WBD220 Audio Transcription

Bitcoin is Reshaping the World with Robert Breedlove

Interview date: Monday 4th April 2020

Note: the following is a transcription of my interview with Robert Breedlove from Parallax Digital. 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 this interview, I talk to Robert Breedlove the Founder and CEO of Parallax Digital. Robert recently wrote An Open Letter to Ray Dalio explaining how Bitcoin will reshape the world. We discuss Bitcoin’s ability to outcompete the current financial system.

“Bitcoin, as the truest form of monetary capitalism, is going to outcompete monetary socialism, which is central banking.”

— Robert Breedlove

Interview Transcription

Peter McCormack: Robert, how are you man?

Robert Breedlove: Good Peter, how are you?

Peter McCormack: I'm good man! I'm about to piss you off because we had a plan to do a show all about the zero and then you decided to write this big letter to Ray Dalio, which I stumbled across and I was like, "I want to talk about that!"

Robert Breedlove: Let's talk about it!

Peter McCormack: It's a long letter, man.

Robert Breedlove: It's a really long letter and I did prepare to talk about zero, but I will do my damnedest, so let's talk about Mr. Ray Dalio.

Peter McCormack: Well do you know what? They're both fascinating subjects and I want to get you back on to talk about zero, but I was gripped reading your letter. I had to skip through some of it because there's so much to it to get to point. Do you know if he read it?

Robert Breedlove: If I've read it?

Peter McCormack: No, do you know if he's read it?

Robert Breedlove: Oh, if Ray's read it? No, so I finished writing it the day before I went to a conference in LA called Summit and it's basically an entrepreneurial festival and Ray was speaking at the event. So Ray spoke for 30, 40 minutes and I got up to for Q&A after and asked him the first question and basically in a long winded fashion, and I put this on YouTube as well, me asking him the question and his response, "How does he see the absolute scarcity of Bitcoin playing into a world where the scarcity of money has totally been compromised?"

And he gave this very educated macro-economic response, but then on the Bitcoin piece, he gave this very ill informed response, that it's too volatile to be a medium of exchange or a store value and he just kind of wrote it off. So I just don't think he's looked at it deeply and that's kind of the conclusion I reach in the letter.

Peter McCormack: Well it's a fascinating article, not just because you've written it to Ray, but actually it's almost like a university dissertation. How long did it take you to write?

Robert Breedlove: I spent a while because I started reading his book, "Principles", I guess in March of that year and I think I published it in October, November. So basically the whole time. I read his book and then I was like every principle that came out of him was like, it's positively embodied in Bitcoin and then he kept writing these pieces that are, "The system's falling apart, you need to be in gold, it's a crisis hedge." He's very bullish on gold and as we Bitcoiners know, if you understand the value proposition of gold and how it became money, you're two thirds of the way to understanding Bitcoin, right?

It's just superior across all dimensions of money essentially. So it was interesting to see Ray consistently write pieces that were bullish Bitcoin, but never say the word Bitcoin and then in fact, he published a little snippet of a video saying the opposite, saying he was bearish on Bitcoin and he's more bullish on Blockchain technology, more bullish on Libra and these other silly concepts. So I decided just to compile all my thoughts into a very long letter, I think on Medium. It's a 104 minute read, so it's not for the faint of heart!

Peter McCormack: Yeah, so I did about 40 minutes on it, I skipped through some bits just to be prepared for this because I was preparing for a talking about the zero and it just popped up and I opened it in a separate tab and I was like, "I'm just going to have a quick look at this," because I hadn't seen it before and I was like, "That's fucking great, man!" I was like, "Oh no!" Because the thing is, it's right for me timing wise, it's kind of perfect. I don't know if you saw, I did this beginner's guide, like 17 episodes, Beginner's Guide to Bitcoin and I'm trying to turn those 17 episodes into one, one hour show.

I'm trying to condense it all down into one show to get out to people so they can just go, "Right, I haven't got time for 17 episodes" and I can go, "Well look, here's one. Just start here." So a number of the things you're talking about in there are hitting on me and also there's things that I've got questions about and I was like, "Right, now we're going to do this, we'll do zero later. We'll come back to zero!" And I know it's annoying cause you prepared for zero and I know it's annoying because this was back from November and Zero's from March, but I've got to talk about this one Rob, I'm really sorry man!

Robert Breedlove: This is what the free market's all about, right? The spontaneity! Let's do it.

Peter McCormack: Yeah, free market! All right, so listen, look, I think you need to do a shorter version of the letter, maybe like a side of A4?

Robert Breedlove: Yeah, there's a guy on Twitter, Mr. Fryerhaus, he actually wrote a short introductory letter to the letter that's maybe 10 minutes, so that's a good start, but I don't know, it's hard! He wrote, I think it's a 600 page book, "Principles", so it's kind of hard to condense that into a worldview that explains Bitcoin in any less space, but it is comprehensive. As you probably saw, I address it from all angles, but yeah, that is my general weakness in writing, is I tend to be a little long winded, but also dense I think. People are like, "It's very long, but also very dense. It's a lot to chew on!" So I do it to sharpen my own understanding and people seem to like it. So I'm just going to keep doing it, but I will try to make a piece that's 10 minutes or less next, I promise!

Peter McCormack: Well listen, look, you shouldn't change the way you work. It is dense, it's actually... Well it's one of those things, I almost felt like, "God, I wanted this printed out and I want to sit there with a pen and highlight bits and go..." Because it's not one of the things you can just half do and then quickly check Twitter halfway through. You need to focus, you need to concentrate, but no, it's good! So let's go through it and we don't really need to address Ray anyway.

This is just a Bitcoin thesis in some ways, so we don't really need to address him or his criticisms to be honest, which is the same stuff that people like you or I have been smashing away for ages, the "Blockchain not Bitcoin", it can't be a store of value because it's too volatile, it can't be a means of exchange because not enough places accept it etc, without the patience that this is a new paradigm in money and we need a little bit of patience for it to build out. But they're the same criticisms that kind of go everywhere. But let's start with your "Primer on Money" man. Give me your "Primer on Money", but give me the shorter version.

