0:02

If you want to understand someone, an individual,

0:04

you can understand what their life has been

0:07

like, where they came from. And

0:09

I think the same is true for Bitcoin. If you really

0:11

want to understand Bitcoin, you need to understand

0:13

where it came from. Hello

0:15

there from New York. How are you doing? I'm here with

0:18

your boy Danny. I've also got Pete Rizzo in the room

0:20

with us here. We just

0:22

recorded a show with him, the legend Rizzo,

0:24

Mr. Bitcoin history. Yeah, we're here in

0:26

New York. We're at Pubkey. We're here for all

0:28

the ETF stuff. I'm sure you've been

0:30

following the craziness, the up and down of the price,

0:33

everything that's going on. We're doing a bunch

0:35

of shows here, then we're heading out to Nashville on

0:37

Sunday. So it's going to be a very busy couple

0:39

of weeks. Anyway, welcome to the What Bitcoin Did podcast,

0:41

which is brought to you by the legends of IRS

0:43

Energy, the largest NASDAQ listed Bitcoin miner using 100% renewable

0:45

energy. I'm your

0:47

host, Peter McCormack, and today I've got Aaron Van Werthem on

0:50

the show. Now, Aaron has been working

0:52

diligently on a book covering the genesis of

0:54

Bitcoin. And you know what? It's

0:56

such an interesting subject. We're going to be talking about the

0:58

history of where Bitcoin came from, the cypherpunks, all

1:01

the original attempts at creating Bitcoin pre-Bitcoin.

1:04

And so naturally we asked him to come to Bedford and make

1:06

a show. So we recorded this a few days ago and at

1:09

the time where everyone's talking about ETFs

1:11

and we're 15 years on from the birth

1:13

of Bitcoin, we thought it'd be

1:15

a good time to cover the genesis. So

1:17

yeah, big shout out to Aaron. Really grateful for him

1:19

to come to Bedford. It's great to hang out, get

1:22

some food and talk about this really important part of

1:24

Bitcoin's history. If you've got any

1:26

questions about this or anything else, you know how to

1:28

get in touch. It's hello at whatbetcoindid.com. Morning, how are

1:30

you? Good morning. I'm good. How are

1:33

you? I'm good. I'm sorry

1:35

you didn't get football yesterday. Yeah.

1:41

What happens is the match, the

1:44

pitch flooded. Yeah, we've had relentless

1:47

rain. I mean, oh yeah, really.

1:49

All season. It feels like

1:52

every game there's been, it's been raining a lot,

1:54

but it was like apocalyptic

1:56

storms this week. The worst

1:58

storms in like 24. four years or something,

2:01

everything flooded. If I showed you the photos, you

2:03

couldn't get it on the ground. It was like a swimming pool. It's

2:06

affected a lot of teams. Well, you

2:08

gotta invest in your infrastructure. Yeah,

2:10

yeah. The Premier League is still going,

2:12

right? I mean, give us another eight.

2:14

So they can handle it. Eight more

2:17

years, eight more years, we might get

2:19

there. But yeah, no, it was frustrating.

2:22

We had someone come in from America who's come to

2:24

the game and it's just one

2:26

of the risks. It's like when people come, if they come in

2:29

in January, there's a risk that it

2:31

might be frozen or waterlogged. But we'll get you

2:33

back. Yeah, I'll be back. You'll be back. It's

2:35

not too far. I

2:37

haven't seen you for a couple of years. Last

2:40

time on the podcast was two

2:42

or three years ago. Something like

2:45

that. You've been quiet. Been

2:47

working Peter. Yeah, what have you been doing? Been

2:49

busy. Yeah, you've been working on a book. That's

2:51

right. How did you know? Listen,

2:54

I'll tell you something interesting. It

2:57

is pure coincidence. Do you remember when

2:59

we did a Beginners Guide series years

3:01

ago? Yes. And we made

3:03

an episode with you. Yes. Pure

3:06

coincidence. The show we're making today is coming

3:08

out four years to the day after that.

3:10

Oh really? Interesting. Full cycle.

3:12

Nice. Yeah, I published, so

3:14

I published, so this is the actual book

3:17

of course, but then I

3:19

also published a, thanks

3:21

Peter. I also published the

3:23

raw manuscript sort of as a collector's item

3:25

a couple of months ago at

3:28

Bitcoin Amsterdam, the conference. And that

3:30

was almost to the day, 10

3:32

years after I wrote my first

3:34

article on Bitcoin. So it was like

3:36

10 years of journalism. You didn't

3:38

inscribe this. No,

3:41

no, I did not. Well,

3:43

congratulations, man. Thank you. Obviously

3:45

we've got a few writers within our

3:47

world of Bitcoin and I know how much work

3:50

goes into doing it. It's a lot of work. And

3:53

I think it's very cool that you've done

3:55

it. So congratulations on it. Getting out there,

3:57

people listening, going by. the

4:00

Genesis book I've seen was on Amazon and

4:02

everyone. Yes, or the Bitcoin magazine store. Oh

4:04

yeah, go buy it. Okay,

4:07

what's the genesis of the Genesis book? The

4:10

genesis of the Genesis book. So your question is,

4:13

why did I write it? Yeah,

4:15

why go and do this? Yeah, well,

4:17

I guess there's partly sort of a

4:20

personal story. But yeah, so I started

4:22

writing it like five, six years ago,

4:24

and it was sort of fresh out

4:27

of the whole block size wars. So

4:29

during the block size wars, I was a

4:32

reporter for Bitcoin magazine, technicalizer, journalist

4:34

for Bitcoin magazine. And you

4:36

were there for a part. And

4:39

it was a very tense time, very interesting

4:41

time. But every week,

4:43

there was something new going on, some sort

4:45

of controversy, some sort of fight. And I

4:47

was really kind of on top of, I

4:50

was in the middle of that sort of covering that from

4:52

a very week to week basis.

4:56

And by late 2017,

4:59

that was sort of over. And

5:02

for me, that was like this

5:04

whole debate was really about the future of Bitcoin and

5:06

where do we want Bitcoin to go? And what do

5:08

we want Bitcoin to be? And when

5:11

that was over, I had

5:13

this strong feeling that I wanted to zoom

5:16

out like, okay, let's so

5:18

we've been discussing where Bitcoin is going or

5:20

might be going now want to know where

5:23

did this actually come from? Like, because I

5:25

didn't know, I knew

5:27

some like, if you would open a Bitcoin

5:30

book, then there would be a

5:32

page that mentioned something about the

5:34

cypherpunks or these other digital cash

5:36

projects. But it was very

5:38

rudimentary, right? There was not a lot.

5:41

And I want to know more. I am a

5:43

historian myself, or at least technically, like I went

5:45

to university to know, I can officially

5:48

call myself historian, so to say. And

5:50

the reason I wanted to be a

5:52

historian is because I believe, if you

5:55

want to understand the present, you

5:58

need to understand where came

6:00

from. If you want to understand someone,

6:02

an individual, you need to understand what

6:04

that life has been like, where they

6:06

came from. Or society, if you want

6:08

to understand why things work the way

6:10

they do, it's good to

6:12

understand the history, where did

6:15

these ideas come from, where did this all

6:17

emerge from. And I think the same is

6:19

true for Bitcoin. If you really want to

6:21

understand Bitcoin, you need to understand where

6:23

it came from. So that's

6:25

what I try to do with this book.

6:28

Also, so other than the

6:30

other thing is, so I was really writing these

6:32

week to week articles being sort of in the

6:34

midst of this. And this was also

6:37

kind of a change of pace in that sense for

6:39

me, which was interesting. Like I really wanted to work

6:41

on something bigger, not this week to week

6:43

type of articles, but you know, take my

6:46

time to actually go in depth on a

6:49

specific topic. So that's

6:51

what I did. So the book is sort of meant to be

6:53

two things in one. It is the

6:55

prehistory of Bitcoin, but in a way

6:57

it also, I think, explains

7:01

Bitcoin itself. I mean, it

7:03

leaves an opening for you to

7:06

do this every few years and build up a

7:09

catalog of books

7:11

that document the history of

7:14

Bitcoin. I'm not going to

7:16

write another book soon. I do

7:18

have an idea for what could be an interesting

7:21

next book, but yeah,

7:23

writing a book is a

7:25

process and it did drain

7:27

my energy quite, like I'm going to have to recharge before

7:29

I can start a new book. Well,

7:32

listen, again, I will

7:34

say congratulations on this. I mean, you

7:36

mentioned the block size wars. Yes, I

7:38

was around. I could not

7:41

fully appreciate how serious that was at

7:43

the time. To me, it was like

7:46

just some technical debate the nerds

7:48

in Bitcoin were having. And it's like, we're going

7:50

to get bigger blocks and we're going to keep

7:52

smaller blocks. I just could not fully appreciate it

7:55

until after it happened. I think it

7:57

took me a couple of years. It was really a conversation I had with

7:59

Eric B actually at one point. He

8:01

fully explained to me the seriousness

8:03

of what was happening. And

8:06

so I never fully appreciated it at the time. And in

8:08

some ways, you know, we're heading into a new era of

8:10

Bitcoin right now. We are into

8:13

a kind of mass awareness, mass adoption phase.

8:16

And some people will just not know that part

8:18

of the history or they'll hear about it,

8:20

won't fully appreciate what happened at that time. And

8:23

it was a pivotal time. Yeah, living through

8:25

that was stressful. It's

8:28

stressful part. That's part of it, but also

8:30

just interesting. And I think one

8:33

of the things people maybe not realized today

8:35

as much as the people like me that

8:37

were sort of there and really living through

8:39

it is Bitcoin could

8:42

have just failed. It was a real possibility

8:44

in my mind that this whole experiment

8:46

project could just fail at this point.

8:49

Like if this fork

8:51

happens, if the community doesn't settle

8:53

on, you know, some sort

8:55

of common idea of what

8:57

is the real Bitcoin in a case like that. And

8:59

there's this big sort of, you know, messy

9:02

civil war kind of situation like

9:04

it was a real failure scenario

9:07

in my mind at

9:09

several points throughout the

9:11

block size wars. But yeah, we pulled

9:13

through Bitcoin is still going stronger than

9:16

ever. Like it came out stronger, but

9:18

it was a super interesting, but tensed.

9:22

So how did you decide where

9:24

to start? Because obviously, I know that Hayek

9:26

features quite prominently in the

9:28

book, which wouldn't have been something I would have guessed

9:31

in advance. I would have thought you would have been

9:33

talking to me with the cypher punks and some of

9:35

the earlier kind of attempts at creating a Bitcoin like

9:37

currency. But you actually start with Hayek. You actually start

9:39

with that quote. I've got to hear because it is

9:41

such a good quote. I've seen

9:44

this a video as well. I love it every single time. It's good.

9:47

I'm gonna read it so people haven't even heard it. But

9:49

I don't believe that we shall ever

9:51

have a good money again before we take the

9:54

thing out of the hands of government, which by

9:56

the way, was something Dave Smith was saying this

9:58

week. But this is the bit I

10:00

really love. Since we can't

10:03

take them violently out of the hands of

10:05

government, all we can do is by some

10:07

sly roundabout way, introduce something they can't stop.

10:11

And ironically, he said that in 1984 as well. It's

10:14

a nice touch. Yeah, it's such a nice touch.

10:17

And I kind of I think that

10:19

quote sits with people a lot. Like

10:22

it's kind of interesting that

10:24

he said that because he

10:26

he basically described Bitcoin. So

10:31

yeah, I opened the book with this quote.

10:33

And the quote really captures

10:35

the essence of what the book is, I

10:37

would say. So your

10:39

question is, where does the book start? Well,

10:41

there is an intro chapter about e-gold

10:44

first, as a sort

10:46

of, you know, that scene

10:49

in the opening scene in Star Wars, where you

10:51

have that rebel fleet, and then you've got the

10:53

big like, that's sort of what happens to e-gold

10:55

in the opening of the book, like you, you

10:57

first need to see the threat, right? Like what

10:59

happens when you start to where you try

11:02

to create new money? Well, you'll be hammered,

11:04

you'll be locked up, you'll

11:06

be your company will be have you ever interviewed

11:08

Dr. Jackson of e-gold? No,

11:10

I haven't. You should, you should definitely talk to

11:12

him at some point. Daddy knows make that happen,

11:15

man. But yeah,

11:17

so the real story sort of starts after

11:20

that. And the real story. So the book

11:22

has two starting points, really. One

11:25

starting point is indeed Hayek,

11:28

Austrian economics more generally,

11:30

but Hayek specifically. And

11:33

then there's a parallel storyline in the book.

