WBD594 Audio Transcription

The Reformed Libertarian with Mike Brock

Release date: Friday 16th December

Note: the following is a transcription of my interview with Mike Brock. 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.

Mike Brock is the lead at TBD, the Bitcoin-focused subsidiary of Block. In this interview, we discuss being a post-libertarian, reconciling the best elements of libertarianism with support for liberal democracy, and how Bitcoin improves the incentive structures within governing institutions.

“It’s just impossible for me to believe that there’s this set of perfect rules, that if you follow them you will achieve this moral maxima and we will get closer to utopia.”

— Mike Brock

Interview Transcription

Peter McCormack: It's great to get you on, Mike.  For people who don't know you, you should introduce yourself.

Mike Brock: Well, I'm Mike Brock obviously, I'm sure it's on the video or on the podcast description.  I lead our newest business unit at TBD, at Block!

Peter McCormack: At Block; TBD at Block.

Mike Brock: Sorry, yes.  At Block, I lead our newest business unit, TBD, which is focused on building onramps and offramps from what I like to call the old money to new money, new money being Bitcoin and stablecoins, for creating more financial access all around the world.  That's the most pithy way of putting it.  In practice, what we're trying to do is we're trying to build open protocols on open standards using open-source software, in order to solve a lot of the challenges that we see with using these technologies on a day-to-day basis.

I think Bitcoin solves the Layer 1 problem really, really well, but there's a whole series of issues that we need to address if we're going to have a more decentralised economy.  Identity is a big piece of that, so we're really focused on building decentralised identity as a tool in order to build more decentralised applications and also allow people to own their own identity on the internet, as opposed to giving it up to these hyperscale platforms that are increasingly being the gatekeepers to our digital life.  So, that's what we're working on.  We think it's critical to Bitcoin adoption long term, and that's what I'm working on.

I've been at the company for over nine years, I was one of the early team members on Cash App.  I was the one who brought Bitcoin into Cash App, I also set up our Square crypto division, now known as Spiral.  Most of the things we've done at the company with Bitcoin I've had some hand in.  So, that's me.

Peter McCormack: So, you know a company on my friends; Miles Suter?

Mike Brock: I know Miles really well, I hired Miles, I brought Miles to the company.

Peter McCormack: Yeah, and you also know somebody who used to play for my football team.

Mike Brock: Who's that?

Peter McCormack: Conor Okus.

Mike Brock: So, I don't think I've ever spoken to him directly, but I know of him.

Peter McCormack: He's at Spiral, yeah.  Well, as I said, one of the reasons I wanted to get you on is you can't help -- well, you can help in Bitcoin to not get involved in politics, plenty of people do.  They're like, "I don't want to get involved in this shit, I'm about Bitcoin, that's my political affiliation, everything else is noise".  I get sucked into political discussions, and there is a substantial percentage of people in Bitcoin who are Austrian Economists, or fans of Austrian Economics, who are --

Mike Brock: Very much not a fan.

Peter McCormack: Yeah, I've seen your profile.  And, who are libertarians, and obviously I've had a lot of those people on my show.  I've done a number of interviews with people like Erik Voorhees, and he's been very good at challenging my ideas with regards to the state.  And I've been sucked down the libertarian rabbit hole a few times, but I never can get there.  I've never been able to fully rationalise the end position these people want.  So, I've kind of felt a lot on my own sometimes with this, because it's quite a rare position to be in. 

But like I say, I discovered you, I can't remember how but when I did, I started to realise there's someone else who can probably do a better job of rationalising what I'm thinking than I am.  But at the same time, we're going to push back.  It's quite recently I was in a thread with you where you referred to yourself as a reformed libertarian.

Mike Brock: Yeah, I call myself post-libertarian; I think it's a pretty common term.  I have quite a few friends who would use that label as well.  So, when I was in my early twenties, I was deep within the libertarian movement in Canada, most of my friends were libertarian, I was part of a cabal of friends, some of them went on to work at places like the Institute for Humane Studies and the Cato Institute.  I still have a lot of those connections today.  A lot of them are like me, they sort of left libertarianism, some of them followed interesting paths. 

There was this weird in between movement for the post-libertarians, it was called Bleeding Heart Libertarianism, or BHL, and some people called it liberaltarianism.  It was an attempt to reconcile the fact that libertarians, particularly in the Cold War period, really got in bed with conservatives in the United States.  And it was like this weird shotgun marriage that was, I don't want to say it was forced on people, but it was rationalised due to the threat of communism around the world, and libertarians were really worried about communism, the Soviet Union, Marxist influences, and they saw conservatives as a natural ally, and this led to this fusionism where libertarians and conservatives got together and created this sort of weird mess that we see today in the United States, with libertarianism and conservatism.

I think especially around the 2008 Financial Crisis, which was really when I was coming of age and I was still enmeshed in a libertarian movement, that was when there was a lot of conversations starting to happen among many libertarians of, "Why are we friends with conservatives again; do we really share the same goals here?  Conservatives are generally pro-war, they want to lock non-violent drug offenders up, send them to jail, they're opposed to immigration.  Aren't we against war; aren't we for immigration; do we really believe that these invisible lines drawn on maps should define whether or not somebody can move around freely and engage in free association?"  So, there was this real I think awakening that happened, and I think that that's what led to at least my post-libertarian journey.

I think I would say today, I'm still in that tradition in the sense that I believe in the liberal idea, I'm a liberal in the classical tradition and I love that philosophy and I'm still a big defender of it and I beat that drum, but I think there's something about what we call libertarianism that is often very reductionist and very suspicious morally and ethically sometimes.  So, I point that out and I am someone who really wants to highlight those contradictions. 

Austrian Economics, which is often very closely associated with libertarianism, and I once considered myself an Austrian myself, but as I matured and I started to have a more healthy appreciation for the complexity of the world, I started to see that there were serious blind spots in that way of thinking about the economy and money that I don't think truly capture the complexity of these things.  I mean, we can get into that, I think it's a really fascinating discussion.  I'm happy to go all the way down that rabbit hole and explain in excruciating detail why I think Austrian Economists are getting it wrong. 

But the short and sweet of it is that I don't believe that there is a true equilibrium to be found in a market.  I mean, obviously supply and demand are real, I would never debate that, but human society is complicated, what makes us happy is complicated, it's hard to quantify.  We're always moving, we're always chasing something new, we're running away from some things, and it's just impossible for me to believe that there's this set of perfect rules that if you follow them, you will achieve this moral maxima and we will get closer to utopia, I guess, if we just do that. 

I doubt that very much and I think Austrians sometimes are a little bit too utopian in the way that they believe that if you subscribe to these very self-consistent principles, say in the Rothbardian sense, referring to Murray Rothbard, that what you'll get is something which is closer to the ideals of freedom and liberty, and there's something suspicious there which is these like normative moral claims at the bottom what they're saying and they're not really honest about it.  I mean, some people are, but there's this argument of natural laws underneath a lot of these claims that are very suspicious like, "Are those the real natural laws?  Did it really take until the 20th century for some guy named Murray Rothbard to discover that there were these laws in the universe that were written in the stars that we just suddenly discovered and this is how we should live, like laissez-faire economics and money and all these actually relatively advanced social concepts were what we truly needed to achieve our moral and ethical destiny?"  That can't be true. 

Humans have been on this planet, modern humans anyway, have been on this planet for at least 60,000 years.  Our closest ancestors nearly 200,000 years and primates, several million; this can't be true.  So, I'm really suspicious of that way of thinking about the world.

Peter McCormack: What do you think the attraction is to people who claim that they're libertarians?

Mike Brock: I think most young people come to libertarianism for the same reason that a lot of young people come to socialism and a lot of these sorts of really utopian ideologies, because you're young and you're idealistic and you want to believe that there are easy answers, and there's not; there are no easy answers.

