← The Peter McCormack Show
The Peter McCormack Show
What is Bitcoin? With Parker Lewis, Robert Breedlove & Vijay Boyapati - WBD265
01:31:27
Location: Squadcast Date: Tuesday 22nd September Company: Unchained Capital, Parallax Digital & Senior Software Engineer Role: Head of Business Development, Founder & Peach If you ask 100 people what Bitcoin is, you will likely get 100...
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- [00:02]
Robert Breedlove
Of anything I've ever looked at in my life, I would put bitcoin as near as inevitable as I could.
- [00:10]
Peter McCormack
Hello there from the United Kingdom.
- [00:12]
Vijay Boyapati
How are you all?
- [00:13]
Peter McCormack
Welcome to the what Bitcoin did podcast.
- [00:14]
Vijay Boyapati
Which is brought to you by the mighty Kraken.
- [00:16]
Peter McCormack
The best place to buy, sell and trade bitcoin.
- [00:19]
Vijay Boyapati
I'm your host, Peter McCormack.
- [00:20]
Peter McCormack
Today, listen, I've got a monster show.
- [00:23]
Vijay Boyapati
I've got Parker Lewis, Robert Breedlove and Vijay Boyaparti asking the perennial question, what is bitcoin?
- [00:29]
Peter McCormack
But before that, I do have a.
- [00:31]
Vijay Boyapati
Message from my amazing sponsors. So, first up this week we have BlockFi, the future of Bitcoin and financial services. Now, with BlockFi you can open up an interest account and start earning on your bitcoin. Now, I'm a customer, I have been for nearly a year now and I've nearly made a whole bitcoin in interest.
- [00:47]
Peter McCormack
Which is very, very cool.
- [00:49]
Vijay Boyapati
Also with BlockFi, using Bitcoin as collateral, you can take out a USD loan and you can also fund your BlockFi account directly from your Bitcoin wallet. And with the BlockFi mobile app, you can now fully manage your account on the go. They have got some other amazing things coming later this year. The team is working on some huge things I can't wait to tell you about. But if you are interested in checking out BlockFi, I do recommend you do your own research then head over to blockfi.com which is B L-O-C-K-F I.com Also, we need to talk about Kraken, my favorite place for buying and selling bitcoin. It is the only place I use for buying and selling bitcoin. Now. Why? Why do you do that, Pete? Well, they are consistently rated the best and most secure cryptocurrency, exchange and security is really, really important to me. They also have the best in class in customer service. So if you've got any issue, whatever it is, wherever you are, whoever you are, if you reach out to them, they're going to get that sorted for you. And if you want to start trading bitcoin, then they have every tool you could possibly need, whatever your level, experience. If you sign up@kraken.com it could not be easier to get going to get started with trading bitcoin. Also they have this beautiful mobile first app called Kraken Pro which allows you to buy bitcoin on the go. With their margin trading futures and OTC desk, Kraken really has every option covered for you. There is no Better place to trade bitcoin. You can find out more@kraken.com or download the app. It's available on the iPhone and Android. Just search for Kraken Pro, which is K R A K E N P R O. Okay, so onto the show today and it's an insane lineup. Now, what is bitcoin? Is sometimes the most difficult question to answer because there's so many people, it's so many different things and you can't always get a consistent response. I find it myself when somebody's like, well Pete, what is this bitcoin thing? And I'm like, well, it's this or it's that. It's a medium exchange. Well, it's also like a hedge against inflation. Like it can get quite complicated. Now depending on who you are, you might just see bitcoin as a speculative tool or a hedge against inflation. But there are people in the parts of the world that desperately need bitcoin for its censorship and caesarship resistant properties. If you're in Caracas in Venezuela, your use case might be very different for someone in New York, which might be very different from someone in Belarus, which might be very different from someone in Bedford. So to discuss this question, I asked my three favorite bitcoin writers to come on the show and dissect it. So if you don't know Parker Lewis, Robert Breedlove and Vijay Boya Patty, then do check out the show notes and go read some of their stuff. Honestly, mind blowing stuff, especially go and read Vijay's bullish case for bitcoin. We also made a show about that.
- [03:24]
Peter McCormack
So you should check that out too.
- [03:25]
Vijay Boyapati
We also get in some broader issues regarding money, what it is, where they feel like bitcoin is heading and what.
- [03:31]
Peter McCormack
The road to hyper bitcoinization looks like.
- [03:33]
Vijay Boyapati
So yes, this is another monster episode I hope you enjoyed. If you've got any questions or any feedback, you can reach out to me. My email address is.
- [03:39]
Peter McCormack
Hello.
- [03:39]
Vijay Boyapati
What bitcoindid.com also my other show, Defiance.
- [03:42]
Peter McCormack
That's it.
- [03:42]
Vijay Boyapati
Defiance News. The first two parts of my series about Ghislaine Maxwell is out. That's proving really popular. It's a really solid series so far.
- [03:50]
Peter McCormack
Part three will be out on Monday.
- [03:52]
Vijay Boyapati
Please do go and check that out. And outside of that, have a great weekend and I'll see you all next week.
- [03:58]
Peter McCormack
Vijay, Parker, Breedlove, how are you all?
- [04:02]
Parker Lewis
Good, I'm doing well. Pete, good to see you again.
- [04:05]
Yeah, doing well. Thanks for having me on and looking forward to catching up with both Robert and BJ as well.
- [04:10]
Robert Breedlove
Good to be here with you guys. Thanks, Peter.
- [04:13]
Peter McCormack
Well, listen, thanks for coming on. You're all people I obviously respect very well. I appreciate all your work. You've all been on the show before. Listen, I wanted to cover what seems like a simple topic, but I also think it's quite a big topic because you know what I'm like. I always talk about my friends down the pub and I often get stuck on the most simplest question about bitcoin, like what it is. And I know it sounds crazy, it should be really easy thing to explain, but actually a lot of the conversations we get into about bitcoin can go in multiple directions, multiple rabbit holes. I have actually, Vijay, been stealing one of your lines recently that it's gold with the magical properties of teleportation. But I kind of want to get into kind of what it is, what it really can be and what it, what it all means to us. So I think, I think a good starting point is just to put you all on the spot again. We'll start with you, Vijay. And if you end up repeating what you said to Tom Woods, I don't mind. But kind of what is bitcoin?
- [05:08]
Parker Lewis
Well, the simplest explanation I always give is that it's a, it's an asset and it's scarce and it's, it's like gold, but it's digital. So it has the added benefit that it can be transmitted digitally. So it's gold. With teleportation built in, that's usually the first explanation I give. And you know, it's not a perfect explanation, but I think it really covers the fundamental core of why bitcoin is valuable.
- [05:39]
Peter McCormack
Parker, yourself, same question, mate.
- [05:41]
Parker Lewis
So I think about probably at its simplest term or when I start I tell people that bitcoin is money and that it today doesn't operate or behave like people are used to interacting with their current form of money or what they have associated with money. But that from a first principles basis and what bitcoin will be on a day to day basis, I believe it is today, but that it will increasingly have those properties that people associate money with today. Bitcoin will grow into that over time and it will be an evolution. And really one of my favorite quotes and Vijay is somebody who I, you know, kind of when I was distilling my own thoughts, you know, probably like first safe, you know, first and second people being safe in Vijay. But one of his great quotes was something along the lines of people deride bitcoin because of its volatility as if something can go from nothing to an entirely stable form of money overnight. And so that there's a distinction between how we all kind of historically have thought about the role that money plays versus how bitcoin behaves on a day to day basis versus its properties. But really at that most simple point, it is money and it will kind of evolve into thinking about it and behaving in ways that we associate money with today. It just will take time to do that.
- [07:00]
Peter McCormack
And Robert, you finally on that first question.
- [07:03]
Robert Breedlove
Yeah, I think this is the perennial question and Bitcoin is clearly a lot of different things to different people at different levels of analysis. So the, it, it really is a rabbit hole. But I, If I had 30 seconds to describe Bitcoin to someone, I say simply that it is an insurance policy on the legacy financial system. So such that the more dollars they print, the more valuable that policy becomes. Because throughout history we've seen repeatedly that fiat currencies sort of end in one common demise, which is hyperinflation or some other form of implicit default. And in that respect, I think Bitcoin is kind of a true barometer for the health of that financial system and an increase in its price is a higher likelihood of the collapse of the traditional system. So I say that in 30 seconds and tell people just to get some, just in case something happens, right, because people understand 2008, people understand the Great Depression. People know there's something wrong even if they can't articulate what it is. And I try to just explain and position Bitcoin as an insurance policy on that something wrong.
