In this episode, My dad is joined by four highly experienced Bitcoiner content creators who've been invested in the world of Bitcoin for many years. They speak about the intricacies of Bitcoin, how it works, other cryptocurrencies, blockchain security, and philosophical opinions on the utility of money and ideal economics. The opinions expressed in this podcast are for general informational purposes only. Don't listen to this and then spend all the money you can't afford to lose on Bitcoin. This episode is brought to you by Helix Sleep, a mattress company that has soft, medium, and firm mattresses. No matter your needs, assuming they can be fixed by a new mattress, you get to try it out for 100 nights risk-free. They'll even pick it up for you if you don't love it. Not sure it gets any better than that? Well, I took the Helix quiz at helixsleep.com/jordanpeterson and I was matched with a mattress that comes right to your door, shipped for free, and even a 10-year warranty. So long days usually leave me feeling quite restless. So when my brain tries to slow down at night, I m so picky about mattresses I m comfortable with. I m trying to find a mattress I'm comfortable with so that I can give you the best night s rest of your life. HelixSleep is offering $200 off all mattress orders and two free pillows for our listeners at Helixsleep, and they'll even be offering you the perfect mattress for you to try out for you. That's a pretty good deal! Thanks to Helixslew for helping me find the perfect bed and pillow, so that you can get a good night's rest so you can have the best rest of the day in the best possible night...and you can even get the most rest you can t afford it...you're not gonna want to miss it...and I'll even get a discount on a pillow and a cup of coffee and a glass of tea...and a bunch of other stuff...so you're not going to have to pay for it, right, you're gonna get it, you'll just...it's not gonna THINK that, right? I'll tell you what I'm trying to do it, I'm gonna do it...I'm gonna tell you how I'll say it like that, I'll just say it, and you'll get it...that's right, right I'm not gonna DO THAT?
00:44:17.300And if you, if you add all this up and make sense of all the transactions, it's the, the, what is recorded is from the genesis of Bitcoin up to the present moment, everything that happened in the Bitcoin ecosystem.
00:44:30.580And so that's, that's, that's what makes it trade.
00:46:28.200And so I would say, please tell me why I'm wrong or if I'm wrong or if you agree, the American dollar has been the currency of record essentially since 1971, perhaps since before that.
00:46:39.240Despite the fact that we've switched to a fiat exchange system.
00:46:43.060And my sense is the reason that people use the American dollar is because the judgment of the world is that by and large, the social structure of the United States, social and economic structure of the United States is such that it's more reliable than any alternative.
00:46:59.560And so people trust individual Americans in some sense, they trust the trusted interrelationship they have with each other.
00:47:07.560They trust the emergent social institutions and, and, and as a consequence of that, they're willing to put the same kind of faith into the dollar that you guys put into Bitcoin.
00:47:28.000Well, I think we have, we can make a fundamental distinction between a money that is chosen by the free market and a money that is forced upon someone by the use of the threat of force, which is essentially what the US dollar is and, and any other fiat currency.
00:47:47.540Your point is, is well taken, which is that the US dollar works as money.
00:47:53.080But I guess the question is in relation to, to what, or, or compared to what, and, and I think that because we, we sort of can't imagine this, this universe that doesn't exist where, you know, the free market was simply allowed to do, to do what it, what it would do.
00:48:10.740So there's, there's, there's two problems with, with the, the US dollar.
00:48:19.380One is that, yeah, it's, it's basically, it's imposed by this legal tender law.
00:48:25.640So, so in the United States, and yes, the United States has economic and political dominance, and that extends around the world.
00:48:33.740But citizens in the United States aren't free to transact in money that they choose.
00:48:40.600If I wanted to make a transaction in gold, I'm legally not allowed to do that.
00:48:47.600I'm not allowed to denominate a contract in gold.
00:48:50.660And I'm also in a technical sense, prevented from saving my money in gold.
00:48:56.380And that's really because of capital gains taxes.
00:49:01.080If, if I want to, want to use gold, for example, to, to protect my savings from debasement, because slowly but surely, the value of the US dollar does decline over time.
00:49:13.300If I then want to go and use that saved money to actually make a transaction, because I'm legally obliged to, I have to pay a capital gains tax and, and sort of give back to the, to the state, the value I've tried to save.
00:49:29.920So I think, yeah, there's a utilitarian dimension.
00:49:33.400So you wouldn't regard that, you wouldn't regard necessarily any increase in value that pertain to investment in gold as an actual capital gain.
00:49:40.900You'd be more inclined, I may be putting words in your mouth, I hope not, but you'd be more inclined to think of that as a hedge against inflation.
00:49:48.680And so not an increase in wealth, but an actual maintenance of wealth, because gold, hypothetically, is more reliable than the dollar, or you could make that case.
00:49:57.760And this is the thing is that, you know, gold, holding gold is, is, yes, technically, it's not an investment, because there's no, there's no return.
00:50:07.220But the other interesting thing is that things that we put our money into these days that are investments, such as real estate, or shares and things like that.