Peter McCormack: I tend to, whenever I sit down with a libertarian to discuss their ideas, I always tend to agree with what they're saying.  I think morally they're usually pretty right.  It's when I start to run through the thought experiments of how you coordinate a society of tens of millions or hundreds of millions of people and how that may play out, that's when I start to have questions and start to struggle.  A while back, I interviewed Scott Horton, and he'd written an article where he doesn't believe in the big red button to get rid of button.  But what I worry about is that humans will always coordinate and if you were to remove the state, something else would replace it that could be worse.  And you're a fan of --

Mike Brock: What is the state; define the state for me?  Tell me what the state is?

Peter McCormack: The state, to me, is a set of borders that defines a country and within that, there is a group of people who are elected to run it, or maybe not even elected to run it. 

Mike Brock: So, let's play a little game here.  Let's steel man a purely voluntarist society from the ground up, let's just do the whole thought experiment today and then see if we can use purely anarcho-capitalist rules.  We'll stick to the non-aggression principle, contractualism, voluntarism, and we'll try to work our way up and see where we get here.

Peter McCormack: But you've already hit one of my first difficult points, is that everyone has to adhere to the non-aggression principle and humans won't.

Mike Brock: Let's give them credit, let's suspend disbelief and then try to see if these ideals can survive.  So, I'm Bob.  So, Bob comes along and Bob sees there's this really, really beautiful island that he wants to buy.  Maybe it's 1,000 square miles of island.  And let's just assume for the sake of argument that the island is properly owned.  I understand that the proper way in which to obtain the morally pure, initial conditions to own land is through homesteading.  So, the island was properly homesteaded and the successor owners were all properly transferred the rights to the island, there's no issues of the island being stolen or there's no war or anything like that that happened.

So, Bob engages in a clean purchase of the island.  He owns it outright, it's a completely free and open transaction.  Bob moves onto the island and decides, "You know what, I think it's really boring to live here by myself.  So, what I'm going to do is I'm going to divide my island up into parcels, I'm going to build roads, I'm going to do all the things to attract people to come here and build houses and businesses, and I want to have Bob's Island, which is going to be the best island to come and do business and raise your family".

In exchange for everyone coming, they have to sign a contract or some sort of 200-year lease to own the land.  You agree in this contract that if you come and live on the island, you have to follow Bob's rules and you sign a contract that Bob is the owner of the island, so even though you're living here, you have to agree to do what Bob says.  So, Bob is essentially the CEO of the island.  So, Bob's really successful, hundreds of thousands of people move to the island, big companies come and set up shop, skyscrapers get built, it's this business paradise; people are living on Bob's island.

Years and years go by, Bob dies, he leaves the island to his son, his son is completely crazy, mad king type thing, starts getting into arguments with some of the big business leaders on the island, and people start getting into conflicts.  But as the years go by, the island starts to turn more and more into something that looks like a totalitarian state, for all intents and purposes.  One day, one of the families, their kid, their 7-year-old kid trespasses in the wrong place, smashes a window, and Bob's son, let's call him Peter, tells them they have to remove the kid for the island.  We have no way to go, we have two hours to get off my property or, "I'm going to go throw you in the ocean and you can go swim to another shore".

If you take anarcho-capitalism, its principles seriously, nothing un-libertarian is happening.  Somebody's just enforcing their property rights, the parents signed a contract.  So, are we going to say this isn't a state, what has happened here, we haven't formed a state?  This is the regression problem that I see in this anarcho-capitalist argument.  And actually, a lot of them will argue that it's not a state because following all these principles, we got to this place by contractualism, voluntarism, non-aggression principle, which now actually defends Peter's island's inheritance.  So technically, if he doesn't leave, they're the aggressors and of course under the non-aggression principle, it's evil to use violence against this 7-year-old to remove him because he's trespassing.

So, this is an example of why I don't think this ideology is very well thought out, and this is why I asked you at the very beginning there to tell me what a state is.  How is that not a state?

Peter McCormack: I think it is a state, of sorts.

Mike Brock: Yeah, but I didn't violate any anarcho-capitalist principle all the way up until the end.

Peter McCormack: How would you have defended that 20 years ago, or whenever it was you were a libertarian?

Mike Brock: I probably would have said I don't think it's likely to happen.  I think I would have probably made some special pleading argument saying, "I think in that world, there'll be competition between jurisdictions, so people can always leave, and the incentives of business will never be towards doing that sort of thing".  And I think as I got older and started to really think about human nature, and seeing how humans can actually quite regularly act against their own self-interest and be quite malevolent and sociopathic, that I came to no longer believe that market forces could not be relied upon to prevent those sorts of outcomes from happening.

Peter McCormack: Yeah, I agree with you, but I tend to come at it a different way.  I had my own thought experiments, but one of the main things was this discussion around freedom, where people would say to me, "Let's go from first principles.  Is coercion right?" and I'd be like, "No".  "But tax is coercion.  Why do you believe the government should tax?"  And when people would come at me with these kinds of ideas, I had no decent defence, because otherwise I'd have to say I believed in coercion.

Mike Brock: Well, it's a trap.

Peter McCormack: It is a trap.  But when I worked through the thought experiments I was like, "Well, you talk about freedom.  I feel very free in the UK.  Actually, in Europe I feel very free.  I don't feel like I need to have a weapon to protect my home, I can travel quite freely.  Everywhere I go, everyone's nice, I feel very safe".  That to me is a certain amount of freedom.  And the ideas regarding libertarianism, where you would be able to defend your home and defend your property and have pure freedom, I would question that and say, "What happens if the guy next door to me has a lot more money and he just comes and steals my land?"  "Well, you could take him to an arbitration court".  "But what if the arbitration court sides with the guy with all the guns and money?"

There was no central rule of law, and that's not to say that I think the central rule of law is great, that's not to say I don't think there are injustices.

Mike Brock: Yeah, of course there are.

Peter McCormack: But this base set of rules I feel is what is missing from this.  So, I've tended to focus more on, I think the libertarians have good ideas, wouldn't it be great if libertarians had more political capital and could influence politics; that's where I've come to.

Mike Brock: I think libertarians got a lot right, I want to be clear, I don't think a lot of the libertarian impulses are wrong.  I mean, I think libertarians were in some ways ahead of their time on excessive use of police force in the United States.  I mean, one great example of that is Radley Balko and his work on really trying to raise people's awareness about police in the United States using incredibly violent tactics, like no-knock raids, dynamic-entry raids, to effectuate drug searches, which he would refer to as, "The deadliest tactic in US policing".  He has a lot of scary data to point that out, and this was all pre Black Lives Matter stuff, where libertarians like Radley were shouting from the rooftops to bring attention to the fact that there were aspects of policing in the United States that were completely out of control in terms of the use of lethal force, and situations where it just didn't seem very justified.

So, I give libertarians a lot of credit for being early in those discussions.  Libertarians have been among the most clear-eyed in terms of the war on drugs.  So, like I said, I still have friends who are libertarians and I consider them really good people.  I'm not anti-libertarian, but I guess the more accurate way of putting it is that I think it's an incomplete view, it's an incomplete view of how we need to think about this modern society that we're in, and all the equities that are involved in keeping this big, complicated game of modern human society together.

Peter McCormack: Is there a way of completing the view though?  Like I say, I think the influence of libertarians within politics, within government, would be useful for better drug policy, for better policing policy, for a lot of different things with regards to supporting more freedom for the people.

Mike Brock: Yeah, I agree.  Then the question then becomes, and this gets into, "What is freedom?"  I mean, you just gave me one conception of it, which is you feel free to move around, you feel safe; that's a form of freedom.  You say you don't feel like you have to carry a weapon.  Some people, that doesn't feel like a form of freedom!

Peter McCormack: No, some people want weapons.  That would be rare in the UK.  I don't know, Danny, what do you think, if we had a vote on guns; pro or con?

Danny Knowles: Maybe 1% pro?

