{ "episodeId": "SLP306", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "guy_swann": { "name": "Guy Swann", "role": "guest", "tag": "GUY" } }, "segments": [ { "speaker": "stephan", "time": "00:08", "start": 8.13, "text": "Hi and welcome to Stephan Livera podcast, a show about Bitcoin. Today for episode three hundred and six, my guest is Guy Swann of the Bitcoin Audible podcast, and we're talking about what makes Bitcoin a breakthrough. This is a great episode for newbies and people who are into crypto. So if you are a regular listener, make sure you pass this episode on to your new coiner friends, because we're gonna be talking about a lot of A lot of the common questions that people have when they are new to crypto and they think that shitcoins will pump harder than Bitcoin, as well as comparison of Bitcoin and shitcoins, we ch- we chat about various concepts around the problems with utility tokens, decentralization, the shitcoin waterfall, and various other ideas. I'm sure you will enjoy this show. Now, this show is brought to you by Swann Bitcoin, and I am now working at Swann Bitcoin also, so make sure you send your friends and family to swannbitcoin.com so they can accumulate Bitcoin with auto- Recurring buys and instant buys. If you are a high net worth individual or a corporate entity looking to stack larger amounts of Bitcoin, check out swanprivate dot com. With swanprivate dot com, you get a dedicated Bitcoin account expert who is available for one-on-one calls. You'll get a little bit more handholding and guided assistance alongside that swan flair and educational and community focus, and also there's a special monthly report called Swan Private Insight. So go to swanprivate dot com and sign up there. Lend at HodlHodl is a peer-to-peer Bitcoin-backed lending platform where you can borrow or lend out stablecoins globally and anonymously using Bitcoin as collateral. So with Lend at HodlHodl, you no longer need to sell your Bitcoin to get some short-term liquidity. Just borrow stablecoins against your Bitcoin and control your collateral in escrow throughout the whole deal, while stablecoin owners can earn some extra interest by lending their stablecoins out and defining the terms and the APR for their deals. HodlHodl's lending platform is currently going through a major upgrade with many improvements to be By the end of the month, sign up to lend dot hodl hodl dot com with a promo code September to get a fifty percent discount on the platform's origination fee once the lending functionality is available again. Are you interested in Bitcoin mining? Compass mining dot io are making it easy for everyone to mine Bitcoin, and Compass have now launched a whole new product line, it's home mining. You can now order miners to your home in the US, and they've even launched a Compass at home mining guide, which you can find over on the website at compass mining dot io. So with Compass, you can your mining hardware, and if you don't want to mine at home, well, you can have that mined at a facility that has been vetted by the Compass Mining team, and so you can set it up at that facility and also select your mining pool, and then from that point, you're just paying the hosting fees and you are receiving Sats. So this is a great opportunity for people to get involved if they don't have access to industrial power rates or potentially to the mining hardware units. So go to compassmining.io and sign up. On to the show with Guy. Guy, it's a pleasure to finally get you on the show." }, { "speaker": "guy_swann", "time": "03:03", "start": 183.19, "text": "Yeah, man. Yeah, man. Absolutely. It's great to be here. It's been, it's been a while since we've had our, our long Austrian debate at the bar. What was that like, two years ago, three years ago?" }, { "speaker": "stephan", "time": "03:18", "start": 198.39, "text": "Yeah, and for listeners, Guy and I, we were hanging out as well at, kind of in and around the events of Bitblock Boom as well, so that was awesome, great chance to meet some Bitcoiners in person and, you know, get a chance to hang out. I mean, the last time we were, we caught up in person, it would have been around Bitcoin twenty nineteen, right? so, yeah. Look, I was, I was keen to get you on. Yeah, it's been a while. Yeah, and I, I was keen to get you on and chat about, 'cause I'm getting these beginner level questions a lot, and I think it's time to do, you know, an episode on those. So we're getting all these questions around new coiners who are coming in, and they either have a question or they, or they might have an argument where they're like, \"Hey, man, what do you think about Shikoin this or this other coin?\" And I think" }, { "speaker": "stephan", "time": "04:03", "start": 242.72, "text": "we And maybe just to outline some of the difference in the thinking, of the typical hardcore Bitcoiner, as opposed to the person who's more of a, let's say, more of a crypto person. So I don't know, maybe if there's any high-level thoughts that you have, how would you sort of, if, if somebody, like the typical question that you might get, right? It might be like, \"Oh, hey, Guy, what do you think about, you know, ETH or ADA or Solana or something?\" Right? That might be a typical question" }, { "speaker": "guy_swann", "time": "04:33", "start": 273.31, "text": "So basically my, my introduction to those ideas is just, I try to hit like kind of a high level analogy. I, I would basically say, is that when communication protocols, like, like the idea of a communication medium necessitates convergence. That's the only reason it can be used as a communication medium is if you're using the same one to communicate. And a lot of people mistake that into saying, \"Oh, we need a monopoly.\" A monopoly isn't everyone converging. Which is on the same thing, a monopoly is everyone has no choice but to use the same thing because of some artificial mechanism. Like street lights and stop signs don't have a monopoly on intersections. It's just the-- it's the common communication medium we need to make sure that we don't slam into the sides of each other crossing an intersection at eighty miles an hour. And so because of that, all communication mediums tend toward one. And we're talk-- when you're talking about a communication of value, the, the pressures, the economic and incentive- Pressures to converge are crazy, crazy strong. They're way stronger than something like a language or a social network, because even though those are strong, I mean, look at, look at the social networks. You got like two, three, you know, major ones that really matter. Search engines, you got basically two. Languages, you know, you have one or two major dom-- like dominant languages, but they work because you're on the same one. You know, you're on Twitter because all the bi-- Bitcoin and crypto people are on Twitter. But the convergence around money Money is even stronger because, because you can't hold value in two things at the same time. Like that, that one unit of value is explicitly a choice to hold A or B, because value is necessarily scarce. You can talk, you can speak two languages, you can be on all the social media platforms, you can go on Hootsuite and you can post all of them at once. Like, there's no ex-exclusivity factor of a normal communication mechanism, but there explicitly must be in something of value. So- So as something becomes the dominant means of communicating and holding value, the trade-off of holding anything less than the dominant gets greater and greater and greater over time. And money in itself is just a mechanism to create that convergence, to make that communication. The val- what's the point of having a whole bunch of monies? What's the point of bartering tokens when the whole point of having the token in the first place was to get around barter? You know, like you, you've unsolved your problem by having multiple monies, the very problem that money solves. So when you look at this on the long term, and it will take a long term for this to play out, money is a huge trend in society. You know, this isn't something that unravels in six months like we're trying to pick which app to use. Money is a massive shift in how we communicate, how we store, and how we think of risk and reward and trust in an economy. It's incredibly foundational. These are fifty-year, hundred-year trends. So look at the long game, play out all those incentives, play out all those, the economic- It's essentially necessity to converge. And at the end of the day, I think what we're asking is, are we going to live in a world where we wanna pick one of our five favorite internets to log into, or is there going to be the internet? Yeah. And I think where we are today is a perfect example of, like, we don't pick which internet we wanna use. We-- it, TCP/IP is the foundation of global, communication, essentially without borders. We now have that for money. Are we gonna have a whole bunch of 'em? I really don't think so." }, { "speaker": "stephan", "time": "08:04", "start": 484.03, "text": "Yeah, of course. Yeah, and to add to what you were saying, I totally agree with what you're saying there, Guy, and to add to what you're saying, I believe Mises, and I think it was in Theory of Money and Credit, there's a spec-- there's a specific saying, you can search it as well, it's something like there would be a tendency for people to go towards the most saleable. and I think the way he, he explains it there is that, you know, things would be one by one Point of view. Now, I guess the part where people who are new to this world might get confused, or maybe, and maybe some of this is just legitimate difference of opinion, there might be people who are like, \"Okay, fine, I get this whole idea of Bitcoin as money, but all these other, some of these other coins or whatever, they're not trying to be money.