{ "episodeId": "SLP538", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "natalie_smolenski": { "name": "Natalie Smolenski", "role": "guest", "tag": "NATALIE" } }, "segments": [ { "speaker": "stephan", "time": "00:00", "start": 0.08, "text": "It was the era of high nationalism, of high homogenization of culture within states, but with the advent of information technologies, the monopoly of the state on information, on commerce, on, warfare has been fundamentally undermined, and there's no putting that cat back in the bag." }, { "speaker": "natalie_smolenski", "time": "00:36", "start": 36.42, "text": "Natalie, welcome to the show. Hi, great to be here. So Natalie, I've seen some of your work and I thought you have some, definitely some interesting things to say about Bitcoin, anthropology, and, political economy. So, why don't you tell us a little bit about your background as an anthropologist and then sort of how, how you're thinking to mesh these worlds of Bitcoin and anthropology?" }, { "speaker": "stephan", "time": "01:02", "start": 61.66, "text": "Sure, yeah. So I'm, you know, I trained as an anthropologist in, the early 2010s, historical anthropology, also, you know, did quite a bit of work in, in philosophy, and, you know, then kind of made a transition into industry. So, you know, I've, I've been in a number of roles, as a brand planner and, as a tech- Technology sales, executive, co-founded a company in twenty sixteen, that built the first Bitcoin-based digital identity wallet. so, you know, we recognized pretty early on that, an immutable ledger for verifying transactions can also be an immutable ledger for verifying digital claims, which, you know, is increasingly important as we move into an era era of disinformation, misinformation, AI-generated, just explosion of data, the need to verify the provenance of that, but it's also quite important to do that in a self-sovereign manner, meaning in a manner that privileges the, the individual as the source and authority of, of, information about themselves. So that's kind of my background. I've, you know, my company was acquired in twenty twenty. I, I still lead business development there. and I also co-founded the Texas Bitcoin Foundation, which is a five hundred one C three public charity specializing in research and education about Bitcoin and political economy." }, { "speaker": "natalie_smolenski", "time": "02:54", "start": 173.7, "text": "Great. And so, yeah, I think there's a lot of implications and things we can get into, around what kind of impact Bitcoin- Bitcoin will have on society, and I think another interesting area is, this, I guess, debate between, let's say some anthropologists and some economists on, where money formed and, you know, what is the real origin of money. I know you're writing a paper on this that's in draft, so do you wanna just tell us a little bit about this and how you got this idea to, to write about this?" }, { "speaker": "stephan", "time": "03:25", "start": 204.64, "text": "Yeah, absolutely. So, you know, my, my anthropological training, focused on, a set of literatures that Tend to not take, economists and economics into account, or if they do, they, they treat it in a very polemical fashion, and, and this often comes down to just Ideological disagreements, between, many anthropologists, and many economists about, the, the value of capitalism as a form of political economy. And so a lot of anthropologists sort of treat the entire discipline of economics as an extended apologia for capitalism, and, and feel this, this need to discount and disparage it as a result. of course As, as you know, I'm sure, economics isn't all one thing. There are many different schools, of economics. a lot of what, gets branded as economics is in fact some flavor of neoclassical economics or Keynesian economics. and there are, you know, of course, many, different, interpretations and schools of thought, around, you know, everything from money to credit to, entrepreneurship to, you know, the, the role of, middlemen, in an economy, to, you know, most fundamentally this question of value, which both anthropologists and economists, deal with. It's, it's sort of the master concept of both fields. And, and so what I perceived Coming at this from an anthropological standpoint is that the discipline wasn't actually making use of some valuable insights from the discipline of economics, valuable, ha, that could in fact inform, anthropological investigations of value. And so that's, that's the direction that I'm going. And in this paper, which, I'm authoring for the Satoshi Papers, this is the first edited volume of, of peer-reviewed essays on Bitcoin, that, I believe has been published ever. so the, the focus of my paper here is just to address David Graeber's theory of money. So Graeber is an anthropologist, he's also a very effective popularizer of anthropological concepts. I have a lot of respect for Graeber, this is why I take him seriously. Enough to, to offer a extended rebuttal, I think, to his theory of money, which, you know, is, is kind of in this place of You know, when a lot of people talk about anthropological theories of money, they're, they're really implicitly talking about Graver's theories of money, because he is one of the few anthropologists who have elaborated systematically a theory of money. and so I, I wanted to kind of address his work specifically as an entryway into this broader question of value and bringing the disciplines of, of anthropology and economics together." }, { "speaker": "natalie_smolenski", "time": "06:50", "start": 409.6, "text": "Right, and I notice in your paper, or at least the draft, that, there's this clash, and I, I, funnily enough, I remember seeing that clash on Twitter, and so- David Graeber, in that clash, is arguing with Nick Szabo, who's also a legend in the Bitcoin world, obviously, right, for his work, and also it gave me these tones of On one, on one camp, you sort of had the Austrian economists who were arguing this commodity money theory, right? Karl Menger, Origins of Money, in the 1870s, talking about how money evolves. It's this theory of like a bottom-up thesis, whereas, there are different theories of money, of course. There's this top-down Chartalist or state theory of money, and so I-- and as I'm understanding, David Graeber's view is more like, \"Oh, no, it started as debt and it's credit, and that's really what it is.\" And then on the other hand, you sort of have the Austrians and others, Austrians and related other people who are arguing, \"No, no, actually, it's a commodity money theory, that's how money, at least, started.