Peter McCormack: And probably every one of those would be a British libertarian.  Nobody wants guns, just nobody wants it, and we want to keep our National Health Service despite criticisms of that.  We just don't want it.  Now, one or two people listening will write to me and go, "You're wrong, I do", but generally speaking we do not want weapons.  That said, if I came to live here, I wouldn't be anti-gun, it's just a different culture.

Mike Brock: Yeah, and I don't think that people want to get rid of the state either.  I don't know where people see evidence for that.  I think that's another -- I mean, not all libertarians do, by the way.  I mean, sometimes it seems like that.

Peter McCormack: Smaller.

Mike Brock: Yeah, it's a smaller percentage of that.

Peter McCormack: No, they want a smaller state.  But the reality is that most people want some form of welfare state, even most Republicans in the United States, and Republicans are typically seen as the small-government party that is anti-welfare, but they're the ones who added Medicare Part D, they expanded social security.  And they know that, because they know that Republican voters by and large want to maintain the welfare state.

I think Milton Friedman probably put it best.  If we're not going to able to get rid of the welfare state, whether some people want to or not, for moral or ethical reasons, we might as well make it work better because people don't want to get rid of it.  I think that's where my head is at on those sorts of things.  I think in the US it's crazy.  I don't know how many types of federal welfare programmes there are, it's very inefficient.  But this conception that we're all going to move to a more laissez-faire world, where it's more sink or swim, rely on charities and churches and community organisations to help people who can't help themselves, as opposed to the government, there's no political constituency for that; that's real.

Peter McCormack: Well, I haven't ever actually researched if there's background data on this, but I would love to see the data on those countries that have a welfare state and the percentage of GDP that goes towards that, and then any associated stats with regards to standard of living or lifetime expectancy.  I mean, I've travelled to countries that have no welfare state and they are horrendous ghettos, and it's not just about being fair, it actually brings more risks to the haves from the have-nots.  So, I don't know that data, I'm sure Danny's having a look at it now.

At the moment in the UK, we have what's seen as a massive immigration problem, and 40,000 people this year have crossed from France, essentially on dinghies, risking their lives to come to the UK.  I'm proud as a country that we actually try and find a way to accept them into the country and can provide them perhaps with housing and support and food to give them a chance to have a leg up in society, I like that.  But I don't like the idea being challenged that I'm anti-freedom because of that.

Mike Brock: How's that being anti-freedom?

Peter McCormack: Well, because that's paid for by your tax, and that tax is theft!  What have we got here?

Danny Knowles: This is just the healthcare spending as a percentage of GDP.

Peter McCormack: That's healthcare spending, but I'm thinking more like tax and standard of living.

Danny Knowles: Okay.

Peter McCormack: Look at that.  Isn't that insane how much the US spends on healthcare?

Mike Brock: It's actually really crazy. 

Peter McCormack: I got to experience both the US and the UK healthcare systems recently, I talked about this on the show.  I have this thing where I get an SVT and my heartrate just goes crazy sometimes, and the symptoms are like a heart attack.  And so, when we were in Miami recently, my lips all went cold, it all happened, Danny took me to emergency care in the US, and a lot was very similar, but there were a couple of things that stood out to me.

The hospital itself was more rundown than a UK hospital, which surprised me.  The wait time was exactly the same, it was a four- to five-hour experience, but I was given way more tests in the US and they gave me some drugs to take at the end; whereas in the UK, they essentially do an ECG and one blood test, or a couple of blood tests.  That really stood out to me that it doesn't matter whether it's private or social, the experience was pretty much the same.  But because of the risk of litigation in the US, they did a lot more checks.

Mike Brock: Yeah, it's interesting.  I'm originally from Canada, so I've experienced the healthcare system on both sides of the border and yeah, there are differences.  I would say emergency care in the US and Canada is pretty comparable, it's pretty much a very similar experience if you end up in an emergency room.  Where things are probably a little bit better in the US, but we pay for it, is access to specialists.  The famous example in Canada is knee-replacement surgery.  Wait times for that are anywhere from six months to a year.  If you need a knee replacement, many Canadians end up, because they're in so much pain, coming south of the border to get it done out of pocket, which is very, very expensive without insurance.

Danny Knowles: We had a Canadian guy in here the other day whose friend was going through the exact same thing, and said the waiting list was 18 months for an ACL replacement.

Peter McCormack: Because of the backlog from COVID.

Mike Brock: But yeah, if you have a heart attack in Canada, you'll get relatively the same level of care as you will in the US.  It's when you're dealing with non-life-threatening conditions, that's when you really feel the way that the care is rationed, and that's the biggest difference.  So, there are trade-offs.

Peter McCormack: We also have it with top-end cancer treatment.  A lot of people in the UK, you regularly see it, someone's fundraising to send their child for leukaemia treatment in the US because the top-end care is better; and there are certain conditions that are considered curable here that aren't considered in the UK.  One of my best friends, he brought his son out here when he was about eight, and he was cured of cancer.  I'm pretty sure it was leukaemia he had and he was cured.  I think that is one of the successes of having a more capitalist healthcare system, in that there's a financial incentive to solve those high-end items.

But at the same time, in the UK, if you have a heart attack, you're not going to have a big bill and be financially crippled for maybe even the rest of your life.  I kind of like that.

Mike Brock: Yeah, and there is some evidence too that -- I mean, there's obviously going to be a drag on the economy from employers having to cover the cost of healthcare as opposed to it being amortised across the whole population through government programmes; I think that's true.  So, yeah, I'm with you.  I think that most people in the United States want that.  It was just the midterm election and another red state just opted into the Medicare expansion again.

Peter McCormack: Which state was that?

Mike Brock: I can't remember which one it was.  Was it Kentucky?  Don't quote me, I don't remember, but one of the states just did as part of a ballot measure.

Peter McCormack: Does the Medicare system work; is it effective?

Mike Brock: Well, Medicare is for once you reach retirement age in the United States, you essentially gain access to a federally-run, single-payer system we call Medicare.  Then there's Medicaid, which is another version for people who are below the poverty line.

Peter McCormack: Which was the one that just expanded?

Mike Brock: I think it was a Medicare and Medicaid expansion if I'm correct, but I can factcheck that.

Peter McCormack: Why do you think there is that significant connection between, especially in the Bitcoin world, there is a connection between right-wing politics and libertarians; do you think it's economics driven?

Mike Brock: I think there's this element, I think it's one of the more unfortunate aspects of libertarian politics that a friend of mine used to call "the thin economic wedge" in libertarian politics, where there's this real obsession that liberty is downstream of economic liberty.  It's a very curious claim similar to the claim of self-ownership, which we can talk about too, because I don't think economic freedom is different from social freedom.  Economic freedom is a social freedom.  Name one economic transaction you can think of that is not a social act?  Buying a coffee is a social act; we're engaged in a social act; advertising is a social act; even going and seeing a sports event or buying gas at the gas station is a social act.  None of these things happen without some social freedom.

So, separating social freedom, I think when people try to separate that, they're thinking in terms of things like same-sex marriage or the ability to use recreational drugs; those are the typical things people think of when they think of social freedom versus economic freedom.  I think it's a really silly distinction, because those things also implicate economic freedom, particularly on the same-sex marriage side.  There are aspects of the tax system that specifically advantages those who can get married; you can jointly file your taxes.  Or, recreational drug uses, there are real businesses that can exist there versus otherwise can't.

Thinking about these things as separate is one weird thing that I think happens sometimes with libertarians where they're like, "Look, I don't really care about social freedoms.  If I have all my economic freedoms, then the social freedoms will come".  My response is, "Why do you think that?  People used to point to Hong Kong and Singapore and mainland China as examples of, 'They're even more capitalist than the United States'".  Maybe that's true in some sense, but would you want to live under a surveillance state, with these crazy systems like the social credit system and omnipresent surveillance online, through completely government-controlled internet?

