← The "What is Money?" Show
The "What is Money?" Show
Gauge Theory, Gold, and Bitcoin | The Weinstein Series | Episode 1 (WiM079)
00:47:19
Eric Weinstein joins me for a multi-episode conversation covering mathematics, physics, history, politics, economics, and money.
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- [00:00]
Eric Weinstein
Foreign.
- [00:08]
Robert Breedlove
Hey everyone. I am thrilled to be joined by Mr. Eric Weinstein today on the what is Money? Show where I think we're going to get into some very deep, fascinating and potentially complicated topics. Eric, welcome to the show.
- [00:27]
Eric Weinstein
Robert it is thrilling to be here. Always a little bit nerve wracking because the bitcoin community is seldom unopinionated. But it's a really interesting community with lots of voices that I think highly of. So this is going to be fun.
- [00:42]
Robert Breedlove
Well, I think there's a lot of opinions out there, especially in bitcoin community. Instead of being strong opinions loosely held, they seem to be strong opinions strongly held. But I try to hold on a little bit more loosely myself. And so I hope that our conversation today can help shed some light on reality. As you said earlier, very, you know, certain groups of people, which I'm sure we'll get into are very good at some things, but not so good at depicting reality. So similar to your show, I'm trying to get to the bottom of things. I think the avenue that I've chosen has been effective so far asking this question, what is money? And all of the twists and turns and the rabbit hole that that takes you. But so where I thought we could start today is with this concept that you've worked on a lot and popularized in the bitcoin community, which is gauge theory. And I'm still. I mentioned to you offline. I've read the chapter, this is in the book called the Physics of Wall street, chapter eight that you recommended. It discusses gauge theory by James Weatherall. Yes. And it shed some light on the nature of gauge theory for me, particularly relating it to some other stuff I'd read about quantum mechanics and whatnot. And interestingly, it's connected to path dependence, which I think is something that's very important in bitcoin's emergence. So maybe we can get into that. I'm going to throw out a general definition and maybe we can just start to riff on it.
- [02:29]
Eric Weinstein
Sure.
- [02:30]
Robert Breedlove
Gauge theories use geometry to compare apparently incomparable quantities.
- [02:42]
Eric Weinstein
That's cool. That is the sort of what you're defining is something called parallel translation, which is the main way in which we are so far using gauge theory, although we have plans to if this ever gets past the initial layer. There's quite a bit more you can do with gauge theory than parallel translation. But I think that we've just defined is a concept called parallel translation, where I can say what it is fairly simply. There are lots of concepts of what, what it means to be constant oh, he's a constant in a changing world. You know, that sort of an informal notion in mathematics. One way in which we talk about constancy is we say that something has a derivative equal to zero. And if the derivative measures the rate of change, and the rate of change is zero, then something by inference is constant. Now, it's very weird. We teach people all about differential calculus through, let's say, the second year of college, typically, and then we reserve a very advanced notion of differential calculus, really, for graduate school for maybe two years later. And you have to decide that you're going to major in either mathematics or physics. And that's called covariant differentiation. Now, what is covariant differentiation? It's a concept whereby you not only have multiple functions that you can consider, but multiple derivatives that you can consider, not just one. Usually we have lots of different functions, but we only have one derivative. Take the derivative. And in fact, that turns out to be a very wrong notion that you should in fact consider a world of different derivatives that way. Let's imagine that you rescale some of your Y axes of a function. If you rescale the derivatives at the same time, then assume that you had a constant function and then the function were scaled to become like an exponential. As long as you scaled the derivative to become in some ways like an exponential, it would continue to be viewed in the same way. That is, the new scaled function would be killed by the derivative, which is the new derivative. The scaled derivative would kill the scaled function in the same way that the ordinary derivative killed the original constant function. In a certain sense, covariant means that the derivative is varying along with the functions that it is making meant to attack. So to take it all the way back up, if you don't even know calculus, derivatives measure rates of change. Something is constant. If its derivative, that is its rate of change is zero, it's not changing. But there are multiple different kinds of derivatives, and those are called covariant derivatives. And the covariant derivatives can vary along with the function. So that if one function was constant under one derivative, a new function would be constant under the new derivative if they're both scaled by the same factor. And that would be called gauge invariance or gauge covariance.
