← The Peter McCormack Show
The Peter McCormack Show
Gradually then Suddenly Pt 1 - Killing the FUD with Parker Lewis - WBD358
02:08:07
Location: Guatemala Date: Wednesday 26th May Project: Head of Business Development Role: Host The Gradually, Then Suddenly series by Parker Lewis on the is an excellent resource for readers with any level of knowledge. Bitcoin is not intuitive...
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- [00:02]
Parker Lewis
It is unnerving when a bunch of virtue signalers while also having no appreciation for the fact that 85% of the people in the world live in poverty and that they don't have access to a reliable form of money that could possibly pull them out of poverty. That they would start to criticize the solution to that problem without any understanding.
- [00:25]
Peter McCormack
Hello there from New York City. Fuck, it is great to be back.
- [00:28]
Unknown
In this amazing city. City.
- [00:31]
Peter McCormack
I can't tell you, New York is such a special place for me for so many reasons. And this is the first time I've been here in God, over 18 months. And the minute I stepped off the plane, got in the taxi, was driving towards the city and I could see the skyline. Honestly, it melted me. And I know New York has had some problems during this Covid era. I know that a lot of businesses have closed down and I really hope it gets itself back on its feet.
- [00:55]
Unknown
Like it was before.
- [00:57]
Peter McCormack
I love New York. I'm so glad to be back. Hopefully you can hear my voice. I mean, it's great to be back in the States, but it's so good to be back in New York. Anyway. Hello you crazy people. Welcome to the what Bitcoin did podcast which is brought to you by Gemini, the only place I am using for buying bitcoin. I'm your host Peter Moore Cormack and today I have an interview with Parker Lewis to go through his gradually then suddenly series of writings. And today we kick off with a very timely episode where we're killing the fud. But before that, I do have a message from my amazing show sponsors. And today we kick off with Exodus Wallet who I am using as my mobile and desktop wallet for my Bitcoin. Now, as you know, UX is super important to me. So when Exodus reach out, when they said, pete, we want to sponsor podcasts, I spent some time playing with both the app and the desktop app and. And you know what? They crushed it. The experience is so easy to use. I've been getting some of my friends on board. I've been saying this is a good starting place for your Bitcoin because it is so easy to use. Now, Exodus Desktop gives you a way to secure and manage your Bitcoin in one beautiful application. And with their mobile wallet you can send and receive safely using a QR code or an address. Knowing that Exodus automatically checks all addresses for errors, make sure you go and check it out yourself@exodus.com or search for Exodus in the Google or Apple app stores. And next up we have casa the safest way to store your Bitcoin now. Forgotten password sim swaps, phishing attacks. There are just too many ways for you to lose your Bitcoin and have it stolen. But with casa, you never have to worry about your Bitcoin again. Now they use a multisig wallet, which allows you to custody your Bitcoin but only move Bitcoin by signing transactions from multiple wallets, ones that you can distribute into different locations. And that is going to protect you from a range of mistakes, errors and vulnerabilities. Now, I've been a customer for coming up to a year and if you've got any questions about it, you can email me and you can DM me and I will get back to you. There is no better time to upgrade your bitcoin security and get total peace of mind. You can find out more at Keys casa, which is K e y s ca S a and next up we have sportsbet IO and look, I talked about in the last show, but I want to talk about it again because we did it. We gave away a lambo at Bitcoin 2021 and the couple who won didn't take the Lambo. We had the extra option. They took the value of the Lambo, the $250,000 in Bitcoin. And this is such an amazing story. So I got to hand them the prize. Well, kind of hand them the price. I mean, you can't really hand Bitcoin over. But I got to give them the option and I spent some time with them and it turns out they were two weeks away from getting married, which is such an awesome wedding present. I'm so glad they won now. Massive thanks to Sports Bet for doing this. Now, if you want to check out Sportsbet IO, they have every market you could possibly be interested in. They got football, they got tennis, American Sports Motorsports, they even have esports. And they always have a range of promotions available for new customers. So if you want to find out more, please head over to SportsBet IO promotions, which is S p o r t S B e t IO Promotions. Okay, so onto the show today and we have Parker Lewis coming back on to discuss his phenomenal gradually then suddenly series of articles. You've probably heard me mention the series loads in previous shows or occasionally I'm tweeting something's happening and I'll retweet it and put gradually and then sudd suddenly. They really are one of my favorite set of bitcoin articles and I've been planning to do a mini series Getting deep into it with Parker for some time, and we finally managed to make it happen. Do you know what? I'll tell you the truth. We already recorded this once and there was a problem with the sound. We did two hours and we couldn't release it. The sound was totally fucked. So I turn around to Parker and say, can we do it again? Of course. He's such a champ. He did. So this is the second time we've made it. And you know what? You're kind of lucky because the second time was even better. Now, in this first episode, we start with the fundamental question that everyone must understand before they can understand bitcoin. What is money? And then we run through all the fud. All the bullshit you've been hearing recently, you've been seeing on Twitter or in some lazy MSN articles. We work our way through that and Parker absolutely crushes it. So I'm going to hand it over now. I'm going to pass you over to Parker. Go check this out. If you do have any questions, you can reach out to me. My email address is. Hello. Of what? Bitcoin. Didcom. All right. Over to Park.
- [05:34]
Unknown
Parker, how you doing, mate? Good to see you again.
- [05:36]
Parker Lewis
Doing well. Good to see you. Look forward to seeing you in person here in about a week.
- [05:40]
Unknown
Yes, yes. I think we all need this and all deserve this. This last nearly year and a half now. It's good to see. I mean, everyone's going to be in Miami pretty much.
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Parker Lewis
Yeah, everyone's going to be here. It was good for bitblock boom about nine months ago, but there were only about 200 people and that there's going to be, I think, 10,000 people in Miami for Bitcoin 20, 21. And yeah, I think like you said, not just the and a half, but kind of where bitcoin is right now and especially the last two weeks. Taking some body blows but emerging from the fire stronger. That everyone will be super excited to see each other and take the hill back.
- [06:21]
Unknown
Well, you've been writing relentlessly. Your Gradually the Suddenly series is fantastic. I've shared it out with some people, but I will put it in the show notes. I recommend people check it out. I absolutely love your work. You're one of my favorite people to talk to about the foundations of something I'd never considered about before, bitcoin. And whilst we've touched on this before, you and I, when I did my beginner's guide, I wanted to go into more detail with you. So we're going to record a few shows over the next few months, but really want to get back, back into the foundations. There's a lot of new people who've come to my podcast, probably tripled in size since we last spoke. They don't all go back and listen to them. So I do want to get into some of these foundations with you because many people don't think about money. Money just becomes this thing we use day to day. Right. We pay with our credit card, we pay with our debit cards. We don't think about. A lot of people don't think about inflation or think about what gives money value. So we're going to crush it today, right?
- [07:18]
Parker Lewis
Absolutely. I think it's the educational parts of bitcoin that it is the first step to anybody becoming a bitcoiner. And it's also the firepower that everyone needs to be able to handle the volatility that we've seen over the last few weeks, that if you're not grounded in actually understanding the fundamentals of bitcoin and ultimately money too, that sits at the foundation, then you really don't have an anchor point and that the world can be very confusing. And so I think that the work that you do, other podcasters, but then also myself in writing and other writers, that it all goes to that effort of equipping people to understand bitcoin at a more fundamental level so that it can actually create value in their lives.
- [08:02]
Unknown
Yeah, and it's good that you allude to this last few weeks. The weak journalists from the mainstream media continue to disseminate nonsense. We are repeatedly dealing with the same FUD that we deal with every year related to bitcoin. So we're going to crush some of those narratives now. But just to kick us off, just for people listening now who may, well, you know, they may have some foundational understanding, but others don't. Let's talk about what is money, what are the basics of money? What gives money value, therefore, what gives bitcoin value?
- [08:33]
Parker Lewis
Maybe if I step one step back before that and then I'll speak to that. I think that there was something that you keyed in on at the top, which is really important, which is this realization and appreciation for the fact that up until bitcoin, virtually everyone in the world, I'm not going to say everyone, because there were people that had cautiously considered what money was, but that those were very few and far between in terms of those people, and that, that. That that's generally the case because money has always just existed and it's always generally worked and worked well. Or seemingly worked well. And that, that it's not really until people start to, to become interested in bitcoin that they have to start questioning, well, why is bitcoin valuable? And as they start to ask that question, it really is the first hole that somebody has to go down, which is what is money? And it becomes. I think it's. One of the best things about bitcoin is that forces people to consciously consider that question because it's a big question and it's not one that is particularly intuitive. And that oftentimes when, you know, if I live in the United States and I ask people, why do 325 million people accept dollars as money? Most people don't have a good answer because it has been taken for granted and that it is something that hasn't been consciously considered. But that the answers are generally something along the lines of it's a collective hallucination, or it's a belief system or money has value because the government says so. And that I think from the top, it's really important to say that it's none of those things, that it's not a collective hallucination, it's not a belief. And money doesn't magically have value because some other individuals that are your peers, but in a different capacity say so. And that at a root level, I think about it as money solves a problem that everyone on earth has, which is a problem of trade and exchange. And that when they start to realize that that is the fundamental problem that money solves, and they have to also appreciate when they consider it, that we are all better off in a world in which we can trade with others, and that we become incrementally better off the more and more people that we can trade with. And so the, the economic good that, that we call money, that is the problem that it's solving. And, and we all happen to have the. Not just it's not a unique problem, it's a common problem, but it's identical. Like, think of the problem itself as how do I trade? And that that is the economic good which money fulfills. And that when you, when you accept that, right, And I'll use the example of if everybody on earth had to go out and hunt their own food or grow their own food, that they wouldn't have time to do other things. And there's certain people that are going to be better or worse at doing that. And that if we have some way to trade efficiently, that the sum of the parts will be far greater than the whole. That if we all don't have to do fulfill each individual thing that we need in our lives. We'll actually be able to fulfill many more things. And when they start to think about, well, how are they going to facilitate trade and exchange, that they need some intermediary good to facilitate that. In a very early agrarian economy, a very small economy, it might have just evolved from trading certain goods in a barter scenario, but that as economies started to become larger, they had this problem of essentially what's generally referred to as a coincidence of wants, that somebody that creates one thing might not want what the other person wants and vice versa. And that that naturally resulted in things being traded for other intermediary goods that people would expect to hold value until they would want to convert it back into something that they did value in the real world or that have real world value. And that as this process evolved, that the world for really millennia have been converging on different forms of money and perfecting money, and that we've gotten to a point in time where we're 2,000 years in the future, we all, whether we consciously consider it or not, appreciate that money is an economic good, that it does facilitate economic coordination. Most people don't understand how or why, but that there is this reality and the way that I describe it for people is that if the problem that money solves is trade, and that that problem is intersubjective, that if I want to trade with you, that we have to both agree on what the intermediary good is. Because I have to have the same form of money, and I've had to receive that from delivering value to someone else if I'm going to pay you and if you're going to accept it in exchange for your goods and services. So if it's an intersubjective problem, there is also, I think, an economic reality that might be disagreed with in academic circles, but that is all value in the world is subjective. Oftentimes people will talk about intrinsic value. And I fundamentally do not believe that that to be true. That it's. We might need certain things for survival, but that the value of them is subjective and that it's money as the economic good that allows us to objectively measure what is inherently subjective value. So we have the same common problem, which is trade, and that the solution needs to be one that is common, because the problem is intersubjective. And while all value is subjective and that money is the good that allows us to objectively measure subjective value, that there are objective ways to measure what will be a better or worse form of money? Because it's solving a very, very specific problem. And that when you start to consciously consider, most people will do it subconsciously. But when you start to consciously consider what gives money value or what economic good would be effective and efficient at fulfilling the function of money, it starts to, to. To really cross over a combination of a few properties that something be scarce. That if you're going to transfer or trade your time and the goods and services that you create with your time, that you do not want to trade that for an intermediary good that somebody can print a lot more of to, to debase the value. Because if you're trading value today, you want to get equal or greater value into the future. And that the property of scarcity is what helps ensure that. But, but scarcity alone does not give money value. It also, and the example that I would use there is for people that are familiar with Mount Rushmore. There's a mountain in one of the Dakotas where there's the heads of four US Presidents and there's only one of them in the world. It's a terrible form of money because you can't carve it up and you can't transfer it. And that, that scarcity alone isn't what gives money value, but that when you combine scarcity with the ability to divide and aggregate an economic good, and not only divide and aggregate, but for the properties of that good, when you divide in aggregate to be fungible. And what I mean by that is if you had 10 units of something, if you divided it in 2 and 8 or 2 units and 8, that the 2 is actually 2 10, and that it is actually 8 10. That the example that I use there is if you were to cut a house in half, it's no longer functional as a house. It no longer is good at securing you and protecting you. And one side of the house is not equal to the other side of the house. And so when you think about then the ability to divide and aggregate and that it'd be important that the left side and the right side be common or fungible. It is important and functional not just for that mere fact, but it's important that one singular economic good can measure all other goods, such that one economic good can be carved up into very small units to measure a bottle of water, or into very large units to value Liverpool or the Dallas Cowboys, and that it's important that that one good can do all of that. But then the third property is really the ability to transfer that because again, we're solving this problem of trade, that you have to have a common standard of value that somebody can't print more of scarcity that can be divided and aggregated to be able to measure all things. But that if we're facilitating trade, you also then have to be able to transfer that. And so when you start to think about it's not any one of those properties, it's the aggregate of all three. And that there aren't many goods in the world that possess all three properties. And that humans, because they have this very natural need to trade and they understand the benefits of it, that they're highly incentivized to find the economic good that's going to allow them to do that best and most efficiently. And that's really what bitcoin represents in many ways.
