SLP288 Hass McCook – Why You Must Set Up A Bitcoin DCA Plan

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Hass McCook aka FriarHass rejoins me on the show to talk about why you should set up a Dollar Cost Averaging Plan. We chat: 

  • Lump sum for you, DCA for us!
  • Is DCA more important than everything else? Even development? 
  • Growing the DCA Army to hasten hyperbitcoinisation
  • CAGR – statistics and dishonesty? 
  • DCA vs circular economy / agorism? 
  • Practical tips

Links:

Prior episode:

Sponsors: 

Stephan Livera links:

Podcast Transcript

Stephan Livera:

Hass, welcome back to the show.

Hass McCook:

Oh, great to be back. Thanks for having me back on and look, sorry to see you leave Sydney. We’re gonna miss you a lot here. We appreciate all the great stuff you’ve done here to help us build the local community and obviously all your international work. We look forward to catching you once the world is free again in real life.

Stephan Livera:

Yeah, well, let’s see. Well, I appreciate the work you’ve been doing out there. Both on the mining front and on the DCA front. I know you’re a big DCA man. Arguably helped change the minds of a lot of people out there about why DCA is important. And I know there are other people out there who have different views, whether they think, “Oh, you should just lump sum”, or maybe you should be you know, you’re overly compromising for the number go up. And the privacy bros who think “No, we should just have a circular economy only”, but maybe if you just want to start with, I guess your thoughts, why did you come to this idea of DCA dollar cost average?

Hass McCook:

All right. So first all, and I’m not saying this as a disclaimer, I’m just saying, this is the reality. Like DCA is not financial advice. Probably make more money, getting lucky buying once and like sitting on it, but this is not useful to Bitcoin. So when I say DCA, I consider it as more of like a tithe; it’s voluntarily giving up a fixed percentage of your income for the sake of good causes. And there is literally no cause on this earth more worthy than Bitcoin. So you alluded to me being like interested in mining and like people ask me like why don’t you like do much mining stuff anymore and environmental stuff. Even though I have made a recent resurgence and the reason is like, none of it matters like literally nothing in Bitcoin matters except DCA.

Stephan Livera:

Strong statement there. So, now people would come back to you there and most people would say, well, hang on. What about developers? Who are, let’s say plugging holes in the system in terms of bugs that are found, and there were vulnerabilities disclosed. Those are important to be patched up surely?

Hass McCook:

Yeah. And they will be. So how do we encourage a developer to work on Bitcoin? If his money grows 30x in one year and then goes nonstop down for three while he has to self-fund. Whereas if we DCA, we set a permanent floor, the guy gets 1% richer every week and development just goes on.

Stephan Livera:

Yeah. So I guess the idea then is it’s like making enough of a steady financial system around Bitcoin is what you’re saying, creates the overall ecosystem in which the other things can thrive, whether that be developers who are improving the protocol or helping ensure that they are reviewing the code in the protocols that there’s no bugs there, or that there is sufficient mining hash rate to keep the network secure. And the idea that it’s staying decentralized across different countries and across different mining pools and different mining operations and different mining hardware and the other broader parts of the

Hass McCook:

So on the hardware element and whatnot. So like, let’s say I personally wanted to invest $20 billion in a mega project, right? It’s not actually that much money, $20 billion. Right. So here was my plan for the 20 billion — build a nuclear power plant, build an ASIC Foundry and a big hard stand to just plug ASICs in and ignore the rest of the world. Just plug my nuclear power plant straight into the ASICs. Now, if Bitcoin was going up 1% of fortnight, every fortnight, relentlessly forever, I as an investor, would be quite comfortable signing a 50 year lease with a big mining company to take exclusivity on the nuclear power I generate. But because there’s so much uncertainty in price and volatility, it’s terrifying for big investors. So they don’t invest. So like I know because Bitcoin is so like illiquid, we can’t avoid like a boom and bust cycle, but it can very easily be levelized. And I’m sure we’re going to talk about how easy it is actually to levelize and like how optimistic and bullish, like this should make people like on the future of Bitcoin.

Stephan Livera:

So people might be thinking, well fine. That’s one thing that there’s everyone who’s regularly stacking, but there might be those people who let’s say they’re sitting on a big hoard of old coins and they could just hit the market and sell a bunch of those coins all at once. So they could say, “Oh, I’ve had it. I want to buy my mansion and my Lambo” or whatever. I mean, we talk about low time preference, but there might be people out there who have a lot of coin and they don’t necessarily share the same values. Would that just mean they’re just sort of dumping on the new incoming DCA people?

Hass McCook:

Yes, but unlike the proof of stake legacy fiat system, you can only sell once, that’s it, done. And the DCA army comes back tomorrow with more money. So eventually these people are just noise. It’s a long-term relentless, absolute transfer from, from weak frivolous hands to the tithers. The people that believe in Bitcoin as a cause. So like I have full respect for the circular economy bros and what they do, but Bitcoin is currently not useful for a circular economy. It will be extremely useful when it’s like a million bucks a coin and like, you don’t need to exit you know, into fiat. You can literally just stay in Bitcoin because it’s stable. And like you know, supposedly there’s a hundred million people that have Bitcoin. If everybody posted up 10 bucks a day, it’s a billion dollars a day. Each coin would be worth a million bucks in a few months, relentless billion dollars a day crashing into the market.

