WBD201 Audio Transcription

Beginner’s Guide #16: The Future of Bitcoin with Jeremy Welch

Interview date: Friday 6th March 2020

Note: the following is a transcription of my interview with Jeremy Welch. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

In Part 16 of the Beginner’s Guide to Bitcoin I talk to Jeremy Welch to discuss the future of Bitcoin. We get into how governments and central banks will react as Bitcoin poses more of a threat, and if we will see hyperbitcoinisation.

“The thing that I can definitely predict; in 25 years Bitcoin will be around.”

— Jeremy Welch

Interview Transcription

Peter McCormack: Jeremy, how are you man?

Jeremy Welch: Doing well Peter!

Peter McCormack: Good to hear from you. I've been doing this beginner's guide to Bitcoin. It's gone done really well actually, very popular. The average show downloads are pretty high on this. People have really enjoyed it, and I've covered everything. I started with Andreas where we did why we need Bitcoin. I've covered the technical with Shinobi, I've tried to steer people away from alt coins with Nic, but 15 shows in now and I've got two to go, and one of them I wanted to cover was the future of Bitcoin.

I had to do it with you, because I don't know if you remember the show where we did, I think it was titled "Bitcoin Changes Everything", I just felt like you were the right guy for this. So are you ready for this?

Jeremy Welch: Awesome! Yeah, let's dive in. There's a ton to cover.

Peter McCormack: Loads to cover and I know we're dealing with the world of opinions here. It's subjective and predictions are hard, but still, I think it might be useful to tell people a little story when I met with you and Alex Gladstein when we were in San Francisco, and you started telling me about all the books you've been reading. You're always thinking about the future, aren't you, and predictions and what's been happening. The way I see it is that you see where Bitcoin fits into this future.

Jeremy Welch: Yeah, so the future of Bitcoin is really embedded in a kind of bigger set of trends, bigger set of system changes, and "Snow Crash" is a great conception of where this future could go. Neal Stephenson himself, the writer, has a few other books "The Diamond Age" is another one too, but beyond that, I think it goes a little bit beyond sci-fi into something that just doesn't even look like anything that's in a book or out of a book. It's just something totally new and totally unique and Bitcoin represents something, a lot of old ideas, in terms of hard currency, but with a lot of new ideas, in terms of computation and predictability, and auditability, opensource tech and the future that comes out of that is something that's pretty exciting.

So I think that's what we were touching on in that conversation with Alex, is just that both the human rights implications and also just the kind of economic implications, and then the political and societal implications. So there's a lot to talk about on the technical side of Bitcoin, but I actually think the next few years of Bitcoin are going to be boring and that's actually a good thing. It's a good thing that things are boring. People are used to Bitcoin, there's a lot more knowledge around Bitcoin, there are some major changes coming, technical changes coming even this year.

So we've got Taproot coming up and Schnorr signatures, and some things like that, but I think the more interesting thing if you're talking about the future of Bitcoin, it's really going to be a story of Bitcoin being consistent and boring and stable, and as a technology, but then the world is changing around it, right? With Bitcoin being that stable, how does the world politically, societally, everything else change as a result of that kind of rock of stability?

Peter McCormack: One of the things, it's difficult to just look at the future without considering the past and I think for me, with regards to you, it'd be good to understand where did it really click for you because we all have that kind of first time we hear about Bitcoin. For me it was at Silk Road and I started using it as a currency, but I would say it probably three to four years after that where it actually started to click to me about the bigger societal impact this could have. Where did it really click for you?

Jeremy Welch: For me, I would say it's been an ongoing thing and this is how I view several different areas of technology. The initial implications happened for me years ago. I was in New York City doing tech start-ups in 2010, 2011. I dropped out, I had left Duke University a couple years before that where I was studying political philosophy and interested in some of these questions of capitalism and systems theory. I went back to Duke, I went back around... This is 2012, 2013, 2014. While I was there is when I really started digging into Bitcoin, found it and read about it and then really started digging into the potential implications.

I think that I had this context, I was in New York City during the financial crisis in 2009, I saw that first hand. I wasn't working in the financial industry, I was working in the ad tech industry, but I learned a ton of things around how the kind of big tech works at that time. Then I also had this experience where most of my friends at the time coming from university, a lot of them were working at these banks and I heard a lot of back channel stories from them. Then all of that then compounded to... I had this break because we sold a company into Google. I stayed there a year, and I left, and I went back to Duke to finish my degree.

I took a more of an independent study path where I was able to just go hang out with a lot of really smart people and also just study things that I wanted to. It was during that time that I really dug in. It was during that time that I really started to understand the potential implications, there's some stuff around even like the Triffin dilemma from very large problems with the global financial system that it has these implications on. Then there's also these kind of technology and local trust problems that has these implications on, but a lot of it started to click then.

Then I would say that the last really six years has been... That's crazy to say! Over the last five, six years has really been a kind of process of proving out that those things are real. The initial kind of learnings and the initial realization happened a while ago that the potential is there, but in any kind of technology, in any kind of system, you have the understanding the potentials of that system and then you have it actually playing out and realizing that potential.

I would say the last especially three or four years has been a lot of very fast realization of potential. That's where, my view that a lot of these things are already hard set, so that's why the Bitcoin itself is going to be kind of boring, but everything around it is going to go faster and faster and faster in terms of how things change.