- [08:13]
Peter McCormack
See that's really interesting though because we've had three quite varied responses there. Vijay, you've essentially talked about Digital Gold park, you've talked about money. And I understand it's kind of the same thing, but I think people think about money slightly differently. They think about it as when they're shopping and they're buying things. And then Robert, you talked about the hedge and again, the hedge is really important. I just had an interview go live today with Lynn Alden and where I don't know if any of you saw our article this week talking about, she's looking back at the last hundred years and it looks likely that a devaluation event is going to happen over the next decade. And I'm with you, Robert. I often talk to my friends now about the fact that it is a hedge against, you know, systemic issues within the monetary system. But back to you, Vijay. I did in preparation, listen to an interview of yours with our mutual friend Stephane Lovera. And you talked about a lot of people misunderstand the term cash. We talk about bitcoin, could be money, it could be cash, but they misunderstand cash because they think it has to be a medium of exchange first. Do you want to talk about that point?
- [09:18]
Parker Lewis
Sure. I mean, I think the word cash, people sort of assume it means something that is very stable in value and you can go to your local baker and use it to buy some bread. But cash also means a bearer instrument, something that's valuable in and of itself. It's not an obligation. Where you go, you take the obligation to another party, a bank, for instance, and say, can I get the thing that's valuable? So an example of this is gold is a bearer instrument. If I give you a gold coin, you have the thing that's valuable. That's different to if I give you a certificate which says you can redeem this certificate for a gold coin that is not a bearer instrument. And when I, you know, this controversy comes up because people point to the satoshi's white paper and say peer to peer digital cash. And that means that he intended it to be exactly like the dollar and it should be low transaction fees and whatever. I take it to mean it's an electronic bearer instrument. It is something that is valuable in and of itself. When you have the bitcoin, you have the thing that's valuable. So that's, that's kind of how I think about cash. That's the aspect or the meaning of cash that I think is most important when we're thinking about bitcoin.
- [10:43]
Peter McCormack
Yeah. It's interesting you say about the white paper because I often think that it isn't the cash bit that is always misleading. I actually often think that the part that misleads people in the white paper is when it talks about e commerce and the issues with e commerce. And I think that's what people, a lot of people end up ended up thinking bitcoin was for, for kind of online digital transactions and probably in their head then considered it should be of any size. Would you say that's like a fair observation?
- [11:13]
Parker Lewis
Yeah. I mean, the thing is, satoshi, when you look at his writing, when you. He wrote a lot of things and, and when anyone writes a lot of things, some of those things are going to contradict each other a little bit. That' the nature of the game. It's hard to be consistent over sort of a large body of writing, especially when it's like informal email and so forth. And the Thing is, I think with Satoshi, he solved this really fundamental problem of computer science. And it was a brilliant thing that he did. But I think people then assume that everything he wrote is correct. I don't necessarily think he had figured out all of the economics. He sometimes talked about bitcoin in terms of gold, and sometimes he talked about it in terms of commerce. But if you think about the rules that are encoded, the consensus rules in bitcoin, it's just, it's not suitable for commerce until it's sort of stabilizes in value because there's this huge opportunity cost of relinquishing it in trade until it's widely adopted. And when it becomes widely adopted, then its purchasing power is going to stabilize. It's not like bitcoin can go to infinity. It goes to some level where most people on earth have some stake in bitcoin, and at that point it's going to stabilize and then it becomes suitable for commerce. And that's when you're going to start seeing people use it as a medium of exchange. Now, there are some counterexamples to this. There are cases where people use it in commerce because the alternative is far more costly or risky. So for instance, buying drugs online, you're not going to use PayPal for that, right? So even though there's this opportunity cost, you're willing to pay the opportunity cost because you don't want to go to jail. And I think in the beginning, bitcoin's usage was dominated by things like that. Silk Road was one of the early businesses. And so I think a lot of people, especially libertarians, you know, I count myself a libertarian, a lot of libertarians saw that and thought, okay, this is for commerce. It's obviously for commerce. Look, people are using it to buy drugs. But I think that was kind of jumping to a conclusion a little too quickly. And it wasn't a good example of how things would play out with merchants in general. And I think if you look at merchant adoption, it's pretty disappointing. And this is even with the efforts of people who are going out evangelizing bitcoin to merchants saying, this is great, this is better than a credit card. You know, Roger Ver spent years and years doing this. He's still doing it with bcash. And really it's. There's no uptick, there's no usage. Because why would you adopt something like bitcoin as a merchant when 99% of your customers don't have any? What is the benefit? What is the benefit to the mental cost you have to pay to figure it out and set up a new payment processing system. The benefits, pretty low. So my view is that kind of stuff only happens when, you know, 90% of your customers have savings in Bitcoin. Then there's a huge incentive to accept Bitcoin and merchants will be jumping all over themselves to set up payment processes which accept Bitcoin and figure out the lightning network and that sort of thing.
- [14:48]
Peter McCormack
No, and it makes sense because there are people who are using bitcoin day to day. I invoice in Bitcoin. I'm sure, Parker, there's certain things that are done with bitcoin because we're in kind of like a part of a circular economy of this which will expand as more people come into the system. But we also have the markets which bitcoin suits. You talk about drugs and such. We have the dark markets. Those markets are built up and suited the trade for that. But what you're essentially talking about, there is no, there is no need. There is no. The kind of cost benefit isn't there for kind of Main street retail to have that right now. But that makes sense. And Parker, we, we did a long show about the nature of money for my Beginner's Guide to Bitcoin. I can't remember if I told you, but like, if you. Outside of the YouTube numbers, that was the biggest show of the whole Beginner's guide of all 19 episodes was Parker Lewis.
- [15:39]
Parker Lewis
I actually, I didn't know. You did tell me that it was popular. I didn't know that it was the most popular series. But I do think that part of that is because it goes, you know, into my initial question about what bitcoin is, because my, my explanation, like the next layer down, I think gets to what BJ's was, which is most people, they don't even. They walk around and they never even think about why. Why do all these people accept the dollar or the euro, right? They've never had to question those assumptions. It's just always been the case and that it's an assumed default and what bitcoin. And I think one of the best things about it is it's causing people to have to ask those really fundamental questions. Because when they think about, well, what is bitcoin? And they think about, well, is it for commerce? Is it gold? I think the first question that they have to ask is, well, what is money? And why do all these people walking around take this piece of paper or a digital representation of it? And as they start to ask those Questions, and this was one of the critical pieces of my path is that I first had to unlock because most people, if you explain gold to them, most people don't think of gold as money. And I didn't. And that was one of the things that safe helped me understand, which just at a very root level, why gold was valued and why it was valuable as a monetary medium. Because somebody will not accept a form of payment in a currency if they don't consider it to be a value or ultimately to be money. And so I think that when we think about that in the context of bitcoin relative to gold or bitcoin and what it will be used as or for commerce is that, and I completely agree with Vijay, that as the population density of bitcoin holders increases, the volatility will go down kind of over time as part of that process. And just naturally a greater number of people are going to be accepting it in their stores or if you're invoicing it as a shipping business, whatever it may be, that early on it will be more niche use cases because the method of payment is that much more valuable that they otherwise wouldn't be able to facilitate the transaction potentially. Like rather than paying PayPal 7% fees, maybe you'll facilitate a payment cross border with bitcoin. But realistically, somebody has to first understand why they want to hold bitcoin and why they should think about it as money before they're then willing to accept it at their place of business. But as more people do that then you're likely it's like, I don't think it's not going to all just happen at once. It's that volatility is going to decline as more and more people hold it. And as more and more people hold it, the probability that you're going to walk into a store and someone's going to say, oh, you can pay me in bitcoin or in dollars, that that will. That over the next, you know, I think in two, three, four, five years will become increasingly prevalent, but the volatility of bitcoin will decline as part of that process.
- [18:38]
Peter McCormack
So that's really interesting. A couple of points in there as well. So Vijay was actually, maybe it's by virtue of others, but was the first person to teach me about the value of bitcoin as money. And it was the chart within your bullish case for bitcoin series which explained the different properties of money. And it ranked fiat bitcoin and gold. And that was a real eye opener for me in kind of understanding why bitcoin is so important. And then, Parker, when we made our show, we went into the history of money and what money is. And I guess what I'm getting at, Parker, is I think a lot of people don't really generally think about money too much in terms of intrinsically what it is. I think a lot of people, it's like breathing. It's just like a natural thing for them. They spend, they don't think about it. But with bitcoin, there's a real need to actually try and understand what money is, to try and understand the money supply, to try and understand what different types of money are. And getting people to take that journey sometimes can be quite difficult.
