WBD616 Audio Transcription
The Evolution of Bitcoin Narratives with Harry Sudock
Release date: Wednesday 8th February
Note: the following is a transcription of my interview with Harry Sudock. 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.
Harry Sudock is Chief Strategy Officer at Griid. In this interview, we discuss a range of narratives evolving in 2023: how Bitcoin’s value is to be explained to newbs, making sense of the general paranoia in society, the critical importance of nuclear energy, and making sense of 2022’s financial contagion within crypto.
“If you believe that there is a pending climate crisis and you do not believe in nuclear energy technology, you’re anti-human and I no longer know how to relate to you on the merits.”
— Harry Sudock
Interview Transcription
Harry Sudock: I'm finding myself having pretty broad podcast fatigue, and it could be a macro bear market symptom, it could be a Spotify platform discovery problem, which I think is most likely, but I'm not getting content that is exciting via podcasts other than What Bitcoin Did. I'm finding it also within the episodes as well, like I'm turning episodes off of stuff; I'm getting 15, 20 minutes in and I'm saying, "The next 90 minutes aren't happening". I'd rather read a book, I'd rather get back to work, I'd rather do anything other than consume somebody else's macro perspective around when inflation's going to have peaked; I can't do it.
Peter McCormack: Okay, that gives me a couple of questions. Firstly, is that an in-life thing; are you in a different mindset at the moment because it's January, you're generally just a bit like, "Well, our industry's been tough", and you're just like there's a lack of patience; or do you think it's just nobody's giving you something interesting?
Harry Sudock: I think some of it is just a lot of the weekly shows that I listen to, or the regular cadence stuff, just isn't hitting. I don't find people to have particularly exciting opinions about the world right now. I feel like Bitcoin Twitter has been kind of getting to the Right answer faster than the media digestive tract. So I'm getting, in 10 tweets, what used to be a 90-minute podcast, and I don't have the patience to them to work through the mental hoops that it feels like bitcoiners have already been through 11 days ago on Twitter.
Peter McCormack: I don't actually have the time to listen to that many podcasts. I think it's one of those weird things, when you make a podcast, you don't really listen to a lot. It's like if you fix computers, you don't want to go around and fix someone else's computer. And we're either travelling or I'm back at home working on the club, so I don't have that much time.
I think it's pretty well-known, my go-to is Joe Rogan, but just because of I think his discovery of interesting people, but even with that I've had some fatigue, but he's had some really good ones recently. He interviewed this bee lady; have you seen this lady? She's on TikTok or Instagram. She goes to houses where somebody's got a bee infestation and she'll take down part of the roof and there's a whole nest there, and then she explains and removes it; she's actually in Austin, but the whole interview is incredible.
Harry Sudock: Wow!
Peter McCormack: I totally didn't expect it, didn't know what it was going to be about, and I learnt something new. I think his discovery's been good, but also at the same time I get the fatigue because I don't want to listen to people who I think might be full of shit.
So, for example, he had that Peter Zeihan on, and I was really excited to listen to that, I'd heard a lot of good things about him; I don't know him that well, and I only thing I see get shared out on Twitter is his opinions on Bitcoin. He's pretty steadfast in his opinions, "It's down to $16,000, it's only got another $17,000 to go, it's going to go negative. It can't be money"; it's just spitting out the same FUD. And I'm like, "Well, if I can't trust you on this, how can I trust you on other stuff? And I'm not sure if I want to listen to you".
Harry Sudock: Forgive me for bringing up the persona non grata in Nassim Taleb, but he has the most brilliant passage on this, which is, and this is for everybody listening, think about the think about the thing that you know best, so whatever industry that may be. Now think about how your peer group of experts think about how the media reports on the thing you know best; it's garbage, right. The people who report on your industry know far less than you do, and so you laugh at their juvenile takes or their juvenile analysis or whatever; we, in Bitcoin, know this overwhelmingly well. The media is terrible at reporting on Bitcoin other than a few shining examples of great quality work.
Peter McCormack: Shall we give anyone a shoutout?
Harry Sudock: Mackenzie Sigalos.
Peter McCormack: Yeah.
Harry Sudock: She crushes.
Peter McCormack: Yeah.
Harry Sudock: And then there's a bunch of others who do really outstanding work.
Peter McCormack: Aaron van Wirdum.
Harry Sudock: Yeah, Aaron's incredible.
Harry Sudock: Rizzo's incredible.
Peter McCormack: Yeah.
Harry Sudock: George Kaloudis is great.
Peter McCormack: Yes.
Harry Sudock: He moderated a panel that I was on and could not have been more thoughtful and well prepared. You see some of the artists who do really sort of rough impressionist work, and then you see their sketchbook and they're doing perfect portraits, that's like George in interviewing. He read four books that I mentioned offhand in an interview two years ago; he was like, "Oh, yeah, I read those in preparation for our 25-minute panel". Unbelievably good; CoinDesk, give him a raise.
Peter McCormack: In fairness, Danny reads four books for every interview I do, he just gives me the notes. Have you done any audiobooks, because sometimes when I've got podcast fatigue, I go to audiobooks?
Harry Sudock: I was going to go there with you. I just finished the Leonardo Da Vinci biography.
Peter McCormack: Wow! Okay.
Harry Sudock: It was awesome; it was the same guy who did the Jobs biography and the Ben Franklin biography, same biographer, Walter Isaacson, and it was just great. This is somebody who is truly a polymath. So, he was equally known at the time that he was working for his military engineering capabilities, he was a naturalist, he was obviously a beyond-brilliant artist, but being able to sit at the intersection of sort of apex art creation, apex engineering and apex science and biology let him weave together these skillsets in just ways that I had no appreciation for previously; walked away from that book ready to talk about it on a podcast and get excited.
Peter McCormack: That art documentary, was it The Last Da Vinci or was it The Last Van Gogh?
Danny Knowles: I've not seen that.
Peter McCormack: There's a documentary that I saw recently; I'm sure it's The Last Da Vinci.
Harry Sudock: It was.
Peter McCormack: Have you watched that?
Harry Sudock: I have not, but I know the painting that it's all about, on vellum, which is lamb skin, there was a cut-out from the front illustration page of a book that was given to, I believe it was his patron's daughter; it turns out to real. But basically, there was a multiyear saga of trying to validate if this was actually a Da Vinci illustration or not, and this guy bought it at auction.
The guy who bid on it, he saw it at an auction, he said it looked amazing, he thought he was either one of Da Vinci's students or somebody else who did a really great example of the work, and I think he bid like $18,000 for it, and then somebody else won it for $23,000. Then, 9 years later, he was able to buy it at the same price, the $23,000 price; the thing's worth $100 million.
Peter McCormack: Are we definitely talking about the same painting? No, it sold for $500 billion.
Harry Sudock: Yeah.
Peter McCormack: Or $450 million?
Danny Knowles: It's The Lost Leonardo.
Peter McCormack: The Lost Leonardo, it sold to the Saudi prince.
Harry Sudock: Which one; Bin Salman?
Peter McCormack: No, I keep wanting to say SBF because that's the three letters of --
Harry Sudock: MBS.
Peter McCormack: Why do I want I want to say SBF?! MBS, yes; I'm pretty sure he paid $450 million for it, and they still don't know if it's a Da Vinci or not. It's a wild documentary.
Harry Sudock: This is crazy. So, you're catching me in an area that has been very exciting this week.
Peter McCormack: Yeah, you know better than me.
Harry Sudock: So, the way they did authentication for some of these paintings and other sketches is, some of them he signed but he didn't sign all of them, and some of them he left a fingerprint on; that's what happened with this one, is that they felt pretty strongly that there was a fingerprint match and then they were able to find the book that it was cut out of, and that's why they feel it's much more likely that it is a Da Vinci than not.