\" Is that-- would you say that's kind of a, a high-level summary, or how would" }, { "speaker": "stephan", "time": "08:01", "start": 481.42, "text": "Yeah, you know, there are these two broad schools, in monetary theory that, that are interdisciplinary. So, economists, social scientists, anthropologists, you know, there's the chartalist school and the metalist school or the commodity school, and they have different theories about how money originates and what it is. you, you offered a, a pretty effective summary there. You know, the chartalist view is that Money is a creature of law, and law is the, the provenance of the state. so in effect, whatever the state decrees to be legal tender within its jurisdiction becomes money. there, there are are commodity theorists of, of money who argue, by contrast, that money is the most salable good, and so it emerges bottom up, from countless interactions of, you know, market actors trying to transact and not being able to transact directly, which is, you know, barter, good for good, and so they need an indirect, mode of transacting. money becomes this, this literally- medium of exchange because it's the thing that most people in that market are likely to want. so if you can't sell, you know, good A or good B or good C, you probably can sell money. and so, you know, these are two different points of view. My proposition in this paper is that it's not an either or. there, there are in fact examples of charterist money, state declared legal tender Fiat currencies, I mean, these things exist, they are, they are out there, they're a material phenomenon in the world, they're used as media of exchange, but they're not a universal monetary technology. And so what I'm, what I'm arguing is that money is a social technology. but like any technology, it can be sort of tailored to different use cases. so credit money is, very useful under conditions of, of high trust You know, and when we, when we say credit, all we mean is deferred payment. so, you know, transacting on credit is, is as old as time itself. and, and in this regard I agree with Graber. I think he's, he's saying something true. but not all forms of transacting are, High trust to that extent. there, there are entire categories of transactions that, are either with strangers or with enemies, or, you know, with, with people you may not just- Have an established relationship with, you en- you encounter them only peripherally, and so you don't really trust them, and you need to transact with them. So what do you use under those conditions? Well, you use something that has use value in and of itself, and commodities, are that. So they're a category of good that's useful, and then when they are used as money, they also attract a monetary use. value, so, so what economists call a monetary premium. and these, these currencies, these forms of money are used, again, low trust or with people you don't trust very much, but also under conditions of very high risk transactions. So the, the stereotypical example in anthropology is, is the wedding. a marriage is an institution. It's a, it's a social institution. It's extremely fraught. The entire community has an interest in making sure that the marriage endures and succeeds and produces offspring and, you know, generates value and wealth that is then passed down as inheritance in the community. And so the families that are coming together in a marriage and then the wider community in which those families are situated, they have a lot on the line in this working out. and so in effect, a marriage is a contract. That needs to be heavily collateralized, with items of real value, where, you know, you're, you're putting real things at stake. And so, you know, whether we talk about dowry systems or bride price systems, very often those are denominated in commodity monies, to a large extent, because there has to be-- there have to be teeth to, to this contract, so to speak," }, { "speaker": "natalie_smolenski", "time": "13:11", "start": 791.3, "text": "So, two, two types of money. Yeah. Yeah. And in a sense, I guess people are showing that they've had to make a certain amount of sacrifice, right? Like if I'm gonna give you my daughter, you need to pay X amount of gold and this number of cows and, you know, et cetera. Right. At least historically, that's what it might have, you know, happened. And maybe today, still in parts of India or something, you know, that kind of thing might still happen. but so- I, I, I am curious on, I think you, you might have seen some of the debates that have gone back and forth, between some of the, let's say, commodity money theorists, the Austrians, and other people and, people like, the late David Graeber, I think one area that's interesting is if we're gonna think of it, as Okay, it's just, you know, it's just this ledger or it's this credit system. What's the credit system denominated in, right? Because we could ask the question, well, you know, even in some of these examples where David Graeber talks about Mesopotamia or something like this, you could ask the question, well, hang on, how did they know to use silver, right? Like, they had to- You know, was there a process of market discovery and then, you know, the state in that system had to sort of piggyback off that and say, \"Okay, we're gonna now take control of this institution and turn it to our purposes\"?" }, { "speaker": "stephan", "time": "14:36", "start": 875.79, "text": "Absolutely. And, and this is again where we, we get into different types of money as different social technologies. So, both credit money and commodity money, at the end of the day Are redeemable in some value. There's always, even with credit money, the IOU eventually has to become something of real value. and in fiat currency systems, what that is, is GDP. so instead, so the difference between credit money and commodity money is that a commodity money, the, the IOU at the end of the day, at the end of the chain of IOUs, is redeemable in a fixed amount of a concrete commodity. so that's why it's, it's much-- it's considered much more stable, f-- from a lot of people's point of view view because they know that, you know, at, at the end of the day, it's redeemable in silver, in this much silver. This IOU is redeemable in this much silver. This IOU is redeemable in this much gold. Or this much Bitcoin. Whereas with fiat money, at the end of the day, what backs it is the economic power of the state as a whole, of, of the jurisdiction over which the state has sovereignty, ostensibly. So I'm just curious there," }, { "speaker": "natalie_smolenski", "time": "16:03", "start": 963.07, "text": "you mean, I guess you're, you're implying like the taxation revenue, right? Like the, in, in that context, it's like the state is sort of asserting its power over its citizens and residents and taxpayers, and saying, based on your future revenues, we're gonna tax some of that and pay that back to our debt holders, which is the government bond holders in this case, right?" }, { "speaker": "stephan", "time": "16:24", "start": 984.14, "text": "Right, and, and it doesn't even have to be taxation revenue, it's the full assets of the state. and so in, in situations of like dire economic extremity, like, for instance, the, the Weimar Republic, or, the Bolshevik Revolution, where, you know, both of these- both of these polities were seeing hyperinflation around the same time historically. They both said, \"You know, forget tax revenues, we, we don't have tax revenues.