Tetragrammaton with Rick Rubin - Jack Mallers

Episode Date: September 18, 2024

Jack Mallers is an entrepreneur, software developer, and founder of Strike, an application that focuses on making Bitcoin payments fast and easy. Introduced to Bitcoin in 2013 by his father, Mallers has since been a pioneer in the world of cryptocurrency. In 2020, he launched Strike, popularizing Bitcoin by leveraging the Lightning Network, which enables instant payments transactions across digital channels. His work focuses on transforming how people move money, and how to make financial systems more accessible, inclusive, and decentralized to everyone. ------ Thank you to the sponsors that fuel our podcast and our team: LMNT Electrolytes https://drinklmnt.com/tetra Use code 'TETRA' ------ Squarespace https://squarespace.com/tetra Use code 'TETRA' ------ Lucy https://lucy.co/tetra Use code 'TETRA' ------ House of Macadamias https://www.houseofmacadamias.com/tetra Use code 'TETRA'

Tetragrammaton. Tetragrammaton. Tetragrammaton. Tetragrammaton. Tetragrammaton. Tetragrammaton. I became aware of Bitcoin early 2013 from my dad.

How did your dad know about Bitcoin? The technical answer is he read a blog post written by Liberty Blitz, Michael Krieger, who went to Duke University, would write about economics and free markets and My dad also went to Duke. He's a big fan of Mike's blog. That's the technical answer. I think the more interesting answer is Both my grandfather and my dad were part of the Chicago finance scene which is very different than New York and Chicago finance as a whole was getting into Bitcoin around then.

Is there a Chicago exchange? Yeah, so my grandfather was actually the youngest ever chairman of the Chicago Board of Trade. Wow. And the New York culture is Wall Street, Goldman Sachs, insider trading, suits, deceitful, lying, relationship edges, right? Wolf of Wall Street, penny stocks. Chicago is the opposite. Chicago is born out of agriculture commodities, right? The Midwest

is where all of the crop that we consume, the commodities that we consume, wheat, corn, soy. And they built financial markets to transfer the risk of producing those crops to a marketplace because we don't want the corn farmer worried about whether it's gonna rain the future demand for the product. We want them making the most high quality produce. Can you imagine going through something like COVID as a corn farmer where you have to speculate

on the future of the market? We'd all be having diarrhea, right? And so they built that market initially, which was solving, you know, core fundamental problems. You know what year that market started? The Chicago market. Oh, man. No, I'm guessing. But I would say 60s maybe?

Long time ago. Yeah. Well, 60s is a long time ago, but as far as institutions go, it's not that long. Yeah. So I mean, the Chicago Board of Trade's been around far longer than that. But when they built the pits in Chicago, and my grandfather was also pioneered taking those exchanges public. So the Chicago Board of Trade no longer exists anymore. It's now the CBO and the CME.

The CME is one of the most successful businesses in the world. It's the largest exchange in the world by volume. And so they really pioneered those, we call them derivative products. So these risk transfers, so a futures contract or an options contract. And again, it was about taking future risk away from those that are producing the commodity,

especially commodities that we consume, and transferring that risk into a highly efficient market. And so they were about solving fundamental problems to advance society and increase human flourishing. And so the culture, my favorite story of my grandfather is the hunt brothers It's a big West Texas billionaire family. They tried to corner the silver market in Chicago so after the US divorced itself from the gold standard and there was a fear in The value of the dollar and people running the hard assets the hunt brothers had a massive silver position and tried to corner the

Markets in Chicago and my grandfather told him to get out of town and ran him out You know, that's a very famous Chicago finance culture is we don't do under-the-table handshakes. It's integrity ethics morals It's a very brick-by-brick city Midwest right and so they ended up going and cornering the market in New York. And so that type of culture and energy is, in my opinion, why Chicago got Bitcoin far before New York, both because the Bitcoin miner is very similar to the corn farmer. Bitcoin is designed to act like a real world commodity. And then the energy of being for the people, you know, like my family and Chicago would be at war with regulators with

bigger and larger government. And so a currency for the people resonated, I think, with the city. So it wasn't just my father, but everyone where I was from was getting into Bitcoin in 2012, 2013. And then the CME, Chicago Mercantile Exchange, they were the first legitimate financial player to launch a Bitcoin product. They launched the Bitcoin futures contract in 2016. That's really interesting. So yeah, I dropped out of college in late 2012. And it was right of college in late 2012, and it was right around then, late 2012, early 2013. Would you talk about things like commodities with your dad growing up and your grandfather?

Yeah, of course, yeah. Unfortunately. You say of course, but I mean, most of us don't have that experience. Yeah, yeah, I mean, my dad is my best friend, so I definitely wouldn't be here without him. And a lot of what I know today and who I am, just as a man, comes directly from him.

Now, what's interesting is so many people in the financial industry are wary of Bitcoin because it's a new model that upsets the old model that is where their expertise is. So it's interesting that your dad would embrace something new when so many would reject something new. Yeah. I mean, he's had what he calls a short dollar thesis,

which plays very much into Bitcoin. Yeah, so my grandfather was chairman of the Chicago Board of Trade. He ended up founding the Discount Futures Brokage that my dad, they were co-founders together, father-son. And it became one of the biggest Discount Future Brokages in Chicago. He sold that to Man Financial and so very entrenched in markets. My dad's summer internship between college semesters was trading the currency pits in Chicago.

And so to see a global currency that is owned by nobody that's digital, so it has all the properties you'd want in a money, but acts and is designed as if it's a real world commodity. Explain about how a commodity works in general, just the idea of what's money's function. Yeah. It was a time when we would exchange, I had a chicken who laid eggs and you had a cow who made milk and we would trade some eggs for some milk

and then we would both have both. So that was the original form. Yep. And then what happened from there? Barter is what we would call that. Yeah. You know, it's funny. I think it's not well understood that money is a technology, and it's one of the oldest

technologies in human history. It was to solve exactly that problem of barter, but more specifically, it's known as the coincidence of wants, which is, you know, do you coincidentally have what I want and do I coincidentally have what you want? For example, you grow apples and I grow bananas. The only way for us to exchange is if you somehow want bananas and I somehow want apples. In a civilization of ten people, that might be fine. Someone build the homes, someone go hunting, hunting someone get fresh water and we can all exchange at dinner But as civilization of 10 million people

Right, we need to find a way to scale and so that's what you know Doing this podcast you can't go into a grocery store afterwards and say I'll take two ribeyes because I just recorded a podcast It's not an exchangeable market good. But you can monetize this podcast for money. And so money, I think, is actually our time and energy in an abstracted form. Would you say that what money is is an agreement? Is that fair to say?

No. I do think that it's mistaken as such. I think it's a massive mistake and misunderstanding that money is just this conceptual agreement that if we all agree a bottle of water is money, then it's money. But again, money is a technology, just like a plane or a car. So if we were all to agree that an apple is a car and you go try and get on the road, you're going to get hurt. But at one point in time, gold was the commodity that was the basis of a lot of things.

But it only was that because we agreed that it was. Right. Well, I would argue that gold was the best at fulfilling the role of money, and that's why it was money. You know, if you look through the course of human history, human flourishing has a correlation to the hardness of our money. It's a technology that we use to scale society so that— Explain the hardness of money.

Hardness is in reference to how hard it is to produce more of. I see. And so— Does reference to how hard it is to produce more of. I see. Does that mean how rare it is? Yeah. So, for example, let's do the dollar. How hard is it for the US government to produce more dollars? Relatively easy. We found that out.

Okay. What about real estate? The thesis behind real estate is it's very hard to produce more land. But is it hard to produce more real estate? Well, surely there's going to be a Manhattan building sometime soon with 10,000 stories, right? So it's not impossible, but it's certainly harder to produce another penthouse than it is another dollar.

Okay, what about gold? Gold is the hardest metal, meaning it's the hardest metal to find more of it. It's inflation rate, so new production is about one and a half percent to two percent a year. So these things are the best that we know of to fulfill the role of money where you want something hard, you want something saleable, you want something liquid, you want something divisible, you want something portable, you want something that's very easy to verify. Difference between fool's gold and real gold, right? And so you can track civilization and you can see that as our money gets harder, it's

easier for us to store value into the future. We as a species become far more future-oriented, which lowers our time preference. And I think that's the story of civilization and human flourishing, is our ability to place a premium on the future. If we're able to value and coordinate for a better tomorrow than expend today, then society and human beings get better. And so for money as a technology- So gold was used for a long time in that role. Yeah, because gold was the best at fulfilling.

Money is the market good that you acquire to exchange later. In contrast- And gold was global as well. Correct. Yeah, in contrast, you acquire a cheeseburger to consume it and eat it. You acquire a car to transport. You acquire money just like a normal market good,

but to store it and exchange it for something later. And gold was the best at that for a long period of time because of its hardness. We couldn't find anything harder than gold because what's really interesting is this is in all market dynamics with more demand comes more supply. If everyone in the world wants an iPhone, Apple will make eight billion of them. And interestingly, that's the case for commodities as well. With more demand for copper,

we're able to produce tons of it, right? And so what's interesting about gold is it's harder to find new production than copper, than silver, than aluminum. And so it's the hardest metal. And that's why it won out as money. Because obviously the more you're able to produce, you're diluting its value. In currency markets, we call that currency debasement, which results in things like inflation.

