WBD320 Audio Transcription
The Sovereign Individual Pt 1 - Bitcoin: The Ultimate Offshore Bank with Robert Breedlove
Interview date: Friday 12th March
Note: the following is a transcription of my interview with Robert Breedlove. 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 Bitcoin writer Robert Breedlove. We discuss why The Sovereign Individual is such an essential book for Bitcoiners, violence in a libertarian world, why bitcoin is a threat to the state and the ascending and descending world.
“Bitcoin is fuck you money, it’s fuck you to every policy, every police state, and every politician in the world. That’s the power of it.”
— Robert Breedlove
Interview Transcription
Peter McCormack: Breedlove, my man, how are you; are you ready?
Robert Breedlove: I'm good, Peter, I'm ready. Thanks for having me.
Peter McCormack: Man, always good to have you. You are the man of the moment; love talking to you. Okay, listen, before we get into this, and I think this will be, as we've talked about before, I think this will be multipart; I've got a few things I want to ask you about before we get into it.
I think a really important starting point is defining what violence is in the terms of this conversation, because when we think of violence traditionally, for example, today I was explaining the concept to my son of The Sovereign Individual; he thinks of violence as somebody attacking, physically attacking somebody. In terms of the book, violence is more than just physical attacks on people which result in injury.
So, for the sake of this conversation, can we just define what "violence" refers to, or the scope of violence?
Robert Breedlove: Yeah. In the scope of The Sovereign Individual, I would say you could sum it up in that it's viewing violence, and you could also say violence or coercion, it could just be the threat of violence or force; influencing human action in the shadow of violence, you could say is coercion. You know, you pay your taxes, you don't go to jail, kind of thing.
This has been, as the book lays out, a dominant resource strategy. So, it started, and the proper way to think about government in this long arc of history is that, once we settled down in the Agricultural Age, we started to accumulate economic surplus; we were producing grain, cattle, whatever the output of the farm is. We needed to protect that from plunderers, from outsiders coming in to steal whatever the surplus was. And, government emerged on the free market, essentially, as a protection service for that economic surplus.
So, you can say that you needed violence to protect from violence, to insulate the productive economy from violence itself; and that's really the framing of it, throughout the rest of this book. And then, it explores how that protection service, that monopoly on violence, tends to become oppressive over time; they start to abuse the privilege. Like most monopolies do, they abuse their monopolistic privileges on society all the time, and how the actual logic of violence, which is largely driven by technology, the cost of attack versus the cost of defence, how it shapes the lines across which human beings organised themselves throughout history. I found it to be a very interesting way to look at things.
The authors had written prior books on the Gunpowder Revolution and a couple of other things that actually zeroed in on some of this. I guess one simple example would be, the knight on horseback, in the Feudal Age; a fully armoured knight could essentially wield force over a large group of peasants. He could go out and violently win in a bout with, say, 40 peasants or so. But, once the invention of the rifle occurred and the Gunpowder Revolution, all of a sudden the symmetry of violence reverted back to favour the peasants, where they could defend from a knight at 100 yards away.
So, these little technological shifts dramatically influence how society organises itself. The last point there; the knight himself, by the way, an even more simplistic innovation made him possible, because he needed the stirrup actually so he could mount the horse; otherwise, the knight was on foot, and he couldn't really move force across space easily. So, something as simple as the stirrup enabled the knight to become the dominant military force in the Feudal Age.
Peter McCormack: So, what we're really discussing in this book is not the eradication of violence; it's that violence exists between humans and the logic changes with different technical innovations, and the logic has changed through to the Agricultural Revolution, through the Industrial Revolution; and, we expect a change through this Information Revolution. But it's all that changes is the logic in line with technological advances.
Robert Breedlove: That's right. I would say the logic of the incentives to violence as well, the big change in the Digital Age, which I'm sure we'll get into, is that incursion technology allows us to secure property in a way that's, when done properly, is immune to violent or unilateral confiscation or coercion.
So, the clear case here is Bitcoin. If you properly custody your Bitcoin on a redundant, multi-signature, geographically-dispersed scheme, there's not -- we always talk about the $5 wrench attack; that's what this is all about. You can now put money in a place that actually analogised later on, and authors do as well, the ultimate offshore bank. It's a place behind this impenetrable wall that cannot be compromised essentially.
So, this radically changes the nature of the nation state, which is premised on unilateral value flows. They send you the tax bill that you do not negotiate; you do not negotiate the rate, you do not negotiate the services that you receive. You also have no say-so at all in state inflation revenue, where they're just printing money to paper over either prior losses, or to satisfy future expenditure at will; and citizens have no say-so on that.
So, the big change here is that citizens -- the punchline, I guess, is that citizens end up being treated more like customers of governments in the future than they are employees. So we could say, as employees of an organisation, we're just going to have this democratic voice governance mechanism. We can voice our opinion through our vote, or what have you; the majority wins, so there's a tyranny of a majority. And then also, the will and intention of a majority sort of gets obfuscated in the electoral process.
Whereas, when you're a customer-based citizen, you have the optionality of exit. So, you don't like how the government's treating you, well then you're Bitcoin goes everywhere at the speed of light and there are no capital controls, there's no confiscation, there's nothing any state can do to prevent that; so therefore, they have to negotiate with you more fairly; they have to treat you better; they have to treat you like a customer with the loyalty they're trying to earn, like every other free market enterprise in the world.
Peter McCormack: And just remind me for a second, because I haven't noted this down, when was this book written?
Robert Breedlove: This book was written in 1997.
Peter McCormack: 1997. Okay, so what we're trying to do here for the people who are listening is that, if they haven't read The Sovereign Individual, hopefully they will purchase a copy and read it. It's in high demand right now. But, we're trying to extrapolate some of the ideas from that in a world where we now have Bitcoin and know that Bitcoin exists. So, this is what we're going to try and do with these interviews, maybe multiple interviews, is talk through the book, talk through the learnings, but kind of relate this to Bitcoin.
One thing the book does really well and in an interesting way is that, it discusses the Industrial Age and the Agricultural Revolution in a historical context and explains exactly what happens. But then, when it moves on to talk about the Information Age, in a very similar tone it explains what will happen, but that is a prediction. So, just an easy first question for you before we start getting into the details, this book is a theory, but for you is it an inevitability, or is it something that is possible that you're preparing for?
Robert Breedlove: I certainly don't believe in the concept of inevitability. There's certainly a feedback loop and I put Bitcoin in that camp too, right. The threat of a black swan, which is by definition an unknowable unknown, always exists. We live in a universe pervaded by chaos and entropy; anything can happen, we don't know.
So, I don't think the book is laying out an inevitability, but they are tracing the historical changes in social organisation, based on the seemingly simple dynamic between kind of, again as we've said, the cost of attack versus the cost of defence. And I found that, the same as when you're looking into the future, it's very difficult to predict the future, but you can get a directional idea looking at economics.