- [19:35]
Parker Lewis
Yeah, I think it's one of those things where I think sometimes there's a reaction where if you ask somebody that question, like, what is money? Why is the dollar accepted by 300 million people, if not a billion people all over the world? In some ways, it frustrates people. It's like, what do you mean? What do you mean, what is money? They don't even have the context to be able to. They describe it in terms of, well, it's what I get paid in and what I pay. But it's like, no, no. Why do people value it in the first place? What are the properties that create the inherent demand? And naturally, people, when they start to first think about it, if they were to say things, they'd say, oh, well, because the government gives its value or because guys with guns give it value, or because it's a collective hallucin. You know, basically it's just a collective belief that we all. We all think it's money and that, you know, because bitcoin, because bitcoin is what it is, and because people are going through this process in their own way, and oftentimes something clicks for a reason that it. That it does differently for somebody else, that they see the price rising, they see more and more people being engaged, and that eventually they just can't ignore it. And that as soon as they can't ignore it, as soon as they start to scratch the surface, and I think Michael Saylor is a perfect example of that. I was like, if you're really going to get into it, that the real rabbit hole is what is money? And as soon as you start going through that process, you naturally have to. If you're going to really think of it in that grain, you're going to have to start going down to a really root principle kind of analysis of, like, what was in Vijay's bullish case for Bitcoin, where he starts stacking them up next to each other and saying, okay, well, what are the properties? And safe also does a great job of this in his book of comparing them side by side, because it's one of the realizations that I came to, which is money is never absolutely. It's always relative. And it's a recognition that it's a tool that man invented to help facilitate exchange and the intermediation of trade. And that in that world, no good is going to quote, unquote, out be perfect, but it will be more functional. And it will be more functional based on an objective set of properties, which Vijay did a great job in his article of just laying out kind of the various different characteristics that you should think about when you're thinking about a monetary medium.
- [22:02]
Peter McCormack
And perhaps some people need to go through the pain. So I don't know if you saw it. It was quite interesting. Don't know if any of you saw this. And you can jump in, but with Apple, you get charts for your podcast rankings. And about three weeks after the news broke of the crash of the currency in Lebanon, my show was the number one financial show in the country, which for me was really kind of like a bit of an eye opener. But like, okay, that kind of makes sense because if you're going through that pain, you might hear about something like that. That might be the driver that brings you into it. And, Robert, that goes to what you said. It then becomes more of a hedge against inflation. And sadly, it might be a bit too late for people in Lebanon. But if you keep. Perhaps Turkey may be a better example. Okay. Their rates of inflation are more insidious. Insidious than, say, the U.K. and the U.S. i think they're at about 12%. But that may be.
- [22:50]
Vijay Boyapati
That may be the kick that you.
- [22:52]
Peter McCormack
Need to realize, like, I can't keep holding this. This weak asset.
- [22:56]
Robert Breedlove
Yeah, it's a great point. And I actually like to encourage people to pursue that question. What is money? Because that is the rabbit, I think that takes you down the proverbial Bitcoin rabbit hole and asking that question. As Parker said, it's so fundamental. We think about money every day, whether we want to or not. You just have to, you think in dollars. Right. And it's almost like the software of money is integrated to the software of our mental machinery. Right. Like our unit of account sort of defines reality for us in a lot of ways. And it's almost like asking a question like, what is water in organic Chemistry, like water, just touches everything in life. So by asking that question, you end up interacting, interfacing with all aspects of life. And you know, back to Vijay's point in terms of adoption for payments, I got this from Vijay's work was, I think it was William Jevons, it said gold was adopted along a very particular monetization path. You know, first it was a collectible, then it was a store value. Then after it had accreted enough value, it began being used as a medium of exchange. And then finally, when it's widely adopted enough as a medium of exchange, people actually start to denominate trade and prices in the money. So I think that is the best analogy for what Bitcoin is doing. Clearly it's being hoarded right now, used as a store of value. And then as it accretes more value, there's more incentive for early adopters and holders to use it as a medium of exchange. And the other, the thing about dollars is interesting, like people do kind of short circuit when you ask them that question, what is money? If they haven't thought deeply about it. But I always like to draw their attention back to dollars. You only think in dollars today because they were once redeemable for gold, right? The free market selected gold is money because it best satisfied the properties of money, which I compress down to five. I know people do five to 15. I say it's divisibility, durability, recognizability, portability and scarcity. The only reason dollars were introduced as a money substitute for gold is because gold lacked in the divisibility and portability departments. So paper currency was introduced as a means of satisfying these shortcomings of gold. And people began to think in dollars or euro or yen or whatever it was, but only because it was redeemable for a free market selected money. Then it's as if we had this bait and switch pulled on us by government, where they gradually increased money supply relative to reserves. And then finally we moved on to the zero reserve standard we call fiat currency today. It's this long game ledger domain or this long con by governments is the only reason people think in dollars today. And I think that's supported too by the total absence of this, this question being addressed in mainstream education or mainstream curriculum. Like no one. There's no zero Austrian economics taught in school at all. You go from kindergarten to a master's degree at Harvard, you'll never hear one peep of Rothbard, Mises, Hayek, any of these guys. And it seems to be a Bit deliberate because the state is very closely intertwined, to put it nicely, with the university system. So it's a big deal. I don't think many people understand it necessarily that gold does make the world go round. It is still prime money in the world today. And if you don't believe me, just look at central bank balance sheets and their buying activities. And all of the abstractions built on top of that are really just. They're false. They're not actually money, they're debt. So bitcoin as a first principle is disruption of money. And that's why I think it's such a hard time for people. People have such a hard time getting their head around it.
- [26:53]
Peter McCormack
Vijay, have you added Austrian economics to the homeschooling syllabus?
- [27:00]
Parker Lewis
Well, I'm sort of doing this hybrid homeschooling. My daughter is going to school, but there's an actual school. I'm really just supervising zoom calls. But, you know, I'm, I'm, I'm going to expose her to Austrian economics when she gets to a ripe enough age. She's only four years old right now, so.
- [27:21]
Peter McCormack
Robert, one thing I want to add into that as well. Like when you heard about what happened with MicroStrategy, I'd love to know what your reaction was, especially having read a lot of your work recently, because I felt like that, I mean, all three of you really is a real validation of everything you've all three stood for and written about. But, and you, Parker, as well. The, the gradually then suddenly is now becoming a meme for actions such as this. But I spoke with Plan B shortly after he released his updated S2F model, his cross asset model. And we kind of discuss what Phase five might be.
- [27:59]
Vijay Boyapati
And we kind of thought, well, maybe.
- [28:01]
Peter McCormack
It'S nation state adoption, but at no point did it even cross our mind that it might be treasury allocation and then incomes. Microstrategy, not with just a small purchase. I think it was 1.8% of the supply across kind of like two phases. Just first with you, Robert, like, what was your reaction to that? Did you feel like it was validation? Did. Were you surprised, or is this something you expected?
- [28:26]
Robert Breedlove
I would say it was sudden. I didn't expect someone to jump in to the degree that Mr. Saylor did. However, I think, yeah, it's a huge validation for all three of us. We've all. And all bitcoiners in general, I think, have been beating this drum for a long time that the game theory of bitcoin sort of operates at all scales right we're seeing it adopted first kind of the grassroots level, but then at some point at the highest level, a central bank would be forced to adopt it at some point again as an insurance policy against its success. But in between there's all types, many different sizes and types of capital pools. And I didn't see this one coming necessarily, but it makes all the sense in the world given Mr. Saylor's business, his cash position and what's happening in the world today. You know, he, he makes a great point that even if it, even on a gold standard and you're only inflating at 2% a year, you know, that's basically getting your value cut in half after 35 years. And he's looking at, at making investments on a 100 year time horizon. So when you're looking at things in that respect and we see this, this perpetual violation of private property rights by governments through monetary inflation, it's like what else could you invest in? You have to invest in the one asset that has definable certain scarcity and that can't be changed by the results of any government decision. So I think it's a huge validation for the space and I also think it's an escalation of the game theory. And I tweeted about this. So MicroStrategy is one of 41,000 listed companies globally that collectively control about $80 trillion in balance sheet. I think they have about 5 trillion of that is liquid. So call it a 5 trillion dollar liquid treasury. Saylor bought 38,250 Bitcoin only I think the number was 520 other listed companies globally. Of the 41,000 could possibly make that same buy based just on bitcoin supply constraints. Assuming 20 million Bitcoin total, so less than 1% of the listed companies globally could possibly buy that much Bitcoin just based on bitcoin supply constraints. So it's, it's escalating this game of musical chairs, right, where all of a sudden this corporate treasury has made it a part of their strategy and they've also de risked it for other corporate treasuries and it's, it's pushing others to adopt similar courses of action or face, you know, financial detriment. So that I just see this game theory sort of permeating itself upwards from the grassroots level to now we're in the corporate level. And I would say within the next decade you'll see it at the central bank level.
- [31:17]
Peter McCormack
What about yourself, Vijay? What did you make of it when you saw it I mean, it was.