Explain that. Currency debasement and inflation. So if a Van Gogh painting, a lot of the value and perceived interest is because it's a one of one. It's Van Gogh can't make any more paintings. He's dead. If everyone that wanted a Van Gogh painting, we could print one. It's going to dilute the value of the painting itself. So with more supply, the value is diluted.

And that's true in the US dollar. So every time the US government prints dollars, they're diluting existing shareholders of the dollar, the existing equity pool of those that hold the money. And they're making those dollars worth less. Another way of thinking about inflation, inflation is thought of as the price of goods price and dollars going up Conversely, it could be the value of the dollar going down. So using an example, let's say hypothetically There's total of a million dollars. It's all that exists. Yep, and a million dollars is associated

It's all that exists. And a million dollars is associated with the equivalent amount of goods that you can get for a million dollars, correct? Yep. And now if you print another million, so now there's two million, the goods don't change. There's still the same amount of goods. Exactly.

Which means that now the two million represent the same amount of goods, so really the value would be half as much as what it was. Exactly. Is that right? That's correct. OK. Yeah.

The production of goods and services is not going up as much as the production of currency. And so the goods and services naturally will appreciate in price known as inflation. And by printing more currency, you're devaluing and debasing the currency unit itself. And it actually goes a step deeper, in my opinion. The mental model I use is money as our time and energy in an abstracted form, meaning you work on a podcast, you mow a lawn, you fix a windshield, you fix a windshield, you run a company, you bag groceries.

In exchange for that you get money. And so money in theory is a reflection of your contributions to society. What are you? You are the time you have in this life and the energy in which that life is expressed. And so money is the tradable market good to store and exchange your time and energy. So when a government debases the currency, by proxy they're debasing you. It's requiring more time and energy of you

to have a family, to have groceries, to have gas. And so yes, currency debasement is exactly that, but then furthermore, to have currency that's operated by government is one of the most heinous acts, in my opinion, because they're able to steal the time and energy from the collective populace. That's how I think about inflation, not so much as your Whole Foods bag goes up, but really the time and energy required for you to have a life that you deem to be worthwhile goes up, which is the biggest form of theft

and crime you can do to a populace. Do you know much about when the dollar was backed by gold and when it changed and why? Yeah. Well, technically in the US it changed in 1971. There's enough evidence to state though that it was far before that, likely in the 30s. And it has a direct correlation to the World Wars. It was the Bank of England, actually. You can make an argument, actually, that fiat currency, which is government-issued currency—the

dollar, the euro, the pound—can't exist without war. And war might not be possible without fiat currency. Because what happened traditionally, government bonds would be a government wants to raise money from its population for some effort. We need to protect ourselves. We need to go murder somebody. We need to stage off some natural disaster event. And the population would go get their gold and give it to the government.

The government would promise them some form of return over some structure, like the 10 year with certain interest rates or such. And the people would band together for the betterment of the country. But it was a very fair and free system because if the collective population didn't believe that they needed to go murder someone, they wouldn't give the gold. What the Bank of England did for the World Wars is the bonds weren't selling. The people were like, by nature of not giving the gold, the people said, why are we getting involved in this?

Right? This is effectively what they're communicating to the government. We don't need to be murdering people. We don't need to be in war. We don't need human blood. I'm going to keep my gold." And the Bank of England issued a loan to itself. So two employees from the Bank of England ended up buying the rest of the bonds with

a line of credit from the Bank of England. And so that is a very confusing way of saying they printed money out of thin air to finance themselves. And that was the beginning of the divorce of gold because now the number of pounds has gone up with the form of credit and the gold backing the pounds is not match up one to one. So now you're running a fractional reserve, you're printing money out of thin air. And it was around then when governments were trying to finance war and didn't have the

gold to finance it. So that is when you started to see a divorcing. Like there was obviously tons of inflation in England after that. It took the United States until 1971 to effectively admit we don't have the gold that backs your US dollar notes. But through the world wars, I think, is when credit money started. LMNT. Element electrolytes. Have you ever felt dehydrated after an intense workout or a long day in the sun? Do you want to maximize your endurance and feel your best?

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Element electrolytes are sugar-free, keto-friendly, and great tasting. Minerals are the stuff of life. So visit drinklmnt.com slash tetra and stay salty with Element electrolytes. LMNT. Tell me the difference between a global currency and a country-based currency. Like when it was gold, you could use that anywhere in the world. Yeah. The adoption of gold by countries was almost mandatory because it gave you credibility

to perform global trade. A country wouldn't want to trade with you if what they were getting in return was a liability that you could print more of, and it's effectively a contract of trust. They wanted a physical commodity, like a hard instrument that you knew you couldn't just print out of thin air. And so countries adopted gold to be able to exchange globally together.

And that was the initial gold standard, as we call it. That was the period of time, as we call it. That was the period of time where in which government currencies were backed by gold and no government would want to exchange and perform global trade and exchange commodities or other goods and services if your currency didn't have a physical commodity underpinning it.

And obviously today, that's very where you know post-world war two We live on this, you know dollar standard where the US Divorces from the gold standard what gold used to represent is now, you know, the bond market US treasuries Which is just US debt So obviously very different where we're back in the world of the dollars backed by the full faith and trust in the United States, as opposed to physical commodity. So how is Bitcoin different than dollars?

So we don't barter anymore. We want to be able to hyper specialize in things. We want humans to be able to create a podcast, to fix windshields, to be creative and express their energy and their time and however they want and exchange that for a money market good. It scales society. It makes us better. Now if I were to exchange my time and energy, let's say, for loaves of wheat bread, that would be a terrible idea and I would get punished for that because that bread would get moldy and go bad.

It's not very easily portable and I can't send it on my phone to Europe in a minute. Now let's do dollars. Dollars are easily inflatable and easily debasable. So I'm storing my time and energy. I'm storing today's work in dollars. And the US government can debase that at any point and they do it frequently. And so that the time and energy I've contributed to this world is increasingly going down in value to everyone else.

So if you have the same number of dollars today that you had 10 years ago, those dollars 10 years ago would have been worth more than they're worth today. Yes, in a term that we call purchasing power. Yeah, a way of thinking of that is a house in America in 1970 was $25,000 and that same house is now $400,000. So the value of the dollar and what it gets you is increasingly going down the more that they issue them and print them. And so that's not necessarily a good store of value either for my time and energy.

So where do I want to put my time and energy in theory if God worked to create money? What would that look like? Well one, you'd want it to be definitively scarce. We've never had a money that is finite in supply. Gold is close. Real estate is close, but quite literally finite. It needs to be easily portable. I need to be able to move it when I want and move it fast and cheaply.

It needs to be divisible. One of the reasons gold didn't work is it wasn't portable and divisible. So you have to give it to governments for them to issue notes, and then once the gold was concentrated in governments, they flipped the script. It needs to be liquid and sellable.

What you want out of a money is at any point in the future, I can exchange it, period. For example, real estate isn't that. I can't sell a fourth of my house on a Sunday night, right? So these are all the properties that I would want to store my time and energy to both be able to save it and then exchange it. And Bitcoin is the first man-made money to solve these problems. And that's a very interesting insight.

We found gold. We didn't make gold. We found land. We didn't make land. Bitcoin is a human engineered technology to solve the problem that is money and to operate an economy with 8 billion people in it. So what is Bitcoin? Bitcoin is the only money in the history of our species

that is fixed in supply. It is the only money in the history of our species where more demand cannot find more supply. It is the most portable money in the history of our species. I can move Bitcoin instantly in less than a second, anywhere in the world of our species. I can move Bitcoin instantly, in less than a second, anywhere in the world, at any time. It is very easily divisible. It's bytes of data.

So I can divide a Bitcoin up into as many pieces as I want. I don't need a government-backed note to split up Bitcoin like I would gold. It is very easy to verify an issue with something like gold is in order to verify it's real, you have to melt it down. It's very expensive. It's very time consuming. Bitcoin is verifiable in less than a second at no cost to me. And then that's part of the technology is that it's verifiable. Yeah, it's built into what Bitcoin is. Yeah. Is that correct? Yeah, exactly. It's technology called cryptography.

But yeah, it's all of Bitcoin is built on modern day technology. It uses modern day technology to design a real world commodity that God would have created for us and you take all of those properties and what you get is the best money in human history and as we talked about before, the hardest money in human history. And as we know there's a direct correlation to how hard a money is that we have access to and our ability to value the future, our ability to lower our time preference, our ability to innovate and contribute. And so in my opinion, it's very obviously the logical next step of human flourishing. Why would there be as much resistance as there is to Bitcoin?

I think because change is hard and scary. It's difficult to adopt something you don't understand. But what's funny is you can look at it two ways. You can say, wow, this is such an obvious technological advancement for our species. Why wasn't this adopted yesterday? Or you could say Bitcoin was invented 15 years ago by an anonymous? Individual with no marketing budget No corporate headlines this person didn't take it public with Goldman Sachs, and it's already a trillion dollar asset class

That's materially changing the world. How long did it take Google to make the impact? It's had righter than 15 years. And so you can look at it two ways. You can go, holy smokes, this is going really fast. Or you can maybe glass half empty. And it's also not for profit, which is different. So much of Google's incentive to grow is profit motive. Correct.

