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Eric Yakes | The Monetary Revolution | Simply Bitcoin IRL · Simply Bitcoin

0:00
Bo welcome to another episode of Simply Bitcoin IRL.
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Today, we have a very special show, we have Eric yikes.
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I hope I pronounced that correctly, maybe I totally
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butchered it, I'm really excited but before we get to that, I
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They don't even have a cell button, which I think is pretty
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dope. Anyways guys, check out Swan
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Bitcoin.com. I also want to welcome my
0:39
guests. Thank you so much for joining us
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today. Eric, I always get so nervous
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with the pronunciation pronunciation pronounciations of
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the last names. I butcher them all the time.
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Yeah. We got a lot of crazy people in
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the industry to. So there's a lot of unique last
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names, but ya know, it happens all the time, but you hit the
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nail on the head. Awesome.
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So dude, I'm in a minute. I you first came on my show a
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long time ago and you don't have any followers.
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I think you just dropped your book, then I saw your career
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completely because that's how it is man, you bring up the proof
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of work in Bitcoin work speaks for itself.
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People acknowledge that people see it and it doesn't matter
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what your skin color is. Where you're from, right people?
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Judge you just on your work, right?
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I think you were telling me at the time that you were living at
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your mom. His house while you were
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writing, this book was a long time ago, so what has changed in
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your life, as everything changed, as usual perspective,
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change you've went on the Peter McCormack podcast, you know that
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podcast gets hundreds of thousands, if not millions of
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listens and Views talk to me, talk to me about your ex.
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Yeah man, it's been a ride and I completely agree.
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I was definitely amazed at just how you know the proof-of-work
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aspect of the industry and just how quickly people We'll bring
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you up and how quickly people will Point towards good work and
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yeah you know when I when I was writing the book I was just like
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thinking through scenarios. It's like okay, you know, like
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I'm going to self publish this thing.
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I didn't really want to go after, you know, a publishing
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deal or anything like that. I was like, if I do that, I know
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that it's, you know, number one, they get a lot more control over
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the book and they're going to make it something that is going
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to be much more easier for them to Market in a lot of ways.
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If I even got the deal then there's all the legwork.
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You have to put in just to get there and I was like, I don't
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really want it to be that, I just wanted to be whatever I
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want it to be and if it works great and if not, you know, at
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least we'll have a really clear understanding of what I think
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about the industry. And then to my amazement.
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Yeah, the book just took off and and it's been awesome.
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It's been a ride. I've met a lot of really cool
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people in the industry, been on some cool podcasts.
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And, you know, I think I've because I'm trying to think the
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last time I was on the show that was probably right about a year
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ago from right now. And you know, I just been
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meeting people in the industry, trying to put together an idea.
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I spent a good amount of time, trying to build a company.
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And I think I really quickly came to the idea that on kind of
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the fun side of things, there's a lot of room for people to be
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allocating investment to the industry and the right ways and
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it's something that I enjoy doing.
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So I've been working towards getting that set up and
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hopefully that'll be something that comes next year.
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And other than that, And we're still in Mom's basement.
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I'm still holding out and kind of investing.
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A lot of what I have into this idea and and yeah, I'm just, I'm
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holding out until I get a little bit more Financial Security
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around that end but that'll probably be a next year thing
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too as well. So thanks to Mom for, you know,
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holding out with me. Yeah.
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And I think, you know, you are not in that situation yourself.
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I think there's a lot of people specifically, the millennial
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generation look like Millennia. To me looked like my age,
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roughly my age. It, look the dude.
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This fact, the fact speaks for itself man.
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The their own data sees that in the beginning of 2020, the
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housing prices in the United States, just went completely
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parabolic. And the reality is that if
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you're under the age of 35 you're significantly poorer than
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the generation that came before you.
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And it's because when they printed all this money, the only
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people that benefited from it where the financial Elites
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meaning people that had the means to Save and assets either
4:31
equities or real estate therefore benefit from asset
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inflation. If you were just a regular Joe
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working for cash working for Fiat and you didn't have the
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luxury to, you know, to put some aside the reality is that over
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these last ten years, when this QE experiments started in 2008,
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2009 your future was stolen, your time was stolen from.
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Right? And I think that that's why
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we're all here and I know that there's a lot of people in your
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situation but it was I want to go back to your book, right?
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It's called the 7th property. First of all, it had one of the
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best explanations for proof of work that I've ever read.
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And I'm not just saying that because you come on the show it
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was it was extremely well, descripted.
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I even the first time he came on the show, I had to read.
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I was like, dude, this is insane.
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It was actually a screenshot from BTC sessions.
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Been that pointed it out. I was like, this is crazy.
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So Eric what is your background and what originally inspired you
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to write? Entire book because that's
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definitely not an easy undertaking.
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Like, it's not something that you just wake up.
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You're like, okay, let me write a book.
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Write it something that you clearly had to sacrifice time.
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You have to sacrifice effort in order to do that.
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So what's your background and what inspired you to write this
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book in the first place? Yeah, totally man.
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You know, so I come from the traditional Finance world, I was
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working for a private Equity Fund and I've been, you know,
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when I first heard about Bitcoin that was in like, Teen.
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And I wrote it off. I didn't understand it very well
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at all. But I was just like, you know,
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based on my initial assessment there's no way I could really
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value it. And, you know, from my
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background I had a lot of like this value investing framework.
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I was a CFA. So you know, a lot of what you
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learn in that curriculum doesn't really necessarily apply.
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It's not that it's wrong. It's just you don't know.
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Nobody's ever really thought about, you know what makes a
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monetary good valuable and you know so it's like is a few years
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and then I had a friend who was A lot more Tech focused who's
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like this thing's really cool does cool stuff.
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Any kind of probe me to start looking into it more and and
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then once I came around to realizing like, oh, this is a
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solution, the Central Banking, that's when I was like, okay.
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This is really interesting to me.
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I was well, aware of all the issues of Central Banking.
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I always had more of like, a libertarian view of the world
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and, you know, believed in free markets.
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And then once I got hooked up spending a lot of my free time
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just reading about Bitcoin and it was a huge decision for me to
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jump into all this. This, you know, I was always
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very career-focused. I getting a job in private
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Equity. I worked very hard towards
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starting. When I was like, a freshman in
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college, and I was there and I was doing it.
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I was like, look I'm not totally in love with what we're doing.
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I didn't realize that I wasn't what didn't realize going into
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it, that I wouldn't be, I wasn't quite as passionate about it, as
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I thought I would be in. Like, one day, it hit me over
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the head and I was like, dude, you spent all this time, reading
7:23
about Bitcoin. You should just jump into this
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industry. And, you know, at that time like
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I own my place. I was kind of like, okay, well
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look, if I sell my place and I moved back home.
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I could, you know that gives me a few years, Runway to kind of
7:35
get things figured out. And, and one day I just decided
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to say fuck it. I'm gonna jump into the industry
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and put it together. I think what I wanted to
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prioritize was, you know, I wanted to do things right.
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I think that a lot of people or off and I'll see, you know,
7:52
there's ways to gain a following in generate Revenue that aren't
7:58
probably good for you in the long term.
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ERM from like a career decision. If you're, you know, want to be
8:03
just like an influencer or something, and like the media
8:04
side of, this was always appealing to me.
