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- [00:00]
Naval Ravikant
Hey everybody. Welcome back to the show. I am super excited because friend of the pod who, Gosh, I don't know when the last time we did a pod was. A couple years ago.
- [00:09]
Balaji Srinivasan
Couple years ago. Yeah.
- [00:10]
Naval Ravikant
Balaji Srinivasan is here in Singapore and I'm in Singapore. I'm a little bit jet lagged. But you're a great podcast guest because you got a lot of ideas and so I got to go visit you in Malaysia. Just north of Singapore, about 45 minutes.
- [00:31]
Balaji Srinivasan
Slightly west. Slightly west of Singapore.
- [00:33]
Naval Ravikant
Slightly west of Singapore. And you have started the Network School, the Network State, all the stuff you've been talking about for years. There's now a there there. Six months ago you found a place where there are apartment buildings and space that is, I guess, relatively cheap and available. And you've got your fan base of tech bros from around the world and ladies joining you to build what. What is the vision here for people who've heard of Network State, Network School, and this sort of project you're working on, which seems to be your life's work, what exactly are you building?
- [01:15]
Balaji Srinivasan
So Network School is the first node of a network society where it serves several purposes. But the United States was started actually not just with the Massachusetts Bay Colony, but with Harvard. It was literally a single room schoolhouse when it started. And the Midwest, the land grant colleges like Texas A and M was agricultural and mechanical, and so that was meant to build up the Midwest. So you had a college and a town kind of side by side. You trained the engineers and the humanists to help build the society. And of course the Bay Area, Stanford and Berkeley helped build Silicon Valley. Right. So those are three examples in the American context where a university and a town and a society kind of all, you know, went together. Right? And so that's what we're doing. We are building a society ourselves. We're building a startup society that's also a template for other startup societies. And the way I think about it is this is the third type of thing. Internet company, Internet currency, and now Internet community. If you go to like ns.com that's, you can see what we're doing. If you go to ns, pretty good.
- [02:20]
Naval Ravikant
Domain name, ns.comnscomnetwork state.
- [02:23]
Balaji Srinivasan
So, right, so it's network school, but it also stands of course for network state and network states, plural. Right. And that's, that's important. So we have, if you go to ns.com dashboard, right, front slash dashboard, you'll see more than 100 startup societies around the world. And the reason for this Is we have these online communities. People send. If you're watching this, you're spending a lot of time online, right? Like you're, you are not by definition. That's right. And so all our transactions are online, all our communications are online, but many of our friends are online and we don't see them in person. But we'd like to do that.
- [02:52]
Naval Ravikant
Right.
- [02:53]
Balaji Srinivasan
So bringing those online communities together in person actually has a physical network effect. I mean, duh. Yes, but also not duh. Right. So we've unbundled the world onto the Internet and everybody's alone at home. Now we rebundle the world into the physical world. And when you do this, suddenly you actually solve a lot of problems. You actually, you reinvigorate democracy. Because when people vote with their feet and move to a location. Now look at, for example, Starbase, right? Starbase Texas, which just incorporated Elon's new thing, right?
- [03:20]
Naval Ravikant
Yeah. Where Starbase is located, decided to take that town and rename it Starbase. And the people who are engineers at Space X voted as well as some of the locals to create a new city or town.
- [03:33]
Balaji Srinivasan
New city or town, yeah. And they won 97% of the vote, right? 97.7%. Okay. And it was like 212 to 6 or something like that.
- [03:42]
Naval Ravikant
Right.
- [03:42]
Balaji Srinivasan
And the thing about this is that is actually reinvigorating democracy. It's Internet democracy because you're voting with your feet to move to Starbase. You're voting with your wallet to help build up this community, and then you're voting with your ballot to ratify what you just did. You're combining all three. You have skin in the game because you actually move physically. You're physically there, you're putting capital in, and then as a consequence that you're also voting to build something. And so it's something where you have a lot of alignment in the community, right. And, and that aspect of the frontier and the physical world, obviously, that built America. Right. A big part of what built America is you had all these people from the old world who came out. And actually there's a. You know, in the mid-1800s, people would just, if they didn't like it on the east coast, they would go further in and they just build their own society. Right. And even the earliest Americas Americans, those were, you know, the European colonists, and they set up the Massachusetts Bay Colony, the Virginia Colony. The whole point was the, that you had a new jurisdiction to do things. Now, of course, people say, oh, the Native Americans were there, that's true. But in many ways they were warlike. And so these new tribes came in. So you had n Native American tribes. Now you have n plus 1, n plus 2, n plus 3. They all slugged it out. And actually the Native Americans were like brave warriors that lost battles. But you know, for example, in Mongolia they make statues to Genghis Khan. And so they should make statues to Sitting Bull and all of these, you know, kinds of horrors. But leaving that aside, that's actually like a war that was lost, a war that was won. That's just what happens all around the world. Nobody has control of any territory forever. And so ideally though, you want to be able to do that today without any wars, without any conflict. Right. How do you do without any conflict? Because everybody thinks all the land is taken, but it's actually not.
- [05:18]
Naval Ravikant
There's all kinds, there's all kinds of spaces around the world. And when people see cheap space, plus their nomads and their digital nomads, they have a high salary, a low cost of living, which means more opportunity. And if you put like minded people together now you've got a bunch of people who are not under economic pressure to live in the Bay Area, which we both saw what that did to people. It made people miserable.
- [05:42]
Balaji Srinivasan
Yes.
- [05:43]
Naval Ravikant
And their entire lives were filled with this anxiety of not being able to keep up with other people. And even the people who were supposedly keeping up felt like they were under massive pressure.
- [05:52]
Balaji Srinivasan
Yes.
- [05:52]
Naval Ravikant
To spend $100,000 a month on a crazy lifestyle. And all the venture money that we were deploying into companies was going to $4,000 a month in rent for a developer to have a one or two bedroom.
- [06:04]
Balaji Srinivasan
Yes.
- [06:05]
Naval Ravikant
It was insane.
- [06:05]
Balaji Srinivasan
Yes.
- [06:06]
Naval Ravikant
And what I saw when I came to, you know, the, the Network state, Network School.
- [06:11]
Balaji Srinivasan
Network school.
- [06:11]
Naval Ravikant
This is the Network School.
- [06:12]
Balaji Srinivasan
Yes.
- [06:13]
Naval Ravikant
In the Network School you have these buildings that were built and not being utilized. And there's a whole backstory there, but it's not important. You found this incredible opportunity and people can go live there for $1,500 a month, all in all, in food, gym, exercise and their apartment, and then be part of a community. So as Paul Graham would talk about that whole, like Ramen break even, you know, Ramen funded, it actually exists here. And there were 150 people there, all grinding on a Saturday. And so these people are coming from a hundred different countries to hang out with each other and go to talks to learn, to build. What, what is their motivation? Because I understand your motivation. You think there's a new mode of society, a new mode of Governance. We have other people in our industry who believe in this. Peter Thiel's done seasteading, obviously. Elon is doing this town in Texas. And people move to Texas because there's less regulation. So I understand your motivation and other people's motivation create new societies, higher function. But the individuals coming.
- [07:18]
Balaji Srinivasan
Great question.
- [07:19]
Naval Ravikant
Get me into their mindset.
- [07:20]
Balaji Srinivasan
So several different. Think of this as kind of like early cryptocurrency. Had various different kinds of people that all came together.
- [07:27]
Naval Ravikant
Yeah. And there's a whack pack of people.
- [07:29]
Balaji Srinivasan
Yeah, A lot of different people there.
- [07:31]
Naval Ravikant
There were people.
- [07:32]
Balaji Srinivasan
Well, yes, but. But successful libertarian. Libertarian.
- [07:35]
Naval Ravikant
Technical anarchist, Exactly.
- [07:37]
Balaji Srinivasan
That's right. So some people were ideological. Right. Some people just were in it for the tech. Right. Some people thought, okay, this could be very valuable someday. Right.
- [07:45]
Naval Ravikant
Business opportunity.
- [07:46]
Balaji Srinivasan
That's right. And you know, there's a mix of different types of things. Right. Some people came just because it's cool. Right?
- [07:51]
Naval Ravikant
Yeah.
- [07:51]
Balaji Srinivasan
Weird, weird, cool, et cetera.
- [07:53]
Naval Ravikant
Right.
