Episode Eight: Bitcoin

Show Notes: 

• An explanation of Bitcoin and why it is essential to human flourishing. 

Whitepaper:
https://bitcoin.org/en/bitcoin-paper

The End of Super-Imperialism:
https://bitcoinmagazine.com/culture/bitcoin-replacing-us-super-imperialism

Books:
The 7th Property – Eric Yakes, 
The Bitcoin Standard – Saifedean Ammous, 
A History of Money and Banking in the United States – Murray Rothbard,  
Confessions of an Economic Hit Man - John Perkins, 
The Price of Tomorrow – Jeff Booth, 
Debt: The First 5000 Years – David Graeber, 
The Road to Serfdom - Friedrich Hayek, 
The Sovereign Individual – William Rees-Mogg and James Dale Davidson, 
The Intelligent Investor – Benjamin Graham, 
The Black Swan – Nassim Nicholas Taleb, 
Principles for Dealing with the Changing World Order – Ray Dalio, 
Layered Money – Andy Edstrom, 
Anatomy of the State – Murray Rothbard, 
Check Your Financial Privilege – Alex Gladstein,
B is for Bitcoin - Seb Bunney,
The Blocksize War - Jonathan Bier, 

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Transcript

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SPEAKER_00 0:24

I'd like to start off by saying that without Bitcoin, this recording would not have been possible for me. The peace of mind and financial security that I have enabled for myself by purchasing Bitcoin is what gave me the freedom to do the work that I have been doing in preparation for this recording and the time required to create it. Bitcoin is designed to do exactly that. It stores your energy in a medium which enables you to utilize it without loss across time. Unlike any other cryptocurrency, Bitcoin is a truly decentralized network based on a protocol that has no center point of failure. The founder, who no one has ever identified, disappeared two years after the software was created, and the community has been running it ever since. We've come a long way since then. There are thousands of people all across the planet running nodes to verify transactions, and miners expending energy to secure the network. Transactions cannot be tampered with because of the invention of blockchain technology. The blockchain is essentially a cryptographic ledger which everyone agrees on in unison to ensure that no one is cheating in the system. Just as double entry accounting ensures that there's no loss of data or corruption in a data set, Bitcoin enables ten thousand entry accounting, and that number is growing with each new node that comes online. Every node holds a copy of the entire blockchain, and you can't edit any particular transaction in the blockchain without disrupting the entire mathematical equation which is used to determine its structure. I know all of that is a lot to wrap your head around. It took me approximately seven years to do the level of research required for me to be at this level of understanding. Trying to condense seven years of learning into a one hour or so podcast is going to be very challenging. There's a lot of information here, it's very dense, and you may want to listen to it more than once. I'm going to do my best to focus on what I think is important to convey, but this recording is not a comprehensive explanation of Bitcoin. In fact, it's not even a comprehensive explanation of my understanding of Bitcoin. This is just intended to be a crash course in the broader topic of Bitcoin and why I think it's important. My brief elevator pitch would be that it has the potential to create endless abundance on this planet and to end large scale war globally. The only feasible way I can see at this moment to stop Bitcoin is by nuking the entire planet. If you prefer the former vision of the future over the latter, it might be worth learning a little bit about Bitcoin to see why I made those outlandish comments. Obviously the situation is not so black and white. Nothing is. But nothing I've said up to this point was meant to be a joke. It is my hope that your education about Bitcoin does not end here. There are lots of other resources available to educate people about Bitcoin. There are dozens of other podcasts about Bitcoin specifically. There are also some really excellent books about Bitcoin that I would recommend. Personally, I could have condensed that seven year period down a lot more if I'd been willing to read books like The Seventh Property or Bitcoin Standard. I wasn't able to understand Bitcoin until I read The Bitcoin Standard. And honestly, I don't think that anyone can understand Bitcoin without reading that book or without doing at least the same amount of research that the author did. And that's not for me to say that I agree 100% with any of these books or that these authors are infallible. Though if you haven't heard their arguments, you'd be missing a piece of the puzzle that's very important to understanding the global economic situation and Bitcoin as a technology. So if you find it easier to learn by reading from a book and looking at charts or from watching videos about Bitcoin, maybe this isn't the best medium for you to learn about it, but I'm going to do my best to convey what I know in a short period of time here. Some of the reason it took me so long to understand Bitcoin is because of my own internal resistance. I had a hard time accepting some comments that I've heard from certain Bitcoin proponents. I had a hard time deciding to read a book that was specifically about Bitcoin because I was worried I would become biased. However, after having taken those steps, I realized that my internal resistance did not serve me. It did not help in my understanding of the basic facts of the network and how it functions. Ultimately, what I found is that this is a truly revolutionary technology. Nothing like this has ever existed at any point in human history. I would also say that none of the cryptocurrencies that have been created after Bitcoin even hold a candle to its potential. I genuinely have no issue with them existing and doing whatever it is that they want to do, but personally I do not invest in any of them. So if somebody is trying to convince you that Dogecoin or Ripple or Ethereum or whatever is going to be the next Bitcoin, just keep in mind that the level of research they've done is probably watching a few YouTube videos, reading some Reddit posts and some blogs, maybe listening to some guy on the news. Basically what I'm saying is don't trust anybody's research. Don't even trust my research. Go do your own. Follow up on these sources that I'm providing if you want to learn more. If you feel like gambling some money in the crypto casino, go for it. But just keep in mind that it is a casino. And as of this moment, right now, none of those other cryptocurrencies have value, in my opinion. Some of them are outright scams, and some of them are just a waste of time. Bitcoin, on the other hand, is a true innovation. And if you think that there's some kind of a future where all of these cryptocurrencies exist together, I would recommend looking into historical examples of bimetallism. Typically the best money ends up winning out over all the others because it's hard to do trade in multiple currencies, at least over a long enough time frame. I have found that Bitcoin is an inherently liberating technology, just the same way that I believe psychedelics are inherently liberating. If there's any theme that I've observed in my own experience with psychedelics, it's that the deeper my understanding of my own being and the universe gets, the harder it is for me to participate in behaviors that are doing harm. Behaviors which I find unethical or at their very best are without purpose. There's certainly a subjective aspect to that. I know that I have a certain purpose in this life, though I can't define it with words, I can feel when I'm on the path and when I'm not. It's an intuition I've developed through my work with