{ "episodeId": "SLP377", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "jimmy_song": { "name": "Jimmy Song", "role": "guest", "tag": "JIMMY" } }, "segments": [ { "speaker": "stephan", "time": "00:08", "start": 8.47, "text": "Hi and welcome to Stephan Livera podcast, a show about Bitcoin and Austrian economics. Today my guest is Jimmy Song, who rejoins me on the show. We talk about this idea of frequent flyer miles as the original altcoins, and I think there are some really interesting parallels that you will enjoy, as well as some interesting reflections for us as Bitcoiners, and we also gain Get Jimmy Song's thoughts on CTV, check template, verify, as well as covenant. How developed is this idea? Is it ready for acceptance and inclusion into Bitcoin, or is there more research and discussion needed? This show is brought to you by Swan Bitcoin, the easy way to buy Bitcoin and also learn about Bitcoin. 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So with lend at Hoddle Hoddle, you're putting up some Bitcoin into an overcollateralized loan At the end, you're paying back that loan with interest, obviously, and then you're receiving your Bitcoin back. Don't forget, you're still holding one out of three keys, so you know there's no rehypothecation, and this is done by putting up offers or accepting offers on the website, so you can put up an offer or, or an accept an offer based on how long you want to borrow and the interest rate that you're looking to pay. So go and check it out, it's lend dot h o d l, h o d l dot com. And now onto the" }, { "speaker": "stephan", "time": "03:00", "start": 180.0, "text": "Thanks for having me, Stefan. It's, always a pleasure. So Jimmy, I see you've been, doing some work out there, writing some articles and doing some great work. I really wanted to chat about, I've got two points I really wanted to chat with you about. One, I thought was really fascinating is the comparison of frequent flyer miles or airline miles and altcoins, and maybe they are the original altcoins. So, what spurred you to go down this pathway? I, I think it's fascinating." }, { "speaker": "jimmy_song", "time": "03:29", "start": 209.12, "text": "Yeah, I, I- I mean, as you know, I've been, studying a lot of, Austrian economics and just figuring how, out how money works. The, the thing that sort of triggered that, I, I think, was my horrible experience trying to get to Miami, actually. and that, that was like three different, flights that I had to book, and two of 'em got just straight up canceled, not even delayed, they just canceled it. And I, I was reflecting on what, what the heck was going on? How, how can they possibly Afford to do this because rebooking all those people, refunding all those people, and I, I came up with several like conspiracy theories, like, okay, fuel prices are getting high enough, especially jet fuel, that it might actually be cheaper for them to not fly people and, and, you know, like, deal with all of the consequences or something like that. But, you know, I, I remembered seeing a video a while back about how the airline industry actually works and what we found out during the- Pandemic, and that spurred me to sort of make this analogy to altcoins, which, you know, obviously was, was a fun piece to write, sort of railing on airlines a little bit, but we, we've all known that they've been, they're, they're zombie companies, they've been bailed out many, many different times. I think the major airlines have all been bailed out in the last fifteen years, and, you know, they're much older companies, so they've been bailed out several times. So looking into" }, { "speaker": "jimmy_song", "time": "05:00", "start": 300.04, "text": "Actually work was a little bit of a shocker, but in a sense it, it all makes sense in retrospect, right? 'Cause it's, it's, you know, this is why they're so inefficient and there hasn't been any innovation" }, { "speaker": "stephan", "time": "05:12", "start": 312.15, "text": "and so on. Absolutely, and I think this is a point that many Austrian economists have been making as well, is that generally in these fiat systems, you wanna be moving closer to the money printer, right? The Cantillionaires. And, I think Safedean has written about this and spoken about this, and others like Raheem And take it to the deck end as well. And it's just fascinating because what we're seeing is these airlines, you know, the ones, particularly the ones with big frequent flyer programs, they're not even making that much money out of the flights, they're making money out of the frequent flyer program. And it's funny because to that point of going close to the money printer, they partner with the credit card companies and with the banks and say, \"Oh, I'll have this credit card where you can earn frequent flyer miles,\" and that becomes their business model, doesn't it?" }, { "speaker": "jimmy_song", "time": "05:57", "start": 356.96, "text": "Yeah, and, learning about it. There's a financialization or this, ability to print their own money that, ultimately keeps these airlines afloat. And, and you know, one of the things we found out during the pandemic was, you know, nobody actually wanted, to give out loans to these airlines based on their fleet, you know, hard assets like their planes. They actually wanted the frequent flyer programs 'cause they realized, like, that the frequent flyer programs are worth much more and that- The economics of it are just that the airlines can print whatever miles they want, and like you said, they partner up with these credit card companies that print the money from nothing. So for them, it's, it, you know, they're giving out, you know, they're, they're printing money from nothing, getting these airline miles, and having some, Other way of, en-enticing people to sign up for even more loans. So they're totally in bed with the fiat monetary system, and there, there's a close correlation between airline miles debasement and things like that." }, { "speaker": "stephan", "time": "07:04", "start": 424.29, "text": "Absolutely, that point about debasement is very true, because that's the other thing that frequent flyers will get up in arms about it when they see, what's called a frequent flyer points devaluation, right? Because part of the game here, right, if, if you're a, if you're a frequent flyer mile stacker You are trying to stack these freaking flyer miles and with the hope of redeeming for a flight, either economy or maybe even a business or a first class flight. But then what happens is if the airlines actually change the redemption tables, then you see the blog posts and the videos and, \"Oh, look, they're changing the redemption, they're making it harder and harder for us to actually get the reward.