\" Our GDP is, or our, fiat is backed by the productive economic power of the people of this country. But, but how do you denominate that? I mean, how, how do you determine that X amount of currency translates into X amount of units of GDP? and it, you can't. And, and this is why, you know, For like international lending, state to state, often the foreign nation creditor will just seize productive assets like ports or factories or land because, you know, the country they've lent to, the debtor country, can't pay them back in money. so they go in and seize productive assets. this is, you know, what China's doing worldwide, as, as many countries default on, on their debt. so, so this is the problem with fiat currency is that, or with, with credit money in general, is that it works as long as you trust that the debtor can pay it back. The moment you don't trust the creditor to pay it back, then the question of measurement comes into play. Okay, well you're a hundred billion dollars in the hole How, what does a hundred billion dollars translate into in terms of concrete productive assets, and the debtor has to come up with that value? whereas if it was a commodity money, and there were a hundred billion dollars of debt in a commodity peg currency, that would translate into a very clearly measurable amount of a specific commodity. so that's really the main difference is like, where does the chain of- Of IOUs end. In a credit money system, at the end of the day, it's assets, or in a, specifically in a fiat money system, 'cause there are different types of credit money. Credit money can of course be, be backed by a commodity. We're talking about fiat money, where the, the credit money is backed by the productive capacity of the country that is issuing the fiat currency, and this, this works as long as As the economy is productive, it continues to grow, but the moment you have economic, collapse or, or even downturn The sovereign credit crisis begins. creditors begin to wonder, like, \"Hmm, like is Sri Lanka able to pay back this debt? is, is the United States, in fact, generating enough economic value to support this massive debt?\" and at that point they start asking for, for real things, either commodities or, real estate or land or industry." }, { "speaker": "natalie_smolenski", "time": "20:08", "start": 1208.07, "text": "Back to the show in a moment. This show is brought to you by CoinKite dot com. So for those of you who are interested in self-custody of your Bitcoin, and if you're holding Bitcoin, you should be, CoinKite has been around since two thousand and twelve, and nowadays they're really focused on Bitcoin hardware and hardware security. When we are securing our coins, we need a device that can secure the private key and also help us with signing the transactions, i.e. spending that Bitcoin. And a great device to do that is the Cold Card by CoinKite dot The Coldcard is a really reliable and secure device. The Coldcard Mark IV has two secure elements, it's got a range of features, the reliability is really great in my experience. You can use the micro SD card to move things back and forth between the device and the computer, or you can directly plug it into the computer and use it easily with desktop software such as Sparrow Wallet or Specter Desktop or Electrum. CoinKite also make a range of other accessories That you can use, such as the BlockClock, the BlockClock Mini, and the BlockClock Micro, as well as steel backup plates and other devices such as the TapSigner or the SatsCard. You can get all of this devices, all of these devices over at Coinkite dot com and use the code Livera for a discount on your cold cards. The lead sponsor of this show is Swan Bitcoin. Over at swan dot com, you can start learning about Bitcoin and buying Bitcoin. Now, many people take an initial lump sum purchase, and then they set up an automated recurring savings plan or Bitcoin purchase plan. And so just every week or every month, they're buying a set amount of Bitcoin, whether that's fifty dollars, hundred dollars, however much they are able to save with Bitcoin, and this helps them deal with the volatility of Bitcoin, because anybody who's been stacking for a longer period of time has seen their purchasing power rise dramatically. Now, over at Swan, there is easy, free, and automated withdrawals As we say in Bitcoin, it's not your keys, not your coins, and Swan makes it easy for you to withdraw to your own coins. Now, Swan also has a service called Swan Private. So for those of you buying larger amounts of Bitcoin, let's say over a hundred thousand dollars, go to swanprivate dot com. You get an individual, personalized service with a concierge, somebody who you can call. You get support in terms of corporate, retirement, and trust accounts, and so that's a great service for those of you who are buying larger amounts of Bitcoin. Otherwise, if you're just getting started and wanna stack Bitcoin, go to swan dot com slash livera to get started stacking Bitcoin. And now, back to the show. Right. And so I guess that can also become a heated thing because maybe the people of that country, like, let's say of Sri Lanka, might say, \"Hey, we didn't, we didn't want this, or this is, you know, this is by a corrupt government who were tak-- putting money in their own pockets. And now, you know, there's this kind of justice question of, is it really right You know, obligation. I, I mean, it's, it's kind of a hard-- there's not really a right answer, right? but I, I think maybe that's, that's a situation, where it's, where it's a breakdown in trust." }, { "speaker": "stephan", "time": "23:23", "start": 1402.51, "text": "Exactly." }, { "speaker": "natalie_smolenski", "time": "23:25", "start": 1404.97, "text": "And so when we're talking about all of these aspects, it's important to also consider what is-- what are the four, what are the purposes of money, right? Like people normally talk about the three, right? Like unit of account, store of value, medium of exchange. These are kind of the main three that most people would talk about Is there a another category, and the reason I'm asking this is if you look at some of Nick Zalber's work, which I'm, which I know you have, he talks about collectibles, and so maybe there's this- Proto-money form, this kind of collectibles, and then you sort of have, the other stages, wh-what's your view on those?" }, { "speaker": "stephan", "time": "24:04", "start": 1443.75, "text": "Yeah. So, So Zabo's theory of commodity money is that, commodity monies always em-emerge, from stores of value. So, proto-money is a store of value. and, and I think that's fairly uncontroversial. you know, his, his, his theory is that, one of the ways that