Peter McCormack: All right, let's go fully big picture then. What are the real potentials here? How far can Bitcoin take us? How far can it go? When answering that, it would be good to answer where you think we are in the lifespan of this? What are the things that you've seen the key milestones that you think we've achieved so far?

Jeremy Welch: I would say that one of the biggest key milestones is just broad-based recognition of Bitcoin. Whether someone's pro or con, they're at least aware of it and just the awareness itself gives an opportunity for that awareness to change from negative to positive not being aware of it and not being aware of the basic properties means that you're still lost in this world of thinking that something like this can't even exist.

Peter McCormack: Sorry, just to interrupt to you, I was at an event recently, a Tone Vays one, I was moderating a panel and it was called "The Road to Mass Adoption". One of the things I said is that I think we're already at mass awareness and the reason I said that is everywhere I go when somebody says to me, "oh what do you do for a living?" "I have a Bitcoin podcast", and almost never does somebody say, "what is Bitcoin?" Everywhere I go, everyone I spoke to has heard of it.

Jeremy Welch: That's exactly right! Everyone's heard of it. The next step here is that we have to get people from just having heard of it to actually believing in it and using it. We may be in a case to where most people in the world don't use Bitcoin in a direct way. Maybe they use some other technology that's built on top of it or maybe they have like some limited savings around there or maybe one of their family members actually has some savings in it, and then, they themselves use another currency, but everything will somehow interact with it going forward.

I think that that's the view is like the awareness is there. Then over time, we're going to go through all these tests, and more and more of the global system, financial system and kind of social systems are going to have more and more dependence on Bitcoin.

Peter McCormack: Are you amazed it has survived and why do you think Bitcoin is so resilient, because I was looking through some of the things that have happened to it, from trusting the technology to things like government crackdowns, we've got Mnuchin now hovering around it, we've had China ban it, we've had things such as the Silk Road and Mt. Gox. It is still here! It's still chugging away every 10 minutes producing blocks and despite all those things, are you amazed by its resilience or is that something you've come to expect now?

Jeremy Welch: I think that I am amazed by it. I think it's a similar thing to flying in a plane now and you fly in a plane all the way around the world. You take off, you land, you take off, you land. It's become such a routine thing now that we don't even think much about it, but if you step back and think, "wow, I'm flying through the air hurtling through the air at hundreds of miles per hour," and very skillfully, carefully landing, it's a remarkable thing. I think that we're at this point with Bitcoin to where if you had asked me even three or four years ago would we be this far along around awareness, this far along around even adoption and other companies building on top of it, I would have told you you're crazy.

I do think that from that perspective, it's blown out my proportions or my expectations, but I think that everybody's so used to it now that we still have a long way to go. On the flip side, I also think again that we're just getting started.

Peter McCormack: Wow, so just getting started! One of the questions I often pose to people when I'm driving around interviewing is like, what does the purpose that Bitcoin serves? I tend to see two camps. There are those that talk about it taking down the central banks and being a brand new financial system and there's other people who talk about having kind of private money.

I know it serves both, but I also get the feeling that if you prioritize one, it changes the approach there. For example, if it's taking down central banks, I think the focus therefore is adoption and focusing on UX, making sure people can get hold of Bitcoin and using it easily. Whereas if you focus in on privacy and censorship resistance, you maybe will tend to focus on other kind of tools. It changes the direction of things. Where are you in this kind of spectrum of the way where you think Bitcoin is focused?

Jeremy Welch: I think that the reality is that many of these things are going to co-exist more than they are. One is just going to rapidly usurp the other. Central banks will continue to exist for, I think a long time. I think that they will evolve in their role and even Bitcoin itself will be a tool in their kind of tool chest. But what will happen is you now have, because it is a global censorship resistant form of money payment system, you will have these pockets of... You can think of central banks as being a part of a kind of bigger state organization system that governs people, governs businesses, governs things, governs borders, governs military.

Bitcoin is this piece of technology that can now be integrated into that or it can stand in opposition to that or people can build a totally new type of system until a new type of government on top of Bitcoin and utilizing some of the key pieces, key features of Bitcoin and that new organization can stand in opposition to the organizations, but the general point there is that I don't think that central banks are just going to go the way of the dinosaur. I think that they will evolve. It's just if they hold their current path and they don't change and they don't evolve, then the central banks that just hold their current path are going to die, but the ones that do evolve even small ways will survive and will continue to grow.

These kind of totally new types of organizations more natively to Bitcoin will probably survive the best, but it's still to see what that may look like. But we're seeing the early days of that, but it's going to take some time for this to play out again. That's why I say we're at the beginning of that.

Peter McCormack: How do you mean we're seeing that play out now already? What kind of things are you seeing?

Jeremy Welch: I think that probably the best example of that may actually be Libra. I think Facebook gets a lot of flak for trying to build Libra, but I do think it's if you look at what they're trying to build, I think that Libra actually has kind of... Maybe the way to put it is like the best approach or the best mix of what kind of future central bank or... Because it's programmable and because they're trying to build APIs around it, because it's going to plug into the Facebook system, it's not as easy to just say that it's like a central bank because it is going to be this currency, but it's at least planned to be more open in both a computing system and a monetary system.