\"" }, { "speaker": "jimmy_song", "time": "07:40", "start": 459.75, "text": "Yeah, and that, that's the thing a lot of people, you know, get up in arms about. But what did you expect? They're a trusted third party, they have, And, and this is the point that really sort of like brings it home for me, is that, you know, the, the frequent flyer mile programs are worth more than the entire airlines themselves. It's kind of crazy. The, the valuation of like American is like, I, I don't know exactly what it is today, but it's, it say it's like fifteen billion, the frequent flyer program's like worth twenty. So that means that the rest of the airline, all of the labor contracts, the heavy equipment, like it's, it's negative. They're, they're losing money on Really, the way to think about these frequent flyer, these airlines is that they're, they're frequent flyer mile distributors, and they redeeming them through flights is how they dismissed their loans essentially. The, the, the frequent flyer miles that you earn, quote unquote, are really claims against the airline, and they, they can change that to whatever they want, and it, it's crazy because most people don't think of it that way. They think of airlines, they think of, oh, booking travel and going from place to place. place. When's the last time you had really good service on an airline? Probably not in a long time, and it's because these airlines have very little incentive to innovate. They're, they're money printers, and they, they're going to get, be able to sell lots of miles to these credit card companies and so on, so they don't have an incentive to make things better. It's kind of like your bank or the DMV or any other rent-seeking like, industry out there. They don't care about the customers. As much as they do, the people that actually pay them, which are, you know, essentially the money printer, the ultimate money printer in the Fed. Or in the case of airlines, it's, well, we can print miles whenever we want, and the government will bail us out if we, if we get in trouble anyway. So there we go." }, { "speaker": "stephan", "time": "09:36", "start": 575.53, "text": "Absolutely. And with the debt relationship, it becomes the new way that they are owned. And so really the regulations, and I mean, it's, it's not like totally came out of nowhere, right? Like there used to Of regulation and they've, they've become almost like an extended arm of control for the government, and even during this hysteria of the last two years, they were enforcing all kinds of hysteria regulations, things like mask rules on the flight and so on. And of course, because they are in debt to the government or they've taken bailout money from the government, which is in turn funded by the taxpayer, right? So it's not free, they then become the enforcement arm for government's hysteria, regulations and control. So it's kind of a really- Insidious relationship that I think a lot of people aren't really thinking deeply about that because they are just sort of looking at the, you know, at the airline and not understanding, oh, what is the root cause? Like, what's the actual business model here? What's, where are they actually being controlled? What's the actual vector for control here?" }, { "speaker": "jimmy_song", "time": "10:37", "start": 636.69, "text": "Yeah, and it goes way further back than twenty twenty. I mean, you remember post nine eleven, all of the TSA infrastructure that got put into airports and so on, and all the different regulations around like when you can take off and all, all, all, all the different things that the government's been able to enforce because they bailed them out so much already, and they, they become sort of like these enforcers of these things. And, and, you know, it's interesting 'cause like the more I studied it, the more I realized like every- Every country has sort of like a prestige airline, right? The, this is the sign that you are a prosperous Western modern country is by having an airline. So Korean Air, Japan Air, British Air, Air France, you know, all of these were actually airlines that were heavily subsidized by government. So from the beginning, and they get bailed out because it's seen as like a prestige thing. If you don't have an airline in your country or any planes flying into your country, oh, then you- You're not really, like a world power or something. So in particular, airlines have become this like very embedded thing with government and, you know, like they almost see it as like a blow to national pride when their airlines go down. The, the US is actually a little bit unique in that regard because there are three major airlines, you got Delta, United, and American, whereas most countries only really have one. It's, it's like Air France or Whatever. but the lack of innovation there is, is very telling because, you know, you, you look at, flight times from the '70s, and it was actually shorter to go across the Atlantic in the '70s than now. I mean, what does that tell you? Fifty years, they haven't figured out any way to make it faster or more convenient for travelers, because that's who should be the customer, but in fact, that hasn't happened. It's, it, it's really governments that are the customers, and they don't care how- How long you spend on a transatlantic flight or how much of an inconvenience TSA is or anything like that. Instead, they just, they want the prestige of having an airline without any of the convenience for the customers." }, { "speaker": "stephan", "time": "12:49", "start": 768.8, "text": "Yeah, that's really a good point. And so it, it also reminds me, and to your point as well, I think some countries almost treat it almost like a loss leader, right? So as an example, Qatar Airways is probably, I mean, it probably, if you look on the airline charts, it's one of the top rated airlines on earth, and You could sort of explain maybe part of that is because the government is trying to drive tourism, right? Because if it weren't for Qatar Airways being one of the top airlines, then would we even know where Qatar is on the map? Would we even know-- Would that many people even go to Doha for flying through for things? I mean, just as an example, right? And so, yeah, and I think the other point that probably to bring the parallel, of course, is to altcoins, because there's like this kind of chasing, right? Because people are chasing, right? And so I Chasing for frequent flyer miles without realizing the cost that they are actually paying to do all this frequent flyer mile chasing or called travel hacking, right? So you see a lot of YouTube videos about, \"Oh, look, look how I traveled for free on business class or first class, and look, see, I just signed up for all these credit cards.\" And yet people don't think about how much time they spend researching to go on these credit cards, how much effort it took to get those credit cards, and, and the constant sort of churning as well of like shutting down this card, getting the next" }, { "speaker": "jimmy_song", "time": "14:07", "start": 846.75, "text": "Yeah, and it, it's this very rent-seeking mentality that fiat money has sort of accustomed us to. We, we'll work really, really hard to get something for free, when really, like, you've just bought yourself a job, right? Like you have to go and research all this stuff. you know, I, I think one of the more popular travel blogs is The Point Guy and Points Guy, and he, he tells you all the travel hacks that you can do. How much time do you think he spends on all that stuff? It's a full-time job and more It's not like he's adding anything to anybody. Everybody that uses his travel hacks aren't-- they're, they're not providing a good or service to anybody. They're really just sort of figuring out how to get to the top of this weird status game within airlines of, you know, becoming, I guess, a gold medallion or diamond status or wha-whatever the hell, e-each airline has. And you, you wanna get to the top of that status hierarchy so you get all the, you know, perks or whatnot. Whatever. But really, it's a job, and if you're gonna do a job, you might as well do something that's actually beneficial to society. But what fiat money, what altcoins, what, what, what all of these rent-seeking, sort of opportunities do is they blur the line between those things. What's actually productive, what creates value versus what's rent-seeking and really extracting resources through the cantillon effect. And that's really what this whole thing is, and it's unconscionable Well, the amount of effort and time and creativity and like skills go into doing this stuff, which is ultimately really stealing from the people that own the airline miles or the dollar or whatever it is. It, like, the, the people that ultimately pay for it are, are the plebs, the schlubs, right? The, the people at the bottom, and nobody really calculates that in their head, and I think if we, if they really thought through it, they would be like, \"Hmm, maybe this isn't the right thing to do.