humans, have evolved to store value is through our capacity to appreciate beauty so it's our aesthetic enjoyment that we derive from things, from adornment, you know, jewelry, fine textiles, shiny metals, these, these are technologies of value that we have learned how to store, and then to exchange for, you know, other, other necessities. so every, every example of commodity money that emerges in the, in the anthropological record is, tied to some collectible, or emerges from some collectible that is used as a store of value. the, what's interesting is that In order to, to truly become money, like a medium of exchange and a unit of account, as well as just a store of value, the collectible over time has to be refined into, a high volume of, in effect, interchangeable, fungible units, that have a reliable-- that serve as reliable measures of value. so that is the unit of account and, and the medium of exchange. You know, if, if I have a beautiful gold necklace, that's a store of value, but, that doesn't-- it doesn't, it has to be appraised, and there's a cost to appraisal. so this is, Salo's other, other point is that, we often- Underappreciate the role of accounting in, the historical development of, both money and, and, mercantile economic systems and, and ultimately capitalism. The question of measuring value is actually extraordinarily, hairy and, measuring value itself is a costly process. And so the more that we can reduce the costs of measuring value value, the more we can facilitate exchange. And so that's what money does, is it basically serves as a shorthand, for measuring value that makes it much easier to transact" }, { "speaker": "natalie_smolenski", "time": "27:05", "start": 1625.35, "text": "Right. And so m-maybe, I guess the, the commodity money theorists might say, well, it starts as, you know, barter and then eventually evolves And over time, there are different goods competing, right? As we said, the most salable commodity, and over time historically, that's typically been gold and silver, and so that then forms the basis for the accounting system, I, I presume, and then that accounting system is becomes like, oh, okay, if we're doing business, it's worth You know, two hundred ounces of gold or wh-whatever how, how much that price is, that's, that's where the accounting aspect comes in. another aspect you mentioned in your paper is this distinction between payment and settlement. So can you just elaborate a bit on that, on the payment versus settlement distinction?" }, { "speaker": "stephan", "time": "27:53", "start": 1673.12, "text": "Yeah, so, thank you for reminding me, 'cause you, you had asked about, the three characteristics of money as a store of value, a unit of account, medium of exchange, and are there other, perhaps characteristics of it? yeah, these, these three elements are kind of where, the consensus of most economists has come to rest on, but, if you, if you look at the literature One of the other characteristics that is frequently mentioned by both, anthropologists and economists is money as a method of payment. and, you know, what is payment? Payment is the settlement of a debt, or it's, it's the method by which a debt is settled. but It doesn't necessarily have to, always result in settlement. so, you know, and this, this psychological distinction is really important because when we talk about settlement, what we're talking about is satisfaction of the creditor. Like the term satisfaction is a psychological term. the creditor has to feel that the debt is settled, because if they don't They're gonna cause trouble. there will be social unrest. The creditors gonna try to get what's owed them, in some way. and so- Human communities have a really high stake in ensuring that all debts are reliably settled within their jurisdiction, because otherwise there's potential for violence, social violence. and this is why the, the governing authorities tend to step in and try to define legally what constitutes settlement of various debts. so in, in criminal codes, it's, you know, as, as, as old as they are, any criminal code you look at historically has, you know, a list of crimes and then, The compensation that is due, the victim of the crime, or, if it's a victimless crime, sometimes the compensation that is due the community or the society. and that then becomes a normative, practice for settling debts, but there's still no guarantee that in any particular case, the creditor or the victim or the wronged party, the plaintiff, will be satisfied with whatever the legal prescriptions for debt satisfaction are. and so like, you know, to, to give an example, there was a, a shocking case, I believe in, in the 1980s of, A mother who discovered that her child had been raped and murdered by, by this man, who, who then she pressed charges against, was taken to court, was convicted, and the mother appeared at the sentencing in court Pulled a gun and shot him, knowing that she was gonna go to prison for this act. This was an illegal act, you know, the justice system had done its work, he was going to be given the prescribed payment for his crime, but she, as the creditor, found that payment insufficient, and she determined as a creditor that through violence she was going to settle the score. so, you know, this is where we get into vendetta, vengeance, the, the institutionalization of the blood feud, which is characteristic of many human societies across history, particularly- Stateless societies, when you don't have a court system to enforce the payment of debts, you often get this chain of retribution, that becomes a vicious cycle and, and that That is extraordinarily destructive of life and property. and so a lot of the reasons that we, human societies evolve a state, is because they're trying to tamp down the violence Of, either individual or small groups like families or clans, engaging in this chain of retributive violence for a debt That can never be settled, because the creditor can never be satisfied. and that process, you know, we've, we've managed to achieve rule of law that, precludes the blood feud But that system is always in danger of breaking down. And when does it break down? It breaks down when people lose trust in the institutions of justice to actually deliver, to reliably deliver, you know, more or less satisfactory set-settlements of debt. If, if people start believing that the justice system is, rigged or, unfair or is captured by- Interests that isn't going to serve them, then they begin to take matters into their own hands and creditors begin deciding outside of the law, much more frequently when they are satisfied." }, { "speaker": "natalie_smolenski", "time": "33:41", "start": 2021.02, "text": "So, yeah, I guess a, it, it can be like a vigilante context or maybe it can be a context where maybe people look for a extra legal, you know, judge even. Maybe, maybe that could be something we start to see where people start to go outside