← The "What is Money?" Show
The "What is Money?" Show
WiM021 - The Frisby Series | Episode 2 | Mythology, Gold, and Government
01:25:05
Dominic Frisby joins me for a multi-episode conversation covering the concepts laid out in his book "Daylight Robbery: How Tax Shaped Our Past and Will Change Our Future"
Loading summary
Transcript174 lines
- [00:00]
Robert Breedlove
Foreign.
- [00:06]
Unknown Speaker
Hey guys, this is Robert Reedlove from the what is Money Show. And as you've learned by watching this show, Bitcoin is the single most important asset you can own in the 21st century. And one of the most important companies in Bitcoin today is NYDIG. NYDIG's mission is to facilitate financial security for all. They accomplish this by bringing a high level of professionalization and sophistication to the bitcoin marketplace. As a true game changer in the industry, NYDIG is safely unlocking the power of bitcoin for forward thinking individuals and institutions alike. By using nydig, you will gain access to an end to end institutional grade platform providing bitcoin OTC transactions, bitcoin collateralized borrowing, secure custody, asset management, derivatives financing, market research and more. And all of these services meet the highest regulatory, governance and audit standards. Led by Robbie Gutman, Yin Zhao and Ross Stevens, NYDIG has absolutely exploded onto the bitcoin scene recently and is leading the way for ongoing institutional adoption in this nascent asset class. So please be sure to check out NYDIG as a single source for all your bitcoin needs. You made this brilliant connection, I think, between gold, beauty, mathematical elegance and truth. Maybe we can jump back into that and maybe. And I think there's a connection there between some ancient myths as well.
- [01:43]
Robert Breedlove
Ancient mythology, I think so all ancient cultures revered gold and it was, it was associated with, with the planets, the sun specifically. I think most of the gold in the world is actually older than the world itself. They're not actually, they're not 100 sure of it, but they think the origins of gold are in, you know, the collision of neutron stars. And it was present in the, the dust of the solar system before and it, it sort of was delivered to Earth by asteroids.
- [02:21]
Unknown Speaker
Wow.
- [02:22]
Robert Breedlove
That's one of the explanations for it. And you have this thing like gold and silver. The Bible always used to say.
- [02:30]
Unknown Speaker
The.
- [02:31]
Robert Breedlove
Gold and silver is mine was the product of God. But that might just have been the king who was the God saying the golden silver is mine. So we don't really know, but that's why we find, you know, we find it in riverbeds and so on. Now if you look at the. It has wonderful characteristics, gold in that it is not only beautiful, but it is eternal. All the gold that has ever been like, you can do whatever you like to gold, you can bend it into whatever shape you like and do whatever you like with it, but you cannot destroy it.
- [03:04]
Unknown Speaker
Wow.
- [03:05]
Robert Breedlove
And I just think that's a wonderful. You cannot destroy gold. And as a result, all the gold that's ever been mined or found still exists somewhere. It might have been lost, but it's not destroyed. Whereas copper or oil or any other thing does get consumed, not gold. And that's an incredible permanence. And so I think when you figure all these qualities, there's an ancient Greek scholar wrote neither moth nor rust devour. It was an observation they made. And so it occupies this status in the mind of just about every culture that there is ancient culture that there was in the world. And it was associated with the sun largely. And the Roman word Aurora was the sun God who rode her chariot across the sky. The Incas thought that gold was the sweat of the sun. Aristotle was, I think it was. Aristotle was sure that, that, that, that, that gold was made by mixing sunlight and water.
- [04:09]
Unknown Speaker
Wow.
- [04:10]
Robert Breedlove
And, and there's this. There's a symbol for the sun which is a circle with a dot in it. And that used to be the chemical, the alchemical symbol for gold. And there's all sorts of Apollo, the God of the sun. And Sunday is, is the gold date. Each metal is associated, each of the ancient metals is associated with the planet and the day of the week. And I think Mars, for example, would be. Iron would be Mardi Tuesday and silver is associated with the moon, Monday and, and various others. I think tin is associated with Jupiter for some reason. And why. And it's always been a symbol of strength, a symbol of wealth, a symbol of prosperity, a symbol of health as well, a symbol of power. You, you know, kings and queens adorned themselves with gold to impress their subjects and their enemies to. But it was also a means to reinforce their godlike status, if you see what I mean. Because God was associated with the planets. And in fact the, the ancient Egyptian pharaohs would be buried with their gold in order to accelerate their, their journey into the afterlife. And so there's this thing of immortality. There's also this quality of purity and excellence and truth in that. There's always myths like the Golden Apples of Hesperides are thought to have conferred immortality on whoever ate them. But if you think of every quest in myth and legend, Frodo's quest for the Ring of Sauron, the Holy Grail, Arthur's quest for the Holy Grail, Hercules quest for the golden apples. It's always a symbol of incorruptibility and truth and purity and excellence and all those things, ambition and purpose. Even today, like, you know, the athlete gets the gold medal, the student gets the gold star. So there's this association with purity and truth. And I love. There's a great quote. What is. I'm just going to see if I can find the quote here. It's. It's from the Lord of the Rings, but it's actually Peter Jackson. Let's see if I can find it. I don't think I can find it. Ah, here we go. So this is in the film of the Lord of the Rings, but Tolkien didn't actually write it, Peter Jackson wrote it. But it's. Some things that should not have been forgotten were lost. History became legend, legend became myth. And I love myths because, like, if you're ever discussing history with an academic, they'll always dismiss myths and religion and stuff in the Bible, but there's always an underlying truth to it. And, you know, if you think of, I don't know, if you've got sporting heroes, you know, you look at sports players today and everyone goes, oh, they're not as good as the guys I watched when I was growing up. And the guys, the sporting heroes you watch when you grow up have become gods in your mind. And there's this process in your mind where. And so in ancient Greece, this is the story of Jason and the Argonauts. There was this idea that there was a Golden Fleece. And at this time, Jason was based, I think, somewhere in Greece, and nobody had navigated the Bosphorus, the water where Istanbul is, that led into the Black Sea, right? And. But in Georgia, on the other side of the Black Sea, this rumor had spread of these Golden Fleeces. And so Jason went off on this ridiculous adventure to try and find this Golden Fleece. He was told to bring it back if he wanted to get the kingdom that was rightfully his. And the king thought he'd given him an impossible task. But when you learned that in Georgia, on the other side of the Black Sea, the way that they used to pan gold is they would take a sheep and they would fleece it, and they would take the fleece and they'd spread the fleece out on a wooden frame and they would put these wooden frames with the fleeces on, in the. In the rivers, and then the, the fleece would catch all the alluvial gold and dust in the, in the water. And then they, once it had got however much alluvial gold there was, they would hang these fleeces up to dry in the sun. And this fleece was said to have been so. Exactly, you can see, so that all. There would have been all the particles in the. In the fleece of the sheep. So you can see exactly how the myth of a golden fleece spread. Yeah, there is some underlying truth to it. And it was said to have been guarded by a ferocious dragon. And, you know, if you've got. If you're the king and you've got your golden fleeces sitting there drying in the sun, well, you're going to put a dragon there to guard it and all sorts of other terrifying monsters as well. So that's just one nice little myth about gold. And this is another one, which back to gold and beauty, which is that Zeus was throwing a party on Mount Olympus. And he threw. And everyone was invited to the party. Everyone except Eris, who was the goddess of chaos. And she was so unhappy that she wasn't invited to the party that she threw. She took a golden apple and inscribed on the golden apple for the most beautiful, and threw that into the party. And immediately the three main goddesses, Athena, Zeus's daughter, Venus, Aphrodite, I should say Zeus's daughter, and, and Hera, Zeus's wife, all began to squabble about who should get this golden apple, because they all said that they were the most beautiful. And Zeus knew that if he chose one, he couldn't win. So if he chose one, he'd really piss the other two off. So he decided to get some human being to vote on who was the most beautiful. And he nominated the Trojan prince, Paris, to decide. And they found Paris sitting on a. On a. On the side of a hill, tending his sheep or doing whatever he did. And the goddesses each appeared before Paris and made their case as to why they were the most beautiful. And I think Paris might have been a bit of a player here because it seems he got them all dancing naked, each in turn in front of them, so desperate were they all, all to be nominated the most beautiful and that, you know, you got here the queen of the gods and Athena and Aphrodite doing naked lap dancing in front of you. That's a pretty, pretty good afternoon. Anyway, and the goddesses all then tried to bribe Paris to vote for them. And Hera offered him unlimited power. And Aphrodite, Athena offered him wisdom and victory and bashed battle. And Aphrodite offered him the love of the most beautiful woman on earth. And of course, Paris chose Aphrodite. And what Aphrodite had failed to tell Paris was that the most beautiful woman on Earth, Helen of Sparta, was married to somebody else.