00:50:18.240Most people are only doing that in an effort, yeah, not to earn a real return, but only to sort of offset the loss of value that comes from the slowly depreciating currency.
00:50:29.280So, you know, that's part of the problem of having a currency where the supply constantly inflates is that people aren't able to simply save money in a simple sense, they're not able to hold money, they have to take that money and invest it and take on the inherent risk in investing, simply to maintain their purchasing power over time.
00:50:53.780And then that, that's basically, that purchasing power is taken away from them again, when they try and go rotate out of that investment back into money.
00:51:02.780Okay, so let me ask you a question about that.
00:51:05.160So maybe I could make a case that, you know, because we're all interdependent, whenever I generate wealth, I generate it as a consequence of my interdependence with other people, I wouldn't be able to do it on my own.
00:51:18.380I'm dependent on the infrastructure, I'm dependent on the government, or at least I have the advantages that those things provide me.
00:51:25.280And so could I not make a case that if I've managed to accrue a substantial sum of excess capital savings, that it's reasonable for the rest of society to expect me to allow some of that to inflate away as a tax on my hoarding,
00:51:43.160as a consequence of the fact that part of my wealth is generated as part of a shared endeavour.
00:51:48.560Because, you know, you could posit a wealth tax, right, that might address inequality, so that there's a 2% wealth tax or something like that on fortunes over $500 million.
00:51:57.980And so they decay with time to restore that hoarded wealth back to the general community.
00:52:03.480What do you think of an argument like that?
00:52:05.380Well, there's a, the problem, well, a lot of this comes back to, you know, we have to go right back to first principles about what we think about the nature of the government or the state.
00:52:19.440Like, do we think that that institution helps or hinders?
00:52:22.660Do we think that that institution can actually redistribute resources in a way that's fair and equitable?
00:52:57.320And the only other thing I'll quickly say before I think handing over is that the problem with using inflation as a redistributive method is that it actually unfairly works against the poor people in society.
00:53:11.640Because those that have wealth, you know, you're talking about a wealth tax or that sort of happens through inflation.
00:53:19.900But the way that it generally plays out is those people who are wealthy, they don't store their money as dollars, they store it in assets.
00:53:27.260And those assets appreciate in value as a result of the inflation.
00:53:33.300Whereas those people who are living on fixed wages, salaries, you know, living week to week with a bank balance there.
00:53:41.480And because they're spending a larger proportion of their money on goods and services, they're the ones who are actually most unfairly targeted by inflation.
00:53:52.960So it actually has the effect of increasing inequality.
00:53:57.160And why do you guys have any faith in the idea that there is actually measurable inflation?
00:54:08.840There's a basket of goods and services that are calculated.
00:54:11.660The price of them is calculated every year.
00:54:13.700But what's in that basket of goods and services seems to me to be a relatively arbitrary choice.
00:54:18.420I mean, what makes you think that there has, in fact, been objectively reliable inflation, say, over the last 30 years, given, for example, that many, many manufactured goods and so forth have got dramatically cheaper?
00:54:31.800Now, I know housing in many places has skyrocketed, you know, to a tremendous degree.
00:54:35.960But do you really feel that the currency has become corrupted and that you can, you can, and what do you rely on to make that case?
00:54:50.360I would say unquestionably debasement of the currency.
00:54:55.260It is an arbitrary harvesting of the economic surplus a productive free market economy is creating.
00:55:05.020So as an economy gets more efficient, it generates more wealth that's passed back into market actors in the form of declining prices.
00:55:13.560So we're getting smarter at making chairs, smarter, providing services, electronics, all these things.
00:55:19.300But by printing money, you're basically stealing claims on that productive, on that economic surplus and doling it out arbitrarily.
00:55:28.820So we could say another way to think about this is that the free market itself, as you've described, Jordan, it's a distributed computing system.
00:55:35.800So we all have our, you know, 120 bits per second conscious attention span, you multiply that out by 8 billion market participants.
00:55:44.700That is the cognitive power of the free market.
00:55:48.880I want to emphasize that because it's such an important point and it could easily be skipped over because, you know, there are people who admire the ideas of central planning.
00:55:57.840And you think, well, maybe there's 40 people doing your central planning.
00:56:00.520And so maybe they're the smartest people in the world and they're doing your central planning, but they have to calculate on the fly a virtually infinite amount of information.
00:56:10.380If they don't have free market prices at their disposal, they have to calculate what metal is worth, what nails are worth, what labor is worth, what rubber is worth, what cleanup is worth, what nursing is worth, et cetera, et cetera.
00:56:22.700And they have to do all those comparisons and they have to do those computations and there's actually no way even technically of doing that.
00:56:30.180And the alternative is to distribute that calculation across a virtually infinite number of actors or actors in the billions at least and let every single person act as a computational device and sum all that.
00:56:50.560It's not even possible that a centralized bureaucracy, a centralized computing model can compete with a distributed computing model of the free market.
00:56:59.380We could actually, in fact, say that the free market is a pure economic democracy.
00:57:04.100People are voting by buying and selling.