8:08
I feel like often really like analytical people aren't as
8:11
drawn to Media aspects, and that was always something that I felt
8:15
made me a bit unique and that, you know, I can also do that
8:18
kind of stuff. I can be a normal dude, have a
8:20
conversation as well as get into the weeds around the analytical
8:24
side. So it's kind of like, okay,
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that's something I want to do, but how do I really want to do
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that? Feels like, You know, I want to
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I want understand this stuff is best as I can.
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I don't want to go out there and just start talking until I
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really like, actually have my head around it.
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And step one was really just getting deep into my
8:39
understanding of Bitcoin and the industry as a whole.
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I think when I was first heard about Bitcoin before I jumped
8:45
into everything, you know I spent there was a period of time
8:49
maybe six to nine months kind of doing the bull run.
8:53
When I was reading it all coins trying to understand it just
8:55
like the Spider Web of Knowledge where when you don't know
8:58
anything about how this works. It's the technological aspects.
9:02
Really interesting. It's like, oh, well, they can
9:03
use as proof of work. What's proof of stake?
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What's like, I don't know. There's all these other
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consensus algorithms I looked into back then, like, there's
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one called like, delegated proof of stake.
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I think. And I was like, oh, this is
9:13
interesting. I don't really understand it,
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but it must be superior. And then, you know, I eventually
9:18
came back around to the idea where I was like I'm pretty
9:20
confident that coin. I was never like before I jumped
9:23
into this I wasn't like a super hardcore Maxi or anything.
9:28
And I'd say I'm still definitely one of them.
9:29
Like moderate open-minded people, but I'm totally 100%
9:33
focused on bitcoin and I think that, you know, that this is all
9:35
that matters. If we're going to have an
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immutable base layer to build off of financial system.
9:40
If you throw that out the window, the none of it matters
9:42
anymore. But that being said, I, you
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know, when I was jumping into it, I was like, okay, well, I
9:49
need to get as deep as I possibly can, in Bitcoin and
9:51
understand all these aspects. And then, you know, I put
9:53
together like, you know, back then this was right before, you
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know, like, right at the beginning of 2020 and I put
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together this curriculum for myself and I, you know, that was
10:05
just places all over on Twitter different blogs different books.
10:11
I actually didn't read really and and they're also a lot less
10:14
Bitcoin books back then but I really didn't read many Bitcoin
10:16
books only thing. I think I think I'd only read
10:19
Bitcoin standard. There was a textbook by
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Princeton professor and a few others that was kind of more of
10:26
a crypto based one that I had read through those actually.
10:29
A good. There is a lot of interesting.
10:34
It was called Bitcoin and cryptocurrency technologies that
10:38
was actually really helpful because it was pretty Technical
10:40
and I like that one. But anyways, there is a lot of
10:43
different things. I wanted to understand, you
10:44
know, I being a fides and understand the technology side
10:47
of the industry that well, I had looked at investments in
10:51
companies that were, you know, in different areas of tech, but
10:55
I wasn't an expert on. You know, I didn't understand
10:57
computers out well at all and that was And of one of the areas
11:00
that I just needed to like, build from the bottom up, get a
11:03
decent, understanding of them. By no means an expert around any
11:06
of it. But I needed to kind of build up
11:08
a base layer knowledge. And, you know, I wanted to get
11:12
to Jimmy songs programming Bitcoin book for my
11:15
understanding of Bitcoin because in my old job, if I wanted to
11:20
understand a company that we are going to buy in his background,
11:24
you know, when I was working, my private Equity Fund, we are
11:25
buyout fund. So, like, what we would do is,
11:27
we'd buy out entire companies and Much more complicated
11:30
process than just making like, a minority investment something
11:33
because there's a lot more that you deal with when you own the
11:35
entire company. So we have very technical due,
11:38
diligence around what we're looking to buy.
11:40
And I had to understand every aspect of the company that we
11:43
were going to buy. I wanted to apply that same
11:46
logic to pick one and go like okay well if I'm you know, I
11:49
don't want to just be some Finance guy who kind of knows
11:52
some talking points about Bitcoin.
11:53
I wanted to get deeper on the technical side and really get
11:56
under the hood. And look at the code and be able
11:57
to interpret that. So I gave myself Myself kind of
12:00
like a beginner level python understanding before I got into
12:04
that. And then after I dread like
12:06
mastering Bitcoin a few other things I did that and then I was
12:09
like, okay, I think I have a pretty good understanding of
12:11
Bitcoin. I you know picked around
12:14
different different books around, you know, like Austrian
12:16
economics, monetary history, monetary Theory, you know, like
12:20
nigs avos writing was instrumental in helping me
12:23
really get my head around. A lot of that.
12:25
I had like a high-level understanding of it before, but
12:27
I wanted to get deeper and then the big thing, Particularly back
12:31
then that I thought was missing is not a lot of people were
12:34
really talking though. You know when the Bitcoin
12:36
standard came out people talked about monetary history quite a
12:39
bit. Not a lot of people were
12:40
actually talking about how the banking system works though, and
12:42
I was like this is a huge piece. I mean, Bitcoin solves a
12:46
fundamental issue with money. It also solves the banking
12:49
system problem in to really understand money today.
12:51
You have to understand how the banking system works without
12:53
that if we're just talking about primitive forms of money and how
12:58
what was valuable about those without Understanding, what's
13:00
wrong with our current banking system?
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It's really hard to make a complete argument for Bitcoins
13:05
value. So I wanted to get deeper into
13:07
those areas and just reading old Federal Reserve, papers, and
13:10
other more kind of like technical reports.
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And and then yeah, after I kind of went through all that I was
13:17
like, look, I need a, I need to be writing this stuff down at a
13:20
bunch of notes was like, I need to write it down so I can get a
13:22
better understanding and and then through that process of
13:26
just like, writing it out, I was like, oh, I could use some blog
13:28
posts, blah, blah, blah, Started writing a lot.
13:31
And then I was like, I'm writing so much here that, you know, I
13:35
guess I could just turn this into a book and that's kind of
13:37
how it happened. I was like, I mean, I don't know
13:40
I think that there's definitely a need for it and anybody can
13:42
write a book and then that led me to the idea of like, well do
13:45
I self publisher published? And I was kind of like God, I'd
13:48
rather publish it myself. Really make it what I wanted to
13:50
be and if it works it works and if it doesn't it doesn't and and
13:56
yeah and that's kind of how it really all started and try to
13:59
remember yet another question to I think, I I'm trying to
14:02
remember it, I don't remember it either, but I think that I
14:08
really appreciate because it kind of, you know, gives a
14:10
perspective of, you know, again, I think there's a lot of
14:13
Millennials in that type of situation where they, you know,
14:17
they find themselves like the reality is man, we got screwed
14:22
like we got the short end of the stick so I think I really
14:25
appreciated that because it really describes your Process,
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where you came from, what your background was and how you fell
14:34
into the Bitcoin rabbit hole, and you can actually make an
14:36
argument that you decided to go backwards, you know, in terms
14:40
of, you know, deciding total back in with your mom, so that
14:44
you can kind of pursue your career and Bitcoin.
14:46
I think that's fascinating. And I've definitely heard that
14:49
story many, many times. But when you were describing all
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of that, Eric, you mentioned a couple things.
