0:00

All right guys, welcome back to the

0:02

show. Sorry for the little bit of

0:05

a gap here. I am still

0:07

working through the process of

0:09

being a parent to two

0:11

children. We're doing pretty good.

0:13

I mean, I gotta say we're holding

0:15

the fort down. Baby Girl is

0:17

doing fantastic, but trying to

0:20

get time to work when

0:22

I'm basically having to full-time

0:24

look after red has been difficult.

0:26

or at least working on recording.

0:28

I have managed to do other

0:30

things, but only things that Brad

0:32

can basically be hanging out and

0:34

doing with me. This will change, but

0:37

in the meantime, I'm actually bringing back,

0:39

and I have been meaning to do

0:41

this for a while, I have had

0:43

conversations with people on doing this, and

0:45

people have recommended me do this, but

0:47

I felt it was good to bring

0:50

back some old episodes and refresh some

0:52

ideas that we've covered, but have

0:54

been kind of so deep in the catalog

0:56

here. that it's easy to forget that a

0:59

lot of new people who have come

1:01

in may have never even heard that

1:03

episode or have only kind of gotten the

1:05

idea in a rough sense or in

1:07

some little tangent that I just go

1:09

down and read this a little bit

1:12

related to it. And to kick that

1:14

off I wanted to hit one that

1:16

I have had a lot of great

1:18

feedback on and one that I also

1:20

personally liked and thought I think is a

1:22

good framing for a lot of people. which

1:25

is an old guys take episode. This

1:27

is guys take 44. Bitcoin is not

1:29

what you think it is. So if

1:31

you haven't heard this one, I think

1:33

you're in for a treat. And also

1:35

if you have not gotten your block

1:37

stream Jade Plus hardware wallet, you

1:39

can get 10% off with code

1:41

Guy. The link and details are

1:43

right down on the show notes.

1:45

Get your keys off of your

1:47

mobile device and in a secure

1:49

hardware wallet that importantly is really

1:52

easy to use with your phone.

1:54

And if you are looking for

1:56

a really great mobile wallet that

1:58

is self-custodial and has lightning built...

2:00

in the bitkit wallet. That's BITKIT

2:02

wallet by Synonym. And actually one

2:04

of the threads where I'm doing

2:06

a giveaway thread for 50,000 Sats

2:08

to three different people. And actually

2:10

you have one day left on

2:12

that so check it out. But

2:14

one of the users said they

2:16

just downloaded it and it's one

2:18

of the best and most user-friendly

2:20

wallets out there. Thank you. And

2:22

I agree. It's just, it really,

2:24

there's no confusion. There's no confusion

2:26

in the wallet. And I like

2:28

how intuitive the idea of savings

2:31

versus spending is, which is

2:33

the delineation between on-chain and

2:35

lightning. If you haven't checked

2:37

it out yet, definitely

2:39

do so, links and details down

2:42

in the shownotes. All right, with

2:44

that, let's get into today's episode,

2:46

reboot of Guy's Take 44. Bitcoin

2:49

is not what you think it is.

2:51

The Best in Bitcoin made audible.

2:53

I am Guy Swan, and this

2:55

is Bitcoin Audible. What

3:11

is up? Everybody welcome back

3:13

to the show. This is

3:16

Bitcoin Audible where you receive

3:18

your PhD in the economics

3:20

technology history philosophy and everything

3:22

else about Bitcoin all for

3:25

the low price of free.

3:27

I am Guy Swan the

3:29

guy who has read more

3:31

about Bitcoin and than anybody

3:34

else you know Now, since we

3:36

have had a ton of new

3:38

listeners, and this will probably be

3:40

the episode I'm going to air

3:42

on the finance podcast week, and

3:45

we've had a lot of new listeners

3:47

to the show and continually seem

3:49

to have a lot of fresh

3:51

ears around the Bitcoin ecosystem in

3:53

general, so I wanted to take

3:56

a guy's take, take an episode

3:58

here to go back to the...

4:00

basics for a minute and kind

4:02

of cover some of the broad

4:04

strokes of what Bitcoin even

4:07

is, which I'm not 100% sure

4:09

if I've really directly done

4:11

this outside of the context

4:13

of some of the many

4:16

hundreds and hundreds of articles

4:18

we've covered. So this guy's

4:20

take is going to break

4:22

down what Bitcoin is because

4:25

it's not what you think. So

4:27

what is Bitcoin if it's not

4:30

what you think it is?

4:32

Bitcoin is money. What? I know

4:34

shocker. Usually this is

4:36

profoundly misunderstood. This

4:38

is almost invariably, this

4:41

is met immediately with a

4:43

criticism that goes something like,

4:45

well, money is a medium

4:48

of exchange and unit of

4:50

account. Bitcoin is never used

4:53

as a medium of exchange, which

4:55

isn't actually true, but typically it's

4:58

not known by most people or

5:00

just ignored. And of course it's

5:02

way too volatile to be

5:04

a unit of account, and its

5:06

market is so small that nobody

5:08

prices things in Bitcoin anyway, so

5:11

it's a terrible money, and therefore

5:13

it can never work. Now this

5:15

is a concept of money that's

5:17

largely self-referential,

5:19

maybe. A better way of saying it

5:21

may be that it only works in

5:23

hindsight, right? It has zero

5:26

analytical or predictive

5:28

power to it. It only works

5:30

to explain something that is

5:32

already the dominant money, but

5:35

it doesn't tell us anything

5:37

about money prior to it

5:39

becoming one. All monies emerge.

5:41

They start out as just a...

5:43

a good in the market and

5:46

then they become a money. In

5:48

fact, most monies developed over centuries.

5:50

That definition of money

5:52

that it's the unit of count

5:54

and medium exchange tells us

5:56

nothing about monetary history. In

5:59

fact, we... Alan Farrington's amazing

6:01

piece, Wittgenstein's Money, which is actually

6:03

W-I-T-T-Ginstein's, Wittgenstein's Money, talking about this

6:06

very concept, he refers to it

6:08

as the semantic definition of money.

6:10

And maybe as an analogy to

6:13

explain what I mean here, is

6:15

that saying money is merely a

6:18

unit of account and a medium

6:20

of exchange, is like saying the

6:22

game of football is best played

6:25

by the team who won it.

6:27

But it doesn't tell us anything

6:30

about the game. It doesn't tell

6:32

us anything about what strategies or

6:34

reasons why one team would be

6:37

better than another. And it tells

6:39

us nothing interesting about how football

6:42

even works. All it tells us

6:44

is the result. When the really

6:46

interesting question is how is the

6:49

game played? What are the attributes

6:51

that make one team better than

6:54

another? What are the strategies that

6:56

would make one the inevitable winner

6:58

and why? That's the interesting definition

7:01

of money. The definition that says,

7:03

oh, it's a medium of exchange

7:06

and unit of account, will ever

7:08

tell us what a money is

7:10

after it becomes money. Again, I'll

7:13

just link to Alan Farrington's piece

7:15

on Wittgenstein's money, which does a

7:18

fantastic job of breaking down this

7:20

concept a little bit deeper. and

7:22

highly recommend. And of course, it's

7:25

audible here on Bitcoin Audible. But

7:27

think about why this is kind

7:30

of a useless definition, right? It

7:32

doesn't give us any way to

7:34

judge two competing monies against each

7:37

other. It presupposes that money can't

7:39

even change, that there's no growth

7:42

or emergence period in it at

7:44

all. It just is a money.

7:46

Because whatever is the medium of

7:49

exchange in unit of account, that's

7:51

the money. So therefore only something

7:54

that has already succeeded as money

7:56

can be money. So it just...

7:58

doesn't give us anything. It can't

8:01

explain why something becomes a medium

8:03

of exchange or unit of account

8:06

while it's still not one. It

8:08

can't tell us why one thing

8:10

would work better than another. It

8:13

couldn't explain why one would fail

8:15

after centuries of being the dominant

8:18

money. And it suggests that the

8:20

entirety of the rich, vibrant, and

8:22

incredibly changing and clashing monetary history

8:25

for thousands of years. Couldn't even

8:27

happen because the only thing that

8:30

can be called money is the

8:32

thing that already became money So

8:34

for our purposes we are dropping

8:37

that definition because it doesn't help

8:39

us An analogous context there is

8:42

that we would only be able

8:44

to say the internet was valuable

8:46

or going to be useful after

8:49

the entire world adopted the internet

8:51

Yet when there are only two

8:54

people on the internet at its

8:56

birth It would suggest that the

8:58

internet could never be worth anything

9:01

and it was never going to

9:03

work as a communication tool because

9:06

only two people are using it.

