Saifedean Ammous, Author of The Bitcoin Standard: The Future of Bitcoin and the Global Economy

Saifedean Ammous is the author of The Bitcoin Standard. In this conversation, Saifedean and Anthony Pompliano discuss Austrian economics, Bitcoin as a risk-on asset, bank fines, the Bitcoin maximalists in congress, and what his current outlook is on the global macro economy. -----BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. -----If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off.

• 0:12Anthony Pompliano?

  Saifedean Amos is the author of The Bitcoin Standard. In this conversation, we discuss Austrian economics, Bitcoin as a risk on asset, bank finds, the Bitcoin maximalist in Congress, and what his current outlook is on the global macroeconomy. I really enjoyed this conversation, and I hope you do as well.

• 0:39Anthony Pompliano?

  Before we kick off this podcast, first a word from our sponsor BlockFi. As many of you know, crypto investors store their digital assets on exchanges or in cold storage for long-term safekeeping. However, this strategy doesn't help them grow their investment holdings or build overall wealth. With the new BlockFi interest account, users can now securely store their Bitcoin or Ether at BlockFi and receive 6% annual interest, paid monthly in cryptocurrency. 6% is an absurdly high rate. It's the best rate in the industry. I highly suggest you go check out blockfi.com/pomp. Again, that's blockfi.com/pomp to sign up and start earning crypto today. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp

• 1:22Anthony Pompliano?

  or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. Alright guys, bang, bang. I am super excited to have Saifedean with us. Thank you so much for taking the time to do this. Thank you, Pomp, for having me. It's a pleasure. Absolutely. So for those that don't know, let's just quickly go over your background, and then you can mention the book and kind of what the thought process was in writing The Bitcoin Standard.

• 2:04Speaker 01

  So my background is that I'm a university professor at the Lebanese American University in Lebanon. And I've done a PhD in Sustainable Development from Columbia University. But throughout the last 10 years or so, my research has moved more and more towards studying monetary economics, particularly the Austrian School of Monetary Economics. Around the same time that Bitcoin came about. And so that made me very fascinated with Bitcoin. And after many years of being completely clueless about it and skeptical about it and, you know, thinking, well, that would be a nice idea if it could work, but obviously it won't work. After several years of that, I finally came around to realize, okay, maybe this thing will work. And maybe if it works, it's going to be a big deal.

• 2:48Speaker 01

  So I went through that phase from about 2013 until 17, at which point I wrote a book, started writing a book about it, which was published in 2018. And the book was essentially my attempt to try and save myself the time from having to explain to people why I think Bitcoin is important. Initially, I thought I would write something brief, like a short ebook that I would sell on Amazon. But as I started writing it, I couldn't stop. And then the whole thing grew into about 300 pages. And it's been published by Wiley and it's now been translated to 13 other languages or being translated to total 14 languages. And it's been far more successful than I had expected. I'm very happy about that.

• 3:32Speaker 01

  And I think it's the first book that studies the economics of Bitcoin thoroughly and academically and rigorously. And it seems to have done well within the Bitcoin community somehow. Very happy for that.

• 3:44Speaker 02

  For sure. So I was at a dinner with you and a few others. And if I remember correctly, you said that the first time you heard about Bitcoin was actually from Trace Meyer. And when he was talking about some of the benefits of gold, et cetera. Did I get that right?

• 4:02Speaker 01

  Yeah, it was one of the very early times that I'd heard about it. I used to follow Trace because I was interested in his work on monetary economics. And he emailed, I was subscribed to his email, and he sent an email about Bitcoin. I don't know if it was the first time. I think I'd heard of Bitcoin before, but I remember him in that message. Trace was saying something about having missed the boat on Bitcoin, on this incredible trade that he'd missed and he'd wish that he had signed up earlier. And this was, I think Bitcoin was in the range of $1 at that time. You had Trace Mayer already thinking he was already too late for it. So for all the people that think of themselves as being late today, everybody thought of themselves as being late.

• 4:46Speaker 02

  It is absolutely incredible to hear that he thought he was late at $1.

• 4:51Speaker 01

  Yeah.

• 4:53Speaker 02

  So as you've written the book, what's like the one thing that that process that you learned that maybe you didn't expect? As you went through actually having to put all these ideas and analysis into life?

• 5:06Speaker 01

  This is an excellent question because I was just thinking of the same thing yesterday. I think the, maybe the, the only idea that really crystallized to me, well, not the only, but I think the most important idea that was crystallized while I was writing the book. This was not something that I had set out to write. But it was the concept of difficulty adjustment and just how important this is to A, making Bitcoin actually work, and B, towards Bitcoin becoming such an enormously important economic phenomenon. I think it's largely down to difficulty adjustment. And this only became really clear to me while writing the book. And it's funny you'd ask this because just yesterday I was thinking of it.

• 5:50Speaker 01

  How, I was trying to think of going through my old drafts of the book and to see exactly when the first time that I had written about difficulty adjustment in this case. Because if you look at previous attempts at digital currency, the thing that they had missing was that they didn't have a way, if you wanted to make it distributed so that it could be cash, so that there was no central authority. The problem was how do you control the supply? How do you control people from, how do you stop people from mining too many coins? And Satoshi's genius solution, which seems a little bit obvious now only because it's a genius solution, was to make the difficulty of mining coins become one of the consensus parameters

• 6:33Speaker 01

  of the network in general, so that mining is no longer, is not something that you can do on your own, based on how many transactions or how much money or how much resources you put in, it's something that's network-wide. The algorithm for mining and the difficulty of mining and the reward for mining is determined network-wide, so that no matter how many people come into the network, the difficulty will adjust in order to make sure that the supply is fixed. This, I think, is the missing ingredient that made Bitcoin work, as opposed to the previous digital cash attempts. And the flip side of it, I don't think maybe Satoshi even was aware of what he was doing with this, but in order to make Bitcoin work with

• 7:12Speaker 01

  this technology, Satoshi may have inadvertently ended up inventing the only strictly scarce asset, liquid asset, that humanity has. It's the only thing in the world whose supply is completely independent of the demand for it or the price for it. So tomorrow, if seven people in the world are only using Bitcoin, we're still gonna have about 1,800 new Bitcoins produced. Whereas if seven billion people are using Bitcoin, we're also going to only have 1,800 new Bitcoins produced. This is entirely unique to Bitcoin. There's absolutely nothing else in the world that has this property, and it's truly astonishing.

• 7:51Speaker 02

  What do you think could take Bitcoin down right now? What's your biggest fear or concern?

• 7:57Speaker 01

  In my recent research, in the book I go, I had a chapter on how to kill Bitcoin, but you know, the usual things that we hear are things along the lines of government banning it or shutting it down, and I'm quite skeptical that these things would work. The first reason is, I think the best example is just look at the war on drugs. I mean, think of something like marijuana, it needs to be grown under the sun, and then it needs to be processed, and it needs to be moved around and distributed and spread out. And you can pretty much buy it on every street corner, well, not street corner, but in every town in the US, you can buy marijuana pretty much everywhere, even when it was fully legal.

• 8:40Speaker 01

  Prohibition never really successfully worked, and that's for something like a plant that's very labor-intensive to move around and produce. Now, think about something like Bitcoin, which offers people a monetary incentive to use it, so you know, you can have your life savings or some serious money in it. So you have a lot of incentive to use it, arguably more serious than the incentive of a marijuana smoker to smoke. And then think about just how hard it is to detect Bitcoin, or how easy it is to hide Bitcoin, or to hide that you're using Bitcoin. You don't even really need an internet connection for Bitcoin, you just need any device that can transmit and receive about two megabytes of data every ten minutes.