So we could have, not saying this would have been easy, but even with something like Amazon in the late 1990s or early 2000s, that business model was premised on decreasing the cost of distribution and doing it in a more timely manner, so a manner more in sync, more harmonised to the customer demand. Those types of business models tend to win out, so you can decrease the cost of distribution; that is related to the expansion of the network, the proliferation of the network.
In this case, the book's looking at the Information Age, which I call the Digital Age, whatever we're going to name it here. When you collapse the cost of information, you've thrown -- the very purpose of a firm, by the way, what we are accustomed to organising ourselves within, the corporation or large nation state, is to make transaction and information cost, to be able to amortise those into the size of the firm; so, to decrease the cost of information by having more trusted interaction with the firm.
All this makes the point that when you decrease the costs significantly, that the actual purpose of the firm gets called into question. So, people are more likely to self-organise themselves in new and unique forms and in a world where, in the Industrial Age, where decree mattered so much, where the actual law of the land was important, because everything was done physically by a sense that you could leverage your physical presence over capital.
So, another example they've given to us, how unions, if they didn't like the wages they were being paid, they would just strike, right. They could strike in place, they could occupy the factory, they could stop production because the production occurred in a physical location that gave them a violent or coercive leverage over that immovable capital.
But, the Digital Age, we have much more products and services that are of an informational content; less physical capital's involved in a million business models in the Digital Age; that option does not exist. There's a natural defender's advantage, or defensive advantage, that gives people a lot of options to move elsewhere, to where they're treated best.
So, it's almost as if coercion cedes to civilisation in the Digital Age, because it just doesn't work as well any more. Now clearly, this is a blanket generalisation to all industries; there are certain things that are still going to be factory-based, probably still unionised for many years to come, but it is to say that the flow of economic energy is away from physical industrial-based industry to digital, non-local industry. As that energy and productivity flows into digitla space, coercion does not work there, because everyone has -- business owners and customer have optionality to the extent that they've never had before.
Peter McCormack: Do you see, with regards to that Industrial Age example you gave, do you see the coercion working both ways in that, obviously you discussed unions working together to coerce what they want; but there is a reality also that those people within the production line have no ability to differentiate themselves, because every job is kind of graded on a specific part of the production line and that person could be replaced with another person? So people don't have a chance to be more productive, they don't have a chance to differentiate themselves, so you tend to get those kind of pay grades.
Do you see the fact that actually, it's like a bidirectional coercive relationship at times because also, some of these people are perhaps under threat that it's very difficult for them to move off and perhaps do another job, move into another industry, where -- let's talk about what happened in the motor trade up in Detroit, right? It's very difficult where those people are so conditioned to that single job within that single employer that also, they could essentially have kind of abusive treatment from the plant owner. So, could it be bidirectional coercion?
Robert Breedlove: Yeah, so it's a constant negotiation, right; employment is at will. So if you, as an employee, do not like the wage you are receiving, then it is incumbent upon you to go out and develop your skillset for alternative employment. Now, as far as it being -- it could only be coercive to the extent that an employer could prevent an employee from seeking another job, which by the way we should probably back up a little here.
Mises makes this point of human action that we have this framework today where we think jobs are sacred and it's almost like a human right, the government needs to make jobs happen and all of this. The only way to have minimised unemployment is to remove interventionism from the economy. So, every time, for instance, when we increase the minimum wage, we have increased the price of labour. So, there are now people that would be willing to work for a lower price but because there's a government mandated price on labour, they are unable to get employment. So, minimum wage creates unemployment; the very phenomenon it is intended to resolve.
This is true, but every government action by the way, and this is big one to swallow, but when a government has to push something by decree, they are necessarily taking factors, productive factors out of the free market. So, if you think of the free market, whatever's happening in the free market, a true free market, would be the voice of the people; consumers are sovereign; consumers are buying and selling. Wherever there are profits to be made, that's indicative of consumer -- that's unsatisfied consumer demand. So, entrepreneurs will go there and satisfy that want.
As soon as a government says, "I'm going to tax you here to do something that the market's not doing", they've now restricted the sovereignty of consumers to go and reallocate their capital to satisfy an arbitrary, geopolitical, government-established aim at the cost of market participants having their own one satisfied.
So, we have unemployment; unemployment is an issue in the world. As Mises calls this, "institutional unemployment". So, it exists and is a problem because of government intervention. So, our misconception here is that we seek, we need more legislation or more minimum wage or whatever law to fix unemployment, when in fact the opposite is true from a first principle standpoint. You need to withdraw human intervention from the marketplace; that's how you achieve full employment.
So, in that instance where I would say there's this bilateral coercive relationship between employee and employer, it's more likely to only be the case when there's intervention, when there's government intervention; because, in a free market, that employee is going to have the widest range of options to go and sell their labour to someone else, if they're not being treated well.
So, it's all about, I guess, creating these opportunities to vote with your feet. We're talking about citizens having the ability to vote with their feet by taking Bitcoin to leave to another jurisdiction; employees being able to vote with their feet by leaving an employer to go to an alternative. The option to exit keeps everyone honest, is kind of the gist of it. Yeah, I think that this relationship, in that case, is least coercive.
But, to your point that it can go both ways, it can absolutely go both ways, there's a natural, I guess, human predilection to want to get something for nothing, right; I think something for nothing is at the heart of all this. It's at the heart of central banking, frankly. We want to produce money and create economic activity by just printing dollars. Central bank shareholders want shares in central banks so they can profit from that money production by doing nothing; they just get seigniorage on this money production. Union workers want to get paid more, even though the market's not bearing that out, so they'll physically commandeer a plant and demand more.
So, there's just this human predilection, I guess, to want to try to steal or confiscate or get more -- gain more value than they've created, let's say. And, that's where the importance of -- historically, the state's purpose was to prevent that; to prevent fraud; to prevent the use of coercion and violence such that an economic network can flourish. But clearly, the state has now become that abuser.
So, now we're moving to this world where Bitcoin actually gives us a fair gain. It's a gain where those strategies are neutralised effectively, so that the dominant strategy becomes long-term cooperation. That's how you're going to create the most value. And the authors go into that. They say that trust and reputation are likely to make a major comeback, because of the irreversibility of some of this. If you can steal a bunch of Bitcoin, you can't undo that; you can't go over to the courts and fix that.
So, they think that the world will move towards something more like we saw, I think it was in the, I forget what age they referenced it, where it was based much more on first of all, your ability to be productive; and then your reputation for being productive. And, you would come to trust that instead of reliance on coercion to fix any problems in economic relationships.
Peter McCormack: So, in terms of how we're going to structure this, there's quite a lot in the book that's historical context we're going to cover, but we should do the setup for people as well. As I said, you should buy the book, people should buy the book, if they can get hold of it. If they can't --
Robert Breedlove: By the way, it's on Lopp's website, I believe, as a free pdf, and it has been sold out on Amazon. It's back order right now.
Peter McCormack: Right, okay. Well, I've seen some quite expensive listings for it as well. I've managed to get me a copy, but I've been doing the audio book version while walking. But, what we're really talking about here is, we're going to be getting into what the authors talk about as how the logical violence will change during this Information Age that we're in, and reference to the virtual community and what microprocessors have brought to the table.
