The Jordan B. Peterson Podcast - 186. Bitcoin： The Future of Money？｜ Bitcoiner Book Club

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00:00:53.860 Welcome to the Jordan B. Peterson podcast.

00:00:56.140 This is season four, episode 40.

00:00:59.380 In this episode, my dad is joined by four highly experienced Bitcoiner content creators

00:01:04.040 who've been invested in the world of Bitcoin for many years.

00:01:07.240 They spoke about the intricacies of Bitcoin, how it works, other cryptocurrencies, blockchain security,

00:01:13.820 philosophical opinions on the utility of money, and ideal economics.

00:01:17.680 The opinions expressed in this podcast are for general informational purposes only,

00:01:22.160 so don't listen to this and then spend all the money you can't afford to lose on Bitcoin.

00:01:26.760 Thank you.

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00:03:29.460 Well, hello, everybody.

00:03:36.680 I'm trying something a little different today.

00:03:39.400 I'm speaking with a book club set up by John Vellis,

00:03:43.640 essentially centering on Bitcoin,

00:03:46.700 which is a phenomenon that I'm very interested in but know very little about.

00:03:50.740 I ran across John's podcast partly because their book club also focused on my first book, Maps of Meaning,

00:04:01.200 and so I looked up Gigi Durr, who's speaking with me today,

00:04:05.180 John Vellis, Richard James, and Robert Breedlove,

00:04:07.440 who make up the four people in this particular incarnation of John's book club.

00:04:13.820 I was interested in their thinking about Bitcoin,

00:04:17.220 and I noticed they were also interested in Maps of Meaning,

00:04:19.600 and so I thought we could try a free-flowing discussion.

00:04:23.480 I haven't done a podcast YouTube video with five people before,

00:04:28.460 so we're going to see how it goes,

00:04:30.100 and hopefully we'll have an interesting discussion about money, about Bitcoin,

00:04:34.140 about Maps of Meaning, about Maps of Value,

00:04:36.660 about languages of value, about information, all of that.

00:04:40.300 So I'd like to introduce Gigi Durr, John Vellis, Richard James, and Robert Breedlove,

00:04:44.960 and maybe I can start with Gigi, and you could just introduce yourself,

00:04:48.440 and we'll move from Gigi to John to Richard to Robert.

00:04:51.820 So Gigi, it's all yours.

00:04:53.560 Yes, I'll do my best.

00:04:54.700 First of all, thanks for having us.

00:04:56.120 It's a great pleasure.

00:04:57.060 I think we're all great fans of yours.

00:04:59.260 I think that's obvious.

00:05:00.680 And yeah, about me, I think most people know me in the Bitcoin world

00:05:03.820 because I wrote a little book called 21 Lessons.

00:05:06.580 It's basically a short summary of what I've learned

00:05:10.420 from falling down the Bitcoin rabbit hole.

00:05:13.260 And other than that, I've been involved in the Bitcoin space for a couple of years.

00:05:17.080 And I've learned a lot.

00:05:19.600 I've read a lot about it.

00:05:20.820 And so I try to pay that forward and share it with the community.

00:05:25.120 And I think that's what brought me here.

00:05:28.560 Thanks, John.

00:05:30.680 Yeah, my name is John Vellis.

00:05:32.600 And as you said, Jordan, I host the Bitcoin Rapid Fire podcast.

00:05:36.520 And first, I'll echo what Gigi said.

00:05:39.460 It's a pleasure to be here.

00:05:41.220 You know, big fan of your work, have listened to many hours of your stuff

00:05:45.300 and, of course, read your books.

00:05:47.380 I've been focusing in the podcast over the last year on exploring Bitcoin

00:05:51.500 and what it is and what it means

00:05:52.800 and speaking with all the different people that are involved in it.

00:05:54.920 But as we told you a bit earlier, I've been placing...

00:05:58.380 The phenomenon that's been most interesting to me

00:06:00.620 has been the transformations that seem to be occurring in individuals

00:06:04.520 as a result of understanding and engaging with Bitcoin.

00:06:08.120 And it's a very peculiar phenomenon, of course.

00:06:10.220 And so that's why I found it so interesting.

00:06:12.280 And of course, I think there's the book Maps of Meaning.

00:06:15.820 And part of the reason why we explored it in the book club

00:06:18.120 is because I think that provides a framework

00:06:20.260 for understanding that phenomenon better.

00:06:22.580 So hopefully, we'll get into some of that today.

00:06:25.440 Yeah, well, part of the reason I wanted to talk to you guys

00:06:27.420 was because when I started looking into what you were doing,

00:06:29.680 I was struck by two things.

00:06:31.560 That there seemed to be a psychological element to your endeavor,

00:06:34.920 but also perhaps to Bitcoin and the Bitcoin community, such as it is.

00:06:39.080 And then also, I was interested in your philosophical speculations

00:06:42.820 about the domain of value.

00:06:44.900 And so we'll go delve into that.

00:06:46.840 What have you noticed about individual transformation?

00:06:49.700 And do you think it's particular to Bitcoin?

00:06:52.660 Like, it's a strange thing to notice and to bring up.

00:06:56.000 So maybe you could elaborate on that a little bit.

00:06:58.980 Sure.

00:06:59.240 Well, the answer is yes.

00:07:00.720 And one of the interesting overlaps between your work and you

00:07:04.140 and the changes that are represented in people that get involved in Bitcoin

00:07:08.840 is I think there's a lot of the instantiation of a lot of the things you talk about

00:07:13.960 are represented in the changes we're seeing in people that engage with Bitcoin.

00:07:17.980 And of course, notwithstanding that your work generally as it permeates out into the culture

00:07:23.440 is providing people with ideas to chew on and that causes some degree of change.

00:07:28.180 But what I've noticed in people in Bitcoin is that it rapidly accelerates this change toward

00:07:33.820 taking more responsibility, as it were.

00:07:36.720 Why do you think that is?

00:07:39.700 Well, there's a couple of reasons.

00:07:40.960 And I think the other aspect, you know, to sum up and not take up too much time initially here

00:07:45.040 is that it changes people's time preference as well.

00:07:48.040 It changes the relationship to time.

00:07:49.840 And so the first, why I think that is, is it's a very peculiar thing.

00:07:58.160 But I think the genesis of it is that Bitcoin allows you to own something and to allow you

00:08:03.900 to exclusively own something for the first time ever.

00:08:07.280 And that is the private keys to your Bitcoin.

00:08:09.760 So it's an extreme form of ownership that is not represented in any other domain of life.

00:08:14.920 It's an inherent property right.

00:08:16.660 What do you think, what difference do you think this idea of unique ownership makes?

00:08:21.220 And then how do you relate that, or if you do, to a difference in time preference?

00:08:25.080 And what does that mean?

00:08:26.960 Well, for one, I would say that because it's the first time to experience something like that,

00:08:32.700 it changes your relationship to responsibility.

00:08:36.200 And I think one of the outcomes from that is that it causes you to contrast that extreme form

00:08:42.220 of both ownership and responsibility in that domain to all the other domains of your

00:08:46.620 life where, let's say, there's a dependence that exists.

00:08:49.880 And so this is kind of the idea of freedom that Bitcoin seems to engender, is that when

00:08:54.140 you take complete sovereignty and control over the thing that most reflects who you are out

00:09:02.400 into the social world, at the very least, and that is money, that is the emblem of your

00:09:06.500 time and sacrifice, or what you gain, rather, for your time and sacrifice.

00:09:11.220 Once you take control over that, I think it provides a very powerful impetus to look at

00:09:17.440 other areas of your life and see where you might establish greater sovereignty and take

00:09:22.860 the responsibility to do that.

00:09:25.440 Another part of it is once you come into this space and you start to realize basically the

00:09:31.380 impact of the current system of money that we use.

00:09:35.100 And I know this is a term that you use and you reference in the book, but you begin to

00:09:39.540 see how Bitcoin represents the information, let's say, the truthful speech that rectifies

00:09:46.720 pathological hierarchies that evolved as a result of false money, you know, as a result of fiat

00:09:53.280 money, let's say.

00:09:54.000 And I think you could broadly say that money is information regarding your own value hierarchies

00:10:02.000 that you, when you use it, you communicate.

00:10:06.040 Right.

00:10:06.280 Right.

00:10:06.760 And so when you use it, you communicate those.

00:10:09.160 And to the extent that there's an intermediary or that there's anything that's distorting the

00:10:15.500 fidelity of that communication, pathological hierarchies, incongruencies between what you're

00:10:21.320 attempting to communicate and what you actually are communicating to that market, I think,

00:10:26.340 emerge.

00:10:27.440 And I think that was what I found interesting about the claims that you guys are making.

00:10:31.300 And I wanted to have this discussion in part to evaluate that claim, to see if there's,

00:10:37.980 well, to see how solidly developed that idea is, because it's a very interesting idea that

00:10:43.140 in some manner, Bitcoin is an incorruptible, provides an incorruptible language of value,

00:10:49.700 preferable to gold, say.

00:10:51.440 So maybe you have to buy the argument first that gold is preferable to a currency that

00:10:55.800 isn't dependent upon something like gold.

00:10:58.260 And that's also a separate argument.

00:11:00.840 But you're making the case then that Bitcoin is superior even to gold.

00:11:05.880 And so we'll go into that.

00:11:07.280 What's your background, John?

00:11:09.720 I started my career in finance.

00:11:11.860 I lived in Shanghai, China for about a decade.

