SLP342 Heavily Armed Clown – Should Bitcoiners Get on Zero Fiat?

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Heavily Armed Clown (aka HAC) joins me on the show to talk about this idea of #GetOnZero. We chat:

  • The case for #GetOnZeroFiat
  • Issues with it
  • Dealing with CGT
  • Mindset shifts
  • Emergency fund
  • Inflation rates
  • What scenarios you still need to hold fiat

Links:

Sponsors: 

Stephan Livera links:

Podcast Transcriptions:

Stephan Livera:

HAC, welcome to the show.

HAC:

Hey, it’s good to be back.

Stephan Livera:

Yeah. So it’s been a while since we spoke, at least on a call, but I was keen to discuss with you—I know you’re responsible for a few things. You’re probably most well known for the WTF Happened In 1971?, but also [you’re] a podcast host, and have been talking a lot about the whole Get On Zero. So just for anyone who doesn’t know you, can you just give a bit of an intro on yourself?

HAC:

Sure. I first got into Bitcoin around 2017. That was when I first started taking it seriously. I went through my early shitcoining days and finding my feet and figuring out—unlike a lot of Bitcoiners—I was into Austrian economics before I found Bitcoin, or tangentially alongside Bitcoin, I would say. And it really clicked for me. It took some time to marinate, but once I got Bitcoin and it really sunk in, I was like, Wow, this really is the future of money—a lot of this other stuff is just a distraction. Because, I was pretty blackpilled, I would say, before I found Bitcoin, just in terms of the state of the global financial system and global geopolitics. And it was all a pretty big mess for me at the time, and I had a lot of trouble navigating it in a way that wasn’t pessimistic. And Bitcoin gave me a ray of hope in the world that I didn’t have before—orange pilled, I guess you could say. And as I got more and more into Bitcoin, I met a lot of other Bitcoiners who sparked a lot of interesting new ways of thinking for me, and new perspectives for the world. And one of those people was Ben Prentice, who reached out to me to come on to my podcast at one point in time. And him and I linked up and got super into economics together and digging down the chart rabbit hole. And that’s how WTF Happened In 1971? came to be, with just a lot of late-night conversations with Ben. And since then, I’ve had a lot of opportunities in Bitcoin—I spoke at Miami conference last year, gave a talk on WTF Happened In 1971?, I’ve written some pieces for Bitcoin Magazine. And more recently I’ve shifted my professional focus into trying to transition to being a full-time software engineer. So that wouldn’t have happened before Bitcoin, I don’t think.

Stephan Livera:

Yeah, it can definitely change all of us in many ways. So today I was keen to talk about this whole Get On Zero, basically, in terms of fiat. Now honestly, I’m open to the idea. I wrote an article about it and I’ve spoken a little bit about it on Twitter here and there, and obviously you’ve been quite publicly promoting the idea. Do you want to just start with your own explanation? How did you come to the idea, and what made it click in your mind for you?

HAC:

Yeah, so let’s provide a little perspective. So 2017, 2018, 2019, we were all about HODL and stacking sats. And I think that those are really good memes. They’ve been really good memes for Bitcoin in terms of breeding adoption, getting people off zero. That was the meme too, Get Off Zero. Because that’s where Get On Zero comes from—it’s a play on Get Off Zero. And those are what—@laserhodl I think coined this term—those are low inflation memes. A lot of us, we were probably some of the few people in the world that were paying attention to what was going on in the repo markets in 2019, prior to the supposed coronavirus pandemic and financial meltdown in 2020. Do what you will with recent events in the world, but the fact is that global debt to GDP is higher than it’s ever been. Negative yielding debt was closing in on $20 trillion a couple of years ago. We’re more leveraged than we ever have been. Central banks have fewer tools to combat that leverage than they’ve ever had. And the economic reality is—the types of things that Mises wrote about—is that when you come to a point in time when governments are covering deficits with the issue of paper notes, then the currency collapse of those notes is inevitable. So we’re really staring down the barrel of a pretty steep precipice here. Whereas before, stacking sats was like, Okay, I know where the future is headed—now I feel like we have a much clearer picture of how it’s emerging. And the future is uncertain. So for us, it’s developing new realtime strategies for navigating this emergent paradigm as we’re stepping through it. And in the last year, just here in the United States—where I know I’m probably the most shielded from a lot of these fiscal and monetary forces—inflation’s been very bad. You look at things like housing, you look at things like food, you look at things like electricity or the cost of energy. Pretty much everything all across the board has gone up, and in some cases has been extremely volatile. So really the Get On Zero movement is about saying, Hey, we’re at the opportunity. We’re fortunate enough right now to have the benefit of the hindsight of history, the understandings that we do of economics, and this tool that allows us to entirely opt out of this system at every level. So Get On Zero isn’t really like a purity test. We’re not looking to beat people over the head with our Bitcoin Bibles and say, Ah, you still have $71 in your checking account. It’s more of a heuristic for looking for optimal strategies to navigate forward into the future. I know for me, my guiding principle is to minimize the amount of time that I’m holding inflationary cuckbucks. Because every second that I have a dollar in my checking account—no matter how few dollars it is—those dollars on average are going down in value, and my Bitcoin on average is going up in value. And I’ve become increasingly convinced that the volatility in Bitcoin is not necessarily—it feels more dramatic, because all of our purchases tend to be denominated in fiat and we’re all default Keynesians at the end of the day so we do our economic calculation in paper—but at the end of the day, Bitcoin isn’t really all that much more volatile than when you’re pricing something like lumber in Bitcoin vs. pricing it in dollars, with how just insane things have been in the last few years. So that’s really the gist of it is: minimize the amount of time that I hold dollars—maximize the amount of time that I hold Bitcoin. And In a lot of cases that ends up meaning I have $0 in my checking account.

