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Hello, boys and girls.
Ladies and gentlemen, this is Tim Ferriss. Welcome to another episode of the Tim Ferriss show. My guest today is a repeat guests, his first episode on the podcast, roughly a year ago was one of the most popular of the last year. His name is Balaji s srinivasan who is Balaji while on Twitter? You can find them at Balaji s that's ba L a--. J is he is an angel investor and entrepreneur formerly the CTO of coinbase and general partner at Andreessen Horowitz.
He was also the co-founder of earn.com, which was acquired by coin basis Council, which was acquired by Myriad teleport, which is acquired by Topia and coin Center. He has been named to the MIT Technology reviews, innovators under 35. He's won a Wall Street Journal, Innovation, award and holds a BS. Ms. PhD. In electrical engineering and an MS and chemical engineering all from Stanford University. Balaji also teaches the occasional class at Stanford, including an online mooc in 2013, which reached a mirror.
250,000 plus students worldwide. The mirror is a joke. Obviously that is large number to learn more about biology's, most recent project sign up at 1729.com. That's 17 to nine.com a newsletter. That pays you the giving out Bitcoin BTC, each day for completing tasks and tutorials, subscribers also receive chapters from biology's free book, the network State. And I highly encourage you to check out Tim dot blog /, B2 the letter b and
24, show notes and time stamps for this episode, feel free to jump around. It is an extensive and wide-ranging and long episode. In the very beginning. We dig into Afghanistan and its importance that lasts for the first. I would say five to six minutes and feel free. Also, if you want to listen, A-Z to just listen, listen, listen, if a subject is not of interest to you, chances are within a few minutes, we move on to a new topic and we cover a lot of ground.
Round two here. Our first conversation. You can check out Tim do blog /. Balaji. Please enjoy this very, very wide-ranging conversation with Balaji s srinivasan.
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Balaji, welcome back sir. It's good to see you last, we spoke. It was q1 2021. It is now Q4 2021 late, October, and I'd like to ask you.
Where should we begin? Well, I thought we might begin with some premises, some of which were sort of predictions in the last pod one in particular. Was I think I'd mentioned that covid-19. I thought of it as a military defeat for the US. And the reason I thought of it as such as because literally, billions of dollars had been allocated for Bio defense over a span of about 20 years since the anthrax episode in 2001.
During SARS and Ebola. All of these scares happened and so the US and 2018 and announced they had a national by defense policy that was supposed to combat man-made and natural threats. And so there's an expectation that of the wmds nuclear biological and chemical. That the US military would have some trick up its sleeve, just like out of the movies where hard men would come in and America's time of need and step in with some magic thing and that totally didn't happen.
And when that didn't happen, that's why I said, you know, covid-19 was a military defeat even if it wasn't being presented that way to the American public, a big piece of the military industrial complex, or the military, whatever you want to call. It was like cardboard is like a potemkin village kind of just fell over with a push
and people kind of argue with me about this and they said no no, no, you know, because
there's right on the border of what you'd think of as military or not. Since most of the folks who had been talked about publicly with the CDC and the FDA and the civilian agencies, but certainly billions had been allocated for Bio defense risk.
Line, You could argue. It wasn't military. You could argue. I was off base, are the military is actually highly competent. But
then one thing that happened six months
ish later after our podcast was a whole Afghanistan thing.
And so now you had
something where the US military had 20 years in two trillion dollars and total air superiority and total surveillance, and the local government that they had set up and a military that they
They trained local military. That they've trained in hand-picked, and equipped. And even a timeline that they had negotiated with the Taliban which had for the most part of deer to, in terms of its terms. It hadn't like fired on American troops during that process. I think it a deer to its side of it and those are advantages that you normally don't get in a military conflict, folks. With that level of ancients like a huge handicap and
golf and you know, there's that
saying right with military things amateurs talk tactics professionals, talk Logistics and the withdrawal showed these military is no.
Longer really that amazing at Logistics. Also the president and the Secretary of State Lincoln said something like the collapse won't happen from a Friday to a Monday. It basically did it was like a Monday to a Wednesday or something. I forget the exact dates but it happened just over a few days and you know Biden says there's not going to be a scene that's like the helicopter evacuation in Vietnam. And there was. And the thing is that I'm not
by the way, saying it's not a
political comment, really. It's basically about the decline of State capacity over the last 20 or 30 years in many.
Ways in 1991. The US was the hyper power after the collapse of the Soviet Union. It was a hyper powers of French, but at that could win everywhere without fighting and in many ways the combination of administration's or less 30-ish years, have blown maybe the biggest lead in human history. Now, it rather than winning everywhere without fighting it fights everywhere without winning. So the
Afghanistan thing I think was sort of hate
to call it a Vindication because it's a very unfortunate thing especially for the Afghans.
For now subject, this medieval regime, but I think that that is something which also has important Ripple effects kind of flips over a card. And you kind of think there's something that's 70% probability and then it goes to a hundred properly, anything about what the consequences of that are. So that's like one, quote prediction or something that came true or piece of a world model. That was Vindicated. Let me pause there. Get your thoughts.
I've no thoughts to share. Please. Continue. Okay. All right, so I will just kind of download content and then pause. And then you, you know, jump in, okay, and you'll be met mostly with silence or I'm not familiar if my breath, if my last conformance is any indication, but I appreciate the pauses. Yes. I can. Also sensor on video. I can raise my hand like a student and then request pause, but yes, okay receipt. Okay, great. So one thing that,
As a meta comment that I want to do is sort of a invite pauses. Certainly be enumerate my premises and sort of Open Source my thinking so that people can understand where I'm coming from. And if I open search by premises and my logic come from those premises and you can at least isolate if you think I'm off base, I mean, the wrong in the premises or the logically start to decouple the to. So how do I build my model? Well, what's Rising, what's up technology, which is drones and
And biomedicine and Robotics and Ai and so on and particularly cryptocurrency, which is the new back end of all of software, as will come to to technology,
cryptocurrency, China and India Tech
in Asia, are up into the right on many different kinds of graphs. Those are those are words, but that captures the phenomenon of literally billions of people every day moving up into the right, whether its global trade or its number of
Art phones. Or it is the number of people doing cryptocurrencies or the progress of a all that is often to the right. And then what is falling is the West as a percent of GDP, if you make a graph of the US and the eu's percent of global GDP, that's been dropping basically for the last 40 years, whereas India and China's share, in particular has been rising, you know, actually has of 2019. Mackenzie had a report on this but H, it was more than 50 percent of GDP, I believe.
Leave by 2019 on certainly PPP terms and I think it's going to pass or has already passed soon. PPP is what pricing power parody. Was that stand for purchase power. Parity. It's basically like just power parity. Yeah. That's what I believe it. Is. It is it's sort of. What can the Dollar by there? What can your Renminbi by there? In terms of number of Big Macs have an adjustment for that? Because some of the production costs are less you ten thousand dollars because the longer way in some of these countries,
so Asia isn't
really the future.
A present. So, what's falling? A, the West is percentage of GDP? There's a graph by visual capless, the US share of the world economy that shows it in sort of absolute terms. And then you can kind of calculate the zero to hundred percent terms. So what's the percentage of GDP? The US military strength as we just discussed and that's a very important topic to discuss further internal u.s. Cohesion. And also, just the European percentage of the world. It was much higher in the early 1900s.
And now it's like on the order of 10% and so just the percentage of
the world. And so if the West is declining a percentage of GDP in
terms of its relative military strength in terms of internal cohesion, and in terms of just raw percentage of the world. Yet all of these institutions that were set up years ago, kind of assumed Western predominance. For example, like the United Nations is the US, the UK France, Russia and China. I know it's only four out of five sits a small count, but that's 80% western or at
European. If you think of Russia's European country, you can argue that whereas in India, there's no Brazil. There's no Japan. And you can argue whether that actually reflects the world. As it is, certainly probably India, should be there rather than France. You might say, India's should be there rather than the UK and you should be there rather than France, or something like that. Go ahead. All right, I raise my hand for those who can't see me, like, yeah, I like this approach. This is a good approach, Professor Balaji. I have a question, sir.
Sir, and we that that is related to the up and to the right with respect to technology and let's just take China as an example, but we can grab both China and India because we discuss India last time as a dark horse of sorts. Yes, and a lot has happened with respect to cryptocurrency in China since we last recorded also, and I'm wondering how that factors in.
In your mind to the up and to the right with respect to technology and Bitcoin or cryptocurrency, or blockchain more, broadly. Speaking with in China and say India, does it mean that the best entrepreneurs or many of the best entrepreneurs simply gets scattered to the wind to places like Singapore and elsewhere from China. What are the implications? And what are your thoughts overall?
So a lot has happened this year in Chinese American and Indian Krypto. So just to discuss that when we were talking a Chinese interference with the Bitcoin network was something that was TBD. It had actually happened yet
with
Chinese crypto. What we discussed was that they might pursue the state. Chinese State might for example block at the
Fireball level but allow my continued which would mean like sort of a peekaboo problem where the Chinese chain gets extended. But so is the rest of world and so on and that would be bad.
But what I also said
was that's like in some ways, the worst case scenario. It's actually better and perhaps more probable that they would just ban mining entirely or go after that. And they're the one state in the world. That is ruthless enough and has a low enough disregard for civil liberties, and no contract law. And
And all of that type of stuff for them to just be able to do that. And that is what they did. It. Meaning. They just went after just said, get out of China. And so if you go to blockchain.com front slash charts 1/3 and go to the all-time chart and look at kind of the period from May to July issue of 2021. You'll see it drop from about 180. Tara hashes per second to about 80 to 90 tear hashes per
Can and what is it? What is it? Sarah? Hash? That's 10 to the 12 hashes per second, meaning 10 to 12 attempts, to solve the inequality, that allows you to mine a new block of Bitcoin. So it's kind of a measure of the computational speed of the Bitcoin Network in the higher. That is the more secure the network because the harder it is to falsify history. Quick interjection.
Why did China do this? And ah, there may be a headline press release equivalent and then there may be some degree of speculation or informed opinion. I would just like to know kind of both. I think the fundamental thing is we can drill into this.
China
is the exception to the sovereign individual thesis India, by the way, might be the partial exception. But China is the exception to the sovereign individual thesis.
Where they
want root over everything. If it's not made in China, they look at it with suspicion and it's funny, you know, made in China to serve a play on words.
If it's not, they look at it with suspicion and
that's why actually they were very early on things like grip firewall or social media bands. Many years before politicians were getting D platform from Twitter decision. Ping denied. Facebook's attempt.
To come into China. And instead, basically, they set up parallel, social networks that could operate within China. But which
the Chinese State have root
access to, they've articulated this actually
explicitly. It's an interesting concept and I think it's at
least there. They've got to some philosophical basis for it, which is the doctrine of Internet sovereignty. That's to say if a nation state is allowed to introduce the physical packets Crossing its border, then it should be able to enter diet, any internet packets.
Crossing its border and they're doing like Customs for that. That's how they justify the great firewall. By the way. There's actually is an article that sort of making the rounds that folks who are listening to this, probably should read on. Weighing who ning. Did you see this article? I did. Not how do you spell that name?
Wa + G hu
+ ing. So the triumphant air of weighing hooning at Palladium mag.com. And this whole site is actually really good but was great about this article is, first of all reading this, you're like, oh,
Okay, the depth of this is just the IQ level is frankly much higher than what you're accustomed to seeing in mainstream media because it just doesn't come from the same set of trite, premises and rehash things that we usually see. So I think it's informative and the whole side is actually really good. But basically what this article is about, is a guy weighing happening who's been there over three Chinese administration's, I think jang's who's and G's, which is unusual.
Meaning he's worked in the government. In the Garment, senior. Most senior levels, the seven man standing committee. And at
least with the article says is, is China's top ideological
theorist and to be consistent across those three administration's. It's sort of like being a rough analogy would be like Robert Gates. Who is SEC def under? I believe both
was he under both Bush and Obama, I think so, right?
Yes. He was appointed under both Bush about which is unusual.
Early political appointees get fired by the you know, they're appointed by Republican the effect that the new regime. Democrat. Yeah, exactly. And vice versa. So sort of like that and he's been there for a
while. The reason I just bring this
article up is you can sort of get a sense
of how much they've been
conscious about the need for State control because they saw the fall of the USSR. They saw the u.s. Move in. After that. They saw that, Russia actually didn't do that. Well, they saw the loss of control. They've always been about control.
And what's interesting is, there's been a tension between
total State control and of course capitalism, which is
decentralization of control. And one thing that is true, that I
think is a constant across these three areas of China. So the Mal era was revolutionary
communism then, dang, Jiang, and
who was internationalist,
capitalism. And now, I think it's fair to say,
under under decision paying it. It's now pretty clear that it's a nationalist socialism.
Militarism and economics is no
longer. First, it is there,
but they're reasserting group control. But from the Nationalist, right, rather than the Communist left in some ways. And so the
reason I think that's important is it's a genuine change in the same way that you can argue. The US, had a genuine change
in culture over the last seven or eight years, call it the great awoken in which is what matically. Is this article at vaux, kind of dubbed, the whole thing and you can sort of see this
Religious fervor taking over the country, all these graphs up into the right of various
words, in kind of the same way China for a long time. Had
this, keep your head down policy where
they didn't like a lot of things. The West was telling them, but they sort of
gritted their teeth and Amanda factories, and they tolerate the humiliation of having their embassy at Belgrade, blown up by a stray bomb. And just being like, oh, you are bad, you know, that type of stuff. They didn't have the power to protest on the world stage. They're just like, you know, what? Just suck it up and we'll
Continue trading for a while. But with
G that is no longer. The
case. They are have, you heard this term? Wolf Warrior, diplomacy, wolf, Warrior diplomacy. I have not if I'm here not correctly. Yeah, wolf Warrior. I like the sound of that, but maybe I shouldn't wait until you define it for me. This is not deep China analysis or anything like that. And I basically consider myself. I think
reasonably informed in China, but
certainly there's folks who speak fluent Chinese. It's like a logarithmic scale. There's folks.
Uno 10x 100x as much as I know in China. So Wilfred diplomacy word refers to is there's a movie called wolf Warrior Two, which was China's number one movie. I think in 2017, it's worth watching. And the reason is worth watching, is it sort of surreal? It is American filmmaking techniques of the Rambo Rocky variety of the mid-80s applied
to a masculine chinese-speaking
hero where the
These are basically cast in the role of the USA, and the USA is cast in the role of
USSR. Yep. So
it is kind of like
a rotation where you
realize what aspects of filmmaking are constant and what are highly
variable Joe at the number one movie in the world is right now is of our time. Speaking. I do not, I learned so much. Where we have our conversations.
Yeah. It's frozen 2005.
No. No, it's well,
you so it's the best thing. It's the
It's a battle of Lake
Chang, Jim Chinese language movie. Here's the thing. It tells you if the things first
is China's in
person Movie Market is massive and it is able to do number one in the world. And I think it just crossed like a billion dollars in box office. Number two, but the movie. Pigs is basically the defeat of the US military in the Korean War, by the Chinese military.
So that's where their head is at. They are making massive Blockbuster.
Sure, epochs with all the Hollywood
techniques about the Chinese military winning and the Americans losing. And moreover. What
you can get cancelled for, in China is insufficient nationalism. As somebody once said, you know, in like the West today
for an ambitious young person. They would articulate a desire to quote change the world but in China it is serve the motherland. Yeah. Yeah. It's different. Its Tara. May I interject for just a second organizers? I just want to say that.
Less listeners get too judgmental about what they're hearing. The US. Has done what we're describing or I should say. U.s. Entertainment, certainly has done what were describing for a very very long time. So this isn't unique to China. It just I think indicates its what is to come, right? It's a Harbinger and it's also a gauge of public sentiment public, sentiment meaning Chinese sentiment on a certain level. Yes.
And I find that deeply interesting. Also, what I find interesting from a entertainment media perspective is as an example. I just want to see the new Bond. It was my first time in a real movie theater seeing a film since covid and there were many different trailers. Most of the movies had at least one Chinese lead actor or actress and that is very deliberate because they need
Chinese eyes, they need that. And so that's another chess piece on the table. It's more like backgammon chess products. It's not a game of complete information, but you get the idea. So I just wanted to just note that because I do think these are trends that are going to become more intensified over time. This is a start-up analogy, but Microsoft made a believe 150 million dollar investment in Facebook in 2007 as part of a way to keep it from Google and they
To the super high valuation. Basically playing Game of Thrones, when Facebook was a still startup. That was actually maybe bombers. Best decision in some ways. What that did was that thing, grew and grew and grew until Facebook is now it's not extremely hostile to Microsoft, but it is certainly appeared in Microsoft. It is up. There. It is grown into a redwood tree of its own. It is also like a roughly, a trillion dollar company. It's the youngest of the big five Google Apple Amazon, Microsoft, Facebook,
and in sort of the same
way with the US did was it
Made a startup investment in China. When Nixon went to China because USSR was a number one, rival at that time. And they have just executed phenomenally well, over the last 35 to 40 years. And now, they have the market size. The internal Market size to be the number one movie Market in the world and they dictate terms now winners right? History, winners film history. And they are writing history, where they're the winners and they're the good guys. And the
thing is the airbrushing is
Obvious when it's somebody else's propaganda, for example, you know, in this movie, which is worth watching, by the way. It's hard to kind of see, you know, you have to get like a streamer out of China or something like that. And by the way, wolf Warrior or the other Wilfred, I think you can just download an iTunes, but the Battle of Lake Jang, Jin is not that easy to see right. Now. One of the things about it
is, this itself is a
change where Chinese to be super freewheeling on IP. The new Z Jinping regime, is not free willing on IP. It's hard to get that.
That it's basically almost as hard as it is to get an American movie on the internet. You have to kind of actually try, it's not just widely accessible DVD on the street kind of thing. And some people think this is similar to the whole Shang Yang school. Are you familiar with that legalism know? Okay. So, so again, I'm not a student of Chinese philosophy and so on. I just, I know some but basically, there's a philosopher named Chang Yang, who?
Is well-known for as an exponent of legalism, and legalism. We would call it the super harsh one of his sayings. If I roughly paraphrase, if I'm getting this right, is, if there are harsh punishments, there will be no punishments. Meaning if you
articulate with the law
is and you ruthlessly enforce it. Then people won't actually go near the border and so on, and there's like another thing
after one year, people would not pick up items left lying in the
street, nor would they take anything that was not their property? The Army had grown strong and the feudal
Lourdes lived in fear. What is the source of that? Oh, that's like from shang's biography.
So the point being is decision being used working on
all this stuff since the beginning but the Tipping Point only came near the end of his first term, sort of like how the greater woking was also happening in the US and just kind of went exponential in 2020. 2021. China is changed. It is now a different thing than what you and I grew up with which was the internationalist capitalism of the ding Jiang and who era.
Your strength and bide your time. I think was like the official philosophy and make plastic stuff for the West have them call us on Creative. Have them depict us as emasculated on TV, just assemble, iPhones grit, our teeth, tolerate the pollution read, the bad are blah, blah, blah, and then work our way up. That's kind of the mentality. And now they're standing right there. Just add one thing to that, which is when I was in Beijing, I lived in Beijing. In 1996. I want to to universities there and the most popular book at the time in this is
Very understandable for a lot of reasons. This is not to fault anyone, but the most popular book at the time, which was stacked. It was widely counterfeited, but also bought legitimately stacked everywhere. You could see it. In the streets in front of stores. It was called, China can say, no, I think it was don't go, Ackley Schwab pool and it was China can say no. And there was this deep sense of I think warranted deep sense of being.
Respected on a lot of levels from a geopolitical perspective. Yeah, and you have that is not new. That is not new and it's just taken a while for them to play the game. So well that they're now in a position to execute extremely well on multiple fronts. Invest right now. The thing is interesting is, if I recalled that was modeled on the Japan that can say no, but there
is a difference, some people will basically say, oh, you know,
people talk about the rise of
Pan in the 1980s. And why won't the rise of China? Turn out the same way. There's a huge difference, by the way, between China and Japan, which is that Japan is literally occupied by the US military. Yeah, huge difference.
Huge difference. You just basically wrote
Japan's operating system and Constitution after WWII. And they have literally a military base there. And I think in a real sense,
they are
a
independently, operated us subsidiary, the
purpose of NATO.
Was keep the Americans in the Germans down and the Russians out. I haven't, but I can imagine may. I also just pull us back to an initial query for those people who are wondering what the some of the punch lines are. So with respect, and then we can come back to all of this. So, just bookmark for a sec when we look at.
The Chinese government's decisions with respect to Bitcoin mining and perhaps cryptocurrency more. Broadly speaking. What are the sort of first order? Second order, third order effects of that? Some of which may have already been seen, but what has happened? And what do you expect? Will happen as a result of that. And we could look at what that means. Within China and outside of China or however you want to approach it. What they've done is setting up a decade and maybe the century.
Don't think people realize how important some of the stuff is. Think
about, you know, for example, their social media
ban. How important is that today versus how important was it seemed to be at the time. Yeah, huge huge, right there was a branch in history. So basically China wants to maintain route and because they want to maintain route. I think they're going to have significant short and perhaps even medium-term advantages, but in the very long run like 20, 30, 40 years. I think the Centre lines up,
As centralized China versus a decentralized world, for a centralized China versus decentralized West. And actually think India maybe actually a big component of that and that's where I think things land up by like 20 40-ish or so, but it's really hard to say because time compresses in the internet era and just to kind of drill into that. Let me give sort of a Sci-Fi scenario here. This is a Sci-Fi scenario, you know, like how when you do a simulation and it's like, okay all the molecules kind of move in this path, but they can
Other paths. I don't assign
super high-probability. This let's call
it a scenario. I don't assign 0 probability to it Chinese
control, American
Anarchy, Indian intermediate. So basically coming back to thing that we kicked it off which is the US military, basically, just got defeated by covid and in Afghanistan. So obviously the immediate question is, will they lose versus China and in particular, will they lose? What will happen with Taiwan?
Now, they're sort of the
The first order response which is, oh, Taiwan and Afghanistan, totally different.
Taiwan is obviously a first world country, and it's an independent nation, and it has its own. Just share a military and a long history of operating independently and civil society, and blah, blah blah, whereas Afghanistan. Obviously, was that was a fixer-upper at best and has a long history of Civil War and was very difficult. So, of course, they're totally totally different, but they're not because there's certain things that are the same. And one of the things that is very much shared between the two thing is a
Marco's willingness to fight because it withdrawal from Afghanistan was based on a reluctance to pursue quote-unquote, forever, Wars. And a thing where the American consensus on the right is isolationist. Like why are we helping these folks out by fighting their Wars for them? And on the left is also isolations, which is why are we harming these folks by bombing them? We should pull back while The Stance is perhaps different. And I actually, I can see reasonable things on both without litigating. The percentage on each.
Each the some force is withdrawal and so it is from taiwan's view questionable as to whether the US would fight. And here's
the problem worse, get fought when
things are questionable. And the Shang Yang said, is if the punishments are certain, there will be no punishments Wars happen. When there's a
miscalculation. For example, I believe Saddam
Hussein invaded Kuwait in 1991 because he thought he had gotten the go-ahead from April glass. Be at that time. Who was the
The US
ambassador basically was like, you know 1991 the Soviet
Union was falling and so on New World Order, let me settle scores. There's a transcript, there's
different transcripts. One of them was we have no opinion on your Arab conflicts issue. Dispute with Kuwait. The
quit issue is not assist you in there. America Secretary of direct baker has direct me to emphasize
this. And so the thing about this is I'm not a scholar of this
particular issue and she may have gotten a bum rap on this or what have you, but people thought that she had given
Clear instructions to Saddam. Now. First of all, it's interesting is like, the US would basic greed. Light invasion is interesting in its own, right, right? Like that. It could happen versus not, but that's what being Leviathan means. If your, the guarantor of order, the Soviets allowed, the North Koreans to go and invade the South, the North Koreans were looking for the nod, the go-ahead from their Patron, to be able to do that. And similarly, the US has actually been working with a rock during the iraq-iran war because they were against Iran, and they thought Iraq was a good way to put a thumb in the eye of the
Have done the hostage crisis. And so that was you've seen the the whole video with Saddam shaking hands, with Rumsfeld. Yeah, for many years ago, right? How does this tie into China? Coming back at the
stack? So the thing is that, that kind of uncertainty is what causes Wars
or provides fertile ground for Worse depending on how its planned, right? Yeah, because
it's not like Invincible US military solid commitment to Taiwan. All right, we're not going to start a
fight. It is,
will they won't? They you're now decision. Treating it out?
Out. It is uncertain for everybody involved. It's uncertain for Taiwan. It's uncertain for
China. You have many scenarios. One scenario, which I think is underestimated is trying to speaks a language. They have lots of people cross border. They have total focus on this as you should pick one side. Like so one possibility, is they try to force a gun to the Head referendum where they try to get kmt to pan blue party. To just vote for reunification with China and that's something where the, be an obvious gun to the head, but it'd be like a peaceful on Sheila's like, you know, Germany and Austria, right? Like they vote for it.
Minor possibility. Of course is an actual military conflict where
maybe the US just doesn't even intervene. Maybe it
does and then there's
like a shooting war and we don't
know what happens after that. But I think it's quite likely that the u.s. Loses now. Why do I think it's likely the u.s. Loses a couple of books. I would recommend. There's the kill Chain by Christian Bros who was formerly very senior on the Senate armed services. Committee. Saw the entire seven hundred billion dollar defense budget including the classified parts.
And he has a quote in there, which is over the past, decade in u.s. War games
against China. The United States has a nearly perfect record. We have lost almost every single time
and he says, this is well known within the Department of Defense, but the American
public doesn't know this and Congress, doesn't know this.
And he actually goes on in the
first chapter, to outline a scenario, where China basically pursues an asymmetric strategy against the u.s. Uses area-denial weapons forced. The US Navy to be way off shore while it's invading.
Taiwan and it can't get the reinforcements over there, over this huge ocean. They're all blown up and or
forced back and basically thinks China would win. So, that's a
nonfiction book. There's also another book that came out this year called 2034. Kill, Shannon came out last year 2030 for which is co-authored by former US Marine, is a, you know, on the ground Sky Elliot Ackerman. And another guy James stavridis, who, I believe was the
former NATO Commander. That
also essentially talks about a
A serious
Chinese effort, on our
conflict with China rather in the South China Sea, where the u.s. Does not definitively. When in fact they almost portrayed the us as this old Battleship. That's getting its butt. Kicked by the Chinese and it goes to nuclear very quickly. Okay, that's in there, scenario. You know, I don't spoil it, but India intervenes at the end kind of play mediator in a sense.
