WBD381 Audio Transcription
Gradually then Suddenly Pt 3 - Bitcoin is Common Sense with Parker Lewis
Interview date: Wednesday 4th August
Note: the following is a transcription of my interview with Parker Lewis. 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, we discuss the printing of money and currency debasement by central banks, why bitcoin is anti-fragile and what makes it a common-sense alternative.
“Everyone is afforded equal rights under the law of bitcoin, nobody gets to print money...when the Fed prints 3 trillion dollars they hit a button on a computer screen and suddenly 3 trillion dollars appear, did that create any economic value?”
— Parker Lewis
Interview Transcription
Peter McCormack: Parker, man, how are you?
Parker Lewis: Doing well. Good to see you again.
Peter McCormack: Well, I'll see you in person soon. I'm going to be in Texas in a few weeks; we'll grab a steak and then we'll just make an excuse to talk about something else, because we can sit down with some mics, which we haven't done in a long time.
Parker Lewis: Yeah, I've seen some of your in-person interviews that you did recently, so we're going to have to do one of those the right way.
Peter McCormack: Jazz it up, man, we'll jazz it up! All right, listen, we've done two shows off your Gradually, Then Suddenly series. We Killed the FUD and we got the First Principles. They've been really popular shows, people really like them. The feedback is awesome, especially on YouTube. The YouTube comments have been universally brilliant, so very excited to cover this now. We're going to be looking at monetary competition, also I think the timing's really good for this one, Parker, because there are a lot of conversations happening right now.
I recently reviewed the Taleb whitepaper with Lyn Alden and we're going to be making a show soon discussing criticisms of Bitcoin and being as critical as we can be, and we've now got Bitcoin become a legal tender in El Salvador. So, I think it's a good time to be discussing this; I think it's the right time. We've got a few bits we didn't get to cover in our last episode, because we did a monster two hours and missed some bits, so I'm ready for this.
So, let's kick off with something we didn't get to cover in the last show, which is an important part of something you were talking about, which was Bitcoin being a rallying cry, Bitcoin being a fight for freedom, which I think again, right now, is especially important with all the crazy shit going on in the world. Bitcoin, for someone like myself, just appears to be that lifeboat, that thing we can refer to, that one thing we have in this world, well there are a few things, but one of the few things we have in this world to say, "This is ours; you can't touch this". So, let's talk about that, man.
Parker Lewis: Yeah, so Bitcoin is a Rally Cry is something that I wrote I think in the two weeks after the 12 March 2020 crash, where Bitcoin crashed from $8,000 to $4,000. I always key everything back to first principles and when Bitcoin crashed from $8,000 to $4,000, I asked the question, "Did anything about this change anything about Bitcoin's ability to credibly enforce a fixed supply of 21 million? If no, I will buy more Bitcoin".
But that was more of just a fun piece that I wrote, because everyone needed a little bit of a pick-me-up. But it's also symptomatic of what happened in March 2020. History will be written dating back to the Financial Crisis and in the lead up to the Financial Crisis, that this all ties together. But there are certain moments, like Lehman Brothers failing, or Bear Stearns; March 2020 was one of those.
It wasn't just the price of Bitcoin coming, it was that the Fed came out in three different series. I believe one on 12 March where they announced, and my memory isn't great on this, but I think on 12 March 2020, they announced a $1.5 trillion increase to their repo programme to provide emergency funding in the repo markets; they then came out a week later, the market saw it, puked, a week later the Fed came out with a $700 billion QE programme. The market kind of rallied and then puked. And if the Fed knew what it was doing, it would have a solution. It's literally just reacting to the market.
Then, I think on 26 March, or 22 March, the Fed came out and basically announced an unlimited QE, "We're going to go bigger and badder than we've ever done. We're not going to put any constraints on it and it's going to be awesome". Everyone else was looking at that and saying, "That's crazy, it's not going to end well. And in the financial community, they say, "That's crazy, it's not going to end well, but they had to do it".
I think, in the Bitcoin world, what we look at is to say, "Hey, that's crazy, it's not going to end well and we are not going to put our fate into somebody else's hands. We are going to take control of that. Enough is enough". And I really do think about it as the Fed printing money, whether people realise it or not, it's like punching someone in the stomach over and over and over again, and there are these certain ideas, like New Hampshire has the "Don't tread on me" as their motto. It's not that it's Texas' motto, but there's a famous flag from Texas' history, which is the "Come and take it" flag.
It's a combination of those two things. It's like, "Hey, you guys thought that you were in control, you thought that you could fix all of our problems. You can't, you keep fucking things up so bad, we're in control now, we're taking control of our own destiny", and that's really what Bitcoin is. It's extremely volatile, the thing goes up and down, but what you are in Bitcoin is in control of your own destiny.
I opened that piece, Bitcoin is a Rally Cry, with a quote or a story about Lieutenant Colonel William B Travis, who fought and died at the Alamo. He wrote a letter, generally referred to as The Travis Letter, and he signed it with "Victory or Death!" But one of the things that I recounted was, there might have been 300 Texan fighters in the Alamo, or somewhere there or around order of magnitude; there were 10X the number of Mexican fighters, and they demanded Travis' surrender from the Alamo and he recounts that in his letter. He said, "The enemy had demanded surrender. I returned their demand with a cannon shot".
I really do believe that that is, against insurmountable odds, and I don't want to call the Fed the enemy, but when there is a force that is working against you, that is working in direct opposition and it feels insurmountable, that's what someone new to Bitcoin thinks. But someone that's been in Bitcoin that's been hardened by it sees, "No, this is just part of the process". This is all just part of the process and this is our only way to freedom; this is our only way to solve the fundamental, structural problems, economically, societally, that we need to get money out of the hands of government. We need to put destiny in our own hands. We need to be able to rely on the fact that if we create value in the world, that we can store it in a form of money that can't be debased.
That might seem like a far cry from someone fighting at the Alamo, but it is the most fundamental element of freedom; that if I contribute value to another human being and I can preserve that into the future, and that some government crony can't choose to make my money, just because they think that it's best, purchase less over time, because what it ultimately means as you multiply it out is, it ultimately ends with Venezuela; it ultimately ends with wealth being destroyed, with people that formerly had wealth being descended into extreme poverty and ultimately violence, and nobody wants that for themselves.
Bitcoin is that flag to say, "Enough is enough". The adults thought that they could fix our lives from central command. They weren't actually the adults, they were just a bunch of crazy people and we're the same people and we're not going to take it anymore. But it also extends to, we want everyone to learn about it, because the more that you learn, the more that you understand about Bitcoin, the less that you look at the volatility of 12 March, or when Bitcoin crashed from $40,000 to $30,000, it's just noise. The real signal, or all the fundamentals, is that nothing about that noise ever changes Bitcoin's fundamentals; it just continues to get stronger over time, and you figure out how to live with what seems to be chaotic, but it actually simplifies everything about money and everything about how you deliver value and how you store value into the future.
Peter McCormack: Do you think you'll start to see state responses to this, especially with conversative states, and I'm thinking just of a couple of examples. The federal government still classes marijuana as illegal, yet some states initially started to legalise it and decriminalise it; now, broadly across the US in most states now, marijuana is legal, or certainly decriminalised at least.
Also, we've seen during the COVID crisis, some of the governors start to do things in opposition to what the federal government wanted people to do. I saw it in Florida, I've seen it in Texas, where the governors removed state mandates on masks in schools and started opening up their economies faster than, say, some of the bluer states; do you think you'll start to see a response to this with regard specifically to money, specifically to the impact on this continual printing of money, that states themselves will want to start to protect their own constituents and therefore, start to consider what their options are?