psychedelics and meditation. Bitcoin has liberated me from the establishment in such a way that I know I can work on what I want to work on. I can work on the things which are important to me with much less fear about my bank account being frozen, for example. And I can completely let go of society's commonly accepted definition of achievement. Whatever that might mean to you, I've created my own understanding of achievement for myself, and that truly is liberating. It is my opinion that Bitcoin and psychedelics are both important tools in the eventual reaching of our human potential and the development of a mass cultural enlightenment. Lots of arguments, lots of opinions. This is from the time of this recording onward going to get much, much worse. It's going to become more controversial, it's going to become more polarized, and that's to be expected with a technology that's this revolutionary and this transformative. From my perspective, the best parallel I can draw between Bitcoin and another technological revolution would be the invention of the printing press. That invention dramatically shifted the power structure of the planet and brought about the first renaissance. The broad overview is that that was a time of separation of church and state. We are currently experiencing a separation of money and state. The effects are likely to be similarly transformative. Because of how subversive Bitcoin is, many of the people who benefit from the prevailing system will try to and are already trying to persuade others that Bitcoin is harmful, dangerous, evil. I'd like to make the case that those opinions will not serve you in the long run. I'll include one of my favorite quotes from Stanislav Groff After having personally conducted over the years more than four thousand psychedelic sessions, I've developed great respect for these substances and their enormous positive as well as negative potential. They are powerful tools, and like any tool, they can be used skillfully, ineptly, and destructively. The question whether LSD is a phenomenal medicine or a devil's drug makes as little sense as a similar question asked about the positive or negative potential of a knife. The reason I use that quote here is because I feel the same way about Bitcoin. The fact of the matter is, Bitcoin exists. Personally, I don't believe it can be stopped. We live in a world where this is a reality, and very few people seem to be aware of it. Personally, I've embraced this new reality as a positive, and it has benefited me. Does that mean it will benefit everyone? Does that mean that no one will use Bitcoin to do things that others don't like? Certainly not. But that doesn't change the reality of the situation. And if I've learned anything over the years, it's that the foundation of my experience is in accepting the realities of what is happening rather than grasping for some ideal future which is unlikely to occur. There is a delicate balance between seeking a better world and seeing the world as it exists today. The latter can only be done if all the information is available to you. What I find more often than not when I talk to the average person about Bitcoin is that they simply are missing information. Or, just as is the case with LSD, people are often inundated with negative ideas and propaganda about these tools. Though I do believe if you listen to what I'm saying without making assumptions and without taking anything personally, you will hear truth in what I'm sharing. There are many different ways to assess the value and importance of the Bitcoin network. But I think the first important question to ask yourself is how much do you understand about our current monetary network? What do you know about the dollar? And I say that to you not knowing what country you're in or what currency you use every day, but knowing that most of the currency on this planet at the moment is fiat currency issued by a central bank, all of which are co-opted and reinforced by the dollar from the Federal Reserve in the United States. When I focus on the dollar in the American financial system, I'm not being arbitrarily American centric. There is a historic precedence for this, and it's called Bretton Woods, which occurred just after World War II, in which the United States dollar was given global reserve currency status. This was done under the illusion that such an action would stabilize global financial markets. I would argue that it is done exactly the opposite. The way that central banks manage our money, create boom and bust cycles, and create inflation, which is devastating to the working class. For greater information on this topic, I would recommend the article The End of Superimperialism by Alex Gladstein. I will link that in the show notes. It's important to note that at the end of World War II, when Bretton Woods was issued, the United States was the most economically strong country in the world, and we were still operating under the facade of a gold backed currency. This is a controversial perspective in mainstream economic circles, but the reason I use the word facade is because each time we had a major conflict, the gold standard was conveniently suspended. That meant that our government was able to wage unrestricted war by printing as much currency as they wanted to. This is a theme that I'll discuss in greater detail later in this recording. In understanding the foundation of money, the first thing to keep in mind is that all value is subjective. The next thing worth noting is that our US dollar is based entirely upon accounting. There is no fixed ratio of dollars to gold held in vaults in Fort Knox or New York or anywhere else. The dollars that we use are not issued by our government, they are issued by the Federal Reserve. The Federal Reserve is a private bank. It is not federal, and it is not a reserve. The Federal Reserve System was sold to the American public and to Congress as a means of expanding credit and reducing risk in the banking sector. What we've seen instead has been larger and larger boom in bus cycles followed by continuous bailouts of the banks. Each time the banks are bailed out, inequality gets worse and inflation gets worse. And inflation is a hidden tax that we do not vote on, which erodes the value of our currency that we are holding. The working class loses the value that they worked to save, loses their retirement, loses their fixed income. Meanwhile, those people in the economy who are holding assets or large amounts of debt end up as winners as inflation chips away at the total cost of their debt over time. Thinking about the dollar in a broader sense, the way I tend to frame it is the incentive structure of our society. Everybody, rich, poor, otherwise, is striving to maintain value so that they can protect themselves and their families. Of course, we're also striving to promote the betterment of society as a whole. And I will make an argument here as to why Bitcoin is a much better tool than the dollar for both of those outcomes. As I mentioned earlier, you're going to see a lot of arguments about why Bitcoin is bad, why it's bad for people, why it's bad for the environment. I would posit that anyone saying anything negative about Bitcoin is actively malicious or they don't understand it. It would be wonderful if people could admit that they didn't understand something rather than reacting in fear, but unfortunately that's not the reality that we live in. Having said that, just as psychedelics are not a magic solution to mental health, Bitcoin is not a magic solution to our economic problems. There are many variables and factors which influence its impact in society. The most important of which is how the banking sector and the governments will react to it. At its core, Bitcoin is a technology which restructures incentives from a corrupted system into one which enables a