\" And so, how would you rejoin to there? Do you have a counterargument, or do you just sort of say it like, \"Well, you know, that's just...\" Not trying to be money, it's just a different thing." }, { "speaker": "guy_swann", "time": "08:59", "start": 539.01, "text": "So typically those other things, not trying to be money, are falling into a trap of having to be money to, to actually maintain the security and the consensus of their protocol, but then pretend that that's not what they are when basically marketing, I guess, or in having to bootstrap that value another way, like some sort of like a yield or, you know, just speculative value in general. So I, I think you kinda- We have to go back to what is the innovation of Bitcoin? What makes Bitcoin an absolute breakthrough? Bitcoin is a revolutionary technology because of the proof-of-work digital consensus system. Like because of a-- we created, Satoshi created a way to use proof-of-work as a mechanism to create an economic incentive structure so that there are no masters in a network of money, but the security and incentives of that system Rely on the value of the money, and the value of the money reinforces the security and incentive of the system. If it isn't money, it necessitate that the security must come from without, from outside of the network, and that the incentive must be able to be proven and issued within the network, which means it must be money. It's the only value that it can have is a monetary value, because that's the money, I mean, that's the value that a thing has that isn't specifically some sort of physical utility. It's like when gold goes up, you know, when gold is a seven trillion dollar, eight trillion dollar market, it's not because you can use it in jewelry and electronics. Ninety-five percent of that value is because it's got a monetary premium and it's got the monetary properties to actually hold that premium so that people don't just produce a crap ton more of it until the premium goes away, which would happen with cotton, with, you know, salt, with houses, with whatever it is. All the other goods don't manage to survive a monetary premium. The ones that are Good money do, and so Bitcoin is exclusively, one hundred percent, digital, pure monetary premium. It doesn't do shit else, and that's expressly a beautiful and amazing thing, and that is exactly what keeps that game theory alive, what keeps the incentive structure working and makes it secure. So what, like a bunch of these DeFi and like crypto tokens are doing, is they're actually trying to fake the monetary assurances by giving a- Reason. If it's a utility token, why is there any reason to hold it outside of the specific utility you want to use it? So, Alan Farrington's most recent piece actually, which is in the, in the, in the works right now, on the recording desk, if you will, he's a great analogy is that it's like casino chips. Is that you're trying to create a really popular casino and you're trying to create a huge flow of people running in and buying casino chips, but why would you hold those casino chips outside of when you want to use What has happened in the fallout from the ICO bubble and the, all the, you know, the new token hype and then the ICO hype and the every, every new hype cycle in the, in the crypto ecosystem, why we've moved to DeFi and, quote unquote, yield farming, because it's a way to make people hold those casino chips for as long as possible, essentially to get the new ICOs, which are now being paid out as interest rates and yield in their platforms, like it's just a- A slow ICO, essentially, or a really slow airdrop, it forces them to lock up the token, which pushes up its, artificially pushes up its value so that you can get the next token. It's like this huge circular token machine where you're locking up token A to get token B, which you can then collateralize for token C, which gives you stablecoin D, which you can then learn turn back around to lock up for token A so that you can start the whole circle all over again. It's rehypothecation and arbitrage, leverage. Excuse me, rehypothecation and leverage all, all the way around, and it only keeps working if there's another flow of a new crypto token and a new crypto lending, trading, borrowing platform with a, with a new thing to get yield, which is just printed out of nowhere. It's just, it, it only survives because there's this constant stream of new things keeping it alive. that's a really long answer to that question, but that's kind of what, that's kind of how I see so much of what's going on in that ecosystem right now." }, { "speaker": "stephan", "time": "13:26", "start": 806.23, "text": "Yeah, so maybe let me try to, obviously that, that was a long answer, but let me try to summarize a little bit. So firstly, we were talking about the economic and monetary arguments of convergence towards the most saleable aspect, right? But then it's not just the monetary and economic aspect, as you were rightly pointing out, it's also the security, and it's sort of like a meshing of these arguments that there's a monetary component to this, but then to also understand the breakthrough of Bitcoin is that, is to understand that people need a reason to hold the coin, and generally speaking Need a quote-unquote reason to hold money, right? As Austrians, we understand, and as Hopper would explain from, you know, the yield-- the, was it, the yield to hold money reconsidered, the demand for money is actually because we face uncertainty in this earth. And I don't know if I might break my arm tomorrow and I need to go to the hospital, and that's why I maintain a cash balance, and that cash balance helps me deal with the uncertainty of the world by being able to pay for hospital bills or whatever may come my way. And so that is why and Answers this question of why would you hold it? Well, because you don't need a reason to hold money. But in the case of these DeFi random coins, they're-- it's artificial. They're trying to create a reason to hold them, but they're not money. They're not trying-- and, you, it depends. If they're try-- if they're, if they're making the argument of, \"Oh, okay, fine, we're not, we're not trying to be money,\" well, now you're in the utility token trap Basically, and a utility token simply will not sustain value for the long term, and I think that's probably the argument there, right, around utility tokens. So how would you explain that around utility tokens?" }, { "speaker": "guy_swann", "time": "14:58", "start": 897.87, "text": "Well, actually, I wanted to add to, what you were just saying, 'cause, 'cause I think you brought up a really good point, is just on the nature of money. Like money is essentially defined, what eventually becomes money is the most saleable good in the market, like that's how it emerges, which kind of from the, the basis of the idea, so Suggest there's going to be one, because the thing that is money is the most saleable. But the yield, you, you brought up the yield, from money held or, or whatever it was, reconsidered, who was that by again? I already forgot." }, { "speaker": "stephan", "time": "15:29", "start": 928.59, "text": "So it was actually by, I think it was a speech by Hopper, but it was actually considering, I believe this guy named Hut, I can't remember exactly, he was essentially explaining, but there's an article, and I, I can put that in the show notes for listeners" }, { "speaker": "guy_swann", "time": "15:45", "start": 944.9, "text": "out there Yeah, I'll add a link to that also. Yeah," }, { "speaker": "stephan", "time": "15:49", "start": 948.79, "text": "yeah," }, { "speaker": "guy_swann", "time": "15:49", "start": 948.93, "text": "yeah. But, a great piece, great piece. I love that one. but it's on the idea that the reason the most salable good has utility is because it's a hedge against uncertainty. Like, like you said, is that the reason you hold money is because it's the one thing that you can get everything else for. So what we're doing essentially in Bitcoin is recognizing the monetary properties as being superior and the, the economic- Economic security, the, the lack of uncertainty in the Bitcoin system being profoundly less than all alternatives, and speculating on the fact that in the future this is going to be the most salable good, that this is going to be the money, and we are even using it as our money in a local com-mu-in a, a subset of the community today, you know, like one percent or two percent of the whole world is hedged or, touching Bitcoin in some way these days. And, so, so I think that's important to, to recognize just The, the concept that money is specifically a hedge against uncertainty. It is about security in and on its face, in, in your ability to store