Now, it would be very difficult for them to create their own currency, but being more liberal towards Bitcoin in specific states would be one response.
Parker Lewis: Yeah, I absolutely do. I think that it's getting to such an extent of risk, truly risk, that I think it's that line of, again, you'll hear it over and over, if you either talk to somebody at an investment bank, or talk to someone at a hedge fund, which are not the people in the real economy, but what they will say over and over again is, "It's crazy, it's not going to end well, but they had to do it". There's not a logical connection there and I think, what these states are realising is initially, they even played along; states of Texas and Florida, a few others. The one that didn't, that doesn't get as much credit as she should, is Kristi Noem in South Dakota, because they never locked down.
But I think that when it comes to the context of money, that it's similar. There was an initial reaction to COVID and the lockdowns, to not necessarily play along, but there was this uncertainty and we're going to have these reactions; but then, as they were able to think about it more and what we were giving up, they said, "Hey, this doesn't make sense and we're not going to do it anymore". The states actually had to step in to lead, because the federal government was encroaching. I think the same exists with money; that everyone was willing to go far out onto the ledge. After the Financial Crisis, it was the same thing. It was crazy, it's not going to end well, but they had to do it.
When you do that more than once, then everyone else starts to look and say, "Hey, the people in the real economy, our livelihoods are at stake. If you keep printing money, I know that you think that you can play like you're God, but we're all adults, we know that money doesn't grow on trees, we know that there isn't any such thing as a free lunch; and if you keep doing what you're doing, you're going to destroy our economies. We're not just going to sit back and allow that to happen; we're going to put protections in place that allow people that live in our states to have an option. We're going to protect and option".
So, I do expect the Governor of Texas, I do expect the Governor of Florida, I'd expect other governors. I don't think that it should be political. I think maybe the opening salvo will appear to be, but that people will start figuring out that they need to assert their rights and my understanding is that it's technical illegal for a state to issue a currency, and also for a good reason. But if a state adopts Bitcoin as money, they're not issuing a currency; they're just using a currency that exists in the world. So basically, that would be the defence that a state would say.
Being able to use Bitcoin, the way it's going to be treated for tax purposes, there will probably be a fight as to how Bitcoin is treated for tax purposes, between state and federal governments, but I do think that we're getting to the point. I'm not signalling alarm bells, I think it's just a natural order. It's going to be a natural course that strong states that have a lot to lose from currencies being debased will embrace and protect the rights of their citizens to be able to freely use Bitcoin. Then what will happen is, all bitcoiners will come, or people who desire and appreciate what freedom affords will go to those places, and that's part of the benefit of being in the United States. We're a republic; we're not a democracy; you can have competition.
That competition gets muted and threatened the more that federal government overreaches, but I do think at a fundamental level that the governors of the states will start to become active as some of the overreach, and this Infrastructure Bill as an example, starts to come out that states will take it into their own hands.
Peter McCormack: Help me understand. I've got a basic understanding of how the States operates as a republic, how the different states offer competition. I understand no state tax, for example, in Texas is one of the benefits of going to live there. But in terms of the federal budget and the Fed printing money, does that cause a particular burden on different states; is the burden shared; do other states particularly benefit from the money printer; does that cause any kind of conflict between states?
Parker Lewis: I would say you could make an argument, but that argument would not exist at the most foundational level. You could make an argument that New York, because it controls the banking system, benefits more from printing money. That argument, that Cantillon effect, is real; you could make that argument.
But truthfully, everyone loses via the printing of money, because it might feel good; I'm not a drug user but the first hit might feel good. If you keep using drugs, it's a descent down a very bad path. The first time that you print money, it's not going to cause the whole thing to come down. The second time, not going to cause the whole thing to come down. You keep doing that and you get addicted to it, and then the whole thing falls. And economies are not zero sum.
So, everyone literally pays the debt of money printing and everyone will, even bitcoiners to an extent. There will be things that don't necessarily happen as freely or easily in our lives, because they won't be able to be delivered, because economies can't both grow and shrink. You can both create wealth and destroy wealth. We all benefit from wealth being created; in a functioning economy, it's almost path dependent on more people contributing and more people creating wealth for themselves.
So, the money printer ultimately leads to Venezuela. Wealth people in Venezuela might have done better than the people down the line, but many of them are no longer in Venezuela; they're either dissidents, or they just can't be where they're from. So, is that really a good outcome; would they rather still be in Venezuela having a reliable form of money living where they grew up? Everyone pays debt when currencies die, basically, and that is the end conclusion of printing money.
If it costs zero to print $1 and it costs zero to print $3 trillion, that's where the value of the dollar is going. And, when you destabilise, whether it's the United States or Europe or China or Japan; Venezuela, Turkey, Zimbabwe are at different points to the curve, Argentina; that is the ultimate end game, so we all pay that debt. So, when I think about it relative to the United States, all it does is allows us to assert different rights, if they are constitutional.
There's a Constitution in the State of Texas that sets Texas law, and Texas law just can't contradict the things that are in the Constitution. Anything that's not in the Constitution defers to the state. Now, that concept has been, probably most people would say "bastardised", but what it allows for is, in theory, but it has to be actually demanded in practice, is that the State of Texas could say, "Our citizens have the right to use Bitcoin. And anybody that tries to threaten their rights is in violation of Texas law and can basically be dealt with via the Texas judicial system".
It's like in Bitcoin, right. Now, most people might not know this, but a soft fork versus a hard fork; basically, states can soft fork. We can make something more restrictive, so long as it's consistent with the US Constitution. So, if the State of New York wants to keep printing money, there might be something that's constitutionally protected that if they tried to say, "Bitcoin's illegal in the State of New York", New York State residents could probably go challenge that and say, "There's nothing in the Constitution that prevents us from using this".
The State of Texas could do something that says, "We're going to certify that using Bitcoin in the State of Texas, and how it's going to be treated for tax purposes, is X, Y or Z". Then, the federal government could challenge it and say, "You're encroaching on your authority", and then the State of Texas would say, "Well, the IRS treats it as property; we're going to treat it as property".
So, it will naturally be a battle, but there is a very logical role for the states to play, and it's foundational to, "We do have this central bank. But if they keep printing money and our citizens have a path to opt out of that, there's nothing that you can or should do to prevent that. And if you are trying to take measures that infringe on those rights, we will need to step up and protect them".
Peter McCormack: And we are seeing that; we are seeing that in Wyoming; we are seeing that in Florida, certainly Miami; and we are seeing that in Texas. It's really interesting to observe that from afar over here, because we don't have a republic. We have one rule for one, one rule for all.
Let's talk a little bit about Bitcoin being anti-fragile, again a good time having reviewed Naseem Taleb's Bitcoin black paper, which was full of errors and mistakes and I'm surprised at some that he doesn't fully understand. But this idea that Bitcoin is anti-fragile, specifically we're talking about decentralisation. And also specifically, I like this point where he talks about Bitcoin gaining strength from disorder.
You know what, Parker, it's something I struggle with sometimes, because as a bitcoiner, disorder is good for Bitcoin. Problems within the traditional financial markets, the money printer, is good for Bitcoin, and I struggle with that just ethically, because sometimes I feel bad celebrating disorder because it's good for Bitcoin. You're probably like, "Shut the fuck up, Pete, it doesn't matter, it's not your fault", but let's talk about that anyway, let's talk about Bitcoin being anti-fragile and why that's important.