- [11:56]
Unknown Speaker
Right?
- [11:56]
Robert Breedlove
And so Paris kidnapped Helen, took her Back to Troy. And so began the Trojan War, the most, you know, probably the biggest war in the world up to that point.
- [12:11]
Unknown Speaker
The face. All over a bit of golden ships.
- [12:14]
Robert Breedlove
Right, there you go. Yeah, all over, all over a bit of all over beauty. All over golden beauty and money and greed and. And all those things. So that's a nice story there. And I'll give you one more myth, shall I? This is a nice one. And this is probably the most related to the history of money. So the most famous myth about gold is Midas, King Midas. And what had happened is that Bacchus, the God of reveling and parties and wine and all the rest of it, was passing through King Midas's territory. And King Midas was in Lydia, which today is Turkey. He was the king of, of there. And he had this lovely garden that he would walk through with his daughter and he loved it. And this sat here, who was one of part of Bacchus's group, just got so drunk and he fell asleep in Midas's garden. And Midas found him and woke up and looked after him and tended him. And then eventually the satyr went back to Bacchus. And Bacchus was so thankful to find his old friend again that he said to Midas, you can have any reward that you like. And Midas thought for a moment, he said, I want the reward that everything I touch turns to gold. And he thought this was a very clever thing. And then of course, he touched his flowers and they turned to gold. And he was like, oh, great. But then gradually everything he touched his daughter and she turned to gold. And he loved his daughter more than anyone else. And he realized he'd ruined his life. And so. And what he thought was a blessing was in fact a curse. So he went to back to back and he said, please rid me of this curse. Rid me of this curse. And they all said, well, Midas is a good man. So what I'll do is if you go and wash your hands in the river Pactolis, which is a river in western Turkey, then your curse will go into the river. And so Bacchus did that. And his power to turn gold, everything to gold, washed into the sands of the river. Now that river Pactolus was one of the most bountiful rivers of alluvial gold in the history of the world at that time. And skip forward three or four generations. Croesus. And the father of Croesus, what was his name? The father of Croesus, I forget his name. Aliates King Alyates they were the first to. They took the alluvial gold, and it was a mixture of gold and silver electrum. And they were the first to mint coins. So they were the first people to mint coins. And the precious metal that they minted their coins with came from the alluvial beds of the river, which had been basically been put there from Midas, getting rid of his curse.
- [15:17]
Unknown Speaker
Wow.
- [15:18]
Robert Breedlove
So, again, you see how the sort of myth becomes the legend and the myth becomes the thing. Now, the genius, we have the expression as rich as Croesus. Croesus was Aliati's son. Now, they. He minted. The Aliatis minted the first coins in Lydia and the genius of Crete, but they were gold, silver mix. And these coins began to be used, and they had a stamp on them. And, you know, coinage was an incredible technology because here you could certify the amount of gold and silver or copper, whatever, in a coin and stamp it with the issuer's head. So you knew it was truthful. You knew the money was good. And the coinage, you know, the principle of coinage, it still exists today. Just so it's a technology that's lasted probably two, 3,000 years, which is incredible, really. I mean, of course, the technology advanced, and the genius of Croesus was that he separated the gold and the silver, and he took all the coins of his dad, melted them down, separated the gold and the silver, and so we had the first gold and silver coins, and he gave us the first bimetallic standard. And the bimetallic standard lasted, you know, forever and ever, right up to the Wizard. The wizard of Oz. The original book was based on an argument about the bimetallic standard in the United States. The yellow brick road was obviously the. The gold standard. And Dorothy had silver shoes. And they only changed the silver shoes to ruby shoes in the film because they wanted to show off their new technology of Technicolor, the original story, you know, and the Tin man is the army, and the. Sorry, the lion is the army, the Tin man is industry, and the scarecrow is agriculture. Agriculture, thank you very much. And then, you know, they finally get to the emperor and he pulls back the curtain, there's nothing there anyway.
- [17:11]
Unknown Speaker
Wow.
- [17:12]
Robert Breedlove
The green city. Yes.
- [17:14]
Unknown Speaker
That's like a modern myth now, right? Wizard of Oz. That's incredible. So that's so fascinating. So I guess one thing that comes to mind is that gold's. From a pragmatic standpoint, gold's indestructibility is what contributes to its two free market Forces favoring it as money because it essentially becomes the most inflation resistant store of value over time. So that's what people always want to favor the money that's least subject to inflation. Basically.
- [17:49]
Robert Breedlove
It'S pure wealth.
- [17:51]
Unknown Speaker
Yeah, pure wealth and zero liability. Right. It's a bearer assets. You're holding a pure money that no one. Again, it's a form of money that is beyond the control of man or was historically beyond the control of man. Central banks have sort of gotten a hold of it today. They had 20% of the supply and they've manipulated it to high heaven.
- [18:18]
Robert Breedlove
But still, do you think of how we were talking about how Bitcoin has liberated people because it's given them financial freedom. We've got the rise of digital nomads and so on, which I'd love to talk about more. But coins did the same thing right back in the day because they suddenly they gave you geographical and social mobility because you could move around and carry value with you. And it helped trade to spread with incredible ease and civilization as a result, to develop and. Yeah, so that's just. I was just.
- [18:52]
Unknown Speaker
Yeah, no, so I like that point too. So coinage was kind of the original certification technology for money. Whereas traditionally, if you're going to trade gold at every exchange, you would have to stop, say the value, make sure it was authentic, weigh it, perform all these techniques on it to authenticate the money. But coinage gave us basically a second layer, if you will, a second layer of technology on gold and that it was immediately verifiable. You could just trust the issuer's stamp versus needing to do all this testing and such. So that increases the recognizability property of money and then reduces transaction costs. We can now transact much more quickly and seamlessly so we can increase trade, increase wealth. Clearly the other thing that. And you brought this up was interesting, is that. So gold has this proof of work to it, that's what secures its supply from artificial inflation, if you will. But what I had never thought about, and proof of work in the sense that it cost you time, effort and energy to go and mine it in the world. But it sounds like there's an even deeper proof of work behind gold and that maybe it was manufactured in the heart of ancient stars. We can't rerun that whole scenario to make more gold in the world necessarily. And now I think, I'm not sure if this is accurate, but I think we've figured out a way to create artificial gold. But it's still so economically like it's Way more expensive to produce the ounce than it sells for on the market. Or maybe there's some other.
- [20:35]
Robert Breedlove
I've seen your tattoo on your arm. Raised your arm.
- [20:38]
Unknown Speaker
My one tattoo, the bitcoin. I'm skin in the game. That's what it represents to me. But that's, that's super interesting that, that gold.
- [20:49]
Robert Breedlove
I'd like to read about that, that, that sort of artificial gold. A bit like artificial diamonds.
- [20:55]
Unknown Speaker
Yeah. I don't, I'm not, I don't know enough about it, but I've, I've heard that it's just not economically viable yet. Yeah. There may be some other differences as well.
- [21:06]
Robert Breedlove
I think coins did something else, Robert, which is they began to create this relationship between money and state in that people didn't do it at first. Human faces only began to appear on coins about 150 years later. Even Alexander the Great, he would stamp his coins with a picture of Hercules, but Hercules looked remarkably like him. And so that. But it was only like a couple of people after a couple of generations after Alexander the Great, where coins were actually in the likeness of the ruler. They were really effective means of, of spreading propaganda and spreading messages. And for example, there are coins in India with Alexander the Great riding a, an elephant.