value, to keep value when other things may rot, when other things may-- maybe you don't own them in the future because of your jurisdiction, you don't know what the price is going to do to these things, you don't know whether cotton's gonna have a good season or a bad season, et cetera, et cetera. Money is the one thing that ha-- that holds the least uncertainty of all. Other places to keep value. So a utility token, a, a bunch of just crypto things that are, that are gonna be hyped on the next token coming into the, into the platform or into the ecosystem. If the only reason you're holding it is to get yield from the next token, you're-- it's the opposite of uncertainty. In fact, I, I think that's why, that's why a lot of people are in this space, is because of all the volatilities, because of all the, the lack of liquidity, because of the huge price surges, it's a, Is that we're betting that the next new token is going to have the same run up that the last hundred tokens have, and so I'm going to stake my previous token to get the yield on the new token while it's being issued, because that's how, that's how all these like lending platforms and things, they bootstrap liquidity, is that they offer a new token, they just print token, and so that's what everybody rushes in to get the reward, it bootstraps a whole bunch of liquidity, and now they're using it as a platform to stake token A, get stoke-token B, For its token, and I mean, it just, it's such a huge circular mess, and it's all chasing the utility of arbitrage, like, like you could argue that arbitrage is a real utility, right? Like if I wanted to steal, man, okay, crypto is actually just arbitraging between all of these different things, and it's producing yield, quote-unquote, is producing interest, but there's no productive asset here. There's no business that's actually built, like making, like yield, yield from a security or a financial instrument or whatever, is because somebody produced You know, it's somebody spent a hundred dollars to produce a piece of electronic software, like piece of software or hardware or something like that, and then sold it for a hundred fifty. Your yield is your profit, it's fifty dollars. So you're sharing that as part owner in this productive enterprise. They're turning a hundred dollars of value into a hundred and fifty. That's not happening in any of these platforms. What they're doing is, it's just, quote unquote, speculative yield. But what are they speculating on? Various yields. There, it's a yield that is arbitraging And, and as soon as you-- is, all you have to do is chase it back to the next token, to the next token, to the next yield, and what you get is token printing, just printing tokens for the next new platform or, or the next thing, and like, it's like ninety-nine percent of the whole thing is leveraged circular yield arbitrage. it's just, it's crazy. I mean, there's tons of gambling money to be made. Like, don't get me wrong, I, I guess, arguably in some sense, that's, that's a And casino, yeah." }, { "speaker": "stephan", "time": "19:48", "start": 1187.77, "text": "Or they go to the casino, to the real casino and gamble, right? but I mean, I think also while we're, while we're on this point, I think it's also an important point just for people, if you are new, it's important that you understand there is an industry of people who are here to try to fleece you. And now, in the past, people like Meltem Demiriz have coined the term the shitcoin waterfall, and the shitcoin waterfall is like this, essentially this process where insiders kind of create a token, pump it up Dump on retail, and they sort of give this perception that there's like a real market here, that crypto is a real thing, and I guess how would you explain this shitcoin waterfall dynamic for somebody who is new to this world, so that they don't get scammed?" }, { "speaker": "guy_swann", "time": "20:32", "start": 1231.65, "text": "Yeah, that's the, this is the most nefarious part of all of it. So I guess probably, what we've explained up to this point is, you could argue as maybe like a good faith attempt at trying to find something that a token would be valuable for, right? Is that we're trying to build these systems, we're trying to build financial instruments and what, but I think the overwhelming majority of it is trying to figure out a new way to issue your own money to- To print a token out of thin air that you can sell to someone. I mean, this is where all of this started from. You know, Bitcoin is open source code, and when everybody comes in deeply ignorant of what the real innovation of Bitcoin is, which is a form of decentralized secure consensus, which necessitates, when you think about using that as a totem for value, consensus makes only makes sense if you're on the same consensus. You know, like so, again, that- Deep convergence toward one. But if nobody really gets that, and this is gonna take a very, very long time to play out, I can copy and paste Bitcoin. I can copy and paste it, I can change one tiny little, I, I can make the block size half as long, I mean, a block time half as long, and call it Litecoin and sell it. And now, now I'm the only one, I can premine it. I can premine hundreds of thousands of tokens on my computer. I mean, imagine in- Imagine the-- even if you're trying to be honest, even if you're trying to be-- you're legitimately trying to find a use for this technology, imagine the overwhelming pull to be able to bring up a Google spreadsheet, punch in a hundred thousand units, and then be able to go to an exchange and sell those units for a dollar apiece. Or A sad, a piece. What would be the pull of being able to do that? That is what the vast majority of crypto is. I can, there was a website, there was a literal website, it probably is still out there, I don't even know, I'd have to dig into my Bitcoin links, but literally was just, it, it was a token generator, like you could just, it had a whole set of, I did it once, I had a," }, { "speaker": "stephan", "time": "22:49", "start": 1368.81, "text": "it was" }, { "speaker": "guy_swann", "time": "22:51", "start": 1371.35, "text": "like a full coin generator or something like that, I can't remember what it's called. Yeah Different parameters of what your block size is, what your block time is, what proof of work thingy you wanna use, and like all this stuff, and then you just print out at the end, and it just gives you a client that you can run, and now you've got your own unique token. Now imagine I can just go to Fiverr and pay two hundred dollars for a really clean, fancy-looking website with all the blockchain graphics and all this stuff, and then brag about how it's got- 5x the, the transaction capacity. it's more secure because it's got two different proof of work algorithms instead of just the one. I mean, imagine how simple the marketing hype would be, and how would you know that I just got it from the website? And what does that two hundred dollar, three hundred dollar investment get me? Might be a hundred million dollars, literally in some cases, things that were straight up essentially copies and tweaks in that, that could have completely existed on the- That website made hundreds of millions of dollars. How hard would you work to try to get some marketing hype or something that you could just say was just enough different or had this fancy utility? And I hired real blockchain devs and I did something really cool in this smart contract so that you could get the incredible amount of tokens that you got for free that you can now sell to everybody who's all excited about you? Your new platform and your new blockchain and all that crap. There is so much-" }, { "speaker": "stephan", "time": "24:30", "start": 1470.34, "text": "Of course, yeah. And then to add to that, there's this whole ecosystem around perpetuating that kind-- these kinds of scams. And so there would be these kind of, at the top, the elite shitcoiners or the insider shitcoiners who make the coin, and then they might go out and get people to promote that coin. And so there's this whole industry of YouTube, and they all say, \"Oh, do your own research.\" And like really, they're like, it's like a paid interview, and basically they're just like shilling some random coin and pretending to help guide people into crypto, right? And there's like, there's like some fund managers who are involved, and they're getting inside on the friends and family level deal where they get some coins and, you know, and in the twenty seventeen run, it was kind of you're getting in on the ICOs at a cheaper price, to then dump on retail at later, at a later date, and then to some extent, that kind of thing happens even" }, { "speaker": "stephan", "time": "25:25", "start": 1525.49, "text": "Industry around it, and so I think a lot of people have created in their mind this idea that, \"Oh, see, you just gotta like review the white paper, and you gotta, you know, this is what it means to be a crypto person or whatever.\" There's this weird perception of that, right? Because these aren't people who've gone and read, economics and thought, \"Oh, okay, what, what makes a good money? Why is Bitcoin gonna be the best money?