Stephan Livera:

Yeah. Excellent. And so I think that’s definitely the part that I can agree, that there’s definitely—in recent years, we’ve seen that shift, and things have gotten even worse—and so even for me, when I was first getting into Bitcoin and the way I would talk about it, I was always being like, Yeah, inflation’s bad. And people would often say, No, Stephan, it’s not that bad. But in recent years it really is starting to get worse. And so in the US—obviously this is the fake number, this is their government number—7% is the CPI number that they’ve said. Obviously we disagree with that number—we believe it’s actually higher than that. So yeah, let’s walk that through in terms of what that looks like and give us a steelman argument. What should people be doing if they want to get on zero fiat? Basically they are buying as much Bitcoin as they can. And then what’s the normal flow look like? Let’s say you have your fiat job. What does it look like for you as a get on zero practitioner?

HAC:

So it’s going to look different for everybody. And a big part of that is because the tooling isn’t really there yet. Let’s go back to 2013. Being a Bitcoiner was much different back then. Your options were very limited. You didn’t have access to a lot of tools and resources. You were probably buying your Bitcoin off of Mt. Gox or peer-to-peer, or you were mining it yourself. Things have changed a lot. Even just in the last couple of years, a lot of these Bitcoin companies that are servicing that stacking sats paradigm have come online and offer those services to Bitcoiners. And that really was a product of the demand from the community for those services. It was like, Hey, I want to be able to buy Bitcoin and have it go straight to my cold storage. Well there’s companies now that do that. But what’s happening now is this new emergent paradigm of, Hey, our currency is collapsing. This currency collapse is inevitable. We’re safer holding and using Bitcoin, which ultimately, at the end of the day, Bitcoin is a money. It’s not an investment. And I think that the stacking sats meme has conflated this in people’s minds—they tend to think about Bitcoin as more of an investment than as a money, when in reality, what we’re looking at here is a very competitive alternative money system. And there are a lot of historical precedents for this. You look at someone like George Soros, who supposedly broke the pound by speculating on currency and basically essentially shorting the pound, which is what you have the opportunity to do now by leveraging your ability to hold more Bitcoin and practically zero or negative dollars. So I think it looks different for everybody. I know for me, I can speak to what it looks like for me, is that I get paid twice a month. All of my living expenses go onto a credit card. When I get paid, I get paid on the 1st. I pay my mortgage—whatever I have leftover goes into Bitcoin. And I carry a $0 checking balance, put all of my living expenses on a credit card. Then I get paid in the middle of the month, pay off the credit card, whatever I have leftover goes into Bitcoin—rinse and repeat. And what I hope to see, and what I think we’re already starting to see, is a fleshing out of that to tooling for Bitcoin-native banking. So I want to be able to have a bank account and I want to be able to have that bank account denominated in Bitcoin, rather than denominated in dollars. I want to have a Bitcoin checking account and I want to be able to write a check or swipe a debit card, and at that point of sale, have that conversion to whatever the local currency my merchant—I call them analog natives, whatever the analog natives—prefer at point of sale, they’ll instantly receive what they want, but I get to hold what I want.

Stephan Livera:

One small thing—I do disagree a little bit that the stacking sats companies are out teaching it as investment. I actually do think of it—it is savings. It’s just that a lot of the newer people coming in think of it as an investment, and obviously once you’re more orange-pilled, you get to that point where you are, No, it’s my savings—this is the money of the future. But fine, that part aside, I think to the broader point, as I see it, around having a fiat balance, or even maintaining a small fiat balance, I think it’s probably useful to hear from the Get On Zero guys. What’s the thought around people who hold an emergency fund in fiat terms? So if you look at normie finance and personal finance, they might say something like, Keep a 3-6 month fiat emergency fund. So what would you say to that idea?

