter money remember that that phrase helicopter money in 2016 or so.
29:57.25
ilm
Cash for flunkers. All kinds of things. It's like you know where's that money coming from. Actually it's coming for you, you're they're they're taking out one of your pockets and putting you to another one and that's.
30:01.19
Trey Sellers
oh yeah, oh Yeah, notes yeah and really and really what was happening is like okay well inflation didn't skyrocket the way that it did ah in in 2020 2021 um, but the reason for that is because we were just coming out of this massive ah definancialization so to speak or this collapse and credit around the world and that was such a strong deflationary force that um, all of the inflation that was being created to combat it. Was able to kind of stop it and maybe like reverse it a little bit to that like to the tune of you know, half percent 1% 2% whatever their their target was they couldn't quite get it up to 2% because there was so much weight coming down from from the collapse of this credit bubble. Um, and and then. Layer in all of the productive capacity that we've created um with the expansion of the internet and iphones and like all these stuff you got to remember the Iphone was released back in 2008 like what the world looks totally different now than it than it did back then and there's so much more productive capacity. In a lot of areas of the economy and all of that drives down prices so they're really just like pissing into the wind so to speak. Um, they're they're fighting against this massive deflationary force. Well when you.
31:27.61
Trey Sellers
When you come to 20202021 and you shut down the entire global economy like literally shut it down and then you print all of that money. There's nowhere for there's no deflationary force to counteract all of that money printing and so that's really the reason that we saw this kind of. Runaway spike inflation that that everybody's dealing with now. Um, so you can't you can't get away from the fact that um, you know inflation is caused from the monetary base expanding. Ah, it's just so far removed from our everyday experience because. Money is built on credit and we just don't see it and it takes time to play through.
32:07.12
ilm
Let's pull that thread a little bit more than of inflation. So in that article you mentioned the trinity study which basically is came to it was a study that led to this 4% rule this 4% safe withdrawal rate which is basically I think that went back to 1926 which bill biyan I believe is his name. We ran. He actually redid this study in 2019 going back with more data in more diverse markets and it came back to actually out to a higher distribution rate of somewhere in the fives and five percent say ah withdrawal rate the initial was again four point two I believe they rounded down to 4% said hey if you have ah. You can you can distribute from your portfolio at initial 4% of your invest total invested assets and then adjust that number for inflation annually in over a thirty year timeframe um out of all the market data we have available at no point would you have run out of money in that thirty years actually. But I believe it was about 98% of the time you would have.
32:58.16
Trey Sellers
Yeah, it's it's it's almost a hundred percent
33:00.40
ilm
Wound up with if not yeah, you would actually a vast majority of the time you would actually ended up with more money than you start out with by multitudes the problem is again. We're trying to outpace and there's it's an inflation adjusted number. So there's a lot of unknowns here now. Can we if we imagine a world.
33:07.78
Trey Sellers
Um, yeah.
33:20.21
ilm
Where there was no inflation that would change how we do all this. For instance, if we had no inflation. We could just look and say Jack cut this out. We got a bill sign. Um.
33:34.66
ilm
Yeah, so if there if there was no inflation then we're just look all right I plan I think I'm going to live for about thirty years I just need to have 30 years of lemu expenses set aside I mean that's that's really broad and oversimplified. But the impact of inflation makes us lot.
33:52.93
Trey Sellers
It's not It's not even that though Jim right? like all this productive capacity that we were just talking about the improvements in society all that it it increases people's purchasing power over time if you're measuring it in something that can't be printed so here we're harking back to bitcoin right. But like you would expect that if we are 3 4 5 6% more productive on a yearly basis if you are just holding money that can't be printed then you're getting you know 3 4 5 6% more wealthy over time so you don't actually have to have. 30 years worth of expenses saved at the beginning. Maybe you only need fifteen or twenty years worth of savings and then that compounding effect that you get from your purchas and power increasing through just general productive capacity growing over the the global economy that takes care of the rest and and um. All the same rules in terms of a safe withdrawal rate apply here in in that same regime It's just that you're not having to go out the risk curve and invest in the stock market or bonds or real estate or art or classic cars or whatever else that you're trying to get your hands on so that you don't have to hold on to cash. If you can hold on to money that can't be printed. Um, you can hold on to like the base layer of savings. that's what bitcoin represents that that's what bitcoin is
35:18.80
ilm
Um, a big issue here is that by money itself is meant to be a store value and then a means of transferring that value that you're able to store the problem is when you have a money I would argue that the Us dollar and pretty much a need. Money out. There is not actually money It's simply currency. But when you have a a currency or money that does not actually store value over a prolong period of time it just transfers that in a diminished capacity over time then people are forced to invest or speculate in different things which in which introduces. Volatility and unknowns and the the necessity to go hire financial planner. It's going to increase your taxes like if we just had a if we had if you had a money that kept its value over prong period of time and ah, you have you have a dollar that's worth a dollar today and in 30 years it's still worth a dollar and you go and use that dollar to. Purchase something There's no capital gains impact versus if you want to have a dollar of purchasing power and in 30 years well during that time you're going to actually have to invest that money and then when you finally sell that investment you're going to realize a taxable event. So. You're getting to get stolen from in multiple ways. 1 of them is through inflation. The other one is it's caused by inflation and that's the capital gains that you were forced to utilize in order to keep up with inflation itself. And yeah, it's it's frustrating now. Let let's say let's take ah, let's take this to ah to bitcoin.
