{ "episodeId": "SLP5", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "neil_woodfine": { "name": "Neil Woodfine", "role": "guest", "tag": "NEIL" }, "guest_2": { "name": "Guest 2", "role": "guest", "tag": "GUEST" } }, "segments": [ { "speaker": "stephan", "time": "00:01", "start": 0.94, "text": "Hey guys, welcome to the Stephan Livera podcast episode five, and my guest today is Neil Woodfine. Welcome, Neil, and thanks very much for taking the time." }, { "speaker": "neil_woodfine", "time": "00:12", "start": 11.7, "text": "Hi Stephan, thanks for having me on the show." }, { "speaker": "stephan", "time": "00:14", "start": 13.7, "text": "Yeah, great. Alright, so guys, I will just quickly intro Neil. Now, I've been following Neil on Twitter for a while, and I think he has just really shared a lot of great insights. In terms of Bitcoin economics and comparison of Bitcoin versus other tokens. And in terms of his background within Bitcoin, he is the organizer of the Beijing Bitcoin Meetup, and he has just recently left Wire, spelled W- Y R E, and they are a payments company based on Bitcoin. And so Neil is now working on his own Bitcoin projects. So yeah, thanks again for jumping on today, and, I think what would be a great insight for the listeners would just be a discussion on the Bitcoin scene on the ground in China. So maybe, you wanna just open it up with a bit of discussion on that, Neil?" }, { "speaker": "guest_2", "time": "01:03", "start": 63.07, "text": "Yep, no problem." }, { "speaker": "neil_woodfine", "time": "01:05", "start": 64.97, "text": "so unfortunately these days I get a little bit negative when talking about, Bitcoin in China. I think, It's, it's probably a bit strong to say it's dead in China right now, but, it's certainly not doing particularly well. like I run the, the, the Bitcoin Meetup, in, in Beijing, with, Richard Benzberg, and, I think, right across the, the rest of the mainland China, you won't find another regular, Bitcoin Meetup anywhere else, which is pretty amazing when you think of, how involved, China has been With, Bitcoin in the past." }, { "speaker": "neil_woodfine", "time": "01:48", "start": 108.21, "text": "unfortunately, kind of what goes around mostly these days is, a lot of altcoining. and a lot of, blockchaining, generally a lot of scams, a lot of pump and dump, and a lot of, misinformation. I mean, China's always been kind of strong on certain elements in the Bitcoin space, so, they've been very, very successful in mining like everybody knows, Bitmain, they basically own the, the, the manufacturing, market there. most of the, the biggest mining operations are based in China. And, also you have a number of, the very large pools are also based, based out of China. but that's about it. And these organizations aren't really, contributing back To the community in, in any major way from what I've seen. and, basically it's left the, the floor to all of the, the old corners and the blockchains to kind of, propagate their their ideas, and it's led to a lot of kind of misleading information, on the China and Bitcoin sphere. so yeah, it's, it's a, it's a bit of a problem, and there still are like a lot of kind of, people interested in the topic. I just think there's not enough people that are willing to like, kind of, make the effort to start producing materials in Chinese and organize events like, like ours, to kind of, provide to that demand. so, Good turnout, between, fifty and a hundred people if we have some speakers, and people are, like I said, always very, very interested, but, it pales in comparison to the number of, Blockchain events and, and, and all coin events that are going on in Beijing and elsewhere in, in China, you'll see like two or three going, going on every week. And it's not just, the domestic players, it's also kind of a lot of expat organizations that, kind of get involved in all of this. so like, in my opinion, there's two kind of Diagnoses to this problem, one is that the, the exchanges were, closed in China and the regulatory situation is very uncertain. So China, for a while, had the biggest exchanges in the world with OKCoin and Huobi and a few other kind of lesser exchanges, But with the closure of them and the, the, the uncertainty around regulations, like Bitcoin certainly doesn't seem to be welcome in China, it means that entrepreneurs and businesses can't really make any long-term plans, and can't kind of- Invest confidently with their, their, their resources and their time in, in building any kind of, meaningful businesses. And so that really kind of incentivizes, short-term players, get rich quick, basically launching product, projects that, Make a lot of money in a short space of time and then move on before kind of the regulatory hammer comes down. So that's one of the, the kind of factors contributing to the problem. the second is perhaps that A lot of people never really understood what they were getting involved in, I think that's probably a bit harsh, but certainly we saw a lot of, Bitcoin businesses like OKCoin and Huobi, paying a lot of lip service to, trustlessness and, decentralization and, kind of, this new kind of financial future, but, kind of with Bitcoin closed down and, the, the kind of, remonbita Bitcoin liquidity, not possible anymore, they've totally changed their tune and are now, promoting all sorts of very strange, economic models, a lot of kind of very questionable, technology and, It suggests that they, they, they weren't really in it for the right reasons in the first place and perhaps didn't understand. And like if they did understand, I think they would be making, more long-term plans for kind of, What I think people like me and you see as the future, which is more kind of Bitcoin-centric." }, { "speaker": "stephan", "time": "06:08", "start": 368.37, "text": "Yeah, great answer. No, that's some great insights there. And what I take from that is It sounds like there's not a very great prevalence of Austrian economics influence amongst the Chinese Bitcoin and, you know, what we might quote-unquote call the blockchain scene. and it sounds as though there are quite a few Chinese sort of altcoiners and ICO pumpers. I presume as organizer of a meetup, I presume you get a lot of offers basically of ICO pumpers who want to, you know, sponsor or have you as an advisor or to come and present to the meetup. Do you have any insights to share on that?" }, { "speaker": "neil_woodfine", "time": "06:48", "start": 407.76, "text": "we'd certainly get a lot of, messages on meetup.com from, and LinkedIn as well, actually, from various different, organizations, both within and without. China looking to, promote their, their projects to, the kind of the, the, the members that we have. I've, I've, from the very beginning, I r-rejected all of those. We, we had, gnosis come and speak, I don't know how you say that, gnosis, gnosis come and speak once, because I