HAC:

Yeah, so ultimately, I think savings is really important, because savings is how we accumulate capital savings. By deferring consumption now, we can better plan for the future, because the future is uncertain. So savings are probably one of the most important things to have. But we’re stuck in this rut of default Keynesianism where that animal part of our brain is still telling us that that paper money the government issues is safer to hold in times of uncertainty than Bitcoin, which we know—objectively—has better monetary properties. And it’s just a function of letting go of that animalistic part of your brain that tells you, No—something about this is wrong, this is unsafe. This is not right. You shouldn’t be holding this government paper money which is just essentially worthless. It’s vapor. It’s nothing. Vs. Bitcoin, which you know is objectively a much harder, sounder money. It can’t be debased, saleable across time and space. It’s a bearer instrument, whereas this cash is essentially nothing—and that even worse when you’re holding it in a checking account. You can hold your savings. You can take custody of your savings. Unless you’re taking self-custody of the money in your bank account and hiding the dollars under your mattress, you don’t have access to that money in times of true crisis. Your bank could essentially be shut down. I think that a lot of the pushback to get on zero is directed at people who don’t have that savings cushion, and maybe will be subject to a lot of volatility. And maybe we could get into that a little bit later, but I think having your savings in Bitcoin means you’re more likely to not need to service that savings over time as inflation is eating into it if it’s denominated in dollars, and, say, you lose 15% of your purchasing power over a year. Well now you have to go back and add 15% to that savings in order to just be able to service it, to keep it on par with where it was when you first accumulated that capital. Whereas if you’re saving in Bitcoin, that Bitcoin is becoming worth more over time as the rest of the world is catching up to this. And you’re not just servicing those savings, you might have to sweep a little bit out of it into a colder storage, or maybe you go out to a nice dinner or whatever, because your purchasing power is increasing.

Stephan Livera:

So the way I’m thinking about it is more like: you might well recognize—and obviously this is a Bitcoin show, pretty much everyone here is all about Bitcoin—we recognize that Bitcoin is the thing to maximize that you can hold. But I think the pushback would be, from my point of view, it would be more like: it’s recognizing that we still live in a society where a lot of other people will not accept our Bitcoin directly. And so that necessitates us either selling some sats to get some fiat to pay that person, or you are using some kind of fiat service to allow us to pay for those bills. So for example, if your rent—your landlord does not accept Bitcoin—well, you’re obviously going to have to sell some for fiat. And I think that’s where the aspect of, let’s say, the person who’s holding a very high allocation to Bitcoin, but just keeping a small amount in fiat terms—that part to me, I think it still makes sense to manage these day-to-day liquidity aspects of it, especially in the case where the other person doesn’t accept Bitcoin, and especially around the aspect around CGT, which we’ll probably get into that, also. So from your point of view, what’s the issue there, then, if somebody’s holding a small emergency fund, as an example?

HAC:

It’s not even so much as that it’s an issue, it’s that, in my mind, it doesn’t make any sense. Because again, from my experience, I still have to pay my mortgage in dollars, and I do, every month. But that doesn’t mean that I’m abandoning my heuristic of minimizing the amount of time that I hold those dollars. I would say on average per month I only hold dollars for a few hours. Because I see that money hit my account, I pay my bills, and then the rest goes into Bitcoin. And in terms of my savings, my savings are denominated in Bitcoin. And I know with certainty that on average, over time, those savings are appreciating in purchasing power, whereas I know that that fiat savings that I would have would be depreciating in purchasing power over time. It’s just a matter of saying, Okay, well I know that, and I’m going to use that as a guiding heuristic. Otherwise, my savings are being eaten into by the government. And ultimately, it’s more philosophically or more ideologically like, Which system do I want to lend my liquidity and legitimacy to? Where do I want my capital? My mind space is fully in Bitcoin. And I know that when the government prints more money, they’re not stealing purchasing power for me. I’m not funding drone strikes in Ajerbekistan or whatever. So hopefully that makes sense. I think I answered your question.

Stephan Livera:

So how I’m seeing it then is there might well be individuals who keep a high allocation to Bitcoin, but for strategic reasons would prefer to not have to, for various reasons which we’ll get into. I think probably the first one is if you live in a country, or you are a tax resident of a country, that has a capital gains tax. Because here’s the thing: as an example, let’s say you take that fiat pay, but something happens out of cycle—let’s say you break your arm—and you need to go to hospital and pay this big bill, or your car breaks down. What are you doing then at that point where, if you don’t have the money to pay for this one-off thing and you haven’t received the pay yet to cover that, then at that point you’re most likely having to sell some Bitcoin and pay the capital gains tax if you’re KYC’ed, or if you find a way to borrow against your coins or something like that. Do you agree? That’s essentially the situation you’d be in.

HAC:

