Based Camp - Bitcoin As an Asset (Why Bitcoin is Unique in Human History)

00:00:00.000 If I have a caravan and I'm trying to move assets between two locations in like medieval Europe or something like that, and that caravan had a lot of gold in it, right?

00:00:10.700 If that is raided by a group of bandits, those bandits, because the gold is easily divisible, it can easily divide it.

00:00:17.460 They can easily use it even in small increments to buy a beard.

00:00:21.560 But if you are a group of bandits and you raid a carriage and it's full of art, expensive art, that is incredibly hard to fence.

00:00:32.760 That is incredibly hard to make of use to you.

00:00:36.420 And the amount of money you're going to get from that is dramatically lower than the amount of money a wealthy person could get from that.

00:00:41.480 And for those reasons, there is differentially less reason to raid those carts.

00:00:47.460 Now, with crypto, it's a little different.

00:00:50.100 If I split my key between multiple carriages, for anyone to gain access to any of it, they would need to successfully heist every single carriage was a portion of my key.

00:01:03.400 I hope it now makes sense to you why this is such a valuable asset to the ultra wealthy.

00:01:08.220 And then the question is, do we live in a world where wealth is being more and more concentrated among a smaller and smaller class of people? 0.96

00:01:15.460 And to me, the answer there is fucking obviously. 0.92

00:01:21.380 Would you like to know more? 0.98

00:01:22.880 You know, you're number one.

00:01:24.920 You are the sun around which we revolve.

00:01:26.920 That is not true.

00:01:28.060 You are the best.

00:01:28.920 And I love you.

00:01:30.220 But we're going to talk about Bitcoin today.

00:01:34.180 Bitcoin.

00:01:35.460 Yeah.

00:01:35.760 Yeah, so we got a comment under, we had done a video on, you know, investment.

00:01:40.880 And we mentioned Bitcoin briefly in that video.

00:01:43.440 And, you know, why I thought I liked it more than precious metals.

00:01:47.180 It's like a long-term investment.

00:01:48.360 And we're pretty heavily invested in that area of crypto, at least.

00:01:52.240 And one of the comments said,

00:01:54.220 you, like, I would never get Bitcoin because you don't own your own Bitcoin.

00:02:00.180 You know, it's always on another exchange, like FTX or something like that.

00:02:03.760 But with gold, I can own my own gold. 0.99

00:02:07.840 And when I saw that, I was like, holy shit. 0.99

00:02:11.440 Like, even in our audience, which I consider a fairly educated audience, 0.97

00:02:14.840 I was surprised by the lack of, like, knowledge about, like, the basics of Bitcoin as an investment

00:02:21.700 or the way Bitcoin works or why it has value.

00:02:25.660 If you are a Bitcoin person, you would hear something like that and just guffaw at the insanity of it

00:02:34.880 because it is so super incorrect.

00:02:40.520 So what we wanted to take this podcast to do is explore Bitcoin as an asset, i.e. not as a technology.

00:02:49.020 Like, not why.

00:02:49.860 And I think this is a problem with Bitcoin videos, is they so often approach it being like,

00:02:56.740 oh, here's, like, the technical part of, like, why it's cool.

00:03:00.340 Here's, like, the whatever, you know.

00:03:02.740 Great.

00:03:03.560 Or, like, here's how to invest and look at these weird charts and this is my method.

00:03:07.320 Yeah, yeah.

00:03:07.660 Or like that.

00:03:08.340 Like, oh, here's it going up into the right and here's it going down and this is how you note it.

00:03:12.760 You know, because of the this and that, like, how it's going to change, blah, blah, blah.

00:03:17.240 Right?

00:03:17.980 Yeah.

00:03:18.260 Whereas I want to try to do an episode on Bitcoin, and this is why I didn't really prep for this episode.

00:03:23.520 Otherwise, I would have on an episode on Bitcoin.

00:03:25.540 Interesting.

00:03:26.080 Just at the highest conceptual investment level, like, as an asset, discuss why it's a thing of value

00:03:33.320 and why I think it will be a thing of long-term value that I am very interested in participating,

00:03:39.940 like, long-term when I think about my kids and stuff like that.

00:03:42.640 Hmm.

00:03:43.540 All right.

00:03:44.200 Let's do it.

00:03:45.060 Well, so, Simone, do you want to take a start in the basics of what you understand of how Bitcoin works?

00:03:50.560 Okay.

00:03:51.080 Things I personally like about Bitcoin.

00:03:54.060 One is it's not owned or run by a government.

00:03:58.900 You know, although there are obviously complications to this, like, where the supply could be manipulated

00:04:03.920 if enough people who hold large amounts of Bitcoin sort of decide they want to change this.

00:04:09.280 Another thing that made it stand out to me is that you actually really can own this. 0.90

00:04:14.060 And this is an asset that when shit hits the fan, you can take with you. 0.64

00:04:19.840 And you literally don't have to have anything as long as, like, you've remembered recovery phrases. 0.97

00:04:26.580 And that's kind of scary.

00:04:28.160 I mean, you could have it written somewhere.

00:04:29.380 You could have it, you know, like, all these different friends, like, hold different ones.

00:04:33.820 Like, there are many different ways you can do it.

00:04:35.420 But, like, literally, you don't even need to have any sort of device or thing.

00:04:39.080 And you can still have your value.

00:04:41.360 And it's not on an exchange.

00:04:43.140 It's not where people can get it.

00:04:45.300 So, hold on.

00:04:45.880 I want to double click on what you said there.

00:04:47.740 Because you're just, like, listing facts.