thought the prediction market sounded quite interesting, and we were very," }, { "speaker": "neil_woodfine", "time": "07:25", "start": 445.3, "text": "Explicit that they couldn't promote their token sale whatsoever, they, they only had to talk about the technology, but during his presentation, like the audience asked some very, very kind of, they asked some probing questions and there wasn't some very, there wasn't very good responses, and then, like a few months later, they launched their token sale and like kept ninety percent of the token supply for themselves or something. And that was basically the last straw for me. I was like, okay, we, we can't have these guys, speaking anymore, and at that point we just limited it to, purely, Bitcoin, Bitcoin projects. but yeah, we, we get a lot of, offers of sponsorship, a lot of people come along to the meetup and work for media organizations, which is a very kind of ambiguous term, they're, they're always looking for kind of ways that we can cooperate. I think, that's why one, a lot of kind of, original Bitcoin meetups around the world got corrupted because for organizers of events like this, it can be, it can become quite like a nice little revenue stream, And I can see why people started taking those offers, but, for us, we, we figured, misleading the, the kind of the community, and there's a lot of kind of new people coming to these events, misleading these guys is, is, is definitely not worth it." }, { "speaker": "stephan", "time": "08:45", "start": 524.81, "text": "The fiat money corrupts us all. Right, right," }, { "speaker": "neil_woodfine", "time": "08:48", "start": 527.97, "text": "exactly, yeah." }, { "speaker": "stephan", "time": "08:49", "start": 528.85, "text": "Yeah, no, that's a great point, and I think, that's a great insight that you've shared there. I think the next thing that I wanted to discuss with you today, Neil, was one" }, { "speaker": "stephan", "time": "09:01", "start": 540.66, "text": "It was from March 2018, and for the listeners, I will put a link in the show notes page. So what I'm gonna do now is I'm actually just gonna read through that thread, and then we can sort of break it down a little bit in detail. So I'm gonna read Neil's thread here. So One, a paraphrased response to someone asking what I think is wrong with the level of understanding of Bitcoin, blockchain, and crypto right now. In 2013, when I first got into Bitcoin, the vast majority of information online regarding blockchain was Bitcoin-centric. If you got into Bitcoin, you couldn't avoid learning about the economics, politics, and philosophy behind Bitcoin's creation, the problems it was built to solve. If you got into Bitcoin for the get rich quick, you stayed for the ideology. Since then, a growing number of people have realized the potential for distortions of the Bitcoin story to extract money from others. This started with pre mined altcoins, but has expanded to permissioned blockchains, utility and equity token sales, and most recently, fork coins. All of these projects have very different, perhaps conflicting, goals to Bitcoin, often representing part of the problem that Bitcoin was built to solve, namely to remove the need for trust in online value transfer and to put re-constraints on monetary expansion. Now all the people behind these projects want is for you to trust them as they freely print more and more money. What this has resulted in is an explosion of non Bitcoin related information online. Misinformation has become a highly profitable business. Unlike in 2013, now a newcomer to the space really has to dig to find any quality knowledge. Ninety nine percent of what they read or hear is going to be junk. There is no coherent ideology within these new blockchain or cryptocurrency movements. The noble goals are gone. Focus has shifted to efficiency gains for the trivial and the esoteric. Wacky economic theories are made up on the spot based on zero references. In 2018, if you get into cryptocurrency for the get rich quick, you stay for the when to buy, when to sell. The scams are winning, for now. They're winning the information war that they started through sheer saturation, but ultimately they can't escape economic reality. If their models are fundamentally broken, they will fail, taking their investors down with them. To save money and time, it's critical that anyone getting into the space for the first time learns first about Bitcoin, not just the tech, but the economics and politics too. For some reason, ideology has become a dirty word in the name of \"open\" Open-mindedness, where supposed to relinquish any form of structured reasoning, a priori and theory are also scoffed at. Instead, real-world observations are primary, understanding secondary. X is worth Y, it must be valuable. I think Bitcoin's continued resilience versus its stream of pale imitators will demonstrate why both ideology and a priori are powerful and essential to taking productive action. So that was the thread by Neil. I think that was a very powerful thread, Neil. maybe let's dive into some examples of, you know, contrasting Bitcoin education today versus back in 2013. So maybe if you could sketch the scene a little bit in terms of what w-what was the scene looking like in terms of sites, resources, forums, the then versus now?" }, { "speaker": "guest_2", "time": "12:37", "start": 757.17, "text": "Right, so I, I think, back in two thousand and thirteen, when I got into it, there, there wasn't a" }, { "speaker": "neil_woodfine", "time": "12:43", "start": 762.9, "text": "whole lot of resources and I, I think a lot of the Bitcoin space revolved around the Bitcoin subreddit. That's definitely changed today, for the Bitcoin space and kind of spot chain more generally, but, yeah, certainly, there was a lot of, people focusing on, the Bitcoin subreddit, Nakamoto Institute was just getting kicked off then, I believe. And I, enjoyed that a lot, I learned a lot from that, and I think it was very formative in kind of, setting my opinions early on. and then, yeah, I mean, there was a few kind of, small blogs, but, there was no kind of, Major, major resources, perhaps some of the Bitcoin news websites like CoinDesk and stuff like that. But all of these, resources were, focused on Bitcoin topics like Bitcoin was still super new then, it was only what four, four or five years old, people were still working out very basic fundamental questions like Should Bitcoin have value? Why, why does it have value? will it continue to have value? And does the technology work? Will it continue to work in the future under like certain stresses and, and, and attacks? And these are kind of like the questions that everybody has since we had to talk about Bitcoin, but I think Bitcoin has kind of proven itself in a lot of those, domains already, and we've kind of come to a bunch of conclusions on it, which means that people are starting