WBD712 Audio Transcription

All Roads Lead to Bitcoin with Checkmate

Release date: Wednesday 20th September

Note: the following is a transcription of my interview with Checkmate. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

Checkmate is Glassnode’s Lead On-chain Analyst and creator of checkonchain. In this interview, we discuss Bitcoin investing and market analysis, Bitcoin as a hedge against inflation and housing market bubbles, the current economic situation, the potential future role of Bitcoin as a settlement currency for nation-states, and the power and unstoppable nature of Bitcoin.

“.1% to 1% is gargantuan numbers, just extraordinary numbers, if bitcoin does in fact achieve 1% balance sheet capacity everywhere…it makes a lot of sense, it’s the perfect currency to settle between enemies for oil, which creates enemies.”

— Checkmate

Interview Transcription

Peter McCormack: Morning, man, sorry I'm late.

Checkmate: That's all right.  It's good, good to be here.

Peter McCormack: Catching up on the sleep.  So, I've been falling asleep about 10.00, waking up at 12.00, and then I'm awake for like three, four hours, and normally I listen to podcasts when I go to sleep.  And so last night, I was like, "It's not working, I'm not falling asleep to podcasts".  So, I open up Netflix, and the first thing that comes up is, "New series of Top Boy".  I'm like, "Oh, I'll just watch that to fall asleep to".  But Top Boy, I think it's the best thing on British TV.

Danny Knowles: I think so, it's one of my favourite TV series ever.

Peter McCormack: Yeah, I don't think there's anything that could be announced I'd be more excited about.

Danny Knowles: I was really excited for Black Mirror, but yeah, I'm with you.

Peter McCormack: Black Mirror was a let-down.

Danny Knowles: Yeah, it was a let-down.

Peter McCormack: Did you watch Black Mirror? 

Checkmate: I started, I watched the old episodes, I started watching one, whatever the recent series is and I just lost interest. 

Danny Knowles: Yeah. 

Checkmate: To be honest, it just didn't get me, so I was like, "All right, carry on, move on".

Peter McCormack: I've liked Black Mirror all the way through.

Checkmate: It's definitely very clever and they push a lot of boundaries and they made you think, right, and there's a lot of things that they kind of brought forward the ideas that we all see and feel, but they just put it into context.  You're like, "Oh God, that's ugly".  That's the whole point of it. 

Peter McCormack: "That's coming, this is coming". 

Checkmate: Or it's here. 

Peter McCormack: Yeah, or it's like "Sh… I kind of do that".  Like the one, what's the one where the girl goes to the wedding and she has the app? 

Danny Knowles: Is that the social credit score one?

Peter McCormack: Yeah. 

Checkmate: Is that the one where you block people and then their face blurs out?

Peter McCormack: I think if you go below a certain score maybe, but then she can't rent the car, she can't get to the wedding, and you see, obviously we're not like that, but we're not far off that.

Checkmate: Social credit score, that's terrifying.

Peter McCormack: Yeah, I did like the Bandersnatch, the one where you choose the journey.

Checkmate: Yeah, I actually didn't like that. 

Peter McCormack: Oh, you didn't? 

Checkmate: No, I mean you go down all the different rabbit holes, and I liked the twists.  There were some points where it went down a completely different path, but I felt that the interactive side of it was like, "Can you just curate and put the show on for me, like you pick?"

Peter McCormack: You might not know this because you're a bit younger.  How old are you; can you say? 

Checkmate: 31. 

Peter McCormack: 31.  So, when I was a kid, we used to get books that were like that.

Checkmate: Yes, no, Goosebumps.  Yeah, choose your own adventure. 

Peter McCormack: Yeah, do you follow the wizard or go under the bridge with a goblin?  Turn the page? 

Checkmate: "Turn to page 86", yeah!

Peter McCormack: So, I kind of liked it because it was like that, but I'm I was just a sick fuck, so in Bandersnatch, I just picked the sickest journey!  But then I assume most people did; I bet that was the test.

Checkmate: I think so.  Well actually, I think that's what it was.  It was them testing which path people go down.  It's a bit of a behavioural study, I think that's what I actually did with it.  They looked at the data of what people selected. 

Peter McCormack: Did they release the data? 

Danny Knowles: I've never seen it. 

Peter McCormack: I thought I saw someone, there was analysis on it somewhere, but I thought that was the actual point of it all.  I bet it came out like, "90% of you are sick fucks, and then 10% of you are scared". 

Checkmate: Because there was one where it was like, "Kill your father", or something like that.  I'm sure most people, they want to see which direction it goes. 

Peter McCormack: "Kill the father, eat the baby!"  Yeah, I like that, but the new series, you don't need to watch them in order.  So, I think the first one I watched was the werewolf one.

Danny Knowles: The new series?

Peter McCormack: Yeah, and I was like, "Okay, it's all right". 

Danny Knowles: And that's a massive spoiler, by the way. 

Peter McCormack: Yeah, I've ruined that.  Fuck!  Sorry.  And then I think I watched the one with the girl who worked in the shop and had the genie, or the angel.

Danny Knowles: I can't remember that one.

Peter McCormack: Gave her three wishes or something?  Oh, no, not three wishes.  She had to kill three people.

Danny Knowles: Yeah.  It wasn't really a genie, it was the Devil, wasn't it?

Peter McCormack: Yeah, well I guess it was the Devil.  I'm just trying to remember it, but I didn't even finish that one.  He was funny, but it was a bit shit.  I Haven't watched the one with the guy from Breaking Bad.  Doesn't he go to the Moon or something, or space? 

Danny Knowles: Oh, yeah.  That one was like a movie, it's like 90 minutes long. 

Peter McCormack: Yeah, it's almost like, you know when you really like -- Oasis did an amazing album, did a great second album, even the third one was all right, and then they've been shit.  Some bands, like Rage Against The Machine, did two.

Checkmate: It's very rare to get more than three albums, like real bangers, start to finish, very few artists actually get it out. 

Peter McCormack: Hard-Fi did one and then they were shit.  Like it's almost like I feel like they've got to that point where they've run out of ideas.  That's disappointing.  Has any band done more than three good albums?  Metallica, without doubt. 

Checkmate: Potentially, yeah. 

Peter McCormack: Ride the Lightning, Master of Puppets, …And Injustice for All, The Black Album. 

Checkmate: I think Rage Might.  Rage Against the Machine probably did.  Self-titled, although Settle for Nothing has never quite hit the spot for me.  That's the only one that I'd give it a nine rather than a ten. 

Peter McCormack: You see, Rage Against the Machine, the first album, so I tell you what I do with Rage Against The Machine.  That to me is one of the few albums where every song is good.

Checkmate: Yes.

Peter McCormack: Like, there is not a filler, and it's not even just saying that like a fan.

Checkmate: No, it's the shit, it's the GOAT.

Peter McCormack: Genuinely every song is a banger.  What was the name of the second album; it wasn't The Battle of Los Angeles? 

Checkmate: No, that was Evil Empire. 

Peter McCormack: Yeah, but to me, if I give Rage Against the Machine a ten, Evil Empire's a 7. 

Checkmate: Yeah, I'm a big fan of Evil Empire, I think that's a banger of an album. 

Peter McCormack: As good as the first, do you think? 

Checkmate: No, not as good as the first.  I mean, how do you get as good as the first? 

Peter McCormack: And then, the Battle of Los Angeles for me is like a five. 

Checkmate: I like Battle of Los Angeles, I think all those three albums are pretty good.  I wouldn't say a ten, definitely self-titled is a ten.  But you're right, getting three albums in a row or three albums at all that hit.

Peter McCormack: But Metallica went all the way from Ride the Lightning through to the Black Album.  I mean, some people even love Kill 'Em All, but it was all right.  Trying to think of anyone, who else?  Korn.  Korn did album after album that was brilliant.  The first one, Life is Peachy; their first five albums were good. 

Checkmate: I didn't spend much time with Korn.

Peter McCormack: Drake hasn't done one good album!

Checkmate: You say that about most artists. 

Danny Knowles: I'd say Jay-Z's done more than three.

Peter McCormack: I couldn't even name three Jay-Z songs.

Danny Knowles: Blueprint, Blueprint2, The Black Album. 

Peter McCormack: Nas has done --

Danny Knowles: What was the first album called?  That was Reasonable Doubt? 

Checkmate: Illmatic's a ten. 

Peter McCormack: Illmatic's an 11! 

Checkmate: That's pushing values! 

Peter McCormack: Illmatic's the best album of all time. 

Checkmate: It's up there. 

Peter McCormack: Well, hip-hop album. 

Checkmate: Absolutely. 

Danny Knowles: That's got zero fillers, every single song.

Checkmate: Oh, yeah, start to finish. 

Peter McCormack: He's the only rap artist who's had two albums in the Source that's got five mics, I think, five out of five.  I think he's the only artist that did it.  He got it for, was it God's Son or Stillmatic?

Danny Knowles: Stillmatic wasn't a great album.

Peter McCormack: Might be God's Son.  Tupac probably did as well.  Eminem, how many has Eminem done?

Danny Knowles: I don't think Tupac had more than two good albums.

Peter McCormack: I can't name his albums.

Danny Knowles: Well, you're not allowed to say one of them.

Peter McCormack: Am I?  Is it rude?

Danny Knowles: Yeah.  But what did he have that was like an actual classic album?  All Eyez on Me.

Peter McCormack: All Eyez on Me is an unbelievable album.  He did a double album.

Danny Knowles: That was All Eyez on Me.

Peter McCormack: Was that All Eyez on Me?  God, there's going to be people shouting out, "Why are you not saying…?" 

Checkmate: Yeah, enjoy your comment section!  You got it all wrong!

Peter McCormack: There's definitely Coldplay and radio fans who think -- 

Checkmate: Yeah, "You missed my album"! 

Peter McCormack: All right, we should talk about Bitcoin.  People are going to be listening like, "Fuck you, motherfucker!" 

Checkmate: Yeah, timestamp!

Peter McCormack: I'm going to get emails about that, emails about swearing.  They will timestamp that!  Good to see you, man. 

Checkmate: Likewise, mate, it's been a long time coming. 

Checkmate: Yeah, look, the work Glassnode does is brilliant, the work you do is brilliant.  Is it horoscopes for men?

Checkmate: A lot of people ask me this question.  And it's funny because sometimes we get queries from people who are quants.  They run data and they're like, "Is there any value in it?"  It's like, "If you could see all the money flowing around the SWIFT system, do you reckon you could find some edge in who's transferring money when and where?"  And, of course.  And at the end of the day, it's psychology, and this is the thing I think is the most interesting part about it.  It's all about collective decisions and it's expensive to change the Bitcoin ledger.  You've got to pay a fee, you've got to do a hash, you've got to burn energy.  So, to manipulate the Bitcoin ledger in any way, shape or form, you have to expend proof of work of some form, and that's a decision.  And within those decisions, we can find all sorts of information.  So, I think it's a fascinating field.  Lots of people think it's voodoo, but again, it's data about the network that you're trading.  Makes sense there'd be information inside the network.

Peter McCormack: But isn't it just traders that use it?  I'm not a trader.

Checkmate: There's both.  And the audience of my videos and the Conference in 2022, I met a lot of people and they're like, "Oh, you're the voice of Glassnode".  And there's two types of people.  And I'm kind of discussing, "Why do you make these videos?"  Well there's two people.  There's people who want to learn to use the tools and there's people who just want to understand what the hell just happened.  And that makes it easier to hodl.  And a lot of people who understand the mechanics, and that's kind of the hodler side, if you understand why things happened, you can survive these markets.  And that's the most important thing, right, just understanding, "I don't care that it's down, but I know why it went down and I feel more confident to tough it out".

Peter McCormack: I wonder how early in people's Bitcoin life they discover Glassnode though.

Checkmate: Yeah, I think like Bitcoin, right, you get a couple of touch points.  Initially, you'll see a couple of charts floating around and you're like, "Oh, that's pretty cool", and then people will come and start to learn it.  But it's like anything, there's a proof of work that's required.  Is technical analysis voodoo?  I don't know, because the charts from the 1920s look very much the same as the charts today.  And the reason for that is that our ape brain doesn't change.

Peter McCormack: Psychology.

Checkmate: Yeah, psychology.  I mean, what is price?  Fear and greed plotted against time.  That's pretty much what it is.

Danny Knowles: Get up that classic fear and greed chart.  You know the one I mean, don't you?

Checkmate: Is it the Wall Street cheat sheet?

Peter McCormack: Yeah, the Wall Street cheat sheet.  Yeah, and Bitcoin is really weird.  I don't know, what's a good analogy?  Think if you wanted to learn boxing, you could pick a number of gyms.  One guy might go in and find a really good coach, he comes in, has a nice training session, and starts to build up his confidence.  Some people go in and they just get the shit beaten out of them by Bitcoin straightaway. 

Checkmate: Totally.

Peter McCormack: They go in and their first experience will be before a 25% drawdown, and they just get the crap beaten out of them.  And having data like you guys had with your commentary, I think is just a little bit of reassurance.  Yeah, here it is.  Where do you think we are now?

Checkmate: I think we're somewhere around the Depression phase. 

Peter McCormack: Yeah, I think so. 

Checkmate: To be honest, it's got a lot of the same feelings as 2019.  And the way I've been describing it, it's sideways, boring nothingness that just never ends.  And when you look at who's left in the market, it's just the hodlers.  There's no reinforcements coming, it's basically just us, which means it's a slow, painful grind.  But you also don't have the magnitude of the drawdown, right, where you've got all that liquidation and major sell side, forced sellers.  A lot of that's happened.

