Nic Carter: Bitcoin Core Values, Layered Scaling, and Blocksize Debates

00:00:00.000 | The following is a conversation with Nick Carter,

00:00:02.400 | who is a partner at Castle Island Ventures,

00:00:05.840 | co-founder of CoinMetrics.io,

00:00:08.600 | and previously a crypto asset research analyst

00:00:11.480 | at Fidelity Investments.

00:00:13.240 | He's a prominent writer, speaker, and podcaster

00:00:17.240 | on topics around decentralized finance,

00:00:19.640 | and especially Bitcoin.

00:00:22.120 | Quick mention of our sponsors,

00:00:24.160 | The Information, Athletic Greens,

00:00:26.800 | Four Sigmatic, and Blinkist.

00:00:29.140 | Check them out in the description to support this podcast.

00:00:32.800 | This conversation with Nick Carter

00:00:34.440 | is part of a series of episodes on cryptocurrency

00:00:37.360 | that is a small journey of exploration I'm on

00:00:40.040 | because I find decentralized finance,

00:00:42.080 | and especially Bitcoin, fascinating,

00:00:44.720 | technically and philosophically,

00:00:46.720 | especially because it may be the very mechanism

00:00:49.440 | that achieves a global decentralization of power,

00:00:52.920 | giving more sovereignty to the individual

00:00:55.440 | and making our systems more resilient to corruption

00:00:58.880 | manipulation, and in general,

00:01:01.020 | to the darker sides of human nature.

00:01:03.560 | Please let me also address something for a few minutes

00:01:06.780 | that happened recently that's been weighing heavy on me.

00:01:10.480 | If you find me annoying to listen to,

00:01:12.240 | please skip to the actual conversation with Nick.

00:01:15.120 | I had a recent podcast episode with Anthony Pompliano,

00:01:19.000 | where we spoke about Bitcoin and life in general

00:01:22.760 | for three hours.

00:01:23.920 | I was curious, inspired, positive,

00:01:26.960 | or at least I tried to be as I usually do.

00:01:30.040 | Someone clipped out, out of context,

00:01:33.000 | a short segment of me mumbling something

00:01:35.200 | about having a PhD, and I started getting mocked online

00:01:39.560 | because that made it convenient for people

00:01:41.760 | to mock me for being yet another, quote unquote, expert

00:01:45.640 | who learns about Bitcoin and thinks he knows everything.

00:01:49.160 | I almost never mention that I have a PhD,

00:01:52.000 | except to make fun of myself, as I was doing,

00:01:55.080 | or at least trying to do in the full context

00:01:57.440 | of the conversation.

00:01:59.400 | I brought up grad school as a random example

00:02:02.040 | of one of the many journeys I've taken that was hard,

00:02:05.460 | but where the destination was in itself not very useful.

00:02:09.840 | I was saying I enjoy exploring with a curious mind

00:02:12.680 | and I'm willing to be patient, to learn, to listen,

00:02:16.080 | to humble myself with knowledge

00:02:18.060 | for the sake of knowledge itself.

00:02:20.320 | Grad school was an example of that.

00:02:22.680 | The PhD means nothing,

00:02:24.720 | at least to me.

00:02:26.080 | I never call myself an expert, or at least try not to,

00:02:29.520 | because that would be dumb,

00:02:31.220 | because I know how little I know.

00:02:34.200 | I'm not a influencer, or a thought leader,

00:02:37.640 | or whatever else silly self-aggrandizing label

00:02:40.960 | people put on their LinkedIn.

00:02:43.080 | I try to be the opposite of what I was mocked for.

00:02:46.560 | I try to think deeply about the world,

00:02:48.680 | to look for the beautiful ideas in the minds of others,

00:02:51.360 | and to be inspired by them.

00:02:53.600 | I wanted to say all this because psychologically,

00:02:56.800 | it struck a bit of a blow.

00:02:58.840 | It made me realize that even when I approach things

00:03:01.480 | with love, I may be mocked, I may be derided,

00:03:05.280 | I may be taken out of context, or even lied about.

00:03:09.000 | With a growing platform, this is sadly only increasing.

00:03:12.060 | I now have learned that there's people

00:03:14.480 | who are waiting for my missteps,

00:03:16.560 | so they can point the finger, laugh, and say,

00:03:19.440 | "See, I told you so.

00:03:21.200 | "That guy's a joke, he's a fraud."

00:03:24.400 | As a fellow human being, the knowledge of this is painful.

00:03:28.280 | Yes, I know people tell me to toughen up,

00:03:31.280 | and my life has been about strengthening my mind

00:03:34.340 | in the face of my limits, but I refuse to not be fragile,

00:03:38.100 | and wear my heart on my sleeve.

00:03:39.960 | It's who I am.

00:03:41.540 | In some sense, this is the immune system of the internet,

00:03:44.900 | but let us be careful not to destroy

00:03:47.460 | the good ones in the process.

00:03:49.700 | The Bitcoin community had to endure many years of attacks

00:03:52.740 | from quote-unquote experts,

00:03:54.620 | and also fraudulent cryptocurrency efforts

00:03:57.060 | that scammed people out of their money.

00:03:59.300 | This created a powerful immune system

00:04:01.980 | that fought the attackers and the scammers.

00:04:04.660 | I understand this, and I also understand

00:04:07.220 | that one of the beautiful aspects of Bitcoin

00:04:10.020 | is its community of humans is decentralized,

00:04:13.260 | but some small part of this community

00:04:15.200 | has come to enjoy the us versus them battles,

00:04:18.180 | sometimes for the sake of the battle in itself.

00:04:21.940 | This happens in political discourse as well.

00:04:24.680 | I understand this, but to my limited mind,

00:04:28.100 | it sounds like groupthink,

00:04:29.860 | which has powerful defense mechanisms against bad ideas,

00:04:33.180 | but has dangerous consequences if taken too far,

00:04:37.340 | as in many periods of human history that I often talk about,

00:04:41.020 | where the us versus them thinking

00:04:43.380 | has led to the suffering of many.

00:04:46.220 | Again, I understand the value of this

00:04:48.180 | as many Bitcoiners explained to me,

00:04:50.220 | but it's not the way I, as a sovereign individual,

00:04:53.580 | choose to walk in this life.

00:04:55.900 | By the way, none of this podcast

00:04:57.420 | should be treated as financial advice.

00:04:59.700 | Before Nick kindly gifted me with $100 worth of Bitcoin

00:05:03.780 | in hardware form, I didn't own any.

00:05:07.580 | I'll probably buy some Bitcoin on Cash App, Coinbase,

00:05:10.700 | and other platforms, and also transfer to a hardware wallet

00:05:14.620 | just to learn how to do it.

00:05:16.140 | But other than that,

00:05:17.500 | I don't necessarily make wise investment decisions.

00:05:20.500 | Money is not a motivation for me personally.

00:05:23.020 | I try to avoid it, actually.

00:05:24.740 | I'm grateful for every day I'm alive,

00:05:26.700 | no matter how much money is in my bank account.

00:05:29.340 | For long stretches of my life,

00:05:30.800 | that number was very close to zero,

00:05:33.180 | and I was always fortunate to be free and happy.

00:05:36.720 | So I encourage you to listen to people much smarter than me

00:05:40.260 | for actual good financial advice.

00:05:42.940 | Here, I'm just exploring ideas.

00:05:45.580 | And as if this has not already gone on too long,

00:05:48.860 | let me please make another comment

00:05:50.380 | on the style of discourse among some Bitcoin maximalists

00:05:54.500 | on platforms like Twitter, that in my humble view,

00:05:58.340 | I may be wrong, but I believe is not conducive

00:06:01.800 | to the nuanced, empathetic exchange of ideas

00:06:04.540 | I very much look for and enjoy.

00:06:06.980 | Again, I appreciate their style of discourse.

00:06:09.460 | I think I understand the value of it, but it's not my thing,

00:06:12.600 | so I don't want to engage in it.

00:06:14.620 | I want to hear the quiet voices in the room.

00:06:17.020 | I look for people to inspire each other,

00:06:19.260 | and when we disagree, I look for disagreement

00:06:21.700 | that is grounded in respect and empathy.

00:06:24.820 | I think that mockery and derision destroys the possibility

00:06:28.380 | of those nuanced conversations.

00:06:30.420 | It drives away the quiet, thoughtful, empathetic voices,

00:06:34.060 | and I try to give those voices space to be heard,

00:06:37.060 | to shine, to exchange ideas, whether we agree or disagree.

00:06:42.140 | So if I happen to block you on Twitter,

00:06:45.220 | I block you with love.

00:06:47.460 | Honestly, I will never speak poorly of you

00:06:50.060 | or even think poorly of you.

00:06:52.100 | I would love to hang out in person,

00:06:53.900 | give you a big old hug, and talk about life over some beers.

00:06:57.980 | If you see or hear me say something stupid,

00:07:00.900 | which I'm sure I do often, or something you disagree with,

00:07:04.700 | and you still respect me as a human being,

00:07:06.660 | please show your love, as I always do to you,

00:07:09.420 | but also send me some links to blogs, books, videos,

00:07:12.900 | podcasts, where people describe why my stated idea

00:07:17.100 | may be totally wrong.

00:07:18.700 | I love this kind of long-form disagreement.

00:07:21.180 | I humble myself every day by reading books and blogs

00:07:24.220 | by people much smarter than me.

00:07:26.620 | Sometimes it strengthens my ideas,

00:07:28.860 | sometimes it totally changes them, but I always learn.

00:07:32.940 | This is a too long way of saying that I'm here,

00:07:36.660 | trying to walk with grace and with an open mind,

00:07:39.980 | a bit of patience, and always love.

00:07:43.420 | If I make mistakes, cut me some slack.

00:07:45.860 | Like you, I'm only human, allegedly.

00:07:49.580 | This is the Lex Freeman Podcast,

00:07:53.300 | and here is my conversation with Nick Carter.

00:07:56.540 | What philosopher or philosophical idea

00:08:00.420 | had a big impact on your life,

00:08:02.420 | not just in the space of cryptocurrency, but in general?

00:08:05.380 | - Oh, so we're going now, we're rolling.

00:08:07.420 | - We're going right in, 'cause you majored philosophy.

00:08:10.060 | - I did, I majored philosophy.

00:08:12.100 | I didn't know what to do with my life,

00:08:14.140 | and my parents said, "Do whatever you find interesting."

00:08:16.580 | It's like, okay, philosophy, great.

00:08:18.700 | Find that interesting.

00:08:19.900 | And it had way more of an impact on my career, actually,

00:08:23.940 | than I thought it might.

00:08:26.900 | Typically, I guess, if you do philosophy,

00:08:28.380 | you go into law or finance, so it sort of makes sense.

00:08:30.540 | But there are a number of philosophers I really admire.

00:08:35.420 | One of my favorites would be Descartes,

00:08:38.700 | probably the notion of skepticism.

00:08:41.780 | It's sort of a rabbit hole.

00:08:42.820 | It's kind of hard to pull yourself out of it.

00:08:45.620 | Basically, the brain and the vat theory,

00:08:47.220 | pulling yourself out of that.

00:08:48.980 | But yeah, I really like epistemology,

00:08:52.060 | questioning what it is to have knowledge.

00:08:54.160 | So Descartes was one of my gateways to that.

00:08:58.980 | - Do you think everything is knowable?

00:09:00.780 | Like we humans can know fully the objective reality?

00:09:05.780 | - Oh, definitely not.

00:09:07.220 | No, I mean, reality is very much processed

00:09:10.540 | through your own subjective lens.

00:09:13.860 | - So how much do you think do we understand

00:09:17.140 | about this world?

00:09:18.780 | Because a lot of your ideas,

00:09:20.140 | a lot of the things we might talk about today

00:09:22.820 | are kind of trying to figure out human civilization,

00:09:25.260 | how human behavior works at scale,

00:09:29.020 | all those kinds of things.

00:09:30.540 | That kind of assumes that we have it

00:09:32.960 | or we're able to somehow figure most of it out.

00:09:36.580 | So in your sort of, when you step way back,

00:09:41.020 | how much of it have we really figured out?

00:09:43.660 | - Well, I think that's the conceit of economics

00:09:45.780 | is thinking that you can model human behavior

00:09:49.420 | in these unbelievably complex systems.

00:09:52.500 | And then I think that's the modern critique of economics,

00:09:55.300 | like the sort of Talebian critique

00:09:57.660 | is that you can't have true knowledge

00:10:00.000 | and they're much less predictable than we think they are.

00:10:03.420 | And we behave according to our accumulated assumptions

00:10:07.820 | and we're using tiny sort of data sets

00:10:09.980 | trained on the last 50, 100 years,

00:10:12.600 | and they turn out to be horribly askew.

00:10:15.340 | And that's when we have our gray swans and our black swans.

00:10:19.140 | So I'm much more on the sort of,

00:10:23.100 | reality is much less notable than we think side of things.

00:10:26.860 | But it is nice to have very concrete things like Bitcoin,

00:10:29.260 | that's for sure.

00:10:30.240 | - Oh, so you think, so most of it is shaky ground,

00:10:33.280 | but there are some things, there's like islands of sturdiness

00:10:36.900 | and Bitcoin is one of them.

00:10:38.460 | - That's a good way to put it, yeah.

00:10:40.340 | I mean, look at the dollar system,

00:10:42.060 | not to pivot this into the dollar right away, but.

00:10:44.560 | (Lex laughing)

00:10:45.620 | The dollar is like-- - That's the shaky ground?

00:10:47.220 | It's the dollar? - It's the most,

00:10:48.500 | who truly understands the dollar system?

00:10:50.600 | I mean, the totality of it, the Eurodollar system,

00:10:54.460 | the way that monetary policy interacts with the economy,

00:10:58.340 | is monetary issuance inflationary?

00:11:01.460 | What's the relationship between unemployment and inflation?

00:11:04.620 | Even policymakers don't understand these things,

00:11:06.880 | economists don't seem to understand them.

00:11:09.420 | What is inflation, how do you define inflation?

00:11:11.380 | None of these things are really known or knowable.

00:11:14.960 | - So a lot of people kind of make a claim

00:11:16.740 | that there's a lot of manipulation possible

00:11:18.540 | with the dollar, with those currencies.

00:11:21.660 | If you couple that with the fact

00:11:23.500 | that people don't understand it,

00:11:25.540 | and yet there's claims that it being manipulated

00:11:28.500 | by centralized power,

00:11:30.740 | how do you bring those two ideas together?

00:11:33.980 | If no one understands it, how can you manipulate it?

00:11:36.660 | - I think what we don't understand

00:11:37.860 | are the long-term consequences of our structures.

00:11:41.660 | So like the Fed's mandate to target unemployment

00:11:45.820 | and steady exchange rates or low inflation,

00:11:50.820 | what we don't understand is, okay,

00:11:54.100 | what is the result of doing that continuously for 40 years?

00:11:57.740 | What is the net effect of that?

00:11:59.940 | What is the consequence of the long-term accumulation of debt

00:12:03.740 | and basement interest rates?

00:12:06.260 | What is the net effect of that on society?

00:12:09.180 | We might understand there's much short-term features

00:12:12.860 | of the system, but I think it's the longer-term features

00:12:15.800 | we don't understand.

00:12:16.980 | - Do you think there's like malevolent people,

00:12:20.140 | like people that don't have good intent in central banks,

00:12:23.700 | like in the system?

00:12:25.120 | When you have centralized power in any forms,

00:12:30.660 | it's susceptible to somebody hacking the system,

00:12:35.940 | taking the power, and in the shadows,

00:12:38.700 | this is where conspiracy theories come in, right?

00:12:40.900 | In the shadows, be able to,

00:12:45.220 | have act out things that have a lot of negative impacts

00:12:50.220 | on a large percent of the population

00:12:52.160 | in greedy self-interest.

00:12:54.700 | Do you think there's people like that,

00:12:55.960 | or do you think fundamentally most people are good,

00:12:58.560 | even those associated with the sort of central banking?

00:13:03.560 | - I mean, I don't villainize those people.

00:13:06.260 | I think everyone is the hero of their own story, right?

00:13:09.080 | So they all believe that they're a force for good

00:13:11.880 | in the world, you have to.

00:13:13.920 | Are there any true villains?

00:13:15.200 | I don't think so.

00:13:16.040 | I think they get socialized into a world

00:13:19.020 | where they believe their particular skills

00:13:22.680 | and their mandate is what they should be doing.

00:13:26.060 | I think they might be presumptuous

00:13:29.600 | or arrogant in some cases.

00:13:31.840 | And I think it's more of a systemic issue

00:13:36.400 | where you have a small handful of very homogenous types

00:13:41.560 | of people with PhDs from the same institutions

00:13:45.300 | that are brought up in the same cultural context

00:13:47.800 | that set policy and wield a tremendous amount

00:13:51.460 | of control over society.

00:13:53.720 | And I think they have this notion

00:13:55.680 | that you can tinker society,

00:13:57.720 | you can play with a few key variables

00:13:59.520 | and tinker society into a state that is desirable or good.

00:14:04.440 | And that's what they're trying to do.

00:14:06.520 | And I think the consequences of that can be pretty bad.

00:14:09.760 | But no, I don't think it's born out of malevolence.

00:14:13.100 | - There's an interesting idea.

00:14:15.080 | I think Michael Malis brought it up

00:14:16.640 | as a test whether you're on the left or the right.

00:14:19.400 | The question he asks, which is,

00:14:23.600 | do you think some people are better than others?

00:14:26.240 | If you say yes, he claims you're on the right.

00:14:31.560 | If you start answering,

00:14:32.960 | if you start saying a lot of things,

00:14:37.080 | like you're on the left.

00:14:40.400 | So if you start explaining yourself,

00:14:42.240 | well, equivocating, yeah, that's a good term for it.

00:14:45.440 | I was really, so in this test,

00:14:49.160 | I suppose I would be on the left

00:14:51.040 | because I'm uncomfortable with the idea

00:14:53.760 | that some people are better than others

00:14:55.640 | as a basic feeling, as a starting point

00:14:59.120 | in the way you think about the world.

00:15:00.580 | Because as we're talking about,

00:15:03.320 | everybody's a hero of their own story.

00:15:06.080 | When you start to think some people are better than others

00:15:09.000 | as a starting axiom,

00:15:11.620 | it's like a slippery slope to where

00:15:16.120 | you think you're way better than others.

00:15:20.960 | And then you start to like, basically,

00:15:23.240 | it's okay to take advantage of a large percent

00:15:27.000 | of the population for the greater good.

00:15:29.920 | - Totally.

00:15:30.740 | - And then you go into Stalin mode and Hitler mode,

00:15:33.740 | where it's okay to murder a large part

00:15:36.000 | of the population for the greater good.

00:15:38.840 | So it's this very dangerous, slippery slope in my mind.

00:15:42.160 | So I try to not, yeah, I was always uncomfortable

00:15:45.880 | with that kind of test or even that kind of thought.

00:15:48.080 | And yes, the same applies, I suppose,

00:15:50.400 | in government, in central banking,

00:15:53.120 | is if you think some people are better than others,

00:15:57.320 | applying your idea of what is good

00:15:59.800 | can have large-scale detrimental effects.

00:16:03.780 | - Of course.

00:16:05.280 | I'm glad you didn't pose me the question.

00:16:07.380 | (both laughing)

00:16:08.480 | I mean, I think maybe the left-right axiom isn't,

00:16:12.260 | the disjunction isn't the way I would sort of put it,

00:16:16.620 | but to me, it's just,

00:16:20.060 | if you reason in a consequentialist way,

00:16:22.400 | that lends itself to authoritarianism,

00:16:25.340 | whereby you think you can shape society

00:16:28.780 | and only you can shape society in a positive direction

00:16:32.000 | according to your specific objectives.

00:16:36.320 | So let's step onto the land of sturdiness, that is Bitcoin.

00:16:40.580 | What is Bitcoin, and in your view,

00:16:44.080 | what are the principles,

00:16:46.340 | the philosophical foundations of Bitcoin?

00:16:49.540 | - Well, Bitcoin, the term, I think,

00:16:52.380 | refers to two things specifically.

00:16:54.500 | So one is the protocol for conveying value

00:16:58.380 | through a communications channel.

00:17:00.380 | So just a set of rules that we collectively opt into

00:17:03.340 | in order to transact online or just at a distance.

00:17:08.940 | And then the other thing is the name of the asset,

00:17:13.020 | the sort of monetary unit

00:17:14.740 | which circulates within the system.

00:17:17.460 | And that always confused people a lot,

00:17:19.260 | 'cause it's like, well, you've got uppercase Bitcoin,

00:17:21.220 | lowercase Bitcoin.

00:17:22.940 | Why didn't Satoshi just give them different names?

00:17:25.860 | Like in Ethereum, you've got Ethereum, the system,

00:17:28.740 | and then Ether,

00:17:30.180 | although people don't really talk about Ether very much,

00:17:32.220 | but they chose to distinguish them.

00:17:36.300 | In Bitcoin, for whatever reason, they're not distinct.

00:17:40.460 | So the two Bitcoins get co-mingled all the time

00:17:43.280 | in the explanations.

00:17:44.780 | - Did you find that's a problem, that confuses things?

00:17:47.700 | I mean, what's really a distinction

00:17:49.460 | between the protocol and the currency?

00:17:51.500 | - Well, they are sometimes distinguished practically.

00:17:55.140 | Like you can transact with Bitcoin

00:17:57.420 | outside of the Bitcoin protocol, for instance.

00:17:59.860 | So you can transact with Bitcoin on Ethereum,

00:18:05.060 | or I have Bitcoin on an OpenDime here.

00:18:08.780 | This would be a Bitcoin transaction.

00:18:10.260 | It wouldn't settle on the Bitcoin network.

00:18:12.240 | - Do you mind explaining

00:18:13.080 | what you have on the table before us?

00:18:15.020 | - Yeah, so I brought you some presents.

00:18:17.020 | (laughs)

00:18:17.860 | - That's awesome.

00:18:18.940 | - This isn't a bribe.

00:18:19.940 | This is just a proof of concept.