to talk about lots of, Lots of other things, and unfortunately that's led to a lot of people discussing very strange and, and, and like I say, wacky kind of, economic theories re-regarding decentralization and, and, and tokens and that kind of thing. for me, like, I originally got into Bitcoin, absolutely for the, for the pump, for the, the get rich quick. I didn't really have any kind of, Clear ideology, back in two thousand and thirteen. I was always a little bit suspicious of authority, but that, that was about it. and I bought some Bitcoin with some, some savings and enjoyed the ride up but it was during the write-up that I learnt about, Austrian economics and libertarianism, which was a really like kind of fascinating kind of new space, for me, and that kind of got me hooked. And so when- When we started taking the ride down again, it really wasn't so much about the, the get rich quick anymore, was it? I realized there was much more to this, technology, way more to this, to this movement, and I think for people getting into, into it now, that is like a hundred percent Not the case. Like what we have is, an asymmetry of incentives, and I hate to invoke, Naval here, but, there's incentives to creating misinformation within the blockchain space because with altcoins, you can make a lot of money very fast. So if you can convince people to buy into these things that you've either pre-mined or, given yourself a, a token allocation, you can dump it on the, on the, the, on the market very, very quickly and make, make yourself a lot of money. But for the people that are talking about reality, people that are talking about, theories that have been proven and, and, and Bitcoin-related materials, there's very little kind of, financial incentive. For them to do that, and we just have this, and what that's resulted in is just this explosion of, of, of nonsense information, and you have people that have only come into the space for a few months and they're talking about like brand new economic theories they've never even read. a real book on economics, like, it's really scary. yeah, I mean, I think it's a really, a bad situation that we're in, but at the same time, it, it's, it's temporary. Like If our theories are correct, all of these projects will ultimately fail, like if they're, if they're not sustainable, and, as they kind of collapse, they're going to teach a lot of people a lot of lessons. And, hopefully that, they will still have enough kind of interest to, pursue and, and, and look into, Bitcoin, Bitcoin related," }, { "speaker": "stephan", "time": "17:09", "start": 1028.79, "text": "Yeah, that's a great point. I think as people get burnt from some of the more, you know, scammy type projects, they may, you know, some, some of them may Come, come back to realize where the real value was to begin with, and was there all along. Yeah. one interesting-- And, and, and," }, { "speaker": "guest_2", "time": "17:26", "start": 1046.04, "text": "and, and, and another, sorry. Another thing is that, like, it," }, { "speaker": "neil_woodfine", "time": "17:31", "start": 1050.58, "text": "It sound-- it might sound like I'm, saying that a lot of this, this, misinformation and this scamming is intentional. It doesn't have to be intentional. I think a lot of these people are absolutely convinced that they're correct. And, they have no reason to doubt it because they're making a lot of money from it. Like, there's no downsides for them when these, these projects fail, so they can kind of just continue going and it feels like something's, something's going right. in some ways, they don't really have any skin in the game, in the way that the structure of these, these projects. So I think that like it's not necessarily people that are like, maliciously trying to, to scam people, but, essentially what they're running is still scams and, if they're not thinking about the projects, if, if they're not thinking about the- the incentives and the structures within these, these projects in themselves, and then, then, like, kind of that's also their fault." }, { "speaker": "stephan", "time": "18:25", "start": 1105.45, "text": "Yeah, yeah. No, great point as well. I think we have a mixture of scammers in this space. We've got the intentional ones and the unintentional ones who, who actually think they're doing the right thing, right? And I think you make a good point in your thread when you say efficiency gains for the trivial and esoteric. So, you know, an example of that might be people who go around, run around talking about their project that they think is gonna take over the world, but they don't understand that it pales in significance against Bitcoin's, you know, kind of mission to try and rework global money. Do you have any examples of, you know, some of these kind of trivial and esoteric projects or kind of the aims that they're going for compared to Bitcoin?" }, { "speaker": "guest_2", "time": "19:08", "start": 1147.55, "text": "I mean," }, { "speaker": "neil_woodfine", "time": "19:11", "start": 1150.71, "text": "one, one example I use quite often is the, the s- decentralized storage, kind of meme that a lot of the, cryptocurrencies are, running on the, on the back of the, this idea that, we need to, decentralize storage, and we need a token to, to, to pay for it. Like, I don't really find storage to be a problem, in my life. I don't think any businesses that I know of or have worked with, Have problems with storage and there's not like a gigantic, benefit there." }, { "speaker": "neil_woodfine", "time": "19:54", "start": 1194.39, "text": "I mean, that's just one example, but I mean, there's, there's, there's, there's, there's, there's hundreds of others, right? you're putting me on the spot here. Yeah, yeah, sure, no, no, that's totally fair. but like With Bitcoin, the, the goals are very, very clear. Like, what we want to do is create," }, { "speaker": "neil_woodfine", "time": "20:13", "start": 1213.19, "text": "an online value transfer system, something that's native to the internet, that doesn't require any third parties, can't be censored, and is, objectively scarce. And that's like, you can sum it up in a sentence, And like the impact is like when you understand monetary economics and the fact that like money is the heart, one half of every single transaction in an economy, like you realize like this has very big implications. But when you talk to kind of people that are buying into the, the, the, the, the blockchain space and the cryptocurrency space, it's very difficult for them to describe the mission of, of, of this movement, like, there's, like, I said in the, in the tweet, there's, there's no coherent ideology whatsoever. like, it's lost all of the kind of libertarianism and anarcho-capitalism, Austrian economics is all gone, just, these very vague and ambiguous goals like decentralization and, and another thing I, I find it's like kind