Hass McCook:

If Satoshi came back tomorrow and dumped his million coins, the price would drop to a grand for a day. And then the next day they’d just another billion dollars. And the next day they’re just another billion dollars and just every day, like forever. And like a lot of people believe that Bitcoin has very high volume, the volume is like a hundred thousand BTC per day. The reality is it’s more like 1000 or 2000 like whales and entities wash trading between each other robbing retail investors biding their time, like until the next halving.

Stephan Livera:

Yeah. So some of the — I guess on chain analytics, it seems to point in that direction that because the veteran’s behavior is more predictable and they are accumulating and then towards the end of the cycle, typically that’s when they sort of start saying, okay, maybe this is enough for this cycle. I might spend some and things like that and then have to wait another few more years, I guess. Although that’s our understanding today in mid 2021 where perhaps in 2014 and 2015, it wasn’t so clear that Bitcoin was coming back.

Hass McCook:

Yeah. It was not clear at all, actually especially like there was no like robust community, like of the Maxis back then, like the big support groups to say sort of snap out of it. This is just pure, raw, like manipulative FUD, literally FUD propaganda, the stuff they teach you about in textbooks. And I think now that everyone kind of understands like I actually tell people like in a positive way that like we are stuck with Bitcoin. Like you might not like, it’s the macho man, Randy Savage meme. Like you might not like it like accept it. Like you’re stuck with Bitcoin. Like it’s not going anywhere. Even we, if we want to change it, we can’t like we’re just — that’s it Bitcoin serves like serves its purpose and serves it extremely well. And it is what it is. And we’re just going to have to like accept it.

Stephan Livera:

Yeah. Right. And for listeners as well, I’m kind of asking the question just to be a bit provocative and just to play the foil. Right. Myself personally, I’m a big fan of DCA. I think you should just be regularly accumulating. I think that’s also a big mindset shift because I recall when I was getting in 2013 days, the feeling was more like, oh, people just do a one-shot buy, at the start and then that’s it. Whereas I think now the understanding is much more improved and now it’s more about actually, no, you need to be regularly accumulating and just every little bit, little bit keep accumulating.

Hass McCook:

So the thing is like, I suppose it’s not like you need to be like, it’s you want to be, so what do I mean by that? So a lot of like, you know influencers Maxis, plebs, like we’re all here for the same reason to like to see Bitcoin come and fix this. We’ve been, we’ve been given a total parallel solution for life. All we have to do is migrate towards it. You know, it’s not practical for everyone to do it instantly like but you know what, I’ve been doing it for seven and a half years ever since I’ve been in Bitcoin, I mined fiat nine to five and migrate it to this parallel ecosystem. That’s it. So I am fully sold on the vision. We’re building for the world here in Bitcoin, but revolutions are not one with nice words and smiles they’re won with money. So if you want to win this revolution, like you have to like add tangible value to it. And there are several ways to do that. Auto DCA does not just mean buy Bitcoin.

Stephan Livera:

So it also means you can be mining and HODLing, or it also means you could be earning Bitcoin and HODLing that as well. So I guess those are some examples. So it’s not literally just buying only on the platforms you can be earning or mining, but I guess it’s also important to…

Hass McCook:

And various other things you can stack other stackers and like, there’s like the value of the work people like you do is auto DCA. You’ve probably stacked that more stackers than anyone.

Stephan Livera:

Well, yeah, I think that’s right as part of teaching people to come in, because sometimes when you want to get someone to do something, you have to put it in terms of what’s in their interest. And so for them, if you can show them, look, when you started in Bitcoin, if you had just done a simple DCA plan of however much, I mean, for example’s sake, let’s say $50 a week or whatever that person can afford to save into Bitcoin. And then you show them the result three or four years later, they’re often blown away at how much they would have made.

Hass McCook:

Yeah, absolutely. And slow and steady does win the race. So I I published a medium post. It was just before the crash from 6,000 to 3000 in November, 2018. And it was like a, like a little religious piece. And I like spoke about the different religious characters in the Bitcoin ecosystem. And there was there was one crew called the sufferers, and at almost every point in a Bitcoiner’s life. There is like a suffering phase and there’s like two ways you can come out of the suffering phase. Like you can either lose your religion or just become more religious. That’s it, it strengthens your resolve, nothing like a tragedy to as they say, bring you or push you away from God.

Hass McCook:

So I said for the sufferers that are currently suffering, that bought at 20 grand and now find yourself at six. And like, God forbid like lower. I said, I promise you, like you put in like 10 bucks a day. And like, I promise you will be a whole coiner. And if you’ve done $10 a day since November 2018, you are a whole coiner. You have like 118 million sats, 10 bucks a day. So it’s cost you seven grand or whatever it is in your dailies. And you’re sitting on 35 grand and that’s like two and a half years. All right. It’s not as good as plumbing, like the absolute bottom one time in your life and getting a 100x, but like who has ever complained about five times their money in two and a half, three years.