Robert Breedlove: Shorter version of the "Primer on Money"! So in any trading society, people steadily seek to trade things for things that are more tradable or exchangeable or saleable, to use an Austrian term and in that process, and they're basically trying to get to the thing they ultimately want, right? If I'm a telescope maker and I'm trying to trade for cars, I would like to trade my telescopes for water because the guy that makes cars more is more likely to need water than he is telescopes, something like that. So in that entire process, something necessarily becomes the most tradable or most exchangeable or most saleable, and that thing is money. That's it!

It has nothing to do with government, it's a free market phenomenon and something rises to the surface to become the most exchangeable thing, that is money. The characteristics that determine what becomes money, people lay out a lot of them, but I like to narrow it down to five. I say money has to be divisible, durable, portable, recognizable, and very importantly, scarce. I try to go through each one of those. So divisible just means it can be subdivided and recombined at varying scales so you can price things. Durable means it persists across time. Portable means you can move it across space very easily and at low cost.

Recognizable means it's verifiable and it's counterfeit resistant, it can be instantly or quickly assayed to be authentic and scarce is what protects it from human greed and allows it to maintain its value across time. So of those characteristics, the technology that historically best fulfilled them were the monetary metals, right? Metals, they're very divisible, relatively divisible, they hold, they're very durable, which is a big deal, right? They last for a long time, which in ancient societies was a big deal when you're trading fruit and things like this that deteriorate. They're also very recognizable and somewhat portable.

They're pretty heavy and hard to move, but they are very importantly, scarce. They're very hard to get out of the ground and very hard to extract. Of the monetary metals, gold was the most scarce, so gold out competed to become money and that's I guess my short primer on money and then from gold, you get into what government did to it.

Peter McCormack: Yeah, so Vijay Boyapati who I had on and his bullish case for Bitcoin, he grades them and he fairly grades them across a number of factors. I think he might have a couple more in than you and one of the things about gold, which I kind of came to understand is that I guess with international global trade, gold became more of a problem in the internet age, than when people were sailing around on ships.

You could store gold on your ships, you could go around and buy things, but in this kind of international world, we needed something else. We needed something that'd be a bit more suitable, which is why their money worked, but that whole system has been abused by governments, abused by central banks, which is why we get Bitcoin, right?

Robert Breedlove: Yeah, so the way I like to put that is government stepped in to resolve the portability and recognizability issues of gold. So gold has a very high value to weight, it's hard to move, expensive to safeguard and store, all these things. So then recognizability was because even though gold is recognizable and there are methods to assay its authenticity, it can also be subject to counterfeit. People have done weird things like paint lead gold and just things like that. So government essentially stepped in to provide, first it was coinage, so they're minting coins and actual gold and it was the smug emperor's face that was stamped onto the coin.

That was shifting the trust function from the individual merchants to where they don't need to trust one another as much, they can just trust that it was minted at the government's coinage dispensary. That basically shifted the trust from needing to trust the merchant and money to trusting the government. It also added to the visibility too, because coinage clearly it makes it much more divisible and easier to use. But the problem that came with that is that they abused the trust function, right? All of a sudden, governments, instead of trusting the gold and the merchant, you're now trusting the government instead, that these tokens, whether they're gold coins, which were later paper currencies backed by gold, that they always had a one to one peg, that this dollar was always fully redeemable for gold.

Essentially it was that abuse of the trust function, which it started out as one-to-one, became one to two, one to ten, before it culminated in this 1971 thing where it's irredeemable and it cannot be redeemed for gold. I'm glossing over a lot of history here, but that's generally the path that it took and what I like to call it, is essentially fiat currency is a pyramid scheme that's been constructed on top of gold.

So gold was determined by the free market to be money, governments stepped into warehouse and to satisfy some of these shortcomings of gold, its recognizability and divisibility and they built this pyramid scheme on top of it that we all use today and called fiat currency. It's kind of brilliant in that everyone thinks the paper in their pocket is money, when in fact it's not money at all, it's just a form of tokenized debt. You're essentially taking full counterparty risks of the issuer, which is the central bank of the government and we see that being abused more heavily today than ever.

Peter McCormack: So this is the interesting thing, if we had a bunch of aliens come and land on our planet today, and we had to explain them the different types of money and the properties, it's very clear that Bitcoin is the best form of money we have. It's obvious to you, it's obvious to me, but there's still many people who just don't get it. We talk about mass adoption and I always say we have mass awareness, as I rarely meet somebody today who's not heard of Bitcoin, but we don't have mass adoption. All my friends heard of Bitcoin and out of my good group of like, my 10 best buddies, one of them owns a very small amount.

They know what I do, they've heard me talk about it and they can't make that leap and it's same with the gold bugs. The gold bugs, they love gold, they absolutely love gold. You explain them all the properties of Bitcoin, objectively speaking it's better than gold on nearly every measure, but it's almost like... I talked about this in the show previously, it was almost like that time where I was buying CDs and MP3s came along, but I still had to buy that CD man, I couldn't buy the MP3.

I couldn't buy the digital version because I didn't have that thing and now I've got a cupboard full of CDs I don't do anything with and I have a subscription to Spotify. I couldn't make that leap and it's almost like some people just cannot make that leap from something physical having a value to something digital having value.

Robert Breedlove: Absolutely, and that's a difficult leap to make! If you've spent your entire lives under the belief that the physical object is money, which for a gold bug, that's very reasonable, as you have 5,000 years of history, of historical inertia, sort of supporting that belief system if you will. But when you get just a little deeper and you look at why did gold rise to the surface to become money? That's when I think you see the value prop of Bitcoin and the way I see it, and I tweeted about this before, is that I see the market cap of gold is essentially pent up demand for Bitcoin.

It's like there's a bunch of a bunch of demand for Bitcoin there that haven't realized that it's superior in terms of all of the five monetary traits we've laid out and there seems to be like this tension between the Lindy effect of gold, which is basically it's been around for so long, you expect it to be around for that much longer, versus the superior characteristics offered by Bitcoin. But Bitcoin has a very limited Lindy effect, it's only been around for 11 years. But the analogy I like to make there is if you polled people in the 90s and said, "Hey, do you think the internet is going to be a permanent feature of your life?" You'd probably get a mixed response. Maybe 50% of the people would say, "Yeah, it's a big deal." 50% of the people saying, "No, it's not a big deal."