36:40.50
Trey Sellers
Insidious as I said yeah.
36:43.40
ilm
So you had this 4% safe withdrawal rate we have to think through what's called a you mentioned the article again. It's sequence of return risk. That's why where this came out was in the 90 s the market just went up a whole bunch and all these goofy talking heads on financial. What a Tv were saying like hey the market's up 12% again this year you can pull out 12% of your portfolio and you won't run out of money. Which sounds fantastic. You know like I wish that was the case but the issue is if you do that in a time like in the 70 s or the 40 s or the nows. Um, what would happen with your portfolio. Um, when the market drops. So that's when Bill went back and tested over prolonged prolonged periods of time over different markets and came out with this 4% so sequence of return is again. It's basically it's not just the returns you see, but the sequence the order in which you have experiences Returns. So if you have a high return at the front of your retirement and then low returns to the end. That's not as negative of having a very low return in the first few years first and then having high returns later on. So um, like.
37:43.88
Trey Sellers
Yeah, if if you if you retire and then March Twenty Twenty happens the next month and um, maybe that's a bad example because they came in and printed a whole bunch of money. Well it's not that bad of example, actually because. Purchasing power actually really did fall off ah off a cliff. Um, but let's take let's take just to make it a little more plain right? Um, the you know if you retire in um, in late 2007 ah, you're at the top of the of the market there. You've just hit your your. Finding your independence number which is 25 times your annual expenses that you expect to have over over the course of your retirement that that equates to that 4% rule. You just hit your number you retire day one on that and then the market and the economy enters into recession. And your portfolio gets cut in half over the next course of the next year well now you're selling way more than four percent of that original value and you haven't had time for compounding to help that value of that grow so that you can keep up with inflation and ah fund your lifestyle there. Now all of a sudden if that happens in year one your chances of getting through your entire retirement just on that portfolio and selling it down ah have lessened drastically. Um, if you make it through the first like 5 years or so I think is what the trinity study is is showing.
39:13.82
Trey Sellers
You make it through the first like 3 to 5 years after that point there's almost no scenario historically speaking where you need to worry about a great financial crisis. Um like one that we that we saw that would would force you to go back to work. But that sequence of return risk that is what that's illustrating is that. Um, you know the volatility that's associated with holding your your savings in an investment vehicle like ah the stock market can adversely impact what your retirement looks like if it just so happens. To be affected at the wrong time.
39:52.79
ilm
Let's bring bitcoin in the conversation then so obviously a lot of the issues that we've highlighted with inflation and money printing and central control and all those things like bitcoin was created as a means of ah correcting that and removing those. Ah.
40:08.57
ilm
The the people who introduce those those problems but we're not at a place yet where bitcoin is uses the money and is a stable store of value in short durations which is important like if you're if you're 100 % in in bitcoin and ah, you retire in 2021 and then the purchasing power of that bitcoin drops by 80, you're in a lot of trouble unless we experience an immediate K-cor Correction um you're you're sort of hosed which I've seen people do this unfortunately years back? Um, when I was working another firm. It's few people who reached out wanting to do these types of things and you have to which bitcoin maximus out there will will maybe throw rocks at me saying that everyone should own all their assets in bitcoin. But I think by introducing unnecessary risk which unnecessary risk comes through ah incorrect portfolio sizing.
40:47.20
Trey Sellers
Um, and.