00:11:14.600 And then whilst I was there, I got out of that because I didn't enjoy the incentives that

00:11:21.600 meant, you know, the behavior that came from the incentives in that industry.

00:11:25.200 And I went into natural medicine and did a degree in that and worked in that capacity

00:11:31.120 for a couple of years.

00:11:32.180 And then all the while I had been interested in Bitcoin and studying Bitcoin.

00:11:36.320 And in 2019, it just kind of became overwhelming.

00:11:38.860 So at the time I was living in Thailand, I decided to start the podcast.

00:11:43.200 And as everyone on this current podcast will attest, once you go down the Bitcoin rabbit

00:11:48.780 hole, it's very, very difficult to claw your way out.

00:11:51.500 You know, you're attempting to find the bottom rather than back to the surface.

00:11:54.800 So that kind of characterizes my pursuit since 2019.

00:11:58.860 What's your background?

00:12:00.540 So I have a heavy tech background.

00:12:03.840 I studied computer science and I studied a little bit of physics.

00:12:06.560 And I've been a computer programmer for the last like 15 plus years.

00:12:11.820 So yeah, I think that sums it up.

00:12:13.860 I grew up with computers and I grew up online.

00:12:16.060 And so I know a thing or two about distributed systems and those kind of ideas that are very

00:12:22.200 helpful to make sense of Bitcoin.

00:12:24.380 But still, it took me a very, very long time to make sense of Bitcoin, like many years and

00:12:29.460 multiple touch points because I lacked the economic knowledge that is required to understand

00:12:35.140 this beast.

00:12:36.360 And so the last couple of years, I read up on my economics and discovered Austrian economics.

00:12:41.680 And that was most helpful to make sense of Bitcoin and what.

00:12:45.860 Right.

00:12:46.000 And so that's another touch point because I've become interested in Austrian economics and

00:12:49.480 going to be discussing Austrian economics with some Austrian economists.

00:12:55.080 Well, they're not actually Austrian, but they're from that school.

00:12:57.340 You also have a profound sense of sartorial splendor, just so that you know it.

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00:17:31.880 Richard, over to you.

00:17:35.220 Thanks very much, Dr. Peterson.

00:17:37.560 So yeah, my name is Richard James.

00:17:39.440 I'm a filmmaker by trade, although in more recent years sort of have worked in other areas and

00:17:47.080 just been running a small business in a completely unrelated area.

00:17:50.740 But I mean, I've had almost a lifelong interest in economics and I studied that through school

00:17:58.920 and into university, but sort of fell out of love with it, I suppose.

00:18:03.980 You know, I kind of dropped out of economics at university, but yeah, maintained an interest in that.

00:18:10.000 And then I also came across the Austrian School of Economics.

00:18:15.560 And I found that to be particularly eye-opening.

00:18:19.000 And it led me down this path of asking that question of what is money.

00:18:24.460 And as we've already mentioned, gold plays such an important role in that.

00:18:28.380 And I think that understanding gold is the first step to understanding Bitcoin.

00:18:32.760 And so, you know, in the last couple of years, I've sort of turned back to filmmaking

00:18:40.020 and trying to link that interest to Austrian economics and Bitcoin.

00:18:46.000 And last year, I sort of set myself a goal for a project to make a film related to Bitcoin.

00:18:52.580 And it had two particular parameters.

00:18:54.620 One was that I wasn't allowed to spend a dollar and it had to cost zero dollars.

00:18:59.780 And the other thing was I wasn't allowed to leave my desk.

00:19:02.920 So I sort of basically put this thing together using content that had already been created

00:19:08.280 by people, you know, working in Bitcoin and talking about Bitcoin.

00:19:13.360 And the film is called Hard Money.

00:19:15.500 It's available free online.

00:19:17.500 So that's sort of been my contribution, I suppose.

00:19:20.900 But I'm more interested in the philosophy of money, the history of money,

00:19:26.100 and in particular, the phenomenon of inflation and the way that links to things like time

00:19:33.260 preferences, as we've already talked about.

00:19:35.320 And also, I suppose, political philosophy and libertarianism and these ideas that there's

00:19:44.720 a certain way of thinking in Austrian economics called praxeology, which is about human action

00:19:52.980 and the way that, you know, really analyzing the way that people sort of pursue, it's very

00:20:02.560 general in the way that they use means to pursue ends.

00:20:06.600 Like that's the very first kind of axiom of the system.

00:20:09.820 And from that, we can draw a whole lot of deductions.

00:20:13.960 And it's interesting the way that leads you down an ethical, being able to create an ethical

00:20:19.280 framework as well.

00:20:20.500 And that's where, I guess, your own work came into it, where, you know, I found that

00:20:26.180 found myself interested in this libertarian system of ethics or morals and, you know,

00:20:32.140 maps of meaning, I think, is essentially a book about morality as well, in that it's

00:20:36.500 a book about how to act.

00:20:37.960 So I found some very interesting parallels there.

00:20:41.440 And what was it about how would you define the Austrian School of Economics?

00:20:45.120 And why did it, why was it of particular interest to you?

00:20:50.160 Well, the Austrian School is, I would say, it's a way of thinking that is about logical

00:21:00.000 deduction rather than empiricism.

00:21:02.340 I think the problem with economics in its current form, you know, modern economics, Keynesian

00:21:09.720 economics, because it's largely influenced by the work of John Maynard Keynes.

00:21:14.260 I think it has a problem where it has this desire to imitate a physical science.

00:21:22.360 You know, it wants to analyze data, you know, get complex in a mathematical sense.

00:21:29.520 But there's a fundamental problem there in that when you're trying to analyze something

00:21:34.500 in economics, you know, we can't set up an experiment and, you know, run a test on a

00:21:42.200 parallel universe.

00:21:43.140 We're dealing with real world, you know, you can't isolate the independent variables, basically.

00:21:50.860 So it makes that kind of analysis fraught with a lot of danger.

00:21:55.580 Right, the behavioral economists are trying to deal with that to some degree, right?

00:22:00.020 By running actual economic experiments.

00:22:03.040 They're more like psychologists.

00:22:04.660 They are psychologists, fundamentally.

00:22:06.320 And the Austrian School takes a very different approach, which is to say, you know, we'll take

00:22:11.760 a certain set of fundamental axioms, you know, and then we'll just, we'll build our philosophy

00:22:19.340 based on logical deduction.

00:22:21.260 So it's sort of all done from the armchair, basically, rather than trying to validate anything

00:22:30.260 via real world data.

00:22:33.580 I guess the relationship between action and economics and value, I suppose, is that people

00:22:39.740 choose to act in relationship to those things that they value.

00:22:43.620 And that the manner in which they act is actually an indication of what they value.

00:22:49.720 And so money becomes an index of people's value preferences and value preferences associated

00:22:56.060 with their preferences for action.

00:22:57.620 I mean, that shapes even such things as perception, right?

00:23:00.140 Because perception, you know, we think about that as something that's automatic, essentially,

00:23:03.860 because the world just appears to us in some sense.

00:23:06.000 But you move your eyes constantly, and you orient your head so that you can hear one thing

00:23:10.880 rather than another, and you pay preferential attention to one thing rather than another.

00:23:16.540 And you do all of that as a consequence of comparative value.

00:23:20.560 And I was reading a book on Austrian economics last night, and they were talking about trying

00:23:25.220 to define economics.

00:23:26.240 And it struck me that the most suitable definition was something like the science of comparative value.

00:23:31.960 It looks like that's what economists concentrate on.

00:23:34.900 And then money becomes an index of comparative value.

00:23:38.160 And then that leads, well, I'm going to talk to Robert next.

00:23:41.500 I'll get him to introduce himself.

00:23:42.820 But I know Robert has written a fair bit philosophically on the implications of money in general as

00:23:48.800 a signal of value and of Bitcoin in particular.

00:23:52.000 So, Robert.

00:23:54.620 Hey, Jordan.

00:23:55.800 Yeah, my name is Robert Breedlove.

00:23:57.500 It's a great honor to speak with you today.

00:23:59.500 I'll just say that your work has had a profound impact on my life that I'd probably struggle

00:24:04.940 to put into words.

00:24:05.760 So, I'll just leave it at thank you.

00:24:08.300 I'm a lifelong student of philosophy and economics.

00:24:13.260 Although more recently, thanks to Bitcoin, I actually was introduced to Austrian economics.

00:24:17.760 So, I've been going down that rabbit hole for the past four years.

00:24:20.200 My background before that is I have a master's degree in accounting and finance.

00:24:25.760 I was a CPA for a number of years.

00:24:27.900 So, I did tax strategies for high net worth individuals, investment partnerships.

00:24:33.180 From there, I moved on to be pretty much a career CFO focused in technology.

00:24:38.240 And then most recently, I was operating a hedge fund before last year.

00:24:43.300 2020 was transformative for a lot of us.

00:24:46.500 And this quote from H.G. Wells really struck me and resonated.

00:24:51.500 He said that civilization is a race between education and catastrophe.

00:24:57.060 And my realization is that the world is so poorly informed about the socioeconomic significance

00:25:03.520 and even philosophic significance of Bitcoin that it was incumbent upon me to take what I

00:25:09.700 think I see as the solution to many problems in the world and just pour all my energy into

00:25:14.740 education.

00:25:16.120 And to that end, I started the What is Money show.

00:25:19.520 I called it this because I do believe that question, what is money?