Stephan Livera:

Yeah. And so this also ties into some of the different statistics that we see, because when people talk about Bitcoin, they’re looking at it often from an investment perspective and in the investing world, they’re talking about things like, okay, what was the return? What was the volatility? What was the sharpe ratio? And a recent statistic that has, I guess, become prominent is this idea of CAGR — Compound Annual Growth Rate. And so people might’ve seen the likes of Michael Saylor come on an interview and talk about how it’s growing at 200% per year, for five years on average or 10 years on average. And I think Saifedean actually also has mentioned that and other people have spoken about it. And so now if we would look at that number today, I think it’s something like a five-year or a 10-year CAGR it might be 110% ish. But I guess it varies where in the cycle, you start and finish, generally speaking, if you’ve done it for at least four years, then you have a pretty good return. But it seems like, I think you took some issue with that as well. So what was your issue with around CAGR and the way we talk about CAGR?

Hass McCook:

So my issue with with CAGR is like people’s usual issues with like statistics lies, damned lies and statistics. So CAGR is factual. It’s just not truthful.

Stephan Livera:

Okay. So what’s the issue?

Hass McCook:

Because no one was here 10 years ago and bought once only 10 years ago and has been sitting on it for 10 years to make 200%, like this is not truthful.

Stephan Livera:

Right So what about even five years ago though?

Hass McCook:

All right. Five years ago, then that number halves, because most of Bitcoin’s gains were made in its first two years of life. Like, it’s just a fact like going from zero to a hundred dollars, like that’s literally infinity gains. Like it’ll never be replicated. It’s not fair to put it in an average. But with that said like over eight years with like a daily DCA, like you’re looking at like 70% CAGR, which is like astronomical over seven years. Like, that’s fantastic. If you’d like compare it as as the exponential works, like 200 is just incomprehensively larger than 70. So, I’ve been in Bitcoin for seven and a half years if I was getting 200% CAGR, I would be a billionaire by now. I am very, very far away from being a billionaire. But with that said, I have gotten around 55, 60% CAGR because I have been DCA-ing meticulously.

Hass McCook:

And like I said, like I would rather see Bitcoin become an impenetrable fortress. So imagine we activated these hundred million people to start doing $10 a day. And within two months, the floor was a million dollars. So the price could not fall below a million because basically you’ve got a billion dollars coming in every day only nine coins. And with enough time, if you’ve got a billion coming in every day, going into the hands of the HODLers, you will literally run out of coins. There’s just nothing left to sell. Like in long-term equilibrium, there is just nothing left to sell.

Stephan Livera:

Yeah. And so it’s important, I guess, to understand that as we made this point before the coins exist already, right? So 18.8 million or something in that range already exist today of the total 21 million. Right. And it’s — really, what we’re talking about is the distribution of those coins out to the rest of the world, but what we ideally want, and this is to the point you’re making is that we want those coins in the hands of strong hand, HODLers, those who are going to keep restricting the supply away from the liquid available supply of coins that is typically available on say the exchanges, the brokers and the platforms, because that tends to just be the traders and the market makers kind of slushing it around between themselves. Whereas the HODLers, are the ones who are actually restricting that supply away from the market and thus driving, or at least raising the price floor. Correct?

Hass McCook:

Yeah, absolutely. And again, it is telegraphing. Yes. It might be like signaling to scammers to get their exit. Yes. You know shitcoins might come along for the ride, but in the end, like you can only sell Bitcoin once. And like, once it’s in a strong hand, like, that’s it, this is how a floor is held. And like, I can understand why people have like FOMO. So I remember like my first time, like buying Bitcoin because of like the constraints, like put upon my start, like with in terms of getting money to an exchange, I was watching Bitcoin go up 10% a day, 300 and 400 and 500. And like, I remember after reading the white paper, I’m like if anyone in the world like reads this, like they are going to buy Bitcoin, I need to get as much Bitcoin as I can, like as fast as possible. And it’s easy to fool yourself into thinking like you know, like Bitcoin’s going to get like this instant influx, but if it does get an instant influx, nobody has priced, then all Bitcoiners deciding to put in $10 a day, it would cause mayhem like you saw what happened with with AMC and GameStop and Doge. Like all it requires is is a large group of very stubborn people to just keep buying everyday.

Stephan Livera:

Phenomenal. Yeah. I think that’s right. And the thing is, people don’t realize the numbers on this because we throw around these numbers of 100 or 200 million people in the world today who have some exposure to Bitcoin, but it’s really a tiny fraction of that who are actually orange pilled, hardcore HODLer and stacker types. Right.

Hass McCook:

Yeah. But like, I think like the tide will eventually turn. So like I know like the Bitcoiners tried to escape from like you know, the accusations of being cultish and whatnot. But we’re being attacked currently by the biggest cult in the universe, in the like environmental cult. And no, I think it’s perfectly fine for us to be cultish. So I always tell people, I view Bitcoin for what it actually is like the largest charitable movement in human history. Like it literally fixes everything. Like you care about the whales, like or not the financial whales, the ones in the mammals in the sea your donate to like Greenpeace or whatever. You know, you want to like save the kids, you donate to like the kid’s charity.

Hass McCook:

But if you want to just save everything in one fell swoop, who do you donate to, or you just donate to Bitcoin. It’s one of the very few charities you can donate to who they don’t take custody of donations, completely decentralized. And you get wealthy for donating and you fix the world. Like, it’s an extremely beautiful thing. So I like to say, I hate saying money’s wasted on charity, cause good charity is never a waste. But the literature shows that at least 40% of like money donated to charity goes to overhead. So it’s just wasted. So if you were to take the world yearly giving to charity and put it into Bitcoin, Bitcoin would be a million bucks a coin.

