https://youtubetranscript.com/?v=HbOajBWY4bs
So hello, everybody. I am here with Robert Breedlove. Robert was suggested to me on Twitter. I kind of asked a question, who people thought I should talk to in terms of crypto. And his name kind of came up on top. He is the host of the What is Money show that tries to explain this Bitcoin to stuff. He has a past in finance and in crypto. And so it seems like he’s the guy to go to. And he he’s already told me that he thinks that there are ways to think about this and to understand this in a symbolic way with a symbolic lens. So I’m really looking forward to finally diving into Bitcoin and crypto with him. Thanks, Jonathan. Glad to be here. All right. It’s my it’s great to meet you. And I’m really looking forward because I have like, let me just say at the outset, which is that I have a I have a kind of a suspicion about Bitcoin. And I can’t explain I can’t totally explain it. And it probably has to do with my experience, which I kind of related off camera before a little bit with you, which is that I was involved. I wasn’t involved. Someone that I trust and that I respect set me up with with a crypto account, which was called Steams, like this attention coin. And, you know, then you kept telling me you need to you need to make sure you’ve got a whatever it’s called an account where you like a wallet account. And I didn’t know what he was talking about. I just kind of followed the steps, set this thing up on Quadranga. And then I lost everything within a day, which because the CEO died. We’re not even sure some people think he pretended to die. So all the money just vanished. And what’s been interesting is actually, I didn’t really get involved in the proceeds of that. But I started getting emails from lawyers about, like, you know, disinterring the corpse and trying to figure out if he was really dead. It was really it was really fascinating just to actually follow how kind of mad and insane the whole discussion got. And I’m noticing, like, all the craziness with Dogecoin and just how mad it is in terms of almost like a meme coin, which is happening. So all of that is making me wonder what the heck is going on. And also, I’m trying to kind of grasp to understand and try to be as open and as positive as possible to try to understand what is going on. So hopefully you can help to shed a light on what crypto is and what Bitcoin means and the symbolism. Yeah, that’s what I’m putting on your plate there, Robert. No, no pressure at all. No, I think you’re you’re drawing attention to one of the main elements of this crypto asset space, which is we have Bitcoin and then we have everything else. And everything else, especially in Martin, like right now we’re in a bull market. So Bitcoin is increasing in price. Everything else is correlated to Bitcoin. So it’s increasing in price. That creates a lot of noise and confusion. It draws in a lot of new people and capital and attention. And you get this confluence of just false narratives, I guess you would say. So the one you mentioned, Steam, that was intended to be a decentralized social media tool, I believe. And it’s OK. It’s a good theory. It’s good on paper, but it doesn’t have any market proven utility. So for instance, the last time we were in a bull market, this is the tens of running four year cycle. So this was 2017. There were people just putting up a website, a white paper, a few pictures of advisors, and they would go and raise thirty million dollars worth of Bitcoin and Ethereum in five minutes. Like it was the fastest and most rich capital raising environment probably in the history of humanity. You can literally just put up a website and raise a ton of money. So in this world, the way I like to distinguish between them is that we have Bitcoin, which is this innovation akin to the internet itself. In many ways, you can think of it as the latest layer in the internet protocol suite. So the internet evolved in layers. Some of them you’re familiar with, HTTP, TCP, IP, etc. There were essentially, it’s a layered protocol for moving information without permission across space and time. But the one thing that it lacked was the ability to move value, economic value across space and time without permission. That’s what Bitcoin adds to the internet. So Bitcoin fits right on top of the internet. It is part and parcel of it. All of these other coins, people call them alt coins more pejoratively. People call them shit coins. They are essentially copying the code of Bitcoin and trying to use it to either compete with Bitcoin directly as money or to disintermediate other marketplaces. So the line that I draw as I say Bitcoin is the internet. All other alt coins are liquid venture capital subjected to little if any due diligence. That’s also part of the internet, isn’t it though? There is an aspect of the internet, not necessarily there is the dark web, but not necessarily just the dark web, but just this kind of madness of information. The idea that because everything is so decentralized, the lack of authority means that multiple narratives can fragment indefinitely. Because you don’t have an authority structure, you don’t know what’s real and what’s not. You don’t have a way to legitimize something, even a business online. It’s hard to know. You see