00:25:24.400 This is the gateway to this rabbit hole that we've all fallen down.

00:25:28.820 It is the key to unlocking a lot of the untruths in the world.

00:25:32.860 And I think it's also the key to perceiving the corruption that's embedded in our current

00:25:37.800 socioeconomic system, at the core of which is central banking, which I'm sure we'll get

00:25:41.980 into a lot today.

00:25:44.780 And yeah, I would just to echo a couple of the things that were mentioned earlier.

00:25:49.600 That question, what is money, has a lot of answers, one of which is I think you've related

00:25:54.320 in the past is that money is essentially a contract of the future.

00:25:57.760 And today, fiat currency, it's a violated social contract.

00:26:02.680 So we have a money by which an institution effectively robs our future.

00:26:07.480 They're compelling the demand for this money and they're violating its supply to enrich themselves

00:26:12.240 and dispossessing everyone else, mostly people economically vulnerable.

00:26:18.300 And to the point about morality, it's like if we don't have a secure social contract in

00:26:23.260 the most important market in the world, which is money, then we can't possibly have a foundation

00:26:27.940 for a sound social morality.

00:26:29.960 So it causes people to be more short-term thinking when your money doesn't hold value

00:26:34.620 over time, you can't plan, you can't create trusting long-term relationships.

00:26:40.840 And then the last piece to that is with central banking violating the supply of money, they

00:26:46.180 are twisting our perceptions.

00:26:48.080 We perceive the world economically through prices.

00:26:50.920 And when that perceptual mechanism is twisted, it breaks down your valuations, your goal orientations,

00:26:58.760 Your trust.

00:26:59.520 I really just trust.

00:27:01.120 Yeah, it really corrodes socioeconomic fabric, social morality, and even individually, to

00:27:08.380 John's point, I think it really breaks us down.

00:27:10.440 And I've experienced that personally in my life.

00:27:12.880 I've kind of flown high and mighty on the fiat currency standard, and I've experienced a

00:27:17.620 certain set of character traits developing myself, and I've experienced an antithetical set

00:27:22.080 of traits developing myself as a result of studying and interacting deeply with Bitcoin.

00:27:26.420 Can you elaborate on that a little bit?

00:27:28.920 You're making a moral contrast that's personal.

00:27:31.180 There's a story there.

00:27:32.200 I'm kind of curious about it.

00:27:34.760 Yeah, I made a lot of money quickly at a young age.

00:27:40.680 And I would say that I walked a bit of a darker path where I just thought that I had made it.

00:27:48.340 I had arrived.

00:27:49.040 I would just kind of party and cut up and travel.

00:27:51.820 I didn't have a lot of...

00:27:53.300 I had lost that deeper sense of meaning or sense of purpose that you speak so eloquently

00:27:58.280 to.

00:27:58.920 And you don't know it when you're up against it.

00:28:02.380 I still thought that I was doing good things and was more or less a good person, but I was

00:28:06.760 just going further and further off course, becoming more and more short-term oriented, more

00:28:11.580 and more pursuing immediate biological gratification, whether it's drinking or whatever.

00:28:20.140 And Bitcoin and this rabbit hole just gave me the larger lens, which we talk about time

00:28:26.860 preference.

00:28:28.200 And when we say lowering your time preference, what we mean is we're expanding your time horizons.

00:28:32.980 So you gain a greater sphere of concern, let's say, beyond yourself.

00:28:39.160 And that sphere is made up of space and time.

00:28:41.940 And as you do that, you start to see yourself as increasingly a more humble and infinitesimal

00:28:49.080 piece of the total picture.

00:28:50.680 But somehow it also enriches you to want to really dig into whatever gifts you have and

00:28:55.720 give back to the whole picture.

00:28:57.400 And why do you think the fiat currency versus Bitcoin issue is relevant to that conundrum?

00:29:06.400 You know, we could say it in the very severe original state of nature, where we're all

00:29:11.520 just cavemen running around trying to eat and have shelter.

00:29:17.000 That is an environment with a lot of scarcity, right?

00:29:20.600 There's a lot of economic scarcity because we haven't begun to trade.

00:29:23.300 We haven't created the division of labor and specialization that creates wealth.

00:29:27.700 And I would argue that fiat currency, because it generates arbitrary inflation, so it's

00:29:34.180 artificially magnifying prices in the world.

00:29:36.780 It's increasing prices when prices should be declining as we get smarter.

00:29:40.520 It's actually magnifying the perception of scarcity in the world.

00:29:44.220 And I think that contributes to social divisiveness up to and including things like cancel culture

00:29:49.200 and other things we see in the world today.

00:29:50.960 I really believe that artificial central bank-induced inflation is a corrosive moral cancer on society.

00:29:59.920 And I think we underestimate-

00:30:00.560 Okay, so let's get some terms straight so that everybody knows what we're talking about.

00:30:04.140 So maybe we start with fiat currency.

00:30:06.200 And Gigi, I'm going to pick on you next because I want you to give us a technical description 0.99

00:30:10.740 of Bitcoin, if you would.

00:30:11.920 And then we can start exploring its psychological and philosophical implications.

00:30:16.980 So let's talk about fiat currency, contrast that with a gold standard of Bitcoin, and then

00:30:24.440 let's talk also about central banking and inflation and just flesh that out so everybody knows

00:30:28.760 where we're at.

00:30:32.000 That's for you, Robert.

00:30:33.780 Sorry, that's for Robert.

00:30:34.800 I'll get Gigi, I'll turn to you for the technical description of Bitcoin.

00:30:38.380 You'd like me to start with central banking?

00:30:39.700 Sure.

00:30:41.380 Yeah, so to give the very high-level description, again, the answer to what is money has many

00:30:48.900 questions or many answers.

00:30:50.400 But one of them is we could say that it's a device for moving value or expressing value

00:30:56.040 across space and time.

00:30:58.040 And historically, it's a technology, right?

00:31:01.520 The free market selects what the best tool for the job is.

00:31:06.120 That's true for essentially every market in the world today, but we've never allowed that

00:31:10.540 to be the case in the realm of money.

00:31:13.900 And the best approximation of that historically was gold.

00:31:17.960 So if we understand that as a technology, money needs to fulfill five critical properties.

00:31:24.520 It needs to be divisible, durable, recognizable, portable, and scarce.

00:31:29.260 And I'll gloss over a lot of history, but essentially, monetary metals best satisfied the divisibility,

00:31:36.700 durability, recognizability, and portability properties of money.

00:31:40.520 And of the monetary metals, gold was the most scarce.

00:31:44.880 And scarcity of money...

00:31:46.840 So what scarcity means is when demand outstrips supply.

00:31:50.540 But what's unique about money is that demand always exceeds supply.

00:31:54.980 There's never enough...

00:31:56.400 People always want more money, right?

00:31:57.920 It's not like you're going to reach a certain amount of apples in your kitchen and you're

00:32:02.780 satisfied with apples.

00:32:03.720 You always...

00:32:04.380 There's always more demand for money.

00:32:05.960 So we could say that money always has this scarcity property inherent to it.

00:32:11.420 But the market gravitates towards the good that best satisfies those first four properties.

00:32:17.760 And then fifthly, has the most inflexible supply.

00:32:22.200 So another way to say this is the most inflation-resistant monetary technology tends to be favored

00:32:27.040 by market actors.

00:32:27.900 Because as it turns out, surprisingly enough, or not surprisingly, people don't like to

00:32:32.560 get stolen from via inflation.

00:32:34.860 You want to hold a money that holds its rarity and scarcity across time such that no one can

00:32:39.540 dilute you.

00:32:40.660 And so why do you regard inflation as theft?

00:32:43.180 So inflation, it's just very simple supply and demand economics.

00:32:48.900 If price or purchasing power in the case of money is where supply meets demand, if someone

00:32:54.320 can arbitrarily increase the supply, they can steal purchasing power from the others using

00:32:59.540 that as a store of value.

00:33:00.620 So that's why, again, gold was selected on the market, because there was sacrifice necessary

00:33:07.080 to obtain gold.

00:33:08.640 You had to expend time and energy to dig it out of the ground, such that in this game-theoretic

00:33:13.680 selection of money, everyone could trust that no one could arbitrarily violate the supply

00:33:18.280 of gold.

00:33:18.920 Because if they could, they would just print gold, if you could, and still value it for

00:33:22.620 everyone else.

00:33:23.020 You could dilute it with silver or something like that, which happened on occasion.

00:33:26.420 Which they did.

00:33:27.040 Yeah, they've counterfeited gold and any number of things.

00:33:29.600 The problem with gold, though, essentially, is that it was great for holding value.

00:33:35.280 Again, back to our original definition, money is a device for moving value across time and

00:33:38.560 space.

00:33:39.100 So gold is excellent at holding value across time, but metals are pretty poor, especially

00:33:44.720 for a globalizing society at expressing value across space.

00:33:48.020 They're very heavy and difficult to move.

00:33:50.040 They're expensive to move, expensive to secure, et cetera, et cetera.

00:33:53.560 So this is where paper currency was introduced.

00:33:58.380 By abstracting gold into a paper currency, we could now increase its transactability across

00:34:04.680 space.

00:34:05.380 And so long as it was redeemable one for one, right?

00:34:08.120 One unit of currency for one ounce of gold, for instance, then it maintained its ability

00:34:13.280 to express a value across time as well.

00:34:15.440 So we're basically augmenting this free market selected technology to make it more transactable

00:34:20.840 across space and time.