41:01.61
ilm
And ah, by not having the right portfolio allocation portfolio size and having unnecessary risks. You actually put your overall bitcoin allocation at risk as well again through poor sequence of return risks and ah distribution times. But anyways I think the people who don't like bitcoin or don't understand bitcoin. If we're sitting here talking about sequence of return risk and pull returns and stuff I think they'll they're probably snickering right now saying like well heck bitcoin so volatile how would this outrageously volatile asset help a ah during this this case of with with sequence of Returns. You can you speak to that like ah.
41:36.27
Trey Sellers
Yeah, that that secrets of of return risk is certainly applicable to bitcoin in the short term. We are not advocating for bitcoin as something that like immediately like.
41:39.64
ilm
That's.
41:56.90
Trey Sellers
One day it's not the next day it is like full global money and can protect against all of these things because you're you're holding the base layer savings mechanism. That's not going to happen. It's ah, there's an order of operations here. It takes time for people to actually understand its value and put a material amount of their net worth into it. Ah, so and and create a liquidity profile for the asset such that the volatility so continues to drop and and at the point in time in the far future where you and I think bitcoin is going. Um, we're denominating goods and services. Ah, and our investments in bitcoin right? We're using this this 21000000 hard cap supply ah as a true measuring stick for all of economic value and when you do that. There's no volatility at all. You don't have to introduce this noise into the calculation mechanism of your day-to-day life of having the purchasing power of or the the measuring stick moving the purchasing power is going to to ah to vary regardless of what money you use. It's just that. You get a clearer signal as to what that purchasing power actually is and it's reflecting in a purer sense. What is actually going on in the economy as opposed to having all this extra noise introduced into.
43:21.89
Trey Sellers
Ah, your assessment of what's going on in the economy because your measuring stick is also is also changing in shape and size That's what's happening when when money is printed um you know and then something busts and there's this cascading liquidation effect of all of this debt you know collapsing in on itself. And then we get these massive deflationary forces. You're seeing that measuring stick you know widen and and crunch widened and crunch. It's really difficult to make economic decisions. You know when you're when you're using that as as the the way that you account for value in the bitcoin world. What we're trying to do here is is. Help people understand that by adopting bitcoin by the world adopting bitcoin we can move away from that like really crazy measuring stick. We can just say ah an inches an inch you know it's like an an inch doesn't move ah back and forth widen and narrow. If you tried to build a house with that kind of a measuring stick. You're going to have a bad time. Um, and the same thing goes for when you're measuring economic value as well. That's what we're going for and when we get there all of a sudden you don't have to worry about secrets of returns risk when you are when you're holding bitcoin because it is the world's money. Is the denominator.
44:38.11
ilm
It's when I when I when I talk about bitcoin and its its value or price. Whatever Um, obviously there, there's there's the exchange rate between bitcoin and whatever fiat currency we werere we're exchanging it for but over a prolong period of time I Deliberately don't use the word like. How many dollars you going to get I use the word purchasing power which trade as you just mentioned purchasing power will move. That's expected. There will be deflationary and inflationary forces in the world for for you know for a house. Maybe you live in a spot that is just really nice and a lot of people want to move there. Ah, that way you would expect natural inflationary forces on the ah on the the homes that area versus if you live in a dump and people decide like Wow, They just it just found out that there's a we on ah on a fault line. Well we expect the value of that house to go down and ah yeah, so but it's I deliberately use that word of purchasing power.
45:09.78
Trey Sellers
Um, yeah.
45:29.00
ilm
So we understand exactly what are we benchmarking things against and when it comes to benchmarking like when you when you have a system of measurement that is fluid and doesn't work I can'tma ru mentioned this but it talks about like you if if you have a ruler that that it just in in its length. And you're trying to measure a table with it. The question is are you are using the ruler to measure the table are using the table to measure the ruler itself and that's where we are like my house a couple years ago appreciated supposedly by 33% but did my house become 33% more valuable. Yeah, right? Dude I've got I've got four kids like there's no way my house is worth 30% more with their fine works of art all over the walls. So my house didn't get didn't appreciate by 33% um, you know our town grew by some so maybe it grew by 8 % but the remaining appreciation of my house that remaining 25% was actually devaluation of the thing that you're denominating it in. Buy that that 25% so we're using this goofy ruler. So I work in my brain works in terrible analogies. So that'd be like Adeline. She's my seven month old so let's say we're trying to measure Adeline against our dining room table. Okay, and she's growing the reason I use that so like ah bitcoin bitcoin is this place of infancy. And I expect it to grow and become the size of the table eventually that Adeline bitcoin but now small but she's growing a regular cadence now. Let's say I wanted to send updates regularly to grandparents about how how big adeline is um I could and I had this ruler to say it. So.