of the, you know, the jurisdiction that they're in, they look for somebody outside to sort of, rule what's the, what's the right, course of action. it's interesting though with, like, with, you know, even with the blood feud aspect of it, I, you know I'd, I'd have to be a bit skeptical that, we've solved that with the state. I think, many states have, have in fact exacerbated that with, you know, if you look at the war on terror and how there are all these people who- You know, then they cause all this blowback, and this is a point that people like Ron Paul has been making, you know, for decades. Right. so, you know, I guess it's unclear to me whether that we've had a net saving there. but even that aside, if we would like to speak to that," }, { "speaker": "stephan", "time": "34:41", "start": 2081.37, "text": "'cause that's a really important point, and this- The War on Terror is an interesting, example because it's an example of a blood feud that is between a state And a series of non-state actors around the world. it's, it's a kind of asymmetric warfare, where- You know, the states that, the parties labeled terrorists are, are living in or coming from aren't strong enough to directly engage in, you know, state to state warfare, with the United States. and so what has happened is you've had entrepreneurial individuals in those countries take, take the initiative to, attack the state that they have- Have blood feud with, in ways that the state can't easily predict or defend against, because they're in fact not dealing with another state, they're dealing with a, you know, a decentralized network of actors, around the world. and so that- Also, calls into question, I think particularly the, the system of international law, because, you know, the United States doesn't have jurisdiction in these other countries, so its court system is designed to resolve domestic disputes internally between debtors and creditors within its own own country. what we've seen in the war on terror, though, is this attempt to-- and not just the war on terror, the, the practice of, of empire in general, is to subject other countries to the domestic jurisdiction of the United States. So you have like, you know, the, the nine eleven attackers being tried in a court in- New York City. well, they're, they're not US citizens and they, they don't reside in the United States." }, { "speaker": "stephan", "time": "36:54", "start": 2213.58, "text": "let, let's say the, the regime of international sanctions that, that the United States, imposes on Other countries and on specific individuals in other countries. Many of those countries are, many of those individuals, they're not US citizens, they don't do business in the United States, but they're being tried in courts in, say, Virginia, for violations of sanctions, because at some point, some transaction in their, their economic network, touched the SWIFT based financial system, which is, you know, a sort of this extension of US jurisdiction globally. and so you're absolutely right, there is an international component to Blood Feud that exceeds the state and shows the crack- tax the vulnerabilities and the limitations of the state as a purveyor of rule of law, let to not even say justice." }, { "speaker": "natalie_smolenski", "time": "37:55", "start": 2275.36, "text": "Right. and I think the other thing that's interesting, from a Bitcoiner perspective, now you spoke about this idea of institutions, right? So I guess if you could just first define how you're thinking of institutions, and then we could talk a little bit about that." }, { "speaker": "stephan", "time": "38:11", "start": 2290.52, "text": "Yeah. So, an institution is just a, a, a social technology for coordinating action. so, you know, human beings have to cooperate to do things, and they evolve these institutions, some explicitly, many, many just implicitly, bottom up. to increase the cost of defection, so if you can tell something's an institution because it's expensive to leave. And to, decrease the costs or increase the rewards of cooperation, so there are incentives to stay within the fold. So whenever you encounter that stra- Structure, as a human being, you're dealing with an institution." }, { "speaker": "natalie_smolenski", "time": "38:59", "start": 2339.24, "text": "Back to the show in a moment. Mempool dot space is the leading Bitcoin and blockchain visualizer. So you can go to mempool dot space and you can see the blocks visualized, and this is also really useful for targeting the fee for our Bitcoin transactions. You can see the high, medium, or low priority, and this allows you to target the fee on your transaction, accordingly in terms of how quickly you want that transaction to be confirmed. I use it all the time. It's a great way to just keep track of how things are going. Now, they have multiple views on the site as well. They have the mining pool dashboard, there is a Lightning network explorer, and they even have a mempool goggles tool. So this mempool goggles tool allows you to look into the different types of transactions, whether these are inscription transactions or multisig transactions or something else, you can look into that and really get some insight into it. And of course, mempool dot space also allows you to view the historical record of transa- Transactions, you can search transactions on mempool dot space. Now, keep an eye out, they've got a mempool accelerator program which is coming out, so if you are interested in that, go and get on the waitlist for that. The website is mempool dot space slash accelerator. And now, back to the show. Right. And so, yeah, like you said, it can be informal, it can be a formal thing, when it comes to Social technologies, things like money. There's also this element of competition, yeah, because, you know, you've got the US dollar system, but you've also got the Bitcoin system, and these systems are In some sense, competing with each other, that over time, you know, I think as more people start to adopt Bitcoin, doesn't that create an interesting competing institution dynamic?" }, { "speaker": "stephan", "time": "40:41", "start": 2440.77, "text": "Absolutely, yeah. So, institutions compete, institutions can be rendered obsolete, they can, they can be, If they can cease to exist, new kinds of institutions can arise. Absolutely." }, { "speaker": "natalie_smolenski", "time": "41:01", "start": 2461.06, "text": "Yeah, and so then- I guess one other thing to tie back to, and you mentioned this idea as well, that you're not going to trade for some particular good unless you think It's going to be a long-lived institution, that there's some durability, right? Right. So if it, you know, if somebody's giving you a gold necklace instead of, you know, some lesser quality metal, you're more likely to take the gold one because you think that's, that's gonna be more durable. So I wonder then How much is it a matter of time for Bitcoin, right, that