00:18:21.660 | So this is basically a Bitcoin bearer instrument.

00:18:26.660 | So I put 100 bucks of Bitcoin on here.

00:18:31.020 | And to spend it, you have to basically

00:18:33.060 | physically destroy part of the device.

00:18:35.100 | You have to poke a hole and poke off

00:18:37.900 | one of the little transistors on this.

00:18:40.300 | So it can only be spent once.

00:18:42.560 | And you can't extract the private key from this device.

00:18:47.380 | So the private key was generated on device,

00:18:49.100 | always stays on the device.

00:18:50.820 | So what it means without breaking off a small part.

00:18:55.820 | So this basically is a way

00:18:59.920 | to physically instantiate Bitcoin.

00:19:02.660 | So it's kind of clever.

00:19:05.460 | - It's basically gold.

00:19:06.640 | - Yeah, effectively.

00:19:07.900 | So here.

00:19:08.860 | - Thank you so much.

00:19:09.700 | - This one's limited edition.

00:19:10.660 | It's orange.

00:19:11.540 | - So what is it called again?

00:19:14.500 | - OpenDime.

00:19:15.700 | The point is, if you wanted to settle

00:19:17.660 | a Bitcoin transaction instantly,

00:19:19.620 | the kind of same way that a cash transaction

00:19:22.240 | is instant final settlement, right?

00:19:24.140 | You would do it with a device like this.

00:19:27.100 | So if I was buying a house from you,

00:19:29.640 | you might prefer to do it with a physical bearer instrument

00:19:35.120 | as opposed to waiting for a confirmation

00:19:37.460 | on the Bitcoin blockchain.

00:19:39.620 | So the moment I hand that over to you,

00:19:41.940 | goes in your possession, you're the owner,

00:19:44.560 | there's no way for me to have retained the private key.

00:19:46.940 | Like I could have created a Bitcoin paper wallet

00:19:49.540 | and given that to you, but you have no assurance

00:19:52.300 | that I didn't copy down the key elsewhere.

00:19:55.860 | So this solves that problem basically.

00:19:57.300 | - So this is a physical instantiation

00:19:59.260 | of the Bitcoin transaction outside the Bitcoin protocol.

00:20:04.260 | - That's right.

00:20:05.780 | - So you're transacting the currency

00:20:07.340 | outside of the protocol.

00:20:08.180 | - So it's analog Bitcoin.

00:20:10.060 | We're rendering it analog, which I always liked

00:20:13.120 | 'cause Bitcoin is this immaterial thing.

00:20:15.500 | And so it's nice to have physical totems.

00:20:18.260 | - How much does it cost to manufacture this, do you know?

00:20:20.860 | - Like 15 bucks or something.

00:20:22.500 | - So this is just kind of almost like

00:20:25.820 | a philosophical statement versus something

00:20:28.900 | that's scalable for use.

00:20:32.220 | The point of Bitcoin is to be in the digital space, right?

00:20:35.980 | But this shows like Bitcoin can be anywhere.

00:20:39.140 | - It's useful for gifts, but yeah, I mean,

00:20:41.620 | I don't know if it would be a suitable foundation

00:20:44.700 | for a physical Bitcoin economy.

00:20:46.700 | - In theory, these would be like cash-like instruments

00:20:49.180 | that you could use to transact.

00:20:50.620 | - Well, I just mean post-apocalypse.

00:20:52.460 | - Yeah, yeah, but you still need to plug it

00:20:55.900 | into your laptop to actually verify

00:20:58.260 | that there's coins on there.

00:21:00.540 | So you still need the internet.

00:21:02.100 | - So I have to take your word for how much money is on here.

00:21:06.460 | - No, I mean, you can plug it into your laptop and check.

00:21:10.540 | - But to transact, to extract Bitcoin from this,

00:21:14.380 | I need to break.

00:21:15.540 | - Yeah, you have to poke a hole through the little hole

00:21:18.620 | and that renders it spendable, basically.

00:21:21.620 | So that's protection against you spending it

00:21:25.460 | and then representing that it's still loaded.

00:21:27.700 | - That's fascinating, cool.

00:21:29.700 | - So the other thing I brought here,

00:21:31.420 | basically dice, 12-sided.

00:21:34.180 | They don't have any Bitcoin on them.

00:21:37.700 | So they just have a bunch of different critiques

00:21:40.380 | of Bitcoin on each side.

00:21:41.940 | (laughing)

00:21:43.780 | - We'll go through them then.

00:21:44.940 | - This is awesome.

00:21:46.180 | - I don't know if we have time to do all 11

00:21:48.340 | 'cause there's one with my phone's logo on it.

00:21:50.700 | But it's just basically a tongue-in-cheek joke

00:21:54.100 | that the critiques of Bitcoin are so formulaic

00:21:56.980 | at this point that you can just put them on dice.

00:21:59.500 | It's silly.

00:22:02.820 | - Well, some of them might be topics

00:22:05.540 | for interesting conversations.

00:22:06.900 | - Oh yeah, you can even arrange the conversation that way.

00:22:10.060 | You can roll the dice and see what you get.

00:22:12.260 | - All right, but first,

00:22:14.140 | the philosophical foundations of Bitcoin.

00:22:17.620 | How do you see Bitcoin outside of just a basic protocol

00:22:21.540 | and a basic currency?

00:22:23.020 | It seems to be, like you said,

00:22:24.740 | it seems like sturdy ground.

00:22:27.380 | So what do you mean by this?

00:22:28.980 | - Yeah, so it's not just any protocol

00:22:30.940 | for moving value around.

00:22:32.020 | It's not just any currency.

00:22:33.180 | It's got specific rules and values that are embedded in it.

00:22:38.180 | And this is an important point,

00:22:39.980 | Bitcoin is the encoding of certain values,

00:22:44.140 | which are often misunderstood or not acknowledged necessarily.

00:22:48.740 | And so it's sort of impregnated with values.

00:22:53.100 | And what they are specifically is a topic of debate.

00:22:55.340 | And there have been civil wars fought over the values

00:22:59.420 | inherent in Bitcoin.

00:23:00.980 | One of them was, should Bitcoin be this cheap, scalable,

00:23:05.300 | the base layer, low-fee payments system

00:23:08.380 | with an emphasis on P2P payments?

00:23:10.420 | Or should it be more of this gold-like digital commodity

00:23:15.420 | that would eventually settle infrequently

00:23:19.580 | and mainly between institutions?

00:23:21.460 | So that's fundamentally a conflict of visions.

00:23:24.420 | So keep in mind that this is just one man's opinion.

00:23:30.460 | I don't speak for Bitcoin.

00:23:31.780 | So I would say the key number one value

00:23:37.260 | that's embedded in Bitcoin

00:23:38.420 | is the notion of non-discretionary monetary policy.

00:23:41.940 | So algorithmic monetary policy

00:23:44.300 | as opposed to human-based monetary policy.

00:23:47.300 | Satoshi was very clear about that.

00:23:48.900 | Bitcoin is an alternative to modern central banking

00:23:52.620 | where you have constant tweaking, constant intervention,

00:23:56.340 | which Satoshi felt leads to credit bubbles and so on.

00:24:00.340 | So Bitcoin proposes

00:24:02.580 | a completely non-discretionary monetary policy,

00:24:06.780 | sort of decays over time.

00:24:08.980 | 50% of the coins were issued in the first four years

00:24:11.580 | and then the next 25% in the next four years,

00:24:14.580 | then 12.5% in the next four years

00:24:17.060 | until you get to 21 million units.

00:24:19.340 | And none of those numbers really matter.

00:24:21.180 | Like it could have been 25 million units

00:24:23.300 | and it could have been a more aggressive slope

00:24:25.500 | or a more gradual slope.

00:24:27.180 | But what matters is that this schedule was proposed

00:24:30.980 | even before the code was public,

00:24:34.020 | the schedule was proposed.

00:24:35.780 | And then we all collectively agreed to stick to it.

00:24:38.440 | And that is kind of a first for monetary system.

00:24:43.120 | I mean, gold kind of has that property, right?

00:24:45.660 | 'Cause the supply of gold above ground

00:24:48.340 | only really increases at 1% to 2% a year.

00:24:50.980 | So it's sort of inhuman, which is a good feature, right?

00:24:54.340 | You don't want to give humans that much control over it.

00:24:57.380 | Bitcoin is a much more fastidious approach to that.

00:25:02.580 | It really is super concrete about what the supply schedule is

00:25:07.500 | and the fact crucially that it can't change.

00:25:09.860 | So we can't have a bailout of debtors.

00:25:13.420 | It was a lot of people,

00:25:14.820 | let's say a lot of people had debts denominated in Bitcoin

00:25:17.900 | and we needed loose accommodative monetary policy

00:25:20.700 | to bail them out.

00:25:21.780 | That's not possible.

00:25:22.700 | We couldn't have a Jubilee denominated in Bitcoin

00:25:26.420 | because the social contract that we've all

00:25:28.500 | bought into and committed to

00:25:32.020 | is that it's non-discretionary.

00:25:34.540 | So that's sort of one of the first things.

00:25:36.700 | And I think ultimately that comes back to

00:25:40.380 | basically a strong respect for property rights.

00:25:44.140 | Because if we were to have unanticipated inflation,

00:25:47.180 | let's say, a really charismatic leader somehow

00:25:50.300 | commandeered Bitcoin and convinced everyone

00:25:52.340 | that we should have 30 million units and not 21 million,

00:25:55.220 | that would basically be dilutive on everybody

00:25:58.780 | that held Bitcoin and had opted into the 21 million

00:26:03.700 | set of coins.

00:26:05.740 | An additional 9 million unanticipated

00:26:07.940 | would have a dilutive effect on everyone else.

00:26:10.260 | And that would be a covert way of effectively

00:26:12.460 | stealing their purchasing power through inflation.

00:26:14.820 | - Is that possible, that kind of thing?

00:26:16.300 | I mean, what's the mechanism of Bitcoin

00:26:19.220 | that resists that kind of charismatic leader?

00:26:22.220 | - Well, we've had people that have had a lot of influence

00:26:26.220 | in Bitcoin in the past

00:26:27.380 | and they've tried to make changes to the protocol.

00:26:29.980 | Not as dramatic as that,

00:26:32.320 | but Bitcoiners have generally resisted

00:26:35.740 | those individuals, institutions.

00:26:38.780 | And Bitcoiners have a good track record

00:26:41.140 | of sort of staying true to those core values.

00:26:44.660 | - So you mentioned values

00:26:47.500 | and sticking to the monetary thing,

00:26:50.820 | but there's bigger values.

00:26:52.420 | There's almost psychological values

00:26:55.820 | that are instilled in Bitcoin.

00:26:57.500 | You make a point that Bitcoin for many is a vessel, quote,

00:27:01.780 | for their expectations, hopes, and dreams.

00:27:04.640 | Can the Bitcoin protocol support this kind of complexity

00:27:10.500 | of the human condition?

00:27:12.260 | So like, there's ideas of freedom

00:27:15.900 | that seem to be spoken about.

00:27:17.940 | There's a sort of ideas of,

00:27:20.020 | I mean, even love. (laughs)

00:27:24.100 | - Yeah.

00:27:24.940 | - I mean, some people kind of use it as a meme,

00:27:26.860 | like, you know, Bitcoin is love or something like that,

00:27:29.780 | you know, mostly to troll me

00:27:32.300 | because I talk about love all the time.

00:27:34.100 | But, you know, these bigger ideas

00:27:36.660 | than just the exchange of currencies.

00:27:41.140 | - Yeah, I mean, Bitcoin itself is very simple, I would say.

00:27:45.380 | Like, ultimately, it doesn't, you know,

00:27:49.020 | pretend to do very much.

00:27:50.500 | It really just settles transactions.

00:27:53.580 | But people do superimpose their own views on it, for sure.

00:27:58.160 | And Bitcoin's qualities give rise to these perceptions

00:28:04.460 | of it having censorship resistance

00:28:06.460 | or giving you transactional freedom

00:28:08.540 | or a measure of transactional privacy.

00:28:12.220 | So because anyone can operate a node

00:28:16.700 | and join the consensus process,

00:28:18.460 | and because mining is a competitive free market process,

00:28:22.240 | that means that it's likely

00:28:25.100 | that you can't be censored by the miners.

00:28:28.180 | So that means you have transactional freedom.

00:28:30.020 | So you have these computer science,

00:28:32.620 | technical features of the system

00:28:34.060 | that cause it to have these political qualities,

00:28:36.480 | which is, it's very hard or impossible

00:28:39.620 | to censor a specific individual.

00:28:41.720 | So it's interesting to see that flow.

00:28:46.880 | So that's one of the core values, for sure,

00:28:48.660 | is the censorship resistance.

00:28:51.060 | Then you have the fact that it's a cryptographic-based

00:28:53.740 | system, and you can hold value in your brain

00:28:57.340 | by memorizing 12 words, for instance.

00:29:00.340 | That gives it seizure resistance,

00:29:02.660 | which is, again, a political concept.

00:29:04.580 | If you wanted to desert your jurisdiction

00:29:08.260 | with your wealth intact in your brain,

00:29:11.220 | you know, that cryptographic feature of the system,

00:29:14.740 | the fact that it's built on public-key cryptography,

00:29:17.500 | and that you can encode a Bitcoin private key

00:29:20.700 | in 12 words, that gives it this political salience

00:29:25.220 | that you're now empowered relative to a dustbot, basically.

00:29:30.220 | - Yeah, I mean, there's so many beautiful concepts

00:29:33.860 | behind cryptocurrency, behind Bitcoin,

00:29:37.300 | that stand for sort of freedom,

00:29:39.780 | some of the basic things at the founding of this country.

00:29:42.760 | The one thing I don't like, personally,

00:29:45.220 | behind Bitcoin and cryptocurrencies,

00:29:48.540 | is that money's involved, and it's like

00:29:50.740 | people's life savings sometimes are involved.

00:29:53.700 | So there is naturally a kind of fear,

00:29:58.200 | a self-preservation, like, instinctual,

00:30:02.360 | kind of dogmatic thing that comes in,

00:30:05.300 | where you're not the best of human nature.

00:30:08.460 | You stop being a George Washington,

00:30:10.740 | and you lose touch of the foundational principles,

00:30:14.580 | which I think are beautiful,

00:30:15.740 | just like the founding principles of this country.

00:30:18.100 | So that's just like, so I like staying

00:30:21.660 | on the level of the philosophy,

00:30:24.340 | versus the level of, like,

00:30:27.140 | all my money is invested in Bitcoin.

00:30:29.540 | And that becomes very tricky territory

00:30:32.860 | to have principled discussions about ideas.

00:30:37.860 | - Well-- - It's an interesting tension.

00:30:39.620 | - I try to stay balanced,

00:30:40.860 | despite being very exposed to Bitcoin, so.

00:30:44.220 | - Let me ask the ridiculous question, just in case.

00:30:47.420 | Who is Satoshi Nakamoto?

00:30:49.380 | - We don't-- - And is it you?

00:30:50.480 | - We don't know.

00:30:51.480 | It's probably not me, because I was,

00:30:54.580 | like, 17 when Satoshi invented Bitcoin.

00:31:00.380 | 16, so unlikely.

00:31:03.020 | And also, I'm not really a programmer, so.

00:31:05.540 | There's a lot of theories, but honestly,

00:31:08.740 | it's one of the greatest mysteries of all time,

00:31:10.540 | because even Bitcoiners that have been around

00:31:13.620 | since day one, really, you know,

00:31:16.940 | people that were around before Bitcoin came out,

00:31:19.300 | they're on the mailing list,

00:31:20.480 | they were active in the cypherpunk community.

00:31:23.040 | You ask them, and they sincerely will not know.

00:31:25.980 | And they may not even have a good guess

00:31:27.900 | as to who Satoshi is.

00:31:29.340 | - Is it important to know,

00:31:30.380 | or is it, like, actually important not to know?

00:31:33.060 | Do you think that's a feature or bug that you,

00:31:34.980 | we don't know?

00:31:35.980 | - Some people don't like the uncertainty,

00:31:37.780 | especially, you know, folks on Wall Street,

00:31:40.300 | they really want to know.

00:31:42.200 | And if you read the Coinbase S1,

00:31:45.000 | their disclosure, pre-IPO, that's a risk factor

00:31:48.920 | that Satoshi could come back.

00:31:51.000 | So the risk management crowd wants to know,

00:31:55.040 | because they want to know if maybe Satoshi had,

00:31:57.960 | you know, undesirable political opinions or something

00:32:00.920 | that would forever taint the project.

00:32:02.880 | - Do you think they were just trolling with that risk,

00:32:05.000 | with Satoshi's identity being a risk factor,

00:32:09.840 | or is that, like, actual, like,

00:32:11.400 | was there an actual meeting and a discussion

00:32:13.480 | of that being a risk factor?

00:32:15.080 | - I think in the risk factor sections of the prospectuses,

00:32:17.920 | it's really just the lawyers doing a total brain dump

00:32:20.240 | to cover absolutely everything they can think of.

00:32:22.240 | - So it's just lawyers, it's not like,

00:32:24.300 | you know, it's like, I think Elon was somewhere

00:32:28.820 | in the legal documents for SpaceX,

00:32:31.400 | mentioned that, like, Earth governments

00:32:34.600 | have no jurisdiction on Mars.

00:32:36.400 | - Yeah. - Like, they threw

00:32:37.280 | that in there, and it feels like,

00:32:39.120 | yeah, that could be lawyers,

00:32:40.240 | but it could also just be Elon trolling.

00:32:42.360 | - Yeah.

00:32:43.180 | - I wonder if it's, like, the Coinbase folks trolling,

00:32:46.240 | or if it's lawyers.

00:32:49.040 | I hope it's the trolling, not the lawyers.

00:32:51.640 | - The Coinbase leadership,

00:32:52.880 | they're not as big trolls as Elon is,

00:32:56.140 | but, I mean, it's a risk, for sure,

00:32:58.600 | from their perspective, because,

00:33:00.720 | let's say Satoshi returned, doesn't seem likely,

00:33:03.240 | and let's say they decided to spend all their coins,

00:33:05.900 | which also seems very unlikely.

00:33:07.580 | That's, you know, rumored to be,

00:33:11.240 | or estimates have it at one to 1.2 million Bitcoin,

00:33:16.240 | which is, like, 50, $60 billion worth.

00:33:20.840 | So, some people consider that to be a risk.

00:33:24.000 | - You think it's, you know,

00:33:26.000 | this is almost like a topic of leadership.

00:33:28.620 | It doesn't feel like anybody,

00:33:30.440 | any one person speaks for Bitcoin.

00:33:32.660 | There's not even, like, prominent figures.

00:33:38.720 | Like, you have, for, like, Ethereum,

00:33:40.760 | you have Vitalik Buterin.

00:33:42.040 | There's a lot of, like, top minds

00:33:46.400 | talking about it, like, yourself,

00:33:48.600 | but it's not, like, one or two.

00:33:51.080 | Do you think, again, is that a feature or a bug?

00:33:53.720 | Like, do you think for effective,

00:33:55.960 | for Bitcoin to effectively have a role in society

00:34:00.640 | that, like, is as large or larger than the dollar,

00:34:04.500 | there needs to be, like, leadership that represents it,

00:34:08.980 | almost like democratic kind of thing?

00:34:11.000 | - Well, that's a real counterintuitive point,

00:34:13.440 | because most Bitcoiners, including myself,

00:34:15.480 | would say, no, the lack of leadership

00:34:17.400 | is a great quality to have.

00:34:19.840 | Because if you have a charismatic leader

00:34:21.640 | and a foundation or corporation that controls it,

00:34:25.040 | maybe they can control the features of the protocol,

00:34:27.600 | and maybe they can expropriate holders of the coin,

00:34:31.720 | or, you know, build in an endowment

00:34:34.600 | that pays them off and gives them privileged access

00:34:38.900 | to the units of the coin, for instance.

00:34:40.640 | So, you know, we call people that have privileged access

00:34:45.400 | to the money spigot, Cantillon insiders,

00:34:48.800 | which is, there is this economist that pointed out

00:34:51.040 | that, as, you know, I think Richard Cantillon,

00:34:54.360 | that as money enters the economy, it has an uneven flow.

00:34:58.000 | Right, and so you see this in the last decade or so,

00:35:01.840 | before that, too, the consequence of money printing

00:35:05.160 | in this country is people that own financial assets

00:35:08.300 | made a lot of money, and people that didn't, didn't.

00:35:10.800 | So you see that Cantillon insider,

00:35:13.340 | Cantillon outsider effect.

00:35:15.440 | And it's the same with a cryptocurrency,

00:35:18.320 | and many other alternative cryptocurrencies

00:35:20.340 | that do have these corporate entities,

00:35:23.360 | or these leaders and CEOs,

00:35:25.380 | they're able to make specific decisions

00:35:27.440 | regarding the protocol and the currency of the asset,

00:35:30.960 | the benefit themselves, their cronies, et cetera,

00:35:33.860 | and that's not a good feature to have.

00:35:36.120 | I mean, it does grant you, you know,

00:35:39.640 | the ability to orchestrate decisions

00:35:41.900 | in a faster and more efficient way,

00:35:44.500 | but long-term, what you're trying to optimize for,

00:35:47.240 | if you're creating a money,

00:35:48.940 | is monetary credibility and soundness.

00:35:51.500 | So you don't really want it changing all that often.

00:35:54.300 | And you don't want to have the appearance of, you know,

00:35:57.860 | these elites that are engaging in rent seeking

00:36:00.280 | or anything like that.

00:36:01.200 | So there's definitely people that are influential

00:36:03.800 | in Bitcoin, there's core developers

00:36:05.520 | that people listen to,

00:36:06.500 | because it's, I would say, a meritocracy, largely,

00:36:09.100 | and they're sort of self-appointed high priests

00:36:11.560 | of the protocol.

00:36:13.120 | I write a lot about Bitcoin, people listen to me,

00:36:15.680 | but it's a completely free market of ideas, right?

00:36:19.300 | I don't have any authority within Bitcoin whatsoever.