Bitcoin is building not based on profit because it's finite and it is what it is. Correct. Is that correct? Yeah. Bitcoin is not a corporation and it's actually very important in the way that it was invented. It doesn't bias anybody. It is equitable and fair for everyone.

Super important. Satoshi Nakamoto, the inventor of Bitcoin, even had to do the energy work to get their bitcoins. There's none printed and issued and granted and given to any person. So it is an incredibly fair and equitable system. It reminds me of like the Big Bang. You cannot reproduce the way this thing has come into creation. And so that's correct. It is a digital commodity. And you know what's even more mind-bending?

I actually like to think that Satoshi didn't create Bitcoin, he found Bitcoin. You know, because you wouldn't say someone created corn or created aluminum or created gold. You found it. And in that way, obviously- Or Einstein's equation equals MC squared. He didn't create that, he found it. That's exactly right.

That's exactly right. Bitcoin is an equation, is that correct? Yeah, Bitcoin, the core invention of Bitcoin is combining something called proof of work with the difficulty adjustment, which I can explain if you'd like but That was the explosion of unlock explain it. So proof of work. It's actually very fascinating Who's invented a very long time ago. Bitcoin is the compilation of a bunch of computer science advancements into one concoction that sparked magic.

Michael Saylor often says it's Satoshi started a fire in cyberspace. It's like we've been trying to rub wood for days and days and this one sparked. Proof of work is this idea that as we live in an increasingly abstracted world in what we call cyberspace where what you see online and in the digital world isn't physically real. We may call the thing on our computer a folder but it's not actually a folder. A file isn't actually a file. It's an abstraction, right?

If you've seen the movie The Matrix, it's like when Neo realizes the spoon isn't real, then he can bend it, right? And what Proof of Work tried to solve is, well, can we get anything in this digital world that is physically real, which is like, well, wait a second. No, a folder can't actually be a folder. There's a difference. What Proof of Work does is it, you have to produce real world energy and specifically computer computations

to produce an arbitrary data set, an arbitrary random number. The only way to actually get that number is by just doing a bunch of random guesses. You don't get an advantage by taking calculus too at Stanford University or by having supercomputers at Facebook headquarters. The only way is its pure randomness, which means you have to just use a computer to guess once, then guess twice, then guess three times.

That requires real energy to be expensed. Atoms in the universe have to move to do that. So that proves real world work. What that real world work ends up producing is that random number. And then that random number could be used as proof of work is why it's called that. It's proof of real work. And in a sense the whole point of it is the proof of work because the random number doesn't mean anything. Exactly. You're not working towards an actionable goal other than showing that the work was done to get to this thing that doesn't mean anything. Is that right? Exactly. Proof of work was initially created to solve for email spam

because there's no cost to write an email. And so one of the problems is that we all get thousands of emails a day of a bunch of nonsense. And so it was, can we impose a physical cost on someone to send an email? And Dr. Adam Back created proof of work in saying, what if in order to send an email. And Dr. Adam Back created proof of work in saying, what if in order to send an email, you had to prove computational work,

which if a normal human sending a few emails a day is no problem, but a bot farm sending a million a day is computationally expensive. And that's why it was created, is the arbitrary data means nothing except for the fact that it's proof that you had to expend real world energy. And energy at the end of the day is the currency of the universe. It's something that we all have access to, that we can't print, that doesn't bias anyone,

right? Time and energy is what composes us as humans. And so proof of work was a monumental breakthrough in computer science because it's the only thing you'll see on a digital screen that is physically real. It's physical proof. And so that was invented a very long time ago, but no one can really crack the code of using that to create a digital commodity. One of the reasons is because okay we now have a way to enforce an energy cost on an action. So if we were to create a money

digitally we would say you know it's gonna be a giant ledger which Bitcoin calls a blockchain updating the state of who has what. A very important question is who gets to write to that ledger? Who gets to update that? Because if it's the US government, we're in the same system. The answer becomes whoever solves the proof of work function. Anyone can do it.

You just have to- Whoever earns it. Correct. You can only get it through earning it. Yes. And the only way you could earn it is through doing the work. Is for proving that you did the energy and the work. But then the problem is, well, how much work? This is the part that no one could crack. Is, well, if you set, you know, 50 push-ups worth of energy or one day's worth of MacBook Pro energy. Well then people are going to be able to contribute more than that, hyperinflate Bitcoin, produce them all or someone's going to have some advantage.

And really at the end of the day when you think of money as time and energy in an abstracted form, proof of work is the energy part. But what about the time part? What Satoshi thought of is his mind blowing is he denominated the amount of energy in time, not in watts, not in CPU processing. He said the amount of energy required to write to this ledger is 10 minutes worth of energy. What does that do? Well it sticks Bitcoin in time rather than in the ground.

Gold if demand for gold goes up, we can produce more gold. Supply will go up because there is more gold in the ground. So gold is stuck in the ground. Satoshi inventing using proof of work and what's called the difficulty adjustment. The difficulty adjustment is exactly that. Adjusting how difficult it is to solve the proof of work. He targets it to be solved for around every 10 minutes. So what Bitcoin does, this distributed computer, this distributed state machine, is it's measuring how quickly people are solving the proof of work, which is a proxy for how many people are trying to do it and want Bitcoins.

And if it starts solving it in nine minutes, eight minutes, seven minutes, it makes the problem harder so that it corrects back to 10. If nobody cares about Bitcoin and people are taking hours to solve it, it makes it easier. And so by that, Bitcoins are stuck in time, not in the ground. So the reason it's harder to mine a Bitcoin now than it was earlier is because so many more people are doing it, and it can only be unlocked every 10 minutes. So the more people who are trying to unlock it, the harder it becomes to be the one to unlock it. Correct.

What you'd want in a god-made money is a money that is backed by time and energy, because that's the job it has to capture it in the market. And that's what Satoshi realized is it uses proof of work for the energy piece and it adjusts the difficulty of that work to stick its schedule denominated in time. And so then what you get is time and energy money, which is clearly engineered for us human beings, but it carries the properties of commodity money, right? Like it's issuance schedule is very similar to gold but that was the big unlock, was holy

moly. We can impose a physical cost that requires energy, not a physical cost of if you let me stay at your place for a weekend or if you give me your corporate shares or if you take me to the horse race. It's an energy cost and Then to stick an asset in time where when Bitcoin was invented We knew how many bitcoins would be issued from now until the day they're all gone

No matter how the future went how close are we by the way? We are very close. We're about over 19 million, I think. So there's only- And 21 million is the total. 21 million is the fixed supply. And based on the 10 minutes, do we know when that is? When does the 21- 2140, roundabout, yeah. In 2140?

Yep. And how does Bitcoin change when that happens? Does it not change? Doesn't change at all. So it's infinitely divisible. So we don't need any more Bitcoins to meet the demand for the world. We can divide the existing pie, right? It's the equivalent of we don't need to, or a very funny joke on the internet is, you

know, people are like, you know, one pizza isn't enough for the whole world. You're going to need more pizzas. You're going to need more 21 million bitcoins. And the idea is, well, you know, we can divide infinitely the one pie for the whole world, right? So it's it's divisible. It's portable. It's sellable. It's liquid. It's verifiable and To me this is we're living through like the digital gold rush actually another ingenious Unbelievable insight by its creator is how the bitcoins were issued because 2140

is a long ways away, but they're effectively all gone. Why did they do that? They issued the majority of the coins in the very beginning. There's many interpretations of why that decision was made. In my opinion, one of the most important is bitcoin is fairly distributed to the people, very important. When I talk about the story with my grandfather of the Hunt brothers trying to corner the silver market, if someone has a material position in a commodity like money, they can expend a lot of influence.

And the fact that this person was able to leak it on a mailing list and build the monetary policy where it was fairly distributed, stuck in time, to the populace on the web, by the time now that it's part of a presidential election, we all have it. You know, you're seeing BlackRock and Michael Saylor and these big corporations and governments try and now compete in ownership for it, they're barely eclipsing 1% of the total supply. And so all of the people own this thing, which was again, it goes to show I think the intention that this person had. It was a true gift to our species.

Their coins have never moved. They didn't monetize it. They didn't get any credibility. They weren't named Time 100 List. I think in many ways we as a society are only as good as our money. We're only as good as our money is hard. So much of today's life happens on the web. Squarespace is your home base for building your dream presence in an

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The US dollar removed any relationship to the physical world. When it gave up the gold standard. When it gave up the gold standard. And then what that says to any rational market participant is the value of this thing is going to go down because there is no physical prohibitive cost to the US government printing what we now know as time and energy. They're not just printing currency. They're printing time and energy. What they do is they borrow from our future. It's very close to time travel.

If I have my own currency that I enforce the population use and I take debt, I'm borrowing time and energy from their future. Their time and energy. Correct. From the future. And then if I can't make whole on that debt, I can just print time and energy, which effectively debases the one that's being expensed today. And so what you realize is you're like, the dollar is only going to go down. Well, what do I do about that? I clearly don't want to hold dollars. And so my dad's thesis-

Do you think he felt that way related to it not being backed by gold? Do you think he would have had the same position if it was backed by gold? No. It was- It has to do with if it was backed by gold? No. It was. It has to do with it not being backed. Yeah, yeah. And this is not just him, it's really everyone. It's a widely held opinion in markets.