00:04:49.060 And I think that that second point is something that can be kind of confusing.

00:04:51.900 And that was clearly confusing to the individual who first heard about this.

00:04:54.880 Okay.

00:04:55.200 Okay.

00:04:55.600 Dive in.

00:04:56.060 So, crypto as an asset, at the most basic level, and I said this in the previous episode on this subject, it is the first time in human history in which we have had an asset with a known quantity that is divisible and easily tradable.

00:05:20.360 And a person could say, well, you don't have full ownership over it, which is just not true.

00:05:24.900 You actually have fuller ownership over Bitcoin than you do gold or any asset.

00:05:32.480 You literally have more ownership over your Bitcoin than you have over a block of gold you're holding in your hand.

00:05:39.560 So, why is that the case?

00:05:41.880 That is the case because unlike the block of gold that you are holding in your hand and someone could come along and yoink it, with Bitcoin, if you have memorized your passphrase,

00:05:52.240 you literally, there is no way to access it other than hacking the entire blockchain.

00:06:02.080 You can be tortured. 0.51

00:06:03.200 You can be tortured.

00:06:04.600 You could be tortured, but do you understand that that is an additional level?

00:06:08.200 You could be tortured for like the location of your gold or something like that, right?

00:06:12.240 Yeah, yeah, yeah.

00:06:12.740 But somebody could also externally find your gold.

00:06:15.960 That's true.

00:06:16.220 You could have somebody come along.

00:06:17.080 No one can find your Bitcoin or other crypto.

00:06:21.700 Unless you voluntarily give up that information.

00:06:25.020 Yeah.

00:06:26.020 And that is wildly different from any other.

00:06:29.660 Now, voluntary, obviously, torture and stuff like that.

00:06:32.540 But that is a level of self-ownership that goes beyond the self-ownership of gold.

00:06:37.520 And then somebody could say, well, he doesn't understand Bitcoin very well, so it's useful for me to explain this.

00:06:43.360 Well, okay, but where is it actually stored?

00:06:46.860 Like, who actually has it if you just have a code in your head?

00:06:52.200 And think of it like this.

00:06:54.060 It's distributed among everybody who has Bitcoin.

00:06:57.200 That's who has it.

00:06:58.480 It's actually a little bit more nuanced than that.

00:07:00.600 But it's sort of like everybody who has a node that's operational for Bitcoin.

00:07:05.100 So there's around 13,000 Bitcoin nodes.

00:07:08.720 So everybody who has one of these, and you can set one up in your house, right, if you want to and participate in the system, is who's storing it for you.

00:07:17.740 And when there is between the nodes incongruencies, so like suppose like a portion of the nodes are like, I want to change what's on the blockchain.

00:07:26.600 You need to get like, basically everyone with a node to immediately participate in this charade when you personally can set up a node whenever you want.

00:07:38.580 Like it's just comically impossible to do.

00:07:42.480 Well, these are like culturally extremely libertarian, independent people too.

00:07:47.120 So it would take a lot, I think.

00:07:49.420 Yeah.

00:07:49.760 So that's interesting.

00:07:51.740 And it would also lower the value of Bitcoin as an asset if anyone found out for everyone else who owned Bitcoin.

00:07:58.560 Like if it could be easily taken like that.

00:08:01.840 And this is what people mean.

00:08:03.340 If you hear somebody online saying something like, not your keys, not your coin, which you probably heard a lot with crypto.

00:08:07.700 So what they're saying is that if you give up your keys, like if you don't know the keys to your own crypto, right, well, then whatever exchange they're on has access to that.

00:08:19.240 Right.

00:08:19.680 And they can go bust.

00:08:20.840 They can screw up.

00:08:21.880 And this has happened multiple times throughout crypto.

00:08:23.920 It probably happened less as time goes on, but it occasionally happens.

00:08:27.460 Right.

00:08:28.120 But this can also happen with assets like gold and stuff.

00:08:31.000 But to go into this, well, then an individual might say, yeah, but you have to initially buy your Bitcoin through an exchange.

00:08:39.620 Right.

00:08:40.100 And that means you don't fully own it.

00:08:42.380 And this is just wrong.

00:08:44.420 This is like saying because I buy it.

00:08:46.920 It is true that like the easiest way to buy crypto is through an exchange.

00:08:49.840 It's not the only way, but the easiest way is to buy crypto through an exchange.

00:08:52.280 This is like saying because you buy your block of gold that you then take home and put under your bed at a store that you don't really have access to that gold.

00:09:01.760 You do as soon as you take your keys off the chain and verify that those keys are real.

00:09:07.900 As soon as you have bought a crypto, specifically, we're just talking mostly about Bitcoin on this, on a chain, and then you have taken the keys from the chain and you have it yourself, you now have full access to that.

00:09:23.220 Yeah, although I will say it is surprisingly hard for unbanked children.

00:09:30.140 Sorry, let me only repeat that.

00:09:32.300 It is actually really hard for many unbanked people.

00:09:35.760 So like a lot of people working in the sex trade, when they started out with Bitcoin and crypto, they were really excited.

00:09:41.940 They're like, this is great.

00:09:42.760 This is the solution.

00:09:43.620 I can accept payment because many banks aren't willing to work with you once that happens.

00:09:47.580 But now, because there are all these KYC requirements, especially for US-based exchanges, before you can even start to trade on them or buy or accept, you have to have a bank account that is associated.

00:10:02.760 You have to do all this stuff with your identity.

00:10:04.520 It is imperfect.