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If we have hypothetically, centralized, China, decentralized world. And India is some type of intermediary. Yeah, or very large and compelling nation-state at the very least. Let's just were on parity with the China discussion on some level. What has happened in India since we last spoke.
With respect to crypto. Okay, and where do you think it's going? The good news is and I may have actually influence this on the
margins. India had been floating or there's
folks in India. Rather had been floating like a crypto ban in January thereabouts. I wrote three articles on this and the Indian crypto Community. The web three Community really got out there. And now nirmala sitharaman, who's the Finance Minister of India, like the equivalent of the treasury secretary. It's actually quite smart and
Mead good comments on this in public and moreover with the deliberation. She said this is not going to be a ban. It's going to be regulation of some kind and over the last 9 months. Indian crypto is just absolutely exploded. There's coin switch / kuber and there's a bunch of these exchanges. I won't remember all of them. They've all just gone. Vertical with the rise of cryptocurrency this year and there's multiple India crypto unicorns and Indians are huge part of the global crypto community. And in the meantime, China,
Has basically forced mining outside and is basically
done with their new bill. It's almost like pushing a guy until he's just almost off the cliff. They essentially have in
2017. They pushed pretty hard to stop much
retail trading activity happening within China. And so,
hence, like Finance kind of left the country and will be and okay, coin resurfaced overseas, but OTC was sort of allowed or kind of winked at now. They're
kind of going after OTC, they're going after
mining. What is OTC?
In this context, over the counter, but what does that mean? In this context? One version of trading cryptocurrency is you go to a website, you click a button, you buy the currency, there's a user interface and so on and OTC trade is like a big block trade where you call somebody on the phone. You're like, I want to buy a million dollars of Bitcoin and the thing is
them as a seller and you as a buyer actually have an
incentive, see if they try and sell a million bucks a Bitcoin. They might move the price. You try to buy million bucks a Bitcoin, you might move the price up. And so you both sort of
Settle on a mid-market price and you do the trade real quick because you don't know if it'll go up or down so that was kind of allowed but they're
cracking down on that too now, but they
haven't done and you can read this bill. It's posted on their website. So long thing that builds like an announcement rather. What
they haven't done is having criminalized
holding. They have that in English.
It is in
Chinese. Chinese is a little rusty. I heard you say something in Chinese just now so I thought it was like you could probably use Google Translate possibly to translate the page. Yeah. That's what I did it. Basically the
The People's Bank of China statement on cryptocurrencies post on the website. It's at this is super long URL, but we put in the show you, if you Google. Yeah, it's like notice on further preventing and disposing of the risk of hype and virtual currency trading that see, English translation via Google translate, and I've a tweet on this, but
basically, they've kind of done everything up to
criminalizing holding.
So they haven't criminalized holding you can still hold. Let me ask you a dumb question. Where do you purchase your Holdings or is it just pre-existing holders of crypto who are now Legacy? Didn't somehow how does it work?
Yeah. It's kind of like that. It's unclear. One of the things about China, you know friend of mine over there said is like in the u.s. There is rule of
law where you have written laws and that supposed to constrain the state and you can kind of operate
with those. Whereas there it's often more like guidelines in a
negotiation.
Which is actually more like interact with the regulatory state in the US, where it's like a moving boundary and they will basically do what they want. It's not something where the laws are meant to be binding on the government in the same way.
We don't know exactly how it's going to be enforced, but it definitely signals to step up and the way you can see that
is actions speak louder than words and that drop in the hash rate is actually a remarkable drop. Now importantly, by the way, it came all the way shouldn't say all the way back up. It came back up to like 150 Terror hashes. So, even the Chinese government going after Bitcoin mining.
It's slow down, transactions, a little bit for a few weeks, but not really all of it.
How much of that do tribute to new mining operations elsewhere, places where you can get cheap energy, where they would expect friendlier regulation, or lack of Regulation versus just the vertical climb of popularity, in Bitcoin and cryptocurrency. What do you attribute? That regaining of hash rate? So, I don't know the exact breakdown one could say, this is folks.
Are looking at this every day, which I haven't been doing for a while.
But Bitcoin mining is now actually
understood to be something, which is a component of the energy grid because in a sense just like when you say a document, it's both a paper document and it's a digital thing. We use the term interchangeably
now, so in a sense,
Bitcoin mining is down like a money battery because on the power
grid, you can't
store power that easily you have to start instantaneously generate it as being consumed.
And every flick of a light switch. And so on a certain this model of this gaussian, we're all these small events. You can't predict whether you're going to flip the light switch on or not, but you can have sort of demand prediction and it kind of goes up and down. You generate the power in proportion to that. The
problem is that if you've got
source of power that are themselves variable like Renewables, for example, is the sun shining or not? Is it wind blowing or not? Now you've
got volatility on both sides and it's hard to match that up and become mining actually comes in there because
it's a load.
That you can put
basically in any location and dial it all the way up and rather than trying to store that energy in a battery. You quote store it as money by mining Bitcoin and depending on the
economics. It may be better to do that. And then with that BTC by energy later,
then to actually store it in a conventional battery. That's super interesting. Super interesting. Yeah. This is
an important thing that is happening now.
Ali, Ted, Cruz of all. People actually give a talk on this. So it's starting to filter out into politicians way. Ted Cruz gave a talk on this subject. Yes, just a few weeks now. That's unexpected. All right,
that's the thing. Is this is becoming a big thing with in
natural gas and so on. Because the flaring problem, looks like this dystopian
blast of flame into the air when
you have a like stranded gas that gets addressed with this. So was he speaking within the confines of the state?
Access or was it more broadly
applied. It's much more broadly applied and this is something which I'm not an expert in this
area. But Google like
Bitcoin mining oil and gas
and you will be able to read about this. It's not just filling guests. Also Renewables
essentially, your renewable energy source, Bitcoin mining increases the
profitability of it, because there is always demand for the renewable energy or
generating. So that one more time, please.
Your renewable energy
source, like especially if it's volatile like solar power or
wind.
Now there's always a way to make money from it. Even if there isn't
Demand on the grid because it's volatile you for example, the
sun may be shining but
nobody's turning on their appliances or the wind may be blowing and nobody's actually consuming the power but you can use that to mine Bitcoin. Yeah, that's that's very interesting. But I was saying it's super, super interesting. Yeah, Power is like instantaneous energy is over time. But go ahead. This is going to be a very stochastic conversation by Design.
By the nature of it, I think, let me just come back. We may return to this subject, but come back to India for a moment. What would be your predictions? May be too strong a word, but what are some plausible things? You see happening or developing in India, over the next three to five years with respect to cryptocurrency or web. Three blockchain, all the
above. What's interesting is now that China serve taken itself.
Out of crypto. It has kind of left the door open for others. The u.s. Certainly has a big
crypto sector. There's a huge fight with in the US on crypto regulation and web three and, and whatnot. And we'll see where that pans out and we'll also see where it pans out and India. It might be better. It might be
worse. We will see. But basically it is I'm cautiously bullish in both the US and India on cryptocurrency, and I'm cautiously
Lee optimistic that both India and China will maintain some degree of stability. And so, I'm not saying it's a five-year thing. But like a
15-year ish kind of thing, 10, 15, 20
years. India could be an intermediate between like kind of a coming American,
Anarchy and total Chinese control.
And let me explain what I mean by this. Just to go back to
that scenario. We were talking about and again sci-fi scenario. I have not seen, I put a lot of weight on this but I think it's possible.
So let's say
You know, I had this one liner which is the US government is sort
of lost route control or the system. The future of hard power is CCP and the future of hard money is BTC. This is related to that nyt CCP BTC triangle. That we talked about last time, which is V, Capital communist Capital crypto capital and just to recap that Tommy's Capital says You must submit. That's a Communist Party. They're strong, you're weak. They have power. You don't bow to the government.
It's very straight forced down the middle, like a fullback. Whoa,
Capital says You must sympathize and that's different that says it is because
you are powerful because you're white or mail or
straight or system you have or you rich or something, you have power and therefore, you must sympathize, you must apologize. And you must bend your eyes down, your eyes are downcast, your head is bent, but it ends in the same position of submission, as communist Capital with a bent head.
And a dispirited stance. It's also an ideology of control. It's just a little more subtle rather than saying they are powerful. They say you are powerful and the trick of it is with the algebra of intersectionality. Everybody's an oppressor on some axis. So everybody's either white or mail or straight or says or
wealthy. Dave Chappelle. He's an oppressor on some
axis for example, right? So anybody can be turned into an oppressor in
this way. So everybody
kind of lives under threat of having their card yanked and instantly
turn into impressed because under pressure on some axis. So that's how
Ow, what capital works? It's more subtle, slightly more
cell and then crypto capital B. TC is the third point on the triangle. And rather than saying, You must submit like, communist
capital, or you must sympathize like, what capital it says, You must be Sovereign. You must hold your head up high jaw out and you must not just hold your own
private Keys. Ideally you're
living off grid with a solar panel and you're
growing your own food and you're in a Bitcoin Citadel, where you're waiting out the
Max
and and so on. So all of those are actually like extremely points. You must
submit, you must sympathize, you must be
Sovereign. And the thing is that while each of them is actually bad, if you just go totally to that point, but they're also bad if you have the total
absence. So for example, obviously you don't want to just completely bow your head to this totality
reinstate, you must submit, but the opposite of that where nobody submits is San
Francisco where you can walk in, and they've legalized crime, anything under 950, or something.
Can shoplift from Walgreens, you go in and help yourself walk
out, repeat it and that's why I like
22. Walgreens are closing in San Francisco. Did you hear about that? I did not, but it doesn't surprise me. Yeah, so they basically have legalized crime and
then, the city government is denying
that this is a real thing. They're
like, oh well greens published in their SEC filing three years ago that they might shut down some stores. Therefore. They're just doing this to make more
profit level, right and
and they're like a little, the rate of crime report a crime has dropped in San Francisco.
And this is basically like quoting
statistics from the Soviet Union at this point because I just see here move along folks
crime rate in SF is so high. Anybody who's there has seen multiple crimes happening as you walk down the
street. There's open air drug deals. There's public defecation. There's
people who walk into a store and Shop lift something. You can just record, probably put a camera up there. You'll see a bunch of crimes. The reporting doesn't happen because the prosecution doesn't have the pieces. I'm so
okay. Point is, if you do not submit you
Francisco. Then okay, if everything is put sympathizing, their buddies competing to be a
victim all the time and that's kind of where we are and many ways in American
society. But the total opposite of that is also bad because the total denial that,
any victims exist is the denial of
Charity and many of our good impulses and that leads you to a society
that's Russia in the
nineties, where for 70 years, all, compassion, and charity,
and Goodwill had been sort of milked out.
Of them because Communism
had said share at gunpoint. So all of that have been linked to us all sympathy was kind of
leached out and that's what you get there on the total
opposite of that. And then sovereignty, of course, I'm sympathetic to this. But
total sovereignty is actually the opposite of for example, division of labor, which is also capitalist virtue. You're trying to do everything yourself and total sovereignty is also a position of total
distrust of everybody else in society and taken to its limit. And unfortunately, the thing about the internet is
people do take
To their limit taken to its limit. It's
like one person can do everything by themselves, but humans are not just individual animals are also social animals. Now, of course, the total opposite of sovereignty is also bad. That's actually the world capital and communist Capital model where they
candy platform you via the corporation or the state at any time since your speech Etc. So this triangle model is kind
of useful because
each extremely point on the triangle is bad but so is the opposite point and so that's why I think we want to do is carve out a decentralized center.
Our that has a healthy Optimum between these with the recognition that different people will Trace out
different Optima. For example, the Netherlands is a
functional Society but so is
Singapore and so is Dubai in its own way. And so on. And
these have different trade-offs of submission, sympathy
and sovereignty. So with that as like, a political
philosophy issue, kind of thing for the modern era. I think one new piece of information for me or last seven. Eight months. Is that the world Capital corner of the
Fine, gold nyt. Corn reason I say nyt CCP. BTC is in many ways. While CCP is in control of China. It is a state controlled press.
It is something where
nobody in the Press is going to go investigate Vision paying order in America. There's that saying if China's got a state controlled, press America's oppressed controlled State. And when we have seen that is a corporate journalists can get a politician fired but not really vice
versa. Yeah. So the org chart
is the other way.
Way, who can get who fired? Who's who's Superior? Now? The thing is immediate rebuttal is. Well. What do you mean? I can write an article and they may not necessarily get fired and I would agree. It's like a stochastic org chart and that's what sort of hides the lines of reporting. But if let's take I don't know the department of the Interior. If the guy from the wsj in the guy from The Washington Post, the guy from The
nyt Who all have the beat that includes Department
interior just started writing - article after
article on the person in that position. Did eventually get capped almost like a board meeting where it's like a
20 vote and they get fired. I just want to sort of share something that came to mind which is has been on my mind for a while. And that is the trends in the US as opposed to somewhat obvious are very different from the trends collectively in China. In one very important respect many respects, but one really jumps out and that is nationalism is unifying.
On a lot of levels, but what we're seeing in the US with, as you put it, the greater woking. And this is not to point fingers at anyone side necessarily but much like the nature of warfare is going to change is changing over time and it's going to involve more and more cyber attacks, non physical attacks. So there will be physical components. I would argue just by watching an audience of say, 10 to 20 million people per month.
and over the last several years that we are in the midst of the beginning of a reputational civil war where the weapons are provided by companies that produce tools for social media and so on, and the attacks may not be those that we would see among different ethnic groups in a case of say, ethnic cleansing, but nonetheless, the damage is seen reputationally and
It's not just the New York Times and a politician. It is like neighbor against neighbor and I find that absolutely terrifying but I do think we're in the middle of that. When I look at it the scale on the intensity. It is absolutely a reputational Civil War and the weapons are technological. You can argue that the
corporate takeover of the
u.s. Actually happened in the 1970s when three privately-held newspaper corporations, you know the Washington Post are shown by
G the New York Times owned by the oxtails Burger family and the Wall Street Journal which is owned by the Bancroft at the time before their sale to Murdoch. They all went after Nixon with the post certainly leading the way and essentially they got quote, the most powerful man in the world fired. Now, of course you can argue and I think it's fair to say that Nixon was a crook. He actually did do those things. He hasn't denied doing Watergate or the Berkeley or anything like that or not litigating. That part. What I will say is that at
the
time what he thought was and was certainly talked about was that JFK had
done it as well in his race against Nixon in 1960. So we just had to do it. And actually there's a book by Seymour,
Hirsch, who is a legendary investigative reporter
expose. The My Lai Massacre won the national book critics award.
So he has a book called The Dark Side of Camelot and claims. For
example, that candy stole the 1960 election, with help the mafia, and all this
other stuff. Some of the stuff has kind of
Around to the public that Kandi had lots of Affairs and all
this type of stuff. But the election part is, I think the material thing, we're Nixon thought that Kennedy had gotten away with it and quote stole it, fair and square, and Nixon decided not to contest
it for the good of the
country and then make some kind of did it himself? And then he got tagged
for it when no
scrutiny, was applied candy point being though, that this concept of quote journalists holding politicians accountable means that the u.s. Is
a press controlled state.
It also means by the way, how's
that accountability doing? If journalists are holding politicians accountable and over the last 30 years, the US government has done very poorly. Who's holding accountable to people who are holding the government accountable. If they are actually the most Senior Management, the board of directors vote who comes in an emergency to remove the CEO. Namely the president, be an impeachment or investigation or
something. Well, ultimately, the board directors is responsible. So,
the thing is though, that the whole thing is set up to exercise power without responsibility because it's a stochastic
Chart No.1 reporter thinks of themselves as being like, in control of somebody because it's like throwing a stone and somebody who's being stoned. No one stone necessarily kills them. But the fusillade the hailstorm does and of course, if you're at the times
or the journal or the Washington Post
back for social media, you had pretty big stones, that you were tossing. And what's interesting is there is just to be on the topic for a
second. There's a concept called impact journalism where the whole
point is to make an impact like that stone hitting somebody.
D, like the impact of a government truncheon, hitting your head, where the idea is, that people will brag. This article led to a government investigation, this article led to so-and-so reforms. Now, with those reforms mean, is that the state made something? There was previously, discretionary now mandatory or
forbidden, the say a law was
passed, Freedom was constrained in the most trivial sense. It's like a 40 mile per hour and 55 mph speed limit. Put you in a box on the V axis of velocity.
You can't go below that or can't go above.
That freedom was constrained, you were previously discretionary. Now, you're in a box, you may argue that box is good or bad, but as every law is passed, you're in a box on more and more and more and more parameters, right? You can only do, you cannot be below this amount. You cannot be above this amount. So it's a literally, like a like an ideological box, like a constraint. So the thing is that when you are able to quote cause impact, in this way, you are powerful but because it's stochastic it's not
Like you order it and it happens with 100% probability. You can deny that that power exists. The whole system is sort of evolved for the deniable exercise of power in many ways. The org chart is actually even embedded in the language. Do the concert. Like Russell conjugation
is Eric Weinstein is big on this to note. That is? I do not know, Russell conjugation. So, Russell conjugation at first, it just seems like a funny curiosity. It's, by Bertrand Russell, the concept also known as like emotive conjugation. So it's like I sweat you perspire, but she
Those God. Okay,
so he docks has she leaks, but the New York Times
investigates, the I've got you, right? So that thing is great. That's a great example. Actually, that's a really good example, really. It's a very important example. And the reason it's
important. Yeah, here's why is when it comes to like, quote?
What journalism is like, what is real
journals? Anybody can go and set up a log to go and review movies or rest.
Wants a little pretty cover, probably easier but review books, or whatever. All that stuff, huge
portions of a modern newspaper. You can just kind of go and do instead of and do yourself.
What is the one thing that you can't do on your own?
I can't think of a lot of things I can't do it on my own, but continue,
I would argue it is the investigative journalist in part because you can't just go to somebody and like start digging through their garbage, interrogating, their friends.
Acting as essentially a for-profit intelligence agency because basically what they will do is they will put somebody under surveillance. That's literally what being a quote investigative journalist is, you're putting somebody under surveillance, essentially wiretapping them eavesdropping on them and so on and it's an extremely hostile thing
because the goal often is try to get that person fired cause
harm to them to cause harm to their company. And to essentially,
Ali right up a prosecution and put that in the paper and that's what they say the court of public opinion. It's basically like an indictment, you know, in fact we sometimes use same word like a biting indictment appear in the paper, but it's stochastic. It's out there and it's deniable as to what happens. You know, I just put it out there. Arthur sulzberger, used to say our job is to tell the public that the cat is jumping through the window. The public will take care of the cap so it can disassembled bomb strategy.
You give them all the parts and you emotive lie, conjugate. You Russell conjugate the whole article such that, the reader who's unaware of this is lead to a conclusion, but you kind of have no fingerprints on it because you just did it with language.
Yeah. It's semantics like word laundering.
Yeah. It's semantics. That's exactly. Its power laundering. I'll give you some concrete examples of this. Like, here's a really good one. There's article in 2012, how punch protected the
times.
And you can just Google that and it talks about
how dual class stock was the savior of the times. And, you know, it was, it was something that was really good because they could think about the long-term then a few years later in, I think 2019. You can't fire Mark. Zuckerberg says kids kids, and this is a denunciation of the same thing. Oh, we are creating a class of royalty that controls our national dialogue, without basically just emotive Lee conjugates. It's other way. So dual class is good when the cells burgers do it.
Bad ones are covered. Does it? I would love to if it's okay with you. I'd love to shift gears just a little bit but it's going to be it'll be tangential. Yes, still related. So we chat a very briefly about I think a pretty justifiable stance that we are already in the midst, not in the middle, but in the beginning of what we might call, widespread reputational Civil War in the u.s., We just going to intensify and it's going to get a lot worse. Once we have a I driving additional misinformation and so on. It's
To be a hell of a thing, which is not that far off. I don't think. But where do you see the u.s. Going in the next three to five years? If we can constrain a little bit because I know it may be easier to go to say 15 directionally, but if you had to make some
Educated guesses or wildest speculations just based on your reading of the kind of Gestalt next three to five years. What do you think?
Plausibly happens in the
u.s. So let me give a scenario and I'm certainly not saying this is
desirable. I think this is possible.
The scenario is Chinese control, American Anarchy. So a Chinese victory of some kind in the South China
Sea over Taiwan Rosa referendum or
military Victory or
something like that, especially if the u.s. Prints money only to lose because you print a lot of money in a war
foreign.
Terry defeat of that
kind would show that the u.s. Is no longer a
hyper power. And with that would potentially result in you know, that saying fiat currency
is backed by men with guns. Yes. Finally he saying I recognize.
Yes I did. Right? Yeah, so that's actually
Krugman himself said that an interview to Joe wiesenthal, several years
ago, Fiat money is backed by member of got. So what happens when those men with guns lose and not in a sort of deniable way to covid or Afghanistan? Like we didn't really try or was it a military thing but to a
competitor
Well,
there's potentially an economic markdown. That happens. I mean, Russia's outcome in World War, One showing me can has a book that argues that the Russian
Revolution. It's called like a new history of the Russian Revolution. Argues, that very good book.
That Russia's, most important thing was, it was at War during 1917. And that's what allowed Lenin others
to take power. It was a
war tenting, it wasn't just some random, proletarian Revolution is the chaos of war that led to that. And so foreign military defeat.
Or even foreign conflict is the kind of thing where it turns things molten things over bubbling, things can flow and move around. And here is a
bad scenario. The bad scenario
is an attempt to repeat
executive order 6102, like the gold seizure, know what, that is. Well, I can kind of read between the lines, but why don't you tell me what it is during the rise of the centralized government of the US and I'll come back to this concept of peak centralization.
Basically, one of the things that FDR did
executive order 6102
which T is All the Gold in the US
and basically like forced it to be kind of exchanged in at a certain price and whatnot. Now, right now we're seeing insane levels of money Printing and it is certainly possible that at some point in the future. They try something like an executive order
6102. And in fact, there's this guy on Twitter
who has moderate following, who basically
is starting to advocate for this type of thing because he'd been predicting Bitcoin was going to go to zero. It's like Facebook.
Fad, it's a bubble. Oh, no, it's terribly. Powerful of Must Be Stopped. You know, it's a flip from this thing is nothing
is going to go to 0 to. We must drive it to 0 or we must seize it.
So if they try something like that and the reason that might be possible is you print a lot of money to finance. This were and now you've got an
executive order 6102 like thing in attempted Bitcoin
seizure. That is the type of thing that could kick off serious civil
unrest. It's possible. The reason is, if you're trying to seize BTC in a time of rampant inflation,
that is no longer something that can be portrayed.
A
as being for the good of the population
because inflation touches, I mean fish is already pretty high
but it touches everybody touches white people, black people Latino people Asian people. It is
economics. It's very hard to portray it
as some
Grand historical conflict or something like that. It really is the
state versus the people. And it's not like the people were printing dollars or managing the economy. They're supposed to the fed and the treasury and whatnot.
So, if inflation is rampant any traces of BTC,
Dad I think could be the match for the next wave of conflict. Just a quick Logistics question is additional instruments and abstractions or created ETFs Futures Etc. In a seizure scenario. Would that be limited to a certain
Form of BTC or would it apply across all of these different instruments?
I don't know. But I think that
basically it's a huge difference between physical gold ETF.
Yeah. Yeah exactly. That's right. And
custodial Bitcoin which is like let's put it as user custodial Bitcoin versus holding coins on an
exchange. If you have your coins on your laptop or your device, you know, it's saying not your key is not your coins. That is something.
It will have to be a serious legal process or even a SWAT team to try to get them from you. Whereas if
they're on an exchange or,
but I advise complying with the law at all times, you know, blah, blah, blah, but this would be
something where it would be easier to enforce that law on a giant exchange that has
all their coins there. Yeah. Sure. You just, you just login, you get a notification. Yeah, that's right. So, there's a graph
that I posted November 17, 18, 20, 20,
Bitcoin is moving off exchanges, prices moving up ecosystem. You building out having this constraint, supplied
all-time high, maybe just beginning which turned out to be true. That was almost exactly a year ago. And it's a graph from glass node Bitcoin: balance on exchanges all exchanges. Which seems to show
that coins have been moving
off exchanges and there's another graph from the alamouti h, eh L. Am you underscore also showing that BC held on spot changes? May be following now. I haven't
Dug into this, you know, like you need it like a pro subscription to Glass node and so on and so forth, but that's an important
metric to monitor because coins on exchanges are easier to
seize than coins off exchanges and to come back to something. You said is that because do you think the main driver there is because people can stake their coins or stake there. Let suppose yeah coins and get a higher return on decentralized platforms. Is that why you think there?
Going off, interest is a massively scalable application, right? Spark your money and get money back. And defy, offers
insane interest at very high risk, and
just for people who don't know, so, defy, decentralized Finance,
decentralised Finance offers. An absolutely insane level of Interest. I wouldn't even quote the numbers because any number I quote, you can find a Higher One. If you can take on more risk, basically. And what does that risk mean? It means possibly loss of principal, like the smart contract could be happy.
Possibly other kinds of things but you know, you can put in a million bucks and get like a hundred thousand dollars a year or more in interest. The thing is that you could also try and put a million bucks and try to make 10 million dollars to some of these coins will 10x. So it is absolutely like the upside of crypto by contrasting Banks. There are like zero interest rates or like nothing
that would not just to play the other side. No one. Can you make more money and also lose more money if you make poor decisions,
exactly crypto. It's
The eunuchs of money you can room Dash RF your entire fortune or
move millions of the keystroke. Do, you know, room Dash, RF is it don't, but I love that. I almost want you not to explain it because like, five people in my audience, will find that amazing and the rest won't get it. But I mean, I can sort of into it. What that means. But why don't you want, you spell it out? For me?
From Dash. RF is it's like a, it's like a Unix man, which means remove everything Dash, recursive Dash.
Force.
So you do it at the top
of your directory hierarchy. Dash, R means descendant. Everything Dash Force means don't ask me any questions and, you know, people are used to doing this when they want to just nuke a directory. But if you do it in the wrong spot, you're like, oh my God, I deleted my entire files
or not. Right? Oops. Yeah.
Now modern systems will kind of detect what node you're in and may not actually allow you
to do that. But that's what being a quote
power, use your means the computer will do what you tell.
Do not necessarily what you actually wanted it to do. That's what a bug is.