Definitely, yeah, yeah. But I don’t see that as a negative—it’s certainly an inconvenience. I don’t want to give the government any of my money. But if I owe them money, it means that I’m richer. If the government is coming to me with a tax bill, it means that I’m richer than I would’ve been otherwise. And in a lot of cases, depending on how you do the accounting, like if you’re doing HIFO, or if you’re doing first in, first out, or depending on just how you’re stacking that up, you may actually be able to take on capital gains even though you’re net richer, because you’ve been buying Bitcoin and holding Bitcoin for long enough that you’re savings have accumulated massively in value. Well, maybe your last paycheck—since then, the price has gone down, and you can maybe potentially claim that as a capital loss, especially if you have pretty decent income. And in a lot of cases I think it nets out, especially if you’re buying Bitcoin on a regular basis. The price is fluctuating. And, Hey, I have to liquidate a little bit of Bitcoin into this local analog native currency to pay the warlords. Well, I’m richer than I would’ve been otherwise. And maybe through some clever accounting, I might not end up owing them anything. It does create a bit of an accounting headache. That is certainly a real problem. And that’s why I think that an honest conversation about this starts with saying, Hey, we need to see more tooling for Bitcoin-native banking. I think there’s already some services that are coming online. Because ultimately—all else being equal—if you’re doing what you’re doing now on fiat with a normal banking system, but if you could do exactly that denominated in Bitcoin fully, then all of that accounting would be taken care of for you, because your paycheck would come in, it’d be converted to Bitcoin, and then at point of sale, it’d be converted out of Bitcoin. And all of that accounting would be done for you in that checking account. And this isn’t to say—I am a firm believer of hold your own keys, savings go to cold storage, they’re not held by a third party custodian—but checking on Bitcoin-native banking is functionally the same as checking on USD banking, or fiat banking. So we’re not really talking about abandoning hold your own keys. We’re talking about doing what you’re doing now with your fiat, but on a Bitcoin-denominated banking account. That would alleviate a lot of those accounting headaches. And then more broadly, to circle back to what you were saying before is: it’d be like if you were living in Venezuela, and you had access to Bitcoin, and you had all of this knowledge that we have. And yes, all of the locals, they’re going to prefer to accept, or be coerced to accept, Bolívars in the majority of transactions. Maybe you might run in with a few people who say like, Yeah, I’ll take Bitcoin, just send me Bitcoin and I’ll give you this good or service that you want from me. But in a lot of cases, you’re going to be paying in Bolívars. You’re not going to hold the Bolívars just because all of the people around you are accepting Bolívars, you’re going to minimize it. And this is an extreme example, because it highlights the logic. You’re going to convert in and out of those Bolívars when you have to—at point of sale, if you can help it. Because you know that they’re a risk to extreme volatility. This isn’t the 1980s. We’re digital natives and we’re interacting with these analog natives as if we’re in a foreign land. And we’re using their currency because their local warlords demand it. But technology has made it so easy for us in many cases, especially with Bitcoin, to be able to transact and instantly be in and out of the currencies that we need to interact with these analog natives. It’s not like we have to go and withdraw cash at the ATM and carry it around in order to be able to pay for things.

Stephan Livera:

So I broadly agree with a lot of what you’re saying. I broadly agree that you want to be maximizing your Bitcoin and minimizing your fiat. I think the difference, or maybe the distinction in our views is more like: I see more of a role for keeping a small sliver of fiat as a way of being able to deal with day-to-day liquidity issues, as opposed to literally going to zero. I think that’s probably the main disagreement in my mind here is the talk is, Ah, go to literally zero, whereas I’m thinking of it more like, Minimize your fiat exposure, because something might come up and you might not be able to quickly go to sell some Bitcoin at the time that you need it. And if it’s an emergency that you need to fix your car or go to the hospital or whatever it may be, you might be left in the lurch at some point there with $0 in your checking account. And, let’s say, if your credit limit doesn’t cover for that, or if you don’t have access to the right services that enable you to quickly go, Okay, I need to liquidate some here.

HAC:

Yeah. If you’re going to be doing this, you would want to have access to a decent line of credit. There are credit cards that you can get access depending on—of course, I understand not everyone’s circumstance is the same—but I have access to basically a credit card with an unlimited line of credit. I don’t want to ever want to carry a balance on that, because the interest is insane, but I mean it has unlimited credit. And you can still write checks, as crazy as it sounds, because nobody’s going to go and cash a check that day. So like even if you need to settle funds, like somebody demands payment in fiat at that moment and you just don’t have fiat, checks are a lot of times an option. And yeah, that is a problem. It would be great if I had a Bitcoin-denominated checking account and I could write checks or swipe a debit card right out of that account. But the fact is, if people aren’t accepting credit cards, a lot of times then, they’re taking checks, or it’s a wire transfer. And in those cases, yeah, you need to try to plan for those things. But very rarely are there emergency situations where you can’t put something on a credit card, at least in my experience. But the way that I’m looking at it is that Bitcoin offers me this opportunity to be set free from slavery. And to me, still denominating some of my energy in dollars and saying, Okay, I’m going to have 90% of myself in Bitcoin world and I’m going to leave one foot in the fiat world—it’s like going back to the farm once a week to work a day. You know what I mean? As a slave. It’s like, Well, I had that job security and my master took really good care of me. So just once a week, I’m going to just go back and I’m going to just pick some cotton, instead of saying like, No, I’m free now. I don’t have to be a slave in this old system. I don’t have to lend liquidity and legitimacy to these slave dollars that are stealing from all of us and are literally causing a meltdown of economic calculation, and peaceful and voluntary and profitable cooperation between people. Literally, the fundamental base layer of social cooperation is being eroded in front of us. The faster all of us move to Bitcoin—one of the things that I found, Stephan, the ways that making this shift has affected me mentally, like affected the way that I do my economic calculations—for one thing, I’d rather pay people in Bitcoin right now, because it’s easier. So whenever I interact with anybody, I’d rather pay them in Bitcoin. And to be honest with you, when I’m getting a quality good or a service, I’d prefer to pay people in Bitcoin, because I’d rather exchange what I know is a good, hard money for this good quality service or product that I’m receiving. I want to be able to have those kinds of transactions. It’s very awesome to know that I’m giving someone something of value in exchange for this thing that I value. That’s the base layer of social cooperation. That’s what we want. But beyond that, Bitcoin now for me is less about speculating. It’s less about buying dips, and about—sometimes I would go through these motions where I’d trying to be stacking sats extra hard. It’s like, Okay, I’m not going to go out to dinner tonight because I really want to buy that dip that just happened. And that’s totally reasonable behavior: defer consumption, take advantage of opportunity cost and those types of things. But for me now it’s more about like, Okay, I’m already on zero. I don’t have any cash sitting around to buy the dip. I can’t avoid going out to dinner tonight to buy more Bitcoin. So it becomes more of a game about maximizing my income, which is a much more socially positive aspect of my personality now, because it’s about, Okay, how can I provide value to other people? And in exchange, get more Bitcoin. Whereas before it was about, What can I defer? And I still make deferment consumptions probably even more so now than I did before, but it’s more of like, No I don’t want to spend my Bitcoin on that. Whereas before it was like, I don’t want to spend my dollars on that so that I can buy more Bitcoin. Now it’s about, Okay, I need to improve my income. I need to hone my skills. I need to provide better products and services to the market. I need to satisfy more people’s needs so that I can get more Bitcoin. And I think that that’s just a healthier way to look. I think that that’s how economic and social cooperation should look.

