{ "episodeId": "SLP1", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "saifedean_ammous": { "name": "Saifedean Ammous", "role": "guest", "tag": "SAIFEDEAN" } }, "segments": [ { "speaker": "stephan", "time": "00:00", "start": 0.5, "text": "Okay, guys, welcome to the first show. For the first guest, we've got Saifedean Ammous. He's an Austrian economist. He's a professor at the Lebanese American University, and most importantly, he's the author of this book that I'm holding right here. It's The Bitcoin Standard. And I think this is a very, very important book. And what Saifedean has really done with this book is he's really combined the insights and presented an understanding of Bitcoin that incorporates all these different, facets in a way that nobody has done up to now in terms of, in the Bitcoin and cryptocurrency world. so welcome, Saifedean." }, { "speaker": "saifedean_ammous", "time": "00:39", "start": 39.25, "text": "Thank you so much for having me, Steven. It's, it's fun talking to you always." }, { "speaker": "stephan", "time": "00:44", "start": 44.32, "text": "thank you, thank you, Saifedean. Yeah, so I think some of the really interesting things I found, you know, about your book is that you were really able to combine the insights and present them across so many different, kind of Austrian economists, and I think some of the key ones, we've got Mises, we've got Menger, we've got Rothbard, we've got people like Giedroylzmann, Hopper, So, guys like Julian Simon as well, and I think along with some of your contributions as well that have, or some of your sort of focuses, if you will, and one of them was around, you know, Bitcoin's block difficulty adjustment and the stock to flow ratio. So I thought there, there were a few really key points, that I got out of my reading of your book. but maybe let's start with just a bit of a basic question. What is sort of, what is the basic case for Bitcoin as sound money? And, you know, what" }, { "speaker": "saifedean_ammous", "time": "01:39", "start": 98.83, "text": "Yeah. So the way that I would look at it, if you, if you study Austrian economists and you see what their conception of sound money is, you'll see that, you know, even though pretty much all of them spoke about gold as, money You know, it wasn't gold for the sake of gold, it was because of gold's economic properties that it fulfilled certain characteristics which made it sound money. In other words, gold's physical and, chemical properties Ensured that it, remained, always, a, a good that had a high stock to flow ratio. In other words, the Stockpile of existing, gold in the world was always very large compared to the, marginal production every year, so the new supply of gold was never, was never very high So it wasn't ever, inflationary and it never increased in supply to a very, high amount. That in turn is what gave gold its salability, in other words, its acceptability as a store of value and as a, medium of exchange, and so The Austrian definition of sound money isn't that money is-- has to be a yellow shiny metal, rather it's that money is, Something that is widely accepted as a store of value and medium of exchange. In other words, the concept of salability refers to the idea that, because something is desirable as a store of value, people want to hold a lot of it, and a lot of people want to hold a lot of it, and so- People will then be willing to accept it as a means of payment because of their, willingness to hold it. In other words, when people, Choose to buy or sell it, or in other words, when people choose to exchange it for other goods, they find that there are a lot of others who are, willing to buy and sell it. In other words, if you're looking to buy food, you'll find that the people who have food are willing to accept that money, yeah, readily, easy" }, { "speaker": "stephan", "time": "03:51", "start": 230.54, "text": "to exchange." }, { "speaker": "saifedean_ammous", "time": "03:53", "start": 232.87, "text": "Exactly. And, and for me, that comes down to the fact that, I mean, the, the reason that it's something would be saleable, would be accepted is Fundamentally, you know, we can go back to a lot of, physical characteristics that, make something desirable, you know, transportability and divisibility and so on. These, these were quite important in the past, but, you know, in the modern world with modern industrialization, we can make anything into whatever form we want. It's not that difficult, so what ends up really-- I mean, we can give different material different physical and chemical properties, what ends up being the Most telling, factor in whether something ends up being money or not is its ability to store value across time." }, { "speaker": "stephan", "time": "04:45", "start": 285.12, "text": "Once" }, { "speaker": "saifedean_ammous", "time": "04:46", "start": 285.62, "text": "something Yeah, once something is good at storing value across time, people want to hold it for the long run, and then people start accepting, payments in it and start using it in payment. And so the point is that If you want to sell a quantity of this good, because it is widely held by everybody as a store of value, when you decide to sell a quantity of it, you're least likely to, move the market effectively, because a lot of people have a lot of it. And so if you start to sell some of yours, you know, there will be many, many buyers looking to buy it, or if you're trying to buy Some of yours, there will be many sellers looking to sell it because a lot of people hold a lot of it. That's" }, { "speaker": "stephan", "time": "05:34", "start": 333.75, "text": "right. and I think that's a key point is that you bring up there, because some people point out, \"Oh, look, Bitcoin is so volatile,\" but really they're not appreciating, in my view, the what is a very, you know, small drop in the bucket, drop, it's a drop in the bucket compared to the ocean of the rest of the world. so do you have any comments around what we might hypothesize" }, { "speaker": "saifedean_ammous", "time": "05:59", "start": 358.97, "text": "Yeah, I mean, the, the way that I see it is that, considering that Bitcoin has only been around for, nine years, the fact that it is at this kind of volume and that it offers this kind of liquidity is, is, is, is, is astonishing so far. so, you know, the, the, the fantasy of having a money that, Grows from zero to being the prime monetary asset of the entire planet and does so smoothly is obviously impossible. The markets don't work like that. It won't just increase at a set rate of say five percent per day every day that is predictable. Because if we knew that that was the case, then people would pile on speculate on it and that would make it rise even more, but then, you know, it'll rise above the trend, it'll fall down, it can't, essentially, you know, the markets can't function, according to a predictable plan, and that's why, I think all of these attempts to create digital currencies that are stable in value are, are doomed because, you know, value is not something that can be- The creed, it's something that emerges and the emergence process cannot be smooth and orderly, it had to, it, it, it grows one convicted hodler at a time You know, more people hold it, more people decide to put it away, that raises the price. But that can't be, a smooth process because we don't know how many people, choose to enter this, everyday." }, { "speaker": "stephan", "time": "07:32", "start": 451.79, "text": "That's right. Yeah, so that's great. Yeah." }, { "speaker": "saifedean_ammous", "time": "07:35", "start": 454.51, "text": "Yeah, but, but, but the, the fundamental, value there, the, the reason that I think, Bitcoin's worth paying attention to is that I think it has the fundamental characteristic that will drive it towards being a widely accepted medium of exchange and store of value, and that is that its supply grows at a A slow rate, and, you know, we're still at a stage now, ten years on, where the supply growth rate is still relatively high. In that it's around four percent, but, that doesn't even take into account that a lot of the coins that exist are probably lost and that their owners can't sell them. So if you take into consideration that maybe four or five million out of the seventeen million bitcoins that exist are, lost permanently and won't be able to be recovered, which looks like it's likely. then, you know, the growth rate is higher than four percent, like five, six percent. Per year, seven percent maybe. And so that's kind of high, relatively speaking. And so I think, you know, we still haven't seen the period where Bitcoin really, It shows us it's hard money chops, shows us it's hard money credentials, which is, you know, in the first three years, even though people knew that the supply was limited, the reality was that miners were producing A lot of new coins every day and they had to sell them because they had to finance their operating in, with, you know, with, with government money. They needed to buy machines and needed to pay electricity bills, and so new coins were being sold on the market all the time, and that just, you know, will make the price be more volatile and will give people, the misguided idea that these coins are easy, that there will always be new Bitcoin coming along. And so in the first few years, you know, we saw things like people giving away, coins and I think that's just, and that's a necessary part of the bootstrapping process that the money initially is easy, that it's easy to mine, but then it just keeps getting harder. But, over time, it's just going