But I just think that Libra captures the same attitude of what a central bank captures and the same directives to where Bitcoin is something different. Bitcoin's just going to exist, and it's going to exist even regardless of whether a central bank or a state human government system wants to utilize it or not. It's just going to exist and it's just going to be out there. Whereas Libra is this kind of digital money organization and this digital money approach, but they are talking about that they're going to have a basket of currencies, and Bitcoin could be a part of that, right?

If you want to look at the stuff that's already happened or the adoption that's already happened in the early part of the curve, then a very easy example is Libra launches. There's a digital currency that's now a part of two billion Facebook users lives, and Bitcoin ends up being part of that basket of currencies. That is a very real possibility within the next year or two and, I think, is a more near-term possibility than say, the US government central bank somehow utilizing Bitcoin.

But we have heard I think it was the maybe the Australian Central Bank, one of the other central banks from another country, I think it was Australia, had actually talked about maybe even factoring a Bitcoin as a part of their asset holdings. Maybe we'll see some of the major central banks actually use it as an asset too, but we'll see.

Peter McCormack: And do you think that the central banks that have got the most chance of survival and then looking at the ones that you think might fail, what does a failing central bank mean?

Jeremy Welch: A failing central bank looks like a failing state. A central bank is just part of the state apparatus in which a country operates and the goal of a state should be to operate for the benefit of its people, government for the benefit of its people, its citizens, than a failing state, and you can go down a list of countries that have inflated away their purchasing power, their currency. Congo even Venezuela, there's just numerous cases now and Venezuela's an interesting case because they've now got the Petro, so they're trying to play this game already.

Maybe it's still in the early stages of that, and maybe they see some success with the Petro, but I think the Petro is actually an interesting case because effectively what they're doing is they're playing the digital currency game, but with the gas as a backing, with their petroleum as a backing, and they called it the Petro. You can see this world starting to emerge to where they even talked about potentially a US digital dollar, but I think that will be a little bit further off. Who knows? Maybe some central bank will even try to go back into a gold-backed currency at some point. I think that no matter what, the next 5 to 10 years, if you look at any global reserve currency, no reserve currency has lasted more than about 60, 70 years if I'm remembering correctly.

We've had a series of these global reserve currencies, and the dollar has been a reserve currency for quite a while now. We're actually past those numbers. There are ways, there might be other cards that we can play, but at least right now, I think that our reserve currency status is at risk. So other countries are also going to be trying different things. A Bitcoin-backed central bank in some capacity may be part of that, a digital currency from another corporation that somehow has Bitcoin at play could be a part of that.

A resource-backed central bank, perhaps Venezuela as an example of that with a digital dollar like the Petro may be an example or maybe a third version of that, but what we have today with the US dollars, where effectively almost kind of Petro and military-backed, it's just that our alliance with Middle East, and the might of the US military is what's backing the dollar.

Peter McCormack: You have countries, I was in El Salvador recently, they're dollarized. Everyone uses the dollar, there is no local currency that people use. They're essentially giving up central banking control of a currency in the country, they're relying on another country. Is it a big leap to move to a country that does that with Bitcoin?

Jeremy Welch: I think that it's a big leap. It is a big leap for that to happen because it would be more similar to just going back to a gold-based or hard metal base currency. It limits what you can do, the ability for a country to just print their way out of a crisis. It constrains a country in ways that they can't just make up their story because they have a hard number they're constantly judged against, but in certain crises, there still will be flexibility. It's not like they're locked into one path, but it just provides this extra measure.

Bitcoin could end up serving like that. Again, it's still very early, and there's a lot of global awareness, and I don't think it would shock anyone if something like that happened within the next 5 to 10 years, but I do think that it would scare people. I think that a lot of people would think it would be very unpredictable, they're much more comfortable with the idea of something like gold. I do think it's going to be an experiment. If something like that happens, it's going to be an experiment for sure.

Peter McCormack: The more likely scenario therefore is a gradual transition where similar to Libra being a basket, maybe a central bank or a government has Bitcoin as one asset alongside, maybe gold and dollar and others.

Jeremy Welch: Yeah, I mean a basket of currencies has been... We have the International Monetary Fund has Special Drawing Rights, SDRs, using a basket of currencies has been something that most central banks or global bankers, global governments are aware of and understand and would probably be more comfortable with and maybe even more comfortable than just going fully gold backed, just in the sense that it gives them more flexibility. It really becomes a kind of a battle for gold control if you were to go back to a gold standard, and so if you went to a Bitcoin standard, it would be a battle for Bitcoin.

There is a question of what does that look like. What does a kind of battle for Bitcoin look like in a Bitcoin standard bank, just kind of Bitcoin standard central bank? Maybe that sparks a lot of innovation and just in terms of hashing power wars, the world will look very, very different if something like that plays out. But it's not as far-fetched as it used to be because again, everyone's aware of Bitcoin, many people are using it and many people are building on top of it. There's a Microsoft team that's building an identity layer on top of it, there's a lot that's happening that it's just shocking how fast we come in a very short time frame.

