Danny Jones Podcast - #61 - How Cryptocurrency is Advancing Human Freedom | Rich Clarke

Episode Date: November 16, 2020

Rich Clarke is an expert in the Cryptocurrency & Austrian Economic theory. Rich is also the organizer of the Bitcoin Atlanta Meetup.  In 2012 he became one of the three insurgent delegates from Georgia for Ron Paul at the Republican National Convention. This experience of seeing the sausage be made in politics made him lose faith in the idea that political action was a viable solution to advance human freedom. It was at this point that Rich began to focus on Bitcoin as a possible tool of human liberation. In the following 7 years Rich has become an expert on the economic philosophies, functioning and landscape of the Cryptocurrency world. https://www.clarkecrypto.com Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Rich is an expert in cryptocurrency and Austrian economic theory. He's also an organizer of the Bitcoin Atlanta Meetup. In 2012, Rich became one of the three insurgent delegates from Georgia for Ron Paul at the Republican National Convention. This experience of seeing the sausage be made in politics made him lose faith in the idea that political action was a viable solution to advance human freedom. It was at this point Rich began to focus on Bitcoin as a possible tool for human liberation. In the following seven years, Rich became an expert.

in economic philosophies and the landscape of the cryptocurrency world. This podcast really opened my eyes to how money works in this country and where we're headed economically. I hope you all enjoyed as much as I did. Without further ado, please welcome the wise and wonderful Rich Clark. Thank you for coming on the show and talking to us about cryptocurrency and Bitcoin. My extreme pleasure. The internet of money.

Is that what it's called? Something like that. Yeah. So how did you get it into this whole. realm, this whole world of Bitcoin and cryptocurrency and doing what you do. You run an organization in Atlanta. So yeah, I run the Bitcoin Atlanta meetup. It's the oldest cryptocurrency meetup in the metro area and, well, probably in Georgia. And I've run it since it started. It was started by somebody else.

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It's before me, but I've run it since about 2014 But it's been going since about 2013 So the way I got into it It's, I don't know, a little bit of a long story. But if you want it, I can give it. I got time. So I was just kind of a normal guy. Back, I went to school.

I got a degree. I got a degree in physics, actually. Really? And then I, but I didn't really do much with it. I became, I was in a rock band in college. So I did, I was doing that. And I was an audio engineer around the southeast. I'd do festivals and lots of pickup gigs.

and sound for bands and stuff like that. And some bigger shows, too. But all around the Southeast, that's what I was kind of doing after college. And then one of the guys that ran Sam with, Michael Gaster's name from Savannah, Georgia, he started talking about Ron Paul, who he was running for president in 2007

for the 2008 presidential race. And Ron Paul, so I started looking at Ron Paul. I watched like a debate or something. Before that, politically, I was just, like, I just waffled around. I didn't know anything about political philosophy or anything like that.

You know, I didn't really teach that much in school. And so my, I watched one of the debates, and I was like, this guy is really interesting. And so I kind of, he kind of took me down a long rabbit hole that led me to study what's called Austria. and economic theory. Austrian economic theory? Okay.

So it's a, it's a, it's basically as close to the economic theory that underpins Bitcoin, basically. And so I was really, I got really into that. They talked a lot about sound money, like gold and silver being money, and the problems with our current monetary system, which we can go into later if you want. and and so that's kind of how I started and then it was just down the rabbit hole for that and it leads you to all kinds of interesting places and then in 2012 Ron Paul ran for president again and I so I worked I volunteered for his campaign and I became one of like the insurgent delegates I guess to the Republican National Convention here in Tampa in

2012. I don't know if you remember that. No, I don't. I wasn't paying any attention to politics 2012. You didn't miss him much. So yeah, I came down here for that and it was an interesting experience both leading up to doing that. Like it took a lot of maneuvering to become a delegate at all because they didn't want anybody who wasn't supporting the candidate at the time, which was Romney, Mitt Romney, down there voting for anybody other than Mitt Romney. So the three of us managed to get in Ron Paul supporters managed to get out of like 76 or something like that. So we go down, we voted for Ron Paul on the floor of the convention.

It was, you know, a fun, big deal, I guess. But the whole thing, you kind of see how the sausage is made, you know, when you see, like, the inner guts of politics, and even when you're working on, like, the local level, and then you work up to the state level, and then you go to the national convention, I kind of got disillusioned with political action as a way to kind of advance human freedom,

which is what I was kind of all about. And so I was looking for alternatives, things that made sense that I could act on. And Bitcoin is the thing that I, very shortly thereafter. I've known about Bitcoin for a couple of years, but I was like, oh, what is this? I was a gold bug. So I was like, what is this, you know, internet scam money?

I don't want anything to do with that. And, but, around 2012, yeah, so August 2012, I started really looking into it, digging into it, and then I really hit the ground running early 2013, and I started, you know, mining Bitcoin and doing all kinds of other things. We could talk about that too later. You were mining it? So you had computers that were building blockchains and stuff?

Something like that. Something like that. Something along the line. How loose understanding of it. Right. So, and really the rest is kind of history after that. So that's sort of the past. the arc of me getting into it.

I really wanted to, I really wanted Bitcoin to change the world. And it may still, I'm very hopeful that, you know, I think it's, the technology is out there. And I think that it has a,

it's definitely going to make an impact on the world in the future. Right. So we were talking on the phone last, and you were explaining to me sort of like the way our current, like the current, currency that we have now differs from Bitcoin when you're trying to explain to me the fundamentals of Bitcoin. Right. And you're trying to explain like the difference between how like inflation works

and how like the original banks, they would take money and they would they use that money to make money on loans, et cetera, et cetera. Can you like, can we just start from like the like the ground right and sort of like build up this sort of idea that you were explaining to me? Yeah, sure. So if you want to look into, not many people know really how our monetary system works today. It's all magic. Yeah. And we know buzzwords like the prime rate of, you know, the Fed since the prime rate and the Federal Reserve board chairmen, they go before Congress and talk every now and then.

But nobody really knows how, very few people know, how our monetary system came to be and what it is today. So basically, if you want to go way back, you know, if you want to talk about what is money, just go that mic a little bit closer to your mouth. You're kind of a quiet talker, so I want to make sure that we get that crispy audio, you know what I mean? Okay. So, so you have to, the first question you ask is, what is money, right? Right. And the definition is it's a medium of exchange.

So it's, you know, in the early days of economic activity, You have barter, you know, so you want to shade, you know, you have eggs, but you want, uh, some shoes. So you have, you got to find a shoe smith, a cobbler, whatever you call, to, that wants eggs. And so he'll make you some shoes and you give some eggs and you're good to go. You make eggs, he makes shoes. But what if you can't find one that makes eggs, or does it make shoes, you know, that wants eggs? And, uh, so that's when this whole idea of,

like a common medium of exchange that people could buy things with came forth. And zillions of things have been used as money over the eons. So cows, seashells, you know, you name it. Right. And, of course, the most predominant one in sort of the modern era, well, the ancient world then, the modern era, was gold, gold and silver. And the reasons that gold became such good money weren't because, somebody decreed, hey, this is good money, let's use it. It's because gold has some emergent qualities

that the market discovered made it a very good medium of exchange. And the sort of fundamental thing, there's emergent qualities that people talk about, like monetary theorists talk about, are things like portability, how portable is it? So, you know, you can use cows for trade, but if you want to trade your cows,

or something, you have to get them, you know, from here to there. It's not easy to move around. So portability, durability. So a cow also, you know, well, you know, they live for a while. They won't live for hundreds of years or whatever. And if they can get hurt and die and get sick, so they're not quite as durable. You know, dry goods like grain and rice and have been used as currency too. in the ancient world.

Those also, maybe have a shelf life of a certain amount of time, so they're not as durable as something like gold, which gold is, you know, you can just sit in a vault

for a thousand years and it'll still be there. Right. So we can't portability, durability. There's this divisibility. So another thing, like a cow,

like, you know, hey, I want to buy this thing from you. How much is it, you know, half a cow. So it's like, well,

you can't say it. It's a little bit difficult. Yeah. half a cow, right? So, but you can take a gold piece and you can cut it in half or give them, you know, and, and so divisibility is a big thing that makes, you know, something good money. There's something called fungibility, which we'll probably come back to you later. It's kind of a weird word, but what it basically means is one is like the other.

So if you take an ounce of gold, one ounce of gold, it's like any other ounce of gold, you know. Whereas, you know, different cows can be worth widely huge difference of money, amounts of money because they can have different qualities that make them desirable. Yeah, I mean, there's breeders that do all kinds of things, you know, different things and make different cows worth all kinds of different amounts of money for different purposes. But, you know, an ounce of gold. And it's another thing, uniformity of the money. So uniformity, fungibility, it's kind of the same thing.

But, yeah, one is like the other. So if you deposit an ounce of gold, you know, at a bank or something, then you're not going to get that exact ounce of gold back. You know, they're going to put it in the vault. And then when you come say, hey, I want an ounce of gold, you're going to get, you know, a different ounce of gold. But it's the same value, so you don't care. You're like, okay, yeah, it's something like the other.

So you have portability, divisibility, or portability. durability, durability, fungibility. Let's see, what was the other one. Divisibility? Divisibility, that's one. So you can divide it up. Right. And then there's another one that they talk about

which is kind of like intrinsic value. That's an interesting one with Bitcoin. But basically it means that one of the, like with the market money, like gold, it has some value. Like people use it for something. Like in jewelry or in our modern world, you can use it for electronics. it has some like intrinsic value to it.

Okay. And Bitcoin does have intrinsic value, but it's not in the sense that we traditionally would talk about. So going way back, that's why gold emerged as money. Oh, scarcity is another one. Scarcity, right. Yeah. So, and that's kind of like some, it's kind of like you have to find a middle ground because some things are too scarce, like platinum and stuff like that.

And so nobody can really get their hands on it. So it's not good money. if things are too plentiful, it doesn't have enough value to make large purchases. You know, you have to get a wheelbarrow full of clam shells or corn or whatever. Right. So gold has historically kind of hit that medium

place where it's scarce enough, but it's but it's not so scarce that people can't get it, you know? So those are the big ones that make for sound money. So that's how gold kind of emerged as to the standard money throughout the world, really. Basically from the biblical times till pretty recently.

Now, how is our money now, like currently, like how is the dollar bills that we buy stuff with? How is that related or tied at all to gold? Well, it's not. so at all. So the, and the path to that is pretty... But wasn't it supposed to be originally? It was originally.

Okay. So back in the, I guess to go back to what we were kind of talking about with like the goldsmiths and whatnot, the origins of banking, as we know it today, started with, you know, you'd have gold and you'd want to own gold to buy things, but you'd have to store it and keep it safe.

And sometimes that was a problem. and so what they would do is the goldsmiths who you know would make things out of gold like jewelry and stuff they would already they would have like 24-7 armed guards or something at their place and a vault or something to keep them safe so people would say okay you know what this guy is really good at keeping gold safe so I'm gonna see if he'll keep my gold safe for me and they and and for a fee and the goldsmiths were like yeah this sounds like a great idea I already have the vault that's got plenty of room so I'll I'll just just add yours to it, and yeah, you pay me a fee. And what they would get in return would be like a receipt, basically,

that says, hey, you own this much gold at my vault. And you can come in and claim it any time. Like a monetary note. Yeah. So over time, what ended up happening is those notes, instead of somebody saying, ooh, I really want this, let me run down to the goldsmith, get my gold, and I'll be back, and I'll pay you. what sort of ended up happening over a period of time is people would,

they would allow you to sign your rights to the gold way. It's kind of like the precursor of what we'd know as like a checkbook today. You could sign the note, endorse the note and say, okay, I'm endorsing this over to this guy. And so if he comes to you and wants gold, he can get it. So then you pay him with the note instead of the gold. You pay whoever you're buying whatever you buy back then. a horse

A horse Something some armor A sword I don't know So you do that And then he could go reclaim it And then eventually what happened is they were just Bearer notes meaning whoever's holding this They don't need to sign anything

They just show up and they present it And they can they can redeem it And so these started to circulate throughout the economy And there'd be different Goldsmiths who had to have different notes But basically they started they acted as money because they were redeemable for gold, but they were more portable and easier to store because they were just paper.

