WBD5264 Audio Transcription

Orange Pilling the White House with David Zell

Release date: Friday 8th July

Note: the following is a transcription of my interview with David Zell. 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.

David Zell is a co-founder of the Bitcoin Policy Institute and Director of Policy at BTC Inc. In this interview, we discuss fighting to make congress aware of Bitcoin’s social value, the strategic benefits of Bitcoin for the US and how our rights are being erased in a digital world and Bitcoin’s defence.

“We have to recognise that there is value in market-based alternatives, and that open monetary networks, bring risks like anything, but also bring unimaginable opportunity for spreading democracy, for ensuring civil liberties and rights, and for connecting more people to the global economy.”

— David Zell

Interview Transcription

Peter McCormack: Morning, Zell.

David Zell: Good morning.

Peter McCormack: How are you?

David Zell: I'm good.

Peter McCormack: So, you're 8th coffee of the day?

David Zell: 3rd.

Peter McCormack: 3rd.  Hey, so we're back and we're both still degenerate vapers, which isn't very good.  You should have taken the bet.

David Zell: Yeah, I should have.

Peter McCormack: Shall we go again?

David Zell: No.

Peter McCormack: You don't want to do it?

David Zell: We can't start every episode this way!

Peter McCormack: Well, I think I can stop tomorrow.

David Zell: No, you can't!

Peter McCormack: I think I can.

David Zell: I don't believe you!

Peter McCormack: Mate, how have you been, how has your week been, how many people have you had a fight with on Twitter this week?

David Zell: Oh, man, yeah.  I really came out of my Twitter shell.  I was beefing with a lot of nocoiners.  It was fun.

Peter McCormack: Yeah, what happened?  Tell people what happened; it's been a big week for you.  And congratulations, by the way.  Tell people what you and Gladstein have been doing, because it was fucking awesome.

David Zell: Thank you, yeah.  So, I guess at the time of this recording, about a week ago a group of "global tech experts" wrote a letter to Congress, where they say they advocate for responsible financial innovation.  They say in the letter that blockchain, crypto, Bitcoin, all of this stuff is just fundamentally useless, evil, solutions in search of problems.  And it's like a terrifying message, because it completely ignores the real-world experiences of people that have used Bitcoin, not to speculate or even save in, but offer them access to finance when nothing else worked.  So, they sent this letter to Congress, they made a big deal about it.

Peter McCormack: Who organised it?

David Zell: Stephen Diehl, Chief Technology Officer of a private blockchain start-up, trying to loot public goods and take them for himself.

Peter McCormack: Hold on, a private blockchain start-up?

David Zell: Yeah, Adjoint.  So literally, most of his work, from what I've seen on GitHub, is just forked off of innovations that have actually happened in the blockchain world, so rollups and all of this stuff.  Yeah, he's just forking things that people have open-sourced, turning it into a private blockchain and private company, and of course going after his competitors as one does.

Peter McCormack: Hold on a second, hold on, we're going to have to go back a step here.  I think I'm blocked by him.

David Zell: Me too.

Peter McCormack: Is he the guy who routinely does threads attacking Bitcoin, maybe crypto as well, but I've only see the Bitcoin ones, but he doesn't allow replies, he switches off the replies?

David Zell: Yes, that's him.

Peter McCormack: Oh, okay.

David Zell: He kind of looks like a malnourished elf or leprechaun.

Peter McCormack: Can you try and bring him up, Danny, I just want to check?

David Zell: He looks like a malnourished leprechaun.

Danny Knowles: What's his name, sorry?

David Zell: Stephen Diehl.

Peter McCormack: Yeah, let's have a look.  Hold on, I just want to make sure it's the same guy.

David Zell: Good morning, Peter Schiff.

Peter McCormack: Good morning, Peter Schiff, how are you today, fine sir?  Yeah, because if it's who I think it is, I actually think he blocked me after giving a reasonable reply, but there's every chance I retweeted it and tore --

Danny Knowles: This guy?

David Zell: Yes.

Peter McCormack: Yeah, this guy, okay.

David Zell: Let's see if he responded to the letter.

Peter McCormack: Hold on, "Crypto assets are indeed an example of an economic technology.  Except it's one where the economists think it's rubbish.  And the technologists think it's rubbish".  That's just fucking bullshit.

David Zell: Oh, that article's terrible.

Peter McCormack: And then he's retweeting that New York Times article, which was based on data that was analysed, what, in the first year and a half of Bitcoin's life?

David Zell: Yeah.

Peter McCormack: Absolutely moronic.

David Zell: Look at this, "Web3 NFTs and cryptocurrency are dangerous to society and the planet, and computer scientists agree".  So, I mean that was the point of our letter, was to say that you can pretty easily --

Peter McCormack: Hold on, that's not our industry.  We're not Web3 NFTs.

David Zell: Exactly, that was Alex's and my point, was that you can very readily separate Bitcoin and stablecoins, I don't mean like LUNA, but the larger stablecoins and Bitcoin, as being legitimately lifesaving.

Peter McCormack: Keep going, Danny, "Web3 is stupid".  I mean, I agree with him on Web3 being stupid.  Okay, so his whole account is dedicated now really to attacking Bitcoin, crypto, NFT, etc, but he's part of a private blockchain group.  So, he's building something based on the fundamentals of one of Satoshi's innovations?

David Zell: Yeah.

Peter McCormack: Can you find his company?  I'm sorry, I just want to get to --

David Zell: Oh, he's scrubbed all -- you'd have to use Wayback Machine, because he's scrubbed a lot of the details on his company's website that confirm the way in which he's relying on ultimately Satoshi's innovation, but also the work of people -- I mean, a head nod to them -- to the work of people outside of Bitcoin, but in the broader crypto world.

Peter McCormack: Okay.

David Zell: I mean, he is worse than a sort of Web3 Ponzi scammer, because he's not only eschewing the principles of Bitcoin like they do, but then eschewing the principles of open-source software.  He wants to take whatever utility he can find in what should be free and open-source, public software, and just loot it, a public good, for himself.

Peter McCormack: You see, I just thought he was ideologically just against Bitcoin; you know you get people who ideologically against it, they think it's criminals.

David Zell: Yeah, or they read the David Golumbia stuff and think it's just super-right wing, QAnon.  They think it's an example of what Richard Hofstadter would call "the paranoid style" in American politics, the nutters basically that have been around forever.

Peter McCormack: Did you find anything, Danny?

Danny Knowles: Not yet.

Peter McCormack: We'll have a look later.  Can you find their letter that they wrote; I haven't actually read the letter.

David Zell: Yeah, so we mirrored their website exactly.  So, they registered the domain, concerned.tech.

Peter McCormack: Concerned.tech?  Oh my God!

David Zell: So, I saw this and obviously was just, "Wow, this is stupid".  Gladstein called me and was like, "Yo, Zell, I've got a great idea, but we need to figure out some way to respond to this".  So, I instantly registered the domain, financialinclusion.tech, which you can pull up next to.

Peter McCormack: Let's just read this, one second.  Danny, can you scroll to the top of concerned.tech?  Okay, so it's got some quotes, "Crypto bosses flex political muscle", "Tech experts urge Washington to resist", etc.  "If you're a concerned computer scientist, technologist or developer and think that the status quo on crypto assets is not sustainable", well part of that I actually agree with, "please join the growing voice in the community that stands for responsible financial innovation, by signing the letter". 

Okay, this is where it frustrates me, because I would rather have Bitcoin and crypto separated, because I think some of crypto is unsustainable, but I think they're going to be talking about global warming and energy use.

David Zell: So, if you could open a new tab, and you go to --

Peter McCormack: Hold on.  Danny, could you click on, "Signing the letter"?  Is that just signing?  Where is the letter?

David Zell: That's the letter right there, scroll down.  The letter is just a Google form.  So, this is it.

Peter McCormack: Okay, "Dear US Congressional Leadership, Committee Chairs and Ranking Members, we are 1,500 computer scientists, software engineers, and technologists, who have spent decades working in these fields producing innovative and effective products for a variety of applications in the fields of database…"

"We strongly disagree with the narrative peddled by those with a financial stake in the crypto-asset industry, that these technologies represent a positive financial innovation and are in any way suited to solving the financial problems facing ordinary Americans…"  Keep scrolling, man.  Have they done anything on sustainability, energy? 