equitable energy exchange, but that will not change human nature overnight. Taking the time to grapple with the profound implications of altering the incentive structure of our society is a very broad topic to approach, but the first thing that I'd like to look at is poverty because of how thoroughly destructive it is to the human spirit. As I've come to understand it, there are two forms of poverty. There is absolute poverty, in which a person cannot afford basic needs like food, water, shelter, clothing, and there is relative poverty, or inequality, which I could simplify as my neighbor has a yacht and I don't. At this moment, I have no idea how the Bitcoin adoption is going or how it will go. But what I do know is that over a long enough time frame, say fifty to a hundred years, both of these problems will be improved dramatically by the adoption of Bitcoin as a global reserve currency. And I'll explain why. There's an economic concept called the Cantalon effect that's very important in understanding the difference between central reserve banking and Bitcoin. The Cantalon effect is based on an observation made by Richard Cantalon in 1755. Cantalon was inspecting the flows of gold as they entered the market from existing and newly founded gold mines. What he observed is that those people who were closest to the origin of that new money benefited the most from the new monetary expansion. And when I say monetary expansion, what I'm referring to is an increase in the supply of money. When new money floods into the market, it doesn't do so in an even or equitable fashion. When that money reaches the hands of the first person who has control of it, it holds the full value of that money at the time when it is issued. Essentially they're holding pre inflation but newly minted currency. Inflation comes in two waves. The first is monetary inflation. That is purely defined as the amount of money in a system. The second is price inflation, which follows later on. And that is the value discussed when economists and reporters are talking about the CPI. I've heard some silly folks say things like money printing doesn't cause inflation. And I would like to ask those people if money printing doesn't cause inflation, then why do we pay taxes? Why don't we just print all our money? We can fund everything with that, and then we can all be rich. Of course, that's completely absurd, and anyone with a basic understanding of supply and demand knows this. I should specify though, money printing is not exactly how it sounds. Only around ten percent of US dollars exist in physical form. The rest of them are created digitally, so you don't even have to imagine money being printed. It's made on a computer with a keystroke. With that in mind, try to visualize what it would look like if a hundred million Americans walk to their banks and ask for their money in cash on the same day. That's a game over for the banks, just so you know. When money's created, it doesn't affect the market immediately. It takes time to quote unquote trickle down to the average citizen, but by the time it makes its way there, it will have manifested the inflation that's inherent in its creation. By this predictable mechanism, the consistent outcome is that the rich get richer and the poor get poorer. Those who are given the largest loans and the largest budgets are able to then buy assets which hold their value through inflation as the currency loses its purchasing power. The way that our government and our banking system has decided to use the dollar is largely to manipulate countries into taking loans that they otherwise probably never would have, and then using those loans and the subsequent debt that they will never pay off to manipulate those countries into altering their public and foreign policy into the interest of the wealthiest people on this planet. You certainly don't have to take my word for it. If you want to look into this, just take a look at the countries who have received the most foreign aid over the last fifty years and how they're doing today. There's an excellent book on this topic called Confessions of an Economic Hitman, and while I don't completely agree with his economic solutions, the factual observations that he reports from his career in finance support the accusation I just laid against the IMF. The same type of manipulation is occurring on an individual level within the United States as well. Having a population that is in just enough debt to motivate them to work for very little reward is a critical component in maintaining a system which benefits a very small number of people. There are two primary views one might have of the global banking system. The first is that they are doing their absolute best and they are simply failing to enable stability, and their ignorance of the complex factors of the market are what are leading to these failures. That seems fully possible to me given that any central planner is essentially claiming that they know what's best for millions of people that they don't know. The second possible conclusion is that the global banking system is well aware of the manipulation that they're using to take advantage of the working class and less developed countries because their ultimate goal is to enslave humanity on purpose. The Duracell battery from Morpheus' hand in the Matrix comes to mind. Ultimately, I don't have an answer for this. It might be some kind of a combination of the two. Either case has some optimism and some pessimism in it. At the end of the day, it doesn't really matter, does it? All you have control over is what you can do. And given that the system is clearly broken and it's not benefiting most people, the rational response would be to figure out a way to opt out. And that is why I am so thankful that Bitcoin exists. I've heard many answers. The metaphor that I tend to lean towards is money is energy. I first heard it from Bruce Lipton, but I've heard it repeated many times since, and the more I think about it, the more it makes sense. In order to make money, you have to use energy. That energy expenditure could be mental, it could be physical, it could be emotional, or money can be transmitted to you by someone who spent their energy. In a monetary system where the working class is using their energy every day running on the treadmill to save for their retirement and save for the protection of themselves and their families. And then there's a central bank which just creates as much currency off the back of that energy that they want. All that does is erode the energy that's been put into the system by means of real valuable work. I think of it like putting water in a smoothie. You've got all this good fruit and juice in the smoothie that's making it taste great, but you don't have enough smoothie to go around all your friends. And so you start adding water. Before you know it, that smoothie ends up more like a LaCroix with no bubbles. And given that one dollar from nineteen seventy one is worth about seven dollars today, our smoothie is now considerably more water than it is fruit. Metaphors can be helpful. Now I'll provide an answer to the question what is money from a more technical standpoint. If you'd like an expanded understanding of this and how it relates to Bitcoin, I would highly recommend the book Seventh Property by Eric Yakes. Money provides three services. It is one, a store of value, two, a means of exchange, and three, a means of accounting. Let's start with the dollar. The dollar is a pretty good means of exchange. It's accepted almost everywhere. In fact, there are sixty or seventy countries that are currently either using it daily or using it as their reserve currency, which is of course to the benefit of the Federal Reserve, because it strengthens their position. However, if you want to send dollars from here to another country, you