Peter McCormack: I love it.  So, "Euphoria: I am a genius!  We're all going to get rich!"  I think that was the first spike up. 

Checkmate: Yeah. 

Peter McCormack: Although, if we hadn't had all the fuckery from LUNA and FTX, I actually think we would have had a higher Euphoria.

Checkmate: So, that second peak, I'm a firm advocate for that April peak when Coinbase did their direct listing, that was the start of the bear market.  That was the all-time high.  And the reason for that is that all of our sentiment shifted.  We never got even close.  A very simple indicator for this is like --

Peter McCormack: Can you leave it up, Danny?

Danny Knowles: Oh, yeah.

Checkmate: -- your active addresses or transaction counts or volume; we hit a significantly lower high in that second peak. 

Peter McCormack: Really? 

Checkmate: So, what that's telling you is we have less momentum, there's less activity.  And the other one that was really interesting is that there was less profit.  So, when we look at coins in the supply, you can measure the delta between when they're required, and either where they are now in the current price, or when they're disposed of.

Peter McCormack: So, did you trade it perfect?

Checkmate: No, I certainly didn't.  And this is actually something that we can kind of touch on in terms of like, is on-chain voodoo?  People forget that it started, like the first metrics came out in 2018.  So, 2018, give it a couple of years and people will start to learn this stuff.  I mean, I joined Glassnode pretty much at the end of Thrill in February 2021.  So, I had three months.

Peter McCormack: So, you moonwalked into the office!

Checkmate: Literally walked in, so now I've got all these metrics and tools.  I was like, "Okay, I've got to actually explore what these things do".  So, my learning exercise of working out, actually finding out what tools, what do they all do?  What do they mean?  Some of them are good, some of them are fantastic, some of them you can probably ignore.  And that whole process, Euphoria, Complacency, Panic, that's been me and my team learning, actually learning what the tools are.  And our newsletter is basically us learning on the job.

Peter McCormack: But you can fully map this to the life cycle. 

Checkmate: Absolutely. 

Peter McCormack: Complacency was that second peak, essentially.

Checkmate: Second peak, and literally a lower high in everything except price.

Peter McCormack: Yeah, and then everything started to sell off a bit and there's a bit of anxiety here.  But in my head, I was thinking 2017.  We had a few of these big selloffs and we had, I think like three big selloffs before we went up.

Checkmate: You know what was super-funny?  A lot of people were saying, "Oh, what if it's going to be like a 2013 double pump?"

Peter McCormack: Yeah. 

Checkmate: It was, exactly.  The only difference is we didn't make really a significant higher high.

Peter McCormack: And then, yes, we had all the selloffs, the big selloffs relating to the fuckery.

Checkmate: And there was a lot of leverage in there.  And this is the thing, there was a lot of commentary of people saying, "Oh, but hang on, all the trading happens on derivatives platforms".  It's like, "Well, that's true".  But one of my biggest insights from all the work I've studied looking at this data, we've got two different metrics.  One is funding rate, which lots of people like to look at in the derivative space.  And funding rate is how much interest people are willing to pay.  It's the privilege of going levered long, how much are you willing to pay for that service, or shorten the underside? 

We've got another metric we call SOPR, which is basically how much profit or loss is getting locked in, in the spot market.  Super-powerful indicator, but certainly one of my favourites.  If you overlie those two things, the exact same chart.  And the reason why --

Peter McCormack: Yes, exactly.  Okay, talk me through this chart.  So, anyone listening, it's a full 2013 to 2023 and so we've got a $2,000 line?

Checkmate: Yeah, so what SOPR is, the higher that market goes, it looks at all of the coins spent on a particular day and basically looks at the delta between the price when it was acquired and the price when it was disposed of.  So, a reading of 1.1 means that on average, the average coin that was spent locked in a 10% profit.  And what you can see is you get extreme values at tops, because that's when the maximum profit's happening.  And here's the great irony, right, the highest value happens when the most people are taking profit.  That's Euphoria.  And a lot of people go, "Oh, I should buy when this goes up".  It's like, "No, when this goes up, you're being sold to".  The smart money is selling when they're taking big profit.  You want to be the smart money.  Put yourself on the other side. 

Likewise to the downside.  People, for whatever reason, and I'm sure most people who are listening, you have to pay your tuition in markets.  No one comes in knowing what to do.  So, what generally happens is you buy the top, you ride the bear market the whole way down, and we have a report on this called Buying High, Selling Low; we can see people who come in for their first cycle, they buy the top, they weather the whole bear market and they bail out at the exact bottom, at scale in mass. 

Peter McCormack: But it's the meme, "Sell the bottom". 

Checkmate: It's the meme.  So, funding rate is basically the amount of leverage that people are taking on.  So, the way that I conceptualise this, I've been trying to contemplate, why do these two charts look exactly the same?  And the reason is because they're both statistically significant populations of the Bitcoin market.  When you want to do a survey of any kind of population statistic, you don't survey everyone.  You get a large enough chunk of people that's going to be representative.  So, the futures market is a very, very large proportion of Bitcoin investors.  The spot market is also a very, very large proportion of Bitcoin investors. 

A lot of people don't realise this, but every day there's hundreds of millions to billions of dollars of deposits and withdrawals, and every single one of those transactions going in and out of exchanges is leaving a signature, because people are spending on-chain.  We can then measure where they bought their coin, where are they selling it, and when one guy is taking profit, SOPR goes up, another guy's going levered long at the top.  So, you're literally seeing two different groups of the market doing pretty much the same thing, it's just expressed in a different type of data.

Peter McCormack: And so, can you use this chart in a different way to almost identify the network becoming more stable, price becoming more stable, and it's almost transitioning to unit of account?

Checkmate: We see a lot of these things, yeah.

Peter McCormack: Yeah, because as you can see, you can see on this chart over years, generally the profits are lower and lower, and so the line's becoming more stable.  That says to me, that's a trajectory towards becoming a unit of account.

Checkmate: Yes, and we also see, I mean in our current environment, we released a report recently called Exhaustion and Apathy.  And what we basically see is that at the moment, before that $29,000 selloff, it was the least volatile Bitcoin has ever been, across pretty much every metric you can imagine.  And one of those metrics we look at is, where are the coins coming from?  Are they coming from $69,000; are they coming from $15,000?  The people that are spending, what was the price they came from?  And what we found is that almost every coin was coming from the exact same price, $29,000.  So, it's just coins jostling around at the same level.  Everyone who's taken profit, who wanted to, has done it.  Everyone who's going to bail out has done it.  And therefore, you need price to move, to motivate somewhere.  It can go up or down, but you need price to move to motivate people to either panic or take profits. 

Peter McCormack: Right, okay.  So, it's like we're just waiting.

Checkmate: You reach exhaustion, basically, and that's what price charts are.  You go through periods of expansion and then you go into contraction, and that consolidation phase is market jostling around trying to find out what is the right price level.  And eventually, you come into these apex of the triangles and the technical analysts go, "Look, it's ready for a squeeze".  We see the same stuff in on-chain, just printed in a different data set, but it's telling us the same information: the market is ready to move, or the market needs to consolidate and find its level again.

Peter McCormack: Danny, can you bring back the Wall Street cheat sheet?  So, I do feel like this is definitely my second full cycle, but kind of my third cycle.  My first one was when we had the run up to $1,200 in 2013, and I wasn't really involved.  I was more just buying Bitcoin to use it on the Silk Road.  And then when it dropped, I just ignored it.  And I kept going back and occasionally checking the price.  And I wasn't holding any Bitcoin.  It was almost like, when do I come back in?  And then I have had a full cycle of 2017 and this is my third one, it definitely feels like Depression.  Although interestingly, with each cycle it's less depressing.

Checkmate: It's experience.

Peter McCormack: Yeah, it's more like, because it says here, "My retirement money is lost.  How can I pay for all this new stuff?  I am an idiot".  I don't feel like that anymore, I'm just like, "Okay, here we are again".

Checkmate: No, absolutely, so my accolade is it's my very first buy ever, like I didn't own stocks, I didn't own anything, and my best mate convinced me to get into this industry.  And I bought on Coinbase, but back then they had a fee for Australian dollars, so if you look at my first ever buy, it's actually above the top tick, because of that extra fee, so like the top and some.  So, that's my accolade.

Peter McCormack: Do you remember the price you bought at?

Checkmate: Oh, no, whatever, I mean it was US$20,000, whatever that is in the Australian dollar.

Peter McCormack: So, in 2017?

Checkmate: Yeah.

Peter McCormack: My first one was £80. 

Checkmate: Yeah, nice.  Did you hang on to it?

Peter McCormack: No. 

Checkmate: So, this is the other thing.  A lot of people, they bang on about how whales own all the supply.  We've shown that people just distribute over the years.  Very, very few people, when they first get into this thing, they see a 60% move.  That's why SOPR caps out at like 10%.  Most people are willing to take a 10% profit.  Most people have no ability to actually sit there and ride the full scale wave, because markets require patience and most people just do not have patience.

Peter McCormack: Well, I'll tell you two interesting things.  One interesting thing, I've been buying since very early 2017.  Sold a little bit here, not taking profit because there's things I want to do in life, bought a bit more, but right now I would say, I'm going to have a guess, but I'm going to say my entire Bitcoin stack is probably about even, if I'm in profit it's a little bit.  I don't exactly, but I can probably find that data out, can't I?

Checkmate: We can plot out.  In fact, Danny, if you go to back to Glassnode, we have a chart that actually maps out by a year, basically the weighted average of people withdrawing through exchanges.  So, if you look at that, you can actually see where the class of 2021, 2022, 2018.

Danny Knowles: What's that chart called?

Checkmate: If you go into, it's called Workbench, and then there'll be under exchanges, and you're looking for Exchange With Average Withdrawal Price (by Year).

Peter McCormack: The reason I bring this up is, friends of mine who ask about Bitcoin, they all think, "Oh, Pete, you must be rich, you must have made loads of money".  Now, if I hadn't have bought any Bitcoin in this cycle --

Checkmate: Yeah, down there, Realised Price, one of those.

Peter McCormack: -- if I hadn't bought any Bitcoin in this cycle, the Bitcoin I have would all be massively in profit, because I essentially bought the majority of it from $600 to say $10,000.  I wasn't buying between $10,000 and $20,000.  But that cycle's done and it's a new cycle where I'm like, "Okay, I'm going to go fucking balls deep in this cycle", and I have, and the current cycle's wiped out the previous cycle because I'm thinking.

Checkmate: Yes.

Peter McCormack: But another thing I brought up with Danny the other day, and I've brought up with a couple of people no one's ever disagreed with me on this point, Bitcoin has never -- I've never, ever bought Bitcoin and thought, "That was cheap".  

Checkmate: It's always expensive.

Peter McCormack: Every single time I've bought Bitcoin, it's expensive.  When I bought it for £80 and somebody explained to me what this decentralised digital currency is that you can use on the Silk Road, £80 like, "That seems pretty expensive", and I bought 3.  Obviously if I knew what I knew now, I would have bought 3,000, but I bought 3!

Checkmate: Well, the thing that people miss is market cap.  The size of this asset, I mean is Bitcoin superior to gold?  In almost every single conceivable way, yes.  So, therefore you're like, "Okay, well gold's $12 trillion; we're $0.5 trillion.  The scale of that alone, that's how insignificant we are.  And yet, at the same time, it's like the 12th biggest asset in the world.  So, it's remarkable because the people who think it's worthless and nothing, it's literally the 12th biggest asset in the world.  And then you also go, "Well, where's it going to go?  What's its potential?"  And you're like, "That's a bloody big number".

Peter McCormack: I mean, just to reiterate the point, when I then started buying again -- I think one of the reasons it might always seem expensive as well is like, you never really, really buy it when you first hear about it, and then you go back.  So, when I went back in in early 2017, started buying, I put about £35,000 into that, and a few shitcoins.  And I was buying about £600, £700.  I was like, "Jesus, I should have bought it all when it was £80.  And then when I was buying it, a few thousand, I was like, "My God!"  And now it's like $25,000 or $28,000, again super-expensive.  Have you ever, Danny, looked at Bitcoin and thought, "Wow, that is cheap.  I'm going to get loads"?

Danny Knowles: I mean, I think that all the time, every time it crashes you think that.  But I understand what you mean, it's not cheap.  But the psychology is like, "Fuck, I want to put all my money into it".  I have done that.

Checkmate: Literally!

Peter McCormack: Don't get me wrong, I'm irresponsibly long, but it just always feels expensive.

Checkmate: Well, to your point here, so this is basically looking at the average withdrawal price by just starting on 1 January, really simple model.  Just look at the weighted average of all the coins coming out of exchanges since 1 January on that year.  So, for this one here, right, that top red line, that's class of 2021.  So, these poor buggers are still underwater on most of their coins.  But by any metric, when you actually look at where the average cost base of the market is, and we can touch on this later on, but part of the work that we did with Dave Puell and Cointime Economics, we think we found the actual cost base of the market, and it's pretty much $30,000.  And that is the level where most people have their cost basis and people react to it.  People still respond, even though it's on average, everyone has their own cost basis that they continue to respond to.  And as you said, yours comes up, so suddenly you're more sensitive to a downdraft because you're going to be in more red.

Peter McCormack: Yeah.  Well, I think Saylor's cost basis is one that a lot of people talk about.