- [21:56]
Unknown Speaker
Right.
- [21:57]
Robert Breedlove
And then there are coins, you know, so they were a means to let you know who was the God, who was the ruler, to spread propaganda. And I don't see how that would have existed prior to coinage.
- [22:10]
Unknown Speaker
Right. So it's almost like we're attempting to hijack the reputation of mythology or mythological figures, perhaps to add trust to the certification function that the coinage represented. You believe in Hercules. You've heard this myth your entire life. Like, well, here's Hercules coin. And then that line was eventually born.
- [22:33]
Robert Breedlove
Hercules coin. Is there a shitcoin called Hercules coin?
- [22:36]
Unknown Speaker
I'm sure there is God coin. If there's not, there will be after the Sears. So that's really interesting. And that too points to this seemingly ineradicable connection between religion, mythology and money. I, I don't. Some people will comment that money is just a belief system, which I think is a little bit misleading because that to me sounds like we could just choose anything and it could be money. We could just say, oh, glass is money. But there's a market driven discovery process beneath it where free market forces sort of push us toward the money that best satisfies certain properties. It's not purely a belief system, but it is a social device. And that it's more of a concept we are attaching to a particular good that satisfies these properties. But I guess to bootstrap that social device, we need things like mythology or the reputation of something deeper to bootstrap the reputation of the money. And it sounds like coinage was used for that.
- [23:46]
Robert Breedlove
It certainly was. It certainly was. And I mean, every king, every. I mean, we still have the, you know, we have the queen on the pound notes today. Every ruler has used money's, you know, become a tool of propaganda, tool of communication. Which brings us back to that.
- [24:08]
Unknown Speaker
Yeah.
- [24:09]
Robert Breedlove
Theme as well.
- [24:10]
Unknown Speaker
Yeah. In the U. S. There's a movie in the US Called Dead Presidents and it's about bank robbers. You know, they're. They're robbing the bank to get the dead. The pieces of paper with dead presidents on them. So, yeah, it's still part of propaganda and mythology. I wanted to ask you one other thing about mythology. I don't know. So you mentioned the alchemical symbol for gold, the circle with the dot in the middle. Yeah. The alchemists also talked about the lapis philosophorum, which is the philosopher's stone, which is this long sought after substance that could turn base metals into gold, basically. And I've read. Which was a really interesting thing because this alchemical pursuit was occurring across civilizations across the world for hundreds of years. Everyone's trying to. Trying to do this, and it's a bit more metaphorical and complicated than just trying to figure out how to turn lead into gold. There's also this moral side of the equation. And the alchemical processes themselves became. They were precursors to the scientific method, actually. So it was kind of heretical originally under the purview of the church to go out and experiment in nature. But the alchemists kind of forked away from the church and said, no, we can go and find redemptive qualities in nature. And that body of thought became science which led us into the modern age. And a lot of this I get from, from reading Jordan Peterson's book Maps of Meaning. But the philosopher's stone was described as the incorruptible substance that would save the world from tyranny. And it was supposed to be actually something transcendent of gold. We often think it's just, oh, the thing that turns metal into gold. But there's supposed to be a substance, the incorruptible substance we would discover. And I've been exploring that in some of my writing and my speaking that I think you alluded to the comedian earlier that said two certainties in life, death and taxes. But with Bitcoin. It seems we have this third certainty of 21 million units. And it appears subsequent to the block size wars, that that is not a corruptible number. It cannot be changed by any political or unilateral attack vector. So I'm ruminating on this lately. It's like, what if Bitcoin is a philosopher's stone type mythological artifact?
- [26:50]
Robert Breedlove
Well, I see, like, I see gold occupying this role in the physical world, but I just think the Internet, the digital world, it is a whole new world and I don't even know exactly where it exists, but it is another frontier, a new place. And as everyone says, bitcoin is digital gold. And we can talk about why bitcoin has done so much better. And gold as an investment. I can, I've got my own theories on that. But the, I'm interested. I, I don't know that stuff about the, the, the philosopher's stone, but I'm interested in this. The. Would it, would it be made of gold? No. What would it, would it be some precious stone?
- [27:42]
Unknown Speaker
Well, it's the thing and the alchemical text, I don't think it's very specific. It's just this like, they just call it the incorruptible substance and everyone's looking for it. And apparently, you know, the, the metaphorical symbol is that it turns base metals into gold, but also as part of the pursuit, it's supposed to also refine your own moral character. So it's a way to purify material reality. But to obtain it, you have to purify moral reality so that the, the seekers of this philosopher's stone would go through trials to purify their own characters.
- [28:20]
Robert Breedlove
Supposedly it's a very good book by a chap called Rory Sutherland, who's an English advertising executive, very good mate of Nassim Taleb, and he called. The book's called Alchemy. And he, he, he advocates, he distinguishes between logic and, and what he calls psycho logic. And he advocates that, that, that you could turn lead into gold with alchemy. And it doesn't matter if you don't actually turn the lead into gold as long as people believe that the lead has been turned into gold, which is quite interesting. And he finds all sorts of wonderful psychological solutions because, you know, he makes the point that you argue logically and then you arrive at the wrong conclusion because there's just stuff that you didn't, psychological stuff that you didn't factor into it. Yeah, I'd really recommend that book, Alchemy by who's the Author Rory Sutherland.
- [29:20]
Unknown Speaker
Rory Sutherland, his name.
- [29:21]
Robert Breedlove
Yeah. The audiobook's really good. He's got a nice plummy English accent, if you like plumbing.
- [29:28]
Unknown Speaker
So what do you think then? Which, by the way, can I ask.
- [29:32]
Robert Breedlove
You a very quick question, please. Just coming back to the bitcoin, let's just say that all the bitcoin core developers agreed this should happen. There was total unanimity and so there wasn't any politics to it whatsoever. Could they change it so that there were 42 million bitcoins instead of 21 million?
- [29:51]
Unknown Speaker
No.
- [29:51]
Robert Breedlove
Could it be changed?
- [29:54]
Unknown Speaker
So the nodes, which is you have the mining network that's securing the bitcoin ledger over time, the. Those are the operators allocating capital and operational expenditure to secure the network and earn Bitcoin and transaction fees. You can think of those as enforcing the rules. Enforcing the bitcoin rules. But they don't select the rules. Neither do the developers either. The developers build, the selectors of the rules are the nodes. So when you download Bitcoin and run a node, you're choosing what rules you want to apply to you, and the consensus of those nodes determines which rule set to run. And then the miners enforce those rules. The magic of Bitcoin is that it's perfected the rule set for holders. So zero inflation, zero unexpected inflation, cannot be confiscated, cannot be counterfeited. Only a valid signature can spend it. So there's no. In theory, at least, there's no design space left to introduce a feature that would cause a breakup of the consensus of bitcoin to drive it to 42 million, for instance, because that's against the interest of everyone. Why would anyone ever vote to increase the supply to 21 million and 1? It would make no sense because people would get diluted. So that's the kind of the dynamic equilibrium that holds it in place.
- [31:30]
Robert Breedlove
Should we talk about why bitcoin's done so much better than gold?
- [31:33]
Unknown Speaker
Yeah. I would like to ask you. So assuming 21 million Bitcoin is certain, I know it's ossifying itself into certainty over time. Right. The longer it holds its supply cap, the more trustworthy it becomes. Kind of the classic Lindy effect. How much do you think that changes the world if we do have this third certainty emerge and how much does it affect? I mean, death probably is not going anywhere, maybe, but with technology, but taxes, clearly it impacts a lot.
- [32:10]
Robert Breedlove
Whenever I think about this stuff, I just become slightly overawed with the enormity of the implications.
- [32:17]
Unknown Speaker
It's enormous, it really is.