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And I think we're just so used to talking about these things
14:58
that it's just become default. Walt.
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And it's just like yeah that's true but you mentioned that
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Bitcoin is the solution to Central Banking and that you
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said that the banking system is a problem and that you can't
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understand Bitcoin without understanding that, the banking
15:13
system is a problem and I think those two topics are absolutely
15:16
fascinating. So what is the problem with
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Central Banking? Why is it such a problem?
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And what is the problem with the current banking system today?
15:24
And where does Bitcoin fit in all this?
15:28
Yeah. And you know, it was What do you
15:31
go through, like monetary history.
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Say like, Okay, so we've had like these forms of, you know,
15:36
effectively commodity money that have existed over time and they
15:39
were always kind of naturally chosen by private markets at
15:42
least in primitive times because they had, you know, these
15:44
fundamental properties that made them good money.
15:47
And then, you know, government started to monopolize them and
15:52
centralized systems of production and storage of those
15:55
different forms of money. And then a lot of moral hazard,
15:58
kind of ensued from that. So at the Historical level, it's
16:03
even when we had reserved. So like for most of History, we
16:07
had these reserve base systems, that were always backed by some
16:10
type of commodity particular, at gold and silver during the
16:13
precious metal are up. And when, you know, the, the key
16:19
issue is really the agency problem.
16:21
In the way that I kind of talked about this, in my book, is that
16:26
You know the agency problem. You know, well, known problem in
16:29
economics that if you are a principal and you hire an agent
16:32
to do something for you and that agent has a conflict of interest
16:36
with you, then they're ultimately going to take
16:39
advantage and those it's going to result in moral hazard.
16:42
Which, you know, we hear that term all the time.
16:44
And, you know, I think a good way of thinking about it is that
16:47
if you were to hire a courier to go deliver a message for you,
16:51
and you just had some legal documents associated with
16:53
something that really only matters to you.
16:55
They're not really Ali valuable to anybody else.
16:57
Then you say, okay, I'm going to pay you guys 200 bucks.
17:00
They're going to deliver it. You can be reasonably certain,
17:02
they're going to deliver it, but if you change that to a bag of,
17:05
you know, a hundred million dollars, then you're probably
17:07
never going to see them again. And that's what that conflict of
17:11
interest resides. And one of the aspects of money
17:14
that I defined in my book is that money is kind of defined as
17:17
the most saleable good. It's the good that people want
17:20
most often more than anything else have a genie came to you
17:23
and was like, hey, I'll give you your an Amount of anything you'd
17:26
say, well, I went, I want money because I can trade that for
17:30
anything else. It's highly saleable so because
17:32
money is the most saleable good. It's more subject to moral
17:36
hazard than anything else and, you know, that's why we've seen
17:40
the amount of fraud. The amount of moral hazard,
17:42
that's emerged. That's why, you know, the
17:43
financial markets have become the most regulated industry in
17:47
the world. It's because it has the highest
17:50
degree of moral hazard and to give anyone control over it
17:53
results in problems, whether it's your government Whether
17:55
it's, you know, any sort of private Enterprise there's
17:58
always that conflict of interest that exists with it.
18:01
And so with banking systems, we always saw problems around that,
18:05
much of it was solved with regulations, but the fact that
18:07
we always trusted government to solve those problems.
18:11
If you look at history you can see the government's ultimately
18:13
ended up whenever they would be given control by a society over
18:17
their money. They'd say, hey look the private
18:19
markets is taking advantage of you.
18:21
Let us control it and then subsequently the government's
18:24
would ultimately do the exact same.
18:25
Because they still have the same conflict of interest.
18:28
And, and when you fast forward to how our current banking
18:33
system works, today, we took that to the furthest extreme
18:38
when we removed ourselves as a glow.
18:40
When we are a global monetary standard and the dollar removed
18:44
itself in 1971 from being backed by gold.
18:47
And now, we pushed it all the way from being pure, commodity
18:51
money, based systems all the way to the dollar is purely just
18:54
debt. Dollars are created when the
18:57
government issues. Any sort of debt and that is, as
19:03
well as not just a government or private banking system as well.
19:06
Whenever dead is issued, that's how we effectively create new
19:09
money, and push it into the system.
19:11
And so, that understanding is really critical because we have
19:15
to understand how we really have two different types of money
19:18
that have existed throughout history, we have commodity-based
19:20
money's and we have credit based loans and credit money.
19:25
Ghibli. If you think about it as money
19:27
or you can conceptualize it just as credit credit was what
19:30
existed is money between people before we actually had
19:34
commodity-based money, submerged people had to trust that
19:38
somebody else would pay them back in a few in the future.
19:42
So it's, you know, understanding that credit is distinct from
19:48
commodity-based money's in the way that we perceive them.
19:50
Because commodity-based money allows us to take work that
19:54
we've done in the past. And he sort of value, we've
19:56
created and it allows us to bring it forward to the future.
19:59
And that's being a good store of value credits.
20:01
Actually the opposite of that it allows us to take expected
20:05
value, created in the future, and bring it to the present, so
20:08
that we can spend it today and some form.
20:11
So it's actually the opposite way of doing it.
20:12
There's actually some sort of balance that really needs to
20:15
exist between both of these things within an economy.
20:18
And when we had, you know, a pure commodity based system of
20:22
money without any credit at all, it would be Very hard for
20:26
businesses to start. Let's say you want to start
20:28
something that requires, you know, a hundred million dollars
20:31
to get going. It's possible that it could all
20:34
be done by getting people to invest in your company and
20:37
through Equity. It's theoretically possible.
20:40
But that takes a huge incentive away from an entrepreneur
20:42
because they say, oh, I'm gonna have to sell my entire Company
20:45
ownership, just to get financed to make this thing happen.
20:48
What if I could actually not give up the ownership and I
20:51
could fix the cost of that and then pay that back in the future
20:55
and like That's kind of the purpose of that demand for
20:57
credit is that we need to be able to fix that liability.
21:00
So that once our company becomes very valuable, we can pay that
21:04
off, it's fixed. It's not just going to be this
21:06
Perpetual. That's what Equity is is a
21:08
Perpetual liabilities. You grow that you continually
21:11
have to pay back to people so it is valuable in that sense and
21:16
it's important to add within an economy.
21:17
But when you understand what we've done today and we've taken
21:21
our money itself, turned it into credit has no more come on.
21:25
Be backing at all. And it's completely pure credit
21:28
and we've taken that natural proportion of, you know,
21:30
commodity money and credit and we've pushed it all the way to
21:33
the furthest end of the spectrum of this is just all credit now
21:37
and and there's huge costs that we're paying in society because
21:40
of that and the amount of malinvestment and you know,
21:44
Austrian economists, this is, you know, fundamental to the
21:46
theories that when you incentivize credit Beyond a
21:50
natural rate that that's going to result in significant
21:54
malinvestment. We see that all the time.
21:55
Time we you know the industries that I came from.
21:57
In the companies I work for, we specialized in buying companies
22:01
that were declining in some form or, you know, on the verge of
22:05
bankruptcy. So like a lot of the industries
22:07
I was looking at where a lot of these older kind of zombie
22:10
company in Industries where you would see how these guys stay
22:15
afloat and why these industries exist.
