Robert Breedlove: Philosophy of Bitcoin from First Principles
嘉宾：Robert Breedlove
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The following is a conversation with Robert Breedlove,
someone who caught my attention and was recommended highly
as a rigorous scholar and thinker
in the space of decentralized finance and Bitcoin.
His podcast titled "What is Money?"
is a good representation of the way his mind works.
He's willing to talk through ideas for many hours,
willing to listen, willing to think,
which makes him a great companion and conversation
to explore the history, philosophy, and future of money.
Quick mention of our sponsors,
Fundrise, Element, MonkPak, and BetterHelp.
Check them out in the description to support this podcast.
As a side note, let me say that I'll have a number
of conversations in the coming months
on Bitcoin and other cryptocurrencies.
None of these conversations are financial advice.
That's not a legal warning.
That's a genuine description of my goals
and approach with these chats.
At least for a while, I personally won't actively invest
in Bitcoin or any other cryptocurrencies,
except to learn about the technology itself.
I don't think this should be a journalistic standard
like the New York Times trying to establish,
which I very much disagree with.
In my humble opinion, I think journalists should be free
to invest in Bitcoin if they want to.
Luckily, I'm not a journalist.
I just know my own psychology and I feel
that my thinking will be muddled by excitement
if I invest before I understand.
I feel the same way about Tesla, for example.
I still don't own any Tesla stock,
and I am still indeed fascinated by Tesla Autopilot
as an artificial intelligence system.
I work hard to be cognizant of the biases
that arise in my mind and always try to choose the path
that maximizes or maintains a freedom of thought
as much as possible.
Also, let me say that I try to be very careful
in selecting guests based not only on the contents
of their ideas, but the richness, complexity, music,
style of their mind and character.
Yes, I will talk with people with whom you
and I may disagree, people who some may call bad
or even evil human beings.
I want to understand them because I believe that,
as Solzhenitsyn said, the battle line between good and evil
runs through the heart of every man.
I think if you always run from evil,
you become blind to the truth of human nature.
This is the Lex Friedman Podcast,
and here is my conversation with Robert Breedlove.
Rousseau opens his 1762 book, "The Social Contract,"
with the following statement, "Man is born free,
"and everywhere he's in chains."
So you talk about freedom and sovereignty quite a bit.
What do these ideas mean to you, the idea of sovereignty?
- Freedom and sovereignty,
I think they're very closely related.
It started just focusing on sovereignty,
which is a word I don't think we talk about enough.
And the general definition of that I would give
is the authority to act as you see fit.
And it's a word that's etymologically associated
with words like monarchy, money, reign.
So historically, it's referred to whatever the locus
of supreme power is in the sphere of human action.
So whether, if you go like back in ancient Egypt,
the pharaoh had absolute sovereignty,
and everyone else was pretty much
operating according to his interest.
You fast forward to today, modern Western democracy,
we have more decentralized sovereignty
in that we all get to go vote and elect officials
that make decisions on our behalf.
So the theme of sovereignty across history
is that it's been gradually decentralizing
across our different models of socioeconomics.
And it's largely, you could say it's rooted heavily
in the money, I would argue,
which is something we'll get a lot into here,
where if you have money, you have the authority
to act as you see fit in the world.
And even in our current political sphere,
if you have enough money,
you can actually reshape the rules, right?
You can reshape laws, you can lobby Congress.
If you're in a certain situation, like many billionaires,
you can negotiate your own tax treaty,
such that you can get favorable tax treatment
with certain jurisdictions in the world.
So this concept of sovereignty,
which today we call, it's common to call states
or nation states or governments sovereign,
meaning that they have power over people.
But as I argue in a lot of my writing,
I actually think that sovereignty
and here's within the individual,
and that we each have our own interiorized space of choice,
which is something like Viktor Frankl called
the final human freedom.
And that we, no matter what our circumstances are,
no matter what exogenous situation we face,
we always have this endogenous power
to choose how we respond to it.
- That's one of my favorite books is "Man's Search
for Meaning."
Maybe we can break that apart a little bit.
So you've kind of spoken about sovereignty
as closely linked to power,
but is there something about your own mind
being able to achieve sovereignty,
no matter what the monetary system is,
no matter what, who has the control
over centralized power, the money,
or whatever the mechanisms of sovereignty
at the societal level.
You as an individual, isn't ultimately all boiled down
to what you can do with your own mind,
how you see the world?
- Yes. - How you interpret it.
- Yeah, I agree.
And as we get a little bit deeper into this,
I think we'll come to see money as an extension
of your mind.
So there's a feedback between money and mind.
For instance, you think in dollars today,
almost guarantee it, most of us do here in the US.
And it's a tool, right?
It's a tool we're using to decomplexify the world around us,
to deal with it, to understand the sacrifices
and successes across an entire history
of economic transactions.
We can boil that all down to the price.
So it's data compression.
And if you can change, if there's a central body,
or central governance mechanism that can manipulate
that money, it can have an impact on your mind.
For instance, today, so I agree with you on the first hand,
say that I do believe in free will.
I do believe in individual autonomy.
But I also think that there are certain devices
and powers in the world around us
that can actually influence how we think.
And it's fascinating to think about the fact
that money might be actually deeply integrated
into the way we think and into our mind.
Like this is, you think about what are the core aspects
of the human mind?
What influences cognition,
the way you reason about the world?
You have the Chomsky-like languages
at the core of everything.
But you're kind of placing money as pretty close
to the core of what it means to be
an intelligent, reasoning human.
I think money is a direct derivation of action
and speech, actually.
It's another expression of the logos.
If we even think of what it means to think,
is that we are generating two different courses of action,
potential courses of action,
and we're populating them with avatars, right?
Maybe ourselves or others.
And then we're comparing how we may act in each situation
and what we think the result would be.
So actually, it's comparison.
Basically, it's comparison and contrasting
of possible courses of action.
And that's the same thing with words themselves.
Most words, the vast majority of words,
only have meaning in relationship to other words.
It's all contextual definitions of a word or more words.
Now, people have argued with me about this
because there is a first word, right,
where you pick up rock and say rock.
But most other words, in higher abstraction,
tend to be relative.
And what's funny about action and speech,
and this gets, I got into a bit of this in our paper here,
is that it's linked to evolutionary biology,
and that once human beings adopted upright stance,
we freed our hands.
We no longer needed our hands for locomotion.
So we started to evolve more dexterity,
and notably, we have opposable thumbs.
So this gives us an ability to manipulate
and particularize the environment
in a way that most other animals cannot.
And what's interesting about this is that
as we gain this ability to manipulate natural resources
and count, point, pointing was a big deal,
and that we could indicate prey or items
that are far off distance, and we could organize ourselves,
we, at the same time, we co-evolved this fine musculature
in the face and tongue.
So it's as if speech developed,
co-evolved really with our dexterity.
§02Transcript · 09:09–18:33
And as a natural extension of that came us making tools.
We started to create things
to better satisfy our wants over time.
And the most tradable tool in any society,
or the most tradable thing is money.
So I really, I argue that action and speech
are quintessential modes of self-sovereign expression.
And the money is just sort of a tech layer
we've put right on top of that,
and that it's a natural derivation of action and speech.
- Okay, that's fascinating to think about sovereignty
from the evolutionary perspective.
And then ultimately, money is the technology layer
that enables sovereignty.
So, you know, it's really fascinating to think about
our modern human society as deeply rooted
in these evolutionary roots
from the very origins of life on earth.
So what, you know, some of the ideas you just mentioned,
what do you see are some interesting characteristics
of just life on earth that propagated to us humans?
Like what ideas propagated through,
have roots in the evolution?
- Yeah, I think one of the deepest impulsions in life
is the territorial imperative.
So all life is seeking to expand
its dominion over space and time.
And we think about, you know, again, physically with space,
it's advantageous to an animal or an organism
to have more territory under its control to raise offspring.
So it's all about reproductive fitness
at the end of the day.
And then we'd also think of reproduction itself
as the genetic impulse to have more,
to replicate oneself across time.
So it's territoriality across time in a way.
And this is very common in most animals.
Not all animals are territorial, but many are.
And you see very interesting behaviors
resulting from territoriality.
This is like animal combat.
You know, the reason birds sing is territoriality,
a number of other things.
And it's my hypothesis,
and others have shared this hypothesis as well,
that mankind is clearly, I think,
would argue a territorial species,
and that he expresses this territoriality
in property rights.
So property, when we hear that word,
we typically think of an asset.
We think of, oh, this house or this stock or whatever.
But property is actually the socially acknowledged
relationship between a human and an asset,
such that you have exclusive rights and responsibilities
to a particular asset.
It is not the asset itself.
So property, it's information, it's a relationship.
- By the way, my mind was just blown.
Property is information, it's not the actual asset.
That's really important.
- Very important.
- That's really interesting.
- Yeah, and then it comes down to
how do we organize ourselves such that
property, that the contributions people are making
are commensurate with the consideration they're receiving.
So if you're adding value to a piece of property,
you're developing a piece of land for use,
in theory, to be fair, you should have the rights
to that fruit, right?
If you go out and plant a garden or whatever it may be.
And this is very, this is rooted in natural law,
where we have rights to life, liberty, and property.
Those are kind of just the base,
the fundamental layer of morality and capitalism, frankly.
And you could think of, to get really primordial with it,
the first capitalist in the world,
just to kind of get some definitions out here,
I'll say capitalism versus communism or socialism,
as the spectrum I'll speak on.
The first capitalist in the world would be the guy,
the caveman that maybe dug a little hole for himself
to shield himself from the elements, right?
Maybe there was a rainstorm or a snowstorm
and he dug a little enclave and he protected himself.
- I thought you were gonna go, 'cause you said primordial,
I thought you were gonna go back
to earlier biological systems.
- I guess primordial for human, perhaps.
- For humans, yeah.
Okay.
- And then the first communist or socialist
would be someone that decided the fruits
of his labor belonged to him.
So he would have violently encroached on that individual
and taken his plot for himself, for his own use.
And that's the spectrum across which capitalism
in the pure sense and communism in the pure sense operate
in that capitalism, each individual has the exclusive rights
to the fruits of their labor.
So anything they spend their time, effort, energy,
creating in the world, they own the rights to that
and they can trade those rights with others,
other self-owned people that have done similar things.
Communism or socialism would imply that other people,
typically the state, have the rights,
at least some rights to the value you've created.
- So there's this interesting moment
when that first caveman, that first capitalist,
drew a line, a circle in this cave and said,
this is mine.
You could say it was free to be claimed
at the time he claimed it.
But it's an interesting moment when asset becomes an asset,
when space-time, as you were referring to it,
becomes something that's now,
can be possessed by a human being.
Is there something special about this moment?
Because it feels like, first of all,
in terms of space and time,
it feels like there's a lot of available space-time
yet to be claimed.
So if we just look at like the universe, right?
We're talking about, there's a funny thing
with Elon Musk and Mars.
I think they sneaked in there for SpaceX
that nobody on earth has any authority on Mars or any,
this is a very interesting question.
It seems almost like humorous at this time,
but perhaps not.
Perhaps there'll be sections of space,
not just on planets, that are gonna be even fought over.
So is there something special about this moment?
Because in discussing sort of violence
and respect for property,
it feels like this is a special moment
because ultimately conflict arises
when you make claims on a particular territory.
It's not always in conflict where people say,
when you look at Hitler or something, for example,
his claim would be in many of the lands
that he attacked and invaded,
that this is ultimately,
this has always belonged to Germany.
So is there something you could say
as to what it means to own an asset or a property?
- Yeah, so in the ancient days of hunters and gatherers,
we could say that property was mostly a loyal title,
which meant it's just whatever you can defend.
So if you've got knives and daggers and satchels
and maybe some pelts you've hunted,
whatever you can hold and defend is yours.
And there's not like there's a government
to appeal to, you're just sort of a free agent
operating in the wild,
defending the assets you can protect on you more or less.
And what really changed the nature of property
is when we get into the agricultural age.
So there's a big flip where we went from just foraging
and hunting all the time, constantly moving,
trying to stay alive to deciding we're gonna settle here.
We figured out how to cultivate crops.
We can create, we can increase the population
'cause we can harvest more energy from the sun
and we can establish a longer term civilization.
What happens in that transition
is that we begin creating economic surplus.
So for the first time in history,
we have grain, stock houses of grain to defend
or maybe meat or cattle or whatever it is we're creating,
we now have savings.
And it's at that time when government emerges as well.
Because once you have savings,
so you have an economic surplus,
you have something that other people want to steal.
This one thing we'll touch on a lot today
is people always want something for nothing.
People are always seeking the path
to get something for nothing.
And I think that drives a lot of our decision making.
And it actually encourages us to be innovative
in a lot of ways.
We're trying to, you could say it's our laziness
that's helping us be inventive in a way.
We're trying to accomplish greater results
with less efforts over time.
But we can cross that line
in seeking something for nothing
where we start to violate the life,
liberty and property of others.
And that's where we shift from kind of capitalistic society
to something more communistic.
And so that's what government is.
It's a protection producing enterprise
for the economic surplus generated by a trading society.
So when people begin to trade,
they create what's called the division of labor,
which is a very common economics term.
Basically means you're better at making hats,
§03Transcript · 18:35–27:23
I'm better at making boots.
If you specialize in hats, I specialize in boots
and we trade, we've created a positive sum game
where you and I both benefit.
So we become collectively more than the sum of our parts
through trade.
And that's why human beings do trade
because we become more energy efficient as a result.
We create more outputs per unit of input.
And you can think of government in that respect,
if we're looking at it, maybe in a tech sense
that the economy is the trade network
that generates wealth, generates innovation,
generates all this whole lap of luxury we live in today
that we've inherited from our forebears is from the market.
It's not from a government.
The government is the network security, if you will.
So we're paying expenses to a vendor to protect peace,
to preserve life, liberty and property in that network
so that we can have,
when there's inevitably disputes over private property,
we can have nonviolent dispute resolution
in the rule of law.
And we can have a reasonable expectation
of being able to conduct commerce without violence.
The problem has been that the protector tends to,
they're in a monopolistic position, we'd say.
They tend to start abusing that position
to obtain property for themselves.
Again, trying to get that something for nothing.
When you control, you are the security guard
for the economy,
the first thing they tend to monopolize is money.
Because if you can control the money,
you're effectively controlling people,
their energy, their perceptions.
And that becomes a, particularly through inflation,
becomes an avenue to get something for nothing.
And that you can just print more money
that everyone else is forced to sacrifice
their time and energy to obtain.
- What are your thoughts about anarchism?
So I talked quite a bit,
he'll be here in a few days actually, Michael Malice,
about ideas of anarchy and his idea,
or the idea of anarchists is that
any amount of government will eventually become
the very kind of thing that you're referring to.
So there's almost no way to have a government
that doesn't then try to monopolize power,
money and all those kinds of things.
Do you think it's possible to have a government
sort of on that spectrum of like anarchy,
maybe libertarianism,
I'm not sure how exactly the spectrum goes,
but where you have a small government
that protects the liberty and property rights
and those kinds of things,
and doesn't expand to then also control
the monetary system and all those other things?
- Agreed, agreed completely.
It was not possible until Satoshi Nakamoto.
So for the first time in history,
we have a money that cannot be monopolized,
cannot be corrupted, cannot be changed,
cannot be weaponized, frankly.
Our current monetary system is weaponized
by those who can print money against those who cannot.
And I think when you have,
at the heart of every modern economy,
which even we could say the US,
we pride ourselves as free market capitalist,
we out-competed communism in the 20th century,
we think that this is the superior model.
Most business people will tell you
that the free market is the best allocator of resources,
all of these things.
But what we have at the heart of every modern economy,
including the US, is an anti-capitalistic institution,
which is the central bank.
The temptation to monopolize money throughout all of history
has been too strong for anyone to resist.
So any, even benevolent, quote-unquote,
dictators that have taken over,
many dictators have inherited, say, an inflationary regime,
where society's coming apart
because someone was clipping the coins
or someone was printing too much money,
and they'll commit to going back to a hard money standard.
So they'll keep society on a gold standard, for instance,
such that they cannot violate
the money to benefit themselves.
But inevitably over time,
because it is a political institution,
there's an incentive there, right,
for, again, to get something for nothing,
to spend more than you're making through tax revenues.
And with that incentive,
people typically ultimately end up pursuing
that inflationary path.
So we get deeper into that about,
inflation is a term that we've been conditioned
to think today is just something normal,
the prices just go up,
and then it's pertinent to a healthy economy,
but it's actually,
if you look at it from real first principles,
it is just theft integrated into the money.
It's a technology backdoor,
is another way to think about it.
You wouldn't buy a cell phone
knowing that someone could siphon your data
off of your private calls and sell it into the market.
Now, I know we do that with a lot of social media stuff
today, and that's something else we can get into,
but you wouldn't do it willingly, right?
You would prefer that your cell phone and your data
was monetized by you,
or if you're gonna sell it,
you would be able to selectively sell it.
Inflation is that, it's similar, it's a tech backdoor.
So it's a money that only a few people
can siphon value off of surreptitiously,
typically slowly,
but eventually as we've seen throughout history,
that slowly builds up into a rapidly
and then causes the monetary system to collapse.
- Do you think there's a benefit to inflation possibly?
So when you have perfect information,
but perhaps you don't need inflation,
perhaps it is purely theft,
but I think of inflation as like the snooze button
on the alarm.
So if you have a hard standard,
you better wake up when the alarm rings,
but all of us kind of like, probably shouldn't,
but use the snooze button.
It's like, okay, well, five more minutes,
10 more minutes.
And then you're saying there's naturally a slippery slope
where it becomes a drug that you fall in love with
and you abuse.
But nevertheless, the usefulness of the snooze button
is that you don't know how you'll be actually feeling
when the alarm rings.
You might be able to ready to pop up.
It might be like, you really need those few more minutes
like to psychologically get yourself out of bed.
This metaphor is just not working at all.
- No, no.
- Do you think there's a use to inflation sometimes
from like an economics perspective?
- I think the drug metaphor is a little more apt
in that inflation does provide
an immediately stimulative effect when used early on.
But what it's doing is it's, again,
we talk about the balance between incentives
and disincentives, right?
That being necessary for a system to function properly.
With inflation, you're essentially giving
the people that can print money
a way to dampen the disincentives they face.
So it destroys feedback loops, I guess you might say.
And another way to look at this is when you,
so using inflation, using quantitative easing,
you can decrease short-term volatility in the marketplace.
So the market is basically this idea,
this form of free exchange
that's trying to zero in on the best ideas.
And the ideas are those that are most fit to reality,
to satisfying the most wants.
It's gonna overshoot, it's gonna undershoot,
you have these little business cycles.
But when it's undershooting
and you're experiencing a business recession,
in a capitalist environment,
the market needs to clear that malinvestment,
that misallocation of capital.
That means someone made a bet on a certain idea
that it would satisfy wants in a particular way,
and that bet did not pan out.
If you then paper over the losses that business is creating,
you're now delaying and exacerbating the volatility
that that idea created.
So this is kind of a Talebian concept
where you can dampen short-run volatility,
but volatility is truth.
Volatility is us matching our ideas to reality.
We're constantly, again, overshooting and undershooting.
So you delay volatility,
you're just amplifying it
and exacerbating it in the long run.
And that's what central bank is doing.
The central bank mandate is low unemployment
and low unexpected inflation, basically.
And so they're trying to achieve economic growth
in a stable way, quote unquote stable way.
This is their ostensible purpose.
And that's just not possible.
Growth is an inherently instable process.
§04Transcript · 27:26–36:06
Can you elaborate a little bit
about the nature of volatility?
Why is it communicating truth?
That's something that a lot of people are afraid of,
is the volatility.
Almost like it's a sign of chaos.
And so they want to escape chaos.
But you're saying that that's actually,
whether it's chaos or not, I don't know,
but it's getting us closer to the fundamental reality
that we should not be trying to escape.
- Yeah, so if we consider that the universe
is pervaded by entropy, right?
This is the second law of thermodynamics,
is that every closed system tends
towards greater disorder over time.
And that life itself, again, I would argue,
expressed through the logos,
we, life, is the anti-entropic principle.
It's the only thing that's converting entropy into order,
chaos into order.
And that's what entrepreneurs are doing, right?
We're living at the edges of the known,
and we're trying to, we're testing ourself
against the entropy of nature,
trying to figure out new and better ways
of saying, doing, or making things.
And then if we do crack a code or figure something out,
we then have a big incentive.
The incentive is to get rich, right?
Because then you have a new idea
that you could then sell back into the marketplace.
So it's this sequence of courageously
confronting the entropy of nature
and converting it into good and useful order,
which by the way, is like the ancient idea of God
and Genesis, which I think is interesting,
that actually enables us to construct civilization
in these layers of anti-entropy or order, you might say.
So today we live in a bubble of anti-entropy or order.
You know, like the coastlines are guarded by the nation
and the city has a certain police force
that keeps it in order.
Even the way we talk, like clearly the words matter,
but also the nonverbal cues, all these things are like order
that has been established over many, many, many thousands
of years of human evolution.
And I think that when I say volatility is truth,
what I'm saying is that the experience of uncertainty
is something that's ineradicable from life, right?
Uncertainty, like it's kind of a paradox
because we're fighting against it, right?