00:34:22.160 The problem with that, of course, is that it introduced the need.

00:34:27.260 First of all, it made money debt.

00:34:28.840 So now all of a sudden we don't have money.

00:34:30.220 We have a paper certificate that's redeemable for money, which is gold.

00:34:34.040 So this paper certificate becomes a debt instrument.

00:34:37.520 And the problem is you now needed to trust the custodian, the bank, whoever's holding that

00:34:42.920 gold.

00:34:43.320 You have to trust that they will not produce paper currency in excess of their gold reserves.

00:34:48.800 Otherwise, they are then the one artificially inflating the currency and able to steal from

00:34:53.740 everyone else.

00:34:55.000 And as it turns out, you know, again, money's like being the most important technology in

00:35:00.060 the world.

00:35:00.480 The temptation to manipulate its supply has proven historically to be essentially irresistible.

00:35:06.760 And banks, which tend to become central banks or nationalized banking operations over time,

00:35:14.400 have always violated that trust function placed within them.

00:35:17.340 Can you give us some recent examples of that?

00:35:20.960 Well, sure.

00:35:21.620 In 1971, the infamous Nixon shock, he took the world off a gold standard.

00:35:27.380 You know, subsequent to World War II, we held the Bretton Woods Conference, where it was

00:35:32.020 determined unilaterally by the United States that the dollar would be pegged to gold, every

00:35:37.700 other currency in the world would be pegged to the dollar.

00:35:40.620 So this gave the United States the infamous exorbitant privilege to just basically be able

00:35:45.380 to print whatever amount of money they want, send the world these paper certificates called

00:35:51.060 dollars, and then receive goods and services in exchange.

00:35:55.620 But other countries agreed to this, one, because the U.S. was the dominant military power at the

00:35:59.920 time, and two, because dollars were redeemable for gold.

00:36:02.820 But between 1944 and 1971, it reached a point where enough countries had lost faith in the

00:36:09.380 dollar that they were asking to redeem their currencies for gold, that Nixon decided to

00:36:14.060 spontaneously close the gold window.

00:36:16.320 So he just moved the world off of a gold standard onto a purely fiat currency standard.

00:36:22.280 And then there's, since that point, actually since 1971 through today, it's been about a 50-year

00:36:26.960 experiment.

00:36:27.960 We have had disastrous socioeconomic consequences across a whole gamut of data.

00:36:32.760 There's a great website to this effect.

00:36:34.560 I would just encourage listeners to check out called WTF happened in 1971.com.

00:36:40.380 And it, you know, we've had obesity, suicide, addiction, clearly global debt to GDP has exploded.

00:36:48.240 It just points towards the devastating force that is arbitrary inflation.

00:36:53.060 Um, so yeah, I hope that answers it.

00:36:57.600 Can I, can I, yes, go ahead.

00:36:59.280 Can I just jump in for a sec, uh, before we move on, we're talking a lot about value.

00:37:03.620 And I think Jordan, you mentioned something earlier that I just wanted to pull the string

00:37:06.380 on a tiny little bit is, and you talk about this in your work, but when we, in order for

00:37:11.660 value to emerge, right, we need to define limitations.

00:37:16.160 So things are defined by their limitations.

00:37:18.300 And as a result of that, we're able to separate them, right?

00:37:22.840 So things emerge out of the void.

00:37:25.020 Their limitations allow us to separate them.

00:37:27.300 Then the problem is how do we order them?

00:37:30.440 Right.

00:37:31.040 And then, so that is how these value hierarchies emerge.

00:37:34.520 And the, the internal measuring stick we use to order things is our own limitations of time

00:37:41.820 and energy.

00:37:42.500 So for a very basic example, if I'm going to look at the lamp, then I'm excluding everything

00:37:48.040 else that I could look at.

00:37:49.240 I'm devoting my time and energy resources to look at that lamp at the exclusion of everything

00:37:53.600 else.

00:37:53.940 The opportunity cost is infinite to anywhere you place your limited resources.

00:37:58.500 And so the, the journey or the evolution of money, of finding a money has been to try

00:38:05.840 to find something that mimics our limitations, that mimics the sacrifices that we make when

00:38:13.100 we, when we bestow value on something.

00:38:16.720 So value.

00:38:17.060 Why would you, why would you say mimics?

00:38:19.500 Well, because we want something to reflect the same limitation.

00:38:23.660 You know, when we're bestowing value on something through our sacrifices, that's basically what

00:38:29.040 value is.

00:38:29.640 I'm sacrificing my time and energy and perception to focus on one particular thing.

00:38:33.680 If I want to express that out into the external world, the ideal way of doing that is to find

00:38:39.740 something that is similarly limited as my own resources.

00:38:43.440 So that's interesting.

00:38:44.400 So yeah, so money, I mean, it's obvious in one sense that money is a reflection of human

00:38:49.380 value, but I hadn't exactly thought about it as a form of mimicry.

00:38:52.820 So what we want is an, an, an arbitrary external agent that's move mobile across people that

00:38:59.560 signifies what people value, of course.

00:39:01.840 So that signifies the value structure.

00:39:04.340 So why sacrifice?

00:39:07.340 Well, that's how we create wealth in the world.

00:39:09.660 We sacrifice our time and energy to create things.

00:39:12.200 So money, that's just another definition.

00:39:14.080 I didn't mean to interrupt, but money as a measure of sacrifice.

00:39:16.760 Okay.

00:39:17.100 Gigi, let's go to you now and let's fill in some of the gaps about Bitcoin per se.

00:39:20.840 Do you want to fill us in about what it is and why you think it's significant?

00:39:24.900 What's revolutionary about it?

00:39:26.260 I'll try my best and I'll try to link it to what's just discussed.

00:39:30.500 Like we, we always try to zero in on something that, yeah, doesn't just melt away and that,

00:39:36.460 that we can use as money.

00:39:37.660 And historically, as we just discussed, gold and silver, precious metals were very good

00:39:42.200 at that because gold is virtually indestructible.

00:39:44.700 And it's also very scarce and invisible and so on and so forth.

00:39:47.640 The problem is, and that's what computer scientists try to solve, uh, like for, I guess, 50 years

00:39:53.620 plus is if you want to do that in the informational realm, have something that represents value.

00:39:59.680 It's basically impossible because you can copy information indefinitely.

00:40:03.240 And that's what's, what's described by the double spend problem.

00:40:06.360 Like if you can read information, you can also, you can also copy it.

00:40:09.820 So you cannot have a token in the digital realm that can't be copied.

00:40:14.320 If you can read it, you can also write it down again.

00:40:16.800 And that's a basic copying mechanism.

00:40:18.280 And that's how computers work.

00:40:19.580 Computers are just basic copying machines.

00:40:22.200 So digital scarcity is kind of an oxymoron and was never possible before Bitcoin.

00:40:26.800 And also in Bitcoin, like the way that Bitcoin works, it doesn't produce anything that can't

00:40:31.020 be copied.

00:40:31.580 Everything in Bitcoin is copied all the time and you can copy every aspect of it.

00:40:35.140 And there's also nothing that is really encrypted.

00:40:36.660 You know, it uses, it uses encryption technology, like cryptographic technology, but it doesn't

00:40:42.440 really encrypt anything.

00:40:43.800 It only uses digital signature schemes to make sure that the ownership of things is clear,

00:40:49.420 but you can read everything in Bitcoin.

00:40:51.380 It's completely plain text.

00:40:52.920 That's why we also say it's speech.

00:40:54.400 You know, it's, you can, you can basically print out how Bitcoin works and put it in a book

00:40:58.760 and you can actually read it and you can feed it into another computer and just spin it

00:41:02.320 up again.

00:41:02.660 And also the output that Bitcoin produces, this ledger, which records who owns what is

00:41:08.720 completely plain text.

00:41:10.380 Like you can make sense of it by just looking at it kind of.

00:41:13.800 And so we have this problem that historically we found physical artifacts to represent this

00:41:21.120 value.

00:41:21.940 Gold coins, for example.

00:41:23.280 And the gold coins, they speak for themselves.

00:41:25.360 Like whoever has the gold coin is in possession of this value, the stored value.

00:41:30.100 Someone else put work into it to extract the gold first and foremost.

00:41:33.540 And after exchanges, you know that whoever earned this gold coin or also stole it, like

00:41:39.100 it doesn't matter.

00:41:40.200 Whoever has this bearer instrument, whoever has this gold coin is in possession of some

00:41:45.420 value and can redeem it.

00:41:47.340 Go to society and redeem it.

00:41:49.380 You can like whatever goods and services you want to have, you can exchange your gold coin

00:41:53.760 for that.

00:41:54.640 And in the digital realm, doing that without any trusted third party before Bitcoin was

00:41:59.800 impossible because of this double spend problem, because of the nature of information that you

00:42:04.320 can't have any token that can't be copied.

00:42:07.300 So what Bitcoin actually does is it is this play kind of, it is this intricate dance of computers

00:42:14.220 all around the world that spin up a system that checks and verifies copies of this ledger.

00:42:21.580 And it makes invalid copies useless.

00:42:24.180 So you can copy it and you can kind of transform the copies as well.

00:42:27.900 But everyone who participates voluntarily in this game agrees to certain rules.

00:42:34.020 And the rules say that we only accept valid copies according to the rules that we signed

00:42:39.720 up to.

00:42:40.420 And this is what makes all this possible.