Bitcoin has been around now for fifteen years, that people in their mind feel that it's been around for long enough that they can start to trust this system?" }, { "speaker": "stephan", "time": "41:45", "start": 2505.15, "text": "Yeah. well, if, if you zoom out, you know, and look at the, trajectory of Bitcoin adoption from its introduction in 2009, It's the fastest appreciating asset in human history, in terms of value, like, value in terms of, of, let's say, denominated in, in other currencies. So, you know, even though from our point of view living through the monetization of Bitcoin, it can often seem painfully slow, on a macro historical perspective, Bitcoin adoption is actually happening extraordinarily fast. and, you know, people understand what it is. Like human beings have lived in ecosystems with different forms of money As long as humanity has, has existed. so, you know, they use different monies for different purposes. And so, I think a lot of the criticisms lobbed against Bitcoin that, you know, it's, it's, It's not gonna be useful as a day to day medium of exchange, for example, are perfectly fine. It doesn't have to be. it, it is a form of pristine collateral That is a store of value, with significant technological advantages over Gold, which is its closest analog, and it could be used as a medium of exchange in extremely low trust or high stakes transactions And so, you know, the, the types of transactions that Bitcoin is most likely to be used as a medium ex-change, of exchange for, are, are like, Transactions between states who don't want to use the US dollar, for example. So, you know, e-when you read like a lot of the charlatan literature on money, The, the exception that they always make to, charterless money is interstate trade or international trade. Why? Because if money is a creature of law, then it's also a creature of jurisdiction, and, you know, unless you're a one world government, you don't have jurisdiction over every country. And so when you trade internationally, by definition, you're trading in units of account that, have- have to be commensurate based on market principles, and those tend to be, high value commodities, so gold, silver, a-and other high value commodities. And, you know, going back to, you know, our discussion earlier about, different forms of, of settling debt like in, in ancient Mesopotamia, for example, there were really two categories of debt. There was debt that was denominated in barley and debt that was denominated in silver. and the debt that was denominated in silver was, you know, the kind of debt that The wealthy, either the state or the, the creditor class is used. Everybody else, all the peasants, you know, their debt was denominated in barley. and so the practice of like jubilee of forgiveness of debts, it was only for barley-denominated debts. It wasn't for the silver-denominated debts, because the people at that end of the socioeconomic spectrum, they had a different need for money. They were using money, in a different way than, than the peasants were. and you see the same thing in, like, you know, the, the metalist monies of the early modern period, even into the twentieth century, where, you know, governments, governments basically had your everyday medium of exchange money that was often, you know, worth very little with some, you know- Copper, or like highly diluted form of silver or, or gold currency, and then you had, you know, sterling, or, you know, True gold, and that was used by international merchants and states to conduct trade across states, and the value of the-- that money had to remain very stable, whereas, you know, the government felt free to devalue the kind of everyday currency used by most people. so again, two types of monetary technologies." }, { "speaker": "natalie_smolenski", "time": "46:36", "start": 2796.14, "text": "Right, and in a way, it's fascinating today because we have the choice. You can opt into Bitcoin today early and you can use the high power money, today, which is, I guess, the novel thing that maybe historically, if we were just everyday, you know, quote unquote plebs, we might not have had access to the gold or the best level money, which I think, I would argue in Bitcoin, it is the best level money, right? and it's interesting you make the point as well about how governments have this, in their mind, they think it's of the world, whether that's, you know, part much of Latin America and Zimbabwe, where they sort of parts of Latin America, they just go through these devaluation cycles, whether it's Brazil, whether it's Argentina, whether it's Venezuela, famously, and they sort of now you're paying thirty thousand units to buy even a coffee or something, yeah, whereas, you know, those of us used to like a Western context might be thinking, \"Oh, the coffee is four dollars, it's not forty thousand dollars.\" Yeah," }, { "speaker": "stephan", "time": "47:33", "start": 2853.34, "text": "yeah. No, e-exactly. I mean, devaluation serves, it, it solves a problem for the state. and, you know, i-if To some extent, it can solve a problem for people if there's a shortage of currency, for example, or a liquidity crunch. but it always-- but devaluation solves that problem by creating another problem, which is devaluation of the unit of account. And so this is why these monies that, that fall into these devaluation cycles just have a limited lifespan. Like eventually they become worthless. And so the, you know, the question- Question is, often, or the problem for central banks has been, you know, how can we keep the devaluation slow enough to where, like, most people don't really notice, and how long can we prolong, you know, the, the life of this currency? 'cause eventually it's gonna have to be either redenominated or a new form of currency is gonna have to be introduced." }, { "speaker": "natalie_smolenski", "time": "48:42", "start": 2922.4, "text": "Right, and one other area I was curious to get your thoughts on is around" }, { "speaker": "natalie_smolenski", "time": "48:49", "start": 2929.32, "text": "in this world with Bitcoin, and I guess this is sort of related to what some people are calling like the sovereign individual thesis, let's say, this idea that more and more people can use Bitcoin and maybe they can go overseas, and there's sort of a jurisdiction competition aspect, or maybe some people are just remaining where they are and they're just transacting with Bitcoin. But at the same time, you've got the state that's trying to tax these people. I, I'm curious if you have any reflections on, you know, like a Red Queen theory of money. It's almost that, like, people are- Adapt, adapting out, you know, to other forms of money because those forms of money are maybe less easy to surveil or to tax." }, { "speaker": "stephan", "time": "49:30", "start": 2969.53, "text": "Right, absolutely. So, the twentieth century was an interesting- Time, because it was, it was the era in human