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Matthew Pines | Bitcoin Adoption Game Theory | Simply Bitcoin IRL · Simply Bitcoin

0:05
Hello everybody. Welcome to another episode of
0:09
Simply Bitcoin IRL today, I have a very special guest.
0:12
I've been looking forward to this for quite a while because
0:16
Troy cross when he came on the show, he's have to have to speak
0:19
with Matthew. So I've been looking forward to
0:20
this. Before we start our
0:23
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Anyways, I want to welcome Matthew onstage.
0:46
Matthew happy to have you, man. It really looking forward to
0:50
this conversation. We've been crossing paths, what?
0:53
A while, just all the conference's, all the events.
0:56
So, how you doing this fine? Tuesday night.
1:01
Do it. Well yeah, thanks for having me.
1:04
Awesome. So I'm going to rip the Band-Aid
1:06
right? From the rip, guys, I've been
1:07
doing this. I did this with Jeff Booth about
1:09
a week ago going to do it with Matt Matt.
1:11
What did you think of the Elizabeth Warren bill that she
1:15
introduced? It was bipartisan she introduced
1:18
it with Senator Marshall. I texted David from Bitcoin
1:24
policy and said I texted him immediately.
1:25
What's going on here? And basically arguing that he
1:28
that he was making to me is like Nico trying to.
1:31
They're trying to move the Overton window.
1:34
And but at least they're showing us their cards.
1:37
Like at least they're showing us exactly to exactly what it is
1:41
they want to do. And for anyone that doesn't know
1:44
the Elizabeth, Elizabeth Warren bill, that she introduces
1:47
Senator Marshall would basically Force software developers in the
1:52
United States to register with the state in order to contribute
1:56
code to bitcoin, very scary stuff.
2:00
Matthew what are your thoughts on that?
2:04
Yes. So first sort of bottom line up
2:07
front is it's not going to become law.
2:10
So just in terms of like framing both kind of practically
2:13
speaking when someone introduces a bill versus kind of.
2:17
What does this mean in terms of the broader kind of movement in
2:20
terms of like the political orbiting window and kind of
2:23
elevation of potential risks to bitcoin excetera?
2:26
Like the basic bottom line assessment is it mostly done is
2:28
like a signaling bill, right? This is what happens when you
2:31
get to the end of a particular Congressional term.
2:33
ERM. And Warren has a really good
2:36
sort of sop for putting out these types of messaging bills.
2:39
Getting a lot of media play, she's really good at kind of
2:41
drawing attention and that helps inside the Senate to help her
2:46
cajole. Folks, maybe they don't have as
2:49
strong a feelings about the subject to kind of come come
2:52
closer to her. So this is all about political
2:54
maneuvering political influence inside the Senate and posturing.
2:58
So yeah. That's like the bottom line
3:00
assessment. I think David is correct that
3:02
it's Doesn't present like a material risk to, you know, the
3:06
current state of Bitcoin and u.s. sort of legal Frameworks.
3:12
But it does you no speak or write those folks inside the
3:16
Senate that have those views are now bringing forth, very
3:20
explicit, legislative proposals that put a lot of teeth behind
3:24
kind of their latent animus to bitcoin.
3:27
Yeah. And so, in a way you write it,
3:31
you know, I'll Be honest with you, Matt like we so the Regular
3:36
Show. This is the more the podcast,
3:38
it's more like an interview but the Regular Show that we do on a
3:40
daily basis, what we're known for simply Bitcoin live, we are
3:45
slaves, the new cycle, we have to stay on top of what's going
3:49
on just to do a good job, right? Because that's what we do,
3:52
right? And slowly what I've seen
3:55
happening as dumb doesn't, I've done this for two years now this
3:59
slow ominous cloud is just coming ever so slowly.
4:03
And I feel like the Elizabeth Warren bill was just another
4:08
escalation of that, but more importantly, it just confer, it
4:12
just confirmed to me that we are kind of heading into this
4:14
territory and what do I mean by that?
4:17
Right? So the US government,
4:19
specifically, the US Treasury Office foreign asset control,
4:22
gets a tremendous amount of Power by controlling the money
4:25
flows, right? The US sanctions policy.
4:29
Bitcoin is open monetary Network, right?
4:32
And we are, we're already seeing.
4:33
Seeing moves by Russia and Iran right to in to implement
4:38
Bitcoin, into your financial system, in a way to circumvent,
4:42
a lot of these us sanctions. So you kind of see where I'm
4:45
going with this, right? I see an inevitable clash
4:48
between us sanctions policy and, and just their whole hot, their
4:53
whole strategy and Bitcoin in itself, right?
4:57
I don't think it in my opinion, I think it's inevitable and I've
5:02
spoke Thai. I've had the privilege to speak
5:04
with Jason Brett, and I've had the privilege to speak with Troy
5:06
as well as the same question. I asked him.
5:09
I'm like, hey guys, what's going on here?
5:13
And basically what they were telling me is Regulators are
5:17
okay with this okay with Bitcoin but they want to maintain
5:21
control over the monetary policy.
5:23
They want to be able to maintain control over money.
5:27
Bitcoin doesn't Flex their it doesn't Bend, right?
5:30
It's not a it's not a question, it's Bitcoin is and that's how
5:35
it is. What are your questions on the
5:37
like? What are your what are your
5:39
thoughts on all this? Yes, so putting a like on my
5:44
like analysts hat right before credit bringing in like personal
5:47
views, right? I try to like just assess the
5:48
situation like two key Dimensions, right?
5:52
Your first observation about this darkening, Cloud, moving in
5:55
kind of what's behind that. I think it's like multi calls
5:58
will but I think one of the most like proximate cause it's just
6:01
Bitcoin success over the past two to three years right in
6:03
general, right? When it's not that big of a deal
6:05
in terms of total market cap in terms of total, a total total
6:09
like users of the network and in terms of penetration of Mining,
6:13
and just as a policy topic, like the government is like an
6:16
iceberg or is like a cruise ship, right?
6:18
It's doesn't turn that quickly. But then once it starts turning,
6:21
it's hard for it to Pivot, right?
6:22
So, it took a while for the government to kind of react to
6:25
Bitcoins pretty Success, right? Post post March 2020 and that,
6:31
you know, that those sort of Echoes throughout the National
6:33
Security bureaucracy, you know, still kind of cascading through.
6:38
So, I think it's a lot in the government's is just playing
6:41
catch-up initially, but then, like anything else with the
6:43
government, right? They always, they always take
6:45
what they already have. Is their latent views as to
6:47
inform any reaction to like a change in the external
6:50
environment and in the government, most of the folks
6:53
inside say the the treasury Department or folks inside the
6:56
FBI, II. You know, they're go to experts
6:59
on crypto are folks that got started working this issue back
7:03
you know and it's early days when was mostly focused on a law
7:06
enforcement perspective on Silk Road and dark web markets and
7:10
then sort of evolved into sort of the ransomware, sort of
7:13
criminal groups. So that's where their experience
7:15
comes from entirely, right? So they're narrow room it
7:18
inside. Law enforcement is basically
7:20
just to stop bad guys and they're viewing.
7:21
Like okay, what sorts of tools are bad guys using, we're going
7:23
to go after those tools and those are the folks inside.
7:27
Accuracy that have the most sort of years under their belt.
7:30
So whenever you know the word comes down from on high that
7:33
Security Council the White House that there needs to be more
7:36
official action, a task force needs to be created when you
7:39
create a national cryptocurrency enforcement team like who gets
7:42
brought on to those those task force who gets brought into this
7:45
team's, it's the folks that have those years of experience but
7:47
their disposition is likely going to be more sort of
7:52
ill-disposed towards towards Bitcoin because of their past
7:55
experience with it. But also like strategically so
7:58
that's like the narrow kind of bureaucratic explanation of like
8:01
why I think you're seeing some of the moves happen is, the
8:04
government is one that works on a lag and to the people that get
8:06
like physically assigned to those Physicians responsibility.
8:10
Are the folks that have have, you know, the, the more narrow
8:13
kind of kind of law enforcement experience associated with what
8:17
with Bitcoin, which is, you know, dispossess them towards
8:20
it, negatively strategically? Right to your question about
8:22
looking forward and this inevitable Clash, right?