- [06:07]
Robert Breedlove
Okay, I'm going to try to echo some of this back to you and let me know where I'm wrong, please. Is this somewhat, and I have, I should tell the audience you and I met in Los Angeles. I had the first two cocktails. I've had in 18 months with you. And it was a very enjoyable conversation overlooking the Los Angeles skyline, talking about.
- [06:29]
Eric Weinstein
You'Re telling it wrong. You and I checked into a hotel where Robert Plant famously said he was a golden God. And I think Jim Morrison hung off the ledge and we got hammered in West Hollywood when you fell off the wagon. But go on.
- [06:45]
Robert Breedlove
Much better telling of the story. I did save some notes from that conversation. And I think the first point you're talking about here for the audience, that's visual. This is a small drawing of that. So essentially showing an exponential curve. But if the unit of measurement or the ruler is changing along with the curve, I guess effectively stretching out the unit of measurement, that that can offset some of the change that's actually occurring. And I map this, my understanding back to Wittenstein's ruler. And he said that if you use a ruler to measure a table, but you can't trust the reliability of the ruler, you cannot be sure if you're measuring the table or you're measuring the ruler.
- [07:35]
Eric Weinstein
Beautiful. That's really good.
- [07:38]
Robert Breedlove
So we need this. I mean, to reach consensus in the world, we need invariance. We need something that does not depend on interpersonal trust, but instead depends on some form of rigorous verification. And the one other thing I want to mention here is this concept of covariance. I mapped this onto inertial frames of reference. And I guess this is just in physics more generally, where. Correct me where I'm wrong here, because I may be wrong. The special theory of relativity was special because it only applied to frames of reference that were moving in tandem, and.
- [08:17]
Eric Weinstein
It really only applied in flat space. Yes, you could almost call it delicate relativity rather than special relativity because it's fragile.
- [08:26]
Robert Breedlove
And then general relativity opened it up to, I guess, non covariant, or I guess you could just say variant frames of reference. Is that correct?
- [08:36]
Eric Weinstein
Yeah. But if I can riff with you, if you don't mind, please. General relativity opened up the idea that the rulers and protractors, I.e. the measurement devices, which Einstein would have called a Romanian or a pseudo Riemannian metric, just fancy name for rulers and protractors and ability to take lengths and angles. You can allow those to vary from place to place. Whereas in special relativity, once you've set the rulers and protractors at one point in space time, every other point in space time inherits the same rulers and protractors only at that new point. Einstein's great insight, 10 years after his famous 1905 Annus Mirabilis, was to Say, what if we allow the rulers and protractors to become dynamic and part of the system and we feed back the information of the measuring devices and the measured, the measurer and the measuree are in a dance with each other, which we call the Einstein field equation, right? In this situation that we're talking about, it's weird because prices measure quantities. So the ruler of quantities that we would measure quantities by would be prices. Because if you buy three carats from your supermarket to put into a salad, or you buy a 3 carat diamond, diamond is probably a lot smaller, but it's much more valuable. So the economic ruler tends to be the pricing system. On the other hand, if you want to measure the prices, then you're using a quantity ruler. Now both your rulers are varying, right? Because your economy is creating different levels of output from moment to moment and the prices are moving around. And so it's kind of a wonderfully diabolical situation in which the ruler of prices is goods, the ruler of goods is prices. Both rulers are moving around and we call the measurement devices that allow us to measure each in terms of the other price and quantity indexes. Now that's how we get cpi, which measures inflation, supposedly, and gdp. These are both price index numbers. And you know, the other thing I would say is if you want a very simple visual, if you go to the Internet and you ask what's gauge theory, you get a bunch of stuff that's not understandable. And sometimes people get angry at me and they say, Eric, you're not understandable. But I think I'm actually more understandable than anybody almost. When we have a very simple point, and I'll just say it, if you want to measure a derivative, you usually measure the rise instantaneously over the run. How far you go along my hand versus how much much you go up towards the ceiling, that's the rise. This is the run. Gauge theory is simply saying you don't have a universal level. Think about a carpenter's level with that little bubble that floats around. This could be called horizontal sloped up, this could be horizontal. There's no set concept of the reference level where you measure the rise from that, in a nutshell, is all gauge theory is. This is ordinary calculus. There's only one reference level to measure the rise in rise over run, and this is gauge