Stephan Livera:

Yeah. So I’d certainly agree with the mindset changes and benefits that you were highlighting there. And I think a lot of those really just come to anyone who keeps a high percentage of the net worth in Bitcoin already. I think for me, it’s like whether you’re at 98% or 99% versus 100%, it’s that last 1%-2%—depending on where people are at or whatever—that can be really hard for people, because of the access to the services, or because, as you mentioned, the accounting headaches. You might not have accounting software that deals easily with all of the Bitcoin wallets that you use. So for example, obviously the exchange transactions tend to be fine because you can normally download some kind of CSV file, put that into your tax accounting software or send that to your tax accountant if you have one, and they can take it from there and run with it. But if you have Bitcoin wallets on your phone, and other things that aren’t really connected that you can easily download, that’s probably one of the main headaches, as you rightly pointed out. And hey, who knows maybe in the next years we start seeing more products and services that help Bitcoiners deal with these aspects of it. And I’m hopeful to see that kind of thing where maybe they do like a credit card where you can collateralize against Bitcoin and spend fiat, but actually it’s credit. So that way you’re not actually—you’re staying on zero in this case. So I think that’s probably the main thing. But I think the other aspect, probably the principle objection I have to literally go into zero rather than say 95%, 98%, 99%, let’s say, is just that risk of an extended bear market. And I think that’s something that for me as a 2013—or having been through multiple 80% drawdowns, it’s just always—and maybe I’m overly paranoid. Maybe I’m overly pessimistic on the path or price trajectory that Bitcoin takes, or the purchasing power trajectory, if we want to use that term, that if we were to go through some big 80% drawdown and then at that point I would have to be spending Bitcoin or potentially there’s a risk that, let’s say, you lost your job during this big downturn. At that point, I think that’s probably the main thing in my mind, or at least one of the main things. So I’m wondering what your thoughts are on that?

HAC:

Yeah. So it’s two things. First and foremost, yeah, if you lose your income, that’s not a good deal in any situation, regardless of how you’re denominating your capital. If you’re fully in on Bitcoin, if you’re half in on Bitcoin, if you’re 98% in Bitcoin, losing your job hurts. And I think we can all agree that income is one of the most important things in terms of your quality of life and your safety and security, is having that regular income stream. Because especially if you’re Bitcoin-native, because as you’re earning income—let’s say we had another extended bear market—even as the price is going down, you’re getting paid on a regular interval. So as the price is going down, you’re getting paid in that equivalent exchange rate. So yeah, while your savings might be relatively depreciating in value—as you’re getting paid, you’re getting paid at that rate. So your income—borrowing any extreme circumstances—and this is again why savings are so important, because the future is uncertain. And I think that we all agree, like if our baseline assumptions I’m sure are all the same. But beyond that, historically, Bitcoin performs at at 200% CAGR. And even in the midst of these bear markets, if you’ve been holding Bitcoin for more than 18 months, chances are you’ve seen your purchasing power appreciate. And even beyond that, if you’ve been holding Bitcoin for more than a few years, a major drawdown in Bitcoin’s price still doesn’t eat into the appreciation that you’ve seen in your savings. Like yeah, your purchasing power mark to market is lower, but your net savings is still in a better position than you would’ve been otherwise. So I think I try to look at it a little bit more holistically, because, really, it’s just a matter of like, Where do I want to place my energy? Where do I want to place my capital? And really evaluating in my mind, Why do dollars feel safer? Why do dollars feel safer? Because the same way that you feel about these potential drawdowns in Bitcoin, I feel about the paper money that my government issues. I’m now more concerned that that offers me less safety and security and stability than Bitcoin, because I know Bitcoin is objectively better. So why would I be thinking, in my lizard brain, that the paper money that the government gives me is better and safer in times of uncertainty?

