Alex, welcome to New York State Podcast.
Thanks for being here. Thanks for having me man.
Awesome. So we've been friends for a
while and it's good. I think it's your first time out
here in Singapore. So you have a new book out,
check your financial privilege, right?
Why don't you tell us about that?
Yeah, so I've got a couple books over the last couple years and
working on on a continual theme, which is why are people turning
to Bitcoin? Yep.
Why is the Fiat system broken? So started with check your
financial privilege, which is an exploration of mainly people in
collapsing economies and in police states.
Why are they adopting Bitcoin and interviewing them,
travelling, meeting them and learning about how absolutely
shattered the monetary system is for so many people?
And you know, I don't know exactly what the situation here
is like in Singapore, but in America and in Europe, we have
this immense financial privilege where it's easy to use money, it
doesn't hyperinflate. It's easy to send money to our
relatives and families. You know, you can take your
money out of your country if you have it in your pocket and it,
it works like I've been using U.S. dollars to, to people here.
If you live in a place like Togo or Bhutan, etcetera, and you
take your money out of the country, it's worthless.
So as the Bitcoin evolution is happening, it's been a lot
harder for a lot of people in in rich economies basically to
understand why, because their money system works relatively
well. But only about a billion people
live in a country with property rights, free speech and open
capital markets and some kind of elections.
The other 7 billion people live in a country that either has
essentially collapsing economy or an authoritarian regime.
So for about 7 billion people, money's broken every day and it
really sucks to deal with. And, and a lot of them are
starting to turn to Bitcoin. So that's that's the sort of
narrative I explored in that book.
So I agree with about 70% of that, but the 30% I disagree
with this, I think you know the the golden billion, right?
Have you heard that term right? That's what I'm referring to,
yeah. Yeah, so the golden billion,
Putin has also used that term. Others have used that term.
I mean, it's like neutral or whatever, but it's like, let's
say the US, Western Europe, Japan, Korea, Australia, New
Zealand, what people sometimes. Reserve currencies.
Yeah, exactly. It's what people refer to as,
quote, the international community.
They're aligned with the Fed. They're basically often used
military bases are there. They're kind of people who will
be at the G7 or whatever, this overlapping list of countries.
I think my disagreement with you, partial disagreement is
that if if you look at China, if you look at the Southeast Asia,
you look at Riyadh or Dubai or even India, Russia.
And so it's over Eastern Europe. And then places like El Salvador
are, they're really not as third world as people think they are.
They've actually improved in some cases.
They're not third world at all in the sense of like, they have
modern infrastructure and they have cars.
You might disagree with, you might say, collapsing economies
or authoritarian governments in the.
World or capture it right? Exactly right.
So, so maybe just as a qualifier, many of those
economies are not collapsing, but you might disagree with the
government, fine, OK, great. So which is different, but it's
also it's it's just an important distinction, right?
Like, it's not like only like wealth is distinct from
government, if that makes any sense, right?
Right. And if you think about Bitcoin
as digital cash and digital gold, you know, depending on
your country, one use case stands out over the other.
In a place like China, the digital cash part where you can
get on capital controls and you can have money that's not tied
to your identity, is really important.
Whereas in a country like maybe Venezuela, the gold part's
really important because you want to escape inflation.
And, you know, look, a lot of countries have both.
But essentially my point was only a very small percentage of
humans live in a country that's sort of protected from both.
And that's, again, where you see most of the world's media's
based there, right? So the narratives that
governments have been saying for almost 15 years now that Bitcoin
is wasteful and dangerous and useless, it's just a complete
lie. It's, it's the opposite.
It's actually been dangerous to not use Bitcoin.
Yeah. And I think I, I basically agree
with you in the sense of especially in some place like
Venezuela or like Lebanon where the currency basically went to
zero and Bitcoin went vertical, right, Nigeria, places like this
Turkey, right. Turkey is an interesting one.
Where so, so the other three I feel are very unambiguous.
Turkey, you know, like the thing about like politics being
Byzantine in the Byzantines. You know, I can't, I, I can't
figure out Turkey myself. I probably want to have someone
from Turkey explain it to me because when I fly through the
airport there, it's actually very nice, right?
And yet their currency is being like wrecked and so on.
So that's an interesting edge case that I feel Bitcoiners
should understand better that I don't understand fully at the
current moment, right? Something about it, it's able to
somehow seemingly operate even as it's got these crazy
inflation rates. So I don't know what's going on
there, right? Or maybe maybe it's actually
going to bust or what have you. But something is something
interesting is happening there. But other places like certainly
Venezuela, certainly Lebanon, certainly Nigeria, certainly
many countries. Now a related thing that's
happening is we have, you know, stable coins being legalized,
right? And my thesis and maybe you you
have some thoughts on this is just like local papers all went
online and then they kind of lost against the New York Times,
Wall Street Journal, Washington Post, which then lost to social
media. Basically in terms of where do
people check first, they check X or they check social media first
for news and then this and then this is like second and third
tier. And that took that was a huge
fight over 10 years because once these guys saw they were losing
the social media, they pushed but fought, fought, fought to
try to censor and then the, you know, push back happened yes.
So I think something similar will happen with lots of local
currencies will essentially lose to USD and potentially other
stable coins or basically USD backed stable coins and other
stable coins. And then USD itself is not as
good as Bitcoin because you know USD is devalued by 100 million X
against Bitcoin since inception, right?
So very similar kind of dynamic where locals lose to global and
the global loses to the Internet first.
Do you agree with that as a general?
Concept, I mean, look, I'm I'm a very focused on Bitcoin, but I
think bitcoiners need to acknowledge probably at least
two use cases that come out of the wider crypto market and one
is obviously staple coins. The other one I really I mean
polymarket is the other interesting.
Those would be the two that I I think are smash hits.
I guess now I would, I don't know if they're technologically
innovative. I think they both are successful
because of regulatory arbitrage. But the point being that I
empathize with stable coins as a humanitarian technology.