to get harder and harder to, to procure. The new supply is going to be increasingly insignificant compared to the existing stockpile. In other words, the, the daily traded volume Of the currency between people who already hold existing, currency is going to be far larger than the new supply of currency. In other words, the, the output of the miners is going to be, a rounding error, an insignificant rounding error in the, In, in, in the total volume of, bitcoins transacted. And once we reach that point, I think, at that point, you know, Bitcoin becomes, really hard money And people, you know, the way to see it then is that people will really want to hold it as a store of value, and that is just going to continue to, become obvious to more and more people over time, and as more and more people do it, use it as a store of value, that just increases its, The depth of its market, in other words, increases its availability, increases the ability of the buyer and seller to find others wanting to buy or sell it, when, when they need to exchange it." }, { "speaker": "stephan", "time": "11:04", "start": 664.34, "text": "these are fantastic points. I hundred percent agree. I think, yeah, you're right about that point that, you know, right now it's about four percent or maybe a bit more inflation, but obviously in the next two years we'll have another halving and then so on and so forth, and then by the time it's twenty thirty to, to what, to the Hard money from a stock to flow ratio. And I think that's another fantastic point that you make in your book, where you, one of the interesting things that you do is you historically situate Bitcoin. You sort of go through history, monetary history, and say, \"Why is it important to use the hardest money?\" And I really like the point that you made about, You basically were saying you need to use the hardest money lest someone else come and take your value by basically producing your monetary unit really cheaply. So if you could just expand on that point a little bit" }, { "speaker": "saifedean_ammous", "time": "11:59", "start": 718.61, "text": "Yeah, I think the way, the way that I put it in the book, you know, it's, you can't really isolate yourself from the consequences of what people are using as a hard money. In other words, this isn't technology that can just be used in a vacuum. you know, you can, you can choose, for instance, not to use a car, and then, that just means that every day it takes you a little bit longer to get to your work, but that's perfectly fine, you know, instead of getting to your work in ten minutes, it takes you thirty minutes, let's say. that doesn't matter. So then, you know, let's say we're both using bikes, but I move on from using a bike to using a car, you stick to your bike. That, you know, s-saves me a little bit of time, but there's no reason why you- You can't just keep going on with your life with your bike, 'cause you know, you wake up twenty minutes earlier than me, you get home twenty minutes after me, but you're in better shape than me. It's a trade-off many people are willing to do, and you can remain, you know, you continue to do that for many decades, and many people have been doing that for decades, and it's perfectly fine. But I think money is a different kind of technology because That's just not an option. You can't isolate yourself from others using the more advanced technology than you. And the reason for that is that, using something as money is, Essentially, the, the goodness of it is in terms of how good it is as a store of value, because anything can be exchanged, you know, and especially today, you know, we can put anything into warehouses and then exchange receipts for it. Or we could make anything into, into, physical form that it makes it easy to move it around and exchange it. I mean, not necessarily anything, but a lot of things. But the, you know, what determines whether something is good or bad as money for me is whether it's a good store of value. And so if you use something as a, store of value that is far superior to what I'm using as a store of value That's a problem for me. It's not a problem that I can just ignore. It's not like my bike. It's an adversarial technology in a way that your ability to store value in your, goods medium of exchange and value store Will just mean that it continues to accumulate and gain value over time, whereas mine will continue to lose value over time, and so then that just puts you in the position where you're able to buy And own whatever value I own because you are accumulating value. So this is, you know, this is, I make this point in my book where I spend about the four, first four chapters talking about, On different monies in their history, and you see that by the end of the 19th century, the whole world was on the gold standard, and the reason for that was not that, you know, Somebody, gold producers, say went and convinced everybody to do it. It wasn't because some government or some king liked the color of gold and everybody followed suit It was economic reality and compelled everybody to deal with it. There was no, there was no way around it. If you used something other than gold, and many people did up until the nineteenth century, you paid a heavy price for it So societies that used, say, cheap, forms of money that were easy to produce, well, they were hard to produce for them according to their technological capabilities, but easier to produce to other societies. I eventually had to switch away from that. The best example is maybe the, glass beads that were being used in West Africa. These were pretty hard money in West Africa because they didn't have extensive, glassmaking technology there. But they were pretty easy money for Europeans to make because glass making was widespread in Europe. And so once Europeans found that West Africans were using these things as money, they would go back to Europe, they would fill an entire boat With, you know, fill the hull of a boat with, many, many glass beads, and then they go take those beads to Africa and use them to buy things. And, you know, for Africans, these things were far more precious than, the cost of their production in Europe, and so it was a hugely beneficial trade wherein the Europeans who could make those glass beads at, on the cheap Could then go to Africa and keep buying up stuff. So people in Africa then, they had no choice about not using glass beads as money anymore Once somebody has a hard earned money, they're able to produce your money at a lower cost than you are able to produce it, or they are able to produce money at a lower cost than the value that you put into your money, another way of thinking of it. Then it's just a license for them to take your value away from you. And the sooner you realize this and switch away from using your, bad store of value, the better off you'll be. And if you don't realize it soon enough In the long run, it really, you know, to the-- it, it really hurt you. And the situation in West Africa was that eventually these things became known as the slave beads because Europeans were able to continue to buy Everything with them to the point that Af- many Africans were left with nothing and then they started buying slaves from Africans, in exchange for those beads. Also, you know, if you look at silver and how silver was demonetized in the nineteenth century and it lost its monetary role You know, it was, it was compelling economic reality that was enforced on the countries that were using silver. They just saw the fact that countries using gold were appreci- were, were, were, Doing better, the global market for gold was getting deeper and more liquid, and the, the ability of gold to store value was rising with time, and so- As a result, more and more people started dumping silver, and then the price of silver started to collapse. And so any country that was on silver, you know, they had to adjust to economic reality and move to the gold standard. And those that didn't, like China and India, they waited a long time until they did that. They paid a very heavy price for that." }, { "speaker": "stephan", "time": "18:31", "start": 1110.94, "text": "yeah, no, that's-- these are fantastic points. and I think there are some interesting parallels that we're seeing today now, because, because our money isn't as-- the fiat money that we use isn't so scarce, people are now being chased into, in, in a sense, they're being chased into speculating in property and in stocks and in bonds, and they don't have, a sort of easy way to store their value. So I think that's an interesting question then for, in the future. So, you know, let's say if the, if, if this thesis plays out, what, what might the norm be? Would people save directly into Bitcoin and then receive a, a small, you know, quote unquote, defl- beneficial deflationary benefit?" }, { "speaker": "saifedean_ammous", "time": "19:16", "start": 1155.89, "text": "Yeah, I mean, the, the, the, the problem and, and the way that I see it today is that People simply don't have, don't have good money available. Doesn't matter where you are in the world, it's, it's, it's as if money has been criminalized, it's been made illegal. It's not possible for people to have money. And Well, you know, the common objection you'll hear from people is that, well, you know, who needs a stable store of value when you can just put your money in the stock market and, make a positive return? And at least, you know, when you put your money in the stock market You are driving the economic cycle forward, whereas if you keep your in, you know, if you just hoard the