\" but it- In a, in a very real sense, you are sort of like taking from the poor and giving it to yourself through this weird system of indirection and secondary effects that really hurt those people, but you don't feel it directly, so you think, \"Oh, yeah, I'm, I'm a, you know, I'm, I'm a diamond status member on, on this airline, and, you know, I get first class flights or I get upgraded all the time. It's awesome.\" Well, like, what value did you contribute to deserve that? there, there's no real opposite side of the coin where you, where you actually like did something useful, and that, that I think is at the heart of this whole thing about altcoins too, right? Like because a lot of people t-think, okay, well, I made money on this altcoin, therefore everything is good. No, everything isn't good. What you've done is essentially stolen from a lot of other suckers that got in later, and, you know, you're proud of that, I guess, but really, have you contributed anything of value to anyone in the- The world. And then why, why the hell are you proud of it? it, it, it's sort of mind-boggling to me that there, so few people seem to make that distinction." }, { "speaker": "stephan", "time": "17:17", "start": 1037.11, "text": "Absolutely, and the parallel with altcoins, we can even look at some of what's going on in so-called DeFi, and you-- we have this airdrops phenomenon and staking, right? And so this is almost-- this is the parallel, right? This is the analog, right? The freaking flyer miles chasers are like these sort of altcoin dummies, and some-- in some cases they're the victim, right? Because they're spending all this time looking for, \"Oh, look, oh, this one's got an airdrop, let me hold this coin.\" You have to hodl their shitcoin in order to get this interest rate or whatever. And so, you know, it just con-- it kinda contributes to this whole ecosystem of premine the tokens for yourself and your friend, your insider friends, you know, you trade some premines to pump the price, bait the retail with the giveaway, and then retail evangelizes the token, and at that point, that's your moment to now dump into the pump, right?" }, { "speaker": "jimmy_song", "time": "18:08", "start": 1088.46, "text": "Yeah, and it's, it's really the desire of many people in altcoin land to get something for nothing. And to be fair More people in Bitcoin land that are that way too. But really what, what a lot of people want is this ability to make a lot of money without doing very much work. Now it turns out that there actually is quite a lot of work in like pumping an altcoin and things like that. So once you get into an altcoin thinking that you're making money doing nothing, right? Like just holding the altcoin and wait, waiting for it to pump, actually you're doing quite a lot of work. You're telling all your friends and family about it, you're using your social networks, you And arguing with people that are saying that your coin is a shitcoin and like, you know, trying, trying to make it seem like it's actually a legitimate thing. You're doing all of the work for the shitcoin, you just don't recognize it as work because you think you're, quote unquote, getting it for free. And ultimately what you end up doing is you screw up, screw over all the people at the end of the cantillon effect, the people at the beginning, the people that are able to get in on the, premine or the presale or what, w-w- you know, the, the early people, they make out fine because, you know, they're at the top of a pyramid scheme, but the people down at the bottom, and these are often people in the most poor and vulnerable places in the world, right? Like, you know, I, I heard a story a while ago about how, you know, you, you go to somewhere like Ken- Kenya and tell somebody about Bitcoin and they'll be like, \"Oh, no, I, I don't do that anymore." }, { "speaker": "jimmy_song", "time": "19:46", "start": 1185.86, "text": "you know, I bought all these altcoins and they all went to zero, right? Like those are the people that ultimately get hurt. All of this pumping and dumping, those are the people that get screwed over at the end. It's, it's not necessarily your Silicon Valley crypto bro or your, you know, internet poker playing friend, like those people usually get in early. The people that really get hurt are the people in Africa or Iran or China or something like that. The, the, these are the people that hear it absolutely last, and it's, it's exactly like the Cantillon effect of fiat money. It's not, it's not the Wall Street banker that's like doing a hundred x leverage on an FX trade, that gets hurt. They, they, they do fine most of the time. The, the people that get hurt are the, you know, people in Zimbabwe and Venezuela and Turkey and North Korea, like the, the schlubs at the very edges, the people that are the most poor and... vulnerable, the people that really can't afford it, those are the people you're stealing from, and it's unconscionable to me that so many people think this is a legitimate way of living, that stealing from the poor and vulnerable is somehow noble." }, { "speaker": "stephan", "time": "21:01", "start": 1260.75, "text": "And the funny part, or the really, the really rich part, is how some crypto people will cloak themselves in the language of freedom, right? They're sort of saying, \"Look, we're all about freedom and decentralization,\" when it's almost like, like a big lie, right? Like it's almost like, You know, WWE and believing that they're really, like, that they're actually wrestling, when really they're kind of acting about it, and the crowd, the audience, is just thinking, they're cheering it on, thinking it's real, but it's actually decentralization theater in many cases." }, { "speaker": "jimmy_song", "time": "21:30", "start": 1289.89, "text": "Yeah, it's, it's all k-fake, I think that's the term you're, referring to, where, you know, the, the wrestlers know that it's all fake, but, you know, they, they pretend it's real for the sake of the show, the show" }, { "speaker": "jimmy_song", "time": "21:46", "start": 1306.22, "text": "within this altcoin community, like, and I find it instructive that almost all of them will talk very aspirationally and, speak the language of retail. W-when, like the, the big difference that you see is when you talk to Bitcoin people, you know that it's gonna be kind of like a technical and hard to understand conversation oftentimes, because we're talking about stuff like Taproot and, you know, covenants, you know, any prevout, you know, check template verify Or whatever, it's like, okay, what is that exactly? And how's it work? And what, what, what's