Do you want to talk about that and how this is actually changing the logic of violence, but more of the setup; and once we've done that, we will move on to talking about Bitcoin as the kind of ultimate offshore bank?
Robert Breedlove: Yeah, so I think it could help -- a quote could frame this up really, really nicely, and I think it was mentioned in the book but it's that, "Technology is advancing much faster than our ability to understand its implications", and I think that's what this is all about. And, it's another version of Andreessen Horowitz's infamous quote that, "Software is eating the world". To me, that phrase rings louder every year. You originally thought, "Oh, who needs a website? These things are just some weird new, fancy thing". Ten years later, everyone needs a website; it's a must.
Then comes the mobile wave where we have, everyone needs an app, or you need to be engaged with these mobile apps. So, it's changed business. You can't really be in any industry now and not be at least tangentially in the technology business. You're running your business on digital software; that's true for everyone in the world, otherwise you're being out-competed. But I think it's also eating our institutional models. It's eating the way we have organised ourselves for hundreds of years.
So, it is one of these -- the authors go into these, which is kind of a fourth turning thing, I guess that every 500 years, we have these major shifts; and, we are living through one, which is really interesting. And frankly, we're one year in to the inflexion point, I think, which was COVID. COVID was a mass accelerant on this transition from Industrial to Digital Age. We already had a lot of the groundwork laid, but people weren't working remote as much; people weren't forced to shelter in place; and by forcing people to shelter in place, it seems like people started to study a lot more about what's going on.
I don't know which -- I assume your educational content and a lot of the Bitcoin community, I think, has contributed, along with Bitcoin Number Go Up, which really amplifies the whole message, coupled with distrust in government rising as the state response to COVID was just abysmal. So it's this snowballing effect that seems to have gone really parabolic in the past 12 months. And I guess the theme here is that digital tools, they're antiquating the nation state model.
The nation state model is based on forcible inorganisation. So as the authors say, they treated taxpayers like cattle. They just could corral them and pretty much take whatever they need from them, cut them down when it was necessary. But, digital technology empowers individuals, as we've touched on a little bit, in radical and novel ways that change the balance of power between nation state and citizen.
This all sounds maybe hyperbolic, but essentially we're born into this world, there's capital and institutions around us that things are flowing; we kind of take it for granted. It just is the way of life. We think, through our own little limited view of reality, we think this is just the way things are, therefore it's the way it always has been, therefore it's the way it always will be. But, when you start to study history, you see this is not the way it has always been, not even close.
The way I like to think about this is, man, we're constantly optimising for more energy-efficient modes of action basically. So, the overarching purpose of man is to channel energy across space and time to satisfy his wants. And we want to do that, we want to use less energy to satisfy more wants; that is productivity in a nutshell. And in that way, we innovate tools. The classic example, we can go out and dig more holes per man hour with a shovel than we can our bare hands.
We also innovate models of society, models of socioeconomic organisation. And that, I think, is the proper frame. If you start to look at human organisation itself as a social device, as a tool for allocating energy, then you can start to compare which ones are more or less efficient. And if we look at something like the 20th century, where we had this ideological and economic tension between Soviet Russia and "Capitalistic" United States, as it was essentially a free market in everything except money, we saw that play out; that the resource strategy implemented by the United States outcompeted USSR, because they were leveraging more free market intelligence, if you will.
So, they had the intelligence of every economic actor behaving in their own self-interest, guided by the profit motive and the price signal, to generate more wealth; whereas the USSR depended on this false sense of -- they tried to replace motive with a devotion to nationalistic faith and they tried to, instead of the price signal, they wanted to command and control all economic decisions. So you had centralised computing, essentially the USSR, competing with decentralised computing, the United States free market.
The decentralised mode of human organisation always outcompetes the centralised mode. Not only is it more intelligent, it can bring more force to bear; but, it also is composed like an open source network if you will; it's composed more so of voluntarily adopted rules, and this is very important. In a fundamentally capitalistic society, the rules are basically just preservation of life, liberty and property. Now, clearly we're not a pure capitalistic society, but I would say the United States was much closer to that ideal than Soviet Russia; whereas, a tyrannical society has to impose all the rules. There are enforcement and security costs necessary to impose that rule set.
So for that reason, again we're talking about increasing the cost of distribution, it's an increasing collaboration of the network. If we decrease the cost of distribution of information and energy in a free market, then it's going to proliferate more as a network; it's going to create more wealth; and it's going to outcompete something like a centrally planned model in Soviet Russia.
This is the thing; so capitalism, as a tool, is better than communism. But capitalism, now this is where it gets a little tricky, because the language has been abused; we don't have capitalism in the world. Central banking is anti-capitalistic; it is a monopoly. Legal monopolies do not exist in pure capitalism. That's why I created this new term for a Bitcoin-based mode of socioeconomic organisation, where no one can monopolise Bitcoin finally.
So, the theory here, I guess, is that as more capital moves into Bitcoin, it changes the shape of socioeconomic organisation towards a more purified form of capitalism, which I have called "sovereignism" here in homage to the series, and that mode will outcompete state capitalism as a resource strategy; it will attract the best and brightest citizens into it, because it's a fair rule set. It's a place where people can protect the fruits of their own labour and can maximise their optionality and wealth creation over time.
So, that's the mega-political transition here. In the same way and for the same reasons capitalism outcompetes communism, sovereignism outcompetes capitalism.
Peter McCormack: And, we're starting to see the early stages of this happening. A number of things you said have reminded me of a conversation I had recently with Balaji, but also something he put out. He tweeted recently a really interesting point that made me think about it for a while, but he said we need to stop thinking in terms of the developed world and the developing world, I'm not sure if you saw this; but, he said we need to think of the ascending and the descending world.
It was a really good point, because in reference to the United States, it's definitely part of the developed world, but I see a solid argument for why it's part of the descending world. We've seen the infrastructure breakdowns in Texas recently; we've seen the massive queues, during the COVID crisis, for food; we've seen ridiculous stimulus package upon stimulus package, which is pushing us towards, or I say pushing America towards a more socialist state.
It isn't obviously a pure socialist state, but there are certainly aspects of interventionalism where there's redistribution of income, which we always know is inefficient. The $1.9 trillion does not work out to the $1,400 stimulus cheques each. I think it's something I think Pierre Rochard talked about. That would have been $5,500 each, but it's money for schools and whatever.
What we're seeing is this migration of people in the US; we're seeing two forms of migration. We're seeing the state regulatory arbitrage, where people are moving from California to, let's say, Wyoming or to Miami or to Texas, we're seeing that; but, we're also seeing people actually exit the country; and with Bitcoin, we're seeing the rise of these digital nomads. I know of at least four that I'm regularly talking to.
To be honest, Robert, if my circumstances were different, I would be a digital nomad right now, because I've spent a year in lockdown; I've got a state which is becoming very oppressive; I live in, well, London's one of the most surveilled cities in the world; we've got really, really crappy free speech laws here; we've got massive government debt and a lot of talk of raising taxes, corporation tax about to rise, talks of capital gains taxes. So, my productive output and my investments and putting my money into Bitcoin is under threat of being taken by the state, due to their failures. And, I'm now looking at what is my optionality.