Stephan Livera:

Yeah. I guess you’ve got to imagine what kind of social and cultural consequences would we have if Bitcoin were to become the global money and okay, this might be 10, 20 years away. We don’t know. But if we were able to transition the world over, then I think it really would fix a lot of things around the world. And that’s hence the saying Bitcoin fixes this. Right? Which many of us have been saying for years, but I think people who are not into this world, like say you and I are, or my listeners, they might be skeptical of that idea. And I obviously it takes time. You have to go and learn. You have to go and really understand some of the economics around this and what the consequences of these actions are and the world under a fiat world. And so I guess people would say, look, this is a controversial statement, Hass. You’re saying, actually get rid of, you know, don’t worry about all these other charities. Just keep buying Bitcoin and add to your DCA plan.

Hass McCook:

That is actually exactly what I’m saying. Because the market will allocate charity efficiently. So you have a look at how good world charity is going to be. Once Bitcoiners are properly rich, for example. So like, so the main priority, like I know it’s hard and I sound very heartless, but the kids have already been starving for 50 years. And if we keep doing what we’re doing, they’re going to starve for another 50. So you just gotta, I’m sorry, like they just need to starve for five more years, you focus on Bitcoin and Bitcoin only. And I promise you, after five years, they won’t starve anymore. Like, that’s all I’m trying to say is like we’re giving money and we’re still not fixing problems and problems are only getting worse. The problem is structural. We’re doing symptomatic treatment, unless the fiat system goes, no charity can ever be a hundred percent effective.

Stephan Livera:

Yeah, though, perhaps some of that is maybe like it takes some marketing budget too, for these charities to get some money and maybe charity. And I guess even this other point is maybe charity is not the best way to fix the problems. Overall. It’s actually to have businesses that can get the cost down to provide food and so on.

Hass McCook:

And if we can provide these businesses, a circular economy with a stable price, like the transition is ready to happen tomorrow, but just the price is too low and not stable. So like nobody has priced in the activation of all Bitcoiners saying, you know what, that’s it, we’re actually, we’re going to make Bitcoin happen tomorrow. And we’re just going to start doing 10 bucks a day. I don’t think anybody has priced that in.

Stephan Livera:

Yeah. And I think you’re right, that the point that I’ve seen you make correctly, which is that it’s not that many people who need to get on board with like, as a fraction of the globe, right. If we’ve got 7.9 billion people on earth, and you’re saying it would be what, 10 million people who need to really…

Hass McCook:

So there’s this, I don’t know if it’s a liar, I’m just spreading old Housewives tales here. But like it’s said that the American revolution was fought by 3% of the population.

Stephan Livera:

Yeah. Pretty incredible.

Hass McCook:

Fought and won, fought and won by 3% of the population. Like if we got a hundred million Bitcoiners, let’s get 3% of them doing 10 bucks a day, that’ll hold the price permanently at the current price. That’s 30 million bucks a day crashing into 900 coins forever until the 900 becomes 450. You know, all it’ll take is a couple of big names in the space saying, you know what, I’m maxing out my weeklies on Swan or on cash app or on relai or Bitaroo for us Aussies here, although they don’t have a max like. Jack Dorsey’s come out and said it I’m maxing out my weeklies on cash app every week like I reckon it’s a great idea.

Hass McCook:

I reckon it’s gonna fix the world. And I reckon it’d be a great idea if you all did it too. And like, I’d be very actually interested to see what the DCA stats are on cash app. So we know know that cash app’s revenue last quarter was three and a half billion. Now, I don’t know how much of that is buy how much of that is sell. They just say revenue. But if you assume like annualized, that’s all Bi[annual] that’s 14 billion a year to absorb the entire yearly Bitcoin inflation at 35 grand a coin is like 11 billion.

Stephan Livera:

And that’s just one provider. That’s not even counting the other exchanges, the other providers, or even the big grayscale and GBTC, and those kinds of vehicles as well.

Hass McCook:

So the floor is somewhat getting set and like, you got to remember, like, the reason I say 10 bucks a day is because that’s 7% of the average OECD wage. Now, all due respect to Mexico, I love Mexico, but like Mexico, for example, is one of the many countries that bring that average down, if you’re living in Australia or America or England, and like, you can’t find 10 bucks a day, like there’s some problems. Whereas in Mexico, 10 bucks would probably be like 14% of their income. And that is a huge commitment. So I do say like 10 bucks flippantly, but it’s what most in the OECD can afford. Googlers and whatnot. They could probably, they could probably ramp up to 500 a day.

Stephan Livera:

Serious commitments there. Yeah. And it’s important as well, to talk about how — I know you were mentioning this before, which is, offline, you were mentioning this idea about stacking to raise the floor for the El Salvador; for the Salvadorans.

Hass McCook:

Yeah. So, absolutely. So I said this like in a joking way, like you know, money that goes down, especially that goes down like really quick, like isn’t useful. Like one of like the most useful types of money is like money that never, ever, ever changes in price. But the most useful one is the one that always goes up obviously the going up forever meme does have a timeline if you or I we put down a bit of a lump sum you know, Aussies first world qualified people, professionals, good income, all that kind of stuff. If we take a 50% hit in two weeks, like we just took, like, we’re still smiling. We’re still happy. Like life still moves on like this is a disaster you know, for somebody in the circular economy. A poor person in El Salvador or a merchant trying to bootstrap a local economy in Africa or anywhere else in the developing world.