• 9:21Speaker 01

  So, for me, I think Bitcoin as a technology is just, it's counterproductive to think of it in terms of killing it. It's almost like thinking of killing a song. It's a song, it's recorded on millions of computers all over the world, and millions of records and CDs and whatever, and you know, if you make it illegal, you can't stop people from singing it, or memorizing it, or doing it. Bitcoin's almost like that, it's getting to the point where it's like that. The technological capacity, capability is needed to operate, to continue to become easier, arguably, and more accessible, whereas the spread of it is larger and larger. So I think direct attacks, I'm not saying, you know, they won't work, but I'm saying

• 10:05Speaker 01

  they're unlikely to work, and they're unlikely to work in the long run, completely destroying Bitcoin. My unpopular opinion amongst Bitcoiners is that the most effective way of killing Bitcoin would be for governments to use, to return to a good monetary policy. I think if we go back to the monetary system in the world, that we had in the world in 1900, if all the world's government ran a gold standard, and they allowed all their citizens free access to banking products, and we had a free market in money and banking, and people were able to sign up for institutions. That do not violate their um uh their their right to financial freedom, that do not violate their right to send or receive money or to um spy on them.

• 10:50Speaker 01

  If that becomes the case, I think that would seriously undermine the economic demand uh and the incentive for people to use Bitcoin, and that would undermine Bitcoin. So as long as the economic incentive for using Bitcoin exists, you don't worry too much about Bitcoin. But if the uh if the economic incentives go away, then that is the problem. But it's kind of a win-win situation, because if Bitcoin ends up scaring governments into improving their monetary policy, well, you know, Bitcoin has sort of won, even if itself doesn't win.

• 11:23Speaker 02

  For sure. And and so for those that don't know, maybe give us a quick uh, you know, two minutes on what exactly Austrian economics is, and then we can get into more the macro uh environment today. But first, just what what's Austrian economics?

• 11:36Speaker 01

  So, I mean, it depends on who you ask. If you ask me Austrian economics is just uh valid, correct, proper economics as it has been studied for many centuries across many cultures and traditions. It's really the classical tradition in the study of economics that has been um, you know, started started off many thousands of years ago and has evolved, and culminated in Austria around the turn of the 20th century. And if you ask other people, they'll tell you it's just a bunch of cranks who can't do math. So, you know, you make your own mind up, uh but I would recommend reading Austrians and reading non-Austrians in order to make your mind up. Don't just read what non-Austrians say about Austrians. The key difference between the Austrian School and the others is that uh the Austrian School uh having, you know,

• 12:21Speaker 01

  its methodology is just basic, the economics of studying how human beings make decisions. Why do human beings make the decisions that they make? And how, what are the consequences and implications of the decisions, of the economic decisions they make? Since the move away from the gold standard and the move towards government control of money, particularly in the nineteen thirties, this was not very useful and helpful for government. Because this kind of school of thought that looked at economics from the perspective of the individual was not very helpful for governments that were looking at managing the economy overall for macroeconomic kind of analysis.

• 13:03Speaker 01

  And so the schools of economics that became popular after government took over control of academic institutions in the West, where the schools of thought that whose main premise lies from, instead of looking at the individual, they look at society from the perspective of the central planner. And that's really where all of modern economics is different from Austrian's. Modern economists approaches economics from the question of what should the policymaker do to fix the economy, or to reduce unemployment, or to reduce inflation, or whatever. Austrian economics looks at the economic problems of the individual, and when it analyzes

• 13:42Speaker 01

  the actions of politicians and governments, it realizes that, you know, you inescapably come to the conclusion that these things cannot be helpful to the individuals it claims to help, because these things are coercive, government policies are coercive. And so this is why it's inextricably linked to libertarianism, because it's individualist approach towards economics helps you understand how individuals make their decisions, and you realize that the only way that an individual can improve their own life is if they have the freedom to make their own choices. And that imposition of choices from above, restricting people's freedom, cannot possibly help them.

• 14:25Speaker 01

  It's not possible for me to make your life better by violently stopping you from having the option to do one thing or the other. So it's a completely different perspective on how you approach the economic question. And I was trained in the modern economics which you learn at universities today, but towards the end of my PhD program, I came across Austrian economics, and it was almost like a complete conversion. I think... To be honest, the difference is, it's enormous. It's like the difference between astrology and astronomy. One is useful, it's helpful, it can help me understand the world. And it's helped me make much better decisions in my own life because it helped me understand how economic decisions take place.

• 15:07Speaker 01

  Whereas the other view, you know, the mainstream economics and those of your listeners who have taken courses in economics will find this familiar. You take the course, even if you get an A in it, the end result of it is that you have understood what these economists are talking about. But it's absolutely irrelevant to the real world. It doesn't help you understand the real world. It helps you get your grades, it helps you get your degree, it helps those economists get published and get their jobs and keep their jobs. But there's a reason nobody reads modern academic journals in economics. Completely unreadable. They're completely irrelevant to the real world. They're only relevant to the promotion of academic economists. Essentially, academic economics has become just a government-run industry.

• 15:53Speaker 01

  Where, you know, the only marker for success is if you're able to get funding from the government. And so the whole thing has, you know, a strong influence of the Federal Reserve and of the government on educational institutions. The conclusions are always favorable and pro-government in a sense. Whereas the Austrians come up with conclusions that, you know, since they're not funded by government to give government answers that it wants. They come up with more realistic and unpopular answers to questions.

• 16:22Speaker 02

  How do you see Austrian economics, if applied today, how do we transition, right? I think that the economics that were taught in, you know, most American schools and practically international schools around the world. Uh, has some key differences to Austrian economics which are outlining. Is there a way to transition back to what Austrian economics would believe is kind of the right path? Or do you feel like we're too far down, we can't turn back now?

• 16:54Speaker 01

  I mean, I'm gonna answer your question in terms of intellectually in universities and in terms of government policies. This is two separate questions. In terms of education, I think the path back is just that people are realizing you go to university and you get into a couple of hundred thousand dollars of debt to get an econ degree and you come out of that degree and all you've learned is basically a bunch of stupid trivia and a bunch of second-rate mathematics. You know, just a bunch of mathematic papers that are not quite good enough to be mathematics papers. It's second-rate mathematics, basically, with no relation to the real world and, you know, you're in debt now for a couple of hundred thousand dollars and you have no real-world skills.

• 17:37Speaker 01

  I think this kind of model in education is, it's time for it to fall apart. And if you look at, I think Bitcoin is a great example because people who are, you know, these people would take the degree, go into the real world, come across something like Bitcoin and be unable to make any sense of it because of their degree. And so when your friends ask you, "Well, hey, you've got an econ degree, but this Bitcoin", and all you have to say to them is tulips and bubbles and whatever your professor told you at university, perhaps it's time to start Googling for some alternative explanations. And this is what's happening. In particular, Bitcoin is driving people to look into economics and I think, you know, there's a reason, I think the reason behind the popularity of my book amongst Bitcoiners

• 18:22Speaker 01

  is because it's the only work in economics that can actually make sense of Bitcoin. You know, you can only have so much of deranged lunatics like Nouriel Roubini telling you it's a crazy bubble and, you know, eventually, okay, fine, we get your point, but wouldn't it be nice to try and make sense of why this crazy bubble has survived so long? You know, tulips wear a bubble for a few months, why does Bitcoin continue for 10 years? And I think, you know, this is, we're moving from educa-, education is moving away from the universities and the institutions to the internet. And that's a beautiful thing because people can learn and they can discover things on their own and it's a free marketplace of the ideas. Universities are not a free marketplace of ideas.

• 19:05Speaker 01

  Universities are a government-run, closed market, centrally-planned market where only government-approved ideas are discussed. You know, you don't have Austrian economists in the major universities in the US. They won't get jobs and their opinions aren't accepted because they're politically incorrect. You can't say that the Federal Reserve causes financial crises. You have to believe, like an article of faith, that the Federal Reserve is the only reason that we are avoiding all the financial crises that would have hit us otherwise. This is how economists actually think. So I think the free market is going to sort this out because the worthless garbage degrees that come from universities with a lot of debt are going to continue to hurt the people who do them.

