#547: Balaji Srinivasan — Centralized China vs Decentralized World, The DeFi Matrix, Ascending vs Descending Trends, Bitcoin Mining as Energy Storage, Reputational Civil War, and Maximalism vs. Optimalism

We have an important preface, an important caveat, an important disclaimer before we get started, and here it is, provided from my lovely lawyers. Here we go. I am not an investment advisor. All opinions are mine alone. There are risks involved in placing any investment in securities or in bitcoin or in crypurrencies or in anything. None of the information presented today. or really any time, since you might be listening to this any time, is intended to form the basis for any offer or recommendation or have any regard to the investment objectives, financial situation, or needs of any specific person. That includes you, my dear listener. So Everything you're gonna hear is for informational entertainment purposes only. And with that said. Please enjoy.

Hello, boys and girls. Ladies and gentlemen, this is Tim Ferris. Welcome to another episode of the Tim Ferris Show. My guest today is a repeat guest. His first episode on the podcast roughly a year ago was one of the most popular of the last year. His name is Balogy S Srinivasan. Who is Bology? Well, on Twitter, you can find him at Bology S. That's B A L A J I S. He is an angel investor and entrepreneur, formerly the CTO of Coinbase and general partner at Andrees and Horowitz. He was also the co-founder of Earn.com, which was acquired by Coinbase Council, which was acquired by Miriad, Teleport, which was acquired by Topia, and Coin Center. He has been named to the MIT Technology Reviews.

Innovators under thirty five, he's won a Wall Street Journal Innovation Award and holds a BS, MS, PhD in electrical engineering, and an MS in chemical engineering, all from Stanford University. Bology also teaches the occasional class at Stanford, including an online MOOC in 2013, which reached a mere two hundred and fifty thousand. Plus students worldwide. The mirror is a joke, obviously. That is a large number. To learn more about Biology's most recent project, sign up at 1729.com. That's 1729.com, a newsletter that pays you. They're giving out Bitcoin, BTC, each day for completing tasks and tutorials. Subscribers also receive chapters from Bology's free book, The Network State. And I highly encourage you to check out Tim.blog slash B2. the letter B and two for show notes and timestamps for this episode. Feel free to jump around. It is an extensive and wide ranging and long episode. In the very beginning We dig into Afghanistan and its importance that lasts for the first, I would say, five to six minutes. And feel free also, if you want to listen A to Z, to just listen, listen, listen. If a subject is not of interest to you, chances are within a few minutes, we move on to a new topic and we cover a lot.

of ground. To hear our first conversation, you can check out Tim.blog slash Bology Please enjoy. this very, very wide ranging conversation with Bology S Srinivasan.

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Tim. Optimal minimal. At this altitude, I can run flat out for a half mile before my hands start shaking. So then also my question. Now it is seen. A cybernetic organism, living tissue over metal mental skeleton.

Welcome back, sir. It was good to see you. Last we spoke it was Q one twenty twenty one. It is now Q four.

twenty twenty one. Late October. Yeah. I would like to ask you. Where should we

Begin. Well, I thought we might begin with some Premises, some of which were sort of Predictions in the last pod.

One in particular was I think I had mentioned that Covid nineteen, I thought of it as a military defeat for the US, and the reason I thought of it as such is because literally billions of dollars had been allocated for biodence over Span of about twenty years since the Anthrax episode in two thousand one and

During SARS and Ebola, all of these Scares happened and so in the US in twenty eighteen it announced they had a national bi defense policy that was supposed to combat man made and national threats and so there's an expectation That

Of the WMD's nuclear biological and chemical that the US military would have some trick up its sleeve just like out of the movies where hard men would come in in America's time of need and step in with some magic thing and that Totally didn't happen. And when that didn't happen, that's why I said, you know, Covet nineteen was a military defeat, even if it wasn't being presented that way to the American public.

A big piece of the military industrial complex or the military, whatever you want to call it. was like cardboard. It was like a potem can villa just kind of just fell over with a push. And people kind of argued with me about this and they said, No, no, no, you know,'cause it was right on the border of what you would think of as military or not. Since most of the folks who had been talked about publicly were the CDC and the FDA and the civilian agencies, but certainly billions had been allocated for bio defense. It was borderline. You could argue it wasn't military. You could argue I was off base there that the military was actually Highly competent.

But Then one thing that happened six months ish later after our podcast was the whole Afghanistan thing. And so now you had something where The S military head. twenty years and two trillion dollars and

Total air superiority. and total surveillance And the A local government that they had set up and a military that they had trained local military that they've trained and handpicked.

And equipped. And even a timeline that they had negotiated with the Taliban which should a for the most part adhered to in terms of its terms. It hadn't like fired on American troops during that process. I think it adhered to its side, but and those are advantages that you normally don't get in a military conflict. Folks with that level of advantage, it's like a huge handicap in golf. And

You know, there's that saying, right, with military things, amateurs talk. Tactics professionals talk logistics. And the withdrawal showed that the US military is no longer really that amazing at logistics. Also The President and the Secretary of State. Lincoln said something like

The collapse won't happen from a Friday to a Monday. It basically did. It was like a Monday to a Wednesday or something like that. I forget the exact dates, but it happened just over a few days. And you know, Biden says there's not gonna be a scene that's like the helicopter evacuation. In Vietnam and there was. And the thing is that

I'm not by the way saying it's not a political comment really. It's basically about the decline of state capacity over the last twenty or thirty years. In many ways in nineteen ninety one The US was the hyperpower after the collapse of the Soviet Union. It was a hyperpower, as the French put it, that could win everywhere without fighting.

And in many ways the combination of administrations over the last thirty ish years. Have blown maybe the biggest lead in human history. Now it Rather than winning everywhere without fighting, it fights everywhere without winning. So the Afghanistan thing I think was sort of

I hate to call it a vindication because it's a very unfortunate thing, especially for the Afghans who are now subject to this medieval Regime. But I think that that is something which also has important ripple effects. It kind of flips over a card. And you kind of think there's something that's seventy percent probably and then it goes to a hundred percent probably. Then you think about what the

So that's like one But prediction or something that came true or or piece of a world model that was vindicated. Let me pause there and get your thoughts.

Yeah I have I have no thoughts to share. Please continue. Okay, okay. I will just kind of download content and then pause and then you you know jump in, okay? And you will be met mostly with silence or I'm not familiar if my pre if my last performance is any indication. But I appreciate the pauses, yes. I can also since we're on video, I can raise my hand like a student and then request pause. But yes, please proceed. Okay. Okay, great. So one thing that

As a meta comment that I Wanna do is sort of A invite pauses certainly. B Enumerate my premises

And sort of open source my thinking so that people can understand where I'm coming from. And If open source my premises and my logic come from those premises and you can at least isolate if you think I'm off base I'm either wrong in the premises or the logic, but at least we start to decouple the two. So How do I build my model?

Well, what's rising? What's up? Technology. Which is drones and biomedicine and Robotics and AI and and so on.

And particularly cryptocurrency, which is the new backend of all of software, as we'll come to. So technology, cryptocurrency China and India. Tech and Asia are up and to the right. Those are

Those are words, but that captures the phenomenon of literally billions of people every day moving up and to the right. Whether it's global trade or it's number of Smartphones or it is The number of people doing cryptocurrencies or the progressive AI, all that is up and to the right.

And then what is Falling Is The West as a percent of GDP If you make a graph of

the US and the EU's percent of global GDP that's been dropping basically for the last forty years. Whereas India and China's share in particular has been rising. You know, actually as of twenty nineteen. McKinsey had a report on this, but Issue was more than fifty percent of GDP I believe.

By twenty nineteen on certainly PPP terms. And I think it's going to pass or has already passed soon. PPP is what? Pricing power parity or what's that stand for? Purchase power parity. It's basically like Purchase Power Parody.

Yeah, that's what I believe it is. It is It's sort of what can the dollar buy there, what can your Renminbi buy there in terms of the number of Big Macs? They have an adjustment for that because some of the production costs or less, you ten thousand dollars goes a longer way in some of these countries. So Asia isn't really the future, it's a present. So what's falling?

A the West is a percentage of GDP There's a graph by Visual Capitalist, the US share of the world economy that shows it in sort of Absolute terms and then you can kind of calculate the the zero to hundred percent terms. So what's the percentage of GDP US military strength.

as we just discussed, and that's some very important topic to discuss further. Internal US cohesion. And also just the European percentage of the world. It was much higher in the early nineteen hundreds And now it's like on the order of ten percent.

And so just a percentage of the world. And so if the West is declining its percentage of GDP in terms of its relative military strength, in terms of its internal cohesion, and in terms of just raw percentage of the world, Yep, all of these institutions that were set up Years ago kind of assume Western predominance, for example, like Yeah, the United Nations is

The US, the UK, France, Russia. And China. I know it's only four out of five, so it's a small count, but that's eighty percent. Western or at least European. If you think of Russia as a European country, you can argue that. Whereas there's no India, there's no Brazil, there's no Japan.

And you can argue whether that actually reflects the world as it is. Certainly probably India should be there rather than France. You might say India should be there rather than the UK and EU should be there rather than France or something like that. Go ahead.

Alright, I raised my hand for those who can't see me. I like yeah. I like this approach. This is a good approach. Professor Bology, I have a question, sir. And that that is

Related to the up and to the right with respect to technology and Let's just take China as an example, but we can grab both China and India because we discussed India last time as a dark horse of sorts. Yes. And A lot has happened.

With respect to cryptocurrency in China since we last recorded also. And I'm wondering How That factors in In your mind.

to the up and to the right with respect to technology. And Bitcoin or cryptocurrency or blockchain more broadly speaking. Within China and say India, does it mean that the best entrepreneurs or many of the best entrepreneurs simply get scattered to the wind to places like Singapore?

And elsewhere from China. What are the implications and what are your thoughts overall? So a lot has happened this year in Chinese American and Indian crypto.

So just to discuss that When we were talking A Chinese interference with the Bitcoin network. Was something that

Was TBD. It hadn't actually happened yet. Chinese crypto What we discussed was that they might pursue the state Chinese state might

For example, block at the fireball level. But allow my continue Which would mean like sort of a peekaboo problem where the Chinese chain gets extended, but so is the rest of the world and so on. And That would be bad.

But what I also said was That's like in some of it's the worst case scenario, it's actually better and perhaps more probable that they would just ban mining entirely or go after that and they're the one State in the world.

That is ruthless enough and has A low enough disregard for civil liberties and, you know, contract law and all And all of that type of stuff. for them to to just be able to do that. And that is what they did.

Meaning they just went after they just said get out of China. And so if you go to blockchain.com front slash charts front slash hashrate and go to the all time chart and look at kind of the period from May to July ish of twenty twenty one. You'll see it drop from about

Hundred eighty Ter hashes per second. to about eighty to ninety terahashes per second. And what is a what is a terror hash?

That's ten to the twelfth. hashes per second meaning Ten to twelfth. Attempts. to solve the inequality

that allows you to mine a new block of Bitcoin. So it's kind of a measure of the computational speed. of the Bitcoin network and the higher that is The more secure the network because Um the harder it is to falsify history.

Quick interjection. Why did China do this? And Ah. There may be a headline press release equivalent and then there may be Some degree of speculation or informed opinion. I would just like to know.

Kind of both. I think the fundamental thing is We can drill into this. China is

the exception to the sovereign individual thesis. India, by the way, might be the partial exception, but China is the exception to the sovereign individual thesis. Where they want root over everything. If it's not made in China. They look at it with Suspicion?

And it's funny, you know, made in China that's sort of a play on words. If it's not, they look at it with suspicion and that's why actually they were very early on things like Grip firewall or social media bands. Many years before politicians were getting deplatformed from Twitter. Xi Jinping

Denied. Facebook's Attempt to Come into China. And instead basically they set up

Parallel social networks. That Could operate within China. But which the Chinese state had brute access to. They've articulated this actually explicitly.

It's i interesting concept and I think it's uh at least they're they're they've got a some philosophical basis for it. Which is the doctrine of internet sovereignty. That's to say if a Nation state is allowed to introduce the physical packets. Crossing its border.

then it should be able to introduce any intranet packets crossing its border and they're doing like customs For that. That's how they justify the great firewall. By the way, there's actually there's an article that's sort of making the rounds that Fuck. who are listening to this probably should read on Wang Huning.

Did you see this article? I did not. How do you spell that name? W A N G H U N I N G so the triumph and terror of Wang Huning at Palladium mag dot com.

And this whole site is actually really good. But what's great about this article is first of all, reading this, you're like Okay. The depth? Of this is just

The IQ level is frankly much higher. than what you're accustomed to seeing in mainstream media because It just doesn't come from the same set of Trait. premises and rehash things that we usually see. So I think it's informative.

And the whole site is actually really good. But basically what this article is about is a guy Wang Huning who's been there over Three Chinese administrations, I think Shang's Who's and X.

Which is unusual. Meaning he's worked in the government. In the government, the senior most senior levels the seven man standing committee. And at least what the article says is he's China's top ideological theorist. And To be consistent across

Those three administrations it's sort of like being A rough analogy would be like Robert Gates, who is sec deaf under I believe both Was he under both Bush and Obama? I think so, right? Yes, he was appointed under both Bush and which is unusual.

Usually Political appointees. Get. Fired by the You know, if they're appointed by the Republican, they affect the Democrat.

Yeah, exactly, and vice versa. So sort of like that. And he's been there for a while. The reason I just bring this article up is You can sort of get a sense of How much They have been conscious about the need for state control. 'Cause they saw the fall of the USSR.

They saw the US move in after that. They saw that Russia actually didn't do that well. They saw the loss of control. See, they've always been about control. And what's interesting is there's been a tension between Total steed control and of course Capitalism. Which is decentralization of control and

One thing that is true that I think is a constant across these Three eras of China. So The Mao era. Was revolutionary communism. Then Dang Jang and Who

Was internationalist capitalism. And now I think it's fair to say under under Xi Jinping, it is it's now pretty clear that it's a nationalist socialism, a a militarism. And Economics is no longer first.

It is there. But they're reasserting group control, but from the nationalist right rather than the communist left in some ways. And so The reason I think that's important is it's a genuine change in the same way that You can argue the US had a genuine change in culture.

Over the last seven or eight years. Call it. The Great Awakening, which is what Matt Glacies' article at Vox kind of dubbed the whole thing, and you can sort of see this. religious fervor, taking over the country, all these graphs up and to the right of various words, in kind of the same way. China for a long time had this

keep your head down policy where They didn't like a lot of the things the West was telling them, but they sort of gritted their teeth and they manned the factories and they tolerate the humiliation of having their embassy at Belgrade blown up by a stray bomb and Just being like, Oh, our bad.

You know, that type of stuff. They didn't have the the power to protest on a world stage. They were just like, You know what? Just suck it up and we'll just continue trading for a while. But With G that is no longer the case. They are Have you heard this term wolf warrior diplomacy?

Wolf warrior diplomacy? I have not if I'm hearing that correctly. Yeah. Wolf warrior. I like the sound of it, but maybe I shouldn't. I'll wait until you define it for me. This is not a deep China analysis or anything like that. And I I basically consider myself

I think reasonably informed in China, but certainly there's folks who speak fluent Chinese. It's like a logarithmic scale. There's folks who know 10 X, 100 X, as much as I know in China. So uh the Wolf Warrior Diplomacy what it refers to is there's a movie called Wolf Warrior Two. Which was China's number one movie. I think in twenty seventeen.

It's worth watching. And the reason it's worth watching is it's sort of surreal. It is American filmmaking techniques of the Rambo Rocky variety of the mid eighties. Applied.

Two A Masculine Chinese speaking hero Where the Chinese are basically cast in the role of the USA And the USA is cast in the role of USSR.

Yeah. It is kind of like a Rotation Where you realize what aspects of film making are constant and what are highly variable. Do you know what the number one movie in the world is right now is of our time of speaking?

Ha. I do not. I learn so much when we have our conversations. Frozen five. No. No, it's uh well so so that's the thing. It's the it's a battle of Lake Chang Jin. Chinese language movie, here's the thing it it tells you a few things. First is

China's in person movie market is massive. And it is able to do number one in the world. And I think it just costs like a billion dollars in box office. Number two But the movie depicts

is basically the defeat. of the US military in the Korean war by the Chinese military. So that's where their head is at. They are making

Massive blockbuster epics with all the Hollywood techniques about The Chinese military winning and the Americans losing. And moreover. What you can get cancels for in China is insufficient nationalism. As somebody once said, you know in in like the West today

For an ambitious young person they would articulate a desire to quote Change the world. But in China it is serve the motherland. Yeah. Yeah it's different.

May I interject for just a second? Of course, I I just want to say that lest listeners get too judgmental about what they're hearing, the US has done What we're describing. Or I should say. US entertainment certainly has done what we're describing for a very, very long time. So this isn't

unique to China. It just I think indicates it's What is to come, right? It's a harbinger. And it's also a gauge of public sentiment. Public sentiment meaning Chinese sentiment on a certain level.

Yes. And I find that deeply interesting. Also what I find interesting from a Entertainment media perspective is As an example, I just went to see the new Bond. It was my first time in a real movie theater seeing a film since Covid. And there were many different

Trailers. Most of the movies had at least one. Chinese lead actor or actress. And that is very deliberate because they need China's eyes.

They need that. And uh so that's another chess piece on the table. It's more like back gaming than chess, probably,'cause it's not a game of complete information. But you get the idea. So I I just wanted to just note that because I do think these are trends that are gonna become more intensified over time. This is a startup analogy, but Microsoft.

made I believe a hundred fifty million dollar investment in Facebook in two thousand seven as part of a way to keep it from Google. And they did so at the super high valuation. Basically playing Game of Thrones when Facebook was a still a startup. That was actually maybe bombers. Best decision in some ways. What that did was that thing grew and grew and grew until Facebook is now

It's not extremely hostile to Microsoft, but it is certainly a peer to Microsoft. It is up there. It has grown into a redwood tree of its own. It is also like a roughly a trillion dollar company. It's the youngest of the big five Google Apple Amazon, Microsoft, Facebook. And in sort of the same way what the US did was it made a startup investment In China.

When Nixon went to China. Because USSR was the number one rival at that time. And they've just executed phenomenally well over the last thirty five to forty years, and now they have the market size.

The internal market size. To be the number one movie market in the world. And they dictate terms, yeah. Winners write history, winners film history. And they are writing a history where they're the winners and they're the good guys. And the thing is the airbrushing is super obvious.

When it's somebody else's Propaganda, for example. You know, in this movie, which is worth watching, by the way, it's hard to kinda see, you know, you have to get like a streamer out of China or something like that. And by the way, w Wolf Warrior or the other? Wolf Warrior I think you can just download on iTunes, but the battle of Lake Chiang Jin is not that easy to see right now. One of the things about it is This itself is a change. Where

China used to be super free willing on IP. The new Xi Jinping regime is not free willing on IP. It's hard to get that. It's basically almost as hard as it is to get an American movie on the internet, you have to kind of actually try. It's not just widely accessible DVD on the street kind of thing. And some people think this is similar to the whole

Shang Yang School. Are you familiar with that? Legalism. No. Okay. So So

Again, I'm not a student of Chinese philosophy and so on. I just I I know some. But basically There's a philosopher named Chang Yang who

is well known for as an exponent of legalism. And legalism we would call it the super harsh One of his things, if I roughly paraphrase if I'm getting this right, is If there are harsh punishments, there will be no punishments. Meaning If you articulate what the law is and you ruthlessly enforce it.

Then people won't actually go near the border and so on. And there's like another thing After one year people would not pick up items left lying in the street. Nor would they take anything that was not their property. The army had grown strong and the feudal lords lived in fear.

What is the source of that? Oh, that's like from Shang Yang's biography. So the point being is Is Hij Ping use working on all this stuff? since the beginning, but the tipping point only

came near the end of his first term, sort of like how The Great Awakening was also happening in the US and it just kinda went exponential in twenty twenty and twenty twenty one. China's changed. It is now a different thing than what you and I grew up with, which was the internationalist capitalism of the Ding, Jang, and Who era.

Hide your strength and bide your time, I think was like the official philosophy. And make plastic stuff for the West, have them call us Uncreative. have them depict us as emasculated on TV, just assemble iPhones, grit our teeth, tolerate the pollution, breathe the bad air, blah blah blah, and then work our way up. That's kind of the mentality. And now they're standing up, right? Just add one thing to that, which is when I was in Beijing, I lived in Beijing in nineteen ninety six. I went to two universities there.

And the most popular book at the time was And this is very understandable for a lot of reasons. This is not to fault anyone, but the most popular book at the time. Which was stacked. It was widely counterfeited, but also bought legitimately.

Stacked everywhere. You could see it in the streets, in front of stores. It was called China Can Say No. Yeah, I think it was Chung Shwa Bu. And it was China can say no. And

There is this Deep sense of I think warranted deep sense of being disrespected on a lot of levels from a geopolitical perspective. And that is not new. That is not new. And it's just taken a while for them to play the game so well.

That they're now in a position. to Execute. Extremely well on multiple fronts. That's right. Yeah, the thing is interesting is if I recall that was

Modeled on the Japan that can say no. But There is a difference. Some people will basically say, Oh, you know People talk about the rise of Japan in the nineteen eighties and Why won't the rise of China turn out the same way?

There's a huge difference, by the way, between China and Japan, which is that Japan is literally occupied by the US military. Yeah. Huge difference. Huge difference. US basically wrote Japan's operating system and constitution. After World War Two and

They have literally a military base there. And I think in a real sense. They are a Independently operated US subsidiary. The purpose of NAT was

Keep the Americans in, the Germans down, and the Russians out. I haven't, but I can imagine. May I also just Pull us back. to an initial query for those people who are wondering. What the some of the punchlines are. So with respect, and then we can come back to all of this. So just bookmark for a sec. Yep. When we look at

The Chinese government's decisions with respect to Bitcoin mining. What are the sort of first order, second order, third order effects of that? Some of which may have already been seen, but what has happened and what do you expect will happen? As a result of that.

And we could look at w what that means within China and outside of China. Or however you want to approach it. What they've done is setting up the decade and maybe the century. I don't think people realize how important some of this stuff is. Think about, you know, for example, their social media ban.

How important is that today versus how important was it seen to be at the time? Yeah, huge. Huge, right? That was a branch in history. So basically China wants to maintain root.

And because they want to maintain root. I think they're going to have significant short and perhaps even medium term advantages But in the very long run. Like twenty, thirty, forty years.

I think the century lines up as Centralized China versus a decentralized world. Or a centralized China versus a decentralized West. And I actually think India may be actually a big component of that.

And that's where I think things land up by like twenty forty ish or so. But it's really hard to say because time compresses in The Internet era. And just to kind of drill into that, let me give sort of a a sci-fi scenario here. This is a sci-fi scenario. You know, like how when you do a simulation and it's like okay, all the molecules kinda move in this path.

But they can move in other paths. So I don't assign Super high probability of this. Let's call it A scenario. I don't assign zero probability to it. Chinese control, American anarchy

Indian intermediate. So Basically coming back to thing that we kicked it off with, which is The US military basically just got defeated by Covid.

And in Afghanistan. So obviously the immediate question is Will they lose versus China? And in particular, will they lose what will happen with Taiwan? Now there's sort of first order response, which is

Oh, Taiwan and Afghanistan are totally different. Taiwan is obviously a first world country and it's an independent nation and it has its own J share in military and a long history of operating independently and civil society and blah blah blah. Whereas Afghanistan obviously was That was a fixer upper at best.

and has a long history of civil war and was very difficult. So of course they're totally, totally different. But they're not because there's certain things that are the same. And one of the things that is very much shared between the two thing is America's willingness to fight. Because the withdrawal from Afghanistan was based on A reluctance to pursue quote unquote forever wars. And a

Thing where The American consensus on the right is isolationist, like why are we helping these folks out by fighting their wars for them? And on the left is also a solution, which is why are we harming these folks by bombing them? We should pull back. Well the stance is perhaps different and I actually I can see reasonable things on both

Without litigating the percentage on each other. The sum force is withdrawal. And so It is from Ch Taiwan's view. Questionable.

as to whether the US would fight. And here's the problem. Wars get fought. When things are questionable. And as Shang Yang said is if the punishments are Certain there will be no punishments. Wars happen when there's a miscalculation. For example, I believe Saddam Hussein invaded Kuwait in nineteen ninety one because he thought he had gotten the go ahead

From April Glassby at that time. who was the the US Ambassador. Basically he was like, you know, nineteen ninety one So union was falling and so on, new world order, let me settle scores.

There's a transcript. There's different transcripts. We have no opinion on your Arab conflict such a dispute with Kuwait. The quit issue is not necessary. America Secretary Derek Baker has direct me to emphasize this. And so The thing about this is

I'm not a scholar of this particular issue. And she may have gotten a bum rap on this or what have you. But people thought that she'd Given. unclear instructions to Saddam. Now, first of all, what's interesting is like the US would basically green light an invasion is is interesting in its own right, right? Like that It could happen versus not.

But that's what being Leviathan means. If you're the guarantee of order The Soviets allowed The North Koreans to Go and invade the south. The North Koreans were looking for the nod, the go ahead from their patron to be able to to do that. And similarly, the US had actually been working with Iraq during the Iraq Iran war because they were against Iran.

And they thought Iraq Was a good way to put a thumb in the eye of the Iranians who had done the hostage crisis. And so that was uh you've seen the the whole video with Snom shaking hands with Rumsfeld. Yeah. Many years ago, right? How does this tie into China? Coming back at the check.

So the thing is that That kind of uncertainty. Is what causes wars. Or provides fertile ground for wars, depending on How it's planned, right?

Yeah. Because it's not like invincible US military, solid commitment to Taiwan. All right, we're not gonna start a fight. It is Will they, won't they? You're now decision treeing it out.

It is uncertain for everybody involved. It's uncertain for Taiwan, it's uncertain for China. You have many scenarios. One scenario, which I think is underestimated, is China speaks a language. They have lots of people cross border. They have total focus on this. So one possibility is they try to force a a gun to the head referendum. Where they try to get KMT, the pan blue party, to just vote for reunification with China. And that's something where there'd be an obvious gun to the head.

But it'd be like a peaceful Anschluss. Like you know, Germany. In Austria, right? Like they vote for it. Another possibility, of course, is an actual military conflict. Where

Maybe the US just doesn't even intervene. Maybe it does, and then there's like a shooting war. And we don't know what happens after that, but I think it's quite likely that the US loses. Now why do I think it's Life of the U S loses? A couple of books I'll recommend. There's The Kill Chain.

Fight. Christian Bros, who was Formerly very senior on the Senate Armed Services Committee, saw the entire Seven hundred billion dollar defense budget including the classified parts. And he has a quote in there which is

Over the past decade in US war games against China. The United States has a nearly perfect record. We have lost almost every single time. And he says this is well known within the Department of Defense But the American public doesn't know this and Congress doesn't know this. And he actually goes on in the first chapter to outline a scenario where

China basically pursues an asymmetric strategy against the US. It uses Area denial weapons. force the US Navy off shore while it's Invading. Taiwan.