Stephan Livera:

So I think the short answer essentially is that there are other people out there who you need to buy products and services from that do not accept Bitcoin. I think that’s the short answer, is that it’s not that we’re insane, it’s that 90% of the world out there is still stuck in the fiat mindset, and stuck only accepting fiat. And so we’re in this weird situation where we want to be able to pay fiat and hold Bitcoin. And so just to the extent that you keep a small balance of fiat just to be able to satisfy the demands of the fiat people, that doesn’t really seem like such a world-changing amount or difference in my mind.

HAC:

I would disagree. And I think that a lot of this system operates on the margin. I don’t think that very many people have savings in general. If you look at the average American, most of them have no savings in the case of an emergency. The majority of their economic energy is in their checking account. And it comes on the 1st and it gets spent up until the 15th when they get paid again. Or however often they get paid. Most people live paycheck to paycheck, and that’s a problem with their ability to maximize their income and defer consumption, and maybe it’s the lifestyle that they live. It’s a whole lot of problems. And Bitcoin doesn’t necessarily fix that for them until they’re ready to take that step and start to save and defer consumption or increase their income—because you have to do one or the other. I think it’s defeatist to say like, Oh, this last $2,000, well that isn’t going to move the needle. It’s not really about that for me. Like I said, it’s more—and don’t get me wrong, being a pioneer is uncomfortable. These are uncharted territories. This is a pretty radical idea, to move completely away from what’s comfortable and what’s normal and what’s familiar, into uncharted land. It’s uncomfortable to be a pioneer, and it’s not for everyone. I understand that. But I do think that there will come a time when everyone’s going to want to move west, so to speak. But right now it’s the few forging the path, moving ahead, saying, We think that this is the way forward. And there are people that are saying like, Well I’m not going to follow you. You guys are going to die. But that’s pioneering in a nutshell. That’s exploring new frontiers, and people may say, Hey, it looks a lot better over there. I’m going to try to catch up. And one of the things that @laserhodl says a lot is that, really what we’re trying to do more holistically here is front-load some of the pain of abandoning fiat. Because we know currency collapse is inevitable at this point. You cannot continue to cover deficits with the issue of new paper notes. It’s simply an erosion of the base layer of social cooperation and trust. You can’t do it. Mises wrote about it. It inevitably causes currency collapse. Inflation is always a product of inflationist policy, not underlying economic conditions. So really what we’re trying to do right now is front-load this pain. Because it’s not easy right now. And it’s a little uncomfortable at first. For me, I feel better than I ever have. I feel more secure than I ever have, despite the fact that I hold $0. And I understand not everyone’s going to do this. And that’s why I think it’s important to highlight that it’s not purity test. For me, it’s a guiding heuristic. How can I minimize the amount of time that I hold fiat? How can I minimize the amount of energy, liquidity legitimacy, that I lend to this system that’s stealing from us, that’s eroding this base layer of social cooperation? That’s my mission. I want to move to a Bitcoin standard as fast as possible. And I think that this is just one more step as to how we get there sooner. And I think debating whether or not that $2,000 in your checking account is going to move the needle—I think is irrelevant.

Stephan Livera:

Yeah. And I agree that it’s probably not really of much use. The people who are 99% arguing with the people on 100% know that that last $1,000 or $2,000, whatever, it’s not really going to really matter that much. It’s more about how many people are going to be brought in and orange pilled, so to speak, and who are now earning and then obviously stacking as much as they can into sats. And HODLing the sats is the important part. So I’m curious as well, how much of the concern—or I don’t know, maybe this is not a concern at all for you—but retaining access to fiat services? So for example, in some banks, you have to have a certain balance to retain access because you might need to be able to make wire transfers or other kinds of fiat electronic transfers. Does that play into your mindset there? Or anything around, let’s say, access to credit as an example. They might need to see a certain history in order to be able to access fiat credit.

HAC:

Sure. We’ve got to be realistic here. There are certain constraints that you have to operate with, and everybody’s situation is different. And that’s why, again, I just have to keep reiterating, because I feel like a lot of the nuance of this movement was lost on Twitter—which of course, like everything. Like yeah, we understand there’s going to be times when maybe you’re trying to buy a house and you have to show that you either have cash, or you have to show that you have income denominated in dollars or something. And you’re going to have to figure out a way to do that. You’re going to have to sell some Bitcoin, move it to your bank account, take a snapshot, send that over to the adjuster. Yeah, do what you got to do. My situation is different than everyone else’s. I use a credit union. I don’t use a regular bank. I don’t have to have any money in my account to still have access to those services. I have a credit card that just continues to work. I pay an annual fee for access to a premium credit card that gives me an unlimited line of credit. And maybe that’s the way to go for some people. Maybe it isn’t—I don’t know. I’m trying to figure out this path as I go. And I’ve certainly found a method that works for me with the services that I have access to. And I think that more and more services are coming online that offer more robust tooling for Bitcoiners to be able to operate on a Bitcoin-native bank. I think that that’s closer than we would think, in terms of being able to access that directly as Bitcoin-native banking. I think that that’s coming. And I’d really like to see a lot of the successful Bitcoin companies pivot to that. I would love to see that.