If you did that poll today, I think it's virtually unanimous that everyone would agree the internet is here to stay, it is a permanent feature of life and Bitcoin's just following that same path. We're 11 years in to this internet of value and in another 10 or 20 years, it's going to be perceived with as much permanence as the internet and then it's just competing against gold based on its characteristics and then it out-competes it. Again, every fiat currency in the world is just a regional monopoly built on top of gold essentially, like those things don't hold any value if the central bank doesn't hold gold. So yeah, it's easy to get lost in the Bitcoin rabbit hole and seeing it sort of out competing the whole thing.

Peter McCormack: Yeah, that Lindy Effect thing's funny as well because people... I pull people up on it now, if someone turns around and says, "If Bitcoin succeeds..." I'm like, "What do you mean if it succeeds? It's already succeeded!" The fact that it's still here, 11 years later, the fact that people are using it, like I use it for work, I will pay people in Bitcoin, I get paid in Bitcoin and I don't sit there thinking, "Oh wow, this is neat. I'm going to use..." I just do it.

It's just like a natural part of what I do because it makes life a little bit easier in some ways and not everything has a permanent lifecycle. I can't remember how long we had a cord telephone at home, but we don't have those anymore. We don't even have a home phone anymore.

I think my dad has one, but they're dead. That's our technology, things come and go. Who knows what the life cycle of Bitcoin will be. But it irks me when even Bitcoiners are like, "Yeah, well, if Bitcoin succeeds." It's like, "No, it's already succeeded." It's like, how far can it go now? And that's where I tend to think and then when we talk about like the people who can't get their head around Bitcoin because it's not physical, whereas they have like physical gold, but at the same time, they're happy to use a digital form of money, because fiat money itself is really digital. Yes, we have these paper token representations, but it really is just a number in a number in a database.

Robert Breedlove: Yep, absolutely!

Peter McCormack: So I'm like, how do we get people past that? How do we get them over that step? Why is it so difficult? Why do you think there are these barriers for people?

Robert Breedlove: Well I think to the point of success, it is the fastest growing asset in human history, like that's an empirical truth today and for people to argue with that, At some point it becomes very self-defeating and you're fighting the tide so to speak. You touched on telecommunications and I mentioned that in the "Primer For Money", but that's a great analogy for money in my opinion, in that the purpose for telecommunications always remains the same and that's to move information across time and space. But the technology we have used to fulfil that function has changed and adapted over time.

We used to use cave paintings, smoke signals, carrier pigeons, telegraph, now we use mostly digital, like the Zoom call we're on today. The same is true of money, money's entire purpose is to just move value across space and time and we've used many different things to fulfil that function over time, whether seashells, salt, cattle, gold, government paper and now Bitcoin. So I think the general thesis is that for the same reason voice over internet protocol and things like Zoom have out-competed the landline, digital absolutely scares money, like Bitcoin out competes analogue money, analogue gold, government paper, but I think the barrier to conception is much bigger because money is so intimately connected to your nationality, a bit of your religious precepts and it’s just a very deeply rooted concept.

So actually like to look at... Digital tech has been so disruptive and so transformative to our lives, I think this is just kind of the latest market test for how profound the digital age really is. If Bitcoin out-competes gold then this is going to be regarded historically as a neo-Renaissance or The Great Awakening some people are calling it. It's a really big deal, this digital landscape that we're moving into!

Peter McCormack: But you're just saying "if" man, but your article said that people will coalesce around the hardest form of money, the best form of money, and Bitcoin is the best form of money. So why is there even an "if" in there? Shouldn't it be when?

Robert Breedlove: I view it that way clearly, but no one can see the future and this is the definition of a black swan, the unknown unknowns. We don't know what we don't know. There could be something that clobbers Bitcoin that we can't perceive. All we can do, and this applies to anything, is look at history and see the trends that have manifested up until this present moment and try to extrapolate them forward. That's what Bitcoin is, it's a bet that the competitive dynamics that have shaped money throughout all of human history will continue to play out.

We're going to continue to coalesce around the scarcest money that's most divisible, durable, portable, and recognizable and what's amazing about Bitcoin is that it maximizes all those functions and it is absolutely scarce. You cannot get less scarce than Bitcoin, or I guess you'd say more scarce than Bitcoin and that's the zero piece, it compares the discovery of zero to the discovery of absolutely scarcity for money.

Peter McCormack: Do you know what's funny also, when you were talking then about the evolution of telephony, it like made me think of Plan B's new updated stock to flow cross-asset model. So I liked the original stock to flow, but I always had this doubt, I was like, "Yeah, all right, I get it, but what if there aren't enough new buyers coming into the market? What if it doesn't happen." Then if we don't have enough demand, it doesn't matter if the supply drops.

You don't have enough demand there's no guarantee in that. But when he brought in his phase transitions and talked about the lifecycle of Bitcoin and how it went from kind of like this nerd toy to being like cash, as a medium of exchange and then it became like digital gold and then it's become a financial asset, I was like, "Okay, this really starts to make sense because I can see that life cycle and I understand that" and it's been making me therefore think like, what is that fifth phase? Have you been through that?

Robert Breedlove: Yeah, what it makes me think of... And my real breakthrough with Bitcoin is when you start to understand the game theory of money and how these competing spheres of interpersonal interests sort of centre on one thing and that is the most serious money, that's the Schelling point. So if you say in game theory is to say a game is any situation where there can be winners or losers, a strategy is just a decision making framework and the Schelling point is the default strategy where you can't trust one another, in games where you can't trust other players.

So that's why people coalesce around the hardest money because it's what allows us to facilitate trade across space and time in the most trust minimized manner with the least need to trust other players. We can just trust the monetary substrates, that have trust in one another.

I see Bitcoin starting out it's like this little kernel of game theory that was just fun money between a couple of cypherpunks, then it gets a market exchange value, sort of roughly at its marginal cost of production and then that was the miracle moment, by the way, like once it gained a monetary premium initially, everything from there has just been a step function of its increasing scarcity, because every time you constrict the new supply flow, the way the economics of money work, and this works with gold, is that the market price will converge to the marginal cost of production because anyone that can go out and mine an ounce of gold will have an incentive to do that at a cost up to its market price.

So you have this dynamic tension between market price and production costs. Bitcoin, that's the beauty of it, is the halving keeps forcing its production costs higher and higher, so it's almost like putting a floor under its market value and that's pushing it through these, I guess you could call them levels of phase transitions that Plan B's alluding to where at first it's a toy for cypherpunks, then it's a monetary asset being used for payments and I guess the ultimate evolution of that would be a global reserve asset of some sort and who knows how far that goes.