Peter McCormack: But it had to be restored; can you get the photo of it pre-restoration? A lot of work had get done to it, an insane amount of work had to get done to it.
Harry Sudock: Same with The Last Supper, an enormous amount of restoration work has been done because it's on a church wall.
Peter McCormack: Yeah, it'll be mad if somebody's paid $450 million for a work of one of his students! We did the audiobook, well we, some of us, but sometimes me, Jeremy and Danny discuss books, we all did this book at the end of last year called Hail Mary.
Harry Sudock: I have it downloaded.
Peter McCormack: Oh my God!
Harry Sudock: It's the sci-fi book?
Peter McCormack: Yeah.
Harry Sudock: Yeah, I have it downloaded; don't spoil me.
Peter McCormack: No, I'm not going to spoil it, all I'm going to going to say is, once you start it, you'll be gripped.
Harry Sudock: Okay.
Peter McCormack: It's not what I expected and it's the most fascinating story.
Harry Sudock: It's Andy Weir, right?
Peter McCormack: Yeah.
Harry Sudock: The guy who did The Martian?
Peter McCormack: Yeah, The Martian.
Harry Sudock: Okay, I have it downloaded.
Peter McCormack: It's been commissioned for a film as well, hasn't it?
Danny Knowles: Yeah, I think so.
Peter McCormack: Yeah, it's been commissioned for a film; it takes a little bit of getting into and then, once it starts going, for me, without giving it away, I don't know what you think, Danny, it didn't go where I expected it, but it went better.
Danny Knowles: It definitely didn't go where I expected it. I wasn't sure about the ending.
Peter McCormack: I loved the ending.
Harry Sudock: I'm changing the topic so you don't spoil me. Have you guys read The Three-Body Problem?
Danny Knowles: No.
Peter McCormack: No; that's been recommended a few times, but I am going to get it now.
Harry Sudock: Yeah, what it feels like you're describing, you need to do this as a team and go through The Three-Body Problem together. There are three books; they're all phenomenal, but yeah, to me, there are like people who have read this book and who've kind of got it and have digested it, and it's such a special --
Jeremy: That's also being made into a TV show by the guys who did Games of Thrones.
Peter McCormack: It's free to download on Audible.
Danny Knowles: All right, I'm getting it.
Peter McCormack: Or I bought it previously!
Harry Sudock: See, this is how we survive bear markets.
Peter McCormack: Yeah.
Harry Sudock: Sci-fi content.
Peter McCormack: I've literally just started The Psychology of Totalitarianism and I just don't know if I've got it in me, man.
Harry Sudock: You know who's a big sci-fi head?
Peter McCormack: Who?
Harry Sudock: Is Matt Pines.
Peter McCormack: He was here like two days ago.
Harry Sudock: Dude, he's the best.
Peter McCormack: We were discussing, because of Zeihan being a little bit misdirecting people on Bitcoin, and then everyone on Twitter was like, "It needs to be Saylor", "No, it needs to be Saifedean". I don't think people pick the right people. I don't think he is going to have anyone, but if we did, Danny's controversial choice is Matthew Pines would be great.
Harry Sudock: He'd be great.
Danny Knowles: I think he's not going to do an Andreas-style Bitcoin show again, so it needs to have another topic and then that's the Trojan horse for a Bitcoin conversation.
Harry Sudock: Every conversation can end up being a Bitcoin conversation if you have the right bitcoiner.
Peter McCormack: Yeah, my personal choice has always been Alex Gladstein, if it's not me!
Harry Sudock: You guys should just talk about podcasting.
Peter McCormack: I think Gladstein would be incredible because there are so many topics he can touch on on human rights and --
Harry Sudock: Totally.
Peter McCormack: You might have skipped the show of mine, but I made a show recently with him about the IMF, and that to me is like a story that I think someone like Rogan would love to get into.
Harry Sudock: So, I'm convinced that the All-In podcast guys are listening to your show.
Peter McCormack: Really?
Harry Sudock: Or listening to Alex Gladstein, because one of their 2023 loser predictions was the IMF, and I'm convinced that they saw Gladstein's piece.
Peter McCormack: So, really interestingly, Chamath's team got in touch; when was that, was about a year ago?
Danny Knowles: It was a good while ago.
Peter McCormack: Yeah, a year and a half ago, and wanted some podcasting advice, and I was like, "What?!" And they're like, "Yeah, we know your podcast is doing really well. Just want some advice", and the trade-off was Chamath was meant to come on the show. It was before he dropped out of – that was Bitcoin 2022, wasn't it?
Danny Knowles: Yes.
Peter McCormack: So, I want Chamath on the show, I've got important questions for him; I don't agree with him on everything.
Harry Sudock: I don't find his Bitcoin take remotely interesting. If I were to get 2 hours with Chamath to interview him, I would spend 1 hour and 50 minutes on all of the growth hacking that he did at Facebook because he is a top 0.1% growth hacker and built Facebook's user base up to 1 billion people; that's the thing that I want the deep dive on, I don't care about the rest of it.
Peter McCormack: Well, they owe me a fucking interview because the trade-off was they wanted to say, "What have you done; how have you done it? And yeah, Chamath will come on the show", and I was like, "Great". So, I just went through everything I'd done, which isn't rocket science, and then he wasn't available, it didn't happen or we didn't -- he wanted to do it remotely where I only want to do in person, so it didn't happen. So, if anyone on All-In pod is listening, probably not David Sacks because he's blocked me, but if anyone else is listening, Chamath owes me a fucking show.
Harry Sudock: And can it please be a show all about his time at Facebook marketing because I'm very curious about that part?
Peter McCormack: We might have to clickbait the title.
Danny Knowles: This is Below Your Line?
Peter McCormack: Dude, don't; he's not going to come on now, he's not going to come on. What can we call it? Who is the best host on All-In pod? I actually don't watch it.
Harry Sudock: Probably the science guy, Friedberg; he's good.
Peter McCormack: I don't know him. I never listen to it because all I ever see are bits on Twitter and I'm like, "It's just not my thing", but I've heard really good things. I was out for a drink with a friend the other night, and she's not into VC start-ups in any way remotely at all, but she said she loves the show.
Harry Sudock: Yeah, they do a good job, they do a really good job.
Peter McCormack: Are they touching on all subjects?
Harry Sudock: I would say it's probably like a three- to four-legged stool of politics, investing, current events, US politics, global politics and supply chain, macro, that kind of stuff as well. It's punchy, right, so you're only getting 60 to 75 minutes kind of length. They have strong opinions that I often agree with or disagree with. They don't do a good job of understanding Bitcoin's role in the world, they're pretty crypto-y for my taste, but I think from what is the nature of the current public discourse, I think they're a pretty good bellwether for affluent American investor class.
Peter McCormack: I might check it out, give it a go, have a listen, but if you're listening, Chamath, David Sacks, who's the other guy?
Harry Sudock: Friedberg.
Peter McCormack: No, there's another one.
Harry Sudock: I don't like him.
Peter McCormack: Maybe he's the one who blocked me; I think it's the other one, Roy, something Roy.
Harry Sudock: Jason?
Peter McCormack: No, Jason, @jason.
Harry Sudock: @jason.
Peter McCormack: Yeah, he's the one who blocked me.
Harry Sudock: Not a fan.