8:26
Or Or positive potential inevitable clash between like
8:30
core interests, right? The core interests of the US
8:34
government, you know, you can you imagine, like, I think
8:37
they've even put this down. Hold on.
8:39
Do you birdie totally buried the lead Matthew?
8:42
Yeah, what are the core interest of the US government?
8:45
Well, there's a lot of them but I think the three that has
8:51
control of monetary policy, the second is monetary stuff like
8:55
that adjustability. And the third would be using the
8:59
dollar system as a tool of Geo, economic coercion, right?
9:02
So sanctions, right? So essentially monetary policy,
9:06
having, you know, a stable Financial system and being able
9:10
to use our control over the sort of global dollar system to
9:14
sanction, you know, our adversaries or folks that that
9:17
we want to compel that's like those are the tools.
9:20
That's like the that's like built into the DNA of certain a
9:23
security strategy and all the instruments of national power
9:26
that the garage The season is going to give up and certainly
9:28
is going to take any potential challenge as a challenge that
9:31
they need to counter or to accommodate.
9:35
As long as it kind of comes into the regulatory perimeter, in a
9:38
way, that doesn't defeat these core.
9:39
These core national interests, I think you mean yeah before
9:47
before thanks Opti before it seizes this is why I have these
9:50
awesome. So so before I interrupted you
9:54
right? Yeah.
9:54
We're about to embark on the you the we talked about the ominous
9:59
Cloud button, the inevitable Clash.
10:02
Yes. So this is where I'm not a
10:04
social determinist right or political terms.
10:06
Like these are the government is made of people, right?
10:08
And I look at it through a number of dimensions, in terms
10:11
of like hoof is who actually are in these positions.
10:15
That's right. And like any government, right?
10:17
They bring their own experiences to bear and policy.
10:20
Usually changes as a function of, like people, right?
10:23
People are in these positions gs-15 is like the sort of senior
10:27
of the civil service and then Senior executive service is sort
10:30
of the more political sort of executive layer that really are
10:34
like the main kind of Cadre of policymakers inside these these
10:40
brackets like inside ofac, right?
10:41
The people that sort of at the top of the leadership hierarchy
10:44
of ofac the 15s. And the SES it's like handful of
10:47
people that really, when it comes down to like making
10:50
policy. Right?
10:51
When the President says like we need to stop these bad guys
10:55
presence and say like hey go after Bitcoin, right?
10:57
That gets translated down through the bureaucracy and then
10:59
someone says well how do we effectively implement this?
11:02
This top-level guidance. Well I got my authorities, I've
11:05
got my tools, I'm going to, you know, implement it in XYZ way
11:09
and if they're - gets Bitcoin and that's going to be part of
11:12
the, that's maybe part of the course of action that they
11:14
proposed that they could have. Proved.
11:15
But, you know, I think this is where I sort of see this as not
11:17
as, like, an inevitable Clash, because I think there are
11:20
reasons to think that US government could come to the
11:22
UVic coins. Potentially, it's quite a
11:27
security interest, but it's going to require accommodation,
11:30
right? It's going to require an
11:31
evolution and this is not going to be necessarily a smooth
11:33
linear process. But like, how I how I see, just
11:37
like US government is not just like abstract monolith of like
11:40
interests its people that run bureaucracies and people have
11:43
different views and those views can change is different.
11:45
We'll come into those organizations as well as when
11:49
they assess those extra that external environment, right?
11:52
It's not necessarily like it's part of my thesis.
11:54
Basically that the, the core instruments that have sustained.
12:00
You, it's natural National Security for the past 50 years
12:02
like this review, economic instruments.
12:04
You could say the dollar system Etc which we have sort of become
12:07
very used to as like a just a go-to tool in the toolkit
12:11
whatever you want to like you know, punish somebody they're
12:13
starting to like we sort of reach Each the point where they
12:17
have a sort of marginal benefit and potentially reaching a point
12:19
where their use has more marginal costs and that's sort
12:22
of, as a declining curve. That means that we may have a
12:25
strategic Challenge on our job on our hands.
12:26
So it looks more like non-traditional approaches to
12:29
how we, you know, get through this decade of intense,
12:32
geopolitical competition monetary instability.
12:35
And I think to assume that today, the US Treasury security
12:38
is going to be the dominant Global Reserve asset for the
12:40
next 20 30 years is is not necessarily a safe assumption
12:44
and so everything else Those right.
12:46
In terms of how we think about structuring their security
12:48
apparatus in terms of enforcing the hegemony of the sort of the
12:51
hegemonic status of US Treasury security.
12:53
Like these are the things we're fundamentally.
12:55
I think the future monetary order is ultimately Downstream
12:59
of the future to a political order.
13:00
So I don't think we can really project too far into the future
13:03
and it makes them strong claims about this inevitable.
13:05
Clash between a certain current construct of monetary rules and
13:11
bureaucratic enforcement mechanisms into that future when
13:14
it could be a lot. The changes in the next 10 or 20
13:16
years. It's like this bottom line to.
13:17
This is just like it's more about a matter of.
13:20
It's a matter of, if it's a matter of time.
13:21
It's a matter of not forcing an issue, you know, sooner rather
13:25
than later, right? Like for me right like that, the
13:27
risk is really that you see Bitcoin disruptively monetize in
13:32
a short period of time, where would present like an acute
13:36
challenge to the existing. Now, security structure, right?
13:39
Where the, like, we haven't had plant.
13:41
We haven't time to adapt to this.
13:42
We had time to formulate a coherent National Over a long
13:46
period of time where we can see how we could calibrate ourselves
13:49
in a way that maybe we can stand it benefit from it relative to
13:52
our adversaries. And yes, this will be like a
13:55
very complicated multi-dimensional National
13:57
Readjustment over many, many years.
14:00
That's that's a feasible path. You could imagine as long as you
14:02
know, you people come into those organizations that have a
14:05
slightly different mindset and have to adapt to, you know,
14:08
changing external circumstances. But if this happens really
14:10
quickly, right? Then that doesn't, then that,
14:12
then that sort of benign thesis would be Would be less likely
14:16
right? Then, you know existing power
14:18
structures. Always do it when they're
14:20
challenged, right? They they're not, they're
14:22
usually not disposed very highly.
14:23
Their first order of business is just to contain the problem, do
14:26
whatever we need to do to keep things stable and that's usually
14:29
where you can get some of those risky scenarios.
14:32
Yeah. So in so I agree.
14:34
I think the transition definitely needs to be gradual
14:39
and be, you know, like all at once. 100% agree.
14:44
Because then you, That knee-jerk reaction, right?
14:47
However, there, Matt, there is a lot of things that a lot of
14:53
these, you know, to put it nicely and cordially.
14:57
There's a lot of power that a lot of these bureaucracies have
15:01
accumulated that in a Bitcoin World, in a hyper Bitcoin eyes
15:05
world that I think, you know, all bitcoiners are, you know,
15:08
talking about and dreaming of excetera Etc.
15:11
A lot of those are going to be greatly reduced.
15:15
And is that a pill that they're there?
15:19
They don't have a choice, but it's something that they're
15:21
going to have to swallow. What are your, what are your?
15:25
What's your perception on that? Because I think, to be honest
15:28
with you, I think Elizabeth won't Warren Jeffs very smart
15:31
lady. She knows exactly what she's
15:33
doing, Senator Marshall, maybe, maybe he got caught up on it,
15:38
but I have a feeling that Senator Elizabeth Warren knows
15:44
what's going on and I think she knows what's going on because of
15:47
the thing that I just described to you, right?
15:50
Specifically, the US government, right?
15:52
They benefit tremendously from having this privilege of being
15:55
able to create money for free that everybody else has to work
15:57
for Bitcoin is the threat to that ride.
16:00
Bitcoin is a threat to that system and allows individuals to
16:04
opt out, right? So what's your response to that?
16:07
Because it's like, I totally agree.
16:09
Like if the transition is slowly right?
16:11
You know, Cory Clips in wrote the race, to avoid the war,
16:14
right? You could hope for a greater
16:16
amount of adoption there for Bitcoin.
