Bankless - 24 - Exploring the Frontier | Erik Voorhees

Episode Date: August 3, 2020

Episode: #24 August 3, 2020 ----- Tools from our sponsors to go bankless: Loopring - trade & pay on Ethereum w/ near-0 gas fees! (use "Bankless" for VIP4 status & trades at 6bps!) Monolith - holy grail of bankless Visa cards Aave - money lego for lending & borrowing Rocket Dollar - tax shelter your crypto ($50 w/ "BANKLESS") (Read this on IRAs and 401ks) ---- Erik's been journeying into the bankless frontier since 2011. That's when he first discovered bitcoin. The open road. The unsettled whitespace. The westward trail. The highway to freedom. That's why he's here. And he's remained true to his values. That's why he speaks out against tyranny. That's why he embraces self-sovereign money and pokes holes in the myths of fiat. That's why he so ardently rejects maximalism.  Enjoy our conversation with one of cryptos original settlers.  We cover: Erik's journey into the bankless frontier The libertarian values in the code Why America isn't capitalist Why flag bucks are destined for collapse Gold, Bitcoin, Ethereum 4 categories of coins Crypto vs the final boss China vs America Why Maximalists lost the plot PRICE PREDICTIONS! How Shapeshift helps us go bankless Join us next Monday for a fresh episode! ----- Resources discussed: (Trade) ShapeShift mobile trading app (UX) Portis web3 login (Guide) Bankless guide for starting the journey ----- Episode Actions: Try the new ShapeShift mobile trading app Give Bankless a five-star review on iTunes! (we need 100) Also...subscribe to Bankless YouTube to watch State of the Nation every Tuesday. ----- Subscribe to podcast on iTunes | Spotify | YouTube | RSS Feed Leave a review on iTunes Share the episode with someone you know! ----- Don't stop at the podcast! Subscribe to the Bankless newsletter program Watch Bankless shows and tutorials on YouTube Visit official Bankless website for resources Follow Bankless on Twitter Follow Ryan on Twitter Follow David on Twitter ----- Not financial or tax advice. This podcast is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions.  Do your own research.

Welcome to bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. David, how are you doing today, sir? I'm doing just fantastic, Ryan, really excited about the future of the bankless nation. And we brought on Eric Voorhees, who is one of the earliest settlers of the bankless nation. We talk about the metaphor of going west a lot, and we talked about it with Eric.

And for those that don't know, Eric Borges is one of the earliest pioneers of this space. He's been through the entire Bitcoin history, and he's been upholding the bankless values before we even call them the bankless values. And so we go through Eric's history of being one of the first settlers of this new nation and what that experience is like and what lessons he has learned along the way. He also talks a lot about the values. I mean, he started, he's an OG. So he started in 2011, and he can, I mean, he was there when Bitcoin was sort of instantiating

its values. And I feel like, David, this episode just like is a Bitcoin Maximus Slayer episode. Like just like knife in the heart, man. Eric totally, I think, brought out the core values that made Bitcoin special in the very early days and talked about how those values could be present in non-Bitcoin crypto networks. And it was super refreshing to hear him talk about that because I think that's what we've been talking about. Like Eric seems to me like he is a member of the bankless nation, perhaps without knowing it. Maybe he was an original founder of the bankless nation and we're just discovering this country a little bit later. But you know what? For some people, Eric is not maximalist enough. So I anticipate some bit pointers that are of the maximumers.

persuasion might not like this episode. Yeah, the part of the episode where we talked about maximalism was absolutely deadly. And I definitely agree that that is part of the bankless values is a commitment to non-maximalism. Bankless values are what enable banklessness. And to whatever degree that some crypto economic protocol, some new technology, regardless of whether it's blockchain, cryptocurrency or not, allows for people to be bankless, then that piece of technology is part of the bankless nation and allows people, to settle there. And Eric Forhees doesn't use those words because, you know, these, these terminology is

unique to the bankless nation. But I think, I think he resonates with them all the same. Yeah, absolutely. We talked about other things, too. We talked about economic freedom. We talked about flag bucks, as he calls them. I, you know, call them boomer bucks, but that's the idea of fiat money. We talked about nation states and game theory, creeping authoritarianism. You know, You have to know that Eric is a pretty hardcore libertarian. So going into this episode, we got into some of his libertarian beliefs and how those intersect with crypto values and bankless nation values. One of my big takeaways from what Eric was talking about was his belief that the growing debt of nation states, particularly of the U.S. nation, is just an insurmountable thing to overcome. And regardless of Bitcoin, regardless of Ethereum, regardless of these bankless tools, that insurmountable

debt is going to bring, in Eric's opinion, an end of the Fiat money regime. So I thought that was a really interesting perspective. Usually you hear from Bitcoins or Ethereum's that like because of, and this was my opinion, and now I agree more with Eric, because of the ability to exit, the Fiat bubble will be popped. But Eric thinks that that Fiat bubble is going to be popped regardless. And so that was one of my favorite parts of this conversation. And he brings some credibility there because he's been talking this way since at least 2011, even before. This is just a great episode for you to listen to.

Before we begin, we should talk about our sponsors. The first sponsor I want to tell you about is AVE. AVE is a defy protocol that you absolutely have to check out. What can you do with it? You can lend. You can borrow banklessly, all on Ethereum. So you could do things like lend die to the protocol. will magically transform that dye into an interest-bearing die account, not just die,

all sorts of crypto assets on Ethereum. You can also borrow against it. AVE has been climbing up the leaderboard as well, and they've recently released Avanomics, which is their token economics upgrade. You can read more about it. We'll include a link in the show notes. So Avanomics grants key decision-making to Avey token holders. It creates more safety.

economic incentives to reward protocol growth. One of the coolest things is it actually introduces a safety module. So there is staked AVE becomes a collateral of last resort. You can find out about AVE-A-Avonomics. Start using the protocol

at AVE.com. That's A-A-A-V-E-E-D-com. The last few months in Ethereum and on D-Fi, we've seen gas prices to scream through the roof. I check the gas prices every single morning and it's always 60, 70, 80, sometimes 100 Gway and it really starts to impact what I'm able to do in a cost-effective manner on Ethereum. This is where loop ring comes in.

Loopring is a ZK roll-up scaling protocol for Ethereum exchanges and payments. ZK roll-ups, it stands for zero-knowledge roll-ups. It's cryptographic magic. ZK roll-ups allow you to combine a bunch of different activity, a bunch of different transactions, all in one small bite-sized trunk, which really reduces the amount of gas it takes in order to process massive amounts of transactions. At loopring.io, you can find a ZK roll-up decks and payment application, where you can maintain the guarantees of the Ethereum L1 blockchain, but you can perform trades and transfers at thousands

of transactions per second, completely gas-free. It's pretty insane. Loopering has the loop ring wallet, a mobile smart contract wallet with ZK roll-ups tucked in natively, and this isn't meant to onboard the general public to Ethereum en masse, giving them the UX and the UI experiences that they're used to in their centralized apps, but with the decentralized guarantees of the Ethereum blockchain. So if you are a trader and you have been eaten alive by gas fees, visit loopering.io and get onboarded to Ethereum's most secure scaling solution. All it requires is an Ethereum address and you can trade on a high performance order book,

completely gas free, 0% maker fees and between 0.06% and 0.2% taker fees, really low. And then also transferring ETH and ERC 20 tokens on the platform is completely free. So visit loopering.org, enter the code bankless when registering, and you will receive the highest level VIP tier for six months. VIP4, which has the lowest taker fees, 0.6%. And you will be able to find that link to sign up in the show notes. All right, guys, let's go ahead and get right into the interview with Eric Voorhees. Bankless Nation, we are so excited to bring on Eric Vorhees. Eric is a Bitcoin OG.

He is the current CEO of ShapeShift, which was the original Dex. He has a strong libertarian bent, which I hope we get into, and like us, is a believer in the separation of money and state. Eric, welcome to the bankless nation. Thank you for having me on. Eric, we'd love to talk to you about your journey. So we often talk about going into crypto, going bankless, as we use the analogy of it's kind of like a journey west. Right. So, you know, in America, it's sort of like the Oregon Trail, you know, the East Coasters don't quite understand it. They're secure and their existing lives and what they're doing.