00:10:06.300 And there aren't great systems if you're totally going off the grid, it seems, with your crypto.

00:10:12.160 I'm sure people are developing better things.

00:10:13.900 But I would say it's still a problem.

00:10:15.560 A lot of people who are trying to use this system the way it should be used, where you don't have to be involved with legacy banking, are still struggling.

00:10:24.560 And I think that's a misunderstanding of crypto.

00:10:26.260 So I think that the Bitcoin nerds right now, when they're trying to talk about why crypto has value, they're wrong.

00:10:33.580 Crypto is never really a good alternative to the mainstream system.

00:10:37.800 It may be for high-end purchases, but we'll get to it.

00:10:41.060 Well, actually, I'll get to that right now.

00:10:42.800 So we used to live part-time in Peru.

00:10:44.680 And in Peru, when I am buying a soda or when I am buying something at a restaurant, right, or I am buying from a grocery store, I am buying in Peruvian Soles.

00:10:58.800 When I am buying a large asset, like a company or a house, I am almost always buying in American dollars.

00:11:06.920 And this is a normal way that economic systems subdivide.

00:11:11.960 Right.

00:11:12.020 I can very easily see an economic system in which Bitcoin is used for large transactions and dollars or local currency is used for small transactions.

00:11:23.660 And when I say large transactions, I mean enormously large transactions.

00:11:27.860 And this is where it gets really interesting.

00:11:30.360 I think the core value of Bitcoin specifically has always been to the world's ultra-wealthy.

00:11:38.220 Never, never to...

00:11:40.600 The average person.

00:11:41.560 The average person.

00:11:42.820 Yeah.

00:11:43.700 And so people would be like, well, what do you mean by that, right?

00:11:46.900 Like, and we've mentioned this on the last time we talked about it, but it is worth going into a bit.

00:11:51.320 Like, why is art such a thing of astronomical value to wealthy investors?

00:11:56.700 It's because an artist can die.

00:11:59.340 And when an artist dies, you have a broad understanding of how many of those artistic pieces there are in the world.

00:12:05.860 Like, no, of course, like Bitcoin, there's also market manipulation was in the field.

00:12:10.000 But that's a core reason why historically art had value.

00:12:12.820 Because an artist could die, which could give you a set number of those artistic pieces in the world.

00:12:17.620 And those pieces are light and easily transportable.

00:12:21.340 Yeah, relatively speaking.

00:12:23.080 Like, easier than gold bars in many ways, you know.

00:12:25.980 Right.

00:12:26.320 But I mean, this is why art was used instead of gold bars historically.

00:12:30.660 Because it was more easily transportable.

00:12:33.140 And you knew how much of it there was.

00:12:35.160 With something like gold historically, you could always presumably find some new vein or some new way of extracting it from the earth.

00:12:41.120 And this has happened repeatedly, right?

00:12:43.380 Like, that makes it a very dangerous asset.

00:12:46.540 Yeah.

00:12:46.760 But Renoir, he's dead.

00:12:48.160 He's super dead, right?

00:12:50.620 Yeah.

00:12:51.440 I mean, you could find new art or people can forge art, right?

00:12:54.700 You know, which is why there's such big industries around detecting that or finding new art.

00:12:58.960 But presumably the numbers that you're going to find are fairly limited.

00:13:04.080 And this is of huge value if you're an ultra-wealthy person, right?

00:13:08.260 Because as ultra-wealthy people, there historically have been periods in which society has turned against you.

00:13:14.140 And you needed to either be able to hide assets or move with lots of assets at once.

00:13:19.640 And gold is typically a really bad asset to move with.

00:13:22.600 An additional benefit of art is that it's harder to fence to non-ultra-wealthy people.

00:13:28.060 So, let me...

00:13:29.740 Oh, I see.

00:13:30.420 Like, you're trying to buy a property in some other country because you're hiding.

00:13:35.040 Like, you're hiding as a wealthy person.

00:13:36.760 And you're like, listen, I have this Van Gogh.

00:13:39.560 Like, take it and give me your beautiful mansion in mysterious nowhere-come country.

00:13:44.360 And they're like, well, what am I going to do with...

00:13:46.180 You know, like...

00:13:47.260 Well, no, they would do a deal like that.

00:13:48.740 And that has happened.

00:13:49.660 So, like, the Shroud of Torrin actually was traded for two castles in Italy.

00:13:53.380 Oh, good deal.

00:13:54.420 As an example of, like, art or relics being traded for high amounts.

00:13:57.360 You know, that's...

00:13:57.860 Now, well, I mean, this matters, right?

00:14:00.480 Because to wealthy people, this has value.

00:14:01.940 They can trade it to other wealthy people for other very large things.

00:14:06.460 The...

00:14:06.940 But with gold...

00:14:08.120 So, like, imagine I have a caravan.

00:14:10.260 Like, this is medieval times.

00:14:11.520 I have a caravan that's moving between two cities that's trying to move my wealth, right?

00:14:16.520 If I have a caravan and I'm trying to move assets between two locations in, like, medieval Europe or something like that.

00:14:22.460 And that caravan had a lot of gold in it, right?

00:14:27.320 If that is rated by a group of bandits, those bandits, because the gold is easily divisible, it can easily divide it.

00:14:34.440 They can easily use it, even in small increments, to buy a beer.

00:14:38.280 You know, you could, you know, historically in the Old West, that's where they'd grow out their nails.

00:14:41.360 They'd scrape a little bit of gold dust and they'd use that to buy a beer.

00:14:44.980 One, like, Nailsworth was one.