16:19
Becomes such a well politically entrenched issue that it's like
16:22
gun legislation like good luck, right?
16:25
Is that what you're referring to, right?
16:27
Is it, is it not? Yeah, go ahead.
16:30
Now, I think again, I'll have a crystal ball, right?
16:33
And I think probabilistic or probabilistically, right?
16:36
So I don't necessarily think anything is inevitable.
16:38
I think in terms of degrees of like, with and things can happen
16:40
that would, you know, shift Balance Bike could in, right?
16:46
I guess where I would start is When I question the premise,
16:51
which is like inevitably just like take over right in terms of
16:59
the dominant governing political institution, right?
17:02
I think it's Bitcoin as institution, right, more than
17:05
even just a money, right? We think of money is a product
17:08
of a certain institutional, Arrangement, right?
17:09
Human Society, human political organization, right?
17:12
Are nested institutions, right? And what we have currently
17:17
exists in. Political structure is a certain
17:20
type of institutional framework, that really evolved out of out
17:22
of what we're to write. Think how the natural beauty.
17:25
And really, just all the federal government bureaucracies are
17:28
currently constituted. It was really, how do we win and
17:31
how we fight and win World War Two and create these vertically.
17:33
Integrated centrally manage, you know, large bureaucratic control
17:37
structures. That can you have tax-and-spend
17:39
large? Large amounts of resources in
17:41
order to, you know, searching manage that sort of
17:45
socio-economic system, technology changes.
17:48
Institutions change, and I think like, my broader thesis over,
17:51
like longer historical time scales, is that there is a sort
17:54
of a typical rise and fall in terms of institutional birth,
17:58
institutional like optimization and institutional Decay, you see
18:02
us throughout history, right? You see, lots of political
18:04
cultures institutions that are well, adapted to a certain
18:07
domestic political and economic environment, technological
18:10
environment, cultural environment, and an external
18:12
geopolitical environment that are usually, the ones that are
18:15
best suited for those, those conditions went, right?
18:17
Like, and that's what the United States.
18:18
It's to tional as or power structure was post-world, War
18:22
Two. I think my broader thesis is
18:23
like these institutional structures are kind of reaching
18:25
a point of of difficulty, right? We're seeing them strain to
18:29
adapt to all sorts of things. Not just pick one, but just, you
18:32
know, cultural Trends, wealth, inequality rapid pace of
18:35
Technology change demographic issues like just you know a
18:39
whole slew of things you could put in this bucket would be a
18:41
slightly different conversation, but I think you can't just look
18:44
at it. Just Bitcoin is like one
18:45
variable, right? That's like changing and then
18:47
everything else Has to change again.
18:49
Stick, like Bitcoin. Is this new variable?
18:51
That's coming into, this very complicated socio-political
18:54
system. That that is already going to be
18:56
challenging, our existing political institutions, right?
18:59
And so, I don't know exactly that you can chart out like this
19:02
like nice clean line into the future and say like Bitcoin is
19:06
the determining variable for how the future political system
19:08
involves. I think it is a new variable
19:10
that is going to potentially be very important variable over the
19:14
next five or ten years, but exactly how this new dynamic.
19:18
Well, sort of play out in terms of the relationship of what we
19:22
currently call it, a state, which is a set of Institutions.
19:25
Like the FED is institution, the treasury Department is
19:28
institution the legal framework at the fines, how our current
19:32
monetary Arrangement Works, sort of implicit Norms about a
19:36
relationship between sort of federalist, you know, like the
19:40
authorities up of the federal government versus state
19:42
governments. Like these things have always
19:44
evolved and they've always been politically tested.
19:47
And it was you Has been driven by sort of endogenous political
19:51
Dynamics, right? Like new social groups, get
19:53
power, new new cultural Trends, take root and dramatically
19:57
change, kind of what? Like the median voter thinks
20:00
it's acceptable and politicians, react to the media and voters
20:03
preferences, ultimately. And so, this is where I don't
20:05
think it's as deterministic as maybe, you know, like, you've
20:09
laid out that there's this inevitable clash between this
20:12
very rigid State system, and this like one single new
20:15
variable, it's going to come in and put you upset the apple
20:17
cart. Like that is a nice.
20:18
In like story but in reality is very messy and I think like
20:21
there are scenarios where like you gets a this rapid take off a
20:25
Bitcoin, it goes to half a million dollars in two years and
20:27
then it would become like the most important issue, right?
20:30
It would be thinking, whatever the government would have to
20:32
react to it and probably not react to it very, very, very
20:36
minute very benignly, right? And that's that would get you
20:38
that sooner where there is this inevitable Clash.
20:41
But yeah, I don't know if that specific scenario is the one
20:44
that we're going to see, I think there's there's other other
20:46
other ways it can play out. I guess that's like more like an
20:50
academic discussion, right? Because this is where I step
20:52
back and I put like, more philosophical hat on.
20:55
You can put it as a growing and is potentially pushing,
21:02
undermines some subset of artists, but our, our, our
21:06
institutions have always evolved.
21:07
And so there's no, I guess, like a priori reason for me to think
21:11
that Bitcoin emerging as a, as a new form of institution, that's
21:14
the premise done. You know, providing this sort of
21:16
self Saverin monetary Asset and a peer-to-peer, you know,
21:20
censorship resistant transmission system, you know
21:22
can't be accommodated under some reconfiguration of of an
21:25
Institutional framework that we would still call something like
21:27
a state, right? Like these things are not
21:29
binaries these things exist on a spectrum and we've seen radical
21:33
transformations of those institutional State structures.
21:36
You know, every few decades and and I don't expect that, you
21:39
know, Trends to stop again. Yeah.
21:42
That was maybe a little abstract.
21:43
No, that's a totally. It totally wasn't because you
21:47
basically work Talking. Okay, so to break it down,
21:50
right? Is if there is rapid adoption,
21:53
right? It might unhinge a lot of people
21:56
and threaten the existing power structure, but if it's a more
21:59
gradual adoption, right? And with gradual adoption, you
22:03
can you could assume that means more adoption of the populace.
22:09
More adoption of the populace, politicians are going to have to
22:13
adopt, adapt to that and you're making the case Matthew that the
22:17
u.s. government specifically not the US government that the
22:21
administrative state, right? The, the a lot of people call
22:23
the Deep State, you know, put that aside and I to talk about
22:26
that, but the, the bureaucracy that's there, regardless of who
22:30
gets elected into Power, you don't foresee that and I want to
22:35
emphasize that rate if they benefit tremendously from
22:38
deficit, spending from being able to print money to write.
22:42
What how much is you know, the one point seven trillion dollar
22:46
Omnibus Bill, right? We we can't afford that tax
22:49
revenue alone that has to be paid for by deficit spending and
22:52
you can make the case that Bitcoin is a threat to that that
22:56
that doesn't you know because regardless of the slow gradual
22:59
transition, the US government is one of the largest employers in
23:04
the world last Last time I checked 10 million people
23:06
employed in the us alone. How are they going to be able to
23:09
pay for those job? This this a huge amount of
23:11
people you know? Or are you making the case that
23:15
the deficit spending is going to be able to continue under a
23:18
Bitcoin standard? Well, there's a lot packed in
23:22
there. I'd say pick one ever existed,
23:24
right? The US government in 20 years,
23:26
maybe 10 years is going to have a lot of trouble paying for
23:28
itself, right? That's kind of like maybe the
23:30
reason why Bitcoin is potentially successful.
23:33
Next two years is because we're going to have to issue so much
23:36
debt. We're going to have trouble
23:37
running into, we're gonna have trouble finding sort of natural
23:40
buyers of that debt. And so the FED is going to
23:42
actually have to sort of be the increasing marginal buyer of
23:45
that debt. And that's sort of how typical
23:46
debt monetization 's and you know, currency devaluation In to
23:50
take place, right? When you have this long term
23:51
debt cycle that associate with political Decay.
23:54
So they gots that would be the case regardless of Bitcoin.