We're trying to innovate our way away from uncertainty
to give us, to create more capital,
which capital is very simply a way of mitigating uncertainty.
So this is why you might have like a stash of food
in case the power goes out or a generator,
like it helps you overcome uncertainty over time.
But uncertainty is also where all the sweetness of life is.
So there's gotta be this balance
with one foot in, one foot out.
- So human society is this kind of bubble of order
that we've constructed and slowly expanding,
but at the edges, you're always going to have that chaos,
that volatility, and that the entrepreneurs
are kind of like jumping into that chaos
and some of them die and some of them succeed.
And so like, if you wanna grow this bubble of order,
you have to be embracing the volatility at the edges.
- Yes.
And reverence for entrepreneurship,
because these are the people putting their neck out,
so to speak, risking themselves.
And they're gonna contribute to society, by the way,
whether they go up in flames or not.
If they go up in flames,
society has witnessed their experience
as something not to do,
or something that doesn't work in a particular time and place
so that you could say they're,
them going up in flames
is a way of enlightening the rest of us.
Or if they figure something out,
Steve Jobs creates the iPhone,
it changes the world forever.
- Enlightening the rest of us.
(laughing)
- And Taleb would say--
- With the fire of their failure, okay.
- Yeah, exactly.
Taleb would say,
individual fragility is inseparable
from ensemble anti-fragility.
So this means that, again,
every time that entrepreneur goes up in flames,
or say a restaurant goes out of business,
when a restaurant goes out of business,
that particular cuisine strategy they were implementing
in that particular time and place,
that's a signal to all the other restaurants in the area
that that doesn't work.
So restaurant food improves from bankruptcy to bankruptcy.
So it's this death of the individual components
that contributes to the growth of the ensemble.
- As a small aside, maybe you can guide me through it.
I don't know if you're paying attention,
but there was some chaos around Taleb
and the Bitcoin community.
I wasn't quite paying attention,
but from my outsider's perspective,
I thought it seemed Taleb was a supporter of Bitcoin.
And then a lot of people were very upset about something.
I'm sorry if I don't know the details,
but can you pull out some profound philosophical ideas
from the disagreement of the chaos?
- I admittedly don't know too much about it either.
I'm a big fan of his writing.
He's always been a little different in person.
Like I actually, he signed one of my books,
I met him in person.
He's got a very abrasive personality.
He's kind of known for it.
I don't think I'm passing any judgment here.
He sort of embraces it.
But he had written the forward
to a really important book in Bitcoin
called "The Bitcoin Standard" for Safetine Amoose.
And then I think they had a little Twitter beef
because Safetine is very much against COVID mask
and state intervention,
whereas Taleb's on the other side of the fence.
And so, and then after that beef,
Taleb came out against Bitcoiners saying,
"Oh, Bitcoiners are crazy and wrong."
- I think the great mask debate of the 2020
will probably be the thing
that ultimately leads to World War III.
I've been very surprised how tense, how much like division
this one little arguably silly thing has led to.
I think a lot of people sort of project their,
like it's almost like not wearing a mask
is a statement of sovereignty, of freedom,
of like saying, "Fuck you" to the man, the government,
the centralized power, or the dishonesty,
or in the scientific community, all those kinds of things.
And then wearing a mask is a sort of kind of signaling
of various kind of social aspect.
I don't know, I'm not paying attention to it.
I actually tuned out.
I was part of a group of scientists
that were looking into like, do masks work?
This very interesting question.
To me, it was an interesting question.
I sort of roll in to ask that very interesting question
'cause I think it is an interesting scientific question,
but then I quickly realized that just as I was doing this,
like scientific exploration of this very interesting
question about Viron particles, like what kind of things,
like from a scientific perspective,
how do we prevent the spread of a pandemic?
Forget COVID, any pandemic, super deadly or not deadly.
Like there's tools, there's testing, there's masks,
there's all these tools, how well do they work?
And then I realized, in April or so,
it became a tool of politics, a tool of philosophy.
And that's when I sort of pulled out.
So it's fascinating.
I think it's a canvas on which people project
their emotions and I guess,
until I got caught up in that kind of,
so there's nothing fundamental,
I suppose, to their disagreement.
- Not that I'm aware of, but he is,
he's written some about, in his books,
the problem with centralization.
I mean, a lot of his writing addresses that
and he actually points to, I think Switzerland
is the best government in the world
because it's decentralized.
So there's that.
I don't think he has any, not to speak for him,
but I don't think he's voiced any specific critiques
on Bitcoin per se.
Could be wrong about that.
- It's just maybe his flavorful language
and the way he likes to communicate.
- And the other theory is that maybe he's playing 4D chess
and having a Twitter boating accident.
So he's, I don't believe in Bitcoin,
I've sold all my Bitcoin.
- Oh, I see.
- Yeah.
Sorry, the boating accident in Bitcoin is this,
I guess it's proverbial by this point,
where it's the way you lose your Bitcoin.
So if someone comes after you and says,
hey, whether it's a government
or an individual's coming after you saying,
give me all your Bitcoin or pay these taxes in Bitcoin,
you go, oh, I had a boating accident and lost them all.
§05Transcript · 36:09–45:10
- Lost them all.
- So, yeah.
(laughing)
- But back to the fundamental nature of space-time.
Let me ask you, 'cause we're kind of left it,
I'd like to go back to this idea of,
that you said that everything we think, say, or do
occurs within the bounds of space-time.
So first of all, maybe you can comment on
what do you mean in this context about space-time,
but also about the nature of truth.
Like how much of all of this is knowable?
How much of this is accessible to us humans?
How much uncertainty, like we're talking about,
is there in the world?
Are you, do you fall in a place where
we can reason deeply about this world and it's knowable,
or is it mostly chaos and we're just holding on
for dear life?
- Yeah, I think I said that all action occurs
within the bounds of space-time.
The other thing, everything we say, do, or make,
the other thing is that everything we say, do, or make
starts out as an idea.
So there's this concept of universal Darwinism,
which basically applies Darwinian principles,
but outside of the biological sphere.
So we could say that this kind of gets
into Richard Dawkins' memetics,
that even ideas are competing, reproducing, recombining.
- That idea is so powerful, by the way.
I don't think it's been understood fully.
I think in the digital, in the 21st century,
in the digital world, from my perspective,
in artificial intelligence, there's yet to be
some profound things to be discovered
about this whole construct.
- Agreed completely.
It's been called an acid, actually,
in that it strips away all of the non-informational
components of something, just strips it down
to its bare bones.
I have a quote in there somewhere about that.
- I'm sorry, which is called an acid?
The ideas?
- The universal Darwinism.
- Darwinism applied broadly, outside of the--
- Applied broadly, and I will condition all of this
with saying that most of my thinking is shaped
by a book I read recently called "The Case Against Reality,"
which introduced me to this concept,
but it tied into Darwinism that I've used
more broadly in the past, looking at things
like money and economics.
So the book "The Case Against Reality" by Donald Hoffman,
he has a quote in the book that describes
universal Darwinism.
It says, quote, "Universal Darwinism can,
"without risk of refuting itself,
"address our key question.
"Does natural selection favor true perceptions?
"If the answer happens to be no,
"then it hasn't shot itself in the foot.
"The uncanny power of universal Darwinism
"has been likened by the philosopher Dan Dennett
"to a universal acid."
And Dan Dennett says, quote, "There is no denying
"at this point that Darwin's idea is a universal solvent,
"capable of cutting right to the heart
"of everything in sight.
"The question is, what does it leave behind?
"I have tried to show that once it passes
"through everything, we are left with stronger,
"sounder versions of our most important ideas.
"Some of the traditional details perish,
"and some of these are losses to be regretted,
"but good riddance to the rest of them.
"What remains is more than enough to build on," unquote.
So the way I would interpret that is that life itself,
I've come to view life as information
propagating through flesh,
and that we are, I guess, DNA is a quadratic code.
I think it's four letters, maybe,
versus a binary, zeros and ones.
And we are ideas, we are strategies
competing with each other.
And nature is that which selects.
It's what selects the winning ideas,
the ones that are most fit to environmental conditions,
frankly.
- You know, talking about sovereignty and individualism,
there might need to be some rethinking here
about what is actually the basic individual entity
that is to be sovereign.
Like maybe our biological meat vehicles
were like way overly attached to them.
Like maybe, especially with genetics
and all those kinds of things,
or artificial intelligence,
or living more and more in virtual worlds
will become detached from that kind of idea.
So for example, if I can clone you,
you know, make 1 million robbers,
and, you know, but you'll all have the same idea.
What is your real value as the,
like I could just shoot you,
and there'll still be 999 of you,
but the idea is the important thing.
- Yeah.
- The things you believe, so.
- I would argue that, I don't know,
even if you clone someone perfectly,
I don't think you can reproduce the individual themselves,
because we're all a product of nature and nurture, right?
So my particular concourse of experience is
the path dependence that I represent cannot be replicated,
as nor can anyone's for that matter.
- Well, that's a hypothesis, so.
That's of course a human meat bag would say.
- Good point.
- So, like desperately trying to preserve himself.
You know, I think it reduces
to some fundamental questions about what is consciousness,
and whether that can be cloned,
all those kind, you know,
it gets to the core of what it is to be human.
What are the things that make you particularly you?
- Yeah, I think it would assume
kind of a materialist viewpoint on reality,
and that if you could reproduce every atom of an individual,
that you would have their experience encapsulated in that.
And you know, Hoffman's, which is a book, is very radical.
He argues that space and time is not an objective reality,
it's a biological interface.
So we are scanning our environment for fitness payoffs,
and this space and time is the rendering
specific to human beings
that allows us to navigate reality effectively.
So the further argument would be
that we all have pretty similar interfaces,
but they're all slightly different too,
'cause we're all, you know, adapting in different ways,
and that different animals have their own unique interfaces.
So we have a certain amount of photoreceptors in our eye,
whereas I think the number's three, might be five,
or something like the mantis shrimp has like seven or nine.
So they can see, and we only see
1/10 trillionth of the light spectrum.
So talk about a tiny fraction.
I mean, 1/10 trillionth is a very minuscule number,
and that makes up all of the light
that we can interpret with our eyes.
But something like a mantis shrimp
could see much more of that.
So I think there's this,
we're very conditioned to have
a fully materialist viewpoint on reality today,
where we think, you know,
the atomic clockwork kind of universe.
But I think there's, I don't think that's true exactly.
And another school that goes into that
is actually Austrian economics,
where we could say that, you know,
we mentioned earlier that an asset is not property.
It's actually based on the relationship
between the individual and the property.
There's this whole realm of relevance associated with,
we're all moving through life
in the course of a goal-directed action.
So when we walk across a room, I go from A to B.
It's because I valued B more than A.
So value is inseparable from human action.
We have a rank-ordered value system in our mind, each of us,
and we're constantly taking action
in accordance with those rank values.
Anything that accelerates us on the course
of our goal-directed action towards our goal is useful.
Anything that impedes us, or we could say is valuable,
anything that impedes us is actually obstructing to value,
and anything that's irrelevant is just valueless.
So this table that we're using right now,
like this is a, it's an accessory to you and I,
'cause it's holding this paper
that's holding the information
that's guiding our conversation.
But we could pay someone $100 to jump over this table,
and this table could simultaneously be an accessory
to you and I and an obstacle to someone else.
So it's this domain, this silent contention
of willpower and agendas occurring
across the face of the Earth
that is what Austrian economics really looks at.
It's the realm of human action, as they call it.
It's called praxeology.
So it's a non-materialist viewpoint on reality,
in that things, we think in terms of matter being reality,
but it's often more so in the sphere of human action,
what matters that is reality.
It's the relevance of a thing
to the course of one's goal-directed action.
§06Transcript · 45:12–54:41
- And that's ultimately, it exists in the space of ideas.
- Yes.
- Not in the space of physical matter.
- And just to jump back to this line here,
I think his fundamental line here is,
the question is, talking about universal Darwinism
as an asset, what does it leave behind?
I've tried to show that once it passes through everything,
we're left with stronger, sounder versions
of our most useful ideas.
That's the key point to me,
in that ideas and information, so far as we can tell,
are the most fundamental substrate of reality.
And information itself, back to entropy,
information is the resolution of entropy.
That's what the bit is, right?
It's a one or a zero.
Whatever reduces your entropy by half is a bit,
and we measure information in bits.
So, and you're right, people don't have ideas,
ideas have people.
Honestly, it's a really profound idea,
or a statement about reality, a reframing of reality.
If we're actually being deeply honest about it,
it's quite painful.
I do appreciate that you defended
your biological meat bag earlier,
but it seems like ideas are the things that have power.
That me, Lex, for example, is worthless.
And relative to the ideas that used my brain
for a bit of a time.
- But so far as we know,
only human beings can generate and share ideas.
So you can't say Lex is worthless.
Like, you are the node of the idea sphere,
the newest sphere.
So I'm, what is it?
From a Bitcoin perspective, I'm like, I'm mining,
I'm solving the cryptographic problem,
and I'm a use, in that sense, I'm a useful node.
- Yeah, you're competing to solve the puzzle of entropy,
right, and when you do solve it,
it benefits the entire network.
- But I guess from my perspective,
just because just working in AI,
I'm looking at the long-term vision.
I see us humans and AI systems as really the same,
and AI systems ultimately as something
that supersedes humans.
- So what is intelligence?
- So in the context of our current discussion,
I think intelligence is very closely linked
to this notion of ideas.
It's the ability to generate ideas, to mold ideas,
to compress seeming chaos into something
into some model, into some theory
that efficiently compresses the chaos
in a way where you can then integrate it with other ideas,
and they can play and all those kinds of things.
So in that sense, it's the turning chaos into order.
It's the molding of ideas
such that our human brains can work with it.
And just from my perspective,
I don't see any reason why that cannot be algorithmatized,
converted into computational systems.
- I would agree.
- Which is scary.
- Scary or potentially really promising, right?
It's kind of the case with all novelty.
It's terrifying as much as it is promising.
That's why you're pursuing it so heavily.
I would maybe take it a step further
and say that intelligence,
and maybe its most simplistic form is error correction.
So we, humans have wants.
Again, we're constantly expressing our value through action.
There's no other way to express it, by the way.
It's whatever you choose to do in any moment,
you are expressing the values you hold
in your mind and your heart.
As we move from less valued A to more valued B,
entropy happens, uncertainty happens, we fall off course.
And it is intelligence that enables us
to render information from that experience
and error correct, right?
So that we can move slightly,
shift our trajectory slightly more towards B
that we're trying to move towards.
So I think that there's something there
that I don't know that we can make synthetically.
And that if we define intelligence as error correction,
it's like error correction to what?
Error correction towards what we find is valuable.
So we're trying to satisfy human wants.
Might not just be our own, could be others as well.
If I'm an entrepreneur,
I'm trying to solve the wants of others, not just myself.
And I'm trying to error correct myself towards that goal,
using intelligence and processing environmental feedback
through intelligence to error correct.
So I don't know how, if you eliminate
the human element completely, who's doing the wanting?
Right, where does value come from?
I know machine learning people who are listening
are saying that's exactly what machine learning is,
which is error correction,
because you have a loss function, objective function
that measures how wrong your thing is.
And you wanna make it less wrong next time.
That's the whole process of machine learning.
But you're saying what humans are able to do
is in a world where there's no,
maybe objective values, absolute values,
you're generating that very loss function,
that objective function, that function that measures
the error comes from the human mind.
Some aliens might disagree with you,
'cause they might have a different objective function.
- I would say purpose comes from consciousness, I think.
And without purpose, there's not error correction.
- Yeah, I mean, this is, again, a hypothesis.
Like, where does purpose come from?
It seems to come from consciousness, you're right.
That's where suffering comes from,
and you want to lessen suffering.
That's where pleasure comes from.
It seems like it's consciousness.
Maybe there is something to this biological meat bag.
- So to take it one layer deeper on this,
and the reason I like this book so much,
again, "The Case Against Reality,"
so he's making the case that space and time
are not fundamental.
- Yes. - Which I started
my intellectual explorations in physics, actually,
astrophysics, so for the longest time,
even the way I describe money,
as I talk about space and time, so that blew my mind.
But this dovetailed nicely with another book called "Lila."
The author is Robert Persig, so he wrote
"Zen and the Art of Motorcycle Maintenance,"
which is a very popular book.
20 years later, he wrote "Lila,"
which no one's heard of, which is crazy.
And he basically says he was wrong about his first book.
And he lays out this entire other
metaphysics of quality, he calls it.
So it's the metaphysics, I think it's
the metaphysics of quality.
But his supposition is that it's not physical reality
that's fundamental, it's not information that's fundamental,
it's value.
So he actually, and it's a beautiful book,
I highly recommend it.
He essentially is refuting causality itself.
We think A causes B.
This book makes the case that B values precondition A,
so that we are actually creating our future
through our value systems.
And this goes back to something,
I think Solzhenitsyn said this,
that the line between good and evil
runs down the heart of every man.
So it's as if our moral decisions are actually
what's creating the outcomes in reality over time.
And then that gets into all the wisdom traditions
related to religion, where it's always talking about
loving thy neighbor and loving God
and all of these other things that are good morally
to create the best outcomes.
- So values are fundamental.
- Value, yes.
- Value is fundamental.
Oh boy, yeah, that's interesting.
It does feel like physics is not capturing something.
There's some people, panpsychists,
argue that consciousness might be one of the fundamental
properties of nature,
like from which emerges everything we see.
So that could be just other words
for this same notion of value.
And then the basic laws of physics
are not capturing that currently.
So maybe humans, in order to understand
from where humans came from,
we have to understand these other properties of nature,
which are yet to be discovered at the physics level.
- And it's, we contend with that underlying nature,
whatever it is, with the logos.
So we're looking at uncategorized nature,
and then we're assigning a word to it.
So we're slicing up chaos into little boxes of order.
And then we're establishing this social consensus
as to those labels, which we call words.
And we're using that to communicate.
And when we communicate,
we can start to build these other things.
This is like the Yuval Harari imagined orders.
So we can create these useful fictions, right?
Whether it's the nation state or human rights or money.
§07Transcript · 54:44–1:04:07
And that allows us to cooperate flexibly in large numbers
so that we can better contend with reality.
We can produce more complicated things.
We can enlarge that bubble of civilization against entropy.
And that's what capitalism is all about.
It's about further specializing knowledge,
further enriching mankind's treasury of knowledge,
and doing it.
But to do that, the communication media that we're using,
the words have to have stable meaning.
The money needs to have value that's dependable, right?
It needs to be something that's,
it's not dictated by any one group.
It's reached by consensus of the entire group.
That's how, so you can think it's like optimizing
for error correction again,
where a free market would be harnessing the intelligence
of all market actors.
And a central planning or a centrally planned market
would be harnessing just the intelligence
of a small group of bureaucrats.
- And it's not obvious how to achieve
this kind of consensus mechanism.
I mean, there's obviously,
we'll talk about sort of Bitcoin as an idea.
Ultimately, the idea of Bitcoin is connecting it to physics.
So like you can trust that physical matter won't change,
but there could be other ideas that will yet,
maybe physics could be changed.
If Eric Weinstein has anything to say about it.
Like it's, we right now believe that physics
can't be changed, the physical matter of the world,
but maybe it can in a way
that we're totally not understanding.
You mentioned sort of reality
from Donald Hoffman's perspective.
Like if we don't have even close to direct access
to the fabric of reality,
maybe we're living in a world that's very like
many dimensions that the notions of space and time
is just like a silly, useful construct
that's not at all connected.
You're starting to look at like Stephen Wolfram's,
I don't know if you're familiar with his view of the world,
that it's like hypergraphs underneath it all,
like these mathematical structures
from which everything emerges.
Like there are like many, many, many orders of magnitude
smaller than what we think of as,
they're even smaller than like strings and string theory.
So like those are the basic mathematical objects
from which it emerges.
I don't, I think that's an interesting philosophical
framework, it's also, people should check out,
a cool way to play with beautiful hypergraph
mathematical structures.
So he has, I don't know if you know Stephen Wolfram is,
but he created Wolfram Alpha and all these tools
that you can actually visualize and play with.
So you can play with physics in a visual way,
which, or at least discrete mathematics,
which I think is incredible.
He doesn't get enough love.
One of the reasons he, I think doesn't get enough love
is because of this little quirk of human nature,
which is the ego.
And he sometimes frustrates a few folks
because he's very, let's say, proud of his work.
- I guess.
- But it's interesting to think about a world
where we don't have direct access to reality,
as Hoffman argues.
And maybe, I don't know if you can comment,
I don't know if you're familiar with Ayn Rand's work
and her whole philosophy of objectivism,
or her whole contention is that, we do have access.
I don't want to misstate it, but at least
she will claim that it's not useful,
or I think she'll probably say it's not correct
to argue that we don't have access to reality.
We have, hence objectivism,
we have direct access to reality.
That's the only thing we can reason about.
And the only way to live life morally
is to reason through everything,
starting with the axioms of reality,
which we do have direct access to.
You have thoughts about her work?
- I am slightly ashamed to say I have not read Ayn Rand yet.
So she is high on my list,
and she's been recommended a number of times.
But, so I don't know a lot specifically
about her philosophy or objectivism,
but to me, it resonates closely
with what the American pragmatist commented on truth.