Parker Lewis: Well, one thing I would say is the fall of Naseem Taleb has been less than graceful, first off!
Peter McCormack: He went after Lyn Alden, for fuck's sake!
Parker Lewis: But it's also enjoyable in the sense that Bitcoin will ultimately humble everybody. You have to have some humility. If you're going to understand Bitcoin, you have to be both genuinely curious, and then you have to have humility, to question some really foundational principles. One of the concepts that, before his fall from Grace, Taleb talked about was this anti-fragile. And even if Naseem Taleb is fragile and even if he's gone off the deep end, if you put ideas that are true in the world, they either resonate or they don't.
I think one of those is the idea of the difference between fragility and resilience and anti-fragility. Because, I do think that maybe if you think about a boxer, a boxer can take a punch. That punch doesn't actually make that boxer stronger. It weakens him to a degree, but he might be able to take a punch better than I could; you lay one solid right hook and I'm going down. But that's the difference between a concept of being resilient and something that takes punches and actually feeds on attacks or risks or stresses. I think that that describes Bitcoin to a tee.
I think it's also one of the things that people most struggle with Bitcoin. There are probably three layers of it, which is most people have never consciously considered what money is, what makes something valuable as money. As they start to question that, oftentimes something that is natively digital is a bridge too far. It still needs to be anchored to something in the physical world to make those other concepts about money in general more tangible.
But then there's idea that because it's digital and because there's a computer system, I think that people look at it and they think that it could be here today and gone tomorrow, that we could just unplug it and that it will fall on its own weight and there's something that's not permanent about Bitcoin. I think just the opposite. It's both that Bitcoin is everywhere and nowhere at the same time, and that creates this degree of beyond resiliency.
Bitcoin is basically the greatest game of Whac-A-Mole that's ever existed, that you can never attack it because it both exists everywhere and nowhere at the same time. There are nodes running such that if half the world went off the grid, the other half continues to exist. Now, if the world ceased to exist, we don't need money and it's not a big deal; but that Bitcoin is a monetary network, it is designed in such a way that has such high degrees of redundancy that there is no head that you can cut off. And, if you were actually attempting to cut off the head, the system itself recognises that and because it's not possible, because you're like, "You're trying to cut off the head of Bitcoin and that doesn't exist", but you are presenting a risk to me, so I'm going to immunise the threat; I'm actually going to respond to it.
An example of that would be, not that this was an intended attack, but when Mt. Gox got hacked or got stolen. Everyone looked at that and said, "We're not going to let that happen to us again". So, that spawned a massive investment in hardware wallets and a promotion of self-custody, education and then the hardware itself and running nodes. But that was really accelerated because a bunch of people lost their Bitcoin.
Separately, when China bans Bitcoin mining, Bitcoin mining doesn't go away. Everyone looks at it and says, "You know what; if a government is not conducive, or creating rules that make it friendly to Bitcoin miners, we need to go places to where they are. So, let's consider that before we invest the equivalent of $100 million, say, in a Bitcoin mine". If a politician comes out and says that we're going to do X, Y or Z with Bitcoin, it also ushers in that idea, "We need to actually custody our own Bitcoin, because we can't be reliant on an institution". Whether it's actual attacks of Bitcoin, whether it's an institution failing like Mt. Gox, or recently there was a South African exchange, none of those things kill Bitcoin and all those things make Bitcoin stronger.
When Bitcoin crashes from $40,000 to $30,000 in 30 seconds, or whenever that happened a couple of weeks ago, or from $8,000 to $4,000, it literally shakes out weak hands. It shakes out the weakest of hands and that people that step in are stronger. Then, people learn, "Oh, Bitcoin didn't die". Then, when people learn Bitcoin didn't die, that helps them; they understand something about Bitcoin that they didn't understand before. But for the people that are really finding the signal, they then say, "I need to actually go and figure out why Bitcoin didn't die". There's the actual signal of the fact that it didn't, but then it elicits a response that is people figure out that they need to educate themselves.
So, whereas people look at Bitcoin from afar and think, "You know what; there could be a silver bullet that just causes Bitcoin to die", that couldn't be further from the truth. Any bullet that's shot at Bitcoin gets absorbed and it is that actual act of attack that causes the Bitcoin Network to accelerate its immunisation of more and more threats. Until a threat is presented, Bitcoin cannot immunise around it, but it will immunise the threat. And as it gets larger and larger, it becomes more and more capable for immunising larger and larger attack vectors and threats.
Peter McCormack: And do you think the reason Bitcoin's become stronger with all these attacks is because it is decentralised, which forces the network to respond more as a unit of people and code? Because, I imagine if it was centralised, these attacks would be easier, or… I guess the best way I'm thinking about it is that, if I consider something like the Blocksize Wars which, funnily enough, some of the people listening to this might not even know about them, or not fully understand what happened back in 2017; but what I learned from that is that it made Bitcoin a lot harder to change. The line for wanting to change something in Bitcoin became a lot harder.
The process of submitting a bid, getting it approved, people agreeing to a change became a lot harder; and to me, that's because it is decentralised, because all decisions are decentralised. Is that what it comes down to?
Parker Lewis: Yeah, I think at its fundamental core; but that plays out in a number of ways, right. So, in the case of the mining S2X Blocksize War, people tried to change consensus rules. Bitcoin, because it was decentralised and because it had become so sufficiently decentralised that it wasn't able to be co-opted by a small number of interests, what happens from there is not everyone sees this at the same time. But certain people look at that and say, "I get it; I was wrong". They say, "Bitcoin is about consensus and the fact that Bitcoin couldn't be changed in this way is a feature".
Other people will find it out for different reasons, but in 2017 the Bitcoin Network was a certain size. Now, it's much larger than that. More people have adopted it, more businesses, more individuals, and as Bitcoin gets larger, it gets more decentralised. If you have 10 million people in a monetary network versus 100 million people in a monetary network, it's incredibly difficult to change -- just look at the political landscape.
The world's never been more divided seemingly, even within single countries. But if there's mass polarisation, even if it's 55/45 or 60/40, as the number of people grow from 10 million to 100 million to 1 billion, the ability to form an overwhelming consensus, that which I would define as over 90%, is impossible on any marginal issue.
So, it's impossible to change Bitcoin in a way that would change consensus code; the things that define what is and what isn't a Bitcoin. It would be impossible to change that, if not for something that is a critical failure, where if everyone looks at it and they're like, "Unless we do this change, Bitcoin fails". So, if it's a blocksize war or how some non-consensus code piece is going to be implemented, anything that's marginal, or even a future blocksize increase, that will always be a marginal issue, because by definition, the Bitcoin Network is functioning.
What we saw with the Blocksize War, which again you have not seen in the last four years, someone in any meaningful way proposed a hard fork. Why? Because they saw a fail, they experienced it, they saw that it didn't work and then they learned from that. And then they know that four years later, the Bitcoin Network is 50X the size; so, if it didn't work when it was one-fiftieth the size, it's certainly not going to work. So, our time would be best spent figuring out how to work within the constraints of Bitcoin. And that very process helps build Bitcoin's immune system.