have to use the SWIFT system. The Swift system is a centralized means of finalizing transactions, which means that whoever's in charge of it can stop transactions from occurring. This is how trade can be used in a way to manipulate countries into doing what those who control the SWIFT system want them to do. Personally, I can't help but see this as a violent coercive behavior that's used to push countries and individuals into taking actions that they never otherwise would have. It can also result in food, medicine, clothing shortages in the countries that are affected by the tariffs. Dollar exchange on the ground level has gotten a little bit easier because of Cash App and Venmo and PayPal, but as far as inner bank transfers go, I think they're extremely below par. It's not uncommon for a transfer to take between five and seven days to go from one bank to another, which at this point in my life I think is ridiculous because lightning payments on the Bitcoin network are instant, and on-chain transactions, even on the lowest fee structure, happen within twenty four hours. As a means of accounting, the dollar is king. It is the global reserve currency, the standard money of the planet. So much so that when other currencies are falling in relation to the dollar and the dollar is losing value itself, people still say that it is strengthening because it is seen as the baseline to all currencies. It's used in business all over the world, some of which is by choice and some of which is by our enforcement, for example, with the petrodollar system, where we ensure that countries only trade oil using the dollar, which again props up our banking structure here in the US. Besides our heavy-handed enforcement, the other reason that the US dollar has maintained its status as the global reserve currency is because of its low volatility in relation to other currencies. However, that volatility is more a matter of perspective than many realize. If you look at Bitcoin priced in dollars, you're gonna see a very choppy chart. If you see the dollar priced in Bitcoin, it's gonna look like a slide to zero. Means of accounting is really a paradigm shift. It is the perspective of value in what you are counting your energy with. Where the dollar really fails is in the store of value arena. The cumulative inflation that we've experienced since 1971 is nearing 600%. And I chose that date because that was when we were officially removed from the gold standard, although any close student of monetary policy would know that we never really were on a gold standard. The reason I say that is because of the inherent flaws in the fractional reserve banking system, and also because of the numerous times we suspended the gold standard to pay for our war escapades. But okay, let's take a look at gold. Gold is historically the best store of value. It is not a great means of exchange because it's extremely cumbersome to move large amounts of it. It requires a lot of security in order to store it in your house and to transport it. Moving, let's say, twenty thousand dollars worth of gold from here to Japan would be a really nervous flight. And then if you extrapolate that out into the millions of dollars, I can't even imagine how you would go about moving that gold around the planet without having it seized from you by some organization that's willing to use violence to take it. As a means of accounting, it's been strong for a long time. But because of the transfer issue, I don't see it coming back as a global currency. Now that we're moving into the technological age, I think we need a currency that matches that. And gold may be much better served as a commodity that's used in manufacturing for technology and space travel than it is as a store of value. One of the counterintuitive concepts in the world of currency is that the best currencies exist between values. In fact, if you have a currency that has some intrinsic value in itself, it actually disrupts trade. And because gold does have its own intrinsic value for various commercial and aesthetic uses, it is not an ideal money. There is a tremendous amount of previously extracted gold in existence on this planet, and a majority of it is held by government entities, which means that they can use their stockpile to manipulate the open market price. That is, of course, assuming that they're going to do this physically and not just do it on paper in the futures market. The next issue with gold is the fundamentally unverifiable scarcity of it. More gold can always be found if we allocate the time, energy, and resources towards finding that gold. By comparison, the total amount of Bitcoin that will ever exist can be confirmed right now by anyone and at what rate they will be released between now and twenty one hundred forty. There is no other asset or commodity or money that offers this feature. In the case of both dollars and gold, there is no way to ascertain the total number of units in the system and there is also no way to confirm how much will be available in the future. Using the public blockchain ledger, it's possible to verify the total supply of Bitcoin using any internet connected device. It's very easy to dismiss Bitcoin as a frivolous waste of energy, but when you understand how Bitcoin works and why sound money is so important to society, you will not feel that way anymore. You'll see the energy expenditure put into the Bitcoin network as a critical maintenance that humanity upholds in order to maintain a sound monetary network. Of course, there's always the argument that we don't need a currency and that money is evil and that we could all just share. And while I don't dismiss those things offhand as some people do, I would like to point out that in a system as large and complicated as ours, we need an information transfer in order to coordinate logistics, manufacturing, and demand. The only single piece of data which transmits all of that information simultaneously is price. When you have price, you know everything you need to know. You inherently see the priorities in the system to direct your behavior. Price provides a manner of communication that doesn't require any language at all. In an economic system without price, you'd have to have a very large complicated dashboard that would track where everything is and how much stock exists of that good. While we as a species are fully technologically capable of making a dashboard like that, I know that it's not realistic to imagine that it would work. I have some experience in manufacturing, and we used to use a program that would do this inside the facility. Every individual person in the facility would have a responsibility to fill out information in this dashboard so we could track the flow of material through the plant and we would know how much stock we had in the various inventory areas. The nightmare of that system is the human input aspect of it. Even in one facility with relatively simple production, we could hardly manage the system appropriately. Inventories were always off, you'd have to recount monthly. Some people weren't trained properly in how to use the system, other people just were generally uninterested in inputting the data they were supposed to. Some departments might have even been a little bit motivated to fudge the numbers here and there for their own benefit. There were many losses of data through that system. However, if the data that's being transmitted and taken in to run your business is price, then any disturbance in that level is going to put you at risk. There's a much higher incentive to accurately enter price data, whether it be inbound or outbound. The fact that it is a price inherently makes the information critical to the function of your operation. That's one reason I believe currency is an inherent human need in the functioning of a complex system. What I just ran