WBD601 Audio Transcription
Defending Bitcoin in DC with David Zell
Release date: Friday 6th January
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 how the Bitcoin Policy Institute engages to educate politicians in DC through combating FUD, distinguishing Bitcoin from crypto, and aligning Bitcoin with US National Security interests and American values.
“In much the same way that the internet changed the world, and changed how we interact with information, Bitcoin has changed how humanity interacts with value and money.”
— David Zell
Interview Transcription
David Zell: I was taking a calculus class over the winter interim just for fun and --
Peter McCormack: You what?!
David Zell: I was taking a calculus class, like a multivariable calculus class.
Peter McCormack: For fun, over when?
David Zell: Over the last two and a half weeks, so Alabama offers a winter interim semester, so it's like a whole semester in two and a half weeks.
Peter McCormack: You and I have very different ideas of fun!
David Zell: There were word problems and I was just fucking around with ChatGPT and I would plug some of the problems in and it would take you step by step through how it got to its answer. Each step seemed logical, but it was just fucking wrong.
Danny Knowles: I saw a really simple version of that; there was someone who put on Twitter that they said, "When I was 6 my sister was 3, when I'm 70, how old will be my sister be?" and it said, "73".
David Zell: Yeah, it falls through some basic logic traps and things like that, but I did see on Twitter where these two computer science people have come out with software that can tell whether or not a sample of writing has been generated by ChatGPT or a human.
Peter McCormack: For now.
David Zell: For now. So, I think some of the kids who are trying to ChatGPT their essays might get fucked.
Peter McCormack: We're still early.
David Zell: We're still early, yeah.
Peter McCormack: Have we used it on an intro yet, on a description?
Danny Knowles: Yeah, we used it on the Danny Scott one because we talked about it in the show.
Peter McCormack: Oh right, okay. So, Danny was testing getting our show descriptions being written by ChatGPT; did you have to make any changes to it?
Danny Knowles: I don't think I made any on purpose.
Peter McCormack: Right, okay.
Danny Knowles: You'll have to read it and see if you can tell.
Peter McCormack: That's interesting, but that saves how long, how much work?
Danny Knowles: It's not that long, but it saves work, for sure.
Peter McCormack: Would you change it if you weren't doing a test?
Danny Knowles: Yeah, 100%. It was just because it was funny and we brought it up in the show, but it doesn't give you a perfect description, but it's pretty close; it's not bad.
Peter McCormack: Does ChatGPT learn?
David Zell: I don't really know enough about how it works.
Danny Knowles: I don't know.
Peter McCormack: Yeah, because if it's AI, it should be learning, it should be improving.
David Zell: That's a question for my girlfriend, I don't know; I'm kind of a luddite, honestly.
Peter McCormack: Look, it's super interesting to see where it goes, because if it gets to the point where we could do all our intros without somebody else doing it, that saves, what, an hour of work?
Danny Knowles: Yeah.
David Zell: Well, I think you could replace me. Did you see I tweeted? Right when it came out, I asked ChatGPT to write a defence of why Bitcoin is good for society, and it did better than half the fucking maxis on Twitter do, justifying Bitcoin.
Peter McCormack: I don't think it can replace me because it learns and I don't learn shit, so I just stay a moron! Do you know what would be interesting, Danny, can it listen to audio?
Danny Knowles: I don't think so yet, but I could be wrong.
Peter McCormack: Do you know, if it could listen to the audio and pull out the show notes and the links…
Danny Knowles: That would be good; Neil's going to be out of a job!
Peter McCormack: I know, sorry, bro; that's my actual bro.
David Zell: Yeah, I had a conversation with him yesterday.
Peter McCormack: Okay, we're very different.
David Zell: I can tell.
Peter McCormack: Yeah, very different; he's the smart one. Anyway, man, how are you?
David Zell: Peter, I'm good. It's great to be back.
Peter McCormack: Always good to see you. You look great, you look like you've lost like 20 pounds.
David Zell: I've actually lost 15 pounds since our last recording.
Peter McCormack: You look good; how did you do it, man? I need to lose like 50 pounds.
David Zell: Stopped being a piece of shit!
Peter McCormack: I'm fucked!
David Zell: Nothing crazy, just not drinking and being active and not DoorDashing all my meals. I was kind of just being a degenerate; I was working really hard and just not prioritising the right things.
Peter McCormack: Yeah, we have Deliveroo in the UK, and I've habitually been using that for my meals, and I've been not exercising, all that same shit, so I'm going to try not to drink for 2023.
David Zell: Nice, I don't think I am either, so we can do that together.
Peter McCormack: Yes.
David Zell: Although our last mutual pact did not go over so well!
Peter McCormack: Do you know what that is, it's like everything I try and give up, the vaping's the hardest; I'll give up air first! I don't need to breathe!
David Zell: Well, I told people I was going to give up drinking and some of my friends were impressed, and it's like, "Well, no, this isn't like a flex, I actually don't like to drink that much". The real challenge would be something that I'm actually addicted to; I'm just fortunate to not be an alcoholic.
Peter McCormack: Yeah, I don't find drinking too hard, but I'm either on or off with it, so if I'm on, I would have drunk on the flight on the way over.
David Zell: You'll be like wasted right now doing this interview!
Peter McCormack: Well actually, I'd get to the airport and I'd have a glass of Champagne, and then I'd get on the plane, I drink wine most of the way, have a sleep, and then I'd get here and we probably would have gone down to a bar and had a couple of beers, I'd have probably gone out with you tonight, and Pines, and probably had a few beers. When we're away on trips like this, I drink most evenings because most evenings we're out for dinner with people. I don't drink in the house too much at home, but I'm on or I'm off, there's no moderation.
I hadn't seen my dad since COVID; he doesn't fly and he lives in Ireland. So, he's come over, he's 74; he looks fucking great, and my dad's never been a drinker. He doesn't drink spirits, doesn't drink wine, he's only ever drunk beer, but he's always been the guy who has two or three beers and then he's done. He didn't drink for three years after my mum died. He looks fucking great, like he's in good shape and he looks great, and then you see other people that don't look so great, and I'm like, "I don't know man".
David Zell: Yeah, it's literal poison.
Peter McCormack: Yeah, I wonder if I'm done with it forever.
David Zell: Yeah. Peter, I have to bring this up, I was driving up there thinking about this --
Peter McCormack: Were you having a beer on the way?
David Zell: A little road beer?! No.
Peter McCormack: Do you remember that?
David Zell: I do, yeah, vividly; thank God for editing!
Peter McCormack: Did we edit it?
Danny Knowles: Yeah.
David Zell: Yeah, let's not talk about that!
Peter McCormack: Hold on, what we should say is we're not talking about you drink-driving.
David Zell: No, it's not what it was, but you actually called, not that the bottom's necessarily in, but you called the bottom a while ago because I remember I texted you, or I Signal messaged you six or seven months ago when Bitcoin was at like $35,000, and I was like, "What's your bottom call?" and you immediately responded and said, "$15,000", which I think is the lowest we've been so far.
Peter McCormack: Did we hit $15,000 or was it $15,500?
David Zell: I don't know if it was $15,000 even, I think it started with $15,000.
Danny Knowles: Yeah, about $15,500.
David Zell: Yeah, so maybe you should just quit podcasting and be a trader or something.
Peter McCormack: I started podcasting because I was a terrible trader.
David Zell: Oh gosh!
Peter McCormack: Yeah, like 2017 is when I kind of started, end of 2016, and there's a whole tweet thread about it, I turned £32,000 into something like £1.2 million.
David Zell: Trading?
Peter McCormack: Yeah, I was buying fucking everything; I loved Dash, I bought like £500 of Ripple and sold it for £30,000. I bought Litecoin, Bitcoin, I bought Ethereum at £9, I bought Golem, anything you can think of, I bought, I just bought everything, and it would go up and I would say, "I'm going to buy something else", and I was like, "I'm a fucking genius; I'm the shit at this!" So, it gets to the end of the year and I'm like, "I'm essentially a millionaire here", bought myself a watch, bought a car.
I'll tell you, it's quite funny, so when I used to have a big spend, it would dump, so I was getting on a flight from the UK in and I bought myself a watch, I was like, "I always wanted a nice watch", bought a watch. There was no internet on the planes, fucking no internet on the plane yesterday, but there was no internet on the planes back then. I landed and the whole market had dumped 30%, I was like, "Damn it!" and then the market came back up and I bought a car, "Damn it!" dumped the next day, but I genuinely thought I was a genius. Then, when it all started to crash, I just thought it would come back and it never did, so I rode it all the way up and then all the way back down.
David Zell: Round-tripped it, yeah.
Peter McCormack: Yeah, and by the time I'd paid off my tax, I had a handful of Bitcoin left. I used to keep a spreadsheet of what the value was in Bitcoin. My top, I had 183 Bitcoin in Bitcoin and shitcoins, and then, like I say, it was less than 20 by the time I was done, and Bitcoin was at $3,000, and then I had to sell some to pay my tax; it was brutal. So, no, if I called $15,000 that was a figure in the air, "What do I think?" What I thought was you tend to bottom out at the top of a cycle, but I just thought we would dump into that top, but that's pure luck.
David Zell: Well, you called it; I thought I'd bring that up.
Peter McCormack: You'd have to show me that text, I can't even remember it.
