Bitcoin-Backed Loans and The Future of Real Estate

Mike DeHaan: [0:00] Really quick before the show starts, in case you haven't heard, we have a growing community of investors called the scale community, which is full of people learning to make massive income with their real estate businesses so they can reach financial freedom a little bit faster than building a rental portfolio solely over time, because honestly, that takes decades, and who has time for that? So if you're an investor who is serious about growing and creating a scalable business without needing to be a slave to it twenty four seven, then go to collectingkeys.com/scale and apply. And if you're a good fit, we would love to have you join the community. So, again, collectingkeys.com/scale. Go ahead and apply, and we'll see if you're a good fit.

Dylan Koch: [0:38] I've actually taken a Bitcoin backed loan to buy real estate.

Mike DeHaan: [0:43] What's going on, guys? Welcome to today's episode of the collecting keys real estate investing podcast. This is the show where you teach you to make massive income, not just passive income with your real estate investing business. And I am Mike DeHaan here with my cohost, Dan Austin and Dylan Cook. And on this show, we're going to start with a quick little announcement of our kind of like, you know, a couple changes we're having going on with the show. So And if you've been listening to this show at all over the last, I don't know, several years now. So we've doing this for over three years. We've traditionally done three episodes a week for the last, I don't know, almost two years. I think we've been doing that dance since 2022.

Dan Austin: [1:25] A lot. So we've been doing Yeah.

Mike DeHaan: [1:26] Interviews on Monday. We do this off market operator radio show on Wednesdays, and then we've been doing these Friday focuses. And we are going to be changing things a little bit going forward starting next week where we are just gonna have two shows a week. We're going to have this kind of general show with me, Dylan, and Dan come out on Tuesdays, and then we're gonna keep their Friday focus. On Tuesdays? On Tuesdays because I like the cadence there. It has like a little bit of a better spread than being like Wednesday

Dan Austin: [1:53] and Thursday. This is a change to me. I didn't even know. Okay. I wasn't paying attention to

Mike DeHaan: [1:57] It's gonna be coming out on Tuesdays, and then we're gonna be dropping the interviews just for the time being. Because, honestly, our interview shows don't usually do quite as well as the other shows, mostly because we reach a point where the guests, they are bringing less value. It's harder to find a good guest. Every single person that pitches us to come on the show is some kind of, like, syndicator or someone that is trying to sell some education thing, or they are, like Mhmm. Someone who got rich before the boom or during the boom, and they haven't done shit for the last three years. And a, those aren't very fun for us to do those those conversations. And b, nobody wants to hear them anyway. And so instead, we decided to spend more time trying to make this show a little bit better, getting some better Friday Focus content put together for you guys. And then if we do find a good guest, we'll just bring them on here to connect with the three of us. We We can have a good group conversation instead of doing the traditional interview style. And also, do just big picture. There's enough freaking interview podcasts. If you wanna go listen to interviews with random schmucks who pretend like they have value for you, go listen to any other show. Just like go on your podcast app and just fucking pick one, and it'll probably be an interview with somebody that you don't really care what they're gonna say. But you can sit in your car and pretend like you're learning something even though it's a complete waste of your time.

Mike DeHaan: [3:11] So there we go. That's a change you're gonna be seeing over the next little bit. And so with that being said, if you have specific topics you would like us to go over on this Wednesday show, you wanna get our takes on things, you want to get kind of like our views on different things that you're seeing in your business, or you're seeing in the real estate space in general, or just the economy, we are gonna be trying to have some more informed, detailed discussions on this now Tuesday show. So, yeah, just let us know what you wanna hear, and we'd be happy to dive into stuff.

Dylan Koch: [3:42] It's funny because I threw on the Better Life podcast today. Today's episode is titled, a 100 k passive income a year with this overlooked real estate niche. Then it got five minutes in, and they introduced a guy who's sober living, and I immediately turned it on.

Mike DeHaan: [3:57] Who cares? Nobody cares about that. We've all heard it. It's all the same people that are doing the same thing. They always have some random shtick that

Dylan Koch: [4:05] Mhmm.

Mike DeHaan: [4:05] They're trying to it's like, and there's more pitch you at the end. I don't know, man. It's just it doesn't need to be that way. So I

Dan Austin: [4:13] think podcasts in general are hopefully switching over because, I mean, people are just kinda bored with the typical podcast structure and tell me about yourself and all this sort of stuff. And it's kinda I don't know what it's moving towards. I haven't been listening to a lot of various podcasts recently, but I mean, the ones that I do follow seem to be more like what we're doing here. Just super educated dudes like us talking about things we're smarter

Dylan Koch: [4:34] about.

Mike DeHaan: [4:34] Not relatable. For well, that's that's good. And you hey. Right, Dylan. They're not super relatable, right, when you get some of those people. Especially, like, so often, get those people around their shows, they're obviously, like, professional podcast guests at this point. Like, the the stories they tell, they're naughty. There's no spirit behind them because they've told the same goddamn story over and over and over again the same way. Yep. And like for me, I think the only shows I listen to, I have a couple comedy podcasts I listen to, because I I like to, like, study how they deliver. And like, honestly, I get pretty good news from comedy podcasts, because they make jokes about whatever the current events are. So it's a good way to kind of, like, know what's going on without falling into, like, the mass media freaking wormhole.

Dan Austin: [5:15] And then I listened

Mike DeHaan: [5:15] to Hermozzi, but his shows are literally just monologues of him talking about whatever the hell he wants to do with business. And I don't know. 50% of the episodes kind of stuff I know, at 50%, I'll pick up, like, little tidbits that I really like, and that's what I go for. It works out great.

Dan Austin: [5:30] So I didn't know you listened to Oksrabozi's I don't

Mike DeHaan: [5:32] I haven't talked about that much. You know, I definitely don't share our stuff in stuff in Slack saying, you guys should listen to this ever. So

Dan Austin: [5:40] Yeah. Check out this episode.

Dylan Koch: [5:41] Well, know how Hormozi is putting in Of course. To make it good.