People talk about the Bitcoin rabbit hole and for me, the rabbit that you follow down the rabbit hole is the question, what is money? And if you just keep asking that question, you get led down a path that makes you question everything, like what is government? What is sovereignty? Was are personal property rights? All these things and Bitcoin is disruptive to that whole foundation, so it really does feel like we're at the dawn of something really big.

Peter McCormack: Yeah, more than just money, right?

Robert Breedlove: Yeah and for this, I always point people to that book, "The Sovereign Individual", because it was written in the 90s and it predicted things like social media, instead of broadcasting it called it narrow casting, which I thought was cool. It predicted anonymous, digital cash, i.e. Bitcoin, it also predicted the digitization of security, so real estate, other things like that.

But the thesis of the book was that the microprocessor would subvert the power of the nation state and it equated digital space or cyberspace to being sort of like international waters, that it's a place where no authority can cast dominion, essentially due to cryptography and privacy and all these things that we can basically enforce our own self sovereign management of our resources and assets and information that no government authority would be able to impose itself.

So it's a very interesting book and it's hard to see where this goes, like if you talk about... This is like a once in a 500 year type of change and if we evolve past the concept of the nation states, that really shakes our identities to the core. Like, "Oh, I'm an American", it makes you re-think the whole world and it's hard to see past that. But I think that book did a really good job of just pointing towards what the world could be like in the wake of a change that profound.

Peter McCormack: Yeah and the timing of some of this is kind of insane. Okay, so the white paper comes out, it came out on my birthday, October 31st 2008 and then we have the protocol drop in 2009. I don't find it for years later, but it was born during the financial crisis and it alludes to the financial crisis and some people will say, "Look, that was just a way of timestamping, it's coincidence."

But either way, I think it's too much of a coincidence. But this weird world that we're living in right now, this kind of strange coronavirus thing going on, like whatever you believe about coronavirus is it's almost put like a microscope on everything, all our belief systems, the state, money, freedom, civil liberties, science, centralized planning, like every one of those things that Bitcoin forces us to question right now is kind of like it's been accelerated into our kind of decision making process.

My world has been turned upside down and I don't know about yours, like I've never been this full anarcho-capitalist, I've still been that kind of person who is a little bit like, "Ah yeah, but if we didn't have this from the state, then this wouldn't work, blah, blah, blah." But even during this process, I'm becoming more anarchist and I'm having even more of my own personal thesis about the state being proven completely incorrect and it's the timing of it, it's just kind of funny that it's happening right now.

Robert Breedlove: Yeah, it's important to understand what an anarchy means as it has a really bad rap. So the word archon, it means ruler essentially, so anarchy means no rulers. It does not mean no rules, like there are still rules in an anarchic society, they are just negotiated and adaptable boundaries that freely acting economic actors agree upon. Whereas in the world we live in today and I call it, central banking and fiat currency, I refer to as monetary socialism, because they've completely inhibited the market function in money, essentially.

Supply and demand do not determine the interest rate, there is no competitive innovation allowed to occur and so for the past 100 years, if you tried to start a business that made money or competed with a bank in any way, you were going to be shut down. All of these things really inhibit the adaptive function of an economy, which we're just constantly trying to figure out better ways of doing things, that's the whole purpose of it and yeah, this latest coronavirus situation has just been from my perspective, a highlight of the failings of the state. So this is important too, the reason we have a global pandemic is because of the state. What happened in Wuhan when this outbreak happened, it started, China suppressed the story.

They tried to downplay it, tried to paper it over and make it look like it wasn't a big deal. They continued to allow flights in and out of Wuhan and I think the number was like six or 7 million people continued to fly in and out of Wuhan while this virus is manifesting itself. So the state suppressing the story in Wuhan gave the virus its incubation period, which allowed it to turn into a global pandemic. So that's first really important to understand, like the reason we're in this situation is because of the centralized police state. Then secondarily it's like the response, it just doesn't make sense. It's this top down response, it doesn't efficiently allocate resources, because they're muting the profit motive.

I saw a thing in New York, a guy had hoarded a bunch of masks and was selling them at a huge premium. That sounds really bad on the surface if you don't understand economics, which most people don't, you're like, "Oh, that's terrible, how could anyone do that?" But in reality, that's what actually solves the problem. It's like people individually guided by their profit motive to go in and satisfy the demands of customers, is what allows this thing to heal itself as quickly as possible. That's what the free market dynamic is! But instead, what do we see from the centralized state is they're printing money, they're closing borders and all these things that don't help solve the problem.

They're just sort of adding to the pile of government debt and sowing the seeds of their own demise I think in the grand scheme of things. But my silver lining to all of it is I feel like other people are starting to see the shortcomings of government as well as a result of this entire process. Most people I know, they've never been... I live in the US, I live in LA and no-one's like, "Oh yeah, the federal government's great!" I've never heard anyone that's pro-federal government, but this process has really drawn a critical eye and it's pushed people to be much more aware I think of everything they're doing wrong in the world.

Peter McCormack: Yeah, I agree, we've got it here in the UK. The government response has been almost universally crap on every possible decision they've made, but even though my friends are critical, my friends will all always think, "Well, the solution is another election in four years and we'll vote a better government" and there's very few people amongst my friends who think there is an option to go, "Well actually we would be better off with no government." It's even tough to get people to the point of thinking, "Well, you'd just be better off having local government, you would just be better off having regional governments competing", even getting them to think like that is too far.

I think that's one of the problems is it's not getting them to be pissed or question the government, it's to get them to think that there's a different way of doing things and that's a huge step. It's a huge step for me Robert, honestly, I buy every part of the theory behind free markets and free market for money, but I also have bits that I am not like fully there, on things that I still question. I try and imagine sometimes what a stateless existence would be like, what would it be like without a state?

What would be better? What would be worse? Will we live in a better society? Will we live in a more dangerous society? I'm still never like 100% fully convinced and I always feel like if anything, it's like we need to wean ourselves off the state, rather than push the big red button.

Robert Breedlove: Agreed! But I think it's important to understand what government is, the function that it actually fulfils is that it is essentially a protection racket, so the government is there...

Peter McCormack: Protecting who though? Themselves and their buddies?