The reality is there is no separation between economic and social freedom.  If there is social control, there's economic control, because all economic activity is downstream of social freedom and our ability to effectuate things through social means.  So, I think that that is just a fallacious way of thinking, where if people say that, it kind of makes sense.  They have these few examples in their head of what economic freedoms are and a few examples in their head of what social freedoms are, and they haven't really thought about it too deeply and they spend about five seconds thinking about it, and then they cut off their thought process.

But if you think about it enough, you realise that you should probably care a lot more about social freedom if you're a libertarian, because that's the real way that your rights will get pulled out from underneath you, including your economic rights.

Peter McCormack: Yeah, I've had a couple of clashes with people recently, people who claim they're a freedom maximalist, who express kind of bigoted views towards gender freedoms, sexual freedoms, and have kind of got sucked into that -- I would say the Conservative Party has pushed a lot back on the advancements of freedoms we've seen for people related to gender and sex.  And I think some of the pushback has potentially been fair, or there are certain things that can be challenged.  But at the same time, I don't understand somebody who claims to be a freedom maximalist, who is triggered by the idea of same-sex relationships, marriages.

Mike Brock: It's very strange, because you often find with extreme libertarians there's this sense of, "I just want to be left alone by the state", but then objecting to people who are now being left alone by the state to do things that they want to do with their bodies; they want to present themselves as a different gender, or they want to love someone of the same sex.  Yeah, exactly, I think when you pull back the layers of the onion on that, what you find is they really just only care about a very narrow set of economic goals; keep as much money as they possibly can, they don't want it taxed.  But generally speaking, they have very socially conservative goals.

This actually speaks to another element of libertarianism, and I sent out a tweet on this the other day, which is a true story, about how I left libertarianism; and what was the actual straw that broke the camel's back was the sort of realisation that I came to, having a conversation with someone, that this person was starting to talk in ways that were suspiciously sounding bigoted, and quite frankly racist.  And I remember asking him straight up, I said, "It really sounds to me like what you're really concerned about here is you want to use property rights, in their most strict sense, as an excuse to basically create an all-white community in society".  And, do you know what he says to me?  He said, "What's the problem with that?  I have a right to do business with whoever I want".

I remember he started jumping down my throat and said, "If you were a libertarian and you believe in property rights, you can't tell me what I can and cannot do with my property".  I realised in that moment, for him, libertarianism was about the right to put up a "white's only" sign in the storefront and then call it property rights, and that was an absolutely earth-shattering moment for me.  I remember, I was in a group of people and people were getting really mad at me that I was pushing back at this guy and I didn't really understand why.  People were like, "What are you saying; the state's going to basically tell people they can't put up 'white's only' signs in their storefront, because that would be a violation of property rights?  How can you be a libertarian and support that?"  And you're like, "Why is this so important to you guys?  What is the line in the sand that you want to draw here?"

I just remember going home after this and being like, "Holy crap!  I can't associate with these people".  I remember being really depressed and feeling completely politically listless.  It actually took me a year, I left my whole political consciousness behind.  I dove into my work and I stopped thinking about politics day-to-day.  Then I went back and I started reading the classics again, and I got into liberal philosophy again, and that's how I get to where I am today.

Peter McCormack: Do you think it's because maybe they want to defend the most extreme version of say property rights to protect all property rights, a bit similar to the NRA; they don't give an inch on anything?

Mike Brock: I think there are people like that.  I think there's a slippery slope fallacy going on there.  But no, I think there were really people there who saw this as a vehicle for bigotry, they really did, and it's not surprising to me that a lot of these people who I knew, after 2016, just took the mask off, they just took the mask off.

Peter McCormack: It reminds me of that Jordan Peterson video.

Danny Knowles: Which one's that?

Peter McCormack: You know, where the comedian interviews him.  Have you seen this video?

Mike Brock: No.

Danny Knowles: With the Australian guy?

Peter McCormack: Yeah, the Australian comedian.  So, it was when Jordan Peterson was discussing the idea of the cake shop.  Do you remember the cake shop?  Can somebody who owns a cake shop refuse to serve somebody who's gay because --

Mike Brock: It's a famous case, yeah.

Peter McCormack: Yeah, but you've not seen Jordan Peterson discuss this?

Mike Brock: I have not seen Jordan Peterson discuss it.

Peter McCormack: Actually, I credit Jordan Peterson for his reaction, but it helped me understand why part of these ideas with regards to property rights and free speech don't work.  You got it?

Danny Knowles: Yeah.

[Video plays]

Peter McCormack: So, I credit him with actually admitting he was wrong, but you go through those thought experiments, and I think some of these ideas fall apart.  I think personally, I like the idea of how we work, how we coordinate as a society, because I think if we don't figure that out, we just end up with something that's worse.  And whether that's worse because we have less care or less social coordination, or we just end up with some new authoritarian structure that comes in its place that fills a vacuum, that's what I always worry about. 

But I then get challenged on the idea of, should there be hate speech laws?  We have them in the UK and I think sometimes they've been used ineffectively.  So, I kind of get lost in this --

Mike Brock: Some of them are pretty scary actually in the UK.

Peter McCormack: Do you know about the comedian with the dog?

Mike Brock: Yeah, I mean some of the stuff you guys do in the UK with these antisocial behaviour orders, and stuff like that, is actually for me a little bit too far; I'm actually more libertarian than that even!  So, we can talk about that. 

But look, I think that we have figured out a really good system and I think liberal democracy is the best thing that we currently have on offer, in terms of trying to build a society that tries to create a system in which we can try to find some balance between all these things we're talking about, like making sure that people who are down on their luck don't end up dead in a gutter; or making sure that our government and our leaders can be held accountable, we do that at the ballot box with electoral democracy; and making sure that the government can't go too far, we do that with placing a liberal conception of rights on what the government can do.  That started with the Magna Carta back in the UK hundreds of years ago.  The US Constitution was another major step, and many other countries have adopted constitutions and human rights charters and stuff like that to try and codify that.

What can we agree on?  I can agree that yeah, we should not have tyrannical majorities that are running roughshod over minorities; we should not have government with unchecked power.  If government is going to have power over us, they have to be accountable to us, they have to be transparent.  These are all things that we have figured out.  And what's really frustrating about living in 2022 is the fact that there's this sense that everything has failed, the whole system has failed, democracy has failed, liberalism has failed, we need something new.  I don't think that's true, I think we've just gotten really lazy about fighting for these systems, fighting for the systems of democracy, fighting for liberal values. 

It feels maybe a little bit, especially in recent months now, that maybe that zeitgeist has shifted and that gives me a little bit of hope, but what is it about that that's so offensive to some people in this space, a liberal democracy?  It's so weird, I feel like in some of these conversations, it almost feels like sacrilege to even say how you support these things.

Peter McCormack: I think because historically, you can point to a number of things the state has done which is not great, which is locking up people in jail, which is unnecessary wars in the Middle East and various other places, it is massive surveillance.

Mike Brock: Yeah, all these things have happened.

Peter McCormack: Yeah, and I think there's plenty of reasons to look at them and say, "This is a problem, this isn't good".  I'm just not the one who thinks we should burn it all down.

Mike Brock: I actually love that you brought this up, because what you say, those criticisms are true.  You talked about one of them earlier when I was talking about Radley Balko and police excesses.  You brought up foreign wars; the Iraq War of 2003 comes to mind as something that when I think about it, it's enraging to think that actually happened, and that the people who perpetrated it haven't been held accountable for it.  Those things are all true, but I think if you're going to do this, you have to engage in a little bit of counterfactual reasoning.

What is the real alternative to trying to go forward and trying to reform and trying to make the future better?  The reality is we're a very flawed species, we always have been.  I mean, sure, we've done all these bad things, but human beings en masse have done really bad things for thousands of years.  Up until the last couple of hundred years, slavery was actually legal in most places in the world; we forget about this.  There's an embarrassing legacy in the United States of slavery, and we should be embarrassed by that legacy and we should be learning about that legacy. 