00:36:22.440 | I'm just a scribbler, you know?

00:36:24.000 | - You're just a scribbler.

00:36:24.840 | - Just a scribbler.

00:36:25.680 | - Well, so was Aristotle, and Socrates, and Nietzsche.

00:36:30.460 | Okay, at the high level, technically,

00:36:35.140 | how does Bitcoin work?

00:36:36.900 | Is there interesting things you could say,

00:36:38.780 | like what are miners, what are nodes, full nodes,

00:36:41.960 | what are blocks, what's proof of work?

00:36:45.360 | Is there a nice way to wrap up

00:36:47.820 | a clean explanation of the protocol?

00:36:50.660 | - Oh man, that could be another five hours.

00:36:54.500 | - Is there interesting, 'cause I'd love to talk to you

00:36:57.580 | about block size wars and sort of the politics,

00:37:00.780 | psychology, the principles around that,

00:37:03.340 | but sort of building up to that,

00:37:04.620 | it'd be nice to talk about how the thing works.

00:37:07.220 | - That's fair, I mean, and the block size wars

00:37:09.420 | are a really fascinating discussion

00:37:12.040 | of how governance debates intersect

00:37:15.220 | with technical features.

00:37:16.820 | So I guess we can, yeah, so basically,

00:37:21.820 | at the highest possible level, Bitcoin is a globally shared,

00:37:26.620 | it's really a replicated ledger that any participant

00:37:32.060 | that wants to be an equal peer on that ledger,

00:37:34.700 | they want to maintain that ledger

00:37:37.340 | and they wanna stay up to date

00:37:38.620 | with the global state of the ledger.

00:37:40.920 | And really any monetary system is just a ledger

00:37:45.700 | with physical cash.

00:37:47.500 | We benefit from the physical instantiation of the money.

00:37:52.860 | - So the physics is the ledger.

00:37:54.420 | - The physics is the ledger, right?

00:37:56.180 | Same with gold, right?

00:37:57.180 | You can't just produce new units of gold.

00:37:59.500 | So we trust that gold atoms are hard to create,

00:38:04.500 | although not impossible, right?

00:38:07.520 | You could fire a bunch of protons

00:38:10.020 | and whatever is the adjacent metal

00:38:13.180 | and create gold atoms, it'd be expensive.

00:38:15.740 | And the same with dollars,

00:38:17.620 | we trust that it's hard to counterfeit a dollar.

00:38:19.640 | So we trust the physical analog world

00:38:22.300 | to help maintain the state of that ledger.

00:38:24.820 | With digital money, like the money in your bank account,

00:38:29.480 | your checking account,

00:38:31.140 | we basically trust our institutions or banking institutions

00:38:34.540 | to keep a faithful record.

00:38:36.700 | And then ultimately we trust the central bank

00:38:38.780 | to administer that system.

00:38:41.060 | So there's kind of a handful of nodes.

00:38:43.220 | In Bitcoin, we trust that the economic incentives

00:38:45.920 | of the system are carefully poised, basically.

00:38:49.220 | So we trust that the free market mining competition

00:38:53.820 | will lead to the miners assembling transactions

00:38:56.940 | into blocks in a faithful and correct way.

00:39:00.180 | And that we are gonna converge on a global state

00:39:03.120 | of the ledger continuously,

00:39:05.020 | which updates every 10 minutes or so with some variance.

00:39:08.980 | And then the miners aren't the sole entities

00:39:12.060 | that control the system.

00:39:13.920 | To really participate, if you're a merchant

00:39:16.660 | and you're accepting Bitcoin,

00:39:18.220 | you really wanna run your own full node

00:39:20.460 | and check the whole history of transactions,

00:39:22.500 | sort of something like,

00:39:24.500 | I wanna say five to 600 million transactions

00:39:26.780 | that have ever occurred on Bitcoin.

00:39:28.580 | - So full node contains all the transactions

00:39:31.220 | ever transacted on the Bitcoin blockchain.

00:39:35.700 | And that's, I saw it's like 200 gigs or something like that.

00:39:39.620 | - Like 350, something like that.

00:39:41.780 | It's doable on a regular consumer laptop,

00:39:44.660 | and that is gonna be really key later on in the discussion.

00:39:47.940 | - Sure. (laughs)

00:39:49.900 | - But so, that's really the ultimate trust models.

00:39:53.060 | First of all, we trust that the miners

00:39:54.460 | that assemble transactions into blocks

00:39:56.440 | and they are the archivists,

00:39:59.060 | they inscribe those transactions onto the ledger,

00:40:02.140 | and they have an economic incentive

00:40:04.340 | to sort of behave correctly

00:40:05.660 | 'cause they're getting paid in no units of Bitcoin.

00:40:08.740 | That's part of it.

00:40:09.860 | But then really you are also,

00:40:12.740 | you're not fully trusting them.

00:40:14.020 | You're actually, if you wanna run a node,

00:40:15.500 | you replay every single transaction

00:40:17.460 | in the history of Bitcoin from the beginning

00:40:20.020 | to the current day,

00:40:21.340 | and you arrive at the present state that way.

00:40:23.900 | So you don't really have to trust

00:40:25.720 | too many people or entities.

00:40:28.120 | You can validate the correctness

00:40:30.440 | of that all the rules have been followed,

00:40:32.760 | that all the Bitcoins that were created

00:40:34.120 | were done so in the valid way,

00:40:36.760 | that the inflation rate was adhered to,

00:40:39.640 | and that there's no covert inflation,

00:40:42.320 | that if you're spending 50 units of Bitcoin,

00:40:46.080 | you had that Bitcoin to spend in the first place.

00:40:50.180 | So it's sort of delicately poised

00:40:52.720 | between node operators who engage

00:40:56.220 | in this validity checking,

00:40:57.840 | kind of anti-counterfeiting checking,

00:40:59.840 | and then also the miners,

00:41:01.040 | which are an industrial entity,

00:41:03.280 | and they basically produce block space

00:41:06.040 | and assemble transactions into blocks.

00:41:08.760 | - And everybody, so the miners are incentivized

00:41:11.760 | to not mess with the system

00:41:13.600 | because they're gaining value from the system.

00:41:15.480 | So if they mess with it,

00:41:16.520 | it's going to decrease the value

00:41:20.080 | of their physical work investment.

00:41:23.240 | - Yeah, so they have to incur a real physical cost

00:41:26.200 | to produce a block, right?

00:41:28.160 | So right now, you get 6.25 Bitcoins in a block

00:41:33.160 | at a minimum, and then maybe some fees as well.

00:41:36.640 | - How hard is it to produce a block now?

00:41:38.660 | - Well, challenging.

00:41:39.760 | I mean, you need, so 6.25 Bitcoins,

00:41:44.040 | and a Bitcoin's worth $55,000 or so.

00:41:46.960 | So it's probably going to cost you

00:41:48.680 | about that amount to produce it

00:41:51.720 | 'cause it's a free market competition,

00:41:53.720 | and miners have very thin margins.

00:41:56.600 | So it's like if I auction off a dollar,

00:41:59.720 | you would pay up to 99 cents to buy that dollar from me.

00:42:03.320 | It's exactly what happens with miners.

00:42:05.960 | They're basically competing for the right

00:42:09.840 | to obtain new units of money.

00:42:11.600 | So logically speaking, they would pay up

00:42:14.440 | to the value of that money in order to earn it.

00:42:16.720 | - And for people who are not familiar,

00:42:18.800 | the process of mining is solving

00:42:21.320 | a difficult cryptographic problem.

00:42:23.640 | That's a computational problem.

00:42:25.560 | - I would say it's not like, people sometimes represent it

00:42:28.320 | as a really challenging puzzle.

00:42:30.280 | The individual puzzle is very simple.

00:42:32.840 | You can do it with pen and paper if you wanted,

00:42:35.200 | you know, like SHA-256.

00:42:37.280 | It's just that you're searching

00:42:38.920 | through the big mathematical space

00:42:40.600 | to find the needle in the haystack.

00:42:43.160 | You're just doing lots of iterations of a simple puzzle.

00:42:46.200 | - It's just brute force, hence like the stability

00:42:48.920 | of the whole idea of the proof of work.

00:42:51.040 | If there was a shortcut, it wouldn't work.

00:42:55.480 | - Exactly.

00:42:56.440 | So let's hope nobody solves SHA-256.

00:43:00.320 | - Yeah, there's a lot of discussions

00:43:02.280 | from the quantum computing space,

00:43:03.740 | but everybody I talk to, all my colleagues

00:43:07.280 | that work in quantum computers say

00:43:10.040 | that we're quite a long way away

00:43:13.440 | from that being an issue in cryptography

00:43:16.560 | and certainly an issue in cryptocurrency.

00:43:19.000 | - That should have been one of the sides on these dice.

00:43:22.400 | It should have been quantum.

00:43:23.240 | - Quantum.

00:43:24.240 | - I don't think it is.

00:43:25.180 | I forgot to put it on this edition.

00:43:27.440 | - People should check out Scott Aronson.

00:43:29.440 | There's a lot of people that are kind of

00:43:33.280 | selling quantum snake oil, so you should be very careful.

00:43:39.000 | I think it is a really exciting space

00:43:41.440 | that might change the world in the next decade

00:43:45.120 | or a couple hundred years,

00:43:48.560 | especially for simulating quantum mechanical systems.

00:43:51.320 | But in quantum machine learning,

00:43:54.400 | people should check out TensorFlow Quantum.

00:43:56.800 | It's a nice way to sort of educate yourself about the space.

00:44:00.160 | And actually, if you're pragmatically minded

00:44:02.320 | to, through software engineering,

00:44:06.200 | explore how you simulate quantum circuits,

00:44:09.040 | how you run machine learning on those quantum circuits.

00:44:11.360 | The main point that Scott makes, Scott Aronson,

00:44:15.040 | people should check out his blog too,

00:44:16.920 | is that there's not yet a single machine learning application

00:44:21.920 | that doesn't do almost as well on a classical computer.

00:44:26.280 | So it doesn't, like, yes, the dream is somehow

00:44:30.740 | quantum computers will change the nature

00:44:33.920 | of artificial intelligence,

00:44:35.340 | but there's yet to be an actual algorithm

00:44:39.400 | or a problem set or a data set where that would be the case.

00:44:44.400 | So skepticism is good in this space.

00:44:47.960 | Anyway, that said, so you kind of explained

00:44:51.960 | how Bitcoin works.

00:44:53.520 | You also wrote a blog post recently

00:44:57.360 | giving a shout out to the new book, "The Block Size Wars."

00:45:00.840 | What is a block size?

00:45:04.480 | - What are the block size wars?

00:45:06.840 | It's history, it's importance,

00:45:08.880 | it's philosophical foundations.

00:45:11.200 | - Yeah, I mean, Bitcoin, at this point,

00:45:13.600 | we have our own civil wars, if you're wondering

00:45:16.620 | about how politically intense it gets.

00:45:19.360 | - It's currently not hot, it's cold.

00:45:21.800 | - Oh yeah, we're in a detente right now.

00:45:23.800 | (both laughing)

00:45:25.080 | - There's no tanks or missiles,

00:45:27.320 | at least not yet, hopefully.

00:45:28.960 | - It can get a little violent, I guess.

00:45:31.240 | I think one of the Bitcoin core developers

00:45:33.680 | or one of the participants in the war

00:45:35.800 | got swatted at one point.

00:45:37.760 | - What's swatted means?

00:45:39.120 | - When someone does a fake phone call

00:45:42.240 | saying that you're holding someone hostage

00:45:44.080 | at your house and the SWAT team goes,

00:45:46.680 | it's pretty scary.

00:45:47.520 | (man sighs)

00:45:48.360 | - Wow.

00:45:49.180 | - Internet warfare tactic, yeah.

00:45:51.200 | But the block size war, I would say, effectively ended,

00:45:54.640 | although we're definitely gonna have more

00:45:58.040 | civil wars in Bitcoin for sure.

00:46:00.400 | But basically the core argument was

00:46:03.040 | a technical one on its surface,

00:46:05.600 | but a very deep political one at its core.

00:46:09.080 | The technical question is how many megabytes

00:46:12.440 | should be in each successive block?

00:46:15.640 | So Satoshi basically installed a limit

00:46:18.360 | of one megabyte per block.

00:46:20.300 | - So we should backtrack.

00:46:21.940 | There was no limit in the beginning.

00:46:24.920 | And it seems like Satoshi, what is this, 2000?

00:46:28.480 | The war started in what, 2017 or something like that?

00:46:32.160 | I don't know when the--

00:46:33.000 | - '15 was when the battle cries began.

00:46:38.000 | What was the first battle in the civil war?

00:46:40.120 | I don't remember.

00:46:41.000 | - But Satoshi, I don't know if you can comment on it,

00:46:45.040 | why did Satoshi set the limit to one megabyte

00:46:47.960 | all of a sudden, almost secretively?

00:46:50.840 | And in the beginning, there was no limit whatsoever.

00:46:55.180 | - Yeah, I mean, we can get into,

00:46:56.880 | and people have spent thousands of hours

00:46:58.560 | poring over Satoshi's writings to find

00:47:01.840 | which side Satoshi was on.

00:47:03.480 | And you can find, like any textual exegesis,

00:47:07.040 | you can find evidence for either side, right?

00:47:10.420 | But yeah, I mean, effectively when Bitcoin was launched,

00:47:13.440 | there was a block size, because if you made a block

00:47:16.200 | over a certain size with the first edition of the code,

00:47:19.200 | it would have crashed nodes.

00:47:22.120 | But then, yeah, in 2010, Satoshi added the one megabyte

00:47:24.640 | limit in a covert way with no comments or anything.

00:47:28.600 | And that stuck, basically.

00:47:31.560 | And then Bitcoin blocks filled up,

00:47:34.720 | and people that had been socialized

00:47:37.040 | into this vision of Bitcoin as an effectively free

00:47:40.440 | transactional network, like why pay a transaction fee

00:47:43.480 | if you're not at congestion?

00:47:45.420 | If the block isn't full, the miner will mine

00:47:47.220 | your transaction for free, right?

00:47:50.760 | People that had been brought up in that status quo

00:47:54.760 | from 2009 to 2015, they noticed the block started to fill up,

00:47:59.680 | and they're like, okay, well, let's just remove

00:48:01.400 | this arbitrary limit, right?

00:48:03.000 | What could possibly be the harm?

00:48:05.360 | And then a whole other faction said,

00:48:08.400 | no, you need to cap the data throughput of the system,

00:48:12.640 | because if you increase it, it's gonna be

00:48:15.640 | highly exclusionary, and ultimately,

00:48:18.720 | regular folks are not gonna be able to run a full node.

00:48:21.520 | - So there's a fixed number,

00:48:23.000 | there's a fixed frequency of blocks,

00:48:26.280 | and so if you wanna increase the number of transactions

00:48:29.400 | per second, you wanna increase the size of the block.

00:48:32.640 | So huge blocks allow you to shove in a lot of transactions.

00:48:36.280 | - Right. - Small blocks don't.

00:48:37.840 | So that's what you mean, like constraining the system.

00:48:40.700 | So what's the benefit of a small block size

00:48:43.680 | where transactions, when you can squeeze in

00:48:48.140 | only a small number of transactions,

00:48:50.240 | and what's the benefit of a huge block size

00:48:52.800 | where you can squeeze in a lot of transactions?

00:48:55.160 | - Well, it really comes down to the way

00:48:57.240 | that you think about the system.

00:48:58.520 | So a lot of people wanted Bitcoin to be Visa scale,

00:49:02.280 | so to have blocks sufficiently large

00:49:05.200 | that you could accommodate a Visa-level scale

00:49:08.860 | of transactions, so--

00:49:10.160 | - Which is many orders of magnitude more transactions.

00:49:13.000 | - That's right, I mean, preposterously larger

00:49:15.800 | in terms of data throughput than, you know,

00:49:18.220 | Bitcoin offers up, or at least it used to,

00:49:20.800 | 144 megabytes of space per day,

00:49:23.880 | and your average transaction's 350 bytes.

00:49:26.760 | So, you know, you could, at a push,

00:49:29.680 | do four, 500,000 transactions a day, which is not many.

00:49:34.160 | So if you wanted to get to Visa scale,

00:49:36.920 | you'd have to increase blocks obnoxiously large.

00:49:40.360 | The small blockers claim that this would overwhelm

00:49:45.040 | the ability of any regular person to ingest that data

00:49:48.640 | and stay current at the, you know, state of the ledger

00:49:52.160 | to replay all those transactions

00:49:54.840 | to ensure that the protocol rules were valid.

00:49:57.000 | So basically, the small blocker contention is that

00:50:00.740 | you eliminate the trustlessness of the system

00:50:03.880 | by pushing a ton of data through the system

00:50:06.040 | because only one or two industrial heavy-duty nodes

00:50:10.240 | would ever be able to run the protocol at that point.

00:50:14.080 | - So, by the way, in the civil war,

00:50:16.040 | the two sides, as you're calling them,

00:50:18.760 | the small blocker and the big blocker sides.

00:50:23.160 | And so that takes us back to the thing that you mentioned,

00:50:27.800 | that a regular computer could be a node.

00:50:30.880 | And with big blocks, that's no longer going to be the case.

00:50:35.880 | So just the number of transactions is going to blow up

00:50:40.120 | the size of the blockchain

00:50:42.720 | that every full node has to store.

00:50:44.960 | And so then, as opposed to a regular mom and pop

00:50:49.480 | type of node, you're going to have to have data centers.

00:50:53.200 | So they're going to have to be owned

00:50:54.600 | by large organizations.

00:50:56.000 | There's going to have to be very few of them.

00:50:58.200 | And that's how you centralize the control

00:51:00.140 | over this whole operation.

00:51:03.640 | So the big blocker, yes, it allows you to be Visa

00:51:08.640 | and do a huge number of transactions,

00:51:10.960 | but it becomes centralized.

00:51:12.080 | And the small blockers, you cannot actually do

00:51:16.200 | kind of merchant style transactions,

00:51:19.120 | but you get the decentralized benefit.

00:51:21.960 | - Well, I don't even think the big block approach

00:51:24.160 | would allow you to be Visa, frankly,

00:51:26.160 | because there's effectively one node

00:51:28.440 | in the Visa network, right?

00:51:31.040 | So you don't really need to maintain

00:51:32.440 | this peer to peer architecture at all.

00:51:34.360 | And the amount of data you'd have to push through

00:51:37.600 | the network to reach Visa scale

00:51:39.440 | is a really preposterous amount.

00:51:41.440 | I mean, and we have now evidence for what happens

00:51:45.320 | when you try and scale up as a blockchain

00:51:47.280 | and do 10 million transactions a day,

00:51:49.200 | which is still not Visa scale, right?

00:51:51.340 | You know, I've seen what it's like to operate those nodes,

00:51:57.160 | and it's not pretty.

00:51:58.200 | So there are totally genuine computer science,

00:52:02.240 | physical limits, because it's a broadcast network.

00:52:07.240 | Everyone has to be aware of every transaction.

00:52:10.960 | And that model, which gives you the trustlessness,

00:52:14.200 | the nice guarantees where everyone's an equal peer

00:52:16.600 | on the network, everyone has audited

00:52:18.520 | the full history of the transactions,

00:52:20.720 | that model falls apart under stress.

00:52:23.300 | So the small blocker vision is that ultimately

00:52:27.560 | you would scale in a layered approach

00:52:30.540 | with the base layer transactions

00:52:32.060 | being settlement style transactions,

00:52:34.640 | and you know, payments happening

00:52:35.800 | at the other layers, basically.

00:52:37.360 | - Is that universally agreed upon,

00:52:40.140 | or like to a large degree agreed upon

00:52:43.040 | that the small blockers have won in this debate?

00:52:47.520 | - Well--

00:52:48.360 | - Where would you put the current state of affairs?

00:52:50.880 | - There was a wave of competing Bitcoin implementations

00:52:54.360 | starting in 2015 with Bitcoin XT.

00:52:56.880 | Actually, Gavin Anderson, who was the guy

00:53:00.200 | that Satoshi handed the reins to when Satoshi left,

00:53:03.760 | Gavin supported this large block proposal.

00:53:07.240 | And so that didn't achieve consensus,

00:53:10.860 | and then there was Bitcoin Unlimited,

00:53:13.180 | and then later on there was a genuine hard fork

00:53:17.700 | where the small blockers couldn't,

00:53:19.900 | or the large blockers couldn't push through

00:53:21.420 | their proposals on Bitcoin itself,

00:53:23.900 | so they just created a competing version of Bitcoin.

00:53:26.780 | - So by the way, maybe you can comment on,

00:53:29.320 | but sort of hard fork versus a soft fork,

00:53:31.500 | a hard fork is when it's no longer compatible.

00:53:35.420 | What's the right way to put it?

00:53:37.240 | They can't operate on the same blockchain,

00:53:40.120 | with the same protocol.

00:53:41.320 | - Yeah, so there's a few ways to define them,

00:53:44.080 | and it's pretty, it gets controversial as well,

00:53:46.820 | but one way to define it as a hard fork

00:53:50.860 | is a expansion of protocol rules,

00:53:54.160 | and a soft fork is a shrinking of protocol rules.

00:53:57.440 | - That's an interesting way to find it.

00:53:58.560 | - It's not very intuitive, so I don't like that way.

00:54:02.160 | Another way is that a hard fork is backwards incompatible,

00:54:05.820 | whereas soft fork is, in theory, backwards compatible.

00:54:09.340 | So in August 2017, basically the large blockers

00:54:13.780 | had had enough, and they said,

00:54:16.300 | "We're gonna hard fork Bitcoin,

00:54:17.740 | "we're gonna create a clone,

00:54:19.920 | "an alternative version of Bitcoin,

00:54:22.260 | "which has a shared history as Bitcoin itself,

00:54:26.920 | "but you completely fork it, and you create a new future."

00:54:31.840 | But everybody that had a balance on Bitcoin at the time

00:54:34.980 | also had a balance on the alternative coin, Bitcoin Cash,

00:54:39.140 | and so that was really--

00:54:40.460 | - That's why it's called Bitcoin Cash, is the hard fork.