- [31:23]
Parker Lewis
Obviously very exciting to see a public company invest such a large fraction of their balance sheet in, in bitcoin. And, and it was really gratifying as well to. I, you know, I messaged Michael and, and said it was really cool to hear that you shared my article with the executive team company. That was really cool. And he replied with some nice things to say. And obviously he's also been influenced by Parker and Robert as well. Those guys have written some really insightful and fantastic stuff, which has influenced me too. I think the biggest thing I take away from it is that it sets a precedent that public companies can do this and it reduces the stigma of it. Because, you know, I'm old enough to remember when there was a stigma around bitcoin, that it was only used for buying drugs online. And U.S. senator Charles Schumer declaimed it on the floor of the US Senate as this, you know, criminal tool. So I, I think some of that stigma, most of that stigma I think by now has gone away. I think it's widely recognized that this is a very powerful tool and seeing a US Public company invest is going to further reduce that stigma. I'm a little hesitant to say that this is going to cause a stampede because when you, when you look at Michael's background, he's. He has a history of pretty unconventional bets. I mean, the guy made $30 million selling a domain. And that I actually take from that story. What I thought was interesting about that story about selling a domain for $30 million is that he had an experience early in his career which helped him understand digital scarcity. He was already primed for this. He was already ready to understand why bitcoin was valuable. He had a mental model. I think most CEOs, publicly traded companies aren't going to start with that mental model. It's going to take a few other companies dipping their toes into bitcoin. Maybe Square is the next one, maybe Jack Dorsey, because he is such a big fan of bitcoin, maybe he pushes Square to invest some, some, some of their treasury in, in Bitcoin. But, but for most CEOs, I think they're going to have to hear about it from a number of people that they trust before they're willing to consider this. So I don't see it as an imminent stampede. This is something I've talked about a little bit, is the psychological process that takes place before someone is willing to even care about Bitcoin, you know, let alone invest some of their savings in it. And I, and I call this the number of touch points that a person has to have, number of people that they have to hear from talking about bitcoin with some interest before they, the light goes off in their head and they think, oh, well, maybe I should get involved in this. And typically it's a number of touch points. I've heard about it from a few people. Combined with the price rising, those two factors are very powerful in bringing new people into bitcoin. So I think, you know, this bull market may see a number of public companies get interested with the price rising and seeing that there are other CEOs willing to do this. But that process could take a couple of years. I don't think it's going to happen overnight.
- [35:03]
Peter McCormack
Yeah, Parker, I want to ask you the same question, but I just want to throw a couple of other points in there as well that you might want to comment on. So again, I mentioned, I interviewed Lynn Alden yesterday and that went live today. One of the things she said that was very interesting about MicroStrategy is they've also essentially created a Bitcoin ETF for those people buying, buying their stock. But another point that's kind of stood out to me is that if more companies invest in bitcoin like Microstrategy, potentially they create a legal moat around bitcoin which makes it more difficult to regulate away in that it will cause way too much harm to the companies who have actually invested in it. Do you, do you see that as relevant?
- [35:48]
Parker Lewis
Yeah, I definitely do. And echoing Vijay's thoughts on this, that probably my first thoughts was, man, that's a lot of bitcoin. And then I thought about the people that were on the other side of that Trade and said 10 Hail Marys for microstrategies, that they just scammed a lot of people out of their bitcoin. But then I thought about the, the legal and regulatory cover because I think that on the one side it is validation, but I think more importantly to bitcoin, it is a public company. And Michael Saylor mentioned this, I can't remember which podcast was on, but he talked about there's disclosure requirements, there's processes that they had to go through. I believe they're audited by kpmg. And so I don't like to think about the institutionalization about bitcoin, but I do think that there are important markers that make it very difficult to go back and that provide cover. And while realistically there should already be sufficient cover when you have the squares of the world not only having cash App, but advertising to buy Bitcoin on Joe Rogan's podcast. And you have companies like the CME Trading Futures and ICE owning back that there already is a lot of COVID But this is just another kind of notch on the belt. And I think it is meaningful for those reasons. And I also think it's just meaningful for, you know, one of the things that, that Robert mentioned is that probably to me, one of the most interesting things about MicroStrategy was that they picked this up in 2020 and they went hard down the rabbit hole. It wasn't just one individual, it was one individual with a board and a company and shareholders and having to get consensus and doing that in a fairly quick timeframe, you know, and I, and again, I agree with Vijay in the sense of this isn't just going to open the floodgates on the margin, it is going to cause a number of companies to start going down their own process. And that one of the best things about that is, and this is what Robert mentioned, but that Austrian economics just isn't taught in, you know, I got an economics degree and it probably is taught, you know, it's not fair to say it's not taught anywhere. But realistically, it's not part of a standard economics curriculum. And that if any of us, you know, any of us here. But microstrategies is a perfect example if you pick it up later in life or with some world experience, we're all generally educated on the other path, the other side, which, you know, I think once you start to learn about astronomical economics, it's not, you know, just an intellectual debate. You compare it to the actual real world experiences that you've had and you've, you've had one education and you're getting a second one and you're, you're having to ask yourself, because there are real life consequences to which one is correct with objective results. And that because we already have the benefit of that past education, we can look at something fresh and be able to more aptly evaluate it. And the more and more people that do that continually come out on the side of understanding why this other approach is a better approach based on objective facts. And so I think the combination of them being a public company, the combination of there being multiple people that had to gain consensus within an organization because they do have exposure and they do have liability. But then I do think it also provides that regulatory cover of a public company doing it, signaling to other public companies that they can but that going through SEC scrutiny, auditing from Big four Auditors that it does just mainstream and reinforce that we're not all just a bunch of criminals and drug dealers.
- [39:21]
Peter McCormack
I'll open the next one up to any of you. Just like, put your hand up if you want to answer this, because I'm not sure who's best to answer, but are there any potential downsides to mass adoption of bitcoin by companies? Is there. Is anyone looked into this, any consideration for the distribution? Could there be any negative effects of this?
- [39:41]
Parker Lewis
I mean, so one. One thing that I would say is I believe that it's inevitable.
- [39:46]
Vijay Boyapati
Okay?
- [39:47]
Parker Lewis
So we can. We can argue the merits of whether or not. I don't see the downside, first off. But if you have a form of money that has a finitely scarce supply and that money is a very basic necessity, one of the ways that I distill it for people is if you stop to think about how clean water gets to your home every day, or how you reliably go to a grocery store and you have tens of thousands of options of food on the shelf and how gas, you know, magically appears at the gas station every single day. The only reason that comfort is possible is because of the coordination function of money. And then the extension of that is money is a very basic necessity. And if there's this thing, Bitcoin, that has by an order of magnitude stronger monetary properties that practically everyone in the world is going to demand that. So I think that, you know, the reality of debating whether or not it's good or bad, I think more people being able to speak the same language of value inevitably will be good. Are there some kind of potential landmines in terms of privacy and surveillance and things that we need to not kind of lose sight of? Absolutely. But if we're just dealing in objective reality, I believe it will happen. So it's just a matter of how do we kind of manage any potential downsides of which I expect there to be few, and that positive externalities to massively outweigh any potential negative consequences of having a publicly shared ledger of transactions for a global monetary system.
- [41:26]
Peter McCormack
Robert, you wanted to add into that.
- [41:28]
Robert Breedlove
Yeah, I'll just add. And this is sort of a more generalized risk that I think about with Bitcoin is actually the timing of hyper bitcoinization or worldwide adoption, whatever you want to call it. I think if it actually, like, if it were to happen today, for instance, if all. If you could flip a switch and bitcoin would just accrete all the value that it would at maturity, it would actually exacerbate wealth disparity because it's in so few hands today, but it's becoming more widely distributed with each price cycle. So I think there actually is a risk there that this tool that is designed to in a way, disrupt the monopoly on money, which is the driver, one of the chief drivers of wealth inequality in the world. Wealth inequality clearly is a natural phenomenon in a capitalistic system, but when you're using monetary inflation to artificially siphon wealth off those at the bottom, you're continuously dispossessing people in the economic hierarchy. So it actually exacerbates wealth disparity. So I think kind of in a weird way, Bitcoin, if it's, if it, if we bitcoinize too quickly, this tool that ultimately promises to alleviate wealth disparity and increase wealth generation could actually exacerbate wealth disparity. So that's an interesting risk to think about. And the other thing is if today people don't understand money as we've clearly laid out. So if banks were to adopt bitcoin pretty rapidly and rehypothecate and run fractional reserves on top of it and somehow keep their customers satisfied, which I don't think you could maintain that illusion for long, but I think you could, you could financialize Bitcoin in the short term. I think certain banks could do that. Like, you know, customers don't understand today that even the dollars in their bank account aren't necessarily held at the bank. Right. Everything's run in a fractional reserve. I think you could perpetrate something similar with Bitcoin in the short run, which could present downward price pressure on it and, you know, cause other complications. So those are a couple of risks that I think about with more mainstream adoption.