00:57:06.300And whatever price is generated on any given asset, that's effectively the truth of what it trades at.
00:57:12.140Any intervention on that, any intervention, any regulation, any pricing czar as they had in the USSR,
00:57:18.640you move along that spectrum towards an economic tyranny where we have now the arbitrary wishes of a few overriding what the free market democracy is selecting.
00:57:29.640And to tie this back to the dollar is, you know, the dollar was gold.
00:57:36.900By the way, fiat currency never emerges on the free market.
00:57:39.400That distributed computing model never selects a fiat currency by itself.
00:57:42.540It's only when natural law is violated, when they step across the line of life, liberty and property and say, I'm going to impose this technology on you or else.
00:57:52.560That's the only time fiat currency has ever emerged.
00:57:55.000And, in fact, the dollar itself was just kind of a bait and switch.
00:57:58.720It was something redeemable for free market money gold that was then replaced with this compelled money.
00:58:04.440And, again, if money is speech, we could say then that fiat currency is effectively compelled speech.
00:58:14.380And if you boil it down to brass tacks, the U.S. dollar today and all fiat currencies, they are mechanically, they're pyramid schemes.
00:58:23.840So pyramid scheme is a system of network marketing, basically, that's useful for enriching those in higher tiers at the expense of those in lower tiers.
00:58:35.680And you're constantly recruiting more lower tiers to enrich the top.
00:58:40.340Okay, so let me draw an objection to that just briefly.
00:58:43.060So I'm going to accept the pyramid scheme hypothesis, but I'm going to say that it's a pyramid scheme that sacrifices the future to the present.
00:58:52.060But that doesn't matter because the future is going to be so much more productive than the present that we can afford that leverage.
00:58:59.920It would be so to make this is the kernel of economics, right, is that I can delay consumption or gratification today, invest for the future, and then enjoy more in the future.
00:59:10.020However, fiat currency and central planning, more generally reverses that it actually induces you to consume and take on debt today and disregard the future.
00:59:21.260This is the raising of the time preference that we spoke to earlier.
00:59:24.120And its arbitrary nature, again, as Mises would describe, all centrally planned action is it runs countervailing to what the free market would choose on its own.
00:59:38.160So no matter what you do, the government cannot make a good decision if they're coercing people to do it because they're withdrawing productive factors from the economy to fund that decision.
00:59:48.800If they want to go to war, for instance, the market may have not selected to go to war, but a government has decided that, no, we're going to pull these productive factors from the economy and push us into warfare.
00:59:59.620So it's contradictory to the essence of democracy itself.
01:00:04.040So you guys really see that Bitcoin, you really do see it as a distributed form of government as well, in some sense.
01:00:11.420It's disruptive to centralized government, yes.
01:00:13.500Yeah, and I think one of the elements of inflation, and again, this is the string back to what we were talking about earlier, and I do think it is a fundamental point to make.
01:00:23.940But if money is how we express our sacrifices and therefore our values into the matrix of value hierarchies that exist in the market, then inflation is doing so without the commensurate sacrifices that everyone else needs to make to allow them to communicate that to the market.
01:00:44.240And so this is where the idea of pathological hierarchies is applicable, is because a naturally emerging market where the fidelity between one's actions, one's choices, one's valuations, and the signal that they send out into the market is pristine.
01:00:58.640And I would make the case, and I would make the case that's what Bitcoin represents, whenever that is diluted in whatever capacity, to a small degree or to a larger degree, that's what creates incongruencies between the matrix of value hierarchies that are out in the market.
01:01:14.820If they are pristine, if they are pristine, if they are pristine, if they are pristine, if they are pristine, if we are all able to communicate with perfection, our value hierarchies to the market, we will see, in my opinion, emergent order.
01:01:25.920I don't see how it could be any other way.
01:01:27.500Where that gets thrown off is when that signal that we're sending carries alternative information, not information that we, through our divine process of mediating chaos in order to bestow value on things and then express that through our actions, not that process, but through some other process of someone who controls the mechanism by which we communicate that.
01:01:50.900And so inflation is just, is changing the relationship between the matrix of value hierarchies without the commensurate sacrifices, and that is what creates pathological hierarchies, and that's what creates, you mentioned, you know, the inequality and the divisiveness and stuff.
01:02:06.720Why do we allow this? Now, we're not going to degenerate into conspiratorial thinking, and I'm always wary of any conversation that involves they, you know, an external actor.
01:02:15.920Like, we've allowed this as a global community, and if what we've done is flawed in the manner that your analysis indicates, why have we allowed it to happen?
01:02:27.660I could say who benefits, and we could go there to begin with, but again, as I said, I'm very leery of conspiratorial thinking.
01:02:34.740I tend to think of large-scale social problems as everybody's problem, you know, but so what do you think about that?
01:02:40.740Why have we allowed this to happen? And let's say, who benefits, and why, and who suffers?
01:02:46.820Well, you know, I'm with you, and 99% of the time, I attribute, you know, the things that we see in the world that we might term evil or bad to incompetence and not outright evil, not malevolence.