• 19:48Speaker 01

  Whereas you go online, you go to the Mises Institute, mises.org, you have tons of PDFs you can read and lectures you can listen to, and you can sign up on my website now and take courses in Austrian economics. For fifty bucks, you can take a whole course. It's about one percent of what you would pay at a university. And I would say it's much more helpful and much more useful. So I think, I'm quite optimistic in this regard because the internet has killed government's monopoly on information. And I think it's only a matter of time before government, you know, government curricula and government propaganda that is taught at universities, it won't survive. And I think the internet is going to kill it and it's going to be wonderful.

• 20:31Speaker 01

  And that's part of the reason why I'm building my project.

• 20:34Speaker 02

  Got it. And so as we have seen over the last couple of weeks, there's two main storylines that I'm interested in. One is the macro global environment. You know, there's really a number of warning signs that are saying, look, there's going to be an economic downturn. And as we know, central banks really only have two tools, right? They can cut rates and they can print money. And they've done a great job of doing both of those in the last recessive periods. How does Bitcoin, in your mind, play into some of the central banking actions as we look at a potential economic downturn?

• 21:11Speaker 01

  I think so far, I would say, I think any kind of attempt to try and look at Bitcoin's price movements so far within a macro lens is probably, should probably be taken with a grain of salt. I think so far Bitcoin's been probably, it's too small to be affected by macro things. I think we're still at the point where one millionaire deciding to put some money into Bitcoin moves the market significantly. You know, we're not at the point where macro things have affected Bitcoin's price significantly. Having said that, I

• 21:49Speaker 01

  think the evidence so far seems to suggest that Bitcoin might be more of a risk-on asset. And I think in this situation, being a risky asset in the case of a financial crisis, if we do get into a recession, what happens to risk-on assets is that people liquidate them because they can't afford to be speculating on risky assets. They need to make rent and they need to eat. And so, you know, the things that you liquidate are the things that are the least, are the most risky, that are the least certain. So, this is why, you know, when the recession started in 2007, 2008, the first thing that got liquidated was the

• 22:30Speaker 01

  mortgage-backed securities and all of these junk credit instruments. The higher the risk and the more of a risk-on asset, the more you suffer during the downturn. And also, of course, the flip side is that these are the assets that make the most returns during the upturn. But, so it's, I honestly don't know where Bitcoin would, how Bitcoin would behave in its first financial crisis because we haven't seen it yet. I would probably lean more towards it still being a risk asset because just looking at the kind of people that are putting in their money and the demand into Bitcoin, I think a lot of it comes from

• 23:11Speaker 01

  the same sort of people who would invest in stocks and in high-risk financial instruments and, you know, there are a lot of tech bros who have a lot of money in Bitcoin. And you can imagine, you know, if they lose their job in their startup or there's a recession and some of the big tech companies go out of business, the people who work in these tech companies are likely going to liquidate their Bitcoins. And, you know, make rent and pay for more pressing expenses. And so you would get, because generally a recession is a flight to safety. What happens in a recession is people dump risk assets and go to more liquid and less risky asset.

• 23:52Speaker 01

  Uh, so I think possibly within the first crisis, we might see Bitcoin behave as a risk on asset and it would dump. But I would imagine that after a few financial crises, Bitcoin's value proposition as a safe haven asset, as a monetary, um, bedrock really, will begin to distinguish itself. And it'll begin to distinguish itself because it will differ from all the other kind of risk on assets. In one crucial respect, which is that all the other risk on assets are very easy for people to make. There will always be more mortgage-backed securities and credit default obligations. And there will be always, there'll always be more junk bonds. There'll always be ways for people to create more of these things, whatever it is, dot coms.

• 24:35Speaker 01

  Whatever high-risk asset is being profitable in a, in a, in a business cycle, more of it will be created. Bitcoin, nobody can make more of it. And so, uh, when it crashes and when it starts inflating again, it's only going to still be the same limited number of coins. And so that's going to create an expectation in people's mind that this, maybe I should keep a little bit of this next time there's a crash because it ended up doing better than more, most of my other risk on assets. And so I think eventually we're going to see Bitcoin move towards being more of a risk-off safe haven asset. But I wouldn't be sure that it would happen with this financial crisis.

• 25:15Speaker 02

  I'm not sure. Did you read, uh, the recent writing that Ray Dalio had about, um, the paradigm shift?

• 25:22Speaker 01

  Um, no, I did not, unfortunately. I saw it yesterday. I skimmed through somebody's comments on it.

• 25:28Speaker 02

  Yeah, basically what, what he, you know, makes an argument for, it's about 10,000 words, I think, that he wrote up. And he says, look, if you look over, uh, you know, about a hundred, 120 years, uh, every decade, there's either bull markets or bear markets, right? And there's kind of an ebb and flow or a paradigm shift, uh, every, uh, decade or so. Uh, and he's basically making the argument that we are entering, uh, or coming up on another paradigm shift of which would have that economic downturn. In that he really, really focuses on the idea of the cuts and the printing of money through quantitative easing.

• 26:11Speaker 02

  How likely or what's your perspective on if we do enter this economic downturn, like the central bank's reaction? Is it the same old tools just on steroids or do you think that they've got some other trick up their sleeve that they'll attack?

• 26:26Speaker 01

  I don't have any special insight into what central bankers do. I don't have any central banker friends and after my book, I'm pretty sure I never will get any of them. So I can't really speculate as to what they will do, but I would imagine, you know, it's going to be more of the same kind of logic, which is, you know, once you've started building growth based on inflation, then you just need to keep finding ways for making more inflation to keep the growth going. It's like a Ponzi scheme. Once you've started that, you need to just keep finding more and more people. So the problem that the world's been facing now is that, you know, everyone is already up to their eyeballs in debt. So how do you get more debt so that we can get more growth? Well, you know, the answer is you shouldn't make your growth

• 27:10Speaker 01

  based on debt in the first place so that you don't end up in a place where everyone is up to their eyeballs in debt. And now you need, you can't find another way of stimulating growth. If growth wasn't based on debt in the first place, we wouldn't be in this bind. So, you know, it's the old Irish saying of somebody who's lost asks for directions and, you know, the answer is I wouldn't start where you are. Don't get lost here. Don't get to this point. So I don't know what they're going to do and what tools they're employing, but of course, one thing worth remembering is that, yes, these tools are highly inflationary, but these tools are of course used in order to counteract the deflationary crash that is brought about by the recession. In fact, the recession itself is a deflationary crash

• 27:54Speaker 01

  where people are dumping their risk on assets and going to the safe haven assets as I was mentioning earlier. So, you know, as a recession happens, what you would expect is that all these other assets would collapse and the dollar would rise in value. So the printing of money is really The attempt to try and put that inflationist Humpty Dumpty back together to, you know, blow the value into all of these dead risky assets again, rather than have it all concentrated in the base currency. So it's not necessarily going to succeed in being inflationary. As we've seen over the last 10 years, central banks can't even do inflation anymore. This is how, how much, you know, they've become so incompetent,

• 28:39Speaker 01

  they can't even get inflation when they want to, which is the one thing that you could count on central banks to deliver. But yeah, we might get a deflationary environment. Their attempt to inflate the bubble might fail.

• 28:49Speaker 02

  And so if the global macro environment is kind of, you know, topic number one, right? So that's one of the key things to keep an eye on when it comes to Bitcoin. I think the second topic that I'm specifically interested in since you have opinions on is all of the governmental hearings that are going on really around the world, but most recently in the US. Start with Jerome Powell, who wasn't involved in the hearings necessarily, but had some comments on the global reserve currency, kind of US dollar status in that role. Maybe just give us an overview of what he said and your thoughts there.