47:06.80
ilm
Adeline on this ruler against this table. Well we can see that she's growing against the overall fixed thing. But if I'm trying to measure her against a ruler that's pegged against this table. But then we throw in this ruler that switches. Well I could say hey Adeline right? now is three feet tall but then we in a month. We want to send the update how of how tall adeline is and since then the ruler got shorter. It's like hey adoline is only two feet tall well did she shrink no the measuring stick itself is being adjusted and suddenly Adeline's seven feet tall. It's like well that's bigger than the rule. You said a few minutes ago how that happened well that happened because suddenly we have this multiple above. Ah, that's where we're at right now we have ah the total monetary supply in the world is just outrageously large compared to things that we're supposed to be being keeping in account of so like the length supposed length of this table is greater than the table's length itself because we're manipulating the ah the means of measurement versus if I just had. My child this thing this bitcoin the purchasing power of it is growing and expanding to eventually we know exactly how much table she is. We've removed this third party that brings so much noise in that ruler. That's that's changing. That's simply noise we have to remove that. From the system itself and allow just 1 thing to be pegged against another That's a terrible analog analogy. That's how my brain works is through these these bad things. But ah in the career.
48:29.80
Trey Sellers
Yeah I mean when when you go through life when you go through Life. You're you're constantly solving problems. Um, it's really hard to solve a math problem. Let's say when every um, every integer or variable. There is a variable like you need a constant. You need a constant in order to be able to solve a math equation. Um, and that constant needs to be the money if you don't have a constant money. You've got variable money. It's going to be really hard to pinpoint what the answer is to ah the question that you're trying to ask and that question for most people is how do I Just live a good life. And ah, plan for my future and be able to give my kids the things that I want to give them so they have a good life So that um, you know they've got food on the table so they can enjoy the sports and games that they want to play so they can grow up and and be. Um, you know, intellectually stimulated and have all the other opportunities that you would want them to have ah that that constant needs to be there. Otherwise it becomes really hard to solve that equation that you're trying to solve.
49:37.67
ilm
Ah, can you imagine if we had algebra and it was like you know a plus seven equals solve for x equals x solve for x and you realize through going through multiple problems that a equals 1 so it's like oh 1 plus seven equals. So the answer is 8 and suddenly it's like wrong a in this equation is actually worth seventeen. It's like why it's like done matter figured out. It's like how do you actually guess what a is supposed to equal or what x is supposed to equal when this this other number this variable is supposed to remain constant.
50:05.33
Trey Sellers
Um.
50:12.29
ilm
But you have some goofball behind the scenes who's like sorry it changed this time. It's like no in order for me to solve for this future thing I have to know what the the variables they're adding up are going to equal otherwise I'm I'm doing a guessing game which honestly is where we're at we're at a guessing game like how do I Invest how would I save for these things like well based off our best guess is what? x.
50:21.10
Trey Sellers
Are.
50:31.80
ilm
What? what? what? a is in this equation we should probably do these things but who knows and that's that there is a necessary place of investing investing is not a guaranteed thing. There's a place of necessary place of investing but we've made it way more complicated than than that it needs to be in that user way another way that you can solve for this volatility.
50:34.16
Trey Sellers
Um, yeah.
50:48.75
ilm
4% state withdrawal rate is by having what we call guardrails so like for our retirees what we do is we actually have about a five and a half percent distribution rate in their portfolio. But then we introduce guardrails. So if in year one your portfolio grows a bunch and instead of having an effective ah instead of having an effective five and half percent distribution rate now you're to. Three and a half what we can give yourself a raise that year or if the market does poorly that year and suddenly 7 out five and half percent distribution rate you're at a 7 % distribution rate. Well we're just not going to give you a cost of moving adjustment that year maybe you have to rain things in and that helps smooth overall volatility and actually ah.
51:27.37
ilm
Inject some more insurance into your your your cash flow over polling period of time which I think is really important when having like bitcoin as it's growing right now that'll help you ah weather those ebbs and flows of purchasing power power.
51:39.90
Trey Sellers
Yeah,, there's there's there's another thing to to recognize and maybe this is like too far past people who are new to bitcoin and they're trying to understand it and and trying to understand its value but you and I can can definitely agree because we've been around for a long time and and fully have conviction. In in bitcoin as like a long-term savings vehicle is that Um, there's so much asymmetry and upside in terms of its purchasing power because it's so young and and not understood and because there's so much store of value. Um, value out there that can be pulled away from subpar assets and into bitcoin Once people recognize that it is superior. Um that you know that trinity study was based off of the ah the total market.