\" and things like that. So there's this whole industry and mindset that I think is very opaque to someone They're just seeing it like, \"Oh, I'm just buying some random cryptos on YouTube 'cause I saw the guy on YouTube tell me, and I did my research, right, guy?\"" }, { "speaker": "guy_swann", "time": "26:03", "start": 1563.14, "text": "Yeah. Yeah, and, and one of the big things is people don't realize just how Staggering the amount of money being pushed around to, to promote these sorts of things. I, I mean, if you talk to people who have been in crypto, like the Shitcoin Insider, my co-host on, Shitcoin Insider, has been working in the crypto and DeFi for a long time, and he even says even some of the stuff that, like, like he's kind of embarrassed having done in the past, he talks about just the massive amounts of money, like the- To get paid for almost nothing just to market, just to go into a Telegram group and start shilling it, and just like, \"No, you guys, you don't, you don't even know. Have y'all not heard about Crapcoin thirteen? Like, oh, Crapcoin thirteen is the bee's knees. It's, it is absolutely revolutionary. And like, just whole like armies of these people going onto social media and Telegram and getting paid good monies to do this. And then you have all these ICO trackers and- Journalistic websites. There's a, there's a great piece I read on Bitcoin Audible actually that, what was it called? It's like I worked in crypto for two years and this is what I learned or something like that. it's by Matt, oh gosh, like Matt Vinali or something like that. I, I can't remember. I'll, I'll see if I can get you the link or whatever. but it's a really great piece and he just talks about basically the mess, like how he was kind of bought into it for a really long See how dirty all the tactics and all the, the marketing and everything was. But you'll get, like these crypto journalists or whatever, you'll regularly get these like, \"Oh, these are the top ten, top ten crypto to look at right now.\" And then you'll get all the big names, right? Ethereum, Solana, Cardano, whatever, whatever is the, the big thing happening right now on crypto Twitter. But somewhere right in the middle For no, for no reason whatsoever, like number seven, it'll be some dog shit token that nobody's ever heard about, like Zincoin, and it's like number five hundred and eighty-three on CoinMarketCap or something. That whole article is paid for by Zincoin. That's the, the whole reason that exists is because Zincoin just printed themselves a shit ton of tokens and they offered up a hundred thousand of 'em or they sold a hundred thousand of 'em on some garbage exchange for ETH, paid them thirty thousand dollars to put that article up, and everybody's gonna read that and it's like, \"Yeah, yeah, all these coins, I have all these ZENCOIN. What's ZENCOIN? Oh my god, I gotta get ZENCOIN. It's just above Solana, and, and, and this, this huge cycle. It, it's an absolute mess of conflict of interest and just people paying, like, when, when you can turn three hundred dollars, fancy website and blockchain graphics, into millions and millions of dollars, how hard is it to split that ten Who's doing your, your journalists. like that's, that's how all of them survive. None of them, none of the big ones don't do that because that's the way they get big. They have to. Like, it's where all of the money is in quote-unquote crypto journalism is a mess." }, { "speaker": "stephan", "time": "29:24", "start": 1764.39, "text": "Yeah, it's a shame, and it's like this whole industry of people kind of supporting each other in awkward or weird ways, right? Or, the rumors around exchange listing, that the idea of, you know, people might create a new coin, as you said, and then pay a bit of money to try to get listed on an exchange because they're hoping that brings in some liquidity, retail liquidity, meaning they wanna be able to dump on people, and then people don't understand that there's actually not as much liquidity as it seems. So then they think, You know, but the reality is the, the liquidity is simply not there at the time that you're trying to dump, like theoretically if you're gonna be this whole shitcoin gambler, right? And I think let's, let's bring it back to, I think what would a typical new person to this world be thinking? And they might be thinking, \"Oh, altcoins have better gains, right?\" They might be thinking, \"Okay, Bitcoin, it's already gone up so much, it just doesn't have that much upside. Let me gamble on some shitcoins, and then that will then" }, { "speaker": "stephan", "time": "30:24", "start": 1823.91, "text": "You and I, we have all heard this argument many, many times over the years, but how would you explain that for somebody who's new? Because in their mind, that might-- you know, if they're, if they're not as well-studied in this world, they could easily think that." }, { "speaker": "guy_swann", "time": "30:38", "start": 1838.04, "text": "Yeah, yeah. So the reason altcoins have better gains is in the short term, is because they're illiquid, is because nobody, nobody owns them, is because they're not used for anything. You know, if you've got a hundred- A hundred thousand dollars in volume for a day, and somebody invests ten thousand dollars, you make a massive move in the price. The market liquidity is eight billion dollars at eight, eight billion dollars a day, and you put in ten thousand dollars and don't move at all. You, you barely, you barely soak up a single market order. You know, maybe you move it a penny for a second, then it goes back down ten or whatever. Like, it just, you, you're inconsequential in the realm of the greater market. Of course, shitcoins are going to move faster. That's, that is the nature of liquidity. If there are a few market orders and you put X dollars in, it's going to eat up more market orders than one that has a lot of market orders." }, { "speaker": "stephan", "time": "31:37", "start": 1897.46, "text": "Right, and as you were saying Guy, the point about how shitcoins can pump harder than Bitcoin, but it's important to note a lot of them won't. And if you know a gambler or if you are a gambler out there, oftentimes if you speak to them, they'll always tell you about their big wins. They won't necessarily tell you about all those times they did it and kind of lost money or went break even on it. And so what happens in practice is that people might, quote unquote, diversify into a basket of shitcoins. And then think that just because one or two coins might have pumped well, that they're a genius trader now, and unless really, like you're saying with the shitcoin insider aspect, unless you're an elite tier shitcoin insider, you are mostly losing money. You are generally losing money on average, especially once you consider the tax impact of trading around, once you consider the liquidity aspect of trying to trade around, and I've written an article about this about why you shouldn't be playing shitcoin gambling games, but hypothetically, because what-- here's what people do, right? They think, \"Oh, what's the next Bitcoin? Or what's the next Doge? Or, you know, what is the next Soul or Ada, right? Because these coins have pumped a lot recently. But here's the other aspect to consider is what's your denominator, right? Because people like you and me and others, we are denominating in Sats. What is important to us is how many, at the end of the day, we're playing this game of musical chairs, and in ten years, fifteen years time, who knows, the music is gonna stop, and it'll despite our, our friend Pierre Richard, right? But, of course, the point being-- You're so mad at you right now. If you measure the--" }, { "speaker": "stephan", "time": "33:15", "start": 1994.61, "text": "Yeah. but the point being, we have to measure things in sat terms. And so as an example, Ethereum, the all-time high in sat terms back in twenty seventeen was around fifteen million sats. For one ETH. and back, a couple, couple of stats as an example, people might point to say, okay, as an example, Sol, right now it's around three hundred and thirty thousand sats, but that came up a lot off the start of the year when it was around seven thousand sats. And so people are looking at these and thinking, \"Oh, look, see, if I just manage to ride this one up, then maybe I can flip it to Bitcoin.\" But the reality is you're just cherry-picking the ones that did pump really hard and not understanding Back to the show in a moment. Get a coldcard over at coinkite.com. The coldcard is my favorite bitcoin hardware wallet and this is a great choice for you if you have left your coins on the exchange and you're now starting to learn about self-custody. The coldcard offers a range of features. My favorite is that it is airgapped. You can use a microsd card and you literally never have to touch your coldcard wallet to the computer. You actually use a microsd card to move that back and forward and use it with wallets like electrum or sparrow or spect desktop, for example, and the coldcard has a range of other features like PSBT support, as well as an address explorer so you can check your receive address. 