In this episode of the podcast from the road, I talk with Mark Lurie about Bitcoin and Bitcoin policy. Mark is one of the leading minds in the country on all things relating to Bitcoin and cryptocurrencies, and he lives in New Hampshire. We talk about Bitcoin's origins, the history of Bitcoin, and the role of government in Bitcoin and other cryptocurrencies. We also talk about the role that governments should play in the space, and how they need to respond to the growing concerns that crypto-advocates have about them. Recorded in Boston, MA! See all the great work going on in the Bitcoin and Cryptocurrency space here at The Bitcoin Project, and be sure to check out the excellent work being done by the excellent team at the Bitcoin Foundation and the Bitcoin Center at the Center for Economic Policy and Advocacy at the Mercatus Center at Harvard Law School, where they are leading the charge on Bitcoin and many other topics related to Bitcoin, crypto, and much more. If you're interested in learning more about Bitcoin or other cryptocurrencies, you can join our bi-monthly Bitcoin and crypto events happening around the world, join us on socials by using the hashtag and tag to be included in the conversation in the tag . if you're a supporter of Bitcoin and/or other crypto-related projects, we'll send you a review! , and we'll get a shoutout in the next week's episode of From the Road podcast episode! We'll be posting it on the next episode of "From the Road" on our socials, where we'll have a live up to date with the latest in the latest episode of The Bitcoin and Currencies podcast, "The Bitcoin And Cryptoconomy podcast! (coming soon! ) , where we cover all things Bitcoin and all sorts of crypto-currencies, crypto-tourism and other things going on around the place where you can expect to learn about Bitcoin, Bitcoin, altcoins, blockchain, and everything else going on across the world of Bitcoin & other things related to crypto, crypto! . Stay tuned for the latest from the Bitcoin & crypto, right here on The Bitcoin & Cryptography. , right here at the "From The Road" on the road! - Tom Connolly Timestamps: 3:30 - What's up? 4:00 - What is Bitcoin? 6:40 - Why is Bitcoin not a currency? 7:15 - What does Bitcoin really mean to you? 8:20 - What are you looking for? 9:00 10:30 11:00 | What's Bitcoin's role in Bitcoin?
Transcript
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00:00:02.000So, episode of the podcast from the road, I
00:00:26.000I actually am in New Hampshire and I called up one of my friends who has been actually helping me get educated about cryptocurrency, but also happens to be a guy I went to college with who lives in New Hampshire.
00:00:36.000So, he came out to the event and we hung out afterwards.
00:00:40.000We're now upstairs in a conference room after doing a grassroots event here in New Hampshire, which went great with a great audience, but we didn't get any questions about cryptocurrency.
00:00:50.000Which I think is a good thing because I think that, you know, I think that there are other issues we needed to cover.
00:00:55.000But a lot of the issues that we did cover related to relate to many of the problems that crypto advocates also share concerns about.
00:01:05.000Stability of the financial system, integrity of the monetary system.
00:01:09.000What does it even mean to have full faith and credit backing a currency if the full faith and credit of that government is itself a questionable proposition?
00:01:20.000So to talk about that, we actually came upstairs and doing a road edition of the podcast with none other than my friend, Mark Lurie, who is one of the leading minds in the country, if you ask me, on issues on all things relating to crypto.
00:01:40.000So we'll just go about 30 minutes, maybe a little less, and just get right into it.
00:01:47.000So here's the thing that I've been, as you know, struggling with in my framework for developing crypto policy, which is that the initial concept was very tantalizing.
00:02:01.000And I embrace wholeheartedly of Bitcoin, but I think it's true of blockchain-based systems, but currency in general, which is to say that this created an opt-out.
00:02:13.000Of the way the normal financial system works, right?
00:02:17.000You have a government that issues a fiat currency, a government that funds its operations through that fiat currency that also has laws and you abide by that system of norms and rules and regulations.
00:02:28.000And if you want to just opt out of that to sort of create a space in the extra-sovereign world where the rules of the jungle apply and nothing more, then have at it.
00:02:40.000It's sort of like you put on the VR goggles.