Few people have died of dysentery along the way. Absolutely, they have. So for many of us, it's kind of a journey, you know, for fortune, for opportunity, for freedom, for a better world. What's the Y crypto for you, Eric? And has that answer always been the same. Is it same now as when you started? Yeah, it's definitely the same as when I started. The Y is essentially because I see this as the most powerful and potent tool for people to escape the grasp of government and to hopefully stem that tide to some degree. You know, ever since I've gotten into this stuff, I have felt detached in a nice way from the follies of governments. And before crypto, I felt very much trapped in that.

I cared so much about what the Federal Reserve was doing or what the government was doing or politics or politicians. I cared a lot about it because I felt trapped inside of that case. And post crypto, I feel that I am, you know, not entirely, but but to a large degree free from it. My money is not trapped or is not a tool of that organization. And it's so empowering. I love that analogy of the West. I very much, that very much appeals to me. I grew up in Colorado.

And there's always just been something about like that desire of pioneering. out into the unknown and just doing it on your own accord that has appealed to me. And so crypto is all that and more. And I've just been so proud to see it grow and to see it achieving some of the potential that we all hoped it would. So it's freedom for you then, Eric, is a big one. Like, what are the those values, what are the values instantiated in the social contract of crypto, the values instantiated in code to you?

Is it mostly freedom? other values as well? Yeah, if I'm to reduce it to one word, that word has to be permissionless. With crypto, you don't need to ask anyone to receive it or send it. And any two people can trade value now across the world instantly. And nobody can stop that. You know, the most powerful government in the world can't stop a Bitcoin transaction. They often won't even know that it's occurring. and that's just so cool. And it's available to everyone. It's not just something that is, you know, a tool for people in the U.S. or in one country or another.

It's not a tool for the rich. It's a tool for every single human person on earth. And they can learn about it in 30 minutes and be using it immediately. And that's just incredible. Eric, like we've been discussing, it's a journey westward into, the bankless world, but I think even before, you know, Ryan coined the term bankless or even before we developed the concept of a bankless nation, that journey westward existed all of the same, right? And I see you as one of the people that paved the way westward almost before anyone else.

So how has this journey been for you? Going and hacking through the jungle before there was actually a trail to follow must have been difficult. Can you kind of just describe what that journey has been like? Yeah. Well, so I got involved in Bitcoin in May of 2011. And certainly back then, the number of people that had even heard about it was fairly small. The number of people that had ever used it was smaller still. And Bitcoin was like $5 back then. The whole market cap was, you know, $50 million or something. And for those of us who were involved way back then, the potential was. so clear to many of us that this could become, you know, a new financial system for the planet, but it was so small a niche that any detractor really had the upper hand and the argument, because there just was no history of it really growing over any sustained period. And so I think a lot of us had to just ignore the fact that we were probably delusional,

you know, just trying to be objective about it. we were probably delusional and probably wrong because something so, something so extremely new and powerful probably will not succeed. That's just kind of statistical outcome there. And yet it has. And so the potential that we we hoped has come to pass, it's this, you know, hundreds of billions of dollars in value now. It's lasted more than a decade. And as we we, you know, at this point, most people, at least in the U.S. have heard of it for sure. Millions of people own it. It's not this weird new thing anymore. It's kind of just, it's kind of just part of life for many people. It's moved into movies and music. It's moved into culture.

And even traditional finance has warmed up to it in a large way. So it's nice to, it's nice to feel like we're not as delusional as we might have been. And it's just, it's so exciting to actually see it become real, whereas before it was so much more theoretical and uncertain. I don't know if you guys have ever seen that meme. So there's this video meme of this guy like dancing in a crazy way at an outdoor music festival. And he's just like dancing for like a full 60s.

You know what I'm talking about? He's dancing alone. At the gorge in Washington. Yeah. Oh, really? So were you in that crowd, David? Were you that guy? Wow, okay.

So anyway, so for people who haven't seen it, there's this guy and he's dancing on his own. And it goes on for a full, like 60 painful seconds. Crazy dancing. And he's in it. He's in it. Everyone else, the entire crowd, is looking at him like, this dude is crazy.

And then something happens. Somebody else joins him and starts doing the dance. Kind of, I don't know, mocking the person. I don't know. maybe just having some fun. And then a few more join. And then pretty soon, you get like two minutes into the video. And an entire crowd, the entire festival is like doing this crazy dance with this guy.

It reminds me very much. You can see people running from every single direction because they saw everyone else joining. Yep. Yep. They phomo in, I guess. And that's what kind of the crypto story reminds me of. It's still crazy now. But it's less crazy than when you started.

It's still delusional now, but it's less delusional than when you started in 2011. How have you seen crypto grow up, Eric? One of the main ways is just that the user base and those interested has gotten a lot more diverse. So it was pretty fair to say back in 2011 that almost every single person was a a radical libertarian slash crypto anarchist. And the vast majority of those people were also engineers or cryptographers. And it's expanded so far beyond that, which is great.

It's certainly a double-edged sword because many of the ideals aren't shared by others. But that's okay. That's something that is inevitable if this thing actually grows. Bitcoin is not going to turn the whole world into libertarians. the reason it's so powerful is because it doesn't need to. It is a libertarian technology regardless of the ideologies of the people using it. So I've always been okay with that and I've seen that as a sign of its success. And actually I think it's part of its camouflage.

If Bitcoin was always only used and desired by radical ANCAPs, then I think it would be much harder for it to remain, you know, legal and permissible. But when quote unquote, respectable normies are into it, then it is, it's able to expand much, much more into the society. So I think that's a really important attribute. That's been one big difference. The other big difference, of course, is the diversity and decentralization of the project on the technical level. So, and I'm talking here about all the different blockchains and all the different projects and tokens and concepts that have come out, I see it very much as, you know, this branching tree where Bitcoin was this trunk that grew out of the ground and it was watered and nurtured. And as it grew, people

started, you know, growing branches in other directions. And that's part of the same decentralization of Bitcoin when it started. It's all part of that same theme. And so at this point, there's no way that I can keep up with all the projects. And I'm in this, you know, every day. So it's just, it's just so much more diverse in its people and in the, in the technology and in the directions that it's trying to go. It's not just a money anymore. It's an entire financial system, you know, filling into every crevasse that people can

pick up. So the nice thing about all of this is that self-sovereignty is embedded in the core social contract and in the code. This is an Austrian money system. And every time a new bank adopts it to issue a stable coin, to do something with it, to settle a transaction, even those banks ultimately make this system stronger. And I love how very practical you are about, hey, we should embrace the mainstreaming of traditional finance on crypto because it makes, it gives us the ability to have a stronger, more self-sovereign system. Can you, can you talk a little bit about why you're so passionate about a self-sovereign money, about why

separation of money in state is, is so important to you personally and to the world? Yeah. So I think money is so fundamental to human life and activity that for it to be tied to a nation or to a government is just really dangerous. Imagine if mathematics was controlled by the Federal Reserve, or if language itself had some overseeing administrator that declared what rules of language existed and what words could develop and what couldn't. imagine if there was, you know, a ministry of thought that would, you know, make sure people

only thought the right things and would get in trouble if they thought the wrong things. These are, these are like fundamental cultural primitives and they need to transcend national boundaries. They need to transcend borders. And for money, that has never really been the case. I mean, certainly back when precious metals were primarily the money that was true to some degree, but you couldn't transfer that stuff across distance and the markets were so fragmented and local back then that it didn't really matter that much. But now that so much trade happens across the world, Bitcoin really allows this concept of borderless communication in the realm of money to exist. and I think while people today might not see why that's important, after they've gotten used to it,

they will recoil in horror at the thought that there was ever a period in time in which people's money was reliant on the boundaries of one nation. So money is supposed to be this organic thing, right? And I think this is kind of a nebulous thought, but what is the free market is largely natural. It is nature. like the free market is a manifestation of nature. And when you say that the nation state or a government or the Federal Reserve has like this top-down coercive capturing of this thing that is supposed to be organic, in my mind, I see that

there is a timer on that. There's a limited amount of time where you can control nature before nature will figure out a way to slip through the cracks and then end up controlling you. There's no controlling nature. And this is why always Bitcoiners chant the name or chant the phrase, you know, the separation of money and state. Because state is something engineered and serves a purpose. And so does money. But money is something organic.