And it can't get the reinforcements over there over this huge ocean, they're all blown up and or or forced back. And basically he thinks China would win. So that's a nonfiction book. There's also another book that came out this year called Twenty Thirty Four.

Kill chain, I think came out last year. Twenty thirty four, which is co authored by a former US Marine who's uh you know on the ground guy. Elliot Ackerman. And then our guy, James Travritus. Who I believe was the former NATO commander. That also essentially

Talks about a serious Chinese effort on or conflict with China rather in in the South China Sea where the US does not. Definitively win. In fact, they almost portray the US as this Old battleship that's

getting its butt kicked by the Chinese and it goes to to nuclear very quickly. Okay. That's in their scenario. I don't want to spoil it, but India intervenes at the end to kind of Play Mediator in in a sense. Just a quick thanks to one of our sponsors and we'll be right back to the show.

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If we have Hypothetically, centralized China. Decentralized. World. And India is some type of intermediary.

Yeah. Or very large and compelling. Nation state at the very least. Let's just s we're on parody. with the China discussion on some level. What has happened in India since we last spoke? With respect to crypto. Okay. And where do you think it's going?

The good news is and I may have actually influenced this on the margins India had been floating or there's folks in India rather who'd been floating like a crypto ban. In January thereabouts. I wrote three articles on this and the Indian crypto community The web three community really Got out there and now

Nirmala Sita Raman, who is the finance minister of India, like the equivalent of the Treasury Secretary. It's actually quite smart. And has made good comments on this in public and moreover With the deliberation she said

This is not gonna be a ban. It's gonna be regulation of some kind. And Over the last nine months, Indian crypts has just absolutely exploded. There's CoinSwitch slash Cooper and a

There's a bunch of these exchanges. I I I won't remember all of them. They've all just gone vertical with the rise of cryptocurrency this year. And there's multiple India crypto unicorns and Indians are a huge part of the global crypto community. And in the meantime, China has basically forced mining outside and has basically done with their new bill. It's almost like Pushing a guy until he's just almost off the cliff.

They essentially have In twenty seventeen They pushed pretty hard to stop. Much retail trading activity happening within China? And

So hence like Binance kinda left the country and Hobie and Oke Coin Reserve Force. Or Cs but OTC was sort of allowed or kind of winked at. Now they're kind of going after OTC, they're going after mining. What does OTC mean in this context over the counter, but what does that mean in this context? One version of trade in cryptocurrency is you go to a website, you click a button, you buy cryptocurrency, there's a user interface and so on. An OTC trade is like a big block trade where you call somebody on the phone you're like I want to buy a million dollars of Bitcoin. And the thing is

them as a seller and you as a buyer actually have an incentive See, if they try and sell a million bucks of Bitcoin, they might move the price. You try to buy a million bucks of Bitcoin, you might move the price up. And so you both sort of settle on a mid market price And you do the trade real quick because you don't know if it'll go up or down. So that was kind of allowed.

But they're cracking down on that too. Now what they haven't done, and you can read this spill. It's posted on their website. It's a long thing. Rather. What they haven't done is they haven't criminalized holding. They have that in English? Uh it is in Chinese. Chinese is a little rusty. I heard you say something in Chinese just now, so I thought it was like I guess you could probably use Google Translate possibly to translate the page. Yeah, that's what I did. It basically the the people's bank of

China statement on cryptocurrencies post on their website. It's at And this is super long URL. But if you if you Google. Yeah, it's like Notice on further preventing and disposing of the risk of hype in virtual currency trading that's the

English translation via Google Translate. And I have a tweet on this, but basically They've kind of done it. Everything up to criminalizing

Holding. So they haven't criminalise holding. You can still hold. Let me ask you a dumb question. Where do you purchase your holdings, or is it just pre-existing holders of crypto who are now legacyed in somehow? How does it work?

Yeah, it's kinda like that. It's it's unclear. One of the things about China you know, a friend of mine over there said it's like in the US There is Rule of law where

You know, you have written laws and that's supposed to constrain the state And you can kind of operate with those. Whereas there, it's often more like guidelines and a negotiation. Which is actually more like interacting with the regulatory state in the US, where it's like a moving boundary. And they will basically do what they want. It's not something where the laws are meant to be binding on the government.

In the same way. Mm-hmm. We don't know exactly how it's gonna be enforced, but it definitely signals a step up. And the way you can see that is Action speak louder than words, and that drop in the hash rate is actually a remarkable drop. Now importantly, by the way, it came all the way Shouldn't say all the way back up, but it came back up to like a hundred and fifty

terror hashes. So even the Chinese government going after Bitcoin Mining It slowed down transactions a little bit for a few weeks, but not really all of it. How much of that do you tribute to new mining operations elsewhere? Places where you can get cheap energy.

Where They would expect friendlier. regulation or lack of regulation versus just the vertical climb of popularity in Bitcoin and cryptocurrency.

What do you attribute that regaining of hash rate? So I don't know the exact breakdown. one could say this there's folks who are looking at this every day, which I haven't been doing for a while. But Bitcoin mining is now actually understood to be something which is a component of the energy grid.

Because In a sense. Just like when you say a document. It's both. A paper document and it's a digital thing.

We use the term interchangeably now. So in a sense Bitcoin mining is now like a money battery. Because on the power grid You can't

store power that easily, you have to sort of instantaneously generate it. as it's being consumed and every flick of a light switch and so on is sort of in this model Of this Gaussian where All these small events you can't predict whether you're gonna flip the light switch on or not, but you can have sort of

Demand prediction. And it kinda goes up and down, you generate the power in proportion to that. The problem is that if you've got source of power that are themselves variable Like renewables, for example, is the sun shining or not? Is it wind blowing or not?

Now you've got volatility on both sides and it's hard to match that up. And Bitcoin mining actually comes in there because it's a load. You can put Basically in any location.

And dial it all the way up. And rather than try to store that energy in a battery You quote store it as money. By mining Bitcoin. And depending on the economics.

It may be Better to do that. And then with that BTC buy energy later. than to actually store it in a conventional battery.

That's super interesting. Super interesting. Yeah. This is an important thing that is happening now. Actually Ted Cruz of all people actually gave a talk on this, so it's starting to filter out into

Politicians Wait, Ted Cruz gave a talk on this subject? Yes, just a few weeks ago. Wow, that's unexpected. Yeah. All right. That's the thing is this is becoming a big thing within natural gas and so on because the flaring problem Looks like this dystopian.

blast of flame into the air when You have uh like stranded gas. That gets Addressed with this. So was he speaking within the confines of the state of Texas, or was it more broadly applied? It's much more broadly applied.

And this is something which I'm not an expert in this area. But Google like Bitcoin mining, oil and gas. And you will be able to read about this. It's not just oil and gas, it's also renewables. Essentially

Your renewable energy source. Bitcoin mining. Increases the profitability of it. Because There is always demand for the renewable energy you're generating.

Say that one more time, please. Your Renewable energy source. Like, especially if it's volatile. Like solar power or wind.

Now there's always a way to make money from it even if there isn't demand on the grid because it's volatile. For example, the sun may be Shining. But nobody's turning on their appliances or the wind may be blowing

And nobody's actually Consuming the power. But you can use that to mine Bitcoin. Yeah. That's uh That's very interesting.

No, I was just saying it's super, super interesting yeah. Power is like instantaneous energy is over time, but go ahead. Conversation by design and by the nature of it I think. Let me just come back. We may return to this subject, but come back to

India for a moment. What would be your Predictions may be too strong a word, but what are some plausible Things you see happening or developing in India. Over the next three to five years with respect to

cryptocurrency or a web three. Blochain, all of the above. What's interesting is now that China's sort of taken itself out of crypto. has kinda left the door open for others. The US

Certainly has a big crypto sector. There's a huge fight within the US on crypto regulation and web three and and whatnot, and we'll see where that pans out. And we'll also see where it pans out in India. It might be better, it might be worse.

We will see. But Basically it is I'm cautiously bullish in both the US and India on cryptocurrency.

And I'm cautiously optimistic. That both India and China will maintain some degree of stability. And so I'm not saying it's a five year thing, but like a fifteen year ish kind of thing, ten, fifteen, twenty years.

India could be an intermediate between like kind of a coming American anarchy And total Chinese control. And let me explain what I mean by this, just to go back to that scenario we were talking about. And again, it's sci fi scenario. I'm not saying I put a lot of weight on this, but I think it's possible. So Let's say. I had this one liner which is

The U S government has sort of lost root control or the system the future of hard power is C C P And the future of Hard money is BTC. This is related to that NY T C C BTC triangle that we talked about last time.

Which is bull capital, communist capital, crypto capital. And just to recap that Communist Capital says You must submit. That's a communist party. They're strong, you're weak.

They have power, you don't. Bow to the government. It's very straightforward. Down the middle like a fullback. Who capital. says you must sympathize.

And that's different. That says it is because you are powerful, because you're white or male or straight or sis you have Or you're rich or something, you have power. And therefore you must sympathize, you must apologize, and you must bend your your eyes down, your eyes are downcast, your head is bent.

But it ends in the same position of submission. As communist capital with a bent head And a dispirited stance. So it's also an ideology of control, it's just a little more subtle, rather than saying they are powerful, they say you are powerful. And the trick of it is

With the algebra of intersectionality Everybody's an oppressor on some axis. So everybody's either White or male or straight or cis or wealthy. Dave Chappelle. He's an oppressor on some axis, for example, right? So anybody can be turned into an oppressor in this way.

So everybody kinda lives under threat of having their card yanked and instantly turned into an impressor'cause they're an oppressor on some access. So that's how What capital works. It's more subtle. Slightly more so. And then

Crypto capital BTC is the third point on the triangle, and rather than saying you must submit like communist capital or you must sympathize Like Wool Capital, it says You must be sovereign. You must hold your head up high.

Jaw out. And You must not just hold your own private keys. Ideally you're living off grid with a solar panel and you're growing your own food. And

You're in a a Bitcoin citadel where you're waiting out the Mad Max and And so on. So all of those are actually like extremal points. You must submit, you must sympathize, you must be sovereign. And the thing is that while

Each of them is actually bad. If you just go totally to that point. But they're also bad if you have the total absence. So for example Obviously, you don't want to just completely bow your head to this totalitarian state. You must submit. But the opposite of that

Where nobody cements. is San Francisco Where you can walk in and they've legalized crime. Anything under nine fifty or something, you can shop lift from Walgreens. You go in, help yourself walk out. Repeat it. And that's why like twenty two Walgreens are closing in San Francisco. Did you hear about that? I did not, but it doesn't surprise me.

Yeah, so they basically have legalized crime and then you know the city government is denying that this They're like Oh, Walgreens published in their SEC filing three years ago that they might shut down some stores. Therefore they're just doing this to make more profit. Blah blah, right? And And they're like oh the the rate of crime report of crime has dropped in San Francisco.

And th this is basically like Quoting Statistics from the Soviet Union at this point. Move along, folks. Crime rate in SF is so high Anybody who's there has seen multiple crimes happening as you walk down the street. There's open air drug deals, there's public defecation, there's people who Walk into a store and shoplift something. You can just

record probably put a camera up there, you'll see a bunch of crimes. The reporting doesn't happen because the prosecution doesn't have the police doesn't have so okay. Point is If you do not submit. You get San Francisco. Then Okay, if everything is put sympathizing, then everybody is competing to be

a victim all the time, and that's kind of where we are in many ways in in American society. But the total opposite of that is also Bad because The total denial that any victims exist. is the denial of charity and many of our good impulses and that leads you to a society that's Russia in the nineties.

Wherefore Seventy years all compassion and charity and goodwill had been sort of milked out of them because Communism had Said share.

At gunpoint. So all of that had been linked out, so all sympathy was kind of leached out. And that's what you get there and the total opposite of that. And then sovereignty Of course I'm sympathetic to this. But

Total sovereignty is actually the opposite of, for example, division of labor. Which is also capitalist virtue. You're trying to do everything yourself. And total sovereignty is also a position of total distrust. Of everybody else in society. And taken to its limit.

And unfortunately the thing about the internet is People do take everything to their limit. One person can do everything by themselves, but humans are not just Individual animals are also social animals.

Now, of course, the total opposite of sovereignty is also bad. That's actually the Work capital and communist capital model where They can deplatform you via the corporation or the state at any time, censor your speech, et cetera. So this triangle model is kind of useful because Each extremal point on the triangle is bad, but so is the Opposite point.

And so that's why I think what we wanna do is carve out a decentralized center. That has a healthy optimum between these With the recognition that different people will trace out different optima. For example, the Netherlands is a functional society. But So is Singapore and so is Dubai in its own way and so on. And these have

different trade offs of submission, sympathy, and sovereignty. So with that as like a political philosophy ish kind of thing for the modern era. I think One new piece of information for me or last seven, eight months.

Is that The Woke Capital corner of the triangle, the NYT corner. The reason I say NYT C C P B T C is In many ways. While C C P is in control of China.

It is A state control press. It is something where Nobody in the press is gonna go investigate Xi Jinping or whatever. In America there's it saying if China's got a state control press, America's a press controlled state.

And when we have seen that is A Corporate journalists can get a politician fired, but not really vice versa.

Yeah. So the org chart Is the other way. Now the thing is, immediate rebuttal is well What do you mean? I can write an article and they may not necessarily get fired and I would agree it's like a stochastic org chart.

And that's what sort of hides the lines of reporting. But If let's take I don't know, the Department of the Interior if the Guy from the WSG and the guy from the Washington Post, the guy from the NYT. who all have the beat that includes the Department of Interior just started writing negative article after article on the person in that position, they'd eventually get capped.

Almost like a board meeting where it's like a three to zero vote and they get fired. I just want to So share something that came to mind, which has been on my mind for a while, and that is The trends in the US, I suppose is somewhat obvious, are very different from the trends collectively in China in one very

Important respect, many respects, but one really jumps and that is Nationalism is Unifying. On a lot of levels. But what we're seeing in the US with as you put it, the great awakening, and this is not to point fingers at any one side necessarily, but much like the nature of warfare is going to change, is changing over time and uh

It's going to involve more and more cyber attacks. non physical attacks, although there will be physical components. I would argue just by watching an audience of say ten to twenty million people per month over the last several years. that we are in the midst of the beginning of a Reputational civil war where the weapons are provided by

Companies that produce Tools for social media, and so on. And the attacks may not be Those that we would see. Among

different ethnic groups in a case of say ethnic cleansing, but None the less the damage is seen reputationally. And that it's not just the New York Times and a politician. It is like neighbor against neighbor. And I find that Absolutely.

Terrifying. But I do think we're in the middle of that. When I look at it, the scale and the intensity, it is Absolutely a a reputational civil war. And the weapons are technological. You can argue that the corporate takeover of the US actually happened in the nineteen seventies when three privately held newspaper corporations, you know, the

Washington Post was owned by the Grams. the New York Times owned by the Oxelsburger family and the Wall Street Journal, which was owned by the Bancrofts at the time before their sale to Murdoch. They all went after Nixon with the post Yeah.

And essentially they got quote the most powerful man in the world fired. Now Of course, you can argue, and I think it's fair to say that Nixon was a crook. He actually did do those things. He hasn't denied doing Watergate or the Berkeley or anything like that. I'm not litigating that part.

What I will say is that At the time. What he thought was and what was certainly talked about was that that GFK had done it as well in his race against Nixon in nineteen sixty, so he just had to do it. And actually There's a book by Seymour Hirsch. So

Is a Legendary investigative reporter. Expose the My Lie Massacre when the National Book Critics Award. So he has a book called The Dark Side of Camelot.

and claims, for example, that Kendy stole the nineteen sixty election with help of the mafia and all this sort of stuff. Some of the stuff has kind of filtered out to the public that Kendy had lots of affairs and all this type of stuff. But the election part is I think the material thing where Nixon Thought that Kennedy had

gotten away with it and quote, stole it fair and square, and Nixon decided not to contest it for the good of the country. And then Nixon kinda did it himself and then he got tagged for it. When no scrutiny was applied to Candy. Point being though that This concept Of

Quote journalists holding politicians accountable. means that the US is a Press control to state. It also means by the way.

How's that accountability doing? If journalists are holding politicians accountable and over the last thirty years the US government has done very poorly Who's holding accountable the people who are holding the government accountable? If they are actually the most senior management, the board of directors vote who comes in an emergency to remove the the CEO, namely the president via an impeachment or investigation or something.

Well, ultimately the board of directors is responsible. So the thing is though that the whole thing is set up Two Exercise power without responsibility because it's a stochastic org chart. No

One reporter thinks of themselves as being like in control of somebody because it's like throwing a stone at somebody who's being stoned. No one stone necessarily kills them. But the fuselage, the hailstorm does. And of course, if you're at the times or the journal or the Washington Post back before social media, you had pretty big stones that you were tossing. And what's interesting is

There is just to be on this topic for a second There's a concept called impact journalism where the whole point is to make an impact, like that stone hitting somebody. Like the impact of a government truncheon hitting your head. Where The idea is that

People will brag this Article led to a government investigation. This article led to so and so reforms. And what those reforms mean is that the state made something that was previously discretionary. Now mandatory or forbidden. That say a law was passed.

freedom was constrained in the most trivial sense it's like a forty mile per hour and fifty five mile per hour speed limit. Put you in a box. on the V axis of velocity. You can't go below that or can't go above that. Freedom was constrained. You were previously discretionary. Now you're in a box. You may argue that box is good or bad. But as every law is passed. you're in a box on more and more and more and more parameters, right? You can only do

You cannot be below this amount, you cannot be above this amount. So it's a literally like a like an ideological box, like a constraint. So the thing is that When You are able to quote cause impact in this way, you are powerful.

But because it's stochastic It's not like you order it and it happens with a hundred percent probability, you can deny that that power exists. The whole system has sort of evolved for the deniable exercise of power. In many ways, the org chart is actually even embedded in the language. Do you know the concept like Russell conjugation is? Eric Weinstein is big on this. Do you know what that is? I do not know Russell conjugation.

So Russell conjugation, at first it just seems like a funny curiosity. It's by Bertrand Russell the concept. Also known as like emotive conjugation. So it's like I swear. You perspire. But

She glows. Okay. So he docs' She leaks. But the New York Times investigates.

Nah gotcha. Right. So that's the thing. That's a great example, actually. That's a really good example. It's a really it's a very important example. And the reason it's important. Yeah. Here's why is When it comes to like quote what journalism is, like what is real journalism.

Anybody can go and set up a blog to go and review movies or restaurants. Well pre Covid probably easier, but Review books or whatever. All that stuff Huge portions. of a modern newspaper, you can just kinda go and do and set up and and do yourself.

What is the one thing that You can't do on your own. I can think of a lot of things I can't do on my own. But continue. I would argue It is the investigative journalism part because

You can't just go to somebody and like start digging through their garbage, interrogating their friends acting as essentially A for profit Intelligence Agency.

'Cause basically what they will do is They will put somebody under surveillance. That's literally what being a quote investigative journalist is. You're putting somebody under surveillance. Essentially wiretapping them. eavesdropping on them and so on. And it's an extremely hostile thing.

Because the goal often is to try to get that person fired to cause harm to them, to cause harm to their company. And to Essentially Write up a prosecution. And put that in the paper.

And that's why they say the court of public opinion. It's basically like an indictment. You know, in fact we sometimes use the same word, like a biting indictment appeared in the paper. But it's stochastic. It's out there and it's deniable as to what happens. You know, hey, I just put it out there. Arthur used to say Our job is to tell the public that the cat is jumping through the window, the public will take care of the cat.

It's like a disassembled bomb. Strategy. Where you give them all the parts. And you emotively conjugate, you Russell conjugate the whole article. Such that

the reader who's Unaware of this. Is led to a conclusion. But you kinda have no fingerprints on it. Because you just did it with language.

Yeah, it's s semantic like word laundering. Yeah, it's semantic. That's exactly it's power laundering. I'll give you some concrete examples of this. Like here's a really good one. There's an article in 2012, how Punch Protected the Times. You can just Google that and it talks about how dual class stock was the savior of the times and you know it was it was something that was really good because they could think about the long term. Then a few years later.

In I think twenty nineteen. You can't fire Mark Zuckerberg's kids' kids, and this is A denunciation of the same thing. Oh, we are creating a class of royalty that controls our national dialogue.

Without Basically just emotively conjugates it's the other way. So dual class is good. When the Selsbergers do it and it's bad when Zuckerberg does it. I would love to if it's okay with you, I'd love to shift gears just a little bit, but it's gonna be it'll be tangential. Yes. Still related.

We chatted very briefly about I think. A Pretty justifiable stance that we are already in the midst Not in the middle, but in the beginning of what we might call widespread reputational civil war in the US, which is just going to intensify. And it's going to get a lot worse once we have AI driving additional misinformation and so on. It's going to be a hell of a thing, which is not that far off, I don't think. But where do you see

the US going in the next, say, three to five years. If we can constrain a little bit, because I know it may be easier to go to say fifteen directionally, but if you had to make some Educated guesses or while that speculations just based on your reading of the kind of gestalt. Next three to five years, what do you think? Plausibly happens in the US. So let me give a scenario.

And I'm certainly not saying this is desirable. I think this is possible. The scenario is Chinese control American anarchy.

So A Chinese victory of some kind In The South China Sea. over Taiwan was a referendum or military victory or something like that.

Especially if DS prints money only to lose. Because you print a lot of money in a war. Foreign military defeat.

would show that the US is no longer a hyper power. And what that would potentially result in, you know that saying fiat currency is backed by men with guns. Yes. Finally, saying I recognize. Yes, I do. Yeah. So that's actually Krugman himself said that in an interview to Joe Weisenthal several years ago. Fiat money is backed by men with gun. So what happens

When those men with guns lose. And not in a sort of deniable way to Covid or Afghanistan, like we didn't really try or it wasn't a military thing, but to a peer competitor. Well There's potentially an economic markdown that happens. I mean, Russia's outcome in World War One Sean McMeekin has a book.

that argues that the Russian Revolution, it's called like a new history of the Russian Revolution, argues that Very good book. That Russia's most important thing was it was at war during nineteen seventeen, and that's what allowed Lenin and others to take power. It was a war tempting. It wasn't just some random proletarian revolution, it was the chaos of

War. That led to that. And So foreign military defeat Or even foreign conflict is the kind of thing Where it turns things

molten things that were bubbling, things can flow and move around. And Here is a Bad scenario. The bad scenario is an attempt to repeat executive order six one oh two like the

Gold seizure. Do you want that is? Well I can kinda read between the lines, but why don't you tell me what it is? During the rise of the centralized government of the US and I'll come back to this the concept of peak centralization.

Basically one of the things that FDR did was Executive Order six one oh two, which Seized all the gold. In the US. And it basically like forced it to be kind of exchanged in at a certain price and and whatnot. Now

Right now we're seeing insane levels of money printing. And it is certainly possible that at some point in the future They try something like an executive order six one oh two, and in fact there's this guy on Twitter who uh you know has a moderate following who basically is starting to advocate for this type of thing because he had been predicting Bitcoin was gonna go to zero. It's like Facebook is a fad, it's a bubble. Oh no, it's terribly powerful. It must be stopped.

You know, it's a flip from This thing is nothing it's gonna go to zero to, we must drive it to zero. Or we must seize it. So if they try something like that, and the reason that might be possible is you print a lot of money to finance this war and now you've got an executive order six one oh two like thing and attempt to Bitcoin seizure. That is the type of thing that could kick off serious civil unrest. Possible.

The reason If you're trying to seize BTC in a time of rampant inflation. That is no longer something that can be portray as being for the good of the population. Because inflation touches I mean inflation's already pretty high. But it touches everybody. Touches

White people, black people. Latina people, Asian people. It is economics. It's very hard to portray it as Some grand historical conflict or something like that. It really is the state versus the people.

And it's not like the people were printing dollars or managing the economy. That was supposed to be the Fed and the Treasury and whatnot. So if inflation is rampant, any tries of BTC That I think could be The match. For the next wave of conflict. Just a quick logistics question. Is additional

instruments and abstractions are created. ETFs. Futures. Etc. In a seizure scenario, would that be

Limited. to a certain form of BTC or would it apply across all of these different instruments? I don't know, but I think that basically it's a huge difference between Physical gold and ETF.

Yeah, yeah, exactly. That's right. And custodial Bitcoin, which is like Let's put it as well. User custodial Bitcoin versus Holding coins on an exchange. If you have your coins on your laptop or your device

Uh you're not saying not your keys, not your coins. That is something where Yeah, there'll have to be a serious legal process or even a SWAT team. to try to to get them from you. Whereas if they're on an exchange or

But I I advise complying with the law at all times, you know, blah blah blah. But This would be something where it would be easier to enforce that law. on a giant exchange that has all their coins there. Yeah, sure. You just you just log in and you get a notification. Yeah, that's right. So there's a graph that I posted November.

Seventeen, eighteen, twenty twenty. Bitcoin's moving off exchanges, price is moving up, ecosystem be building out, having this constrained supply at the all time high, maybe just at the beginning. Which turned out to be true, that was almost exactly a year ago. And it's a graph from GlassNode. Bitcoin, colon, balance on exchanges, all exchanges.

Which seems to show that coins have been moving off exchanges. And uh there's another graph from Thalamu T H A L A M U underscore. Also showing that BTC held on spot.

Exchanges may be Be falling. Now I haven't Dug into this. You know like you needed like a

pro subscription to GlassNode and and so on and so forth. But that's an important metric to monitor. Because coins on exchanges are easier to seize than coins off exchanges. And to come back to something you said, is that because do you think the main driver there is because people can stake their coins or stake their I suppose yeah, coins and

Get a higher on decentralized platforms. Is that why you think they're coming off? Interest. is a massively scalable application, right? Just park your money and get money back.

And DeFi offers Insane. Interest. At very high risk. Yep. And and just for people who don't know, so DeFi decentralized finance. Decentralized finance offers an absolutely insane level of interest. I wouldn't even quote the numbers because

Any number I quote you can find a higher one if you can take on more risk, basically. And what does that risk mean? It means Possibly loss of principle like the smart contract could be hacked. possibly other kinds of things. But

You know, you can put in a million bucks and get like a hundred thousand dollars a year or more in interest. The thing is that you could also try and put a million bucks and try to make 10 million dollars because some of these coins will 10x. So it is absolutely like the upside of Crypto. Yeah, by by contrast in banks, they're at like zero interest rates or like nothing. Now now just to play the other side. Nowhere can you make more money and also lose more money if you make poor decisions.

Exactly. Crypto, it's like the Unix of money. You can Room dash R F your entire fortune or move millions with a keystroke. Uh. Do you know what room dash Rf is?

I don't, but I love that I I almost want you not to explain it because like five people in my audience will find that amazing and the rest won't get it. But I mean I can it's sort of intuit what that means, but why don't you why don't you spell it out for me. Room dash Rf is it's like a it's like a Unix command, which means remove everything. Dash recursive dash force. So you do it at the top of your directory hierarchy. Dash R means descend into everything. Dash force means don't ask me any questions.