money, if you save value in money, you're just being, antisocial by sticking that money under your mattress, figuratively. And therefore, preventing it from circulating in the economy and generating jobs. And that's of course, Kenyan nonsense. It's, it's, It's, it's an embarrassingly silly thing for people to say, because number one, economic activity isn't generated through spending, economic activity is generated through production, and so- Me putting money under mattress or, saving it or investing it, i-it isn't going to magic economic resources, isn't going to create more labor. Is going to make people want to work more or less? The, people's- That is not, it," }, { "speaker": "saifedean_ammous", "time": "20:53", "start": 1252.54, "text": "it, it's not about the level of spending contrary to, to Keynesian, Perspectives. but more importantly, I think th-th-what people don't get is that the value of money is that if you have it as a reliable store of value. You know, this is a different thing from investment, that's what people don't understand. There's nothing wrong with investment, but it's a different thing from money. Money is meant to be the thing that offers you high liquidity, in other words, high salability, better way of putting it. That you're always able to sell it when you want it, so that will maintain its value over time. So that's something that everybody needs to have some bit of, because, you know, you never know when you break a leg, you never know when you get into an accident, you're gonna have an emergency, and you need to Do something about it. This is-- this requires you to have some money, and everybody needs to have something like that. Investment is what you do after you've secured a little bit of money that, you know, you can use as your," }, { "speaker": "saifedean_ammous", "time": "21:58", "start": 1317.67, "text": "basically the, the, the foundation is, is the money. Then once you've moved beyond that, then you start investing. And so if people had the ability to hold, a certain amount- In money that is hard, that is hard to confiscate and hard to inflate, then beyond that they will put the rest of their money into investments But they'll be able to take good risk with that investment because they have the, solid rock basis of a hard money that maintains its value over time. In other words, money offers you no return, but it, you know, it has the least risk and it has no return, but, it's, it's liquid, it's highly liquid. Investments Little liquidity, or they're supposed to have low liquidity because, you know, you're supposed to be tying up your capital with somebody who's using it productively, and that's That's the point that Keynesians miss, you know, if it's, if, if it's, you know, for, for investment to be real, it's not just, i-i-the money needs to be tied up, the money needs to go somewhere, and the person needs to be able to use it, and so it can't be very Nature and the, the fact that we have very liquid markets for getting in and out of, investment doesn't really change that, it's more about just the fuzzy nature of the money that we have that, it can be withdrawn. easily out of investments. But if you look at, you know, early stage investment, the reason, it's illiquid is that the company needs to have the money and it needs to have the commitment for the money, and it can't continue to operate, With fickle investors coming in and out of, businesses, and that's what, that's a feature, not a bug, and that's why, you know, the IPO, the, the ICO model is, another reason it's completely broken. Early stage, you know, there's a reason companies don't IPO at the early stage because they need the predictability of having the money and they need it independently of- The market valuation of their company. So, you know, they need to just know that we have X amount of dollars for the next few years and to work accordingly and not have to check their, Stock price every morning. Once the company has matured to a point where, you know, profitable and reliable expenses and revenues, then it can IPO and it can, go onto the market where it offers that liquidity." }, { "speaker": "stephan", "time": "24:36", "start": 1476.11, "text": "Yeah. And another great point actually, that sort of brings up, it's almost like these companies that had done an ICO, now they're sitting on, you know, big chunks of Ethereum, and now they basically got to try and time the market on when do they kind of sell out some of that Ethereum or try and buy it? Things with that Ethereum, and now they're having to kind of do investment management on that Ethereum rather than just go to business in, in, you know, actually creating a, a valuable product." }, { "speaker": "saifedean_ammous", "time": "25:03", "start": 1503.07, "text": "I mean, of course, if they had a valuable product, they wouldn't have been ICO'ing in the first place. Nobody who has an actual product has been doing an ICO, it's just a big, It's just a big recycling, of Ethereum from one, ICO to another, you know, starting from Ethereum itself all the way down to all these different layers of, ICOs that have been built upon it, as we say, stupid games, stupid prizes. but yeah, so, so, so I think to go back to the original point, if people had the ability to just- Form of money that is reliable, that they could store their value in, then, you know, this would be the financial basis that give everybody financial security, and then with the rest of their money The current situation is that people don't have that, and so they're having to risk, to, to take risk with everything, with all of their money. You either put it in real estate or you put it in stocks or you put it in venture capital or whatever, but everything is out there and everything Offers a return, so everything has a risk. And so the dangerous thing is that of course, you know, you could end up making and losing everything, and, you know, you don't even have to make the mistake yourself, you could just be driven towards the mistake because of the, you know, the cost by the manipulation of the money supply. But the absence of a store of value is why people end up having to speculate and why the fiat system is just one big speculative bubble after another. You look all across the major economies of the world Housing is just always continuously appreciating and getting much, much more expensive because everybody's using their house as their, safety net, financial safety net rather than as, as a home, and that's- that's, that's not healthy. Yeah, it's, you know, as an, it's, it's, it's a rational decision for people to do it in this current situation, because if you look at it, you know, what do you do? Do you hold cash as your money or do you hold the- Or do you hold stocks? Well, stocks are very volatile. At least the home, you know, it's even because, even though it is volatile, at least it has the security of it being there always. so you can always live in it, and so that, you know, whatever happens, at least you always have a home. So it, it, it is rational within the current incentives of the current system to do something like that. But the end res- the, the result of everybody following that path is that houses just continue to become insanely expensive because people are using their houses as their, Savings account. And so demand for much higher. And I think if we had a sound money, if we had a hard form of money, people would buy houses only when they needed them, only when When you're able to afford it, and only when you know that you want this house because you want to live in it in the long run. In that kind of world, there'd be far less demand for buying houses and houses would be, I think less expensive and we'd have a far smaller, bubble or maybe no bubble. You know, people now overinvest in building many, many houses because At the margin, people are buying more houses than they need, not because they want the house, but because they want to use it as a store of value. That's right. And this is really, just directing so much of society's resources towards constructions or towards construction And how-- And as we saw that, ten years ago, you know, blew up in a giant bubble across the world." }, { "speaker": "stephan", "time": "28:48", "start": 1727.79, "text": "Yeah, that's right. And I think it's, it's almost a parallel to the point you were making around the glass technology, where, you know, if, if the prices for that go up enough, well, then now enough new supply will try and hit the market, and then what happens to your store of-- What people were incorrectly using as their store of value, well, the price tanks." }, { "speaker": "saifedean_ammous", "time": "29:09", "start": 1748.75, "text": "Exactly, the point is that if it's easy to make, you know, it's, it's, I mean, houses are relatively hard to make, you can't just print houses. Although actually 3D printers might change that, but, they are, they're relatively hard to make and that they are expensive, but they're not that hard to make, so you can just continue to make more and more houses, and that's what ends up happening. If people end up using anything as a store of value, the producers of it will find a way to make more and more of it, and so that will bring the price down. So effectively, you know, you can think about the process of monetization as just the market finding the strongest bubble, and the hardest bubble to pop. And so people invest their money in cars, in houses, in, buying oil and government bonds and buying commodities and stocks, all these things are, yeah, all of these things are bubbles that