And even in civilization at this point, nobody stores, you'll never find a billionaire with one billion US dollars. In fact, they probably have negative dollar balance. They're borrowing against their assets, right? They hold equity in companies. They hold real estate. They hold harder assets that are harder for people to make more of and dilute their share. And so his thesis was hard assets like real estate.

And he also thought exchange stock, exchange equity would go up because if you debase the population's currency, you turn everyone into a speculator. It's not enough to just be a good bartender or just be a good artist or just be a good corporate CEO. You have to do your job and then be a money manager and then understand Japanese central bank policy, real estate markets, futures contracts because you have to earn your living and then find a way to save your living because the money isn't doing the job that it's supposed to do in the market.

And so exchange stocks should go up because everyone is a speculator, whether they know it or not. And so that was his position forever, and he called it short dollar, right? He's monetizing this idea. And then when Bitcoin came, you know, him and I often talk about Bitcoin's the best expression of currency debasement. It is the antithesis of fiat, and so it is the creme de la creme of short dollar. And I think that for him clicked, I'll tell you exactly when it clicked.

That clicked when all the Silk Road stuff happened actually. I don't know about that, tell me about that. The Silk Road was an online drug marketplace which used privacy technology called Tor with Bitcoin to create a truly free market on the web where people were able to sell everything between marijuana to heroin. You can get anything. The thesis was people should be left to their own devices to exchange for goods and services.

You don't need any central government or any central interference to tell you what's good or bad for you. People will do things that interest them and if there are consequences then those will be felt, people will learn and eventually we'll all do what's best for our bodies. We don't need both non-elected and elected officials to tell us how to be us. And so its attempt was to create a marketplace that was truly free. And it was a global marketplace online.

It was a global marketplace online. Founded it. It was a website. Yeah. You had to access it through a technology known as Tor. So it wasn't on the World Wide Web. They call it the Dark Web is what it's known as. But again, that connotation is negative.

It uses technology where it's untraceable, extremely private. The technology is actually developed by the US government initially in warfare. But it used that and combined with bitcoins is one of the easiest ways to track us all is by our money. You have a bank account, you swipe your Visa card, you use Apple Pay. These corporations and governments know everything about you, not only where you are and what you're spending, but what you like, how much you're making.

And so by using those two technologies, it created this marketplace where anyone can buy and sell anything. I never used the service, but if you have conversations with those that did, it wasn't about doing drugs and getting super effed up. People were medicating themselves, learning a lot about which drugs were higher quality, which drugs.

I mean, it had review systems like Amazon. It was like a phenomenal, peaceful, free market. It also was extremely safe because you weren't going to a back alley under a stadium to get any good or service you needed. It was being shipped to you in the safety of your home. So it removed your reliance on sketchy dealers in the neighborhood. It was defining. Now whether it was net good or bad, I'll leave that to speculation, but the point for

my father was the government tried to stop it and they couldn't. And a lot of people thought, well, that means that it's going to change the drug marketplace and you're going to be able to go to CVS and get heroin. It's like, no, no, no, no, no. To him, they ended up shutting it down, but they shut it down through the privacy technology they found the server. They couldn't shut it down because of the Bitcoin piece. And to him, that was the aha moment.

It was like, hold on. If they can't shut this thing down, the Bitcoin piece, to stop heroin sales on the internet, they can't change the monetary policy either. So he knew it was secure. on the internet, they can't change the monetary policy either. So he knew it was secure. Secure that it wasn't going to be able to be inflated, it wasn't going to be able to be controlled. That was that big aha moment for him while everyone was focused on this has everything

to do with the war on drugs. The illegal use. He wasn't focused on the illegal use. He saw this is proof of concept, that this is hard money. The illegal use he wasn't focused on the illegal use he saw This is proof of concept that this is hard money Exactly, Rick. That's exactly right. I understand Exactly. It was rules with no rulers Are there any hard currencies around the world government backed

hard currencies? No, you know what's funny is for all of the, you know, our currencies are no longer backed by gold. All the central banks around the world surely buy a lot of it. So governments still have a relationship with gold and clearly still value it. And there's newer projects where certain governments have built packs and relationships and are trying to experiment with potential gold back instruments.

But the simple answer to that question is no, not today. How did the euro change the countries in Europe? It's really important to understand that money wants to be won, meaning I don't want to have to store and exchange 30 different currencies. As soon as Europe became an economy and a market that exceeded just a specific country region, you're going to naturally find the tendency to have one money that everyone stores and exchanges time and energy for as opposed to 30.

So that's a good thing. So it's a good thing. It's not only a good thing, it's almost again if money is a technology just like an airplane, if you try and use a banana as an airplane, you're going to get hurt and not ever do that again. If you try and use 30 currencies as a money, you're going to get hurt and have a serious issue. If you try and use wheat as money, you're going to get hurt in the equivalent of trying to fly an airplane that isn't an airplane.

So it's a technology and the way this technology ends up trending is one money wins out for very obvious reasons. You want to hold the thing that everyone else is using as money, that you are secure in being able to exchange at some later date and that you can sell at any point. And so, you know, I'm doing trade in the lira and all of a sudden I need pounds or something, right? Like you can imagine, I do today's work. Okay, what am I exchanging that work for?

30 different currencies, 50 different currencies, the market wants one. And that's what's also particularly interesting about something like Bitcoin is, today we live in a world where we're all connected. We've never been in a more interconnected world in an economy this size of eight billion people. And so even having pound euro dollar is often too many.

The world tries to solve this problem today by having the dollar that you've heard this world reserve currency, right? So anyway, money tends to be one and monies compete typically over monetary policy, over their hardness. The reason people prefer to hold dollars over Nigerian Naira is because the dollar is harder. The US government prints far less dollars than the Nigerian central bank prints Naira. So monies are- Still?

Yeah, monies are very competitive and they tend to be one. There's one crown winner. That's why when people are like, we're going to have all these coins and all these tokens, no, we're not. Like if I walk into a subway and I say, I have 47 tokens, they're like, oh, but you're missing the 48, you can't shop here. No, money wants to be won. That's how they compete over monetary policy, over their hardness.

We've talked about Bitcoin thus far in terms of how to hold value. Hold value? Value, yeah, store value into the future. Storage of value. In terms of using it, like now, in most places you can use a dollar or you can use a credit card that represents a dollar. How does that work with Bitcoin? So there are places that accept Bitcoin, and I think that that'll increase with time. But the most important piece is, as long as Bitcoin is liquid in the major currencies

that we all use, if I have a billion dollars worth of Bitcoin, I can move a billion dollars worth of value anywhere in the world, anytime, for a couple pennies worth of fee. And it'll get there depending on how you do it, seconds, minutes, hours. That's insane. And that billion dollars is liquid in US dollars. So if I then wanted to sell that and buy, I don't know, a Major League Baseball team, I could do that transaction all in 10, 20 minutes if I wanted to. And that's the most important part, is if I can sell the Bitcoin for dollars.

So the fact that it's liquid, we're not thinking of it as replacing the dollar, or we're not thinking of it replacing the dollar yet. Yeah. Yeah, I think really what Bitcoin competes with is central banks, is that some private group sets the value of our money, which again, sets the value of us, our time and energy of who we are. Explain that, setting the value. So the Federal Reserve, a lot of their job, effectively, you know, they have two mandates, but effectively their job is assigning the cost of money.

They do this in various ways, but the most popular is through interest rates. And so by defining the interest rate, you are subscribing, you know, how much it costs to access, you know, more dollars. When interest rates are zero, like we saw in COVID, you get highly inflationary times that follow because it costs me nothing to go print more dollars, to go get infinite loans. I don't owe anything on the creation of new money.

When they raise interest rates tremendously, you see banks fail, you see real estate markets fail, you see recessionary tendencies because they're increasing the cost of access to money. So they try to hit certain mandates like employment and growth of the economy. But at the end of the day, what they're doing is they're able to manipulate the value of where we're all storing our labor. It has been cherished in tribal wisdom traditions for thousands of years.

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Warning, this product contains nicotine. Nicotine is an addictive chemical. Let's talk about the growth of the economy for a minute. We often hear GDP as the how you calculate how the country is doing. But often it seems like the GDP can go up, but regular people's lives don't seem related to that number. Yeah. I think, you know, one could maybe say you could look at the metric of new friends for

a human to see how well they're connecting with the world and expanding their worldview and building relationship. But a really important thing to understand is how much money are they spending to acquire those two friends? Anyone can get a lot of friends if they're spending billions of dollars to acquire them. So the metric isn't just GDP, it's debt to GDP. How much money is the US government borrowing to produce the growth? And the ratio you're interested in is that exactly?

So if the US is almost 130 percent debt to GDP global debt to GDP is 350 percent these are numbers that have never been worse Which is how much money are we borrowing verse how much growth are we producing to pay it back? So yes, so if you're borrowing more than the GDP, the GDP doesn't matter at all. So the US is growing, but not in a healthy way. It's borrowing more than it's growing, is that correct? Yes, yes, exactly.

I never knew that. I never heard it explained so simply. Exactly. So that's why when you see the deficits are going up, the US debt is growing. Yes, we are producing growth, but we're spending too much to produce that growth. And the growth is not very natural. So yeah, I think, you know, I talk about this often. If you're in debt to someone, theoretically you have two options.