00:02:44.000And say, you just do what you do in that space, and you're good to go.
00:02:49.000And then there was the overreach of government to say, no, no, no, no.
00:02:51.000That happens under our watch, and we're going to regulate you.
00:02:55.000And, you know, a lot of crypto advocates and, you know, freedom advocates were sort of saying, no, stay out of our hair.
00:03:02.000But then it seems like when I look at the modern crypto policy contours, I know there's a lot that happened in between, but that sort of says that, well, actually, we want to participate in the existing legal frameworks and banking system and whatnot.
00:03:18.000And so we need some level of regulation, but Not all the ones that you apply to other things that look and walk like a duck and quack like a duck, but we don't want to call it security.
00:03:29.000And so I think that to me is the fundamental tension and interesting issue here.
00:03:34.000But maybe you want to just riff off of that a little bit and talk about What you see as the original philosophical promise of crypto, and how that can, starting with Bitcoin, but in ways in which we can still preserve that promise against the backdrop of what looks like more of an internecine mess today about what the relationship between regulations and crypto should actually be.
00:03:57.000Yeah, well, I think that's a good way of starting to frame it.
00:04:01.000So crypto emerged with Bitcoin after the 2008 financial crisis.
00:04:08.000And the initial goal was to create an opt-out from the traditional financial system that couldn't be tinkered with by governments, central banks, etc.
00:04:21.000It was a stable currency, kind of like gold, that Was more portable and secure in many ways by goal.
00:04:30.000And that would be a check and balance on the traditional financial system just because it existed as an opt-out.
00:04:37.000Now, crypto has grown a lot from there.
00:04:40.000And I think one of the things that people struggle with is that it's not actually monolithic anymore, right?
00:05:37.000You can be in crypto, you can stay in crypto, you use crypto, you don't really have to interact with the traditional financial or economic world.
00:05:48.000You can be entirely in crypto world if you want to be.
00:06:12.000You know, it's a better way of doing things.
00:06:14.000Disrupting is sometimes a scary way of describing something, but it can just be a better way of doing things.
00:06:19.000And so there's no reason you'd want to separate that from the traditional financial system.
00:06:25.000I think the last thing to say is that there's a lot of people who, it's not necessarily that they want favors.
00:06:33.000It's not necessarily that they want different treatment.
00:06:35.000It's that the reasons we created the frameworks around regulation policy that we did for the financial system, as it traditionally is known, are not Relevant.
00:06:46.000They're not useful for what crypto is, right?
00:06:49.000They were built for a way of doing things that is different than what crypto enables.
00:06:56.000I mean, that concedes one premise that...
00:06:59.000Those regulations were largely useful for the thing that they were doing either.
00:07:03.000They might be equally useless in that context as they are for crypto.
00:07:06.000But at least they were designed with that in mind, right?
00:07:09.000So a lot of our financial regulations hinge around the idea that in order to do anything with money, you pretty much have to give that money to someone.
00:07:17.000A bank, a payment processor, a brokerage, right?
00:07:22.000Within the crypto ecosystem, you hold your own money and you can exchange it with other people without going through an intermediary.
00:07:30.000And so, it's like, well, why would we apply all the rules we created in order to make sure that these custodians didn't run away or do something problematic with their money to an environment where like there's no custodian.
00:08:10.000But what if the premise is – and I don't – like I have deep skepticism of much of that regulatory apparatus, financial regulation broadly, but that is neither here nor there for the purpose of our discussion.
00:08:23.000Like what if the bargain is that, okay, in order to have the protections of the rule of law – And protect against things like theft or, you know, whatever, confiscation or, you know, different ways of saying theft, misappropriation, whatever it is.
00:08:38.000In order for having that legal regime, you have to then opt into feeding the beast.
00:08:43.000And feeding the beast is that regulatory regime that you create.
00:08:49.000If you crypto people want, so I'm taking from the standpoint of government here, if you crypto people want some kind of protection according to that same legal regime and rules of property rights and whatever that are enforced by the government, then you have to opt into that same regime.