someone selling something online, how do you legitimize this transaction? It’s hard to know. Yeah, that’s a great point that information itself suffers from unlimited replicability. It can be replicated at an infinite amount. So it’s hard to find source of truth in the digital world. That’s another thing Bitcoin has done. It’s established a proof of work money, which means it’s a money premise on sacrifice. So it actually brings qualities of physical reality, like final settlement, which is very important to money, into digital reality. You hear this term thrown around a lot, blockchain, crypto assets. It’s the only market proven use case for blockchain is Bitcoin. Everything else is just, again, venture capital. It’s just an idea. So I think it’s very important to distinguish between the two. The other bright line between them is that Bitcoin is the only money in the world that no one can control. You could say gold fit the bill historically. That’s why gold was selected as money. It was kind of an apolitical money that no one could artificially increase the supply of. So it was a reliable store value. Bitcoin has now become that for digital space, whereas all of the other altcoins are controlled by someone, whether it’s a developer community, an executive board, or anything else. They have not achieved this critical property of decentralization that’s really important to the power structure of money. The idea is that Bitcoin, it by its own process, gets controlled by its own reality, let’s say, or its own. No one can clamp down and decide how many Bitcoin there are. It’s part of the very process of Bitcoin to lay itself out on its own, let’s say. Trey Lockerbie Yeah, there’s this path dependent emergence that Bitcoin’s gone through, where it was released as the first of its kind into the world. It was the first and only crypto asset. It was considered a joke initially by most people. They just thought it was a joke, which gave it time to grow organically and gave its mining network and developer community time to grow organically. It gave time for its rules to ossify. It’s a trillion dollar market, and for all intents and purposes, there’s no way to stop it or disrupt it. The other thing that is important is that it’s perfected the properties of money. These other coins that are claiming to be better in one way or another, they don’t actually address the five properties of money, which are divisibility, durability, recognizability, portability, scarcity. Bitcoin has essentially taken all of the properties that make money good and perfected them. Satoshi, in doing that, he left no design space left for another crypto asset to come and disrupt Bitcoin. Just to talk back to your particular circumstances where you got knocked over on the exchange, that’s another area of common misconception. People hear about all these exchanges getting hacked and all these scams and people launching these coins and disappearing with the money, and they conflate all of that with Bitcoin. They think Bitcoin is getting hacked. They think Bitcoin is stealing their money, and it couldn’t be further from the truth. Bitcoin is operated with perfect fidelity over 12 years. It’s grown already to be the most secure computing network in human history. Never been hacked. There’s never been any unexpected inflation, no double spending. But everything else in and around the space is the scamiest, dirtiest space in the world. It’s hard for people, I think, to disentangle the two. We have this world shattering innovation that’s disruptive to gold. Gold is a tool we’ve been using for 5,000 years as money. There’s a 12-year-old digital disruptor emerging against gold, but it’s surrounded in this cloud of scams and people trying to just get rich quick schemes, I guess people are fiddling. So when you say that it’s never been hacked, it’s never been… What is it about the system which makes it that way? What is there which makes it impervious to these problems? It’s a beautiful composite of design and incentives. So on the design side, it’s a very simplistic set of computer code, really just designed to do two things, which is create a new block of transactions every 10 minutes and maintain a supply cap of 21 million. So it’s the first asset in human history we know has an absolutely fixed supply. It’s an incorruptible money. It’s a money that no one can change. There’s a bit of a rabbit hole there, but it’s essentially the corruption of the money has been the chosen attack vector for all state powers throughout history. They always clip the coins, they always inflate the bills. It’s free money. It’s this temptation that no one has ever been able to resist. And for the first time in history, we have a… And gold was great at that historically because no one could just artificially increase the supply of gold. But once we abstracted gold into paper currency, people started to manipulate gold as well. And central banking today, they own about 20% of the gold supply and corrupt the world by doing so. Bitcoin is this emergent, incorruptible monetary base layer for human organization. And it’s something unlike we’ve ever seen. And the incentive side to it, and this is the… It takes a bit of time to get your head around it, but Bitcoin essentially incentivizes everyone who