Podcast Summary: The Peter McCormack Show – Dan Held on Bitcoin's Immaculate Conception (WBD043)

Release Date: October 31, 2018

In this insightful episode of The Peter McCormack Show, host Peter McCormack engages in a deep and comprehensive conversation with Dan Held of Picks and Shovels. The discussion delves into Dan’s extensive journey in the cryptocurrency space, his latest work on Bitcoin’s origin story, and his perspectives on Bitcoin’s design and future. Below is a detailed summary capturing the key points, discussions, insights, and conclusions from their conversation.

1. Introduction and Background

The episode begins with Dan Held setting the stage for a transformative moment in Bitcoin's narrative. He predicts a future wave of simplicity in Bitcoin’s story that will resonate broadly as trust in traditional governmental systems wanes.

Dan Held [00:00]: "We're going to see one more wave where the narrative gets so simple that everyone gets it. And that narrative will be broadcast at just the right moment when people are starting to lose faith in their governments, where it'll finally hit that chord. It'll finally hit that resonance frequency."

Peter introduces the episode as a special bonus recorded alongside Dan, coinciding with the 10th anniversary of Satoshi Nakamoto’s release of the Bitcoin white paper.

Peter McCormack [00:42]: "Today I'm releasing a special bonus episode I recorded with Dan Held from Picks and Shovels... as Today is the 10th anniversary of Satoshi releasing the white paper, I felt it was a very cool interview and a very fitting one to release on the day."

2. Dan Held’s Journey into Bitcoin

Dan provides an extensive overview of his background, highlighting his upbringing in Texas with a strong libertarian influence, which shaped his interest in Bitcoin as a form of sound money and a rebellion against traditional financial systems.

Dan Held [02:53]: "I grew up in Uptown, which is kind of a fun, kind of younger place to go... in Texas, there's a very strong libertarian culture... a lot of people really respect freedom."

He recounts his introduction to Bitcoin in 2012 through a small investment firm in Dallas and his realization of Bitcoin’s potential for uncensorable payments. His career trajectory includes developing ZeroBlock (an early version of a market data aggregator), working at Blockchain.info, ChangeTip, and Uber before co-founding Picks and Shovels.

Dan Held [02:53 - 04:16]: "I was attracted to bitcoin... it was going to be something incredibly big. Through a serendipitous roll of the dice, my company relocated me out to San Francisco... in May 2013, my co-founder Kevin Johnson and I built the first real-time market data and newsfeed aggregator on mobile called ZeroBlock."

3. Introduction to Picks and Shovels and Interchange

Peter praises the name "Picks and Shovels," highlighting its cleverness in the crypto space. Dan explains that Picks and Shovels focuses on building infrastructure, with their flagship product, Interchange, a portfolio management tool designed for institutional crypto traders.

Dan Held [09:21]: "We are building something called Interchange, which is a portfolio management tool for institutional crypto traders. We take all of their complex trade and transaction history, pull it all together, sanitize it, standardize it, and then calculate different complex portfolio metrics."

Peter inquires about Interchange's current status and the exchanges it interfaces with, to which Dan responds that they are launching with the top five US crypto exchanges and aim to include professional trading platforms like ICE in the future.

Dan Held [10:42]: "We're hoping to have the top five US Exchanges when we launch."

4. Dan Held’s Writings and 'Planting Bitcoin'

Peter shifts the conversation to Dan’s prolific writing, particularly his article "Planting Bitcoin," which explores Bitcoin’s origin story in depth. Dan shares that the idea stemmed from a conversation with Jill Carlson and Meltem, where he realized Satoshi Nakamoto's timing was as brilliant as the code he developed.

Dan Held [12:42]: "Satoshi's brilliance wasn't just in the species of tree that he chose to plant, the bitcoin code. It was the season, the soil, and the gardening techniques that were equally as important."

He emphasizes that his value lies in synthesizing various expert thoughts into an accessible narrative, acknowledging that he built upon the ideas of others while crafting "Planting Bitcoin."

Dan Held [14:55]: "I stand on the shoulders of giants. My value is in the connectivity of all of everyone else's thoughts and stitching together a more easy-to-read narrative."

5. Key Aspects of Bitcoin’s Design

Dan delves into the critical elements that made Bitcoin successful, focusing on its 21 million hard cap, decentralized blockchain, and proof of work mechanism.