So the goldsmiths kind of figured out that once this became like a big part of their business, only like 15% or 10% of their patrons would come in on any given week or month to withdraw their gold. So they had all this gold that just kind of sat there. why not make money with it while it's sitting there? And so at first it started where they would have an agreement with the gold holder. Like if somebody had a lot of gold there, say, hey, how about we loan this gold out and we can earn interest? And then we'll split the interest, you know. And the guy would say, yeah, that sounds great.

And so they'd do that. But then eventually the banksters, even, you know, especially for like small depositors, they would cut out that portion of it. They would just say, okay, you can leave it here, and maybe they don't have a fee for you leaving it there. Maybe they'll do it for free, but they're going to be loaning it out and making interest on it. So that's how, so they started, in addition to their storage fees,

or maybe in place of their storage fees, they'd start loaning the gold out. Or loaning the notes out for the gold. Or they weren't loaning the actual gold. So, no, they would loan notes for the gold, right. Right. So they'd leave the gold safe in the vault, and they'd issue notes because the notes are circulating like currency.

So that allowed them to make money on the reserves in their vaults. What then came next was a pretty brilliant idea, which is, hey, you know, again, nobody comes in for all of this at once. And who's to really know if we put more notes out there than we actually have gold in their vaults? so let's say if they had 100 ounces of gold in their vaults maybe they'd give a loan and instead of you know so then they'd say they have 85% of their gold they're leaving and they're leaving it so 85 ounces of gold they're leaving for loans so say if they've already loaned out those 85 ounces of gold or the paper backing it

but somebody comes to them and they still they want to loan too and they say well you know what nobody's going to notice if there's 10 more ounces of gold paper, you know, receipts floating out there. So I'm going to loan this guy these receipts and he'll pay me back interest. And so that would be, that's called fractional reserve banking. Fractional reserve banking. So basically the amount of notes you have out there, so liabilities, right? The amount of notes you have to repay outweighs what you actually have in the bank.

Okay. As long as everybody doesn't show up at once, it's not a problem. And you can make money on the notes that have nothing back in them. And so this kind of became pretty addictive sort of drug because you can literally just make money out of nothing. You can make interest on holdings you don't even have. So at first it started you're using other people's money to make money, right? other people's deposits to make money, which was great.

But then it just kind of went to this next level where you can, based on your reputation, you can, and your notes circulating the economy, you can just push them out there, and people will still circulate them. And so, you know, bankers could have in the past inflated, you know, to double or triple the amount of notes they'd have on. Based on the gold they would have in the bank. Yeah. And what would happen is they, then you'd get what's called bank,

runs, which people may have heard of. Bank runs? Bank runs. So basically if the word gets out that they're a dishonest banker or whatever and they've put out way more notes, way more paper than they have backing it, what are people going to do? They're going to

go and they're going to be like, well, I'm not going to be I'm not going to get left holding the bag. If they don't have the gold, I'm going to go get mine right now. And they show up and they they want the gold and and then they and then eventually they run out and then you still have a line out the door of people with the receipts and they collapse and fail right and right which is kind of a good thing because it was a sort of free market way to keep these guys from going crazy with this whole scheme so so there's always this threat of bank runs um what we have now is that like that system on crazy steroids, like bigger than Arnold was at his peak.

You know? So the Federal Reserve, you know, during the history of United States, like when the United States was formed as the Articles of Confederation, so it was just like separate states in like this loose confederation. And it was like that for about 10 years after the Revolutionary War. So each state kind of You know the history of how governments learn to To issue paper currency and stuff is a little convoluted too But the sort of moral of the story is that the states

There was hyperinflation in a lot of the states because when And we can talk about that a little bit later inflation and how it affects us But what they kind of learned the founders learned through experience was that Really this whole government printing money thing didn't really work that well. And so in the U.S. Constitution, it's actually in there that only gold and silver shall be money in the United States of America. And so that was the case for a while. We had two central banks. One was called, I think the Bank of the United States. It was founded in like 1800 or something like that.

And then its charter ran out. And then Andrew Jackson, there was a second bank in the United States that was chartered as well. and Andrew Jackson quashed that one. It's something he's kind of famous for. It's kind of a crazy story. And then we didn't really have a central bank until 1913. Actually, I just went to a conference on Jekyll Island last week, which is an island off the coast of Georgia.

It's a little barrier island. It's, I think, actually, the smallest one. It used to be a retreat that J.P. Morgan owned in 1800s. It was the Jekyll Island Club. And there's this book that everybody should read by a guy named G. Edward Griffin called The Creature from Jackal Island. And it's basically like the comprehensive history of the founding of our Federal Reserve. And it was founded. The reason it's called The Creature from Jackal Island is that it was like they got together a cabal of guys,

some senators and some big bankers got together on Jekyll Island in 1910. And they basically drafted. what would become the Federal Reserve Act that created the Federal Reserve Bank, which is the Fed. Wow. So that's why you guys did your conference there? Yeah. So there was a conference there actually, yeah, there was a conference there over the weekend.

It's kind of, you know, a fun thing to go. And if you go to the Bejekyll Island Club, there's a Federal Reserve room. And there's a plaque that says in this room, the Federal Reserve was, you know, drafted or jogging. At the time, though, it was a big secret because they didn't want anybody to, to know who was getting together and why and where because it would have gotten people suspicious. But bottom line is with the creation of the Federal Reserve, it allowed the, it allowed the, with any central bank, England pretty much invented central banking. They had the Bank of England.

It was like the first central bank. And the Federal Reserve is pretty much a copycat of that. And what it allows the government to do is, this whole fractional reserve system. So, you know, the government has a certain amount of money and that the Federal Reserve will hold that money, like the gold, literally gold. There's literally gold in the Federal Reserve?

Well, there's debate about that, too. But there definitely has been in the past. So, you know, Fort Knox is where the Treasury is supposed to hold a lot of its gold. And then also the Federal Reserve Bank of New York, I think, has a big vault. It's supposed to be a lot of gold in there, too. So you have this gold.

Before 1913, only gold and silver was money in the United States. So we had silver coins. So the quarter, the nickel, the dime. Well, not the nickel, the nickel is made of nickel. But the nickel, sorry, the dime and the quarter, the half dollar, the dollar, were all silver coins, well, like 90% silver, I believe. and then we had what was called the Morgan Dollars

which were these big gold they're big gold pieces and these actually circulated his money we also had bank notes that circulated and stuff like that too before the Federal Reserve but when the Federal Reserve was founded

what we had is this this ability of the government to the way the government funds itself is with taxes, you know, up to that point and debt. So the government issues bonds. I'm sorry, I know this is like, I'm like, I feel like this is like the feeding you with the water hose here. No, no, it's okay.

No, it's okay. Skipping over like so much stuff. No, that's good. But the government makes money, raises money with bonds, which is basically debt. Okay. So people buy the bonds, like, you know, during the war, you've heard about like World War II. Buy your war bonds to help pay for the war and stuff like that. Okay.

And so they'd sell them to private entities, basically. And so people would buy the bonds and they would yield the returns. That was the way the government could raise money for projects. Okay. Well, what the Federal Reserve can do is they can buy bonds as well. Uh-huh. So they're like a bank, but they're chartered by the Congress, actually. So they're like a hybrid sort of organization.

So it's a private bank, but it's chartered by Congress. so they have special privileges and they can buy the government's debt and this is kind of getting to how it works today but when they buy the government's debt they issue the government dollars for that debt right but they literally just print the money

for that debt to the government so they say okay thank you government for we'll buy a billion dollars in treasury bonds from you sure and then they'll send the U.S. Treasury a billion U.S. dollars, a billion Federal Reserve notes. They're called Federal Reserve notes. Those Federal Reserve notes are, they literally just print them. Well, these days they don't even print them. They just, it's just like a data entry.

So kind of the brass tax is that when the government needs money, so let's just use, like, you want to know about today's money. when the government needs money for stimulus checks. Right, okay. For people. Right. They don't say, okay, how much taxes do we raise this year? You know, can we afford this?

How much money do they spend on the stimulus checks this year? Something in the trillions? Yeah, well, it's like, yeah, it's like a trillion or $2 trillion. Right. So when they do that, they don't sit there and say, okay, how can, you know, how many, let's take from, we're going to, we can't afford this. this, we're going to take from this, you know, entity, we're going to cut the FDA budget here. We've got to make this happen.

No, they don't do any of that. They don't look at the tax revenues. They don't care. All they do is they go to the Federal Reserve and they say, hey, we need $2 trillion. Okay. And the Federal Reserve says, okay, well, start printing your treasury bills, you know, your bonds that we're going to buy and print two trillion of them. We'll buy $2 trillion worth of bonds. And then we'll give you $2 trillion.

dollars and it's literally just comes out of nowhere the government just owns owes them two trillion dollars yes in the future and they pay interest on that to the federal reserve um so that's uh so basically there really is and ever since 1971 i can talk about that in a second there is no gold backing for the u.s dollar at all period in the story it's not backed by anything it's bad it's backed by the faith in the military, essentially, the United States of America, is all that's back in the U.S. dollar. How does that make sense? Backed by the military?

Well, I mean, yeah. How? Explain that. Well, all right, let me go back a little ways. So after World War II, there's a state of affairs in the world where the United States actually held something like 60% of the world's gold. because, you know, we were this huge manufacturing powerhouse, and we manufactured so much of, like, the war materials,

and so many countries were sending us their gold for safekeeping one, but also mostly just for just commerce. And so the United States had this huge stock of gold, and the kind of, I guess, world elites, if you will, didn't like this sort of imbalance. And so they all met at Bretton Woods, which is a place in New Jersey, I think. And they came up with this thing called the Bretton Woods Agreement.

And what that said is that it made the U.S. dollar, like essentially the World Reserve Currency. And the reason it was the World Reserve Currency is because it was, the U.S. dollar would be redeemable for gold at $35 an ounce. It pegged gold at $35 an ounce. Okay. For foreign countries. So foreign countries could come, if they had dollars, they could retrieve their, they could use their dollars and trade them from gold. So that caused a few things to happen. Foreign governments would start hoarding dollars and getting dollars

because it was the one currency that was backed by gold still. And so this Bretton Woods kind of state of affairs, and by the way, U.S. citizens weren't allowed to own gold at this time. So it was illegal. Weren't allowed to own gold. FDR in 1933, banned gold. nobody could hold gold. They said that, what was the slogan?

It was something like, they blamed people who hoarded gold for the economics, not the economy not turning around. They were, they would hoard it. They were saying, oh, they're hoarding it, so it's not getting out in the economy.

Choking the economy, right? And so they said, you better give it up. So there was like a, you could have like some tiny amount, like two ounces or something like that or something of gold. But the fines were crazy.

It was like $10,000 fine. And in 1933, I think that's like a quarter of a million dollars now. So, and then people got put in jail for it too. Not very many, but some if they were found to have been hoarding more gold. So U.S. citizens weren't allowed to own gold, but it was, but U.S. dollars were redeemable for gold for foreign countries. So these foreign countries, what they started doing is a lot of them started redeeming their gold. In the 60s, they redeemed their dollars for gold.