• 29:29Speaker 01

  I mean, I thought it was amazing to hear him say those things because I generally agree with what he said. He said that the role of the US dollar as a global reserve currency offers the US, you know, it entails privileges and responsibilities. And I think he's correct. Obviously, you can print money for free and just, you know, you export pieces of paper to the rest of the world, not even paper, digital dollars now, and you import actual goods and services for it. So that's a nice deal. It sounds like it's a nice deal. But of course, I think the long run impacts of it are quite destructive for America and people who think. I I I I find it quite amazing that there are people who think of it as a sort of

• 30:13Speaker 01

  yeah, well, you know, this is some sort of jingoistic patriotism that, yeah, we're American, we can print all of the world's money and the whole world has to work for our money. I mean, it sounds nice if you think the world is a pissing contest, but it's actually quite destructive for the US economy. It's destructive because it means that your government basically has no restraints and it can do whatever it wants, which leads to all the incredible overreach of government in all aspects of people's lives. Um, you know, from surveillance to economic controls and all of these things. Yet, people think this is just a normal functions of government. A hundred years ago, none of this bullshit existed. You know, a hundred years ago, under the gold standard, there was no war on drugs,

• 30:56Speaker 01

  there was no mass surveillance, there was no financial surveillance, there were, the world was a much freer world than what it is today. And that was how the, that was normal. What we have today is what's not normal. And it's not normal, you know, because these government functions are not things that are demanded by money, by markets, and they're not things that are even demanded by voters. They're things that government can only get away with doing because it has a magic printer that clears it from the consequences. And so it's just another government monopoly that allows the government to abuse its users. And this is why you get all the abuses of law enforcement and this is why the overreach of government can be so big in the US today because government runs in a magic world

• 31:41Speaker 01

  in which opportunity cost doesn't exist. There's no limit on how much you can make of things. So fiscal, as he was saying, you know, that this just allows the government to live in fiscal la la land where even, you know, crazy ideas like modern monetary theory and all these, um, you know, Keynesian and Marxist concepts of economics where money is just something that the government can make, these crazy nonsense ideas are becoming popular again in the US, which is, you know, it's, it's, it's, it's, it's a significant intellectual regression to find people talk about this in public and not get laughed at. It's, it's quite amazing and worrying and disconcerting.

• 32:24Speaker 01

  Um, and I think that's the disadvantage of having a global reserve currency. And the second one being that it's destroyed the US's, um... Industrial and competitive capacity in many ways because it's just not profitable to produce things in the US anymore. Why produce things in the US when you can just get low interest rates and you know, basically that's what all large companies in the US do today. They just take low interest rate loans and they invest in companies because they have a lower funding cost than anyone else. So you think of something like IBM today. What the fuck does IBM, sorry, excuse my language, but what the hell does IBM do these days? Anyway, it used to make computers today. It just, you know, all we see is just a bunch

• 33:07Speaker 01

  of press releases and advertisements and consulting and so on. But really ultimately what they do is they take money at a very low interest rate and they buy hundreds of companies, speculate on them, they offer consulting services, which basically, you know, if you look at their blockchain stuff, you know that most of the stuff is just largely make work. It's, and so that for me is a, is a result of the reserve currency. It's a result of the US economy being separated from the reality of economics, from the reality of opportunity costs by the fact that we have this magic printer. It's destroyed the sense of fiscal and financial responsibility for the government, but also for individuals and for businesses. And I think in the long run, it's quite destructive. You know, the

• 33:52Speaker 01

  US became the world's strongest economy, not by using fiat money. It did that by using a gold money. That's how the US was built. And I think a return to hard money would be much better for the US. And it's, it's, it's quite amazing that Powell says he doesn't see the US's Federal Reserve notes surviving as the global reserve currency forever. I think that's a very smart thing to say because yeah, it's, it's, it's a completely unsustainable and unbalanced situation where one government prints the money for all the world's governments to use. It's not sustainable and you know, Americans are not happy with it and the rest of the world are not happy with it. And I think there's a very, very simple technical solution for it, which is to utilize a neutral money,

• 34:37Speaker 01

  not a government money.

• 34:39Speaker 02

  And so going on that, right, with this idea that there is this neutral money. I think that a lot of people would identify and understand, you know, take China and Russia, for example, who have openly said multiple times that there is a high cost to them using the US dollars, the global reserve currency. I think that they've even agreed to conduct some bilateral trade, not priced in dollars and instead using other currency. To me, it feels like, you know, once you understand what Bitcoin is and how it works, it is almost

• 35:19Speaker 02

  like a game theory that plays out where people will start to elect to use Bitcoin or trade settlement between countries because what you get is you say, look, we won't use my currency because your country doesn't trust that I'm not manipulating it and I'm not going to use yours because I don't trust that you're not manipulating it. So let's go use one that we know neither one of us manipulate and therefore we begin opting into this non-government controlled currency, really out of game theory more than anything else. Does that sound right? Okay, so that does sound right to you?

• 35:52Speaker 01

  Absolutely. I think I've tweeted something along the lines of Bitcoin's killer value proposition is that, you know, the Chinese don't want to use the dollar, the Americans don't want to use the yuan, and obviously the Americans would prefer to use the dollar, but, you know, the whole world doesn't like to use the dollars. So Bitcoin being, since nobody controls Bitcoin, Bitcoin is the only one that's acceptable to everyone. It's nobody's first choice, but it is, it is an acceptable choice for everyone and that's just going to be more workable than trying to continue to coordinate between 100 selfish governments, each one wanting to have its own national currency. However, I'll just, I'll say, I

• 36:32Speaker 01

  think maybe where I might disagree is that I don't see this happening from within central banks. I see it developing independently of central banks. In other words, people in China and Russia and the US and all over the world, when they're trading with one another, they're just going to start to opt out of their government's central bank's system for trading and start using mechanisms for settling trade using Bitcoin. I think Arguably more likely scenario for Bitcoin to grow than central banks adopting it.

• 37:04Speaker 02

  Got it. And so really what ends up happening is it's you can't change the people who are addicted and benefiting from the existing system and the printing of money. Instead, what you do is you almost go to the end user and the end user begins to adopt it and you work backwards from the end user, hopefully back to the central banks, etc.

• 37:25Speaker 01

  Hopefully not back to the central banks. I mean, hopefully, I think, you know, the subtitle for my book is "The Bitcoin Standard: The Decentralized Alternative to Central Banking." I think we can just replace central banks. Instead of having a world with, you know, maybe a couple hundred central banks, but really one central bank, which is the Federal Reserve, because they all just are branches of the Federal Reserve, because they all function with its dollar. Instead of having a world with one central bank, Bitcoin allows us to have a world where the most centralized layer of our monetary system consists of thousands or tens of thousands of central banks all over the world, none of whom can change the monetary policy, and all of whom are able to perform final international settlement and clearance of transactions.

• 38:05Speaker 01

  I think if this ends up being what Bitcoin does for us, it's going to be one of the most significant inventions ever.

• 38:12Speaker 02

  Jerome Powell obviously had a bunch that say, "Let's move on to Steven Mnuchin, the Treasury Secretary in the US, who has made some pretty bold claims. One, around Bitcoin and how it's being used, but then also, two, the fact that he essentially said the US dollar isn't really used for illicit activity or money laundering, etc." Now, any thoughts on his recent comments?

• 38:39Speaker 01

  I mean, I hope that he's saying that because he's going to decriminalize all the millions of people who are criminals because they've used the US dollar with drugs. It's completely preposterous and absurd thing to say. Millions of people are in jail for trading drugs with dollars. All of the world's biggest financial crimes have been done with dollars. It's quite astonishing that people talk about Bitcoin being used for crime. Bitcoin is used for crime, possibly, if it is used. I generally think it's massively overstated, and I think Bitcoin is bad for criminals, particularly bad for criminals. But, you know, at the end of the day, even if they are using it, it's the small-time criminals that are using it.