Checkmate: Yeah, it was at $29,000 or something.

Peter McCormack: $20,500, yeah. 

Checkmate: That guy's got stones of steel, that's for sure. 

Peter McCormack: So, interesting, so yellow is what year?

Checkmate: 2020.

Peter McCormack: 2020.  Wow, that's interesting.

Checkmate: Which is Michael Saylor.  2020 is Michael Saylor.  It's dead on our current price; $29,000 or $26,000. 

Peter McCormack: 2017.  Yeah, look at my 2017 coins, they're good.  My 2018 coins are good. 

Checkmate: Actually, if you move the cursor, Danny, you can actually see how deep FTX -- I mean, the purple line is all time.  We got down to only class of 2017 was in the green, everyone else got minced.  Price literally took everybody out.  So, FTX, in my view -- because when we look at a lot of the bottom formation patterns, when Three Arrows blew up back in June, in many ways that's when I think the bottom started.  And FTX was a bit of a hyperextension.  It just kind of dropped below that level as an exogenous force.  Obviously, it spooked the market.  But you can also see that once the market worked its shit out, it reverted.  It was almost like a just complete retrace, right, undo.  But that whole structure has a lot of bottom formation patterns.  It looks very much like pretty much every textbook floor. 

Peter McCormack: Yeah, I mean we had a lot though because LUNA sold off 80,000 Bitcoin, am I correct? 

Checkmate: I think so.  I mean you could pull it up.  If you go to charts and you type in, "LUNA", you should be able to find it. 

Peter McCormack: Was Three Arrows their own selloff, or was it just the market spooked by the news of what they'd done? 

Checkmate: I think it was them being spooked. 

Peter McCormack: Okay, the actual main selloffs, the only real big selloff itself was LUNA. 

Checkmate: LUNA, yeah, that was a full-scale -- yeah, I mean look at this.  What did they go to?  80,400 coins and then just minced overnight, dropped the whole lot. 

Peter McCormack: Was it literally overnight; in one day? 

Checkmate: Yeah, and so actually I've got a good story with this.  When LUNA started imploding, me and my best mate, we were in Mexico at the time, and we were getting on a plane to fly over to Portugal for a Glassnode offsite.  And we're sitting there on the plane on the tarmac because, for long story short, we had to pass through Canada, and that was the easiest route for us to get to Portugal.  And as we're on the tarmac, we're watching, and the UST price is down like 98 cents, 92 cents, starting to fall off a cliff.  And we're like, "Shit, this looks like it's going to implode".  Because the LUNA model, I'd looked at it way back, not LUNA, but there was another asset I'd looked at way back in the day that someone floated past my desk, and it was the same model, where it's basically the supply of the asset backs the stable coin.  It's like, "Okay, that's great in a bull, but in a bear, people are going to hold onto the stable asset and know that they can mint more of the supply, and you're going to get this doom loop, or it's just going to mint infinite supply". 

Lo and behold, LUNA never crossed my radar until I started seeing people tweeting about it.  And we were watching the price, 92 cents, and we made a bet, "Where is it going to be?  Is it going to have recovered, or is it going to be lower by the time we get to Canada?"  By the time we got to Canada, it was down 40 cents.  And then when we got to Portugal, it was like the supply of LUNA had gone to trillions, and the whole thing had hyperinflated.  So, over the course of a flight, it went to zero.

Danny Knowles: I'm actually quite impressed that they sold 80,000 Bitcoin and only dropped $6,000.

Peter McCormack: Yeah.  Well, the interesting thing about that as well is they managed to wipe out their treasury and their stablecoin, the whole lot in one hit.  But if they'd have just accepted that LUNA was dead, they would still have had 80,000 Bitcoin. 

Checkmate: Well that's, what was it, the EOS ICO, right?  They got 140,000 BTC for building what?  Not sure.

Peter McCormack: 2017, I was hanging out in LA, and I was like doing Facebook posts and tweets about shitcoins and stuff.  I wasn't even a podcaster then.  And I got introduced to some bloke and he invited me up to his hedge fund office and he was telling me about EOS.  He's like, "You should put everything you've got into this, trust me".  It was at 50 cents.  And I can't remember how much I put in.  I want to say I put like $100,000 in, and that was a lot of money to me at the time, a lot of money. 

Checkmate: A lot of money to most people. 

Peter McCormack: Yeah, I mean I had no job, no income, I'd made a bit on Bitcoin and Ethereum.  And it went up to 60 cents.  I was like, "Oh, cool".  And it came down to 55 cents, and I panicked, and then it went up to $22, and I sold it at 55 cents!

Checkmate: That's what happens with most people.  And that's the thing.  Markets are about trading against yourself, it's your emotional state.  And that's what all this data, not this data, this just captures stupidity.  But a lot of the data we look at, it's human decisions.  It's all about profit and loss is the biggest motivator.  It's why people come in and stick around in the market.  And we still respond the same way we always have.  Always respond the same way to fear and greed.

Peter McCormack: Yeah.  Well, I mean I haven't traded now since a few years.  I don't look at shitcoins, I don't buy or sell shit coins.  I just build my Bitcoin stack, and I'm just so much calmer, relaxed about it all.

Checkmate: Well, that was my 2019.  I mean, I went through 2018, but I really only learned about Bitcoin at the back end of 2018.  That's when on-chain started to come out.  And 2019 was, I would probably consider my formative years of actually listening to podcasts, starting to understand what the hell this thing's all about, understanding the macro economy, and just putting all the puzzle pieces together.  And then on-chain was like a tool that helped me visualise it and actually map it out and start to explore those angles.  But that kind of formative year of learning about how markets work, how does Bitcoin data actually apply, you know, it was down, price just kept going down.  And you question yourself, "Why the hell am I buying this thing?"  The average price was like $8,000.  $8,000 looks fantastic right now. 

Peter McCormack: Great price! 

Checkmate: I mean, I'd love to see that price again.

Peter McCormack: Yeah.

Checkmate: So, that's where you kind of learn that bear market experience.  Most people do not survive any bear in any asset and as a result, they will come back and no doubt rinse, repeat the same mistake.  But those who stick it through -- and actually this is something I find really interesting and, Danny, there was that chart that we had before about the shrimp, bring that up, but the concept of people learning.  There's a chart, this one here, this is actually my favourite chart of any Bitcoin metric.  What we're looking at here is in the orange line, that's the shrimp balance, everybody who's got less than 1 BTC.  Just aggregate, and again these things don't have to be perfect numbers, we're just literally looking at every coin.  We're using our entities and clustering and things but, "Just show me everyone with less than 1 Bitcoin".

Peter McCormack: How do we know that's a person and not somebody with ten wallets?

Checkmate: So, actually this is a real -- I'll close this out.  So, I get this question a lot.  If you're a dollar cost averager, and let's just say, for example, you withdraw 0.1 Bitcoin every month, that's how you do it.  If you do that for 12 months, you're going to have 1.2 Bitcoin.  So, in theory, you should no longer be a shrimp.  Now, unless you actually combine your UTXOs or you withdraw to the same address, there's no way for you to link, like for the clustering system to actually link those together.  However, at the same time, particularly in the shrimps and crab, these smaller cohorts, we all behave the same.  I'm still dollar cost averaging, so does it matter if I'm in 1 or 10?  No, I'm just going to look at everyone with less than 10, because you all have a very similar behaviour.  As an amorphous blob, the error bars on an individual level may be large, but on an average, it's all pretty much the same.  Your behaviour pattern is the same. 

Peter McCormack: Do you ignore dust wallets? 

Checkmate: You can, yes. 

Peter McCormack: Does this ignore dust wallets because what I would say is --

Checkmate: This one, they do.

Peter McCormack: Because I would say over time, I am leaving a trail of dust wallets everywhere.  I've probably, without doubt, I've probably got over 20 addresses that I no longer use that have dust amounts.

Checkmate: So, the important thing about this metric is it's not looking at accounts, this is looking at balance.  So, your dust is so insignificant in the grand scheme of things that even if it's in there, it's a spec.

Peter McCormack: So, what that line says to me is that a total addressable market of Bitcoin holders is growing.

Checkmate: Yes, so there's a few things.  The line is going up, so overall the shrimp have just been net accumulators always.

Peter McCormack: Is that because their balances are so low there's no point selling off?

Checkmate: No, and that's what I think the chart down the bottom shows, the area chart, that's the 30-day change, the 30-day gradient of the balance.  So, it goes higher when there's more accumulation, more buy side.  So, the first thing you note is that the spike that we had at the 2017 top didn't get revisited for a very long time.  So, that's literally people realising that there's this Bitcoin thing, that's me.  That's me buying my coin on Coinbase and getting minced.

Peter McCormack: A little bit higher though!

Checkmate: A little bit higher, at an extra 5% fee.  So, you can see that basically people came in and bought the rip in a serious way.  They then got destroyed through the bear market, but then look at the next time that we recovered that.  Same price, $20,000, but in a bear market.  And so then, FTX blew up and there's a combination of people just taking self-custody, but also, $15,000, I'll take it all day, every day.  So, what you can see here is the success of Bitcoin education over the last five years, because the retail bought the rip in 2017, same price, but it was the exact wrong thing to do.  In 2022, they bought the dip at the same price, $20,000 or thereabouts, but they bought the low.  They bought the lows of the bear market.  And you can actually see that that level has been sustained for some time.  So, you can see that shrimp are basically absorbing pretty much the amount of mined supply.  Just for a sense of scale, it's significant.  And to me, that shows people are stepping in and buying at the lows rather than the highs.  Education.

Peter McCormack: What causes the big price changes?  Because I never react to news and never react to big price changes myself.  So, say Monday morning, the SEC announced that BlackRock are getting their ETF, ignoring the fact that someone will front run it, we will see a rip on the price.  I neither buy before that because I don't know what's happening.  When it's happened, I neither buy because I don't buy the reaction.  Equally, when something happens and the price crashes, I definitely don't sell after the crash.  I might buy, but generally my buying and selling has got very little to do with what's happening right now.  It's, what is my current capital position; what is the price; do I feel like I want to buy right now?  And actually, most of my accumulation, whether it's me or my football club, is now when I get paid in Bitcoin, I just hold the Bitcoin. 

So, the football club has accumulated a small treasury, whether we've been paid in Bitcoin for buying tickets, whatever, we just hold that Bitcoin, we never sell it.  And same on the podcast, one in four invoices is probably paid in Bitcoin, I just keep that.  But so, I don't react to anything.  But say last week, say we suddenly see a $1,000 candle, what makes that happen?

Checkmate: Yeah, that's a great question.  And I think the first thing is that what you just described is why, when we look at cost basis models, that's what matters, because you're working off your personal cost basis.

Peter McCormack: Yeah, but who's moving the market?

Checkmate: So, who actually moves it, in most instances when you see news headlines, you just get like a candle that comes immediately off it.

Peter McCormack: But you get candles without news headlines as well.

Checkmate: You do and a lot of it is because, I mean and this is the same for all markets, it's all algorithmic.  There's so many algorithmic traders that they're just scanning.  Bloomberg releases a headline, they get a bunch of keywords and then, "Bang", they fire off some kind of trade.  So generally speaking, it's actually because you get these algorithmic traders.  In many ways, what's the saying, "Markets in the short term are a voting machine".  It's basically just like voting for whatever the narrative is at the time.  But over the long term, they're a weighing machine, which is where fundamentals come into play.  That long, slow DCA, just pulling coins off the market, over time, that creates the underlying buy side. 

In the short term, a good example was that selloff from $29,000 to $26,000 that we had the other week.  That was almost entirely derivatives, in terms of just leverage flush out.  And in my view the market goes, and actually I was talking with Willy about this last night.

Peter McCormack: But hold on, wasn't that right at the time there was a bit of news that came out in Bitcoin Magazine? 

Danny Knowles: It was SpaceX selling their coin. 

Checkmate: So, this is what I love about markets.  Every man and his dog, the moment the price sells off, "Why?  Why did it happen?"  And then who has an incentive to answer that question?  Every news outlet.  So, they say to the intern, please go and find a reason.  I don't care what it is, just find a reason and publish it.  And everyone's like, "Oh, look, it was SpaceX".  It's like, no, it was actually the market was ready to move.  And that's that Exhaustion Apathy paper I said before.  The market was ready to move on every single metric.  And what we basically showed is that, particularly in the options market, the market was massively under-pricing downside risk.  So, there was lots of leverage built up, lots of people were positioned long, and what do you need?  Just give me one tick that's going to take out one guy's stop loss, which takes out the next one, takes out the next one, and you get a cascade.

Peter McCormack: Right, okay.  Yeah, because when those big movements happen -- and another interesting thing, actually, when there's a big movement from news, you usually find within two or three days it goes back to the price it was, whether it was up or down, and that's what I always find quite interesting.  It gets back to the price it should have been. 

Checkmate: The Bart Simpson pattern is fascinating, it keeps showing up. 

Peter McCormack: Yeah, but that's always when it's a reaction to news.  It's the movements that happen without news that seem to set the current kind of range. 

Checkmate: Yeah, that's the weighing machine.  The short-term moves are the voting machine, and the just gradual grind that takes time, it's patience, but it just over time starts to be -- and you're right, some of these moves have lie a more organic manoeuvre to them, and those are the ones that actually set the real tone of things.  So, yeah, it definitely works on both sides, but yeah, in some ways, most of the time in my view, I think the market is primarily spot driven and we talked about this with Willy the other day.  The 2021 cycle was very much driven by the GBTC bid.  The amount of coins that were going into that thing was truly extraordinary, and we saw as soon as that went into a discount, that was pretty much the top.  And once we had that selloff in May, sentiment was just gone, dead. 