22:17
In most of these guys were staying afloat because they just
22:20
had very cheap credit. They keep borrowing and rolling
22:22
over and, you know, pushing their death now.
22:25
A few more years out and then you see that everywhere within
22:29
the economy. And that's what we've done.
22:30
We've created this exorbitant amount of credit and all these
22:33
perverse incentives and all these companies exist, that
22:36
probably shouldn't even exist, whereas all that labor and
22:41
capital that exists, that's being directed towards these,
22:44
you know, low demand type companies, because it credit
22:48
should be getting directed towards something that's much
22:50
more valuable for people today. And, and that's kind of like,
22:55
you know, A very high level. That's kind of the idea.
22:58
And, you know, for the purposes of my book, when I was writing
23:02
it, I geared it a bit more towards people with like a
23:04
finance background and really just making the investment
23:07
thesis for Bitcoin. Very clear.
23:11
And, you know, I think that it's really important to understand
23:14
how the banking system works. Because you have to understand
23:17
how its created and ultimately how that creates these
23:21
incentives within the supply. So if you just understand
23:24
commodity money and Save He's good.
23:26
It should be this. This was better than what's
23:29
happening today. It's I feel like it's a bit of
23:31
an incomplete understanding because you have to say, Okay,
23:33
well, here's how many actually works today and then you can
23:36
really contrast that with all the issues that emerge and how
23:39
commodity money should be a much bigger piece of it.
23:43
Yeah. So it's kind of general idea.
23:45
So you said something really interesting and it was
23:47
fascinating, right? It's that the and honestly to
23:51
put it simply and correct me if I'm wrong here.
23:53
Eric, it's it's really an engineering problem in terms of
23:57
because it's like look like with in terms of the moral hazard
24:01
issue, right? If you leave it to the financial
24:04
industry, tremendous amount of moral hazard, you have to kind
24:08
of Outsource that to the government and the government
24:11
finds itself abusing the system to benefit themselves.
24:17
And I think that is that the reason that your book is called,
24:20
the seventh property, is the end of the day, what is bitcoin?
24:24
Bitcoin is rules without rulers and it kind of allows the system
24:28
to exist and to kind of tied in with what you're talking about.
24:32
Just now, in terms of commodity money and credit money, the fact
24:35
is that governments are not incentivized to allow their
24:39
citizens or a lot of people that live under them to use,
24:42
commodity money as, in the case, in the 1930s with FDR's.
24:45
One or two, right? It's bad news for for
24:49
governments. The nation state.
24:50
The modern nation-state, right? Yep.
24:52
So here comes Bitcoin and it's this giant Fu For You Know, lack
24:57
of another expression and it just protects the individual
25:01
where the individual wouldn't have that protection.
25:04
So is this kind of the balance that you're talking about?
25:07
Are you making the case that Fiat will exist in a hyper
25:12
Bitcoin eyes World? It will just Bitcoin will kind
25:14
of always be that check Khan power type of thing.
25:17
Yeah, so I'm not making a case. I think Fiat will exist.
25:20
And actually, this is a big distinction that I think is.
25:25
People need to understand in the industry that I often see kind
25:28
of being misconstrued but it's like, well, what is Fiat?
25:31
What is fractional Reserve? What is credit?
25:34
And I think a lot of people throw the idea of credit into
25:37
the bucket of Fiat and it's that's not really what it is.
25:40
I mean Credit in the broadest term is any form of like
25:44
deferred payment That can happen in a legally enforceable, way.
25:48
Or that can happen in just a private way, like that could be,
25:51
you know, you go to a bar one night and the bartender's like,
25:54
hey, what do you want? Your like, take a beer, I forgot
25:57
my wallet. He's like, here, I'll give you
25:58
one, you pay me back the next time and then, you know, that's
26:01
the most basic sense and then, you know, there's legally
26:04
enforceable, contracts that allow you to do something
26:07
similar and that could be without money.
26:09
Even being involved. That could be like a working
26:12
capital account within a company.
26:13
Do you have on your Accounts receivable.
26:17
You can say hey give me 60 days instead of 30 to pay you back
26:20
and we'll say sure and that increases the amount of credit
26:24
within the system. So like that's kind of just like
26:26
a basic form of credit without actually having a monetary
26:28
transaction involved but what do you say the issuance of money?
26:32
The way that governments do it today is a form of credit.
26:36
Oh certainly, yeah, yeah, so I'll break down that point it
26:41
basically. So like that that's credit that
26:44
will always the two. Areas that is described like,
26:46
that's credit that will always exist in some form.
26:50
And I guess the best way to describe that is that because
26:55
economic resources when you for entrepreneurs, entrepreneurs,
27:00
have to plan for the future, they have to anticipate what the
27:03
world wants. And when they do that, they have
27:06
to in order to accommodate whatever that is.
27:09
They have to have a certain scale of capital to achieve that
27:13
today in order to make it happen tomorrow.
27:15
And credit enables that to occur.
27:18
Now, people will say in a Bitcoin system, we're gonna have
27:20
a lot less credit and they completely agree because people
27:23
are going to have a lot more wealth from savings.
27:25
There's probably going to be a greater incentive to equity
27:27
Finance in a lot of ways. But nonetheless, the idea of I
27:32
don't have enough savings to finance this economic Venture
27:34
that I'm expecting, will be valuable in the future credit
27:38
facilitates, the ability to achieve the scale to where you
27:40
can actually go after that. So like that's kind of like a
27:42
fundamental role that it does with the new economy.
27:46
The question is, is okay. Well, I just described like how
27:49
credit would emerge kind of in a private way.
27:52
And then how does that credit actually exists in within a
27:56
system like a banking system, or even just the system of we can
27:59
use a broader term and go say credit.
28:01
Intermediaries the idea of I'm going to make a loan to
28:05
somebody. Not everybody can do that on
28:09
their own. It's actually a really technical
28:10
process. How do I, you know, what's the
28:12
purpose of the loan? How do I assess?
28:13
This person is not a credit risk to me.
28:15
Will I get my money back. So it's something that people
28:18
specialize in and we have intermediaries that say, okay,
28:22
if you have savings and you would like to earn a rate of
28:25
return on those and take some risk, then give us your money
28:29
and we're going to assess counterparties that are going
28:31
to, you know, we can make loans do that are going to earn a rate
28:33
of interest and if they're good at that and they are successful
28:37
and they don't take on too much risk, than that system.
28:40
Sustains and it performs a really key function because now
28:42
these loans are going out and they're not just going out Bye
28:46
everybody doing it themselves but it's by A specific group who
28:49
has specialized knowledge that allows them to effectively do
28:51
that better than other people would.
28:53
But hold on a second because so I see the finance background,
28:59
though, it's coming out. So Parker Lewis wrote this.
29:05
Awesome piece is called the Great d financialization, right?
29:08
And he was basically making the argument that Bitcoin fixes the
29:14
part-time investor. Somewhere.
29:16
Let's say I'm a plumber or I'm a painter and you know you're
29:20
making over a hundred thousand dollars a year and you just
29:23
maintain your value. Just want to maintain your
29:25
value, you're forced to either store your your value and real
29:29
estate which is why the real estate market so inflated or
29:32
inequities you know, you could also make the case of
29:34
Commodities, right? But Bitcoin you no longer need
29:39
to become that part-time investor.
29:41
You could just start saving and Bitcoin.
