Peter McCormack (3:42)

Andreas, how are you?

Andreas Antonopoulos (3:44)

I'm doing very well, Peter, how are you?

Peter McCormack (3:46)

I'm very well. Thank you for joining me for this. So as I said to you, I'm putting together a series of interviews for new people who are discovering bitcoin to help them learn about it in a kind of very easy and efficient way. The first episode is why we need bitcoin so Andreas, take me away. Why do we need Bitcoin?

Andreas Antonopoulos (4:05)

Because we're heading into the 21st century now with a system of money built in the 16th century and a system of banking and finance built in the early 20th century. And both of them are plagued by politics and fighting and restrictions which are not suitable for the kinds of problems our planet is facing. So we've got these global markets, we've got this global community, we've got this global Internet, and yet our money is fragmented and plagued by these petty considerations of nationalism and putting the flag and faces of old dead people on bits of paper. The money system is controlled by governments in such a way as to promote nationalistic ideals rather than improve commerce, which is what money is supposed to do. And even while in the Western world, we have the best forms of money and banking that money can buy, even those are horribly fragmented, slow, inefficient, and full of mistakes. But the truth is that that's the best. It gets depressingly bad from there on. So if you go to South America or Africa or even Southern Europe, if you go into Asia, the money systems get progressively more political, more about surveillance, more about control, less about commerce, and even more inefficient. And these systems exclude a huge number of people counting in the billions from the world economy. Why bitcoin? Because the 21st century needs a 21st century system of Internet money that is open, borderless, neutral, censorship, resistance, immutable and permissionless, that serves the needs of commerce for every person in this planet, no matter where they are, no matter who they are, anytime, anywhere, and that's Bitcoin.

Peter McCormack (6:14)

So you get to travel the world, you get to speak to a lot of people, you get to understand what's going on in different parts of different economies. As you said there, as you go to South America or Africa, as the economies are weaker, you see worse situations. Do you find it's easier to explain Bitcoin to people in these economies than, say, in places like the UK and Europe and America?

Andreas Antonopoulos (6:38)

Absolutely, yes. It's much easier to explain because a lot of the problems we see with money have a lot to do with moving money across borders. Borders are a very big thing in traditional money, and also the difficult politics of various repressive, dysfunctional, and corrupt governments. If your government isn't repressive, corrupt, or dysfunctional, your money still is a giant surveillance system. But you don't notice the impact of that because it happens slowly. It erodes democracy, it erodes the institutions of popular will. It erodes a lot of those things and it enables kind of corrupt criminal activity at the highest levels within your society. But you don't notice those because they don't generally affect your day to day. In countries where those problems are much more in your face, the question why Bitcoin doesn't come up. Instead the question becomes how do I do bitcoin and how quickly can I do it?

Peter McCormack (7:43)

So that's very interesting because it's usually therefore a response to crisis or response to a situation you're already suffering with. Probably one of the reasons why it's difficult, maybe in considered more successful western economies, it's difficult to get people to consider Bitcoin beyond a personal financial gain, but beyond speculation. So how do you think we encourage people to take it more seriously in western countries? Or do we have to accept that it might have to be at a time when there is a financial crisis that hits us here?

Andreas Antonopoulos (8:16)

Well, I honestly don't think that we have to have people in western countries take it more seriously. I think Internet money is interesting to western developed nations when it can do applications that can't be done with traditional systems. When you talk about super fast, super secure, super IT micropayments, then you can start doing things with cryptocurrency that you can't do with traditional systems of money. And then it's interesting, it's interesting for gaming, it's interesting for new applications. Your autonomous vehicle that you want to have interact with an electricity charging station is not going to have a credit card of its own. And if it does, that would be a security nightmare. But it could have some bitcoin of its own to do that kind of transaction. So you start seeing these 21st century applications that emerge that are not about crisis, they're about a new form of networked money. Until we really have widespread adoption and the need for those applications, it really is, as you said, most of it, either a speculative curiosity or for some people who are in the tech sector, it's a cool, elegant technology thing that they can get involved in and develop a career around, which I think is also a great motivator in developed nations.

Peter McCormack (9:41)

Okay, so let's start breaking down these kind of dangerous global megatrends that support the reason for why we need bitcoin. So let's start with cash and financial privacy. You know, for me it feels like it's getting worse. And as we, as money becomes more digital and as we lose cash in its physical form, privacy is becoming worse. And also it's becoming discriminatory as well, which is A separate point, you've talked a lot about financial privacy. Why is financial privacy important?