David Zell: Yeah, actually I don't know if I have it; I got locked out of my Signal so it's probably gone.
Peter McCormack: But if I had any conviction, I would have sold my Bitcoin and bought back at that point, and I didn't, so yeah, it's been pretty brutal, man, brutal since, what, March, April?
Danny Knowles: Yeah. Well, I think the top was November 2021.
Peter McCormack: Was it really that long ago? I thought we had a second top in February.
Danny Knowles: No, it was like November 2021, yeah.
David Zell: I've kind of enjoyed it, honestly.
Peter McCormack: There are things I enjoy and things I don't enjoy, like I enjoy wiping out bullshit.
David Zell: Yeah.
Peter McCormack: I enjoy the lesson, my own personal lessons of things I've got totally wrong, willing to put my hand up about those, but I don't enjoy seeing people lose a lot of money; that sucks.
David Zell: Yeah.
Peter McCormack: And there's been a lot of that, and look, our business relies on sponsorships at the moment.
David Zell: Right, well so does mine, right?
Peter McCormack: Yeah.
David Zell: I run a Bitcoin non-profit.
Peter McCormack: There you go.
David Zell: So, that's obviously not a great thing to be doing when the market is down, but it's really tough to explain to people what I do for work because no one really understands what a thinktank is and no one really understands what Bitcoin is.
Peter McCormack: Ask ChatGPT!
David Zell: That's the thing you say.
Peter McCormack: "What does David Zell do for a job? What is a thinktank?"
David Zell: And so, then you say, "I run a Bitcoin thinktank", and either people's eyes glaze over or they really want to sit down and talk about it. I think the conversations, when the market is down, tend to be better because people notice like, "You're clearly into this for more than just Moonboy reasons, you must believe this is helping us achieve some sort of normative good, like there is something useful and you're passionate, there's some sort of ideological bent"; whereas, when the price is high and you're like, "Oh, I advocate for Bitcoin", I think the default assumption is, "Well, you're just sort of bag pumping".
So, I kind of enjoy the follow-up questions of like, "Wait, so you're spending all your time advocating for this thing that most people believe is debt, it's down whatever it is, 70%". So, I kind of like that framing of, "No, the fact that I'm doing this in a bear market, the fact that we're all doing this in a bear market demonstrates that there's something much deeper than just the financial benefit that some people have with Bitcoin".
Peter McCormack: Well, I think that's one of the lessons from this bear market, like I remember during the bull market, every time Bitcoin went up $1,000, I would retweet the previous one of $1,000 and I would just become this tweet thread, and I regret that.
David Zell: Yeah, it's so cringy.
Peter McCormack: It's cringy and it's wrong and it's the wrong incentives to the point now, with the football club, I wrote a whole article on there about why you should not buy Bitcoin like, "I don't want you to buy Bitcoin, I want you go learn about it, but I don't want you to buy Bitcoin". So, that's just one of those lessons from a bear market, for me; you, it's bit a different, you were like 12 when you discovered Bitcoin or something.
David Zell: 13, but yeah.
Peter McCormack: I was collecting stickers.
David Zell: Yeah, again, I don't really have my 2013 holdings, so I'm not a secret whale or anything.
Peter McCormack: Listen, not everybody would have heard your previous shows, we've always got new people coming in, let's explain to people what the BPI is, what it is you've created.
David Zell: Yeah. So, we actually just had the one-year anniversary of BPI, yeah, it's crazy, but the Bitcoin Policy Institute is a thinktank that I started with my friend, Grant.
Peter McCormack: What is a thinktank?
David Zell: In the most abstract sense, a thinktank is a non-profit or an organisation that amalgamates expertise to kind of influence policy or influence the thinking around policy. Usually, thinktanks have some sort of ideological bent or some sort of meta narrative that they're advancing. So, you've probably heard of things like the Brookings Institute.
Peter McCormack: No.
David Zell: Cato Institute?
Peter McCormack: Yeah.
David Zell: Yeah, okay, so that makes sense. So, Cato is sort of the libertarian centre-right kind of thinktank, Brookings is sort of the pinnacle of thinktanks, kind of the centre-left equivalent, but BPI, our sort of bent is that Bitcoin is good for the world.
So, I guess what we do is we have an interdisciplinary cohort of academics, so economists, lawyers, philosophers, climate scientists, national security scholars, who we employ to write and think about the implications of Bitcoin as an emerging monetary technology for the United States and for liberal democracies and for the globe generally. So, we're not lobbyists, we're technically like a charity, so we're not lobbying people on policy but instead trying to do something like the intellectual groundwork in DC that would support good policy.
I joke with bitcoiners that a lot of what we do is take insights that people had on the talk forums a decade ago and just put them in a fancy format that people in DC are used to seeing, because you can't print out a Twitter thread and be like, "Look at this". It could be the most brilliant analysis ever, but we were talking about ChatGPT a second ago with these epistemic heuristics, there are epistemic heuristics in DC, and so a screenshot of a talk forum blog post is not going to be very persuasive; but taking that same information, citing a couple of sources and putting it out from a group of 12 PhDs or whatever with the letterhead on the top and the logo, you get taken a little bit more seriously.
I guess the reason I started it was I was in DC, I was working for Bitcoin Magazine, I was their Director of Policy and Public Affairs, and one of my first trips up there I was meeting with some of the politicians who are extensively pro Bitcoin, and really I kind of credit Representative Warren Davidson in some ways with --
Peter McCormack: Up in Ohio.
David Zell: -- yeah, with sort of the inspiration to start BPI because I asked him, "What can we do? You're up here in DC, you're fighting for Bitcoin, what do you need?" and he said, "Credible research and information. My colleagues are bringing all of this credentialed research on Bitcoin saying why it's bad, saying why it's dumb, saying why it's a Ponzi scheme, and I can't exactly bring a copy of Bitcoin Magazine on to the congressional floor and say, 'Well, these people think differently', it's not a credible source", no offence, David Bailey; it's not perceived as a credible source in certain circles.
I've always been a nerd, I like research, so it kind of just made sense like, "Okay, well let me see how many academics I can find who are interested in Bitcoin", and found all of them on Twitter. Matthew Pines had a couple of hundred followers and he was just putting out these really nuanced and insightful threads on Bitcoin; DMed him, DMed Troy Cross, all these people. I shot them DMs and amassed this group that were these philosophers, Andrew Bailey, Craig Warmke, Bradley Rettler who had this little group called Resistance Money.
So, they were even earlier than us in forming a Bitcoin research collective, and so I just kind of formalised it into a thinktank structure and raised some money for it, mostly from David Bailey, from Michael Saylor, friends who were just bitcoiners and thought this was a cool project. And yeah, the top-shelf thesis was that in most policy issues, you're sort of stuck debating within a very strict utilitarian framework, like take abortion or gay marriage or gun control or whatever; everyone already knows what the issue is, and so it's about weighting pros and cons.
With Bitcoin, my thesis was that we still have an opportunity to define the thing that is being debated, which is really rare. So, in high school, in college, I was the debater, that was my thing, and I was a national champion in high school and in college in debate, and you learn from doing that, that when you can control the definition of the thing that you're debating, you have a massive advantage.
So, unlike all these other issues that are sort of baked in, nobody knows what the hell Bitcoin is. So, there are two thoughts that emerge from that. One is, "Well, how do you expect there to be good policy on Bitcoin if people don't believe that it's socially useful or good, if they think it's just some sort of speculative digital Ponzi scheme or if they think it's just a shadowy super coder nonsense? How do you expect good policy if people don't believe that it's good?" Then, on the flip side, the second thought is, "Well, if people understand why Bitcoin is something that strengthens liberal democracies, why Bitcoin is something that accelerates freedom and all these sorts of central axioms of America and open societies, well then I would expect policy to be a lot better".
So, that's what BPI does, we're researching Bitcoin from all these different policy-relevant perspectives, but making a well-researched, intellectually honest case that Bitcoin is this awesome thing and that it's really good for the world. Cognitive risks and downsides and all of that, I don't think we're a propaganda outlet, all of our work tends to address the counterarguments to what we're saying. So, yeah, we definitely paint an optimistic world view, an optimistic picture of Bitcoin, but it's one that I think we all believe, so it's cool.
Peter McCormack: National debating champion; what competition was that?
David Zell: So, in high school I did public forum debate, which is two-v-two debate, and then in college I did parliamentary debate, and actually my partner in college was Grant, who I started BPI with.
Peter McCormack: Okay, but when you say national champion, is there a specific competition you're in?
David Zell: Yeah, there are three main national championships in high schools; I won one of them and then I did all right in the other two, like top 20 or something like that.
Peter McCormack: I watched a film recently about a debating team, what was it called? I'll dig it up and I'll let you know.
David Zell: Okay.
Peter McCormack: You'll probably know all about it. So, in doing that, is there a topic given and you're just given a side to argue?
David Zell: You have prep both sides.
Peter McCormack: You have prep both sides?
David Zell: So, you flip a coin at the start of the round, winner gets to pick either which side they want to argue or whether they want to speak first or second; traditionally, you pick speaking second, it's more of an advantage, but it depends on the format. So, in the type of the debate I did in high school, you had one topic every month and you spent quite a bit of time researching and preparing your arguments. The type of debate that I did in college, you got the topic and your side assigned to you and then you had like ten minutes to prepare for an hour-long debate.