And this gets into a conversation of like why organic money is so necessary is because you can't control nature. And money, Austrian money is basically a statement that money should be organic. And if you don't allow or money to be organic, it will blow up in your face in the future. And so I think this aligns with like why we want self-sovereignty when it comes to our money is because having self-sovereign money means that we are using money in its natural state in a way that we can depend on over the long term. Do you resonate with that thought? Totally. The metaphor of nature is really a good one. I think an important principle to convey in this point is that when you're engineering things,

the smaller and simpler the system, the more feasible it is to engineer it, and the larger and more complicated the system, the less feasible it is to engineer it. And the great problem of strong centralized government is that they do not appreciate this fact. And they try to engineer massively complex things like markets, societies. And so, you know, certainly a person or a group of people can engineer and design and control something that is relatively small. You know, certainly the government could create a small park and decide where every plant and blade of grass goes. And if it's small, it could probably even look nice. They could probably do a good job of that. But imagine the government trying to

design nature itself, you know, the complexity of the oceans and the atmospheres and the meadows and the animals and the, you know, bacterias, just the immense complexity can't be engineered because humans aren't able to do that in any proper form. Money and economies are of that level of complexity. And so you can't, you can't have it be designed because you'll design something that will break. It will become fragile. It will not be able to adapt. And Bitcoin really just takes that power away from central planners and allows a flourishing in an open and spontaneous market. So the concept of the bankless nation, and I know earlier you hit on the fact that maybe a nation isn't the best organizational scheme, but what we refer to when we call the bankless nation is something

a little different. And I think the core values of the bank Nation does respect the role of nature in these systems, right? So the bankless nation is what we call kind of just the collection of tools that the crypto world has provided Bitcoin, largely Bitcoin and Ethereum, but then also mainly all the protocols on Ethereum, which also represent like sort of manifestations of nature. Like all the different protocols on Ethereum are inside like the same free market environment. And they represent their own little organisms, our own little plants. And so, uh, and it's so, it's so messy. What do you mean by that? It's messy. It's, uh, it's not, there's so much noise in the, in the industry and in the ecosystem. There's so much, um,

waste. There's so much failure. And these are, this is evidence of an organic system that is iterative and adaptive. And so when you look into crypto and you see all these projects rising and falling and succeeding or scamming or doing something fully new and unique, that, that noise is a really good indication that you have something organic that is that is going to flourish over time. But for some people, that's really scary and they want to control that. Yeah, that's a really interesting metaphor. I think what you're saying is that, you know, the nature produces everything and not everything is meant to live.

And so the bad things will ultimately die and the good things will be left behind. Is that where you were going with that? Yeah, yeah, it's similar to the concept of creative destruction. And it's just so prevalent in crypto. And to me, that's a sign of its success and the life that it has within it. And to some people, they see that as this horrifying situation in which they need to step in and regulate and control it. So it's a very different kind of viewpoint. Right.

And so what gets me so excited about the growth of this bankless nation is it is the first. organic nation. It is the first nation that kind of created itself, bootstrapped itself, through organic processes. And so, I mean, that's why I'm here. And I think, I think that's why by your... Well, would you, would you say the internet is not that? I would, would say the internet is that. Yeah. I would. I would include that there. It's a crucial tool to, well, so when the internet first came about, there was this, I can't remember what it's called, but it was that, like, declaration of independence of cyberspace. I think that's the name. And that was very similar to like a, the declaration of independence of the United States.

But instead of a nation state opting out of like a monarchy, it is the people of the world who have access to the internet, which is now like almost everyone, declaring independence into this self-sovereign realm, which is cyberspace. And I think now that the the crypto economic future has more or less arrived, Bitcoin and Ethereum, now we have this self-sovereignty of money and finance that also exists on this self-sovereignate. is cyberspace domain. Yeah. Yeah. Unfortunately, the people who, who want to control behaviors do not, they don't recognize it, and they will not permit that power to be taken from them. And so really the only way to do it is to create a system that can't be controlled.

It can't be usurped. And Bitcoin did that. You know, you can argue that certain encryption protocols have done that for communication as well. So that's that's super powerful and it doesn't require the permission of anyone to use it. I want to get back to the final boss, which is the nation state in a minute. But first, I have a question for you, Eric, just put on your libertarian cap for a minute. I don't know if you ever remove your libertarian cap for someone. No, I think it's pretty well stuck at this point.

Okay. So what we're talking about just now was that things like mathematics, things like language, like money should be essentially public goods for the world. They shouldn't be coercive and controlled by any single individual entity, whether that's a nation state or something else, right? What is the libertarian, I guess, bent towards public goods? Should some things like very base protocols like communication, internet communication, like money, like language, should those things be public goods and everything else, you know, shouldn't be? I'm just curious how, because I know like there's kind of a libertarianism really emphasizes private goods and

property rights and those sorts of things. So help me understand that a little bit. Yeah, a very good question. I don't really love this term of public goods and I wouldn't ascribe it to something like money or language or mathematics. I think implicit in this concept of public goods is some obligation to provide it for people. So like if something's a public good, there's almost an obligation that someone has a right to some of it at the exclusion of someone else. I think when you're talking about language, mathematics, money,

it is an explicitly private thing. But what's different is that anyone has access to it, but no one has an obligation to provide it. Right. So no one has an obligation to teach you mathematics. Nobody has an obligation to teach you language. No one has an obligation to give you money. And yet you can use all these things and they are non-exclusive as well. When you're getting wealthy, it does not mean that you're taking that from someone else. When you're learning mathematics, you aren't taking that knowledge from another person. So I don't like this public good concept. The broader question of like, are public goods ever? appropriate is a really good topic for debate. I think there are some things like air and and water, especially ocean water, that are really hard to privatize effectively and and maybe are appropriately thought of as public goods. But that's a that's another topic I guess. So Eric, would you prefer a term like neutral goods or even you like you like you'd like the

in permissionless. These are permissionless goods? Yeah, permissionless is great. Let's talk a little bit more about where we are today. I saw a tweet from you recently that said a capitalist system does not have central banks. But I thought in America we were in a capitalist system. Maybe not. Let's talk about that. Also, you've used this term, which I really like flag bucks to describe, I think, all fiat systems, right? Fiat monies like US dollars or euros, that sort of thing. I've started calling them boomer bucks because they used to actually be backed by something. It feels like the boomers sort of switch things up on us over the past 40 years or so. But I also like the term flag bucks.

Can we talk a little bit about what's happened to our money systems and the central banks that are essentially the institutions in power of them? Yeah. So something that I was pretty blind to, and I've, I've called myself a libertarian ever since early college. But something I was pretty blind to was that money, you know, in particular the U.S. dollar, is not a result of capitalism or a feature of capitalism. It's actually quite antithetical to capitalism. I just never even thought of the dollar being, you know, good or bad in that way.

And when I started learning about, you know, the Austrian economy, and started learning about the nature of money, I realized that that was not only a problem, but that was one of the biggest problems and was one of the biggest blemishes on this notion that America is a capitalist economy. I don't think you can call yourself a capitalist economy when the most important good in that whole economy is centrally planned. That just seems, that just seems kind of like a silly claim. And so many people in the Western world, they appreciate the folly of central planning and they think of like the Soviet Union not being able to produce enough shoes and they they feel in their own mind like yeah of course you don't centrally plan

something so important as shoes and yet they tolerate the central planning of something even more important than shoes money is far more important than shoes and and yet it is centrally planned and money properly understood is just a good it is just one of the many goods that people are trading and bartering for. It happens to be the good that people trade the most for. And for that reason, it is the one that is most important to not be centrally planned. This is a fairly, I think this is a point that almost no one in the U.S. would agree with that the U.S. is not capitalist because of the dollar. But I think once you have a perspective of how money actually works and how it should and does emerge from an open market and that anything that is a form of money that's imposed on a market

rather than from a market is antithetical to this concept of capitalism. So I think my answer to the question, why do we tolerate this in the U.S., is that it benefits the rich, and the rich are the people that care. And I think there's a lot of, there's a lack of education in the U.S., especially in, like, perhaps the 99% about how this works or why this is. important. And so I think the reason why we tolerate this is that the people that should care aren't educated about it and the people that it benefits just leave it alone because it benefits them. Is that your impression as well? No, I actually disagree. I think most of the quote-unquote

elites or the super wealthy or those who have positions of great political power, I think most of them are uneducated about this. I think most of them do not understand how, markets work. Most of them do not understand how money emerges from the market. And they don't support the dollar because it benefits them as rich people. Maybe it does. But I think they support it primarily for the same reason that poor people support it, which is that they look to government to solve their problems. And they look to government to administer important parts of their life. and they think that you need this central entity to handle things that are important, things that are important like healthcare or education or money.