Andreas Antonopoulos (10:11)

Well, I just want to first comment on something you said about us losing cash. We're not losing cash. Cash is deliberately being taken away from us as a means of transaction. And that is a very deliberate political strategy that started in the 1970s and is gaining momentum, especially in countries like the United Kingdom. And it is a very, very dangerous trend, like many of the other control, surveillance, authoritarian trends we've seen, even in supposedly free and democratic countries. Why is privacy in financial affairs so important? The reason is that if you understand that money is the language by which society not only coordinates, but also expresses value, and where cash is the last remaining mechanism before cryptocurrencies that allows people to coordinate and express value to each other without anyone else in the transaction, without intermediaries, then it becomes obvious that if you lose the ability to have privacy on those issues, it undermines many of the other fundamental freedoms. So we have to think about freedoms in terms of two different categories. Let's call them prior restraints and consequences. Right? So you're free to speak, right? So let's say freedom of speech. You have freedom of speech unless there is prior restraint. And prior restraint is where someone stops you from being able to speak at all, which is kind of the worst form of censorship and strictly prohibited in most constitutional free countries, with a variety of exceptions. Of course, then there is consequences where you're allowed to speak. But if you say something that is not in accordance with norms or mainstream political opinion or whatever, the consequences are severe from social consequences, which of course, are appropriate and part of a free society to extrajudicial enforcement by governments where your social status, your ability to get a job, your ability to move freely, and other freedoms are taken away from you because of something you said. So privacy is important because it protects from both aspects of this. If you have anonymity, you can speak, and then you can also get away with the speech. And that applies to many other fundamental political freedoms, like the freedom of association, the ability to associate with political causes or other causes you want to and associate with other people. If you strip away financial privacy, then in many practical ways, your ability to exercise all of your other fundamental human rights is significantly eroded. So, first of all, with modern credit cards and payment systems, you get surveilled in three different ways. You get surveilled in terms of your network, meaning the associations you form. You get surveilled in terms of the content of your purchases, so people can see which books you're buying which organizations you're subscribing to, not just create a graph of your associations, but look for specific types of content. And then the third one that most people don't think about is the geographical aspect of it, which is every time you do a transaction, it reveals the location at the moment you did a transaction. And that means that if you string enough of these together in your daily life, you can basically be tracked as to your whereabouts through your bank account without even having to activate the GPS on your phone. So all of these are critical aspects of freedom, because if you take them away, what happens is that all of the other human rights and freedoms gradually start to crumble. And a government, on the other hand, that has power over financial information and the ability to do financial surveillance, censorship and control gains enormous political power. They can monitor the activities of dissidents and political opponents. They can monitor their campaign spending directly related to things like that. But they can also apply consequences by, for example, penalizing democratic expression. And I'm not talking here about North Korea. Let's come a lot closer, why don't we? How about Catalonia, right? How about the ability of a Spanish government to apply those kinds of extrajudicial controls over people who associate with the Catalan Independence Party or right in the UK with a Scottish devolution movement, or Northern Irish and Irish devolution movements and all of those things. So even in free societies, the power given to governments to control is enormous. And financial surveillance is one of the most powerful tools they have.

Peter McCormack (15:26)

Based on your work and your studies around the erosion of financial privacy, what other examples have you seen and where have you seen this really at play where people have lost financial privacy in this head of a devastating impact upon the freedoms in that country?

Andreas Antonopoulos (15:42)

Well, I think one of the very useful recent examples was the surveillance of Hong Kong protesters by monitoring their purchases of subway cards, metro cards, to go to specific locations in the city. So they, you know, the first protests that started in Hong Kong were back in, I think, 2015, and a lot of people were jailed as a result of their participation in those protests after the fact, by analyzing their financial activity and therefore being able to pin down their movements. So this time they've wised up. And one of the scenes we saw was long, long lines in front of the cash machines to buy, not to use the tap to pay systems or the RFID metro cards, but instead to use coins to buy paper tickets for the subway system so as to subvert that surveillance mechanism. But in China in general, we're Seeing this move to apply social consequences, more than 100 million people have now been prevented from public transport, flying on an airline, getting on a train, getting jobs based on something they call a social credit score. And those kinds of attitudes are permeating in the West. The idea of pre crime and thought crime and scoring people according to their behavior and then changing the level of freedom they have. You said earlier we're losing cash. Well, there's a deliberate attempt to eradicate cash transactions so that everything can be inside the closed and surveilled financial system. So when a lot of people think about and hear about Bitcoin, they hear about digital currency, and they think that our future is a choice between analog currency that we have today and the digital currency of the future. That's not true. We already have Digital currency today. 92% or more of all of the currency in circulation in most countries is completely intangible. It's in spreadsheets and databases and banks. Only 8% is in physical cash. That physical cash is shrinking, deliberately being eradicated from the economy. And there are more and more strict limits as to what you can do and how much you can use cash for. What happens when that goes to zero? Well, now you have the future. And the future basically is now a choice between two different forms of digital cash, one of which is government controlled, completely centralized, completely surveilled, end to end, and with the ability within one wrong election to elect an authoritarian government that can simply turn off their opposition's finances. Imagine if you go to a protest and from that moment on, you cannot buy food at the grocery store. And that's the future we're marching into. And the other possible future is a digital currency of the people, by the people, for the people, or in fact, many, many digital currencies with different degrees of privacy, different degrees of flexibility that give us choice, that are completely transnational in operation, that do not pay dues to intermediaries like banks, but they also don't serve up our private data to governments. Most importantly, they cannot be turned off. You cannot be turned off as a person, and your rights cannot be turned off with these systems of cash. So it's a stark choice.