52:22.17
ilm
Are.
52:35.91
Trey Sellers
Going up by you know, 8 to 10% per year and you adjust it for inflation. Maybe you're getting like 5 to 7% in in purchasing power growth or whatever to combat to to compound well if bitcoin has all of this upside because it's becoming more and more adopted now. All of a sudden. Even though it's more volatile. It's still growing way faster than that stock market investment or savings vehicle that you're using and so that has to also play into into account when you're thinking about a safe withdrawal rate and all that that can be scary for sure, right? But ah. You know, but but that definitely does play into this equation.
53:14.28
ilm
Um I think it was in 2020 this this fun statistic came out and who knows what bitcoin will do moving forward. Um, but I believe it was from the genesis of bitcoin in 2009 until sometime in 2020 um, if you had your portfolio one one percent in bitcoin the remaining Ninety Ninety nine percent sitting in cash. You would have outperformed s and p five hundred index with substantially less volatility in your portfolio and yeah, obviously the the adoption rate at that point massively. Skyrocketed who knows we'll do moving forward from a percentage growth and of a price but ah yeah I think does speak again. It comes to portfolio sizing not saying you have to have 100% of your portfolio in this thing. But if we if bitcoin becomes this global store value and sediment layer. Um, we would expect that to take up a lot of the existing financialization of other assets and ah yeah I think that would um.
54:15.45
Trey Sellers
Yeah, you? why? Why would you? Why would you hold your schooler value in something that ah can't be moved and is taxed every year and has constant maintenance costs and ah you know things that you have to fix. Um. Which I'm referring to you know your your house or other real estate assets. You got to deal with tenants if. You've got real estate investments. Um, you know like those can be good investments and there are some good tax benefits there but there are a whole hell of a lot of work and are you really outperforming.
54:51.78
Trey Sellers
Um, just holding the stock market. Um, if you're you know, doing real estate there. Well why would you hold the stock market if you've got to trust that this counterparty that's holding onto that is going to be there. Um, and and let's not forget like we're taking a very we're taking a very um, uscentric. View here in a very us-centric conversation. Um the rest of the world does not have the same type of privilege that the us does in terms of access to the stock market. Um, you might not have access to the right stock market. You might not have access to any stock market at all. Um, your. A large portion of the world. Their only option for saving any type of value at all is the the cash or the the currency or the money that they are forced to use on a day-to-day basis. Um, and across the world in places like Argentina and Venezuela and lebanon and turkey. And various other places around the world like the the opportunity for people to take this very us-centric approach that we've been talking about for the whole last hour um it's just not there so they need an alternative they need something that they can access that they can control that. Can't be taken away from them by their government and that cannot be printed into oblivion. Um, they don't have access to ah dollars in a lot of cases and they don't have access to the us stock market. Well what other option do they have bitcoin can be that option. It can be something.
56:24.14
Trey Sellers
Even despite its volatility that allows people to actually build up savings and and follow the fire methodology. Ah, even though they don't have access to you know the same types of tools that that you and I do.
56:39.44
ilm
Let's if yeah, do you have a few more minutes cool let let's let's take a second. So let's say someone's thought like all right I'll buy some of this I think it makes so it makes some sense like I'll I'll go ahead and get some but ah and I encounter this regularly I'm sure you do with with where you work the ah you know.
56:42.49
Trey Sellers
Um I do yeah.
56:56.74
ilm
I Saw this article I have a friend who they had some bitcoin early on and they lost it and now it's in a you know landfill somewhere or whatever they lost their seed phrase like how once you once you've bought bitcoin or acquired it in some capacity. What are different Ways. We can just talk through like simply from the simplest means of holding it through the more secure means of holding it. How do you make sure this thing is kept like we've talked about in the in other episodes like how this is a Bearer assets. You're able to take custody of it itself. What does that mean or what are different ways of custoding it and what are the risk and tradeoffs with those.
57:35.59
Trey Sellers
Yeah, bitcoin can really help you in your personal finances and in the way that you manage you know saving for the long term. But only if you can actually hang on to it right? And so um, there there are different ways to do that and everything has tradeoffs. What.
57:35.93
ilm
Um.