11:35

And that starts with the emergence of hacker

11:37

culture. And these two storylines

11:40

throughout the book start to merge.

11:42

Okay. Okay, so why Hayek? Well,

11:45

let's go back one more step. I'm

11:48

conscious that over the next year, there's

11:51

gonna be a flood of new people coming into Bitcoin and

11:53

they're gonna discover podcasts like this and Stefan's and Marty's. And

11:55

what they always do is they tend to go back through

11:57

the history of the shows. And they're going to see this.

12:00

show for whatever we call it, the Genesis of Bitcoin

12:02

or the birth of Bitcoin, whatever we call it, and

12:04

they're going to listen to it. And

12:06

I know a vast number of these

12:08

people would never even heard of Austrian

12:10

economics. They won't know who Hayek is.

12:12

I certainly had no idea. I never

12:14

heard of Austrian economics before discovering Bitcoin.

12:17

I studied economics at school. It was never brought up. It

12:19

was all Keynesian bullshit. So

12:22

just out of the fact that I know they're going

12:24

to come and some people, can you just give a

12:26

background of what Austrian economics is and who Hayek was?

12:30

Yes. So let's

12:35

see, how far do I want to go back? Let's

12:39

just start with Menger.

12:42

Say, he was sort of the first

12:44

Austrian economist and he kind

12:47

of, what's

12:50

the best way to put that

12:53

sort of re-centered, re-centered the

12:55

science of economics. So how do

12:57

you study economics? How do you

13:00

study the economy? And

13:02

he sort of re-centered that

13:04

in the 19th century around

13:07

the individual and specifically

13:09

subjective preferences. So

13:11

what is value? How do

13:13

you divine value? Before that, most

13:16

economists or all economists, they

13:19

sort of figured that value

13:21

depended on the cost to

13:23

produce something. So the

13:25

cost to produce a pair of

13:28

shoes, that's where the value comes from. And

13:31

Menger sort of turned that upside down and he said,

13:33

no, the cost, no,

13:35

the value of a pair of shoes actually

13:38

comes from individuals. Like you

13:40

like shoes, right? Like you like sneakers. So

13:42

because of your preference, your subjective

13:45

valuing of shoes, that's why they're valuable. That's

13:48

why you want to pay for it. So

13:51

it's a very individual thing. And

13:53

this provided sort of a

13:56

new cornerstone to study economics from.

14:00

This became known as the Austrian School of

14:02

Economics. It started in

14:04

Austria, obviously. Nowadays, there's

14:06

Austrian economics everywhere, but it's

14:09

still called Austrian economics. This

14:12

was at that time just to differentiate

14:14

from other forms of

14:16

other ways to study economics.

14:20

What Hayek at some point did, or

14:22

his big contribution, you

14:24

could say is that he explained

14:28

what the price system does. So

14:30

what are prices? What's

14:34

the price of a pair of shoes? He

14:37

argued that prices essentially

14:40

embed all the

14:42

relevant information that people

14:44

in an economy, economic actors,

14:46

need to make their decisions. So

14:50

you don't need to

14:52

know if you're buying shoes. You don't

14:54

need to know what the

14:56

cost is of leather or what

14:58

the cost is of labor. You just

15:00

need to know what these shoes cost,

15:02

and that's how

15:05

you make your decision. So it embeds all these

15:07

things. Another good thing that's embedded, for example, is

15:10

transportation costs. You don't have to know where

15:12

these shoes are made or what it costs

15:14

to bring them here. It's all embedded in

15:16

the price, and you just need the

15:19

price to make your decisions. This

15:21

is true for every actor

15:23

in the economy. I'm just talking about

15:25

you like a producer, but obviously, this is

15:28

true for the shoe producers as well.

15:31

They have a cost for the leather. So

15:34

this is how the economy

15:36

communicates how

15:38

to allocate resources, the price

15:40

system. This is what Hayek paid

15:43

contribution. Now

15:45

because of this, Hayek became

15:47

interested in money. Prices

15:49

are measured in

15:51

money, essentially. So now he wants

15:54

us to know, what is money then? What

15:57

does money come from? The.

16:02

Was interesting in context of bitcoin

16:04

is as high as get some

16:07

points. Describes.

16:10

Was he fought ideal money would

16:12

look like how ideal money would

16:14

work and what he describes his

16:17

really bitcoin like he he describes

16:19

his money that's international that can

16:21

be used across borders and that

16:23

has a limited supply. Like

16:26

Bitcoin and rice and he described this

16:28

not only before Bitcoin. Over

16:31

for mobile Cena discard to for the into them. Are

16:34

you describe this in the Ninety thirties?

16:36

It was as yes Law a long time

16:38

ago. Or yet. So he describes this.

16:41

Ideal. Form of money that's you

16:43

know I would say it he was

16:45

is from Bitcoins. however. He

16:48

did not think it was possible. He said

16:50

this would be ideal. But. We can't

16:52

do this because how would you do

16:54

this? You need some sort of monetary

16:57

institution that gonna regulate this. It's gonna

16:59

make sure there's a limited supply but

17:01

monetary institutions can be corrupt. Said was

17:03

they need to be based in some

17:05

country. What happens is that if a

17:07

war breaks out like this country's and

17:09

probably gonna use the money prince or

17:12

if they have that ability so he

17:14

describes this ideal form of money but

17:16

then conclude it's it's not possible. Say

17:19

because He? because now. Was.

17:21

Us same as a weapon Now it

17:23

would be interesting to see if he

17:26

would have been a bit crazy almost

17:28

must have been right now. But as

17:30

you foundational saw his blood is the

17:32

foundation of our to is to have

17:34

people understand why that so important Because

17:36

ah there is a foundation having blood.

17:39

Bitcoin. Is Bill and on the foundation

17:41

of Austrian ideas ride sitters? He had

17:43

to be apropos of Jennifer Know it's

17:46

Is. Yeah, I had had to build

17:48

this with that consideration. Yeah, well. What

17:50

I lay out in the book is

17:52

how. Influential. Hi

17:54

X I dears have been on

17:56

all these people that were working

17:59

on the. And

18:01

it's not just this idea so

18:03

high that sort of affairs several

18:05

times in the book because I

18:07

think at several points throughout his

18:09

life he he's very interesting. Idea.

18:11

To they're very relevant to between. So

18:14

I just explained by early in his

18:16

career he had this idea that money

18:18

should basically work as a ruler right?

18:20

So do you need to set limited

18:22

supply In the only way you can

18:25

reliably measure things not just across space

18:27

but also across time is if the

18:29

money supply seem as if the in

18:31

like in like a ruler it shouldn't

18:33

change in in size. Now so this

18:36

and but he does not. Possible Price.

18:38

Then. I hear this big debate

18:40

with games or did this was of that?

18:42

Maybe you've seen the rap video a similar

18:44

to have yes it's it's a pretty famous

18:47

there's to actually them really good like they're

18:49

way better than they have any right to

18:51

be us is that they're sees rap videos

18:53

d them what would you call it's. Rap

18:56

videos but or up better at

18:58

bay my anyways. Diesel.

19:01

Very worth watching, but this was

19:03

a real debate and thirty's Mccain

19:05

sign of one of the one.

19:08

that debate is not. Based

19:10

some arguments but based on popularity

19:13

cases ideas were much more popular

19:15

within sort of the elite schools

19:18

out that this is a different

19:20

kind of favorable to the elite.

19:22

So yep yep so cases I

19:25

there's also about money by the

19:27

way so became so and stabilizes.

19:30

I detail this immigrants subs. They

19:33

had this idea that money should

19:35

be stable, overtime and noise. Hi

19:37

Fi says he would disagree with

19:40

them but games and of when

19:42

states debates but in in the

19:44

seventies inflation happens basically everywhere in

19:46

the world including in England's and

19:49

lots of places and it's kind

19:51

of breaks keynesian teary because case

19:53

in theory would have suggested that

19:55

you cannot have both inflation and

19:58

unemployment but that did happen so

20:00

occasionally them kind of. I

20:03

wasn't crisis and at this point

20:05

Fiat came back and he started

20:07

to write about months or policy

20:09

again a such right about all

20:11

those problems with inflation and. although

20:14

although although. The. Missile

20:16

Location resources that that and. Produces.

20:20

And Death until he. and the facts.

20:22

Old topics you've probably discussing the show

20:24

a lot a lot of times for

20:26

it will be and echoed again Right

20:28

now we haven't met inflation again. As

20:30

a worldwide issue we have the the

20:32

new form a Keynesian the Mmt this

20:34

to sneak out and proud Rise who

20:36

have been saying that inflation or money

20:38

printing fine as long as you can

20:40

keep control of inflation They've proved again

20:42

they can't keep the translation. We've had

20:44

massive inflation and now what we have

20:46

is A in Argentina we have some

20:49

these been elected. In a country that

20:51

had very i place of the next

20:53

day's campaign and against this who has

20:55

publicly talking about the tend to lean

20:57

affects to nicer I said what we'd

20:59

all be an echo to game right

21:01

now rice so high comes back to

21:03

start writing about months or policy again

21:06

and this time he has a new

21:08

idea. So remember in the thirties he

21:10

advocated is limited supply money international but

21:12

he didn't think it was possible. In

21:14

the seventies he comes back and he

21:16

says. I figure

21:18

it out. Guys have an even better

21:20

idea. We need to leave money to

21:23

the markets. We just needs the free

21:25

markets to decide what it wants to

21:27

use his money. So. Raw.

21:29

You know this problem of having some

21:31

institution manager of a know? We'll just

21:33

leave it to the markets will have

21:35

people the economy. Everyone decides what they

21:37

want to use his money. Now

21:40

there's a problem here

21:42

he recognized because if

21:44

he wants to, Allow.

21:47

That if you want to enable that if you

21:49

want to make that a possibility that governments are

21:51

gonna have to. Facilitate. this

21:53

or i'll allow this at least is

21:55

is it has to be possible to

21:57

do this for banks he a free

21:59

bank said It would be

22:01

determined like for banks would

22:03

be allowed to just create currency

22:06

and issue this on the market and

22:08

then people can choose but governments would have

22:10

to agree with this. And of course governments

22:13

benefit from being able to print money. So

22:15

it's kind of an uphill battle. He

22:17

realized but he made the case that we

22:20

need some sort of social movement

22:22

to try to make this happen and

22:24

to try to convince governments. Well

22:27

that went nowhere. But that

22:29

was his idea in the 70s. Then

22:32

another decade or two later

22:34

now he's you know he's at old age

22:36

basically he was born in 1899. So you know

22:39

old man at this point but

22:42

still very radical. Now he has

22:44

this idea. OK I still believe I was

22:46

right. I still the way. I

22:48

still believe the way to do it is to leave

22:50

money to the market. However

22:52

governments aren't going to allow it.

22:55

So we need to figure out

22:57

a way that we enable this

23:00

so that governments can't stop it. So that's

23:02

the quote. Right. Now

23:04

at this point these are these

23:07

ideas are the free banking idea for

23:09

example. These have been resonating

23:11

with this other group of people like

23:13

the cypherpunks and they

23:16

are building these technologies that governments can't

23:18

stop. Like that's sort of their whole

23:21

modus operandi is

23:23

that they create you

23:25

know remailers which is

23:27

a precursor of Tor. They create public

23:31

key systems. So they're working

23:33

on these technological tools that

23:35

governments can't stop. And

23:37

this idea of Hayek of

23:39

creating a money that governments can't stop is

23:41

you know resonates very well with them. And

23:44

that's I would say

23:46

that's that's sort of where Bitcoin came from.

23:48

It's these two ideas technologies that can't be

23:50

stopped and money that can't be stopped combined.

23:53

And voila. Where did

23:55

the cypherpunk movement itself come from. How

23:57

did that start. Again,

24:01

let's see what's a good starting point. Well,

24:03

a pretty good starting point is probably just

24:06

with Tim May and Eric

24:08

Yewks. So Legends, yes. So

24:12

Tim May was a physicist

24:14

at Intel, but he retired

24:17

fairly early. And

24:19

Eric Yewks was a hacker. He

24:22

worked at E-Cash

24:25

for, DigiCash for a little while. So

24:27

that was the first DigiCash project that

24:29

was based in Amsterdam by David Schaum,

24:32

which was also futures in the book, of

24:34

course. But

24:36

he kind of came back to the

24:39

United States' dissolution and he met with

24:41

Tim May. And

24:43

at that point, so

24:45

cryptography, cryptography always

24:48

exists, right? Like since the Roman

24:50

times. But for most of

24:52

these, for most of human history,

24:54

the only way to have

24:57

private communication would be to

24:59

first exchange the

25:01

secret keys. So if we wanted

25:03

to communicate privately online, for example,

25:05

the only way we would be sure that we're talking to

25:08

each other and that no one else can read it is

25:10

we kind of need to meet in

25:12

person and exchange these keys. So

25:14

this is what RMEs were using and secret services

25:16

and these kinds of entities.