These things are all so important that, of course, someone needs to be in charge of that. I think that's why primarily they support fiat dollars. But that's only those who have even thought about it for a moment, whereas most people never think about the nature of money at all. But Eric, so isn't that sort of inevitable? Like, this is a very quick shortcut of how Fiat became Fiat, but it's, you know, back to what you're saying, it was a combination of the people, like not wanting bank runs and being terrified of the volatility and the market crashes and this sort of risk.

So they turn to a centralized body to say, you know, come help us, come save us, right? And so, you know, the bankers get together. They form a plan that evolves into the Federal Reserve. and now we have a central bank. Isn't this just human nature? Like we panic, we don't like volatility, we're fearful, so we look to a higher authority to come bail us out when things get tough. Yeah, unfortunately, it is human nature, and I don't know if that can change.

I hope it can. I hope we're living in a period of history where sentiments and beliefs in what the appropriate role of government can change, but maybe it can't. and, you know, thank goodness Bitcoin is permissionless because I don't need people to vote on whether I can use it or not. Otherwise, I would forever be in a minority that never won out. So now we're living in a very bizarre time, maybe since 2008 when it started. I guess it's been bizarre, but especially now, we're getting ready to print another $1 trillion, basically.

I'd add to the deficit. it yesterday goldman goldman sacks came out and said buy gold they said this is a quote we have real concerns around the longevity of the u.s dollar as a reserve currency those concerns have started to emerge and they think gold will appreciate 20 percent like for a for a major bank to say that is is this a is this a shakeup are the are the boomer bucks the flag bucks are they are they are they starting to collapse is this the beginning of the end First, I think it's important whenever there's a large organization to not assume that the organization is some kind of monolith. So like Goldman Sachs is obviously this massive, massive organization.

Lots of people there, probably many people with different opinions. And so I saw what you're talking about yesterday. And it's certainly meaningful that Goldman Sachs would put that out. But they may also be putting out a message, you know, from some other analysts saying something. quite different. So I don't know that we can read too much into it from Goldman as an institution. But yeah, it's definitely a big deal and a lot of people will see that as a signal. One might ask why Goldman wasn't saying people should buy gold two years ago when it was $1,300 and why they wait until it's at its all-time highs to recommend it.

But still, yeah. I think it's important. The nature of money is becoming part of the public discourse increasingly, which is really good. The term fiat currency, like in 2008, was not ever used. That term was something that you'd find in a textbook by Rothbard, but it was not something that you'd hear anyone on CNBC say. And now that term comes up quite often,

Sometimes in the context of people speaking about Bitcoin, but sometimes people will just refer to it as fiat, which is such a huge change because by categorizing it as fiat, they're implicitly acknowledging that it's money of a certain type. And when you think about money as having certain types, it leads you to the thought process that maybe some types are better than others, and you can get into that discussion, which is really healthy. So yeah, it's good to see this stuff changing slowly. is it the beginning of the end for for fiat certainly anyone who reads zero hedge has thought that's true every day for the last 12 years yeah so yeah i i'm one who does believe that fiat will go away um i think it will definitely happen within 20 years and maybe within five or 10 so i think the writing is on the wall for this silly super restition of fiat, but timing is pretty hard. Well, I think you're right about sort of the mental mindset shift and the awakening to this idea of like, or the question, awakening to the question among the mainstream of, okay, hey, wait a minute, where does our money come from, right?

I'm very sure you won't have a positive perception of UBI or that sort of thing, right, from the libertarian school of thought. But one byproduct, that aside, one byproduct, which I find is interesting, is I have my Normie friends so-called who are starting to think about like how the money actually gets created because they're receiving $1,200 checks from the U.S. government, right? And they're like, okay, wait, wait, how is that possible? Where do they get this money? And then you have the money printer go burr, right? And they're like, oh, okay, so that's how it works. So the government can just print money on demand. Wait a second. And doesn't that start? You talked about the superstition, right? But

money is ultimately a social structure. It is a superstition. It's a meme, as we would call it. Are you seeing like the foundation of the meme starting to get shaken up? Is that sort of why you're thinking over the next five to ten years? People will start scratching your heads and look towards self-sovereign money systems? I think Fiat is going to go away, even if nobody was changing the discourse or talking about it. It will go away just as a matter of economics, because the debts of these nations are so large and growing so much. They are funded through either just straight out to basement, you know, printing of money or they're funded through debt.

And the debt grows and grows. And so what you end up with is that the debt is just going to be monetized at some point, which is just a nice euphemism for printing money. That process will unfold mathematically, regardless of what, anyone is talking about. So that's why I think Fiat goes away is because the debt destroys the illusion that it is worth something. And you mentioned that money is a meme or a shared belief. I think proper money is not a meme and is not a shared belief. Proper money is based on the observation of what people are trading for. So it's based on the observation that this person wants this item.

And so is trading for that? This other person wants that same item. And through iteration, there come to be different goods that are traded very commonly by people. And ultimately something that is commonly traded by nearly everyone is just what we call money. And it's not a social contract. It's a consequence of trade. But in a fiat world, I think you're very right. It's much more of a belief system, much more of a religious.

and when you look at any fiat currency paper bills, how can you look at that and not think that this is some kind of crazy cultish religion? It's so obviously just based on symbolism that should give people pause, but when you grow up accepting it, it's just kind of normal. One other thing I found interesting about the Goldman report was that they mentioned gold, right? Clearly, non-sovereign, store of value, bullish on gold. Right. They didn't mention Bitcoin. They didn't mention Ether. You're bullish on all three. Why is crypto better than gold? I don't want to rehash a whole Peter Schiff conversation, but is like crypto the gold for millennials? So, yeah, I am bullish on gold. I own gold. And I think that much of why I quickly understood the value of Bitcoin was because I understood the value of gold. I understood why it became money and why it was a good money.

And Bitcoin had many of the same attributes and some extra ones that gold didn't have. So I think they're really good compliments. You know, Bitcoin does not have 5,000 years of history, and that's worth something. That doesn't make gold better, but it is something. Like that stability over millennia is a huge value that Bitcoin is not going to usurp anytime soon. But certainly gold has a lot of disadvantages that Bitcoin gets rid of. entirely. The ability to send it anywhere instantly at nearly zero cost is huge. You can't cross a border with $10 million of gold. You'll probably end up in jail. And you can do that so easily

with Bitcoin. You don't even have to, Bitcoin doesn't even have to be on you when you're crossing that border. That portability of it is so, so powerful. So I think they have different enough attributes that it's good to have some of both. And certainly anyone, as I've told people since I got involved, everyone needs to realize how experimental Bitcoin and these other cryptos still are. They become more established every day, but there's still experiments. There could still be some horrible zero-day bug. There could be some horrible thing that destroys the encryption or the mining algorithms. I don't think that will happen, but it could. People just need to realize that that is an ever-present risk with crypto systems that is not at all a risk with gold. So both are good,

both emerge from markets. And I think they have nice compliments to each other. But I take it you're more bullish on the crypto aspect, at least from a price appreciation perspective. Totally. Yeah. I mean, if you're going to speculate on one or another, you know, no question that the potential gains on crypto are just one or two orders of magnitude higher than gold. But that's true on the downside as well, that volatility. Bitcoin can go down to $1,000. Gold is not going to lose 90% of its value. Bitcoin probably won't, but it's more likely than gold to do that.

Hey guys, going bankless is a journey, and you don't have to do it alone. So we're going to pause the episode with Eric real quick and talk about some of our bankless sponsors that offer tools for you to help you go bankless. As we all go westward, we need to get our values into the crypto world, but hopefully escape the tyranny of centralized rent-seeking institutions. And that's where Monolith can help you get your value into the crypto world while skipping over the crypto banks. Monolith, coming soon to Monolith is an on-ramp directly from your old world bank account into your smart contract wallet on Ethereum. And for those that don't know, Monolith also has a defy card which uses dye in your smart contract

wallet, but on the Visa network. So you can go to your grocery store, swipe your defy card, pay for your groceries like a normal person and still be part of the crypto bankless crypto economic future that we are all excited about. So you can get your value from your bank account directly into your crypto visa card without having to go through any crypto bank intermediary, which is just absolutely fantastic. In order to get started, go to monolith.xyZ and get your bankless visa card today. I want to tell you about another bankless tool that I personally use. It's fantastic. This one is for our U.S. listeners. It's called Rocket Dollar.