You've instructed the computer to do something. There's
an error in your logic. You didn't think through a scenario, didn't think through an input and it does we told to do Mo not where you want it to do by. This is like a
super important thing in terms of cryptocurrency, because it solves the principal-agent problem and replaces it with your ability to debug. You know what I mean by that should talk about that. Forcing.
He said the principal Asian.
Principal agent. I'm kidding. Yeah. Yeah, sure. I wanted to know who this principle Asian is. Yes? Principal agent problem. No, I don't know what that means. Please continue.
So this was like in back in 2013 when I understood the full scope of this. I was like, holy cow. And the reason is whenever you have a principal and an agent, for example, you have a venture capitalist as a principal and they fund a CEO. Who's there agent or you are the principal and you hire a plumber. Who's your agent to fix something?
Or you hire a banker to go and sell something for you. The problem is that in the two by two Matrix of you win, you lose they win. They lose all four outcomes are possible in particular. It is possible for you to lose and them to win. For example, they take commission without delivering you Returns on your portfolio. And in fact, the principal-agent problem is a fundamental thing of every single relationship on an org chart manager.
Engineer co-manager vco, every single edge. There has a two by two, Matrix of who can win, and who can lose now. The key is to try to diagonalize this as much as possible, such that the win win and lose. Lose you, both win the most together and you both lose the most together since there isn't any Temptation for one party to defect off diagonal and win at the other guys
expense. Yeah. Yeah. Read your terms and conditions.
Carefully, yeah,
that's right. And the thing is that this becomes more complicated. When you have just two people. It's a two by two. When you have three people. It's a 2 by 2 by 2 because eight outcomes win-lose times win lose tens would lose. Its a Cartesian product. When you have n people, it's two by two by two to the nth power. It's like
this hypercube as it gets very
complicated. So it starts to happen in large organizations, is that some subset of people picks the strategy where they win and everybody
It's losses. For example, 51% can vote themselves, the money of the other 49%. That's a street, win-lose 0, some kind of dynamic. Now, the way that startups avoid, this is with Equity. If you've heard the term like aligning incentives, it actually comes from like math where it's like a diagonal alignment pointing through this hypercube of incentives. Where the key thing to do is especially to start up 51% could vote themselves other 49%. Shmoney in theory, if everybody, you know, as a shareholder vote in a sequel.
The reason any money to distribute all the money comes in the exit. There's so internal politics are limited because internal resources are limited in a small company. And so, what you do there is rather than encourage people to compute every possible strategy in this giant 2 by 2, by 2 by 2 hypercube. Instead you say the win win, win win win win. Win quadrant for all n of us went together in an exit, you know, an acquisition or IPO. We don't have to do out the math. That pays off the most
and every other off diagonal thing were some Coalition wins while the other group loses is suboptimal. Okay. Now here's the thing. The principal-agent problem comes from the fact that when you've got two human beings, their interest never fully
coincide. There's a situation where
one can die either can live or vice versa, you know, trolley problem type things, push hard enough, and there's often a Divergence in incentives, not so for robots. Not so, for programs, not so, for intelligent
agents and you're going to tie this into crypto crypto collection.
Yes, because with
cryptocurrency a program, can now trade on your behalf. You can rather than hiring a banker to go and trade for you. You can write a program that will trade for you while you sleep on crypto currency exchanges and especially decentralized
exchanges worldwide that
program that you write to trade. Especially the reason I say decentralised exchanges worldwide is that is truly just pack it to packet that's full internet. They may not even be a sign up process that is fully on chain. So
so that is something where you just like you go from a
telephone number to an IP
address. You know, telephone number is a human Associated thing. But IP address is a machine Associated thing. Any machine can call any other machine via an IP address. That's when IP address really is you go from a human bank account to a cryptocurrency address and you remove the human Association, and now a program can hold money. Make money, lose money fully autonomously. So now, rather than hiring the banker. You write the program.
No more. Principal-agent problem because the program has no mind of its own. It's only the mind that you give it. This is super important because as trust, in society decreases, it is harder and harder to maintain a skilled organization of human beings because there's more and more Divergence. It's an individual era. Everybody is going in this direction. Why are you the boss? I should be the boss. In fact, both equality and freedom while in some ways they're off.
Often made antipodal to each other where they're actually also similar in another respect which is if we are all equal totally equal. If you ain't the boss of me, you know, I have total freedom then there's zero hierarchy.
All flattened out. It is basically anarchic. And in that situation, everybody feels that everybody's interests have diverged. So I mean every man for themselves now in that situation is hard to maintain a civilized society. So I think that the answer is going to be robotics cryptocurrency. How did those things relate? Well, when you give a robot instructions to go and unpack a box, it just does it. There is no Divergence between the capitalist in the worker. The capitalist is the worker.
Management becomes automation. There's a great book factory physics are her.
This book. I have not
it's way harder to build an assembly line then to work on an assembly line, factory physics a good book. Also
eliyahu goldratt book. The goal is
quite good. He kind of managed to wrap a it's kind of funny. It's like it's almost like a fictional story around operations research type stuff. It's executed better than it. Sounds. Okay. It's like May
consume who Moved My Cheese for
Operations research Finance.
That's right. That's right. That's right. So both of these are good books. Factory physics is like it's like a textbook that takes a very quantitative approach to
cycle times and other parameters, when a factory
setting but the main thing that you take away from that is so, you know, I designed a
robotic genome sequencing assembly line like 10 years ago as part of my first
company and this is something where you realize. Whoa, It's actually way harder to build an assembly line than to run it.
It's like the difference between writing a program and running a program because every box there, it's actually very similar to architecting like a data, analysis pipeline,
which more of your viewers will have done because something has to
flow out from this and into something else. Ask me the right format. It has to process only this, many units, at a given time, you need to use buffers and cues to get rid of it and so on. And in many ways by the way, that data analysis pipeline thing. Now, integrates with the offline, physical stuff where you'll do some physical processing to wait for a computation online. And then the physical,
Kicks off. So
ten years ago. I was kind of merging Robotics and Ai and cues and all this type of stuff, you know, and say we like tech people, you'll you'll mess around with a Palm Pilot years. Before people are using an iPhone, or you will be in World of Warcraft. Before people are doing VR, or everybody's on Twitter before the people on Twitter. Right? So, I kind of saw this firsthand and one of the biggest things was what you want to do from any process like that. Is it eliminate as much human error as possible?
And eliminate as much human error as possible. It means is limiting has been humans from the process as possible. It's an error to have humans. If you want to eliminate human error. Okay, and if you can reduce it to just bugs in your code, that's way better because you can see that on screen. It's super consistent. At least the error is made in the same way every time, just to give an example, if somebody rotates a so-called 96-well plate. Okay, and 8 by 12 plate, if they just rotate it wrong, but they're cranking through high volume and there's rotated wrong, which is easy to do. I mean, they've got
Of markers on it, but,
you know, people are people that can screw up
this 96 samples that are off 96 patients, get the wrong report.
Wait, 96 patients. Have what type? What is the plate have to do with patients? So
visualize, like a plastic tray with indentations in it to contain liquid. And so there's indentations are like really small basically eyedropper. You scale invitations, if you Google like 96 well plate, you'll see go to Google Images. You'll see like a visual at this,
right? Okay, and so
Each cell there is often like a patient sample. So you might have 96 samples from 96 different patients in this plate and then you're putting various regions in there and putting it through this process. And if you rotate it wrong, everybody gets the wrong result. Like 23
months, you're saying, right. I understand, you're saying they are matched incorrectly. Is that what you mean? Yeah. Yeah,
exactly, right. So, they had like a sample swap error back in 2010, where
Bunch of people got the wrong ancestry
results. They were oh, you know, they
thought they were this ancestry there. Another answer you thought, oh my God. Am I an illegitimate
child? There's
so the downstream consequences of this like very human error are something that the error was to include human. And yeah, so what is going to happen is the currency means that you don't have to hire a banker. You can write an intelligent agent to
trade for you. Robotics means you don't have
to hire a worker. You can
Program, a robot management literally becomes automation. So rather than writing out instructions and setting up the assembly line, and positioning workers are in calculating cycle times and so on and so forth. You as the manager for many people, by the way management is it's not tangible, and that's why they devalue it. The way. The labor theory of value is is talked about the Marxist theory of value.
It starts with a visual, the factory floor. You have these workers who are working and it's like, oh, we oh, we oh,
and you have this evil.
Cat boss with a cigar who's got his feet up on the desk. And it's just basically cracking the whip on these were workers. And of course scenes, like this did exist in late 1800s, America. And I'm not arguing that unethical bosses didn't exist. But the fundamental premise of this is 0, the workers are doing all the work and this fat cat is just sitting there in contributing nothing and so on and so forth. And part of that is because capital and management are kind of intangible and it's often denied. They
Any value, but now what is actually possible is a totally different model where it doesn't start at the factory floor. But instead you start. Let's say in an academic lecture hall. And now you say, okay. Let's say it's physics. What percentage of people are able to comprehend the material and what percentage of people could write the textbook and then what percentage of people could rewrite the textbook and it is on that small minority of people that we depend for refrigeration and flight.
Fiber, optics and so on. It's opposite rather than this small set of fat cats who exploits this giant pyramid with all these workers at the bottom. It's like an inverse pyramid Theory where the vast vast majority of people depend upon this small, small group of technologists, to create all the stuff that they don't understand how to operate that maintains modern civilization. The funny thing is that your engineering grad student often has both of these mental models in their head at the same time and it just depends on whether they're thinking of themselves as
As a port exploded worker or a sophisticated engineering character. And what I would argue is that in the 20th century, the reason that the labor theory of value preponderate it is that there was leveraged to large groups of workers. They could do a strike that because of mass production. You needed workers to operate a factory. So, there was leveraged there. And, you know, of course, what happened was, they the Soviet Union, they pushed everybody into a lose-lose scenario, where? Yeah, there was a strike, but it wasn't.
Loosen area where the workers win in the bosses lose. It was a lose-lose scenario where after enough strikes, you got communism, where nobody could strike, you know, you have the White Sea, labor Canal, you have the gulag you had basically communism, is this giant slave, labor country, this prison state where you couldn't escape, they would shoot you if
you try to get over the Berlin Wall, for example, right?
So it actually The Leverage existed between workers and capitalists in a certain way. Now, it's a different kind of thing. Now, with the dock worker shortages with the truck driver shortage has, there's a huge incentive for
Automation, and for Robotics, and people maybe are just doing. If you've heard this thing, the great resignation. It's happening across many different social classes with labor, shortages of a different kind. It's on a strike. It's resignation. Okay. Well, I can't get somebody at this price, fine. Let me figure out how to automate this with robots and now, and here's a critical thing. It is not intangible anymore. Management is not intangible. It's not just instructions that the boss is giving to the workers and he puts his feet up on a desk. It is literally code and GitHub is lines of code. That's a move this arm here.
Position it here calculate the degrees of freedom. Here. It is math. It is computer science. It is now tangible because it is code, and now you're not giving instructions to a worker, you're giving instructions to a robot, a computer, an agent. All
right. This is actually a perfect segue to when I was going to lead into and I'm just going to talk for a little bit to set the stage beginning. Probably just before our last conversation in q1 of this year and certainly with
increasing depth over the last six months. I've been spending a lot of my time in what we might consider it web three more immersed in blockchain and cryptocurrencies and ft is ETC. So many of the things that I had read about have become less theoretical for me, and there are things that I've been able to explore and thankfully not experienced in some of the negative.
Is that if have led me to all sorts of realizations? So, for instance, one is, if you just read crypto Twitter, at least some of the people on crypto Twitter, which I would suggest no one do if that is your sole source of information, but some interesting discussions, nonetheless. There are some techno idealists or techno optimists who sort of paint this decentralized future, that is just utopian and almost every respect.
Fact, but there are risks in bad coat, right? Smart contract risk and there are insurance companies, Nexus, mutual and many others of different types that try to provide ways for people to protect themselves. Against the downside of certain types of smart contract risk. We talk about the pseudonymous economy. Last time whereby people would use alter egos of different types that didn't change constantly, but rather a crude, some type of reputation.
Value. This is another thing that I've seen most acutely for myself, within D, Phi and nft is specifically within ft's people who are collecting high value or what are currently high-value, jpegs in essence, right? But pieces of artwork that are non fungible and people now have hundreds of millions of dollars worth of these pieces of artwork in some instances.
It and very few people. If anyone knows their real names, I've had this experience for the first time where I've even met some of these people in person and tried to make small talk. We chatted about this before we started recording and I'm like, oh, hey, where are you flying in? From in there? Like Matt? Yeah. I'm not going to answer that. I was like, oh, wow. Okay. This is, this is the different different conversation than I'm accustomed to but there's also some degree of counterparty risk when you're dealing with.
Pseudonymous.
Identities. Let's just say where you don't yet have established some reliability score outside of a verified account and check mark on Twitter, which you can also be faked that can also be sort of hacked in some respects. So here's my overarching question and I'm going to lead into it. So I'm sure you've heard this line, you know, trusted third parties or security holes. So on paper, I'm like that makes sense, but when you start to really wait,
In to say n of T is just as an example. And people say, you need to be your own bank. There's a lot of responsibility and Logistics that goes into being your own bank in the same way that if you, for instance, want to or imagine living in this kind of utopian, decentralized world where there's a degree. I'm not saying this is you but a degree of Anarchy. And we saw this during riots in the last year or two in places like Portland in many cities around the world.
World you quickly end up in a state that is not unlike what we saw during Hurricane Katrina, where are these atrocities being committed left? And right because there's no law enforcement. So then that leads to questions of Do You Want To Be Your Own law enforcement. I've seen how much fraud there is and sophisticated social engineering goes into some shadowy corners of the world of n FTS say with people posing as a customer support and discords and then taking
Shots of people QR codes and so on. I mean, there's there's a level of kind of sophistication that I hadn't personally been exposed to because I'm shielded by my, you can I'm sure pick this apart, but I'm shielded on some level from certain trusted third parties, right? I do not have the obligation to act as my own Bouncer and security guard and Banker, so I'm wondering.
If you'd like to kind of comment on any of this because I have realized that for me personally being Jason Bourne in my physical and Digital Life on every level is a scale and scope of responsibility that I don't really want. Even though I have some I have firearms training. I have some technical ability. I have an incredibly good Network. I could actually organize my life around some of some of those
Sort of pillars of self-sufficiency, but I'm not convinced. I totally want to and I'll tie this in. Also you were talking about Singapore before we started recording and you said it's for centralized it delivers. So I'm just wondering for Muggles who might be listening and I would include myself in that group. We're like, you know, I'm not ready to be the Lone Ranger on the frontier of complete decentralization for all of the perceived risks that at least I see once you start to weight into it. Where's the
Goldilocks point. And how do you decide that for yourself? I thought about this a lot from many different angles and let me at least, give you my thinking on it and, you know, shoot it or agree as you want. This kind of relates to thing. I was talking about earlier with communist capital V Capital cryptic Capital submission sympathy. So, you know, you must submit, you must sympathize, you must be
Sovereign. And that last point of the triangle, you must be Sovereign.
As you are discovering is
actually not. That's why I said it's an
Point. It is too hard for
pretty much anybody to not just hold their own currency, but grow their own food and get their own water and so on and so forth. Humans are individuals, but they're also social animals and you make some compromises. Now the stuff I just discussed on robotics actually reduces the necessary skill of societies in theory you could have and this is where I think we end up in 2050 or 2040, maybe even sooner you
go back to the future. Now, of robotic Farms, robotic guitar kick Farms. Where, if you're looking at automation of agriculture, it's getting there. It's really improving dramatically AI for picking things and so on and you kind of
give your instructions to your robotic field
hands because then you go truly full stack your quote Off the Grid, but you have maybe a modern life. Now, of course, you need enough land. You're still going to have trade. You're not going to grow every crop there, but you might be able to do. Okay. So I do think that there's an eventual thing. I don't know what the minimum scale
Society is. I think it's smaller than 300 million might.
Smaller than a million might be even a few thousand people. Could operate
something decent. There's actually to make that more explicit. There's a, you know, the project open source
ecology. I don't I'd recognize the words I can imagine, but why don't you describe it?
Yes. It's a little different than what people think. When they hear the word ecology. It's basically a kit of 30 open-source machines. That if you build them from scratch, you could rebuild civilization, the global village construction set. Okay? Open source. Blue. So it's like, how do I get running water?
ER, and how do I get this? It's all the things that Civilization depends on, and, but it's machines that you can build yourself and there's also a couple of other books. Like this is a book called
the knowledge by I think.
Lewis start now which I think is really good and you know how to rebuild our
world from scratch kind of the post-apocalyptic thing. That's what the knowledge is about.
Yeah, the knowledge:, how to rebuild our world
from scratch.
And then there's another book which is how to invent everything. A survival guide from the stranded time traveler and
Those books, I think are quite good. Okay, those two as well as, like, open source ecology because it addresses some of what you're talking about, which is, how would somebody start from scratch and do this? We don't know how to do it. And in some ways, what's happening is
There's a cycle of centralization decentralization that just happens for example, in China. It's like there's the Warring States period and then the whole thing is Unified and then it breaks up again and see unified. And we see this in the computer screen two, totally different context, which is you have mainframes. Then you have personal computers. Oh and then you have cloud and then you have cryptocurrency and smartphones. You kind of goes back and forth. Like this, the thing about this is when you know, system is centralized people Chief at the control and
They want sovereignty. They want Power, they push on it, then they managed to break it up. Then it's all decentralised and chaos. And now what is scarce is leadership. They're like, oh, let's put it back together and so on and seen from one vantage point. This just looks like a cycle. You just keep coming back where you came from, you go from Anarchy, back to tyranny to enter key to trite, but seen from another standpoint. It's like a helix. It's a cycle in the XY plane, but we are making progress in sort of this ascending.
Cycle over many generations. Now, I'll put an asterisk on that too, which is I don't believe that progress is necessarily guaranteed. In fact, there's a couple of good podcasts or shows like the fall of civilizations podcast or you know, some aubergine actually has some good stuff on this where he talks about Gobekli Tepe, which is like the oldest human civilization. It appears looking at some of the civilizational records that humans may have like gotten pretty Advanced and then just kind of
Totally collapsed. And we've done that a few times
in human history. So you're saying you believe in Atlantis.
Well, I thought only kidding. I'm kidding. Okay,
so like Gobekli Tepe, for example, it's this site that's kind of like Stonehenge except way older than Stonehenge found in what is today modern turkey that pushed way back our dates of when civilization started.
Okay, so it might be like, you know, playing a video game where you get to level 15 and then you die
ghetto, 27, and then you die. And this
just might be the most advanced human civilization. We've built to date. But it could just collapse and we might come back. I mean happened to the dinosaurs. They got hit by a meteor. Yeah, what's happened? I mean there's
some pretty bizarre archaeological records and really interesting carbon dating done in South America. Also, that would point to Advanced civilization will collapse of different.
That's right. And so the thing is that when you say progress is possible, but it's not guaranteed. For example, think about Christianity in the Roman Empire like Christianity in some sense was no offense to your listeners have nothing against it, but it was like the original communism at the time of the Roman Empire, it tore down the Roman Empire. It said slaves are good and sooner rich, man, go through the eye of a needle than get to heaven and basically it D legitimated, the Roman Empire and
eventually it fell.
Well, at least the Western Roman
Empire and that was something you got the dark ages for a while until the sort
of fusion emerged on the other side. You had the germanization of Christianity, you know. Had
for example, why do you have st. Nicholas and Santa Claus and snow next to a scene of Bethlehem? And the manger in the desert? Those are two totally different cultures thousands of miles apart, but what's happened is copy-pasting, one story next to another like horizontal Gene transfer.
In organisms, the meme. Replicates, even if the substance is changed quite a bit. So what happened was eventually, After the Dark Ages, you got, but thing that was a contradiction in terms or oxymoron before the Christian King, not the Roman emperor of the Holy Roman Empire, of course,
it was in continuous with thing but conceptually and you kind of had that
rapprochement but there was a dark ages like a collapse of civilization in between and so bad. I'd ears, or let's call it. It's better here. Let's call it. Certain ideas can collapsible has a
Ation that has happened. Okay. Yeah, and, yeah, we've recovered but it's not necessarily guarantee. If we've collapsed is guarantee that will clear cover. The dinosaur was didn't, of
course, while some ideas or even generated or myths to collapse civilizations. Yeah.
So, right. So, this gets to something, which I think of, as a very important part
of the future political axis, which is you can
say, it is, you know, Democrat Republican. You can say it's centralisation and decentralisation, but I think
And even more important axis in the medium to long term is going to be transhumanism versus an ARCA primitivism. And we kind of talked about some of this before, I think, did we? Yeah,
let's reiterate it. And then I just want to make sure I bookmark that I want to come back to how do you find this sweet spot on the spectrum. Because yes, yes. Yes, one concern I have. Is that the decentralized tools? Given the literacy required and the precautionary measures and tech savvy.
Be required will forever remain or for a long time, maybe not forever. But for a long time Remain the tools of half a percent of a given population or maybe a few percent of a given population. Unless there are you is slapped on top, which will ostensibly just create again. Trusted third parties. So it seems sort of antithetical but I don't want you to lose your train of thought but I want to make sure that we come back to that.
So let me quickly do in our comparison transfusing then come back to your point. So the quick thing
That is in our comparative. ISM says, we're not living in nature. We're far away from it. We're having all these Plastics. We're having all of this pollution. That's why. Maybe in you know, there's there's a like a right-of-center version of that which is like our testosterone count is down, which is actually that sounds
like a conspiracy theory. It's actually like a scientific fact is
a way lower than it used to be for adult men. All that is down. And so there's some aspect you know where this is now neutral or diabetic. We're eating all these grains.
And it's all bad instead. We need to kind of reject modern civilization and part or full like the Unabomber thesis and just go back to the land. And, of course,
the problem with this is, I think that's a
romanticized version of what going back to land is, I don't care. If some people want to go and do an Amish thing and live on their
own or snapshot some point in time. They want to like, tear down, industrial civilization,
conversely. The transhumanist thing is the opposite which says, what makes us human is technology, you know, Richard randoms book, how cooking me?
Human your heard that I have. Yeah. Okay. So finally one book I've heard of
so Rings book is.
I've also read Horton Hears a Who just ask my just my level of reading it. Continue. Your Chinese is way better than mine.
And we have an on / Nationals are my I learned from from you know, like tools of X is amazing. Thank you. But hooking made us human. Essentially says that technology is actually part of humanity in the sense that we sort of.
Outsource our metabolism to cooking and therefore could have evolved in a different way and was that is probably also true for clothes and other things, you know, there's this book The Naked Ape, which is kind of also about that. And the idea is that, you know, we are a technological species, technology is not some anti-human thing. It is Humanity. It is a difference between US versus animals. And so our destiny is to get to the Stars. Let's do this. Let's become Transcendent beings. Like one with the machine, ray machine interface. This vessel is just what we are today, but
Our ancestors ancestors, if we really want to make our ancestors proud, they were single-celled, organisms, or like, non-human creatures. So, whatever is in front will be to us as we are to them. And so that's like the transhumanism thing. And what's funny is both of these in their extreme form are like off-putting to some people, they like, why can't we just like sick where we are, but the nature of things is that those people who have ideological Zeal, will start pulling the train in One Direction versus another. It's very hard to kind of keep something just stable in one state, you have to end technology.
Ecology and communication turret. So, now, coming back to your point. Basically. What do you do in all these institutions collapse? Because most people cannot be that Sovereign, because it's like an overnight plunge into refounding. Everything. It is not simply be your own bank. It's maybe be your own food supply and there's certain things that are sitting on your desk that cost you 10 bucks, but you would never be able to build a more. It's very, very expensive building from scratch. Like a, don't know. Look at like a USB
cable. Well, how am I going to build this? I'm holding.
A ballpoint pen.
Yeah, of course, that's a famous thing. You know, no one can build a pencil. The first unit rolling off. The assembly line is wildly expensive. Then the 1 million or billion is super cheap, but getting to that point of Technology from just a grass field.
Insane. Super hard. Yeah. It's gonna be a hard to do from your intentional community in the jungles of Costa Rica. That's right,
but all the supply chain stuff is going to start. Forcing a
A greater degree of autarky. If we're lucky. It is just a gradual, ramping up. If unlucky, it is too fast and you don't have time to adapt. It's like the difference between like working out, gradually versus go put up 300 and break your elbow or whatever. The point is. What I think happens is unbundling, Andre bundling, one of Mark Anderson's collaborators. Long time. Go ahead. This throw offline, which I love because so
funny but it's also true
is only ways to make money in business are bundling an unbundling.
And this gets back to the spiral thing. I was talking about. For example, you take the songs off of a CD. You unbundled limit MP3s. Then you re bundle them to Spotify playlists or you take the Articles out of a newspaper and you put them into individual URLs and then you re bundle them into Twitter
feeds that or subscription, right
or subscription. That's right. And you take the countries that we have today, the people no longer feel a
loyalty to your unbundling, them into the coming, American
Anarchy.
And then you're going to re bundle them on the other side into groups that do have something in common and that will be probably a really messy Global process. When this Pax Americana Falls, one. Analogy is the Thirty Years War in some ways. By the way, that's actually quite analogous to what we're going through. Do you know about what happened then?
I do not. I would love to know, tell me sir
the printing press.
I have this tweet, actually, on this.
Printing, press + Martin Luther led to the Reformation led to the counter-reformation led to the religious wars. The thirty years, war led to eventually, the Peace of Westphalia and the nation state and the internet plus Satoshi Nakamoto. Led to the decentralization by announces the Reformation led to the counter decentralization led to potentially the coin Wars, the America in turkey, and then question, mark question, mark and then Network state. So let me explain what that means.
Means by the time of Martin Luther the Catholic church had become this ossified centralized power and it had, for example, this thing called indulgences where you could go and sin and you just go and pay some money and be like, yeah, that's a church. They be like, no biggie. Okay, you have Hall Pass. Yeah. It's a hall pass. Exactly, right. You can argue. It's similar and you know, I noticed a little bit of a poke but like a carbon credit go and sin with carbon and then by a credit, right? You might argue. That's a good.