Dan Austin: [5:44] Yeah. He is. Yeah. He does it.

Dylan Koch: [5:45] Right. Like, every other else is just doing a monologue. It's their first take Yep. Of whatever popped in their head during that time. Exactly.

Mike DeHaan: [5:51] And he's also like somebody that has a legitimate track record that is verified. He's very, very seasoned and experienced. Mhmm. And he doesn't like have some super special secret thing in his that he figured out and got lucky with, and is now just like trying to be a podcast guy. Absolutely.

Dylan Koch: [6:06] Tell you that too. Yeah. He's like, this isn't sexy. Yeah. You know, this So Yeah. So it's true. Authenticity goes a

Mike DeHaan: [6:12] long way. And so for this show today, something that we wanted to dive into were two weeks out. I guess when this comes out, it'll be three weeks out from the election. And there has been this big shift towards I don't know. I'd say this big rising of Bitcoin has popped up a lot in general media. There are even things like companies that what were you saying again? Microsoft is looking at holding, like, some of the reserve cash and Bitcoin and all these different things. And when it comes to crypto stuff, I always feel like it's like a shiny object thing that people that are investors, business owners kind of like think about. Some people dabble in it. Some people don't. But, Dylan, you're super into Bitcoin.

Dan Austin: [6:53] Mhmm.

Mike DeHaan: [6:54] And so our thought with this show today was to kind of hear from you, why you believe in it as somebody who studied it a lot, as someone who has a lot invested in Bitcoin, as someone who's been in the game for a while. Because I I know for me personally, I was buying Bitcoin and crypto years and years ago, 2016, 1718, I sold pretty much all of it to start my real estate game, and I haven't really thought much about it since. So it's a lot more developed since back then. Back then, it was pretty shady, honestly, like, where we used to buy a lot of these random coins and shit. So I guess for this show, Dylan, you wanna give us, like, elevator pitch, how you think Bitcoin connects to real estate and, like, the larger economic picture that we're gonna be seeing over the next four years and beyond with the Trump administration and everything else. But, yeah.

Dylan Koch: [7:44] Yeah. I will do my best, because this can go Sure. A thousand different ways. But to start, I mean, there's a really a schematic going around social media right now that basically says, you know, 2012, the median home price was 50,000 Bitcoin, whatever it was. 2016, it was, you know, 20,000. It just keeps going down and down and down. Mhmm. Whereas the cost of real estate in dollar terms have has gone up significantly, you know, since the past ten, twenty years. Right? So let's say on average, we've had a 200% increase in home prices over the past ten years. But if you would denominate those home prices in Bitcoin instead of in dollars, you're actually down. Right? Like, your your cost got cheaper. And so next year

Dan Austin: [8:25] had Bitcoin then.

Dylan Koch: [8:27] Assuming you had Bitcoin. Right. Exactly.

Dan Austin: [8:28] I don't have Bitcoin. So how can that help

Dylan Koch: [8:30] me? Okay. We're starting with the premise here, Dan. So basically, it's like changing the denominator, and people would argue that it's not real estate that's going up, it's a dollar that's losing value because of economic policies set forth. Really, you know, the past couple of decades, but really since, know, COVID in 2020. So tying it is like, what's a better store of value? It's really like what it comes down to in forms of real estate. Whereas real estate, obviously, you can leverage. It provides cash flow, tax depreciation, etcetera. Mhmm. Whereas Bitcoin is just really just supply and demand at this point. There's only ever gonna be a fixed amount of Bitcoin, which is 21,000,000 coins. And the last one isn't mined until 2140. And that issuance, you know, kind

Mike DeHaan: [9:12] of 2140 is like a hundred years from now?

Dylan Koch: [9:14] Correct. Yes.

Dan Austin: [9:15] Okay.

Dylan Koch: [9:16] And so but the issuance started, and it actually so big Bitcoin actually came out in 2009. Right? So like it's actually been around for almost twenty five years.

Mike DeHaan: [9:24] I don't

Dylan Koch: [9:24] think a lot of people

Dan Austin: [9:24] Can I one thing while while you're on this topic too? Yeah. And one day one day run out of Bitcoin, if you're the last one with the Bitcoin, what do you do? So Do you just lose all that money?

Dylan Koch: [9:35] No. You would theorize at that point that it would be part of, like, basically the global economy, and they would you would just buy and sell and trade at, you know, as Bitcoin left. I'm saying that they're that the total issuing supply would just circulate.

Mike DeHaan: [9:46] But that they always say that there's, you know, a certain number of coins, but the problem is you can buy, like, a tiny fraction. Like, I could go and buy 5¢ worth of Bitcoin right now.

Dan Austin: [9:54] It could be fractionalized. Yeah. Yeah. You could. Misunderstanding the whole coin. Are you saying that they because they they have the halving. They had one this year. Right? So there's 21,000,000.

Dylan Koch: [10:04] 20 yeah. They did.

Dan Austin: [10:05] Right. 20 so there's 21,000,000 Bitcoin.

Dylan Koch: [10:07] So back up a second, Dan. I think

Dan Austin: [10:09] Sorry. Are you just saying are you just saying they won't mine anymore? There will be none no

Dylan Koch: [10:13] more mine. What I'm saying. Sorry if that wasn't clear.

Dan Austin: [10:15] Well, because the way I no. I appreciate that, Dylan, because the way it's been explained to me in the past is that Bitcoin, as it's mined, it disappears, it but actually doesn't disappear from the economy. It still exists as a coin. You just can't you can no longer mine it.

Dylan Koch: [10:27] Correct.

Dan Austin: [10:28] It's as if all the gold was mined in the earth.

Dylan Koch: [10:31] Correct. Exactly. And so in 2009, the issuance was 50 Bitcoin approximately every ten minutes, and that's just set up on the protocol level. Every four years or so, it's actually over 210,000 blocks. But about every four years, that they issuance could supply in half. So from 50 to 25 to 12 and a half to whatever. Currently, we're at 3.125 issuance. So it's a very much a like a de like reverse exponential decrease in the supply. Right?