theory. And the idea being that if I scale a function, I have to scale the derivative at the same time, which means I have to change the level, which I call horizontal. So if I'm willing to Change what I call horizontal, then in some sense what I can keep doing is continue to take the new derivative of the new function and will equal the same transformation applied to the old derivative of the old function. The reason that derivatives are so important, by the way, is that if you want to know how things propagate, how things move in the world. It used to be that we said that economics, in a sort of a bit of an off color joke, had physics envy. The fact is that physics lives on partial differential equations. It tells how things move across time and space. And if economics cared to continue the analogy with physics, it would be focused on its theory of derivatives, which we've now called gauge theory. And if you want to think about physical gauge theory, and this is going to be kind of a crazy statement, electrons are basically the functions and the photons are basically the derivatives. Quantum electrodynamics is the theory of electrons and photons and interaction. And it's really a theory of functions and their derivatives under a gauge principle that keeps everything together.
- [13:22]
Robert Breedlove
Okay, lost me a little bit at the end there.
- [13:26]
Eric Weinstein
Well, let's go back to Bitcoin then.
- [13:29]
Robert Breedlove
Okay, please.
- [13:31]
Eric Weinstein
So how did all this crop up? This cropped up because as in the book you read, which is the Physics of Wall street, in the early 1990s, my collaborator and now wife and I, Pia Malani, started to suggest that all of economic theory is a naturally occurring gauge theory that had not been recognized. And what's more, the so called marginal revolution, which was the penetration of differential calculus and associated thinking into economics, used the wrong notion of the calculus. It used the ordinary calculus that you would teach to a first or second year undergraduate who might be going on to, let's say, medical school. The right version of the calculus is only taught to differential geometers effectively and physicists or people who study either one of those two subjects because it's not yet penetrating the world. But allow me to make a prediction on your show. I predict that every serious client of the ordinary differential calculus will become a client of gauge theory within say 100 years. In other words, gauge theory is simply differential calculus done correctly. And what's more, it's backwards compatible. Anything you could do in the old differential calculus, you can do in gauge theory. And now by calling it gauge theory, it definitely sexes it up a bit and makes it seem like super exotic and fancy. But it's nothing more than differential calculus where rise over run is measured from a reference level that is set internally within the theory. So how did this all get going? Well, because Economics is a major user of differential calculus. Through the so called marginal revolution, we thought we had stumbled on a complete revolution within economics. Every single thing that differential calculus had touched was using the wrong version of the differential calculus. And if by happenstance that particular application was fine, you could retain it because it was 100% guaranteed, backwards compatible, because this reference level is always included in the starter set. But it turned out that economics was making use of the actual geometry determined by these derivatives. Famously, I think George W. Bush said that. I forget who it was. We had hoped we would be greeted as liberators in Iraq. I think we had hoped that economics was going to be really excited to see this. But in fact what happened was that it complicated everything. Are you telling us that all of economics uses the wrong version of calculus? That the marginal revolution which permeated every aspect of economic theory is in effect using the wrong math? And the answer is yes, that's exactly what we're saying.
- [16:48]
Robert Breedlove
Wow. Okay, let me try to echo some of this back and see where I get to. So the old view was that space time was this fixed fabric, this theater on which everything played out in the cosmos. Einstein comes in, says it's not like that. There's actually a conformity between action and matter and energy and space time. We know mass bends space and time and acceleration changes the effects of space time, et cetera, et cetera. And so the rise over run, which I guess is derivative, that's the first derivative. This is a ratio of movement across space and time. It's how we define movement, actually. It's even speed itself. Right. It's change in position over change in time. I guess I'm saying that correctly. How quickly you move across space over a given amount of time, it's a ratio. To tie this to economics, prices are ratios of exchange expressed in money, which is just the universal language of economic numeracy. And that's done. It emerges naturally, but it's done as a cognitive expedient because it's a lot easier to talk about things and perform economic calculus. Actually it's only possible to perform economic calculation and money versus trying to tell me how many tables a chair cost and all the endless exchange ratios.