- [18:10]
Unknown
Yeah. So for me, it's really been traveling. That's made me understand money a lot better as well. I'm so fortunate to speak to people like yourself and Nick Carter and Vijay and all these amazing people and learn about bitcoin. But real world experiences you really can't beat. And I can think of three places now where I've had this kind of light bulb moment with money when I went out to Venezuela. Yeah, I'm in the uk, we have essentially one form of money we use which is the pound. Everybody uses it, everybody trades with it. We don't have other currencies, we don't re. I know some people hold and secure gold, but we don't really use it. But when I went to Venezuela, there were five currencies. There was the dollar, there was a Colombian peso, there was the Bolivar, there was bitcoin, and then there was the petro. And what was very clear when I was there is depending on where you were, people really wanted the dollar or they wanted bitcoin. So when I was going to restaurants, whilst you could pay the bolivar, they would ask for the dollar. And some of the locals I met who work out there just wanted bitcoin. And that gave you the realization that there are people who understand, they themselves intrinsically understand what is good money, because they've been exposed to terrible money. Similar in Cambodia, whilst you have a local currency, people really wanted the dollar. But the most interesting one was this last few weeks when I was in El Salvador, down at El Zonte, which you've got to go and visit, man, I'll try and get you down there at some time just to see this growing bitcoin project. It's 18 months since I first went There now, almost every store accepts bitcoin. But it's not just that people wanted paying in bitcoin. So I've got this herniated disc at the moment. I went to see this lady who's a specialist in BACS and I got out my dollars to pay. She said, well, I accept bitcoin, could you pay me in that? And in the stores they wanted to be paid in bitcoin. So these people now intrinsically themselves understand why bitcoin is a better form of money. But I think for a lot of people, unless you've done the work, you've really researched it, it's very difficult to understand maybe why bitcoin is better money. But when you go to these countries and have the experience of the locals who have been exposed to terrible money, they suddenly understand it.
- [20:34]
Parker Lewis
Absolutely. And I think that there's two maybe factors that work in opposition to each other. That if you're in a developed world that has a form of money that is relatively functional day to day, that it doesn't create the immediate incentive to want to learn or to feel like you need to learn. On the other side, you do have access to information and you generally live in an environment where you've got clean water, healthcare, a roof over your head, and that you live in the comfort of a place where you can spend hours to try to understand bitcoin. So it's basically you don't have the same urgency or incentive, but you are in a position to consume more information in a place where the economic reality is more day to day self preservation. That those people, while they don't have the benefit of the comfort of necessarily living in a developed world that has a highly functioning economy, they also are in a position to much more intuitively understand Bitcoin. Because it's this idea that whether you consciously consider what makes Bitcoin a better money, that that sometimes can be limiting or restricting of your ability to understand it. And what I mean by that is that ultimately Bitcoin just becomes an a B test, as does any currency. That people don't have to know how bitcoin works. If they observe it in the market, that it is the currency within their local economy that holds its value the best, then that is going to be the money that they prefer. And, and that truly is an AB test. I am contributing value and I'm having to make a decision at a point in sale or point of sale as to what is going to carry this value that I've already contributed into the future. And if you're wrong, the consequence is very penalizing and you have a very high incentive to be right. And that most of that can be observed in the market and that for those that don't have to immediately observe it in the market, there are tools like your podcast, like my writings, to consciously consider it. But 99% of the people in the world are not going to have to do that. Right? 99% of the people don't have to understand how the telephone works or how this video conference works. It just works. And that's essentially what people do in the real world. I have this problem. I don't necessarily know how the technology works, but it works and I will use it to my best advantage.
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Unknown
There is another thing that's become really obvious to me with traveling as well, because we talk about the properties of money. You talk about it. Vijay did an excellent job with his bullish case for Bitcoin. But there is another thing that's become very obvious, is the gatekeeping around money. As I've traveled, so the place that I've been spending time with in El Salvador and El Zonte, a lot of people there don't have access to bank accounts. It's a natural reality. You hear about this, but it's a natural reality. Most people just don't. They just live week to week, month to month, day to day with the physical currency they have access to and similar. I went to Guatemala afterwards and was being told of various stories like, if you want to take out a substantial amount of money out of your bank, it's really quite difficult. We're talking low thousands. He said one of the things that Guatemalans have come to accept that it isn't really their money. He was telling me, he's like, we know it isn't our money, it's the government's money. And if we want to get a significant amount out, it's very difficult. We have to complete all these papers. But the advancement of mobile technology has actually pushed forward the ability for people to have access to money and bank accounts. Because when I'm in El Zonte and I go to pay with lightning, the person I'm buying off has a Lightning wallet on their phone. We don't have to deal with a bank. We can, we can operate outside the bank. And similar with in Guatemala, the guys were saying there that with the problems with the banking system, he actually onboarded his mother, he orange peeled his mum by saying, you don't need to go to the bank. You can hold your wealth on your phone, you can hold it in a bitcoin wallet. And that kind of gatekeeping that happens around money via the state, especially in the developing world, is another interesting factor that's only just become more prominent to me recently.
- [25:19]
Parker Lewis
Well, one, I think if anybody, whether it's the developing world or the developed world, if they actually read a bank account agreement, that the process of reading that bank account agreement will make Bitcoin far more intuitive. That it's basically, if I were to summarize it, check all your rights at the door, and I'm going to take everything and that I hold all the chips and I have certain obligations to you, but there's a lot of scenarios in which I don't. And that it really is not your money. Like definitionally, any, any deposit into a bank, it is now their money and they have a liability to you that they may or may not make good on in the future. And that it became necessary as a function largely to scale what was the prior standard of value gold, in terms of how the legacy banking system emerged. And I do think about Bitcoin breaking down those barriers and disintermediating banking, that there is no reason why, if you're on the beach in El Salvador, transacting with a vendor, that you need a bank now. Now I think that there will still be banks and there will still be financial intermediaries, but that the nature of that relationship will fundamentally change as a result of Bitcoin. But it all comes back to and starts at the only way that that economic good Bitcoin delivers value to those people in El Salvador is if it functionally performs the, or at least efficiently functions the performance of what money should do for them, which is producing value in the real world and storing it and intermediating a series of transactions. And that that woman or that vendor who is asking for Bitcoin, they wouldn't do that if they hadn't observed whether consciously or subconsciously that Bitcoin holds its value, whether understanding or not. And so generally, I think what you do a great job of on this podcast and what I focus on in the writing is helping more and more people understand the why as to why it will hold value. Why with Bitcoin, it also has properties such that you don't need to rely on the bank, that it is a very, very powerful thing to both have a form of money that holds its value, to have some understanding as to why, even though you don't really need to, but then have unilateral control of it. That that is incredibly empowering. But it also provides a level of freedom that wasn't possible before Bitcoin.
- [28:06]
Unknown
Yes. Okay. So I think we need to deal with some of the criticisms now, some of the kind of regular FUD that we have to deal with in bitcoin. And I, I actually am sympathetic to how people come to these conclusions. What I'm not sympathetic to is when journalists are exposed to the counter arguments and choose to ignore them. But I think most people come into bitcoin, come with questions. I mean it's, it is very unusual. It's a, it's a, it's a decentralized form of money. People don't even know what decentralization means or why it's important. We're so conditioned to have an estate controlled money that this new kind of bitcoin thing's a bit weird. So I think it's perfectly understandable to question bitcoin, especially if you're new. But I think we should work through these because if somebody is new and they are having these questions, I think you're going to do a great job of breaking them down. I'm going to do them. I've got notes for our thing. But I'm going to do them in a different order because I want to deal with volatility first. I do think volatility is an important thing to understand with regards to bitcoin. I always say you need to, you need to, you need to get through your first four years. Then volatility becomes something easier to manage because you've usually written a cycle out. But let's talk about volatility. Let's explain why we have volatility in bitcoin and, and why that isn't essentially a death knell in bitcoin's coffin.