Peter McCormack: Yeah. All right, man, well I'll check that out. But I'm with you, I don't think there's a lot of interesting content out at the moment. I'll tell you another reason I don't think there is, is I think a lot of podcasts have tried to become very current, so they're all discussing the same thing. So, event happens, they all discuss it; we do it sometimes. We had Ukraine/Russia covered, we had SBF covered, which we had to, but whatever the thing is that everyone's covering --
Harry Sudock: It's the current thing, like everybody's got to orient themselves around the current thing, and I think that we, as bitcoiners, we're pretty --
Peter McCormack: We are the current thing at the moment!
Harry Sudock: We're allergic to that, like Bitcoin is designed to not be the current thing; it's designed to be boring, stable and click forward one step at a time.
Peter McCormack: Come on, man, you wanted to be the current thing again!
Harry Sudock: I'm open to it being the current thing.
Peter McCormack: Maybe that's what worked out well for us in that, because we travel for 6 weeks, make 20 shows, we can't always cover the current thing, what's going on, so we have to make timeless shows if we can, a little bit.
Harry Sudock: And your show is different because it is always oriented around a guest, it's always an interview; it's not the main cast talking about the next list of topics, it's about you're bringing somebody on who has a reason to be there, they've got a particular experience or business or view on something that you want to hear about. So, I think being an interview first, topic second kind of show is a buffer against being the current thing.
Peter McCormack: You know why that is though, don't you?
Harry Sudock: Because…?
Peter McCormack: No one wants to hear my fucking opinion! I literally have people on YouTube all the time saying, "Can we just remove Pete's bits?" or, "I skip Pete's bits". We even had one the other day, because Danny's got fans now, it said, you know like there's a podcast, there are ads on it, it says, "Podcast starts at 9 minutes", and they stamp it, they go, "Danny starts at 41 minutes"; brutal!
Harry Sudock: See, that's the real use for ChatGPT.
Peter McCormack: There you go.
Danny Knowles: Removing Pete from the audio?!
Harry Sudock: Exactly!
Peter McCormack: Danny's using that for our podcast.
Harry Sudock: I'm sure.
Danny Knowles: I think it's going to have a big role this year, honestly; I think it's going to be used in every business.
Peter McCormack: If we got a little audio reader, could we replace a guest? "What would Harry Sudock say about podcast fatigue?" We wouldn't even need to get you in, we would just need to get those tones.
Harry Sudock: Just send me the script and I'll audiobook it for you!
Peter McCormack: How have you been, man; did you have a good break?
Harry Sudock: Yeah. Well, I got COVID Christmas Eve which sucked.
Peter McCormack: First time?
Harry Sudock: Second.
Peter McCormack: Worse second time?
Harry Sudock: No, better; it's much better second time, but just like older parents and grandparents, don't want to get around them, so my Christmas became a couch and television nap.
Peter McCormack: It sounds pretty good.
Harry Sudock: Which was, in retrospect, not the worst option!
Peter McCormack: I quite like the sound of that.
Harry Sudock: So, restful; I got to recharge the batteries, come back very fresh. I'm a default aggressive kind of person; I like to be very proactive and hit hard, and so I'm really excited to work on Bitcoin stuff this year.
Peter McCormack: Yeah, I'm glad you said that. I certainly felt fatigued towards the end of the year. I don't think I was fatigued because of the price so much, it's more the volume of bullshit and then it seemed there was more bullshit layered on more bullshit, and we just got hit so many times. And when you keep getting hit so many times, there are other things you have to deal with.
So for example, outside of this I have my football club, and there are people who hate us, they've just decided they hate us, "We hate you". And so there's one guy specifically who I've blocked him from our Twitter, so he waits for other people to tweet so he can reply to them; he's a fucking idiot. But all he's been doing this year has been retweeting articles of crypto companies or Bitcoin companies failing; he just wants to attack it. It's that thing, because so many bad things have happened, you're almost having to defend Bitcoin to people again, you almost have to explain again; that fatigues you because you want to be explaining the good stuff, you want to be on the offence, not on the defence.
So, I got to the end of the year and I was just like, "Oh man, this is hard work", and I've actually come back into this new year, caught up with Danny and Jeremy, made some shows, I'm feeling optimistic and looking forward, like you, to getting back into it.
Harry Sudock: Yes, it's time; Bitcoin's education cycles wait for no one. We, as the distributed users of this software, we go through cycles, Bitcoin doesn't go through cycles, Bitcoin clicks every ten minutes. So, the opportunity to use the scarce time in front of us, it's a huge opportunity but there's almost time pressure that I feel all the time, which is that Bitcoin will not remain niche forever. So, educating people I care about, getting my own kind of mindset deeply framed out for myself, continuing to do that education and re-education work for myself around Bitcoin.
I don't have a Nostr set up yet; I need to, and I haven't gotten to it yet, but these are things that are developing in the broader Bitcoin ecosystem that are exciting and that are new and that if I don't stay super on top of, will pass me by. The one that comes to mind especially is there was a bunch of people who got really, really good at Lightning routing, they were earning fees on routing and they were doing a bunch of bespoke setups on that; I run a business, I don't have the time.
Peter McCormack: Do you want me to show you?
Harry Sudock: Yeah, show me how; let's open the laptop.
Peter McCormack: Okay, I was joking! Have you found that the way you explain Bitcoin to people has evolved?
Harry Sudock: I find that the parts of Bitcoin that require explanation have changed. So, at the beginning, a lot of it was like, "What's up with this 21 million thing? What do you mean hard cap; how does that even work?" I spend almost no time explaining how 21 million hard cap works any more. Everybody kind of has digested the fact that there are only going to be 21 million Bitcoin, "How?" "Not really sure, but we think that this is like a thing that is true", it has become true in the global consciousness of Bitcoin.
Now, I spend a lot more time talking about proof of work versus proof of stake, I spend a lot more time talking about energy, I spend a lot more time talking about nodes a little bit, but more so it's Layer 2, Lightning, transaction throughput; those ideas feel like they're gathering more of the question process with somebody who is maybe financially literate but not Bitcoin literate, or somebody who's technology literate but not Bitcoin literate. It feels like the questions are less of, "What are Bitcoin's functional underpinnings?" and more sort of unique deep dives into single topics or single questions.
Peter McCormack: So, if I was one of your buddies who was, pre-Bitcoin life, one of your old school buddies, and I phone you and I'm like, "Harry, I think I need to get into this Bitcoin thing but I know shit about it; tell me about it", what would you say? What is it, man; why should I care?
Harry Sudock: Bitcoin, it's a new monetary technology. So, the same way that you didn't used to be able to use Venmo or Cash App or whatever, Bitcoin represents that level of unlock but everybody in the world can do it. So, you don't need a bank account, you don't even need an app store account, it becomes truly universally accessible money.
Peter McCormack: Yeah, but why do I need that, man? I can Venmo you and my girlfriend and whatever, my mum, why do I need you?
Harry Sudock: Yeah, so I think that's like the rub, is like the American perspective on Bitcoin is going to end up being vastly the minority perspective on Bitcoin, which is Bitcoin is financial insurance, at least at the beginning, or monetary insurance at the beginning, and not like the lifeblood of your household. So, for so many other people around the world who end up using Bitcoin, it becomes household lifeblood, it is the way that you function over time; whereas in America, the dollar, at least on a year-over-year basis, largely works and is a productive asset for us and is useful.
So, I think understanding that usefulness in a Bitcoin use case native way is harder for Americans, but conversely the arguments around Bitcoin as a financial asset, as a way to preserve wealth over time, I think Americans get that a little more clearly, and you see that in some of the demographic breakdowns of who owns Bitcoin.
Peter McCormack: Yeah, but then I would say to you, Harry, it wouldn't preserve much over the last year; are you sure?