Peter McCormack (19:29)

Yeah, I mean, what happened in Hong Kong was incredible. I did see that. And without a physical form of cash, that wouldn't have been possible. They would not have been able to have bought those tickets. There is a. I find a general growing distrust of governments globally, especially at the moment. We're seeing lots of different movements and lots of different demonstrations. You know, from France to Lebanon to Chile to Hong Kong, we've gradually seen an erosion of our personal freedoms. Are there any side benefits to Bitcoin whereby it helps protect freedoms outside of finance?

Andreas Antonopoulos (20:03)

Oh, well, absolutely, yeah. So because financial activity is at the center of human social activity, even though money is stigmatized, the truth is that it actually provides a basis for a lot of the underlying social activity that happens. And you've got to think about one of the other aspects of this is the difference between acting locally as part of a neighborhood and community, where you have a significant amount of interaction and exchange of value in your local environment, versus acting through global intermediaries. So, for example, when you go to your local grocery store, your local news agents, and you shop with cash, what you're doing is you're keeping that transaction entirely local, and that allows the local business to thrive and continue. As you can imagine, the more intermediaries you add and the more secondary costs you add, the more that erodes their ability to continue and they get replaced by big chains, essentially. That's not about just financial activity. That's basically breaking down the fabric of local communities and neighborhoods and breaking the ties that keep society together until you're not talking to anyone. You know, you're talking to a junior employee of a giant conglomerate who. Who is only in the store for three months before they get moved to another job and not only doesn't know you, but even if they did, can't really serve you as a person because they're not authorized to deviate from a checklist and a scri. And that's basically taking away our humanity. That's destroying the basis of neighborhoods and societies. Those are the secondary effects. The other big one, of course, is in politics, especially if you think about it in terms of global politics. If I as an individual want to hire someone in another country in order to do some web design work for me, now we are in the 21st century. People can export their labor directly. And that also means that I can invest and inject vitality into an economy that is in crisis and help some people out not as charity, but by giving them employment. Well, with traditional financial systems, that's almost impossible to do. And so the freedom to do commerce globally is really important. And then finally, there's the whole aspect of participating in the political activity. So democracy itself. It's bad enough that democracy has been flooded with money, and that's the predominant mechanism of speech, but it's even worse when that money is very, very tightly controlled by financial institutions that can therefore control and funnel or prevent the accumulation of money in certain political causes. Whether that's for example, in the West, WikiLeaks, or next year it might be Greenpeace because they decided that's a terrorist organization. Money will always flow to Lockheed Martin. It will never stop flowing to them, but it may stop flowing to your local animal activists, environmental activists or other political organizations. I think recently they tried to pass a bill in the UK to ban some environmental group or classify them as terrorists or something like that.

Peter McCormack (23:52)

Extinction rebellion.

Andreas Antonopoulos (23:54)

Yes, exactly. Right here in the US they even tried to do that with, I can't remember the name of it, with this cycling thing, which is a once a month gathering of cyclists in the streets, which has been going on for 25 years in New York. I think it started in New York.

Peter McCormack (24:13)

So the WikiLeaks thing is interesting because a lot of people won't actually know why Bitcoin was so important for WikiLeaks. They won't know the background to Visa and MasterCard and what actually happened. They will know who WikiLeaks are. They will have heard of Julian Assange and know what they did. But it might be worth here explaining actually what happened with WikiLeaks and Bitcoin and how it helped them.

Andreas Antonopoulos (24:32)