9:08

So what are the attributes that

9:10

we would be able to see

9:13

while the internet was still just

9:15

two people? That would explain why

9:18

the internet was a revolutionary technology.

9:20

And even though the AT&T phone

9:22

network had billions potentially of users

9:25

all around the world, it was

9:27

clear... even when there are only

9:30

two people that the internet was

9:32

going to make it obsolete. That

9:34

is the framework that we need

9:37

for Bitcoin. We need to understand

9:39

what money is at that level

9:42

so that we can understand why

9:44

it's so much superior to all

9:46

of the monies today. And that's

9:49

the argument I will make. Unfortunately,

9:51

this is not something that I

9:54

think can be easily covered in

9:56

one episode, but I'm going to

9:58

do my best. And I think

10:01

the most important place to start

10:03

and the most important thing to

10:06

understand is that money arises in

10:08

a market. emerges naturally. There are

10:10

only a handful of times in

10:13

which governments have dictated a monetary

10:15

good and this has largely been

10:18

in the effort to control or

10:20

co-opt a different monetary good that

10:22

had already emerged. This is the

10:25

most important thing to understand is

10:27

that money is natural, natural and

10:30

foundational. But it arises in a

10:32

market as the most... marketable good.

10:34

It has historically been the thing

10:37

that was most widely desired by

10:39

market participants. And as long as

10:42

it has a handful of other

10:44

attributes that reinforce this and make

10:46

it useful in the context of

10:49

money, in the context of trade

10:51

and storing value over time, then

10:54

the fact that it is the

10:56

most desired good makes it more

10:58

desirable in its own right. So

11:01

it becomes a circular value that

11:03

because it's desirable and it has

11:06

a set of very critical monetary

11:08

attributes that are in terribly, terribly

11:10

difficult to come by, that it

11:13

then becomes more valuable because it

11:15

can be traded with others. Because

11:18

you can own it, you can

11:20

accept it in trade. Simply because

11:22

you know someone else will want

11:25

it. This is what's referred to

11:27

in the context of value as

11:30

a monetary premium. It is the

11:32

value that has nothing to do

11:34

at all with it actually being

11:37

used. So cattle was money, has

11:39

been used for money and currency

11:42

before. Real estate has been used

11:44

for trade, land has been used.

11:46

But the value that it accrues

11:49

above and beyond. wanting to eat

11:51

the cattle or live on the

11:54

land or the metal that could

11:56

make swords. or that could build

11:58

electronic devices or whatever it is,

12:01

all the value that is not

12:03

the use value, the consumption value

12:06

of that good, is that becomes

12:08

the monetary value, the monetary premium.

12:10

And this is simply because other

12:13

people will want to hold it

12:15

and have it so that they

12:18

can store and trade merely the

12:20

value that it has across time,

12:22

rather than use it for its

12:25

consumption purpose. And this is actually

12:27

really kind of interesting when you

12:30

look back through history, because one

12:32

of the most prominent historical monetary

12:34

goods was salt. And in the

12:37

context of storing and trading value,

12:39

salt wasn't just a spice. It

12:42

was actually one of the most

12:44

potent tools for preserving food as

12:46

we've ever had. And that's still

12:49

to this day. We've worked really

12:51

hard to make tons of other

12:54

artificial or chemical preservatives, but few

12:56

do the job like good old

12:58

salt. So the very tool that

13:01

was so widely used to store

13:03

food became a store of value

13:06

as well because it was so

13:08

desirable in the market. And salt

13:10

is one of the oldest monies,

13:13

actually. It predates recorded history. We

13:15

actually have no clue when it

13:18

was really first used for this

13:20

purpose. It's all throughout the Bible

13:22

and the earliest texts of religious

13:25

texts and any significant civilization to

13:27

upwards of like 8,000 years ago

13:30

when salt was first being used

13:32

as a currency and was being

13:34

held as this incredibly valuable and

13:37

precious good. Cool stories, some of

13:39

you might know this, but this

13:42

is actually where the word salary

13:44

comes from, right? It's derived from

13:46

a phrase. in ancient Greece that

13:49

literally referred to the salt rations

13:51

that were paid to Roman soldiers,

13:54

which was considered one of the

13:56

most precious things that you could

13:58

be paid in. And

14:01

it's prominent all throughout. It's,

14:03

like I said, it's throughout

14:05

the Bible, many, many religions, the

14:07

history of very disparate and

14:09

unrelated cultures and civilizations, phrases,

14:11

the salt of the earth,

14:13

that guy's not worth this salt.

14:15

Even though we think of

14:17

it today as the stuff

14:19

in the, you know, little

14:21

shaker that sits on the dining

14:24

table, its roots are very deep

14:26

still in our society and

14:28

language. So after... something develops

14:30

a monetary premium after it

14:32

becomes a currency and a money.

14:35

What role does it serve?

14:37

Because looking backward in that

14:39

way can actually help us

14:41

explain or make sense of why

14:43

one thing would work better

14:45

as money than something else.

14:47

And also why specifically in

14:49

this example salt would have been

14:52

a really good currency. When

14:54

a money... begins to be

14:56

used to store and trade

14:58

value. It becomes a collective accounting

15:00

tool. It's a way to

15:02

account for value, production, trade,

15:04

loss, profit, all of these

15:06

things across people that are not

15:08

doing their accounting together, but

15:10

doing it individually while able

15:12

to take in information from

15:14

the rest of society about what

15:17

production or task. or goal, they

15:19

should actually be focused on.

15:21

Those things that are most

15:23

expensive, those things that carry

15:25

the largest monetary cost, are those

15:28

things that are most desirable

15:30

and least achievable. And those

15:32

things that carry incredibly low

15:34

or almost no cost are the

15:36

things that are incredibly easy

15:38

to come by and or

15:40

wildly abundant. So we don't

15:42

need more people wasting time on

15:45

those things. And as an

15:47

accounting tool, salt works great

15:49

because it's very value dense

15:51

and it can be broken up

15:53

into the tiniest. of parts

15:55

that can be recombined without

15:57

any loss as to what

15:59

the thing itself is back into

16:01

a greater hole later. This is

16:04

the same reason why monetary

16:06

metals were so successful and

16:08

eventually ended up eclipsing salt

16:10

as the dominant monetary good throughout

16:12

history. But one grain of

16:14

salt is really small and

16:16

one pound of salt is

16:18

a pound of salt, right? I

16:21

could have a pound of

16:23

salt and you could have

16:25

a pound of salt and

16:27

it's not really much difference between

16:29

my pound and your pound.

16:31

Whereas a pound of chicken

16:33

is not another pound of

16:35

chicken. You could have a fresh

16:38

and healthy chicken, I could

16:40

have a rotten and sickly

16:42

and pathetic chicken that didn't

16:44

have any fat on it and

16:46

was beaten and ugh. When car

16:48

isn't equal to another car.

16:50

Maybe I've got an old

16:52

battered piece of shit with

16:54

200 thousand miles on it and

16:57

yours might be a brand

16:59

new Ferrari. Salt is salt.

17:01

And in a much more

17:03

perfect sense, gold is gold. It

17:05

doesn't matter where your pound

17:07

or ounce or gram of

17:09

gold is anywhere. You can

17:11

melt it down and it's pure

17:14

gold regardless. This is referred

17:16

to as fungibility. Every unit

17:18

of it is the same

17:20

as any other unit. And in

17:22

a divisibility sense... It can

17:24

be broken down into tiny

17:26

parts and then recombined. Like

17:28

it doesn't matter if my gold

17:31

bar was created from a thousand

17:33

grams of gold. I can

17:35

still just melt it down

17:37

and make it into a

17:39

gold bar and it's the same.

17:41

It's no different than a

17:43

gold bar that was made

17:45

from three big chunks that

17:47

equal a kilogram. It's still a

17:50

kilogram of gold. This is

17:52

a combination of fungibility. All

17:54

the units are the same.