00:54:43.000 | - That was one of them, there were more, actually.

00:54:45.100 | I mean, there are-- - What the heck

00:54:46.060 | is Bitcoin Satoshi's Vision BSV, Bitcoin SV?

00:54:50.380 | So this is all talking about increasing the max,

00:54:53.220 | the limit of the block size more and more and more.

00:54:55.940 | - Yeah, that was one of the changes

00:54:58.140 | they wanted to push through,

00:54:59.580 | but BSV was a fork of Bitcoin Cash, so--

00:55:02.880 | - Hard fork of Bitcoin Cash.

00:55:04.200 | - Yeah, so now there's multiple big blocker blockchains

00:55:08.320 | floating around, it's like--

00:55:09.160 | - What are your thoughts about them?

00:55:10.640 | - Well, I was-- - 'Cause they're pretty popular,

00:55:12.800 | sorry to interrupt.

00:55:14.560 | - Are they popular?

00:55:15.400 | I mean, if you look at the metrics, they're not,

00:55:16.920 | and they don't trade, they, I think,

00:55:20.160 | each trade below 1% of the value of Bitcoin itself.

00:55:22.920 | - I see, so measuring popularity is like

00:55:24.760 | how much they actually, oh, value,

00:55:27.640 | or the frequency of trade.

00:55:28.840 | - Oh, no, no, I mean, they do a fair number of transactions,

00:55:32.280 | but there's no way to know that that is genuine

00:55:35.480 | or just contrived, so ultimately,

00:55:38.580 | the true measure, I think, in my mind,

00:55:40.200 | is just where the market prices these protocols

00:55:44.080 | relative to Bitcoin, because that's a prediction market.

00:55:48.340 | If Bitcoin Cash was being priced at 50% of Bitcoin,

00:55:52.040 | you could say the market has given it a 50% chance

00:55:56.260 | of unseating Bitcoin, right?

00:55:57.780 | But both Bitcoin Cash and Bitcoin SV,

00:56:00.960 | which was a hard fork from Bitcoin Cash itself,

00:56:04.600 | are well, I believe at this point,

00:56:06.480 | well below 1% of the value of Bitcoin.

00:56:08.920 | - And in the, in the ranking of different cryptocurrencies,

00:56:12.900 | what is it, Bitcoin Ethereum?

00:56:14.440 | Is Ethereum in value second? - Yeah, it's number two.

00:56:18.080 | - And then Bitcoin Cash is the one that,

00:56:19.680 | it's in the top five, right, but it's just a fast drop-off?

00:56:23.100 | - You know, I haven't checked lately,

00:56:24.360 | but I think it's reached kind of morbidity.

00:56:27.460 | You know, it doesn't really have much traction.

00:56:31.560 | The blocks aren't full, so the whole value proposition was,

00:56:34.360 | you know, we will get all this merchant adoption

00:56:36.940 | if we increase the block size.

00:56:38.400 | That just didn't materialize.

00:56:40.320 | In my view, they had a flawed vision of how adoption works

00:56:44.160 | and what blockchain should optimize for.

00:56:46.880 | Maybe you get a Bitcoin Cash supporter on the show,

00:56:51.000 | they'll give you a different answer.

00:56:52.960 | But yeah, full disclosure, you know, I have my sympathies,

00:56:55.360 | and I think the small blockers, one, that's girmish for sure.

00:56:59.440 | - So at this time, there's no merchant adoption and so on,

00:57:02.120 | so it's kind of, it's vision, the whole reason for existence,

00:57:06.240 | at least for now, hasn't materialized.

00:57:08.760 | And so that's a indication, it's possible that, well,

00:57:13.020 | it's a sign that perhaps that's the wrong way

00:57:16.480 | to accomplish the scalability.

00:57:18.760 | - Well, you know, first of all,

00:57:20.640 | I think the layered scaling model is definitely correct.

00:57:24.200 | I mean, that's absolutely the way these things have to work

00:57:26.960 | given the constraints of blockchains.

00:57:29.040 | - What is the layered scaling model?

00:57:31.840 | - It's really how all payment systems scale,

00:57:34.120 | blockchain or otherwise.

00:57:35.880 | And I think a lot of people don't understand this,

00:57:38.400 | is that there is no equivalent to scaling of the base layer

00:57:42.960 | in the regular payment space.

00:57:44.860 | That totally doesn't happen.

00:57:46.720 | All of them are built on layers.

00:57:48.160 | So Visa is like the fifth layer in the payment stack

00:57:51.640 | that ultimately depends on these utility scale

00:57:54.600 | settlement systems like Fedwire, Chips, ACH,

00:57:58.720 | basically interbank settlement systems.

00:58:01.240 | So you've got these slow moving,

00:58:03.940 | but high assurance settlement systems.

00:58:07.520 | Fedwire is probably the number one,

00:58:09.920 | like when you send a wire,

00:58:10.880 | that's using the Fedwire system typically.

00:58:13.780 | On top of that, you have banks

00:58:16.560 | and then you have payment processors.

00:58:18.640 | And then you build up these layers and layers and layers

00:58:20.840 | and then you have these fast payments,

00:58:22.640 | Venmo, PayPal, credit, debit, Visa, you name it.

00:58:27.640 | Those payments are not final when they occur.

00:58:30.600 | A credit card transaction will not be final

00:58:33.240 | for 90 to 120 days.

00:58:35.780 | So-- - That's fascinating.

00:58:38.120 | - You've decoupled the payment,

00:58:40.000 | the financial message and the settlement.

00:58:42.120 | Those are distinct concepts.

00:58:43.520 | And the settlement happens on a deferred basis.

00:58:46.320 | So that's how you get scalability

00:58:49.000 | is you have lots and lots of messages,

00:58:51.600 | but they don't settle for a long time.

00:58:54.960 | They might settle on a net basis, on an end of day basis.

00:58:58.800 | But so that's really how it works.

00:59:00.880 | And then you have Fedwire where your average transactions

00:59:03.200 | are the millions of dollars.

00:59:04.960 | And there's only a few hundred thousand transactions a day.

00:59:07.440 | That's sort of an interbank settlement network.

00:59:10.120 | So that's my vision for how I think Bitcoin will develop too.

00:59:15.320 | Bitcoin itself on the base layer

00:59:17.760 | is the slow moving high assurance final settlement network

00:59:20.960 | where if you're sending money

00:59:21.800 | to the other side of the globe,

00:59:23.400 | to someone you don't trust,

00:59:25.280 | where you want that payment to be final

00:59:27.560 | in a short period of time,

00:59:29.360 | and both counterparties know it's final,

00:59:31.680 | then you would use that.

00:59:33.200 | But if you wanted to buy coffee,

00:59:34.400 | you could do it on a second layer.

00:59:38.000 | Lightning would be one way.

00:59:39.440 | There's a bunch of side chains now.

00:59:41.620 | Or you could use a more centralized solution if you wanted.

00:59:46.260 | - It's kind of a profound idea

00:59:47.940 | that in the space of transactions,

00:59:50.340 | when you're buying coffee or buying anything really

00:59:52.260 | from a merchant or exchanging goods

00:59:54.780 | and all those kinds of things,

00:59:56.900 | that most of the time,

00:59:59.620 | like basic honest behavior, human behavior,

01:00:04.220 | which it does appear that most of our society

01:00:07.260 | is based on the fact that we're all,

01:00:09.100 | most of us are honest.

01:00:11.640 | Is like stuff is not gonna go wrong

01:00:14.000 | when you do the transaction.

01:00:15.720 | And you only need like the base layer,

01:00:18.720 | whether it's Bitcoin,

01:00:19.560 | whether it's, I forget the terms you use

01:00:22.080 | for the credit card version,

01:00:24.080 | but you need that just to verify,

01:00:28.600 | just to like resolve any disagreements or shady shit.

01:00:33.600 | - Yeah.

01:00:34.560 | - And that's a really rare occurrence.

01:00:37.040 | So it's okay for that to be handled

01:00:40.600 | in the small block debate,

01:00:43.720 | handled at a rate that's much, much lower

01:00:46.000 | than the rate of the transactions.

01:00:48.400 | That's a really interesting idea

01:00:50.840 | that when we spend money,

01:00:53.080 | we didn't actually exchange the money most of the time.

01:00:57.080 | - Yeah, most of the time,

01:00:57.920 | you're not getting final settlement

01:00:59.400 | when you do a transaction.

01:01:01.400 | And oftentimes that causes,

01:01:04.240 | there's pluses and minuses.

01:01:06.580 | On the plus side, you have huge efficiency

01:01:08.600 | if you use a credit network like Visa,

01:01:10.760 | but it's in the name credit, right?

01:01:12.800 | Visa is extending you credit, right?

01:01:14.960 | They're kind of guaranteeing your reputation

01:01:16.760 | to the merchant,

01:01:18.000 | but fraud happens all the time, right?

01:01:19.760 | There's always fraud

01:01:21.520 | because you have this reversibility, right?

01:01:25.120 | And so you can engage in fraud against a merchant.

01:01:29.080 | If you have a final settlement,

01:01:32.440 | there's no possibility for fraud.

01:01:34.200 | So that's one reason merchants kind of like accepting Bitcoin

01:01:37.280 | because once you receive an inbound Bitcoin payment

01:01:40.960 | and you deliver some good or service,

01:01:44.720 | that payment can't be reversed.

01:01:46.840 | But frankly, most of the transactions

01:01:49.040 | we undertake on a daily basis

01:01:52.200 | do not require those strong assurances of final settlement.

01:01:56.080 | There's one exception, which is physical cash.

01:01:58.640 | With physical cash or the open dime,

01:02:01.080 | a cash-like product,

01:02:03.000 | you actually are getting final settlement.

01:02:05.520 | But most online banking transactions,

01:02:09.720 | most P2P digital wallet transactions in the dollar system,

01:02:14.720 | they're not really final at all.

01:02:17.280 | - You mentioned Lightning, Lightning Network.

01:02:21.080 | What is it?

01:02:22.520 | What are your thoughts on it?

01:02:23.840 | And what are your thoughts about any kind of alternatives?

01:02:27.440 | - So Lightning is one potential payment solution

01:02:32.320 | built on top of Bitcoin

01:02:34.200 | where you have different assurances,

01:02:36.360 | different transactional assurances,

01:02:38.560 | but ultimately it's very proximate to the base layer.

01:02:40.960 | So if something goes wrong,

01:02:42.560 | you can always basically settle to the base layer.

01:02:44.520 | - Just layer two.

01:02:45.600 | - Yeah, layer two, you could say.

01:02:48.360 | And basically the intuition is

01:02:50.480 | it's kind of like opening a bar tab.

01:02:52.480 | So you go to the bar and you might drink a dozen beers

01:02:55.400 | over the course of the night, maybe half a dozen.

01:02:58.300 | And well, I guess nobody goes to the bar these days,

01:03:02.520 | but let's say you did.

01:03:05.080 | You open a tab and at the end of the night,

01:03:07.920 | you settle up once.

01:03:09.640 | You're not necessarily paying each time

01:03:12.160 | you get another beer.

01:03:14.140 | So it's the same idea.

01:03:15.520 | You're opening a channel,

01:03:16.640 | an ongoing relationship with your counterparty.

01:03:19.640 | And so Lightning has you open a channel

01:03:22.160 | with a counterparty and you're sort of sending back and forth

01:03:24.840 | these cryptographic commitments saying,

01:03:27.200 | I agree to send you some Bitcoin,

01:03:29.080 | but you don't necessarily settle

01:03:30.480 | each time you make a transaction.

01:03:31.880 | So you can do hundreds of thousands

01:03:33.280 | of transactions in a channel.

01:03:34.840 | The other thing Lightning proposes is saying,

01:03:37.800 | okay, well, now that we have channels established,

01:03:40.640 | what if we interlocked a number of channels together?

01:03:44.160 | So if you and I have a channel

01:03:46.020 | and me and my buddy have a channel,

01:03:47.960 | my buddy can now pay you

01:03:49.640 | because you have a relationship through me, basically.

01:03:53.800 | And so Lightning is this network,

01:03:55.420 | this overlay network that sits on top of Bitcoin

01:03:58.560 | and allows people to transact in a much faster

01:04:01.680 | and less frictional way without the need

01:04:04.440 | for Bitcoin's kind of slow periodic settlement,

01:04:07.540 | assuming that everything sort of goes well.

01:04:11.320 | - Do you see any downsides to this?

01:04:14.000 | Like, have you seen flaws in the whole system

01:04:16.040 | from a security perspective, from a scaling perspective,

01:04:19.900 | any of that, or is Lightning working well?

01:04:23.120 | - It works.

01:04:23.960 | I use it when I initially sold those dice,

01:04:27.500 | I sold them on Lightning.

01:04:28.680 | I was one of the first merchants to use Lightning

01:04:31.640 | back in the day, the first edition of the dice.

01:04:35.480 | - So people could buy these dice somewhere?

01:04:37.520 | - Well, they used to be able to.

01:04:38.800 | I haven't made a new edition recently.

01:04:40.960 | They're very scarce and very special.

01:04:43.240 | They're like physical NFTs.

01:04:45.320 | - Physical NFTs. (laughs)

01:04:46.920 | - Yeah.

01:04:47.760 | I mean, the flaw with Lightning is really that you,

01:04:50.400 | you know, and this can be remediated in a number of ways,

01:04:52.340 | but you have to sort of pre-fund these channels.

01:04:54.320 | So it's a weird concept to have to inject liquidity

01:04:57.820 | into a channel in order to accept a payment, you know?

01:05:01.600 | So I'm sure those user experience problems can be solved,

01:05:05.960 | but it's still in a state of relative immaturity.

01:05:10.080 | So we'll see.

01:05:11.400 | - In terms of other ideas that are sidechains,

01:05:15.000 | just soft forks of Bitcoin,

01:05:17.400 | you've mentioned something about Schnorr and Taproot.

01:05:20.040 | What are your thoughts about this update to Bitcoin

01:05:25.120 | in terms of its promise to improve privacy and scaling

01:05:29.260 | and so on?

01:05:30.100 | And what other things are you interested, excited about

01:05:33.180 | in terms of the development of Bitcoin?

01:05:35.660 | - Well, Schnorr and Taproot,

01:05:37.620 | that's the first new protocol upgrade since Segwit in 2017,

01:05:42.620 | which was what laid the groundwork

01:05:46.020 | for Lightning to be developed, basically.

01:05:48.540 | And Schnorr and Taproot is really the first protocol change

01:05:52.060 | in three, almost four years now.

01:05:55.080 | So we're very excited about it.

01:05:57.800 | - I mean, is there something interesting to say technically

01:06:03.160 | about what are the things it's actually going to improve?

01:06:06.280 | And maybe on the politics side,

01:06:10.320 | bringing a protocol change on Bitcoin,

01:06:15.320 | what does that actually involve?

01:06:16.840 | - Yeah, I mean, it's a huge deal

01:06:18.160 | because the last time we tried to make a change

01:06:20.280 | to the protocol, we had a whole civil war over it.

01:06:22.680 | And it was incredibly difficult

01:06:25.080 | to get Segwit activated in 2017.

01:06:28.360 | And it took all this brinksmanship and threats

01:06:31.240 | and all these campaigns.

01:06:33.080 | And it was this whole thing.

01:06:35.120 | Luckily, I think things have quieted down

01:06:37.240 | and there's much more consensus

01:06:38.600 | that Schnorr and Taproot is a good change to Bitcoin

01:06:41.320 | and everyone generally supports it.

01:06:43.220 | But everyone kind of has PTSD over the last time

01:06:46.800 | when we tried to change Bitcoin.

01:06:48.680 | And so we're sort of really dithering

01:06:50.400 | over how we actually want to implement it.

01:06:52.720 | So it's taking forever

01:06:54.400 | because we're trying to set the protocol

01:06:56.360 | for how do you change Bitcoin itself?

01:06:58.600 | And all of our assumptions went out the window last time.

01:07:02.080 | So we're trying to reset and decide

01:07:04.160 | what is a legitimate way to institute a change to Bitcoin?

01:07:07.960 | So that's actually the big question right now.

01:07:09.680 | It's not, should we implement these changes?

01:07:11.920 | We basically all agree that we should.

01:07:13.960 | It's a meta question is,

01:07:15.600 | what's the valid way to implement new changes to Bitcoin?

01:07:18.800 | What's a way that is scalable in the longterm

01:07:21.640 | and will last and people will consider credible,

01:07:24.280 | even if this one isn't controversial at all?

01:07:26.900 | So that's where we're at.

01:07:28.680 | We're basically debating over how do we implement

01:07:31.200 | this change that we all want.

01:07:32.840 | To get a feeling of how slow Bitcoin governance is

01:07:36.680 | and how deliberate it is,

01:07:38.400 | everybody collectively wants the change,

01:07:40.800 | but we haven't fully agreed

01:07:42.160 | on how we're gonna put it into Bitcoin.

01:07:44.480 | So it's the classic sort of Bitcoin situation.

01:07:47.560 | But what it is, is I mean,

01:07:48.720 | Schnoor is an alternative signature scheme.

01:07:51.120 | I think it was encumbered by a patent

01:07:53.720 | and it had only just been unencumbered

01:07:57.040 | when Satoshi created Bitcoin, I believe.

01:07:59.920 | It's a better signature scheme than Elliptic Curves,

01:08:02.280 | which is what, than ECDSA, which is what Bitcoin uses.

01:08:07.080 | And so it's been long enough that we now trust it.

01:08:11.360 | Kind of in cryptography, it's meant to be Lundy.

01:08:14.200 | It's sort of, you wanna test it over time

01:08:17.320 | and then it's considered safe to use.

01:08:19.200 | So Schnoor has been around for long enough

01:08:21.800 | that we've decided to rip out ECDSA and insert Schnoor,

01:08:25.680 | which is just a different signature scheme,

01:08:27.280 | which is more efficient.

01:08:28.480 | And it has better properties.

01:08:30.920 | Like if you wanna do a multi-signature transaction

01:08:33.160 | where many people collectively sign

01:08:36.560 | in order to permission a spend,

01:08:38.700 | that would be more efficient in a bytes sense

01:08:42.240 | than ECDSA, for instance.

01:08:44.800 | So it's pretty incremental.

01:08:46.800 | And then Taproot is all about having transactional conditions

01:08:51.800 | that are sort of withheld from final entry

01:08:56.320 | onto the blockchain.

01:08:57.540 | So it's kind of a way to have more private,

01:09:03.520 | conditional transactions on Bitcoin.

01:09:07.600 | So both of them, I would say, are incremental changes.

01:09:11.760 | - Is this an over-exaggeration

01:09:13.760 | that Schnoor-Taproot might improve privacy and scaling,

01:09:17.000 | which is at the high level of things that people mention?

01:09:20.040 | Is that just like a dramatic way of trying to frame

01:09:24.560 | what's fundamentally an incremental improvement?

01:09:27.400 | - Yes, but incremental is the word, right?

01:09:29.960 | We're not gonna get an order of magnitude enhancement

01:09:32.120 | to either privacy or scaling,

01:09:33.720 | but we will get a considerable enhancement.

01:09:37.600 | But privacy and scaling are actually two sides

01:09:39.360 | of the same coin, because you get more transactional privacy

01:09:42.680 | by removing data from the ledger

01:09:44.480 | so that there's less metadata

01:09:46.800 | for people to surveil and analyze.

01:09:49.080 | And that's also how you scale,

01:09:50.920 | by compressing and being really space efficient

01:09:54.900 | with transactions.

01:09:55.960 | And the more parsimonious you are,

01:09:58.480 | the more economically dense each byte

01:10:01.320 | that everyone has to retain on the ledger is.

01:10:03.840 | And so those are very closely allied concepts.

01:10:09.200 | - So do you mind if we go through

01:10:11.760 | some potential criticisms of Bitcoin?

01:10:15.960 | - Totally.

01:10:16.840 | I spent the last five years tackling these every day.

01:10:21.840 | - Are the dice the same?

01:10:24.000 | - Those two are the same, yeah.

01:10:25.360 | There are three editions.

01:10:26.320 | - So let's go.

01:10:27.320 | - Okay.

01:10:29.720 | - Go with the dice.

01:10:30.560 | - What do we got?

01:10:31.400 | - Silk Road.

01:10:32.280 | What does that mean?

01:10:33.120 | - Silk Road, classic.

01:10:34.520 | Classic situation.

01:10:35.920 | So I mean, that was the darknet marketplace

01:10:38.720 | set up by Ross Ulbricht in the early days of Bitcoin.

01:10:42.080 | That's one of the first killer apps for Bitcoin

01:10:45.240 | was being the payments network

01:10:46.960 | behind this darknet marketplace.

01:10:49.880 | And you know, where you'd go to buy drugs and things.

01:10:53.400 | And so that became associated with Bitcoin,

01:10:55.760 | if you remember the press coverage from back then.

01:10:58.520 | But over time that faded and it became less of a critique.

01:11:01.920 | - So like the critique is that Bitcoin

01:11:04.680 | is something you would use for illegal activity,

01:11:07.940 | for drugs, for crimes, all those kinds of things,

01:11:10.640 | as opposed to for any kind of legitimate transactions

01:11:13.440 | and merchant transactions.

01:11:15.680 | - And today Bitcoin settles $10 billion a day

01:11:18.640 | and the vast, vast majority of it is completely legitimate.

01:11:22.160 | It's just a useful alternative system.

01:11:25.040 | But back then a huge fraction of all Bitcoin transactions

01:11:28.480 | were related to the basically illicit marketplaces.

01:11:32.400 | - And if you're just tuning in,

01:11:33.640 | this incredible tall-sided guy

01:11:36.020 | has 11 common criticisms of Bitcoin, I think.

01:11:40.780 | - Yeah.

01:11:41.700 | - In a genius way has put together.

01:11:43.980 | Maybe we could do a couple more.

01:11:45.580 | Oh, it was Satoshi something, Satoshi coins.

01:11:51.780 | - Satoshi coins, we touched on that early in the episode.

01:11:54.980 | What if Satoshi returns and sells all of their coins?