Yeah, so the thing here is that back in, I think it was 2012, an embargo was started against WikiLeaks. And this was, I believe it was right after WikiLeaks published the first of Chelsea Manning's diplomatic cables that revealed war crimes in Iraq, especially the assassination of the Reuters journalist from a helicopter and various other war crimes that were happening and had been covered up. And at that time, an embargo was initiated. Now, keep in mind, this is a situation where you have an organization that is publishing and therefore is committing acts of journalism. They had every right to have that information because they were under no obligation to keep it secret, nor were they bound by any confidentiality or secrecy agreement. Now, Assange is being prosecuted under the Espionage act, which is preposterous and unconstitutional, but it may actually succeed anyway. WikiLeaks was not prosecuted. WikiLeaks was not charged. No grand jury, was a panel, no opportunity to get witnesses or examine charges against them. No. Instead, what happened? The Department of Justice sent a letter to Visa, MasterCard, PayPal and American Express and said, if you do business with these people, we are going to start auditing you and putting pressure and cuts you off from our systems. And through that extrajudicial coercion, they all immediately cut WikiLeaks out of the financial system. And of course WikiLeaks then had no ability to appeal. Appeal what? No judicial action had actually been taken. This is the classic behavior of a regime. If it wasn't the US we would have called that a regime. When Putin does that shit in Russia, we call it a regime. At that moment, people who were involved in the Bitcoin space decided to persuade WikiLeaks to start accepting Bitcoin to bypass the embargo. And things like that have happened many, many times since. Now you may think that politically speaking, OK, WikiLeaks is an extreme example because. Because WikiLeaks is engaging in nation states, geopolitics, and maybe they're not so innocent and maybe they have relationships with various nations, none of which really matters. Because the rule of law is not about who you are, it's about applying things equally to everyone. Once you start taking shortcuts there because the means are justified by the ends, then you don't have rule of law anymore. You just have raw power. If you don't like WikiLeaks and you think, oh well, serves them right, they shouldn't have poked the bear, then we can look at several other examples where this has happened to far, far simpler causes. In the US this kind of activity in an operation called Operation Choke Point, which is a collaboration between Department of Justice and various state agencies to cut off a whole list of industries that operate in the US that are actually legal, both legal federally, in many cases, in other cases not legal federally, but legal in some states, like cannabis, where it had been legalized, medical cannabis included, other ones that included licensed and legal gun dealers, escort services, gentlemen's clubs, basically strippers, sex workers of various types, pornography and things that at least in the US are perfectly legal. And through this Operation Choke Point, they basically shut down their access to the banking system entirely. Of course, the side effect this has is one you end up with these businesses becoming largely cash operated businesses, which massively increases their risk of getting robbed at gunpoint. In the case of course of sex workers, that means a massive increase in violence and risk for people who until then were able to engage in this profession through online payments and with online appointments. This got much worse with Festa and Sosta and Sesta, whatever they call those laws that were passed in the US pushed a lot of people back out onto the streets. And the murder rate among sex workers has quadrupled just a year later, directly as a reflection of these policies. Again, all of these people are dirty perverts who are doing things that we don't like as a society. So you may decide they don't deserve the protections of law. And let's keep going down the list because first they came for WikiLeaks and I wasn't a spy, so I didn't say anything. Then they came for sex workers, and I wasn't a sex worker, so I didn't say anything. Then they came for pot smokers, and I wasn't a pot smoker, so I didn't say anything. Well, next they're coming for immigrants. And I don't know about you, but I'm an immigrant. I'm an immigrant in this country and I've been an immigrant in most of the countries I've lived in. Next, they come for immigrants, then they come for refugees. Then they come for protesters of the Keystone Pipeline in North Dakota. Then they come for protesters for democracy in Hong Kong, and the list goes on and on. This is a slippery slope. There is no category that they will not apply control and power on unless that category is rich friends of the dictators themselves or rich friends of the current regime, elected or not. And so if you take comfort in the fact that they haven't come for your demographic yet, trust that whenever we've seen history start demonizing whole groups of people and throwing them outside of the scope of the rule of law. The circle of people affected gets wider and wider and the circle of people who can get away with it gets smaller and smaller. And before long you're going to find yourself on the wrong end of something. And this isn't a partisan issue. This isn't a left versus right. They do it equally to people on the right who are protesting for the things they believe in. They do it equally on the left, to people who are politically active for the things they believe in. This is a bipartisan issue of power of the very few over the very many.

Peter McCormack (31:20)

And we shouldn't think that just because I'm in the uk, I'm near London and anyone who's in another country, such as the US or Germany or even Australia, that kind of seen as, I mean, especially Australia recently. But countries that we believe that are fair, open and free democracies, we shouldn't feel like that we aren't a risk here. I think, especially what happened recently. Yeah, especially what's happened in Australia recently.

Andreas Antonopoulos (31:48)

And the U.K. i would bundle the U.K. and that the U.K. has had, you know, two decades of reactionary authoritarian laws, starting with RIPA, which I was there when that was being discussed in the early 90s. And then they just keep piling on these authoritarian laws and keep eroding personal freedoms. And Australia has simply done it on an accelerated schedule. It's a smaller population, they can run those experiments much more easily. And the reason a lot of that is happening there is because if it works and they get away with it in Australia, they export that shit immediately to the uk. And of course, the other thing you got to realize is while in many of these countries there are laws from preventing the whole scale surveillance and intrusion of privacy and authoritarian measures against their own citizens, they are allowed to do it against citizens of other countries. So they have these beautiful bilateral agreements where the Brits spy on the Americans, the Americans spy on the Australians, the Australians spy on the Brits, and they just pass the information backwards and forwards so that the fact that your government isn't allowed to spy on you is small comfort. If you understand that they just outsource that to the other four parties in those agreements to do it for them, and they still get the same information and they share those databases. It's just a thin veneer of legality thrown over what is a vast conspiracy. But not a conspiracy theory, an actual conspiracy that has been revealed in great detail.