- [07:53]
Balaji Srinivasan
And so today, for example, at network school, what kinds of people do we have? So we have those people first. And you know, like maybe the number one demographic are those folks who are remote workers and who often can't get a visa into the West. So these are people can't or won't, don't want to go.
- [08:10]
Naval Ravikant
Right.
- [08:10]
Balaji Srinivasan
They think it's over and so on and so forth. But they're Internet first people. Right. So that's how it expressed our ideology, Internet first. So obviously I'm friendly to, you know, people in the US and I'm friendly to many people who are conservatives and so on and so forth. But America is only 4% of the world and Red America is only 2% of the world. Right. But if you say Internet first, you include many of those people. And you also say, hey, if you're Canadian, Australian, you know, from New Zealand, uk, that's this term canzuk. If you're Indian, if you're European, Japanese or American, you. The Internet is where you're all equal. All nodes are equal in the Internet. You can have the same monetary policy, you can have the same contract law, smart contract law, you can have the same transaction certification. Basically what the blockchain represents is not rule of law, which is breaking down in some ways with Delaware and all the crazy things in the US but it's rule of code. So everybody's a peer here. Right. So the thing is a lot of the sort of progressive values of, you know, equality, democracy, science, media, I actually believe in those things. Just on the recent corrupted versions so.
- [09:18]
Naval Ravikant
The people who are coming, their motivation is to be around like minded people.
- [09:21]
Balaji Srinivasan
Like minded people. That's right.
- [09:22]
Naval Ravikant
And they want to build companies or build a life. So. Right, so meet people, find a mate. What's the motivation when you talk to them? Because it's only been six months.
- [09:32]
Balaji Srinivasan
Yes.
- [09:33]
Naval Ravikant
But you've got hundreds of people and you had thousands apply, so. Yes, it struck a nerve.
- [09:37]
Balaji Srinivasan
It struck a nerve. That's right. So I think this is something where people want to build communities in the physical world. We spent so much time online, we want to build. Build things offline. Right. So some of them are coming because they're remote workers and they're tired of being by themselves. They want to be with the community.
- [09:53]
Naval Ravikant
Right, got it. So it's alone or with people who are also remote workers. And we've seen that this nomadic lifestyle, there was like an kind of different Airbnb type startups and office sharing startups that try to organize these people. But you've got such a big profile socially and with the crypto community that can kind of be a beacon or a lighthouse today.
- [10:11]
Balaji Srinivasan
That's right. And I'm just a shelling point. Yeah. You know, the purpose is crucially to. This is just like the first one of these. And I fund vegan ones and I fund carnivore ones, I fund Hindu, you know, strip societies and Christian ones and Jewish ones. All of these different kinds. There's, there's some in Brazil, there's some in, you know, Honduras, there's some in Switzerland. And so all different kinds of startup societies. That's quote, true diversity. Right. Many different kinds of things. There's like Sanskrit immersion, Latin immersion. Many different kinds of startup societies have a different thesis on what would be a cool kind of community to build. And you'll see whether they work. It's again, just like a tech company. You know, if we thought about early X or early Twitter, it seemed like the silliest thing in the world. Why would anybody want to treat their breakfast? But it became really important.
- [10:54]
Naval Ravikant
Right.
- [10:54]
Balaji Srinivasan
And so in the same way, there's many different concepts of what a startup society is. Okay, so just to answer your question, also, again, A, remote workers, B, people who can't get visas to us. See a lot of people who ideologically want to build startup societies just like they wanted to build cryptocurrencies.
- [11:07]
Naval Ravikant
That's very meta.
- [11:08]
Balaji Srinivasan
Yes.
- [11:08]
Naval Ravikant
So they're looking at this vision and saying, the society I'm in is not fulfilling to me. It feels broken in some way. It feels suboptimal. And this seems exciting.
- [11:19]
Balaji Srinivasan
Yes.
- [11:20]
Naval Ravikant
And this is why maybe the press, when they look at you as an individual and crypto, they kind of look at it like, these people are crazy Internet people who don't want to pay taxes. They want to, like, skirt governments and create their own world, and they're kind of leaving the real world. It's not that. It's their builders who want to build something that fits their sensibility.
- [11:43]
Balaji Srinivasan
That's right. And the thing is, everybody here pays taxes, everybody here obeys regulations, and so on. And the same thing. Like when I CTO of Coinbase, I built a genomics company, and so on and so forth. We dot every I and cross every T. Right. So we make sure to be, you know, like, render under Caesar what a Caesar's, and so on and so forth. Right. But many, many countries actually want these kinds of people there.
- [12:03]
Naval Ravikant
Yes, Desperately.
- [12:04]
Balaji Srinivasan
Desperately. Right. Because most countries aren't rich countries. Most countries are small countries. In fact, most countries have actually less than 10 million people. And so if a network school node or startup society node is open there, suddenly all this talent and capital from around the world floods in. All people want to do is be able to, like, drink coffee, hit keys on their laptop, build cool stuff. Right?
- [12:24]
Naval Ravikant
Yeah. Work out.
- [12:25]
Balaji Srinivasan
Work out, go to dinner. Yeah, exactly.
- [12:26]
Naval Ravikant
Like, have a life. Exactly.
- [12:28]
Balaji Srinivasan
It's really not that hard, you know, and this is a crucial thing. You don't just need tax breaks, you don't need subsidization. People are happy to pay, in a sense, a subscription fee to a society where, you know, the roads work, the traffic lights are on, and so on and so forth. That's fine. What they just don't want is to be, like, attacked for being a tech worker or technologist. And one thing also I do think is going to be. So I mentioned the remote workers visas, the network stators, like ideological network stators, you know, Then there's also people, some who want to join a startup society and others who want to join with the intent of eventually building one. Right. So early Coinbase, for example, has a Coinbase diaspora of all these people who've created lots of crypto companies. So many of the people at network school are learning the template that we're building. And, for example, there's small things. It's actually, it's surprisingly hard to get to San Francisco. Quality coffee. It's not that hard, but it's, like, harder than you would think, right?
- [13:23]
Naval Ravikant
Yes.
- [13:24]
Balaji Srinivasan
And other kinds of things, like parts of what we call the daily loop, like, you know, so for example, you wake up workout coffee, you know, office pod, conference room, and so on and so forth. Once you actually start calculating that out and minimizing all of the transit times, it's like almost like a factory like thing. Right. So then you can rack and stack more office pods, more coffee stations as a function of demand and so, and so, so you can just save people so much time. Whereas normally if they're in a big city, they're like, oh my gym is like 30 minutes across from me and that's like a huge tax on you every single day and so on. So you can start optimizing daily life. That gives them more time to just learn or sit on the beach or what have you.
- [14:04]
Naval Ravikant
Right. Which is kind of like if you, if you think about what we do when we build products or services and technology at our best, we're removing friction, delighting customers and lowering the cost of it.
- [14:14]
Balaji Srinivasan
Yes.
- [14:14]
Naval Ravikant
And if you. What I saw today was a bunch of people who are really happy and who are around like minded people and who feel like they have a stake in it. Which is also super interesting because you, you look at what happened in America over our lifetime, the last 40 or 50 years, people feel disconnected from it. They feel like they have no agency. They feel like they're like victims in the machine or cogs in the wheel, something more dystopian. And they feel like the government doesn't represent them. But what I saw was a lot of agency. Like you guys built a gym and you guys are building the schedule and you have speakers. So you know, I think it's pretty easy to be cynical when people look at it. And I was watching some of the press coverage of. I guess there was somebody also doing this in Middle of America. They bought a lodge somewhere in Wyoming and your name was mentioned over and over again that they were like inspired by you. Do you know who I'm talking about?
- [15:05]
Balaji Srinivasan
There's, there's some articles and stuff.
- [15:06]
Naval Ravikant
There's actually somebody who is like a Berkeley guy who left Wyoming thing, the Wyoming thing, because they're into daos or whatever. But that's good. And I was like, I don't understand why they're so upset. And these are like woke people from like Wired magazine or whoever who are criticizing this or. I don't know if they were being sensationalistic, but there seemed to be some animosity towards people saying I would like to build my own society.