25:20

But it was only in the 70s that

25:24

the modern form of public key, so

25:26

public key cryptography was invented where there's

25:28

public keys and private keys. And

25:31

this sort of, this

25:35

started looking for different

25:37

words. Well, whatever. This started a revolution

25:39

in the field. So a lot

25:42

of cryptographers in the 70s,

25:45

they got really inspired by this

25:47

idea and started

25:50

to come up with all kinds of

25:52

new applications

25:54

of cryptography. However,

25:57

throughout most of the 70s and 70s.

26:00

1980s, this was really something that

26:02

happened in the domain of like academics,

26:05

universities. And

26:07

it was Tim May and

26:09

Eric Hughes, when they met in California,

26:11

like old friends, they met in California,

26:14

and they started to talk about this topic. And

26:17

Tim May had this interesting idea in particular,

26:19

he had this idea of

26:21

he called that blacknet. And

26:24

blacknet was a website

26:27

or an online

26:29

service, where you could

26:32

sell information. The particular

26:34

type of information that he thought

26:36

would be interesting for people to

26:39

buy would be information

26:41

that's otherwise secret. So

26:44

company secrets, maybe

26:46

army secrets, maybe like

26:49

whatever classified documents, anyone

26:53

can get their hands on, it will be valuable

26:56

to someone out there, and if you can sell

26:58

it anonymously. Tim May thought

27:00

that was very interesting. Very

27:04

Wikipedia. Yeah,

27:06

it's very WikiLeaks. What's

27:11

the idea in selling? Because there's obviously

27:13

an associated risk with selling this kind

27:15

of data. Was it

27:17

under the belief that if you made

27:19

this data something that you could purchase,

27:22

that that would change the incentives of

27:24

these institutions that you're selling the

27:26

data of? Yes. So

27:28

Tim May was quite libertarian,

27:32

or anarchist, you could say, kind

27:34

of an icon capitalist

27:37

type. And

27:39

so he didn't like big governments. And

27:43

he believes that if governments,

27:48

armies, but also big multinational type

27:50

of companies, if they couldn't keep

27:52

secrets, they also couldn't be that

27:54

big. Like they would sort of

27:56

be forced to stay small. which

28:00

he thought was a very interesting idea. So

28:03

that was sort of his motivation there. And

28:07

so yeah, he met with Eric Hughes

28:09

and they start to discuss these kinds

28:11

of ideas, like all the potential that

28:13

these new cryptographic tools could deliver

28:15

to the world and all the ways that it could

28:17

change the world. And,

28:22

but they came, they sort of had

28:25

this big lingering question. They were

28:27

very excited about all of this, but

28:30

they came back to

28:32

this question, why doesn't any of

28:34

this exist? Like these tools have been invented,

28:36

it's possible, but it doesn't exist yet.

28:39

And that's when they decided to actually

28:41

take action. So Tim May and

28:44

Eric Hughes and John Gilmore was a sort of,

28:47

also a friend of theirs, and

28:50

they started to invite

28:52

friends of theirs to

28:56

start building these tools, essentially. So they

28:58

started meeting in California at first, at

29:00

first in a physical meeting at

29:03

Eric Hughes' apartment was the first meeting. And

29:06

they started to, yeah, have

29:08

these brainstorm sessions and

29:14

figure out how to actually build these tools

29:16

and how to bring them to the public.

29:19

From there, they also started a mailing list and

29:22

this mailing list became like an internet

29:24

phenomenon, an early internet phenomenon. We're

29:26

talking like early nineties. And there

29:28

were like, at that point, people from all

29:30

around the world. But the names of

29:33

the people on that list is incredible. Like

29:36

I've seen it, like you got like Mark Andreessen

29:38

on there, you've got Junie

29:41

Nasanj on there. Yeah. You

29:43

have Mark's question on there, I believe. It's

29:45

incredible, isn't it? Yeah, also a lot of

29:48

the Bitcoin OG types, the Nixavo, the Halvini,

29:50

of course, the White Dice. Yeah,

29:53

it was a fairly

29:56

widely read list within a

29:59

niche. domain. But anyone who was

30:01

sort of interested in the

30:04

internet in these days, again, early days, it

30:06

was a sort of an internet

30:08

phenomenon, an early internet phenomenon at that

30:10

time. Yeah,

30:12

so soon after they founded the

30:15

CypherPunks, the crypto wars started. So

30:17

the crypto wars was this attempt

30:20

of the US government to stifle

30:22

the use of cryptography. They

30:25

also saw the potential of cryptography

30:27

and they got worried. And

30:29

especially they were worried about like terrorists using

30:32

it or these kinds of ping-pong. Or at

30:34

least that's what they always

30:36

say. That's what they said. Let's put it that

30:38

way. It's always terrorists and pedophiles. But the truth

30:40

is, really, they just don't want a

30:42

free society. I'll

30:46

leave that conclusion to you. But that's what

30:48

they claimed anyway. Yeah. So let's, but yeah,

30:52

the CypherPunks, they thought

30:54

this was a really bad idea. Indeed,

30:57

because privacy is human right. And privacy

30:59

is important to have a free society.

31:01

It allows people to really be

31:04

themselves if you feel like you're always being

31:06

watched. That really stifles

31:08

freedom of expression. David

31:11

Schallm said that. He said without privacy, you

31:13

don't have democracy. Exactly. Yes. So David Schallm

31:15

was a big inspiration for the CypherPunks in that

31:17

sense. And

31:19

where was it going with this?

31:22

Yeah. So the CypherPunks started to fight

31:24

back, essentially. And they did

31:27

so in a pretty interesting way. So

31:29

they weren't the only ones that were

31:31

worried about these new regulations that were

31:34

being rolled out. So for example, a

31:36

specific example of these types of regulations

31:38

was you couldn't export cryptography

31:40

out of the United States. So

31:43

you couldn't share mathematical

31:45

functions with a bit that

31:48

would make you aware of it. Weapons

31:51

exporter, technically. That

31:53

were the regulations. So

31:58

there was sort of... kind

32:00

of a multi-front war, I would say,

32:02

the crypto wars. So you did have

32:04

the commercial parties, like the Netscapes, they

32:07

found that it was harming

32:09

their business, essentially. They couldn't

32:12

export their products abroad. They

32:14

couldn't sell their web browsers

32:16

abroad because they were using strong cryptography.

32:19

So it was harming their product, or they

32:21

would have to sell like weakened versions of

32:23

it, which wasn't as commercially viable. So

32:26

they were against these new

32:28

rules. And then also you have

32:31

human rights groups, like

32:33

the ACLU or the Electronic Frontier

32:35

Foundation. They also started

32:38

to lobby against these types of regulations.

32:41

And then you had the cypherpunks. And the

32:43

cypherpunks were like the radical branch. They were

32:45

the guys that said, fuck

32:48

you with your rules. We're going to do it anyways. We're

32:51

going to build this stuff. We're going to spread this stuff.

32:53

We don't care what you think. Tim

32:56

May at one point compared the cypherpunks

32:58

to the Black Panthers of the civil

33:00

rights movements. They were the radical arm.

33:03

So yeah, they were the cypherpunks. And

33:06

one of their main goals

33:10

was to create electronic cash. So they

33:12

were building these other privacy tools, but

33:14

electronic cash was always

33:16

considered sort of a holy

33:18

grail type of thing that they wanted to

33:20

create, that they tried to

33:22

build. And they did build versions of it,

33:25

as I described in the book, that

33:27

didn't quite work. But that

33:29

was always their goal. Wasn't there a big

33:31

win with like PGP though? Wasn't it defended

33:33

in the end under like

33:36

code of speech? Yeah.

33:38

So Phil Zimmerman, he was under what's

33:44

the term? I wasn't under arrest, but

33:46

he was under observation. Yeah.

33:48

Well, they were looking into him. Yeah.

33:50

So to say, yeah, there's a, there's

33:53

their investigation. Yes. Yes, exactly. And

33:56

so yeah, that was for creating

33:58

PGP. So the, encryption software.

34:02

And at some point,

34:04

he decided

34:07

to publish the algorithm in

34:09

a book. So he actually

34:12

printed out the PGP algorithm

34:14

in a book. And that

34:18

fell under freedom of speech

34:20

law, or at least that was sort of

34:22

the statements he was making. There's a longer

34:25

story here where they sort of goad it.

34:28

I don't know if it was the NSA or it was

34:30

the relevant agency.

34:33

They first sort of asked them, hey, can we

34:35

export this book? And then the answer was, yeah,

34:37

of course you can export a book. Why are

34:39

you even asking? And then they

34:41

printed the PGP algorithm in a

34:44

book. And then they sort

34:46

of make the case, well, you said we could

34:48

print books, right? Like, what's the problem here? And

34:50

the book. Yes, exactly. So that was the case

34:52

we're making. The other great example,

34:54

of course, is Adam Beck's t-shirt. Adam

34:57

Beck, as most Bitcoiners will know,

34:59

is currently the CEO of Blockstream.

35:02

He also in the 1990s,

35:05

he printed the RSLA algorithm on

35:07

a t-shirt. So you can actually

35:10

wear the RSA algorithm on

35:12

a t-shirt. And that would

35:14

mean that technically, if you wore that

35:16

t-shirt and you crossed the border out

35:18

of the United States, or you

35:20

would show it to a foreign national, again,

35:23

you were a weapons exporter. So yeah, he

35:25

was printing these shirts and selling these shirts for a

35:28

type of digital cash, by the way, that digital

35:30

cash was at that time really

35:35

trialing. And

35:38

yeah, also to make the case, to

35:40

make the argument or to

35:43

make the statement how ridiculous these laws

35:45

were. And in the end, the side

35:47

punks, as well

35:49

as the other human rights. So the

35:51

crypto wars were won, basically, by the

35:53

cypherpunk. Again, not just

35:56

the cypherpunks, there were these other industry and

35:58

human rights groups. collected effort

36:00

in the end, won the crypto wars

36:02

and since then cryptography has been legal.

36:05

Now we have it in our phones and you know,

36:08

signal and what's happening. Yeah, I

36:10

mean, look, it's been under attack here

36:12

in the UK. You're right. Yeah.

36:14

And I think it was signal who said

36:16

they might have to leave the UK. Danny's

36:19

talking about this a lot, but they're under

36:21

attack. And again, it's because they want to

36:23

stop pedophiles, you know, which obviously is a

36:25

noble cause. We don't want, we

36:28

don't want to be an enabler, but at the same time we

36:31

must need cryptography.

36:34

And well, talk about trade offs, right?

36:36

Trade offs. But for some reason, it

36:38

seems very hard for, you

36:41

know, authorities these days or in

36:43

the nineties to grasp that cryptography

36:45

isn't really new in that sense.

36:47

We were always allowed to have

36:50

private conversations in our living room.

36:52

We even were allowed to have private

36:55

conversations over mail. Like there's the last

36:57

that you, you, you've mail privacy, right?

37:00

But then we create this new technology to

37:02

communicate and now all of a sudden it's

37:04

a problem. Same with money.

37:06

We always have cash. It was never a

37:08

problem. It was always perfectly fine to pay

37:11

each other anonymously. This new technology is invented

37:13

and now all of sudden it's becoming a

37:15

problem. No, I think these are

37:17

very normal. Like, yes, there are trade offs. Of

37:20

course, you know, pedophiles

37:22

to name that example, they might abuse

37:24

the fact that you can close curtains

37:28

and that you can do

37:30

very bad things behind closed doors,

37:32

but we're not going to impose

37:34

laws to ban curtains. It's

37:36

a basic form of privacy that we

37:39

always had and we shouldn't give away

37:41

now. Can

37:43

you tell the story of Diffie and Hellman? Cause

37:47

lovely one. I've interviewed where he's brilliant.

37:49

He's so brilliant. Yeah.

37:52

So what's what's field Diffie is. Yeah.