57:53.14
Trey Sellers
What I do in my role and what we do it on chained is to help people to hold on to bitcoin in the best possible way that eliminates or drastically reduces the ability for them to just make 1 mistake and lose a bitcoin. So let's step back and and talk a little bit about fundamentals here as you said. Bitcoin is a bearer asset. It's akin to holding a bar of gold or bag of cash in your hand. It's something that you can keep in your possession and the way this works is that you are managing what is called private keys. It's essentially just secret information. You can kind of think of it like a secret password. Um, and as long as you are the only person who knows and has access to that password you are the only person on the planet who can spin this bitcoin nobody can take it from you. Um, you are are not able to have the bitcoin move from your possession into somebody else's without a cryptographic. Signature from these private keys and so when you start to understand that there's there's some kind of power that is um that is illuminated there which is that wow I can hold on to this thing and literally nobody can take it from me. Without me somehow cooperating or them getting cans on this secret information. Um, but the flipside of that is if they get access to that secret information they can spend your bitcoin regardless of where they are in the world. They don't have to like come to your house and grab your borrows of gold that you've that you've buried in your backyard. Um, you know so.
59:26.12
Trey Sellers
Ah there's there's a little bit of a double-edged sword there. Ah but those cryptographic keys because we're just dealing in math and and information here you can actually manage bitcoin where you don't have that single point of failure and that's what we do at unchained. We help people to hold bitcoin that is protected behind multiple keys. 3 in fact, with a quorum of those keys needed to spend the bitcoin out of the vault as we call it once it goes in so our clients hold 2 keys we hold one and that puts them in a position where they have full unilateral control over the asset. Um. Have no single point of failure because they can keep those keys in geographically dispersed locations and if something happens to them. We're in a position to help because we've got that third key and we can act with um, you know, ah in cooperation with one of those other keys in order to. Ah. Refresh the the setup and get them into an ah uncompromised situation if something happens to them and their bitcoin needs to pass down to their family. We're in a position to help with that with that scenario as well. And so um, you know bitcoin um, security and. The act of actually holding onto it and making sure that that you are securing it in in a way that is resilient to your mistakes that where bitcoin can't just be taken from you. It's come a long way over the last you know 7 eight years or so and.
01:00:57.37
Trey Sellers
It probably has a long way to go but we have the tools now that will allow people to actually take a material position in bitcoin. Some people start dipping their toes in with like a 1 % allocation it's like hey if I buy 1% of this thing because. I think it might go up or could go to 0 well, that's great like could have a very significant impact to your ability to save over a long period of time if you could hold on to it. Ah, and if it goes to 0 well, you know you've got the rest of your portfolio in the stock market and that goes up and down by 1% you know every single day so you want to go feel that right. But when you start to develop conviction. Ah, people tend to want to allocate more to bitcoin and when you start doing that you need to make sure that you are securing. It appropriately. So we talked about how bitcoin is a ah bearer asset and how you can actually control it yourself. Well why would you want to do that. Because you don't want to trust somebody else with an asset that you don't have to do that right? We've seen a lot of exchanges go bankrupt we've seen banks go bankrupt and and needy bailouts and that kind of thing. Um, you don't have to be dependent on somebody else to manage your wealth for you. In this new world of bitcoin. You don't have to be reliant on a counterparty because bitcoin is not based on debt right? The reason that we have to kind of brings it full circle. The reason we have to have intermediaries and banks and other financial institutions involved in our transactions from day to day is because ah.
01:02:32.25
Trey Sellers
You know we we need to be able to transact over ah large, um spaces and do that very quickly and that requires those people moving money over electronic communication systems. Um and up until now the most efficient way to do that is to create debt right to create Credit. Um. Bitcoin is not like that you get all the benefits of ah that credit-based monetary system where you can zap value around without having all of the downside of the counterparty risk that comes with those financial intermediaries and those banks involved in all of your transactions knowing everything that you're doing. And taking a ah 2 to 3% slice of that of that transaction volume right? So we can just leapfrog all of those financial intermediaries you can hold your wealth in your own hands. That's very difficult. Ah for you know governments or any other bad actor to claw away from you and also if you set it up the right way. Very difficult for you to lose um and you can get all of the benefits of that bear asset without any of the downsides of holding cash or gold that you can't send over large spaces. That's very difficult to to um you know essay and make sure that it's real and and all that kind of thing. Bitcoin solves for so many problems. Um and you just have to recognize that secure it in the best possible way and then just sit back and and watch as you you know, take a better view than an index fund or real estate in terms of the savings vehicle that you've got.