Robert Breedlove: So a government is a monopoly on violence essentially to prevent violence and it's intended to be a space within the boundaries of which all property rights are respected and that space is defended by the army and police internally to resolve disputes and things like this. So government is a localized affair historically, but the reason we have this huge bloated federal government today where you have people in, for us, it's Washington DC, making decisions that affect everyone in the country and everyone in the world for that matter, people that are isolated from the consequences of their own decisions, lacking skin in the game is because they have a monopoly on money.

They can print money to fulfil to enrich themselves, fulfil their own desires, by taxing everyone, so you have a few hundred people in Washington able to tax 300 million people behind their backs, through inflation, to then fund these schemes political schemes that are close to them and it just perverts the whole system of governance. So it's hard to talk about because we've all lived under this, we're all born into a nation that essentially it's your nationality and it's a core part of your identity. You don't even look at it as like a business arrangement. You're a customer of the government and you're almost like a slave to the government.

You're just born into it, you pay them whatever they tell you to, you pay them and you're happy with whatever they give you, you don't have a lot of say in the process. You could argue that with democracy, you get a vote, but the intention of the voting process gets very muted largely by the lobbying mechanism, which is again in a fiat currency issue. So I think in this world we're going into, it's going to force people to take much more responsibility for themselves, right? And that includes financial responsibility, physical security, just being aware of your surroundings and being prepared for any eventuality, because there's not a nanny nation state, that's going to be there to take care of you all the time and if you don't see that, it's like, just look at their actions!

They're pursuing their own individualized ends and extorting you in the process via inflation and taxation and that's everywhere. That's not just any one country, that's all the countries and the federalized nation state model is that. I just think that the promise of Bitcoin is to take us back to a freer market dynamic in life where government's more localized and the tax rates are consensual. You're actually seeing that government starts to solicit us for our citizenship versus us just being born into it and having to accept it. Again, it's a very long game in the distant future, but it's happening right now. So the more people we can wake up to this, it's kind of like the more lives we can save, I think in the process.

Peter McCormack: So you are not in the headspace of, "Let's completely get rid of the state." Your headspace is more, "Let's have a smaller state, let's have a more accountable state, a more local state." Or is that just a stepping stone?

Robert Breedlove: You privatize the state. We know economics 101, monopoly is bad, monopoly is always bad and it comes at great expense to everyone that's subjected to it, to the benefit of the monopolists. So let's just get rid of monopoly! Let's just get rid of monopolies and have governments be a private affair, as it's a private business! So I actually was joking about this the other day, someone was like, "Oh, you should do political office." I'm like, "That goes against everything that I believe in" but if I had to do it, I would run on a platform of dismantling the government. I'm going to privatize all the functions of the government.

Thinking about it a little more deeply, you can actually sell it to private entrepreneurs, sell the license to the post office or police, whatever the functions that government provides today, you could sell it to entrepreneurs, use the license fees to actually pay for the people that are being hurt during the transition because it would be very messy and people would be having a hard time with the transition. So anyways, the state is a business, it's not going away, we're always going to need someone to provide that protection service and to preserve private property rights.

But it does not need to be one government to rule 300 million like we have in the US, it should be much more localized and it should all be competitive between one another because that's what keeps them honest. It's the competitive frictions that keep market actors honest, right? It keeps prices low, it keeps innovation high and it maintains that incentive for us to constantly prove one another wrong in the marketplace and in doing so, create an innovation that everyone benefits. That is the wellspring that the free market is and that we're amuting with the federalized state and central banking.

Peter McCormack: But the starting point is fixing the money.

Robert Breedlove: The starting point is in money that cannot be confiscated, inflated, or stopped and that's what Bitcoin is. I call it a zero fucks money!

Peter McCormack: So I told you earlier that I was putting together this one hour version of my beginner's guide and the show I'm on at the moment, the one I'm reviewing is the one with Dan Held, where we talked about Bitcoin's monetary policy and what we came to is the beautiful simplicity of it, so a fixed 21 million cap, where the issuance halves every four years, so you have this predictable issuance against the ultimate hard cap, and that's pretty much it.

But the thing that I came to the realization, even during that session with Dan, I'd never actually really thought about it during my own, but the realization that I came to with Dan is that what we have now is money, which is managed by like a few guys in a room.

It'll be in London here, in Washington in the US and they're trying to make decisions that ultimately fix problems for millions of people in millions of different situations, which you can't do, as somebody is always going to be left out. But the alternative is you have this known simple monetary policy that everyone else themselves has to adapt to and it's down to you, you know the issuance, you know the supply, you've got a free market and t's up to you to go out there and adapt yourself to it, which ultimately becomes a fairer and more honest system.

Robert Breedlove: Absolutely! This is actually been quantified that the human attention span is only, I forget the exact number of bandwidth, it seems like four bits, right? We can only absorb four bits of information at a time, anyone of us through our eyes and in that sense, you can think of the free market as a distributed computing system, where it has all the eyes and all the world looking at economic reality and assimilating feedback into prices and innovations. So it's like the Central Banking model, you have the wisdom of the boardroom, right?

10 guys, 20 guys, 50 guys, a 100 guys, it doesn't matter, a 1000 guys, looking at monetary policy trying to make a decision versus a free market, which would be 7 billion people deciding for themselves, pursuing their own interests, culminating the best approximation of truth that we could arrive at in the form of technology and price. What would that be? If we look at the free market functional historically, it was as if it was trying to zero in on absolute scarcity, which Bitcoin represents. It arrived at gold as money, because again, it satisfied those characteristics and it was the most scarce, monetary metal that satisfied those other four characteristics.

So Bitcoin, which is just an amazing breakthrough in that it is being pure information, it better satisfies the visibility, durability, recognizability, and portability, and introduces the ability for us to have absolutely scarce money because you cannot guarantee a fixed supply of anything physical. The example I give there is if we could flip a switch right now and make everyone's occupation in the world, gold mining, the supply of gold would soon soar, so we can't actually limit a supply of anything that's not digital, right?

So we discovered absolute scarcity for money in Bitcoin and that's how I like to look at it is that we're moving from the centralized compute model. We had socialism in Soviet Russia, by the way which failed, news to everyone and what did they do? I think in Solzhenitsyn's book, there was a committee that was responsible for 10,000 pricing decisions per day and they had to decide price of food, price of this, price of that per day, this small group of guys are trying to decide making 10,000 pricing decisions for the economy, per day!