Here we go, "Other significant externalities include threats to national security through money laundering and ransomware attacks, financial stability risks from high price volatility, speculation and susceptibility to run risk, massive climate emissions from the proof-of-work technology utilised by some of the most widely traded crypto assets…"

So, the annoying thing is, I wish this separated Bitcoin and -- oh, fucking hell, "Lead signatories", okay, scroll.  David Gerard, okay, well he's a cunt, so fuck him; Stephen Diehl is a cunt.  Sorry, that's the second time --

David Zell: Kelsey Hightower took his name off of this list, by the way, after debating Gladstein.

Peter McCormack: Yeah, Nicholas Weaver is also a cunt.  Dave Troy?

David Zell: Dave Troy is the lead QAnon guy basically now.

Peter McCormack: I mean, this isn't really a credible list of people, it's just a bunch of morons.  Again, I'm sorry for swearing, but sometimes you have to do it.  Okay, typical bullshit.  By the way, just reminded me, did you see this morning what Salesforce has announced?

David Zell: No.

Peter McCormack: They've announced their NFT platform!  You should find that as well, because even on their promotion, they start attacking proof of work as well.

David Zell: Of course.

Peter McCormack: Yeah, of course.

David Zell: So, this is the website I made.  So, I registered the domain financialinclusion.tech and basically worked for 72 hours straight with Alex, and we made a response.  Essentially, our response is quite simple.  If you go back to that letter, they say, "These are solutions in search of problems with an abject lack of utility, that represent no positive benefit to society".  Well, empirically that's just false, for the quite literally billions of people that you can separate into two main baskets: either unjust restrictions to finance, whether that's because of authoritarianism, misogynous banking policy, or lack of infrastructure; or second, people that are facing crises, whether it's war, economic instability, currency devaluation, whatever. 

Quite literally, more than half of the world experiences problems like that, that basically no one in the West can really imagine.  And over the last few years, human rights activists have noted that Bitcoin and stablecoin have worked when nothing else did.  So, their letter basically relies on taking the lived experiences of millions of people and just saying, "I don't care.  Your problems are not worthy of being solved".

Peter McCormack: This was what I was saying to Nicholas Weaver yesterday, because he does it from his point of privilege in Berkeley!

David Zell: Exactly.  So, if you look at our letter, we have people from 20 countries: Cuba, North Korea, Palestine, Lebanon, Nigeria, Togo, Eritrea.  These people, every single signatory of their letter, except for two, enjoys the euro or dollar system, which 80% of the world does not.

Peter McCormack: Hold on, you said "Responsible Crypto Policy" and not Bitcoin.  Is that wider acceptance that you need crypto for stablecoins?

David Zell: Well, we just wanted to make it clear what we were talking about, because they're talking about crypto policy as well.  And it is worth noting that all of these activists really do like stablecoins as well; they use both stables and Bitcoin.  Speaking to these people, these were the main feedback.  It's not like human rights activists are just yield farming, but it's worth including stablecoins as well.  So, yeah, we wrote this letter and I made the website.

Peter McCormack: Scroll down, Danny.

David Zell: I think it's telling that in just two and a half days, we had activists from 20 different countries, including Garry Kasparov --

Peter McCormack: Yeah, keep going, that's what I want to see.  I want to see who you've got signing.  Okay, Fodé's amazing, Fadi's amazing, I'm trying to think who I know.  Leopoldo López, yeah, Garry Kasparov, Alex.  I mean, this is just a great group of people, Yeonmi Park, great group of people.  Yeah, great, brilliant, good on you, fuck those guys.

David Zell: And to the crypto point, that's sort of our second point.  So we say first of all, to make the argument that you're making, you have to ignore and hand-wave away people that have experienced horrors that you couldn't imagine, and who just say outright, "I have needed Bitcoin when nothing else could work".  The second is that it is dangerous, like you alluded to earlier, to lump this entire industry together when you're making these critiques.  The difference in utility that yield farming YAMs has for the world versus an open, permissionless, monetary network, those two things don't belong in the same sentence. 

So, that's our second point, is that of course there are scams, of course the broader blockchain, crypto industry is rife with bullshit, but you can very clearly, through just listening to the stories of real human beings, separate Bitcoin and stablecoins as having a massive social good, and you never see that expressed.  Criticisms of Bitcoin are almost universally presented without any nod toward potential benefit to society, so that's why we wanted to do this letter, because there's no way to really respond to it.  It's not an argument, it's just we listened to activists who have faced tyranny, who have faced currency devaluation, who have suffered under the current financial system, have turned to find a solution and found Bitcoin waiting for them. 

So, it's just a slap in the face, and we wanted to make sure that Congress knew that these technologies were not solutions in search of problems; that the problems are very real.  And just because you can't imagine what it would be like to not be sure if the money in your bank account would be there tomorrow, it's not easy for people in the West to imagine why Bitcoin might be useful.  So, we wanted to platform the stories of people for whom Bitcoin has been phenomenally useful.

If you see the quote on the top page there, I mean even recently with Russia/Ukraine, I know that was politicised, but the main takeaway was that in those first few days after the invasion, everything went to shit, nothing worked.  And so you get the President of a large human rights organisation in Ukraine, who's one of the first signatories of this letter, because she said, "We had to use this stuff", and she literally credits Bitcoin with saving the lives of her friends.  If that's an abject lack of utility, then I don't know what to tell you.  You're probably just a piece of shit if you can read something like that and say that Bitcoin is an obvious net negative for society.

Peter McCormack: It reminds me of the conversation we had the other day with Craig Warmke, where we discussed the ideas with regards to trying to be objective with regards to Bitcoin.  There are people within Bitcoin who are incentivised to promote it, because we have skin in the game.  How do we get to a point where we, as what Weinstein said to me, "We're not selling our own book", if you know what I mean? 

That is a difficulty when you set to benefit from this, but at the same time, you're trying to promote the growth and the regulatory protection for everyone else.  You can have a bias and what you should do is have an equal job of also recognising the negative externalities or the negative second- and third-order effects from having Bitcoin.  It's a really useful exercise to go through; I did that with Craig.

But in that, in this paper, Danny, we should put that paper in the show notes for this, because he had this bit where he was looking at people who were negative towards Bitcoin.  Can you get that quote out, because it was brilliant?  He's talked about, there's people who essentially have discovered Bitcoin early on, they had their relevant skills to be able to --

David Zell: See why it mattered.

Peter McCormack: -- see why it mattered, didn't buy it, and then they get --

David Zell: There is an equal and opposite incentive.  I've seen people say on Twitter, any article about Bitcoin or crypto ought to disclose whether or not the author owns it.  I think that there's an equal and opposite bias that comes from having had the opportunity to buy Bitcoin and then not; that also should be disclosed.  If you're writing an article and you're one of these people who tweeted about why Bitcoin is going to zero in 2013, I have a hard time believing you're not just as biased as someone that has a bag.

Peter McCormack: This is exactly what he's talking about.  So, I'm quoting him from this, "Many had the chance to buy Bitcoin early, but chose not to, even though their areas of expertise should have enabled them to see Bitcoin's early potential.  Given the enormous returns of early Bitcoin investors, we'd expect many early critics to double-down as critics after seeing that being a critic early on cost them millions".

This is the bit that kills me; it's hilarious, "As someone who has lost money on options trading, I know first-hand how painful it can be to admit such mistakes.  So, I can't imagine how painful it must be to admit publicly that despite being in the right place at the right time, with all the requisite background knowledge, you cost your family generational wealth by being wrong, not just once, but continuously over several years".  I think that's absolutely brilliant!

David Zell: Desalination!

Peter McCormack: He's done this thing below, this chart, "The Salinity Coefficient", "I once collaborated on a salinity coefficient to measure how salty, and therefore how biased, a critic might be given Bitcoin's price at their first public condemnation".  It's utterly brilliant, but he's right and you're right.  If we should know if someone holds an asset, we should know if they've missed the opportunity.  And these people, David Gerard is one of them -- I mean, David Gerard, at one point, was wanting Bitcoin.  And he's made it his life's work to attack Bitcoin, and some of these people have made it their life's work.

What they've done, they haven't adjusted their mental model as Bitcoin has evolved, as we've learned more about Bitcoin and what Bitcoin can do for people.  What they've done is they've adjusted their arguments against the new arguments, which makes them not objective.  You will, and I will, happily criticise Bitcoin, criticise its flaws.