01:02:57.620I think, you know, there's many factors here, but one is it happens kind of, it happens in slow motion, and so people end up not being able to see it.
01:03:08.200For example, like you would say today, hey, I got my iPhone, I got Netflix, we're talking on Zoom, things are good and right in the world.
01:03:14.840And I, you know, I know oftentimes you discuss not to, you know, discredit, not to go out and try to change the world, not to be too critical of the state of the world,
01:03:24.680because the order that we experience is almost miraculous. But I would say that there's an element of that that may cause you not to see the, how things have become disordered.
01:03:35.800I mean, it's difficult to see that. And so when we talk about the disruptive effect of inflation that I just alluded to, a lot of people have a difficult time seeing that.
01:03:45.940We can objectively isolate problems that are going on in the world, inequality and social problems and, you know, all the craziness that we see in the world.
01:03:54.360And we attribute that to fill in the blank cause. Whereas I think what we attribute most of that to is the disordering that results from this fractured congruence of value hierarchies that are being communicated in a market.
01:04:08.560That's where I think most of that comes from, but it takes time to play out.
01:04:15.860Right. And we are leveraging right now, we are still benefiting from the order, the structure that was imposed as a result of, let's say, being on a gold standard and the political and social dynamic that that fosters.
01:04:31.740In many cases, we've been living off the stability that that fosters for the last several decades.
01:04:36.520I think you could make a case that despite technological advancement that might might cause us to think, hey, things, you know, aren't so bad or may cause to distract us.
01:04:45.720I think you can make the case that the equity that we've been living off of of that stability is coming to an end.
01:04:51.940And I think we're seeing that in many different cases. But, you know, I think that's why it happens in slow motion and people are not educated enough or necessarily paying attention enough to notice the relationship between all the different things that are going on.
01:05:04.360Okay, so let me ask you guys a question about what happened in 2008. And so I may be completely wrong about this, but my understanding was that the 2008 crisis was fundamentally produced by a technological revolution.
01:05:22.800And the technological revolution was something like the realization that you could take investments of a certain risk level mortgages, let's say, substandard mortgages, and by bundling them together in huge tranches and huge groups, you could quantify the risk.
01:05:41.220And as a consequence of quantifying the risk, you could discount, you could make the group of investments more valuable than they would be as the sum of the individual investments, which I thought was a brilliant innovation.
01:05:54.840And so now the companies, banks traded these huge tranches of subprime mortgages, because they could quantify the risk.
01:06:02.280And that means that that could be accounted for financially. And so the risk was ameliorated. And the flaw was, well, no one realized that doing so on mass would increase the probability that housing prices would become correlated across time across huge geographical regions, for example, across the entire United States.
01:06:22.020And so the housing market could collapse all at once. But so so I you could make the case that that was actually a flaw in the free market computing prowess, because a technological innovation came along, warped the entire system.
01:06:36.780And then what had to happen was the political system had to rescue it. And so I watched that and I thought, well, did I was the political system embedded in the economic system, which is, I think, the argument you guys are fundamentally making?
01:06:49.700Or is the economic system embedded in the political system? And is what's wrong with my analysis of what happened in 2008?
01:06:56.920Wasn't it the case that the market was rescued by the by the political actors? Is that incorrect?
01:07:05.360The arson is putting out the fire. Sorry, go ahead.
01:07:07.900Yeah, no, I could start and you guys feel free to jump in. So I would first encourage you to look into what's called the euro dollar system, which is essentially these, these, this.
01:07:19.700We control the pyramid scheme in the US, the domestic dollar supply, but there's this offshore derivative system where everyone's trying to peg the dollars that the central bank doesn't control.
01:07:28.500That's actually been considered to be at the root of the 2008 crisis. And then this was kind of a cover story.
01:07:36.220But if we just get back to error, so we could say risk is error, right? So there was this embedded risk that we thought we had calculated and contained.
01:07:46.280But what was actually happening is because we have centrally planned money, it's pushing hidden risk into the economy, right?
01:07:53.880Because the free market distributed intelligence, intelligence being defined as error correction, it's mitigated by the central planning of money.
01:08:00.960So these hidden risk accumulate. And that's why we've had increased volatility since 1971. We have these huge economic booms, we print a bunch of money, inflation runs hot, but so do assets, everyone thinks they're doing really well.
01:08:13.160And then we have these catastrophic retracements back to economic reality.
01:08:17.180And actually, that's because incremental incremental reaction to risk is not is not being implemented.
01:08:23.600That's what we're diverging perceptions from reality, effectively.
01:08:26.500So even the correction in March 2020, that was the sharpest liquidity collapse in the history of markets was faster than 1929.
01:08:34.340So we would expect as more fiat currency, which is artificial liquidity is pumped into the system, it's further distorting this economic perceptual faculty and creates even more volatile boom and busts.
01:08:46.820This is the Austrian business cycle theory in a nutshell.
01:08:50.040And the only way this, the only way to resolve this is to let the free market clear errors.
01:08:54.640That's what it does. That's what consciousness does too, by the way.