- [32:19]
Robert Breedlove
And. And you Sort of do need to come back to this. You know, we're, as we're speaking, Bitcoin's having a bit of correction. It's gone from, I think, 64,000 to about 48,000, something like that. By the time this goes out. The numbers might be different, but, you know, so you do, when you're going through one of these corrections, and they do come because it's a, it's, it's a, among other things, it is a speculative asset and it's a new technology. And you always get excitement and speculation around new technologies. But not only is it a new technology, it's a new technology that is money. So it's about as bubbly an asset class as you could possibly invent. And it is very psychologically driven. The periods of ex. Isolation and then whatever the opposite to euphoria is, depression. So they do come. So and so when you go into the, if the, when you go into one of the periods of depression, as we might be on the edge of now, we don't know, it's important to remind yourself of these enormous possibilities of this new system of storing wealth that can be transferred anywhere in the world without the need for, you know, government authority that is protected by this incredibly powerful computer network built on God knows how many kilowatts of energy. You know, the, the, it is just, it is so powerful. And, you know, people don't still today, I think younger people, this doesn't apply to so much, but older people don't realize the value of digital assets and what a breakthrough this idea of digital scarcity is. But as soon as you start thinking about it, thinking of the enormity of it, and you think, like, in 1990, I'm not going to be able to give you the exact number, but I think the combined, I can tell you that the combined value of the four biggest companies in Silicon Valley today is something like. I should really get the precise number if I'm, if I'm quoting this on a podcast. But it's something like, I think it's over 200 times higher today than it was in 1990, in 30 years. And this typifies the extraordinary growth that has happened in the digital economy that hasn't happened in the physical economy. There's been growth in the physical economy, but it's been 3 or 4% a year. Yeah, but digital, anything digital is just growing, grown, grow. And there's several reasons. Firstly, there's no regulation to get in the way. Everyone's experimenting. There's, there's it's, it's the Wild West. There's no you can do what you like. It's invention. It's also to do with the scalability of digital. You know, if you've got one song, you know you want to, you stick it on the App Store. That app can be downloaded a million or a billion times. Whereas if I build a brilliant, I don't know, mug, I've still got to fabricate and distribute a billion of those mugs around the world. So there's a scalability to digital. Google can do some new improvement to its search engine, and immediately it's available to millions or billions and the information. So there's this scalability. And because things happen so quickly, it attracts more invention in investment. And so this, this just causes this incredible growth. But the one problem that digital technology didn't have was scarcity. There was no concept of digital scarcity because of this easy replicability of replicability. And that was a problem that Satoshi solved, obviously, with the blockchain, and he created digital scarcity. And so you've got this new digital economy in a separate world that is accessible to anyone, anywhere with an Internet connection, and then you've got this incredible store of value built on it. The possibilities are tremendous. It's just unbelievable when you think about it. But I will say this, and I realize this is heresy to bitcoin maximalists, but the one place where dilution can come to bitcoin is not in bitcoin itself, but it's in shitcoins. But not all shitcoins are shit. There are some good alternative coins out there. I'm a big fan of the privacy coins for various reasons. And so in a funny kind of way, they're the biggest threat to bitcoin. The proliferation of crap. I think once bitcoin sort of levels out, it gets to the. What do they call it, the leveling out of the Lindy curve and the.
- [37:43]
Unknown Speaker
Top of the S curve.
- [37:45]
Robert Breedlove
The top of the S curve. Once that happens, then I think it'll be harder to pump shit coins because the whole thing will just be more established. But, you know, I'm a big believer in the Hyatt competing currencies thing. And I think in the same way that, you know, I've got five or 10 messaging apps on my computer now, Signal and WhatsApp and iMessage and Gmail and Telegram and all this, I think you're just gonna. We're going to. Well, we have the same thing with money, and you're just gonna have lots of different monies. But bitcoin does seem to be the backbone of the whole thing. And it has the network. So somebody could invent a coin that's faster, stronger, quicker, blah blah blah, limited supply. But it would never have the same network that bitcoin has. So I suppose what's the weakness of bitcoin is it loses its network. That's the threat. People just stop using it. I don't believe they will, but that's the danger. Is that fair enough or not?
- [38:53]
Unknown Speaker
Yeah, no, that's a fair assessment. I agree with you that the digital domain is purely capitalistic. It's just whatever the market says goes more or less very difficult to regulate. Governments are still trying to catch up with these digital monopolies that have been around for freaking 20 years now. So government's slow to move as usual. The zero marginal cost of distribution is an absolute game changer. Microsoft can ship a product to every customer in the world at the click of a mouse. No physical company can even hope to compete with that. But I'd say we diverge on the shitcoin versus Bitcoin. I actually, in addition to bitcoin being digital scarcity, I think the other big game changer and what I argue is a one time discovery is that it represents absolute scarcity. We've never had something that we knew with basically perfect information that its supply was fixed and unchangeable. Again, the third certainty, this 21 million.
- [40:03]
Robert Breedlove
Bitcoin, there's nothing like that in the physical world, is there?
- [40:07]
Unknown Speaker
Right. Gold is the closest thing. It's the most predictable supply over time, the most predictable inflation rate. And that's how I see it playing out, is that we'll have full consolidation at the monetary layer, just like we did with gold. Basically globally. Gold remains the preferred geopolitical money in the world today. For that reason it best satisfied the properties of money. And I think bitcoin has more or less perfected them. So I see shitcoins competing directly with Bitcoin as money as doomed to failure, more or less. There's no identifiable attack vector on Bitcoin. And even if assuming they did identify some superior feature that the market determined was better than Bitcoin, for whatever reason, Bitcoin maintains its ability to adapt. It is still open source software. It can add new features. It does not. It optimizes for survivability and not for features. But if something was significant enough, Bitcoin can add it. And we've seen this already with things like segregated witness and Schnorr signatures. And taproot, it does add features over time, but it does so very slowly to make sure it continues pumping out a block every 10 minutes at a 2 megabyte block size and has a 21 million cap. So it's optimized for survivability because it is the ultimate enemy of the state. Every state in the world would turn off bitcoin immediately if they could. But that's the beauty of bitcoin is that it's military.
- [41:38]
Robert Breedlove
The cat came out of the bag and they let it out of the bag. They never realized what it was.
- [41:42]
Unknown Speaker
That's right.
- [41:43]
Robert Breedlove
I'm talking about in 2013, 24. I've actually got a chapter in my book, why Bitcoin is enemy of the state in that one.
- [41:51]
Unknown Speaker
Really? Yeah.
- [41:53]
Robert Breedlove
They, they, they, they, they, they had their chance to shut it down and they didn't know what it was and they just thought it was fun. And it's going to be. It's, it's, it's, it's, it's not the bubble, it's the pin. I love that quote.
- [42:10]
Unknown Speaker
Yes. Yeah. And now that it's a trillion dollars in market cap, it's seemingly at a point where it's unstoppable.
- [42:20]
Robert Breedlove
They can't close it down, America can't close it down. Now, it's too much corporate interest in it, it's too established.
- [42:27]
Unknown Speaker
So that's the big.
- [42:28]
Robert Breedlove
And didn't Nigeria make it illegal and bitcoin transactions have gone up by 30%?
- [42:33]
Unknown Speaker
Yes. Everyone's tried and it backfires most often. This is the most fascinating aspect of the narrative to me, which is maybe off the back of that philosopher's stone mythology is like, what if the digital age is as transformative as the movement from the feudal age to the industrial age? We're just totally revamping society from the ground up.
- [43:01]
Robert Breedlove
It is.
- [43:02]
Unknown Speaker
If it is, then in theory, most economic activity would move to digital space. Bitcoin.
- [43:11]
Robert Breedlove
And it will.
- [43:12]
Unknown Speaker
Yeah. So bitcoin could actually be a 12 year old digital disruptor to a 5,000 year old monetary technology, which is gold. Now I agree they'll coexist in some capacity, but I think bitcoin could largely demonetize gold. And if it does that, then we're talking about the disruption of central banking, the disruption of the nation state, the disruption of global warfare. It's staggering.
- [43:39]
Robert Breedlove
Well, it is staggering. I often use the analogy that people say gold is natural money and in a way it is. And there's a beautiful thing about gold which is that the rate of New production of gold is the same as population growth. So if you took a long chance chart of gold growth and the expansion of the gold supply and population growth, they. They pretty much match each other. So there's a certain beauty to that. But, you know, gold is natural money. Well, the horse was natural transport until they invented the car.