of- Almost a little bit anti-capitalist and kind of anti-progress, in that they, they describe corporations as like kind of, a negative for society because they have Profit incentives and the, services cost more because the companies are taking a cut, but like that's how business works and those incentives are the incentives for the businesses to provide better services and actually th- through competition, those, those, margins are always kept Fairly minimal, whereas like we know that decentralized systems, I mean, Bitcoin's a great example, they're not very efficient, like they're, they're very expensive to run, they're typically very slow and like People aren't necessarily, going to get a good service for them when it's applied outside of the, the monetary sphere. and then you've got the problem that like, they're all inflationary, so we've got multiple different projects all launching their own tokens. Like at infinite, just for forever, and like it's a very, very inflationary, so like it's, like when I say it's, counter to what Bitcoin stands for, we've got like something that's very anti-capitalist and, and very, very inflationary. It feels to me like, and I mean, all these projects rely on a lot of trust because they have very, very centralized development teams, aren't particularly secure from a, proof of work perspective, they just seem to be completely at odds with the goals of" }, { "speaker": "neil_woodfine", "time": "22:47", "start": 1366.99, "text": "Believe in, decentralization or kind of, disintermediation." }, { "speaker": "stephan", "time": "22:52", "start": 1372.01, "text": "Yeah, great points. Agreed. alright, so I suppose then let's contrast that and let's, you know, talk about what resources are there out there that you believe are actually good ones for, you know, new people to learn about Bitcoin?" }, { "speaker": "guest_2", "time": "23:07", "start": 1387.2, "text": "Yeah, this is, this is something that," }, { "speaker": "neil_woodfine", "time": "23:09", "start": 1388.92, "text": "I've, I've got an article, I've got like about ten media articles that just never get finished. But one is like, good resources for people. I mean, obviously I'm a huge fan of the Satoshi Nakamoto Institute I think that is a brilliant resource, particularly the crash course, in, politi- Bitcoin's political economy. I think that everybody getting into Bitcoin, cryptocurrency or blockchain for the first time like absolutely has, has to read that. there's also James and Lopes, very good, summary, although I, I find that, that can be sometimes overwhelming for somebody new and they can kind of get lost, or very, very bored. so I'm kind of cautious about, sending that, sending that out to people. But I, these days my best resource is Twitter, and like nothing beats a well-curated, Twitter, Twitter feed, And I would recommend that everybody makes, makes the effort to kind of curate their own Twitter feed, but, one of these days I'll put out my article with a, a bunch of recommendations for, people who'd follow." }, { "speaker": "stephan", "time": "24:16", "start": 1455.99, "text": "Yeah, no, agreed. I think, I think the Nakamoto Institute Crash Course is one of the best ways to come into this space and really learn what are the key things to understand. And I think, you know, it's a great point that you make about Twitter trying to curate your own feed in such a way that you get, you Low noise. And I think the challenge that a newbie in, you know, two thousand and eighteen or late two thousand and seventeen is they don't know who to even listen to, you know? And that's, that's, you know, that's really what your, what your thread was really about, is that there's just so much noise out there, it's very hard to filter down to what is the signal, what is, where is the, who's, who are the people to listen to, right? Because it's such a multidisciplinary thing that you just, you can't really, Definitely a, difficult, spot there for a newbie. So, yeah. So let's move on to the next thread that I wanted to discuss, which was a thread that you had, and basically the point about it was you were saying Bitcoin is not about functionality, usability, or convenience. It's currently quite bad at all of those things, but it's about sound money. Did you wanna sort of ex-expand a little bit on that theme?" }, { "speaker": "neil_woodfine", "time": "25:30", "start": 1529.96, "text": "Yeah, so often these tweet storms are triggered by, people I'm talking to in real life, and they'll start like throwing some questions or some arguments my way, and I kind of summarize them in a tweet storm. But, in this one, I think, somebody was criticizing Bitcoin for not being particularly convenient and difficult to use and like it's never going to succeed as a result. what I was trying to get across to them was that Like, Bitcoin is already very, very successful and, it's not succeeding because it's, it's useful and it, it won't succeed because it's useful because, I mean, we already have some very, very Useful payment technology, like I think China and Alipay rocks in terms of usability, like they've, they've really nailed it, but unfortunately it's, Alipay is getting worse, recently because it's reliant on this, fiat kind of Reminby, backboard and, increasingly kind of KYC and AML is rearing its, ugly head and, it's becoming, More and more difficult to, to, to use. so one example is you can only make, transactions up to a certain amount in a year, I think it's like somewhere, two hundred thousand, rmb or something like that. Once you go over that, that's it, you, you can't make any more transfers. To anyone. What you have to do if you ever receive money into one, one of these wallets, whether it's, Alipay or, or WeChat, you have to first withdraw it to your bank account, but then you can still send it out again via the app. But it has to come from your bank account. You get all these kind of like crazy kind of friction, entering the system, and this is because it's built on, a base layer which is not trustless, which relies on third parties And as, it's starting to get kind of, all sorts of interventions, and that's where Bitcoin offers its value proposition, like, i-i-it's value comes from the fact that it's trustless, that, it can't be censored, and that it's, it's scarce, and, and that's what's going to lead, lead to its success. That's not to say that like usability isn't something that we should be, shouldn't be working towards. Like, there's all sorts of, Businesses and kind of, developers working on really interesting, solutions to this. it's not something that I'm particularly, concerned with. and I think we always have to bear in mind that like Bitcoin has some very kind of key unique value propositions that don't exist elsewhere, and we have to focus on those and kind of protect those and, and develop upon them, before we start talking about usability or expanding