01:12:00.260 | So we don't know for sure how many coins

01:12:02.820 | Satoshi actually mined or produced

01:12:05.140 | because there's a degree of probabilistic analysis

01:12:08.980 | that you would do.

01:12:10.340 | There's a few thousand blocks that were mined

01:12:15.340 | by what we think is a single entity in sort of 2009.

01:12:19.260 | And so if you add them all up, you get to about a million.

01:12:21.620 | So people think that Satoshi mined a million coins

01:12:24.700 | and then they're worried that Satoshi would return

01:12:27.540 | and market sell all the coins,

01:12:30.540 | thus crushing the price of Bitcoin.

01:12:33.580 | - So looking at some of these, no CEO,

01:12:38.060 | I think we touched on that.

01:12:38.900 | - We did, we see we've already hit on the dice.

01:12:42.660 | - No merchants, that's no longer true.

01:12:45.900 | - We talked about that, yeah.

01:12:47.140 | - There's a scalability one,

01:12:51.140 | and I think that one has addressed the idea

01:12:54.100 | that you're mentioning with the block size debates

01:12:56.100 | and the lightning network that by adding extra layers

01:12:59.540 | on top, you can achieve scalability.

01:13:02.380 | - That's my vision, that's my theory.

01:13:05.060 | And you can do it in a permissionless

01:13:08.580 | and a permissioned way.

01:13:09.620 | Like Coinbase is a big Bitcoin exchange.

01:13:12.420 | They provide scalability.

01:13:14.020 | They're a financial institution.

01:13:16.420 | You can settle up internally on their own database

01:13:19.540 | and then periodically settle to Bitcoin.

01:13:22.420 | - So they do something like the lightning network internally,

01:13:26.260 | so something like this, some kind of mechanism.

01:13:28.340 | - Well, honestly, I'm not sure exactly how it works.

01:13:30.660 | They might have that built in, but just generally speaking,

01:13:34.100 | institutional scaling is a model for scaling, right?

01:13:38.140 | Where you could have banks holding Bitcoin

01:13:40.340 | and they issue notes against Bitcoin

01:13:42.420 | and those are your payments,

01:13:44.180 | and then the base layer is the settlement layer.

01:13:47.320 | - I think that's what you're getting with the boiling oceans

01:13:52.380 | is this is like the impact on weather, I suppose.

01:13:57.100 | On the environment.

01:13:58.420 | So that is a concern that people have

01:14:02.900 | in terms of the proof of work requires

01:14:04.940 | that there's a lot of computational resources being used

01:14:08.220 | and that requires a lot of energy

01:14:10.100 | and some large percentage of the world's energy

01:14:13.460 | is used to mine Bitcoin.

01:14:15.660 | How would you respond to that criticism?

01:14:18.900 | - Yeah, I mean, that's been the loudest critique

01:14:20.700 | of Bitcoin this year in the press.

01:14:22.700 | - This year, really?

01:14:23.540 | - Yeah, so I mean, it's not like a new criticism,

01:14:26.620 | but Bitcoin is consuming more energy than ever.

01:14:29.340 | So as the price rises, the electricity consumption rises.

01:14:34.020 | And so we've heard renewed bellyaching over this for sure.

01:14:39.020 | I mean, if you don't believe that Bitcoin is useful,

01:14:44.660 | then you're inclined to think

01:14:45.940 | that all of the energy consumption is a waste.

01:14:48.820 | So that's, it's something that's sort of unrebuttable

01:14:53.780 | if you fundamentally contest the validity

01:14:57.300 | of the Bitcoin system.

01:14:58.540 | - So if Bitcoin is like a thing that will take over,

01:15:03.540 | will become like the main mechanism of financial transactions

01:15:09.500 | or transactions period in the world,

01:15:12.340 | then you say, well, the cost of energy use

01:15:14.420 | is actually quite low relative to the benefit it provides.

01:15:17.180 | If you think it's not going to be,

01:15:19.340 | if it's just a volatile way to make a little money

01:15:24.340 | in the short term,

01:15:25.900 | then you see the energy use as really wasteful.

01:15:28.980 | - It's totally spurious, yeah.

01:15:30.580 | So--

01:15:31.420 | - So then there's no really response, I suppose.

01:15:34.860 | - That's, so I can totally get into the details

01:15:38.300 | of Bitcoin's energy mix and things like that,

01:15:40.380 | but that's like at a high level what the debate is.

01:15:43.160 | It's this normative question.

01:15:44.580 | Like, does Bitcoin have an entitlement

01:15:46.740 | to consume any of the world's resources?

01:15:49.220 | And that's actually where the debate should end

01:15:51.780 | much of the time,

01:15:53.320 | because a lot of people fundamentally dispute

01:15:56.700 | the validity or usefulness of Bitcoin as a system.

01:16:00.220 | And so of course, they're gonna consider

01:16:02.580 | the energy usage illegitimate.

01:16:05.220 | Now, there's a lot of mitigating factors

01:16:07.060 | if you think that Bitcoin is potentially a useful system,

01:16:11.300 | which is Bitcoin consumes energy in a very peculiar way,

01:16:16.180 | which virtually no other industry does,

01:16:18.980 | which is that Bitcoin is a geography-independent

01:16:23.860 | buyer of energy,

01:16:25.340 | which is not how we humans typically consume energy.

01:16:29.700 | Like, we need energy to be produced

01:16:31.420 | near to population centers,

01:16:33.500 | and we need it to be produced at the, you know,

01:16:36.340 | corresponding to the peaks and troughs

01:16:38.580 | of our consumption, right?

01:16:40.360 | 'Cause we have to 100% match the demand

01:16:42.380 | and the supply at all times, right?

01:16:44.860 | Otherwise, we have blackouts.

01:16:46.580 | So Bitcoin doesn't care about any of that.

01:16:50.700 | It just buys energy on a constant basis.

01:16:54.360 | And so it's, you know,

01:16:55.500 | indifferent to where it's being produced.

01:16:57.660 | And so the consequence of all that

01:17:00.420 | is that Bitcoin will buy energy

01:17:02.660 | that's otherwise being wasted, basically.

01:17:05.380 | So it will buy so-called stranded energy assets

01:17:09.460 | that would not make it to a population center.

01:17:11.560 | And in fact, most energy produced

01:17:15.740 | ultimately does not sort of make it to,

01:17:18.420 | you know, your socket in your wall.

01:17:21.540 | And so this is why so much Bitcoin is mined in China,

01:17:25.100 | for instance.

01:17:26.100 | It's not because, you know,

01:17:27.560 | Chinese industrialists had a special affinity for Bitcoin.

01:17:30.940 | It's because the Chinese grid

01:17:33.060 | had a massive overabundance of energy,

01:17:36.100 | and particularly in four provinces,

01:17:37.620 | Sichuan, Yunnan, Inner Mongolia, and Xinjiang.

01:17:41.720 | So in those four provinces,

01:17:43.260 | those are all pretty distant from major population centers.

01:17:47.780 | So because of that,

01:17:49.480 | you can't really transport the energy that easily.

01:17:51.420 | And so huge amounts of energy are curtailed,

01:17:54.600 | or basically wasted in all those provinces.

01:17:57.180 | And so miners set up shop there

01:17:59.500 | because they could mine Bitcoin with the excess energy.

01:18:02.060 | They could monetize this thing

01:18:03.180 | that otherwise was gonna go to waste.

01:18:05.460 | So, you know, there's things like that,

01:18:07.340 | which, you know, I think mitigate the reality.

01:18:11.420 | Bitcoin is not really rival

01:18:13.100 | with our consumption of electricity.

01:18:16.420 | It's not depriving anyone of electricity.

01:18:18.460 | It's mostly these stranded assets

01:18:21.460 | that are going into supporting the Bitcoin network.

01:18:24.460 | - So maybe let's do a last one,

01:18:26.900 | since you mentioned China.

01:18:27.740 | It says China control.

01:18:29.460 | So if so much mining's happening in China,

01:18:31.680 | how do we not,

01:18:33.580 | how do we prevent nation states

01:18:37.260 | from controlling much of Bitcoin?

01:18:39.660 | - Yeah, that's the flip side of a large portion

01:18:42.500 | of the blocks being mined in China

01:18:44.060 | due to this energy feature which I discussed,

01:18:46.580 | which is that there's a lot of Chinese miners, for sure.

01:18:50.500 | Now the question ultimately is,

01:18:53.180 | what degree of control do miners have

01:18:55.540 | over the Bitcoin system?

01:18:57.460 | And that was part of the block size debate.

01:19:00.820 | I mean, the miners,

01:19:03.220 | when we implemented segregated witness in 2017,

01:19:06.420 | the miners just didn't wanna do it.

01:19:08.820 | Eventually the users, the regular folks running nodes,

01:19:12.260 | rebelled and basically said,

01:19:14.940 | "Look, we're gonna implement this whether or not you do it."

01:19:17.700 | And it was a threat to the value of Bitcoin

01:19:20.140 | because if this threat had gone through,

01:19:22.140 | it could have split Bitcoin and it would have been

01:19:23.860 | really messy.

01:19:25.100 | So the miners sort of capitulated.

01:19:27.400 | So I think the current consensus

01:19:30.340 | is that miners do not have unilateral control over Bitcoin

01:19:33.700 | and that governance is more poised

01:19:36.220 | between people that run nodes,

01:19:37.940 | developers and miners.

01:19:39.300 | It's sort of a triumvirate

01:19:41.260 | where neither of them has total control.

01:19:44.260 | So that's my current model for controlling Bitcoin.

01:19:48.460 | I think if you asked a miner,

01:19:51.060 | they would tell you they didn't feel

01:19:52.420 | that they had sort of unilateral control

01:19:54.460 | over Bitcoin either.

01:19:55.540 | - Almost as a thought experiment,

01:19:58.220 | can I ask you to think about

01:19:59.740 | if some of your predictions, some of your analysis,

01:20:04.700 | some of your understanding of Bitcoin is wrong,

01:20:08.180 | in the following sense,

01:20:09.700 | where it will not have the impact

01:20:12.060 | that you have a vision for it,

01:20:17.020 | that it will not have the scale of impact

01:20:18.980 | and perhaps in terms of value will go to zero

01:20:21.300 | to something very low and other cryptocurrency

01:20:23.500 | or other financial systems will overtake it.

01:20:26.780 | What would be the reason for that in your mind?

01:20:29.460 | Like, why might you be wrong?

01:20:32.540 | If you look back at it in the future,

01:20:36.020 | what did you not understand about Bitcoin

01:20:38.700 | that will result in that?

01:20:41.340 | - Yeah, that's a great question.

01:20:43.740 | I think for that to happen,

01:20:46.140 | one of two things would have to obtain,

01:20:48.700 | one of two things would have to happen

01:20:50.300 | for Bitcoin to just be irrelevant basically.

01:20:53.060 | Either central banks totally clean up their act

01:20:57.340 | and stop engaging in rampant money printing,

01:21:01.660 | which I don't expect that to happen anytime soon.

01:21:03.820 | I mean, it looks like we're normalizing

01:21:05.900 | this new regime of inflation,

01:21:08.620 | pro-inflation just to remediate the debt issues we have.

01:21:12.260 | So that would be one thing that would make Bitcoin,

01:21:16.420 | cryptocurrency much less relevant

01:21:18.380 | as if everyone becomes totally assured

01:21:20.740 | of the soundness of sovereign currencies basically,

01:21:24.460 | namely the dollar, like the dollar being the main one.

01:21:28.140 | It seems like we're going completely opposite direction

01:21:32.820 | with most people seem to be noticing

01:21:35.300 | the stirrings of inflation in society.

01:21:37.780 | I mean, you might've noticed that too.

01:21:39.460 | It's showing up in commodity prices,

01:21:41.060 | lumber prices, in food, obviously in financial assets,

01:21:44.660 | and it'll show up in consumer prices generally soon.

01:21:49.060 | But so that would be one way for Bitcoin

01:21:51.060 | to basically become irrelevant

01:21:52.580 | 'cause it's a dialectical thing.

01:21:56.500 | Bitcoin is held in opposition

01:21:58.980 | to the established monetary regime.

01:22:02.540 | So if they completely reform themselves

01:22:04.860 | and the dollar becomes super sound once again,

01:22:08.980 | and the Fed stops tinkering the way they constantly do,

01:22:13.740 | then we wouldn't need cryptocurrency as much.

01:22:18.220 | The other thing would be if a completely superior design

01:22:23.020 | for a new sort of state independent monetary system emerged,

01:22:28.020 | but it's really hard to even imagine

01:22:30.660 | how that would come to emerge.

01:22:32.780 | And there's good reasons to think that Bitcoin,

01:22:36.540 | the conditions of its launch were extremely favorable

01:22:40.340 | and hard to replicate.

01:22:41.620 | - Can you speak to some of those conditions?

01:22:44.020 | Why it's a unique timing wise moment for Bitcoin to emerge?

01:22:49.020 | - Yeah, so obviously Bitcoin was born

01:22:52.140 | in the depths of the financial crisis,

01:22:53.820 | which gives it a nice historical element,

01:22:58.020 | but that was kind of a coincidence.

01:23:00.380 | Honestly, we know that Satoshi had been working on it

01:23:02.780 | earlier in back in 2017.

01:23:06.060 | The really special thing about Bitcoin

01:23:09.220 | was that it was launched anonymously

01:23:12.500 | by an entity that did not seek any glory

01:23:15.420 | or credit for what they did

01:23:16.940 | and apparently never monetized it at all.

01:23:19.860 | So they never really moved any of their coins.

01:23:23.540 | Satoshi sent one test transaction to Hal Finney,

01:23:27.420 | who's one of the earliest Bitcoiners.

01:23:29.860 | Aside from that, as far as we know,

01:23:31.140 | Satoshi never spent any of their coins.

01:23:33.580 | So you have this wonderful Promethean quality

01:23:36.940 | whereby it's almost self-sacrificial.

01:23:39.260 | I mean, it's like this borderline godlike figure

01:23:43.820 | in terms of their restraint,

01:23:45.220 | finds this monetary technology

01:23:47.900 | and releases it to the world and pays the price.

01:23:50.500 | They never took advantage of their filthy lucre.

01:23:53.660 | They never recognized any of the $50 billion

01:23:57.900 | that they made from Bitcoin.

01:23:59.460 | And Satoshi also didn't assign themselves

01:24:03.860 | any privileged access to the coins.

01:24:06.780 | Satoshi could have just written in the code,

01:24:08.780 | I own 10% of the coins, but they didn't.

01:24:11.900 | They just mined in the open free market competition

01:24:14.260 | like everyone else.

01:24:15.100 | It's just that Satoshi is an early miner

01:24:17.580 | to support the network,

01:24:19.180 | accumulate a lot of coins for sure,

01:24:21.380 | but they didn't have any privileged special access.

01:24:24.220 | So that's one thing that's extremely special

01:24:27.260 | about the launch is that we had a founder

01:24:29.420 | that was truly committed to the monetary protocol

01:24:31.620 | and didn't seek either recognition or financial spoils

01:24:36.180 | and then also left.

01:24:37.620 | Satoshi left in 2010, 2011

01:24:40.780 | and hasn't really been heard from since.

01:24:42.780 | - It's a very George Washington move, gangster move

01:24:46.140 | where he didn't want power

01:24:47.820 | and once he got power, he let go of it.

01:24:49.740 | - Precisely.

01:24:50.580 | - That was a key actually move.

01:24:52.660 | That was probably one of the most important moves

01:24:56.860 | at the founding of this country.

01:24:58.500 | - That's right, George Washington could have been a king,

01:25:01.140 | probably if he'd wanted

01:25:02.260 | and Satoshi could have been Jerome Powell if he'd wanted

01:25:06.180 | and Satoshi could have held on to power indefinitely

01:25:10.020 | but chose to leave.

01:25:11.740 | The other thing is that Bitcoin circulated

01:25:13.900 | for a long period of time from January 2009

01:25:17.500 | to about July 2010 without really having a financial value.

01:25:22.500 | So there weren't really any marketplaces,

01:25:25.660 | it didn't have a value

01:25:27.140 | and so that gave it this really great distribution

01:25:31.420 | among a broad set of stakeholders

01:25:33.900 | and there were no venture funds or hedge funds

01:25:37.100 | trying to aggressively buy up all the supply back then.

01:25:40.340 | Now when you have new cryptocurrencies launched,

01:25:43.000 | they're aggressively pre-mined

01:25:45.020 | and some gigantic Silicon Valley venture fund

01:25:48.140 | is gonna own 30% of it

01:25:50.540 | and so it's sort of impossible to conceive

01:25:52.520 | of how that could become a global money

01:25:54.660 | because how could a Silicon Valley investment firm

01:25:59.660 | own 30% of the money supply?

01:26:02.620 | That doesn't make sense, that's just so oligarchical.

01:26:06.120 | It's unbelievable.

01:26:07.940 | So Bitcoin by contract is a very bottom-up thing.

01:26:11.740 | It was the early enthusiasts,

01:26:15.020 | people that were really excited about the technology,

01:26:19.540 | they're the ones that obtained those early coins

01:26:22.260 | and so there was a real element of fairness

01:26:25.220 | and just an organic nature to its launch

01:26:27.620 | which would be incredibly hard to recapture.

01:26:29.740 | Today, let's say Satoshi came back

01:26:32.540 | and they said, "Okay, I made Bitcoin 2.0,

01:26:36.060 | "I'm gonna release it."

01:26:37.540 | There'd be the most aggressive land grab ever

01:26:41.300 | by gigantic pools of capital

01:26:44.140 | to sort of get favorable allocations of the new system.

01:26:48.980 | - Can Satoshi with Bitcoin 2.0 build in

01:26:52.460 | a resistance mechanism or a prevention mechanism

01:26:56.740 | for the land grab?

01:26:58.140 | - It would be hard to because

01:26:59.700 | if you have capital and resources,

01:27:02.900 | I mean, if it was a proof of work chain,

01:27:04.540 | you'd just have people that would invest

01:27:05.860 | a ton of money in mining, for instance.

01:27:07.900 | But most new blockchains, cryptocurrencies

01:27:10.380 | are just sold basically.

01:27:12.380 | They're issued in token offerings kind of thing.

01:27:15.700 | - So it's hard to enforce through the protocol

01:27:19.180 | the decentralization of control power.

01:27:22.700 | - It'd be challenging too

01:27:23.580 | and people have tried to do airdrops

01:27:25.900 | where they distribute coins to a large number of people.

01:27:29.220 | Basically, it doesn't work.

01:27:30.700 | Most people don't care about the airdrop.

01:27:32.500 | So it's hard to have an equitable distribution.

01:27:36.240 | I think the conditions of Bitcoin's launch

01:27:38.340 | were so lucky and favorable

01:27:41.220 | that they're very unlikely to be replicated.

01:27:44.020 | So I do think it's gonna be a real challenge

01:27:46.580 | to ever have a new competitor

01:27:48.560 | that's as decentralized, as leaderless,

01:27:51.520 | as dispersed, sort of distributed as Bitcoin is,

01:27:54.420 | has its credibility.

01:27:56.220 | I don't know how you could overrule it

01:27:58.260 | on those important features.

01:27:59.900 | - What about Bitcoin's comparison

01:28:02.100 | to other current cryptocurrencies?

01:28:03.900 | So Bitcoin versus Ethereum, for example.

01:28:07.340 | Why is it possible that Ethereum overtakes Bitcoin?

01:28:12.340 | - That's certainly possible.

01:28:13.640 | Yeah, I'm not ruling it out.

01:28:15.780 | Ethereum leadership is sort of wise enough

01:28:18.580 | to understand that they shouldn't compete with Bitcoin

01:28:22.460 | on those most profound qualities.

01:28:25.900 | Like Ethereum doesn't really aspire to be more sound

01:28:30.380 | from a monetary perspective than Bitcoin.

01:28:33.300 | In fact, the Ethereum leadership

01:28:34.460 | are sort of constantly tweaking the monetary policy.

01:28:37.620 | So they went for a completely different trade-off.

01:28:40.220 | They also don't compete to be as decentralized

01:28:44.980 | from a governance perspective,

01:28:46.900 | 'cause there's leadership.

01:28:48.020 | There's an ETH foundation,

01:28:49.800 | there's a charismatic leader, Vitalik,

01:28:52.340 | and Ethereum has this policy of hard forks.

01:28:55.580 | So in Bitcoin, hard forks are extremely rare.

01:28:59.140 | In Ethereum, it's the default way to change things.

01:29:02.060 | So it's a much more adaptive system

01:29:04.620 | and it changes more frequently,

01:29:06.580 | but that also means that it's sort of,

01:29:08.740 | they're incurring more risk

01:29:10.080 | when they introduce those changes.

01:29:11.960 | There's much more complexity.

01:29:13.100 | So Ethereum is smart because they sort of understood

01:29:17.580 | Bitcoin as the top dog when it comes to a sound money,

01:29:21.460 | a digital gold type thing.

01:29:23.780 | And they went for all of the different trade-offs.

01:29:26.520 | They wanted to be more of a platform.

01:29:29.620 | They wanted to have more complexity

01:29:31.100 | of the transactional layer.

01:29:32.980 | They wanted to take on more risk

01:29:34.980 | in terms of changing the protocol.

01:29:36.540 | They wanted to change more quickly.

01:29:38.980 | They wanted to make the monetary policy more mutable.

01:29:42.500 | So Ethereum takes that completely different tack.

01:29:46.420 | Of course, I'm not ruling out

01:29:48.140 | that it could take over Bitcoin

01:29:50.000 | from a market cap perspective.

01:29:52.180 | It's just a very different system.

01:29:53.840 | And I tend to think that Bitcoin is the most disruptive one

01:29:58.060 | because it's the most equipped

01:29:59.820 | to challenge sovereign currencies in the grand scheme.

01:30:03.420 | - Do you think they can coexist?

01:30:06.260 | So like in the future, do you see a world where,

01:30:10.140 | Ethereum captures some large percent of the market,

01:30:16.500 | but nevertheless the minority?