- [44:23]
Unknown Speaker
Right? Yeah.
- [44:25]
Robert Breedlove
So, you know, and there is a, There is a.
- [44:30]
Unknown Speaker
That's a good one.
- [44:31]
Robert Breedlove
I mean, I've. I feel really sorry for. You know, I first learned about Fiat Money and all this, but 2005, I came to this whole thing and I started and I earned a bit of money and I started buying, investing it in gold. And then once you start investing in gold, you start reading about gold and you realize how what a political metal gold is. And, you know, I started reading about Fiat money and debt and I was like, this is unbelievable. And, you know, I pretty quickly became an anti fiat money thing. And in those days you would have to. Every time you wrote something and said something, you have to explain to people what Fiat meant. It was just so exhausting. And I did a video called Fiat Money Explained or something. We've got millions and millions of hits on YouTube and I wrote a film called Four Horsemen, which was huge in about 2012, 2013, it's had like 9, 10 million hits. It's like the sort of bible of the film about the global financial crisis. And spent ages in that film lecturing. I narrated it as well, lecturing about the damages of the Fiat money system. And then along comes Bitcoin. And it's wonderful because it's the most powerful, educative tool because as well as investing in it, you. You start learning about money. And everyone know, now knows the word fiat. They now know and they were fungible. Nobody knew what fungible meant until about a year or two ago. And so it's a hugely educational tool as well as everything else that it does. But I feel sorry for gold bugs because like, I used to go to, I'm 51 now, so in 2005, I would have been, you know, 35, 36, something like that. And I used to go to gold conferences and there'd be lectures about US money supply and all the rest of it, and we'd all say, gold's going to the moon and silver's going even higher. The possibilities for silver just looked enormous and silver never came good. It briefly went to $50 in 2011 and everyone got very excited and then the bubble popped. But because it was just such a disaster that everyone cries manipulation Because. Because gold just doesn't do what it's supposed to do. And everything that the gold bug said was going to happen to gold has happened, except it happened in bitcoin, not in gold.
- [46:56]
Unknown Speaker
Right, right.
- [46:59]
Robert Breedlove
So the gold bugs were right. They just had the wrong vehicle.
- [47:02]
Unknown Speaker
That's right.
- [47:04]
Robert Breedlove
And I feel really sorry for them. And as I say, I'd go to gold conferences, age 35, and I would be the youngest person there by miles. And then I'd start going to Bitcoin conferences, 2013, 2014, whatever it was. And by then I'd be in my early 40s. I'd be the oldest person there.
- [47:23]
Unknown Speaker
Right.
- [47:23]
Robert Breedlove
So there's a really generational thing. And I'm 50 years old now, and I'm right on the sort of cusp between the two things. And I think one possibility I've been considering is that the idea of ever going back to a gold standard just seemed ridiculous. And I used to say I had a friend who was very high up in the Conservative Party and I used to tell him to tell George Osborne to print the money and buy the gold. All the gold that Gordon Brown sold off, buy it back. Just print the money and buy it back. He's going, what? Even. And at this point, gold was like $1,200 or something. And everyone was like, it was in a runaway bull market. And it was like, what's at these prices? I said, yeah, just do it. But the idea of going, going back to gold standard just seems silly. But the bizarre thing is it's the one thing that central banks own. They don't own any bitcoin. Or if they do, they keep it a secret. But I really doubt they do. I just don't believe there. The only places they're going to earn bitcoin is somewhere like Iran or Venezuela, which are much more autocratic. So. So they do what they're told in anywhere where there's transparency, United States or Britain or somewhere, they just won't. But anyway, so if there's some kind of eventual hyperinflation or runaway inflation, collapse of the currency. I think, by the way, inflation is a very real possibility. Even if you just measure the. Even measuring just consumer prices alone. I mean, we all know we have huge inflation in house prices, but I mean, actual inflation like we saw in the 70s is a real possibility now because there's just such a huge rates of savings because nobody's been spending any money in Covid. Yeah, it all goes all that. So I think that's a not definite. But you Know, we might get 6 or 7% inflation, which will push rates up, at which point everything goes tits up.
- [49:11]
Unknown Speaker
Yeah.
- [49:12]
Robert Breedlove
And when, if things do start to go tits up, you might actually see governments go, well, we've Bitcoin, Bitcoin, bitcoin. And they might try and actually fight it with the gold.
- [49:21]
Unknown Speaker
Yes.
- [49:22]
Robert Breedlove
In a funny kind of way, bitcoin might force governments to do something, go back to a gold standard of some kind, which they would never in a million years have considered.
- [49:30]
Unknown Speaker
That's right.
- [49:32]
Robert Breedlove
Once upon a time. I'm not saying that will happen, but I think it's a scenario.
- [49:38]
Unknown Speaker
I think it's a very strong possibility, actually, because historically, the way I describe it, there's a great book on this called Gold wars by Ferdinand Lips, documents this entire geopolitical cold war on gold. Because gold was the governor of governments, if they abused their monetary policy, gold would leave their country and there was this natural check so that they couldn't be overly abusive. Monetary policy. That's why they basically took concerted action over time, a lot of it driven by the US and the US's international branch, the IMF, to get countries off the gold standard. The last one to come off was Switzerland in the 90s, 1909. Yeah. But Bitcoin, by emerging as a competitor to gold, we'll say, at least, and serving as this irrepressible barometer of monetary policy. If I have to Describe Bitcoin in 30 seconds, I say it's an insurance policy on central banking, the more dollars they print, the more valuable it becomes. So it's like, you can't hide inflation. They suppress the gold price and derivatives markets, the London gold pool. All of these schemes to keep fiat currency relevant, they can't do that with bitcoin. So bitcoin forces governments to start behaving more honestly again, which now they're going to be faced with the lesser of two evils. It's like, do we let this bitcoin thing keep running or do we buy some and let it just destroy our monopoly on money forever? Or do we try to go back to a gold standard so it imposes these market forces on government, forces them to be more honest.
- [51:24]
Robert Breedlove
I'll tell you something, and this is something I've been writing about, so I've got all the facts present in my. All the data present in my head. China has way, way, way more gold than it says it does, like way more. Now, America is the world's largest gold owner and it has 8,133 tons, is the Figure it has. Just remember that figure. 8,133 tons in Fort Knox, apparently. Except Fort Knox hasn't been audited for 50 years or something ridiculous. But that's the nominal figure that it has now. China. In the year 2000, there was about 4,000 tons of gold in China in private hands as well as state hands, you know, jewelry and so on. And since 2007, China has been the world's largest gold producer. It's mined over six and a half thousand tons since. Since 2007. Six and a half thousand.
- [52:30]
Unknown Speaker
Wow.
- [52:31]
Robert Breedlove
50% of Chinese gold miners are state owned. Okay. China has not. You talk to any gold dealer? No. It's very difficult. China does not export its gold. It's not allowed to. It keeps all the gold it mines. Chinese gold companies operating in Asia, Africa, South America and Australia have produced a similar amount of gold that they've produced at home. That gold's all gone back to China. As well as being the biggest producer of gold, it is the biggest buyer of gold. It is the biggest importer of gold. And 20,000 tons, 20,000 tons have gone through the Shanghai Gold Exchange since 2008, has gone through and been withdrawn. And lots of gold goes into China and doesn't go through the Shanghai Gold Exchange. But if you just take Chinese production and the existing gold in China and the Shanghai Gold Exchange, you have about 29,000 tons of gold in China. Now, China's been famously encouraging its citizens to buy gold ever since 2008, and they have been buying it like mad. But let's just say 28, 29,000 tons, let's say 50% of that is state owned. I don't think that's an unreasonable assumption. That means China has 14 and a half thousand tons of physical gold. I remember that original figure. America has 8,000 tonnes, so that China has 1.8 times the amount of gold that America has. It says it's got less than 2,000.
- [54:12]
Unknown Speaker
Right.