Harry Sudock: Yeah, of course. This is the time preference conversation, which is on any one-year basis, Bitcoin might look terrible, but if you're willing to look at Bitcoin over a multiyear period of time, that's when it starts to get exciting. If you're able to look at the improvements in development in Lightning, in these other kind of venues of growth, that's when Bitcoin looks more exciting. But on any single year basis, no doubt it's performed brutally.
Peter McCormack: Danny, can you look up the price of Bitcoin on 23 November 2017?
Harry Sudock: Yes.
Peter McCormack: Because this is potentially --
Harry Sudock: Oh, it's going to be higher.
Peter McCormack: But there's a reason for that date; do you know what that date is?
Harry Sudock: 23 November 2017?
Peter McCormack: What might have happened just over five years ago?
Harry Sudock: What?
Peter McCormack: I launched this podcast.
Harry Sudock: No way!
Peter McCormack: Yeah. So, somebody messaged me the other day and said when I announced I've launched a new podcast, they're like, "What's it about; why are you launching a new podcast?" I was like, "Well, I just want to talk about some other subjects, do some other things", and he was like, "Yeah, because there's nothing to talk about Bitcoin". I said, "What do you mean?" It's like, "Well, it's failed, it's failed since you launched it". I was like, "What do you mean?" He's like, "The price is down".
Danny Knowles: 23 November?
Peter McCormack: Yeah.
Danny Knowles: $8,200-ish.
Peter McCormack: He's fucking wrong!
Harry Sudock: Up only.
Peter McCormack: When did it go up to $20,000?
Danny Knowles: 17 December was about the top.
Peter McCormack: It's around about then, isn't it?
Harry Sudock: Yeah.
Peter McCormack: I would have laughed if I had launched it 17 December. So, we're actually, on a five-year basis, we're down, oh no, we're about even; it's a store of value! So, the reason I ask about that, how you explain it to people, because I found myself, Harry, talking about more of the why Bitcoin not what it is. I talk about what it isn't, trying to do that separation between Bitcoin, shitcoins and NFTs, that's an important thing, but it's more the why, why you need to consider this now.
I've tried a two-pronged approach is that this is a potential insurance for you for your kids over multiyear, like you said, 5, 10, 15, 20 years, but also I tried to explain this to Brandon Quittem and he completely disagreed with me, but I think it's a vote for independence from government. So, even if you're not sure about it and you just want to go and find out a bit, just go and buy some, go and buy £30, £50 and then you've got some, and then tell somebody else to do that, and then everyone starts to become part of this ecosystem that's saying, "Okay, we all want a bit, we all want a stake in this separation from government", but it doesn't sell well.
Harry Sudock: I would say that it's bigger than just governments.
Peter McCormack: That's fair.
Harry Sudock: My sort of Bitcoin shit test for the future is, I ask myself the question all the time, how do I know we've won? One day, we may wake up and we have won, and how do I know when that day has come? To me, the day that I know that we've won is when the labour force, the people who work are able to dictate to their employers, "Do not pay me in GBP, do not pay me in USD, do not pay me in CAD, pay me in sats". When I am able to get paid natively into the Bitcoin network, and I'm able to dictate that to my employer, and we, broadly, are able to dictate to our employers, that's when we know because we've exited at that point because so much of the yoke of bureaucratic systems revolves around the paycheque ecosystem.
My taxes are automatically deducted, my 401(k) and IRA are automatically contributed to, my insurance is automatically paid for, "Oh I've got these tax deferred dollars that go into my healthcare spending account". You're in this walled garden of your employer, your government and your healthcare insurance system, at least in America, and that garden of payment rails and tax rails is designed to keep you in it.
So, when people are able to say, "I don't want that, I want this", and the employers are facing enough pressure from employees to do this for them, to provide access to them in these sort of sats native, Bitcoin native ways, that's when we've won, and there's been enough of a groundswell to have this sort of very low friction switching cost from the previous walled garden ecosystem into an open ecosystem. To me, that's the juncture.
Peter McCormack: So, do you think of what the implications of that are; what else has changed?
Harry Sudock: All the time, and the short answer is that it means that Bitcoin probably is dramatically more expensive in purchasing power, it also probably means that the ability to, on an opt-in basis, transact with each other, has become drastically more free. So, we see people engaging voluntarily with each other in trade or employment or whatever the case may be. That voluntary transaction, that explicit transaction, that conscious versus unconscious choice will be the predominate way of thinking.
Peter McCormack: You sound very libertarian right now; that's not a criticism, not a pejorative.
Harry Sudock: No, the ways that the frog is getting boiled, it's just even more subtle and nefarious than I think we have an appreciation for.
Peter McCormack: I agree, but I think more people are becoming aware of this, there's a lot more questioning. Now, that works both ways, I think a lot of things are being questioned that don't need to be and the questions are weird and stupid.
Maybe not a bad example, I've tweeted a little bit about Andrew Tate recently; I think he's a fucking idiot and I think his message to young children is terrible. I know some people love him, he has a lot of simps that protect him. He's now been arrested, accused of some quite serious crimes, trafficking, coercion, etc, and publicly some people have been very supportive of him, and strangely, some right-wing Christians, conservative Christians, which doesn't make any sense.
Anyway, to me, I don't see very many differences between him and Harvey Weinstein apart from the fact that he hasn't yet been convicted; the main difference is he's publicly telling people what he's doing, "I'm doing this, I'm doing that". People are questioning it, saying, "No, no, it's the Matrix, no, the government want to shut him up"; when he got arrested, "They're trying to shut him down". I think that's where it's gone too far, it's like, "How do your eyes not show you this guy's a fucking idiot?"
Harry Sudock: But he and that whole sort of sphere of interactions are so far downstream from the nature of the problems. The nature of the problems are that we are told on a regular basis, "Don't believe your lying eyes", right?
The food pyramid's good; the obesity rates in America, it's not a problem, we're just not accepting our bodies properly. That's crazy, it's crazy that we are told to digest and accept writ large. This argument that Jeffrey Epstein killed himself, the cameras all just shut off and he hurt himself and now all the guards are dismissed, but suicide. We're asked to believe these phenomenally disbelievable things and said, "Don't believe your lying eyes. You're looking, you're seeing it's happening in front of you, stop believing it".
So, what happens when you enter into a paradigm where the de facto notion is, if you do not accept the Truth trademark that gets fed to you, you are either a bad person and do not have a role or place in society and then expect to introduce that paradigm to hundreds of millions people and not end up with radicalisation and weird, strange outcomes on the other end is crazy. You're adding such a dark and chaotic element to our ability to sense make of where we are.
Where are we; what does inflation mean? "Oh, inflation's not real, it's transitory", well, where's the apology; where the apology from the Biden Administration, the Federal Reserve Bank and everybody who tried to feed us the idea that inflation was going to be a transitory idea; where's the retrospective? Where do we have an honest conversation around data and facts and take the opportunity to learn, at a baseline societal level, and have a discourse in dialogue around what went wrong and why did we not get it right; what were the inputs that lead to that?
Or are we the foie gras goose on the wrong end of marketing where the funnel is jammed into our mouths and information is pushed into the funnel and anything other than taking it and getting turned into a pate is Wrong, Amoral.
Peter McCormack: It's incentives though, you just have to follow incentives. There's an inertia to admitting you're wrong, like a fear.
Harry Sudock: But we didn't use to.
Peter McCormack: Look, I can tell you, as somebody who has very publicly said some things that down the line you're like, "Fuck, that was so wrong!" that it's hard. But the strange thing is, when you admit you're wrong, you say, "Look, I got this wrong, I'm sorry", you look at the responses. There are a lot of people who turn around and say, "Fair play to you for admitting that, yeah", and they trust you more because of that because we're all fallible, apart from you, we all say stupid things and regret them.