And You know, people are used to doing this when they want to just nuke a directory, but if you do it in the wrong spot, you're like, Oh my god, I deleted my entire files or whatever, right? Oops. Yeah. Modern systems will kind of detect what node you're in and may not actually allow you to do that, but

That's what being a quote power user means. A computer will do What you tell it to do, not necessarily what you actually wanted it to do. That's what a bug is. You've instructed the computer to do something, there's an error in your logic. You didn't think through a scenario, you didn't think through an input. And it does What you told to do, but not what you want it to do.

By the way, this is like a super important thing in terms of cryptocurrency because Yeah. solves the principal Asian problem and replaces it with Your ability to debug. Do you know what I mean by that? Should I talk about that for a second? You said the principal Asian?

Principal agent. Sure. I wanted to know who this principal ag Asian is. Yes, principal agent problem. No, I don't know what that means. Please continue. So this was like in back in twenty thirteen when I f understood the full scope of this, I was like, Holy cow. And the the reason is Whenever

You have a principal and an agent. For example, you have a venture capitalist as a principal and they fund a CEO who's their agent. Or You are the principal and you hire a a plumber who is your agent to fix something, or you hire a banker to go and sell something for you. The problem is That

In the Two by two matrix of You win, you lose. They win, they lose. All four outcomes are possible. In particular, it is possible for you to lose and them to win.

For example they take a commission without delivering you returns on your portfolio. And in fact The principal agent problem is a fundamental thing of every single relationship on an org chart. Manager engineer, CEO, manager, VC CEO.

Every single edge there has a two by two matrix of Who can win and who can lose? Now the key is to try to diagonalize this as much as possible.

Such that The win win And lose lose. You both win the most together. And you both lose the most together.

Such that there isn't any temptation for one party to defect off diagonal and win at the other guy's expense. Yeah. Yeah, read your terms and conditions carefully. Yeah. That's right. And the thing is that this becomes more complicated when you have just Two people, it's a two by two.

When you have three people, it's a two by two by two. 'Cause there's eight outcomes. Win lose times win lose times win lose. It's a Cartesian product. When you have N people, it's two by two by two to the nth power. It's like this hypercube. And so it gets very complicated. So it starts to happen in large organizations. Is that Some subset of people

Picks the strategy. Where they win and everybody else loses. For example Fifty one percent can vote themselves The money of the other forty nine percent. That's a straight win lose zero sum kind of dynamic. Now

The way that startups avoid this is with equity. If you've heard the term like aligning incentives. It actually comes from like math. Where it's like a diagonal alignment pointing through this hypercube of incentives where The key thing to do is especially to startup. Fifty one percent could vote themselves out of their forty nine percent's money in theory if everybody, you know, is a shareholder vote and everybody's equal.

But There isn't any money to distribute. All the money comes in the exit. There's n so internal politics are limited because internal resources are limited in a small company. And so what you do there is

Rather than encourage people to compute every possible strategy In this giant Two by two by two by two hypercube. Instead you say the win win win win win win win quadrant We're all N of us went together.

In an exit. you know, an acquisition or an IPO. Well, you don't have to do out the math. That pays off the most And every other off diagonal thing where some coalition wins while the other group loses

Is suboptimal. Okay. Now here's the thing. The principal agent problem comes from the fact that That

When you've got two human beings, their interests never fully coincide. There's a situation where one can die and the other can live, or vice versa, you know, trolley problem type things. Push hard enough. And there's often a divergence in incentives. Not so for robots. Not so for programs.

Not so for intelligent agents. And you're gonna tie this into crypto blockchain. Yes. Yes. Because With cryptocurrency, a program can now trade on your behalf. You can rather than hiring a banker. To go and trade for you.

You can write a program that will trade for you while you sleep. On cryptocurrency exchanges and especially decentralized exchanges worldwide. That program That you write. To trade especially the reason I say decentralized exchanges worldwide is that is truly just

Packet to packet. That's full internet. There may not even be a sign up process. That is Fully on chain. So that is something where You know, just like you go from a telephone number

To an IP address. You know, telephone number is a human associated thing, but an IP address is a machine associated thing. Any machine can call any other machine via an IP address. That's what an IP address really is. You go from a human bank account to a cryptocurrency address and you remove the human association. And now a program can hold money. Make money, lose money.

Fully autonomously. So now Rather than hiring the banker, you write the program. There's no more principal agent problem because the program has no mind of its own. It's only the mind that you give it.

This is super important. Because As trust in society decreases, Із хадер і хар то майтен. a scaled organization of human beings because there's more and more divergence. It's an individual era

Everybody is Going in this direction, why are you the boss? I should be the boss. In fact, both equality and freedom. While in some ways that they're often made antipetal to each other, where they're actually also similar in another respect, which is if we are all equal,

Totally equal. If you ain't the boss of me You know I have total freedom. Then there's zero hierarchy. It's all flattened out. It is basically anarchic.

And in that situation. Everybody feels that everybody's interests have diverged, so I'm you know, every man for themselves. Now In that situation it's hard to maintain a civilized society. So I think that the answer is going to be Robotics, cryptocurrency, how do those things relate? Well

When you give a robot instructions to go and unpack a box, it just does it. There is no divergence between the Capitalist and the worker, the capitalist is the worker. Management becomes automation. There's a great book, Factory Physics. You ever heard of this book?

I have not. It's way harder. To build an assembly line. than to work on an assembly line. Factory Physics' a good book. Also Eliyahu Goldrat's book, The Goal.

Managed to wrap a It's it's kinda funny. It's like it's almost like a fictional story around operations research type stuff. It it's executed better than it sounds. Okay. It's like whom who move my cheese for um operations research finance. That's right. That's right. That's right. So both of these are good books. Factory physics is like it's like a textbook that

Takes a very quantitative approach to Cycle times and other parameters within a factory second. But the the main thing that you take away from that is And so you know, I designed a robotic

genome sequencing assembly line like ten years ago as part of my first company. And This is something where You realize whoa, it's actually way harder to build an assembly line than to run it. It's like the difference between writing a program and running a program. Cause every

Box there. Architecting like a data analysis pipeline which more of your viewers will have done. 'Cause something has to flow out from this and into something else. It has to be the right format. It has to process only this many units at a given time. You need to use buffers and cues to

Get rid of it and so on. And in many ways, by the way, that data analysis pipeline thing now integrates with the offline physical stuff where you'll do some physical processing to wait for computation online and then the physical process kicks off. Ten years ago, I was kind of merging robotics and AI and cues and all this type of stuff. You know what? And say we like.

Tech people, you'll You'll mess around with a palm pilot years before people are using an iPhone. Or you will be in World of Warcraft before people are doing VR, or everybody's on Twitter before other people are on Twitter, right? So I kinda saw this firsthand. And

One of the biggest things was What you want to do from any process like that Is eliminate as much human error as possible. And eliminating as much human error as possible means as limiting as many humans from the process as possible. It's an error to have humans if you want to ha eliminate human error, okay? Then

If you can reduce it to just bugs in your code. That's way better. Because you can see that on screen. It's super consistent, at least. The error is made in the same way every time. Just to give you an example. If somebody rotates

A so called 96 well plate, okay, an eight by twelve plate. If they just rotate it wrong, if they're cranking through high volume. And there's rotate it wrong, which is easy to do. I mean they've got Kind of. Markers on it, but you know, people are people can screw up. There's ninety six samples that are off. Ninety six patients get the wrong report.

Wait, ninety six patients of what type? What does the plate have to do with patients? So visualize like a plastic Tray. We're

indentations in it to contain liquid. And so those indentations are like really small, basically eyedropper You scale indentations. If you Google like Ninety six well plate, you'll see go to Google Images, you'll see like a visual of this, right? Okay. And so You sell there.

is often like a patient sample. So you might have ninety six samples from ninety six different patients in this plate. And Then you're putting various reagents in there and putting it through this process. And if you

Rotate it wrong. Everybody gets the wrong result. Like twenty three. Right. I understand what you're saying. They they they are matched incorrectly. Is that what you mean? Yeah, yeah, exactly, right? So They had like a sample swap error back in twenty ten.

Where A bunch of people got the wrong ancestry results. They were Oh, uh you know, they thought they were this ancestry, they were another ancestry, they thought, Oh my God, am I an illegitimate child or something like that. So the downstream consequences of this like Very human error.

Or something that The error was to include a human. And so What is gonna happen is Cryptocurrency means that you don't have to hire a banker. You can write

An intelligent agent to trade for you. Robotics means you don't have to hire a worker. You can program a robot. Management literally becomes automation. So rather than

writing out instructions and setting up the assembly line and positioning workers there and calculating cycle times and so on and so forth. You as the manager For many people, by the way, management is uh it's not tangible. And that's why they devalue it. The way the labor theory of values

is talked about the Marxist theory of value, it starts with a visual of the factory floor. You have these Workers who are working and it's like Oh we W And you have this evil fat cat boss.

with a cigar who's got his feet up on the desk. And it's just basically cracking the whip on these poor workers. And of course scenes like this did exist. In late eighteen hundreds America, and I'm not arguing that unethical bosses didn't exist. But

The fundamental premise of this is Oh, the workers are doing all the work and this fat cat is just sitting there and contributing nothing and so on and so forth. And part of that is because Capital and management are kind of intangible. And it's often denied that they create any value. But now What is actually possible is a totally different model where it doesn't start at the factory floor.

But instead you start, let's say, in uh an academic lecture hall. And now you say, Okay. Let's say it's Physics. What percentage of people are able to

comprehend the material and what percentage of people could write the textbook. And then what percentage of people could rewrite the textbook? And it is on that small minority of people that That We depend for refrigeration.

And flight. and fiber optics and so on. It's the opposite, rather than this small set of fat cats who exploits this giant pyramid. With all these workers at the bottom, it's like an inverse pyramid theory. where the vast, vast majority of people Depends on the easy.

upon this small, small group of technologists to create all the stuff that they don't understand how to operate that maintains modern civilization. The funny thing is that your engineering grad student often has both of these mental models in their head at the same time. And it just depends on whether they're thinking of themselves as a poor exploited worker. Or a sophisticated engineering character. And what I'd argue is that in the twentieth century

The reason that the Labour There Value preponderated is that there was leverage to large groups of workers. they could do a strike that because of mass production, you needed workers to operate a factory. So there there was leverage there. And you know, of course

What happened was they In the Soviet Union, they pushed everybody into a A lose scenario Well yeah, there's a strike. But it wasn't a win lose scenario where the workers win and the bosses lose. It was a lose lose scenario.

Where after enough strikes you got communism where nobody could strike. You know, you had the White Sea Labor Canal, you had the Gulag, you had basically communism as this giant slave labor country, this prison state where you couldn't escape. They would shoot you if you tried to get over the Berlin Wall, for example, right? So it actually The leverage existed between workers and capitalists in a certain way. Now it's a different kind of thing.

Now with the dock worker shortages, with the truck driver shortages, There's a huge incentive for automation and for robotics. And People may are just doing, if you've heard this thing, the great resignation. It's happening across many different social classes. With labor shortages, Of a different kind.

It's on a strike, it's a resignation. Okay, well I can't get somebody at this price. Fine, let me figure out how to automate this with robots. And now and here's a critical thing. It is not intangible anymore. Management is not intangible. It's not just instructions that the

boss is giving to the workers and he puts his feet up on a desk. It is literally code in GitHub. It is lines of code that say move this arm here, position it here, calculate the degrees of freedom here. It is math, it is computer science, it is now tangible. Because it is code. And now you're not giving instructions to a worker, you're giving instructions to a robot, a computer.

An agent. All right. This is actually a perfect segue to what I was going to lead into. And I'm I'm just gonna talk for a little bit to set the stage. Begin probably just before our last conversation. In Q one of this year.

And certainly with increasing depth over the last six months. I've been spending a lot of my time in What we might consider Yeah, web three. More immersed in blockchain and cryptocurrencies and FTs, et cetera.

So many of the things that I had read about have become less theoretical for me. Mm-hmm. There are things that I've been able to Explore and

Thankfully not experience and some of the negative cases that have have led me to all sorts of Realizations. So for instance One is If you just read crypto Twitter At least some of the people on crypto Twitter, which I would suggest no one do, if that is your sole source of information. But

Some interesting discussions nonetheless. There are some techno idealists or techno optimists who sort of paint this decentralized future that is just Utopian in almost every respect. But There are

risks in bad code, right? Smart contract risk. And there are insurance companies, Nexus Mutual and many others. of different types that try to provide ways for people to Protect themselves. against the downside of of certain types of smart contract risk. We talked about the pseudonymous economy last time, whereby

People would use alter egos of different types that didn't change constantly but rather accrued some type of reputational value. This is another thing that I've seen most acutely for myself within DeFi and NFTs specifically within NFTs, people who are collecting

high value or what are currently high value JPEGs in essence, right? But pieces of artwork that are non fungible. Uh and people now have hundreds of millions of dollars. worth of these pieces of of artwork in some instances. And very few people, if anyone, knows their real names.

I've had this experience for the first time where I've even met some of these people in person. And tried to make Small talk. We chatted about this before we started recording and I'm like, Oh, hey, where are you flying in from? And they're like, nah, yeah, I'm not gonna answer that. And I was like, Oh wow, okay, this is this is a different different conversation than I'm accustomed to. But there's also Some degree of counterparty risk. When you're dealing with pseudonymous

Identities, let's just say Where you don't yet have established some reliability score. Outside of A verified account and check mark on Twitter, which can also be faked. That can also be sort of hacked in some respects. So here's my

overarching question and I'm gonna lead into it. So I'm sure you've heard this line, you know, trusted third parties are security holes. So on paper, I'm like that makes sense. But when you start to really wade into, say, NFTs just as an example, and people say you need to be your own bank. There's a lot of responsibility and logistics that goes into being your own bank. In the same way that if you

For instance. want to or imagine living in this kind of utopian decentralized world where there's a degree, I'm not saying this is you, but a degree of anarchy. And we saw this during riots in the last year or two in places like Portland, in many cities around the world.

you quickly end up in a state that is not unlike what we saw during Hurricane Katrina, where these atrocities being committed left and right because there's no law enforcement. So then that leads to questions of do you want to be your own Law enforcement. I've seen how much fraud there is and sophisticated sort of social engineering goes into some shadowy corners of the world of NFTs, say with people posing as customer support and discords and then

taking snapshots of people's QR codes and so on. I mean th there there's there's a a a level of kind of sophistication. that I hadn't personally been exposed to. because I'm shielded by my you can I'm sure pick this apart, but I'm shielded on some level from certain trusted third parties, right? I do not have the obligation to act as my own Bouncer and security guard.

And banker. So I'm wondering If you'd like to kinda comment on any of this because I have Realize that for me personally

Being Jason born in my physical and digital life on every level is a scale and scope of responsibility that I don't really want. Even though I have some I have firearms training, I have some technical ability. I have l an incredibly good network. I could actually organize my life around some of Some of those.

sort of pillars of of self sufficiency, but I'm not convinced I totally want to. And I'll tie this in also, you know, you were talking about Singapore before we started recording and you said it's for centralized it delivers. So I'm just wondering for muggles. who might be listening. And I would include myself in that group where we're like, you know what, I'm not ready to be the lone ranger on the frontier of complete decentralization for all of the perceived risks that at least I see once you start to wade into it. Where's the Goldilocks? Point and how do you decide that for yourself?

I thought about this. A lot from many different angles. And uh l let me at least give you my Thinking on it. And you know, shoot at it or

Or agree as as you want. This kind of relates to the thing I was talking about earlier with Communist capital, work capital, crypto capital. Submission, sympathy. So you know, you must submit. You must sympathize, you must be sovereign.

And that last point on the triangle you must be sovereign. as you are discovering is actually not that's why I said it's an extremal point. It is Too hard. For pretty much anybody.

Two Not just hold their own currency, but Grow their own food and get their own water and so on and so forth. Humans are individuals, but they're also social animals. And you make some compromises. Now

The stuff I just discussed on robotics. Actually produces The necessary skill of societies. In theory.

You could have, and this is where I think we end up in twenty fifty or twenty forty, maybe even sooner. You could go back to the future and have robotic farms, robotic autarkic farms. Where if you're looking at the automation of agriculture, it's getting there. It's really improving dramatically. AI for picking things and so on. And you kinda give your instructions to your robotic field hands. 'Cause then you go truly full stack, you're quote off the grid, but you have maybe a modern life. Now Of course you need enough land, you're still gonna have trade, you're not gonna be able to grow every crop there.

But you might be able to do okay. So I do think that there's an eventual thing, I don't know what the minimum scale society is, but I think it's smaller than three hundred million, might be smaller than a million, might be even a few thousand people could operate something decent. There's actually to make that more explicit, there's a you know the project Open Source Ecology? I don't. I recognize the words. I can imagine, but why don't you describe it?

Yeah, so it's a little different than what people think when they hear the word ecology. It's basically A kitchen of thirty open source machines that if you build them from scratch, you could rebuild civilization, the global village construction set.

Okay, open source blue. So it's like How do I get running water? And how do I get this? It's it's all the things that civilization depends on. And uh but it's machines that you can build yourself. And there's also A couple of other books like this is a book called The Knowledge.

By I think Louis Dartnell. Which you think is really good. And you know, how to rebuild our world from scratch, kind of the post apocalyptic thing. That's what the knowledge is about. Yeah, the knowledge, Colonel, how to rebuild our world world from scratch.

Um and then there's another book. Which is how to invent everything, a survival guide from the stranded Time travel. And those books I think are Quite good. Okay, those two.

As well as like open source ecology. Because it addresses some of what you're talking about, which is How would somebody start from scratch and do this? We don't know how to do it. And in some ways what's happening is There's a cycle of

centralization, decentralization that just happens. For example in China it's like There's the warring states period. And then the whole thing is unified. And then it breaks up again and it's unified. And we see this in the computer industry in a totally different context, which is You have mainframes, then you have personal computers. Oh, and then you have

Cloud and then you have cryptocurrency and smartphones. It kinda goes back and forth like this. The thing about this is When You know, system is centralized, people chaf at the control And they want

Sovereignty, they want power, they Push on it. Then they managed to break it up. Then it's all decentralized and its chaos and now what is scarce. is leadership. They're like, Oh, let's put it back together and so on.

And seen from one vantage point, this just looks like a cycle. You just keep coming back where you came from. You go from Anarchy back to tyranny to anarchy to tyran right. But seen from another standpoint. It's like a helix. It's a cycle in the XY plane, but we are making progress in sort of this

Ascending cycle over many generations. Now I'll put an asterisk on that too. Which is I don't believe that progress is necessarily guaranteed. In fact, there's a couple of good

podcasts or shows like The Fall of Civilizations podcast or You know, Samu Berja actually has some good stuff on this. Where he talks about Gobekli Tepe. Which is like the oldest human civilization. It appears

Looking at some of the civilization records. That humans may have like gotten pretty advanced. And then just kind of Totally collapsed. And we've done that a few times in human history.

So you're saying you believe in Atlantis? Well I'm kidding, I'm kidding, I'm kidding. So like Gobekli Tepe, for example, it it's this this site that's kinda like Stonehenge, except way older than Stonehenge. Found in what is today modern Turkey. That pushed way back are dates of when

Civilization started. Okay. So it might be like, you know, playing a video game where you get to level fifteen and then you die. Get a full twenty seven and then you die. And this just might be the most advanced human civilization we've built to date.

But it could just collapse and we might come back. I mean, happened to the dinosaurs, they got hit by a meteor. Yeah, well it's happened to I mean there's some pretty bizarre archaeological records and Really interesting carbon dating done in South America also. That would point to

Advanced civilizational collapse of different types. That's right. And so the thing is that when you say progress is possible, but it's not guaranteed For example, think about Christianity in the Roman Empire. Like Christianity in some sense was no offense to your listeners, I've nothing against it, but

It was like the original communism at the time of the Roman Empire. It Poor down the Roman Empire. Slaves are good, and sooner a rich man go through the eye of a needle than get to heaven and Basically it delegitimated the Roman Empire and eventually it fell.

At least the Western Roman Empire. And that was something you got the dark ages for a while until this sort of Fusion emerged on the other side. The Germanization of Christianity. You know, I had for example Why do you have to do it?

Saint Nicholas and Santa Claus and Snow Next to a scene of Bethlehem and the manger in the desert. Those are two totally different cultures, thousands of miles apart. But what's happened is copy pasting

one story next to another Like horizontal gene transfer in organisms. The meme replicates Even if the substance has changed quite a bit. So what happened was eventually after the Dark Ages you got

A thing that was a contradiction in terms or oxymoron before the Christian king Not the Roman Empire, the Holy Roman Empire. Of course it wasn't continuous with the thing, but conceptually And you kind of had that rapprochement, but there was a dark ages like a collapse of civilization. In between. And so bad ideas or or let's call it idea.

Let's call it Certain ideas. Can Collapse civilization. That has happened.

Okay. Yeah. And yeah, we've recovered, but it's not necessarily a guarantee if we've collapsed is a guarantee that we'll complete recovery. The dinosaurs didn't, of course. Well, some ideas are even generated or myths Two collapse. Civilizations. Yeah, so right. So so this gets to something which I think of as a very important part of the Future

political axis which is You can say It is, you know, Democrat, Republican, you can say it's centralization, decentralization. But I think And even

More important access in the medium to long term. Is going to be Transhumanism versus anarcho primitivism. And we kinda talked about some of this before, I think, did we? Yeah. Uh let's reiterate it and then I just wanna make sure I bookmark that I wanna come back to how do you find this sweet spot on the spectrum because one concern I have is

Is that the decentralized tools given the literacy required and the Precautionary measures and tech savvy required will forever remain, or for a long time, maybe not forever, but for a long time remain the tools of Half a percent. of a given population, or maybe a few percent of a given population.

Unless there are UI slapped on top, which will Ostensibly just create again trusted third parties, so it Seems sort of antithetical. But I don't want you to lose your train of thought, but I wanna make sure that we Come back to that. So let me quickly do anarchism transhumanism, then we come back to your point. So

The quick thing on that is An archive primitivism says We're not living in nature, we're far away from it. We're having all these plastics. We're having all of this

Pollution That's why maybe in you know, there's there's a like a right of center version of that, which is like our testosterone count is down, which it is. Actually that's not like a conspiracy theory. It's actually like a scientific fact is like way lower than it used to be for Adult men. All that is down and s there's some aspect you know, where

This is now neutral. We're diabetic. We're eating all these grains. It's all bad. Instead we need to kind of reject

Modern civilization in part or full like the unibomber thesis. And just go back to the land. And of course. The problem with this is I think that's a romanticized version of what going back to land is. I don't care if some people want to go and do An Amish thing and live on their own or snapshot some point in time. They want to like tear down industrial civilization.

Conversely, the transhumanist thing is the opposite, which says What makes A human. Is technology. You know Richard Rangham's book, uh, How Cooking Made Us Human. You ever heard of that? I have, yeah.

Mm-hmm. Okay. So finally one book I've heard of. Ha ha ha. So Rang's book is important, here's a who. Just to start my level of reading. Your Chinese is way better than mine.

And we have a non over I and I should say non-over, I mean I I learned from from, you know, like tools and titans is amazing. Thank you. But Hooking Made Us Human essentially says that technology is actually part of humanity in the sense that we sort of outsource our metabolism to cooking and therefore could evolve in a different way. That's probably also true for clothes and other things. You know, there's this book, The Naked Ape, which is kind of also about that. And the idea is that You know, we are a technological species. Technology is not some anti human thing, it is humanity.

It is a difference between us versus animals. And so our destiny is to get to the stars. Let's do this. Let's become transcendent beings like one with the machine, Ray Machine Interface. This vessel is just where we are today. But our ancestors ancestors, if we really want to make our ancestors proud They were single cell organisms or like non human creatures, so Whatever is in front will be to us as we are to them. And uh so that's like the transhumanism thing. And what's funny is

Both of these in their extreme form are like off putting to some people. They're like, why can't we just like stick where we are? But the nature of things is that Those people who have ideological zil. We'll start pulling the train in one direction versus another. It's very hard to kind of keep something just Stable in one state.

Yeah. You'd have to end technology and communication, et cetera, right? So now coming back to your point. Basically What do you do when all these institutions collapse? Because most people cannot be that sovereign. Because it's like

An overnight plunge. Into Refounding everything. It is not simply Be your own bank, it's maybe be your own food supply.

And there's certain things that are sitting on your desk that cost you Ten bucks. But you would never be able to build them or it's very, very expensive to build them from scratch. Like a I don't know, like a like a USB cable. Well how how am I gonna build this? I'm holding up a ballpoint pen. Yeah, of course. That's a famous thing, you know. No one can build a pencil.

The first unit. Rolling off the assembly line is wildly expensive. then the one millionth or billionth unit is super cheap. But getting to that point of technology from just a A grass field in sand is super hard.

Yeah, it's gonna be hard to do from your uh intentional community in the jungles of Costa Rica. That's right. But all the supply chain stuff. is going to start forcing a greater degree of autarky if We're lucky.

It is just a gradual ramping up. If unlucky. It is too fast and you don't have time to adapt. It's like the difference in like Working out gradually versus go put up three hundred and break your elbow or whatever. The point is

What I think happens is unbundling and rebundling. One of Mark Anderson's collaborators a long time ago he had this throw off line, which I love because it's so funny, but it's also true. Is only ways to make money in business are Bundling and unbundling.

And this gets back to the spiral thing I was talking about, for example. You take the songs off of a CD. You unbundle them in Tempi threes. And you rebundle them into Spotify playlists. Or you take the articles out of a newspaper and you put them into individual URLs. And then you rebundle them into Twitter feeds.

Yeah, or a subscription, right? Or a subscription, that's right. And you take the countries that we have today. That people no longer feel a loyalty to You're unbundling them into the coming American anarchy.

And Then you're gonna rebund them on the other side. into groups that do have something in common. And that will be probably a really messy global process when this PAC maricana falls. One analogy is

The thirty years war. In some ways, by the way, that's actually quite analogous to what we're going through. D do you know about what happened then? Yeah. I do not. I would love to know. Tell me, sir.

The printing press. Yeah, this tweet actually on this. Printing press plus Martin Luther led to the Reformation. led to the counter reformation. Лед релігіс воз

The thirty years war led to eventually the peace of Westfalia and the nation state. And the internet plus Satoshi Nakamoto led to the decentralization by analogy to the Reformation. Led to the counter decentralization. led to potentially The coin wars

The American anarchy. And then question mark, question mark, and then network states. So let me explain what what that means. By the time of Martin Luther The Catholic Church had become this Ossified centralized power.

And had For example, this thing called indulgences. Where you could go and sin. Then you can just go and pay some money. And be like, Yeah to church. They'd be like no biggie.

Okay, you have to Paul Pass. Yeah, it's a hall pass, exactly, right. Yeah. You can argue it's similar and you know, I know this is a little bit of a poke, but like a carbon credit. Go and sin.

With carbon and then buy a credit. Right. You might argue that's a good thing or a bad thing, but it's it's analogous. Gotta make those fuckers more expensive. Gotta make'em anyway. Good. An even better example is like TSA Pre. Where like everybody's a sinner, everybody's a potential terrorist, but pay this money, you can be in an express lane.