- [54:13]
Robert Breedlove
It's got way more. I know for a fact it's got way more. And there's the. The. They just don't declare it. Because to say we've got more gold than the United States would just be a challenge. It would be not quite a challenge of war, but it would be such a big thing. So now you look at, you know, China, China sees itself as the world's greatest country. And the fact that over the last three or four hundred years, whatever Western countries have been superior, that's a sort of temporary blip in the context of history, which, you know, China's been top dog for thousands of years. And empires on the ascent. Their money is always sound.
- [54:50]
Unknown Speaker
Yeah.
- [54:51]
Robert Breedlove
It's empires in decline where the money turns bad. And you can usually pinpoint the beginning of the end of the empire to the time at which they started debasing their money. The two things coincide. America 1971, Britain 1914, the Roman Empire almost to the exact Nero was the fact the first guy who started debasing the coinage. And, and the Roman Empire reached its greatest extent like within about a decade after that, a couple of decades. China has shed loads of gold and it's the, the it's army owned some, it's sovereign wealth fund owns some. There's other departments of the state that own some and they only declare some of what's in the People's bank of China. Look at what China does, not what it says because they're two very different things.
- [55:37]
Unknown Speaker
Yeah.
- [55:38]
Robert Breedlove
Now there's been a, a bit of propaganda apparently. I haven't actually seen the video but I've heard about it, read about it in the Wall Street Journal circulating where there's a character white man and it's in English, this video white man dressed in a, with a shirt that's got the American flag shirt on it and he gets knocked out by a gold digital yuan. And what's the statement there? Now we know that China's been working on its own central bank digital currency since 2014 at least. I think the only country that's more advanced is the Bahamas. That well known international threat. And we know that it's been working in a sense that it's been buying huge amounts of gold if it wants to get take up for its currency. You know it'd be humiliating if China released a gold backed digital currency. It would be just humiliating for the West. Right. With its unbacked fiat money. You know we print money, China mines gold. Yeah. And you know it's a, you know it's not very well kept secret that China wants top dog money status in the world. Yeah. And I think three quarters of bitcoin mining takes place in China so it's just a matter of when they pull the plug I would say. But gold's going to have a big part of it and when that happens I think the gold price will have to go up. It won't go up like bitcoin's gone up, but it will have to go.
- [57:13]
Unknown Speaker
Up, it'll have to explode. So when you say pull the plug you mean execute gold backed digital yuan.
- [57:20]
Robert Breedlove
Yuan, yeah. There's a famous I think it was it Deng Xiaoping or someone said, we must not shine too brightly. And so that's, you know, conducted Chinese policy. We must not shine too brightly. And they've just gone about it working, sold stuff, intellectual property. There's more billionaires in China now than there are in the US Right. It's just an astonishingly ambitious, hard working, you know, and their tax model is very much copy Hong Kong, which we talked about. Yes, but it's sort of authoritarian capitalism. It's quite scary really. But, but you know, they don't, they don't tolerate dissidents. If, if, if, you know, Black Lives Matter or something, started campaigning in Beijing, that would be shot or something. Pretty right?
- [58:05]
Unknown Speaker
Yeah. My friend Mark Yusko, he says, China, please go. The US please go fish. They're just thinking 500 steps ahead of our political leaders in a lot of ways.
- [58:19]
Robert Breedlove
Oh yeah, because they don't have to think four years ahead to how do we win the next election.
- [58:23]
Unknown Speaker
Right, exactly.
- [58:24]
Robert Breedlove
It's just not in their minds.
- [58:26]
Unknown Speaker
And this would be the DeathStroke to the US dollar if they launch this successfully over time, at least not immediately. And I think that's a great point too.
- [58:37]
Robert Breedlove
The gold plan happened, by the way, before bitcoin came along, that was already well on the road. They might now look at it and go, oh, bitcoin, we might need to pivot into bitcoin. Yeah, they probably already have, but they.
- [58:52]
Unknown Speaker
Yeah, I'm sure they. The bitcoin they do acquire, because they've acquired some through some of these scams that go out and acquire bitcoin. Like, I forget the name of them, but there's a big one in China that are essentially a Ponzi scheme that was getting people's bitcoin to guarantee them a return. I think the state seized a lot of that. To your point, they wouldn't have auctioned.
- [59:17]
Robert Breedlove
Off the Silk Road bitcoins. They would have kept them.
- [59:20]
Unknown Speaker
Right. The US has been auctioning it off. The rumor I hear is that the CCP at least holds some of it. They probably sell it off selectively, but who knows, possibly get accurate data out of there. That's a great point. That when a civilization is emerging or competing to be the superpower, it tends to have a sound currency. Only later on does it start to debase itself. And that's really what China appears to be doing. And it could be much worse because as you said, Fort Knox has not been audited in 50 years. I've also heard rumors that there's no gold Left in Fort Knox.
- [59:56]
Robert Breedlove
I've heard that.
- [59:57]
Unknown Speaker
And we're, yeah, we're just running.
- [59:59]
Robert Breedlove
The rumors are going to persist until you order the gold.
- [60:01]
Unknown Speaker
Exactly.
- [60:02]
Robert Breedlove
So it's a great, there's a great joke. So the head of the American military goes to President Biden. Mr. Biden, Mr. President. Mr. President. There's no gold in Fort Knox. And Biden goes, what do you mean there's no gold in Fort Knox? And the head of the military. Because there's no gold in Fort Knox. And Biden says double the guard.
- [60:23]
Unknown Speaker
That's exactly what I think they've probably been doing. Yeah. Again, there's no oversight, there's no sunlight, there's no transparency to keep it honest. So I'm sure whoever had access to it did whatever suited their agenda either confiscating it, selling it, whatever, but who knows? That's all speculation, but I guess we'll find out. What's scary about that though is if China comes to power is they're perfecting this digital dystopia, this social credit system. And if they became the global superpower and tried to roll that out, I mean, that is very, that's a bleak Orwellian future.
- [61:08]
Robert Breedlove
I've been thinking about these and like programmable money, money that has conditions attached to it. Money that you can only spend on certain things, you know, in certain government recognized retailers or on certain government recognized products. You know, you can only use this money to buy a house or whatever. I think it's going to usher in the possibility of bespoke interest rates. So interest rates vary from person to person according to what their social credit score is. This social credit score. If you have the right opinions, if you subscribe to the right worldview and you don't question the orthodoxy, then you'll get rewarded with this money. And if you have the wrong, if you have wrong views, you'll get penalized. I think, you know, it's, it's very medieval. What's going on with, by the way, we're going to come back to, you know, what's going on with all this? You know, excommunication was a medieval practice, but effectively you get, you get straw manned and everyone, you lose your job because you said use the wrong words about something or you get banned on Twitter. Well, that's excommunication, isn't it? Yeah, same thing. All these medieval practices, still burning witches at the stake and witch hunts and all that. It's all happening, but just in a digital way.
- [62:33]
Unknown Speaker
Right.
- [62:33]
Robert Breedlove
We talked in the beginning about the same dance but so, and then the other thing is money that has a programmed expiry date, you have to spend your money before it expires. You know, it's really, really concerning. But if we start, we each get a central bank digital wallet and we start using wallets rather than banks. The implications for banks are very bad by the way, traditional banks. But we all get used to using wallets and having wallets on our computer and so on. Well, that's just going to be an on ramp into Bitcoin.
- [63:11]
Unknown Speaker
Yeah, right.
- [63:12]
Robert Breedlove
People are going to go, oh, I get it, I understand how wallets work now. Well, I start doing a Bitcoin and that goes up. But then your fiat program, fiat central bank money probably won't be allowed to be used on bitcoin exchanges in, you know, in the more ruthless places.
- [63:28]
Unknown Speaker
Right.
- [63:28]
Robert Breedlove
So it's, it's, I think we're going into the future, a future generally where the rules are made less by lawmakers. They are set in code.
- [63:42]
Unknown Speaker
Right.