23:57
Right now that, you know, maybe the political narrative would be
24:00
this is being caused by Bitcoin because Bitcoin would be like
24:03
the sort of the the most sensitive measure of that sort
24:07
of monetary political instability and they would like
24:10
want to attack the coin because it's a symptom of this
24:12
endogenous, you know, sort of Decay.
24:17
But like, I don't think Bitcoin is gonna be the cause of it.
24:20
Just a mechanically that that would be the trouble regardless
24:23
and the government was eventually going to run into
24:25
this problem, we're going to have to find a way to
24:28
politically accommodate a lot of different obligations that we
24:31
but we can't necessarily meet right like between entitlement
24:34
spending defense, spending a whole bunch of other objectives
24:38
that are going to run into the fact that the global mindset
24:40
Arrangement isn't it going to accommodate our deficit
24:42
issuance, right? That was the, that was the Crux
24:44
of our hegemonic status. In the past 50 years is that we
24:47
could print the money like that, that was not just A matter of
24:50
political will write, or it was a matter of a Jew economic
24:53
Arrangement where like we ran deficits.
24:55
We absorb surpluses from, you know, like OPEC basically and
24:59
then and then China, and we had this nice treasury sort of u.s.
25:04
dollar sale recycling system built that that's what enabled
25:07
the growth of, you know, kind of a lot of these, a lot of these
25:13
sort of other other obligations that.
25:15
Now, maybe we can't support. So you're asking, like, okay.
25:18
Well then what's the political reaction, right?
25:20
Like the narrow interests of say, the folks that work in the
25:22
government is going to be like their job.
25:23
Well obviously, right, but like we've seen this happen before,
25:27
right. Where like, you know, this is
25:29
like a political question, right?
25:30
People are going to vote, ultimately right to their
25:33
interests and like you could change the Congress and the
25:36
Congress can say, yeah, we're not going to finance these
25:38
deficits anywhere like that. That would just be like a very
25:40
specific kind of like little correction and that's you seen
25:44
that throughout history and ultimately like yeah it's
25:46
government can't sell Finance, it needs to Congress to you
25:49
know, pass those But you're like, so I decompose this
25:53
broader question of, like, US Government needs the money
25:55
printer into. Well, what?
25:57
What are those specific? You know, Social Power centers.
26:00
Right? There's very different sort of
26:03
structure is whether it's like, Wall Street as like one nucleus
26:06
of like, institutional Elites that have a certain relationship
26:09
to the current monetary and political Dynamic, there's the
26:12
folks that are elected to congress.
26:14
There's, you know, broader Business Leaders.
26:16
There's, you know, an active in an elegant and motivated
26:20
citizenry that can engage in the political system and express
26:23
themselves. Like these are not like Tech is
26:26
one group that runs the show, right?
26:27
Like even though it's nice sometimes you're like, tell
26:30
ourselves it is because it's a clean story, it's a lot of
26:32
messy, you know, political actors that have their own
26:36
narrow self-interest that yes, like the 50-year history of this
26:40
kind of dollar treasure recycling system work really
26:42
well for certain sectors of our political and social system,
26:45
right? Especially those sectors that
26:46
could capture those Capital flows coming in.
26:50
From you know, oversee Surplus Nations.
26:52
So the Russian oligarchs going and buying up London property,
26:56
the the Middle Eastern princes, you know, recycling, a lot of
27:01
their, their extra cash into JP Morgan and Goldman Sachs
27:04
products and, and real estate investment products and buying
27:08
up, equity, and social media companies and Chinese, surpluses
27:12
coming in and buying up land. And another assets.
27:16
Like this is, this was the, this was the dynamic where a lot of
27:20
of these external dollar Surplus is were recycled and United
27:22
States and industries that stood sort of capture, those flows
27:26
are, don't want to see those photos broken right case in
27:28
point like Ray dalio right? Ray dalio who I think has a good
27:32
analytic assessment of these long-term Dynamics.
27:35
But his firm, which is supposedly step back from
27:38
Bridgewater. You know, they manage, you know,
27:40
billions of dollars for the Chinese State Central Bank and
27:46
Associate institution. So like they are like a core
27:50
Example, of some it's of some existing actor that we don't
27:53
want the system to change in terms of these dollar flows.
27:56
I don't think Bitcoins be the thing that breaks those flows.
27:59
Like those flows are on our sort of inherently unstable, right?
28:03
And they reach a point where they can't be sustained because
28:05
they cause other like other failures, right?
28:09
For example, like this system has resulted in periodic
28:12
Financial crises that have balloon public debts.
28:15
This system has resulted in massive social Elegies right
28:20
where our manufacturing base gets eroded in.
28:23
You know, the fire sector Finance Insurance, real estate
28:25
stands to gain those. Some subsets of the population
28:30
losing by taping Jamie dimon hates Bitcoin, right?
28:33
I have a thesis, right, which is that there's other actors that
28:37
have a say in the system, I think there are a lot of them,
28:40
they could be growing in importance, and could counter
28:42
balance. Some of those existing actors
28:44
that wouldn't want the system to change.
28:46
But, you know, one important actor is the like accumulated
28:49
me. voter who likes feels the system isn't working for them
28:52
and might be open to, you know, evolutionary exploration of
28:55
Alternatives and when people behind like a radical measure
28:59
that would sort of infringe on what we think is, you know,
29:01
inherent American, you know, civil rights, civil liberties
29:06
and important new stakeholder that I think could become you
29:10
know, something that's like at least Bitcoin neutral is going
29:14
to be the department and intelligence apparatus which I
29:17
think is now recognized that this This financial system for
29:21
the past 50 years which we really sort of like super super
29:24
charged. U.s. hegemony is causing all
29:29
sorts of second-order feedback loops that are now maybe like
29:33
creating more costs and potentially putting us at an
29:36
acute National Security disadvantage.
29:38
For example, China weaponizing, their dollar Surplus is as part
29:42
of, they'll trade initiative to exert, geo-economic influence,
29:45
throughout Eurasia and Africa and even South America and
29:47
Europe. Okay, this is a problem using
29:49
dollar In the dollar system against us, right?
29:52
And another related pathology that is creating an acute
29:55
National Security. Vulnerability, is the US
29:57
Treasury security itself, which is, you know, the foundational
30:00
dollar funding collateral in the offshore dollar system, and we
30:04
need that system to become stable.
30:05
Because whenever there's a run in the offshore dollar system,
30:08
treasury Securities, get fire sold, and like we saw in the
30:12
repo crisis. Why like we saw in particular,
30:13
March 20 20. There's actually a run on the
30:17
offshore dollars and treasury, security Market goes, no bid and
30:19
the It has to do trillions of dollars of QE and the defense
30:23
Department's waking up to this. And realizing this is an acute
30:25
just reaching vulnerability to us and that we can't keep.
30:28
We can't expect the system to just inevitably endure and be a
30:31
source of National Power as opposed to source of national
30:35
weakness. And so, there is, I think just
30:37
to like, zoom out then like these are different interest
30:40
groups, different, sort of eggs, from a status quo, institutional
30:42
power centers, that could react differently to Bitcoins marginal
30:47
success. I agree with you, the certain
30:50
incumbent Elites that would be completely against Bitcoin
30:52
succeeding because it would take away the punch bowl that they've
30:55
been, you know, dipping into for the, for the past several
30:58
decades. But I think, you know, I don't
31:01
think those as those stakeholders necessarily are the
31:03
only people that have a say. And I yeah, that's like one of
31:07
my, you know, interesting observations is like yeah, like
31:10
getting getting these folks in our security apparatus to
31:13
realize that maybe jpg Jamie dimon and Radiology.
31:16
I don't have u.s. u.s. National interest at heart
31:18
ultimately. Maybe they have, you know,
31:20
Bridgewater and JP Morgan's National, you know, personal
31:22
interests at heart, and maybe the system that they've
31:25
leveraged their personal benefit is starting to create, you know,
31:28
a cute vulnerabilities for us. And so that's, that's that
31:31
creates a door that creates an opening right.
31:32
At least, doesn't mean there's a doesn't mean they're all on, you
31:35
know, the clean side per se, but it does.