01:08:57.680So you can think of the free market as our interconnected consciousnesses mediated by the price signal.
01:09:02.820When you disturb the price signal, our consciousnesses become divided, and we have increased errors and blow ups.
01:09:08.780Well, that's why I suggest to people that they don't engage in deception, because they distort the value signals and they warp their own consciousness.
01:09:29.180And maybe to bring this home, the question you asked could also be rephrased to pick a more like an example that people might be familiar with.
01:09:38.780You could also ask like, was the drug addict or was the person suffering from alcoholism saved by alcohol because he suffered withdrawal?
01:09:46.840And that's like a very similar question.
01:09:49.960And then you could argue, yes, we gave him the substance and he survived.
01:10:05.440And that's what Bitcoiners are arguing or just in general people advocating for sound money are arguing that we need to get off the fiat standard that can be arbitrarily manipulated and manipulates the price signals, manipulates the whole economy.
01:10:17.820Okay, so that's a fundamental tenet of Austrian economics is essentially that central planning in relationship to the monetary supply that isn't informed by incremental free market decisions produces error that accumulates and produces cyclical booms and busts.
01:10:38.260That's very interesting because there is a psychological analog to that.
01:10:41.200That psychological analog to that is failure to react to error when they're committed incrementally to store the errors up, which compound across time and to collapse.
01:10:50.660And the oldest myth, some of which I talk about in Maps of Meaning, talk about, for example, the reemergence of Tiamat in the Mesopotamian myth, which is the consequence of corruption accumulates and produces catastrophe.
01:11:04.380It's the flood myth idea, essentially.
01:11:05.900So the business cycle theory in Austrian economics is a recast of the flood myth and the Tower of Babel.
01:11:47.020When we look at Maps of Meaning, you know, I think this is part of the reason why we're so interested in talking about it,
01:11:54.000is because we take those truths that are seemingly entirely unrelated to markets and money.
01:11:59.820You know, it's all about mediating the forces of nature, the structure of reality in conjunction with the social relationships that constitute life,
01:12:08.600and trying to figure out what behavior is the most optimal balance between the two.
01:12:15.600And I think we could carry that over to money and markets.
01:12:19.960Well, it's funny, because, you know, Maps of Meaning could have been called maps of value.
01:12:23.480And obviously, money is a map of value.
01:12:25.140But I hadn't drawn the analogy between a map of value and money.
01:12:30.040Although, in retrospect, that seems like an obvious thing to do, which is why I got interested in your idea about incorruptible money.
01:12:54.160It digs into chaos, into pure entropy, into pure energy, and let's say mathematics, and spits out the greatest form of order that we as human beings use in the social realm, which is money.
01:13:09.920And it does so in the archetypal way, in the maximal possible way of doing so.
01:13:15.860And it does so in an incorruptible manner.
01:13:18.860And so if you take a lot, you know, if you take those things, you could easily, you know, that could easily have been talking about the regenerative hero as described in Maps of Meaning.
01:13:28.060And I think it's represented in Bitcoin.
01:13:32.520And that's why it's having such a revelatory effect on it.
01:13:35.220It provides a really weird bridge between the objective world and the world of value, too, doesn't it?
01:13:39.340Because all the computation occurs in objective, like that's objectively real, and that objectively real, incorruptible computation produces an unerring signal of value, or that's the theory, at least.
01:13:51.820Okay, so let's talk practically for a bit.
01:13:54.120So then we'll return to the central discussion.
01:13:58.300I mean, Elon Musk has recently objected to Bitcoin on the basis of, and maybe this is, is this a flaw?
01:14:04.360Bitcoin becomes more and more expensive to produce as we proceed through time.
01:14:09.360And the consequence of that is that we do, in fact, use up more energy, or at least that's in one form, which is computational energy.
01:14:15.720Maybe we gain that back and, you know, efficiencies within the market itself.
01:14:52.020Like if you have something in the real world, writing something down about it, you will always have to trust the person that wrote it down.
01:14:59.620And what's so ingenious in the world of Bitcoin is Bitcoin uses the only thing you can do with information, which is to transform it, to anchor it to the real world.
01:15:29.360It also makes sure, like it even decentralizes time itself, which sounds kind of weird, but it's very hard to keep a decentralized system synchronous because of relativity and other effects.
01:15:40.380So if you wouldn't have something like physical proof of work, you would need to trust a central authority in terms of time because the order of things, like the order of transactions, needs an absolute order of time.
01:15:53.960And all these things combined are solved by the proof of work system that Satoshi Nakamoto introduced.
01:16:01.280And so the energy expenditure, the basic question becomes, once you realize that, the basic question becomes, is it worth it?
01:16:09.700And society in general asks this question about all kinds of things, like are cars worth it?
01:16:20.300All these things, they take up a lot of energy.
01:16:23.520And Bitcoiners argue that Bitcoin is definitely worth it for the sound money aspect alone.
01:16:28.320Musk is determining by fiat that it isn't, instead of letting the market decide.
01:16:33.640It's very hard to decipher what Musk meant with his recent comments because Tesla is still holding a lot of Bitcoin on their balance sheet.