Peter McCormack: There's also some social things happening right now and some political things are happening right now. As you know, I've been traveling a lot. I've been to Chile to cover the riots, I went to Venezuela, I've just been out to Turkey, I've travelled quite a few countries now, but there are some clear parallels. There is a growing left-to-right divide and a growing anger against inequality and outside the politics here whether you believe in socialism or capitalism, libertarian, whatever. What I don't really care about is your political identity in this point, is that what there is this left-right divide and this rich-poor and it's a growing divide. There's a growing resentment from people.

As I said, whatever the politics are, the resentment tends to be not so much of the divide itself, but how the divide occurs, how much corruption is there, how the people at that bottom rung especially in places like South America, which has a very small middle class, they feel like they've done their part. They've worked, they've paid their taxes, yet they are having access to less and less services, and the rich are getting richer and the poor are getting poorer. Where do you feel Bitcoin fits into that whole narrative that is spreading globally?

Jeremy Welch: Yeah, there's a lot embedded in what you just talked through. That's great and it's a great jumping-off point, but there's a lot embedded there! I would say that the few things to cover there, one, is I've talked before about Bitcoin and really any currency. I mean Bitcoin is just this kind of evolution of currency, it's just better money, better currency. When you get into what a currency ultimately is, it's just a value transfer communications medium. I want to touch on that. Then I also want to touch on the idea of inequality and the idea of difference and the political balance are happening, but this widening gulf and how political systems work can touch on that a little bit.

Then can also touch on this idea of corruption in growth and the middle class and being furious at the fact that you're someone who follow the rules and you're getting screwed. The government or a business interest or someone else is screwing you and what all that looks like. I think the first two or three points are actually helpful to touch on the last one and what we're seeing with this middle-class situation. Bitcoin as a communications medium and currency as a communications medium, when you get down to what a currency is, it's just a common language. That's an easy way to think of it.

A good currency is a language that anyone understands, it's a language of exchange. If I'm making apples and you're making corn and I want some corn and you want some apples, then we can do the direct exchange or we can actually have medium of exchange. We can have a currency that sits in between us that is easy to trade with. From that perspective, Bitcoin is really interesting because being open-source and also not being controlled by a singular central party and also having all the stats, everything is an open system not just that it's open source, but even the running of the system, you can pay attention and you can see what's happening, it's just way more predictable.

In that simple, simple example of currency and just the ability to trade and exchange, you need to be able to speak the same language. You also need to know that the other person that you're exchanging with is actually following the same rules that you're following. I'm expecting that if we're using Peter dollars and I'm expecting the exchange rate to be 10 apples per Peter dollar and you're expecting the exchange rate to be 5 apples for Peter dollar, then we basically have to arrive at a middle ground somewhere in terms of the exchange for the goods that we're about to make.

But if you have this dollar that is giving off enough information that is an open-source system and also it globally scaled the technology itself and operating the technology is also done in open transparent way with this open transparent ledger, then what that means is that my ability to price, my ability to say and predictably say, "well I'm going to price or I'm going to say that the exchange should be 10 apples per Peter dollar," you have a higher incidence or a higher chance that we're going to be agreeing in terms of an exchange-rate if that makes sense. It's critical to have this kind of open money that allows a system to emerge to where two people in two different locations with two totally different backgrounds can arrive at similar estimations.

Bitcoin at its core as a communications medium is remarkable because of that, because it's better than any other currency in the world. It has this trustability, this predictability and anybody can check it any time of the day. We don't have to wait for quarterly Fed minutes, and we don't have to wait for emergency Fed action with this recent coronavirus every day, we can just look up the stats. We can learn as much as we want. Because of that, again, it provides this kind of base open communication medium. What that means is, is that anybody that's dealing with Bitcoin, actually feels like they're part of this kind of nation of Bitcoin in a sense like they feel like they're part of this community of Bitcoin.

They're already on this right communication level with the other person that they're dealing with. What that does is that literally if we're talking about now jumping to the second point of talking about kind of inequality generally, what that does is it builds a bridge. If we're talking about inequality generally and where that arises from, people are just different. People live in different places, they come from different backgrounds. They're genetically and typically, very different. People are just different. That's okay, difference is great. That's how we end up with someone who makes metal music and someone who makes classical music, and someone who makes pop music and all this kind of disarray of different types of products in music and culture.

That comes from the fact that we're all different. That's awesome! But we still need this kind of common language to trade with and communicate with. What I would posit is that at least my kind of approach to thinking about the world and how this has evolved is that the history-to-date, we have been locked in both information...

Locked isn't like the perfect word, but I'll just say that we've been boxed in or have been used in these information systems and money systems to date that have been mostly regional, local, or national and have scaled with different types of money and different types of technology. One example of that is kind of like the history of newspapers that every city would have a major newspaper and everybody in that city would read or a lot of people in that city would read the city newspaper every week and would know what's going on in that city or that region. Instead of city newspapers, we're at national newspapers or even just global newspapers, but the Internet is the big kind of missing piece in this story of inequality and this story of difference.

When you only had one major information mechanism or you had a narrow set of radio stations, you had a narrow set of movie and music publishers, you had a narrow set of newspapers again, TV channels, radio stations, and now we have the internet which is just makes it easy for millions of these things to exist and so you have these fracturing communities. Maybe, a good example of this is... Not Vox, but what's the publishers...

Peter McCormack: BuzzFeed?