Like, huh? It doesn't strike. Anybody as well. Right. You know, it's like this weird thing where if the issue is safety, why can you pay for it? Or at least Yeah.

Arouses question marks. So two things. No, I was just gonna bring us back to your tweet. The other thing I'll say for folks. Is If you want to learn a bit more about Martin Luther and many of the things that followed, there's an incredible Podcast episode takes a little while to get warmed up.

Called Prophets of Doom. Which is on Hardcore History by Dan Carlin. It was the first episode I ever listened to of his, which got me hooked. Fascinating. Listen. So I recommend that to folks. And back to our regularly scheduled Apologies, sir, please continue. Great. Also, there's a good thing on this called the Bitcoin Reformation with

Tour de Mister T U U R D E M E E S T R That kind of goes through some you know, similar ideas basically like analogizing Bitcoin to to Martin Luther. So maybe look at both of those together and and then you know the historical version and and some of the parallels. But briefly.

Martin Luther Because his attend the printing press, he didn't just nail his ninety five D Cs to Whitting. In I think fifteen seventeen. He basically, you know, the people were able to copy his arguments.

And for the first time people had heard these sort of Deconstructing arguments. That said the Catholic Church is a scam. You should have a personal relationship with God. Doesn't matter what the church says.

Server server. And so yeah, that was a religious argument, but it was also an argument over power and who should hold power. And for a long time when I was a kid, I didn't understand Why are people Arguing about the body of Christ like a waiver it seemed like the weirdest

kind of thing to argue about and fight and kill about. I I just didn't understand this. Now I understand that a lot of those things were sort of Proxies for who has power. Does the church have power or did these new guys have power? And so what happened was the Reformation was like this thing of basically of decentralization of power away from the church. And the counter reformation took a little while to get underway. But this was the Catholic Church saying, Uh uh not so fast.

And basically fought there's some reforms, there's also some combat. And these were the wars of religion. You know, do you go with the centralized church or the decentralized Protestant movement, Protestant versus Catholic. And Eventually after thirty years of war Very bloody war.

People We're like, okay, you know, we're gonna come up with essentially a live and let live Philosophy The piece of Westfalia where We're within nation states.

And you have the monopoly of violence within that and a transnational religion. doesn't have influence within this geography. So that's to say the Catholic Church doesn't have influence here and It was like

Okay, we're both pretty bloody. What's Settle this. And the thing is that's Way out of living memory. That is

Many generations ago. But You know, sometimes people seem to need One thing that's funny is a lot of things kinda you can argue they happen in like seventy, eighty year cycles. Because

Things drop out of living memory. And then certain aspects repeat. So Things people have sort of forgotten how bad war is in some ways.

So They're kind of LARPing it. And maybe they'll make it act into a real thing. This is actually Fukiyama mentioned this that his end of history thing actually had a pressure in comment that People

on some level are wired to struggle And if they don't have struggle, they will reinvent struggle. They will struggle against order and prosperity to kind of make it hard. Manufacturer struggle. Yep. Absolutely. Yeah, exactly. That's right.

And that's Francis. Francis Fuchiana. Yeah, let me actually I'll find the exact quote. Hold on one second. And while you're looking for that, then I want to come back to the Bitcoin or cryptocurrency comparison and the part that I stumbled over when you were reading the tweet initially was the I wanna say the great

recentralization or something like that, and I just wasn't sure what that was. So Centralization, decentralization, recentralization is like Entity unbundling rebundling. It's like

CDs, individual MP threes, playlists. It is newspapers, individual articles, Twitter feeds. It is Countries Anarchy new countries, new cities. What is that in cryptocurrency?

The the recentralization. So it is For example, an exchange It's happening on many different scales, but one of them is Store your money in a bank.

Okay, pull it all out and you've got Bitcoin on your computer. Stir money in exchange. Okay, pull that out and then put it on a DEX partially. Each step here actually gives you control. decentralized exchange. And there's ways of kind of doing this where

You have less risk. than on a centralized exchange. For example, it's an atomic trade, it's on the deck's like a flash loan, and then you're getting it back in the next transaction. There's various ways of doing this where A centralized exchange improves your control over a bank and a decentralized exchange improves your control over a centralized exchange. Even if there's

Parts of it that seem like you're reinventing the wheel. The wheel was reinvented. In fact, there's this great graphic that shows an original stone wheel. And then like a chariot wheel, and then like a modern Michelin tire. We do need to reinvent the wheel.

And we have reinvented the wheel. We just need to be conscious of when we're doing it. So The way I kinda think about this Oh just to finish that reformation analogy, by the way. Just like there was the Catholic Church and then there's the Reformation, which is a decentralizing event. And then there's this huge fight.

With the counter reformation and then eventually a truce Where Protestantism basically one relative to the previous Arabic Catholicism did not die out. It's still a big thing. Similarly, I think

You can think of the era we're in as The decentralization And now the counter decentralization. So just like the printing press in Martin Luther kicked off the Reformation The internet and crypcurrency have kicked off the decentralization. And what does a counter decentralization look like?

It looks like de platforming from social media platforms. It looks like unbanking It looks like The Chinese surveillance state. It looks like basically

Exercising root control. It's basically a route versus routers. So do you have root over this computer system and you're exercising root control? Or do you have this decentralized set of routers that are just routing packets back and forth? And The counter decentralization

I believe is going to Succeed in China and fail in the US. And what I mean by that is I think China because the They have very ruthlessly competent managers.

Yeah, there's actually a good video by Eric X Lee From twenty thirteen which It doesn't hold up in every respect today. Because there's certain claims he makes that for example that

There's things where he says that The Mao error is continuous with the ding error when really Dang was really a coup against Mao's successor. It was a total shift in direction, sound what Mal intended. So those two parts, maybe he just has to say that for domestic consumption or what have you. So you have to take it with a grain of salt, but the rest of it is actually very interesting.

Where at least gives a twenty thirteen Chinese vantage point on their system. Why do they actually have these ruthlessly common managers? Because the way that the CCP works is yes, there isn't voting. If people want to exercise political power, they join the party. Sort of similar to how in the US yes you can vote. But if you really want to be politically powerful, you wanna run for mayor or something like that, that means joining a party.

So sort of like that, of course not the same, but but roughly analogous, those people who are quote politically ambitious Join the communist party and they might start as Running some small Really tiny town of a hundred people. And then they level up and they go to

something of ten thousand or hundred thousand people or a million and then eventually ten million and each level becomes more and more competitive. And they have Surveys they do of the populace. And they do like three sixty reviews where they're looking at your peers who are running other cities and they're looking at your superiors' reports. It's like promotion in a corporation.

And so now of course there's patronage and there's connections and so on that go into it. But it's like a giant corporation where they're looking very much at metrics and did you build this many toilets? Did you hit your numbers from above? Did you manage the population's discontent? Is this region, does it have higher dissatisfaction than other parts of China, and so on and so forth. So Corporation is not a democracy, but it is

responsive to its customers in a certain way. And the Chinese government was always kind of conscious of qu losing the mandate of heaven and having too much dissatisfaction. So did all these polls and so on, try to keep ahead of public sentiment, solve these kinds of problems and so on. I'm not saying they're good. I'm saying that this is how They selected for competent leadership. That's why they have a lot of engineers in in their ranks and that's why they built the great firewall and other things,'cause they have guys who

are basically selected as capital allocators as managers. So because of that, because they accept the great firewall, because they ban social media, because they've done other things. I think China is going to When the counter decentralization where, you know, people thought that their bands on the internet and their controls on the internet wouldn't work. They kinda did. They basically just had their wall garden where they have root access and

Xi Jinping can basically push a button and anybody can be disappeared. There's like super famous actresses that just got Disappear. As I said, ruthlessly comment,'cause that's kind of a scary thing to be under. You don't really You don't have any recourse. There's no civil liberties, there's no human rights.

And Yeah, it's true that over the last forty years they've delivered a lot of benefits to their population, there's this huge Group that's being pulled out of poverty. But that level of absolute power can also go south.

The point is that I think they will succeed, they have succeeded arguably in The counter decentralization. By contrast in the US The US establishment is by turns

Apathetic. It's either apathy or panic. For example on Covid Oh it's not a big deal. Oh For example, these tech journalists wrote this article, No Handshakes, please, trying to make fun of

anybody for taking precautions, trying to shame taking precautions. Folks wrote about Oh these bubble boys are so concerned about this making fun of this early on in Covid. And then they switched Completely to panic later. and never acknowledge that they had had all this false reporting, misleading reporting to be they you know, they accuse people of quote being racist for saying, hey, maybe we shouldn't have the Chinatown parade.

After with the Wuhan coronavirus on the loose after Wuhan itself had canceled its own parades. This is like January, February 2020. So what happened was they were at first apathetic Oh, this is not gonna be a big deal. Nobody should do anything. Then they're panicking, oh my God, ah and so that kind of mode is very common. The US establishment is not selected for folks who look ahead. It's selected for

Actors, propagandists. It's not selected for capital allocators. Just a couple examples. Lorena Gonzalez, this legislator in California, thought that Relatively junior guy at Founders Phone was a billionaire. Or Brian Williams and uh you know member of the New York Times editorial board.

by three hundred million Americans, all of them would get like a ton of money. And obviously they wouldn't. So you actually select for folks who are verbally good but innumerate. And that's very different from what the Chinese system selects for. And that results in folks who are not like VCs or technologists are not like

calculating ahead or doing contingency planning or saying Neither apathy nor panic. We can have a technical plan to potentially succeed. If we do X, Y, and Z. So what that results in is a US establishment that's always behind the eight ball.

Lehman is a surprise, bear is a surprise. Covid is a surprise. Trump is a surprise. Afghanistan's a surprise. Everything is a surprise. And then they react in this very reactive way. Facebook is a surprise. And why is it a surprise?

Because Facebook's a fad, Facebook's a bubble. These tech journalists, for example, in in twenty thirteen even, there's this article Why Facebook will never make a significant profit. Or

Famous article Amazon dot bomb. Okay, or another, you know, NYT classic. Google's toughest search is for a business model. And It's

It's something where, you know, this goes back so far in in some ways Basically These guys are They're so used to inheriting something that they could never have built. They sit upon this

Uh. that they don't understand what it is to build something and they don't think anybody can build something. And so for they're dismissive of the stuff. Until it gets so big that it can't be denied and then they react in this super panicked way. So let's extend that to Current

And year term. Crypto. And you you could take that in any direction you want. It could be sure. BTC ether otherwise in the US. Is there going to be a rash? Regulatory whiplash.

Because cease and desist letters and so on. to DeFi companies and there's a lot of scrutiny. Over lending products. Where do you foresee that going? By the way, I will say one thing, which is

Once you do get in the mode of trying to react to this stuff that's all at Point oh one percent traction. You're thinking like an angel investor. Because It's like

When you start looking at that dashboard and you no longer set your filter at something that's at fifty percent of the population traction or even ten percent You know, when you go to point oh one percent and a tiny percentage of the population is using it. The number of things you're looking at explodes. And you need to have a really good

detector for what will be important and what won't be, and it's gonna be erroneous at times and it needs to be quantitative because you put in fifty K into this and fifty mil into this. And so It's hard. But that's actually what capital allocation involves, especially in the modern era, is figuring out what's gonna get big and getting ahead of it. So

To your question. What is going to happen with sort of the regulatory states collision with crypto? There's various scenarios, but I think On balance.

they're going to lose. And let me explain what I mean by that. They they meaning the US government? The federal government is federal government. And why do I say that? Well

The short version is The US government is losing control over both domestic and international affairs. And so states and cities within the US will take Positions at variance with the Feds. Because cryptocurrency is becoming so valuable to them that they'll have the equivalent of sanctuary states and sanctuary cities for crypto. Crypto entrepreneurs will write

model legislation that will be adopted by places like Texas and Wyoming and Colorado and Florida and other kinds of things. That For example, prevent bitcoin seizures in law. Before the thing happens. That

Give uh this is already there, by the way, in some ways, like Wyoming's Dow Law. is quite advanced. Miami has accepted some city coins and Texas is big in Bitcoin mining. So this is already happening. But the next level of that is doing the same thing that they're already doing versus the Feds.

Which is openly defying them and saying actually we're doing state nullification. And just to give you some recent examples of this. The federal government is losing control of events. I just made like a little List of this the other day. But both domestic and international affairs.

Inflation, Afghanistan, China on Taiwan. France on the AUKUS thing, El Salvador on Bitcoin. Seventeen states, by the way, opposed this idea that The FBI should be sent to school board meetings. So seventeen states wrote a letter on education. Texas has taken a different policy on on vaccine mandates and abortion. Germany went its own way on Nord Stream two.

Florida is pushing back on this financial surveillance thing saying that They are not going to abide by the federal government's edict on this. So you're seeing

significant energy at the state level within empire. And then also outside from places like El Salvador or Switzerland that are just taking policies that are at variance with Now this is quite different from ten or fifteen or twenty years ago when

Under Obama, for example, there was a lot of Kicking in doors in Europe, going after Swiss bank accounts. or sanctioning everybody on the planet, or invading everybody for democracy like under Bush. So abroad, there a lot of muscle is being thrown around. And then domestically Basically the the feds would would step in and Force states to do something.

But over the last few decades what we've seen are Sanctuary cities. For immigration, we've seen states have different gun laws. H seen states have different marijuana laws, we're seeing a larger and larger divergence. States, for example, had different gay marriage laws than than the Feds for a long time.

We're seeing a larger and larger divergence. States are becoming genuinely differentiated from each other and from the federal government, and that's happening within, and then countries abroad are also taking a different route. So France, for example.

You know, now they're going hard on nuclear. Which is definitely not a priority of, to my knowledge, at least the current admin. Germany is trading with Russia. That's not something the US government wants them to do. India is trading with Russia on like some missile stuff. That's again something the US government threatened sanctions on. So countries are doing things that the US government doesn't want them to do and states Within the US are doing things the federal government doesn't want them to do. So because they're losing control over world events, the whole Pax Americana.

is based on The repeal of the Tenth Amendment at home and regulatory harmonization abroad. So you know, FDR effectively repealed the Tenth Amendment where Everything that wasn't officially the federal governments was left to the states.

But a very broad interpretation of the interstate commerce clause said that everything is interstate commerce. So The states actually don't have any rights. We're gonna reinterpret it as the federal government having power over everything, and therefore you get these Alphabet supervagencies, FTA and SEC and all these things kind of rose out the FTR era. And then abroad. Go ahead. You you left. No well I was I was uh just like the alphabet soup mention. It shows you shows you my level of of uh of humor, sophistication. But if I could interject for one second, if you had to live in the United States, where would you live and why?

Texas or Florida? Okay. Why? Probably Florida. Why? Because those are becoming like freedom states.

I think Wyoming's also good. I think Colorado under Jared Police is really good. You're basically seeing The Pro freedom. You know, Jar Police a Democrat, by the way.

He's a tech founder. Keep understands That was Blue Mountain, right? Way back in the day. Didn't didn't you have Blue Mountain? The uh

Gift card company way back in the early days. I could have sworn. Yeah, that's right. Yeah, he was uh he was a few years ahead of me at Princeton. And

Did very well. Super smart guy. I think he he actually is like involved with tech stars and so on. So It's something where In some ways, sort of the center and south of the country are gonna diverge from the west coast and the northeast, I think, you know, roughly speaking. But that's not straight Democrat Republic. That is more

Decentralization versus centralization. And so I think that those states It's literally like a search engine, right? One thing I've wanted for a long time, and actually I wrote about this like eight, nine years ago. But I think that

The next political model is what I call crowd choice. Where you have a search engine Where the rows are jurisdictions and the columns our policies

Sort of like Nomadlist.com. But it's basically a bunch of attributes. And then you just Put in your preference. Then you sort and filter.

But then the next step is to group with a bunch of your friends and have you all put in your preference. And then it finds jurisdiction that is closest to your collective preferences. Let me ask you just before we I want to not lose that, but with Florida and Texas, when we're talking about freedom, what does your hierarchy of freedoms look like? Because there are also a lot of people listening just to act as a proxy for the listener would say, Well you may have greater, say, financial freedom because uh a state might act like a crypto safe haven of some type, but there may be sacrifices that you

Make And sort of tacitly endorse in reproductive freedom. Exactly. So how do you how do you think about The had a stack rank.

Those things. The first thing I'd say is As a pragmatist Being in the US and the US citizen means you're sort of de facto funding all the wars the US wages around the world and so on. So people are implicitly already making

moral trade offs of some kind. When you point that out, that sometimes takes the heat down'cause a new thing is different from the thing they've all it's already baked, the the moral compromise they've already made implicitly. You buy stuff And you don't know where that supply chain comes from. Maybe there's something that you would disagree with ethically. So people make these compromises all the time. And fundamentally I think it is It's a vector. Policy is not a scalar, it's a vector.

It's a set of decisions, you know a tax rate of X and A zero one as to whether Drones are legal and this is your reproductive Freedom slash abortion policy and this is your this policy.

And you know, there's there's an aspect of Deguspus non disputandum. I can't know what that means. Oh Sounds like some Latin though, if I'm not uh probably mispronounce it but The Guspus nonis disputandum is In matters of taste there can be no disputes. So There's aspects of this that are

Preferences rather than absolutes. I might say thou shalt not kill, but I can't say thou shalt like the color green. That's a preference. So some of these things and crucially by the way, I think there are multiple optima. This, by the way, I was coming up with sort of a name for how I think about, you know, my philosophy or something. Could you define Optima, please?

Sure. Yes. So Imagine looking down at a Bit of hilly terrain. And a local optima is The peak of one of those hills.

А глобал Optima is The highest peak Of the highest hill. Right. Got it.

So If your goal was to ascend to the highest height, you might ascend to the top of one of the hills, but really what you want is the global optimum in this case, which is The top of the highest hill. However, it could be the case

They could have multiple hills all in the same region. That are basically of the same height. Got it. Okay. If, for example, you thought of your kind of latitude and longitude there as I don't know, let's say you're

And your I don't know, your equity compensation versus cash percentage. In a company culture, these are like sliders that you could set to like zero and a hundred, both of them. And if you replace that hill analogy with latitude and longitude with These two zero and hundred sliders.

You could imagine different kinds of companies that had different combinations. They're both equally successful in market cap on the Z axis. But that had different policy combinations. Yeah. How does that apply to to states similarly? How would you look at it? Very similarly. That's right. Because I think right now we sort of think of Companies

Currencies Cities. Country is Communities as being different things.

But they're all gonna become the same thing. Essentially the projection of a social network. Or rather. Company is Become like apps.

Effectively on This will sound like tech babble, okay, but a blockchain Is property rights, identity Historical records marriage and birth certificates, all the type of stuff a society can run

A ton of stuff. that it currently does at City Hall on a blockchain. It's property rights, it is Who has admission to what building, who owns what property, what sale occurred at what time. Who paid who, dispute resolution, a lot of that stuff goes on chain.

And then a lot of companies butt off from that and use that as an application point. So All of these things basically set around companies, currencies, cities, countries Communities Uh

Settle around chains. That is like the the software stack for running a A community. And you know, an analogy to this Is

Before the internet books and movies and music. And songs. Television. Telephone calls, those are all different.

And then after the internet, they go turn into packets and all kind of mixed together. And So The normal thing that a macroeconomist will say is he'll say something like Governments aren't households.

Have you heard that before? Nope. I have not. There's a quote actually.

Tyler Cowan quoted it. Think it's John Lanchester. And the Something review of books. Gosh, hold on, let me find it. January

twenty thirteen. Richard Feynman was once asked what you'd pass on if the whole edifice of modern scientific knowledge had been lost and all you could give to posterity was a single sentence. What axiom would convey the maximum of scientific information the fewest possible words. His candidate was All things are made of atoms.

In a similar spirit, if the whole ramshackle structure of contemporary macroeconomics vanish into thin air, The field had to be reconstructed from scratch. The sentence which packs as much of the discipline into the fewest possible words might be Quote Governments are not households. The reason this is really important Is

This is why people will argue that What I'm talking about for company is doesn't apply to cities'cause they're fundamentally different. Governments are not households. And there's a whole discipline of macro that has arisen around this. However, I argue that

Actually in many ways, American and Western macroeconomics. is in its own way as pseudoscientific as Soviet economics was There's a whole discipline, by the way, of Soviet economics.

Marx's economics that had all these equations and so on. And there's some aspects of it. that are still useful, like Kantor's work on maybe it was Kantor Kantorovich. on linear programming and optimal allocation. Yeah, so some of it Is okay, but a lot of it was basically

Essentially just a recapitulation of Marxist premises. And when they say governments are not households and they say that recapitulates the whole field What they really mean Is that the government has guns

And households do not. And therefore the government can seize money. And coerce people to do things and households cannot do this. So everything which assumes some ability to do redistribution, some ability to print, some ability to do this, some that is a hidden assumption. The bullet point at the end of QED is a bullet. And

The assumption is of course a force, as opposed to physics. Where it's the analogy gives us to physics and atoms, the human element isn't there. So once you say governments are not households and you think of it from a different angle of governments have guns, yes, it is true they are different. But I do think that in the medium term future

Because of exit, because of global mobility. I mean we have this tension now, you know, I talked about exit a lot even before the coronavirus. as the most important right. But post corona, post lockdown People prize it way more.

When it's taken away, you prize it more. You prize free migration. And we're seeing a great migration in the US. So the great resignation.

The great migration, remote work. All this and lockdown. All this stuff has made people both more Aware. Of

you know, how important the policy is of the state that they're in. And were able to move. And you know, by the way, everybody doesn't have to move. You know, only a small percentage of the world moved to the US and look at what a big deal that was. On the margins

Some degree of mobility can cause massive change. This is also why everybody doesn't necessarily need to hold their coins. The fact that some people can It's just like, you know, Steve Bomber back when this apocryphal story But when an executive left from Microsoft to Google

supposedly like through a chair or shoved a chair or something like that. Everybody didn't leave need to leave Google. Enough people need to leave that he's like, Okay, this is real. Google is a real competitor. And eventually that led to him stepping down and Setya taking over. So the thing is that the great resignation, the great migration, remote Lockdown. All of these things mean much more exit. When there's much more exit.

When you can hold your coins on your person When you're renting rather than buying. When you're basically running light and your stuff is in NFTs rather than real estate. And when all of the stuff when your books are in Kindle, when your mail is in Gmail Or ideally, you know, in some kind of decentralized thing versus centralized service.

When you don't have obligate ties to the land. Then the state has less leverage. And so because of that Over time. It moves, for example, to like a subscription model.

When you say it, you mean residency in a given place? Yeah, like Swiss cantons have something like this where you pay X dollars per year and that satisfies your obligation to them to live there. And I think the future business model of governments is A subscription and B inflation.

What that means is There's a SAS. Type service that you subscribe to. And that gives you access to all this government stuff. Like a V zero of that is like Sing Pass in Singapore, for example. Estonia has something called X Road.

And the thing about this is it actually isn't just a revenue model for them, it's also actually a crime and punishment model. Where right now we think of digital de platforming as completely lawless. And policing as forceful and inhumane. But it may turn out that in the future

If your punishment is being deplatformed for something, but it's written in law beforehand. It's not some arbitrary thing that's being made up. It's like seven day suspension in order for doing this and it's like having your driver's license revoked for infractions. Yeah, exactly. And so the thing about this is I'm not saying that's good necessarily, but it is more humane than jailing somebody, arguably. And again I'm not also saying I'm not so unrealistic as to think that physical punishment is never necessary or anything like that. Not at all. But I do think that having levels of steps

are valuable where you you don't have to escalate it all the way. You can have a deterrent, which is, you know, a slap, you know, digital slap. For digital suspension. versus All the way to the gun. The gun is a really serious thing. So basically, when you have these subscription states.

You pay. And you have effectively access to this service and doors open. And literally physically open, like you know, the the key unlocks it. It's basically quote digital border control. In the sense of

Why do you have access to the state? Because you've paid in. You have a subscription, you have an identity, it unifies Passport. Driver's license. All of this stuff. Now immediately people say, Oh my God, that gives the root operator of the state enormous control. And it does.

So that's why you have to preserve the right to exit. You have to preserve Bitcoin, you have to preserve cryptocurrency. And then there's boundary cases where If you went and killed somebody. Would you then have the right to exit right after that? Probably not.

And so there's some social smart contract that you sign upon physically entering or virtually entering this jurisdiction. Just like terms of service on a website. But it's more serious. And you might require like a cryptocurrency deposit, for example, rather than just a click through of I have read this.

And so it's almost like Posting bail or posting a bond. to enter the jurisdiction and if you We're posting a deposit with rent and if you exit without doing it, then that is forfeit.

And that is significant enough, for example, to deter Petty crimes and what So that's like the subscription aspect and the inflation aspect is I think as I said, unbundling and bundling, bitcoin is necessary as a corrective Twent century fiat.

But there's another way of thinking about Fiat, which was actually a useful thing for me to conceptualize. You know Chesterton's fence, you know that concept? I do not. So there's a fence sitting out there and someone says, I don't know this fence is here, I'm gonna tear it down. He's like, Well If you know why that fence is there, then maybe I'll let you tear it down.

Because it might be there for a good reason. There's a a second version of this which says Often there's a structure that exists and the reasons that people give for its existence are not the actual reasons. For example Religious taboos on preparing milk and meat a certain way. Tree for Haram.

The theory is that That was related to in a desert environment, food would spoil. And these taboos Would roughly keep people safe. Even if they

We're kind of religious as opposed to scientific. They sort of help people stay away from impure food. And so people thought that you were struck down by God if you violated them, but it's really a bacteria or something you had. So the practice kept you safe. So even if the active ingredient wasn't well understood. So one thing about fiat currency that I observed the other day. But hold on hold on a second, pause there. So you said they believe something Or they believe the justification for something. I think you've there's sort of an inaccurate assessment of the history of something. So that is true. You take that to be true or untrue, what you just said. About the religion. Food taboos. Okay, got it. It's sometimes true. I I like I haven't run the study myself

these written religious practices actually ended up in food purification. There's certainly things where there's tribes that have had potion preparation processes That include a genuine active ingredient. that pharmaceutical companies have then extracted and put into a pill.

Yeah. Yeah. There's often an active ingredient in some folk practice that we don't yet know how it works. For example One thing's sort of interesting is like acupuncture and Bioelectricity. Bioelectricity is actually like a real thing and it's not really talked about.

But evidently has implications for wound healing and so on and maybe Acupuncture is tapping into that. This guy uh he's got a great TikTok. Are you on TikTok? No, but educational TikTok.

Um What's his name? Nasjack. N A S J A Q has a great video on bioelectricity and like limb regeneration with citations and visuals and

And so on. Sometimes there's stuff and it works and we don't know why it works and in fact maybe our reasoning for why it works is wrong. People actually still disagree in some ways on how Lift works for an airplane. And of course with physics there's there's things like this.

So the two business models of States. In the future will be I think rather than coercive will be subscription and inflation. Subscription we just described. Inflation. Yeah, is this.