- [15:30]
Balaji Srinivasan
I can put it in one sentence, please. Yeah, they don't want us to have self determination. Right. Fundamentally, they basically have replaced God with gov. They worship these failing Western states and they are, in a sense, imperialist, where they want them to have bureaucratic power over the entire world and everybody in it. Right. And so because of that, if you say, thank you very much, you guys do your thing, but we want to do our own thing, right? We want to basically say, hey, we want to have our own society and we want to be able to determine our own rules and we want to be able to live together. And so, and so even by the way, if you're just co living, forget even, you know, there's different stages, by the way, there's like co living, then you might negotiate a special economic zone and then all, you know, eventually, eventually, eventually, maybe you've got, you can get an island, get sovereignty or what have you.
- [16:25]
Naval Ravikant
Okay, but that's like last time, did that ever happen, that an actual government, new country was formed in the world, on planet Earth?
- [16:33]
Balaji Srinivasan
Yeah, last time, yeah. Oh, well, let me show you something. Right, so actually there's.
- [16:37]
Naval Ravikant
So, because I understand you're making these like communes, kibbutzes, I don't, you know, little societies, pods, however you would describe what you're doing in this nascent state. But the idea of like going and finding an island and saying, hey, we have sovereignty, nobody can tax us.
- [16:53]
Balaji Srinivasan
Yeah, take a look. Ready?
- [16:54]
Naval Ravikant
Nobody.
- [16:55]
Balaji Srinivasan
Before I show you this graph. Right. What is your mental model of how many, like going back, let's say to 80 years. Right. What's your mental model of how many new countries were formed?
- [17:05]
Naval Ravikant
Wow. I'm trying to think of, like, countries that seceded from their mothership would be the primary source of that. I'm thinking of all the colonies of the British Empire would be the first group. Just logically. Or other countries in the Middle east, like, I don't know, Qatar and those kind of countries were part of uae and they were forming and unforming.
- [17:28]
Balaji Srinivasan
Here's a graph.
- [17:28]
Naval Ravikant
So you tell me. Okay, there it is.
- [17:30]
Balaji Srinivasan
So 4x.
- [17:32]
Naval Ravikant
It's 4x. Since the. Yeah, since 50 to 200.
- [17:35]
Balaji Srinivasan
Yes. And the thing is, I can show you this graph.
- [17:37]
Naval Ravikant
Well, those are UN member countries. So they were accepted to the un, but they maybe existed as countries.
- [17:43]
Balaji Srinivasan
Well, no, I mean, that's the thing is if you define what is a country, that's actually an important. If you define a country as a UN member, the first thing, most people are surprised. It's almost 4x over 80 years. Right. The second thing is exactly as you point out, the British Empire, the French Empire, and then over here, this big bump is the Soviet empire breaking down and new countries arise, Right?
- [18:01]
Naval Ravikant
Sure.
- [18:01]
Balaji Srinivasan
Now, there's two important features of this. First, if you go backwards in time, this is actually the most centralized the world has ever been. When you go backwards time, I'll show you some graphs. The number of, you know, independent jurisdictions in like Germany, India, it just rises rapidly like this. You have thousands and thousands of little, like, you know what San Marino is? You ever been there?
- [18:22]
Naval Ravikant
No.
- [18:23]
Balaji Srinivasan
Okay. It's like a little state lit. Let me show you something. So San Marino in Italy, Right. Is like this, this tiny, tiny thing. It's a microstate that is like a piece of the past that still sits in the present. It's like a little city there, but it's its own sovereign country.
- [18:40]
Naval Ravikant
Okay. Wow.
- [18:41]
Balaji Srinivasan
Yeah, It's a UN member. Right. And the thing about that is Garibaldi, when he was unifying Italy, San Marino gave him refuge. So he didn't. He let it keep its sovereignty. Okay. So that's like a duck bill platypus, like this evolutionary missing link. And it tells you, oh, all the things we think of as countries like Italy, France, you know, China, India, they're roll ups.
- [19:03]
Naval Ravikant
Yes.
- [19:04]
Balaji Srinivasan
Of lots of smaller city state, ish, like things that used to exist. That's what the world used to be, used to be like fragmented like that. And it got rolled up into these big things for the purpose of conscription and taxation because you basically build these giant, you know, nation states which have as many people as you can pack in there, like the Soviet Union and so on. And they all didn't fight each other. And that's the century of giant wars and conflict and whatever. Right. I'm not saying everything about that was bad, but a lot of it was bad. Right. Okay, so now we're going, in a sense back to the future where just like we went from gold to fiat to digital gold. Right. We're going from city state, nation state, network state.
- [19:40]
Naval Ravikant
Got it.
- [19:40]
Balaji Srinivasan
I'm not saying everything goes to network states, but I think that will arise. And the big difference is network states are decentralized, so they're everywhere and nowhere. So city state is only in one place, but network state is decentralized, just like bitcoin is decentralized. You've got nodes everywhere and you unify them as an archipelago.
- [19:52]
Naval Ravikant
Got it. So there'll be these little outposts in different countries of network state. Ers.
- [19:57]
Balaji Srinivasan
Yep.
- [19:58]
Naval Ravikant
People who believe in the network state concept that you've created and that if any one of the nodes goes Offline, like when China was like, yeah, no more bitcoin. Or Korea had no cryptocurrency for a bit, I think then they relented. The. The distributed network heals because people could just leave that's. And go to another place. And this seems to be sort of interested on your take on this, even in the United States, where you think moving from one state to another would be your right and would be a great choice for a human being to make. Like, maybe I like the weather or the people or the culture more in a different state, or I just want to change a pace. I've lived in three different states and four different major cities in my life, and it's one of the great joys of my life is to discover those new ones. But I've never had as much vitriol or questioning of my decision to go to Texas.
- [20:50]
Balaji Srinivasan
From California.
- [20:51]
Naval Ravikant
From California. It seems like there's a group of people who are like, you're doing this for nefarious reasons. And. And then even deciding to live on a horse ranch as opposed to living. Living in the city was also like. People were a little critical. Like, why are you doing that? Like, well, I can have my cake and eat it too. I can go to California and New York anytime I want. And then Keith Raboy was also derided for going for the sin of going to Miami.
- [21:16]
Balaji Srinivasan
You know why I'd argue by. It's because California has been under one party Democrat control since 2011. So you. California's not a democracy.
- [21:25]
Naval Ravikant
No.
- [21:26]
Balaji Srinivasan
Right. And that's actually why all of the stealing for the NGOs, for the homeless encampments, the homeless industrial complex has been out of control because they destroyed democracy in California. There's no democratic accountability for the Democrat Party. Basically looting the conference, or that's how I'd put it. And so. Because that. The only true vote against that is to leave, which is why I left, which is why he left. That's right. And so that's why Elon left. Right. He couldn't even build a sign in San Francisco. Right. And there's like some signs of life or what have you. I know there's some people.
- [21:53]
Naval Ravikant
I don't think it's falling into the Pacific, but I do think it is in a very.
- [21:57]
Balaji Srinivasan
It's a downward.
- [21:58]
Naval Ravikant
It's a spiral. It's.
- [21:59]
Balaji Srinivasan
Yeah, I think. I think it is. At a minimum, it has lost a lot relative to what it could have been.
- [22:04]
Naval Ravikant
It's a doom loop. And I consider it a doom loop. And I consider Austin what You're doing here what I'm seeing in Dubai and the Middle East, Abu Dhabi. This kind of like a boom spiral.
- [22:14]
Balaji Srinivasan
I think that's right.
- [22:15]
Naval Ravikant
Where it's kind of working its way up. That's right. Energy seems to be people who are interested in it. So. Okay, so we know that those people feel like they're losing control, and they also feel like they're losing high earners who are creators. And I think this is like a very pernicious thing because they think of.
- [22:30]
Balaji Srinivasan
You as a slave. Right. Like, basically.
- [22:32]
Naval Ravikant
But I'm a creator and capital allocator.
- [22:34]
Balaji Srinivasan
I know, I know. But they want. You see, here's the thing. Every communist state was like this. North Korea, East Germany, the Soviet Union, Cuba, and actually also Nazi Germany. They all didn't want people to leave. They put exit taxes or they shot people for leaving. They built the Berlin Wall because their citizens were basically slaves. That's what communism is. It's slavery. Right. It means 100% taxation is slavery. Right. You get there by being so far left for the workers paradise that all the workers are in gulags. Right. So they don't want you to leave because they basically want you to just work for them. Right, right. And so exercising. I mean, the thing is, one thing that's good, though, is the right to exit is actually a fundamental right. It's in, like the UN Charter of Human Rights.
- [23:15]
Naval Ravikant
Right.