01:04:04.83
ilm
It's it's easy to get lost in so many of the other things about bitcoin from a ah again I generally view this in a more of a macro macroeconomic lens and get caught up in that or you can take in the technology side of things. But I mean a few days ago was bitcoin white paper day celebration of when Satoshi released. Ah, the the white paper to talk about what is bitcoin how he's built it and the title that itself talked about it's peer-to-peer money like this is something that we're removing these. These trusted third parties that you know all the times we've we've placed trust in people that shouldn't have trust the problem is by by just because you own bitcoin this is ah this is a a poor argument but a common why here is well you know whatever this this institution collapsed that institution collapsed. I thought bitcoin was supposed to solve that it's not bitcoin's fault. That's this institution's fault that you're not supposed to place trust in so we have brought centralization back in and there are places that that helps it's necessary to an extent That's where even when you when you when you own bitcoin. There's a lot of ways to own it. You can you can keep it on in exchange you really? but you want to be very cognizant of what exchange you have that on you kept it on mount gox or ftx or litany of other ones over the years your bitcoin was was taken it was either it was either stolen from you directly or was stolen because it was actually never bought and ah you just had a.
01:05:33.31
ilm
You know your screenshot shows you had bitcoin but didn't exist that would be like Tre. Ah, you said Jim I want to buy some real estate in Hawaii from you and I said all right here give me give me a million bucks I'll get you beach beachside property in Hawaii right now to give it to you I give you a picture of it even like perfect. That's mine. But you're a really busy guy. You're not going go to hai today or tomorrow in the next year so I can go out and sell that same beachfront property to a million other people and suddenly I just got a lot of dollars and maybe there's one. There's maybe there's one real estate actual house in hai maybe there's maybe there's none that doesn't matter because I have your money. And none of you are able to actually testify that hey I have taken cusy this thing I've been there. This is mine and that's why these these bad actors in this space do like they've given you a picture of your beachfront property. But you're not actually going and verifying that. Yes, this is mine and I'm taking custody of that and so in in essence you're by keeping on exchange your. Doing that and again, that's that's dangerous. That's sort of like ah fine gold. But then never actually seeing the gold and trusting that it's at a a gold vault in Switzerland which they probably maybe they have the goal I'll know. But then even if they have it what if someone else who's really smart is able to go in there and and take it. Plunder it. Maybe it's suddenly switzerlands in a war zone and they get invaded and someone takes that gold. It's not yours anymore. Sorry so there's that um, you can move it all over to like a ah hot wallet on your phone which I keep some bitcoin on a a mobile wallet and that's just I keep some on there so I can.
01:07:04.10
ilm
Send payments to people and ah use it as they did it day-to-day manner I think it's going to be really important for that payment layer of bitcoin that means an exchange you can move it over to a single signature hardware wallet or finally as you just talked about a multi- signatureature wallet. So yeah, there's degrees of trust and what you highlighted at the start of this part of the conversation is there's tradeoffs with convenience and trust and security and depending on what you're going to use it for if you're going to day trade bitcoin which I would not advocate to do you probably want to keep it on the exchange. That way. You're not moving it on off a wall that'd be that'd be equally as goofy. But if you're actually if you're going to if you're going to own this thing as a means of of personal wealth growth over a pro long period of time I think it's foolish to not actually take custody of it and once it becomes a decent amount. Of your net worth. Um I think it's equally as foolish to not go ahead and move this to a multi ah multi-key setup to remove risks a lot those risks. maybe they're not maybe not risk of third parties. You're probably a pretty big risk to yourself something it happens. Just forget your password I forget password passwords all the time like for Google I literally reset my Google password anytime I go into Google that's just it's the way of life. Um, ah.
01:08:28.90
Trey Sellers
Um, but most people who ah are taking it upon themselves for self-custody they lose it because they make a mistake not because there's some person who's like knock on their door and and stealing their bitcoin. Um, and the other major way that people lose bitcoin is by leaving you on exchange. Which in essence is always connected to the internet. It's accessible from anyone anywhere in the world with an internet connection or who can socially engineer a support person at that exchange and trick them into sending your bitcoin away right? And maybe you get it back. Maybe you don't but um. You know you definitely don't want to take that chance with something that is finite in supply right? So We we kind of started the conversation talking about how banks and you know governments and all this have the ability to print money for themselves and for their friends you can't do that with bitcoin. Once it's gone. It is gone. There's no way to print more of it. So either that has to come from somebody else to make you whole or you're not going to get it back and so you have to be very mindful with how you manage this asset. Um, that's obviously one of the main benefits of bitcoin though right? like.. That's why you want to hold it. You want to hold it because it can't be printed because the supply can't be increased and your wealth stolen from you from out from under you by other people who have the privilege of printing the monetary units that you are forced to use um that that is the essence of the.