Bitcoin Is Short term volatile, but shows immense long-term appreciation. The S dollar is actually the opposite. It is short term relatively stable. Forget about inflation for now. I'll come back to that.

It is short term relatively stable, but over the long term you can see it has had A huge drop in purchasing power. Now, right now this is talked about in a moral way. And I understand why because Essentially the quote fiat engineers

don't really acknowledge this as a trade off or even recognize it as such. It gets back to this thing of like the religious taboo. But if you think about it from an engineering mindset, Most people hold a portfolio. They don't hold a hundred percent BTC and a hundred or a hundred percent well, some people hold a hundred percent USD, but You don't usually hold a hundred percent BTC, you hold some BTC and some USD. Why? Because some of this is stable on a daily basis. And the rest is appreciating over time.

Now. Here's the concept. What if Those are just opposite engineering trade offs. There's say

The long term depreciation of Fiat. Провадц ефективний за фонд. to stabilize it in the short term. And just to think about that from an equation standpoint If you were to Do do you know what like uh an order book is?

Uh, probably not what I have in my imagination. So why don't you tell me. Okay, so this was something actually which I didn't know before I got into cryptocurrency and if I think I mean the number of people who know what this is is probably increased by a hundred or a thousand X over the last ten years. And it's very important because It describes what how supply and demand and prices

Really in track. Prices don't come from storks. They come from this. Where does it come from? Okay, so let me explain. No, I'll come all the way back up. So

You go to the store and You buy I don't know, a gallon of of milk. That's gonna cost you I don't know how much it is today. Let's say it's Five bucks. Okay, maybe ten bucks in with all the inflation, but right. Five bucks.

So Fine, you're a price taker. If instead you go to the store and you say, I want all your milk I want Two hundred individual one gallon bottles I'll pay five bucks per

You can do that. But now If you want yet more milk, you need to go to the next store. They have an inventory of Thirty gallon bottles, but it's

Five fifty. And as you start buying out inventory here. Word gets around and people start hiking the price because they know you're gonna walk in and clear them out of all of this. Liquidity of milk. And

That is the difference between Having a small enough demand that you don't really affect the price. And having a large enough demand that you actually move the market. And one way of thinking about it is These are like bids that are placed on either side.

One store has placed a sell order. Of Two hundred gallons of milk. At five bucks. And the next door has placed a cell order.

Of thirty gallons of milk at five fifty. And all of these add up. to be all of what is for sale and there might be a ton. There might be Thousands of gallons. If somebody really wants to pay twenty bucks a gallon, there's like thousands of gallons that become profitable to produce at that level, at that price.

And then conversely. Demand is sort of lowest at five dollars. But there'd be a ton of demand. There might be lots of people who would buy a gallon of milk for a dollar. So you can visualize this sort of V shaped thing.

Where the current market clearing price is five bucks. But if a lot of people sudden buy And clear out the supply. then the next available unit might be at like eight bucks or ten bucks. And conversely, if there's a huge amount of supply

And there isn't demand the market clearing price drops from like five dollars to like Four or three dollars. Okay, with me so far? I am. So that is called an order book. And that is actually how prices are born.

Prices literally come from the interaction of supply and demand. So all kinds of people are being trained as true capitalists because they're actually seeing the root acts to the system, how prices are set. Between supply and demand. Supply and demand are now like computable, visible, tangible. This has huge implications for lots of things.

Because those order books are gonna come to everything. As we cryptoify the whole world. It's not just BTC USD that has an order book. Where you're buying units of BTC for blocks of USD or vice versa. It's not just either USD.

It's not just every coin versus every coin. It's every asset versus every asset. This is what I call the DeFi matrix. A digital wallet doesn't just hold Bitcoin. It can eventually hold everything. It can hold fiat currencies, Ethereum, tokens, NFTs, whatever. And so it's got billions of rows.

But it doesn't just hold everything. Everything trades against everything. Well to just to interject for a second, I mean a very concrete I feel like NFTs and expensive or not expensive J bags are sort of the Will be an on ramp. It's like a gateway drug for a lot of people into crypto and web three and so on. And you can see just for people who want to look for articles on this and certainly you can see it yourself. But if you compare traditional art to say

Open C and collectibles or NFTR work on OpenC. Price discovery. And the sort of transparency of order book that you're talking about is right there, and then there are analytics being built on top of these marketplaces. I want to give one example of what's already happening for folks.

Exactly. Right. So essentially Order books mean price discovery. All kinds of things suddenly become liquid and priceable. Things we could never price before, like a minute of your time. as a JPEG, a megabyte on your hard drive. All that type of stuff becomes priceable. And just to relate it, I'm going to talk about the DeFi matrix, come back up to the order book

Come back up to Smart fiat. Then back up to subscription and inflation, then back up to the rebundling after the American anarchy. What is a DeFi matrix? Digital wallets mean you can hold every asset in your computer, not just Bitcoin, not just Ethereum, but fiat currencies like CBDCs when central bank digital currencies come out.

Every stock, every bond, every NFT, every video game potion, you have a billion items in your digital wallet. Those billion items you don't just hold them, you trade them against the billion items you have this gigantic table. And every existing exchange today A crypto exchange. Stock exchange

A foreign exchange, you know, foreign currency exchange. All of them can be considered sub matrices of these, like a crypto exchange's Fiat currencies and cryptocurrencies versus each other. A stock exchange of stocks and fiat currencies A foreign exchange is currencies versus currencies. All those are just sub matrices of this massive defi matrix.

And some of them are actually exchanges and some of them are so called automated market makers where You've got some rare piece of art and you've got Or rather, like some infrequently traded token, and you've got another infrequently trade token, this will give you some conversion between them at some price. It might be a high price, but you can go directly between them. The DeFi matrix. means everything is just getting repriced all the time. Every asset competes against every other asset.

People don't understand how big a deal this is. It's kinda like It's a huge deal. Huge, huge deal. Yeah, j even for a Luddite like me, it's a fuck a huge deal. Once you really start to look at it, it's Huge. Enormous. It is the internet of wealth, internet of money. And it's gonna be similar. It's like every newspaper went online. And then Google News came online and indexed them

And suddenly every newspaper competing against every other newspaper. And so what that meant was that Now all the ones that were just reprinting AP stories were no longer competitive. And so lots of weak newspapers that weren't adding that much value died.

And so in the same way, when every asset is competing against every other asset, That is like Extreme capitalism. There's no geographical advantage anymore. Not just competing, but also you can sort of cross collateralize and do all sorts of wacky not wacky, but new things that are going to upend a lot of

our current thinking around how capital flows. That's right. And one of the big ones is it's actually a second attack on fiat currency. The first attack. Is that

Bitcoin appreciates and Bitcoin can't be seized and so on, like all the stuff we've done over the last the last ten years. The second attack, what do they call it when you sell a company or you go IPO? They call it a liquidity event. Because cash is universal barter and you can exchange it for other things, whereas you can't exchange stock directly.

The DeFi matrix changes that. Everything is always liquid all the time. So at some price. you can get a quote for something so long as it's not like banned by the state. And

If you can get a quote for something, do you need to actually convert it into cash? You can just do it instantaneously. You can liquidate as necessary. And in fact, you want to hold minimum necessary cash. And have everything else'cause cash doesn't appreciate. In fact, cash depreciates. And so Now liquidity is itself a second whole

Access. Where it reduces the amount of wealth in fiat currencies. The DeFi matrix It's this very, very big thing. It will be to this decade. What the social graph was the previous one.

And you might say, Well, why don't countries just ban it? Well The thing is that Coercion only works within your borders. And large countries can try it, but small countries like Switzerland or Singapore or Dubai or Sonia.

We'll see an opportunity here. Two level up their fiat currencies, recognizing That they no longer have a geographical advantage. Just like local newspapers no longer had that geographical advantage, they were just put into this global competition.

Recognizing no longer geographical image, they might add privacy features. They might add transparent management of reserves, it might add Bitcoin backing, suddenly Currencies are competing with each other. In a way they never have before on features.

And not simply like monetary policy and so on. Central bankers become Vitalic and Zuko. The smart ones at least are the ones who don't just Or like the newspaper guys that that don't N GMI, you've heard that one? Yes, I do NGMI. Not gonna make it. Exactly.

Probably nothing. Yeah, probably nothing. Exactly. This is the same thing that the remote economy has done is It has put Miami in direct competition With San Francisco. And poorly managed cities.

Right. This was recently reported, I don't know how true it is, but the mayor of SF Told the mayor of uh Miami. Hey, stop taking my people. And he's like, Uh, I love you, but no. Yeah.

Awesome. And the reason that is awesome is Removing from The tired Two party system. Two

The wired. N city system. From two parties to twenty or thirty or fifty or a hundred cities competing for you. Means That

Internal disputes are less And Inter city competition is more. Yeah. Which is healthier.

Arguably. You can all you can say that gets bad when it goes to interstate violence. But it is good when it is economic competition Because that is, you know, this Marquis of Queensbury rules and make your city better and make it greener and make it cleaner and make it healthier and have a better life for people and you'll attract good residents.

So Coming back up, so the DeFi matrix was every asset against every other asset. All assets trade against all other assets in the DeFi economy, just like all cities trade against all other cities in the remote economy. By the way, those are related because municipal bonds and municipal equity, like city coins are like municipal equity, you know, the equivalent of municipal bonds in a sense, or like the the next version.

All of those will also trade. And so you'll have the price of a city. Every ideology, every thing will have a price which roughly reflects people's measure of belief in it. Are there more buy orders? Are people long on the city? Do they think it's going to improve in ten years? Is the next Shanghai Or is it the next Detroit sell, sell, sell, sell? That's reflected in real estate values currently today, but it's kind of opaque.

That all becomes REITs. that are on chain and so the price of a city goes up and down. And in fact, that is actually probably gonna be the determinant of your reelection. Did you boost? The re of the city

Or not. That's actually quantitative and numerical and empirical. It cuts through the BS. Did you deliver shared prosperity for your residents or not? Basically, did more people want to buy into the city, buy a subscription, buy a piece of the digital read. versus not. And by the way, let me just talk about the REIT for a second. You know, a REE Real Estate Investment Trust.

One thing I've thought a lot about is There's an interesting way to sort of cut the Gordian knot of Nimbi Yimbi. And What the hell is Nimbi MB? I was like, I got Guardian knot, but what is

The hell is Nimbi Yimbi. Nimbi, Yimbi, I'm a little surprised you haven't heard this one because this is a big thing in cities, and probably in Austin, but NIB is not in my backyard. You can't build in my backyard. And then Yimbi is a more recent movement that's like, yes, in my backyard, we need to build housing. You know, housing scarcity is bad. Okay. And essentially. intra city kind of thing. Now what leads to this dispute is that

The Nimbe is Have They own houses. And their property values go up if they can constrain supply while demand remains constant. A lot of the stuff they did in San Francisco restricting housing construction because of shadows and sorts of I think is short sighted.

Because By driving away demand It's something where in the long term it's detroitifying the city. You know, tech is leaving. Not even that long term, it's happening now. Especially with such a limited inventory. I mean, especially for a city of that size, right. Yeah, the rebutto this is Oh, that place sucks. It's too crowded and the food sucks. That seems like a contradiction. I'm I'm butchering that, you know, the proverb. Nobody wants to go there, it's too crowded.

But There's a truth to that, which is Why did Frenti not make it? It couldn't handle the traffic, so people went elsewhere. Nobody goes there anymore. It was too crowded, meaning it fell over, it couldn't handle the load, it couldn't scale, and therefore it lost.

So Yeah. The demand goes up and then it crashes down to nothing. So nobody goes there anymore. It's too crowded. It's not always a fallacy. It's sometimes a real thing. It means the thing couldn't scale. The point is that with Nimbi Yimbi And you hear me out because I'm gonna say something that'll sound

Totally shocking or whatever, okay? Maybe Thank God. Please continue. Okay. Okay. So so maybe the problem Is actually that Direct ownership of Non fungible property.

Leads people to only have an interest in their local house But not a shared interest in the city or community or town as a whole. And If you can separate out

The utility of living in the house. From the value proposition of selling the house. And actually Xi Jinping of all people was like Houses should be for living in not speculation. The more that people move into the digital realm, the more they start thinking about things in terms of investments and so on, just like you can split out, for example, a corporate stock, you can split out the voting shares versus the economics, and you can like sell the vote independently in some context.

Can we split out the utility from the appreciation? In one model. is You buy a big plot of land. Like a burning man style thing in the middle of nowhere.

And You set up a read on it. And Basically every square, you know, I don't know, maybe every square meter or something like that, is like a share in the read because it's all equal at the beginning. Now you might say the city center is somewhat more valuable than the outside.

When somebody goes and lives there, they do not own their home. Instead they own shares in the REIT. And so as the city expands If They're asked to literally like demolish their home.

I'd like move to Maybe a bigger home, but something differently. They have an interest in the city as a whole, they have an economic interest in the city as a whole, not just their individual home. Do you see what I'm saying? I do. And I was thinking, you know, in addition to the read

I can't remember the terminology used, but like the municipal bonds. The city tokens. I'm not sure the proper phrasing. But if your taxes or your SAS fee that you paid to a given city or state went into a city or state based Token. insufficient quantity and you'd have to figure out what the sufficient quantity is to properly incentivise someone who's

resourced at X level or Y level or Z level. That would also be a good thing. sort of a line. So it's interesting. You could kind of go back to have you heard of Georgism? I haven't. I it sounds like it has something to do with George, though.

Yeah, so well yeah, so Henry George, this was this a concept which is It is obscure. This one is a pretty obscure, I guess, but it's things might come back to the future. So George is um is the idea that the one thing that governments really do own is land. That's the arbitrary thing.

and that all revenue should come from that. And it's interesting'cause kind of outside of left and right. The premise is everything else is value added by humans, but land is this thing that was arbitrarily sort of stolen or controlled or whatever by a government. And so Land is the ledger that states have access to. And more generally, land plus natural resource rights. And

The thing about this is You can imagine People talk about like gold back currency, you can imagine Land backed City coins.

Where The city is reorganized as a REIT. This might have to be done from scratch, by the way, because legacy cities might not be able to do this reform. Basically like Land reform under communism, you know, in a sense collectivization, except it's capitalization. Ideally you would be opt in Sounds tricky. This sounds tricky. Yeah. So like doing it with a legacy city, I I don't have a good answer for it. But let's say you go and buy land in the middle of nowhere.

And there's a ton of middle of nowhere, by the way. America is still a big country. Russia's big. Canada's big. There's actually a lots of wide open piece of land. And what you do is because it's the internet. You do a drone overflight of it.

You recruit people to Crowdfund this territory. And they have to buy in and hold. The City Coin That's like the right to build on

this number of shares like square meters or whatever the territory. They have to commit to some holding period. They can't just buy and then leave and and speculate. There's a commitment to actually build into it. And then you you have something where at the beginning just a quick side note. That's another thing I learned about since kinda wading into the waters of Web three wash trading. And all that kinda s yeah. Anyway.

We don't have to go down that rabbit hole. But yes, so to prevent people from flipping, there's a holding period. It's essentially something where it's again unbundling and rebundling where In a sense. Markets Say, hey, screw loyalty, it's an economic transaction.

Any sort of rediscover loyalty or patriotism or loyalty cards or frequent flyer miles or holding periods, whatever you want to call it. Loyalty is valuable because loyalty produces collective goods. That An individual can't necessarily

Having their own. Other people's loyalty to something is valuable to you because you know it'll be stable and it'll be there when you come back. We should uh take a second just for people. So holdling Hotel H O D L I've read a number of different explanations for this. One is hold on for deer life, another one is hold, but it was a typo and therefore that's what that's what it is. Yeah, that's what it was. Basically It was a typo, there's a guy who is drunk and he posted I don't I'm not smart enough to do the trades, I'm just holding Yeah.

And and off it went. Yeah. Have you heard the term backronym? I have not heard the term backronym. A backronym is a reverse engineer acronym. So hold on for dear life. is like a reverse engineered acronym. I like that. I like that. That's clever. Yeah, they often do it for like, you know, bills coming out of DC like the Patriot Act or something. It's some like abbreviation or whatever. Yeah, yeah.

Or the CARES Act. So basically And by the way, on the topic of like loyalty and so on, this is actually a deep point because My friend and you know, somebody who I agree with on some things, disgusting things. No Smith had this tweet about how

When the police We're basically quasi abolished in San Francisco. You have organized crime looting these stores. And actually the working class employees At these stores are being

victimized by essentially a mafia, a criminal class, because the police have left. It's not like some Jean Valjean going and stealing a loaf of bread. It's a guy who's just like methodically loading stuff into the car and then going and fencing it on Amazon or eBay. Very different kind of thing. It's genuine crime, organized and and willful crime. Yeah, totally different. And people can look back at the Loma Prieta Loma Prieta earthquake. And what happened during that period of time in San Francisco, same story. After the Loma Prada earthquake that happened?

Well, after the Loma Praetor earthquake, people overestimate the amount of infrastructure, mobile infrastructure that is available. in a given city. Right. So in San Francisco I did disaster response training with The It's called Nert.

Nurt? Northern California emergency response team training with the fire department and believe the police department was also involved and they just kinda speced out how long you could expect to go without services. if certain capacities went down, like water or electric. And during Loma Prieta. Which is also called I believe the World Series earthquake, because it was caught on camera during the World Series.

People were well, I shouldn't say people. Criminals were greasing the hills at Dolores Park and just carjacking car after car after car after car. Which is s sort of like a just a reminder of some of the possible harsh realities that await you if you have No available. law enforcement or infrastructure. So so let's get to decentralized defence in a bit.

After the American anarchy, but Yeah, yeah. Okay, I'm covered. Okay, okay. So the thing about this is Abolish the police, abolish the economy, or at least the physical economy. And the reason is in the digital world and everything that you can map to digital you can protect it with the cryptography, but the physical

Still Requires physical balance. It may eventually move to robots. Like drone enforcement of law or something like that. That would actually mean law is Code really is Law. But at least for a while.

It is going to be physical police and and and so on. But we're starting to see Robo Cops like Robo Dogs and stuff walking around with the cops and so and like in V one of this era. V O point one. But

Abolish the police, abolish the economy means If you don't have police, then people are just gonna steal. If they're just gonna steal, there's no property rights and then there's no stores and all the Walgreens leave and and whatnot. But it's actually also deeper than that, which is Yeah, unless there's some prestige Or praise. Because

You know, the police, the military do risk their lives for relatively low pay. Actually I mean I know Policem are sometimes well paid nowadays. But In general.

And you can argue this point, of course, you know, there's lots of people who get mad about this, but In general, you know, at least non trivial. And so the price often can offset that, but what does is the patriotism and the feeling of serving your country and serving your collective and whatnot.

When that loyalty and patriotism is no longer there, when that center doesn't hold, when people don't believe in it It's not like the economics can just continue. Or at least they can't continue very easily. Because The guys who will step up to

essentially collectively defend property and going back to the earlier thing, you know, it's when there's uncertainty that war happens. It's when there's uncertainty that crime happens. If there are Strong punishments there will be no punishments. The Shen Yang concept.

It's like the variable reward, the variable punishment that kind of like, you know, should I make a break for it? Should I go for it? If it's certain, then people typically won't do it. It's like a very swift and certain deterrent. If it's worth the risk, it might be worth the risk. What you don't want is for people to start calculating Whether that kind of crime pays. Once they start calculating it, then it's bad. you get a destabilization because more people do it.

And that overwhelms even more limited resources and you start moving to a new equilibrium of a mafia state. Which is like Russia in the nineties. Which unfortunately I think is similar to what the coming American anarchy might be. So just talking about this coming back, so

The DeFi matrix is all versus all, all assets versus all. The order book tells you how prices are determined. And You know, when I mentioned that future states will have subscription versus inflation. All currencies.

are gonna compete against all other assets and cities will also be able to issue their currencies alongside states Issuing a currency Will become a new business model. It already has been. And the currencies of Companies

And cities and countries and communities. Will trade alongside digital currencies in one gigantic thing. Do currencies almost like tokens. become and we have to be careful here with I mean, who knows how it'll get resolved, but sort of unregulated securities, but you're sure they're they're sort of interchangeable in this hypothetical example, right?

Yeah, on that topic, by the way, I do not believe tokens are securities any more than I believe YouTube is television. And the thing is YouTube was not regulated like television. You don't need a T V license. You don't need a broadcast license. Skype. or telephony to go and place a WhatsApp call. That's not regulated like ATT.

Email is not regulated like the post office. Because we didn't take these super old things and apply them to the internet. And the same way, going and citing hundred year old statutes or stuff from like the nineteen thirties. In the twenty twenties or twenty thirties is simply in a positive.

Larry Page had the saying, any law that's more than fifty years old just has to be re examined, probably can't be right. I mean it's before the internet. Paraphrase Larry Page. So I think these laws will get re examined. I think the what the Soviets call the correlation of forces is against them. But So far as they're in effect or being interpreted that way, of course, be compliant, et cetera, et cetera.

With that said, not every country is America, and in fact, actually I RT something the other day. Where it's actually more and more common now. For crypto projects to ban Americans from buying into them. You may have seen some of these things, right? They literally IP ban Americans.

And the thing is Like a lot of Swan's Yeah, they're just I ID banning instead of IP banning. Yeah. That's right. This you should expect more and more of. Where The US throwing its weight around We'd

Sanctions and threats and so on. is suddenly starting to realize that It's backlashing on them. Because the expectation is Oh, so you want the American market? Well you need to comply with us.

And now entrepreneurs realize I don't need the US market to win. So no, thank you very much. I'm just gonna block Americans. This already happened in New York with the bit license. Where it basically meant that Any crypto innovation. It was I mean, in a sense it was good. Because it just ensured that

We move. The future of finance out of Wall Street. No, could you describe what bit license was and then what happened? Yeah, is a set of onerous regulations on cryptocurrency companies where It was just basically passed so that somebody could have a

career achievement and It was something where you just have to fill out enormous amounts of paperwork and it was uncertain the timeline and the cost. I mean, you're a company, right? You can't Startup can't wait years for a possible license before it operates. So what happened was New York overestimated their leverage. And they're like, We're New York. What are you gonna do? We're the center of the world. You can make it here, you can make it anywhere. Actually, no, I can make it elsewhere, and New York is last on the list.

And so rather than putting them at the front It was too onerous, it was too high a form to fill out, too high a price imposed for that first customer'cause that's what regulation is. It's the price of your first customer. Or another way of putting it, your first customer is the state. That grants you the license to operate.

and have access to their market. Now, as that relative share of that market declines, as the rest of the world becomes bigger, as the percent of GDP that New York controls or financial GDP, whatever you want to call it, finance market that New York controls drops. Suddenly it's leverage drops off a cliff. But it's regulators haven't caught up and they still think that they have that leverage when you just IP ban all New York people and just have them last. And maybe you do that. featured three years in. So it ensures New York is at the back of the line for innovation. So startups just move.

Yeah. Startups just move, but they also IP ban. And so this is a new thing,'cause the US is supposed to be at the front of things and whatnot. Well that's happening in Asia Pacific, right? In in the sense that entrepreneurs are sort of leaving the gravitational pole of China to have their physical base elsewhere. Yes, absolutely. So both China and the US are driving away their best. Actually all three corners of that triangle are

NYT, C C P and BTC, their fundamental weaknesses are they're driving away some of the best. NYT, for example, is Piling up the midwits. But it's losing Mark Anderson and Glenn Greenwald. C C P

It certainly Got a bunch of nationalist Zombies. I mean, some of them are are actually pretty smart, but They're losing The next Jack Ma and Machuan CEO and Byte Dan CEO and so on. They've decapitated all of their major tech companies. And they don't make the pretenses about it like

When NYT did that to Uber, there's this whole because it's decentralized, because It's stochastic because the press can't just fire somebody like Xi Xin Ping can just basically order and fire somebody, it had to be like a thousand articles and this whole process to decapitate them. And replace Travis with A guy who I like, but who was formerly on the NYT editorial board, who is acceptable to NYT. So

The journals effectively went and decapitated a tech company. They're trying to do that to Facebook now. But because there's still some pretense of rule of law. And some pretense of Due process and free speech. It can't just be like they do in China where they just chop and gone, but it certainly is doing something where it's alienating

Many of the best from the NYT corner, just as CCP is alienating many of the best from the CCP corner of the triangle. And actually, even the BTC corner of the triangle. Maximalism, which is like the extreme version. Is alienating people like Vitalik or Zuko or the Solana founders, or anybody who wants to Innovate on so called L one.

They're kind of being pushed away from from that corner. So those three corners are kind of pushing what I think of as the decentralized center. You know, it is The folks who no longer believe in NYT, the folks who are Leaving C P are the folks who want to do L one innovation besides BTC.

There may be B to C and They may respect BTC. And use it and hold it. But they're not mononumists. That is to say there you know, like there's monotheism.

Yeah. Monotheism only one god? There's also monostatism, only one government. The government can do everything. You know, there's this ad from ten years ago. Government is a thing we all belong to. Where People replaced G O D with G O V as like

The strong man up there is like rather than the guy with the beard, it becomes like the US government, the US military. It's really strong and it's benevolent. It can Kill your enemies. And it can redistribute the money and take care of the poor. And then the third version of that is mononymism.

Which is Not Replacing G O D with G O V, but G O V with BT C where it's like There's certain people who

It's sort of a joke, Bitcoin fixes this, and I do believe by the way that Bitcoin fixes a lot of things. But it doesn't fix everything. And when you project so much onto it, it actually becomes unrealistic. Again, to be clear, relative to most people, I'm probably down near that corner, but it's like a log scale. You know. There's people who are ten X or a hundred X. So

What are we missing from the matrix? Cause I definitely want to ask you some additional questions. So I'll just come back up those six points. So DeFi matrix, all versus all, all currencies trade against all other currencies. The order book is each cell in the DeFi matrix, how that price is determined. How does this relate to the concept of the future business models of governments? So subscription and inflation. Basically You pay, you know, for the subscription to have like this effectively digital passport, wallet, driver's license.

Currency of the city, log in property rights, marriage certificate, birth certificate, death certificate, all that stuff. The inflation comes from the smart version of fiat. Says hey. Bitcoin is volatile today.

But appreciating over time, Fiat is flat today. But depreciating over time. And the reason is The reason it's flat today is we're sort of seizing some of the money a little bit. To maintain its price stability.

Against a bunch of goods. And this way all the pieces link together. So essentially If you were to design Not a Fiat coin, but a flat coin.

Where it's not The dollar or the Rimin B. It is a new digital asset. whose property is That unlike the inflating dollar, it is flat. Against the number of chairs or

bottles of milk or or things like that. Would try to be as flat as possible in a time of Money driven inflation. In order for that to work, you need some reserve of that flat coin. Let's say there's

Ten goods that you're monitoring. The the price of flat coin versus chairs, the price versus milk. The price versus Tomatoes, whatever. Those are 10 order books. With buy and sell demand, like we talked about.