- [23:15]
Balaji Srinivasan
In a sense, the right to exit is the thing that distinguishes leadership from dictatorship. Right. The leader lets you leave. Right, Right. That is, if people can't distinguish the two. The difference is the dictator doesn't. It's a prison state.
- [23:26]
Naval Ravikant
Right.
- [23:26]
Balaji Srinivasan
But leadership is. You've voluntarily opted in to be there and you can voluntarily opt to leave.
- [23:32]
Naval Ravikant
Right. And they have to earn you being a citizen.
- [23:35]
Balaji Srinivasan
That's right.
- [23:36]
Naval Ravikant
And they're of service to you. Which is how it didn't feel for a lot of us in California, New York, and that's when this great migration happened. People felt like, well, why am I buying into this society which feels dangerous and deranged at times? And I could go somewhere where it's more constructive or more in line with my ideals.
- [23:56]
Balaji Srinivasan
This is right. And this is also actually the counterargument when people are like, oh, Elon, it's techno monarchy. It's not technomarchy. It's actually techno democracy. Why every single person who's gone to Starbase chose to be there. Yeah, any person there can leave.
- [24:09]
Naval Ravikant
They opted in with their presence. And I think that's like, actually, if you Think about voting, yes, your vote doesn't matter in California, New York, to a certain extent, but voting where you live, that is the ultimate vote, I believe.
- [24:21]
Balaji Srinivasan
Yes. And actually this is a important paradigm shift because essentially what is democracy, it's the consent of the government, right? And I mean that's, you know, like the Protestant Reformation, they took away all the Catholics, you know, the nothing against Catholics, okay, but like the, the Catholic Church, the Pope, all this stuff isn't in the Bible, right? That's like superstructure that was added later, fine, there's all these precedents, whatever. But the Protestant Reformation said let's clear away all that and talk about the root. Go to the radical. That's what radical means, go to the root and say, you know, the direct relationship with Jesus and you know, so.
- [24:51]
Naval Ravikant
The essence of it, sorry, so if.
- [24:53]
Balaji Srinivasan
You go to the root of democracy, it's the consent of the government. And the problem with 51% democracy is that 49% have not given their consent to the current rulers, right? And that's what you keep getting. You get a 49%, 51% this back and forth and the guys who win by 51% try to govern like they've got a 99% majority and that produces backlash. And we've seen that back and forth, right? And then the elections become more and more hard fought and that 2% flips the other way and then you get a huge see saw this way. The alternative to that, to the two party system is the thousand city system.
- [25:22]
Naval Ravikant
Migrate to the one that fits you best and have consensus in that society that 80, 90, 97% in the case of Starbase, agree that rocket ships going to Mars and the noise pollution caused by them is not pollution, it's joy.
- [25:37]
Balaji Srinivasan
That's right.
- [25:38]
Naval Ravikant
And every time we hear that noise, we are excited and thrilled.
- [25:41]
Balaji Srinivasan
Yes.
- [25:41]
Naval Ravikant
At progress. Whereas another person might consider that noise. Absolutely. Why they didn't move to that area, they wanted quiet.
- [25:48]
Balaji Srinivasan
And here's the thing is, let's say that you take that as an important cost, right? Because the frontier is a filter, right? The frontier filters for a certain kind of person who's willing to take some pain for some gain. We see that all the time in startups. It's not a big company employee, right? So take that example, Mars. So let's say you say, okay, we want to get to Mars, we want to the rocket launches. So everybody just has ear protection stuff at home. Sure, fine, you can solve that. Maybe there's better soundproofing at home, there's ways you can Solve that. When you set this as a goal of getting to the stars, then you can use technology to mitigate the downsides. Right? And but it's whether people have that can do attitude. They're aligned on the goal. Right. So my view is that the thousand city system, as opposed to the two party system is how you get genuine diversity. And actually, you know what? There's already a prototype of this. We've actually been doing this for 20, 30, 40 years. You know why?
- [26:34]
Naval Ravikant
Tell me.
- [26:35]
Balaji Srinivasan
So imagine if at age 18 or age 21, you picked your country like you pick your college, right? But that's actually already the case for millions of people from Asia. Why Asia? India. At age 21, they would apply for their master's degree at MIT or Stanford or what have you, and they would have the F1 student visa for college, they'd have the H1B visa for their company and then they'd get a green card or permanent residency and then eventually citizenship at the country level. So college, company, country were like this, it was a labyrinth that an immigrant, tech immigrant has a stack. It's a stack. That's right. So college, company, country. Right. And the thing is nobody has packaged that together. That's one of the things we're doing the network school we want to just like, you know, with cryptocurrency. Part of the reason you bought cryptocurrency is to get more fiat currency in the sense people would get BTC to get more USD. That was one important metric, right. Part of the reason to come to like a crypto society or a network society is to improve your fiat passport. So lots of people who come from countries, they're meritorious, they're smart, right. We can get them worker visas, we can get them maybe Dubai golden visas, things like that, we can let them see the world. Right? Because people don't understand that if they're born without what people call passport privilege, they're basically like in prison, they're locked. Right. It's very hard to see the world, to get to other countries. And so we can upgrade that. We can get them, you know, employment passes and so on and so forth. And they're hardworking and they deserve all of that. Right. And they'll do a good job with that. Right.
- [27:58]
Naval Ravikant
You know, it's. This is my first trip internationally. Well, first time in Singapore.
- [28:04]
Balaji Srinivasan
Okay, what do you think?
- [28:06]
Naval Ravikant
I am really fascinated by places that are like startup cities because this is a 60 year old city. They're having their 60th anniversary in August. I found out. And I was like, this is one of the few times I've gone to a country that is younger than America. Usually when Americans go abroad, they're going to a country that's older. Yes, Much older, typically. And I have the same experience when I go to the Middle east, which is Dubai. Dubai. These are new cities that in 1950 were deserts, right?
- [28:35]
Balaji Srinivasan
Yes.
- [28:36]
Naval Ravikant
So it's fascinating to see those countries and the enthusiasm that people have for them. And also, it was also a little bit sad for me because as an American, as a high profile American who has an opinion that sometimes people listen to, or at least they hear it.
- [28:51]
Balaji Srinivasan
Yeah.
- [28:51]
Naval Ravikant
But they don't have to agree with it.
- [28:52]
Balaji Srinivasan
Sure, sure, sure.
- [28:53]
Naval Ravikant
But, you know, there were a lot of people asking me to explain what's going on in our country and asking me to explain it because they're perplexed and saddened by how America is interacting with the rest of the world. So putting aside my belief system, just the candid feedback I got, I would say I've been heartbroken, crestfallen at how people were talking about America. And it's the first time in my life I've ever had it.
- [29:23]
Balaji Srinivasan
It's actually kind of heavy on my.
- [29:24]
Naval Ravikant
Heart the last three days because people were saying, what? Why don't you.
- [29:28]
Balaji Srinivasan
Why is he doing this stuff?
- [29:29]
Naval Ravikant
Why are you doing this to us? Why can't we come to the country? Why don't you want us to come to America on vacation? I was talking to some folks who are extremely successful. These are the most. The 0.1% of the 1%. The 1% of the 1% were telling me my kids can go anywhere. And on vacation, they want to go to China because they believe it's the future. They don't want to go to America for college and they don't want to go to America because they feel like they might get harassed at the border. And then we want to do business with your country. And we thought that the new administration would be embracing the rest of the world, getting rid of regulation and that we'd have this great era of interoperability and we'd have like an acceleration in business. And now you're just rattling the cage constantly. And we want to do business, but you're sending us to go do business in other places and we can't rely on you anymore. And that actually, I think maybe is the heart. Most heartbreaking thing is that they feel like we're not a reliable partner is what they were telling me. This is not my position. This is the input from People in Singapore who I think represent a certain level of sophisticated, globalistic world savvy people. And so maybe you tell me how as an American. So you're an American who lives abroad now, like you, what do you think of what's happened? You know, and we can't get away from politics, we can't get away from Trump because it's, it's defining a lot of what's happening in the world right now. So tell me the perception and your perception.
- [31:02]
Balaji Srinivasan
Here's how I think about this. And I actually did shed a single manly tear.
- [31:07]
Naval Ravikant
Okay.
- [31:08]
Balaji Srinivasan
When writing the network state book.
- [31:10]
Naval Ravikant
Yeah.