people will put money into as a store of value, but all of these are lousy as a store of value by Simple, because of the simple fact that you store value in them, you make it attractive for others to, make more of them and, produce seems to bring the price down. And so, you know, the way that gold became money was through hundreds of years of people storing value in many, many different things, and then all of these things getting inflated, but only gold being inflated the least, or gold surviving is the one that got in its supply increased the least. And so therefore, over time, it just, it just It was the strongest bubble or the, hardest bubble to pop, because it's hard for people to make more and more of it. And I think we're s- we're seeing something like that now People putting their money into anything else will, you know, they'll experience something generally pretty much everything is getting a five percent. Plus or minus return per year, through either, you know, you speculate on it now and then it ends up that a lot of people buy in it this year and so you make a good return, but then next year people will make more of it and that will bring the price down. So roughly speaking, you know, anything that's going to want to be monetized, anything that people are using as a store of value Is offering a plus minus five percent per year, something like that, except Bitcoin. Bitcoin, because of its hardness, has been doing around five hundred percent per year on average over the last, eight years. And it'll likely continue to do something like that more, I mean, who knows? We don't know what's gonna happen, but it'll likely outperform everything else in the long run. just because it's very hard to make. In other words, when people spec-- you know, people don't even need to be intelligent enough to recognize these, issues or to even think about them, but Through trial and error, the people who end up putting money in Bitcoin will end up doing better, and so the value of the Bitcoin will rise. That will give Bitcoiners more wealth compared to others, and then that will encourage others to start putting more money into Bitcoin, and so over time More and more wealth and value go into Bitcoin, even with all the bubbles and the price crashes and the rise and drop in the price, we're still going to see this process, I think. Continue to repeat because, you know, the economic reality is that no matter how or crashes, people just can't make more of it, whereas they can make more of everything else." }, { "speaker": "stephan", "time": "32:55", "start": 1975.32, "text": "Yeah, and I think, yeah, that's a great, another point that you raised, which, we mentioned earlier, which is around the bit-- around Bitcoin's block difficulty adjustment. So just for anybody who's, new to that, basically the point with that is that Bitcoin is on a very strict release or supply schedule, and because of that schedule, no matter how many new miners and hash power hits the network, it's still only going to make that set amount of Bitcoin. So, as you point- point out that that actually makes it much, much harder than basically anything else. so I think that's a good, kind of point which leads into this concept that it's, it's, it's not quite an-- it's not an accident that, you know, Bitcoin's superiority. It's not like in some ways there's some elements of fluke or chance about it, but in some ways it's not. but I think another kind of point actually that brings to mind is what you've mentioned earlier, which is around the immaculate concep- Of Bitcoin, you know, its difficulty to change. So, if you could just elaborate a little bit around, around why, why is Bitcoin, better at-- and what, what is the deal about the immaculate conception quote, quote, quotation marks?" }, { "speaker": "saifedean_ammous", "time": "34:13", "start": 2052.77, "text": "for me, the, the, the, the whole reason Bitcoin has value is, and people who have, In point over the last few years, I think we're, we're just continuing to be more and more vindicated by this. The only reason Bitcoin has value is that it is hard to change, is because it has a hard monetary policy that nobody can change. If Bitcoin's value proposition was that it or quick payments, then, you know, I think Bitcoin would be, it, it would have collapsed and failed by now because if you look at it, you know, the amount of Bitcoin that, the, I mean, the, the, the, the transaction fees on Bitcoin and the capacity for Bitcoin transactions has been shown to be limited. to the scaling problems are surrounding Bitcoin so far. and, you know, there's always going to just be a limit on how much we, have as transactions in this kind of centralized, sorry, so this kind of deep Simply because, you know, the way Bitcoin works is you need ten minutes for each block and, without one confirmation at least, you shouldn't accept the payment because it can be, It could be fraudulent. And so that system for mass payments, that's not a way to replace, Mastercard or Visa. so the people buying it aren't not the card and visa, they're buying it for something else. And my view is that it is being bought because it's a store of value, and it's a store of value only because We know this is the supply and we know that the supply can't be increased. And so," }, { "speaker": "saifedean_ammous", "time": "35:58", "start": 2157.9, "text": "what from all the others is that it's the one Coin that can even come close to making this, claim that can be increased, because every other coin out there. It's largely trivial for the people behind it to change the code and change the supply. So we saw, you know, the second biggest coin in terms of the market value and in terms of- And in terms of the number of people maybe using it, it's probably Ethereum. And we saw that when things in that coin Of the people who run it, and the centralized party that is in control of this currency, it was almost trivial for them to hard fork the currency and reverse it. change the transaction log and then repeat things in a way that was favorable for them. it's a long story of the DAO, if anybody is interested, which is now pre-history, although it was only what two years ago, I think, or wasn't even one year ago or two years? Yeah, I think it was two." }, { "speaker": "stephan", "time": "37:06", "start": 2225.71, "text": "two? I can't, I can't remember the specific date. I think maybe one and a half. I'll look it up. but yeah," }, { "speaker": "saifedean_ammous", "time": "37:11", "start": 2230.8, "text": "yeah, yeah, but I mean, it's, it was trivial for them to change things. So they still, you know, the Ethereum people still don't know what their monetary policy is. They need to hard fork To implement a new form of monetary policy at some point, they might switch to what they call proof of stake, which is a complete- So I, I hope they go along with it because it would suit them Perfectly. But, you know, most likely what is gonna end up happening is the different, versions. so the more we get of these different forks that copy Bitcoin The more we just see the real value proposition of Bitcoin, which is there is a difference in all of these forks because it's, because it's the only one In control of it. As soon as one of these forks gets forked, you know, the people who made the fork, whether they like it or not, they control this thing. They have made something that they control, and they have made something that they can change at will, and so they can change the monetary policy behind it at will. And that means that this isn't hard money, because it's money whose hardness is determined only by somebody deciding that it is hard, whereas Bitcoin, you know, it doesn't need anybody to- Is, and it's operating as it is, and whether you like it or not, it means nothing." }, { "speaker": "stephan", "time": "38:40", "start": 2319.58, "text": "Yeah, no, that's a good point. It'll" }, { "speaker": "saifedean_ammous", "time": "38:41", "start": 2320.63, "text": "continue. Yeah, it'll continue to operate And it continues to be hard, whether you like it or not. Whereas all the others, they just depend on somebody promising that they're going to keep it hard. In other words, the only way to make a new Bitcoin is through proof of work. But, but if you want to make more of any of the altcoins, any, any one of the altcoins or shitcoins or forks of Bitcoin, it's not through proof of work, it's through proof of whatever scam artists are behind that fork or coin. That's really what it comes down to There's no guarantee that, you know, the people behind Zcash or Ethereum or any of those coins, you know, they could get together tomorrow and decide, \"Well, we're gonna change the money supply to increase it by five percent or ten percent.