through, essentially, is the practical aspect of the debate between Marxism and capitalism. And while I can deeply appreciate the desire for a society without any power structures at all, including those of capital, I realize that in order to reach that place, violent force would have to be enacted by a governing agency, and I will not condone that for any reason. However, I have recently seen a peaceful and voluntary solution proposed to assist in humanity reaching a post scarcity civilization through the use of a deflationary currency. There's a book called The Price of Tomorrow by Jeff Booth on this topic. It is definitely worth reading and it's given me a tremendous amount of optimism for the future. To give you a brief idea of one realization I've had since reading this book, it is that since the beginning of the Industrial Revolution, the cost of goods trended in the downward direction. In the Price of Tomorrow, Jeff Booth points out that technology is deflationary. All technological advancements result in higher efficiency that result in lower prices. Or at least that's how it should work in a sound monetary standard. But that certainly is not what we're seeing today. There's more than one outlet for inflation in the economy. Aside from price increases, which are very obvious to the consumer, inflation can also swallow up productivity that would have resulted in deflation. Have you ever wondered why there wasn't a dramatic increase in wages when computers were implemented in offices? Have you ever wondered why hours were not reduced for workers given the incredible efficiencies that they found with computer technology? Nearly all of the productivity increases that we've had since nineteen thirteen have been swallowed up in inflation. If we allowed for those productivity increases to filter down to the actual price level, we would be living in a situation that is a lot more affordable. This is why I don't believe that money is inherently evil. Although I can fully sympathize with those who have the intuition that it is, because they're not wrong. The currency that we are using today, the US dollar, is fully corrupted. And if you're not aware of the alternative that's available and its benefits, which require a pretty profound paradigm shift, then it really might feel like money is a helpless situation that's always a trap. But I don't think it is. It's not a trap if we're allowed to choose our own money. Throughout most of human history that was our right to choose our own money. But now we're told what money we're supposed to be using. However, there is one other argument against currency which comes up quite often, and that is the return to barter. There's a book called Debt The First Five Thousand Years, written by David Graber, which does a good job of explaining the history of trade through an anthropological lens. In the book, David points out that we don't have many examples of large civilizations using barter as their main means of exchange. The primary reason for this is because of the coincidence of wants issue. If you want to trade, let's say, a wheelbarrow for chickens, you need to rely on the supplier of the chickens that they want a wheelbarrow. What if the person that is trying to trade chickens doesn't want a wheelbarrow? What if they want bananas? And then you go to the banana person and they don't want your wheelbarrow either. They want bricks. After all day walking around the village, you get lucky. The brick guy wants your wheelbarrow, so then you're going to trade your wheelbarrow for bricks, your bricks for bananas, and your bananas for chickens, just so that you can trade your wheelbarrow for chickens. Assuming that all of that trade was frictionless and it happened in a short period of time, which is very unlikely, there's still a potential for gain and loss in each trade in that chain. You have to decide with the person you're trading with what those two items are worth. Those two items values vary based on the season, based on the productivity of the chickens, based on the quality of the wheelbarrow. Nothing is really fixed in an economy. Most of the time, these barter trades would take the form of debts. Which brings us right back to a means of accounting. The barter system is extremely inefficient at scale, which highlights the need for an intermediary value system that enables people to price items in an agreed upon asset, for example, silver, gold, beads, shells dollars, or Bitcoin. Now that I've laid out the basic foundation as to why money's important, I'd like to bring the discussion back to the comparison between currencies. No currency exists in a vacuum. You cannot study any single currency without understanding its relative value to other currencies and commodities. Considering Metcalfe's law in the application of currencies, it's not wise to ignore the existence of Bitcoin in favor of another monetary network. I think social media is a good metaphor for this. If you see the times in which people start migrating out of a certain social media platform and into another one, the value of the previous network drops exponentially and the value of the new network increases exponentially, simply due to the fact that more people are using it. The same thing happens with currencies. And it has happened many, many times throughout history. I hear many people say that they think they're too late getting into Bitcoin. And with what I just mentioned in mind, it's very obvious to me that we're very early. There's very few people understanding this technology, there's very few people using this technology. It makes up a very small portion of people's portfolios and global finance in general. But given its value along the three metrics that I mentioned earlier, along with the fact that transactions cannot be stopped, controlled, or altered, its expansion is inevitable. I'm going to get into some of the common complaints I hear about Bitcoin. And one of them I mentioned earlier is the environmental aspect. Now, as I mentioned, if you think it's a frivolous expenditure of energy and there's no value in the network, then of course all of that power that it uses is going to be seen as a loss. However, if the energy consumption of Bitcoin is looked at in comparison to the global gold mining infrastructure or the global banking infrastructure, it's already exponentially more efficient than that. I've seen proposals that point out Bitcoin mining being used to stabilize energy. Energy grids. At times of peak consumption, the miners are turned off, and at times when there's more generation than consumption, they're turned back on. All of this is done spontaneously by miners just based on the cost of energy. This allows the energy grid to store its energy value in the blockchain rather than wasting it. As power generation functions today, any excess power that is generated is literally wasted. They will run a cable into the ground and discharge energy into the ground because it can't be stored in a battery or consumed by the public. They have to waste it. Someone who's not familiar with energy production might say, well, maybe just don't produce as much, but you see there's a major issue there because you don't always know what demand is coming your way. You have to be ready. The grid has to be ready to take on the demand that it is being put under. And balancing that load is an industry in itself. Bitcoin miners have also set up to mine using the power that's emitted from flare gas that would otherwise just be discharged into the air. What the Bitcoin network does and what it is incentivizing people to do essentially is to capture energy waste and turn it into Bitcoin to make it productive, in other words. In a broader, more theoretical approach to understanding the environmental impact of Bitcoin, it's important to point out how terrible the fiat currency