it actually going to do? And what's security like? It, it's, it's actually kinda difficult to understand. But when you talk to an altcoin, they're like, \"Oh, this will enable freedom,\" or they'll, they'll make these horribly complex problems sound really simple, and they'll, they'll talk very aspirationally, probably because they don't know any of the technical details, and if they actually did, they would realize that it's a complete Oh, you know, DeFi, it's, you know, people need loans. Of course they need loans, and, you know, this is what makes it possible. It's like, you try to, like very few of them actually understand the mechanics of staking, let alone the economics of staking or like what, what, what the actual risks are. It's just, oh, you know, people need loans, therefore I can make money off of this, something like that. The way they talk is exactly what you would need in order to get retail to buy into it" }, { "speaker": "jimmy_song", "time": "23:16", "start": 1395.76, "text": "Something that I've been told by many people in the altcoin space that, that, that they do all the time is a large part of their, budget and strategy is based around how do we get retail to buy more into this, right? what, what's the next narrative that we can push? Oh, yeah, you know, we can, we can get artists using NFTs, you know, like, and we could, we could, you know, everybody hates Wall Street, what, what if we did something around that? Let's, let's do DeFi" }, { "speaker": "jimmy_song", "time": "23:46", "start": 1425.84, "text": "Censorship resistant social network. So let's, let's do something called Web three and let's, let's push that one out, or let's, let's do something on like metaverse, you know, everyone likes VR right now. Like, these are all like sort of custom made sort of memes almost, to get people to buy these coins, to get people, pumped up about it. i-it's another sort of like snake oil salesman pitch essentially, each time. And There are so many people that are trained from the fiat mentality of wanting to do very little work and make a lot of money, that they are all desperate for these opportunities to go do that, and so they get suckered. And yeah, it's, it's tragic because again, it's the poorest and most vulnerable that" }, { "speaker": "stephan", "time": "24:35", "start": 1474.76, "text": "ultimately gets screwed. Yeah. And a couple examples as well in that vein is that they try to get people bought in, in that sense, right? It's like the Ponzi nomics encourage it. So these airdrops Might be dropping some of the token supply to bridge users, liquidity providers, distinguished community members, you know, these are the kinds of things that they give the tokens to. And so they sort of get people bought in, and then they, you know, it's almost like, people selling MLM things like Amway to their friends and family and say, \"Hey, look, you gotta buy this thing, and I got into it, and you could do well too.\" And, you know, it becomes a bit, yeah, we should eschew these things," }, { "speaker": "jimmy_song", "time": "25:10", "start": 1510.12, "text": "right? It's really monet" }, { "speaker": "jimmy_song", "time": "25:16", "start": 1516.0, "text": "Just so wrong, right? but that, that's not to say that that hasn't happened before. If you, if you have friends that are, you know, a lot of women for whatever reason, they like run their own, quote unquote, businesses on Facebook. It's really monetizing their friends and family, right? It's, okay, now I'm gonna go start a Bible study, and by the way, I sell these like, you know, juices or like clothes or something like that, and it's, it's horrible 'cause, I mean, like at least of as, you know, flipping o- that Jesus was flipping over tables in the temple about, right? I- it's like bringing, like selling this stuff to your friends and family just seems horribly wrong, and it is, you know, it, it destroys a lot of relationships for that reason. And, you know, if you have any relatives in, Amway or any of these like MLM schemes, you know exactly what I'm talking about. It, it's not pleasant, and you almost feel like you've lost a relative to this company. And Since they, you know, altcoins have taken it to another level, you, you've lost them to the altcoin. They, they've sold their soul, their social graph, their friends and family in order to pump this thing, thinking that really they're getting something for nothing. In actuality, you're, you're paying dearly in the form of your relationships." }, { "speaker": "stephan", "time": "26:35", "start": 1595.28, "text": "Yeah, that's sad. And so, I mean, let's try to be constructive. What kinds of things should people be doing instead of chasing after frequent flyer miles or trying to get this chase for altcoin? I, I mean, probably some examples could be working on a skill set, working on your business, or working harder at work to, to try to, you know, make more money in that way, in, in a more honest form. I think these are some, and then obviously, f-f-from a Bitcoin point of view, you do these things and then you stack more sets, right? So that's sort of the more, I think, constructive way, to go about these things is to eschew the, altcoins, and frequent flyer points," }, { "speaker": "jimmy_song", "time": "27:16", "start": 1635.74, "text": "That's exactly right. The, the, the irony of course is that all coins and, airline miles, fiat money, all of these things are in one category, and Bitcoin is in a complete different category, 'cause there aren't no cantillionaires in Bitcoin. There isn't nobody that can sort of like, extract value from, the, there, there's nobody, no money printer. So what you're forced to do is actually provide a good or service that others feel val-- find valuable, because Because it's not confiscatable, you know, like it, it's, it's a much better way to save. That means that even if the government comes to your door, you know, a-as long as you have it in a, a, in a secure way, they can't take it away from you, right? I mean, they can threaten you and things like that, so you may give it up anyway, but at least you have the option of holding onto it, and it gives you that property right that's greater than, you know, even something physical like You, you really are, are more motivated to go and get Bitcoin, instead of buying yourself these rent-seeking jobs like pumping an altcoin or, you know, getting the best airline status at a particular airline or something like that. Go do something productive, right? Like, you, you could spend the same amount of time doing something that others find valuable, you know, like, you know, say programming or making, product Of some kind, right? Like, you know, if you're, if you're a woodcarver, go carve something, right? Like, go make furniture. I don't know, wha- whatever it is, if you can make something that the market wants, then you can, you can make money and store it in Bitcoin. Like, you, you probably have done something that other people like instead of annoying them to death with your talk of altcoins or whatever, and you're able to save, you're actually contributing to society, to the building up of civilization instead of redistributing More people to yourself or to other people that are higher on the totem pole on your altcoin. That act, I think ultimately is going to be way better for the society you live in anyway. If you're able to go and build roads and sewers in your community, that's going to be way