history when the state had the most capacity to dominate money, and not just dominate money, but dominate information, dominate trade, dominate war. Like, I would suggest that the twentieth century was kind of the apogee of state power. it was, it was the era of high- nationalism, of high homogenization of culture within states, but with the advent of information technologies, the monopoly of the state on information, on commerce, on, warfare has been Fundamentally undermined, and there's no putting that cat back in the bag. and so what, what we're seeing is, Private challenges to the monopoly of central banks over money. so whether it's Bitcoin or Tether, or other, you know, experiments in, in privately issued currencies, we're getting back to an era that existed, everywhere before the advent of central banking, which is that, privately issued monies were common. That didn't mean that state-issued monies didn't exist, they still existed, but there was no way that the state could monopolize the use of money within even its own jurisdiction, because it, it was one actor among many. and so that's, that's the world I think we're heading back to, is that it's not so much that central banks are going away, it's that- The central bank is a political institution. It, it serves some people better than it serves others, and so the people that it doesn't serve are going to find or create forms of money that do serve their interests better." }, { "speaker": "natalie_smolenski", "time": "51:51", "start": 3110.63, "text": "Right, I think we're, we're coming, we're, yeah, it's almost a return. It's like a, as my friend Vijay Bohrati like to say, we're living in this fiat interim. Yeah. And so, the, I, you know, like you said, I think these central banks will continue to exist for some time, but their power is going to wane, comparatively, and that will be really interesting for people who are more interested in liberty, let's say. Yeah. one other area I wanted to talk- Touch on with you, we're sort of jumping a little bit, but there's been a recent move in the EU moving against open source development. And I know you commented on this recently, so I wanted to get you to elaborate on some of your thoughts there. What's going on here and what's the threat for liberty and, you know, for open source?" }, { "speaker": "stephan", "time": "52:38", "start": 3158.05, "text": "Yeah, so, you know, the, the European Union, is, is in a tough position right now. It's in, in recession, it has been for a while. it, you know, policymakers in the EU recognize they're, they're losing the economic competition, both to the US and China. and so there's, there's a political debate happening about how to rectify this issue. and for some policymakers in the EU, they see the answer as, small and medium enterprises that are building and shipping software, like that this is, this is where innovation's gonna come from and, and policy should support these businesses. Which, again, great intentions, nothing wrong with that. The problem is that they've taken a look at the software stack and recognized that, oh, you know, ninety, ninety-five percent of the software stack of many of these SMEs in Europe is open source. So, you know, but, you know, we, we want these businesses to be able to demonstrate compliance with the whole set of new cybersecurity regulations that we're rolling out. and we recognize that, you know, there's a, there's a high cost to compliance that can be, you know, anywhere, anywhere up to, you know, twenty-five percent of the total like operating, budget of many of these firms. So how can we lower the cost of compliance for small and medium enterprises so that it's not just the big dogs who are able to comply with these laws? Well, what if we required all the open source code to comply with these cybersecurity regulations? So that's That's the law that's been proposed. and of course, yeah, you know, it's, it's undoable, like you, you can't," }, { "speaker": "stephan", "time": "54:53", "start": 3293.34, "text": "Somehow corral and demand, every volunteer of every open source project to be, you know, certified, a certified developer by, by the EU, and, you know, to then- Regularly submit open source code bases for security review and certification. These are volunteers. I mean, it's a" }, { "speaker": "natalie_smolenski", "time": "55:17", "start": 3317.48, "text": "complete joke, right?" }, { "speaker": "stephan", "time": "55:19", "start": 3318.64, "text": "It's, it's just impossible. And so they're going to-- And" }, { "speaker": "natalie_smolenski", "time": "55:21", "start": 3321.46, "text": "from what I'm understanding--" }, { "speaker": "stephan", "time": "55:23", "start": 3322.74, "text": "Yeah, go ahead." }, { "speaker": "natalie_smolenski", "time": "55:24", "start": 3323.52, "text": "Yeah, and from what I'm understanding, they are going to impose some kind of Legal liability for security defects found in applications that have some underlying open source code. So the scenario could be, you could be some You know, open source developer in the EU, just, you know, in your volunteer time, you're just contributing on some open source project, that open source project gets called or touched by some company's code, and now you can get pulled into a lawsuit? Yeah. That sounds ridiculous. No, it," }, { "speaker": "stephan", "time": "55:52", "start": 3352.46, "text": "it, it absolutely is. And there are some, you know, people in the EU saying, \"No, no, no, that's not the case. It's not, it's not what's gonna happen.\" the problem is, it's, it's, it's very similar to like some of the legislation that's been proposed by Senator Warren and others in the United States around like reporting requirements for, cryptocurrency, transactions, is, you know, the definition is expansive enough to include miners, you know, to, M I N E R S, to include, you know, people have no way of complying with, with these reporting requirements, and so- No matter how well intentioned it is, what it's, what it's doing is creating enough regulatory fud and like literally fear, uncertainty and doubt on the part of contributors to open source, or industry that relies on open source to where these people are just gonna start looking for alternate, alternative jurisdictions to do business in because they don't, they don't want to be caught in the drag net, even if it's not the intention. Of the law, they see enough ambiguity in it that they're like, \"Oh, that's a huge risk. I need to get out of here.