The other good example is the 2019 rally from $4,000 to $14,000.  That was driven by the PlusToken Ponzi in China and that was just a straight-up spot bid.  It was fuelled by derivatives, people on the short side had no idea this this PlusToken was going on.  They're shorting this thing.  I'll never forget $6,000; as we came back up to that $6,000 floor, everyone was like, "Well, we bounced against it for all of 2018.  It has to be resistance". 

Danny Knowles: That was here, wasn't it? 

Checkmate: So, I'll never forget.  So, by the way, that $14,000 was during Bitcoin 2019.  Go up to that.  What's the date of that?  26 June.  Yeah, that was pretty much during Bitcoin 2019. 

Checkmate: Yeah, it would have been.  So, I'll never forget.  So, that candle down the bottom there as we came off the bottom went from like $3,000 to $4,000, above the first S, that was April Fool's Day, 2019.  I'll never forget it because this is when I've learned about Bitcoin, I've finally read the Bitcoin Standard, I've read the whitepaper, I'm like, "Oh, man, this thing makes a whole lot of sense now, I get it".  And I'm starting to study on-chain data and I've gone back and looked at the realised price and we're trading below it for all of 2015.  And I had a spreadsheet and I'm like, "All right, cool.  If I keep buying this amount", this is when I'm getting paid my shitty salary in the UK as an engineer, and I've got this spreadsheet, "If I keep DCAing, I'm going to have so many coins".  

I got 12 months under the price, and then it just zipped straight through it.  And it was the first time, the lesson I learned from 2019, is FOMO comes at you really fast.  You immediately go, "Holy shit, I didn't stack enough".  And then you feel that, that FOMO to get in.  And I know I bought plenty of coins up there at like $14,000, $12,000, and then the bear market kicks back in and you're just like, "Why am I doing this?"

Peter McCormack: COVID hits, we dip down.

Checkmate: Sending money to the exchange, and you're like, "This just makes no sense".  But then 2021 happens, you're like, "Okay, this actually does make sense.  This is all about debasement", all the macro stuff plays out, and you're like, "Okay".  This thing really did, it did protect a lot of people.  People bang on about it wasn't a debasement hedge.  I mean, it was the best performing asset by some margin, right?  The difference is you didn't sell.  That's why you don't like it.

Peter McCormack: Well, the debasement hedge also is an interesting one because if you first hear about Bitcoin, Bitcoin is a debasement hedge.  You cannot work in the mindset that it's a debasement hedge today.  It's a debasement hedge for the future.  That's the way I've explained to every single person, it's like you might buy it today as a debasement hedge and next week you could be 10% up or 10% down or 20% up or 20% down.  It's never going to be a short-term debasement hedge.  What I'm pretty highly confident is over a 5-year period, any coin you buy will be a debasement hedge; over a 10-year period, I'm even more confident; over a 20-year period I'm highly confident.  So, my son, if I say to him now, "Look, Conor, you're 19.  40 years you're going to want to retire.  I guarantee you, subject to no catastrophic technical error with Bitcoin or catastrophic global government crackdown on Bitcoin, just if it's allowed to do its thing, anything you buy over the next ten years is probably your pension when you're 60.  You're very good".

Checkmate: Well, I think a good dynamic here is, what else are you going to buy?  Like, what else are you going to buy when you actually look at the mechanics?

Peter McCormack: Well, you can buy houses; they're hard.

Checkmate: But most people can't.

Peter McCormack: Yeah, most people can't, but okay, yeah, fair.  There are various things.  Hopefully, some people can get on the housing ladder and that will suit their risk profile.  And I know people will listen and be like, "Oh no, you can't".

Checkmate: Well, so the difference here is, if you say that in Australia, we've got 13:1 ratio of median house price to median income.  It's the largest bubble, it's astounding how big it is, like Canada and New Zealand.  I look at this, I'm sure that housing and land will do better than the Australian dollar, but do I really want to buy something that's that over-levered?  I mean, it's a Ponzi scheme and they're running out of buyers.  You look at that scale and say, "I mean, yes somewhere, but not necessarily here". 

Peter McCormack: It always comes back though.  As long as they're printing money, it will always come back. 

Checkmate: This is true.  It's impressive how hard they can kick the can. 

Peter McCormack: Well, look, can you get the population growth chart?  We're building more people, we're not building more land.  That's what my dad always told me. 

Checkmate: That's true.

Peter McCormack: I bought a house at the top of -- I bought my house, my second house, I think it was something like June 2008.  Whenever, it was a month before the Global Financial Crisis, and I bought it for £285,000 in the UK, and the value dropped over the next year or two.  By the time I sold it, I sold it for over £400,000.  It was like 15 to 20 years later, but that was kind of a debasement hedge, having that house. 

Checkmate: Oh definitely. 

Peter McCormack: Not as good as Bitcoin.

Checkmate: I mean, the houses here went up 25% for two years and then you look at how much money do they print?  Well, they double the money supply, so it's like 50% up in two years.  Yeah, it makes sense. 

Peter McCormack: So, that's population -- 

Danny Knowles: This is by country, it's not great. 

Peter McCormack: No, you want the global. 

Danny Knowles: This is interesting, I just pulled this one up by accident.  This is the percentage growth, which is dropping rapidly.  Yeah, that's because of Tinder.  Tinder has destroyed population growth!  But you know, if you can buy a house in your early 20s by the time you retire in your 60s, I can't answer all countries globally, but western liberal democracies, UK, US, Australia, I'm pretty sure you'll be fine.  Now, a lot of bitcoiners say, "Just buy Bitcoin", but you've still got to rent, and in the UK, most rentals are about the same as the mortgage price.

Checkmate: Yeah, that's even true here.  Rent's insane. 

Peter McCormack: So, when everyone's like, "No, you shouldn't buy a house", I'm always like, "What the fuck are you on about?"  If I'm going to pay £1,500 pounds a month rent, I might as well pay £1,500 pounds a month mortgage.  All right, I'm not as liquid, but most people don't move that much.

Checkmate: I think the challenge is the adjustable-rate mortgages, that's what gets people.  And we're in a regime that people haven't prepared for.  I mean, there's a lot of people who are going to get hit with these --

Peter McCormack: They're happening now.

Checkmate: -- I mean, 7%, 8%, and not only did they not factor it in, the banks didn't factor it in.  We had a thing called the Royal Commission, which is basically like a big public inquest into the state of our banks.  And what they basically found, I forget the actual wording, but basically that they were malfeasant in the degree of like NINJA loans and stuff they were giving out here in Australia, they were malfeasant.  And they brought in these rules to say, you have to actually check people's income.  If I earned $400,000, the banks weren't even verifying it.  So, they brought in that you have to check it.  COVID happens, the first thing they did is they repealed all of it.  All of it got stripped straight away.  They're like, "Oh, we need to simulate.  Sorry, take it all away".  I mean, just kick that housing Ponzi and get it going again.

Peter McCormack: Well, I mean I know in the UK that 7%, 8% mortgages could literally destroy our economy. 

Checkmate: Oh, absolutely. 

Peter McCormack: Because everyone going from a fixed rate to a variable rate, their mortgages are going to double, if not more.

Checkmate: It must be terrifying.  I mean, in fact it's headline news here every night.  It is the one thing that people watch the bloody rate hikes as if it's a sports thing, right?  There's whole ceremonies around it now where everybody tunes in, you got to find out what the rate hike was doing. 

Peter McCormack: Mate, I had a bit of a stroke of genius luck with the last house I bought.  So, I bought this house and the guy I bought it from hadn't completed some of the official documentation at the time.  It was a really weird situation where I'd sold my house and people were waiting to move in, and so I had to break the chain, because I was like, I will lose these buyers.  And I said to him, can I just store some of my stuff in the garage until you're ready?  And he was like, "Yeah, I'll be ready in a month".  And I was like, "Cool".  Anyway, he's like, "Where are you going to move to?"  And I was like, "Oh, I'm just going to rent".  He said, "Well, why don't you just move in?  You're buying it, the mortgage is approved, I just need to get this stuff done".  So I moved in.  Eight months later, I still haven't bought the house.

But what I'm starting to worry about is there's an expiration date on the mortgage I've been offered, and that's closing down hard.  And eventually, we completed everything a month before the expiration date on the mortgage offer.  So, I moved, I actually bought the house, what was it, February this year, Danny? 

Danny Knowles: That makes sense.  And in that time period, hadn't rates gone up like 3% or something, 4%?

Peter McCormack: Yeah, but I had a 2% mortgage that was held out for me.  Yeah, they're up to like 3%, 4%.  No, the base rate was up. 

Checkmate: Base rate, and then you had 3%, 4% for the actual mortgage, yeah.

Peter McCormack: And so anyway, the great thing for me is that essentially my 2% starting rate got delayed by almost a year.  So, by now I'd have 6 months left.  I've got 18 months left.  And I don't know what's going to happen to interest rates between now and then, but what's fully on my mind is that in a year and a half, my mortgage could double.  It could fucking double!

Checkmate: They're big numbers.

Peter McCormack: I don't think it will.  I look at the UK government, my very loose crappy prediction, which I would love Lyn Alden here to correct me on, but would be that they're going to have to print to stop this.  They're going to have to reduce the interest rate.  The government kind of cannot afford the interest rates themselves. 

Checkmate: That's the thing, I was talking about this the other day.  If you run it, extremes inform the mean.  Let's run it to extremes.  Let's say we go into a period of massive deflation, right, some kind of correlation.  One moment, a March 2020 event.  What are they going to do, let it collapse?  No.  They have to step in.  So, you get printing as you go down.  If you go down the path where inflation comes back, then interest rates are going to go up because the market's going to go, "We need more yield to cover the inflation cost".  And they can't afford that either.  So, what are they going to do?  They can print the difference anyway.  The only difference is, which way does the printing go?  It's either being paid out in interest payments or yield curve control, or it's getting paid out in QE, to start buying bonds again. 

Peter McCormack: Yeah, I mean, it even came out in the UK, the triple-lock pensions now, I think they've got to put another £50 billion in by 2030, or 2045.  There's all these different pressures on the government, but they have to print.

Checkmate: And the numbers are just getting so large.

Peter McCormack: But look at this, sorry, "Triple lock could add £45 billion a year to state pensions bill by 2050".  Is there a bigger indicator of inflation than this?

Checkmate: No, there was a paper that Arthur Hayes wrote about recently.  There was a Fed paper coming out of the St Louis Fed, and it basically talks about the fact that the inflation tax is the most credible tax for us to use here.  And what I found really interesting about that piece, it's definitely worth reading, but it's talking about there's two types of money that they can essentially impose the inflation tax on this cash, which is a small component, but if you do it, you need a long duration with very, very high rates.  I can't remember the numbers, 30%, 40% or something over a long period of time. 

The alternative is you have to up the reserves that banks need to hold with the Fed and you cut the interest rate on it, and how many people outside are going to say, "Oh, that's not fair to the banks"?  No chance.  So, basically people are going to say, "I don't care".  But what you do there is you increase the monetary base that you impose the inflation tax on, which means you don't have to run it at 40% for X amount of years, you can run it for 6% for five years or ten years.  And you do something that's much more palatable to the public.  And then, with all the CPI fudging and when the Fed's releasing papers saying this is probably what we're going to have to do, Arthur's point is you should probably listen to them.  Don't fight the Fed.  They're not releasing this because -- they're giving you forewarning that this is what's coming. 

Peter McCormack: Well, I don't know when it's coming, but I know that there is a cost squeeze on people in the UK.  But right now, it feels like it's towards the lower end of the economy.  I think the middle class in the UK is kind of surviving, and I think it's because what they're doing, they're not saving.  They're just not saving, they're living for now, they're just like, "Fuck it".  A bit like what I saw in Argentina, everyone there was saying to me, they're like, "Look, we just get paid and we spend it, just live for now".

Checkmate: Yeah, there's lots of people, millennials who are in that very nihilistic state with like, "I'll never afford a house so I may as well spend all my paycheque.  And, it's very fair, that's the problem.  It's like, "Yes, that's right, but what if you could actually save and potentially buy a house, you know, start learning about -- this is another challenge.  The fiat system requires people to speculate and gamble on markets, and even my parents, they're retired now and they're trying to work out, "How do I not lose my life savings?"  And then you look at the options of assets, there's just not that many good options for you.

Peter McCormack: Dude, when I was in Argentina, we went out for dinner one night, and the guy who facilitated all of my meetings and interviews, we went out with his three, four best friends, got to this lovely restaurant.  And you've got to bear in mind, it's my first night in Argentina.  Having been to Venezuela and seen a country decimated by inflation, I expected to come into a crisis.  I expected to visually see a crisis.  And you didn't.  If you didn't know anything about Argentina, you just sit down in there, in Buenos Aires, you'll be like, "It's like everywhere else, shops are busy".  We go out to this restaurant, this restaurant is packed.  There's not an empty seat in the restaurant.  I'm like, "It doesn't make sense".