And so sure enough, the gold was flowing out of the U.S. to these other countries at a rapid rate, actually. Because the U.S. had produced a lot more, the U.S. government had produced a lot more dollars than it had gold in the bank, just like the old bankers of old time, you know, the goldsmiths did. There's more dollars in circulation than there were gold in the Fort Knox. So you're saying like the U.S. military is the only thing that's going to stop. other countries from coming and taking all of our gold. Well, I'll, I'll, uh, okay, let me get to that. Okay. I haven't forgotten that original question.

Okay. I'm just trying to get to, we're at. So, uh, in 1971, Richard Nixon, basically the outflow of gold was happening so fast that, um, that we were going to run out, essentially, if we kept exchanging the dollars for gold, the foreign countries.

So Richard Nixon closed the gold window in, in 1971. It was an executive order and he basically said Brentwood's agreement is done and the U.S.

dollars no longer redeemable for gold. What they had done at that point is Henry Kissinger who was his think Secretary of State had worked out

a bunch of deals with like the Saudi shakes and princes and whatever and kings and in the Middle East that basically we would industrialize their economies

and we would come in because we figured out they had a ton of oil and we'd go in and we'd build up their countries, build up their oil industries but OPEC would only accept dollars for oil. So at the same time

we closed the gold window, this deal, this deal was just happening and just happened where if you wanted oil, you had to pay for it in dollars. So one would think that if we were saying, okay, you can't get any more gold, people would lose confidence in the dollar and like the dollar's value would collapse. But because they had this other system in the works, they would, it basically became like the petra dollar. So the countries could still hold dollars and be like, okay, but these are still useful because I still need these to buy oil. still have to buy. And that's how it is to this very day. So when I say it's backed by the U.S. military, what I mean is there's there have been several countries, like Iran is the one that pops out most of my mind,

who have tried to set up, because Iran has a ton of oil. They've tried to set up like oil exchanges where they would accept something other than dollars, U.S. dollars. So they'd set euros or Chinese won, something like that. And I think that has a lot to do with a lot of the tensions that we have with Iran is that they I mean there's other things too We've caused a lot of problems over there and in the past But basically if anybody threatens this sort of dollar hegemony on oil They will get a military response most likely of some kind and so in that respect the US military does sort of back the dollar like the force of the US military because if

anybody truly threatens the the sort of global World Reserve status of US dollar yeah it like if any nation state does they could receive retribution but basically that's what government is it's government in general is you know the ability to force somebody to do something. Okay. In my opinion, like they, they, it's the monopoly on the use of force,

basically is what a government is, like in a certain jurisdiction, you know? Legal, like the legal monopoly on it. Of course, people use force all the time and commit crimes and stuff, but they can't legally do it. Okay, so how does Bitcoin solve this?

Okay. Solve this problem. And actually, before you do that, how do you explain to people like dummies out there like me what Bitcoin is. Somebody has no clue. How do you explain it?

Right. So Bitcoin is a new sort of evolution in, like, monetary technology. And I guess the sort of like elevator pitch is, it's an uncensurable, unconfiscatable fixed supply monetary, easily transferable transmittable, monetary unit. Okay? So

there's a lot of like if you exist in the world we live in today like there's capital controls that keep you from moving your capital from place to place. There's tons of middlemen. tons of middlemen. Yes, it also cuts out the middleman.

In the early days of Bitcoin, we had like an easy pitch, and that was, hey, check it out. I can send you money between our phones. Because Bitcoin kind of had, that was sort of revolutionary in like 2009. But now everybody does that with like cash app and stuff. So that's not as cool. But what makes Bitcoin different,

and Bitcoin and cryptocurrency is different, is that the, well, let me talk about what happens when, the government or banks or whatever, you know, basically issue the, do the fraction reserve scheme, issue all the money. What we see is, so like, I'm a realtor up in Atlanta is, you know, and I, so over the last six months, we've seen housing prices go up, like quite a bit. Are they still going up?

They're starting to level off a little bit, but they're going up. And I think this is a phenomenon in a lot of places. some would say, I mean, part of that is because there's low supply. You know, supply and demand is, like, kind of the whole market. A lot of people were kind of, like, not wanting to move because they, COVID and stuff like that. So, like, there were fewer houses on the market than historically there would have been. And so that helps drive prices up. But also it is, it's, you know, the government gave all these loans to people, like the PPP loans.

They did the stimulus packages. There's people on unemployment making, you know, like, like, you. reasonable amounts of money actually like $1,200 a week sometimes when it was kind of at its height. And, you know, when you, this money is just injected into the economy. Like, it didn't come from tax revenues. It came from that sort of mechanism I was telling you about where the Federal Reserve buys the debt and just creates the money. But the economy is still the economy.

It's still the same as it was the day before they sent these checks out. There's still the same amount of stuff. Yeah. Still the same amount of houses. There's still the same amount of food. Still the same, you know, the economy hasn't grown overnight to, you know, to match whatever percentage increase the supply of money was. So what you end up having is you have these, you have more and more dollars chasing after

the same amount of goods and services. And so what you see happening, like, for instance, real estate is you say, okay, my client really likes this house. Let's make an offer. I call the listing agent, oh, well, Sorry, we already have 10 offers on this house. So if you want it, you know, you need to go over list price. So, okay, we'll go over list price.

And then we'll, hey, we'll put an escalation clause in, which basically says we'll go $1,000 more than the highest bidder, you know. Wow. Stuff like that, yeah, to try and get in the house. And so what happens is that the price gets bid up, right? And part of that is because there's more of these dollars in the system. also, you know, interest rates are low, which is another kind of aspect of inflation. So all these dollars are chasing after the same amount of assets we have is price inflation, which means the prices of everything goes up.

And so when you magnify this effect over, you know, the federal reserve has been around for 107 years since 1913, when you magnify that out over 100 years of, you, this sort of gradual debasement of the money, the dollar's worth a fraction of one percent of what it was when the Federal Reserve was started. So you have to ask yourself, where did that money go? Like, where did that purchasing power go? Like, who got it? And the answer is, it goes to the people who get the money first.

So it's called the cantillion effect, if you want to Google it. But can't somebody say cantalon, cantilian. Cantillion effect. Okay. Basically, the first person that gets that new money, they can go out and spend it in the world at the same prices as things were yesterday. Before the market has had a chance to realize that, hey, there's all this new money in the world. So, you know, where are we going to, so they get to price.

purchase it at sort of a lower price than everybody else. So like say a month later, if the money supply is increased by 10%, what that will mean is in a month or so, once the market's kind of worked this out, everything will cost 10% more. So the guy that bought the item for 10% less with that money when he first got it has essentially, you know, since the money was just made out of thin air for him, he he stole 10% of the purchasing power of everybody in the economy

by injecting that new currency into the economy. So with Bitcoin, one of the key sort of founding principles of Bitcoin is it has a fixed supply. So it's emitted gradually over time through a process called mining. But at some point, it tapers off to zero that are admitted. And the total amount that will ever exist is 21 million Bitcoins. But how?

How is it possible? How can you cut it off? So at one point, miners won't be able to make any money on it? Well, the miners also make money on transaction fees. Okay. So when people want to make a transaction,

they pay what's called a minor fee in Bitcoin. And the fee, it's just like a market. So if the Bitcoin's network's kind of busy, the fees can go up. If it's not really that busy, that goes down. But the idea is that I think the last bitcoins will be emitted in like 2130. And so once that happens, the hope is that there'll be so many people using Bitcoin

and there'll be so many transactions and it will have scaled to meet the demands of the economy that, yeah, the miners can exist easily off of those transactions. Okay. But the way that it's done is it's hard-coded into the Bitcoin code that, that the Bitcoin miners, which basically they are, you know, people who own a computer in the early days, it was any computer. Now you get to buy these like $2,000 processors, right?

Yeah, or something like that. So just a brief thing about mining and what it is, because it's a big part of how Bitcoin works. It's super complicated to understand. It's not super complicated, but it is, I mean, somewhat technical. So the example I give is that if you imagine, imagine these computers every 10 minutes, well, on average 10 minutes, they're given a new cryptographic puzzle to solve. And it's, I think of it like a needle in a haystack. So they start,

they have to find the needle in this cryptographic haystack. It's basically like, like if you have an email password and somebody wants to figure it out, if they don't know you all enough to like social engineer you or something. They can try what's called brute forcing it, which is basically like, well, I'll try this word. That didn't work. Okay, I'll try that word. Okay, maybe if I tweak it a little bit here.

And people can code computers to do this and brute force your passwords. And so it just takes a certain amount of time to do that. And then eventually they'll guess right. And if you don't have any protections in case, in place, you'll have access to your stuff. And so basically these computers are, trying to brute force this puzzle.

And it's like looking for a needle in a haystack. And so the first computer that finds the needle broadcasts, hey, I found it to the network. And then the rest of the network looks at the needle. And based on the last needle that was found, they can prove that this needle is the legitimate needle. It's the next block in the blockchain. They've solved the puzzle.

And then that miner gets a reward for finding that needle. And he also gets a monetary reward, and he also gets the ability to write all the transactions that have happened in that last 10 minutes. So if people are like, hey, I want to send you some Bitcoin, and the other guy says, I want to send you some Bitcoin, those transactions are all put out there. And they, they,

And then the miner who finds the needle will sweep up those transactions and then earn the fees off those transactions. And then earn the fees off those transactions as well. And then he'll encode them into that needle allows, it's more like a key. It allows him to write to the Bitcoin blockchain. And that, that, that, that, and then once he does that, he gets a block reward, which is the, that's how Bitcoin is created. So he gets a Bitcoin for that? He gets some Bitcoin for that. It's to incentivize people to participate in the network and validate the transactions.

It started off at 50 Bitcoin. And then every four years, it's hard-coded that it cuts in half. Who created the first 50 bitcoins? That would be the anonymous founder. Nakamoto? Yes, or group of founders. Satoshi. Satoshi Nakamoto, right?

Nobody to this day really knows who he was if it was a lone person acting or a group of individuals where they come from who, you know, there's people who have speculated certain things, people who have found, like, evidence to try and figure out where he may have lived or whatever. Like based on when he did his posts, people think that he probably lived in the East Coast of the United States, stuff like. like that. But, or he could have just been clever and every time he posted, posted at a certain time that would make him look like somewhere else. Or it could have been multiple people. But yeah. Where did he post stuff?

It started off in a mailing list called the Cypher Punk's mailing list. Okay. Yeah. Right. Which was formed in like, I think the mid-90s. A bunch of nerds in California, San Francisco. Okay. Started doing a little meetup at one of the guys' headquarters. What was his name? Eric Hughes, I think.

And Eric Hughes wrote the Cypherpunk Manifesto, which you can look up. It's just like a paragraph. And then they had a mailing list. And these guys had been trying for... They were basically a bunch of guys that really can serve with privacy. And the Cypherpunk Manifesto basically... says that privacy is key to

free society in this modern era like cryptographic privacy and along with those kind of ideas also come a lot of guys who are interested in sound money and they know about how the Federal Reserve works and how it basically robs

savers of their money you know over the course of generations and so they worked on this whole idea of cryptocurrency. And the nearest thing to it was Hash Cash, which I think was

Nick Zabo's project. Hash Cash was a way to protect you from email spam by basically it would make you do a little computational work. He invented proof of work, basically, which is what the mining algorithm

sort of is for Bitcoin. Basically said you have to do a little computer computational work to send an email that way if somebody couldn't just send out a zillion emails as spam to somebody yeah I think that was like

90 it was like 2000 something 2003 or four he came out with that and then Satoshi Makamoto just basically came out of the blue like I just started posting in this thing and dropped the white paper for Bitcoin and this thing and everybody was kind of like

well this is really interesting and what Nakamoto had done is he just basically he had taken a lot of the stuff that the cypherpunks had learned and figured out and just kind of put them together nicely into this nice package and coded it up and launched it. And so he was the one to answer your question, he or she, whatever, was the one that mined the first blocks of Bitcoin.