Well socialism got out competed by capitalism because we had the whole population making those pricing decisions for themselves in every single market except for money and so the way I look at it now is we have our version of capitalism out competed socialism, and now Bitcoin, as the truest form of monetary capitalism is wanting to out-compete monetary socialism, which is Central Banking and it's just a matter of energy efficiency.

This all sounds like we're kind of freedom fighters or "Oh, ra, ra, power to the people!" Which it is in a way, but it's also pragmatic because we're just saying, "This system out competes that system" and we've seen it historically and we're seeing it again. So that's where I'm putting my chips and that's where I'm writing and talking about.

Peter McCormack: Yeah, look I'm there, 90% of the time, most of the time and that there are things I think about and I think about, "Yeah, but what about the safety net for those less fortunate? What happens in situations like that?" That is like the last relics of my own socialist beliefs, right? I think about that or I think about how do we get people to understand and even consider becoming self-sovereign?

It's a beautiful idea, right? I've got it down here because in your article, you talk about the US dollar and your critique is that you're exposed to the risk of payments being censored, reversed, and surveilled. All important points, but also realistically, someone like my dad, the benefits of the fiat money is that reversals exist and the benefit of fiat money is that it is insured by the bank.

If there is a mistake, it's stolen, they just repair that shit for him. Someone like him couldn't be self-sovereign, this is a guy who I spent 30 minutes teaching copy and paste the other day! So is that like transition to this new world? Does it add complexities for some people? Does it make it too difficult for other people? And that's one of the things I think about.

Robert Breedlove: Yeah, so the reality of the safety net, it is always necessary, right? We're always going to have the more helpless among us, but again, it occurs at a local level and if you're in a world where wealth can't be perpetually confiscated via inflation and its people are operating on a monetary standard that appreciates year over year, if you hold gold, it gets more valuable every year and on average, as the productivity of the world grows relative to the fixed supply of gold or Bitcoin, it becomes more valuable.

So this incentivizes people to save, because everything's getting cheaper year over year. So, "Why buy the car today, if I can buy it next year, I know it's going to be cheaper" and incentivizes communities and individuals to have savings, which as we all know, if you're in a good position and your neighbour's hurting, that's who you're going to help, you're going to help your neighbour, should you have the means to do it.

But when you abstracted away and you're paying money into a federalized state that then pays you back in social security and there's all these layers of bureaucracy in between where the wealth is getting confiscated, that's where just the concept of the safety net falls apart and for guys like your dad, this isn't the end of banking, by the way. I know Bitcoin is the gold layer, Bitcoin is gold is kind of the best analogy we have and what it is the end of, is centralized banking, where they centrally control the money supply.

Free banking will always be a necessary business function or for people don't want to custody their own assets. There will always be a need to match the maturity of deposits with demand, for loans, people always have savings and people always have a demand for loans to do projects and such. So there's a necessary free market function that banking provides and that's not going anywhere.

But I agree that in the process, like where we are today to get guys like your dad on board, it's hard, because not your keys, not your coins, all these things, it's hard to sell to someone, especially if they didn't grow up with digital technology,. I know when I'm talking to baby boomers plus about anything tech, there's a very discernible difference between both of our mindsets. They look at it like a mystery box, whereas us digital natives, it's just much more intuitive. So I don't know, it just takes a while I guess.

Peter McCormack: It could be a generational shift anyway. I don't see in the short term, us losing our governments as it is. I just don't see it over the next, say even decade. So this could be a multi-decade, this could be outside of our lifetime, even yours and ours and for me it's more about, are we heading directionally in the right way? I think right now we're not, I think the state is getting bigger, it's getting worse and I think that's almost certainly true.

But I do think people are waking up to some of these problems like you alluded to earlier and also people have got options now, people have the options. Not everywhere, in Saudi Arabia, you have less options, in Iran you have less options, in Turkey you're losing options. In Hungary you're losing options. But here in the UK, certainly you have more options. In the US you have options, but you have a vote out with Bitcoin and you have the ability to stand up and say, "I've had enough of this" and I think we're starting to see that.

It's whether people use the opportunity they have now to really question everything and push back, or are we going to come out the end of this stuff with a bunch more bullshit Robert? I've got it today. Look here, I'll show you on my phone, I'll talk it through to the people who are listening, but like Sky News app, because I got the alert that came through, number one thing, you see what that is?

Robert Breedlove: I can't read.

Peter McCormack: So it says, "Public urged to download NHS contact tracing app." So we're getting all this other kind of things coming in.

Robert Breedlove: Oh God yeah!

Peter McCormack: These kind of invasion on our privacy, this kind of tracking stuff, there's one step before, two steps perhaps from China's social credit scores. So whilst I feel like more people are waking up to the problems, I also feel like we're heading into a worse situation and I'm wondering like, what's the breakout?

What's the tipping point for some of this stuff where we really see a change, because it's taken me kind of three years within Bitcoin to even get to where I am and I'm nowhere near as hardened as someone like you and I'm way off someone like a Matt Odell or Marty Bent. How do we get people who are totally conditioned to the state? How do we just get them across? It's hard man!

Robert Breedlove: It is hard. There's the saying, "It's darkest before the dawn" or even in the phase transitions, that maybe Plan B alluded to, before water freezes, it has this energetic freak out, where you see this spike and it's intervened and then boom, it crystallizes into ice. So there's always these storming things right before major phase transitions and I think that's what we're on the cusp of. For people like perceiving the state, the one thing that you have to have zero tolerance for, is any incursion on your freedom of speech.

We have to be able to speak freely so that we can have public debate and public forums so that our ideas can go to war so that our bodies don't have to. That's what the bedrock of Western civilization is built upon and anything that tries to inhibit that, like I saw there was an article in The Atlantic recently where they were talking about the government's need to regulate speech on the internet. Fuck that! You can never let anyone impinge on your freedom of speech or we will slide into totalitarianism and this is not hyperbolic. Quickly study history, the first thing that goes is speech and then goes everything else.

Peter McCormack: Dude, we have this in the UK. You know I'm being sued for saying words right now?

Robert Breedlove: No, I didn't know that.

Peter McCormack: You know the Craig Wright thing?

Robert Breedlove: Yeah, I know Craig.

Peter McCormack: Yeah, you don't know he's suing me?

Robert Breedlove: I did not know that.

Peter McCormack: Yeah, so he sued me in the High Court right now for words, because I said he's a fraud.