01:30:18.740 | - A hundred percent, a hundred percent.

01:30:21.540 | Bitcoin has already been tokenized and put onto Ethereum.

01:30:25.700 | Many units of Bitcoin,

01:30:26.780 | I think over a billion dollars worth.

01:30:28.820 | So not only do they coexist,

01:30:31.260 | they are actually mutualistic.

01:30:33.580 | So they're like two creatures that have this,

01:30:36.460 | you know, it's like the rhino and like the bird,

01:30:40.180 | the pecks the parasites off the rhino's back or whatever.

01:30:43.260 | - Yeah. - Right?

01:30:44.100 | So I don't know which is which in the analogy, but.

01:30:47.100 | - Yeah, I don't know who the parasites are.

01:30:48.620 | (both laughing)

01:30:51.380 | - Or, you know, the alligator

01:30:53.100 | and the teeth cleaning fish or whatever, right?

01:30:55.820 | So, you know, I always wonder why the alligator

01:30:58.020 | doesn't just eat the fish,

01:30:59.620 | but I guess they're brushing its teeth basically.

01:31:02.540 | So, Ethereum is, it gives you more transactional flexibility.

01:31:07.540 | There's much more experimentation happening there.

01:31:10.940 | It has this whole decentralized finance element.

01:31:14.260 | There's a huge number of Bitcoins

01:31:15.580 | that circulate on the Ethereum protocol, right?

01:31:18.380 | 'Cause Ethereum is open to other asset types basically.

01:31:22.540 | So I think that's actually accretive to both systems

01:31:26.620 | because Ethereum gets to have this good form

01:31:28.740 | of collateral Bitcoin on the system,

01:31:31.580 | which has good volatility characteristics.

01:31:34.180 | And then it's a supply sink for Bitcoins,

01:31:37.740 | which are sort of now they're injected

01:31:40.460 | into this third party protocol.

01:31:42.460 | And that I think reduces the velocity of Bitcoin overall

01:31:46.460 | and it's probably good for the valuation.

01:31:49.020 | - So you see it quite possibly could be

01:31:51.260 | a symbiotic relationship.

01:31:52.780 | That's really interesting.

01:31:53.660 | - I think so, I think so.

01:31:55.820 | - What are your thoughts about Vitalik, Buterin?

01:32:00.820 | What are your thoughts about some of the other figures

01:32:04.060 | in the space outside of Bitcoin?

01:32:07.220 | - I think Vitalik made some mistakes with Ethereum.

01:32:09.940 | Ultimately, like I disagree with some of the decisions

01:32:13.380 | that were made along the way.

01:32:15.260 | Like there's this infamous case of this bailout

01:32:18.020 | where 14% of Ether was lost in the smart contract

01:32:22.380 | or really this smart contract

01:32:24.980 | that a lot of Ethereum leadership

01:32:26.340 | were sort of backing and supporting was hacked.

01:32:29.300 | And then the foundation with Vitalik support

01:32:33.180 | chose to make a change to the underlying protocol

01:32:37.620 | to undo the hack, right?

01:32:39.460 | So to me, that was not the most prudent approach

01:32:45.940 | because you're basically violating the core protocol rules

01:32:50.180 | in order to undo, you know, to bail out a specific contract

01:32:55.180 | which has failed.

01:32:56.420 | Granted, there was a lot of Ether in there,

01:32:58.900 | but I think that shook the credibility

01:33:01.100 | of the Ethereum system that happened back in 2016, I think.

01:33:05.540 | That was one reason why I became disenchanted with Ethereum.

01:33:09.580 | - So basically, even if in that case

01:33:12.580 | that might fix an important problem

01:33:15.620 | that opens the door to centralized,

01:33:19.300 | like manipulation of the protocol in the future.

01:33:22.660 | - Yeah, it basically demonstrates

01:33:24.220 | that there's certain elites at the protocol level

01:33:27.180 | that can exercise specific control over the system.

01:33:31.900 | And, you know, a lot of people have lost money

01:33:34.900 | in hacks on Ethereum.

01:33:36.780 | A lot of contracts have gone south, huge amount of value,

01:33:40.580 | but they didn't get a bailout.

01:33:42.500 | And it was just when, you know,

01:33:44.300 | this specific contract called the DAO, D-A-O,

01:33:48.340 | was hacked that, you know, the leadership intervened.

01:33:53.580 | And, you know, to their credit,

01:33:55.140 | they haven't had a significant intervention

01:33:57.460 | or bailout since then, but it did normalize the practice.

01:34:01.980 | And I think it weakened the social contract.

01:34:04.660 | So I would prefer that you sort of bite the bullet

01:34:07.820 | in that situation and you accept the failure of that contract

01:34:12.300 | - That would be a ballsy move to bite that bullet.

01:34:15.620 | - Yeah, I mean, and then you would have had like

01:34:17.660 | what they thought was a malicious entity

01:34:19.220 | in control of a lot of coins.

01:34:21.580 | I think the real reason they sort of felt

01:34:23.660 | that they had to undo it was because they'd always planned

01:34:27.000 | to move to this proof of stake world

01:34:29.420 | where your political control over the system

01:34:32.000 | is a function of your wealth in the system.

01:34:34.800 | And they didn't want this attacker,

01:34:36.980 | which would have inherited all this significant wealth

01:34:40.260 | to have influence over that future proof of stake version.

01:34:44.460 | That's sort of my theory.

01:34:46.020 | - Yeah, I mean, that makes sense.

01:34:47.660 | It kind of reminds me of the bailout of car companies.

01:34:53.380 | You know, this is difficult.

01:34:56.620 | There's a lot of people that criticize the bailout

01:34:58.980 | of these large companies, you know, but.

01:35:01.860 | - Creative destruction.

01:35:02.960 | I mean, I was critical of the bailouts

01:35:05.460 | that happened during COVID.

01:35:07.540 | I mean, I generally think that it's healthier

01:35:10.220 | for society for bad firms that aren't making money

01:35:13.700 | to fail or be reorganized under the various,

01:35:17.300 | you know, forms of bankruptcy.

01:35:19.260 | And you saw what happens.

01:35:21.740 | You see the, you know, the corporate sector in Japan

01:35:25.820 | in the '90s, there was this like slow motion insolvency

01:35:29.340 | where basically firms weren't allowed to fail.

01:35:32.340 | And the Japanese corporate sector lost competitiveness

01:35:35.660 | because bad firms did not fail.

01:35:38.380 | And so, you know, the process of actual capitalism

01:35:41.740 | for the market clearing didn't occur.

01:35:44.260 | So I'm always in support of, you know,

01:35:48.060 | of the free market being allowed to clear

01:35:50.500 | for non-profitable firms to fail.

01:35:52.980 | - It's complicated, man, 'cause creative destruction

01:35:57.740 | seems to be in the long term a positive,

01:36:00.140 | but human civilization is such that short-term pain

01:36:07.340 | has real impact on people, you know?

01:36:09.900 | - Yeah, policy makers don't ever want to incur

01:36:12.340 | that short-term pain because they have a short-term outlook

01:36:16.380 | and term limits often, so.

01:36:18.980 | - But, and also just it's short-term pain.

01:36:21.780 | Forget policy makers, forget politicians.

01:36:24.100 | It sucks to lose a job for an individual.

01:36:28.980 | You know, you could say the company,

01:36:31.300 | creative destruction of a company

01:36:33.540 | means the company was inefficient

01:36:35.460 | and that's going to have a ripple effect

01:36:37.900 | of teaching everybody else

01:36:39.100 | what an efficient operation looks like.

01:36:41.580 | But like, there's jobs that are being lost.

01:36:44.060 | There's families that have to suffer because of that.

01:36:46.500 | I mean, that's a tension we live in society

01:36:49.540 | is having a basic safety net for our world

01:36:53.780 | because there's a level beyond which,

01:36:58.900 | like if through creative destruction,

01:37:01.500 | that you have some percent of the population

01:37:03.700 | that dips below a certain level

01:37:06.020 | that you would call like suffering.

01:37:08.580 | We don't want that.

01:37:10.060 | And that's a difficult thing to live with.

01:37:11.860 | Like, yes, in the long-term,

01:37:14.500 | you want inefficiency to be destroyed

01:37:18.500 | and efficiency to be rewarded,

01:37:21.700 | but there does seem to be a base level

01:37:24.180 | of like quality of life that we want to uphold.

01:37:27.860 | That's a difficult thing to think about.

01:37:29.420 | I think about that a lot.

01:37:30.380 | There's a doctor called Paul Farmer

01:37:33.340 | that, you know, there's like in Haiti or in Africa,

01:37:38.340 | there's a child who's dying.

01:37:41.540 | And as a doctor, you want to give everything you have,

01:37:45.860 | all the money you have to save that one child.

01:37:48.440 | But there, you know, and you do actually,

01:37:52.780 | but that's a very human action.

01:37:57.700 | It's not an economic, it's not a rational action

01:38:02.100 | from a game theoretic perspective,

01:38:03.580 | because there's no way you can take that action

01:38:05.860 | for every child who is suffering.

01:38:07.780 | But there's something deeply human about doing that

01:38:09.860 | for that one particular child.

01:38:12.060 | In that same sense,

01:38:13.460 | creative destruction is an economic principle,

01:38:16.640 | but it's not necessarily that same kind of human principle.

01:38:22.220 | And there's a tension there.

01:38:23.860 | - I see it.

01:38:24.980 | I mean, I think that's the issue

01:38:27.380 | with modern central banking really,

01:38:29.140 | is that the central bank always has an incentive

01:38:31.980 | to lower interest rates.

01:38:34.180 | And they've been doing that from the '70s towards today

01:38:37.260 | on this, you know, well '80s really on the slow march down,

01:38:40.980 | because whenever there was a hint of a crisis in the economy

01:38:44.900 | or financial asset prices started to fall,

01:38:48.100 | their reaction is, okay,

01:38:49.460 | we'll inject more capital into the economy, we'll save it.

01:38:52.780 | But my view is that these palliative short-term measures

01:38:57.580 | cause the buildup of a huge amount of fragility

01:38:59.500 | in the long-term.

01:39:00.620 | And then the ultimate collapse is much worse

01:39:03.420 | than the counterfactual situation

01:39:05.140 | where you raise interest rates,

01:39:07.420 | you took your medicine, and the economy was healthier.

01:39:12.220 | So, and that's sort of, that's why people like Ray Dalio

01:39:15.540 | point out that you have these long-term debt cycles,

01:39:19.080 | and we're sort of at the end of one now,

01:39:21.420 | is because we couldn't take our medicine,

01:39:24.340 | we couldn't let interest rates clear.

01:39:28.100 | We constantly wanted to ward off any difficulty,

01:39:31.900 | and we didn't ever want to deleverage, truly.

01:39:34.600 | And then when the debt crisis happens and it hits,

01:39:39.540 | it's horrendously bad.

01:39:41.440 | - So do you think Bitcoin might reach

01:39:46.620 | a million dollars in value?

01:39:49.260 | It's having a current resurgence,

01:39:52.580 | a crazy one in 2021 in the recent months,

01:39:55.700 | of over 60,000 I guess it is now.

01:39:59.260 | Do you think it's possible it goes over 100,000?

01:40:01.660 | Do you think it's possible it goes to a million?

01:40:03.500 | - You can't rule anything out with Bitcoin.

01:40:06.380 | So, I mean, I'm not one to put price targets on it,

01:40:09.580 | but one way it could reach a million dollars

01:40:12.260 | is Bitcoin's value stays unchanged in real terms.

01:40:15.300 | - And dollar crashes.

01:40:16.140 | - And the dollar depreciates against it.

01:40:18.380 | Not that I expect hyperinflation, but yeah,

01:40:22.500 | I mean, look, Bitcoin is worth about 1/10,

01:40:25.380 | slightly under 1/10 the value of all the gold in the world.

01:40:28.860 | And gold is worth 10 trillion,

01:40:31.700 | 11 trillion dollars in the aggregate.

01:40:34.320 | Do I think Bitcoin can be more culturally

01:40:36.740 | and economically salient than gold in two decades time?

01:40:41.620 | 100%.

01:40:43.380 | Bitcoin was unknown 12 years ago,

01:40:46.420 | and today 100 million people worldwide own Bitcoin.

01:40:50.000 | So just extrapolate that.

01:40:51.820 | What is the level of penetration you think we'll get?

01:40:54.660 | 500 million, a billion?

01:40:56.340 | You can easily tune these adoption curves however you like.

01:41:02.460 | I don't think it's done monetizing

01:41:05.860 | and being adopted globally.

01:41:08.260 | - Do you think it can become the base layer

01:41:10.620 | for a lot of our financial operation,

01:41:12.300 | like become the main base layer for all our transactions?

01:41:16.460 | So even banks will use Bitcoin essentially,

01:41:20.860 | and Visa would use Bitcoin as the base layer.

01:41:23.900 | It would actually operate very similarly

01:41:25.820 | at the surface layer,

01:41:27.300 | but at the base layer it would all be Bitcoin.

01:41:29.860 | - That's precisely what I expect.

01:41:31.460 | And banks and Visa are already using Bitcoin.

01:41:34.380 | So Visa has embraced Bitcoin in a really big way actually.

01:41:39.380 | And it's always funny to the people saying

01:41:41.500 | Bitcoin has to change in a certain way

01:41:43.620 | so it can compete with Visa.

01:41:45.300 | No, Visa adopted Bitcoin, right?

01:41:49.200 | PayPal adopted Bitcoin.

01:41:51.040 | Square adopted Bitcoin.

01:41:53.060 | Obviously they're not tearing out

01:41:54.300 | all of their existing infrastructure,

01:41:55.980 | but they're totally engaging with this thing.

01:41:59.620 | Banks have now begun,

01:42:01.660 | they got the green light to provide custody for Bitcoin

01:42:04.900 | for their depositors.

01:42:05.940 | That's the first step.

01:42:07.580 | Eventually, it'll happen one of two ways.

01:42:11.340 | Either Bitcoin native financial institutions

01:42:13.540 | will become banks.

01:42:14.900 | That's already happening.

01:42:16.460 | There's Bitcoin exchanges that have gotten banking licenses.

01:42:19.780 | Or banks themselves will start to engage with Bitcoin

01:42:22.940 | as a reserve asset.

01:42:24.780 | It'll converge either way.

01:42:26.140 | That's totally happening.

01:42:28.860 | And yes, I mean, I don't think Bitcoin

01:42:30.620 | is gonna power every financial transaction.

01:42:32.620 | I think it'll coexist alongside sovereign currencies,

01:42:35.900 | but I think it's a great reserve asset.

01:42:39.780 | It's a very powerful asset

01:42:41.380 | to build a financial system on top of

01:42:43.980 | because it's highly, highly auditable.

01:42:46.120 | It's something that you can take physical delivery of

01:42:49.060 | very cheaply.

01:42:49.900 | And those are great qualities.

01:42:51.740 | If you're a depositor in a bank,

01:42:53.900 | they can prove to you how much Bitcoin they have.

01:42:56.460 | They can't really easily prove in the old system

01:42:59.460 | how much gold they held on deposit.

01:43:01.940 | And you can easily conduct a run on the bank.

01:43:04.180 | You can hold them accountable because you can withdraw it

01:43:07.620 | because making a Bitcoin transaction is pretty easy

01:43:11.340 | at the end of the day.

01:43:12.520 | Unlike fiat currency, it's like kind of,

01:43:14.580 | you can't really withdraw all your dollars from the bank.

01:43:17.220 | I mean, you sort of can,

01:43:19.180 | but you're not gonna wanna take delivery

01:43:20.940 | of pounds of cash or anything like that.

01:43:23.540 | So it's a good modern asset

01:43:26.580 | upon which to build a financial system, basically.

01:43:29.780 | - You mentioned Square and Visa sort of investing in Bitcoin.

01:43:34.940 | What do you make of probably one of the higher profile,

01:43:38.260 | big investments in Bitcoin, which is Tesla and Elon Musk,

01:43:42.100 | but there's also a few billionaires like Chamath

01:43:44.060 | and all of them investing.

01:43:45.820 | What do you make of this whole movement?

01:43:47.060 | Why do you think they're doing it?

01:43:48.600 | I mean, Tesla's an interesting case.

01:43:50.140 | Why do you think Tesla's buying so much Bitcoin?

01:43:54.260 | - I honestly don't know.

01:43:55.220 | And I would love to truly know

01:43:56.580 | Elon's genuine thoughts on Bitcoin

01:43:58.860 | because he's kind of sending us mixed messages, honestly,

01:44:03.580 | with his embrace of Dogecoin, which is sort of playful,

01:44:08.420 | not exactly sure what point he's trying to make there.

01:44:11.100 | - So you were involved with Dogecoin,

01:44:12.620 | you mentioned offline a little bit in the early days,

01:44:15.660 | or at least played around with it.

01:44:18.860 | What do you make of Dogecoin?

01:44:20.220 | What do you make of Elon and Doge?

01:44:21.700 | What do you make of this particular meme coin?

01:44:25.980 | Is it one, like a legitimate cryptocurrency,

01:44:30.100 | or is it two, like a funny internet way

01:44:34.820 | of saying F you to the man?

01:44:36.860 | - Yeah, it's a good question.

01:44:39.140 | I mean, so I wasn't like a figurehead in Dogecoin

01:44:41.860 | or anything, but that was totally my introduction to crypto

01:44:44.860 | was mining Dogecoin in my dorm room

01:44:47.740 | and then tipping people online in Dogecoin,

01:44:51.420 | which I just thought was the funniest thing.

01:44:54.080 | So I guess that was really easy to entertain back in 2013.

01:44:59.580 | But it was very playful at the time.

01:45:02.140 | There was a culture around Dogecoin

01:45:04.500 | and the people liked it because it was in opposition

01:45:07.780 | to the Bitcoin culture, which was really serious

01:45:10.340 | and involved lots of Austrian economics

01:45:13.260 | and Rothbard and Hayek and stuff like that.

01:45:15.940 | So that was my introduction to cryptocurrency

01:45:19.580 | was because I thought the Bitcoin people were pretty lame

01:45:22.840 | and they were way too serious about all this stuff.

01:45:25.620 | And I was like, okay, I'll just be a part

01:45:28.260 | of the Dogecoin community.

01:45:29.220 | And they did all these funny publicity stunts.

01:45:31.860 | They paid to send the Jamaican bobsled team to the Olympics.

01:45:35.580 | Great stuff.

01:45:38.380 | They put the Dogecoin logo on top of a NASCAR car.

01:45:41.100 | And that tickled me so much

01:45:43.900 | because it's like this made up internet coin.

01:45:47.020 | This was back when crypto was pretty novel

01:45:48.820 | and still kind of funny and stuff.

01:45:51.060 | And that was really entertaining.

01:45:53.280 | Fast forward seven, eight years,

01:45:55.940 | Dogecoin is way less entertaining now, frankly,

01:45:58.420 | because the leadership left,

01:46:01.260 | the community spirit evaporated.

01:46:03.980 | The meme didn't persist.

01:46:06.180 | I mean, Doge itself is not really a contemporary meme.

01:46:09.260 | I mean, it's an old meme.

01:46:10.460 | - Although that new refresh of the meme,

01:46:12.580 | like Doge, I haven't heard that name in a long time.

01:46:15.740 | Or Doge is like in a hat smoking a cigarette.

01:46:19.060 | I mean, there's some sense

01:46:20.180 | where Elon is reinvigorating the meme.

01:46:22.980 | And it's funny 'cause one influential figure

01:46:25.340 | could do just that, which just speaks to the tension

01:46:29.460 | that you're talking about.

01:46:30.680 | Like Tesla's investing Bitcoin,

01:46:32.860 | and yet Elon, he also tweets about Bitcoin, but he's--

01:46:37.620 | - I mean, who am I to question the meme, right?

01:46:40.420 | Like I can't dissect internet culture

01:46:44.260 | and panantically sit here and tell you it's an invalid meme.

01:46:47.460 | If people believe in it, then it's real.

01:46:50.620 | - Is there a space for meme coins at this time,

01:46:54.100 | like Doge or somebody else to almost like,

01:46:57.520 | it does serve a lot of purposes,

01:47:01.360 | which is, like you said, it pulls in people

01:47:04.880 | into this whole space of digital currency

01:47:07.460 | and into cryptocurrency, allow them to explore,

01:47:12.460 | allow them to have fun

01:47:13.780 | as opposed to taking everything very seriously.

01:47:16.460 | Is there still space for that?

01:47:17.860 | - Yeah, yeah, and I mean,

01:47:19.440 | the crypto landscape is very broad today.

01:47:22.020 | So whatever cultural element you seek to find

01:47:26.680 | within crypto, you will find.

01:47:28.860 | It was a bit different in 2013

01:47:30.660 | because Bitcoin was kind of the only game in town.

01:47:33.260 | There were a couple altcoins.

01:47:34.980 | And so Dogecoin made a lot of sense as a counterpart

01:47:38.660 | to Bitcoin as a less serious counterpart.

01:47:41.060 | Today, crypto is just this like gigantic cultural

01:47:44.100 | and economic trend.

01:47:45.800 | So it's very multifaceted.

01:47:48.760 | Dogecoin is one of the many ways

01:47:52.220 | that people have to engage with it.

01:47:54.380 | I think a lot of people that buy Dogecoin

01:47:56.580 | based on Elon's implied guidance are gonna lose money

01:48:00.700 | because fundamentally there's nothing enduring

01:48:03.340 | about Dogecoin.

01:48:04.180 | It's an ancient fork of Bitcoin.

01:48:07.300 | It's unmaintained.

01:48:08.620 | It's probably at risk actually from a protocol perspective.

01:48:13.580 | It's merge mind with Litecoin, I think.

01:48:15.880 | If there was an inflation bug on Dogecoin,

01:48:19.460 | it's unclear who would sort of be able to remediate that.

01:48:23.260 | So it's not technologically very sound.

01:48:27.660 | So I wouldn't recommend that anyone stores wealth in it.

01:48:31.420 | - Yes, it's funny 'cause cryptocurrency,

01:48:34.700 | like my interest in cryptocurrency

01:48:37.100 | is in the exploration of technical ideas.