So, what you're talking about, we're starting to see. And, we talk about this virtual world and my business is a virtual world. I have eight employees distributed around the world, who I can pay in Bitcoin if I want. Let's throw one more into that; I've had all my bank accounts closed down, and that was because I refused to tell them what I was spending all my money on. I said, "That's none of your business. If I've got to complain, I'll complain".
So, all these things that you're talking about and all these things that are talked about in the book, I'm experiencing myself and I'm seeing other Bitcoin people experience it. So, rather than be a theory, it kind of is playing out now.
Robert Breedlove: Again, no question we're in the Digital Age. I think anyone who denies that is living under a rock. But now, we're one year into what I called, the inflexion point, or the acceleration point, and now I think we're really starting to see a lot of the hypothesis from this book start to really play out. It already nailed a couple of things. It predicted the rise of social media. It actually predicted the use of a pandemic by governments that, when people started to protest, governments would try to reinforce the relevance of borders through a response to a pandemic; so, that's interesting to think about as well. And I like, it was Balaji you said, the ascending and descending world?
Peter McCormack: Yeah.
Robert Breedlove: It sort of speaks to the broader shift in world view as well, whereas in the 20th century, we're much more likely to think in statics; like developed, developing world. We can label something and that's kind of what it is; First World, Second World, Third World, things like that. Whereas in the Digital Age, we've become much more aware of just how fluid and dynamic the world is. And at the bottom of that would be, physics tends to permeate upward how we look at the world, and so we're moving away from the Newtonian model to something more like Einsteinian or Quantum, where things are constantly fluid, liquid, in flux.
That way of describing the world, of ascending and descending, is much more dynamic, than I would say our traditional static viewpoints. And it's a great point too that you can't assume that because the United States, for instance, has this legacy infrastructure that made it superior in this particular age, that that set of advantages carries over to the new competitive playing field. So, in fact, the opposite is true; something that was once an asset can quickly become a liability.
So the classic example here, I've been talking to Booth recently about the Booth series, is the Blockbuster example. They were dominant in content rental, like video games, movies, etc, because they had this huge network of stores and they had a very efficient logistics network for pumping these things out and getting new releases onto the shelves, and whatever.
As soon as Netflix came about and started to capitalise on streaming, so streaming this content versus physically distributing it, the very asset that defined Blockbuster's advantage in the marketplace almost overnight became their biggest liability. So all of a sudden, they're saddled with all these stores, this large distribution network, logistics infrastructure, all of the employees that had been trained and dialled in on this mode of distribution, it's rendered irrelevant almost overnight. So, your greatest asset can flip to be your greatest liability almost instantaneously in the Digital Age.
Another possibility of that is something like 3D printing. This can occur on a much larger scale as well whereas today, we have China serving as the production factory, largely for the United States, but also for many other places in the world. There's a huge amount of capital invested in that logistics infrastructure.
If 3D printing becomes mainstream, which is something, again, looking at the economics of it; it's not making a prediction, it's just saying, "Okay, what can a 3D printer do?" It turns out today, it's being used to produce high-cost low-volume parts way better than the China model, let's say. So for custom pieces on a boat or something like that, you can render a piece for, say, one-fiftieth a cost that's ten times as good in quality.
But, as that becomes more mainstream and people can just download an idea, a software blueprint for whatever the thing is they're going to print, print it in their home or print it somewhere nearby, you can now collapse the cost of distribution again; you've informationalised this product. So all of a sudden, this logistics infrastructure that, say, United States has with China, that all becomes a huge liability.
Therefore, ascending world, the developing world, can potentially have a very large advantage in this transition. There's the example of Africa, where they actually leapfrogged the telecoms rollout where, because they didn't have this legacy infrastructure that we have to upgrade in the US, where they go from telegraphs to telephones to 1G, 2G, 3G, 4G, whatever, Africa was able to adopt the latest and greatest much more quickly; so, it gained them a lot more agility to move faster than a developed world or descending world competitor.
That's a good way to look at it too, because you're getting these more nimble, more modern territories that have adopted the latest and greatest technology, without being burdened by the liabilities associated with legacy technology; those become much more attractive. They can move faster, they can create more wealth, there's less cost involved in them; and in a world where state revenues are declining, because people have recourse to something like Bitcoin, they can opt out of predatory tax regimes, they can opt out of over-inflationary regimes, they can just put their savings in the offshore bank of Bitcoin, state revenues are going to be declining.
So, the states that have the least liabilities, like in the US, we just have a black hole of unfunded pension liabilities, social security, all of this; it's a tremendous number that will never be paid. By the way, if you're in your 30s or 40s or younger and you think you're going to ever draw social security, I would check your local map. The authors make the point that in this world, people will start to migrate to the states that are the most technologically agile, that have the lowest liabilities, because revenues will be in decline, so states with lower liabilities will be more solvent and therefore less predatory; they'll be less likely to overly inflate or overly tax their citizens.
So, I think that's a great way to look at it. Instead of thinking of the world in static terms, we need to think in a rate of change terms, because the rate of change now is the big deal. So, things can move so quickly on an exponential scale that you can go, like something we just went through, right? Bitcoin was under $4,000 a year ago and it's $50,000 today and the bull market just started.
Peter McCormack: And it's probably never going under $20,000 again.
Robert Breedlove: Probably not.
Peter McCormack: Yeah, without a black swan reason. It might never go under $30,000 again and there's a chance it shoots up to $100,000 at some point this year and we get the new base.
Robert Breedlove: Yeah, if we use the last cycle as a proxy, it never went below three times its prior all-time high, so we'd expect it to run up some blow-off top if the cycle repeats, and then it would never come down below, say, $60,000; so, we'll see.
Peter McCormack: But, we also have this changing situation with Bitcoin where people in previous cycles have tried to pick a top or tried to sell or tried to predict it, but people are now thinking, "I have this pristine asset. If I time it wrong, I may end up, through a certain trading period, with less Bitcoin than I had previously and that's not going to work for me. So, rather than play those cycles, I'm going to hold on to that pristine asset, like Saylor talks about, and I'm going to leverage the cheap, weak sovereign currency for my day-to-day needs".
So, that puts additional pressure on Bitcoin, because it lowers the available supply, which becomes an accelerator for this kind of Bitcoin world, which itself is super interesting.
Robert Breedlove: Yeah, that's absolutely right. Bitcoin is the tip of the sphere in this whole thing, by the way. The authors have this quote; they say, "When the greatest tax haven of them all is fully open for business, all funds will essentially be offshore funds at the discretion of their owner". That's what Bitcoin is; it is the ultimate offshore bank with no counterparty risk. You still had counterparty risk in the offshore banking model; that was the preferred means of wealth preservation, access, etc in the 20th century, because they built a business around it, frankly.