- [29:36]
Parker Lewis
Maybe before I explain that, what I'd like to provide, maybe some context around is kind of my series and why I write. Yes. And that I like to reinforce for people that I am somebody who's deep down the bitcoin rabbit hole. I believe that everything of value for bitcoin is derived from the fact that there will only ever be 21 million Bitcoin. And understanding how that happens is the real innovation in bitcoin. I don't think everyone's going to have to understand that. But that, that's the difficult thing. But that kind of setting a baseline that everything of value in bitcoin derives from the fact that there's a monetary system that has a fixed supply, that's executed on a decentralized basis that can't be debased and that the entire world can access it and benefit from it. But when I, I have that view today and when I was coming to understand Bitcoin, it's not something that came intuitively to me. And I like to reinforce that for people that bitcoin is the opposite of intuitive. And then something, you hear something or you read something and it starts to click. And it's often a series of unlocking certain mental blocks. And that there are oftentimes a lot of top level questions about bitcoin that shut people down at the beginning, that kind of prevent them from going to the next layer or deeper down the bitcoin rabbit hole. And because I experienced many of those myself, basically two things happened. I had the benefit of reading the bitcoin standard before it came out. I also had the benefit of meeting safety in a moose. And he helped me unlock mental blocks. And, and then when the book came out, I started sharing it with people and I realized that it was the best way to leverage my own time. That I either I could either explain these ideas or I could just buy a book and give it to him and safe could do it for me. But that I also knew there were a lot of questions that I had to continue to work through that trip a lot of people up. And I, because I had that experience personally, I thought that it would make sense to essentially whether or not the way that I frame things makes sense to any individual. It was how I had to work through them logically and that many people, that I would connect with many people and accelerate their path down to bitcoin. And so as we talk about volatility as a first one, because it is a big question that trips people up out of the, out of the starting gate. So I think it is a really important one to start with. There is also this reality that if you could list 10 questions of the things that don't make sense to somebody that's first looking into bitcoin. I also reassure everyone that practically speaking, everyone that's become come before them has asked those same questions or struggled with those same questions and that there are resources out there, my series, one of them, that help people think through why each of those questions or how to think about them or why they're not problems. So volatility is a big early one that trips people up. And I, I like to frame it for people as it makes perfect sense that there's this thing, bitcoin that a bunch of crazy people are saying is going to be the future currency of the world, but it's super volatile and they don't see it being used day to day. And it doesn't operate in any way, shape or form like any form of money that they've known. And so it's perfectly reasonable that they would look to this and say this thing can't be money. And my, my response to it is that Bitcoin is both volatile, because there will only ever be 21 million Bitcoin, but that is also the fundamental reason why people demand it. And what I mean by that is that all fundamental demand is derived from the fact that there is a currency system that has a credibly enforced fixed supply and that is valuable to many people. It's difficult for people to understand, but knowledge just distributes as a function of time. And that if you recognize that there is information asymmetry and that for each person that starts to accumulate Bitcoin or adopt Bitcoin as a standard of value, their knowledge from that first point of saving for the first time versus one year out, versus two year out versus three out, increases almost definitionally that you can't start to begin the fundamentals of Bitcoin until you own it for the first time. And, and then your knowledge increases and then think about everyone at a different point on that continuum and that more people are doing it every day. And so if we live in a world where today there are only 18, or not only, there are already 18.7 million Bitcoin that are in circulation and there will only ever be 21 million. And that if information distributes on an accelerating basis, if not exponential basis, that if 10x the people demand Bitcoin, and Bitcoin is generally adopted in waves, which I think is generally a function of just human psychology, nothing specific to Bitcoin, that If demand increases 10x and the supply is perfectly inelastic because we have this finite scarce monetary system, which again is the fundamental value that what you ultimately have is 10x the people valuing something for the first time, that that ride is inevitably going to be volatile. It's going to force the price up. But there exists information asymmetry. There exists the fact that a lot of new people are valuing this good for the first time, that it will very naturally, just as a function of price discovery, be volatile. There is no other path. And, and DJ Boyupati, who you referenced, who just published the book edition of his bullish case for Bitcoin, he has one of the best quotes, and I'll get it as close to possible or as close to Verbatim as I can. But it's this idea that establishment economists deride. The fact that Bitcoin is volatile. As if something can go from nothing to a stable form of money overnight without volatility. It's entirely ludicrous that monetization of a good on the free market in every case in history, by definition has to be volatile. The volatility is natural. That volatility will decline as more and more people learn about Bitcoin. More and more people learn about why it's valuable, that it is storing value again, whether consciously or subconsciously. And if I think about it today as maybe there's 100 million people that have bitcoin any exposure, but realistically there's definitely fewer than 10 million that have material exposure. Bitcoin is a utility to 8 billion people and it's already won and people just don't know it yet. And what's happening now is that knowledge gap for an increasing number of people is shrinking and people are accumulating knowledge and understanding it. More people, literally every day people don't unlearn Bitcoin, just more people learn about it. That if, let's say there's 10 million people that have material exposure to Bitcoin, the next 90 represent a 10x increase of the base. The next 900 million or 990 million represents 100x increase that that path. Because 18.7 million Bitcoin are already in circulation, there will only ever be 21 million. And there's no supply response to increasing demand. The path merits that it must be volatile when new people of that orders of magnitude adopting it or pricing a good for the first time are coming to understand it and then appreciating that their knowledge grows over time and that Bitcoin becomes more intuitive. But let's assume that volatile path and let's assume once a billion people have Bitcoin, that the next hundred million people don't represent a 10x increase from the 10 million that have material exposure to it today, it represents 10%. And that Bitcoin will become not volatile once the embedded base of Bitcoin holders is larger than the new adoption. And that doesn't mean we have to get to three and a half billion. Because adoption is not just a function of individual numbers of people. It's the amount of wealth that those people have, the amount of wealth they're storing in the Bitcoin network. But that Bitcoin naturally stabilizes only as a function of population density of Bitcoin holders getting to such a critical Mass, that incremental adoption is percentages rather than multiples, if not orders of magnitude. And that the reason why that will happen is, is that there will only ever be 21 million Bitcoin. The same problem for everyone, the same solution, and it's of value to virtually everyone. One last thing on the volatility piece that I think is important for people to appreciate, that even if they understand this idea that there will only ever be 21 million Bitcoin and that it's naturally volatile, that there's also this recognition of how people deal with volatility in their day to day lives. That when somebody adopts bitcoin for the first time, they aren't just immediately putting 100% of what is their value saved into that asset. And that it oftentimes starts as a 1% of their liquid assets. And then maybe as their access to information or understanding of information grows and it's 5%, but as their understanding of bitcoin grows, their tolerance for volatility grows, but that they're also not exposed to it all at once. And so oftentimes people will look at it and say, how can this be a currency? Or how could somebody allocate part of their wealth to bitcoin? And if they start to think about it as like, well, if 1% of my wealth is volatile, but I understand why that volatility skews to the upside materially, then it's just a matter of managing all the other things in my life around that volatility. And it's something that bitcoiners do every day. And that if you start with a knowledge base that you will come to the same conclusion that the volatility is to your benefit and that you just to manage the rest of your assets or the rest of your life around it, and over time you'll tolerate more and more of it.
- [40:25]
Unknown
So I guess the reality is that bitcoin, being a good itself and being a perfect free market good itself, is exposed to supply and demand. And right now we're seeing a massive increase in demand which is affecting its relative value to fiat currencies. So we're essentially in that phase right now whereby it doesn't make too much sense to use it as a medium of exchange. Yet people are, because we know as this expands personally, if we hold our bitcoin, it has a potential much higher value in the future. We have much more purchasing power. But what we are seeing is with a bit of a lag, we are seeing it starting to become a medium of exchange. Certainly in El Zonte, in El Salvador, it is being used as a medium of exchange. So. So that kind of makes sense to me. Okay, so. And rather timely. The next thing I want to deal with. Were you about to jump in with something there?
- [41:27]
Parker Lewis
Well, well, I was going to say that. That there is something very fundamental about what you just raised, which is that so long as somebody else in my market economy is willing to accept my dollars for their goods and services, I am incentivized to spend a currency that is depreciating in value over time and to save my currency that is appreciating. And that I will only save my currency or I only spend my currency that is appreciating if the person that's delivering value to me on the other side dictate or demand that I pay them in that better form of currency and that there will. It's not just that we think that bitcoin is going to appreciate over time, that our purchasing power is going to increase, is that we know the fundamental reason why more people will adopt it and that when more people adopt it, if the supply cannot be increased, that its value will increase by that very fact, and that it's not by chance. It's because of this necessity that every human being values and benefits from having an intermediary good as money, and one that has a fixed supply. And because everyone has that same intersubjective problem, we only need one form of money, that is that driver. And that anybody who's not spending their bitcoin that's saving it so long as others take it, that that is a rational behavior. But what you're describing in El Salvador is they don't have access to another form of money. Or if they do that, it's that they've keyed in on the fact that they have access to a better one and that enough of them in a very local area have figured it out, that there's probably a pricing system starting to emerge where they say, hey, you want to come and get a taco at my shop on the beach in El Salvador, pay me 2,000 sats. And that happens because they have a high enough density of holders and adopters in one area to be able to affect that. And so there's this very natural progression of once you consciously or subconsciously understand that bitcoin will hold value, the store of value, and your understanding that it will again be an observation in the market or understanding about this 21 million supply, then and only then do you consider to use bitcoin. As a medium of exchange, that it's a very logical progression of is this thing going to store value for me? If so, then I'll figure out how to ways to demand it as a form of currency and that it follows that flow.
- [44:06]
Unknown
I think in Zel Zonte, there's two different reasons people accept bitcoin or demand bitcoin. I do think there are people who are just accepting it because they've been given the opportunity to accept it as a currency and they know some people want to spend it. And I don't actually think. I think some of those don't really care. They want to sell their good pay me in dollars, pay me in bitcoin. There are also this second group who've really spent the time understand bitcoin and want it. So I think both exist. But it is a seed which is growing and it's kind of fascinating. I mean, I myself, Parker, I want my sponsors to buy. That's the first question I ask. Can you pay me in bitcoin? Some can, some can't. But I'm not dictating it, but I'm certainly asking the question. And what we're seeing is it's almost like every one of these things comes back to your fantastic title. The gradually. Then suddenly, I think we're gradually starting to see that kind of. That growth in people demanding bitcoin.
- [45:06]
Parker Lewis
Yeah. And there's also just this recognition that everyone exists on a continuum. Right. And that certain people might be at a relative similar point of a continuum, but other people within their economy are going to by definition, be at a different one, but they're on the same path and each of them will get to the same endpoint. And that, like you said, there's naturally going to be people. Yourself, you had to understand why bitcoin was going to reasonably hold its value, and now you want to be paid directly for it. Others might look at it and say, hey, if someone has this and it's a relatively good form of currency, I'll accept it. But somebody else in that local economy will. Will be more like you. But either one of those two people will ultimately like the gap will converge because of the information either, again, observed in the market or consciously considered.
- [45:57]
Unknown
Okay, so the next thing I want to target, I'm jumping around on the list here because I'm trying to deal with things in what feel like a priority order and is highly, highly relevant now, is bitcoin does not waste energy. We are dealing with relentless amounts of which I consider attacks on bitcoin based on the energy argument and the arguments are the same. They're not based on proper research, and people are now having to do a lot of work to try and defend this. And obviously we now have our mining council, which I. I'm nervous about. But you quite bluntly claim that bitcoin does not waste energy.