I would want, I would want them if I lived in Lebanon OR if I
lived in Turkey, or I mean, just think about Egypt and Nigeria
are the largest country in Africa and the largest country
in the Arab world. And they both have lost the
currency has lost 75% of its value against the US dollar in
the last three years. That's almost 350 million
people. So I, I empathize with why
people want stable coins. But ultimately what's really
interesting if you think about it is that stable coins kind of
do the opposite of Bitcoin in the end.
Like they kind of enhance state power, they enhance dollar
hegemony, they enhance dollar network effect, and they create
almost like a new petrodollar effect where the stablecoin
issuers are becoming the largest buyers of U.S. debt in the
world. So last year, the only people,
the only institutions to buy more debt than stablecoin
issuers together where JP Morgan and China.
And this year it's probably, they're probably going to be #2
and #1 So they're really helpful for U.S. government.
And Bitcoin is just solving a different problem.
Like they, they don't ultimately solve the same problem.
Like Bitcoin is unconfiscatable, unstoppable.
It's going to have improving privacy over time.
It's 21 million, it's scarce. And stable coins are guaranteed
lose money. Coins, like, as you pointed out,
like they're losing money every year.
And the ones that have dominated the market are centralized and
they, they get frozen all the time.
So while stable coins, I would argue are humanitarian
technology, Bitcoin is freedom technology.
And I think there's a big distinction.
Totally. I totally agree with you.
But just just to talk about that, just for a second, I
actually think of stable coins. You can separate them into Fiat
coins and flat coins, of which a Fiat coin is just a mirror of an
on chain. You know, like basically it's an
on chain version of an off chain, you know, Fiat dollar.
And then in theory, you could have a flat coin, which was an
asset, which was stable against other assets.
But in practice, it's very hard to have that because let's say
there's a scarcity of tomatoes, the price of this will rise
against that, right? So it's very difficult.
You're going to have to sacrifice like in theory, you
could do some balancing whatever against a basket of goods and
keep the price table. In practice, it's very, very
difficult to do so because those those goods could, you know,
could fly away. OK.
But so when we think of it as a Fiat coin, though, then you're
right. It's just a projection of these
governments on chain. The question is what is the
medium term consequence of that? I think it is on net beneficial
for freedom, OK. And my argument is once it's on
chain, it's swappable. And when it's swappable, then
you can exit and because you can exit, you have greater
jurisdictional choice. No argument with that, but
that's that's that's because they haven't done shotgun KYC
yet. The moment and I just did like
what Tether and what Circle do fundamentally are at odds with
the world's financial system as it stands, which is built on
control and surveillance. And there's going to be a moment
in the near future. Who knows, maybe something
doesn't some of the something terrible with stablecoins that's
all over the news. But as soon as there you start
to get KYC on chain with the big centralized issuers, which I
just think is a matter of time. Then, you know, things get very
complicated and, and I don't, they lose the, the value like
the, the main value that I care about with stablecoins is
someone in Lebanon who, or in Turkey or wherever Argentina who
doesn't have AUS bank account can have AUS dollar on their
phone. It's like a euro dollar in your
pocket really. I mean, it's amazing.
As soon as that's taken away, you know, the whole system
changes that. I guess the one thing that you
could bank on maybe is that if you take that away, the whole
stable coin machine slows down and the US government needs the
stable coin machine to grow. So this is kind of interesting,
right? So.
So I actually, you know, CTO of Coinbase, I actually launched
USTC on the Coinbase site. Yeah.
And one of the big things was, you know, do you have whitelist
or blacklist on chain? And just to explain what that
is, basically whitelist would mean every single address has to
be KYC before you can send or receive to it, which is
essentially the same as the wire transfer system off chain.
Right. That's the fear with Bitcoin
also, right? The, the alternative to that was
you just have KYC at the entry and exit points where you're
trading USD for, for USDC or vice versa.
And in exigency, you have the ability to freeze or seize if
there's like a lawful court order.
And so, and so it's like a terrorist group or something
like that, right? That was, that was, that was at
least the theory of it, right? And now obviously the ability to
freeze and seize is not something that exists in
Bitcoin, right? But on balance, I think that
did. Then there's other aspects where
you can program with it. You can send much smaller
quantities and so on and so forth.
So on balance, I think it was an improvement from a technological
and freedom perspective, yes. Given, you know, I'm, I maybe
relative to most people, I'm an ideologue.
Relative to you, I'm a pragmatist.
Well. But you're actually fairly
pragmatic, even in your own way. Yeah, I'd say, well, but how,
how would you look at this? So we have like let's say
stablecoins 1.0 which are Tether and Circle.
Let's just say as a as a approximation of 95% of.
Well, USDC center and tether, yes, go ahead.
Yeah. USDC and USDT.
Yeah, All right. Now we're going to have the
second wave, which are going to be made by large corporations
that are much more, you know, like stripes.
I don't think they're going to succeed.
You don't think they're going to succeed.
So tell me what? Why not?
Because they're trying to do look nothing.
By the way, I, I, if stripe people are watching this.
I like them different people, nice people.
They they're very competent of what they do.
But there's several reasons I am without calling out stripes
thing or whatever you know there's.
Several companies trying to do this.
So we'll come and try to do this.
Why am I very skeptical is whether they'll succeed 1st is
they just don't understand crypto.
They understand Bitcoin. And what that means is from a
DNA standpoint, for example, you need incentives for people to
adopt. These things are already at huge
scale, like there's a technical adoption, there's a programmer
adoption, so on and so forth. For example, if you have like,
OK, let's talk to Libra, right? Why one of the reasons Libra
didn't work? There's many reasons, but one
reason is it was like a bank chain, right?
So it didn't have the transformative upside of
adopting a new financial network that was critical to get
millions and millions of nodes around the world to adopt it,
right? If there's no asset, there's no
adoption. That's like 1 premise.
The second premise is that these latecomers usually don't
viscerally get crypto in a deep way.
Yeah. So they'll always nerf it in
some way to make it more compliant and think that's a
feature. To me that's the key is the
openness wins, yes. And look, say what you want
about Tron, which is the main blockchain that that USDTUSDT
runs on around the world and ironically is the main
blockchain that I think most value goes over every day with
stablecoins. If you say what you want about
that blockchain, it's it's it's relatively open, meaning you
don't have to provide your passport to use it.