Robert Breedlove: What a fucking loser!

Peter McCormack: The cost of a case like this, it's not cheap! We're talking fucking big money, I don't even know if I can publicly say the numbers, but we're talking a lot of money and the kind of money I can't afford. Luckily I've got Tether helping me out with this, but it's for words and it's because I've called him a fraud. I said he's fraudulent and the point being is this has been a real lens for me on free speech in that we don't have free speech in the UK.

But where I realized this is a problem, it's not so much that I worry that I can't say something, I'm worried that I cannot afford to now even defend it because the cost of litigation around speech is so high that usually the people who are the ones who want to sue you for it, are the people who have got the money. The people who can't afford to defend themselves, who need to be saying something, they're not afforded the protection like you have with your first amendment rights.

We don't have that and therefore you can't afford. After this case, I have to think, "Shit, I have to be very careful what I say, because I know I can't afford to defend myself. I can't afford the litigation of another case like this" and that's a real problem. So I'm with you on, absolutely we need free speech, but we don't have that here in the UK and that is a problem.

Now what we see in the UK is we see this growth in surveillance now, we've got these cameras in London, they're anti-crime cameras, whereby they can use facial recognition technology and they're scanning all day every day and they spot somebody who's committed a crime, it's got like 80% accuracy and it can alert the police to go find them and arrest them, right? The logic to anyone who's conditioned to the state is, "Well, that's great, that's catching criminals."

But it's always, "Where's the next step where they will use this? Could we be at a stage whereby, well, this is somebody who doesn't have the contact tracing app on, yet we know they've bumped into this person and we've seen them at this location. Do we go and arrest them for this?" Where does it always go to far? And it always feels like we're going down this fucking slippery slope.

Peter McCormack: Yeah, there are so many problems with, the old saying, absolute power corrupts, absolutely. Well fiat currency is what enables us to channel and concentrate power into the hands of a very select few people, whereas in a world of unconfiscatable, uninflatable money, you wouldn't have that. You'd have power much more distributed in the hands of much larger number of people having control over much smaller states, if you will, or companies or anything else, any form of human organization and Hayek talked about this too.

He's an old Austrian economist, he's got a great book called "The Road to Serfdom", but he described when power becomes concentrated, such that the decisions of a few people govern the lives of millions, it not only corrupts the individual, but it actually changes the nature of the power, it's intoxicating. So if you or I were placed in that situation, we couldn't even necessarily trust ourselves and it would corrupt our own character, if we were responsible for that.

It's just an inhuman task. It's not to say that it's been done intentionally, like there's some grand design that the government's here to take away your liberties and empower itself, but it has happened by these incremental steps, these incremental encroachments over time, "Oh, just do this, just do that."

There's a great book on this, I can't remember the name of it, but I think it's called, "Honourable Men", maybe, but the author is describing the progression of, there are some 1930s German citizens that were just teachers, factory workers, whatever and he's documenting their journey into the German army basically, where at first it's, okay, they sit them down and say, "Look, we're going to go do these things today, but you have totally freewill. If you don't like it, you can go home" and the guys decided, "Oh, I'm going to stay for my comrades, your colleagues, because I don't want them to have to go do these thinkable things alone."

So they go out and they round people up. First they put them in arenas, then when it gets too crowded, "Oh, we need to go out and shoot the old people" and then by the end of it, they're full on killing pregnant women and kids and all that. So it's this steady encroachment of corruption that really fucks things up for humanity. The promise of Bitcoin is that having a system that is incorruptible, the thing that can't be confiscated and the thing that can't be fought over. Money has been the means and the ends of all war.

When Germany would invade a country in Europe, they would go straight to the central bank and hoard their gold reserves and that's also the reason most of the gold ended up in North America, as it was a geographic safe haven from Nazi plundering, which then America steps in, after the end of World War II, kicks ass, does Bretton Woods agreement and now we're the central bank of the world, now we wear the crown. It's always fighting over the gold! If you just watch history, it's fighting over the money, fighting over the gold and Bitcoin is just this money that you can't forcibly confiscate. It's not worth fighting over because it removes the carrot, I guess, from warfare a little bit.

Peter McCormack: Do you think as Bitcoiners, we have any blind spots with regards to all this?

Robert Breedlove:Yeah, of course, everyone has blind spots. The state's going to fight hard against us and I think what we're seeing now is the beginnings of that. They probably realize they're losing control in the digital age and it's one thing to have Twitter starting a little bit of an uprising, like the Arab Springs and things like this, but it's an entirely another thing to have a digital technology threatening your monopoly on money.

They're going to fight to hold onto this and again, that's where we must be diligent in our freedom of speech, because it's never done as an explicit measure. It doesn't just, you wake up tomorrow and we have a world dictator, it slides there slowly and gradually, and it starts with violations of speech.

Peter McCormack: Do you think that's happening in the US right now? I've been following Trump with interest and there's been the times where I've thought, "No, he's done some interesting stuff" and then other times I'm like "I'm not sure on this guy", but his constant criticism of the press and his branding everything that isn't pro-Trump as fake news, it feels like he's pushing the bar as much as he can for what you can do as a president.

I feel like if he was maybe a president of a different country, perhaps someone like what Erdogan has done in Turkey is that he would just dismantle the press because he's pissed off with it. Erdogan has jailed, he's fined, he's had people fired for writing critical pieces of his leadership and I feel like perhaps Trump would do the same in other countries. Now if a Trump supporter is listening to us, they're going to immediately jump to his defence and I get that. I mix it in politics in some way, but do you see what I'm getting at?

Robert Breedlove: Yeah, I do. I don't like to zero in on individuals because I think that facilitates the problem a little bit because it doesn't matter if it's Trump or Erdogan, as long as that system exists, the most corrupt and unscrupulous among us will find a way to sit in that seat. So long as there are the reins, basically over 300 million people for one guy to hold, the worst guys are going to get there and hold them.

So it's a matter of changing the system instead, but I speak to Trump specifically, all of this talk of fake news, it's all an incursion on speech and maybe being used against him as well. I'm not trying to single him out in saying, he's just a bad guy going one way, people can also, the other side of the aisle, the liberals can use that against him too. They can manipulate...

Peter McCormack: I agree!