00:09:04.000But if you want rules of the jungle, then we're Operating in parallel ecosystems.
00:09:09.000Like, what would be the best response to that?
00:09:11.000I think most crypto people would say, sounds great to me.
00:09:17.000Yeah, they would rather operate on their own with some separation than As compared to be subject to a bunch of laws and rules which don't make a ton of sense and are applied because they're there already, not because they achieve the goal they were originally created to achieve.
00:09:36.000And so if those are the choices, yes, I think most crypto people would say we'd rather separate ourselves.
00:09:44.000But then now the point is, okay, but so long as your government are going to overreach – That bargain, then let's at least do it in a way that's like sensible.
00:10:09.000I mean, if you could figure out the contours for a separation, I mean, it's feasible that everyone would be happy with that.
00:10:17.000But that's certainly not on the table right now.
00:10:20.000And so it's not something that I think most people are grappling with.
00:10:25.000The other thing is, you know, it is tricky to draw those lines because this economic activity and financial activity is happening in this crypto universe, right?
00:10:35.000But the people still live in the real world, right?
00:10:39.000And so, it's impossible to completely separate them, right?
00:10:43.000I mean, maybe you don't apply financial or securities regulation, right?
00:10:48.000But you still can't have people like funding terrorists or You know, kidnapping people and holding a gun to their head so they give them crypto, right?
00:11:01.000You can't just totally separate, let's say, crime, right?
00:11:05.000And so I think it's a little more difficult than it seems to draw that line where you just separate the two worlds.
00:11:10.000Well, I mean, crime is unrelated to crypto is the point.
00:11:15.000Like I'm saying, if somebody does a hack, it's internal to crypto, and steals crypto out of your wallet, then you're operating under rules of the jungle, and sorry, you opted out of the regulatory regime, no police coming in and sort of restoring your money.
00:11:28.000But if you kidnap somebody and you're holding ransom, like, I don't think that that's – the essence of that act isn't the currency you're demanding the ransom on, it's – I agree.
00:11:38.000So maybe that's one place where you can draw that separation and like everyone agrees on.
00:11:43.000But I think you have to work through a lot of those issues because it's not always so cut and dry.
00:11:51.000So if you could snap your fingers and sort of lay out – Three to four crypto policy tenets that you think get us to a better place relative to the status quo in a way that's actually achievable for, say, the next president of the United States, what would it be?
00:12:50.000And so, we created this framework that basically said, okay, it assumes that money has to go through some sort of intermediary, a bank, a brokerage, a money transmitter, what have you.
00:13:04.000You know, obviously, there's cash, but people don't walk around with millions of dollars in their cash, you know, in their pocket normally.
00:13:12.000And so we created this framework where it's like, okay, all financial institutions, you have to do KYC on your customers so you know who they are, right?
00:13:31.000So the way I would revise it is say, look...
00:13:36.000The goal is to prevent money laundering and terrorist financing.
00:13:41.000Any means to do that that is effective should be allowable.
00:13:47.000In crypto, it's really hard to know who the people holding money are, but it's really easy to trace the transactions.
00:13:57.000It's like imagine if all the money in the world were in a bank vault, right?
00:14:05.000Everyone had the key to their safe deposit boxes and all the safety deposit boxes were clear, right?
00:14:10.000And the bank logged the transfers between every safety deposit box.
00:14:16.000It'd be pretty easy to stop money laundering because you can follow the money.
00:14:19.000You don't know who's who, but you can follow the money.
00:14:22.000And it turns out like following the money net-net is like kind of more effective than like knowing, screening each person each time they go to each different bank.
00:14:35.000And so KYT, you know, your transaction, you know, would be probably more effective eventually than KYC. And it would prevent a lot of the problems which create friction between the crypto world and the traditional financial world today.
00:15:01.000So, in general, securities law assumes that if you are buying something, you're giving money to someone else.
00:15:11.000And so, there's always an issuer, right?
00:15:16.000They're holding their money for you, and they're producing value for you.
00:15:23.000In crypto, you have this concept of smart contracts, which is basically you have code, which you kind of set up the rules, like what trades should be done when and how to calculate prices.