- [46:37]
Parker Lewis
Yeah. So the energy one, I think it's particularly topical right now because of the noise that Elon Musk has created. But not just Elon Musk, also this ESG crowd. And I think that there's a couple different tracks that people take when they defend Bitcoin's energy consumption. And there's this important recognition on the top that is Bitcoin consumes a lot of energy on a relative basis. It's actually very small, but on a gross basis. And most people don't understand the orders of magnitude of how much energy is consumed in the world, so they don't really have a baseline. And when they hear something compared to the amount of energy that bitcoin consumes, whether it's more energy than a small country or more than 10 million homes in the United States, that it sounds like a lot. And that the natural response is that people try to justify it by saying that bitcoin incentivizes renewable energies. It's either it's consuming only energy that's being wasted. And I really think that that is the wrong framing. It's not necessarily fundamentally wrong. I believe those things to be true. I believe that bitcoin does incentivize renewable energy to be developed. And I believe that bitcoin does. Not just that. I believe it does that. And bitcoin also captures wasted energy by definition. We see it every day, but it's really important. And I also think that it's beautiful that somebody like Elon Musk doesn't get. Doesn't get it. Like he doesn't see it. And he sends a loud signal to everybody else that he doesn't get it. And what I mean by that is that if you start to understand the problem that Bitcoin is intending to solve, that that becomes the entry point to understand the justification for all the energy that bitcoin does consume and will consume into the future, and that the counterpoint is also true. If you do not understand the problem that Bitcoin intends to solve and that it will solve the most fundamental problem of more than 7 billion people in the world, then there could be no defense or justification for the energy that it consumes. So if you don't understand the problem statement and that the solution that bitcoin offers any amount of energy consumed could never be justified. And it's a good thing that we talk about this right after volatility. If you see this highly volatile thing and you have no understanding for why people demand it and why people value it, and then you're told that it consumes 18 gigawatts of power, of course you have no grounding or no foundation to even think about. It's like there is no utility in this thing and it consumes 18 gigawatts of power. That's bad for the environment. And so I start people with, they have to understand that first principle problem of what is money? And they have to understand why bitcoin fixes the problem of money and that it's possible that singularly bitcoin solves a problem for 7 billion people. Because without that, there's no way to agree to disagree if we're not speaking from the same principle. And the analogy that I use, not the analogy, the example that I use is let me explain the macro of this and then I'll get into a micro example that that helps it make sense that money is the economic good that consumes, or let me say this, money is the economic good that coordinates all other resources within the economy. It's what allows humans to trade with each other efficiently. If you and I ask people to go do this exercise, the next time that you go into a grocery store, sit in the very center of the grocery store and start to consciously consider how many human beings had to conspire to get all of the things that you want in one place, such that at the end of your day, you can mindlessly walk through the aisles and grab one of what are thousands of goods all in one place. And that when you start to add that up, that on any modern grocery store, that it's probably not fewer than 100 million people contributed to that process. If you start to think about each individual good, the supply chains that required to not only produce the good, but to get that good to market, to get that good into your grocery store, all the materials, the point of sale systems, the technology in the point of sale system, the roads, the trucks that delivered it, the energy that required the roads to be built and the trucks to be built, that all of that does not happen by some collective loosening ship. It only happens and it only exists by the function of money. And each one of those inputs, whether it's the goods on the shelves, the shelves themselves, the POS terminal, the roads, the trucks, the energy to build all those things that each one of those things required energy to be consumed, that there are energy inputs and there are energy outputs. And that the first energy input is getting energy out of the ground. And that in order to get energy out of the ground efficiently, it's a very complicated thing, it requires money to do because it requires a lot of different skill sets. If you start to think about wells and oil field services and kind of upstream, midstream, downstream refinement power production, that those very kind of first principle energy inputs, that those themselves are highly complex systems and require a monetary good to cord. And so if all these goods that we can consume down the line and thinking about the grocery store, that they also only get there via the function of money. And so when you start to understand this problem, you start to realize that we will not get the goods at the grocery store, nor will we have power at our homes if we don't have a reliable form of money. And that the way that I describe it, and Bitcoin does not waste energy, is that because of that fact, money is the first order and then the second order is getting energy out of the ground. And then the third and higher level orders are, and derivatives are the actual end market goods. That if all of those end market goods require energy inputs and that they're the energy outputs that the highest and best use of energy becomes securing the money and the monetary network. Because we won't have the other things down the line if we don't have the money to get the energy resources out of the ground. And so the example that I use to connect that for people is Venezuela.
- [54:18]
Unknown
Yeah, well, I can tell you my experience when I went out there, firstly I went to Colombia and I went to the border at Kukata. And when you talk about a store being able to coordinate all the different people to ensure that store's full, that has broken down. I was at the border of Kukata where every day tens of thousands of people cross the border to buy things down in Colombia because they cannot get them in Venezuela.
- [54:45]
Parker Lewis
Yeah. And when you see those real world examples and you feel it, that it becomes more tangible. And that when you recognize that 85% of people in the world don't have a great coordination engine and that Venezuela went from having one that generally worked to one that doesn't, and it becomes more tangible for those people in the process of it stopping to work because they know what it's like for wealth to be destroyed and they start to understand and associate that with problem, again, consciously or subconsciously with the breakdown of the money and that, that if I bring it back to the highest level of Venezuela, it is this recognition that Venezuela is one of the most oil rich countries in the entire world. It's, it's either Venezuela or Saudi Arabia and that there is this natural resource that really is the good that we need to unlock and lift people out of poverty. Again, we need to consume energy. We need energy inputs to create energy outputs to get clean water. We need energy inputs and energy outputs to get healthcare, to get food at the grocery store so that people don't have to live in an impoverished world or be sick for 90% of their days because they aren't either nourished or they don't have clean water. That money is also the good that fulfills all that. So you take Venezuela, most oil rich country in the world, if not 1, 2, and it's underneath the ground. If you look at oil production in Venezuela, it is rapidly falling off a cliff. And that the reason why is because they don't have a form of money to coordinate the resources, to get the resource under the ground, above ground and then refine it, to turn it into the products that we need to consume in our daily worlds. What that also means is that the country that has this beautiful resource underneath its soil can't in a reliable way deliver power, electricity, clean water, food, health care to its citizens. And you take wealth and that wealth gets destroyed and people become impoverished. And it's all tied back to this money function breaking down. And it's a perfect example of this energy component. Because when I talk about how that money is the first order and that the highest and best use of energy should be to protect a monetary network because every other energy input and output and coordination of resources as a derivative of that first order, that it's not that Bitcoin is going to consume energy that's going to destroy the planet. It's actually, it's going to ensure that the energy that we need to lift people out of poverty continues to be fulfilled. And that it actually, if you don't have a water waste management system, you know, efficiently, like some places like India, that you're actually going, that the, that the environment is actually massively polluted and that Bitcoin fulfills a function that everyone needs. And that when we think about its utility and we think about, it's like you literally could just, you could justify nothing of an energy input that you consume down the line. If you can't justify the energy input that Bitcoin consumes So while I do think that there's benefits to highlighting of Bitcoin's going to actually improve energy grids, which it will. Bitcoin is going to incentivize development of renewable resources. It will. Bitcoin is going to capture wasted energy that wouldn't otherwise be consumed. It will. But that fundamentally misses the point that the best use of energy, because money is literally the most fundamental of economic goods that allows for civilization to coordinate and to lift people out of poverty. That if you actually want people to be lifted out of poverty, then you should be promoting energy consumption in the bitcoin world. And it actually pisses me off. It is spoken from such a point of privilege when people in the developed world that are either billionaires or hedge fund investors or private equity investors, I find it unnerving. And I'm not a social justice warrior. I work on Bitcoin in many ways for selfless reasons. But it is unnerving when a bunch of virtue signalers have no appreciation either for the complexity of energy production and consumption and the benefits which that provides them in their day to day lives. While also having no appreciation for the fact that 85% of the people in the world live in poverty and that they don't have access to a reliable form of money that could possibly pull them out of poverty. That they would start to criticize the solution to that problem without any understanding. That they would crow about it, without actually getting to the first principles to actually provide any conscious thought to well, why would this energy be consumed that they just immediately look at the surface and say it is consumed. And I have a very shallow and lazy way of thinking and because I don't understand the utility of Bitcoin that therefore it must be a waste. Like what a position of privilege to make that statement given the state of the world.
- [60:26]
Unknown
Don't often see you based, Parker.
- [60:29]
Parker Lewis
Yeah, not, not. It's not exactly a Jack Mallers, but this particular subject, it truly is unnerving. Like the idea of esg, like these people have no clue. And it is, it is all about power. It's all about virtue signaling. And it is without any fundamental understanding of actually wanting to do any social good. No fundamental understanding and no desire to do social good.
- [60:52]
Unknown
Do you remember when we had that conversation about Venezuela in Texas?
- [60:56]
Parker Lewis
Yeah, yeah, we had it at Cooper's.
- [60:58]
Unknown
Yeah, I just released that episode where I was like Bitcoin won't fix Venezuela. And you came to me and you said. I was really triggered by that pitch. And at the time I was like, well, it won't fix Venezuela because your fundamental problem is removing the government. I'm much closer to you now on this, based purely on your explanation of coordination of the economy in that you can do this, you can do this despite who's in government by allowing people to have a form of money which allows them to coordinate. So I still think they need a better form of governance than Maduro. But I understand where you're coming from now.
- [61:45]
Parker Lewis
No, And I also, I think I talked about a bit when we had that conversation in Austin. But I understand where you're coming from. I think about it at the root level, if they don't have bitcoin, they have no hope. Like, they don't have a tool to combat cronyism and government manipulation and government coercion. So it's like if you don't have that tool, you are at a loss. But I also am sympathetic for the idea that money is just a tool. It is just a tool that is used by humans to coordinate all other economic activity. And that is a really, really, really important tool because it is what allows for the type of coordination that can lift people. Like without that, you do not lift hundreds of millions of billions of people out of poverty. That is money. And the coordination of money that allows that. But it also, bitcoin does not magically remove the kleptocrat from the kleptocracy. And that, that is ultimately something that people have to do. And that by having a coordination tool like Bitcoin, it gives them a fighting chance. It gives them something, a foundation off of which to stand. But I'm also recognizing of that idea that ultimately you have to want to be free on a really fundamental level, to fight back in more ways than just having money, but that the money actually provides you a tool to be able to coordinate in a way that either routes around government and as a method to be for self preservation and survival. But that it also, because bitcoin changes people, once they have access to that tool, they are actually more capable of cooperating, coordinating with others. But again, it doesn't eliminate a dictate. It doesn't eliminate a kleptocrat. Like human beings have to do that and they have to have that will. And bitcoin just provides them one kind of peaceful tool to be more effective in that process.
- [63:52]
Unknown
Excellent. You've given me a real. That piece there. I'm going to be cutting out and I'm going to be creating a video. I'm going to put it up on Facebook. That was some strong and important words. So thanks, Parker.