Peter McCormack: Wow, okay. So, is debating something you just naturally have a talent for, or can you train, or is there a bit of both?
David Zell: Yeah, I think you can train; some of my most rewarding experiences with debate were really coaching. So, after high school, I got to college, did a couple of tournaments with Grant, but the main thing that I did on the debate front was helping start debate programmes in all of these inner-city schools in like Tuscaloosa. Most people aren't getting the type of education that teaches them to construct an argument, to deconstruct an argument to --
Peter McCormack: Think?
David Zell: Yeah, to do that critical thinking, so yeah, I think it's one of the best things. Hopefully, my kids, when I have them, hopefully they do debate; I think it's good for people. Some people are naturally good but I think anybody can get good at it, and the type of thinking that debate rewards I think is useful far beyond just high school competition or whatever.
Peter McCormack: There is one slight issue I have with debating, and it's interesting you answered the question that there is a topic and you prepare for both sides, in that sometimes in a debate structure, it's about who can win rather than working collaboratively to find the best answer.
David Zell: Yeah.
Peter McCormack: We had Nate Harmon and Steve Barbour on recently kind of debating to discuss climate change, but really on that climate stuff, I don't like the debates, because the debates are about taking a position and arguing against the other person, and I don't think that actually gets you to the truth; I think working more collaboratively to find the truth is what's more important. That's my issue with debating.
David Zell: I think that's reasonable. I think that the only way to arrive at a conclusion about a lot of tough questions is to make an argument and then have good faith debate and subject that argument to criticism and iteratively improve on it, so I think it's both.
If you want to arrive at something closer to directionally the truth, debate has to be a part of that, but you're right, the sort of like formal structured -- it's a game, it's not about who's right, it's not about getting to the truth, and so when it's devoid of that good faith kind of like, "Oh, you know what, that's a good point, I'm wrong, you proved me wrong", there's not much room to do that in a formal debate. So, yeah, it's not sufficient, but I think it's necessary to think well to make an argument and let people attack it and try to defend it.
Peter McCormack: Yeah, and I think that's one of those major criticisms I have about Twitter, why I think it's so destructive in that it's become this kind of mass, uncoordinated debate, often with some great presented ideas, some poorly presented ideas, and then sometimes ideas challenging by dunking or memeing, which again, can be useful but then can be not so useful, but I find there's little to no truth finding in there; it's like a game.
David Zell: Yeah, I think not everyone but a lot of people on Twitter are just waiting to be triggered, waiting to be offended, they want to assume the worst, and I think that's kind of the thing that I notice, is that everyone seems to assume the worst in each other on Twitter, so I don't know; I despise it and I've been wrestling with how I use Twitter.
I used to tweet a decent bit, and you may have noticed, I don't really tweet that much anymore, I only tweet work-related things, like a long thread on why Bitcoin is good for you as national security or something like that, but I've been on Twitter in general way less, tweeting way less. But the thing I have to have for a balance is that's where my main audience is for BPI, so I have a lot of friends that I don't see in person ever or that often and Twitter's a great way to stay in touch with them and feel connected to them, so I don't know.
Peter McCormack: You've got to keep promoting this BPI. So, with the Bitcoin Policy Institute, what is it you're actually trying to do; what are the outcomes? I know you're trying to affect policy, but what are the wins; what are the goals here?
David Zell: I think there are several baskets of goals; I can go through them in turn. So, one is that I think this bull market in particular, from the regulatory side, was characterised by a really outsized presence in DC by crypto and Web3 interests because they're all centralised. So, you have a token or a project or a VC fund and it's very reasonable, it's a cost of doing business, you take some percentage of your capital and you hire a lobbying firm and you hire policy people and they go, when there are conversations happening about policy, it's like, "Oh, well who do we invite? Let's invite the policy guys from a16z and from these various companies". So, you have this dynamic where Bitcoin, despite being half the market cap of all digital assets, they didn't really have a seat at the table.
You have to give credit to Jerry and Neeraj and Peter and that crew, because I think Coin Center has done, and they've been doing this for way longer than us, for a long time, and doing a great job at it, but outside of them, there wasn't really a Bitcoin seat at the table. So, one KPI is how often are we looped into these discussions; how often are we able to sit at the table and bring the perspective of people that are chiefly interested in Bitcoin? I wouldn't say I'm a Bitcoin maximalist per se, but Bitcoin is really the only crypto that I care that much about and makes me passionate.
So, one KPI is, are we getting a seat at the table, because Bitcoin, by nature of being a decentralised technology and truly decentralised, it doesn't have a CEO, it doesn't have a de facto lobbying budget, and there's no one to call. You can call the CEO of Ripple if you want to have a congressional hearing about XRP; you can't call Satoshi to come testify in Congress. So, that's one quick meta goal, is not speaking for Bitcoin because we're just one organisation, but being an organisation that's there day in and day out, doing the work that has Bitcoin top of mind.
Another goal is promoting more research on Bitcoin. So, one of the interesting things that I noticed when I was recruiting scholars for BPI was that there was a bit of trepidation among a lot of them. They were worried about how their peers would see them; how it might affect their tenure chances, very much like the academia that the Bitcoin community likes to criticise fairly; thinking differently of them for dedicating time to researching Bitcoin.
So, another goal is like, well, if we have this sort of structure, it gives people who are in academia something to point to, to their colleagues, to their advisors, whoever, and say, "Yeah, I promise I'm not crazy; I'm working at this thinktank that's working on this". There's a kind of network effect of that, like the more people like Troy and then all of these people, Margot, the more people like this who are out and researching Bitcoin as academics, it makes it that much easier for the next person to shift their scholarly focus maybe away from something else and toward Bitcoin.
Then the other goal, and the terminal goal I think, would be living in a world in which everyone in DC at least understands the argument for why Bitcoin is good. I think it's a big ambitious to say we're going to orange pill everyone in the world; that's dumb.
Peter McCormack: But at least understand.
David Zell: At least know why it's different than crypto, broadly. It's like, if you're a pro-gun control person, you could at least give the other side's argument, right?
Peter McCormack: Yeah.
David Zell: That's a world I want to live in, where people don't look at you like you have two heads when you say, "Bitcoin is really good for the billions of people that live in countries with runaway inflation or authoritarian regimes". I like Bitcoin, but I least I know that is a reason people like it.
Peter McCormack: What is a win for you, and have you had any significant wins yet?
David Zell: Yeah, I think going by those KPIs that I mentioned, the major win that I'm most proud of is getting this thing off its feet and it existing. It's been a real struggle to raise money for this, to keep the lights on, so the fact that we're still here a year in, big win. But I think some of our bigger wins have come from shifting the Overton window around Bitcoin in DC, influencing other thinktanks. We have a subscriber list we send emails to, and seeing more and more people subscribing to our email list with ".gov" email addresses, like Senate staffers, congressional staffers. Troy got invited to brief the White House on Bitcoin mining, which was so cool.
Peter McCormack: It's so cool.
David Zell: Matt's national security paper, he'll have to tell you about this because I don't know a ton of the details, but I know that got passed around through the CIA, which is pretty cool.
Peter McCormack: Is that cool; is that a good thing?
David Zell: I think so, yeah, I mean it's information which yearns to be free, and I'd rather them reading that than reading Stephen Diehl or David Gerard's opinion on Bitcoin.
Peter McCormack: Fuck David Gerard!
David Zell: Yeah. So, no, I think that's great. Look, I might get cancelled for this, but I don't think that the interests of the Central Intelligence Agency are that disparate from the outcomes that Bitcoin engenders. You can love Bitcoin and hate the CIA, but I think Bitcoin undermines communist states, I think Bitcoin spreads freedom and democracy. I think Bitcoin makes it easier for people in closed societies to vote with their feet and vote with their capital and expatriate their wealth from Orwellian regimes to the United States.
Peter McCormack: I'm almost certain I got a visit from the CIA in El Salvador; have I talked about that on the show?
Danny Knowles: I don't know, you've definitely told me but I'm not sure you said it on the show.
Peter McCormack: I had this weird experience, man. So, when I went to interview President Bukele, there was a bunch of people from USAID outside the room, they had a meeting with Bukele, and I think they were like, "Who's this guy in the Metallica shirt with tattoos?" So, this guy comes up to me and he's like, "Yeah, hi, who are you? What are you doing here?" I was like, "I've got a meeting with the President about Bitcoin". He was like, "Oh, what do you do?" I was like, "I have a podcast and I'm going to be interviewing him in a few days", and he was like, "Yeah, we're really interested in this Bitcoin thing; can we talk to you about it?" and I was like, "Yeah, fine".
So, he gave his boss my number and the next day I get a call that said, "Do you want to come down to the US Embassy and talk to us about this?" I was like, "No, but you can come to my hotel; this is where I'm staying". Anyway, these three dudes turn up and one guy was like, "Hi, I'm so-and-so, I work for USAID", the second one was like, "Hi, I'm so-and-so, I work for the State Department", and this third who basically he looked like you know when you see those guys running along the president's motorcade?
David Zell: Yeah.
Peter McCormack: Like full chiselled jaw, like crisp suit.
David Zell: Secret Service.