Exactly as. Soon as you cross that Rubicon
it it it just I would agree with you like I don't know where
these are going if you have to like put your ID in the.
The thing is that essentially from a cultural standpoint, the
late adopter is selected to be a late adopter because they're a
late adopter. They're going to be more
cautious. They're going to nerf it.
They're not using assets for adoption.
I mean, when I, when people tell me they're doing a stable coin,
because a lot of people say this, it's like I look at them
and I say, OK, I'm interested Only if it's taking some non off
chain, like a, let's say, you know, some random country that
doesn't yet have its Fiat currency on chain.
That could be worth doing a stable coin with potentially,
right? Because that that bridges those
people into crypto And so it's fine.
And then they can get into Bitcoin and so on from there,
right. So that could be worth doing.
But most other people, like stable coins only make sense
from a revenue standpoint when you have huge deposits, and even
then. Taylor's the most profitable
company in the world. Well, per capita, yes.
Yes. But then the question is like,
are you making real returns right now, Taylor?
Actually, see, The thing is most other people who are buying U.S.
Treasuries are doing it with their own money.
You know, Tether is taking deposits from people and then
they're able to get the returns. And so like, you know, would it,
would you, let's say you have a million USD of value, would you
actually hold it in USD today? I don't think you would.
You'd want to hold it in. Something else to be clear,
Tether's portfolio is much larger than the 160 billion.
I, I know, I know, I know. But but I'm saying though, is
that tethers interesting where they're actually making returns
on treasuries. The most other people who are
treasury buyers are not making returns on treasuries because
they're using their own capital to go and buy treasuries,
whereas Tether is using customer capital in a sense.
So I guess one way to tie that part of the conversation up is
just long term. I'm in this because I think
Bitcoin separates money from state.
And I talk about Bitcoin, yeah. And I really think it's
important that we separate money from state because states have
totally destroyed everything they got their hands on when it
comes to Fiat currency technology.
And just to finish the thought, like if you want to read an
awesome scientific history of money, Lynn Alden's Broken Money
really breaks this down. And the 1st 2/3 of the book
don't even mention Bitcoin or cryptocurrency, but they
basically talk about how money has become, has been on a track
evolving from a tool of relative freedom where, where you can
kind of do what you want and commerce with each other.
And over the last 150 years, it's evolved into a tool of
control and surveillance. And finally we have a new track
where we're evolving the money and making it better and, and
moving away from that towards freedom.
And you know, I, that's what I'm here for.
And you know, when I go to a country like Malawi, I went two
years ago and 16 days after a overnight 44% currency
devaluation, it was just so horrifying to think about the
fact that the government could just press a red button in a in
a democracy and just immediately steal from everyone at mass.
And that's just, I think it's a crime against humanity.
But. It's crazy.
It's funny, like, you know, military treatment has this
line. Inflation is taxation without
legislation. Have you heard that one before?
Yeah, I mean, but you know, the overnight devaluation of such
magnitude, Americans are relatively unfamiliar with.
The last time we had that was FDR.
Yes, yes. And that was the 60 that was
going from it was like $35 per oz to $20.67.
Exactly. Yeah, 20 to 35.
That's right. And so that's a lot.
That's a lot. And actually.
Within a few months. Within a few months.
That's right. McReynolds, who is the one of
the dissenting justices on the Supreme Court.
Yeah, he said, you know, today a dollar is $0.60.
Tomorrow might be $0.30, the day after might be 1 cent.
He was completely right. That's actually what did happen,
you know, But good. But but no, I mean, but I mean,
again, the average person on this planet has lived through
something like that much more recently, whether they be in
Peru or Hungary or so. Many different countries have
had crazy hyperinflations over the last 50 years and one of the
cable coins don't really fix that because ultimately these
stable coin issues going bankrupt.
I agree. I agree.
Like the dollar is, at least. I think the stable coins as a
bridge to the future and from a pragmatic standpoint, I think
it's good that they exist, but then we want to.
Get to So do you think they hasten the evolution towards a
world where Bitcoin is a more dominant currency or do you
think they slow that? Hasten absolutely.
Interesting. Absolutely.
Hasten it. And for example, I mean, first
of all, lots of people buy Bitcoin, would see a coin.
Yeah, just that alone is a huge thing.
Right, that's the. And it it like almost every
crypto exchange for crypto, crypto trades is denominated in
stable coins or in Bitcoin. And so like just just that alone
out there is basically everything, you know, much of
the crypto economy. And this is basically why I
would call myself a Bitcoin polytheist rather than Bitcoin
maximalist, because I do believe that that whole crypto economy
eventually leads people back into Bitcoin.
Okay, right. In the sense of they'll try XY
and Z and they'll say, you know what, let me save in BTC.
That's actually hard currency. That's right.
And so there's something to that.
And from a pragmatic standpoint, go ahead.
I'd like to believe that the one area where we might encounter
some problems is laid out in a book called The Bitcoin Dollar
by a guy he used to edit Bitcoin Magazine and Mark Goodwin.
Interesting, I was going to write a post on exactly this.
I didn't know there's a book that come.
Out. Yeah, it's interesting.
So the idea is he looks at the Petro dollar and how the US was
floundering with the dollar in the early 70s.
We, the dollar lost more than half of its value versus the
German mark in just a couple years.
And then we, we found a way to tie the dollar to energy
purchases, right? So you need oil.
Guess what? You got to eat U.S. dollars.
So he looks at that and how that's really helped prop up the
dollar. And now he's looking at
stablecoins as essentially the infrastructural on ramp to
Bitcoin. You want a Bitcoin, maybe you
need these, maybe you need dollars.
I mean, it's, it's kind of true, right?
Like a lot of people around the world who have who want Bitcoin,
a lot of them have to get some kind of dollar banking or neo
bank relationship first. Yeah, but.