And they distinguished, what you could say is absolute truth,
which is at the bottom of reality,
whether it's Mr. Wolfram's mathematical formulas or value,
whatever it may be, it's something ineffable,
something beyond the reach of epistemology, perhaps even.
And maybe that's why religion just sort of points to it,
right, is trying to use,
I think Joseph Campbell said something like,
"Religion is using stories
to point towards the same transcendental mystery
we all experience but cannot articulate."
So something like the artist uses lies
to point to the truth, something like that,
that kind of thing.
- That's really good.
- But the American pragmatist said that,
because at the end of the day, this is all about,
when we say truth, we need something that is socially,
close to social consensus
and is not shakable by political action.
So that's what physics and mathematics are.
It's an unshakable point of reference,
I guess you might say.
So the American pragmatist defined truth
as the end of inquiry.
And in markets, we could say that the market itself
is a forum that generates truth.
We call this pragmatic truth,
to separate pure objective truth
that we can't even talk about without polluting it
versus pragmatic truth, which is something that's useful.
So the example here would be,
if I give you a map and you're trying to go
from your house to the local brisket restaurant,
and the map gets you from your house
to the brisket restaurant, is that because the map is true?
Or is that because the map is useful?
They're very hard to disentangle
when you're just looking at it pragmatically.
And in markets, markets, I argue,
generate three forms of pragmatic truth.
One is the price.
So this is the collective subjective demand
and purchasing power of humanity
running up against the objective supply of capital
and resources in the marketplace.
So there's demand overlaid on supply.
The result of that is the price.
So that is the most truthful exchange ratio,
which is the closest approximation to the value
of any good in the marketplace.
So it gives us a data point on which we can operate.
It's compressing all known market realities
down into a single actionable number.
You know, based on the price of bread or copper,
whether you wanna buy more of it,
you wanna abstain from buying it,
or maybe you wanna try and find substitutes.
And you can think of that price signal,
it's like an economic nerve signal
that's coordinating human action across time.
So if we're one socioeconomic superorganism or collective,
that the price signal is the nerve.
And that's the first form of pragmatic truth
that markets generate.
The second form would be tools and innovations themselves.
So entrepreneurs are experimenting across time.
They're trying to satisfy the wants of consumers.
Consumers are sovereign in the marketplace.
Whatever the consumer wants, the consumer gets, right?
I'm trying to satisfy that.
I'm trying to do it at a profit.
So I'm trying to take,
viewing the existing price signals
of goods in the marketplace,
I'm trying to assemble those in a way
at a cost lower than the final solution
I'm delivering to my customer.
I'm selling it at a price higher
than the productive factors I combine to create it.
And in that iterative process,
we're constantly discovering new and better ways
of solving problems or satisfying wants.
So we could say to go out and dig a hole, right?
Someone wants a hole dug,
that a shovel is gonna let you do it much faster per hour
than you would with your bare hands.
So what is the pragmatic truth of digging holes?
It's a shovel, right?
It's the best way we know how to solve
any particular problem based on
the existing treasury of knowledge.
So every tool, again, we're back to ideas being fundamental.
The shovel itself is just a knowledge structure.
We've figured out a way to create this particular implement
and then we've indexed the raw materials
we found in nature to this knowledge structure
to create a shovel, which allows us to better satisfy
human wants faster, cheaper, better, effectively.
- I'm trying to generalize,
you're blowing my mind a little bit here.
I'm trying to generalize the idea of tool
to how to think about it.
'Cause I keep just, when you say tool,
I keep imagining different,
§08Transcript · 1:04:09–1:13:21
like specific instantiations of a tool.
I'm trying to see, so the price is a pragmatic truth
that's communicating value in this network.
- Subjective demands against objective supply.
- Subjective.
- So it's an economic democracy.
- Got it.
So that's the demand supply.
And then the tools are the ways of extracting
or solving problems is the more general kind of.
- Or satisfying wants.
- Satisfying wants.
So wants are somehow,
that's part of the supply and the demand.
- And what wants are back to value, right?
'Cause everything someone wants,
they're expressing their value.
- Okay, yeah, so the shovel is a pragmatic truth.
The shovel is truth.
It feels like a good book title.
Okay, sorry.
So what other, what is the third one?
- And then the third one, I would argue,
is virtue, actually.
- Oh, wow.
- And another way to maybe think about this
is competitive competency,
but it's also cooperative competency.
So we're learning over time what characteristics,
what patterns of action, what mindsets,
what mental tools, what heuristics are most useful
to satisfying customer wants.
So I think that becomes, over time,
becomes sharpened into virtue.
We know it's best to be honest,
because if you lie, it's very energy inefficient.
You're creating this little fork of reality.
And then if someone else asks you about that lie again,
you have to put another layer of lies on top of it.
Where if you just tell the truth,
you're just recollecting what happened.
And so that sort of keeps,
again, when we're talking about delaying volatility,
if you lie, you're delaying short-term volatility,
but you're increasing long-term volatility.
- What about murder?
I haven't been able to figure out why murder is bad,
'cause I just keep wanting to murder people.
And I've murdered many, sorry.
- You should see someone for that.
(laughs)
- Well, that's why I'm trying to get an interview
with Vladimir Putin.
So that's fascinating, virtue in this market
with the supplies and demands, and there's the tools,
which is also a pragmatic truth, and there's virtue.
It's a pragmatic truth.
- Yeah, and if we interfere with that free market process,
again, if we overstep, which this maybe ties into murder,
if you start to be coercive against life,
liberty, or property,
so if you're forcibly taking someone's life,
you're breaking down the trust in that market
that generates these pragmatic truths.
If you forcibly infringe on someone's liberty, right,
for any reason other than them originally breaking
or infringing upon life, liberty, or property,
then that's not gonna work either.
And then if you violate private property rights,
if you steal property from others,
you're breaking down the trust
that the intersubjective fabric of money and markets
and the rule of law, all of these useful fictions
are meant to preserve,
you're corrupting it and breaking it down.
- What's kind of interesting to think about the market
is helping evolve the virtues.
It's sharpened into virtues,
and then these virtues can then go into motivational posters
or like in books that we all agree on
and then eventually take for granted
as if they were somehow fundamental to human nature,
but they're not perhaps fundamental,
they're just pragmatic truths.
- Yeah, another way to consider competition itself
is that it is a discovery process.
So entrepreneurs are competing with one another
and they're trying to best satisfy consumer wants
at the lowest possible price.
So they're placing bets of time, energy, and capital
on themselves, on their idea, their business plan,
and then the market decides, right,
the consensus of market actors decide which one was better.
One lives, one dies.
So competition itself is helping us get closer to truth,
to pragmatic truth.
So we're discovering what is the right price for this asset.
And that price, by the way, is derived,
again, in the sense of data compression.
Everyone in the world can see that price.
Everyone in the world can then put their skin in the game
by choosing to buy or sell or short or go long
or do any number of financial actions on that price.
And that information is then propagated back out
to everyone else.
So it's this feedback loop between market actor and price
that makes it so useful.
And that's what carries us.
So it's these collisions of interest that carry us,
it removes the unuseful aspects of ourselves
or of our tools or of a price
and reveals pragmatic truth to us.
- Can you play my therapist for a second?
And if we talk about creative destruction,
I think Bukowski, Hunter S. Thompson has a quote,
something like, "For all instances of beauty,
many souls must be trampled."
- Wow.
(laughing)
- But it, there does seem to be an aspect of competition
that destroys, you were talking about
entrepreneurs sort of on the outside
of the circle of order,
striving to make sense, to compress volatility
of the chaos of the universe.
Is there some way to protect a little bit
against the pain of that destruction
of that creative destruction?
That entrepreneur screaming on fire
as he enlightens the rest of us,
is there some role for us humans together
in the togetherness of it?
Also government, but any kind of collectives
in helping that entrepreneur who's on fire
maybe after a few minutes to spray him with some water
and put him out of his misery?
- I would say that, you know, pain
is the inarguable basis of being, right?
Pain is, no matter how you try to explain it away
or describe it, or,
it's not something you can rationalize away, right?
It's no one, I think, ever,
like someone may want to cut themselves
to have an endorphin high,
but no one wants to suffer, we'd say, right?
So pain in that sense,
it is what we're constantly trying to deal with.
And to move away from, or create buffers between us
and potential pain or potential uncertainty.
And that pain is information.
When we experience something that is misfit
to the outcome we desired, that pain is what puts us,
it encourages us to change our trajectory,
to get back on course towards our valued aim.
So as far as, you know,
you need entrepreneurs that are exploring,
and you're trying to do something new,
if you're a pioneer of any kind,
you are courageously facing pain.
You're willfully confronting it.
So I don't think it's avoidable in that sense.
It's not like we can have pain-free economic growth,
like what the central bank would maybe have us
lend to believe that we can just run these experiments
and when they fail,
we'll just paper over all the losses and continue.
Or you're just delaying and exacerbating
the inevitable volatility back to reality.
But what I would say is that capitalism,
'cause we're building,
we're increasing the capital stock of the world,
which again, capital is the mitigation of risk.
So we're reducing the overall risk of existence
by accumulating more capital in the world.
And that's what protects that entrepreneur
that's deciding, hey, I saved up a million bucks,
I'm gonna go try this business idea,
I'm gonna put all my money on the line.
And if he goes up in flames,
then his cost of living, when he comes back to reality
and he's starting over from zero,
his cost of living is substantially lower
starting over from zero
than he would be out in the wilderness on his own.
So it's the accumulation of capital stock
is the buffer against uncertainty for everyone.
And it gives you actually more potential
to go out and experiment,
to go out and confront the chaos of nature
because you are better healed effectively.
- So I think we're speaking
in sort of idealistic terms about the power of capitalism,
when it works well.
Is there any aspects that you think
that don't work well in a free market?
In all the basic pragmatic truths
that we were talking about,
is there ways it can go wrong?
- So I would first argue that we have never seen
an actual purely free market.
§09Transcript · 1:13:25–1:23:27
Closest example would be,
kind of geopolitically we have a free market
and that governments are not necessarily governed.
But they are premised on governing large groups of individuals
so that's not, doesn't exactly--
- You mean between governments?
- Yes.
- See, but isn't there still,
so a free market, maybe you can correct me,
is the free market still grounded in the ideas
of property rights and all those kinds of things, right?
So governments tend to also sometimes
be violent towards each other.
- That's right.
- So they don't respect all the basic aspects of capitalism.
- That's right.
So maybe another way to look at this is that
gold is the original governor of government, actually.
And this is the reason governments have abused
and gone off of the gold standard.
So historically, if you are a bank or a nation state
and you produce more currency
than your gold reserves can justify,
then people, then gold will flow out of your bank
or out of your country.
So there's this natural check
via the money that, via capitalistic money, which is gold.
Gold was selected by the free market,
it's not decreed by government.
It provided this natural check on government action.
So my, I guess to get back to the original question is,
we've never seen a pure free market
because money has always been monopolized
and coerced, frankly.
So to try and answer what goes wrong with a free market
is really difficult because we've never actually seen it.
And I would define free market as one
in which government only protects life, liberty,
and property, and so that has a very minimal role in society.
Again, just as network security
for the economic trade network.
And anything that, any government function
that goes beyond those three core functions,
which by the way are pretty much
the core tenets of morality as well.
So government's just really intended to preserve
natural law, if you will.
Anything that goes beyond that
is moves us closer to an unfree market.
So every regulation, every act of coercion
is actually a gradation closer to a purely unfree market,
which would be a monopoly.
So in terms of what I guess theoretically
we could say goes wrong in the free market
is that it's volatile.
It's trading off, it's accepting short-term volatility
in exchange for less long-run volatility.
- Yeah.
- And this tends to be the way of nature, by the way.
So if we look at something like
there's a region in North America called Baja, California,
and it runs into the United States
and it runs down into Mexico as well.
So the same topology, but two different jurisdictions.
In the US, we very heavily manage forest fires.
We're trying to manage nature effectively.
Whereas in Mexico, it's much more unregulated.
It just, when wildfires spring up, they let them burn off.
In North America, when wildfires spring up,
we're actually extinguishing them.
So we're constantly trying to dampen
the short-run volatility of these small brush fires.
Whereas in Mexico, we just let them burn.
We let nature do its thing.
The consequence of this is that
the wildfires still occur eventually,
but they're much larger and much more devastating
in North America where human intervention has occurred.
Because it's dampening nature's natural corrective mechanism
of clearing this underbrush with these more frequent
and smaller fires at the cost of much larger fires.
So again, we're delaying short-term volatility
and exacerbating long-run volatility.
And in Mexico, it's the opposite, right?
Just these wildfires burn much smaller
and more continuously over time.
The further effect of that in North America
is that the fires can get so big and so hot
that it burns away the topsoil.
So it actually destroys the fertility of the soil itself.
So the point of this is that human intervention, right?
Even the intention behind North American authorities
managing that forest fire is to create less destruction.
That is the intention.
But the intention is divergent from the outcome.
So in Talebian speak, he would say that human intervention
moves us from mediocristan into extremistan.
So mediocristan would be something much more like nature
where, for instance, you can't double your body weight
in a day, probably can't even do it in a year, right?
But in extremistan,
which is something much more information-based,
you can double or send your net worth to zero
in a single trade, in a single moment, right?
So when we try and intervene with natural biological systems
that have these feedback loops,
we actually start to push the system more,
to behave more like an extremistan system.
That has less short-run volatility,
but more extreme long-run volatility.
- But the question is where you look at capitalism
or communism, for example, and by the way, yes,
I will talk to somebody who's a Marxist or a communist.
Richard Wolff is a pretty eloquent defender of these ideas
'cause it's always good to really understand ideas
as opposed to just reject them offhand.
When you look at the system of capitalism
or the system of communism,
there's ideals and a lot of people argue
in this perfect form would actually be good for the world.
The question is how resilient are they
to the corruption of human nature?
And I mean, you're saying that there's never been
a free market, it's a very true statement.
The question is how resilient is capitalism
or whatever implementations of capitalism
we had up to this point to human nature
where one person would become successful
through legitimate means,
then starts to try to manipulate the system
that takes it away from a free market
or takes it away from the things
that gave them the riches in the first place
and then try to through corruption, get more,
get this, the thing you said, the lazy human ways.
Now try to figure out how to get something for nothing.
- That's right.
So how resilient do you think is capitalism to that?
- Well, the best implementation we've had of it
really has been the United States,
I think up until this point,
but it's still the central banking itself.
This was in the 1848 Manifesto to the Communist Party.
Measure number five reads,
an exclusive state monopoly
and centralized control over cash and credit.
So the central bank is a Marxist or communist institution.
It is antithetical to the free market principles
on which the United States was founded.
And indeed the United States resisted
the implementation of a central bank.
I think it was Andrew Jackson.
I know there was the first national bank,
the second national bank were both disbanded.
And then Andrew Jackson, which is my favorite Tennessean,
he has some famous quotes about routing out the bankers
like a den of vipers.
I think he punched one of the central bankers in the face
back when our leaders were a bit more badass,
I guess you might say.
And finally in 1913, the Federal Reserve was implemented
and it's been kind of all downhill from there.
- So what is, can you, oh, sorry, go ahead.
- I was just gonna say that communism and capitalism,
it's also a matter of scale.
The ideal behind communism is from each
according to their ability to each according to their need.
Sounds beautiful, right?
Sounds like a great, peaceful, harmonious way
to organize ourselves.
The problem is, and by the way,
I am a communist in my family, in my home, right?
- At that very smallest of scales.
- Yes, in your very small circles of trust,
you're much more likely to behave selflessly
towards one another.
- By the way, I look forward to the Bitcoin community
clipping out that part, saying that Robert Breedlove
is a communist and the ideals of communism are beautiful.
- Yeah, context matters, people.
- Sorry, go ahead.
- But to your point, it does not scale, right?
As we move into this larger system
of socioeconomic cooperation, which is necessary
to deepen the division of labor, to generate more wealth,
right, we need to interact with one another
on much larger scales than this communistic utopian ideal,
we get into the realm of capitalism,
where we need really sound rules, hard rules,
consensus, verifiability, and frankly, prices.
'Cause the other thing in Soviet Russia
is they tried to replace the profit motive
or the price signal with this devotion
to this nationalistic faith and devotion,
where it's like you don't need self-interest anymore,
you don't need prices or profits,
you can just protect Mother Russia, right,
and serve Mother Russia, and that would create wealth.
And what happened?
Right, they destroyed price signals,
§10Transcript · 1:23:29–1:34:01
there were shortages, there were famines,
there's all levels of corruption.
Because to your point, it's once you,
people have to run the system no matter what.
So when people are always pursuing something for nothing,
and you put someone in a seat of much closer
to absolute power, where they're making
all the pricing decisions, they own all
of the productive factors in the economy,
they're not beholden to any market force,
there's no market check on their action,
that that institution tends to become more corrupt.
And further, it's an inferior resource strategy.
And I alluded to this earlier, where the other way
to think about free market versus central planning
is it's decentralized or distributed computing
versus centralized computing.
So each one of us, I think that the number
is 120 bits per second of active awareness.
So we can take in, clearly we process a lot more than that,
but our active awareness, I think, is 120 bits per second.
In a centralized planning body like in Soviet Russia,
they had the pricing czar, maybe they had 10, 20,000 people
deciding the prices for the entire country,
you're only getting that much data throughput,
20,000 people times 120 bits per second.
Whereas in a free market, if everyone is free
to interact with deep capital markets
based on an accurate price, you're getting
the data throughput of 120 bits per second
times the entire economy.
So you're getting, it's a more efficient means
for disseminating knowledge effectively.
And then again, knowledge is just,
the more knowledge a socioeconomic structure can contain,
the more wealthy it is, right?
Prices, tools, all these things are just knowledge.
So in that respect, that's why something like capitalism,
even in its marginalized form, state capitalism,
outcompetes communism.
It's distributed computing versus centralized computing.
- You know, we kind of brought up religion
and Joseph Campbell and myth and the propagation of ideas.
And it kind of, before I forget,
I wanted to ask your thoughts about this.
You know, Jordan Peterson, I haven't really understood
exactly, like be able to pin him down exactly
what he sees as the role of religion in human society.
But it feels like he's describing it
as having value for us.
The ideas of myth are valuable.
They're valuable mechanisms toward,
I think you mentioned kind of directing us
in this world as a human society.
Do you think about myth?
Do you think about religion?
What's the use of it in this construct of markets
in this framework of where ideas are ultimately
the fundamental thing that makes societies work?
- Yeah, I think Jordan Peterson, who I'm a huge fan of,
he's been very influential on my thinking
and influential on my own religious views as well.
I think his position would be, and he's said this before,
that he acts as if God exists.
And I've had some arguments about this before,
but to me that points towards the preeminence of action
and how important action is
versus your cognitive beliefs necessarily.
And I think there is a lot of utility in that,
that if you follow the moral code
of something like the Bible,
you do reap benefits from that.
Society reaps benefits from that.
And this is not, and sometimes I bring up this point
and people are like, oh my God, are you kidding me?
Have you read the Old Testament?
They're clobbering people with rocks
when they do the wrong thing.
The Bible doesn't claim to be this,
like do everything that was done in the Bible.
It's more like charting this moral progression
where we came from this very barbaric society
into something more like the New Testament
where we're honoring individual sovereignty
above the state and things like that.
So I think that mythology itself
is another form of data compression.
If you look at these stories,
Cain and Abel is a good example,
or Peterson makes the point that it's a tiny story.
It's a paragraph-ish long,
but it contains so many layers of meaning
in regards to violence, to evil, betrayal, work.
The divergence between intention and result,
'cause I think Cain is actually making,
he's making the effort to sacrifice for God,
but the sacrifices he's making are not,
God doesn't find them useful, right?
And so he sort of rejects them.
For a, again, we're organized by these useful fictions,
these Heraurian imagined orders.
I think mythology is kind of the original version of that
where we were learning to organize ourselves around stories
to best coordinate our action across space and time.
And so I think it's very foundational.
And back to what we were saying in the beginning,
that if value truly is fundamental,
I think it's interesting that all these stories
point towards often common moral values.
They're not perfectly aligned,
but it does speak to just the evolutionary
importance of morality and the subjectivity of morality,
where morality sort of evolves over time
based on, frankly, the capital stock we've accumulated.
The more capital stock we've accumulated,
the easier life is, the less barbaric we have to be.
Whereas if we're living in conditions of true scarcity,
then we tend to be a bit more barbaric towards one another.
And that too, to dovetail this into something
largely unrelated, but I think is really important,
is inflation.
Inflation by artificially increasing the prices
of goods and services in the world, right?
We're injecting more dollars,
chasing the same level of goods and services.
We are artificially increasing scarcity.
Perceived scarcity, right?
And when you increase perceived scarcity,
you are amplifying divisiveness.
The natural state of man is when everything is scarce
and you really have to fight hard
just to eat or drink water that day.
So it's de-civilizing in a way,
by artificially amplifying the perceived scarcity
in the world.
- Can you elaborate, how does inflation
increase the perceived scarcity in the world?
- So we can think the price itself is an indication,
it's a data packet, if you will.
The price is a data packet on supply and demand, right?
It's telling you how much supply there is
of something in the world relative to the demand.
So when you print money and artificially increase that price,
it's diverging away from supply and demand.
It's becoming just more of a product of policy
than it is of free market fundamentals.