Hass McCook:

So like that’s why I call it a tithe more than like an investment or something else. Like you know, put some, put some money down, just lock up some funds. Right? Okay. There’s no yield, but the yield is a very nice feeling and a very good quality of sleep. And knowing that these really disadvantaged people are now using their own skills and impetus to build businesses like grow communities, like you’re literally like supporting magic. Magic is happening in these places. And like, it only costs you 10 bucks a day.

Stephan Livera:

Yeah. This is the new way to make the world a better place is to actually set up your DCA plan and just automate. I think that’s also very important for most people, because trying to rely only on manual buys can be difficult for people. What would you say to someone who says, “Okay, Hass, I like this idea of buying Bitcoin, but I just want to do it manually.” What’s your thought on that? How would you respond to them?

Hass McCook:

Look, manual is okay. Sometimes. And I frequently use the manual feature in tandem with my automatic feature. Here’s what I say. Like basically that, meme I tweeted the other day that the joker in the subway, listening to the director they tell me like you know, I bought a lump sum six months ago and I’m up like 10 times, holding is easy. And I’m like, just, you wait until it crashes 50% and see if you’ve got the stomach to buy. You’ll say, “Oh, maybe I’ll wait until it drops 70% and I’ll buy.” And then it does drop 70%. And let’s see if you have the stomach to buy, you’ll say, “Oh maybe I’ll wait until it drops at 90% and I’ll buy” and then shut your eyes, open your eyes.

Hass McCook:

It’s up 50%. And like you know, you’ve missed it and you say, all right, I’m just going to wait till it dips 20%. And I’m going to buy close your eyes, open your eyes. It’s up another 30%. All right, I’m going to wait till it pulls back 10%. And then I’ll buy close your eyes, open your eyes up 50%. And you’d be like all right? I’m going to buy. And then the next day it crashes 20%. Are you going to buy? If you have it on auto, you’re just going to buy every day. It doesn’t matter. You don’t even have to look at the price, but if you do look at the price one day and you see that it’s ripped down savagely then maybe if you can afford it you know, intelligently invest in a dip. But what I’m saying, like is like you can become, and like we do have time you know, until the hundred million are activated.

Hass McCook:

Cause that could really happen at any time.

Stephan Livera:

Yeah, we really don’t know.

Hass McCook:

And I don’t put too much stock into like GameStop and AMC and all of that kind of stuff. I think it’s an absolute waste of time. But it’s like very illustrative. So the people fighting game stop, were doing it to fight the hedge funds, some of the bigger players, a couple of hedge funds, like have blown up, but no major damage to the big ones. They say, don’t hate the player, hate the game. Gamestop and AMC, are hating the player. Bitcoin makes the game stop.

Stephan Livera:

That’s a great way to put it. And I think it’s about getting new people to understand the importance of setting up their DCA plan, because then you’re contributing and you’re becoming part of this. And you’re helping contribute because for people who are new in the space, just remember that pretty much everything in this space is indexed to the price, everything. And so people might say, oh, look, you’re always talking about number, go up, blah, blah, blah. But that’s also the reality, right? The number of say, wallet downloads, or exchange sign-ups or developers or mining hash rate you can pretty much name almost anything in this space. And a lot of it is indexed to the price. So if the price goes up, then all of these other benefits can flow to Bitcoin. So that’s one of the benefits there. Now, now one flip side, and this is maybe more of the privacy bros or samourai wallet. Some of those guys, I think their criticism of this argument might be something like, well, see, a lot of these compliance bros are telling people to go sign up on the KYC exchange and you’re compromising too much just to get the number go up and you know, you’re going to be sorry that you were pushing all these people onto KYC platforms and things like that. What would you say to that sort of argument?

Hass McCook:

When Bitcoin is a million dollars, a coin, the friar himself — the bum, the homeless fryer will be able to afford to buy every Congressman and Senator in the United States, 10 times over. Stop worrying about KYC. That’s it. If we win the KYC is a fiat problem. It is not a Bitcoin problem. It is a fiat problem. When Bitcoin takes over, KYC is not going to be an issue. Privacy will be, privacy from thieves, privacy from all of that kind of stuff, but governments fear Bitcoin for a reason, but unfortunately they are stuck with it. So that’s what I say to the security bros. Like, it doesn’t matter, like Bitcoin is a little bug that can be crushed now very easily at a million dollars a coin. It’s un crushable. And with the activation of a hundred million people doing $10 a day, like you get to a million a coin, like in a matter of weeks.

Stephan Livera:

So I think there’s probably that difference of opinion there. So some of the privacy bros and the those guys might think of it, like, no, see, I thought the whole idea is it’s peer to peer cash and they’re not necessarily being a BCasher, right. That’s a four year old debate, but they’re saying, oh, no, it’s about the circular economy. It’s about people being able to do agorism and do commerce that’s outside the purview of the state and things like that. Where I think maybe that’s the clash with let’s say the people who are saying number go up is the factor that actually causes all of these other aspects of freedom that we can overall have.