David Zell: Sure.  There's stuff in David Gerard's book that's true.  It's not that they're making stuff up, but once you become a professional nocoiner, the nuance that you're referring to is not incentivised.  And to the point of incentives, show me a policy debate, or debate in society generally, where there are not large financial incentives on both sides.  I think people take this unfounded glee when they note that positive writing about Bitcoin is tied to financial interest, because someone might own it.  What a naïve view of the world.  That logic can be applied to quite literally anything.  There are people with financial stake in -- any deviation from the status quo, I would confidently say, has meaningful financial incentives on both sides.

So, yeah, you have to try to recognise that and know what the bias of your source will be.  But if you take financial incentive as an excuse for dismissing research or thoughts on a topic, then you won't be able to consume any content, except for the stuff that your bias tells you is true.

Peter McCormack: I think that's one of the big issues with the climate change debate, is the massive financial incentives there.  You've got lobbying from groups who benefit from fossil fuels, and you've got people who will benefit from the curtailment of the use of fossil fuels and moving into green energy.  You've got people creating ESG indexes, who are the investors, that's probably people like BlackRock, who are the investors in the ESG companies who are set to benefit from the promotion.  So, every area of that is controlled by financial incentives.

David Zell: And both sides pretend like it's not there.  It's a debate about government expenditures in some ways, and subsidies.  The fossil fuel crowd will seldom admit that there are massive, massive fossil fuel subsidies in the United States.  They will point out the renewable energy crowd, and Tesla, and rightly point out that subsidies can create perverse incentives; the old saying, "Taxes pick winners, subsidies pick losers".  They'll point out the green subsidies and say, "This is hogwash and evil".

Then the same thing is true in the inverse.  The people who defend renewable energy will rightly point out that there are horrible incentives created by fossil fuel subsidies, but won't point out some of the -- I don't know, I'm kind of a carbon tax fan, to be honest.

Peter McCormack: Okay, really?

David Zell: Yeah.

Peter McCormack: I just think every system will be abused.

David Zell: Yeah, and that's the trouble with it.  I don't know if I would actually support a carbon tax in practice, because it rests on the ability of some centralised point of information and truth to determine what the negative externality of a certain amount of carbon omissions is, and that's where it falls apart. 

But I think you can reason through first principles really easily, like a carbon tax, and that's kind of a reason.  It's a very wonky thing, a policy wonky thing, but you see centre-left and centre-right people tend to converge on it, because it's not a crazy assumption to say that a transaction is fine if it's between two consenting parties; and it's also reasonable to say that a transaction can have impacts on people who are not part of that transaction.  It doesn't make those impacts any less valid, nor does it make them any less relevant to a calculation of the impact of that transaction.

So, if I own land next to a lake and you buy the land from me, that's totally fine.  But if you start dumping toxic pollutants into the lake and that water goes downstream and starts affecting the health of people in the nearby community, I'm not a fan of just saying, "Well, that's the market.  This guy owned the land and who cares?"  So, in theory, the whole point about carbon tax is that it just gets rid of the whole subsidy debate.  It's just, "Let the market sort it out".  There is an externality to the omission of carbon, I would stand by that, I'll probably get heat for it!

Peter McCormack: I agree with you.

David Zell: There is an externality, the question is, "How much?"  Given the current state of things, I would have a hard time trusting that whoever was determining what that tax would be, would land at a reasonable number, and that's where it falls apart.  But yeah, in theory, I think a carbon tax makes a lot of sense, because then you can just move past it and say, "All right, I'm going to pay whatever my small tax is that attempts to offset for the societal harm of carbon", and then move on with your day.

If we had a carbon tax, I don't think the Bitcoin ESG FUD would even exist; who cares?  That's kind of the point.  You're paying for your emissions, and then everyone can move on with their day.

Peter McCormack: Would we not just have SG?

David Zell: What do you mean?

Peter McCormack: Well, ESG is Environment, Social and Governance.

David Zell: Yeah, Bitcoin is ESG!

Peter McCormack: I know, I know!

David Zell: That's the whole point of the S, and of course ESG is an obvious scam.  It's a BlackRock tool to say that some bombs are better for the environment than others.  ESG is nonsense!

Peter McCormack: It's a BlackRock idea for them to profit off their investments.

David Zell: Removed from ESG as this corporate framework, and thinking about it more from the lens of, "Should we evaluate how certain investments affect the Environment, Society and Governance?"  Sure, whatever.  Bitcoin, by that logic, is wonderfully ESG.  It has a massive social good, it has unclear net implications for the environment, but likely to be positive in many ways, and certainly not worth the alarmism that we've seen.  And so, Bitcoin is 100% ESG.

What's funny actually about the ESG frameworks and Bitcoin, there was a paper that came out last year that found that, I'm going to try to quote this exactly, "Bitcoin is characterised by a relatively low carbon intensity, when compared to the average equity in a typical American's portfolio".  So basically, they compare owning equities and owning stocks and bonds versus owning Bitcoin.  And what they actually conclude, accounting for multiple hashrate, price scenarios, all of this stuff, that if you have no Bitcoin and just an average portfolio of stocks, if you rebalance your portfolio and add Bitcoin, you're actually reducing, in most cases, the carbon intensity of your investments. 

So, next time someone asks you if Bitcoin is bad for the environment, ask them if they own stocks, because literally just owning the S&P 500 is contributing to more emissions than owning Bitcoin.  So, it's just pretty silly, yeah.

Peter McCormack: Anyone watching the video is going to be like, "A drink has suddenly appeared".  We have just got drinks.  Interestingly, my brother just texted me, he's obviously listening to another show I made, because he said, "Pete, I don't think you should be using the C-word in the show", and I know he's right, I shouldn't be; it's just some people… 

Okay, I just want to go back a step, back to the letters.  Do these get read; how important are they?

David Zell: Do they get read?  Yeah, they get read.  But whether or not every person that we sent the letter to is going to mull it over, I have no idea.  But there's multiple reasons you do this: one is because these stories are real and there's no one else covering it, there's no one else housing this content.  I mean, for a while, it was just Gladstein travelling around the world, meeting with people and hearing their stories and experiences and writing Bitcoin Magazine articles.  So, there's the utility of housing this type of content on an easily-shareable link and publicising it.

Second is the media coverage.  So, CNBD picked it up, I saw, so they ran an article that said, "21 activists sent a letter to Congress saying Bitcoin helps them in the face of currency collapse", so that's part of it as well.  How much it's going to influence directly the debate around crypto is unclear.  My aspiration is that it shifts the Overton window. 

I mentioned earlier so much of the criticism on Bitcoin is tough, because you have people that are isolating negative externalities.  And of course, if you just only discuss the negative impacts of something, it doesn't matter how negative it is; if something is just marginally negative with zero utility, of course it's bad, of course it's a waste of energy.

Peter McCormack: Fentanyl.

David Zell: Right, yeah.  But when you want to evaluate something fairly and you want to craft good policy, you want to see, okay, what are the benefits and risks of this?  So, what I hope that this letter does, amongst other things, is recentre the lived experiences of people that are less fortunate than us.  I hope it introduces and solidifies within the debate on crypto, and Bitcoin in particular, that there are people's lives at stake.  This isn't just financial speculation, this isn't just people coding in their mother's basement; this is people that are facing some of the worst circumstances that a human being alive today could, and are relying on Bitcoin and stablecoins to help them.

So, next time there's a hearing on Bitcoin or crypto, I would like to think that there is recognition of this social value that frames criticism.  I disagree with a lot of people who want to just handwave away things like ransomware, cybercrime or whatever, all these petty arguments that you hear people make about Bitcoin.  I get it, right?  If you're the government, you want to know the impacts of this stuff on your whole operation.  But at the same time, you need to know that it's a vital tool for democracy abroad as well, you need to know that it's a vital tool for some of the world's most vulnerable as well.

Peter McCormack: It reminds me of Peter Van Valkenburgh's Senate testimony.  If you can find that, that's amazing --

David Zell: It's so good.  That is a truly inspiring speech; he crushes that.

Peter McCormack: Yeah, what was it he said?  "For every criminal who --", something along those lines.  If Danny can find it, that would be good but, "For every criminal who uses Bitcoin for X reasons, somebody in Nigeria is using it as an activist against police brutality.  For every person who uses it for ransomware, there's somebody --" so he spelled it out, that there are these trade-offs.