So if you have an IRA or a 401K, the problem is it's jailed inside of your brokerage. So your Fidelity account, your Schwab account, that means you don't have good access to crypto. The only crypto that you can buy is in a trust form and it's marked up like 5x, 6x, 8X the price. You're getting ripped off. So what you need to do is break your retirement account out of jail. set up something called a self-directed IRA or a self-directed 401K. We've written articles about this that will include in the show notes. Rocket Dollar takes care of all of the pain in getting set up.

They help you with the paperwork. You can break your retirement account out of jail and also use the bankless code to get $50 off. So make sure you use that code bankless when you sign up on rocket dollar.com to get $50 off. Eric, you talked about how the youth. think that the Fiat world will end in the next 20 years probably or hope perhaps even sooner than that. And I think contained in that statement or contained in that belief is the ability to exit out of the system, which we've never had before, before now, before crypto. Like, it's what Bitcoin invented. This is what Ethereum invented. You know, even you can even still use like the US dollar

and kind of exit out of the US financial system via, you know, crypto dollars on Ethereum, which is really just like a stepping stone into, you know, it's a gateway drug, if you will. Do you think that that ability to exit is the core driver of the Fiat, the end of the Fiat regime? Or are there other things that also impact the end of the Fiat regime as well? No, the core driver is just the mathematics of the debt. That's the core driver. You need nothing else other than that for Fiat to end. the ability for people to find workable alternatives certainly helps, and it'll help a lot of people as Fiat falls apart, that there's already this other alternative financial system getting built.

The biggest risk right now is that none of these crypto systems are scalable enough to handle a billion people, but they don't need to handle a billion people yet. So we need to keep working on it and keep growing this stuff. And certainly the diversity within crypto is going to help it absorb the refugees as they flee from fiat. Can you elaborate on why the debt of a nation is so important to the ending of the money? And in a world without crypto, but with the amount of debt that we have, what would people's options be?

Yeah. So, the U.S. government has something like $24 trillion of debt right now. And that's 10 years ago, that started. going up by a trillion dollars a year, which was crazy. Now it's going up by like a trillion dollars every couple months. There is no way for the government to pay that back or to even stop it from growing. In fact, the opposite is happening and is growing exponentially, whereas the economy and the economic output of the country grows at a much lower rate. Because of this, the mathematics of the interest compound the debt.

into the stratosphere at some point. And because of that, there comes a point at which the marginal bondholder, the person who is owed money by the government, will start seeing that and be like, okay, this is getting sillier and sillier. How much longer will I feel comfortable lending to this clearly bankrupt organization? Right now, everyone seems very comfortable lending money to an organization that can never pay the money back. It's a great example of the greater fool theory that ends at some point. or more accurately, it doesn't end at a certain point.

It ends gradually as people start demanding higher interest rates for those loans. And so once that happens, the debt compounds the problem, the interest rates on the debt rise, the debt increases faster. And there comes a point at which the bond market will collapse. And what that means is that people start to get spooked, that they will be the last ones holding the bags. They will start selling their bonds. and the interest rates on the bonds will rise and rise. And the only way that that process is

halted is by some kind of default, either an explicit default where the government says, we can't pay this back and these debts are done, or through implicit default, which is debt monetization, just printing money to pay people back. That, of course, causes inflation, or more accurately, that is inflation. And to the extent that that is done, it compounds the problem as well. Because if the prices arising from all the inflated money, then again, people will require higher interest on that debt. So that process does not get stopped in any way other than fiat currency collapse. And it's impossible to figure out the timing of that, but it's inevitable that that process will happen. Is that one of those things that's kind of like the Berlin Wall

it's gradually, then suddenly? Yeah, probably. It's certainly not going to be like a calm process over 20 years. It's going to be something that starts building and then spikes. And that'll be when it's done. Just to link this concept back to what we're talking about at the beginning of this episode, this is very much related to how you can coerce nature for a little bit, but ultimately it's going to blow up in your face. And I think this, what you're talking about, the, the, you know, a debt monetization event would be, you know, the end of that metaphor, right?

This is where nature blows up, blows up in your face. So how does the ability to exit and the existence of these alternative, you know, Austrian money currencies, how does that fit into the picture? And in the event of a debt monetization event, how do these things, you know, impact the world, just their mere existence? How do they impact that? Where do they fit? Yeah. So in the early phase, which is what we're in now, some people at the margins will increasingly feel comfortable holding some amount of their savings in these alternatives. So 10 years ago, nobody felt comfortable holding some of their savings in Bitcoin. Today, many people feel comfortable holding some amount of savings, and that might be

a small amount, but it's some. As the system matures, as people get comfortable with it, as they can do more and more with it. The degree to which they're comfortable holding a portion of their savings in this asset over dollars rises. This is true for individuals. It'll be true for companies. It'll be true for nations. And so there's just this period where people become increasingly comfortable with the alternative and both things are used. Like right now, I use dollars every day.

I use Bitcoin frequently. I'm comfortable on both of those rails. And as people learn about this stuff and they get over that, that initial skepticism and strangeness, it starts to just become part of their life. And then that's before any kind of crisis in Fiat. When the crisis in Fiat starts happening, all those people who are already comfortable with the alternatives

are going to be fairly well positioned. They'll be good. What's going to be tragic is all the people who really have resisted this alternative entirely and have no idea how to use it, own none of it. and when they start scrambling for any alternative that they can get their hands on, the prices are going to be so crazy and wild that they're going to get totally destroyed. And that's a horrible tragedy.

There's no way to stop that. But that's why you don't want to be the last person holding debt on an organization that is $24 trillion in the hole. So, Eric, this conversation about nation states and this move to non-sovereign currency does make an assumption, Let's maybe get into what that assumption is. So recently there has been a, I would say a creeping authoritarianism that has crept into our nation states. And you'd probably argue that's been going on for a long time, right? But we're seeing things in Hong Kong, for instance. I recently read an article that was talking about if you are in Hong Kong and in social media back in 2014,

you said something about supporting pro-democracy, Hong Kong. then banks, Western banks, Credit Suisse, HSBC, UBS, are actively freezing accounts on behalf of the Chinese government. We've got the U.Gers in China. We've got the Patriot Act in the U.S. lest we think our Western democracies are immune from this, we've got China launching a nation-state digital currency, how long until the U.S. eliminates cash

and implements its own digital currency, giving them the power to freeze accounts, reverse transactions, right? So the government... Yeah, they already have that power. The dollar is already a digital currency. Exactly, right? So they could flex it. I guess the question is this was a question that Ben Hunt from Epsilon theory sort of brought up, right, when we're talking about this with him, is he doesn't think we can beat the final boss. He thinks that's the hill that we're going to die on because money is so powerful for nation.

state actors that they won't give us an opportunity. It's like FDR saying holding gold is illegal back in the 1930s. Is there a path to beating the final boss here, Eric? Or are we sort of, are we sort of doomed from the outset? Great question. This was something that we love to debate about in 2011, 2012, all the Bitcoin forums. Wow. Like what, you know, to what degree would the government and try to ban all this and to what degree would they be effective in doing that. Fortunately, they have been much less hostile to crypto than I feared they would be. There are a number of reasons why I think that's occurred. So can we beat the final boss? I mean, beating the final boss in this case

can be done by any person who simply stops or marginally avoids dollars over time. If you move out of that asset and into crypto assets, you avoid that. Now, the government does not have the resources, nor even the political willpower, to go into everyone's house and torture them into giving over their keys. They cannot do that. What they can do is apply substantial pressure to companies that are involved in this industry. both in the U.S. and abroad, and force them into compliance with whatever dictates they want to throw at them. They already do this. And if you get into that final boss stage,

if crypto is wholesale banned or made illegal, I think there would be a period of, you know, serious volatility. Crypto prices could drop by 90%. Who knows? Maybe they would go up. I don't know. but they can never take the crypto away from people. And because one of the foundational tenets of this technology is the ability to build decentralized systems, over time you're going to see much of this ecosystem exist outside of any company, just people interacting with each other through these decentralized systems.

That's super powerful. And so the governments can put all the pressure they want on companies. They can throw a number of people in jail but the systems can't get shut down. And for that reason, I don't think the, not only do I not think the final boss is beatable, I think it's inevitable. And again, it's just, it's just economics.

It's just math that fiat, when debased like this, cannot outcompete a form of money that can't be debased. It just, it won't happen. Eric, can we talk about a choke point that David and I worry about a lot? And that it's basically why we are united under this whole bankless, you know, meme, if you will. It's this. So like walk through that. What if all of the transactions on, say, a Bitcoin or even Ethereum are happening inside of crypto banks?