Hass McCook:

So I think the hyperbitcoinization will come before the freedom and the freedom will be a lagging indicator. So if we activate these hundred million people, how long do you think a billion are activated? It won’t take more than a month. If they’ve seen the price, you think people are excited at 50 grand to buy a Bitcoin, wait till you see them at a million bucks. So eventually, like if they want agorism, it’s more important that a billion people are buying a little bit every day to support a circular economy. It’s not useful to just have Michael Saylor buying bitcoin. Yeah.

Stephan Livera:

And of course he can’t hold it on his own. Right. It takes a mass of people. So I think perhaps there’s a bit of a tension there for some people because people come to Bitcoin with different goals. There are some people that come to Bitcoin with the idea of doing agorism and only for privacy aspects. And I mean, for me, I’m supportive of the privacy guys. Right. And I have I talk about coinjoin and various privacy techniques…

Hass McCook:

Me too. I’m trying to tell people to help make these guys rich so they can keep doing their work. Right. It’s not useful for them if it’s not useful for them, if number goes down, like they’re dipping into their stash, they are living in the circular economy. If number is always going down, it is not useful for these people. Like I am trying to support them. Like, it’s just indirect patronage instead of giving somebody direct patronage, you’re just making his wealth go up. You know, obviously that’s predicated on him having like original wealth, but if somebody wants to be that maxi and not have like any skin in the game, like Antonopoulos, like, I just don’t believe it. Like if you’re as convicted about Bitcoin, as some of these people, like there is nothing you wouldn’t do for some satoshis like if there’s a will, there’s a way.

Hass McCook:

And, and like the best I can do for you. Cause it’s not very easy for me to find individual developers to sponsor. It’s a big problem. The donor beneficiary like matching problem. So that the best we could possibly like hope for is just make the number go up. And like the market will allocate efficiently. Like you’ll have blockstreams grow out of the ecosystem who hire developers, like as number go up you have the swan’s of the world, come out. This is just a part of like a natural growth of anything. As number go up, things generally improve. So the best you can do is just like show your support for the industry as a whole. And you’ll see what the industry is made of and what we can produce.

Stephan Livera:

And I think it’s also interesting because no other coin really has number go up. And that’s why Bitcoin is so important. And I think that actually matters in the long term because having number go up now, I know some people hate that whole idea of it, but it actually is what drives so much of the investment and interest. And that in turn is what drives development, which in turn makes Bitcoin stronger, more resilient and more able to function as a network at scale. And I think that’s really where we’re going with all of this.

Hass McCook:

Yeah. And like too big to jail is a real thing. Like, can you imagine if like any government tried to like, or sorry, like US government tried to like seize Bitcoin, if it was at a $50 trillion market cap, bad things would happen to legislators, like I’m not issuing threats or anything, but at that point, like you are threatening like a legitimate wealth base. The government is already stuck with it and it’ll just be more and more stuck with it as number continues to go up. And the beautiful thing about like, about Bitcoin is, or rather government, or like, there’s very few beautiful things about government. But the only beautiful thing is it is like a state of mind, that’s it.

Hass McCook:

The government really, it’s a figment of our imagination and it’s just a whole bunch of people. That’s it? You get a couple of these people to become Bitcoiners and watch if they’ll ever, ever legislate against their own self-interest, it just won’t happen. And if we can activate these a hundred million people and the, and the coin price goes to a million bucks, name me one politician that won’t want to get in on some Bitcoin, it’s just human nature. So the privacy bros should worry about like privacy solutions for us to defend ourselves from each other. But hopefully we don’t actually have to worry about a big government too much for too much longer, but it’ll take a quick activation, like a, of a mass of people. Yeah. And as most revolutions in history you know, have shown us. Yeah.

Stephan Livera:

And so while the El Salvador news is very interesting test of what’s going on, let’s remember that when you spend Bitcoin on the other side, they’re probably going to be selling some of that for fiat. And so that adds actually a lot of sell pressure because ultimately what we really want to grow the whole ecosystem is new HODLers. And of course it takes time, right? So some people might start out spending some Bitcoins here and there or spending in El Salvador, let’s say, and then they might have like a dual cash balance. Right. They might hold some USD and some Bitcoin, and maybe at the start, it will be mostly US Dollar, right. Because that’s what they know. That’s what they’re comfortable with. I remember seeing some stat that apparently only 1% of people in El Salvador would be using only Bitcoin.

Stephan Livera:

I think about 25% would be using a mix of Bitcoin and USD. And 75% were saying, oh, I’m just going to stay with USD. And that’s fair enough, because it hasn’t come into place yet. They haven’t seen it yet. I think the actual law comes into practice in, I think, 7th of September around there. So it’s early days and of course that’s changed over time. So, I mean, if you look back, Paul Tudor Jones used to say 1% Bitcoin allocation, and then recently he said 5%. Right? And so it’s a similar story. So it starts small and it’s going to grow, but there will be a whole bunch of new people who are spending Bitcoin. And if there’s not enough people who are DCA stacking, then the effect on that will not be necessarily upwards. Right. It just takes time to grow that base of HODLers. And maybe that’s part of this whole cycles thing, right. That it kind of just moves in these four year cycles because people need time to get comfortable with it and comfortable holding more of their cash balance in BTC, as opposed to US dollar or some other fiat.