- [18:14]
Eric Weinstein
Yeah, when you tell an economist that's like comparing apples and origins, they say so.
- [18:20]
Robert Breedlove
Exactly. And so that clearly points to the importance of money. And now just to speak to the marginal revolution of value, as I understand it before, and this is in the 1870s, I think, so this is relatively new. Before the marginal revolution, there was a belief that Individual objects had intrinsic value or these units of utils. There were a number of utils in a wagon, a number of utils in a house, and the actual trading value of those was some objective relationship between the two. Marginal revolution comes along and says, no, there is no cardinal number of utils or whatever these elementary particles of value are. All there actually is is preference. Each market actor has preferences, ordinal preferences, not cardinal, meaning that you can't assign a number. You can't say this house is 100 and this wagon is 70. It's all about this market actor prefers the house to this number of wagons. They have a rank ordered list of preferences. So it's an ordinal list instead of a cardinal list. And this was the subjective revolution. There is no objective value. It's all subjective to the market actors preferences.
- [19:37]
Eric Weinstein
Yeah, it's an interesting point. Economics refers to cardinal versus ordinal utility theory as you state, and I think John Stuart Mill and company were associated with actually coming up with units. So real numbers to measure just how happy or sad something makes you. I forget whether it was Pareto or Marshall, but fairly early in the 20th century there was a lot of pressure to drop this as an uninvestigable concept. You can self report that it made you 7utils happy, but how do we really know? How do we know that your seven utils are my seven utils, et cetera, et cetera. The funny thing about that though is that it was retained in one place. So if you happen to have a probabilistic situation because of the Bernoulli solution to the St. Petersburg paradox, I don't know if you've ever encountered this thing. It's really important somebody says, I'll tell you what, we're going to play a game. You tell me how much you want this game and I'll tell you whether I'm willing to play it with you. We're going to flip a coin. If it turns up tails, you get nothing. If it turns up heads, we go again. If it turns up tails, after that you'll get one coin. If it turns up heads, we go again. Then you'll get 2 coins or 4 coins or 8 coins, etc. Up until the point where you finally get the get the flip, that gives you a payout and ends the game. Now, if you calculate the expected return of that game, so what is the sort of the probabilities times the prizes and sum that up, it should seem like you should pay effectively an infinite amount of money for the privilege of getting that payout from that game. And yet there's a 50% probability you're going to get nothing and there's a 1/4% probability that you're going to get one coin. So try to imagine somebody comes to you and says to you, hey, you want to play this game? And you do the calculation and it looks crazy. So the solution of that was you don't add up the probabilities times the payouts. You add up the probability times the subjective cardinal value of the payouts. And because your first dollar allows you to get something to eat and your next hundred allows you to clothe yourself and another fifty allows you to find a roof over your head for a night, those first dollars are far sweeter than the billionaires first 150 because it doesn't make much of an impact. And so we would say that that's the declining marginal utility of money, which we allow in a probabilistic problem and then we forbid it everywhere else in economics, which sort of shows you that something a little funny is going on. But that's the thing that when summed, doesn't give you an infinite amount. The fact is that those very remote possibilities of huge payouts are valued much less than the likelihood that you're going to get nothing for whatever you pay for this gain.
- [23:01]
Robert Breedlove
Yeah, sorry, go ahead.