\" it's trivial for them to do this. It's none of these coins have anywhere near the kind of decentralization." }, { "speaker": "stephan", "time": "39:37", "start": 2376.77, "text": "And I think that's-- Go on, go on." }, { "speaker": "saifedean_ammous", "time": "39:40", "start": 2379.85, "text": "Yeah, I mean, I mean, this isn't something that is, the onus of proof isn't on me to prove that the onus of proof is on them. To illustrate credibly to the markets that they cannot change it, and that's not something that you can just install, you know, it's not, it's not like we copy Bitcoin's design and then here we have an immutable blockchain because we copied Bitcoin's design, no, because any immutable blockchain can be made mute The rules of the blockchain. So what makes Bitcoin, immutable isn't the code, what makes it immutable is the fact that the code is decentralized and Distributed amongst, adversarial stakeholders that have no possibility of coordinating and move away from it because, you know, we saw in twenty seventeen We saw with Bitcoin's, fork crisis, well, it was crisis for others, not for Bitcoin. We saw that it, it wasn't possible for these people to change Bitcoin's supply But to change Bitcoin's block size, well, they just ended up with another shitfork. And, so Bitcoin has proven its immutability or, so I should say, Bitcoin has, made a very credible claim for being, for, you know, for being able to tell you that you can be fairly confident that in the next one hundred years, we're still not going to be able to change anything with Bitcoin You cannot make that claim about any other altcoin. It would be trivial for any of them to change anything. We've seen, you know, how trigger happy they are with And, the onus is on them to illustrate how they have a set monetary policy, but it's not something that they are even interested in illustrating because You know, if these people cared about hard money, they'd be in Bitcoin. The only reason that you might start your own stupid altcoin is because you don't understand hard money anymore Astonishing, you know, when you follow all these people that have started their own coins, it's universally true that not a single altcoiner I have ever met or come across understands our economics, and by economics, I obviously mean real economics, Austrian economics. It's impossible to find a shitcoiner who's not a Keynesian. It's impossible. Every single shitcoiner and multi-coiner and altcoiner, you know, you, you scratch the surface Economic understanding and you just get a cesspool of Keynesian garbage ideas festering in their brains, every single one of them. You know, there, there isn't even one of them that even, Will, pay lip service to Austrian ideas. And it's, you know, we've had a lot of fun with these multi-coiner, David Paul and, Kyle Samani, you know, when they start talking about economics or they talk, they, they want to dismiss Austrian economics Obviously they're completely ignorant of it, they don't even know what it is, so they all resort to the same idiotic platitudes about, oh, well, Austrian economics is too rigid and not practical in the real world, and, it's not very realistic explanation of how the Just idiotic, Keynesian brain damage propaganda they resort to. None, none, none of the altcoins are even making a claim towards trying to be hard money and, You know, if the people behind them valued hard money, they'd be Bitcoiners." }, { "speaker": "stephan", "time": "43:12", "start": 2592.17, "text": "That's right. And I think one thing that I really like about your book is you, you actually point out the difference in- Sort of different conceptions of scalability. So in the part, you know, a-and one of the key points around scalability that you sort of add in that came in later is around the importance of censorship resistance or gov- like whatever your money is being government resistant, because if it can just be inflated, well then we're back to the same problem that we're in today. So I think that kind of brings up that next question of what is Bitcoin really competing against? Is it competing against banks or central banks or even something like the BIS? Yes, and the IMF and some of these big, multinational or kind of eng-- like big, government-sponsored world organizations." }, { "speaker": "saifedean_ammous", "time": "43:58", "start": 2638.19, "text": "Yeah, I think that's the, that's the fish that we are here to fry No, the, the conception of Bitcoin competing against banks, I think is very misguided. and a very interesting idea that I came across a couple of days ago for the first time from a guy called Max Hillerband, he was interviewing me. And he made that, and he made the point that in the first ten years of Bitcoin We've had relatively high inflationary rate of the supply, and that easy in Bitcoin meant that, the-- meant that the block reward was subsidizing the mining of Bitcoin. So The, the users of Bitcoin got to use it without having to pay transaction fees because miners were happy to process transactions for free or for very little. The real reward, the real reward wasn't the, wasn't the inflationary, reward of the coin, not in the transaction fees. And so that Created the, you know, just like in Austrian business cycle theory, we know that easy money creates malinvestment by, making people, disconnect Through value and through opportunity cost of actions, the high inflation of Bitcoin has made block space artificially cheap, and so it led to a lot of man investment into block space And led to a lot of people putting a lot of, you know, building business models around the cheap transaction fees, becoming emotionally invested in having low transaction fees, and that just something that wasn't going to be sustainable after the reward, after the Bitcoin reward, drops in value transaction fees eventually are gonna have to take over, and it's going to have to be the case over time that transaction fees need to become more and more important. So," }, { "speaker": "saifedean_ammous", "time": "46:02", "start": 2761.89, "text": "Where was I going with this? What was your question? Sorry. no, I was basically" }, { "speaker": "stephan", "time": "46:05", "start": 2764.69, "text": "just talking about what is Bitcoin competing against, and I think, yeah, like basically you've answered the question. It's just that Bitcoin isn't out to stop banks and banking, it's out to stop central banking and the other monetary interventions that governments do, such as legal tender laws, the existence of a lender of last resort, implicit bailout guarantees, capital gains tax laws, so on and so forth, that act to sort of force us to use fiat money, you know, and I guess in the Austrian parlance, and someone like, you know, Guido Hulsmann, when he uses, in his book, The Ethics of Money Production, he talks about how Legal tender laws force us to sort of use the inferior money and treat it as though it was the superior money." }, { "speaker": "saifedean_ammous", "time": "46:53", "start": 2812.86, "text": "Yeah, absolutely. So, you know, that, that, that notion that was marketed by a lot of the early Bitcoiners that- Bitcoin is, free instant transactions around the world is, it's, it's, it's funny to think of it that way, but it is money investment. It- And business model that was only possible because of the inflationary, monetary policy of the Bitcoin central bank in the first ten years, that people even got this notion that we can run the Bitcoin proof of work system for free. Somehow you'll be able to utilize, put your transaction on this one megabyte block that is transmitted to the entire world and recorded over, Thousands of computers all around the world, you'll be able to transmit your transaction on that one common ledger and have it recorded on all these computers for free. And that's a broken business model that many, have tried to fit on Bitcoin, but that can't sub-survive, it can't survive," }, { "speaker": "stephan", "time": "47:55", "start": 2874.95, "text": "and it won't survive." }, { "speaker": "saifedean_ammous", "time": "47:56", "start": 2875.94, "text": "I think," }, { "speaker": "stephan", "time": "47:57", "start": 2876.58, "text": "but" }, { "speaker": "saifedean_ammous", "time": "47:57", "start": 2876.9, "text": "the reality is, you know, if you, if you think about it, the, the, the The, the model of banking itself, I mean, banking has existed under, under Easy Money and it'll always exist, in my opinion, the core functions of banking. And you can ignore the sort of emotional, hysteria that many people today have around banks being evil, banks being evil. It's not banking that is wrong. Banking is a normal, activity, normal, healthy e-economic activity which- In particular, you know, the two core functions of banking, which is deposit banking, I think is always going to be something that people will demand, just because people don't want To have access to all of their money available for them at all times, because that's a massive security risk. Majority of people will prefer that their money is held somewhere safe So that they aren't, you know, always under the threat of having all of their money taken away from them. You don't want to have all of your wealth stored under your mattress. just because if it is under your mattress, then it's trivial. If it's under the mattress, then everybody could lose all of their life savings in five minutes if they just have a gun put next to their head. So people are always gonna want to have their wealth, or a majority of people at least are always gonna want to have their wealth Stored with the organization able to provide safe storage. And then secondly, the model of the, the other s- very important function that banking provides is, Matching borrowers and lenders or matching investors with, with, entrepreneurs, that's a highly important and sophisticated job where, you know, the bankers sit down Take your deposit and then look at your timeframe, how long you want to keep the money with them, and then they'll find somebody who needs that money for the same period and utilize-- to utilize it for their business. And they will take the money from you and give it to them. That's, that's a very legitimate function because the majority of people shouldn't be required, you know, I mean People specialize, and it, it, it's, to try and think that we're going to kill banking is just to try and think that we're going to get rid of the