Jeremy Welch: Yeah, like BuzzFeed quizzes. There you go! BuzzFeed quizzes are like a perfect example of this. You have just millions and millions of these sub-communities that can now exist because of the internet. The potential, I think, for all these sub-communities was always there. You have a lot of differences in between people, but because everybody was only using this newspaper or using this news channel or using this community, all these differences were getting smoothed over, but now because the internet, people can engage with people around the world.

Then they're like a little hundred group of people that like some anime or some book or some music or whatever that is, and they can form these tiny little subgroups and so you get these more and more kind of cultural manifestations that come out. Each of those cultural manifestations, that's a difference. The internet brings out more detail, more informational detail in the global populace. That's the kind of root problem that ultimately has resulted in a lot of the clashes. I think that we see both in culture and politics and elsewhere is that the internet is enabling us to finally realize a lot of the idea differences that we've had for a long time.

People are finally comfortable saying like, "yeah, I believe this or I believe that," because of the fact that they can find other people too that are part of that community. They can engage with them, they can grow those ideas and the internet itself is part of the mechanism that's expanded the range of possible ideas. That's point number two. Point number one was again that any good currency is a good communications mechanism, is ultimately what it is, that allows two people to trade and have a common language that they can trade in.

Now point number two is with the internet growing, you now have this massive engine that's creating differences between people. That gets us to point number three which you brought up about the widening gulf and wealth and the widening gulf in political spectrum, political views, political clashes and then also even this question a middle class versus upper class. Middle class first of all, middle class was largely created during the Industrial Revolution as a function of these jobs that were in factories and that were needed even for the kind of global system to work, but the middle class hasn't always been there historically.

You've had kind of multiple tiers of wealth, but the middle class hasn't always been there, but I'm just raising that point because historically, it wasn't always there. There's no guarantee, it'll stay there, but I think that the more important point here is with this new range and differences of ideas and cultures and everything else, it makes it harder than ever for us to communicate. It makes it harder than ever for us to politically organize. It makes it easier than ever for people to actually make contact, but it makes it harder than ever for you to get kind of large swaths of people to be extremely highly engaged in communities.

What's resulted in that is that you've had politicians and others that have created this kind of outraged culture and political infighting as a way to bond people together through fear and Bitcoin or good currency actually provides us a way out of that because as a common language, you're already part of the group. If you participate in this common language, this common currency, this common community regardless of what your belief set is, your political set, then you can communicate, you can trade, you can have friendly relations.

I know there's a long stretch to run to those three points, but I think that just bleeding all that up to say that the answer to this wealth and equality, the answer to getting screwed if you're part of the middle class because you think you're playing by the rules, but it turns out that the rules weren't what you thought they were, if you have open money, if you have an open system, if you have Bitcoin and you have an open system to where communication is easier, to where the average middle-class person can check Bitcoin, can look at basic stats, can make sure it's running just as well as the more wealthy classes or lower income classes, they can all do this.

They can all understand and see how that money is reacting to world events on the same level, then it reduces the opportunities or reduces the chances that there would be some kind of a scheme going on to hoodwink one of the middle classes, lower classes whatever, because it is a common communications mechanism, because it is a reliable boring stable asset in system that makes it easier or lowers the risk of being hoodwinked.

Peter McCormack: It goes back to having the best form of money, but the open transparency, I think what you're saying is you can't hide the corruption.

Jeremy Welch: Yeah, you can't even hide it. That's it exactly, because it is an open system, it is harder to hide that and because of the censorship resistance, it is harder to hide corruption just across the board. The existence of Bitcoin as a system, not just as money, but as a communication and computation system or money being a part of that, means that it is harder to hide corruption. It will be increasingly.... I mean you will have potentially, maybe you'll still see some central banks. You'll still see corruption and other types of forms, but this particular type of corruption will be harder to run.

Peter McCormack: Yeah, I guess added into that is that a lot of the corruption stems from the ability to control the money and to print the money as you need. We know with Bitcoin, that's one of the problems that you have to have a little more fiduciary responsibility.

Jeremy Welch: Yeah, it's not even just the money system, it's a legal system as well. There's an interaction between that where you have maybe certain parties that are politically immune from their actions and can be corrupt because they either have enough money or they have enough political clout or they have enough force like they may be a part of a military in a certain country or they may be a part of the legal function. There are several of those levers that you could have a tight hold on or be a critical part of that could give you some level of immunity which would enable you to run some corruption if you wanted to. Bitcoin, by being this open system, you can't change it.

No party has that level or that ability to corrupt things. If they do make any changes, it's immediately apparent. It doesn't say that the things will never change or that there won't be attempts at corruption, but what it does say is that if that happens, that it will be able to be immediately detectable or near immediately detectable. Then, that again will reduce the potential corruption overall. I don't know exactly what that means in terms of how things would play out with the widening wealth gap. I won't say I expect, but I suspect that the wealth gap will actually get wider over time just because of the way capital systems work, but it's still to be seen.

Peter McCormack: Do you think this would change the nature of politicians and politics itself and the way the expectation of behaviour will have from politicians? Well I guess we have the expectation now, but we're always let down, but do you think this will change the nature of politics?

Jeremy Welch: Oh, it definitely will. We're already seeing that. I would say that one way to think about all of this stuff is just an open system versus a closed system and what meaning there is. Two things, one, is an open system being just like something that's transparent that you can see how the system is running.