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With unchained capital, you can create a multi-signature vault and do So there's this urgency, you don't wanna just leave your coins on an exchange, and even with single signature hardware wallets, you are still vulnerable to failure in that wallet. So with a multi-signature setup, you hold two keys and Unchain holds the third. They've also got a concierge package which helps people who have never even held their keys before get set up. You'll have two hardware wallets shipped to you and you'll get a call to teach you how to set up your Bitcoin vault. And so from then on, you can actually feel A lot more comfortable because you have your keys distributed into multiple locations. So go to unchain dot com and check out the details there. Use the code livera to get a discount on your concierge package. And now back to the show." }, { "speaker": "guy_swann", "time": "36:07", "start": 2166.94, "text": "The vast majority of them go down, and the longer, the longer the time span on any of them, they're increasingly just down in con- in the measured in Bitcoin. And you're also, you're also in a, in a situation where you're just chasing green candles. There's ten thousand of these things. So sure, Solana went up five thousand percent or some stupid shit, but guess when you're going to notice it? After it goes up five thousand percent, everybody else is too. Which means they're going to be running in, chasing those green candles, and that's exactly the liquidity of the guys who did the premine and the guys who've been orchestrating a Telegram pump and dump in their private groups and paying for the journalists to stick Solana in their top ten most interesting cryptos right now and, paying for social media bots to remind everybody it's like, \"Yeah, these are cool, I like this, but have you heard about Solana?\" Like, who've been laying the framework For six months, for this pump, you're the liquidity, you're their liquidity to get the hell out of it. They're, you're as soon as those green candles look good enough to make you go, \"I can't believe I missed this,\" is when they put in red candles. That is the reason they need you, is so they can exit. And, and this, you see this all the time, if it can go up in green candles a whole lot, very, very fast, it's gonna come down just as fast, and you are going to be absolutely miserable. You're gonna have your ass handed to you over and over and over again, I promise you. Every Bitcoiner who tells you this knows it personally. I know it personally. It is a nightmare. It isn't fun. It doesn't come with nothing but great gains. You will feel good when you get your big green dildo and you're like, \"Yes, yes, I finally did it! \" And you will tell everybody about it, but it will be after you already had five big red ones. And you're, you're too embarrassed. You're just finally feel like you're making some of it back. It's a job. It is a full time miserable, stressful job. There are nights where you can't go to sleep, where you wake up at three o'clock in the morning because you're like, \"Oh god, oh god, what is the price doing? \" You have a dream that it went down fifty percent in Zencoin Crap Token thirteen, and it's, it just, you don't want to be there. If, if you wanna do that, if you wanna day trade And stress day in and day out at a job that is a full time job where sometimes you make money, most of the time you lose money, go to town. But if Bitcoin's gains aren't good enough for you, I don't have to, I don't, all that stress is out of my life. I don't do any of that, and I still make what, hundred percent, two hundred percent a year? Bitcoin is nowhere near done, not even close. Bitcoin is just getting started. If two hundred percent a year gains aren't good enough for you, I, I, I don't I don't know what to do. I don't know what to do. You're okay. Good luck. Good luck. You wanna get two hundred percent in a week, lose it all next week? Okay. Some people, that's, that's it for some people. But I live stress-free. I get other shit done, you know? I record stuff, I make a podcast, I start a family. I ain't, I ain't staying up to three o'clock in the night worried about whether the price is going up or down the next hour. Nah, fuck that. That sounds awful." }, { "speaker": "stephan", "time": "39:35", "start": 2374.64, "text": "If you are trying to play that game, you are their liquidity, that you are the one they're dumping on. There's a good chance that you are in that position, and here's the other aspect as well, you have to consider longevity, right? Because it's easy, you know, it's-- well, not easy, but it's relatively easier for a coin to have a good performance in a, over a one-year time period or a two-year time period, but- Here's an example for, or even an exercise for the listeners out there. Look in, use the Wayback Machine or the Wayback Archive or one of those things, and look at the top five shitcoins of two thousand and sixteen, or the top ten from then, and compare what is the top ten now. How many are the same? And which coin stayed number one all of that time? Right? I think that's an important exercise for people out there, wouldn't you say, Guy?" }, { "speaker": "guy_swann", "time": "40:16", "start": 2416.18, "text": "One hundred percent. Because you get, what's it called? Survivor bias. Survivor bias is you, you look at what-- and it's kind of the same, it's similar bias to, you know, looking at ten thousand coins that are plummeting or doing nothing interesting at all and seeing the two that just shot up with green candles. You know, if you're just looking through, if you're just scrolling through CoinMarketCap looking for the one that's really freaking green while everything Like, guess what? You're gonna find one. You're always gonna find one. But if you look at anything that has any amount of longevity, where you can invest in it and go to sleep at night and be okay with, like, you know, actually get some restful sleep, that list is almost nonexistent. Like, like it's, it's basically Bitcoin. And if everything is traded against Bitcoin, if you're worried about how much Bitcoin you have, it's basically nothing. It's nothing, you're, you're gonna, it's just gonna be pain, in my opinion. And I think when you look at the long term and we talk about convergence and which one has the most profound security and settlement assurances, which is the value of this thing to begin with, the reason it is sound digital money is because you own it without anybody else's permission, because you can transfer it without anybody else's permission. There are no masters, there are no dev keys, and it provides An economic incentive, a game theory incentive structure, so that there just will not be masters. It's secure from having a master. When, when you look at the most secure and you put this on a long enough timeframe, I just don't, I just don't think these other things. And, and I fully admit, I fully accept that I might be wrong about this, you know? Like, like I'll, I'll let that go. You know, I'm, I'm not trying to be an ass, even though I'd probably sound pretty, direct about this. And in the You know, I, I know your mission, I know my mission is about freedom. This is about ending the state monopoly on money. so there are plenty of cases, I guess you could say, to be made for let's just make as many cryptos as possible. And if we accomplish that goal with ten thousand cryptos, and I'm totally wrong about the game theory and the incentives around convergence on a single money, and that maybe we are just gonna barter tokens endlessly and we're gonna yield farm and arbitrage between Yield farmings. Okay, I don't really care. Like, I, like, I'm not gonna be like butthurt and be like, \"Oh, you're-- I, I'm not gonna hate you for, for doing that.\" I don't care if we get rid of the state monopoly on money. Perfect, perfect. We do it with a bunch of crypto? Whatever, crypto is life. I don't give a shit. Like, that is the mission. But the reason I sing the tune that I do is because I think everybody else is gonna get clobbered and they are" }, { "speaker": "guy_swann", "time": "43:07", "start": 2587.44, "text": "Drug pool after the other to people who are making enormous amounts of money and exiting and just walking away. They have no longevity, they don't care about the system, they're here for fiat gains or Bitcoin gains, and they don't-- they, they will gladly walk away from it because it's not secure, it's highly centralized, like those lending platforms. They have, like I mentioned, dev keys. You know, if you're talking about security and decentralization, if somebody can go to the developers, if a police officer- Enforcer, an enforcement agency, the IRS, the SEC, can go to the developers and tell them that you're liable for everything that happens on this platform. You are going to be punished unless you shut this down. The question is, can they? Yes, yes, we've seen it over and over and over again. I don't know of a single one that doesn't have developer keys, which means they can just go in, they can just shut the whole thing off. That's not-- How is that meaningfully decentralized? What's the point of decentralization if it just costs more and you still AWS to shut the thing down. It's, it's a facade, it's theater, it's theater for the sake of making it look like there's something of value here that is external to the explicit group that holds the keys to the kingdom. And, you know, so maybe, maybe, I think there's a very