You can pay it back like an honest man. or you can say, I'm really sorry, I took out a loan, I can't pay back, I hope you forgive me, but I'm not going to be able to make you whole and we call that a default. Pay it back default. Now, the US government conveniently has a third option, all governments with their own currencies, which is you can devalue what you owe. If I owed you 100 US homes, I'd be like, shoot, I don't want to default and I'm going to have

a tough time paying that back. That's expensive. But what if I could devalue the price of a US home and make each US home worth a penny? Now I only owe you... I can pay that back. That's the same thing with the US government is by printing currency, they can devalue their debt. It's very obvious what's happening is we are in so much debt, we're not producing enough

growth, the US government cannot default. They also, quite literally, the math we just walked through can't pay it back. So what's the only thing they can do is print currency. And so when everyone's surprised about inflation or surprised about these numbers, it's just very obvious. It's the only way out for them, which goes back to my dad and I's thesis on short dollar and Bitcoin. Bitcoin's the best performing asset in the last 15 years.

And by the way, it's not particularly close. The last decade alone, Bitcoin's average annual return is 63%. Insane. Insane. And I think what that says, you could say that says a lot about Bitcoin and the invention, which is true. You could also say that says a lot about Bitcoin and the invention, which is true. You could also say that says a lot about the dollar and the level of debasement that we're living through.

So yeah, all of this stuff is very obvious, but it does crack me up when the US is like, look at our GDP, we're growing. It's the equivalent of like, look at all these people that want to hang out with me. It's like, well, what's the context? How much money are you spending for people to be around? How much debt are you accruing to grow? How are other crypto coins different from Bitcoin? I think the main one is that they do have a central group or a founder or a lead that did print and issue tokens for

themselves or with some bias. Other crypto tokens are much more like a central bank than Bitcoin in that way. I think of them as they're less legally accountable ways to be a central bank not more interesting ways to be a central bank, not more interesting ways to be like Bitcoin. So for example, Ethereum, there was a foundation that created I think 70% of the initial supply, gave it to themselves, and then pre-sold these tokens on a private market, gave certain access, defined their own price. So that to me is much more like I run a company, I created the company, and I owned 100% of the shares, and then I've divvied those up, I've given them

to certain employees I like better than others, I've sold them to some investors at a certain price that I agreed on. That doesn't sound like money, an equitable, fair money that the world can use trustlessly to exchange. doesn't sound like money, an equitable, fair money that the world can use trustlessly to exchange. So. Tell me about centralized versus decentralized in general.

Yeah, there's a phrase by Nick Szabo that goes, central third parties are security holes. You don't want trusted parties. If you need to trust a government or a corporation or a CEO, those are security holes. You don't want trusted parties. If you need to trust a government or a corporation or a CEO, those are security holes. These people can be co-opted. They can change their mind. They can bias people. They can bias themselves. And so you want to build a system that's resilient to any one central party of trust. That's the whole point. I think decentralized has gotten co-opted almost. It's this voodoo thing that carries no definition. We're in a decentralized dentistry. We're gonna

Decentralize medical what the fuck you guys talking about really what you want is you want to relieve any? Well, there's no Authority that can turn against you. Mm-hmm. Does that be right? Yeah, there's no trust required. And trust is really a proxy to control, right? Like so there's no entity party individual that has any outsized control. There's no admins in the system.

And so therefore, it's a system that can operate without the need for trust. So Bitcoin is, it doesn't have a controller, it doesn't have a boss. It's its own system. Yeah. And again, this is the commodity-like properties that Satoshi wanted, which is who's the boss of gold? Who's the boss of corn? And so I think people get really confused, they confuse themselves because they think of Bitcoin is similar technology to Google and Facebook, right? It's digital and we're living in the internet age, so I don't understand that part.

And it's like, yeah, but there's no boss to aluminum either. It is commodity-like in that way. And it's like, yeah, but there's no boss to aluminum either. It is commodity like in that way. And it's nonprofit. That's another thing that's important. There's no profit motive built into Bitcoin. You can use it as a currency and you can make profit, but the system itself is not profit seeking. Yeah, it's like a public park.

It's for those to go and use as they need, but it's, you know, technically it's a protocol, but yes, exactly right, is it's a public utility for humanity to use as perfect money. But it has no ruler, controller, biased corporation, rules without any rulers was the goal, 100%. And it's even harder than gold because it is finite. Yeah.

Gold is finite, but you can still find more. Correct. If you look at the history of gold, with more demand comes more supply. If the gold price 10Xs, then the supply of gold will surely 10X as well. We can go find more. The problem is the reward for finding more gold today

isn't enough. But if you increase the reward to find more gold, you can find more gold. What's fascinating about Bitcoin is it's the only money where more demand can't find more gold. What's fascinating about Bitcoin is it's the only money where more demand can't find more supply. But what does that mean? More demand has to find a higher price.

You can find more supply, but the supply comes from the existing holders, not from the ground. The only way to find more supply not from existing holders is, again, to solve time travel. If you're able to travel into the future, you can hack Satoshi's stock in 10 minutes worth of intervals. But as far as I'm concerned, no one can time travel. So Bitcoin is stuck in time. And if it's stuck in time, then you want more Bitcoins?

OK, 10x the price. You'll find some sellers. And when you get to the 21, then it's purely will be dividing and trading and it becomes more valuable as people want it. Yep. Exactly. Yeah. I mean, so you can say bitcoins are acquired through proof of work in Bitcoin mining, which is computationally trying to get this random number. You can also say Bitcoins are acquired via proof of work of people doing their jobs,

like working in the real world, providing value to society and exchanging that value for Bitcoins. So when some rich mega trillionaire is like, I love Bitcoin now and I want a bunch of them, they're exchanging the work they've done in their life to acquire the amount of wealth that they have into Bitcoin. If they want more Bitcoins, then they can increase the price. Let's say Bitcoin's 60,000 today. I want 100,000 of them. There aren't 100,000 for sale at 60,000, and there's none in the ground, and you can't

time travel. Try again at 61,000. Try again at 62,000. So as soon as you start buying them, the price goes up. Right. It's very simply supply-demand. If demand increases and the supply can't, and that's what you see. Who are the leading figures in Bitcoin? I understand nobody owns it. I mean, everybody owns it. Yeah.

But who would you say are the leading voices, who are the most instrumental figures in the Bitcoin world? I think Bitcoin is truly an ecosystem in the way that developers, those that are technically competent enough to work on the technology, have an important voice. I think corporations that are building products for people to utilize this technology, buy it, store it, send it, receive it. Important voice. Those that mine bitcoins do the proof of work to secure the network have an important voice.

So I don't think that there's such a big hierarchy in that way. It is really in the eye of the beholder type of thing in the network. I know people that value Bitcoin because of its privacy characteristics. I know people that value Bitcoin because of its ability to transport. There's people I know that do cross-border payments with Bitcoin, and I know people that like Bitcoin because we're living through a highly inflationary time and they need to store their wealth. So I don't know.

I think it depends on the context. Tell me the story of El Salvador. I had just founded the business I run today. And part of my thesis is, well, hold on a second. If Bitcoin acts as a physical commodity, we call it a bearer instrument, it's not a line of credit, it's not an abstracted form that points to real money, it's digital but physical, which is like, wow. And it can move instantly and at no cost anywhere in the world?

Well surely we can improve global payments, cross currency payments, unlock new forms of payment. And so I bought a ticket at the time to El Salvador one way to prove out that concept. There was a community in El Salvador that was really into Bitcoin and so I knew that they wouldn't think I was crazy. So I bought a one way ticket to prove out cross-border payments from America to El Salvador. There's a big cross-border payment corridor, remittance corridor there, because at least

at the time, people would leave El Salvador to America, find work in America, and remit money home. And so it was a proof of concept trip. What would be the cost for someone doing that? Yeah. Someone moves from El Salvador to the US, they earn money in the US, they send money home to their family. What happens in that transaction in the old version?

Well, it's very expensive and very slow. Arguably the most fascinating point though is that a lot of the costs are fixed, meaning it's not 1% of any value. 1% of $10 and also 1% of $100 and also 1% of $1 million. It's just a number. A lot of the costs are fixed. So the smaller the amount that you're sending, the bigger percentage of that money that's being taken.

Exactly. Understood. Exactly. So it really disadvantages. People who are sending small amounts of money. Exactly. So it really disadvantages people who are sending small amounts of money. Exactly. And so that was a lot of my unlock was not only can we make it cheaper and faster for everyone, but can we unlock newer markets? What if I wanted to bust tables in South Florida as a young Salvadoran that's trying to help his or her family and I could send $10 home

instantly at no cost at any point. You're not only improving on what's existing, but you're enabling new because the fixed cost of the legacy system prohibits certain participants in use cases. And so you're almost, we talk about GDP, that's GDP growth. You can make the argument that the velocity of money has a correlation to GDP Which is economic activity and opportunity and so that was the idea I went to prove out was exactly that and Yeah, I went and The product worked really well and people were using it so much so that the government

DMed me on Twitter Really? Yeah, they reached you. Yeah I'll never forget. I was sitting in a sushi restaurant in the first floor of my hotel and I got a DM from the president's brother. It was Incredible actually it wasn't hey heard you're in town or what are you doing here? the president's brother. It was incredible actually. It wasn't, hey, heard you're in town or what are you doing here?