17:56

Each one is the same as

17:58

any other and divisibility. And

18:00

believe it or not there

18:02

are not many goods that

18:04

share this attribute. This is incredibly

18:07

difficult and rare thing to

18:09

come across in a... marketable

18:11

good. And we know that

18:13

all other things equal, monies that

18:15

have this feature, are superior and

18:18

will win out against any

18:20

alternative that has less viable

18:22

of those two characteristics. Again,

18:24

all things equal. There are other

18:26

more important characteristics that can

18:28

actually outweigh a difference in

18:30

fungibility and divisibility that we've

18:32

also discovered, but we're going to

18:34

ignore them for just a

18:36

second. and we'll just say

18:38

that the more fungible and

18:40

divisible money beats out a less

18:43

fungible one if they are

18:45

equal in every other way.

18:47

But why? Because this is

18:49

a critical part of it being

18:51

a good accounting tool. If

18:53

the points in your budget

18:55

at the end of your

18:57

budget weren't the same as the

19:00

points at the beginning of

19:02

your budget, what would be

19:04

the use of budgeting for

19:06

your household? Money is a collective

19:08

accounting tool that allows society to

19:11

organize what and where and

19:13

when we should do certain

19:15

tasks. And that might sound

19:17

boring, quote unquote, collective accounting probably

19:19

seems like something that's not

19:21

that important. But a damn

19:23

near could argue that it's

19:25

more important than opposable thumbs. Case

19:27

in point, monkeys have opposable

19:29

thumbs, but they do not

19:31

have a tool for collective

19:33

accounting. Thus, they have small groups

19:36

and no society. Money is

19:38

why civilization exists. And this

19:40

is not an exaggeration or

19:42

some pontification on how awesome Bitcoin

19:44

is or whatever. As human

19:46

beings, we cannot scale our

19:48

relationships past something referred to

19:50

as Dunbar's number. This is the

19:53

number of simultaneous relationships that the

19:55

average person can properly account

19:57

for in their head. So...

19:59

For every additional person, let's

20:01

go back, you know, 10,000 years

20:03

or something, every additional... person

20:06

to a tribe, it adds

20:08

an order of magnitude more

20:10

relationships to the group. Like for

20:12

instance, I'm a friend with

20:14

Bob and Nancy. It's me,

20:16

Bob and Nancy. We're buddies,

20:18

we have a group of three,

20:20

but I don't just need

20:22

to know my relationship with

20:24

Bob and Nancy's relationship for

20:26

us to get along. So when

20:29

Chad joins the tribe, it

20:31

doesn't add one relationship, me

20:33

and Chad, it adds three

20:35

new relationships. Bob and Chad, Nancy

20:37

and Chad, me and Chad. We

20:40

went from three relationships to

20:42

six by adding a single

20:44

person. So when there are

20:46

a hundred people in our tribe,

20:48

the number of separate connections

20:50

in our network. becomes massive

20:52

and they're always changing. You

20:54

know, maybe Chad and Nancy were

20:56

good friends last week, but

20:58

then something happened and I

21:01

don't know about it and

21:03

now they're mortal enemies. And suddenly

21:05

all of the relationships of

21:07

everybody in the group have

21:09

to shift and react to

21:11

this new friction. So the ability

21:13

to have a single cohesive

21:15

group breaks down. without collective

21:17

beliefs and collective trade. After

21:19

getting past Dunbar's number, which is

21:22

around 150 people estimate, it's an

21:24

estimation and it kind of

21:26

varies, but after 150 you

21:28

stop feeling like you're part

21:30

of a tribe that all has

21:33

one goal and that you

21:35

can get a sense of

21:37

what you're doing and you

21:39

start to feel like disparate groups.

21:41

This is why huge corporations

21:43

have such an incredibly hard

21:45

time. making it seem like

21:47

people who are in some, you

21:49

know... Technicians circle in some

21:51

single town are actually part

21:53

of the whole and instead

21:56

they look at it as this

21:58

big stupid corporation that doesn't

22:00

care about them or anything

22:02

they feel disparate they feel

22:04

disconnected from it because they've gone

22:06

too far past Dumbar's number.

22:08

Inevitably it breaks down into

22:10

factions into regions and they

22:12

have to feel like they're competing

22:15

with each other to some degree.

22:17

They aren't that other region,

22:19

we're our region. Technicians hate

22:21

the stupid support callers and

22:23

vice versa. This is where collective

22:26

tools are crucial. This is

22:28

where language, religion, and money

22:30

come into play. These are

22:32

the glue that hold everything together.

22:34

They are foundational coordination tools.

22:36

When these tools become manipulated

22:38

or corrupted, like when politics

22:40

manipulates and destroys language, it can

22:42

pit people against each other

22:44

that might not even disagree.

22:46

It obscures the true meaning

22:48

of what each other might be

22:51

saying or what beliefs we

22:53

actually hold. And when money

22:55

becomes a tool of control

22:57

or political privilege, when it's debased

22:59

and printed arbitrarily to meet some

23:02

subjective political vision, These things

23:04

don't have short-term local consequences.

23:06

These things poison cultures. These

23:08

things destroy long-term investment across the

23:10

society and ultimately make society

23:12

break down. Civilization cannot be

23:14

maintained without strong stable language

23:16

and reliable economic coordination. It's like

23:19

editing the DNA of society,

23:21

like if we're talking about

23:23

like an organism, it's like

23:25

going in and screwing with the

23:27

DNA to get some single

23:29

unimportant attribute, and then trying

23:31

to deny or refuse to

23:33

believe that there are second... in

23:35

third order effects of screwing

23:37

with the DNA which has

23:39

caused the entire organism to

23:41

get cancer all over or die

23:44

because you just fcked the fundamental

23:46

process by which that organism

23:48

creates grows and heals itself.

23:50

So without these mechanisms reliably

23:52

and sustainably providing their role to

23:55

society, Dunbar's number, again 150

23:57

people, is about the best

23:59

humanity can do. And in

24:01

my opinion, the most important of

24:03

those three tools is money.

24:05

Because from the context of

24:07

shared value, from the ability

24:09

to trade and organize economic production,

24:12

which is the source of

24:14

all prosperity, language and a

24:16

collective belief system would actually

24:18

naturally emerge, if there's a total

24:20

of value that disparate groups

24:22

can operate with, you can

24:24

trade across groups who speak

24:26

different languages. You can certainly trade

24:28

across groups that have separate religions

24:31

and potentially even separate morals

24:33

if the code of the

24:35

monetary language, ownership, and property

24:37

rights remain consistent across them. Money

24:39

is more foundational than language

24:41

and religion. Now I'm sure

24:43

some anthropologist or linguist would

24:45

argue with me vehemently about this,

24:48

but I stand by it.

24:50

And my evidence is that

24:52

gold was mythologized and held

24:54

as something of the gods. in

24:56

essentially every great society of

24:58

history and that it was

25:00

done before that society became

25:02

a great, not after. In other

25:05

words, it wasn't a result

25:07

of the society being great

25:09

that they adopted gold as

25:11

money. It was a prerequisite. They

25:13

adopted gold as money and then

25:15

became a great society. And

25:17

we'll actually get into that

25:19

in a minute with an

25:21

excellent thread on Twitter that I

25:24

want to go over. So

25:26

all of this is a

25:28

roundabout way of saying money

25:30

develops into a collective accounting tool

25:32

and there are certain attributes

25:34

of that make it incredibly

25:36

good for accounting and one

25:38

of those is the attributes that

25:41

make it like a budget

25:43

sheet, all the points are

25:45

the same and you can

25:47

break them down indefinitely into smaller

25:49

and smaller units. But what

25:51

exactly does this enable? Why

25:53

do I think civilization cannot

25:55

survive without it? This literally creates

25:58

the miracle of modern society.