small chance that I am wrong about this, and I fully admit that. And if I am, cool, I, I owe some, I have a all corner, shit corner friend who I said, if, you know, ten years from now, it still looks like this And, you know, it's become the dominant form of finance and, money. I said, \"We're gonna sit down. I'm gonna say, 'You absolutely told me so, and I owe you a beer.' Cool. Maybe that happens. I really don't think so, and I would never advise anybody to, to take that route because I think, I think this is just, you know, regurgitations of the 2017 like ICO bubble. It's just looking for the next hype to-- 'Cause there's always new blood, there's always fresh blood, and He has to go through the same painstaking mistakes and learning process, and that learning process is profoundly profitable to people who can take advantage of the information asymmetry. People come in deeply ignorant, everybody does, I don't mean that as an insult, everybody is deeply ignorant of money, of what these technologies are, what the value proposition of these things are. They are insanely different. They're just, they're, it's a very- Very novel technology. It looks nothing like, there's no easy thing to analogize to. Like the framework for understanding these things is essentially nonexistent. You have to build it from scratch. That information asymmetry is gold to the people who are here and know how to sell you bullshit. And there's mountains of it. There's absolute mountains of it. If you want to investigate, quote unquote, crypto, understand Bitcoin first. Get some Bitcoin, sit on it. Learn about it, figure out how Bitcoin works, why Bitcoin works, what made Bitcoin unique previous to the world where Bitcoin didn't exist, then look at crypto, then branch out and see what you learned. You'll probably reach the same conclusion I did, I feel like maybe not, who knows, but you'll at least protect yourself a little bit if you just start with Bitcoin and branch out from there. That's where it was all born, that's where it all started from, that's where you should start too." }, { "speaker": "stephan", "time": "46:37", "start": 2796.89, "text": "Yeah, yeah. And it's important to remember that a lot of the coins are lapping about decentralization. And so the reality is, somebody out there could stop that platform or try to roll it back, whereas in Bitcoin, that really, it just doesn't exist, right? And now, look, in fairness, we, we should say there are-- there's maybe one or two instances in Bitcoin's history. I think in twenty ten, there was, famously the buffer overflow incident, and so someone made, I think, like eighty-four billion bitcoins. Something like that. but I think it's also important to remember, Bitcoin was the first and it was different then, right? Back then, in twenty ten, before there was this whole cottage industry of shitcoin, people who were doing it to kind of make new money. Back then, it was, it was truly more like a project, right? It was just like, it, it, the price was far lower. It was just a different beast back then, and the world was a different world. It was" }, { "speaker": "guy_swann", "time": "47:29", "start": 2849.07, "text": "also deeply centralized because there's only like a hundred people. Y-you know Because everybody's running the Satoshi client, it's only decentralized as a maturity process, you know? so, sorry, sorry to interrupt, but, but yeah, necessarily, like everything else benefits from Bitcoin having had that bug before everything else even existed. It was, it was an experiment. It didn't even have any value. It was like, it was worth literally zero dollars. It was just people running shit on a computer and wondering, wondering if this thing was gonna actually survive. Can we keep running this system? So, yeah, sorry, you keep going." }, { "speaker": "stephan", "time": "48:07", "start": 2887.03, "text": "Yeah, yeah, no, absolutely. And I think it's, it's important to point out the distinguishing factors there. And it's also important to remember that there are hacks on shitcoin DeFi almost every week. We see some new hack. it sometimes in the hundreds of millions of dollars range. And then what happens is, because they might end up handing it back or something, because they thought, okay, well, there's no way I'm gonna be able to exit liquidity out on an exchange because it's all the KYC. So then it kind of points out to you, how decentralized are these ecosystems if they, if that's what, if that's how they feel about these things, right? How really decentralized are these things? And here's another aspect. With a lot of the shit coins, people just treat it like numbers on And I buy it. How many people are actually running a node for this shitcoin? How many people are using a wallet and self-custodying for that shitcoin? These are all questions that, as, you know, a new person to the space, we have to consider, don't we?" }, { "speaker": "guy_swann", "time": "49:02", "start": 2942.49, "text": "Yeah, yeah, one hundred percent. You know, like decentralization, like, like I just mentioned with Bitcoin, decentralization is something that you earn, like it's not copy-paste, you know? Like, it's a, it's a maturity process. So I, I use an analogy" }, { "speaker": "guy_swann", "time": "49:20", "start": 2960.34, "text": "Satoshi and Hal Finney were the only ones running it, was clearly highly, highly centralized. They could have hard forked in an hour, like, to, to change something, and, and, you know, Satoshi just hits Hal up and be like, \"Dude, update your client.\" He's like, \"Alright.\" You know, like, like, like it was, it was necessarily centralized. It's like an infant. The code, the protocol itself, is just the DNA. So when you copy paste it, you can say, \"Oh, our protocol is just like Bitcoin, Literally copied Bitcoin's code and then we changed parameter A, B, and C, but you didn't copy its decentralization. You didn't copy all of the nodes, the, the hundreds of thousands of nodes all around the world. You didn't copy the Lightning Network. You didn't copy the growth and the ecosystem and all of the exchanges and all the relevant interest and the social, the social defense mechanism that, and the precedents that had been set over Bitcoin's lifetime. You copied its genetic. So just It's like you could watch an infant grow into a young man and get strong and, you know, you know, maybe they, they've learned a lot of skills and they're able to survive out in the wild on their own, and then they grow up into a lumberjack, and your mission is to cut down trees. You're going to get the lumberjack. Somebody else can copy that genetic code and make a new infant in a womb, but that doesn't-- and they're going to say, \"Look, I've got a lumberjack,\" but they don't have a lumberjack. They don You have to wait for years and years to see that precedent. They still might die as an infant due to some disease or because they didn't pass some test or because some bug entered the system and they decided to fully centralize as opposed to actually take the hard route of undoing the bug, of reversing it to keep consensus. You know, that's the beauty of like Bitcoin's, quote unquote, rollbacks or whatever it was, is that they didn't break consensus. Almost all the other, like Ethereum or whatever, they specifically broke- Fork consensus to follow the most powerful, the, the leaders' interests of the platform. Bitcoin didn't do that. Bitcoin actually, specifically from the beginning, did everything they could to make sure that wasn't happen. What they did was saved consensus. They rolled back so that the fork didn't happen, and this is multiple times. Every bug that has happened in Bitcoin since has, gone about it the same way. The two thousand thirteen, rollback was the same, and in doing so It prevented a fork so that consensus was, remained secure, consensus remained trustless, and so that the people who were on the quote unquote outdated system weren't put at risk. They weren't forced to update to some client that they didn't trust. They could still main- they could still one hundred percent validate the Bitcoin system that they were part of, and their money was still valid. And what you see in these other, these alternative systems, in like Ethereum or whatever, is essentially the opposite. Being the trend, rather than toward more decentralization, more or less trust in, you know, some central party running things and the attempt to keep it as fully backwards compatible as possible and as broad as the ecosystem can manage, as you see this trend, whether slow or incredibly fast or just starts out centralized and never goes anywhere, towards centralization, towards more trust. I mean, Ethereum is a great example because now they're going- proof of stake, and proof of stake has never actually worked in practice for distributed consensus on any of these major, major things without checkpoints, without, without signed checkpoints, and they even admit, like there was like an episode with, oh god, what was the show? I don't, I don't remember the show, that sucks. I, I'll, I'll see if I can find it again, but, where they talked about, and I listened to it with one of the Ethereum developers, they even specifically said, it's like, \"Oh, well, we're, we Trade off for more centralization so that we can