00:14:46.720 Anyway. 0.92

00:14:47.200 Gross. 0.81

00:14:47.400 So, this is why... 0.90

00:14:50.120 Sorry, it was saloons, I think.

00:14:51.660 We'd get the pinky, the long pinky nails for the scooping of gold dust. 1.00

00:14:55.260 Yeah.

00:14:57.100 Anyway, Simone.

00:14:58.620 So, but...

00:15:00.320 But if you are a group of bandits and you raid a carriage and it's full of art, expensive art, that is incredibly hard to fence.

00:15:10.220 Yeah.

00:15:10.560 That is incredibly hard to make of use to you.

00:15:13.580 And the amount of money you're going to get from that is dramatically lower than the amount of money a wealthy person could get from that.

00:15:19.200 And for those reasons, there is differentially less reason to raid those carts.

00:15:27.500 Now, with crypto, it's a little different.

00:15:30.420 If you raid it and you get access to the key, you have full access to it.

00:15:34.720 But that's if you gain access to the key.

00:15:36.520 But this allows you to do things like ship parts of the key separately.

00:15:40.480 So, for example, like when we die, different parts of our family who don't like each other have different parts of our crypto keys.

00:15:47.500 Well, and friends who don't know each other exist.

00:15:50.180 Yeah.

00:15:50.360 Yeah.

00:15:50.660 Like people have our keys who do not know each other, have never heard of each other, have no idea who else has been looped into this thing.

00:15:58.800 Yeah.

00:15:59.100 Yeah.

00:15:59.500 And they have a system that we have developed for bringing them all together and gaining access to all of that crypto, even if we die, right?

00:16:05.380 But this is very different.

00:16:10.360 And we also have a system where we don't know our own keys.

00:16:12.660 So even if somebody were to torture us, they couldn't gain access to our keys.

00:16:15.480 I suppose I should make that clear.

00:16:17.000 All of our keys are done.

00:16:17.940 I mean, I think also there's the problem of we cannot remember our keys.

00:16:21.240 Yeah.

00:16:21.480 They're all maintained through these treasure hunt systems.

00:16:24.740 But anyway, which is fun.

00:16:26.520 It's much more fun.

00:16:27.540 But that's really interesting.

00:16:28.900 Because what that means, suppose historically you had Bitcoin instead of...

00:16:31.840 Doesn't that just mean we would be tortured for longer because they wouldn't believe us?

00:16:37.000 It makes sense if you knew us.

00:16:39.060 Yeah.

00:16:39.400 It would.

00:16:40.020 Yeah.

00:16:40.200 But it's not like people torturing you are really close to you.

00:16:43.560 True.

00:16:44.560 I always worry about that.

00:16:45.780 I worry about the scenarios in which...

00:16:48.440 Because I'm an easy pushover.

00:16:50.660 Someone looks at me the wrong way and I'm like, I'll tell you everything.

00:16:54.520 But if I'm literally like, I don't know, they'll think I'm just not breaking.

00:16:58.060 That's a scary scenario.

00:16:59.620 Anyway, so let's talk about this historically from a Bitcoin perspective, right?

00:17:04.820 So suppose instead of moving gold or instead of moving art, I'm trying to move Bitcoin between

00:17:08.920 two locations.

00:17:10.000 And I'm doing this in old-timey carriages, right?

00:17:12.900 Okay.

00:17:13.600 This is medieval period.

00:17:14.900 If I split my key between multiple carriages, for anyone to gain access to any of it, they

00:17:23.380 would need to successfully heist every single carriage with a portion of my key.

00:17:28.140 Yeah.

00:17:29.560 And have the instructions for how to put it together, which might be a different carriage

00:17:33.960 of the courier.

00:17:34.800 Not that it couldn't be done, but I hope it now makes sense to you why this is such a valuable

00:17:39.320 asset to the ultra-wealthy.

00:17:41.360 And then the question is, do we live in a world where wealth is being more and more concentrated

00:17:46.440 among a smaller and smaller class of people?

00:17:48.600 Mm-hmm. 0.99

00:17:49.800 And to me, the answer there is fucking obviously. 0.98

00:17:54.120 This is not a trend that's reversing. 0.96

00:17:56.380 And in a world with wealthier rich people, crypto has an increasing level of value, specifically

00:18:05.400 Bitcoin.

00:18:06.520 Yeah.

00:18:06.900 We could talk about, oh, yeah, but what about ETH?

00:18:09.060 Like, that's like ethical Bitcoin, right?

00:18:11.200 Except the code base gets changed pretty unilaterally all the time.

00:18:16.760 And if they ever wanted to, they could just change it.

00:18:19.120 It really has none of these assurances that Bitcoin has.

00:18:22.560 Like, I've been going over and over again, all these assurances that make it such a stable

00:18:26.060 asset.

00:18:27.020 ETH doesn't have those assurances.

00:18:30.100 Yeah. 0.98

00:18:30.880 Now, I'll tell you what Bitcoin does not fucking have. 0.98

00:18:33.260 And this is important to understand if you've only heard about it from the Zeitgeist. 0.97

00:18:35.900 It is not an untraceable.

00:18:38.680 It might be the single fucking most traceable asset in the world, which is part of what

00:18:43.440 makes it easy to verify. 0.70

00:18:45.920 But if you've gotten into Bitcoin because you think you've gotten some form of currency that

00:18:50.720 people can't trace where it's going, they may not be able to trace who owns a wallet.

00:18:56.340 But even that is harder these days with government controls.