Stephan Livera:

And so one other aspect I’m curious to get your thoughts on: so this is a view articulated—now again, I don’t necessarily agree with this view, I’m saying it for the sake of an interesting discussion—there are people like say, Michael Saylor, for example, who comes out and says, Oh, Bitcoin is digital property. And we’re still going to use the US dollar because that’s the world reserve currency. And in that frame of mind, it’s more like, Oh, you just use fiat credit. So you would—obviously, if you’re Michael sailor, you can access very, very cheap credit, but let’s say the average pleb can’t access that level or that pricing or those kinds of terms, but should they still be thinking about actually using the fiat system for their own benefit? So for example, if they were to use fiat loans to be able to stack more? Or should they use a fiat car loan or a fiat home loan, et cetera, to avoid spending Bitcoin, and these kinds of things. And of course, it’s not a one size fits all like you were saying, of course everyone has their own financial situation and different needs and so on. But to that extent, what do you think about the idea of using the fiat system, the credit available to many people in the fiat system, as a means of either stacking more or continuing to HODL rather than spend?

HAC:

Yeah, I think it’s 100% a great idea. I’m not against it at all. Because that’s what George Soros did. When he was speculating that the pound would fail, he was essentially negative. He was shorting it by leveraging debt against that currency. And that’s essentially what you’re doing as a Bitcoiner who’s leveraging fiat credit to obtain more Bitcoin. I would caution people to focus first on income to get to a secure and stable place in terms of savings and income, unless you’re in a situation where you have no savings at all. And then maybe it’s worth it to take a little bit of risk to try and acquire some Bitcoin and hope that it appreciates in value. Because if you’re living paycheck to paycheck right now in this environment and you have no savings, you’re in a really bad spot, and you have really got to get your butt in gear, or this system is going to crush you. You will be destroyed by this. And this is not a joke. This is very, very, very serious. And I worry about people, but the honest truth is that, as this continues to accelerate, a lot of people are going to lose everything. And I hate to see that, I hate to consider that, but that’s an economic reality. We’re just observing this happening. And we’re reacting to it as it emerges. We can’t change reality. This is what it is. But yeah, I totally think people who are in positions where they want to take advantage of artificially low interest credit like home equity loans or mortgages, or maybe you’re in a position where you can leverage business credit like Michael Saylor—by all means, have at it, do what you’ve got to do to short the dollar.

Stephan Livera:

Fantastic. Now probably the other objection that I’ve seen people give around this idea of Get On Zero is perhaps what we might call staying under the radar. There might be some HODLers out there who, let’s say, because they never sold Bitcoin, never had to actually report on it, because they just wanted to be able to purchase Bitcoin and HODL it, and only spent fiat. And in doing so, not having to actually do a capital gains tax event, and therefore not having to report. How much value do you place on that idea that there might be some value, in a broad sense, of people staying under the radar and legally not reporting things to the government?

HAC:

Virtually none at all. And the example that I use is that if we were all buying under the table and selling under the table and doing all of our transactions and cash peer-to-peer, then Bitcoin would look a lot more like Monero than it does like Bitcoin. Bitcoin is where it is because of the adoption curve. And the easiest on and off ramps for Bitcoin are through KYC’ed institutions. And unless you’re accumulating all of your Bitcoin—so I think a lot of people conflate, like when it comes to privacy, they conflate transactional privacy with custodial privacy. Because if you’ve bought any Bitcoin off of a custodial exchange, well then some government institution knows that you own that Bitcoin. They may not be able to prove that you still have it or that you don’t have it, and you can’t actually prove that either, but—well, you can only ever prove that somebody is willing to sign a message saying that you own that Bitcoin, that’s all you can ever really prove at the end of the day—so there’s a difference between obfuscating custodial privacy vs. obfuscating, transactional privacy through services like JoinMarket or Wasabi or whatever. And I think people conflate that problem. But more than ever, our most challenging, most urgent, most pressing problem facing us is this collapse of the base layer of social cooperation, which is money. And what we need is to usher in the adoption curve of Bitcoin, whether that be through KYC, whether that be through no KYC, whether that be through peer-to-peer. The honest truth is that the fastest liquidity on-ramps into Bitcoin are through KYC’ed institutions. And that’s okay. Trust me, I’m not a fan of reporting anything to the government. I’m not a fan of giving the government percentages of my net worth. I also don’t want to go to prison. So I have to play that game. I have to interact with—I have to follow the customs of the warlords, so to speak, of the analog natives. But if you think that you’ve bought all this Bitcoin off of CashApp and you’re hiding from the government because you haven’t reported any capital gains transactions because you’ve never sold a single Satoshi—I’m sorry, you’re just deluding yourself. You’re living in a fantasy world. If you’ve taken a picture of yourself with your driver’s license and sent it into one of those exchanges, then they know you own Bitcoin.