01:16:45.700I think it's about 2 billion US dollars worth in Bitcoin and they don't intend to sell any.
01:16:50.680And so, you know, like it's, it's a political game to, to like, it's, it's, it's, so let me ask you this.
01:17:00.540If you guys are right, this, tell me if I'm leaping somewhere, I shouldn't be here, but what should happen is that whatever energy is expended in the production of Bitcoin and the maintenance of the system should be more than recouped by the increased efficiency of every system that use Bitcoin as a transactional device.
01:17:18.600And so the net energy, there'll be a net energy gain, not a net energy loss, if you calculated it across the entire system.
01:17:25.800And so it's a mistake just to look at the cost of generating Bitcoin in the absence of considering the efficiencies that Bitcoin would produce.
01:17:33.000And the same is true for, for gold as well.
01:17:35.340You know, like it takes a lot of energy to extract gold from the ground.
01:17:38.140And historically, society in general answered this question in the affirmative.
01:17:45.740And, um, right, but there were limits, right?
01:17:49.120Because once the ore becomes insufficiently rich, at some point you stop refining it.
01:17:54.660So, so there's a, there's a limit, but according to your logic, at least the, the limit on the energy expenditure that Bitcoin produces should be produced by the market response to Bitcoin, not by some fiat judgment about whether or not it's like ecologically sustainable, because that's just a guess.
01:18:10.080And the best indicator that we have for ecological stability is going to be cumulative free market decisions, even though those aren't necessarily very good.
01:18:17.760They're better than anything else we could possibly generate rationally.
01:18:20.760And just to clarify one point, and then I'll let Robert dig into this.
01:18:25.500Bitcoin like doesn't take energy because the production of Bitcoin takes energy.
01:18:29.600The production of Bitcoin, it's an emissions schedule.
01:19:05.920I'll try to dovetail and tie some things together.
01:19:08.020So the general tenet here is there is no value in money without sacrifice.
01:19:15.580We, we, there has to be an energy expenditure to secure the supply of money or the network of money.
01:19:21.280That's what ensures against its corruption, basically.
01:19:24.860And if we zoom out, even cost anything, that's right.
01:19:28.120And someone would just arbitrarily suck value out of it by printing it, right?
01:19:31.480That's what the central bank is designed to do.
01:19:33.260So if we zoom out a little further, we could say the entire purpose of the world economy is to increase collective energy efficiency.
01:19:40.460That's why, that's why we are trading and specializing.
01:19:43.640That's what profits are actually, right?
01:19:45.460It's an indication that we've provided, we've satisfied a want more efficiently.
01:19:51.940And that, that rewarded profits to the entrepreneur that then invites more competition, more production, et cetera, et cetera.
01:19:56.980So back to John's point, the entrepreneur, this is the, the individual element that courageously faces the chaos of nature, right?
01:20:05.240With his skin in the game, his, his own capital plans, et cetera, trying to convert it into good and useful order.
01:20:11.600The entrepreneur is the living hero myth.
01:20:14.700And that's what the free market honors.
01:20:16.640It honors the sacrifices that entrepreneurs go out into the world and make for us.
01:20:21.680Whereas something like a bureaucracy is antithetical to that.
01:20:25.380So to get back to your, your point about why central banking, how did we allow it to happen?
01:20:30.080And I boil it down to this is that even the entrepreneur, he's pursuing something for nothing.
01:20:34.980He's trying to find a way to satisfy wants more cheaply, more efficiently to enrich himself and to enrich others.
01:20:41.060That axis you talk about between chaos and order, good and evil, right?
01:20:45.120We're all pursuing something for nothing, but there's a point where you can cross that axis into the domain of evil, where it's intentionally harmful to others to, to benefit ourselves.
01:20:55.880I think that's what central banking has, has done, right?
01:20:59.440It's the entrepreneur wants something for nothing by figuring out how to provide a good or service, but so does the central bank.
01:21:05.480But it's, it's crossed that divide to where it's actually economically harming others to give its shareholders, its private shareholders, a perpetual economic free lunch.
01:21:15.780It has no sacrifice in the money creation process.
01:21:18.560It pays a dividend to undisclosed shareholders.
01:21:21.260It it's a parasite on the productive economy effectively.
01:21:24.060And I would say that no one is better than their incentives, right?
01:21:28.080It's not like, how did we let this happen?
01:21:29.320It's like, there was just an attack vector on gold.
01:21:31.420There's technological shortcomings of gold that allowed it to be corrupted.
01:21:35.540That's how we got the central bank built on top of gold.
01:21:38.380So I think by introducing Bitcoin, a money that's really hard to steal in terms of inflation or confiscation, it, it pushes us to be more hardworking as a society, because that is the only profitable strategy.
01:21:50.940We become entrepreneurial, whereas if money is easy to steal, like it is under the central bank model via inflation, we slide towards kleptocracy, right?
01:21:59.060And that's what you see that even Elon, he's very close to the fiat.