26:00

the specialization of labor, and

26:02

the limitless prosperity that arises

26:04

from being able to efficiently coordinate

26:06

billions and billions of people onto

26:08

a single truth about what

26:10

is or is not needed

26:12

within society. Otherwise, without money,

26:14

we would have to barter, we

26:17

would all have to directly

26:19

know... what we would run

26:21

into the dumbbar is number

26:23

immediately where i would have to

26:25

know that nancy specifically always

26:27

wants shoes or maybe she

26:29

wants shoes right now and

26:31

maybe in a couple of days

26:34

she's needing to repair something

26:36

on her house or Chad

26:38

really likes fish so if

26:40

i want to trade with something

26:42

that Chad has i need

26:44

to make sure that i

26:46

catch and have some fish

26:48

on hand And I need shoes

26:51

right now for Nancy, but if

26:53

it's next week, I gotta

26:55

remember to get my shoes

26:57

over to Bob who needs

26:59

shoes temporarily. But unfortunately, they're girly

27:01

shoes, so I don't know

27:03

if he's gonna want him.

27:05

But I gotta trade him

27:07

for something. Maybe some fish, so

27:10

I can trade for Chad,

27:12

because Chad knows how to

27:14

fix stuff on houses, which

27:16

is what Nancy wants. You see

27:18

how stupidly and impossibly complicated

27:20

this can get with like

27:22

four people. is just a

27:24

laughable impossibility. It just means that

27:27

there's no economic coordination whatsoever.

27:29

Money solves that problem and

27:31

makes everyone across society. Even

27:33

those with different religions, different races

27:35

who speak different languages and live

27:38

under vastly different governments allow

27:40

them to speak the same

27:42

language of value and specialize

27:44

down into the most incredibly specific

27:46

of tasks and become part

27:48

of an economic whole. It's

27:50

the difference between a billion

27:52

people working separately and a billion

27:54

people working together. What can

27:56

any one of those people

27:58

accomplish on their own versus

28:00

what can a billion people accomplish

28:03

working on the same thing

28:05

toward the same goal? That

28:07

is the difference in a

28:09

society that has a money, has

28:11

a reliable sound money and

28:13

one that is not. And

28:15

so many people take this

28:17

for granted. They do not realize

28:20

what an absolute miracle it is

28:22

of... the specialization of labor

28:24

of the economic coordination that

28:26

we are the beneficiaries of.

28:28

You know, the average person probably

28:31

goes into a grocery store

28:33

with disgust and hating capitalism

28:35

or whatever if they even

28:37

know what that word means. But

28:39

the next time you do

28:41

that, next time you go

28:43

into a grocery store, just

28:45

stop for a second and look

28:47

around. Sometimes I go into

28:49

a place and I'm just

28:51

overwhelmed with how much went

28:53

into making this possible. Stop and

28:56

think what you are looking

28:58

at. And in a historical

29:00

context, how stupidly impossible it

29:02

ever was that this thing even

29:04

exists. There are literally tens of

29:07

thousands. I think the average

29:09

is like 50,000 items in

29:11

the typical grocery store. And

29:13

they come from every corner of

29:15

the earth. into one giant

29:17

refrigerated box that you can

29:19

drive too quickly from your

29:21

house so you can walk around

29:24

and pick what you want.

29:26

From a historical standpoint, that

29:28

is science fiction numb. sense.

29:30

Try to imagine the number of

29:32

people, look at one product

29:34

and try to work through

29:36

your head, the entire production

29:38

line, where it came from, and

29:40

the number of people who

29:42

collectively worked together to bring

29:44

just that one item to

29:46

the shelf in front of you

29:49

before its expiration date, organized,

29:51

and in order by alphabetical

29:53

or category or type of

29:55

How many different locations? The farmers

29:57

that grew the food that you

30:00

harvest in South America this

30:02

time of year, but in

30:04

just a few months, it's

30:06

still going to be in stock

30:08

at your local grocery store,

30:10

but they're going to be

30:12

harvesting it in a completely

30:14

different hemisphere, or possibly halfway around

30:16

the world from where it

30:19

was today, because the seasons

30:21

change, or people who packaged

30:23

the food. The people who design

30:25

and build the compressors and

30:27

the engines that keep the

30:29

food cold and the people

30:31

who make the ink and the

30:33

print that goes on the

30:35

front of the can and

30:37

the paper, the people who

30:39

drive the trucks and organize the

30:42

shipments so that they get to

30:44

their destinations, the people who

30:46

test and experiment and find

30:48

new foods, or lower-cost methods

30:50

to achieve the same quality or...

30:53

you know, change the way

30:55

the compressor works or make

30:57

some little, little turning gear

30:59

or something, just a slightly more

31:01

efficient, it saves a cost.

31:03

And even though it's only

31:05

10 cent per refrigerator that's

31:07

run, it gets put in a

31:09

billion different refrigerators and saves

31:11

collectively a hundred million dollars

31:14

a year because somebody found

31:16

one little thing to improve. And

31:18

this trail literally doesn't stop.

31:20

It is a massive never-ending

31:22

circle, and you can take

31:24

branches indefinitely. And at some point,

31:26

whatever it is that you do,

31:29

you could go down all

31:31

of the branches of probably

31:33

every single product in the

31:35

grocery store and figure out where

31:37

it is. that you had

31:39

a hand in making that

31:41

thing come about. That is

31:43

made possible because of money. There's

31:46

this brilliant piece we have

31:48

read on the show called

31:50

I Pencil by Leonard Reed.

31:52

It is one of the most

31:54

fascinating thought experiments in this

31:56

context and it argues correctly

31:58

that there is no person

32:00

on earth who could make a

32:02

simple number two pencil. If

32:04

you have not heard it,

32:06

I don't want to spoil

32:09

it for you because it's a

32:11

brilliant piece, I will link to

32:13

it in the show notes.

32:15

And actually, I'll link to

32:17

another, this is a speech

32:19

by Tom Woods. It was called,

32:22

applying economics to American history,

32:24

and it's a speech that

32:26

I really love, and there's

32:28

this story that he tells in

32:30

this speech about, there was

32:32

a day where... He was

32:34

on he was like chaperone

32:36

on some sort of field trip

32:39

with his kids or something

32:41

and some I don't remember

32:43

if it's his child but

32:45

somebody had like an asthma attack

32:47

and it was like the

32:49

middle of the night like

32:51

one o'clock in the morning

32:53

or something and he jumped in

32:55

his car and ran out

32:57

and went to like a

32:59

corner pharmacy store that was

33:01

open 24-7 so he runs down

33:04

the aisle and he finds the

33:06

how bureau or whatever it

33:08

is the medicine that the

33:10

kid needed to make sure

33:12

that you know he was going

33:15

to be okay and that

33:17

he paused and he just

33:19

stopped to himself what a

33:21

miracle it was that in the

33:23

middle of the night in

33:25

this random place that he's

33:27

never even been and this

33:29

kid has this disease that was

33:32

incredibly difficult to fix and

33:34

somebody halfway around the world

33:36

probably fixed it and then

33:38

produced it on the other half

33:40

of the world and then

33:42

it just happens to be

33:44

a quick drive from where

33:46

he was lit up in the

33:48

middle of night ready for him

33:51

to come get it for

33:53

a couple of bucks which

33:55

was the amount of time

33:57

it would take him to work.

33:59

an hour's worth of work

34:01

to pick this up, to

34:03

run back, and potentially, you

34:05

know, in some context, save this

34:08

kid's life. Obviously, it wasn't

34:10

that severe in this scenario,

34:12

but still, it literally could

34:14

have. And how could we ever

34:16

take that for granted? But

34:18

that whole speech, that whole

34:20

speech is really good, and

34:22

that story always stuck with me,

34:25

because it was just fun.

34:27

So I'll link to that

34:29

in the show notes as

34:31

well. So this is all possible

34:33

because of money. Money is a

34:35

totem of value. A universal

34:37

coordination tool. It works so

34:39

broadly, we can coordinate even

34:41

the most disparate and distant sources

34:44

of production, talent, and the

34:46

key human time, which is

34:48

what all production, talent, efficiency,

34:50

waste, innovation, all of it comes

34:52

back to human time. So

34:54

our history lesson. The role

34:56

of money ends up serving

34:58

as a collective accounting tool, where

35:01

I can reliably say that

35:03

I have produced this past

35:05

value because I have the

35:07

salt or the gold as evidence

35:09

of it. And then we

35:11

begin to see that money,

35:13

despite most commonly emerging from

35:15

a good on the market, that

35:18

was probably used for something else,

35:20

I'm using that not to

35:22

consume food or... that gold,

35:24

not as an electronics or

35:26

metallic device itself or jewelry, whatever

35:28

it is, I'm using it

35:30

to store and translate value.