David Zell: I think it is actually very similar in structure to the debate about social media.  It's so easy to find examples of -- you're someone who's tried to quit Twitter before.

Peter McCormack: Yeah, to give up.

David Zell: Yeah, fuck Twitter!

Peter McCormack: I love it really!

David Zell: Yeah, of course.  But when you just look at some of the negative externalities of social media, it's easy to make the case that this stuff is just awful and toxic.  It fucks your brain, your attention span, your serotonin; it makes people addicted, it makes them less able to engage with long-form content.

Peter McCormack: Terrible for discourse, polarises people.

David Zell: Misinformation.  But then, what about the fucking Arab Spring?

Peter McCormack: Yeah, I know.  Or any issue.  If there's any issue now that you hear about and it's suddenly breaking news, the first place you go to is Twitter, because there are people on the ground reporting.

David Zell: Yes.  So my position is that social media is obviously a net good, but not without myriad downsides.  So, yeah, you can take all of these negative impacts of social media, which notice, by the way, that all of those are very First World problems, "Oh, the quality of my information is deteriorating" or, "My technology that would astonish would be unbelievable to almost any human being that's ever lived on the planet.  I have the collected of mankind in a rectangle in my pocket", and just be pissed about it because of some negative…

So, yeah, then you get the Arab Spring.  And so, you recognise that there is this sort of fundamental public utility of being able to spread information quickly and efficiently to anyone, anywhere in the world.

Peter McCormack: Which is exactly what Bitcoin is.

David Zell: With value.  So, there is this similar value in being able to exchange value instantly to anyone anywhere in the world.  So, I really think that we will see, over the coming decades, the Arab Spring moment for Bitcoin, in the same way that people were using Twitter in the Middle East to coordinate protests and keep these fights against authoritarianism afloat.

What will help as finance increasingly becomes digital, we move away from cash, we give governments, both liberal and illiberal, an increasing ability to financially police, surveil, seize, etc, you can't exercise your First Amendment rights unless you spend money.  We have the First Amendment right guaranteed to us to petition the government, to free speech, to lobby.  Well, how are you going to get to DC to go talk to these people?  You're going to buy a plane ticket.  How are you going to do your march or your protest?  Well, you've got to pay $50 for a protest permit, and you've got to get the whiteboard and Sharpie to make your sign, or whatever.

So implicit, fundamental to the ability of free expression, or to the right of free expression, to the ability to carry out a protest against an unjust government, you have to be able to transact.  And so, where you saw states over the last 75 years, authoritarian states, use this centralised power that they had over information to quash dissent, then the internet comes and they no longer have that ability; you see now I think the same thing, but with value, where Bitcoin, like the internet and social media allowed for this free exchange of information, Bitcoin will do the same thing but with value.

When governments, who don't want their unjust acts, their authoritarianism brought to light or challenged, they will shut down the bank accounts of every protester and render them incapable of not only exercising some abstract right to speech, but to life itself.  And it's stories like that that make a conversation about Bitcoin using 0.18% of global energy just ludicrous, when they're not included front and centre.  We need to say that this is a technology that ostensibly helps millions of people and also uses 0.18% of global energy, not just focusing on its energy usage.

That, Peter, is the point of the letter, is that next time someone says some First World trivial problem of Bitcoin, like social media is bad because people cyber bully you because you're Peter McCormack and you're a statist; when people talk about problems that are on that tier that they have with Bitcoin, you point them to this website, you say, "Tell these people who have come to rely on Bitcoin that they don't matter, and that your First World problems are more important than their oftentimes life or death struggle".

Peter McCormack: Well, maybe we should organise a field trip and we should go up to Berkeley, get Nicholas Weaver, pick him up a chai latte on the way, fly him down to Venezuela, take him to Cúcuta, let him actually see what's happening on the border of Venezuela and Columbia, actually see the difficulty people have because they don't have any fucking money or access to money.  Let him see.

David Zell: I don't think he'd care.  So, he will say that they're Peter Thiel hired crisis actors.

Peter McCormack: Yeah, but this is the point, is that you have to get out of your own liberal western democracy bubble and see what real life is like for the majority of the planet, which is a bit shit, which is either under double- or even triple-digit inflation.  It's no access to banking services, it is being trapped under authoritarian regimes.  I mean, you guys have First Amendment, we have pretty crappy free speech laws in the UK, but the UK's pretty good compared to China.  I can still go down to Downing Street and stand outside the gates of Number 10 and call Boris Johnson a wanker and I won't be arrested.

We have those freedoms, but we live in pretty developed western liberal democracies.  Bitcoin is good for us, it's still good for us, it's good for the Canadian truckers who want to protest, it's good for us, it's good for everybody.  So, let's do a field trip.

David Zell: I don't think he'd take us up on it.  It's worth noting though that one of the signatories to that anti-crypto letter, Grady Booch, responded to my tweet and said, and this was a ridiculous tweet; he said, "I've never denied that there are people like the ones in your letter.  Of course, people who live in Third World countries, or under authoritarians, could possibly benefit from this".  So, my response was, "Well then, why did you sign this letter?" because the letter doesn't say, "Bitcoin offers social utility to people in extreme poverty, crisis, authoritarianism; no, it says, "There's an abject lack of utility and a solution in search of problems". 

So, that puts Grady in a bit of a double-bind.  He either just doesn't agree with the letter he signed and should have written his own, or he thinks that he gets to be the arbiter of which problems are real and constitute problems, and which problems are fake.  You can't sign something that says, "There's an abject lack of utility, no positive benefit to the world and a solution in search of problems", while just readily admitting that, "Yeah, everything in that letter's true".  You're either a really unthoughtful, or really unempathetic person, if that's your perspective, and there's not really escaping that.  You either just didn't read the letter and weren't paying attention, or you did and just decide that some problems are worthy of your consideration and others you can just handwave away.

Peter McCormack: What do you think is the mental model for people in Congress to be considering things like this?  There's a lot of considerations for something like Bitcoin, so there's everything from, "This is money we don't control; this is money that people can use without us being able to track at times", we know some tracking can be done, but this is also a commodity that offers some freedom, which obviously some people within the US, in Congress level, care about freedom or claim to care about freedom.  But then, there this myriad of things it does globally for other states. 

The US has routinely done a mixture of interfere, but also help people in other states.  I'm not going to say everything the US has done is bad.  We can equally spot everything that's happened in Iraq and agree that's terrible, but we can also recognise other programmes that come from out of the US, which have helped people in other countries; it's a complicated picture.  How do you think the mental model works for these people; does it all come down to what their constituents think and maintaining power; or, do you think there are people who are genuinely in Congress who are ideologically driven to do good?

David Zell: Well, that's a lot of questions!  I would start by saying that you point out the adventurism in the Middle East as a prime example of bad US policy.  And then you allude generally to things that the US Government does that maybe aren't so bad.  One example of that is that the state department funds, pretty significantly, internet infrastructure all over the world; why?  The internet's not American, the internet is open and more or less decentralised.  No single party really controls the internet.  It brings with it both great benefits and some costs, but we fund it; why? 

We fund it because the internet, at its core, represents the fundamental values of western liberal democracy: free and open exchange of information.  It's the bedrock of the trend of globalisation has been that the internet was able to connect and empower people who previously would have never even interacted, much less collaborated together on a project via Zoom, or Google Docs.  So, I think Bitcoin is the same way. 

Where the internet is not controlled by the United States, we have disproportionately benefited from it.  And in a large part, that's because we've made it a great place, for most of the internet's existence, to be a tech entrepreneur, whether it's our strong IP laws, taxes, whatever, there is a set of environments through policy, that the United States has crafted, that has allowed it to take a disproportionate stake in the success of the internet.

So, I think my general framework for talking about Bitcoin to staffers or to politicians, it's really not that different from just a normal tech policy issue.  That's the story of tech regulation, is that the government crafts laws, and then technologies that no one could have foreseen, for which laws could not have accounted, develop, and then people have to figure out, "Okay, what is this stuff?  How do we cap its potential downside, and how do we maximise its upside for us?" and it's a natural thing. 