- [43:37]
Vijay Boyapati
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- [46:40]
Peter McCormack
Just moving on from this, I kind of want to move on to kind of what can this really be like, where can this really go? I'm sure for somebody like yourself who's been into Bitcoin for a long time, you always hoped to see the growth, you always hope to see the expansion of bitcoin and the adoption of bitcoin. But perhaps it has even exceeded your expectation by now because there were so many risks, there's so many opportunities for it to fail or it to be regulated out. But here we are, we're having this conversation from people all around the world. We're talking about an asset with billions, like hundreds of billions in value, but also at a time which is really set up well for Bitcoin. Again, I'm going to echo Robert's point about wealth inequality and refer back to my interview with Lynn Alden again. But she talked about the fourth turning and, and the reason she talked about that is that in the kind of boom and bust cycles, we're in a essentially coming to the end of a super cycle where wealth inequality, it's kind of like really, really growing. Especially with what's happening with the pandemic and the stimulus packages kind of exacerbated this. So we're in this really unusual time where we actually have a tool that we could have been in this situation with no Bitcoin 10 years ago, 11 years ago, just so Toshi hadn't upgraded this. We could have been in this exact situation, all doing whatever we would be doing with our lives, but not have this tool. So like, sorry, it's a big lead up, but how far can this go and like realistically for you and what's the realistic outcome here?
- [48:11]
Parker Lewis
Well, I believe Bitcoin will be the world's monetary base. I believe it's going to be essentially the same thing that gold was in the 19th century. It's going to be the foundation of a new financial system and all sorts of financial infrastructure is going to be built on top of it. That's what I think the end goal of this is. I'm not necessarily one who thinks bitcoin solves every problem, but I think it solves a very, very important problem which is a non inflatable, censorship resistant monetary basis that dramatically changes the way the world works. Because currently governments fund their operations through inflation. And if governments have to switch to funding operations through direct taxation, that inherently limits the scope of government because there's always going to be pushback. When people see money being taken out of their pocket. Inflation and taxation are quite different. Taxation, you see the money going out and people get upset. Like, there's a point where Your government takes 40 or 50% out of your paycheck and you reach for the pitchfork. But when they use inflation, people don't really understand that that's even happening. That money is being taken out of their pocket and given to someone who's in a privileged position, like a banker. And, you know, central banking began as a way to fund war. And for me, that's one of the big political issues that will help make the world a better place. If bitcoin becomes the world's monetary base is, I think it's going to be much harder to fund warfare. And that, I think is a tremendous boon to my children and my grandchildren and so forth. So that's what I'm excited about, is bitcoin changing the world for the better by limiting the scope at which governments can spend and distribute money to people who are politically well connected.
- [50:19]
Peter McCormack
When you talk about bitcoin being the monetary base, essentially a bitcoin standard, similar to we have with the gold standard. The gold standard was something that was created by governments and it was something they adhered to. And eventually they ended the standard. Do you feel with bitcoin that we're in this unique position in that it's essentially a voluntary standard that you either choose to become part of or not. And essentially the gravity of bitcoin would kind of force you to. Because other people may say, well, look, I don't want to trade with you because you are not using bitcoin.
- [50:52]
Parker Lewis
Well, I slightly disagree with that. I didn't think government's creative standard, I. I think gold was chosen as money by the market because it was just inherently superior to everything else that was tried before. Seashells and cows and even silver and gold eventually triumphed because there's this network effect and it sucks savings in. People realize that they want to keep savings in the monetary good that everyone else uses. So it's game theoretic in a sense. You're sort of looking around saying, I want to keep my savings in something. What do I keep it in? Should I keep it in shovels? Should I keep it in fishing rods? No, I want to keep it in the thing everyone else wants to keep it in, which is gold. And so this network effect gets bigger and bigger and bigger. And I think governments just ultimately recognized that gold was the most demanded money, and so they Said, okay, well, that's what we have. We have a gold standard. And of course, government sort of manipulated the gold standard. They issued their own bills and said, these bills are redeemable in gold. So that's what you might call the classical gold standard, that a dollar or a pound was redeemable for a certain amount of gold. And nations traded back and forth these bills, but really what they were referring to gold underneath. So I think it has to be a market phenomena. And I think the same thing is going to be true for bitcoin. Bitcoin is going to be adopted by the market because it's so much superior to the alternatives, and it's superior to gold as well. The big disadvantage of gold is its physicality. It's. It's a physical object, which really it. It causes these problems of centralization of custody. If you hold a large amount of gold, if you're Rockefeller or JP Morgan and you have a lot of gold, you're not going to keep it under your mattress. You're going to put it somewhere where it's secure in a bank. And the problem with that is that banks are easily rated. It's very easy for a government to come in and say, look, all your gold is ours. Now, the fact that bitcoin is digital and not physical gets away from that custodying problem. People, if they want, at fairly low cost, can custody their own bitcoin. And if there's ever a question of lack of trust in a financial institution, you can pull your. Pull your bitcoin very quickly. The same was not true for gold. You would have periodic bank runs where people would lose confidence in a bank and then run down to the bank and try and pull out the gold. But I think the digital nature of bitcoin makes it so that centralized custodying is less of a risk than it was with gold.
- [53:48]
Peter McCormack
And yourself, Parker, how about yourself? How do you feel about right now? Like, if we went back a year, I used to see you every couple of months. I'd be flying over to the states and I'd always have a little trip to Austin and would catch up. And now I can't get on a plane. The world's a very different place. A lot of weird stuff's going on again. Feels like a. It's sometimes hard to celebrate it because you don't want to see people go through hard times. But we do have this tour a bit kind. Like, how far do you think this can go?
- [54:15]
Parker Lewis
Yeah, I actually. I missed the days. I think this time last year, we were In Wyoming. Yeah, we were eating ribeye and at a bitcoin hackathon. So the world has changed. But we'll get back to that hopefully someday soon. But I do, I agree with Vijay. I think that bitcoin will over time, and I probably more so than most people think it will be on a more accelerated basis than a lot of people, but that the entire world will shift over to a bitcoin standard and that bitcoin will be again, things will always be considered near money and that there will never be 100% adoption of Bitcoin as money. Everything is relative. And that ultimately through money, we are using it as a medium to facilitate a series of transactions or exchanges. And one of the ways that, or one of the authors and writings that helped me understand not just Austrian economics, but then also as it relates to Bitcoin, it was Hayek and a couple pieces the Use of Knowledge in Society, particularly where he talks about the function of a pricing mechanism. And that the pricing mechanism is really a channel of communication or a communication system in which only the relevant information is passed along. And it's essentially a filter. And one of the. I don't know if it's the example he uses, but it's one that I relate to. It would be like if a, if there's an earthquake in Chile and the copper supply chains get disrupted and you're a producer in the United States and you're building houses and it involves copper for telecommunications or whatever requires copper, that you may not know that there was an earthquake in, in Chile, but you know that the cost, something happened in, in the cost of copper and that you need to either charge more to your end customer substitute or do something else. But that, that's. That the price mechanism is really a communication channel. And that, you know, the realization that I had was that a pricing mechanism in a price system only emerges out of the common use of a, of a common medium of exchange or a common currency. That the pricing mechanism is the output of convergence on a common form of money. And that at the end of the day that is us all being able to speak the same language of value, that the value is an inherently subjective concept and that it is the common use of money that allows us to be able to objectively kind of gather to what value is or how we think about value, which is an inner subjective problem. So I think that kind of at that highest level it is we are all going to be using to 95% plus of the world the same form of money. And what that's going to allow us to do is in a more direct way than we've ever possibly been able to, to speak the same common language of value to more people. And that, you know, as Vijay mentioned, that the end result of more being, more people being able to communicate the same language. But then I think, as he pointed out, taking away that, that, that ability to, to cause distortion in that function, to allow a central bank or a government to intervene, to be able to print money, that that also requires that anybody that, that is voluntarily participating in the, in the monetary network, or not necessarily requiring, but will be the preponderance is that if you want to attain some of that form of money, you're going to have to deliver value in a peaceful way. Not to say in 100%. We're not, you know, I think naive, we don't live in a utopian world, but that more and more people will have that channel to cooperate and to coordinate because they will be able to speak a common form of language. And that kind of monetary standard will all be built on Bitcoin.
- [58:11]
Peter McCormack
So Bitcoin is the international language of cooperation.
- [58:15]
Parker Lewis
Yeah.