The more expensive something is,
that is a signal to the marketplace
and to market actors that it is scarce, right?
That's why a Leonardo painting might sell for $16 million.
There's only one, there's a lot of demand for it.
Maybe my numbers are off, but you get the point.
It's the reason mask spiked in price
after the COVID announcement, right?
There was not enough supply,
toilet paper, et cetera, et cetera.
So inflation, and by inflation,
I specifically mean arbitrary fiat currency
supply inflation by legal monopoly,
not inflation's a commonly misunderstood word.
That is amplifying the perception of scarcity
among market actors in the world.
And I would argue that it actually amplifies divisiveness.
I think this is the key maybe to looking at
the connection between the monopolization of money
and things like cancel culture,
because it's increasing our natural predilection
to be combative with one another
because we think there's more scarcity in the world
than there actually is.
Versus in a world where you're not increasing
the money supply, prices are declining every year.
As prices decline, this is a signal to market actors
and the market that scarcity is declining.
There's less need to fight over things.
And all of this ties back into the old Bastiat saying
that if goods don't cross borders, soldiers will.
So if we're not trading with one another,
if we're not acting interdependently
and we're not becoming more intelligent as a market
and that increased intelligence or increased knowledge
is reflected in decreased prices,
because prices are just the exchange ratios of things.
So the smarter we can solve problems,
the better we can solve problems, the less prices would be.
So it induces more cooperation.
- I love how you tie inflation cancel culture together
as essentially artificial creation of increase of conflict,
increasing artificially increasing scarcity
and thereby artificially increasing conflict.
That's really fascinating.
You're short-circuiting my brain
many times throughout this conversation.
Okay, I'm struggling.
This robot is struggling to keep up.
Okay, maybe to step back at the useful fictions
or pragmatic truths, let me ask the question
that you've answered in many ways already,
but let's explicitly look at what is money?
- Oh, as you know, that's my favorite question.
§11Transcript · 1:34:04–1:43:50
(laughing)
Is the name of the show I just launched,
the "What Is Money?" show.
Clearly, we could say the Bitcoin rabbit hole
is what's led me to explore a lot of these ideas in depth.
And I think as we've demonstrated today,
it goes well beyond just the economic sphere
when you start to think about things like exchange
and morality and time preference and civilization.
So I love the question, what is money?
I think it is the key to incepting a deeper understanding
of the world into people, that if you actually
just start to ask the seemingly simple question,
it surfaces more and more layers of truth.
And I recently, I just wrote a piece,
I think I have 30-something answers to this question.
- So sometimes it's actually a more systematic way
of asking the question of what is the meaning of life?
There's some questions that are almost unanswerable,
but in their asking allow you to get closer to truth,
deeply understand the nature of our human existence.
And the meaning of life is almost like this
initial philosophers striving towards that.
If money is indeed as fundamental,
as you've described, especially in the context
of value being fundamental, then that is a really,
that's a more, let's take a 21st century way
of asking the same question about
what is the meaning of life?
You mentioned that it's a meta property
out of the list of many ways to answer that question.
How would you help people to think about that?
- Yeah, the first most serious answer
comes from the School of Austrian Economics
and it defines money as a universal medium of exchange.
So this would be any good that is used,
held and used purely for purposes of facilitating exchange.
So in the configuration of demand for any particular asset,
it's bifurcated between its utility,
which is something, a service that it can render to you
in real time, whether it's, if it's water, you're thirsty.
That's the utility of water is that it can quench your thirst
whereas the marketability would be the expectation
of future exchange, that other people would want
this asset in the future to trade it
for whatever they may have.
Money is just going to be the good in any trading economy
that has the highest proportion of marketability
relative to utility.
So today that would be gold.
Gold has utility, it's used in electronics,
it's used in dental, dentistry and whatnot,
but it's largely used as a store of value across time
and that's what it's been used for for 5,000 years.
So if we say gold has a $10 trillion market cap,
maybe 2 trillion of that is its utility value
or it's actually demand for use in computers and dentistry
and then 8 trillion of that is demand
for its use as a store of value.
Money, the marketability aspects of money
boils down to five services that money can render.
Money needs to be divisible, it needs to be durable,
it needs to be recognizable, it needs to be portable
and it needs to be scarce.
So I'll gloss over a lot of history with this
and just say that historically,
money's always been a technology,
still is a technology or a tool.
I use these terms interchangeably
and you can think of a technology
as just a more sophisticated tool effectively.
To best satisfy those properties,
monetary metals were determined
to be the most satisfactory tool,
the most divisible, most durable, most recognizable,
most portable tool in the marketplace.
Of the monetary metals, gold was the most scarce
as quantified by either its stock to flow ratio
or its inflation resistance.
So simple way to say this is that
people always prefer the money most resistant to inflation.
- That's a nice definition of scarcity in the context
of money is if you were to measure it,
the resistance to inflation.
So how hard is it to artificially increase the supply?
- That's right.
That is the hardness of money.
And that's why gold is hard money.
- 'Cause the alchemy is hard.
- That's right.
'Cause no one cracked the alchemy, so gold became money.
So that's such a nice, clean explanation of what is money
with the five elements and gold ultimately won out
because of the last piece of scarcity.
- That's right.
And to get to maybe dig a little deeper there.
So scarcity, we commonly think of scarcity
as strictly a supply property,
where if there's not much of something, then it's scarce.
But it's not actually true.
Scarcity occurs when demand exceeds supply.
So when there's more demand than the supply can justify,
the thing becomes an economic good
and it establishes itself a market price.
So there's more demand for the thing
than the supply can satisfy.
The unique thing about money as a concept at least
is that demand always exceeds supply.
There's never enough money to satisfy everyone, right?
Because another definition for money,
it's the most marketable good.
So it can be traded for any other good,
service, piece of knowledge in the marketplace.
So humans being what we are, we're never satisfied, right?
We always want more of something, whatever it may be.
So money as the ultimate token of obtaining that something
is always scarce as a concept.
But the problem with money is that if you can,
as you alluded to, easily increase its supply,
then all of a sudden you can compromise
the scarcity of it over time
and you can rob people through inflation.
So that's why the market settled on gold as money.
- And robbing is reallocating the value that,
so essentially the one property,
like why scarcity is important is it adds a lot more
friction to the reallocation.
Like through essentially violence or implied violence.
- Well, it prevents it through cost of extraction too.
So if you want to go out and dilute gold holders today,
you have to go out into the world and mine gold.
It's a very expensive process.
That process tends to find equilibrium
where production cost equals the market value of gold.
So if market value is $2,000 an ounce today of gold,
its production cost is gonna be around there.
That's the natural market equilibrium.
So that way gold miners cannot just dilute people over time.
Whereas if you look at something like fiat currency,
which we're jumping ahead a little bit,
but its production cost is zero.
So there's a reason the market value of fiat currency
historically has always converged to zero
because its production cost is near zero.
So the extension to that question might be
how did we get from gold to paper currency?
And again, this is rooted in the properties of money.
As good as monetary metals were,
and as good as gold is as money,
at holding value across time,
it's rather limited in terms of portability.
It is not as useful for moving value across space.
This is another definition of money, by the way,
a social device for moving value across space and time.
So to rectify this technological shortcoming of gold,
we introduced, first of all,
the custody of gold was gradually centralized
into fewer and fewer warehousing operations.
This is because there are economies of scale
associated with using gold as money.
And that if you centralize the custody,
the warehouse owner can then issue a paper receipt,
called a warehouse receipt for that gold.
And then market participants can trade that paper
as if it's good as gold.
And everyone has an option at any time
to go and redeem real gold from the warehouse.
So that system works.
Until the problem with it is that it introduces the need
to trust the custodian.
So it's introducing counterparty risk
in the form of the custodian.
And now should that warehouse choose
to increase the supply of paper notes to gold
beyond its supply.
So if it's got three tons of gold
and it issues six tons worth of paper receipts,
all of a sudden it's participating in a fraud.
It's basically lying.
It's representing that it has more gold
than it actually does.
And this is, that is the pathway
that we got into banking and central banking.
Is we needed a convenience mechanism
to rectify the portability shortcomings of gold.
We needed to be able to move value across space.
Gold is doing a great job at moving value over time,
but not space.
Paper currency gave us the ability
to move value across space.
But it introduced this attack vector
for warehouse operators, which became banks,
which became central banks,
to modify the supply to suit their own political agendas.
- Added the snooze button.
Allows you to do just do a little fraud.
- To get something for nothing.
- Something, just a little bit at first.
- Yeah.
- Just this one morning, just a little bit.
§12Transcript · 1:43:53–1:52:40
I mean, I don't know if you can speak to
the birth of fiat currency.
Is there some interesting characteristics
to that, those early steps that created it?
Like, could it have been averted?
Or is this the natural progression of governments?
- You know what's funny is that
central banking was initially designed
to be the custodian of gold, right?
So they were going to custody the gold,
issue paper on top of it,
and then they would maintain,
you could trust the public stamp effectively.
You could trust that the central bank
had as much gold on reserve as they said they had.
And they were supposed to be the trustworthy institution.
So we went from placing our trust
in a free market game theoretic process,
or trusting gold,
and we began trusting this institution instead.
That institution would not have arisen
if the portability of gold was really high.
If we could have somehow sent gold
across a telecommunications channel,
there would have been no need for a central bank.
Everyone could have custody their gold
in any information bearing medium, frankly,
and they could beam it around the world at any time.
So this whole institution itself
is rooted in a technological shortcoming of gold.
So I think it's,
another way to think about that is maybe had there been,
all the gold in the world today
fills two Olympic-sized swimming pools.
All the gold mined throughout all of human history.
So there's not a lot.
What if there had been just like way more?
There'd just been, I don't know,
20,000 Olympic swimming pools worth?
Portability wouldn't have been as much of an issue.
And this is to say,
assuming gold was still the most scarce metal
in all these things,
portability would have been less of an issue.
We would have had less dependence
or need for a central bank.
So I think it's kind of idiosyncratic
in that we just happened to end up here on this planet
with a certain amount of gold.
It best satisfied the properties of money.
- And a certain amount of humans,
the geographic dispersed such that portability
had certain properties that you want to achieve
for humans in the geographical space
to be able to be exchange value.
- It became more of an issue as we globalized.
As we became more of a global society,
we needed money that could move across space really fast.
So we could trade in international capital markets.
So that drove the central bank
to become the dominant institution of the world.
And if you follow the flows of gold throughout history,
you know, I've been watching this documentary
on World War I and World War II on Netflix.
I think it's called World War II in Color.
- Oh yeah, that's really good.
- So good.
When I say gold has been the governor of governments
or gold is geopolitical money,
like it is the base layer operating system,
has been the base layer operating system for analog society.
So it's always been about who controls the gold.
It's who makes the rules.
And that's in that context
is why Bitcoin is so interesting
because it is the disruptor to
this base level operating system
that's functioned for all of human history.
- I think this is a good place to ask.
We asked the what is money question.
What is Bitcoin?
- That's a question as complicated as what is money.
I think if you get a general understanding of money
from a number of angles
that we could say Bitcoin is the most superior
monetary technology that has ever existed.
- So one of the most superior implementation
of the ideas of money that you talked about,
you talked about money as speech,
you talked about money as an idea.
We talked about money as sovereignty.
- Yeah, so we're attaching the concept of money
to your point to whatever tool best satisfies
those properties of money
or best renders those services we need for money.
- And as you said, you're using the word tool
and technology interchangeably here.
- Yes, yes.
And another thing to think about here is that
we think often in terms of goods or services,
but actually everything is a service.
So it's not the physical properties of this pen
that I find valuable,
it's the services that it renders to me
that I want to write a letter.
This serves me by allowing me to lay ink on paper
and communicate information.
So value, humans attach value,
as we alluded to earlier, to services, not goods.
So the properties or the services that money renders
that human beings value are those five properties,
divisibility, durability,
recognizability, portability, scarcity.
Metals best satisfied those services historically,
but Bitcoin as the most superior monetary technology
in human history, essentially perfects them.
It's as close to perfection as we've ever been.
So in terms of divisibility,
each Bitcoin can be broken down
into 100 million subunits called a Satoshi.
If that divisibility were ever a problem,
which actually there was a question that came up recently,
if you divide the world population
by the total supply of Bitcoin,
you end up at like 0.3 Bitcoin per person,
call it 300,000 Satoshis per person.
What if that was not enough
to facilitate economic activity?
And the answer to that is Bitcoin can soft fork
into further divisibility.
So if Bitcoin ate all the money in the world
and the average Bitcoin or wealth
was say 300,000 Satoshis each,
but that wasn't divisible enough maybe to buy coffee
and do all these day-to-day transactions,
what would happen?
Well, we would increase its divisibility.
So Bitcoin's perfected divisibility.
The divisibility of money lets us transact across scales.
All right, we can buy coffee or we can buy a house.
Durability is an interesting one.
So clearly something like gold is very durable.
It's resistant to degradation over time.
Bitcoin is just pure information,
but it's stored in a distributed format.
So information stored in a distributed fashion
tends to be virtually infinitely durable.
The example I like to give here
is something like the Bible.
The Bible is just distributed information.
It's stored everywhere and nowhere, so to speak.
And for that reason, it has outlasted empires.
And Bitcoin's similar, right?
You can't make changes to it unilaterally.
- But to make explicit,
the ways in which it is not durable
is the fact that it relies on computing infrastructure.
Like it needs computers.
So if you were to destroy all the computers in the world,
it needs mechanisms that store
and transfer information.
- That's right.
- And so you could attack it.
I mean, you could attack gold in the same kind of way,
as opposed to the physics,
but it's probably easier to destroy
all the computers in the world
than it is to destroy all the gold in the world.
Maybe not, I don't know.
Anyway.
- Yeah, you're right.
Maybe, I'm not sure which one would be harder to destroy.
But the other thing is there's a dynamic incentive.
So every time you destroy Bitcoin miners,
you're creating incentives for anyone else
with access to electricity to mine.
'Cause you're making the algorithm easier.
- Yeah, so the destruction is difficult
because of the decentralized nature of the whole thing.
- And the difficulty adjustment.
- Yeah, so you're gonna have to use nuclear weapons
and cover the whole globe.
But anyway.
- Yeah, and by then we've got much bigger problems
than money, right?
- That's right.
So, okay, so that's durability.
- So portability, Bitcoin's pure information.
It can move at the speed of light.
It can't get much faster than that.
Recognizability refers to the ability to verify
the veracity of the money or its authenticity.
So you can actually, when we used to transact gold,
there were time-honored techniques for verifying
that it was gold and not gold-plated lead, for instance.
This is where we get the term sound money.
A gold coin made a very particular sound
when dropped from a certain height.
You know, you've seen people biting coins.
These are all techniques for testing
§13Transcript · 1:52:42–2:01:43
the authenticity of gold.
And with Bitcoin, we have something unique
in that if you're running a full node,
you can verify that the Bitcoin is Bitcoin, right?
It cannot be tampered with.
It cannot be faked.
And in addition to that, as a node operator,
you can audit the total supply of Bitcoin at any time,
which is unlike any money in history.
So you know with full certainty
if you're holding 1,000 Bitcoin,
you have 1,000 out of a possible 21 million forever.
You have a guaranteed fraction of the total supply.
- Yeah, so a full node contains information
about every transaction that's ever been had,
so you can figure out, yeah, I mean,
all the truth of this money is all right there.
- Yeah, it's like a fractal constituent
of the whole network, right?
The whole Bitcoin blockchain is comprised in a node, too.
Not the proof of work piece,
but the entire transaction history.
And so that's unique as well.
And that's what makes Bitcoin the ultimate store of value,
is that you know with certainty what the total supply is
and will ever be.
And you know that your share of that supply is fixed.
It cannot change.
It can only improve, actually.
If someone loses, you know,
if the Satoshi stash is truly gone forever,
the million Bitcoin never moves,
then we're talking about 1,000 Bitcoin
out of 20 million instead, and so on and so forth.
As more people lose access to their Bitcoin,
they're basically making a contribution to everyone else.
It's anti-dilutive.
- And there's certain properties of Bitcoin
that are sort of a little bit more into the details
that ensure that the full nodes,
like the size of all the transactions that ever happened,
at least currently, can be stored
in a single computer, for example.
So it doesn't blow up too quickly.
- That's right.
- But you know, there's arguments that that's not necessary.
You can make arguments for that to be a very nice property,
but you can also say that there's like drawbacks to it.
That's hence the block size debates
and all those kinds of things.
- Yeah, that was the Bitcoin Cash Civil War, right?
Was that particular piece.
- Yeah.
- And you know, ostensibly they were saying,
oh, we need more transaction throughput
to buy more coffee and do more transactions.
But what they were actually doing
was increasing the size computing power necessary
to run a full node,
which would have theoretically
compromised decentralization.
- So yeah, but it would, in theory,
in theory, it would allow you
to have much more transactions.
- That's right.
- But the drawback, it would,
because no longer can be stored
in a single computer, personal computer,
then it naturally leads to decentralization.
- Yes.
- Same kind of thing we see with gold.
- Which would have compromised its survivability.
- Right.
So, what else is there?
- The last one, which leads straight into this one,
actually is the most important one of money,
which is scarcity.
And that you need to know the supply
is fixed and safeguarded from counterfeiting and inflation,
which counterfeiting and inflation
are the same thing, by the way.
Counterfeiting is criminalized inflation.
Inflation is legalized counterfeiting.
So, central banks today,
when they say they're printing money, they're not.
They're counterfeiting currency.
That's a very important part.
And Bitcoin, as I've argued in some of my writing,
is more than just an invention.
It's actually the discovery of absolute scarcity,
in that we have unveiled a property of money
that we will only discover once.
And it's got really major ramifications
for the world at large.
So, with gold, for instance, as we've covered,
it became money because it was
the most relatively scarce monetary metal.
Its supply was hardest to increase over time.
However, if we could somehow flip a switch today
and make everyone in the world go out
and start mining gold,
we could increase the supply much more quickly.
Its historic inflation rate's about 2%.
We could double that pretty quickly.
Bitcoin, with Bitcoin, it is not possible.
So, no matter how much effort and energy and capital
and operational expenditure we pour
into the mining network,
we cannot deviate from its fixed and diminishing supply curve
from between now and the last Bitcoin being mined in 2140
because of the difficulty adjustment.
It's constantly, it's adapting to human action, actually.
So, the harder we pursue it, the more that it proceeds,
and then the less we pursue it,
the more available it makes itself.
And this is, it's a real major breakthrough
because it's the closest thing to perfect information
we've ever had in an economy.
And perfect information is this,
it's a theoretical but unattainable state of the market
where all market actors have all the relevant information
about everything so that they can compete
as efficiently as possible.
And in this state, in a state of pure information,
we have, I'm sorry, perfect information,
we have perfect competition.
And in perfect competition, we maximize wealth generation.
So, we're competing as freely as possible
from coercive and violent impediments.
And so, I think Bitcoin, in that sense,
is going to pull the world closer to a state
of perfect competition than we've ever been before,
which would increase wealth generation
to an extent we've never seen before.
- Many of the things you said about Bitcoin
also hold for other cryptocurrency technologies
that followed after.
Can you say something to why you think Bitcoin
is the superior technology
from a pragmatic truth perspective,
than say, Ethereum, but also other crypto,
like Bitcoin Cash, like other hard forks of Bitcoin,
and, or maybe things that might yet to be invent,
tools yet to be invented.
- Yeah, so, this is a good point of argument
because a lot of people have countered me and said,
"Bitcoin cannot be absolute scarcity
because you can fork it and create something
with the same properties as Bitcoin,
or potentially even better properties, right?
You create something with a deflationary monetary policy."
That's what Bitcoin Cash was actually.
It forked Bitcoin with all of the same properties,
except for the block size that we alluded to earlier.
The problem is, is that money is valued.
Again, it's the good with a configuration of demand
that is predominantly marketability.
So, it is valued based on its liquidity.
That is how many other trading partners are there
in that monetary network.
So, it is a network valued
because of its liquidity and network effects.
So, any new entrant into the market for money
will always, is incentivized to always choose the money
with the deepest liquidity and the most network effects.
This is why money has tended to be a winner-take-all market
because it's essentially a single purpose tool, right?
It is a tool for,
if we consider that tools are time-saving devices, right?
The shovel lets you dig more holes per man hour
than you can with your bare hands.
Money is a tool, there's yet another definition of money,
that lets us calculate, negotiate,
and execute trades more quickly.
So, that function tends to coalesce towards one solution.
And so, the short answer would be that for the same reasons,
quantifiable reasons, right?
Like inflation resistance and liquidity and network effects,
that we have one analog gold,
we're only likely to have one digital gold.
And I think the Bitcoin Cash Fork
proves that out empirically.
It's a good case study because--
- Well, it's one case study, right?
But okay, so that's really well put.
So, like gold was sticky.
Once it was accepted, the network effects,
the winner-take-all took over.
And here's a fundamentally different kind of like,
analog versus digital is a leap in technologies.
- That's right.
- And you're suggesting that there may not be,
there's unlikely to be other leaps of that kind
into a whole nother kind of space of technologies.
- I would argue that Bitcoin,
it's kind of like the ideological synthesis of gold,
taking the monetary properties of gold
and combining them with the internet itself.
And in doing so,
it has essentially perfected the properties of money.