Peter McCormack (33:30)

Next up, I talked to Andreas more about why we need Bitcoin. But before that, I have a message from my amazing sponsors. So New year and I need to welcome my new sponsor, Kalman Law, or Kalman Law, one of the oldest names of Bitcoin and Fintech and one of the premier law firms in the space. Kelman Law is run by Bitcoin OGs based in New York. And unlike a lot of crypto lawyers you will find online, these guys actually understand Bitcoin and Fintech. They were already operating in the space in 2013 because they are committed to the cause of Bitcoin and what it means for the world. And of course, most importantly, they always accept Bitcoin as payment. One of the partners, Zachary Kelman, is known for drafting a bill submitted to the US Congress in 2014 aimed at exempting on chain Bitcoin transactions from US regulations. And the other founded partner, his brother Daniel Kelman, was on my show last year as part of my Mount Gox series. You might remember his name from that he was helping me understand some of the complexities around civil rehabilitation. In that case, the Kelman Law team is staffed with lawyers with expertise in litigation, dispute resolution, anti money laundering, and US and international corporate structuring for fintech businesses or companies and individuals operating in the Bitcoin space. So Listen, if you are a fintech business or you have a dispute with someone involved in Bitcoin, maybe someone owes you some bitcoin, or you just need legal advice relating to Bitcoin or fintech, open up your email and send a message to Infoelman Law. That's k e l m a n Law. Kalman is with one L, not two. Or just go to their website Kelman Law which is k e l m a n Law.

Peter McCormack (35:09)

Another really important error for why we need Bitcoin is with regards to how central banks manage the economy and manage monetary policy. Do you want to talk about that and how Bitcoin changes things with regard to that?

Andreas Antonopoulos (35:21)

Yeah. Well there's two really broad perspectives to this. One of them you hear a lot in Bitcoin, which is a sort of Austrian economics based perspective that is mostly focused around free markets and capitalism and libertarian ideology as well as the soundness of money, the gold standard, etc. Etc. Which is I think a great intellectual framework but at the same time it's also one that can be alienating to some people who are on a different part of the political spectrum unnecessarily. So I'm going to go with a different tech. I mean you can read a lot about that and hear a lot about that and I think that's a useful framework, but it's not everything. I'm going to take a different framework and that framework is this. Our current financial system is fragile. The traditional financial system is fragile. And the reason it's fragile is because when you have a system that is very, very complex and dynamic, like the international financial system, when you have imbalances in the system, those imbalances can be fixed by people making private, relatively selfish decisions to profit from those imbalances and also by small cycles of corrections where if things are not efficient, a more efficient competitor will step in, or if a business is malperforming, it will go bankrupt. It will get its assets essentially recycled back into the economy. So a more vibrant startup can pick up some of those assets really cheaply, finance its, its ability to compete. And these are all healthy things. But what's happened over the last 25 or 30 years is with a huge amount of intervention, especially through the financial services industry, governments have sabotaged and in some cases completely stopped many of the normal functions of open markets. So they prevent the dynamic self correcting mechanisms from taking place and try to control things. I used the metaphor before, which is this idea that if you have a forest and you aggressively put out all fires, that occur in that forest, you disrupt its natural cycle. And so undergrowth that would be cleared out every now and then with a small fire accumulates and then you have a massive conflagration which doesn't just clear out the undergrowth, but it turns the ground to glass, sterilizes the topsoil and destroys the ecosystem to a degree that it doesn't recover for a decade. So stop a lot of small fires, you get a big one that's actually destructive rather than the small ones. People in California learned that lesson over decades because in order to protect property, they destroyed the ecosystem of the forests. But the same thing happens on a bigger scale in economies, which is if you don't let the Lehman Brothers and the Goldman Sachs and the Deutsche Banks that are actually zombie banks that are functionally insolvent, if you don't let them take the losses, get broken apart, write off the loans, take the hit, burn the investors who took those risks and do it on a small scale instead, they get bailed out, they get a new method of accounting where they can hide these losses, they get zero interest money where they can basically accelerate and increase their leverage. They simply double down and make it worse and build bigger non performing loan portfolios with cheaper money. If you repeat that enough, and we've now been doing it since the early 80s again and again and again and again and again, you build up the undergrowth, the dead wood in the forest layer, if you like, of the economy and you have all of these zombie malperforming companies that are not going out of business, that are keeping all of the capital and the workers and the equipment tied up, because they can get yet another junk bonds loan from a non performing bank that itself is insolvent, but is not being allowed to go under, et cetera, et cetera, that system is fragile. In 2008 we saw it almost blow up in our face. And once again the solution was to not let it basically clear out the dead wood, but instead fuel an even bigger set of bubbles that's going to blow up even harder next time. If we keep doing this, we're basically going to see very, very bad crises erupt. Our current traditional financial system, because it's constrained by borders, because the money itself is being used to play geopolitics, because the banks have become deputized in law enforcement to fight various stupid war on X type battles of social politics and meddling in society, because the same financial organizations and their super organizations, the central banks and the wire transfer systems like Swift, have not only been deputized into law enforcement, but have been drafted into the military and have become part of militarized currency that is used to fight trade wars and currency wars and sanctions and embargoes to promote various geopolitical goals. They have at the same time become incredibly fragile as mechanisms of commerce. And in a world that's increasingly globalized, you have all of these islands of separated fragility that can't balance out. And that's the real danger. It's not just about sound money and capitalism, et cetera. It's about saying that the people of Sudan don't deserve to have access to the world economy. So let's condemn them to poverty, because that's going to fix terrorism. No, it's going to make it worse. And we keep doing this to dozens of countries. We keep condemning billions of people to poverty while we build these house of cards financial systems in developed nations that are a mirage of money changing hands as fast as possible and debt getting shuffled around in this giant musical chairs game where at first there were fewer chairs than people dancing. Now we just took the chairs away entirely and we're just pretending it's all cool because no one remembers the last time the music stopped. 90% of the traders in the markets today have never seen bond interest rates above 2 or 3%. 90% of the traders in the markets today have never seen a bond crash. 90% of the traders in the market today got into their profession after 2008 have never seen massive stock losses. They're in for a surprise.