Peter McCormack: And he was like, "Hi, I'm so-and-so, I work for the government". I was like, "Okay". Anyway, so the first guy would be like, "How does mining work?" and then the second guy was like, "Why is there 21 million?" and then that guy would be like, "If you were a gang in Honduras, how would you use Bitcoin to facilitate money laundering?" It was just this really weird experience, and I was just like, "Why would he just say, 'I work for the government'; why wouldn't he tell me which department?" It might not have been anything.
David Zell: These things are always like double-edged swords. One of the things I like to talk about when I'm in meetings with staffers about Bitcoin is that you can make all the same arguments against Bitcoin against Tor, but Tor was born out of the US Naval Research Lab, was funded and open-sourced by US intelligence agencies, and to this day, I believe receives upwards of 80% of its funding every year from the US Federal Government. So, in the same way that Tor is used for both licit and illicit activities, in the same way that Tor both enables malign actors but also helps people break firewalls and censorship, it's sort of the same thing as Bitcoin.
Peter McCormack: Yeah. So, if you're a thinktank, how do you differ from lobbyists, or are you essentially a lobbyist?
David Zell: Definitely not lobbyists. So, there's a pretty rigid definition of lobbying, but essentially it is receiving money to advocate for a particular legislative outcome, like a yes or no vote, on a piece of extant legislation. So, going to DC and saying, "Hey, I'd like to take 30 minutes and talk to you about why I think Bitcoin is good for America", or, "Why I think Bitcoin is good for energy infrastructure", or, "Why I think it's good for combatting China", that's not lobbying, that's just education.
Peter McCormack: What's the lobbying version?
David Zell: The lobbying version, so that's like what Coin Center does; they're a 501(c)(4). I don't know if they're registered lobbyists, but their non-profit status allows them to lobby. So, lobbying would be, "Hi, there's this piece of legislation that's being voted on soon and Section 2 whatever, line whatever, is written in such a way that it creates this outcome. We want you to either vote no on this bill because of this reason or we want this wording to be changed to reflect this concern". So, if you're in the weeds, like nitty-gritty, trying to rally votes for or against something, trying to amend legislation that's extant and being debated, that's when you're moving into lobbying territory.
Now, the IRS allows us to do a limited amount of lobbying; so, a (c)(3) can, it sort of varies and it's like a scale, it depends on your budget and whatever, but I think it's up to 20% or 25% of our activities can be lobbying. But we expect more scrutiny because we're a Bitcoin non-profit, so we do very, very limited lobbying. Like, if there was another infrastructure bill-type deal, we would probably use all of the lobbying points that we've banked up to work on that, but for the most part, 99% of what we do is just advocacy and education.
Peter McCormack: That education work you're doing, the information you're putting out in front of people, they're also seeing information come in from the likes of Greenpeace, Ripple, de Vries. Is this essentially, I guess, like a debate but without structure?
David Zell: Yeah, that's certainly one way of looking at it, absolutely, with way more complexity, like you said, that lack of structure. But yeah, it's sort of a battleground of ideas because everyone comes into a meeting with whatever information they've read or heard. So, yeah, a lot of times you start a meeting and you're trying to ultimately, in my role at least, in our role, you're trying to be useful, you're not trying to shove pro-Bitcoin propaganda down people's throats, it's like, "Hi, we're a group of academics, we know a decent bit about these topics. Do you have any questions for us; what is your office thinking about these things? Any questions about Bitcoin we can answer for you?"
So, that's usually how we get into some of the energy debates or, "I heard Bitcoin uses as much energy as a small country". "Oh, okay, well did you know that Bitcoin only has about two times the emissions of video games in America, or that it only has about four-and-a-half times the emissions of YouTube alone?" "Oh, that's really different; I thought it was horrible". It's like, "Well, yeah, actually some of this research is pretty bad, it doesn't account for the difficulty adjustment". "What's that?" "Let me explain. It doesn't account for the halving". "What's that?" "Let me explain". So, you kind of encounter the anti-Bitcoin research in your day to day doing something like this, and yeah, you have to respectively but forcefully push back on junk science.
Peter McCormack: The people who you're in the end trying to influence are the people who make the decisions, who vote, it's the Senators and the members of Congress, but you're not really speaking to them directly.
David Zell: It's almost always staff.
Peter McCormack: Yeah. So, how does that work internally? Are staffers then collecting the information themselves, agreeing what they think and then interpreting it for the Senators?
David Zell: Well, yeah, because when you think about it, if you're a Senator or Congressman in America, technically you're responsible for knowing quite a bit about the world, and so there's no way a single person can do that. And so every office has an army of staffers, usually people that are my age, like early 20s, usually in the 23 to 30 range; they do all the legwork really. But even those guys and girls are stretched thin, so you meet a staffer who's like, "Yeah, I work for Senator so-and-so, and I'm responsible for agriculture, transportation and fintech", or whatever.
It's not like each office is going to have a crypto person, although I think the last year, digital asset regulation was one of the flashy issues du jour in DC, and so I noticed a lot of offices would bring someone into a meeting and say, "This is our crypto person right here". But usually it's just some smart, young person who has spent six months reading about it, and they're the de facto crypto expert for that particular office. But obviously it's different, like Lummis and Davidson, and Elizabeth Warren, Brad Sherman on the other side, there are members who have made crypto regulation, one way or the other, a larger part of their policy work.
Peter McCormack: Well, even with Ted Cruz, my interview with him, whatever you think of him, his depth of knowledge on how Bitcoin works was impressive.
David Zell: Yeah, Ted Cruz is a really smart guy, again, not to get political or whatever, with no commentary on his politics, I've spoken with a lot of politicians in my life and Ted Cruz was in a league of his own in terms of the depth of analysis. I met him and he was like, "Boom!", he's a really bright guy. He was also a really successful debater in college actually, at Harvard.
Peter McCormack: I never knew that. Okay, so have you been successful, or are we generally being successful in getting that separation between Bitcoin and crypto; is that being effective?
David Zell: It's hard to measure success. I think there's been more of that narrative in the last year in DC than ever because of us, because that's our principal narrative, is that Bitcoin is special. We're not trying to tear down crypto, we're not trying to say, "Everything is a scam that isn't Bitcoin". From a first principles' perspective, we're really in favour of people being able to experiment with nascent technology and build decentralised financial architecture; that's awesome, in general, from a very principled perspective.
Instead of saying, "It's Bitcoin not shitcoins", or whatever, we're saying, "Look, Bitcoin is different enough in form and function, in its origin, all of these things, that it warrants separate consideration from Shiba Inu or whatever, or FTX". You have to understand, a lot of these people don't even understand the difference between a centralised firm, like FTX, an exchange, from a layer one, from Bitcoin. So yeah, trying to break the mould of, "This is all in this one bucket of crypto", to like, "Hey, there are a lot of different things happening here, and we think Bitcoin is special".
So, that's actually one of the things I'm really excited about for this year with BPI, we're putting on a one-day conference in DC called What Makes Bitcoin Special? So, it's invite only, it's mostly going to be staffers and members of government, but Bitcoin Magazine's going to livestreaming all the panels, so anybody can tune in and watch it. But it's going to be all of the BPI fellows, some people at other thinktanks and groups in DC, just spending a day talking about Bitcoin, unpacking FTX, unpacking DCG and the Grayscale stuff, and principally explaining what makes Bitcoin special, so I'm really excited for that.
That's kind of the thesis, is that you can't just convince someone overnight, but repetition does wonders. So a lot of our job is just beating that drum until we're blue in the face and hopefully shifting the Overton window and the discourse, and downstream of that, the policy toward a better outcome.
Peter McCormack: How much has FTX made all our lives more difficult? We didn't see you at Pacific Bitcoin because you were down in DC fighting fires.
David Zell: Well, I think we had more legislative outreach to us in that two-week period than we did cumulatively in the year that we have been running. So, the short answer is that FTX was horrible for crypto's perception in DC because so much of the education was funded by Sam, or done by Sam and the FTX people, and I think politicians really gravitated towards him because he was from their world, MIT kid, parents are professors. He, again, sort of checked these epistemic heuristics of, "Oh, this isn't just some shadowy super-coder, this is a smart kid from MIT who's built a successful business around this. I will listen to him and hear what he has to say".
I think the immediate reaction was, "These crypto people are all liars, they're all grifters, they've fed us nonsense and BS information", and it really hurt a lot of people's reputations; all these politicians that got money from Sam were getting blasted online, blasted in the press, so huge destruction of trust or renewed scepticism. Now, you're even hearing people say, like one of the new anti-crypto policy beliefs is that we actually shouldn't regulate it at all because regulation legitimises it and crypto is so inherently bad and wrong that we shouldn't regulate it at all. I think a lot of bitcoiners hear that and they probably think, "Oh, gee, anything but that!"
Peter McCormack: Hold on, isn't that a good thing if they don't regulate it?
David Zell: No, that's what I'm saying, it's sarcastically being like, "Oh, anything but that, please, please!" These are like anti-crypto people who are like, "No, these guys want to be regulated and what we should do is not regulate them because the regulation gives them legitimacy, the legitimacy gives them capital from institutions and retail investors, so we should just ignore it altogether". So, it's interesting because there's like a subset of the anti-crypto crowd that has gone so far full cycle that they have the same views as Bitcoin maximalists on policy.
