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Bitcoin's Upcoming Halving: What to Expect

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Bloomberg Mar 26 08:50 · 15.3k Views

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  • 00:00 Just give me your thoughts on the on the halving,
  • 00:03 what's going on Ed?
  • 00:04 I miss you brother.
  • 00:05 You look good.
  • 00:06 The
  • 00:07 Bitcoin happening,
  • 00:08 Yeah of course man,
  • 00:10 the halving is a huge deal.
  • 00:12 So just to be clear, everyone is aware of the fixed supply of Bitcoin.
  • 00:16 There will only ever be 21 million, but not
  • 00:19 all 21,000,000 have been issued to the world yet.
  • 00:22 And so
  • 00:23 Bitcoin is on a fixed issuance schedule.
  • 00:25 Satoshi program when he launched, he or she or they launched Bitcoin on how those would be issued out.
  • 00:32 We're at about 19,000,000 out of 21 so far
  • 00:35 and every 10 minutes more and more get issued
  • 00:38 and the halving is when that issuance schedule gets cut in half.
  • 00:41 So the supplied, the forced sellers, those that pay money to produce bitcoins, which then have to sell it to pay for their cost,
  • 00:48 that's going to be halved.
  • 00:49 And so the really simple way to think about it, Ed, is if demand remains the same and the Bitcoin sold gets cut in half,
  • 00:57 should have an impact on the price to the upside.
  • 00:59 So it's a big event and we're all pretty excited about it.
  • 01:03 Jack, let's have a healthy and robust debate here, but just give me a moment to outline
  • 01:08 a counterpoint to you because you've been in the camp for a while, right?
  • 01:11 That there
  • 01:12 is only ever going to be 21 million Bitcoin
  • 01:15 and so prices have to go up.
  • 01:16 That's that's kind of the argument you've made.
  • 01:18 If you'll just give me that and you've talked about in the context of hyperinflation, don't be holding dollars.
  • 01:24 But I would point out
  • 01:26 that the market doesn't see further inflation.
  • 01:29 It doesn't see more inflation to come.
  • 01:31 And if you'll allow me,
  • 01:33 if you look at this morning's trading in terms of liquidity,
  • 01:36 I think 30 to $40 billion worth of Bitcoin was out there in the market.
  • 01:41 So
  • 01:42 there are counterpoints to the thesis that you've outlined.
  • 01:47 Is that is that the end of your point?
  • 01:49 End of my point.
  • 01:50 Please proceed.
  • 01:51 OK.
  • 01:52 Yeah, I was trying to be polite.
  • 01:53 I mean,
  • 01:54 let me let's dumb it down.
  • 01:56 The the problem with central planning money,
  • 01:59 which is such a core technology to society working.
  • 02:02 Think about it, Ed.
  • 02:03 You go to work every single day and you pour your blood, sweat and tears all of the time you spend on this planet.
  • 02:09 In exchange for what?
  • 02:11 Money.
  • 02:13 So the central planning of money convolutes and complicates so much of the inner workings of society.
  • 02:19 Let's go back to basics.
  • 02:20 Our government is in debt, right?
  • 02:22 Yes or no?
  • 02:22 the US government.
  • 02:23 That is what all governments, right.
  • 02:25 Our government's in debt.
  • 02:26 OK, traditionally, Ed, if I owed you 20 bucks,
  • 02:29 I'd have two options.
  • 02:31 I'd one, have to default on that and say, you know what, Ed,
  • 02:34 I hope you still consider me a good friend, but I'm not going to make hold on that $20.
  • 02:38 The other is I could pay it back.
  • 02:40 Those are classically the two options that anyone in debt has right
  • 02:44 now.
  • 02:45 The government, because they centrally plan and control our currency,
  • 02:49 unfortunately has a third
  • 02:51 and that's that they can print more money, devalue the debt that they have and that they owe
  • 02:57 and allocate more capital to themselves.
  • 02:59 So our government
  • 03:00 can't default the US, the United States of America cannot default on debt.
  • 03:05 It would collapse the entire planet.
  • 03:08 We also cannot afford to pay it back.
  • 03:10 So if you just like, listen, I didn't even go to college, brother.
  • 03:13 This is just one O 1 basics how the world works.
  • 03:16 If we can't default and we can't pay it back,
  • 03:19 what's the only option that they have to do?
  • 03:21 No matter what, they sit and tell you at the Fed chair meetings and all of the economists, they have to issue more dollars.
  • 03:29 And so if there's going to be more pieces of green paper, you want them competing for the most fixed thing,
  • 03:35 right?
  • 03:35 There's more dollars that are competing for a fixed amount of Bitcoin.
  • 03:39 And yes, real estate's gonna go up too, 'cause there's
  • 03:41 more dollars competing for real estate, but they can make more real estate, they can find more gold, they can't make any more bitcoins.
  • 03:47 And that's just.
  • 03:48 I mean, even a college dropout can understand that, my friend, let me jump in.
  • 03:52 And again, just reiterate the your, your, the basic of the argument is that they're only ever gonna be 21 million Bitcoin.