Anyway, we sit down and I'm talking to them about it and I said like, "How is this happening?"  And yes, they said they just spend.  But I was like, "But how are you doing this, how are you managing this?" and they pretty much all agreed 30% of their time, essentially their side gig, second job is managing their money.  It's, "I've got paid, what do I do now?  Where am I going to put these pesos?  Okay, so I'm going to convert those to Tether on Tron, I'm going to buy some Bitcoin, right, here's my credit card".  What a lot of people do, they buy all their groceries at the start of the month on their credit card and they've essentially got a 7% discount by the end of the month.  But all the time they're thinking about it.

Checkmate: It's literally 30% lost productivity.  You're spending on a completely worthless --

Peter McCormack: That's the point, 30% lost productivity.

Checkmate: That doesn't even include the tax, which is then another, like you've got taxes on top of that and you kind of sum all these things up.  I can't remember who said it.  Maybe it was Dominic Frisby where it's like, "When you actually sum up, what is the most expensive thing that you've ever bought?  It's your government, because you look at all the layers, and you see those videos that come out where people are finally like, "So, hang on, you're telling me they tax my income, then they tax everything I buy".  And then, my favourite is that you get an interest rate to protect you from inflation and they tax that as income as well. 

Peter McCormack: Can you try and find that Alistair Milne tweet?  You might have to go back a week or two.  Alistair Milne, do you know Alistair? 

Checkmate: I know of him. 

Peter McCormack: Yeah, he summed it up brilliantly.  Somebody put it to me brilliantly once to explain it to me.  They said about taxation -- because again I'm not anti-tax, I'm like Dominic Frisby.  He isn't even anti-tax.

Checkmate: It's constant, it's never going away.

Peter McCormack: He said to me, it should be about 15%, that's about a fair tax rate.  And I can't remember who said to me, they said, "What your tax rate?"  I said, "Well, I'm on top rate, it's 45%" but they said like, "Let's say, just for the sake of making this conversation easy, let's say you pay 50% tax".  I was like, "Okay".  They said, "Okay, from 1 January to 30 June you work for the government".  I was like, "What?"  They said, "Yeah, everything you do, you work for the government. All you get is everything you earn from 1 July to 31 December".  They said, "But not exactly, because you pay petrol, you pay fuel duty, you pay alcohol duty, you pay VAT, you pay all your different car taxes and road taxes".  They said, "With your business, you're paying Corporation Tax", which you have to pay before you pay yourself.  They said, "You kind of work for the government up until about the middle of October".

Checkmate: I was going to say, you might get October onwards!

Peter McCormack: Yeah, I was like, "What?"  They said, "Yeah, about 15, 16 October to the end of December, that's when you earn for yourself" and so I was like, "Fuck, yes".  So, that's the way I think of taxation, "How long am I spending it?"

Checkmate: At the end of the day, money is your time.  And to be honest, I think that is the end.  Like for me, what is the money question?  It's time.  It's your spent time that you need to defer for some other point.  I think it's the best way to think about it.

Peter McCormack: Well, that's what American HODL says.

Danny Knowles: Proxy for time.

Peter McCormack: Proxy for time, yeah.  And so, how much are you giving away? 

Danny Knowles: Do you want me to keep looking for it?

Peter McCormack: Yeah, keep going, it'll be a list, it's all about taxation.  It's there, yeah.  Yeah, this is it, okay.  Love this.  "Country dependent, this is what 'freedom' looks like in the West.  Want a university education?  First you must get into debt and repay it when you get a job.  Then you pay taxes on whatever you earn.  You pay taxes on your home you live in and the car you drive.  You pay taxes on nearly everything you buy, especially energy, fuel, alcohol.  Even if you buy hot food, taxes.  Made a company that generated a profit?  Taxes on any profits.  If you sell that company you made or profit from a risky investment, taxes.  Still got something left? 

"The government deliberately inflate living costs so anything you manage to save is devalued, forcing you to take risks with your money and keep working for longer.  If you're fortunate enough to die with savings or a home paid off, your estate pays taxes after you're gone.  In summary: positive economic contribution, taxed; home, taxed; transport/travel, taxed; positive investment outcome, taxed; personal consumption, taxed; death, taxed.  In return you may get certain services of varying qualities (roads and infrastructure, emergency services, healthcare, garbage collection, police, etc).  The system is designed to keep us in servitude for as long as possible, making it very difficult to achieve 'escape velocity' and move to a lower tax country or become wealthy enough to not need to work.  There is no option to opt-out aside from leaving, which is something only the wealthy can afford". 

It is a brilliant, brilliant tweet and I've spent my last six years doing this -- can you leave that up, Danny -- doing this podcast defending democracy, because I know what happens in countries without democracy, which can be authoritarian, tyranny, it can be persecution.  But it's very, very hard now to defend it.  I don't know the alternative.  I know some people will say, you know, it is smaller government, it's more responsible government.  Yes, I get all that. 

But some of this is really interesting; he's even put in there, "If you buy hot food, taxes".  This is an interesting point.  So, football club, we obviously sell beer, food, shirts, tickets.  Food isn't taxed in the UK, like if you go to the supermarket and you buy a loaf of bread, you're not taxed. 

Checkmate: I think fresh food isn't taxed here too. 

Peter McCormack: So, we go to a place called Booker to buy the food for the football club, you know, buy the burger buns and the buns, we're not taxed.  But when we build the burger to sell, we have to pay VAT on it. 

Checkmate: It's now a product.

Peter McCormack: It's now a product, we have to pay VAT on it.  And so, you have to build that in.  But it's so true. 

Checkmate: Yeah, totally. 

Peter McCormack: Like, we work fucking hard, me and Danny, and from that, we've managed to have like an okay life.  But still looking at going, when can I retire?  How can I retire?

Checkmate: I saw a good tweet the other day, I forget who did it, but it was basically saying that no one's actually looking to fix the problems, all they're looking to do is get enough wealthy enough that they don't have to worry about them any more.  And that is kind of where we're at.  People just want to make enough to escape, because you look at the problem, like the scale of this thing, I mean where do you even begin to fix this stuff?  It's a long road.

Peter McCormack: No, it's even worse than that, I'll tell you what it's worse than that.  I've travelled with this job and I've been to places that have been decimated by inflation.  Yeah I went to Venezuela, I've been to Argentina now.  I've worked my nuts off for 25 years.  Since I left uni, all I've done is work and work hard, and I've built companies, I've employed people; I feel like I've contributed.  I feel like I've contributed with the tax I've paid, the jobs I've created, the opportunities I've given people.  I don't say this as a flex; I've earnt my dues.  I own an okay house, life is okay.  I'm not wealthy that I can just stop, but my worry now is, I remember one specific conversation.

Before I went into Venezuela, I went to Colombia, and it was when I was making my first ever film, my second ever film, and I'm sat there and interviewing a guy who is from Venezuela, and he was either a doctor or a professor, I can't remember, he said, "I was fairly wealthy for Venezuelans, I had good savings, had a nice house", he said, "I essentially got wiped out overnight, just went.  Everything I had is gone because the money died, so I was done, my bolivar was done".  And he's come here and he said, "I had to come here and start again".  By the way, he's in his 50s, and so this is my biggest worry, having seen that. 

When we look at what's happening with interest rates, we think, "Well, the government might have to print to flatten the curve a bit on those interest rates, but if they do that, we then know inflation will be up again, so interest rates will come back".  So, we're potentially in this yo-yo situation until there is a wipeout, which by the way Luke Gromen said to us, you could see a two-year to three-year period of 150% inflation, similar to what Israel did.  And I look at that and go, "Fuck me, I could get to 50, 55, I could get wiped out here".  So, what I think about now is not just how do I protect my income, not how do I find a yield for my investments; how do I also protect myself from just a wipeout?"

Checkmate: Yeah, capital preservation.

Peter McCormack: Yeah.

Checkmate: And think about how many people who have -- I mean, my background is engineering.  I have no financial experience, I'm self-taught, I think a lot of bitcoiners are.  The vast majority of people, like if I ran my engineering career all the way to the end, I probably would have never -- I mean, if I didn't find Bitcoin, I wouldn't have discovered finance.  If I didn't discover finance, I would have no idea about any of this stuff, and I'd just be another pleb who's working at trying to just survive, and all you have left is some investments, if you're lucky, at the end of it.  And you don't have the skillset, and you shouldn't need the skillset, to actually just not lose.  But that's the game; it's about not losing.

Peter McCormack: But the skillset, this is almost the crux of everything I think about Bitcoin right now.  We've got an article up on the Real Bedford website, it says, "Why you should not buy Bitcoin".

Checkmate: Yeah, I think it's a good framing, I like it.

Peter McCormack: And the whole article is about, "You should learn about Bitcoin, then you might buy it".  Our governments have got away with everything they've got away with for years, decades, because we're dumb, we're too dumb to know what they're up to. 

Checkmate: And they know it.  That's what's in that St Louis Fed paper.  They literally say people can't pass it, they can't understand what's going on, which makes it the perfect tax because people don't know how to fight back against it.  All they see is prices going up, but they don't even link it to the fact that there's deficit spending and too many bonds entering the market.  All these things, that's where the inflation comes from.

Peter McCormack: Dude, at school, A-levels, I did economics for two years.  I learned about Keynesian economics as fact, not as, "This is an idea and a model"; as fact, "This is how the economy works.  Keynesian economics is an important model of economics, how it works".  I was just fed that bullshit, okay?  And I had no idea about any of this stuff, no idea at all.  And I'm still, compared to most bitcoiners, I'm pretty dumb, okay?  But I know enough to know now how we're being screwed and be prepared.  But I've done this for six years, you've done it for how long?  Danny's done it for how long?  We're right down the rabbit hole. 

So, I care more about talking to people outside of Bitcoin than bitcoiners.  The show is talking to bitcoiners, smart people like you.  But most of my time that I care about is, I care about when I go back to Bedford and I sit down in the pub with my best mates, or I go down to the football club and I just say to people, "How's life for you at the moment?  How's finances?  How are your savings?  How are your investments?" and find out what people know.  People don't know shit, they've got no fucking idea.  They don't realise, most people, not everyone, some do, most people don't realise why inflation is happening.  They're like, "Well, it's the war in Ukraine and the gas prices have gone up".  No, that's not inflation.  They don't understand why.  There's a suspicion that it's the government, but then they're like, "Well, that's a fucking Conservative Government.  If I vote for Kier Starmer, Labour will fix this".

Checkmate: Yeah, "If I vote my guy in, it'll go away".  It's just not going to happen.

Peter McCormack: What they don't realise is these economic models are party independent, pretty much.  Maybe in Argentina, it's going to be different if Milei wins because he's a libertarian, but generally, party independent.  But people just don't fucking know.  And that's why I feel like there's an imperative now for everything that you do, I do, Danny does, everybody in Bitcoin, we need to get away from bitcoiners talking to bitcoiners about Bitcoin, patting each other on the back and saying, "Yeah, 21 million, scarcity", fucking we all know this shit.

Checkmate: Yeah, we've solved that problem.

Peter McCormack: Yeah, everyone does.  Stop patting each other on the back, stop arguing about drivechains, leave that to, I don't know, John Carvalho or Adam Back, let them argue over that shit.  Every one of us, like a plague, we should be out there talking to non-bitcoiners.  It's not even about educating them about Bitcoin, it's educating them about what is happening right now in the economies.  By the way, I don't think they can fix this, I think we're fucked anyway.

Danny Knowles: I don't think so either.

Checkmate: Well, my background, as I said before, it's engineering and I have no financial training so I don't have all the baggage.  People show the supply and demand curve, I was saying to Danny before, I don't know what that thing does, I don't know how to read it.  I know how to read charts, but that makes no sense to me because I've never studied it.  But what I do see is the economy is a machine.  And I remember I was saying before, in one of my first lectures way back in university, they said, "Right", he's talking to a room of 300 engineers, "about a third of you are going to end up in finance".  And internally, I scoffed.  I was like, "The hell would I go into finance".  But now it makes sense.  It's because I learned how to do problem-solving.  And when I look at the way that Lyn solves problems, I can follow her logic very, very simply because it's that engineering mindset.  And it's looking at things from a cause and effect. 

A big part of what we do is you look at, well, what's driving the 90%?  And generally speaking, the 90% you can solve on the back of an envelope, plus or minus 10%, 20%.  And if you just solve for that area, all the detail comes in solving the smaller component.  But for the most part, they're really simple assumptions, you know, how the economy works.  And you look at it as an engineer, you see it as a machine, and these cause and effects, which for some reason the fiat economists just can't see, because they've been trained not to see it, but an engineer looks at it and goes, "I mean, what do you mean?  Like, these are really obvious.  If you print money here, it's going to show up over here".  So, I find that part so fascinating. 

Bitcoin draws people from all different backgrounds, but we all see the same convergent result, we all come to the same realisation.  And one of the big -- the Bitcoin Alive conference they had here last year, there was a Spaces that we had after it, and one of the big talking points that came out of that was the proof of work that you see behind someone's eyes when they've come to the realisation of Bitcoin, you realise they've gone down all the rabbit holes you've gone down.  They've tested all the ideas, they've run it up against their prior biases, and they've all converged to the same thing that just makes so much bloody sense.  We all get to the same result and you go, "This Bitcoin thing actually solves these problems", over the long term, it's going to take time, it's going to be a painful road, but you don't hold an asset that trades like this without a very high level of conviction.  And someone who's developed that conviction, imagine when we get down the path where politicians have got this kind of proof of work behind their eyes, we'll start making long-term decisions, planting trees that you'll never sit under.  I think that's really like, what does Bitcoin fix?  To me, it's that long-term arc. 

Peter McCormack: Yeah, the time preference.