Hass McCook:

Yeah. And it takes time to learn and burn. Everybody eventually, like, from my experience, like with long-term holders, everybody finds their way into DCA eventually. So for the, newer starters out here, like this is hard earned experience. Like always like joke around and saying, I once bought 40 dips in a row. So like, this is hard earned experience. Just automate it, stop worrying. If one day you — if you believe it’s a big dip. And like obviously I’m not going to like tell you how to suck eggs. If you feel like buying Bitcoin, like do it. But I tell people, I try to guilt and shame them into this. I say, lump sum is for you. Auto DCA is for us.

Stephan Livera:

That’s a good way to put it. So in terms of DCA, do you have any thoughts on frequency? Some people like daily, there’s weekly, some people say monthly, what’s your thought?

Hass McCook:

Look, for me, I’ve been I have been running the numbers and it like generally speaking, like frequency, doesn’t matter between daily, weekly, fortnightly, monthly. Remember if it’s a hundred million people each doing one monthly buy, statistically speaking, you have a pretty good, like spread of when those buys are happening. And like there’s regular buys happening by the hour or whatever it is, but it’ll all depend on your particular broker or exchange and their fee structure. So for example, some exchanges, like I do Bitaroo. I was like at one stage, like you know, in their earlier days, like I was doing hourly just to make a point. And like my average fee rate was 0.19%, whether I did that hourly or monthly or whatever, like Bitaroo — fantastic.

Hass McCook:

But other exchanges or brokers might say what, we charge a flat dollar, like fee per stack. So that, that way it might not work out best to do daily, you might do fortnightly. So like everybody in their like own like individual circumstances and depending on how their exchange and broker work. So for example, to use the Bitaroo example, again, I send money there at the start of the month, once for one fee and it draws down, other brokers or exchanges might do a pull and you might get charged per pull or whatever it is. So everybody work out you know, what’s best for them in terms of fees and, and, and level of KYC and whatnot. But in terms of frequency, like, I just say daily, because I’m a zealot, but like, realistically, just as long as it’s automated, like you’re going to be okay.

Hass McCook:

So like it might depend on the frequency or pay, like, I’m one of the lucky ones to get paid weekly you might just like money hits your bank account on payday. And like you just set up an automatic transfer to go to your exchange or, or whatever it is. Check out my pinned tweet @FriarHass. I’ve pretty much got all the options for all the Bitcoin only automated auto stacking options, just auto stack and don’t look back basically.

Stephan Livera:

Yeah, that’s right. Yeah. And listeners of course my podcast sponsor my lead sponsor — Swan Bitcoin. So you can use my link: swanbitcoin.com/livera. It’s excellent for those of you in the US but also those of you who are international, they have international there as well. But for that case, you’re doing a wire, but that can still work if you’re doing larger amounts and you just want to get started. It’s a good way to get started there. And I think it’s important to remember that the kinds of returns that you’re getting with DCA, let’s say 70% CAGR. That’s still incredible. Right? If you were in the S & P 500, you might be getting, I don’t know, 12 to 15% per year with Bitcoin DCA, you’re getting 70%.

Hass McCook:

It’s 70%. Every five years. Yeah. Yeah. Basically. And I can put my hand on my heart and tell you, look you in the eye and say 70, because like, that’s buying daily for the last eight years, seven years, six years, five years, four years, three years, two years, one year, it’s all been roughly around the 70 mark. Some years you start, like, if you started in 2017, like right now, your performance is slightly worse because you’re in the middle of a bull cycle. So a lot of it is cherry picking, depending on when you start. But eight years of daily data, which I’ve had a look at, like, I’d be able to like put my hand on my heart and like, even in a bad year, a Bitcoin is good for plus 40% on DCA because you get terrible, horrifying lows for like brief period. And if you’re like stacking daily during that period in five, six weeks when it resolves, you’ve doubled all the money, you’ve stacked in that period. So like, so I remember when I like alluding back to that time in November 2018, when I was telling the sufferers to DCA, if you’d bought a lump sum at 20 grand, you are down like 75% at that point. If you’d been DCA-ing daily, like you were up like 8%.

Stephan Livera:

Yeah. Incredible. And so the real power is that if you have this going, and it’s important to turn it on and have it automated, because then during the dips and during the bear market cycle, you are accumulating so many sats at a very cheap price. And then once the price comes back up, then you’re laughing. And so it’s just important to have it set on because automation is so important because if people, if you try to manually do it, it’s just not going to happen.

Hass McCook:

You’ll get in your head. it’s very hard to buy Bitcoin when the price is going up or down quickly, it’s impossible to rationally make decisions very, very difficult. Like, especially if you’re just starting out in a new like emotions will take over and you’re effectively become shark bait. So the only way around that really is to just, just not look at the price. Now that does require conviction, which is why I love the Swan approach. Learn first and what DCA, like, lets you cheat a little bit because you know, you’re not overexposing yourself too early and you can sort of learn while you earn kind of, so like as you’re stacking more and more, grow your know, increase your conviction and then like not looking at the price, like becomes quite easy.

Stephan Livera:

Yeah. So how would you say that for somebody who is new and they might be thinking, okay, so maybe I set up a lump sum to start and then set up a DCA on top of, to go on top of that. Is that how you would normally approach it for people? Or how do you differentiate for them? Whether they should just start only with a small DCA or they should actually take a lump sum at the start?