more constructive to every, everybody. And that, that's the technology that, or that, that's what Bitcoin enables. And, this is the big divide between these things that- That at least to me is just really, really wide, and there, there's no comparison. Yet people lump all of these things together, and people get scared of Bitcoin as a result, and we, we've, lagged in Bitcoin adoption as a result of all these rent-seeking things that have essentially come from the years of fiat mentality that we've been subject to through the central banks." }, { "speaker": "stephan", "time": "30:09", "start": 1808.76, "text": "Back to the show in a moment. Now, I'm excited to announce a new sponsor of the show, Voltage. Voltage has constructed the leading- Enterprise-grade Lightning solution for Bitcoin builders who are creating the future of financial technology and Layer 2 applications. The decision to integrate Lightning no longer has to be an afterthought. Voltage makes it really easy for any organization to integrate or build on Lightning. You can scale nodes instantly by the thousands, you can get quality, liquidity, easily, and much more. What was once a headache is now simplified. 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And finally, Unchained Capital. It's becoming more and more clear that everybody needs to learn to self-custody, and with Unchained Capital, you can get some support on that process of self-custody with their concierge onboarding program, so you can pay upfront. They'll ship you the hardware wallets and then they'll do a call with you and teach you how to do this, even if you have never held your Bitcoin private keys before. And doing this, you will have what's called a two-of-three multi-signature setup, meaning you hold two hardware wallets or hardware signing keys, and you can keep those in two different locations, and Unchain holds the third key, so they can support you if you have lost one of those keys as an example. So this can give you that peace of mind and knowing that you are removing single points of failure in your security setup. So that website is unchained dot com slash concierge. Use the code livera for a discount. Now, back to the show. Yeah, so it's, it's about ridding ourselves of this fiat mentality, even if we are Bitcoiners, there are ways in which the fiat mentality can seep into what we do, and it's about really analyzing our lives and thinking, wait, is this actually a productive use of my time? Is this... And that's not to say that you have to be working and grinding, sixteen hours a day. I mean, of course, time spent" }, { "speaker": "stephan", "time": "32:46", "start": 1965.78, "text": "Speaking, I think the amount of mental energy and effort spent chasing freaking flyer miles, as an example, it, it might really be a waste of time. So I think it's just worthwhile for all of us to think about that and really focus on being productive is the, I think the lesson for all of us really. and you mentioned the point around profit-property rights, Jimmy. So I think this probably ties in nicely with, your article recently about Check Template Verify and fuzziness of private property rights. So can you give us a bit of an- An overview, what are you getting at in this article?" }, { "speaker": "jimmy_song", "time": "33:19", "start": 1999.23, "text": "Yeah, so, a lot of it comes, from just having read the book, Democracy, The God That Failed, and, you know, Hopper's, sort of exploration of how property rights are very fuzzy in a democracy. His, his argument in that book is essentially with a monarchy. You know, he, he's not pro-monarchy per se, but, the main benefit there is that there is no weird thing called public property. It's either the mona- Mark's are yours, and if he's taking your property, he needs a really good justification. And, you know, e-everyone kinda sees it for what it is, which is it's, it's tyranny. Whereas in a democracy, when they take your property and say it's for the public good and call it public property, then it's, somehow like considered better. And th-this is sort of the conceit behind socialism of all types. It's, it's this idea, well, we're gonna take your stuff so that- That everybody can benefit or something, something to that, that degree. And he points out all of the sort of, weirdness that comes from public property, and, you know, he, he argues in the book that really all rights are property rights, like, stuff that you don't think of as property rights is, like freedom of speech, for example, that, this is sort of like the calling card of the left, right? Everything is freedom of speech or whatever. it's, it's actually a property right. Because where are you saying these things? If you're saying it in my house, you're shouting, you know, like something that I disagree with inside my home, I could kick you out. You don't, you don't have the right to say that, it's my property. But, you know, once you have public property and it's like a public sidewalk next to, you know, an abortion clinic or something like that, then it's like, well, you can kinda do it because, you know, it's kinda all our property or something like that. Or to take an a, a The homeless encampments in the, in, in the public property, the, the park that was, around Austin and actually on the sidewalks as well. And the weird thing was, okay, well, like, can you kick them off? I, I don't know, 'cause, like, who, who does this thing belong to? And how do we, like, manage it or do something with it? and you get this weird inefficiency, 'cause if you're gonna house homeless people, then you should build a building for homeless people and not use- Public parks as homeless grounds, 'cause a public park is to be enjoyed and run in and, you know, play football in or something. If you're like using, like either have no services for them or have a, a service that matches their need, like to have this in-between thing where you're using-- you have it for one purpose but use it in another is just a really terrible use of property. So the idea from the book that I got- That I, I, that, that really impacted me is that when you have these weird fuzzy boundaries around property, and you, you end up with very weird incentives that ultimately are destructive to that property itself. When you own your property, you tend to take care of it. I take care of my house, I take care of my land, take care of my car, right? but if it's owned by somebody else, then you don't tend to take care of it. This is why littering, quote unquote, is a problem, right? 