- [23:05]
Eric Weinstein
There's one more thing which is that what we assert that no one has ever challenged us on, it's hard to imagine, is that cardinal utility has the structure of something called a principal bundle over ordinal utility. Principal bundles are where gauge theories live in their most sophisticated formulation. In other words, try to imagine that all of economics was taking place on an island, and for 150 years nobody noticed that the island was actually a whale swimming around in the ocean. That's how crazy this assertion is. And it's one of the reasons why I think it sounds grandiose and irresponsible to a lot of people. Are you telling me that nobody ever noticed that all of economics is based around the so called representative consumer being a principal bundle? That utility theory forms a geometric structure of the geometric structure of a gauge theory? And the answer is yes, I am saying that so far as I know, economics is based around a series of bundles and derivatives that make it one of the most beautiful geometric theories I think that we've ever encountered outside of pure mathematics and physics. And there is not even what I would say, a generally competent group of economists to review the claim.
- [24:41]
Unknown
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- [24:43]
Robert Breedlove
By watching this show.
- [24:45]
Unknown
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- [25:49]
Robert Breedlove
I really like the analogy, or I don't know, maybe it's more than an analogy that economics is kind of the geometry of markets in a way.
- [26:00]
Eric Weinstein
Because this, to me that's what our claim is.
- [26:02]
Robert Breedlove
Yes, well, and I think it's enshrined in the Austrian literature actually. So you look at, we'd say Keynesian economics has more of the physics type envy you've described, but Austrian economics is very demathematized. It's really like Euclidean geometry or any other form of geometry. It's just rooted in these axioms that we then rationally, deduce. I guess they are theorems from, but it's based in an a priori rationalistic epistemology. Whereas all of these other Keynesian economics is much more empirical, I guess you could say. I would call that more economic history versus first principle economics, which is how.
- [26:49]
Eric Weinstein
I view it's an interesting question because you see, one of the problems with Keynesianism is that it's like trying to describe a physical system, when in fact your interference with that physical system may be the most important determiner of how that physical system behaves. So if somebody says, okay, I've got this distribution of temperatures at time zero, and then I allow it to run, what will my distribution of temperatures be at time seven, let's say. Then I say, well, I could try to solve that problem using the heat equation. But tell me something, are you going to be pumping heat in over here and sucking it out over there and shaking the box and sticking your hand in? The person says, yeah, I mean, somebody's got to manage the economy. And then I say, well, then I don't want to guess what it's going to do, because my guess is that you're going to interfere with everything that my calculations would. And if I don't have a model for you, Mr. Central Banker, I don't know how it's supposed to evolve, because you could step in at any moment and say, we're closing the gold window and opening the latex window where you can exchange money for rubber to stretch your dollar further. Something like this, Okay, I don't know what stupid things going to occur to you. I can't be responsible for trying to guess my future because you've got your finger on the scale, your thumb is pushing down on the scales that I use to measure and evaluate what it is I'm doing with my life. So I'm sympathetic with what Keynesianism wants to do in theory, which is to alleviate things like the economy seizing up because everybody prefers to hold savings due to nervousness. Okay, but what you're also doing is that you're giving certain people the right to play God, and I don't think they have the wisdom to do it.
- [28:46]
Robert Breedlove
Agreed completely on that. And this is something that quantum.
- [28:51]
Eric Weinstein
I want to say something more, please. It's not intrinsically that I think everybody is corrupt or stupid, but my, my experience with this has been very interesting. In essence, I understand that the field doesn't want to acknowledge that it doesn't know what it's doing, but it doesn't. It's not like they're saying historically, this is really an important claim. Let's see if there's anything to it. It's more like, how do we make this go away? And the usual way to make things go away is that you start attacking the people. What are their motivations? Why are they doing this? Why do they think it's a big deal? Well, we should be able to agree that if the field is not interested in itself as a science, it doesn't want to scientifically progress, it's not interested in new techniques or whether or not the claims that it's made are provably false, then you wouldn't want those people at the Keynesian tiller. Even if you believed in Keynesianism, you'd say, why would I want the least competent people who are the most head in the sand, the people who want to stay in Plato's cave and never see the sunlight? Why would I want them with their hands on the tiller of the economy? Why would I want their thumb on My scale in the marketplace of ideas. In part what I've become just incensed about is how dare you hide your field away from challengers. You can pretend to have a Nobel Prize, which you don't, but why don't you line up all the Nobel Prize winners who want to go down and fight this thing off?