Peter McCormack (42:46)

Yeah.

Peter McCormack (42:46)

How big is the bubble? Have you projected how bad a crisis we could have if it pops? And it truly pops? What's your position on Bitcoin being an assurance against this and being a safe asset? Do you think it could be? Do you think it's an unknown?

Andreas Antonopoulos (43:02)

I don't know how big the bubble is. I know it's bigger than 2008, significantly bigger. And you can see that in stock market valuations. And it's no longer just one bubble. What happened in 2008 was primarily concentrated in real estate. And now it's spread to every financial asset out there in many ways. It's also spread to crypto. One of the reason we've had these massive rallies in crypto is because once you've invested in real estate, bonds, equities, junk bonds, commercial bonds, municipal bonds, student loans, automobile loans, commodities, et cetera, and all of those are hyperinflated. At some point you go, well, what else is left that's still delivering yields? And you see this Little crypto market on the side, like, let's throw some billions into that, see what happens. Cheap money sloshing around isn't good for any industry. And some of it is sloshing into our industry and creating these extreme situations. I don't think that we should wish for a crisis so that we can see how good the lifeboat is. That's like the manufacturer of a lifeboat trying to demonstrate their new lifeboat on a giant cruise ship. But they've only got enough space for 12 passengers, and there's 12,000 passengers on the ship. You don't start drilling a hole in the hull to test your new lifeboat. At that point, we're not big enough. And so if there is a massive crisis, first of all, what most people don't realize, I think, is that in the beginning at least, crypto will crash hard. And the reason it will crash hard is because a lot of the venture capital, corporate investments, and private investment from individuals that is based on cheap money and disposable income and excess cash in portfolios, et cetera, like in every other part of the economy, will dry up. Right when people get scared when there is a recession like that, they pull back their investments and they're going to pull back from crypto, too. Crypto needs, what is it, $100 million a day in order for the price to just stay where it is. I think some number like that, I don't remember exactly, but based on the new supply, that's created.

Peter McCormack (45:25)

1800 coins, right?

Andreas Antonopoulos (45:28)

That's just bitcoin. But across the entire industry, if you only take Bitcoin. Yeah, 1800 coins, what is that? $18 million? People need to buy $18 million of Bitcoin just for the price not to go down, just to stay exactly where it is every day on top of what they already own. That means that's a fair bit of investment. And times365, you're looking at a good chunk of change every year just to maintain parity. From that perspective, I think the first order effect that happens if we have a massive recession is crypto crashes, because all of the liquidity dries up, which is the classic effect and first symptom of a recession. Then there is a number of possibilities, one of which is that it emerges as one of the safe havens, assets, and people try to exit the things that are crashing faster for the things that are crashing slower. And you see the classic pattern where gold and bitcoin, yen and Swiss francs and a couple of other metals and commodities either stabilize or even start growing. In price or in value. But again, this is a difficult technology to get into. The number of markets that exist are relatively limited. The on ramps and liquidity to get on board is limited. People don't know how to use the technology. It's going to lead a lot of people into custodial situations where somebody else holds their keys, which is going to cause hackers to take away that crypto. And so all of those things are really a symptom of the fact that we have a small lifeboat and a very, very large number of people who need saving. So I'm hoping we don't end up in a crisis anytime soon because we're not ready. And you know, it's going out into your front yard and going, I'm rich bitches. When all of your neighbors are unemployed and starving is a scenario for the apocalyptic fantasies of preppers in the U.S. it's not a scenari a good society. So I think that's a dangerous scenario.