01:22:01.640Yeah, and I like the we terminology a lot better, you know, because, because it does, you make a case there, you make a case for a kind of technological inadequacy is that as a species, we haven't been able to generate a sufficiently incorruptible language of value.
01:22:16.820And that has produced all sorts of negative consequences, some of which you're outlining, it's a problem that we all have.
01:22:22.080Okay, so practically speaking, guys, Bitcoin, it's not easy to spend, it's not, you can't go into a store and spend it, like it doesn't have that portability that you described, Robert, as a cardinal element of a necessary currency.
01:22:34.920And it isn't obvious to me that it's been rapidly moving in that direction, but that may be a mere consequence of my ignorance, or my timescale, maybe it'll do happen in 10 years, and that's virtually instant from a historical perspective.
01:22:48.760I mean, how do you think, do you think Bitcoin can leap the gap between its, what would you say, somewhat?
01:23:02.300Can I just hop in real quick on the last point before we answer this, and then we'll get to it.
01:23:07.220But Jordan, you mentioned, you know, is this energy expenditure and the environmental issues around Bitcoin, is it worthwhile, right?
01:23:14.740And as you said, the market is the best thing to determine whether something is worthwhile or not.
01:23:19.320I tend to think of our impact on the planet, not as the planet in isolation, but as in human flourishing.
01:23:25.700I mean, isn't that what we should be looking at when we talk about the environment, not just is the natural world harmed in some way, but is our relationship...
01:23:33.480Well, otherwise, we're just talking about maximizing someone's ideological perception, right?
01:23:40.600So I think our question should be, what is basically the ratio between the consumption of resources and the human flourishing that it nets?
01:23:48.720And I think that money, because it's the thing that allows you to determine the relative worthwhileness of everything else, it means that there is nothing more important than that object.
01:24:02.320So whatever the free market selects as the money, the resources used to instantiate that, to perpetuate it, are definitially worthwhile because it permits the relative valuation of everything else downstream of it.
01:24:17.800But I just wanted to get that piece out.
01:24:23.820If I might jump in, in terms of you can't go to the corner shop and spend your Bitcoin, I would say that's a fair criticism, but that was true 20 years ago for e-commerce and other technologies.
01:24:37.680So it happens gradually than suddenly.
01:24:40.120That was the same criticism was like, what am I going to do with a smartphone?
01:24:44.960What am I going to do with the internet?
01:24:49.480And electricity, a lot of Bitcoins or some Bitcoiners like to use this metaphor because Bitcoin is also a network and electricity is also a network.
01:24:56.460So you have network effects that they take a while to grow.
01:25:10.740Currently, because we are still in this early adoption phase and Bitcoin is an exponential technology built upon other exponential technologies.
01:25:18.640So it lives on the internet and it uses like smartphones and other devices that are exponential in nature to propagate itself.
01:25:26.380Then it's it will just take a while until it is ubiquitous.
01:25:30.840But I think also it is unstoppable, just like the internet was, you know, the internet dematerialized all kinds of things.
01:25:35.960And it just took a little bit to play out.
01:25:37.520And Netflix wasn't possible from day one.
01:25:39.980And video Zoom calls that we are having right now weren't possible from day one.
01:25:43.800And very similarly, Bitcoin is evolving and building itself up in layers.
01:25:48.140And currently, its main use is as a censorship resistant money.
01:25:54.300If you are not allowed to have a bank account for whatever reason, Bitcoin serves you very well.
01:25:59.280And if you if you want to have a long term store of value, Bitcoin is an excellent choice of store of value as well.
01:26:07.060And just look at at the data, like historically, year over year, Bitcoin compared to the US dollar gained 200 percent.
01:26:13.820So if you put some money in Bitcoin, if you have done that in the past, you you are better off than having money on the bank account or under your mattress because of the inflationary nature of fiat currencies that we discussed.
01:26:26.760And I think it will just it will just continue to evolve just like the Internet did.
01:26:32.740And people will find it useful for various different reasons.
01:28:10.640Well, so that's well, you know, that's kind of an interesting conundrum there, too.
01:28:14.620You kind of ask yourself, there's no shortage of of dire science fiction predictions about the buildings of systems that we can't even stop.
01:29:10.240And there's plenty of crime facilitated online as well.
01:29:14.080And, you know, like I don't even want to go into bank robberies and cars that were early adopted by bank robbers so that they can run away faster.
01:29:21.940So I think that would be my answer to that question.
01:29:24.300And Jordan, just very quickly on that one, you know, in your writing and such, you detail how the religious traditions, particularly Christianity in our case, have informed the legal system.
01:29:37.460And one of the very special ways that it's done so is that it sanctifies the sovereignty of the individual, even if that individual is is has obviously committed a crime.
01:29:49.640They are given the right of due process.
01:29:52.100They are presumed innocent until proven guilty.
01:29:54.760And this is a technology that fundamentally sanctifies the sovereignty of every individual.
01:29:59.820And what they choose to do with that sovereignty is their choice.
01:30:04.700But you guys are also making a case, all of you, that the very act of Bitcoin sanctifying the sovereignty of the individual is actually tilting individuals towards doing something good rather than something bad.