- [30:41]
Robert Breedlove
Right, Yeah, I think it's an excellent point. And the general insulation from competition, both ideologically and economically, is the problem with the monetary system. It's a legal monopoly, therefore distorted prices, no innovation, corruption, et cetera. So I want to get back to this, please. I think this is an excellent point because in my mind, this is derived from quantum physics. Heisenberg Uncertainty principle, actually, if you don't mind, please.
- [31:15]
Eric Weinstein
Gauge theory is not derived from quantum. I just want to.
- [31:22]
Robert Breedlove
Oh, yeah, I'm sorry. Not making that claim in particular. I'm just drawing a connection here that this where you describe trying to isolate an economic experiment, but you can't because there's some hand coming in. You don't have a model. The individual.
- [31:36]
Eric Weinstein
I see. You want to make it. You want to make a sort of an interference. Physicists tend to be a little touchy about using the uncertainty principle and Schrodinger's cat and all that kind as by way of analogy.
- [31:47]
Robert Breedlove
But I understand, I may be outside of my lane here, but just the way I'm currently thinking about it is there is this inextricable relationship at a very fundamental level between the observed and the observer. And the way, again, interpreting this through the Heisenberg Uncertainty principle, you cannot simultaneously know the velocity and position of a, of a particle at a certain resolution. Right. There's a trade off, I guess, between. The example I saw recently of this was you could have a very high resolution photo of, say, a pool table, or you could have the same file size as a video, but the video would be much lower resolution, but it would give you a different form of information I'm sure you have.
- [32:34]
Eric Weinstein
That's just a trade off.
- [32:36]
Robert Breedlove
Yeah, there's a trade off, but this is.
- [32:39]
Eric Weinstein
This is deeper. In other words, there are plenty of things where you're observing it causes it to be in some state that it wouldn't have been otherwise. One doesn't need to invoke Heisenberg and quantum theory in order to get that kind of a feel. It's very tempting to do it, and I'll be honest, physicists do it when there's nobody looking and then chastise everyone else for doing. But yeah, the issue with position and momentum Being in some sense in conflict. I don't know how to say it the best, but it says that there's a particularly beautiful set of simplistic states. As long as you want to ask questions about position, there's a different set of simplistic states if you want to ask questions about velocity, and those states are known not to be the same states. Now, I could mumble words about eigenstates. It's not going to help your listeners. It's just that there are certain problems for which one set of objects behave simply. And there's a different set of questions where a different set of objects behave simply and they can't be the same set.
- [33:54]
Robert Breedlove
Right. Okay. So I guess the general principle I'm attempting to extract is that the actual, the nature of the observation or the questions we ask or the frame of reference we place on an observation actually affects what we see in many ways. And so can I give it.
- [34:15]
Eric Weinstein
Can I give a classical version of this? Yeah, I have a theremin. My wife got me one for my birthday. And have you ever played with a theremin?
- [34:23]
Robert Breedlove
I have not.
- [34:24]
Eric Weinstein
Your hands move around in space and it changes the capacitance of the object and you get those sci fi tones. Now, if I want to inspect my theremin, moving towards it causes it to change its pitch. There's no way of approaching my theremin that doesn't cause it to change its behavior. I can't just look at my theremin and see what it's doing, because if I move close to it, it'll change the pitch of the object. Now, the reason I picked the theremin is that it's not a quantum system. It's a classical field theory called electromagnetism that causes that to happen. And you already see the effect. So I'm just saying that gauge theory is closer to classical electromagnetism than it is to quantum mechanics. And those two concepts collide in something called quantum field theory, which is, for example, what we're talking about with electrons and photons at the be beginning.
- [35:23]
Robert Breedlove
Yeah, maybe I'm. I'm maybe using wrong terms here because, again, the book I read most recently on this, on quantum in general was the Dancing Woolie Masters. And the author of that is.