interacts with it to operate in its favor. So if you’re mining Bitcoin, you’re expending energy to secure the network and you’re being paid in Bitcoin. If you’re buying or selling Bitcoin, you have a money that is becoming increasingly scarce over time. So its supply is diminishing. So for instance, in the past 12 months, we’ve been producing US dollars for 108 years. In the past 12 months, one out of every 100 billion in market cap, they’re pretty much unstoppable. Bitcoin is already 10 times that size. Bitcoin is a trillion dollar market today. So it appears that it is one of the most significant innovations of our lives, possibly even bigger than the internet itself. All right. So one of the things that, because I’ve been thinking about this, trying to figure it out, because obviously I don’t understand the technical aspects of it, and I probably never will, which might be fine. One of the things that makes something valuable, like you name the five aspects of money, and what was surprising to me that I didn’t hear in that is something like trust. Because trust is something which is beyond the system. And a trust is responded, like in a monetary system, in a traditional monetary system, trust is related to authority. That is, I trust in the money system because I recognize the authority. That’s why there was a stamp of the king on the coin, is because the stamp of the king tells me that this is what it says it is, right? And that this has value, let’s say. And so one of the things that happened with Bitcoin in the past 20 years is that at some point it dropped to nearly nothing, right? Like there was a massive crash. I don’t remember what year it was. It’s been through four market cycles, giant run up and giant crash. And so that, to me, like those extremes, although I can understand that they’re maybe not as bad as those other cryptos that you talk about, like these kind of crap coins or whatever you call them. It seems like the fact that it doesn’t have authority, that in a moment of panic, then it can become nothing. Like it can go from everything to nothing. I don’t know if that makes sense, that it doesn’t have meaning. It doesn’t have meaning. It doesn’t participate in a web of meaning. So the trust factor of money, I would argue, it actually coalesces to those properties. So the very nature of value itself is value is the relevance of a thing to our goals, right? Whatever closes the gap between my wishes and their fulfillment is valuable to me. Anything that blocks that process is destructive to value. Anything that is irrelevant is just value less. So values is inherently subjective, qualitative, and it’s not going to be a good thing. Quality of existence, quality of being, and we look at the world through a lens of value. Things to us are either obstacles or tools getting us on our way or blocking us along that path. So historically, gold was the tool that best satisfied those properties of money. And that’s why over an entire history of entrepreneurial experimentation, the free market selected gold as money. It was the most divisible, durable, recognizable, portable, and scarce thing in the world. So we could say gold earned the trust of market participants without any authority being involved whatsoever. You could say the authority of God, perhaps, right? Gold was governed by the laws of chemistry and nature such that its supply could not be artificially increased. It’s essentially indestructible. So it had a very high stock to flow ratio, which is another way of saying it did not inflate quickly. Its supply increased about 2% year over year. So if you parked your wealth in gold, you knew you could trust. You had a lot of confidence that your wealth would only be inflated about 2% every year, no matter what anyone tried to do, right? No matter what law government passed or anything that happened in the sphere of politics and human affairs, nothing could change that. So it was a trusted base layer. So I don’t think authority, and that would be my point there with gold, is that you don’t need authority to establish trust. What you need is time and experimentation, right? What tool solves the aim for people? And the aim with money is to move your economic value or wealth across space and time. So what holds its value across time? That’s what’s first and foremost. And then secondly, what can be used to transact that value across space with other market actors? One of the things gold has that Bitcoin doesn’t have is that you can use gold to make a crown, right? You can use gold to make an altar or you can use gold to make a throne. Which actually marginalizes its monetary use case, I would say. Because dedicated to something higher. That’s one of the reasons why I’m saying that that’s how it gets its authority. Because it’s shiny and it gets dedicated up, or it gets offered to God, you could say. So this is correct. This is how gold… So another way to understand money, and by the way, this is why the show is called the What Does Money Show? Because this question has a million answers. Money, another definition of money, is that it is the most exchangeable or tradable or liquid asset in a trade network. So if you go into a prison today, very often they use cigarettes as currency. Right? That’s just the most tradable asset