35:32

I'm using it, using it

35:34

as an authentication of the work

35:37

I have done in the

35:39

past. It is my claim

35:41

on future resources that I

35:43

am owed back from society because

35:45

I have produced it and

35:47

not yet consumed it. So

35:49

think about this in the

35:51

context of savings. If I have

35:54

$10,000 in savings from my

35:56

job And what I do

35:58

is I make sandwiches. And

36:00

every single sandwich that I make,

36:02

I have a dollar profit. Well,

36:05

then if I have $10,000,

36:07

it means that I have

36:09

created 10,000 sandwiches positively into

36:11

society. I have a net of

36:13

10,000 positive sandwiches into the

36:15

world, into the economy that

36:17

I haven't taken back. All

36:19

I am holding is a token

36:21

that says I've done it

36:23

in the past. I've added

36:25

to the bucket of economic

36:27

resources and I have yet to

36:30

take it out. The amount

36:32

I have in savings is

36:34

the net productive value that

36:36

I have given to the rest

36:38

of the world provably. I

36:40

have done it with skin

36:42

in the game and someone

36:44

else put their value on the

36:47

line to say, yes, I

36:49

agree, this is what it's

36:51

worth. My savings account... is

36:53

my contribution to society. And also

36:55

note that as an authentication tool,

36:58

it's informational. It's not a

37:00

physical tool when used as

37:02

money. The purpose of money

37:04

is to translate the information of

37:06

the value I created in

37:08

the past and make it

37:10

accessible to me in the

37:12

future. This is why paper representations

37:14

of money work. Why collectibles

37:16

were a historical money as

37:18

well despite seemingly having no

37:20

other value? So it wasn't just

37:23

gold and salt and cattle

37:25

and Wampam. Well, actually, Wampam's

37:27

a great example, like seashell

37:29

money and Kula ring, the Kula

37:31

ring, like Kula beads and

37:33

the African glass beads and

37:35

these things that were actually

37:37

collectibles, but they were really hard

37:40

to create. As these things developed

37:42

value and they became money.

37:44

they ended up having value

37:46

as the money themselves. because

37:48

they ended up being generational proof

37:51

of the value that other

37:53

people produced into society. So

37:55

going back to the idea

37:57

of salt and more specifically the

37:59

monetary metals like gold, developing

38:01

a monetary premium quote-unquote? Well

38:03

a purely virtual form of

38:05

money like paper fee-ot only has

38:07

a monetary premium. It doesn't

38:09

have a use base. it

38:11

is all monetary premium, which

38:13

means that its value is entirely

38:16

in its ability to authenticate

38:18

what has happened in the

38:20

past. But it can develop,

38:22

nonetheless, after requiring any value at

38:24

all, a virtual monetary representation or

38:27

collectible or something, and have

38:29

done so many times in

38:31

the past. And it doesn't

38:33

even matter what that original use

38:35

was. I'd refer to... One

38:37

of the most essential works

38:39

in Bitcoin on the nature

38:41

and origins of money is called

38:44

shelling out the origins of

38:46

money by Nick Zabo and

38:48

it is so good obviously

38:50

audible on this show you can

38:52

just look at it in

38:54

the library at Bitcoin audible.com.

38:56

I would listen to the

38:58

reboot because I think that's my

39:00

updated audio version of it.

39:02

The really old version is

39:04

kind of... low quality and

39:06

I screw up some pronunciations and

39:09

stuff. But I've listened to it

39:11

myself numerous times and honestly

39:13

it's probably about time for

39:15

a refresh of that one

39:17

honestly it is so so good.

39:20

So that one will be

39:22

in the show notes as

39:24

well. But money simply has

39:26

to gain value in the market

39:28

for some reason for its

39:30

then monetary attributes to take

39:32

the leading role in obtaining

39:34

the monetary premium in obtaining its

39:37

value as a money and

39:39

it doesn't it literally doesn't

39:41

even matter what in fact

39:43

it can be circular in that

39:45

some people saw that this

39:47

thing could have a monetary

39:49

premium and if it developed

39:51

one it would be a very

39:53

successful money and so they bought

39:56

it and assigned it a

39:58

value initially under the assumption

40:00

that one day it could

40:02

be a money. So other than

40:04

fungibility and divisibility what might

40:06

be those other aspects of

40:08

money what might be one

40:10

of the most important aspects of

40:13

a good money that could

40:15

lead one to see that

40:17

it might be superior to

40:19

some other monetary good. The most

40:21

important differentiator between one and

40:23

another is scarcity. How difficult

40:25

is it to make more

40:27

of? Now think about why this

40:29

is crucial, particularly if we

40:32

are talking about money as

40:34

an informational tool to authenticate,

40:36

to verify value that we have

40:38

created in the past. And

40:40

let's just use like a

40:42

stupid simple example, go back

40:44

to our Bob and Nancy and

40:46

Chad thing. So if there are

40:49

20 notes of a currency,

40:51

we will say it's a

40:53

virtual currency already. There are

40:55

20 notes of this currency that

40:57

exist, and we are a

40:59

tribe of 20 people, and

41:01

collectively we can each catch

41:03

one fish per day and nothing

41:06

else. Well then in a

41:08

perfect world. One of those

41:10

monetary notes would equal one

41:12

fish. If there were no new

41:14

notes. But what if you

41:16

could create another note? Way

41:18

easier than you could catch

41:20

another fish. Or wouldn't you just

41:22

make notes and buy other

41:24

people's fish? I would. I

41:27

would be like, why am

41:29

I spending all this time fishing?

41:31

I could just make a note

41:33

and buy a fish. So

41:35

I would stop fishing. And

41:37

not only would there now

41:39

suddenly be more notes, because every

41:42

single day I would add

41:44

a new note into circulation,

41:46

but simultaneously... are less fish

41:48

because I stopped fishing. I stopped

41:50

being a productive member of

41:52

society until that point where

41:54

the value of the money

41:56

was low enough that it was

41:59

now more work for me

42:01

to produce maybe 50 notes

42:03

per fish. So if me

42:05

making 50 notes equals the amount

42:07

of work it would take

42:09

for me to catch one

42:11

fish, that is the point

42:13

where I finally go back to

42:15

catching a fish. when it costs

42:18

50 notes to buy a

42:20

fish. And in the meantime,

42:22

the money would completely fail

42:24

at organizing our economic activity or

42:26

storing what we did in

42:28

the past into the future,

42:30

because saving one note while

42:32

we have 20 notes, where it

42:35

might cost my neighbor a

42:37

whole day of not eating

42:39

in order to save one

42:41

note. And they think in a

42:43

month, they're going to get

42:45

one day's worth of food

42:47

back. And that's why they

42:49

starved themselves for a day. But

42:52

then just a month later,

42:54

it gets them less than

42:56

a 50th of a fish,

42:58

which might as well be no

43:00

fish at all. And in fact,

43:02

just keeping the fish and

43:04

eating a rotten one after

43:06

30 days rather than saving

43:08

the one note might have been

43:11

the better option. Money has

43:13

to be scarce for it

43:15

to be a good accounting

43:17

tool for value because value is

43:19

scarce. It is inherently scarce.

43:21

And as a collective accounting

43:23

tool, For it to work

43:25

reliably and actually coordinate resources across

43:28

billions of separate participants, it

43:30

has to be extremely difficult

43:32

to create the accounting unit.

43:34

If it's easy to create, it

43:36

can't account for anything. It's

43:38

the same reason that your

43:40

house, if you budget in

43:42

your house, it would be completely

43:45

meaningless if at the end of

43:47

the month you just throw

43:49

in a bunch of points

43:51

whenever you want to cover

43:53

up the fact. that you know

43:55

you set half of your

43:57

possessions on fire and you

43:59

have got a big negative

44:01

at the end of the month

44:04

well if you just you

44:06

know get yourself surplus quote-on-quote

44:08

by just throwing a whole

44:10

bunch of easy to create points

44:12

onto your budget and you

44:14

have positive numbers what does

44:16

that mean what what good

44:18

does that do you it's not

44:21

an accounting tool anymore it's

44:23

just something to you know

44:25

make yourself feel better and

44:27

a funny but kind of a

44:29

horrifying truth is this is

44:31

what our government does The

44:33

economy destroys resources and goes

44:35

deeply into debt by making things

44:38

less efficient and being more wasteful.