- [64:04]
Peter McCormack
Next up, I talked to Parker more about killing the fud. But before that, I do have a message from my show sponsors. Okay, we're going to kick off with Gemini who I am using for buying and selling bitcoin. But we're mainly buying right away. We're hodlers. We're not selling. Come on, it's a bull market. We're not selling. Now I've been using the Gemini app for buying the dips, but I also set up my DCA for twice monthly buyers of bitcoin and I'm yet to see a better or easier interface for buying Bitcoin. With this streamlined trading view, you now have access to all the tools you need to understand Bitcoin and start investing all through one clear, attractive interface. If you want to find out more, please head over to gemini.com which is G E M I N I.com and next up, we'll welcome in my new sponsor Revolut to the podcast. Now, as many of you know, Lloyds TSB, my bank of the last 20 years, closed down all my accounts recently. It's pretty clear they do not like bitcoin. Enter Revolut where it couldn't be easier to create an account because Revolut reached out to me and they're like Pete, we don't want to support you. Come on, come over to Revolut. And most importantly, they like bitcoin and they are making it easy for someone like me to transfer to exchanges. And Revolut are offering 20 pounds or $20 to all new customers that complete three card transactions. It just takes a few minutes to set up and you can create a card and add it to Apple. Pay immediately to get the cash in your pocket asap. But you know what I would do? I would turn that straight into bitcoin. Now this is a new relationship and I'm working with the Revolut team to help them build a bank which is bitcoiner friendly. There is a lot to navigate so bear with us. We are on this. Now if you want to find out more and you want to take up the offer, then just head over to revolut.com wbd that is R E V O-L-U-T.com wbd all right, next up we have Blockfi, the future of bitcoin and financial services offering you a range of products for bitcoiners. Now, with a blockfi interest account you can earn yield on your bitcoin. Now I have been a customer for two years making my Bitcoin work for me. Also, you can take out a Bitcoin backed loan and borrow against your Bitcoin without selling. And you can also now register for a BlockFi credit card which launches imminently offering 1.5% rewards back on all card purchases. If you are interested in checking out blockfi, I recommend you do your own research and then head over to blockfi.com, which is b, l o c k f I.com and last this week we have Ledger, the world's most popular hardware wallet. Now with a hardware wallet you can take custody of your Bitcoin. And I have been a Ledger customer since early 2017 and that Nano S I bought back then I am still using now. Ledger makes it easy for you to safely manage your Bitcoin using their Ledger Lies software which interfaces with your device. You can even connect your Nano S to your Android phone to manage your Bitcoin on the go. If you want to find out more, please head over to ledger.com which is.
- [67:07]
Unknown
L E-E-R.com okay, the next thing I want to touch on is regulation and this just purely on a selfish reason. Somebody might be okay with volatility. They might understand the long term investment thesis with Bitcoin and say I get this, I'm fine, I'm going to stack my SATs. They might be okay with the energy argument or not give a shit, just I don't care. I just care selfishly about my investment. But the idea that the government might suddenly ban Bitcoin is something people will think about. It has just been banned again in China for the 85th time. It is banned in Bolivia. I think it's banned in Pakistan. So there is that on a selfish level, that fear, what if the government does ban this? What does, what does that mean for my investment? You say it can't be banned.
- [67:55]
Parker Lewis
Yeah. And, and that may be a bit of a loaded term, but I'll help kind of unpackage what I, what I mean there. Yeah. So in, I think the article title is titled Bitcoin cannot be banned. And the way I start people, and I also start people with this for any and all questions that people have about Bitcoin kind of goes back to that same first principle which is all value in Bitcoin is derived from the fact that there will only ever be 21 million. That, that that fixed monetary system provides a utility for so many people. That, that, that is why people adopt it. That's what gives people value. It solves the problem of money for literally everybody in the world or has the potential to that people have to start there on this question. And if anybody ever says the government's going to ban Bitcoin, anybody, any, whether they're a noob or someone that's kind of midway on their path to Bitcoin, they should ask that critic, as with all of these questions, but how does Bitcoin enforce a fixed supply of 21 million? Because I will promise you that the critic that says that the government will ban Bitcoin does not know. They do not have an understanding of how that is possible, which is Bitcoin's true innovation. And that when you start to understand that the critic has no clothes, then you start to put the messenger in a different light. They may be somebody that you respected for some other reason in your life, but that if you can understand that they are not an expert on Bitcoin and that they do not have a conception for how it happens, how bitcoin enforces a fixed supply, that they don't really have a foundation off of, whether or not deposit, whether Bitcoin can or cannot be banned, they're perfectly inequipped to add commentary to it. So I think it's important to start with that baseline. Then the derivative becomes, okay, if we accept that the Bitcoin either has value or does not have value, whether it can enforce a fixed supply of 21 million, that everything kind of rides on that fact that I tell people to think about a decision tree. If you believe that Bitcoin cannot fulfill or credibly enforce a fixed supply of 21 million, then the decision tree of is Bitcoin functional as money? If you say, no, it can't credibly enforce a fixed supply of 21 million, then there's nothing for the government to ban. Okay, like, nothing to worry about over here, guys. It doesn't work as money. But if you come to the conclusion that Bitcoin can credibly enforce a fixed supply of 21 million, then Bitcoin is functional as money. Again, there's some other things that you'll need to unpackage to get from digital scarcity to functional as money. But that's the path to get there. Then at that point in the decision tree is like, yes, there actually is something for government to ban. So now I need to evaluate this question. But if you haven't evaluated the higher level, then you're really, you don't know whether or not you need to go further and you don't have a baseline to Evaluate whether or not they could. And I simplify from people that saying ignore 21 million for a second. But what would be the scenario in which the government would want to ban Bitcoin? It would only be the scenario in which bitcoin is working as money. And if they wanted to ban Bitcoin, then it would be a very loud signal that in their mind bitcoin is a, is some threat to their monopoly status over money. And that in itself should be a very loud signal that Bitcoin is working to you, whether or not you understand how or why Bitcoin functionally enforces a 21 million fixed supply. And there's another economic reality that when would the government do that again? The government will only do that when it becomes apparent to them that Bitcoin is threatening their monopoly status. That bitcoin is becoming so successful that storing wealth so effectively for so many people, that it's threatening monopoly status of the currencies that they use to control their people and power around the world, that only then do they step in to try to ban it. So you can either be the person that doesn't own Bitcoin and doesn't have their purchasing power increase to such an extent that the government would, would feel threatened by it and not have a decision point. If the government came to you and said we're going to ban Bitcoin, you could either be that person that doesn't have a decision to make because they're, they, they, they continue to hold the form of money that lost its value relative to Bitcoin. Or you could be the rational economic actor that decided to act out of survival and self preservation to hold a form of currency that does store value that in fact increased in purchasing power so significantly because so many people adopted it, that it's threatening the monopoly power of reserve currency. Any rational economic actor chooses the latter. They choose to have a decision point at that point in time. If the government come and said this is now banned, that you want the decision as to what you do, that you want to be in control, that you want to have that held and own that asset for that period of time because you're a survivalist, because it is Darwinian, and then the next thing comes, which is if you've done the work to understand how bitcoin enforces a fixed supply of 21 million, you will start to gain an appreciation for that. It's only able to do so because it's decentralized and that there is a very natural order that as more people adopt bitcoin and as the network gets larger and potentially larger to the point where the government then realizes that, that there's a problem, that then and only then the government realizes it. But also the bitcoin network is also so much further decentralized at that point in time because it's grown. And growth dictates that it decentralized. So bitcoin's immune system and its security system exists on a decentralized basis and it becomes more and more secure. Basically the game of whack a molecule becomes larger and larger as more people adopt it, that if the government comes out and says, we're going to ban bitcoin, it's only because it's working. And they also send a loud signal to billions of people that it's working and that they should be paying attention. And that when people start to understand those dynamics, they understand that there's only one right answer. It's that if they've developed an understanding of the 21 million, they will also have developed an understanding of why the government can't stamp it out. They may make it difficult to own in certain jurisdictions, but bitcoin will flow to the places where it's openly accepted. And that's where societies will flourish. The societies that have good forms of money and that accept and embrace good forms of money, that they will move there. But even if one regulatory regime tries to stamp it out, not only will they be able to, but there exists a reality that the government has tried to ban things. In the past. They tried to ban private ownership of gold. When they did that in the United States in 1933, Gold did not cease to exist as a phenomenon. It did not lose value. The dollars that people were forced to trade for lost value. When the government tried to ban booze, booze wasn't banned. Prohibition. There is this fundamental reality that when an economic good and when an innovation is so valuable and delivers value to so many people, that human beings will find a way to use that utility. And that as you understand the construction of bitcoin, you also understand that any government attempt to ban it will cause it to fuel. It will fuel the wildfire. It will be like a 60 mile an hour wind on a forest that has a raging fire. And in my view, if a developed country, that's not a communist country ever tries to ban bitcoin, it will be the fate accompli of all fiat currencies. And that most people that are in that position when they play the 4D chess in their minds will also understand that, that it will be the demonstration that they have no clothes and that the thing that they were telling their citizenry that this thing was a shiny object and that it wasn't money and it was too volatile to be a currency. All of a sudden they send the loudest signal that you should probably have that. And that's a comment that SAFE makes. So I won't use it as my own original thought, but he says if your government wants to ban something, you should probably want to own that thing because there's a reason.
- [77:00]
Unknown
Yeah, yeah. Well, I mean, every time I speak, you're like you always say to me, when you move into Texas. We had a conversation before this. I also think there is just not a. Not just the ban on the bitcoin, but those state. States and nations that are hostile to bitcoin seem to be hostile across the board, seem to have quite draconian, oppressive laws. The UK itself is becoming an. An absolute shit show. Like, I'm a proud Brit and I'm proud of my town and I love British people and. But I am, you know, quite significantly considering where I want to live because of the difficulties that my government puts in place for me to be an everyday, ordinary citizen. Not, not just with bitcoin, not just with the banking system, but everything else. And that does create that regulatory arbitrage. We are seeing it. Estonia and Malta have done very well in Europe in attracting bitcoin people due to the friendly regulatory environment they've created. So that is a reality. The regulatory arbitrage is existing. You're seeing it yourself in the US People are moving now. Covid has lit the fuse to make people realize they don't have to live in San Francisco, they can live in Wyoming, Florida, Texas is happening.
- [78:27]
Parker Lewis
Yeah, yeah. And the reality is people respond to incentives. Right. And that if people look around the world and say, well, if the government advance it, you're not just going to get up and leave Austin, Texas and move somewhere else. But that regulatory arbitrage is a thing and there's this very fundamental. It has nothing to do with money. It has everything to do with freedom. That human beings are, majority of them are predisposed to want to be free and that they're going to seek that out and they're going to enforce that they have it one way or the other. And that, you know, when we talked whether it was in April, I think we were trying to get you to come to our Austin bit devs that you couldn't leave and it wasn't just because of the uk, but it was because of the relationship between the UK and the United States. But I was joking with you then I was like, you need to get on a private plane and get to Texas. You know, like get your kid, you know, get your kids, like get your house in order. But like when that starts, that's. And Stefan's dealing with the same thing.
- [79:23]
Unknown
Where, yeah, he can't leave, can't come.