system is for the environment. And when I say that, I'm specifically referring to the military industrial complex, but if you look closely at the subsidies in the agricultural market or in the history of public works, you may find what I found, which is a tremendous amount of waste and poorly aligned incentives. Many and very likely most government expenditures are not done in the interest of the public good. They're done in the interest of the investors and lobbyists who are pushing for these particular initiatives to be put forward, or they're being implemented by politicians who simply want to get reelected. You can think of any stimulus check as a bribe for a vote. Whether they're intended as bribes or as a short term method of patching up a broken system, welfare initiatives do create dependency on the state, and when the state is doing violence globally, and we continue to allow them to do so, they're utilizing our dependency on them to harm humanity and the planet. In my view, this is not a partisan issue. I'm not sure how far back I'd have to go in US history to find a president who isn't a war criminal. All the presidents who have been in office during my lifetime certainly are. Now, with that in mind, it's very important to remember that there's no such thing as a government funded initiative. Everything is taxpayer funded. Everything is predicated upon those who create real value in a system. However, our government has found a very clever way to fund their conflicts, and most people on the planet, most Americans, even most educated Americans, seem to have no idea that this is going on. Our federal government knows that American citizens don't have an interest in being the police of the planet, and for that reason we will not pay for those wars in taxes. So instead, the government taxes us through inflation. The monetary policy that we live under allows our government to spend indefinitely. They create new loans, credit, currency based on essentially nothing at all, except for the threat of violence, and our money loses value as a result. That is how wars are funded, and they would not be possible without that inflation mechanism. We do not vote directly on any of this. No one asks our permission to do this. However, we are all complicit in it because we allow it to continue, and every person who holds or uses the US dollar is benefiting directly from this violence. If any of this is upsetting or startling to you, I would implore you to process that anger and let it out in a way that does not harm anyone else. It is my belief that if we struggle against this system violently, the likelihood of success is very small, and any success that we manage to find will be corrupted by the violence that we use to get it. If you play their game, they will win. They always win their game. My proposal is to make a new game. The system that we are fighting against has police, it has prisons, it has tanks, it has drones, it has digital surveillance on a broad scale across the globe. When that system is activated against an enemy, it is nearly unstoppable. Luckily at this point, it's still made up of human beings. I have fears that in the future there may be less and less of them. Even though a soldier can be brainwashed to think their enemy is subhuman, and then given amphetamine so that they'll fight for three days straight, which has been done numerous times in history, there's still some semblance of humanity to negotiate. There is no semblance of humanity in a robot dog with a machine gun on its back. I hope not to see any more development along the lines of robotic military equipment. And at the risk of sounding too much like Sarah Connor from Terminator, I know that artificial intelligence is under development, I know that robots exist, and I know that machine guns exist. The inevitability of their integration is a concern that we should watch out for as a species. The number one way I can see to disincentivize that type of development is simply to defund it. When I refer to the dollar as the incentive structure of humanity, what I'm pointing to is the fact that money steers brains. Money in the way it's distributed determines how our children educate themselves for the workforce. It determines who works in what industry and for how much pay. If the government has an unlimited budget, then there's an unlimited salary for anyone working on these machines that kill people. That's not the kind of world I'd like to live in. However, if we begin to struggle against the situation that we're living in with violence, it will only increase the stakes and that will result in greater violence. It will serve as a justification for more dramatic crackdowns against resistance. And as I mentioned before, this is not partisan. This act swings both ways. If you surrender power to an administration, the next administration will have that power. If you point your finger at your opposition and beg the state to fight them with violence, they will maintain forever the authority to use violent force to sort out political problems. It doesn't matter to me what illusory side you think you're on. If you let that sink in, you will see how it can backfire against you. The continuation of violence in any form lends greater support to the development of tools that kill people and infrastructure that imprisons them. What you resist persists. My suggestion is a nonviolent route, one that results in the building of a parallel system which is better than the current system. My suggestion is to use a doctrine of voluntary action to motivate others to join your cause. Forcing people is a losing game. It doesn't matter what your purpose is. The ends do not justify the means, and might does not make right. Money is a perfect avenue with which to do this. And I'd like to share this quote from nineteen eighty-four that will provide some insight into the kind of thinking that's gone into this for a very long time. I don't believe we shall ever have a good money again before we take the thing out of the hands of the government. We can't take it violently out of the hands of the government. All we can do is by some sly roundabout way introduce something they can't stop. FA Hayek. I'd love to say that Hayek was talking about Bitcoin. But his quote is twenty-five years older than the Bitcoin white paper. That's not foresight, that's philosophical and economic theory at work. I know that Hayek gets a lot of flack because of his association with Milton Freeman and Ronald Reagan and Margaret Thatcher and free market economics, but what I'd like to point out is that none of those people understood monetary policy, or at least not to the degree that they did anything about it. They unleashed the free market but kept the fiat system, which really defeats the entire purpose and does nothing to fight inequality. In fact, it exacerbates it, which is exactly what everybody's so upset about now. A quote unquote free market with a continued fiat system is really the worst case scenario that I can imagine. Every criticism against neoliberal policy falls directly onto this topic. Where arguments against neoliberalism really fall flat is that they don't see all the problems they are pointing to are exacerbated or caused by the fiat system, not by free market economics. Free market economics would dictate that we choose what currency we use. Until I see that happen, it's not a free market. Most of the economists and all of the politicians who have postured as though they care about the free market are only cherry picking the policies that are helpful to them and their financial backers. NAFTA, the North American Free Trade Agreement, is twenty four hundred pages long. How many lines of policy do you think it takes to tell people that they can trade what they want when they want? Turns out just one. I just did it. Peace is a natural