But Tethers location in El Salvador may turn out to be I am
ultra bold but like you see. Just before we move on, that's
that's a little scary. Like if they're tying, if they
found a way to harness Bitcoin to power the dollar, the way to
defeat that is very simple. Pay me in Bitcoin just to
finish, like we just went to Thailand and Thailand's
installing this new system where they're going to try and harvest
Bitcoin. When you arrive, like if you're
a Russian tourist, you'll be able to give them Bitcoin or I
think a couple other different cryptocurrencies.
And then you get like essentially the CBDC, which you
can buy anything in the country with.
So that's kind of. The the fear as we move in that
direction, the solution is merchants in Thailand except
Bitcoin and then you can just sidestep that whole process.
So for me, Bitcoin's all about, I understand Bitcoin's a great
savings thing. It's the best savings technology
we've ever seen, etcetera, etcetera.
I get it. I've no issue you want to buy an
ETF, but I think how how it's ultimate value for humans is as
payments. So that's kind of what I'm most
interested in down the road. Sure.
So right now Bitcoin can do about the transaction volume of
Fedwire right on chain, on chain, yes, right.
So my view is basically that it is infrequently you have
infrequent on chain transactions and I know we'll probably
disagree on how functional lightning is and so it's our
fine, but I think that the scenario that you described is
actually a victory in the sense that.
Which scenario? Well, basically Bitcoin is
accepted everywhere and you can everybody, I mean we're kind of
already there because already in a sense the global reserve
currency, because it is like for many people in many places, they
would want one BTC more than the equivalent in a block of gold.
And that's going to just expedite from.
Here, that's going to expedite from here, right?
Yeah, I think gold is gold is also being a comeback by the
way, if you seen the the charts right.
Yeah, I think. Gold is the currency.
Is becoming the currency of the state and Bitcoin's the currency
of the network. Yeah, just for the listeners,
like we just mentioned that gold used to be worth $35.00 an
ounce. Yeah, it's now $3500 an ounce.
So let's just to see that's a great way to measure the actual
value of the dollar for time, so.
So Justice Reynolds was completely right, yes, where he
said it'll be worth $0.01 because it's like 100, like a
99% devaluation, right, over less than 100 years, right.
So the OK, so coming back. So yes, now one thing I want to
talk to you about is so on check your financial privilege.
Yes, what your take on your intended market for it?
Yeah, are people who are in relatively wealthy countries who
just don't understand the problem Bitcoin solves because
they are right. Yeah, and I also wrote a book
called Hidden Repression, which is about basically how the IMF
and World Bank loot poorer countries for the.
Purposes. Yeah, I mean, well, basically in
a nutshell, the IMF and World Bank were set up as part of the
Bretton Woods system and the late 1940s, as the US and its
allies prepared for a new economy that they would control.
And in the same meetings in New Hampshire that it was decided
that the dollar would play the role of the global reserve
currency instead of the Bancorp, which is what Keynes and the
others wanted. They decided that the US would
also house headquarter and and control by different means of
the world's lender of last resort, which is the IMF, which
is intended essentially to bail out countries that can't meet
their trade requirements anymore to keep the machine going.
They didn't want to see the autarky of the 1930s.
The World Bank was supposed to fund development work that
private capital didn't have an appetite for.
So at the beginning these two institutions were benign and and
arguably did really well in digging out Japan and Europe
from from a lot of infrastructural disaster.
The problem is once they started get getting going, what you have
is the end of colonialism essentially in name at least,
and the birth of a new kind of colonialism, which is debt
colonialism, which is what I talk about in my book, which is
what kind of World Bank do they create debt traps for these
countries? And how that works is because
you need dollars for everything. Paying back your debt, getting
oil, getting fertilizer, buying planes from Boeing, if you're
gonna the CD doesn't do any of that.
You cannot use the CD to to pay back debt to the IMF or to buy
oil or to buy an airplane. So the only way to get dollars
for many of these countries has been to borrow them at a high
interest rate. And then what happens is they
can't pay it back. And the IMF, who's, who's
essentially whose assets at the end of the day are on the
balance sheets of, of Western banks would rather just make
another loan then shrink their balance sheet.
So this is the mechanism we've seen over the last 70 years.
And it's why a country like Bangladesh has gone from in the
1970s, an average, a foreign debt of something like 100
million to today 100 billion. That doesn't track with the
population growth. It's become completely
untethered. So if you look at the debt of
developing countries, even though that might be a misnomer,
many of them are actually deindustrializing.
What you see is a debt trap. And and in dollar terms, it just
keeps going up and up and up and up.
So what I was looking at basically is from a human point
of view. So there was no escape in the
70s and 80s, like when Volcker ripped up interest rates to near
20% and then proceeded to essentially destroy a lot of
the, of the what was then called the third world, third world
debt crisis, where maybe 20 million people were killed as a
result of the structural adjustment policies.
In the 80s, you know, there was no escape.
If you were in Peru, what, what were you going to do?
What's really interesting today is like in an individual level,
you can escape. You can go into Bitcoin like no
matter where you are and you know, interviewing people in all
these different countries and learning that they're starting
to turn to this is very inspiring.
At at the beginning of the book, I have a little saying that says
for the victims of development, they may never get the justice
they deserve, but they make it a way out.
And I think that that's the exploration of that book.
So I'm going. To ask you a question of that
because that's that's interesting it's interesting
frame. So to roughly kind of you, you,
I'll play it back. And so, so let's say the IMF is
for in theory bailing and the World Bank is for building,
right? So IMF is for bailouts, right?
In theory, right, for bailing people out and the World Bank is
for building. So the World Bank is almost
like, well it's debt, but in almost kind of like equity
investment in the sense of it's supposed to.
Build a dam or something. It's.
Supposed to build a dam? Exactly.
Then you have more tax revenue and then you can do things with
it and so on and so forth. And the Marshall Plan, which was
at least one of the conceptual precursors to to World Bank, you
can argue that it did work or what have you, right?
And because it did rebuild Western Europe and you know, the
German economic miracle and so on.
So do you think these were good institutions that went bad or
is? OK.
I mean a good, I mean, I think even in a Bitcoin standard, you
could have these institutions. It's just because the West can
create money much more cheaply than than other countries it to
become predatory. But that's a very useful way of
thinking about the reason is like what the US did post World
War 2. I think is still
underappreciated in the sense of the relative mercy.