usability." }, { "speaker": "stephan", "time": "28:24", "start": 1703.8, "text": "Yep, great points. Yeah, and I think the point I take away from that thread is really just that we have to keep layer one trustless and that really all of these other fancy pants, you know, usability, convenience, functionality, a lot of those points are just gonna have to come in on upper, you know, layer two, layer three, higher layers. That's what, that's, how I would think of that." }, { "speaker": "guest_2", "time": "28:47", "start": 1727.29, "text": "Yeah, I mean, I, I, I maybe we can come," }, { "speaker": "neil_woodfine", "time": "28:50", "start": 1730.13, "text": "somebody will come up with a great solution for making, layer one more efficient, more usable. I don't think that should be, resisted, it just According to current, like, analysis and like theoretically, it just doesn't add up. It doesn't seem like Layer One is going to scale much more, than it already has. And therefore, we should, therefore, we should focus, focus on Layer two. another point on this as well, like, I work in the payments industry, and one thing that I often say is that payments is a regulatory game and not a technical one. Like The reason why PayPal and, TransferWise and all of these, payment companies succeed is because they're very, very good at navigating the regulatory landscape, adapting to regulatory changes. That's where the success comes from, lowering the, the cost of transactions is, like using economies of scale to deal with, the regulatory obstacles that are put in the way. It's not a tech node, so when you have these fintech companies and they're talking about technology, payments isn't really about technology, it's all about, managing that, that, that regulatory risk. But with Bitcoin, it totally flips, and now all of the, the, the, the, the payment issues and efficiency and stuff, all of it becomes a technical issue now. Now we're not talking about like regulations and KYC and AML, jurisdictions and different, fiat and FX markets and all of that. Now we're Technology and like the, it's gonna be really, really, huge kind of benefit to payments and financial transactions. I think we're gonna see a lot of, really interesting developments in that space." }, { "speaker": "stephan", "time": "30:31", "start": 1830.95, "text": "Yeah, excellent artic- articulation there, Neil. I think, yeah, you make a great point there that really a lot of these payment companies are just their skill is in dealing with regulation, it's not in coming up with, you know, architecting clever technical solutions. So great point. I think the next one to get into is around Yeah, you had another thread which is around the, what we might call the bad incentives of people who make unnecessary tokens and ICOs. And so in this thread, you basically talk about how a lot of these ICOs and altcoins, and they're, they're, they're often cynical money grabs, and they're just using kind of unnecessarily fancy words, and they're basically interposing unnecessary tokens. So did you wanna expand a little bit on that?" }, { "speaker": "neil_woodfine", "time": "31:18", "start": 1877.68, "text": "If anybody follows me on Twitter, they've heard a lot about this 'cause I talk about it a lot, probably way too much." }, { "speaker": "guest_2", "time": "31:24", "start": 1884.11, "text": "yeah, but I, I, I think like, Right" }, { "speaker": "neil_woodfine", "time": "31:28", "start": 1888.04, "text": "now, like a lot of people are coming to a conclusion on, Silicon Valley that perhaps it's not all we made it to be. Certainly when I- Entered the startup space, there was a lot of kind of big VCs and a lot of kind of startup thought leaders that I looked up to, but, as we enter this kind of like Bitcoin, blockchain, crypto mania, I'm starting to realize that a lot of these people that I respected perhaps, Aren't as kind of, screwed on as I thought, thought they were, and I think what w-we've seen with the kind of altcoin token mania is kind of like this Ultimate culmination of like Silicon Valley ideology, which is like build fast and break things, like just experiment for experiment's sake, pump and dump, like With like IPOs and acquisitions, and like we've got to the point where they've dropped all pretense of like building something useful with like actual revenue streams, no cash flow, and we're just into pure equity. So we're into like this project that sells itself on just story, marketing, and like the, the thing that's like The product that sold is just equity, like the, we've kind of, just, it's kind of all this, this, this kind of insanity that's going on. and then we look at the incentives within the, Within the systems that they're proponents for, and they just don't add up. So, y- in any of these, I think like we, we brought up the example previously of, Shared storage. typically within these networks, you're gonna have, two types of user. You're gonna have the actual users, the people that are getting value from the system, and the, the service providers. So in the, the case of, sharing, in, in the case of the shared storage, you've got somebody sharing their hard drive to the network in exchange for tokens. And if you look at it closely, there's no incentive for either of these entities To hold the token, so the user doesn't want to hold the token, he just wants to buy, storage space, and then the service provider receives these tokens in exchange for providing, Some hard drive space. Like he doesn't want to use the service himself, he's, he's a service provider, he doesn't want to go on to spend these tokens on somebody storing his information, so he definitely doesn't want to store the tokens either. And so he- To liquidate. and then you look at the founders of the project, the, the, the, the, the, the CEO and the, the developers that are working on it All these guys also don't want to hold onto the tokens in the long term. The, the whole point of the token model is that they create what they call incentives for them to develop Open source software and their incentive is to dump, their incentive is to sell these tokens at some point in the future. so one question I often like to ask these when I'm kind of trolling in real life is like, \"What, what's your target price? Like, when, when are you going to dump?