In order to maintain it To be flat. You need to keep the price. Within that V, just like not moving too much, and that means Some amount of money so you can place buy and sell orders to stabilize it when other people are selling and buying. Now

That will deplete that amount of money over time and where do you replenish it from? Let me ask a dumb question. When you say so you can place buy and sell orders to maintain the flatness of the flat coin, who is you in this case? It's basically the manager of that flat coin. It is the city. Or the government. Or the entity. I see what you're saying. Basically it's a new central banker.

Right, exactly. It's like this it's like the central bank. You know, Green Spanish like the plunge protection team. And The thing about it and this is crucial You might say, Well, wait, didn't we just invent the new boss, same as the old boss, so how come you saying central bankers That's why like I mentioned the helix, like the spiral, unbundling and rebundling

Just like you go from CDs to MP threes to playlists. Here you go from Unconstrained fiat. Where you have no alternatives. And

It is just being printed and seizing everybody's money silently. To Bitcoin, which checks at. And now to a checked Fiat. We're

If they print too much or inflate too much and they're doing too much more than is necessary to achieve short term monetary stability, you exit to BTC. In the same way that with a company If it issues too many shares. And dilutes everybody down, you're like, No, thank you very much, and that you liquidate to cash.

Bitcoin at a hundred billion. valuation market cap. Bigger than a hundred billion is a is an industry Bitcoin had a trillion is a government Bitcoin at ten trillion or maybe a hundred trillion, somewhere in that range.

Is a world government. Just not the one that anybody imagined. Essentially, you know, there's this vision of a world government that was like this sort of communist socialist world government thing that everybody would be brotherhood of man. And there's sort of the libertarian thing of F that, F the UN, we want to do so and then Bitcoin is actually like a libertarian ish world government. Which constraints.

In the sense of they can't spend more than they have because they're Users will go to the DeFi matrix and cash out the currency for BTC. BTC is like the zero zero of the DeFi matrix. Most people don't Think about this.

But Gold. Is When people thought okay, Bitcoin would achieve convergence with gold, it has done that, by the way. It's around a trillion, it's like the same order of magnitude as gold, and then gold's like two and Bitcoin is like one or two. It's like one point two. So Bitcoin's like one point two trill, and I think gold last I look was like two trill. So it's the same order of magnitude. Bitcoin has now hit gold. But here's the thing.

Gold today is a shadow of what gold was. Gold was the thing that King's wanted that it was a thing that constrained all states It has its flaws because

Spain could mine gold out of the new world and basically cause this huge inflation shock of gold coming back. So it wasn't like a constant in the same way. But Bitcoin as digital gold, if the world economy is recentered around it, that's not a trillion dollar thing. That's like A hundred trillion dollar thing. That's like the thing that everybody cares about.

It's a very, very different matter. So that is how basically future governments, though, are subscription and inflation Which is roughly similar. Two A SaaS company's SaaS subscription and its equity. Those are the new business models of governments, right? Subscription and inflation.

They're non coercive because It's not profitable to be coercive. Setting SWAT teams around costs money. And so instead, what you want to do is have somebody hit a key and enter your society. Enforcing compliance is costly. Drones and so on may change this. And so that is actually, I think, a a trend for like twenty forty, twenty, late twenty thirties.

I say drones, I don't just mean Aerial drones, I mean like autonomous robotics of all kinds, walking robots, driving robots, all that stuff. As we mentioned earlier, that solves the principalation problem. You don't need to Have people fold into you.

The robot will do exactly what you say. So like an individual can exert much more control if they've got a robot fleet. So Coming back up, this is how I see us Rebundling eventually after the coming American anarchy. And

Why do I say American anarchy? If you recall we talked about the decentralization and the counter decentralization. And why I thought the counter decentralization would succeed in China. 'Cause they have highly competent management. They ruthlessly competent.

But they're selected for capital allocators, people who can get ahead of the curve. Engineers. Folks who basically set up the great firewall and block social media before anybody in the West realized how significant that stuff was gonna be. I mean they had seen the Arab Spring in China, so they knew what it could be.

But they acted early. And now today what you have is the same Writers who celebrated free speech at that time Are now you turning on it. And basically arguing only media corporations should be considered true. And they're they're they're trying to jam the jack in the box.

But it's already kind of sprung out because they're very rearward looking. In the West, I think the counter decentralization will fail. Because These guys are rearward looking because it got too big, because also they're not selected for engineering competence. How many people in Congress can even name what a firewall is? How many of them could define what a private key is?

They're selected for being lawyers and actually also actors. And you know, why do I say actors? This is actually a bigger thing that I realized. Hollywood explains more of America than I had realized. Essentially

Everybody who's an influencer is like a celebrity and Politicians are reading lines given to them And when there's less and less and less connection with the real world, when it's more and more just rhetoric to to win elections and celebrity influenc online

They basically become like actors reading scripts. And there's no follow through. There's no follow up. Of course, this trend has been going on for a while. You know, obviously Reagan was an actor and there've been famous actors on the base of name recognition. But now just the concept of acting, you know, Bruno McCaze has also written about this how you know the current admin is kind of like a And it has been for a while, Trump as well. It's not a partisan thing. It's like a hologram. It's like an order that people are going through the motions and acting, but something very different is bubbling elsewhere. It's like C C P and BTC and these things that are not part of the movie. So the thing is

But San Francisco, in twenty nineteen, I actually had this post. I think Holds up fairly well. Yeah, I said this is Like about six months, seven months right before

Covid nineteen. I said San Francisco has this is like June nineteenth, twenty nineteen. San Francisco has thirty thousand car break-ins a year. The streets are filthy and a health hazard. It's extraordinarily expensive. Yet feces and prices rise in tandem. This is a bubble which will burst.

When the right alternative finally appears, just like taxi medallions. And I said San Francisco can be compared to the Two A terrible product with great legacy distribution.

Users hate it and want to leave, just like they want to leave Oracle or something like that. But network effects keep people in for a while at least. As extractive rents continue to soar, when the true alternative finally arrives, exit will be rapid. When was that? That was June eighteenth, twenty nineteen.

Good timing. Good timing, right? So I was like, you know, this feels like a rubber band tension. Which is getting, you know, too strong.

And what was funny, by the way, was Paul Graham's response, which I actually think also held up well, which I only actually saw Much later. Paul said.

In response. This seems unlikely. Historically it's been common for hubs of certain industries to draw people despite high costs and low quality of life. When they decline, it's always due to some external force, e.g., the whole country does, not simply an alternative appearing. And there's a guy who replied to both he said, It looks like both tweets held up from October twenty twenty-one. It's pretty isn't that good? I posted the cool, right? That is good. And

And so essentially, you know, there's a there's a recent post that I actually like a lot. Uh have you heard of the concept of ten segrety? I have actually. Uh that's uh Nice boost to my confidence. Yes. So uh I I'm familiar with it until it's a

context of Buckminster Fuller and different design principles. Yeah, and so this is something where I had probably seen it, but I was not actually aware of the word. you know, until a few days ago. And Sinsecrity is

I think an excellent visual metaphor. See I had thought of things a lot of things implicitly in terms of that. In terms of like Rubber band tensions and like force diagrams. And like there's a rubber band tension in SF between how

Horrible the city was, and Which was pushing people out, feces and prices rising in tan, and just being attacked on the street. In the super expensive city. You know, no public transport and it's like You know, unsafe for women and cri all this stuff, right?

Yet on the other hand, you had all these tech jobs and all this stuff keeping people and the valuations of these companies kept going up. So The money was available to like compensate for the stuff. Uber this year and expensive apartment or whatever. So there's this like this crazy thing happening where money is being pumped in from the cloud and just Incinerated by the city and You know, it's twelve billion dollars a year.

on this stuff. I think it's thirteen point seven now. It's like the probably the worst managed You can't even call it a first world city, really, anymore. That doesn't even apply. It's a it's a descending world city. Did I tell you about that? I don't use the term developed world and developing world anymore. It's just all ascending world and declining world. And that's a declining world city.

That makes sense to me. Let me say one thing just real quick on Tensegrity. So it's a it's a combination of tension and integrity. Here's the definition. The characteristic property of a stable three dimensional structure consisting of members under tension that are contiguous and members under compression that are not. So you can find this on Wikipedia. They're also A somatic or physiological examples of this, at least certainly some people would posit that fascia.

And some of the internal structures of the body, one could make an argument. would also fall under the under this this this principle or definition of Tinsecrity. Yes, and there's this good post, you know, there's a blogger who I hadn't heard of before, but It's uh panalysis P A N A L Y S I S dot substack.com

Front slash P, front slash Y dash Wars dash charts. So A Tensegrity model of international relations. I thought this was really well done because this is kind of how I modeled things in my head. But it was great to see a visual metaphor for it and relate to stuff I already know, like force diagrams and stuff. Where In this post.

You can see, for example, the UK and Germany, you know. They both align because they have democratic ideals and they have auto and meat trade and they're part of the NATO alliance. But what pushes them apart? language and they have differing regulations, right? So there's both Pull and push.

And The thing is that whenever You have that like rubber band tension, but Sintegrity is a better model'cause it's not just Like one force at a time, it's many different forces.

This thing can kind of withstand some push and pull and whatnot. But if something just goes really strong or really weak, suddenly the whole structure goes ca chunk. Because There's things that are connecting to other things. And so what happened with San Francisco

was I could tell that these forces were like in like extreme tension But I felt that It would collapse. I didn't realize There's gonna be Covid, of course, you know, six months before Covid. But I did know that it wasn't gonna persist. And just what happened was

These forces were there and then one of them just suddenly went to zero because everybody went remote. Since you didn't have to be in the city at all. And all the culture changed at once. It was a crowd exit. It was a collective exit. A cultural convention changed which said If you're serious, you're not in person. 'Cause before, if you're serious about a deal

You were in person. But now if you're serious about your health, you were not in person. And so now there's an excuse In a sense, not just an excuse. But

You can turn down every plane flight. You can turn down every in person conference, they must offer a remote option. It's actually really important now. So the thing is that That's why Covet nineteen is a permanent shock. Whenever you take a bunch of people who are at the

zero point on an axis and then you spread them out where like some of them were a hundred percent remote. Even in the removal of that force post vaccination, it doesn't all come back. It's like hysteresis. Absolutely. Yeah. There's a lot of durability. And we could just look at examples of how many Zoom invites I get, even though we could just do telephone and walk around. Even though people are now reengaging with one another. And also there's something to be said for the proof of concept that we witnessed for mobility.

And relocations during Covid. So people prove to themselves and their peer groups prove to them that it was possible. to not just trial other locations while working, but insist on being relocated, or else you are going to take a different job. And Th those kind of macro trends feed On

each other and Austin is a great example. When you have zero friends in Austin moving to Austin is a harder decision than if you have five and once you have fifty In Austin it becomes quite easy. And I think we see that along a number of different directions. That's right. And now the new thing is those fifty friends can all move together.

Yeah. So I wrote an article at one seven two nine.com from slash miami. Which actually cites articles from twenty thirteen that I think Predict this. In some detail.

I give this talk, Silicon Valley's Ultimate Exit, and I have follow up essay called Software is reorganizing the world. The talk about how software is enabling these mass migrations And that's fundamentally the resolution. To our current

Disaligned world. What you really want is not a fifty one percent democracy, you want a hundred percent democracy. That is You don't want a situation Where

It's the absolute minimum necessary consent. Where it's a Fosbury flop like we talked about before. We're just barely clearing the bar. And you have fifty one percent of people vote and forty nine percent of people are unhappy. Those forty nine percent will comply in the most grudging way possible and your majority is very

Contingent and could drop. with one bad headline or event. What happens is low levels of consent The fifty one percent me. feel like they want to impose

Their will on the forty nine percent via coercion. And that's actually bad because It's easy to coerce. When it's like point oh one percent of the society, when it's like some Random murderer

You're gonna get ninety nine point nine million percent of society agreeing that Course of force is legitimate against them. When it's fifty one versus forty nine percent. Not only is coercion much, much, much harder to do by orders of magnitude, because the ratio of Ninety nine point nine nine to point oh one.

Is Much greater than the ratio of fifty one to forty nine. Now these coercion much, much, much harder. It is also not obvious that it's gonna be something that'll even maintain your majority because even the application of coercion reduces your majority. So instead what you want

is to resolve this, right? You're not gonna resolve that by just voting more. It's going to be resolved by some combination of Either coercion or migration. And when I say why coercion? Well One side coerces the other Into

Just completely agreeing with them. They basically win a civil war. That's what happened with The Russian Reds versus Russian whites after the Russian Civil War. But there is in the US

In the cold civil war. There was an article on this in twenty eighteen that actually Both uh Jack Dorsey and Evan Williams. And it was

Here, hold on I'm gonna see. Good things act. There's an article from early twenty eighteen, so almost four years ago now. The great lesson of California in America's New Civil War. Why there's no bipartisan way forward at this juncture in our history. One side must win.

And you know the people Writing this in a Roy Texera. is a co author, you know, the emerging democrat majority. And essentially they say, Remember the great lesson of California, the harbinger of America's political future, and realize today such bipartisan cooperation simply can't get done.

And Essentially what they're Basically saying is California is a one party democrat state. And

That's what you want. For the country. So then the natural continue of more progressive to more moderate solutions then got worked out within the context of the only remaining Functioning party. So essentially they're just saying

Just win. And Yeah. Of course. It is a question mark.

as to whether you actually quote want democracy if You want your party to win every single election. If you don't even want the other party to exist and consider them illegitimate. then that's actually not really in a democracy anymore. Or if it is

It is something that's actually more similar if it's a one party rule, it's similar more similar to a communist party where It's just a smoke filled room where the primary is not really the general election. The general election is just a formality and the primary is the real election. You could argue it's still a democracy if the primary is an open primary. But

The thing about this is Ev and Jack basically RT this uh didn't endorse the per se, just said interesting take. But It definitely got a fair amount of attention. And this is what I mean about one path forward when you have

massive disagreement like that is just one party just courses the other. And course Includes a lot of stuff. It could mine physical force. But It can also mean what we've seen, which is

de platforming, unbanking, et cetera. In fact, one way of thinking about this sort of cold civil war Is eighteen six one to eighteen sixty five. If you look at the map prior to eighteen sixty one,

The blue. We're Geographically separated. And of course they were ideologically separated, but the victory condition was obvious, like The North invades the South's territory.

Ideological and geographical victory coincide. But today if you look at a map of the US, blue and red They're at the county level. They're all mixed between themselves. And so there's nothing to invade, there's nothing in physical space. That you can

Invad they're all mixed. But there's an article from twenty seventeen that gives a visual From CGR dot org. It's uh title is Study Breitbart led Right wing ecosystem altered broader media agenda.

But the main thing about this is the graphs. That are mid screen on this. I have no opinion on the article itself. But the graphs that are in the middle show Here, I just paste in the link for you so you can see them, okay.

The graphs in the middle show that Even if the blue and the red are on top of each other in physical space. They are completely disjoint in digital space. Yeah. That's it.

Yeah. Yeah. So that is where the war is being waged. And here's the thing, if victory in the physical realm Is invading somebody's territory.

Victory in the digital realm is invading their mind. Victory here looks like Blu blotting out red or red blotting out blue. And now we can actually look back on the last several years with a completely new lens.

Which is not the marketplace of ideas but the battlefield of ideas. And now we understand deplatforming, unbanking, canceling, et cetera. Not as disputes within a free society. But as digital warfare. Yeah.

Where you're trying to take out Their tanks. They're going to be able to do it. There are big guns on the other side. by having them wink out of the digital space so they can't recruit more soldiers, energize them, et cetera.

Yeah. This is war that is fought with Words. And with

Keystrokes and with economics, it's not Guns and shells. Though it did bleed over to the real world. During the riots in the capital and so on. The physiquity of this. is secondary but it's not non existent.

So this, I think, is actually not the coming conflict though. This conflict is Democrat-Republican. I think the coming conflict rotates it by X degrees or in a different plane. The coming conflict is gonna be centralization versus decentralization. Where it's gonna be basically like Fiat versus Bitcoin. I think that's that's quite likely to come.

And so a lot of people switch sides. There's gonna be people who are Let's say super patriot republicans who will side with the government, my country Right or wrong. Like the guys who were in the Russian military

Who stayed in the Soviet military. It doesn't kinda matter. And then there's folks who We'll switch to the or take the decentralist side. And that's actually many of the tech CEOs.

Jack Dorsey's a Bitcoin Maxwellist. Zuck is now doing Ethereum with with Facebook and so on. Many of those are gonna go on the crypto. So I think Bitcoin itself will be like the main flashbow in the conflict and crypto is sort of Bitcoin is different from crypto. Because Maximalists want it to be different. That is to say, whether you think of them it's kinda like

Is Taiwan part of China? Or is it its own country? If you're the Chinese government, Taiwan is part of China. And if not, it's its own. Now in reverse If you're a maximalist, Bitcoin is its own thing and all crypto is just scams, et cetera, et cetera.

Whereas if you are in crypto or in web three Actually Bitcoin is great, but It does one thing, which is digital gold, and then we need that. We also need private cash and we need

programmable currency and we need smart contracts, we need all this stuff. For what it's worth. I had this uh But basically

Satoshi Wasn't a troll. He didn't start fights on the internet. He spoke to Zuko, who was the Founder of Z Cash.

He endorsed the idea of Namecoin. In general, I think he was about as attitudinally different from some of his Self style disciples. as a mythical Jesus was from the Spanish Inquisitors. So I I definitely wouldn't call myself a maximalist. However

And moreover, I would also say if you look at Satoshi's Writings. You know Hal Finney? You ever heard of Hal Finney? Who's basically like the I I have heard that name, but I can't place it. Is the first named person to engage with Bitcoin, the first person to engage with Bitcoin publicly

other than Satoshi like replied on the original email. Some people think he was Satoshi and used his name to boost it. Certainly he fits. But he passed away from a degenerate disease. However, he froze his body, so maybe we can revive him at some point. But here's the thing.

And Finny said, Satoshi, are you endorsing the idea that Additional blockchains which each create their own flavor of coins, which trade with bitcoins on exchanges. So she said Right. Domain objects. Parentheses domain coins question mark.

could represent the right to own a domain for a year. So Satoshi Nakamoto Did entertain the concept. Of issuing other digital currencies.

Domain coins. So That might seem like totally obvious to you or me. Whereas I Or you might think of

Satoshi as uh Like a Newton and The Bitcoin white bear is like Principia Mathematica, like a feat of science or a feat of engineering. A lot of Maximists think of it more as like a religious text. And to be fair, You can argue it's got aspects of it'cause it's not simply an engineering innovation.

It has implications for how one lives and that Basically, debt is bad and inflation is bad, and equity is good and capitalism is good. There's a lot of principles that are bound up in it. Freedom, pseudonymity, Lots of different principles, the network society, all those things are bound up in it. Even the Genesis block has this concept of the bank bailouts being bad. So it does have something which is more than just You know, F equals M A.

And so I understand where that comes from. And basically in many ways I think This will be seen as something like The Bible or the Quran or the Communist Manifesto. Or the Americation, we're still close to this event.

But the Bitcoin wiper, the invention of Bitcoin, is going to be something that Just like there's Sunnis and Shiites. Protestants and Catholics.

There's all these different schools of thought. And there's Maximalists and there's Ethereum people and there's CBDCs are this weird kind of thing that like the counter reformation, you know, the Catholicism adopted some aspects of what Process and was criticizing them for C B D Cs are the state.

the centralised state adopting some aspects of digital code secrets work. All these things come out of this. Hold on, may I interrupt? Here's what it is. Here's what it is. Okay, okay, I'll just say this. Sixty sixty seconds. Sixty seconds.

Here's what I was saying. I was saying that The past iteration of this Cold civil war was Democrat, Republican. Think of that as World War One.

Now there's like a rotation of it. Which is like World War Two. That may not be the best analogy because there's most of the same groups who fought at the same time. We might come up with a better one, which is like World War One and the Cold War, or or World War T and the Cold War, where the US and the US are on the same side than on different sides. But the point is that

Last one's Democrat Republican, the next one is decentralist versus centralist. And Bitcoin Maximus on one side and woke capital on the other. And then there's folks who are in the middle. And like crypto is sort of in the middle.

Web three is in the middle, but I think it's more on the decentralist side. And then you'll have folks who Or Republican types who are also more in the middle, but they're gonna be more on like the state side. So that's I I think what the coming axis is, which is the rotation of the current axis.

And that leads to I think significant civil conflict because there are They're kind of irreconcilable. But I do think the decentralized version will win. But now let me give the mic to you and I'll come back and explain why. Okay. Alright, we may end up hitting pause on that and coming back to it in another conversation.

Rapid fire questions. We'll see how successful I am. But uh the couple of things I'll say. Number one is that for people who are interested in How humans make meaning and create myth. Spread myth. You could substitute ideology for myth if it makes you sound smarter, that's fine.

I would suggest they read or reread Dune. So I'm rereading Dune. I've read it before by Frank Herbert, and it is Incredibly sophisticated and nuanced. With respect to As an adult.

As an adult. Oh, absolutely. As basically meme warfare. And the use of not just myth, but the human proclivity almost necessity Four. Myth.

Something called My country or whether it is a religious doctrine. And this we can get into separately. We talked about it a bit in the first episode, but I would suggest people reread Dune, which I'm doing right now because I'm about to see the movie and I want to make sure my memory is fresh. But the whole idea of the lineage of the Benegesterate is really worth looking at very, very, very closely. Also really Talks about in a sense decentralized

Guerrilla warfare on multiple fronts. It's a Fucking fantastic book. So everybody should read that. And bit of trivia. Because I imagine a lot of people listening will be If not crypto native, crypto curious. So the word the word and the name Nakamoto.

Is In Japanese. Japanese is a lot better than my Mandarin, but is Center originally. would be one way to translate that, Naka Moto. And the the character for Naka

Is the same character, different reading. as the Jong of Jong Gua of China. Middle Kingdom, although I think the better way to translate that is center kingdom. And I just wanted to drop a little bit of trivia for any language nerds out there, but Nakamoto is a really

It's a great. Last name for Satoshi Nakamoto. All right, my questions. First one Very important. Have you always said RT instead of retweeted? I guess. I don't know. I mean I think it m I might use them interchangeably.

Is this like an accent thing? No, no, no. Just I just like it. I've never heard that verbally before, so I like that. All right. So You said I'm not a Bitcoin maximalist, but I want to ask you a question. I'll preface it with saying people listening, this is not investment advice, informational purposes only. It's a way for me to Better understand And share your thinking.

Ball G If you were starting from scratch. had no holdings in crypto. But could only bet in one place. BTC versus

ETH versus other. You only get to pick one. Which would you choose and why? P T C. BTC. Why? And the reason is

Everything else is a technology company, whereas Bitcoin has become almost like an element Like gold. That's to say The fact that Bitcoin not only is the first but

It has the disappeared founder. It has because it has the disappeared founder. It fits a certain kind of Mentality where because there's no leader, you don't feel like you're submitting to somebody you don't feel like you're submitting to somebody by buying gold. Satoshi is who you make them out to be. This is not how I think about money typically.

But If you look on any dollar bill, there's Weird incantations there's like a pyramid with like eyes on it and so on. Most forms of bills, they have the most famous people in the country on them. The branding exercise is actually pretty important on this stuff. And

The thing is that you can separate out the economic, the ideological, and the technological. As I said, it's a log scale. Most people would consider me. From the outside, very similar to a Bitcoin Maximalist, but I'll give you two thoughts on that.

So first is on the economics, yes, if I can only buy one thing you just buy Bitcoin. Because Nothing competes with it. It is possible, by the way, now to be clear, do I think it's a hundred percent chance of success? No. I think it's possible that there is some

remaining security issue. Associated with the code. But What's interesting is you know, Square is now doing some decentralizing mining. And the fact that mining's being driven out of China is actually good.

'Cause I don't think any other state has the state capacity to do what China did and the ruthlessness. So it's unlikely that there's gonna be a technical attack on Bitcoin. The only thing that's gonna happen Going forward is potentially a Regulatory or software attack. But outside of that it's community so strong that can probably

Prepare on that. Regulatory tax are also less likely to kill it because This is losing control over the world. If Germany defies on North Stream two and if Sanctions don't affect Germany anymore and does doesn't affect India. If El Salvador can go Bitcoin.

Some states will have Bitcoin be legal as well as within the US So the federal government doesn't have the veto. So finally really the technical attack. Is there some possibility of some Zero day that can like inflate a lot of coins and be hard to patch, that's possible. It is still something where There's like one client that is very popular, one Bitcoin client. It's not a multi client

thing. So that's a main weakness right now. Is it possible there's some supply chain attack? Where some library is included and it hasn't been audited sufficiently. Yes. Also quantum cryptography That's kind of an unknown, but is it possible that

Say quantum decryption. becomes something that is out there before quantum encryption. That quantum decryption is highly centralized and Some governments can do it or some centralised actor can do it, but quantum

Encryption is not something everybody has access to. Those are all possibilities, but the risk factor is relatively low. So that's on the economics. On the ideological kind of the way I think about it is If you go item by item. probably I agree with Maximus on many things. I understand where they're coming from. Exit the Fed, check. Stop the bailouts, check.

Return to sound money, check. Build a volunteer society, check. And the welfare warfare state check. Bitcoin is a global reserve currency, check. Bitcoin has an epochal technological breakthrough. Check.

But Bitcoin is the only digital asset ever and everything else is evil? That's where they lose me. And that's X. And buy Bitcoin sell maximalism.

is the economic slash ideological thing. Because I'm not a monotheist. I'm you might say it's From my cultural background or something like that.

India is polytheistic, it's plastic, it's pluralist. I believe in the value of immutability, but I also believe in the value of programmability. And I think it's good that those are two separate things. If it's immutable like Bitcoin or gold, it's not going to be highly mutable and programmable. Those are two valuable things, but they're two almost necessarily separate things. So thing about it is that's that's on the ideology.

Again, though, the reason I think maximalists are going to have amazing traction or huge traction over the coming years, I think Bitcoin Maximalists, in a sense, the most important political movement in the world that people don't understand about today. Because essentially their argument is It's all a scam. That is to say the Fed is a scam, but actually all the printed money means many of the corporations are a scam, the censorship is a scam, lots of things that the state is saying are

False. Everybody who's rich, they're all cantillionaires because have you heard that term, the cantilone effect? Do you know what that is? I do not. The cancel on effect is some people get the printed money first. So it's not uniform in terms of its application or society. There's some truth to that. That's bidding up assets. That is causing something where it's like dunking on Mars. Actually, I think Mars has lower gravity than the US. It's like space jam.

Junking on the moon. Yeah, dunking on the moon. That's right. Actually Mars thirty eight percent of the gravity there's so yeah, like basically dunking in a lower gravity environment. You might still need to be athletic. But less so. That's sort of what it's like.

doing tech or V C in this highly inflationary environment, at least for now. It's possible that All gains are just wiped out because things go totally vertical. That that's what happened in Weimar. Everybody thought they were Have you read When Money Dies? I have not. Okay, that's that's a good book that actually

Joe Calangelo had a good clip from. I'll just kind of read that clip. This is by Adam Ferguson. He had a great quote. Currently reading When Money Dies, the history of hyperinflation weimar Germany. One of the wildest aspects I never knew was that early on, people all thought they were getting rich. They were selling hard assets. What they thought were insanely high prices and marks. And so

Essentially because the printed money flowed To some first rather than others, there's this cantalone effect. And My banker congratul here's some quotes My banker congratulates me on every new rise, but he does not dispel the secret uneasiness which my growing wealth arouses in me. It already amounts to millions. Speculation on the stock exchange is spread to all ranks of the population and shares rise like air balloons to limitless heights. The value of my industrial investments is rising to an extent which seems to be incomprehensible and almost makes me uneasy.