44:40

And when it turns out

44:42

that there's a massive loss

44:44

across the board, the government

44:46

and the central bank literally just

44:48

worked together to cook the

44:50

books to the orders of

44:52

trillions of accounting points to

44:54

make it look like everything's all

44:57

hunky-dory. Oh, we got positives

44:59

everywhere. Look how great it

45:01

is. This is like we're

45:03

all in a plane together and

45:05

we're in a nose dive

45:07

headed toward a cliff and

45:09

whenever the market sends us

45:11

screaming signals that we should be

45:14

pulling up and the altimeter

45:16

is going nuts showing us

45:18

that we're in a nose

45:20

dive. The government literally just breaks

45:22

the gauge and pushes it back

45:25

up to level to normal

45:27

so that we can all

45:29

rest easy on our way

45:31

to our deaths. Fun isn't it?

45:33

That's how our monetary system

45:35

works. Not even really an

45:37

exaggeration. So let's actually look

45:39

at another historical example of a

45:41

money that emerged that proves

45:43

the informational nature of money.

45:45

And it is one of

45:47

my favorite monetary goods in history.

45:50

Yes, I am that much

45:52

of a nerd that I

45:54

have a favorite historical monetary

45:56

good. It is the rhyestones of

45:58

the yap. And this is

46:00

another great piece we have

46:02

read on this show all

46:04

about this. It was relatively short

46:07

summary actually by Milton Friedman and

46:09

there's a lot more that

46:11

you can dig into about

46:13

the Rhyestones and their history

46:15

and stuff, but I'll make sure.

46:18

to look that one up

46:20

in the library and have

46:22

that link in the show

46:24

notes as well. But the rise

46:26

stones of the yap. This

46:28

is possibly the best allegory

46:30

to Bitcoin that I think

46:32

has ever existed and I love

46:34

it. And funny enough it

46:36

worked for centuries before it

46:38

was both politically and technologically

46:40

obsolete. So the island of yap.

46:43

They used a dominant monetary

46:45

good known as R.I.I. These

46:47

were huge limestone disks or

46:49

wheels almost. So they're just giant

46:51

disks that were massive massive heavy

46:54

stones. Stupidly difficult to move

46:56

and mostly they just sat

46:58

around. But they were pretty

47:00

and imposing so they made for

47:02

a good collectible. and they

47:04

were obviously extremely durable. They're

47:06

just a giant stone. They

47:08

lasted for generations and generations to

47:11

store and pass down wealth.

47:13

You can still go to

47:15

the islands and see them

47:17

sitting around. And of course, something

47:19

because they were so huge

47:21

and heavy and because the

47:23

limestone, the stone they were

47:25

made out of, wasn't even native

47:27

to the island. They were

47:29

extremely difficult to create more

47:31

of. Now they weren't perfectly

47:33

fungible because there were some bigger

47:36

ones and some smaller ones,

47:38

but it wasn't complicated enough

47:40

to outweigh its other excellent

47:42

monetary attributes. It's scarcity, its durability,

47:44

and durability, which you would think

47:47

this specifically would not have

47:49

those attributes. But it does,

47:51

and we'll explain just a

47:53

second, because this money was almost

47:55

completely transferred virtually. So how

47:57

is this done? By telling

47:59

everybody. So let's say

48:01

I had a big old fat

48:04

shiny rhystone at the top of

48:06

the hill next to the town

48:08

square, right? Everybody knows it's mine.

48:10

Guy's stone is the best stone.

48:13

You're all jealous. And I want

48:15

to buy your farm. We agreed

48:17

to do so because maybe you

48:19

want the stone to pass down

48:22

your generational wealth. Do you want

48:24

to pass it down to your

48:26

daughter who's getting married and you

48:29

want them to have a long-term-term

48:31

wealth? to pass down to your

48:33

next generations. So you want to

48:35

make a trade. So what we

48:38

go is, what we do is

48:40

we go down to the town

48:42

square and basically announce to everyone

48:44

and record with the local religious

48:47

authority, the tribe leader, that I

48:49

no longer own the Rhysestone on

48:51

top of the hill. It's now

48:54

your stone. It doesn't move, doesn't

48:56

exchange hands. All it does is

48:58

sit there as proof of value.

49:00

and proof that it is a

49:03

scarce thing to transfer that we

49:05

can go walk up the hill

49:07

and verify. And exchange is done

49:09

solely by consensus. Now sometimes it

49:12

did move, you know, obviously they

49:14

had to get it there, and

49:16

this is actually why the, you

49:18

know, the huge stone disc had

49:21

a donut hole in them so

49:23

that you could put like a

49:25

big tree through it and sort

49:28

of the middle of it and

49:30

then like roll them around with

49:32

like ten people together, but... For

49:34

the most part, this wasn't necessary.

49:37

They just stayed put. For near

49:39

five centuries, this was their culture's

49:41

monetary good. And to really get

49:43

a sense of what this was

49:46

and how it worked and how

49:48

this money operated and why it's

49:50

such a good allegory to Bitcoin,

49:52

there is a story from this

49:55

island that just stuck with me

49:57

because it illustrates so many things

49:59

all at once. So the limestone

50:02

was not prevalent on their island.

50:04

They had to go acquire it,

50:06

make the stone and bring it.

50:08

back. So one of the wealthier

50:11

members of society, of this society,

50:13

took a boat and with the

50:15

help of a bunch of other

50:17

men, went to one of the

50:20

neighboring islands, carved out a huge

50:22

and particularly majestic one of these

50:24

rhystones, hauled it back onto the

50:26

boat, and then they returned to

50:29

the island. But when they got

50:31

back into port, they couldn't dock

50:33

because there was a storm coming

50:36

up and the seas were too

50:38

rough. So they anchored out in

50:40

the bay. hoping to make it

50:42

past the storm, but the storm

50:45

got bad enough that the boat

50:47

capsized and sank to the bottom

50:49

of the bay with the stone.

50:51

All the men returned to the

50:54

island, but they didn't have the

50:56

rice stone. Yet, because the man

50:58

explained what had happened, gave the

51:01

whole story to the village and

51:03

everyone, and that everyone on the

51:05

boat, everyone who went with them,

51:07

attested to the size and the

51:10

beauty of the stone. And because

51:12

they had no share in it

51:14

themselves, no conflict of interest or

51:16

reason to exaggerate their versions of

51:19

the story, they let the stone

51:21

enter into circulation on the island

51:23

anyway. So instead of just the

51:25

stone at the top of the

51:28

hill or the stone by the

51:30

beach, this was the stone at

51:32

the bottom of the bay. And

51:35

it was handed down for generations.

51:37

Notice the important distinction here. The

51:39

stone didn't have to even exist.

51:41

As long as it shared the

51:44

attributes that it couldn't easily be

51:46

created into circulation, i.e. without the

51:48

work, the attestation from the many

51:50

independent auditors, the distant expedition to

51:53

retrieve it, it would not have

51:55

been allowed into circulation. The stone

51:57

was merely a proof of work

51:59

and he was able to prove

52:02

the work without the stone. As

52:04

long as this was the case,

52:06

It could continue to work as

52:09

money, because in the end, it

52:11

is merely a tool to... translate

52:13

value from the past into the

52:15

future. Now this leads me to

52:18

an analogy that I like, I

52:20

really like to ask people who

52:22

demand that Bitcoin is backed by

52:24

nothing, whether it's created arbitrarily or,

52:27

you know, mostly it's kind of

52:29

a gold bug thing, right, that

52:31

they'll lean heavily on this claim,

52:33

that because there's no gold to

52:36

redeem Bitcoin for it can't be

52:38

money. So I like to bring

52:40

up a thought experiment. What if

52:43

we had a paper currency that

52:45

was perfectly backed by gold? And

52:47

somehow this was 100% provable. There

52:49

was no question that anyone in

52:52

the world for whatever reason could

52:54

counterfeit these notes when you had

52:56

one of these notes and could

52:58

easily look at it and know

53:01

beyond a shadow of a doubt

53:03

no matter who, what authority anywhere

53:05

in the world said otherwise. that

53:07

this one either was or was

53:10

not backed by a piece of

53:12

gold, and that these were all

53:14

proofs of a single ounce of

53:17

gold that had been locked away

53:19

into one giant vault that was

53:21

like a mile deep into the

53:23

earth. But everybody just used the

53:26

notes, because they were as good

53:28

as gold, right? No one ever

53:30

redeemed them. They only used it

53:32

to trade and hold value. simply

53:35

in the notes because you could

53:37

so easily prove the notes and

53:39

it was so clear that the

53:42

notes were representative of the gold,

53:44

well then you didn't have to

53:46

go all, you didn't want to

53:48

go all the way down into

53:51

the vault and you know, you

53:53

know, open up the, you know,

53:55

1800 locks and... complicated mechanisms and

53:57

get out the gold and weigh

54:00

it and then you just got

54:02

to bring it all the way

54:04

back up and later you just

54:06

got to trade it again for

54:09

the notes because it's so hard

54:11

to move the gold around and

54:13

it's easier to verify the note

54:16

than it is to weigh and

54:18

check the purity of the gold

54:20

itself just so nobody did it.