Peter McCormack: Do you know what; an interesting thing that goes with that is that I think as an individual, as a human who interacts with Bitcoin, who uses Bitcoin, if you stick around for the journey, because some people like you said, weak hands get shaken out when the price drops; but I've done coming up to four-and-a-half years now properly in Bitcoin, not back when I first discovered it, but properly in since early 2017, buying, holding, fucking up with shitcoins, becoming essentially a Bitcoin maxi; I find that as an individual, you also become more anti-fragile along with Bitcoin.
You become more anti-fragile in terms of your approach to the world, your thoughts on money, your thoughts on the economy, a little bit more disciplined. I just generally find that you, as an individual, become more anti-fragile as well.
Parker Lewis: I agree with that. I would say, when I think about this concept of anti-fragility, it has this idea that as stressors get applied to Bitcoin, either small stressors through the course, or big stressors in terms of big period bouts of volatility, or hacks of exchanges, or attacks from governments, coordinated action, that when we think about Bitcoin, just the volatility as an example, I don't get joy out of knowing that there was some poor sap that panicked and sold Bitcoin. That does not give me joy that somebody just got rekt.
But I do look at that from a practical perspective and say, "The herd just got culled". And if somebody is looking at it and trying to understand what's happening, and I'm talking about there was a period where Bitcoin crashed from $40,000 to $30,000 and it happened in two minutes, where it was teetering between $38,000 and $39,000 then it just snapped down, somebody stepped in and bought Bitcoin. So, you have the weakest of the lots selling and the strongest of the lots buying, someone that really gets it.
When you can appreciate that and you start to tie that idea to why Bitcoin never dies, to why every time that it falls someone's always buying, because more and more people figure out the fundamental, because it's easy to buy Bitcoin when it's going up; it's difficult to buy Bitcoin when it's crashing, when it's a falling knife. But through that process, you have to understand that the Bitcoin Network is tangibly getting stronger as a direct result of that volatility and the herd being culled.
When I think about it from an individual level, it's like think about a universe of people that are being borne of volatility, or constant uncertainty, versus the opposite extreme, the Fed system which are bubble-boys, which are like, "Any appearance of the market cycle turning, we're going to print some money to make the very short term more comfortable at the expense of the long term". So, I view the Fed system, which is an inherently fragile system, as basically sacrificing the long term for the short term, creating long-term pain for short-term gain.
The bitcoin system, because it does harden individuals; when you have to live with that volatility, you have to plan your life around it and you have to say, "I am going to be okay. If 90% of my wealth cuts in half tomorrow, I'm okay, I'm going to survive that. Maybe I have to change my behaviour, maybe I have to save a little bit more, maybe not buy this", but when you have those two extremes, a bunch of bubble-boys in the Fed system and then a bunch of people that are hardened by volatility, yes, when you add up a bunch of people that on an individual level have been borne of volatility, been borne in the stressors, lived with the chaos, that over time that's how you actually get stability, by adding a bunch of those individual instances, individual learnings.
If you tolerate short-term volatility, which we do in Bitcoin, we know that what we get for that is long-term stability. But you have to understand the fundamentals for that, and it is the polar opposite. The Fed system is, prevent short-term volatility for long-term volatility; the Bitcoin system is, tolerate short-term volatility, because it's actually a benefit. The more that we can tolerate the volatility in the short term, the more stability that we have in the long term.
Peter McCormack: One of the things I was thinking about though, purely on a personal level, was that if I hadn't discovered Bitcoin, I'd still be working in advertising, whether I'd run my own agency or work for somebody else; but I'm working in a pounds-based system and I'm tied to that system, I'm tied to the office, I'm tied to the staff and I'm tied to the people.
I flip that and look where I am now. I've done my four-and-a-half years in Bitcoin where I've been stacking, so I've essentially been through two bull runs. So financially, I'm in a position where Bitcoin has afforded me better purchasing power than I would have had if I'd have held my money in pounds. But add to that the fact that if my attack is failure of the pound, failure of the government, attacks from my government, I'm essentially in a better position, because I am anti-fragile because I've got the wealth protection of Bitcoin, but I've also got the ability to move geography.
If I wanted to get out of the UK, I can get up, I can move, I can come and sleep on your couch in Texas, I could go to El Salvador. I could go to another jurisdiction which is a bit more Bitcoin-friendly and not have that fear of being stuck within the system. I can operate my business from anywhere in the world, because it's a Bitcoin-based business, but also add to that another thing that I'm thinking about these attacks.
I recently made a show with Katie The Russian and I'm considering that second passport, having that flag that I can put in another country. Bitcoin, on a personal level, has made me consider the attack vectors that risk my own ability and my family's ability to survive and live, and I'm putting in place these alternatives. But that wouldn't have happened without Bitcoin; I wouldn't have been making these considerations, and that's why I talk about on a personal level, becoming more anti-fragile alongside Bitcoin, because it makes you rethink a lot of things.
Parker Lewis: Yeah, it definitely makes you rethink things, it makes you question things, it makes you approach literally everything that you do with a sharper pencil. I think there's a spectrum between not having any self-awareness of the magnitude of what's happening in the world in terms of the consequences of governments printing money and what you have to do out of necessity to protect yourself; there's that one end of the extreme just being not self-aware at all and having no appreciation to preppers that are on the other side.
But where bitcoiners I think sit is, we see things that are inevitable, and we see things at the foundation of a lot of problems, and we understand that Bitcoin is the solution to that. Once you start to see that, then you start to see, "Well, what do I have to do to protect this, because what my money represents is the surplus of everything that I've produced in the world that I haven't consumed?" and by definition almost, you're producing for others, but you haven't consumed that of others, and you need that necessarily to store and maintain its value over time, otherwise why would you continue to coordinate and to deliver value to others.
But in Bitcoin, like you said, you start to think of those things. It is not crazy to think that when I say that Bitcoin can't be banned, it's not that some government is not going to be crazy and try to limit their people's ability to use it; that will certainly happen in certain chaotic places that don't have respect for rule of law. But that is a scenario and if I have done all of this to protect my wealth and I don't contemplate that as a scenario doesn't mean I necessarily have to call on it, but I need the call option.
But it also translates to holding your own keys. Maybe there's a 10% chance that Coinbase suddenly locks out everybody from their Bitcoin. That is a ruin event if they do do that. I cannot afford that and I know that I'm going to have to take out some responsibility to control my own keys and I'm willing to do that, because I understand risk better. I understand risk better now by understanding Bitcoin better. I understand what is at risk holding Bitcoin and what is risk, investments and contributing my time and labour to having an enterprise at Unchained Capital as an example.
Once you question some very foundational principles and start to understand that the experts aren't experts and that all this other world that seems crazy actually is and it doesn't have to be, then you very naturally, out of self-preservation and self-defence, think about, "Well, if I've gotten all of this, if I've figured all this out, that is precious and I have to protect it". So, even if it's 1% probably or 5% probably or 10%, if it were to happen, it becomes untenable and I have to protect myself against that.
That is part of the process as individuals, and ultimately when you add them up into communities, states, countries, societies, when you have more and more people that are hardened, that are taking accountability and personally responsible, the ultimate outcome for everybody is better in those environments.
Peter McCormack: Okay, let's talk about Bitcoin being common sense and again, this is good timing, because our favourite critic, Mr Peter Schiff up here, he put out a tweet, I think it was yesterday, referring to Michael Saylor's position saying that we need, I can't remember if it was 1,000 hours to understand Bitcoin, not that I fundamentally agree or disagree with Saylor, but you refer to Bitcoin being common sense. I think it can be, I don't think it's straightaway; that's one of the things. It's like when Neo sees the Matrix; you have to get to that point where you see it, and there's a different trigger point for different people. It certainly didn't happen for me straightaway. I was buying Bitcoin, because I just thought it would go up.