- [35:35]
Eric Weinstein
I'm gonna hook you up. Gary's friends don't let friends don't let friends read the Dancing Woolly Master. The problem is, it's inspiring, but it's. You're gonna get a lot of mysticism that is probably best saved for later.
- [35:51]
Robert Breedlove
Understood. I do appreciate the Mysticism at times.
- [35:56]
Eric Weinstein
So hate.
- [35:59]
Robert Breedlove
Maybe to pull it, maybe to pull it out of that realm. I agree with what you're saying here. Describe the device you just described. It's also something like a thermostat, right? There's just a feedback loop that as the temperature in the room increases, it causes the air conditioner to kick on, which is in turn measuring the temperature. So there's a goal seeking or zeroing in behavior in certain devices. So in the realm of economics, it seems that goal seeking or zeroing in behavior for purposes of expressing market prices and performing economic calculation would be towards the most invariant money, the commodity with the least noise in the channel, which would then in turn allow it to maximally express useful information. In my mind, this idea of minimizing. What did we say here? The derivative, basically. And maybe this gets into why gold is a gauge theory that gold had the most predictable ratio of change in rise and run, so to speak, which would be supply over time of any commodity which contributed to its selection in the marketplace as money as the medium for expressing reliable, truthful prices.
- [37:26]
Eric Weinstein
So we should talk about gold. When we talk about gold, I assume. I think what you're talking about is Gold197. There are different isotopes of gold.
- [37:40]
Robert Breedlove
The one that's in the pretty bricks and all the central bank vaults.
- [37:44]
Eric Weinstein
Well, that's just the thing. I think that's gold 197. There are lots of different golds, but there's only one stable version of gold. For example, if you have gold198, imagine that I pay you or you pay me for this interview. This, this honorarium of. Did we say 100,000? I believe we did. $100,000 deliverable in gold.
- [38:08]
Robert Breedlove
Yes, it is.
- [38:09]
Eric Weinstein
But you're so pissed off that you give it to me not in gold 197. You give it to me in gold 198. And I don't even check the gold because we're friends until two and a half days later and it turns that half of my gold is now mercury.
- [38:29]
Robert Breedlove
Pretty bad.
- [38:30]
Eric Weinstein
What happened? Well, that's the whole. It's not hard money. The reason we choose 197 is, first of all, it tends to be made not only in stars, but in stars doing violent things to themselves or each other like colliding or going supernova or something. So it's super hard to get those. Forget. I think it's 79 protons and whatever the rest is in neutrons.
- [38:57]
Robert Breedlove
Yeah, we have that in the notes here. I think that's right?
- [39:00]
Eric Weinstein
Is that right?
- [39:01]
Robert Breedlove
79 protons, 118 neutrons.
- [39:06]
Eric Weinstein
So if one of those neutrons should happen to flip into a proton, then you've just changed the atomic number of the nucleus, because the atomic number is just the number of protons, because that determines the electron shells. So it's very important. If you're going to use gold as a store of value, you need it not to change character on you. And that's kind of the cool thing about 197, is that the neutrons don't flip into protons, thereby destroying the value of the gold you hold. So it's very difficult to make Gold197 because you need a star, and you need probably another star in a collision or something like that. And it's very hard to destroy it because it's the unique, stable isotope of the material. Now, with that said, the miracle of gold is that gold is a physical gauge theory, which means that it can become a logical gauge theory. A logical gauge theory. When we're talking about your wealth in your holdings in, let's say, xaux, you are talking about how many combinations of protons and neutrons, which are all made up of three valence quarks, each two ups and one down in the case of the proton and two downs and one up in the case of a neutron. The ups, I believe, have charge + 2/3. The downs have charge -1. So 2/3 + 2/3 minus 13 gives you 4/3, minus 13 is 3/3 or 1. That's why the proton is positively charged with a charge of 1, and the neutron is plus 2/3, minus 1/3, minus 1/3,. That's 2/3 equals 0. Hence, the neutron is neutral. Now, that physical gauge theory we were talking about, if you and I were going to do a drug deal or we were going to buy weapons or stuff on our hotel roof, um, it's very important that nobody knows what badness we're up to, not just two guys drinking in West Hollywood during the day. So it would be necessary for us not to alert the world that a transaction has taken place. What allows that to happen is gauge theory. I can propagate the gold bar that I brought to our meeting physically in space. I will push it with my thumbs. It is a wave. The wave will travel over to you, you will enter your custody, you take possession of it, and it solves the double spend problem. What is the double spend problem? It's very important that when I give you gold, that I no longer have Gold?