§14Transcript · 2:01:47–2:10:56
You can't get more divisible, durable, recognizable,
portable, or scarce than Bitcoin.
So, Satoshi has kind of,
he left no design space for a superior technology
to intercede and out-compete Bitcoin at this point,
now that it's established a liquidity
in the network effects. - Far superior technology.
- Yeah, but it's a combination of the tech itself
and the social layer. - And the social layer.
That is coalesced to it.
- You can't separate those two out.
- That's right. - They're all connected
and then the political as well.
I mean, but the portability, for example,
that's another way to phrase that is the,
what is it?
The scaling.
So, the number of transactions,
that's a limitation for Bitcoin
that many argues a feature, many argues a bug.
You have a bunch of cryptocurrency technologies
that are able to achieve much higher,
much faster frequency of transactions,
much more transactions, all that kind of stuff.
What are your thoughts on that?
The low level of transactions that's possible with Bitcoin.
Do you think that's a feature?
Do you think that's a bug?
- Necessary for security, actually.
And even these other crypto assets
that settle more quickly,
they settle with less assurance of finality.
So, Nick Carter has a great piece on this, actually,
called "The Settlement Assurance is Stupid."
It's really good, where the gist of it is
that there is more work being done
in each block of Bitcoin
that it is less vulnerable to reversion.
So, it's giving you higher degrees of assurance
that your settlement or your trade
has occurred with finality,
whereas other blockchains are much more vulnerable.
And again, with Bitcoin,
the evolutionary path of money with gold
is that it was first used as a collectible.
It then became used as a store of value.
After it had stored enough value,
it began to be used as a medium of exchange.
And then finally, when it was used widely enough
as a medium of exchange, it becomes a unit of account.
We actually start to think in the money.
Bitcoin's following a similar path.
So, it started out as kind of a collectible.
Today, I would argue it's a store of value,
one of the most effective store of value
we've ever seen.
So, that evolutionary path that Bitcoin's following
is similar to gold.
First a collectible, today a store of value.
To be an effective store of value,
it has to optimize for supply cap.
That has to be the first,
and this is all Bitcoin really needs to do
to be successful, by the way.
Exactly what it's been doing for 12 years,
virtually flawlessly,
which is keep creating a block every 10 minutes
and keep enforcing a supply cap of 21 million.
As long as those two things hold,
it is sound money, the ultimate sound money,
the most inflation-resistant money there's ever been.
It's actually completely immune.
It's taken unexpected inflation to 0%.
We know with perfect certainty
what Bitcoin's supply will ever be.
For it to be used more broadly as a medium of exchange,
it can't make trade-offs at the base layer
to increase its portability, for instance.
Even though portability's maybe kind of a misnomer,
'cause Bitcoin has extremely high portability,
just doesn't have extremely high transaction throughput.
So, we could say you can move it pretty quickly
anywhere in the world,
as long as you're willing to bid up for the block space,
but you can't satisfy all the world's economic volume.
You can't do 300 million transactions per second
like you can on a centralized database like Visa.
But Bitcoin needs to be this,
it has to be a store value first
before it can be a medium of exchange.
So, it has to protect the supply cap first
before making any trade-offs for that.
And I would argue that that's why Bitcoin is so rigid,
is that it's optimized for survivability
and optimized for that supply cap,
and it's pushing experimentation and other features
that would increase its transaction throughput
to higher layers.
So, I think Lightning Network
is something that's very interesting.
It's still early, but there's a lot of throughput
already being used on the Lightning Network.
And it makes some slight trade-offs
in terms of the trust minimization of Bitcoin.
You end up trusting these smart contracts
instead to move the Bitcoin,
but you pick up nearly unlimited transaction throughput.
So, that's how, and that's how biology evolves,
that's how the internet evolved.
It evolves in layers.
So, I think Bitcoin, you can sort of conceive of it
as the latest layer to the internet,
and it's one that preserves this store value property
better than any asset we've ever had.
- Let me ask sort of a critical question of,
if you're wrong about your statements about Bitcoin,
you find out years from now that you were wrong,
what would that look like?
What would be the things that make you realize you were wrong?
Likely ideas or crazy out there ideas?
Do you think about this kind of stuff?
- All the time.
- 'Cause you speak very confidently about Bitcoin.
And one of the things, let me put it this way.
I think certainty, I feel like that's like a stoic statement
certainty leads to ruin or something like that.
Like certainty, I think is an antithesis to progress often.
And especially in your writing,
but this is true for the Bitcoin community.
There's a certainty about the Bitcoin.
And that makes me very skeptical,
no matter how good the ideas are.
Whenever things are good, this might be the Russian in me.
I think like, what are the ways this is gonna go wrong?
So, what do you think are the ways this might go wrong
or you're wrong in your conception of what Bitcoin is?
- Yeah, so science evolves via negativa,
meaning that we're not proving hypotheses.
And that's what becomes the body of science.
Science is whatever is left over
as we disprove hypotheses, right?
Whatever we can empirically through experimentation,
disprove gets discarded and whatever remains,
whatever theory remains that hasn't been disproven
is science effectively.
This process is similar to market actors
zeroing in on a store value, right?
They're experimenting with different forms
of storing wealth across time.
Some do better than others,
and eventually everyone ends up on the one that is best.
That's what gold was.
In terms of understanding Bitcoin,
I look at it as a similar approach.
And that is the main question I'm asking myself
is how do you stop this thing?
How do you turn it off?
How do you end it?
If you're a nation state particularly
who has the most to lose in this transition,
what is the attack vector by which they neutralize Bitcoin?
I mean, that is the $250 trillion question.
And I've spent five years
thinking about this thing very deeply.
I've read everything on monetary history
I can get my hands on.
The general thought of how it is stopped,
and this is the snag point that a lot of people get to
in their explorations down the rabbit hole
is they just say the government will never allow it.
And that becomes kind of their bottom.
It's like, all right, Bitcoin's interesting,
it's superior money, blah, blah, blah,
but the government will never allow it.
- Was Ray Dalio, did he say that?
- Dalio is currently stuck there, yeah.
- So Ray Dalio said that Bitcoin seems to be too promising.
If it is in fact as promising as it looks,
governments are going to,
I don't forget what the exact quote is,
but not allow it, ban it.
Governments will ban it.
So how do you get Ray Dalio unstuck from your perspective?
- Well-
- And how do you get unstuck from that idea
that governments, will governments,
how do you prevent governments from stopping a thing
that threatens centralized power?
- Well, Bitcoin is an idea.
So governments that are really good
at fighting centralized threats to their power, right,
whether that's a currency counterfeiter
or a competing nation state or business they don't like
or an individual they don't like,
you know, they can kill them, they can throw them in jail,
they can use any number of coercive
or violent tactics to suppress it.
But how do you point a gun at an idea?
How do you, how do you coerce an idea?
And that's, you know, there's some anecdotal history here
§15Transcript · 2:11:03–2:20:40
where there's the PGP case, which in the United States,
the court was trying to classify it as munitions
when we were shipping this pretty good privacy software
overseas, government wanted to classify it as munitions
and restrict that exportation.
But, and this was a circuit court case precedent,
when the PGP attorneys actually printed out the source code
on paper and presented it as evidence in the court,
all of a sudden it became protected under freedom of speech
and that it's just code is speech, code is language
and therefore at least in the United States,
it's protected under the first amendment.
I think a government ban would be largely unenforceable,
frankly on Bitcoin, being that it's pure information.
If you suppress market actors
from using it in one jurisdiction,
you're just creating incentives for them to go elsewhere.
And you're actually increasing the incentive
for other jurisdictions to be favorable towards it
because then they can create,
they get to benefit from the tax revenue
and the businesses and the innovation
that's occurring in and around Bitcoin as a result.
- So you don't think if a particular central bank,
like in Europe or United States bans it,
not maybe using those terms, but in some kind of way,
you think that provides a really strong incentive
for the other big players to enable it?
- That's right.
And that they're more likely, by the way, since,
and governments know this, by the way, too.
The other thing that causes a government
to shoot itself in the foot is that if they ban something,
they draw a lot of attention to it.
People are smart.
I mean, people ask why, why would a government ban it?
Why can't I use this?
So that's kind of typically be the last arrow
in their quiver.
They may try to ban it if Bitcoin
really starts to monetize very quickly
and the power structures that they impose today
start to dissolve faster than others might think they will,
then they might try and ban it.
But I think that ban will be largely unenforceable.
They're more likely to tax it,
which they already do tax it.
They're likely to increase taxation of it.
They're likely to try and make it more white market
by actually tracing Bitcoin, seeing who has it,
attaching identities to Bitcoin ownership,
and making sure that they're getting their pound of flesh
on all the transactions it results in.
But I don't think, the other thing about this is,
so we saw the internet out-compete intranets,
in that we'd say that open source networks
tend to out-compete closed source networks.
And there's a really good reason for this.
And it's because in a closed source network,
there are costs associated with defending
the network itself.
So you have to, the network owners,
the owners of the closed source network
have to expend resources protecting it from competitors,
and they have to expend resources imposing its rules,
because people, they're not voluntarily adopted rules,
so you actually have to impose these rule sets.
Whereas an open source network,
which is something much more akin to capitalism,
in its pure sense, these are voluntarily adopted rules.
So all market participants have agreed
and consented to this rule set.
So there's no enforcement cost,
and there's no turf protection,
'cause anyone can freely enter or exit the open network.
For that energetic reason, I think open networks
out-compete closed networks, typically.
And in the digital age, that's why I think,
that's why internet out-competes intranet,
and that's why open source networks
are gonna eat closed source networks.
So what Bitcoin would be in that lens
is the ultimate open source monetary network,
devouring closed source central bank monetary networks.
And I just don't see how,
there's no possibility of unilaterally stopping Bitcoin
or destroying it.
So then they're more likely to regulate or tax it.
And again, the other fallacy here is that a lot of people
tend to think of governments as these singular,
indivisible entities that just move under one plan,
but in reality, it's a lot of people, right?
A lot of people with loosely coupled interests
and agendas and whatnot.
Regulators and others,
when they're wearing their citizen hat,
they're gonna see this thing monetizing.
They're gonna be on the front lines
of trying to regulate it, trying to control it.
And I think what's likely to happen
is they're gonna start to adopt it
to buy some of it even as an individual
or possibly even ultimately at a central bank
or sovereign wealth fund level
as an insurance policy against its success.
And once you start to acquire something
and then you have a vested economic interest
in its monetization, I think it kind of dissolves
any of the power structures that are arrayed against it
from the inside.
So I've written a lot about this
in a new series called "Sovereignism,"
which is based loosely on a book
called "The Sovereign Individual."
And that's the general thesis
is that microprocessing technology
would devour our organizational models,
the most important of which is the nation state.
So I think we're going into this world
where coercion and violence is just much less rewarding.
You can't, the economics of violence are declining
because of the low cost of protecting property, right?
You can now protect your monetary property in Bitcoin
at orders of magnitude less costs
than is necessary to run a banking network.
So it changes the way we organize ourselves.
And again, if we, zooming back to gold
as kind of the original governor to governments,
where if they manipulated the money,
gold would leave their country.
That's why governments have taken relatively concerted action
to go off of the gold standard.
There's a great book on this called "The Gold Wars"
that outlines how governments have been waging a cold war
against gold for the past 50 years.
Bitcoin sort of renews hope
for that free market governor of governments.
And that is this digital gold
that governments cannot stop or co-opt.
So I think it's something,
that's why I think it's such a big deal
is that it is changing.
It's a new useful fiction, you might say.
A useful fiction that's superordinate
to the mythology of the nation state and government
as the dominant institution in the world.
- Well, I hope you're right
that all forms of centralized power
start breaking apart naturally.
So governments, the more and more power
is given to the individual,
whatever the technology is.
And Bitcoin seems to be a promising technology
that empowers that, enables that.
That seems to be the trend.
And that's a promising trend,
at least from a perspective of somebody
who values this particular biological meat bag
that's full of consciousness.
- I think Bitcoin is exposing the greatest scam
in human history, which is political authority.
Like who gives anyone the right to be politically,
have political authority over anyone else?
People should be free to adopt the rules
and systems and tools that best suit their needs.
And that arc of history we covered earlier,
where as socioeconomic systems have become more favorable
towards individual sovereignty,
the more wealthy we have become,
the more we have given the individual,
we've maximized individual choice,
the more wealth that society has created,
and the more it has out-competed
the systems that have come before it.
The latest would be capitalism triumphing over socialism.
- Before maybe we eat, you are in Texas,
you brought over some brisket.
Before we maybe indulge in that,
let me bring up one quick topic,
and then we'll take a break.
And the topic of what some may term
the toxicity of the Bitcoin community.
That you've written that Bitcoin toxicity is tough love.
Do you wanna break that apart a little bit,
sort of the idea, the philosophy of the toxicity
that seems to be present in part in the Bitcoin community?
- Yeah, we were talking about this a little bit
before we recorded, and I've been through the gauntlet
with Bitcoin toxicity as well.
I came into this space professionally in 2017.
I was originally running a multi-strategy
crypto asset hedge fund.
And my initial investment thesis on the world was that,
Bitcoin was a big deal, but there were all these other
exciting coins and projects and ways the technology
was going to be used.
And that view of reality met this immune,
I guess you could say as an ideological immune system,
this Bitcoin toxicity, and that it's kind of a filter
that's trying to catch bad or useless or even scamming ideas
§16Transcript · 2:20:45–2:30:22
that this space is very well known for.
As we've touched on today, Bitcoin, in my opinion,
is this world shattering innovation,
but it's in a sea of the most scammy stuff ever.
People, anybody can go and create a coin.
So you can go and launch one immediately online,
and you can throw up a website, an advisor page,
post a white paper talking about how great
your technology is going to be and how it's going to change
the world, and you can raise $30 million in Bitcoin
or Ethereum in 30 seconds kind of thing.
So it's drawn in a lot of this scam artistry,
you might say.
And I think people living through that,
because there is this natural predilection for people,
when they first come into Bitcoin, you're excited about it,
then you get lost in the shit coin universe.
And then just looking at the market success of Bitcoin
versus, and when I use the word shit coin, I'm just--
- You say with all the love in the world.
- All the love in the world.
I guess you could call me a toxic maximalist in some ways,
although I consider myself a freedom maximalist,
not a Bitcoin maximalist.
- Yeah, I saw that line.
That's a good line.
- Bitcoin, tracking the market success of Bitcoin
versus alternative crypto assets,
the signal is very clear that Bitcoin
has out-competed all of them.
So I think that Bitcoin cultural toxicity has evolved
as an immune response to those bad ideas,
which is actually, if you think about it,
kind of is a tough love, right?
You don't want new entrants to the space
to get lost in shit coin jungle and learn the hard way,
the way many Bitcoin maximalists have,
that the real innovation is Bitcoin.
But like an immune system, I think it can also go too far.
And so I think it's useful when it is defending the space
from false narratives, we might say,
but it becomes detrimental when it's attacking people
that are inquiring about Bitcoin
or people that are approaching Bitcoin
with a good spirit and good intention and a desire to learn.
Because then at that point,
it's actually impeding the free flow of ideas,
which the example in your clip
was totally taken out of context.
And then you're literally just saying,
"I'm here to learn and contribute.
I think I've got some stuff to do."
And then people attack that.
Like that doesn't make any fucking sense.
It's like you're attacking someone who's approaching it
in a good spirit and asking questions.
- Yeah, and I think sometimes talking about it,
the toxicity in the Bitcoin community as an immune response
has a negative effect of giving it a pass.
Because like, it almost says,
"Look, it equates it with the human immune system,
which seems to do a really good job."
And so you could say that the toxicity has a lot of features
in the sea of fraudulent projects
that steal money from people.
It's really useful to make sure
that you give people the harsh truth
about who is and isn't a scammer.
You have to take it away from that metaphor
of the immune system and look at basic human nature.
And human nature can go to some dark places,
which is, it's sad to say that some people,
maybe many of us can enjoy for its own sake, the toxicity,
the mockery, the derision.
And you stop being part of the immune system
that makes a successful idea propagate
and start being a sort of a destructive virus yourself.
And that's something I think about
'cause I am new to this particular immune system,
but I've explored other immune systems.
And I think you understand this world much better than me,
but I tend to prefer sort of love
as a mechanism for spreading ideas,
to err on the side of love and kindness,
and almost like an open-mindedness
in a way where you're constantly lowering yourself
in the face of other ideas, constantly questioning yourself.
But I think I understand that that might be more applicable
in certain contexts, like maybe in the space of science
or something like that.
But in the space of Bitcoin as it currently stands,
there's so many people that are trying to scam others
out of their money that the kind of harshness required
is different.
Nevertheless, I do want to put it on people like yourself
and others who I know you wouldn't consider yourself this,
but you're one of the faces or leaders in this space
to call people out a little bit,
to inspire them to be more loving, I suppose.
But it's difficult 'cause you want to walk
that line carefully.
You don't want to be too loving and open-minded.
Otherwise, your brain falls out.
I get it.
It's a difficult balance to walk.
- It is subtle and it's nuanced,
and it is difficult to walk.
And I think that, that's why I try to say tough love
because when we're young, we may have certain ideas
about the way we want our life to go,
but then maybe our parents are not letting us
do certain things and we think they're,
I know when I was a kid, I wanted to get my,
when I was in fifth grade, I wanted to get my ear pierced.
My mom wouldn't let me do it.
And I was, oh, come on, Mom.
I thought it was so cool.
And then two years later, I'm like, thank you, Mom,
for not letting me get my ear pierced.
I think it comes from a place of good intention
that they are actually,
they have asked themselves that question, right?
That they've been inquiring in why not this crypto asset
or this crypto asset, and they've done the exploration.
They keep coming back to Bitcoin
and they've seen people being taken advantage of.
But to your point, it's like it can,
this tough love can become detrimental,
just like the immune system can become detrimental, right?
It can overreact and it can actually harm the human body.
So I would say that it's such a tricky and nuanced topic
that even biology hasn't figured it out, right?
A lot of people have autoimmune diseases.
And then there's the other thing that we have this natural,
I agree with you about love.
I think love is like the deepest value.
That's a whole nother philosophical thing,
but we're biologically programmed to pay more attention
to things that are adversarial or harmful, right?
That's part of us protecting the meat suit, so to speak.
So there is some maybe better delivery method
by being a little bit toxic to really get the point across,
like, hey, don't get lost over here.
These things can hurt you.
Really try to focus on Bitcoin,
but the toxicity of that message,
I guess it increases its ability
to penetrate the individual, but it can also go too far.
So it is-
- It's interesting, but I,
almost to push back a little bit,
toxicity is a funny word.
I think maybe another way to say it is,
I brought up like Christopher Hitchens
and somebody who like, okay,
you might say is toxic or something like that.
'Cause he's basically a intellectual powerhouse
who's also a troll.
So he's constantly, it's like guerrilla warfare
in the space of ideas.
He's very harsh in his disagreements and criticisms,
but it's done with incredible grace and skill and poetry.
So-
- We could use more of that.
- We could use more of that.
So toxicity just like,
these are just words.
They can mean a lot of different things,
but disagreement doesn't have to be done with love,
but it should be done with skill if it's to be effective.
So there's a lot of ways to be effective in guerrilla warfare
but you want to learn how to shoot
or whatever the weapon you're using and to do it well.
Some people do it better than others
and it's worthwhile to learn to do it well.
Again, I prefer love, but even love,
just because you think you're communicating a good idea
which you very well may be,
doesn't mean it also doesn't require skill
to do the communication well.
Whether it's disagreement and harsh
or more agreement and loving and so on.
- Yeah, I think very fundamentally
that all of our decisions,
we alluded to earlier that every decision
is an expression of value, every action we take.
They ultimately come from fear or love.
Fear would be something much more in the biological domain
where it's like we're trying to protect ego,
we're trying to behave selfishly.
This is the domain of sin.
I don't know all the sins, gluttony, greed, sloth,
wrath, lust, pride, envy.
These are all selfish behaviors.
Whereas something like love,
it's morally superior in that it's more selfless.
I don't know that we can properly define love
with words at all, but I would say maybe like selfless action
could be kind of a generalization of it.
And that way, it is really hard, to your point,
§17Transcript · 2:30:25–2:39:53
it's hard to love in a world that has a lot of conflict
that might make you fearful
if you're really focused on your meat suit.
But if you're focused on the bigger picture
and you're focused on others and legacy and life,
that there is a way to do it.
And that's why I actually think Christ,
that is the highest moral aim.
He met all of the vitriol in life,
betrayal, hate, violence, he met it all with love
and he met it with compassion.
And that's why, regardless of if you believe
that he actually lived or any of this,
he is symbolic of the highest moral consciousness possible.
And Carl Jung would say that that was a suitable alternative
to psychoanalysis, was actually setting your moral aim higher
and striving towards it diligently.
So, I mean, I agree completely,
we need more of that in the Bitcoin space.
We need more of that in the world, frankly.
- In the world, yeah.
- And these things, they're all intertwined.
We touched on the beginning, all of us get to decide,
but the world does influence,
kind of if we adopt fear or love,
but it takes, I don't know, it takes good systems
and it takes, I guess, good leaders to set an example.
- Yeah, I do believe that there's like individual people
can have a ripple effect.