37:57

So there's a chapter telling

37:59

this story. story in the book, of course. And

38:03

Whitfield Diffie was this brilliant

38:07

mathematician. He was

38:11

part of the early hacker movement. So the

38:14

book also details or tells the story of

38:16

where the emergence of the hacker culture.

38:19

Whitfield Diffie was part of that. And at

38:27

some point, he wants to create in the

38:29

70s. It's really two things. He wants to

38:31

create sort

38:38

of a digital safe, so

38:40

a way to keep documents

38:42

secure. And he

38:44

wants to create digital

38:46

authentication. Am I

38:48

pronouncing that right? Authentication, authentication. What

38:51

is it? Authentication. Right. Authentication.

38:55

So a way to prove that a

38:57

document, which can be a contract or

38:59

a letter or is really written by

39:01

the person that claims

39:04

to have written it essentially, a way to

39:06

prove digital ownership, you

39:08

would say.

39:10

So he wants

39:12

to create this and

39:15

he hears sort of rumblings or

39:18

he hears whispers

39:20

that the NSA may have invented

39:23

this form of cryptography where this

39:25

is actually possible. And

39:28

he gets really kind of

39:30

upset that it's hidden behind these closed

39:32

doors of this secret

39:35

organization. At that time, the NSA was

39:37

actually a secret organization.

39:40

Like officially, they did not exist.

39:42

Nowadays, back

39:45

then, it was actually a secret that they existed.

39:48

And he heard that they might have

39:50

had this technology that allows people to

39:53

communicate privately, for example. And

39:57

he doesn't like that. He's like, this is

39:59

a funded taxpayer money and this

40:01

is a very important tool

40:04

to have for the future of

40:07

humanity essentially. Again, for many

40:09

of the same reasons that you just mentioned, Ciao

40:11

had, like if we want to prevent

40:13

a totalitarian society, then people need

40:15

to have privacy also in a

40:17

digital age. So

40:20

he believes that this is

40:22

like a human right or a public right

40:24

to have this kind of technology. So

40:26

he goes on this tour throughout the

40:29

United States and he starts

40:31

talking with cryptographers,

40:33

computer scientists, anyone he

40:35

can find, authors

40:38

of books on

40:40

this topic. And he really sort

40:42

of tries to figure out a way,

40:45

he tries to figure out the secret

40:47

essentially like how is this possible? How can you create

40:50

something like this? And

40:52

at some point during his travels, he

40:54

meets Martin Hellman, who's a university professor.

40:57

And turns out he

41:01

was also thinking of this problem

41:03

essentially. And

41:05

they start collaborating. At

41:07

some point also Ralph Merkel joins sort

41:10

of there. He was a bit younger,

41:12

but he joins

41:15

their well subcommittee.

41:18

How should I call it? Their effort

41:21

to invent

41:24

this. And at some points,

41:27

yeah, so they invent public key cryptography.

41:30

At some point they figure out this

41:32

trick that if you have a public key

41:35

and a private key, where you can share

41:37

the public key, but keep the private key

41:39

secret, then you can realize

41:41

these things. Then you can realize private

41:43

communication as well

41:46

as authentication. I was struggling with

41:48

that word. Authentication.

41:52

Yeah, so it's quite

41:55

a fascinating story. It really determines

41:59

idealist essentially. with Phil Diffie

42:01

when you met him, right? Yeah, super

42:03

interesting. And he

42:07

does it. He actually figures this thing out.

42:10

The NSA is not happy about it at all. And of course,

42:13

the crypto wars, as I mentioned later,

42:15

happened all because of this. But yeah,

42:17

it really unleashes this

42:19

whole new era of research and

42:23

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b-i-t-c-o-i-n-a-t-l-a-n-t-i-s.com Okay so

45:36

when did the decentralization of money start

45:39

because you said the cypherpunks were

45:41

discussing like a whole bunch of ideas. What

45:44

was the original background?

45:47

Was it privacy, separation of money and state?

45:51

It didn't feel like the

45:53

original ideas were based around

45:55

anti-inflation, anti-debasement. It was more

45:57

about just taking... allow

46:00

people to transact privately. Yes. Yes.

46:04

So indeed, it started with David Shamm,

46:06

essentially. He's like the

46:08

godfather of digital cash. He's the first guy

46:10

in the 70s. As

46:13

I just mentioned, this cryptographic revolution

46:16

was sort of unleashed. And

46:18

then he was one of this generation of cryptographers

46:20

that tried to build on these ideas

46:24

and came up with interesting

46:26

new applications of cryptography.

46:29

And one of the ideas he had was for

46:33

creating an electronic form of cash,

46:35

which he did. So that's DigiCash and

46:37

M-Sram, and they created eCash. His

46:40

goal was specifically to create a

46:42

form of money cash

46:45

for the internet that could be used

46:47

anonymously. So people should be able to

46:49

pay each other without anyone else knowing

46:52

who paid who or how much, like the privacy

46:55

of transactions. That was what drove

46:57

him. The

47:00

technology was, in fact, built

47:02

for banks, essentially. So it

47:04

was not really its own form

47:06

of money in that sense. It

47:09

was more a layer for banks that

47:11

they could offer to their customers. If

47:13

you want to use electronic cash, but

47:16

it's essentially backed by dollars or euros

47:18

or whatever fiat currencies

47:22

the bank uses. So

47:24

the goal was electronic cash. But

47:27

this idea made its way first

47:30

to X-Tropion rounds. I

47:33

haven't mentioned it yet. Explain who they are. I

47:35

haven't mentioned X-Tropions yet. Because they're a little bit

47:37

more wild than the size

47:40

of folks. Well, they were both pretty wild,

47:42

I would say, but in slightly different ways.

47:44

Yeah, the X-Tropions was

47:47

this group. It was started by Max Moore,

47:49

who was a Brit, moved to California. His

47:52

origin name was Max O'Connor, but he changed his

47:54

name to Max Moore. He and a

47:56

friend's original name... Tom

48:01

Bell, and he changed his name to Tom

48:03

Morrow. So now you have Max Moore, Tom

48:05

Morrow. And they, for

48:08

a reason, because they had

48:10

these very optimistic futurist ideas.

48:12

So in the future, we'll have

48:14

more and more and more. And

48:17

more of... It

48:20

represents growth. And so they had a

48:22

very utopian idea about this. Specifically,

48:25

what they were trying to achieve was eternal

48:27

life. That was sort of the core focus.

48:30

So by eradicating all disease,

48:32

curing all disease, if we keep

48:35

our medical advancements and technology going,

48:38

we can cure diseases and

48:40

we can cure old age. And at that point,

48:42

we can basically live forever. When we

48:45

live forever, we can colonize space. We

48:47

can use AI to solve

48:49

any problem we might incur. We

48:52

can upload

48:55

our minds into the cloud. They

48:58

had all these futurist ideas, one

49:01

of which also is cryopreservation.

49:03

It's like how many? How many? Exactly.

49:06

He was an exropean, for example. So

49:10

the idea was we can live forever. We're

49:13

almost there. We're just

49:15

a couple of decades away. So

49:17

if you are unlucky enough to not

49:20

make the cut-off point, essentially, and live

49:22

forever, for the time being, you can

49:24

freeze your body or your head

49:27

at least, and then future

49:29

technology will be able to bring you back to life.

49:31

And then you can still live forever. He can work

49:33

a couple of decades away. That's what they fought.

49:35

In fact, the

49:39

founding father of this movement,

49:41

you could say, his

49:44

name was FM 2030. And

49:46

this is in the 1980s. And

49:55

so he picked 2030 as he thought

49:57

that would be the year that Eternal

49:59

Life is realized. 2030

50:01

so we're only six years away actually

50:03

Peter. Yeah, it seems feasible with the

50:05

if you compare Check

50:08

GPT three to four to five and

50:11

the fast movement of AI Yeah, probably

50:13

check GPT can just solve it for us soon I

50:15

think that's why I think it's the AI will fix

50:17

it and solve it for us. Right? I hope so

50:19

Well, I don't know you sound like an exropion. Yeah,

50:21

you wanna live forever. I don't want to die But

50:23

I don't know if I want to I mean you you

50:25

can still Decide to just

50:27

stop at some point, right? Yeah,

50:30

it's just your own decision then you can't turn

50:32

that back No,

50:35

you probably I mean depends on what the solution is

50:37

maybe maybe at some point you can just stop taking

50:39

the pills I will and stop aging right and then

50:41

you you'll send her uploaded to the cloud. You

50:44

can have a pause, right? Yes,

50:46

if we're not already, of course, would you freeze your

50:48

head? Well,

50:51

I you need to Subscribe

50:53

to a list if you want to do that and

50:56

I haven't I do know someone who has done it

50:59

I know someone who's done it. Yeah, it's

51:01

probably the same but quite pop I think I think

51:04

we're publicly about it, but we'll talk about I'm

51:07

a bit hesitant to call it. Yeah, I'm pretty

51:09

sure I'm pretty sure you sit on this podcast.

51:11

Oh, that's But

51:13

also Fran Finney, she's me. She will be like

51:15

how so right folk about that. Yeah, we had

51:17

a funny conversation I was like, yeah,

51:19

but you've been frozen at different ages like, you

51:22

know when they saw you out you You're

51:24

gonna be the older one much older woman than ever Right,

51:26

just like yeah, but what have the technologies to the age

51:28

right the age me. I'm sure we'll be fine The

51:32

whole concept weighs me out we

51:34

got sidetracked a bit so these were the ex topians and

51:39

Yeah, okay, so they had this

51:41

very futurist utopian ideas now

51:43

They weren't the first one to

51:45

a futurist utopian ideas Although

51:48

they were maybe the first ones that took

51:51

it really seriously like not in a science

51:53

fiction way But like this is something we

51:55

can actually achieve and we can actually give

51:57

it in our lifetimes possibly But

52:01

the other differentiator is, so for

52:04

example in Star Trek you have this... Are

52:07

you Trekkie? I'm not actually,

52:09

I just know of it. Honestly, I think it's

52:11

shit. I've never even given it

52:13

a chance. The Wrath of Khan. Other

52:16

than the movies. Star Trek II, The Wrath of Khan is

52:18

a good movie. I think the rest of it

52:20

is just crap. Right. Yeah, I've seen

52:22

some of the new ones. I'm gonna get all these

52:24

furious emails now. You know what you want to bow?

52:27

Star Wars though is good. Yeah, of course. The new

52:29

ones. Well, so

52:32

like, so, so, okay,

52:34

let's just have a little segue. Yes,

52:36

I'd like for it. So

52:40

four, five and six, the original one, two,

52:42

three. Oh, brilliant. One,

52:46

two and three are horseshit. I

52:48

like them. Horseshit. No,

52:50

I think these are still pretty good. I

52:53

think they're hated too much. Like they're

52:55

still pretty good. I

52:58

didn't like them, but I did like

53:00

in part three where we saw how

53:02

Darth Vader became Darth Vader. I thought

53:04

that was pretty cool. Seven

53:07

eight and nine, I think are better than one, two and three. Oh,

53:09

come on. Really? Better

53:11

than one, two and three. These are so

53:13

horrible. But, but they are, they're not great

53:15

either, but there's, there's good bits in it.

53:18

They look beautiful. We're not gonna agree on

53:20

this one Peter. But I actually think the,

53:22

you know, they've done these independent stories. So

53:24

this is the Han Solo one. Like nine,

53:27

nine was the worst of all. Nine was

53:29

terrible and the ending is terrible. Like it

53:31

is actually, like there was that big fight,

53:33

the whole thing's rubbish. But

53:38

it was, you know, they did those independent stories. They did

53:40

the Han Solo one and then they

53:42

did the one that was the prequel to

53:44

Star Wars. Oh,

53:47

had the girl in it. Yeah, the prequel

53:49

to part four, basically. Yeah. Yeah.

53:52

Rogue One. Rogue One, that's it. It's

53:55

a non four, five, six one. It's

53:57

pretty good. I would say, I agree.

54:00

There's too much Star Wars now. I

54:02

stopped watching. I'm done now. Basically,

54:04

I'm done with all the Disney stuff. Rogue

54:06

One is like the one exception that's still reasonable.

54:09

Yeah, I think Rogue One is better than reasonable.

54:11

I think it's good. I liked it. Fair

54:14

enough. It was emotional. All right,

54:16

back to the story. Yeah, back to the

54:18

story. Yeah, it's like Disney. Okay, so we

54:20

were actually not even talking about Star Wars.