division of labor, you know? But that's You know, if you're a doctor, you don't want to spend your time thinking about where to invest your money. Idea of there being businesses out there who specialize in, how to invest the money, they compete for your money and you give it to them and then they offer you good returns, but if they don't, you take your money out and you try it with somebody else. That allows you to focus on, on an engineer or a lawyer or whatever actual productive-- Well, lawyer is a bad example, but you know, doctor or engineer or whatever productive act- Actual job that you're doing to serve society. You know, people focus on that instead of everybody trying to be, you know, Warren Buffett in their spare time. You're not gonna be Warren Buffett in your spare time if you're trying- Surgeon, you have to choose, you know? And it's good that you don't, need to do that because people can specialize in it and then you can, delegate to them. So I think the function of banking is just normal, healthy part of a market economy that's always going on. Problems we have with banking are due to the fact that banks have a monopoly that is enforced by government and due to the fact that governments allow banks to create money. In other words, by having a central bank as a lender of last resort, you're making banking just from being a business of deposits and, lending Into a business of money creation, and so when they can create money, and they have a protected monopoly that allows them to create money, it's only a matter of time before banks really abuse this. So the problem really isn't banking, the problem is the model of central banking that backs our banking system," }, { "speaker": "stephan", "time": "51:56", "start": 3115.72, "text": "That's" }, { "speaker": "saifedean_ammous", "time": "51:56", "start": 3115.96, "text": "right. Ultimately, it's run on easy money. So what, what we-- what I think Bitcoin is offering is just a completely separate, independent, financial system built on hard money That is going to be, that is going to be competing with the easy money from all the central banks around the world and And witness the development of financial institutions on top of Bitcoin that-- and we are witnessing it, obviously, it's, it's growing by the day, but over time it's going to grow more and more. And the interesting thing will be to see how it grows and develops over time. My, my personal perspective is that we're still going to see banks, but I don't think we're going to see Reserve banking. Sorry, that was a different question. And we're going to" }, { "speaker": "stephan", "time": "52:45", "start": 3164.69, "text": "see," }, { "speaker": "saifedean_ammous", "time": "52:47", "start": 3166.69, "text": "yeah, I don't think we'll see fractional reserve banking on, Bitcoin, but we will see banking, and we will see Bitcoin develop into an alternative to central banks. In other words, the Bitcoin settlement network is going to be an alternative to the, interbank settlement and payments network or intercent, payment and settlement network, whereas instead of where we have one central bank for the entire planet, which is the US Federal Reserve, we've moved to a world in which we, you know, the US Federal Reserve today is the only institution that can offer final settlement. Final cleanings or, or maybe you could argue a few other central banks can, but fundamentally they all are branches of the US central bank because they all use dollars as the At their, money and so the Federal Reserve's liability, but we move from that towards a system in which we have thousands and thousands of central banks. able to offer final clearance of payment across the world. In that case, you know, it'll be far more decentralized and it'll be a free market system. It would get us get rid of the, you know, the Federal Reserve as the final central bank, and also all these international, control central banks around the world like the IMF and the World Bank and the Bank of International Settlements, these unelected, unaccountable bureaucrats who, you know, with With the, with their small little decisions that they take before their lunch in the morning affect the fate of millions of people living in countries all, and, it's, it's a travesty, economic system that these Institutions even exist. It's, it's a real tragedy that the IMF exists, that the BIS exists, the World Bank exists, and, it's going to be a wonderful world when we get rid of these things. Imagine, imagine a world in which all of the parasites that work in these Absolutely, criminal organization. These people have to get actual jobs, you know, teaching math to children or, driving, Uber cabs around. Society would be far more productive when these people are actually being productive instead of just, Going out there and, forcing others to, utilize the, the, the, their crappy money at, with the threat of" }, { "speaker": "stephan", "time": "55:12", "start": 3312.02, "text": "That's right, yeah. And I think, one of the things that, y-y-you know, it's interesting that some people are now trying to sort of sow dis-disorder or fear to say, \"Oh, look, with Bitcoin and the Lightning Network, if Bitcoin is the settlement layer, people might now start doing fractional reserve on top of it.\" But what kind of safeguards could Bitcoiners put in place to stop this? So as an example, would they, you know, make audit requirements on large Bitcoin-hosted wallets and exchanges, or would they want to see demonstra- of reserves, or would they, you know, maybe if they heard rumors, they would do bank runs and that these, you know, yeah, yeah. Exactly," }, { "speaker": "saifedean_ammous", "time": "55:50", "start": 3350.03, "text": "and, you know, with Bitcoin, I think I don't know, I, I, I listened to the perspective and the debate on fractional reserve banking within Austrian economists for quite a while, and I'm not convinced of the fractional reserve bank it could develop And Bitcoin, I think all the examples of fractional reserve banking that we've had have either collapsed or have had a lender of last resort. I don't see fractional reserve banking as being stable without a lender of last resort" }, { "speaker": "stephan", "time": "56:22", "start": 3381.93, "text": "Yeah." }, { "speaker": "saifedean_ammous", "time": "56:23", "start": 3383.05, "text": "I think the theoretical, explanation and the empirical record support this contention. However, if you look at, You know, but then again, I'm, I'm, I'm happy to be proven wrong about this. It's not something that I take so, religiously. You know, if we end up having a free market monetary system with hard money and some form of fractional reserve banking doesn't develop well, then" }, { "speaker": "stephan", "time": "56:50", "start": 3410.13, "text": "Yeah, that's fine. But I," }, { "speaker": "saifedean_ammous", "time": "56:52", "start": 3412.34, "text": "I, I think it'll develop, and the reason is that, w-i-i-in a free market without a lender of last resort, the ability of the, banks to create credit Is obviously always restricted by the fact that they could be liable to, be subjected to bank runs. People come in and ask for their money, and so the banks can't do fractional reserve banking much Because they, once they start, inflating the credit and the money supply, they, people could wake up about it and then start demanding their money and get it out. Now, in the physical world, this is restrained by the fact that, you know, physical bank runs can be discouraged in many ways, government can, somehow force you to You continue to deal with the bank as it is, banks can be very slow in redeeming obligations to people, governments can come in and print money to save the bank, and this is really fundamentally the reason why we don't see bank runs is that If we were to all go to the bank today, the central bank would print enough money to, or, you know, increase enough money supply to allow money out. so because we know that we could get it, we don't need to do it, and so it's, it's just a threat, i-i-i-it's, it's the fact that they are there. That makes this stuff, not happen. However, in the world of Bitcoin, the marginal cost of conduct very, very little, it's very cheap for people to Click a button and ask for their dollars, for, for their bitcoins out of an exchange, and so, and also without a lender of last resort. The way that I see it, as soon as a, as soon as a bank is engaged in fractional reserve banking, as soon as a bank has, increased, its life- Yeah, assets, liquid assets to, back it up. Then it, the way that I see it is in a digital world, its own assets or its own, tokens will be the value They will, be discounted compared to the underlying asset, and they will be discounted to the, they have been fractionalized. And so the result will be that people will just, want to take their money out of, that, financial institution, and I think the bank run would happen very quickly, so the, the financial institution would fall apart quickly. So, you know, we haven't seen a successful example of fractional reserve banking in Bitcoin so far. I've asked Professor Light White you know, why he thinks that is the case. And his argument was, well, you know, because there's no lending in Bitcoin, nobody's borrowing in Bitcoin, and then that means there's no fractional reserve banking. Which, you know, I see the point, but I think you could still have it, you know, you could have a form of fractional reserve banking, and exchange office, Bitcoin payments In an asset that they produce, you know, they run a payment network backed by