- [58:16]
Peter McCormack
Amazing. All right, Robert, you as well, man, what do you think? You've already mentioned hyper bitcoinization. Like what do you think right now I know you're a deep thinker about this stuff.
- [58:26]
Robert Breedlove
Yeah. I think it's very important to understand the history of government as largely this system that has time and time again plundered the Commonwealth through monetary inflation. Right. Every government gives in to the temptation to control money. They always manipulate the rules and supply to their own benefit and externalize all the costs onto society up to the point of basically social disintegration. Right. That was the fall of Rome. We see, you know, hyperinflationary events in Venezuela today and arguably far off from something similar in the more developed world. And I think in that context frames up Bitcoin's importance really nicely. Because Bitcoin, if you consider that governments continuously plunder their commonwealth through inflation, Bitcoin is basically plunder proof money. Right? It's money that cannot be easily confiscated directly because it's just, it's non corporeal. It's really hard to physically confiscate and you can't inflate it at all. So it completely eliminates stuff via inflation. And so in that respect, I consider Bitcoin in its distant future to become this base money for a global digital, non state economy. And that has two functions. Right. Like to Parker's point about providing us this universal Language of value or this channel of exchange that's totally free from the noise of unexpected inflation. It actually increases wealth generation because it's lowering the barriers to trade. And trade is what causes wealth, right? And it also reduces capital and wealth destruction, to Vijay's point, by defunding the war machine. Right? Like war is the most anti economic activity we can possibly engage in. We're literally mobilizing capital to go and destroy other capital. And so it's just totally maniacal and insane. So I think bitcoin and that grand sense sort of saves us from ourselves in a lot of way and really pushes us and forces us to become more economic and cooperative. And another thing I think about is the nature of like man has a sinful nature, right? As someone would tell you from a Christian perspective. And it's, it's the, it's actually greed, I think, that drove the game theory of gold, right? It's like everyone's looking to have their wealth stored in a medium that is least subject to compromise by others, intentional compromise by others. And that's what drove people to adopt gold, right? No matter what you did, you couldn't counterfeit it. Alchemists couldn't produce it. No one could inflate its supply no matter how hard they tried. So in that sense, I think bitcoin is interesting too because greed is what actually drives Bitcoin's market value, right? There's this huge incentive to hold it and hoard it and it also secures its network. Bitcoin mining is this purely capitalistic activity where the race for profit margins actually creates a larger and more robust and anti fragile network. So in that sort of, I guess, religious sense, I look at bitcoin as this system that converts the individual sin of greed into our collective salvation. So I think that's just a really interesting way to look at it.
- [61:52]
Peter McCormack
Damn. Do you, do you, do you think about like the road to hyperbitcoinization? Do you think about perhaps the collapse of modern governance? I mean, look, I'm a, I wouldn't call myself a libertarian like Vijay, but I'm definitely a sympathizer to the ideas. I've just never really, I've always struggled to really understand a society without government. Have you thought about the, the kind of road, hyperbitcoinization and perhaps that it might be a kind of like a bloody road that we might have to go through a period of turmoil to get there? Have you considered that?
- [62:27]
Robert Breedlove
I, I always point people on the subject to the book. We've probably all Read the Sovereign Individual. I think that's the most accurate portrayal of what I, the direction I think things would take over time. But the funny thing about government is that so effectively it started out as a localized protection racket, right? It's like we have the monopoly on violence so that you all citizens aren't violent against one another. We'll provide you this non violent means of dispute resolution called the rule of law. And that was meant to support trade and wealth creation. But the weird thing about that is when a government. So you're basically, it's the biggest protection group in the room. But when, when two protection groups conflict and one defeats the other, all citizens kind of want to go to the guy that won, right? So government has this inherently centralizing effect. And I, I think that that's what got us to where we are today, is that the state is that the biggest gang in the room with the most guns and violence. But they, they can only support their size because of fiat currency, because they're able to confiscate wealth at scale. So again, in that book, Sovereign Individual, it actually depicts a decentralization of those monopolies. So something looking much more akin to Game of Thrones or like old style organized crime where you have local mafias. I think that's kind of the direction we will move. But the counterbalance, all the traditional incentives to violence is we're living in a knowledge based economy now, right? More so, More and more. So there's a big disincentive to violence there from a nation state level and then two again, the unconfiscatability of bitcoin. It doesn't make as much sense to go to war or go into a gang war to try and defeat your enemy if you can't confiscate any wealth from them. Which gets into a whole nother aspect of bitcoin that's super interesting. Which is collaborative custody, multi signature solutions like what Parker and Unchained are working on. I mean these things were simply not possible with any monetary technology before. So it's this huge impetus for us to become again, more cooperative and economic.
- [64:50]
Peter McCormack
All right, that sounds like a whole show in itself, my man. I'll have to agree on that at some point. Vijay. Okay, so listen, I'm obviously bought and I've got skin in the game with all this. What do you think are our biggest hurdles here collectively as bitcoiners, but, but also potentially in terms of like all the different tools or options or things out there. What are the biggest hurdles for us to get us to this better place. Is it education? Is it technical? Is it apathy? Is it regulations? What are the things that the biggest hurdles for us to get over?
- [65:23]
Parker Lewis
I think it's just the size of the fiat on ramps. I think, you know, the, the biggest impediment to more money coming to bitcoin is the ease with which people can get their money into bitcoin. You still kind of need to, I mean, it's not that hard, but you still need to figure out going to an exchange and, and, and putting in a buy order and do I keep it on the exchange, do I keep it on a hardware wallet, that sort of thing? You know, I think something like a bitcoin ETF would help a little bit. I just view it as like the number of on ramps that you have is going to help Bitcoin, the ease with which you can get your money into bitcoin. So we have, you know, Coinbase, Square, Cash, Kraken, etc. I think it's going to help when the larger financial institutions see that the smaller institutions are making a lot of money from people buying and selling bitcoin. I mean, if you're a payment processor, you can't help but notice that square is making a lot of their profit from bitcoin. I mean, square is like a, you know, not particularly interesting or successful payment processor compared to the others in this space. It's not like it's dominant or anything, but they're making a lot of money from this. If I was Venmo or I was Stripe, I would, I would definitely be paying attention. And eventually I think the larger financial institutions going to see the amount of profit that's being made and that's going to increase the on ramps to bitcoin. So really education is great. It helps, I think, to get certain people down the rabbit hole. But ultimately I think most of adoption is going to be due to greed. People just want to be involved. And that's why you have these waves getting bigger and bigger where people have heard a little about, a little bit about it in the wave and so they're somewhat primed. Maybe they bought a little bit of bitcoin in the previous wave and then in the next wave they've seen their stake grow to something that's somewhat meaningful in their portfolio and they get really interested and they jump in because naturally they're greedy. And each wave sees a new batch of people coming in because of this. It's just you need to get to the place where the average person or my you know, my mother feels like it's something that she can do, it's easy for her to do and that process is just going to take time. I'm not worried. I'm extremely bullish on bitcoin. I'm as bullish as anyone I know. But I'm also not necessarily a person who thinks this has to happen overnight or that's going to happen in a couple of years, over the time period of 50 years. I'm extremely bullish. I have extreme conviction in bitcoin and it's something that I think is whatever bitcoin I have is going to benefit my grandchildren. But the process of opening these on ramps and the financialization of bitcoin I think is going to take time. So yeah, that, that, that time and on ramps would be my answer.
- [68:35]
Peter McCormack
How do you feel about that as well, Parker? Because Cash app is great. We also have the grayscale trust talks of fidelity creating a fund. I've heard that we have a lot of custody solutions now. How do you feel about this kind of range of onboarding solutions that maybe take people away from custody in themselves or operate in a node like. Do you think that matters? Do you think it's important that we have a lot of people at the grassroots level doing this? Is there a certain way that people should be bitcoining?