- [79:24]
Parker Lewis
To Bitcoin, can't come to Bitcoin 2021. And those are restricting of freedoms. And one of the beautiful things about bitcoin that's never existed in this way, it's like if money is a storehold of wealth and that it's, that it's intermediate, intermediating a series of transactions. I trade one day and it's going to be sometime in the future until I convert that back into real world value. I'm storing wealth. And what Bitcoin lets you do is in a way that has never existed, it allows you to create real world value in one place in the world and literally put that in your pocket and fly across the world and transplant that value to then be able to exchange on the other side. And the tangible example that I would use is imagine that gold was the monetary good. Most people I appreciate don't understand why gold was money, but there's a reason why they called it the gold standard. The world previously converged on one standard of value. And then there's a fundamental reason why, there's a fundamental reason why Bitcoin is now replacing that. But just use gold as an example. If you had worked for 20 years in India and you had traded and you were, you were storing wealth in gold, you cannot just take pick up all that gold. It's relatively easier than to move something other that is physical. But you can't just put 100 bags of pounds of gold in a bag and get on an airplane and that Bitcoin represents the greatest mobility of physical capital that has ever existed. Bitcoin is digital, but the value you create in the real world is physical and that's you're storing it in a digital medium. And that this idea of governments banning Bitcoin is inherently tied to this idea that it's not just that regulatory arbitrage existed, it's that you can put in your pocket the value that you've created in Britain and bring it to Texas and help coordinate economic activity here if you want to in a way that you otherwise couldn't have done before. Bitcoin and that incentive, I also think about it like, because that is a deterrence that it will. It will induce good behavior on behalf of governments. And. And there's this, you know, in the United States, we have this very. You know, in certain ways, it's being threatened. But there's a lot of people in America who really value the Second Amendment. And, you know, that. That right to. To. To bear arms and that it's not because they want to go out in war with each other. It's actually because when there's 600 million guns in America, that those 600 million guns that are held by the citizenry are a deterrence to a tyrannical government, either a tyrannical government or some other government coming and trying to war with the United States, that when the people themselves are armed, that deterrence provides a protection. And I think about Bitcoin the same way that if you have bitcoin keys, and let's imagine just the United States, that same exact circumstance where there's 600 million guns. Imagine there's 300 million people in the United States, or 325 million. Imagine there's 600 million private keys, if they're all distributed physically throughout the United States, that if the government wanted to try to impede that. That each one of those keys is the aggregate nature of those keys is a deterrence, and that the keys themselves provide security. And actually, it's not so much that we're going to have we will use them, but that it will be peaceful and that the government won't come back out and ban it, because if they did, we can literally take those keys and go to another geography in a way, and take our value in a way like we never have before. And their existence is what will actually prevent it. The incentive structure is what will act or cause people to act in a way that is consistent with their own interests. And there will be exceptions. There will be the Chinese and there will be the Indian governments, and the wealth will be expropriated from those nations as a result, but that the people that make the good decisions will flourish and prosperity will go to the places that have the most Bitcoin, which may be Texas, which I believe will be Texas, for the record. Yeah, well, I think it's science, actually.
- [83:41]
Unknown
Well, I'm going to come. Come and spend a month with you soon, so we'll see how that works out as a. As a test. Okay. This one. This one's kind of my favorite one. The reason this is one of my favorites is because once I understood this, it gave me the foundation to Understand a lot more about Bitcoin and why I reject all shitcoins. I don't care if people trade shitcoins. Go ahead. And I do think shitcoins provide some value in teaching people about Bitcoin. So I'm not a complete anti shitcoiner. But at the same time understanding that Bitcoin is not too slow, understanding why the foundational layer of. Sorry, how the foundational layer of Bitcoin works, how it provides security, how it provides decentralization. This to me was the most important lesson. So bitcoin is not too slow. Something which nano people, XR people, XRP people, BSV people, BCash people, they always claim it's slow, it's outdated technologies, it's a boomer coin. I actually think this is the most foundational thing you need to understand about Bitcoin, that it is not too slow.
- [84:48]
Parker Lewis
I do think that this is one of the most foundational questions that people struggle with. Again, because when they look at money and they recognize that the money that they use day to day is not volatile, that they have the same problem with Bitcoin's volatility, that it doesn't map well and that the same thing exists on this idea that Bitcoin's too slow and that oftentimes there's kind of two ideas when they talk about too slow. That it's that bitcoin transactions only get cleared or settled every 10 minutes. And realistically it's not just every 10 minutes, it's on average every 10 minutes. So there might be 20 minutes before the next bitcoin transactions are settled and then it might be three minutes after that. That on average is 10 minutes. So it's both long, long periods of time on a relative basis as well as unpredictable. And that doesn't map well to how people think about how their money operates today. They think about it as when they swipe their credit card at the grocery store, that money was paid and that. And if that can't happen at that point in sale, then the thing can't be functional as money. The other thing is that there's the slow nature of it, but then there's also the transaction control capacity. There's a reality that there's a limited amount of transaction capacity on the bitcoin based layer and that people will look at that and they will say Bitcoin cannot fulfill the number of transactions that that exist in the world today. So therefore it can't be the solution. And so it's important, I think, for people to have that context of, of this kind of what we mean when we talk, when people say that it's slow and it's because of block intervals and really that the way to think about that is just transaction settlement, that the transactions don't get cleared, but on average 10 minutes, and that there are a limited number of transactions that can happen on average every 10 minutes. And that ultimately I reinforce for people before I provide the kind of explanations that I have in this piece. It's like, again, always start from the perspective that people like myself and people like you, Pete, we've struggled with these same things. We've had to. We had these same questions because they are, they are logical questions to ask. And that there are resources and that people, everyone that's come before you has had to get beyond this, that it has had to emerge on the other side and say, nope, it's not too slow and nope, there are a way to satisfy all the transactions. And it's important to know that. So I start there with a baseline, then I let people know. Again, everything comes back to this idea of 21 million Bitcoin. The Bitcoin's innovation is. And it's this idea, or the way I describe it in the piece, Bitcoin is not too slow, is keying in on this idea that Peter Thiel talks about in his book Zero to one, that Bitcoin's true innovation, the reason why it's provided a step function change and improvement in money, is that it created, or however you want to think it created, invented. We discovered finite scarcity and that finite scarcity exists in digital form. That's zero to one. The fact that there will only ever be 21 million Bitcoin, as he describes in the book, that the scaling of a new technology is oftentimes one to n. So zero to one is finite scarcity in digital form, and that is 21 million Bitcoin. One to n, which is a scaling problem, is far more pedestrian of a problem to solve than having solved the problem of digital scarcity and finance scarcity, because that finite scarcity provides the foundation for a global monetary system. And so when people start to appreciate that, it's like, wait, think about the weight of the problem. Is Bitcoin finitely scarce? Is it possible for something to be finitely scarce in the world? And the analogy that I use for people is when I send an email to you, I have a copy of the email and you have copy the email. When I send a document, I retain a copy of the document on my server. Now you have A copy of the document on your server. Server. If Netflix is streaming data to me, Netflix has that data on their servers and it's being at least shared for a permission for a period of time that I get access to it. That before Bitcoin, everything in the digital world was, practically speaking, infinite. And that the innovation that Bitcoin has provided is to go from that infinite world to a finite world world where if I send you a bitcoin, I no longer have it and you have it. Or if I send you a fraction of a bitcoin, I no longer have it and you have it. That it's possible on a decentralized basis for people all over the world to be sending transactions to their counterparties in their local economies in a way that we can all rely upon. That the settlement of it happens. That all the bitcoin and all the money gets into places that it's supposed to be and that it can't be spent by others. That's 0 to 1. How we scale that apparatus is, again, it will be a challenge, but it's also pedestrian relative to the problem that's already been solved. And it's that we generally have to have some humility that if this first innovation is the one that really went from zero to one, that we don't necessarily have to know how the smaller problems that are more marginal will be solved, even if they're still challenging. But that almost by definition, if the 10x hard problem was solved, that the 10% problems will be. And that there is this reality that we're working on them every day.
- [90:48]
Unknown
But for some context, let's just give some idea about how long it took to solve that zero to one problem. And it was multiple technologies and multiple innovations that was finally put together by Satoshi that did this. But this is a problem that people were working on for at least, what, two decades?
- [91:07]
Parker Lewis
Yeah, I think it is just as a marker. It's good for people to appreciate that because there is this idea and it speaks to another one of the pieces, another one of the things that people struggle with. But oftentimes people look at Bitcoin and they say, how could the first one be the one? And part of that is a default, because they're comparing an economic good that is money, to competition, that they know between companies and that competition. And there is something that is fundamental about money that dictates that there only be one that the natural order of money monopolizes. But even if I set that Aside, they saw MySpace and then Facebook come along, AOL used to exist, that they look at Bitcoin as technological. Right. Altavista. That's a good one. Ask Jeeves that they see Bitcoin as a technology and that it's a technological revolution, and they miss that it's a monetary revolution and thinking about it on a technology perspective rather than a monetary one. And that in that world, if you're thinking about Bitcoin kind of as a technology rather than a money, that you will miss the fact that it solved a fundamental problem that you've ever considered before. And that, you know, when we. When we think about the derivative problems that Bitcoin will solve from there and how it will do that, that, that there's. There's this. There's this just very fundamental perspective on Bitcoin that when we think about, like, the things that are actively being developed, whether it's lightning, network or side chains, that all of those pieces of the puzzle exist at a higher order than finite scarcity. And that those problems, while they're being actively worked on, can't be worked on or are of no value if the base money itself doesn't have a fixed supply or a finite supply, because all value is derivative, derived from that. And so it's just like you have to kind of think about it and understand Bitcoin at multiple levels. Then to get to this, this point further out, that Bitcoin is not MySpace, it can't be replaced. And to your point, which is the right one, that is, this was a problem. Bitcoin wasn't the first one. Bitcoin was not the first digital currency that was conceived. And that's something that most people, just as a fact, do not know, that this was a problem that cryptographers were working on for 20 to 30 years, and that Bitcoin wasn't the first digital currency. It was the first digital currency to work. But then you have to pair that with. Do not think about Bitcoin as a technology. Think about it as a monetary network. And if it was the first one to work, then it would also be the last one to work. And that has nothing to do with Bitcoin and everything to do with money.
- [94:29]
Unknown
Love it. And that kind of answers one of the other problems we've listed down, where this is a typical thing that someone like Peter Schiff will roll out. Said it has no value because it can be copied, but it's exactly the same. It can't be copied because they're thinking about it in terms of technology rather than a monetary revolution.
- [94:49]
Parker Lewis
Right. And that really keys in on the same idea that leads to that thought process, which is think about Bitcoin as open source code. Okay? And I tell people Bitcoin does not have a fixed supply of 21 million just because software code magically says so. And the way I articulate that to people is if you copy Bitcoin's code base, you can do it. It's open source, people have done it. Yeah, you could do it tomorrow. Go to the first principle, go copy Bitcoin's code base and say that there will only ever be 21 million Bitcoin. Two problems exist. You can copy the code base, you can't copy the monetary network. You can't copy the people that have adopted this other system as money and that have understood a framework as to how in this system the 21 million will be credibly enforced. And you've just introduced something that has no credibility. But it comes back to this idea of the reason why Bitcoin wasn't the first digital currency to work. It was, it was the first digital currency to work, wasn't the first one attempted. But that because it was the first one to work, it would merit that it would be the last. That because Bitcoin is already functional and because it was the first to work, because it was the first one to figure out how to deliver a credibly credible, which is an important term. It's not just that we say that there will be 21 million, that it is credibly enforced and that none of us have to trust as to how that happens and that it's not possible to deviate from it. That that existence of a finite supply monetary system obsoletes the necessity for any future to come. And because it obsoletes it, because we only need one currency, people will struggle. In this world where there's multiple currencies that exist. There's the dollar, there's a euro, there's a yen. But if they go and pull 99.9% of the economic value that it's transacted by people in the world, 99.9% of those people only interact with one currency on a day to day basis. Again, go back to the example of the grocery store. It's not by some coincidence, it's not by some collective hallucination that we all arrive at that end point. It happens for very fundamental reasons. It happens for reasons that we, you know, that I've, that I've worked through in my, in my pieces that are more on first principles rather than on the fud. But you come Back to this idea. Bitcoin exists, except that it does exist. Except that it's a monetary network that has, whether it is today or not, about $800 billion was a trillion dollars will be many trillions to come in the future. That exists in the world. And people have been trying to copy it, right?