Two, being a closed system being something that is closed off and you can't even see the rules, but there's another way to look at that in saying that an open system may have the rules on the surface, and the rules that you see are also the rules on how things actually work where a closed system also could be something to where there may be some public rules that it appears that things work in a certain way, but in reality, there's this kind of second rule set that's kind of hidden, and that’s how things really work.

I would say that like the politics of the day, if you're a politician or if you're a governor in some capacity and whether you're in China or you're in the US, we are in political systems currently where even if they're Democratic, many of them are still, in effect, more closed systems. Not in the sense that you can't see some of the things that are going on, but in the sense that the things you see are not necessarily the real story.

Peter McCormack: Okay, can you explain that?

Jeremy Welch: Yeah, let's just look at the financial crisis for instance. We can all see that money was printed, we can all see some of the details of what happened, but we have no idea what was said back rooms. We have no idea, the nuances of what happened in both at the governance level or some of the corporate level, some of the bailout level. We know that certain that very few people went to jail. We know that based on the legal structure that many people should have gone to jail, but they didn't. We have no idea what those backroom situations were, even though the public is being told like, "hey, this is good for everyone, and this is what's happened."

There's some backroom understanding that if you were a part of one of those banks, then you really have the real knowledge as to what kind of really happened. That's the story of governance through our history is it's almost always been two layers of one that's been more like, "okay, this is the public story," and then one that's been below the surface is the reality. This goes back to just in allegory, Plato's cave, but I think that ultimately, any system, governance system, monetary system, anything to where the reality and the kind of public view are closer and closer and closer or the exact same, that's a more open system.

In that more open system, the closer those two are and it could be a function of just the way the system is designed, the better because you can't get away with as egregious of abuses. It's much harder for sociopaths and other kind of corrupt individuals to manipulate the system to where things are just much more open. Therefore, people actually trust that system more and more and more. Bitcoin is one of those where again it's an open system, it's open source, but also just the operations of the system generally are easy to see.

It doesn't mean things that won't change, it doesn't mean people won't try to corrupt it, but if they do, it's very easy to detect that and see that and to see the public story of maybe some of the core developers or someone else diverging from the reality of what you're seeing with the kind of underlying code and underlying behaviour of the system.

That fact of the story diverging from reality is harder to happen. Therefore, talking about politics and talking about what you ask, I do think it will be harder for politicians to be corrupt. It doesn't mean they won't try, but at least in this area, it will be harder potentially in the future because of this.

Peter McCormack: Okay, just moving to a slightly separate subject, but I think it's a line to this, is that the world is pretty weird right now Jeremy, it feels like it's the weirdest time I've ever lived. I've seen that there are certain governments now who started to even try and clamp down on cryptography. They want full access to all our money, our information, our data, this real kind of dystopian future feels like it's encroaching right on us now. I think that sort of thing in the US where they're trying to ban all forms of cryptography, I'm pretty sure Australia banned it, I think the UK tried to in 2015.

There's some little weird things happening right now. After that, we have data hacks. I talked about protests across the world and the real standout one for me was Hong Kong where people actually kind of... The Hong Kong protesters kind of won. They actually got the Chinese government to back down, but there's a lot of really, really weird stuff going on right now. Do you see Bitcoin as a reflection of that or do you see Bitcoin as a tool to support that or just both?

Jeremy Welch: I mean it's independent of that way. If anything, I would say that those things would have happened in some capacity, it's just that Bitcoin actually... Because what's that a result of... Oh, there was a third part of our discussion just a minute ago which is basically the nature of economic growth that we should factor into that. This actually factors into this question, is that if the pie, if there's this kind of core truism, that I do believe that if the economic pie does not continue to grow, then you're going to get a lot of bad things happen if you end up in this Malthusian kind of cutthroat world where everybody is trying to get their piece.

But if you're growing the overall economic picture, the economic pie, then everybody can have their slice, their little piece of the growth. I don't think Bitcoin is just this tool that was, thanks Satoshi Nakamoto, that was given to us in recognition of like, "okay, the world monetary system, the world governance system is getting really complicated." I do think it was in response to some of the corruption, but it itself kind of exists independent of that corruption. It may exacerbate and make that... I don't think if Bitcoin itself is exacerbating and making that corruption faster, but I think the existence of that of Bitcoin means that people can now believe in an alternative or they can believe that something else is possible.

But the root of the problem really comes down to economic growth. If you have really strong economic growth, then population is generally much, much easier to manage, people are much happier. If you have stagnation, which is what I do believe that we're seeing in many economies, in many areas around the world and you're not growing as fast or you're not growing at all, then you're going to get major protests. People can't feed their families, and people can't even grow families, then people are not going to be happy.

That's going to result in more protests, that's going to result in more demands for more [Inaudible] for people to eventually get those things back, that personal wealth back. So Bitcoin feeds into that, it may exacerbate it a little bit, but ultimately that's the root problem, is the growth problem.

Peter McCormack: Right okay. Kind of timely now, we're going to potentially have a very serious problem economically. We have coronavirus.

Jeremy Welch: Sure!

Peter McCormack: Resulting from that, I guess if we do see significant impact on the global economy, we are going to see perhaps, not even that we're not going to see growth, we're actually going to see the economy shrink. That could throw more fuel on to the fire of these types of protests.