Or
a bad thing, but it's analogous. Got to make those fuckers more expensive, gotta make him work for anyway,
kitten and even better example is like TSA Pre where like everybody is a sinner herb a substantial Cyrus, but pay this money. You can be an express lane. Like, huh? It doesn't strike anybody as right, you know, it's like a weird thing where the issue was safety, where I can you pay for it or at least it. Arouses
question marks. So, two things now, just going to bring us back to your Tweet. The other thing I'll say for folks is, if you want to learn
Earn a bit more about Martin Luther and many of the things that followed there's an incredible podcast. Episode takes a little while to get warmed up, called prophets of Doom, which is on Hardcore History by Dan Carlin. It was the first episode I ever listened to of his, which got me hooked fascinating, listen, so I recommend that to folks and back to our regularly scheduled Balaji, sir, please continue
great. Also, there's a good thing on this called the Bitcoin Reformation with Tour de mr. T uu r d-- emea.
TR that kind of goes through some similar
ideas, basically like analogizing Bitcoin to to Martin Luther. So maybe look at both of those together and then, you know, the historical version and some of the
parallels but briefly Martin Luther, because his 10, the printing press, he didn't just nail his 95 Theses to wooden gun and I think 1517. He basically, you know, people were able to copy his arguments. And for the first time people had heard these sort of
deconstructing.
Arguments that said, the Catholic church is a scam. You should have a personal relationship
with God, doesn't matter what the church says,
etc. Etc.
And so yeah, those are religious argument, but is also an argument over power and who should hold power and for a long time when I was a kid, I don't understand why are people arguing about the body of Christ, like a wafer, it seemed like the weirdest kind of thing to argue about and fight and kill about, I just didn't understand this. Now. I understand that a lot of those things were, sort of proxies for, who has power.
Does the church have power or did these new guys have power? And so what happened was the Reformation was like this thing of basically of decentralization of power away from the church and The Counter Reformation took a little while to get underway. But this was the Catholic Church saying not so fast and basically fought. There are some reforms, there's also some combat and these were the wars of religion, you know, do you go with the centralized church or the decentralized process and movement process a Catholic? And eventually after 30 years of war.
Very Bloody War. People were like, okay, you know, we're going to come up with essentially a Live and Let Live philosophy. The Peace of Westphalia where we're within nation-states and you have the Monopoly of violence within that and a transnational religion doesn't have influence with in this geography. So, that's a the Catholic Church doesn't have influence here and it was like,
okay, we're both pretty bloody. Let's settle this
and I think it is that's way out of living memory. That is many.
Reactions go. But, you know, sometimes people seem to need. One thing is funny is a lot of things, kind of, you can argue, they happen to like 70, 80 or Cycles because things drop out of living memory and then certain aspects, repeat. So,
Things people sort of forgotten how bad war is in some
ways. So they're kind of LARPing it
and maybe they'll make it into a real thing. This is actually fukuyama mentioned this, that his end of History thing. Actually, a depression comment that people on some level are wired to struggle and if they don't have struggled they will re event struggle. They will struggle against order and prosperity to kind of make it hard to
manufacture struggle. Yeah. I've seen. Yeah, exactly. That's right, and that's Francis Francis fukuyama.
Yeah, let me actual find the exact quote on
second. And while you're looking for that then I want to come back to the Bitcoin or cryptocurrency comparison and the part that I stumbled over when you were reading the Tweet initially was the I want to say the great resent realization or something like that and I just wasn't sure what that was. So
centralization. Decentralization re centralization is like entity unbundling, re bundling so I get CDs individual.
Three is playlist. It is newspapers individual articles, Twitter feeds. It is countries and our key, new countries, new
cities. What is that in cryptocurrency? The the re centralization? So it is, for
example, in exchange. It's happening in many different scales. But one of them is Stir your money in a bank. Okay, pull it all out. And then you've got Bitcoin on your computer, stir your money, in an exchange. Okay, pull that out and then put it on a decks. Partially. Each
step here actually gives you the actual Dee's decentralized Exchange.
Decentralized exchange and there's ways of kind of doing this, where you have less risk than on a
centralized exchange. For
example, it's an atomic trade. It's on the decks like a flash loan and then you're getting it back in the next transaction. There's various ways of doing this where a centralized exchange, improves your control over a bank and a decentralized exchange
improves, your control over
centralized change, even if there's parts of it that seem like you're Reinventing the wheel, the wheel was reinvented. In fact, there's this great graphic that shows an original Stone wheel and then like a chariot wheel.
Till then like a modern Michelin tire. We do need to reinvent the wheel and we have reinvented the wheel. We just need to be conscious of when we're doing it. So the way I kind of think about this, I'll just finish that Reformation now with you by the way, just like there was the Catholic church and then there's the Reformation which is a decentralizing event. And then there is this huge fight with the Counter Reformation and then eventually a truce we're processing. Basically one relative to the previous era but Catholicism to not die out and still a big thing.
Similarly, I think you can think of the air over in as the decentralization and now the counter decentralization. So just like the printing press and Martin Luther kicked off the Reformation the internet and cryptocurrency have kicked off the decentralization. And what is it counter decentralisation look like? It looks like di platforming from social media platforms. It looks like on banking. It looks like the Chinese surveillance state. It looks like basically exercising, route control. It's basically route versus routers.
So do you have root over this computer system and you're exercising root control, or do you have this decentralized set of routers that are just routing packets back and forth and the counter decentralisation? I believe is going to succeed in China and fail in the US. And what I mean by that is, I think China because they, they have very ruthlessly competent managers. It is actually a good video by Eric axley from 2013, which it doesn't hold up in every respect today because,
There's certain claims. He makes that for example, that addition paying will step down and they figured out political succession because you're picking repealed that or whatever. There are things where he says that the malware is continuous with the ding error when really doing was really a coup against Mouse successor. It was a total shift in Direction, sounded Mal intended. So those two parts maybe he just has to say that for domestic consumption or what have you. So you have to take it with a grain of salt, but the rest of his actually very interesting. We're at least gives the 2013 Chinese vantage
point on their system.
Why do they actually have these?
Little silly comment managers. Because the way that the CCP works is yes, there is in voting. If people want to exercise political power, they join the party sort of similar to how in the u.s. Yes. You can vote. If you really want to be politically powerful you want to run for mayor or something like that, that means joining a party. So sort of like that, of course, not the same, but roughly analogous. Those people who are politically ambitious, join the Communist party and they might start as running some small, really tiny town of 100 people and then they level up and they go to
Something of 10,000 or 100,000 people or a million, and then eventually, 10 million, each level becomes more and more competitive and they have surveys, they do of the populace and they do like 360 reviews for. They're looking at your peers, you're running other cities and they're looking at your Spears reports. It's like promotion in a corporation. And so now, of course, there's patronage and there's connections and so on the go into it, but it's like a giant Corporation where they're looking very much at metrics. And did you build this many toilets as you hit your numbers from above?
Did you manage the populations just content? Is this region? Does it have higher dissatisfaction that other parts of China and so on and so forth. So Corporation is not a democracy, but it is responsive to its customers in a certain way. And the Chinese government was always kind of conscious of losing the Mandate of Heaven and having too much dissatisfaction. So did all these polls. And so on try to keep ahead of public sentiment solve these kinds of problems. And so on. Again, I'm not saying they're good. I'm saying that this is how they selected for competent leadership that we have a lot of engineers in.
Their ranks and that's why they built a great fire will know things because they have guys who are basically selected as capital allocators is managers. So because of that because it sets the great firewall because they banned social media because they've done other things. I think China is going to win the counter decentralisation where you know, people thought that their bands on the internet in their controls internet wouldn't work. The kind of did they basically just had their Walled Garden where they have root access and vision pain can basically push a button and anybody can be disappeared. There's like super famous. Actresses that
That just got disappeared. Now. That's as I said, ruthlessly comment because that's kind of a scary thing to be under. You don't really do not have any recourse. There's no civil liberties. There's no human rights. And yeah, it's true that over the last 40 years. They've delivered a lot of benefits to their population. There's this huge group that's been pulled out of poverty, but that level of absolute power can also go south. The point is that I think they will succeed to have succeeded, arguably, in the counter decentralization by contrast in the US. The u.s. Establishment is
By turns a pathetic. It's either apathy or Panic, for example, in covid. So it's not a big deal. Oh, for example, these tech journalist wrote this article. No handshakes. Please trying to make fun of anybody for taking precautions, trying to shame taking precautions. Folks, wrote about. Oh these bubble, boys are so concerned about this making fun of this early on in covid and then they switched completely to panic later and never acknowledged that they had, all this false reporting misleading reporting to me that, you know, they accuse people of quit being racist for saying hey, maybe we shouldn't have the China.
A town parade after with the Wuhan coronavirus on the loose after Wuhan itself. It canceled, its own parades. This is like January February 20. So what happened was? They were at first a pathetic. This is not going to be a big deal. Nobody should do anything and then they're panicking. Oh my God. And so that kind of mode is very common. The u.s. Establishment is not selected for folks who look ahead and selected for actors propagandists. It's not selected for Capital allocators. Just a couple examples Lorena Gonzalez, this legislature in California thought.
At relatively Junior guide. Founders fund was a billionaire or Brian Williams and member of the New York Times editorial board. Thought that if you divide a Bloomberg's Fortune by three million Americans, all of them would get like a ton of money and obviously they wouldn't. So you're actually select for folks who are verbally good but innumerate. And that's very different from the Chinese system selects for and that results in folks who are not like VCS or Technologies do not like calculating ahead or doing contingency planning, or saying neither, apathy nor Panic. We could have a technical plan to
Really succeed. If we do X Y & Z. So what that results in is the u.s. Establishment. That's always behind the eight ball. Lehman is a surprise, bear is a surprise covid. Is a surprise. Trump is a surprise Afghanistan's surprise. Everything is surprised. And then they react in this very reactive. A Facebook is a surprise. And why is this surprise? Because Facebook's of fad, Facebook's of bubble. These tech journalist, for example, in 2013, even there's this article why Facebook will never make a significant profit or famous article. Amazon.com.? Okay, or
There, you know, nyt classic, Google's toughest searches for a business model and it's, it's something where, you know, this goes back so far in some ways. Basically, these guys are, they're so used to inheriting something that they could never have built. They sit upon this, you establishment that they don't understand what it is to build something. And they don't think anybody can build something and so forth are dismissive of the stuff until it gets so big. That it can't be denied. And then they react in the soup.
I panicked way.
So let's extend that to current and near-term crypto and you could take that any direction you want. It could be sure btc-e through. Otherwise in the u.s. Is there going to be a rash regulatory whiplash?
We've already seen cease-and-desist letters and so on to defy companies and there's a lot of scrutiny for Lending products. Where do you foresee that going?
By the way? I will say one thing, which is once you do, get in the mode of trying to react to this stuff. That's all at 0.001 percent traction, you're thinking like an angel investor because it's like when you start looking at that dashboard and you no longer sit your filter at something that's at 50% of the population traction or even 10 percent. You know, when you go to .001,
Ten and a tiny percent of the population using it. The number of things you're looking at explodes and you need to have a really good detector for what will be important but won't be. And it's going to be erroneous at times and it needs to be quantity because you put in 50 k into this and 50 million to this. And so it's hard. But that's actually what capital allocation involves, especially in the modern era is figuring out what's going to get big and getting ahead of it. So, to your question, what is going to happen with sort of the regulatory State solution with crypto?
There's various scenarios, but I think on balance they're going to lose and let me explain what I mean by that. They made in the US
government. The federal government is better or government.
And why do I say that? Well, the short version is the escarpment is losing control over both domestic and international Affairs. And so states and cities within the US will take positions at variance with the feds because currency is coming. So valuable to them that they'll have the equivalent of sanctuary state.
In sanctuary cities for crypto Drifter entrepreneurs will write model legislation that will be adopted by places like Texas and Wyoming and Colorado and Florida and other kinds of things that for example, prevent Bitcoin seizures, in law before the thing happens, that give this already there, by the way, in some ways. It's like Wyoming's. Dow law is quite Advanced. Miami has accepted some City coins and Texas is big in Bitcoin mining. This is already happening, but the next level of that is doing the same thing that they're already doing.
Versus the feds, which is openly defying them and saying, actually, we're doing State nullification and just to give you some recent examples of this. The federal government is losing control of events. I just made like a little list of this the other day, but both domestic and international Affairs, inflation Afghanistan. China on Taiwan France on the orcas thing, El Salvador and Bitcoin 17 states, by the way, opposed this idea that the FBI should be sent to school board meetings to 17 seats were two letter on education, Texas.
Can a different policy on vaccine mandates and abortion. Germany went its own way on North stream to Florida, is pushing back on this financial surveillance thing saying that they are not going to abide by the federal government edict on this. So you're seeing significant energy at the state level within Empire. And then also outside from places like El Salvador or Switzerland, that are just taking policies that are at variance with what the US government's position is. Now this is quite different from 10 or 15 or 20 years ago.
When under Obama, for example, there was a lot of kicking in doors in Europe going after Swiss bank accounts or sanctioning everybody on the planet or invading everybody for democracy like under Bush. So abroad, there are a lot of muscles being thrown and then domestically basically, the feds would step in and force states to do something. But over the last few decades, but we've seen our Sanctuary cities for immigration. We've seen states, have different gun laws had seen states. Have different marijuana laws. We're seeing a larger
Your Divergence States, for example, had different gay marriage laws than the feds for a long time. We're seeing a larger and larger, Divergence states are becoming genuinely differentiated from each other, and from the federal government and that's happening within and then countries abroad are also taking a different route. So France, for example, you know, now they're going hard on nuclear, which is definitely not a priority of to my knowledge at least the current Administration. Germany is trading with Russia. That's not something the US government wants them to do India's trading with Russia on like
Some missile stuff. That's again, something the US government threatened sanctions on. So, countries are doing things that the US government doesn't want them to do. And States within the us or doing things the federal government to some other to do. So because they're losing control over world events. The whole Pax Americana is based on the repeal of the 10th Amendment at home and Regulatory harmonization abroad. So, you know, FDR effectively repealed the Tenth Amendment, where everything that wasn't officially. The federal government's was left to the States, but a very broad interpretation of the
Commerce Clause said that everything is interested Commerce. So the state's actually don't have any rights. We're going to reinterpret as a federal government, having power of everything. And therefore you get these alphabet soup of agencies, FDA and SEC and all these things kind of rules out the FDR and then abroad. Go ahead
your left. No, I was I was just like the alphabet soup mention should? Yeah. Yeah. You my level of humor sophistication, but if I could interject for one second, if you had to live in the United States, where would you live in? Why?
Texas or Florida? Okay. Why
probably Florida? Why? Because those are becoming like Freedom States. I think Wyoming is also good. I think, Colorado under Jared police is really good. You're basically seeing the pro-freedom jar, police a Democrat, by the way, he's a tech founder. He
understands those blue mountain right way. Back in the day didn't didn't have Blue Mountain. The gift card company way back in the early days. I could have sworn.
Yeah, that's right. So yeah, he was, he was a few years ahead of me at Princeton and did very well,
super smart guy. I think he actually is, like, involved techstars and so on. So, it's something we're in some sort of the center and south of the country are going to diverge from the West Coast in the Northeast. I think, you know, roughly speaking. But that's not straight. Democrat Republican. That is more decentralization versus centralization. And so I think that those States, it's literally like a search engine, right?
One thing I've wanted for a long time. Actually, I've wrote about this like, 89 years ago, but I think that the next political model is, what I call crowd choice, where you have a search engine, where the rows are jurisdictions and the columns are policies, sort of like Nomad list.com, but it's basically a bunch of attributes. And then you just put in your preference and you sort and filter, but then the next step is to group with a bunch of your friends and have you all put in your preference vector and then it
It's a jurisdiction that is closest to your
Collective preferences. Let me ask you just before we want to not lose that, but with Florida and Texas. When we're talking about Freedom, what is your hierarchy of freedoms? Look like? Because they're, they're also a lot of people listening just to act as her proxy for listeners. Say, well, you may have greater say Financial Freedom, because a State might act like a crypto Safe Haven of some type, but there may be sacrifices that you make. And
Tacitly endorse instabilities reproductive Freedom exactly like this. Uh, so how do you how do you think about the how to stack rank those things?
The first thing I would say is as a pragmatist being in the u.s. In the u.s. Is and means you're sort of de facto funding. All the wars, the u.s. Wages around the world. And so it's a people are implicitly already making moral. Trade-offs of some kind when you point that out that sometimes takes the heat down because a new thing is different from the things they thought that's already baked, the moral compromise.
I've already made implicitly you buy stuff and you don't know where that supply chain comes from. Maybe there's something that you would disagree with. Ethically. So people make these compromises all the time and fundamentally, I think it is. It's a vector policy is not a scalar. It's a vector. It's a set of decisions, you know a tax rate of X and a 0 1 as to whether drones are legal and this is your reproductive Freedom /, abortion policy in, this is your this policy and you know, there's there's an aspect of De gustibus. Non dispute end. Mm. I
can for
Ask don't know what that means.
Oh
sounds like some Latin though, if I'm not
probably mispronouncing, but the gospel is known. As disputandum is in matters of taste. There can be no disputes. So there's aspects of this that are preferences rather than absolutes. I might say, thou shalt not kill, but I can't say thou shalt like the color green. That's a preference. So some of these things and crucially, by the way, I think there are multiple Optima this, by the way. I was coming up with sort of a name for how I
Think About, You Know, My Philosophy or something.
Could you define Optima, please?
Sure. Yes. So imagine looking down at a bit of hilly terrain and a local Optima is the peak of one of those Hills and a global Optima is the highest peak of the highest
hill. Right? Got it.
So if your goal was to ascend to the highest height, you might Ascend to the top of one of the hills, but really what you want is the global.
In this case, which is the top of the highest hill, however, it could be the case that you could have multiple Hills all in the same region that are basically of the same
height. Got it. Okay.
If for example you thought of your kind of latitude and longitude there as a no let's say your percent of time spent remote and your I don't know your Equity compensation versus cash percentage in a company culture. These are like sliders that you could set to like 0 and 100 both of them and if you replace that he'll analogy with,
Latitude longitude with these 20 and 100 sliders. You can imagine different kinds of companies that a different combinations. They're both equally successful in market cap on the Z axis, but that had different policy
combinations. Yep. How does that apply to States? Similarly? How would you look very
similarly? That's right, because I think right now we sort of think of companies currencies cities countries communities as being different things, but they're all going to become the same thing. Essentially, the projection of a
The network or rather companies become like apps. Effectively on this will sound like take Babel. Okay, but it blockchain.
Is property rights, identity, historical, records, marriage and birth certificates. All the type of stuff. A society can run a ton of stuff that are currently. Does it City Hall on a blockchain? Its property rights. It is who has admission to what building who owns what property, what sale occurred at what time, who paid, who dispute resolution a lot of that stuff goes on chain and then a lot of companies, but off from that and use that as an application point. So all of these things basically set around companies currency cities countries.
Is communities all settle around chains that is like the software stack for running a community and, you know, an analogy to this is before the internet books and movies and music and songs television, telephone calls. Those are all different. And then after the internet, they got turn into packets and all kind of mixed together. And so the normal thing that a macroeconomist will say, is they'll say something like governments aren't households. Have you heard that before?
Nope. I have not
there's a quote actually think it was Tyler Cowen quoted. It thing is John Lanchester in the something Review of Books. Gosh, let me find it January 2013 Richard Feynman was once asked what he would pass on. If the whole edifice of modern scientific knowledge has been lost and all you could give to posterity with single sentence. What Axiom would convey? The max amount of scientific information. The fewest possible words. His candidate was all. Things are made of atoms.
In a similar Spirit, if the whole ramshackle structure of contemporary macroeconomics vanish Into Thin Air in the field, had to reconstruct from scratch, the sentence, Which packs, as much the discipline. It's a few as possible words might be, quote, governments are not households. The reason this is really important is, this is why people will argue that what I'm talking about for company is doesn't apply to cities or two countries because they're fundamentally different governments around households. And there's a whole discipline, a macro that has arisen around this. However, I argue that actually
Ali, in many ways, American and Western macroeconomics isn't own way. As pseudo-scientific as Soviet, economics was, there's a whole discipline, by the way of Soviet economics marks, economics that had all these equations and so on. And there are some aspects of it that are still useful like cantor's work on movers Kettering kantorovich on linear programming and optimal allocation, you know, some of it is okay, but a lot of it was basically essentially just a recapitulation of marxist premises.
And when they say governments are not households and they say that recapitulates, the whole field. What they really mean is that the government has guns and households do not and therefore, the government can seize money and course people to do things, and households cannot do this. So everything which assumes some ability to redistribution, some ability to print, some really do this owns that, that is a hidden assumption. The bullet point at the end of QED is a bullet
And the assumption is, of course, a force as opposed to physics where it's, the analogy gives us to physics and Adams the human element isn't there. So, once you say governments are not households and you think of it from a different angle of governments have guns. Yes, it is true. They are different. But I do think that in the medium term future because of exit because of global Mobility. I mean, we have this tension now, you know, I talked about exit a lot, even before the coronavirus, as the most important, right? But post
Post lockdown people prize it way more. When it's taken away. You prize it more, you prize, free migration. You probably ability to leave and we're seeing a great migration in the u.s. So the great resignation, The Great, Migration remote work. All this and lock down. All the stuff is made people both more aware of, you know, how important the policy is of the state that they're in and were able to move and, you know, by the way, everybody doesn't have to move it, only a small percentage of the world.
Old moved to the US and look at what a big deal. That was on the margins, some degree of Mobility. You can cause massive change. This is also why everybody doesn't necessarily need to hold their coins. The fact that some people can is enormous leverage on the system. It's just like, you know, Steve Ballmer back when this apocryphal story, but when executive left from Microsoft to
Google
supposedly like threw a chair or shoved, a chair or something like that, everybody didn't leave, you need to leave Google enough. People need to leave that. He was like, okay. This is real. Google is a real competitor and eventually that led to
him, stay.
Down inside you're taking over. So the thing is that the great resignation, The Great Migration remote, lock down. All of these things being much more exit. When there's much more exit, when you can hold your coins on your person when you're renting rather than buying when you're basically running light and your stuff is in FTS rather than real estate and when all of the stuff, when your books are in Kindle when your mail is in Gmail or ideally, you know, in some kind of decentralized thing versus centralized service, when you don't have obligate ties to the land, then
Then the state has less leverage. And so, because of that over time, it moves, for example, to like a subscription
model, when you say it, you mean residency in a given
Place? Yeah, like Swiss cantons have something like this where you pay X dollars per year and that satisfies your obligation to them to live there. And I think the future business model of governments is a subscription and be inflation. What that means is, there's a SAS type service that you subscribe to and that gives you access to all this government stuff.
V-0 that is like sing pass in Singapore. For example, Estonia something, called X Road. And the thing about this is it actually isn't just a revenue model for them. It's also actually a crime and punishment model where right now we think of digital di platforming as completely Lawless and policing as forceful and inhumane, but it may turn out that in the future. If your punishment is being deep lat form for something, but it's written in law beforehand. It's not some arbitrary thing that's being made up. It's like seven days suspension in order for doing this.
And it's like a
Having your driver's license. Revoked for
infractions. Yeah, exactly. And so, the thing about this is I'm not saying that's good necessarily, but it is more Humane than jailing somebody arguably. And again, I'm not also say I'm not so unrealistic. As to think that physical punishment is never necessary or anything like that. Not at all. But I do think that having levels of steps are valuable where you don't have to escalate it all the way you can have a deterrent which is, you know, a slap, you know, digital slap or digital suspension versus all the way to the gun, the gun.
A really serious thing. So basically, when you have these subscription steeds you pay and you have effectively access to this service and doors open and literally physically open like, you know, the key unlocks it, it's basically quote digital border control in the sense of why do you have access to the state? Because you've paid in. You have a subscription, you have an identity, unifies passport, driver's license, all of this stuff now immediately, people say, oh my God, that gives the root operator of the state enormous control.
Roll, and it does. So that's why you have to preserve the right to exit. You have to preserve Bitcoin. You have to preserve cryptocurrency. And then there's boundary cases. Where if you went and killed somebody, which you then have the right to exit, right after that. Probably not. And so there's some social smart contract that you sign upon physically entering or virtually entering this jurisdiction. Just like terms of service on a website, but it's more serious. And you might require like a cryptocurrency deposit for example, rather than just a click through of, I have read this. And so it's almost like,
Posting bail or posting a bond to enter the jurisdiction and if you were posting a deposit with rent and if you exit without doing the thing, that is forfeit, and that is significant enough for example, deter Petty, crimes and what. So that's like the subscription aspect and the inflation aspect is, I think, as I said unbundling and bundling Bitcoin is necessary as a corrective to 20th century Fiat, but there's another way of thinking about Fiat which was actually a useful thing for me to conceptualize, you know, chesterton's fence. You know, that
concept
I do not.
So there's a fence sitting out there and someone says I don't know this fence is here. I'm going to tear it down. He's like well if you know why that fence is there. Then maybe I'll let you tear it down because might be there for a good reason. There's a second version of this which says often there's a structure that exists and the reasons that people give for its existence are not the actual reasons, for example, religious taboos on preparing milk and meat a certain way tray for Haram. The theory is that that was related to in a desert environment food would spoil and these
Choose would roughly keep people safe. Even if they were kind of religious as opposed to Scientific. They sort of help people stay away from impure food. And so people thought you were struck down by God if you violated them, but it's really a bacteria or something. You have. So the practice kept you safe. So even if the active ingredient wasn't well
understood. So one
thing about fiat currency that I observed the other
day, but hold on. Hold on a second. Pause there. So you said, they believe something where they believe the justification for something. I think he's, there's sort of an inaccurate.
Assessment of the history of something. So that is true. You take that to be true or untrue. What you just said about the religion stands True Food, taboos. Okay. Got it.
Sometimes like I haven't run the study myself to see if these written. Religious practices actually ended up in food purification. There's certainly things where there's tribes that have had potion preparation processes that included genuine, active ingredient. That pharmaceutical companies have been extracted and put into a pill. Yeah. There's often an active ingredient in some
Practice that we don't yet know how it works. For example. One thing is sort of interesting is like acupuncture and bioelectricity bioelectricity is actually like a real thing. It's not really talked about, but evidently has implications for wound healing, and so on. And maybe, acupuncture is tapping into that. There's this guy, Scott, great Tick-Tock. Are you on Tick-Tock? No, but educational Tick-Tock. What's his name? Naz Jack NES. J. AQ has a great video on bioelectricity.
Tea and like limb regeneration with citations and visuals and and so on, so sometimes their stuff and it works and we don't know why it works. And in fact, maybe our reasoning for why it works is wrong. People actually still disagree in some ways on how lift works for an airplane and, of course with physics, there's things like this. So the two business models of states in the future will be. I think rather than course, it will be subscription and inflation subscription. We just described inflation dead or is this Bitcoin is
Short-term volatile, but she was immense long-term appreciation.