Mike DeHaan: [10:59] If you

Dan Austin: [10:59] can't just print more.

Dylan Koch: [11:00] You can't just print more. And that is protocol driven, and it's driven by what's called like a proof of work mechanism where people around the globe have these ASIC computers that basically do, like, these really intense math problems to solve the next block to issue the coins. And that's different from, like, the proof of stake system, which is, the Ethereum, the Solanas, the other the Chainlinks, the other big cryptos that are out there where, essentially, it's kinda like the US dollar system where the more dollars you have, the more pull and, like, just like influence that you have. You know, you can be the largest Bitcoin holder in the world, and you cannot change the protocol That's whatsoever. So that's like one big difference between a lot of the other coins that are out there too.

Mike DeHaan: [11:38] Yeah. But as Dan said, you can run it, you can Gotcha. Split. Right? And do different things. So like, remember back when I was into it, they split and had Bitcoin and Bitcoin Cash. Right? Where they were different algorithms. Correct. Bitcoin Cash, don't even know if that's still around or not. But, like, I don't understand why they can't just do that repeatedly over and over again and essentially reduce the value of the whole thing, especially once the algorithm's done. I mean, is that that is that their version of inflation?

Dylan Koch: [12:04] Well

Mike DeHaan: [12:05] Right? Except it's like one for one?

Dylan Koch: [12:07] No. I don't know if that's their version of inflation. My rebuttal to that argument is, the source is still open code. Like that's Litecoin, that's Bitcoin Cash, that's Bitcoin SV. Like all these are just the same code with a little bit of variation of either like the supply issuance changing, etcetera. Like you can change whatever metric that you want. But it's kinda like the explanation for this is like the network effects around Bitcoin. And this what you're describing, Mike, is a lot bigger risk in the early years than it is today because of how ingrained it would be in today's economy. We have sitting US senators pushing for a Bitcoin strategic reserve. Companies putting it on the balance sheet. Microsoft being one of them is voting on it in December. So it's so has such a political influence now that I would say it's less of a risk than that was 2015 and or beyond. And actually, in 2017, there was something called the block size wars, where this was actually a debate on what to do with the protocol. And actually, it was the reason for some of the split.

Dan Austin: [12:58] So there are major companies like MicroStrategy, never heard of them. But as I was doing my research, that has $4,500,000,000 of Bitcoin on their balance sheet.

Dylan Koch: [13:07] So they're kind of the the leading indicator of this. And Michael Saylor's the CEO, and his thesis was to basically like, I have this company. It spritz off 40,000,000 a year in positive cash flow. I've tried everything I can do to grow my company, I can't really grow it. But because inflation is actually like 20% or whatever it was, you know, he doesn't trust the government metrics, That he's like, I'm sitting on a melting ice cube of cash. He's like, my I have $200,000,000 in cash, and it's losing power every day. Mhmm. I could buy treasuries. I could buy gold. I could buy other companies. But where do I put this excess reserve? And he found Bitcoin, and he deemed it as a reserve asset or pristine collateral is another terminology they use. So he basically went balls to the wall. He put all those cash reserves in it, started issuing debt, started issuing equity to buy more Bitcoin and put on its balance sheet, and it actually has been the best performing stock since he's done that in, like, 2020. He did, the the networking thing. Like, Wikipedia is open source. But, like, no one goes to other no one uses Google or Bing, like, or, like, other places. So, like, it just depends how big of, like, a foothold this technology or protocol has already. HTTP is an Internet protocol that's been around for what? Since the sixties, seventies?

Dan Austin: [14:14] Mhmm.

Dylan Koch: [14:15] And like people use that instead of other web interfaces.

Mike DeHaan: [14:18] Yeah. Which makes sense.

Dan Austin: [14:19] Yeah.

Mike DeHaan: [14:20] So I guess like that that sort of I guess leads to my question is, the actual utility of Bitcoin, right, from, like, an enterprise perspective. Because the average Joe Schmo that is buying it, they're buying it and they want the value to go up so they can then sell out and have more USD, right, or more currency wherever they live that they can actually spend. So when they're using it as, the store value, you want something that is stable. You know? Bitcoin fluctuates in value. It can drop a lot very, very quickly. At least it used to be able to. I think market cap by big enough. Now that's more stable than it once was. But, like, I remember back in January 2018 when every cryptocurrency crashed, like, insane amount. Like, it was like, some of them were, like, 90% in, like, two days. Right? Bitcoin now, I think, has a big enough market that's not gonna happen. But I guess the utility of it, of using it as a store value, I said, don't understand why they think that could work if it's not necessarily directly related to the inflation of the US dollar. Right? Whereas I would say real estate is more so tied to the inflation of the US dollar because as the inflation went up, so did the property values directly. It's influenced by interest rates. Whereas Bitcoin isn't really tied to anything.

Dylan Koch: [15:37] Yeah. I mean, its biggest correlation really has been net liquidity.

Dan Austin: [15:41] Sure.

Dylan Koch: [15:42] So like, as the Fed does either QE or injections or reverse repo facilities, honestly, has more of a connection with liquidity than anything else. Mhmm. To your point, like, it goes back to the bigger it gets, the safer it is. It's kinda like the Linde effect. Where and so these are more risk again earlier in its in its lifespan. And now that you have the BlackRocks of the world issuing, today was the first day the options even got issued on iBit, is the the BlackRock ETF. But you have to look at it from at least that four year time horizon, because those are those halving cycles.

Dan Austin: [16:14] Mhmm.

Dylan Koch: [16:15] So every four years, the supply gets cut in half. While in the meantime, it's kind of getting more ingrained in the in the economy, and in the demand is increasing. The other thing I'll say to this is like, us as US people who have been on the dollar, who have Venmo, who have PayPal, are less likely to see the utility than maybe some other third world countries. Mike, you're actually probably a good person to ask because you do travel a lot, and like deal with maybe forex currencies. But if you're in El Salvador or some other place that isn't dollarized, like or you need dollars and can't get them, like, Bitcoin is another avenue to do that, where you don't need a trusted middleman like a PayPal or a Western Union or something to to transact monetary value.