31:37
It means that it seems like the forces of opposition aren't as
31:41
monolithic. Is, you might assume this is the
31:44
fascinating. I'm really enjoying this shout
31:47
out, straight out. Roy, you got it spot on my
31:50
friend. So you said something really,
31:54
really it. At least it's interesting.
31:57
I thought it was really interesting that this idea that
32:01
it's not a monolith, right? It did.
32:03
The u.s. government, it's a bunch of special hate saying
32:07
that, but a bunch of interests and interested people, very
32:11
powerful, you know, group of people from different sectors
32:15
and that kind of makes up the power structure do.
32:18
You believe that Bitcoins incentives are going to be great
32:21
enough to win over enough of the populace to, you know, to at
32:29
least drill up that political willpower, right, it.
32:33
Yeah. What are your thoughts on that?
32:36
That's like a predict a future question.
32:37
And I'm not good at predicting the future questions, but this
32:41
is more type of this is more, you know?
32:44
Because it's not. This is what I think about all
32:46
the time, right. Yeah.
32:47
I got a theory of it, right? Yeah.
32:49
So II like the model it out, right?
32:51
And I can see. So again, these are very like,
32:57
Very complex systems, right? We're like finding the knit like
33:00
the nice clean story is a nice clean story, but reality is
33:03
messy and often stuff happens, right?
33:05
Like covid happens. You know, Ukraine war happens,
33:08
right? Like lots of stuff that we don't
33:10
know is going to happen in 20, 23 and 24 25 that could create
33:14
lots of exhaustion of shocks, you know, that that could affect
33:18
the coin at extremely negatively extremely positively, right?
33:20
And and and that affects ultimately your question is like
33:23
what is the adoption curve? Look like right?
33:26
Because if everything is Downstream like to Cory's Point
33:28
like is, is Downstream of the adoption curve?
33:31
Well, then, like everything drills down to the question of
33:34
well, then what are the key factors that will change the
33:37
adoption curve over what time Horizon, what and I break that
33:40
down to like two buckets, right? What can happen or what is
33:43
likely to happen versus like what should happen?
33:46
You know, say like to pick one itself, like the Bitcoin
33:50
Network, the Bitcoin Community, the Bitcoin narrative structure.
33:54
You know, these types of discussions like the things Like
33:57
all like within the Bitcoin, like, nascent institution,
34:00
right? What can the Bitcoin nascent
34:02
institution do to maximize, you know, the rate of change of that
34:08
adoption curve? That's like 11 path of analysis
34:11
and discussion. Once an effective communication
34:14
strategy, what's an effective narrative framework?
34:17
What's an effective technical development strategy for, you
34:20
know, stratum V2 versus Taro versus all these, you know,
34:24
potential dips. Lightning Network.
34:27
Developments like one whole strand of discussion that like
34:30
ultimately helps form a view of how fast do you think that
34:33
adoption curve goes? You know, getting institutions
34:36
to sell it, your 401k, all that stuff, right?
34:38
That's like the subject of a lot of Bitcoin conversation.
34:40
There's a whole nother set of discussions which is like what
34:43
can happen in the rest of the world, right?
34:44
What can happen with like things like the covid, you know, shock?
34:49
Right. Which, you know, I think I would
34:51
recognize. It's like that was a critical
34:52
inflection point for Bitcoins adoption to a certain extent
34:55
because it caused such A dramatic reaction both
34:58
politically socially economically in terms of
35:02
monetary expansion that like Bitcoin, you know saw like you
35:07
know whatever 20x from the from the marsh flows and so that that
35:12
that's how I would put it into the stupa to keep up and so then
35:15
any one of those you can have a separate conversation about what
35:17
do we think is likely to happen? That's like the most promising
35:22
developments a with them like Feta mints and other custody
35:25
solutions that could help me. Make, you know, the the the
35:29
hurdle for self custody little bit lower and that makes the
35:32
psychological aversion to bitcoin for the like the median,
35:36
you know, adoptee lower. And that increases its total,
35:39
you know, addressable, you know, user base quickly more quickly,
35:45
what could be another exhaustion?
35:46
Assay - are you shocked geopolitical shock political
35:51
shock domestically that because that could cause people to wake
35:54
up to the value proposition of Bitcoin, right?
35:57
Canadian truckers or at The Sovereign level Russian
35:59
sanctions or some other, you know, monetary breakdown like
36:03
another repo Market breakdown or some instability in the treasury
36:05
security Market, some real flip back to quantitative easing like
36:10
all of these ultimate. That's that's where the question
36:12
comes down to. For me, it's like if everything
36:15
comes down to bitcoin adopting faster in terms of like not
36:18
number go up in terms of price. But number of up in terms of,
36:21
you know, like people that hold some material, not of their net
36:24
worth in Bitcoin and understand. And it and understand how to
36:28
solve custody it. That's, that's the number that
36:30
you would want to go up and you want to see.
36:33
Okay, well that's based that's but that's the bottom line,
36:36
right? Because if that number reaches
36:37
some critical threshold, right, we don't know exactly what it is
36:41
domestically. At least, then I think you
36:43
could, you could argue that these tail risk scenarios of,
36:47
you know a government you know cracked on.
36:50
You can have a whole service question.
36:51
How that would happen, what they would try to do or who's the day
36:54
that would be doing it like you know, that That's what reduces
36:58
the that pushes those Tails further out, so the Tails
37:01
doesn't mean they're gone. It just means, you know, we're
37:03
thinking in terms of probabilities and, you know,
37:05
certain things pulled pull that type of scenario closer, certain
37:08
things, push it away and certainly growing adoption and,
37:11
you know, making it seem like this is a good thing for America
37:14
and its easy thing for people to use.
37:17
That's how that's how you see it succeed.
37:19
Yeah, and that's the, you know, that's the I call a narrative
37:23
trench warfare, right? That's the battle right is
37:26
Winning over the hearts and Minds to at least have enough of
37:30
a Grassroots movement here in the US but there's been a true.
37:33
There's been a pattern that I've noticed Matthew, which is in the
37:40
developed World, Alex clouds Dean calls it Financial
37:43
privilege, right? The bread and circuses are
37:46
strong so to speak. What I mean by that, very
37:48
developed, Financial rails and the inflation is ever.
37:51
So slight that people don't really notice the totally other
37:56
conversation. In the developed world.
37:58
I'm sorry in the developing world where it's not a matter
38:03
of. Oh speculative, you know,
38:06
Bitcoin fixes this. It's a matter of how do I put
38:09
food on the table, right? So it's something totally
38:11
different incentive structure in my opinion.
38:14
The developing World incentive structures much stronger and I
38:17
brought this up to Jeff Booth last week and his response was
38:21
fascinating. He said, people that are farther
38:23
away from the benefits of the monopolies are going to be the
38:26
first ones to adopt an alternative.
38:29
And I thought that was I thought that was really, really
38:31
fascinating to the question that I have for you Matt is it is a
38:36
very strong answered what he said right at the question.
38:38
I have for you, Matt is our the incentive.
38:41
Do people have enough of an incentive in the west, to adopt
38:45
something like Bitcoin, without something breaking, of course,
38:48
something breaks, you know, inflation stays where it's at
38:52
or, you know, something catastrophic happens.
38:55
Then it's like, okay, people are like going to see Alternative.
38:57
But how things are right now. The reality is that most of my
39:00
friends, most people like most of my old friends, really.
39:03
Cuz you're not friends with me anymore.
39:05
Because all I do is talk about Bitcoin.
39:08
How is that enough of an incentive?
39:12
Because the the educational thing is very strong like it's a
39:16
very uphill battle is what I do every single day is trying to
39:19
orange pill people but it's extremely difficult.
39:22
The reality is that most people just they don't care, right?
39:25
If you speak to someone in As well.
39:27
You speak to someone in Argentina.
39:28
They like, I love this thing. This thing is awesome.
39:30
Where can I sign up some in the west it's like uses too much
39:34
energy, right? I've heard that many times.
39:38
Yeah, no. I mean, people really only use
39:40
anything when they need it, or they think it's cool, right?
39:42
And so, there's like different arguments, right?
39:44
Like or they think it's going to make them Rich, right?
39:46
Those are the three things, right?
39:46
So it's like, use it because you need it.