There are so many examples throughout history of technology stripping away some facets of state power, and everyone just having to readjust and reorganise around that.  So, the printing press, it was only the Catholic Church that could create and disseminate information.  The printing press gets invented, all right, genie's out of the bottle, now anybody can go print information.  Then the internet happens.  Now, anyone can take that information and send it anywhere to anyone.  Then Bitcoin happens.  Now, anyone can take value and use the rails of the internet to send and exchange value anywhere in the world.  And like those other two examples, I think the printing press and the internet, yes, had some risks, but were quite obviously, and especially in hindsight, wonderfully net positive.

Peter McCormack: Well, this takes me back to this thought experiment from Craig Warmke.  What he was trying to do was explain that people have a bias, they come with a bias, and you have to try and do a thought experiment to get people away from that, and just explain to them two different worlds.  There's a world with Bitcoin and there's a world without Bitcoin.  But when you make the decision of the world you want, you have to strip away all your experience and knowledge of your existence, everything you've been through.  So, when you go into that world, you don't know whether you're…

So, let's use Elizabeth Warren.  You don't know if you're going to come into that world as Elizabeth Warren, or you're going to come into that as a Bangladeshi market trader; you've got no idea.  You could be dropped in North Korea.  So, if you don't know where you are going to be in that world, the odds of you coming out as a senator are very, very small.  The odds of you coming out as just some normal pleb living in a Third World country are a lot higher. 

So, if you don't know which world you're going to come into, but you have all the data and information on how the world works, would you want to live in a world with a form of money which is open, permissionless, censorship resistant, you can send value around the world instantly and free to anyone; or, would you want to live in a world without that?  You could be dropped into a place where you don't have banking services, you're under authoritarian rule, and there's a serious risk.

The thing that this highlights is the people who make the decision, the people who make these decisions are the ones that have the biggest risk from these technologies, therefore they have an out-weighted bias in making their decision, and this is super-important.

David Zell: Yeah, absolutely.  And even from a self-interested lens, Peter, I think that policymakers would increasingly realise that properly considered, Bitcoin is quite good for the United States.  So, Matthew Pines wrote a really good white paper for us, it was called Bitcoin and National Security.  And he essentially makes three very reasonable arguments that are worth going over.

So, the first argument that he makes is kind of what I alluded to, that Bitcoin has at its very core principles that line up well with democracy, our notion and construction of civil liberties and rights, and just the traditional liberal world view: free markets, minimal government interference, personal liberty and autonomy, these natural God-given rights; and that the more people who use Bitcoin, the more America benefits, especially in a world in which countries like China are trying to make parallel institutions to those in the West.

You see for 40 years, the dominance of the International Monetary Fund, and then China comes out with the Asian Infrastructure Investment Bank, and now there's a new game in town.  The same is true for most modern financial global infrastructure.  It's mostly been a western thing; now we're seeing parallel alternatives crafted by authoritarians, and those systems are different in many ways, but most importantly is that they're closed, they're permissioned, they're surveillable, they readily enable things like social credit scoring. 

So, for every person who lives in a country who is experiencing the problems of the decline of correspondent banking, something that Mallers talks about a lot, who are looking around and trying to figure out what option they should use, every person that picks Bitcoin, rather than China's CBDC, that constitutes a win for the United States.  So, his first argument is this nice kind of broad articulation of why Bitcoin is this very American thing, the benefits of which are not always immediately direct, but are positive for a country like the United States, who at least in principle, exists both to govern its country and also spread these democratic principles abroad.

The second argument that Matthew makes is that you kind of get in or miss the boat.  And if we're able to, and the United States by "we", is able to craft policies that encourage entrepreneurship and innovation to happen here, even if we don't control Bitcoin, in the same way we don't control the internet, we can still position ourselves to experience a disproportionate benefit.  You can almost think of it like a quasi seigniorage, where if major exchanges, wallet providers, miners are located here, then as the network scales and more people use Bitcoin, we're setting ourselves to do just fine.

The second argument he makes is that there's this just intuitive economic benefit of, you don't want some of the smartest minds in cryptography and computer science leaving this country to go start products and services elsewhere.  And then his third point is all about combatting China, basically saying that China has constructed a system, called the Belt and Road Initiative, I think people have probably talked about this on your podcast before; the TL;DR version is that we are years away from having a CBDC in the United States, if ever.

So for right now, as China is rolling out DCEP, the name of its CBDC, and has extensive trade relationships with the very people who are in the regions most underserved and increasingly underserved by the legacy financial system, it is useful for the United States to see the rise of an open, neutral monetary network that offers people a choice.  Because, if you have to choose between a Chinese CBDC or Bitcoin, that choice is very obvious.  But unfortunately, if your choice is no other options or a Chinese CBDC, it's also very obvious which one you choose.  So, I think that Bitcoin puts this downward pressure on the shittiness of government CBDC projects.

Peter McCormack: There's a very clear currency war at the moment as well playing out.  There are clear issues with the dollar, as Steve McClurg told when he was on the show yesterday, he said, "China has not been accumulating US Treasury Bonds".  They clearly are spotting an opportunity if there is runaway inflation or issues with the dollar, that China can position itself as being another reserve currency.  And if you've got these nations with particular interesting assets, such as airports and ports around the world, and they are in requirement of money, they can become slaves to this new Chinese currency.

David Zell: Very easily.

Peter McCormack: But the place I was going with that is, I don't think the US can now beat China at a currency level with its own currency, because what choice does it have?  It has to either make a freer currency, or they have to be better at control.  They're not going to be better at control, because they're not going to go down the authoritarian route that China's gone down.

David Zell: Well, we'll see.

Peter McCormack: Well, they might try, but they're not going to do it to the extent that China's done it, because they don't have full control of the system.  So, you would not get away with a CBDC linked to a social credit score linked to cameras linked to full control of access to services, like they've got in China.  That's not going to happen in the US; it wouldn't get away with it.  And if you tried to, it would take so long to get through, because civil liberty groups would protest against this, it would go to Congress; whereas, China just gets to do it.

So, if you cannot beat them at control money, you have to beat them at freedom money, you have to create the most free money out there.  And the best thing is, it already exists; they don't have to do anything and that money will win.

David Zell: And a currency competition is not something that should be treated with concern.  Hayek writes about this in the Denationalisation of Money quite well, and Nick Anthony at the Cato Institute just put out a good policy brief on this as well, where he says, "The US should actually welcome currency competition".  And I think he makes a similar argument to one that I have made, which is that even if you don't use Bitcoin, you should appreciate its value in eliminating a monopoly.

Monopolies are bad, and almost everyone can agree that when you have a monopolistic actor, they lose all incentive to be decent to their consumers.  So, you can actually relate this going up the thread a bit to the point about the IMF and the Asian Infrastructure Investment Bank.  So, from 1971 to 2001, the average number of IMF loan conditionalities was 430-something.  What that means is, when the IMF is giving a country a debt-relief package, or a government experiences some crisis and the IMF is going to bail them out, they would attach with that money a set of conditions.  For years, some of the IMF conditionalities were lengthy and absurd, almost Kafkaesque, all these hoops you have to jump through.

So, how does China compete with the IMF when they launch the Asian Infrastructure Investment Bank?  They do what you're saying America would do with currency; no strings attached.  They just start handing out cash to people.  Well, very quickly, the average number of IMF conditionalities drops down to like 30, so this massive reduction, because whether or not you like China, I'm not a fan of the CCP, but creating the Asian Infrastructure Investment Bank, creating this parallel institution, eliminated a monopoly and everyone benefited.

How does that relate to Bitcoin?  If you, like some of these CBDC advocates have pointed out, believe that there is value in creating a digital money, or even a necessity to create a digital money, it's very easy to take whatever proposal you see for digital money, and compare it to this nebulous world and say, "Well, we need it, so we're going to use it".  Now, they can't get away with that.  They can't just say, "Internet money is good, so we're making a CBDC.  Shut up and take your medicine".  They have to prove that what they've created is better than Bitcoin.  That's a really high bar.

So, I think that Bitcoin, in the same way that the Asian Infrastructure Investment Bank put downward pressure on the conditionalities attached to IMF loans, that's just a random example, but I think Bitcoin does the same thing with CBDCs.  And Xi Jinping will have to understand this as well, insofar as his goal is to onboard people to the digital yuan.  Why do you think he's banning Bitcoin?  He doesn't want people to compare the social credit system, the centralisation, the surveillance that's sort of inextricably linked with the Chinese central bank digital currency, and a free, open-source, open, global, permissionless, monetary network.  And I think that will actually happen here in the United States to some extent as well.