- [97:36]
Unknown
Yep.
- [97:36]
Parker Lewis
For many, many years. Have the humility to understand. Nobody has been able to replicate it in 12 years. Ask the questions as to why and there are answers. Just start with that kind of understanding. Don't trust, but start from that understanding and try to figure out why. Because that also then comes back into this idea. Idea of Bitcoin's not too slow that if the True innovation is 0 to 121 million fixed supply, all value derives from that fact. If, if money monopolizes based on its very core function, we don't have the need for other cryptocurrencies or other digital currencies or other currencies period. Dollar, euros, yen. That's really Bitcoin's not Bitcoin I don't even really think about as competing with Ethereum or I mean Ethereum is trying to compete with Bitcoin, but really Bitcoin's competing with day to day currencies, the dollar, the euro, the yen to a lesser extent or more through an intermediary gold. And that if Bitcoin solved that zero to one problem. The only way to scale Bitcoin is to build on top of it. It's not to build on the side of it. And that's actively what will happen that, that when we think about, and I do like to go into a granular basis of like to give people an understanding. When you swipe your credit card at Starbucks or at the grocery store, your money's not going to Starbucks or the grocery store. They're checking your account to see if it's. If you have enough money. And the money transfers at some later point in time in large settlement transactions that actually happen much slower than bank Bitcoin. And so there is a reality, and this is not how I expect Bitcoin to scale that if we put the exact same banking system on top of Bitcoin, it would work from a customer experience perspective or from a user experience perspective the exact same way there'd be settlement transactions in the background, you'd swipe a credit card. Bitcoin could work in that world. Again, it won't be as that I don't believe. I think there will be a lot more disintermediation of, of the financial Flows. But it, but it's, but I think it's important for people to key on that. Think about bitcoin and that 10 minute interval that is like the New York Fed settling large transactions. And that high value transactions will exist on the Bitcoin main chain where you need large settlement transactions, occurring transactions and that smaller transactions day to day, whether they be credit or actual settlement of smaller transactions, will have happened at higher levels of Bitcoin like the Lightning network or on side chains. Then this other idea of the limited transaction capacity that the Bitcoin blockchain, as it's commonly referred to, one of the things that people miss about Bitcoin, I'd say is that the idea that there is a one thing to note for people. Just think about Bitcoin as being able to process about 3,000 or so transactions every 10 minutes. Obviously there's billions of people in the world. All the people that have started to store wealth in Bitcoin have not just suddenly been like oh you know what, we're not going to be able to satisfy transactions for a billion people. People shouldn't have to deal with it. That, that we, we do have payment channels being worked on in Bitcoin that exists at a higher level where you or I could have millions of transactions back and forth between each other and then we just settle the net on the main chain in one transaction. And that's technologically how, how I think most people, whether it's the lightning network or some other iteration that's similar to the Lightning network, how Bitcoin will scale volumes, but at a, at a, at a more fundamental level, that limited capacity on the Bitcoin main chain of 3,000 transactions every 10 minutes, that limited throughput and the scarcity of that throughput is inherently tied to how Bitcoin was able to have a zero to one innovation of finite scarcity. And so you have to understand, or at least the way that I understand it, I think that this helps other people understand it, that there is no fixed supply of the currency without a fixed supply and fixed throughput of transactions. And the reason being is that every time a Bitcoin transaction is sent to give people context, there are people in the Bitcoin network that run energy, as we previously discussed, to provide security for the network. That security for the network is basically validating transactions. Is the Bitcoin that's being spent? Is that a Bitcoin a valid Bitcoin transaction or not? The two most important rules in the Bitcoin space, not Bitcoin space, there's a number of consensus rules. But the really foundational one of how to conceptualize this fixed supply of 21 million IS or IS this Bitcoin that's being spent, was it issued in a way that was consistent with the 21 million supply cap, and has it previously been spent that those are the most, those are the two most fundamental validation rules. There are others that are puzzle pieces that are also important. They're all important, but those are just kind of conceptualizing at a high level to the most important rules. Was it issued consistent with the 21 million supply cap, and has it previously been spent that in return for providing that security function, those people that are, that are consuming energy to secure the network, to validate transactions are getting paid singularly in Bitcoin, Bitcoin denominated. So they're consuming real world resources to perform a security function, and they're being paid just in Bitcoin. And they wouldn't do that if they did not have some expectation that that value would hold into the Future. Today, every 10 minutes, or on average every 10 minutes, 6.25 Bitcoin are issued. That amounts to about 900 per day, or about 325,000 per year, which represents about 1.6% inflation, or 1.6% of the network that's having to be devoted to subsidized security today. But if it's 6.25 today, about a year ago it was 12 and a half, and every four years it cuts in half. So in about three years, the 6.25 will cut in half again to 3.125. That process of cutting in half is how we get to this point of having an asymptotic fixed supply of 21 million, that if you continue to go out every four years and divide in half, eventually you get to the smallest unit of Bitcoin and the amount of new Bitcoin they're issued is zero. But if we come back to today, every 10 minutes in return for security, in return for enforcing this fixed supply of 21 million, 6.25 bitcoin are issued. But in addition to that, a certain small amount of Bitcoin is attached to every transaction to, to compensate those providing security for the network, to validate individual transactions at a future point in time, that 6.25 will be zero and there will only be the transaction fee component. And the way that we ensure that there will be a transaction fee market to pay for security is by having a fixed throughput that you have to create competition for that fixed throughput to prioritize high value transactions and to create the fees that are necessary to ensure that security will exist beyond the last Bitcoin being issued. And that when you also start to think about it in that, in from that perspective, it is how Bitcoin solves the tragedy of the commons problem that we have this fixed throughput that everyone constantly has to figure out how to use most efficiently and to figure out how to use most economically and profitably. And those that are able to do it most profitably are going to deliver the most value to other people. But it is this inextricably linked fixed supply is tied to fixed throughput. And the scarcity of these two things provide the foundation of a monetary system that billions of people will be able to use. And humans are going to have to adapt to how they use that scarcity most efficiently and most effectively. And that is why we have to scale Bitcoin at higher levels rather than at the Bitcoin main chain. Because if it was at the main chain level or at the base layer level, then we would have a tragedy of the commons problem. We would have people spamming the network and all incentives become aligned by having a fixed throughput. And that security function of 10 minute block intervals helps basically create the flywheel that ensures that we'll have these higher levels orders. But there would be high, there would be no higher level payment orders that can scale payments. The one to n problem if we didn't have the zero to one. And that zero to one digital scarcity problem equation merits that block intervals be 10, 10 minutes. That provides a security function to the network. And then the limited throughput also provides a security element to network because it ensures a vibrant fee market and competition.
- [107:14]
Unknown
You're crushing it today, Parker. I don't think there's very many people who speak so well about Bitcoin. I'm only going to take up a little bit more of your time. There's one last thing I want you to cover because it is the last regular FUD thing. It came out yesterday, I think. Was it the Wall Street Journal? The guy wrote that we should ban Bitcoin because of ransomware. He was rightly criticized for that ridiculous take, but. Well, I mean, you say Bitcoin is not for criminals. I mean, bitcoin is for everyone. And we have to accept that it will and does have certain amount of criminal usage, but as does all money. But I'll let you take it.
- [107:56]
Parker Lewis
Yeah, I do think that it's like the Bitcoin cannot be banned or the idea that bitcoin can be banned, the bitcoin for criminals, it's the, it's like the late last, I don't know if it's like the stage of grief, you know, like one of the last stages of grief is denial that both, you know, bitcoin can, you know, the idea that bitcoin can be banned, it's an omission that bitcoin works. Similarly, if people say that bitcoin's for criminals, they're in the same statement admitting that bitcoin's functional as money. And so again, the decision tree always comes back to will there ever be 20, will there only ever be 21 million Bitcoin? Because it's. Is bitcoin functional as money? If it credibly enforces a fixed supply of 21 million, it is. If not, it's not. And that, you know, the point that you bring up is the right one and that, you know, when you, when you start to understand the history of bitcoin, people oftentimes learn that bitcoin, one of the first early commercial uses of it was on the Silk Road. And God bless. And God, you know, thank God for, for Ross Ulbricht that, that he did that and that hopefully we'll have someone sane in the White House to be able to, to get him out. But that I also, I also reinforce for people that criminals are not in the money losing business, right? Drug dealers are not in the money losing business. In fact, the US dollar is the preferred currency of cartels everywhere, right? So let's just start with that reality or those two realities. Dollars are the preferred funding currency of criminals everywhere. And that criminals do not like to lose money, they're in the profiteering business. And so when people kind of have this basis that the Silk Road was one of the first early uses of, of bitcoin, they very logically say, why would someone use it? Again, it comes back to that idea, if you don't understand the first principle about money, of why bitcoin is fundamentally a value, and you just saw it fluctuating on the screen and you think that your dollars just work fine for your euros. Of course you're predisposed to think that only somebody that is of some kind of illegitimate or illicit purpose, that only that would be a utility to be outside the system.
- [110:24]
Unknown
System.