Dan Austin: [16:53] I think that drives that to home, and I don't remember where I learned this. Could have been for Mike maybe, but I think I I learned it when I was back in school is like in some, like, African countries, they use SIM cards as currency because cell phone minutes are actually more valuable to them than anything that they can trade it. Right? And so just because of their different towers, different systems, all this stuff, and money goes through hyperinflation cycles and all these and some these third world countries in in North Africa in particular, that's sim card. So it's like it just speaks to it doesn't matter what it is. Like, it could be used as a currency.

Dylan Koch: [17:26] Yeah. Cigarettes in jail is a big one. But, like Mhmm. Money as, like, globally has certain characteristics. That's why gold was used for so long because it's durable. You can be transported. It retains its value. And, you know, we were on a fixed rate monetary policy up until 1971. And the whole world was. Like, rhizomes was a global thing for a while. So, like, if you look at the history of monetary policy, sound money are being tied to some kind of commodity has always been the case until 1971. So, actually, these fifty, sixty years that we've had of purely fiat currencies and having the US treasury being, like, basically the reserve Mhmm. Is actually, like, not the norm. It's just kind of like what we've been doing in everyone's current living lifestyle.

Dan Austin: [18:06] Well, I think the argument too for the utility like, I used to be pretty much so in, like, well, there's no utility. What are you gonna do? What are you there's no useful value with this. And really, even like when you go back to gold, gold in modern day has very little value other than like electronics manufacturing and stuff like that. But it's like, there is not doing something other than storing value for most applications. Bitcoin really doesn't do anything for utility. But if it's enough people believe it has value, then it doesn't matter what utility it is. Like, we could call freaking rocks, any some other rock a store of value. Right? And if all the majority of people believe in that, which is also why the US dollar has been kind of the the one thing that everything's kind of tied to in the world economy is because enough people believed in it.

Mike DeHaan: [18:51] And that's kind of like honestly my the the tricky thing for me with Bitcoin and crypto is you're right. It has to be based around belief, and there's no, like, actual deciding government around it who's deciding that it has value. Right? Because some people think Pokemon cards have a certain amount of value. Some people think Beanie Babies. Right? They had was it the the daffodils in was that Netherlands? Was it daffodils or whatever the flower was that

Dylan Koch: [19:14] Oh, you're talking about tulips?

Mike DeHaan: [19:15] Yeah. Where they were like trading tulips for like insane money.

Dylan Koch: [19:18] Yeah. But unlike tulips, like, they're very they die. Right? That that was just dumb from

Mike DeHaan: [19:22] the start. I mean, like, I don't know. They they can be re can be reproduced. Yeah. Bitcoin technically has a has a death date, 2140 or whatever you said. But, I mean, like, it's all it's all relative though. You know, like, I was just in Laos a few weeks ago, which is technically one of the poorest countries in the world, if you look at it compared to a standard monetary policy. But while I was there, it's because they trade goods. Right? Goods and services. They don't use money. Like, we were on this longboat going through the the river there to get to this town that we were gonna stay in, and we watched this other boat roll up, and they just, like, traded a fish for a freaking empty Pepsi bottle full of crickets. Mhmm. Right? And a jug of water. Like, that that was their means of exchange, is that's for them is a is a equivalent value. Right? Right.

Dylan Koch: [20:08] But that's not that's not like, that's an apples and oranges comparison to something that's the size of, like, The US economy. So, like, barter was done for us too, but because of its inefficiencies and everything you just described, like, you couldn't have a US economy run on barter.

Dan Austin: [20:21] Yeah. No. And you you can't tax bartering. Right? And so that's the challenge is the taxation with you know, you have to have taxation to run the government to all that sort of stuff, so that also drives the people to be poor.

Mike DeHaan: [20:30] Yeah. Well, if you're looking at the large US economy, that's for sure that's totally different. Right? But most people aren't looking at the larger US economy. They're looking at it as a means of direct exchange. Technically, you could buy a house with Pokemon cards. Like, why why could you not do that?

Dylan Koch: [20:43] Because the receiving party probably wouldn't take them.

Dan Austin: [20:46] Well, but if it was like a Pokemon nerd, if it was like Post Malone, he'd probably take your Pokemon

Mike DeHaan: [20:50] cards with Right? But, Zoe, it comes down to how everyone mutually agrees that the, you know, it's a mutual exchange of value. And so when it comes to things like Bitcoin, challenges is like, there's kind of this has to be like this group adoption and perception, but there's no governing body that actually determines how valuable it is. It all comes down to the perception of the individual.

Dylan Koch: [21:09] Which to me, that's a good thing. Like fiat kinda means by decree, and Bitcoin is more of a bottom up phenomenon where I think it's almost more fair in the issuance. Whereas, the closest you are to the to the money printer in The United States, the better off you are. Mhmm. The wealth the wealth get wealthier for a specific reason. You have good credit. You have access to capital, etcetera. But if you're somewhere in one of these third world countries that are poor, and you were saving in rubies or whatever, and instead you switch your rubies for Bitcoin, and now you're you went up 10 x, and you wanna escape the country Yeah. You can do that as long as you can memorize 12 words in your head, versus if you just did that with gold, you can't because they like, there's literally countries that would stop you from taking the gold out of the country. Yep. So you can transfer your wealth anywhere. Yep. So I almost think like this adoption curve is happening in places that we don't see as Americans. It's happening in third world countries more and more and more, like El Salvador who make it legal tender. And eventually, we're gonna be one of some of the last people that use it because we have the dollar.

Dylan Koch: [22:06] The dollar will be the last domino to fall.