'Cause it's pub Public land, and it's, it nobody actually owns it, so who's gonna go and cle-clean it up or whatever? So having, fuzzy property boundaries I've determined is kind of a terrible thing, and one of the really nice things about Bitcoin is that it has very clear pub- property boundaries. If, if you have your keys, it's your coins. If it's not your keys, it's not your coins, right? Like that's what we say in Bitcoin all the time. If you have it on an exchange, it's not yours 'cause you don't Exchange, you, you're, you're sort of sharing property with them and, you know, maybe they're supposedly taking care of your stuff, but having the clear property boundaries is an important part of it, and that, this is why so many Bitcoiners are passionate, because they really own it, right? Like, this is really my property, so I will defend it to death, and I will make sure I take care of it, and, secretly this is why so many Bitcoiners are really into the open source stuff and Trying to figure out how to secure it better and make it, make it better by contributing even some of their own free time to, to making it work because they really own the Bitcoin and they wanna make sure that it, it continues to thrive, whereas, you know, with public property, you get decay and destruction essentially." }, { "speaker": "stephan", "time": "38:06", "start": 2286.09, "text": "Yeah. And so then bringing it to the notion then of covenants and particularly CTV Check Template Verify, how are you seeing that? Are you seeing it like covenants would make it-- Well, firstly, I guess, are you saying that-- Are you sort of making an argument against covenants in general or against CTV specifically? And, I mean, also just while we're on this, I mean, could we make the same kind of arguments about, say, multisig or about Check Lock Time Verify or CSV, right? Because these- These are also other ways that it's not as absolute, let's say." }, { "speaker": "jimmy_song", "time": "38:41", "start": 2321.22, "text": "Yeah. So I, I think my argument is, against covenants in general, not OpCtV. I mean, they're, they're, at least as far as I can tell, OpCtV is pretty simple, as a programmer, it's fairly easy to reason about. It's okay, like you, you, you tell it what parts you're gonna sign, the rest can be whatever, and, you know, that, that's the idea And from a programming standpoint, I think it's fine. I like, yeah, they're, they're like recursive covenants and all these esoteric things that I, I don't think honestly that many people understand, but from a conceptual standpoint, yeah, it's probably fine. Or technical standpoint, it's fine. i-it's really the economics that I don't think that we've really thought through as a compute community. For a programmer, as a programmer, it's great because, okay, now I can do this, I can do this, I can add this, I Honestly, this is what Jeremy spent the last two and a half years doing, is saying, \"Okay, now you can do this with Opstv, and now you can do this with Opstv.\" He's a programmer, so he's thinking in terms of all the cool stuff that's now possible because of the soft code. But, you know, as a holder, as a, you know, somebody that's studied economics, it makes me more hesitant because, okay, what are the unseen effects here? Are, are we really getting something for nothing? what, what are, what are And, like, do-- does this actually fuzz boundaries around property or not? and that, that's a question that I've been asking myself. And I'm not, I'm not necessarily saying that, you know, I'm against covenants per se, but this isn't a conversation that honestly we've had as a community is, \"Are, are I-- like, what are the possible restrictions that you can put on others?\" Right? Like, and, you know, if, if, if something like this becomes way more popular You know, they put an off-CCTV in front of it, then it's like, okay, now, like, I, I know where it is, but I, I can't withdraw or it, it becomes like sort of like a permission thing. And to your point, like, to some degree, a lot of that is already possible with something like multisig and the various locktime, opcodes. You, you, you can sort of lock it up. They're a little bit harder to execute, and I think, you know, it, it, it There are two, but, you know, again, it's, it, it's all about what, what are the ways in which this actually, like, what, what are the nefarious ways in pe- in which, ways in which people can use it? Are there things that you can do with covenants that you can't do with multisig that could be used in a way that's very detrimental to the user, right? Like, I, I, I believe there's a way to essentially make it so that you can only sort of like, you know- You know, you, you could kind of restrict it for a while. A-and this is the, I don't know, maybe this is an argument against recursive covenants, but the, the idea that you can sort of lock, lock it in a certain way forever is kind of scary to me. Like, you know, you, you have a hundred Bitcoin and, you know, it can only get spent with this kind of thing. Well, I mean, what, what if you ever wanna change it, right? Like that, that kind of-- That's a lot of restriction to put" }, { "speaker": "jimmy_song", "time": "42:07", "start": 2526.67, "text": "The idea of stuff like coin pools, I think that in particular has some serious like scaling ramifications or, things with respect to lightning and so on. But yeah, like the, I, I, I just feel like we need to have that conversation first as a community before evaluating any of these covenant proposals, including OPS, OPS TV, and okay, well, we've inadvertently like introduced this thing. It, it, it seems like to some degree covenants are- Almost like Turing completeness, it's, it's very easy to adu- introduce. Like, I think Andrew Polstra showed that OP_CAT could do it. It's like, what? Like, that seems like such a, such a simple thing. How, how's it possible that OP_CAT would, would add it? But it, it kinda does. So, I don't know, we, we, we just need to have a more thorough exploration of the economics and not just, \"Hey, here are the tech-- cool technical things that we can do, because this is people We're talking about, and if it comes down to the developers versus the users, I'm siding with the users every time, 'cause they're the ones that have skin in the game." }, { "speaker": "stephan", "time": "43:14", "start": 2594.24, "text": "Of course. And I think I absolutely agree with you that the conversation needs to be had. I think the ecosystem needs to just hash that out and really have that discussion. Are the benefits worth the cost, right? So, now I'm, I'm not like being a massively pro-CTV guy, but just for the sake of argument, I could say currently, even today, there are footguns in" }, { "speaker": "stephan", "time": "43:37", "start": 2616.69, "text": "Coin eater, you know, like one of those dead, burn addresses, right? I could theoretically do that, and maybe the argument would be, hey, well, that's on the developers to make sure that their wallet software isn't putting that user into a wrong or a bad pathway or a footgun per se of, you know, sending their coins to a burn address or into a covenant that they couldn't recover the coins out of. and I think the other point that I'm curious to get your response on this is, what about this idea of perhaps like a social resistance, right? Layer, anyway. So as an example, could the government come out right now today and say, \"Look, yes, big exchange A, B, and C, before you're allowed to withdraw to your customers, we have to also be a multisig party on that withdrawal, and it, it's got to be a one of two, and I, the government, hypothetically, have to be one of the cosigners.