39:48
Is it? Because it's cool.
39:49
It's like a social signifier or you because it's gonna make you
39:51
rich. And so like in the developing
39:55
world, right? In terms of like we're looking
39:56
at just like total numbers of people, I think it's the need to
40:00
use it. That's the most sort of driving
40:02
factor that to your point, right.
40:04
And now it's glass teens, you know, excellent.
40:07
Writing some sort of articulated that this is a tool that's being
40:10
used to solve real-world problems by people who, like
40:14
need this particular type of tool and okay great and and yes
40:17
like that drive it, that rationale I met use case for
40:20
that that subset of adoption is probably not going to be all
40:23
that applicable to the typical, You Know, Rich fat, you know,
40:27
sort of Westerner who's got visa.
40:29
And you know, MasterCard I mean I think they're still doing with
40:32
it. There's some segments of the
40:33
population that, you know, still find, you know, they're not all
40:36
that rich. They don't.
40:37
All all that have access to Banks or, you know, Financial
40:41
privacy is a concern for them. They're worried about, you know,
40:43
this is like a spouse, you know, that might be, you know,
40:47
monitoring everything they do. And they want to, you know, have
40:49
their own like a better life is like this, this is like there's
40:52
reasons, I think people in the West for still, we still have
40:55
that kind of need to use justification, but I agree.
40:58
Like the principal motivation behind.
41:00
I think most people in the west is because they get school or
41:03
they think it's going to make the bridge.
41:05
And how, what's that? All right, for those people, I
41:09
think it, I think, the reason why this kind of balances out is
41:12
that, you know, for the folks in the west, they don't have to
41:14
need it to stay put like two percent into it, right?
41:17
And if you have this makes it such an easy thing to do and
41:21
just like, no one looks at their stock portfolio, really?
41:23
They just say, okay, give me the etf's for whatever and if that
41:26
ETF has a two percent allocation to bitcoin, then that's two
41:29
percent allocation the Bitcoin right now.
41:30
That's not easily Bitcoin. That's you know, a Bitcoin I owe
41:33
you and some ETF product but it's you know, there's so much
41:37
Much wealth in the United States that like in terms of net effect
41:40
on the market cap, that would probably be a lot more than, you
41:43
know. Someone in in Lebanon that's
41:47
like has a clabsi maker system is taking you know all their net
41:50
worth was raised to be a thousand US Dollars equivalent
41:52
of putting into Bitcoin just so they can like at least get it
41:55
out of this banking system and protect her from you know an
41:58
extractive oppressive Elite sort of you know like dysfunctional
42:03
State. Yeah these are different
42:05
arguments but I agree like This is where I know.
42:08
It's more of like a Choose Your Own Adventure, right?
42:11
Like these are so good or bad. This is just the way I think
42:14
it's going to play out. Yeah.
42:16
So you said something really interesting, right?
42:18
Which is you know if big percentage of the population put
42:21
2% of their wealth in Bitcoin But that only works if that if a
42:29
large portion of that of that number is taking Bitcoin into
42:32
self custody like that is the revolution is taking wealth back
42:37
into your position. You're in the process, you're
42:39
taking out of the system. That's what's actually going to
42:43
effectuate change if a lot of people are just treating
42:45
Bitcoin, like Robin Hood, it's like, oh, whatever nothing
42:48
changes. Right?
42:49
It Catlin. Long has been screaming from the
42:51
skies like rehypothecation rehypothecation.
42:54
And we just saw it. We saw a small fraction of what
42:57
the consequences of that. The reason I'm saying small is
43:02
because I suspect that this is what's happening right now.
43:06
Could you imagine the FTX equivalent in five years?
43:09
It's going to be Mount gox, right?
43:12
Everyone's like that was terrible.
43:15
Lord, FTX, um. So what are your thoughts on
43:19
that? Like it?
43:20
And you mentioned feta minutes earlier, right?
43:23
The I just I call this A self custody problem.
43:27
People get mad at me on Twitter when I say that because they're
43:29
like there is no self custody problem.
43:30
I'm like, dude, you understand? We're hardcore bitcoiners we
43:33
could use a cold card with our eyes closed, but the fact is
43:37
that you introduced self custody to someone with a cold card.
43:40
First, they're going to throw the cold car there.
43:41
Be like you're a crazy person, right?
43:44
So yeah, this is a, you put your finger on it, right?
43:47
And, you know, I don't have a good answer for this because I
43:49
think this is, this is a chat is a challenge, right?
43:52
There's a challenge for user interface is a challenge for
43:55
Like technical development, right?
43:56
Like, you know, I just thought I forget his name I'm blanking out
44:00
of but he just put out a new proposal for like a certain type
44:03
of Vault structure, right? Which you can kind of like
44:05
safely time lock. I didn't read all the details
44:08
but like this is meant to solve some of this challenge of where
44:11
you don't want to have all everything in a single say that,
44:13
like you've got, you know, tucked away somewhere.
44:15
This isn't like, I think, ultimately, this is going to be
44:18
about technology development, right?
44:20
Like, you know, whether it's dips or whether it's just, you
44:23
know, something that can interact, you know.
44:25
In some sort of, more of a hybrid fashion.
44:27
Okay. Then provide some more
44:31
hybridizations and allows people to sort of, you know, dip their
44:34
toe in the water. You know.
44:36
Again this is not going to be like an overnight you know
44:39
re-education on the function of bear assets, right?
44:41
Like this is going to be a challenge and that's ultimately
44:45
yeah. Like this is where the political
44:46
question comes in, right. I have this For just to put it
44:50
slightly. But it comes back to this
44:51
question is like, if the coin where you succeed, you know,
44:54
outside the United States like at a national level, right?
44:57
That's like there's different ways.
44:58
This could go, but I think you got to consider all the
45:00
different permutations and like one I think plausible, I
45:03
wouldn't put like a high percentage point on it, but like
45:05
what? Yeah, yeah, yeah.
45:06
I think it's damaged ends of earn.
45:08
Thank you. Whoever put that in.
45:10
Yeah, go check out his Twitter feed and he just posted it like,
45:13
yesterday or today. I'm that sort of I'm at fault
45:16
proposal is So shifting back to like, if you had a GCC Nation
45:22
decide, we're going to take 5% of our Sovereign wealth fund,
45:26
we're going to put it into Bitcoin and we're going to solve
45:27
custody it as a sovereign wealth.
45:30
It's a tution and maybe you know, will take like will first
45:33
have like Michael sailor will have you know one of these
45:35
institutions institutional great because providers do it.
45:37
But eventually like a whole point is we want to like make it
45:40
something like gold that's in her own Vault.
45:41
We're going to do it ourselves etc.
45:43
Those, those Nations start developing their own, kind of
45:46
like, Sovereign custody Solutions.
45:49
That I'm sure. Like other nations would look to
45:51
be like, oh, how did you guys do that, right?
45:53
And Salvador was, I think too small to, I think really move
45:56
the needle in terms of this list.
45:57
This Global picture, you can imagine, then like bunch of
46:00
Middle Eastern, sovereigns that have say, 5% of their sample of
46:03
fun in a self custody Bitcoin Solution.
46:07
That's like an interesting thing right.
46:09
But that's a very different Dynamic.
46:10
I think bitcoiners are comfortable with because that
46:12
that's like a bunch of just existing Elite you know not
46:15
necessarily liberal you know, people I think Bitcoin like I'm
46:19
not sure how we would feel about that, right?
46:20
If like the people on the Vanguard a Bitcoin adoption or a
46:23
bunch of, you know, Saudi princes and folks, in Dubai, or
46:28
in Kuwait with a bunch of oil, money and natural gas money that
46:31
they want to protect from us. Sanctions like are we good with
46:33
that? Like we would have to be
46:35
comfortable with that being like the Vanguard of the adoption as
46:37
opposed to you know the typical Lebanese sort of Lebanese person
46:40
trying to protect their money from the banking system.
46:42
But this is the yeah that's a plausible scenario that could
46:45
play out. I don't Bitcoin is my friend
46:48
Annie's Bitcoin is a global you know Network.
46:51
So I think you're going to see it interact with different
46:54
political systems, very differently.