- [63:43]
Robert Breedlove
So the platform makes the rules. So, and by the way, I also think we're going into a world, we talk, we've talked mentioned at the end of nation states. If you look at the combined market cap of Google, Microsoft, Apple and Amazon, it's bigger than I think the GDP of every country in the world, except maybe the USA and China and possibly Germany and Japan. It's extraordinary.
- [64:04]
Unknown Speaker
5 trillion market cap, something like that.
- [64:06]
Robert Breedlove
Yeah. It's just, I mean the UK for example, I think our GDP is about 3 trillion. So it's worth more powerful than the UK. So big tech is more powerful than nation states already. And you know, so it almost doesn't matter what the free speech laws are in a certain country. The free speech is what Twitter says they are or what Facebook says they are or what YouTube. So that's the free speech. And, and, and the tithe that we pay to these companies is our data. Yeah, that's the, the new types. But I think we're going into this, this kind of world. And, and so the platform will be the lawmaker, the platform sets the rules and the central bank digital currency will be another heavily government controlled platform. And at the moment there's this unholy alliance between big tech and governments. And you know, I'm pretty sure that big tech didn't want Trump getting elected. You know, they wanted Biden and they were pretty much on his side, rightly or wrongly. I know, but they're both spending more money than they've got, Whichever, whichever one you choose. But the, the, the, but so there is this sort of alliance, but at a certain point big tech will just go, no, I'm not going to do that. Yeah, it's going to be more power. So that, that is a threat to the nation state. And then the other big threat to the nation state is, you know, we think nation states are, are, you know, we think that Italy's always been there or China, Germany's always been there. It hasn't. Italy's not even 200 years old. Germany's not even 200 years old. The United States is what, 250 years old. Yeah, they're all built around tax models that were designed around an industrial age of physical goods and physical people in an economy that was easy to quantify and measure and control and regulate. You know, you're the man, you go to work for this company every day. We get the company to deduct your taxes. Bob's your uncle, Fanny's your aunt, you're the company. You're transporting this good to this place. We can see the goods you're transporting. We'll see how much money you're making. You pay this amount of tax, that's the design. Tax is control taxes, power. Tax is rule. As soon as a government or a king or a ruler or leader lose their tax revenue, they lose their power, they lose everything. And we're going into this sovereign individual re smog world of people in the digital economy using non government money working in the gig economy. You know, people who work in the gig economy, either by design or just simply by incompetence, pay much lower levels of tax than the easy taxable deductible at source income tax. In a physical economy, the income taxes work so well because it's an easy tax to collect. But 50% of government revenue around the world comes from income tax. 50%. And suddenly, if more and more people in the digital economy, particularly if they're spending less than 183 days in each country, in each place, who do they pay tax to? In many cases, they don't even know. It's slightly different for Americans because you have to pay tax wherever you are in the world, to America, which is a law that goes back to Abraham Lincoln trying to protect union tax revenue in the Civil War. Again, a law brought in in an emergency that never went away temporary. But the digital economy is a challenge to the nation state model because the tax systems have not adapted to the realities of the new of the digital economy. And if they don't, the nation state is doomed. The other problem, the nation State has of course is it's just spending way more than it is actually taking it in taxes and remaining, relying on inflation and debt to paper over the cracks. And that's only sustainable for so long.
- [67:53]
Unknown Speaker
Right. And that very activity actually drives people to adopt Bitcoin. The more heavily government overreaches via direct taxation or inflation, the more incentives they're creating for people to say f this and move into an inflation resistant money. I wonder if you've thought about. So that's a great point too that and highlights even more so the importance of Bitcoin in that if China is making this macro move, let's just say that the culture and organizational model that it would usher in is very bad, very antithetical to the free market principles, at least on which the US was founded. Not that we so much have today. But there's this other aspect of Bitcoin that's really interesting. I don't know if you've heard of.
- [68:44]
Robert Breedlove
What if China waged war on Bitcoin?
- [68:47]
Unknown Speaker
Yeah, that's a multi hundred trillion dollar question. What does that look like? How do they stop it? And I think that is where a lot of people get hung up in their intellectual exploration down the rabbit hole is they just think, oh, the government will stop it, they'll never let it happen. But then it becomes mechanically, I guess the analogous question is how do you deal deactivate the Internet everywhere, worldwide, forever. Because it's not enough to just censor Bitcoin transactions or censor the Internet temporarily to stop Bitcoin, you actually have to stop the Internet permanently.
- [69:25]
Robert Breedlove
I don't think China would want to do that.
- [69:27]
Unknown Speaker
I don't know if they even could.
- [69:30]
Robert Breedlove
Yeah, it would want to control it.
- [69:32]
Unknown Speaker
Yeah. And the other theory, the theory there at least is that the game theory of it is as one jurisdiction clamps down, they're creating incentives for other jurisdictions to adopt because there's a lot of associated tax revenue. No one wants to miss the next wave of innovation. Again, we saw what the Internet did for the US economy and it's been an absolute. The most valuable companies in the world are all domiciled here. No one wants to miss that next wave of innovation. But it's a great question, let you.
- [70:04]
Robert Breedlove
Use the word there, Robert. Censor. I'll give you a nice little, little fact fact. The censor was an ancient Roman magistrate who was responsible for maintaining public morality. Hence we have the word censorship. He was also the tax collector. And, and we talked about the relationship between tax and freedom. And one is a barometer over the other, how taxed you are measures, how free a country is. Well, you know, the. The same applies to free speech. And, you know, a census is levied. You know, people levy, so they know who's where in order to. To levy taxes on them.
- [70:45]
Unknown Speaker
Wow. Interesting. Yeah. And that, That's. Yeah, that. That whole term censorship resistance is seemingly obscure to a lot of people, but it is very important. It's a very deeply rooted aspect of freedom. And this is one other aspect of Bitcoin I wanted to bring up. I'm not sure if you've thought a lot about, but you've probably heard of the Lightning Network, which is just the second layer on Bitcoin that lets you transact.
- [71:13]
Robert Breedlove
Steven Levera made me get a Moon Wallet.
- [71:17]
Unknown Speaker
Nice. Gives you much higher transaction throughput and privacy. And the trade off is you're not settling to the base chain. You have the option to, but you're not with each transaction. So there's a little bit of trade off in trust minimization, but you pick up a lot of throughput. There are apps being built on top of the Lightning Network already. One is called Sphinx Chat.
- [71:39]
Robert Breedlove
Yeah.
- [71:39]
Unknown Speaker
It's essentially rooting its community. So it's a messaging app. People are. My podcast is also on Sphinx Chat. The app people can go on and listen to this podcast, for instance, that we'll publish. They can pay sats per minute via the Lightning Network. And because that app is built on the Lightning Network, it is as censorship resistant as Bitcoin or nearly as censorship resistant as Bitcoin. So Bitcoin may. There's this possibility that Bitcoin could revivify the democratic principles that the Internet originally represented. Supposed to be this great force for free speech. Clearly, it's gone a different way. Like, to your point, the platforms have become the censors, but we could create this. It could serve as this base layer for actual digital free speech that is fully censorship resistant. And I think that is another incredibly interesting value proposition of Bitcoin beyond just money.
- [72:43]
Robert Breedlove
Yeah, I'm.
- [72:44]
Unknown Speaker
Do you.
- [72:44]
Robert Breedlove
Did you ever hear that declaration of Cyberspace? Oh, it's just wonderful. I'm just trying. I'm just getting up on my.
- [72:53]
Unknown Speaker
Yeah.
- [72:55]
Robert Breedlove
So it was written by a chap called John Perry Barlow, who was. I think he was with the Grateful Dead or he was with some famous. Banned. Anyway, it's a declaration of the independence of cyberspace. Governments of the industrial world, you weary giants of flesh and steel. I come from cyberspace, the new home of mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather. We have no elected government, nor are we likely to have one. So I address you with no greater authority than that with which liberty itself always speaks. I declare the global social space we are building to be naturally independent of the tyrannies you seek to impose on us. You have no moral right to rule us, nor do you possess any methods of enforcement. We have true reason to fear here. Governments derive their just powers from the consent of the government. You have neither solicited nor. Sorry. Governments derive their just powers from the consent of the governed. You have neither solicited nor received ours. We did not invite you. You do not know us, nor do you know our world. Cyberspace does not lie within your borders. Do not think you can build it as though it were a public construction project. You cannot. It is an act of nature and it grows itself through our collective actions. It's great, isn't it?