effect of trade, Charles de Montesquieu. All I'm pointing out here is that the use of the words free market are similar to the use of the word liberal. It doesn't mean what people think it means. What it's meant so far is basically we're as free as we want to be as long as we don't interfere with the government's ability to do violence in their own interest. When I stop to think about the broader implications and effects of our military industrial complex, the trauma that it's created for our people and for those who we've attacked, I feel so much pain. The generational trauma of those soldiers who came home and raised children in a house full of fear and mistrust, the families who have lost loved ones in drone strikes, the people who lost their businesses and their homes due to bombs going off in their countries, for conflicts that they had nothing to do with and never wanted to be involved with. But they were living in a place that was unlucky enough to be a convenient target for some larger country to attack. And when I focus on that, I understand the damage of fiat currency on humanity and on the environment. Because after all, the United States government is the biggest polluter on the planet. These changes are based in the psychological motivation inherent in deflationary currency. As it exists today, we are holding and using a currency which we know, whether consciously or not, will be worth less next year than it is worth today. That has been the case for a very long time and has no signs of improving under our current monetary policy. Imagine instead holding a currency which you know on average is always going to be worth more next year than it is today. What do you think that's going to do to your buying habits? What do you think that's going to do to your saving habits? When there's a sound money and you know that you're holding your value, you're less motivated to spend it. That's going to mean less manufacturing, that's going to mean spending less money on items that you don't need, and that also equates to less damage to the environment. While toning down manufacturing is seen as an absolute catastrophe under the current system, that is a treadmill that never stops. We need to return to nature. We need to think about the planet and how we're going to work with it more holistically. I'm well aware that many people do not agree with this solution, and as the situation exists today, all I can do is offer to be a source of information if they're interested. But I also know that it's up to each individual to survive. It's up to each individual to take care of themselves. When we rely on some external authority like the government to take care of us, we put our well being in their hands, and we live at their mercy. It may sound harsh, but this is what returning to nature sounds like. We need to take responsibility for ourselves, help others as much as you can, but you can't save a drowning person without a boat. If you swim out to a drowning person in a lake, they will drown you. I assure you that these experts in ties in Washington and New York are not thinking about our best interest, they are thinking about themselves. They are building their own boats, that's how it works, and it's working against our favor. I don't respond to this situation with anger or disgust, though those emotions were certainly part of the realization process for me. At this moment, I feel more optimistic than anything else, understanding the reality of the situation and knowing that it can be better if we decide to change it. I don't think that people are inherently selfish or evil the way that some do, but I do believe that centralized power enables the abuse of mass numbers of people by small groups. And anything we can do to alleviate that leverage is something that I'm enthusiastic about. I can see that much of the legacy news media is entrenched in this ideology that will inevitably lead to them bashing Bitcoin and saying everything they possibly can to dissuade people from beginning involved. But as far as I'm concerned, this is the counterculture. This is the revolution, and this is a currency of peace. This is the way that we opt out of the system and start building our own, productively, cooperatively, and with love. If I had any single piece of advice for you in regards to how to insulate yourself from manipulation, it is to turn off your television, stop watching Netflix, get rid of social media, and meditate. Go inside, find yourself. There is truth and intuition and we are all trained to ignore it. The answer, as it is with all things, is love. Love thy neighbor, love thy enemy. Don't get caught up in the details. Unfortunately, I haven't seen a lot of love in the Bitcoin community thus far. I've seen a lot of have fun staying poor and you're not gonna make it and these sort of comments. I don't think that's beneficial to the discussion. That is only going to exist to alienate people who are otherwise suffering from a very violent and unequal situation that they themselves had nothing to do with creating. We've inherited this system through years of manipulation and lack of understanding of what's being done. The current monetary standard is obscured by intentional complexity, which is by design keeping the average person out of the walls of the Federal Reserve. It all appears to be too complicated to understand, and I can assure you it can be understood, but the answers you're going to receive are not going to be pleasant because there's nothing there. The infinite complexity of Keynesian economics is merely a smokescreen to keep anybody from ever understanding the hollowness of the system that we're all victims of. Which leads me to the next big complaint about Bitcoin, and that is in regards to the inequality that's inherent in it. Those who invested early are going to do extremely well, and those who come later are going to add fuel to their investments. I can see that life is not fair. That is a reality of the circumstances we live in. However, I don't believe that Bitcoin is the origin of this inequality. I believe the current system of fiat money is the origin of inequality, and Bitcoin is part of the solution. If you look at the addresses of Bitcoin users, you can see that there has been a consistent decline in addresses holding more than a thousand Bitcoin, and a consistent increase in addresses holding less than one Bitcoin. If you look at those same metrics using the dollar, you will see greater and greater inequality over time. This can be viewed by looking at more indirect metrics like household income and stock ownership in the US, CEO salary to average employee salary ratios. That last one in particular is very interesting if you track it from the 70s until now. One of the unique innovations of the Bitcoin blockchain is that it is publicly viewable. So there's all sorts of metrics you can look at, including how long everyone's been holding their Bitcoin and in what amounts, what their timing was when they bought and sold, and also how much Bitcoin is being circulated in the network. At the time of recording this, approximately 60% of Bitcoin hasn't moved whatsoever in the last 12 months, which means 60% of the value in the network decided to hold through two all-time highs and two 50% drawbacks. To me, that demonstrates a lot of certainty that it's going to continue to gain value. Another interesting metric is that 90% of the total supply of Bitcoin is currently in the network. Out of a total supply of 21 million, approximately 18.9 million Bitcoin are already in the network. The remaining 10% won't be completely released until year 2140. And I know this because the mining structure and the maximum supply are all transparent and predictable based on the original software written by Satoshi Nakamoto. The entire Bitcoin network is based on securing that system