Jeremy Welch: Yeah, the weird thing about coronavirus actually is that... Have you seen any headlines about protests recently in Hong Kong?

Peter McCormack: Well actually I just read about one yesterday, they just started again. That was interesting that you should ask that because they had stopped, but yeah. They've just started again.

Jeremy Welch: Well we'll see how this plays out, but there were and there are still some in Europe right now, but as coronavirus grows, you may actually see a limiter in terms of public mass gathering protests. It doesn't mean protests will stop. Protest may happen in other ways, but they're going to have to manifest themselves in a different way, but coronavirus is going to wreak havoc on the overall system. We've known for a very long time that another major virus was a risk to the global population. We've been connecting and inter-connecting and moving towards this globalist system.

That makes the spread of capital and spread of money and spread of trade much easier which helps solve some growth if you can sell to more people, but it also opens up this weakness which we have not seen majorly exposed, which is this potential of mass pandemic. It is a real challenge that we now have this reality of, and I'll go ahead and call it a reality of mass pandemic. I know the World Health Organization has been hesitant, but I mean it's a pandemic. It's everywhere, it's crazy!

Peter McCormack: Of course.

Jeremy Welch: I think that this is still very early in the process of coronavirus. I think it is going to change a lot of our lives, but a lot of people are thinking, "oh this will just be one of the flus" or "this will just be the next few months," but I don't think that's the case. I think that this has been a risk for quite a while, it's been a potential for quite a while. We just haven't had it again manifest itself and it's not going to go away. Now that we've seen it once, I do think that coronavirus itself may just flare back up again.

There may be a second or third wave of it, but I do think that in this more globalized world that this will continue to be a potential risk. We're going to have to come up with new ways of doing things and maybe that's social isolation. Maybe we have some new cultural norms that come out or limits to mass conferences and mass events, but something's going to have to change to protect us from that while still enabling the growth picture. It's going to be twice as hard now, we have to both maintain a growth picture, maintain more innovation to grow the economy of role while still minimizing the risk of something like this, and that is going to be hard.

As more people face hardship, they're going to want to protest or they're going to want to find some way out. It's either going to be riots, or it's going to be protests or there's going to be something that happens. So whoever is in any political office or leadership office in the next few years, it's going to be a real challenge for whoever's in office.

Peter McCormack: Yeah, if somebody new was listening to this podcast and they've gone through the Beginner's Guide, most of the time, they're going to be thinking that, "look, this is a new form of money, it's a better form of money, perhaps a way to take down the central banks", but always with you Jeremy, I'm always thinking much bigger. I'm thinking this is a complete change to society. Like that show we made, it changes everything. How do you get people to think beyond to just being a change to money?

Jeremy Welch: I think that there's something that happens, it's hard to replace the actual activity the first time someone actually holds their keys whether you do that on a Trezor or on... We have key master multi-sig. If you set up a multi-sig system and you realize that you have the ability to be your own bank, that itself is just a remarkable step. Now getting people to that point is still a little bit of a hurdle. We're trying to make that easier at Casa, but it's still a hurdle. But once someone has that experience, there is a light bulb that goes off. It's hard to replace that by just explaining something and unfortunately, I think that it is going to take building new experiences or having new things.

It'll take several more years for us to have some of these new technologies or new things that can result from a system like this before most people really understand it. It's not easy to explain. I don't necessarily have an answer for you as to how to just get people to grok it immediately other than just, "okay, here, set up a key. I'm going to send you some funds. You just transfer $10,000 instantly. It's very low fee, and you control it entirely. You don't have a lot of cash on you." That's the most remarkable thing.

Peter McCormack: Okay, so looking forward, I did say this would be about the future of Bitcoin. We've covered a lot of the political and social elements here, but just on a technology level, you said it's going to be quite a boring few years ahead, but what are some of the most important things coming for the technology of Bitcoin?

Jeremy Welch: The most significant is just Taproot and Schnorr signature's near-term improvements in terms of signing. There are some privacy implications there that are important too. The technology layer itself will be pretty boring, that's a feature. That's a good thing that it's not going to change dramatically, but I think that you will see some of the systems around it change, the user interfaces around it, the way people use it, again trying to get more multi-sig, more multiple key signing and easier key management.

That's what we're spending a lot of time on. I think that the hashing power conversation is going to be something really interesting over the next few years. You have more miners coming online, you have more technology around mining and some of those innovations are actually around power consumption or where you're sourcing that power. That's going to be an interesting story the next few years. But again, Bitcoin is going to be boring, that's a good thing! I always try to kind of package these nuggets or bits of knowledge into easy sayings and two of my more recent ones are Bitcoin is going to be boring, and that's a good thing.

The second one is bet on balkanization. Balkanization just means fracturing in terms of states and more isolation, more independence and I think that has implications for how Bitcoin is structured and how mining will be structured and how some of those other pieces of the Bitcoin system will be structured.

Peter McCormack: All right listen, nobody likes predictions Jeremy, but just thinking ahead 1 year, 10 years, 50 years, where do you see Bitcoin? I know that's a massive question and don't worry, I'm not going to come back in 50 years and go, "look mate, you were wrong!"