Cryptobanks become the custody agent. Crypto banks become the trading mechanism. The Bitcoin blockchain gets so busy that the average user can't complete a peer-to-peer transaction. So it all pools into these large crypto banks. Of course, banks are centralized. They eventually become the apparatus of the state. How can they not? How can they resist that?

It's a centralized choke point. Do you worry about that for Bitcoin? I'll tell you that's why we are excited about Bitcoin, but we're also very excited about these D5 protocols on Ethereum because you have the ability to do more without banks. You don't need them to trade anymore. You could use uniswap and no one can stop uniswap. Do you worry about that for crypto for Bitcoin?

Yeah, I worry about it, although I think it's a self-correcting phenomenon. I think there's always going to be people who use centralized services for some things and decentralized services for others. And the better the user experience of one, the more it'll win out over the other. So basically, if crypto banks, let's call them, have a great user experience and are providing a service that customers like, then they'll tend to earn business over time. if they start telling you where you can send your money and they start demanding too much personal private information and they start putting all sorts of restrictions on you then then that user experience is going down and you're going to be more inclined to try the alternatives that don't suffer from that problem so that's why I think it's it's self-correcting and I also think it's inevitable that these centralized companies will become increasingly simply you know unwilling unwitting agency of the surveillance apparatus, all the centralized exchanges already are. We as ShapeShift have dealt with that ourselves and it's horrible and it just keeps going. As that happens, I think the

pressure on users of this stuff to move into more free systems that don't have those encumbrances will only increase. And the beauty of crypto is that that option is available. It's not that everyone needs to use decentralized systems, but they can whenever they wish. That's incredibly powerful. And I think if the government was smart, and that's debatable, certainly there are smart people within the government. If they realize that the more restrictions they put on these centralized services, the more people will just flee into the open fields of the decentralized stuff. Maybe that will cause them to be a little more lenient and not be quite as draconian and totalitarian. We'll see.

So what do you think of the decentralized finance stuff that's going on right now? Do you think it meets that criteria? Yeah, I think it's cool as hell. And I'm dismayed by a lot of the maximists who just shit all over it because it's The reason they shit all over it is because it's not built on Bitcoin. If it was built on Bitcoin, they would be loving it. They would find all sorts of justifications for why it was great. They would be the ones out there knocking down all the criticisms of it.

But because it's built on the wrong tribes coin, they hate it and they find every flaw they can. There are certainly many legitimate criticisms of where DFI is today. A lot of the projects are more decentralized than they appear, or are more centralized than they appear. That's a big problem. But decentralization isn't a black and white thing. And I think a lot of these projects are going to, over time, become increasingly decentralized. So I'm not so concerned that some of them aren't perfectly decentralized today. I think that's a journey.

And there's just so much innovation happening there. Like you can't look at that and not get inspired and excited about what's going on. It has tons of risks. I think there's going to be at least one horrible, you know, Dow-like catastrophe, probably in the next year or two. But that doesn't mean D5 failed. That's part of the experimentation. So as long as people realize that all this stuff is volatile and experimental,

and they have that risk tolerance. I think it's cool as hell. Eric, so like that's what the bankless nation is basically like all about is can we do more stuff in a decentralized way with our money, with our finance? It's not about maximumists. If you called us a maximalist, I mean, we'd say we're bankless maximalists, if anything. But can I ask like I feel sometimes like Bitcoin maximalists has sort of lost the plot here, right? It's like, why has that happened? Was it that way? in 2011, was there always a contingent that was just like money go up, our tribe, price go up, our tribe at all costs and all the other decentralized tech and money systems are shit?

Or is this new? It has emerged in proportion to the diversity of the ecosystem. So in 2011, Bitcoin was 99.9% of all crypto. So the tendency toward maximalism was basically non-existent. As the ecosystem has diversified and other projects have been built, and particularly other projects have succeeded like Ethereum, the maximalist tendency has really gotten turned up. And I say this often, but I used to be one of those people. I was someone who shit on other coins and other projects because I thought at best they were a distraction from the quote unquote real project, which was Bitcoin. And at worst, I thought they were just kind of scams or that kind of thing.

What came to change my mind is realizing that one of the most important attributes of what Bitcoin is, is this decentralization. And you cannot argue for decentralization and at the same time argue that there should only be one monolithic blockchain. That is a degree of mental gymnastics that I was not willing to make. So I switched. I started realizing that part of the promise of Bitcoin is these other coins. Again, they are branches of the same ethos. Some of them compete with each other. Some of them are complementary to each other.

I think it needs to be observed that both Bitcoin and Ethereum have hit their all-time high prices and market caps roughly together. Empirically, there is not evidence that the growth of one harms the growth of the other. I think they are both very different systems that have different strengths and weaknesses. I own both. I'm bullish on both. I think Bitcoin is stronger because Ethereum exists. And I think Ethereum is stronger because Bitcoin exists.

So I don't really know how to solve the maximalist issue. And it's just such a waste of time and so tragic because there's a lot of a lot of Bitcoiners who spend more time shitting on other crypto projects than they do building their own. And that's just really a waste of time. Yeah. So I think we're really aligned with what you said. You had this legendary tweet that I think sums it up recently. You said in reality there are four categories. Number one, there's Bitcoin.

Number two, there's Ethereum. Number three, there's other valuable coins. Number four, yes, there are shit coins. That's number four. I think some people take what you just said and what we think. and they say that because we're not Bitcoin maximalists or single coin maximalists, that somehow we're coin relativists. And we think that like Tron or XRP are suitable global financial systems for the world.

Like how do we explain that this is not binary thought here? There are clearly some chains that embrace the bankless values, the decentralization values, the open financial system, permissionless financial system value. And there are others that don't. And those that don't are shit coins. Like, it seems really simple to me. Why don't they get it? Well, they believe what you just said.

They just think that Bitcoin is the only one that embodies any degree of decentralization. One of the most silly things that they claim is that only Bitcoin is decentralized and everything else is centralized. That binary thinking is just so obviously wrong. because nothing is perfectly decentralized. It's a degree thing, right? Like Ethereum today is very likely more decentralized than Bitcoin was several years ago.

These things change in their decentralization over time. And they just, I don't know, I guess it's a sign of like a weak mind to not see the nuance of these projects and to not be able to hold two different projects in your head and analyze them on their own merit. and their own flaws independently. And I think what causes a lot of that, to be honest, is just people who have a financial

stake in a project and feel insecure about that project are going to put a lot of energy into shitting on the other projects. And I'll all admit that I felt a little bit of that back when I was a maximalist. I, you know, I owned a bunch of Bitcoin and I did not like the fact that other people were building these other chains and that they were growing in value. And I, but the difference was I recognized that. flaw in my own thinking and that and that bias and I got rid of it. Some people haven't been willing to do that. You know, the memes popping back up in my head, Eric, of you're back,

you're in the Bitcoin tribe, right, in the crypto tribe, but you're that guy at the music festival again that's dancing, right? And saying like, not all of these other chains are bad. Some of these systems embrace Bitcoin or values too. I am optimistic that more Bitcoiners will kind of come around and get back to the like some of it's just i think education and time and defy has to prove itself and it's it's still early and young i'm optimistic about that yeah i yeah it just it's so tragic because the if the tribes were united the whole the whole ecosystem would just be so much healthier and so much stronger and ethereum is not bitcoin's enemy you know who Bitcoin's enemy is, it's the NSA, it's the IRS, it's FinCEN, it's these government agencies that are

trying to surveil that chain and see everything that the people using it are doing. Those are actual enemies. But instead of like trying to tackle those entities, because, you know, admittedly that's very difficult, they spend all day on Twitter just shitting on Ethereum. So in defense of what Bitcoiners often say, largely of Ethereum, is that they hold the concept of sound unprintable money like in the highest degree like that is the whole point of these systems and to some degree Ethereum is centralized because we hard fork both L1 or I mean both Ethereum one we hard fork every now and then which implies that there's some amount of centralization and also Ethereum 2 is essentially well it's not centrally planning because

there's roughly seven or eight different client teams all operating in parallel but centralization around those seven to eight client teams And we've also changed the monetary policy of Ethereum, and there is a monetary policy of Ethereum. And so to some degree, there is some centralization of Ethereum that is presence. And largely, I do think that there is some weight to, you know, the sound money mean, where unprintable sound money is like, you know, the future, what we really want. The gold standard, not actually talking about like the gold, the element, but just like the top-tier standard that we're looking for. So how much weight do you give that criticism of Ethereum as, you know,

it's monetary policy is kind of undefined and nebulous and centrally coordinated? So first of all, again, all of these projects have some degree of centralization. It's a question of degree. And anyone who wants to start debating about the points of these degrees, that's a fair topic of discussion to say, you know, where are the areas in which Ethereum is too centralized? or how can we make it more decentralized in these areas? That's a great discussion. That same discussion is relevant to Bitcoin.