I mean, because you had to control experiment.
The Soviet side was incredibly vengeful and the Western side
was, you know, relatively, you know, like like positive
towards, especially towards Japan and so on and so forth.
And Germany, many countries that had been conquered were just
turned into like basically total slaves, like by the, you know,
by the Soviets. But so the Western system, like
Japan did come back, you know, West Germany did come back.
So there was like, you know, South Korea also got built up.
Vietnam, you know, well, Vietnam, you can argue they did
it more on their own, right. So there's some version of this.
And even actually after the end of the Cold War, Eastern Europe
did get rebuilt, right? And it did it's economies did
improve. That's why I'm I'm poking is one
question is. It's shifted.
So what you see is in the 60s it starts to shift.
So I'll give you 2 examples of projects that are very
stereotypical of the World Bank in the IMF since the 60s.
On the World Bank side, they would do something like this.
They would make a loan to a country, maybe Mauritania for a
bauxite mine and they would make a loan to build a, a, a, a train
infrastructure, the mine itself and, and that's about it.
Meaning like they would the, the local government would get the
money to build all this, which by the way, they would hire
companies from the, the creditor nation.
It's called the double loan. So it's a France loans a million
francs at the time to the Mauritanian government.
What does the Mauritanian government do?
They immediately spend a million francs hiring French companies.
So you watch the money go out and the Mauritanians still owe
principal plus interest. It's called the double loan.
So this was happening all over the world.
So, you know, every loan that would go out, in many cases, you
know, 80% of the money would come right back to the to the,
to the lending nation or more. So this kind of thing was
happening and that infrastructure wasn't helping
the people of that country. It was just helping us get that
box that are the grounded into our economy and maybe the local
nation would get a cut. So that became like a
stereotypical World Bank loan throughout 70s, eighties, 90s.
At the same time, the IMF, who likes to say they, they aren't
political and they don't get involved in politics.
I mean, they backed the worst dictators you can imagine.
I mean, it's like a laundry list.
Mobutu, Portillo, Marcos, Mengistu, the CCP, we just, you
know, just think Saddam. So I mean, you could go 50
dictators wide on a giant mosaic and they backed them all.
And, you know, this undermines their their argument that
they're out there to like bring stability and good to the world.
So, you know, I have that's where I started my journey.
And I was like, why are they bailing out all these crazy
dictators? Like, why is CC, who's
responsible for the biggest massacre basically in the last
10 years of unarmed civilians, Why did he get 3 billion?
Why did he get $3 billion bailout?
And, and guess what he does as a, as a condition for taking
that money? He imposes a massive currency
devaluation and raises taxes on Egyptians and cuts key
subsidies. It's just, again, this is what's
been happening for the last seven years.
So now they've got something new that they're doing in Egypt, for
example. Yeah, deal with with the UE for.
Ross, right now that now the sands are shifting because you
have China doing something similar with its own credit and
and the Gulf countries. But guess what, they don't print
the reserve currency. So it's a very different
different dynamic but but in any event.
But they seem to be doing well, right?
Like in the sense of, or rather somehow.
Getting a return on their investment.
Yeah, that's right. China, I would say definitely
the Middle East, definitely the Middle Eastern countries.
Yes. So what's interesting about that
is I think this is part of the broader and interesting
phenomenon, which is in theory the the US and more generally
the West has the greatest business model of all time
because it can just from one standpoint, you can hit a button
and literally print a trillion dollars, which is like selling,
as I've said before, like $1000 iPhone to a billion people is
very hard to do. And it's trillion in revenue.
Forget about in profit and forget about how much effort it
would take you to get that. And you know how many, like you
know how many factories you need to turn out a billion phones and
so on. So the despite having or perhaps
because of having the greatest missile of all time, they are
out competed by others because they're very poor at allocating
the capital, because they the energy required to actually go
and build a productive world. It it, it's gradually, gradually
dissipated. Like all of that printed money
could in theory be used to build bridges and and do productive
things and so sort, but in practice, because there was an
effort that led to the results didn't build the sinews and so
and so forth. I, I, I think over the last
couple years, I think you're on to something.
But like generally speaking, going back 50 years, it would be
a mistake to think that they're like useless or corrupt or
inefficient. If you look at the capital flow
of the world, it's really amazing actually.
So starting in 1982, capital has drained, has been drained from
poor countries to the golden billion.
And it started small and now it's several trillion a year.
So despite this idea that we help poor countries or we give
them aid, it's the opposite. We're draining tons of capital
out and that's that's Dec colonialism.
And my hope with Bitcoin is like that individuals can escape from
that. And I just don't see stable
coins fixing that. Just a question are are?
You know, like during the mortgage crisis, there were a
bunch of bad loans that were made, right?
And many of them were made on the basis of, oh, we will help
these poor people discriminate against people or what have you.
And actually turned out to be bad for both parties and for
everybody else because a lender would make a loan to somebody
who couldn't repay it. That person would default ruined
their financial livelihood, but it also in bulk break the bank.
And then everybody who is a bystander to that transaction,
who let's say it was, you know, I don't know, selling services
to that bank was doing so in part on the bank having good
financial condition which was based on these transactions or
material. So that guy also got wrecked,
right? And so it was something where
the bad loans were in some sense predatory, but also stupid and
self-destructive because they couldn't be paid back.
Everybody was trying to consume or earn more than their means in
a sense, right? Like where these people were
buying a house that they couldn't afford and the lender
was trying to juice their numbers of.
Revenue. But what happened to those?
The US government ended up subsidizing the market, Yes,
which is the same thing it does with all these crazy loans to
dictators. You're right.
So, so the, the government came, the US government came and
printed 787 billion and bailed out a lot and which was at the
time this insane thing that was like, Oh my God, now they just
hit a button and do it every day 6.
Plus trillion dollars of government and mortgage debt on
the balance sheet. From, from, from OA exactly
right but and so this side got bailed out and this side really
kind of didn't right. But in the the thing about it
is, OK, so maybe you can't analyze it in the absence of the
backstop, right? But it was so the 4th party, the
government came in and and diluted everybody down with with
dollar inflation to bail these guys out.