And the first transaction... Mine the first blocks of... It's called the Genesis block. It's the first block of information. It was empty. because there were no transactions. Right. It didn't even exist, right?

Nothing was there. Nothing was there. But it did reward him with 50 bitcoins to his, to his Bitcoin wallet that he could create it. And he actually, I think he ran it as kind of a test net for a while. He did send some Bitcoin to Hal Finney, who's now dead. He was another Cypherpunk contributor. That was, I think, the first Bitcoin transaction where he sent, you know, he's like, okay, download the software.

The software creates what's known as a wall. it file and I'll send you some and it worked. But it's another kind of breadcrumb is they think that Nakamoto may have worked in some kind of lab where he had access to a bunch of computers because he actually had a, he actually had a whole bunch of computers that were mining in the beginning that he was testing with. Like it was something like 30 or 40 computers and they were all kind of the same. They all kind of did blocks at about the same time.

so it took them about the same time to find the needle so they figured they're probably about the same type of computer but that's kind of a rabbit hole yeah but that's that's who mine the first bitcoins um okay i don't know i feel like i'm jumping around a lot yeah no no it's super it's super interesting now there's also multiple different types of bitcoin like there's bitcoin then there's things like Ethereum. Right. How are these things different? Are these just people like finding opportunities in this whole Bitcoin craze to...

Well, Bitcoin's an open source project. So that means that anybody can go read the code. It's not like some secret. Right. So like one of the first alt coins that I knew about was one called light coin. Altcoin. That's the term. Okay.

They're alternate versions of Bitcoin. Okay. And it literally was just an alternate version of Bitcoin. It was a word for word basically copy paste of Bitcoin. The only thing that he changed in the code, a guy named Charlie Lee, the only thing that he changed was he changed the block time. And so Bitcoin, the way that it works, that's so interesting, it took, have you ever heard of BitTorrent?

Yeah. Yeah. So it's basically like a decentralized file sharing. Right. Like you want to download a movie or something. Right. So basically hundreds of people will have this movie on their computers, right? And then you say, hey, I want to download that too.

And so you get a little file. And then it goes out and looks, says, okay, who has this? Okay, this guy has it, that guy has, that guy has, and that guy has it. I'm going to download from him, him, him. And you download a little bit from each peer, right? But there's no, like, the reason it works is because there's no, and the reason it hasn't been taken down by the authorities is there's no central, like, bit torrent company that you can sue. raid,

fine, take down otherwise. Nobody owns BitTorrent? No. No, no, nobody owns Bitcoin. Okay. It's just a program that exists. It's just a decentralized protocol.

Okay. And people can, now there's, and it's open source. So a lot of people have developed different apps and stuff that work with Bitcoin and they talk to the network.

But, yeah, that's how. What about websites like Pirate Bay or those types of websites? The thing is, those are just, repositories for the for the for the the the key files that let you know that that that they're like little tags that basically say okay uh this movie this like say this like let's say something legal like a like a like a like a like a open like a public domain book or something you want to

download it yeah it's in the public domain there's because there's plenty of legal content available of course on a bit torn as well um you'll download this you'll say okay I'm something like the pirate bay and find uh, Moby Dick. Okay. I want to read it. I want to read it. Get the e-reader version of Moby Dick. And it'll come up and it'll show several files and it'll say

okay, this this file has 15 people that also have it. And this file has one. This one's kind of dead. There's nobody that like we know about it, but nobody out there is hosting it. And so you click on that file and all that file is just like

basically metadata about about that file and then you load that into your bit torrent software and then it goes out and looks for where else has it. But Pirate Bay doesn't host anything aside from

just those, basically the metadata for those torrent files. So the only thing you download from the Pirate Bay is like a tiny, like, three-kilabyte file. It's like a portal to these other files that you can download. Right. It's basically like a, it's basically

like, it's basically like you have your library cards and, well, not anymore. When I was growing up, we had library, you know, you had the, the Dewey Decimal System, you know. Yeah, yeah, yeah. You'd have your card catalogs. And then you'd say, okay, I need to, the author's name starts with, you know, an L. So you open up the L drawer and you look, oh, here it is. And then you go to the stacks and you find it. So all that Pirate Bay is, is just the card catalog.

Oh, okay. You're not actually downloaded. So unlike Napster. So Napster actually hosted the stuff. Napster started, you know, Napster was like 1990, whatever, eight, nine. And they got, they were a company, though, and they ran this file sharing thing, and they got sued out of existence. Right. Right.

Right. So, Bitcoin took this idea of a decentralized platform, like BitTorrent, where it's just one node connecting to another in like a spider web. but there's no central point of failure. Like all you have to do to run a Bitcoin node is just open up the software and bam, you're part of the network. So even if somebody wanted to take down the Bitcoin network, right, they would have to find every computer that's running it in the world and smash that computer. They'd have to go into space, I think, at this point,

because I think there's Bitcoin nodes running in orbit and kill those. When you say node, do you mean those computers that are mining? It's just a computer. It doesn't even necessarily. have to be mining anymore. Okay. Okay. In the beginning, all nodes were pretty much miners. Okay.

But we'll get to the sort of, we can get to the, let's shove that for a second. The arms race. Yeah. The arms race in mining. Right. That's kind of a fun thing to talk about. But, uh, anyhow, it's, it's an, it's a very durable network because it's, it has no central point of failure.

Um, as a protocol. So it took that, so Satoshi Nakamoto took that idea of sort of BitTorrent and decentralized networks. And then he also took this proof of work idea and then combined them with, in my opinion, what were some pretty sound economic principles and created what we know as Bitcoin. The proof of work algorithm, which is what does the mining, The needle in the haystack search is what. You know, it gets people to contribute something of value. And so because the power and the computing, the computer you use is they cost money.

And so a lot of people will say that unlike gold, Bitcoin doesn't have any intrinsic value. It's not backed by anything. Technically it's true that there's no ounce of gold or anything. thing else in a vault for every Bitcoin in the world. But Bitcoin is backed by the hardware and the power, like physically backed by the hardware and the expenditure of energy that it takes to run the network. And it's very high at this point. I was watching something with this guy who had this massive, massive warehouse or like a bunch of warehouses in Iceland that were just storing these computers, like racks and racks and racks of these computers. It must have

been like tens of thousands of computers that were all mining the Bitcoin. So it's people like that who keep Bitcoin alive, right? Right. Yeah, basically. Well, they secure the network. And so most people don't know this, but Bitcoin is, uh, what kind of money does that guy make? It's the largest, basically, uh, cryptographic network in the world. So it's, it's, the Bitcoin network is actually the biggest supercomputer in the world. That's pretty scary together. It's not scary because it only is good at doing one thing. Right. Right now. Yeah. It's only good at finding, you know, for the most part, the way the hardware is built

these days. It's really only good at one particular hashing algorithm, which is good for finding Bitcoin. So why isn't Bitcoin good for investing or like long-term investing? It's only good. Who said that? I was watching something earlier. I think it was what's his name? Andreus Antonopoulos. He's awesome. You should give him on. He was saying that Bitcoin is not good for investing your money into. It's good for making transactions, but it's not good. It's not a good way to invest money and earn a return, something because it's so volatile.

Maybe I didn't listen. Maybe I didn't hear that right. Okay. If you're getting in the world of like investing, you know, it's like not investment advice. Am I better to invest in the SP 500 or invest all my money in Bitcoin? Well, the S&P 500 has been pretty volatile as well lately, but. But over the past 100 years has gone up. Right.

That's a personal preference thing. So Andreas, kind of famously, a few years ago, he, he's always spent, he's received payment in Bitcoin for his speaking fees, and he spends it for everything. And so, I think he had some, like, family emergencies and stuff where he cashed in a lot of his Bitcoin earlier on before it, like, went. parabolic the last time. And so he really didn't have a lot of Bitcoin that he held. And so that's his personal investment philosophy. He uses it as a medium of exchange. And he kind of, I think, hedges against the volatility by going ahead and spending it.

Okay. More closely immediately. A guy named Roger Vair, who's a big name kind of in the Bitcoin world. He used to be called Bitcoin Jesus. Right, yeah, he's a kind of a wacky guy. He owns Bitcoin.com. Right. He said he tweeted out something like to Andreas.

This is like two or three years ago now. He tweeted out that if only Andreas had kept a few hundred dollars worth of Bitcoin and hold on to it, he would be a millionaire by now, you know. And Andreas said, responded somehow. But what ended up happening? You know, Andreas has like a donation address, like a Bitcoin address that he just has posted on, on his Twitter.

Somebody donated a million dollars to Andreas. Like he's like, now you're a millionaire. Holy shit. When was this? 2017 or 16, 17, 18, something like that. What's the most Bitcoin has ever been worth? It was actually,

I think the highest value was, $19,66666 is what I saw. So almost $20,000. And that was in December of 2017. December. And what is it at right now in October of 2020? $11,300. Yeah.

So it's about half. About half. That's not good. But, well, it was even worse than that. I think it hit 3,000 something in 2018. Really? Actually, no. In March, when the big.

crash happened in the market everything crashed yeah uh bitcoin went down i think 4 000 something again it was it had been back up at like 10 or whatever but it just or eight or nine and it's but it came back just like the market then it came back and rebounded and it's back to where it was before the the march crash but yeah um that being said so when i started with bitcoin bitcoin was 100 almost exactly. And what? 2012? 2013. Okay.

I was going to start mining in 2012, fall 2012, but here I'll talk about the arms race a little with mining. It was a little rabbit hole. When Bitcoin, I told you earlier that Lightcoin was just a tweak of the Bitcoin network. It changed the block time. What that means is that

the network targets for a new block to be found about every 10 minutes for Bitcoin. But it's not like a hard, it's not like a hard, it's not like this happens every 10 minutes. It's a target. It's how fast the computers can do it, right? Exactly. So a lot of times what happens is a computer will get lucky and it'll find it in two minutes or something. And so over the course of two weeks, it checks to see it. if the average is 10 minutes.

And if it's not, what it'll do is it'll either make the puzzle harder or easier, depending to make it 10 minutes. So if, and pretty much all the time, it's always been getting harder because computers are getting faster and faster and able to find it faster and faster. So if you... So the faster the computers are, the more height, like the more complex they're encrypted? The harder the, if you want to think about it this way, the bigger they're haystack gets, right?

For finding the needle on the haystack. Right. So if you get a machine, if you imagine this machine that gets, it's, it's kind of good at finding needles in a hay sack. You know, you can have a little small haystack. It'll take it 10 minutes and then it'll find it. But if you have this like industrial hay sorter machine that can just gobble that through that two seconds.

Right. And find the needle. Then it just needs to make a bigger stack. So it started off you could just mine Bitcoin on, on your laptop. Like anybody could mine it. But then people figured out that if you used GPUs, graphic processing units, like video cards, you could get pretty efficient performance. And it was like an order of magnitude better at solving the puzzle.

And so then people who had CPU, you know, just doing it with their laptops, weren't really able to do it anymore because the GPUs were so good at it that the algorithm had to make it harder. So, like, if you had your little CPU, you know, it would be like one guy looking at this giant haystack, you know, to go through, and he wouldn't be able to. But if you had the GPU, it could power through it and do it in 10 minutes. And then what came out next was FPGA's field programmable gate arrays. Field programmable gate arrays. Anyhow. And those, those lasted a little while.

they're basically just like highly adaptable programmable circuits you can you can sort of specialize things for so they're very good like specialist chips

you can program them do all they're using all kinds of industries for all kinds of things but then shortly after those came out the ASICs came out application specific integrated circuits basically these are

CPUs that are designed to do just one thing and they're designed to do them really well special built, custom built. And these are supposed to come out in like the fall of 2012. And there's this one company that was developing them or putting them out called Butterfly Labs. I almost hate to give them a plug because they ended up being huge scammers. But they're not around anymore, so it's not a big deal.