Peter McCormack: Is there any regulation that could have stopped FTX actually happening, as in like banking regulation, transparency reports?
David Zell: I don't know, there's probably stuff, yes and no. There's regulation that could have probably caught them sooner, could have limited Americans' exposure to it, etc, but we can't regulate an offshore -- he was doing all this stuff offshore, so regulating exchanges like banks, some of these other things, could have made it harder for them to do shadier things and also conduct business in America, but with crypto it's so tough because you can just use a VPN and pretend you're in Argentina and access the platform that way or whatever.
So, I think there might be things that could have mitigated it, but I don't think there's like a silver bullet policy that like, "Oh, if only we'd had…"; the short answer is no, I don't there's a single policy that would have prevented it.
Peter McCormack: We do have it within the Bitcoin crowd, there will be certain people who say, "Stop wasting your time, stop buttering up to politicians, just focus on Bitcoin, just keep building out, Bitcoin will win anyway"; what do you say to that?
David Zell: A lot to unpack there. So, I guess the most important thing is that I'm not religious in my confidence in Bitcoin, I don't think anything in life is guaranteed, so look, people can do whatever they want. I think that's the nice thing about Bitcoin, there's no corporate structure, you don't need anyone's permission to start a Bitcoin thinktank. So generally, my response if someone says, "You're wasting your time", is like, "All right, well then don't do what I'm doing and go do something else; cool".
We all pick boulders to push up hills and this is the boulder that I've chosen; I like it, it's a nice a boulder. But you don't have to like it; you can think it's a dumb boulder and you can think that it's a waste of time and that's great, go and do something else. I'm not a really technically adroit person, I don't code at all very well, I'm not going to be contributing to Core, I'm not going to be building software that improves the functionality and usefulness of Bitcoin, but I think I'm decent at what I'm doing, and I believe there's a net good in it, our donors believe that as well.
So yeah, first I would caution against believing that anything is just path dependant, I think that mindset just breeds complacency, it rubs people the wrong way, it comes off as religious. Not that there's anything wrong with being religious, but yeah, I don't think that's a generally healthy mindset to have. You talk to successful entrepreneurs or successful people in general, I don't think many of them would sit there and say, "Oh yeah, I actually thought the moment that I founded this company that it was going to make me a billionaire". You just don't do very well if you're going into it believing, "I don't have to do anything; it's all going to work out".
The more practical thing that I would say is a lot of people conflate, and I think we've talked about this before, but a lot of people sort of conflate themselves with the Bitcoin protocol, which is a really bizarre thing. It'll be like, "Bitcoin can't be stopped! Tick-tock, next block; there's nothing you can do to keep the network from producing new blocks". Okay, yeah, Bitcoin sounds pretty indestructible; are you indestructible as a person, as a bitcoiner? The government can make life for bitcoiners really hard, even if it can't stop the protocol from functioning.
So, there's some kind of personal motivation of, "I like America, I want to live in America, I think it's a great place, there's no other country I'd rather be in, and I really like Bitcoin, so I don't want the place that I live to be hostile to Bitcoin", and I think educating people about why Bitcoin is useful to the interests of America and why it aligns with American values is good.
Do I think BPI's going to be save Bitcoin? No, I don't have this grandiose vision, it's just look, these conversations are happening so you can bury your head in the sand and say, "Well, I don't want to talk to politicians", great, don't, but it doesn't stop the conversations from happening, it doesn't stop the regulation from happening. So really, I see the choice is like, "Do you want a seat at the table or do you not?" I'd prefer to have a seat at the table.
Peter McCormack: What tables are they though?
David Zell: The smoke-filled rooms! But yeah, the conversations that are had about policy. The government isn't some real thing, it's just a bunch of people, and so it's like, "Oh yeah, we've got to do crypto policy. Well, who do we know that's an expert in crypto? Oh yeah, these guys at Cato or these guys at Brookings or these guys at BPI; let's call them and see what they think". So, it's kind of about putting yourself in these social webs where people see you as a source of truth, or at least a valuable perspective to get.
Peter McCormack: Do you think there are any existential risks to Bitcoin through regulation in the US? I've always felt like, if America outlawed it, it kind of feels like it could destroy it, like if there was regulation that said, "You cannot own or use Bitcoin as an American citizen, that's a crime", I kind of feel like Europe will certainly then bend the knee on it, and then what is it? It might still carry on, used in South American places and other places, but I feel like that could be quite destructive.
David Zell: Yeah, it's a complicated question, and existential is a big threshold; the price would go down a lot, and so I think the best argument to make for there being an existential regulatory threat to Bitcoin would be kind of akin to security budget FUD, right?
Peter McCormack: Yeah.
David Zell: Look, they can't stop the Bitcoin network, but yeah, I think if the US Government were to outright ban it, which I don't think is going to happen, I think we're way too far gone for that, but if that were to happen, yeah, I think the price would nuke.
Peter McCormack: Which nukes the security budget.
David Zell: Right, and so there is an argument to be made that there's a risk, and that's the thing about existential risk, is that when you're talking about existential risk, the impact is infinite, like if your end is a better place to be a bitcoiner, there's no worse fate than Bitcoin getting banned or Bitcoin not having a sufficient security budget.
So, because the threat is so large, any non-zero probability warrants taking that pretty seriously, so I can both believe that there is a low probability of a very horrible thing happening, and believe that it's extremely unlikely that that bad thing actually happens. And honestly, Bitcoin, I think the kind of mainstream view in DC is that it's just not the scariest thing in the world.
One of the memes about Bitcoin that I think has permeated the halls of government in America is that it's pretty traceable. Obviously, I don't think anyone in DC is thinking about the implications of SegWit for privacy in the future or whatever, but in general people are like, "Oh yeah, we can trace this, whatever, it's fine". The bigger concerns are consumer protection stuff, so like FTX, how do we regulate these exchanges and these centralised entities that Americans are parking their money with? Stablecoins have been a much bigger topic of conversation, DeFi.
So, there are bigger targets I guess and bigger perceived risks by a lot of people in government than Bitcoin, but you get this out-of-leftfield stuff, like Elizabeth Warren's recent bill that would effectively ban self-custody, it would neuter all the things that are cool about this tack.
Peter McCormack: Yeah, but her shit's not really going anywhere, is it?
David Zell: No, but it's troubling that it was bipartisan, it's troubling that she had a Republican, he co-sponsored that bill with that.
Peter McCormack: Which Republican was it?
David Zell: Senator Marshall.
Peter McCormack: It's surprising to find a Republican on that side of things.
David Zell: Yeah, and I think that was alarming, but yeah, most bills never make it anywhere, but it's about setting the goalpost, and again, this concept I refer to a lot of shifting the Overton window, it's like right now, it's a split legislator, and so the probability of really any meaningful policy coming out is low, but this stuff doesn't just go away. So, in a couple of years, maybe the tides have shifted, maybe people are more anti-Bitcoin, maybe a certain political party has a greater hold on power, and they're like, "Oh yeah, remember that bill Elizabeth Warren had? Well, she had some good ideas; let's revive some of that".
So, that's an area where we push back, even though the bill doesn't have a chance really at all of going anywhere. It is so damaging to normalise the policy belief that self-custody should be outlawed, it's like, "How do you expect to protect people from something like FTX if you are banning the thing that keeps people from parking their money with shady people?"
So, that's the argument that we make in Washington, it's like, "If you care about consumer protection, then you need to make sure it's a right for every American to self-custody. Everyone should have the right to hold their own private keys". So, sometimes we adopt the language of Washington of like, "Well, consumer protection? Awesome; you care about that? So do we. Self-custody is the best form of consumer protection possible". Now, on the Luke stuff, obviously it has its own risks, but you could not have avoided FTX.
Peter McCormack: I'm not sure what's going on with that Luke thing.
David Zell: Neither am I.
Peter McCormack: I think it sounds a bit weird.
David Zell: It all seems off, but I have no thoughts, I can't comment, I'm just waiting for more information.
Peter McCormack: The only thing about it is I didn't like the kind of cheerleading against the -- I don't know, man. Luke has done some amazing work for Bitcoin; he managed to figure out SegWit as a soft fork, he's a clever motherfucker.
David Zell: Yeah.
Peter McCormack: And dunking on him, I didn't like it.
David Zell: Yeah, I guess I could comment on the commentary about Luke having a lot of Bitcoin.
Danny Knowles: Do you want to just explain what happened for people that might not know?
Peter McCormack: Yeah, that's fair.
David Zell: So, yeah, Luke Dashjr, really prolific --
Peter McCormack: Do you know it's not Luke Dash Junior?
David Zell: Oh?
Peter McCormack: It's Luke Dashjr.
David Zell: Oh, Luke Dashjr.
Peter McCormack: Yeah, everyone thinks it's Luke Dash Junior, it's Luke Dashjr.
David Zell: Well, as I say, I don't fucking know! But yeah, basically a prolific Bitcoin developer put out this really bizarre thread that was just like, "I've lost all my…" he initially had some weird wording.
Peter McCormack: Yeah.
David Zell: It was like, "Up to many of my Bitcoin", basically he lost a bunch of Bitcoin to a hack.
Peter McCormack: 200 Bitcoin.