- [69:05]
Parker Lewis
I don't think that there's a way that people should be bitcoining. I think that there's are natural tendencies and propensities to do or to facilitate kind of a flow from. I come in, I know nothing, I follow price, I buy and then I start learning and understanding more about bitcoin and become more comfortable. And so there's a transition. And I think that realistically the best thing about bitcoin is that it's voluntary and that there are economics involved and that a free society will actively and ruthlessly compete to come up with the best ways not just to buy bitcoin but to secure it and for different use cases. Because I think that while there's a reason why the longer that people remain in bitcoin, the more likely they are to facilitate self custody. And that's kind of the way that we think about it unchained. Why we develop around multisig and try to put keys in the hands of our clients is because that's where we see the most mature bitcoiners ending their journey. But I also agree with Vijay that and I think it's really a function of the size of bitcoin as bitcoin increases in value, there's more capital being invested. And the more that Bitcoin is worth, the more infrastructure that can be built. And that Bitcoin, I think generally because of human psychology, is adopted in waves. And in some ways you can look at that as irrational and otherwise you can, you can look at it as rational that people are following a pricing system and a pricing mechanism and a price signal and saying, I don't know why I'm supposed to be buying Bitcoin, but other people are. I'm going, I need some of that. And that as people do that, then again, value increases, more people get sucked down the rabbit hole, more people understand it. But then also it's stealing mindshare away from a legacy monetary system. And as, as that process occurs more and more with more people's attention on it, the better technology gets and the better that the infrastructure gets and the wider the distribution becomes. And one of the ways that, that I describe it is if you think, because I think this came up previously, Vijay mentioned it. But when you think about gold as a monetary medium, it wasn't something that was agreed upon by governments at one point in time, gold was ore in the ground. And that as more people kind of found it valuable, whether it be for decorative or collectible reasons, more and more people owned it. As more people owned it then a monetary network was built around it. I think about where we are in Bitcoin today is Bitcoin is that ore in the ground and it's becoming money as we build the monetary network around it. And that monetary network is dependent on infrastructure. And that there naturally is just not going to be a one size fits all solution, but that more and more people, and I think, you know, just as, as, as Bitcoin experiences positive externalities from value, the dollar and all other fiat systems have a negative selection problem. As more people think about how like, you know, more people, like the stripes of the world, like Vijay mentioned, they're looking at square and saying, how are people going to be moving Bitcoin around in the future? Future? I have a skill set and maybe technology in place that I can use to be leveraged in that new monetary system, that it only gets better. And I think that while we're making certain investment decisions on our side around self custody, because we think it's where most people for the lion's share of their economics will be stored when they're holding Bitcoin, we're also recognizing that everyone doesn't get there overnight. And that realistically, just based on the Nature of money, that there's going to be various different applications and they're going to look differently, but that's going to evolve and only get better in time. As you know, 500 million people have bitcoin, a billion people, because just the competition will dictate that it will.
- [72:56]
Peter McCormack
All right, listen, I got a couple of questions left I want to get through. Don't want to take up too much more of your time, but I do appreciate it. Robert, what are the risks here? How can we fuck this up? And I don't mean just us, I mean collectively, society as a whole. What's the shit that you worry about? Or is it just inevitable?
- [73:15]
Robert Breedlove
I mean, nothing is inevitable. I definitely hesitate to ever use that word. But I will say that of anything I've ever looked at in my life, I would put bitcoin as closest, as nearest inevitable as I could. I think there are risk with. There's a battleground to be had now on for privacy with bitcoin, and it may actually be the battlegrounds of the next hard fork. Some people think you need privacy at the base layer, but there is sort of a trade off there with, with guaranteeing the 21 million. And then there's also a need to increase transaction throughput to. For bitcoin to evolve into its medium of exchange role. Now there's a lot of promise in the lightning network to sort of resolve both of those issues with privacy and transaction throughput, but that's still very early in terms of other risk. I just say, you know, again, nothing is inevitable. So black swans by definition are unknown unknowns. Bitcoin's still very young, you know, even though it's. It's got quite the track record in its short life, it is still very young. So I just advise people to, you know, be cautious, invest in education and never invest more than you can afford to lose unless you're irresponsibly long, like some of us may or may not be.
- [74:39]
Peter McCormack
Yeah, I'm irresponsibly long, but fuck it. Vijay, is there anything you anywhere you think, well, I say that, but you know what? Some people are irresponsibly long on the pound or the dollar. Like, if you really look at it, you could say I'm irresponsibly long on bitcoin. But the reason I moved like up to 60% of my cash reserves from my company and is because I felt I was irresponsibly long on cash. I've got no need to spend this money over the next year to two Years. That's where I felt and I kind of, I flipped the script on myself. Does that make sense?
- [75:14]
Robert Breedlove
Absolutely. That's a sailor move and I, I support it.
- [75:18]
Parker Lewis
Yeah.
- [75:18]
Peter McCormack
Cool. So Vijay, yourself, do you think what are the risks here? Yourself, like, you've been a long time bitcoiner, you've been deep in this for a long time.
- [75:28]
Parker Lewis
You know, I commented on Twitter that I think bitcoin has been substantially de risked in the last three years. I think significantly, this isn't like, you know, it's gradually de risked. I think the biggest risk that bitcoin faced was the hard fork and the contentious hard Fork. In 2017, when you had a real attack on bitcoin, the biggest, most powerful companies in the space tried to change bitcoin to suit themselves.
- [76:00]
Really.
- [76:00]
They have businesses and they thought, we want to change bitcoin to benefit us, we want to reduce transaction fees and that's what we think bitcoin should be. And they failed. And, and that's. Bitcoin is the only cryptocurrency that has faced a test like this. And ultimately, I think the only risk that matters and the risk that will eventually matter is a state attack. And because bitcoin is a non sovereign currency and eventually states are going to realize it's going to threaten their monetary policy. And you see slight inklings of this where people say, well, if bitcoin gets really big, then it's going to make it hard for central banks to manipulate interest rates. Well, yeah, that's what you want. But there will come a point where nation states, if they feel threatened enough, may try to attack bitcoin and the question is whether or not it can survive that attack. That is the only attack that I think is significant, except perhaps for protocol risk. There is still lingering. There will always be lingering protocol risk because it's built on cryptography. And perhaps we learn something about cryptography that we didn't know that blows this all out, like quantum computing becomes really cheap or something like that. I think the risk there is very small and has diminished significantly over time. And that's partly because of Satoshi's genius in choosing. He was extremely conservative in the cryptography he used. The choices he made were to build Bitcoin on very well established, well understood cryptography that had been well tested for many, many years. He could have gone with the bleeding edge, but he didn't. And honestly, that's part of bitcoin's ethos, is to be conservative and boring, which is really good. You don't want to Build a financial system on a, On. On a. On a base that is constantly changing and has an ethos of move fast, break, break things. Which when I look at Ethereum, that's what I see. I see it's essentially an experiment. It's an experiment in computer science. And well and good, they get to play with that and try and experiment. But I would never want to build a financial system on top of something like that. So bitcoin's core ethos has been state to be stable and to be conservative. And I think that's helped reduce the risk over time. So I was saying that an attack by a nation state is the only risk that I think is meaningful. And the question in my mind is whether we get to political capture fast enough for that risk to diminish. And I'll give an example of Uber, the ride sharing app. What happened with Uber is that they would go into markets and they would disrupt the existing taxi business. And it was very, very unpopular with the taxi companies. And they would lobby hard, and local governments would be very sympathetic, you know, having gotten a lot of donations and having very cozy relationship with taxi companies, and they would fight back and they'd try and regulate Uber and try and make it like a taxi company. But Uber had an advantage that it had all of these drivers out there who were very incentivized for Uber to succeed and not to be regulated. And it had a lot of users as well. You go into a city and people would say, I don't want Uber to be. I don't want it to be a taxi company. I want it to be Uber. I want it to work the way it is. I don't want to pay all these extra fees. And so they very quickly built up some natural lobbying group and they, they were able to get political capture because of that. And the same thing can happen with Bitcoin as well. If you have wide enough ownership, especially ownership among people in power, people who have, you know, a substantial amount of capital, or people in Congress. There are a few members of Congress who have bitcoin, but really what you want is a large fraction. And I think I read some paper where there's a theory that if you get to somewhere between 30 to 40% of a population wanting something, even though they're not a majority, they have enough influence to push things through this sort of tireless minority. And the legalization of marijuana is an example of this. It was illegal to use marijuana for a long time, but there was a, you know, a group that was very passionate about legalizing marijuana. And it eventually got to the point where some large enough fraction of population thought, this is stupid. Why are we making this illegal that they were able to get it over the line? And I think the question for me is, can we get to that state with bitcoin before we see a state attack? I'm hopeful, but I, I think that's an open question. And we'll see, we'll see over the next decade what happens.
- [80:52]
Peter McCormack
All right, look, final question, and I'll put this to all three of you and start with you, Parker. What would you say for the doubters, the people who still doubt? Because it still happens. Right. You know, I've had at least three times in the last week conversations on Twitter with people coming up with different reasons, centralization of mining in China, you know, it's too volatile. The similar, same arguments. But rather than address those particular arguments, what would you say to those people, the people who are still doubting this?