Swiss banks had built a business around being anonymous and secure and high accessibility. They had good terrain, by the way, for protecting -- Switzerland had geopolitical neutrality, plus they had good terrain which makes them kind of hard to invade; so, they were this analogue offshore bank, if you will, for most of the world. A lot of this happened when Europe was imposing really heavy taxes in their reconstruction period. A lot of people moved their capital to Switzerland to protect it from taxation.
So now, the analogy's great; I go into it in the next part 2 of the piece that I'll publish that is that title, Bitcoin: The Ultimate Offshore Bank. We have this mode of capital preservation that offers orders of magnitude more privacy, accessibility, inviolability than the Swiss bank, plus you have no counterparty risk. So, I think that's the useful framing as, "Oh, what is Bitcoin; why would anyone use it, it's magic internet money?" No.
Offshore banking's a $40 trillion market in the world today and gold's $10 trillion. They're both trying to serve more or less the same purpose. It's trust-minimised wealth preservation over time. And, to that end, to the end of satisfying that want, there is no better tool in the world than Bitcoin. And so, as people awaken to that and they start to move their savings into Bitcoin, that's what drives this collapse in state revenues, in both unilateral taxation and inflation.
Peter McCormack: Well, yeah, because if there is a collapse in revenue from taxation and the tax receipts can't cover the outgoing government cost then, as you know, they have to increase spending, as we've seen with these stimulus packages. I mean, the UK has now got, I think, its highest debt-to-GDP ratio position since something like the 1960s; it's something ridiculous, and we're about to see an impact on tax.
The funny thing is, even with the raising of the tax, this £2.2 trillion debt that the UK has is never going to be paid off; it's never going to happen, but they will inflate it away. So, you get people in the position -- and I think what's going to happen with this transition to Bitcoin, we're minting new Bitcoin millionaires, we're minting new Bitcoin whales all the time. And, I can't remember what the price is, but somebody recently told me about a price where, at a certain price where Bitcoin reaches, half the world's billionaires will be bitcoiners.
These millionaires, multi-millionaires, billionaires who aren't happy with their services provided by their government, aren't happy with their conditions are happily going to migrate, become digital nomads, go to friendly jurisdictions, your Portugals, your Maltas, your Estonias, your Cayman Islands; and that's going to, again, be another wealth drain out of these western nations, again accelerating it.
Everything feels like it's like Parker Lewis, Gradually, Then Suddenly; everything feels like this acceleration of what's happening here. But, what was quite interesting, I'm referring back to your notes; anyone listening, Mr Breedlove has produced an outstanding set of notes, "Taxing authorities have grown accustomed", and you mentioned this earlier, "to treating their taxpayers as a farmer treats his own cows, keeping them in a field to be milked. In the Digital Age, these cows grow wings", and we're seeing that.
Robert Breedlove: Yeah. And, that's one side of it, right; the taxpayers. That is the productive base on which all politics rest. It needs a productive economy to syphon all of our votes, to be a non-productive politician, let's say; and there's no such thing as a productive politician, by the way. I make this point in a piece that, the legislator's pen cannot create wealth; it can only redistribute wealth.
So, I think that's the big awakening here as well, is that we're moving from a world where we thought somehow, by virtue of a popularity contest, we would put a guy in office that could make things better and it's just silly; it's just a silly nonsensical notion. It's consumed a lot of our cognitive space. So, if you go and talk, at least in America, you talk to your normal American, they've got some big opinion about politics and how this guy's better than that guy, or this girl's better than this girl. It's all the same; it is all the same. None of it will ever create the outcome you want, the only outcome is that they will plunder the common wealth to their own benefit; they will serve their central bank masters; that's the only guarantee in this whole game.
And at the other side of this, so that's the taxpayers; the other side of that is who you alluded to, it's these ultra-rich. Typically in these transitions, governments become increasingly desperate as the taxpayers are becoming increasingly upset and distrustful of government. They start to demand these exotic things, like MMT, a wealth tax, exit tax. The taxes become disproportionately skewed on the wealthy; there's a lot of anger towards the wealthy.
I'm debating people on Twitter sometimes telling me how evil Jeff Bezos is, how he is the incarnation of evil, having no conception of entrepreneurship, or how much productivity Bezos' business has added to the world. He has decreased the cost of living for people worldwide. I'm not saying he's a pure entrepreneur; he's benefitted a lot from the fiat currency spigot as well, largely because Amazon was able to outrun state laws and state taxes in the early days, so they were able to decrease the cost of distribution relative to a Walmart, or whoever else. So, he may have not been as successful in a truly capitalistic world; who knows? But to say he's evil is silly; you're shooting yourself in the foot. If you don't want rich problem-solvers --
Peter McCormack: Well, it's that statement we saw regularly during whenever Bernie Sanders' campaign is that, "Billionaires should not exist" which is obviously a deeply flawed statement on so many levels; but the concept that they shouldn't exist puts a cap on production.
Robert Breedlove: Right, which is just as bad as minimum wage; it creates its opposite effect. You put a cap on the wealth then you're going to suppress problem-solving in the world; you're going to increase a set of problems in the world. And, by the way, which is so silly for a guy like that to say that, "Billionaires shouldn't exist. We're going to go print $10 trillion to give everyone helicopter money", you're going to make everyone a billionaire, right? You're going to be like Zimbabwe eventually; wasn't it Zimbabwe, everyone was a billionaire, trillionaire?
Peter McCormack: Yeah, it was Zimbabwe.
Robert Breedlove: So, the point there is --
Peter McCormack: Well I mean, there's Venezuela as well and I think Venezuela have just minted their 1 million bolivar notes this week, I think I saw; I could be wrong.
Robert Breedlove: So, as the government, let's say ineptitude reaches its climax, which I think we're near today, people that are dispossessed because the government, the central bank specifically, has been printing money which confiscates wealth from those that depend on the store of value function of dollars or euro, or whatever it is, the most; so it's dispossessing people in the socioeconomic hierarchy, it's enriching those that are already rich. This is the classic, the rich get rich or the poor get poorer.
When that hits a tipping point and the middle class has been eviscerated enough, people rise up. There's populism, there's revolt, there's anger and that becomes expressed through the voting mechanism, through public demonstration, through riots and protests and eventually, politicians will capitulate and they will start to try and more heavily tax the rich.
I think when that happens actually, overlaid with Bitcoin being the only monetary medium available to the world that is totally immune to wealth distribution, which is to say confiscation, I think that's going to be a major tipping point in that billionaires start to protect themselves from government overreach in Bitcoin. And, that is only going to accelerate the need for the government to print even more money, to deliver helicopter money and what have you. I just don't see that being reversible.
The funny thing of Bitcoin is nobody becomes less bullish. Do you know anyone that's sort of interacted with Bitcoin and bought a little bit, then backed up? I mean, you could maybe argue a few of these crypto jokers that are trying to peddle the shitcoin; but anyone that's taken a serious look at it, no one becomes less bullish.
Peter McCormack: No, you're absolutely right. I can think of key interviews I've done in the last year which have made me more bullish, which have led me to buy more Bitcoin; specifically one with our mutual friend, Brandon Quittem where we discussed The Fourth Turning --
Robert Breedlove: That's a great episode.