Mike DeHaan: [22:09] Yo. If you don't follow me on Instagram, which is that mike underscore invests by the way, then you might not know that we officially have a new mission as a brand, and that is to help 2,000 real estate investors build million dollar businesses. Obviously, to do that, we need to get in front of as many people as possible. So quick little ask to help us reach that goal. First, shoot me a follow on Instagram at Mike underscore invest. Second, follow collecting keys podcast on Instagram. That's at collecting keys podcast all written out. And third, every time the algorithm is kind enough to show you a post from either of us, share it on your story or in your post and tag us. If you do that, I'll DM you, and we can have a little DM conversation about what is preventing you from having that million dollar business that everyone is seeking. And we can see if we can come up with a plan to help you make that massive income, not just passive income. So again, if you see any of our posts, just go ahead, reshare them, tag us, and let everyone know that you enjoy the content we produce. It will help us a ton, and then I'll be happy to help you as well.

Dan Austin: [23:13] This argument is really hinges upon the majority of people adopting, which I think we're getting to that point in time where as we as we get closer and closer to Bitcoin becoming like a thing, it's because a large portion of wealth and people believe in it. But the argument for this is is that the American dollar and global currencies or just like local currencies are heavily manipulated by their governments. And so the idea is that Bitcoin itself could be potentially manipulated, but as more and more people adopt it and it becomes more democratized, I think it's less likely that they're going to be able to manipulate it. And like, I'll give you like the the examples like The US economy. Right? Quantitative easing, quantitative tightening, they're just putting money in and out of the economy by buying government bonds or buying mortgage backed securities. So they're manipulating the value of money, and they're also adjusting interest rates to manipulate it. And then if you look at like The US, like we wanna say, okay, say we're not doing it to hurt other people, We're just doing it to make our economy stronger. Go to China, where it's very, very well known that they peg their the yuan or whatever to American dollars, but then they adjust it, they will not let their currency go above or below a certain value.

Dylan Koch: [24:25] A peg. Yeah. Exactly.

Dan Austin: [24:26] They peg it. And then they also publicly, on purpose, devalue their currency and do other things to make it so that they can become a larger exporter to other parts of the world. So they very, very tightly manage and manipulate their currencies to only benefit them. So like, if you think America's perfect and China's bad, like, that's a really good argument for that. But I think America also manipulates their currencies to affect the world economy too.

Dylan Koch: [24:52] To your point, like, there are self interest involved when humans are involved. Does it make sense that 14 members of the FOMC committee can make decisions based on the volume or price of money for the rest of the world, and everyone comes out equal? No. Like, it just doesn't. Right? And but because you can't really change the protocol with Bitcoin, it is a more fair system. The only thing that the supply doesn't move. The only thing that moves is the price. And that'll be based on really the demand that comes with it. And I think that demand is ever increasing. And, you know, if you're looking at what wealthy people do, and you know, if you're trying to tie this to real estate and being an investor, they take asymmetric risks. Right? So what can you buy for $90,000 that could potentially be worth a million dollars within a decade or two? You can't buy any real estate that does that. Right? So even if A lot of people's like questions around this can be solved with position sizing. Make it one to 2% of your portfolio. If it works out, great. It'll be 50% of your portfolio. If it doesn't, you didn't really lose a whole lot.

Dan Austin: [25:49] Wrap up the argument if you can, and it's like a one minute pitch of of why as Bitcoin gets more and more adopted, it will be less likely than a fiat currency to be manipulated by a government or a very wealthy person.

Dylan Koch: [26:00] Because the the proof of work mechanism that's that is usually used for to like come to consensus about what the longest chain is, what transactions go in the blockchain, what should not, is ran by decentralized nodes all over the country. Right? And so those nodes have to come to a consensus. That would mean that people in Afghanistan, China, Russia, United States, Mexico, all over the world, would have to get 51% of the network Mhmm. To basically agree that the actual chain is wrong. Right? And that's just very, very unlikely given that the dynamics of how the The US I don't know, like the global economy works. Because they're so spread out amongst everyone, you'd be shooting yourself in the foot if you said this was this one is wrong. Because if you're a major holder, right, and you said like, okay, we're gonna do a 51% attack and make this wrong, the value of the network's gonna tank. So like if you're a big holder, why would you do that? You're just gonna be shooting yourself in the foot.

Dan Austin: [26:56] So there's no okay. So there's no chance of like a psyops pump and dump scheme by a by a bad actor or a large country that has a lot of money? No.

Dylan Koch: [27:06] Not to my opinion, no. And like, you know, I guess the breakthrough here is that everyone's like, Bitcoin is the first blockchain. It can't be the only one because technology, you know, gets advanced on or whatever. But digital money has been tried before. There is Digi Money, eCash, bMoney, all those kinds of stuff, basically, through cryptography in, the late nineties. I don't I don't know that all all that much. But because he was able to basically solve digital scarcity is like the the term, whereas like, if I send you a photo, you can send it to a million different people. But if I can send you a Bitcoin that is digital, you can verify that it's only in your possession and only in your address. That like, it's called the double spend problem. That's what people have been spending decades to figure out. And like the proof of work mechanism is what solved that.

Dan Austin: [27:48] Gotcha.

Dylan Koch: [27:48] So I don't know if that answers your question, but like that is I guess an important steppingstone to remember.

Dan Austin: [27:52] Well, just think about like market manipulation, which we know happens in places. GameStop was a good example of the little man basically saying, fuck you. We're not gonna let you big hedge funds or whatever, you know, tank this company because they're, you know, essentially manipulating the market. So for Bitcoin, for example, could China, US Government, Russia do a pump and dump scheme by using real money to buy this stuff, to inflate price, get a huge chunk of people, a large purse like, group of people to try to get Bitcoin to 200,000, and once it gets us 200,000, continue to, like, start selling off. But all that way, you're able to strip out all the wealth from lots of

Dylan Koch: [28:31] parts The of the answer is probably yes. But every time that has historically happened, you've seen more and more people just keep buying the bottom. And we've historically had higher lows with every cycle that we've had.

Dan Austin: [28:43] I agree with

Mike DeHaan: [28:43] that.