David Zell: Yeah, and one of the immediate reactions was like, wait, this guy has been incessantly tweeting, I wouldn't say "incessantly", but has often been tweeting about wanting donations and has insinuated, not stated but through the language and subtext of his tweets, has kind of made it seem like he's struggling financially. So, I think a lot of people were like, "Wait, why did I give this guy money? He's got 200 Bitcoin", and I think that's unfair.
Peter McCormack: Yeah, totally.
David Zell: The guy has eight kids, he's doing work for free, and so I kind of rolled my eyes at the people that were like grabbing pitchforks. But there's something to that, it's like if you're asking people for donations, it's important to be transparent about where you are.
Peter McCormack: Is it?
David Zell: Yeah, absolutely.
Peter McCormack: Why should somebody work for free if their net worth is high?
David Zell: They shouldn't, people should be compensated for their labour.
Peter McCormack: One of the weird things, I get lots of emails to the show, and one thing is people tell me how much Bitcoin they have. They're like, "Hey, Pete, so I've been in Bitcoin for two years and I'm up to 0.73 Bitcoin", or, "I've got 3.8 Bitcoin", and my immediate reply always is, "Don't tell anyone how much Bitcoin you've got".
David Zell: Yeah, don't tell anyone.
Peter McCormack: So, how can he be transparent?
David Zell: Yeah.
Peter McCormack: He would have to tell people what Bitcoin he's got.
David Zell: Yeah, and I don't have a strong opinion here. I think there's a legitimate point to be made that some of his tweets suggested a level of financial insecurity that maybe wasn't there.
Peter McCormack: Well, what if he doesn't want to spend his Bitcoin?
David Zell: Yes.
Peter McCormack: I donate to his Patreon, like $50 a month, more than happy to do it; his work's been incredible. What if it's like his Bitcoin he's just left forever for whatever legacy he wants and he collects fiat Patreon to pay for his 48 kids?!
David Zell: Yeah, the short answer is I think it's completely reasonable to ask people for donations if you're doing work; that's literally what I do.
Peter McCormack: Yeah, what's your wealth?! You got into Bitcoin when you were 13!
David Zell: Yeah, I would be kind of upset if people were like, "Oh, well, you got into Bitcoin in middle school, so why are asking for donations?" Because running a non-profit is really expensive; I can't afford to bankroll.
Peter McCormack: Having eight kids is fucking expensive!
David Zell: Eight kids, man; that's crazy!
Peter McCormack: I've got two and it kills me.
David Zell: Yeah, I have none, but I'm sure one day I'll be able to relate to you on that.
Peter McCormack: Dude, don't man, honestly; one day you will. I don't even know where we're going with that, but anyway, I just didn't like the whole dunking on him, it was like, "Fuck off!". Then I didn't like how it was used to say, "Look, if he can't do it, no one…"
David Zell: I think that was even more annoying.
Peter McCormack: So, I didn't even understand his setup, and he obviously has a setup only somebody like him, who's like a super brainiac computer nerd, can set up. And then other people were saying, "If he can't do it, nobody else can do it"; Trezor, Ledger, Coldcard, they're all pretty easy. The only time I've seen people fuck that up is they didn't back up their private key or there was a phishing exercise, but that's the only time they fucked that up; it's not that hard. People out there are making out like, "If he can't do it, nobody can do it"; it's not that hard.
David Zell: Right. Well, I think what it really kind of strikes at though is society's expectations for how money should function. I think, if you were totally green to Bitcoin and crypto, I don't think your immediate thought would be self-custody, it'll be like, "Wait, why can't you just roll it back?" So, that's a huge part of my world view is that competition in money is good, that competition in monetary policy is good.
The point of competition is that you have discreet products with discreet trade-offs in different sorts of setups. So, okay, you have some money that is not censorship-resistant, but you can call your bank if you get scammed and get your money back. Then you've also got money that no one can stop you from transacting with, but if you get your Bitcoin stolen, you're kind of SOL.
So, I think it's important, from the perspective of, "Hey, there are trade-offs to everything", and we get all these great things with Bitcoin, we also lose certain things with Bitcoin, and ultimately, it's just kind of a personal judgement of like, "Well, which of these things do I care more about?" and then, "How do I allocate my capital and my wealth in turn?" So yeah, I also thought that the dunking on self-custody was silly in response to that; that definitely frustrated me. But yeah, it does show one of the trade-offs that Bitcoin makes, which is that there's no one you can appeal to to get it back.
Peter McCormack: Yeah, there was like that defeatist final tweet from him in that thread, it was like, "Yeah, I guess it's gone".
David Zell: Yeah.
Peter McCormack: It sucks for him.
David Zell: it's awful, and yeah, it kind of made my stomach turn to read some of those comments because it's like, "Holy crap, this guy just lost" --
Peter McCormack: $3.5 million or something like that.
David Zell: Yeah, and geez, if you have any shred of empathy, it's like that almost brings me to -- I'm not going to say I cried when I read it, I don't know the guy, but it's like, "Damn, that is brutal!"
Peter McCormack: Yeah.
David Zell: That sucks. I think a lot of people probably just saw that he had more Bitcoin than they'll ever dream of having and wanted to dunk on him because they were envious.
Peter McCormack: Yeah, he should come out and go like, "Look, it is what it is, I've got another 10,000 here in cold storage, go fuck yourself!" He wouldn't do that.
David Zell: Yeah, anyway, enough of the Luke stuff.
Peter McCormack: Yeah. What is the BPI core thesis? If you were in Washington and you're sat down with a new staffer and it was like a completely open conversation, what's your core thesis of Bitcoin if you had a minute to explain; what do you say to them?
David Zell: In much the same way that the internet changed the world and changed how we interact with information, Bitcoin has changed how humanity interacts with value in money. And in the same way that the internet enabled a whole host of new businesses and new opportunities, it also came with its own set of risks and downsides. We got Amazon, we also got new forms of scams; we got people living in disconnected, remote parts of the developing world who could sell their baskets on Alibaba or eBay, and we got criminal groups that could use it to undermine infrastructure in countries. Bitcoin is very similar to that.
Our belief is that, in the same way that the open flow of information enabled by the internet made the world a better place, the open flow of value, enabled by Bitcoin, will do the same thing. So, that's kind of our top-shelf framing, it's very in the style of early Andreas videos honestly, and again, a lot of what we do is not ground-breaking or new thought, it's not that original, I think it's true. So, I think relating it to things that people understand, like the internet, explaining there are benefits and risks but that the directional trend of freeing up people to transact with each other, in the same way that the internet freed them up to communicate with each other, will make the world a better place.
Now, that's just an argument; people can make arguments against it. I don't expect that to just immediately convince anyone, but that's the way that I like to prime people to think about Bitcoin. It's like there are discreet risks, there are discreet opportunities, nothing's black and white, but this is revolutionary. It's not going anywhere, it's altering the fabric of society, and let me tell me you why I think that, when we weigh the benefits and we weigh the risks, it's a net positive for the world.
Peter McCormack: Do you attach it to traditional American values?
David Zell: Yeah, I try to, but I'd say, yeah, there's this sort of --
Peter McCormack: It's a leading question, by the way.
David Zell: Yeah, there is the argument about, "Oh, it aligns with freedom of choice", and all of this stuff, but I think it more clearly also aligns with US strategic interests. Like our adversaries, like China, are building competing monetary stacks, they're building walled gardens and they're actively trying to onboard companies and people across the world to their closed walled garden, dystopian payment architecture; enter Bitcoin, which presents an effective bulwark to that. We'd much prefer people living in low- and middle-income countries to use Bitcoin to connect to global finance than digital yuan. So, I like to relate Bitcoin to broad bipartisan strategic interests.
Peter McCormack: So, the reason I say it's a leading question is, as somebody who's been travelling to America for nearly 20 years now, coming back and forth, absolutely loving it, fascinated by the country, the people, the history, I do kind of feel like, over the last few years, traditional American values relating to freedom and privacy have been under attack. I think the Constitution feels like it's been unable attack more than ever. It's almost like, correct me if I'm wrong here, but the Fourth Amendment relates to unchecked surveillance.
David Zell: Unreasonable searches and seizures, and due process.
Peter McCormack: It almost feels like the Fourth Amendment just doesn't fucking matter anymore, like no one gives a shit about it. I know people do, and lawyers do, but the US Government is constantly breaking that, and what my worry is is there are parts of America or parts of Washington which are kind of distancing themselves from traditional American values. If I lived here, I wouldn't consider myself a Republican or a Democrat; I think, if anything, I'd be centre-right. I just feel like there's been this drag away from it.
Danny was talking about the meme earlier, it was like the new $1.7 trillion Infrastructure Bill, whatever it was, nobody knows where that's going but tell me where you're spending $600, like, "We want to know every payment you're doing, everywhere, all the fucking time". The lack of privacy, the trajectory towards CBDCs, it's like --
David Zell: Well, there is no constitutional right to privacy.
Peter McCormack: Yeah, there isn't.
David Zell: Fun fact, the word "privacy" does not appear in the US Constitution once.
Peter McCormack: I did not know that.
David Zell: Yeah, a little trivia for you, and I think that's probably because the Founding Fathers, I assume it's because they thought the Fourth Amendment would cover that. Another fun fact, the United States Postal Inspection Service predates the Constitution. So, we've been reading people's mail since before we even had a constitution, which is interesting.