- [31:10]
Balaji Srinivasan
Because I had some of the same emotions on in that you're talking about. And the way I look at it is Britain, America, the Internet. Okay, Right. Britain was an amazing, amazing thing, honestly, for the world. The British Empire, a lot of people attack it and they had a lot of faults, but it did on net advance civilization. There was a lot of good things Britain did. But eventually the British Empire, exhausted, handed the torch to America and it's no longer an empire. The British Empire is just uk, it's just a country. That's right. And the start of the American empire was arguably 1939. There's this great book called Tomorrow the World by Stephen Wertheim that actually documents that the fall of France was actually the moment. It wasn't actually post World War II at the beginning. The fall of France was a moment that the Americans, at that point, they had been happy to let the British do all the empiring and just build up their country. But once they saw that the Nazis or maybe the Soviets could build an empire that was bigger than the British, they're like, oh, we have to do this. So that moment was when America turned truly into a global empire and they set out to be a global empire. That's why there's 750 military bases worldwide. That's why the headquarters of the UN is in New York. That's why, like for example, Harvard Kennedy School of government alone has 20 heads of state that were trained there.
- [32:25]
Naval Ravikant
Right.
- [32:25]
Balaji Srinivasan
That's why the US has regulatory harmonization. All these countries around the world use US regulations. There's like a Hungarian fda. That's why there's US multinationals everywhere. And I could go on and on, right.
- [32:35]
Naval Ravikant
The number of Internet searches being done at Google. Google is the number one search engine in every country except for like Korea, China, Russia.
- [32:45]
Balaji Srinivasan
Yes.
- [32:45]
Naval Ravikant
And maybe still Japan. And maybe it's 50. 50 Japan. Yeah.
- [32:48]
Balaji Srinivasan
I don't know.
- [32:49]
Naval Ravikant
But I think it's maybe Four countries.
- [32:50]
Balaji Srinivasan
It's like four countries. That's right. But here's the thing. The issue with empire, any empire, is you get this global footprint, but it also ends up sort of eating away the core of the empire. Right. And it does so in two ways. The left is mad because they feel that your people are oppressing people around the world, which is sometimes true. And the right is mad because they feel that your people are bearing a burden of the rest of the world, which is also sometimes true. So eventually the left and right basically get tired of empire and shut it down, and then they often regret it. Right. So that happened with the British Empire, that happened with the French Empire, and happened within our lifetime, within with the Soviet Empire. Everybody thought that the aftermath would be something great. And it was actually, it was. It was mixed. That, you know, Eastern Europe was free and it did well and so on. Estonia did well. Russia itself did very poorly for a long time. And then it's like somewhat started to recover. But, you know, fine point being, we are in the last stages of American empire. Okay. Because four forces, you know, red America doesn't is against the deep state. Blue America is against the Trump administration. Tech America is against the regulatory state, and China is against US hegemony. So all four of those vectors are pointed down. So nothing is keeping the current establishment up. Every day there's another hit to it going down. That's never. It's like a solar eclipse. It's never happened in our lifetime before. Right. And you can't cut off foreign trade and foreign travel and foreign tourism without also eventually cutting off foreign capital flows into the dollar. And then without the reserve currency, American standards of living will fall very rapidly. I don't know how much, 50%, 90%, 99%. But this is similar to what happened after the fall of Soviet Union. The ruble hyperinflated. Now, one thing, we're actually in the middle of something. Have you ever, you know, been in. Well, a Tesla is actually very noticeable acceleration. Have you ever been in a bullet train? Yeah. So if you're in a bullet train, it can accelerate in such a seamless way that you don't even realize how fast you're going. Right, right. So do you know how much the US dollar is devalued against Bitcoin since inception? 100 million x. Because Bitcoin started at 0.1 cent.
- [34:50]
Naval Ravikant
Yeah.
- [34:50]
Balaji Srinivasan
Actually, you wrote, honestly, one of the best early articles on bitcoin, where actually there are a lot of things that were.
- [34:57]
Naval Ravikant
I said it's the most dangerous open source project I've ever seen because it could destabilize the entire world because the sovereignty of countries is military and their currency. And this could change history forever. Yeah, I was shook when it was at 12 cents.
- [35:14]
Balaji Srinivasan
So the thing is that as soon as bitcoin appeared, capital started flowing into it and it's gone up 100 millionx against a dollar and there's only like another 10x to go, or 100x. But that last 10x will be felt in a different way. See, the thing is, at $100,000 per bitcoin, everybody's happy. But a million dollars for bitcoin, people understand, like, empire's over. There's something about that as like a round number. And so, and so people are like, wait a second. And one way of thinking about it is like normal inflation is supposed to be like 2% a year. That works out to like 0.2% a month. It's an arbitrary figure. It comes from New Zealand. It should really be 0%. But let's say, okay, hyperinflation is 50% a month, right? So 0.2% a month, normal inflation, hyperinflation, 50% a month. What if we define super inflation as 5% a month?
- [36:00]
Naval Ravikant
Right.
- [36:01]
Balaji Srinivasan
If you work it out, the compounded rate at which the dollar has been devaluing against bitcoin is like 10.41% a month for 16 years. Okay, so we're actually already in the middle of the global run on the dollar. It's like that bullet train that's been accelerating without people seeing it. That like the alternative is already here. And you're seeing BlackRock saying Bitcoin's an alternative to the dollar. Right. The other alternative, by the way, is gold, physical gold that's also at all time highs. So gold and digital gold are the things that'll be obvious warning symbols in retrospect that this order is changing. Right. And so then what comes on the other side? Right. My, my view is that the future is China versus the Internet and the heirs to American empire. China has the military and the manufacturing. And it's, it's like, it's one of these things where, you know, guys like Peter Zion will say, oh, China's going to fall into a ditch. It's going to get old before it gets rich. The US can blockade China, et cetera, et cetera, et cetera. And in actuality, a lot of those things are happening in reverse. For example, China's blockading the U.S. china's proxy, Iran has its proxy, the Houthis the that's blockading Suez. Right. And in many ways, US Demographics are worse than Chinese demographics. Why? Because you've got this polarized society with everybody fighting each other. You have all of this ethnic conflict. You have young minorities expected to pay for old people's Social Security and on and on us. You have men and women hating each other and whatnot.
- [37:21]
Naval Ravikant
Right.
- [37:21]
Balaji Srinivasan
So US Demographics are a cauldron of ethnic, gender, political, economic conflict and resentments waiting to bubble over. Right. China, for its false, has like homogeneous society. Right. And so the problem is China is very strong. Right. I think of the people who downplay China as the stealth on the Chinese stealth bomber. Right. They're not doing anybody any favors. China is extremely strong and it's very competent. And if we can't build an alternative, then it will just be dominant.
- [37:49]
Naval Ravikant
You believe the. What Trump is doing in terms of shutting the borders and changing this sort of tariff regiment is so an isolation in the isolation and then getting rid of immigration largely. This is a very dangerous strategy.
- [38:04]
Balaji Srinivasan
It's a very dangerous strategy.
- [38:06]
Naval Ravikant
It's not going to work.
- [38:07]
Balaji Srinivasan
Well, it's like, it's not even like, it's like, you know, the thing, like a nice strategy. Cotton. Let's see if it works for them. Right? Just take the tariff thing alone. Okay. Those were simultaneous tariffs on the entire world, Right? So Vietnam got hit, Cambodia got hit. All the ways good. They're strays.
- [38:25]
Naval Ravikant
They're strays. Stray bullets.
- [38:26]
Balaji Srinivasan
Exactly. Like I analogize it to, like firing into a crowd to like get China. Right. Everybody who got hit by the stray is not going to care that you were trying to get China. They're going to care how careless and random you are with the lives of all these people. And just to talk about the tariffs for a second, first, everybody who is pro American in all these countries, they're the ones with American customers, with American vendors, American suppliers, all those people who were the political faction in those countries that push for good relations with America, that push to travel to America, to trade America, all those people just got discredited, right? They just got economically harmed. They got absolutely nuked because they trusted in the stability of the United States of America. They trust in the stability of the trade system. They trust in predictability. Yeah, exactly. That's right. And when you add it up, it's basically the US no longer wants to be the hub of this global financial empire. They don't want the foreign workers, they don't want the foreign trade. There's a faction of MAGA that is incorrect in Their own way, as economically irrational as a far left that actually thinks that 77 million MAGA can compete with 1.4 billion China, let alone the entire world. It's simply not true.