Peter McCormack: -- the episode I made with Nik Bhatia discussing layered money; I did an episode with Ben Prentice and Heavily Armed Clown, discussing WTF is happening -- and Guy Swann actually; I discussed my episode with Stephanie Kelton. You get to that point with it -- I mean, I think if you have the benefit of a full cycle, so you've ridden a bear market and are now in the green, it becomes a lot easier to remain bullish, because you should be able to survive another bear market.
Yes, your value in pounds, dollars might drop, but once you can ride out any bear market, you've essentially got to "fuck you, money" stage and then you obviously don't become less bullish.
Robert Breedlove: Absolutely.
Peter McCormack: And what happens is, I think also over time, what's happened this cycle, a lot of your other fears start to drop away. I think we now have, and I've talked about it a few times, I think we have this regulatory moat around us now. We're not fully protected, but we have a certain amount of protection with the amount of money that's in Bitcoin, the fact that Tesla are in Bitcoin; that Square's in Bitcoin; MicroStrategy. We have these people there that, if the regulators try and push too far, they try and put too onerous regulations in place, we have this pushback.
I think certain states could still ban Bitcoin. I still think Brazil, India, Russia, those types of more authoritarian state could still ban it. I think in Europe, in the US and the western nations, I think it's a little bit more difficult. But you're right; I think what happens is, you become more bullish and I think you become more fearful of holding sovereign currencies, which I have.
Robert Breedlove: Absolutely.
Peter McCormack: So, considering this ultimate Bitcoin offshore bank and considering people don't become less bullish, considering this kind of incentive model for Bitcoin, there are two things I think about with regard to the state, wrapped around the idea of this kind of transition period.
I'm often, when I'm discussing with libertarians, I'm often thinking, with regard to the state, there are politicians or there are people who are naturally evil, or who are naturally power-hungry, but I don't believe every politician is. Whether or not we believe they all add no value or take value away, I still believe some politicians themselves are institutionalised to the idea that we need the state and politics is a natural part of life and they go in with good intention. I do believe there are politicians with good intention.
I'm often thinking, "Well, why is the outcome always the same [or] why is the outcome always negative?" and I think it's just the way the game theory of politics plays out and the way that politicians tend to protect the state and protect their own jobs and protect their own interests. As we all know, during a pandemic, no politician stopped getting paid or were furloughed, or lost 20% of their salary.
So, I do start to think about, we do have this regulatory moat around Bitcoin at the moment. It probably isn't seen as too much of an existential threat to the state, but based on the theory of the sovereignism and The Sovereign Individual that it is ultimately an existential threat, I'm interested in the transition period. How will the state react; what kind of reaction will we see?
As you put in your notes, governments have got used to enjoying a monopoly of a currency that they can depreciate at will, but inflation as a revenue option will be largely foreclosed by the emergency of Bitcoin. And as you've said here, individuals are now free to opt into the most user-friendly monetary policy ever; zero terminal inflation rate. I'm interested in this transitional period, what's the state reaction going to be? Are we going to see some kind of war; are we going to see an attack on Bitcoin?
Neil Woodford talked about this; he said, "The real battle is to come with Bitcoin". We've had the Bitcoin Civil War, the real battle is going to come with the state when they realise the existential threat that it is to who they are. How much have you thought about this?
Robert Breedlove: Yeah. It's the greatest known unknown. We alluded to earlier that black swans are knowable unknown. We know this is a threat to Bitcoin, but actually Bitcoin is designed around this entire threat. It's designed to be survivable through a nation state attack, through a concerted nation state hostility even. Bitcoin has made every engineering trade-off possible to optimise for survivability for this very reason, but it is the ultimate enemy of the state, as you properly understood.
Now, when you start actually talking to politicians and central bankers about this, I don't know that they fully see and grasp its applications at this point. I would say it's becoming, again with Number Go Up, it's increasingly clear that this thing is a big deal. But, you would expect at some point there to be this self-preservation, Darwinian-like response from the institutions that face existential threat from Bitcoin.
And, I don't know; my thinking on it now is actually, you alluded to it earlier that we tend to think there are certain bad people, good people, right; bad apples, good apples. I actually think that people and their characters are emerging properties of the incentive structures they are operating within. One of my favourite quotes, which a lot of people don't seem to get when I say it, but I think it's very deep and meaningful is that, "Human nature is like water; it takes the shape of its container".
So, there have been a number of experiments run where, if you put a person in a position of authority, or they have a certain asymmetric advantage over another, they tend to kind of fill that role, you know.
Peter McCormack: It's the Stanford prison experiment?
Robert Breedlove: That's right, exactly. But, if you put them into a situation where the rules are fair, fixed, applicable, then people are going to adapt to, again, the most advantageous strategy which, in that situation, would be long-term cooperation or fair competition, you'd say, based on those rules.
So, I think where Bitcoin takes us is that today, we have politics as a scaled-out affair. We, in the US, have some concerns about what political happenings are occurring in Washington DC, even if you're in California on the west side of the country. And it's only because there is a monopoly on money. If there's no monopoly on money, you're going to really quickly disregard what's happening in the political sphere at the other end of the world.
So, another way to say this is that when you move out of fiat currency and into Bitcoin, extortion is no longer scalable, so you're not able to suffer under this invisible form of extortion we call inflation and unilateral taxation, and politics itself and government reverts back to a more localised affair. We can think here too that the other flaw in thinking, that I think is really important to flesh out, and this is really common with a lot of macro guys and girls, is, "Oh, China owns Bitcoin. The United States will never let it happen". They talk in these economic aggregates as if there's a single, indivisible unit in the world called China or the United States and it's just not reality; it's not real at all.
What is real is that we have this more or less tightly grouped constellation of mutual interests, sociocultural affiliation, geopolitical affiliation, whatever it may be that comprises the nation state. So, it's not like China, we'd say as the CCP, which tends to be a little more singular directive in action, so that it behaves more like an indivisible aggregate; but, something like the United States is much more decentralised, we'd say, even though there's a strong federal government. It doesn't mean that the US moves as one single entity in all areas of decision-making.
So, what I see happening here is that every one of these judges, policemen, arbitrators, everyone that works in the government, they have a dual hat; they have another hat they wear as a citizen, basically. So, they're engaging with Bitcoin maybe through two different lenses. One is, "Hey, I need to go do my job, it might make my boss happy and he needs to make his boss happy and respect the government bureaucracy". And we can put central banks under this umbrella; anything, any government bureaucracy. But, they're also operating with this hat of, "Hey, I'm a citizen, I need to protect my wealth, I need to provide for my family, etc".
So, what I think will happen here is, as the magic of Bitcoin Number Go Up technology, the harder governments squeeze, the more they try to confiscate, inflate, increase taxes, etc, the more people are going to slip between their fingers into this ultimate offshore bank of Bitcoin, which increases its market cap. And, as we all know, incentives -- again, human nature's like water; it takes the shape of its container -- incentives shape reality for you.