No one's perfect their whole life, no one goes through their whole life and every opinion they have, which is subjective, proves to be right; that never happens. But we have a culture now of dunking on people for being wrong and people are not willing to make mistakes, and it's a primary issue with politicians, is you cannot trust them.
Harry Sudock: No.
Peter McCormack: I mean, the other day I was watching, I don't fully understand the Speaker of the House thing, but I was watching this video online and it was Matt Gaetz, and he was kind of like the holdup to McCarthy getting through. I mean, I don't know the details, someone else will, but he was the holdup for him getting the number of votes he needed, and they show a guy go up to him in whatever chamber they're in and whisper in his ear and Gaetz goes kind of white and then he ends up voting for him that evening. And you're like what is going on here; what is the horse trading in the background for you, and your self-interest, that means you get this Speaker of the House for the whole country; what is going on? I don't live here, I just see it, but try and see if you can find that video because it's weird.
Harry Sudock: And again, to me, all of this is downstream of the fact that we have a government body that the whole fate of hundreds of thousands, if not millions of households, sit on the back of this one person's opinion.
Peter McCormack: One?
Harry Sudock: Well, if he's the last holdout vote, it all ends up there, right; if you win 51/49, one person turns that vote.
Peter McCormack: Is it his opinion or is it his incentives, like is something offered to him or something threatened to him? He doesn't have an uncheckered past.
Harry Sudock: I think that there is a foundational problem of standards. We have lowered our standards around what we expect of each other, of our elected officials, of our partners, of our community leaders; we just don't hold each other to nearly as the standards as we perhaps used to, and so I try to stay action-oriented here.
Peter McCormack: Can I interject and just say I think we do if we disagree with them, and that's a problem, because if you look at the entire body of government, they're meant to represent every constituent, not just the people who voted for them, they're meant to represent every constituent. But if we become so partisan that we only hold to account the people who we disagree with, we're giving a pass to the people we agree with, and there becomes a problem in that, it becomes a problem in that you end up becoming increasingly ever polarised. We don't hold the people --
Harry Sudock: On our team.
Peter McCormack: Yeah, on our team, and that's the problem because we give a pass to our team or we're basically saying to them, "You can lie and say it's transitory because you're on my team, but if the other team did it, I've got a problem with you". Here we go, look. Put the sound on; oh yes, The Godfather music!
Harry Sudock: That shoulder tap!
Peter McCormack: Yeah, but look at his face; he looks worried. I mean, what's he said to him, "Remember that trafficking of a minor, a cross-border charge?"
Harry Sudock: Yeah.
Peter McCormack: "We've got receipts, man"; you don't know. This is why it's bullshit, but I think we have to have this more collective holding together. We had a guy in the other day we did an interview with, Vivek Ramaswamy.
Harry Sudock: Oh, the COVID guy.
Peter McCormack: Was he a COVID guy?
Harry Sudock: Is he a doctor?
Peter McCormack: No, he wrote a book called Woke, Inc.
Harry Sudock: Oh, I'm thinking of different.
Peter McCormack: He's going to polarise some people, and I didn't 100% believe in him in that we started a conversation talking about the problems of the left versus the right, and he said it shouldn't be a left versus right thing, it should be the managerial class and then the civilian class, and that's where the separation is, because the managerial class essentially runs society and the civilian class essentially accepts everything.
So, think of it almost like the truckers in Canada versus the politicians; the truckers' right to protest was destroyed, they were demonised, Trudeau has control of government but they also have control of the media, and he said the people who were suffering are being co-opted into a team but really they're constantly being attacked together. They're the people we're making the poorest through inflation, they're the people we're taking any civil liberties from, and actually, they should be collective together.
Like, in the UK at the moment, we have a lot of strikes; we've got the rail strikes, we've got the nurses' strikes. The nurses, it shouldn't matter whether you're left versus right, it should be that you have worked your bollocks off through two years of COVID, there's been massive inflation, and you haven't been given a pay rise. We made this film about inflation in the UK; there are nurses now, full-time nurses, who are having to go to food banks because their salary doesn't cover their entire costs; that's who we should be bringing together.
Harry Sudock: The issue, in my observation, is that the mechanisms by which the teams try to recruit or co-opt out of what you're describing were the worker class.
Peter McCormack: No, he was very specific to say to us, "Do not say 'the worker class'".
Danny Knowles: But then he described it as a worker class in a different way.
Peter McCormack: I know, but it's not the worker class because you could be the civilian class --
Harry Sudock: The civilian class?
Peter McCormack: Yeah.
Harry Sudock: It's a better word.
Peter McCormack: But you could fabulously wealthy but you're not co-opted into the managerial class. Say you're a farmer who owns a number of farms, but you're still part of the civilian class.
Harry Sudock: It's about power.
Peter McCormack: Yeah, power between companies, media, politicians that control everything, almost like the World Economic Forum's ability to infiltrate into governments. Now, I'm not saying I agree with all of his things, but you can certainly see the connections.
Harry Sudock: You can absolutely see the connections. I think that it's the mechanisms of control are ultimately the revolution routing around, pick your way out, but I think we're seeing it. To me, it feels more brazen, it feels like I can never unsee the, "You're going to own nothing and you'll be happy".
Peter McCormack: Do you know the background to that?
Harry Sudock: No.
Peter McCormack: So, that wasn't actually a World Economic Forum policy, it was a thought piece by an external person, wasn't it? And not to say they didn't publish it and they didn't put it up there.
Harry Sudock: And my answer doesn't matter, it's the idea that you are the carbon they plan to eliminate.
Peter McCormack: Yeah.
Harry Sudock: That's the heart of all of this, is that, "For the greater good, you need to have less and we're going to tell you what amount of less you're going to get".
Peter McCormack: Yeah, and you can see that, especially in somewhere like Holland, what they've done specifically to the farmers, or Sri Lanka, what they've done there; that's why the Gladstein show was so important.
Harry Sudock: Yes, I totally agree, and what so revolts me is that there are groups that we're talking about, whether it's the politicians or the media or the WEF or whoever, they have this limiting belief that the only way that we can survive, whatever that means to them, is if we eliminate X, Y and Z, and I just don't believe that's true. I don't believe that we need to manage our electricity consumption, I don't believe that we need to do more with less or we need to not eat beef or whatever the sort of sacrifice de jour is, I just don't believe it's true, because at the end of the day, humans are prospering in untold ways that 50 or 100 years ago would have been unimaginable.
The great gift, and maybe eventually great curse of the internet, is that life is pretty bearable; we don't shit in the woods; we find a way to feed more people on planet Earth than ever before; we have an enormous amount of unused land, we're terrible stewards of the land that we have, we could be doing so much more and doing more efficiency and raising quality of life. Technology is this ultimately deflationary force where $1 goes a lot further towards a higher quality of life than it used to, and if we just harness these steps forward, we have an opportunity to raise the floor enormously further. This idea that we're going to run out, we're not running out, we're limiting ourselves, and it's a disgusting treatment of humanity, it's a disgusting treatment of the innovation that is available to us with the technologies in front of us.
I'll piggyback on your nuclear comment earlier because I think it's just ridiculously important that we have the ability to have unbounded access to energy; there is no such thing as scarcity, we're not going to run out. If we had the will to invest in an electric grid that was powered by nuclear reactors on a much broader basis, the cost of energy would fall to de minimis amounts.
Peter McCormack: Can you get up that chart we had?
Danny Knowles: On that though, before we get that up, I saw a think the other day, a bank in Australia are now doing a per transaction carbon footprint to the customer. So, with every transaction, you get like a score in terms of how much carbon that's emitted, and that's one step before they put a limit on how much you're allowed to have in a month.