DS dollar is actually the opposite. It is short-term relatively stable, forget about inflation for now. I'll come back to that. It is short term relatively stable. But over the long term, you can see it has had a huge drop in purchasing power. Now, right now, this is talked about in a moral way and I understand why, because essentially, the quote Fiat Engineers don't really acknowledge this as a trade-off, or even recognizes it such gets back to this thing of like, the religious taboo, but if you think about it from an engineering mindset, most people hold up,
Folio, they don't hold 100% BTC and 100 where 100 percent but some people 100 USD, but you don't usually hold 100 BC, you hold some BC and some USD why? Because some of this is stable on a daily basis and the rest is appreciating over time. Now, here's the concept. What if those are just opposite engineering trade-offs? That is say the long-term depreciation of Fiat provides effectively the funds to stabilize it in the short term.
And just to think about that from an equation standpoint, if you were to don't like an order book is
probably not what I have in my imagination. So why don't you tell me?
Okay. So this was something actually, which I didn't know before I got into cryptocurrency and I think, I mean, the number of people who know this is probably increased by 100 or 1000 X over the last 10 years. And it's very important because it describes what how supply and demand and prices, really interact prices. Don't come from storks. They come from this and
Where does it come from? Okay, so let me explain now. I'll come all the way back up. So you go to the store and you buy, I don't know. A gallon of milk, that's going to cost you. I don't know how much it is today. Let's say it's five bucks. Okay, maybe 10 bucks it with all the inflation, but right, five bucks. So fine. You're a price taker. If instead, you go to the store and you say, I want all your milk. I want 200 individual one gallon bottles. I'll pay five bucks per you can do that. But now if you
Want yet, more milk, you need to go to the next door. They have an inventory of 30 gallon bottles, but it's 550 and as you start buying out inventory here, word gets around and people start hiking the price because they know you're going to walk in and clear them out of all of this liquidity of milk. And that is a difference between having a small enough demand. You don't really affect the price and having a large enough demand that you actually move the market.
And one way of thinking about it is, these are like bids that are placed on either side. One store has placed a sell order of 200, gallons of milk at five bucks. And the next door has placed a sell order of 30 gallons of milk at 5:50. And all of these add up to be all of what is for sale. And there might be a ton. There might be thousands of gallons. If somebody really wants to pay 20 bucks a gallon. There's like thousands of gallons that become profitable to produce at that level at that price.
Ice. And then conversely demand is sort of lowest at five dollars, but there'd be a ton of demand. There might be lots of people, who'd buy a gallon of milk for a dollar. So you can visualize this sort of v-shaped thing where the current market-clearing price is five bucks. But if a lot of people Suddenly by and clear out the supply, then the next available unit might be at like 8 bucks or 10 bucks and conversely if there's a huge amount of supply and there isn't demand in the market, clearing price drops from like five dollars for like four or three dollars,
okay?
Me so
far I have
so that is called an order book and that is actually how prices are born prices, literally come from the interaction of supply and demand. So all kinds of people are being trained as true capitalist because they're actually seeing the root access to the system. How prices are set between Supply event, supply and demand are now like, computable visible tangible. This has huge implications for lots of things because those order books are going to come to everything as we crypto fi the whole world.
Old. It's not just BTC USD that has an order book where you're buying units of BTC, four blocks of USD or vice versa. It's not just either USD. It's not just every coin purses, every coin. It's every asset versus every asset. This is what I call the D Phi Matrix. A digital wallet. Doesn't just hold Bitcoin. It can eventually hold everything can old fiat, currency is aetherium tokens, and ft is whatever, and so it's got billions of rows, but just hold everything, everything trades against
everything, but just to interject for a second. I mean it.
Three concrete. I feel like NF teas and expensive or not expensive. Jpegs or sort of the will be an on-ramp. It's like a gateway drug for a lot of people into crypto and web 3 and so on. And you can see just for people who want to look for articles on this and certainly you can see it yourself. But if you compare traditional art to say, open sea, and collectibles, or a Nifty artwork on Open Sea price, discovery.
And the sort of transparency of order book that you're talking about is right there, and then their analytics being built on top of these marketplaces. That want to give one example of what's already happening, folks.
Exactly. Right? So, essentially order books mean price, Discovery. All kinds of things. Suddenly become liquid and price ssible things. We can never price before, like a minute of your time, as a JPEG, a megabyte on your hard drive, all the types of becomes price of oil and just to relate it. I'm going to talk
D Phi, Matrix, come back up to the order book, come back up to Smart Fiat, then back up to subscription and inflation, then back up to the re bundling, after the American Anarchy. What does it defy Matrix? Digital wallets mean, you can hold every asset in your computer. Not just Bitcoin, not just a theorem but Fiat currencies like CBD sees when Central Bank, digital currencies come out every stock every Bond. Every nft, every video game potion. Give a billion items in your digital wallet, this billion items. You don't just hold them. You trade them against the billion items. You have this gigantic table and every existing.
Exchange today, a crypto exchange stock-exchange a foreign exchange, you know, foreign currency exchange. All them can be considered sub matrices of these like a cryptic changes Fiat currencies and cryptocurrencies versus each other. A stock exchange is stocks and Fiat currencies of Foreign Exchange is currencies versus currencies. All those are just sub matrices of this massive D, Phi Matrix, and some of them are actually exchanges and some of them are so called automated market makers where you've got some rare piece of art and you've got a rather like a some in frequently traded token and you've got
They're infrequently trade token. This will give you some conversion tree that some price might be a high price being go directly between them. The D Phi Matrix means everything is just getting repriced all the time. Every asset competes against. Every other asset people to understand how big a deal. This is. It's kind of
like it's a huge deal. Huge, huge deal. Yeah, even for a lot. I like me. It's a fuck. A huge deal. Once you really start to look at it. It's huge enormous.
It is the internet of wealth internet of money, and it's going to be similar. It's like every newspaper, went online. And then,
Google News came online and index them and suddenly every newspapers competing against every other newspaper. And so what that meant was that now, all the ones that were just reprinting, AP stories were no longer competitive and so lots of week newspapers that weren't adding that much value died. And so in the same way, when every asset is competing against every other asset, that is like extreme capitalism. There's no geographical
advantage anymore. Not just competing. But also, you can sort of cross collateralize and do all sorts.
Those wacky not wacky, but new things that are going to upend a lot of our current thinking around how Capital flows.
That's right. And one of the big ones is, it's actually a second attack on fiat currency. The first attack is that Bitcoin appreciates and Bitcoin can't be seized. And so on, like all the stuff we do on our last last 10 years, the second attack. What do they call it? When you sell a company or you go IPO they call it a liquidity event because cash is universal.
Barger, and you can exchange it for other things. Whereas, you can exchange doc directly the D Phi Matrix changes. That everything is always liquid all the time. So at some price, you can get a quote for something so long as it's not like banned by the state. And if you can get a quote for something, do you need to actually convert it into cash? You can just do it instantaneously. You can liquidate as necessary. And in fact, you want to hold minimum necessary, cash and have everything else is Cash. Doesn't appreciate, in fact, cash depreciates, and so now liquidity is itself.
Second hole axis where it reduces the amount of wealth held in Fiat currencies. The D, Phi. Matrix is very very big thing. It will be to this decade, what the social graph was the previous one and you might say, oh why don't countries Hispanic. Well, the thing is that coercion only works within your borders and large countries can try it but small countries like Switzerland or Singapore or to buy or Sonia will see an opportunity here to level up their Fiat currencies recognizing
That they no longer have a geographical advantage, just like local newspapers. No longer have the geographical advantages are just put in This Global competition. Recognize any longer Geographic Advantage. They might add privacy features. They might add transparent management of reserves. They might add Bitcoin backing suddenly, currencies are competing with each other in a way, they never have before on features and not simply like monetary policy. And so on Central, Bankers, become vitalik, and Zuko, the Smart Ones at least to the ones who don't just
I like the newspaper guys that don't and GMI. You've heard that
one. Yes. I do commend him. I'm not going to make it exact gonna make it probably nothing. Yeah, probably nothing exactly.
This is something that the remote economy has done is it has put Miami in direct competition with San Francisco and poorly managed cities, right? This was recently reported. I don't know how true it is. But the mayor of SF tilde. Mayor of Miami. Hey, stop taking my people. He's like
I love you, but no.
Yeah, that is awesome. And the
reason that is awesome is removing from the tired two-party system to the wired n city system from two parties to 20, or 30 or 50 or 100 cities competing. For you means that internal disputes are less and Intercity. Competition is more. Yeah, which is healthier, arguably, you can. All you can say that.
It's bad when it goes to Interstate violence, but it is good when it is economic competition because that is, you know, this Marquis of Queensberry rules and make your city better and make it Greener and make it cleaner and make it healthier and have a better life for people in you'll attract. Good Residence. So coming back up. So the D Phi Matrix was every asset against every other asset all assets trade against, all other assets in the defy economy. Just like all cities trade against other cities in the remote economy. By the way, those are related because municipal bonds and minute.
Equity like City coins are like Municipal Equity, you know, the equivalent of Miss will Bonds, in a sense are like the next version, all of those will also trade and so, you'll have the price of a city, every ideology. Everything will have a price which roughly reflects people's measure of belief in it. Are there more by orders or people long on the city. Do they think it's going to improve in 10 years? Is the next Shanghai? Or is it the next Detroit? Sell, sell, sell sell, that's reflected in real estate values currently today, but it's kind of opaque that all becomes REITs at that.
Are on chain and so the price of a city goes up and down and in fact, that is actually probably going to be the determinant of your re-election. Did you boost the Reit of the city or not? That's actually quantitative and numerical and empirical it cuts through the BS. Did you deliver shared prosperity for your residents or not? Basically did more people want to buy into the City by a subscription by a piece of the digital read verses not by the, let me talk about the read for a second, you know, a real estate investment. Trust. One thing. I've thought a lot about
There's an interesting way to sort of cut the gordian knot of NIMBY MB and the hell is
Anna B&B. I was like, I got gordian knot. But what is the hell's gonna be in? Be
named BMB. I'm a little surprised. You've heard this one because it's a big thing in cities and probably in Austin. But NIMBY is not in my backyard. You can't build a, my backyard. And then, um, be is a more recent movement. That's like, yes, in my backyard. We need to build housing, you know, housing, scarcity is bad. Okay, and essentially audit, this is like this Intercity.
Kind of thing. Now, what leads to this dispute is that the nimbys have the own houses and their property values. Go up if they can constrain Supply, while demand remains constant, a lot of the stuff they did in San Francisco restricting housing, construction, because the shadows. And so it's over. I think it's short-sighted, because by driving away demand, it's something where the long term, it's Detroit defying the city, you know, Tech is leaving. Not even that long term. It's happening,
especially with such a limited inventory. I mean, especially for a city of that size.
Right. Yeah, the rebuttal to this is 0 that place sucks. It's too crowded and the food sucks. That seems like a contradiction. I'm butchering that, you know, the proverb. Nobody wants to go there. It's too crowded, but there's a truth to that which is why did Friendster not make it? It couldn't handle the traffic. So people went elsewhere. Nobody goes there anymore. It was too crowded, meaning it fell over. It couldn't handle the load. It couldn't scale, and therefore it lost. So yeah, the demand goes up and then it crashes down to nothing. So nobody goes there anymore. It's too crowded is not always a fallacy. It's sometimes.
The real thing, it means that they couldn't scale. The point is that with NIMBY MB, and hear me out, because I'm going to say something that will sound totally shocking or whatever.
Okay, maybe thank God. This is this is the whole conversation was just so timid. Please get it. Okay. Okay, so so,
so maybe the problem is actually that direct ownership of non fungible property leads people to only have an interest in their local house, but not a she.
Our interest in the city or Community or town as a whole and if you can separate out the utility of living in the house, from the value proposition of selling the house and actually is Asian ping of all people was like, houses should be for living in, not speculation. The more that people move into the digital realm, the more they start thinking about things in terms of Investments, and so on, just like, you can split out, for example, a corporate stock, you can spell out the voting shares versus the economics, and you can, like, sell the vote independently in some contexts. Can we split out the
The utility from the appreciation and one model is you buy a big plot of land like a burning man style thing in the middle of nowhere and you set up a Reit on it and basically every Square, you know, I don't know, maybe every square meter or something like that is like a share in the because it's all equal. At the beginning, you might say, the city centre is somewhat more valuable than the outside when somebody goes and lives there. They do not own their home instead. They own shares in the Reit. And so, as the
The expands if they're asked to literally like demolish their home and like move to maybe a bigger home, but something differently. They have an interest in the city as a hold of an economic interest in cities whole not just their individual home. You see I'm saying
I do and I was thinking, you know, in addition to the read I can't remember the terminology used but like the municipal bonds, the city tokens. I'm not sure the proper phrasing, but if your taxes or your sass fee that you paid to a given
City or state went into a city or state based token in sufficient quantity and you have to figure out what the sufficient quantity is to properly incentivized. Someone who's resource at X level or why level or Z level, that would also sort of a line.
So it's interesting, you could kind of go back to have you heard of George's?
Mm. I haven't. It sounds like it has something to do with George though.
Yes. Oh, well. Yes. Oh, Henry George. This was
Is a concept which is is obscure that this one is a pretty obscure, I guess. But it's things might come back to the future. So George is. MM, is the idea that the one thing that governments really do own is land. That's the arbitrary thing and that all revenue should come from that. And it's interesting because kind of outside of left and right, the premise is, everything else is value, added by humans. But land is this thing that was arbitrarily, sort of stolen or controlled or whatever by a government. And so land is the
A juror that states have access to and more generally land, plus natural resource rights. And the thing about this is, you can imagine people talk about like gold-backed currency. You can imagine land, backed City coins, where the city is reorganized as a Reit. This might have to be done from scratch, by the way, because Legacy cities might not be able to do this reform basically like Land Reform under communism, you know in a sense collectivization except it's capitalization. Ideally, you would be opt-in,
sounds too.
Sounds tricky. Yeah,
so like doing with a legacy City. I don't have a good answer for it. But let's say you go and buy land in the middle of nowhere and there's a ton of middle of nowhere. By the way. America is still a big country brushes, big Canada's big. There's actually lots of wide open piece of land and we do is because it's the internet, you do a drone over flight of it. You recruit people to crowdfund this territory, and they have to buy in and hold the City Coin. That's like the right to build.
Build on this number of shares, like M2 or whatever the territory they have to commit to some holding period. They can't just buy and then leave and speculate. There's a command to actually build into it. And then you have something where, at the beginning is
another thing, just a quick side note. That's another thing I learned about since kind of wading into the Waters of web, 30 wash trading and all that kind of. Yeah. Anyway, we don't have to go down that rabbit hole. But yes, so to prevent people from flipping, there's a holding period.
It's essentially something where it's again, unbundling, Andre bundling. We're in a sense. Markets say hey screw loyalty. It's an economic transaction and these sort of rediscovered loyalty or patriotism or Loyalty cards or frequent flyer miles or holding periods. Whatever you want to call it. Loyalty is valuable because loyalty produces Collective Goods that an individual can't necessarily have on their own other people's loyalty to something is valuable to you. Because, you know, it'll be
Stable and will be there when you come
back, we should take a second just for people. So, hold lling, whole little H OD El, I've read a number of different explanations for this one is, hold on for dear life. And other one is hold. But it was a typo and there. Yeah, that's what it is. Yeah, that's what it was.
Basically, it was a typo. There's a guy who's drunk and he posted. I'm not smart enough to do the trades. I'm just holding
and that and off it went.
Have you heard the term back?
For him. I
have not heard the term. Backronym. A
backronym is a reverse engineered acronym. So hold on for dear. Life is like a reverse engineered acronym? Like that. I like that. That's clever. Yeah, they often just for like, you know, bills coming out of DC like the Patriot Act or something at some like abbreviation or whatever. Yeah, or the cares act so basically and by the on the topic of like loyalty and so on this is actually a deep point because my friend and you know, somebody who I agreed on some things just going to things no Smith had this tweet about
out how when the police were basically a quasi abolished in San Francisco. You have organized crime, looting, the stores and actually, the working class employees at the stores, are being victimized by essentially a mafia criminal class, because the police have left, it's not like some Jean, Valjean going and stealing, a loaf of bread. It's a guy who's just, like, methodically loading stuff into the car, and then going in fencing it on Amazon or Ebay, very different kind of thing. It's genuine crime, organized and willful crime.
The a totally different and people can look back at the Loma.
Create a Loma Prieta, earthquake, and what happened during that period of time in San Francisco. Same
story after the Loma Prieta earthquake, that happened.
Well, after the Loma Prieta, earthquake, people overestimate, the amount of infrastructure mobile infrastructure, that is available in a given City rights in San Francisco. I did Disaster Response training with the called nert. Nert, Northern California, emergency response. Team training with the fire department and leave. The police department is also involved.
Moved and they just kind of suspect out how long you could expect to go without Services. If certain capacities, went down like water or electric and during Loma Prieta, which is also called, I believe the World Series earthquake because it was caught on camera during the World Series. People were, well, I shouldn't say. People, criminals were greasing the hills at Dolores Park, and just carjacking car after car after car after car, which is
Of like just a reminder of some of the possible harsh realities that await you if you have no available law enforcement or infrastructure.
So let's get to decentralize defense in a bit after the American Anarchy, but
when we start, I still don't know how inflation fits into. Yeah. Yeah. Okay. Okay. Okay. Okay.
So the thing about this is abolish, the police abolish, the economy, or at least a physical economy. And the reason is in the digital world and everything that you can map to usual. You can protect it with the cryptography.
Rafi, but the physical world still requires physical violence. It may eventually move to robots like drone enforcement of law, or something like that. I would actually mean laws code really is law. But at least for a while, it is going to be it, physical police and, and so on. But we starting to see RoboCop's like robo dogs and stuff walking around the cops. And so and we're like in the one of this era the 0.1, but abolish the police abolish, the economy means if you don't have police then people are just going to steal if they're just going to seal. There's no property rights and
No stores and all the Walgreens leave and whatnot, but it's actually also deeper than that, which is, you know, unless there's some Prestige or praise because, you know, the police the military do risk their lives for relatively low pay, actually. I mean, I know policemen are sometimes well-paid nowadays, but in general, and you can argue this point, of course, you know, is lots of people who get mad about this but in general, you know, at least for service the risk of death is actually non-trivial and so the price often can offset that but what does is the patriotism?
Mm and the feeling of serving your country and serving your Collective and whatnot. When that loyalty and patriotism is no longer there when that Center doesn't hold when people don't believe in it. It's not like the economics can just continue or at least they can't continue very easily because the guys who will step up to essentially collectively defend property and going back to the earlier thing. You know, it's when there's uncertainty that war happens. It's when there's uncertainty that crime happens, if there are strong punishment, there will be no punishments, the Shang. Yang concept.
It's like the variable reward, the variable punishment that kind of like, you know, should I make a break for it? Should I go for it? If it's certain then people typically won't do it. It's like a very Swift and certain deterrent, if it's worth the risk. It might be worth the risk. What you don't want, is people to start calculating? Whether that kind of Crime Pays. Once they start calculating it, then it's bad. You get a destabilization because more people do it and that overwhelms even more limited resources and you start moving to a new equilibrium of a mafia state which is like Russia in the 90s, which unfortunately, I think is similar to what the coming American Anarchy.
Might be. So just talk about this coming back. So the D Phi Matrix is all versus, all all assets versus all, the order book, tells you how prices are determined. And you know, when I mentioned that future States will have subscription versus inflation, all currencies are going to compete against all other assets and cities will also be able to issue their currencies alongside States issuing, a currency will become a new business model. It already has been and the currency is of companies and cities and countries and communities.
Is will trade alongside digital currencies. In one gigantic thing, do
currencies almost like tokens become and here, we have to be careful here with. I mean, who knows how it'll get resolved? But sort of unregulated Securities, but your shirt there, they're sort of interchangeable in this, hypothetical example,
right? Yeah, on that topic, by the way, I do not believe tokens are securities anymore than, I Believe YouTube is television. And the thing is YouTube was not regulated like television. You don't need a TV license. You don't need to broadcast.
License Skype or telephony to go and place a WhatsApp call, that's not regulated. Like AT&T email is not regulated like the post office because we didn't take these super old things and apply them to the internet and the same way going in siding, hundred-year-old statutes or stuff from, like the 1930s in the 2020s. OR 2030s is simply an apposite Larry Page. Are the saying any law. That's more than 50 years old. Just has to be re-examined. Probably can't be, right. I mean, it's before the internet paraphrase, Larry Page, so I think these laws
We'll get re-examined. I think the with the Soviets called the correlation of forces is against them. But so far as they are in effect or being interpreted that way, of course be compliant etcetera. Etcetera with that said, not every country is America and in fact, actually IRT add something to their day where it's actually more and more common. Now, for crypto projects to ban Americans from buying into them. You may have seen some of these things, right? They literally IP ban Americans and the thing is,
like, a lot of Swiss banks. Yeah. They're exactly ID. Banning instead of I
IP Banning, yeah,
that's right. This, you should expect more and more of where the u.s. Throwing its weight around with sanctions and threats. And so on is suddenly starting to realize that it's back, lashing on them because the expectation is oh, so you want the American Market? Will you need to comply with us and now? Entrepreneurs realize I don't need the US market twin, so no. Thank you very much. I'm just gonna block Americans. This already happened in New York with the bitlicense where it basically meant that
You crypto Innovation. It was, I mean in a sense it was good because it just ensured that we move
the future of Finance out of Wall Street. Now, could you describe what bitlicense was? And then what
happened? Yeah, is a set of onerous regulations on cryptocurrency companies, where it was, just basically passed so that somebody could have a career achievement and it was something where you have to fill out, enormous amounts of paperwork. And it was uncertain, the timeline and the cost. I mean your company, right? You can't start up. Can't wait years for a
Double license before it operates. So what happened was New York. Overestimated, their leverage and they're like, we're in New York. What are you going to do? Where the center of the world? You can make it here? You can make it anywhere. Actually. No, I can make it elsewhere and New York is last on the list. And so rather than putting them at the front. It was too onerous. It was too high, a form to fill out to Ayah price imposed for that first Customer because that's what regulation is. It's the price of your first customer or another way of putting it. Your first customer, is the state that grants you the license to operate.
It and have access to their market. Now as the relative share of that market declines as the rest of the world becomes bigger as a percent of GDP that New York controls or financial GP, whatever you want to call it Finance Market, that in your controls drops. Suddenly. It's leverage drops off a cliff but it's Regulators haven't caught up and they still think that they have that leverage when you just IP ban, all New York people and just have them last and maybe you do that feature three years in. So there's New York is at the back of the line
formation. So startups, just move. Yeah,
so I've just moved but they also IP ban. And so this is a new
New thing because the u.s. Is supposed to be at the front of things and whatnot. Well that's happening in Asia
Pacific. Right? And in this sense that entrepreneurs are sort of leaving the gravitational, pull of China to have their physical base elsewhere.
Yes, absolutely. So, both China and the US are driving away their best. Actually, all three corners of that triangle. And why TCP and BTC, their fundamental weaknesses are, they're driving away. Some of the best nyt. For example is piling.
The mid words but it's losing Marc Andreessen and Glenn. Greenwald. CCP is certainly got a bunch of nationalist zombies, guys. I mean, some of them are actually pretty smart, but they're losing the next Jack, Ma and mate, one CEO, and B dance co and so on, they decapitated all of their major tech companies and they don't make the pretenses about it. Like when nyt did that to Uber, there's this whole because it's decentralized because it's stochastic because the Press can't just fire somebody like Z Jinping can just basically
I order and fire somebody. It had to be like a thousand articles and this whole process to decapitate them and replace Travis with a guy who I'd like. But who was formerly on the nyt editorial board who is acceptable, 10, y t. So the journalist effectively went and decapitated a tech company. They're trying to do that to Facebook now, but because there's still some pretence of rule of law and some pretense of due process and Free Speech. It can't just be like they do in China where they just chop and gone, but it certainly is doing something where it's alienating many of the best from
And mighty corner. Just as CCP is alienating, many of the best from the CCP corner of the triangle and actually even the BTC corner of the triangle maximalism, which is like the extreme version is alienating people like metallic or Zuko or the Solana, Founders, or anybody. Who wants to innovate on so-called L1. They're kind of being pushed away from from that corner. So those three corners are kind of pushing what I think of as the decentralized center, you know, it is the folks who no longer believe in MIT the folks who are leaving CCP or that folks who want to do L1?
Besides BTC. They may be Beach sea and they may respect BTC and use it and hold it but they're not Manu. Mists that is to say there. You know, like there's monotheism. Yeah. Monotheism. Only one. God is also minus T2. Some only one government, the government can do everything, you know, there's this ad from 10 years ago. Government is the thing we all belong to where people replace G OD with govt is like the strong man up there as like rather than the guy with the beard becomes like the u.s. Carbon Theo's military. It's really strong and it's been
Blind. It can kill your enemies and it can redistribute the money and take care of the poor. And then, the third version of that is Manu - mm, which is not replacing g0d with govt, but your V with BT see where it's like. There's certain people who believe the government can do anything. It's sort of a joke Bitcoin fixes this. And I do believe by the way, the Bitcoin fixes a lot of things but it doesn't fix everything and when you project so much on to it, it actually becomes unrealistic. Again to be clear relative to most people. I'm probably
Lie down near that corner, but it's like a log scale, you know? Yes, I like those
people who are 10x or 100x. So, what are we missing for the Matrix? Because I definitely want to ask you some additional
questions. So I'll just come back up those 6.60 D, Phi Matrix, all versus all all currencies trade against all other currencies. The order book is each cell in the D Phi Matrix, how that price is determined. How does it relate to the concept of the future business models of governments, so subscription and inflation. Basically, you pay, you know, for the subscription to have like this effectively did
Passport wallet. Driver's license, currency of the city login property, rights marriage certificate birth. Certificates are all that stuff. The inflation comes from the smart version of Fiat says, Hey, Bitcoin is volatile today, but appreciating overtime, Fiat is flat today, but depreciating over time. And the reason is the reason it's flat today is we're sort of seizing some of the money a little bit to maintain its price stability against a bunch of goods and this
With all the pieces like together. So essentially if you were to design, not a Fiat coin, but a flat coin, where it's not the dollar or the Renminbi is a new digital asset whose property is that unlike the inflating dollar. It is flat against the number of chairs or bottles of milk, or things like that, a flat coin would try to be as flat as possible in a time of money driven inflation in order for that to work. You need some reserve of that flat coin. Let's say
Ten Goods that you're monitoring the price of flat coin versus chairs. The price versus milk the price versus Tomatoes, whatever. Those are ten order books with by and seldom. And like we talked about in order to maintain it to be flat in to keep the price within that V. Just like not moving too much. And that means some amount of money. So you can place buy and sell orders to stabilize it. When other people are selling and buying now that will deplete that amount of money over time. And where do you replenish it
from? Let me ask a dumb question when you
You say so you can place buy and sell orders to maintain the flatness of the flag coin, who is you in this case?