00:42:42.580 And what comes out of it is simply a list.

00:42:45.900 It's an unbreakable contract of trust.

00:42:49.000 Yeah, it's like unbreakable is a really big word.

00:42:51.860 And everything in Bitcoin works kind of probabilistically, including like cryptography itself.

00:42:56.240 It's basically, it makes use of an asymmetry that some problems in our universe are very

00:43:03.040 hard to solve unless you know the exact solution to it.

00:43:06.140 So that's basically all like the root of all cryptography.

00:43:10.140 Like if I know the secret, I can decipher the message instantly, very easily.

00:43:13.900 But if you don't know the secret, you will have to guess every possible secret.

00:43:18.180 And this is where this asymmetry of power comes from.

00:43:20.680 So cryptography is inherently defensive.

00:43:23.280 And this is what Bitcoin makes use of as well.

00:43:26.360 Like if you don't have my private key, you cannot spend my Bitcoin, period.

00:43:30.580 Like the heat death of the universe will come first before you will be able to do that.

00:43:35.120 And this is the power of Bitcoin.

00:43:38.060 So can you get extremely simple and describe what Bitcoin is?

00:43:43.900 Yeah, that's the 21 million Bitcoin question.

00:43:50.680 I'm afraid there is no simple answer.

00:43:52.960 Like the best I can give you is it's basically, you can think of it as a shared Excel sheet,

00:43:59.020 like a shared ledger that simply attests to who owes what to whom.

00:44:06.720 Like it has a list of, these are the 21 million Bitcoins that we have.

00:44:11.780 And John owns some and Robert owns some.

00:44:14.400 And it's a list of transfers.

00:44:16.240 So it's a list of transactions.

00:44:17.300 And 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.

00:44:30.580 And so that's, that's, that's what makes it trade.

00:44:33.700 Exactly.

00:44:34.260 Ownership.

00:44:34.900 That's what, that's what makes it so trustworthy.

00:44:37.060 It's like a, it's a computerized accountant.

00:44:38.880 It's keeping track of who owes, who owns what and who owes, who what.

00:44:42.980 And it's distributed everywhere.

00:44:44.800 So no one can corrupt it.

00:44:46.360 And you can't get access to anyone's store because their key is encrypted in a way that makes it impossible to break.

00:44:53.400 Like it's, it's because everyone holds their own keys in the best case.

00:44:57.360 Like I, I hold my own keys and you don't, you don't even know, like you can't associate my Bitcoin addresses with myself.

00:45:05.280 That's also why I'm an invisible man.

00:45:07.240 So a lot of Bitcoiners take care about their privacy.

00:45:10.240 And that's a big, like a big topic in the Bitcoin world as well.

00:45:14.220 And so there is simply no attack vector.

00:45:16.400 You cannot, like, you cannot invade all the homes of all the Bitcoiners across the world and steal their private keys.

00:45:22.380 And that's what you would have to do to break the whole system.

00:45:25.600 So the security is distributed in the sense that the security is at the edges and the system itself is insanely resilient.

00:45:33.360 And what enables this trust is exactly as you have said, it's, it's transparent and it's radically distributed.

00:45:39.460 Everyone has a copy.

00:45:40.320 So I can check it for myself from, from, from the very first block, like the genesis of Bitcoin up to the present moment.

00:45:46.640 I can verify everything myself.

00:45:48.700 Right.

00:45:49.240 So it's completely transparent.

00:45:50.740 It's completely distributed.

00:45:51.780 There's no centralized authority.

00:45:53.600 It can't be cracked.

00:45:54.920 It can't be stolen.

00:45:56.080 It doesn't inflate.

00:45:57.420 It can't be inflated.

00:45:59.120 It isn't subject to, at least so far, to any form of overt administrative control.

00:46:04.500 So let me ask all of you guys a question.

00:46:06.460 Maybe John and Richard can chime in on this because they haven't spoken too much yet.

00:46:10.040 So one of the questions might arise, especially in relationship to Robert's comments, is that we switched to a fiat currency back in 1971.

00:46:17.820 And obviously you guys are no fans of fiat currencies, but we do have money and it does work.

00:46:24.640 We, we can still, it still stores value.

00:46:27.120 We can still spend it.

00:46:28.200 And 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.

00:46:39.240 Despite the fact that we've switched to a fiat exchange system.

00:46:43.060 And 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.

00:46:59.560 And so people trust individual Americans in some sense, they trust the trusted interrelationship they have with each other.

00:47:07.560 They 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.

00:47:18.360 And so that's working.

00:47:19.760 And so, so what's the problem exactly?

00:47:22.060 And is there something wrong with my reasoning?

00:47:24.780 Maybe Richard, you could comment on that.

00:47:26.560 And if not, someone else jump in.

00:47:28.000 Well, 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.

00:47:47.540 Your point is, is well taken, which is that the US dollar works as money.

00:47:53.080 But 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.

00:48:10.740 So there's, there's, there's two problems with, with the, the US dollar.

00:48:19.380 One is that, yeah, it's, it's basically, it's imposed by this legal tender law.

00:48:25.640 So, so in the United States, and yes, the United States has economic and political dominance, and that extends around the world.

00:48:33.740 But citizens in the United States aren't free to transact in money that they choose.

00:48:40.600 If I wanted to make a transaction in gold, I'm legally not allowed to do that.

00:48:47.600 I'm not allowed to denominate a contract in gold.

00:48:50.660 And I'm also in a technical sense, prevented from saving my money in gold.

00:48:56.380 And that's really because of capital gains taxes.

00:49:01.080 If, 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.

00:49:13.300 If 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.

00:49:29.920 So I think, yeah, there's a utilitarian dimension.

00:49:33.400 So 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.

00:49:40.900 You'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.

00:49:48.680 And 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.

00:49:56.560 So exactly correct.

00:49:57.760 And 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.

00:50:07.220 But 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.

00:50:18.240 Most 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.

00:50:29.280 So, 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.

00:50:53.780 And 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.

00:51:02.780 Okay, so let me ask you a question about that.

00:51:05.160 So 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.

00:51:18.380 I'm dependent on the infrastructure, I'm dependent on the government, or at least I have the advantages that those things provide me.

00:51:25.280 And 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,

00:51:43.160 as a consequence of the fact that part of my wealth is generated as part of a shared endeavour.

00:51:48.560 Because, 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.

00:51:57.980 And so they decay with time to restore that hoarded wealth back to the general community.

00:52:03.480 What do you think of an argument like that?

00:52:05.380 Well, 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.

00:52:19.440 Like, do we think that that institution helps or hinders?

00:52:22.660 Do we think that that institution can actually redistribute resources in a way that's fair and equitable?

00:52:32.440 And can it do that efficiently?

00:52:33.840 That's almost an entirely different question.

00:52:36.820 You know, I tend to be very sceptical of what the state can do in that respect.

00:52:42.000 And I think that freely acting individuals would possibly be able to do a better job.

00:52:48.640 So you basically have a free market response to that objection, that the free market is going to do better as a calculating device.

00:52:56.880 Absolutely.

00:52:57.320 And 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.

00:53:11.640 Because those that have wealth, you know, you're talking about a wealth tax or that sort of happens through inflation.

00:53:19.900 But 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.

00:53:27.260 And those assets appreciate in value as a result of the inflation.

00:53:33.300 Whereas those people who are living on fixed wages, salaries, you know, living week to week with a bank balance there.

00:53:41.480 And 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.

00:53:52.960 So it actually has the effect of increasing inequality.

00:53:57.160 And why do you guys have any faith in the idea that there is actually measurable inflation?

00:54:02.860 Because is it reasonable?

00:54:07.040 I don't understand inflation.

00:54:08.840 There's a basket of goods and services that are calculated.

00:54:11.660 The price of them is calculated every year.

00:54:13.700 But what's in that basket of goods and services seems to me to be a relatively arbitrary choice.

00:54:18.420 I 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?

00:54:31.800 Now, I know housing in many places has skyrocketed, you know, to a tremendous degree.

00:54:35.960 But 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?

00:54:44.340 What data do you rely on?

00:54:48.460 I could jump in here, I think.

00:54:50.360 I would say unquestionably debasement of the currency.

00:54:55.260 It is an arbitrary harvesting of the economic surplus a productive free market economy is creating.

00:55:05.020 So as an economy gets more efficient, it generates more wealth that's passed back into market actors in the form of declining prices.

00:55:13.560 So we're getting smarter at making chairs, smarter, providing services, electronics, all these things.

00:55:19.300 But by printing money, you're basically stealing claims on that productive, on that economic surplus and doling it out arbitrarily.

00:55:28.820 So 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.

00:55:35.800 So we all have our, you know, 120 bits per second conscious attention span, you multiply that out by 8 billion market participants.

00:55:44.700 That is the cognitive power of the free market.

00:55:48.720 Right.

00:55:48.880 I 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.

00:55:57.840 And you think, well, maybe there's 40 people doing your central planning.

00:56:00.520 And 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.

00:56:10.380 If 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.

00:56:22.700 And 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.

00:56:30.180 And 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.

00:56:42.220 And that's what the free market does.

00:56:43.540 It's not even in principle replaceable by a logical cognitive mechanism.

00:56:48.720 I can't see how it is.

00:56:49.820 That's exactly right.

00:56:50.560 It's not even possible that a centralized bureaucracy, a centralized computing model can compete with a distributed computing model of the free market.

00:56:59.380 We could actually, in fact, say that the free market is a pure economic democracy.