\"" }, { "speaker": "natalie_smolenski", "time": "57:16", "start": 3435.55, "text": "Right. And even in, in the case of ambiguity, you could be worried that You may be politically targeted, right? Because now they can sort of just get out, go after anybody. But the broader point really is that I think the EU is just shooting themselves in the foot, as you were saying earlier, that their intent may have been to try and lower the cost of compliance, but this is gonna massively raise the cost of compliance, and to a level that people are just not willing to pay. And so they'll, like, probably the net result is there'll be just less open source developers in the EU, and what we'll see is probably EU- Developers who are really focused on open source will just leave. Yeah. And so that is also gonna create, you know, a broader problem for the EU with it, with an aging population and low fertility and so on. Like, it, it just, is gonna make them very, very uncompetitive, and, you know, maybe that comes back to competitive institutions, right?" }, { "speaker": "stephan", "time": "58:07", "start": 3487.43, "text": "Yeah, yeah, exactly." }, { "speaker": "natalie_smolenski", "time": "58:11", "start": 3491.37, "text": "Yeah, so, fundamentally, it just looks like, a very awkward situation there, and, you know, maybe they will actually just have to take some pain, right? Like if they go through with this, if they've passed this law and it looks like it's gonna go into effect, I believe early next year or early this year, sorry, twenty twenty-four. Yeah. So I think it was passed in December. and so- Maybe people in the EU just have to live without certain applications, right? I think another example I heard is that apparently Signal, the application that people use for texting and stuff, is gonna be moving out of the UK because of their laws about end-to-end encryption." }, { "speaker": "stephan", "time": "58:46", "start": 3525.96, "text": "Yep. no, absolutely. It's-- we're in an era now of full jurisdictional arbitrage. the costs of leaving a particular jurisdiction have, in some ways, never been lower. We have, we have higher both physical mobility and mobility of information, digital mobility, than ever in human history. So why governments would be taking pains to increase the cost of doing business in their jurisdictions or, or of innovating in their jurisdictions is completely beyond me" }, { "speaker": "natalie_smolenski", "time": "59:22", "start": 3562.23, "text": "Yeah. Alright, well, one other thing, let's talk about Texas Bitcoin Foundation. So I know you are a founding member, tell us a little bit about this and what are you hoping to achieve there?" }, { "speaker": "stephan", "time": "59:32", "start": 3571.74, "text": "Yeah, so, I founded the Texas Bitcoin Foundation because I saw a gap in the bi-- Bitcoin ecosystem that, you know, there are a lot of, policy oriented organizations, but- Often the questions that underpin policy recommendations also require a, a high level of scrutiny, and, and a rigorous approach. So the, you know, the thinking behind, like digital self-sovereignty, why, if we make policy recommendations favoring digital self-sovereignty, the first question that many lawmakers will have, and even many voters will have, is, \"Why does this even matter?\" and so it's that, that thirty thousand foot view of political theory and political economy that wasn't being developed. and within the academy, which is kind of where I come from, there's a lot of skepticism and hostility toward Bitcoin, and the, the language that kind of the Bitcoin community is using doesn't translate to the language that many academics speak. And vice versa. So there's this huge gap. so, so basically what I wanted to do is create a organization whose mandate was, rigorous scholarship on the topic of Bitcoin and political economy to begin bridging the gap between the university, and, and policymakers and the Bitcoin community" }, { "speaker": "natalie_smolenski", "time": "01:01:19", "start": 3679.15, "text": "Got it. I am curious," }, { "speaker": "natalie_smolenski", "time": "01:01:23", "start": 3683.67, "text": "is University, as it is today, a lost cause, right? Like, have they just been captured? I'm curious what you think." }, { "speaker": "stephan", "time": "01:01:29", "start": 3689.8, "text": "Yeah, I mean, universities," }, { "speaker": "stephan", "time": "01:01:34", "start": 3694.35, "text": "universities are, often established institutions on a model of education that you know, is, is frankly medieval, i-in many ways. It's still feudal, structurally. And the, the challenge with- With institutions in general, is that they are conservative. Institutions don't innovate, institutions repeat and preserve. they're characterized by risk aversion, their, their main objective is preservation of the institution, it's not innovation, and, and the motivation of individual actors within institutions is to Maximize their position within the institution, even at the expense of the institution itself. And so this set of incentive structures in the context of the university has created cultures of, ideological conformity, of groupthink, of profound aversion to change, that are inimical to the search for truth. That said, you know, there are still departments within specific universities that, that are doing excellent research, and, and good work, and, and so I wouldn't say the university as such is a lost cause. I think rather it is like many of our institutions of the state, in this era of decline and kind of sclerosis that needs, Either re founding or, startup institutions that begin competing with these older institutional forms and eventually replace them because they're more competitive" }, { "speaker": "natalie_smolenski", "time": "01:03:40", "start": 3820.56, "text": "Right, yeah, and I, I mean, the reason I asked that as well is because, as I'm sure you know, the recent news with the Harvard president being, basically removed from that position because of plagiarism, and, you know, people are sort of-- A lot of people are critical of universities because of how co-- high the cost is to go to university, and, it's, you know, I think I saw, Rob Henderson was commenting that, the IQ, the average IQ of university attendance has come down a lot. So, It's almost like the signal that you got from having a university degree is almost gone because now it's just so many people are going to university. So I guess that, that's where I was coming from, but at the same time, like you said, it's a time for universities to, ship up or shape out, right? They have to improve or they'll be, disrupted. Somebody else will come in and say, \"Hey, I'll do that same thing for-- I'll provide not just the education, but maybe the credential and the signaling in some other cheaper way Rubber meets the road." }, { "speaker": "stephan", "time": "01:04:39", "start": 3879.54, "text": "Right, absolutely." }, { "speaker": "natalie_smolenski", "time": "01:04:43", "start": 3883.15, "text": "Alright, well, I think we'll finish up there, but I'll make sure listeners check out the links. So it's, nsmolenski on x dot com, satoshipapers dot org, and txbitcoinfoundation dot org. So listeners check out the links. And Natalie, thank you for joining me." }, { "speaker": "stephan", "time": "01:04:57", "start": 3897.64, "text": "Thank you so much for having me." } ] }