• 39:24Speaker 01

  All the big boys, all the real criminals. You know, they only bank with the best. They don't have time for small peanuts like Bitcoin. They bank with JP Morgan, HSBC. You know, that's, uh, I was just talking to somebody who works in compliance and he tells me, you know, now the entire business model is just, uh, has the banking fines baked in as part of the operational costs. So banks go and do all of the things that they know are illegal and they just budget the fines they're gonna have to pay as part of the cost of doing business. So effectively, uh, and I think this is just always the case with all kinds of government monopolies. You know, the, the kind of simplistic idiotic take that Keynesian economics tries to teach people at university is

• 40:09Speaker 01

  we find out that X is bad, government passes a law that says X is illegal, and then X doesn't happen again. And this is really a very childish way of looking at how the world works, you know? Why don't we just pass laws that say it's illegal for children to fall from windows? And then now we won't have children falling from windows anymore. You know, if you just make it illegal, it won't happen, right? Well, no, because gravity will happen and if you put a boy outside of the window, they're gonna fall. That's just how it is. In fact, if you pass a law that says it's illegal for children to fall out of windows, you know what's gonna happen? A lot of idiot parents are going to throw their kids out of the window thinking the kid's not gonna fall because government passed a law that says the kid can't fall.

• 40:51Speaker 01

  So, you know, I, I, the, the, this idea that legislation is just, uh, going to solve the, the problem, I think is ridiculous. And I think the dollar is used for criminal activity on the, a- a- and putting a monopoly body in charge of determining what is criminal and what isn't is just an invitation for abuse. And so right now, you know, the war on drugs has no interest. And I, I, I remember seeing an interview with somebody, um, who said, you know, we are no longer at the point where we care about trying to reduce the flow of drugs into the US. We're just there to try and reduce the power of the, uh, cartels. And it's astonishing because, you know, the only thing that gives the power to the cartels

• 41:35Speaker 01

  is the fact that the drugs are criminalized. And so all of this way of making criminalization and, you know, having government oversight and control, whether it's with drugs or with banking, all that it really ends up doing is strengthening a monopoly and allowing that monopoly to misbehave. And so we see this with banks. We see how, you know, HSBC and JP Morgan are constantly in trouble for lobbying, for money laundering, and yet life goes on. You know, they pay their fine and life goes on. Well, I think if we actually had a free market system, I think it would be far, far, far harder for criminal organizations to put their money through it because your own bank would have an interest in never being found to be associated with criminals because

• 42:20Speaker 01

  it could lose its customers. And so they would behave. In a free market, they'd have far stronger incentives than they do under a government-controlled monopoly system that just sells them indulgences. It's like, you know, how the church used to sell people homes in heaven. This is it. You just go to the regulators and you pay them money and then you can launder all the Mexican drug cartel money that you want.

• 42:40Speaker 02

  What's your take in terms of this idea that money laundering could, maybe it doesn't completely go away, but if Bitcoin becomes adopted on a global basis, it actually deters money laundering because money launderers don't want to use a currency that can easily, the transactions can easily be seen. Does that sound like there's a belief to that or do you think that that's more of a hatred?

• 43:08Speaker 01

  I mean, I think, I think there is definitely something to that. I don't think Bitcoin's good for criminals in general because I, I mean, you know, it's, it's a very common misconception that Bitcoins is anonymous, that the media has helped to feed. And a lot of people are in jail today because they thought their Bitcoins are anonymous. So, you know, they went on Coinbase, bought some Bitcoins, transferred them to their drug dealer, and then a few months later, the drug dealer gets busted, they get tracked down, and well, guess what? It's not that anonymous. You actually would have been better off using a gift card or some other kind of payment. Uh, so I I don't think it's very good, you know, generally, uh, rule one of committing a crime might be, don't leave a trace of it on a public ledger,

• 43:52Speaker 01

  stored over tens of thousands of computer all over the world. So generally, I would not recommend it, you know, I think criminals are better off sticking to the tried and tested criminal currency of choice, the US dollar. That's just, nothing quite has the, uh, bank for the buck for the criminal like the US dollar and all of its, uh, mass, uh, money laundering institutions that we mentioned. Uh, but, uh, but in general, you know, I doubt that Bitcoin will be able to scale to the point where, uh, you know, mass payments will be carried out on-chain. I think the point of my book is that Bitcoin's on-chain, Bitcoin's blockchain itself, on-chain

• 44:34Speaker 01

  transactions are going to be more akin to large settlement transactions, accounting for small payments happening, um, being netted effectively between, uh, people that, between, uh, between entities that can settle on-chain. So in other words, if I need to buy something from you, we're not going to put it on a, um, the Bitcoin blockchain, I'm gonna buy it from your bank, you know, I'm gonna send the money from my bank to yours and they'll settle with one another on the Bitcoin blockchain at the end of the day or the month. So I think eventually, uh, the way that this is going to work out, it might just be that, you know, we're going to get privacy, not because everyone's going to be able to buy their drugs on the Bitcoin blockchain, we're going to get privacy because we're gonna have free market banks that will give you your privacy if you want it, because it's

• 45:19Speaker 01

  a free market good, and anything you want on a free market, you will get. So if you wanna be in a bank that won't ask you what you do with your money at all, you can treat, you can find a bank like that. If you'd like, if you, if you feel that you want to be in a bank that does not engage in any kind of business, then yeah, you're free to go into a bank and say, well, for instance, I don't want this, uh, I don't want to be... And I don't want anybody else in this bank to be using drugs or buying alcohol or using it for pornography or whatever. And there will be banks that will just be very clear and say, you know, we don't process payments for pornography or drugs or alcohol or whatever. So I think we're gonna get this kind of world in which these things can be provided by the market.

• 46:03Speaker 01

  And in that kind of world, I think, you know, the need for money laundry will probably be reduced because the ability of government to continue to extract money from people is going to be undermined by the fact that they don't have a money printing press. So I think that if you look at government, how it functioned in the 19th century, without the printing press, there was a lot more liberalism and a lot more individual freedom and there was a lot less money laundering. You don't hear about money laundering in the 1900s. It wasn't such a big deal because moving, your money was yours, you didn't have to launder it. I think that's really how Bitcoin solves this problem.

• 46:43Speaker 02

  Got it. I want to go to the current Senate and congressional hearings in the US on Libra, which then eventually touched on Bitcoin. High level, your perspective on what you saw kind of play out and then I'll ask some more pointed questions.

• 47:00Speaker 01

  I'm also quite surprised that all of the undercover Bitcoin maximalists in the US Congress, I presume, I presume a lot of my anonymous shitposting followers on Twitter are actually members of Congress now and because they seem quite familiar with all the memes and the stuff, so that's very encouraging. But yeah, I think the amazing thing about it was that Libra has turned out to be an incredible gift for Bitcoin. I think very few things have done more for Bitcoin awareness than Libra because it's really seriously and vividly driven the point home for people of why Bitcoin is different.

• 47:40Speaker 01

  I mean, it's like, it's almost like it's an elaborate joke planned by Bitcoin maximalists in order to make the world understand what we've been saying for so long. You know, the difference between Bitcoin and all these other currencies, there are all these other currencies, there's a couple of people sitting in a room somewhere that could decide to change everything. It's true for Libra, it's true for... All the other altcoins, and it's true for government money as well. And that's really why Bitcoin is unique. Bitcoin has a fixed supply, which means that nobody can mess with the supply, which means that the market and market demand only is the only thing that determines the value on the market. So Bitcoin is purely free market money. And I was, I was very happy to see Congressman Davidson make this exact point,

• 48:25Speaker 01

  which is as long as nobody controls the supply, nobody can control the price. That's why Bitcoin is different. It's a neutral protocol. Um, so I think this point being driven home is very, very important. I would expect it's going to take another decade or so for it to sink into most people's heads. But once it does, Bitcoin's value proposition will become clear and more and more people will start using it and it's going to grow into that role. Uh, that, that, that's generally how I see it. Because a- as you said, you know, we're going to see the same dynamic, the game theory with corporations. So Facebook would obviously like to run a payment system based on their own money. Google would like to do the same and Apple would like to do the same. But eventually, you know, their cu- their customers are going to want to trade with one another.