and making sure that it doesn't change. So now would be a good time to introduce Mr. Nakamoto. Satoshi Nakamoto is a pseudonym used by an individual or group of individuals while creating the Bitcoin network. He released a white paper in 2009 that I would highly recommend reading to get an overview of the beautiful simplicity of his invention. The objective of his work was to create a peer-to-peer, digital and decentralized currency that doesn't require any third parties to settle transactions. Once the network was up and running, Satoshi disappeared from the internet completely, and no one has been able to discern with any certainty who he was. There are some theories and there are some whack jobs out there who have claimed to be him, but so far there's been no proof as to who Satoshi Nakamoto is. That is a wonderful asset to a decentralized system because now there is no authority, even a founder that can get in the way of the mission of the network. The network is now completely distributed and completely open source. The brilliance of the invention of Bitcoin comes in twofold. One is the blockchain, which is essentially a massive distributed ledger, similar to double entry accounting, except instead of double entry, it's thousands of entries. And these entries are continuously coordinated across a global internet infrastructure. This is why no one bad actor or even group of bad actors can do anything harmful to the network without having more than fifty percent of the control of the network. Day by day that type of attack is becoming more and more impossible. The second innovation is the concept of proof of work. Proof of work ensures that the network requires physical. Physical hardware and physical energy expenditure in order to participate in and secure the network. This makes it impossible for anyone to attack the network without expending a tremendous amount of energy. If someone were to be successful in this monumental task, they would also nullify all the value of the network and thus make their investment in attacking it pointless. Many people like to point to blockchain and say that blockchain is an incredible invention and that it's a huge innovation, but that Bitcoin doesn't interest them. I can assure you that the people speaking along those lines don't truly understand Bitcoin or blockchain, and they're merely following a hype trend. If you're interested in learning more about that, I would highly recommend the Bitcoin Standard by Sefidun Amus. While the title of his book may lead you to believe that he's biased, I assure you that his inspection of the topic is academic in nature. There's no other cryptocurrency on the market that is as decentralized with a blockchain, with proof of work, and without a founder in the public eye. Blockchain technology does not lend itself to every situation the way some people think it does, and many of the other cryptocurrencies are outright scams. None of them have the same deep philosophical and economic base that Bitcoin does. Slowly but surely they will all fall by the wayside as Bitcoin continues to soak up the global market cap of monetary energy. I know a lot of this sounds pretty novel and extreme, and I'm aware of that. I'm also aware that one podcast is not going to explain Bitcoin to anyone. It's an extremely complicated, multifaceted topic. Unless you have a background in Austrian economics, it's not easy to pick up this topic. And as I mentioned, it took me a long time to get to this level of understanding. That included a lot of reading, a lot of listening to podcasts, and a lot of sifting through toxic garbage on Twitter, to be honest. But there's lots of gems in there, and I'm still learning. And where my learning about Bitcoin concludes is where my learning about the rest of the world in relation to Bitcoin begins. Through my experience with psychedelics and with Bitcoin, I become very wary of the state and of medical institutions and universities and the media and the DSM and any quote unquote expert who is prepared to tell others that they know what's best for them to the degree that they're willing to take rights away from individuals. In an ideal world, all human action would be taken voluntarily. The closer we can get to that state, the better. Bitcoin is about resisting the control that we did not volunteer to obey and frankly did not vote for either. This brief recording is just a neon sign pointing to a rabbit hole. And if you want to jump in, that is up to you. I am not telling you what to do. I'm not even advising what you should do. But I thought that this would be a valuable opportunity for me to provide some information and education about something that I think is very important. As I mentioned at the beginning, there are dozens of podcasts and dozens of books written about Bitcoin, specifically about Bitcoin. And that's what you should look for if you're interested in learning more. I would also advise you not to go out and buy a bunch of Bitcoin just because you're excited after this podcast. It's really best if you fully understand what you're getting involved in. And the best investment strategy is to set a recurring buy and buy a little bit every week. If you buy a bunch at once, the likelihood that the volatility is going to scare you away is a lot higher. If you're buying all the time, it doesn't matter if the price is going up or down. In the long run, the numbers always going up. It's due to that NGU technology. The rate at which Bitcoin is released to miners reduces by half every four years. The scarcity is fixed and the demand is continuously increasing. Enjoy it. Be skeptical of anyone who's excited about NFTs or other altcoins because they're laced with moral hazard. You really never know who's involved, who founded it, and where it's going. A lot of the software that they say is going to change the world doesn't even exist yet. And while they may have a big fancy website with a bunch of company logos on it of partners they're working with, like Google and Apple and whatever else, it doesn't mean they're going to get that software off the ground. I've seen dozens and dozens and dozens of projects fail. And each one that fails, whether it's a rug pull or it's a legitimate collapse, leaves millions of dollars of investor funds wiped off the map. This is also why it's important to make sure that you manage your private keys when you're holding Bitcoin. You do not want to leave it on exchange. You don't want to send it into some service that grants you a yield. You want to make sure you have custody of your Bitcoin using a cold wallet. If you didn't understand anything I just said, that's a perfect reason why it's better that you educate yourself further before you start buying large amounts of Bitcoin. There's no rush. The whole idea here is to stay grounded in your understanding of the long term potential of Bitcoin. The short term gains of crypto may be exciting, but they don't hold a candle to the concept that Bitcoin represents. Separating money and state, reinventing currency as it exists today. Digital scarcity in combination with fungibility, these are the profoundly powerful fundamentals in the Bitcoin network. The rat race created by Fiat Currency tricks us into thinking in short term gratification, it's truly a self destructive incentive structure. It can be avoided and altered if we consciously change the incentive structure of society. My only hope is that this can be done in a way that's nonviolent, gradual enough for most people to make it on the boat, and fast enough that those who want to stop the boat can't. If you hear anyone saying that Bitcoin is destabilizing the financial structure of a country or the planet, I would like to ask you to stop and think. If a software is disrupting the stability of a financial structure, was it really that stable to begin with?