But it comes a point when it starts to make common sense when you hit that trigger point, whatever it is for you, and then you cannot unsee it. All that happens is, whatever you're doing, whether it's a Jerome Powell being interviewed, whether it's a news report, whether it's inflation prices coming in; whatever happens, you start to see things and put them in the context of Bitcoin and you can't unsee this. Then, Bitcoin is inevitable; Bitcoin does become common sense.
Parker Lewis: Yeah. The idea that I tried to draw out in Bitcoin is Common Sense, is that oftentimes people say that Bitcoin is an IQ test and I don't see it as an IQ test. I think that a lot of people overthink it, that people that might score high on an IQ test, they'll sit at Bitcoin and they'll stare at it and they'll stare at the components and they'll fail to see the forest through the trees. And then you'll have someone else come along and they'll be, "Oh, wait, there's only going to be 21 million Bitcoin and the government's printing trillions of dollars? Yeah, what do I have to lose? This makes sense; this makes more sense than that".
So, there was a pamphlet or essay written by Thomas Paine before the American Revolution, which was titled, Common Sense, and I think the opening line of it, which I included in my piece, talks about essentially communicating that the ideas that he's going to put forward are not yet commonly accepted, and that oftentimes time rather than reason or logic makes more converts, that it's just something you have to experience, it's something that you have to feel and see, and then it makes sense rather than, you can't just overthink it now.
Coincidentally, he basically then makes a logical case as to why it's obvious that we have to have an American Revolution. But when I think about those ideas in Bitcoin, it's that more often somebody just has to have an experience that makes Bitcoin make sense. That might be somebody gets censored by their bank and they get a letter that says, "Hey, we're closing your bank account tomorrow, or in the next 30 days. You're no longer a customer". I think it was a Sequoia partner, or a major Silicon Valley VC, who got a letter. He had been a client of either Bank of America or Wells Fargo, one of those legacy banks, and they were shutting his bank account down in 30 days for no apparent reason.
Peter McCormack: Dude, it happened to me. I had my Lloyds Bank, for 25 years, I mean I've talked about this a million times, but I was with them for 25 years. They phoned me up and they wanted to go through all of my payments and explain what they were, basically the exchange transfers; it was the Bitcoin stuff. I just said, "Look, it's none of your business. I'm a 42-year-old adult, I'm a parent of two children, I don't need a parent from you at the bank. I'm not overdrawn, I don't owe you any money and I'm not telling you this".
I got a letter, my bank accounts were going to be closed down in 6 weeks, after 25 years of service, and that was it; I was done. That was only this year and I had massive of conviction already, but that was, "Holy shit, I can lose my banking services. What if I lost my banking services and they refused to give me my money back?"
Parker Lewis: Right, because it's not actually your money, it's their money; they just have a liability to you. It was interesting how you said that, "After 25 years of service", because that's literally what it is. You served the bank for 25 years and then they just told you, "Hey, you're out". So, it's either an experience like that, or it's somebody in Argentina that's seen their currency hyperinflate, and maybe we're not truly at hyperinflation yet, but that's where it's going, and they say, "Okay, I don't have to understand everything about Bitcoin, but I'm looking at it and it's holding it's value, it's functioning, and this other thing isn't. It's an AB test".
There are a few principles that I talk about in Bitcoin is Common Sense, which are two truths: money doesn't grow on trees; and, there is no such thing as a free lunch. Those are things that we are taught as kids and that we fundamentally know. Money doesn't grow on trees and there is no such thing as a free lunch; somebody has to make it. When you start to realise what's happening today, that the government's printing trillions of dollars -- and I try to quantify it for people.
In the three months from March 2020 to June 2020, the Federal Reserve printed $3 trillion, digitally created, however you want to think about it, the digital equivalent of printing $3 trillion of base money, effectively doubling the amount of money that was actually in the banks, in the banking system itself; not necessarily the total base money supplied, but almost doubling the actual dollars that the banks themselves have. This month, the last week, if you go back and look at it, the Fed right now is printing over $100 billion a week, or at least they did last week.
It is common sense that if you are going to contribute eight hours a day to somebody else, which is what you're doing when you're doing work, it doesn’t make any sense to have somebody else in a land far away to be able to print the unit of currency that you're being paid in; that doesn't make any sense. In Bitcoin, you can basically either recognise that the old system is a world where somebody gets to print all the money and it's just not you, or you opt into the system where no one can get to do that including you.
That is the idea that people key in on, where it's like 21 million; it's fixed. Everyone is afforded equal rights under the law of Bitcoin; nobody gets to print money. Whether or not they understand how that's possible, it's just a common-sense test. It's like, "Hey, the government printed $3 trillion last year. They're printing $100 billion a week this year. Which one do I want?" I can see the market test of Bitcoin holding its value over time; I don't need to know how the telephone works to be able to use the telephone; but they key in on that common sense that money doesn't grow on trees.
There's this other idea that I talk about in the piece, because most -- status is a pejorative term, but most people that are apologists for the Fed system, that believe the Fed is doing some good in the world, I would argue the opposite. I would argue that they're not doing it intentionally; they're not trying to make people poor, even though they are.
If you think that the Fed is doing some good, actually go all the way down to the operation of when the Fed prints $3 trillion. They hit a button on a computer screen and suddenly, $3 trillion appeared. Did that create any economic value? It didn't create any jobs. When the Fed creates $3 trillion, they literally hit a button on a computer screen. Did something fundamentally change about the economic system, or did it just be co-opted to change who gets to allocate the money, because it most certainly is the latter and that changing of who gets to allocate the money actually itself becomes destructive to the economic order; it actually makes it function less well.
Peter McCormack: Well, there's a bun fight as well, right; prior to the pressing of the button, there's a bun fight between the Democrats and the Republicans about how the money will be used?
Parker Lewis: Yeah, absolutely. And that also isn't the actual people who are doing the work, who are contributing value to society by actually producing things of real-world value, tangible value. So then, when we bridge together that idea of money doesn't grow on trees, which is true, and that there is not such thing as a free lunch, it's like, "Hey, you just made lunches for somebody and they just gave money to somebody else that made the lunches that you created today worth less". Someone has to figure that out by having their actual stored labour, which is what money is, degrade over time which, again, people will say inflation is theft or whatever it is.
I would just think about it as, I produced something for somebody yesterday and now they get to buy it from me for less today. Why does that make sense? Or, I have to buy something that has less value than I've already produced in the world, and it doesn't make sense. The operation of printing money does not actually create economic value; it actually degrades it. When people zoom out a bit, rather than key in; you can focus in, but how does Bitcoin credibly enforce the fixed supply of 21 million; how does it do that? It's a really hard equation to solve, and can it possible be, the more -- it's possible to know and I help people almost every day understand the "how" Bitcoin credibly enforces the fixed supply of 21 million.
But I also tell people, before you try to zoom in on that problem, first zoom out and understand the "why", because the why is common sense. The why of the common sense is, we all need something that is an alternative to what exists today, when what exists today doesn't make sense. And over time, it is going to be looked back upon as, "Oh, yeah", it will be the most obvious thing that's ever happened. In 40 years, when we look back on these days of Bitcoin, they're going to be like, "How the hell did people not see this?"