But if we take human history as a total view on human history, humanity has been pretty shitty to itself.  We've fought wars, many wars, not just the Iraq War, but World War I; I've studied it and I'm still not clear on what happened there, it's the weirdest thing that ever happened in the 20th century that led to millions of deaths.  So, yeah, we have a capacity to be very shitty, but we also have a capacity to be very beautiful.  We've gotten progressively better.  There's another way of looking at our history, there's another way of looking at where we've come from.

Peter McCormack: Of course, yeah.

Mike Brock: Slavery is not legal anymore; same-sex marriage is legal; we have most Americans today, if you poll them, think that the Iraq War is a mistake.  I mean, that's progress of a kind, the fact that people realise that these mistakes have happened.  So, this idea of, "What are we going to do?  We're going to anthropomorphise countries and say, 'Well, you did this, so these sins are attached to you' and so we have to somehow punish the state, which isn't even a thing, it's just a conglomeration of a whole bunch of people working together and reacting to incentives?" 

The state is just an idea, it's just a concept, it's just following a bunch of rules that we wrote down on a piece of paper.  The United States is not a person that's guilty of something.  I think a lot of us think like that as a mental shortcut, and I know why we do because it's a useful abstraction, but it doesn't get you anywhere, it doesn't tell you what -- I mean, if you do think like that, then yeah, we should take the United States out back and we should execute it for its crimes.  But the United States isn't a person and it doesn't make sense to think of it that way.

Peter McCormack: I think there's parts of what the United States has done, and maybe this is one area you agree with and why you're a fan of Bitcoin, but creating this global reserve currency.  Are you friends with Alex Gladstein?

Mike Brock: Yeah, him and I, we had dinner just the other night.

Peter McCormack: Oh, great.  So, I'm going to bore people on the show because I keep mentioning this at the moment, but it tends to happen when you have an important show.  We made a show about -- did he talk to you about his paper he's working on on the World Bank and the IMF?

Mike Brock: Yeah.

Peter McCormack: So, we made a show on that and then a lot of the ability for not just the USA, but Europe and other western liberal democracies, the ability for them to be able to progress and create this high standard of living is this kind of economic imperialism that they've imposed on the rest of the world.  Things like that, again they're not good, and we're in agreement on this.  So, my question there really would be, what are the reforms then that we want; what are the reforms that would end some of the things we've perpetrated on the rest of the world, or even in our own societies?  That's where I'm more comfortable; it's not to burn it all down, it's to say, "Okay, democracy has its challenges, how can we improve things?"

Mike Brock: Yeah, so it's funny, Alex and I actually had this conversation over dinner and we were talking about the World Bank and the IMF, and he had asked me how I thought about it.  And I got into talking a little bit about, if we're going to get a little bit sociological and philosophical here, is the way I look at a lot of these things is there's path dependence issues that get us to where we are today.  I think it's very true that the World Bank and the IMF have done quite a bit of damage in terms of enmeshing the global South in debt, and then giving them more debt to pay off older debt, and have created something that is morally problematic, to say the least.  And yeah, I think Gladstein's message on this around Bitcoin being this emancipatory force here, to allow people in countries to take control of their own destiny, is certainly something that I support and I'm in agreement with.

I think that when you look at how did we get here, I think there's a lot of road to hell being paved by good intentions there.  I think there probably were some starry-eyed people along the way.  I'm not a conspiracy theorist; I believe that one of the reasons why Nixon originally broke down and went to China and started to normalise relations, and the fact that Thatcher handed Hong Kong back over to China, was a belief that through engagement and through economic development, that China in particular would liberalise over times, as a result of economic reforms.  And I think the World Bank and the IMF have tried to follow a similar script, hoping that through economic investment, that a lot of these countries would reap the benefit of market economies, they would become more productive, they would be able to pay back these loans, and they would become more liberal democracies that were more wealthy.

What ended up happening though was that a lot of these governments were corrupt, they embezzled a lot of the money, didn't make it to the people, didn't actually turn into investments all, infrastructure wasn't built, if it was it was purely in service of just setting up mines that were exporting raw materials back to First World countries.  But I do think that two things are true: one, these systems were set up with people who were starry-eyed about the power of economic reforms and market economies that would actually lift people out of poverty worldwide; and by the way, market reforms have lifted billions of people out of poverty, let's be very clear.  But we didn't spend enough time advancing the cause of freedom, liberty and democracy.

What happened was, we had a neo-liberal movement in the 1970s, 1980s and 1990s in particular, that felt if we could just jumpstart capitalism around the world, democracy and liberalism would follow.  And I think what happened with the World Bank and the IMF had a lot to do with that, and we reached this point where we are today where we're looking at it now and we're like, "Holy crap, it hasn't done that, it's actually made these countries even more dependent on foreign aid over time, they haven't developed their economies, their governments are corrupt and that corruption is being reinforced by these regimes that we've created".  So, yeah, it's a moral dilemma that we have to take on. 

So, I agree that we need people to realise that and we need to start taking positive steps towards including billions of people on this planet that simply do not have access to what we do sitting here at this table.

Peter McCormack: Back to my question on reforms though, what do you believe needs reforming?  You might not have done this!

Mike Brock: We could be here for the next five hours!  What do I believe needs reforming?  Specifically the IMF and the World Bank?

Peter McCormack: No, more with say domestic politics to begin with.  I think there's a lot of nihilism at the moment, I think people are losing faith in what their vote actually does or means.  Politics seems to be attracting shit people and I think good people avoid it because they don't want to have their lives destroyed.  I mean, at the moment in the UK, we don't have the two-party politics issues that you have here in the US, we just have fucking wankers in politics, just people you don't want to vote for.  Kier Starmer and the Labour Party, I couldn't vote for him; we've had four Prime Ministers in the last couple of years in the Conservative Party. 

I mean, Boris Johnson, who by the way used to claim he's a libertarian, he's not, he was just a Conservative; we've had Liz Truss destroy our economy; we have Rishi Sunak at the moment, who is very authoritarian in the way he speaks at times.  There's just no one to vote for and there's no one to believe in or get behind; there's no one to look up to.

Mike Brock: Yes, if you want democracies to survive, people have to have a perception that government is responsive to their needs, and is paying attention to the things that they care about.  And I think, yeah, that nihilism you speak of, I'm raging against that all the time, because the reality is that we're the problem, we're the problem with democracy, I'm the problem with democracy, we're all the problem with democracy.  This idea that it's just the politicians' fault, that can't be true.

Peter McCormack: We keep voting for them.

Mike Brock: Yeah, we keep voting for them, and we can stand for election, and I think we need to reinvigorate people's belief in that.  Political change can happen and it has.  The UK was an economic basket case in the 1970s, and of course Thatcher came in and reformed the UK economy, she broke the back of the Trade Unions, which was a very difficult period for the UK.  But the UK went on to a massive economic boom.  The next 20 years in the UK was impressive in terms of how much economic development happened after that.

The reality is is that we can make things better, we can and we have.  The idea that we're stuck, the system has failed, it can't go any further, is a false despair.  It's within the power of all of us to do this and I guess all I can do is keep screaming from the rooftops that, yes, we should all care about democracy.  If we want something to happen, then we should identify candidates that support our points of view on those things and we should try to elevate them.  We can donate money.  I mean, we should at some point get to how Bitcoin can help with democracy, because I think it can.

Peter McCormack: Well, that was my next question!

Mike Brock: Well I think, yeah, that's the double-edged sword of democracy.  If you engage, then democracy will respond to that engagement.  If you disengage, then special interests and nefarious interests and malevolent interests will capture the politicians, will capture politics and we will have governments that are not responsive to the wants and desires and needs of the people who they govern, it's that simple.

Peter McCormack: So, what does Bitcoin mean to you?  And I put that question to you because again, based on the questions that come at me, "You're a statist cuck --"

Mike Brock: I hate that term!  That is a pejorative term.