- [41:54]
Robert Breedlove
Yes.
- [41:56]
Eric Weinstein
So what is that? That's a conservation law. So as long as you're in the stable isotope of gold, and there's no force that we know, that's cost effective to create more gold, and there's no radioactive decay. In the case of beta decay, what we were talking about before, that means that the conservation law, which is the physical gauge theory, shows up in logical gauge theory as a double spend problem being solved. What's more, though, is that there's no blockchain. There's no record that you and I have transacted. If somebody wants to verify that you have gold, they hire an assayist. And the assayist says, look, I don't know where this thing came from. Maybe he was dancing in a bar under an assumed name. Maybe he was selling drugs. Maybe he works at Walmart. We don't know, but he's got gold. I would like to see the logical world accept a port of the physical world. In other words, not just because of money. It would be very important if we could start to simulate the actual physical world inside of the computational one. That means I need conservation laws. The idea that, let's say you and I are listening to the Rolling Stones country Honk song, and you say, I love that song. You say, okay, well, here's a file. Just copy the file onto your hard drive. So now we've got two copies of the song. We've sort of just violated the double spend at the level of an MP3 because we created more by digitally copying it. If you did that with gold. Oh, I see, you've got a bunch of gold. Let me just make a copy of your gold, and then we can both have gold. We destroy the value of gold for what we're trying to do. What I would like to do is to say we only have one copy of reality that we know never throws an exception. Nature, whatever she's made of, never gets into trouble. You can explode a thermonuclear device. You could have a supernova collision. It doesn't tear the fabric of space and time. So wouldn't it be cool if the only thing we know to be fully internally consistent could be ported into a computational environment? So if you had the rules for the world, the complete rules, you'd start trying to write a computer program to say, can I come up with an equivalent of each one? And then once you do, you have a copy. It's a little bit like, you could do this with your genes. You could store your genes in a cell, or you could store the content of your genes on a hard disk and you could create one from the other and go back and forth. Now, that desire to move the physical world into the logical world is not something that I ever conceived of how to do until I saw Satoshi and I thought, holy cow, this guy is effectively practicing logical physics. But it's not quite right, because everything is constantly entangled with this ledger. The blockchain is this permanent record, and it may be anonymous with respect to everything other than the wallet. You don't know who holds the wallet. You don't have a name. But effectively, bitcoin is constantly blabbing about who's got what. And I don't necessarily want to register every thought I've had with the government, and I don't necessarily want to register every transaction I've had with the government either. If I buy a pack of cigarettes or a pack of condoms or pack of cards, I don't necessarily want somebody in the government to say, oh, okay, great information, Eric. Thanks for phoning that in. I'm concerned that bitcoin is misimplemented, that it's the most ingenious, most fantastic discovery of recent times. And if I say that, it doesn't protect me against the ridiculous maxis who, no, they're just, they got a screw loose. It's amazing. It may be the greatest invention, but if it's not, if it's not God's work himself, they get upset. And I don't want the blockchain constantly recording anything, everything, any more than I want gold to be fitted with a blockchain. Imagine that you suggested, hey, we've got a new chemical tracer where you can trace every bar of gold. You can know what its history is, where it transact. Who would want that kind of gold over regular gold? Nobody. And that's what you've got in bitcoin. And that's the big problem is that you haven't realized that Satoshi may have given us a first step, which is how to do locally enforced conservation laws under the double spend problem. But then it has to be globally entangled. What we're trying to do is to think about, could we start to dream of about distributed computing without being entangled with the universal ledger that is instantiated in many places?