00:19:00.460 It is dramatically more traceable how it's being used than dollars or gold.

00:19:05.480 Or even bank accounts, really.

00:19:08.900 If you're using a lot of, like, international, like, offshore bank accounts and stuff like

00:19:12.820 that.

00:19:13.020 So that's an important thing to note.

00:19:14.100 If you wanted an iteration of something like this, like, Monera might be better if you're

00:19:18.800 like, I want something that actually is, like, untraceable, untraceable.

00:19:22.280 But even that stuff, I don't know.

00:19:23.760 Like, you can look into that category of crypto.

00:19:25.720 That is not why I think it has value.

00:19:27.540 Because that's a smaller minority of people who value the thing because it's untraceable.

00:19:32.540 So Bitcoin's value is just its fungibility, transportability, and known quantity.

00:19:38.760 Like, that's it.

00:19:40.080 Now, what other misconceptions do I often hear here?

00:19:45.880 Well, I think a lot of people are like, well, there's zero practical application.

00:19:49.320 No one's using this.

00:19:50.320 No one can use this for day-to-day transactions. 0.94

00:19:52.480 There's zero fucking practical application of art.

00:19:54.480 This is probably a point I should go a bit deeper on because a lot of people hit this 0.95

00:19:59.460 as a stumbling block when trying to understand why people value an asset like Bitcoin, which

00:20:05.120 has no practical value.

00:20:06.660 The practical value of any particular asset determines the floor of its value, but not

00:20:12.880 the ceiling of its value.

00:20:15.040 Assets used as bargaining tokens are almost always valued at a level that is much higher

00:20:22.640 than their practical value.

00:20:25.000 Currency is often thought of as, like, the core bargaining token asset.

00:20:28.560 You know, if you look historically, you could look at things like precious gems, crystals,

00:20:34.060 or gold.

00:20:35.420 Now, people would be like, yeah, but gold has practical value.

00:20:38.380 Yet, if I ask someone the practical value of gold today, they're like, well, it can be used

00:20:41.860 in electronics, right?

00:20:42.920 If I ask someone the practical value of gold historically, they'd say, well, it could be

00:20:46.420 used in jewelry.

00:20:48.140 Well, then, why did it maintain a linear value as this core practical purpose changed?

00:20:55.080 And that's because gold has always been valued at much more than its practical value because

00:21:00.840 it was used as an intermediary for exchange.

00:21:04.460 With gold, I think it can sometimes cloud people because people can think of the industrial

00:21:08.720 applications or something like that.

00:21:10.780 Instead, let's talk about something like diamonds.

00:21:12.920 So, you look historically at the value of diamonds.

00:21:16.540 They have almost always been valued at much, much higher than their practical value, especially

00:21:21.680 before we found out about the industrial capabilities of something like a diamond.

00:21:27.140 Why were they valued like that?

00:21:28.840 Because the elites always need some sort of ultra-scarce portable asset to do really high-value

00:21:38.880 transactions.

00:21:39.620 But a person could say, well, yes, but even historically, a diamond could be used in things

00:21:44.800 like jewelry.

00:21:46.420 And it's then saying, well, why would you use a diamond in jewelry instead of, like, a

00:21:50.920 really pretty seashell, right?

00:21:52.740 There's many seashells that are approximate in beauty to a diamond.

00:21:55.960 It's because a diamond is scarce and therefore a sign of value.

00:22:01.380 It is its scarcity and portability which is giving it its value.

00:22:05.160 Now, a person may say, yeah, yeah, yeah, but at least a diamond, unlike Bitcoin, has some

00:22:10.340 base level of practical utility.

00:22:12.660 Well, that's really irrelevant.

00:22:14.300 As soon as you have admitted that any asset is trading for more than its practical utility

00:22:19.580 because of its scarcity, that net difference is the net difference of where something like

00:22:26.600 Bitcoin can come in and have value.

00:22:28.240 Well, but I mean, I would also argue that when we go to various communities in Latin America,

00:22:35.100 when we look at Venezuela, like, suddenly crypto is pretty pervasive.

00:22:42.060 Not always Bitcoin, quite frequently Bitcoin.

00:22:45.640 So let's, let's, yeah.

00:22:46.980 And this is actually an interesting point that you're making here.

00:22:49.160 Crypto has differential value in economic situations in which people do not have trust in their

00:22:58.580 governments.

00:23:00.580 Okay.

00:23:01.580 So if you're thinking about it as an investment asset, I ask a question.

00:23:05.840 Do you think that 50 years from now, people will have more trust in their governments than

00:23:10.540 they do today or less trust in their governments than they do today?

00:23:14.300 I think it's pretty obvious.

00:23:19.400 For me, the biggest question I have about Bitcoin as an asset is supercomputers and how

00:23:25.180 long until it's cracked.

00:23:27.180 Because the blockchain is cracked and we have friends who off the record have told us that

00:23:32.360 they, like, if you look at like the quantum computers that they're working with, they're

00:23:36.480 not that far from being able to do it or they could even do it right now.

00:23:40.460 Yeah, it could even be the case that for over a year, someone, multiple people have cracked

00:23:45.860 this.

00:23:46.260 They just, there's a clear incentive to not talk about it.

00:23:51.320 Now, this is what's really interesting to what Simone is talking about here.

00:23:54.780 If you crack Bitcoin with a supercomputer, you actually have a huge economic incentive to

00:24:02.820 not let anyone know that you've cracked a Bitcoin.

00:24:05.140 Otherwise, everything you take from it has no value and you would take stuff at small

00:24:10.940 levels.