Robert Breedlove: But at the end of the day, we can't put one guy in charge of 300 million, that's just the systematic truth and again, I think if any politician is speaking, honestly, on behalf of the people, the only thing they can say is this thing has gone too far and we need to get back to our roots. This system, it centralizes and corrupts and I don't think anyone would argue with that.

Peter McCormack: So what's the playbook then? What the playbook for the fight back?

Robert Breedlove: Well, what's amazing about Bitcoin is that by buying and holding it, you're actually participating in a peaceful revolt. Every incremental unit of demand for Bitcoin is an incremental unit of demand taken away from fiat currency, which is the mechanism that perpetuates all of these schemes, all of these problems of the state, everything you don't like about government, it is funded through Fiat currency. So if you choose to hold Bitcoin and save in Bitcoin...

By the way, I'm under no delusions that it's possible to just flip the switch, I still use dollars every day, but you can make a gradual shift out of the fiat currency complex into Bitcoin and just by doing that, you're voicing your opinion to the world saying this system doesn't work, that it is unfair, it is corrupt and it has violated millions of people's livelihoods. It's been used to plunder commonwealths, it's been the funding mechanism for perpetual warfare, the 20th century was the century of total war and I think it was Ron Paul said that there's no coincidence that the century of total war and the century of central banking were the same century.

If you don't like war, then you don't like fiat currency and if you don't Fiat currency, then the only free market alternative that can't be confiscated or violated is Bitcoin. I guess arguments can be made for gold as well, if you choose to hold gold and opt out. Maybe that's a method, but gold's been confiscated in the past and has all these other shortcomings without lines, so Bitcoin's a revolution in that regards.

Peter McCormack: But I think we need some things alongside it, right? We need better journalism, I think we need better education, I think we need, as part of that revolution... With my kids, I'm trying to teach them things they're not being taught at school. I'm doing the similar stuff, I'm not just talking about Bitcoin, but I'm talking about the government, I'm talking about the state, I'm talking to them about the decisions they make and I'm going through that process with them.

There's stuff they're not getting at school, they're not being taught about money and when they're taught about politics or economics, they're taught about the state version of these. So I think that's an important part, but I think journalism is really important here and perhaps as a similar, I think you alluded to it earlier, as we have a decentralized form of money, perhaps this growth thing, citizen journalism, people figuring stuff out and toiling themselves is going to become much more important than the bullshit we're fed from mainstream media.

Robert Breedlove: Yeah, journalism and education are two other areas that government seeks to exert its monopoly and I think that is the big promise of the digital age is that we now have these channels for freedom of speech, which the ancient Greeks called the logos, which is our divine power as human beings. It is our ability to tell and believe and interpret stories, effectively. Now that we have channels that can't be centrally managed or manipulated, it's led to the creation of all these other things, All these little communities, like home-schooling is now a big deal, right?

People are calling government education, a fiat education and so here in the US, I don't know about UK as well, but in the US, we imported our educational model from 1880s Prussia, where they had an educational system that was designed to provide childcare for their factory workers and create future factory workers or create future soldiers. So it's very state propaganda first, they say the pledge of allegiance in the morning to the flag of the United States of America and you're memorizing state capitals. There's a whole programming to it.

Then I think the digital age is pulling the rug out from under a little bit, but it's just really important that people see that and people see that this process is being continued through our children. So where are you putting your children? What are you feeding your children? What are they listening to? What are they learning? Who's instructing them. Who's guiding them? Just take a more active role in that. I have a 16 month old daughter and that's everything to me, is thinking about what she is going to be taking in through her eyes and ears and how she's going to see the world. I don't want to advocate that to some authority that's going to program her in a way that fulfils its needs, I want her to be critical thinking and an individual.

So that's education, then media and governments have always sought to control media and the internet. I think the great thing we did in the US is take this, do not harm approach when the internet started to really proliferate, the government basically passed a decision saying we're just going to let it happen, let it evolve and see where it takes us and I think that decision was critical because they could have probably squashed it in its infancy, but now it's become such a worldwide phenomenon that it's sparking this great awakening in a lot of ways.

Again, because we have these new and adaptive rails to connect our consciousness with one another, to express our logos in ways that can't be stopped or manipulated. This very call we're having right here, this was not possible 20 years ago at all. Podcasting in general, is an innovation on par with the printing press, because now people who... We've only been reading quietly to ourselves for a hundred years and we've been listening to stories for a hundred thousand.

So now people with all their excess time, they're spending an hour or two a day doing monotonous whatever, doing the dishes, driving to work, you can now tune into things like this and listen to these perspectives that aren't state programming. You're not listening to some soap opera on the radio or whatever it is, you can actually choose your area of interest and concern and go down your own rabbit hole and find people that are talking about it like us. So all this digital tech is... The Digital Age is the right moniker for it, like the Industrial Age, the Information Age, now the Digital Age is just a really big deal.

Peter McCormack: I feel like you've been hiding under the radar a little bit Robert?

Robert Breedlove: Isn't that what cypherpunks do?

Peter McCormack: I don't know man, I think the stuff you write is fucking excellent! Really, really good. I think you've got a book in you there, you probably are working on something?

Robert Breedlove: Yeah!

Peter McCormack: I really enjoyed this and I hope you understand why I wanted to have this conversation? The zero stuff is amazing, we'll revisit that. Give me a month and we'll come back and we'll do that. But this was the right time for this show, for this content, this was the right time to discuss it. I always look up to and appreciate talking to somebody who's a little bit further into it than I am, because I always personally need that kick up the ass to deal with my own personal blind spot.

This is why I had to make this show today. But I really appreciate you, especially as I changed the topic of our conversation 10 minutes before we did it. I appreciate you doing that. Listen, look, I'm going to put it in the show notes, people need to go and read this shit of yours, but look, tell people where they can find you.

Robert Breedlove: Sure, so I'm on Twitter, my last name is Breedlove.

Peter McCormack: That's a great name, by the way!

Robert Breedlove: Thank you very much, my mum gave it to me, thanks mum! My Twitter handle is @Breedlove22 and then I post pretty much everything there. I post a lot of my writings on Medium and then just started posting them on Digg as well, which is digg.com and that's it. I'm speaking at a lot of events and whatnot this year, and always happy to talk Bitcoin.

Peter McCormack: Well listen, keep up the amazing work, let's do this again in a few weeks and let's cover that other show. I wish you all the best and really appreciate you giving me your time here!

Robert Breedlove: Yeah man, thank you!