There are things about Bitcoin that are more decentralized than would be ideal. Every time a minor drops off the network, it just became a little bit more centralized. Every time a node drops off the network, it became a little more decentralized. The core development itself is relatively centralized. That doesn't mean it is centralized. It means relatively so. And if you had twice as many core developers, it would become more decentralized. So these are all fair points to debate and discuss.

The problem with the Maximilus is they don't debate and discuss them with genuine curiosity. They just say Ethereum is centralized, so it sucks. Bitcoin is decentralized, so it's great. And that's the extent of their thinking. So, Eric, what's your take on this? We talk a lot about EF being money, right, using the high act term, right? Like is eth money in your opinion? Could it be a sound money?

It's different than Bitcoin, but is it a sound money? Yeah. So much, much like decentralization, money is an emergence. It's something that things become, they head toward the properties of money. And the same debate was so common in like 2011 or 2012 about, like, is Bitcoin money or not? And again, it's not a binary thing. If you're using it as money, if you're using it as a medium of exchange, then it's money for you. You're using it as money.

And the people you're trading with are using it as money. Many people don't use Bitcoin for money. Many people don't use Ethereum for money. But both of them have the attributes that make them good money. Ethereum is better in some ways. Bitcoin is better in some ways. They're both strong. And I think as they grow, people will find them useful for different things.

Eric, I don't know if you have a take on this, but I'd be interested in what you think, just, you know, off the cuff. So Ray Dalio talks a lot about empires, right? I think, you know, he presents some compelling, interesting evidence that China is rising. American dominance is declining, at least relative to China. like fiat's never lived in a world that has bilateral power structures, like large nation states that are equal as powers. That's not true. The Cold War was very much a time of fiat. Fair enough. Fair enough. I guess the question is, do you see a China versus America cold war on the horizon? And how does that impact kind of the shaping of everything we've been talking about with crypto? Yeah, good question. So I think the best attribute of the world is how much countries trade with each other today. Countries that tend to trade with each other become reliant on each other in a mutually beneficial way that gets destroyed very quickly if they go to war or if they start isolating from each other. So both China and the U.S., and I should clarify, both the Chinese people and the American people have a very strong interest and benefit from those countries trading with each other. What politicians will do is sort of a separate question and is always a scary thing.

Certainly China will become larger than the United States in the size of its economy, you know, over the next couple decades. Will that change how the world works? Maybe. Maybe not. I don't know. But I think a more important issue than the China-U-S relationship is the debt of the United States in particular. And I guess the thing I would worry most about is if there is an economic catastrophe from a bond market collapse, the leaders of many countries will be very reluctant to blame themselves for their spending,

which is what caused the actual collapse. They will be very eager to blame the other tribe. For the Americans, it'll be China. For China, it'll be the Americans. And that's really dangerous because so many people will believe the politicians, and they will want to blame that other person across the ocean rather than their own spending that they've done as a nation. So that's what I'm really worried about.

I love that distinction that you made, and I'm not sure if people caught it, but you made the distinction between the Chinese people and China. Why did you make that distinction? Yeah, so I hate collectivism. I hate defining people by groups. Admittedly, I still do it sometimes, you know, everyone does. But when people talk about like U.S. versus China, that's just such a narrow frame of reference.

I try to treat people as individuals. And so when people say, like, China is stealing IP, you know, like, what does that mean? Does that mean every Chinese person is actively stealing IP? No, first of all, maybe it's true, maybe it's not. But if it is true, it's probably either a particular company who is stealing IP, meaning particular individuals who are doing that, or the government organization itself. And again, particular people within that.

And I think that's important because when you collectivize an entire country of hundreds of millions of people, you just, you lead into the tribalism that is that is so different. dangerous. When you treat people as individuals, it's hard to start wars. It's hard to cause the atrocities that many governments have caused in the past if people realize that everyone's just an individual. Well, I think this is a little bit of a semantics argument because I think when we ask the question, you know, the coming China, America Cold War, I think what we're really trying to get at is like the actions of the leadership, the government of each respective nation state in their stance towards each other. And then how.

And what I'm concerned about is how the government of America and its stance towards China and vice versa, the stance of the Chinese government and its stance towards the American government, how that impacts the people, both of the separate countries. And where you separated, you know, the Chinese people from the Chinese government and also the American people from the American government, I definitely do see alignment between the Americans and the Chinese in their opposition to what I'm not. I'm worried about, which is a cold war between the American government and the Chinese government. Does this framing resonate with you a little bit better? Yeah, it's just, it's just too easy to collectivize people into a whole group. You know, like a billion Chinese people are all individuals. They disagree with each other on things. There are, you know, there are people ranging from, you know, the best people in the world to

the worst scum in the world and same in the United States. And to get into the habit of treating people. as individuals and trying to not group them together is, I think, a good, just mental process that people should be trying to achieve. You know, like even earlier, you mentioned, you said, we, we are printing another trillion dollars. You know, you just kind of said that naturally. Like, none of us on this call are printing dollars. And yet you use this term, we as if we're actually doing that. This, I think, is an intentional rhetorical strategy of, those in government to to convey their policies as if it is all of us doing it. And clearly we're

not. I have no responsibility for the printing of that money. I have no responsibility for that debt. I have no responsibility for the bombs that the United States politicians drop on other countries and kill children. None of that is me. So I do not like when people say we or collectivize a whole country like that. Can I ask you, Eric, to put on your libertarian cap. Oh, you didn't remove it. Never mind. Well, but let me ask you another libertarian question.

Sure. So, okay, so it's been said, or I've thought, I don't know if anyone said that, but I've often thought that violence is the final foundation settlement layer for transactions, for things, right? So even if, you know, let's say David has private keys that I want, I can go rent attack him with violence. And basically he doesn't have those private keys anymore if I'm more powerful. So government is kind of the process of hiring somebody with a big stick to protect us from

violent individuals, right? So take that thought park it somewhere. What happens if you've got two governments, politicians at war, and one group of governments or politicians has a set of classical liberal values? they embody, you know, classical liberal libertarianism, freedoms, the sorts of things that are supposed to be preserved in the American Constitution. Yet the other one does not. Do we not need to hire a government, a group with a big stick to protect us

against the opposing set of politicians from another powerful country who would seek to take those liberties away from us? Does that question make sense? Yeah. Certainly that's the justification for much of why government exists is because you need a strong protector. And if all that government ever did was protect people from violence, then I don't think I'd be a libertarian. I think that sounds fine to me. That would be such a smaller government, such a more narrow government than what actually goes on, where I don't think many people actually. believe the government will protect them from violence. I think the government will often clean up the mess if there is a violent act. They will file the paperwork. Some of the people they might

throw in jail if they're being violent. Some of that goes on. Very rarely do they prevent violence. And much more often, they are actually the instigators of the violence. So throughout the 20th century, tens of millions of people were killed by governments. Tens of millions. And those numbers are so big that people, people just don't comprehend it. And yet they, they see like a shooting where someone kills like three other people on the street. They look at that in horror and they're like, oh, government needs more power to make guns illegal, for example. Because they have no sense of proportionality of the damage and the mass murder and destruction the government's way down. I think the absolute power corrupting absolutely concept is really important here.

And there's no libertarian has any perfect solution to anything, but perfection is not the standard that we should be striving for. We should simply realize that violence and coercion are really dangerous and bad, and we should do what we can to structure society in a way that will minimize how much violence and coercion gets used and centralizing it all in these massive organizations that can buy nuclear weapons and battleships and cause the most crazy destruction that anyone could ever imagine is maybe not the right way to do that. So that's, I think, unfortunately, a minority viewpoint. Most people really desire a big, strong government to protect them, and I don't know how to solve

that. So I resonate with so much of what you're saying about libertarian thinking personally. But I do have this one kind of struggle I think with it. Others, but one of them is the defense argument. So you said if governments just were providing defense

and nothing else you wouldn't have a problem with it. But what if one government realizes that certain other things increase their ability to defend their country? For example, one might argue fiat money printing basically gives a nation the ability to go to total war. So one more libertarian government says, we're not going to do that like power to the people. We're going to embrace crypto.