Peter McCormack: Danny tells me off for even referring to myself, but they're like, "You're a statist, you don't even understand Bitcoin.  If you understood Bitcoin, you wouldn't be a statist" and I'm like, as far as I'm aware, Bitcoin for me was peer-to-peer electronic money that routes around the control of anyone.  But I don't remember anytime, correct me if I'm wrong, I haven't read all of Satoshi's writings, but he said he'd created Bitcoin to get rid of government, it was to get rid of central banking.  And I'm okay with that, I don't think that's a bad idea.

We had the elimination of church and state, and I think the elimination of money and state should be debated, but at the moment I have plenty of uses for Bitcoin that materially improve my life within the sphere of democracy.

Mike Brock: Well, to bring up Alex Gladstein again, I think the work that he's doing at the Human Rights Foundation with Bitcoin, pursuing the cause of democracy in places where it seems hopeless, and the way that Bitcoin is being used by human rights activists and democracy activists and in Africa and in Russia, in the case of Alexei Navalny' organisation, the Anti-Corruption Foundation, I mean these are real ways today that Bitcoin is being used to advance the cause of freedom and democracy.  So that's very real and I want to give a shoutout to Alex Gladstein again and the amazing work he's doing at the HRF on that.

Now, in terms of where we end up and whether or not money and the state ever end up getting completely separated, I'm a bit sceptical that that will ever quite really happen.  I am one of those people who accepts the reality that I think credit will continue to be a very dominant form of money, whether or not it's denominated in Bitcoin or not, whether or not Bitcoin ever becomes a unit of account.

One thing I believe though is that Bitcoin really changes the incentives in a really, really dramatic way, for if central banks continue to exist and continue to issue state money, fiat currency, they will have to do so in a world where an offramp to Bitcoin is going to be omnipresent, where they're going to have to think about the mechanics of how their currency works.  It's going to be a lot easier in the future for people to lose trust in alternative currencies if Bitcoin becomes an omnipresent global currency.

Peter McCormack: It's like another check and balance.

Mike Brock: It's a check and balance; and we should want that.  Like I said, I'm a smaller liberal and the purpose of democracy is to give power to the people, it's not to give power to the government.  The government is there to provide protection, to provide a common set of rules and laws, so we can all be more free, so we don't have to worry about, you said earlier, like worrying about your safety and having to carry a gun to protect yourself at every moment of the day.  Safety is a form of freedom, I agree with that, I'm with you on that, and those are the sorts of things we want government to do.

The sorts of things we don't want government to do is to come into our bedroom, to tell us where we can work and where we can't and where we can live and who we can be friends with and who we can associate with.  When government starts doing those things, and I'm going to sound a lot like a crazy libertarian/anarchist too, I believe that there are limits to the power of government.  And I think we're moving into a scary world where the digital sphere is a double-edged sword and we see both sides of those swords.

On one side, we see with Bitcoin, the democratising power of it, the ability to return power to individuals in a way where governments can't control it, corporations can't control it.  But I see the other side of that sword of technology with really scary, Orwellian surveillance states like China.  Technology's very dangerous.

Peter McCormack: Or, America!

Mike Brock: Well, yeah.

Peter McCormack: The NSA.

Mike Brock: The NSA.  The things that Edward Snowden exposed, I mean these programmes appear, to me anyway, to be unconstitutional, contrary to what US law appears to allow for.

Peter McCormack: Fourth Amendment?

Mike Brock: Yeah.  A government breaking the law is a serious problem for democracy.  Government should always be below the law.  So, yeah, we need to start thinking about ways that we return power to people, and Bitcoin is super-compelling in that regard, and it's one of the ways that I think we can really start to hopefully bend the course of history back to some balance, where government is more responsive to us, more responsive because they realise that we have power to choose where we save our money, how we spend our money.

I think I'm more on Andrew Bailey's side of this, that I think Bitcoin may incentivise states to be a lot more responsible with fiat currency.

Peter McCormack: I agree with that.

Mike Brock: I said this at Bitcoin Miami earlier this year, as I think ironically Bitcoin may be the thing that saves fiat from itself, because it creates this check and balance where governments are going to continue to want it, so they can tax in that currency, because they want to maintain a welfare state and they want to issue bonds for capital investments to build bridges and roads and stadiums and all these other things. 

So, I think there'll be a great incentive for governments to try and maintain the power to issue fiat.  But I don't think they'll be able to do it at the levels of irresponsibility that we've seen over the last 20 years, what we saw happen in the late 1990s and early 2000s, and how we've blown up these asset bubbles with incredible easy money policies, zero interest rate policies.  We see these graphs from like the St Louis Fed and we're like, "How can this --"

Peter McCormack: Well, what we saw yesterday.  We were looking at a chart, we were looking at debt clocks; it's scary things.  I mean, I've always had a very simple way of explaining this.  This is how I explain Bitcoin to people and why it matters.  I ask somebody about their budget, "When you get paid at the end of the month, what do you do?"  "You pay for your house and your car and you put your money by for your food and maybe some for a holiday, you have a little bit left over".  I was like, "What happens if you go over budget?"  "Well, maybe I'll get a loan".  I say, "What happens if you don't pay the loan back?"  "They take my house off me".  "Well, what if you had a printer up in your room and you could just keep printing money and kicking the can down the road?"  "Well, I would print that money".

That's exactly what we've given government.  Now, if you took that ability to print money away, I believe a government would run a budget and they'd have to stay within budget, they'd have no choice, because they don't have the ability to print money.

Mike Brock: No, they would still think on debt.

Peter McCormack: Yeah, of course.

Mike Brock: They would still borrow against the future.

Peter McCormack: But they could be bankrupted easier.

Mike Brock: Yes.

Peter McCormack: And we know the US Government is running the risk of default.  There is a potential in our lifetime of a US Government default.

Mike Brock: Oh, there's certainly a potential there. 

Peter McCormack: Which is crazy.

Mike Brock: The sovereign debt risk in the United States is rising, it's troubling.  I don't think we're near it now, but you can see how it could happen now and it's scary.

Peter McCormack: But they should, if you look at the budget now, they should be slashing the military spend, they should be slashing social security spend and they should be running a budget.  To me, that is natural.

Mike Brock: I think it's inevitable the taxes are going to go up in this country, and people don't want me to say that.

Peter McCormack: Well, I think you're right.  They're going to go up in the UK at the moment.

Mike Brock: Yeah, it's inevitable.

Peter McCormack: We had Liz Truss try the opposite, which was to reduce taxes and increase spending, and she blocked the pension market.  Now we've been told that we're going to see higher taxes and slashed spending, which is sadly exactly what is required to get back to trying to balance the budgets as close as we can.

Mike Brock: Yeah, I mean I think it will eventually reach that point.  I lived through a little bit of that when I was younger, growing up in Canada in 1993, the Canadian Government debt-to-GDP ratio got frighteningly high.  The government was six months away from default.  People don't realise this, but the Liberal Party had won the election in 1993, deposing the Progressive Conservative Party.  It was one of the greatest electoral defeats in the history of the country.  I think the PCs were reduced to two seats in the parliament; it was a massive majority.

Peter McCormack: It sounds like El Salvador.

Mike Brock: The Liberals had run on -- they had an election platform called the Red Book, and it was all the crazy things they were going to do and all the social services.  And when Jean Chrétien became Prime Minister, Paul Martin became the Finance Minister, they realised that they were in a lot of trouble, the country was in recession.  And when they started to realise that the bond markets were moving against Canada and the cost of borrowing was spiralling out of control, Canada underwent what a lot of people at the time saw as -- I mean, there were protests and public sector unions were protesting right, left and centre. 