54:22

We were talking about Star Trek. Yeah, like

54:24

Star Trek. The only reason I mentioned Star

54:26

Trek is because in

54:29

Star Trek, there's this, like, this Maleficent

54:32

world government that's sort of, you

54:34

know, well-meaning and sort of shepherding

54:36

humanity in the right direction. I mean, I

54:38

haven't watched it, but that's what I heard.

54:41

The Daxthropians, now we're really back to the book. Daxthropians

54:44

had this different idea of how

54:46

to realize this utopian future. Namely

54:49

they had this Hayekian idea. They

54:52

believed that Hayek sort of provided a

54:54

blueprint. Namely you got to remove government

54:56

from the economy. You got to let

54:58

people experiment. You got

55:00

to let the free market figure it out. You got

55:03

to, you know, people have these,

55:05

you know, desires to live longer,

55:07

for example. Just let people alone.

55:11

And that's how we'll figure it out. Okay.

55:14

Now you get Halvini. Halvini

55:16

was one of Daxthropians. And

55:19

he learned about this digital cash project that David

55:22

Chan was working on. He

55:25

likes this digital cash project and

55:28

he starts advocating it to

55:30

Daxthropians. And

55:33

his argument for why Daxthropians should care

55:35

about it is because it's a way to keep

55:37

government out of your life. Sorry.

55:41

Right? So just for

55:43

a privacy reason, we want to have

55:46

free markets. We want to get government out of our

55:48

lives. So we need digital cash. We need a way

55:50

to pay each other anonymously. Now

55:52

this idea really resonates with Daxthropians.

55:55

But at this point, some of Daxthropians, like

55:57

Max Moore, who are so inspired by Halvini.

56:00

I had

56:03

ideas about the economy and money that

56:06

now he starts to connect the dots and

56:08

he starts to think, wait a minute, if

56:12

we have this electronic cash technology, now

56:15

we can start to apply the

56:17

same technology, not just for privacy

56:19

reasons, but also for monetary reform

56:21

reasons. So now we can

56:23

create a free market money that

56:25

governments can't stop. So

56:27

we can sort of kill two problems.

56:29

We can solve two things in one

56:31

go. We can have privacy and we

56:34

can have monetary reform. So

56:36

he started to advocate these ideas to

56:38

other exropions. Now who were some

56:40

of these other exropions? They

56:42

included Tim

56:45

May, one of the founders of

56:47

the cyberpunk, Nick Szabo, Wydai,

56:49

a number

56:52

of these cyberpunks that then started to

56:54

sort of go in their own direction.

56:56

They sort of split off from the

56:58

exropions. I mean, some of

57:00

them were just part of both, but they created

57:03

this new group that was more focused

57:05

on cryptography and computer science

57:07

and electronic cash, for example. But

57:09

yeah, these two ideas of electronic

57:11

cash and monetary reform, they

57:14

were really merged within

57:17

the exropion movement. And that's where

57:19

the cyberpunks in part at least came from. Interesting.

57:25

Did you cash ultimately failed as

57:29

decentralized? There's

57:32

a lot of disagreement on why it

57:34

failed exactly. Yeah, that was your original

57:36

question, right? Or at least one of

57:39

your questions like decentralization. So did the

57:41

cash failed? And

57:44

that's one of the most controversial

57:46

parts in the book is why

57:48

it's failed exactly. There's really two

57:51

perspectives or two very different ideas about

57:53

that. So on the one hand,

57:55

you have several

57:57

of Chum's former... employers,

58:00

basically, who worked at DigiCash, they

58:03

believe that

58:05

it fails because David Chow was not

58:08

a good businessman. Which I've

58:10

heard. That's

58:12

what they claim, and I've spoken with several of them, and

58:14

they still believe that. So there

58:17

was a lot of interest for

58:19

Microsoft, wasn't there? Microsoft, big banks.

58:21

Well there was also one big

58:23

bank that did adopt it, which

58:26

was Deutsche Bank. But

58:30

yeah, there was a lot more interest. It's

58:33

also a little

58:35

bit unclear how concrete this

58:37

interest was. Again, two parts

58:39

of the side of the story. But

58:41

yeah, Microsoft, FISA,

58:44

was it FISA or MasterCard? Well, I think it was

58:46

FISA. FISA,

58:49

big Dutch banks. There

58:52

was a lot of interest, and

58:54

there was this general perception among people that

58:56

were interested in the early

58:59

Internet that DigiCash had

59:01

this great potential. They were really

59:03

seeing it as sort of this

59:05

rising star, the next Netscape, for

59:07

example. This has so much

59:10

potential. We need digital cash. Everyone was sort of

59:13

on board with this idea. Keep in

59:15

mind, this was before it was obvious

59:17

how the Internet

59:19

would pay for itself.

59:21

It was before advertising became

59:23

sort of dominant in how

59:25

websites sustain themselves and the

59:27

private model. So at this

59:30

point, many people thought it would be actually

59:32

digital cash. You would actually have to pay

59:34

to visit the website, for example. So DigiCash

59:36

was really this rising star. So

59:40

yeah, I think that's part of why there's

59:43

still... It's still

59:45

a touchy subject for a lot of people that

59:47

were there, because they really felt like we are

59:50

working for this new, big thing, and

59:52

it just kind of went nowhere. So yeah, former

59:54

employees think David Chow was a bad businessman. He

59:57

was a... opting

1:00:00

out of deals like last minute or asking

1:00:02

for more money just before signing a contract

1:00:04

and these kinds of things. David

1:00:07

Chahom, however, he believes that that's not the

1:00:09

case at all. He does point

1:00:11

out, I made some great deals like Deutsche Bank,

1:00:13

like how could you say I'm a bit bad

1:00:15

businessman? Like look at, you know, it's

1:00:17

not easy to make a deal like that. He

1:00:20

can't be objective about the failure of it. Have

1:00:25

you talked to him? Yeah. Yeah,

1:00:27

I mean, I spoke with him. All I know is it does

1:00:29

pain him. I think

1:00:31

Bitcoin pains him. Right. Yeah,

1:00:34

he's not a Bitcoiner. But he is.

1:00:38

In what sense? I

1:00:42

think Bitcoin pains him because he was there at

1:00:45

the very start of it. And

1:00:47

he invented one of the precursors, which was

1:00:49

an important stepping stone to Bitcoin. But

1:00:53

he didn't fully grok Bitcoin

1:00:55

himself either because he was

1:00:58

disillusioned, upset, whatever reason. And

1:01:00

therefore he kind of missed out on the whole

1:01:02

thing. He knows he's an important part

1:01:05

of the history. He's in your book.

1:01:08

He's mentioned all

1:01:11

the time with regards to privacy because he

1:01:13

how much he stood up for privacy is

1:01:15

a fundamental pillar of democracy.

1:01:20

But he missed

1:01:22

out on Bitcoin for whatever reason, and

1:01:25

he could have been fabulously wealthy from it. And

1:01:28

there is this thing with a great warm

1:01:30

key that does it with journalists. He

1:01:33

calls it the saltiness index. I'm not saying this

1:01:35

about David Chum, because I'd be insulting. But I

1:01:38

think the early you discover

1:01:40

Bitcoin, but don't

1:01:43

adopt it and purchase it. I

1:01:46

think you build up a subconscious dislike

1:01:48

for it. Yeah,

1:01:50

yeah, I've just seen this so many times. I

1:01:53

think Nathaniel Popper is another good example of this.

1:01:56

Right. I mean, there's many examples. Yeah,

1:01:58

there's so many. So

1:02:00

these people can't be objective about it. I really

1:02:02

like David Chow and I mean,

1:02:05

he's kind of a hero. He's a total

1:02:07

hero He's an absolute hero but

1:02:10

I met him once and he was working on some shit

1:02:12

coin and it was just it pained me because it's like

1:02:15

You know, like surreal. Yeah, and I

1:02:17

think there's a bunch of grifters who got around him and convinced

1:02:19

him to do a thing But his name to and I thought

1:02:21

it was just sad. It's like you shouldn't be

1:02:23

doing this. You should be kind of like semi retired

1:02:27

Yeah, opinion leader who hasn't got to worry

1:02:29

about money who you know supports

1:02:31

Bitcoin. I believe he's a Bitcoin I just don't

1:02:33

believe he can accept that he is one Yeah,

1:02:35

like why would he not be like

1:02:37

Bitcoin does everything that he wanted to do? Maybe

1:02:41

it doesn't offer enough privacy. Yes, right.

1:02:43

Maybe maybe we are building Xiaomi in

1:02:45

systems on top of it I know

1:02:47

like ecash systems like come on. They

1:02:49

like I think it's

1:02:51

a sad story You know, it reminds me of it reminds me of

1:02:53

like professional footballers Who

1:02:56

by the end of their career? Haven't

1:02:58

kind of managed their finances and they end up

1:03:01

they end up with a tough life after they

1:03:03

think because they're they're no longer Playing and owning

1:03:05

the money. They haven't managed their money. They maybe

1:03:07

get a huge tax bill and they're suddenly They're

1:03:10

kind of thrown onto the heap right and I

1:03:12

feel like in some ways David Chamm is a

1:03:14

really important person Was kind of like

1:03:17

whether it was self-inflicted or whatever, but it's kind of been

1:03:19

thrown on the heap Yeah,

1:03:21

well, there's an interesting analogy in

1:03:24

the book itself also a charm

1:03:26

related which is that While

1:03:29

chow was a big inspiration for

1:03:31

many of the cypherpunks He

1:03:34

also they also didn't get

1:03:36

along very well, right? So David Chamm

1:03:38

didn't really like the cypherpunks that much

1:03:41

because David Chamm was more moderate

1:03:43

Like he had a more sort

1:03:45

of moderate purpose for his

1:03:48

technologies than some cypherpunks But now

1:03:50

there were different Gradients

1:03:53

of like radicalism within the

1:03:55

cypherpunk movement with Tim May

1:03:57

being like very radical like he was his and

1:04:00

okay, start that one to bring down governments. And

1:04:03

Chum didn't actually like that very much. He was

1:04:05

like, no, this is, you know,

1:04:07

I'm building this technology so people have privacy.

1:04:11

I'm not building it to undermine the state

1:04:13

like that. That wasn't his goal. Pizza

1:04:16

first, I live the other way around. Some

1:04:18

cypherpunks weren't really happy with David Chum,

1:04:21

because David Chum had these patents

1:04:23

on digital cash. He did digital

1:04:26

cash, e-cash that he invented. The

1:04:28

technology that it uses was patented by him

1:04:31

and his company. So

1:04:33

cypherpunks were very interested

1:04:35

in this, but they couldn't experiment with

1:04:37

it freely. So there was

1:04:39

sort of frustration with him as well.

1:04:41

So even though there's an interesting dynamic

1:04:44

there where he's both a great inspiration

1:04:47

as well as, you know,

1:04:49

they didn't get along that well actually. Well,

1:04:51

I mean, why do you think digital cash failed based on what

1:04:53

you've seen? Or you don't have to answer it if you don't

1:04:55

want to. No, no, that's fine. That's

1:04:58

what we worry about. The other perspective,

1:05:00

the David Chum perspective is there

1:05:02

just wasn't a market for it.

1:05:05

That's it. Like he was a fine businessman. There

1:05:07

just was no market for it. I

1:05:11

mean, obviously I wasn't there. I've spoken with multiple

1:05:13

people that were there, but I was not there.

1:05:15

So, and I will, you know, when this was

1:05:17

all happening, I was like 10 or so. So

1:05:21

I don't know, but

1:05:24

I think the most reasonable guest or

1:05:28

what I suspect is that it's both true. I

1:05:31

suspect that David Chum was probably not a

1:05:33

great businessman. I suspect that he was probably

1:05:35

indeed turning down offers that

1:05:37

he really shouldn't have turned down, but

1:05:40

also there just wasn't a market for it. You

1:05:45

know, Deutsche Bank did roll it out.

1:05:47

Also Credit Suisse, I think it's called.