It's basically the manager of that flat coin. It is the city or the government, or the
entity. I see you're saying basically, it's a new Central Banker, right? Exactly. It's like this, that's like the central bank. Got it. You
know, Greenspan is this concert. Look plunge, Protection Team and the thing about it and this is crucial. You might say well we didn't. We just invent the new boss. Same as the old boss. Oh, how come you saying Central Bankers? That's why. I like I mentioned the
Looks like the spiral unbundling Andre bundling just like you go from CDs MP3s to playlists. Here you go from unconstrained Fiat, where you have no Alternatives and it is just being printed and seizing, everybody's money silently to bitcoin, which checks that. And now 28 checked Fiat where if they print too much or inflate too much and they're doing too, much more than is necessary to achieve short-term monetary stability, you exit to be DC in the same way that with a company
Why if it issues too many shares and dilutes everybody down. You're like no. Thank you very much. And you liquidate to cash recorded a hundred billion valuation market. Cap pick 100 billion is an industry. The Clannad a trillion is a government Bitcoin at 10 trillion or maybe a hundred trillion somewhere in that range is a world government. Just not the one that anybody imagined. Essentially, you know, there's this vision of a world government. That was like this sort of communist socialist World. Government thing, that everybody would be Brotherhood of Man and they're sort of the libertarian thing of F that after un
We want to do. And then Bitcoin is actually, like a Libertarian issue World Government, which constrains, every state in the sense that they can't spend more than they have because their users will go to the D, Phi, Matrix and cash out. The currency for BC BT, C is like the 00 of the D Phi Matrix. Most people don't think about this, but gold is when people thought. Okay. Because I'm but a chief convergence with golden has done that by its around a trillion. It's like the same order of magnitude as gold and it goes like to, and Bitcoin is like one or two.
To, it's like 1.2. So, because like 1.2 trillion and I think gold last. I looked was like to try also the same order of magnitude Bitcoin has now hit gold. But your thing goal, today is a shadow of what gold was gold, was the thing that Kings wanted that it was a thing that constrained all states. It has its flaws because Spain could mine gold out of the new world and basically causes huge inflation shock of gold coming back. So it wasn't like a constant in the same way. But Bitcoin is digital gold at the world, economies re-centered around it. That's not
Million-dollar thing that's like a hundred trillion dollar thing. That's like the thing that everybody cares about this, very, very different matter. So, that is how basically future government. So our subscription and inflation, which is roughly similar to a SAS companies, SAS subscription and its Equity. Those are the new business models of governments, right subscription inflation there non-coercive because it's not profitable to be coercive setting SWAT teams around cost money. And so instead what you want to do is have somebody hit a key in
Enter your Society, enforcing compliance is costly drones and so on may change this and so that is actually I think a trend for like twenty forty. Twenty late, 2030s say drones. I don't just mean aerial drones. I mean, like, autonomous, robotics of all kinds walking robots, driving robots, all that stuff. As we mentioned earlier, that solves the principal-agent problem. You don't need to have people fold into you. The robot will do exactly what you say. So, like an individual can exert much more control. If they've got a robot Fleet. So coming back up.
This is how I see us re bundling eventually after the coming American Anarchy. And why do I say American Anarchy? If you recall, we talked about the decentralization of the counter decentralization and why I thought the counter decentralization would succeed in China because they have highly competent management. The ruthlessly competent with are selected for Capital allocators, people who can get ahead of the curve Engineers folks who basically except the great firewall and block social media before anybody in the west realize, how significant that stuff is going to be. I mean, they had seen the Arab Spring.
In China, they knew what it could be, but they acted early. And now today, what you have is the same writers who celebrated free speech, at that time, are now you turning on it. And basically arguing only media corporations should be considered true and they're they're trying to jam the Jack in the Box, but it's already kind of sprung out because they're very rich looking and the West I think the counter decentralization will fail because these guys are real Road looking because it got too big because also they're not selected for engineering competence. How many people in Congress?
Is can even name what a firewall is? How many of them could Define what a private key is? They are selected for being lawyers and actually also actors and you know, why do I say actors? This is actually a bigger thing that I realized Hollywood explains more of America than I'd realized. Essentially everybody who's an influencer is like a celebrity and politicians are reading lines given to them and when there's less and less and less connection with the real world, when it's more and more just rhetoric to win elections and celebrity influencing online. They basically become
Like actors reading scripts and there's no follow-through. There's no follow-up. Of course. This trend has been going on for a while, you know, obviously Reagan was an actor and I've been famous actors on the base of name recognition, but now just the concept of acting, you know, Bruno McKay is also written about this. How, you know, the current administrative. Like a it has been for a while Trump as well. It's not a partisan thing. It's like a hologram. It's like an order that people are going through the motions and acting, but something very different is bubbling elsewhere. It's like CCP and BTC and these things that are not part of the movie. So the thing is with San Francisco.
20:19 actually had this post that I think holds up fairly. Well, you know, I said this is like about six months. Seven months, right. Before covid-19. I said San Francisco has is like June 19th. 2019. San Francisco has 30,000 car break-ins a year. The streets are filthy in a health hazard. It's extraordinarily expensive yet, feasted and prices rise in tandem. This is a bubble which will burst when the right alternative. Finally appears just like taxi medallions, and I said, San Francisco can be compared to a
Durable product with great legacy distribution, users hate it and want to leave just like they want to leave Oracle or something like that. But Network effects. Keep people in for a while at least as extractive Brent's. Continue to soar when the true alternative finally arrives exit will be rapid. When was that? That was June. 18th, 2019.
Good timing,
good timing, right? So I was like, you know, this feels like a rubber band tension, which is getting you know, too strong. And what was funny by the way, it was Paul G.
Sponsors, actually think also held up. Well, which I only actually saw much later. Paul said in response. This seems unlikely historically has been common for hubs of certain industries to draw people despite high cost and low quality of life. When the decline is always due to some external Force, EG the whole country, does not simply an alternative appearing, and there's a guy replied to by these, that looks like both tweets held up from October 21. It's pretty as isn't that good?
It's good, right. That is
good. And, and so essentially, you know, there's a
Don't post that. I actually like a lot. Have you heard of the concept of ten secretary? I
have actually that's a nice boost to my confidence. Yes. So I'm familiar. I had not heard that until just a second and segregate within the context of Buckminster Fuller and different design
principles. Yeah. And so this is something where I probably seen it, but I was not actually aware of the word, you know, until a few days ago and sincerity is I think an excellent visual metaphor. See
I thought of things a lot of things implicitly in terms of that, in terms of like rubber band tensions and like force diagrams. And like, there's a rubber band tension and SF between how horrible, the city was, which was pushing people out, feces and prices rising in tandem just being attacked on the street and the super expensive city. No, no public transport. And it's like, you know, unsafe for women and cry all the stuff right yet. On the other hand. You had all these tech jobs and all this stuff, keeping people in the valuations. These companies kept going up.
So, the money was available to like compensate for this stuff. Uber this here and expensive apartment or whatever. So there's this, like this crazy thing happening, where money is being pumped in from the cloud and just incinerated by the city. And you know, it's 12 billion dollars a year on this stuff. I think it's thirteen point seven outs, like the probably the worst manage. You can't even call the first real City really anymore. That isn't even applied to descending world city. Did I tell you about that? I don't use the term developed world and developing world anymore. It's just all ascending world and declining world and that's a declining.
City that makes sense to me. Let me say one thing. Just real quick on tents egg ready. So it's a combination of tension and integrity. Here's the definition. The characteristic property of a stable three-dimensional structure consisting of members under tension that are contiguous and members under compression that are not. So you can find this on Wikipedia. There are also a somatic or physiological examples of this at least, certainly some people would posit that fascia and some of the internal structures of the
The body one could make an argument would also fall under the under this, this principle or definition of tents, egg
ready? Yes, and there's this good post, you know as a blogger hadn't heard before but it's a pain analysis. PA Nal Ys is dotsub sack.com front slash P from /. Y dash Wars, Dash start. So attend security model of international relations. I thought this is really well done because this is kind of how I modeled things in my head. It was great to see a visual metaphor for
Related stuff. I already know like force diagrams and stuff. We're in this post. You can see for example, the UK and Germany, you know, they both aligned because they have democratic ideals and they have Auto and meat trade and their part of the NATO alliance. But what pushes them apart, language, and they have differing regulations, right? So there's both pull, and push and the thing is that whenever you have that, like, rubber band tension, but sincerity is a better model, because it's not just like one force at a time. It's many different forces. This thing.
Can kind of withstand some push and pull and whatnot. But if something just goes really strong or really weeks and the whole structure goes to chunk because there's things that are connecting to other things. And so what happened with San Francisco was, I could tell that these forces were like in like extreme tension, but I felt that it would collapse. I didn't realize that was going to be covid. Of course, you know, six months before covid, but I did know that it wasn't going to persist and just what happened was these forces were there and then one of them suddenly went to 0.
Everybody went remote since you didn't have to be in the city at all, and all the culture change it, once it was a crowd, exit was a collective exit, a cultural convention changed. Which said, if you're serious, you're not in person. Because before, if you're serious about a deal, you were in person, but now if you are serious about your health, you were not in person. And so now there's an excuse in a sense, not just an excuse, but you can turn down every plane flight. You can turn down every in person conference. They must offer a remote option. It's actually really important.
Important now. So the thing is that, that's why covid-19 is a permanent shocked. Whenever you take a bunch of people who are at the zero point, on an axis and then you spread them out where it, like, some of them are 100% remote. Even in the removal of that force, post-vaccination. It doesn't all come back. It's like hysteresis.
Absolutely. There's a lot of durability and we could just look at examples of how many Zoom invites I get. Even though we could just do telephone and walk around, even though people are now
Aging with one another and also there's something to be said for the proof of concept that we witnessed for mobility and relocations during covid. So, people prove to themselves and their peer groups prove to them that it was possible to not just trial other locations while working, but insist on being relocated or else, you are going to take a different job and those kind of macro Trends feed on
each other and Austin is a great example. When you have zero friends in Austin, moving to Austin is a harder decision than if you have five and once you have 50 friends in Austin, it becomes quite easy. And I think we see that along a number of different
directions. That's right. And now the new thing is those 50 friends can all move
together. Yeah.
So I wrote an article at 172 nine.com Francesca, Miami, which actually sites articles from 2013 that I think predict this in some detail. I give this talk silk.
Always ultimate exit and a follow-up essay called software is reorganizing the world that talk about how software is enabling these mass migrations and that's fundamentally the resolution to our current dis aligned world. What you really want, is not a 51% democracy, you want 100% democracy. That is, you don't want a situation where it's the absolute minimum necessary consent, where it's a Fosbury Flop. Like, we talked about before, we're just barely clearing the bar. And you have 51% of people vote and 49% of people.
All are unhappy, those 49 percent will comply in the most grudging way possible. And your majority is very contingent and could drop with one bad headline or event. What happens is, low levels of consent, the 51% me feel like they want to impose their will on the 49% Via coercion and that's actually bad because it's easy to coerce. When it's like point, 0, 1 percent of the society, when it's like some random murderer. You're going to get 99.99% of society agreeing that cores.
Force is legitimate against him when it's 51 versus 49%. Not only is coercion much, much, much harder to do by orders of magnitude, because the ratio of 99.99 2.01 is much greater than the ratio of 51 to 49. Not least coercion much, much, much harder. It is also not obvious that it's going to be something, they'll even maintain your majority because even the application of coercion, reduces your majority. So instead what you want is to resolve this route. You're not going to resolve that by just voting more.
More. It's going to be resolved by some combination of either coercion or migration. I'm going to say why coercion well, one side coerces the other into just completely agree with them. They basically win a civil war. That's what happened with the Russian Reds versus the Russian White's after the Russian Civil War, but there is in the US and the cold Civil War. There was an article on this in 2018. That actually was Artie did by both Jack Dorsey and Evan Williams, and it was here.
I'm going to see.
Get the exact. There's an article from early 2018. So almost four years ago. Now, the great lesson of California in America's new Civil War by. There's no bipartisan Way Forward at this juncture in our history. One side must win. And you know, the people writing this, you know, Roy took Sarah is a co-author, you know, the emerging Democrat majority. And essentially they say, remember the great listener, California, the harbinger of America's political future and realize today. Such bipartisan cooperation, simply can't get done and essentially what they are.
Basically saying is California's a one-party Democrat State, and that's what you want for the country. So then the natural Continuum or Progressive to more moderate Solutions and got worked out within the context of the only remaining functioning party. So essentially they're just saying just win and now, of course, it is a question mark as to whether you actually quote, want democracy. If you want your party to win every single election, if you don't even want the other party to exist and consider them illegitimate then,
That's actually not really in a democracy anymore. Or if it is, it is something that's actually more similar. If it's a one-party rule. It's similar to more similar to a Communist party where it's just a smoke-filled room where the primary is not really the general election, general election, just a formality in the primaries re-election. So you could argue still democracy. If the primary is an Open Primary, but the thing about this is Evan Jack basically RT. This didn't endorse a sage said, interesting take, but I definitely got a fair amount of attention, and this is what I mean about.
Fast forward when you have massive disagreement like that is just one part of just course, is the other and course, includes a lot of stuff. It could mean physical Force. But it can also mean what we've seen which is D platforming. On banking, Etc. In fact, one way of thinking about this sort of cold Civil War is 1861 and 1865. If you look at the map prior to 1861, the blue, and the gray were geographically separated, and of course your idealized we separated. But the
Victory condition was obvious like the north invaded, the South territory ideological and geographical Victory coincide. But today if you look at a map of the u.s. Blue and red there at the county level, they're all mixed between themselves and there's nothing to invade. There's nothing in physical space that you can invade. They're all mixed but there's an article from 2017 that gives a visual from CG r dot org. Its title is study Breitbart lead, right wing ecosystem, altered broader media agenda, but the main thing about this is
Graphs that are mid screen on this. I have no opinion on the article itself, but the graphs are in the middle show here. I just paste in the link for you so you can see them. Okay, the graphs, The Middle show that even if the blue and the red are on top of each other in physical space, they are completely disjoint in digital
space. Yeah. That's okay. To see that they do. Yep.
So that is where the war is being waged. And here's the thing, if victory in the Physical Realm,
Is invading somebody's territory victory in the digital realm is invading their mind Victory here. Looks like blue. Blotting out, red or red, blotting out blue and now we can actually look back on the last several years. With a completely new lens, which is not the marketplace of ideas, but the battlefield of editors and now we understand D platforming on banking, canceling Etc. Not as disputes within a free Society but as digital Warfare
Yeah,
we're trying to take out their tanks, their battleships, etcetera. Their big guns on the other side by having them, wink out of the digital space. So they can't recruit more soldiers. Energize them, Etc. Now. This is war, that is fought with words and with keystrokes and with economics. It's not guns and shells though. It did bleed over to the real world during the riots and the capital. And so, on the physicality of this is secondary, but it's not non-existent.
Aunt. So this I think is actually not the coming conflict, though. This conflict is Democrat, Republican. I think the coming conflict rotates, it by X degrees or in a different plane. The coming conflict is going to be centralization versus decentralisation where it's going to be basically like Fiat versus Bitcoin. I think that's that's quite likely to come and so a lot of people switch sides. There's going to be people who are let's say super Patriot Republicans who will side with the government, my country, right? Or wrong.
Guys who were in The Russian military, who stayed in the Soviet military? It doesn't kind of matter. And then there's folks who will switch to the or take the decentral aside. And that's actually many of the tech CEOs. Jack Dorsey is a Bitcoin maximalist razak is now doing etherium with with Facebook and so on many of those are going to go on the crypto side, but I think Bitcoin itself will be like the main flash when the conflict in crypto is sort of Bitcoin is different from crypto because maximalist wanted to be different. That is to say, whether you think of them. It's kind of like
Like is Taiwan part of China or is its own country? If you're the Chinese government Taiwan is part of China and if not, its own country, you know, in Reverse, if you're a maximalist pick one is its own thing in all crypto is just scams, etc. Etc. Whereas if you are in crypto or in web 3, actually becomes great, but it does one thing which is digital gold and then we need that. We also need private cache and we need programmable currency and needs more contracts. We know the stuff for what it's worth. I had this couple of tweets on this.
But basically Satoshi wasn't a troll. He didn't start fights in the internet. He spoke to Zuko who is the founder of Z Cash. He endorsed idea of namecoin in general? I think he was about as attitudinally different from some of his self-styled disciples as a mythical. Jesus was from the Spanish inquisitors. So I definitely wouldn't call myself a maximalist. However, and moreover I would also say if you look at Satoshi is writings, you know how funny your have healthy knee. Who's basically? Like the
I have heard that name, but I can't
It is. The first named person to engage the Bitcoin, the first person to give you a Bitcoin publicly other than Satoshi like replied on the original email. Some people think he was Satoshi and used his name to boost. It. Certainly he feds, but he passed away from a general disease. However, he froze his body. So maybe we can revive him at some point. But here's the thing. How finian Satoshi a discussion and Finney said, Satoshi. Are you endorsing? The idea that additional blockchains is each, create their own flavor of coins, which would trade with Bitcoins on exchanges. So she said, write to me know,
Objects, parentheses domain coins. Question mark, could represent the right to own a domain for a year. So Satoshi Nakamoto did entertain the concept of issuing other digital currencies domain coins. So that might seem like totally obvious to you or me. Whereas I were, you might think of Satoshi as like a Newton and the Bitcoin. Why Perez like principia Mathematica like a feat of science or a feat of engineering? A lot of maximum
Think of it more, as like a religious texts. And to be fair you can argue. It's got a specific because it's not simply an engineering Innovation. It has implications for how one lives and that basically debt is bad and inflation is bad, and Equity is good and capitalism is there's a lot of principles that are bound up in it. Freedom, pseudonymity. Lots of different principles, the network Society. All those things are bound up in it. Even the Genesis block has his concert of the bank, bailouts being bad. So it does have something which is more than just you.
No, f equals Ma. And so I understand where that comes from. And basically, in many ways, I think this will be seen as something like the Bible or the Quran, or the Communist, Manifesto or the American Declaration. We're still close to this event. But the Bitcoin wiper the invention of Bitcoin is going to be something that just like there's sunnis and Shiites Protestants and Catholics. There's all these different schools of thought and there's Maximus and there's a theorem people and there's cbc's are this weird.
Think like The Counter Reformation of Catholicism adopted, some aspects of what processing was criticizing them for cdc's are the state. The centralized State adopting some aspects, would digital currency crisis were all of these things come out of this?
The hold on May. I interrupt here - here's one. Okay, I'll say this, 60, 60 seconds. I'm gonna give you a quick second, 60 seconds.
Here's how I was saying. I was saying that the past iteration of this cold Civil War was Democrat. Republican think of that as World War one. Now. There's like a rotation of it.
It, which is like World War Two, that may not be the best analogy, because there's most of the same groups who fought the same time. We might come up with a better one, which is like, roller one and the Cold War. We're to in the Cold War where the US and the US are on the same side, than on different sides. But the point is that that's what is democrat-republican. The next one is decentralized versus centralist and Bitcoin maximalist on one side and what capital on the other. And then there's folks who are in the middle and like crypto is sort of, in the middle, web threes, in the middle, but I think it's more on the decentral aside and then you'll have folks who
Our Republican types who are also more in the middle, but they're going to be more on like the Stateside. So, that's, I think what the coming accesses, which the rotation of the current axis and that leads to, I think significant civil conflict because they're, they're kind of irreconcilable, but I do think the decentralized version will win, but I'll let me give the mic to you and I'll come back and explain
why, okay. All right. We may end up hitting pause on that and coming back to it. Another conversation. I want to say a few things that I'm going to segue to some rapid fire questions.
Russians will see how successful I am. But the couple things I'll say number one. Is that for people who are interested in?
How humans make meaning and create myth spread myth.
You could substitute ideology for myth. If it makes you sound smarter, that's fine. I would suggest they read or reread Dune. So I'm rereading Dune. I've read it before by Frank Herbert and it is
incredibly sophisticated and nuanced with respect to many adult as an adult. Oh absolutely. As basically me more fair and the use of not just myth but the human proclivity. Almost necessity for myth, whether that myth is something called my country or whether it is a religious Doctrine in this, we can get into separately, we talked about it a bit in the first episode, but I would suggest
As people reread doing, which I'm doing right now, because I'm about to see the movie. And I want to make sure my memory is fresh. But the whole idea of the lineage of the been, a gesture. It is really worth looking at very, very, very closely. Also really talks about in a sense decentralized.
Guerrilla warfare on multiple fronts, it's a fucking fantastic book. So everybody should read that and bit of trivia because I imagine a lot of people listening will be if not Krypto - Krypto curious. So the word, the word and the name Nakamoto is in Japanese Japanese lot. Better than my Mandarin. But is Center origin would be one way to translate that Nakamoto and the character for naka?
Is the same character different reading as the Jung of junghwa of China Middle Kingdom, although I think the better way to translate that is Center Kingdom and I just want to drop a little bit of trivia for any language nerds out there. But Nakamoto is a really, it's a great last name for Satoshi Nakamoto. All right, my questions. First one very important. Have. You always said, Artie did instead of retweeted? I
guess. I don't know. I mean, I think,
Think I might use them interchangeably. Is
this like an accent thing? No. No, just I just like it. I've never heard that verbally before so I like that. Alright, so you said I'm not a Bitcoin maximalist, but I want to ask you a question. I'll preface it with saying people listening. This is not investment advice informational purposes. Only. It's a way for me to better, understand and share your thinking. Balaji if you were starting from scratch.
Had no Holdings in crypto, but could only bet in one place, BTC versus eith versus other. You only get to pick one. Which would you choose and why PTC BTC? Why? And the reason is
everything else is a technology company whereas Bitcoin has become almost like an element like gold. That is to say the fact that Bitcoin not only is the first but
It has the Disappeared founder, it has because as disappeared founder it fits a certain kind of mentality where because there's no leader. You don't feel like you're submitting to somebody. You don't feel like you're submitting to somebody buying gold. Satoshi is who you make them out to be. This is not how I think about money typically, but if you look on any dollar bill, there's weird incantations. There's like a pyramid with like eyes on it. And so on most forms of bills, they have the most famous people in the
Country on them, The Branding exercise, actually pretty important on the stuff. And the thing is that you can separate out the economic, the ideological and the technological. As I said, it's a log scale. Most people would consider me from the outside, very similar to a Bitcoin maximalist, but I'll give you two thoughts on that. So first, is on the economics. Yes, if I can only buy one thing. You just buy Bitcoin because nothing competes with it. It is possible by the way, now to be clear. Do I think it's 100 chance of scoffs? No, I think it's possible that there is some remaining security issue.
You associate with the code, but what's interesting is, you know, square is now doing something with decentralizing Mining and the fact that my name is being driven out of China is actually good because I don't think any other state has the state capacity, to do what China did and the ruthlessness, this is unlikely that there's going to be a technical attack on bitcoin. The only thing that's going to happen, going forward is potentially a regulatory or software attack. But outside of that it's community so strong that can probably repair on that regulatory. Tax are also less likely to kill it because this is losing control over the world. If
Defies on North stream to. And if sanctions don't affect Germany anymore. It doesn't affect India. If El Salvador can go Bitcoin. Some states will have Bitcoin be legal as well as within the us as the federal government doesn't have the veto. So finally really the technical attack. Is there some possibility of some zero day that can like inflate a lot of coins and be hard to patch that's possible. It is still something where there's like, one client. That is very popular one Bitcoin client. It's not a multi-client thing. So that's the main weakness right now. Is it possible? There's some supply chain attack.
Where some libraries included and it hasn't been audited. Sufficiently. Yes. Also Quantum cryptography. That's kind of an unknown. But is it possible that say Quantum, decription becomes something that is out there before Quantum encryption, that Quantum description is highly centralized and some governments can do it or some centralized actor can do it. But Quantum encryption is not something. Everybody has access to those are all possibilities, but the risk factor is relatively low that's on the economics on the ideological. Kind of the way I think about it is if you go item by item,
Probably agree with Max Muscle many things. I understand where they're coming from exit, the FED check, stop the bailouts check return to sound money. Check, build a volunteer Society check and the welfare Warfare state. Check Bitcoin is a global Reserve currency check Bitcoin as an epochal technological breakthrough. Check, but Bitcoin is only digital asset ever. And everything else is evil. That's where they lose me and that's X and buy Bitcoin. Sell maximalism is the economic / idea.
Cool thing. Because I'm not a monotheist. I'm, you might say, from my cultural background or something like that. India's polytheistic. It's plastic. It's pluralist. I believe in the value of immutability, but I also believe in the value of programmability and I think it's good that those are two separate things. It's highly immutable like Bitcoin or gold. It's not going to be highly mutable and programmable. Those are too valuable things, but they're to almost necessarily separate things. So think about it is that's that's on the ideology again.
Though the reason I think maximalists are going to have amazing traction or huge traction over the coming years. I think Bitcoin Maxim's in a sense, the most important political movement in the world of people don't understand about today because essentially their argument is it's all a scam that is to say, the FED is a scam, but actually all the printed money means many of the corporations are scam. The censorship is a scam. Lots of things that the state is saying are false. Everybody who's rich. They're all can tell Ian Ayres because I've heard that term the can't alone effect, you know, that is
do not
the canceled.
Fact, is some people get the printed money first. So it's not uniform in terms of its application or Society. There's some truth to that that's bidding up assets, that is causing something where it's like, dunking on Mars. Actually. I think Mars is lower gravity than the u.s. It's like Space
Jam dunking on the moon.
Yeah, dunking on the moon. That's right. Actually, Mars, 38 percent of Travelers. So, yeah, like basically dunking in a lower gravity environment, you might still need to be athletic but less. So that's sort of what it's like doing Tech or VC in this, highly inflationary environment. At least for now. It's
Isabel that all games are just wiped out because things go totally vertical that that's what happened environment. Everybody thought they were heavy red when money
dies, I have not.