• 49:10Speaker 01

  So what do you do? Obviously, each one of them would like to be their own, uh, protocol, but they're not going to get along. Wouldn't it be nice if there was some sort of mutual protocol that allows them to interoperably send the money amongst one another? Just like you can interoperably send emails from your, um, Apple phone to a Google account or whatever? Yeah, the way that interoperable things work is that they are run on standards, on protocols that nobody controls, on neutral protocols. And that's what Bitcoin is.

• 49:40Speaker 02

  And, and so the three comments that I think really caught my attention, right? The first was, um, I think it's Patrick McHenry, the representative from North Carolina, who, uh, really made a point that Bitcoin is unstoppable. Where I thought, I thought that, uh, there's plenty of people who have hit around it, but him blatantly saying that, uh, over and over again, um, and then saying, look, and the people who have previously tried to, um, stop Bitcoin have ended up failing, was a really important moment that got, uh, acknowledged and kind of put out there so bravely right out of the gate.

• 50:17Speaker 01

  Yeah, absolutely, and I think that is beginning to sink in. And it's very important because, you know, if you're a congressman, and at the end of the day, this is politics, and you're trying to maximize your own, you know, the own utility that you get from this job, you know, you have to pick your battles. And so, picking a battle against something like Facebook, well, you know, if you're a congressman, and you decide to go after Facebook, you get to drag Mark Zuckerberg, a billionaire, into Congress, and you get to boss him around and talk to him like he's a little boy, and that's going to make you very popular. It's going to make all of your constituents very proud of you, and it's going to be great optics for the camera. And you can, you know, sound indignant and pound the table

• 51:02Speaker 01

  and talk about people's pictures and privacy and so on. And that wins you votes. You know, you take it out on him, and then you can destroy his currency. You can hurt his company. It's very easy for them to go after Facebook. But if you try to do the same thing with Bitcoin, A, there's nobody to put in the stand. There's nobody to go after. There's nobody you can blame. You know, nobody is responsible for Bitcoin. I mean, you can call a bunch of Bitcoin maximalists and put them to testify in Congress, but all they'll do is just tell you to eat a goddamn steak. There's not much you can get out of us. There's nobody responsible for Bitcoin. So, it's bad optics because there's nobody for you to grill. There's no Mark Zuckerberg evil person for you to win votes by harassing.

• 51:46Speaker 01

  And you're not going to get anything out of it. If you try and attack Bitcoin, it's much harder to get anywhere than you would if you try and attack an ICO or if you try and attack Facebook or this coin or whatever. So, I think politicians, you know, are realizing this is not a battle that is worth picking. It's better for us to just go after the other coins. And, you know, the more this goes on, the more it's just going to be an unquestioned assumption that, you know, okay, there's Bitcoin, Bitcoin is there, but, oh, let's go after Libra. Let's go after Google Coin. Let's find out what Apple is doing with their thing. But, you know, Bitcoin is just going to be the giant elephant in the monster that people just don't know what to do about.

• 52:30Speaker 02

  For sure. The second comment that really caught my attention, and I forget who the representative was, but he basically held up a dollar bill, right? Or a US dollar, fiscal dollar. And he said, you know... Anyone who picks this up off the ground essentially can use it. There's no censorship. There's nobody who can stop you from handing a physical dollar to anybody else as long as you have a dollar in your possession. Many of these centralized tokens, censorship gets introduced and frankly, I think that everyone realizes they will be subject to political pressures, right? And he brought up the example of a couple of conservative folks who have been banned from Facebook or other platforms.

• 53:13Speaker 02

  And the question really was like, you know, if you ban somebody from your platform, will they still be allowed to use this currency? Right? And the question or the answer was really, we don't know yet, which wasn't no. And so I think that again, really highlights the difference between Bitcoin and some of these other proposed cryptocurrencies.

• 53:37Speaker 01

  Yeah, and it's not, it's not per se the fault of these other currencies or the fault of Facebook. It's just when you've put yourself in that position, you can, you know, because it's not a protocol, because it's not like a dollar bill that's in somebody's hand that they can do with it whatever they want, because you're going, you're making them go through your own servers and your own platform, then in a sense, yeah, you are responsible for what those people do. So, you know, on the one hand, they would like it to be uncensorable, open to everybody. But on the other hand, if it starts getting used for child pornography or terrorism, they can stop that, which means that they are liable for it if they don't. And that's why you don't make your own shitcoin.

• 54:22Speaker 01

  That's why you use Bitcoin, because Bitcoin is a neutral protocol. If a terrorist uses Bitcoin, that's not my problem as somebody who uses Bitcoin. But if a terrorist uses Libra Coin, that is Facebook's problem, because it's your coin, it's your platform. And, you know, these things, a few years ago, when Bitcoin Maximus would say this stuff about why Bitcoin is different from the altcoins, you know, these didn't make sense to most people and people would tell us, well, you know, we're not going to get to that. And well, it is getting to that. And we're seeing the importance of these design aspects in Bitcoin and we're seeing just how vital it is that, you know, this whole week goes by and all this storm and the president tweeting about Facebook and Bitcoin and all that. And at the end of the week, what happens?

• 55:05Speaker 01

  Well, we know that Facebook Coin is in deep trouble. We know that Facebook is probably not gonna have an easy time launching their coin. And Bitcoin, it's exactly where it was a couple of weeks ago, a couple of months ago. Pretty much the same, new block every 10 minutes, doesn't care.

• 55:21Speaker 02

  Yeah, the part to me that um was the the third comment, and you mentioned the shitcoins, was uh when the congressman asked Melton to describe the difference between Bitcoin and the shitcoin. And it was this weird like cultural moment where it felt like the depths of the depths of Bitcoin Twitter had made its way into the halls of Congress. Right, I was like, what is going on like?

• 55:51Speaker 01

  Yes, absolutely. I mean, this is something that I struggle to communicate on my own Twitter account. I mean, my own mentions are full of people that are always, wait, no, but how could you say this? No, but that other coin is this and this and that. And and and he's so wonderfully cut through all of the noise and the hype. It's just get to the key point, which is that, look, we've got enough track record on Bitcoin that you can credibly make the claim and not get laughed at if you say nobody controls Bitcoin. Because we saw in 2017, the majority of Bitcoin businesses and many Bitcoin holders and many Bitcoin developers got together and said, you know, miners as well, and people who own the hash rate and people who produce the hash rate, all got together, a majority of them, and said, we're gonna change just the block size.

• 56:34Speaker 01

  And they couldn't. So that really will, you know, I think that's the most important historical event in Bitcoin. Because it'll always allow us to point people at it and say, look, if you want to tell us that Bitcoin can be changed, on us is on you to prove to us how you are going to be able to change it when, you know, all these people weren't able to change it. And remember, you know, this was two years ago, Bitcoin was smaller back then than it is right now. So it was easier to change back then than it is now. So now it's just getting harder and harder, and it's just becoming more and more unlikely that you can uh change it. Uh but no altcoin has anywhere near that. I mean, no altcoin has gone through anything remotely contentious even, if you think about it.

• 57:18Speaker 01

  It's very, very little contention, because altcoins are more like a startup. It's a group of people that are building their own project. And so, yeah, there are maybe internal struggles between those people. But there's one chain of command at the end of the day, and things just... Run and go by and continue to operate smoothly. Um, I, I, I'm quite amazed at, at the fact that he really pinpointed that point and Milton did a great job, um, explaining it to him.