01:48:39.720 | But cryptocurrency is also, like in the case of Dogecoin,

01:48:45.240 | like for LOLs, at least originally, like a meme coin,

01:48:50.240 | but it's also a mechanism for investment.

01:48:55.600 | And so those are sometimes a tension.

01:49:01.020 | - 100%.

01:49:01.940 | - And it's unclear, sort of like, yeah,

01:49:04.780 | you know, the meme with Doge has almost become

01:49:07.780 | to take it to, I guess, to a dollar,

01:49:09.900 | trying to drive the price of the value up to a dollar.

01:49:13.300 | But, you know, implied in that is like this overlap

01:49:17.060 | of the meme coin and like legitimate investment.

01:49:20.260 | And so you have a lot of young people, I think,

01:49:23.020 | who almost start getting greedy and wanna make money,

01:49:27.940 | like as opposed to having fun.

01:49:31.660 | And that becomes a different beast then

01:49:33.380 | because you're essentially making financial decisions

01:49:37.780 | that can have a long lasting, like, you know,

01:49:40.380 | money is freedom.

01:49:41.780 | And if you make stupid financial decisions,

01:49:47.820 | you can remove freedom from your life.

01:49:50.140 | And that's, it can be detrimental in that sense.

01:49:53.020 | So I don't, it's difficult, I don't know what to do

01:49:56.140 | with that set of ideas because a lot of cryptocurrency,

01:49:59.780 | including Bitcoin, is very volatile because it's new.

01:50:03.180 | So you're trying to figure out the space of like,

01:50:07.300 | what's actually going to be a large part of,

01:50:11.500 | like you speak of network effects,

01:50:12.980 | like what's going to take over the world.

01:50:15.380 | And through that process,

01:50:16.980 | there's going to be a lot of volatility.

01:50:19.180 | And if you're talking about cryptocurrency

01:50:22.980 | as a investment mechanism,

01:50:26.900 | then it can have a real detrimental effects

01:50:29.500 | on people's lives.

01:50:31.180 | - Yeah, and that's really the challenge

01:50:33.660 | with operating in the crypto space, talking about it,

01:50:37.260 | overlaid on top of everything that's interesting

01:50:39.980 | politically or culturally about it

01:50:41.940 | is the financial incentive.

01:50:44.020 | And so, you know, it's not all fun and games

01:50:48.020 | because there are literally billions

01:50:50.780 | over a trillion dollars at stake now.

01:50:53.700 | So if you buy Dogecoin,

01:50:55.700 | because some influencer on TikTok said so,

01:50:58.820 | you've now made a financial decision, right?

01:51:00.980 | So I'm not going to scold any Dogecoin buyers

01:51:04.100 | or any crypto asset buyer for that matter,

01:51:07.180 | but be aware that there are like billions of dollars

01:51:10.860 | of really elite hedge funds that are trying to front run

01:51:15.140 | all of your decisions and evaluate social sentiment,

01:51:18.300 | things like that.

01:51:19.820 | So it's a water full of sharks, basically.

01:51:22.660 | And by the way, if you're listening to this,

01:51:25.260 | don't take this podcast

01:51:26.860 | or anything I ever say as financial advice.

01:51:28.940 | That's definitely not my interest or expertise level.

01:51:32.340 | Now the interest here is to explore different ideas.

01:51:36.500 | Speaking of which, you've written a little bit about NFTs.

01:51:40.060 | I'd be interested to hear your opinions

01:51:43.820 | on this space of ideas, these non-fungible tokens.

01:51:49.220 | They seem to have a cultural impact currently,

01:51:54.220 | but do they have a long lasting technical,

01:51:57.140 | financial or cultural impact, or is this just the Fed?

01:52:00.380 | What do you think of NFTs?

01:52:02.620 | - Yeah, I think the current enthusiasm for NFTs

01:52:06.500 | and the financial metrics you see,

01:52:08.340 | the growth there in that sector

01:52:10.740 | is partially a function of where we are

01:52:13.100 | in the actual credit cycle.

01:52:14.940 | So oftentimes when inflationary events occur,

01:52:19.500 | you have correspondence speculative manias

01:52:22.300 | that occur at the same time

01:52:24.260 | because people intuitively feel

01:52:26.580 | that the fiat currency that they hold is being debased.

01:52:30.100 | And so they frantically look around

01:52:31.780 | for other places to put it.

01:52:33.140 | So stocks, property, commodities,

01:52:38.140 | and then other asset classes, NFTs are an asset class.

01:52:44.340 | And this is a case with any inflation

01:52:46.300 | you look at in history,

01:52:48.140 | you saw these correspondence speculative manias,

01:52:50.700 | basically, speculative episodes.

01:52:53.860 | So a lot of us feel that inflation is occurring,

01:52:57.420 | whether it's in CPI or not,

01:52:59.340 | that basically lots of dollars

01:53:00.660 | are being injected into the economy.

01:53:02.860 | We've all seen stocks massively appreciate

01:53:05.340 | even as GDP contracted.

01:53:07.580 | And so a lot of people sort of got cottoned on

01:53:10.740 | to this notion that, wow, is the Fed,

01:53:13.780 | that lowers interest rates

01:53:14.980 | and Congress spends a huge amount of stimulus dollars

01:53:18.780 | into the economy, financial assets gonna go up,

01:53:20.940 | so I better have exposure to all that stuff.

01:53:23.860 | And so you see virtually every asset class

01:53:26.820 | is awash with cash right now.

01:53:28.540 | People are investing like their lives depend on it,

01:53:31.300 | investing, trading, whatever,

01:53:32.900 | whether it's options, volumes on Robinhood,

01:53:36.420 | like kind of retail brokerages, things like that,

01:53:39.500 | whether it's stocks, whether it's crypto,

01:53:42.580 | and then other collectibles, baseball cards,

01:53:44.860 | their valuations have been skyrocketing.

01:53:47.100 | And so I think NFTs are part of that.

01:53:49.300 | It's a new asset class.

01:53:50.860 | It's basically an opportunity to invest in sort of art

01:53:54.020 | or collectibles, in-game items, things like that.

01:53:59.020 | I think that explains a large degree of the enthusiasm,

01:54:03.860 | the excitement is that it's a novel asset class

01:54:06.260 | that people can trade.

01:54:08.140 | And right as these inflationary tailwinds pick up.

01:54:12.660 | Now as for the sort of virtues

01:54:15.700 | of the actual technical phenomenon,

01:54:19.740 | NFTs are actually not a new idea at all.

01:54:21.780 | So you've had NFTs, I didn't call them NFTs,

01:54:25.220 | but in 2016 built on Bitcoin, for instance.

01:54:28.140 | So it's been around for a while.

01:54:30.220 | What it is is a serial code,

01:54:33.020 | basically a string of data

01:54:36.060 | that is inserted onto a public blockchain

01:54:38.740 | and then circulates as a unique token.

01:54:41.380 | And then the question is, okay,

01:54:42.700 | well, what does that data refer to?

01:54:44.500 | What's the external reference?

01:54:46.300 | And that has to be defined.

01:54:47.860 | There has to be some entity which says,

01:54:50.060 | oh yeah, this unique string refers to like this piece of art

01:54:53.540 | or digital content or trading card or whatever.

01:54:57.700 | So NFT, the concept itself is like an incredibly broad idea.

01:55:00.860 | It's just, well, what if we took barcodes

01:55:04.580 | and put them on chain so that they could be traded

01:55:08.020 | and so they could circulate freely on a peer-to-peer basis

01:55:10.580 | and plugged into exchanges and things like that.

01:55:13.620 | So that concept is super valid,

01:55:16.100 | clearly has protocol market fit, right?

01:55:20.340 | People are using it for a really wide array of purposes.

01:55:23.900 | It's completely gonna exist.

01:55:26.220 | May the valuations contract of NFTs in the aggregate?

01:55:30.700 | Definitely possible, probably likely.

01:55:33.700 | But I think the notion of creating enduring collectibles

01:55:38.700 | or artworks that have accompanying signatures,

01:55:44.100 | basically autographed art on the blockchain,

01:55:47.060 | that has totally been validated.

01:55:48.700 | I think that won't go away.

01:55:50.780 | - I wonder if there's ideas like BitCloud, for example.

01:55:54.820 | I don't know if you saw that.

01:55:55.780 | If there's ideas built on top of this concept,

01:55:58.300 | it doesn't have to be like Ethereum, NFT.

01:56:00.580 | It could be just the concept of non-fungible tokens,

01:56:04.020 | whether those kinds of things could take hold.

01:56:07.740 | And it's less about financial transactions

01:56:11.700 | and more about almost like,

01:56:14.540 | I don't know how to put it,

01:56:18.700 | but like staking identity in some way,

01:56:23.420 | whether it's BitCloud or identity of objects.

01:56:26.500 | Like there might be some way of connecting physical reality

01:56:30.340 | and digital reality in some interesting ways.

01:56:33.220 | So just the financial aspect is a way to put

01:56:36.980 | some validity behind the identity.

01:56:40.860 | I wonder if there's ideas there

01:56:43.620 | that are yet to be discovered

01:56:46.580 | or ideas that are yet to take hold.

01:56:50.700 | Like BitCloud, it seems interesting.

01:56:52.380 | Seems shady as hell, seems a little scammy.

01:56:54.960 | I don't know if I like the idea that you can bet on people.

01:57:00.260 | - Essentially. - Right.

01:57:01.780 | Yeah, I think my market cap on BitCloud is like $90,000

01:57:05.420 | and I haven't done anything there, so.

01:57:07.660 | - Did you take, like verify yourself or whatever?

01:57:13.300 | - I have not.

01:57:14.140 | I think people would yell at me on Twitter if I did, so.

01:57:17.460 | - And it's unclear whether it's a scam yet or not, right?

01:57:20.300 | It's unclear where it's coming from.

01:57:22.420 | - Well, there is some details about the investors.

01:57:27.180 | It's backed by some pretty big name investors.

01:57:28.940 | So I probably wouldn't use the word scam to describe it,

01:57:31.300 | but it's got Ponzi-like dynamics,

01:57:34.260 | like everything in crypto.

01:57:36.100 | So there's very questionable.

01:57:38.340 | And then also, is it using people's likeness

01:57:40.780 | without their permission,

01:57:42.980 | which is, I think, a legal question.

01:57:44.940 | So there's open questions around it.

01:57:47.540 | But is our public blockchains

01:57:50.900 | and that sort of architecture,

01:57:53.260 | is that gonna be useful for decentralized

01:57:55.860 | or alternative forms of social media?

01:57:58.180 | - 100% yes.

01:58:00.900 | I'm super, super bullish on that idea.

01:58:03.380 | Basically, creating open protocols, open namespaces,

01:58:08.340 | ways to organize without the dependence

01:58:11.100 | on a single node, effectively, in Silicon Valley,

01:58:15.380 | the Twitter node or the Facebook node.

01:58:18.460 | I think it's a matter of urgency

01:58:21.300 | that we create digital gathering spaces

01:58:24.620 | where you have strong property rights.

01:58:26.860 | You have a claim on your identity.

01:58:28.500 | You have a claim on your data.

01:58:30.580 | And open architecture is our way to do that.

01:58:32.620 | I don't know if it'll be a blockchain,

01:58:34.900 | but certainly I think the general concept

01:58:39.740 | introduced by blockchains is a good template

01:58:42.740 | for how to organize these systems.

01:58:45.900 | - Yeah, value, freedom, value decentralization of power,

01:58:50.740 | whatever the mechanism.

01:58:52.340 | Let me ask you about love.

01:58:55.020 | - So there is a Bitcoin maximalist community

01:58:58.580 | that sometimes, so those folks in general

01:59:04.580 | have a strong belief that Bitcoin is good for the world.

01:59:09.580 | And it's almost an ethical imperative

01:59:11.580 | to sort of help Bitcoin succeed,

01:59:16.500 | which I think as a member of any community,

01:59:22.300 | I think it's beautiful to believe

01:59:23.820 | in the vision of the community.

01:59:26.020 | There does seem to be some properties

01:59:28.660 | of what some may call like toxicity

01:59:32.220 | or derision and mockery and those kinds of things.

01:59:35.420 | Some folks have criticized this, right?

01:59:41.180 | That Bitcoin maximalism is not necessarily good

01:59:44.940 | for the world, even if Bitcoin is good for the world.

01:59:48.400 | What are your thoughts about this kind of approach,

01:59:53.300 | philosophically or practically to the spread of Bitcoin?

01:59:58.300 | And is there a way that we can add more love to the world

02:00:02.940 | while we add more Bitcoin to the world?

02:00:05.620 | - Oh, that's a great question.

02:00:07.100 | I mean, Bitcoin is sort of what you make of it.

02:00:09.500 | So you can define your own path

02:00:12.940 | as you advocate for Bitcoin or don't for that matter.

02:00:17.380 | So my chosen approach is the approach you see here,

02:00:21.860 | which I try to minimize the amount

02:00:24.980 | of sort of harshness or mockery,

02:00:26.780 | although I've been known to be mean on Twitter too.

02:00:30.580 | - Well, Twitter is a specific, sorry to interrupt,

02:00:32.860 | is a specific media where this takes its worst form.

02:00:36.380 | So I'm learning, listen, I'm actually,

02:00:38.860 | because of this podcast, but in general,

02:00:40.460 | I'm part of different communities.

02:00:42.580 | And some are full of like unabashed love

02:00:46.740 | and some are like, what I experienced on Twitter,

02:00:50.060 | the Bitcoin community at first,

02:00:51.980 | I was off put in terms of the intensity, the mockery,

02:00:56.980 | - I bet, yeah.

02:00:58.020 | - The layers of lull,

02:01:00.500 | like the layers of not taking anything seriously.

02:01:05.580 | And I think there's power to that.

02:01:08.500 | There's freedom to that.

02:01:09.580 | I appreciate it.

02:01:10.700 | I have respect for it, but it's not my thing on Twitter.

02:01:15.340 | It's just not the way I enjoy communicating on Twitter.

02:01:18.900 | I retired from Twitter.

02:01:20.860 | I hit a hundred thousand followers and then I retired.

02:01:23.420 | So I'm free now.

02:01:25.220 | I don't have to tweet anymore.

02:01:26.340 | It's great.

02:01:27.420 | But I totally can see the point.

02:01:29.620 | I wish that Bitcoiners were gentler in their approach.

02:01:34.220 | Not all Bitcoiners are like that, of course.

02:01:36.500 | There's 50 to a hundred million of them worldwide

02:01:39.500 | and a few tens of thousands on Twitter.

02:01:42.340 | So I'm not gonna claim

02:01:44.060 | that they're necessarily representative.

02:01:46.260 | The toxicity though is kind of a learned habit

02:01:49.700 | because Bitcoin has had so many episodes

02:01:53.860 | where strong willed institutions,

02:01:57.060 | - The dice.

02:01:57.900 | - Billionaires, the dice are pretty toxic,

02:02:00.380 | you could say, right?

02:02:01.380 | I'm basically mocking critics of Bitcoin.

02:02:04.380 | - But at the same time,

02:02:05.900 | you're saying that the criticism has been predictable

02:02:08.380 | and repeatable and it's been the same throughout.

02:02:12.340 | - Yeah, and that's a pretty dismissive thing to say, right?

02:02:16.580 | That I can reduce you to an algorithm

02:02:19.420 | of with 11 permutations.

02:02:24.420 | But the thing to remember, I guess,

02:02:27.940 | is that some of the best funded companies

02:02:30.740 | in the Bitcoin space,

02:02:31.580 | the most powerful miners, billionaires,

02:02:33.940 | have tried to change and co-opt and alter Bitcoin

02:02:37.380 | to shape it to their liking.

02:02:41.180 | And without these incredibly hardcore

02:02:43.380 | sort of high priests of the Bitcoin protocol,

02:02:46.340 | it would have been hopelessly malleated

02:02:50.180 | in all number of ways.

02:02:51.900 | And so there is a reason

02:02:54.940 | why someone would be incredibly protective of Bitcoin.

02:02:59.020 | Does that justify immense toxicity on social media?

02:03:05.060 | Probably not, but it's a leaderless protocol.

02:03:09.740 | So the whole point is that it's money for enemies.

02:03:12.580 | And some of the Bitcoin maximalists came for me too

02:03:16.020 | when I made suggestions that they didn't like.

02:03:18.580 | But I'm happy to use it, the protocol,

02:03:21.740 | because I know that that transaction will be final

02:03:25.940 | regardless of how odious my counterparty is

02:03:28.860 | or how politically disfavored their opinions are.

02:03:33.180 | - See, I mean, and this is where there could be disagreements

02:03:36.460 | but I think you have to think about what's effective

02:03:41.460 | as a defense mechanism of strong ideas.

02:03:44.620 | And I personally think that like kindness and thoughtfulness

02:03:49.620 | and like is much more effective

02:03:55.860 | because it lets the idea shine

02:03:58.580 | as opposed to the personality of the individual humans

02:04:02.660 | overriding it.

02:04:04.300 | But there's debates on this.

02:04:06.180 | - I mean, I take your side on that.

02:04:09.620 | I think a patient and careful approach is the way to go.

02:04:13.660 | Now, do all critics deserve good faith engagement?

02:04:16.980 | No, I would say.

02:04:18.260 | A lot of critics of Bitcoin operate in extreme bad faith.

02:04:21.780 | And the reason why is because

02:04:24.060 | we're not just talking about technical questions.

02:04:26.460 | In fact, most of this conversation has not been technical.

02:04:28.940 | It's been political

02:04:30.300 | because Bitcoin is an intensely political idea.

02:04:34.220 | And so a lot of people are predisposed to totally hate it

02:04:38.580 | and to wish death on Bitcoiners.

02:04:40.820 | I mean, there was a professor at GW

02:04:43.340 | I saw earlier this week that was musing

02:04:45.740 | about getting all the Bitcoiners on a boat and sinking it.

02:04:48.740 | It's like, in what other context

02:04:50.620 | would a upstanding professor muse about mass murder?

02:04:55.060 | But in the context of Bitcoin, it's sort of okay

02:04:57.620 | within his peers because you're talking about something

02:05:03.140 | that most people don't like.

02:05:04.820 | It's a concept that's alien to them

02:05:06.900 | that doesn't jive with the way they see the world.

02:05:09.540 | And so because it's so pitched from a political perspective,

02:05:14.540 | there's a lot of critics as well as defenders

02:05:18.980 | that operate in bad faith, I would say.

02:05:21.620 | But that's the nature of the beast.

02:05:23.060 | It's because we're proposing a very disruptive thing

02:05:26.340 | and there are people that would be disrupted by it.

02:05:28.900 | - You wrote a blog post titled "On Writing."

02:05:33.540 | You're, I think, an excellent writer.

02:05:36.700 | So let me ask, what does it take to be a good writer?

02:05:41.440 | What does it take to write some of the blog posts

02:05:46.440 | you've written, sort of condense a set of ideas

02:05:50.380 | in your head, the mess that's probably in your head

02:05:52.660 | and putting down on paper in a way

02:05:54.900 | that communicates the idea clearly and powerfully?

02:06:00.780 | - So that was basically the point of the blog post

02:06:03.300 | is that being an impressive writer

02:06:05.580 | is different from being an effective writer.

02:06:08.220 | So I think the answer to your question

02:06:11.500 | is humility, basically.

02:06:13.420 | So I think if you let pride and vanity seep

02:06:18.420 | into your writing, then you risk creating

02:06:23.620 | a very noisy signal, creating a very inefficient channel

02:06:27.440 | for communicating literal neural arrangements

02:06:30.920 | from your brain to someone else's brain.

02:06:32.880 | And that's what I think about when I write,

02:06:34.520 | is like, wow, I have the power to, at scale,

02:06:38.660 | change the literal physical composition of people's brains,

02:06:43.080 | to rewire them.

02:06:44.360 | If I make an idea that's so persuasive, that's so sticky,

02:06:48.040 | if I coin a phrase that is so pithy,

02:06:51.560 | then I can alter their brain.

02:06:54.440 | That's crazy.

02:06:55.440 | I mean, you're letting someone reach into your head

02:06:57.040 | and mess with it a little bit.

02:06:59.120 | That's unbelievable.

02:07:01.480 | And that's like a superpower.

02:07:02.560 | And if you could do that to 100,000 people at once,

02:07:05.460 | how powerful is that, right?

02:07:07.280 | - And you mentioned Descartes, "I think, therefore I am."

02:07:09.720 | That's like literally rewired millions of brains

02:07:12.720 | throughout history.

02:07:13.560 | - Right.

02:07:14.380 | I mean, that's one of the most powerful,

02:07:15.480 | like, "Cogito ergo sum," one of the most powerful

02:07:19.600 | phrases ever written.

02:07:21.400 | And that sent a zillion philosophy undergraduates

02:07:24.560 | down a rabbit hole of skepticism

02:07:26.120 | that some of them didn't make it out of.

02:07:28.480 | And they're convinced that the brain in the vat theory

02:07:31.640 | is true and there's no way to know

02:07:34.160 | what our tangible experience is.

02:07:37.060 | But yeah, so that's the beauty of writing.

02:07:41.220 | And the thing that interferes with that is our pride,

02:07:45.720 | our desire to impress people and look good to them

02:07:50.180 | and show off our vocab and stuff.

02:07:54.440 | And that was the point of that piece

02:07:57.040 | is that I went on this journey

02:07:58.360 | where I eventually realized that,

02:08:00.640 | I don't know if I'm any better of a writer

02:08:02.320 | for having realized it,

02:08:04.040 | but I think that is a necessary condition.

02:08:06.880 | - So does that mean there's a value to striving

02:08:11.880 | for simplicity in the words as opposed to,

02:08:16.200 | I mean, complexity?

02:08:18.900 | - I think so, for sure.

02:08:21.260 | And we deal with complex topics all the time in crypto.

02:08:24.660 | And that's always a huge red flag for me.

02:08:26.880 | I mean, if you can't explain something simply,

02:08:28.560 | do you understand it?