I think that CBDCs built in a world with Bitcoin, by very nature have to be better than whatever sort of Orwellian panopticon the government would have developed without Bitcoin, not that there won't be an Orwellian panopticon, there probably still will be anyway, but we're at least having conversations about digital cash.  That's something that Bitcoin very, very explicitly changed and shaped about the CBDC debate.  It's not just this recognition that we need internet money and digital money for an internet and digital age; it's that these rights that we've had that were implicit, like the right to use cash, are starting to slip away.

We actually can't be passive about this.  We have to examine critically which of these de facto rights that are being erased by technology do we choose to bring with us into the digital world.  Cash is a perfect example of this, where there's nothing in the Constitution that says you have a right to use cash, but none of the Founding Fathers could have ever imagined a world in which a transaction would, by necessity, be placed on a centralised repository accessible to the government.

So, if you view the Constitution as a mediation of rights and privileges between people and states, the condition under which that contract was written was one in which cash was just the assumption, it was just the state of the world.  Now, it's not entirely clear whether or not my children will have cash, but I know that because Bitcoin exists, they will have a really viable cash alternative.  So, that's another way in which Bitcoin has influenced this debate, where the government is now going through great efforts to say, "Our CBDC will be privacy protected, we promise".

Peter McCormack: We promise!

David Zell: "We're going to retain the properties of cash".  So, Bitcoin set a floor.  It said, "If the public is going to accept this, it can't just be money that has faster settlement speed, it can't be just money that's digital; it has to be cash".  So, the market will decide and I just think people will have a hard time believing that spending their $5 of Fedcoin is the same as spending $5 of Bitcoin.  If you want that experience of paying for something in cash, you're not going to feel comfortable using your CBDC for it.

Peter McCormack: Well, a lot of people will, because they have no idea what we're talking about, they have no idea of the threat, they're not red pilled, and that's the thing.  You can get very far down this Bitcoin rabbit hole and you do not understand the mindset of somebody who is a nocoiner, whose only exposure to Bitcoin is maybe seeing something in a tabloid newspaper, which is just some alarmist article about climate change.

There's a lot to consume to get to the point of living a standard normie life, where you go to work, you get paid, you pay your tax, you do your shopping, you go to the pub, to suddenly reconsidering your entire mental model around, what is the role of money, how it operates, how the government issues it, what are the cynical things they do.  That's a big leap, you've got to do a lot of work, you've got to do a lot of reading, listen to a lot of really cool podcasts!

David Zell: Yeah, I wonder what the statistics on this would be, if you just asked people, "Would you be okay if we got rid of cash?"  I hear your point, but I also think that most people can recognise this fundamental value to using cash, and it's a nice opportunity to make this a really bipartisan thing as well.

Peter McCormack: But people are moving away from using cash.  I haven't had a single dollar in my pocket this entire trip.

David Zell: Well, it's not about the percentage of your transactions that are made in cash, it's about the excellent properties of cash, knowing that I can have some in my wallet and knowing that I can choose to pay for certain things in cash.  And there's an endless amount of examples you can get into, where someone wants to pay for cash.  Maybe you're taking medicine you don't want someone to know that you're taking; maybe you're buying a book about politics that's a little edgy, you don't want someone knowing about that; maybe you're making a donation to a certain religious group or a non-profit.

Peter McCormack: I think those are really rare edge cases where people really think that through, I just think they are.  I get it and I agree with you, I just don't think people have been red pilled enough to really understand and think about it.  I bring this up time and time again, all my friends know I have a podcast, they know it's a Bitcoin podcast.  Of my group of friends, one of them knows a bit about it because he bought some, but he trades shitcoins.  If we go down the pub and talk about this, I sound like a nutter.

David Zell: Well, you just sound like a nutter in general!

Peter McCormack: Well, no, but they think I'm mad, they think I'm a conspiracy theorist, they think I'm anti-state.  But in the world of Bitcoin, I'm actually quite moderate.  But in their world, I'm crazy, I'm telling you, they think I'm crazy, my family did.  We've got my brother there, we've orange pilled my brother; it's taken some time and he's in now, he gets it, but I'm just saying, it's a big leap.

David Zell: Yeah.  Well, it's a conversation that, like you said, I think a lot of people aren't ready to have.  And in my view, it's one that we need to be debating very rigorously.

Peter McCormack: In the public and open.

David Zell: In the public, right.  It's wild to me that as recently as six or seven months ago, both the Fed and -- basically no agency in government, let me put it that way, was really willing to give comment on the CBDC proposals, or e-cash proposals that they were working on.  You can tell that if we were to leave this issue alone, the government would prefer that we all just wake up one morning and we're using CBDCs. 

I just think this is truly an example where, yes, it's about the technical merits of a CBDC versus Bitcoin and it's easy to have that argument, but it's deeper than that.  It really is about which of these fundamental assurances of living in America, that are not codified in law but in practice, do we risk eschewing when we move to an increasingly digital world.  We have to be so vigilant about this, and it's terrifying to me that proposals for a CBDC are just happening behind closed doors.  And it's ludicrous that journalists are trying to get in touch with some of these entities, and they're just declining to comment.

If the government is pondering something that's going to strip liberties away from you and their response is, "No comment!" then we need a lot of attention on that issue.

Peter McCormack: What do you think the Founding Fathers would have written into the Constitution if it was now?

David Zell: Well, it's interesting, right?  The word "privacy" is not in the US Constitution.

Peter McCormack: No, but you're mildly protected in the Fourth Amendment, right?

David Zell: Precisely, and so this is a good sort of shoo-in here.

Peter McCormack: Although, regularly the Fourth Amendment is brought up.

David Zell: Yeah.  So, the word "privacy" is not in the Constitution.  The Fourth Amendment protects you against unreasonable search and seizure.

Peter McCormack: Would you call NSA reading every message, able to track and listen to every call, "unfair search and seizure"?

David Zell: Yeah.

Peter McCormack: Yeah, of course.

David Zell: Right.

Peter McCormack: And it's still going on.

David Zell: Precisely, of course.

Peter McCormack: Snowden's still living in Russia when he's actually somebody who's exposed something.

David Zell: Right.  So, yeah, the word "privacy" is not in the Constitution, and I think it's probably for several reasons.  Yes, it's because the Fourth Amendment, you would generally expect -- what else would you protect?  How else would your privacy have been violated back then?  Someone's looking through your window at your house?  You're not going to put that in the Constitution.  So, I don't know what would have been changed; that's a really tough question, but I think it's quite clear that the implications of the internet and distributed software fundamentally colour the mediation of power between states and people, that they grant governments unimaginable levels of surveillance.

I think Hamilton, of all of them, would probably be a CBDC fan.  I mean, he would enjoy, I think, the ability to readily dictate monetary policy.  I think Jefferson would be turning in his grave if he heard about CBDCs.

Peter McCormack: But just take cash generally, even forget the technology argument --

David Zell: Oh, yes, 100%.

Peter McCormack: You have a right to free speech, you have a right to bear arms, money is the --

David Zell: A right to cash I think would almost certainly be written in the Constitution.  If we could travel back in time and say, "Hey, this what the world looks like, here's what's being debated by the government.  Cash is almost eradicated and now every transaction, if some people have their way, will be logged onto a single --" I don't think they know what a database is!

Peter McCormack: But I think you're going even too far in that one.  Again, forget the technology argument; I'm saying, the right to have, hold and use cash, because you have a right to free speech, you have a right to bear arms, do you have a right to monetary sovereignty?  What I mean is, the risk of being cut off from the financial system, what you said at the start, should that right exist; should the government be able to switch you off from access to cash, to money, because that's the fundamental thing?  A lot of people say, "The Second Amendment protects the First Amendment", okay; but if there's nothing to protect money --

David Zell: You don't get any amendments.

Peter McCormack: Yeah.  And I think sometimes, hasn't the First Amendment been used to protect cash in some ways?  Coded speech?