If you're a Bitcoin holder and all of a sudden it's 10X in price, you're going to maybe think a little differently about how you treat it from a regulatory standpoint, as an individual, right. And maybe that shapes like a boss, maybe he's also bought a little bit to protect himself from inflation. So, the analogy I make is that I think Bitcoin acts as this digital asset that's kind of dissolving the incentives that bound nation states and institutions together; I think it kind of dissolves them from within.
I go into this in the piece, actually; there's a psychological experiment called, The Selective Attention Experiment, and a psychologist assigns a task to the people in the experiment and they're watching a video. It's a short video of 20 seconds long, people in black shirts and white shirts. And they say, "All right, you watch the people in the black shirts. Count how many times they pass the basketball back and forth". They're all on a basketball court, running around, passing the ball. And so, you do that, you engage with the task, you count the number of passes of the basketball.
Then, at the end of this 20-second video, then the experimenter asks you, "So, how many times did they pass the basketball?" and whatever, some are eight, ten, whatever the number is. Then the experimenter asks, "Okay, thank you. Did you see the six-foot man in a gorilla costume walk into the middle of the frame of the video, flail his arms about for five seconds and then walk off screen?" and 75% of people don't see it.
Peter McCormack: I didn't see it! I know the video; I didn't see it.
Robert Breedlove: Yeah, and it's great. It's on YouTube; you can go do it yourself. Once you know it, you sort of see it, but if someone gets you with this without describing it to you in full, it's been repeated many times. 75% of people don't see it. So, the moral of the story there is that you're incentives, or the aim of your goal-directed action, determines not only how you see the world, but it determines what you see in the world. You literally don't see that guy in the gorilla suit if there's no incentive for you to look for him, basically; you're following the passes.
And, I think that Bitcoin will shape not only how regulators in their role as citizens see the world, it will also shape what they see in the world; they'll start to look at this alternative financial system differently. And then to your point earlier, we already have this regulatory moat where, every time a Square, a Tesla, a MicroStrategy, any of these major public equities take a position, they bring with them an army of lobbyists, influencers, political affiliation, etc.
So, it becomes really hard to resist at some point. And I think instead, I'm sure there's going to be a counterstroke from the state, I'm sure there's going to be some fight; but, I think it's going to be less of this epic battle between Bitcoin and the state. It's going to be more of the state dissolving into Bitcoin over time.
Peter McCormack: There will be people on the side of the state. We've already seen typical kind of arguments that it feels like people who think they've missed out. I certainly feel like there's some people who feel like they've missed out and therefore, they want to be anti-Bitcoin and pick up, the mainstream press do it a lot, pick up whatever kind of FUD there is; like the Tether FUD until the Tether FUD passed away and that's gone now; now it's energy FUD; whatever it is. I certainly think there's that.
I also certainly think there are people who just do not agree that the idea of a full anarchist world is better than one with states and countries and some people believe that, despite all the flaws, we're better off with the state, we're better off with that push and pull of democracy, even with its flaws; because, without that, like the book does comment on this, we don't have a working example of an operational country which is essentially anarchist in nature, or without a state.
I, myself, still can't get myself to a position of that, but I do like the idea of a smaller state. I do like the idea of the state dissolving into Bitcoin, but providing a service; and they are forced, within the provision of that service, to keep to a budget, because they don't have the ability to print money as they do now. So, that transitional period is the thing I'm thinking about. Where do we end up; where do we become?
It reminds we of a conversation I had with Erik Voorhees I had a long time ago. He said, despite him being a libertarian he's, "I'm not calling for the end of the state now. What I'm calling for is for them to get smaller, just 5% smaller next year, and see what happens". And for me, what this becomes is almost like an A/B test of the state, of what can they provide or what should they provide? If they are restricted to a budget, what services do they drop first? And it then becomes that perhaps we do operate with a state, but a much smaller state, in a different way that's providing services, which are subject to the free market.
Robert Breedlove: No, it's a great point. I would argue that there is no historical example of this cryptoanarchist ideal of social organisation, because of what we're talking about, by the way. Money has always been confiscatable; coercion and violence has always been useful, because we didn't have digital technology, we didn't have encryption frankly to put these things, whether it's capital, commercial relationships, ideas. We can put them behind an impenetrable digital wall now; we didn't have that defenders' advantage in any of the analogue ages, right, agricultural or industrial.
So, that's why, in this piece, I've called Bitcoin before, it enables this purified form of capitalism, but I think you just have to almost give it an entirely new name, because nothing like this was possible before Bitcoin and encryption tech essentially; that's the big change here. And at a really fundamental level, the book goes into this, I'll try to do it justice, but this is something rooted in mathematics, that encryption itself; it's very easy to multiply prime numbers, but it's very easy to divide them and determine if they're prime.
So, it makes the point that this simple asymmetry in the structure of mathematics itself actually creates this defenders' advantage that reshapes society. I don't know that I did that justice perfectly, but I would say go check that out in the book. It talks about first principles, right; it's like we've discovered something in mathematics effectively that causes us to organise ourselves. So, it's super bottom up.
But the point on democracy, that's what the free market is, by the way; it is a pure democracy, it's economic democracy, because we're all voting with our buying, trading and selling decisions. And, since Bitcoin enables that in a more pure sense, we're going to have this miniaturisation of the state, which is going back to what it was originally, as a localised protection service. So, whatever physical capital we have locally that needs to be defended and protected, the state would provide that.
But, on something like Bitcoin, those property rights are being defended by the mining network. The defence is inbuilt into the money almost. So, that's just another way to look at it, is that we just reduce the need of citizens for the protection service itself, because the assets being protected, it's now the security is integrated into the asset with Bitcoin.
Then, the book also goes into, and this is a prediction we've yet to see play out, that we would see the broader digitisation of property rights as well. I heard a really interesting podcast. I forget the gentleman that was on it, but he was discussing RGB, which is a third layer protocol on top of Bitcoin, how it actually can enable a lot of these contractual relationships, independent of the core system. So who knows; Bitcoin may underpin even more than we understand today. It could be more than money; it could be the base layer for digitising tangible property rights as well.
But, the big thing here is, yet another way to think about this, and I'm always doing that; that's how I think. Monetisation itself shifts our incentives. So, whatever we're monetising, we produce more of. So, we monetise gold, right? Say gold has a $1 trillion market cap for its industrial use, roughly, whatever, or electronics, etc. Well, gold's market cap is closer to $10 trillion. Why do we produce so much more gold? Because we monetised it. There was a demand; part of its demand configuration was industrial and part of it was for exchange, monetary use case; so we increased production of gold because we monetised it.
Fiat currency is debt; that's what it actually is. It incentivises you to take out more debt, because inflation erodes real debt at the time, so we monetise debt in the creation of fiat currency. Where are we at now? We have 350% global debt to GDP and rising. Another way to think about that is fiat currency, I won't say it's backed by nothing, but it's backed by the anticipated future cash flows of the taxing authority. So, fiat currency is backed by coercion and violence. So, we have monetised coercion and violence.
That is why it is, we'd increase production of coercion and violence at the state level. And, again, not to say that you're shooting people to pay their taxes; it's in the shadow, as we defined violence at the beginning of the episode, in the shadow of this unilateral imposition or decree or threat of violence or threat of coercion. That's what fiat currency is premised on.