Bitcoin and they, issue tokens that are partially backed by Bitcoin. I think we could have seen a business model like that that is similar to fractional reserve banking But it's not sustainable and you just don't see, because there's no lending, but because why would anybody take the asset that is, say, seventy percent backed by Bitcoin and trade it on par with Bitcoin? It'll always just be, discounted by thirty percent next to Bitcoin, which just makes the whole process moot. You know, what's the point of, Making this twenty percent Bitcoin entry at seventy percent of Bitcoin's price, rather than just continue to, call it Bitcoin and then just run with an asset that is one hundred percent backed by Bitcoin. Yeah. So, So I, I, I don't see it developing. I think that's just not going to work out. Yeah. But we'll see." }, { "speaker": "stephan", "time": "01:01:11", "start": 3671.54, "text": "Yeah, no, that's a great point. I think, yeah, I agree. I think a fractional reserve Bitcoin would trade at a different price to the full reserve Bitcoin, and that's where, like, that's basically, what you're saying. one other point I had, was interesting, actually, this came up from the, Peter Schiff debate with Eric Voorhees, and, I suppose there's been Bate, Peter. And I think, one of the inter-- one of the points that he tries to make, and I'm just curious to see how you would come back to that argument, is he basically, one of his main arguments was, \"Oh, look, gold has other things you can do with it other than the medium of exchange component, and in his view, this is what gives it that quote-unquote intrinsic value,\" which, again, even from an Austrian point of view, just that term, intrinsic val-value, doesn't really work. But I'm just curious how, how Debate with him, how would you come back to him?" }, { "speaker": "saifedean_ammous", "time": "01:02:08", "start": 3728.77, "text": "I mean, it's, it strikes me as odd that the, yeah, I think it was Pierre Rochard who mentioned, during, there was a shift debate about how just how much of a Keynesian leadership it needs to sound like when he's trying to knock Bitcoin and, and then this is one of them, the idea that something has intrinsic value, when nothing has intrinsic value. value is human consciousness, only humans give things value, only humans understand value. So the just because Bitcoin is not physical doesn't mean it can't have value, and you know, the best example you could tell Peter Schiff is, you know, I'll take his, take his laptop. He, you know, would he not pay money to, for, for all of the non-physical stuff that's on his laptop? Like if I had access If I managed to break the security protecting his laptop and then managed to, say, lock his, all of his files For them to be deleted in a week, like the ransomware attack, you know, people pay real money to get their data back. Well, that data's not physical." }, { "speaker": "stephan", "time": "01:03:25", "start": 3805.56, "text": "That's right." }, { "speaker": "saifedean_ammous", "time": "01:03:26", "start": 3806.36, "text": "Right? You know, it has all of your company files, it has all of your family pictures, it has all of those things that you find extremely valuable, even though they're not physical. So just merely something being physical doesn't give it value. Something- being not physical doesn't mean that it can't have value. so we give value, and Bitcoin is a digital way of representing value through numbers that Has acquired value because people have valued it. And so the problem, see, Bitcoin Austrians need to really, come to terms with. They need to just get over their emotional attachment Peter Schiff can sort of understand because his, his entire business model depends on pumping gold, but, he needs to just come to terms with the fact that, look Gold isn't money because it's yellow or because it's shiny or because Mises said so or because Menger said so. These aren't the reasons that gold is money. It's not its physicality and it's not the- It's money. It is money because it was accepted on the market. It's sound money, the definition of what made it sound money. Buy it and sell it at a price that they choose, that they accept. Between the buyer and the seller, the, the, the value of Bitcoin is determined between the buyer and the seller of Bitcoin, and it's not, it's, it's not decreed from above by government or by somebody else. And that's really what makes Bitcoin hard money as opposed to," }, { "speaker": "saifedean_ammous", "time": "01:04:58", "start": 3898.0, "text": "money. And that's also what makes gold money. So the value of, the fact that Bitcoin just emerged on This is really, you know, the most astonishing thing for Bitcoin, for me, was the moment that it moved towards people beginning to pay real money for, or I shouldn't say real money, beginning to pay government money for it. But the fact that people started exchanging- Resources that were valuable with real opportunity cost for this digital thing is still for me the most, to happen, you know, the last those beats, is really still That's it, you know, once, once we moved from zero, anything above zero, I think that was, that was ninety percent of the world take over battle won. Now the rest of the world is just coming to terms with it. Might take another hundred years, but really it was Laszlo who just, set the ball rolling. Yeah. That, that was it, you know, once it moved towards being a good that had a market. People were willingly trading it without somebody putting a gun to their head and forcing them to accept it. And, you know, whatever the value was, once it moves towards that, that's it, I think it was game over. That, that's just going to continue to-- Once it had value, it's going to continue to appreciate in value, it's going to continue to prove itself to be a better store of value, and over time, you know, it's just going to be a matter of the rest of the world coming to terms with this. And learning to accept it and deal with it." }, { "speaker": "stephan", "time": "01:06:24", "start": 3984.31, "text": "Yeah, yeah, I" }, { "speaker": "saifedean_ammous", "time": "01:06:26", "start": 3986.03, "text": "agree. So, so, you know, for, for, for, they, they just need to come to terms, I think, us as an economist, need to think. And it's a good that has generated salability on the market, it is accepted on the market, it has, it has a, an increasingly liquid global market. The liquidity is increasing by the day, the pool of buyers and sellers, potential buyers and sellers is increasing by the day, and the suitability of this good to play a monetary role is increasing by the day. So right now, you know, people buying it aren't buying it, because they're using it as a, daily medium of exchange, they are using it as a store of value and they're speculating on its suitability as a store of value to continue to, increase its, use Change, and I think that's, you know, that, that's like any entrepreneurial bet. It's, it's, it's a bet that has, positive and negative risk in it, but it so far has been working out for people who, Have bought Bitcoin with a long term horizon. Anybody who's bought Bitcoin and decided to sit on it for more than three years has, been rewarded handsomely for doing so. Yeah, that's right. Exactly." }, { "speaker": "stephan", "time": "01:07:38", "start": 4058.4, "text": "And I think the other thing that is, what might kind of distinguish, if you will, between the what we might call the crypto Austrians, you know, such as yourself and Pierre and Bitstein and Vijay Bohrpati and some of those other guys, and sort of the more traditional Austrians. I think there's a slightly more appreciation of the stages of money. So this is something I think, you know, it, it-- William Stanley Jevons wrote about saying, you know, things start as a collectible, then store of value, then medium of exchange, then unit of account, and, you know, I think we're just seeing that now in real time" }, { "speaker": "saifedean_ammous", "time": "01:08:15", "start": 4095.31, "text": "Yeah. Yeah, exactly. It's, it's, it's, it's that fallacy of thinking that if Bitcoin isn't born in its, final form, then it's never going to get to that final form. And that's just, you would expect that kind of silliness from Canadians who think the world is just Everything comes from government decree, who can't understand the concept of things emerging through human action, who think, you know, I mean, the, the, if you are a Keynesian, then generally you think government is what decides what money is, and so- From that, you can see how they could have the conception that, well, you know, Bitcoin can't be money because it's not stable, there's no central bank, there's no government to stabilize its value. But Australians should know the prices on the market. And it's not going to be a simple process, it's going to be, a, a market process of dis-discovering what is going to be suitable as money. And that's, that, that's really, I think, a better way of thinking of it. I think it was Neil Woodfine, who's always got some very interesting takes on Twitter, where he said, \"You know, it's, it's a very popular thing for people to say money is a social construction, and it's just...