Okay. That's that's a good book. That actually, Joe Colangelo had a good clip from, I'll just kind of read that clip. This is by Adam Ferguson. Had a great quote currently reading when money dies, history of hyperinflation. If I murder me, one of the wildest estimates, I never knew is that early on people all that? They were getting rich, they were selling hard assets for they thought were insanely high prices in marks. And so essentially,
Because the printed money flowed to some first rather than others. There's this cantillon effect and my banker congratulate. Here's some quotes. My banker congratulated me on every new rise, but he does not dispelled the secret uneasiness, which my growing wealth. Arouses in me, had already amounts to Millions speculation on the stock exchange has spread to all ranks. The population and shares Rises like air, balloons, Limitless Heights. The value of my industrial Investments is rising to extent which seems to be incomprehensible in all, this makes me uneasy. This thing is something, of course, then the hyperinflation comes because everybody's Rich, they all spend and all the
Prices. Only rise because more money is chasing fewer Goods in the US, its nonlinear. Actually when aspect of it that I hadn't fully understood is the printed money is in some ways contributing to the great resignation. So for whatever reason you're having strikes, you having people who are not working as truck drivers or working as Dock Workers anymore, maybe more power to them. They've gotten this printed money, but what that does is actually it nonlinearly depresses Supply, not just of labor, but of goods because the ports aren't being unpacked.
That's why the administration is talking about bringing the National Guard to like go and man The Docks but that concept is it's not more money. Chasing the same Goods. It's more money. Chasing fewer supply of both goods and services, less labor, and less stuff, because people are not being paid to unload things or build things. So I think there's a nonlinear inflation effect. That might be coming.
Oh, yeah. Well, you can look at, you know, Lumber and a number of other things that I think are a byproduct of multiple
factors. It's by Perry, multiple factors Lumber in particular. I think it like went up and then a crash.
And overall inflation is definitely here. It's now no longer being denied as some conspiracy theory, but no longer seeing its transitory their mating. It's bad. Oh, I'm confused as to why it happened. Eventually. They're going to say it's good because it's wiping out all of the fortunes. It's like a jubilee. All your debts are gone. Why are you mad about it? And then they might move to seizures, unfortunately. And so I know I'm saying this in a chipper tone, but let me give some good aspect of this. One of my macro Theses. We've kind of talked about before is that
Centralization is 1951, Telephone Company AT&T and two superpowers. The US and USSR and three TV stations ABC, CBS and NBC. And so we're kind of running history and reverse at least in the west. And I have this essay on this, at satomi a dotsub stack.com. You give this very flattering title to it, which I would not have chosen. But if you Google sot ony e, Balaji service and you'll see
it and we'll put it in the show notes as well, put in the show notes, right?
This goes into more detail, but basically, if you go
Go backwards from 1950. To 1890. The Western frontier closes, but you go forwards from 1950, to 1991 the internet. Frontier reopens. And you can actually map these things backwards in time. You get the Spanish Flu for words, you get covid-19 backwards, you get the robber, barons forwards, the tech billionaires backwards. You get the private banking era for words, you get the crypto era backwards you get the cross of gold speech by William Jennings. Bryan, today forwards, you get digital gold backwards, you have right and left fighting in the streets and today.
Fried in the fighting in the streets backwards. You get VMR Germany. Today. We have like VMR America where the split, the inflation, and the cultural stuff. That was very common. If you see like Babylon Berlin, it's a lot of similarities to Modern America. There's this book, called voluptuous, Panic, that kind of documents. What VMR Germany was like similar to America today, culturally, as well. It's not just the, when money dies gives the economic aspect, Bluffs, Hispanic or Babylon. Berlin will give like the cultural aspects similar. You also have the conflict in the state and capitalism where the centralized States, you know, FDR was doing.
The Brain, Trust is packing the courts National industrial Recovery Act. He was doing the entire alphabet soup was set up at that time. And of course the gold seizure and you also have something. If you go even further back in time, sort of Antebellum polarization. The thing is the attentive listener will say, well, while you just mix things from like the 1920s, with the 1800's and so on. And I say, yes, but that's because it's sort of ABCD, but it's not exactly. Dcba. It's not exactly happening. Exactly the same reverse.
Her. I think the common symptom is decentralized fists clenching in 1950 is now losing control and so similar events are recurring in a different order.
Because centralized control is dropping off, for example, that centralized control allowed for public health and also censorship. That's why the Spanish flu. I'm not sure if it was solved but you just didn't hear about it. Because since she was actually effective, that was part of the arc up of the centralized State. And now we have the arc down of the decentralized states. There's neither effective censorship nor effective public health. And so you have like this total catastrophe or at least perceived catastrophe around covid-19. And the way I think about it is it wasn't the Spanish Flu.
Gently, it wasn't 100 million debt, but it's going to be on the other 10 million deaths. It's pretty severe. We're lucky that. It wasn't Spanish Flu. It might who knows could mutate. And the thing about this is when you have this world view, at least in the west, as I'll come back to China, A lot of these things are happening, but we're seeing the alternative outcome. So for example, you're getting the cross of gold speech and he's like, you know, we will not be torture of road is like impaled for get crucified. I think on a cross in gold and now we're getting digital gold, people want gold back to the populist movement.
Is not against Gold's Fort. So you're seeing a lot of these things happening in. Reverse, not the frontier closing, but the frontier opening. And one of them that I think is pretty important is the stuff that FDR had the brain Trustee of the brains on his side. And so, executive order 6102 the seizure, they were able to implement it but I think if they try it this time, it's not going to work. Yeah, because history is running in reverse and the IQ is not part of the
state policy of Maya interrupt. Go ahead. Yeah. Could we pause that and leave the audience wanting more?
Particular thread and my asks a number of new questions.
Sure, but let me say one last thing and then let's go to
that. Okay.
Now I'm going to say something that sounds sci-fi. Basically, the modern you ask, the whole thing is, the entire mythology is beating the Nazis and being the Confederate. So, beating the ethno-nationalism broad and the secessionist or would have you at home and what may happen? Over the next 10 to 15 years is the regime may lose to the ethnic National abroad. Namely CCP.
And they be lose to the Maximus at home and sessions at home and The Break-Up may happen. And the difference is, of course, that the Chinese Communists are non-white and their communist. They're not white Nazis. So they're different International. So it's different enough and the secessionists or whatever you want to call them. This time are absolutely not for slavery. There for freedom. In fact, you could argue their anti-slavery activists because they don't want to submit. So I think that it's quite possible that we see the reverse outcome of a lot of things.
And then at that point we want to do is if the CCP wins and if we have American Anarchy, we need to figure out some way to rebuild civilization or guard civilization because in that world the thing is anything. Good can massively over correct? You have to have some limiting principle because otherwise too much is not enough. This is why I would not call myself a maximalist. I call myself an optimist that is to say, I want to figure out what the optimum is across many variables. Instead an explicit objective function, rather than simply maximize.
Nothing, we're too much is Never Enough? You maximalism. Just leads. You can call it fundamentalism. You can call it extreme. It just leads to a certain variety there. And again, I'm not trying to beat anybody up on this. I'm just trying to say that. Yeah, okay, retire, the current system, whatever you do or I do it seems destined for that retirement. We have to think about what the next system looks like after the how do we ensure that? We don't have crypto Anarchy, but crypto civilization. Yes. I think that the Chinese are going to rise. But what is an unchecked China? Look like the u.s.
After 1991 behaved quite badly in some ways, you know, all the invasions, the uncheck China might be quite mean. And so, how do we defend civil liberties? How do we defend privacy? How do we defend civilization in this environment where we have sort of the reverse outcome? I know that's provocative. Call that a Sci-Fi
scenario. You are once again outlasting. Me and the battery in my headset and I know I can't change my audio source with the software you think. So I may lose audio all together, so I want to ask couple.
Of remaining questions. I'm going to just throw a number of them out there at once. So I think this will make the most sense and then you can pick and choose what you want to go after here. Are some of them if you had to be bullish on one US based big tech company, which would you choose? And then if you're still doing Angel Investing or if you were doing Angel Investing which categories were areas, would you find most interesting and then any predictions for the next?
Or are there any things you're preparing for in the next 12 months with contingency plans of different types? Either one. The one
thing I want to say is before we get into that, just on the topic of secession for a second just to make sure I clarify my position is, I believe in volunteerism. And so I think rather than fighting over land I have zero interest in doing that personally and said, I think you should try to crowdfund territory in. No man's land. So nobody else has a claim on it. You've got it fair and square.
We're and it's in the middle of nowhere. Like basically the equivalent of Burning Man because fighting is stupid. And there's plenty of territory out there and I'd rather build it from scratch without a fight. So I would not call myself a specialist. I do think that if you look at some of the conversation around National divorce, that is happening on both sides, that is happening in NY mag publish something on this a few years ago, which is American breakup. I think maybe it's time for America to split up. Sarah Silverman has talked about this and folks on the right have talked.
So-called National divorce. So it's definitely in the air. And one last thing I'll say is that all of this stuff? The language is super important because session, of course, sounds bad, but Independence sounds good. It gets back to that concept of Russell. Conjugation. The American Revolution was secession of the colonies from the British, but that was independence from the American perspective. So this also get said earlier, concept of our winners writing history. So the adjectives I chose where as neutral as possible. I want to be clear that I don't support.
Any kind of physical conflict, you know, peace-loving, and I'd want to basically, like by territory outside of this. However, what I want, or what you want, there's some forces that might be greater than us. So, in this sci-fi scenario, this is how I sort of see the Harry Selden like psychohistory
happening clarification accepted. Thank
you. And, you know Tech of history is it's like the prediction of the future, there's a scenario analysis. So why is that scenario now so important? Well, I send some probabilities that scenario. There's also other possible scenarios another possible scenario.
Is it's just a lot of disagreement and just a lot of migration and yelling online for many many years and then, it's something like, what happened with the Soviet Union where it does break up, but it breaks up in almost basically peaceful / bloodless way and that's like, a good outcome. And I think that's likely, that might be the most likely. It's much better than civil conflict and there's things like, with Interstate unions, for example, where, maybe that's what happens, but we'll see. Obviously. Hope for the best plan for the worst.
Your points on this actually relates to Big Tech goes and bullish and bearish and whatnot. The u.s. Big tech companies that are in the most bullish on. I don't think actually, I don't know if I actually hold any shares in these companies I might in some like, entity of intensity, but it's certainly not to my knowledge, a large holding. I'm actually most bullish on Twitter, / square and Facebook. And the reason is Twitter, /, bear the recent put them as they're going to become, probably merged into something, like, with squares, Bitcoin support. And the fact that Jack is CEO of,
Of course, you're two separate entities, but he can figure it out and probably offer Bitcoin payments on Twitter for many things and basically built like a Bitcoin aetherium into Twitter. What do I mean by that? Like a big quantity remaining? It's like a lot of the functionality or copied functionality of etherium, like rootstock sort of I think cloned the etherium evm. So it might have a lot of functionality that theorem or Salon or something that our chains, but that is sort of Bitcoin backed and there's different ways of doing that. There could be basically essentially a centralized version.
And that says like a minimal decentralized component, which is one way of doing it and you just like load Bitcoin on to it and the rest of the centralized there's ways of doing with zero knowledge. There's a number of different engineering trade-offs that could be made. But essentially I think that's One Direction like Twitter / Square, then, Facebook because duck is also a founder. And, you know, he's just, I do respect him. I really do. And the reason I do is the number of hits that he's taken over the years to start is like a 21 year old kid in his dorm to build what he's built.
And from that to the three billion person Network. I mean, a lesser founder would have backed down after the mistake on Libra, but Libra, and then DM. And now he's doing know, V, which actually think is a much better chance of working because it's natively crypto. I did actually say this at the time that what they should have done to start with Bitcoin, and theory, and payments and WhatsApp, and do remittance corridors rather than doing this. I think this might be some public record of it, but I definitely, definitely talked about it rather than doing a new coin. Start with the existing ones, build up experience.
Perience on that. I'm rather than doing Libra and that wasn't their first shot. But you know what that looks like what they're doing now in Novi and very, very few. People would have had the conviction to persist with something. In the face of that level of resistance. I'm going to Congressional hearings. Most people would have quailed same with all the negative. Press, same with the Oculus bet that's two billion dollars for something where they had to go through multiple iterations to get the product to work. But now, you know, they're going to Rebrand the company around the mattress or
Am I made this comment? Basically, Instagram was not an easy call this something where it's being retrospectively, litigated because it's worth a lot. But, just a bullet point, this Instagram raise it, five hundred million valuation. The day before zoc offered a billion for the company 1 billion was like, 25% of their cash and handy about like, 4 billion times. There's actually a lot of money, it was weeks before the Facebook IPO. The board wasn't consulted. They were just informed and Instagram had no
Revenue. Yeah, that's not, that's not an easy call.
That's not an easy call dad, you know, and in fact, John Stewart, mocked his the time. He's like a billion dollars for Instagram. The only thing that's worth that is something that instantly gets me a gram of cocaine, right? Everybody mocked it. Made fun of it. They said, oh, this is such a bubble purchase. They're so stupid it indeed through the IPO. Potentially. I mean, there were so many aspects to that where that was a highly highly non-consensus call. That has now been turned into always an obvious by and
Think about this, the problem is that people who are wrong, will not admit. They are wrong. The only way to show that you were not 2x Rider than somebody but 10,000 ex-writer than somebody else is an investment where your 10,000 ex-writer, 10,000 x more correct? And by the way, this is very common. Google's toughest searches for a business model or the internet is, is not going to be a thing. So many articles on the early internet were like this. Or, of course, Bitcoin is going to 0 or
But 19 is not going to be a thing. These journals are not off by like 50 percent. You can't just read the article and think you're being sophisticated by discounting it. Their mental model. The world is often off by 10,000. Or 100,000
x though, In fairness just to set a Counterpoint. There are some journalists who are incredibly prescient. There are good and bad and ugly with, in the world of Journalism, just to be
fair. Sure, sure, but many of them are becoming VC's in Angel, Investors or going to
subset.
Yeah, a lot of them are defecting because the ecosystem is just full of vitriol. Like everyone's pissing in the pool. So a lot of people are getting out of the
pool. Yeah, because the thing is what I'm talking about is really, I should preface it with the corporate journalist. The one who's employed by a Legacy Media Corporation and that Legacy Media Corporation will cells. Burgers company. The New York Times will literally run Billboards advertising itself. As a truth Fox will run Billboards advertising itself as fair and balanced. The Washington Post will literally equate itself to democracy itself. Now, Facebook doesn't do that, you know, Tech
Any has the balls to do that. Say that your equivalent of Truth or fairness or democracy itself, but yet, that's a for-profit corporation that has the arrogance or the lack of self-awareness or something to come out and say I determine what is true for the world. I am the paper of record. I am the first draft of History. Whoa, you know, like the Monopoly of Truth is Upstream of the Monopoly of violence. The Monopoly of Truth. You say that wmds are in rock and then people go and invade. You say that somebody is guilty. You prosecute them in the court of public opinion and they get prosecuted. And so that's it.
Super important power that some privately-held media, corporations shouldn't have. And so what's happening? Now, fortunately is that powers being decentralized first in the most important way which is on chain truth, cryptographic truth, not argument from Authority, but argument from cryptography, not nyt, but BTC step Powers being taken away. And what's funny is, as, you know, I'm not the kind of person who thinks white is an insult, but these folks are, and for some rich white, Nepeta, slyke salzburger to be determining, what is true for the
Whole world is simply not applicable one might even say it's quote, white privilege. And so instead what we should have is something that is a Global decentralized Network, where people of every group including of course, white Americans can participate and determine what is true through a mathematical process that starts with figuring out who has what Bitcoin and then it goes to who has what asset and then it goes to who made what assertion and that's like The Ledger of record concept that we talked about before. So there's a root and Branch thing where corporate journalism has also lost that they don't understand it just like
CCP is hard power. And BTC is hard money. Cryptography is hard truth and corporate journalism is actually lost control over hard truth. Just give you one example of this from earlier this year, metallic beaut Aaron made a large donation to India for covid and you know how people knew that it
was real. Look at the blockchain.
They looked at the blockchain that was ground truth. That's really important. Because what is the other thing that you tend to do nowadays, you know, you will, if something is real, let me see if it's on Twitter. Did that guy?
I actually say that and the thing is, that's actually not perfect nowadays, because Twitter D platforms, a lot of people. So their record is gone or you know, last year Twitter was hacked. If you remember that and besos and other people were posting things. So while it's imperfect in the not too distant future, there's things like d, so there's various kinds of decentralized, social networks out there capsule, all these things that are coming or out there in the not too distant future, that back end is also on chain. So to show that, somebody said something you won't link to Twitter. You link to the crypto Twitter version, the unchain record.
Shows they posted this or said this and because it's protected by proof of work or similar consensus algorithm. You can compute how much money would be required to falsify that how much computation, how much energy would have to go in to falsify that that is really interesting because you also have multiple confirmations. It's not just one source. The thing is, I don't care. If something has a thousand retweets. What I care about is if it has two or three independent confirmations from economically disallowed actors. This is the same as accademia. By the way, everybody's optimizing citations. We actually want to optimize
As independent replication. That's what true Sciences. It's not peer review. It is physical test. This leads to kind of worldview stuff. What am I interested in? So the reason I was interested in, I said, Twitter square, and Facebook. Is there still? Founder lit because their founder LED they're getting into respectively Bitcoin and web 3, whereas Google for example, I respect. So in there, it's very hard to run an organization like the one that he does but with the big exception of AI under deepmind, thanks to keep my next session. Google really has an Innovative that much. There were some
Obviously things like try to integrate robotics that was taken down by Scandal. But basically conceptually technologically economically was sound, kind of put that all Under One Roof and actually Advance the state of the art of Robotics. They had Boston Dynamics. They acquired all these companies are going to need them all together. Unfortunately, Scandal took that down. They had all these messaging apps. Basically, there's kind of being adrift. They've got too much money and they don't have enough Focus or would have use all the same big company stuff that thing. Remember I said before about, how if there's a lot of money within a company people can do the off-diagonal, they can loot. They formed those
coalition's. Right. The
Win
loss and loss win as opposed to everybody wins. So that's definitely happening there and just to show why I'm not bullish on them. I mean, it's 2021, you don't, they don't have, you know, it's a core thing for search that they would have had seven years ago. If probably Larry Page was still in
charge. I do not. But is that block
explorers? Why don't they have blockchain.info and either scan? Those are people don't get this but block explorers are actually the stealth threat to search.
That is to say, we're not used to thinking of them as a threat to search because financial data of the blockchain type being indexed on a website, like boxing.com or either scan where you're looking through smart contracts and so on that seems like categorically distinct from text and media information. That's on the internet that you go through web search, but guess what? The internet of money and the internet of information eventually merged together because with something like d. So with what was called bit cloudy, so if you go to their block Explorer,
You can see that every post and like and so on is on chain and that shows that actually more than just financial data can be represented on chain social data can as well, their social data can pretty much everything else can because social networks include media and all this other type of stuff. So it's all going to go on chain eventually and some of the zero, knowledge stuff. Like, what's dark, where is done, is solving some of scalability issues. So it all goes on chain. That actually is a threat, not just Google, but also Facebook and Twitter, because indexing the web is hard index.
Social media company's database is even harder because it's closed in corporate, but indexing a public blockchain is easier than both just to give one example with indexing the web. You have to go and have a crawler that has to guess when to recrawl one of a million sites. When is it going to refresh? You? Don't know. They're not going to ping. You see if to guess and you've to spend spare. You have to a whole Cisco model on this kind of thing. That's just like one piece of the whole web crawling problem with a blockchain. It's the opposite. Every update is pushed to you. You just subscribe to it and just get a block push to you and then you re an exit. So like enormous parts of like the
Our infrastructure are solved by different abstractions, that take millions of lines of code and like, reduce it to nothing. And then the question is, can block chains themselves scale and why would people put everything on chain? Well, it seemed insane in 1992. Say you're going to stream movies over the Internet. That was crazy, and people thought it wouldn't scale, but it did. And one of the other reasons, by the way, they were going to get blockchains is a back-end for everything, you know, who sucks it, information, security
control. Think of a lot of people, but what is your
answer?
Government ID developers, you know, who's actually awesome at security.
Tell me Balaji.
No, I'm okay, whatever.
But trip to developers. Yeah, so most
people don't understand this, right? There's a website called rek TDOT news and essentially documents every major hack in crypto.
Yeah. It's like the fuck company of crypto.
Yeah, so millions of dollars get stolen but here's the thing. That's why people like what do you talk about crypto is secure this, all these hacks. Here's the thing. We're churning out the equivalent of combat veterans.
This is a live fire environment because see the thing is in web to your systems, can get hacked without you knowing about them. Someone can just get onto your computer and they'll just hang out there. Slurp up information sit there. And the reason is, it's not a negotiable, instrument the data, in your database. Didn't know what the price is on the open market. They might want to sit there and slurp it more information. They might want to escalate their privileges and so on and so forth. If however, there are cryptocurrency private keys in every directory, you've now given that attacker an incentive.
To just take the money right now because who knows? You might move it in 10 minutes. So that suddenly makes intrusions tangible. That you might still have a politically or ideologically, motivated attacker. But once intrusions become tangible and you can see the damage that is done. It's like capture the flag on everything. Insecurity. One of the hardest things about computer security is, it's like, oh my data was hacked. All right. Guess it happened again. There's this website called. Have I been poned where you can type in your email address and find how many different hacks you were subject to go ahead.
I'm just wondering who owns that site and just enter your e-mail. Got, it's
okay, Troy, Troy Troy knife in his last name, but he's a good guy, is like a security guy who's legit? Okay, but but, yeah, it's good question. Right? So, but, have I been poned? Like the thing is companies. Now subscribe to have I been poned to run their users emails through to make sure that they're not reusing a password that was already hacked. Huh. Now, think about what's going on there. That's like a shared database between companies that they're using. So,
Like your login to excite. Depends on your log into Y and Z and W site. That's kind of like the concept of this is post. Yes, you meeting a blockchain on how blockchains are A Primitive 4shared Steet between companies where I can write to it and read from it in such a way that I can't interfere with your reads and writes. But point is that kind of gives a shadow of like what a shared login kind of system looks like the point, is this the current hacks of crypto things. Obscure the fact that in web to you can set security 20 and just
On utility because if you have utility of customers, and if you don't have utility, you don't, but security is sort of orthogonal to that at least at the beginning in web 3, that's not the case. If you don't do an audit of your contract, if you don't think about formal verification, if you don't use a type, safe language, if you don't really think through all of your error modes and maybe use audited contracts and be extremely defensive in what you're doing. Your contract gets hacked on the first day, so minimum necessary security is much higher.
It is that requirement for making money.
And they sweat it. People sweat it for real. Like they know that one compromise, you lose the money and people do die in the digital realm. And best practices come about and new tooling is coming
about. What do you mean by people die, you mean initiatives, projects companies?
Yes. Exact is vert in Virtual war. In this virtual cyberwar companies. Do die. This Killer fun. Sack their death, right reputation killed. So, the thing about this is when people look at ransomware and so on ransomware is a
Actually, you know how that works. Right? Like basically, there's a security hole undetected security hole on something like a an epic software. And then there's a thing that appears when it says, pay me some Bitcoin or pay me, some mineiro in order to unlock your computer. Yep. Now, if this is not yet feasible, but it's going to happen. Do you know where that would be actually extremely hard to do? Would be to run that ransomware on the Bitcoin or theorem Block Chain itself. Yep. Why because if they could have hacked it, they could have awarded themselves a billion dollars.
Somebody else to do it. So the thing is that blockchains will become by dint of their built-in bug Bounty by dint of the fact that they're not just open source, but open state.
The most secure back and Platforms in the world.
Now, don't you think that's also going to be a Cambrian, explosion of social engineering. I mean, I would imagine that all sorts of sort of Kevin mitnick, the art of deception type, social engineering, will explode to sort of not skirt. But on some level circumvent, very tight, technological precautions, and we're seeing that in This chords. Certainly, I mean, I have to imagine this is
Happening, although I haven't read any accounts. But one of the crazy things in the nft world is if someone gets hacked because they accidentally give someone a QR code, or God, forbid, their passphrase. They can see exactly where their stolen stuff is, right? They can look at a an unidentified wallet holding their stuff and watch someone selling their stuff. It might not be plausible or sensible now, but at some point in the future, I could
Good for see there, being greater value of sum n FTS to the person who had them stolen than the person who did the stealing, in which case you would have sort of Ransom like circumstances. I don't know.
Every crime we can possibly think of will happen in that sense might already have James and Lopez's GitHub of like I think Bitcoin physical attacks. So Physical plus virtual, we combine social engineering but I think in some ways there's good and bad, The Bad is
With the state proceeding with decentralisation winning the American Anarchy. That may follow remember the things we're talking about 10 secretary and the rubber band. So right now we're in this weird phase of a narco Tierney where there's a crazy guy who is smashing windows or pooping on the street in San Francisco. That's the Anarchy. But the Tyranny is that the Uber driver who parks next to him gets a two hundred dollar ticket for being on the wrong side of the road. So guys, smash the window of the car. Nothing happens to them. The poor working-class guy who Parks inside of
It gets whatever hundred dollar ticket. So it's a combination of Anarchy. And tyranny that I think is so the new information to me over the last eight or nine months has I think that the Tyranny doesn't have enough State capacity to sustain for long and that's different than the Soviet Ernie. That's different than the 20th century. Top-down States. What I've sort of realized is if in the 20th century, the big problem was tyranny because you had
Sort of left authoritarian and right, authoritarian extremists and what was precious was freedom and equality in the sense of being treated as an equal member of society, rather than equal protection under the law, all that stuff in this Century. I think, after that, rubber band, snap happens, which I think is going to happen and the Tyranny vanishes and we just have Anarchy. What is scarce is not freedom, but leadership, that is saying a time of tyranny, but scarce freedom, in a time of Anarchy would scarce is leadership.
Yeah, and what happens I think is like Russia in the 90s. This is
book. I think like May apposite something while you're looking for that and that is, I would imagine human nature Being Human Nature. Doesn't seem to have changed all that much over the last few Millennia. That if we have say, decentralized social networks, while it may be true that no Central Authority, candy platform, you, you will have Lord of the Flies Dynamics.