46:56
And it gives me like one nice, simple narrative that you're
46:58
gonna be able to like, put it all under its, it's going to get
47:02
very messy. Yeah, I have two questions on my
47:06
mind and I'm debating. Which way do I want a fork this
47:09
conversation? Because I just came up with one
47:13
when you were, when you were just saying your bit.
47:15
Mm-hmm. Okay, I'm gonna In this
47:17
direction because this is what I wanted to ask you in the very
47:19
beginning when you were talking about the how the government
47:23
structure isn't necessarily a monolith, the way that and I
47:27
love how you said it, right? Everyone wants this beautiful
47:29
story but it's not. There's a lot more nuanced.
47:32
It's a lot more complex and I love that you really opened my
47:36
eyes on that because I never really looked at it from that
47:38
perspective. So Matt, do you believe in?
47:42
And hopefully, we have a time for the next question.
47:45
But do you believe Leave the theory in the sovereign
47:48
individual that basically the information age is going to lead
47:52
eventually to the death of the nation state.
47:55
How its organized today. Do you believe in that theory or
48:00
again to use your words? Or is that just a very simple
48:04
you know way of Storytelling basically.
48:11
If you're gonna be like the PHD thesis question here, it's like,
48:14
you know, there's a lot in that question.
48:17
I would I said, the bottom line is, I think it's directionally
48:20
accurate, but I think there's a lot of uncertainty around that
48:25
directional. I've around that direction and I
48:28
think it was a direction in time scales because at least, like,
48:33
at a structural level, right? Like Usually you see existing
48:39
institutional framework. Specially like, we might call
48:40
like nation state structure, which is a relatively recent
48:43
like legal concept, like a nation state has existed since
48:46
like Peace of Westphalia and the concert of Europe.
48:49
And even then it was kind of like there are hierarchies of
48:51
Nations. They were the Great powers and
48:52
there was kind of colonial possessions.
48:55
These are all kind of like he's our narrative fictions, right?
48:57
These are legal Concepts, these are political Concepts.
49:01
These are like, you know, stories people say like I'm a,
49:04
I'm a part of this government. When materially what you
49:07
actually look at, is you look at how many people exist in which
49:11
cities, and who pays their who pays their salaries and what
49:15
tools are they have, what legal authorities, do they have, what
49:18
weapons do they have? Like these are the things like
49:20
material foundations of these institutional structures.
49:24
We have examples of like these breaking and really bad ways
49:26
like the you know, collapse of the Soviet Union and everything
49:29
that can come out of that like just chaotic environment where
49:32
an existing state structure that sort of erodes from within and
49:36
that You know, was managing this large, you know, geographically
49:40
and culturally, you know, heterogeneous area collapses and
49:43
you get this sort of chaos, right?
49:45
You get sort of warlordism we see that throughout history,
49:48
right? Because of the rise and fall of
49:49
sort of central dynasties. In China has seen this Dynamic
49:52
play, our you have, you know, essentialize power that grows to
49:55
some point at which it can sustain itself and like any sort
49:57
of inevitable Dynamic where it reaches a point of mutual
50:02
expansion, like it starts to waste more resources, to try to
50:05
keep itself. Elf from collapsing and that
50:08
causes the collapse to go faster like a star.
50:10
You know, transmuting elements up.
50:12
If you gotta change to say iron and then it can't get any
50:14
marginal kind of nuclear energy, and then it's real collapses and
50:17
you get a supernova, right? I don't know.
50:19
That's like the inevitable path, right?
50:21
Um, cycle. That's mostly like political
50:30
plus economics. There's folks like acceptable
50:32
that look at it, mostly from this life, softly technological
50:34
angle. I think, predicting the future.
50:37
Is it possible, right? I just think there's going to be
50:40
other things that we're not really, we don't really know
50:42
their full effects yet. Like if you took like chat GPT
50:46
and you scale it up by a factor of a hundred and ten years, what
50:49
does that mean for Matt? Yeah, the means of production
50:52
was it mean for distribution of surplus labor and political
50:56
reactions against that neo-luddite ISM.
50:58
And like there could be entirely new political and sort of social
51:01
reactions and kind of reactions that could right now don't
51:05
exist. That could be I'm like a
51:06
dominant fractures in society in 5 or 10 years, that that's where
51:11
I was having difficulties is great.
51:12
It's like a high-level schema that I think was really
51:14
prescient in a lot of ways, but like I try not to narrow down
51:17
and like, what this vote. This is the way the world is
51:19
going to be and I think like we're hitting somewhere thing.
51:22
A lot of these weird inflection points, whether it's like AI
51:24
technology, whether it's just like General institutional
51:28
instability across a lot of Dimensions, geopolitical
51:30
instability. Like, it's gonna be a messy
51:33
decade. I just want to get through it.
51:35
And I think, Bitcoins, Real raised on debt, should be to get
51:38
through the decade without either precipitating like a
51:41
massive counter-reaction by like the existing institutional
51:44
framework and then political framework just like work on
51:46
itself, right? Go and grind in the gym and get
51:49
really strong and like, you know, like build up your core,
51:52
you know, so that you can, you know, like we're running the
51:55
marathon this decade essentially because you can very messy, a
51:58
lot of stuff could happen. It could be hit, you know, like
52:00
you're getting whacked from all angles and I think, you know, if
52:03
we sort of reach some new equilibrium after a period of
52:06
Disorder and you know, recalibration maybe there's
52:10
like, you know, a quietude and we can like calmly adjust to
52:13
some new arrangement, I don't know.
52:15
Like yeah, acknowledge it technology.
52:16
May not let us do that. It might just be like Smooth
52:18
takeoff and then Rim the super a.
52:20
I take over scenario. We'll see.
52:22
So it's, you know, I really enjoyed this conversation
52:26
because basically the you're very careful not to Very careful
52:34
to emphasize the complexity of a lot of these things and point
52:38
out you know human beings tendency to storytellin simplify
52:44
certain highly complex macro issues and I really enjoyed that
52:51
it really really open my eyes today.
52:55
So you mentioned something in the very beginning, which was
53:00
the overall macro Sure you do agree with in the sovereign
53:04
individual and what is that that the macro picture is essentially
53:08
that information Technologies are going to take away a lot of
53:12
power from the existing nation-state models that you're
53:16
right. That in the grand scheme of
53:18
history there. They're very they're at they're
53:20
actually really really young, right?
53:21
These aren't very old types of models in the current
53:25
organization scheme, right? It's just it just continues to
53:28
grow and grow and grow. You do believe that the internet
53:32
Bitcoin, you know, the free flow of information youth.
53:35
Do you agree that it's going to affect these nation states
53:40
ability to to do things the way that they've been used to doing
53:44
it. Right?
53:44
That, you know, extremely effective, taxation number one,
53:48
and number two, you know, the ability again, the ability to
53:52
print money. Basically, you do agree that in
53:57
the long term. Because of the nature of this
54:00
technology, you do agree that. It did.
54:05
I mean, I would say it's common sense, right?
54:08
I mean, I'm hopeful, I guess I have like, I'm a realist and I
54:12
spent a lot of time thinking about like bad, like bad, click
54:15
worst-case scenarios and and I also see just like we have we
54:19
have examples now of existing state structures that have
54:22
effectively captured the internet to wield it as a tool
54:25
for social surveillance and oppression and like China.
54:29
It's not total. There are you know, like You
54:33
know, there are cracks here and there, but it's devices for the
54:36
ruling Elite to basically keep the political system, you know,
54:39
decently stable. This is a major, I think it's
54:42
gonna be a major Trend. This decade is the balkanization
54:46
of the global internet and to what extent do it's really gonna
54:50
come down to this. This is a larger conversation
54:53
but like the trajectory from the open end up being like is open
54:56
protocol to really being a bunch of like walled, Gardens, right?
55:00
Of like of like, oh my God, archaic technology.
55:03
No platforms. Right?