01:09:59.77
Trey Sellers
Ah, the the foundation of value that bitcoin brings to the world is that it is hardcapped twenty one million. There cannot be anymore and so whatever the range of custody option that you choose and the tradeoffs that you choose to make you just need to keep that in mind right? You might be an individual and if you're an individual.
01:09:59.89
ilm
You can.
01:10:18.88
Trey Sellers
And you have the means you should absolutely hold your own keys if you're an organization or an enterprise. Um, multisig is a great way to distribute the key management for the bitcoin that is sitting in your treasury that you need to fund your business as like an endowment over the next hundred years um multisig is a great way to. Involve multiple people and distribute the trust of that treasury to to make sure that the bitcoin cannot be lost there as well and there are some businesses and enterprises who can't actually hold their own keys either because they just really don't feel comfortable with it. Their auditors hate it ah hate the idea of it. Ah, or they have regulatory mandates that prevent them from doing so um, but there are ways to use the technology that's under the hood here right? that this this multi-sig um and private key management technology. Um, that allows you to distribute that risk across multiple institutions that are independent of each other That's one of the cusdy options that we offer as well and one of the things that I focus on on a day-to-day basis is helping enterprises and large family offices and people who need to have massive amounts of. Bitcoin exposure and bitcoin on their balance sheet. Um, but they can't or don't feel comfortable holding their own keys yet. So we provide a path for them to get that exposure distribute the risk across multiple counterparties instead of relying on layers of counterparty risk by trusting some black box institution.
01:11:48.35
Trey Sellers
That would that you don't even know if the bitcoin is actually there all of these things are options for people depending on their situation organizations depending on their situation and you know unchain makes that available but bitcoin generally has opened up this Pandora's box of new options for the world. It's opened up new ways to save um, new ways to manage your wealth that create financial independence not only in the fact that you have this like incredible savings technology but financial independence in the sense that you can manage your own wealth and you don't have to rely on somebody else. You don't have to trust somebody else with the majority of your net worth you can hold it yourself. You can do that in a really safe way and you can get all of the benefits that come with doing that alongside the fact that the savings vehicle is there to help you you know, endow your. Family for generations to come. That's really why we're here like that's that's what gets me up every morning and and helps me ah to help people understand the value of bitcoin and all that it's it's rearranging the incentive structure of the world and getting us to a place where. We're building on savings and and equity ah as opposed to on debt and something that is really fragile and collapses all around us at all times and creates all kinds of chaos in the world. We got to move away from that and towards something that that speaks truth and reliability and has this like.
01:13:23.90
Trey Sellers
Lower time preference view of the world. So we can get all the benefits of the greater productivity that that we're all working for so hard every day.
01:13:33.22
ilm
Um, awesome. Well, it's ah think's a good place to wrap it up that was ah, a varied conversation. But now I appreciate talking through. Just yeah, how how can be utilized from a I don' use the word savings or investing but as a savings vehicle. Um, and then. Yeah, the the common concern of how do I make sure that I don't screw this up somehow from being stolen or more than likely my own forgetfulness and ah yeah, appreciate I appreciate you I appreciate what unchains doing and yeah, we'll definitely. Link some stuff to learn more about ah you I'll link your article in this and if people don't reach out. How should they reach out to you directly should they reach out to Unchain. What's what's best there.
01:14:16.10
Trey Sellers
Yeah, um, you know I'm on Twitter or x or whatever they call it these days at ts underscore hoddle my article is both on the unchained website and the blog as well as on my personal website which is traceellers.com you can get in touch with me there. Um. And then you know I'm available on Linkedin if you want to reach out there. Ah but otherwise definitely go check out on chain see what we're offering. We do complementary consultations as well. So you can you know, get on the calendar of of you know my calendar or somebody on my team and we'll talk you through exactly how we approach this. Ah, issue of securing your bitcoin and all the other financial services that we layer on top of that that core custody product to make sure that you're maximizing the value of your bitcoin while you're holding it. Thanks a lot jim really enjoyed it.
01:15:02.32
ilm
Sweet Thanks Trap appreciate it. You are.