Peter McCormack (47:51)

You've explained a good number of reasons why we need Bitcoin. I understand these myself. And we do have various people to talk about hyper bitcoinization. But do you see a scenario where Bitcoin becomes the primary currency? Or do you see a scenario of dual currencies where it sits alongside traditional fiat? How do you see this playing out?

Andreas Antonopoulos (48:13)

So I get roundly criticized for this because there's two aspects to this and there's two aspects to my perspective. First of all, there's a difference between what I want to see and what I think will happen. And that's important to mention. What I think will happen is not necessarily what I want to happen or I think is the best scenario or the rational scenario or the outcome of sound rational economics. It's just I don't think most people are particularly rational. I would like to see a form of sound money with a single efficient protocol that allows everybody to trade cleanly and efficiently with a common unit of account. Beautiful. What a great world. And also everybody should speak English to make it easier for me because that's the language I learned. And also everyone should follow the same political and religious opinions. None of this is going to happen because people are fickle, weird and unique. Instead, what I see happening is there will emerge a few economic standards that will dominate the economic value of money. Some of these may be fiat, some of these may be gold backed or some other asset backed mechanism of money. But I do think in the long term the majority of these, if not all, will end up being crypto. And within Those I expect we'll see a classic power law distribution where one, two or three systems will dominate more than 50% of the value, maybe not a lot more than 50, and the leader may only have about 40%, but the tail is so long that the next three combined don't even have 20. Again, that's the very dilute, minimally maximalist perspective because it's still a parallel. You still have a very strong dominance of one economic system. But I do think that what we're also going to see is the emergence of thousands and thousands of different tokens which will have varying degrees of economic utility. Some of them will only be for social affinity and association, meaning sports teams, pop stars, maybe even nation states as sports teams, if you know what I mean. People who basically subscribe to USA Coin because they like chanting usa usa. And it's a sports metaphor for nationalism. And you may see of course, many currencies that have lesser economic value but have other forms of utility, perhaps more flexibility for transactions or smart contracts or other things like that. I think we've gone from a world where there were very few choices to a world where there will be an overwhelming number of choices. To me, the real tipping point is when most of those choices are no longer made by you, but by intelligence software that resides in your digital wallet that decides which token, currency or system is the best for the transaction needed at the moment and which token, currency or system is the best for long term store value. And shuffles between the two of them, a bit like a protocol negotiation. You open your browser and you go to httpsgoogle.com your browser talks to the Google web server and says, I Support the following 14 encryption standards and hashing standards. How about you? And the Google server says, well, I've got these 12, but I really like these three. How about we do the first one? And your browser goes, yeah, I can do the first one, but I actually prefer the second one. And then eventually negotiate and start a connection. This happens in sub second time in your browser. I don't see why not. Why we can't have a similar environment emerge where you walk up to a coffee shop point of sale system, your phone arrives in proximity and says, hello, I support the following three currencies, two of which I have liquidity in right now, one of which I can swap over in half a second. What do you want? And the point of sale system says, we accept the following 4635 currencies, and you find the intersection of those two sets and your wallet takes care of it. You don't even know what currencies you have or what currencies you're paying in. That's a protocol level choice.

Peter McCormack (52:59)

Wow. Okay, so I want to finish on two final questions for you. The first one is there'll be a number of people listening to this who haven't bought Bitcoin before. I've heard about it. Maybe they don't fully understand it, maybe they're dismissive of it. They've heard everything you've said, but you know, right now the world is okay for them. They go to work, they're getting paid, and they've got their debit card to pay for everything. What do you say to them and why they should care about Bitcoin now?

Andreas Antonopoulos (53:25)