Harry Sudock: They will take it from you if you let them.
Peter McCormack: That's the Australian commies!
Danny Knowles: That's fucking scary.
Peter McCormack: I keep telling Danny he needs to move back to the UK, come hang out with me in Bedford.
Danny Knowles: So, this is the live grid in the UK.
Peter McCormack: Yeah, so what I thought was really interesting in this is that I think it's set up wrong, because I understand what they're doing, we want to move, we want to decarbonise the world as best possible, we don't even have to have an argument over whether you believe it's important or not, but I do, we need to decarbonise the world.
So, if we look here, 19% of the UK energy is coming from fossil fuels, 48.2% from renewables, 17.7% from other sources and then 15.2% from transfers. So, great, 48.2%'s renewables. Okay, again we don't need to have the argument about whether you believe they are actually renewable, but the point is that it's misleading. Do you know what this should be? This should be carbon free, carbon emitting, or carbon neutral, carbon positive, whatever the things are because nuclear should sit alongside solar, wind and hydroelectric.
Harry Sudock: And calling gas the same thing as coal is also ridiculous. Let's just live in carbon accounting land for a moment, if I were to take a coal plant and decommission it and replace it with a combined cycle natural gas plant, I have decarbonised the vast majority of emissions coming out of the coal plant.
Peter McCormack: So really, what we should have them do is grade it, because this isn't about fossil fuels and renewables, this is about carbon.
Harry Sudock: It's about emissions or not.
Peter McCormack: It's about emissions, because what would happen is nuclear would go to the top.
Harry Sudock: By a wide margin.
Peter McCormack: I know there are timescales to this, but it might go above solar, it might go above wind. I don't know in terms of the construction costs and energy output, but I'm sure it can be calculated.
Harry Sudock: Do you know what biomass is?
Peter McCormack: Yeah.
Harry Sudock: Let's just really go to the middle of it.
Peter McCormack: Biomass, I only found it in the last one.
Harry Sudock: Yeah, biomass is cutting down trees and burning them.
Peter McCormack: Yeah.
Harry Sudock: It's being called as carbon free or carbon whatever as nuclear.
Peter McCormack: Well, it's just other sources.
Harry Sudock: Yeah, but that doesn't mean anything.
Peter McCormack: Yeah, it's meaningless.
Harry Sudock: It is a propagandised chart because to call biomass and nuclear in the same category, from an emissions perspective, is just a laughable farce. If you take a tree, you cut it down and you burn it, the tree can no longer take carbon out of the atmosphere. How do trees grow? They consume carbon out of the air. So, you've now limited the ability for that tree to remove carbon from the air; and then you burn it and you turn it directly back into incredibly emission-heavy -- start a campfire in your house.
Peter McCormack: And then breath it.
Harry Sudock: See how long the room is liveable; it's ridiculous to do this.
Peter McCormack: Anyone listening, please do not do this.
Harry Sudock: Yeah, obviously don't do that.
Danny Knowles: But that is a way of lot of people heat their home in England though.
Peter McCormack: It's actually happened.
Harry Sudock: It's a chimney.
Peter McCormack: No, it's actually happened; look it up, look up the guy who created a bonfire in his front room or something, somebody actually did it and burnt down his house, fucking idiot!
Harry Sudock: So, don't do that!
Peter McCormack: Yeah.
Harry Sudock: But this is the point, is that if we were going to deal honestly with this type of problem, this global crisis, this climate catastrophe, and we were going to deal with it honestly, there is no such thing as a coherent environmentalist position that is anti-nuclear and pro-climate mitigation; that position doesn't exist in the factual world.
Peter McCormack: Yeah.
Harry Sudock: We're going to take an attempt to live in the objective reality together here where, if you believe that there is a pending climate crisis and you do not believe in nuclear energy technology, you are anti-human and I no longer know how to relate to you on the merits. Nuclear technology is critical infrastructure for humanity all over the planet, and there is no position that can go the other way on that one.
Peter McCormack: So, Anthony Jared, who we had in, the nuclear guy who worked on the subs and the aircraft carriers, he actually did a calculation, and it's deaths per kilowatt hour.
Danny Knowles: Terawatt hour.
Peter McCormack: Deaths per terawatt hour. So you can actually look at the -- look, this itself isn't perfect, but anyway, deaths per terawatt hour, it was something on solar, what was it?
Danny Knowles: I think solar was 0.02 and nuclear was 0.03 or something like that.
Peter McCormack: Yeah, and then something like coal is massively high.
Danny Knowles: It was like 9.
Peter McCormack: Yeah, because our example was one pit collapse can kill more people than have ever been killed by nuclear. Do you know how many people have been killed by nuclear accidents?
Harry Sudock: It's got to be less than 1,000.
Peter McCormack: Yeah. So, based on our interview, and we'll have to double-check this, no one died at Three Mile Island.
Harry Sudock: No.
Peter McCormack: No one died at Fukushima.
Harry Sudock: Correct.
Peter McCormack: I thought there was one, yeah, well I thought there was one guy. Chernobyl --
Harry Sudock: It was like 17 or something.
Peter McCormack: 46.
Harry Sudock: Yeah.
Peter McCormack: 46, that's it. Now, look, there is a different factor, there is a huge amount of land which is uninhabitable around Chernobyl, we have to accept that, and I don't know what the exclusion zone is around Fukushima, those things do exist as well, they have to be taken into account; you can't just say death. There is a chance if Chernobyl had have been much worse, the exclusion zone would have been bigger, I accept that, but that was decades ago with old technology run by Soviets, no offence, Soviets, but run by Soviets in an era of different regulations.
Harry Sudock: And by the way, at Chernobyl, only one of the reactors melted down; the other two continued for 17 more years.
Peter McCormack: Did they? I didn't even know that.
Harry Sudock: The other two reactors kept producing electricity.
Peter McCormack: I didn't even know that.
Danny Knowles: I think they only got decommissioned 2017 or something.
Harry Sudock: Yeah.
Peter McCormack: And they didn't have that kind of like protective seal that all the things are built with now. I've come a long way in nuclear in the last few months, ever since sitting down with Alex Epstein actually, forcing myself to go down that rabbit hole. I am now firmly in the position that we need to see a proliferation in the development of nuclear reactors and a reduction in the regulation that slows that down.
Harry Sudock: Yes, yes and yes. 50% of the budget for a nuclear project is estimated to be regulatory spend, not construction spend.
Peter McCormack: Yeah. What I want to know is, my potential conspiracy theory is I wonder how much of the work of the environmentalists who are anti-nuclear and anti-green energy is financed by the fossil fuel industry; I wonder if they're gone full circle and said, "Yeah, well, let's get these guys to do our business for us", because I don't fucking trust anyone when there's money involved.
Harry Sudock: At the end of the day, when you look at technology that is obviously positive sum, and if someone's willing to read three books about the nuclear energy industry, and if I had to recommend three books, it would be Shorting the Grid, it would be Energy and Civilisation, and The Grid.
Peter McCormack: I've got two more for you because we got a couple yesterday.
Danny Knowles: One was called Atomic Awakening.
Peter McCormack: Yeah, Atomic Awakening, so I bought that, and what was the other one? I bought that on Amazon; give me one second, I'm going to tell you. You know Atomic Awakening then?
Harry Sudock: I haven't read it yet; I've heard the title.
Peter McCormack: Okay, let's go and see what I ordered yesterday; Power to Save the World: The Truth about Nuclear Energy. So, that's by somebody called Gwyneth Cravens; so apparently, she used to be an environmentalist and did the work and she was like, "Okay, I'm wrong", and so she's written a book about it.