00:57:04.100 People are voting by buying and selling.

00:57:06.300 And whatever price is generated on any given asset, that's effectively the truth of what it trades at.

00:57:12.140 Any intervention on that, any intervention, any regulation, any pricing czar as they had in the USSR,

00:57:18.640 you 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.

00:57:29.640 And to tie this back to the dollar is, you know, the dollar was gold.

00:57:36.900 By the way, fiat currency never emerges on the free market.

00:57:39.400 That distributed computing model never selects a fiat currency by itself.

00:57:42.540 It'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.

00:57:52.560 That's the only time fiat currency has ever emerged.

00:57:55.000 And, in fact, the dollar itself was just kind of a bait and switch.

00:57:58.720 It was something redeemable for free market money gold that was then replaced with this compelled money.

00:58:04.440 And, again, if money is speech, we could say then that fiat currency is effectively compelled speech.

00:58:09.520 It's the same thing.

00:58:10.560 They're forcing a language of value.

00:58:13.180 They're forcing its use on you.

00:58:14.380 And if you boil it down to brass tacks, the U.S. dollar today and all fiat currencies, they are mechanically, they're pyramid schemes.

00:58:23.840 So 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.

00:58:35.680 And you're constantly recruiting more lower tiers to enrich the top.

00:58:40.340 Okay, so let me draw an objection to that just briefly.

00:58:43.060 So 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.

00:58:52.060 But that doesn't matter because the future is going to be so much more productive than the present that we can afford that leverage.

00:58:59.920 It 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.

00:59:10.020 However, fiat currency and central planning, more generally reverses that it actually induces you to consume and take on debt today and disregard the future.

00:59:21.260 This is the raising of the time preference that we spoke to earlier.

00:59:24.120 And 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.

00:59:38.160 So 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.

00:59:48.800 If 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.

00:59:59.620 So it's contradictory to the essence of democracy itself.

01:00:04.040 So you guys really see that Bitcoin, you really do see it as a distributed form of government as well, in some sense.

01:00:11.420 It's disruptive to centralized government, yes.

01:00:13.500 Yeah, 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.

01:00:23.940 But 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.

01:00:44.240 And 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.

01:00:58.640 And 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.

01:01:14.820 If 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.

01:01:25.920 I don't see how it could be any other way.

01:01:27.500 Where 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.

01:01:50.900 And 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.

01:02:06.720 Why 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.

01:02:15.920 Like, 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?

01:02:27.660 I could say who benefits, and we could go there to begin with, but again, as I said, I'm very leery of conspiratorial thinking.

01:02:34.740 I tend to think of large-scale social problems as everybody's problem, you know, but so what do you think about that?

01:02:40.740 Why have we allowed this to happen? And let's say, who benefits, and why, and who suffers?

01:02:46.820 Well, 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.

01:02:57.620 I 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.

01:03:08.200 For 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.

01:03:14.840 And 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,

01:03:24.680 because 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.

01:03:35.800 I 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.

01:03:45.940 We 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.

01:03:54.360 And 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.

01:04:08.560 That's where I think most of that comes from, but it takes time to play out.

01:04:12.440 It's a form of faulty information.

01:04:15.860 Right. 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.

01:04:31.740 In many cases, we've been living off the stability that that fosters for the last several decades.

01:04:36.520 I 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.

01:04:45.720 I think you can make the case that the equity that we've been living off of of that stability is coming to an end.

01:04:51.940 And 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.

01:05:04.360 Okay, 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.

01:05:22.800 And 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.

01:05:41.220 And 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.

01:05:54.840 And so now the companies, banks traded these huge tranches of subprime mortgages, because they could quantify the risk.

01:06:02.280 And 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.

01:06:22.020 And 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.

01:06:36.780 And 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?

01:06:49.700 Or is the economic system embedded in the political system? And is what's wrong with my analysis of what happened in 2008?

01:06:56.920 Wasn't it the case that the market was rescued by the by the political actors? Is that incorrect?

01:07:05.360 The arson is putting out the fire. Sorry, go ahead.

01:07:07.900 Yeah, 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.

01:07:19.700 We 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.

01:07:28.500 That's actually been considered to be at the root of the 2008 crisis. And then this was kind of a cover story.

01:07:36.220 But 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.

01:07:46.280 But what was actually happening is because we have centrally planned money, it's pushing hidden risk into the economy, right?

01:07:53.880 Because the free market distributed intelligence, intelligence being defined as error correction, it's mitigated by the central planning of money.

01:08:00.960 So 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.

01:08:13.160 And then we have these catastrophic retracements back to economic reality.

01:08:17.180 And actually, that's because incremental incremental reaction to risk is not is not being implemented.

01:08:23.600 That's what we're diverging perceptions from reality, effectively.

01:08:26.500 So even the correction in March 2020, that was the sharpest liquidity collapse in the history of markets was faster than 1929.

01:08:34.340 So 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.

01:08:46.820 This is the Austrian business cycle theory in a nutshell.

01:08:50.040 And the only way this, the only way to resolve this is to let the free market clear errors.

01:08:54.640 That's what it does. That's what consciousness does too, by the way.

01:08:57.680 So you can think of the free market as our interconnected consciousnesses mediated by the price signal.

01:09:02.820 When you disturb the price signal, our consciousnesses become divided, and we have increased errors and blow ups.

01:09:08.780 Well, 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.

01:09:16.960 It's a very dangerous thing to do.

01:09:18.420 That's right.

01:09:18.980 Because you only use deception to...

01:09:20.780 That's exactly what money does.

01:09:22.180 That's exactly what fiat money does.

01:09:24.980 Fiat currency is a living lie.

01:09:26.600 That's it in a nutshell.

01:09:29.180 And 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.

01:09:38.780 You could also ask like, was the drug addict or was the person suffering from alcoholism saved by alcohol because he suffered withdrawal?

01:09:46.840 And that's like a very similar question.

01:09:49.960 And then you could argue, yes, we gave him the substance and he survived.

01:09:54.080 So it was a good thing.

01:09:55.420 And he made it through.

01:09:57.480 But what would actually be necessary is kind of, you know, like that's not the cure.

01:10:02.500 You would need to quit cold turkey.

01:10:05.440 And 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.

01:10:17.820 Okay, 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.

01:10:38.260 That's very interesting because there is a psychological analog to that.

01:10:41.200 That 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.

01:10:50.660 And 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.

01:11:04.380 It's the flood myth idea, essentially.

01:11:05.900 So the business cycle theory in Austrian economics is a recast of the flood myth and the Tower of Babel.

01:11:12.880 Is that right?

01:11:13.280 Because those are the two parallels, the two mythological parallels.

01:11:16.800 Tower of Babel is administrative overload, essentially, and the corruption of systems.

01:11:21.360 And the flood is, you know, the catastrophe, the downside of the natural catastrophe, I would say.

01:11:28.940 Yeah, well, I think you hit on one of the main points of this discussion generally, is that truth is represented across scales.

01:11:37.720 Maybe that's a part of the definition of truth, is that you can see it across scales.

01:11:41.540 It's represented in different forms across scales.

01:11:42.720 It's certainly part of the definition of deep truth.

01:11:45.600 Right.

01:11:46.360 Yes, definitely.

01:11:47.020 When 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,

01:11:54.000 is because we take those truths that are seemingly entirely unrelated to markets and money.

01:11:59.820 You know, it's all about mediating the forces of nature, the structure of reality in conjunction with the social relationships that constitute life,

01:12:08.600 and trying to figure out what behavior is the most optimal balance between the two.

01:12:15.600 And I think we could carry that over to money and markets.

01:12:19.960 Well, it's funny, because, you know, Maps of Meaning could have been called maps of value.

01:12:23.480 And obviously, money is a map of value.

01:12:25.140 But I hadn't drawn the analogy between a map of value and money.

01:12:30.040 Although, in retrospect, that seems like an obvious thing to do, which is why I got interested in your idea about incorruptible money.

01:12:37.200 Yeah.

01:12:37.380 And so you think of incorruptible money as computationally advantageous, essentially.

01:12:42.740 That's the basis of the idea.

01:12:44.920 Yeah.

01:12:45.240 And I think, again, to pursue this, I think Bitcoin is the regenerative hero in different form.

01:12:51.800 It takes the forces of nature.

01:12:54.160 It 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.

01:13:09.920 And it does so in the archetypal way, in the maximal possible way of doing so.

01:13:15.860 And it does so in an incorruptible manner.

01:13:18.860 And 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.

01:13:28.060 And I think it's represented in Bitcoin.

01:13:30.440 It's instantiated in Bitcoin.

01:13:32.520 And that's why it's having such a revelatory effect on it.

01:13:35.220 It provides a really weird bridge between the objective world and the world of value, too, doesn't it?

01:13:39.340 Because 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.

01:13:51.820 Okay, so let's talk practically for a bit.

01:13:54.120 So then we'll return to the central discussion.

01:13:58.300 I mean, Elon Musk has recently objected to Bitcoin on the basis of, and maybe this is, is this a flaw?

01:14:04.360 Bitcoin becomes more and more expensive to produce as we proceed through time.

01:14:09.360 And 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.

01:14:15.720 Maybe we gain that back and, you know, efficiencies within the market itself.

01:14:20.100 You could argue that.

01:14:21.120 But what do you think about Musk's recent decision with regard to Bitcoin?

01:14:25.060 I would love to jump in on that because I have written about that extensively.