Stephan Livera:

That’s correct. And so at some point in the future, or even today, there are information-sharing agreements going. And it depends on which country of course, and which jurisdiction and all of this, but it’s quite common. And it could become a thing in the future where, let’s say, person ABC is requested by the government and they say, Hey person ABC, we asked the exchange, they saw you purchased 50 million sats. Do you still have them now? Do you owe us a capital gains tax bill on this? And so while I haven’t heard of that yet, it is definitely a possibility in the years to come. So that’s something that people have to think about. And so, yeah, I think that’s a good point you make. I would say there is perhaps even for people who have KYC’ed and purchased coins on some exchange years ago—let’s say someone bought coins in 2017 at a few thousand dollars a coin. And now as we speak, the price is $43,000. And so for them to now—if they had to sell—they would now have to pay that CGT, basically. But I guess again, this comes back to the point you were saying earlier that, in the case of Get On Zero, that they would’ve been incrementally HODLing a little bit more sats, and therefore they are going to end up net net ahead in sat terms, in Satoshi terms, which is obviously the terms we care about. So I suppose, would that be the steelman? Would that be your argument?

HAC:

Yeah. And one of the things that I find advantageous about Get On Zero is that it encourages me to spend my Bitcoin. Because like I said earlier, it’s just easier. Because I don’t have dollars. I have a credit card. So if you have a Stripe account, yeah, I can pay you with that. But it’s actually easier for me to just pay people in Bitcoin. And I actually think that we should be encouraging this, because the more peer-to-peer transactions that we get going, every time I send Bitcoin peer-to-peer to someone else, well now it’s liberated from that KYC. If I receive Bitcoin in exchange for a good or a service, it’s KYC-free. No one knows, unless I’m keeping a record of the transaction and I’m aligning it with the customer’s information, which I’m not doing for any of things that I’m receiving Bitcoin for in exchange as a service. Nobody’s come along and said, Hey, you need to make sure you do this. I’m not going to. Every single time you send Bitcoin peer-to-peer, it’s liberating it from this KYC system. So if we want to get to the point where we’re making that custodial risk irrelevant, we need to get as many people on board as we can, and we need to increase the amount that people are actually using Bitcoin as money, because then it becomes irrelevant whether or not you’ve been KYC’ed at point of sale or whether or not you were KYC’ed at point of liquidation. We want to expand the Bitcoin economy. We want more and more people coming on board, getting involved with this, using Bitcoin to store their economic time and energy. And that’s how we win. We win by reaching increasingly accelerating levels of adoption. We win by using Bitcoin as money and making the fiat slave irrelevant.

Stephan Livera:

Yeah. I think that’s probably a good spot to finish up. So here’s the way I’m thinking about it—and I’ll give you a chance to also respond with your own thoughts on it as well. But I think the way I’m seeing it is: I believe that eventually we’re all going to get on zero, eventually—and yes, it’s subjective—but I think there’s potentially, depending on your business and how you do things, you may be in a situation where you have to wire fiat. And so you might need a small amount of fiat liquidity. I don’t want to dox too much of my own personal life, but basically, let’s say, it’s in a very high allocation percentage and essentially, I’m still operating under that general idea of minimizing fiat, I’m just not literally at zero. That’s where I’m at. But if you want to give any closing thoughts for listeners about why they should think about getting on zero or minimizing fiat, and of course, where can they find you as well?

HAC:

Yeah. Maybe Minimize Fiat would’ve been a less obtrusive hashtag for people. We would’ve caused a lot less drama. But nobody would be talking about that. So Get On Zero. It’s in your face. It’s radical. It’s crazy. It flies in the face of what a lot of people think traditionally is smart. But our world doesn’t make a lot of sense right now. And I think we all want to see clown world end. And I think every dollar in our checking account is one more dollar for them to steal from you to pay for clown world. And I want to raise my kids in Bitcoin world, not clown world. I don’t like clown world. I don’t enjoy clown world. I don’t have fun in clown world. Clown world keeps me up at night. I want clown world to end as soon as possible. And I can take steps towards that by reducing the amount that I fund clown world—which clown world is funded by deficits. Clown world is not funded by tax revenues. So that’s really what it comes down to to me. And yeah, because you said it’s subjective and I would agree that it’s subjective in the sense that you have to do what works for you, but I don’t think that you’re going to go wrong if your objective, holistic guiding principle is to minimize fiat. Minimize the amount of time that you hold dollars, minimize the amount of dollars that you hold, or whatever your fiat currency of choice is. I use dollars because I’m in America. And I don’t think you’ll go wrong. I really don’t. I don’t know the future—the future’s uncertain for all of us, despite what anybody may tell you—but I know that Bitcoin is objectively the best choice.

Stephan Livera:

Fantastic. And Colin, what can people find you?

HAC:

Oh, they can find me on Twitter at @heavilyarmedc.

Stephan Livera:

Fantastic. Thanks, HAC.

HAC:

Thanks, Stephan.

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