that they have access to. And it best satisfies those properties. So it is money in that trade network by definition. So gold emerges as the most tradable thing because it satisfies those properties. But it was only ever traded in the first place because it had industrial use. Making a crown, building an altar, jewelry, dental, electronics, whatever this is. And still today, gold has a market cap of like 200 to 20,000. So it did a 100X in two and a half years. It then came down 85% over the course of a year to 3,500. So now we’re in another bull market. It’s close to around 60,000. So it’s up 20X off of that low roughly. And we would expect this bull market to peak somewhere later this year. But this volatility is occurring. Volatility itself, it exists. I’ve said that volatility is truth. So we say the universe is pervaded by entropy, right? Everything’s changing. Everything’s tending towards increasing disorder with these little pockets of order here and there. That is expressed as price volatility in the marketplace. Bitcoin is the fastest growing asset in human history today. It’s gone from 1 trillion in economic value today. That path could not possibly be linear. It’s been driven by its halving cycle. So every four years, the new supply issuance of Bitcoin gets cut in half. And if you just hold price as supply and demand, so if you’re holding demand constant and you cut supply in half, what happens to price? Price gets a lot of upward pressure. And it tends to overshoot. It’s actual value you could say, which is, let’s define price as an appraisal of value, right? So you could say value is tracking some fundamental utility of Bitcoin as money, whereas its price is just what it’s trading for in the marketplace. So as its value increases over time, its price is overshooting and undershooting that value along the way. That is the volatility of Bitcoin. And it does, the other thing to that point is this is true of all assets. This is not just Bitcoin. Yeah, but not to the levels that we’re seeing. Right. Amazon’s more volatile, been more volatile than Bitcoin in its early years. Amazon drew down 94% on the dot com bus. It had double digit drawdowns every single year, the past 20 years. It’s up 45,000% off its lows. So volatility and market cap are inversely proportionate. And this also applies to Bitcoin. So the bigger Bitcoin is becoming, the less volatile it’s becoming over time. But this narrative, by the way, is being pumped so hard by mainstream media. Bitcoin is a Ponzi scheme. Bitcoin is too volatile. It is blasting from every channel on mainstream media. But it’s just, I would argue these media channels that are controlled and serving the interest of central banking, propagandizing against a technology that is disruptive to their business model. Yeah. So here’s the question. So here are a few questions that I’ve got when I hear what you’re saying. And so there are two things that come to mind. One is, so for example, one is the problem of the internet and the problem of this potentiality. So one of the things that happens when something presents itself as a wild potentiality, you know, and the internet is an example of that, where the internet presented itself at first, and still a little bit now, as infinite possibility, right? No borders, no authority, you know, total, almost anarchy of discussion, anarchy of possibility, anything can happen, anything is possible. And that was that that’s kind of how it was presented to us right in the late 90s. And now we could say the opposite of that. We could say the internet is the system of control, the most total system of control that has ever been invented in human history, that that there are that that social media, these systems that are out there are able to read your thoughts, are able to predict your movements, know everything that you’re going to do everything you’re thinking, and are trying to direct that ideologically in ways that has never happened in the entire history of humanity, right? And so what I’m trying to bring about is that the idea of like pure potentiality, what it calls for, it’s almost like it’s calling for a master. And so it’s like, if you, the real world is like a balance between potentiality and actuality, like the real world is this kind of this ebb and flow, this like normal masculine, feminine, these kind of relationship between opposites. But when you present something which is like chaos, then it’s like it’s asking, it’s creating a tantalizing thing for order to kind of clamp down upon. So it’s kind of like a riot, a riot. What comes after a riot is police, and not just regular police, riot police, that come with guns and with things that they usually don’t use, right? If anarchy breaks out, then more authority is put on it in order to clamp it down. And so you could say you don’t like that, which whatever, it doesn’t matter, it’s still going to happen, right? Because that’s, it’s almost like it’s part of the system. And so when I look at what’s going on with crypto, it’s weird, like my intuition, and I may be wrong, because I don’t understand the technical part of it. But when I look at what’s happening with crypto, I see, I intuit that there’s also a movement towards a hyper controlled world currency that will be a totalizing currency. And