00:15:34.000And it kind of runs on its own, right, on the blockchain.
00:16:46.000And he's kind of caught between a rock and a hard place where it's like, you know, he doesn't really have the tools to regulate and protect investors in a good way.
00:16:54.000So, he has to talk a big talk and then go after the bad actors.
00:16:57.000But that creates uncertainty, which hurts everyone.
00:17:00.000And so, you know, obviously, there's a lot of crypto that is not a security, right?
00:17:10.000A token is a representation of something, right?
00:17:12.000A gift card is a representation of something.
00:17:16.000A artwork is a representation of the history of that artwork, right?
00:17:20.000It's why the Mona Lisa is worth more than a copy, right?
00:17:24.000You know, my membership cards, my AAA card is a representation of my membership in AAA. And there are tokens That fill all those different purposes.
00:17:35.000It is self-evident that many of those are not securities, right?
00:17:39.000But they get painted with a broad brush and then it hurts a lot of innovation.
00:17:45.000So what would you do with the securities law then?
00:17:48.000Just not treat it as security basically?
00:18:29.000These things just kind of need to be, like, rethought.
00:18:34.000And probably the most effective way to do that is to, like you suggested, ring-fence a lot of crypto and say, like, hey, it's the Wild West.
00:18:45.000As it matures, like, we'll re-engage and we'll come up with common sense regulation that applies.
00:18:52.000There's a list of, you know, specific things that I think could help, but I really think the securities acts need to be revised themselves.
00:19:06.000It's certainly not something that can happen at the regulatory level.
00:19:19.000I mean, one of the things that bothers the heck out of me, this has nothing to do with crypto, has nothing to do with crypto, is that insider trading is nowhere defined in the securities laws.
00:19:30.000And anytime someone's pushed to define it in the securities laws gets who objects.
00:19:35.000The SEC, because they actually want them to be written vaguely.
00:19:38.000That's one example among many, that's a famous example.
00:19:41.000But, you know, I think that in some ways the vagueness again, as it applies to crypto, in that to use that analogy, may not be what they see as a bug, right?
00:19:52.000They see that as a feature because it gives the Genslers of the world more authority than the people who are actually elected to Congress or the Senate to pass statutes.
00:20:01.000The insider trading example is interesting because there was congressmen and senators, et cetera, that had – thinks that we need to change legislation on this.
00:20:09.000Certainly, there are people who have called for greater clarity in industry and yet the SEC opposes the efforts to define it statutorily.
00:20:17.000It would not surprise me if that same pattern of behavior actually purposefully what you're describing as just like a problem and assuming a well-intentioned, oh, well, like let's just all work together and fix it, I think presumes a sort of – Purity of intention that I don't think exists in most of the administrative state.
00:20:40.000Not only does it not – And I think they like the vagueness, actually.
00:20:43.000Yeah, not only – So Congress has to act, but they don't want Congress to act because that means they can't decide to do whatever the heck they want to do, which is what most of these bureaucrats actually – how they derive their power in their sense of what they call discretion, but what really is just arbitrariness, undermining the idea that we're a nation built on the rule of law when they actually would prefer it just be a nation of men.
00:21:02.000And the irony is, you know, these agencies are set up to accomplish a mission, right?
00:21:09.000And they are going to Fulfill that mission.
00:21:12.000If it's protecting investors, they're going to focus on protecting investors, right?
00:21:16.000And they're going to say that they evaluate the trade-offs incrementally between their, you know, capital formation and encouraging economic growth.
00:21:23.000But really, like, when things like FTX happened, right?
00:21:27.000Or Madoff happens, like, it makes them really look bad.
00:21:29.000They focus mostly on preventing bad actions, not encouraging good actions.
00:21:34.000And striking that balance, you know...
00:21:37.000That's hard and they were set up so that there is a check and balance on that.
00:21:41.000They're set off on this mission and then the legislature and, you know, the executive branch check and balance them, right?
00:21:49.000And when that falls away, you just get the mission, even if well-intentioned, and you don't have the check and balance.