David Zell: Well, yeah, the jurisprudence that I've read has been pretty bearish on the argument that a transaction constitutes speech.  I obviously feel quite differently.  To your point earlier, that world where you say, "Should the government have a right to just have an on and off switch to people's finances?" that was incomprehensible to the people that wrote this nation's charter documents.  And so, as such, I think it makes it obvious that that document is insufficient to properly represent a fair mediation of rights and powers in 2022.  And, yeah, I would like to think that were the Constitution written with knowledge of what the world would look like today…

I mean, I think a lot of the Founding Fathers didn't believe that -- it's funny.  If you read the contemporaneous writings by a lot of the Founding Fathers, I think they would have been thrilled if that document had made it 30 years.  If that thing had lasted a generation, they would have been like, "All right, we did our job".  I don't think any of them really, truly thought that America would still be using that same document centuries later!  I mean, I think that thought was incomprehensible to most of them, and there's sufficient evidence to suggest that this was a rough draft, it was a first stab like, "Let's put this on paper and try out this new America thing". 

While they took the project very seriously, yeah, I think they all would have thought it a success if their kids were using this Constitution.  I don't think anyone thought that we would just converge around this document and have it ossify and just stay with us hundreds of years later.  That would have been wild to them, I think.  And yeah, I like to think that they would have included, with a knowledge of how the world would look now, and that we would still be using that document, a right to cash.

Peter McCormack: How do you feel then -- okay, let me go back a step.  Obviously, we've had Senators Gillibrand's and Lummis' Bill now been put forward, and there's some reaction.  I think some bitcoiners are naturally sceptical, because it's like, "Don't regulate this shit".

David Zell: Right, as they should be.

Peter McCormack: As they should be, because it's come from a place of circumventing regulation.  This is to subvert the state.  But at the same time, Bitcoin has kind of crossed the divide now, crossed the chasm in some ways; I think Steve Blank wrote that book.  But it is now a part of the financial system, it is part of culture, it is part of society.  Everyone has heard of Bitcoin, certainly in the UK, in the US and most developed countries; and a lot of developing countries, we know now, have heard of this.  It is there.  It's unlikely for this thing to exist in a world of governments without having some form of regulation.

So, how do we square that circle, where the founding ideologies behind Bitcoin are now having to -- the edges are getting frayed because, you know, Ted Cruz is talking about it, we've got Wall Street traders trading it, it is now both cash and a commodity; how do we square that circle?  Do you think people have to kind of let go a little bit of their ideological goals for Bitcoin?

David Zell: No, I don't think so.  It's a tough question.  There's so many ways that you can take it.  Gosh.  Where I would start with that question would be to note that almost every counterculture movement that is picking up steam and starts to get out of the mum's basement, so to speak, runs into this inflection point where there is a direct trade-off between bringing this ideology, this counterculture, this movement to as many people as possible; and, I guess I should say, retaining the ideological purity that was in this neatly constructed, poignant, counterculture movement.  There's this inevitable delusion of the specificity of the world view that you spread to more people, and so it becomes a question of what you view the value of Bitcoin as.

To me, the value of Bitcoin is global money, so I can reason from first principles very easily that global money won't work if it requires that everyone have the same view of the world, just on face.  So when someone says, "You're not a bitcoiner if you think this or think that", if you expect this project to become a global money, you have to abandon, quite quickly, any hope that it will convert everyone to your particular view of the world.

Peter McCormack: Which interestingly is a top-down approach, where really Bitcoin is bottom-up.

David Zell: Yeah.  So, what I would say about the policy stuff is there are a couple of ways you could look at it.  One is that, if you want Bitcoin to grow and spread and you want people to have access to Bitcoin as quickly as possible, and you want development in the ecosystem, there's an argument to wanting that to happen in the United States.  As much as people like to shit on America, it's still, for so many reasons I think, the best place for innovation.  You've got the strongest capital markets in the world, the strongest intellectual property rights in the world; you've got a reasonably good place to innovate.  So, I would prefer for innovation on Bitcoin to be happening here, from a timeframe consideration and just a product quality and quality of innovation perspective.

Where it starts to get dicey is when regulation, or proposed regulation, isn't just written to -- well, let me put it this way.  The problem is when regulation is written or proposed that doesn't just run afoul of a principle of Bitcoin that's as broad as, "Fuck the state", but instead a fundamental of Bitcoin's utility.  If the government is to propose, for example, a law that restricted self-custody, that's when it's like, "Okay, that's horrible".  It's not just that some regulation of policy is infringing on an abstract notion of libertarianism or anarchism; sorry, that's going to happen and it's been happening.  Bitcoin has been regulated since a couple of years after it was invented.

What we have yet to see, but worries me, is regulation proposed that fundamentally kneecaps Bitcoin at least in the United States, that says, "Own all the Bitcoin you want, give us your private keys, use your Chivo wallet, use your Fed wallet".  That is a world that is possible and one that we just have to rigorously fight against.  But I think the notion of just ignoring all regulation and ignoring policy battles, or even just fighting everything, is also quite silly.  It dilutes the potency of your message, when every single law or bill that mentions crypto or Bitcoin, you just attack viciously.  People are going to stop listening to you, at least in DC, pretty quickly.

But if you're willing to recognise that most of these laws just aren't going to affect Bitcoin that much, like most of the concern isn't really on Bitcoin, I think regulators are far more concerned about neobanks, stablecoins.  Recently with LUNA, they're more concerned about these just open and obvious Ponzi schemes.  I'm not too worried about Bitcoin's policy environment, and it's good that we have champions like Lummis in office, and I think that our political capital is stronger when we conserve our energy for the fights that really matter.  I think if you have an industry whose reputation in DC is just throwing a tantrum every time the government talks about it, no one's going to listen to you.

Peter McCormack: Well historically, freedoms have been fought for.

David Zell: Yeah.

Peter McCormack: So, if people want Bitcoin to be successful, they have to fight for its freedom to exist.

David Zell: That's why the early cypherpunks started the Electronic Frontier Foundation.  I mean, yeah, I think I said this on your last podcast, and it's like a paraphrase from Hal Finney who said that, "The notion that you can just retreat into cyberspace and that will be sufficient to protect your privacy is ludicrous".  Whether or not it's moral or just, or should be that way, it is very, very reasonable to operate from the assumption that, if you want to keep your privacy and you want to keep your civil liberties and rights that, yes, in line with the history of democracy, you will have to go to bat for those things and fight for them, both by building technology, yes, by building software that resists tyranny, but also by --

Peter McCormack: Educating.

David Zell: -- convincing other people that privacy is worth protecting, convincing other people that having cash is important and having a digital alternative to cash is important.

Peter McCormack: Do you think Bitcoin therefore needs its own Constitution?!  I know we have consensus rules that's really a constitution, but a set of principles that are red lines we won't cross, like self-hosted wallets are a must.

David Zell: I don't know about a formal document!

Peter McCormack: No, I don't mean a formal document, you know what I mean.  Because, what would be useful to do is -- because you've made the point that Bitcoin is global money.  That means anyone can use it, people from any geography, gender, age, political background, whatever beliefs, are going to come and use this thing.  But it is useful to then consider, "What are our red lines; and where can we argue and blur the lines and where are we not going to argue?"

David Zell: I guess my personal ones would be the right to run your own node, the right to run a CoinJoin --

Peter McCormack: The right to own your private keys.

David Zell: Yeah, the hard, negative towards anything that tries to restrict self-custody.  So, the right to self-custody, the right to run a CoinJoin, the right to run your own node, the right to mine.  Anything that infringes on those would, I think, be obvious inclusions.

Peter McCormack: It would be an interesting debate to get those out, to see what are the hard red lines people have, because other people have other red lines.

David Zell: Yeah, absolutely.  I mean, other people would say, "I won't accept any policy proposal unless it eliminates all taxes on Bitcoin".  Is that a red line?  Are you saying, "I'm not going to sit down at the table unless Bitcoin isn't taxed?"

Peter McCormack: That is a red line for some people, it's not for me.

David Zell: Of course it's a red line for some people.  But I think the most obviously intuitive, reasonable, defensible red lines would be making sure that nothing is infringing on people's ability to run a node, own their private keys and self-custody, to run a CoinJoin, and to mine.  I think if you can do those four things, we'll be fine.  There might be shitty laws and we can fight those, but nothing will be in any way existential to American Bitcoin users.  Those four things are -- that's the all-hands moment, when something is proposed that's like that, that tries to interfere with one of those fundamental rights.  Yeah, that's a huge problem.