that if you don’t use that currency, you won’t actually be able to trade at all. And so it’s not right now, it’s not here, it’s not totally there. But there is this, it’s like, it’s like, there’s an intuition that I have that I can see it on the horizon, just like I could see in the internet, you know, even 10 years ago, I could see that this is moving towards a system of control. Yeah, first on the topic of free speech, the internet promised to be this great democratizing force, giving all of us the ability to just exchange ideas freely, which in a lot of ways, it’s given us many tools to that effect. But it’s also been monopolized, right? These platforms are controlled, that we have the emergence of data monopolies, the fang stocks, etc. that monetize our data and our attention. Bitcoin, there’s a promise in Bitcoin, and this hasn’t completely emerged yet. But because Bitcoin is an immutable protocol on the internet stack, there is the possibility now, and we’re already seeing it at higher layers, in both what’s called the lightning network, which is a layer on top of Bitcoin and applications built on the lightning network, particularly one I’m thinking of called Sphinx chat, that enable unstoppable free speech and social media tools. So you can actually anchor these tools into the Bitcoin blockchain such that they cannot be censored. So the just let’s just say, on the horizon, is this glimmering hope of an uncensorable internet built on top of Bitcoin. So that’s one great feature that’s still kind of on the horizon, but possibly emerging. I would argue too that Bitcoin, it actually introduces a disciplinary force to the chaos of the internet. That’s actually why proof of work was originally invented. It was invented to inhibit email spam. So instead of just spamming every email address in the world with countless solicitation or marketing or scam emails, this system of proof of work created a mechanism by which each one of those would cost you just a little bit, so that would really disincentivize spam. So it would incentivize, it gives people that want to communicate via the internet, it gives them skin in the game, there’s a cost associated with our communication. So their communications become more authentic and honest. So I think Bitcoin can introduce that to the internet by actually forcing by making messages uncensorable, but also causing, allowing people to be able to gate, you know, what they receive, and then also force people that want to communicate to pay up, basically reduces spam. And then I would say that your intuition on the movement towards one world totalitarian or authoritarian currency is very likely. I think that race has already begun between kind of China, the US and the extension of the US, which are the IMF and the World Bank. They are racing to have a countermeasure against Bitcoin, because Bitcoin is, it’s perfect. I’ll use perfect in quotation marks, because nothing’s perfect, but it’s perfected the properties of money, it’s disrupting gold. And with it, their institution of systemized time theft, which is the central bank, you know, we hear about all this money in the world being printed, very few of us understand that no new wealth is being created as a result of printing that money. We’re just shifting the claims on capital from one set of hands to another. So it’s systemized theft at scale. Central banking is at best, a misguided institution at worst, it’s the greatest criminal enterprise in human history. Yet no one’s talking about it. No one understands it. It’s above politics, by the way, it’s politics is the puppet show that central banks put on to distract us from the truth. And I would say that the countermeasure that they do take against Bitcoin, whether it’s the IMF, or the Fed coin, or whatever it may be, there’s going to be a money that’s forced upon us, they’re going to cancel physical cash, they’re going to say you have to turn in all your physical cash to get us fed coin. And you’re going to let that money will live inside a walled garden. And they can turn it off and they can turn it on, they can choose what you spend it on. If they don’t like what you’re saying online, they could turn off your money completely. We’ll move into this world of something much more like a China social credit score system, where if you’re not playing friendly with the state’s ideology, they will dial up or dial down your ability to use money, travel, everything. And in that world, this Orwellian world of total censorship and control, I think Bitcoin is the only answer. It’s a money that no one can control, no one can censor, no one can weaponize, right, to steal from others. So that’s the big battle here. It’s a battle between authoritarianism and the free market. So the image of Bitcoin and the image of crypto, I guess, is like it is in a way a stampless currency. It doesn’t have the stamp of authority. It’s dark in the good and bad sense, right, in the sense that you can’t know. If you have Bitcoin and you have it, like you said, then you’ve got it. That’s it. No one can take it from you, right, unless they’d actually take the number, like your whatever code or whatever. I don’t know how it works, but whatever it is that they would physically steal from you, like once you’ve got it, then you’ve got