Peter McCormack: So, how do you define what unreasonable search and seizure is then?
David Zell: Sort of with due process; so, in America, the standard is reasonable suspicion or probable cause. We have these different sort of thresholds of evidence and we apply them to different contexts.
Peter McCormack: So, $600 every payment isn't probable cause, it's just mass surveillance.
David Zell: Yeah. I think you're right that America has deviated post-9/11 from a lot of these core principles, but ultimately people are making trade-offs of values, which is a common problem; you have two things that you believe represent normative goods and there's some tension between them. Now, this is way more philosophical, but I'm kind of like a draconian on this, like I believe there's a unity of value, but that's for another day.
Yeah, in general, I think people are like, "Hey, we have to balance freedom and security; we have to balance liberty and equality". So, yeah, I think we've made some really unfortunate choices there. And I think the rapidity with which technology is dominating our lives, it's also changing the fundamental nature of the world in which the Constitution was written. The Founding Fathers could not have anticipated mass communication, they could not have anticipated the amount of information that you'd be able to glean from people's purchase history, from people's transaction history, from people's search history, their phone calls. So, we're I think approaching a point, and I think we're probably already reached it, but --
Peter McCormack: Need some more amendments?
David Zell: I think we are certainly at a point where we have to be very deliberate about which principles of liberal democracy we choose to bring with us into the digital age and which we choose to leave behind, because it is I think inarguable that technology is rapidly just changing the realm of what's possible with surveillance, with control.
So, the worst thing that you can do is just ignore it and say, "Oh, it's all going to be fine, we've got the Constitution, it is what it is". No, I think we are in real danger of losing fundamental rights, fundamental notions about being free in a liberal democracy, if we're not careful. So, that's also a way that I like to talk about Bitcoin; I think it really does align well with American values, with liberal democrat values.
For example, if you're using Bitcoin, no one can stop you from making a transaction, but you are going to be responsible for the consequences of that transaction; that aligns really nicely with the fundamental liberal principle of you can't be treated like a criminal by the government until they've proven that you've done something wrong. So yeah, in some sense, it's kind of like this cypherpunk notion of, "Well, if our rights aren't going to be respected by law, we can build technology that digitally enshrines these rights".
Peter McCormack: The path to updating or changing the Constitution, I can't even foresee the complexities and debates and discussions that would lead to that even happening; I just don't understand US history or US politics enough.
David Zell: Arduous process.
Peter McCormack: Yeah.
David Zell: And it hasn't happened for a while.
Peter McCormack: Yeah, when was the last time; do you even know?
David Zell: I should.
Peter McCormack: It doesn't matter; Danny will look it up.
David Zell: Yeah, what was the last constitutional amendment?
Danny Knowles: 1992, the 27th Amendment was changed.
Peter McCormack: Were you born? You probably weren't born, were you?
David Zell: I was born in 1999.
Peter McCormack: Fuck's sake, man! At least you were born last century.
David Zell: Yeah, a big flex.
Peter McCormack: Yeah, I was born in the 1970s, dude.
David Zell: It's nuts.
Peter McCormack: The fucking 1970s!
David Zell: Yeah.
Peter McCormack: Just interestingly, just a side point, I just forgot that I read the other day that Microsoft are integrating ChatGPT with their search, and I heard that Google, they had some kind of thing where they issued a red warning, I think it's like an internal warning, that this is like an existential threat to their business.
David Zell: Oh wow!
Peter McCormack: Yeah, because if you can get AI to give you a better answer than -- Google fucking sucks now; it's like five ads, ads down the side, it doesn't do what it did in the early days where it just gave you the best result, it's just like ads and bullshit. If someone can come out with a search engine that genuinely finds you the best result, people will move quickly. Hold on, the internet pre-dates you, doesn't it?
David Zell: Well, yeah, obviously.
Peter McCormack: Of course, I was 14. When I was your age, there was a search engine called Altavista, that was the one that everyone used. So, first it was Yahoo! but that was more like an index; then everyone started using AltaVista, and AltaVista was great; and then Google came along with their page rank system, just destroyed them. It was like, "Oh, just use Google, it's better". You just had that experience, that first search was great, but it always sucked because the experience wasn't as good as Google, but if someone introduces this and it does a better job…
Danny Knowles: I remember Ask Jeeves.
Peter McCormack: I remember Ask Jeeves, they had the ad with the dog!
Danny Knowles: Yeah.
Peter McCormack: And where was Lycos.
Danny Knowles: I don't know that one.
Peter McCormack: Lycos, yeah, loads of them, the search engine wars. Okay, man, so listen, tell me what you guys are working on now, what are your big pillars of work?
David Zell: Yeah, so I think a lot of what we did last year was building up this big body of research, we wrote a lot of white papers, we wrote a lot of long-form research pieces, and this year I see our main goal is leveraging the bear market to beat those drums until we're blue in the face, so converting Matt Pines's 60-page white paper into one-pagers, into discreet bullet points.
Peter McCormack: Into tweet threads, a full circle!
David Zell: Yeah, I think there's more research that I want to do, there's more research that, well not me do, but there's more research I want to fund, that I think will be good, particularly around the China stuff. I really think one of the compelling arguments in DC for Bitcoin is just how well it aligns with our needs in strategic competition with our advisories. But yeah, a lot of it is distilling the research that we've done over the past year, putting it into digestible bite-sized forms, and then just promoting those ideas. So, this conference that we're putting on, Cash App, they're our first sponsor, which was amazing. We're going to be looking for more sponsors for that event. I think Pubkey said they would sponsor the alcohol, which would be awesome.
Peter McCormack: Are they the New York people?
David Zell: Yeah, they're awesome.
Peter McCormack: Yeah, you know they show all our games?
David Zell: I did not know that.
Peter McCormack: Yeah.
David Zell: But their bar is awesome.
Peter McCormack: Yeah.
David Zell: If you're ever in New York, you need to go to Pubkey, and if you're a chess player in New York, like I am, it's right next to Washington Square Park.
Peter McCormack: Is there where all the old guys sit outside and play chess?
David Zell: There are a lot at the parks, but yeah, that's where I like to play. It's also near Chess Forum, which is a chess shop, but in the back they've got these tables and people from all walks of life go and play pickup games of chess. So, whenever I'm in New York, I sort of run the circuit of Chess Forum, Washington Square Park to gamble on chess with the hustlers, and then Pubkey.
Peter McCormack: How good are you?
David Zell: I'm all right; Jack Mallers is way better than me, but he was really, really good. I think, on league chess, the last time I checked, I was on the 55th/60th percentile, so I'm solid and I'd, on average, probably beat the average person that plays chess casually, but I'm by no means good. That's one of my goals for the new year, is to get to 2,000 Elo in chess because I'm about 1,700 right now.
Peter McCormack: We should play, I can play, but I don't have any strategy.
David Zell: Have you been to the Bitcoin Park yet here in Nashville?
Peter McCormack: Yeah, of course.
David Zell: So, I made Rod keep chessboards at Bitcoin Park.
Peter McCormack: Let's play.
David Zell: Yeah, we'll rip it.
Peter McCormack: Look, I'm not good, I don't understand chess strategy, I play and I move positions forward and I gradually try and find something, and I try and look at every angle that you're coming in at. I don't understand all the Queen's Gambit and all the different fucking strategies. I played Jack in El Salvador and it was another level of chess that I didn't even know existed at that time, like he was talking me through, "If you do this, I'm going to do…", he knows the first 20 moves in any scenario.
David Zell: He's a great chess player, yeah; I played him in a Blitz game in the Bitcoin Magazine office here in Nashville, and he was literally having a conversation with Odell about Lightning and privacy, a nuanced technical conversation about Bitcoin with Matt, while playing me, and I'm decent. He used probably less than 20 seconds of his total time; there were increments, every time you move you get additional 3 seconds added to your clock, probably used less than 20 seconds over the course of like a 30- or 40-move game and barely looked at the board.
Peter McCormack: But he doesn't need to look at the board.
David Zell: Then, at the conclusion of the game, was just like, "Oh wow, you're a really strong player", and I didn't really know where I messed up, it just kind of reached a point where I was like, "I'm just positionally losing this game. I'm good enough at chess to equal material, but I've got double pawns on the F-file, he's got a better control of the centre". I was like, "There's no way I win this", and he was like, "Oh yeah, you were doing great, but here, on move 14…", and he puts the pieces back together, replays the game, is like, "This was a bit of an error, Knight F3, not the best move. Maybe you should have played here instead".
Peter McCormack: He can play with his back turned to you and not even look at the board.
David Zell: Yeah, I can do that too, but only against not great players can I win.
Peter McCormack: Yeah, but how do you remember where all the pieces are?
David Zell: Well, because it's just like sort of numbers, right; there are 64 squares, it's 8x8 grid, so you have A1, B1, etc, across and then you have like --
Peter McCormack: No, I know all this, I still think it's insane.
David Zell: When you play enough chess you can just, I don't know, think about it.
Peter McCormack: Visualise it?
David Zell: Yeah.
Peter McCormack: I watched this great film over the holiday about that famous chess player who went crazy, like they thought he was the greatest ever; you'll know him.
David Zell: Bobby Fischer.
Peter McCormack: Bobby Fischer, that was it; that was incredible.