Whereby someone accrues incredible reputation, / power, societal Sway, and can effectively Force Exile by just causing so much vitriol and acid to be thrown at any individual player. So it in the sense that I expect it will see d platforming by other means, than some
Central. Yes. So we'll order, I think what happens is you get re
Asian. So yes, I do agree with that. For example, what's happened in the US is if China has centralized censorship by the state and yes, because the first amendment prevents that you have decentralized censorship by corporations, where it's technically compatible with the First Amendment, but it's spiritually not compatible. And then the response that is the third order which is decentralized censorship resistance. See, because the sort of Western form of censorship is this retrofit, it's not like the Chinese where they set out and they're like, you know, we're
Going to take the hit, we're going to take the pr, hit the reputational, hit, whatever International hit is going to censor because this was a retrofit on the system. It is retrofitting this tyranny on a top of a previously, free system. When Twitter was, you know, the Free Speech ring in the Free Speech party, you know, in started out with that is a bad fit and there's still enough people with living memory of what that freedom look like. It is now becoming a parent which was not to me, I think a year ago that the state capacity for really exercising that
In a coordinated way is not there. That is to say if the Chinese state general like lawful Evil versus chaotic, evil are
from Dungeons and Dragons from Dungeons and Dragons. Yeah, exactly the idea. You should probably describe what they mean. But
yes, lawful evil is methodical careful evil. And in some ways, I think it's a caricature to say this in some ways, but in some ways, the Chinese State you can think of it as lawful evil when they set out to censor you
You or dr. To every switch is flipped every, you know, the guys all fan out, like, Bitcoin mining Band, Boom. They actually just go and execute on it, like ruthlessly like a corporation, the top guy gives the order and they all go into it. If you watch like the Chinese military parades under Z Jinping, they don't even salute, the seven-person CCP standing committee more. It's not a salute of an oligarchy. It's a salute of one guy and that one guy gives an order and all these guys go through, like, the little, like robotic like this. That's the whole point of the military.
Raid. By the way, is to show that in peacetime. If they can do this in a wartime, they're just completely coordinated ballet of violence. Basically, that's the whole point of military parade. Their it like lawful evil. Whereas the American state in many ways is chaotic, evil Afghanistan. Just like this total catastrophe and we have stores being burned down and people storming the capital and States doing this and money being printed and look there, a butterfly. You know, I'm on Twitter yelling at this person and there's no coordination of any kind. There's no strategy this August
Thing is a great example. Do you follow this at all?
I did not
by the way, as a side light. Some people be like, oh, why are these crypto Bros Tech Bros? Like, you know, getting into foreign policy or Politics on the other hand. They'll also say, why don't these Tech pros of crypto is why don't they learn some history and Humanities? Like, you know, I said, these are mutually contradictory criticisms, of course right here, but my response to that is twofold, first is, as I mentioned before, just like, after the 2008 crisis, it was obvious that the Federal Reserve, the bankers didn't have it under control.
In fact, Bernanke in 2004 had given the speech at Jackson Hole Wyoming. I believe on the great moderation on how macro economic volatility had been solved and they had it all under control and no big deal, meaning no more depressions. Nothing. Of course, if years, later financial crisis happened, so they obviously didn't know what they were doing. Even if they had control of the system, hence fintech hence crypto because of that distrust and now we're seeing in 321 if it wasn't apparent before, but it's really apparent. Now, is that the foreign policy establishment of the
The US and National Security, the military establishment didn't just blow covid a blue Afghanistan despite two trillion dollars and twenty years. They basically blew the largest lead in human history. Arguably over the last 30 years in Empire at its absolute Zenith is now losing to the Taliban. And by the way, it's not even like Vietnam, you know why? The Vietnam defeat was actually more excusable because they had a superpower sponsor. The Soviets were on the other side. The Chinese were on the other side, supplying arms. Those were serious States, who's back in the towel.
And China is in putting in weapons, to my knowledge. Russia isn't, maybe Pakistan. It's not like Vietnam. It's actually much worse than that. As a defeat. So point is just like the bankers, obviously didn't know what they were doing. So time for other people to come in, new fresh blood. If you take a look at my fellow Tech Bros in finance and VR palantir, and, and Rule teal and Palmer, Luckey, waltzed in with no background and Advance, the state of the art of the intelligence and military communities, that kind of shows a she'd, I think of what is possible.
And if we do decide to get involved in this in, obviously, in cryptocurrency, guys, like metallic people who are running these coins are running economies. They are running monetary policies of large countries. It is a step up from Simply running a company. You're running a community. You have to think about things, you can't control people's actions. You can nudge Maybe by pushing through an update. But even that update may be pushed back on it is actually like the executive, legislative and Judiciary the president, and the lawyer congressman, who edit text and then the Judiciary that enforces.
The fallible and highly unreliable and irregular Judiciary, rather than that. You have the executive of the CEO or the founder. You have the legislative, which are the coders that proposed the edits and changes and you have the Judiciary, are the nodes that interpret the code, but do so in an extremely Faithful Way, in a sense. It's a violation of equal protection. Every time somebody with the same facts walks into a Wyoming court and gets different Justice For example, than a Milwaukee court or Minnesota Court, whatever, right?
Like every time that happens on something that's supposed to be uniform, the same input should give the same output. That's what rule of law should mean. And I'm not saying I'm not beating up just using Wyoming Minnesota as an example, not being up, any particular state. I'm saying that the concept of a judge changing their decision-making based on anything other than the raw inputs judicial discretion. In many ways is actually often bad because you have things for people start going jurisdiction shopping. Not because the law is different, which is fine. But because the judge likes this
Sarah likes that and has a certain attitude towards this. It's like there's an apocryphal Israeli study where people get lighter sentences after the judges have eaten something and their blood sugar is up. So they're more merciful, that's bad and said you should have this alternative. So my point is though, that Founders are now getting into rule of law, currency with palantir and roll into military and foreign policy stuff. So that this preface is kind of why we're starting to think about all of this stuff. Another preface. I know perhaps the preface. Well actually talk about France.
Caucus and then come back to that. So it was France. Talk, is that is this like amazing thing that shows when you know, talk about like chaotic evil. These don't know what they're doing. So here is kind of the sequence of events, basically, after the whole Afghanistan withdrawal thing where it was just so televised, everybody saw the images of this catastrophe, and it wasn't just obviously people within the US who saw it All American partner saw it and they're like, whoa, that military that we saw in Hollywood beating up aliens. And so on, is unable to manage.
Your withdrawal without any gunfire Taliban was even shooting at them. I do support. I think that withdrawal overall probably was a good idea in the sense of or at least necessary. It's complicated, but the execution was catastrophic, that's kind of the conventional wisdom. It is, how are the secondary consequences? I think are important one. Is that the admitted? I believe Turn the page on this from a PR standpoint and that's why this August announcing was teed up. And the thing about it is, it's very unusual. You know, when is the last time you've seen?
President and the prime minister of the UK and the Prime Minister of Australia in a
simulcast.
Can't remember
can't remember, right? The thing is it could have been something that was like signed to some deal of like a million things that happen in government that are not a prime-time announcement. This was intentionally. The goal was hey, turn the page. Yeah. I know you thought we screw up in Afghanistan but we're pivoting to Asia, was totally serious about it. Haha China, right? And so the problem is though that it actually revealed a bunch of issues. First is the fact that is Australia the UK and the US. Well, there's something called the five eyes and
Is Australia. UK US New Zealand Canada? So there's this Canadian newspapers said, what is it three eyes now? Because why were the other two excluded? Well, New Zealand because they don't have some nuclear. There's something about nuclear subs can operate in their territory, or their Maritime region and Canada, because evidently there's such wimps militarily. They don't have anything. But the thing about that is it showed to the external world. Something they've never seen before, which is internal division, among the five eyes. Number one. Similarly, the quad, which was this much ballyhooed.
Good thing of India, Japan Australia, and the US, which actually did make some sense in the sense of India. Japan are, I think serious countries versus China. If you wanted to make an alliance at that would make sense. India and Japan were left out of this and the UK, which is on the other side of the world was brought in now who has more concern with China then India and Japan which are real countries that border them. They're not going anywhere. The UK doesn't really have an Empire anymore. Doesn't really have stuff in the Pacific. Hong Kong went away. So what the heck? It also just like it showed the five eyes, really. The
Is it showed internal division in the quad? Indian Japan made polite murmurings in public, but within India within Japan, if you read the newspapers, are there like WTF and then France itself? Because they had this sub deal with Australia that evidently by all reports wasn't going that great. It was taking a long time etcetera. But Australia have recommitted to their relationship. Now, all the stuff is being are in the public because here's what happened. France got annoyed and France isn't just France. France is basically one half of the EU with Germany and
they got the EU to denounce this and they pulled their ambassadors. And part of it is that their pride was wounded because they actually have islands in the Pacific. They have actually a significant I think million plus population of actual French citizens in the Pacific near Australia, more than the UK, does they still think of themselves? Because they're on the UN Security Council is like a great power and now they were just sort of lied to and backhander. That's how they think about it, you know, if they were screwing up on the sub aspect, but the thing about it is they got really mad pull their Ambassador, the EU.
And the US are now actually largely split on China because they said Frances and just France, France is that you and even if I think the EU is declining and Britain will break all has broken off from it, of course, but Scotland might break off from Britain and Catalonia and the vice grab countries. A male break off from the EU. Still the EU is like a thing, even if it's declining. And so the EU is now kind of split and they're like, you know, what? U.s. You don't you go and do your thing on China and we'll do our own things. So China Morning Post had actually something on this. And then what will surely get Australia got Subs.
But you know, the fine print is due on the first like nuclear submarine, that Australia builds is going to appear don't date. They've got
us. What is that
20 years? 20 years. See the thing is, this is not a serious thing. It reminds me of the San Francisco, 300 million dollar bustling that took almost two decades. Patrick Collison has a website called Fast. I'll give you the exact URL. It is Patrick Collison.com, front slash fast, and he shows that stuff in the past was built way
faster.
He gave an example of a nuclear reactor.
Yeah, exactly. The first nuclear submarine was built faster in like a few years relative to this one, which is will take 20. So how is that possible? The first sub those built 40 years ago as fashion this one or like the Empire State Building was started and finished in four hundred ten days. The Eiffel Tower was built in two years and two months, this type of stuff. Think about this is we know that it is physically possible to do that today because China does it trying to build a hospital in ten days during covid? There's videos, you can see of them building like a subway station in nine hours.
Or a building in like ten days? Then of course, what people say is 0 and this is cope. By the way, they'll be like, oh, that's all, you know, Chinese construction. It's socks. It's just going to fall down. It's plastic crap. We have like good stuff. I'm like, have you seen the Millennium Tower and SF. Have you seen the SF Transit Center in SF? Those are also cracking and going to fall over. Even nyt actually did a thing on how SF is an actually earthquake proofed and all the building codes. Don't mean anything. So unlike the US.
Getting like high-quality structures for all of that money and time and moreover. Even if even if you granted and Pelosi the photo of like a building in China filler, even if like some tiny tiny percentage of the time, you have some structural issue when you go from many years to be able to build a hospital in ten days or being able to build a subway station, nine hours. It's like a hundred or thousand X like the amount of money you save is so dramatic that you can slash rents. And crucially also enable military victories.
Because the military is about the physical world and if China as a subroutine can contemplate building a hospital in ten days. They can also contemplate building a blockade or a bridge or something else in the physical world. And if the u.s. Can only build a sub in 20 years, it's like an older man. Whose bones don't heal as fast anymore, who can't do the things that they used to do anymore and yet still think of themselves. That's a dangerous part. If you're 80 and you think of yourself as 20? Okay? Young at heart is one thing. But going in, trying to knock out.
104 reps. You might hurt yourself. You're trying to avenge that much after not doing something in a while and you might never be able to get there again under as that as that man. You might need your son to be able to do it. That might be the last time you bench that amount of what you sow might need a new nation to be able to do these things like a rebirth of some kind. So then going a little further with China. The Arcus thing that just made them mad. It didn't give any results. The u.s. Is acting. China is taking actions. Because do you see this like recent Hypersonic missile launch.
I did actually see the news. I
don't read the coverage but
have no worries. The escarpment is on
it. That was basically a Fuck You Very Much show of power
response. Yeah, and you can argue, you can argue. Why are we hearing about this stuff? You can argue. Oh, the military-industrial complex is leaking it to get more money for Hypersonic weapons. Oh, the military industrial complex, you know, wants us to know think we're losing to China. So therefore will buy more weapons that may be true, but it's actually also true that the u.s. Is weaker.
Lead in China in the South China Sea on specific issue, the China cares about which is Taiwan. It may be possible for someone to have an interest in it. But it also being true. It was like, we welcome the competition. This is what was you? I'm like you welcome the competition when it comes to, you know, welcome military competition. That is exactly the kind of competition. You do not welcome. You're welcome economic competition. That that might be fine. I mean, you don't really welcome that. But okay, you can tolerate the thing is that it's a generalization, but a lot of change.
Have said, Chinese culture generally, trust actions over words and Western political culture today, at least is 100% verbal. It's just all signifying and hashtags and so on, on Twitter and like, almost zero offline. Accountability for actually doing anything Tech culture. I would say is something of a hybrid. At least, you know, the pre 2019 technology might call it crypto culture, or web three culture. Now, we're absolutely. There's a story that you're telling in a slide deck, but the numbers really, really, really matter, especially once numbers exist. Once you're at series a or series beer,
Beyond another investment of money doesn't come that easily. It requires you to actually deliver results. It's not simply like an election and investment is much more diligence on it. And the thing is that what happened was? This August thing made China mad without getting any results now, so this joke Hypersonic missile as well, which is separate thing. But, you know, the US government is on it. They've just band gifted and talented education in New York. Take that China, right? Let's go to crank out. Tons of people who understand how to fly something past Mach 5 and know how to deal with.
Ultralight materials. Like that's good. Just look at that. What a chess move, right? And by the way, it's not like the federal government doesn't care about education. They do, they're actually saying the FBI to stop people from protesting School boards, but not to stop them from like Banning gifted and talented add. Right? And then of course, India was in Japan. Requirement, we part of this squad discussion. India also is kind of having it a little bit both ways where they're also, as part of something called the SEO Jun that
is and do not. It's the
Shanghai cooperation organisation. It's sort of like the it's a little bit like a Neato issue thing.
Most people in the west, don't know about, but it's pretty important. Becoming more important is China. Russia, Iran, just became member kazahkstan, like the Central Asian countries and actually India and Pakistan were admitted at the same time, which made me kind of quizzical. Because first, India being in anything with Pakistan, other than like, the UN is pretty unusual and S, India and China, being tears unusual, but India, seems to be taking a balancing role is almost the opposite of its cold war role where it was closer to the Soviet Union, then it was to the US but it
Aunt, in the Soviet Camp. It wasn't like Fielding troops of the Warsaw Pact this time. It is closer to the u.s. In the west than it is to China, but it's not going to be like the UK, which is like America's poodle is, people would say, you know, after the Tony Blair thinks it's going to actually take its own independent things. So SEO people believe, maybe that's just a way for India, to kind of hedge a little bit. But being in book quad and the SEO meeting is kind of a. It's like, you know, you pull both the Knicks and the Lakers or whatever. And then, of course, Taiwan saw this and was like, oh boy,
China got more annoyed. So point is why do I go into this example in detail? This is just pure chaotic evil, or at least just chaotic, you know, even if not evil. It's something that pissed off the French pissed off the Chinese show that the three eyes and the quad were internally dis aligned piss off the EU and split them versus China. Basically did it all for a photo op after another military disaster and essentially achieve the exact opposite of what they even want to achieve, which is pure Optical thing and there's
Military gain whatsoever. And this is being done at the most senior levels. It was a choice to do this at the leadership of these three countries. This is just one event. But as you can see, it had Ripple effects, and so on, but it's like the anti Alliance, it like broke apart alliances rather than putting them together. So because of this, this is that's like the foreign level and domestic, you can give similar examples, for example, like 17 states are now protesting this thing of, you know, sending the FBI to Local School boards to be mad about protests. And, you know, so the rubber band snap that I think.
Going to happen is that that control of the US, the federal government over locals and Internationals is just going to contract until only those jurisdictions that elected the current president, listen to that, the federal government. And those that didn't just nullify everything and just take it to court and don't abide by it. And then the question is, how does that actually play out? Is that purely legal? Is there? Like National Guard stuff involved? Who's actually if anybody is prepared.
To actually shoot somebody over this and I don't know it's hard to say but I can see the conflict kind of Brewing. Alright, so that was lawful evil. Yes is chaotic. So let me let me get on that
top. Let me hop in. I don't know but we're at five hours plus now, so I think I would like to bring this to a close if I may the and we can also continue offline. A lot of these are subjects, but I'll skip the Angel Investing or hypothetically.
Investing in, let's just fast
answered for it. I'll give you my fast answer on it ready. So my fast answer is, I'm broadly interested in obviously crypto, obviously startup cities and network states, which I've talked about. But if I was going to cut into areas, I'd say crypto info by, oh, Robo, Astro and actually Politico. So cryptos obvious info. Actually. I think that thanks to walk - basically
Lee media, corporations have abandoned many niches Sports Illustrated is not Sports Illustrated. Teen. Vogue is not Teen Vogue. In fact, if you took these articles they basically all sound like the same. I can't even type stuff and if you just strip The Branding and you just had an AI try to distinguish it. I'm not sure you could because they're essentially all like on Twitter and they're all part of the same sort of conformist group now though with sub stack and with ghosts and with decentralized media, like mirror, I'm small investor mirror. What you're seeing is
Independence, have the means to go and effectively start their own Media company, but they also have an incentive to give a different message than the mainstream. So you're seeing Matt Iglesia, San Glenn Greenwald and Taibbi, and Barry Weiss, and Jesse single. And so, this huge IQ drain of some, of the best writers from these old Outlets, leaving them only with those who were incapable of writing originally enough to become Founders for
In Academia several years ago. There was a new level above professor and that was founder or investor. Because you can scrape for, like, a whatever hundred thousand dollar Grant from some stupid bureaucratic committee, or you can make a 100 million dollar company exit it. And then you're basically able to investigate whatever the heck you want for the rest of your life. You can build a lab out of spare parts, or you can build a future that you want like, you know, veggie upon day for example left Stanford and you know strength by fund. I recruited him two Aces. He's right.
And so, the level above professors founder, the level above Journal corporate Journal is now founder. And so info is very interesting because all these niches are going to be recolonized by Independence, that started from the beginning with a better brand because they've been abandoned the Sports Illustrated the Teen Vogue, Etc. So media, I'm actually much more interested in and I think you can make a profit in it, like the athletic, for example, shows you can it just that you can't see the same thing as everybody else. You need to have the people who are independently minded. That's like the new thesis.
A new wrinkle. I also actually think that India could become a media superpower and I know I say that and immediately people think, oh, what do you mean Bollywood Bollywood is going to become really popular. I'm not so sure about look, Bollywood is fine. But what I mean by that is a lot of Animation is done in India, like if you look at the end of tenet, a lot of the visual effects were done there. A lot of computer Graphics. There's something called sogdia, South Asian journalists Association, obviously, there's Bollywood celebs Talent exist there and the same way that China ascended, the ladder for making plastic stuff.
And iPhones to doing first party stuff. Like drones for DJI or WeChat. I think we've China's attack and Manufacturing superpower. I think India becomes a tech and media superpower and can potentially be like the bright Sun to the West Black Mirror because Western media is sort of declining in Revenue with technology. That's why they have this Black Mirror attitude towards it o-o. Everything is so bad. Whereas India is ascending the technology. All this stuff is just gotten better over. Their lifespan smartphone has coincided with a huge Improvement in living standards.
Hundreds rather than a collapse in their old media model. And so, anything is very underrated in terms of where that replacement media is going to come from. All the folks have just mentioned single and Barry. I like all of them, but they're like defectors from the old. I think we're also gonna get a lot of fresh blood from overseas and genuinely internationalize media because it shouldn't just be a bunch of Brando's in New York. It should be globally representative and, you know, people should be able to tell their own stories without being intermediated by some New York media Corporation rights. Okay, so that's info then,
Media, but it's also movies and our stuff so mention crypto. Info bio. So, telemedicine is now legal in the US. Thanks to actually some of the things pastoring covid wearing. But legal is doctors can do telemedicine across state lines that opens up the market in a big way. And it is possible now to use that to unlock medical tourism and start actually unlocking fee-for-service medicine, which is actually way better than Insurance. Like in general, you only want insurance for catastrophic things. You don't want it for routine, things. You don't pull out.
Out your car insurance to pay for gas or a floor. Mat. It's only for like emergency things and same with Healthcare. Your base going to lose money on everything other than emergency insurance. So it's telemedicine, its medical tourism. But it's also Quantified Self. It's all the true transhumanism, which is brain machine interface, and genetic engineering, and all that stuff. And then with Robo, I think that's also underestimated because being done on the industrial side of things, as robotic, agriculture manufacturing, farming retail.
Supply chain. All of the recent supply chain stress, I think is going to cause an acceleration of that, and it's also actually the way to erode China's manufacturing advantage in the medium to long term, just like everybody has a smartphone, you have a bunch of robots that start making things for you. And I think one thing I linked with hundred dollar robot arms, you can start learning this at home and just learning how, you know, a six degree of Freedom, arm works, and grasping, and all this stuff. Build your own robot Overlord, Astro. I think that's actually, you know, it's funny right after I think
That's that's coming down way and cost such a SpaceX is a whole industry is building out there and then Politico is kind of the startup cities and network States and the media and crypto stuff. But what is the next post-war order look like? And I think it looks like National stacks and neutral protocols. So neutral, Protocols are the crypto stuff. But National Stacks are not just an American internet, a Facebook, and Twitter and Instagram. And so on, not just a Chinese internet of WeChat and B dance, but a Indian internet, and a Brazilian and a Russian, and a
Knees, and this piece of this already like Korea has Naver and Russia as Yandex, but going further with that and having kind of equivalence National equivalence. So that local leaders are going to basic demand this of they can't get D platformed and it might be that you know, some countries have the scale to do it themselves like the US and China probably India or Russia others might be in groups. Like it might be a bunch of Spanish-speaking countries of do it together, but National Stacks, I think will be important and in collaboration with neutral protocols that sort of like domestic.
Evil versus foreign travel, domestic transaction. Communication versus foreign. So the type of stuff I'm thinking about in terms of Angel Investments and the thing that's there that you know, I could probably talk more about as a transhuman and stuff but that's under Fire is very important. This reversing aging that's bionics. It's pre machine interface, limb regeneration and bioelectricity. I think that is if in the 2010s what was underrated where crypto and China, I think in the 2020s what's underrated are India and you know, transhumanism it'll be more obvious by the end of the decade, but that's kind of
How I think about things, I have a offline we can talk about some scientific studies that you may be interested in supporting, so we should talk about that. Lest we forget 1729. Do you want to tell us what the latest and greatest is with respect to
1729. I've been kind of running it in like Alpha ashore. Last few months not posting that much recently because been kind of working on some new stuff, but on November first, I'm going to be announcing a lecture series with like weekly VR lectures.
And having them recorded. So if you can't attend and the goal is to basically build a community in audience in VR and start putting up the polished versions of what I've been working on. And so just, you know, go to my Twitter and you'll see the announced over there or subscribe at 73
nine.com. Perfect beautiful. And for those who don't know, just briefly.
The origin story
17:29. I look shorter. So it refers to the, it's sort of like the E equals MC squared of India just like equals mc squared came from. Einstein. The genius Western physicist, 70 Tryin comes from ramanujan, whose genius Indian mathematician and what it represents is the first number that the sum of two cubes in two different ways. It's 1 Cube plus 12 cubed and it's also 9 Q + 10 cubed and it's famous because when ramanujan was
Was very ill on his deathbed mathematician was a friends trying to cheer him up and he came by and he said, hey, you know, this taxi that I came in on was as very boring license plate at 1729 and ranjan said, oh no, you know, it's actually very interesting number it is, you know, the sum of two cubes in two different ways. And so it's something that everybody can understand, you know, you know, cubes and sums are. But it also illustrates that ramanujan was on, you know, a first-name basis with every number and it has a couple of other kind.
Things, which is it's about Indian and international and spending a lot of time in India now, but it's also Universal sort of like Google was both an American company and a global company. It's also something that has a number theoretic connotation because ranjan studied prime numbers and number Theory and that underpins cryptography and crypto, which is also something I think about. So, yeah, it's kind of a fun thing.
It's nice tie-in. So 1729.com people can check that out. They can follow you on Twitter at Balaji s Fair.
Remember correctly, b.
As in boy, is an alpha L. Sin. Lambda is an alpha G. Is enjoys in India. Essence am see. Okay, nailed in Kiev on. I'm not sure those all the call
signs issue said like Bravo foxtrot or something. I usually just make it up as I go if I need to spell it out in that time away. Balaji. Once again, I don't know how you sustain this level of output. It is remarkable, and I appreciate you taking so much time.
On the other side of the planet to have a very wide-ranging conversation. So thank you very much. Is there anything else that you would like to add in brief or requests that you'd like to make the audience? Anything at all before we close out this conversation?
I think that was great. I think that I'd like to see you all in VR. So come by.
That's right. That's right 179.com. Lots of exciting things ahead. Well, thank you Balaji for be listening. We will have copious.
Copious show notes that will need a small stadium of my own full of show notes. Experts, help, assemble everything. But we will have list to all of the books and people. And so on mentioned in this episode, you can find that at Tim dot blog, / podcast and I will probably create a short redirect. So you can just go to, Tim dot blog, /, B, to b, as in bravo. Nah.
Or two and that stands for Balaji second episode, of course, so, Tim do blog. / B2 will take you to all of the show notes and until next time. Thank you for tuning in. Be safe out there. Hey guys, this is Tim again. Just one more thing before you take off and that is five. Bullet Friday. Would you enjoy getting a short email for me? Every Friday? That provides a little fun before the weekend between one and a half and two million people. Subscribe to my free newsletter, my super short.
Newsletter called five bullet Friday, easy to sign up, easy to cancel. It is basically a half page that I send out every Friday to share the coolest things. I found or discovered or have started exploring over that week kind of like my diary of cool things it often includes articles and reading books. I'm reading albums. Perhaps gadgets, gizmos, all sorts of tech, tricks, and so on, they get sent to me by my friends including a lot of podcast, guess. And these strange, esoteric things end up in my
And then I test them and then I share them with you. So if that sounds fun, again, it's very short. A little tiny bite of goodness before you head off for the weekend. Something think about if you'd like to try it out. Just go to Tim dot blog, /, Friday, type that into your browser. Tim dot blog, / Friday, drop in your email and you'll get the very next one. Thanks for listening.
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