29:43
So yeah, what you're just describing Just now, isn't that
29:47
part of the old system or do you believe in?
29:51
You believe that credit will be necessary in the future just for
29:56
entrepreneurs to function just for new businesses to rise?
30:00
And then that's actually interesting because I forget who
30:03
it was that came on the show it was it was Vijay Porta-Potty
30:08
right? And I asked him a very similar
30:10
question. I said, you know that's the kind
30:13
of the idea that the kansans have, right?
30:15
Right, this idea that Austrian economics will never work out
30:18
because people are not incentivize to spend their
30:22
money, right. So what are your thoughts on all
30:26
this? Yeah, so I think that it's a
30:30
great point. I think that the so like what
30:32
you were just talking about that is the reason that credit will
30:36
be so much less than it is today.
30:38
Like what I was talking about earlier, we've had credit get
30:40
pushed all the way to this crazy extreme, there is actually a
30:44
natural market. Like there's demand for credit
30:47
in a natural if you think about it.
30:49
Theoretically, if the Fiat system were removed and we were
30:52
on a Bitcoin standard, what amount of credit would people
30:55
actually want and to address your point around?
30:58
Well, now that people can, we have a deflationary form of
31:02
savings? We have this currency that gains
31:04
value over time. So why would I just go invest in
31:07
real estate or something when it's continuing to gain value?
31:10
And I think the best way to understand that is that if we
31:13
get to a hyper Big kanai's World, We have this, you know,
31:17
we're on a global Bitcoin standard its money for
31:19
everything. Well Bitcoins appreciated for
31:23
very significantly over time everybody who owns a lot of
31:26
Bitcoins can be a very wealthy person if we get to that point
31:31
in the world. Bitcoin is going to have like a
31:33
deflation are e-rate and that's going to be.
31:37
It's going to be some amount you know it's called it's a five
31:40
percent every year you know you're going to gain 5% but now
31:43
like right now Bitcoins price goes up because Capturing market
31:46
share, once it captures that entire Market, its prices, and
31:51
going to go up from that anymore because the markets of money,
31:53
you know, effectively saturated. Now it only goes up from
31:56
whatever that natural rate of deflation is and that's the
31:59
difference between the changing its Supply every year.
32:02
So it's going to have nearly zero inflation.
32:07
And then how much productivity is increasing within a given
32:10
year. So the cheaper that we make
32:12
things for people Bitcoin being fixed is going to appreciate
32:16
kind of at that rate it. So you know it's a very
32:18
theoretical idea. We don't really know exactly
32:20
what that rates going to be but nonetheless there's people say
32:23
Okay. So let's say I'm running 5% a
32:25
year on bitcoin that savings and that's the purpose of savings.
32:30
That's a real idea of saying this, but people don't just want
32:32
to save their money. People want to earn a greater
32:35
return. People want to take risk.
32:36
People won't understand that I could be employing this money
32:39
into something. That's this creating economic
32:41
value and and that'll be the distinction.
32:44
Is that the way it is today A, because our savings we lose
32:48
money over time. Well, we're employing and
32:50
everything because it's like everybody says, like don't
32:52
holding cash, you know what to do that.
32:54
You have to have it, some form of investing, that whole idea is
32:57
going to go away. We're going to say, oh I want to
33:00
save, this is awesome. I like this, I'm only going to
33:03
invest it in something that I really deemed to be a valuable
33:06
economic project. And that's why credit Will
33:09
shrink massively because of that incentive.
33:12
But it doesn't mean that it's really gonna go away.
33:14
It just means it's going to change.
33:15
Change and its proportion is going to be so much smaller.
33:19
So we're trying to remember what else around that.
33:24
So first of all, Eric, that was fascinating.
33:27
I really, I really, really appreciated that that
33:30
explanation and having Vijay having yourself.
33:33
And I'm starting to understand a lot of these Concepts.
33:36
Again, I'm a Content guy, I'm a media guy, so I really
33:39
appreciate that. You said something though, that
33:42
was really interesting, right, which is and I agree with you.
33:44
The theory of Returns you know how long until it gets to that
33:49
point? Are we talking about, you know,
33:51
Faust has this idea where you know Bitcoin captures five ten
33:55
percent of the global work Global, you know well that it's
33:58
between I think it's like 225 million dollars, something like
34:01
that. How long until this happened?
34:03
Is this decades, are we under pressure?
34:06
Should people be stacking like crazy right now?
34:08
Because in 20 years, you know, Bitcoins only going to be a five
34:12
percent appreciating asset. What are your thoughts on that?
34:15
Yeah. Yeah.
34:15
This is you know at the end of the day I have no idea but I
34:19
think that, I guess if I were to try to break it down what I
34:26
think, will cause it to take some time.
34:30
And when I say, you know what that is is when Bitcoin is let's
34:35
say, effectively saturated the market for money in the world,
34:37
sounding Global Bitcoin standard.
34:41
There's a lot of goods and services that Not Goods, but
34:46
there's a lot of well I guess technically there's a lot of
34:48
technology and services that need to be built.
34:53
That will support a Bitcoin standard effectively in order
34:58
for us to get there and that will probably be a significant
35:02
timeline similar to how long it took for all the architecture of
35:05
the internet to build out. It wasn't just TCP IP wasn't
35:10
just HTTP but it was also well we need a lot of these base
35:14
layer. Functions.
35:16
We need web browsers to emerge and be widely adopted and then
35:19
we need applications to exist this entire ecosystem that has
35:23
to build out and right now Bitcoin and there's a lot of
35:27
time and effort being spent building it out on Alternatives
35:31
and you know what, if all that time and effort was happening on
35:34
bitcoin, which I think it's kind of an interesting way to think
35:37
about it, just because I look at a lot of crypto is I think, what
35:43
are the benefits to bitcoin is? A lot of it's like, are in That
35:46
I eventually see is going to flow into Bitcoin and you know,
35:49
the SAT I think the tragedy is that consumers are really paying
35:53
the price for that R&D but I viewed as a way that there's
35:57
there's valuable ideas and Concepts that emerge on it, that
36:00
are ultimately going to be replicated in some protocol on
36:02
top of Bitcoin, or potentially, some application in the future.
36:05
And we can look at that ecosystem and learn from what's
36:08
good and what's bad. But I think that as this all
36:13
builds out, it all is going to be I doubt on one standard and
36:16
effectively have to get to a large scale to be able to, you
36:19
know, support the throughput and the consumer adoption of the
36:23
global economy that's going to take a long time.
36:26
I mean, just like a very tangible point is the, there's
36:29
kind of a bottleneck in lightning adoption.
36:31
If we tried to on board, you know, billions of people to
36:34
lighting tomorrow. Each one of those people would
36:36
require an unchanged transaction.
36:40
That could be confirmed, you know, within a block period.
36:43
And if you add up all the numbers, Is actually getting
36:46
everybody on is a single user through an unchanged.
36:50
Transaction would take years just to get them online so like
36:53
obviously it's not going to happen in that way but there's a
36:56
lot of things where it's like okay if this were to happen in
36:59
the next five years like we probably wouldn't be ready yet.
37:02
But and then just basic consumer applications education, all
37:06
these things that take a lot of time are going to need to happen
37:10
in that could be decades, you know?