Harry Sudock: Phenomenal. I don't know anybody who's done the work and ended up saying, "Nuclear's still bad", and so we have an obviously positive sum technology, and then we've got prohibitive regulatory environments that have basically said we can't build these.
Peter McCormack: In fairness, Everett, who was on this morning, he actually said to us the regulatory environment is changing.
Harry Sudock: It is.
Peter McCormack: There is a bipartisan bill that's pro-nuclear. Look, it's coming down to the fact that we have an energy problem and then suddenly these things melt away.
Harry Sudock: Let's pick on our favourite friend, which is Gavin Newsom in California. So, Gavin Newsom has been a long-term anti-nuke environmentalist until, I don't know, he decided maybe he's got larger political aspirations, and all of a sudden, it's not so important for us to shut down Diablo Canyon, and now maybe we need to give it a little more extended useful life, and maybe we should save the plant; why? Because it's very hard to run a political campaign in California when there are hundreds of thousands, if not millions of people suffering from rolling blackouts, which is what happens when you remove firm, low-cost baseload from an electric system; I would criticise a Republican doing the same thing. This is a totally bipartisan issue for me; I believe that if you are on the team that wants to shut down reactors, I am not on your team.
Peter McCormack: So, if Bitcoin fixes this kind of incentive model, what does it do within the private sector? You talked about millions of voluntarily interactions, but we know companies can equally be as bad as politicians when money's involved. They can be greedy, they can pollute, they can destroy the environment, they can manipulate markets; we've seen this in the unchecked crypto industry where any fucking idiot can create a token and they can pump it, make themself rich and run away. Getting rid of the government doesn't suddenly make everything good, it's how do we make everything more on this?
Harry Sudock: And I would caveat to say that it's not about getting rid of the government, it's about getting rid of the mechanisms by which the government can pick winners and losers.
Peter McCormack: Fair.
Harry Sudock: This is not saying we don't want to have a government; this is saying that it's not reasonable for the government to pick energy providers' technologies on a winners and losers basis.
Peter McCormack: So, what do they do instead?
Harry Sudock: Maybe this is unpopular is some of the full-blown ancap circles, but I think that there are negative externalities, there are pollution behaviours that companies should be restricted from engaging in; making your toxic waste somebody else's problem is wrong and there needs to be a mechanism by which we keep people from doing that.
I don't know that more roads argument is one we need to have at all, but I think that there are some negative externality prevention and public good development opportunities that I think the government is good at working on, and I think that those are phenomenal when the right people are resourced the right way and incentivised the right way to do that.
I don't think we should have private courts; I think the court system functions really well as part of the government, so I think that there's obviously a role to play, this is not a get rid of everything argument. It's an argument that, should we need $100 million to get through all the regulatory hurdles to start a bank, should it cost that much; should it be that onerous? No, I believe that a more competitive environment produces better outcomes for everybody.
So, it's really about the pulling of the ladder up behind the existing incumbents, the managerial class, and further entrenching them. That further entrenchment, retrenchment that they seem to be incentivised to participate in, that's the part that's hard for me.
Peter McCormack: Yeah, I just want more power given to the largest group of people who have the least influence and get most fucked by everything; I want a vote to matter.
Harry Sudock: So you want proof of stake, America run by proof of stake?
Peter McCormack: No, I want proof of work. I don't know, I can't figure that analogy out, man; this is like the 20th show we've made in 3 days! Okay, if democracy was proof of work -- we love having you on our show, you're kind of my favourite bitcoiner; we need to admit that publicly. We've always wanted to make a show with you which is Everything is Good for Bitcoin because you've said that to us before, but we've never actually made it.
2017 will be remembered for the ICOs, and we will remember 2013 for Mt. Gox, so there are different eras and we've learnt from them. You would say 2013 kind of a made us stronger, Mt. Gox did, "Not your keys, not your Bitcoin"; 2017 made us stronger because it's like, "These shitcoins don't work", but it's not binary, people will make shitcoins and we've still had whatever, but things happen that make us stronger. When we look back at 2022, there's a lot of crazy shit that's happened, Harry. How do you think we will reflect on this in five, ten years' time and how did it make us stronger?
Harry Sudock: Yeah, to me it's very clear, Bitcoin does not fix financial contagion, and let's be very clear about what happened in 2022. What happened in 2022 is that there were a lot of loans that were made, either collateralised by nothing or collateralised by bullshit or full-blown fraud and theft, and we can step through all the examples, as has been done time and time again, but basically, there was a lot of leverage introduced into the system that had no basis for being there, had no laws of physics reason to exist.
What came of that is what comes out of any leverage bubble, which is it pops; a lot of people who thought that they were well-collateralised weren't, a lot of people who thought that they had money deposited somewhere realised they didn't, and it's the South Park meme, "And, it's gone". So, the bubble collapsed faster than anybody was able to salvage liquidity or salvage collateral. So, what we're going to look back on is this is not a crypto year, this is a financial infrastructure year that we're going to look back on and say, these are lessons, for better or for worse, the banking industry learned these lessons several times and do everything that we, as an extended industry, got burned for.
The traditional banking system does all these same types of things pretty well; they know how to margin a loan, they know how to handle collateral. There's a reason why your brokerage is not also your custodian in a stock market trading venue, for instance. So, if I have an account at E*TRADE, E*TRADE doesn't hold the stock certificates, Bank of New York might or Brown Brothers Harriman might or another venue might, and so there's a separation between the brokage and the custodian. I guess we all figured out that that's important this year, and why is that important; why does Bitcoin fix this? Because Bitcoin removes the need for the custodian altogether.
What everybody else, who's participating in other versions of crypto assets, has learned is that you can self-custody it or you can partition-custody. Both of those are better than comingling custody with brokerage, because if you comingle those things, that's how everything gets fraudulent and disappears, because that's what's happened whether it's Celsius, 3AC, FTX, pick your bad actor. All of those problems happened because people were allowed to borrow money without guardrails or without reasonable collateral.
Peter McCormack: If the traditional industry has learnt this in 2008 and many other times, how do we fix this in this industry? You can fix it for yourself, you can self-custody if you've got no counterparty risk, when there's a contagion, you've still got your Bitcoin, but there is still financial damage done in the purchasing powers' hit.
Harry Sudock: Absolutely.
Peter McCormack: Therefore, in four years' time, two years' time, three years' time, there are multiple ways this won't happen again; there might not be the liquidity in the market to finance these types of businesses or those who are lending might have better lending practices, but what else can be done? Human greed never goes away, people are always trying to find weird greedy ways to bring leverage into the system; is this a natural phenomenon?
Harry Sudock: Yeah, I think it is, I think it's a natural phenomenal to the degree that we, as individual actors, across the whole ecosystem, tolerate it. Yes, there's a price impact, but if you held your Bitcoin on a hardware device, you woke up with exactly as much Bitcoin as you did the day before BlockFi halted withdrawals or whatever, so there are these sort of counterparty-related consequences that you have either passively or actively opted into.
So, what you as an individual choose to opt into, which is to do business with a venue that does something that you either don't understand or you're exposed to -- and I think this is why the FTX story has been gotten wrong so many times, is that they had a terms of service that they lied about, they defrauded you, they committed a crime, and so why were they able to commit that crime? (1) they were bad, (2) they held collateral for more people than maybe they deserved to give them that collateral.
So, it's critically important to understand, if you do not self-custody your asset, who is custodying it and what kind of regulatory framework are they operating within; what does their balance sheet look like? Let's just say I custodied one share of a company with Fidelity, I'm able to get insight into Fidelity's balance sheet because they're a regulated entity, or if I'm looking at publicly traded company, for instance, like Wells Fargo or JP Morgan, I'm able to look at their balance sheet which says, "These are their liabilities. If they go away, what assets do they have to pay me when I sue them for losing my thing?"