But so in fall of 2012, when I was looking, getting into mining, I was going to get some GPUs and build some computers and whatever. but these butterfly labs guys had built all these or put out all these Google ads. I don't know how much they paid on Google ads, but literally any time I searched for anything, you know, Bitcoin mining related,

their ads were everywhere. And these A6s were like an order of magnitude more efficient than the GPUs. So I'm like looking at all these profitability calculators. Okay, if I buy this GPU, you know, it'll pay for yourself in like a year or something like that. And then you're looking,

then this ad, pops up and you're like oh my god if this thing comes out it would pay for itself in like three days you know you pay $1,000 for it or $500 for it and then it's so fast that in three days of mining bitcoin you would get $500 with the bitcoin but then they just so I was like well I'm just I'll just wait until they come out and there's no point in getting my GPU gear ready and so but then they didn't come out they didn't come out they didn't come out and then it was like 2013 uh they still hadn't come out or they well they still hadn't been delivered um they were out there it turned out that what butterfly labs was doing is yeah of course like if they have the heart it's like

the cantillion effect i was talking about with uh the person that has the money first uh they so they had these miners that could mine like ridiculously fast first like they were the first guys so they're like well you know they'd have a burn in period right where they're tested or something. Right. So they would run them, they were running them at their facilities. And then, uh, that would cause the, the network hash rate to go up a lot like the, you know, because they were really powerful. So that meant that the, the haystack was getting bigger. And then once the haystack had gotten big enough, then they would send them to the customers that paid for them. Wow. So they would make a ton of money. Oh my God. What a scam. Yeah. And ASIC companies still do.

It's still that way that you need to be. whatever the next generation ASIC is, the closer you are to the, like the hardware manufacturer. Like, because literally, if you order one, making a profit,

it could, like getting it next week versus the week after next. Could be the difference between you breaking even and making money or you never really recouping your... Because of how fast they're advancing? Well, because of how, it's not just the advancement.

There's also, you know, if you manufacture a bunch of these, it's a you know there's strength of numbers too so the more you have looking right the more odds there are that somebody's going to get lucky and find it faster you know so they're mass producing these things too but that's that's why instead of getting in in 2012 when bitcoin was like $20 or $12 something like that I ended up getting in finally I just it was March I think or no January February 2013 the price started going up and I was like man I mean I

missed the boat. I should have started. I should have started mining. I should have just said, forget it and bought the computers and mine. And yeah, I remember like a year later after I'd been mining for a while. I remember I was looking, I was trying to troubleshoot something. And I looked through this, I was looking through this forum. And it was a post from like, yeah, mid, late 2012. And this guy was like, oh, guys, I've got this GPU, which is the exact GPU I had. Because I was trying to troubleshoot that one GPU. He's like, oh, there's one, I'm only getting one Bitcoin a day. What am I doing wrong?

One Bitcoin a day. Yeah. And at that time, that would have been a fantastic return because Bitcoin was, when I was reading it, Bitcoin was like $200. And so that would have been like $200 a day off that one little GPU if you'd help. So Bitcoin right now is you said at about $11,000. Yeah. That's right. How much, how could I mine?

enough to make one Bitcoin in a day. Well, the way, if I told you the block, there's the block reward. Yeah. Right? It rewards out,

um, now at six point, so, so we've had, every four years, it cuts in half. So it started at 50. Then four years after it started,

it went to 12 and a half. And then just recently, it went to, sorry, sorry, 25. I went to 25. And then the third happening, it went to 12.5.

And just recently it went to 6.25. And this is how the... 6.25 what? Bitcoin's per block. Okay. It cuts itself in half every four years. And that's how it's going to go to zero in the future. Oh, okay.

I get it now. That's all right. This is the largest audience of ever confusing. Hopefully. Yeah. So, what was the first? question? Oh, you earned my one bit. Yeah. So how can I, yeah, how can you mine? So now it's down to six and a half Bitcoin per block per block. But what people realized, and this happened really

early in Bitcoin, like back, even when the CPUs and GPUs are used to mine it, um, um, so if you were going to buy some hardware to mine Bitcoin, you could set it to mine Bitcoin called solo mining, where you're just looking, you're just playing with everybody else trying to find on the chain. And maybe you'd get lucky and you get 50 Bitcoin, but it would take, you know it's all about statistics and averages there are not statistics but a how plausible it is you'll find it's like playing blackjack or something well yeah but it could so so you could run your machine you could get the 50 bitcoins or the 25 bitcoins are now the 6.25 bitcoins but it could take you like three years or something wow of mining right or what people have done is they join pools so they pool

their power, their mining power, into this pool. And then the pool is much more, because it has a huge amount of mining power, if you just have like one miner or something, you can hook up to this, you can link up with a pool. And the pool has a huge amount of mining power. So they find a couple blocks a day. Oh, wow. Right?

And then when they do is they divvy it up. Okay. To all the, you know, depending on how much you contributed to the miners. I did in the past, yeah. Okay. I always did pool mining. Why'd you stop? Because, well, I stopped mining seriously in 2015 or 14.

The prices of everything, Bitcoin went up to $1,300 in 2013, and then it crashed back down to like $600 by January 2014 or February or something like that. And then it actually eventually made its way back down, I think, almost $200 or $250, something like that. And during that time, it was just not profitable to mine. Like, he spent more in power and being a pain. Also, I had it at a friend's warehouse, and he ended up, I ended up not being able to do it there anymore. Yeah, isn't it scary?

Like, especially pooling, like, if you're talking about pooling and joining other people's power grid and having a bunch of people with their processors that are mining Bitcoin, I mean, you've got to be pretty scared. You know, that place has to be pretty secure. Well, no, no, the, the thing is, you don't need to pool with people in a physical location. You pool with them wherever they are. So you can be alone in your dorm room and you can join a pool.

Oh. And so they're all just basically what it'll do is it'll, so when you're, when you're searching for the needle on a hay stack, you know, what they'll do is they'll say, okay, you've got this giant stack. All right. Here, you take this clump of hay. You take this clump of hay. You look through that hump of hay.

You look this clump of hay. Okay, I get it. You look through this clump of hay. Right. And they can divvy that. out over the internet, right? So, but there are huge facilities that, like you talked about

the one in Iceland, where, and there's a ton of them in China where they, they just go through the, you know, they have these giant facilities. And so, yeah, security is probably an issue. Although, really, if you break in there, all you're going to really be able to get is, you're not going to be able to

get at the Bitcoin, you know, like, right. It's just a bunch of hardware. If someone want to, they could just go fucking take a baseball bat and break all your computers and. Yeah, they could do So, yeah, pooling allows small operators to get like a regular return. You know, instead of, like, if you buy a piece of hardware to buy Bitcoin and you hook it up as a solo miner, you'd be like, well, maybe I'll get 6.25 bitcoins, but it might take two years for me to find that. Or you could say, I'm going to hook up to a pool where they're regularly finding blocks,

and then they're going to divvy up, you know, depending on how many stacks of hay you looked at, they'll give you your proportionate share of that block, plus a fee, you know, for them running the pool. Right. So then you get, maybe you'll get the same amount. Maybe you get 6.25 Bitcoin in two years over the, you know, over the course of you running it.

But you're getting it in like a steady stream instead of just, oh, wow, I found a block all at once, you know. So when is this, when did you do? you say it stops again? I think it's 21.30. 2130. But so today is, it's 2020 today and

we're already at 18 million, I think, of the 21 million. 18 million bitcoins of the 21. Yeah. So it's, it's going to get a less and less amount, you know, as like,

it's a really like winnowing down. It's probably going to be way earlier. Well, no, it'll be that. It'll be 21.30. But by then, You know, what's funny is it's actually worked that the value is kept up with the havenings, you know. So like at every having, it's kind of like basically the miners' profitability is cut in half overnight. But on the long run, the price has managed to keep up pretty well as far as, you know.

So even in, you know, 21, 30 or whatever, like when people are mining, Some fraction of, you know, like one Bitcoin every block, you know, like 0.05 Bitcoin per block or whatever it is. You know, that 0.05 Bitcoin may be worth... How do they come with that number? Why that number, though? I don't get it. 21. 21 million?

Yeah. You know, I think Stochi talked about it somewhere. There's a really cool book called The Book of Stochi. That's all of his writings. Everybody, anybody's been able to really find, like, so online and whatever. And they compiled them into a book called... the book of Stochi. And I think he may have talked about why he picked 21 million.

I think it was just like an equation he did that basically, you know, because people think, you know, hey, what if the global economy is running on Bitcoin? Remember we talked about divisibility? Yeah. Being a fundamental thing of money. That, you know, there's more than 21 people in the world. So, you know, does that mean it's going to be too scarce? Like, are people going to be?

21 million people. Yeah, there's, you know, 7, 8 billion. Right. So that's not enough for everybody to have one Bitcoin. So, but Bitcoin's are divisible by eight decimal points. So it's, so of, of the 21 million, it's that many times, you know, so the amount of units can be chopped up into is eight billions. Oh, oh, yeah, I want you here.

Yeah, it may even be trillions. One Bitcoin, you can divide eight times? No, you can invite it to the eighth decimal place. Eighth decimal place. Okay. So it's real small. I've never done the math on it.

So you can have a lot of Bitcoin units. So even if Bitcoin was worth like a million dollars, theoretically, the unit of Bitcoin is they've called it the Satoshi. So like that's like 0.000-0-0-0-0-0-1,

Bitcoin is one Satoshi. So I think I did the math once. Even if Bitcoin was a million dollars, one Satoshi. is still worth $5. Wow. So you can buy a coffee with it. Wow.

Right. So it could be that, so I think you just did some math. Like, okay, 21 million is a good number. It's divisible, you know, it's when you divide it up

to the 8th decimal place, it's plenty of currency to go around and be used around the world practically for things. But, um, these, these apps that you use on your phone to buy stuff,

did they do the math for you? Like do they automatically, like wallets? Yeah, like the wall, whatever, yeah, however you transact on your phone.

Yeah. Yeah. They, they'll, they usually keep up with some exchange rate or something. And so you can either enter US dollar amount or the Bitcoin amount, however you want to do it. Okay. So. Now, when we were talking about those alt coins, like light coin or Ethereum or whatever, what did the Winklevoss twins, the two Facebook twins, when they first got into Bitcoin,

is that what they started doing was developing their own alt coin or did they just invest a bunch of money into Bitcoin? And they, what they did is they, I don't know their thought processes when they got in exactly, but they saw it as something very promising. And so they, when they got their settlement from Facebook, you know, they had a fair amount of capital to play with. What they started doing is they started investing in early Bitcoin companies that were dealing with Bitcoin. So they were angel investors for a couple of companies, I think. And then they bought a ton of it. and they bought it at like

I don't know how much I don't know what their cost basis per coin was but it's low it was probably below $100 per coin and they put millions and millions into it so they're worth a lot of money what were the companies doing that they were investing in

the Bitcoin companies the one I know about I'm pretty sure about this I'm not Is it called Libra or something No that was Facebook's Oh yeah Zuckerberg tried to make a competing one.

That's an interesting story, too. Everything's a rabbit hole in crypto. That's why it's so hard to talk about. So the Wink of Voss, I believe they invested in Bit Instant, which was you could buy Bitcoin with credit card, you know, over the website. The founder, one of the founders of that named Charlie Shrem, he actually lives in this area. We should get him on.