It is those kind of foundational build blocks of realising that money doesn't grow on trees, or there is no such thing as a free lunch, the government's printing trillions of dollars, Bitcoin is offering something in stark opposition to that and all it is is a system where people can't print money, and you've got to understand how it's possible for something digital to be money. That's where I send people back to our prior episode of What Bitcoin Did to understand some of those foundational principles.
But don't overthink the problem; this is common sense; it's not an IQ test. A billionaire can look at Bitcoin and not get it, which they often do. Mark Cuban, Warren Buffet, Charlie Munger, they are the type, the high IQ people, they will stare at this equation; they will miss it. Then, someone who is working on the line will look at it and be like, "Holy shit, this is awesome! 21 million; you're telling me it's possible that I can be paid in a form of money that the government can't debase? I'm kind of distrusting of that whole printing of trillions of dollars. I don't particularly seem to benefit from it. Yeah, I'm in". That's the idea.
Peter McCormack: Especially if you're in Argentina or Lebanon, it's a lot easier to explain to somebody than maybe in the US or the UK. I mean, we've discussed that before. If you've had your money destroyed by the government through hyperinflation, or high inflation; I mean, we're seeing relatively low inflation right now, but if you've had that experience, I think it's a lot easier to understand.
I also think, my starting point always these days is, I used to say to people, "You need to get a bit of Bitcoin, you need to experience it". I actually tell people now, "Go and read Vijay Boyapati's, Bullish Case For Bitcoin, and specifically look at the chart he created which grades every form of money based on it's properties. Just look at that, it's all you need to know; just look at that chart and that's why I hold Bitcoin". I think that chart itself explains the common sense.
Okay, cool. Let's talk about Bitcoin Fixes This, because I sometimes think it's an overused term and you and I had a disagreement with regards to Venezuela. I've said I think I might be wrong; I'm ready to have a beer and a steak and discuss that again with you. Last time I said, "Bitcoin won't fix Venezuela", and you disagreed with me, and I think we're going to have that conversation. But generally speaking, I sometimes think the Bitcoin Fixes This term is overused, but I generally support the idea of Bitcoin Fixes This; I think it is healthy. Let's talk about this.
Parker Lewis: So, in the piece, Bitcoin Fixes This, I specifically talk about quantitative easing as an idea. And I think that when bitcoiners joke about -- I wouldn't say necessarily joke, because there's truth to it, but when they meme that Bitcoin Fixes This, it's with this perspective that so much of what's broken about our economic structure, but then it seeps in to more of a societal structure, is because our money is broken.
We don't necessarily know how Bitcoin is going to fix something, or when it's going to be fixed or exactly how. If we key in on that some problem ties back to the foundation of money and the monetary structure being broken, then Bitcoin fixes it. We don't necessarily know what the solution is, but we know that the root cause is something to do with money being broken, governments printing trillions of dollars and monetary debasement. Once you start to understand Bitcoin, you can start to see those things.
If we think about the fact that 50% of Americans don't have savings, well if you have a form of money that degrades in value and you incentivise spending of it and everyone becomes trained not to save because it's not in their interest to do it, because their money will literally purchase less in the future, then what do you get? You get people that don't have savings.
But if you have a form of money that incentivises savings, that increases in purchasing power, then every single individual that's saving in that currency will think long and hard about whether they actually need that cup of coffee, whether or not they need the house that's as large as it is, because every economic decision changes based on the calculus of, "Well, rather than the default position they're going to purchase less in the future anyway, might as well spend it now", it turns to, "Oh, this is actually going to purchase more. I need to make sure that I really need this".
So, that's just one example, but if you trace it all the way back to, I'd say, where the spring comes out of the ground, we're talking about a fundamental problem of governments being able to print money, and that Bitcoin fixes that. Everything else that Bitcoin fixes is a derivative of something that stems from the monetary structure, not just having a crack in the façade, but truly falling on its own wing at the current moment.
I also, though, have a recognition that most people, when I throw the term around quite liberally and frequently, quantitative easing, most people don't understand what quantitative easing is. So, I talk about it in that piece, Bitcoin Fixes This, an architecture of what QE is and why it fundamentally causes imbalance, and why it ultimately breaks both the monetary structure and the economic structure, and then some of the consequences of that.
Peter McCormack: Well, it's one of the biggest impacts that Bitcoin had on me, is that consideration around spending, because you know what, Parker, I've never been financially responsible. I've always just spent, spent and enjoyed life and got to the point where I'm in my early 40s, I don't have a pension, I didn't have particularly strong savings. Well, I say I'm in my 40s now, but I was 37 when I got back into Bitcoin. But it does reconsider things, because it's like, "Do I purchase this or do I hold sats? If I hold those sats, where do those sats put me later on?" I think that's a really important thing.
That misallocation of resources, I mean we talked about that in the first episode we made. And it also makes me think of this other thing with regards to CBDCs; I don't know if you've seen it. I think it's China who was talking about, with their CBDC, they're talking about putting a use-by date on money; a fucking use-by date where you don't have it anymore! I was like, "What the fuck?" That's next level encouragement to spend.
Parker Lewis: I would check on that. I mean, I would not be surprised by anything with how crazy people are getting today; the world's gone mad. But if they do that actually, do you have no self-awareness? Have you totally lost your mind? I think the answer's yes, but I would look at something like use-by date as, I could understand how someone truly fucking batshit crazy could think that's a good idea. But those are the types of things that cause people to wake up out of the Matrix, to be like, "Holy shit, they just did that!"
Peter McCormack: Well, it's here, I mean I've got it, "Digital Currency: yuan comes with an expiry date: spend it or it will vanish. The Keynesian dream to boost the velocity of money may finally come true. China is exploring exploration dates with its upcoming digital yuan, which means the currency will expire if not used in a certain timeframe"! Link that in with your fucking social credit score; Jesus Christ!
Parker Lewis: But these are the things where you say you kind of feel bad about, you know, governments printing money is good for Bitcoin. I don't want to see the US economic system, or any economic system, destabilise, because that's literally how wealth gets destroyed. But it's also out of our hands. If you do crazy shit and print lots of money, sorry this is what happens and the history is already written and we're all going to have to live through it, so thank you.
But instances, like what you just read, it's like there are crazy people in the world that have no goddam common sense, that are making decisions that truly are life and death. I don't want to put a vibe for a meme of, "People are dying!" but Venezuela, because it's not funny; when money fails, wealth is destroyed. And what wealth destroyed means is that people's quality of life and ability to access basic healthcare, food, water, medicine, power, all those go away, because that's what we're talking about.
But when you have people that will literally think through and say, "I'm actually going to say this, that we're going to put money up that expires and if you don't spend it…", and they have no ability to think through the first-order, second-order, third-order effects of what is going to happen to a society when you do that, that people are not going to plan for the long term. When I think about Bitcoin, it's difficult to articulate these ideas.
But it's almost like there's a Y-axis. On one side of the Y-axis, it's money slowly increases in purchasing power versus the alternative of money slowly decreases in purchasing power. Now, we fundamentally know why ultimately, money can't just slowly decrease in purchasing power, that eventually it will break and it will no longer be valued and it will happen in a very rapid descent; we've seen it play out in history and we know why that will happen.
But if we just assume, in this instance of everything degrades, everything increases in purchasing power, which is what will happen if you have a neutral supply of currency like Bitcoin, a finite supply, because of the incentives of the currency, think about 7 billion people operating with a calculus of, "My money will purchase more in the future versus less", versus the opposite, "My money will purchase less in the future versus more".