Dylan Koch: [28:44] And so this volatility that is obviously very prevalent has gotten diminished every cycle we go through. And I think there will be a breaking point, which it might be this cycle, where because it's so adopted, that that volatility range will become less and less and less. Because there's BlackRock's involved now. Because Vanguard or, you know, pick out your who you want. You're getting large players now, s and p 500 companies, countries, pensions, wealth funds that are all buying into this now. So can it still happen? Sure. But that doesn't change like any of the other things that could still happen too. Like, you could probably try to do that with Apple or Tesla if you wanted to too.

Dan Austin: [29:18] Yeah. I'm just trying to explore this with you guys right now. It's like, what if you were like the Chinese government and you were printing money and putting in a bank account? So it never went into the economy, but you had this bank account where you're printing money, dumping in there, and then over a long period of time, like built up this gigantic bank account and then started buying Bitcoin, because Bitcoin maybe is not a direct corollary to the economy, so it wouldn't create any red flags around an inflationary like situation. Right? Like if you just printed $10,000,000,000,000 and dumped it in US economy, you would eff everything up. Right? If you just kind of only were buying Bitcoin because it's not really in the economy, because it's not to Mike's point, there's no utility for it that people are trading it really and actually taking out, extracting money.

Dylan Koch: [29:58] Not at volume, but it is happening.

Dan Austin: [30:00] Right. But like if you were doing that over a short period of time though to dump money into it and take it and then strip that out, you could you're essentially not trying to do it for profit, but you're trying to strip wealth away from the rest of the population.

Mike DeHaan: [30:11] They do that with any commodity though. Right? And that's what Saudi Arabia has been doing with oil forever.

Dylan Koch: [30:16] Yeah. Oil Right. That was actually a silver thing was with the Hunt Brothers. It was a big thing that happened for a while. I think the important thing to learn there though, Dan, is no matter how let's say you owned 20 of the 21,000,000 Bitcoin. You can't change the rules of the protocol and how it is issued and how it is governed. I think that is the deciding factor versus versus you have Ethereum or even like for dollar sake. You know? You all know the wealthy politicians who can influence policy.

Dan Austin: [30:41] And I 100% agree with you there where it's like, again, previous like 2018, I would have been like, yeah, Bitcoin, which I was, was like, I just don't see how it does anything. But now, like, we know that people around the world are manipulating things that we just took for granted that we're like, oh, that's that's an institution. Like, we know that stuff's getting manipulated. Commodity prices, dollars and cents, economies are all getting manipulated for better and for worse. So there's not really a good argument to say Bitcoin could get manipulated because everything's getting manipulated at some level.

Dylan Koch: [31:13] Right. But there's only a 3.125 getting issued every ten minutes. I think the on a weekly basis, it's like 900.

Mike DeHaan: [31:19] Mhmm.

Dylan Koch: [31:19] If they're gonna manipulate it, they're gonna manipulate it one way.

Mike DeHaan: [31:22] I do think though while it still needs to be transferred to like a fiat currency to be be usable, that is kind of the issue. Right?

Dylan Koch: [31:31] Like Yeah. So the hold on. I'll just touch on that real quick. I think, you know, the leading economists that I listen to would say, for something to become a money that isn't government issued, it would go in steps. The first one being a proven store value, then medium of exchange, then unit of account. So like, store value first, prove it has some kind of utility over a long time frame, then people start trading it, which happens Yep. You know, in other countries. Like, you can go to Starbucks in El Salvador and pay with it over your phone. Right? Or like, I could hold up a QR code and pay you over the the webcam if I wanted to. Mhmm. And then eventually, once it becomes ingrained enough, then it's your native account, which is different than the monetary policies we've had historically. Who knows if that'll be true or not, but that that would be my counter argument to what you're saying.

Dan Austin: [32:12] Yeah. Yeah. Can you send me your QR code real quick?

Dylan Koch: [32:14] Yeah. I'll send you one that I received.

Dan Austin: [32:16] Oh, no. No. No. I want to send

Dylan Koch: [32:18] you one.

Mike DeHaan: [32:18] So I guess for the average person, you know, real estate investors, someone kinda look at like long term investing. Like, should they just go and buy Bitcoin?

Dylan Koch: [32:26] One thing, and then we'll do this. I've actually taken a Bitcoin backed loan to buy real estate. And so I think that might be applicable, you know, to real estate investors going forward. If you're a like, it might be a not be applicable to someone who doesn't have any Bitcoin because obviously, you'd need that to put up the loan for the collateral. But the collateral is honestly like a little bit better than real estate. There could be a day where people or you go to a bank, and you lend, you say, I have this Bitcoin. I'd like to put up as collateral. Sure. You give me money.

Mike DeHaan: [32:51] Have like a condition where like if say Bitcoin drops below a certain price, you have to pay that off?

Dylan Koch: [32:56] So you'd either have to put more money in to get your LTV Sure. To act to where you wanted it to. Or they it would be in an escrow account where they can just simply take the money. Instead of having to go through the foreclosure process of a house Sure. Can literally just get the money. So if you're a lender or a hard money lender, like, I would almost look at this as another avenue to generate some money. Because right now, you could look at the leading companies, they're about what a hard money company would be. Like two points origination, 12% interest only during the duration of the loan. But if I took out a $100,000, I'd have to put up $200,000 worth of Bitcoin as collateral. Yep. So they're over collateralized on their part. Right? So they don't they don't there's no risk to them.

Dan Austin: [33:32] It's like a big billionaire like Jeff Bezos, like he is maybe worth 200,000,000, and he can stake that to go buy a $100,000,000 yacht without selling it. Because they're like, yeah, Jeff's good for it, but he'll put up his stake in Amazon to do that, to go buy his yacht.

Mike DeHaan: [33:45] Right. But if Amazon drops below the scratch price of whatever, he'll have to come up with the money.

Dan Austin: [33:50] They're gonna be like, give us that yacht. It's a

Mike DeHaan: [33:51] head it's like a whole thing. Yeah. On my trip, I watched the first season of succession. That's like the whole thing is,

Dan Austin: [33:58] like, in the first

Mike DeHaan: [33:58] couple episodes is the stock market tanks, and they have this huge deck called that was levered against the company because it dropped below the price that was part of their loan agreement. Right?