It was the longest Twitter DM I've ever received and it was about their vision for culture, for money, for architecture, music, art, talked about who they wanted to become. I mean, it was a very thorough, in-depth DM, and somehow me being in the country and what I was working on, like, inspired that message. And I read it, and I respond,

and then it was a we want to meet. And the we want to meet was, I was like, well give me a week is what I asked for, seven days. Because I was terrified. I mean at the time El Salvador is the most dangerous country in the world, supposedly. I felt safe when I was there, but supposedly. And a government in a country that had gone through a civil war lost their own currency. Central America had a history of authoritarians at the time.

And so I was terrified, very young, felt I was in way over my head. And I wanted a week, call my dad, call my investors. And they said, you have 24 hours, gave me latitude and longitude. And I remember calling my dad and just telling him I loved him and we'd been in this together and the way he had raised me was do what's right, no matter how difficult. Did you know anything about the president at that time?

Nothing. I also, it's important for people to know I'm not into politics generally, even American politics. You know, I've always felt in my heart that the best way for me to effect change is to build stuff and to do things. And so- Politics is not about that.

Exactly. I didn't know anything about anything, but I knew enough to be like, oh, this could go good or bad. Both were an option. And I called my dad and told him I loved him and that, hey, if this is how I go out, I'm not mad at that. And obviously, it ended up being amazing. And again, it was so fascinating. Bitcoin was a small piece, the attraction

for hard money. They wanted hard money for their society. They wanted technology. They wanted to be forward thinking. Welcome to the house of macadamias. Macadamias are a delicious superfood, sustainably sourced directly from farmers. Macadamias, a rare source of omega-7, linked to collagen regeneration, enhanced weight management, and better fat metabolism. Macadamias are healthy and brain-boosting fats.

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What has happened now? Bukele, the president that everyone's now probably aware of, he was new. They were coming off a civil war, I believe in the 90s, which decimated the country. Awful. Terrible, terrible. So much so that they lost their own currency. So they're operating on the US dollar. Very violent country.

Everyone felt unsafe. Everyone- Was the US involved in the Civil War for it to end up being on the US dollar? No, I don't believe so. I think that what you see in a lot of countries with failed currencies is that they adopt the US dollar. I see.

Yeah, and these countries also have a really awful relationship with the IMF and the World Bank, where these are institutions that finance loans to these countries that need to maybe get back up on their feet, need a little helping hand. But the structure of these deals is really disadvantageous. You know, what you want your kids to avoid is like cyclical spiraling debt, you know, when your credit card bill is, you can never climb out of it. So the IMF poses as something that's helping these countries when really they're presenting

them with onerous contracts. Yes, victim behavior, taking advantage of someone that's in a vulnerable position. Wow, that's really crazy. I didn't know that either. Yeah, it's messed up. And so that was the position they're in. And when talking to them, the most fascinating part, I remember the first meeting, I had a few buddies

that both grew up with me and one that worked for me at the time. I mean, the company was tiny at this time, like a few folks. But they came with me on this trip. And I got back. Everyone was ecstatic that I made it out, I didn't go to jail or something. And they're like, what happened?

I said, the first hour we must have listened to music. It was fascinating. It was about art and philosophy and vision. And we talked about the Bitcoin stuff, but it was more this energy that there was a country where they felt they could rebuild and inspire, and not only inspire themselves, but inspire the world. Talked often about if they were able to achieve what they wanted to achieve here, what it would do for other countries in Central America, in Latin America, throughout the planet.

And I then spent like consecutive meetings over and over, and we would go to different restaurants and cuisines. We would go to the studio where they would listen to music. And it was a very fascinating experience where, you know where I think people in the media now think it was headquartered in some computer room where we're just working on Bitcoin and that's far from the truth. Their vision for Bitcoin was interwoven in where they think the country should go and society at large.

They think society should be tough on crime, clean, hard money. Government shouldn't operate very big. The less government owns, the better for the people. These type of philosophies. Were these all things that they learned watching Singapore? I often call El Salvador's ambition at the very least, yeah, the Latin American Singapore. At the time, Singapore didn't come up much. It came up, but so did everything.

I mean, even we would talk about some of the destruction in popular US cities, right? So everything came up. I mean, it was fascinating. Like they were drawing the future that they wanted to see, which I'd never seen that. I've done Silicon Valley investor meetings. I've been on mainstream media and such i'd never sat down

And someone taken out their ipad and showed me a sketch Of what they wanted to be a part of where they drew it and I was like wow and there was definitely I would say singapore influence, but It certainly wasn't We saw what singapore did and we're going to try and do the same. It was their own vision their own Yeah, and they're proud of that What happened from those meetings? Yeah, so one of the concepts we thought of was

making Bitcoin legal tender in the country both legal tender and The government acquiring bitcoins for their own. Does that mean instead of the US dollar? It was and the US dollar. It was not to attack or disrupt what already existed, but that Bitcoin could be extremely additive, is that it attracts tourism, give favorable laws and regulations for those that want to use it and build on it.

So it attracts technology, it attracts new business. And also just support the people owning not only a hard money and arguably the best money, but a money that the government doesn't have a direct relationship with. It is money for them. Bitcoin is the highest form of property rights. It's a physical instrument that I can store in my brain. How insane is that?

And so by supporting and enabling the people to hold something that you can't confiscate from them was a really like defining idea for any government in the world. Even like the US government, I couldn't imagine them making Bitcoin legal tender in that way. Was that the first country in the world to do that?

Yeah, at the time, all of this was novel. In many ways, it felt artistic. We were creating, and it was all new and ambitious. It was incredible. And how has the adoption worked out thus far? You can Google this and build the opinion that you want. In my opinion, phenomenally, tourism is up hundreds of percent. New business up, revenue up, GDP up, remittance cost down.

So like the thing we did set out to solve, working initially. And so I think for one of the poorest and devastated countries in the world, it is a resounding success. One of the other things they understood really well is that Bitcoin is an open network. Anyone can participate and join, and you all effectively act as the same team in that the government knew that when adopting it, they'd also be on the same team as Jack Dorsey, as Michael Saylor, as Aaron Rodgers. You know, you've athletes, entrepreneurs,

businessmen, hedge funds, and you're plugging into that. And it gave them a tremendous rebrand as well, where this was a tech forward, innovative, curious, progressive, a lot of energy in this move and it connected them with a lot of the world that you can only dream of having that type of relationship as an emerging market in Central America. So I think an unbelievable resounding success and the amount of investment they've got. I mean, Cathie Wood is one of the most popular American investors, and she's visiting this

country that she probably couldn't point out on a map four or five years ago and saying that she is going to invest and predicts the GDP to 10x in the next five years. Wow. And these are, I mean, I can confidently say at the time I was there, nobody maybe outside of myself and the government thought those things were possible. So in my opinion, resounding success. Are they doing an annual Bitcoin conference there as well? There is an annual Bitcoin conference. It's not hosted by the government.

One of the things that we did disagree on and that I still stand firmly with is you have to let it go. The government built a- But they can support it. They don't have to control it, but they can support it. I think the best way for them to do that is actually to support others to build. So, you know, one of the things we did disagree on is they wanted to build a wallet, a government-built Bitcoin wallet.

Their intentions were good. They wanted people to be able to trust the fact that this wasn't a move where a bunch of Americans are going to sell you technology and monetize you and is that you know You can be confident that we're in this with you and we're gonna support you and we're gonna have your back and build something for you guys because you know, I'm a Millennial white male from Chicago. They wanted to make sure that the people knew that this wasn't my thing,

that it was the country's thing. But I thought it was a terrible idea because you don't want the government to build anything. It feels centralized. Even if it's not, it feels like it is. Yes. You want the government to be so supportive to everyone else where I'm not the only person building there. Yeah. And so they... So the government could give you incentives to build there, but that would be the extent of their involvement.

Yeah, exactly. And they went through that journey. And you can ask them. It's far from perfect. It was never supposed to be. But now I think they've landed in a great spot where the laws regulation, phenomenal, the tax treatment, phenomenal. The tax treatment, phenomenal. If you operate and run a business there, no taxes on any of your Bitcoin stuff.

So they're encouraging innovation to be built there. And that's the way. And so, for example, the conference is actually not hosted by them, but they're very supportive and enable those that want to host events and conferences to do so. That sounds good. That sounds like a good, a good situation. Yeah. What was it like living there? It was cool. I had mentioned earlier, I didn't go to college. So a lot of my life was kind of spent

initially in my room, hacking on stuff with my dad. You go to these boot camps and stuff and no one's my age. You're like learning the code with 50-year-old men, I'm 18. So I think that was really like one of the first forms of travel, where it wasn't visiting buddies studying abroad or anything. I was immersing myself in a culture that at times made me feel inspired, uncomfortable, very different, language barriers. And so I really enjoyed that, looking back on it, for sure.

The contrast from America to this country, that was also the first time I'd experienced that where I was like, wow, Both felt the privilege of being from America and what it means to be a developed nation and have access, we talk about energy, have access to be able to connect to WiFi whenever I want, television, transportation, something else washing my clothes besides me, some machine. I felt that.