This thing is something of course then the hyperinflation comes'cause everybody's rich, they all spend and all the prices suddenly rise'cause More Money is chasing fewer goods. In the US, it's nonlinear, actually. One one aspect of it that I hadn't fully understood is The printed money is in some ways contributing to The great resignation. So

For whatever reason you're having strikes, you're having people who are not working as truck drivers or working as dock workers anymore. Maybe more power to them. They've got in this printed money. But what that does is actually it nonlinearly depresses supply, not just of labor. But of goods because the ports aren't being unpacked.

That's why the administration is talking about bringing the national guard to like go and Man the docs. But That Concept is it's not more money chasing the same goods, it's more money chasing

Fewer supply of both goods and services, less labor and less stuff because people are not being paid to unload things or build things. So I think there's a nonlinear inflation effect that might be coming. Oh yeah, well you can look at you know, lumber and a number of other things that I think are a byproduct of multiple factors. It's a byproduct of multiple factors. Lumber in particular, I think it like went up and then it crashed. And overall inflation is definitely here. It's now no longer being denied as some conspiracy theory. They're no longer seeing it's transitory. They're meeting it's bad. Oh, I'm confused as to why it happened. Eventually they're gonna say it's good because it's

Wiping out all of the fortunes. It's like a jubilee. All your debts are gone. Why are you mad about it? And then they might move to seizures, unfortunately. And so I know I'm saying this in a chipper tone. But let me give some good aspect of this. One of my macro theses We've kinda talked about before is That peak centralization was nineteen fifty.

One telephone company, ATT, and two superpowers, the US and U Cr. And three T V stations A B C, C B S and NBC. And so We're kind of running history in reverse. At least in the West. And I I have this essay on this at

Setony.substack.com He gave this very flattering title to it, which I would not have chosen. But if you google S O T O N Y E We'll put it in the show notes as well.

Put in the show notes, right? This goes into more detail, but basically if you go backwards from nineteen fifty to eighteen ninety, The Western frontier closes, but you go forwards from nineteen fifty To nineteen ninety one, the internet frontier reopens. And you can actually map these things backwards in time, you get the Spanish flu, forwards, you get COVID nineteen.

Backwards you get the robber barons. Forwards to tech billionaires. Backwards you get the private banking era. Forwards you get the crypto era. Backwards you get.

The Cross of Gold speech by William Jennings Bryan. Today, forwards you get digital gold. Backwards. You have to Right and left fighting in the streets. And today you have Bridel fighting in the streets.

Backwards you get Weimar Germany. Today we have like Weimar America, where there's both the inflation and the cultural stuff that was very common. If you see like Babylon, Berlin, there's a lot of similarities to modern America. There's this book called Voluptuous panic that kind of documents what Weimar Germany was like, similar to America today culturally as well. It's not just the when money dies gives the economic aspect, Baluptuous Panic or Babylon Berlin. We'll give like the cultural aspects similar. You also have the conflict between the state and capitalism, where these centralized states, you know, FDR was doing

The brain trust. It's packing the courts, National Industrial Recovery Act. He was doing the The entire alphabet soup was set up at that time. And of course the gold seizure.

And you also have something if you go even further back in time, sort of antebellum polarization. The thing is the the attentive listener will say, Well, Balls, you just mix things from the like the nineteen twenties with the eighteen hundreds and so on. And I say yes. But that's because it's sort of A B C D. But it's not exactly DCBA. It's not exactly happening in exactly the same reverse order. I think the common symptom

Is this centralized fist? Clinching. In nineteen fifty is now losing control. And so similar events are recurring in a different order. because centralized control is dropping off. For example

That centralized control allowed for public health. And Also censorship. That's why The Spanish flu I'm not sure if it was solved, but you just didn't hear about it because censorship was actually effective. That was part of the arc up of the centralized state.

And now we have the arc. Down of the decentralized states, there's neither Effective censorship nor effective public health. And so you have like this total catastrophe or at least perceived catastrophe around COVID nineteen. And the way I think about it is It wasn't the Spanish flute, fortunately.

It wasn't a hundred million dead, but it's gonna be on the order of ten million dead, so it's pretty severe. We're lucky that it wasn't Spanish flu. It might, who knows? Could mutate. And The thing about this is When you have this world view, at least in the West, as I'll come back to China.

A lot of these things are happening. But we're seeing the Alternative outcome. So For example, you're getting the cross of gold speech, and he's like, you know, we will not be torture or impaled for crucified, I think, on a cross of gold.

And now we're getting digital gold. People want gold back. So the populist movement is not against gold, it's for it. So you're seeing a lot of these things happening in reverse, not the frontier closing, but the frontier opening. And one of them that I think is pretty important is The stuff that FDR had the brain trust, he had the brains on his side.

And so Executive Order Six One O Two, the seizure they were able to implement it. But I think if they try it this time, it's not gonna work. Yeah. Because history's running in reverse and the IQ is not Part of the state. May I interrupt?

Go ahead. Yeah. And leave the audience wanting more on this particular thread. And may I ask. A number of new questions. Sure, but let me say one last thing and then let's go to that.

Okay. Now I'm gonna say something that sounds sci fi. Basically the modern US, the whole thing is The entire mythology is beating the Nazis and beating the Confederates. So beating the ethnationalists abroad and the

secessionists or what have you at home. And what may happen over the next 10 to 15 years is The regime may lose to the ethnicals abroad, namely C C P And they may lose to the maximalists at home. And sessions at home. And the breakup may happen.

And the difference is, of course, that the Chinese communists are non-white. And they're communists, they're not white Nazis, so they're different ethnationalists, so it's different enough. And the secessionists or whatever you want to call them this time. Are Absolutely not for slavery. They're for freed. In fact, you could argue they're anti slavery activists because they don't want to submit. So I think that it's quite possible that we see the reverse outcome of a lot of things

And then at that point, what we want to do is If the C C P wins and if we have American anarchy We need to figure out some way to rebuild civilization or guard civilization Because in that world, the thing is anything good can massively overcorrect.

You have to have some limiting principle because otherwise too much is not enough. This is why I would not call myself a maximalist, I call myself an optimalist. That is to say, I want to Figure out what the optimum is. across many variables and set an explicit objective function, rather than simply maximize something.

Where Too much is never enough. Maximalism just leads you can call it fundamentalism, you can call it Extreme it just leads to a certain variety there. Again, I'm not trying to Beat anybody up on this.

I'm just trying to see that Yeah, okay, retire the current system. Whatever you do or I do, it seems destined for that retirement. We have to think about what the next system looks like after that. How do we Ensure that we don't have crypto anarchy but crypto civilization.

Yes, I think that the Chinese are gonna rise. But what does an unchecked China look like? The US unchecked after nineteen ninety one Behaved quite badly. In some ways, you know, all the invasions, the unchecked China might be quite mean. And so how do we defend civil liberties, how do we defend privacy, how do we defend civilization in this environment where

We have sort of the reverse outcome. I know that's provocative. Call that a sci fi scenario. You are once again outlasting me and the battery in my headset, and I know I can't change my audio source with the software we're using, so I may lose audio altogether. So I want to ask a couple Of

Remaining questions. I'm going to just throw a number of them out there at once. I think this will make the most sense. And then you can pick and choose. If you had to be bullish on one US based

Big tech company, which would you choose? And then uh If you're still doing angel investing. Or if you were doing angel investing, which categories or areas would you find most interesting? And then Any

Predictions for the next twelve or are there any things you're preparing for in the next twelve months with contingency plans of different types. Either one. The one thing I want to say is Before we get into that.

Just on the topic of secession for a second, just to make sure I clarify what my position is. I believe in volunteerism and so I think Rather than fighting over land, I have zero interest in doing that personally. Instead, I think you should try to crowdfund territory. In no man's land.

So nobody else has a claim on it and you've Got it fair and square. And it's in the middle of nowhere like basically the equivalent of Burning Man. Because fighting is stupid and there's plenty of territory out there and I'd rather build it from scratch without a fight. So I would not call myself a secessionist. I do think that if you look at some of the conversation around

National divorce. That is happening on both sides. That is happening in NY Mag published something on this a few years ago. Which is American breakup, I think.

Maybe it's time for America to split up. Sarah Silverman has talked about this. And folks on the right have talked about so called national divorce. So it's definitely In the air. And one last thing I'll say is that

All of this stuff, the language is super important because session, of course, sounds bad. But independent sounds good. It gets back to that concept of Russell conjugation. The American Revolution was secession of the colonies from The British. But that was independence from the American perspective. So this also gets that earlier concept of our winners writing history.

The adjectives I chose were as neutral as possible. I wanna make clear that I don't support any kind of physic. Yeah. peace loving and I'd want to basically like buy territory outside of this.

However What I want or what you want, there's some forces that might be greater than us. So in this sci fi scenario This is how I sort of see the Harry Selden like. psycho history happening.

Clarification accepted. Thank you. And you know what psycho history is, it's like the prediction of the future. This is just scenario analysis. So why is that scenario analysis important? Well I assign some probability to that scenario. There's also other possible scenarios. Another possible scenario is It's just A lot of

Disagreement. And just a lot of migration and yelling online for many, many years. And then It's something like what happened with the Soviet Union where it does break up. But it breaks up in

Almost basically peaceful slash bloodless way. And that's like a good outcome. And I think that's likely. That might be the most likely. It's much better than civil conflict. And there's things like with interstate unions, for example, where maybe that's what happens, but

We'll see. Obviously, hope for the best, plan for the worst. To your points on this actually relates to big tech coves and bullish and and bearish and whatnot. The US big tech companies that are the most bullish on I don't think actually I don't know if I actually hold any shares in these companies. I might in some like entity of an entity. But it it's certainly not, to my knowledge, a large holding.

I'm actually most bullish on Twitter slash square and Facebook. And the reason is Twitter slash screw the reason I put them is they're gonna become probably merged into something like But Square's Bitcoin support.

And the fact that Jack is CO of both, of course they're two separate entities, but he can figure it out. And probably offer bitcoin payments on Twitter for many things and basically build like a Bitcoin Ethereum into Twitter. What do I mean by that?

Like a Bitcoin Ethereum meaning It's like a lot of the functionality or copied functionality of Ethereum, like root stock sort of I think cloned the Ethereum EVM. So it might have a lot of the functionality of Ethereum or Salon or some of these other chains. But that is sort of Bitcoin backed. And there's different ways of doing that. There could be basically essentially a centralized version that just has like a s minimal decentralized component. Which is one way of doing it.

And you just like load Bitcoin onto it and the rest of it's centralized. There's ways of doing it with zero knowledge. There's a number of different engineering trade offs that can be made. But essentially I think that's one direction, like Twitter slash square. Facebook because

Zuck is also a founder and you know, he's just I do respect him. I really do. And the reason I do is The number of hits. That he's taken over the years. To start is like a twenty one year old kid in his dorm to build what he's built.

And From that to this three billion person network, I mean A lesser founder would have backed down after The mistake on Libra.

But Libra and then DM and now he's doing Novi, which he actually think is a much better chance of working because it's natively crypto. I did actually say this at the time. That What they should have done is start with Bitcoin and Ethereum payments and WhatsApp and do remittance corridors. Rather than

Doing this. I think there's there might be some public record of it, but I definitely Definitely talked about it. Rather than doing A new coin, start with the existing ones, build up Experience on that.

Um rather than doing Libra and that wasn't their first shot, but you know what? That looks like what they're doing now with Novi. And very, very few people Would have had the conviction. To persist with something in the face of that level of resistance. And we're talking congressional hearings.

Most people would have quailed. Same with all the negative press. Same with the Oculus Bet. That's two billion dollars for something where they had to go through multiple iterations to get the product to work. But now, you know, they're gonna rebrand the company around the metaverse. Or Instagram. I made this

comment basically Instagram was not an easy call. This is something where it's being retrospectively litigated because it's worth a lot, but Just to bullet point this. Instagram raised it five hundred million valuation the day before Zuck offered a billion for the company.

One billion was like twenty five percent of their cash in handy about like four billion times. So it's actually a lot of money. It was weeks before the Facebook IPO. The board wasn't consulted, they were just informed. And Instagram had no revenue.

Yeah, that's not that's not an easy call. That's not an easy call. That you know, and in fact, John Stewart mocked it at the time. He's like A billion for Instagram, the only thing that's worth that is something that instantly gets me a gram of cocaine, right? Everybody mocked it, made fun of it. They said, Oh, this is such a bubble purchase, they're so stupid. It endangered the IPO potentially. I mean, there were so many aspects to that. Where that was a

highly, highly non consensus called. That has now been turned into oh it was an obvious buy. And the thing about this, the problem is That

People who are wrong will not admit they are wrong. The only way to show that you were not two X writer than somebody. But ten thousand X.

Brighter than somebody else. is an investment where you're ten thousand X writer. 10,000X more correct. And by the way, this is very common. Google's toughest search is for a business model, or the internet is not going to be a thing. So many articles on the early internet were like this. Or of course bitcoin is going to zero. Or COVID nineteen is not gonna be a thing.

These journals are not off. But like Fifty percent. You can't just read their article and think you're being sophisticated by discounting it. Their mental model of the world is often off by ten thousand or a hundred thousand X. Now in fairness, just to set a counterpoint, there are some journalists who are incredibly prescient.

There are good and bad. And ugly within the world of journalism. Just to be fair. Sure, sure, but many of them are becoming VCs and angel investors. Or going to sub stack. Yeah, a lot of them are defecting because the ecosystem is just full of

vitriol. It's like everyone's pissing in the pool. So a lot of people are getting out of the pool. Yeah, because the thing is what I'm talking about is really, I should preface it, with the corporate journalist, the one who's employed by a legacy media corporation. And that legacy media corporation will Salzburger's company, the New York Times, will literally run billboards advertising itself as the truth. Fox will run billboards advertising itself as fair and balanced. The Washington Post will literally equate itself to democracy itself. Now Facebook doesn't do that.

You know, no tech company has the balls to do that. Say that your equivalent of truth or fairness or democracy itself. But yet that's a for profit corporation that Has the arrogance or the lack of self-awareness or something to come out and say, I determine what is true for the world. I am the paper of record. I am the first draft of history. Whoa, you know, like

The monopoly of truth is upstream of the monopoly of violence. Monopoly of truth. You say that WMDs are on rock and then people go and invade. You say that somebody is guilty, you prosecute them in the court of public opinion and they get Prosecuted.

And so that's a super important power that some Privately held media corporations shouldn't have. And so what's happening now, fortunately, is that power is being decentralized. First in the most important way, which is On chain truth, cryptographic truth. Not

Argument from authority, but argument from cryptography, not NYT but BTC. So that power is being taken away. And what's funny is As you know, I'm not the kind of person who thinks White is an insult. But

These folks are. And for some rich white nepotist like Salzberger to be determining what is true for the whole world is simply not applicable. One might even say it's quote white privilege. And so instead what we should have is something that is a global decentralized network where people of Every group, including, of course, white Americans, can participate and determine what is true through a mathematical process that starts with figuring out Who has what Bitcoin? And then it goes to who has what asset.

And then it goes to who made what assertion. And that's like the ledger of record concept that we talked about before. So there's a root and branch thing where corporate journalism has also lost though they don't understand it just like C C P is hard power and BTC is hard money. Cryptography is hard truth. And corporate journalism has actually lost control over hard truth. Just give you one example of this from earlier this year.

Vitalic Veteran made a large donation. to India for Covid. And do you know how people knew that it was real? Look at the blockchain. They looked at the blockchain.

That was ground truth. That's really important. Because What is the other thing that you tend to do nowadays, you know, you will If something's real, let me see if it's on Twitter.

Did that guy actually say that? And The thing is, that's actually not perfect nowadays because Twitter deplatforms a lot of people, so their record is gone. Or, you know, last year Twitter was hacked if you remember that, and Bezos and other people were posting things. So While it's imperfect.

In the not too distant future, there's things like DSO, there's various kinds of decentralized social networks out there, capsule, all these things that are coming or are out there. In the not too distant future, that backend is also on chain. So to show that somebody said something, you won't link to Twitter. You'll link to the crypto Twitter version, the on-chain record that shows they posted this or said this. And because it's protected by proof of work or similar consensus algorithm, you can compute How much money would be required to falsify that?

How much computation, how much energy would have to go into falsify that. That is really interesting. Cause you also have multiple confirmations. It's not just One source. The thing is I don't care if something has a thousand retweets. What I care about is if it has

Two or three independent confirmations. From economically disaligned actors. This is the same as academia, by the way. Everybody's optimizing citations. What you actually want to optimize is independent replication. That's what true science is. It's not peer review. It is. Physical test.

This leads to kind of worldview stuff. What am I interested in? So the reason I was interested in I said Twitter Square and Facebook is they're still founder led. Because they're founder led. They are getting into respectively Bitcoin and Web Three. Whereas Google, for example I respect Sunder.

It's very hard to run an organization like the one that he does. But With the big exception of AI under Deep Mind. Thanks to DeepMind Acquisition, Google really hasn't innovated that much. There were some promising things like trying to integrate Robotics.

That was taken down by scandal. But basically conceptually, technologically, economically it was sound to kind of put that all under one roof and actually advance the state of the art of robotics. They had Boston Dynamics, they acquired all these companies, they're gonna knit them all together. Unfortunately, Scandal took that down. They had all these messaging apps. Basically they've just kind of been a drift. They've kind of got too much money and they don't have enough focus or what have you. It's all the same big company stuff. That thing, remember I said before about how if there's a lot of money within a company, people can do the off diagonal, they can loot.

They form those coalitions. Right. The win loss and loss win as opposed to everybody wins. So that's definitely happening there. And just to show why I'm not bullish on them. I mean It's twenty twenty one. You know what they don't have? You know, it's a core thing for search.

That they would have had Seven years ago? If probably Larry Page is still in charge. I do not. What is that? Block explorers.

Why don't they have blockchain.info and either scan? Those are People don't get this, but block explorers are actually The stealth threat to search. That's to say

We're not used to thinking of them as a as a threat to search because Financial data of the blockchain type being indexed on a website like blockchain.com or EtherScan, where you're looking through smart contracts and so on. That seems like categorically distinct. From text.

and media information that's on the internet. That you go through web search. But guess what? The internet of money and the internet of information eventually merge together because With something like DSO, with what was called Bitclock but Dieso, if you go to their block explorer

You can see that every post and like and so on is on chain. And that shows that actually More than just financial data can be represented on chain. Social data can as well. Social data can pretty much everything else can. Because social networks include Media and all this other type of stuff.

So it's all gonna go on chain. Eventually. And some of the zero knowledge stuff, like what Starcare has done is solving some of the scalability issues. So if it all goes on chain. That actually

Is a threat not just Google, but also Facebook and Twitter? Because Indexing the web is hard. Indexing a social media company's database is even harder because it's closed and corporate. But indexing a public blockchain is easier than both. Just to give one example, with indexing the web, you have to go and have a crawler that has to guess.

When to recrawl one of a million sites. When is it going to refresh? You don't know. They're not going to ping you. So you have to guess and you have to spend spare you have to do a whole Cisco model on this kind of thing. That's just like one piece of the whole web crawling problem. With a blockchain, it's the opposite.

Every update is pushed to you. You just subscribe to it and you just get a block pushed to you and then you reindex it. So like enormous parts of like the entire Infrastructure are solved. by different abstractions that take millions of lines of code And like reduce it to nothing.

And then the question is can blockchains themselves scale? And why would people put everything on chain? Well it's would seem insane in nineteen ninety to say you're gonna stream movies over the internet. That was crazy, and people thought it wouldn't scale. But it did. And one of the other reasons, by the way, that we're gonna get blockchains as a backend for everything

Do you know who sucks at information security? Can for think of a lot of people, but what what is your answer? Government IT developers. Do you know who's actually awesome at security?

Tell me. Bology. No, I I'm okay, whatever. But crypto developers. Yeah.

So most people don't understand this, right? They there's a website called R E K T dot News and essentially documents every major hack in crypto. Yeah, it's like the fuck company of crypto. Yeah. So millions of dollars get sold, but here's the thing. That's why people are like, What are you talking about? Crypto? It's secure, there's all these hacks. Here's the thing. We're churning out the equivalent of combat veterans. This is a live fire environment because see the thing is in web two

Your systems can get hacked without you knowing about them. Someone can just get onto your computer and they'll just hang out there, slurp up information, sit there. And the reason is It's not a negotiable instrument. The data in your database They don't know what the price is on the open market. They might want to sit there and slurp in more information, they might want to escalate their privileges and so on and so forth.

If however There are cryptocurrency private keys in every directory. You've now given that attacker An incentive. To just

Take the money right now because who knows, you might move it. In ten minutes. So that suddenly makes intrusions tangible. Now you might still have a politically or ideologically motivated attacker. But once intrusions become tangible. And you can see the damage that is done.

It's like capture the flag on everything in security. One of the hardest things about computer security is it's like, oh my data was hacked. All right, guess that happened again. There's this website called Have I Been Pwned. Where you can type in your email address and find how many different hacks you were subject to. Go ahead. I'm just wondering who owns that site. Tro Troy Troy uh I forget his last name, but he he's a good guy. He's like a security guy who's legit. But yeah, it's a good question, right? So but have I been pwned, like the thing is companies now

Subscribe to have I BeanPwn to run their users' emails through To make sure that they're not reusing a password that was already hacked. Yeah. Now think about what's going on there. That's like like a sharp between companies. That they're using. So like your log into X site depends on your login to Y and Z and W site. That's kind of like the concept I have this post, yes, you may need a blockchain on how.

Blockchains are a uh primitive for shared state. between companies where I can write to it and read from it in such a way that I can't interfere with your reads and writes. But. Point is That kind of gives a shadow of like what a shared login kind of system looks like.

The point is this. The current hacks of crypto things obscure the fact Yeah. In web two, you can set security to zero. And just focus on utility because

Yes. You have utility, you have customers, and if you don't have utility, you don't. But security is sort of orthogonal to that, at least at the beginning. In web three that's not the case. If you don't do an audit of your contract, if you don't think about formal verification, if you don't use a type safe language, if you don't really think through all of your error modes and maybe use audited contracts and

be extremely defensive in what you're doing, your contract gets hacked on the first day. So minimum necessary security is much higher. It is a requirement for making money. And they sweat it. People sweat it for real, like they know that one compromise you lose the money. And

People do die. In the digital realm. And best practices come about and new tooling is coming about. What do you mean by people die? You mean initiatives, projects, companies? Yes, exactly. It's vir in virtual war. In this virtual cyber war.

Companies do die. They just get all their fun sack. They're dead. Right, reputation killed. So The thing about this is When people look at ransomware and so on. Ransomware is actually You know how that works, right? Like basically there's a security hole, undetected security hole on something like a an epic software, and then there's a thing that appears when it says, pay me some Bitcoin or pay me some Monero.

in order to unlock your computer. Yeah. No. If this is not yet feasible, but it's gonna happen. Do you know where that would be actually extremely hard to do?

Would be to run that ransomware on the Bitcoin or Ethereum blockchain. Itself. Yeah. Why?

Because if they could have hacked it, they could have awarded themselves a billion dollars, they don't need somebody else to do it. So the thing is that Blockchains will become By dint of their built in bug bounty, by dint of the fact that they're not just open source, but open state. the most secure backend platforms in the world.

Now, don't you think that's also gonna be a Cambrian explosion of social engineering? I mean, I would imagine that all sorts of Sort of Kevin Mitnik, the art of deception type social engineering will Explode to sort of Not skirt. But on some level circumvent very tight

Technological precautions. And we we're seeing that in Discord. Certainly, I mean, I have to imagine this is happening, although I haven't read any accounts, but One of the crazy things in the NFT world, right, is if someone gets hacked because they accidentally give someone a QR code or God forbid their passphrase. They can see exactly.

where their stolen stuff is, right? They can look at a an unidentified wallet holding their stuff and watch someone selling their stuff. It might not be plausible or sensible now, but at some point in the future I could foresee There being greater value of some NFTs to the person

Who had them stolen than the person who did the stealing, in which case you would have sort of ransom like circumstances. I don't know. Every crime we can possibly think of Will happen. In that sense. Might already have Jameson Lop has this

GitHub of like I think Bitcoin physical attacks. So physical plus virtual will be combined, social engineering. But I think In some ways. There's good and bad. The bad is

With the state receding. With decentralization winning. The American anarchy that may follow. Remember the thing we were talking about with Ten Segrety? And the rubber band. So right now we're in this weird phase of anarcho tyranny. Where

There's a crazy guy. Who is Smashing windows or pooping on the street in San Francisco. That's the anarchy. But the tyranny. Is that the Uber driver who parks next to him

Gets a two hundred dollar ticket. for being on the wrong side of the road. So the guy who smashes a window of the car, nothing happens to them. The poor working class guy who parks inside a road gets a whatever hundred dollar ticket. So it's a combination of anarchy and tyranny. That I think is so the new information to me over the last eight or nine months is I think that The tyranny doesn't have enough state capacity to sustain for long.

And that's different. Than the Soviet journey. That's different than the twentieth century top down states. What I've sort of realised is If in the twentieth century the big problem

Was tyranny. Because you had sort of left authoritarian and right authoritarian extremists and what was was precious was freedom. and equality in the sense of being treated as uh an equal member of society rather than The equal protection under law, all that stuff.

In this century I think after that rubber band snap. Happens, which I think is gonna happen. And the tyranny vanishes and we just have anarchy. What is scarce is not freedom but leadership.

Say in a time of tyranny what scarce is freedom In a time of anarchy but scarce his leadership. Yeah. And what happens, I think, is Like Russia in the nineties is this book

I think like May I posit something while you're looking for that, and that is I would imagine human nature being human nature doesn't seem to have changed all that much over the last few millennia. That If we have, say, decentralized social networks While it may be true that no central authority can de platform you, you will have Lord of the Flies dynamics.

Whereby Someone a crew's incredible reputation Slash power, societal sway. And can effectively Force.

Exile by Just causing so much vitriol and acid to be thrown at any individual player. So it In the sense that I expect it we'll see.

de platforming by other means than some central order. I I think what happens is you get recentralization. So yes, I do agree with that. For example, what's happened in the US Is If China has centralized censorship by the state And yes, because the first amendment prevents that.

You have decentralized censorship by corporations, where it's technically compatible with the First Amendment, but it's Spiritually not compatible. And then the the response that is the third order, which is Decentralized censorship resistance. See because

The sort of Western form of censorship is this retrofit. It's not like the Chinese where they sit out and they're like, you know, we're gonna take the hit. We're gonna take the PR hit, the reputational hit, whatever, international hit. Just gonna censor.