01:14:29.540 And I think what you said is exactly right, that Bitcoin is a map of value, so to speak.

01:14:37.340 And what's so interesting about Bitcoin is that Bitcoin is both the map and the territory.

01:14:43.200 And as I've said before, in the informational realm, we cannot link, usually, like we cannot link the map to the territory.

01:14:51.100 You cannot do it.

01:14:52.020 Like 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.

01:14:59.620 And 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.

01:15:08.660 So this is what proof of work does.

01:15:10.000 That's what the energy expenditure is for.

01:15:13.080 And the energy is used for various things.

01:15:15.780 So it's used to secure the system.

01:15:18.720 It's used to distribute new coins.

01:15:21.200 It's used to make sure that the history becomes incorruptible.

01:15:25.320 So it also secures the past.

01:15:27.520 So it does a couple of things.

01:15:29.360 It 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.

01:15:40.380 So 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.

01:15:53.960 And all these things combined are solved by the proof of work system that Satoshi Nakamoto introduced.

01:16:01.280 And so the energy expenditure, the basic question becomes, once you realize that, the basic question becomes, is it worth it?

01:16:09.700 And society in general asks this question about all kinds of things, like are cars worth it?

01:16:18.380 Are smartphones worth it?

01:16:19.360 Is the internet worth it?

01:16:20.300 All these things, they take up a lot of energy.

01:16:23.520 And Bitcoiners argue that Bitcoin is definitely worth it for the sound money aspect alone.

01:16:28.320 Musk is determining by fiat that it isn't, instead of letting the market decide.

01:16:33.640 It'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.

01:16:45.700 I think it's about 2 billion US dollars worth in Bitcoin and they don't intend to sell any.

01:16:50.680 And 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.

01:17:00.540 If 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.

01:17:18.600 And so the net energy, there'll be a net energy gain, not a net energy loss, if you calculated it across the entire system.

01:17:25.800 And 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.

01:17:33.000 And the same is true for, for gold as well.

01:17:35.340 You know, like it takes a lot of energy to extract gold from the ground.

01:17:38.140 And historically, society in general answered this question in the affirmative.

01:17:42.900 Yes, it's way worth it.

01:17:44.200 Like it's, it's worth to dig this up.

01:17:45.740 And, um, right, but there were limits, right?

01:17:49.120 Because once the ore becomes insufficiently rich, at some point you stop refining it.

01:17:54.660 So, 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.

01:18:10.080 And 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.

01:18:17.760 They're better than anything else we could possibly generate rationally.

01:18:20.760 And just to clarify one point, and then I'll let Robert dig into this.

01:18:25.500 Bitcoin like doesn't take energy because the production of Bitcoin takes energy.

01:18:29.600 The production of Bitcoin, it's an emissions schedule.

01:18:32.620 So it's constant.

01:18:33.320 We know when the last Bitcoin will be mined.

01:18:34.860 It's, it's going to be around in 2140 and it doesn't matter how much energy you expend, it won't be, it won't go quicker.

01:18:41.480 It won't go slower.

01:18:42.280 So if you, if you dig harder for it, it will be harder to find.

01:18:46.000 And if you stop digging for it, it will get easier to find.

01:18:48.980 So that's the genius invention of the difficulty adjustment.

01:18:51.960 So there is no one-to-one link of Bitcoin production and energy expended.

01:18:55.720 The energy is used for different things for its security, for example.

01:19:01.280 And Robert, I think you, you want to say a few things.

01:19:05.340 Yeah.

01:19:05.700 Yeah.

01:19:05.920 I'll try to dovetail and tie some things together.

01:19:08.020 So the general tenet here is there is no value in money without sacrifice.

01:19:15.580 We, we, there has to be an energy expenditure to secure the supply of money or the network of money.

01:19:21.280 That's what ensures against its corruption, basically.

01:19:24.860 And if we zoom out, even cost anything, that's right.

01:19:28.120 And someone would just arbitrarily suck value out of it by printing it, right?

01:19:31.480 That's what the central bank is designed to do.

01:19:33.260 So if we zoom out a little further, we could say the entire purpose of the world economy is to increase collective energy efficiency.

01:19:40.460 That's why, that's why we are trading and specializing.

01:19:43.640 That's what profits are actually, right?

01:19:45.460 It's an indication that we've provided, we've satisfied a want more efficiently.

01:19:51.940 And that, that rewarded profits to the entrepreneur that then invites more competition, more production, et cetera, et cetera.

01:19:56.980 So back to John's point, the entrepreneur, this is the, the individual element that courageously faces the chaos of nature, right?

01:20:05.240 With his skin in the game, his, his own capital plans, et cetera, trying to convert it into good and useful order.

01:20:11.600 The entrepreneur is the living hero myth.

01:20:14.700 And that's what the free market honors.

01:20:16.640 It honors the sacrifices that entrepreneurs go out into the world and make for us.

01:20:21.680 Whereas something like a bureaucracy is antithetical to that.

01:20:25.380 So to get back to your, your point about why central banking, how did we allow it to happen?

01:20:30.080 And I boil it down to this is that even the entrepreneur, he's pursuing something for nothing.

01:20:34.980 He's trying to find a way to satisfy wants more cheaply, more efficiently to enrich himself and to enrich others.

01:20:41.060 That axis you talk about between chaos and order, good and evil, right?

01:20:45.120 We'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.

01:20:55.880 I think that's what central banking has, has done, right?

01:20:59.440 It's the entrepreneur wants something for nothing by figuring out how to provide a good or service, but so does the central bank.

01:21:05.480 But 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.

01:21:15.780 It has no sacrifice in the money creation process.

01:21:18.560 It pays a dividend to undisclosed shareholders.

01:21:21.260 It it's a parasite on the productive economy effectively.

01:21:24.060 And I would say that no one is better than their incentives, right?

01:21:28.080 It's not like, how did we let this happen?

01:21:29.320 It's like, there was just an attack vector on gold.

01:21:31.420 There's technological shortcomings of gold that allowed it to be corrupted.

01:21:35.540 That's how we got the central bank built on top of gold.

01:21:38.380 So 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.

01:21:50.940 We become entrepreneurial, whereas if money is easy to steal, like it is under the central bank model via inflation, we slide towards kleptocracy, right?

01:21:59.060 And that's what you see that even Elon, he's very close to the fiat.

01:22:01.640 Yeah, 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.

01:22:16.820 And that has produced all sorts of negative consequences, some of which you're outlining, it's a problem that we all have.

01:22:22.080 Okay, 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.

01:22:34.920 And 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.

01:22:48.760 I mean, how do you think, do you think Bitcoin can leap the gap between its, what would you say, somewhat?

01:22:58.660 Store value of the exchange.

01:23:00.860 Yeah, yes, that's right, exactly.

01:23:02.300 Can I just hop in real quick on the last point before we answer this, and then we'll get to it.

01:23:07.220 But Jordan, you mentioned, you know, is this energy expenditure and the environmental issues around Bitcoin, is it worthwhile, right?

01:23:14.740 And as you said, the market is the best thing to determine whether something is worthwhile or not.

01:23:19.320 I tend to think of our impact on the planet, not as the planet in isolation, but as in human flourishing.

01:23:25.700 I 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...

01:23:33.480 Well, otherwise, we're just talking about maximizing someone's ideological perception, right?

01:23:37.920 Exactly, exactly.

01:23:38.100 This is what the environment should be.

01:23:40.160 Right.

01:23:40.600 So I think our question should be, what is basically the ratio between the consumption of resources and the human flourishing that it nets?

01:23:48.720 And 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.

01:24:02.320 So 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.

01:24:17.800 But I just wanted to get that piece out.

01:24:20.760 Yeah, yeah.

01:24:21.460 A fair point.

01:24:22.740 A fair point.

01:24:23.820 If 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.

01:24:37.680 So it happens gradually than suddenly.

01:24:40.120 That was the same criticism was like, what am I going to do with a smartphone?

01:24:44.960 What am I going to do with the internet?

01:24:47.340 Electricity.

01:24:47.800 It doesn't work yet.

01:24:49.000 You know, yeah.

01:24:49.480 And 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.

01:24:56.460 So you have network effects that they take a while to grow.

01:25:02.160 But Bitcoin is very usable already.

01:25:04.600 And there are a lot of people already living on a Bitcoin standard.

01:25:07.460 So they are earning Bitcoin.

01:25:08.660 They are spending Bitcoin.

01:25:09.500 They are using Bitcoin day to day.

01:25:10.740 Currently, because we are still in this early adoption phase and Bitcoin is an exponential technology built upon other exponential technologies.

01:25:18.640 So it lives on the internet and it uses like smartphones and other devices that are exponential in nature to propagate itself.

01:25:26.380 Then it's it will just take a while until it is ubiquitous.

01:25:30.840 But I think also it is unstoppable, just like the internet was, you know, the internet dematerialized all kinds of things.

01:25:35.960 And it just took a little bit to play out.

01:25:37.520 And Netflix wasn't possible from day one.

01:25:39.980 And video Zoom calls that we are having right now weren't possible from day one.

01:25:43.800 And very similarly, Bitcoin is evolving and building itself up in layers.

01:25:48.140 And currently, its main use is as a censorship resistant money.

01:25:54.300 If you are not allowed to have a bank account for whatever reason, Bitcoin serves you very well.

01:25:59.280 And if you if you want to have a long term store of value, Bitcoin is an excellent choice of store of value as well.