\" typical of the kind of brain damage that is taught in universities today, which is, you know, nothing has a reason, everything is socially constructed. This is of course Marxist, Marxist garbage, economics that has been taught at universities for long Specifically in the case of money, this is very useful because it helps people-- it, it helps hoodwink people, it helps make people stupid enough that, you know, whatever, anything can be used as money. If we all agreed that, say, toilet paper is going to be the monetary system, then we would all be using toilet paper as money, and then that would be money. This is the kind of thing that Keynesians want to believe because this is the kind of- thing that you need to believe to believe in their idiotic monetary system, yeah, if, but they, they can't conceive of the notion that, no, not, it's not just about people deciding it. If everybody decided that toilet paper would be money, every- Like by that idiotic choice that they make, because, you know, actions have consequences. So it's not the process, it's not socially-- much better, as Neil Woodfin puts it, it's much better to understand it as being socially discovered. Yeah, that's right. So there are things that will make for good money and there are things that will make for bad money, and you're free to socially construct with your friends any kind of, monetary system you like. You know, you're free to decide that we're gonna use toilet paper as money, and other people will be free To decide to use other things as money. And a couple of hundred years later, you know, those who chose toilet paper and those who chose things that aren't very good will just end up, whereas those who chose things that work well as money will end up succeeding. So This is really what Bitcoin is, this is what Bitcoin is doing. It's, it's being monetized through people beginning to recognize more and more its value proposition, and I think, Austrians, should start, thinking of this more and more seriously. It's, it has market scalability, it's increasing by the day, its liquidity is increasing, its ability to be bought and sold by the day is increasing, its supply is just getting harder and harder And in the immortal words of Satoshi, I would tell them, \"You know, it might make sense to get, okay, it catches on. I think everybody needs to keep that in mind. If it does catch on, it's going to be a big problem," }, { "speaker": "stephan", "time": "01:11:53", "start": 4313.03, "text": "Well, for the, for the Chartalist and Keynesians, yeah, it'll be a big problem for them. Not so much for, those who, had the foresight and the prudence to acquire some early. Yeah," }, { "speaker": "saifedean_ammous", "time": "01:12:04", "start": 4324.33, "text": "and, and especially the people who had the foresight and the prudence not to fall for the idiotic, Government propaganda that gets taught at universities as, as economics. That's really the, that, that, that's the, key point." }, { "speaker": "stephan", "time": "01:12:21", "start": 4341.44, "text": "Yeah. So look, I mean, now that you've written, I mean, honestly, I think this Bitcoin Standard book is going to be, very, a lot of people are gonna look back on this and sort of see that, this book as one of the key things that helped convince a lot of people what, like, what Bitcoin was really about, like, what was sound money. I, I guess my question then is, what's, what's next for you? Do you have another book or another project in mind, Saifedean?" }, { "speaker": "saifedean_ammous", "time": "01:12:48", "start": 4368.08, "text": "Yeah, what's next is I wanna write an economics textbook. That's what I really wanna do. Okay, is it gonna be like a big" }, { "speaker": "stephan", "time": "01:12:53", "start": 4373.71, "text": "magnum opus type one or what?" }, { "speaker": "saifedean_ammous", "time": "01:12:57", "start": 4377.8, "text": "I think what I'd like to do is just, I mean, if, if, when people ask me for economics books after reading my book or after taking my classes It's hard to recommend a one go-to resource. The best thing that we have probably today is, Rothbard's Man, Economy, and State. But, pretty old and it's also huge. I mean, it's about a thousand pages, and then the second part of the book, which is Power and Markets, is about another five A thousand five hundred pages. And, you know, it's not written in today's language, it's a little bit outdated, people won't be-- many people, especially, you know, young people won't be able to really, Enjoy reading a thousand five hundred pages of, Prof. Bar's very systematic and very detailed treatment of the topic. And so I, I mean, I think, particularly for university students, I think there would be value in there being a, more updated and, brief" }, { "speaker": "saifedean_ammous", "time": "01:14:06", "start": 4446.36, "text": "they brief but they shorter, version that communicates the main ideas. I mean, obviously, you know, Lockboard is the math I think Wright as well as Rothbard, I, I'll never be able to communicate as well as he does, but the, the, you can get a lot of the, a lot, you can get the main ideas across without needing a thousand five hundred pages, I think, or I would hope, you know, haven't started yet, but, I, I'm hopeful that you might be able to. communicate the main concepts of, economics in less than that, and I'd like to write a book in three hundred, four hundred pages that could serve as a sort of, one go-to stop for somebody who wants to learn economics, on sound economics. And the idea would be Bitcoin Book touches on a lot of those ideas, but it doesn't, doesn't do it systematically. It doesn't do it like a textbook would. It doesn't do it, from the context of explaining Bitcoin, you know? So, when we're explaining Bitcoin, we need to explain business cycle, so we jump towards business cycle, we jump towards money, we jump towards this and that. But I'd like to just do this from scratch, from beginning with what is subjectivism and what is scarcity and what is marginal analysis, and then, you know, just the, the, the proper Austrian way of reasoning, fraxological reasoning and co-deducing implications of it and the building on it. I want to, I, I'd like to be able to write something like that, put it in three hundred, four hundred pages, and so that, you know, if university professors want to teach economics, they're able to use it. And, use it as a sort of Keynesian, garbage-free, one hundred percent free of all kind of Keynesian propaganda. It'll be free of the twentieth century basically." }, { "speaker": "stephan", "time": "01:15:59", "start": 4559.57, "text": "Yeah, yeah. And I think it'd be good to sort of dispel some of the, kind of commonly taught notions. You know, it might be good at having like a debunking or some, some of that, some, some sort of section like that as well." }, { "speaker": "saifedean_ammous", "time": "01:16:11", "start": 4571.56, "text": "Yeah, I think, I mean, I'd like to-- I, I don't want to turn it into a book that debunks things, because I am hopeful that, the-- First of all, you know, we've already had enough books debunking Keynesian economics. I think if you still need somebody to debunk And, you know, I, you're probably beyond," }, { "speaker": "saifedean_ammous", "time": "01:16:34", "start": 4594.68, "text": "my ability to help you. But, you know, the way that I see it is that these things the, I, I hope that the book will outlive Keynesian economics, so it would be, you, you, you'd be planning for obsolescence if you're, if you're writing a book to just debunk Keynesian economics. Hopefully in- In, in within a few years, you know, there won't be many people taking Keynesian economics seriously, I hope, and so the book wouldn't be very useful. I think I, I'd like to write it considering my view would be that I would love to write it without having it be Fixated on, if you, i-i-if you, if you let, if you frame the book as, \"Hey, here, this is debunking of Keynesian economics.\" Essentially allowed them to win, because you've essentially allowed them to frame the terms at which you're going to be approaching the topic. And for me, I'd like to just ignore Keynesian economics and present sound, proper economic, teaching. Yeah, no, that's a great idea actually. In its own right. Yeah, in its own right. And then, you know, once, once you've read it and understood it, you know, then the debunking of Keynesian economics is, it's, it, it just happens automatically in your mind. You know, you'll never be able to take Keynes seriously. I think that's, that's a better way of, approaching the book." }, { "speaker": "stephan", "time": "01:17:55", "start": 4675.09, "text": "Yeah, no, that's good, and I think it'll also have more of a timeless quality about it as well that way. So that's, that's another kind of angle that you can take it. anyway, look, we've gone a little over an hour now, I suppose I'll, we'll start wrapping up. So I suppose where can the listeners find you and find your work online? So I'm" }, { "speaker": "saifedean_ammous", "time": "01:18:15", "start": 4695.12, "text": "most active on Twitter, as you know, where all of our, cult of, Bitcoin is usually active. Saifedean is my handle, S A I F E D E A N. my book is The Bitcoin Standard, you can find it from, Amazon and many other online and offline booksellers. my website is Saifedean dot com and it has links to my latest papers and my blog posts and, all sorts of other online, goodies that I, that I have. yeah, that's about it." }, { "speaker": "stephan", "time": "01:18:55", "start": 4735.14, "text": "Okay, that's great. so, yeah, what I'll do is I'll, I'll put all the links, in a, in a show notes page for this episode, and you can find all, all of my work at stephanelivera dot com, and I'll put a show notes page there for this, and, likewise, you can find me on Twitter at stephanelivera. lastly, would appreciate if you, share and rate and review the podcast as well, as I'm" } ] }