We're going to embrace gold. We're going to set a gold standard. Another government says no, we're going to go full surveillance system on our population. We're going to use fiat, you know, money printing and the power that it gives us and then become so powerful through these mechanisms that they then, that the more libertarian government is unable to defend them. I know we're verging into like a little off topic, but I've always wondered that about the libertarian defense kind of philosophy. Yeah, I think this is really where this concept of like gun ownership is important. I think, and I would be curious

if there's a counter example of this, but I do not believe there's ever been an example in history where one country has successfully invaded. another country where that other country was both highly open market. So, you know, strong open economy with markets left to flourish and is heavily armed, where the citizenry themselves is heavily armed. Because the energy and resources required to conquer such a place just becomes impossible. The defense is so distributed that there's no, there's no place to. There's no place to, a bomb to win. It just becomes a perpetual guerrilla war that can never be won. And so probably would not be attempted. And the other important point is that why would that country ever even

try to invade them? Because they could get far wealthier by simply trading with that. Right. You would destroy the whole purpose of the incentive to invade them in the first place if you did that. The economy, the existence of the economy and the existence of the free market is the thing that you want. And you don't get that by invading that with a military. Exactly. You would destroy much of the productive capacity. And you'd end up just spending tons of money,

fighting a never-ending guerrilla war to what end, to get what? You know, it's silly. So, Eric, I want to turn into something a little bit more concrete instead of our very high-level conversations. Tell us about what's going on at ShapeShift. And for those that don't know about the product, maybe give us the pitch, what is the ShapeShift product? And can you tell us about the innovation and development that's going on there? Yeah.

So most people that have heard of ShapeShift know of what it was when we started, which was a simple tool to convert one digital asset into another. And today we're quite different. So today it's much more appropriate to think of us as basically like a self-custody alternative. to a Coinbase. Basically, we are a place where people can buy crypto from Fiat. They can store it safely. They can trade it between different coins. You know, they can track the performance of that value.

They can send and receive as a wallet. Kind of all those base functionality things you can get with Coinbase. Shapeshift has, but in a self-custody model where you always control your keys. We think that that's super important. And it's harder to do a UX in a good way like that. we think that's an important challenge, and so that's what ShapeShift does. So yeah, if anyone hasn't tried Shapeshift in the last couple of years, I'd recommend just trying it out. We just released our app last week, our mobile app. It's beautiful, by the way. Thanks. Thanks. Yeah, I love it.

It's been really fun to build it, and we have some pretty cool plans with it in the future. But, yeah, it's really a great way to get started. It can be your normal, you know, crypto spending wallet. It supports multiple chains, integrated trading at extremely good exchange rates within that app. And very soon it's integrated into the Shapeshift.com platform as well. We also acquired Portis back in March. And for those of you in the Ethereum world, Portis is a pretty big deal. It's essentially a web three provider. It's basically a way to log into DAPs with the same funds using just an email and a password.

and so you can access your money at various different apps and interact with them. So we are continuing to integrate Portis into our system. So in the very near future, you'll be able to use the same, you know, the app that you log in on your mobile phone. We'll have the same money that you can use with DAPS throughout the ecosystem. They'll all be under one self-custody account. Unlike many other competitors, Shapeshift is not Ethereum and ERC20 only. So you can get you can have Bitcoin, you can have other popular blockchains in there. And so that's really what we're what we're working on is really making that user experience

great and always maintaining a fidelity to the self-custody model. One thing about the crypto world I'm really bullish on is just the removal of email and password. So this, this acquisition of Portis makes me particularly bullish. Can you kind of go into the details about how Portis removes email and password from the equation? So Portis does not remove email and password. password from the equation. It is an email and password login. So in other words, like when people are comfortable with Coinbase is because you have this simple email and password concept that everyone's familiar with and you log in and all your stuff's in there and you can use it. And Portis allows that

to be done in a self-custy way. So that's what we're, that's what we're making happen. So my impression is with Portis, you can basically use like your Gmail email address and it can be one-click access, basically, you don't have to worry about a, you know, 12 to 24 word recovery phrase. It sort of takes care of that for you, still in a self-custody type way. Yeah, and to use that across different applications. So one email and password is the same funds on your phone, on a web browsers to the sheepship.com platform, and on all these different apps. And to be able to go from like fiat into Bitcoin seamlessly, and then seamlessly, into Ethereum or die and then into these different daps, all all just in one place. That's the,

that's the vision. That's great. And would you use the term decks for this? Or do you think like decentralized exchange means something else? So people have often called shapeshift a dex and it's sort, it has some of the attributes of a dex. So it's, it's self-custody like a dex is. But shape shift is a centralized company. So we're not, we're not decentralized, but people are holding their own funds. So when someone's doing a trade. through ShapeShift, what's happening is their asset, call it Ethereum, is sent to us, and we send them another asset like Bitcoin from our own wallet, you know, kind of right away. So they're trading directly with Shapeshift.

And Shapeshift behind the scenes is aggregating all the liquidity of these various things at different exchanges. So a user can just go from one asset to another seamlessly with a high degree of liquidity and at a really good price. Yeah, so the bankless thing about this, of course, is it's non-com. custodial, you guys don't hold the private keys, right? And we were talking so much about decentralization being a spectrum. This is a nice place on that spectrum where you get a lot of the user experience of what we're

used to on the web with single click email access to sign on. Plus, you know, you're not giving up custody of your funds. You're keeping that entirely bankless. You own the private keys. Yeah. Yeah, we want to make self-custody as, you know, and friendly as custody services. Because I think that's really when you get popular adoption.

They won't take a self-custody position on their own, even if they understand why it's valuable, because they just want things to be easy. So we have to make self-custody as easy for these people as a normal custodial model. And we're getting there. I think once the Portis login is unified across our services, people are going to see what we've really been working on, and they're going to realize

how powerful that is. Eric, it's been such a pleasure to have you. Final question for you, just because it feels like we're entering a new era, possibly. Do you think we are entering the next bull cycle for crypto right now? Hell yeah. I definitely do. I definitely do. What's it going to be like?

I mean, you've been through all of the cycles, I think. 2011. What's this one going to be like? Yeah, three or four of them. I don't know. Each one's crazier than the last. And so, you know, I think just because price predictions are always fun, just because I'm almost always wrong. I think F is over 1,000 by Christmas. I think Bitcoin is over 20,000 by Christmas. And where these rallies take both of those coins, I don't know. But probably 5 to 10x the prior peaks kind of thing. And this cycle will repeat. It's a speculative mania.

And you have to be careful with it. You can't lose your head in the up or the down or the volatility in between. And ultimately, it's much better to just hold long term and try not to worry about it too much. But certainly these huge bubbles bring in an immense amount of interest and new people that want to build things. And for every, for every speculator that just wants to make a quick buck, there's often someone who might start that way and then they figure out that, oh, there's an entire revolution going on and I'm going to stick around and see what this does. That's how many

people get involved. So I think they are, these cycles are healthy for the industry and they're always, they're always fun. People just need to keep their heads about them. Eric, fantastic. David, I think we've got our sound clip to you talk and advertise this episode. right there. Eric, thank you for being bold with all of your statements today. Even making price predictions just for the hell of it. Yeah, I guarantee you they'll be wrong. Of course. But you know what? Order of magnitude. Order of magnitude, right?

Yeah. We give some grace there. It's okay to be wrong. Absolutely. Thank you on behalf of the bankless nation, Eric. Some action items for you guys. One thing you need to do is try out the shape shift. try out shape shift on mobile. It's non-custodial. It's the original non-custodial crypto exchange. The UX on mobile is absolutely awesome. You can do more than ERC20s on it.

It's fantastic. We'll include a link in our show notes. Also, David, we are at 79 on five-star reviews. Man, are we going to make it to 100? I have this goal of like 100 five-star reviews by the end of August. What do you think? Yeah. And everyone knows that the five-star reviews.

Five-star reviews on the bankless podcast is directly correlated to the crypto prices. So if you really want Eric's predictions of Bitcoin and Ether to come true, you've got to give those five-star reviews. That's how we get the bankless gospel into the ears of more people. And so if you are trying to build the bankless nation alongside us, the easiest and most simple thing you can do right now is pull out your phone, wherever you listen to your podcast and give us those five-star reviews. Absolutely. Guys, risks and disclaimers, Bitcoin is risky. Eid is risky, crypto is risky, so is Defi. This is not financial advice. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone. We are glad when you are with us.

This has been Bankless Episode 24.