You have not just 7 billion people, but it's every financial decision, every economic decision, what they build, how they build it, how they save, how they consume. It sharpens literally 7 billion pencils multiple times a day; it has people, and Saifedean talks about this quite a bit, it necessarily causes people to weight the future more than the present. And when you have people that are weighting the future more than the present and you're not adding those up in ones and twos, but in millions and ten millions and hundreds of millions and billions, then the actual output of that society will be far greater, more peaceful, more functional, less divisive, than what we have today.
When you have everyone being forced onto a hamster wheel that necessarily causes people to make short-term decisions at the consequence or expense of long-term stability, that is what you get. That's like an inception of this meme of Bitcoin Fixes This. But if you hack the system, if you just flip that script, flip it from everything marginally degrades to everything marginally improves, it changes everything at a very fundamental level. That is ultimately the alternatives to AB test that people have in Bitcoin; they can either stay on the hamster wheel, or they can get off.
Peter McCormack: All right. Let's talk about Bitcoin being the great definancialisation, and the one bit that stood out for me in this, that really was a lightbulb moment, is where you talk about risk-taking being productive, risk-taking is rewarded. It makes me think of things like the FDIC Insurance programme for the banks that allowed them to take massive risks in lending money out to people who could not afford properties, well it helped the banks to take massive risks and lend out money to properties they couldn't afford, knowing the FDIC would bail them out, as they did in 2008.
To me also, the really interesting part about this is, it's only a few people who really get access to these kinds of risks, these kinds of benefits from taking these risks, and it puts the whole system at risk from complete collapse by a few bad players. I mean also, I added that, it really makes me think of The Big Short. It's a brilliant film; it's a film that means a lot to a lot of people with Bitcoin. But it's the bit actually at the end, where the family pack up and they get in their car and they've lost their home. I can't remember, what was the number; was it 6 million people lost their home in 2008? I can't remember the number, I'd have to dig it out, find out.
But what it makes me think is that there's a few risk-takers that are impacting the lives of millions of people.
Parker Lewis: Well, I would think about it as maybe that there's a certain class of individual, or a certain train of economic thought, and I'll just throw Joe Weisenthal under the bus --
Peter McCormack: Okay, interesting.
Parker Lewis: -- because he's a Bloomberg talking head. But they look at, say, an interest rate that's paid on a deposit, and they say, "People shouldn't be rewarded for not taking risk". Basically, if you just have money in the bank, why should you be paid an interest rate? They use that as a defence for this truly bankrupt and broken idea of negative interest rates. It's like, it should be a privilege for you to have somebody else hold your money and to have them already lend it out and you should actually pay them for that. You should pay them for the right to have already leant your money out and to already take risk, and the best-case scenario is they have to give you less money back in the future. The worst-case scenario is that they gave it to someone and you're not going to get any of it back, I'm sorry.
It's like people are living, maybe it's the Matrix, it's like they're living in a world where they're devoid of reason, where it's like, "No, that's my money". And I key in on this point of Bitcoin is the Great Definancialisation, that if you are to have money, you have already taken some risk. You have already invested your time and energy, whether you did something speculatively, or you worked behind a counter, you contributed your time and it was based on a promise that you would be paid at some point in the future.
But for most everyone, they're paid two weeks in arrears; they're taking some risk. If I contribute my time and energy -- but that also starts far beyond when the work is actually contributed. So, most people have to prepare decades, going back to middle school, when people start to become conscious of cause and effect; and middle school for us is right between elementary school and high school, 7th to 9th grade. It's like, the decisions that I make today are going to dictate whether or not I have a home in the future, or I'm comfortable, or my life is good.
If I think about that in a more tangible way, think about someone that has a craft, that is learning to play the violin, or an NBA player, an NFL player, that are making sacrifices for a decade so that you can show up to the stadium on a Sunday and cheer and be inspired by speed and strength, and be invested there. They put in ten years of work to get to that place and that's their craft. So, the risk-taking is devoting their time and energy and life to something that delivers value to other people. Then, by the point that you get paid money, you've already taken the risk, you've now been compensated.
What our current economic system and monetary system cause is that it forces people onto a hamster wheel by which they perpetually have to take risk; because, if I've invested a decade to get paid money, which is the output of risk-taking, if I'm immediately put in that position of now that's going to degrade 2% a year, we've been lulled to sleep basically. We are the frog that as the water boils, we'll be like, "Oh, well it's just 2%". But everyone, if they sit back and they say, "Well, what does that mean over a decade?" 2% over a decade, compounded as just under 20%, compounded over two decades is just over 40%.
Imagine having the consequence as an individual, always think about it as the individual and then multiply it, or aggregate up to a collective; but if each individual's put in a situation where they had to invest their time, energy, take risk, be paid in a form of money and then, over the course of a decade, they have to replicate or replace 20% of the surplus of what they've provided to somebody else, because that's what savings in monetary form is: you've provided value to somewhere else and you have consumed less from other people. If you have to replicate 20% of that over a decade, or 40% over two decades, you start to make very bad individual decisions. You start to take risk, rather than save.
You're only taking risk for the purpose of maintenance, of replacing what you've already saved. And then, when you take that from an individual level and you add it up, you start stacking up tens, hundreds, thousands, millions, tens of millions of people, you get very perverse incentives and outcomes ultimately. People have to understand that there is a difference between savings and investment and risk-taking.
I think about savings as monetary; risk-taking as putting monetary savings at risk, with a goal of producing something of value. Think about it as the entrepreneur. I see a problem; it is that it's difficult for people to custody Bitcoin themselves. I'm going to endeavour my life, my time and energy to helping build a solution that makes it easier for people to custody their own Bitcoin. That's what we're doing at Unchained Capital.
Now, if I'm wrong about that, if that's not what people actually want and they just want to custody with a third party, then I've devoted my time and energy and I'm not going to ultimately be paid for it in a way that I expect to be. That is trial and error and that's risk-taking. I'm risking my own time, which is ultimately my own labour, which is ultimately my life. Now, that's a decision that I'm making and I'll only be pursuing that endeavour if I expect to be rewarded for it, but I'm putting my own capital at risk, my own time, my own energy at risk. But I've got Bitcoin. That's my savings; that's my fallback so that if this doesn't work out, I don't have that ruin event.
Now, what people have had to be trained into is that when they invest in the stock market, that that's a form of savings. No; that's risk-taking; you've put your money at risk. But they do that and that doesn't mean that all investment -- investment is incentivised, because I'm incentivised to go out and take risk, because if I deliver value to people that they didn't even almost understand that they needed before they needed it and I built the architecture and the infrastructure to provide them a service, I get rewarded in more Bitcoin than I would otherwise get if I didn't do that.
So, people have to understand that the lines have been blurred in the existing and the legacy world. But it goes back to that idea of the drug dealer, right; they create their own market. They give their first hit away for free and then people get addicted to it, right? That's the 2% inflation that causes purchasing power to degrade, where if you just looked at it as one year, you might be able to overcome. But then, they start gearing their entire lives around maintenance of replacing what otherwise is degrading; and it's only degrading because the Fed is literally printing money, because someone in a far-away land is just deciding to degrade all the value that they've already contributed to the world.
So, when people start to key on this idea that savings is fundamentally different from investing or risk-taking and at most, of what people perceive to be savings in our current legacy system, is not actually savings, but that they've actually been forced onto that hamster wheel, because they've been told that they have to make their money grow. Why do they have to make their money grow? Because it degrades in value. Why does it degrade in value? Because the Fed prints it.