It was very poor. Education was sparse, right? Access to energy was not nearly the same. So it was the first emerging market and the first time I was traveling, not from like Chicago to London. Yeah, yeah, yeah. Cool. What year did you buy the one-way ticket? That was February, 2021. And have you been back since? Yeah, recently.

Has the country changed at all since? Oh, totally. Really? Oh yeah, yeah. Just in three years. Oh yeah. My favorite story to tell, I was there for the inauguration of the president,

he was reelected. And my favorite story to tell is when I landed in the airport. And it hit me all at once. The airport was nicer than O'Hare, Chicago's airport. Clean, new, beautiful. Just, you know, like the attention to design. Design meaning, you know know how do you want an

experience to be felt and perceived when creating it you know and in Chicago there's no art. Things are dirty. Colors are dull right like the black is now gray. The green now looks gross and in the airport was beautiful and the staff had energy. There's just a lot of hope you can feel by just landing there. I imagine in the US, like in the 1960s, airports probably felt like that. Exactly, yeah. It was just cool to be around people

that were inspired and hopeful. And then a lot of the buildings and architecture, you can clearly see the new investment into the country and the new capital coming in and the businesses that we're supporting and a lot of tourism. But the airport was like the biggest night and day because the first time I was there, it felt like I landed in a place that had bombed itself

and was struggling to be a country. And recently it was, you know, it was one of the nicer airports I'd been to in a very long time. That's incredible. Incredible. What may fall within the sphere of Tetragrammaton? Counterculture? Tetragrammaton.

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Tetragrammaton. Ancient wisdom for a new age. Tetragrammatin, the canon of fine objects. Tetragrammatin. Muscle cars. Tetragrammatin. Ancient wisdom for a new age. Upon entering, experience the artwork of the day. Take a breath and see where you are drawn. Have any other countries been inspired by El Salvador in terms of taking on Bitcoin as a serious piece of their story? Yes, definitely.

I think the unique part about El Salvador is it was a country that did not have its own currency. There's a huge difference between a country to adopt Bitcoin that's not forgiving its ability to print money, to print time and energy versus one that is. So I think that's the big leap is, you know, is there going to be a country that's brave enough to say, we're gonna forgive the ability to print currency,

print time and energy, debase the populace if we mess up, and instead adopt something that we can never control. That has not happened yet, but it's certainly inspired. Well, why would a government want to give up that power? Makes sense. Exactly. The people would have to demand that for that to happen. Exactly.

Afterwards, the media and everyone's asking me, who's next? Guatemala, Argentina, you know, it's very, what are the neighboring countries that have maybe similar interests and similar energy? And I thought they were kind of missing the bigger picture, which is, to your point, it's not very natural for a government to forgive that. I thought more to the United States to be the next to quote unquote adopt Bitcoin. I don't know about the legal tender piece, but to own it because the US is the world reserve currency and how they're going to manage the global debt to GDP, the domestic debt to GDP, the fiscal situation that they're

in and also the fact that to me Bitcoin is far more American than the dollar. Bitcoin's about equality, right? Like everyone on the network is treated equally. It's about free speech. It's about technology. Hope. So had Bitcoin existed at the founding of America, chances are the founders would have used Bitcoin. 100%.

I mean, Thomas Jefferson, there's numerous quotes of many that have come before us saying one of the greater dangers is a banking system that controls our money. And so absolutely. It's funny, you know, I do think often that maybe folks 500 years from now, 1,000 years from now will look back and be like, man, I can't believe that there were humans that lived through

the technological revolution of the internet and the radio and all of this crazy, but money kind of lagged. There was a 50 to 80 year period where they were still using fiat, but they were all on the web. What do you think that was like? It feels like Bitcoin is the natural extension of monetary technology in this digital age, but it it lagged by a couple decades of generation. And it's better in every way than what we use now, but it's not controllable by the people who control the current system. Yep. Yep. You told the story of an El Salvadorian comes to Miami, he works, he sends money back to his family,

and in the old model, the cost of doing it would really cut into what that money was. What are other ways that fiat money is biased against poor people? Well, the biggest is by far looking at the wealth gap. You could tell a lot measuring the health of society. You can look at the middle class and we have no middle class anymore. You can just look at the middle class and we have no middle class anymore. You just look at America even. The wealth gap is so large that less than 10% of America owns more than 90% of the assets

in the wealth. How that comes to be is very obvious. If you are printing money, you're debasing those that are holding the dollar, you're also conversely increasing the wealth of those that are owning assets. If you did own a home in 1970 and that home was worth $25,000 and is now worth $400-something thousand dollars, then those that are holding assets are getting increasingly more wealthy. If we take it back to time and energy in an abstracted form, you're having a class of individuals that are not contributing more time and energy to society,

but are being rewarded in new money and wealth creation. It's the story of the haves and the have-nots. Yeah. The haves are benefited by the system. Yes. The have-nots are hurt by the system. 100%, and then you have those that can't yet afford assets That are in dollars paycheck to paycheck trying to build savings that are working backwards if you think

Recently the US housing market has been inflating at over 20% per year If you're not getting a 21% raise every single year, Which nobody does. Which of course nobody does, you are literally not making progress towards becoming a homeowner. And so what you get is a massive wealth gap, and you get a population that feels at war with each other. I personally think, and subscribe to the Fix the Money, Fix the World,

a lot of the hate and the anger, I think is driven by broken money. The current system clearly benefits those that hold assets, the wealthy. What's fascinating about Bitcoin is the fact that we all have access to it. So talking about Salvadorans, when was the last time a Salvadoran had access to own something that's going up 63% year over year on average and getting them out of inflationary pressures. Never, never. But before Bitcoin, not everyone had access

to Miami beachfront real estate. Not everyone had access to secure tons of gold protected by armed men and women in their basement vault. It was hard to get an asset to get out and Bitcoin is an exit door available to everyone. But you can clearly see in the wealth gap, the destroying the middle class. Like the problem is if you're on the first floor and you need to get to the third floor, so lower class, middle class, upper class, but there is no second floor. It becomes impossible for both, by the way, not only for those on the first floor to get

to the third, but the third floor can't get to the first, which is equally as bad because you don't have to do any real work for the world to continue to stay up on the third floor. One of the things Bitcoin solves is, again, proof of work, not just computationally, but in order to persist wealth, you have to be doing valuable things for people. You don't just get to be rewarded from the spigot. What are other problems that decentralized currency solves? The biggest problem is distributing the monetary policy.

That's the biggest thing, is just making sure that nobody can print it. No one has access to the energy. But I think from there, everything else flows. It's naturally global, in my opinion. So there's no bias to a country, there's no bias to a populace, there's no bias to a certain part of the world. It's then naturally equitable and fair. What it does for property rights, which we touched on briefly, but property rights is one of the most core tenets to society working.

Being able to say, like, this thing is mine and no one can take it from me. The US built a lot of its growth and its standing on supporting property rights. In theory we protect people from walking into your house with a bunch of guns and saying this is now my house. Like no you have a right to your property. But that's legally bound through the judicial court system. So there's a lot of trust there and sometimes people make the claim that it's not always

fair. Bitcoin is the purest form of property rights and that it's property that you can store in your brain. Actually, fascinatingly, it's the only property where someone that's trying to steal from you is incentivized not to kill you. If you have a bunch of gold or a bunch of real estate and I murder you, it's now my real estate and my gold. But if you have a bunch of Bitcoin,

well, you can't kill me, that's the only way to be sure you won't get it. I wouldn't be threatened by the gun. So that to me shows how entrenched and powerful this new form of property rights is, just such an advancement in money and in property. And these things are directly correlated to human flourishing. Tell me about the security of Bitcoin. Can it be hacked? No. Can it be stolen? Well, you know, I personally believe that growth comes from more self-ownership.

What I mean by that is I think today a lot of people play victim to I'm not doing good because my president didn't do good for me, my boss didn't do good for me, my partner didn't do good for me. It's like you own and control your own destiny. And I think we need to get back to a culture and society that values self-ownership and self-direction and taking control of their own future. I give that context to say it is true. Nobody is there to do Bitcoin well for you.

You can effectively hire a company by becoming a customer to do stuff for you if you'd like, but your Bitcoins can be hacked. And it is a level of financial ownership where you can theoretically secure your Bitcoins on your own and if you make a mistake, there's no one there to bail you out. That's the whole point.

So yes, bad things can happen, but that's not to Bitcoin itself. It's to your instance of using it or your company's instance of using it. So the system itself is deeply secure, cannot be hacked. The applications above it, sure. In the same way that some bank can be hacked, but it doesn't mean the entire United States are right. It's just one-off instances. Some bank can be hacked, but it doesn't mean the entire United States, right? It's just one-off instances.

What are the best practices if you have Bitcoin to maintain your security, if that's the case? The top tier standard, the gold standard, so to speak, is holding the keys yourself, holding the coins yourself. There are many ways to do that, many products that actually help you do that. That's what's fascinating is there are business products that help you control coins yourself. Pretty cool.