He lives around here. What's his name? Charlie Shrem. But he ended up being. kind of made example of he actually went to jail for a couple years for some stuff involved but Bit of Instant basically ended up failing

but that didn't the Winklevoss that still didn't keep them from owning they own a ton of Bitcoin I don't know what it is how much it is but they've definitely got billions of dollars I think Bitcoin at this point Is Charlie the guy who was running Silk Road? No

Oh, okay. That was Ross Ulbricht. Ross Ulbricht. Allegedly. Is that the guy you were telling me about who? Yeah. We were talking about on the phone? I think so.

What's his story? So he was in like a library or something. Yes, that was crazy. So the Silk Road, there's been many aversions after him. Yeah. Because I guess it's a popular idea. But basically. And that's why Bitcoin has such a bad rap to it because people think about buying drugs or

buying organs or buying whatever. or human trafficking. So basically Ross and or people around Ross or a group of people built this thing in 2000, probably 11 or 10. Maybe 2010. No, no, it's probably 2011 or 12. They built this thing called the Silk Road. It ran on the dark web, right?

Which is sort of an area of the Internet that you can't really access unless you know how to get there. But it was basically eBay for, but you use Bitcoin. And you could list anything on there. So while one could easily sell shirts or chotchkes or knitted sweaters, I'd say that there was a large amount of drug sales on the Silk Road. And it was brought the attention to some political folks. I think the famous video was like Chuck Schumer. who is like looking at it.

It was like a news story. And Chuck Schumer was like, scroll, he's like, oh my God, you can buy anything on here. And that's when they exploded. Like that's when it became like, that was like huge advertising for them. People were like, oh, wait, I can do what? Yeah.

So, yeah, they went on Silk Road and you could buy, basically you'd pay for it with Bitcoin and then it would get mailed to you, you know. So just like you be a except for, you know. Anything. Anything. Anything. Basically, it was free market, right?

Mm-hmm. And so Ross was kind of... And there's no way of tracking you when you buy it with Bitcoin, right? There's no way anyone can find out it was you. Well... Unless you're like an extreme hacker. No, it's... That's part of the...

So Bitcoin is... This is a little tiny rabbit hole here. Bitcoin is what we call suit anonymous. It's not anonymous. Okay. So basically you have... You have an address that you're given, right? or that your wallet creates.

And it's just like a long string of characters, right? It's like, I don't know, how many 36 digits long or something like that. And it just looks like gobbled you. But that's your address. And so the way Bitcoin forms consensus, which is another big innovation of Bitcoin, is the ledger. So it's like if you have your money in a bank, right? the bank has

you know let's just imagine it's the olden days and they ascribe said okay you came by and you deposited $10 in the bank so they make an entry in their little ledger says okay this account this person's account plus $10 then you come out next day and you

withdraw five okay this person's account minus $5 that's how you know all the banks in the world do it there's some guy and so if you come and you try a withdrawal $15 so you only have $10 in they say oh no you don't have enough so we can't

give you $15 because you only have 10 in there or five left whatever so the way that Bitcoin solves this sort of problem of seeing who owns what which is a big problem that they solve is the ledger for Bitcoin

is public so you can go and you can look on the Bitcoin blockchain there's like websites called block explorers that basically will check all these transactions that the miners have written into the blockchain and they'll they can if you put in an address you can see all the transactions that ever happen for that address really but how do you know who has that who owns that address don't necessarily but if you can map a person to an address like if like if i send you a

bitcoin address to uh pay me for something right then you know hey that address belongs to rich And then you can go to Blocketsboro and you can see the entire history for that address. And then, so the various authorities and or companies' organizations have actually gotten very good

at this sort of blockchain analysis stuff. There's lots of tricks they can use. And so this is actually something that's, because remember, the cypherpunks were all about privacy. So at the time, it was thought to be, when Bitcoin came out, people said that's private, you know?

And it was, more or less, kind of anonymous, but with the tools that have come out now, that's actually becoming more of a problem where people can kind of figure out who's doing what on the blockchain through some complex analytics and stuff like that. There's like actually, actually not too long ago, the IRS put out a job posting, basically asking for people who are experts in blockchain analysis to apply. Yeah, because they're very interested in stuff too, because if people, people are making money on Bitcoin. They want to know. We want you to pay tax on that shit, right? Exactly. Okay.

So, the original question, though. Yeah, I want to hear about how this guy got the guy who started Silk Road and how he got busted and what's going on with him. Right. So he, um, uh, I forget how I was tying all that in, but yeah, so basically he built this. He built like an eBay where you can buy anything you want. And people didn't like it. Well, no, people loved it. The government didn't like it. The government didn't like it. Um, so the, the FBI started investigating.

figured out. And actually, part of the, I think one of the ways that they were able to track it to him is he had posted a Bitcoin address at some point in a forum to, like, for somebody to send money to him. And he went by the handle of the Dread Pirate Roberts, DPR. And, and so this, that was able to link, that they were able to then link it to link that address to one of the Silk Road addresses and then to that username and then he just had to figure out who that username was.

And a lot of people speculate that he may have not been like the only guy running, but he was just maybe an admin or something. He definitely was involved as far as we can tell. But he, so they figured out who he was

and yeah, they did a sting operation on him and they did it in a public library. He would go to a public library to work. and so the big thing when you're dealing with somebody who's you're trying to investigate or get their you know any incriminating evidence that may be on their computer right but he's a fairly knowledgeable crypto security guy so like a lot of if you're in a position like him where he may or may not be like favorable to the government uh you know under investigation or something you might like have a thing

where if you do a certain key press on your computer, it encrypts your whole computer, or if you close your lid, you know, it's encrypted unless you lock it. It locked it so they can't get into it. So they set up this thing where this male and female FBI agent pretended to get to a fight in the library. Uh-huh. Like right near him.

And the fight was escalated to a point where he felt like he needed to get involved. So what he did is he sat his laptop down. open and stood up to go approach them or something. And that's the moment where they basically pounced. And she, the dude moved to restrain him. And then the girl went and threw this thumb drive thing in his computer that would keep, keep it from shutting down and start downloading everything off of it. What?

Yeah. They have these little, it's just like a little. It's like a little. It's like a thumb drive that just sucks everything out of the computer. Yeah, basically. And he didn't have any kind of fail. also got like a mouse wiggler in it so basically like if so it won't let the laptop go idle you just get wiggling the mouse or something so it keeps and then they see how they got him and then they leveled all these crazy charges on him um the to this day when i talked to people at ross olberg they're like oh yeah isn't that a guy that did murder for hire on the silk road there was a murder for hire charge placed on him as this long list of charges that And one of them was murder for hire.

And that's the one that made like all the headlines. Mm. That he basically was trying to have somebody offed and pay them in Bitcoin, you know, and this thing. But, but before the trial even started, like, that was completely dropped. Like, there was, it was completely baseless. No, no basis in fact whatsoever. And, but it's enough to like, it's-

Why did they come up with that? Why did they say that? To smear him. Really? Yeah, I think it's- Nobody, like, tried to, try to pay. somebody on Silk Road as like a hitman. There's the old saying that, you know,

uh, that a lie can go around the world twice before the truth gets its shoes on. You know? That's funny. So like, you know, the redaction of that or the fact that those charges are dropped isn't news. But the charges themselves are, are good news.

You know what I mean? Like, like, like, like posting that this kid was doing murder for hire stuff, you know, makes, sells newspapers, but like saying,

oh, that was retracted like a year later. or doesn't. But either way, what they got him for... Well, maybe they said that, maybe they said that, like,

somebody did, like on Silk Road tried to hire a hitman to commit a murder on his platform. No, they said he... No, no,

no, no. They said that he did it himself. That was the implication was he did it himself. Okay. But do you know, but that charge... Do you know if that was something

that happened on Silk Road? I don't think it did happen on Silk Road. No? It's not really... like I don't know how you would advertise like murder I mean would you just say

I don't know if you put up a posting like hey I'll kill people for you I don't I don't think they did have I think they did have terms of service I'm not an expert on it but I think they did have service service I'm pretty sure that would have been outside and they might have flagged it or something yeah it's not have flagged it okay so I don't I don't think that actually was happening on Silk Road

and he definitely was not involved in it personally. So, but that, that kind of helped soil his reputation though. And then, I mean, basically he was made example of, I think, they hit him with like kingpin charges for, for all the drug stuff. It resulted in the arrests of a bunch of people who were actually dealing drugs because they were able to tie them, tie their addresses to them personally through like chain analysis or something. They made missteps,

missteps somewhere along the way to, to compromise their identities on the blockchain. And they, so they made several arrests on the, um, uh, of actual drug dealers. But to my knowledge,

I don't think Ross ever dealt any drugs. He just ran the platform, you know? Right. So, and what he made, he hit, he hit like a middle man fee on transactions. Yeah,

yeah, and he was also the escrow agent. So, like, now if you send money to somebody, you have PayPal, right? PayPal basically kind of holds the money until you transfer it. And then make sure that you send the goods, right? So they would act as like an escrow agent. So the Bitcoin, they would hold the Bitcoin and then release it once it was delivered safely, you know, to the... So actually, they were holding a lot of Bitcoin when it was seized.

So a lot of people who were using the platform lost a lot of Bitcoin to the government. And they, I guess, were able to, I don't know if it was on his laptop or via his laptop, they were able to get access to other servers. But they, it was a lot of Bitcoin. It was like 600,000, $60,000, something like that Bitcoin that was on there. It was millions of dollars. And they sent it out in increments that, I don't know what it is on the phone. But if you know, on a touchstone phone, you got the numbers that line up with the,

the letters that line up, like in the old days, if you wanted to text, you'd do like, you know, like two, let's see, like so, I can't do it in my head, but like, you know, two, one, three would, like, spell a word. It's like each letter had three, each number had three letters attached to it. Like 5808 upside down as boobs on the calculator?

No, like that. Like, anyhow, it was, I think it was like, let's see, one is A, B, C, two is, On a touchstone phone. Two is... Oh, I see you're saying. Right. Okay, so it was...

Yeah. I want to say it was... It was two, one... They sent it out increments. It was two, one... Three or four, two-on-four. And it was the FBI. Like, if you typed it into a phone, it would be FBI.

And so they sent it out of the wall... out of the... Ross-Obruck wallet in those increments that made FBI. So it was like 100 transactions. of that amount to different wallets at the government. And then the government auctioned him off a couple years later. Really? Yeah.

Do you know what the current status of his cases? Yeah, it's pretty sad. So he got, like I said, level, like he had kingpin charges put on him. So like I could use a drug kingpin. And he got a double life sentence. So he's in jail forever. They've appealed it. A double life sentence.

For running a website where people can sell drugs. I think he was like 25 or 26 when this all happened. So, yeah, so he's got a double life sentence. His mom, who's a great person. Her name's Lynn. If you go to freeross.org, you can find a bunch of information about him and his case. She runs freeross.org. She's spoken in my meetup before a couple years ago.

and, you know, she basically, I mean, she's his mom, so, of course, but she talks about, they've appealed it all the way to the Supreme Court. And basically his only hope now is a presidential pardon. Really? It's all he's got left. Yeah, it's presidential party. So there's, so free rost org, they're trying to do, like, petitions and stuff to. How old was he when he went in?

What's that? How old was he when he went into prison? He was in his 20s. In his, God. Yeah. I'm pretty sure. He was like 25, 26. something like that, you know, a couple years out of college.

And, you know, she says he was just an idealistic kid. You know, he just wanted to create this marketplace to facilitate trade and whatever. He wasn't like trying to be a drug kingpin or ruin people's lives or anything like that. But, yeah, that's what you get for building certain websites is double life sentences. So it's pretty bad. So, yeah. But there's more, like, there's more, go ahead, what we're saying? Just anybody listening, go to freerost.org and check out his story and what you can do to help.