Peter McCormack: Well, I think this is why it's really useful there is a new wave of bitcoiners starting their first tour of duty, who've come in and have a different point of view, or a different understanding, or different opinions on how the world works, how they think it should work.  I think people who've come in from the Bitcoin Policy Institute that you work with, I think they're doing a lot of interesting things, I think a lot of new and interesting people have come into Bitcoin Magazine.  I'm finding people just by random articles and following them.

David Zell: I found most of the BPI crowd on Twitter.  Troy Cross had a couple of hundred followers and was just tweeting these threads, and I was like, "Oh, my gosh!"

Peter McCormack: We threw some gasoline on him.

David Zell: Yeah, I mean I don't have any gasoline, but yeah.

Peter McCormack: But you do.

David Zell: I mean, Matthew, all those people, mostly I found just on Twitter.  And that's why I wanted to make BPI ultimately.  I'm interested in this stuff and it felt to me very reasonable that in the first ten years of Bitcoin, that the policy and political conversations are very wonky, "Who's going to regulate this?  What is crypto policy itself going to look like?"  I'm not a lawyer, those are not the questions that interest me. 

The questions that interest me are, okay, we're in this new epoch of Bitcoin where the question is less, I don't want to say less, but has evolved into including not just regulatory and policy debates, but debates about the policy implications of Bitcoin, "How will this affect every other thing in American life?  How will Bitcoin affect energy markets and energy independence?  How will Bitcoin affect CBDC proposals?  How will it affect US national security?  How will it affect authoritarianism abroad?"  These one-step-removed policy conversations, "What are the social implications of this technology?"

I saw for a while that outside of the Twitter-verse, and independent people just blogging and writing, that the Nakamoto Institute would be the only example of people that were doing this really early.

Peter McCormack: And really fucking well.

David Zell: And really well, yeah.  There wasn't really much, especially that had a particular audience in mind, that wanted to talk to other policy wonks, that wanted to talk to journalists and staffers and people in DC.  So, that's the main reason I made BPI, is because I wanted to -- there was this content that I wanted to consume, and there was this thought that I wanted to engage with people on, and it didn't have a super-natural home.  So, I just made my own thinktank and made the type of content and research that I wanted to see.

Peter McCormack: Well, what's been interesting with this is, is you can actually go back on the history of Bitcoin and look at the journey it's been gone on in phases.  So, the early years was really just the nerds and the cypherpunks and the geeks getting together and just figuring out how this thing works, "How do we break it?  How do we get more people using it?  How do we maximise decentralisation?"  But you go to the Bitcoin Talk forums, they're just fascinating conversations about just getting this thing to work, getting some people to use it, and just trying to break it.

Then it feels like the next phase was really like the fork wars was really testing Bitcoin as a form of money, and could people create a better form by forking off, which all of them failed and Bitcoin survived that.  We're kind of beyond that now.  If someone tried to fork Bitcoin, it would be fucking ridiculous.  No one would take it seriously, and so we've gone beyond that.

David Zell: But there's still so much left to uncover.

Peter McCormack: There's still people who've got to figure stuff, like they've still got to protect it, it's still got to grow.  But there are some pretty robust ways now for upgrading Bitcoin.  That was tested recently with BIP 119, it didn't get social consensus; Taproot did get social consensus.  So, a lot of that stuff is figured out and the right people are working on that.

But now we're in the -- Bitcoin is a thing within the world now, it is a financial asset, it is something that politicians talk about, and I don't think that people -- it's okay that new people come in to figure that stuff out who are better equipped, or have better skillsets to do that, and I think that will be tricky for some people to handle.  There'll be some people who either want to cross the divide and be involved in that and don't have the skillset, some will.  There'll be some people coming in who do have that skillset who wouldn't have been particular useful during the fork wars, or during the very early days, and that's okay, that we bring in these waves of new experts or opinions or people who can drive this forward.

David Zell: Yeah, and the nice thing about being a thinktank is we're just kind of thinking!

Peter McCormack: In a tank!

David Zell: In a tank, yeah!  We get Troy and everyone and just huddle in a tank and just, yeah --

Peter McCormack: Just think!

David Zell: But yeah, I mean the nice thing is unlike, I don't want to name them, but unlike previous attempts at similar things, no one is under the impression that we are representatives of Bitcoin, no one is under the impression that we speak for Bitcoin, or for some loosely constructed group of people.  We are literally just an independent non-profit that's interested in the future of money.

Peter McCormack: Could you argue that you speak for the users of Bitcoin?

David Zell: No, absolutely not, no.

Peter McCormack: I would argue that letter you and Gladstein did speaks for the users of Bitcoin?

David Zell: Yeah, sure, but get your order of operations flipped.  People may agree with our content and say, "This resonates with me and represents my views".  If that's the case, then yes, sure, it's speaking for anyone for whom that's true.  What it's not doing is saying, "We represent the 40 million people that use Bitcoin" or, "We represent the 200 million people across --" we don't represent anybody except the people that are on our website.

But yeah, I think people have had a good reaction to the stuff that we've put out.  I think largely, especially in the Bitcoin community, people have liked it.  People have also disagreed, which is awesome; that's the whole point.  I want there to be a better medium than Twitter for having these nuanced debates and conversations about Bitcoin.

Peter McCormack: You can do it on a podcast.

David Zell: You can do it on a podcast, you can do it on a Zoom call, you can do it emailing with someone.

Peter McCormack: What are the main pillars of objection to the work you guys have been doing?

David Zell: There's been several, but I guess the main ones are, "Are you trying to speak for Bitcoin?"  A lot of it's not necessarily that negative, more just you're wasting your time like, "The government's already made up their mind, they want to ban Bitcoin.  So, why are you doing any of this?"

Peter McCormack: Which is fundamentally untrue.

David Zell: Yeah.  But I mean it's all just noise.  The good criticism that I have received, there's been some good criticism.

Peter McCormack: Has there been anything that from that criticism, you've shifted your approach or shifted your thinking?

David Zell: Yeah, definitely.  I think when we put our first letter on energy out, a couple of months ago, Gigi got in touch and was just sort of stern, but was just like, "Hey, I think there are some things I would change about your language here.  I would do this".  The main thing was something that we have grown into, which is really making, as a first priority, centring the social value of proof of work first.  So, yeah, there were some comments from Gigi about how we were talking about proof of work, and I thought that was really helpful.

That was a great example of criticism that's like, "I have a direct and actionable thing that I think that you should change", rather than, "You're a spook [or] you're a whatever".  That stuff, I just filter out, because we don't really have any grand ambition, other than to research Bitcoin and figure stuff out and inform people, in particular the government, that Bitcoin is a potent force for social good, in the same way that the internet was; and that to properly bring with us the rights and liberties that we've enjoyed since the inception of this country into the digital age.

We have to recognise that there is value in market-based alternatives, and that open monetary networks bring risks like anything, but also bring unimaginable opportunity for spreading democracy, for ensuring civil liberties and rights, and for connecting more people to the global economy; and that all of those things, if done well, from the United States' perspective, can be quite beneficial.  So, it really just means creating an environment where in the free market of differing regulations and countries, people working on Bitcoin choose to work here.

That's what we need to do.  We need to have a regulatory environment that can compete with other countries, and where a rational bitcoiner, who wants to start a business, chooses to work here, and not begrudgingly accepts it, or pulls like an SBF and just moves to the Bahamas, which say what you will about FTX or Sam, is a great example I think of the point that I'm making, that if you're not thoughtful about crafting an environment that is good for innovation, that is good for entrepreneurship, that is good for hosting the people that are working at the cutting edge of technology, those people will happily go somewhere else, and all we will do is just box ourselves out of something that we could have, like the internet, benefited immensely from.

Peter McCormack: That's a great place to finish, that's a wonderful ending, David.  I love you, man, I think you're doing amazing stuff.  I think you've been a great addition to what's going on in Bitcoin.  You are always welcome to come on the show.

David Zell: Thank you.

Peter McCormack: I really appreciate what you've done.  What you did with Gladstein this week was incredible.  Keep doing good stuff with the BPI, stay in touch, man, keep crushing.  Tell people where to do and find out more information.

David Zell: Yeah, go to btcpolicy.org.  Just finished our new website.  The first one was shit, it was just a couple of hours in Webflow, so, yeah.

Peter McCormack: David hasn't slept for four days.

David Zell: It's kind of true!

Peter McCormack: All right, man, well listen, take care, love you, man, keep doing what you're doing, keep crushing, see you soon.

David Zell: Thanks, Peter.