So that's what I try to do, sort of embody the,
I'm just one ant, but one of the things I have faith in
is I'm trying to do that more.
I know this is a podcast,
but I'm trying to do less talking and more doing.
I've been disappointed in myself, if I'm being honest,
how much talking I've been doing,
as opposed to like in my own private life,
I live the thing I talk about,
but I also haven't created much.
And I believe in the power of individuals
that create stuff, like create an idea.
Through those individuals that try to create something new,
the world progresses.
And hopefully there's more and more,
more and more of those people.
So you mentioned kind of people who,
what the Bitcoin community might call scammers.
I have a lot of passions in my life
that I focus a lot of my attention to.
You know, Bitcoin doesn't happen to be yet one of them,
Bitcoin and cryptocurrency, you know.
- I'm glad you said yeah.
- I'm always looking for things
to really fall in love with.
So how is a person like me supposed to figure out,
I also happen to have a platform a little bit,
and how am I supposed to figure out
who is an interesting,
what is an interesting set of ideas and what are not?
Because people are financially tied
into a lot of the cryptocurrencies that we're talking about,
certainly with Bitcoin.
You know, their livelihood,
their wellbeing is tied up to it.
So it becomes much more emotional, much more personal.
It's no longer purely an exploration of ideas.
It's really almost like a threat on your property.
Like it's a personal threat
and it makes it very difficult to explore those ideas.
So I understand that,
but it makes it very difficult for somebody like me
to just walk in and be curious.
So how do I proceed in this difficult world
in exploring this landscape
and not give a platform to ideas that may harm others?
- I guess first I'd like to commend
your forthrightness about this,
because I don't think many people
try to walk that line necessarily.
People, again, kind of the territorial imperative,
they'll put whoever on, they'll help expand their reach.
- Oh yeah, that's true.
- Or say whatever needs to be said to expand their reach.
So I think you're coming from a good place, I'll say that.
There's a great piece written
on the topic of scammers and scamming.
I think it was by Goldstein.
He wrote a piece called "Everyone's a Scammer."
And it's sort of back to this, you know,
general human proclivity
to try and get something for nothing always.
Which again, it can be positive,
it can be innovative, or it can be negative.
You can be trying to steal from people.
That might be, I think that's a useful piece,
just to kind of see the crypto world through that lens.
And that's how Bitcoiners are thinking all the time.
They are by nature adversarial thinkers.
So they're trying to minimize the need for trust
in any situation and maximize verification.
As far as sifting through the ideas,
I guess this is back where the cultural immune system
has some utility.
Because there were times when I thought
this particular crypto asset,
you know, Augur was one I was really into,
that it could facilitate prediction markets,
and prediction markets could make,
you know, markets more efficient, et cetera, et cetera.
But when that investment thesis
basically met the cultural filter or immune system,
it forced me to reevaluate my position,
forced me to really look into it more deeply.
And through that exploration,
I realized that it would need to be built on Bitcoin
to work, basically.
So, but it really comes down to like you doing your homework,
but we can't all deeply evaluate every idea out there, right?
- Yeah, one of the things I struggle with,
with Alex Jones, for example, I had dinner with him.
I could tell that would be a very fun conversation,
but like, then I also understand that there's
like consequences to that conversation
that should be explored with care.
And so you need to take on the responsibility
of being a chef or the puffer fish
and all those kinds of things.
That said, just like you said,
it's very difficult to know this ahead of time.
And I will probably make mistakes.
And that's a shitty thing to have to live with,
that I'm going to make mistakes and some of them very large.
Like, yeah, I mean, I can imagine a bunch of different ways,
but all we can do in this world
is once we make the mistakes, we acknowledge those mistakes.
- Yes, learn.
- And learn.
And also, I have to put this on the rest of us,
that you don't take one thing that a person did
and then burn them at the stake for it.
That you realize that we all make mistakes,
that a particular mistake does not make the person.
And this applies to taking stuff out of context
over hundreds of hours of talking,
but it applies to actual, like in context, big mistake.
So what if I murdered somebody at some point?
Just give me a break.
No, there are some things that are too far, of course,
but in general, we need to give each other a chance.
Yeah, but I'm still, I walk with a heavy heart
knowing that I'll probably make a mistake,
especially one that I didn't mean to.
That's the one that worries me most.
- Well, this is human nature.
Like, hamartia, to miss the mark.
That's the root word of sin.
Like, we are sinful by nature.
We can't help it.
There's no way, again, pain is information, right?
There's no way to learn other than trying,
failing, learning, and then you put yourself
in better formation, right, in formation
to better deal with it next time.
So I hope, I don't get the sense that you're actually
afraid of making a misstep.
Like, I think you're just maybe disappointed
is a better word.
Like, you know you're gonna make the mistakes.
- Yeah, that's exactly, that's a much, much better word.
- But we have to embrace that.
- Yeah.
- That's the only way anything,
it's the only way we can advance.
As we're dealing with an incomprehensible reality,
all we can do is throw spaghetti at the wall
and see what sticks.
- Yeah.
- And in that process, we're all inherently gonna
hurt ourselves and hurt others,
and that's where love and forgiveness come into play, right?
And yeah, I think the other thing is that
this culture of reducing people down to a label, right?
Whether it's racism or whether you're calling them a scammer
or any number of terms,
you're discounting their sovereignty to zero, right?
You're taking a super complex human that is vast,
contains multitudes, is changing over time,
and you're trying to put them in a bucket of a word.
And that is just, I think, a cognitive fallacy.
Like, it's not only gonna hurt the person
that you're winnowing down to a word,
it's also gonna hurt you.
In your attempt to decomplexify reality
by assigning this person to a term,
you're actually gonna create bad outcomes for yourself
because you're not gonna understand that person.
- I do also think there's a failure
of our social media technology
that incentivizes that kind of reduction to a label.
It's just the viral nature of that reduction.
§18Transcript · 2:39:56–2:49:15
So it's not only do we humans naturally do that,
our social media platforms make that easier,
more fun, more effective to do that at scale,
the mass hysteria.
So I think there's actually technological ways
of adding friction to that.
- Yeah, I wonder, I mean, I agree with you
that social media is an amplifier
to this natural way of dealing with one another,
but I wonder, and my thinking has evolved a lot on this,
that there's something below
the way we're treating each other too, right?
We could say civilization sort of advances
in the tools we make and the way we treat each other.
We tend to have better tools, better quality of life,
and better morality, better quality of living,
and ways of dealing with one another.
And I think that when you corrupt the money,
that it really does push us the negative direction,
pushes us away from,
again, encouraging or magnifying scarcity artificially
causes us to be more divisive.
When things are more divisive,
we tend to be less civilized, less nuanced,
more black or white, or this or that,
or you're this, or label A or label B.
So I really think, and this is a harder one to unravel,
but I think if we can fix the money, right,
which again is the base layer operating system
for human moral action in the world,
that it has downstream effects.
So we'd actually maybe start to treat each other
a little better on social media,
despite the fact that it enables this faster communication.
- That's interesting.
So perhaps fixing social media, as I've been thinking about,
is treating the symptom, not the cause.
- Yeah, that is the Bitcoin rabbit hole in a nutshell.
Is it, you know, they say fix the money, fix the world.
You keep tracing these different social malaises
or technological difficulties, lack of innovation.
You know, Weinstein's entire Portal podcast,
"Something Went Wrong in the Early '70s."
We went off the gold standard in 1971.
And there's a great website, wtfhappened1971.com.
Goes through this whole gamut of socioeconomic data
that's completely gone askew since the early '70s.
- Yeah, you had this whole video.
What do you think about Eric Weinstein and Bitcoin
and the gold standard?
Does he, I actually haven't heard him talk about his thesis
about the '70s in connection
to the going off of the gold standard.
Yeah, what are your thoughts there?
What are your thoughts about his general relationship
with the Bitcoin idea and the community?
- Yeah, the first exposure I had to Eric was his,
I think it was his first episode with Peter Thiel.
And they're going through that thesis
that there's been this general institutional rot
and suppression of innovation since the early '70s.
And he's trying to identify what it is.
I don't think they ever pended on the money
on going off the gold standard.
But in recent interactions with Eric,
I've interacted with him on Clubhouse.
We recently released an episode of the show
I did with Chris Espley.
And it was titled "Dear Eric Weinstein."
So we're going through his worldview
that he's expressed in the portal
and tying it back to the money in different ways.
And he's engaged.
Eric retweeted the show.
We exchanged some messages.
He's been very open-minded.
He's asked some really good questions.
So I get the sense that he's approaching this
very wholeheartedly.
He does bring with him his existing worldview
and his existing theory.
The one that really blew up was gauge theory.
They got really popular.
I don't know a lot about gauge theory.
I actually messaged Eric and said,
"I want to learn more," genuinely,
because he seems to be serious
that that needs to be considered in the sphere of money.
And so I want to learn more about it.
But I think overall, it's great.
It's great to see an intellectual heavyweight
of his caliber gravitating towards Bitcoin.
Yeah, he has some gauge-theoretic conceptions
about the world broadly, but also about economics,
which ultimately boils down to just a set of mathematics,
which allows you to more effectively reason about the world.
And he has a certain set of views there.
So it's fascinating to see him grapple with it.
I think he's also kind of,
actually kind of like all of us,
grappling with the idea of what is Bitcoin in this world.
It's a very young technology,
and it's unclear exactly how the ideas of the past
fit with it, integrate, how the two integrate together.
And so it's interesting to explore,
not just Bitcoin in particular.
So for me, what I've always saw Bitcoin as
from the beginning, from a narrow worldview,
is computer science, which is where I come from.
And so I wasn't almost aware in the social,
political, financial aspects of Bitcoin.
But now I see that there's not just power,
but there's fascinating ideas to explore
on that side of things.
Not just the computer science,
not just the technical details,
but the political, the socioeconomic, the philosophical.
- That's where I find all the fascination
in the world, frankly.
I would, one other thing about Weinstein,
and intellectuals more generally
that are skeptical of Bitcoin,
I would challenge them to read the book, "Human Action,"
written by Mises, I think in 1949,
he published the English version.
It's essentially the Bible of Austrian economics.
And I think Austrian economics is a noticeable gap
in most modern intellectuals' worldviews,
that it's not taught in school.
I mean, I have a master's degree in accounting and finance,
studied a lot of economics in school.
There's not one peep of Austrian econ.
- The least, we love talking about all the degrees he has.
- I was a CPA.
(laughing)
But it's, that curriculum that we get in college
is noticeably deficient in Austrian economics.
And I think there's a reason why, right?
It's heavily government influenced.
Again, master's degree in accounting,
they never taught me about what money is
or where money comes from.
All you learn is that the central bank issues money
and the central bank takes money away.
So it's conceived of in the textbooks
quite literally as God, right?
An entity that suffers no opportunity costs,
that basically is the foundation
of the entire Keynesian worldview
that you're taught in economics.
And Austrian economics
is the opposite end of the spectrum of that, right?
It's actually the culmination,
which economics is the youngest science in the world,
by the way.
So it is kind of the front,
it's the frontiers of science in many ways,
like to actually, when I say praxeology,
many people have never even heard of that.
But it's something, it's an a priori study
equivalent to something like mathematics,
that you're building things from first principles
to reason about economic reality.
And I think that book,
it's a very difficult book written by Mises,
1200 pages, translated from German.
The way he wields English is fascinating and terrifying
all at the same time.
It'd probably take you six months to read it
if you read it daily, seriously,
like it's a beast of a book.
But that will plug the gap, I think in most,
any intellectual that's skeptical about Bitcoin,
I think that will plug the gap
that's necessary for you to see it in a new light.
- Well, I'll take that as a challenge.
Now that we took a little bit of a break,
ate some good Texas brisket,
thank you for that, by the way,
- Oh yeah, quite welcome.
- Let me ask the ridiculous question.
At the core of the idea of Bitcoin is this guy
or this entity named Satoshi Nakamoto.
So the ridiculous question is, who is Satoshi Nakamoto?
And first of all, is it you?
- It's not me.
- I wish.
- And is this an interesting question?
Or is it just something about our human nature
that wants to, that always tends towards mystery?
- Well, as we've touched on a bit today,
you know, mythology, in my opinion,
is something that is intrinsic to how we see the world
in a lot of ways, like it's how,
it's kind of the structure
by which we build these useful fictions.
And so in that way, you could just say that
Satoshi is the Godhead of Bitcoin effectively.
And I think a compelling argument could be made
that his disappearance is what really solidifies
§19Transcript · 2:49:18–2:58:59
Bitcoin's decentralization.
Because if there were one individual
to personally vilify or denigrate or attack,
you know, to disparage or question the motives of,
you know, if he's out on the Hollywood Hills partying,
everyone knows he's got a million Bitcoin, you know,
it would just kind of tarnish the entire project
in a lot of way.
But the fact that on that theme, something for nothing,
this guy actually gave humanity something for nothing.
And it appears that he didn't profit in any way,
he, she, or they.
Actually heard recently that he identified as a he
in some of his communications.
So it sounds like it is a he.
- See, like his communications being like studied,
like almost like exactly as if he is a religious,
- That's right.
- Like a prophet.
- Yeah.
- I mean, it's fascinating to imagine that he's still alive
and living in this world.
And it's even more fascinating to imagine
that he's perhaps participating in the Bitcoin community.
Because I mean, that's, that takes a special human being
to out of principle do that, to do, to remain anonymous.
That's very much the George Washington.
Yeah, I always wonder like how many people are like that.
There's a cliche that like absolute power corrupts
absolutely like power corrupts,
but it seems like the progress of humanity
depends on the people whom power doesn't corrupt.
- Hmm, interesting.
- And it's enough to have just a small selection of those.
- Yeah.
- And even if most of us are too weak,
we give into power if given the chance,
all it takes is a few.
- That's, I've never thought of it like that,
but Marcus Aurelius immediately came to mind.
You know, the guy that he had the keys to the kingdom
and he apparently adhered to the stoic virtues
until the end.
But yeah, I agree with Satoshi.
The other thing that's interesting is he would be
by far the most wealthy person in the world
on a liquid asset basis,
because he has a million Bitcoin,
which is 60 billion liquid net worth at current prices.
So if he is still alive and just operating in the world,
he is daily and moment to moment resisting massive incentives
to go and just be the richest guy in the world.
- He's the ultimate hodler.
- Yeah.
(laughing)
- I mean, it's turning down not just financial success,
but also fame.
I mean, fame is another drug, it's kind of power,
but it's in itself is also a drug,
especially in this modern society, in this attention.
- And he would have both.
- He would have both.
It's fun to imagine who it could be.
It's fascinating if it's somebody like you
or somebody like Elon or somebody like that.
That's fascinating to think about.
- I think Elon would be hilarious.
He came out and he was Satoshi and be like,
"Hey guys, I know I'm already the richest guy in the world,
but I gotta go ahead and double my lead here."
- What do you make of Elon Musk investing with Tesla,
investing in Bitcoin and maybe broaden it out
in some of these other big companies?
Billionaires, but also people tied to major companies
investing in Bitcoin.
- Yeah, I think Michael Saylor
really led the charge on that.
He's the CEO of MicroStrategy that I think they've acquired
upwards of $2 billion in Bitcoin now.
Started acquiring August, maybe of 2020.
And he's personally bought a lot of it.
He bought a lot as a treasury reserve asset
for his company, MicroStrategy.
Then they leveraged up on a convertible note and bought more.
So he's really gone, really leading the charge
in this Bitcoin institutional adoption.
- Your conversation with him is a really interesting one.
Your series of, I mean, series of episodes, I suppose,
but it's only a couple of conversations, I guess.
- Yeah, we recorded twice, five and a half hours each.
So it's about 11 hours of content.
And yeah, thank you.
A lot of people have said that it's the best
first principle thing they've ever seen on Bitcoin,
which I take no credit for that at all.
I mean, I just sat down with a guy and unleashed him.
He's just a beast.
- Yeah, but it's fascinating that
his long-term vision with it.
I mean, I'm not sure I'm all philosophically bought in,
but if he's right, if this set of ideas are as powerful
as he describes, as you described,
that this would change the world,
which as you say, it's funny that a company
like MicroStrategy might be the company
that has the biggest macro effect
on our economy, on our world.
- Yeah, the conversation reshaped my worldview a lot too,
because he framed money as energy,
which I had often thought of money as time.
And it explored those connections a lot in my writing,
but looking at it as energy,
and then his supposition that the purpose of life
is to basically channel energy across space and time.
So we're just trying to figure out how to channel
more energy across space and time
toward the satisfaction of aims.
And his definition, or his answer to that question,
what is money, is that money is the highest form
of energy a human being can channel.
So it's a claim to all other forms of energy
we can manifest in the world.
And that just completely reshaped how I see it,
brought in this whole other side
to my intellectual explorations of money.
- Can you elaborate on that a little bit?
So I understand money is time,
which is in itself a really powerful idea,
but money is energy, channeling energy.
Can you break that apart?
- Yeah, so I guess,
definitely have to check out the whole series
to really get his perspective,
but I'll do my best to condense it.
Life itself, all forms of life,
they're dependent on energy.
Energy fuels everything,
fuels life and action and motion and all of that.
And we could say that maybe like a plant
is harnessing solar energy
and then reallocating that into growth.
So its aim is to grow towards the sun.
So it's allocating energy towards its goal
of harnessing more solar energy kind of thing.
And humans too have evolved
to figure out how to harness energy in different ways
to satisfy higher and more complicated aims.
So the original energy network
that he referenced was fire.
We actually learned to wield fire
as a tool in and of itself.
So not only are we learning to channel energy,
but we're actually learning how to isolate energy
as a tool in and of itself.
And so we went into that,
how harnessing fire had changed human beings.
And actually, this is one of the earliest examples
to have a co-evolution between tool and our biology,
because when we developed fire, we developed cooking.
And cooking is, you can kind of think of it
as pre-digestion in a way.
We're liberating these macronutrients,
we're making things that otherwise
would not be digestible, edible.
And it increases the efficiency
by which we extract nutrients from food.
That's what cooking does.
So when we figured out cooking,
we liberated all these digestive resources
that were reallocated towards higher cognitive development.
So there's this evolutionary path
between figuring out fire and us becoming smarter,
which was interesting.
Some other early examples he gave,
he went into were missiles and hydraulics.
So missiles being, we learned to hunt at a distance.
We can't bring down a woolly mammoth,
maybe with spears and up close and personal force,
but we could with spears and javelins
and slings and whatnot.
And then he went into how we've used water
to channel hydraulic energy.
So we can basically overcome gravity.
We can move, you know.
There's theories that the pyramids were constructed using,
the blocks were moved using hydraulic energy
or using water.
Clearly we use like cargo ships and whatnot
to move things much more efficiently across water
than we could the land.
So his whole view is how we keep figuring out better ways
and more efficient ways to harness energy and channel it.
And in that perspective,
money has always represented a claim
on all other forms of energy.
So whatever energy couldn't be channeled
towards something useful in the economy historically
would go into gold mining.
So gold became this residual, this economic,
this token of the excess energy created
§20Transcript · 2:59:04–3:09:05
by the market economy.
And then you could take that token of energy
and use it to redeem for any other form of energy
or any other products of energy itself.
I guess that's my best approximation of it.
And it just really shattered my worldview again
'cause I'd always thought about it as time.
Like we spend time sacrificing to obtain money
that we then redeem for commensurate sacrifices
from others.
But I'd never considered it purely as energy.
And then it also ties back into gold
where there was an energy expenditure necessary
to obtain gold.
So there's a proof of work associated with obtaining gold
that protected its market value.
So you had to expend, again,
if market value of gold's 2000 an ounce,
you had to expend 1900 an ounce mining.
So it kept producers honest in a way.
- So do you think something like proof of stake
that's more about reputation
than actual exertion, like energy can work?
- No.
I think proof of stake is inherently centralizing.
It's like the old Matthew principle,
from those who have to those who have,
more will be given from those who have not,
everything will be taken.
That's what proof of stake is.
You need proof of work to embody skin in the game
and the marketplace such that contributions
are commensurate with consideration received.
That's how systems work.
- What's the idea why proof of work
might incentivize decentralization?
Do you worry that as Bitcoin becomes more powerful,
it may become again more centralized?
- Well, the decentralization of Bitcoin
is largely driven by the nodes actually,
which aren't actually mining.
They're just choosing which rule set to implement.
And then the mining network
is actually enforcing that rule set.
So I think the mining network
is inherently decentralized in that
really anyone with access to cheap energy
can become a miner.
You can freely enter or exit the market
or the network at any time.
But maintaining the block size at a manageable level
is what's key to maintaining node decentralization.
- This is an interesting question.
Who do you think has more power, the miners or the nodes?
'Cause the nodes carry the idea of the protocol,
like the specifics.
So in some sense, they have more power.
And Bitcoin is an idea.
- They're kind of mutually indispensable though,
'cause you can't have,
there's no security without the miners.
So without the miners, Bitcoin is just an idea.
And the idea of Bitcoin is maybe existed
even before Bitcoin, right?
Just sound money.
We just say sound money as an idea.
But there was no way to root that
into thermodynamic reality without Satoshi figuring out,
not just proof of work.
It's the entire composite of the difficulty adjustment,
proof of work, one-way hashing, et cetera.
So I don't know, that's hard to say,
hard to disentangle the two.