55:05
That all kind of arranged with each other and with the state to
55:08
basically, you know, align with their their political
55:12
benefactor. So like These are competing to
55:24
sort of pull acquired territories and populations into
55:28
their block. This is what like the Chinese
55:30
digital Yuan and Bri is all about is essentially trying to
55:34
pull in more of the raisin free into the Chinese sort of techno
55:39
block. And they're going to export
55:41
their surveillance systems in their AI technology and their
55:45
digital currency platforms. And try to, you know, get these
55:49
populations into there. It's fear of influence, that's
55:51
really going to be like anchored in these hard technical networks
55:55
and then they're just trying to, you know, squeeze out, you know,
55:58
the the global Facebook Network plus the global Swift, you know,
56:02
and fedwire system. Plus, you know, you know, like
56:07
the bilateral trade flows that they're trying to feel like this
56:09
is the, this is the problem. You have a geopolitical
56:12
competition, is that the competition dynamic means that
56:15
each of those two competing systems, like, is not going to
56:20
like Bitcoin. Much, right?
56:21
Because I because the opposite to both of them right to sin
56:23
extends. You might this is that Bitcoin
56:25
is like much worse for the Chinese version here.
56:29
It's so like we should not try to compete with China on there
56:31
like just try to replicate what China is doing and try to create
56:34
like a an American version of that, you know, surveillance CDC
56:38
system that just has like an American flag on it versus like
56:41
a Chinese flag on it, but like we should actually have like a
56:43
techno governance system and a value system that like aligned
56:47
to our values that will be more attractive like just endogenous.
56:50
Ali to 100% 100% but that's not compatible with the, like, for
56:57
example, mat in the digital assets framework, right?
57:02
The executive order released by the body Administration, which
57:07
led to the US Treasury to release a report in that report,
57:11
it was called the future of money and that entire report
57:14
called the future of money. They mentioned stable coins,
57:18
they mentioned Payment Systems. Bitcoin was oh And the future of
57:21
money, according to them, our Central Bank, digital
57:24
currencies. And then you think about like,
57:25
why is the future of money, okay?
57:27
Because what Central Bank, digital currencies, they're able
57:30
to maintain their privilege, right?
57:33
So I agree with you. I think Bitcoin is much closer
57:37
ideal, so the founding principles of this country,
57:41
right? But specifically to the
57:43
bureaucracy there, they have much closer ideals to the China,
57:48
sit essential Bank, digital currency.
57:51
Yeah. I mean there are certain people
57:52
who like surveillance like you know folks in you talk to Warren
57:56
staffers they just think they secrecy act and kyc.
57:59
Am I like these are Universal goods?
58:01
And in fact, we should make the sacrifice between Financial
58:03
privacy, individual autonomy, on behalf of National Security
58:07
Programs. That these are, these are not
58:08
interest that we have to, like way delicately.
58:11
There's just a clear preference for one value, set over another
58:15
and I think, well, okay, there are people who have that value
58:17
set. I think it's a matter of, that's
58:20
a matter. Political contestation and
58:22
Democratic argument. And then representative, you
58:24
know, engagement in the political system to make those
58:27
people's preferences, not determine itive of how National
58:31
Security power is wielded. I think, right now, you know,
58:33
these things change very quickly, so I'm not, you know,
58:35
everyone focus on warm like Warren's one person.
58:38
She is 77. She's not going to be here
58:40
right. Running a show in 10 years,
58:41
right? So it's like, okay, like maybe
58:43
not fixate so much, I'm just that one person.
58:46
Hey, Grady, the treasury Department?
58:47
Yeah. Like the be like the bureaucracy
58:49
is going to respond to this. Uh, sure that they see
58:51
politically. If your app is to agree
58:53
accuracies, do the like oftentimes, you know, there's
58:55
people just like they have a day job 95 and, you know, it's like
58:59
the political, like the political that run those
59:02
departments, that, you know, are like the head of this big
59:05
machine and you can that those people are those people change
59:08
very frequently, right? Like every Administration comes
59:10
in, you get her like a 180 degree shift of how these have
59:12
had. These agencies are oriented
59:13
towards these things so is where I don't think it's as
59:17
deterministic as this, but that's why I'm engaged in
59:19
Bitcoin is like a I like to write about this because I
59:23
conversation you can make this argument that like well maybe
59:26
like the knee-jerk reaction is to sort of try to mimic China
59:29
because that's like you know like the obvious thing to do.
59:32
Well actually maybe that's like long-term and even the short
59:35
term going to be like bad for us.
59:36
Maybe it's going to cause more conce.
59:38
More cost to us either politically or even just like
59:39
because of hard power. Right?
59:40
Like even the FED cows said, privately that he doesn't lie
59:44
like a CBC because, you know, it makes him someone that like
59:48
Congress can, like twist more buttons with, right?
59:51
He wants like no, part of this. It's like a major political like
59:55
it's like radioactive to to sort of own that pool.
59:59
Like now. He's be like political,
1:00:01
essentially he already has got would like yeah supercharging.
1:00:04
Yeah. And those like, much more
1:00:05
complicated mine. Sorry question.
1:00:07
We, you know, in a rattle like that's like the function of the
1:00:09
offshore dollar system, and exactly how a CDC like really
1:00:13
doesn't really work for that. Like, you would have to
1:00:15
disintermediate the global Banks.
1:00:16
I actually don't, impose our has made this point.
1:00:18
Like, it wouldn't be like a simple technical Craddock
1:00:20
surveillance control apparatus, it would be like we need to get
1:00:22
rid of basically the global monetary higher through existing
1:00:25
plan. That would really Target like a
1:00:29
lot of the existing Public Power structure like the jpmorgan's
1:00:32
really fight that hundred percent.
1:00:35
So you might see this weird, I braided like a wholesale,
1:00:37
Stephen. You see that's just kind of like
1:00:38
interbank clearing and then they whitelist stable coins and you
1:00:41
get you know, they have to do the same kyt am well, you know
1:00:45
thing and then seal the technocratic margin, the
1:00:47
rulemaking and how this works internationally.
1:00:50
I don't know. This is yet to be determined and
1:00:52
I think it's still what it's all of a an open aperture to see how
1:00:55
it could shake out. And, you know, I don't think
1:00:57
it's individuals have agency. That's like the bottom line.
1:01:00
This isn't just like, inevitable historical Dynamic, you know,
1:01:04
these are things that like people can can can affect yeah.
1:01:09
Wow, what a rabbit hole mad? I really enjoyed this.
1:01:14
Thank you so much for for for joining us today.
1:01:19
Why don't you tell everybody what you're working on now days
1:01:23
and where people can find you online?
1:01:28
So my day job is I'm the director of security
1:01:30
intelligence for a geopolitical and cyber security advisory firm
1:01:33
called the Krebs stainless group.
1:01:35
So if you're a c-suite Executives for a multinational
1:01:38
that's confronting geopolitical. Give me give me a shout.
1:01:40
I'm also a nice sturdy fellow at the Bitcoin policy Institute
1:01:43
started by David Zale get McCarthy with a full roster of
1:01:46
fellows. Trill you mentioned that really
1:01:48
are trying to engage the putting out like, you know, good
1:01:50
research and Analysis on bitcoin specifically to help shape kind
1:01:53
of the larger policy conversation and I'm on Twitter
1:01:56
at Matthew underscore Pines. Yeah, I just released a novel
1:02:00
about like three days ago on AI and Quantum Computing.
1:02:04
So, you know, if you're just sitting, you know, sort of
1:02:06
Espionage science Thriller stuff, check that out.
1:02:09
It's on my pin tweet. So, yeah, it's a comb.
1:02:11
What's it called? Its called an expectation value.
1:02:14
I'm like a full physical. Very, very, very cool not wonky
1:02:22
at all. I think it's really interesting.
1:02:25
Matt, thank you so much for joining us on some to bitcoin
1:02:27
are. I'm gonna pay you back stage for
1:02:29
a second guys. Hope you enjoyed the show, make
1:02:32
sure to hit that like button, subscribe, if you feel like this
1:02:35
conversation provided you value, the normal live show will be
1:02:38
back tomorrow. Now, at 12:15 p.m.
1:02:40
Eastern Standard Time and of course, shout out to Opti.
1:02:44
Thank you so much for for producing like, always my
1:02:46
friend, guys. I'll catch you on the next one.