But the federal public sector spending fell by 40% by the end of the decade, because it had to.  The government saw the end was nigh and the country had to go through some pretty painful adjustments.  A federal sales tax was imposed, the GST.  That actually did happen at the end of the previous government.  Chrétien had actually promised to get rid of this 7% federal sales tax that was imposed, but then he realised he couldn't get rid of it, because it was one of the few lifelines that was bringing in enough funds.

I was much younger then, but yeah, I think the United States is headed for a moment like that, where one day someone in the Treasury Department is going to be looking at some spreadsheet on their computer, and they're going to realise, hopefully when they're not too late, that something has really got to change and fast, or the United States is going to be in a lot of trouble.

Peter McCormack: Well like I say, the UK is exactly the same.  Danny, he's another Canadian.  That's three Canadians.

Danny Knowles: Another Canadian.  It's been a week of it.

Peter McCormack: Yeah, it's been a week of Canadians.  Somehow, have we been civil-attacked by the Canadians?

Mike Brock: I'm also an American citizen, a dual citizen.

Peter McCormack: All right, fair enough.  So, when you think about Bitcoin then, what are the important things for you?  You see everything debated on Bitcoin Twitter, Crypto Twitter; what are the things you care about now?

Mike Brock: I care about building transactional utility for Bitcoin; I care about Lightning, continuing to develop Lightning and address the challenges there; I care about building decentralised identity in order to enable more robust self-custody scenarios.  I think that finding ways to make Bitcoin relevant to people's daily life, as opposed to something that you trade on an exchange and draw fancy lines on charts and try to figure out, "Is the bottom in yet; is this the top; is this the reversal?  I think this is a head-and-shoulders pattern".

Peter McCormack: A death cross!

Mike Brock: Yeah, a death cross!  This is something which I am very much uninterested in.  I'm really interested in building infrastructure on top of Bitcoin that can ultimately bring a better experience than we have today in fiat.  This is my realisation, as a product person.  I worked on Cash App for nearly a decade and my learning is that it's not enough to be better.  Certainly it's not enough to be better just because of principles like decentralisation or censorship resistance.  I mean, these are not the reasons why people use Bitcoin.

If people think that people use Bitcoin because it's decentralised and censorship resistant, then I have series questions about why TikTok continues to be the fastest growing social media application, given the fact that it certainly is not decentralised and it certainly is not censorship resistant.  It's in the media all the time that the Chinese Government has its hands all over that application. 

You and me are weird; we care about this stuff a lot.  I care about the properties of decentralisation and censorship resistance and the fact that it's outside of the control of the state.  My daughter doesn't care about that, my wife doesn't understand it, or she doesn't care about that, and they're living with me and they're kind of representative.  I think this is something that informs my work.  To me, TBD is very much about first principles, how do we build products and services that are easier to use, they're more approachable, they're safer, they're cheaper, they're faster than what people are using today?  That to me is what this industry, if there is an industry to be called the Bitcoin industry, that has to be where the focus is; it cannot be on Number Go Up.  People get made at me, I tweeted out that Number Go Up is not a use case.

Peter McCormack: I saw that!

Mike Brock: A whole bunch of people got mad at me and said, "That's not true, because that's like savings".  Okay, maybe I'm willing to concede the point a bit, that as a savings vehicle, it's good.

Peter McCormack: It's just not enough.

Mike Brock: It's just not enough, that's not going to sustain it.  Artificial scarcity is not enough to sustain something.  I can create artificial scarcity anywhere for any reason.  I can come up with arbitrary rules, people do it all the time; they're trying to create these new cryptocurrencies that we all call shitcoins.  So, artificial scarcity is just not enough of an incentive to make it work. 

The good news is Bitcoin already has really substantial market effects in place, substantial liquidity all around the world.  We can build payment systems on top of it, we can build remittance solutions on top of Bitcoin, we can secure digital identity with Bitcoin; we're doing that with ION.  So, these are all the things that people need to be focused on in this space if they want to see this future, if they want to see that future where Bitcoin is a check and balance on the excesses of government, if they want to make sure that Bitcoin is this emancipatory force that allows us to return economic power and political power, maybe, ultimately to individuals, particularly in the cases of those people who are fighting for the right to be free in the first place, especially with the work that Alex Gladstein is doing at the HRF.  I think that's how we have to think about it.

So, I try really, really hard to avoid talk about the price; I try not to care about it, I try to be very dismissive about the price of Bitcoin on any given day, because it's such a distraction to the hard work that needs to be done if we're going to build a new financial system around Bitcoin, which I want to do.  It's what I'm doing every single day at TBD.

Peter McCormack: We don't really talk about the price on the show any more.  We don't make price shows.  We used to make a once-a-month show with Willy Woo; we don't do that any more.  It was a different reason we stopped it.  We stopped it because we wanted to do all our interviews in person, but now we wouldn't go back to that.  I mean, we'd maybe do a one-off with Willy, but actually he talks about other interesting things anyway.

Back to your point whereby people are not going to use Bitcoin because it's decentralised or censorship resistant, it's more a point they can use it because it is, there are certain people out there who can use it because of that, which is great.  But I get it, I'm with you.  I'm beyond hodl now.  I think hodl's great if you're new and it's a great meme for trying to get people to forget about the volatility and price.  I'm now about utility, I want to use it.  We use it for our football club, we've got all our merch here, we're selling it at the event and people were paying in Bitcoin.  We hold that Bitcoin.  I now spend Bitcoin when I wouldn't, and I want to spend it, because I see it more as a revolution, and to be part of the revolution I've got to contribute.

To me, starting to use it, rather than focusing on every bit of Bitcoin and what it's worth in the future, means I'm contributing to that revolution.  That's a really important part to me.  And we need people to use it, because if more people use it, more people need it, the price will go up which will allow things like mining to expand, which will allow education resources to expand.  The network effect creates all these kinds of perpetual loops of spread of information.  So, I'm really in the camp of wanting to use it.  I want more use cases for it, I want it to be better; I don't know what they are.

Even though I prefer using Lightning from Visa, in the end a transaction is a tap or it's a tap.  How can it better; what more can it do?  It can maybe go across border easier.

Mike Brock: Not to toot my own horn a little bit here, but I think that the way it's going to feel better is when we really solve decentralised identity and verifiable credentials.

Peter McCormack: Our man, Jeremy, loves this stuff.

Mike Brock: Yeah, when we solve that problem and we're able to use that as the way in which we mediate transactions, then you can really start thinking about self-custody scenarios that feel as good, if not easier, than custodial scenarios or using your Amex card or your Visa card, because it will be more secure, it will be more easy to use, everything will be a one-click onboard to a service.  We can actually use these technologies to create the future we always wanted to live in where, we have full control over our identity, it's not stored in some centralised database yet we still have the mechanism to create webs of trust, figure out how to trust each other on the internet, know you are who you say you are, therefore have transactions that can even potentially have recourse.

I think one thing that I'm predicting, and people's mileage will vary on this, is the emergence of Layer 3 payment protocols.  So, obviously we all know that Bitcoin is Layer 1 and Lightning is Layer 2.  I think we're eventually going to reach a point where we have more recourse-based protocols that can provide a lot of the benefits that credit cards do today where, yes, you can reverse the payment if someone defrauds you, or they don't provide services, or there's non-delivery of goods, because this is a real problem.  If you do something like buy, I don't know, a diamond ring online and let's say you send someone $7,000 of Bitcoin and you sit there and wait and a month goes by, you send an email, "My ring hasn't arrived", there's no recourse.

Peter McCormack: But how do you arbitrate that?

Mike Brock: I think we're going to have trust protocols.  Look, how does it work today?  The way it works today is we have these systems of social trust.  We're not even aware they're there.  Why do we trust Amazon is going to deliver boxes to our house based on what we enter in there?  It's for social trust reasons.  We socially trust them because we know all of our friends use Amazon and it's worked out and we read in the news that Amazon -- and we build up in our mind all of these puts and takes about what to trust in life, and there's more puts there than takes, so we trust Amazon.