Checkmate: Time preference.  I think it's the most important component.  Money is time.  It is your spent stored time, and to me, that's the kind of overarching theme.  A lot of people, when you recognise that, you're going to lose up to October.  You've got to pay someone else for that.  That's your immediate time, but then you've saved your spent time and someone's stealing it from you.  It's bollocks.

Peter McCormack: Your social circles, your friends outside of Bitcoin, do you talk to them much about this? 

Checkmate: I have stopped in more recent times. 

Peter McCormack: You've stopped?  They think you're a psycho?

Checkmate: Yeah, they're just sick of hearing it.  There's a couple of them who've kind of worked it out and got it and kind of clicked, but a lot of them just see the price, they see the asset, and that rabbit hole is much, much harder to get people to walk down.

Peter McCormack: Well, I think what it is, it's a bit like, I am overweight, I'm definitely overweight, I need to be 30 pounds lighter, right?  I come in with a coffee, I eat a Tim Tam, because I can have one Tim Tam, it's not going to make a difference now.  But it's the accumulation of Tim Tams over 5 years I've put on 30 pounds, I know that, right?  I know if I don't eat that Tim Tam today, tomorrow, by the end of the year, I might have lost 10, 15 of those pounds.  But it's fucking hard, and I think that's the difficulty with Bitcoin.  It's not going to solve your problem now, at all, unless you get fucking lucky.  It's not going to solve your problem now.  You're saying to people, "Look, learn about Bitcoin, think about how it works, and then 5, 10, 15 years down the line, you're going to be in it, you're going to be in a good place". 

Checkmate: Bitcoin changes you, not the other way around. 

Peter McCormack: Yeah. 

Checkmate: Because it changes, it does, it completely reshapes the way you think about it.  And I mean, all around the world, every bitcoiner I've met has that same story.  It changed the way they think about their own life, the world, it forced them to go down rabbit holes, it tested their biases.  And I mean, that's a learning experience.  Going through that process, you learn a lot about yourself.  And I think that is an underappreciated element, but it's a very long, slow grind, where the more people get to that level of almost self-actualisation, thinking through where they are in their life, how the whole monetary system around you actually impacts other people and societies, and then making decisions that aren't necessarily for you, they're for your kids or for your grandkids or that long-term view.  Plant more trees that you're not going to sit under.  I think if we get there, it's big.

Peter McCormack: Well, so when you go first into Bitcoin, it makes you think about the scarcity of money.

Checkmate: Yes.

Peter McCormack: But I think what it's done for me, I think even more importantly than the scarcity of money, it's made me consider the scarcity of time. 

Checkmate: Yes. 

Peter McCormack: And that's, you know --

Checkmate: Your scarcest resource. 

Peter McCormack: Dude, I'm 44 years old, you know, I get a paper about today, or go on the internet, there's going to be people who've died in their late 40s, early 50s.  You know, I could die tomorrow, I could die in 30 years, but I am in that end bound, that last stretch.  I want to retire in 10 years, you know?  I want my kids to be able to have a home, I want my grandkids to be able to have homes.  That time component is super-important, and I think about that a lot now.  And that's why I'm like, all I fucking think about all day, every day right now is, how do we communicate these important topics that you learn as a bitcoiner, not Bitcoin itself, but all these other things to a wide audience?  Like, how do we get people to just think about these things?  How do we communicate the fuckery of government, the millstone between taxation and inflation?  How do we get people just to think long term?  

It's really, really hard because, again, you're saying to somebody, "Listen, I've got this book for you, it's called The Bullish Case for Bitcoin; I've got this podcast for you, it's called What Bitcoin Did; I've got this other podcast, Stephan Livera, Marty Bent; I've got these this data here at Glassnode.  I need you to basically the next year focus on this shit.  I need you every waking moment you have, when you're going for a walk, you're at the gym, listen to this podcast or this audio book.  I need you to really test all your ideas, to think about your money.  And at the end of it, the end of that year, I think you're going to be pretty well set up for the rest of your life".

Checkmate: It does set you up.  And actually, surviving a bear market is a life skill.  If you can survive a bear market, the skills that you learn through that process, they set you up for being more resilient.  Being patient, understanding, building conviction, surviving something where it's, I mean, it feels pretty dire at times.  In the Depression phase, it's pretty dire, but it's character building.  And if you come out the other side of it, I mean it's a life skill you can't pay for.

Peter McCormack: Yeah, well like you say, that Depression gets easier.  As somebody who has had real life depression, anxiety, and panic attacks, when you first suffer from that kind of mental illness, it's really fucking rough. 

Checkmate: Absolutely.

Peter McCormack: But you learn the tools to deal with that.  If you get a rebound, like I've had a repeat of anxiety, I'm like, "Okay, I know what it is, I know how to deal with this now".  You just learn the life skills for that.  But it's getting so -- I mean, Danny, I feel like you, the way we talk, I feel like you have more success with your friends.  I reckon more of your friends understand thinking about Bitcoin, thinking about that than mine? 

Danny Knowles: Maybe.  Out of my group of, say, ten close friends, there's probably two or three. 

Checkmate: Probably about the same ratio on my side. 

Peter McCormack: I've got one, and even he's not that deep. 

Danny Knowles: I wonder if, like you're a generation older than me, I don't know if that would make a difference.  Also, like I think we've grown up in it in -- we entered the workforce basically at the Financial Crisis, and then we had COVID, and we're now in this situation where everything's fucked again. 

Checkmate: Well, it's the millennials living through their fourth once-in-a-generation, once-in-a-lifetime crisis. 

Danny Knowles: We've never had it easy.  And I think people truly feel that and then I think they're going to be way more susceptible to listening to you and hearing a solution.  When did you first start work; early 1990s, would it have been? 

Peter McCormack: Okay, so yeah, it's weird because I feel like I've worked since I was 14 years old.  I've had paper rounds and jobs, but I entered the workforce at 20, 21 so what's that?  Yeah, 1991. 

Danny Knowles: Yeah, so you had ten years of gravy train, right?

Peter McCormack: Yes and no. It felt like there was opportunity, it felt like the world was prosperous and when I wanted to get on the housing ladder, my first house was £100,000.  That same house now, same location, is definitely over £200,000, maybe £250,000 and I had to borrow £5,000 off my dad.  But if I wanted to, I could have saved that £5,000 and It would have taken me not too long.  I was just like, a house came up and I was like, "Dad, can you lend me £5,000", he's like, "Yeah".  And I paid him off probably within a few months. 

But I look now with Conor, same position, knowing what his potential to earn is if he improves his skills, so say Conor was on £30,000 a year, he cannot get -- I think for Conor to get on the housing ladder now, with me lending him a deposit, he needs to be on over £50,000, which for a 21-year-old…?

Checkmate: I was saying to Danny before, when I moved over, because I spent two years in London in 2018 to 2020, and I took a 30% pay cut.  I was earning less as a senior engineer in London than I was as a graduate in Sydney.  That's just the base wage. 

Peter McCormack: And London isn't cheap, dude.

Checkmate: No, London's not cheap.  I mean, and I was at the top bracket of what they could pay me, and even so, it was less than I got as a graduate in Australia. 

Peter McCormack: Where were you living in London? 

Checkmate: In between Islington and Angel Station. 

Peter McCormack: I mean, that's nice. 

Checkmate: That's a good spot. 

Peter McCormack: Yeah, it's a good spot.  Okay, were you in a shared house? 

Checkmate: No, it was me and my partner. 

Peter McCormack: You and your partner, one bed? 

Checkmate: Yes.  Yes, most definitely one bed. 

Peter McCormack: Okay, when was this? 

Checkmate: 2018 through to 2020.  We were the last plane out of London when the pandemic hit.  We made a decision on a Thursday night.  I was on a phone call, my partner's pacing around and eventually it's like, "We have to leave, they're closing Sydney airport".  And on the Thursday night, we called up the removalists and they said, "You're lucky, we've had an opening on the Friday.  So, we'll be there 9.00am tomorrow morning.  You got to take it.  We said, "Okay, done".  So, we spent all night packing up the house, they showed up on the Friday, packed everything into boxes.  The Saturday morning, we woke up and it was the first day of UK lockdown.  So, it's like someone turned The Truman Show off.  It was just like, everything is shut, there's not a single person on the streets.  And we're standing there with our bags, just like, "Okay, I mean this is all we've got". 

That was the other thing, trying to book a cab.  The most stressful cab ride I've ever had, probably will never match it.  I tried to find a black cab, because I'm like, "I just want to get to the airport, I don't want to fuck around, I want to prepay for a cab that's going to get me there".  And I don't know if you've ever tried to find a black cab. 

Peter McCormack: Of course.

Checkmate: On the websites, they're horrific.

Peter McCormack: Oh, on the website.

Checkmate: All their websites, like the first three look like straight up scams.  I'm like, "I cannot put my credit card to this".  So, anyway, it was like the fourth link, or whatever it was, I'm like, "Okay, this one looks semi-legit".  And we're standing there on the side of the road waiting for this guy, 15 minutes late, half an hour late.  So, I call the booking service, I'm like, "Where is your guy?"  And anyway, they said, "Oh, don't worry, we'll call him".  About five minutes later, I get a call, "Don't worry, bruv, I'm just around the corner".  I'm like, I don't like the sound of this at all!  And I'm waiting there for a black cab, nothing, nothing.  Oh, one turns around, no, not ours. 

Then the most beat-to-shit, olive-coloured Ford turns around and we're like, "Oh, it's not him".  And he pulls up and the guy gets out and he's wearing a track suit, the exact same olive colour as his car, track suit, top and bottom.  And we're like, "Please, please no".  So, anyway, he grabs, "Yeah, I'm the guy", sticks the bags in the back of the car and we're like stressed as.  Anyway, he chose not to go the freeway and pay the tolls.  So, he's going all the fucking back roads, and he's just cruising.  And so, it's those streets where you've got to pull over to let someone go past.  And we are stressed out of our mind.  We're looking at the clock.  We're like, "We are not going to get to this flight".  And the only saving grace, because by the time we realised that he skipped the freeway, we had gone far enough down this maze that it was now the fastest route to just press on. 

So, anyway, the only saving grace, you know on Google Maps it shows you like the bar chart of how busy something is?  There's like a bell curve?  The pink bar for right now was zero, because there's no one at the airport.  So, we got there and we're running through Gatwick with our bags. 

Peter McCormack: Oh, you had to go to Gatwick, not even Heathrow?

Checkmate: No, to Gatwick.  So, we are the only people in the whole airport, you can hear our footsteps echoing through the halls, carrying our bags.  We get to the front desk and we're like, "We know we're late, but can you please take our bags and get us on the flight?"  Like, "Sorry, we can't take your bags, it's too late".  And then we're like, "Please, we need to get to Sydney".  They're about to close the airport, this is the last flight, "Can you please get us on?"  And literally, the baggage handler was standing next to me, he goes, "Don't worry, I'll take them down".  So, he manually took, from the front desk, took our bags down.  We run through the airport.

Anyway as we're coming into Dubai, which is our first stopover, we're sitting at the front, flight attendants are sitting opposite us, and they're saying, "Have all of your next flights been cancelled?"  They check their schedule, "Yeah, I've got nothing after this, it's all gone".  We're just like, "Oh my God, we're going to get stuck here.

Peter McCormack: Dubai would have been all right!

Checkmate: What, for three months? 

Peter McCormack: Yeah! 

Checkmate: But anyway, as we're like taxiing in to swap over the plane, all the boards are just red, cancelled, every single flight.  And we're just thinking, "We're not going to get out of this.  We're going to get stuck here".  And the plane behind us did get stuck.  They didn't get out, they were stuck in Dubai for whatever the pandemic length was before the airport closed, but Sydney airport closed for six months.  So, until we took off on that second plane, we were stressed as. 

Peter McCormack: I probably flew that same day as you. 

Checkmate: Yeah, right. 

Peter McCormack: Because, do you remember? 

Danny Knowles: You'd gone to Greece, hadn't you, or Turkey?

Peter McCormack: Yeah.  So, there was these rumours of a lockdown coming that it was going to be the next day that Boris is going to announce it.  And my camera guy was in Nepal and I got a call about the migrant crisis in Turkey, that all the migrants were basically being shipped to the border with Greece.  Erdoğan had had enough because Turkey is essentially the gateway for immigrants coming in from a lot of the world, but large parts of the Middle East, who want to get to Europe, and he'd had enough.  So, he was renting buses, filling them with migrants and going to the border.  And I'd spoken to, was it Miles at Cash App, and I said, "I think this is a film that he's making".  He said, "Just book the flight, go, we'll sponsor you".  And so, I literally booked the flight and I went, and the flight was fairly empty. 

I went out and made the film, and then I came back through like a ghost town of -- I think I got COVID -- yeah, ghost town of an airport back to Stansted.  That was a ghost town apart from a lot of security, but it was a weird, weird experience.  But when I booked that flight, at the same time I'd also been looking at Bali thinking, "This lockdown's coming, it might be a good time to get out of the UK".  So, I was looking up in Bali, these beautiful apartments that cost fuck all to rent.  I was like, "Right, I'll go with the kids, we'll go out", because I thought the lockdown was going to be a couple of weeks, "we'll go out and chill there".  And no, I went off and went into a migrant camp on the border of -- and got COVID! 

But yeah, so when you're in between Islington and Angel, I'm going to try and estimate your rent; £2,500? 

Checkmate: It probably would have been about that, pounds, yeah. 

Peter McCormack: So, you need to be... 