54:22

The notes were as good as

54:25

gold. What would happen if the

54:27

keys to the vault were lost?

54:29

Or maybe there's a bomb that

54:31

went off in the silo that

54:34

was locking it away, such that

54:36

all of the gold was essentially

54:38

irretrievable. Or better yet, the one

54:40

day, the gold literally just vanished,

54:43

but nobody ever went down there.

54:45

The gold simply wasn't there anymore.

54:47

It was completely unacceptable, like the

54:50

stone at the bottom of the

54:52

bay. If no one ever opened

54:54

up the safe to see. and

54:56

the notes were still completely secure

54:59

and provable. How long would the

55:01

notes keep working? If they remain

55:03

perfectly provable as part of the

55:05

original set, could not be counterfeited,

55:08

and even better, no bank or

55:10

government in the world could even

55:12

partially or even attempt to counterfeit

55:14

or print them without them being

55:17

somehow an obvious fake. When would

55:19

it stop working? What would make

55:21

it stop working? This is Bitcoin.

55:24

It's got greater scarcity. It's got

55:26

better scarcity than gold. It's near

55:28

perfect ability to easily and cheaply

55:30

verify its authenticity. It is bank

55:33

and government counterfeit proof. It's fungible

55:35

because it's literally money distilled down

55:37

to its most essential form an

55:39

accounting unit. It is endlessly divisible

55:42

because again it's an accounting unit.

55:44

It cannot be created without massive

55:46

amounts of provable work. It is

55:48

literally in the name, proof of

55:51

work. And none of them can

55:53

be created out of a hard

55:55

limit of 21 million. And best

55:58

of all, it is digital and

56:00

programmable. Meaning it can be given

56:02

instructions and ownership can be as

56:04

varied as you would want. Oh,

56:07

this actually brings me back. There

56:09

was a point about the Rhysestones

56:11

that I forgot to mention. I

56:13

said that they were... divisible. So

56:16

virtual made them portable, right? Because

56:18

I could trade you the one

56:20

on top of the hill and

56:23

all we got to do is

56:25

yell. Are you like, are you

56:27

on the one on top of

56:29

the hill? And everybody knows and

56:32

now it's done. We portabled it.

56:34

That's not a word. But I

56:36

also said divisible. Well, let's say

56:38

me, my wife and my two

56:41

sons own each own a fourth

56:43

of that rice stone at the

56:45

top of the hill. Because, you

56:47

know, this was based on village

56:50

consensus. the whole stone. So if

56:52

everybody's just keeping track of who

56:54

owns what stone maybe 20 people

56:57

own my stone together and we

56:59

each have different proportions of it

57:01

and my wife could sell her

57:03

quarter to somebody else in town

57:06

and then we'd have you know

57:08

it's basically a weird form of

57:10

multi-signature we didn't have to own

57:12

or trade the entire stone we

57:15

could just split up the ownership.

57:17

Well you can do this same

57:19

thing in Bitcoin except that you

57:21

don't have to trust that You

57:24

know, some religious or local authority

57:26

is going to enforce it when

57:28

the time comes. It's based on

57:31

cryptography. It's based on the fact

57:33

that you know a cryptographic secret

57:35

that nobody in the world could

57:37

ever guess, given the greatest supercomputer

57:40

ever built and enough time until

57:42

the heat death of the universe

57:44

to try it. Bitcoin unequivocally enforces

57:46

the rightful owner. on your phone.

57:49

It is not a cash app

57:51

competitor. It's not a social network

57:53

that's going to be replaced by

57:55

something better that comes along. It

57:58

is a fundamental protocol of digital

58:00

value. It is far more akin

58:02

to TCP IP and the internet

58:05

itself than it is to World

58:07

of Warcraft money. It is the

58:09

first system ever to create, to

58:11

be able to mimic the... Attributes

58:14

of physically owning something in the

58:16

real world. where, because you own

58:18

it, because you have it in

58:20

your possession, you are the owner,

58:23

you have a bearer asset, like

58:25

a gold coin. That's never been

58:27

possible in the digital space. If

58:29

you had a JPEG, you didn't

58:32

really have anything. You had something

58:34

that a million other people could

58:36

have, five other people could have,

58:39

or everybody in the world could

58:41

have. It was just a copy.

58:43

There's actually no way to move

58:45

a thing in digital space at

58:48

all. The only option is to

58:50

copy it and paste it. The

58:52

only way to achieve the illusion

58:54

of moving it is to delete

58:57

the original copy so that the

58:59

only copy is in the other

59:01

place. It created a universal truth,

59:04

a totem to coordinate everybody around

59:06

who owns what without meeting any

59:08

authority at all. And in fact,

59:10

by evicting any attempt at authority

59:13

from the system in every way.

59:15

It has perfect scarcity. and value

59:17

security like gold does that cannot

59:19

be faked. It has the fungibility

59:22

and divisibility of gold because it's

59:24

just a digital point, but we

59:26

are able to still retain the

59:28

digital portability that you get from

59:31

Fiat, from paper and virtual dollars,

59:33

and that also have the variety

59:35

of uses and functions of the

59:38

many different... services and needs in

59:40

a modern financial age when you

59:42

write futures contracts, you have Oracle

59:44

betting based on real-world events, when

59:47

you have time-based contracts, when you

59:49

have shared ownership with multi-signature, and

59:51

on and on, and it's the

59:53

scarcity and verifiability that made the

59:56

physical money so successful combined with

59:58

the digital ease and versatility. that

1:00:00

made Fiat replace it and become

1:00:02

the predominant money in the modern

1:00:05

era. It is the best of

1:00:07

both combined and solves the largest...

1:00:09

Gaping problem in fiat money today.

1:00:12

This is why Bitcoin is emerging

1:00:14

as money. This is exactly what

1:00:16

it would look like. It would

1:00:18

happen in wild swings as the

1:00:21

information slowly spreads into the economy

1:00:23

or the market as the feedback

1:00:25

loop of its completely inelastic supply.

1:00:27

Like literally no coins, no new

1:00:30

Bitcoin are created into circulation out

1:00:32

of a strictly defined schedule that

1:00:34

updates every 10 minutes and demand

1:00:36

due to its price increases continues

1:00:39

to unfold. So understand everything about

1:00:41

Bitcoin is defined and set in

1:00:43

stone except its market price. The

1:00:46

market price is the one thing

1:00:48

that Bitcoin does not know or

1:00:50

care about. So it perfectly responds

1:00:52

to swings to its demand and

1:00:55

the market sentiment, which is exactly

1:00:57

what we need right now. That

1:00:59

is why Bitcoin is so volatile.

1:01:01

It is emerging as a money.

1:01:04

Its total addressable market as a

1:01:06

monetary good is massive. And the

1:01:08

supply cannot either increase or decrease.

1:01:10

in order to smooth any of

1:01:13

that movement out. It is real

1:01:15

prices. It's real reactions to the

1:01:17

market in real time, and it

1:01:20

is global, so there's no one

1:01:22

market that dominates it in any

1:01:24

way, shape, or form. And this

1:01:26

is desperately what we need to

1:01:29

get off the plane that's heading

1:01:31

into the cliff so that we

1:01:33

can get on a rocket ship

1:01:35

that clearly indicates that when we

1:01:38

should pull up and get the

1:01:40

plane back in the air so

1:01:42

that everybody doesn't die. Right now

1:01:45

we are on a sinking ship

1:01:47

because we do not have real

1:01:49

prices. What we need more than

1:01:51

anything is real prices and Bitcoin

1:01:54

gives that to us. And remember

1:01:56

at the end of the day

1:01:58

all of this is about a

1:02:00

tool to allocate human time, to

1:02:03

allocate and coordinate value across time.