Moving into the Bitcoin world, we have a technology, monetary technology, that has monetised energy. So now, in theory at least should that relationship hold, we would increase the production of energy tremendously and we'd decrease its cost of production. And, if you look at something like the Kardashev scale, have you heard of this, where you have Type 1 civilisation, Type 2, Type 3?
Peter McCormack: Oh yes, I have, yeah.
Robert Breedlove: So, Type 1, and I may have the types wrong here, but you've harnessed all the energy on your own planet; Type 2, you've harnessed the energy of your solar system; Type 3, so on and so forth. That is the arc of civilisation. Again, human beings are the animals that channel energy across space and time towards the achievement of aims. The more energy we can harness, the more civilised we become.
So, I think Bitcoin is the gateway to that higher order of civilisation, and what we're trying to get our head around is that; it's this tectonic shift away from statism towards sovereignism.
Peter McCormack: It's funny, because I've got a note here. I was going through the notes and I'm working on an idea for a show with Ben Prentice, who's now a producer on What Bitcoin Did; and, we're working on this idea of this show called, The Brilliance of Satoshi; everything he got right. And it's really interesting to watch these other shitcoins change their monetary policy or pivot, etc, because they're always trying to reconfigure themselves.
Very little of that has had to happen with Bitcoin. It's pretty much out of the box; its monetary policy has never changed; it seems brilliant in design. But, not only that; we're having this quite deep conversation with regards to the future shape of society, this transitional phase, and there is so much deep intellectual discussion by very smart people regarding Bitcoin and I just put a note here; I mean, we don't know if Satoshi is alive or not or following this, but I wonder if he really fully comprehended, like if he thought about it, like this deeply thought.
I wonder if he just thought, "Look, I'm going to create this form of money out of reach of government, out of control, with a fixed supply, trying to make the fairest, hardest best money there is"; or he actually realised that Bitcoin could be an essential component of civilizational change? We won't know, but I just wonder that.
Robert Breedlove: Yeah. I have a hard time imaging that one guy had foreseen all of this. Bitcoin is such a powerful gravity well in terms of finance, capital, human organisation, philosophy; it is an incredible rabbit hole; the rabbit hole of all rabbit holes. Clearly Satoshi was brilliant, he, she or they, but I have a really hard time imaging they could have envisaged all of these consequences and how fast it's all happened. I don't know; I don't know the answer.
Peter McCormack: It's the hardest question now when people are, "What is Bitcoin?" because it becomes a harder question to answer; because it's, "Well, I want to tell you this, this little dot, but really it's all of this". I talk to my son. We have really long conversations about this and I do my best to try and explain it as best I can and in a way that he can understand and comprehend. But it's more than just saying it's hard money, it's digital gold.
Based on the theories of, for example, The Sovereign Individual, or based on the potential civilizational change we're going through, if we are in the fourth turning, as I discussed with Brandon Quittem, therefore the importance of Bitcoin; based on all these things, it's such a deep rabbit hole that I just, like I say, I wonder if he fully comprehended it. Perhaps he did; perhaps he read The Sovereign Individual; perhaps that was his inspiration. I mean, we'll never know, but it's certainly on my mind.
Robert Breedlove: Yeah, I mean I think he probably did read The Sovereign Individual honestly. He was very much dialled in to the Cypherpunk ethos, or was a Cypherpunk. But, it's funny; people talk about the monetary policy of Bitcoin and it actually obliterates the notion of monetary policy. So we could say that, okay, it was Satoshi's policy; maybe you could say that, that he just picked a number. But, what he was really doing was choosing a fairest role for money, which is that no one can confiscate it by inflation; it's perfectly predictable, perfect information. It's really just using inflation to bootstrap itself, but there's no unknown inflation.
So, it's almost like a form of natural law. He's created this law that exists independently of mankind. So, the same way we have to figure out how to deal with gravity, how to deal with thermodynamics; we now have to figure out how to deal with 21 million Bitcoin and 0% terminal inflation. And, that's why Bitcoin is fuck you, money. It's fuck you to every police state and every politician in the world, and that's the power of it. That is the core power and that's why it's the tip of the sphere to this sovereignism thesis.
In terms of what it is, I agree with you; we have no idea. They say it could be the foundation of, you know, we were talking about property rights earlier; there's Lightning Network; there are so many use cases that are possible on top of it. We don't know; we simply don't know. One description I do like a lot though is that, we've found a way to mix electricity plus greed and turn it into indisputable truth. We just have electricity to mine; we have Darwinian self-interest, self-preservation stirred in a pot; and now we have global indisputable truth for all of us to build our own economic strategies in trying to serve one another and serve ourselves in the process.
Peter McCormack: Dude, listen, I think for a part 1, that's a really good point to end it. I think that's a great introduction. There are some other bits we're going to have to cover in follow-up parts. We've got to look at the historical perspective and see how this plays out but, man, honestly I could sit and talk to you for hours, especially through this shit. I learn so much. Sometimes I'm like, "Are we being weirdos here?"
One of the things I've realised is that I've kind of held off with the more hyperbolic claims of bitcoiners ever since I've been in, and I've always found myself apologising because they're often right. I've gone back and read a number of things on Pierre Rochard and the Nakamoto Institute. They themselves have predicted a lot of what's happened. So now, I'm just in for the ride. I'm in now; let's see how this plays out.
But, that's a great start, dude. Listen, just tell people where to follow your work and we will follow this up with a subsequent part.
Robert Breedlove: Yeah, I'm excited to do that. I think this is a really important text to share and I think, once we get done on this, let's open source all the notes. We can point people towards the book online as well. This is important because this transition is very uncertain. The best thing you can do is arm yourself with knowledge, I think, so this is why I feel very strongly about what we're doing here and hopefully, the writing too helps.
Again, my name's Robert Breedlove; I'm on Twitter @breedlove22; just started the "What Is Money?" show, so there are links there. I'm doing these long, informed, intellectual discourse sessions with the most prolific thinkers that will sit down with me. I'm working with Jeff Booth now and yeah, it's similar to what we're doing here. We've going deep on topics and hopefully, externalising the minds of some of these great thinkers for other people to see.
A quote I heard recently was, I forget who said it but, "Civilisation is a race between education and catastrophe".
Peter McCormack: Love it!
Robert Breedlove: So, we're just trying to amplify the education side.
Peter McCormack: Well listen, man, you know what I think of you; I think you're one of, if not the most important speakers about Bitcoin right now. I think the work you're doing is fantastic. What I love about it is you're drawing in other voices outside of Bitcoin, other people who are just being tempted by it and they want to talk to you, and I think the work you're doing is important and I hope some of the most important shows out there start getting you on.
I know you've got some stuff coming up; we've talked about other shows hopefully you'll be on, but look, just keep doing what you're doing, it's really important work. I'm learning a lot from you and I appreciate everything you do, man.
Robert Breedlove: Thank you and I really appreciate you too and thanks for having me.