00:21:55.000And I'm not sure it's fair for them to check and balance themselves.
00:21:59.000Yeah, I'm sure it's not fair, actually, because that's part of the problem with the fourth branch of the government is it's designed to exist outside of the bounds of checks and balances.
00:22:13.000That's exactly why it was sort of a demonic creation of sort of a quiet bargain of the executive branch and the legislative branch.
00:22:24.000Nobody wanted to actually be held politically accountable Even though they were politically empowered.
00:22:28.000And so they decided to sort of kick it outside.
00:22:31.000And so actually, it's this weird analogy to where we began the discussion, actually.
00:22:36.000Is that we've got the Constitution, but we want the rules of the jungle.
00:22:38.000We'll kick it off to the administrative state.
00:22:41.000And that effectively exists as a parallel morass that Actually, occasionally interfaces with the legal system, but more or less increasingly has nothing to do with it.
00:22:56.000About the statutes that are passed versus the regulations that go through in, you know, pick your favorite part of the alphabet soup, SEC to FDA to, you know, God knows what, TSA to FTC to, you know, whatever.
00:23:09.000And I think that's kind of an analogy with what we do with the crypto system is like this system, like they said, Congress is so broken, let's just kick it out and create this new thing.
00:23:52.000And so the – you know, in the Constitution, we build in checks and balances to try to prevent that, right?
00:23:59.000So like the Second Amendment is an example where, you know, you can say a lot of things about it, but there's kind of a hard check on the – Encroachment of the police state because, you know, people might have guns, right?
00:24:12.000And that prevents a certain amount of creep of the state.
00:24:19.000In the financial sphere and in the legal sphere, we tried to solve that problem with checks and balances, right?
00:25:08.000You can only do so much to inflate your currency, you know, to solve your problems before people really start opting out.
00:25:15.000And that's a hard limit that countries come up against sometimes.
00:25:20.000In the same way, the legal system can encroach, right?
00:25:27.000And encoding your rules of organization with other people in code on a blockchain can provide an opt-out jurisdiction if you don't want to be part of the current legal system.
00:25:40.000And that is a check and balance on the legal system that actually might make things better for us.
00:25:44.000In the same way that when file sharing came out, right, it forced the music industry to convert to things like streaming and Spotify.
00:25:51.000No one uses Napster anymore, but because of Napster, we have Spotify, right?
00:25:56.000And in the same way, because of the Second Amendment, We have a lot of freedoms.
00:26:02.000And because of Bitcoin, we may have a more constrained Fed.
00:26:06.000And there wasn't really a good way to do that otherwise.
00:26:09.000And I think the constrained Fed is – I mean, that would be a boon to economic growth in this country.
00:26:15.000And if cryptocurrency advocates played a role in creating the competitive pressure – To deliver that result, we would owe crypto advocates a debt of gratitude in this country because as you know, that's a big part of my focus in the presidency is to put the Fed back in its place.
00:26:33.000And I think that's a very long-term goal, right?
00:26:36.000Obviously, that's not where it is today.
00:26:52.000And the ability to foster that is a long-term boon to all of our freedoms, right?
00:27:01.000Ambitious, lofty, but I think I could buy the possibility of that.
00:27:05.000But even still, you don't have to think about it on the scale of centuries, even in the short run and the way it shapes the terms of debate that I buy.
00:27:11.000And I think it's- I mean, we're talking about it.
00:27:15.000If I'm successful, I'll be, by definition, influenced by- Ongoing debates like this one forced by cryptocurrency as an alternative that otherwise caused us to have a discussion about the Federal Reserve that we might not be having in the same way but for it.
00:27:28.000So that's already – that's already the best proof we need that it's tilting the scales of discussion about Fed reform at least for the better.
00:28:11.000It makes me really appreciate the primary system we have because everyone you meet is more willing to be engaged with these issues and takes it upon themselves to go see the candidates.
00:28:20.000That is just not something you get in You know, deep blue and deep red states.
00:29:31.000And, you know, hopefully that's going to actually put us in a best position, not just to deliver slogans, but actually to deliver a result.