David Zell: Yeah.
Peter McCormack: Do you know about this, dude?
Danny Knowles: No.
Peter McCormack: Would you say he's the greatest that ever lived?
David Zell: Well, okay, this always inspires debates in the chess world because you have to understand people are products of their times. And so today, we have chess engines that are orders of magnitude better than any human could be, so you can learn way more now than you could then.
Peter McCormack: From the engines?
David Zell: Right, and so one way you can kind of look at who's the best player is like, well, not like would Paul Morphy beat Magnus Carlsen, but how good was this given person relative to their contemporaries? It's tough to span 250 years.
Peter McCormack: Yeah.
David Zell: Paul Morphy is an example of a chess player from the 1850s who was a young guy, really only played in his late teenage years and early 20s, and his games are among the most studied. He was famous for making these crazy sacrifices and this just beautiful, romantic, swashbuckling-style of chess where he's doing moves that aren't really necessarily sound, but in a timed game, in the heat of the moment, you're like, "Wait, that's a free piece, I'm going to take it, oh wait, another free piece", and he'll sacrifice half of his pieces and then have this crazy checkmate. Today, with engines, with the level of precision that people play, you don't see that as often, it's more rigid.
Peter McCormack: Didn't that happen in that Bobby Fischer game; was it like game six against the Russian?
David Zell: Well, yeah, I think he played Spassky.
Peter McCormack: Yeah, they refer to it as like the greatest ever game of chess.
David Zell: I think there are several contenders, but I think that might be his immortal game or whatever, one of his immortal games, yeah.
Peter McCormack: Yeah, it's a film worth watching. Also, watch the Magnus Carlsen documentary; this guy's insane.
David Zell: Speaking of chess and Bitcoin, I actually wrote an article about chess in Bitcoin where I interviewed Magnus Carlsen, Sam Bankman-Fried and Jack Mallers.
Peter McCormack: You actually interviewed them?
David Zell: Yeah, all three of them.
Peter McCormack: How did you get Magnus Carlsen?
David Zell: Emailed his manager.
Peter McCormack: Wow!
David Zell: I said, "I heard a rumour that Magnus is into Bitcoin", and he was at a tournament and was like, "Sorry, he probably won't respond", and then he was like, "Yeah, actually he has like --" I didn't get to talk to him but I sent questions and then his manager asked him and then he emailed me his answers back.
Peter McCormack: I'd love to interview him. Lex Fridman did one with him but he just went down a whole path I didn't give a fuck about, so I'd love to interview him; we should try and get him.
Danny Knowles: We should.
David Zell: Yeah, get Magnus. I think, if I remember correctly, I could pull off the email after the interview, but I think he was like, "Yeah, my dad and I sometimes like to trade it". I think he was interested in the game of trading; I didn't get the impression that he was really a bitcoiner or anything.
Peter McCormack: You can imagine someone like his brain's interested in like, "Well, what is it; what is it about?" It's a little bit like Kasparov's kind of getting closer because he does all the work with --
David Zell: With Alex, yeah.
Peter McCormack: Can I tell you my Kasparov story?!
David Zell: Yeah, and then I'll tell you mine!
Peter McCormack: It's so fucking embarrassing! So, I went out to Oslo for the Human Rights Foundation Freedom Forum.
David Zell: Yeah, I was there too.
Peter McCormack: No, the previous one. So, I'm there with Alex and Garry Kasparov comes over, and I don't know who Garry Kasparov is, and I kind of recognise him, and Alex is like, "Oh Pete, you should meet Garry Kasparov". I'm like, "Are you that chess dude?" and he's like, "Yeah", then he walks off, and Alex Gladstein's like, "Pete, I can't believe you just asked that to Garry Kasparov!"
David Zell: So, my story was I met Garry Kasparov, they did the same, they did their conference in Miami a year or two ago, and Alex said, "Do you want to meet Garry?". I'm like, "Yes, yes, yes, absolutely!" So, I walk up to Garry and I'm like, "Hi, my name's David. It's such an honour to meet you. You actually sort of taught me chess because when I was a kid, I had the Nintendo DS app that was like, 'Garry Kasparov teaches you chess', and I just want to say it's such an honour to meet you. You're such an inspiration", and he just looks at me and goes, "Okay", and then just walks off.
Peter McCormack: I think he said the same word to both of us.
David Zell: Yeah, and I met him later in an event in New York, and it's like, "Hey, let's talk about Russia, Ukraine and Bitcoin".
Peter McCormack: And he's off?
David Zell: And it's like, he's on, he wants to talk to about it… I kind of messed up, it's like, "What am I going to say to this guy that he hasn't already heard a million times?"
Peter McCormack: Do you know what one of my ultimate interviews I want to do, I want to get Garry Kasparov and Jack Mallers at a table and talk about Bitcoin, that's what I want to do.
David Zell: I think that's pretty doable.
Peter McCormack: I know, it's totally doable; I don't know if Garry's ready on the Bitcoin thing yet.
David Zell: I think he should be reading BPI stuff because Garry is such a big believer in democracy and his biggest passion is, from what I can tell, promoting liberal democracy. So, I think that's probably why he's attracted to the work that Alex is doing, and obviously whatever his role is, President or on the board of Human Rights Foundation, and I'm sure that's what Alex told him to whet his appetite, was like, "This is a human rights technology, this is a pro-democratic technology in the sense that it undermines closed societies and benefits open societies". So, if Kasparov's on the fence about Bitcoin, I might have to email Alex some of our work on this, see if he'll get Garry to read it.
Peter McCormack: Do it. Hopefully, he's listened to this show! All right, man, okay, so listen, final question, how can people help because obviously you need help with what you're doing; how can people help? The work's super-important. Look, I love Coin Center, I love everything they're doing; they advocate for public blockchains. You guys are focused on Bitcoin, so I love what you're doing as well, and to me, it has a different level of importance because it's just focusing on Bitcoin. You have our full support with anything you need. If anyone of your team wants to come on the show, we've had nearly all of them, we'll have them all back. How else can other people listening help?
David Zell: Yeah, so I guess in brief, engage with our work, share it on social media, follow our account on Twitter. If Bitcoin has been good to you, maybe consider donating; we entirely run on donations, and every dollar counts, we're on a shoestring budget. We've got an OpenSats page so you can donate there, you can donate on our website. If you're a company in the space and you want to get more involved, you can email me, or anyone can email me at dz@BTCpolicy.org, but if you're a company and you want to talk to people in Washington about stuff you're doing, you want to collaborate with us, hit us up.
If you run a Bitcoin company, I would really encourage you to sponsor our event in DC. We'll bring you out to our conference and you'll have the chance to talk with members of government and staffers about your business and the things that are on your mind when it comes to policy and regulation. So, yeah, if you've got the means, it's also a tax write-off for a 501(c)(3), so if you're not one of the people that's super underwater this year and you've got some capital gains to offset, it's a great way to do it. But yeah, every dollar counts, and if you can't give, share our work.
Peter McCormack: All right, man, well listen, absolute pleasure getting to know you these couple of years. You're always welcome on the show; you're just a great person to talk to. Anything we can do to help, just reach out. Just keep doing your thing, man; it's amazing, it's been amazing to watch, and congratulations on it all.
David Zell: Thank you, I can't thank you enough, man. Having me and really all the BPI fellows more than me because I feel like they're the real stars, having all of them on the show has done so much for us. We're kind of a glorified blog and I think now we're more of a real thinktank, and you guys played a huge, huge role in that, so thank you.
Peter McCormack: We're always looking for interesting people to talk to and you just keep throwing them up; Natalie Smolenski was my favourite interview last year.
David Zell: Brilliant.
Peter McCormack: She's brilliant, like Troy, watching him is brilliant.
David Zell: Yeah.
Peter McCormack: Actually, these are all brilliant people.
David Zell: That's my job, is I just kind of find these cool people and bring them in. I'll drop this on the podcast, we just added a new fellow to BPI, so we'll probably put something out on Twitter about this, but do you remember a couple of weeks ago there was that Harvard paper that recommended that central banks buy Bitcoin?
Peter McCormack: Yeah, but wasn't it to like 2% or 1%?
David Zell: Well, it was sort of a model, depending on what your circumstance is, but the economist at Harvard that wrote that paper just joined BPI as a fellow.
Peter McCormack: Let's get him on.
Danny Knowles: What's he called?
David Zell: So, he'd be a great person to have on the podcast.
Peter McCormack: Yeah.
Danny Knowles: What's his name?
David Zell: Matthew Ferranti.
Danny Knowles: Okay.
Peter McCormack: Where is he based?
David Zell: I think Cambridge for now; he's wrapping up his PhD.
Peter McCormack: Cambridge, where is that; Massachusetts?
David Zell: Yeah, you've got it.
Peter McCormack: That's not far from New York, right?
David Zell: No, it's a pretty easy train ride.
Peter McCormack: Yeah, let's make that happen. Interestingly, is that why we got that response recently where the government was saying banks shouldn't be holding Bitcoin?
David Zell: I don't think that was related to the paper, no.
Peter McCormack: No?
David Zell: No.
Peter McCormack: All right. Well, listen, we'll get him on. Keeping bringing them through, keep doing your thing. We're here to support you, brother. Take care.
David Zell: Thanks so much.