1:02:05

And there's a piece we just

1:02:07

read. recently on the show that

1:02:09

is so good for this one.

1:02:12

Bitcoin is Time by Durgiji. It

1:02:14

also helps to explain why, just

1:02:16

a general idea of why all

1:02:19

resources can be boiled down to

1:02:21

time. Everything else is kind of

1:02:23

just a layer on top of

1:02:25

the time cost of accomplishing something.

1:02:28

It is the universal constant that

1:02:30

all of our goals, all of

1:02:32

our dreams, all of our production

1:02:34

requires. Talent, labor, innovation, all of

1:02:37

this is just a derivative of

1:02:39

how it affects the time cost.

1:02:41

And it also, this piece, Bitcoin

1:02:43

is Time, also beautifully illustrates why

1:02:46

Bitcoin's ultimate and revolutionary purpose is

1:02:48

as a coordination mechanism. It is

1:02:50

a way to create a universal

1:02:53

economic order of events, a sense

1:02:55

of time that no single party

1:02:57

can manipulate, and that keeps a

1:02:59

record of monetary history. And therefore,

1:03:02

every party, every trading party can

1:03:04

independently trust this totem, and therefore

1:03:06

any other potential differences or jurisdictional

1:03:08

differences or property rights differences or

1:03:11

religious differences or racial differences, whatever

1:03:13

it is, do not have to

1:03:15

come into play. You can still

1:03:17

trade based on the value totem

1:03:20

that they, the same language of

1:03:22

value that they speak. It is

1:03:24

a way to create a sense

1:03:27

of time and financial events that

1:03:29

has no master. And just like

1:03:31

it's stupid and inefficient for everybody

1:03:33

to have their own version of

1:03:36

a clock, that has their own

1:03:38

time system. Like I have 60

1:03:40

seconds to a minute and you

1:03:42

have 193 seconds to a minute.

1:03:45

We use the same coordination system

1:03:47

to coordinate tasks and economic activity

1:03:49

all around the world. We all

1:03:52

basically use the same clock. and

1:03:54

it makes no sense to have

1:03:56

a huge number of various arbitrarily

1:03:58

different clocks. Well, it doesn't make

1:04:01

any sense to have a ton

1:04:03

of various arbitrarily different floating... monetary

1:04:05

goods either. The same reason why

1:04:07

a single dominant money is better

1:04:10

than a bunch of different monetary

1:04:12

goods is literally the same reason

1:04:14

why having a money at all

1:04:16

is so much better than barter.

1:04:19

And this is a basic truism

1:04:21

of networks, of communication systems in

1:04:23

general. Another great piece on this

1:04:26

that I'd recommend is on network

1:04:28

effects, shelling points and lending points.

1:04:30

It's something like that. I'll look

1:04:32

it up and get the actual

1:04:35

title. I can't remember what the

1:04:37

order is exactly, but it's by

1:04:39

Willem Vandenberg. And it really breaks

1:04:41

down the key concepts of what

1:04:44

we know about communication protocols, about

1:04:46

network effects, and communication mediums, and

1:04:48

why they always tend to consolidate

1:04:50

toward one. Why it seems that

1:04:53

whereas, you know, having like... random

1:04:55

electronics devices or whatever. We'll have

1:04:57

hundreds of different devices or cars.

1:05:00

We'll have hundreds of different cars,

1:05:02

different shapes, sizes and all sorts

1:05:04

of stuff carrying different various numbers

1:05:06

of people and all this stuff.

1:05:09

But somehow the rules of the

1:05:11

road are the same for the

1:05:13

road are the same for all

1:05:15

the cars. And then same with

1:05:18

the phones as we have all

1:05:20

these different smartphones, we've got little

1:05:22

screens, we've got little screens, we've

1:05:24

got laptops, blah blah blah. But

1:05:27

they all speak the same internet.

1:05:29

have this tendency to explode in

1:05:31

variety and serve all of these

1:05:34

varying different purposes. But then these

1:05:36

underlying communication systems, these foundations for

1:05:38

communication, why do they consolidate onto

1:05:40

one? Why don't they seem to

1:05:43

benefit from this huge degree of

1:05:45

variance in competition? So that's a

1:05:47

really, really great piece on that

1:05:49

concept if you want to dig

1:05:52

a little bit deeper. It kind

1:05:54

of digs into the idea and

1:05:56

this is so crucial to the

1:05:58

to understanding Bitcoin and It's the

1:06:01

reasons the same reason and why

1:06:03

we don't choose which of the

1:06:05

five different internets we're going to

1:06:08

connect to. We all log into

1:06:10

the internet. There's a reason why

1:06:12

TCPIP, the underlying protocol stack for

1:06:14

the internet, has not changed since

1:06:17

the late 70s. It's 50-year-old technology,

1:06:19

despite the endless amount of innovation

1:06:21

and layers built on top of

1:06:23

it. And that same reason, that

1:06:26

those are to both true, is

1:06:28

why it is extremely likely to

1:06:30

have a single dominant monetary foundations

1:06:33

with thousands of layers, payment systems,

1:06:35

apps, and financial services built on

1:06:37

top of it. So I'll have

1:06:39

all of these links if you

1:06:42

want to dig a little bit

1:06:44

deeper in the show notes. This

1:06:46

episode was just the tip of

1:06:48

the iceberg. There's about a thousand

1:06:51

hours of history economics. Game theory

1:06:53

delving further into why money exists

1:06:55

in the first place, what happens

1:06:57

when you see monies compete with

1:07:00

each other, the nature of Bitcoin

1:07:02

emerging into the monetary atmosphere and

1:07:04

the consequences of that, and what

1:07:07

it would look like if it

1:07:09

did look like a new perfectly

1:07:11

scarce money was monetizing from zero

1:07:13

and succeeding beyond anyone's wildest expectations.

1:07:16

You can find those in the

1:07:18

show notes all those the articles

1:07:20

and videos and stuff I mentioned

1:07:22

in the show notes either in

1:07:25

your podcast app or just at

1:07:27

Bitcoin audible.com and search it right

1:07:29

there in the library So I

1:07:31

want to hit today's Bitcoin resource

1:07:34

before we close this out Okay,

1:07:36

so today's Bitcoin resource is the

1:07:38

breeze wallet B-R-E-E-Z So drop the

1:07:41

last e And you can check

1:07:43

it out at breeze dot technology.

1:07:45

This is not a sponsor of

1:07:47

the show. This is just one

1:07:50

of my absolute favorite lightning wallets.

1:07:52

So lightning, I'm sure most of

1:07:54

you know, but just in case

1:07:56

lightning is a paper. protocol on

1:07:59

top of it. So think of

1:08:01

like WWW like the web was

1:08:03

built on top of TCPIP to

1:08:05

make the internet. Well the lighting

1:08:08

network is a payment system on

1:08:10

top of Bitcoin that has instant

1:08:12

fast and massively scalable payments

1:08:15

to tens of thousands

1:08:17

hundreds of thousands of

1:08:19

transactions per second. And Breeze,

1:08:21

BR EEZ is absolutely one

1:08:23

of my favorite non-custodial wallets.

1:08:25

So you're holding your own

1:08:27

keys and running your own little

1:08:30

lightning instance and it just

1:08:32

works and I absolutely love this thing I

1:08:34

swear by it I use it all the

1:08:36

time so if you're looking to get

1:08:38

into Bitcoin I highly recommend

1:08:41

that wallet with that I hope

1:08:43

you guys enjoyed this episode of

1:08:45

Bitcoin audible thank you so much

1:08:47

for joining me there is so

1:08:49

much more to learn and so

1:08:51

much more to explore and so

1:08:53

much happening in this space right

1:08:56

now We are epic winning recently

1:08:58

so stay tuned don't forget to

1:09:00

subscribe I am guys swan and

1:09:02

until next time everybody take it

1:09:04

easy guys