have all these great features. It's like these features are only features because they're decentralized. You, you know, like DeFi isn't a feature if it's just fi. You know, like if you build it on a centralized base, what's your arbitra- what's your regulatory, how are you getting around regulatory anything? How are you, if AWS, if Bezos can shut you down and make the whole ecosystem scramble to even keep the connect- Action alive. What, what's the value of paying fifty dollars fees on Ethereum to yield farm something that somebody can just cut off? Just use Google. Like, like just, just use a centralized service. Just build it centralized, for crying out loud. But, I kind of lost my train of thought there. but" }, { "speaker": "stephan", "time": "54:09", "start": 3249.09, "text": "yeah, yeah, no, actually one point I wanted to add to what you were just saying is, now let's contrast with Bitcoin. Bitcoin just recently went through a, an instance where one of the large states of the world, China miner went and said, \"No, no more Bitcoin mining,\" and there was a significant portion of the Bitcoin network that had to now come offline in terms of mining, that is, had to come offline, and those miners had to shift, and what you and I saw, and what we saw, is that the-- obviously there was an initial drop in the hash rate, obviously. As we would expect, but that hash rate rose back up very, very quickly. And so I think that's a genuine and objective example where we can point out here that actually Bitcoin is a lot more resilient as a system because it is more decentralized. These miners had an incentive to get their equipment out Or either sell it to somebody else who can run it, and it's, it's brutal, right? Mining is a brutally hyper-competitive environment, and the system remained robust to this kind of shutdown, and we couldn't say the same for altcoins." }, { "speaker": "guy_swann", "time": "55:11", "start": 3310.92, "text": "Yeah. It was actually- Like really, really amazing. It's, it's kind of incredible how robust the system has become over, like, like during this, during the last like five, six years or whatever, against so many different potential problems that had I not specifically been following it, had I just been using Bitcoin regularly, I never would have known. It was arguably like fifty to sixty percent of the fundamental security infrastructure of- The Bitcoin network. What other service or system or platform could possibly shut down fifty to sixty percent of the entire infrastructure, keeping it running and have zero interruption in service and no fundamental change in how it actually operated and migrated halfway around the world? Like, I mean, it literally, you're talking about massive amounts of hardware that just picked up shop, you know, unplugged and dispersed to like twenty other different countries and found a new spot? The plug back in and get back up and running, and there was zero network interruption." }, { "speaker": "stephan", "time": "56:18", "start": 3377.65, "text": "Exactly. And, and just for context, listeners, we're talking literally about hundreds of thousands of mining machines here. Right? It's no small feat to achieve that, that, and every person involved had the incentive to do it, right? Because if you're a miner or a mining pool, or, you know, you had this incentive to get out there and help make this happen, because there was so much money on the line for you to do this. And so I think that is also an important point, is that the incentives of Bitcoin are a bit more better aligned for the system to operate into the longer term. And I think that is an important point that people only understand, and they only come to understand this once All right, you've listened to Guy Swann, or you've listened to my podcast, you've done your reading, you've done your homework, you've been discussing, or maybe you go to the Bitcoin meetups and you talk with people and you learn, and that's really what is-- that's actually doing your own research, right, instead of the, Shitcoiner version, of that and so I think the other thing people might have as a concern, if they're new, they might be thinking, \"Oh, but Guy, isn't Bitcoin old technology? Right? This is like...\" Obviously, I'm, I'm just representing the concern, right? It's not, no, yeah, yeah, yeah, what would you say to that kind of concern?" }, { "speaker": "guy_swann", "time": "57:28", "start": 3447.79, "text": "Okay, so, So is TCP/IP. so are traffic lights. so is English. How, how often do we update English? it's a communication medium. It's a-- it is a protocol. TCP/IP really has kind of been unchanged since 1978. I guess, I guess probably like the formalized version for the last, like, really significant up-get-update was probably '83, '84, something like that. but it's like 40 years old. Isn't it the MySpace of the internet? You know, like, isn't it old technology? The whole point, the whole point of a cryptographic, specifically cryptographic, but the whole point of a communication medium, add to that a system of cryptography and a game theory and incentive structure to it, which is whole levels of extra complexity and risk involved in doing something wrong, is the fact that it has last for a long period of time and does One job profoundly well and reliably. You know, you don't just, you know, like, like side, like during the, the cipher, the days of the cipher punks leading up to Bitcoin is, there were tons of people who would quote-unquote, quote-unquote, roll their own crypto, and they were considered morons and cranks. They would go on like SciDotCrypt or whatever, and they'd be like, \"I've got a new cryptographic algorithm or whatever, and it's super unbreakable,\" and, Andrew Polstra in a treatise on altcoin As a great line, it's like anybody can create a cryptographic protocol that they can't break, but like, of course you can. If you've got even like a, any sort of game theory model, like, you, you, it's limited to your own ignorance. So if you make something that you can't break, it just means that you don't understand it well enough to break it. Like, that, that's the best thing that you can design. and they have an incredibly short lifespan. You, the number one rule in cryptography and cypherpunks is don't Use the one that is trusted, use the one that has survived for ten years, twelve years, because it has the Lindy effect. We know that it actually works, we know that it reliably does its job, and these things are completely based on that security. that's where their value is fundamentally comes from. TCP/IP does a single job, and it does it incredibly well. It does it better than anything, it does it more reliably than anything else does, and it is, it is that fundamental communication medium that everybody has adopted. Trying to change that, like quote-unquote hard fork TCP/IP, would be a freaking nightmare" }, { "speaker": "stephan", "time": "01:00:16", "start": 3616.35, "text": "That point is correct, like don't roll your own crypto, right? And so there are all these aspects that only become apparent once you've done further reading and research. And I think, look, I think the other big one that we get from newcoiners and people who are new to the quote-unquote crypto world is they say, \"Oh, but Guy, doesn't Bitcoin use too much energy? I heard there's these other more energy efficient coins. Why don't I use those?\"" }, { "speaker": "guy_swann", "time": "01:00:44", "start": 3644.57, "text": "this is This is a two hour long conversation. probably the, the easiest way to explain this is that the use of energy to secure the system is the innovation. It is exactly why Bitcoin is a breakthrough. Proof of work is what is fundamentally a breakthrough in a, in creating a system of trust, or a system that doesn't require trust, that you can verify its assurances. So it would be like, I, I, I, for, for just a simple analogy without really getting into the heart of mining, is the security of Bitcoin is the inability to edit it, is the assurance that you know just how much it costs anyone to- Try to reverse something that happened in Bitcoin's history. That cost is explicitly defined in the proof of work. That is how you know the thing is secure, that is how you define and measure its integrity. Without it, it has nothing. It's essentially like a force field. It is a, a pure energy force field around altering or editing the history of Bitcoin so that you know it only moves forward. To say I've got a system That doesn't use any of this energy is to say that I have a system that isn't secure, that has no force field around it, and it is vulnerable to massive, like just a huge, a huge subset of problems, or it's just highly centralized. And in the context of like proof of stake, so, an analogy I like to use is that if Bitcoin and proof of work is a force field around everything and everyone who has money and capital within that force field, and economic- activity within the Bitcoin ecosystem. Well, then proof of stake is having the, you know, five dudes who have the most money involved, tied, like, tied up in it, and giving them guns and having them stand around and believing that they're not going to turn the guns on everybody else's money because they can't. And this is explicitly why you see proof of stake