37:13
And you know on top of that then it comes down to how is it going
37:17
to be constrained from a regulatory angle?
37:20
And how are these companies going to be constrained?
37:22
Are there going to be any sort of significant issues that
37:27
ultimately set the industry back a significant period of time?
37:30
You know, let's say worst case scenario you know G7 economies
37:34
are all like let's shut this thing down.
37:36
It's gotten too big. We can't let this happen and
37:39
then we're like okay well the game theory works out because
37:41
now that money is just going to flow to developing economies and
37:44
all the developing Economies have a very strong incentive to
37:47
want to attract capital and gain power and become significant
37:50
themselves. So there's going to always be
37:52
some sort of fertile environment, but it's gonna be a
37:55
lot harder to make that all happen.
37:57
You know, that could set the industry back a very long period
37:59
of time. So I think that depending on how
38:02
that builds on how the incentives work, that could
38:05
extend the timeline. My bet I'm betting on decades,
38:09
you know, in a recent research report, I kind of put it down
38:12
like the year like 2050. I think we could be getting
38:15
pretty close Close to it and that'll probably be enough time
38:18
for a lot of the ecosystem in infrastructure to get built out.
38:21
But if there's anything, I'm wrong about all the time in this
38:23
industry, it's how quickly things happen.
38:26
I remember jumping into this and thinking like, oh, you know,
38:29
like, I remember when I was jumping into this, and I'm like,
38:31
well, look like the Winklevoss twins are on scene and BC right
38:35
now. Like, that's good for Bitcoin.
38:37
And it's like now it's just like, it's such an irrelevant
38:40
thing Bitcoins. On a global scale.
38:41
I wouldn't have guessed that we'd get to where we are as
38:43
quickly as we have. So, Could be pleasantly
38:47
surprised by its adoption. I'm actually a little worried
38:51
about the adoption and happening too quickly because of the
38:54
reaction of set of G7 countries. Right?
38:58
Yeah. The reality is that a lot of
39:01
these countries, you know I might use yours words now that I
39:06
learned benefit tremendously from being able to issue three
39:11
credit basically right and they're able to pay their own
39:15
bureaucracy. Or seize their own
39:16
administrative States, right? And that power that comes from
39:19
that Monopoly, you know, on the issuance of money is something
39:23
that I just don't think they're just going to give up like, hey,
39:26
here you go. You know, here are the keys.
39:28
You guys are awesome. Innovation, this is great, but
39:31
do not going to do that. And I think that, you know, you
39:34
see the language Nick, Carter did an excellent job just like
39:36
kind of debunking. You know, the digital assets
39:39
framework. That was released by The White
39:41
House. Yep.
39:42
But you kind of see this aggression?
39:45
And if it happens, too quickly, I see them just pushing back
39:50
hard. But if it becomes like this,
39:52
Grassroots movement where individuals are starting to ask,
39:56
like, very basic questions, why are you forcing me to use the
40:00
money that's designed to lose value?
40:02
What is legal tender laws? Why is this treasury getting to
40:06
dictate? Who is entitled to use money?
40:08
Who's not entitled to use money? They're not even elected or
40:11
appointed. What is going on here?
40:13
And you know, these are all things that That, you know, the
40:17
mainstream Consciousness is still asleep to the theft that
40:24
is going on, you know, and I think that unless they wake up
40:28
before the powers that be pushed back, I think bitcoiners of
40:33
course, you know we could all Bitcoin gives you the power to
40:35
vote with your wallet. But with your feet, we can all
40:37
move to El Salvador, but a lot of us in the United States,
40:41
would rather not want to move to El Salvador, you know.
40:43
So, I agree with you, man. What are your thoughts on the
40:47
recent movements treasury sanctioned open source software,
40:53
first time in its history. So never done that before.
40:55
It's always been individuals and countries.
40:58
What are your thoughts on the digital assets framework by the
41:00
White House? New York, State Banning
41:03
proof-of-work? Mining what are your thoughts on
41:06
this? Is this just a natural.
41:08
This is the separation of money and state.
41:09
This is the state kind of in its last death row saying.
41:12
No, I'm not gonna go, you know, we're still in.
41:15
Sarge, what's going on? What are your thoughts on all
41:17
those Eric? Yeah, I think like a caveat this
41:21
with, I'm not a regulatory expert.
41:23
I could be saying making comments about this that are
41:25
totally naive, but I think that, you know, there's good precedent
41:31
that was set with Phil Zimmerman and pgp encryption back in, that
41:36
was a 90s. Yeah, well I might be wrong
41:41
about that maybe this 80s, I can remember but and there's good
41:44
precedent set for kotas, free speech.
41:47
And that's a strong form of argumentation.
41:49
And I'm optimistic about how you know, our rights can be
41:52
protected from that. But I, you know, I see your
41:56
point. I kind of view this is I don't
41:59
view it as any sort of last You know, last ditch effort by
42:05
governments, try to stop something.
42:07
I think that they're just getting started.
42:09
And I think that they're testing the waters, it's interesting.
42:14
I mean, I could kind of pontificate about this for a
42:16
while and I just don't have a lot of certainty, but I think
42:20
that there's a there's a high probability that You know some
42:30
of the there's there's a high probability that this could be
42:38
this could be the start that ultimately hurts Bitcoin
42:44
domestically in a significant way.
42:48
I think that the best thing probably that could benefit us
42:52
in the situation like some people have this take on the
42:55
industry, whether like no we need to be lobbying we get to
42:58
government behind it. I It it's like yeah might as
43:02
well do. I think that ultimately that
43:05
time and effort spent on that angle is going to come to
43:08
fruition. And I just think that when the
43:12
incentive is far too strong and the best case, scenarios that a
43:17
lot of major service providers and companies are co-opted by
43:21
the government in some form and it gets allowed to exist as like
43:23
Bitcoin TM. I think the best thing that can
43:27
really happen is that we have developed mint in economies that
43:32
are either contrary to the us as interests and are willing to act
43:36
outside of, you know, the willing to act outside of the US
43:40
interest or their, you know, developing enough to where they
43:44
can. They're not a significant to the
43:47
u.s. at the current period of time.
43:48
So if we have a bunch of El Salvador's pop up all around the
43:51
world and that actually in aggregate forms, this pretty
43:54
material economy. That is the I think that that's
43:59
a great day. Ants mechanism because all the
44:01
u.s. is concerned about what's the Escape valve.
44:04
And if we already have a large enough threat in place for where
44:09
the capital is going to move through permissionless payment
44:12
rails and where the industry can ultimately move, that would
44:17
probably be the greatest deterrence to the US, ultimately
44:20
accepting defeat in the long term.
44:22
And, you know, that that's just going to be such an incredibly
44:25
complicated thing. And that's what I love about
44:27
Bitcoin is because they're one form of of control, they would
44:30
have over these economies is what is itself being undermined
44:34
through that adoption. So it takes quite a bit of power
44:39
away from the US outside of, you know, becoming a belligerent
44:41
nation and, and they just wouldn't have a strong incentive
44:45
to do that. So, I think that that's the best
44:48
thing that could probably happen, that would deter it.
44:51
I'm not against people in the industry trying to go at it from
44:54
every angle and see what works. It's not like anybody really
44:56
knows how any of this is going to pan out.
45:00
But I'd say that's kind of how I'm looking at it.