- [74:37]
Unknown Speaker
Beautiful.
- [74:38]
Robert Breedlove
It goes on and on, but it's.
- [74:40]
Unknown Speaker
It.
- [74:41]
Robert Breedlove
I won't read the whole thing.
- [74:42]
Unknown Speaker
Yeah, that's.
- [74:44]
Robert Breedlove
And I'll give you the final line. We will create a civilization of the mind in cyberspace. May it be more humane and fear. Let me do that again. I'll give you. We must declare our virtual selves immune to your sovereignty even as we continue to consent to your rule over our bodies. We will spread ourselves across the planet so that no one can arrest our thoughts. We will create a civilization of the mind in cyberspace. May it be more humane and fair than the world your governments have made before.
- [75:22]
Unknown Speaker
It's beautiful. It's.
- [75:23]
Robert Breedlove
It's great.
- [75:25]
Unknown Speaker
Extremely cipher punk.
- [75:27]
Robert Breedlove
It's totally cypherpunk.
- [75:29]
Unknown Speaker
Yeah. And it's. It seems as though that's the.
- [75:38]
Robert Breedlove
Almost.
- [75:38]
Unknown Speaker
The only way that civilization can continue to persist is if we move to something like this. Because if you go to the. China, say China succeeds. Implements a global social credit system. The digital yuan, whole nine yards. I don't think that will destroy the market economy. It will destroy wealth. It will destroy quality of life. I just think it would destroy civilization in the long run.
- [76:04]
Robert Breedlove
Yeah. The big problem China has is the demographic one. The consequences of their one, the one which is another case of unintended consequence gone bananas. But because they're suddenly going to be. Their population is going to be so old, that's the one big problem they've got.
- [76:25]
Unknown Speaker
Yeah. So you mentioned earlier you wanted to talk about why bitcoin has outperformed gold.
- [76:32]
Robert Breedlove
Yeah. Okay. So it comes back to that thing of scalability that we talked about. And there's this been this incredible, for want of a better word, gold rush in the digital economy. And it's just seen growth. Technology has just seen growth. That's just eclipsed anything that the physical economy has to offer now. It used to be that wealth meant farms and mines and factories and these kind of things, physical things in a physical world, real estate. But I would argue that real estate is actually a financial asset because so much of the wealth of real estate is just funny money and debt and particularly housing. In the UK it's worse, but it's pretty bad in America as well, I gather. And as a financial asset, 97% of currency is digital. Only 3% of money actually exists in physical form. But the real wealth today is no longer mines, farms and factories. It's still worth something. But the wealth today is intellectual property, trademarks, software designs, apps, shares in, in NASDAQ listed companies. Bitcoin, the wealth is all digital. It's not physical anymore. And so that's just where the money's gone. And gold is the most analog, tangible asset of the lot. And we're in a digital world now. We're not in a physical world anymore. And then along comes bitcoin does everything that gold does, but in this new digital world, in this new reality. And so it has this technological genius behind it because it solved this problem of digital scarcity, double spending. So all the computer coders love it, all the libertarian nerds, anti Goldbach stuff, love it. Pro Goldberg love it. Because here's a libertarian system of money that you can't print. All the black market loves it because here's finally, we can do drug deals on the Internet without banks. And there's just this confluence of things. But basically it's the growth of a new technology and in this, the money for this digital world. And it's basically the difference between digital and physical. Why bitcoin? Plus, you've got all the growth stuff of the expansion and development of a new technology and the establishing of a new technology. But the main thing is it's just one is physical, one is digital.
- [79:41]
Unknown Speaker
Yeah, I agree. I would add that. Do you think still that central banks are manipulating the price of gold as well?
- [79:54]
Robert Breedlove
Probably, but I don't think they give a toss. I just think every now and then gold has a little run and everyone starts talking about money printing. But bitcoin's way more noisy. I'm really good friends with James Turk. I consider him, he's like a father to me in many ways because he's taught me so much. Do you know James, do you know who I mean by James?
- [80:15]
Unknown Speaker
I don't know.
- [80:16]
Robert Breedlove
He's one of the sort of grandfathers of gold. He founded a company called Gold Money which is very big and wrote a book called the Coming Collapse of the dollar in 2005, 2006, which is sort of seminal gold bug thing. And he really embraced the new world of the Internet and made gold work in the new world of the Internet in the. And he was just a great spokesperson. He was like Michael Saylor but for gold back in the noughties. And he's a great guy and he will tell you that the gold price is manipulated and he's got more evidence than I do. But I tend to, I think conspiracy ascribes the perpetrators of conspiracy with greater competence and greater imagination than they actually have. And my experience of, you know, there are individuals who are working in government who are extremely competent and clever, but collectively, you know, group think and you know, group think ends in all sorts of disastrous things. And there's very little imagination in group, in government groups. And so I just think collectively there isn't the competence or the imagination to perpetrate conspiracies competently. You know, they can't even build a road. Yeah. You know what I mean? And so, yeah, so, you know, they probably manipulate markets a bit and they probably sell gold a bit when they need something to happen and you know, they're doing the latest money printing. They're probably like, yes, sell gold down and let's. The plunge Protection team almost definitely does exist. But so. But never ascribe to conspiracy. That which can be explained as a cock up is my sort of fallback logic. And I just think it's an analog asset in a digital world. I still own lots of it. I wear it around my neck. I think it's fantastic. I love it. I've got loads of gold miners. One day time will come. But at the moment its thunder's been stolen by bitcoin.
- [82:19]
Unknown Speaker
Yeah, well said.
- [82:20]
Robert Breedlove
So we're at maybe when bitcoin reaches its point on the S curve, maybe that's when gold's time comes.
- [82:27]
Unknown Speaker
Yeah, I mean I don't. So hard to say.
- [82:31]
Robert Breedlove
It's. It's cultural as well. Like when, like the gold sovereign, this thing around my neck is half an ounce of gold. I probably shouldn't say that somebody will mug me, but it's half an ounce of gold. Two gold sovereigns melted down. I got went in gold spare market in 2013, I had a load of gold, silver. I got really pissed off with it just sitting there doing nothing, going down in value. So I thought, I'm going to enjoy this. So I melted them down and made this, this little necklace. But, but the, as I said, when you handle gold, it does have this, you know, or quality. But how often does a Westerner meet gold in his daily life? Almost very rarely.
- [83:11]
Unknown Speaker
Yeah.
- [83:11]
Robert Breedlove
You know, once upon a time, the gold sovereign is the old pound coin. We would handle that people would handle gold. You know, Indians, Chinese, they actually handle gold. They have physical gold. It just is not culturally part of our lives anymore in the West. And so somehow. And even the gold that we do own, if you buy the gold ETF or a gold miner or just buy some physical gold, most of the time it's stuck in a vault. You never actually touch it. So you may as well own bitcoin. But the, you never see the gold anyway.
- [83:43]
Unknown Speaker
Yeah.
- [83:43]
Robert Breedlove
So, you know, so there's a company called. Oh God. It's connected with James Turk. There's two things. Oh, what's it called? I forget what it is, but it's a company that's making 24 carat investment gold jewelry and you look at it on the Internet and it's really, really interesting and they, they've. The gold jewelry itself is really beautiful and you do want to buy it when you see the website and it's listed in Canada. But they've got a side thing where they've invented the developing some new technology with hard drives and hieroglyphs and it's basically using gold and the permanence of gold to preserve hard drives for all eternity. And I think that technology is going to have a real use with bitcoin keys and, and ledger wallets and all the rest of it. If you've got a lot of bitcoins, it might be that the cold card or whatever it is you use to store them is made of gold.
- [84:48]
Unknown Speaker
Interesting. Yeah. Well, especially if bitcoin did demonize or bring down gold's monetary premium, it would make it much more useful for that.