I guess an interesting question is, I guess, remember gay I was,
was that evil or was it stupid? And here's my distinction,
right? The distinction is like, I think
of good as helping somebody else without concern for oneself.
Smart is helping somebody else while also helping oneself.
OK, evil is harming somebody else while helping oneself, and
stupid is harming somebody else while also harming oneself.
And are their actions actually evil or are?
They, well, there's, first of all, who's they, right.
So most people who work at the IMF and World Bank or even
whatever the Chinese development banks, they're not evil.
They don't, they think they're doing good.
They don't even know the full outcome.
I would almost argue that these are outcomes of our way of life
in our system as opposed to like evil conspiracy plans.
I don't think a bunch of people got together and said, oh, let's
create debt colonialism. No, it just was sort of an
outcome of what we were doing over time.
And that's why we need has. It worked out.
Has it worked out for anybody in your view besides Western
Europe, Japan, South Korea? Yeah, There's like a couple of
examples of a country that takes this kind of debt and is able to
pay it back, get out. I mean, I mean, India is a good
example of one that was kind of tried to stay away and and has
done. Reasonably well.
Whatever, you know, your view of India, like, you know, a lot of
the work they did at least post 1990, you know, has been done
without that. Previous to that, there was
crazy World Bank, yes, to India that did insane things like
unspeakable things. That's a great graph.
Syringali Coalfields, yeah, stuff.
Look that up. It's insane so.
That's a great graph to make. What were the other examples
that you thought were worked out well?
Or reasonably well. Well, I mean I'm saying it
didn't work out well. I mean we literally the IMF ones
to India in the 70s were premised on the sterilization of
men. So no, no, no I'm not.
Saying that like I, I agree. With more pre 19, yes, they've
been doing OK. I mean, Korea is a famous one
and there's very little, I mean, most of them have been
catastrophic in my view, in terms of yes, yes, it's true.
I want to, I want to, I want to just steel man the other side of
it. And so, well, the steel man
would be like, OK, well, like Indonesia is richer, generally
speaking, than it was, you know, 40 years ago, which is true.
My argument would be it'd be a hell of a lot richer if it's
currency had been devalued by 99%, which is what has happened.
Interesting. It's like the, the, I was just
there, the rupiah was, was, was worth like, you know, $40.40
rupiah to a dollar in the 60s today, if because they've
chopped off a bunch of zeros, it's 60 million per dollar.
Think we got that. So yes, it's true.
They've done decently well. But guess what, if they're, if
all their resources weren't being drained to Japan and to,
and to Europe and America in that way, they, they'd probably
be as rich as we are. You know, it's just something I
think about a lot. And I'm like, look, now we have
a peaceful way for people to get out.
So what I want to get to two things.
What am I doing personally and HRF on this?
And, and what does this mean for America?
So just very briefly, HRF's getting involved because, you
know, we help people under difficult political climates who
don't have the same access to court systems and NGOs and media
outlets like I do in America. And you know what, like they're
never going to have a good CBDC in those countries.
It's just like maybe in America you could have one, but like,
not, not, not in Togo, right? So they need open,
permissionless, open source money that's decentralized that
their government can't control. So we promote education,
infrastructure, tooling and community building across all of
the world for that. And we deploy about $1,000,000
in Bitcoin every quarter to do that.
And we've done more than 300 grants to different
organizations and individuals since 2020.
And we're we're going from there.
It's really exciting and it's amazing to see the impact.
I just visited sites that we've been supporting in, in Bali and
in Chiang Mai and in Bangkok. And it is so cool what people
are doing with Bitcoin out here. I mean, from there, there's a
system in, in Thailand, for example, where like basically
you can pay any merchant with Bitcoin.
Like you can just have a moon wallet, like a totally, you
know, non KYC wallet on your phone and you can have some
Bitcoin. And what you do is you scan the
code of the merchant and you what's happening is you're
sending a lightning payment and there's a literal person on the
back end who's paying the Fiat and taking the lightning and it
works. It's really amazing.
So there's all these cool systems that are now allowing
people to live in Bitcoin. And like in Kenya, there's one
called Tendo. You live in Bitcoin and you can
pay any invoice in the country, including a cab driver and they
get and PESA immediately. So we're you're seeing people
design these really cool ways to get people to get out.
So that's what we're focusing on is like the pay me in Bitcoin
element, like how can we make Bitcoin freedom money around the
world? And then like the second part
and we can then react to that is, and what I really want to
talk about is America, like I really think that the dollar
system, the Fiat system is not ideal.
I think it's done some good things like dollar hegemonies.
Obviously it's great to have one common language for the world of
money, but it's got a lot of downsides and it's been very
predatory. And I really think that a
Bitcoin standard would be awesome for America because it
would, it would serve a lot of the good things that the dollar
does, global network effect for, for money, etcetera, etcetera.
But it would also not be so predatory.
And it would be great for us vis A vis our, our quote UN quote
rivals, right? Because at the end of the day, I
think that if you have money that provides you free speech,
private property and open capital markets, guess what?
That's what America's DNA is. But the Chinese Communist Party,
for example, or North Korea or whatever, they're based on
confiscation, censorship in close capital markets, like
they're, they're fundamentally incompatible, I would argue,
with Bitcoin from that point of view.
So I think just to conclude that I think the founders of America
would have loved Bitcoin, like Jefferson Washington didn't even
want a central bank. I think it is patriotic to want
to improve our money. I think it's patriotic to be
critical of the dollar, and I think we should head towards the
Bitcoin standard. And I think it'd be great for
America. And it'll be a real struggle for
for more centralized regimes because if you live in a country
where the people have power over the government, you should have
nothing to fear from money that's giving power to the
people. So that's kind of the rest of
what I want to lay out. Interesting.
SO I do agree that like in a sense BTC and CCP are at 2
opposite ends of the spectrum like in a sense total freedom,
total control yeah, they would pose it probably as total
anarchy and total order or something like that right.