00:24:11.480 You'd likely do a Superman thing, like a tax on everyone who has Bitcoin.

00:24:15.160 Right.

00:24:15.320 Now, what's interesting about these quantum computers is at least my understanding of

00:24:18.420 existing technology is you really can't have that many at a time.

00:24:21.620 And they can really only be operated by large state or corporate institutions.

00:24:25.760 What do you mean you can't have that many at a time?

00:24:28.340 I just mean they're incredibly expensive to build.

00:24:30.180 I predict that within 100 years, computers will be twice as powerful, 10,000 times larger,

00:24:36.260 and so expensive that only the five richest kings of Europe will own them.

00:24:41.180 Oh, as in like very few people would be able to afford.

00:24:44.060 Well, no.

00:24:44.740 So I've heard some people be like, well, I found this method that would enable me to do

00:24:49.420 it without tons of money.

00:24:50.420 So, I mean, it's plausible that someone has developed a method that's actually affordable,

00:24:54.420 less plausible than the people who are brute forcing it with money, of course.

00:24:57.720 But still.

00:25:00.800 So that's what I worry about with Bitcoin is does increasing technology make it less relevant?

00:25:05.360 And I think that is a really real and very big fear.

00:25:09.940 But I think it doesn't.

00:25:11.180 I guess.

00:25:11.980 Yeah, I guess there's less risk with the U.S. dollar because there are so many different

00:25:14.700 processes at play.

00:25:16.280 Here's the other thing.

00:25:17.020 People would say, well, what if governments ban it?

00:25:19.460 Right.

00:25:19.740 Like that could hurt its value and that can hurt its value in the moment.

00:25:24.080 But over the long term, look, let me put it this way.

00:25:28.900 How much how many Chinese people do you think own Bitcoin and how many times do you think

00:25:34.100 China has banned Bitcoin?

00:25:35.860 Right.

00:25:36.300 Like a lot, a lot and a lot.

00:25:38.640 So, yeah.

00:25:40.400 If anything, increasing and frequent bans just make it like prove its use case more to

00:25:47.400 individuals.

00:25:47.900 Hearing a government ban something once is scary for its long term potential.

00:25:53.680 Hearing that a government had to ban something like five different times is very promising

00:25:59.060 to that thing's long term potential because it indicates that the government clearly is

00:26:03.820 having trouble actually banning its use.

00:26:06.380 And therefore, you know, an asset does not require government approval to continue to be

00:26:12.320 of utility.

00:26:12.860 And also, any negatives from the bans are already baked into the price of the asset.

00:26:19.660 Hmm.

00:26:20.880 Yeah.

00:26:21.580 And I think for us, though, like the big thing for us was doing a lot of work with Venezuelans

00:26:27.220 and doing a lot of work in Latin America and just seeing it actually in everyday use.

00:26:33.020 Because for us, we were first exposed to crypto in like 2012.

00:26:37.980 And it was always in this really like abstract kind of difficult to use environment.

00:26:44.000 So I was just like, well, this is always going to be relegated to like super techie

00:26:47.000 people who are really into it from a theoretical standpoint.

00:26:50.380 And then when I saw super non-tech savvy people using and exchanging crypto, I realized, oh,

00:26:58.040 wow.

00:26:58.360 OK, so even people who are not into tech who don't even own a PC or like, you know, like

00:27:05.880 anything, a lap, like anything larger than a smartphone are using this.

00:27:09.960 OK, I'm interested.

00:27:12.040 And let's talk about gold for a second.

00:27:13.620 Right.

00:27:13.920 So people can be like, yeah, well, the government can't like it can ban your ability to hold

00:27:19.200 Bitcoin, but it can't ban your ability to hold gold.

00:27:21.400 And it's like literally the U.S. government has done that before the 1935, a gold reserve

00:27:28.100 act banned the ability to personally hold gold with the exception of jewelry and collector's

00:27:33.420 coins.

00:27:34.620 So this has happened before, right?

00:27:36.440 Like, no, any asset that threatens a weak currency is going to be subject to potential

00:27:43.100 bans.

00:27:43.760 The question is, how easy is it for the government to search your house for that asset? 0.82

00:27:47.720 Gold, fairly fucking easy, especially with current technology. 0.98

00:27:52.520 Bitcoin, basically fucking impossible. 0.98

00:27:56.960 So that is really... 0.98

00:27:58.740 You just made the point that it's like easy to trace.

00:28:01.680 So that's a problem.

00:28:02.760 What you'd say is the boat.

00:28:05.340 That's what everyone says.

00:28:07.100 The boat?

00:28:07.960 I lost it in a boating accident.

00:28:09.940 I had all my keys in the boat and then the boat sunk and I don't have...

00:28:13.760 You know, or you were one of those people who tried to memorize your keys and you forgot

00:28:17.700 them or, you know, there are so many famous cases though, like already, of people who

00:28:25.460 bought Bitcoin, you know, and it was like this really theoretical thing and they completely

00:28:29.860 forgot about it because they thought it was worth absolutely nothing.

00:28:33.280 And then, you know, especially when Bitcoin was at its height, like around the pandemic,

00:28:37.700 they like, you know, are digging through old like computer wreckage to try to find where

00:28:41.980 like maybe they saved their...

00:28:42.700 So just because you can prove that Bitcoin went to a wallet that you at one point had

00:28:46.540 control over doesn't mean people can prove you have it right now.

00:28:49.660 Exactly.

00:28:50.380 Which is important.

00:28:51.160 So people can know when you spend Bitcoin on something.