Yeah. Now, aren't there other websites like Silk Road out there now? Yeah. Like dark web style websites where you can buy stuff. Oh, yeah. As soon as that Silk Road went down, somebody built another one. Right. And that one, that one scammed everybody.

Like, the second one that was built, you know, once they got to a certain critical mass. Mm-hmm. You know, because they were acting as an escrow agent as well. So instead of the FBI stealing all their money, stealing all the user's money like the original Silk Road, this guy just, once he got to a certain amount of Bitcoin that he had, he just shut everything down and took the money and ran. But yeah, since then there have been tons of people that makes different.

I mean, it's just, it was a good idea, or a popular idea. I got a lot of traction. And if you think about it, you know, if you're into doing drugs, or whatever, it's a pretty safe way of acquiring. I know that there's, I mean, I had a friend of mine in college who, he got, like, carjacked and beat up once just trying to get some drugs or some neighborhood once. Oh, you mean, like, on the streets? Yeah, he went to the wrong neighborhood and they stole his car.

It had his guitar, his favorite guitar in the back seat. Yeah. He stole his car and beat him up. God damn, dude. And he was just trying to buy some weed, I think. What? Where was he? It was in Augusta, Georgia.

Okay. Yeah. So it's dangerous. I mean, it's for all parties involved, you know, just paying some money and getting it in the mail. If it's just something you're, you know, it's just for your own recreational purposes and whatever. And, you know, it's your body. You can screw it up however you want or become enlightened, however you look at it. Yeah. Right. They need to legalize drug, man. It makes everything so much better. All drugs. Yeah. I mean, the war on drugs has been pretty terrible for our country. in the world.

Like it's, it's definitely failed. And, uh, definitely, the biggest hoax ever. Well, and it's the biggest overreach. I mean,

I've been, I've had my car searched, uh, at least two times, um, just based on, one was when I was a teenager and the cop was like, hey,

you know, we searched a car and I was an idiot. And I was like, yeah, sure. I don't care. And, uh,

I mean, because I knew there was nothing in there. Mm-hmm. But my, this my dad's car. Before it was, mine. Oh shit.

He found some like pill bottles for my dad's prescription. What are these? And I was like, I don't know, man. Like, you know, it's just my dad. It had my name. He's the same name as mine. So I put my name on and I was like, I don't know, man. There's my dad.

And it's like, still, he was trying to, you know, they're trying to find something. And then the second time was maybe five, six years ago. Yeah. And then I was smarter and I was like, no, you can't search my vehicle. And next thing I know, they had a dog there. And they told me that the dog had alerted to my vehicle. and then the dog was in my car. I was like,

yeah. Well, that's happened to me multiple times on the way to back and forth from Miami and the Keys. Really? Yeah, on alligator alley.

There's a road that, I don't know if you're very familiar with like South Florida, but there's this long stretch of road that goes from the west coast of Florida to the east coast of Florida, like down low. And that's where a lot of the drug traffickers

are notorious for traveling and smuggling shit. And I, when I was younger, I got pulled over almost every time that I drove down that road, get my car completely strip-searched, everything.

Right. Even if you said no. But that's a wormhole, too. That's a whole, I mean, that's a whole other rabbit hole. We could go down to the war on drugs. Well, again, a lot of arguments about my wife about politics and, you know, like the fairness of, unfairness of our society in a lot of ways.

Yeah. And really, I think that it's, I mean, a lot of it orbits right around this whole criminalization of drugs and what people want to do with their own bodies. Right. And the, I mean, luckily, we're in a time where like weed is becoming you know marijuana is becoming legal most places um especially for med i mean if it's even legal in georgia for medical use um medical marijuana is legal as far as i know CBD is legal in georgia um and we're not exactly known for being a

progressive right uh state not at all so um i i mean i think that you know putting people in prison for non-violent things is uh i mean even trump uh did something a couple like a couple of like a couple years ago where he rolled out some forgiveness program for people of nonviolent, people of nonviolent drug offenses and stuff like that. Because I mean, it ruins. I mean, you ruin people's lives. Actually, funny enough, I was just at a diner before I came here and I was talking to this guy there and he's older now. He's probably in late 50s, but he said that he, he'd gone to jail for four years in the 90s for dealing cocaine. Really? Yeah, he's like, you know, it's part of my story now.

It's fine. He's a successful guy now. You know, he's doing fine. But, you know, it just drags so many people into it that really, you know, otherwise be productive members of society. Yeah, you get sucked into that system that you did, that criminal justice system that. And the vicious cycles. Yeah. I mean, I've talked to.

You can't escape it. And it's, it's, it's slavery is what it is. I mean, it's literally just like modern day slavery. Yeah. Well, I don't. know if they're out doing work in the fields, but I know. Right, but they work for those prison. The people in those prisons, they do a shitload of work and they make, I forget

what the number is, but they make those federal prisons get paid a certain amount of money per inmate per day. Right. It definitely feeds the bureaucracy. Right. And, yeah, so there's a, I recommend a book, I forget the author's name, but he's from Florida. It's called Arrest Proof Yourself.

I would definitely read that book. Arrest proof yourself. Yeah. Interesting. Yeah. It's good book. It's on audible. Is it?

Is it? Listen to it while you're driving into the keys. Okay. Yeah. I haven't been driven there in a while, but that's a good. I'll have to check that one out. Yeah, I just read that recently. It's really good.

But it talks about, he calls it the electronic plantation, which is the, it's basically what he calls the NCIC National Arrest Records. Basically, even if you're arrested, in this country now. It goes into the NCIC database. Even if everything's dropped, even if you get paid by the state because it was all done improperly

and you're innocent, just having that arrest record can really screw up your life. And he goes through all kinds of examples of how that is. Really? Yeah. You said he's in Florida? Yeah, he lives in Florida.

I forget his name. But he wrote it like 10 years ago, but it's still an interesting book. So, yeah, arrest proof yourself. But it just kind of goes into how corrupt and how instead of I how arrest happy our nation is and then with the when you combine that with the drug

the war on drugs where you can get people to go into jail for just having possession of something I mean it just it's it's it's if we could get rid of that one if I could say if I could snap my fingers and say there's one thing to get rid of in the in this country I think even ahead of the whole Fiat money system,

the Federal Reserve system where our money is backed by nothing, I'd probably just get rid of the war on drugs. I think that would help. There's a country, I can't remember, I can never remember exactly what country it is, but there's a country that actually

made all, like, the hardcore drugs legal. And if you're a heroin addict, you can actually go into a clinic and have a conversation with a doctor who can, like, talk to you. about what the effects of them are

and if you want to safely take your heroin they'll give you a fucking syringe I think it's like Spain or something like that It's not Spain Maybe it is I don't I don't know it's it is some Yeah I've heard that same thing

But they've seen a huge drop in crime Like a massive Their crime rate It's like extremely low because of that When you treat it like a You know a disease Instead of making them a criminal You know you help a lot of things

I mean a lot of people Are just self-medicating themselves for pain and suffering and whatever, you know. And so like... Especially here, right? Especially in this country. A lot of people are unhappy. Yeah, I guess so we get the opioid crisis or whatever.

But, yeah, I don't know, man. I think that's a... But like I was saying, the Silk Road, it just provided a safer way. I mean, it's happening anyway. I mean, people are going to go find this stuff. If they want it, they can find it. It's a safe way to do it. It's a safer way to do it, in my opinion.

So, I mean, it's, it's, it's to a degree charitable. And I've talked to people, I've had some conversations with people, not many, that have used those types of things and both, like, on both sides of the transaction. And they were just like, yeah, man, it's just night and day. They liked it? Oh, yeah. I mean, just because the safety and the ease of it. And, yeah, so.

So what's the best way for me to start? start investing in Bitcoin. Do I use, do I use one of these alt coins, like light coin or Ethereum? Well, there's literally thousands and thousands of alt coins now. Right. And, uh, and they're all just, so what's the difference between most of these alt coins and the original Bitcoin? They all have various, some of them, like, like, like, like, like, like, Bitcoin I told you about, they were just, like, they even, like, dubbed themselves when they came out, like, Bitcoin is gold and will be silver. They had a faster block time.

There's going to be more of them emitted in the end because of that faster block time, I'm pretty sure. And, but literally it was just a copy and paste of the code. There's no new functionality. Just trying to rebrand it and make money. And it worked out. And it's still a fairly valuable coin, you know, despite. What is so? So then there's a lot of other ones, though, that add functionality of some kind.

So there's a lot of experimentation happening. So Ethereum. Yeah, this kid Vitalik, right? He's getting flown. He's meeting with Vladimir Putin and the Kremlin. And he's all over like, what's so special about this kid? I think he's Canadian. And he is, but he's a Russian son of Russian immigrants.

He's a scary looking kid. He's funny. There's lots of really funny memes of him. I bet. I bet. It's a famous meme. Vitalik laughing. Anyhow, I've met him in 2014 at a conference before Ethereum launched.

And he was just a kid that was writing for Bitcoin, was it Bitcoin magazine? Yeah, Bitcoin magazine. He was just doing some writing for them. And he was super interested in Bitcoin. He was a programmer. And, I mean, at the time, he couldn't have been over 20 years old. And so, yeah, he just, I think he actually was trying to pitch some of his ideas to the Bitcoin sort of core developing team, the guys who kind of maintained Bitcoin.

But in the end, he just ended up launching Ethereum. And it's basically a smart contract. It's called a smart contracts platform. So it just adds a bunch of... That's what Ethereum is? Yeah, it adds a bunch of sort of a code layer on top of the currency. And actually, he never really envisioned, according to him, he never envisioned Ethereum itself being like a currency.

It's just the token that everything runs on on his, on all these smart contracts. So smart contracts can do things like basically instead of Bitcoin where you just, okay, I want to send it to you, I want to send it to you now. Okay, did you get it? Yes, I got it. Bitcoin can do some other things, and it can actually do smart contracts too. It just hasn't really been built out. But instead of that, you can make a lot more complicated things happen on Ethereum.

Like you can make a smart contract that, say, if you put your coins in it, it'll send them out to everybody in three weeks or something. It'll send them out to these four people or something like that. Or if you want to have a job done or something, you could send it to a smart contract. And once you, you know, that way the guy doing the job knows that the funds are there and locked in the smart contract. And then maybe once you guys both agree that everything's done to satisfaction,

then the funds get dispersed to whoever needs them. And then there's lots of more complicated use cases. but one of the main ones that's happening right now, like as we speak, that's kind of a big deal. You ask me, where can you get Bitcoin? Okay, where can you get this? That was your initial question. So the answer to that a year ago, well, the answer to that now is still there's centralized exchanges. So there's people who have set up services, like the one I told you about earlier,

Bid instant where you just buy Bitcoin with the credit card. One of the earliest ones, well, the earliest one, I think, was one called M.T. Gox. which stands for Magic the Gathering online exchange. Oh, yeah. I heard of that one. It was basically eBay for, it was based in Japan for trading magic cards, which is like a, yeah, I know a magic card game. So, you know, so they had this like marketplace kind of thing.

And the owner of the guy that bought it was this French guy. What was his name? I can't believe I forgot his name. Anyhow, he bought it. and decided that he wanted to add like a Bitcoin market. Like, okay, he can buy Bitcoins here. And so he just put a thing up where they were selling Bitcoins because I guess he was mining them or whatever.

And it became like a huge thing. And then they ditched the, they were still called Mount Gox or MT Gox. They ditched the card trading thing altogether. It was gone. They just became a Bitcoin exchange. Really? So you could wire them money and then they would send you Bitcoin or ACH money to them. And there were no restrictions.

pretty much whatsoever. But they went down in 2014, kind of epically. How did they go down? I think it was a hack. It could have been an inside job. It's still under investigation. Oh, and they lose like millions and millions of dollars.