Dan Austin: [34:08] Oh, was that, like, the opening the That's first, like, problem.

Mike DeHaan: [34:11] That goes on in that. And so they have to bring on, like, this private equity to bail them out, and that's what causes, like, the family

Dan Austin: [34:16] And they're worried about their inheritance.

Mike DeHaan: [34:18] Yeah. But so I guess and and with your Bitcoin loan, it would be the same fundamental principle, I'm assuming.

Dylan Koch: [34:25] Right. But I didn't have it it is. Exactly. Isn't like that's why you have to be very conservative with your LTVs. Like, I did a 50% because and I did a very small portion of what I actually own. Because if you had to put it more collateral, you'd be fucked if you didn't

Mike DeHaan: [34:37] have it.

Dan Austin: [34:38] Yeah.

Dylan Koch: [34:39] But It's a tool. I was able to get basically a $100, and I didn't have to get an appraiser. I didn't have to, you know I got all the money up front, no draw schedule. So like I might use this avenue going forward in my real estate deals, just because it's an easier process and sometimes using a hard money lot.

Dan Austin: [34:55] Super awesome for like flipping and double closes shit. Why not stake it? But you're right. Don't over lever just like with anything. Like, if you were to go get true hard money loans, don't over lever by getting 20 hard money loans when the market's kinda dicey. Like, stay whatever you're comfortable with in your actual financial situation, but, like, it's sick. It's almost like just like a quick line of credit because you Dylan, I know you. You're not planning to sell your cryptocurrency at any large scale, so it's just sitting there. Like, might as well use it without having to pay capital gains on the use of it.

Dylan Koch: [35:23] Yeah. And one of the propositions from it's been theorized, is like they'll get rid of capital gains on on Bitcoin. Right? Mhmm. Like, it would be used as like a currency and not a commodity. So like, if that's the case, then you just made 30% on your whatever you're

Dan Austin: [35:37] holding. Interesting.

Mike DeHaan: [35:38] I know that. See, but so honestly, this is which is why I think all this shit's crooked, is when they start, like, saying stuff like that, and you have all these politicians that are really pushing it, and you have these people of influence that are really pushing Bitcoins, and we're gonna get rid of capital gains and dollars or stuff. The average person, that's great. Behind the curtain, they're all doing that for their own benefit.

Dylan Koch: [35:59] For sure.

Mike DeHaan: [35:59] Right? And they're like, we've been accumulating this shit. I've been rich for the last, you know, twenty years, and I've just been dumping money into Bitcoin and other things. And they go, now I'm in a position of power. I have an audience. I'm gonna influence the value of this by going and shilling it to the general public. And then I'm gonna go, oh, and actually too, we're gonna get rid of capital gains tax because I wanna make sure that I get rich as fuck off the stuff that I've been pushing forever. Like, it's like, in my mind, it's no different than when people go and, like, leak news about stocks to get influenced with price, except that that's regulated by the SEC. The Bitcoin stuff isn't regulated at all, and that's where it gets real sketchy.

Dan Austin: [36:35] Okay. I agree with you. Like, because I do think that exists. But what's the difference in politicians pushing initiatives that drive the economy in different directions? Like like the whole, like, go green in these certain industries where, oh, wow. They're investing

Mike DeHaan: [36:48] They incentivize what they want.

Dylan Koch: [36:49] They incentivize what they want.

Dan Austin: [36:51] They're invested in these companies, and they they created a whole another economy for them to get super wealthy because they said, oh, wind farms are a really good idea.

Mike DeHaan: [36:57] Well, totally. And that's a problem as well. Right? That's why Nancy Pelosi went in and somehow is a fucking genius in whatever inside trading she does. Right?

Dan Austin: [37:05] Like out there. It it's

Mike DeHaan: [37:06] all it's all bullshit. Yeah. But at least with those things, they're generally behind companies that produce a product that can hopefully bring a larger value than just their stock price. Right? Whereas Bitcoin

Dan Austin: [37:18] They don't.

Mike DeHaan: [37:19] It didn't bring any additional outside value to except for to the people that are holders of it.

Dylan Koch: [37:25] Right? I mean, you have to realize, it is now the eighth biggest asset in the world as a good market cap. Right? Like It's

Dan Austin: [37:32] bigger than silver.

Dylan Koch: [37:33] Yeah. Right? And then it and it's only a couple companies that are bigger than it, and that that trend is just increasing. So yes. As it sits today, does it do volume to make it to make a difference? No. But that's not the trend. The trend is is going where it's growing exponentially. And not to get like, I don't know, frou frou y because I know we don't do that on the show. But there are people who've been career politicians for forty years, who've pushed the stocks, done insider trading, done ESG initiatives, who are honestly, in my opinion, piece of shit human beings.

Dan Austin: [38:02] True facts.

Dylan Koch: [38:02] Like, I don't know them yet, just for one c. 80% of like the current circulating Bitcoin is owned by a small number of wallets. A lot of them have put up the initiatives like El Salvador is a good example. Like, they basically did that economy on the like, was self funded from like a donor. So the people who who own this, the large wealth, aren't the current political establishment. Mhmm. Maybe they can use some of their newfound wealth for things that aren't the status quo. If that's good or bad, I don't know. But at least it's a change.

Mike DeHaan: [38:31] Yeah. Maybe. I don't know. I'd say well, it's interesting because this is like, I would say where the libertarian part of Bitcoin gets interesting because there's this kind of general view where I would say like, people that are really into Bitcoin, they believe in each other. And, like, they believe that they will take down the establishment. And I found tend to come from a view of, like, I don't believe in most people. I think most people are kinda dirtbags, and they're all have their own self interest at heart. All politicians are fucking dirtbags. Everyone that's trying to, like, you know, get this message going, there's always some kind of self interest Right? In If I even produce in this show, our self interest is we want you to, like, join the scale community. I want you to come with me and do deals together. We don't do this like for fun. It fucking costs money for us to do this. So we have a motive behind it. Just like everyone that promotes Bitcoin or everything else, they have to have a selfish motive. Otherwise, they wouldn't be doing it.