1:05:49

Like there were some banks that

1:05:51

rolled it out and there was just no

1:05:54

interest for it. There was just also no market for

1:05:56

it. So it was

1:05:58

ahead of its time. But

1:06:01

also, so another thing I pointed out

1:06:03

in my book, we're skipping ahead a

1:06:05

little bit now, but I'll just point

1:06:07

it out real quick is one

1:06:10

of the problems with e-cash is

1:06:12

that there's no financial reason to

1:06:14

adopt it, right? You

1:06:17

can adopt it for privacy, but how many people

1:06:19

really care about that? Well, some do, but maybe

1:06:21

not everyone, right? While everyone

1:06:23

cares about making money. The

1:06:26

Bitcoin is clever, limited supply

1:06:28

as the kids call it these

1:06:30

days, number go

1:06:32

up technology and that does help

1:06:35

adoption. So even if you don't care about that,

1:06:37

but you just care about the privacy part, it's

1:06:40

still good to have the number go up technology

1:06:42

if you want it to be widely adopted. Come

1:06:44

to the gains, stay for the revolution. Right. So

1:06:47

e-cash did not have that. And

1:06:49

then another problem, as you mentioned, it was

1:06:51

of course centralized. There's

1:06:54

actually a more interesting example here,

1:06:57

which is not e-cash itself, but

1:07:01

e-cash had this trial currency,

1:07:04

which was this was called cyber

1:07:06

bucks. So they basically

1:07:08

trials. So as I mentioned, e-cash itself

1:07:10

was meant for banks and

1:07:13

banks would bank the cash

1:07:15

with actual fiat money. So euros, dollars,

1:07:17

whatever the bank was using. But

1:07:20

before they launched this product, they

1:07:22

launched cyber bucks and this had

1:07:24

the same technology, juice the same

1:07:27

technology, but it was put there basically

1:07:29

just as an experiment. Let

1:07:31

people experiment with this stuff. The

1:07:34

only thing they said is there will only

1:07:36

ever be 100 million coins. Essentially,

1:07:38

there will only ever be 100 million

1:07:40

units. And

1:07:45

the cyber banks started experiment with this. So

1:07:47

they started to actually use this thing and

1:07:50

kind of play around with it. And

1:07:52

because of this limited supply or this promise of

1:07:55

a limited supply, it actually started

1:07:57

to gain some value. It was actually some

1:07:59

value attached. to this experimental currency. So

1:08:02

Adam Back, I mentioned the T-shirts earlier, the

1:08:04

RSA T-shirts. He was actually selling these for

1:08:06

this cyber box. Really? Yeah.

1:08:10

Interesting. Yeah, so the cyberpunks, they

1:08:13

were using these kinds of, the cyberbox, and

1:08:16

some of them were just kind

1:08:18

of saving it. Or, I mean,

1:08:20

I don't think they were holding

1:08:22

millions of dollars worth of cyberbox, but they were,

1:08:25

who knows? But, you know, they were,

1:08:27

it had some monetary value. And

1:08:32

then at some point DigiCash failed. Again,

1:08:35

either because the child was not a good businessman or

1:08:38

because there was just a market for whatever happened, DigiCash

1:08:41

failed, and as DigiCash failed, the

1:08:44

cyberbox server also went down. So

1:08:46

now all of a sudden, everyone who

1:08:48

had some cyberbox had no

1:08:50

cyberbox. It was gone, the server was gone.

1:08:53

So it was worthless in an instant. And

1:08:56

I think this was a real lesson for

1:08:58

a lot of these cyberpunks, that, okay, if

1:09:00

we're gonna create digital cash, it

1:09:03

needs to be something that cannot just disappear or

1:09:05

be shut down. So was

1:09:07

it, was BitGold next? No,

1:09:13

well, BitGold never

1:09:15

existed. Yes, but like the white

1:09:18

paper proposed was. Let's say the

1:09:20

digital cash projects that I really

1:09:22

highlight in my book are E-Cash,

1:09:26

DigiCash, then we go

1:09:29

B-Money, R-POW, Bitcoin. I

1:09:35

feel like I'm forgetting one. Am

1:09:37

I forgetting one? I mean, I don't know if

1:09:39

it's part of it, but like, do you bring up

1:09:41

Liberty Reserve? No, no, no. That

1:09:43

is part, okay. So let's talk

1:09:45

about HashCash. Big up,

1:09:47

Adam back. Yeah, so it went from, I

1:09:49

would say, or

1:09:52

at least in my book, the order is E-Cash,

1:09:54

and then a little bit later comes HashCash. Yeah,

1:09:57

so I mean, HashCash was an

1:09:59

important. Because I think of

1:10:01

Bitcoin as a jigsaw puzzle, right? Or

1:10:04

let's say a decentralized

1:10:07

form of money was a jigsaw puzzle. Bitcoin

1:10:09

was the first time all the pieces were put together.

1:10:13

And one of the important pieces of

1:10:15

that is hashcash, it's proof of work. It's what Adam

1:10:17

Beck came up with. Talk

1:10:19

to me about that. So

1:10:22

you want me to just riff on the

1:10:24

hashcash? Well, just, again, there's going to be

1:10:26

people listening who won't

1:10:29

know the importance of

1:10:32

proof of work, where it came from, the background,

1:10:34

the way that Adam did. Yes.

1:10:36

Yeah. So I mentioned earlier

1:10:38

that the cypherpunks were building these privacy

1:10:41

technologies. And I

1:10:43

also mentioned they had a mailing list. So this is early

1:10:45

90s. Around

1:10:47

this time spam was becoming a problem

1:10:49

on the internet. Remember it clearly. Email

1:10:52

spam was a nightmare. So

1:10:55

this started to bother the cypherpunks

1:10:57

as well. This was becoming a real problem

1:10:59

for one cypherpunks mailing list

1:11:01

itself was being spammed. But

1:11:03

an even bigger problem was they had

1:11:06

created these remailers and they were running

1:11:08

remailers. So this was a way to

1:11:10

email someone anonymously because the

1:11:12

email would be, you know, bumped from address to

1:11:14

address before it got to the recipient. It's kind

1:11:16

of the precursor of Thor. Yeah. But

1:11:19

these remailers, they were being and they

1:11:23

were being spammed a lot like baby.

1:11:25

Basically, a lot of cypherpunks thought they

1:11:27

were essentially being attacked like they were

1:11:29

spam so much that the intention was

1:11:31

to make these remailers unusable. And therefore

1:11:34

it was an attack on privacy on

1:11:36

the Internet. So

1:11:38

what they wanted to create, what they wanted

1:11:40

to make to solve

1:11:42

this problem was digital postage.

1:11:44

So the equivalent of postage

1:11:47

stamps for the Internet. And

1:11:49

they had some ideas about how to do it. You

1:11:53

know, they did not want to get the

1:11:55

government involved. That was very important to them.

1:11:57

Like they didn't want to just ask the

1:11:59

government, please make spam. illegal because in that

1:12:02

case the government's going to get to define

1:12:05

what kind of internet traffic is legal and not.

1:12:07

Yeah, you don't want that. Don't want that. And

1:12:10

also it would essentially require

1:12:13

that anyone who sends an email

1:12:15

needs to do some sort of KYC

1:12:17

type of thing because otherwise how are you

1:12:19

going to catch a spammer? So government needs

1:12:22

to be not

1:12:24

a part of the solution. That was sort of the design

1:12:26

goal. There were

1:12:28

some ideas, some were like digital cash related, but

1:12:30

eCash at that point was not ready to be

1:12:33

used for something like this. And

1:12:36

then Adam Back came up with hash

1:12:38

cash. Now I

1:12:40

will mention real quick that he

1:12:42

actually reinvented something that already existed.

1:12:45

Like a couple of years earlier there was another

1:12:48

system that worked very similarly,

1:12:50

but I'll leave that aside from

1:12:52

now. Adam Back did not know about this, that's

1:12:54

for sure. Or at least that's

1:12:56

what he claims, I believe him. And

1:12:59

he invented this way of creating

1:13:03

postage for emails. And what he

1:13:05

did essentially was you

1:13:08

take some properties

1:13:11

of the email you're sending and then

1:13:14

you've got to make calculations on it or you've

1:13:16

got to hash these. Okay. And

1:13:18

then not every hash is valid. So only

1:13:20

a subset of potential hashes that you can

1:13:23

create is valid. So

1:13:25

what you're doing really, if you're

1:13:27

sending an email that has a valid hash, is

1:13:30

you prove I've made a bunch of hashes until

1:13:33

I found a valid one, which means

1:13:35

I spent energy,

1:13:37

I invested energy on

1:13:39

being able to send this email. So

1:13:42

then anyone who's receiving that email

1:13:44

can really quickly check

1:13:47

that he invested the energy, did he include the

1:13:49

right amount of proof of work, did he include

1:13:51

this valid hash? If not, I'm going

1:13:53

to bounce this, I'm not going to even look at it. So

1:13:55

a remailer would say, this is not going through my program. And

1:13:58

only if it was valid. Would it be

1:14:00

accepted? So the trick

1:14:02

here is that if I want

1:14:05

to send an email to

1:14:07

you or to anyone else, I got

1:14:09

to do this little bit of computation, which

1:14:11

is going to require my computer to do like,

1:14:13

you know, two, three seconds of work, whatever it

1:14:15

is. And that's fine, right? That's

1:14:17

not going to ruin my day. But

1:14:20

if you're a spammer and you

1:14:22

want to send millions of emails,

1:14:24

now you got to do millions

1:14:26

of two, three-second calculations. This is

1:14:29

actually requiring real resources. And

1:14:31

if it requires enough resources,

1:14:33

then spam becomes unprofitable. So

1:14:36

that was the idea. So it was a

1:14:39

form of postage. It was postage

1:14:41

is a pretty good analogy because

1:14:44

whoever is receiving it can't like, respend

1:14:46

it, it's just used. So this is one

1:14:49

time use kind of thing for

1:14:51

this one envelope, basically. And that's it. However,

1:14:55

it did introduce something interesting.

1:14:58

It introduced essentially a form

1:15:01

of digital scarcity. It

1:15:03

tried actual physical scarce

1:15:06

resources, energy, real world

1:15:08

energy to something digital.

1:15:10

So you couldn't just easily copy it.

1:15:12

It actually, you know, it proves real

1:15:16

scarcity. So this provided a building

1:15:18

block for digital cash projects that

1:15:20

followed. I know big

1:15:22

gold didn't get created. I

1:15:24

know it was just proposed by Zabo, but

1:15:27

it was still important, right? Well,

1:15:31

yes, you mean important for

1:15:34

Bitcoin. I think that's your question. It

1:15:36

kind of feels like it was the

1:15:38

precursor to Bitcoin. It

1:15:40

resembles Bitcoin a lot. Yeah. So

1:15:43

there's several ways in which

1:15:45

it resembles Bitcoin. And

1:15:48

the most interesting or well, one of them,

1:15:50

for example, so he, Nick Zabo,

1:15:54

wanted to create a digital form of cash. He

1:15:56

was one of the cyber punks and

1:15:59

when hash cash. was invented, as I

1:16:01

just mentioned, it sort of showed the

1:16:03

cypherpunks, electronic

1:16:06

scarcity seems actually possible.

1:16:09

So now we've got to figure out a way to transfer

1:16:13

this. As I mentioned, Hashcash is like a one-time

1:16:15

use kind of thing. So they

1:16:17

wanted to create something that was transferable.

1:16:21

On top of that, Nick Gabo,

1:16:23

who worked at DigiCash, he had

1:16:25

experience at DigiCash and he saw what a

1:16:28

centralized system looks like and the risks that

1:16:30

are associated with a centralized system. So

1:16:35

he wanted to create something that was decentralized,

1:16:37

essentially. So

1:16:39

what he designed was a system

1:16:43

where, again, I don't know

1:16:46

how technical you want to get, not very technical, I

1:16:48

would assume. No, I don't think that, not today. Yeah.

1:16:51

So the idea was essentially you start with

1:16:53

a number and then you got a

1:16:55

hash on that number. One can hash on

1:16:57

that number and then the first

1:16:59

person to find a felled hash, that

1:17:02

hash is now his or hers,

1:17:04

like that becomes ownership. And

1:17:07

then through public key cryptography, you can

1:17:09

sign a message saying this hash is

1:17:11

now his or this hash is now

1:17:13

sent to this public key. So

1:17:15

that's how you make it transferable. Now,

1:17:17

there's a lot more to it. Do you want

1:17:19

me to get into it or how? To

1:17:22

be honest, the most interesting part for me

1:17:24

is what are the main differences between B

1:17:27

money and Bitcoin? Sorry,

1:17:31

so Bitcoin and Bitcoin. And why didn't Zabo actually

1:17:33

go and build it? Do you get into that?