Just I always try to at least give you know their.
Yeah, they tried to ban mining because it wasn't harmonious on
the 100th anniversary of the CCP.
That's right. That's right.
So the my one question I have for you is one of the things I'm
most interested in, and this is what I work on all the time, is
bring the Internet into the physical world, right?
So the same like ultimately what Bitcoin is, is volunteerism.
It's consent, right? And it's in a sense, it's in the
deepest sense, you know, democracy is about the consent
of the governed and all of the superstructure of election this
and poll that and so on and so forth is just a way of sort of
quantifying, measuring and channelling that consent of the
governed into something, right? And so the withdrawal of consent
is exit, you know, or it can be voice and so on and so forth.
And so Bitcoin reflects digital consent.
Like do I consent to be here or not?
Do I, you know, like if you if you disagree with this Fiat
currency or this policy now? Exactly right.
OK, so bring that consent into the physical world to me means
voluntary opt in societies, communities, cities and perhaps
eventually countries, star societies and potentially
network states, right? I think we have Internet
companies like, you know, Netscape was arguably the first
modern Internet company. We now have an Internet
currency, Bitcoin. And what I think about a lot are
Internet communities, for example, Bitcoin beach in El
Salvador, right? Or some of the things you're
talking about, like the shops here and there.
So like to know your thoughts on that, like, you know, bring this
stuff into the physical world. What?
What do you think about that? Yeah, we need more than just
Bitcoin. So the Bitcoin communities are
really cool. I mean, I've visited a ton of
them. They tend to pop up where
there's been a difficult history.
Fiat currency. That's interesting.
OK. Yeah, yeah.
Like they tend to be in places where the money doesn't work
very well or where, you know, like Bitcoin.
Chiang Mai is a community that's built in many ways because of
Burmese refugees who don't have a bank account in Thailand.
So they've learned how to use Bitcoin.
And when the earthquake happened earlier this year, it was
impossible to use the US dollar to help people who are trapped
and starving. We were able to run a Bitcoin
fundraiser and help people. I mean, so it's just so
frustrating. You know, we get again and again
this bitcoin's useless. I mean, it's the stupidest
thing. I mean, it does things that the
dollar just cannot do so many things.
I had a big piece coming out in the journal of democracy in
about 10 days, 8000 words on a blow by blow of human rights
defenders adopting Bitcoin around the world because it's
the only thing that'll work. So I'm I'm I'm bullish and I'm
following that. But ultimately we need other
systems to help Bitcoin achieve its its its goals.
And and two, I have two that I'll posit to you.
Maybe 3-1 is for sure Noster, which I understand is like not
getting the adoption speed that a lot of people would hope, but
it's not there's. A client damus for a nostril.
Yeah, there's just a lot of great ones.
And look, I would argue to you that it's not having a lot of
adoption maybe. I mean, I think it's great.
I there's a couple 100,000 people on it, like I have 50,000
followers. It's great.
I get there's no algorithm. I choose the algorithm, you
know, it's cool, but the, the reason it's not doing what
Farcaster or Blue Sky is doing is because it's not like AVC
product. It's it's an open network and it
doesn't have a company. So it's like the early days of
Bitcoin. It's hard.
It's like hard if you have no one who's willing to give you 50
million or 100 million to do growth.
Right, Jack, in theory. Well, Jack is kind of, he's
doing bit chat now, right? Right.
So Jack invested, but invested is the wrong word.
He gave a lot of money to open source developers working on
Noster, right? But they're, they're not like
coordinated necessarily. They're all just working on the
project. But if you have Noster, like for
example, like if the people look me up on Noster, they can
permissionlessly ZAP me, which is like just instead of
reposting my stuff or liking it, they can send me Bitcoin
immediately. Boom.
And it's so cool to think about this from a, from an activism
perspective, from a political perspective.
I mean, it just means that it's just completely different when
you can send micro amounts of money to people.
I think it's really what the Internet was designed to do.
But we need something better than Bitcoin and Lightning.
I mean, even in Lightning's wildest dreams is not gonna be
what you buy coffee within 20 years in the Bitcoin world.
That's where E cash comes in. Look, it was created in the 80s.
It's an awesome technology that does full private payments that
are instant and they can work offline, but it didn't work very
well with Fiat money as the base.
People figured out, though, that it works really well with
Bitcoin as the base. So you have two implementations
now. Xiaomi and E Cash with.
Bitcoin yeah you have cashew and fiddy mint and they both are
awesome so when I shop now abroad like just.
Explain that with that as basically it's like you deposit
some BTC effectively and then you essentially.
Have into a neo bank, yeah. And then you essentially it's
it's hub and spoke. Architect you get an IOU that's
fully private that the bank can't selectively censor and
doesn't know what's happening until you go to redeem it.
And the way they're connected is all these mints basically
lightnings like the central nervous system for what's going
to happen. So you have all these mints and
custodians, you know, say you have exchanges, you have E cash
mints. So that is potentially scalable
because basically you have one on chain Bitcoin transaction.
Yeah, you store it up at a bank that's then issuing IO us that
are backed by Bitcoin. They're not IO us, but they say
digital IO us they. Are I mean they're credits.
Yeah, they're credits. That's right.
But basically you have, let's say, mints, you have exchanges,
you have custodians. And the difference is in the
modern era you can actually sum up those visual IDs and compare
them to the proof of reserve, for example.
You can cryptographically make it so that people know that
they're going to get rugged, yeah.
So the reason that's Go? Ahead, but yeah, just and then
you also have payment pools. So like people are coming out
with new stuff for Bitcoin like Spark that David Marcus is
working on Arc you're going to see a lot more and Lightning is
the central nervous system. It's the clearing layer for all
that stuff. So it's not what I used like I'm
I was wrong. I thought lightning was going to
be like 5-6 years ago. I thought lightning was just
going to be like what we would buy coffee with.
You could do it today. It works well but not in 20
years because lightning ultimately is tied to on chain
opens and closes of channels. This.
Interesting new stuff. OK, yeah, I've changed my mind.
I try to be Bayesian, yeah, but what I'm I?