\" And is that something that would have to be socially resisted anyway, because theoretically, it's possible today?" }, { "speaker": "jimmy_song", "time": "44:34", "start": 2674.09, "text": "Yeah, it, it, it is, and it's, Mostly sort of because so many people have them on exchanges already. So in a s-in a sense, they're sharing property boundaries with, or like the property boundaries around the coin on an exchange are already kind of fuzzy. and government can certainly come in and do something like that. so first of all, get your coins off the exchanges, right? It's not really your property, just like the dollars in your bank account aren't really your dollars, it's a liability for the bank. similarly Your coins on an exchange are liabilities to the exchange, they're not really your coins. So that would be, I, I think a, a significant part of it. But yeah, I mean, they, they certainly could do like a two of two like you're talking about and then, force people, force all these exchanges to do KYC beforehand, and if, if it meets the requirements, then the government will, you know, send their signature over later or something like that. That, that certainly could be the case. And that would require a lot of user resistance, but thankfully a lot of people do have coins off of the exchange, and that means that they are able to, sort of naturally resist it or not be subject to it. It's really only the people that are, quote unquote, seeing it as an investment that have it on these exchanges that are going to get screwed out of their money, but in a sense, they kinda deserve it because, again, the-- you have a liability against the exchange, and there's not just the- Trust a third party of the exchange, but an implicit trust a third party in the form of government, because, you know, the, the exchanges have some sort of license or, regulatory oversight by the government anyway. So, you know, that, that, that part I think, I, I, I think will have to happen regardless. But, you know, there, there are, sort of like these weird covenant constructions that I, I think we really do need to explore. Like you said, it's possible- to, you know, throw away your money into weird addresses and lose them that way. This would be a little more sinister though, because it, it would seem like it's more Safe or that it's legit when it's actually not, that you're introducing a trusted third party into a covenant without re-realizing. And that, that's really where my worries go are situations where there is an implicit third, trusted third party, and it's like, okay, like, I didn't know that this was actually how it worked, and, you know, perhaps there will need to be some user, user rebellion against that stuff. And i-i-it is like the libertarian To me is like, okay, well, if you, if you're careful with it, then you're still gonna be-- you don't have to use any of it. and I, I can't see that argument where it's like, okay, you don't, you don't have to use any of these features or whatever. And maybe what, what's needed with something like covenants is just a lot more education on this stuff and say, all right, like, you need to learn about, you know, how these covenants work, and if you're gonna use any of" }, { "speaker": "jimmy_song", "time": "47:48", "start": 2867.99, "text": "there are enough sort of like weird corner cases around this stuff that we need, we just need to be extra careful and make sure that it's not going to introduce, weird incentives that essentially break Bitcoin up into like KYC coin and non-KYC coin, something like that." }, { "speaker": "stephan", "time": "48:06", "start": 2886.06, "text": "Yeah, absolutely. And I think you're right to point out that there could be things that we aren't seeing yet because maybe there needs to be more discussion and research into what other possible ways things could go wrong. And it's not just kind of at a technical layer, but at a, at a social level. And I mean, to your point around education, you're right that that, and that is also a very hard battle to face, right? Because even today, I recall seeing a stat from, some of the Bitrefill guys saying that of Cash App users paying to Bitrefill, who both, both sides support Lightning, only one third of them were using Lightning for their transfer, when they could, you know, instant-- And, and this is Cash App, right? So it's kind No, because if these users already have access to Lightning, and Bitrefill has access to Lightning, and they're not using it to buy the vouchers with Lightning, well, that's already kind of pointing to this idea that, you know, if they can't understand that, then how are they gonna understand the implication, the deep implications of, \"Oh, I'm sending this money, or I'm receiving it via a covenant which isn't directly in my wallet yet.\" And so I think maybe that's, genuinely a difficult uphill battle there around education." }, { "speaker": "jimmy_song", "time": "49:13", "start": 2952.8, "text": "Yeah, ed-education is," }, { "speaker": "jimmy_song", "time": "49:18", "start": 2957.51, "text": "We all, everyone who owns Bitcoin is sort of incentivized to learn a little bit more about it, and every time we have sort of these weird confiscation events or whatever, I think people just are, like, they, they learn way more about it, right? and this used to be much more the case when we had like a lot more hacks, like, Mt. Gox and Prior, like, the, it, it used to happen on a regular basis, and a lot more people were very careful about what they were doing. nowadays- It's like, we've kind of gotten complacent. I mean, there, there are hacks all the time on altcoins and whatever, and people, I don't know, we- weirdly just sort of dismiss them. It's like, it's, it's a, they kind of look at it like a VC portfolio or something. Yeah, that one, that one busted, whatever. Like, as long as one of them is a unicorn, it's fine. but with Bitcoin, I think we have gotten a little bit complacent because, you Bitcoin as a system is anti-fragile. You, you actually, we haven't had enough disorder, if that makes sense. Other than say, China's mining thing." }, { "speaker": "stephan", "time": "50:26", "start": 3025.75, "text": "Yeah." }, { "speaker": "jimmy_song", "time": "50:27", "start": 3026.57, "text": "Yeah, we, we need more people to actually kind of like go through some suffering and weird things. I like, we, we know like Coinbase screwed up many times, we know that Bithenticate screwed up. Unfortunately, there's just so much money flowing into it, they just make the customers whole and don't worry too much. If the customer suffered, then, you know, then- They would take better care of their stuff. Instead, they're sort of relying right now on bailouts, of one kind of or another, and that, that's not good. I, I, I think people need better, you know, better custody of their stuff. And this, this, by the way, is one of the reasons why I'm a little bit cautious about Coinbase, though. You know, like an exchange will probably sell whatever KYC thing or subtle thing as Hey, we're, we're just protecting your coins, and we're, we're adding security to it or something like that, to make it very difficult for robbers. And that, that's the argument they'll give, which is what every government in the world, every central bank in the world will say, it's, it's really for your safety that we're doing these authoritarian things. and it'll be a big debate, it'll, and this is where like, okay, well, can we as a community really resist that as users? Are we, are we able, are we really going to be able to show that? And, and I don't know, I don't know if that's a battle we're ready to fight or, or like, you know, giving covenants ultimately might make, exchanges more powerful, which, you know, I'm not, I'm not sure I want. so, you know, the, these are the conversations that we need to have." }, { "speaker": "stephan", "time": "52:08", "start": 3127.94, "text": "Yeah, right. And I think you're right to point out that it's almost like we need to explore the social implications of" }, { "speaker": "stephan", "time": "52:18", "start": 3137.75, "text": "Now, we've, we've been kind of more, I guess, slightly negative on