Then it's like, "Oh, wait, but I don't have to exist in that world anymore. There's this other alternative that I can opt out of that world and I can just save in a form of money that doesn't get debased". Life becomes much more simple in that world. And what people are going to realise is that all of these financial assets that have become monetary substitutes, or near stores of value, are in fact risk-taking endeavours.
Bitcoin is superior in performing the function of what they are actually trying to solve for via these financial assets. And over time, people will look at it and they'll be, "Why am I holding a junk bond that's returning 4% in a currency that is being printed at faster than 4% a year?" And they will say, "I'm out, eject, give me Bitcoin". Then, they will look at stocks too and they will say, "Wait. This stock has a dividend yield of 1%, or this stock doesn't even pay a dividend, and it's trading at 100X times earnings. Why do I own this? I only own this because it's part of a 'blue chip 401(k) Plan'. I'm out, give me Bitcoin. All I need is a better form of money that doesn't lose value".
As more people figure that out, this idea of the difference between savings and risk-taking and investments, they will realise that they don't have enough money, that what they actually have is at risk, and that they're incentivised sooner than the next guy down the line to get out of the financial landscape that is highly levered and get into a form of money that can be fully reserved, that can be out of anybody else's control.
As they do that, that is part of the Bitcoin monetisation process; it's part of the process that will cause Bitcoin to become less volatile, to become a stable day-to-day currency. And there is one of the lines, because it's something I think people feel once they get into Bitcoin, that there are two ideas. There's something deeply cathartic about beginning to save in a form of money that works in your favour, rather than against it. It's like an 800-pound gorilla being taken off your back, or somebody's foot being put on your throat.
When you take that off, you're like, "You know what; I've got the best form of money that I could possibly have, or that's ever existed". I can go focus on my day-to-day life, the things in my personal life, creating value for other bitcoiners at Unchained. I can do that and I don't have to worry about that. That's there and that's always going to be there for me. If something doesn't work out in the risk-taking endeavour that I'm currently pursuing, I've got that and I know that it's secure.
It actually allows you to think about money less. We might talk about Bitcoin and the ideas around Bitcoin, but when you have a form of money that does its job, that works in your favour, rather than works against it, you actually get consumed less in the day to day about needing more. If your money is going to hold its value better, you almost definitionally need less of it. As you need less of it, you think about it less and your life can be devoted to actually delivering value to other people, rather than just making money.
It truly is a little bit mindboggling, the effect that Bitcoin has on you once you start to get beyond the break essentially, once you get past the beginner stage of adoption and it starts to become intuitive. You realise that Bitcoin is the solution to a lot of problems, but in a world that has been hyperfinancialised, that is all part of a hamster wheel that has you believing that you need to make more money, or that you need to make your money grow. Really, you don't really need to make your money grow; you just need a better form of money, and life becomes so much more simple when you do get that better form of money, and it is Bitcoin.
Peter McCormack: Well, that's a great way to finish it, Parker. I can't really add much more to it than that. It's really strange listening to it all though, because as you talk through it, it gives me the feeling of, this is everything I've been through over the last four years, this better understanding. And look, I'm not the smartest bitcoiner ever. I mean, I don't understand it technically like others, but I do understand simple things, about why I should hold Bitcoin rather than other assets.
It's why I've gone to that point where I'm 90%, 95% in now; where I only hold eight weeks' cash flow in pounds for my business and personally, and I've gone down that path. Everything you've talked about, like accepting volatility, considering your purchases, I've been through all of that and I feel in a much healthier place personally than I was prior to Bitcoin, financially certainly. I feel, like I said before, I feel more anti-fragile myself.
Listen, I really appreciate you coming on and doing these shows and explaining to people. You explain Bitcoin in a way that other people don't. You've always got that consideration for what money is and what makes good money and that's always a lens through everything you seem to do, or that's certainly the lens I see it through when you're explaining it. So, I really appreciate it, man.
Certainly, you should tell people a little bit about what you do, because you've put the effort in for me here! Tell people a bit about Unchained.
Parker Lewis: Yeah, well Unchained is based in Austin, Texas. We host the awesome Bitcoin developers meet-up. Always recruiting bitcoiners and Bitcoin companies to come to Austin and Texas, because I do think that coming on these podcasts and helping to educate about Bitcoin, helping to accelerate the path down the rabbit hole, or the adoption curve, to someone really understanding it at an intuitive level, what we're ultimately doing here is building a monetary network.
Unchained Capital, in our own way, are helping to build a piece of that, which is helping to standardise and institutionalise collaborative custody; basically, helping create a bridge between a world if you're on an island self-custody and you're checking all of your rights at the door with a full custodial solution, something that puts keys in people's hands, but has a trusted partner to be there alongside of them, to help them secure their assets; but ultimately, putting them in maximum control, where people are sovereign over their wealth.
So, that's really the core foundation of our platform. It's built on multisig; it's built on the idea of collaborative custody. Our clients have two keys; we have one. But then, that serves as the foundation for what we think is a more anti-fragile financial institution that should be built tailored to the Bitcoin world.
But I think about it as a much broader piece. We're doing one thing in the Bitcoin space, but what we're all doing in aggregate, literally anybody that's just adopted Bitcoin, people are producing content, people are building infrastructure. Most people from the outside looking in see a price trading on a screen and it feels like a stock. What is actually happening is a monetary system is being built from the ground floor. Individuals and businesses are building that, and we're doing that in Austin.
I have an incentive personally and professionally, but ultimately because I think that it's important for bitcoiners to be around and to be in places where they can come together and talk about ideas and talk about what they're working on, because the network doesn't get built without us. So, if you're a bitcoiner that is thinking about making a move to Austin, people are getting off the boat every day and it's only gaining strength.
So, beyond what we're doing at Unchained, there's something special happening in Austin and if you are having FOMO, you should be, and the next Austin Bitcoin developers' meet-up is 19 August, and then there's a lot happening in the State of Texas. Not only is it the great mining migration, the great Chinese mining migration of 2021, and many miners are coming to Texas, but BitDevs Austin is 19 August.
Pleb.fi Austin is the 21st and 22nd. We're hosting an event, I believe it's at our office, it might be on campus, for our UT students, University of Texas students, to help them understand Bitcoin. One of our interns is going to be leading that. And then, we're going to go down, and that's the 24th, we're going to go down to Houston for the Houston Bitcoin meet-up. The Houston Bitcoin meet-up, I believe, is already the 2nd largest meet-up in the country.
Then, we're going to complete the Texas triangle, going up to Dallas, for BitBlockBoom!, which is the 26th to 29th. So, there's a lot that's happening in the State of Texas in general, but particularly this month. So, if you were thinking about coming to Texas, you should probably come check it out this month in August. There'll be a lot of bitcoiners around, all over the state, and we just want more and more Bitcoin and bitcoiners here.
Peter McCormack: Well, you've been hammering me to move there for a long time, and I'm getting closer and closer to certainly spending more time there. I told you, I'm going to spend quite a bit of time next year. I'm coming in in three weeks. I'll come to Houston, I'll come to Dallas, and I'll probably buy the biggest steak I can find you, because I certainly owe you it, and we'll have a proper catch-up, talk Bitcoin and eat some steak and drink some whiskey, man!
Parker Lewis: I'm looking forward to it.
Peter McCormack: All right, brother. Listen, appreciate you and everything you're doing, and I will see you in a few weeks.
Parker Lewis: See you soon.