Yeah, lots, lots of money. It was in, it happened sometime in early 2014. Their website went down. First, what happened first, they'd had a bunch of scares, first of all. like it wasn't very well run so they'd have a bunch of

they'd had problems for like ever with scale you know scaling to meet this huge demand that was coming in and and and so they'd have problems and they usually had fixed them and they had like a big

lead in the whole kind of network network effect like they were the big name and yeah then one day I think in like January February of 2013 they stopped doing Bitcoin withdrawals. So they suspended with Bitcoin withdrawals.

And people were like, whoa, what's going on with that? And then their website was still up, so people could still log in. And you could actually trade Bitcoin between users still. And so this one guy had this brilliant idea. It was really brilliant. He made another exchange. He called it Bitcoin, Bill. builder.com.

And so he was like, okay, if you send me your coins on Mount Gox, I'll credit you on my website, and you can exchange your Mount Gox coins for real Bitcoin for people who want to deposit and buy, so it's a way for basically people to speculate on what did I thought Mount Gox would come online again or not, which I actually partook in and lost money on. I know some people lost a lot of money doing that, though. So, yeah, it was dumb of me. But, so yeah, basically I went on and bought, I sent Bitcoin. to this guy, BitcoinBuilder.com, and I bought, so if I had sent one Bitcoin in there or something,

I could buy like four Gox coins, right? Because everybody's, so if Mount Gox just was like, okay, everything's fine, bam, I would have had four Bitcoin, basically, that I could have withdrawn. But of course, that's not what happened. They went down. One day their website went down, and it came out later that they were hacked. And then there was another exchange implicated that went down a couple years later called BTC-E. They were a Russian exchange. and they the FBI took them down somehow I don't know

but they said they were implicated actually in the Mount Gawks hack so I think Mount Gawks that's still like the people who have like a bankruptcy claims against Mount Gawks because they filed bankruptcy so anybody who had coins there could maybe get something back

through the bankruptcy process it's still ongoing as far as I know what happened to all those coins that got stolen they went out got laundered through in various places. I think BTC-E was involved in that somehow.

But again, you can kind of track them. Like, theoretically, you can track them. But I'm not sure if, since it's all under investigation, I'm not sure if any of that has been made public, what happened to them. Oh. Yeah, because you would think it would all be trackable, right?

You'd be able to figure out where everything went. Right. But I don't know. I'm sure there are people that have gone down that rabbit hole. I haven't particularly. But that could bring you. to sort of another point, though.

There's a saying in crypto, since we're talking about exchanges and how to buy it, there's a lot of exchanges now in the U.S. It's not like the old days, though, where you just send money and you get Bitcoin back. Like, it's pretty heavily regulated now, which has its good things and as bad things. I'd say mostly bad.

But, you know, they have to verify who you are, like follow all the sort of anti-money laundering, know your customer, loss. The big ones are Coinbase and Gemini. Of those two, I kind of like Gemini better. Gemini, that's the Winkle-Loss. Yes. Winkle-Woss twins. The Gemini Twins.

That's their exchange that they built. And the thing is, when you hold, when a lot of people, and I know a lot of people who have been in Bitcoin for a long time, they still do this. They leave their coins on the exchange, like in the exchange wallet.

And essentially what you're doing then is your you're holding your coins in somebody else's ledger, just like you have it in a bank. Like if you have your money in your bank, if that bank becomes insolvent or something, there's FDIC insurance, which is another rabbit hole to insure you, but essentially that money's gone if somebody,

if the bank becomes a solvent, if these exchanges, so when Mount Gox became insolvent and went under and those coins got, I mean, it was, game over for, I know people that lost hundreds of bitcoins on Mount Gocks. And so it was, it's just, it's just gone, man. It sucks. It's the Wild West, you know.

Yeah. And so whenever you're sending them to these exchanges, you're, you're taking your Bitcoin, which is kept track of on the Bitcoin blockchain. So that means you have an account balance on the Bitcoin blockchain ledger, you know, that's the one that I told you that's shared across all the computers and everything. um there's short of the entire internet shutting down there's nothing that can really take or you losing your access to those by losing like not taking care of your security well enough or losing your you know your hard drive dies and you didn't have backups short of that there's nobody can take that

money from you that those those that's those bitcoin from you nobody can go and seize them uh easily unless they physically take your computer and force you to send them out, you know. But once you put them on a third-party exchange, it's just an entry on their bank ledger. They control the actual asset, the Bitcoin. You don't control it anymore. So if they go under, if they get hacked or whatever, your stuff's all at risk of that. And they're pretty big, you know, a lot of these exchanges, they're pretty big honeypots, you know. Hackers are always trying to get into these exchange wallets.

Right. They've gotten very good at the exchanges have got. gotten very good at securing the coins. How the hell do you pay taxes on your Bitcoin? If it's so volatile, the price goes up and down. Well, what if you would have bought it at like $10,000 and by the, in December, it's worth $30? The way the IRS handles it is if you, it's just like any other investment.

So the same thing with stocks. Like you can hold the stock and go up to $100 and then back down to what you bought it for, you know? It's, uh, they count it whenever you convert it back to US dollars. so that's the taxable event is when you cover up oh okay yeah so you can hold bitcoin you can buy it a hundred dollars and then it goes up to 1300 and it goes back down to 200 and as long as you didn't sell in any point in there

there's no taxable event okay so but there's and the crypto universe and uh taxation is a is a nightmare frankly i bet um yeah you'd have to get like a specialized uh accountant if you're doing anything crazy with crypto to deal with that. But if you're just, you know, buying the coins and holding them, stuff like that, it's pretty straightforward. Just like buying anything else and holding it. Okay. What kind of stuff are you doing in Atlanta? What kind of,

you do a lot of conferences and stuff? We do our normal Bitcoin meetup. Of course, we haven't done, we did our first one since COVID hit last month. But basically we just kind of are topical. We do something like I think we're having done next week. We're going to talk about Fed coin, which is the Federal Reserve, is actually going to be rolling out some interesting stuff next year probably that's kind of similar to its own version of Bitcoin. Interesting. Yeah, there's this law that got passed in March.

Anyhow, we're going to talk about that. Usually it's something topical. We get together at this co-working space at an executive airport in Atlanta called Petty Cab Airport. at the Globe Hub and we usually have like barbecue and stuff and just it's just more like a social club of people who are interested in in Bitcoin and crypto so that's what we do there in Atlanta so it's Bitcoin Atlanta.org okay and I do have a crypto consulting company called ClarkCrypto.com okay what's it called Clark crypto my last name Clark C-L-A-R-K

K-E actually but if you type either yeah if you type Either one in. Okay. You can, you can, you can get there. Crypto Clark. I have that one,

do. You have both just in case. They type it wrong. Yeah. All right, perfect. So it's ClarkCrypto.com. So,

you know, I'll do consulting for, as anything as simple as, hey, can you help me buy some Bitcoin, or help me navigate these exchanges or whatever,

um, all the way up to like helping people, you know, I have, I mean, I know a lot of people in the business. So if I don't know, the answer to your question, I can point you in the right direction.

So legal consulting for like, if you want to launch like a token or something, can help you with the tokenomics and the legal aspects of that of doing a launch. And securing your coins is a big thing I like to talk to people about because with great freedom. Because you basically, Barack Obama actually gave us like the best line for Bitcoin. He said, if the, if the photography can't be broken, it's just like, people running around with Swiss bank accounts in their pockets, which is what basically like having a Bitcoin wallet is basically. It's like that's exactly bright.

That's exactly what it is. So, but you have to be able to secure them properly. You just want to do some best practices type of things. So help people with that. I also have a friend of mine who does wallet recovery. You know, if you screw something up and you,

you think you lost your bitcoins, he can help you recover them. But yeah, I am, but there's a lot of great products coming out that are making it easier and easier to store your coins effectively. This company, Edge, they don't pay me or anything. I just am a big fan of them. They have a wallet. They're out of California, the Edge Wallet. And I've known their founder since 2014.

And they, they kind of try and straddle. that line of, you know, we want your grandma to be able to use this, but we also want to back it up and make it secure so you can. And so I've done it where I've got a new phone or something and I just go on and install the app, enter my username and password, and bam, it's all repopulated from their backups. But they don't actually keep anything on their servers. So even if they got raided or something, all the data they have, or if they got hacked. All the data they have on their wallets is all encrypted on your device. Okay.

So if you forget your username and password. It's compartmentalized. Yeah. So they never get any raw data on their end. But yeah, if you remember your username and password, you can restore it on any device, stuff like that. Cool. So you can also buy cryptocurrency through their wallet too. Oh, really?

Yeah. They have a service now. They just started a year or two ago. So. Sweet. to get on that. Yeah, well, I'll set you up with someone. I'll send you with something after this.

Hell yeah, let's do it, man. But that's what I'm up to. And I don't know. I feel like we jumped around a lot. I hope somebody, you guys got something out of it. Yeah, well, I definitely did. I definitely learned a lot. It's a super fascinating subject.

And there's tons, like you said, tons of rabbit holes. You can get lost down. Right. We should do it again. Yeah, we will. I'll try and do like a more linear. Yeah. progression through everything.

But yeah, the moral story is the takeaways, inflation is a giant hidden tax on the world, the governments of all the world governments use against their populace to basically, we don't even need a tax system anymore. They could just print the money and through inflation do everything they wanted at this point. someday it'll fall apart, but until it does, it's a great game.

Can you imagine that day? I don't want to, but, I mean. They don't want, I mean, they want to regulate it. The thing is, they're very smart and they've got a lot of, I mean, they've got a lot of levers they can pull to keep things going. But Bitcoin is like gold and silver, a hedge against inflation, which inflation is, you know, they say, like, death and taxes.

Well, these days, death and inflation. are like sure thing. So because of limited supply of Bitcoin, I think it's going to be a sink for a lot of U.S. dollars that are printed out of thin air. And I'm, you know, I'm a big anti-war on drugs. I'm a big anti-war guy, though, too. And so really this whole notion of like global war that we've

like World War I, World War II, and then this kind of whatever we have now, which is just like wars going on all the time, you know, in the Middle East or whatever. They all couldn't be funded without this Fiat money system where they can tax everybody stealthily, you know, through this hidden tax of inflation, where gradually your savings are eroded

and your income never keeps up with it. Like I was talking, the Uber driver last night. Your income, you know, there's all this new money in the economy and, yeah, but he gets paid the same. He's not making, you know, Uber still pays him the same rates pretty much, maybe even less.

Right. Because, you know, there's so many people driving Uber now, unemployment and all that stuff. So the wage is never quite keep up with inflation. So even if, like, inflation is really like 4% a year every year, let's just say, like, that's the inflation rate. Most employers give like 3%. Right.

But if you magnify that out over 40 years, right? Where's that money go? That's a 40% reduction in your salary. Like, you know what I mean? Oh, yeah. Right. There's 1% difference there. So inflation's 4%, but your salary only goes up 3%.

So it's 1%. But you take that over a 40 year career. That means that if you're working kind of the same job for 40 years, which a lot of people do, on that 40th year when you retire, you're as far as like keeping up with your expenses, you're 40%, you're 40% less well off than when you started. God damn. So that's dark. Yeah.

But that's why everybody, that's why all household, you know, used to be in the 50s and 60s. One dude could make money for his whole family and, and, uh, and the wife could stay home with the kids or whatever. But now everybody's, you know, two, two, two income family. You have to have like a two income family to keep up most. Yeah. So sound money and Bitcoin are the answer to that. End the wars.

If you want to end war and increase the living standard of more people in the world, by Bitcoin. It'll solve your problems. Awesome, man. Thanks for coming down and doing this. I really appreciate it. Thank you. And I hope you guys enjoyed. Thanks, guys.