Dylan Koch: [39:21] Yeah. So there's a book, if anyone's like listening to this, like where the fuck do I start? Because there's a lot of stuff out there. The Bitcoin Standard is like probably the what I would recommend most people go to. But in that book, it was the first time, you know, prior World War two, World War one, they had to fund wars, basically with taxpayer dollars. Yep. They had war bonds. Right? Like, they really didn't do all that shit. And then we've only had like this military industrial complex like after because we could print our own money. Now we just print however much money we want to fund the wars all over the country, whether that be Ukraine or any other wars we've had. If you're on a sound monetary policy, and it like, Bitcoin does become the world reserve currency, you can't print more of it. Yeah. So like, it's almost like this humanitarian who Humanitarian.

Dan Austin: [40:03] Whatever. Humanitarian.

Dylan Koch: [40:04] Humanitarian. Thank you. I did out the part where this is so like

Dan Austin: [40:08] No. Keep it in. Keep it in.

Dylan Koch: [40:09] Like, it could almost be a more peaceful transition if you're on a currency that doesn't influence other people just based on where you live in the world. I don't know. So like, maybe I'm too optimistic. But like, that is my biggest

Dan Austin: [40:20] I was hoping that we'd keep killing people for profit.

Mike DeHaan: [40:23] Well, no. So now what we're gonna do is is fewer people are gonna kill more people for their own profit. Instead of it being like the country's profit is gonna be specifically for them.

Dan Austin: [40:33] They're gonna build robots.

Mike DeHaan: [40:34] Yeah. AI's gonna come and fuck everyone anyway, way before twenty Yeah. One

Dan Austin: [40:38] So we're gonna we're gonna starve them out, dude. That's what we're doing. So

Mike DeHaan: [40:41] but anyway, so I guess for the average person, you know, is I guess this is the play they should just like buy Bitcoin. And also, if you're such

Dylan Koch: [40:49] a buy some.

Mike DeHaan: [40:49] A maximalist or whatever they call it, why don't you just sell all your shit and put in Bitcoin?

Dan Austin: [40:53] Good point.

Dylan Koch: [40:53] So I have sold real estate to buy Bitcoin. But all of it. Yeah. Oh, and so that's the thing. You know, there are think

Dan Austin: [40:59] some there are people like that. Dylan's not that guy though.

Dylan Koch: [41:02] Yeah. There are people like that, but to be honest, like, we're not there to the point where Bitcoin produces cash flow. Like, we're just not there. It should've might one day. Like, if I'm Yeah. Maybe I can lend mine out someday and you know, get income that way. But I like real estate for other for diversity reasons and

Mike DeHaan: [41:17] You don't need cash out. You just need more internet schmeckles, bro.

Dylan Koch: [41:20] That's what it's all about.

Dan Austin: [41:21] What what's your what's your plan, Mike? Do you have a do you have a a crypto or Bitcoin?

Mike DeHaan: [41:25] No. So because here's my problem is I opened my coin I hear your problem. The other day. And I was buying Bitcoin back in it was 2017 when it was, like, $1,600. And so now I look at it at, like, $90. And I'm like I'm I basically like the guy that used to flip houses fifteen years ago and is looking at house values. And I

Dan Austin: [41:45] was like, that's a shitty fucking That's how I feel when I look at Yeah.

Mike DeHaan: [41:50] Yeah. I'm just like I a sunk thoughts bias. I I

Dylan Koch: [41:53] have a, like,

Mike DeHaan: [41:55] I I don't wanna say, like, I missed the boat sort of a thing or it's like it's like, in hindsight, maybe I should've kept stuff. But it it's funny because when I first started buying it, I felt like I was putting an incredible amount of money into it because at the time for me, was. And I literally, I think maximum that I actually transacted was, like, $12,000. They're, like, went from my account as cash into Bitcoin and Ethereum and a couple of other coins that I bought. And so with how everything's grown, that'd be worth, like, not nearly as much as my real estate has been worth or the amount of money that I have made by using that money that was in crypto, which is was kind of like my initial marketing dollars that I spent when Dan and I started business. And so, I don't know, like, I could do it as like an investment, but like the investment in myself has paid off significantly more than if I just parked in there and I was a miserable fucking prick for the last five years working an engineering job if I wanna kill myself.

Dylan Koch: [42:51] Yeah. I'm not arguing that. If you can spend run up a business that spits off 100 hundreds of thousands of dollars per year Right. And you can keep doing that, keep doing that. But I'm saying if you have excess capital, if you're a company that produces net income and you're just sitting there with it, kinda like the Michael Saylor example, don't put it in treasuries. Don't just leave it in a checking account. Put it somewhere where it's gonna Alright. Grow for

Mike DeHaan: [43:11] So everyone got tired of Dylan being mister smarty pants over there, and so his system crashed. So we're gonna log off here. Awesome, guys. Well, thanks for listening. Not a lot of real estate talk today. But honestly, if you're looking at kind of the big picture, I do think that it probably makes sense over the next four years in a bit to explore alternative assets as well to keep some excess cash, especially if you're running like a real estate business that's spitting out some solid cash flow. You need to put that money somewhere. Maybe it's crypto, maybe it's stocks, you know, maybe it's what else people buy? I don't know. Something else. Fucking Pokemon cards, Beanie Babies, sort

Dylan Koch: [43:44] of thing.

Dan Austin: [43:44] I don't know.

Mike DeHaan: [43:44] But, Hope you enjoyed that. If you want to help us grow the show, please share with your friends. It's the easiest way to help us grow is if you tell somebody else give it a listen. And that way, get some more dedicated listeners would help

Dylan Koch: [43:56] us Mhmm.

Mike DeHaan: [43:57] Continue in getting in front of more people and spreading some good word around real estate in a time where everyone's trying to buy small businesses that they're really just gonna fail and bankrupt themselves within the next eighteen months, for being honest. So thanks for listening. I'll talk to you guys next week.