\" Because I think that's- Incredibly important information for anybody that's investing in the project, because once these people have dumped their tokens, these incentives that they're all talking about suddenly don't exist anymore. So there's no m-more kind of interest in kind of, continuing to develop on the project and then you've got all of the kind of, satellites to these projects which are described as advisors and then promoters, and you'll have like, I'm sure a bunch of meetup organizers also taking tokens in exchange for, allowing these people to promote to their networks. all of these guys also don't wanna hold the tokens, they're not interested in buying hard drive space, they just want to, to sell and like- When you break it down like this, you realize that no one wants to hold the tokens at all. Zero people want to hold them. And, and how can you, sell this as an investment? How can you describe it as an incentive if everybody within the network, is incentivized to sell. it just doesn't, it just doesn't add up. Yeah. Yeah. Yeah. And even more, and like, and" }, { "speaker": "guest_2", "time": "35:45", "start": 2145.04, "text": "I think, I think a lot of people disc- a lot of people disc- use the analogy of like a" }, { "speaker": "neil_woodfine", "time": "35:49", "start": 2149.04, "text": "fairground. And people, pay tickets to get in the fairground and get access to the service. And so like, I'm going to go to, Storge or whatever, and like, I'm gonna buy their tokens so I can use, use their service. But the thing is with the fairground, they fix the prices. Like, there is no free market, there is no exchange rate. Like, the exchange rate is set by the fairground, and they force you, if you're gonna enter their territory, to, to, to, to pay for a ticket at a set And you can't, you can't, you can't achieve that when you're, you're selling these things and allowing, allowing people to speculate on it, on an exchange, like it just, it doesn't, doesn't make sense. And it, it drives me crazy that, These people don't have any kind of, ideological, or kind of, liter-literature backing to their economic theories. Like, you have some very, very intelligent people that have, like, been successful in the past And they have no kind of basis for the theories that they're, that they're, proposing. and I find that very, very, offensive, that they think that, that's okay." }, { "speaker": "stephan", "time": "36:59", "start": 2219.11, "text": "Yeah. Yeah, right. Yeah, and I think the other point just to add to that is, it's also, it's not only is there nobody who wants to hold it, it's that the, the timing is all completely wrong. Because these ICOs, they get paid upfront, and so then now they have no more incentive to actually go and build an actual, build a working, viable product. They just get all the money upfront, and they can just skip and run, or they could, you know, put in the most Token, you know, very poor effort and some tokenistic effort, if you will, and then just say, \"Oh, well, it couldn't work, we failed. Oh, well, guess, you know, we're just gonna scoot off with the money.\"" }, { "speaker": "guest_2", "time": "37:39", "start": 2258.69, "text": "Exactly, and, and that's, that's the theory. So we look at, like, we just kind of think about it a priori, we look at it and we're like, okay, that is gonna be the result" }, { "speaker": "neil_woodfine", "time": "37:47", "start": 2267.14, "text": "of this system. And then you look at what's" }, { "speaker": "guest_2", "time": "37:49", "start": 2268.89, "text": "actually happened," }, { "speaker": "neil_woodfine", "time": "37:50", "start": 2269.61, "text": "that's what's actually happening, like You get these people that are launching multiple projects one after the other, there isn't no incentive for them to stay on once they've, they've raised that money in. And a lot of them perhaps will stay on, but they get to live out this like strange kind of like Silicon Valley CEO, fantasy where they just like hire a bunch of people and get them to do things while they're kind of like relax and, and, and, and kind of command people to, to develop. Very, very questionable products, isn't it?" }, { "speaker": "stephan", "time": "38:19", "start": 2299.48, "text": "Yeah, yeah, agreed. Okay, the next one I wanted to ask you about is just a discussion on Nasim Taleb's concept of the intolerant minority. So some people have commented in the past that they believe, okay, it's Bitcoin's intolerant minority that's gonna make it win, but I think you had a slightly different point of view. Did you wanna expand on that?" }, { "speaker": "guest_2", "time": "38:45", "start": 2325.13, "text": "yeah, so I, I, I, like," }, { "speaker": "neil_woodfine", "time": "38:48", "start": 2327.98, "text": "I think even within the kind of Bitcoin maximalist space, I'm probably a little bit contrarian on this one because I don't think, this makes sense at all. I think it's, analog to the, Bitcoin is a cult religion, Bitcoin is tribal. I think it's the same as that, that argument. This kind of idea that," }, { "speaker": "neil_woodfine", "time": "39:11", "start": 2351.13, "text": "Bitcoin is kind of like a, a confidence game or perhaps a marketing game, and we have to convince people, to use it, I think in Taleb's theory of like, was it the dictatorship of the minority? what he's describing is not people, kind of buying into these, to, to the ideology of the minority, it's them being flexible, adapting to it, Whereas I think in, in Bitcoin, what we want to see and what we expect to see is completely the opposite. W- if Bitcoin is a superior, monetary asset, if it, if it's better than, fiat, in both scarcity and like, ability to use it freely, then people will use it because it provides them benefits, and they will eventually buy into the system. For, for its benefits. instead of them kind of being like, \"Oh, okay, the Bitcoin is being stubborn again, okay, we'll, we'll use Bitcoin.\" Actually, I think in a monetary system being, a stubborn minority is really bad. Like, if you look at the B-Cash guys, they're not going to do very well if they're going against the majority. Like, money relies on the fact that you're part of the majority and that you can exchange it for more things. So like, yeah, I, I don't particularly like this like intolerant, meme. I think it kind of, describes Bitcoiners as, as bullheaded when actually they're, they're very, very open-minded and, are just kind of making decisions based on, the reality as they see it." }, { "speaker": "stephan", "time": "40:55", "start": 2454.93, "text": "Yeah, no, I think that's a great point you make, and actually the, Beecash analogy is quite a good one. I, yeah, I haven't heard that before. I thought it's, it's sort of like saying it's not that Bitcoin is gonna win because of, because the pe- the Bitcoiners are so intolerant, Bitcoin is gonna win because of its monetary superiority" }, { "speaker": "neil_woodfine", "time": "41:16", "start": 2475.84, "text": "Correct. Yeah, exactly. like, for example, the internet, was not, successful because we had a minority of people insisting that you send them an email instead of, sending them a letter, like People chose to send emails because they're, they're more convenient, they're faster, they're cheaper, all that stuff. with Bitcoin, people are going to choose Bitcoin because it's scarce and therefore can hold its value much better than, a fiat currency, and because they can send it without