1:17:35

Yeah. So the biggest

1:17:37

problem that Zabo

1:17:39

sort of found and

1:17:42

couldn't really solve was, well,

1:17:46

essentially the double spend problem. That's what it comes down

1:17:48

to, right? So let's

1:17:50

say I just mentioned you have this hash and it belongs

1:17:52

to me, it belongs to my public key and I want

1:17:54

to send it to another public key. But

1:17:56

what if I sign the same message twice and

1:17:58

I send it to two people? public keys. Now

1:18:00

I've doubled the money. That's

1:18:03

not good. That's something you need

1:18:05

to prevent. And

1:18:08

Szabo's idea to prevent this was to

1:18:10

create a network

1:18:12

of servers, or there

1:18:16

would be BitGold servers

1:18:23

that would keep track of ownership. So they

1:18:25

would maintain the ownership record.

1:18:28

So if you want to know, in case of

1:18:31

a double spend, like where did the money actually

1:18:33

go, you ask this ownership record, the

1:18:35

servers that are keeping track of this. However,

1:18:38

this wasn't really a solution,

1:18:41

because who gets to be

1:18:43

part of this system? Who

1:18:45

gets to decide this? Sounds

1:18:47

like a federation. Yeah,

1:18:49

you need to set up some sort

1:18:51

of federation, but who is allowed to

1:18:53

be part of the federation? And importantly,

1:18:55

how do you know it's not one

1:18:58

person just operating every computer, every

1:19:00

network, or every server? So

1:19:03

then if that happens, that person

1:19:05

can just double spend. That person

1:19:07

can manipulate and game the system

1:19:09

in all kinds of ways. Szabo's

1:19:11

sort of solution was,

1:19:14

because messages are cryptographically

1:19:16

signed, you can sort

1:19:18

of see which server is being honest

1:19:20

and not. But this really

1:19:23

only works if you're online to

1:19:25

monitor what's going on. If you

1:19:27

come online and you

1:19:29

see this discrepancy, some servers say this

1:19:32

public key owns these coins

1:19:34

or these hashes, and this

1:19:36

other server has another ownership

1:19:38

record, then how are you

1:19:40

going to know which one is telling the truth? There's no

1:19:42

way to know. So in that sense,

1:19:46

it was a very interesting idea. It

1:19:48

was interesting to create money in this

1:19:50

way through proof of work. And

1:19:52

it was an interesting way you can

1:19:55

transfer the ownership, but he just

1:19:57

didn't quite figure out. how

1:20:00

to make it secure essentially,

1:20:02

how to stop double spending. He

1:20:05

couldn't solve the problem, right? He couldn't

1:20:07

solve the problem of the ownership registry.

1:20:09

His best solution was something along the

1:20:11

lines of people will just

1:20:14

have to figure out which registry is being

1:20:16

honest, which resembles, as

1:20:18

a sort of modern example, it's kind

1:20:20

of like the Ethereum classic fork, you

1:20:22

could say, where there

1:20:24

was one registry that stole

1:20:27

money and one registry that

1:20:29

just applied with actual smart

1:20:31

contract rules. And

1:20:34

now that's the one that had to rename

1:20:36

to Ethereum classic and anyway. But

1:20:39

that's sort of the idea. OK, there's a disagreement

1:20:41

and now people just have to figure it out.

1:20:43

So it wasn't really a good

1:20:46

solution in that sense. Right. But people,

1:20:48

you know, people liked Bitcoin. They just

1:20:50

there was a problem to solve. So

1:20:52

so was it was it

1:20:54

be money next? Yeah, these were

1:20:57

these followed very shortly after. Yeah. Like there

1:21:00

was only a month in between. That was

1:21:02

why they joined Twitter. Yes,

1:21:04

I saw that. Yeah. Yeah. Yeah. So

1:21:06

Nick's and actually why they as well.

1:21:08

So there was a cypherpunks mailing list.

1:21:12

And then there was also I

1:21:15

think it was called a lip sec mailing

1:21:17

list. I'm pretty sure. Yeah. Lip sec. And

1:21:20

they were actually also discussing money. And so

1:21:22

this mailing list had an example of why

1:21:24

that and also a bunch of sort of

1:21:26

hierarchy and free banking economists

1:21:29

like George Salgin was on there and

1:21:31

Lawrence White. And so anyway,

1:21:33

so they were discussing these

1:21:35

ideas there, these are cash ideas. And

1:21:38

then why I came up with a

1:21:41

system that very much resembles Bitcoin,

1:21:43

you would say, or a very similar idea.

1:21:47

Also, just an idea, though, something that

1:21:49

was never implemented. The

1:21:52

big difference with Bitcoin

1:21:55

was the

1:21:57

money. The difference, the

1:21:59

big difference. between B-money and BitGold

1:22:01

was BitGold used

1:22:04

sort of these hashes as money. So you

1:22:06

create a hash and that is money, while

1:22:09

B-money was more moving into the

1:22:11

direction of creating some

1:22:14

sort of monetary policy. But

1:22:16

why did I thought that, why

1:22:19

did I was basically of the

1:22:21

opinion that money should be stable?

1:22:23

Like he had more of this,

1:22:25

in the book I described

1:22:27

them as stabilizers. Which

1:22:30

is still dominant today, right? Economists today

1:22:32

still think money should be stable

1:22:35

in a CPI sense. So

1:22:37

why did I have this idea as well? He

1:22:40

didn't really know how to implement it. But

1:22:42

what's more interesting about why did

1:22:44

I proposal is, so

1:22:47

Nick Szabo had this idea for an

1:22:49

ownership registry. And

1:22:52

why did I sort of have this idea as well? Like that's

1:22:54

an option. But he also had another

1:22:56

idea. He

1:22:58

also proposed, we can

1:23:00

also just all keep track

1:23:03

of the

1:23:05

ownership registry. So he... That

1:23:08

next step. Yes. You can

1:23:10

see that as sort of next step. Like we're all

1:23:12

going to keep track of all transactions. We're all going

1:23:14

to keep track of who's sending

1:23:16

what transaction to who. And

1:23:18

if everyone has this ownership registry, then

1:23:21

no one can double spend. You can't double

1:23:23

spend on someone because that person knows exactly

1:23:25

who owns what. Except

1:23:29

that's not actually... It doesn't

1:23:31

actually work either because

1:23:33

he didn't

1:23:36

have a consensus algorithm. He didn't

1:23:38

have a way to make

1:23:40

sure that everyone actually had the

1:23:42

same registry. So it

1:23:45

was an interesting idea that everyone would keep track of

1:23:47

it. But it's important that

1:23:49

everyone's keeping track of the same thing. So

1:23:52

he didn't solve that problem. But

1:23:55

other than that, he was thinking in

1:23:57

that direction. He also had this idea

1:23:59

of transforming. transferring ownership of

1:24:02

these digital coins through public

1:24:04

key cryptography. Everyone keeps

1:24:06

track of everything. It's also produced with

1:24:08

proof of work. So you can see

1:24:10

like Bitcoin is getting closer and closer.

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which is u-n-c-h-a-i-n-e-d.com. You

1:26:49

mentioned there was another one, ARPOW? ARPOW,

1:26:51

yeah. So that was Hal Vinnie's concept.

1:26:54

So why have I not heard of

1:26:56

this? I don't know because

1:26:58

you haven't read my book. No, but I

1:27:00

feel like I have

1:27:02

heard about it at some point. But was that

1:27:05

something again, was it just a proposal or was it created?

1:27:07

It was created. How have you actually created this? So I

1:27:09

have heard of this. Yes, no, I have. Yeah, so

1:27:11

this was a bit later. So both BitGold

1:27:13

and B-Money were in 1998, Hashcash was in

1:27:16

1997, E-cash

1:27:19

was also in the 90s. And

1:27:22

ARPOW was 2005. So

1:27:26

a couple years later. And it's

1:27:28

sort of an interesting backstory here is

1:27:30

that at this point, most

1:27:32

of these people, most of these cypherpunks,

1:27:34

they have kind of given up on

1:27:36

this idea. They've kind of figured it

1:27:38

can't be done. Also,

1:27:41

no one seems to care. People seem to be

1:27:43

very happy to just use credit cards and everything

1:27:46

else. PayPal was launched

1:27:48

at that point. So people don't

1:27:50

care. Whatever, I guess we're going

1:27:52

to get on with our lives.

1:27:55

But Halvinnie, he actually still

1:27:57

was very interested in this. interested

1:28:00

in realizing this. So then

1:28:02

he came up with ARPOW. ARPOW

1:28:06

works a bit different.

1:28:09

So ARPOW stands for reusable

1:28:12

proof of work. And

1:28:15

he actually did, he went back

1:28:18

to using a central server. But

1:28:21

he used it in an interesting way. And

1:28:24

also, there were potential ideas to

1:28:26

maybe sort of decentralized over time

1:28:28

to multiple servers. But

1:28:31

the important thing here was, basically,

1:28:34

you create money through proof

1:28:37

of work. There's this server that's

1:28:39

keeping track of ownership if you want to

1:28:41

transfer it. Works a bit like e-cash, you

1:28:43

could say. Or at

1:28:45

least it could have worked. He didn't implement it like

1:28:48

that, but it was possible to implement it like that

1:28:50

over time. What's

1:28:53

interesting about his design is that he

1:28:55

used something called Remote Affestation.

1:28:59

Essentially, these servers were running free and

1:29:01

open source software. It was open source

1:29:04

software. And

1:29:06

there was this,

1:29:09

it was an IBM chip. I believe it

1:29:11

still exists. But I don't believe it's very

1:29:14

reliable or there's some problems with it. But

1:29:17

basically, you could have the server

1:29:19

prove cryptographically

1:29:21

that it was really running the

1:29:23

software that it said it was

1:29:25

running. So that's how you know,

1:29:27

like you can check the

1:29:30

software. It's open source. So anyone can check the

1:29:32

software, you can see that how it works and

1:29:34

how it's supposed to work. You can see that

1:29:36

you can't just create money out of nothing. You

1:29:38

need to actually perform proof of work. You can

1:29:40

see that double spending is impossible. You can see

1:29:42

all that in the software. And

1:29:44

then you can check on the server that

1:29:46

is really running that software.

1:29:48

And that's how it becomes sort of this

1:29:51

trustless idea. Now again, it was imperfect. But

1:29:53

interestingly, it did work like it works.

1:29:56

ARPA was a real thing. And we'll...

1:30:01

Well, I was going to say there was some

1:30:03

minimal uses of it, but it was really

1:30:05

minimal. Like it was basically not used. So

1:30:08

why was it not used? Again,

1:30:12

for one, you have this

1:30:14

problem that, so it offered

1:30:16

privacy. It was like from

1:30:18

cash and you could have privacy,

1:30:22

but there was just no incentive to adopt

1:30:24

it. In the case of

1:30:26

ARPOW, it's even worse than in the case of

1:30:28

eCash. Like eCash was at least backed by fiat.

1:30:31

ARPOW was not. So you

1:30:33

had this electronic form of cash that was

1:30:35

unbanked. But because

1:30:37

it becomes cheaper to produce

1:30:40

hashes over time, it

1:30:43

becomes easier to create new money over time

1:30:45

and therefore you get this inflationary effect. So

1:30:48

there was really no reason for anyone to

1:30:50

want to accept ARPOW. And

1:30:52

therefore there's also no reason for anyone to want

1:30:55

to own ARPOW because you can spend it anywhere.

1:30:57

It works, but it had this

1:30:59

chicken and egg problem. It technically

1:31:01

worked, but it didn't have

1:31:04

a good monetary policy behind it.

1:31:08

Yeah, there was no way to bootstrap it,

1:31:10

essentially. It's interesting, by the way, that Greg

1:31:12

Maxwell was one of the contributors to this system

1:31:14

as well. Oh, interesting.

1:31:17

Interesting. For those who don't know, Greg Maxwell

1:31:19

is like a legendary business core developer. What

1:31:22

I haven't mentioned, but it is interesting, sort

1:31:24

of pointed out because... For

1:31:27

my book, I did a

1:31:31

lot of research of

1:31:33

the Soperpunk mailing lists archives.

1:31:37

And it's really interesting to read all of

1:31:39

these discussions

1:31:41

and debates that they were having

1:31:44

about electronic cash. They were

1:31:46

having discussions about

1:31:49

how it should be designed, how it should

1:31:51

work. But because of that, they

1:31:53

also dove into the topic

1:31:56

of money itself. And

1:31:59

it's interesting. interesting to see them, like

1:32:01

if you read these archives, or hopefully if you

1:32:03

read my book, you can really get this sense

1:32:05

that they were figuring out step

1:32:07

by step that actually

1:32:10

electronic cash doesn't need to be backed.