• 57:46Speaker 02

  For sure. Yeah. And look, you know, if you think of Libra, for example, and Calibra, um, or some of these other people have built, uh, I, I know a number of people who are working on the products at Facebook, um, their hearts in the right place, right? It, it's, I think you said it perfectly earlier. It's not their fault that they face some of these challenges. It's just the fact that they are working at a centralized company that, you know, I think we saw this past week, um, a lot of politicians either one, really don't like them or two, uh, find it easy to attack them for, uh, campaign reasons, right? And so it's, um, it's pretty incredible that, uh, Bitcoin was created by an individual

• 58:28Speaker 02

  or a group of people, uh, put out into the world, has gotten the adoption that it's gotten to today, and we still do not know who the creator is. And, um, I think that that has been a massive benefit for Bitcoin, uh, that just is almost impossible to replicate anywhere else.

• 58:47Speaker 01

  Absolutely. And I think, uh, uh, many people have said this and I say it, I think if Satoshi stuck around and if he wasn't anonymous, I think Bitcoin wouldn't have worked. I, I would not have been interested in Bitcoin in 2011, 12 and 13 if Bitcoin was a bunch of people who sat together on a table and decided what's going to happen with the next block, you know? The fact that it was just this piece of software that worked on its own with whoever chose to use it and didn't rely on anyone is what made it interesting. And that's why I find it enormously hard to take any altcoin seriously. It's just, you know, sure, you've got a bunch of people who sat together and can make a bunch of code to do a bunch of things that look like Bitcoin, but you're missing the, the, the fifth element, the, the, the quintessence of it, the, the, the magic juice that makes

• 59:32Speaker 01

  it, uh, run, you know, the, you can, you can put all the parts together, but you need the special lightning to make Frankenstein start moving around.

• 59:41Speaker 02

  For sure. What, um, looking forward, what are the one thing that you're most excited about? And the one thing you're most concerned about, uh, for Bitcoin?

• 59:49Speaker 01

  Excited? Hmm. Well, I mean, uh, generally, I, you caught me by surprise. Generally, when I ask, uh, answer that, I just say, you know, the next block. That's it. As long as the next block comes along, then I don't want anything else. As long as we get a new block every 10 minutes, that's all that there is. Concern, I think, um, I think that the, the, probably the main concerns relate to issues of, um, custody and key ownership and people being able to manage their keys. Uh, there are no magic solutions to this, just people need to develop, uh, better, uh, technical hygiene, essentially, better ways of understanding how to keep their data safe and how to keep their information safe.

• 1:00:34Speaker 01

  And I think, you know, we need, uh, we, we need, uh, the market to introduce more solutions. We need more entrepreneurs working on, uh, user-friendly solutions that are safe for custody that allow people to remain in charge of their money, um, and not have the risk of it having, or of it being confiscated or inflated or stolen. While at the same time, I think the challenge is to make sure that that money is, uh, you know, that, that, that people have access to it, but it's also safe. So you don't wanna just, uh, you know, you, I think as Bitcoin enters, if it continues to grow, the, the, the model of people just keeping treasures in their backyards or in their homes,

• 1:01:17Speaker 01

  uh, it's, it's, it's not going to cut it. We need, um, you know, we need something that's more safe and we need something that's more scalable and that's more functional, that integrates with payment mechanisms. And a lot of companies are working on that. And that's, uh, well, it's not so much a concern, I'd say, possibly also what's, uh, most exciting.

• 1:01:37Speaker 02

  For sure. Before I finish up, I always ask a rapid-fire set of questions. Uh, most important company in Bitcoin today?

• 1:01:45Speaker 01

  Oh, tough one. Hmm.

• 1:01:48Speaker 01

  Well, I think I'm going to shamelessly plug a company that I have invested in myself, because I genuinely believe they are possibly the most important.

• 1:02:01Speaker 01

  It's called Upstream Inc. and it's run by Stephen Barber from Alberta in Canada. And what he's building is a, basically, a fixed, a ready solution in shipping containers that can be installed on oil fields, and that solves the problem of oil, of the gas flares at oil fields. So, most oil production as a by-product will produce methane gas. But that methane gas is too cheap to transport, because it's, you know, it would cost more to transport it to a place where it's usable. And so most oil fields end up having to burn that methane on-site, and so it's just burning money, because it's, you can't do anything else with it, because, you know, the oil field is in the middle of nowhere and there's very

• 1:02:45Speaker 01

  little oil demand, very little energy demand in the oil field. So Barber and Upstream Inc. will get you a shipping container that you put in your own oil field, and that will turn all of the methane into, use all of the methane energy for mining Bitcoin. So it'll make your oil field much more profitable and it'll reduce the amount of pollution and burning that your oil field does, and allows you to earn Bitcoin. And I think the value of it is, you know, the, the, obviously, this is not just important because it's profitable. I think the real value proposition here is that it's going to, number one, make Bitcoin mining far more distributed and robust, so

• 1:03:26Speaker 01

  that it's going to get much, much harder to try and attack it if you want to attack it, because you're gonna have, you know, a very large number of very isolated sites mining from all over the world. You know, oil fields in Norway and Nigeria and Saudi Arabia and Russia and Alberta and Texas will be connected and mining Bitcoin. And that's just going to make it very hard to target mining systematically, so it makes Bitcoin safer. And I think the long-run impact of just... But in general, just the idea of spreading Bitcoin mining around away from civilian

• 1:04:06Speaker 01

  centers and away from competing for energy with civilians or industrial facilities towards going to places where energy is at surplus. That's, I think, going to be one of the most revolutionary things that Bitcoin does because it's just gonna facilitate so much more innovation in exploration for energy and so much more utilization of off-grid energy sources that's gonna make us much more robust in terms of our energy sources and far less reliant on government grids. I think this is a very underrated point. Governments, you know, they make grids centralized so that they can force people to rely on them and they want you to join their grid.

• 1:04:48Speaker 01

  And Bitcoin is going to finance so much mining operations on energy off the grid that I think it's gonna significantly decentralize energy production as well. In the long run, I think this is an enormously important thing and that's why I'm really excited to be invested in this company.

• 1:05:03Speaker 02

  Yeah, you bring up some great points there. The two that I, or the one question I always get from the institutional investors is the environmental question, right, of hey, Bitcoin really consumes a lot of energy, why is that? What are your thoughts? And I always try to describe to them the economics of mining and how the, you know, driving down the cost of power leads to better economics for the miner and where do you find the lowest cost power? Do you use renewables? And so there's this like almost global hunt for cheap, efficient and sustainable energy in order to participate in the grid and have the best economics, which I think one is driving a lot of adoption of certain energy sources, which is good.

• 1:05:48Speaker 01

  Yeah, absolutely. I mean, Bitcoin, Bitcoin is basically out there as an announcement saying to anyone in the world, if you have electricity that you can produce at less than five, well, to be accurate, maybe four, three cents per kilowatt hour. You can print money if you develop that energy source. And so, anyone in the world who has access to an energy source that's cheap, because of Bitcoin, now has the incentive to develop it. Most cheap energy sources are only cheap because they're far away from from demand and because energy is expensive to transport. And so Bitcoin allows you to transport that energy without having to build the infrastructure. You don't need to build power cables. You don't need containers or oil pipes

• 1:06:32Speaker 01

  to take the energy out of your location and send it there. You just need an internet connection that sends hashes and zeros and ones. So you're exporting your energy in the form of the hashes and the cryptography, the cryptographic hashes that the miners perform. It's the cheapest way to sell energy. So it's amazing. It's going to lead to massive development of cheap energy sources. And, you know, people underestimate just how much better that's going to make people's lives.

• 1:06:57Speaker 02

  Yeah, it's actually how I got really, really deep into Bitcoin. Was my partner and I, we both made an investment. He made an investment much earlier than I did into a company called PRTI. And what they essentially do is they have an off-grid energy source. They take car tires. They get paid to take them in a waste management model. They both put them into reactors, burn them in what they call thermal demanufacturing. So basically breaks down at a really high heat all of the materials. And they get oil, steel, carbon and syn gas on the back end. They sell the oil and the steel as a commodity. They take the carbon and syn gas, turn it into power through a turbine.