Jeremy Welch: Well somebody will! I think that the prediction game is a hard one and honestly, it's kind of an unproductive one. What I would just say is that it almost doesn't matter. I think that the thing that I can definitely predict in 25 years is that Bitcoin will be around, I can predict that. I can predict that basically short of collapse of Internet and power consumption and some massive, massive casualty event that results in just massive catastrophic failure of a lot of our other civilizational systems, Bitcoin will be around.

That's the one kind of thing is that there is this co-dependence and interdependence between Bitcoin and between the social and economic system and the civilization that we have. If that collapses, then sure, there's a risk of Bitcoin also collapsing, but as long as those two are alive, it's going to be around, it's going to be growing, in 25 years and even 10 years. The banking systems will have all changed and will have all realized and further internalized the reality of Bitcoin. You will see some very different systems there. I do think that we'll still have corruption, but I do think that we will at least see... I'll put it this way, I think in the 10 next years and maybe even the next 5, we will at least see, at least one wave of mass outing of corruption.

Let's put it that way, on a global scale, whether that's tied in the current banking system or if another nation-state is collapsing or something else happening, you will see these waves of corruption being outed. It doesn't mean that the corruption is going to totally go away, but just that corruption being outed, means that some of those systems are starting to fail and that as a result, those people are outed only after kind of that stuff has failed. I do think that we'll see more stable systems long term, I think that we'll see a more peaceful future in a lot of ways long-term as some of these things realign, but it's in that chaos of realignment that things are going to be complicated.

On the Bitcoin specific side, I do think that there's no way around people managing keys in some capacity. That's something that again at Casa that we've invested a lot of time in and we were doubling down on this year and Nick and Jameson are leading the charge there. I'm serving as an advisor mainly, I stepped back again for family health reasons, I had a family member that got sick.

But on the key master side, we've been spending a lot of time, we just shipped some inherent services, we just shipped some other stuff and I'm going to just go ahead and do a little shameless plug around Casa, but I do think that usability around Bitcoin is important, but just usability around key signing more widely is going to be really important for the future of Bitcoin and in the future for a lot of systems and a lot of personal data and personal wealth for people. I do think that we will get to mass adoption and mass thinking around key signing and key management.

I think that overall a computing experience is going to change pretty dramatically. I would predict it and expect that at least one of the major FANG-type companies, you've got Facebook, Google, Amazon, at least one of those will go the way of Kodak and losing a lot of market share or just totally collapsing or something. Just as again, I think all the computing stuff is actually intricately tied into the monetary system as well on how things work. As Bitcoin grows, again companies are going to have to adapt to.

There's going to be a lot of activity. I think Bitcoin itself is going to be relatively boring. That's a great thing, bet on balkanization, and we're going to see more isolation. Coronavirus is accelerating that, but overall, I think the future is quite bright. I'm very optimistic for where things are going in terms of our personal wealth and family wealth. There's going to be a bumpy road to get there, but we've all got as Bitcoiners and as one big community, we've all got to kind of band together and work together to build this better future.

Peter McCormack: Cool. If people like what you've got to say Jeremy, I'm going to recommend our other shows, but have you got like any specific books or specific bits of literature you would recommend reading? We'll throw "Snow Crash" in there, but anything else you think people should take a read of?

Jeremy Welch: Oh, that that's an interesting one. "Sovereign Individual" is an interesting one, but I do think that one's starting to get overplayed. As much as there is in there that is an interesting prediction, there's a lot in there that's just totally missed. One that I have consistently recommended the last few years is "A Thousand Years of Nonlinear History", just talking about systems theory more generally, I think that is one thing that people can dig into a little bit. There is some density around that, but I think that thinking of all these things, as kind of just systems that are either open or closed more predictable or not and are either resilient or not, or let's call it more or less resilient because the non-resilient systems are typically gone pretty quick.

But more or less resilient, I think the more you look at the world that way and just see Bitcoin, it's not that like Bitcoin is the end-all be-all, it's that Bitcoin is just the most resilient thing that's out there, it's going to survive. I think that digging into any books or topics just in terms of systems theory and systems thinking, and again, one of my favourite ones is "A Thousand Years of Nonlinear History" is definitely something to try to invest in or wrap your head around.

Peter McCormack: All right cool! Well, listen, always love talking to you. I usually prefer it when we do it in-person, it's strange to do it remotely. it's always a different experience. But I always love to talk to you about Bitcoin Jeremy, you always get me super hyped about the future, so thank you. Listen, I wish you the best, I'm sure I'll see you again pretty soon. Well hopefully! It depends on all the travel stuff, but hopefully, I hope I'll see you soon.

Jeremy Welch: Yeah, we might be seeing each other. Get your VR headset, Jameson has been doing... I think they're doing an MIT Bitcoin thing with a virtual meetup. I think we're going to see a lot more of these kind of virtual meetups, so whether I see you in the Metaverse which is the space from "Snow Crash", the Metaverse or in real space, either way, look forward to connecting, thanks for having me on! Really interesting to see where all this stuff plays out the next few years and, everybody, stay safe! All this coronavirus stuff is no joke, everybody should be taking it seriously. But yeah, we'll leave it at that.

Peter McCormack: All right man. Well good luck! I'll speak to you soon.

Jeremy Welch: All right, take care!