45:02
Yeah. And I 100% agree.
45:04
I think the, and that's something we say all the time.
45:06
It's like, if the office of foreign assets Control
45:09
Department of Treasury, that's responsible for sanctions
45:12
starts, putting pressure on Industrial miners.
45:15
You know, censoring certain blocks pulls in Russia and that
45:20
as well aren't gonna give two flying laughs.
45:23
You know, what the hell, those American mining pools do.
45:26
And you know you have it's funny.
45:28
You say, you have Iran and you Have Russia saying, hey, we are
45:32
going to use Bitcoin for international payment.
45:34
It's not because those governments are good, but
45:36
they're trying to find a way to circumvent current US sanctions
45:40
policy, right? So yeah, yeah.
45:42
The the game theory to this is fascinating and, and in the
45:46
meantime, we'll all these countries will specific.
45:48
The United States is trying to hold on to power individuals are
45:51
benefiting from this tremendously, but I have a soft
45:54
spot for the US. And I think what I've realized
45:58
kind of making content Over the time and I'd love to get your
46:01
thoughts on this. Is that really what's required
46:04
in the u.s. it's not lobbying politicians, it's a waste of
46:08
time. What's required in the u.s. is
46:12
Grassroots and getting the ideas and principles of Bitcoin into
46:17
the mainstream Consciousness. These ideas have already been in
46:21
septic. Like you said, you talked to
46:22
someone in Turkey, talk to someone in Nigeria, talk to
46:25
someone in Argentina and your the, under the age of 40 and you
46:29
say Bitcoin the He's like, yep, pay me.
46:31
That sounds great. I love that.
46:34
That's better than whatever fiat currency, I have.
46:36
But as gladstein wrought throughout this phenomenal book
46:39
called Financial privilege, he's talking about this right, is
46:43
that in the developing world? I mean developed World, we've
46:46
had the luxury of having these relatively stable Fiat
46:51
currencies that don't steal from you enough for you to really
46:54
notice that it's just bread. A lot of complacency here and
46:59
unless that Agency is completely broken.
47:03
I don't I think that the u.s. government just going to get
47:05
away with it. That Central Bank, digital
47:07
currencies stimulus money for everyone, here you go, put your
47:11
yeah, social security number ID into this app.
47:15
You'll get it tomorrow and a lot of people think.
47:16
Yeah, this is great. This is phenomenal.
47:19
You know. So I think that unless that
47:21
happens I mean that could also kind of be incentive.
47:24
I mean look Eric, what do you think?
47:27
Because the reality is that we haven't had inflation in our
47:30
lifetime, the levels that we have right now, right?
47:35
What if we have 10 years? What if we have an error?
47:37
Like the 1970s stock market went sideways crazy.
47:41
Inflation, kind of hostilities all over the world.
47:45
Do you think that's enough to wake up enough of the NPCs to
47:49
the reality that this Fiat money is a scam?
47:52
And the reason I'm asking you, this question is because you
47:55
come from the traditional Financial world.
47:57
I have six friends that have orange peeled The seventh friend
48:02
works for Goldman, he's part of wealth management.
48:04
It's been seven years, I've been six years.
48:07
I've been telling him about this and he still doesn't believe in
48:11
Bitcoin and ask Greg Faust as to why that is and he's like Nico
48:15
it's because they pay him not to understand and I thought that
48:18
was a phenomenal answer. So what are your thoughts on
48:21
this man? One of those Finance guys,
48:24
finally going to budge and they're going to finally see the
48:27
writing on the wall in like okay, you know, maybe We give
48:31
this thing a shot. Yeah, I think so.
48:35
Yeah. What are the finance guys?
48:36
Going to budge. So what was huge this year?
48:40
And I included this in a research piece, I did back in
48:42
May and it was talking about what's going on in like the
48:46
global Sovereign Reserve economy and as well as just like you
48:50
know what makes the US dollar the global Reserve like how does
48:53
that effectively happen and why do countries want dollars so
48:56
badly. And I kind of walk through that
49:00
and I won't point I cover the report server in by zoltán pose
49:04
our who's a very well-known research analyst at a Credit.
49:08
Suisse and it was huge because when was this, I think it was
49:12
this was right at the end of February, we had the Russian
49:18
sanctions occur. And it was, you know, we know
49:24
the US government had never really quite gone to this length
49:27
with this significant and um, economy before And in this
49:32
thought piece that Zoltan put out his just like, well we
49:37
materially undermine kind of this idea of like what are the
49:39
property rights that you have when you hold dollars?
49:42
And that's probably going to be setting up a ripple effect
49:45
around the world. And then when you pair that with
49:47
supply shortages, he's like, this could significantly
49:51
undermine what's happening in Global Currency markets and we
49:54
are starting to see that and you know like the financial world
49:58
that's referred to as a Trend of multipolarity where, you know,
50:04
we've been living in this unipolar world around one
50:07
currency, and one dominant force in the u.s. is the police sir of
50:11
the world. And we have the power and what
50:13
we do is we say, we'll give you guys US Dollars, you guys use
50:17
those for your trade, at an international level, and we're
50:20
going to protect your trade routes.
50:21
And we're going to use our military power to make sure that
50:24
your life goes well. And that's how they really got a
50:26
lot of adoption of US Dollars globally.
50:28
So I mean if you like for We want to know why the US was
50:31
really adopted, is the global Reserve?
50:34
It's because we were the most powerful country and we could
50:36
trade our military force and protection to countries, who
50:39
want to, you know, use our economic interest of dollars.
50:43
And and that was a really key piece because what happens when
50:46
your country and you see the u.s. sanction that you say, oh,
50:50
so if I kind of fall out of line with something, then a lot of my
50:54
Reserve assets or the currency that I'm using could take a
50:57
significant hidden value or I can be restricted.
50:59
Now obviously, what? Russia is doing is, you know,
51:01
belligerent but it is something that's signaling to the rest of
51:06
the world. Hey, maybe we're not as safe as
51:09
we thought we were in this system, the u.s. is going too
51:11
much further lengths than we anticipated.
51:14
What else could we use? What can we hold is a Fail-Safe
51:18
other than dollars and and I think that this kind of a
51:22
narrative is something that's probably going to bring in a lot
51:25
of institutional capital in the nearest term because you I read
51:30
the paper is like, look, the dollar is so deeply entrenched
51:33
at this point, that it's not even about the military
51:36
protection of such a system. It's it's about the fact that
51:39
we've already made it the medium of exchange, everything's, you
51:42
know, trades denominated in dollars.
51:44
And that's why people wanted as a reserve asset in the first
51:47
place. So, because all these contracts
51:49
already set up and these systems are already set up.
51:51
It's going to take a very long time for all of that to
51:54
structurally change so that we can utilize Alternatives and,
51:58
you know, the economy's like Russia and China.
52:00
That Of the greatest interest they've been making leaps
52:03
towards that and they're continuing to make leaps towards
52:06
that and they are D Dollar Rising.
52:08
And, you know, before Russia made all these decisions.
52:10
They were one of the largest gold reserves in the world and
52:14
they had been doing that for a long period of time and because
52:17
they knew what was going to happen.
52:20
So that narrative that we're shifting kind of from this u.s.
52:24
dominated monetary system into multiple systems.