- [39:27]
Naval Ravikant
Well, no, I was going to say the idea that Americans want to rush in and make iPhones in a factory is like so farcical. It's not that iPhones can't be made in America.
- [39:36]
Balaji Srinivasan
When you bring this up on X, people will say, they'll get really mad and then they'll say, well, I want someone else to be able to work in a factory.
- [39:43]
Naval Ravikant
Right, right. But you can't find anybody in your family who said, wow, wouldn't it be great if I could do that? Now listen, we do make Teslas, but in factories in America. It can be done. We're making rockets in America. It's not the question of if we can make them there, but if we're going to close the border and we have 4% unemployment, who's going to work in these factories?
- [40:00]
Balaji Srinivasan
Yes, but let me give, let me give also the Steelman case for MAGA because I understand where their worldview comes from. So first is they would say, okay, sure, maybe I, as a white collar worker, whatever, don't want to work in a factory. They would say that. But it's way better that a blue collar worker has opportunity to work in a factory than dying of fentanyl or whatever.
- [40:17]
Naval Ravikant
True. Okay, okay.
- [40:18]
Balaji Srinivasan
Number two, they'd say factory work produces skills and stuff that, you know, there's all kinds of mechanical maintenance and whatnot, which you don't want to over offshore and center overseas. I'd agree with that as well. Third, they'd say as red American, they've gotten a hard time from blue Americans, Red Americans being sent overseas to die and so on and so forth. Blue Americans have exploited them. There's some truth to that as well. Okay, I could go and I could say quite a few things. Another thing they'd say is we're running these trade deficits for so long, we can't run them endlessly. And we need to be able to make things at home. We'll be too dependent on others, we're too dependent on China, too dependent on the rest of the world. There's some truth to that as well. Okay, but what they get wrong is a, they're in a huge hole and they think that they can just get out with some sudden move. Right. You cannot get out of 45 years of deindustrialization with 45% tariffs. There's no overnight fix for this.
- [41:08]
Naval Ravikant
Right.
- [41:09]
Balaji Srinivasan
Two maybe. Yes, blue America and Red America have been fighting, but that doesn't mean Vietnam is the enemy of Red America. It also doesn't mean, like, Canadian Conservatives are the enemy of Red America. What they managed to do by threatening to invade Greenland and Canada and doing these tariffs and so on is just like the Wokes built the anti woke coalition. The Magas have built the post American coalition. Even Canadian conservatives who are their natural allies, if Canadian conservatives like Pierre Paul Ivre and so on are getting crapped on. Right. And do you see the graph of the Canadian Conservatives?
- [41:38]
Naval Ravikant
Yeah. So basically, if we are this unpredictable to the rest of the world, the world will look for more predictable partners to partner with. And it's happening as we speak. We're five months into this presidency and already you have China, Singapore, Russia, India and everybody in between going, well, if we can't figure out how to work with the Trump administration, if we can't figure out how to work with America, I guess we should just work with each other. And that's a very dangerous place to be. Like, perhaps we're overplaying our hand and.
- [42:12]
Balaji Srinivasan
Absolutely.
- [42:13]
Naval Ravikant
How important we are to China, how important we are to India, like, how important are we? Do they have other customers? I think they have a lot of other customers.
- [42:20]
Balaji Srinivasan
They have a lot of other customers. And in fact, look, in 2015, China was taken aback by the trade war. But over the last 10 years, they're now prepared for it. And a lot of Trump tactics don't work anymore. They're not surprised anymore. It's just the same kind of thing. And they reduced their share of revenue for the U.S. it's only 15%. 16% of Chinese trade goes to the U.S. 85% is overseas. They've built up these other markets. So whereas the US Needs the parts that are from China. Let me tell you a little story, right? So in the late 2000s, around 2008, with the Beijing Olympics, you remember that, right? So there was pollution in Beijing. Now they've actually solved it, but there was heavy pollution.
- [42:55]
Naval Ravikant
Yeah, terrible, right? The runners would not want to run a marathon there.
- [42:58]
Balaji Srinivasan
That's right. So China basically went. They knew all the people who are polluting, and they went to them like a few weeks before, and they told them to shut all their stuff down so they'd have clear skies for the Beijing Olympics. Okay. So I was operating the clinical lab at that time, and there was a global shortage of a specific kind of chemical precursor that was used in various biomedical reactions. And the price, like skyrocketed like 100x for that time because one of those factories like China was just the, the scale supplier of like the whole world.
- [43:29]
Naval Ravikant
Single pound failure.
- [43:30]
Balaji Srinivasan
Yeah, yeah. Now that meant like research, clinical testing and so on ground to a halt for anything that used this compound. Or you had huge spikes in costs just for a few weeks. Now look, this wasn't the end of the world because it did resume, but a lot of people had lab test interruptions, research interruptions and so on. And that was 20 years ago. And that gave me a sense of what China is. Right. It is just upstream of the physical world. Like the US military is made in China. Like Tomahawk missiles. You know, There's a report, $400 million the Pentagon paid Govini to go and study the US military supply chains. Tomakut missiles, JDAMs. The supplier suppliers in China, right. The former Secretary of the Navy, Carl del Toro in 2023, he says the US Navy, one Chinese shipyard can build more ships than the entire U.S. navy combined.
- [44:14]
Naval Ravikant
They have 13 shipyards. In some cases, their shipyard has more capacity. One shipyard has more capacity than all of our shipyards combined.
- [44:21]
Balaji Srinivasan
You have hegseth recently on a podcast, Sean Ryan podcast, and he said Chinese hypersonics can sink every U.S. aircraft carrier.
- [44:28]
Naval Ravikant
Our whole power projection platform is aircraft carriers and the ability to project power that way strategically around the globe. And yeah, we have a nuclear triad.
- [44:35]
Balaji Srinivasan
And all of that, but a big part of it.
- [44:37]
Naval Ravikant
And if, you know, 15 hypersonic missiles can take out our 10 aircraft carriers in the first 20 minutes of a conflict, what does that look like?
- [44:45]
Balaji Srinivasan
You have basically this US Navy chart that shows China's 200x US shipbuilding capacity. China now has a world's large navy, right? And people say, oh, it doesn't have the aircraft carriers yet.
- [44:53]
Naval Ravikant
But that's like saying Netflix has the number of ships, but it doesn't have the tonnage. But these are semantic arguments.
- [44:59]
Balaji Srinivasan
Semantic arguments. Because it's like saying how many blockbuster stores does Netflix have? You know, their paradigm shifting. They're going with standoff missiles and hypersonic. Anyway, the point is to the predictability part. All these countries, it's even worse than them just trading with each other. They're all re centering around China because it's a global hub for trade. China has ships in every port. It has relationships with every country. Every country needs Chinese goods, right? And so China just has more leverage. And people think that the US has leverage because it's a consumer. But what's it giving? It's giving basically dollars. Why Are dollars valuable now? We have to ask deeper questions. The only reason the US can maintain its current level of consumption is that there was a global financial empire where the right built the US military and left did US diplomacy underappreciated by the right. Look, you and I, we've been on lots of cap tables. We've done lots of deals. Imagine a cap deal with 196 people on it. That's a huge pain. Yeah. Okay, now imagine 186 countries and how hard it is to get them to sign on the line which is dotted. That's a huger pain, right?
- [45:55]
Naval Ravikant
Yeah. A lot of work.
- [45:56]
Balaji Srinivasan
And so things like the WTO or WHO. US diplomats got 196 countries to sign onto this stuff.
- [46:02]
Naval Ravikant
Yeah.
- [46:02]
Balaji Srinivasan
Okay. They got 196 heads of state. 100 like all kinds of crazy standouts, holdouts. US diplomats were the best ever. And so was the US military the best ever. And because of this, the left and the right, state and Pentagon worked together to build the greatest empire of all time. Right.
- [46:19]
Naval Ravikant
And is it just over now? I mean, it's just over now. It's just over.
- [46:22]
Balaji Srinivasan
Is your position or it's, it's ending and people haven't marked it to market. Basically hard power is China and hard money is, is bitcoin. Right. That's, that's the future political axis. CCP is total control. Bitcoin is total freedom. Right now total freedom can also be total anarchy.
- [46:37]
Naval Ravikant
Right.