- [110:24]
Parker Lewis
But again, you're not coming at it from a perspective of understanding what money is, what makes a good form of money or not. And because you haven't asked those fundamental questions, you're entirely ill equipped to have any opinion about whether or not Bitcoin is for criminals. And that there is a reality that because criminals are not in the interest of losing money, that all examples like the Silk Road made apparently was that Bitcoin worked, that someone was able to affect a transaction and it was reasonably going to store its value for a period of time. That money provided a utility and if it didn't, it wouldn't have, but that if it did that there is no logical conclusion that it would only provide value to criminals or that it ever did. And that if Bitcoin were functional as money, if it incredibly enforced a fixed supply of 21 million, that that would be a utility for everybody. And that when we think about this context, it is if Bitcoin credibly enforces a fixed supply of 21 million, of course criminals are going to use it, of course. But Apple Computer can also use it. Dell can use it, GE can use it, GM can use it. There is also no logical leap that if there's a currency system that works for human beings, that more when you have a better form of money, that a greater proportion of that monetary system will be controlled by people that offer things like drugs or that are criminals and not the Apple computers of the world that will similarly get a utility out of it. And that when people start to appreciate, and I think this is one of the. It truly is, one of the worst developments in probably the last 30, 40 years is the weaponization of the financial system and the degradation of financial privacy. That, that if you think about any innovation, like criminals are criminals, period, there's a rule of law and criminals will break those rules of law. Think about guns. Law abiding citizens use guns to defend themselves every day. It's not about going and hunting. You know, I love hunting and all, but guns are a function of self defense. That is what the second amendment is about. Criminals. Whether or not guns are legal or not, criminals are going to find the tools and commit crimes with them, right? But it's not just guns, it's the Internet. We developed the Internet, not we, but some smart people in the 1970s and then it was commercialized over time. Of course criminals use Internet every day. It's actually the Internet that enables ransomware, right? So it's like, why don't you criminalize Internet use? The tool is the tool is the tool. The act of a crime is how the tool is used to affect some crime. So criminals use roads every day. Criminals use the Internet every day. That every innovation, if it is innovative, it by Definition will provide value to so many people that it will become a common tool that is used by everyone, including criminals, but that the tool itself is not criminal. We just have weaponized money and the financial rails as a way, a foolish way to try to stamp out the criminals. But as we find with every tool, whether it's the Internet or roads or guns, that the criminals by definition are committing crimes, they're going outside of the rule of law and they're using all the tools that are available to their resources to do so. And if there's not something unique about money, and I think that those are really two foundational points, there is also the reality. And then if I get to the fundamental level about bitcoin, Bitcoin only is functional. And again this ties back to 21 million Bitcoin. There are a certain set of consensus rules, the two ones to articulate as it relates to the 21 million. Even though all of them are important in enforcing the 21 million. Think about it as all those 15. You know, I don't know if it's technically 15, but it's approximately in and around there there's a certain number of consensus rules. And that that two of the critical ones are is any bitcoin that's being transacted today is it was issued originally consistent with a fixed supply of 21 million and has it previously been spent that that part and parcel to how bitcoin enforces those 21 million rules are those the there's a 21 million fixed supplier, there's consensus rules and that that happened on a decentralized basis. That is only possible if bitcoin operates permissionlessly and if it is resistant to censorship. And what I mean by resistance to censorship, or what's commonly referred to as censorship resistance. It doesn't mean if PayPal wants to deplatform you, that's not censorship at the bitcoin network level. If my company, because I'm a regulated financial institution in the United States, whether I think the law is reasonable or not, if I decide not to work with someone, that's not censorship at the bitcoin network level. Censorship at the bitcoin network level is that there are a certain set of consensus rules that validate whether or not a bitcoin is a bitcoin and those rules are in fact native to the network. Bitcoin is a closed loop system. It's important to appreciate that Bitcoin knows nothing about the outside world. All it knows is how to issue currency. And whether a bitcoin is A Bitcoin, that's the only two things that we need it to do. But in order for it to do it, that the only rules that must apply are the rules that are native to the protocol and those set of consensus rules. That is how Bitcoin enforces a fixed supply of 21 million. That if it were possible for an outside force to censor the Bitcoin network and basically to apply a rule that is exogenous to Bitcoin, to alter them, whether it's alter them actually in the code base or to prevent otherwise valid transactions from being processed, that that process potentially of censoring a single transaction calls into question the entire value chain. That if you can censor a single Bitcoin transaction at the network level, prevent a single transaction from being mined and cleared, that if it says, yes, this Bitcoin was issued consistent with the 21 million supply, and yes, it hasn't previously been spent, and yes to a number of other boxes that have been checked. If that transaction doesn't get validated because some exogenous force said so, then what you have just demonstrated is that Bitcoin is censorable and that the rules of the network are not the only rules that are governing what is and what isn't currency in this system. And that if you can alter or influence one rule and if you demonstrate that Bitcoin is censorable, then everything is at risk. That you could potentially alter the fixed supply of 21 million. And that it's not just a very simple slope, that it is actually the censorship resistance that enforces 21 million. And if it becomes censurable that you can, that that would be at risk. And that when you think about that, who are the logical people that we would think to censor Criminals, right? Whether it's, you think that the people of Iran, which I think is asinine, or if you thought that they were criminals, you know, like we should want all 85 million people in Iran to be able to have access to a reliable form of money. Or, you know, you know, someone might look at it and say, oh, that person's a drug college, we shouldn't give them access to it. We're not going to throw the baby out with the bathwater. It's this idea, if we have an innovation, it's going to be used by everybody. And we expect that some people are going to use it for illicit reasons, but that we're not willing to. And when I say we, it's like anybody that thinks about Bitcoin as a value or a utility, that there's a utility to having a currency system that's outside of the government, that has a fixed supply of 21 million, that it would not be rational to say, oh, I think it's a good idea to censor a single transaction. Even if you think that the persons of ill regard that you wouldn't sacrifice the entire network and the entire utility because of that, you would accept that it is possible and it will be inevitable. Just like criminals use the Internet, that they're going to use Bitcoin, but that we're all going to get so much greater utility. And that by the fact of if we were to say that Cranial can't use Bitcoin and we enforce some exogenous rule, that all of what we've done is undermined our entire currency system, which is a utility. Now there's a reality too, that based on the construction of the system, because it is so decentralized and because Bitcoin is in every jurisdiction, that even if a company, like a virtue signaling company like Marathon Oil wants to have like an ESG compliant, even an, yeah, even like an OFAC compliant mining, it's like there's no. Mining is not money transmission. As a miner, you're not a financial institution. You're not subject to BSA and aml. All you're doing is virtue signaling and you're trying to create an attack vector for Bitcoin. Unknowingly, maybe. But all the while, even if you do that, there's enough Bitcoin miners and people that are mining all over the world to ensure that the single transactions at a protocol level cannot be, cannot be manipulated, it can't be censored. And that very fact ties into the fixed supply of 21 million. So yeah, like fuck Marathon, you know.
- [120:47]
Unknown
Did you see what happened with them when they mined their OFAC compliant block? That people were sending tainted coins to them, to that block?
- [120:55]
Parker Lewis
Yeah. And then.
- [120:56]
Unknown
Brilliant.
- [120:56]
Parker Lewis
And then, and then they. And then they, you know, when the next mine miner mines a block, they will ultimately mine on top of it. Right. So. So it's all virtue signaling. It's beyond virtue signaling that it's communicating a lack of understanding of the network and a lack of understanding of Bitcoin. And all of those people just naturally get dealt with with, you know, the networks in control there.
- [121:26]
Unknown
Fuck off, Marathon wankers. Parker, man, you've nailed it. Two hours. Let's let people know. This is the second time we've done this. Now we, Parker and I recorded this about what Is it about a month ago? Six weeks ago. And the sound screw?
- [121:42]
Parker Lewis
Yeah, I think so. I think the sound screw sound screwed.
- [121:44]
Unknown
Up, so we left it for a few weeks to do it again. I think this one's come out better. I think your tools are even sharper than last time. This is a great show to send around to my friends. It's a great show for new people to bitcoin, and it's a great show for someone even like myself, four years in, who wants to refine some of his thinking. I will definitely be stealing some of the lines you've put out on this show. I really appreciate you, man. I think you are one of the most valuable assets to bitcoin with your writing, the time you give people like myself to. To do a podcast when you got a business to run. And I'm looking forward to catching up with you next week, mate. It's been a long time. We can share a whiskey or a beer and finally hang out.
- [122:29]
Parker Lewis
Yeah, I'm looking forward to that. I appreciate you, you know, not only what you do, but also spotlighting the series. I do. I do think about it as, you know, part of, like, my writing. I originally set out to help leverage my own time because I saw the benefit of leveraging my time via Safety's book, the Bitcoin Standard. But that through that process, it actually caused me to distill my own thoughts. And by distilling those thoughts, it put me in a better position to be able to communicate ideas that were in my head, to get them logically down on paper, and then I could speak about them more effectively. But that through that process, it also helped me focus my understanding of Bitcoin and my understanding of bitcoin and understanding of how it credibly enforces a fixed supply kind of hardened as part of that process. But then also, as I come on these podcasts and talk about different ideas and get asked different questions that I'm constantly learning. I think everyone's constantly learning because bitcoin is constantly evolving. And so it doesn't matter if somebody's, you know, kind of brand new to bitcoin or someone's early in their journey or, you know, wherever they are at their point, that. That all of these resources and even, like, articulating ideas here, I'm thinking about new ways to say something based on different questions that I get asked. So it's actually helpful to my process and. And helping me be better. And I hope that the people who listen get some benefit. And I know that, you know, certain People won't, but that certain ideas connect with different people and that's that that's why more people getting out, more content and more educational resources and more ideas like it's going to connect with different people for different reasons. So I really do appreciate coming back on and the second try at it. It feels just as good and look forward to. To digging into more of the series and seeing you in about a week.
- [124:27]
Unknown
When's the book coming? Because you definitely have a book. You have enough material for a book?
- [124:31]
Parker Lewis
Yeah, I'm working on it. Truthfully, the bitcoin adoption over the last four months has, has been so great. And I am helping to run this business here at Unchained Capital day to day, helping people custody their bitcoin better that I was hoping to have. I was truly, I was hoping when I began the year, I was hoping to have it buy Bitcoin 2021. And it's just going to be a collection of the essays kind of reproduced, repackaged. So I'm not going to try to rewrite things. I want those things to be artifacts that I said this at this point in time. But I do want to be packaged as a book so that people can read it and have a physical version. Now my goal is bit block. Boom. So it's August at the end of August in Texas.
- [125:14]
Unknown
Right? Okay, awesome. Well, listen, so I'm going to commit.
- [125:18]
Parker Lewis
The summer, the summer of bitcoin to getting that book done so we can get the resources to even more people.
- [125:26]
Unknown
We will see. We might be coiling up for another leg up, so you might be rammed and busy, but I'm going to hold you to it.
- [125:32]
Parker Lewis
What we might need to do is go down to El Salvador, go to the beach, be able to get me an environment where I can actually focus on some things I need to do on the riding side and knock it out there.
- [125:47]
Unknown
I would love to get you down there. I've been toying with the idea and I mentioned to Michael Peterson I think we should have a conference down there. I think it's. I think a lot of bitcoiners need to make that pilgrimage and see the place because it is incredible. But listen, this is awesome.
- [125:59]
Parker Lewis
I agree.
- [126:00]
Unknown
What you've done is just highlight. You highlight how beautifully simple bitcoin is and incredibly complex at the same time. But it is a beautiful system and your work is invaluable. So thank you, man. Beers next week. Whiskey's next week in Miami. Can't wait to see you, dude.
- [126:18]
Parker Lewis
Look forward to seeing soon.
- [126:21]
Peter McCormack
All Right. What did you think of that one? Now, Parker is one of my favorite bitcoiners to talk to. He always smashes it. And it was great to catch up with him in Miami. I used to spend a lot of time with Parker. Every time I went to Austin, I would hang out with him and he'd be like, pete, when are you moving to Austin? And you know what? Something I'm seriously thinking about. And Parker is one of the reasons. Now here's gradually, then suddenly series is well worth checking. Now, you can find links to this in the show notes. Please go. Please go and read this. And I will get Parkour next month to further go down the rabbit hole with him on this. Also, just a note. Since we recorded the show, marathon have stopped with their OFAC compliant blocks and are now signaling for taproot. We gave them some in the show. That has changed. Still keep an eye on marathon. They kind of seem a bit sketchy to me anyway. In the meantime, if you want to reach out, you can join our telegram group or you can. You can hit me up on my email address. It's hello.
- [127:10]
Unknown
What?
- [127:11]
Peter McCormack
Bitcoindid.com. if you are a regular listener of the show, if you're listening regularly and you haven't left me a review on itunes. Come on, what are you doing? Go and do this. It only take you two minutes. Go and leave me a review. Support the show. We definitely deserve. Well, I hope we deserve five stars. You might be like, you know what, Pete? Your show's a bunch of shit. And give me one star. Fine, I'll accept that. So be it. But if you like the show, you want to give it a five star review, well, I will be very, very grateful. All right, it's New York City. I got to get out here. I got to go and do some stuff. I love you all and I will.
- [127:43]
Unknown
See you all on Friday.