We didn't do that, we're letting Google Sheet screenshots replace public company disclosures, and that's the lesson, and maybe this is cold, but we need to grow up and do business like adults and deal with each other like adults. Yes, we can do the Bitcoin think where we self-custody and we take possession of our asset, and that's critical and we should do that, but we also need to do business with each other along the way; accepting inadequate corporate governance or accepting inadequate financial reporting or auditing, we can't tolerate that. I think that's what got us into this mess with FTX, with 3AC and with others is that we let a piece of paper and a Twitter reputation do the talking instead of an audit, and shame on us.
Peter McCormack: But how do we enforce that?
Harry Sudock: By not doing business with them if they don't provide it.
Peter McCormack: Sure, but we're talking about five or six bad actors caused this entire contagion primarily.
Harry Sudock: Yes.
Peter McCormack: Other people will do business with them, so what I'm getting at is do you think this something that gets solved by the industry and an industry set of standards, self-regulation; or do you think it comes from central regulation? The reason I bring it up is I'm pretty well-known for not being opposed to regulation, and what happened after the 2008 Financial Crisis was new regulation, which puts stress tests on banks and their ability to survive, and they've largely worked.
Harry Sudock: Yeah, I think it's not about being pro or anti for me, it's just about being a realist, and I think what we end up seeing is in all of the above, frankly.
Peter McCormack: Yeah.
Harry Sudock: I think different jurisdictions are going to take different postures and introduce different rules. Like it or dislike it, it's about dealing with the reality in front of us and continuing to (1) work on Bitcoin and make Bitcoin more useful, and then (2) build exciting businesses with the time and the attention that we have.
We've got an industry full of incredibly smart and dedicated and principled people building exciting businesses, whether it's on Bitcoin base chain or Lightning or something else, continuing to use new products and stay open and excited about what this technology can do. To me, I try to really, really aggressively check myself and remind myself that, imagine if this was internet and right now it was 1994, what would I say to myself?
Peter McCormack: Buy more internet.
Harry Sudock: Exactly, buy more of it, but also use more of it, right?
Peter McCormack: Yeah.
Harry Sudock: Nobody had built all of these internet-enabled businesses yet, and so the best was going to come. Facebook wasn't going to be founded for another ten years, Google didn't exist yet, Amazon had barely just gotten started; the most important companies in the world had not been started.
Peter McCormack: It's crazy really.
Harry Sudock: So, check your time preference privilege, bro'.
Peter McCormack: I always look back at Instagram selling for $1 billion and think, "Jesus!" I remember the time when WhatsApp sold for $19 billion, I was like, "Wow, you guys have done well", but the guys at Instagram who sold for $1 billion? Didn't the Google guys have a meeting with Yahoo and they offered them $1 million for their original technology?
Harry Sudock: I think so, and then Snapchat got offered and turned it down by Facebook as well.
Peter McCormack: Yeah, it's madness.
Harry Sudock: Speak of podcast fatigue, I have a podcast recommendation for you.
Peter McCormack: Okay.
Harry Sudock: Do you listen to Acquired?
Peter McCormack: No, I'll check it out; hold on, did they just change their name or something?
Harry Sudock: No.
Peter McCormack: I think there's maybe a company that's become called Acquired; I'm sure I saw something on Twitter.
Harry Sudock: That's possible, and they're shitcoiners to be fair, but they're also awesome business historians, and they do like two- to three- to four-hour deep dives, and they do like one episode a month on a different company, and they do a really good history of a bunch of the companies that we've just mentioned.
Peter McCormack: I will definitely go and check that out. Okay, before we close out, a couple of topics; in terms of mining, looking forward, what do you want to look forward this year because it's been a rough time for miners? Obviously, I think it cut deeper than a lot expected; we've seen some massive companies in huge amounts of trouble, some refinancing. That goes back into that whole fucking contagion though, like people using ASICs as collateral without that consideration when the price drops the ASIC value drops, which is obviously an issue, but what are the reasons to be optimistic about mining?
Harry Sudock: The more time that I spend looking forward right now on mining, Bitcoin's going to do what it's going to do. I think the machine efficiencies are what they are right now; I don't think we're going to get way more efficient from here. How can we creatively integrate into electric systems? So being able to discover a second revenue stream for miners which is playing unique roles within energy systems; Riot does a good job of this, a bunch of the mining companies are thinking about this.
Peter McCormack: We saw that Hive thing today, 194 Bitcoin was it, or 184 Bitcoin in value from shutting down?
Harry Sudock: Exactly. So, being able to play these unique roles within energy systems is something that Bitcoin miners are uniquely positioned to do. So, continuing to spend time thinking about what role a mining company can play when it relates to grid stability, when it relates to average price, when it relates to all of these different kind of core energy functions, introducing a mining company to that ecosystem is incredibly positive sum is what we've seen, and so looking at new creative use cases for that. What Jack and Stillmark invested in in Africa around these stranded hydro mines --
Peter McCormack: Gridless.
Harry Sudock: Gridless, thank you, stuff like that, I think that's all tremendously exciting and I think that, as time goes on, those types of unlocks and secondary revenue streams, in addition to the block reward and subsidy, or the transaction fee and block subsidy, that's what gets me really fired up; I think that that matters regardless or bear market, bull market, whatever; that's important to work on in every market cycle.
Peter McCormack: What else are you looking forward to this year? Give me a zinger to end with.
Harry Sudock: What am I looking forward to this year? I'm looking forward to Bitcoin being born, frankly. We talked about it at the beginning, how do you explain to someone new, what's your Bitcoin kind of elevator pitch? The good news is I have to spend less time explaining what Bitcoin is, and so the household nature of Bitcoin, it's getting from 0 to 1, 1 to 10, 10 to 100; we're somewhere across that cycle now where maybe not everybody who needs Bitcoin is owning Bitcoin and using Bitcoin, but they've heard of it and they know about it, and some of that value proposition is becoming part of the mainstream consciousness. So, what that means is that I can spend less time telling people what Bitcoin is and spend more time telling them what Bitcoin does.
Peter McCormack: Brilliant. Harry, I love you, man.
Harry Sudock: I love you too.
Peter McCormack: I'm not sure when I'll see you next, but whenever it is I look forward to it, and thank you for doing this. You are my favourite bitcoiner; I love hanging out with you.
Harry Sudock: You're too kind.
Peter McCormack: Keep doing your thing, and yeah, I'm sure we'll hang out some time this year; might be Miami.
Harry Sudock: We're going to hang out more, we're going to hang out a lot this year is my prediction.
Peter McCormack: Okay, cool, man. Send people to Griid; where do we send them?
Harry Sudock: You can follow us @griid on Twitter or griid.com, but just follow me mostly, @harry_sudock on Twitter, and that's where I spend my time.
Peter McCormack: How do you pronounce your surname?
Harry Sudock: Sudock.
Peter McCormack: I've always pronounced it "Suddock".
Danny Knowles: Me too.
Harry Sudock: And you could also pronounce it lots of different ways.
Peter McCormack: Yeah.
Harry Sudock: I get all kinds, and I'm not --
Peter McCormack: Where's it from?
Harry Sudock: My grandparents are from like Poland, Ukraine.
Peter McCormack: Okay. By the way, have you been doing more on Twitter because that was one of your things we spoke about?
Harry Sudock: I've been doing more on Twitter.
Peter McCormack: How's that going?
Harry Sudock: You plant seeds in the bear market.
Peter McCormack: All right, man. Right, thank you, we will see you soon.
Harry Sudock: Yes, sir.