Didn't want to poke you on it. That's why I wanted, yeah.
But I could, I mean, I think I'm much more bullish on lightning
than I was because now I figured out what it's going to do, OK,
It's going to be this clearing layer for all the different
pools. So let's say you have a
cypherpunk mint and then you also have a coin base account
was KYC, but then you also have like an arc payment pool or a
spark address. Guess what?
They all talk to each other instantly by doing a swap over
lightning. That's how it works today.
Like so when I when I went shopping in Bali at the
Indonesia Bitcoin conference, I bought a T-shirt.
I used E cash that was on my phone.
The merchant didn't get E cash. They were paid in lightning, but
like it left my phone and it was swapped by a lightning service
provider instantly and there's money to be made there.
So there's all this infrastructure being built and
it's just cool that I can go around the world and I can spend
fully fully private money and the merchant gets Bitcoin.
We're seeing some cool stuff. So that's really interesting.
And then the last piece would be so if you have Bitcoin noster E
cash bit chat. And Pam pools and then bit chat
OK. Right.
Well, I mean, basically the E cash piece is what's needed for
ultimately I think like buying coffee like you're not going to
be on chain or lightning was my point.
Maybe the other stuff pans out, but we'll see.
But bit chat's also really interesting because now we can
do offline communications that are connected.
So for example, like if we fire up bit chat right here,
whoever's in this building basically can can be, can all
all of a sudden we can we can talk to each other and we can
trade ecash notes. So.
The hard thing the hard thing, that bitch head is cool just to
explain. It's like.
It's like a grid of the world network.
Thing, yeah, it's a grid of the world, I think where if I get it
right, it's, I don't know the exact grid size, things like 10
kilometers by 10 kilometers or something along.
Those Oh no, it's way smaller because it mainly uses
Bluetooth. OK, so it's like a couple 100
feet fine, but then they can Daisy chain.
Fine, so so you have Bluetooth to Bluetooth totally local on
Internet chat. The hard part about something
like this to me is you need to have a very large critical mass
in one location for that to work.
Like it actually has to be like within a building, for example.
But normally what happens with any Internet app is it signs
people up around the world like this, which are all very
distributed. So they log on to the app, open
it, they don't see anybody to talk to.
So they've got a critical mass problem where they need to be
launched at a conference or launched at an event or
something like. That would work.
So 3 days and it's still buggy. And I mean, Jack Vibe coded it a
month and a half ago. So it's like and then a friend
of mine named Kale, Vibe coded the Android version like we are.
We are doing this because we have Vibe coding now.
I'm not, I'm not, I'm not being critical.
I'm just saying but. I'm just admitting that it's
that they're buggy and it's early, but last week I think it
was Thursday, 50,000 people downloaded Bitchat in Nepal and
that's interesting. Because it might give like some
offline kind. Of yeah, let's say you're in a
protest and all of a sudden internet's gone.
I mean, I guess it's useful. The second country, 10,000
deadlines in Indonesia, that was that day.
And then the US was like 7000 downloads, just to give some
sense. Yeah, this thing is moving.
So it's like it's very interesting.
And my my it's. It's interesting backup plan,
yeah. Like like it's like a flashlight
when the power goes out kind. Of it took me a while to see
what Jack was doing here. It's not just a backup plan,
it's that it connects via Noster basically like and when you have
Internet, all of a sudden you have this global censorship
resistant network. It's an interesting vision.
It is. The thing about it, which is
funny, it's kind of a merger between the old physical carry a
message to. Somebody and the new and the
new, right? And the last piece I'll say is
what's cool is, for example, you fire up bit chat, you can then
take your E cash wallet. Let's say I have some money on
my E cash wallet. I can create an offline invoice
and paste it into bit chat and then you can claim it.
And we don't have to have any Internet for that.
And that's really neat. Like you can send money with no
Internet. That's cool.
I mean, and I guess it's not that crazy because just now I
had no cell phone service here and I bought something at
Starbucks because I just used tap pay and really all that is
is it's my phone giving a number to the other person.
Ecash works the same way like the payer doesn't need Internet
and E cash. So you can do some really cool
stuff. So my point is there's like a
constellation of technologies growing around Bitcoin that are
making it very powerful. Now.
It doesn't compete right away with like maybe the ease of
stable coins for some people, but it's it's growing man.
It's very exciting to see and we're, we're doing what we can
to push that out because ultimately, you know, I, I just
think again, having experienced and talked to people who lived
through these insane devaluations, I just think
that's one of the world's thing, worst things that happens in the
world today. It's actually kind of already
happening. The dollar is devalued 50%
against. Gold.
It's like, it's like COVID, yeah.
And it's valued 75% against Bitcoin since 23 and three.
And it's devalued 50% against gold since I think in the last
two. Years, right?
Yeah, so. That's actually all I mean, it's
happening. One of the weird things is this
thing it's it's happening in front of us.
It's happening in front of our eyes.
And and yet it's like a train that's accelerating and you just
don't perceive it because you're in it, you know, So what?
Are we? The last thing I'll just say is
just like a lot of people again, Bitcoin's useless.
I can't understand why you why you'd use it, right?
So I was interviewing these Cubans in 2020.
They were using Bitcoin. They were converting their
pesos, which were at the time trading about 30 to a dollar
into Bitcoin. OK, So since then bitcoin's gone
from $5000 to $120,000. OK, amazing.
The peso, the Cuban peso has gone from 24 per dollar to more
than 400 per dollar. So when people say Bitcoin saved
my life, it's real and it's happening all over the world.
And, and I just, it's funny to me that a lot of people we
probably know in our social circles would say that's
nonsense and it's true. So some people just kind of have
to open their eyes. I just want to check their
financial privilege. Amazing.
So get your two books, we'll put them on.
Screen, Yeah, Awesome. Thank you.
Welcome and let's work GR for freedom.
Amazing. Thank you.
Thank you for your support for Bitcoin.
It's been important. Great.
Thank you. Yeah, 10 years together.
I know. Right.
Yeah, it's been a while. Good, good stuff.
OK, talk soon. Talk soon.