  • 03:57 And the the,
  • 03:58 the
  • 03:59 finality of that what what am I trying to say the the, the supply constraint on that is what we'll provide up with momentum.
  • 04:05 I have many questions for you I think put your strike CEO hat on and let's talk about payments.
  • 04:10 Give me an update on the state of crypto payments.
  • 04:14 We got a lot of questions about this, about real world adoption
  • 04:17 because we we kind of over the market mechanics of Bitcoin.
  • 04:20 Now I think at this point
  • 04:22 what are you seeing out there globally?
  • 04:25 I think the biggest
  • 04:28 I don't, I don't know if it's tension.
  • 04:30 The biggest story is stable coins for sure.
  • 04:33 Here's my personal take
  • 04:35 a Bitcoin is the only neutral value transfer protocol for the world.
  • 04:41 We view it at strike as the single value transfer protocol for planet Earth.
  • 04:45 Now, that sounds like a lot of gobbledygook.
  • 04:48 What I actually mean by that
  • 04:50 is Bitcoin is the only physical digital instrument.
  • 04:53 So a stable coin is just an IOU for a bank deposit.
  • 04:56 It's like a innovation to ACH, but you have Counterparty.
  • 05:00 Risk with the issuer, with regulators, with where the bank deposit is held at that bank.
  • 05:05 What if they're fractional reserve?
  • 05:06 So bitcoins, the only physical instrument on the Internet that we can move globally.
  • 05:12 So we view it as the way like it's like the TCPIP of value transfer for the web.
  • 05:17 But the problem I think is that consumers around the world prefer stable coins because of their relative stable value to Bitcoin.
  • 05:24 So when you have emerging markets like in Africa,
  • 05:27 like Latin America, all through Latin America, they find it difficult to stomach the volatility.
  • 05:32 If you're living paycheck to paycheck, Bitcoin can be an intimidating asset.
  • 05:36 So where we are spending a lot of our time is trying to meet the consumer demand
  • 05:40 of Africa, of Latin America, where Bitcoin, the technology is just so far ahead of everything else.
  • 05:47 But the dollar value is valuable to consumers in these regions.
  • 05:51 So
  • 05:52 I think that's going to be a lot of the payments innovation over the next few years is the marrying of those two concepts.
  • 05:58 Just a quick follow up on that.
  • 05:59 So geography was one of the other questions that we got.
  • 06:02 So for example, you know, how's the El Salvador HQ going?
  • 06:06 Is it is one, is one example.
  • 06:07 But you mentioned I think Africa and Latin America.
  • 06:10 Do you kind of have, we only have a few seconds, Jack, did you have a specific list of countries to which you've actually expanded service?
  • 06:17 Yeah, we just launched Strike Africa.
  • 06:19 I think, listen, every single person on the planet is dealing with Fiat debasement is dealing with what I explained is the fact that their government has to issue more of their currency.
  • 06:28 So access to Bitcoin is paramount.
  • 06:30 It's the killer use case because it's the only thing that no one on the planet can create more of.
  • 06:34 And then for payments, we think it's fascinating to disrupt cross-border payments.
  • 06:39 I mean the fact that I can move something physical like a water bottle or my iPhone from here to Nigeria, but it's a Bitcoin
  • 06:45 is crazy man.
  • 06:46 The cost should really come down there.
  • 06:48 So
  • 06:48 Africa, we've launched, Europe is up next, Latin America after that, we're on a warpath to bring a Bitcoin focused consumer experience to the world, no altcoins and
  • 06:58 we're doing well.
  • 06:59 I'm curious to see where this goes.
  • 07:01 Jack, I actually have a a question for you in real time
  • 07:04 through the IB on the Bloomberg Terminal.
  • 07:06 I'm just going to read it to you,
  • 07:07 Jack, how can the blockchain sustain itself
  • 07:11 if the miners who are validating the transaction mine less and less new coins?
  • 07:17 That's that's a direct question to you from our audience.
  • 07:20 Yeah, so the miners get paid fees,
  • 07:24 so every single transaction is
  • 07:26 a fee associated with it.
  • 07:27 So minors in theory collect revenue.
  • 07:28 There's been blocks as of recent where the fees actually are more than the issuance reward.
  • 07:34 But the Bitcoin protocol also auto adjust itself and and the the difficulty required
  • 07:40 to mine blocks changes
  • 07:42 by how many people are mining as well.
  • 07:44 So the the the protocol is built to sustain itself and this is also a problem
  • 07:48 that is way out in the future.
  • 07:50 I think sometimes when people get stressed out,
  • 07:52 listen the Bitcoin price is outpacing the halvings right?
  • 07:55 Bitcoin is going up multiples more than the issuance is being have Bitcoins already up over 100% in the last calendar year, right?
  • 08:02 So I think that this is
  • 08:05 anxiety inducing problem that we may face in 20304050 a hundred years.
  • 08:10 But the answer is Satoshi's intention was transaction fees
  • 08:14 is that people pay
  • 08:16 for block space, pay to get transaction finality
  • 08:19 and that should sustain the network plenty.