covenants, maybe the positive side, just to sort of hear that argument out a little bit. I guess the, the pro-covenants argument in this case might be something like, look, now, not to rush something into Bitcoin, but could it be that without further improvements in this direction, we won't get the scalability that we need for people to self-custody, right? So arguments here will be made around things like, okay, it's more easy to do vaults with CTV, or maybe Maybe open up a lot of Lightning channels and scale Lightning, maybe those things could help pot-potentially, although maybe there's even a downside there as well, like could those Lightning channels be easily closed? I mean, there's, there's obviously there's discussion and debate around that. But I'm curious, on your point of view, how are you seeing that in terms of the scalability wins that could come potentially from this?" }, { "speaker": "jimmy_song", "time": "53:10", "start": 3189.58, "text": "Yeah, so coin pools, I think, are huge scalability and privacy improvement 'cause your coins are hidden in one giant UTXO, right? Like, you could have a hundred Bitcoin UTXO, you only own like half a Bitcoin in it. No, nobody has any idea really, and you, you just sort of have it in there, and you can open a Lightning channel out of it and do a submarine swap. Next thing you know, like, nobody has any idea which coins are yours. or maybe even a Lightning channel to another coin pool, I don't know. And that could be very interesting in terms of privacy, in terms of scalability and so on. But like in a sense, I, I'm, I'm a little bit hesitant about the level of premature optimization that we seem to be doing in that direction. 'Cause I mean, Lightning's fine, we, we have very low fees, and, you know, there, there are, you know, lots of layer twos, that, that are already out there that, you know, haven't been saturated at all. you know? The, the time to expand the width of the road is when you're starting to get some traffic and, you know, you, you can see it down the line. I, I don't know if that's necessarily something that we're gonna see, That quickly. And, you know, we, we saw in El Zante that you, you do have like mini communities that, you know, essentially have one UTXO, right? Like, you kinda have something in a coin pool with a trusted community already. And that's, that's another model that might scale way better. Like, if, if you trust the people in your community, maybe that's the way to do it. I don't know. Like, 'cause the assumption has always been, oh, everything needs to be trustless or whatever. But at, at a small scale, Kinda well, right? Like it's, when you get to really, you know, large scale, that trust becomes a really big problem because you don't know the people that you're screwing over. but, you know, like if you're in a trust group with a small number of people, yeah, those aren't bad. And, and, you know, like I, I come from an Asian culture, and, you know, my, my dad was telling me this story about how he got my mom an engagement ring. And, and they have these Pools that they, they do, they're, they're called kiz in, i-in Korean culture, but it's this idea that everyone pools your money, pool, pools together their money every month, so you pay like a thousand dollars into it and you might have a group of ten friends, right? and the ten of you put it in, you put a thousand dollars in every month, and then one person takes it every month and it rotates. And the idea there is, it's, it's kind of like a forced savings mechanism, and, you know, if That, okay, when it's your turn, then, then you use that money to go and make a down payment. And my dad told me like he got really lucky 'cause he got, he got the first position. So first, first one, he, he took it and he bought my mom an engagement ring and, you know, he, he was able to get married and stuff like that. He was like, \"All right, now, now I can go get married.\" And, you know, that, that, that's what happened. Yeah, like that's totally a trust relationship, right" }, { "speaker": "jimmy_song", "time": "56:22", "start": 3381.55, "text": "I, I don't know, that, that might be a way in which we scale. Now, like, is it better or worse than, you know, like, a, a completely trustless coin pool? I, I don't know. But these are the kinds of, innovations, conversations that we all need to have because, you know, like, how much do you wanna enforce? And like, if you're enforcing a covenant with, like, your mom or dad, like, like, do you really need it? I don't, like, I trust It's like Bitcoin, right? Like it's, like they, they, like they don't need a covenant or something like that, some escape valve or whatever, because they trust me. Like if you, if you can sort of like leverage your trust relationships for a lot of that scale, that, that might just work, and you just might need, I don't know, a layer two that's personal to your community or something like that. So, I don't know, like, it seems a little bit to me like premature optimization, and that's, that, that's where I'm I don't know about like the scaling argument there." }, { "speaker": "stephan", "time": "57:24", "start": 3444.29, "text": "Yeah, gotcha. And to your point, it's, it's still early days, there are lots of different approaches. So, I mean, there's Liquid and side chains, there's Bitcoin Beaches model, there is ideas like Fedi Mint, and, you know, of course, just Lightning today, like it, you know, there's all these ideas that maybe there is more expl- exploration, and I think the crucial point though, as you're saying, is discussion around the social implications of having covenants or CTV I think, yeah, it comes back to a lot of education as well. I know, you're doing something down in El Salvador soon, isn't it?" }, { "speaker": "jimmy_song", "time": "57:59", "start": 3479.26, "text": "Yeah. So I'm, planning to teach a bunch of developers in El Salvador about Bitcoin. You know, we'll, we'll, we'll see where that goes, but Stacy is heading that up and they're, lining up some scholarships. So if you are interested in, you know, taking the course for free in El Salvador and you happen to be in El Salvador and, you know, Central America that, that wants to work on the Bitcoin stuff in El Salvador, you know, I would encourage you to apply for the scholarship and, yeah, and start building stuff. Fantastic." }, { "speaker": "stephan", "time": "58:35", "start": 3515.22, "text": "Well, Jimmy, I think it's probably time to wrap up here. So, you know, today we've spoken a bit about why frequent flyer miles are like the original altcoins, and we've spoken a bit about, let's say, the problems of fuzzy private property rights as opposed to more strictly or tightly defined- Property rights. where can listeners find you online and, subscribe for updates from you?" }, { "speaker": "jimmy_song", "time": "58:57", "start": 3537.18, "text": "Yeah, so I'm on, Twitter at jimmy song. I also have a website, programmingbitcoin dot com, and you can sign up for my newsletter there at jimmysong dot subsat dot com. you know, it's, it's, got a lot of news on Bitcoin. It's, it is a paid subscription, although I do one free a month and so on. So if you're interested, sign up. Fantastic. Well, thank Jimmy, I enjoyed" }, { "speaker": "stephan", "time": "59:22", "start": 3562.01, "text": "chatting. Get the show notes at stephanlivera dot com slash three seven seven. Thanks for listening, and I will see you in the Citadelles." } ] }