it. So because it’s dark, it also has a negative aspect in the sense that you don’t know who owns the Bitcoin, right? And so what happens in 10 years when all of a sudden we discover that the Chinese government and the central banks actually own 85% or 90% of Bitcoin, and we didn’t know, but now we find out because we don’t know who owns it. The Bitcoin itself, because it’s those who own it who will have power. So what’s being set up is like a secret elite of power that we don’t know who it is. There’s this massive amount of value that exists in the dark and we don’t know who has it. And so what happens when we discover that it’s actually the same agents that we want to get away from that actually own the most of Bitcoin? I think it’s pretty unlikely that they could ever own 85 to 95%. I don’t know, like I’m just saying a number. I mean, the only way they could do that is you’d have to monetize all the central bank balance sheets into Bitcoin. So Bitcoin’s market cap would be 3,800. And now it’s grown 20x roughly in the 14 months since. So again, it’s all about this ratio of how many dollars, the rate of production of dollars, the ratio of that to the rate of production of Bitcoin. That’s what drives the price of Bitcoin. So if we have these short term economic shocks, Bitcoin can suffer. But then on the backside of that, Bitcoin is going to expand a lot as we print more dollars. And just to answer that, the one last point of your question before was, you know, Bezos is a great example of an amazing entrepreneur, right? He’s created so much additional productivity for the world. That’s why he’s rich. Like, we can strip out some of the arbitrage maybe where he kind of skirted state taxes and a few of these things, right, because he’s operating with a digital network versus a physical network. But overall, that’s what entrepreneurship is. It’s people going out into the world, solving problems, selling those solutions into the marketplace. Everyone benefits as a result, we become more wealthy and more productive as a result. On a Bitcoin standard, where I said earlier, the fiat, there’s a lot of strategies related to getting near the fiat currency spigot to get wealthy. On a Bitcoin standard, all you can do is be an entrepreneur. That’s the only way you can earn money. You can invest intelligently, or you can go out and solve problems for humanity. So I think we’ll just unleash the power of human ingenuity on all the unsolved problems specifically related to the environment. And we didn’t even get into energy, which is a whole nother very interesting topic with Bitcoin. If we want to decarbonize the atmosphere, we have the technology for that today. The problem is that it’s too energy intensive. Bitcoin mining is a perpetual bounty program for entrepreneurs to seek out cheaper and stranded energy sources. So we now have this global incentive to push energy costs lower, right? It will in turn make decarbonization more economically viable and desalination, right? Because water is another issue. But hey, if we can get desalination cheap enough, we can drink ocean water. So there’s this whole, again, this vortex of incentives that are referred to as Bitcoin as I don’t know what else to call it. It’s this brand new game that’s purely voluntary, purely transparent. And I would argue, I mean, I guess it’s still out for debate, but I would argue it’s purely a net benefit for humanity, like the trade offs that it makes optimized for individual sovereignty, individual optionality and individual freedom. And I think instilling those characteristics into market actors is what creates the best outcomes for all. Yeah. Look, I will definitely think about it. I appreciate your time. And I would say people go into the comment section. I’m learning about this. And so I will definitely be paying more attention to the comment section and seeing your thoughts about what Robert is talking about, your objections to my objections. And we’re gonna keep this discussion going. I’m gonna keep thinking and I probably will be talking about Bitcoin a few more times to try to wrap my head around it as well. So thanks for your time, Robert. I really appreciate it. Yeah, glad to be here. And so where can we point people to in terms of seeing what you’re working on? Yeah, I’m on Twitter at breed love 22, it’s BR double E D L O V E two two. And then the YouTube, the sorry, the website for the podcast is what is money podcast.com. And it’s also on YouTube. And I encourage people that’s why again, named it the what is money show. It’s like, you don’t have to trust me. I know I speak emphatically about this. I’ve been studying it for five years nonstop. I feel strongly about it, but trust yourself, go out and ask the question. What is money? And I promise you, if you follow that question deep enough, you’re gonna unveil a lot of very interesting truths about the world. Yeah, especially now. And I think it is definitely even in terms of symbolism, understanding what is money, what is credit, what is interest, all of these things are are subjects that I that I’m I definitely want to put more attention into because they’re crucial to understand and to to see where we’re going. So thanks for thanks again for your time, Robert. Yeah, thank you so much for having me. All right.