- You've talked about money as morality too.
How do you think about moral and immoral action
in the context of money?
- There's this great quote by Rothbard,
who's a famous Austrian economist.
And he says, "To be moral, an act must be free."
Unquote.
And I think morality, it changes over time
and it has its roots in biology.
Jordan Peterson makes the point that even animals
have their own sort of pseudo morality.
Where like with wolf packs, for instance,
if there's a dispute between the alpha males,
or I guess between an alpha male and a incumbent,
the two males will have a fight basically.
And then when one is decided that one has won,
the loser will basically roll over
and give up his neck to the alpha male.
And they do this instead of fighting to the death
because in a wolf pack, they need every wolf.
So they can go out and bring down,
you never know when you're gonna need the 20th wolf
to bring down the big buffalo the next day or whatever.
So they've developed this less than fight to the death
social morality to optimize their effectiveness
as a wolf pack.
And similarly for humans, our morality sort of emerges
through competition and play even.
There are these implicit rules that come into place
based on how we're organizing ourselves over time.
And so with money, it's interesting
because most tools we would consider to be amoral,
as in a hammer can be used to build a house,
which could be seen to be good,
like a good constructive purpose,
or could be used to bash someone's skull,
which could be something evil.
And that the tool itself is amoral,
it doesn't have any independent morality of its own.
All of the morality is associated
with the wielder of the tool.
So what's the quote, like any tool can be a weapon
if you hold it right, sort of thing.
But money's maybe a little bit different in that
when you monopolize money,
it's only useful as a tool for one thing.
And that's for allocating wealth away from some
and to others.
So it is the only utility of monopolized money is theft.
There's no other, you know,
there's a lot of propaganda out there that will say,
oh, we need to print money to get out of this disaster
or to give to the poor, whatever this,
whatever moralistically camouflaged political aim
is being discussed,
at the base layer of monopolized money
is that it's only useful for taking from some
and giving to others.
So another way to think about this is that
money is a paper claim on the savings of society.
So it is just a ticket for redeeming savings,
which could be time, could be capital,
could be knowledge from any market actor in the world.
So it's kind of a list of who owns what, if you will,
it's a proxy list.
If there's one group that can amend that list
and others cannot,
then they're basically able and incented to
modify that list to their own benefit.
And that's effectively what a central bank is doing.
So a central bank is determining how much money to create.
They're also determining who gets to receive
that money first.
And the first recipients of that money
are gonna be the beneficiaries in an inflationary regime.
So those that receive the money last
are the ones being robbed.
Those that receive the money first
are the ones that are receiving the stolen proceeds,
let's say.
And this has a really corrosive effect on social morality
because if we consider that people's time horizon,
which the Austrians call the time preference,
the more short-term thinking you are,
the more likely you are to engage in selfish behavior.
Right, if you know that it's all over tomorrow
and you've been working your whole life to develop,
you know, this business or create this reputation
or whatever your thing is,
but you just are given the foreknowledge
that tomorrow it's all gonna end,
you're much more likely to go out
and just maybe get drunk and party that night
because there's no more repercussions, right?
Whereas if you know that you're gonna live
for a very long time,
you're much more likely to plan for the future.
And money's very,
so we just say that your time horizon
is closely related to your morality, right?
The longer term thinking you are,
the more moral you would tend to behave,
the more you would care about long-term relationship
building versus going out and getting wasted.
And money too impinges very closely on our time preference.
And again, time preference is the Austrian term.
So low time preference means you're long-term oriented.
High time preference means you're short-term oriented,
which can be a little trippy for some people
'cause it sounds backwards.
But if your money constantly loses value,
you are incentivized to become more short-term oriented.
You are handicapped in your ability to plan for the future
because your money, which is intended to be,
here's another definition of money,
as an insurance policy against uncertainty.
So no matter what problems you encounter in the world,
this money will best help you deal with those problems.
When that insurance policy against uncertainty
is injected with uncertainty,
it's polluted with the uncertainty of inflation,
your time horizon shrinks,
your ability to plan long-term shrinks.
And this impinges on social morality.
So there's a great book on this
called "Honest Money" by Gary North.
And in that book, he gives the parable of the winemaker.
§21Transcript · 3:09:08–3:18:57
The winemaker, if we just imagine
the hypothetical winemaker operating a business
in a centrally banked economy,
and let's say his central bank just doubled the money supply
to quote unquote save the economy,
say an increase in money supply from one to $2 trillion.
This winemaker that's accustomed to selling wine
at $20 a bottle is now faced with basically three choices.
And an important point here too,
before we get into his three choices
are what prices are themselves.
Prices are the most visible aspect of any service.
So when you increase prices,
you are incentivizing your customers to look elsewhere.
They're gonna look at your competition.
When you decrease prices,
you're incentivizing market actors
to look closer at your product, right?
You're delivering a solution at a lower price.
So this winemaker that's accustomed to selling his wine
at a $20 price point, all of a sudden,
because of a central bank has tripled the money supply,
he has three choices.
He can either keep selling his bottle at $20
and all of his inputs will increase
due to inflation by 50%.
So he will lose 50% of his profit margin as a result.
So he can choose to eat that loss.
He can choose to double the selling price
of his bottle of wine from $20 to $40
because all of the price of his inputs doubled.
So then he would maintain his profit margin.
Or the third one is that he could choose
to water down his wine or use inferior ingredients.
So he could use cheaper inputs
and maintain the output at the same price.
So he could basically start selling his customers
an inferior product for the same price to preserve his profit.
Now again, case number one, it's not very palatable.
He doesn't want to eat the economic loss.
Case number two, it's not very good either
because he's then incentivizing all of his customers
to go shop other winemakers if he doubles his price.
So human nature being what it is,
trying to get something for nothing,
inflation actually seeps into other industries
by encouraging producers into option three,
which is to deceive your customer in the short run.
And again, this would be done initially at the margins.
Maybe it's just a few drops of water.
Maybe it's just some cheaper grapes.
But over time,
this inflation is actually inducing producers
to weigh their financial wellbeing
against their moral integrity.
So it's forcing them into this dilemma
that would not exist in a free market economy.
And it's not a good idea to do that.
Because as they charge more money for wine
that is inferior, the buyers of that wine,
also living in a central bank economy,
are also getting scammed by not only the inflation,
but also the wine.
So it becomes this kind of corrosive,
contagious moral effect
that propagates throughout an economy.
And that's why I've argued in a lot of my writing
that inflation is this infectious moral cancer on the world.
I think it is tied back to a lot of the social strangeness
we've seen in modern times,
where there seems to be a lot of fake people
and a lot of fake businesses and a lot of scams,
all of these things.
I think it really is rooted in the money.
And Bitcoin has the first money in history
that has a 0% terminal inflation rate,
or said differently, zero unexpected inflation.
There's no theft integrated into Bitcoin.
You can only earn it through work
or sacrificing resources to obtain it.
It is the antidote to this moral cancer
that inflation riddles our society with.
- Again, you're blowing my mind a little bit
to think about the ripple effects of inflation,
the way it seeps through with our interactions.
So at the very, the early ripples
is the effect it has on the products,
on the dilution of the wine,
but also it might have a ripple effects on the character,
on the behavior of people.
That's interesting, artificial creation of scarcity,
creating, having effects on society at the social,
like the social fabric.
- Yeah. - And I guess you're arguing
the morality.
- It's perverting free market dynamics,
which again, we said free markets generate pragmatic truth.
So inflation distorts price signals,
which means it confuses capital allocation.
So we're trying to solve problems,
but all of a sudden we can't tell if this price increases
a matter of true supply and demand change
or a matter of policy change.
So it clouds our economic perceptions.
It suppresses innovation,
because now you've exacerbated
the boom and bust business cycle.
People are gonna overborrow and go into projects
that they can't profitably sustain,
so then there'll be a huge collapse.
So that actually breaks the market's function
of generating innovation.
And then, yeah, I would argue too,
that it pollutes our pursuit of virtue, let's say.
- Maybe it's pushing back, but I don't think so.
It's not as clear to me,
perhaps because I haven't thought about it deeply,
that money is core to life and human interaction,
because there might be other forces,
other fraudulent forces, other things in human nature
that are creating these effects as well.
So it's clear, I think you're articulating really well,
that there's these negative effects from inflation.
I wonder if there's other undiscovered,
not undiscovered, but ones we're not making explicit now,
forces that are creating all the things we're seeing now,
with, like you said, cancer culture and all those things,
but also the negative effects on the quality of products,
on the excellence of the creativity,
and the innovation, all those kinds of things.
I wonder if there's other factors.
It's kind of, listen, it's compelling to think money's
at the core of it all.
Like if you fix, I forgot what the phrase was.
- Fix the money, fix the world.
- Yeah, fix the money, fix the world.
Again, things that sound good, I'm skeptical of by nature.
So I wonder if there's other things that are beyond money
that are somehow deeply integrated into our human nature.
- Another one related to money is social cohesion itself.
So very simple anecdote for this was,
the more you increase the inflation rate,
social cohesion is inversely proportionate to that.
So the extreme example would be hyperinflation, right?
Where the money is produced in such excess
that it loses all meaning and relevance.
So today in Venezuela, there is cash clogging the gutters,
clogging the streets, clogging the sewer system,
because the cash has lost all relevance.
And so anecdotally, we would suspect that, okay,
if there's a inverse relationship between inflation
and social cohesion, if we could then take inflation to zero,
couldn't we theoretically increase social cohesion
to its maximum?
So another way to say that is inflation
is a de-civilizing force,
whereas natural price deflation,
which would occur in a hard money economy,
where there's either a fixed supply of Bitcoin
or relatively scarce supply of gold, for instance,
that lays claim to an increasing capital stock
of goods and services.
Prices would naturally decline every year
as we became smarter.
So the market price becomes a reflection
of our collective knowledge.
So by letting prices decline naturally over time,
we can actually induce civilization.
But by trying to force prices higher all the time,
via the central bank, we're creating the opposite effect.
- So we talked a little bit about the Soviet Union,
and I happen to have lived through the collapse
of the Soviet Union.
And so what are the factors, the causes in your mind
to why the Soviet Union collapsed?
- So, definitely a multivariate situation.
I think there's a lot of factors.
One that jumped out to me recently,
again, from that documentary that I didn't note before,
was that at one point, Stalin eliminated,
I think, 75% of his intelligence force.
Which I think when you're competing
with another nation state,
and intelligence and covert operations
are very integral to your survival.
I think that was definitely a shot in the foot.
But at a higher level, I would say that capitalism
and communism were each resource strategies
of the 20th century nation state.
And they seem, we commonly consider them
to be diametrically opposed,
but there's actually a lot of commonality between the two.
The difference would be that in Soviet Russia,
as we alluded to earlier,
they tried to completely replace price signals
with this nationalistic faith and devotion.
So they removed the economic nerve signal,
which coordinated the allocation of capital over time.
So this inhibited their ability to generate wealth.
Whereas in the United States,
§22Transcript · 3:18:58–3:29:04
we left most markets open to free enterprise.
So we honored the integrity of price signals,
and we allowed people to trade and accumulate wealth.
So in every market, except the market for money,
both markets maintained a central bank,
as we've gotten to.
So I think in a really big picture standpoint,
that's why capitalism outcompetes communism,
is because it is able to generate more wealth
than communism was,
and therefore was able to put financial pressure
on the USSR until it reached the point of bankruptcy,
essentially.
This similar model, I would argue,
is that for the same reasons we saw capitalism
outcompete communism,
which I think the data that I recall
was that the USSR's economy was valued
at close to one third of its inputs.
So if you just didn't do anything inside the USSR
and just sold all the raw materials that were going into it,
it would have been worth three times as much
as sending the materials in,
running it through the efforts,
and then shipping things back out.
It was value destructive versus value creative.
And I would argue this is because,
again, the centralized computing model
versus decentralized computing model,
it just became more and more corrupt over time.
It got to the point where I think most of the occupations
in USSR towards the end were as informants.
All right, they were working for the state.
Jordan Peterson makes this point too,
that at some point it was actually illegal
to be sad in Soviet Russia,
because if you were sad,
you were contradicting the utopian view of the state.
So if you were sad,
you're implying the state's not doing something wrong.
But by the way, this does remind me,
do you know what Jordan Peterson thinks about Bitcoin
and about the future impact of Bitcoin on the society?
- No, I don't actually.
We're hopefully gonna be talking to him soon about that.
We did a book club on his book, "Maps of Meaning,"
and he engaged with us about it.
So we're hoping to deliver the orange bill to Mr. Peterson.
- The orange bill.
I think his audience is one of the most important audiences
in the world to understand Bitcoin.
These people that are conscientious and responsible,
I think they'll quickly understand
Bitcoin's value proposition
and help elucidate it to the world.
- I'm trying to remember what he said about it.
Basically, I think his support of Bitcoin is grounded
in the kind of people who are opposing Bitcoin.
So without understanding Bitcoin,
he starts to like Bitcoin
because of the people who are opposing it.
(Lex laughing)
I mean, that's partially why I am interested in Bitcoin.
It's like all the people in power
and all the kind of shady, fraudulent, non-genuine people
who are dismissing Bitcoin are making me think, hmm.
- One of Jordan's definitions of God is,
he says, "God is found in the truthful speech
"that rectifies pathological hierarchies."
And I think that is a beautiful definition
of what Bitcoin is doing in the world,
and that we have this pathological hierarchy
called central banking,
by which the rich get richer and the poor get poorer,
that is used as a mechanism for perpetual theft
and funding warfare at a global scale.
Like Ron Paul said, it's no coincidence
that the 20th century of total war
was also the century of central banking.
When you have an institution of currency counterfeiting,
which the central bank is,
you are no longer bounded by your own balance sheet
when you go to war.
You don't have to just go to war on your own resources.
You can now pillage the Commonwealth
and pilfer the savings of society as a whole
before you go bankrupt.
And indeed, this is what Hitler did, right?
Hitler hyperinflated in the Weimar Republic
to fund his war efforts.
And frankly, every dictator, every world war,
every internment camp in history was made possible
by the weaponization of money in fiat currency.
So I hope, I know Jordan Peterson
is a huge proponent of free speech.
And I think that's ultimately at its deepest essence
as what Bitcoin really is, right?
It is just the purest form of monetary speech we've ever had.
And by purifying that primary operating system
of human action, I think we can eliminate
this pathological hierarchy that is unfortunately
the dominant institution in the world today.
- Yeah, I'm definitely, especially with these explorations
of Bitcoin, this journey I've been on,
I'll revisit some of the aspects of human history
that I've been looking at, like Stalin and Hitler,
with a, from a perspective of a monetary perspective.
Like what are the effects of inflation?
How was it used as a tool in gaining power,
in maintaining power, in manipulating the populace,
in doing, in inflicting suffering
and I would say evil onto the world.
It's interesting.
It's interesting.
I'm gonna have to sort of go back into the whole.
So I tend to focus more on the human nature
and less about the tools that human nature leverages
to effect change, but you're right that in some sense,
money is a tool which can be effectively used
to perform moral and immoral actions,
depending on how it's used.
- And there's a feedback between the two, right?
There's, specifically with money itself,
it's the, I don't know,
here's the way I've been posing it lately,
is that I actually think,
we typically think of people as good or bad,
or again, trying to label people all the time,
but I think people and their characters
are emergent properties of the incentive structures
they inhabit.
- Yeah.
- So, what does Charlie Munger say?
Don't show me the incentives,
I'll show you the outcome kind of thing.
This is a flawed incentive structure
we've been operating within.
Now I'm not speaking to the intention,
people wanna argue with me all the time,
like Jerome Powell's not a bad guy,
he's doing his best at the central bank,
he's doing what he thinks is right, that's fine.
Whether that's true or not, it actually doesn't matter.
The intention is divergent from the outcome.
The institution that they are running
is premised on deception and theft,
and it is handicapping the productive economy.
So when we're, even the terms we use, printing money,
you're not creating any new value,
you're not infusing the economy with anything,
any new productive factors whatsoever.
You're just harvesting the economic surplus
created by entrepreneurs in the marketplace.
It's impossible to add any value to an economy
by increasing the paper claims on its savings.
So, there's a feedback loop between man and tool,
between creator and created,
and I think we have to honor the relationship
above either one, right?
Trying to put the right people in the system
or just build the right system, we need both.
- Do you think the interesting question
of whether the people that are in control of central banks
or in positions of power there,
if they themselves are malevolent,
they themselves are bad actors,
or they're simply like leaves floating along the river,
sort of just a cog in the machine,
an ant in an ant colony that operates
in a certain kind of way,
like where do you put the blame?
Do you put the blame on the way things are operating
onto the individuals or onto the system itself,
the idea behind the system?
Where, and is it useful to place the blame somewhere?
'Cause for me, it might be useful to understand that
in order to figure out what the solution is.
I tend to not put the blame on the individual.
Like I tend to believe most people are good
and want to see themselves as good.
And so in that case, it's very difficult
to be truly malevolent as you would need to be to control,
to gain centralized power at the large scale.
But I know a lot of conspiracy theorists
and just a lot of people think that there is evil,
humans in the world that seek power, maintain that power,
and they use that power for bad purposes.
I think they're just people
and they're just trying to get something for nothing
like all of us do.
- I like this framework of thought that you have.
- Honestly, and that's what the central bank is,
is the ultimate institution to get something for nothing.
You get a perpetual income stream,
the ability to acquire more and more territory in the world
through monopolizing the supply of money,
and you can literally print money.
You can buy your way out of anything
and buy your way into anything in the world.
So it is, I think the most,
§23Transcript · 3:29:06–3:37:51
I'd say the most,
but a group of very intelligent people
put this thing together and figured out
how to get something for nothing in perpetuity
by clouding people's conception of money.
And if we look at the central bank,
it's been around for a while,
but the latest implementation here in the US is the Fed.
It's about a hundred years old.
It's an analog age institution that I think has lost
a lot of its relevance in the modern age.
And I don't think it will survive
the ever galvanizing gaze of the digital age.
There's just too much sunlight, too much transparency.
Today, ideas move too quickly for something like this
to remain relevant.
But there are just people,
they are just seeking something for nothing.
But I think when you concentrate that much power
and that much control,
that much wealth into the hands of few,
it does change.
Hayek argued that the nature of power,
again, it's something that we all sort of desire.
To be completely powerless, you're really unhappy.
If you're totally powerless, you're a slave.
Someone else tells you what to do.
You have no autonomy.
It's miserable.
It makes the consolidation of power alluring
and that we want to protect ourselves
from that slave state, let's say.
But like many things, it can be taken too far.
And when you concentrate power into too few hands,
Hayek argues that it actually transforms.
It becomes something much more intoxicating
than it would be if it was held in a more distributed way.
And I think that gets into a lot of these,
I don't know if they call themselves elites
or people call them elites or whatever,
like let's say shareholders of central banks,
people participating in the World Economic Forum,
things like this.
They come, I guess the incentives, right?
The incentive schema they're in is rewarding them
constantly, telling them everything they're doing,
saying and thinking is correct
'cause they just keep getting richer all the time.
And it leads you closer to this definition of evil,
which in the book "Paradise Lost,"
Friedman said, "Evil is the force
which believes its knowledge is complete."
So these people become more and more convinced
that they have the plan or they have the course of action
that will save the world,
that if everyone would just listen to them,
that they would lead us to the promised land, right?
Whether this is Bill Gates saving us from a climate crisis
or any of these other economic policies
that are targeted at a certain outcome,
but almost always diverge almost perfectly
from that outcome, creating its opposite effect.
I think that's the problem,
that we have this mechanism that can concentrate wealth
and power into the hands of so few
that it leads to the proliferation of evil,
meaning that it convinces people
that their knowledge is complete.
Whereas something like a Bitcoin
almost forces the opposite outcome.
In a Bitcoin-denominated world, a pure free market,
the consumer is sovereign.
So you cannot earn value in the world
unless you are serving your fellow man,
unless they have expressed
through their buy and sell decisions in the marketplace,
right, you've created a satisfaction of a particular want
that they value so much,
they've acquired so much of your good or service
that you've become rich.
You can only maintain that position of wealth
so long as you continue to serve your fellow man.
So it changes the incentives such that dominance
in the world can no longer be paired with coercion,
it has to be paired with competence.
And that's how this, when we say Bitcoin fixes this,
that's what we mean.
Like it restores that skin in the game,
that balance of incentives and disincentives
that help us properly navigate reality.
And it prevents the buildup of systemic rot
like we see with the central bank.
- What books, people love this question,
and you're exceptionally well-read,
you've explored all kinds of ideas.
Is there some books, technical, fiction, philosophical,
coloring books, children's books,
had an impact on your life
and you would maybe recommend to others
that they should read?
- I think we mentioned a couple of them here today,
but I think a really useful triplet of books
that I've been recommending recently
to help diffuse this materialist worldview of reality,
where we still think in kind of the Newtonian model
that it's atoms and cause and effect.
I'd first recommend Jordan Peterson's book,
"Maps of Meaning."
It's a deep dive into mythology
and how it's developed over the course of history
and how it's reflected both in our social structures
and our intra-psychic nature really,
and how they come to reflect one another in a way,
like the way we think again, shapes the world,
and then the way the world is shaped,
shapes the way we think.
That's an excellent book.
It's very dense and difficult read.