21 Million Hard Cap: Dan underscores the significance of Bitcoin’s fixed supply, highlighting its role as the first provably scarce digital asset and its rejection of Keynesian economics.

Dan Held [22:11]: "The 21 million hard cap is by far the most exciting thing about this. It was the first provably scarce digital good and a complete rejection of Keynesian economics."

He elaborates on how this scarcity creates a viral loop, driving demand as prices increase without a corresponding increase in supply.

Decentralized Blockchain: The decentralization of Bitcoin ensures its censorship resistance and resilience against governmental interference.

Dan Held [29:48]: "Satoshi built this for one purpose only. The DNA was exactly crafted to be censorship resistant. This organism needed to survive in a highly adversarial environment."

Proof of Work: Dan explains proof of work as a physical mechanism ensuring the security and integrity of the Bitcoin network by making it prohibitively expensive to alter the blockchain.

Dan Held [31:38]: "Proof of work proves the energy and time spent to build the digital wall around the Bitcoin blockchain, making it incredibly secure."

6. Discussion on Bitcoin's Future and Resilience

Dan draws parallels between Bitcoin’s resilience and that of a cockroach surviving nuclear blasts, emphasizing its anti-fragility and robustness through various challenges like Mt. Gox, Silk Road shutdowns, and internal community conflicts.

Dan Held [54:45]: "Bitcoin has a 99.9927% uptime, which is greater than the US dollar and almost any other software in the world. Bitcoin is stable."

He portrays Bitcoin not just as a volatile asset but as a stable ledger absorbing global instability, reinforcing its role as sound money.

7. Fungibility and Stablecoins

The conversation shifts to the issues surrounding fungibility in Bitcoin and the rise of stablecoins. Dan expresses skepticism about stablecoins, citing issues like KYC/AML compliance, censorship, and the inherent challenges in maintaining stability without compromising on Bitcoin’s core principles.

Dan Held [48:54]: "Fungibility is going to be an important question as the network matures... I don't think it's an issue right now, but it will be in the future."

He critiques stablecoins for their potential to enable censorship and destabilize the market, arguing that fully private or crypto-collateralized stablecoins may falter under stress.

Dan Held [59:42]: "Stablecoins are an attack on Bitcoin because they require adherence to KYC/AML, limiting their social scalability and enabling censorship."

8. Final Thoughts on Bitcoin’s Impact and Future

As the conversation wraps up, Dan shares his profound belief in Bitcoin as a vote for freedom, highlighting its role in providing financial autonomy and its potential to reshape global economic systems.

Dan Held [64:56]: "Bitcoin is a vote for freedom. It's a vote for you in a world full of volatility, of politicians that you don't like, of government policies that you find unsavory."

He anticipates significant institutional adoption and infrastructure development, positioning Bitcoin as a foundational element for the next wave of financial innovation.

Dan Held [62:40]: "I'm incredibly excited to see the infrastructure that's necessary for the next wave of adoption being built."

Peter concludes by encouraging listeners to explore Dan’s writings and stay connected through various platforms.

Notable Quotes with Timestamps

• Dan Held [00:00]:
  "We're going to see one more wave where the narrative gets so simple that everyone gets it... It'll finally hit that resonance frequency."

• Dan Held [22:11]:
  "The 21 million hard cap is by far the most exciting thing about this. It was the first provably scarce digital good and a complete rejection of Keynesian economics."

• Dan Held [29:48]:
  "Satoshi built this for one purpose only. The DNA was exactly crafted to be censorship resistant."

• Dan Held [31:38]:
  "Proof of work proves the energy and time spent to build the digital wall around the Bitcoin blockchain, making it incredibly secure."

• Dan Held [54:45]:
  "Bitcoin has a 99.9927% uptime, which is greater than the US dollar and almost any other software in the world. Bitcoin is stable."

• Dan Held [64:56]:
  "Bitcoin is a vote for freedom. It's a vote for you in a world full of volatility, of politicians that you don't like, of government policies that you find unsavory."

Conclusion

This episode offers a thorough exploration of Dan Held’s insights into Bitcoin’s foundational strengths, its resilience, and its transformative potential for financial freedom. Dan’s blend of technical knowledge and philosophical perspective provides listeners with a nuanced understanding of why Bitcoin stands as a pivotal innovation in the world of digital assets. Whether you are a seasoned crypto enthusiast or new to the space, this conversation sheds light on the intricate layers that make Bitcoin not just a cryptocurrency, but a movement towards a freer economic future.