02:08:29.600 | So if you're talking about something complex,

02:08:33.660 | if you can't find simple ways to discuss it,

02:08:37.420 | my presumption is that you're actually

02:08:39.740 | obfuscating the truth.

02:08:41.700 | And this is what Orwell railed against

02:08:43.820 | with political language.

02:08:45.740 | He really hated political language

02:08:47.620 | because he felt that its authors

02:08:50.240 | were using deliberate obfuscation.

02:08:53.560 | And he hated euphemisms.

02:08:55.460 | And I hate euphemisms too.

02:08:57.020 | I much prefer forthrightness and clarity of thought.

02:09:02.860 | But most people when they write,

02:09:05.020 | don't really endeavor to be particularly clear.

02:09:08.840 | They might be writing to show off their startup

02:09:12.320 | or to demonstrate to people how cool they are

02:09:16.300 | or how well read they are.

02:09:19.940 | They're displaying, it's like a peacock style display.

02:09:23.240 | What fraction of people write

02:09:25.680 | to actually communicate meaning?

02:09:27.860 | Small fraction.

02:09:29.540 | - It's especially difficult because what I've detected

02:09:32.900 | is something in us humans as readers

02:09:37.280 | assign more credibility to people that obfuscate.

02:09:40.440 | So like simple, clear communication of an idea

02:09:48.000 | is not like the immediate reaction

02:09:51.120 | is not one where we assign credibility to the person.

02:09:55.720 | Like that was brilliant.

02:09:59.640 | There's a lot of people that I kind of listened to

02:10:02.440 | without really understanding

02:10:03.600 | what the heck they're talking about.

02:10:06.040 | But it sounds musical and smart.

02:10:08.240 | And then I see a lot of folks assigning credibility

02:10:12.040 | to that person.

02:10:13.740 | And it's unfortunate.

02:10:17.880 | It's unfortunate that there's that tension as a reader

02:10:20.640 | that we appreciate the beauty and power

02:10:23.880 | of like complex weaving of words

02:10:28.880 | without assigning as much value

02:10:33.880 | to like actual clear communication of an idea.

02:10:36.640 | - And I'm always skeptical in speech as well.

02:10:40.080 | When someone will describe someone as articulate,

02:10:43.160 | I'm always immediately skeptical

02:10:45.480 | of the value of what that person is saying.

02:10:48.680 | Because if you articulate,

02:10:50.600 | you can make bad ideas sound very acceptable and great.

02:10:53.620 | - Noam Chomsky has said this before.

02:10:57.600 | As a way to defend the way he speaks,

02:11:01.800 | he said that like he's suspicious of charismatic people

02:11:05.480 | because they can basically sell any kind of idea.

02:11:08.040 | He speaks in a very monotone and boring way

02:11:10.980 | so that whatever the value his ideas have,

02:11:13.440 | it'll shine through.

02:11:14.980 | There's something to that.

02:11:17.160 | There's something to that. - I love that.

02:11:18.480 | - But it's a difficult journey.

02:11:19.880 | It's a difficult path because then,

02:11:21.720 | I think it's the right path

02:11:23.080 | because ultimately you focus on the quality of your ideas.

02:11:25.840 | And in the long term, that wins.

02:11:27.600 | - I agree.

02:11:29.320 | - Just by way of advice,

02:11:32.400 | is there, if people are interested in Bitcoin

02:11:34.640 | or cryptocurrency in your work,

02:11:37.040 | what are good books or resources on Bitcoin

02:11:41.160 | from you and from others that you can recommend

02:11:43.560 | that were in your own journey helped you

02:11:45.480 | or you've seen help others?

02:11:47.880 | - Well, it's very easy,

02:11:50.280 | or it's much easier today to make the Bitcoin journey

02:11:53.520 | because the quality of content is so much better

02:11:55.440 | than it was when I started.

02:11:56.660 | I mean, when I learned about Bitcoin,

02:11:59.440 | there was the Bitcoin Wiki and the Bitcoin Stack Exchange

02:12:02.760 | and the subreddit and that was kind of it.

02:12:05.560 | And you had to just pick up everything.

02:12:08.220 | The economic theory hadn't really been worked out

02:12:10.440 | very much, so you had to pick everything up from scratch.

02:12:13.720 | The good news is that there's a huge abundance of content

02:12:17.160 | and that's actually one of Bitcoin's greatest strengths

02:12:19.780 | is that people are totally inspired to write about it.

02:12:22.560 | And it's almost a rite of passage at this point

02:12:25.480 | if you're like a Bitcoin thinker to have your book.

02:12:29.560 | I don't have a book yet.

02:12:30.460 | I would love to recommend my book.

02:12:31.880 | I haven't written one.

02:12:33.120 | - Do you think about writing a book?

02:12:34.600 | - Yeah, I think it's my duty, 100%.

02:12:37.480 | Everyone that has created a lot of Bitcoin content

02:12:40.200 | probably should condense it into a book

02:12:42.440 | to give it an enduring status.

02:12:45.360 | - It's interesting 'cause you mentioned Block Size Wars

02:12:49.320 | and you've written on a lot of different topics.

02:12:52.360 | So you could both write a big,

02:12:56.960 | like sapien style book about Bitcoin or cryptocurrency, right?

02:13:01.960 | But you can also write a book on each,

02:13:05.120 | like a specific thing.

02:13:08.040 | And now that you put pressure on yourself

02:13:10.000 | and talk about simplicity, right?

02:13:13.100 | Where do you lean on those different book journeys

02:13:16.000 | that you might take on?

02:13:17.840 | Do you have in you eventually like a Bitcoin book?

02:13:22.840 | - I mean, I tallied up the words that I wrote

02:13:25.680 | in the last couple of years on Bitcoin.

02:13:27.200 | It's like over 100,000 words a year.

02:13:29.820 | So that's two novels there.

02:13:32.920 | But yeah, I think I do.

02:13:35.400 | I think there's so much underexplored space in Bitcoin.

02:13:39.200 | I mean, a systematic interpretation

02:13:41.960 | of Satoshi's writings, for instance.

02:13:44.400 | And a lot of people don't want anyone to do that

02:13:46.880 | because they don't want it to have these religious overtones

02:13:49.160 | where you're engaging in interpretation,

02:13:52.160 | but that's something that should be done.

02:13:56.800 | There's a lot of Bitcoin histories

02:13:58.200 | that haven't been written.

02:14:00.240 | There was a great Bitcoin history recently published.

02:14:03.080 | This is one of my recommendations is "On the Block Size War"

02:14:07.160 | by Jonathan Beer,

02:14:09.480 | who runs probably the best research desk in the industry.

02:14:12.320 | So there's huge amounts of history that has transpired

02:14:18.200 | that hasn't been chronicled.

02:14:20.240 | And some of the accounts are indifferent.

02:14:23.640 | They're often written by outsiders,

02:14:25.640 | journalists that maybe don't fully engage

02:14:29.720 | with the Bitcoin system.

02:14:31.880 | - Do you think the humans are interesting in the story too?

02:14:35.040 | - Of course, they're the most interesting thing.

02:14:38.120 | Bitcoin itself doesn't really change that much.

02:14:40.320 | It's kind of this cold protocol that just sort of

02:14:44.120 | takes along, but the characters are just fascinating.

02:14:47.080 | I mean, and there's so many unbelievable characters

02:14:49.720 | in the Bitcoin story, unbelievable.

02:14:51.720 | - Yeah, that's the cool thing about Bitcoin

02:14:54.760 | and cryptocurrency and just internet is the weirdos,

02:14:59.000 | the brilliant weirdos.

02:15:01.480 | All the people in the stuff that's already established

02:15:05.200 | are boring, like economics professors are all boring.

02:15:09.240 | But the interesting people, the wild ones

02:15:11.760 | are the ones that are innovating in the crypto space,

02:15:15.360 | which is, that's where the dangerous weirdos are

02:15:19.760 | and the exciting, brilliant weirdos.

02:15:21.960 | - Well, you had to be kind of crazy to adopt Bitcoin

02:15:24.840 | in the first sort of five years of its life.

02:15:27.000 | So there's an adverse selection element there.

02:15:30.800 | I don't know if that's an uncharitable way to put it,

02:15:32.840 | but like some of Bitcoin's earliest evangelists

02:15:36.960 | are not the evangelists I would have chosen,

02:15:39.720 | but they were the ones that we got.

02:15:41.480 | - It's the one we got, but is there resources?

02:15:45.280 | You're basically saying just throw a dart

02:15:48.560 | and most books are going to be good,

02:15:51.280 | or is there something that stands out to you?

02:15:52.800 | - I mean, your average book is terrible for sure,

02:15:55.520 | but not on Bitcoin specifically, but just in general.

02:16:00.160 | It depends whether you like the computer science,

02:16:02.520 | the economics, or the history,

02:16:04.960 | but my recommendations would be,

02:16:07.160 | obviously the Bitcoin white paper,

02:16:10.560 | and Satoshi's complimentary writings,

02:16:13.600 | that's very important, is to try and understand

02:16:15.760 | the intentions behind the system.

02:16:17.920 | And also to understand the system

02:16:19.720 | without having your view colored

02:16:21.880 | by some third party's description of it.

02:16:24.600 | Most descriptions of Bitcoin are really bad.

02:16:26.800 | So just go to the originals,

02:16:29.240 | go to the Hal Finney's posts,

02:16:31.520 | Satoshi's posts on Bitcoin talk,

02:16:33.400 | there's a huge amount of lucidity there.

02:16:35.240 | And actually most of our questions about Bitcoin today

02:16:38.880 | that we have a decade later,

02:16:40.040 | were really answered in those earliest days.

02:16:42.520 | People just don't know it.

02:16:44.440 | The canonical economic work relating to Bitcoin,

02:16:49.440 | a lot of people don't like it.

02:16:51.120 | I think it's fine, would be the Bitcoin standard.

02:16:54.000 | - A lot of people don't like it.

02:16:55.920 | I just read it, it's good.

02:16:57.080 | I like it.

02:16:57.920 | - I think it's a good description

02:17:00.480 | of sort of the Austrian perspective,

02:17:02.240 | and then how it relates to Bitcoin.

02:17:04.440 | There isn't that much about Bitcoin in there,

02:17:06.160 | but I think the point is,

02:17:07.480 | once you've understood, you know,

02:17:09.440 | Seyfriedin's view of monetary policy,

02:17:12.160 | Bitcoin makes a ton of sense,

02:17:13.400 | so you don't actually need to argue for it that much.

02:17:16.040 | So the Bitcoin standard is a good introduction

02:17:19.520 | to sort of the orthodox thought in Bitcoin.

02:17:22.160 | There's a more recent book called "Layered Money",

02:17:26.640 | which I liked by Nick Batia,

02:17:29.760 | which goes into more depth

02:17:31.800 | about what I was talking about earlier in the conversation,

02:17:33.760 | the layered approach to scaling.

02:17:35.920 | And that's a really critical thing to understand.

02:17:38.680 | Then technical books about Bitcoin.

02:17:41.120 | I like "Grokking Bitcoin",

02:17:42.880 | which is a very computer science heavy one.

02:17:46.880 | There's a good textbook called

02:17:49.920 | "Bitcoin and Cryptocurrency Technologies"

02:17:53.120 | by Arvind Narayan.

02:17:56.160 | I think he's a Princeton computer science professor,

02:18:00.680 | which is really good at building intuition.

02:18:02.840 | Antonopoulos' books, "Mastering Bitcoin", are good.

02:18:08.160 | Then there's like simpler intuition building books

02:18:11.440 | that aren't hardcore on the economics

02:18:13.000 | or the protocol design.

02:18:14.840 | So you have like "Inventing Bitcoin" by Jan Pritzker,

02:18:17.680 | which is good.

02:18:18.520 | You have "Bitcoin Clarity" by Kjaer Bakkers.

02:18:21.280 | As you can tell, I have like,

02:18:22.520 | my bookshelf is like mostly Bitcoin books.

02:18:25.640 | - Okay, well that's a good selection.

02:18:26.880 | And of course, like you said,

02:18:28.440 | your writing and your book,

02:18:30.360 | that comes out this year or next year?

02:18:33.920 | Next year?

02:18:34.760 | - I think I'm gonna need 18 months.

02:18:36.640 | But most of the good Bitcoin content

02:18:39.800 | is just online, on Medium, on Twitter.

02:18:42.840 | It's a decentralized consensus kind of thing.

02:18:49.000 | - What about book recommendations that you could give

02:18:53.320 | people who love these outside of the world of crypto

02:18:56.720 | that maybe had an impact on your life?

02:18:58.720 | Fiction, like sci-fi, maybe technical, philosophical.

02:19:03.160 | Is there something you would recommend

02:19:04.480 | that people might read?

02:19:06.080 | - I really liked "The Three-Body Problem",

02:19:08.080 | but that's a really hackneyed recommendation.

02:19:11.280 | But it really made me think.

02:19:12.400 | And I like the hard sci-fi,

02:19:14.400 | you know, the commitment to science and science fiction.

02:19:17.960 | So I thought it was very clever.

02:19:19.600 | - Is there one, is there something that really annoys you

02:19:23.040 | in terms of the opposite of hard sci-fi,

02:19:25.280 | like that doesn't get stuff right, movies?

02:19:27.840 | - I mean, I have issues when I watch ostensibly sci-fi

02:19:34.880 | or fantasy films that are not consistent about the rules

02:19:38.680 | for the universe that they've laid out,

02:19:41.480 | or where they're just impossible to comprehend,

02:19:43.640 | like Christopher Nolan's latest film.

02:19:47.920 | - Oh yeah.

02:19:48.760 | - You needed a spreadsheet to understand that.

02:19:50.520 | - "Tenet".

02:19:51.360 | - "Tenet", yeah.

02:19:52.200 | - I didn't trust that maybe he was consistent

02:19:54.080 | about the rules of his universe.

02:19:55.320 | I just did not understand it at all.

02:19:58.360 | - In that sense, I really, probably one of my favorites

02:20:01.200 | is "2001 Space Odyssey".

02:20:03.440 | It's so, obviously it's many, many decades ago,

02:20:08.120 | but it's quite brilliant in both its consistency

02:20:13.120 | and the depth of thought put into like

02:20:19.040 | what the technology would actually be.

02:20:21.800 | Not in like visually, not in kind of silly graphical ways,

02:20:26.800 | but in terms of function and its impact on humanity.

02:20:34.040 | So, but that takes care, that takes a lot of work.

02:20:40.880 | And that takes genius actually,

02:20:42.280 | which is why Kubrick is regarded for what he is.

02:20:48.400 | - What advice, you've taken an interesting journey

02:20:51.280 | through your life.

02:20:52.280 | You were at Fidelity, a philosophy major.

02:20:56.360 | You're now one of the seminal minds

02:21:00.760 | in the world of Bitcoin and cryptocurrency.

02:21:03.880 | Who the hell knows what the next five,

02:21:05.800 | 10 years looks for you?

02:21:06.960 | If you were to give advice to somebody young today,

02:21:12.140 | you know, making their way through life, making a career,

02:21:16.200 | what would you, what kind of advice would you give?

02:21:18.800 | - See, the problem with advice is that in a world

02:21:23.540 | where so much of success is defined by luck

02:21:26.380 | and serendipity is that the advice givers

02:21:30.100 | often don't know why they've been successful, right?

02:21:33.500 | And so they might say, you know,

02:21:35.500 | I was wearing a green tie on the day of my job interview

02:21:38.640 | and so you should go out and wear green ties.

02:21:41.460 | And so they might just get the causality

02:21:43.360 | completely wrong, right?

02:21:45.600 | I mean, I'm not gonna claim

02:21:47.080 | that I'm super successful yet,

02:21:49.620 | but see, that's the problem is that I don't think

02:21:53.860 | my journey is replicable necessarily.

02:21:55.800 | So, you know, who am I to give advice?

02:21:59.760 | Although the one thing I will say is that

02:22:01.760 | the thing I did right was to become completely obsessed

02:22:07.360 | with a domain I found really interesting and held promise.

02:22:12.360 | Like if I had been really interested

02:22:14.360 | in like "Magic the Gathering",

02:22:15.760 | I wouldn't have been able to like do much with that

02:22:18.560 | aside from build like a killer, you know,

02:22:20.520 | card pack or whatever.

02:22:21.800 | And I wasn't afraid to, you know,

02:22:27.440 | really put myself out there and, you know,

02:22:30.960 | float my thoughts online and see how people reacted to them.

02:22:33.560 | Even if I said stuff that was completely erroneous

02:22:36.280 | or wrong all the time, the rewards to writing

02:22:39.600 | and just publishing content are immense,

02:22:41.920 | as you know, obviously.

02:22:43.600 | It's the most high leverage activity

02:22:45.700 | I think most young people have available to them.

02:22:48.200 | And I was very lucky and I benefited from a lot

02:22:53.800 | of favorable coincidences, a lot of people

02:22:57.040 | that took a chance on me.

02:22:58.800 | And if I had more time, I would sit here and name them.

02:23:02.700 | - Is there something you in your actions

02:23:06.340 | that made you more open to the benefits of luck?

02:23:12.460 | Sort of, you know, luck can bring you a lot

02:23:14.960 | of positive and negative things.

02:23:16.780 | So saying you're lucky means you are able

02:23:19.480 | to ride the wave of whatever positive stuff

02:23:21.840 | luck can bring and brought you.

02:23:23.140 | - Well, that's right.

02:23:23.980 | You have to put yourself in a position to be lucky

02:23:26.600 | and most people don't.

02:23:27.960 | So you just have to get as many shots on goal as possible.

02:23:30.860 | And of course luck plays an undeniable role

02:23:35.360 | in any career path, for sure.

02:23:37.840 | But you do have to make yourself available to it.

02:23:42.820 | And you have to take a ton of chances.

02:23:45.620 | But yeah, that's the problem with advice.

02:23:50.400 | It's just so hard to replicate it.

02:23:52.500 | So I find it illegitimate most of the time.

02:23:54.900 | - You heard it here, kids.

02:23:59.260 | Don't listen to anything Nick just said.

02:24:01.660 | - Exactly.

02:24:02.500 | - Wear a green tie to your interviews.

02:24:04.380 | It'll work out well.

02:24:06.200 | Do you think there's a meaning or reason

02:24:08.740 | to any of this, this existence, this life?

02:24:12.120 | - Well, we make our own meaning, for sure.

02:24:15.320 | I find a huge amount of meaning in what I do.

02:24:17.620 | I find it beautiful.

02:24:21.080 | I feel very lucky and blessed to be in the line of work

02:24:24.920 | that I'm in.

02:24:25.760 | To have your hobby and your passion and your job

02:24:29.040 | just be a completely integrated thing.

02:24:30.940 | So that's where I find meaning.

02:24:34.160 | - But you're just a bag of cells and bacteria

02:24:38.240 | that eventually dissipates, dies,

02:24:42.540 | and it goes into the ground and disappears

02:24:46.020 | back into the universe.

02:24:48.080 | I mean, that doesn't make any sense.

02:24:50.260 | - Well, that may be true,

02:24:51.300 | but I find the sublime in things like Bitcoin.

02:24:55.360 | I find it incredibly inspiring to work on it.

02:24:57.940 | I believe it's a hundred year plus project.

02:25:01.180 | And it stirs those aesthetic emotions in you,

02:25:06.180 | as I'm sure your work does.

02:25:07.820 | - So you find it beautiful.

02:25:09.480 | - Absolutely, absolutely.

02:25:11.480 | And inspiring more than just beautiful.

02:25:14.080 | - So you have hope for human civilization

02:25:16.120 | and Bitcoin is part of that hope?

02:25:18.080 | - Yeah, it's a very optimistic view.

02:25:19.920 | And people accuse us of being pessimists

02:25:22.520 | and saying that we are rooting

02:25:24.120 | for the collapse of civilization.

02:25:25.760 | Completely false.

02:25:26.940 | Bitcoiners are wildly optimistic

02:25:31.840 | because they believe that you can monetize

02:25:33.400 | a completely new system from scratch

02:25:35.680 | and compete with the strongest superpower

02:25:38.440 | in the military and the dollar

02:25:39.760 | and everything that goes with that.

02:25:42.480 | That's the craziest, most ludicrously optimistic

02:25:45.340 | proposition imaginable.

02:25:46.900 | So I think Bitcoiners are the most

02:25:49.840 | optimistic people out there.

02:25:51.440 | - I don't think there's a better way to end it

02:25:55.000 | on that hopeful vision of human civilization, Nick.

02:26:00.000 | I've heard a lot of amazing things about you.

02:26:02.480 | I was binge watching your interviews,

02:26:06.640 | binge reading your blogs, fell in love with your work.

02:26:11.400 | You're a good dude, inspiring, brilliant.

02:26:14.640 | Thank you so much for wasting all

02:26:16.480 | your valuable time with me today.

02:26:18.520 | - My absolute pleasure.

02:26:19.840 | - Thanks for listening to this conversation

02:26:22.360 | with Nick Carter and thank you to the information,

02:26:26.000 | Athletic Greens, Four Sigmatic and Blinkist.

02:26:29.520 | Check them out in the description

02:26:31.080 | to support this podcast.

02:26:33.080 | And now let me leave you with some words

02:26:35.160 | about freedom and beauty from Stephen King.

02:26:38.760 | Some birds are not meant to be caged, that's all.

02:26:42.240 | Their feathers are too bright,

02:26:44.100 | their songs too sweet and wild.

02:26:46.800 | So you let them go, and when you open the cage

02:26:49.320 | to feed them, they somehow fly out past you.

02:26:52.240 | And the part of you that knows it was wrong

02:26:54.000 | to imprison them in the first place rejoices.

02:26:56.680 | But still, the place where you live

02:26:59.040 | is that much more drab and empty for their departure.

02:27:02.320 | Thank you for listening and hope to see you next time.

02:27:05.960 | (upbeat music)

02:27:08.540 | (upbeat music)

02:27:11.120 | [BLANK_AUDIO]

Nic Carter: Bitcoin Core Values, Layered Scaling, and Blocksize Debates | Lex Fridman Podcast #173

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