Actually, this trilogy is pretty brutal,
probably take you a year to read, hours a day.
The second one I mentioned earlier was "Human Action"
by Mises.
The ultimate tome on Austrian economics
will help explicate this realm of relevance,
I think, that economics truly is,
where, again, there are things,
and then these things become means or ends
once we channel our purpose through them.
So this realm of non-materialist relevance
that I think's really important to grasping economics
at a first principles level,
I think that book lays it out tremendously.
And then the last one would be,
I think I mentioned this at the beginning,
was that book "Lila" by Robert Persig,
where he's making the case that value is fundamental.
And all of these books,
they kind of all point to that, actually.
They're pointing back to value being the fundamental thing,
values expressed through moral action
as being the fundamental substrate of reality.
So it'll, if you're like me,
I grew up quite scientific-minded,
it'll help diffuse some of that
and maybe retrain you to the other side of reality.
- So you said these books are difficult.
Maybe you can comment on which aspect is difficult.
Is it just the technical nature?
Is it the length?
Is it the depth of the ideas
or how long it takes to integrate them?
And more, sort of importantly,
is there recommendation, advice you can give
on how to integrate these ideas,
how to read, how to learn in the spaces
from your own life?
Like, how do you enjoy taking in ideas?
And this could be for these books,
but also in the Bitcoin world
and reading a bunch of different ideas written by others,
just integrating stuff,
even watching podcasts and all those kinds of things.
- Yeah, I'm a reader.
I love to read.
One of the most useful things I've ever done
was take a speed reading course.
I actually think there's a version of this
available on Tim Ferriss' website.
It's like a 30-minute speed reading course.
It's all about eye movement.
Instead of moving your eye continuously,
line over line, it's more about jumping in your brain.
You can train your brain to just absorb words
in their totality versus kind of reading word by word.
- And also not,
I haven't fully taken that journey actually,
but I remember taking a few steps on that journey,
realizing that I'm speaking inside my head.
I'm saying the words inside my head
and that's actually getting in the way.
- That's right.
- So there's a lot of little hacks like that.
I may be lazily, I'll have to,
now that you mentioned, I'll have to revisit this.
But I have convinced myself
that I don't need to read faster
because that's not ultimately the bottleneck.
The bottleneck is in the me thinking about stuff.
In fact, I like reading really slowly
or so I convinced myself.
Because ultimately it's not about gaining more information.
It's about time spent thinking deeply.
- Yes.
- But maybe that's just me being very lazy
'cause yes, it's true.
It's important to think deeply,
but maybe I could speed up the consumption of information.
- It's fine.
I like to be dynamic actually.
So usually speed reading initially
§24Transcript · 3:37:55–3:46:40
and that diffused that internal dialogue for me.
'Cause when I was reading one word at a time,
I was having that too.
You almost get a feedback in your own head.
You're reading the word out loud
and it's clouding your thoughts.
If you're speed reading, you can't do that.
You're just, you're taking in groups of words at a time
so you can't internally verbalize it, I guess.
And then I also am really big on annotating,
underlining, writing in the margins.
I prefer a physical book,
but I also read the Kindle a lot
'cause it's just so convenient.
Anywhere you're waiting in line
or every night before bed, I'm reading my Kindle.
And I also advocate rereading a lot.
So if you found something that struck you at a deep level,
you found particularly fascinating,
like you have to listen to that.
That's your, I don't know, your mind or your spirit signal
that that is something meaningful to you.
And you should, to your point, reread it,
sit with it for a long time, write about it.
And that becomes the ultimate triumvirate
of synthesizing an idea, actually.
If you can read about it and then write about it
and then go and talk about it,
you get this crystallization of understanding
that's just not possible doing any one of the three
or any two of the three.
So I definitely highly recommend people to do that.
And in terms of how are those books difficult?
I mean, in every way, they're all long books.
In terms of density, I would say "Lila" is the least dense.
Maybe "Maps of Meaning."
I don't know, but "Maps of Meaning"
and "Human Action" are both extremely dense.
But they're just, I had to read those books very slow.
You just have to take your time with them.
To give you an idea with Jordan Peterson,
he's said this a lot with "Maps of Meaning."
He spent three hours a day writing for 15 years
to write that book.
It's probably, I think it's a 600 page book.
He said he estimates he rewrote every sentence in the book
50 times, five zero, to try and get it just perfected.
And when you read these sentences,
you can tell that he rewrote it 50 times.
- I've used actually Anki for space repetition.
It's like a piece of, it's an app.
I'm not sure if you're familiar with it,
but it allows you to load in facts or terms
or entire paragraphs.
And then it brings them, you review them every day.
And then it brings them up less and less often over time
as you show yourself being able to remember
the thing that you wanted to memorize.
And oftentimes when I'm reading,
what I want to memorize is the key idea.
But also I use it for, I'm terrible with names,
so I started to use it for names too,
of names of people, names of people that I want to remember.
And also throughout history and also my own personal life,
but also events.
You know, dates to me are usually not important,
but sometimes dates are really important.
And so it's really useful.
I recommend it highly.
Naval, I think, mentioned a piece of software
called Readwise or something like that,
that I hope I'm saying that correctly.
It's something like that.
And what it does is it goes to your highlights
from your Kindle or the various places
where you highlight stuff that integrates with Goodreads.
And it does the same kind of space repetition,
but for things you've highlighted.
- That's super cool.
- It sends an email every day.
It's been really, I recommend it highly
'cause it sends like to me an email form,
a selection of the things I've highlighted
and previous things I've read.
And it's like this weird, like shock to your memory
that sprinkles, like I'll have a,
probably way too much Orwell in there.
And it just kind of like, it brings you back.
And these ideas that are,
because what you realize depending on how you highlight,
but at least for me,
and I think it's probably true for a lot of people,
the things you've highlighted had at that moment
and like an emotional impact on you.
And so like these things are just like
hitting you hard again.
It's like, whoa, it might not be meaningful
to anyone else except you.
And it's something I recommend.
You never know with these like hacks or tools and so on,
like what's actually BS and what is amazing.
And that one is kind of amazing.
So at least for me, it works for me and Naval.
I think he's the one.
- Read wise you said.
- Read wise or something close to that.
It could be read something else,
like read wealth or something.
The one other thing I really like,
and this is more of a new one is,
I used to always listen to music at the gym,
but now I've just,
'cause I'm so backlogged on podcasts, right?
There's just, there's so many.
I exclusively listen to podcasts when I'm walking
or when I'm at the gym,
anytime I'm doing something that I can't read basically.
And I think there's something really special
about exercise and ideation.
I mean, I don't know if this happens to everyone,
but my creative juices just go ballistic
when I'm at the gym.
Like I hit a certain point of,
I guess heart rate and you're sweating enough,
then the ideas just start to flow.
So I'm basically at the gym now listening to podcasts,
exercising as fast as I can to try to get to that state of,
where you're just straining,
you're strenuous exercise, I guess you would say.
And then I'm end up typing notes into my phone
as fast as I can with all these ideas that are flowing.
So I've created a lot of good writing out of that.
- Yeah, it's kind of work.
So I do running quite a bit.
So running outside and I'll listen to,
I've been, okay, I told myself this has been going on
for about a year is I only listen like the stuff
that's either World War II or World War I related.
So Hitler, Stalin, like difficult historical stuff.
And also listen to brown noise.
So those are the two modes.
So brown noise helps me,
this is like white noise, but like deeper, I guess.
It helps me remove the world.
And at the gym, there's a lot of distractions.
When you're running, there's a lot of distractions.
It helps me remove the world.
So one, I'll be listening to difficult historical ideas.
And then when my mind is all of a sudden
starting to generate ideas,
I'll listen to brown noise and force myself to think.
It's kind of, it's meditative in a sense.
And your mind wants to be lazy.
You want to, it's hard, man, like running and thinking
in the sense that some of the ideas
that come into your head are pretty heavy.
It's about your own life.
It's your own demons come in there,
but also just difficult ideas
that require you thinking through
and persevering through that,
like not letting yourself get lazy
and like thinking through it has been really,
for me, rewarding in the same way
that you're saying it is for you.
It's true that like podcasts and music,
like shallow, like funny podcasts or music
have been a kind of filler distraction.
But informational podcasts,
like podcasts that have some depths of ideas
or audio books have been truly rewarding.
I try to listen now less and less to podcasts
that are just fun.
'Cause I feel like I enjoy it too much
and I don't allow my mind to get bored
and to think through stuff, to explore ideas.
It's so easy to fill the space
that usually would be filled with thought
and instead fill it with fun podcasts.
Like there's a bunch of comedy podcasts I really enjoy.
So there's value to that, of course,
but you have to realize it's entertainment.
It's not, you don't get much value except entertainment.
- Right, right.
And there's utility to the boredom too, I think.
To give your mind the space,
I guess your subconscious maybe the space
to chew on some of these problems, right?
Where you've imbibed so much knowledge,
you've highlighted and thought about something,
but then you need to stop thinking about it for a while
and let it marinate in the subconscious.
And then these flashes of insight
that people have described,
sometimes I get them in the middle of the night,
like I just wake up from a dream and have them
and I got to write it down.
Or sometimes it's in nature, taking a walk.
But I think that's very important too.
We can't just brute force our way into understanding.
§25Transcript · 3:46:43–3:55:01
You know, there's this interplay
between kind of the brute force reading intake
and then just relaxing, meditating, sleeping, being bored,
letting your subconscious do the heavy lifting.
- And there's, you should be aware of the fact
that there's a war for your attention going on.
So there's a lot of, there's been better and better
and better mechanisms that are designed
to steal your attention.
So I kind of see it as a war zone
between my right for boredom
and the internet wanting your attention.
In fact, Clubhouse as an app has been,
I'm probably not gonna use Clubhouse much anymore.
There's some aspect of my own inner loneliness
and whatever it is that pulled me into Clubhouse
a little bit too much to where it robbed me
from that lonely time alone,
where I sit and listen to Bruce Springsteen
and think about life.
So I wanna-
- That's way more important.
- It's way more, well, yeah, at least, you know,
it's all in balance.
'Cause there is a Clubhouse,
like a lot of these social networks when you use, right,
can be a way to discover new ideas, new people.
But the boredom is just being alone
with your thoughts is priceless.
- Absolutely.
And you gotta know yourself, right?
Like it took me a long time to realize I need solitude.
- Yeah.
- Like just how I'm wired, how I'm built.
I need like an hour a day solitude.
So you gotta listen to that part of yourself.
You might be compromising something like that
where you feel like you always need to be
with your girlfriend or whatever it may be.
But I would suggest listening to that voice.
- Yeah, I try to remember things
that made me feel good over time,
like long-term had positive impact
and long-term had negative impact
and do more of the former and less of the latter.
We don't often think like that.
You know, we talked offline about like carnivore diets,
for example.
I try to remember that carbs don't make me feel good.
- Yeah.
- In the moment, it's hard to remember that.
But you have to remember that that's the case.
And in the same way, exercise,
it's hard to remember that exercise makes me feel good.
Like-
- Especially when it's time to go to the gym.
- Especially when it's time to go to the gym.
But you should remember that
because the kind of person you are without exercise,
for me, just like he's beautifully said,
that you have to know yourself.
The kind of person I am without exercise
is a less good person, a person I'm less proud of.
- The food thing is so hard.
By the way, I still, you know,
I can't tell you how many times I've learned the lesson.
Like, don't eat that.
But then, you know, you go a few weeks
of not eating whatever that is,
and you're feeling good.
And then you're, I don't know,
something creeps up inside you.
Like, ah, you could just have one,
or you could just do this.
But for me, it's sugar.
Like, sugar just makes me feel terrible.
But I always, not always, but if it's been a long time,
I start to make that exception in my mind.
Like, oh, you can have a little bit.
And then I eat it and I feel terrible.
So I don't know how many times I've done that dance,
but it's not cool.
- Well, it depends on how painful it is,
and then you learn the lesson.
I actually embrace the fact
that I'll never learn the lesson with vodka.
Every time I drink, especially with Russians,
is like, I quit drinking every time.
And then I forget.
There's like a slow drop off.
It'll be like two weeks, and then.
- Na zdorovie.
- Na zdorovie.
(laughing)
Very good.
So it never makes me feel good.
It never results in anything good,
except the beautiful social chaos.
- Yeah.
- Which is ultimately somehow, there's value to chaos too.
- Yes.
- There's value to that.
Whatever the hell stupid stuff you do when you get trashed,
the over the top emotion of love usually,
or whatever, camaraderie, there's value to that too.
Like, as I get older, I realize,
'cause the world, sometimes, especially when you get older
and the world wants you to be an adult,
in order to maintain the youthful spirit,
you have to use all the tools you can.
- Yeah.
- And alcohol is one of them.
- Right.
- To do all the stupid shit you can,
even if you're like getting older.
- To lower the inhibitions.
- Lower the inhibitions.
- Against that taste of uncertainty
that is the sweetness of life, right?
To be able to go out and be a flaneur at a party
and not really know what you're gonna do.
And we have this draw to the wild side of life.
As much as we try and build up order around ourselves,
I think there's always gonna be an appetite for that.
I've always, most of my life,
I've always been a social drinker,
but I actually gave up alcohol a year ago.
And I would add that to the idea,
the repertoire for dealing with bigger ideas.
Because alcohol's fun, it's a good times,
it can be analgesic, it can give you all these benefits
if you use the right amounts.
But I got to the point, personally,
where I was trying to wrestle with these ideas
that are just so much bigger than me.
And I have this backlog of books
that was growing faster than I could read them,
that I just reached a point where I decided
I wanted to start making sacrifices toward attaining that.
And alcohol was just an easy one.
Even if you just drink socially on the weekends,
you're probably spending five to 10 hours drinking,
and then maybe another, what,
five to 10 hours recovering, perhaps, on the day after.
So it was a difficult transition initially,
but once you get through a couple of months,
I feel amazing without it.
I sleep better than ever.
My workouts are better than ever.
I'm sharper than ever, I'm more lucid.
So I'm not trying to be a proponent for not drinking,
but I just want to say--
- But you're a proponent for sacrifice in some dimensions.
- I am a big proponent for sacrifice, yes.
- Is there advice you would give to a young person today,
curious about Bitcoin,
curious about how they succeed in the world,
or both career-wise and just in life in general?
- I mean, the strongest piece of advice I have for,
this is beyond just Bitcoin,
this is you managing your own personal and financial affairs
is that you need to invest in knowledge first.
It's not good enough to just follow the crowd
and buy a 60/40 portfolio and put it in a Roth IRA
and plan on social security.
I mean, the world's changing much faster
than any existing institution
is going to be able to keep up with.
So that's why I named the show, "The Question, What Is Money?"
Like, I think that, to me,
is the rabbit that took me down the rabbit hole.
It's like just asking that question
naturally progressed to these other questions,
like what is value, what is government,
what is the purpose of society, speech,
all of these things.
So I would encourage people to arm yourself
with knowledge and study.
A lot of financial people always give you a line of advice
and then say, "This is not financial advice."
I'm like, "This is financial advice."
Like, study, study, learn.
- Knowledge is power.
- Yeah.
- This is official financial advice.
- And you're exercising your divine trait,
which is the logos, right?
That we are these animals that can tell and believe stories.
So it feels like almost a sacred duty
to really sharpen that part of ourselves
and use it to create the best world possible.
- And then the second one was the, I think,
health and fitness stuff.
Maybe everyone does this in their 20s.
They just live a little fast and beat themselves up.
Not that I wasn't, like I was living well
and successful by a lot of measures,
but I wish I had maybe gotten my act together
a little bit sooner.
I just think--
§26Transcript · 3:55:05–4:03:42
- Fitness, morality-wise.
- Yeah, drinking, I think morality and eating.
You know, I just was kind of doing whatever I wanted
in some ways, let's say.
- Is there a value to a trajectory
that includes a lot of mistakes?
So maybe you're supposed to make the mistakes in your 20s.
- That's a great point.
- Maybe the 20s are all about the mistakes.
Accumulate the most mistakes possible.
- Yeah, I don't--
- As quickly as possible.
(laughing)
- I don't regret any of it,
but now that I'm kind of in this place where I feel good
and I know the value of a good night's sleep,
I've more deeply explored my own potential
that I feel maybe a little regretful
that I didn't do this earlier, is all I'm saying.
So maybe just exploring different sides of yourself, right?
See what it's like to go and make a bunch of mistakes
and be wild and crazy,
and then maybe try to walk the straight and narrow
for a few months and just see what it's like.
- There's probably a guy doing vodka shots right now
listening to this podcast with his buddies,
and if you are, please take a shot for us
for all the mistakes you should make in your 20s.
And what about love?
We talked about money is ultimately a mechanism
by which you can pave a moral path through life.
To me, one of the purest expressions
that is love broadly defined for a family, for others,
for knowledge, for the world,
is basically an optimistic open view to the world
that embraces all that is beautiful about this world.
So do you think about love often in a personal sense,
romantic, family, friendship, and in the broad sense
about its value in a successful life?
- Yeah, of course.
I'm blessed to have a two and a half year old daughter,
and love is a word we throw around.
I love these potato chips.
I love you, man.
I love you, my daughter.
It's got so many different intensities,
I guess you might say.
I don't know, my intuition is that
it is something very fundamental to the universe.
Again, I know words don't do it justice,
but if we just proxy love with selfless action,
the whole damn universe is selflessly acting, right?
It's just unfolding.
And it may sound a bit hippie-dippie,
but my intuition is just that love is the core of it somehow.
I don't have anything to back that up, really.
It's just...
- In the way you're framing it,
it's making me think that love,
we talked about sort of meditation,
as opposed to thinking from an egocentric perspective
of you, the individual operating in this world,
is allowing you to be empathetic towards the world
and thereby think of the universe,
think of the world acting through you,
almost like accepting this notion that ideas have you,
you don't have ideas.
That you're not existing in the universe,
the universe is existing through you.
It's sort of like, that's what selfless
in that context means, is embracing that thought.
That's a weird thought.
That's a weird thought that we're just here
for a little bit of time.
These meat vehicles, receptacles,
and this much bigger thing is just using us,
not in a malevolent way, but just like a river flows,
is using us to create more and more beautiful things.
- Yes, yes, more and more beautiful things.
We are the universe experiencing itself, frankly.
- That's a trippy thought, man.
That in some sense, the universe created us
to experience itself.
- And we are one of the highest forms of beauty
that nature has created.
If we just think one of the most complex
and adaptive thing, we're a reflection of nature.
And another thing that comes to mind here is that,
Dalio has this quote where he says,
"Truth, or more accurately, an accurate depiction
"of reality is necessary for any good outcome."
So when we think that love or value is primary,
I think that too reinforces this thesis
that acting out of love or acting out of proper moral action,
you're best reflecting the fundamental nature of reality.
Therefore, you're best creating the best possible outcomes
or the things of the most beauty,
whether that's your artistic expression,
your children, your business, whatever it is.
And Jordan Peterson goes deep into that
where you have to listen to that sense of meaning
in your life, or you might have some decision on paper
that's so great this way,
but your heart says no, your heart says otherwise.
I've tried to listen to my heart throughout
and I think that creates the best outcomes.
- But nevertheless, does it make you sad
that you in particular, Robert,
are gonna be dead pretty soon?
We talk about scarcity, one of the certain things
that ensure the scarcity of the human experience
is the fact that you and your consciousness
are gonna be done, they have a deadline.
- Only time and Bitcoin are absolutely scarce.
I'm fortunate that when I,
I guess I got started on this philosophical journey
a bit when I was younger,
but I got into Musashi and Sun Tzu quite a bit
who wrote, Musashi wrote the "Book of Five Rings."
Sun Tzu wrote "The Art of War."
And one of the things that, I mean,
these guys were just absolute beasts.
They lived and died by the sword
and they were just very great equanimity
about all things in life.
And I also found this kind of in the Stoic philosophy
where they just are very cool with everything.
And one of the lines there is that,
"The way of the warrior
"is the resolute acceptance of death."
And so I've always tried to think about that.
Like, of course I experienced fear.
I experienced everything that you do in a meat suit, right?
Like anxiety and all the things,
but I always try to have that higher order view of myself
and that it's just a certain experience occurring
at a certain level,
but it shouldn't override your kind of highest order self.
That's just resolutely accepted death
and that this is your one play in life.
So hopefully that propels me towards proper action.
- I think scarcity cannot help but lead to something good.
Just like with this conversation,
sadly must come to an end.
The scarcity of it is what makes it beautiful.
So Robert, this was one of my favorite conversations,
philosophically and in every other level,
just the ideas and the way you express them around Bitcoin,
around morality, around money,
has been really inspiring and really educational.
And I'm glad you're out there fighting the good fight.
And I'm glad you're wasting all of this time with me.
It was really fun.
And thank you for coming down to Texas
and having some good old brisket together.
This was really fun, man.
- This was awesome, Lex.
Thanks for having me, man.
- Thanks for listening to this conversation
with Robert Breedlove.
And thank you to Fundrise, Element, Munkpack,
and BetterHelp.
Check them out in the description to support this podcast.
And now let me leave you with some words
from Nassim Nicholas Taleb.
Anti-fragility is beyond resilience and robustness.
The resilient resists shocks and stay the same.
The anti-fragile gets better.
Thank you for listening and hope to see you next time.
(upbeat music)
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