having to ask a third party for permission. Yeah. And those are the qualities that are going to attract people to it, and they're not going to be adopting it because they're being flexible to a, to a small minority, they're gonna adopt it because they actually personally want to use it and see, see the benefits." }, { "speaker": "stephan", "time": "42:06", "start": 2525.62, "text": "Yep. And perhaps now the flip side of this argument, the other way people come at it, is they say, \"Oh, you Bitcoiners Does Bitcoin need to be more, more, quote unquote, civil to win, or can it win regardless?" }, { "speaker": "guest_2", "time": "42:21", "start": 2540.9, "text": "like, who-- more civil to who? Like The people that this comes from are generally" }, { "speaker": "neil_woodfine", "time": "42:27", "start": 2546.88, "text": "like, one of like a bunch of categories, they're either altcoiners, who are basically promoting, these very nonsensical, economic systems and, Not really contributing much. You got the private block chainers, who, are just like, glorified, consultants in most cases, who generally don't know anything about technology. and then you've got, proponents of the fiat system and no coiners. And yeah, Bitcoiners are uncivil to them, but like- All of these, I mean, particularly the, the no coiners are kind of enemies of, enemies of Bitcoin and, they're causing a lot of harm, by promoting the ideas that they're promoting, and they deserve to, be criticized and, and, and held to the flame for it, in my opinion. From my experience, like Bitcoiners are extremely civil." }, { "speaker": "neil_woodfine", "time": "43:28", "start": 2608.23, "text": "like I recommend anybody that thinks Bitcoiners aren't civil to head to a, a Bitcoin focused event, whether it's a Bitcoin meetup or a- something like building on Bitcoin or, Bodhi Konepaja, like these events are incredibly civilised, everybody's super nice and welcoming and, doesn't get in on anybody's back even, even in debates, I think, yeah, people are just a little bit upset because their, their ideas are being criticized and, and they don't like it. I mean, actually, another point on that, I bumped into a bunch of ICO guys recently at some of the events that I've been attending, and to, in real life, I find them to be completely obnoxious, 'cause, I mean, I'll give them the cold shoulder if they start like chatting about their, their ICO projects, but they will insist on describing why their, their, their project makes sense, and Alone, like I'm pretty sure if you chat to a Bitcoiner and they weren't interested, you weren't interested in talking to them, they would, they would, they would be cool with that and just kind of move on. But, these ICO guys are on a mission to, to, to- frame themselves as not, not scammers." }, { "speaker": "stephan", "time": "44:38", "start": 2677.75, "text": "Yeah, yeah, you got, the missionaries. Alright, the next one I wanted to t- chat about, and I've seen you comment on this, is just the absurdity of regressing back to barter, like let's say you had bread coin and steak coin and milk coin" }, { "speaker": "neil_woodfine", "time": "44:55", "start": 2694.74, "text": "Right, yeah, like essentially that, that's what, this kind of multi-coin model is proposing, there's an infinite number of services that we can provide in the world, therefore, like Do we have an infinite number of tokens? I think multi-coiners would suggest any online service would require its own token, but like, if you, compare that to the, to the real world, like every service and good that we buy doesn't require its own token, and if we did all use a separate token for each different service, it would be incredibly inefficient. Like Anybody that's read about the, the emergence of, of money knows that the reason that money exists and that we gravitate towards one, commodity for, for, for monetary use is because this like multi coin model is completely inefficient and it's just a, a gigantic Backward step towards barter where we have tokens that represent all the things that we can think of," }, { "speaker": "neil_woodfine", "time": "46:00", "start": 2759.7, "text": "again, like, total madness. And I think sometimes when you- You ask these people how it would work, I can really drill down with them. I've tried it a few times, they'll generally start describing things like, baskets of tokens and like, indexes, and using atomic swaps and decentralized exchanges to flick in and out of these different tokens, but I, I, I don't think they understand, like how, liquidity works on an exchange like, I've worked at an exchange and building liquidity is really, really difficult, and the idea that you could have like ten thousand coins, all with a, a pair with another ten thousand other coins, it's all madness. You wouldn't be able to build up any kind of serious liquidity between all those tokens, you'd have to go through One token which had more liquidity with all the other tokens, i.e., Bitcoin, and, and again, for any of these tokens, the more exchangeable they are, the, the better these atomic swaps get, the more efficient they are. The less reason you have to hold any of the tokens at, at any one point. You hold your Bitcoin, and then when you want to use one of these questionable services, you immediately convert your Bitcoin into the token, spend it, get whatever service that you wanted, and then the, recipient on the other side immediately liquidates via a atomic swap into, into Bitcoin, and then the token like cannot achieve any kind of meaning of meaningful value, whatsoever." }, { "speaker": "stephan", "time": "47:38", "start": 2858.49, "text": "Yeah, yeah, yeah. So, yeah," }, { "speaker": "neil_woodfine", "time": "47:41", "start": 2860.51, "text": "yeah, I mean, like, yeah, these guys have a very, very hard time describing in, in any kind of, clear way how, how, how this model would work." }, { "speaker": "stephan", "time": "47:50", "start": 2870.44, "text": "Yeah, yeah, and I think you make a fantastic point there about how the better atomic swaps get between the different cryptocurrencies, whether they're centralized or decentralized atomic swaps, the better that is for Bitcoin, because now there's even less reason to hold these altcoins. There's more- More reason that people would want to just go to the best one and not waste time holding a sub, you know, a subpar coin or a coin with less liquidity. You'd want to get out of that as soon as you can." }, { "speaker": "neil_woodfine", "time": "48:19", "start": 2899.39, "text": "So the only reason that you would ever hold, one of these tokens is because these projects have created artificial friction that requires you to, use one to, to access their service. But I mean, like if you think about like your toolbox at home You haul your toolbox, you buy a toolbox, and you haul your toolbox at home, because, you need it like, immediately when, when