So what I say to them is that the first thing to realize is that this is a fairly important new technology. It is the Internet of money and the monetization of the Internet itself as a protocol. And just like learning how to make HTML web Pages in the mid-90s or learning how to make mobile apps in the mid-2000s, you can build a career or profession or a specialty in your current career and profession that differentiates you from everybody else. I think one of the biggest benefits you can get from this space is being one of the people who learned the skills, understood the terminology in words, and were able to apply it within their own career early. Knowledge is power. And also knowledge is an investment. And it's an investment that doesn't have volatility. You can't bankrupt your knowledge. And even if you learn something that's not immediately applicable in one area, it usually crosses into others. The other nice thing with education is you don't have to pick the right technology. So maybe you start studying the wrong blockchain. It doesn't really matter because the things you learn apply to many other places. Unlike if you invest in the wrong blockchain, in which case that can be painful, you also don't have to get the timing just right. Timing is really important in investments. Not so important in education. The space is moving fast, but it's also moving a lot slower than society itself. So there's plenty of time to apply this knowledge. And whether you acquire it today and apply it five years from now or eight years from now doesn't really matter. So education first. The second thing is, almost everybody I hear who comes into this space asks me the question, how do I buy Bitcoin? And my answer is, don't earn it. Shift your perspective to one of acquiring an investable unit or commodity to one of participating in this new economy itself by swapping the thing you always swap for value, which is your labor, your services, your products, your crafts business or whatever it is that you do for units of currency. You don't buy sterling, you don't buy dollars, you earn them, your boss pays you in them. And yes, maybe you can persuade your boss to pay you in it. If you're self employed it's a lot easier. But most people have a little second gig or a hobby or something where they can start doing it, start playing with this stuff and experiencing it. And maybe at first nobody tries to pay you, increase crypto, but one day they will. And then finally, if you do decide to invest, there are a couple of important principles that we have in this space. Probably the most fundamental and one of the slogans I coined is not your keys, not your coin. Meaning that this is a system where we remove intermediaries, we remove third parties, we don't give other people control. That's one of the benefits of this system of money. In order to really acquire Bitcoin, not just acquire a promise of bitcoin from someone else, but acquire actual Bitcoin, you first have to learn how to control digital keys. And that's quite a learning steep curve, but it's worth learning because it's a fundamental new skill of the 21st century. Learn how to control your keys and once you've learned how to control them, then maybe invest in a small amount of digital currency and only as much as you feel comfortable controlling with the level of knowledge you have about how to control your own keys and then build from there. There's a lot of great local communities where you can meet people. Some of them will try to persuade you to get involved in multi level marketing, pyramid, Ponzi scheme. So don't believe promises of easy riches. Instead try to find the people who want to teach you how to use the tools who seem to be in it for principled reasons, not money making, and then take it at your own pace.

Peter McCormack (57:50)

So you actually answered my second question in there. What I was going to say to you next was how does somebody then get involved? So you've answered that. So listen to close out Andres, it'd be great to let people know how to follow you. I've learned so much from you. I've learned so much from your videos and, and what you've done and you've been a great help to me. But not everyone who listens to this will know you. If they want to find out more, they Want to read more or watch more of what you've done? Where are the places they can find you?

Andreas Antonopoulos (58:15)

So the easiest way is to use my online handle or nickname, if you like, which is a Antonop is the first initial of my first name and then the first seven letters of my last name. Aant, O, N, O, P. I am Antonop on Twitter, a Antonop on YouTube, a Antonop pretty much everywhere, with a few exceptions. If you see someone saying they're me and they want you to invest in their scheme, they're not me. I do almost all of my work as free, open source, licensed education that is available for anyone for no money, available online, freely shared, mashed up and reused by everyone. I've produced hundreds of videos and audio shows and four books. I'm currently writing my fifth, which will be published this year. You can get all of that for free, and in return, many of the people who have benefited from my work then support me directly with a subscription on Patreon, which allows me to be neutral, to not have sponsors, to not charge for community events and things like that, but instead to be responsive and accountable to the people I educate and to the people who appreciate my work on a voluntary basis. So you can also find me on patreon.com aantonop which is really important for me because it helps me pay for my staff that help me get the educational material to more people around the world in more languages than ever before, and to continue doing this work.

Peter McCormack (59:53)

Fantastic. Well, I will share out every link in the show notes. I will encourage people to follow you on YouTube, on Twitter, to buy your books and just keep doing what you're doing. And I appreciate you coming on my show again and good luck with everything you're doing.

Andreas Antonopoulos (60:08)

It's been a real pleasure and I hope we'll talk again.

Peter McCormack (60:11)

I'm sure we will. Thank you.

Peter McCormack (60:15)

Okay, so what did you think of that? Did you enjoy that first episode of the series with Andreas? Had you heard it before? If not, I hope you enjoyed it. I think this series is going to be a really helpful package of podcasts for newcomers to the space, and I couldn't imagine a better first guest than Andreas. I really love this show. I don't really have the intention of putting shows across multiple podcasts, but this is such an important one. I really wanted to get it out on what Bitcoin did. It's really great to get his take on how money is becoming more and more of a tool for financial surveillance, and that is eroding democracy and freedom and that the removal of cash in society is speeding this process up so it clearly highlights the importance of a censorship resistant money. So that's why we need bitcoin. Over the next few weeks I'm going to be releasing a whole bunch more episodes which will introduce people into how bitcoin works, the history and what they need to care about. So looking forward to getting those out. If you do have any questions do feel free to hit me up. My email address is hello atbitcoin did calm also if you want to support the show it's all up on my website. Just head over to whatbit bitcoindid.com click on the support section. Everything you could possibly do to help the show is listed there. And as I said I'm just working on my plans for the year. So many places I want to visit, so many shows I want to make. But if you've got any ideas, if you do want to reach out to me my email address is hello what bitcoin did come.

Andreas Antonopoulos (61:38)

Sat.