Hass McCook:

So I’d say have a firm look in the mirror and be very, very like honest with yourself and say, can I handle losing 50% of my money for three years? If yes, just go all in now. All in now has always been like good advice. If you go all in now and then go away for five years and don’t look at the price, but it’s very hard to go away for five years and not look at the price. I tell people, if you can’t handle that in your stomach, just put in what you can handle and then just top it up. And that way, if it does drop 50%, you’ve got, you’re not like your home isn’t wrecked. Like you’ve, you’ve actually got money up here up your sleeve and you’re comfortable in life to be able to take advantage of the opportunity.

Stephan Livera:

That makes a lot of sense for people because the thing is, and this, I think this even comes from the normal world is this idea of risk tolerance. And it’s common that people overstate their level of risk tolerance. So they might be at the start saying, yeah, I’m really gung ho I’ll ride through an 80% drop, but then when it happens, it’s another thing entirely. So just something for people to be aware of that it’s a common tendency to overstate our risk tolerance level there. So that’s why you’ve just got to think about these things and be when you’re coming in and just starting, you’ve gotta be willing to take that big drop as you know, right. As Hass, you and I, we’ve been through these big drops. It takes time to be hardened. And I think by now, because you and I are in solid profit, even on on those we’re sort of still okay, even if we take a 50% haircut. Right. But for someone who’s new, that can really scare them out.

Hass McCook:

Yeah. And it’s impossible to impart the full wisdom in such a short space of time, but like the Bogdanov meme like are real.

Stephan Livera:

So what’s the Bogdanov meme for people that don’t know.

Hass McCook:

So basically there’s, I mean, the Bogdanov twins, very handsome, gentlemen there’s a meme that like they’re watching like traders through the ether and like watching like their buying patterns. And as soon as a newbie trader hits the buy button, they get onto the phone with their mates and say, all right, he’s bought dump it. And like you see it all the time, like the price whipsaw or like, we’ve seen it. I think like Bitcoin has had something like 10% days in the past two weeks, either up or down. So like avoid the whipsaw. Like you are shark bait. Even the veteran traders, like you know, I was trying to tell people, they also think I’m joking, but like I know like — and I read about this quite a few anecdotes, like some of the big whale accounts, like actually wait until they start seeing like a suicide hotline support posts in like Reddit forums and on Twitter before they say, all right, show’s over like let’s turn the boat around.

Hass McCook:

I don’t know how believable that is, but you do see like, I don’t know if it’s bot accounts or whatnot, but like, you do see like desperation during the 50% crashes. And it’s not nice, like to always like you know, keep [you] seeing [it] cause every, every cycle it’s this time is different and like Bitcoin’s never going to drop again. The only way Bitcoin will never, ever drop again is if we activate the hundred million.

Stephan Livera:

Activate the DCA army.

Hass McCook:

Activate the army and the price will never drop again. But while people are making big lumps, like you’ve got the inflation to deal with, unless the lumps are coming in daily, like prices are going to trend down. So DCA like not for you, but for us and yeah, that sounds very utopian and communistic and the agorist and all of that, not going to like that. And you know what, that’s fine. I’m happy to support. Like, I’m happy to support them achieving their goals and their ends. And like I’ll be helping them do that by just buying Bitcoin everyday. So they don’t have to, but as long as enough do then then that’s basically it. And like, you don’t have to do it for long. Inflation is effectively like zero in about eight years, 12 years.

Stephan Livera:

Yeah, because by then, I mean, the actual Bitcoin inflation rate will be very low. I think the stat I recall is by the year 2035. So 14 years from now, the amount of Bitcoins issued will be 99%, which is crazy when you think about it. And we’re going to hit the point of 90%. I think later this year, as in 90% of Bitcoins that will ever be mined will be mined by the end of this year, 2021.

Hass McCook:

So it’s going to be an interesting final hundred to see people fight, to see the miners fight over that 1%. And it’s going to be a great fight to watch. So I do love mining props to also, I believe one of your sponsors Compass. So just to shout out to Compass. Great report yesterday, full disclosure here. I’m probably getting a nice free steak dinner from one of the compass boys. Zack, I think that the whole team is betting against him in our little bet.

Stephan Livera:

Yeah. We’ll have to do an update get a mining episode out of you later and a chat about the mining dynamics as well. So for listeners who aren’t familiar, Hass has a lot of knowledge and has written a lot on Bitcoin mining. And so we’ll talk about that. So I guess let’s just summarize things for listeners, if you’re new, the easy way to get started is set up your DCA plan. It’s important that you just get it started and automate this thing. You know, Hass has a lot of suggestions and recommendations out there. So you guys can follow him. You can follow him. His Twitter handle is @FriarHass. Hass anywhere else you would like listeners to find you before we let you go?

Hass McCook:

I’ve been publishing quite frequently now with over at Bitcoin Magazine. So you can check me out at bitcoinmagazine.com. Just pop open the authors’ page and search for Hass and you’ll find a lot of my stuff there. And basically the final message to the faithful. They’ve heard this once. You know, they’ll hear it again, but if you want the price to be stable you’ve got to put your nuts on the table. So this war will not just be one with a coconut smile. We got to put our ankle in it. We got to back this baby home. Doesn’t need our backing. Bitcoin will eventually win no matter what we are stuck with it after all. So by hook or by crook, Bitcoin will win, but if you want it to happen soon, we can very, very easily supercharge it.

Stephan Livera:

Fantastic. Thank you, Hass.

Hass McCook:

Thank you.

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