00:28:53.980 So if I'm spending Bitcoin on something illicit, people can easily prove that.

00:28:58.740 People cannot easily prove that I currently have Bitcoin, which is important to note.

00:29:03.340 Now, another thing to note about gold as an asset, and this has always been very confusing

00:29:07.160 to me about gold.

00:29:07.740 There requires a very specific and narrow level of social collapse to be of utility as

00:29:13.900 an asset.

00:29:15.260 Let me explain what I mean by this.

00:29:17.700 So for gold to be the single like recurring reserve of asset, I would need most global economies

00:29:25.500 to break down, right?

00:29:27.560 So like the United States, everything like that, like the Europe, et cetera.

00:29:32.420 I would need the internet to break down because, you know, Bitcoin would need to not be a better

00:29:36.960 asset.

00:29:37.740 But I would need people to broadly understand the value of like a scarce tradable metal and

00:29:45.800 be able to test it.

00:29:49.500 That is that requires like a level of social cohesion, which is just very unlikely in these

00:29:56.220 other meltdown scenarios.

00:29:58.400 So what do you say to the people who are like, and that's why I just buy guns and ammo?

00:30:03.060 I think that is a very valuable thing to invest in.

00:30:06.080 I think guns and ammo.

00:30:08.360 So pretty much if society falls below a certain level of technology or a certain level of social

00:30:13.400 cohesion, guns and ammo become the core store of value.

00:30:16.540 Very, very, very, very, very obviously.

00:30:19.820 And that being the case, I can understand the huge swath of levels of which society could

00:30:26.580 collapse below, let's say, like 10% societal stability.

00:30:32.440 Below 10% societal stability, guns and ammo are the core source of value, right?

00:30:37.280 Gold becomes the core store of value between like 10% and 15% societal stability.

00:30:46.400 It's a very narrow range.

00:30:48.100 Right.

00:30:48.320 That's where you still have global networks of trade, but the internet is down, okay?

00:30:55.640 Between, I'd say like 15% and like 60% societal stability.

00:31:02.600 So these are scenarios in which people don't really trust most governments, but the internet

00:31:07.460 is up.

00:31:08.040 Global trade is kind of operational, but with private piracy.

00:31:12.120 Those are the scenarios in which Bitcoin is the core asset of value.

00:31:15.220 So it's just like a much wider range and much more likely range in terms of when I look at

00:31:20.140 real outcomes for the world that I think we're going to fall into.

00:31:23.420 You know, as I say, I think the world's heading to where South Africa is today in terms of stability.

00:31:28.220 So rolling blackouts don't mean the internet has no value or Bitcoin has no value, right?

00:31:33.680 It's the same with, you know, unsafe streets, unsafe care, you know, moving assets.

00:31:38.800 All of that stuff only increases the value of Bitcoin, right?

00:31:41.940 Even frequent blackouts doesn't make the internet go away as like a thing, right? 0.89

00:31:46.640 I think things need to get pretty fucked for the internet to go away. 0.85

00:31:51.800 But that's my take. 0.99

00:31:53.220 That's actually a scary thought.

00:31:55.500 I don't know how much there is protecting the internet the way it works now.

00:32:02.140 Well, I mean, we've had some friends.

00:32:03.680 The other thing that I know people have stored as an asset in case of collapse is Wikipedia.

00:32:10.460 Yeah.

00:32:11.020 And then they have other hard drives they can put it on and trade it for.

00:32:15.960 And they have it in their clarity cages, obviously, because that's very necessary.

00:32:20.620 Yeah.

00:32:20.800 So they put, by the way, they took Wikipedia from before.

00:32:24.160 The before times.

00:32:24.900 Before it became all biased and everything, which now is wildly biased.

00:32:29.220 But yeah.

00:32:30.980 Isn't that fun?

00:32:32.900 Yeah.

00:32:33.260 So, I mean, there are scenarios in which it matters.

00:32:38.140 I don't think people should, like I've said before, buy any sort of crypto, not being ready to lose all of it.

00:32:48.340 And for multiple reasons, like the value can go to nothing.

00:32:51.340 You could lose your keys.

00:32:52.860 But also, like, never consider buying a currency if you don't have a cold wallet that you plan to move it to.

00:33:00.180 Like, leaving it on an exchange, I agree, is not a good idea.

00:33:02.940 So, there you go, right?

00:33:06.280 Yeah.

00:33:07.020 And there's also weird things you can do with all this.

00:33:09.800 It's split up portions of your key and make it so that even you can't easily access it, which is the way that we handle everything.

00:33:15.480 Which is weird to a lot of people, but I think it makes us marginally safer.

00:33:20.680 Yeah, I'm sure people have much more sophisticated ways of going about this.

00:33:25.740 But we're just talking about, like, basic functionality here and why it gives us hope.

00:33:31.460 And I think a lot of why we like it is ideological because we have this sort of libertarian view that people should have.

00:33:37.720 I disagree. 0.78

00:33:38.440 I don't fucking, I think Bitcoin has value because the number of tyrants in the world is going to increase. 0.97

00:33:42.720 I think the core bet I'm making with Bitcoin is tyrants go up. 0.98

00:33:48.380 Government stability goes down.

00:33:50.980 So, yeah, it's a very real risk.

00:33:53.440 You're not at all wrong, as depressing as that may be.

00:33:57.340 So, it's, you know, it's a good hedge.

00:33:58.660 But again, I think you should be ready to lose all of it because, you know, the world is unpredictable and it's a weird asset.