- [46:38]
Balaji Srinivasan
So I'm, I'm very sympathetic bitcoin. I'm certainly more on this side of things, but I think you want some balance between total control and total anarchy. Right. And that's where network states, that's where Dubai, that's where maybe India, that's, maybe Eastern Europe and other places will, will have to be. And so to your point about predictability, the problem is lots of countries are now thinking of China as a less unpredictable partner than the US even after the Shanghai lockdowns of 2022 when China put the country, which is crazy, but it's actually really bad.
- [47:07]
Naval Ravikant
Well, a dictatorship that will put a million Uyghurs into a concentration camp. A dictatorship that will put their country under surveillance that will take the entire sector of entrepreneurship and say we own the companies now and Jack Ma is going to go into reeducation or oil painting classes.
- [47:25]
Balaji Srinivasan
Like he's too.
- [47:26]
Naval Ravikant
Yeah, that's more reliable than the United States. Like let that sink in that people are making that choice.
- [47:31]
Balaji Srinivasan
And the problem is that basically it'll be, there'll be the version 3.0, which, which is the V1, is sort of the instinctive conservative reaction Chinese Communist Party and so on and so forth.
- [47:41]
Naval Ravikant
Right?
- [47:42]
Balaji Srinivasan
The V2, there's a certain kind of sophisticated international commentator who will say something like this and let me explain it and then I'll give a counterargument to what they're saying. They'll say, well, the US blew up the Middle east and China's building up Africa. The US got in all these wars, killed these people. China hasn't done that. The US wrecked its cities and China's built up its cities. Therefore China's peace will rise. China is good. Right. Now my counterargument to that, accepting that some of that is true, that China did build itself up, and so on and so forth. If you think about the US it was generally the better actor of the US versus USSR up to 1991. Like West Germany was better off than East Germany. South Korea is better off than North Korea. Capitalist countries wealthier or freer than communist countries. Right. But after 1991, it became so powerful that it lost its way. Hyper power went to its head. They started blowing up these countries. It started basically like a, like a really wealthy grandkid or great grandkid or.
- [48:28]
Naval Ravikant
Just interventionism for no reason.
- [48:30]
Balaji Srinivasan
They put the fortune up their nose, right? Like there's a saying, shirt sleeves to shirt sleeves in three generations, being born really, really, really rich is actually sometimes a curse because they don't understand the value of hard work. Right? So all these people inherited an empire that they could never build. And the last 30 years of management since 1991 has been some of the worst management maybe of any empire ever in history. Right. Okay. Problem is that on the current path, when China wins, right? Meaning like the US has its sovereign debt crisis because all these things on the tariff, what they're doing, they're reducing the demand for the dollar. The demand for the dollar is the only thing that's keeping the US economy afloat. Because you know, the Fed's plunge protection team. Don't know what that is.
- [49:10]
Naval Ravikant
Yeah.
- [49:10]
Balaji Srinivasan
It basically buys stocks with printed money. Right. It's upward redistribution of wealth in a sense. Right. This has been going on at least since the 90s, you know, with the Fed's mortgage backed securities. It's admitted it's buying assets with its own balance sheet many other times. It uses like shell entities and so on to that. It spots people money and so on, but it props up the market with printing. Okay. When the. And obviously 2022, 2021 with up until 2020 too, the, the post Covid market was propped up by printing. When there isn't global demand for the dollar, when you have weak treasury auctions, when people aren't, aren't able to trade with us, why would they want to hold US dollars anymore, right? They can't send their people in, they can't send their workers in, they can't, they can't even come there for tourism. Why do they want to hold US dollars? Again? Especially because they can be frozen with sanctions, especially when there's bitcoin and gold and so on. They won't, right? So when that happens, you get a markdown and China just rises into the vacuum. People don't understand that. It's like number one in many research fields, right? It's number one in many manufacturing fields. It's way stronger than people think. And the problem is China will be even meaner than you think when it's dominant right now. What constrains China? Internally, China is not constrained, so it can throw all its people in lockdown for in like Shanghai 2022. But externally it still feared the US and the US is almost the opposite. Internally there was Republican democrats who was somewhat constrained, but externally it was bombing all these countries because it didn't feel constrained, right? Says absolute power corrupts absolutely. So we need a counterbalance to this completely unleashed China. And that is the Internet, right? Because with the Internet we can actually. That's the heir to American values, right? Of course it's capitalism, it's freedom, it's.
- [50:43]
Naval Ravikant
A manifestation of democracy, but it's also.
- [50:45]
Balaji Srinivasan
That it's right, it's the libertarian values and the progressive values, right? In the non corrupted form, right? So it's freedom, it's capitalism, it's contracts, it's cryptocurrency, but it's also democracy, equality, media, science. In a real sense, I'm one of the biggest funders of those things in the world. For example, I fund all this decentralized science, right? I fund all these decentralized media, all these decentralized citizen journalists, things like provenance, you know, the who, what, when, where, why, how of a story. Like the where is proof of location, right? The who is proof of human right. And there's all these decentralized ways of doing this to get to truth, right? To get to media, to get to science, to get to equality. Because that's what crypto is. It's an equal system for the whole world. Hernando de Sota has written about this. Like all these people in Latin America are artificially poor because they don't have property rights. Now we can deliver that to them over the Internet. Right. And this is no longer theoretical. Ten years ago, talking about, like, crypto in poor countries was theoretical. Now it's not. These people need crypto, like in Lebanon, in Nigeria, in, like, Venezuela. Their phones are their lifelines. They are crypto first. They are Internet first people. And when I'm talking, it's not theory that we're talking about, it's practice. Right?
- [51:48]
Naval Ravikant
Yeah.
- [51:48]
Balaji Srinivasan
So Internet first. I think that is the one thing that can build an economic union to. That can balance China.
- [51:54]
Naval Ravikant
Interesting. Let me ask you just as a total aside, it seems like the bitcoin game that everybody's buying into was based upon it not being centrally controlled. And now you have an actor who has 600,000 bitcoins out of the. Well, Michael Seller, I think, has 600,000 now.
- [52:13]
Balaji Srinivasan
Something like that. Yeah.
- [52:14]
Naval Ravikant
So he's the largest holder other than, I guess, the dead Satoshi Wallets.
- [52:18]
Balaji Srinivasan
Yeah.
- [52:18]
Naval Ravikant
So.
- [52:18]
Balaji Srinivasan
So full Stoshi. I'm from friendly with all these guys. Sure.
- [52:21]
Naval Ravikant
It's not a character thing as much as does it break the game that somebody wants to buy up that much of the supply of bitcoin. And then just as we wrap, like, I think we all expected that maybe bitcoin would be replaced or hacked at some point. It hasn't been hacked. And I mean, I guess you can make arguments about, you know, the, I guess, layer twos as Solanas, the Ethereums, you know, serving a different purpose. But is bitcoin here to stay? And does this consolidation of bitcoin into a small number of holders jeopardize that?
- [52:53]
Balaji Srinivasan
Good question. So how to think about this first is.
- [52:57]
Naval Ravikant
It sounds like you're thinking of how to be politically.
- [53:00]
Balaji Srinivasan
No, no. There's 10 different dimensions to it. So I want to.
- [53:03]
Naval Ravikant
Well, let's just go right at the sale. Okay. So.
- [53:06]
Balaji Srinivasan
Absolutely. So I'm actually also, like, an advisor to one of these bitcoin treasury companies, like Komodo holdings, just came out. Jack mallers has done one, 21. It's funny, two of the names that I had, 21 and Nakamoto, are both being used for these bitcoin treasury companies. Right. So I think on balance, it's good, but it has risks. Okay. On balance wise, it good because it allows tradfi, all these other people who could not put capital into bitcoin, to put capital into bitcoin and it boost bitcoin. It is quite possible, perhaps even likely, that at some point There will be an attempt for a seizure. Okay. Because Bitcoin at 100,000, again, everybody's smiling. Bitcoin at a million, let alone 10 million. A lot of that is the flippening. Right. Somewhere, you know, a long time ago, my friend Olaf and I calculated that somewhere between 100,000 and a million dollars for bitcoin is the billionaire flippening. When most billionaires become crypto, there's about 2,000 gold billionaires. Somewhere around that range, there's a flip. Most billionaires become crypto. Right. And then of course, a million dollars isn't worth what it's worth anymore. Faith in the dollar is eroded. And it could go very quickly from like, I don't know, maybe it's 300,000 to a million. There'll be a point which there's a loss of faith in the currency and it just goes like this. Okay? Now at that moment, see, remember 2021, when Trump was not allowed to tweet? Right. After Jan6. Right. You and I saw the emergence of social media and in, in the year, let's say 2010, remember the social Network movie came out?