You know, usually corporations sell products that enforce and retain the control they have. But it's what we call cold storage self custody, where you custody the asset yourself. And there's tons of like a block has a product called BitKey, Cold Card, Ledger, Trezor for anyone listening and wanting to give these things to Google. These are all hardware devices that have different approaches to allowing you to store your Bitcoins on a device that you can put in a safety deposit box, store under your

mattress, put in a vault of your own. And there are different ways to distribute it where I can hold a key is what it's called, my partner can hold a key, my business associate can hold a key, and it takes two or three of them to move the coins at once in case someone gets compromised. So it's actually a really cool property of Bitcoin that it is technology and technology is never done being built, right? Like it's an infinite project that theoretically can always get better. And so it's programmable in this way, which is different obviously than gold in real estate. For it to work with the current infrastructure, do you need to change Bitcoin into dollars

to use them? Depends on what you want to do. Yeah. Like in El Salvador, for example, no. A lot of the country accepts Bitcoin natively. But yeah, I think people initially get tripped up in their head of if I have my entire net worth in Bitcoin and I need to buy something that doesn't accept Bitcoin, am I stuck in an alternative universe?

And the answer is no, of course not. In fact, I own only Bitcoin. I don't own any dollars. The way I do it is I spend on credit cards. So I borrow the currency that only goes down and I get to spend it without having to own it which is the US dollar and the banking system gives me this line of credit on a credit card and then every month if I need to pay down some expense I just click a few buttons, sell the Bitcoin, done.

But in that way I'm storing my money, my wealth, my labor, my contributions to society, my time and energy in a money that protects me and is designed to be good. And that sounds like a really easy way. What you're describing is super easy. The best. Your buying procedure is no different than it was. The only thing that changed is how you're paying the credit card bill essentially? Yep. Yeah, the US dollar kind of acts as an Abstracted payment rail to connect to the life. I want to have but where I'm actually

Storing and doing the core exchange is in Bitcoin if you think about it over the last year Bitcoins gone up a hundred 100%, which is another, it's a fancy way of saying Bitcoin's doubled in price. So for me, everything in my life has gotten half off. So owning the US dollar is inflationary, meaning everything else around you gets more expensive. Owning Bitcoin is deflationary, meaning everything around you gets cheaper.

So I live my life very peacefully. Everything around me gets cheaper, more attainable for me. My dream house when I got into Bitcoin was maybe 100,000 Bitcoin. My dream house today could be half a dozen Bitcoins. And so I just sleep well knowing that my money is stored in the hardest asset in the history of our species. And then I spend and interface with the world with these dollar things because that's just where society is right now.

That's not an issue though, it's pretty convenient. What is Bitcoin for countries? This is actually a funny story. We're gonna open source the work we did with the government and just let everyone have access to how we thought about the legal tender law. Sharing the model, basically. Sharing the model. There was friction because right after the announcement,

I heard from people the IMF reached out to me and I mean just like straight up no bullshit. I was scared at the time and so There was some derailment for that. It's the first time I stayed in a hotel under like a so they don't want it They don't want the information to be spread on how to do this. The IMF has a relationship with Argentina right now that says, we'll give you a new loan if you promise us you won't use Bitcoin ever.

Tells you a lot. Are they taking that? Do we know? I think they did take that. So, I mean, there's some expiry to it. So, expiration. It's not a forever deal. And I don't believe it was under Malay, which is the new president. But yes, the IMF reached out to me. I ended up presenting to the IMF. I recorded it myself and published it on my own. So I really do believe it's important that everyone has access not only to the model

and the work but the conversation. I like all conversation public and accessible. I like all work that can be public and accessible to be. And so yeah, we published as much as we could. Yeah it was interesting I guess I'll say. And I still to this day am not confident the The IMF loves the idea of emerging markets adopting this accessible open source money. Well, it goes against their business model. Exactly.

Exactly. Yeah. El Salvador now since buys one Bitcoin per day, they own I believe over 5,000 Bitcoins at this point. And they now have a treasury asset for the country that's worth, I'm trying to do the real math in my brain on current exchange rates, $400 million, $500 million, half a billion dollars. Which they didn't have before. Of course not. If Bitcoin continues to compound like it is, they can go to the IMF and say, it was really

nice knowing you guys. We appreciate it, but we got it from here. And how beautiful that is. What did they have to do to do that? Nothing. They just adopted this commodity-like big bang of an invention to free themselves of any relationship that has influence over the country that they want to have and the culture that they want to have and the people that they want to develop and yeah that I think

seems to be the fear. Have any other countries reached out to you directly? Yeah I tried to be really clear. One of the difficult things at the time was there was a group of, there was people, I would say no specific group, that thought, I'm too involved in this project. This can't be my thing. And it needs- Well, is it your thing? No.

So then- It was just at the time, there was like, you need to- You're promoting an idea. Correct. Then there was also at the time, people that were like, well, why aren't you living there? Why aren't you more involved? Why aren't you risking more? And so I've made a very particular effort to kind of be clear, it's not my thing.

I'm very proud of the role I played, but it has to be the country's thing. It has to be Bitcoin, this network and community of people's thing. And so I didn't do anything other than advise and be there and help create. And so people have reached out to me under that. But everything over that, where it's, you know,

we need you to perform a certain task, I say, that's not what this is about. You know what I mean? So, but that's how it works for everything. Like even in this presidential race, you know, I've talked to some of the candidates and it's, if you want my advice. I love doing that, I love being helpful if I can,

and working towards a version of the world that I wanna see, I love building towards that. And so whether you're government, or a business, or an individual, a friend, family. So, definitely in that context. What's the relationship between Bitcoin and Web 3? I have to admit, I'm not the biggest fan of Web 3, Web 5, DeFi, in the sense that I feel like they are weaponized.

I don't even know what these things mean. This is not specific to Web3, but there's a culture in quote unquote cryptocurrency and blockchain that preys on the fact that people don't totally understand it yet. I call it an arbitrage on the trend. Are you familiar with an arbitrage trade? No. Let's say to my left, I can buy apples for $1, and to my right, on the other side of town, I can sell them for $1 and to my right on the other side of town I can sell them for $10.

That's an arbitrage where I'm making $9 every single pop. That's monetizing a market inefficiency. In theory both should be at $5, but in practice the market is operating inefficiently and I'm able to take advantage of that. I think that other cryptocurrencies and other blockchain concepts, I call it an arbitrage on the trend where there's a regulatory arbitrage where you're doing things that historically have been illegal but the law has not adopted to the new technology yet. So when I say Ethereum and others like it are acting more like a less legally accountable

central bank than they are like a Satoshi Big Bang commodity-like invention. So there's a regulatory arbitrage and then an informational arbitrage where I can create money in my basement, pay Justin Bieber to tell a bunch of millennials that it's the next big thing and take advantage of the fact that they don't understand the difference between Bitcoin and Justin Bieber coin. So I think that this is a giant arbitrage movement. I think eventually the apples trade at $5 each and the trade is over. And I think eventually these things end up washing away. But Web3, Web5, DeFi, these things don't mean much to me.

They sound like abstracted concepts that are more marketing and sales than they are substantive value. What I will say, Web3 is the one that was from Ethereum in these type of cultures. Web5 was by Jack and Block. You know, that energy is more about, can Bitcoin be the currency of the internet? Now that, I think is phenomenal, and is a lot of the core energy of the project.

So I agree with that, but why can't you say we're working on making Bitcoin the currency of the web? Like why do you have to say like we're decentralizing? Like all these abstracted concepts that take you so far away from the work itself that it becomes impossible to understand What do you think the next steps for Bitcoin are what do you see? What do you think the next steps for Bitcoin are? What do you see in the next year, the next three years, the next five years? How do you imagine things changing? I think Bitcoin is marching itself towards being the world reserve currency.

I really do. People I think are ashamed to admit they care about the price. A lot of folks in this space, I'm in it for the revolution, right? We're in it for El Salvador, not for the number to go up. I call bullshit because the price is the only metric and insight we have into how much of the world is using it as money, right? If you go back to solving barter with money, it's how much of the world is storing their cash balance, their labor.

So if the value goes up, it's more valuable. It's working. It's doing its job. Right. And so I think Bitcoin continues to march in higher price, in higher market cap, because it's being adopted more as money. I fundamentally believe that monies compete, monies want to be won. Monies compete over monetary policy, over their hardness, and Bitcoin is the inevitable victor.

So that's where I see the world going. I will say I had this epiphany once, this really high level philosophical framework to think about Bitcoin where I think what death means to life, Bitcoin will do for money, meaning the only reason I value my life in the way that I do is because I know for certain I'm going to die. If I could live forever, I'd go to the gym in 100,000 years. I'd look to build relationship and have family in a million years. I'd eat donuts for the next 10,000 years and think about a better diet in the 10,000

in first year. Time as a resource is infinite but my time isn't. It's the fact that my life is finite and has a fixed supply that allows me to value today. If there's infinite amounts of dollars or in theory infinite amounts of gold, Elon's talking about, he can get more in Mars. How do you value the paycheck you're getting now? Bitcoin as the only finite money we've ever invented is what death is to life. It allows us to value today. And so it's not just about money's competing

and the new kid on the block being the victor. But what does that do to the world? This like fix the money, fix the world. If all of a sudden we can value our time and energy with a finite resource, what does that do to our time preference? What does that do to our ability preference? What does that do to our ability to transport value into the future? What does that do to our ability to value the future

and place a premium on tomorrow versus today? I think, yeah, we reintroduced the middle class. I think the wealth gap closes. I think relationships strengthen. I think we get a lot more peace, human flourishing. I think we enter a chapter of our species that will be looked back upon as pivotal and historic. Music Thank you.