1:32:12

It started out with eCash that was

1:32:14

backed, and then step by step,

1:32:16

or there were different opinions,

1:32:20

but then they sort of start to figure

1:32:22

out that, wait a minute, maybe we can

1:32:24

create something that's actually not backed, that's just

1:32:26

this proof of work kind of thing, or

1:32:28

just this limited supply. Like Adam

1:32:31

Bank is a very pivotal person in

1:32:33

this part of history. He

1:32:37

really was one of the first people,

1:32:39

or the first that came

1:32:41

to this conclusion that, wait a minute,

1:32:44

we don't need a bank, we can

1:32:46

just create electronic cash that's unbanked. And

1:32:48

so yeah, that's where these ideas really came from, and

1:32:50

that's where you get all these systems

1:32:54

we just described, including R-PAL, which was

1:32:56

unbanked. And then you have the inflation

1:32:58

problem, like there was this bootstrapping problem

1:33:01

that Hal Vinnie didn't

1:33:03

solve, not clear how clear it was

1:33:05

to him that it was a problem,

1:33:07

it was clear to Greg Maxwell, he really

1:33:09

sort of realized that. Well,

1:33:12

for adoption, the

1:33:15

interesting thing is that there was two things to

1:33:17

solve, like you had to technically solve the

1:33:20

building of decentralized

1:33:22

home money, but it's the monetary policy

1:33:24

as well, especially in

1:33:27

the fiat world we live in, knowing

1:33:30

that the white paper came out in 2008, what

1:33:32

was the

1:33:35

Times newspaper that was included in the first

1:33:37

block, all that kind of stuff. It

1:33:40

always comes back to that point, this come

1:33:42

for the gains, stay for the

1:33:44

revolution. It's a bit like that

1:33:46

really with the technology, it's kind of like,

1:33:49

protect my money, and then everything

1:33:51

else comes after it. It's an argument like your debate I

1:33:53

have with Danny, I keep

1:33:56

saying, as important as

1:33:58

privacy is, you have someone like Matt O'Dell. well,

1:34:00

standing up for the importance of privacy and privacy

1:34:02

in Bitcoin. And I fully back him, I

1:34:05

understand what he's saying, but I keep

1:34:07

saying to Danny, it's like, we have to

1:34:09

win 21 million. Everything will

1:34:11

come off the back of 21 million, but you have to win

1:34:13

21 million. You protect people's money,

1:34:15

you protect their self-interest, and everything else comes

1:34:17

after that. And it feels like

1:34:19

that was one of the big things that Bitcoin

1:34:22

did. It's not just this technique solved the problem.

1:34:24

It solved the problem of currency debasement,

1:34:26

like a huge issue. And

1:34:29

then you incentivize people with this kind of

1:34:31

like every four years, there's an opportunity to

1:34:34

make a ton of money. It's a great incentive

1:34:36

model to get people to adopt something. Yeah.

1:34:40

So in the book, that's

1:34:42

why I have these two storylines. Like

1:34:44

this really represents the two storylines. It's

1:34:47

the technical storyline that leads to Bitcoin,

1:34:49

and it's the monetary storyline that leads

1:34:51

to Bitcoin, and how they merge over

1:34:53

time. And I think still today, you see

1:34:56

this in the Bitcoin community, where there's people

1:34:58

coming from two different directions. They're

1:35:00

interested for two sort of different

1:35:03

reasons. It's sort of a merger of two

1:35:05

subcultures. It's techies on the one hand, it's

1:35:07

a monetary reformers on the other. And

1:35:10

sometimes they don't really understand each other, I feel.

1:35:13

But it's really, yeah, you can trace

1:35:15

this back all the way to the

1:35:17

prehistory of Bitcoin, where these two different

1:35:19

movements came from. And

1:35:21

I would say why they need each other. It

1:35:25

works as a tandem. Yeah, I think the

1:35:27

monetary reformers are the marketing team, really. It's

1:35:30

like, you know, it's the great pitch. But

1:35:35

at the same time, you need

1:35:37

also to have some sort

1:35:39

of reason why it has some value in

1:35:42

the first place. And I think being able

1:35:44

to make payments that you can't

1:35:46

make in any other way also is sort of a

1:35:48

spark for value, don't you think? Sure.

1:35:51

But like even last night, we were in my bar, I saw a

1:35:53

guy who used to play football with him, I was like 10 years

1:35:55

old. Big shout out to Andre if

1:35:57

you're listening, because he was like, tell me about this Bitcoin

1:35:59

thing. I was like, download my podcast. But

1:36:03

he was like, why did it matter? There's

1:36:06

no, you know, these conversations happen all the

1:36:08

time and they never start with, well,

1:36:11

privacy is really important because people don't

1:36:13

care. Everyone's on Facebook, they know their privacy. Well,

1:36:15

they don't care until they have to. Yeah, but

1:36:17

like I'm just saying, it's just not a, it's

1:36:20

not a starting point to convince people to get

1:36:22

into Bitcoin. Well, it's convinced you, no? Like you

1:36:24

were buying stuff from the sale growth. Yeah, but

1:36:26

that was, yeah, I had a need and a

1:36:28

use case. Exactly, that's my point. Yeah,

1:36:30

but the big driver was the, you know, the

1:36:34

monetary revolution, like the things I could do, you

1:36:36

know, protect my money, grow my capital. Yeah, but

1:36:38

for you, that came later. Like you first had

1:36:40

to discover it through this other way. Sure, but

1:36:42

that's somebody asking me. Again,

1:36:45

it's not always, I'm not saying it's

1:36:47

like singular, binary, there will be people

1:36:49

discovering for different reasons. But generally speaking,

1:36:51

when people ask me, I cannot sell

1:36:53

them on privacy, okay? And

1:36:56

other people, you will, Alex Clastian will sell a

1:36:59

lot of people on privacy, especially in his world

1:37:01

of human rights and activism. But

1:37:03

what I can turn around to people at the moment and say, ask

1:37:07

them just how's inflation affected you? And

1:37:09

then I can ask them if they know why inflation exists.

1:37:11

Then I can explain this always

1:37:13

a monetary phenomenon. And then I can

1:37:15

say, why Bitcoin solves that? And

1:37:17

it's like, huh, okay. And then

1:37:19

I just say, yeah, I keep all my money in Bitcoin. I

1:37:21

have done for six years and this changed my life. I'm not

1:37:24

being debased. And so like,

1:37:26

I just think it's a marketing department, but

1:37:28

it's a great marketing department. Right.

1:37:32

It is, but I think the other side

1:37:34

is equally important. It

1:37:37

really comes down

1:37:39

to this combination of these two

1:37:41

ideas and together, apes together structs.

1:37:44

Yeah. So what's the way to say that? Well,

1:37:46

so let's go do Halloween, 2008. I'm

1:37:50

in Las Vegas, gonna bring my 30th birthday. Yep.

1:37:53

And white paper drops from

1:37:56

an anonymous person. It's

1:37:58

called Satoshi Nakamoto. Yep. Does

1:38:00

Satoshi arrive at the time,

1:38:02

I was just saying he dropped

1:38:04

the white paper, or was

1:38:07

it a profile that was lurking for a

1:38:09

while or part of conversations? Did

1:38:12

he present himself at the drop of the white paper?

1:38:15

Well, there were some private emails before

1:38:18

that, right? He emailed Adam back and

1:38:20

Waidai before that. Yeah, Waidai didn't buy

1:38:22

into Bitcoin at first, did he? Neither

1:38:25

did Adam back. Oh, Adam didn't either. No. What

1:38:27

were their doubts? Adam,

1:38:33

so again, they've both seen so

1:38:36

many projects fail that they

1:38:38

just kind of became the solutions. I think that's

1:38:40

true for both of them. Waidai

1:38:43

very specifically, like even

1:38:45

when Waidai published B-Money,

1:38:47

he was kind of already done. Like

1:38:50

he still put an idea out there, but

1:38:52

he had already become the solutions. He had

1:38:54

already concluded, all right, apparently no one

1:38:56

cares about privacy. We've been trying to build all this

1:38:58

stuff for all these years as

1:39:00

the cypherpunks. And now people

1:39:02

are just giving

1:39:05

it, they don't care. They're

1:39:07

just using credit cards or they're just using

1:39:11

non-anonymous email. No one's using PGP. They

1:39:14

became the solutions. What

1:39:18

was your question? Oh yeah, so

1:39:20

that's probably why Satoshi comes along

1:39:22

and he has his electronic cash

1:39:24

idea. They've seen so many electronic

1:39:26

cash ideas. None

1:39:29

of them ever went anywhere. So they just

1:39:31

sort of didn't care unless, of

1:39:33

course, one of them is Satoshi. But

1:39:36

I won't speculate on that. I

1:39:39

kind of already did now. Hey,

1:39:41

listen. It's not my guess,

1:39:43

by the way, but who knows, right? Is

1:39:46

your guess Craig Wright? Let's not go there. All

1:39:48

right, so the white paper dropped. Sorry,

1:39:50

I got distracted by. No,

1:39:52

it's fine. The white paper

1:39:54

drops, though, then after that,

1:39:57

it's on to the mailing list. General

1:39:59

reaction. positive, negative,

1:40:02

intrigue? Yeah,

1:40:04

so maybe the one thing

1:40:06

to point out about what was very interesting about

1:40:09

the White Paper, so I mentioned, of course, that

1:40:11

one of the key problems that both BitGold and

1:40:14

B-Money suffered was that there was no

1:40:16

consensus algorithm. So what Bitcoin

1:40:18

and Satoshi did in the White Paper, very

1:40:20

interestingly, is that he sort of turned

1:40:23

the currency creation technology,

1:40:25

approval work, into the consensus system.

1:40:28

So while BitGold,

1:40:30

for example, used the hashes themselves

1:40:33

as money, like you could

1:40:35

own a hash and you could transfer that. In

1:40:38

Bitcoin, as everyone who listens probably

1:40:40

know at this point, in

1:40:42

Bitcoin, a hash just whoever

1:40:45

finds a valid hash gets coins from the

1:40:47

Blackboard. It has the rights to pay themselves,

1:40:49

catch the miners. And

1:40:52

then on top of that, this provides

1:40:54

the consensus algorithm. So the longest chain

1:40:56

of hashes, that's what everyone will settle

1:40:58

on as the valid chain. So now

1:41:01

you've figured out a decentralized way of

1:41:03

creating a ownership registry. Yeah,

1:41:06

the reception was not great.

1:41:12

So basically, so at

1:41:15

this point, there's no longer the Cypherpunks

1:41:17

mailing list. The Cypherpunks mailing kind of

1:41:19

stops. And it is in part because

1:41:21

it's part

1:41:23

of spam, in part because the Cypherpunks

1:41:26

have this ideology that you

1:41:28

should not ever censor anyone.

1:41:31

So anyone was allowed on the mailing list and

1:41:33

anyone was allowed to send any mail. And therefore,

1:41:35

there were a lot of flamewars. And

1:41:38

when John Gilmore wanted to introduce some

1:41:40

form of moderation, he got a lot

1:41:42

of pushback. And

1:41:45

I'm sorry, sure, at some point, the

1:41:47

Cypherpunks that wanted to have

1:41:49

a more moderated discussion that

1:41:51

wasn't just complete site rails

1:41:53

by flamewars and stuff like

1:41:55

that, they started the cryptography mailing

1:41:58

list. So they were there. they

1:42:00

were there. And that's where Satoshi

1:42:02

popped up. And that's where he proposed his

1:42:04

idea. And yeah, that was

1:42:06

basically, yeah, I was met

1:42:08

with indifference and skepticism for the

1:42:10

most part. And

1:42:13

famously, Hal Vinnie was sort of

1:42:15

the one exception. Again, Hal Vinnie,

1:42:17

of course, as

1:42:19

I mentioned, he still had this

1:42:21

idea for digital cash in 2005, ARPAL, like

1:42:23

long after most people had just given up

1:42:25

on the idea, essentially, he still came up

1:42:28

with ARPAL. And then when Bitcoin launched, he

1:42:30

was also, he got interested.

1:42:32

He had one of the few positive

1:42:35

responses. And then I think

1:42:37

Perry Metzger, who was the

1:42:39

moderator, he at some point

1:42:41

said, also

1:42:44

he said, let's stop this discussion

1:42:46

until there's actually actual technology. Also,

1:42:49

there was just a lot of confusion. But

1:42:52

I should mention, actually, there were also

1:42:54

some pretty valid critiques early on. Like,

1:42:56

I think the very first response

1:43:00

to the white paper was about scaling. So how