almost universally has, as soon as it's big enough to be viable or, or to be economically important, they have developer checkpoints. Most of the time, they have Developer checkpoints from the beginning, which just means that you have a trusted third party deciding what the, what the truth is, which means that why are you decentralized? You're not, it, it doesn't matter if it's like, oh, it's a hundred blocks decentralized, and then there's checkpoints. It's like, why, why are you, what are you wasting all this time on a hundred blocks for? Why don't you just sign? Like, you're, do you still just have a centralized party telling you what the truth is? And, when you fundamentally the way to think about" }, { "speaker": "guy_swann", "time": "01:03:30", "start": 3810.54, "text": "Obscure and hide where the vulnerability is. Is that what you are doing in proof of stake? The reason proof of work works, the reason proof of work actually works, is because the energy cost and the security is provable outside of the network. What you're trying to do is define the truth of the system's history. So if you use its history to define the history, you're begging the question. Like in proof of stake, what you're doing is you're saying The person who owns the most stake is the one who decides how much stake other people own. Like they're, like you're, you're using its history to give proof of its history, and necessarily that means you're, you still have the question of, okay, well, what's the valid history to decide who's deciding what the history is? So what you end up doing is just this really convoluted, overly complex mechanism of punishment and separation and time delay and all this stuff that routes all the way back around to checkpoints by the developers. a-and almost universal, I, I think there's something fundamentally broken about the concept of proof of stake, that if, if you're using the history to define what is the valid history, the person who-- I mean, we can get into a hundred different ways that this could be attacked, but I think it's all just kind of, you know, details, it's un-unnecessary details, 'cause I think there's just fundamentally something wrong with doing that if there's- There's no proof. Like, if, if one person doesn't have to go through the force field because they are the ones who define what the force field is, there's no force field. There's, you know, there's no-- it's just, it's a lack of security" }, { "speaker": "stephan", "time": "01:05:12", "start": 3912.75, "text": "Yeah, that was a fantastic explanation because ultimately there are big marketing budgets being thrown to essentially- Create the fear, uncertainty, and doubt about Bitcoin. And in many cases, it is some of these shitcoin people who are putting money in to get a paid PR piece, written up as a news article about why, oh my god, Bitcoin uses too much energy and why we should use their chosen shitcoin, right? And so in the case of Ethereum, there is a recent episode as well for listeners, I'll just point out, with Alex B, where we talk about some of the centralizing factors around that and how- As, as like a, as like an intelligent critique of the system, it's not just kind of us, you know, saying, \"Yeah, it's a shitcoin,\" although it is, but it's more actually pointing out why is there a tendency towards that centralization. And so I think that's the other thing as well, because when somebody is new to, quote unquote, crypto, and they hear a Bitcoin, person telling them, \"Just stick to Bitcoin,\" oftentimes in their mind they're thinking, \"Oh, hang on, are you guys just, are you It, because in their mind, it's, although it's not, in their mind they're thinking, \"Oh, it's like a Ponzi scheme or a pyramid scheme or something,\" and this Bitcoin guy just wants me to buy his bags, but that's not what's gonna make me rich, right? And I'm, I'm- Assuming a little bit, but I think perhaps in the back of their mind, that's, that might be part of what's going on there." }, { "speaker": "guy_swann", "time": "01:06:39", "start": 3999.5, "text": "I think that's understandable. Y-you know, that's, that's a point that is, 'cause it's so easy when you just, you know, walk into this thing to say everybody's shilling their bags, and basically everybody is, right? so before you have any foundational understanding of any of this, that's what all of it's going to look like. And To some, then there's a, there's a grain of truth in all of that, you know? Like, I, I, I could, if I'm, if I'm holding Ethereum, I want you to hold Ethereum. If I'm holding Bitcoin, I want you-- I have, I have an incentive to have you hold Bitcoin. But at the end of the day, you know? You could also argue that me telling you to use TCP/IP and not buy this other shitty router for five hundred dollars from this random company that says they've got the next internet protocol, sure, okay, it benefits me if you get on TCP/IP because then we communicate, but you know, it's also a really bad idea to buy that other guy's, guy's crap, you know? Like, there's also very fundamental truths and principles that you can unravel about why these things converge and why Bitcoin is clearly the most saleable in the entire crypto space, and why we're very likely gonna end up with one of these things that is meaningfully used in, in, in any sense of the word, and, so sure. You know, that's a, that's at least a valid criticism from a very high level social discuss nothing else sort of perspective, and it makes perfect sense that that's the perspective when you step into this, you go through the door of Bitcoin and the crypto world, and that's what you see. Just dig deeper, just dig deeper, and you'll see there are very serious fundamental differences, there are incredibly thorough and well- Laid out critiques, in, in every possible, in every possible avenue, and that's not an arbitrary reason that we say that, you know, like, I, I could just as easily, like, there's, there's a lot of foundation for why the shortcut is the rest of the morall shit coins. You know, nope, I don't come-- at least me specifically, I don't come to that decision lightly. You know, I, I didn't-- it, I, I spent five years trying to figure out if there was something there. From Namecoin to the ICO bubble, I desperately wanted to see something else in crypto. And with that, with all the reading, ten thousand hours of reading about all of this stuff, I came to the conclusion that it's ninety-nine point nine percent a waste of time, and that it's gonna, something's gonna have to survive for ten years for me to stop and take a second look and make me wonder if maybe I'm wrong." }, { "speaker": "stephan", "time": "01:09:36", "start": 4176.6, "text": "Yeah, so look, I think that's probably a good spot to finish up, and listeners, I wanna encourage you, make sure you check out Guy Swann, follow him on Twitter, check out his podcast, he comes highly recommended if you are new to the space, Guy is a great resource, you can find a lot of excellent material, and his explanations, as you've heard, his articulation is excellent of the, you know, the raison d'être of Bitcoin, why are we here, why is it, why does it work the way we, you know, we explain it. So" }, { "speaker": "guy_swann", "time": "01:10:04", "start": 4204.8, "text": "Yeah, I, I mostly, the centralized center of my, little internet world is basically Twitter. I'm at the guy Swann on Twitter and, or at Bitcoin Audible. And, yeah, I do two podcasts, Bitcoin Audible and Shitcoin Insider. Shitcoin Insider is just kind of like my guilty pleasure. Like, I try to be, quote unquote, nice to crypto and diplomatic, but I do, I do have my moments where I just wanna go sit down for an hour and a half and rail about how- Stupid all that shit is. So forgive me if your crypto adjacent and shitcoin insider offends you, but I love the show and it's not going anywhere. It's, it's infrequent, but it's there. but, Bitcoin Audible, yeah, Bitcoin Audible main idea there if you, if you don't know about the show is I, I read, I mean, I do guys' takes and interviews, like, like this as well, every once in a while, but I just make all of this stuff All the stuff about Bitcoin, about this space, about the cryptography, about the history of it, about the cypherpunks, available in audio. Like, yeah, like just like I mentioned at the beginning of this, Alan Farrington's piece. Alan and Big Al have a new one called Only the Strong Survive. it's, it's absolutely gold. It is exactly on this topic. I even used a couple things from it because I've just, it's fresh in my mind. But, brilliant piece is gonna be an audio probably towards the end of this week, I might have to break it up, but it's, it's the audible of all the Bitcoin shit. So, if there's an idea that you wanna dig into or a concept that you want to explore, Bitcoinaudible dot com, type it in, I probably got a show on it." }, { "speaker": "stephan", "time": "01:11:45", "start": 4305.66, "text": "Excellent. Well, thanks to you, thank you so much, Guy. It's been a pleasure chatting with you. Yeah, dude. Always, man. Good chat, man. Get the show notes and the transcript at stephanilivera dot com slash three o six and make sure you share the show with your friends and family. Thanks for listening, and I'll see you in the Citadel." } ] }