- [54:26]
Naval Ravikant
Yep.
- [54:26]
Balaji Srinivasan
You know, was absent from that movie completely.
- [54:28]
Naval Ravikant
The Winkle Eyes. No, they weren't.
- [54:30]
Balaji Srinivasan
They were in politics.
- [54:31]
Naval Ravikant
Oh, yeah, right.
- [54:32]
Balaji Srinivasan
That movie basically treated Facebook as like Universal Studios or like Disney. It was like, it was like a playground. Right. It was impressive from a financial standpoint and a user based standpoint. But there's not a single mention of politics. No one understood what was to come. Right. But over the 2010s, all politics became social media. Right. And if in 2010, I told you that in 2021, the president of the United States will be defined by whether or not he is able to tweet, even given that the Arab Spring and other stuff had happened. You just said biology. You're just exaggerating. Social media just isn't that important.
- [55:02]
Naval Ravikant
Right.
- [55:02]
Balaji Srinivasan
It would have seemed surreal.
- [55:03]
Naval Ravikant
Literally he was silenced by a cobble of four or five companies.
- [55:07]
Balaji Srinivasan
Yeah. And now if I tell you, deplatformed, I don't know the exact year, but by sometime plus, minus maybe 2035, a country will not exist if it doesn't have gold or digital gold. Like it literally will be insolvent. Like you're not the president if you don't have social media. You're not a country if you don't have cryptocurrency or maybe gold. Right. I think physical gold is interesting because the complement to crypto, it has different failure modes. States will go with physical gold. And individuals and startups will go with digital gold. The reason is physical gold requires trucks, it requires guys with guns, it requires like, you know, facility magnetometers and so on. So like something like China, like a state can protect that because they've got little guys with guns around it and they go and you know, like the Korean demilitarized zone. You can imagine something like that between Russia and China where they just have hand each other gold bricks every day to do settlement.
- [55:57]
Naval Ravikant
Right.
- [55:58]
Balaji Srinivasan
So something like that could work between countries that basically their embassies become places for gold settlement. I think that's very possible, but that's too much fixed cost for an individual. Right. And also gold bricks can be detected when you go through metal detectors. That may be the real purpose of TSA, actually. Okay, so point being though, to your point, it is possible that seizure orders do happen when Bitcoin gets to a certain level. Then what happens? All the bitcoin that is not able to be seized, that's free. Bitcoin is actually more valuable, number one. Number two is I think that even in an economy which is Bitcoin maximalists don't, I don't think, I'm not a bitcoin maximalist, but they don't understand or they don't want to accept this point that there will be other assets besides digital gold. Right?
- [56:39]
Naval Ravikant
Of course, yeah.
- [56:40]
Balaji Srinivasan
Because Bitcoin itself is like it's expensive to transact. When you're transacting, it'll be a small number of daily transactions, relatively. It's about the scale of Fedwire, by the way. Fedwire, about 500000 daily transactions. Bitcoin's about the same. High denomination transactions that are infrequent. That's what Bitcoin is. Everything else will go to Ethereum, Solana, you know, like privacy coins and so on and so forth. Right. And, and other chains like this because you just don't want to have all that traffic on just one chain. So already you have, you know, for example, usdc, usdt. On other chains you have smart contracts on your chains, your privacy on your chains. Because Bitcoin is immutable. And these are things aren't. Now what are the risks of Bitcoin? One is seizure. Two is quantum. Right?
- [57:25]
Naval Ravikant
Yeah.
- [57:26]
Balaji Srinivasan
We definitely need quantum resistant Bitcoin.
- [57:28]
Naval Ravikant
And that's not farcical in your.
- [57:31]
Balaji Srinivasan
That's not farcical?
- [57:32]
Naval Ravikant
No, no.
- [57:33]
Balaji Srinivasan
It'll happen.
- [57:33]
Naval Ravikant
It's probable. And it's possible in the short term. And it's probable in the long term.
- [57:39]
Balaji Srinivasan
Yes. The main issue with, with quantum. Is not that there isn't a solution on the radar for Bitcoin, because with quantum decryption, you can also have quantum encryption.
- [57:47]
Naval Ravikant
Sure.
- [57:47]
Balaji Srinivasan
The key question is, is quantum decryption something where we can put a quantum safe algorithm in place and time and people think we can? The hard part is moving every coin from the old address to the new quantum safe address could take almost a year. So a lot of old coins could get raided in that time. Right. So then there's various.
- [58:05]
Naval Ravikant
This is wild to think about that you might even be better off just starting a new product.
- [58:11]
Balaji Srinivasan
There might be a QBTC or something like that. Right. But in a sense, even if bitcoin only achieves its objective now, one thing you get, by the way, is what's called social reset. Right. Social reset could be something where the community just agrees between themselves that we're just going to snapshot the chain at this point in time and move it over to this new chain.
- [58:33]
Naval Ravikant
Wild.
- [58:34]
Balaji Srinivasan
Okay. So that is a non technical but social kind of thing, which I think is absolutely going to happen at some point.
- [58:39]
Naval Ravikant
Wow.
- [58:39]
Balaji Srinivasan
Right. Because bitcoin is. There's more bitcoiners than there are Americans. Right. More. Many Hundreds of millions worldwide. Right. And importantly, bitcoin appeals to a lot of people in China. Why? Because money the party can't seize.
- [58:52]
Naval Ravikant
Yeah.
- [58:53]
Balaji Srinivasan
So even as American culture unfortunately is becoming less appealing to people in China, Internet culture is still valuable. Right. They still need the free Internet. They still want GitHub. Right. They still want bitcoin, they still want these things. Hundreds of millions of people in China still like these things. Right. That's what I call the Chinese capitalist party. Right. So, you know, as sad as it is to see America lose its soft power, the Internet still has and it's still rising.
- [59:15]
Naval Ravikant
Right.
- [59:16]
Balaji Srinivasan
So to your point, I think we're going to see all kinds of crazy drama, remember with social media, all the edge cases that people talked about. Actually, you remember in the late 2000s when people talked about deplatforming, it was corporate deplatforming.
- [59:27]
Naval Ravikant
Yeah.
- [59:27]
Balaji Srinivasan
It was like, gosh, it was a company with a Zynga that got, you know, Mark Minkus company.
- [59:32]
Naval Ravikant
Yeah.
- [59:32]
Balaji Srinivasan
You get Neuter.
- [59:33]
Naval Ravikant
Yeah, yeah.
- [59:33]
Balaji Srinivasan
Or Meerkat push off of Twitter. Right. So that was corporate deplatforming. Then there was ideological deplatforming. But every possible abuse of social media, censorship, this. And the other half happened. And then the years to come, every possible crazy attack on crypto is going to happen, but because there's so many coins. It'll be very difficult to take the currency of the people, by the people, for the people from this earth.
- [59:55]
Naval Ravikant
On that note, gosh, congratulations on taking a lot of theories and making them into reality. You're six months into this journey, but it's clear you struck a nerve. And I think that you're doing important work as a backstop against people being cynical and not thinking that new things can't be tried. So I wish you great success with your Network School State and the believers in it. I think that's kind of the most interesting part, is that you've assembled hundreds of people in person and tens of thousands of people online who actually believe that this audacious project is worth their energy and their time and their geography. So congratulations. Thank you.
- [60:35]
Balaji Srinivasan
I'll say one last thing, which is, people, you're watching this apply to Network School, NS.com. and also, if you're an angel investor, a VC and so on, we have space. So personal Runway, basically, $18,000 a year. Like, that'll carry you 125k.
- [60:51]
Naval Ravikant
Incubator check will go with two founders. A couple of years more.
- [60:54]
Balaji Srinivasan
Yeah. Well, so. Actually way more than that. Right. Like, so, basically. So if you have. If you're. If you can't get to the US On a. On a visa, if you just want to cut your burn, apply to ns. And if you're an investor, we can take your companies. We've got plenty of space. And so. And so companies.
- [61:07]
Naval Ravikant
Great pitch.
- [61:08]
Balaji Srinivasan
Great.
- [61:08]
Naval Ravikant
All right, we'll see you all next time. Bye. Bye.