- [81:19]
Parker Lewis
You know, Well, I take the approach and this was. I included this quote from Common Sense in one of my articles, but it's that time converts more people than reason or, oh, along that, that kind of, that thought process that to me, that just, it's not worth the energy to try to convince somebody and that in my experience, that something has to have piqued somebody's intellectual curiosity and they have to be interested in understanding why or how for them ever to potentially be able to see or understand Bitcoin is money. That, that, that inherently has to be a voluntary and forward process on whoever wants to know. So that if somebody's, you know, loosely called a denier or someone that doesn't want to see it, they're never going to see it. And that one of the things I tell people is that bitcoin is basically the opposite of intuitive. It's extremely counterintuitive. And then over time, as you stare at the problem long enough, something eventually clicks in your understanding of money and understanding of how bitcoin in its finite scarcity can be that, and that is actually kind of over time becomes in most people's minds, order of magnitude better that it goes from being the opposite of intuitive to intuitive to hyper intuitive just as a function of time. If you are staring at the problem in good faith, trying to understand it, and you have that own kind of curiosity, that kind of only an individual control on themselves. If I like to think about it, is if somebody doesn't want to know, it's like talking to a brick wall. And it's not worth Anybody's time, it's not worth theirs or yours. And that time will convert more than reason, because more and more people, when they're looking at an objective set of facts, will come to that conclusion that bitcoin is a better form of money. And at a certain point of time, their hands become forced. That right now we have the luxury and the benefit to be able to sit down, think about it. But as a conversation, as a consensus emerges again, people can continue to use the dollar and the euro, but as more and more people decide to say, hey, let me evaluate this, they're going to come to that conclusion that bitcoin is a better form of money. And once we hit a tipping point, then those are just going to. Everyone else is just going to be dragged along.
- [83:37]
Peter McCormack
Fantastic. Breed love, man. What about yourself? Do you have anything for the doubters?
- [83:42]
Robert Breedlove
Yeah, I think if nothing else, 2020 reinforced the, the truth that human beings are really poor at understanding exponential functions. I think there's actually a quote out there. The greatest inability of the human race is our inability to understand exponents. And so we had this thing, this Covid situation starting in Wuhan, People, especially here in the US wrote it off, oh, it's never going to happen here. And then two months later, we're all wearing masks, the world shut down, etc. So things that change exponentially can have huge outsized impact on the world very rapidly. And it's important to understand that bitcoin is the first money we've ever had characterized by an exponential decay of new supply flow.
- [84:29]
Peter McCormack
Right?
- [84:29]
Robert Breedlove
It's new supply flows cut in half every year. And just for a sense of scale on those numbers, I think we're around 300,000 new Bitcoin issued per year today in 2020, that number contracts by the year 2100 to 0.3 Bitcoin produced per year. So that's seven or eight orders of magnitude contraction. And the other thing I like to tell people is that the market is smarter than you might think that you are. And that's true for everyone. And this is the best performing asset in history. So, like, at what point do you get stopped out and say, all right, I need to have some exposure to this thing because it's still going, right? It hasn't stopped. There's no indications of it abating anytime soon. So I think you need to have the real conversation with yourself about when you take it seriously.
- [85:20]
Peter McCormack
All right, Vijay, take us out, man.
- [85:23]
Parker Lewis
I would say that money is the biggest market on earth by far. People like to Talk about how big these tech companies like Apple and Google and Amazon and Facebook are. But they're drops in the bucket compared to the size of the market for money. And in my opinion, bitcoin is the most important innovation to money in a thousand years. So you're talking about an innovation, a disruption of the biggest market on earth by far. So I would just say go get some. Don't worry about figuring it out or going down the rabbit hole or anything like that. Go get some right now. And you know, that might sound crazy. You don't understand it. Why would I invest in this thing? Anything, no matter how risky it is, can be put into a portfolio by just choosing the appropriate size. And maybe the comfort level you have is 1% of your portfolio or 0.1%. There is some number where you would think it doesn't matter. If it goes to zero, then my portfolio moves that much per day. So my advice is go get some, get a steak. Because this is has the potential to be important even if you don't understand. You probably understand that the market for money is big and that disrupting it is, you know, potentially very valuable things to go get a steak. That will give you enough skin in the game to figure it out later on if that stake becomes large enough.
- [86:53]
Peter McCormack
Amazing. Listen, this has been amazing. Thanks guys. Look, I owe you all a huge thanks. I picked the three of you to come together for this by design because you my three favorite writers on the topic of bitcoin. Vijay, very early on your article the Bullish Case of Bitcoin changed my entire thinking about bitcoin as money and why it is the best form of money. Parker, your series on gradually and then suddenly made me realize like the impact this can have on everyone else and Breedlove. Obviously I only read some of your stuff recently, but I think of your work as like the magic mushrooms of bitcoin writing because it just fucking takes me into this new dimension. I'm like what? What's going on here? But like you're my three favorite writers, you all do an amazing job and I couldn't make a show without people like you coming on. So look, a big thanks just just to like end Vijay tell people how to find you in your work.
- [87:43]
Parker Lewis
I my article the Bullish Case for Bitcoin is on medium and you can find me on Twitter. Real underscorevj on Twitter and I'm mostly being a parent I don't have. I wish I had time to do more long form articles the last time we spoke which I think was. Was it two years ago we talked about.
- [88:02]
Peter McCormack
You owe me.
- [88:03]
Parker Lewis
I wanted to write the Bearish case. Yeah, it's been very difficult to find time. I have three young kids. Kids. So I. Most of my thoughts are on Twitter there. If I. If I have a longish thought, it appears in a Twitter thread. So. So find me there.
- [88:19]
Peter McCormack
Yeah, I get it, man. I got two kids. I understand. Parker, how do people find you, man?
- [88:23]
Parker Lewis
Yeah.
- [88:24]
Well, first, thanks for having me back on. Always enjoy it and hope that you get back to Austin sometime soon. But people can find me on Twitter. Parker at Parker A. Lewis. I work at Unchained Capital. You can find me on our. I. I distribute all of my content on our blog, unchained-capital.com and if anybody is looking for better ways to secure their bitcoin for the long term or need bitcoin financial services, reach out Predov.
- [88:48]
Peter McCormack
Take us out, man. How do they find you?
- [88:51]
Robert Breedlove
Thanks Vijay and Parker. This is a lot of fun and thanks Peter, for having me again. You can find me on Twitter @ BreedLove22. That's my last name. B R E D l o v e 2 2. And then all my writings are on medium. Also you can check out our website. I post a lot of the same things. Parallax digital IO p a r a double l a x digital IO the 22.
- [89:14]
Peter McCormack
Was that like your jersey number?
- [89:17]
Robert Breedlove
It was like my lucky number. I don't really even know where it came from. I've had it my whole life.
- [89:22]
Peter McCormack
I thought it might be your football jersey number. Well, listen, look, thank you all. I'll share all out in the show notes. Can't wait to get this out. I'm sure, sure people are gonna love it. Take care and like, I hope to see you all in person at some point. Hopefully this coronavirus will end and we get back on the planes. Take care. Vijay will share some recipes soon. Okay. What did you think of that?
- [89:43]
Vijay Boyapati
Bit of a monster, right? That was a monster episode. Absolutely loved it. Even my engineer got back to me, said, yo, Pete, I had to listen to that twice now. I love talking to all of these three guys, but having them on together.
- [89:53]
Peter McCormack
Was a real treat.
- [89:54]
Vijay Boyapati
And it's just another show that makes me really bullish on the future of bitcoin. And I think it will be fascinating.
- [90:00]
Peter McCormack
To see how a lot of this.
- [90:01]
Vijay Boyapati
Stuff starts to play out over the next few years. You know, will we get to the point where we have nation states and central banks using bitcoin? If they don't how will they reject it? Will we see some kind of money wars? I mean, it's really going to be fascinating to see. Anyway, I hope you enjoyed it. A massive thanks to Parker, Robert and Vijay for coming on and if you've got any feedback, you know, you. You can reach out to me.
- [90:20]
Peter McCormack
It is.
- [90:21]
Vijay Boyapati
Hellohatbitcoindid.com if you want to support the show, really, at the moment, I'm just asking you to go on to itunes.
- [90:27]
Peter McCormack
And leave me a review.
- [90:27]
Vijay Boyapati
They're really helpful for the rankings. Look, if you think it deserves one star, well, go and give it, but obviously I'm not going to be your friend.
- [90:34]
Peter McCormack
I'm not going to send you a Christmas card.
- [90:36]
Vijay Boyapati
But if you also think it deserves five stars, please go and do it. It takes about two minutes and it really supports the show. Outside of that, have you checked out.
- [90:42]
Peter McCormack
My other show, Defiance?
- [90:43]
Vijay Boyapati
We've got this really interesting series on, on right now about Ghislaine Maxwell. She was the former girlfriend of disgraced pedophile financier Jeffrey Epstein. We're getting into some. We're getting some quite detail on this. Some really good research, really good investigative works been done by my colleague Tom Pattinson.
- [90:59]
Peter McCormack
That's it.
- [90:59]
Vijay Boyapati
Defiance News. Go and check that out. Outside of that, have a great weekend and I'll see you all soon.