52:28
A lot of people think like, oh, like China, they're going to
52:30
take over. The strongest military force,
52:31
it'll just shift to them and really the incentives are kind
52:34
of more aligned so that it's going to be a lot of different
52:36
systems that are probably emerge and that's going to take a long
52:40
period of time. I think gold will actually
52:42
probably benefit a lot from that in the near term but I think
52:45
long-term what we're going to see as well, what's the
52:48
advantage that Bitcoin has over gold?
52:50
You can permissionless Lee transact it and you know it has
52:54
the same scarcity on par and the custodial operations require so
52:58
much less trust so it Makes way more sense as a reserve asset.
53:02
The problem that it has, it's not liquid enough.
53:06
So in obviously, like Bitcoin is a large liquid Market from our
53:09
perspective, but if you're a Sovereign Nation, you know,
53:12
you're dealing in the most liquid markets for assets in the
53:15
world. We're talking us, treasuries,
53:17
and we're talking gold. I mean, I think gold is the
53:19
fifth most liquid Market in the world and that's not in terms of
53:23
settlement costs. That's a different thing, but in
53:25
terms of liquidity, your ability to buy and sell significant
53:28
amounts that won't move. The price of the market.
53:31
Gold is very good at that. It actually costs a lot to move
53:34
into. Actually make your transactions
53:36
and care but that's a little bit different.
53:38
Bitcoin is still lacking on the liquidity side, all those
53:42
settlement costs or a lot less so the Bitcoin Market needs to
53:46
grow more. But that's that that's one of
53:49
those suddenly moments that. I think I see coming in Bitcoin
53:53
is if Bitcoin gets to attend trillion dollar market cap.
53:57
Then I think that we could see a very significant Amount of
54:00
sovereign institutions that start to adopt it and start
54:05
conducting trade and systems upon it.
54:08
So that kind of goes back to my point from earlier.
54:10
We need to have things set up so that that can happen and it can
54:13
go well and and so yeah. Anyways that's kind of what I
54:19
see is like one of the major drivers of institutional
54:22
adoption once enough in place. And let's say you know Bitcoin
54:26
is at 3 trillion market cap and we're in a you know Financial So
54:30
like we pretty much are right now we're in a recession if we
54:35
get that decoupling event and Bitcoin does continue to grow, a
54:40
lot of Institutions are going to look.
54:41
I think that we'll start to see more smaller economies who have
54:44
the greatest incentive to use Bitcoin as a reserve because
54:47
it's permissionless if we start to see more of them adopt it I
54:51
think the narrative in an Institutional investors mind is
54:54
really going to form. Like let's get ahead of this
54:56
thing. This thing ain't done.
54:58
This thing's going to keep running and And then we start to
55:01
see the u.s. flow into it a lot more and a lot of major Capital
55:05
providers and the private side of things start to invest.
55:07
And that's that kind of suddenly moment.
55:10
Do you ever see the US government holding Bitcoin and
55:15
its reserves? Or is that just a concession?
55:17
Is that like we lost here's the thing.
55:20
Let's put it on our balance sheet and it's very symbolic as
55:23
well. Do you ever Envision a world
55:25
where that happens and kind of if you apply a little bit of
55:28
Game Theory to it? The only reason, As to why they
55:31
would do that is because they would have no other option but
55:34
to do that. Yeah, I think in this goes back
55:39
to your point earlier, I think. Yeah, that's probably a very
55:42
likely scenario. I think to your point earlier
55:44
though, education and Grass, Grass Roots movements, what I
55:48
love about over the past year, basically is the amount of
55:52
state-level Representatives, who started to support Bitcoin and
55:56
how quickly that's been growing. And that we have, you know, the
56:00
most dominant political news channel, that's actively
56:02
bringing on Advocates of Bitcoin.
56:04
I don't know how long that's going to last, but it's
56:08
certainly true that it's been gaining traction at the lower
56:11
with lower level politicians. So it could be, I think it's
56:16
kind of parallel to the idea that in, this is what I love
56:19
about the system. The founding fathers set up, but
56:21
it's parallel to the idea where we're like, okay, well, if these
56:24
smaller economies all adopted, then we're going to kind of
56:26
force the big guys to eventually opted into it.
56:29
It's kind of It's like if we get so much grass, roots support
56:34
like a state level, they potentially could force the
56:37
incentives. I mean every auditions need to
56:39
get elected and if they're gets enough support, there is enough.
56:41
Education of people are like hell yeah, there's so much shit
56:44
wrong with this. We're in a recession.
56:45
We've had these idiots that have been just printing money and
56:48
manipulating our currencies and putting us all, you know,
56:51
destroying our wealth. At the same time, we've lost
56:53
from every single Angle now. And when we get into that
56:56
situation, the state you know, there's going to be tons of
57:00
politicians who have an incentive to say I could get
57:02
elected if I support this. You know, that's the number one
57:05
political issue that people have is inflation right now and if
57:08
that grows enough, that could create just kind of like this in
57:11
domestic incentive structure and thank God we live in a state
57:14
level system that could potentially have it happen
57:17
internally within the us. But I think that's still very
57:20
optimistic thinking I think you know and we're just about
57:24
wrapping up Yes, I 100% agree. I think Wyoming, Texas, perhaps,
57:31
Tennessee. And I say those States because
57:34
of those states, that bitcoiners have the most amount of
57:37
political influence, the moment, a state takes Bitcoin puts it on
57:44
its balance sheet. It's game over that states.
57:48
That have so much sovereignty over the federal government
57:52
because a lot of these states depend on all that, you know,
57:54
that that Fiat coming in. But now that kind of gives us
57:58
that's like kind of pulls in El Salvador, look, we use the US
58:02
dollar to great, but fuck you fed weird kind of doing making
58:07
our own rules now. All right.
58:10
Yeah, I think that's fascinating.
58:11
I think that way before the federal level definitely is
58:15
state level do Shouldn't and I think that's spot-on.
58:18
Anyways, Eric I really enjoyed this.
58:21
I learned a lot. I really appreciate is one of my
58:23
favorite conversations. I've had a long time.
58:27
Why don't you tell everybody where they can find you and what
58:30
you're working on these days yet?
58:32
As follow me on Twitter, it's my full name and you know, I got a
58:37
website, you can kind of pick their my blog and look at some
58:39
of the stuff. I've been writing a lot of my
58:42
lot of my writings in just around like what will banking
58:44
systems look like, what will credit look like, kind of
58:46
getting You into that theory as well as, like, practical
58:48
applications of how that could emerge on the lightning Network
58:51
that Reserve piece. I was talking about the
58:53
international Game Theory. I wrote a long form piece on
58:56
that to that's all on there. You can check out my book.
59:00
It's on Amazon, it's called the seventh property and it's also
59:04
just linked on my Twitter. So if you want to find anything
59:06
about me to look at my Twitter handle, I got to kind of all
59:09
linked on my page of my website and yeah hika is a blast man I
59:13
had a great time this conversation.
59:15
Yeah man thank you. Much learned a lot like last
59:18
time you came on it's a pleasure man I'm going to put you back
59:21
stage and I'm going to roll out the intro to take about 15
59:25
seconds. See you guys see you guys later
59:27
for a regular episode simply Bitcoin IRL 12:15 p.m.
59:32
Eastern Standard Time. You later