you need it, right? and it's inconvenient to go to a store, buy a new toolbox, and then fix whatever you're, fix whatever you're repairing. But if you could, make the toolbox appear in an instant and, disappear in an instant, you wouldn't, you wouldn't ever need to buy that toolbox and haul it at all. You would and in exactly the same way with these tokens, people are just going to, or I'm saying they're going to, actually nobody's going to do this because none of this makes sense, but let's say, there was a project that required this, nobody's gonna hold the token, they're just going to, buy and sell it." }, { "speaker": "stephan", "time": "49:21", "start": 2961.18, "text": "Exactly, fantastic analogy, I like the toolbox one, that's really good. Okay, now the next one, is, it's a, it's a common And sometimes even, you know, people who are kind of pro Bitcoin make this error. They, I guess I'll ask it this way, is Bitcoin backed by energy, math, scarcity, or decentralization?" }, { "speaker": "guest_2", "time": "49:49", "start": 2989.1, "text": "Okay, so, yeah, people are using this," }, { "speaker": "neil_woodfine", "time": "49:52", "start": 2992.3, "text": "this \"backed by\" term, totally willy-nilly, it's starting to lose all meaning. So, historically- In a monetary context, back by means, there is a, a commodity sitting somewhere in, a, a vault, That, whatever you're using as the currency represents, and that's, that's what backed by means in, in, in a monetary sense. but now, like, we still-- I mean, perhaps it was the US dollar that started, I don't know, but like, it's backed by the, the faith of the US government or whatever it is on the, on the dollar bills. it's backed-- a lot of people say it's backed by, the tax payer, it's backed by, the military" }, { "speaker": "neil_woodfine", "time": "50:43", "start": 3043.11, "text": "Expanded into the cryptocurrency space, where people start saying like it's backed by decentralization, it's backed by, all these, really wonderful things. But, I think If we're going to really like, succeed with this kind of monetary revolution, then we have to start using terms properly. Like the, one of the reasons that we're in this mess in the first place is because people have forgotten what money is and how to use, these terms. so, like when we, we talk about backed by, I think Bitcoin is just backed by Bitcoin, it's not backed by anything else, it's, The, the energy used, to create it is the same as the energy used to, mine gold, for example, and we don't say gold is, is, is backed by energy, it's, it's nonsensical. All Bitcoin is, is a scarce commodity. yes, it requires energy, to, to, to, to, to obtain it, and yes, it relies on decentralization to maintain its, its scarcity and maintain its censorship resistance, but it's not, it's not backed by any of these things. we may, in the future- I expect that we will start to see, Bitcoin derivatives, and then we can start seeing that, like, this token that we're, sending around is backed by Bitcoin. You can probably, possibly, see it a bit liquid Box streams liquid, I don't know, like the tokens on there are backed by Bitcoin. but yeah, I think we need to start using that, that, that term, more correctly." }, { "speaker": "stephan", "time": "52:19", "start": 3138.72, "text": "Yeah, yeah, agreed. Fantastic point. I like the way you, articulated that there as well. Okay. So I think, the last one is just a bit of a throwaway one, thought it was kind of funny. I saw a good tweet by you, you said, it's-- and it's related to Nasim Taylor's concept, \"Skin" }, { "speaker": "stephan", "time": "52:38", "start": 3158.01, "text": "To use on a smart contract themselves. All BTC hodlers I know are saving their coins to purchase things and make investments in the future." }, { "speaker": "neil_woodfine", "time": "52:48", "start": 3167.56, "text": "Yeah, so this, this puts back into the, incentives to kind of hold and dump that we, we talked about earlier. But like, when I'm talking to, S-heads, as they're called, about Ethereum, like, I like to ask, it wasn't me that said it, it's somebody else on Twitter, mentioned it, I can't remember who it was, but it was the one of the questions they like to ask them is, what's your favorite smart contract? not often. This is a difficult question to answer, but, but yeah, like, in the same way, it's like, okay, what, what, what are you saving your tokens to s- to spend, spend on? Like What, what smart contract are you looking to spend those, those, those ethers on? And, and generally there's not, there's not a good answer, and, they tend to try to worm their way out of it, whereas like every single Bitcoin Long-term holder that I know are all looking forward to, I mean, there is an el- certainly an element of get rich quick to it, but are looking forward to, buying things with it, having fun, but then also kind of investing, creating businesses, and basically using the tokens that they're holding as, as money. Whereas the Ethereum people are far less sure about what they're going to use them for, they, I think they, they secretly and really don't wanna say it, but they're all looking forward to somebody else wanting to use these smart contracts so they can sell their, sell their Ethereum to them, but I don't think that, that person's gonna come." }, { "speaker": "stephan", "time": "54:19", "start": 3259.14, "text": "Yeah, great, great point. I think it's sort of like a smart contract greater fool theory sort of thing going on there. Yeah. Okay, so I think, we're, we're getting, pretty much to the did you have any final comments that you wanted to make, Neil?" }, { "speaker": "guest_2", "time": "54:36", "start": 3276.01, "text": "no, I, I'm good. That was a fantastic chat. you've had some amazing guests" }, { "speaker": "neil_woodfine", "time": "54:41", "start": 3281.09, "text": "on, prior to me, so it's an, an honor to, to, to be on the show. Oh, man, it was a pleasure to have you on as" }, { "speaker": "stephan", "time": "54:49", "start": 3288.88, "text": "well. All right." }, { "speaker": "neil_woodfine", "time": "54:50", "start": 3290.24, "text": "I, I, I would like-- Oh, sorry, yeah. I was just gonna say, anybody, anybody, who's on Twitter definitely needs to follow me" }, { "speaker": "stephan", "time": "54:59", "start": 3299.14, "text": "if Neil on Twitter, his handle is n woodfine. I'll put the link to Neil's Twitter account on the show notes page for this episode, as well as some links to some of the tweet threads and comments that, Neil has made that we discussed today. so guys, look on my website stephanlivera dot com, search s l p five, and that will be the show notes page for this episode. and, yeah, just finally, if you, and- Enjoy the show, please give it a five star rating and share it with your friends. and with that said, we'll say goodbye to you guys and, see you in the next one. Thanks. Bye." } ] }