00:34:06.960 Well, I understand you're saying, oh, yeah, we are not investment advisors, blah, blah, blah.

00:34:10.960 We're just talking about something from, like, a conceptual standpoint.

00:34:15.820 Yeah.

00:34:16.520 And you're saying, yeah, don't invest anything.

00:34:19.060 This is true with any investment class.

00:34:20.480 Don't invest anything you're not prepared to lose.

00:34:23.020 But, I mean, I broadly think that most metal assets that were traditional value stores, gold, silver, etc., they're just going to decrease over time, long term.

00:34:32.860 Yeah, I definitely have a lot less confidence in precious metals that are not, like, strategically undervalued now.

00:34:42.020 Like, we're talking about stuff that's used in batteries that are going to be ramping up in production, for example, right?

00:34:47.720 Like, that's different.

00:34:48.940 But just, like, traditionally precious metals is less.

00:34:52.600 These are the proxy for wealth in a historic context because they're just, like, super unusable as wealth stores and wealth movers.

00:35:03.380 And if you look historically, you could say, well, then why were they so useful in the Old West? 0.92

00:35:08.000 Because we were fucking mining it back then. 0.52

00:35:10.660 Like, in the gold rushes and stuff like that, you know, it was in people's evoked set of wealth, right? 0.98

00:35:18.980 And it had corollaries in the historic context, right?

00:35:23.440 Like, there was no competitor to it.

00:35:26.720 Gold hasn't had a great competitor in a very, very long time.

00:35:31.220 Now it has one and it's just one that is almost comically better than it.

00:35:37.220 Like, it is joke levels better than gold.

00:35:41.420 Gold or bullets.

00:35:42.540 But, again, you know, bullets, I'm not saying bullets don't matter.

00:35:47.680 Bullets matter.

00:35:48.500 You want to store wealth.

00:35:50.020 I'm just saying if you want to store it for the vast majority of societal collapse scenarios, it's crypto and bullets. 0.99

00:35:56.260 It's not other shit. 0.96

00:35:57.640 Now, there's other stuff you can do. 0.98

00:36:00.000 Phosphates, advanced semiconductors.

00:36:03.380 There's some other things that might be worth storing value in, just not precious metals.

00:36:09.080 Well, I also think that when you get to weird stuff like that, even bullets, the risk of counterfeiting, if you're not really careful, is higher, right?

00:36:18.880 So then that's just one other thing to consider.

00:36:21.480 Yeah.

00:36:21.600 Well, here's something I'd ask.

00:36:22.860 If you're wondering why I think gold has such low value, imagine society has collapsed. 0.99

00:36:27.720 Somebody comes to you, the fucking car full of gold, and they want to trade it for your guns or your food or your semiconductors or your whatever. 0.98

00:36:39.760 Are you actually going to take that as trade? 1.00

00:36:44.020 Do you actually think that there's somebody else out there who's going to take that in exchange for shit that you need? 0.99

00:36:50.100 Or are you going to say, hey, I noticed you have a gun in your car. 0.99

00:36:53.140 Can you give me that?

00:36:54.020 I noticed you have a hoe in your car. 1.00

00:36:55.740 Can you give me that?

00:36:56.620 I noticed you have a shovel in your car.

00:36:58.180 Can you give me that?

00:36:59.320 I noticed you have some horses or some chickens.

00:37:01.520 Can you give me that? 1.00

00:37:02.400 Fucking of course. 0.99

00:37:04.780 Like, common sense, man. 1.00

00:37:07.220 I don't know.

00:37:07.820 Well, that's your opinion, and that's my opinion.

00:37:12.180 And I'm sure we're going to get a lot of other opinions in the comments, but fun to talk about it.

00:37:16.560 Yeah.

00:37:17.260 We also have no idea how much gold there is in the world.

00:37:19.400 And that's another thing that's important to know.

00:37:20.920 Like, we know how much Bitcoin there is in the world. 0.95

00:37:22.640 We have no fucking clue how much gold there is. 0.90

00:37:24.320 Well, and how, I mean. 0.98

00:37:26.520 No, what I mean is we don't know if there's gold in Fort Knox.

00:37:29.680 Oh, I see.

00:37:30.840 Right.

00:37:31.100 If it's actually there.

00:37:32.600 We don't know if there's gold in a lot of the banks.

00:37:34.360 Some of them are audited.

00:37:35.860 Some of them are not.

00:37:36.700 Mm-hmm.

00:37:37.760 That's true.

00:37:38.480 I forgot about that.

00:37:39.760 Yeah, not, not.

00:37:40.360 You didn't even mean in the earth.

00:37:41.900 You just meant that people say they have.

00:37:44.660 Yeah.

00:37:45.120 Like, that's a weird thing about that asset class.

00:37:49.160 We just don't know.

00:37:50.060 Now, realistically, if it turns out that, like, a bunch of gold that we thought existed in the world doesn't exist, it would increase the value of all other gold.

00:37:57.680 That's true.

00:37:58.240 But you're not going to find that out.

00:38:00.340 And the fact that people can lie about this so easily devalues gold over time as institutions are more and more willing to lie to the public, which I think is the world that we're entering.

00:38:11.440 Yeah.

00:38:11.560 So in general, low-trust world, potentially dangerous world, corrupt world, Bitcoin plus crypto equals promising.

00:38:26.620 Yeah.

00:38:27.840 I love you, Simone.

00:38:29.120 I love you, too, gorgeous.

00:38:30.080 I love you, too.

Based Camp - November 27, 2023

Bitcoin As an Asset (Why Bitcoin is Unique in Human History)

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