What we need to do is we need to be able to have that for the digital realm, for Bitcoin, and the way we do that with verifiable credentials is we can literally do the same thing where you can have a digital identity, I can have a digital identity, or a company can have a digital identity, and then it can have verifiable credentials, where other trusted actors in the system vouch for each other and we can cryptographically verify we're dealing with who we are. 

Once we do that, we can actually have lower-risk transactions, where it doesn't necessarily have to be a Layer 1 transaction, or even a Layer 2 transaction; where it can be more like a pure net settlement layer through escrow services, where people will accept that sort of thing, because that's the only way people will do these things, otherwise they'll choose to by from online vendors that use Layer 3 payments versus other payment mechanisms where it's just too easy to defraud them.  And people get all upset at me.

Peter McCormack: Well, it's against what Satoshi said in pretty much the first paragraph of the whitepaper.

Mike Brock: It is, but here's the problem, and this is what I said and I got into a pretty big debate.  Someone pulled me into a conversation recently, it was on a Twitter Spaces or something, and I really got into it; and my argument here is that if there is no recourse, then the rate of fraud is simply part of the transaction costs.  So, if 5% of all of your Bitcoin gets misappropriated, misdirected, for non-delivery of goods, or your failure to provide services, I mean it will probably be higher than 5% in a world where there's no recourse, that's more expensive than the credit card exchange today.

Peter McCormack: Yeah, but don't we have the fact that within the current system where you can have transactions reversed, there is a different fraud that happens there, and that's also part of the transaction cost?

Mike Brock: Yeah.

Peter McCormack: So, don't we have it better this way?

Mike Brock: I think it's more that people will choose the payments layer that reflects what's at stake.

Peter McCormack: Okay, so you could have the reverse one, or you could have the anarchist one?

Mike Brock: Yeah.  So, for example, if you're moving $100 million worth of Bitcoin to settle some major international settlement, you're going to want to do it on Layer 1.  You're not going to screw around with some crazy system where there could be a chargeback.  But if you're buying a coffee, where there's very little at stake, where the actual risk of a chargeback or being defrauded over that is de minimis; the business would lose pennies, but the extra customers it might get because of the lower risk to the customer more than makes up for it.  And I think those transaction costs end up being much, much lower.

So, I think what we're going to see is, we're going to see multiple layers of payments, where what's at stake in the transaction is going to determine whether or not someone feels safe doing a Layer 1, Layer 2 or Layer 3 transaction.  I think Layer 1 is final settlement and everyone doesn't need that, which is why we have Lightning.  And Lightning is where we can have non-reversible P2P transactions, it's incredibly low risk, where you still don't need that much trust because it's really hard to screw the other person over.

But then we're going to have a third layer, which I believe are going to be trust protocols, where social trust is something that we rely on very heavily to create efficient economic transactions.  And the nice thing about this new world is, unlike this world today, we basically are at Layer 3 today with all of our debit cards and credit cards around the world, and there's no way for us to get down to a Layer 2 or a Layer 1 scenario today.  But in this world, we'll just be able to do that; we'll just be able to drop down to Layer 1 when it's important to us, when we need to know that we have the money in hand and no one can screw us over.

So, I think it's going to be like that and I think TBD is starting to work on things that I think exist more in that Layer 3 world.  And I think that is necessary to solve a lot of these problems, because chargeback fraud is very real and you don't have to tell me about it.  I work for a company that deals with it every single day.  However, there is another side to it.  People do get taken for a ride.  I've ordered things online before that never showed up and it was really good that I was able to call my bank and say, "The thing I just paid $2,000 for, it just never --" actually, I once bought something off of eBay and they sent me a box and it was literally empty inside!  So I saw the FedEx thing, "It's on its way", so they completely took me for a ride.

I think people are still going to want to have recourse payments and recourse payments are going to be appropriate for the vast majority of low-stakes economic transactions.  You're not going to want to have recourse payments if you're buying a house or a car, if you're sitting in a car dealership.  You're probably going to do a Layer 2 or a Layer 1 transaction.

Peter McCormack: How does that work though in terms of chargeback fraud?  Will I also, in my identity, show if I'm somebody who's regularly requesting my money back; how does that actually work in the reality?

Mike Brock: In reality, it's just a delayed settlement, it's escrow, like delayed settlement mechanism.

Peter McCormack: But how do we arbitrate whether I received my box or not?

Mike Brock: There's going to be companies, there's going to be a business.  Recourse payments, maybe that's where Visa and Mastercard will pivot their businesses in the future and they'll find some business model to do that.  That's how I view it and I think maybe they'll figure out ways to continue to have some sort of customer loyalty programme, or maybe some businesses will actually pay some small, nominal fee to be part of their payment network or part of their marketplaces or their discovery networks, and that's how those things will happen.  But I believe that those things will happen because I think the demand is there, and the potential for fraud is just very, very high.

But I do think that the difference between that and what we have today is that Layer 1 and Layer 2's always there, you can always use it.

Peter McCormack: Yeah, it's pretty fucking rad!

Mike Brock: That's the cool thing, no one will ever be stuck at Layer 3.  They'll always be able to say, "You know what, I want my money in my wallet and I want it now", and I think that's what's going to keep the system honest  But I do think that Layer 3 is the next step.

Peter McCormack: All right, well I'm yet to be convinced on that one.  All right, let's talk about FTX and we'll finish out.

Mike Brock: Okay.

Peter McCormack: How did you take all that in this week, because it's pretty fucking awful?

Mike Brock: Look, I have long believed that it comes down to what we were just talking about.  Without utility, this is all nonsense, it's just a casino, and that's what I think this is.  I think that we're seeing -- the reality is that a whole bunch of easy money, a lot of it pandemic-related actually, I think a lot of people took their stimulus cheques and went and bought a bunch of these ridiculous cryptocurrencies with them, and everything was up and to the right and we saw a classic bubble form.  The bubble started to pop and we're seeing the reckoning of that and I've expected that.

I mean, I've been saying this for a long time, that I think there's a lot of mania here.  I've said it on several podcasts months ago, that I thought there's way too much froth in this market and I totally expect that there's going to be some shoe that drops at some point.  I didn't know when it would happen.  It turned out it happened four or five months later, but (1) I'm not surprised, (2) I'm very angry because I know a lot of innocent people are getting hurt by this, and (3) it upsets me that I feel like a lot of us are going to get painted with that brush, even though we were trying very, very hard to not be that, we were trying really, really hard to work on what we saw as what was important, which was leveraging these technologies to build utility for people who are underserved by the financial system.  Or, in the case of what's happening around the world in some of these authoritarian countries, providing a life-or-death tool to people to be able to literally survive.

I saw it like that and it's really, really sad that we're going to have our work cut out for us over the coming months and years to continue to educate people on the fact that Satoshi's vision, a P2P payment system of Bitcoin, is not the same thing as a big, giant casino of thousands and thousands of these tokens that who even knows what they were originally meant for.  There's no other way to put it.  It's hard to even compare it to a casino, because at least with a casino, you have some sense of what the odds are and stuff, there's some sense of rules.  But it was just tulips, that's all it was, it was tulips.

Peter McCormack: I actually think now that's a very profound way to end this.  So, I salute you, Mike Brock, I really enjoyed this.

Mike Brock: I enjoyed it too.

Peter McCormack: I hope you can come back on the show sometime soon and Jeremy's going to be really pissed off I didn't push you on the DIDs, but fuck Jeremy!  Yeah, thank you.

Mike Brock: Sorry, Jeremy!

Peter McCormack: I've really enjoyed following you on Twitter, I enjoy your work.  I think everything you're doing at TBD -- when are you going to get a name?

Mike Brock: It's our name!

Peter McCormack: Dad joke!  All right, listen, you take care, anything you need give me a shout and, yeah, hopefully we'll do this again soon.

Mike Brock: Yeah, thank you, thank you for having me.