01:30:15.860That there is that it's not just neutral, as Gigi was was was was laying it out, that there's an intrinsic ethic to Bitcoin that is more likely to tilt it in a positive direction, which would be a more what would you say, a more powerful rejoinder to the Bitcoin equals criminality criticism.
01:30:33.360So the question is, is that see, that's what I'm trying to wrestle with here is, OK, so let's accept your proposition that Bitcoin is an incorruptible currency.
01:30:44.700I mean, I can't come up with an obvious rejoinder to that.
01:30:48.500And then so that means that we have an incorruptible language of value that enables us to make better decisions.
01:30:53.760Well, we do use money to make decisions.
01:30:58.800I mean, sometimes look, sometimes when I'm trying to decide whether I'll do one thing or another, I'll do the thing that makes more money because I can't decide any other way.
01:31:07.100It's an obvious way of picking one thing over another when they're relatively commensurate.
01:31:11.300Other people seem to value it more because they'll pay more for it.
01:31:14.160So it's actually helpful as a cognitive.
01:31:16.700It's a helpful cognitive tool pricing, obviously, because it simplifies decision making to a tremendous degree.
01:31:22.540So it's integrally involved with decision making.
01:31:25.620You could make the case that in an economy or in a market that's properly constituted and structured, i.e. people's expression of their values is not corrupted, that you following that signal of something being more financially rewarding is moving toward the good because the good is the aggregation of all.
01:31:43.500So that's really what's at the bottom of this as far as I was concerned.
01:31:46.660That's what got me so intrigued by what you were thinking, because that's an unbelievably radical claim.
01:31:52.560And it doesn't apply if the money is corrupted.
01:31:56.180You're basically saying that you could rely on an incorruptible currency as an unerring signal of value.
01:32:02.460So you're doing all your computation externally.
01:32:05.280You know, in this new book I wrote, Beyond Order, I made the case that a lot of our sanity is distributed.
01:32:11.040Like we tend to think of ourselves as organized within.
01:32:13.620That's part of the psychoanalytic tradition, the psychological tradition for that matter.
01:32:17.380We sort of keep ourselves sane if our psyches are well-structured.
01:32:21.100But a lot of the way we stay sane is by interacting with other people.
01:32:24.720And the signals they send us and that we respond to keep us sane.
01:32:29.020And you can see we're all going off in all sorts of weird conspiratorial directions as a consequence of being locked down under COVID for so long.
01:32:36.140Because everybody's brains are, we haven't been subjected to enough social correction for a while because we're isolated and we all go kind of off the rails as a consequence.
01:32:46.460So if the value language is incorruptible, then you can externalize your cognition and you can rely on the market almost completely to make decisions for you.
01:32:57.120So you'd buy the cheapest car, for example, all other things being equal because the calculation would have already been done for you.
01:33:05.500I mean, there's going to be a bit of individual idiosyncrasy, but fundamentally.
01:33:09.360The greatest reward would be climbing the value hierarchy of the market in aggregate.
01:33:13.400And then the question becomes, what is at the top of the value hierarchy of the market, of the collectivity of all people?
01:33:21.780And so then, in my opinion, yes, that allows you to outsource some of your cognitive load and determine where you should deploy your resources more easily.
01:33:31.220But I think that also allows us to contend with what is.
01:33:34.900And if we can do that, then I think we can solve our problems more easily.
01:33:38.080And of course, the market is a massive component of identifying those things.
01:33:42.120And I think it empowers us to say, which is a huge part of your message, is when we see things out in the world that we don't like or agree with, our action is what changes those things.
01:33:54.180Our contribution to that market to nudge or shift the matrix of value hierarchies in whatever way is the best way we can affect change.
01:34:04.820Well, we do affect change because we buy things and then there's more of them.
01:34:08.860I mean, we do make, we do have that impact every time we make a purchasing decision.
01:35:03.700Prices in words, like the, you could say prices are speech, right?
01:35:07.480Or money is speech expressed through prices.
01:35:09.520And when we violate that, when we have an institution, which also we create institutions to do the same thing.
01:35:15.540We want an institution, so we don't have to think about the important civilizational operation.
01:35:19.820We can just rely on the institutional practice, so we don't need to think about it.
01:35:23.880When we corrupt, that institution tries to corrupt words or prices, as communism did in the 20th century, or central banking does to prices today.
01:35:31.480It destroys the generative principle of order in the world, which is individual sovereignty.
01:35:38.740It's just a tool that maximizes the freedom and the sovereignty of the individual, empowering them to be entrepreneurial.
01:35:44.520And then usher in a more wealthy and abundant world as a result.
01:35:49.500And maybe if I tag on to that, I think you in your work, you came to the conclusion that free speech is paramount, but it's also dangerous, but it is good.
01:36:01.440And we would be saying that Bitcoin is free speech money.
01:36:06.860And along the same lines, it is very powerful and it can be dangerous, but it is also good.
01:36:12.420So the net benefit outweighs everything else.