01:26:07.060 And just look at at the data, like historically, year over year, Bitcoin compared to the US dollar gained 200 percent.

01:26:13.820 So 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.

01:26:26.760 And I think it will just it will just continue to evolve just like the Internet did.

01:26:32.740 And people will find it useful for various different reasons.

01:26:36.820 And you regard it as unstoppable.

01:26:38.560 And so on what basis do you make that claim?

01:26:41.180 Why do you believe that?

01:26:42.320 Bitcoin is pure information.

01:26:43.820 It is pure information and also the system that is running it like the asset itself is pure information.

01:26:50.320 I can store 12 words in my head and I have Bitcoin in my head, literally.

01:26:54.620 So it is very useful in that regard.

01:26:56.600 That's what makes it that what makes it virtually resistant to to nobody can take it away from you.

01:27:04.900 Like if you secure it properly, Bitcoin has certain properties that allows you to make sure that you and only you can spend the Bitcoin.

01:27:14.820 And on the system side of things, the Bitcoin network itself, it's just computer code.

01:27:20.580 And so it's just information.

01:27:21.820 And we as a society are very good at making sure that important information, information that various people regard as important survives.

01:27:30.380 So we often like to compare Bitcoin to other informational texts, just like the Bible, for example, that outlast empires.

01:27:40.380 Because it is very hard to destroy pure information if it is distributed well enough.

01:27:46.560 And the whole reason for the Bitcoin system to work in that complicated manner that it does is because it maximizes decentralization.

01:27:55.520 It maximizes censorship resistance.

01:27:57.780 The whole idea of the Bitcoin system is to build something that they can't stop and it doesn't matter who they are.

01:28:03.640 So it's it's to build a system that we as humanity can't stop.

01:28:08.240 Exactly.

01:28:08.940 Right, right.

01:28:09.260 To build a system that we can't.

01:28:10.640 Well, so that's well, you know, that's kind of an interesting conundrum there, too.

01:28:14.620 You 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.

01:28:23.700 Downsides to Bitcoin.

01:28:24.940 Well, how about the facilitation of criminal activity, underground criminal activity, for example?

01:28:29.020 And like if you guys put your heads together and you had to critique Bitcoin as a social danger, what would you say?

01:28:37.640 Oh, there's the there's definitely the criminal element, which seems immediately relevant.

01:28:42.480 I would say it's it's the same as with every powerful tool.

01:28:46.720 Like a chef's knife is a very dangerous weapon, but you can also prepare beautiful meals with it.

01:28:51.020 And we have to kind of make sure to wield these powerful tools directly.

01:28:55.660 But it's also kind of, you know, like the genie is out of the bottle.

01:29:01.480 We kind of have to just like with the Internet, you know, like the Internet and every other technology before it, it can.

01:29:08.120 It's just a tool.

01:29:08.740 It can be used for good and bad.

01:29:10.240 And there's plenty of crime facilitated online as well.

01:29:14.080 And, 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.

01:29:21.940 So I think that would be my answer to that question.

01:29:24.300 And 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.

01:29:37.460 And 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.

01:29:49.640 They are given the right of due process.

01:29:52.100 They are presumed innocent until proven guilty.

01:29:54.760 And this is a technology that fundamentally sanctifies the sovereignty of every individual.

01:29:59.820 And what they choose to do with that sovereignty is their choice.

01:30:04.260 Yes.

01:30:04.380 Right.

01:30:04.700 But 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.

01:30:15.860 That 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.

01:30:33.360 So 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.

01:30:42.560 And that seems fair enough.

01:30:44.700 I mean, I can't come up with an obvious rejoinder to that.

01:30:48.500 And then so that means that we have an incorruptible language of value that enables us to make better decisions.

01:30:53.760 Well, we do use money to make decisions.

01:30:58.800 I 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.

01:31:06.840 Right.

01:31:07.100 It's an obvious way of picking one thing over another when they're relatively commensurate.

01:31:11.300 Other people seem to value it more because they'll pay more for it.

01:31:14.160 So it's actually helpful as a cognitive.

01:31:16.700 It's a helpful cognitive tool pricing, obviously, because it simplifies decision making to a tremendous degree.

01:31:22.540 So it's integrally involved with decision making.

01:31:25.620 You 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.

01:31:43.500 So that's really what's at the bottom of this as far as I was concerned.

01:31:46.660 That's what got me so intrigued by what you were thinking, because that's an unbelievably radical claim.

01:31:52.560 And it doesn't apply if the money is corrupted.

01:31:55.600 Right.

01:31:56.000 That's what I'm saying.

01:31:56.180 You're basically saying that you could rely on an incorruptible currency as an unerring signal of value.

01:32:02.460 So you're doing all your computation externally.

01:32:05.280 You know, in this new book I wrote, Beyond Order, I made the case that a lot of our sanity is distributed.

01:32:11.040 Like we tend to think of ourselves as organized within.

01:32:13.620 That's part of the psychoanalytic tradition, the psychological tradition for that matter.

01:32:17.380 We sort of keep ourselves sane if our psyches are well-structured.

01:32:21.100 But a lot of the way we stay sane is by interacting with other people.

01:32:24.720 And the signals they send us and that we respond to keep us sane.

01:32:29.020 And 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.

01:32:36.140 Because 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.

01:32:46.460 So 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.

01:32:57.120 So you'd buy the cheapest car, for example, all other things being equal because the calculation would have already been done for you.

01:33:05.500 I mean, there's going to be a bit of individual idiosyncrasy, but fundamentally.

01:33:09.360 The greatest reward would be climbing the value hierarchy of the market in aggregate.

01:33:13.400 And then the question becomes, what is at the top of the value hierarchy of the market, of the collectivity of all people?

01:33:21.780 And 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.

01:33:31.220 But I think that also allows us to contend with what is.

01:33:34.900 And if we can do that, then I think we can solve our problems more easily.

01:33:38.080 And of course, the market is a massive component of identifying those things.

01:33:42.120 And 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.

01:33:54.180 Our contribution to that market to nudge or shift the matrix of value hierarchies in whatever way is the best way we can affect change.

01:34:04.820 Well, we do affect change because we buy things and then there's more of them.

01:34:08.860 I mean, we do make, we do have that impact every time we make a purchasing decision.

01:34:13.640 So that, hmm.

01:34:16.080 And part of this, I would just add that, so sovereignty itself, it's the generative source of sovereignty.

01:34:22.280 It is the logos, right?

01:34:23.940 So as you've described in your work, we first had thought, I guess you could say, then we had action.

01:34:30.200 Then we had developed speech to describe our actions.

01:34:33.160 And that became embedded in something like the Bible.

01:34:35.280 We describe our moral development across time.

01:34:37.400 And then money, we'd say money is the tech layer on top of that.

01:34:41.000 It is the natural extension of speech and action that allows us to, as a mode of self-sovereign expression.

01:34:47.160 So when we, and that's rooted in the logos, the logos defined as the word or ratio in Greek.

01:34:55.380 Prices are exchange ratios denominated in money for, again, outsourcing this cognitive load to the market.

01:35:01.740 It's the same thing as words.

01:35:02.660 That's a computation of value, yeah.

01:35:03.700 Prices in words, like the, you could say prices are speech, right?

01:35:07.480 Or money is speech expressed through prices.

01:35:09.520 And when we violate that, when we have an institution, which also we create institutions to do the same thing.

01:35:15.540 We want an institution, so we don't have to think about the important civilizational operation.

01:35:19.820 We can just rely on the institutional practice, so we don't need to think about it.

01:35:23.880 When we corrupt, that institution tries to corrupt words or prices, as communism did in the 20th century, or central banking does to prices today.

01:35:31.480 It destroys the generative principle of order in the world, which is individual sovereignty.

01:35:37.680 So that's what Bitcoin is.

01:35:38.740 It's just a tool that maximizes the freedom and the sovereignty of the individual, empowering them to be entrepreneurial.

01:35:44.520 And then usher in a more wealthy and abundant world as a result.

01:35:49.500 And 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.

01:36:01.440 And we would be saying that Bitcoin is free speech money.

01:36:06.860 And along the same lines, it is very powerful and it can be dangerous, but it is also good.

01:36:12.420 So the net benefit outweighs everything else.

01:36:17.120 All right.

01:36:17.660 That is a great place to end, guys.

01:36:19.480 That's a nice, natural place to end.

01:36:21.040 Gigi, John, Richard, Robert, thank you very much.

01:36:24.400 I can't believe that our time is over.

01:36:26.260 That flew by madly.

01:36:27.560 And that's exactly what I was hoping it would do.

01:36:29.560 So it was a pleasure talking to you guys.

01:36:32.300 We'll do this again.

01:36:33.560 And I really appreciate you taking the time to speak with me.

01:36:36.940 And I hope everybody who's listening or watching found this engaging and useful.

01:36:42.640 And I'll keep reading what you're doing and watching what you're doing.

01:36:45.460 And we'll see how all this transpires.

01:36:48.020 We'll see you next time.

The Jordan B. Peterson Podcast - August 09, 2021

186. Bitcoin： The Future of Money？｜ Bitcoiner Book Club

Episode Stats

Summary

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The Jordan B. Peterson Podcast - August 09, 2021

186. Bitcoin： The Future of Money？ ｜ Bitcoiner Book Club

Episode Stats

Summary

Transcript

186. Bitcoin： The Future of Money？｜ Bitcoiner Book Club