Checkmate: And then that's the other thing, they slap you with council taxes and just, oh, the numbers keep stacking up.  And the biggest challenge is that they need a three-month rent up front.  Because this was post-Brexit, and they're like basically anyone who's a foreigner, and the agent was saying, "It is extremely hard to get people in because they can't trust you're going to be around". 

Peter McCormack: Yeah, you might just jog on. 

Checkmate: Yeah, so basically it was like three months' rent up front on an engineer's salary and I just don't have enough cash. 

Peter McCormack: Well, you do the maths.  So, £2,500 a month rent-ish, throw in your council tax, throw in your rates, your water, that's going to take you to £3,500.  So, that's £3,500; £4,200 after tax. 

Checkmate: So, my salary was £40,000.  So, my partner had to get a job because otherwise I think my whole salary was 80% of our bills. 

Peter McCormack: But this goes back to the Dominic Frisby point that he made in our film.  He said, "It used to be one salary, and that would pay for your house, your food, your costs, maybe a holiday a year and your car.  Now you've got two salaries --"

Checkmate: And a couple of side gigs. 

Peter McCormack: A couple of side gigs, trying to do the same, which also means you've got kids not being raised by their parents, and this is the squeeze.  And I always think with all this stuff we've talked about -- by the way, I was wondering, should we have done more of this data?  But it is what it is.

Danny Knowles: We didn't even get on to the thing we were going to do!

Peter McCormack: Oh, fuck, yeah!  Honestly!  But this is important stuff.  Where has the money gone?

Checkmate: Oh, it's a great question!  Wouldn't you love to just see?  I mean, give me the same data, imagine if we had a block time that was ten minutes for the Fed, I'd love to chart this stuff out.

Peter McCormack: But you can look at GDP. 

Checkmate: Where is it going? 

Peter McCormack: GDP has gone up constantly.  Everyone is getting squeezed a bit harder.  I'm sure a lot of people I know do not have a pension.  I think we're migrating to a world where retirement doesn't happen for people.

Checkmate: Oh, big time.  Well, I mean I think that markets abide by the laws of physics, which is that energy can be neither created nor destroyed, it just transforms.  Money just moves around the system.  It's not destroyed, it's just moved value.

Peter McCormack: Where is it?

Checkmate: Where did the value go? 

Peter McCormack: Where is it?  Where's the fucking money?

Checkmate: It concentrates.

Peter McCormack: Well, that and to people; is it to BlackRocks owning 40,000 houses in America?

Checkmate: I think, when you look at it, those memes, or it's like, US Senator's salary $200,000, run that experiment over a career of 40 years, whatever that works out to be.  Oh, just a quick 10X or a 20X; that's the real net worth. 

Peter McCormack: What's her name, the old girl, they track her trades? 

Checkmate: Pelosi. 

Peter McCormack: Yeah, Nancy Pelosi.  So, she's 83, she's running for Senate again, she's 83, she has a salary of what, $200,000?

Checkmate: The level of ego to do that as well, like to not let the young step in and actually take over, is beyond me.

Peter McCormack: She's worth $290 million. 

Checkmate: That's wild.

Peter McCormack: $290 million!  She's a great trader!  But that's a whole other thing.  We need young people in politics voting for what they give a shit about.  This is an 83-year-old setting policy for a world of youngsters who can't afford shit.  Fuck off!

Checkmate: Well, that's the other thing, don't bet against the young because they're going to outlive you.  And the other thing is that 83, the reality of the situation is they can't do this for that much longer.  So, at some point in time, there's going to be a very rapid changing of the guard.  And we're going to see a lot of this stuff start to transition and shift, because I can't remember what the exact saying is, but policies occur one retiree at a time.  That's going to happen, you're going to start getting people with new ideas.  It eventually happens, and it generally happens in these big waterfall moments, especially when you have such an old cohort.  I mean, the biggest population we've ever seen, the baby boomers, when they really move out of positions of power, things are going to start to transition and clear the pipes, I think, pretty quickly.

Peter McCormack: Well, this is why Milei and Argentina are so interesting.

Checkmate: That's going to be an interesting experiment. 

Peter McCormack: Yeah, and it's super interesting because when you look at Milei, you've got to go, well, who would vote for him?  He's a libertarian.  So, the elite -- 

Checkmate: Relative to where they currently are, I mean, let's go. 

Peter McCormack: But you look at it and you go, "Who does he appeal to?"  Well, he certainly doesn't -- I mean it's something like 45% of people in Argentina live in poverty.  I might be wrong by 5%, it's about 40%, so he doesn't suit the poor because he's a libertarian.  He'll be about small government, low taxation.  Therefore, all the subsidies which go to all the poorest for energy, they will go.  So, you'll be thinking, "Well, they wouldn't vote for him".  Anyone who's part of a union will think, "Well, unions are going to lose their power", so they wouldn't vote for him.  The elites probably don't want to vote for him.  Does he suit the middle class?  Well, he's high risk.  So, I think it's the youth. 

There's a brain drain in Argentina.  The young people are leaving, and this is sad for Argentina because they're very much a family-based culture.  I experienced that when I was there, it was beautiful.  But I was talking to the young people or their parents, they're saying, "Yeah, they're leaving for Australia, UK, America because they've got prospects and opportunity".  Is there any way of finding out who's voting for Milei, or the average age of a Milei voter?  Because he's not coming in like --

Danny Knowles: Here's the polls, I'll look for that. 

Peter McCormack: Javier Millet, 35%; Massa, he's the guy that's been in before, 25.  So, I could be wrong.  Somebody from Argentina might be listening to this going, "You're a fucking idiot".  But I think the thoughts are that Milei and Patricia might form a coalition, so his radical ideas with her experience.  I could be wrong.  Patricia also might be that person everyone hates.

Checkmate: Well, one thing I think, and this is what I was saying before with the extremes, the highest probability is that we're not going to have a clean, smooth-sailing -- like, the highest probabilities are the extremes are going to happen.  So, if you run that book, we're going to start seeing complete shifts in the way that different economies work.  I mean, Bukele, right, that's a complete total shift in what's going on, rightly or wrongly, it's a whole new world to what they've experienced in recent years.

Peter McCormack: So, look at this.  I mean, the title of the article Danny's brought up is --

Danny Knowles: I can't find any stats on it.

Peter McCormack: So, the headline is, "Young people's anger fuels far-right populist as Argentina's election nears".  I feel like that title is a little bit provocative, because I don't think he's a populist.  And they call him a far-right populist.  He's not. 

Checkmate: I mean everyone's a far-right populist these days. 

Peter McCormack: If you're popular, yeah.  Okay, "The star of Argentina's ongoing election cycle is a libertarian economist who has proposed complete dollarisation and claims climate breakdown is a 'socialist lie'.  Every TV channel covers him.  His name is brought up in taxis and hair salons, by those who think he is the last hope for the country's troubled economy and those who are panicked by the proposals", etc. 

Checkmate: You know what I find really interesting?  The dollarisation component.  I mean, he's a libertarian candidate and he doesn't agree with central banks, but he also understands that you can't just go straight to a, like, what else are you going to go to? 

Peter McCormack: Free market currency. 

Checkmate: Exactly, so he understands that the dollarisation is the pathway of least resistance and where you're probably going to have the most success, even though you're then reliant on the Fed. 

Peter McCormack: Well, yeah, he's subservient to a different central bank. 

Checkmate: Yes, but he recognises the limitations of that system. 

Peter McCormack: But in Argentina, there's no separation between government and central bank.  The central bank isn't an independent institution, it's a printing machine for the government.  And so, I think my assumption is he's thinking, "What we need right now is stability, and we're not going to get stability with our own currency.  Let's dollarise, let's rebuild the economy, let's build a strong economy based on a strong currency".  Now that will destroy anyone who owns a peso.  And it's a high risk for the working class because they will lose their energy subsidies.  They are the people who are living on the peso.  The middle class are already using the dollar, it suits them more.  There's a reality.  This is going to be bad for the poorest in Argentina straightaway.  But obviously, it will start rebuilding.

Checkmate: So, if you think about like if you run the hyperbitcoinisation scenario, the theory is that because it's a sounder money, over the long term, society will improve.  We're about to see a microcosm because they're about to go from a complete shitcoin in the peso, to the dollar which relatively speaking -- 

Peter McCormack: Then to Ethereum! 

Checkmate: Well, yeah, relatively speaking they're going to something that is much, much sounder than what they had.  So, the delta between where they come from, where they go, if this goes through, and it's also why Tether is such an interesting experiment, because when I look at that view, the US Government can shut down Russia's reserves.  If they can shut down Russia's reserves, they can shut down Tether's reserves.  So then, I look at that equation, it's like, why haven't they?  And my takeaway is it feels to me like Tether's been blessed to continue to tick along, because the fact that it hasn't been taken down --

Danny Knowles: Well, they're like one of the biggest buyers of bonds in the world. 

Checkmate: It's like 22nd in the world, right?  So, if you think about it, what has America found?  They've found a buyer of bonds where they can export dollars to the rest of the world to pay for our pensioners' pension.  You can pay for American pensions and if you think about it, even though you're still getting the developing world to pay for American retirements, all parties are better off because the retirements get funded and you're not using the peso any more on this side.  So, in that way, it's a very interesting experiment where that dollarisation, it's actually the best scenario for all parties, even though it's not perfect, but the world's not made of perfect scenarios, right, it's made of trade-offs?

Peter McCormack: Well this is what Parker Lewis was saying. 

Danny Knowles: Tether's the central bank now! 

Checkmate: Yeah!

Peter McCormack: No, but this is what Parker Lewis was saying to us, do you remember, when we were in Austin, because we were like, "Why don't people get Bitcoin?"  He's like, "Look, for hyperbitcoinisation to happen, the dollar has to fail.  So, what's going to happen is these failing currencies will go to the dollar first, and then it will be Bitcoin". 

Checkmate: And the dollar just progresses towards the core. 

Peter McCormack: Yeah.

Danny Knowles: Everything converges on the best money. 

Checkmate: Yes, it's competition. 

Peter McCormack: So, this is super-interesting and again this is another point.  Five years ago, 52-year-old Milei wasn't even a politician.  I think we're going to get these curveballs coming in.  And our politicians are going to go, "Well, you're a fucking idiot, you're a liar, you're not representing the people".  Who have you got in the US like that?

Checkmate: People are sick of the status quo.

Peter McCormack: So sick.

Checkmate: Something needs to change and you're right, it's going to come from around curveballs.

Peter McCormack: Yeah, and it might come from bitcoiners.  They might become politicians.  They might go, "Look, this is bullshit", and they're able to establish new parties.  You know, Bukele kind of established a new party, Milei's kind of establishing a new party.  I love that they're calling them the far-right though.  But the truth is, it is the youth.  The youth is a large voting bloc, so if you can win the youth and other pockets, you can have influence.  They're fucking sick of it.  They know they've been robbed by the older, the elites, the boomers, and everyone's starting to feel that.  And so, I think this is a super interesting experiment and I think we will see similar scenarios around the world. 

I want to see it in the UK.  Fuck Labour, fuck Conservatives, fuck Lib Dems, they're all bullshit.  They're all selling the same story from a different side of the centre.  I was with Nigel Farage recently.  Had a great chat with him before the interview and it was a very, very real chat and he said, "There is no difference between Labour and Conservative".  He said, "They're both big government, they're both high tax, they're both surveillance states.  What's the difference?" 

Checkmate: It just keeps growing.

Peter McCormack: It just keeps growing.

Checkmate: It's remarkable. 

Peter McCormack: And the most interesting thing about Milei is like, "I want to make it smaller".

Checkmate: Well, I was saying to Danny before, one of the big reasons I had to leave engineering is because you just get squeezed so heavily.  And the reason is the consultants in the middle.  We're the ones who do a lot of the thinking and the designing and the building of this stuff.  You've got the contractor, who has a bigger legal team than they do builders, because their job is to find every single way that you've messed up and they can squeeze you on the contract.  And on the other side, you've got the government who has, like, we lost bids for multi-million dollar dams, because we were $15 or $500 over in the price like, "I cannot justify to my superior spending more". 

So, the trade-off here is, there was a whole period where the engineering consultants -- and the government used to have engineers.  So, the consultants will do the work, but the engineers at the government were really good.  So, you would send your designs to them and they would literally mark your work and give you better recommendations.  So, the consultants started doing shitty work because they're like, "Don't worry, RMS will just, their engineers will solve it for us".  So, then what happened is the government realised that this was happening, so they got rid of all of their engineers.  They've only got a very small cohort of guys who check it.  The problem is that now it's just all about variations, because the contractors and the consultants have learned that they have no technical prowess to tell us what's right or wrong.  So, we can say, "Oh, yeah, we found this new problem and we have to redo it.  So, there's a variation".  So, they bid low, but then they mince them on variations. 

A good example, the light rail, I mean, Australia has a classic example.  Our infrastructure blows out left, right and centre.  It's always double or triple minimum.  And there was one point where they dug up George Street and they exposed all of the electrical cables, all the sewage pipes.  But Ausgrid, our main power provider, they didn't come out to inspect.  I can't remember the exact details.  They didn't actually come out to check their cables.  The contractor found them, but because Ausgrid didn't cite them, they refilled all the land and then Ausgrid goes, "Oh, we didn't come out".  It's like, "Oh, okay, that's fine.  That's a variation.  We'll dig it up for a second time and now you can come and look at it".  So, they literally dug it up twice.  Everyone gets paid, but the government doesn't have the technical prowess to push back on it.  That's just this interesting dynamic of the free market trying to make their money and the government being incapable of dealing with it. 