Because it this was a retrofit on the system. It is retrofitting This tyranny on a top of a previously free system when Twitter was, you know, the free speech wing and the free speech party, you know, and started out with that. Is a bad fit. And there's still enough people with living memory of what

That freed like? It is now becoming apparent, which was not to me I think a year ago. That the state capacity for really exercising that in a coordinated way is not there.

There's to say If the Chinese state do you know what like lawful evil versus chaotic evil are? From Dungeons and Dragons? From Dungeons and Dragons, yes, exactly. I I do you should probably describe what they mean, but yes. Lawful evil is

Methodical careful evil. And in some ways, I think it's a caricature to say this. In some ways, but In some ways the Chinese state, you can think of it as lawful evil. When they set out to

Censor you. Or Every switch is flipped. Every you know, the the guys all fan out like Bitcoin mining banned. Boom, they actually just go and execute on it like ruthlessly, like a corporation. The top guy gives the order and they all go and do it. If you watch like the Chinese military parades

under Xi Jinping. They don't even salute the seven person C C P standing committee anymore. It's not a salute of An oligarchy, it's a salute of one guy. And that one guy gives an order and all these guys go like they're a little like robotic like this. That's the whole point of the military parade, by the way.

Is to show that In peacetime if they can do this, and in wartime there's this completely coordinated ballet of violence, basically. That's the whole point of military party. They're at like lawful evil, whereas the American state in many ways is chaotic evil. Afghanistan just like this total catastrophe and we have stores being burned down and people storming the capital and states doing this and money being printed

And look there, a butterfly, you know, I'm on Twitter yelling at this person. And There's no coordination of any kind, there's no strategy. This AUCA thing. Is a great example. Did you follow this at all? I did not. By the way, as a sidelight, some people be like

Oh. Why are these crypos, tech bros like, you know, getting into foreign policy or politics? On the other hand, they'll also say, Why don't these tech bros or crypto, why don't they learn some history and humanities? Like you know, it's a these are mutually contradictory criticisms, of course, right? But My response to that is twofold. First is, as I mentioned before Just like after The two taus eight crisis it was obvious.

that the Federal Reserve, the bankers, didn't have it under control. In fact, Bernanke in two thousand four had given the speech at Jackson Hole. Wyoming, I believe, on the great moderation. On how Macroeconomic volatility had been solved. And they had it all under control.

And no big deal, meaning no more depressions, nothing. Of course, a few years later, financial crisis happened. So they obviously didn't know what they were doing, even if they had control of the system. Hence FinTech, hence crypto, because of that distrust. And now What we're seeing in twenty twenty one, if it wasn't apparent before, but it's really apparent now. is that the foreign policy establishment of the US, the national security, the military establishment

Didn't just blow Covid, they blew Afghanistan. Despite Two trillion dollars in twenty years. They basically blew the largest lead in human history, arguably, over the last thirty years. An empire at its absolute zenith. Is now

Losing to The Taliban. And by the way, it's not even like Vietnam. You know why? The Vietnam defeat was actually more excusable because they had a superpower sponsor. The Soviets We're on the other side.

The Chinese were on the other side, supplying arms. Those were serious states. Who's backing the Taliban? China isn't putting in weapons. To my knowledge, Russia isn't. Maybe Pakistan. It's not like Vietnam. It's actually much worse than that as a defeat. So point is just like the bankers obviously didn't know what they were doing. So time for other people to come in, new fresh blood. If you take a look at my fellow tech bros in finance and VR,

Palantir and Andrew. Teal and and Palmer Lucky Waltz in the U.S. With no background. And advanced the state of the art. of the intelligence and military communities.

That kind of shows a shade, I think, of what is possible. If we do decide to get involved in this, and obviously in cryptocurrency Guys like Vitalik. People who are running these Coins.

are running economies. They are running monetary policies of large countries. It is A step up from simply running a company. You're running a community. You have to think about things. You can't control people's actions. You can nudge maybe by pushing through an update, but even that update may be pushed back on. It is actually Like the executive, legislative and judiciary, the president and the lawyer congressmen who edit text and then the judiciary that enforces it, the fallible and highly unreliable and irregular judiciary.

Rather than that You have the executive of the CEO or the founder. You have the legislative, which are the coders that propose the edits and changes and you have the judiciary or the nodes That interpret the code.

But do so in an extremely faithful way. In a sense, it's a violation of equal protection. Every time somebody with the same facts walks into a Wyoming court and gets different justice, for example, than a Milwaukee court or

You know, Minnesota court, whatever, right? Like every time that happens. on something that's supposed to be uniform, the same input should give the same output. That's what rule of law should mean. And I'm not saying I'm not being up I'm just using Wyoming, Minnesota, as an example. Not being up any particular state.

I'm saying that the concept of a judge Changing their decision making. Based on anything other than the raw inputs. Judicial discretion in many ways is actually often bad. Because you have things where people start going

Jurisdiction shopping not because the law is different. Which is fine. But because the judge likes this or likes that and has a certain attitude towards this. It's like there's that apocryphal Israeli study where people get lighter sentences after the judges have Eating something.

And their their blood sugar is up, so they're more merciful. That's bad. Instead you should have This alternative. So my point is though that

Founders are now getting into Rule of law. Currency With Palantir and Andrew into military and foreign policy stuff. So I have this preface.

It's kind of why we're starting to think about all of this stuff. Another preface. I know a preface to preface. Well actually let me talk about France Awkison and then come back to that. With France August

That is this like amazing thing that shows w we know talk about like chaotic people, they just don't know what they're doing. So here is kind of the sequence of events. Basically After the whole Afghanistan withdrawal thing where It was just so televised. Everybody saw the images of

This catastrophe and it wasn't just obviously people within the US who saw it all American partner saw it. And they're like Whoa. That military that we saw in Hollywood beating up aliens and so on is unable to manage a withdrawal.

Without any gunfire. Talvin wasn't even shooting at them. I do support. I think the withdrawal overall probably was a good idea. In the sense of the year. Or m at least necessary. It's complicated. But the execution was catastrophic.

That's kind of the conventional wisdom. It is, however, the second order consequences I think are important. One is Yeah. The admin wanted to I believe turn the page on this from a PR standpoint.

And that's why this August announcement was teed up. And the thing about it is it's very unusual. Uh you know, when is the last time you've seen President and the Prime Minister of the UK and the Prime Minister of Australia in a simulcast. Can't remember. Can remember, right?

The thing is, it could have been something that was like signed to some deal of like a million things that happen in government that are not a prime time announcement. This was intentionally the goal was to Hey, turn the page. Yeah, I know you thought we screwed up in Afghanistan, but we're pivoting to Asia and we're totally serious about it. Ha ha, China, right? And so the problem is though that It actually

Revealed a bunch of issues. First is The fact that is Australia, the UK, and the US Well there's something called the five eyes. And that is

Australia, UK, US, New Zealand, Canada. So there's this Canadian newspaper that said What is it three eyes now? Because Why were the other two excluded? Well, New Zealand because they don't have some nuclear there's something about nuclear subs can't operate in their territory or their maritime region and Canada because evidently there's such

Wimps militarily they don't have anything. But The thing about that is it showed to the external world, something they've never seen before, which is internal division among the five eyes. Number one.

Similarly, the quad Which was this much Ballyhood thing of India, Japan, Australia, and the US. Which actually did make some sense. In the sense of India and Japan are, I think, serious countries versus China.

If you wanted to make an alliance that that would make sense. India and Japan were left out of this. And the UK, which is on the other side of the world, was brought in. Now who has more concern with China? than India and Japan, which are real countries that border them. They're not going anywhere. The UK doesn't really have an empire anymore. It doesn't really have stuff in the Pacific. Hong Kong went away. So what the heck?

It also, just like it showed the five eyes were really the three eyes, it showed internal division in the quad. India and Japan made polite Murmurings in public. But within India, within Japan, if you read the newspapers there, they're like uh WTF. And then France itself.

Because they had this sub deal with Australia that evidently by all reports Wasn't going that great, it was taking a long time, et cetera, but Australia had recommitted to their relationship. Now all this stuff is being air in the public because here's what happened. France got annoyed, and France isn't just France. France is basically one half of the EU with Germany.

And so they got the EU to denounce this. And they pulled their ambassadors. And part of it is that they're Pride was wounded. Because

They actually have islands in the Pacific. They have actually a significant, I think, million plus population of actual French citizens in the Pacific near Australia more than the UK does. They still think of themselves'cause they're on the UN Security Council as like a great power. And uh now they were just sort of Lied to and backhanded, or that's how they think about it, even if they were screwing up on the sub aspect. But the thing about it is

They got really mad, pulled their ambassador, the EU and the US are now actually largely split on China, because they said France isn't just France, France is the EU. And even if I think the EU is declining and Britain will break off has broken off from it, of course, but Scotland might break off from Britain and Catalonia and The Vice Grab countries, they may all break off from the EU. Still the EU is like a thing, even if it's declining.

And so the EU is now kinda split and they're like, You know what, US, why don't you go and Do your thing on China and we'll do our own thing. South China Monroe Post had actually something on this. And then what did Australia get? Australia got Subs. But you know what the fine print is? Do you know when the first like nuclear submarine that Australia builds is gonna appear? Do you know the date that they've got is? What is that?

Twenty years. Twenty years. See the thing is This is not a serious Mm. It reminds me of the San Francisco three hundred million dollar bus lane that took almost two decades. Patrick Collison has a website called Fast.

I'll give you the exact URL. It is Patrickalson.com. Front slash fast. And he shows that

Stuff in the past was built way faster. Oh he gave an example of a nuclear reactor. Yeah, exactly. The first nuclear submarine was built faster in like a few years relative to this one, which is twenty. So how is that possible the first sub that was built forty years ago is faster than this one, where like the Empire State Building was started and finished in four hundred ten days, the Eiffel Tower is built in two years and two months. This type of stuff. The thing about this is we know That it is physically to do that today because China does it. China built a hospital in ten days during COVID.

There's videos you can see of them building like a subway station in nine hours or a Building in like ten days. Then of course what people say is Oh. And this is Coke, by the way. They'll be like Oh that's all. You know, Chinese construction, it sucks. It's just gonna fall down. It's plastic crap. We have like good stuff.

I'm like Have you seen the Millennium Tower in SF? Have you seen the SF? Transit center in SF? Those are also cracking

and gonna fall over. Even NYT actually did a thing on how SF isn't actually earthquake proof. And all the building codes don't mean anything. Sound like the US is getting like high quality structures for all of that money and time. And moreover Even if Even if you granted and put people see the photo of like a building in China, the federal even if like some tiny, tiny percentage of the time

You have some structural. When you go from Many years To being able to build a hospital in ten days. or being able to build a subway station in nine hours, it's like a hundred or thousand X.

Like the amount of money you save is so dramatic that you can slash rents. And crucially. Also enable military victories. Because the military is about the physical world. And

If China as a subroutine Can contemplate building a hospital in ten days, they can also contemplate building A blockade. Or a bridge. Or something else in the physical.

And if the US can only build a sub in twenty years It's like an older man who's Bones don't heal as fast anymore. We can't do the things that they used to do anymore. And yet still think of themselves, that's the dangerous part. If you're eighty and you think of yourself as twenty Okay, young and hard is one thing.

But going and trying to knock out three hundred for reps. You might hurt yourself if you're trying to bench that much after not doing something in a while. And you might never be able to get there again under as that as that man. You might need your son to be able to do it. That might be the last time you bench that amount of way. You so it might need a new nation to be able to do these things. Like a rebirth of some kind. So Then going a little further, but China, the August thing, that just made them mad.

It didn't give any results. The US is acting, China is taking actions. Because Uh do you see this like recent hypersonic Missile launch?

I did actually see the news. I haven't read the coverage. But Have no worries. The U S government is on it. That was basically a Fuck you very much. Show of power.

response. Yeah, and and you can argue you can argue why are we hearing about this stuff? You can argue, oh the military industrial complex is leaking it to get more money for hypersonic weapons. Oh the military industrial complex, you know, wants us to know we're think we're losing to China, so therefore we'll buy more weapons. That may be true, but it's actually also true that the US is weaker militarily than China in the South China Sea. On the specific issue that China cares about, which is Taiwan. It may be possible for someone to have an interest in it, but it also being true. It was like

We welcome the competition. This is what we say. I'm like Uh you welcome the competition when it comes to You don't welcome military competition. That is exactly the kind of competition you do not welcome. You welcome economic competition, that that might be fine. I mean, you don't really welcome that, but okay, you can tolerate it.

The thing is that It's a generalization, but a lot of Chinese people have said Chinese culture generally Trust. Actions over words. And Western cul uh political culture today at least is a hundred percent verbal. It's just all signifying and hashtags and so on on Twitter and like

Almost zero offline accountability. For actually doing anything. Tech culture, I would say, is something of a hybrid, at least you know, the pre-2019 tech culture. You might call it cryptoculture or web three culture now. Where Absolutely, there's a story that you're telling in a slide deck.

But the numbers really, really, really matter. Especially Once numbers exist, once you're at series A or Series B or beyond. Another investment of money doesn't come that easily It requires you to actually deliver results. It's not simply like an election. An investment is Much more diligence on it. And the thing is that what happened was this Awkis thing

made China mad without getting any results. Now I saw this joke. Hypersonic missiles, well. Which is a separate thing, but you know, the US government is on it. They've just banned gifted and talented education in New York. Take that, China.

Right. That's gonna crank out tons of people who understand how to fly something past Mach five and know how to deal with Ultra light material. It's like that's d Look at that. What a chess move, right? And by the way, it's not like the federal government doesn't care about education. They do. They're actually saying the FBI to stop people from protesting school boards. But not to stop them from like banning gifted and talent to dead, right? And then of course India was and Japan were like, Why aren't we part of this quad discussion? India also is kind of having it a little bit both ways, where there also is part of something called the SEO. Do you know what that is?

And do not. It's the Shanghai Cooperation Organization. It's sort of like the It's a little bit like a NATO ish EU thing that most people in the West don't know about but it's pretty important becoming more important. It's China, Russia Iran just became member.

Kazakhstan, like the Central Asian countries, and actually India and Pakistan were admitted at the same time, which Made me kind of quizzical. Because First, India being in anything with Pakistan other than like the UN is pretty unusual. And second, India and China being clear is unusual. But

India seems to be taking a balancing role. It's almost the opposite of its Cold War rule, where it was Closer to the Soviet Union. Than it was to the US. But

It wasn't in the Soviet camp, it wasn't like fielding troops with the Warsaw Pact. This time. It is closer to the US in the West than it is to China, but it's not gonna be like the UK, which is like America's poodle, as people would say, you know, after the Tony Blair thing. So it's gonna actually take its own independent thing. So SEO people believe maybe that's just a way for India to kind of hedge a little bit.

But being in both the quad and the SEO meeting is kind of un y it's like You know, you're b both the Knicks and the Lakers or whatever. And then of course Taiwan saw this and was like, Oh boy. Because China got more annoyed. So the point is, why do I go into this example in detail?

This is just pure chaotic evil. Or at least just chaotic. You know even if not evil. It's something that Piss off the French, pissed off the Chinese, show that the three eyes and the quad were internally disaligned, and

Piss off the EU and split them versus China. Basically Did it all for a photo op. After another military disaster. And essentially

achieve the exact opposite of what they even wanted to achieve, which is a pure optical thing. And there's no military gain whatsoever. And this is being done at the most senior levels there's a choice To do this at the leadership of these three countries. This is just one event, but as you can see it had ripple effects and so on, but it was like the anti alliance. It like broke apart alliances rather than putting them together.

So because of this This that's like at at the foreign level and domestic you can give similar examples. For example, like seventeen states are now protesting this thing of you know sending the FBI to local school boards to be mad about protests. And You know, so

The rubber band snap that I think is gonna happen Is that that control of the US the federal government over locals and internationals is Just gonna contract. Until only those jurisdictions had elected the current president

Listen to the the federal government. And those that didn't just nullify everything and just take it to court and don't abide by it. And then the question is How does that actually play out? Is that purely legal? Is there like National Guard stuff involved?

Who's actually, if anybody is, prepared to actually Shoot somebody over this. And I don't know. It's hard to say. But I can see the conflict kind of brewing. All right, so that was lawful evil yes, chaotic evil. How did we get on that topic? Let me hop in. I don't know, but we're at

Five hours plus now, so I think I would like to Bring this to a close, if I may. The and we can also continue offline on a lot of these subjects. But I'll skip the angel investing. Yeah.

Hypothetical angel investing. Unless there's a fast answer for it. I'll give you my fast answer on it, right? Yep. So my fast answer is I'm broadly interested in obviously crypto. Obviously

Startup cities states. Which I've talked about. But if I was gonna cut into areas, I'd say Crypto Info, bio, robo, astro, and actually politico.

So Crypto is obvious. Info Actually I think that Thanks to

Wokeness basically Media corporations have abandoned many niches. Sports Illustrated is not sports illustrated, Teen Vogue is not Teen Vogue. In fact, if you took these articles, they basically all sound like the same I can't even type stuff and

If you just strip the branding and you just had an AI try to distinguish it, I'm not sure you could. Because they they're essentially all like on Twitter and they're all part of the same s sort of conformist group. Now though with Substack And with Ghost and with Decentralized media like mirror.

I'm a small investor in mirror. What you're seeing is Independent have the means to go and effectively start their own media company. But they also have an incentive to give a different message than the mainstream.

So you're seeing Matt Iglesias and Glenn Greenwald. And Taibi And Barry Weiss. Jesse Single.

And so this huge IQ drain Of some of the best writers From these old outlets. Leaving them only with those who were incapable Of

Writing originally enough. to become founders. For example, in academia several years ago There was a new level above professor and that was founder or investor because you can Scrape for like a whatever hundred thousand dollar grant. From some stupid bureaucratic committee.

Or You can make a hundred million dollar company. Exit it and then you're basically able to investigate whatever the heck you want for the rest of your life. You can build a lab out of spare parts. Or you can build a future that you want, like you know, Vijay Pandey for example left Stanford and you know was joining the biofund, I recruited him to to A six and D's friend of mine. So the level above Professor's Founder, the level above

Journo Corporate Journo is now founder. And so info is very interesting because All these niches Are gonna be recolonized. Bye.

Independent. that started from the beginning with a better brand because they've been abandoned, the the sports illustrated the T and Vogue, et cetera. So media I'm actually much more interested in. And I think you can make a profit in it, like The Athletic, for example, shows you can. It's just that you can't say the same thing as everybody else. You need to have The people who are independently minded. That's like the new thesis, the new wrinkle. I also actually think that

India could become a media superpower. And I I know I say that and immediately people think, Oh, what do you mean, Bollywood? Bollywood's gonna become really popular. Oh, I'm not so sure about that. Look, Bollywood is fine. But what I mean by that is A lot of animation is done in India, like if you look at the end of Tenet.

A lot of the Visual effects were done there, a lot of the computer graphics. There's something called Saja, South Asian Journal Association. Obviously there is probably but a lot of talent exists there. In the same way that China ascended the ladder for making Plastic stuff.

And iPhones to doing first party stuff like drones with DGI or WeChat I think If China's a tech and manufacturing superpower, I think India becomes a tech and media superpower.

And can potentially be like The bright sun to the West Black Mirror because Western media is sort of declining. In revenue with technology, that's why they have this black mirror attitude towards it, oh everything is so bad. Whereas India is ascending the technology

All this stuff has just gotten better over their lifespan. The smartphone has coincided with a huge improvement in living standards rather than a collapse in their Old media model. And so India, I think, is very underrated in terms of where that replacement media is gonna come from. All the folks that just mentioned

Single and Barry I like all them. But they're like defectors from the old. I think we're also gonna get a lot of fresh blood from overseas. And genuinely internationalized media because it shouldn't just be a bunch of randos in New York. It should be globally representative. And you know, people should be able to tell their own stories without being intermediated by some

New York Media Corporation, right? So okay, so that's info. Then That's media, but it's also movies and our stuff. So I mentioned crypto, info. Bio. So telemedic is now legal in the US.

Thanks to actually some of the things past during COVID. What I mean by legal is doctors can do telemedicine across state lines. That opens up the market in a big way. And it is possible now to use that

to unlock medical tourism and start actually Unlocking fee for service medicine. Which is actually way better than insurance. Like in general You only want insurance for catastrophic things. You don't want it for routine things. You don't pull out your car insurance to pay for gas.

or a floor mat. It's only for like emergency things. And same with healthcare. You're you're basically gonna lose money On everything other than emergency insurance. So is cell medicine. It's medical tourism, but it's also Quantified self.

It's all the true transhumanism, which is Bray Machine Interface. And genetic engineering. And all that stuff. And then with Robo.

I think that's also underestimated'cause being done on the industrial side of things. That's robotic agriculture Manufacturing, farming. Retail Supply chain. All of the recent supply chain stress I think is gonna cause an acceleration of that.

And It's also actually the way to erode China's manufacturing advantage. In the medium to long term, just like everybody has a smartphone. You have a bunch of робоts. that start making things for you and I think

One thing I linked was a hundred dollar robot arms. You can start learning this at home. And just learning how, you know, a six degree of freedom arm works and grasping and all this stuff. Build your own robot overlord. Astro, I think that's actually you know, it's funny, right? Astra, I think that's that's coming down way in cost.

It's not just space, there's a whole industry that's building out there. And then politico is kind of the start up cities and network states and the The media and crypto stuff, but What does the next post war order look like? And I think it looks like national stacks and neutral protocols. So neutral protocols are the crypto stuff.

The national stacks. are not just in American Internet. Uh Facebook and Twitter and Instagram and so on, not just a Chinese internet of We chat and

Bite dance. But a Indian internet and a Brazilian and a Russian and a Japanese and there's pieces of this already, like Korea has neighbor. And Russia has Yandex. But going further with that. And having kind of equivalence, national equivalence So that local leaders were gonna basically demand this so they can't get deplatformed.

And it might be that, you know, some countries have the scale to do it themselves, like the US and China, probably India. Or Russia? Others might be in groups, like it might be A bunch of Spanish speaking countries that do it together. But national stacks I think will be important and in collaboration with neutral protocols.

That's sort of like Domestic travel versus foreign travel. Domestic transaction communication versus foreign. So it's the type of stuff I'm thinking about in terms of angel investments. And the thing that's there that, you know, I could probably talk more about is the transhuman and stuff, but that's under Wow, that's very important. That's reversing aging, that's bionics, that's brain machine interface.

Lumber generation and bioelectricity. I think that is If in the twenty tens what was underrated where crypto in China I think in the twenty twenties what's underrated are India and you know transhumanism

And it'll be more obvious by the end of the decade, but That's kind of how I think about things. I have a Offline we can talk about some scientific studies that you may be interested in supporting. So we should talk about that. Lest we forget seventeen twenty nine. Do you wanna tell us what the latest and greatest

Is with respect to seventeen twenty nine? I've been kind of running it in like alpha ish over the last few months. Not posting that much recently'cause been kind of working on some new stuff. But on November first, I'm gonna be announcing a Lecture series

With like weekly VR lectures. And having them recorded so if you can't attend. And the goal is to basically Build a community and audience in VR and start putting out the Polished versions of what I've been working on.

And uh so just you know, go to my Twitter and you'll see the announce. over there or subscribe at septy twenty nine dot com. Perfect. Beautiful. And for those who don't know Just briefly.

The origin story. Seventeen twenty nine. Oh, sure. So it refers to the It's sort of the E equals M C squared of India. Just like equal C squared came from Einstein.

a genius Western physicist. Sempty Trian comes from Ramanujan, who's uh Genius Indian mathematician. And what it represents is the first number that's the sum of two cubes. In two different ways. It's one cube plus twelve cubed.

And it's also nine cubed plus ten cubed. And it's famous because When Roman Chin was very ill on his deathbed, a mathematician who's a friend was trying to cheer him up. And he came by and he said

Hey, you know, this taxi that I came in on was has a very boring license plate at seventeen. Twenty nine. And Runjan said, Oh no. You know, uh it's actually a very interesting number. It is, you know, the sum of two cubes of two different ways. And so it's something that everybody can understand.

You know, you know cubes and sums are. But it also illustrates that Ramanujan was on, you know, a first name basis. Weird. Every number. And it has a couple of other kind of things which is

It's about Indian and international, and spending a lot of time in India now. But it's it's also universal. So like Google was both an American company and global company. It's also something that has a number theoretic Connotation because Rajan studied

Prime numbers. And number theory. And that underpins cryptography and crypto, which is also something I think about. So Yeah, it's just kind of a fun thing. Nice tie in. So seventeen twenty nine dot com. People can check that out. They can follow you on Twitter at Bology S.

If I remember correctly. B as in boy, A as in alpha, L's in lambda, A as in Alpha, G as in Joy, I's in India, S is in Sam. C. Okay. Nailed it. I'm not sure those all the the call signs. I should have said like Bravo Fox Trot or something.

I usually just make it up as I go if I need to spell it out in that type of way. Once again. I I don't know how you sustain this level of output. It is remarkable. And I appreciate you taking so much time on the other side of the planet. Two.

have a very wide ranging conversation. So thank you very much. Is there anything else that you would like to add? In brief, or requests that you'd like to make to the audience, anything at all before we Close out. This conversation? I think that was great. I think that

I'd like to see you all In VR. So come by. That's right. That's right. one seven two nine dot com.

Lots of exciting things ahead. Well thank you Bology for everybody listening. We will have copious, copious show notes that we'll need a small stadium of my own full of show notes experts to help assemble everything. But we will have lists to all of the Books and people and so on mentioned in this episode. You can find that at Tim Dotblog. Slash podcast. And I'll probably create a short redirect. So you can just go to Tim.blog slash B2.

B as in Bravo. Number two, and that stands for Bology, second episode, of course. So Tim.blog slash B2 will take you to all of the show notes. And until next time, thank you for tuning in. Be safe out there. Hey guys, this is Tim again, just one more thing before you take off, and that is Five Bullet Friday. Would you enjoy getting a short email from me every Friday that provides a little fun before the weekend? Between one and a half and two million people subscribe to my free newsletter, my super short newsletter called Five Bold Friday. Easy to sign up, easy to cancel. It is basically a half page that I send out every Friday to share the coolest things I've found or discovered or have started exploring over that week. It's kind of like my diary of cool things. It often includes articles I'm reading, books I'm reading.

albums perhaps, gadgets, gizmas, all sorts of tech tricks and so on that get sent to me by my friends, including a lot of podcast guests, and these strange esoteric things end up in my field and then I test them and then I share them with you. So if that sounds fun, again, it's very short, a little tiny bite of goodness before you head off for the weekend, something to think about. If you'd like to try it out, Just go to Tim.blog slash Friday. Type that into your browser. Tim.blog slash Friday. Drop in your email and you'll get the very next one. Thanks for listening. This episode is brought to you by BlockFi. BlockFi is building a bridge between cryptocurrencies and traditional financial and wealth management products. They're creating innovative products to advance the digital asset ecosystem for both individual and institutional investors, and its platform now manages more than 12 billion in assets.

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