• 1:07:41Speaker 02

  And if you look at the business on a pro forma basis, the business breaks even on unit economics by getting paid to take the tires and install the oil and the steel. So you essentially have zero cost power, if you will, right? Kind of an air quotes. And so rather than sell it into the grid, we started building rigs right there on the site. And we always joke that by vertically integrating an off-grid energy source with crypto mining, which are two, in many cases, unrelated fields and interests, you get this really interesting advantageous mining facility. The problem in that business is it can't scale to 500 megawatts of power tomorrow.

• 1:08:26Speaker 02

  It kind of costs intensive to build, but I think it's a perfect example of the type of ingenuity that people are going to go to get more power.

• 1:08:36Speaker 01

  Yeah, and the nice thing about Upstream is doing is that it can scale to 500 megawatts. It's just that they won't be in the same location. So you just send those containers all over the world and we can get many, many, many megawatts running on this.

• 1:08:50Speaker 02

  For sure. What's the one regulation that you would change or improve if you could?

• 1:08:56Speaker 01

  Regulation on Bitcoin? I mean, my view is that these kind of things don't really matter because if you make regulations harder than you drive people towards Bitcoin, you make it easier, then you also drive people towards Bitcoin. So I think Bitcoin is in a position of strategic superiority that I don't pay much attention to regulation. But of course, it does matter for Bitcoiners. So obviously, any kind of criminalization anywhere in the world, I would like to see it removed because I don't want to see any Bitcoiner go to jail because they did some math.

• 1:09:26Speaker 02

  Absolutely. What's the most important book you've ever read?

• 1:09:30Speaker 01

  Can I say mine? No, I'm kidding.

• 1:09:33Speaker 02

  Usually I do have to say to people, but you cannot say your own.

• 1:09:38Speaker 01

  Well, I mean, it's a very tough one. A lot of books have influenced how I think. It's really hard to name one, but can I just name an author instead of a book?

• 1:09:52Speaker 02

  Yes.

• 1:09:52Speaker 01

  Yeah, so I'll just go with Marty Rothbard. Marty Rothbard's works have been the most influential in changing my way of thinking about the world.

• 1:09:59Speaker 02

  Before I end, I always let the guest ask me one question, but we've got to talk about aliens first. Believer, non-believer, any thoughts there?

• 1:10:10Speaker 01

  About what?

• 1:10:11Speaker 02

  Alien.

• 1:10:12Speaker 01

  Aliens?

• 1:10:14Speaker 02

  Yeah.

• 1:10:14Speaker 01

  I have no idea.

• 1:10:16Speaker 02

  No idea?

• 1:10:17Speaker 01

  Yeah, I mean, it's not something that I think a lot about. I mean, if they show up at some point, I'll figure out what I have to do, but until then.

• 1:10:27Speaker 02

  That might be the most honest answer anyone's ever given.

• 1:10:32Speaker 01

  Yeah, I try not to think too much about things I can't control. So that leaves me with very few things to think about.

• 1:10:39Speaker 02

  That is fair. That is definitely fair. What one question do you have for me to attend it?

• 1:10:43Speaker 01

  The question everybody wants to know, when moon?

• 1:10:48Speaker 02

  No, look, here, I'll answer something seriously that's tangentially related to that, which is, I continue to think about this framework of, take 2017, right? Kind of the peak of the last bull market after the halving. And I think there's probably a lot of people who thought, you know, I don't know, $5,000 Bitcoin, $10,000 Bitcoin, but we got to 20, right? And it kind of, I think, exceeded the expectations or predictions of many people. And it was all retail driven. As we go into this next bull market and halving and kind of the same cycle or pattern,

• 1:11:34Speaker 02

  the one thing I keep thinking about is, there's a lot of people saying, you know, 50,000, 100,000, right? And if you have institutional interest, meaning bigger dollars flowing into the system, and you still have the fixed supply, you know, there's likely to be a high probability or a higher probability than we give it credit, that we're all underestimating what's possible. Right? And so that's priced in the short term. Over a long period of time, I absolutely think that we are all underestimating what is possible. And what I wrote about the other day was, you know, who would have thought 10 years ago that Bitcoin would have gone from a cryptographic email list and basically like the basement

• 1:12:19Speaker 02

  of the world and completely off the grid in terms of conversation to the White House, the Treasury Department, the Federal Reserve, the halls of Congress, etc. Just nobody would have believed that it would only take 10 years to get there. Right? And so it's like if we, you know, goes back to Bill Gates quote of we overestimate what we can do in one year, but underestimate what we can do in 10. And so if you look out 10 years from now, we're probably underestimating what's possible. That comes from price, that comes from adoption, that comes from, you know, a whole bunch of aspects. And so I just spent a lot of time thinking about and really trying to push myself to a level of discomfort around like,

• 1:13:03Speaker 02

  what is possible, right? And I think that it's a question that doesn't have an answer, but it's a really interesting mental exercise to go through because you start to kind of open your horizons of what is possible.

• 1:13:18Speaker 01

  Yeah, I think so. Um, I mean, I, I have no idea how far we'll go. Having said that, you know, it's important to remember that the move from $1,000 to $2,000 is gonna require much, much less new money than the move from 10 to 20. You're, you're adding an enormous amount and you're creating so much appreciation in the hands of holders that so many of the holders are going to sell on the way. So, yeah, it could go up, but I think it's, it may not. I'm, I'm not very good at trading and making profits on trading. I just hold and, you know, try and not be too risky.

• 1:14:03Speaker 01

  So I, I, I, I'm a little too careful from telling people to get too excited.

• 1:14:09Speaker 02

  My, my favorite thing about Bitcoiners is that many of them, myself included, admit openly, we are horrible traders.

• 1:14:22Speaker 02

  And especially then you overlay a highly volatile asset where you can get on the bad side of a trade very quickly. And so what ends up happening is, you know, Bitcoins are like the ultimate savers.

• 1:14:36Speaker 02

  Get Bitcoin and they hold on to it and they hold on to it for a very long period of time. So I think that works. Where can people find the book, the courses, etc. Where do they go?

• 1:14:46Speaker 01

  You can find all of this stuff on my website, safedean.com. So you can find my book in 14 languages and where to buy it in all those languages. And then you can find my online courses, Start Learning Austrian Economics, Start Learning the Economics of Bitcoin. Our courses begin on July 22nd, 10 lectures that are done over online, live. And then there are discussion seminars you can sign up for as well with only 10 students, 10 to 12 students, where we sit and discuss the readings in more detail. And it's all on safedean.com.

• 1:15:18Speaker 02

  Awesome, man. Listen, thank you so much for taking the time to record this. I think that it is no secret that you have a very unique perspective in the world and many people have learned after reading the book about the prospect of Bitcoin. So from all levels, thank you.

• 1:15:34Speaker 01

  Thank you so much. A pleasure to be on your show and thank you for having me.

• 1:15:37Anthony Pompliano?

  All right, guys. Thanks so much for listening to that podcast. Before I let you go, one more word from our sponsor BlockFi. Their new interest account allows you to securely deposit your Bitcoin or Ether at BlockFi and receive 6% annual interest paid monthly in cryptocurrency. This rate actually compounds, so you receive a 6.2% APY, which is very attractive given the alternatives. So you can actually take your Bitcoin, you can deposit it with BlockFi and get paid an interest rate of 6% in return. Go check out blockfi.com/pomp. Again, blockfi.com/pomp to sign up and start earning interest on your crypto today. Hey, everyone. Pomp here. If you liked this episode of Off the Chain and want to help

• 1:16:20Anthony Pompliano?

  us take crypto to the top of the apple, Spotify and other podcast charts, please do us a favor and rate, review and subscribe. To review, simply go to the Off the Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on Off the Chain.