Peter McCormack: Again, when I was in Argentina in Buenos Aires, we were running around, there was a lot of work being done to the roads, and I did say to Juan, who I was with, I was like, "Well, at least the work's being done and they're trying to improve things here", and he said, "No".  He said, "Our roads are fine".  He said, "They keep digging them up and they keep re-laying them and making them better so the unions have got jobs for the workers, and so the unions will ensure the workers vote for them. 

Checkmate: Yes.  We do that here in June.  So, our tax year is July, June/July, the cutoff.  Every June without fail, you'd better believe you're going to get a new footpath in your neighbourhood because the councils have got this money, if they don't spend it, and they just go, "It's alright, we can build a footpath on this road", so June is footpath month.  They just go through and build. 

Danny Knowles: Same in the UK.  Every year at the end of the financial year, they just cover the roads in that surface stuff.

Checkmate: If you don't spend it, they won't get it again next year, it's just ridiculous.

Peter McCormack: But that also happens in the private sector.  When I had my advertising agency, you used to have all your meetings about October.  Once you stop finishing paying the government, you get a call and it's like, "Look, I need to spend this now, because if I don't spend it now, they're going to lower my budget next year".

Checkmate: It's great, isn't it?

Peter McCormack: All these fucking incentive structures.

Checkmate: And it's all incentives, it all comes down to incentives.  And that's one of the things you have to assume, and that's what I like about Bitcoin's design, is it assumes things that are guaranteed.  Human beings will be greedy.  If you assume anything else, your system's going to get minced.  You have to assume that human beings are going to be greedy, and we're going to act on our own self-interest and on our profit motive.  And Bitcoin is designed to do exactly that, and it just works off that very, very simple principle.  It's a constant. 

Peter McCormack: Yeah, and it's a powerful organism. 

Checkmate: Don't fight it, and it is an organism. 

Peter McCormack: Yeah, it is a powerful organism that nobody can get in front of. 

Checkmate: Totally. 

Peter McCormack: You cannot get in front of it.  It's just going to chew you up and spit you the fuck out. 

Checkmate: Michael Dunworth, I know you spoke to him recently. 

Peter McCormack: Love Michael. 

Checkmate: He said at the start of his talk at Bitcoin Live, something which still sticks with me, he goes, "We as a society do not possess the technology to stop it".  And the more you think about it, the more profound that gets.  We do not have the technology.  What would you do?  If you had to stop it, you can put regulations, you can ban people buying it.  Yeah, you might slow the adoption, but try and stop the Bitcoin network.  You can't.  There's nothing we can do to stop it.  It's great, isn't it?

Peter McCormack: I love it!  Yeah, because you basically need to eliminate all electricity. 

Checkmate: Yeah, you have to go -- well, even then --

Peter McCormack: Oh, generators. 

Checkmate: -- you'll have NVK sending it on his ham radio!

Peter McCormack: Yeah!

Checkmate: Exactly, you can't stop it and it goes down the path of, I think it's hilarious when the gold bugs are like, "Oh, yeah, but when the power goes down we'll use our gold coin", just like, "Mate, you need water, canned food and guns.  You don't have a bunker?  You don't need Bitcoin or gold coins at that point in time.

Peter McCormack: You can just imagine them there, like trying to chisel off a bit of their gold, the fucking idiots.

Checkmate: I went down the process, because I went and bought a physical ounce.  It was a really instructive --

Peter McCormack: You're talking about gold here?!

Checkmate: Gold, yeah! 

Peter McCormack: Okay, not weed! 

Checkmate: No, that's separate!  No, buying an ounce of gold was actually a really informative process. 

Peter McCormack: Buying an ounce of weed is a really informative process. 

Checkmate: It is also an informative process.  But no, there's a place down here called Jaggards.  And it was funny, because you buy it online, you've got to bring in your passport and all the rest of it.  And I go in there, drop it in, they go out to the vault, pick up the bar.  And there's a bloke next to me, an older gent, and they're counting out his silver coins, his gold coins, and he's talking about, "Oh, how are the kids?  Yeah, good.  No.  How's your boat?  No, good".  And I realised, this guy's stacking sats.  He must come in here every month because he's on a first-name basis.  And I'm just going through this physical process.  I've taken a $150 haircut on the spread going in.  If I ever wanted to sell, you can take another $150 haircut and you're like, you're just done.  Like gold's just not going to make it.

Peter McCormack: There's been multiple times during the length of this podcast, Danny will confirm this, I've gone through a time of thinking, I should get a bit of gold just in case, a hedge against my Bitcoin.  It's usually when I've talked to someone like a Larry Lepard, or somebody who knows a bit about that.  Every single time I go through, I even went to the point of nearly ordering something.  I was like, "Hold on, let's work this through.  I'm going to take delivery.  Where the fuck am I going to put it?  Okay, well, I can deal with that.  I can stick it in the garden or I can put it somewhere".  But then I'm going to be like, "Hold on, what if I need to sell it?"  Who's my buyer of last resort?  I don't have a global liquid network on my phone with an instant sales.  Every single time, I've got to that point and said, "No, it's Bitcoin".  Every single fucking time. 

Checkmate: Yeah, I do the same thing, I go through the same process.  I do own some gold and people ask me, "Why do you own gold over Bitcoin?"  It's like, "Well, because I don't want to have to sell my Bitcoin and I also don't want to hold the cash, so gold is like my middle buffer.  It's that thing that if I needed to, I'm okay to take a 10%, 20% haircut on the gold.  I'd be really pissed if I had to take a 50% haircut on my Bitcoin, because I've got less Bitcoin and at a bad price".  So, my gold is that kind of liquid in-between phase.  

But I've looked at like, we've got a share that trades on the ASX, which is basically a warrant.  You can send it to the Perth Mint and they will then send you gold.  Now the problem is you've got to pay an $80 fee to get it minted from your shares into a bar, you've then got to pay a 1% storage fee for however long they hold it, then you've got to pay 1% in terms of insurance to get it posted.  And you do the sums and I was looking at this and I'm like, "And I've got to wait like six weeks, seven weeks".  Thirty seconds later, the money just goes and I buy Bitcoin, it's in my wallet immediately.  It's like, how do you compete?  It is a 10X compute, you can't win.

Peter McCormack: You know when you see those big racks of gold bars?

Checkmate: Yes.

Peter McCormack: Do you know what they remind me of?  They remind me of around, say, 2005 in my lounge, I had my racks of CDs.  I own 1,500 CDs, racks and racks of them, and every month I'd buy 10 more.  I used to buy so much music.  When Spotify first came along, no it wasn't Spotify, it was Apple Music, I'm like, "I'm not buying every song digitally, fuck that.  There's no way I'm buying that", and I never did, because I want my CD, I want my inlay card and I want my big rack of fucking CDs.  Then Spotify came along and I was like, "What do you mean?  I'm spending £150 a month, I can spend £15, I can access every song in the world instantly?"  Never bought another CD again. 

Checkmate: Yeah, 10X improver.

Peter McCormack: Yeah, 10X improver.  And all those CDs are now sat in boxes.  I've got like three boxes under my stairs from when I moved house and I don't know what the fuck to do with them.

Checkmate: You're still emotionally attached to them.

Peter McCormack: Yeah, it's like music, I went through it with the DVDs, I went down the tip, they've got a recycle pile for DVDs and I put them in there.  I'm still emotionally attached to them.  Some of them are autographed as well.  I can't sell them to Music Magpie, even when they do and they give you like 50 cents a CD, like I listen to shitty heavy metal.  No one wants Sepultura, Beneath the Remains.  No one's buying that.  And so they just sat there and I look at those gold bars and I say eventually, no one's going to want them. 

Checkmate: Yes, I agree. 

Peter McCormack: All right, they might get recycled into industrial use. 

Checkmate: Oh, that's my favourite Peter Schiff argument.  It's like, "Oh, but you can use it for gold fillings in your teeth".  It's like, "Mate, you do not want to see the price if that's where it collapses to.  If that's its primary use case, you're good". 

Peter McCormack: You just need governments to switch over.  Someone like Bukele has done it.  I don't think he's buying gold; he's buying Bitcoin, he's stacking stats.  As more nations do that, I mean I pretty much think gold is basically propped up by government. 

Checkmate: I've always thought so.  My mental model long term -- actually Jack Mallers was kind of the first person that started talking about this idea that kind of solidified to me, that Bitcoin is almost like this giant layer of liquidity and you can send, I mean it's one of the few assets in the world that has a fiat currency exchange everywhere in every fiat currency.  Gold is probably the only other asset and the dollar that has that same mechanic.  And liquidity could flow in.  You could in theory send Apple shares and they come out as euros on the other side of the world, and Bitcoin is that transfer of medium because there's an exchange for every asset.  It's kind of this big amorphous blob of just collateral liquidity. 

The other thing I've been thinking about is gold, I think for nation states, simply because of the 5,000 years, it will still be base settlement.  There is no more final settlement than, "I literally shipped you a gold bar, it's now in your vault".  But it's also a prick to move.  So, what I suspect will happen is they'll start testing 0.1% in Bitcoin, that just looks like a liquid layer on top of their gold, and this will be driven by oil.  We're seeing the Shells of the world, the oil producers, they're getting involved because it makes sense for them financially.  They become more equipped with Bitcoin infrastructure.  And then you end up with a system where, "Okay, well we tested that 0.1%, we settled a billion dollars here, a hundred billion dollars there.  Well, maybe this is actually pretty useful.  Maybe we hang on to a little bit more Bitcoin", and suddenly it becomes a 0.1% or a 0.2% and you can see how that grows. 

You go from the liquid layer of your gold portfolio to, "We actually should have a balance sheet of this".  And that's that argument of going from 0.1% to 1% is gargantuan numbers, just extraordinary numbers.  If Bitcoin does in fact achieve 1% balance sheet capacity everywhere, it's extraordinary.  But that's the opportunity set that I think is there because it makes a lot of sense.  It's the perfect currency to settle between enemies for oil, which creates enemies. 

Peter McCormack: You sit in this unique position where you have a huge amount of data at your disposal and you understand that data, right?  But you also sit in a world of Twitter where you see the memes, you also sit in the real world.  Everything's coming at you.  I think you probably are one of the people who gets the biggest variety of data, news, opinions coming in.  With everything that comes into you, what does Bitcoin actually therefore mean to you? 

Checkmate: It's a solution for a lot of things, it's a solution.  I think at the end of the day, the proof of work of where your mind has to go to grasp it, is to me the most important thing, because that's what changes the individual.  And as more individuals go through that journey and they change around Bitcoin, I think the future of that, we've got more people having longer-term thinking, actually doing their own proof of work to understand mechanics of whatever it is, the economy, their food, all these kind of things.  I know bitcoiners go down the path of seed oils and all that, but it's all rooted in, "I don't really trust that label, because who put it there, what are the incentives behind it?"  So, to me, it's actually a psychological game in many ways.  And I think it's about looking at how society evolves around it.  It starts small. 

Danny and I were talking about this before.  I think we're at the point where a lot of the forerunners, people who are likely to get it, have got it.  And that chart we showed before, like in five years, Bitcoin education has done a lot.  But I think the next round of people, it's going to take a lot longer because they're not predisposed to understanding Bitcoin.  You're talking about the masses who take a lot longer to go through this process.  People are nihilistic.  To turn the cruise ship from nihilism all the way through to optimism is a long, slow path.  So, what took us 5 years might take the next cohort 15 years.  So, I think Bitcoin's going to be a very long journey, but I also think it's probably going to be an S-curve as well, where it's going to go through these big cycles of adoption. 

But to me, it's a solution to the way people think.  It's a motivator for fresh thinking and fresh perspectives.  I mean, I never thought about finance until I got into it, but it's been the most, by far, intellectually stimulating thing I've ever found and ever seen.  And that's why I find this data so fascinating, because I get to study what everyone else -- what is everyone else's experience.  They're dealing with their cost basis, they're dealing with their acquisition and selloffs and derivatives, and then when I see that people are learning cycle after cycle, it's pretty cool.

Peter McCormack: Dude, we're going to have to wrap up because we've got an event.  I could have talked to you probably for another fucking two hours about all kinds of --

Checkmate: Do it again?

Peter McCormack: We will definitely do this again.  I absolutely loved this, man.  Look, everyone knows Glassnode, we'll send them to Glassnode, but what about you; where do you want people to follow you? 

Checkmate: Yeah, so you find me @_checkmatey.  Checkmate was unfortunately taken so I put a Y on there so I can be a pirate.

Peter McCormack: You've got a weird E in your thing as well.

Checkmate: It's a Y, yeah.  And the M.

Peter McCormack: Oh, is it the M? 

Checkmate: Yeah, it's the M. 

Peter McCormack: It's the M, alright.

Checkmate: Yeah, so you'll find me @_checkmatey.  The work we do, we've got a YouTube channel for Glassnode, and also our insights portal.  And really, the tool there, it serves two purposes.  It's helping people understand the tools, but it's also people just want to know what the hell's going on, and how you can use data to actually explore the mechanics.  So, it's been a lot of fun. 

Peter McCormack: Well, listen, you're welcome on the show whenever the fuck you want to come on, loved this.  Yeah, keep doing your thing and let's go and do this event. 

Checkmate: Good on you, gents.  Thanks, cheers.